Shenzhen Textile (Holdings) Co., Ltd.
Financial Statements and Auditor's ReportFor the year ended December 31,2023
Contents
Auditor's Report
Consolidated and Company Balance sheet
Consolidated and Company Income statement
Consolidated and Company cash flow statement
Consolidated and Company Statement on Change in Owners’ Equity
Notes to Financial statements
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Auditor’ s Report
DeShiReport(Shen)Zi(24)No. P02833To all shareholders of Shenzhen Textile (Holdings) Co., Ltd.：
I. Opinion
We have audited the financial statements of Shenzhen Textile (Holdings) Co., Ltd . (hereinafter referred to as "the Company"), whichcomprise the balance sheet as at December 31, 2023, and the income statement, the statement of cash flows and the statement of changes inowners' equity for the year then ended and notes to the financial statements.In our opinion, the attached financial statements are prepared, in all material respects, in accordance with Accounting Standards forBusiness Enterprises and present fairly the financial position of the Company as at December 31, 2023 and its operating results and cashflows for the year then ended.II. Basis for Our Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants in China. Our responsibilitiesunder those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.According to the Code of Ethics for Chinese CPA, we are independent of the Company in accordance with the Code of Ethics for ChineseCPA and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion.III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters.
1. Recognition of polarizer sales revenue
As mentioned in Note (V) 40 to the financial statement, in 2023 the operating income reported in the consolidated financialstatement of Shenzhen Textile Group was RMB3,079,678,375.45, of which the sales revenue of polarizers was RMB 2,885,625,542.77,accounting for 93.70% of the total operating income. The sales revenue of Shenzhen Textile Group's polarizer is recognized when thecustomer obtains control of the relevant goods. Due to the importance of polarizer sales revenue to the consolidated financial statement asa whole, and the revenue is one of the key performance indicators of Shenzhen Textile Group, there is an inherent risk that managementwill manipulate revenue recognition in order to achieve specific objectives or expectations, therefore, we have identified the recognition ofpolarizer sales revenue as a key audit matter for the audit of the consolidated financial statement.
In response to the above key audit matter, the audit procedures we implement mainly include:
Test and evaluate the internal control of the revenue-related business of Shenzhen Textile Group.Examine sales contracts with key customers, identify contractual terms and conditions related to the transfer of control of goods, andassess whether the accounting policies for revenue recognition comply with the requirements of accounting standards for businessenterprisesPerform revenue analysis procedures by production line, product type and customer, and analyze the rationality of revenue changesbased on market and other factors.Samples are taken to perform detailed tests on sales revenue, check supporting documents such as invoices, outbound delivery orders,and receipts related to revenue recognition, and verify the sales of major customers by letter of confirmation and evaluate the authenticity ofpolarizer sales revenue recognition.Select samples of sales transactions before and after the balance sheet date, check the supporting documents such as invoices,outbound delivery orders, and receipts, and evaluate whether the revenue is recorded in the appropriate accounting period.
2. Impairment of polarizer inventory
As mentioned in Note (V) 8 to the financial statement, as of December 31, 2023, the inventory book balance reported in theconsolidated financial statement of Shenzhen Textile Group was RMB852,104,157.04, of which the book balance of polarizer inventory wasRMB838,447,375.39 accounting for 98.40% of the total inventory, and the corresponding inventory decline reserve wasRMB107,290,039.96. In accordance with the Group's accounting policy, inventories are measured at the lower of cost or net realizable valueat the end of the year, and when the net realizable value of inventories is lower than cost, a provision is made for inventory price declines. Asthe provision for inventory declines involves significant management estimates, we have identified the impairment of polarizer inventoriesas a key audit matter in the audit of the consolidated financial statement.In response to the above key audit matter, the audit procedures we implement mainly include:
Test and evaluate the design and implementation of internal controls related to inventory impairment;
Implement inventory on-site monitoring procedures, check the check-count quantity of inventory on a sampling basis, and observe thestatus of inventory to evaluate the inventory quantity and condition at the balance sheet date;
Evaluate the reasonableness of management's methodology for accruing provisions for inventory declines and the importantassumptions and parameters used to calculate net realizable value;IV. Other information
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The management of the Company is responsible for the other information. The other information comprises information of theCompany's annual report in 2023, but excludes the financial statements and our auditor's report.Our opinion on the financial statements does not cover the other information and we do not and will not express any form ofassurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, indoing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in theaudit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, weconclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in thisregardV. Responsibilities of Management and Those Charged with Governance for the Financial Statements
The Company's management is responsible for preparing the financial statements in accordance with the requirements of AccountingStandards for Business Enterprises to achieve a fair presentation, and for designing, implementing and maintaining internal control that isnecessary to ensure that the financial statements are free from material misstatements, whether due to frauds or errors.
In preparing the financial statements, management of the Company is responsible for assessing the Company's ability to continue as agoing concern, disclosing matters related to going concern and using the going concern basis of accounting unless management eitherintends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with the audit standards will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout theaudit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud mayinvolve collusion, forgery, omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by management of the Company.
(4) Conclude on the appropriateness of using the going concern assumption by the management of the Company, and conclude, basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may causethe Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether thefinancial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theCompany to express an opinion on the financial statements and bear all liability for the opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit andsignificant audit matters, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regardingindependence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on ourindependence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance inthe audit of the financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, inextremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.Deloitte Touche Tohmatsu CPA Ltd.(special general partnership) Chinese C.P.A.
（Project Partner)Shanghai ChinaChinese C.P.A.
March 26, 2024
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Consolidated balance sheetDecember 31,2023
Consolidated balance sheetIn RMB
| Items | Note | December 31,2023 | December 31,2022 |
| Current asset： | |||
| Monetary fund | (V).1 | 472,274,448.00 | 991,789,968.19 |
| Transactional financial assets | (V).2 | 821,946,114.68 | 319,605,448.44 |
| Note receivable | (V).3 | 50,963,943.01 | 74,619,100.26 |
| Account receivable | (V.).4 | 820,134,833.95 | 636,583,469.93 |
| Financing of receivables | (V.).5 | 22,839,459.13 | 54,413,796.91 |
| Prepayments | (V).6 | 19,499,886.80 | 18,391,444.67 |
| Other account receivable | (V).7 | 3,220,285.42 | 10,585,975.38 |
| Including：Interest receivable | - | - | |
| Dividend receivable | - | - | |
| Inventories | (V).8 | 736,392,172.27 | 558,447,648.77 |
| Other current asset | (V.).9 | 60,773,457.39 | 69,535,531.24 |
| Total of current assets | 3,008,044,600.65 | 2,733,972,383.79 | |
| Non-current assets： | |||
| Long term share equity investment | (V.).10 | 127,682,020.70 | 134,481,835.74 |
| Other equity instruments investment | (V)..11 | 145,988,900.00 | 167,678,283.27 |
| Real estate investment | (V.).12 | 125,603,207.18 | 126,315,834.76 |
| Fixed assets | (V.).13 | 2,066,006,237.73 | 2,240,221,656.36 |
| Construction in progress | (V.).14 | 31,307,060.74 | 38,061,619.60 |
| Use right assets | (V).15 | 11,999,466.57 | 15,365,393.88 |
| Intangible assets | (V).16 | 39,564,422.80 | 44,192,571.95 |
| Goodwill | (V).17 | - | - |
| Long-germ expenses to be amortized | (V.).18 | 3,503,660.94 | 4,470,957.79 |
| Deferred income tax asset | (V).19 | 60,605,365.42 | 69,823,814.29 |
| Other non-current asset | (V).20 | 29,517,420.71 | 42,553,016.47 |
| Total of non-current assets | 2,641,777,762.79 | 2,883,164,984.11 | |
| Total of assets | 5,649,822,363.44 | 5,617,137,367.90 |
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Consolidated balance sheet(Continued)
In RMB
| Note | December 31,2023 | December 31,2022 | |
| Current liabilities： | |||
| Short-term loans | (V).22 | 8,000,000.00 | 7,000,000.00 |
| Notes payable | (V).23 | 31,049,291.49 | - |
| Account payable | (V).24 | 408,548,136.24 | 327,049,873.70 |
| Advance receipts | (V).25 | 1,450,096.30 | 1,393,344.99 |
| Contract liabilities | (V).26 | 1,436,943.34 | 4,274,109.40 |
| Employees’ wage payable | (V).27 | 56,437,162.09 | 61,166,444.90 |
| Tax payable | (V).28 | 4,340,895.14 | 8,897,312.51 |
| Other account payable | (V).29 | 184,528,344.55 | 197,345,455.37 |
| Including：Interest payable | - | - | |
| Dividend payable | - | - | |
| Non-current liability due within 1 year | (V).30 | 108,102,752.99 | 104,183,438.22 |
| Other current liability | (V).31 | 80,082,477.22 | 92,945,741.78 |
| Total of current liability | 883,976,099.36 | 804,255,720.87 | |
| Non-current liabilities： | |||
| Long-term loan | (V).32 | 505,578,314.56 | 607,421,585.00 |
| Lease liability | (V).33 | 6,687,317.22 | 8,628,672.71 |
| Deferred income | (V).34 | 97,485,986.89 | 117,814,796.10 |
| Deferred income tax liability | (V).19 | 44,177,287.45 | 47,974,267.80 |
| Total non-current liabilities | 653,928,906.12 | 781,839,321.61 | |
| Total of liability | 1,537,905,005.48 | 1,586,095,042.48 | |
| Owners’ equity | |||
| Share capital | (V).35 | 506,521,849.00 | 506,521,849.00 |
| Capital reserves | (V).36 | 1,961,599,824.63 | 1,961,599,824.63 |
| Other comprehensive income | (V).37 | 93,607,380.81 | 109,596,609.31 |
| Special reserve | (V)..38 | 104,262,315.64 | 100,909,661.32 |
| Retained profit | (V).39 | 216,160,896.14 | 170,636,610.95 |
| Total of owner’s equity belong to the parent company | 2,882,152,266.22 | 2,849,264,555.21 | |
| Minority shareholders’ equity | 1,229,765,091.74 | 1,181,777,770.21 | |
| Total of owners’ equity | 4,111,917,357.96 | 4,031,042,325.42 | |
| Total of liabilities and owners’ equity | 5,649,822,363.44 | 5,617,137,367.90 |
The notes are integral parts of the financial statements_____________________ ______________________ ______________________
Legal Representative: Person-in-charge of the accounting work：Person-in -charge of the accounting organ：
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Parent Company Balance Sheet
In RMB
| Note | December 31,2023 | December 31,2022 | |
| Current asset： | |||
| Monetary fund | 9,125,800.27 | 426,042,455.28 | |
| Transactional financial assets | 741,243,309.42 | 319,605,448.44 | |
| Account receivable | (XVI).、1 | 12,671,623.65 | 15,643,024.11 |
| Prepayments | - | - | |
| Other account receivable | (XVI).2 | 14,013,552.95 | 14,132,756.62 |
| Including：Interest receivable | - | - | |
| Dividend receivable | - | - | |
| Inventories | 32,814.05 | 26,237.85 | |
| Total of current assets | 777,087,100.34 | 775,449,922.30 | |
| Non-current assets： | |||
| Long term share equity investment | (XVI).3 | 2,087,532,810.79 | 2,092,431,333.83 |
| Other equity instruments investment | 131,185,500.00 | 151,618,842.39 | |
| Real estate investment | 102,430,682.27 | 101,190,712.85 | |
| Fixed assets | 2,522,229.44 | 11,346,585.35 | |
| Construction in progress | 191,875.56 | 308,243.90 | |
| Deferred income tax asset | - | - | |
| Other non-current asset | 27,823,005.45 | 25,997,082.15 | |
| Total of non-current assets | 2,351,686,103.51 | 2,382,892,800.47 | |
| Total of assets | 3,128,773,203.85 | 3,158,342,722.77 | |
| Current liabilities | |||
| Account payable | 411,743.57 | 411,743.57 | |
| Advance receipts | 540,673.07 | 691,160.58 | |
| Employees’ wage payable | 15,810,919.71 | 18,510,589.33 | |
| Tax payable | 3,115,369.56 | 7,121,466.14 | |
| Other account payable | 106,722,393.87 | 113,736,371.24 | |
| Including：Interest payable | - | - | |
| Dividend payable | - | - | |
| Total of current liability | 126,601,099.78 | 140,471,330.86 | |
| Non-current liabilities： | |||
| Deferred income | 200,000.00 | 300,000.00 | |
| Deferred income tax liability | 40,855,186.12 | 44,363,868.30 | |
| Total non-current liabilities | 41,055,186.12 | 44,663,868.30 | |
| Total of liability | 167,656,285.90 | 185,135,199.16 | |
| Owners’ equity | |||
| Share capital | 506,521,849.00 | 506,521,849.00 |
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| Capital reserves | 1,577,392,975.96 | 1,577,392,975.96 | |
| Other comprehensive income | 83,629,830.81 | 98,855,668.75 | |
| Surplus reserves | 104,262,315.64 | 100,909,661.32 | |
| Retained profit | 689,309,946.54 | 689,527,368.58 | |
| Total of owners’ equity | 2,961,116,917.95 | 2,973,207,523.61 | |
| Total of liabilities and owners’ equity | 3,128,773,203.85 | 3,158,342,722.77 |
The notes are integral parts of the financial statements
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Consolidated Income statement
In RMB
| Note | Year 2023 | Year 2022 | |
| 1.Operating Revenue | (V).40 | 3,079,678,375.45 | 2,837,988,264.36 |
| Less: Operating cost | (V).40 | 2,561,631,844.53 | 2,374,005,896.43 |
| Business tax and surcharge | (V).41 | 9,293,623.13 | 7,907,126.91 |
| Sales expense | (V).42 | 34,195,670.61 | 35,962,529.35 |
| Administrative expense | (V).43 | 134,371,410.53 | 128,388,940.29 |
| R & D costs | (V).44 | 104,653,040.92 | 80,520,155.54 |
| Financial expenses | (V).45 | 24,399,501.16 | 12,943,606.57 |
| Including：Interest expense | 27,339,804.17 | 31,131,112.38 | |
| Interest income | 12,947,471.64 | 8,327,248.75 | |
| Add: Other income | (V).46 | 50,740,363.91 | 26,350,210.89 |
| Investment gain | (V).47 | 10,828,635.56 | 19,383,351.87 |
| Incl: investment gains from affiliates | (6,898,983.89) | 1,307,639.15 | |
| Financial assets measured at amortized cost cease to be recognized as income | - | - | |
| Changing income of fair value | (V).48 | 2,151,780.82 | - |
| Credit impairment loss | (V).49 | 4,535,775.14 | (4,618,553.09) |
| Impairment loss of assets | (V.).50 | (126,089,709.42) | (202,573,465.84) |
| Assets disposal income | (v).51 | 1.72 | 31,264.60 |
| II. Operating profit | 153,300,132.30 | 36,832,817.70 | |
| Add：Non-Operating income | (V).52 | 1,449,879.26 | 14,993,082.57 |
| Less：Non-Operating expenses | (V).53 | 8,205,801.51 | 7,477,057.47 |
| III. Total profit | 146,544,210.05 | 44,348,842.80 | |
| Less：Income tax expenses | (V).54 | 19,407,731.47 | (67,443,123.52) |
| IV. Net profit | 127,136,478.58 | 111,791,966.32 | |
| (I) Classification by business continuity | |||
| 1.Net continuing operating profit | 127,136,478.58 | 111,791,966.32 | |
| 2.Termination of operating net profit | - | - | |
| (II) Classification by ownership | |||
| Including：Net profit attributable to the owners of parent company | 79,268,250.45 | 73,309,182.94 | |
| Minority shareholders’ equity | 47,868,228.13 | 38,482,783.38 | |
| V. Net after-tax of other comprehensive income | (V).37 | (15,870,135.10) | (10,204,603.14) |
| Net of profit of other comprehensive income attributable to owners of the parent company. | (15,989,228.50) | (10,085,509.74) | |
| （I）Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period | (16,267,037.45) | (10,058,739.46) | |
| 1.Re-measurement of defined benefit plans of changes in net debt or net assets | - | - |
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| 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. | - | - | |
| 3. Changes in the fair value of investments in other equity instruments | (16,267,037.45) | (10,058,739.46) | |
| 4. Changes in the fair value of the company’s credit risks | - | - | |
| (II)Other comprehensive income that will be reclassified into profit or loss. | 277,808.95 | (26,770.28) | |
| 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. | - | - | |
| 2. Changes in the fair value of investments in other debt obligations | 178,640.10 | (178,640.10) | |
| 3. Other comprehensive income arising from the reclassification of financial assets | - | - | |
| 4.Allowance for credit impairments in investments in other debt obligations | - | - | |
| 5. Reserve for cash flow hedges | - | - | |
| 6.Translation differences in currency financial statements | 99,168.85 | 151,869.82 | |
| 7.Other | - | - | |
| Net of profit of other comprehensive income attributable to Minority shareholders’ equity | 119,093.40 | (119,093.40) | |
| VI. Total comprehensive income | 111,266,343.48 | 101,587,363.18 | |
| Total comprehensive income attributable to the owner of the parent company | 63,279,021.95 | 63,223,673.20 | |
| Total comprehensive income attributable minority shareholders | 47,987,321.53 | 38,363,689.98 | |
| VII. Earnings per share | |||
| Basic earnings per share | 0.16 | 0.14 |
The notes are integral parts of the financial statements
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Income statement of the Parent Company
In RMB
| Note | Year 2023 | Year 2022 | |
| I.Operating revenue | (XVI).4 | 77,822,508.75 | 56,046,883.88 |
| Less：Operating cost | (XVI).4 | 9,822,306.53 | 9,544,956.96 |
| Business tax and surcharge | 3,193,559.74 | 2,296,709.15 | |
| Sales expense | 233,086.71 | 106,542.65 | |
| Administrative expense | 46,901,768.72 | 46,419,746.13 | |
| Financial expenses | (3,418,990.44) | (5,381,252.49) | |
| Including：Interest expenses | 356,264.79 | 6,601.33 | |
| Interest income | 3,838,789.68 | 5,369,095.59 | |
| Add：Other income | 153,012.52 | 269,698.97 | |
| Investment gain | (XVI).5 | 19,300,515.95 | 18,656,000.37 |
| Including: investment gains from affiliates | (6,898,983.89) | 1,307,639.15 | |
| Financial assets measured at amortized cost cease to be recognized as income | - | - | |
| Changing income of fair value | 2,151,780.82 | - | |
| Credit impairment loss | 708,847.28 | 940,005.04 | |
| Impairment loss of assets | - | - | |
| Assets disposal income | - | - | |
| II.Operating profit | 43,404,934.06 | 22,925,885.86 | |
| Add：Non-operating income | 6,431.44 | 6,004,050.33 | |
| Less：Non-operating expenses | 59,123.40 | 100,500.00 | |
| III. Total profit | 43,352,242.10 | 28,829,436.19 | |
| Less：Income tax expenses | 9,825,698.88 | 2,191,277.71 | |
| IV. Net profit | 33,526,543.22 | 26,638,158.48 | |
| 1.Net continuing operating profit | 33,526,543.22 | 26,638,158.48 | |
| 2.Termination of operating net profit | - | - | |
| V. Net after-tax of other comprehensive income | (15,225,837.94) | (9,906,869.64) | |
| （I）Other comprehensive income items that will not be reclassified into gains/losses in the subsequent accounting period | (15,325,006.79) | (10,058,739.46) | |
| 1.Re-measurement of defined benefit plans of changes in net debt or net assets | - | - | |
| 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. | - | - | |
| 3. Changes in the fair value of investments in other equity instruments | (15,325,006.79) | (10,058,739.46) | |
| 4. Changes in the fair value of the company’s credit risks | - | - | |
| 5.Other | - | - | |
| (II)Other comprehensive income that will be reclassified into profit or loss | 99,168.85 | 151,869.82 | |
| 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. | - | - |
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| 2. Changes in the fair value of investments in other debt obligations | - | - | |
| 3. Other comprehensive income arising from the reclassification of financial assets | - | - | |
| 4.Allowance for credit impairments in investments in other debt obligations | - | - | |
| 5. Reserve for cash flow hedges | - | - | |
| 6.Translation differences in currency financial statements | 99,168.85 | 151,869.82 | |
| 7.Other | - | - | |
| VI. Total comprehensive income | 18,300,705.28 | 16,731,288.84 |
The notes are integral parts of the financial statements
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Consolidated Cash flow statement
In RMB
| Note | Year 2023 | Year 2022 | |
| I.Cash flows from operating activities | |||
| Cash received from sales of goods or rending of services | 2,985,794,229.99 | 3,046,091,280.79 | |
| Tax returned | 5,073,509.20 | 113,982,534.22 | |
| Other cash received from business operation | (V).55(1) | 87,277,323.90 | 218,296,299.96 |
| Sub-total of cash inflow | 3,078,145,063.09 | 3,378,370,114.97 | |
| Cash paid for purchasing of merchandise and services | 2,466,252,261.73 | 2,453,492,479.82 | |
| Cash paid to staffs or paid for staffs | 255,045,680.87 | 253,460,171.00 | |
| Taxes paid | 54,636,406.53 | 59,230,421.14 | |
| Other cash paid for business activities | (V).55(1) | 117,443,974.16 | 121,948,492.41 |
| Sub-total of cash outflow from business activities | 2,893,378,323.29 | 2,888,131,564.37 | |
| Net cash generated from /used in operating activities | (V).56(1) | 184,766,739.80 | 490,238,550.60 |
| II. Cash flow generated by investing | |||
| Cash received from investment retrieving | - | 28,500,000.00 | |
| Cash received as investment gains | 13,769,440.75 | 18,075,712.72 | |
| Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets | 11,634.84 | 101,301.53 | |
| Net cash received from disposal of subsidiaries or other operational units | - | - | |
| Other investment-related cash received | (V).55(2) | 1,454,000,000.00 | 1,316,000,000.00 |
| Sub-total of cash inflow due to investment activities | 1,467,781,075.59 | 1,362,677,014.25 | |
| Cash paid for construction of fixed assets, intangible assets and other long-term assets | 64,069,967.97 | 123,210,891.17 | |
| Cash paid as investment | - | 1.00 | |
| Net cash received from subsidiaries and other operational units | - | - | |
| Other cash paid for investment activities | (V).55(2) | 1,840,500,000.00 | 1,140,433,371.49 |
| Sub-total of cash outflow due to investment activities | 1,904,569,967.97 | 1,263,644,263.66 | |
| Net cash flow generated by investment | (436,788,892.38) | 99,032,750.59 | |
| III.Cash flow generated by financing | |||
| Cash received as investment | - | - | |
| Including: Cash received as investment from minor shareholders | - | - | |
| Cash received as loans | 8,000,000.00 | 73,230,492.79 | |
| Other financing –related cash received | - | - | |
| Sub-total of cash inflow from financing activities | 8,000,000.00 | 73,230,492.79 | |
| Cash to repay debts | 103,387,387.94 | 26,642,157.50 | |
| Cash paid as dividend, profit, or interests | 57,324,944.21 | 56,596,142.54 | |
| Including: Dividend and profit paid by subsidiaries to minor shareholders | - | - |
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| Other cash paid for financing activities | (V).55(3) | 8,776,024.71 | 9,144,572.43 |
| Sub-total of cash outflow due to financing activities | 169,488,356.86 | 92,382,872.47 | |
| Net cash flow generated by financing | (161,488,356.86) | (19,152,379.68) | |
| IV. Influence of exchange rate alternation on cash and cash equivalents | 456,132.31 | 1,947,479.23 | |
| V.Net increase of cash and cash equivalents | (V).56(1) | (413,054,377.13) | 572,066,400.74 |
| Add: balance of cash and cash equivalents at the beginning of term | (V).56(2) | 874,474,834.46 | 302,408,433.72 |
| VI ..Balance of cash and cash equivalents at the end of term | (V).56(2) | 461,420,457.33 | 874,474,834.46 |
The notes are integral parts of the financial statements
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Cash Flow Statement of the Parent Company
In RMB
| Note | Year 2023 | Year 2022 | |
| I.Cash flows from operating activities | |||
| Cash received from sales of goods or rending of services | 79,719,541.58 | 49,647,323.90 | |
| Tax returned | - | 600,618.94 | |
| Other cash received from business operation | 20,183,240.81 | 7,065,800.34 | |
| Sub-total of cash inflow | 99,902,782.39 | 57,313,743.18 | |
| Cash paid for purchasing of merchandise and services | 3,005,590.09 | 2,458,133.73 | |
| Cash paid to staffs or paid for staffs | 38,735,139.38 | 33,850,730.29 | |
| Taxes paid | 19,540,659.95 | 6,260,647.31 | |
| Other cash paid for business activities | 18,940,923.33 | 5,334,787.37 | |
| Sub-total of cash outflow from business activities | 80,222,312.75 | 47,904,298.70 | |
| Net cash generated from /used in operating activities | 19,680,469.64 | 9,409,444.48 | |
| II. Cash flow generated by investing | |||
| Cash received from investment retrieving | - | - | |
| Cash received as investment gains | 12,954,592.48 | 17,348,361.22 | |
| Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets | - | - | |
| Net cash received from disposal of subsidiaries or other operational units | - | - | |
| Other investment-related cash received | 1,250,200,000.00 | 1,316,000,000.00 | |
| Sub-total of cash inflow due to investment activities | 1,263,154,592.48 | 1,333,348,361.22 | |
| Cash paid for construction of fixed assets, intangible assets and other long-term assets | 2,784,786.15 | 2,586,581.13 | |
| Cash paid as investment | - | 1.00 | |
| Net cash received from subsidiaries and other operational units | - | - | |
| Other cash paid for investment activities | 1,550,500,000.00 | 1,134,754,229.41 | |
| Sub-total of cash outflow due to investment activities | 1,553,284,786.15 | 1,137,340,811.54 | |
| Net cash flow generated by investment | (290,130,193.67) | 196,007,549.68 | |
| III. Cash flow generated by financing | |||
| Cash received as investment | - | - | |
| Cash received as loans | - | - | |
| Other financing –related ash received | - | - | |
| Sub-total of cash inflow from financing activities | - | - | |
| Cash to repay debts | - | - | |
| Cash paid as dividend, profit, or interests | 30,747,575.73 | 25,332,693.78 | |
| Other cash paid for financing activities | - | - | |
| Sub-total of cash outflow due to financing activities | 30,747,575.73 | 25,332,693.78 | |
| Net cash flow generated by financing | (30,747,575.73) | (25,332,693.78) | |
| IV. Influence of exchange rate alternation on cash and cash equivalents | 571.84 | 1,886.83 |
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| V.Net increase of cash and cash equivalents | (301,196,727.92) | 180,086,187.21 | |
| Add: balance of cash and cash equivalents at the beginning of term | 310,322,528.19 | 130,236,340.98 | |
| VI ..Balance of cash and cash equivalents at the end of term | 9,125,800.27 | 310,322,528.19 |
The notes are integral parts of the financial statements
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Consolidated Statement on Change in Owners’ Equity
In RMB
| Items | Year 2023 | ||||||
| Owner’s equity Attributable to the Parent Company | Minor shareholders’ equity | Total of owners’ equity | |||||
| Share Capital | Capital reserves | Other Comprehensive Income | Surplus reserves | Retained profit | |||
| I .Balance at the end of last year | 506,521,849.00 | 1,961,599,824.63 | 109,596,609.31 | 100,909,661.32 | 170,636,610.95 | 1,181,777,770.21 | 4,031,042,325.42 |
| Add: Change of accounting policy | - | - | - | - | - | - | - |
| Correcting of previous errors | - | - | - | - | - | - | - |
| Merger of entities under common control | - | - | - | - | - | - | - |
| Other | - | - | - | - | - | - | - |
| II. Balance at the beginning of current year | 506,521,849.00 | 1,961,599,824.63 | 109,596,609.31 | 100,909,661.32 | 170,636,610.95 | 1,181,777,770.21 | 4,031,042,325.42 |
| III .Changed in the current year | - | - | (15,989,228.50) | 3,352,654.32 | 45,524,285.19 | 47,987,321.53 | 80,875,032.54 |
| （1）Total comprehensive income | - | - | (15,989,228.50) | - | 79,268,250.45 | 47,987,321.53 | 111,266,343.48 |
| （II）Investment or decreasing of capital by owners | - | - | - | - | - | - | - |
| 1．Ordinary Shares invested by shareholders | - | - | - | - | - | - | - |
| 2．Amount of shares paid and accounted as owners’ equity | - | - | - | - | - | - | - |
| 3．Other | - | - | - | - | - | - | - |
| （III）Profit allotment | - | - | - | 3,352,654.32 | (33,743,965.26) | - | (30,391,310.94) |
| 1.Providing of surplus reserves | - | - | - | 3,352,654.32 | (3,352,654.32) | - | - |
| 2．Allotment to the owners (or shareholders) | - | - | - | - | (30,391,310.94) | - | (30,391,310.94) |
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| 3．Other | - | - | - | - | - | - | - |
| (IV) Internal transferring of owners’ equity | - | - | - | - | - | - | - |
| 1. Capitalizing of capital reserves (or to capital shares) | - | - | - | - | - | - | - |
| 2. Capitalizing of surplus reserves (or to capital shares) | - | - | - | - | - | - | - |
| 3．Making up losses by surplus reserves. | - | - | - | - | - | - | - |
| 4. Other comprehensive income carry-over retained earnings | - | - | - | - | - | - | - |
| 5．Other | - | - | - | - | - | - | - |
| (V). Special reserves | - | - | - | - | - | - | - |
| 1. Provided this year | - | - | - | - | - | - | - |
| 2．Used this term | - | - | - | - | - | - | - |
| （VI）Other | - | - | - | - | - | - | - |
| IV. Balance at the end of this term | 506,521,849.00 | 1,961,599,824.63 | 93,607,380.81 | 104,262,315.64 | 216,160,896.14 | 1,229,765,091.74 | 4,111,917,357.96 |
The notes are integral parts of the financial statements
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Consolidated Statement on Change in Owners’ Equity(Continued)
In RMB
| Items | Year 2022 | ||||||
| Owner’s equity Attributable to the Parent Company | Minor shareholders’ equity | Total of owners’ equity | |||||
| Share Capital | Capital reserves | Other Comprehensive Income | Surplus reserves | Retained profit | |||
| I .Balance at the end of last year | 506,521,849.00 | 1,961,599,824.63 | 119,682,119.05 | 98,245,845.47 | 125,317,336.31 | 1,143,414,080.23 | 3,954,781,054.69 |
| Add: Change of accounting policy | - | - | - | - | - | - | - |
| Correcting of previous errors | - | - | - | - | - | - | - |
| Merger of entities under common control | - | - | - | - | - | - | - |
| Other | - | - | - | - | - | - | - |
| II. Balance at the beginning of current year | 506,521,849.00 | 1,961,599,824.63 | 119,682,119.05 | 98,245,845.47 | 125,317,336.31 | 1,143,414,080.23 | 3,954,781,054.69 |
| III .Changed in the current year | - | - | (10,085,509.74) | 2,663,815.85 | 45,319,274.64 | 38,363,689.98 | 76,261,270.73 |
| （1）Total comprehensive income | - | - | (10,085,509.74) | - | 73,309,182.94 | 38,363,689.98 | 101,587,363.18 |
| （II）Investment or decreasing of capital by owners | - | - | - | - | - | - | - |
| 1．Ordinary Shares invested by shareholders | - | - | - | - | - | - | - |
| 2．Amount of shares paid and accounted as owners’ equity | - | - | - | - | - | - | - |
| 3．Other | - | - | - | - | - | - | - |
| （III）Profit allotment | - | - | - | 2,663,815.85 | (27,989,908.30) | - | (25,326,092.45) |
| 1.Providing of surplus reserves | - | - | - | 2,663,815.85 | (2,663,815.85) | - | - |
| 2．Allotment to the owners (or shareholders) | - | - | - | - | (25,326,092.45) | - | (25,326,092.45) |
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| 3．Other | - | - | - | - | - | - | - |
| (IV) Internal transferring of owners’ equity | - | - | - | - | - | - | - |
| 1. Capitalizing of capital reserves (or to capital shares) | - | - | - | - | - | - | - |
| 2. Capitalizing of surplus reserves (or to capital shares) | - | - | - | - | - | - | - |
| 3．Making up losses by surplus reserves. | - | - | - | - | - | - | - |
| 4. Other comprehensive income carry-over retained earnings | - | - | - | - | - | - | - |
| 5．Other | - | - | - | - | - | - | - |
| (V). Special reserves | - | - | - | - | - | - | - |
| 1. Provided this year | - | - | - | - | - | - | - |
| 2．Used this term | - | - | - | - | - | - | - |
| （VI）Other | - | - | - | - | - | - | - |
| IV. Balance at the end of this term | 506,521,849.00 | 1,961,599,824.63 | 109,596,609.31 | 100,909,661.32 | 170,636,610.95 | 1,181,777,770.21 | 4,031,042,325.42 |
The notes are integral parts of the financial statements
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Statement of change in owner’s Equity of the Parent Company
In RMB
| Items | Year 2023 | |||||
| Share Capital | Capital reserves | Other Comprehensive Income | Surplus reserves | Retained profit | Total of owners’ equity | |
| I.Balance at the end of last year | 506,521,849.00 | 1,577,392,975.96 | 98,855,668.75 | 100,909,661.32 | 689,527,368.58 | 2,973,207,523.61 |
| Add: Change of accounting policy | - | - | - | - | - | - |
| Correcting of previous errors | - | - | - | - | - | - |
| Other | - | - | - | - | - | - |
| II. Balance at the beginning of current year | 506,521,849.00 | 1,577,392,975.96 | 98,855,668.75 | 100,909,661.32 | 689,527,368.58 | 2,973,207,523.61 |
| III .Changed in the current year | - | - | (15,225,837.94) | 3,352,654.32 | (217,422.04) | (12,090,605.66) |
| （I）Total comprehensive income | - | - | (15,225,837.94) | - | 33,526,543.22 | 18,300,705.28 |
| (II) Investment or decreasing of capital by owners | - | - | - | - | - | - |
| 1．Ordinary Shares invested by shareholders | - | - | - | - | - | - |
| 2.Amount of shares paid and accounted as owners’ equity | - | - | - | - | - | - |
| 3．Other | - | - | - | - | - | - |
| （III）Profit allotment | - | - | - | 3,352,654.32 | (33,743,965.26) | (30,391,310.94) |
| 1.Providing of surplus reserves | - | - | - | 3,352,654.32 | (3,352,654.32) | - |
| 2．Allotment to the owners (or shareholders) | - | - | - | - | (30,391,310.94) | (30,391,310.94) |
| 3．Other | - | - | - | - | - | - |
| (IV) Internal transferring of owners’ equity | - | - | - | - | - | - |
| 1. Capitalizing of capital reserves (or to capital shares) | - | - | - | - | - | - |
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| 2. Capitalizing of surplus reserves (or to capital shares) | - | - | - | - | - | - |
| 3．Making up losses by surplus reserves. | - | - | - | - | - | - |
| 4．Other comprehensive income carry-over retained earnings | - | - | - | - | - | - |
| 5．Other | - | - | - | - | - | - |
| (V) Special reserves | - | - | - | - | - | - |
| 1. Provided this year | - | - | - | - | - | - |
| 2．Used this term | - | - | - | - | - | - |
| （VI）Other | - | - | - | - | - | - |
| IV. Balance at the end of this term | 506,521,849.00 | 1,577,392,975.96 | 83,629,830.81 | 104,262,315.64 | 689,309,946.54 | 2,961,116,917.95 |
The notes are integral parts of the financial statements
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Statement of change in owner’s Equity of the Parent Company(Continued)
In RMB
| Items | Year 2022 | |||||
| Share Capital | Capital reserves | Other Comprehensive Income | Surplus reserves | Retained profit | Total of owners’ equity | |
| I.Balance at the end of last year | 506,521,849.00 | 1,577,392,975.96 | 108,762,538.39 | 98,245,845.47 | 690,879,118.40 | 2,981,802,327.22 |
| Add: Change of accounting policy | - | - | - | - | - | - |
| Correcting of previous errors | - | - | - | - | - | - |
| Other | - | - | - | - | - | - |
| II. Balance at the beginning of current year | 506,521,849.00 | 1,577,392,975.96 | 108,762,538.39 | 98,245,845.47 | 690,879,118.40 | 2,981,802,327.22 |
| III .Changed in the current year | - | - | (9,906,869.64) | 2,663,815.85 | (1,351,749.82) | (8,594,803.61) |
| （I）Total comprehensive income | - | - | (9,906,869.64) | - | 26,638,158.48 | 16,731,288.84 |
| (II) Investment or decreasing of capital by owners | - | - | - | - | - | - |
| 1．Ordinary Shares invested by shareholders | - | - | - | - | - | - |
| 2.Amount of shares paid and accounted as owners’ equity | - | - | - | - | - | - |
| 3．Other | - | - | - | - | - | - |
| （III）Profit allotment | - | - | - | 2,663,815.85 | (27,989,908.30) | (25,326,092.45) |
| 1.Providing of surplus reserves | - | - | - | 2,663,815.85 | (2,663,815.85) | - |
| 2．Allotment to the owners (or shareholders) | - | - | - | - | (25,326,092.45) | (25,326,092.45) |
| 3．Other | - | - | - | - | - | - |
| (IV) Internal transferring of owners’ equity | - | - | - | - | - | - |
- 22 -
| 1. Capitalizing of capital reserves (or to capital shares) | - | - | - | - | - | - |
| 2. Capitalizing of surplus reserves (or to capital shares) | - | - | - | - | - | - |
| 3．Making up losses by surplus reserves. | - | - | - | - | - | - |
| 4．Other comprehensive income carry-over retained earnings | - | - | - | - | - | - |
| 5．Other | - | - | - | - | - | - |
| (V) Special reserves | - | - | - | - | - | - |
| 1. Provided this year | - | - | - | - | - | - |
| 2．Used this term | - | - | - | - | - | - |
| （VI）Other | - | - | - | - | - | - |
| IV. Balance at the end of this term | 506,521,849.00 | 1,577,392,975.96 | 98,855,668.75 | 100,909,661.32 | 689,527,368.58 | 2,973,207,523.61 |
The notes are integral parts of the financial statements
- 23 -
I. Basic Information of the Company
1.Company overview
Shenzhen Textile (Holdings) Co., Ltd (hereinafter referred to as "the Company") is a company limited by sharesregistered in Guangdong Province, formerly known as Shenzhen Textile Industry Company and established in 1984.The Company was listed on the Shenzhen Stock Exchange in August 1994. The Company publicly issued RMBordinary shares (A shares) and domestic listed foreign capital shares (B shares) to the domestic and foreign publicrespectively and listed them for trading.Headquartered in Shenzhen, Guangdong Province, the main business of the Company and its subsidiaries(hereinafter referred to as "the Group") includes the research and development, production and marketing ofpolarizers for liquid crystal display, as well as property management business mainly located in the prosperouscommercial area of Shenzhen and textile and garment business.
2. Scope of consolidated financial statement
The financial statements have been authorized for issuance of Board of Directors of the Company onMarch 26,2024.
. II. Basis for the preparation of the financial report
（1）Basis for the preparation
The Group implements the accounting standards for enterprises and related regulations promulgated by theMinistry of Finance. In addition, the Group also discloses relevant financial information in accordance with the No.15 Compilation Rules for Disclosure of Information by Companies ofIssuing Securities to the Public-GeneralProvisions for Financial Reporting (2023 Revision).
(2) Continuous operation
The Group evaluated its ability to continue as a going concern for the 12 months from 31 December 2022 and foundno matters or circumstances that raised significant doubts about its ability to continue as a going concern.Accordingly, the present financial reporthas been prepared on the basis of going concern assumptions.
(3) Bookkeeping basis and pricing principle
The Group's accounting is based on the accrual basis. Except for certain financial instruments-which are measured atfair value, the financial reportusesthe historical cost as the measurement basis. If the asset is impaired, thecorresponding impairment provision will be made in accordance with the relevant regulations.Under historical cost measurement, an asset is measured at the fair value of the amount of cash or cash equivalentspaid or the consideration paidat the time of acquisition. Liabilities are measured by the amount of money or assetsactually received as a result of the present obligation is assumed, or the contractual amount of the present obligationis incurred, or the amount of cash or cash equivalents expected to be paid in the ordinary course of life to repay theliability.Fair value is the price that market participants shall have to receive for the sale of an asset or shall to pay for atransfer of a liability in an orderly transaction that occurs on the measurement date. Whether the fair value isobservable or estimated using valuation techniques, the fair value measured and disclosed in this financial report isdetermined on that basis.For financial assets that use the transaction price as the fair value at the time of initial recognition, and a valuationtechnique involving unobservable inputs is used in subsequent measures of fair value, the valuation technique iscorrected during the valuation process so that the initial recognition result determined by the valuation technique isequal to the transaction price.
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Fair value measurement is divided into three levels as to the observability of fair value inputs, and the importance ofsuch inputs to fair value measurement as a value inputs, and the importance of such inputs to fair value measurementas a whole:
The first level of input is the unadjusted quotation of the same asset or liability in an active market that can beobtained at the measurement date.The second-level input value is the input value that is directly or indirectly observable for the underlying asset orliability in addition to the first-level input.The third level input value is the unobservable input value of the underlying asset or liability.
- 25 -
II. Important accounting policies and accounting estimates
1.Statement of compliance with accounting standards for business enterprisesThe financial report prepared by the Company complies with the requirements of the Accounting Standards forBusiness Enterprises and truly and completely reflects the consolidated and parent financial position of theCompany as of December 31, 2023 and the consolidated and parent operating results, the consolidated and parentshareholders' equity changes and the consolidated and parent cash flows for 2023.
2. Accounting period
The Group's fiscal year is the Gregorian calendar year, i.e. from January 1 to December 31 of each year.
3.Business cycle
The business cycle is the period from the time an enterprise purchases an asset for processing to the realization ofcash or cash equivalents. The Company's business cycle is 12 months.
4. The base currency of account
RMB is the currency in the main economic environment in which the Company and its domestic subsidiariesoperate, and the Company and its domestic subsidiaries use RMB as the base accounting currency. The overseassubsidiaries of the Company determine RMB as their base accounting currency according to the currency of themain economic environment in which they operate. The currency used by the Company in the preparation of thisfinancial report is RMB.
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5.Determination method and selection basis for material criteria
| Item | Material criteria |
| Receivables for a significant single provision for bad debts | The proportion of individual item exceeds 0.5% of total assets |
| Important accounts receivable for the recovery or reversal of bad debt reserves | The proportion of individual item exceeds 0.5% of total assets |
| Significant prepayments that are more than 1 year old | The proportion of individual item exceeds 0.5% of total assets |
| Significant accountspayable and/or advance receipts aged more than 1 year Contract liabilities and other payables | The proportion of individual item exceeds 0.5% of total assets |
| Cash received in connection with significant investment activities | Amount exceeding RMB 50 million yuan |
| Payments of cash in connection with significant investment activities | Amount exceeding RMB 50 million yuan |
| Significant non-wholly owned subsidiary | More than 10% of total assets, or total revenues or total profits |
| Significant joint ventures or associates | Net assets account for more than 5% |
6. Accounting treatment of business combinations under the common control and under non-commoncontrolBusiness combinations are divided into business combinations under common control and business combinationsunder non-common control.
6.1 Business combinations under common control
The enterprises participating in the merger are ultimately controlled by the same party or multiple parties beforeand after the merger, and the control is not temporary, therefore it is a business combination under the commoncontrol.Assets and liabilities acquired in a business combination are measured at their carrying value on the consolidatedparty at the date of consolidation. The difference between the carrying amount of net assets acquired by themerging party and the carrying amount of the merger consideration paid is adjusted for the equity premium in thecapital reserve or for retained earnings if the equity premium is insufficient to be offset.Direct carrying value on the consolidated party at the date of consolidation. The difference between the carryingamount of net assets acquired by the merging party and the carrying amount of the merger consideration paid isadjusted for the equity premium in the capital reserve or for retained earnings if the equity premium isinsufficient to be offset.Direct expenses incurred in connection with the business combination are recognized in profit or loss for theperiod when incurred.
6.2 Business combinations and goodwill under non-common control
The enterprises participating in a merger are not ultimately controlled by the same party or multiple partiesbefore and after the merger, therefore it is a business combination under non-common control.Consolidation cost is the fair value of assets paid, liabilities incurred or assumed and equity instruments issued togain control of the acquired partyby the purchaser. Intermediary fees such as auditing, legal services, valuationconsulting and other related management expenses incurred by the purchaser for the business combination arerecognized in the profit or loss of the period when incurred.The identifiable assets, liabilities and contingent liabilities of the acquiree that are eligible for recognition acquired bythe purchaser in the merger are measured at fair value at the date of purchase.The cost of the merger is greater than the difference in the fair value share of the acquiree's identifiable net assetsacquired in the merger, which is recognized as goodwill as an asset and initially measured at cost. If the cost of themerger is less than the fair value share of the acquiree's identifiable net assets acquired in the merger, the fair value of
- 27 -
the acquired acquiree's identifiable assets, liabilities and contingent liabilities and the measurement of the cost of themerger are first reviewed, and if the consolidated cost after review is still less than the fair value share of theacquiree's identifiable net assets share acquired in the merger, which shall be included in profit or loss for theperiodoccurred.Goodwill resulting from business combinations is presented separately in the consolidated financial statement andmeasured at cost less accumulated impairment provisions.
7. Criteria for determining control and preparation method for consolidated financial statement
7.1 Criteria for Determining Control
Control means that the investor has power over the investee, enjoys variable returns by participating in the investee'srelated activities, and has the ability to use its power over the investee to influence the amount of its returns. TheGroup will reassess the relevant elements involved in the above definition of controls as a result of changes in therelevant facts and circumstances.
7.2. Methodology for the preparation of consolidated financial statement
The consolidated scope of the consolidated financial statement is determined on a control basis.
The merger of subsidiaries begins when the Group acquires control of the subsidiary and terminates when theGroup loses control of the subsidiary.For subsidiaries disposed of by the Group, the results of operations and cash flows prior to the date of disposal(the date of loss of control) have been duly included in the consolidated statement of income and the consolidatedstatement of cash flows.For subsidiaries acquired through a business combination under non-common control, the results of operationsand cash flows from the date of purchase (the date of acquisition of control) have been appropriately included in theconsolidated statement of income and the consolidated statement of cash flows.
For subsidiaries acquired through a business combination under common control, regardless of when thebusiness combination takes place in any point of the reporting period, the subsidiary shall be deemed to be includedin the scope of the Group's consolidation on the date on which the subsidiary is under the control of the ultimatecontrolling party, the results of operations and cash flows from the beginning of the earliest period of the reportingperiod are duly included in the consolidated income statement and the consolidated statement of cash flows.
The principal accounting policies and the accounting periods adopted by the subsidiaries are determined inaccordance with the accounting policies and accounting periods uniformly prescribed by the Company.
The impact of the Company's internal transactions with its subsidiaries and between subsidiaries on theconsolidated financial statement is offset at the time of consolidation.
The shares of the subsidiary's ownership interest that are not part of the parent company are shown as minorityinterests under the item "minority interests" under the item on shareholders' equityin the consolidated balance sheet.The shares of the subsidiary's net profit or loss for the period that belongs to minority interests is shown under theitem "minority profit and loss" under the net profit item in the consolidated statement of income.
The minority shareholders’ share of the subsidiary's losses exceeds the minority shareholders’ share ofownership interest enjoyed in the beginning of the period, and its balance is still offset by the minority shareholders’equity.
For transactions that purchase minority stakes in a subsidiary or dispose of part of the equity investment withoutlosing control of the subsidiary, it’s accounted as equity transactions, and the carrying amount of the owner'sinterest and minority interest attributable tothe parent company is adjusted to reflect their change in the relevantinterest in the subsidiary. The difference between the adjustment of minority interests and the fair value of theconsideration paid/received is adjusted to the capital reserve, and if the capital reserve is insufficient to offset it,then it’s adjusted to the retained earnings.
8. Joint venture arrangement
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Joint arrangements are divided into commonly-operated ventures and jointly-operated ventures, which are determined inaccordance with the rights and obligations of the joint venture parties in the joint venture arrangement by taking intoaccount factors such as the structure, legal form and contractual terms of the arrangement. Commonly-operated refers toa joint arrangement in which the joint venture parties enjoy the assets related to the arrangement and bear the liabilitiesrelated to the arrangement. The jointly-operated is a joint arrangement in which the joint venture party has rights only tothe net assets of the joint arrangement.The Group's investments in joint ventures are accounted by using the equity method, please see Note (III) 17.3.2"Long-term equity investments accounted by the equity method".
9. Standards for determining cash and cash equivalents
Cash refers to cash on hand and deposits that can be used to pay at any time. Cash equivalents refer toinvestments held by the Group for a short period (generally within three months from the date of purchase), highlyliquid, easily convertible into a known amount of cash, and with little risk of change in value.
10.Foreign currency transactions and translation of foreign currency statements
10.1 Foreign Currency Business
Foreign currency transactions are initially recognized at an exchange rate similar to the spot exchange rate on thedate of the transaction, and the exchange rate similar to the spot rate on the date of the transaction is determined in asystematic and reasonable manner.
At the balance sheet date, foreign currency monetary items are converted into RMB using the spot exchange rateon that date, and the exchange difference arising from the difference between the spot exchange rate on that date andthe spot exchange rate at the time of initial recognition or the day preceding the balance sheet date, except: (1) theexchange difference of foreign currency special borrowings eligible for capitalization is capitalized during thecapitalization period and included in the cost of the underlying asset; (2) The exchange difference of hedginginstruments for hedging in order to avoid foreign exchange risk is treated according to the hedge accounting method;The exchange differenceresults from changes in other carrying balances other than amortized cost for monetaryitems classified as measured at fair value and changes in which are included in other comprehensive income, it shallbe recognized as profit or loss for the period.
Where the preparation of the consolidated financial statement involves overseas operations, if there are foreigncurrency monetary items that substantially constitute net investment in overseas operations, the exchange differencearising from exchange rate changes is included in the "foreign currency statement translation difference" itemincluded in other comprehensive income; When disposing of overseas operations, it is included in the profit or lossof the period of disposal.
Foreign currency non-monetary items measured at historical cost are still measured at the base currency amounttranslated at the spot exchange rate on the date of the transaction. Foreign currency non-monetary items measured atfair value are translated using the spot exchange rate on the fair value determination date, and the differencebetween the converted base currency amount and the original accounting currency amount is treated as a change infair value (including exchange rate changes) and recognized as profit or loss for the period or recognized as othercomprehensive income.
10.2 Translation of Foreign Currency Financial Statements
For the purpose of preparing consolidated financial statement, foreign currency financial statements for overseasoperations are converted into RMB statements in the following manner: all assets and liabilities in the balancesheet are converted at the spot exchange rate at the balance sheet date; Shareholders' equity items are converted atthe spot exchange rate at the time of incurrence; All items in the income statement and items reflecting the amountof profit distribution are converted at an exchange rate similar to the spot exchange rate on the date of thetransaction; The difference between the converted asset items and the total of liability items and shareholders'equity items is recognized as other comprehensive income and included in shareholders' equity.Foreign currency cash flows and cash flows of overseas subsidiaries are translated using exchange rates similar tothe spot exchange rate on the occurrence date of cash flow, and the impact amount of exchange rate changes oncash and cash equivalents is used as a reconciliation item and is shown separately in the statement of cash flows as"Impact of exchange rate changes on cash and cash equivalents".The prior-year year-end amounts and the prior-year actual are presented on the basis of the amounts convertedfrom the prior-year financial statement.
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Where the Group losses control of overseas operations due to disposing of all the ownership interests in overseasoperations or the disposal of part of the equity investment or other reasons, the difference in the translation of theforeign currency statements in the ownership interests attributable to the parent company related to the overseasoperations shown below the items of shareholders' equity in the balance sheet shall be transferred to the profit orloss of the period of disposal.Where the proportion of equity interests held in overseas operations decreases due to the disposal of part of theequity investment or other reasons without lost the control of the overseas operations, the difference in thetranslation of foreign currency statements related to the disposal part of the overseas operations shall be attributedto the minority shareholders' interests and shall not be transferred to the profit or loss of the period. Wheredisposing of part of the equity of an overseas operation in an associate or a joint venture, the difference in thetranslation of foreign currency statements related to the overseas operation shall be transferred to the profit or lossof the period of disposal according to the proportion of the disposal of the overseas operation.
11.Financial instruments
The Group recognizes a financial asset or financial liability when it becomes a party to a financial instrumentcontract.In the case of the purchase or sale of financial assets in the usual manner, it shall recognize the assets to be receivedand the liabilities to be incurred on the transaction date, or derecognize the assets sold on the transaction date.Financial assets and financial liabilities are measured at fair value at initial recognition. For financial assets andfinancial liabilities measured at fair value and changes in which are recorded in profit or loss for the period, therelated transaction costs are recognized directly in profit or loss for the period; For other categories of financialassets and financial liabilities, the related transaction costs are included in the initial recognition amount. Where theGroup initially recognizes accounts receivable that do not contain a material financing component or do not takeinto account the financing component in a contract not older than one year in accordance with No. 14AccountingStandard for Business Enterprises-Revenue (the "Revenue Standard"), the initial measurement is made at thetransaction price as defined by the revenue standard.The effective interest rate method refers to the method of calculating the amortized cost of financial assets orfinancial liabilities and apportioning interest income or interest expense into each accounting period.The effective interest rate is the interest rate used to discount the estimated future cash flows of a financial asset orfinancial liability over the expected life of the financial asset to the carrying balance of the financial asset or theamortized cost of the financial liability. In determining the effective interest rate, the expected cash flow isestimated taking into account all contractual terms of the financial asset or financial liability (such as earlyrepayment, rollover, call option or other similar option, etc.), without taking into account the expected credit loss.The amortized cost of a financial asset or financial liability is the amount initially recognized less the principalrepaid, plus or minus the accumulated amortization resulting from the amortization of the difference between theinitial recognition amount and the amount due date using the effective interest rate method, and then deduct theaccumulated provision for losses (for financial assets only).
11.1 Classification, recognition and measurement of financial assets
After initial recognition, the Group conducts subsequent measurements of different classes of financial assets atamortized cost, measured at fair value and changes in which are recognized in other comprehensive income, ormeasured at fair value and changes in which are recorded in profit or loss for the period.The contractual clauses of a financial asset provide that the cash flows generated on a given date are only thepayment of principal and interest based on the outstanding principal amount, and the Group's business model isaimed for managing the financial asset is to collect contractual cash flows, then the Group classifies the financialasset as a financial asset measured at amortized cost. Such financial assets mainly include monetary funds, notesreceivable, accounts receivable and other receivables.The contractual terms of a financial asset provide that the cash flows generated at a particular date are only thepayment of principal and interest based on the outstanding principal amount, and the Group's business model formanaging the financial asset is aimed at both the receipt of contractual cash flows and the sale of the financial asset,
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then the financial asset is classified as a financial asset measured at fair value and the change therein is recognizedin other comprehensive income. Such financial assets with a maturity of more than one year from the date ofacquisition are listed as other debt investments, and if they mature within one year (inclusive) from the balancesheet date, they are shown as non-current assets maturing within one year; Accounts receivable and notesreceivable classified as measured at fair value and changes in which are recognized in other comprehensive incomeat the time of acquisition are shown in receivables financing, and the other acquired with a maturity of one year(inclusive) are shown in other current assets.At initial recognition, the Group may irrevocably designate investments in non-tradable equity instruments otherthan contingent consideration recognized in business combinations that are under non-common control as financialassets measured at fair value and changes in which are recognized in other comprehensive income on a singlefinancial asset basis. Such financial assets are listed as investments in other equity instruments.Where a financial asset meets any of the following conditions, it indicates that the Group's purpose in holding thefinancial asset is transactional:
The purpose of acquiring the underlying financial asset is primarily for the purpose of the recent sale.The underlying financial assets were part of a centrally managed portfolio of identifiable financial instruments atthe time of initial recognition and there was objective evidence of an actual pattern of short-term profits in therecent.The underlying financial asset is a derivative instrument, except for derivatives that meet the definition of afinancial guarantee contract and derivatives that are designated as effective hedging instruments.Financial assets measured at fair value and changes in which are recorded in profit or loss for the period includefinancial assets classified as measured at fair value and changes in which are recorded in profit or loss for theperiod and financial assets designated as measured at fair value and changes in which are recorded in profit or lossfor the period:
Financial assets that do not qualify as financial assets measured at amortized cost and financial assets measured atfair value and changes in which are included in other comprehensive income are classified as financial assetsmeasured at fair value and changes in which are recorded in profit or loss for the period.At the time of initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Groupmay irrevocably designate financial assets as financial assets measured at fair value and changes in which arerecorded in profit or loss for the period.Financial assets measured at fair value and changes in which are recorded in profit or loss for the period are shownin trading financial assets, and financial assets with maturity of more than one year (or have an indefinite maturity)from the balance sheet date and expected to be held for more than one year is shown as other non-current financialassets
11.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost are subsequently measured at amortized cost using the effectiveinterest rate method, and the gains or losses arising from impairment or derecognition are included in profit or lossfor the period.The Group recognizes interest income on financial assets measured at amortized cost in accordance with theeffective interest rate method. For financial assets purchased or derived that have incurred credit impairment, theGroup determines interest income based on the amortized cost of the financial asset and the credit-adjustedeffective interest rate from the initial recognition. In addition, the Group determines interest income based on thecarrying balance of financial assets multiplied by the effective interest rate.
11.1.2 Financial assets measured at fair value and changes in which are recorded in other comprehensive incomeImpairment losses or gains and interest income calculated using the effective interest rate methodrelated tofinancial assets classified as measured at fair value and changes in which are included in other comprehensiveincome are recognized in profit or loss for the period, and except that, changes in the fair value of such financialassets are recognized in other comprehensive income. The amount of the financial asset recognized in profit or lossfor each period is equal to the amount that is recognized in profit or loss for each period as if it had been measuredat amortized cost. When the financial asset is derecognized, the accumulated gain or loss previously recognized in
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other comprehensive income is transferred from other comprehensive income and recognized in profit or loss forthe period.Changes in fair value in investments in non-traded equity instruments designated as measured at fair value and thechange in which are recognized in other comprehensive income are recognized in other comprehensive income,and when the financial asset is derecognized, the accumulated gain or loss previously recognized in othercomprehensive income is transferred from other comprehensive income to retained earnings. During the periodduring which the Group holds the investment in the non-tradable equity instrument, the dividend income isrecognized and recorded in profit or loss for the period when the Group's right to receive dividends has beenestablished, the economic benefits associated with the dividends are likely to flow into the Group and the amountof the dividends can be reliably measured.
11.1.3 Financial assets measured at fair value and changes in which are recorded in profit or loss for the periodFinancial assets measured at fair value and changes in which are recorded in profit or loss for the period aresubsequently measured at fair value, and gains or losses resulting from changes in fair value and dividends andinterest income related to the financial asset are recorded in profit or loss for the period.
11.2 Impairment of Financial Instruments
The Group performs impairment accounting and recognizes loss provisions for financial assets measured atamortized cost, financial assets classified as measured at fair value and changes in which are recognized in othercomprehensive income, and lease receivables based on expected credit losses.The Group measures the loss provision at an amount equivalent to the expected credit loss over the life of notesreceivable and accounts receivable formed by transactions regulated by revenue standards that do not contain amaterial financing element or do not take into account the financing component of contracts not exceeding one year,as well as operating leases receivable arising from transactions regulated by No. 21Accounting Standard forBusiness Enterprises -Leases.For other financial instruments, the Group assesses the change in the credit risk of the relevant financialinstruments since initial recognition at each balance sheet date, except for financial assets purchased or derived thathave incurred credit impairment. If the credit risk of the Financial Instrument has increased significantly since theinitial recognition, the Group measures its loss provision by an amount equivalent to the expected credit loss overthe life of the financial instrument; If the credit risk of the financial instrument does not increase significantly sincethe initial recognition, the Group measures its loss provision by an amount equivalent to the expected credit loss ofthe financial instrument in the next 12 months. Increases or reversals of credit loss provisions are recognized asimpairment losses or gains in profit or loss for the period, except for financial assets classified as measured at fairvalue and changes in which are recognized in other comprehensive income. For financial assets classified asmeasured at fair value and the change thereof is recorded in other comprehensive income, the Group recognizes acredit loss provision in other comprehensive income and includes impairment losses or gains in profit or loss forthe period without reducing the carrying amount of the financial asset as shown in the balance sheet.Where the Group has measured a loss provision in the preceding accounting period by an amount equivalent to theexpected credit loss over the life of the financial instrument, but the financial instrument is no longer subject to asignificant increase in credit risk since the initial recognition at the period balance sheet date, the Group measuresthe loss provision for the financial instrument at the period balance sheet date by an amount equivalent to theexpected credit loss in the next 12 months, and the resulting reversal amount for loss provision is recognized as animpairment gain in profit or loss for the period.
11.2.1 Significant increase in credit risk
Using reasonably and evidence-based forward-looking information available, the Group compares the risk ofdefault on financial instruments at the balance sheet date with the risk of default on the initial recognition date todetermine whether the credit risk of financial instruments has increased significantly since initial recognition.In assessing whether credit risk has increased significantly, the Group will consider the following factors:
(1) whether the internal price indicators have changed significantly due to changes in credit risk.
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(2) whether the interest rate or other terms of an existing financial instrument have changed significantly (e.g.,stricter contractual terms, additional collateral or higher yields) if the existing financial instrument is derived orissued as a new financial instrument at the balance sheet date.
(3) whether there has been a significant change in the external market indicators of the credit risk of the samefinancial instrument or similar financial instruments with the same estimated duration. These indicators include:
credit spreads, credit default swap prices for borrowers, the length and extent to which the fair value of financialassets is less than their amortized cost, and other market information relevant to borrowers (such as changes in theprice of borrowers' debt or equity instruments).
(4) whether there has been a significant change in the external credit rating of the financial instrument in fact orexpectation.
(5) whether the actual or expected internal credit rating of the debtor has been downgraded.
(6) whether there has been an adverse change in business, financial or economic circumstances that is expected toresult in a significant change in the debtor's ability to meet its debt servicing obligations.
(7) whether there has been a significant change in the actual or expected operating results of the debtor.
(8) whether the credit risk of other financial instruments issued by the same debtor has increased significantly.
(9) whether there has been a significant adverse change in the regulatory, economic or technical environment inwhich the debtor is located.
(10) whether there has been a significant change in the value of the collateral used as collateral for the debt or inthe quality of the guarantee or credit enhancement provided by a third party. These changes are expected to reducethe economic incentive for the debtor to repay the loan within the term specified in the contract or affect theprobability of default.
(11) whether there has been a significant change in the economic incentive expected to reduce the borrower'srepayment within the term agreed in the contract.
(12) whether there has been a change in the expectations of the loan contract, including the waiver or amendmentof contractual obligations that may result from the anticipated breach of the contract, the granting of interest-freeperiods, interest rate jumps, requests for additional collateral or guarantees, or other changes to the contractualframework of financial instruments.
(13) whether there has been a significant change in the debtor's expected performance and repayment behavior.
(14) Whether the Group's credit management methods for financial instruments have changed.Regardless of whether the credit risk has increased significantly after the above assessment, when the payment of afinancial instrument contract has been overdue for more than (inclusive) 30 days, it indicates that the credit risk ofthe financial instrument has increased significantly.At the balance sheet date, if the Group determines that a financial instrument has only a low credit risk, the Groupassumes that the credit risk of the financial instrument has not increased significantly since its initial recognition. Afinancial instrument is considered to have a low credit risk if it has a low risk of default, the borrower's ability tomeet its contractual cash flow obligations in the short term is strong, and even if there are adverse changes in theeconomic situation and operating environment over a longer period of time that do not necessarily reduce theborrower's performance of its contractual cash obligations.
11.2.2 Financial assets that have undergone credit impairment
Where one or more events occur in which the Group expects to adversely affect the future cash flows of a financialasset, the financial asset becomes a financial asset that has experienced credit impairment. Evidence that creditimpairment of financial assets has occurred includes the following observable information:
（1）significant financial difficulties of the issuer or debtor;
(2)Breach of contract by the debtor, such as default or delay in payment of interest or principal;
(3)The creditor gives the debtor concessions under economic or contractual considerations relating to the debtor'sfinancial difficulties that would not have been made under any other circumstances;
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(4)The debtor is likely to go bankrupt or undergo other financial restructuring;
(5)The financial difficulties of the issuer or debtor that result in the disappearance of an active market for thatfinancial asset;
(6)Purchase or derive a financial asset at a substantial discount that reflects the fact that a credit loss has occurred.Based on the Group's internal credit risk management, the Group considers an event of default to have occurredwhen the internally advised or externally obtained information indicates that the debtor of the financial instrumentcannot fully pay creditors including the Group (without regard to any security obtained by the Group).Notwithstanding the above assessment, if a contract payment for a financial instrument is overdue for more than 90days(inclusive), the Group presumes that the financial instrument has defaulted.
11.2.3 Determination of Expected Credit Loss
The Group uses an impairment matrix on a portfolio basis on notes receivable, accounts receivable and otherreceivables to determine credit losses on relevant financial instruments. The Group classifies financial instrumentsinto different groups based on common risk characteristics. The common credit risk characteristics adopted by theGroup include: type of financial instrument, credit risk rating, type of collateral, date of initial recognition, industryin which the debtor is in, value of collateral relative to financial assets, etc.For financial assets and lease receivables, the expected credit loss is the present value of the difference between thecontractual cash flows due to the Group and the cash flows expected to be collected.The reflection factors of the Group's methodology for measuring expected credit losses on financial instrumentsinclude: an unbiased probability-weighted average amount determined by evaluating a range of possible outcomes;the time value of money; reasonable and well-founded information about past events, current conditions, andprojections of future economic conditions that can be obtained at the balance sheet date without unnecessaryadditional costs or efforts.
11.2.4 Write-down of Financial Assets
Where the Group no longer reasonably expects that the contractual cash flows of financial assets will be recoveredin whole or in part, the carrying balance of the financial assets will be written down directly. Such write-downsconstitute derecognition of the underlying financial assets.
11.3 Transfer of Financial Assets
Financial assets that meet one of the following conditions are derecognized: (1) the contractual right to receive cashflows from the financial asset is terminated; (2) the financial asset has been transferred and substantially all of therisks and rewards in the ownership of the financial asset have been transferred to the transferring party; (3) thefinancial asset has been transferred, and although the Group has neither transferred nor retained substantially all ofthe risks and rewards in the ownership of the financial asset, it has not retained control over the financial asset.Where the Group neither transfers nor retains substantially all of the risks and rewards in ownership of a financialasset, and retains control of the financial asset, it will continue to recognize the transferred financial asset to theextent that it continues to be involved in the transferred financial asset and recognize the relevant liabilitiesaccordingly. The Group measures the relevant liabilities as follows:
Where the transferred financial assets are measured at amortized cost, the carrying amount of the relevant liabilityis equal to the carrying amount of the financial asset that continues to be involved in the transferred less theamortized cost of the rights retained by the Group (if the Group retains the relevant rights as a result of the transferof financial assets) plus the amortized cost of the obligations assumed by the group (if the group has assumed therelevant obligations as a result of the transfer of financial assets), and the relevant liabilities are not designated asfinancial liabilities measured at fair value and changes in which are recorded in profit or loss for the period.Where the transferred financial assets are measured at fair value, the carrying amount of the relevant liabilities isequal to the carrying amount of the financial assets that continue to be involved in the transferred financial assetsless the fair value of the rights retained by the Group (if the Group retains the relevant rights as a result of thetransfer of financial assets) plus the fair value of the obligations assumed by the Group (if the Group has assumedsuch obligations as a result of the transfer of financial assets), the fair value of such rights and obligations is the fairvalue when measured on an independent basis.If the overall transfer of financial assets satisfies the conditions for derecognition, the difference between thecarrying amount of the transferred financial assets at the derecognition date and the consideration received as a
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result of the transfer of the financial and the sum of the amount corresponding to the derecognition portion of theaccumulated fair value change originally included in other comprehensive income is included in profit or loss forthe period. If the Group transfers financial assets that are investments in non-traded equity instruments designatedas measured at fair value and changes in which are recognized in other comprehensive income, the accrued gains orlosses previously recognized in other comprehensive income are transferred from other comprehensive income andrecorded in retained earnings.If a partial transfer of financial assets satisfies the conditions for derecognition, the carrying amount of the financialassets as a whole before the transfer is apportioned between the derecognized portion and the continuingrecognition portion at the respective relative fair value on the transfer date, and the difference between the sum ofthe amount of the consideration received in the derecognized portion and the amount corresponding to thederecognized portion of the accumulated fair value change originally included in other comprehensive income andthe carrying amount of the derecognized portion at the derecognition date is included in profit or loss for thecurrent period. If the Group transfers financial assets that are investments in non-traded equity instrumentsdesignated as measured at fair value and changes in which are recognized in other comprehensive income, theaccrued gains or losses previously recognized in other comprehensive income are transferred from othercomprehensive income and recorded in retained earnings.If the conditions for derecognition are not met for the overall transfer of financial assets, the Group continues torecognize the transferred financial assets as a whole and recognizes the consideration received as a liability.
11.4 Classification of financial liabilities and equity instruments
The Group classifies the financial instruments or their components as financial liabilities or equity instruments atinitial recognition according to the contract terms of the financial instruments issued and their economic essence,not just in legal form, combined with the definitions of financial liabilities and equity instruments.
11.4.1 Classification, recognition and measurement of financial liabilities
Financial liabilities are divided into financial liabilities measured at fair value and whose changes are included incurrent profits and losses at initial recognition and other financial liabilities.
11.4.1.1 Financial liabilities measured at fair value and whose changes are included in the current profits and lossesFinancial liabilities measured at fair value and whose changes are included in current profits and losses includetransactional financial liabilities (including derivatives belonging to financial liabilities) and financial liabilitiesdesignated as measured at fair value and whose changes are included in current profits and losses. Except forderivative financial liabilities which are listed separately, financial liabilities measured at fair value and whosechanges are included in current profits and losses are listed as transactional financial liabilities.Financial liabilities that meet one of the following conditions, indicate that the purpose of the Group's financialliabilities is transactional:
The purpose of undertaking relevant financial liabilities is mainly to repurchase in the near future.The relevant financial liabilities are part of the identifiable financial instrument portfolio under centralizedmanagement at the initial recognition, and there is objective evidence to show the actual short-term profit model inthe near future.Related financial liabilities are derivatives. Except for derivatives that meet the definition of financial guaranteecontract and derivatives that are designated as effective hedging instruments.The Group can designate financial liabilities that meet one of the following conditions as financial liabilitiesmeasured at fair value and whose changes are included in current profits and losses at initial recognition: (1) Thedesignation can eliminate or significantly reduce accounting mismatch; (2) According to the risk management orinvestment strategy stated in the formal written documents of the Group, the financial liability portfolio or theportfolio of financial assets and financial liabilities are managed and evaluated on the basis of fair value, andreported to key management personnel within the Group on this basis; (3) Qualified mixed contracts containingembedded derivatives.
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Transactional financial liabilities are subsequently measured at fair value, and gains or losses caused by changes infair value and dividends or interest expenses related to these financial liabilities are included in current profits andlosses.For financial liabilities designated as being measured at fair value and whose changes are included in the currentprofits and losses, the changes in fair value of the financial liabilities caused by changes in the Group's own creditrisk are included in other comprehensive income, and other changes in fair value are included in the current profitsand losses. When the financial liabilities are derecognized, the accumulated change of its fair value caused by thechange of their own credit risk previously included in other comprehensive income is carried forward to retainedincome. Dividends or interest expenses related to these financial liabilities are included in the current profits andlosses. If the accounting mismatch in profit and loss will be caused or enlarged by handling the impact of thechanges in credit risk of these financial liabilities in the above way, the Group will include all the gains or losses ofthe financial liabilities (including the amount affected by the changes in credit risk) in the current profits and losses.
11.4.1.2 Other financial liabilities
Other financial liabilities, except those caused by the transfer of financial assets that do not meet the conditions forderecognition or continue to be involved in the transferred financial assets, are classified as financial liabilitiesmeasured in amortized cost and subsequently measured in amortized cost. The gains or losses arising fromderecognition or amortization are included in the current profits and losses.If the modification or renegotiation of the contract between the Group and the counterparty does not result in thetermination of the recognition of the financial liabilities that are subsequently measured according to amortizedcost, but the cash flow of the contract changes, the Group recalculates the book value of the financial liabilities andrecords the relevant gains or losses into the current profits and losses. The recalculated book value of such financialliabilities is determined by the Group according to the present value of discounted contract cash flow that will berenegotiated or modified according to the original actual interest rate of the financial liabilities. For all costs orexpenses arising from the modification or renegotiation of the contract, the Group adjusts the book value of themodified financial liabilities and amortizes them within the remaining term of the modified financial liabilities.
11.4.2 Derecognition of financial liabilities
If all or part of the current obligations of financial liabilities have been discharged, the recognition of financialliabilities or part thereof shall be terminated. If the Group (the Borrower) and the Lender will sign an agreement toreplace the original financial liabilities by undertaking new financial liabilities, and the contract terms of the newfinancial liabilities are substantially different from those of the original financial liabilities, the Group willderecognize the original financial liabilities and recognize the new financial liabilities at the same time.If all or part of the financial liabilities are derecognized, the difference between the book value of the derecognizedpart and the consideration paid (including the transferred non-cash assets or the new financial liabilities undertaken)will be included in the current profits and losses.
11.4.3 Equity instruments
Equity instruments refer to contracts that can prove that the Group has residual interests in assets after deducting allliabilities. The issuance (including refinancing), repurchase, sale or cancellation of equity instruments by the Groupare treated as changes in equity. The Group does not recognize changes in the fair value of equity instruments.Transaction costs related to equity transactions are deducted from equity.The distribution of equity instrument holders by the Group is treated as profit distribution, and the stock dividendspaid do not affect the total shareholders' equity.
11.5 Offset of financial assets and financial liabilities
When the Group has the legal right to offset the recognized financial assets and financialliabilities, and this legalright is currently enforceable, and the Group plans to settle the financial assets on a net basis or realize the financialassets and pay off the financial liabilities at the same time, the financial assets and financial liabilities are listed in
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the balance sheet at the amount after offsetting each other. In addition, financial assets and financial liabilities arelisted separately in the balance sheet and do not offset each other.
12 .Notes receivable
12.1 Methods for determining and accounting treatment for expected credit lossesof notes receivableThe Group separately assesses the credit risk of notes receivable with significantly different credit risks, includingnotes receivable that have not been accepted at maturity and notes receivable that have clear indications that theacceptor is likely to be unable to fulfill the acceptance obligations, and other notes receivable are accrued forexpected credit losses on a portfolio basis based on The increase or reversal of the provision for expected creditlosses on notes receivable is included in the profit or loss for the current period as a credit impairment loss or gain.
their credit risk characteristics.
12.2 Portfolio types and basis for determining credit loss provisions based on credit risk characteristics
Except for the notes receivable that assess the credit risk individually, the rest of the notes receivable are dividedinto different portfolios based on their credit risk characteristics:
| Portfolio Category | Determining basis |
| Portfolio 1 | Bank acceptance |
| Portfolio 2 | Trade acceptance |
13.Account receivable
13.1 Methods for determining expected credit losses and accounting treatment of accounts receivable
The Group uses an impairment matrix to determine the credit losses of accounts receivable on a portfolio basis.The increase or reversal of the provision for expected credit losses of accounts receivable shall be recognized inprofit or loss for the current period as credit impairment losses or gains.
13.2 The type of portfolio and the basis for determining the provision for credit losses based on the credit riskcharacteristics of the portfolio.
The Group classifies accounts receivable into portfolio1 based on common risk characteristics. The common creditrisk characteristics adopted by the Group mainly include the credit tenor and operating conditions of the debtor.
13.3 Calculation method of aging for credit risk characteristics portfolio recognized by aging
The Group uses the aging of accounts receivable as a credit risk characteristic and uses an impairment matrix todetermine its credit losses. Aging is calculated from the date of its initial recognition. If the terms and conditions ofthe accounts receivable are modified but do not result in the derecognition of the accounts receivable, the agingshall be calculated consecutively.
13.4 Determining standard of individual provision according to individual provision for bad debts
The Group assesses credit risk of accounts receivable individually due to its significant differences in creditriskwith evidence demonstrated greater credit risk.
14. Financing of accounts receivable
14.1 Determination method and accounting treatment method for expected credit loss of accounts receivablefinancingThe Group recognizes credit loss provisions for accounts receivable financing in other comprehensive income andincludes credit impairment losses or gains in the current period's profit and loss, without reducing the carryingamount of accounts receivable financing presented in the balance sheet.
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14.2 Judgment criteria for individual provision of credit loss reserves based on individual provisionThe Group evaluates the financing of corresponding receivables based on the acceptance bank credit status of bankacceptance bills and makes provisions for credit losses.
15.Other accounts receivable
15.1 Methods for determining expected credit losses and accounting treatment of other receivables
The Group determines the credit losses on other receivables on a portfolio basis. The increase or reversal of theprovision for expected credit losses of other receivables is recognized as credit impairment losses or gainsin profitor loss for the current period.
15.2 Calculation method of aging for credit risk characteristics portfolio recognized by aging
Aging is calculated from the date of its initial recognition. If the terms and conditions of other receivables aremodified but do not result in the derecognition of other receivables, the aging shall be calculated consecutively.
16.Inventory
16.1 Inventory Category, Goods Out Pricing Method, Inventory System, Amortization Method for Low-Value
Consumables and Packaging
16.1.1 Inventory Category
The Group's inventory mainly includes raw materials, products in process, finished products and materialsentrusted for processing. Inventory is initially measured at cost, which includes purchasing cost, processing cost andother expenses incurred to make inventory reach the current place and use state.
16.1.2 Goods Out Pricing Method
When the inventory is issued, the actual cost of the issued inventory is determined by the weighted meanmethod.
16.1.3 Inventory system
The inventory system is perpetual inventory system.
16.1.4 Amortization method of low-value consumables and packaging materials
Turnover materials and low-value consumables are amortized by straight-line method or one-time write-offmethod.
16.2 Recognition criteria and accrual method of provision for inventory falling price loss
On the balance sheet date, inventories are measured according to the lower of cost and net realizable value.When the net realizable value is lower than the cost, the inventory depreciation provision is withdrawn.
Net realizable value refers to the estimated selling price of inventory minus the estimated cost, estimated salesexpenses and related taxes and fees at the time of completion in daily activities. When determining the net realizablevalue of inventory, it is based on the conclusive evidence obtained, and the purpose of holding inventory and theinfluence of events after the balance sheet date are also considered.
Inventory depreciation provision is drawn according to the difference between the cost of a single inventoryitem and its net realizable value.
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After the inventory depreciation provision is withdrawn, if the influencing factors of previous write-down ofinventory value have disappeared, resulting in the net realizable value of inventory being higher than its book value,it will be reversed within the original amount of inventory depreciation provision, and the reversed amount will beincluded in the current profits and losses.
17. Long-term equity investment
17.1 Criteria for joint control and important influence
Control means that the investor has the power over the investee, enjoys variable returns by participating in therelated activities of the investee, and has the ability to influence the amount of returns by using the power over theinvestee. Joint control refers to the common control of an arrangement according to the relevant agreement, and thatthe related activities of the arrangement must be unanimously agreed by the participants who share the control rightsbefore making decisions. Significant influence refers to the power to participate in decision-making on the financialand operating policies of the investee, but it cannot control or jointly control the formulation of these policies withother parties. When determining whether the investee can be controlled or exert significant influence, the potentialvoting rights factors such as convertible corporate bonds and current executable warrants of the investee held byinvestors and other parties have been considered.
17.2 Determination of initial investment cost
For the long-term equity investment obtained by business merger under the same control, the initial investmentcost of the long-term equity investment shall be the share of the book value of the owners' equity of the mergedparty in the consolidated financial statements of the final controlling party on the merger date. The capital reserveshall be adjusted for the difference between the initial investment cost of long-term equity investment and the bookvalue of cash paid, non-cash assets transferred and debts undertaken; If the capital reserve is insufficient to be offset,the retained income shall be adjusted. If equity securities are issued as the merger consideration, the initialinvestment cost of long-term equity investment shall be the share of the book value of the owners' equity of themerged party in the consolidated financial statements of the final controlling party on the merger date, the sharecapital shall be the total face value of issued shares, and the capital reserve shall be adjusted according to thedifference between the initial investment cost of long-term equity investment and the total face value of the issuedshares; If the capital reserve is insufficient to be offset, the retained income shall be adjusted.
For the long-term equity investment obtained from the business merger not under the same control, the initialinvestment cost of the long-term equity investment shall be the merger cost on the purchase date.
Intermediary expenses such as audit, legal services, evaluation and consultation and other related managementexpenses incurred by the merging party or the purchaser for business merger are included in the current profits andlosses when incurred.
Long-term equity investment obtained by other means except the long-term equity investment formed bybusiness merger shall be initially measured at cost. If the additional investment can exert a significant influence orimplement joint control which however does not constitute control on the investee, the long-term equity investmentcost is the sum of the fair value of the original equity investment determined in accordance with the AccountingStandards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments plus the newinvestment cost.
17.3 Subsequent measurement and profit and loss recognition method
17.3.1 Long-term equity investment calculated by cost method
The company's financial statements use the cost method to calculate the long-term equity investment insubsidiaries. Subsidiaries refer to the invested entities over which the Group can exercise control.
Long-term equity investment accounted by cost method is measured at the initial investment cost. Add orrecover investment to adjust the cost of long-term equity investment. The current investment income is recognizedaccording to the cash dividend or profit declared by the investee.
17.3.2 Long-term equity investment calculated by equity method
The Group's investment in associated enterprises and joint ventures is accounted for by the equity method. Anassociated enterprise refers to the investee over which the Group can exert significant influence, and a joint venturerefers to a joint venture arrangement in which the Group has rights only over the net assets of the arrangement.
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When accounting by equity method, if the initial investment cost of long-term equity investment is greater thanthe fair value share of the identifiable net assets of the investee, the initial investment cost of long-term equityinvestment will not be adjusted; If the initial investment cost is less than the fair value share of the identifiable netassets of the investee, the difference shall be included in the current profits and losses, and the cost of long-termequity investment shall be adjusted.
When accounting by the equity method, the investment income and other comprehensive income arerecognized respectively according to the share of the net profit and loss and other comprehensive income realized bythe investee, and the book value of long-term equity investment is adjusted; The share is calculated according to theprofit or cash dividend declared by the investee, and the book value of long-term equity investment is reducedaccordingly; For other changes in the owners' equity of the investee except the net profit and loss, othercomprehensive income and profit distribution, the book value of the long-term equity investment shall be adjustedand included in the capital reserve. When recognizing the share of the net profit and loss of the investee, the netprofit of the investee shall be adjusted and recognized based on the fair value of the identifiable assets of theinvestee at the time of investment. If the accounting policies and accounting periods adopted by the investee areinconsistent with those of the Company, the financial statements of the investee shall be adjusted according to theaccounting policies and accounting periods of the Company, so as to recognize the investment income and othercomprehensive income. For the transactions between the Group and the associated enterprises and joint ventures, ifthe assets invested or sold do not constitute business, the unrealized internal transaction gains and losses shall beoffset by the portion belonging to the Group according to the proportion enjoyed, and the investment gains andlosses shall be recognized on this basis. However, the unrealized internal transaction losses between the Group andthe investee belong to the impairment losses of the transferred assets and shall not be offset.
When recognizing the share of the net loss of the investee, the book value of the long-term equity investmentand other long-term rights and interests that substantially constitute the net investment of the investee shall bewritten down to zero. In addition, if the Group is obligated to bear additional losses to the investee, the estimatedliabilities will be recognized according to the expected obligations and included in the current investment losses. Ifthe investee realizes the net profit in the future, the Group will resume the recognition of the income share after theincome share makes up for the unrecognized loss share.
17.4 Disposal of long-term equity investment
When disposing of long-term equity investment, the difference between its book value and the actual purchaseprice is included in the current profits and losses. For the long-term equity investment accounted by the equitymethod, if the remaining equity after disposal is still accounted by the equity method, other comprehensive incomeoriginally accounted by the equity method shall be accounted for on the same basis as the direct disposal of relatedassets or liabilities by the investee; Owners' equity recognized by changes in other owners' equity of the investeeexcept net profit and loss, other comprehensive income and profit distribution shall be carried forward to currentprofits and losses in proportion. If the long-term equity investment accounted for by the cost method is stillaccounted for by the cost method after disposal, the other comprehensive income recognized by the equity methodaccounting or the recognition of financial instruments and accounting standards before gaining control of theinvestee shall be accounted for on the same basis as the direct disposal of related assets or liabilities by the investee;Changes in owners' equity other than net profit and loss, other comprehensive income and profit distribution in thenet assets of the investee recognized by using the equity method are carried forward to the current profits and lossesin proportion.
If the Group loses control of the investee due to the disposal of part of its equity investment, if the remainingequity after disposal can exercise joint control or exert significant influence on the investee in the preparation ofindividual financial statements, it shall be accounted for by the equity method instead, and the remaining equityshall be treated as if it were adjusted by the equity method at the time of acquisition; If the remaining equity afterdisposal cannot be jointly controlled or exert significant influence on the investee, it shall be accounted foraccording to the relevant provisions of the standards for the recognition and measurement of financial instruments,and the difference between its fair value and book value on the date of control loss shall be included in the currentprofits and losses. For other comprehensive income recognized by the Group before it gains control of the investee,when it loses control of the investee, it shall be treated on the same basis as the direct disposal of related assets orliabilities by the investee. Changes in owners' equity in the net assets of the investee, except net profit and loss, othercomprehensive income and profit distribution, shall be carried forward to current profits and losses when it losescontrol of the investee. If the remaining equity after disposal is accounted by the equity method, other
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comprehensive income and other owners' equity will be carried forward in proportion; If the remaining equity afterdisposal is changed to accounting treatment according to the recognition and measurement standards of financialinstruments, all other comprehensive income and other owners' equity will be carried forward.If the Group loses joint control or significant influence on the investee due to the disposal of some equityinvestments, the remaining equity after disposal shall be accounted for according to the recognition andmeasurement standards of financial instruments, and the difference between its fair value and book value on the dateof joint control loss or significant influence shall be included in the current profits and losses. Other comprehensiveincome recognized by the original equity investment due to accounting by the equity method shall be accounted foron the same basis as the direct disposal of relevant assets or liabilities by the investee when the equity method isterminated. All the owners' equity recognized by the investee due to changes in other owners' equity except netprofit and loss, other comprehensive income and profit distribution shall be carried forward to the currentinvestment income when the equity method is terminated.The Group disposes of the equity investment in its subsidiaries step by step through multiple transactions untilit loses control. If the above transactions belong to a package transaction, each transaction will be treated as atransaction that disposes of the equity investment in its subsidiaries and loses control. Before losing control, thedifference between the price of each disposal and the book value of the long-term equity investment correspondingto the disposed equity will be recognized as other comprehensive income, and then carried forward to the currentprofits and losses when it loses control.Provision forinventory falling price loss is generally made on the basis of a single inventory item.
18. Investment real estate
Investment real estate refers to real estate held to earn rent or capital appreciation, or both, including rentedhouses and buildings.
Investment real estate is initially measured at cost. Subsequent expenditures related to investment real estateare included in the cost of investment real estate if the economic benefits related to the asset are likely to flow in andthe cost can be measured reliably. Other subsequent expenditures are included in the current profits and losses whenincurred.The Group adopts a cost model for subsequent measurement of investment properties, and adopts the average lifemethod to provide depreciation over the useful life. The depreciation methods, depreciation periods, estimatedresidual value rates and annual depreciation rates for various types of investment real estate are as follows:
| Category | Depreciation period (years) | Residual value rate (%) | Annual Depreciation Rate (%) |
| Houses, buildings | 10-40 | 0.00-4.00 | 2.40-10.00 |
When the investment real estate is disposed of, or permanently withdrawn from use, and it is not expected toobtain economic benefits from its disposal, the recognition of the investment real estate will be terminated.
The difference between the disposal income from the sale, transfer, scrapping or damage of investment realestate after deducting its book value and related taxes is included in the current profits and losses.
19. Fixed assets
19.1 Recognition conditions
Fixed assets refer to tangible assets held for producing goods, providing services, leasing or management, witha service life of more than one fiscal year. Fixed assets are recognized only when the economic benefits related tothem are likely to flow into the Group and their costs can be measured reliably. Fixed assets are initially measured atcost.
Subsequent expenditures related to fixed assets shall be included in the cost of fixed assets if the economicbenefits related to the fixed assets are likely to flow in and the cost can be measured reliably, and the book value ofthe replaced part shall be derecognized. Other subsequent expenditures are included in the current profits and losseswhen incurred.
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19.2 Depreciation method
Fixed assets shall be depreciated within their service life by using the life-average method from the monthfollowing the scheduled serviceable state. The depreciation methods, service life, estimated net salvage and annualdepreciation rate of various fixed assets are as follows:
| Category | Depreciation life (year) | Estimated net salvage rate (%) | Annual depreciation rate (%) |
| Houses and buildings | 10-40 | 0.00-4.00 | 2.40-10.00 |
| Machinery equipment | 10-14 | 4.00 | 6.86-9.60 |
| Transportation equipment | 8 | 4.00 | 12.00 |
| Electronic equipment and others | 5 | 4.00 | 19.20 |
Estimated net salvage refers to the amount that the Group currently obtains from the disposal of fixed assets afterdeducting the estimated disposal expenses, assuming that the expected service life of the fixed assets has expired andis in the expected state at the end of the service life.
19.3 Other instructions
When the fixed assets are disposed of or it is expected that no economic benefits can be generated through theuse or disposal, the fixed assets is derecognized. The difference between the disposal income from the sale, transfer,scrapping or damage of fix assets after deducting its book value and related taxes is included in the current profits andlosses.
At least at the end of the year, the Group will review the service life, estimated net salvage and depreciationmethod of fixed assets, and if there is any change, it will be treated as a change in accounting estimate.
20. Construction in progress
The construction in progress is measured according to the actual cost, which includes various project expendituresincurred during the construction period, capitalized borrowing costs before the project reaches the scheduledserviceable state and other related expenses. No depreciation is allowed for construction in progress.
Construction in progress is carried forward as a fixed asset when it reaches the intended usable state. The standardsand timing points for the carry-forward of various types of projects under construction into fixed assets are as follows:
| Category | The criteria for carrying forward to fixed assets | The time point at which it is carried forward to a fixed asset |
| Installation of machinery and equipment | The equipment has been accepted by asset management personnel and user personnel and meets one or more of the following conditions according to the actual situation: (1) Relevant equipment and other supporting facilities have been installed; (2) The equipment can maintain normal and stable operation for a period of time after debugging; (3) The production equipment can stably produce qualified products for a period of time. | It has reached the intended usable state |
21. Borrowing costs
Borrowing costs that can be directly attributed to the purchase, construction or production of assets that meetthe capitalization conditions will be capitalized when the asset expenditure has occurred, the borrowing costs haveoccurred, and the necessary purchase, construction or production activities to make the assets reach thepredetermined serviceable or saleable state have begun; Capitalization shall stop when the assets that meet the
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capitalization conditions purchased, constructed or produced reach the predetermined serviceable state or saleablestate. The remaining borrowing costs are recognized as expenses in the current period.
22. Intangible assets
22.1 Useful life and the basis for its determination, estimates, amortization method or review procedure
Intangible assets include land use rights, software and patent rights.Intangible assets are initially measured at cost. Intangible assets with limited service life shall be amortized bystraight-line method in equal installments within their expected service life from the time they are available for use.Intangible assets with uncertain service life shall not be amortized. The amortization method, service life andestimated net salvage of various intangible assets are as follows:
| Category | Amortization method | Service life (year) | Estimated net salvage rate (%) |
| Land use right | Straight-line method | 50(Legal Right to Use) | - |
| Software | Straight-line method | 5(The useful life is determined by the period of time that is expected to bring economic benefits to the company) | - |
| Patent | Straight-line method | 15(The useful life is determined by the period of time that is expected to bring economic benefits to the company) | - |
At the end of the period, the service life and amortization method of intangible assets with limited service lifeshall be reviewed and adjusted if necessary.For the impairment test of intangible assets, please refer to Note (III) 22 "Impairment of Long-term Assets" fordetails.
22.2 Post-employment benefits are all defined contribution plan.
Expenditure in the research stage is included in the current profits and losses when incurred.
Expenditures in the development stage are recognized as intangible assets if they meet the following conditionsat the same time. Expenditures in the development stage that cannot meet the following conditions are included in thecurrent profits and losses:
(1) It is technically feasible to complete the intangible assets so that they can be used or sold;
(2) Having the intention to complete the intangible assets and use or sell them;
(3) The ways in which intangible assets generate economic benefits, including the ability to prove that theproducts produced by using the intangible assets exist in the market or the intangible assets themselves exist in themarket, and the intangible assets will be used internally, which can prove their usefulness;
(4) Having sufficient technical, financial and other resources to support the development of the intangible assets,and having the ability to use or sell the intangible assets;
(5) Expenditure attributable to the development stage of the intangible assets can be reliably measured.
If it is impossible to distinguish between research stage expenditure and development stage expenditure, all theR&D expenditures incurred shall be included in the current profits and losses. The cost of intangible assets formed byinternal development activities only includes the total expenditure from the time when the capitalization conditions
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are met to the time when the intangible assets reach the intended use, and the expenditure that has been expensed intoprofit and loss before the capitalization conditions are met in the development process will not be adjusted.
23. Long-term asset impairment
On each balance sheet date, the Group checks whether there are signs that long-term equity investment,investment real estate measured by cost method, fixed assets, construction in progress, right-to-use assets andintangible assets with definite service life may be impaired. If these assets show signs of impairment, the recoverableamount is estimated. Intangible assets with uncertain service life and intangible assets that have not yet reached theserviceable state are tested for impairment every year, regardless of whether with signs of impairment.Estimating the recoverable amount of an asset is based on a single asset. If it is difficult to estimate therecoverable amount of a single asset, the recoverable amount of the asset group is determined based on the assetgroup to which the asset belongs. The recoverable amount is the higher of the net amount of the fair value of the assetor asset group minus the disposal expenses or the present value of its expected future cash flow.
If the recoverable amount of an asset is lower than its book value, the asset impairment provision shall beaccrued according to the difference and included in the current profits and losses.
Goodwill shall be tested for impairment at least at the end of each year. When testing the impairment ofgoodwill, it shall be conducted in combination with the related asset group or asset group portfolio. That is, from thepurchase date, the book value of goodwill is allocated to the asset group or asset group portfolio that can benefit fromthe synergistic effect of business merger in a reasonable way. If the recoverable amount of the asset group or assetgroup portfolio containing the allocated goodwill is lower than its book value, the corresponding impairment loss willbe recognized. The amount of impairment loss will firstly deduct the book value of goodwill allocated to the assetgroup or asset group portfolio, and then deduct the book value of other assets according to the proportion of the bookvalue of assets other than goodwill in the asset group or asset group portfolio.
Once the above-mentioned asset impairment losses are recognized, they will not be reversed in future accountingperiods.
24. Long-term deferred expenses
Long-term deferred expenses refer to the expenses that have occurred but should be borne by the current periodand subsequent periods with an amortization period of more than one year. Long-term deferred expenses shall beamortized evenly by stages during the expected benefit period.
25. Contractual liabilities
Contractual liabilities refer to the obligation of the Group to transfer goods or services to customers forconsideration received or receivable from customers. Contract assets and liabilities under the same contract are listedon a net basis.
26. Employee Remuneration
26.1 Accounting treatment method of short-term Remuneration
During the accounting period when employees provide services for the Group, the Group recognizes the actualshort-term remuneration as a liability, and records it into the current profits and losses or related asset costs. Theemployee welfare expenses incurred by the Group are included in the current profits and losses or related asset costsaccording to the actual amount when actually incurred. If employee welfare expenses are non-monetary benefits, theyshall be measured at fair value.
The social insurance premiums such as medical insurance premium, work injury insurance premium andmaternity insurance premium and housing provident fund paid by the Group for employees, as well as the trade unionfunds and employee education funds withdrawn by the Group according to regulations, shall be calculated accordingto the stipulated accrual basis and accrual ratio during the accounting period when employees provide services for theGroup to determine the employee compensation amount, and recognize the corresponding liabilities, and be includedin the current profits and losses or related asset costs.
26.2 Accounting treatment of post-employment benefits
Post-employment benefits are all defined contribution plans.
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During the accounting period when employees provide services for the Group, the amount payable calculatedaccording to the set deposit plan is recognized as a liability, and included in the current profits and losses or relatedasset costs.
26.3 Accounting treatment of dismissal benefits
If the Group provides dismissal benefits to employees, the employee compensation liabilities arising from thedismissal benefits shall be recognized at the earlier of the following two dates, and included in the current profits andlosses: when the Group cannot unilaterally withdraw the dismissal benefits provided by the plan to terminate laborrelations or the proposal to cut back; When the Group recognizes the costs or expenses related to the reorganizationinvolving the payment of dismissal benefits.
27. Estimated liabilities
When the obligation related to contingencies such as customer return are the current obligations undertaken by theGroup, and the fulfillment of this obligation is likely to lead to the outflow of economic benefits, and the amount of thisobligation can be measured reliably, it is recognized as estimated liabilities.
On the balance sheet date, considering the risk, uncertainty and time value of money related to contingencies, theestimated liabilities are measured according to the best estimate of the expenditure required to fulfill the relevantcurrent obligations. If the time value of money is significant, the best estimate is determined by the discounted amountof expected future cash outflow.
28.Revenue
28.1 Accounting policy used for measurement and revenue recognition disclosure according to type of business
The Group has fulfilled its contractual obligation, that is, when the customer obtains the control right of therelevant goods or services, the income will be recognized according to the transaction price allocated to theperformance obligation. Performance obligation refers to the commitment of the Group to transfer clearlydistinguishable goods or services to customers in the contract. Transaction price refers to the amount of considerationthat the Group is expected to receive due to the transfer of goods or services to customers, which however, does notinclude the money received on behalf of third parties and the money that the Group expects to return to customers.
The Group evaluates the contract on the start date of the contract, identifies the individual performance obligationscontained in the contract, and determines whether each individual performance obligation is performed within a certainperiod of time or at a certain point of time. If one of the following conditions is met, it belongs to the performanceobligation within a certain period of time, and the Group recognizes the income within a certain period of timeaccording to the performance progress: (1) The customer obtains and consumes the economic benefits brought by theperformance of the Group; (2) The customer can control the goods under construction during the performance of theGroup; (3) The goods produced by the Group during the performance of the contract have irreplaceable purposes, andthe Group has the right to collect money for the accumulated performance part completed so far during the wholecontract period. Otherwise, the Group recognizes income at the point when the customer obtains control over therelevant goods or services.Transaction price refers to the amount of consideration that the Group expects to be entitled to receive as a result of thetransfer of goods or services to the customer, but does not include payments received on behalf of a third party andamounts expected to be refunded to the customers by the Group. In determining the transaction price, the Group takesinto account the impact of factors such as variable consideration, significant financing elements in the contract, non-cash consideration, consideration payable to customers, etc.
If the contract contains two or more performance obligations, the Group will allocate the transaction price to eachindividual performance obligation on the contract start date according to the relative proportion of the separate sellingprice of the goods or services promised by each individual performance obligation. However, if there is conclusiveevidence that the contract discount or variable consideration is only related to one or more (but not all) performanceobligations in the contract, the Group will allocate the contract discount or variable consideration to one or morerelated performance obligations. Separate selling price refers to the price at which the Group sells goods or services to
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customers separately. If the separate selling price cannot be directly observed, the Group comprehensively considers allrelevant information that can be reasonably obtained, and estimates the separate selling price by using observable inputvalues to the maximum extent.For sales with return clauses, when the customer obtains the control right of the relevant goods, the Grouprecognizes the income according to the amount of consideration expected to be charged due to the transfer of goods tothe customer (that is, excluding the amount expected to be refunded due to sales return), and recognizes the liabilitiesaccording to the amount expected to be refunded due to sales return; At the same time, according to the book value ofthe expected returned goods at the time of transfer, the balance after deducting the expected cost of recovering thegoods (including the loss of the value of the returned goods) is recognized as an asset, and the net carry-over cost of theabove assets is deducted according to the book value of the transferred goods at the time of transfer.For sales with quality assurance clauses, if the quality assurance provides a separate service in addition to assuringcustomers that the goods or services sold meet the established standards, the quality assurance constitutes a singleperformance obligation. Otherwise, the Group shall handle the quality assurance responsibility in accordance with theAccounting Standards for Business Enterprises No.13-Contingencies.According to whether the Group has control over the goods or services before transferring them to customers, theGroup judges whether it is the main responsible person or the agent when engaging in transactions. If the Group cancontrol the goods or services before transferring them to customers, the Group is the main responsible person, and theincome is recognized according to the total consideration received or receivable; Otherwise, the Group, as an agent,recognizes income according to the expected amount of commission or handling fee, which is determined according tothe net amount of the total consideration received or receivable after deducting the price payable to other interestedparties.
If the Group receives the payment for the sale of goods or services from customers in advance, it will firstrecognize the payment as a liability, and then change it to income when the relevant performance obligations arefulfilled. When the advance payment of the Group does not need to be returned, and the customer may give up all orpart of its contractual rights, if the Group is expected to be entitled to the amount related to the contractual rights givenup by the customer, the above amount will be recognized as income in proportion according to the mode of thecustomer's exercise of contractual rights; Otherwise, the Group will only convert the relevant balance of the aboveliabilities into income when it is extremely unlikely that the customer will demand to perform the remainingperformance obligations.
Please refer to Note (III) 30.2.2 "The Group as a lessor records the operating leasing business" for the accountingpolicy of the Group's income recognition in property leasing.
29. Government subsidies
Government subsidies refer to the monetary assets and non-monetary assets obtained by the Group from thegovernment free of charge. Government subsidies are recognized when they can meet the conditions attached togovernment subsidies and can be received.
If government subsidies are monetary assets, they shall be measured according to the amount received orreceivable.
29.1 Judgment basis and accounting treatment method of government subsidies related to assets
As long-term assets can be formed in the production line subsidies and equipment subsidies of the Group'sgovernment subsidies, these government subsidies are government subsidies related to assets.
Government subsidies related to assets are recognized as deferred income, and are included in the current profitsand losses in installments according to the straight-line method within the service life of the related assets.
29.2 Judgment basis and accounting treatment method of government subsidies related to income
As the Group's government subsidies, such as industry development support funds, enterprise developmentsupport funds and tax subsidies, cannot form long-term assets, these government subsidies are government subsidiesrelated to income.
Government subsidies related to income, if used to compensate related costs and losses in future periods, will berecognized as deferred income, and are included in the current profits and losses during the period when related costs
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or expenses are recognized; if used to compensate the related costs and losses that have occurred, will be directlyincluded in the current profits and losses.Government subsidies related to the daily activities of the Group are included in other income according to thenature of economic business. Government subsidies unrelated to the daily activities of the Group are included in non-operating income.When the confirmed government subsidy needs to be returned, if there is a relevant deferred revenue balance,the relevant deferred income book balance will be offset, and the excess will be included in the current profits andlosses; If there is no relevant deferred income, it will be directly included in the current profits and losses.
30.Lease
Lease refers to a contract in which the lessor transfers the right to use assets to the lessee for consideration withina certain period of time.On the commencement date of the contract, the Group evaluates whether the contract is a lease or contains alease. Unless the terms and conditions of the contract change, the Group will not re-evaluate whether the contract is alease or contains a lease.
30.1 The Group as the lessee
30.1.1 Split of lease
If the contract contains one or more leased and non-leased parts at the same time, the Group will split eachseparate leased and non-leased part and allocate the contract consideration according to the relative proportion of thesum of the separate prices of each leased part and the non-leased part.
30.1.2 Right-to-use assets
Except for short-term leases, the Group recognizes the right-to-use assets on the start date of lease term. Thestart date of lease term refers to the start date when the lessor provides the leased assets for the use of the Group. Theright-to-use assets is initially measured according to the cost. The cost includes:
Initial measurement amount of lease liabilities;
For the lease payment paid on or before the start date of the lease term, if there are lease incentives, deduct theamount related to the lease incentives enjoyed;· Initial direct expenses incurred by the Group;· The estimated costs incurred by the Group for dismantling and removing the leased assets, restoring the premiseswhere the leased assets are located or restoring the leased assets to the state agreed in the lease clauses.The Group refers to the depreciation provisions in Accounting Standards for Business Enterprises No.4-FixedAssets, and accrues depreciation for right-to-use assets. If the Group can reasonably determine that it has acquired theownership of the leased assets at the expiration of the lease term, the right-to-use assets will be depreciated within theremaining service life of the leased assets. If it cannot be reasonably determined that the ownership of the leased assetscan be obtained at the expiration of the lease term, depreciation shall be accrued during the lease term or the remainingservice life of the leased assets, whichever is shorter.According to the Accounting Standards for Business Enterprises No.8-Impairment of Assets, the Groupdetermines whether the right-to-use assets have been impaired, and carries out accounting treatment for the identifiedimpairment losses.
30.1.3Lease liabilities
Except for short-term leases, the Group initially measures the lease liabilities on the start date of lease termaccording to the present value of the unpaid lease payment on that date. When calculating the present value of the
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lease payment, the Group uses the lease interest rate as the discount rate. If the lease interest rate cannot be determined,the incremental loan interest rate is used as the discount rate.Lease payment refers to the amount paid by the Group to the lessor related to the right to use the leased assetsduring the lease term, including:
· Fixed payment amount and substantial fixed payment amount. If there is lease incentive, the relevant amount oflease incentive shall be deducted;
· Variable lease payment amount depending on index or ratio;
· The exercise price of the option reasonably determined by the Group to be exercised;
· The amount to be paid to terminate the lease when the lease term reflects that the Group will exercise the option;
· The amount expected to be paid according to the residual value of the guarantee provided by the Group.
After the start of the lease term, the Group calculates the interest expense of the lease liabilities in each period ofthe lease term at a fixed periodic interest rate, and includes it in the current profits and losses or related asset costs.
After the commencement of the lease term, if the following circumstances occur, the Group will re-measure thelease liabilities and adjust the corresponding right-to-use assets. If the book value of the right-to-use assets has beenreduced to zero, but the lease liabilities still need to be further reduced, the Group will include the difference in thecurrent profits and losses:
· If the lease term changes or the evaluation result of the purchase option changes, the Group will re-measure thelease liabilities according to the present value calculated by the changed lease payment amount and the reviseddiscount rate;· If the estimated payable amount according to the guarantee residual value or the index or proportion used todetermine the lease payment changes, the Group will re-measure the lease liabilities according to the present valuecalculated by the changed lease payment amount and the original discount rate.
30.1.4 As the judgment basis and accounting treatment method for the lessee to simplify the treatment of the
short-term lease
For the short-term lease of some factories and some rented warehouses, the Group chooses not to recognize theright-to-use assets and lease liabilities. Short-term lease refers to the lease that does not exceed 12 months and does notinclude the option to purchase on the start date of the lease term. The Group will charge the lease payment for short-term lease to the current profits and losses or related asset costs in accordance with the straight-line method in eachperiod of the lease term.
30.1.5 Lease change
If the lease changes and the following conditions are met at the same time, the Group will carry out accountingtreatment on the lease change as a separate lease:
·· The lease change expands the lease scope by increasing the right to use one or more leased assets;
· The increased consideration is equivalent to the individual price of the expanded part of the lease scope adjustedaccording to the contract situation.
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If the lease change is not accounted for as a separate lease, on the effective date of the lease change, the Groupwill re-allocate the consideration of the changed contract, re-determine the lease term, and re-measure the leaseliabilities according to the present value calculated by the changed lease payment and the revised discount rate.If the lease scope is reduced or the lease term is shortened due to lease change, the Group shall correspondinglyreduce the book value of the right-to-use assets, and include the related gains or losses of partial or full termination oflease in the current profits and losses. If other lease changes lead to the re-measurement of lease liabilities, the Groupwill adjust the book value of the right-to-use assets accordingly.
30.2 The Group as the lessor
30.2.1 Split of lease
If the contract contains both leased and non-leased parts, the Group will allocate the contract considerationaccording to the provisions of the Accounting Standards for Business Enterprises Revenues on transaction priceallocation, and the basis of allocation is the separate prices of the leased part and the non-leased part.
30.2.2 Classification and accounting treatment for rental housing leases
A lease that essentially transfers almost all the risks and rewards related to the ownership of the leased assets is afinancial lease. Other leases except financing lease are operating leases.
30.2.2.1 The Group as a lessor records the operating lease business
During each period of the lease term, the Group adopts the straight-line method to recognize the lease receiptsfrom operating lease as rental income. The initial direct expenses incurred by the Group in connection with operatingleases are capitalized when incurred, apportioned on the same basis as rental income recognition during the lease term,and included in current profits and losses in installments.
The variable lease receipts related to operating leases obtained by the Group, which are not included in the leasereceipts, are included in the current profits and losses when actually incurred.
30.2.3 Lease change
If the operating lease is changed, the Group will carry out accounting treatment on it as a new lease from theeffective date of the change, and the lease receipts received in advance or receivable related to the lease before thechange will be regarded as the receipts of the new lease.
31. Deferred income tax assets/Deferred income tax liabilities
Income tax expenses include current income tax and deferred income tax.
31.1 Current income tax
On the balance sheet date, the current income tax liabilities (or assets) formed in the current and previous periodsshall be measured by the expected income tax payable (or refunded) calculated in accordance with the provisions of thetax law.
31.2 Deferred income tax assets and deferred income tax liabilities
For the difference between the book values of some assets and liabilities and their tax basis, and the temporarydifference between the book values of items that are not recognized as assets and liabilities but can be determined intax basis according to the provisions of the tax law and tax basis, the balance sheet liability method is adopted torecognize deferred income tax assets and deferred income tax liabilities.
In general, all temporary differences are recognized as related deferred income tax. However, for deductibletemporary differences, the Group recognizes related deferred income tax assets to the extent that it is likely to obtaintaxable income to offset the deductible temporary differences. In addition, for the temporary differences related to theinitial recognition of goodwill and the initial recognition of assets or liabilities arising from transactions that are neitherbusiness merger nor affect accounting profits and taxable income (or deductible losses), the relevant deferred incometax assets or liabilities are not recognized.
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For deductible losses and tax deductions that can be carried forward to future years, the corresponding deferredincome tax assets are recognized to the extent that it is likely to obtain future taxable income for deducting deductiblelosses and tax deductions.The Group recognizes deferred income tax liabilities arising from taxable temporary differences related toinvestments in subsidiaries, associated enterprises and joint ventures, unless the Group can control the time when thetemporary differences are reversed, and the temporary differences are unlikely to be reversed in the foreseeable future.For deductible temporary differences related to the investments of subsidiaries, associated enterprises and jointventures, the Group recognizes the deferred income tax assets only when the temporary differences are likely to bereversed in the foreseeable future and the taxable income used to offset the deductible temporary differences is likely tobe obtained in the future.
On the balance sheet date, deferred income tax assets and deferred income tax liabilities shall be measuredaccording to the applicable tax rate during the expected recovery of related assets or settlement of related liabilities.
Except that the current income tax and deferred income tax related to transactions and events directly included inother comprehensive income or shareholders' equity are included in other comprehensive income or shareholders'equity, and the deferred income tax arising from business merger adjusts the book value of goodwill, the remainingcurrent income tax and deferred income tax expenses or gains are included in the current profits and losses.
On the balance sheet date, the book value of deferred income tax assets shall be rechecked. If it is probable thatsufficient taxable income will not be obtained in the future to offset the benefits of deferred income tax assets, the bookvalue of deferred income tax assets shall be written down. When sufficient taxable income is likely to be obtained, theamount written down will be reversed.
31.3 Offset of income tax
When the Group has the legal right to settle on a net basis and intends to settle on a net basis or acquire assets andpay off liabilities at the same time, the Group's current income tax assets and current income tax liabilities arepresented on an offset net basis.
When the taxpayer has the legal right to settle the current income tax assets and liabilities on a net basis, and thedeferred income tax assets and liabilities are related to the income tax levied by the same tax collection department onthe same taxpayer or to different taxpayers, but in the future, the taxpayers involved intend to settle the current incometax assets and liabilities on a net basis, or acquire assets and pay off liabilities at the same time, the Group's deferredincome tax assets and liabilities are presented on an offset net basis.
32. Changes in important accounting policies and accounting estimates, and correction of previous errors
32.1 Changes in significant accounting policy
On November30, 2022, the Ministry of Finance (MOF) issued Interpretation No. 16 of Accounting Standards forBusiness Enterprises ("Interpretation No. 16"), clarifying that the accounting treatment of deferred income tax relatedto assets and liabilities arising from a single transaction is not subject to the initial recognition exemption.Interpretation No. 16 revises the scope of the initial recognition exemption of deferred income tax in AccountingStandard for Business Enterprises No. 18-Income Tax, clarifying that Accounting Standard for Business EnterprisesNo. 18-Income Tax-provisions regarding exemption from the initial recognition of deferred tax liabilities and deferredtax assetsdoes not apply to individual transaction that is not a business combination and the transaction does not affectneither the accounting profit nor the taxable income (or deductible loss) at the time of the transaction occurs, and theassets and liabilities initially recognized result in the same amount of taxable temporary differences to the deductibletemporary differences . The regulations will come into force on January 1, 2023 and can be implemented in advance.
After assessment, the Group considers that the adoption of this regulation will not have a significant impact on theGroup's financial statement.
32.2 Significant Changes in Accounting Estimates
There are no significant changes in the Group's accounting estimates during the year.
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IV. Taxes
1. Main tax categories and tax rates
| Tax category | Tax basis | Tax rate |
| VAT | The balance after deducting the deductible input tax from the output tax; The tax calculation method of "exemption, offset and refund" is applied to sales of export products | The output tax for domestic sales is calculated according to 13%, 9%, 6% and 5% of the sales amount calculated according to relevant tax regulations, and the tax rebate rate for export products is 13% |
| Urban maintenance and construction tax | Payable turnover tax | 7% |
| Surcharge for education | Payable turnover tax | 3% |
| Local education surcharge | Payable turnover tax | 2% |
| Business income tax | Payable turnover tax | 25%、20%、15%、8.25% |
| Property tax | Residual value or rental income after deducting 30% from the original value of property at one time | 1.2% |
The disclosure statement if there are taxpayers with different enterprise income tax rates
| Name of taxpayer | Income tax rate |
| The Company | 25% |
| Shenzhen Shenfang Property Management Co., Ltd. | 25% |
| Shenzhen Shengjinlian Technology Co., Ltd. | 25% |
| Shenzhen Beauty Century Garment Co., Ltd. | 20% (Note 1) |
| Shenzhen Lisi Industrial Co., Ltd. | 20% (Note 1) |
| Shenzhen Shenfang Sungang Property Management Co., Ltd. | 20% (Note 1) |
| Shenzhen Huaqiang Hotel | 20% (Note 1) |
| Shengtou（HK）Co., Ltd. | 8.25% ( Note 2) |
| Shenzhen SAPO Photoelectric Co., Ltd. | 15% (Note 3) |
Note 1: See Notes (IV), 2 (2) for details.Note 2: According to the Tax Ordinance of Hong Kong, Hong Kong companies applied the two-tier system ofprofits tax , and the first profit of HK$ 2 million will be calculated and paid at 8.25%, and the profits generatedthereafter will be calculated at 16.5%.
Note 3: See Notes (IV), 2(1) for details.
2. Tax preference
(1) In 2022, SAPO Photoelectric, a subsidiary of the Company, was jointly recognized as a high-tech enterprise byShenzhen Science and Technology Innovation Committee, Shenzhen Finance Bureau and Shenzhen Tax Service,State Taxation Administration, respectively, with a certification period of 3 years, and the certificate numbers ofGR202244204504 respectively. It shall apply the preferential tax policies for high-tech enterprises within threeyears after it is recognized as a high-tech enterprise, and pay enterprise income tax at the rate of 15% after beingfiled by the competent tax bureau.
(2) The Company's subsidiaries Shenzhen Beauty Century Garment Co., Ltd., Shenzhen Huaqiang Hotel Co., Ltd.,Shenzhen Lisi Industrial Development Co., Ltd. and Shenzhen Shenfang Sungang Property Management Co., Ltd. arequalified small and low-profit enterprises, and according to the Announcement of the State Administration of Taxationof the Ministry of Finance on Further Implementing the Preferential Income Tax Policies for Small and MicroEnterprises (No. 13 of 2022) and the announcement of the State Administration of Taxation of the Ministry of Finance
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on the preferential income tax policies for small and micro enterprises and individual industrial and commercialhouseholds (No. 6 of 2023),the part of the annual taxable income of small and low-profit enterprises not exceedingRMB 3 million will be reduced to include in the taxable income by 25%, and the enterprise income tax will be paid atthe rate of 20%.
(3) In accordance with the relevant provisions of the Notice of the State Administration of Taxation of the GeneralAdministration of Customs of Ministry of Finance on Import Tax Policies for Supporting the Development of the NewDisplay Device Industry (No. 19[2021]Cai Guan Shui ), SAPO Photoelectric , a subsidiary of the Company, meets therelevant conditions and enjoys the policy of exemption from import duties for related products from January 1, 2021 toDecember 31, 2030.
(4)According to the relevant provisions of the Announcement of the State Administration of Taxation of the Ministryof Finance on Clarifying the Policies for VAT Reduction and Exemption for Small-scale VAT Taxpayers(Announcement No. 1 [2023] of the State Administration of Taxation of the Ministry of Finance), SAPO Photoelectric ,a subsidiary of the Company, meets the relevant conditions and is eligible to enjoy the policy for taxpayers of theproduction service industry to offset the tax payable for the period from January 1, 2023 to December 31, 2023inaccordance with the policy of 5% addition to the current period's deductible input tax amount to offset tax payable.V. Notes of consolidated financial statement
1.Monetary Capital
In RMB
| Items | Year-end balance | Year-beginning balance |
| Cash at hand | 1,710.40 | 3,980.56 |
| RMB | 1,651.50 | 3,980.56 |
| HKD | 58.90 | - |
| Bank deposit( Note 1) | 462,967,619.54 | 874,795,302.32 |
| RMB | 396,264,667.05 | 853,053,825.65 |
| USD | 62,535,102.56 | 17,490,003.77 |
| Yen | 3,440,280.17 | 4,200,382.59 |
| HKD | 727,569.76 | 51,090.31 |
| Other monetary capital(Note 2)： | 9,305,118.06 | 116,990,685.31 |
| RMB | 9,305,118.06 | 116,929,425.84 |
| Yen | - | 60,972.46 |
| USD | - | 287.01 |
| Total | 472,274,448.00 | 991,789,968.19 |
| Including : The total amount of deposit abroad | - | - |
Note 1: Bank deposits include demand deposits and 7-day call deposit interest of RMB1,548,872.61.Note 2: As of December 31, 2023, the Group's other monetary funds include RMB3,400,000.00 of funds whose use isrestricted due to account freezing and RMB5,905,118.06 of bill margin.
2. Transactional financial assets
In RMB
| Items | Balance at the end of this year | Balance at the end of last year |
| Financial assets measured at fair value and whose changes are included in the current profits and losses | 821,946,114.68 | 319,605,448.44 |
| Including: money funds and structured deposits | 821,946,114.68 | 319,605,448.44 |
3. Notes receivable
(1) Notes receivable listed by category
In RMB
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| Items | Balance at the end of this year | Balance at the end of last year |
| Bank acceptance | 50,963,943.01 | 74,619,100.26 |
(2) On December 31, 2023, the Group had no pledged bills receivable.
(3) On December 31, 2023, the notes receivable that have been endorsed or discounted by the Group and have notyet matured on the balance sheet date
In RMB
| Items | Amount to be derecognized at the end of this year | Amount not derecognized at the end of this year |
| Bank acceptance | - | 42,665,954.11 |
(4) By accrual of bad debt provision
In RMB
| Category | Balance at the end of this year | Balance at the end of last year | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Proportion (%) | Amount | Accrual proportion (%) | Amount | Proportion (%) | Amount | Accrual proportion (%) | |||
| With bad debt provision accrual on single item | - | - | - | - | - | - | - | - | - | - |
| with single minor amount but withdrawal single item bad debt provision | 50,963,943.01 | 100.00 | - | - | 50,963,943.01 | 74,619,100.26 | 100.00 | - | - | 74,619,100.26 |
| Bank acceptance bill | 50,963,943.01 | 100.00 | - | - | 50,963,943.01 | 74,619,100.26 | 100.00 | - | - | 74,619,100.26 |
| Total | 50,963,943.01 | 100.00 | - | / | 50,963,943.01 | 74,619,100.26 | 100.00 | - | / | 74,619,100.26 |
(5) On December 31, 2023, the Group had no bills receivable actually written off.
4. Account receivable
1. (1)Disclosure by aging
In RMB
| Aging | Balance at the end of this year | Balance at the end of last year |
| Within 1 year | 848,526,236.04 | 670,780,300.16 |
| 1-2 years | 1,640,043.18 | 614,645.76 |
| 2-3 years | 618,907.34 | - |
| Over 3 years | 12,911,211.29 | 12,883,224.42 |
| Total | 863,696,397.85 | 684,278,170.34 |
(2) Classified disclosure by credit loss provision accrual method
On December 31, 2023, the credit risk and credit loss provision of the accounts receivable of the above portfoliowere as follows:
In RMB
| Balance at the end of this year | |||||
| Category | Book balance | Bad debt provision | Book value | ||
| Amount | Proportion (%) | Amount | Accrual proportion (%) | ||
| Account receivable that withdrawal bad | 71,687,951.26 | 8.30 | 27,464,002.48 | 38.31 | 44,223,948.78 |
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| debt provision by single item | |||||
| Account receivable withdrawal bad debt provision by portfolio | 792,008,446.59 | 91.70 | 16,097,561.42 | 775,910,885.17 | |
| Including：Portfolio 1 | 779,372,185.30 | 90.24 | 15,882,600.54 | 2.04 | 763,489,584.76 |
| Portfolio 2 | 12,636,261.29 | 1.46 | 214,960.88 | 1.70 | 12,421,300.41 |
| Total | 863,696,397.85 | 100.00 | 43,561,563.90 | 820,134,833.95 |
In RMB
| Amount at year-begin | |||||
| Category | Book balance | Bad debt provision | Book value | ||
| Amount | Proportion (%) | Amount | Accrual proportion (%) | ||
| Account receivable that withdrawal bad debt provision by single item | 74,770,706.00 | 10.93 | 28,457,163.32 | 38.06 | 46,313,542.68 |
| Account receivable withdrawal bad debt provision by portfolio | 609,507,464.34 | 89.07 | 19,237,537.09 | 590,269,927.25 | |
| Including：Portfolio 1 | 591,168,603.26 | 86.39 | 18,295,605.12 | 3.09 | 572,872,998.14 |
| Portfolio 2 | 18,338,861.08 | 2.68 | 941,931.97 | 5.14 | 17,396,929.11 |
| Total | 684,278,170.34 | 100.00 | 47,694,700.41 | 636,583,469.93 | |
As of December 31, 2023, the Company has no accounts receivable with significant individual provision for baddebts.
As of December 31, 2023, the credit risk and bad debt provision for Portfolio 1 accounts receivable are as follows:
In RMB
| Category | Balance at the end of the year | |||
| )Expected average loss ratio (%) | Book balance | Provision for bad debts | Book value | |
| During the credit period | 1.87 | 687,200,006.06 | 12,850,250.59 | 674,349,755.47 |
| 1-30 days overdue | 2.49 | 88,368,765.06 | 2,204,379.13 | 86,164,385.93 |
| 31-60 days overdue | 21.77 | 3,803,414.18 | 827,970.82 | 2,975,443.36 |
| Total | 779,372,185.30 | 15,882,600.54 | 763,489,584.76 | |
As ofDecember 31, 2023, the credit risk and bad debt provision of Portfolio 2 accounts receivableare as follows:
In RMB
| Ageing | Balance at the end of the year | |||
| Expected average loss ratio (%) | Book balance | Provision for bad debts | Book value | |
| Within 1 year | 1.55 | 12,569,011.29 | 194,785.88 | 12,374,225.41 |
| 2-3 years | 30.00 | 67,250.00 | 20,175.00 | 47,075.00 |
| Total | 12,636,261.29 | 214,960.88 | 12,421,300.41 | |
As o fDecember 31, 2023, the provision for bad debts is made based on the general model of expected credit losses.
In RMB
| Bad Debt Reserves | Stage 1 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit losses for the entire duration (credit impairment occurred) | ||
| Balance as at January 1, 2023 | 34,269,017.23 | 13,425,683.18 | 47,694,700.41 |
| Balance as at January 1, 2023 in current | - | - | - |
| -- Reversal to the II stage | (125,323.83) | - | - |
| -- Reversal to the I stage | - | - | - |
| Provision in Current Year | 10,785,115.69 | 2,857,008.27 | 13,642,123.96 |
| Reversal in Current Year | (17,775,260.47) | - | (17,775,260.47) |
| Conversion in Current Year | - | - | - |
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| Write off in Current Year | - | - | - |
| Other change | - | - | - |
| Balance as at 31 Dec. 2023 | 27,153,548.62 | 16,408,015.28 | 43,561,563.90 |
(3) Provision for bad debts
In RMB
| Category | Balance at the beginning of this year | Amount of change this year | Balance at the end of this year | |||
| Accrual | Recovery or reversal | Write-off or cancellation | Other changes | |||
| Provision for bad debts | 47,694,700.41 | 13,642,123.96 | (17,775,260.47) | - | - | 43,561,563.90 |
There is no bad debt provision recovered or reversed with amounts significant during the year.
（4） There are no accounts receivable actually written off during the year.
（5）Top 5 of the closing balance of the accounts receivable collected according to the arrears party
In RMB
| Name | Balance in year-end | Proportion(%) | Bad debt provision |
| Client 1 | 157,318,095.40 | 18.21 | 3,255,038.13 |
| Client 2 | 124,972,436.40 | 14.47 | 2,437,300.46 |
| Client 3 | 105,546,202.49 | 12.22 | 1,985,018.81 |
| Client 4 | 62,902,335.60 | 7.28 | 1,242,469.89 |
| Client 5 | 60,181,476.77 | 6.97 | 1,117,846.56 |
| Total | 510,920,546.66 | 59.15 | 10,037,673.85 |
5.Receivable financing
(1) Presentation of financings receivable classifications
In RMB
| Item | Balance at the end of the year | Balance at the end of the previous year |
| Bank acceptance bill | 22,839,459.13 | 54,413,796.91 |
The Group considers that the bank acceptance bills held by the Group have a high credit rating and do not havesignificant credit risks, thus no provision for bad debts has been made.
(2) On December 31, 2023, the Group had no pledged receivable financing.
(3) On December 31, 2023, the receivable financing that have been endorsed or discounted by the Group and have notyet matured on the balance sheet date
In RMB
| Items | Balance at the end of this year | Balance at the end of last year |
| Bank acceptance bill | 59,520,699.22 | - |
(4) On December 31, 2023,There are no Receivable financing actually written off during the year.
6.Prepayments
(1) List by aging analysis:
In RMB
| Aging | Balance at the end of this year | Balance at the end of last year |
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| Amount | Proportion % | Amount | Proportion % | |
| Within 1 year | 16,927,119.84 | 86.81 | 16,690,766.68 | 90.75 |
| 1-2 years | 969,677.39 | 4.97 | 1,700,677.99 | 9.25 |
| 2-3 years | 1,603,089.57 | 8.22 | - | - |
| Total | 19,499,886.80 | 100.00 | 18,391,444.67 | 100.00 |
On December 31, 2023, the Group had no prepayments with an age of more than one year and a significant amount.
(2) Prepayments of the top five ending balances by prepayment object
The total amount of the top five year-end balances collected by prepayment objects is RMB 13,857,835.22,accounting for 71.07% of the total year-end balances of prepayments.
7. Other receivables
(1) Disclosure by age
In RMB
| Balance at the end of this year | Balance at the end of this year | Balance at the end of last year |
| Within 1 year | 1,860,613.92 | 9,677,505.85 |
| 1-2 years | 548,779.55 | 822,689.31 |
| 2-3 years | 690,301.34 | 329,051.11 |
| Over 3 years | 18,115,521.40 | 18,154,298.53 |
| Total | 21,215,216.21 | 28,983,544.80 |
| Less: Bad debt provision | 17,994,930.79 | 18,397,569.42 |
| Book value | 3,220,285.42 | 10,585,975.38 |
(2) Disclosure by payment nature
In RMB
| Payment nature | Book balance at the end of this year | Book balance at the end of last year |
| Current payment | 15,350,589.97 | 16,330,801.03 |
| Deposit and security deposit | 2,000,722.80 | 2,801,300.29 |
| Export rebate | 710,026.13 | 1,023,715.60 |
| Reserve funds and employee loans | 577,183.94 | 580,028.97 |
| Freeze funds | - | 6,559,327.26 |
| Other | 2,576,693.37 | 1,688,371.65 |
| Total | 21,215,216.21 | 28,983,544.80 |
(3) Provision for bad debts
As ofDecember 31, 2023, the provision for bad debts is made based on the general model of expected credit losses.
In RMB
| Bad Debt Reserves | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit loss over life (no credit impairment) | Expected credit losses for the entire duration (credit impairment occurred) | ||
| Balance as at January 1, 2023 | 494,588.28 | 198,890.09 | 17,704,091.05 | 18,397,569.42 |
| Balance as at January 1, 2023 in current | - | - | - | - |
| ——Transfer to stage II | (28,089.18) | 28,089.18 | - | - |
| ——Transfer to stage III | - | (106,906.07) | 106,906.07 | - |
| -- Reversal to the II stage | - | - | - | - |
| -- Reversal to the I stage | - | - | - | - |
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| Provision in Current Year | 671.40 | 158,326.45 | 7,224.50 | 166,222.35 |
| Reversal in Current Year | (393,251.53) | (10,103.39) | (165,506.06) | (568,860.98) |
| Conversion in Current Year | - | - | - | - |
| Write off in Current Year | - | - | - | - |
| Other change | - | - | - | - |
| Balance as at 31 Dec. 2023 | 73,918.97 | 268,296.26 | 17,652,715.56 | 17,994,930.79 |
As ofDecember 31, 2023, the provision for bad debts is made based on the credit risk characteristics portfolio.
In RMB
| Stage | Balance at the end of the year | |||
| Expected average loss ratio (%) | Book balance | Provision for losses | Book value | |
| Other receivables for which provision for credit losses is made based on the credit risk characteristics portfolio | 84.82 | 21,215,216.21 | 17,994,930.79 | 3,220,285.42 |
As of December 31, 2023, the credit risk and bad debt provision for other receivables are as follows:
In RMB
| Aging of accounts | Balance at the end of the year | |||
| Book balance | Provision for losses | Book value | 账面价值 | |
| Within 1 year | 3.97 | 1,860,613.92 | 73,918.97 | 1,786,694.95 |
| 1-2 years | 9.23 | 548,779.55 | 50,646.56 | 498,132.99 |
| 2-3 years | 31.53 | 690,301.34 | 217,649.70 | 472,651.64 |
| Over 3 years | 97.45 | 18,115,521.40 | 17,652,715.56 | 462,805.84 |
| Total | 21,215,216.21 | 17,994,930.79 | 3,220,285.42 | |
(4) Provision for bad debts
：
In RMB
| Category | Balance at the beginning of the year | Change amount for the year | Balance at the end of the year | |||
| Accrual | Recovery or reversal | Transfer or write off | Other changes | |||
| Expected credit loss over the entire duration | 18,397,569.42 | 166,222.35 | (568,860.98) | - | - | 17,994,930.79 |
| Total | 18,397,569.42 | 166,222.35 | (568,860.98) | - | - | 17,994,930.79 |
(5) There are no other accounts receivable actually written off during the year.
(6) The top five of the year-end balance of other receivables categorized by the debtor
In RMB
| Other receivables | Balance at the end of the year | Proportion of total balance of other receivables at the end of the year (%) | The nature of the amount | Ageing | Balance of provision for bad debts at the end of the year |
| The total amount of other receivables with the top five balances at the end of the year | 16,287,801.03 | 76.77 | Account current receivables of external units | Within 1 year, Over 3 years | 15,246,651.03 |
8. Inventories
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（1）Category of Inventory
In RMB
| Items | Closing book balance | Opening book balance | ||||
| Book balance | Provision for inventory impairment | Book value | Book balance | Provision for inventory impairment | Book value | |
| Raw materials | 403,031,948.06 | 7,506,047.48 | 395,525,900.58 | 291,062,812.80 | 48,809,720.50 | 242,253,092.30 |
| Processing products | 309,068,674.96 | 64,610,590.25 | 244,458,084.71 | 258,881,779.59 | 41,882,202.00 | 216,999,577.59 |
| Semi-finished | 137,596,740.37 | 43,501,540.31 | 94,095,200.06 | 183,723,885.96 | 92,381,073.63 | 91,342,812.33 |
| Commissioned materials | 2,406,793.65 | 93,806.73 | 2,312,986.92 | 9,016,668.25 | 1,164,501.70 | 7,852,166.55 |
| Total | 852,104,157.04 | 115,711,984.77 | 736,392,172.27 | 742,685,146.60 | 184,237,497.83 | 558,447,648.77 |
Note: The carrying balance of polarizer inventory is RMB838,447,375.38, and the corresponding provision for
price decline is RMB107,290,039.96.
（2）Inventory falling price reserves
In RMB
| Items | Opening balance | Increased in current period | Decreased in current period | Closing balance | ||
| Accrual | Reversed or collected amount | Write-off | Other | |||
| Raw materials | 48,809,720.50 | 1,768,514.83 | - | 43,072,187.85 | - | 7,506,047.48 |
| Processing products | 41,882,202.00 | 46,991,687.69 | - | 24,263,299.44 | - | 64,610,590.25 |
| Semi-finished | 92,381,073.63 | 105,484,567.76 | - | 154,364,101.08 | - | 43,501,540.31 |
| Commissioned materials | 1,164,501.70 | 93,806.73 | - | 1,164,501.70 | - | 93,806.73 |
| Total | 184,237,497.83 | 154,338,577.01 | - | 222,864,090.07 | - | 115,711,984.77 |
The specific basis for determining the net realizable value of inventories and the reasons for the provision for theinventories price decline reversed or resold during the year:
| Items | The specific basis for determining the net realizable value | The reason for the reversal or resale of the provision for inventory price decline in the current year |
| Raw materials, work-in-progress product, and consignment materials | The net realizable value is determined by the estimated selling price of the relevant finished product, less the estimated costs to be incurred at completion, and less the estimated selling expenses and the relevant taxes | Get used or sold in the year |
| Finished products |
The net realizable value of the inventory isdetermined by the estimated selling price minus theestimated selling expenses and related taxes
Sold in the year
(3) On December 31, 2023, there was no amount in the inventory balance for guarantee and no amount for capitalizationof borrowing costs.
9. Other current assets
In RMN
| Items | Balance at the end of this | Balance at the end of |
- 58 -
| year | last year | |
| VAT to be deducted and input tax to be certified | 27,399,897.46 | 26,077,404.45 |
| Advance payment of income tax | 47,034.59 | 11,654.12 |
| Receivable return cost | 33,326,525.34 | 43,446,472.67 |
| Total | 60,773,457.39 | 69,535,531.24 |
10. Long-term equity investment
In RMB
| Investees | Opening balance | Increase /decrease | Closing balance | Closing balance of impairment provision | |||||||
| Additional investment | Decrease in investment | Profits and losses on investments Recognized under the equity method | Other comprehensive income | Changes in other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Other | ||||
| I. Joint ventures | |||||||||||
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | 129,506,271.76 | - | - | (7,135,777.68) | - | - | - | - | - | 122,370,494.08 | - |
| Subtotal | 129,506,271.76 | - | - | (7,135,777.68) | - | - | - | - | - | 122,370,494.08 | - |
| 2. Affiliated Company | |||||||||||
| Shenzhen Changlianfa Printing & dyeing Company | 3,105,796.55 | - | - | 252,320.54 | - | - | - | - | - | 3,358,117.09 | - |
| Hongkong Yehui International Co., Ltd. | 1,869,767.43 | - | - | (15,526.75) | 99,168.85 | - | - | - | - | 1,953,409.53 | - |
| Subtotal | 4,975,563.98 | - | - | 236,793.79 | 99,168.85 | - | - | - | - | 5,311,526.62 | - |
| Total | 134,481,835.74 | - | - | (6,898,983.89) | 99,168.85 | - | - | - | - | 127,682,020.70 | - |
- 59 -
11. Other equity instruments investment
(1) Investment in other equity instruments
In RMB
| Items | Balance at the end of the previous year | Changes in the current year | Closing balance | Dividend income recognized during the year | Gains accrued to other comprehensive income | Losses accrued to other comprehensive income | Reason designated as being measured at fair value and change being included in other comprehensive income | ||||
| Additional investment | Decrease in investment | Gains included in other comprehensive income during the year | |||||||||
| Union Development Co., Ltd. | 125,753,939.39 | - | - | - | (15,296,239.39) | - | 110,457,700.00 | 208,000.00 | 107,857,700.00 | - | Planned to be held by the Group for a long time. |
| Shenzhen Dailishi Underwear Co., Ltd. | 23,637,000.00 | - | - | - | (5,895,100.00) | - | 17,741,900.00 | 1,037,735.85 | 15,182,043.74 | - | Planned to be held by the Group for a long time. |
| Shenzhen South Textile Co., Ltd. | 16,059,440.88 | - | - | - | (1,256,040.88) | - | 14,803,400.00 | 814,848.27 | 13,303,400.00 | - | Planned to be held by the Group for a long time. |
| Shenzhen Xinfang Knitting Co., Ltd. | 2,227,903.00 | - | - | 757,997.00 | - | - | 2,985,900.00 | 148,000.00 | 2,461,900.00 | - | Planned to be held by the Group for a long time. |
| Jintian Industry（Group）Co., Ltd. | - | - | - | - | - | - | - | - | - | (14,831,681.50) | Planned to be held by the Group for a long time. |
| Total | 167,678,283.27 | - | - | 757,997.00 | (22,980,045.07) | - | 145,988,900.00 | 2,208,584.12 | 138,805,043.74 | (14,831,681.50) | / |
(2) Statement of the circumstances in which there is a derecognition during the yearAs of December 31, 2023, there has been no derecognition of investments in other equity instruments.
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12. Investment real estate
(1) Investment real estate adopted the cost measurement mode
In RMB
| Items | House, Building |
| I. Original price | |
| 1. Balance at period-beginning | 328,128,815.41 |
| 2.Increase in the current period | 22,238,626.99 |
| (1)Outsourcing | 644,437.82 |
| (2) Transferred from Fixed assets | 21,594,189.17 |
| 3.Decreased amount of the period | - |
| （1）Dispose | - |
| （2）Other out | - |
| 4. Balance at period-end | 350,367,442.40 |
| II.Accumulated amortization | |
| 1.Opening balance | 201,812,980.65 |
| 2.Increased amount of the period | 22,951,254.57 |
| (1) Withdrawal | 9,117,671.12 |
| (2)Transferred from Fixed assets | 13,833,583.45 |
| 3.Decreased amount of the period | - |
| （1）Dispose | - |
| （2）Other out | - |
| 4. Balance at period-end | 224,764,235.22 |
| III. Impairment provision | |
| 1. Balance at period-beginning | - |
| 2.Increased amount of the period | - |
| (1) Withdrawal | - |
| 3.Decreased amount of the period | - |
| （1）Dispose | - |
| 4. Balance at period-end | - |
| IV. Book value | |
| 1.Book value at period -end | 125,603,207.18 |
| 2.Book value at period-beginning | 126,315,834.76 |
（2）Investment real estate without certificate of ownership
In RMB
| Items | Book balance | Reason |
| Houses and Building | 12,944,151.87 | Unable to apply for warrants due to historical reasons |
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13. Fixed assets
(1) List of fixed assets
In RMB
| Items | Houses & buildings | Machinery equipment | Transportations | Other equipment | Total |
| I. Original price | |||||
| 1.Opening balance | 742,709,971.36 | 2,655,871,126.91 | 15,875,027.26 | 50,483,511.70 | 3,464,939,637.23 |
| 2.Increased amount of the period | 6,625,073.63 | 58,968,661.84 | 1,224,757.32 | 1,058,285.96 | 67,876,778.75 |
| (1) Purchase | 375,978.84 | 12,004,429.74 | 946,881.22 | 1,058,285.96 | 14,385,575.76 |
| (2) Transferred from construction in progress | - | 46,964,232.10 | 277,876.10 | - | 47,242,108.20 |
| (3)Other changes | 6,249,094.79 | - | - | - | 6,249,094.79 |
| 3.Decreased amount of the period | 21,655,211.05 | 3,405,884.77 | 8,888.71 | 7,002,175.11 | 32,072,159.64 |
| （1）Disposal | - | 2,272,154.22 | 8,888.71 | 753,080.32 | 3,034,123.25 |
| (2)Transferred from Real estate investment | 21,594,189.17 | - | - | - | 21,594,189.17 |
| (3)Other changes | 61,021.88 | 1,133,730.55 | - | 6,249,094.79 | 7,443,847.22 |
| 4. Balance at period-end | 727,679,833.94 | 2,711,433,903.98 | 17,090,895.87 | 44,539,622.55 | 3,500,744,256.34 |
| II. Accumulated depreciation | |||||
| 1.Opening balance | 173,190,869.37 | 986,203,419.91 | 5,871,266.55 | 34,223,428.40 | 1,199,488,984.23 |
| 2.Increased amount of the period | 30,063,009.36 | 195,106,408.71 | 2,005,472.53 | 5,841,471.09 | 233,016,361.69 |
| (1) Withdrawal | 23,813,914.57 | 195,106,408.71 | 2,005,472.53 | 5,841,471.09 | 226,767,266.90 |
| (2) )Other changes | 6,249,094.79 | - | - | - | 6,249,094.79 |
| 3.Decreased amount of the period | 13,833,583.45 | 2,177,192.99 | 7,124.50 | 6,972,131.93 | 22,990,032.87 |
| （1）Disposal | - | 2,177,192.99 | 7,124.50 | 723,037.14 | 2,907,354.63 |
| (2)Transferred from Real estate investment | 13,833,583.45 | - | - | - | 13,833,583.45 |
| (3)Other changes | - | - | - | 6,249,094.79 | 6,249,094.79 |
| 4.Closing balance | 189,420,295.28 | 1,179,132,635.63 | 7,869,614.58 | 33,092,767.56 | 1,409,515,313.05 |
| III. Impairment provision | |||||
| 1.Opening balance | - | 25,120,608.21 | - | 108,388.43 | 25,228,996.64 |
| 2.Increase in the reporting period | 9,820,261.26 | - | 6,126.41 | 145,183.36 | 9,971,571.03 |
| （1）Withdrawal | - | - | - | - | - |
| (2) Other changes | 9,820,261.26 | - | 6,126.41 | 145,183.36 | 9,971,571.03 |
| 3.Decrease in the reporting period | - | 9,971,571.03 | - | 6,291.08 | 9,977,862.11 |
| （1）Disposal | - | - | - | 6,291.08 | 6,291.08 |
| (2) Other changes | - | 9,971,571.03 | - | - | 9,971,571.03 |
| 4. Closing balance | 9,820,261.26 | 15,149,037.18 | 6,126.41 | 247,280.71 | 25,222,705.56 |
| IV. Book value | |||||
| 1.Book value of the period-end | 528,439,277.40 | 1,517,152,231.17 | 9,215,154.88 | 11,199,574.28 | 2,066,006,237.73 |
| 2.Book value of the period-begin | 569,519,101.99 | 1,644,547,098.79 | 10,003,760.71 | 16,151,694.87 | 2,240,221,656.36 |
(2) Fixed assets without certificate of title completed
In RMB
| Items | Book Value | Reason |
| Houses and Building | 11,193,085.07 | Unable to apply for warrants due to historical reasons |
(3) Mortgaged and secured fixed assets
As of December 31, 2023, the Group's fixed assets mortgaged by bank loans are detailed in Notes (V), 21 "Assets withrestricted ownership or use right":
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14. Construction in progress
14.1 Summary of projects under construction
In RMB
| Items | Year-end balance | Year-beginning balance |
| Construction in progress | 31,307,060.74 | 38,061,619.60 |
14.2 List of construction in progress
In RMB
| Items | Year-end balance | Year-beginning balance | ||||
| Book balance | Provision for devaluation | Book value | Book balance | Provision for devaluation | Book value | |
| Installation of machines and equipment | 31,307,060.74 | - | 31,307,060.74 | 38,061,619.60 | - | 38,061,619.60 |
15. Right to use assets
In RMB
| Items | Houses and Building |
| I. Original price | |
| 1.Opening balance | 28,914,047.83 |
| 2.Increased amount of the period | 11,048,317.88 |
| (1)Newly increased | 11,048,317.88 |
| 3.Decreased amount of the period | 6,511,563.48 |
| (1) Termination of lease | 6,511,563.48 |
| 4. Balance at period-end | 33,450,802.23 |
| II. Accumulated depreciation | |
| 1.Opening balance | 13,548,653.95 |
| 2.Increased amount of the period | 8,257,857.90 |
| (1) Withdrawal | 8,257,857.90 |
| 3.Decreased amount of the period | 355,176.19 |
| (1) Termination of lease | 355,176.19 |
| 4.Closing balance | 21,451,335.66 |
| III. Impairment provision | |
| 1.Opening balance | - |
| 2.Increase in the reporting period | - |
| （1）Withdrawal | - |
| 3.Decrease in the reporting period | - |
| 4. Closing balance | - |
| IV. Book value | |
| 1.Book value of the period-end | 11,999,466.57 |
| 2.Book value of the period-begin | 15,365,393.88 |
16. Intangible assets
(1) Information
In RMB
| Items | Land use right | Software | Patent right | Total |
| I. Original price | ||||
| 1. Balance at period-beginning | 48,258,239.00 | 22,336,546.33 | 11,825,200.00 | 82,419,985.33 |
| 2.Increase in the current period | - | 263,523.53 | - | 263,523.53 |
| (1) Purchase | - | 263,523.53 | - | 263,523.53 |
| 3.Decreased amount of the period | - | - | - | - |
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| 4. Balance at period-end | 48,258,239.00 | 22,600,069.86 | 11,825,200.00 | 82,683,508.86 |
| II.Accumulated amortization | ||||
| 1. Balance at period-beginning | 15,274,148.35 | 11,128,065.03 | 11,825,200.00 | 38,227,413.38 |
| 2. Increase in the current period | 891,565.32 | 4,000,107.36 | - | 4,891,672.68 |
| (1) Withdrawal | 891,565.32 | 4,000,107.36 | - | 4,891,672.68 |
| 3.Decreased amount of the period | - | - | - | - |
| 4. Balance at period-end | 16,165,713.67 | 15,128,172.39 | 11,825,200.00 | 43,119,086.06 |
| III. Impairment provision | ||||
| 1. Balance at period-beginning | - | - | - | - |
| 2. Increase in the current period | - | - | - | - |
| 3.Decreased amount of the period | - | - | - | - |
| 4. Balance at period-end | - | - | - | - |
| 4. Book value | ||||
| 1.Book value at period -end | 32,092,525.33 | 7,471,897.47 | - | 39,564,422.80 |
| 2.Book value at period-beginning | 32,984,090.65 | 11,208,481.30 | - | 44,192,571.95 |
As of December 31, 2023, the Group's intangible assets mortgaged by bank loans are detailed in Notes (V),21"Assets with restricted ownership or use right".
17. Goodwill
(1) Original book value of goodwill
In RMB
| Name of the investee or matters that form goodwill | Balance at the end of last year | Increase this year | Decrease this year | Balance at the end of this year |
| SAPO Photoelectric | 9,614,758.55 | - | - | 9,614,758.55 |
| Shenzhen Beauty Century Garment Co., Ltd. | 2,167,341.21 | - | - | 2,167,341.21 |
| Total | 11,782,099.76 | - | - | 11,782,099.76 |
(2) Goodwill impairment provision
In RMB
| Name of the investee or matters that form goodwill | Balance at the end of last year | Increase this year | Decrease this year | Balance at the end of this year |
| SAPO Photoelectric | 9,614,758.55 | - | - | 9,614,758.55 |
| Shenzhen Beauty Century Garment Co., Ltd. | 2,167,341.21 | - | - | 2,167,341.21 |
| Total | 11,782,099.76 | - | - | 11,782,099.76 |
18. Long-term deferred expenses
In RMB
| Items | Balance at the end of last year | Increased amount this year | Amortized amount this year | Other reduction amount | Balance at the end of this year |
| Decoration and facilities renovation fee | 4,470,957.79 | 1,218,440.63 | 2,160,430.42 | 25,307.06 | 3,503,660.94 |
19. Deferred income tax assets/Deferred income tax liabilities
(1) Uncompensated deferred income tax assets
In RMB
| Items | Balance in year-end | Balance in year-begin |
- 64 -
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Credit loss provision | 59,994,128.15 | 10,538,054.68 | 65,076,915.43 | 11,372,802.27 |
| Asset impairment provision | 132,512,745.52 | 19,876,911.83 | 206,115,717.20 | 30,917,357.58 |
| Unrealized profit from internal transactions | 2,145,963.47 | 321,894.52 | 2,235,077.97 | 335,261.70 |
| Employee compensation payable | 4,173,800.00 | 1,043,450.00 | 9,397,730.55 | 2,143,607.14 |
| Deferred income | 96,647,256.82 | 14,497,088.52 | 116,768,810.33 | 17,515,321.55 |
| Deductible loss | 127,769,387.40 | 19,165,408.11 | 90,052,078.73 | 13,397,964.96 |
| Changes in fair value of investment in other equity instruments | 14,831,681.50 | 3,707,920.38 | 14,831,681.50 | 3,707,920.38 |
| Lease liabilities | 12,177,572.68 | 1,826,635.90 | 15,365,393.88 | 2,304,809.08 |
| Total | 450,252,535.54 | 70,977,363.94 | 519,843,405.59 | 81,695,044.66 |
According to the Group's profit forecast results for the future period, the Group believes that it is likely to obtainsufficient taxable income in the future period to make use of the above deductible temporary differences and deductiblelosses, so relevant deferred income tax assets are recognized.
(2)Details of the un-recognized deferred income tax liabilities
In RMB
| Items | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred income tax liabilities | Deductible temporary difference | Deferred income tax liabilities | |
| The difference between the initial recognition cost of long-term equity investment and tax basis | 62,083,693.36 | 15,520,923.34 | 62,083,693.36 | 15,520,923.34 |
| Changes in fair value of investment in other equity instruments | 138,805,043.74 | 34,701,260.94 | 160,494,427.01 | 40,123,606.76 |
| Rent receivable | 10,108,726.81 | 2,527,181.70 | 7,584,635.96 | 1,896,158.99 |
| Use right assets | 11,999,466.57 | 1,799,919.99 | 15,365,393.88 | 2,304,809.08 |
| Total | 222,996,930.48 | 54,549,285.97 | 245,528,150.21 | 59,845,498.17 |
(3) Deferred income tax assets or liabilities listed by net amount after off-set
In RMB
| Items | Trade-off between the deferred income tax assets and liabilities | End balance of deferred income tax assets or liabilities after off-set | Trade-off between the deferred income tax assets and liabilities at period-begin | Opening balance of deferred income tax assets or liabilities after off-set |
| Deferred income tax assets | (10,371,998.52) | 60,605,365.42 | (11,871,230.37) | 69,823,814.29 |
| Deferred income tax assets | (10,371,998.52) | 44,177,287.45 | (11,871,230.37) | 47,974,267.80 |
(4)Details of income tax assets not recognized
In RMB
| Items | Balance in year-end | Balance in year-begin |
| Deductible temporary difference | 14,740,965.97 | 5,742,636.02 |
| Deductible loss | 442,263,671.30 | 464,226,095.10 |
| Total | 457,004,637.27 | 469,968,731.12 |
(5)Deductible losses of the un-recognized deferred income tax asset will expire in the following years
In RMB
| Year | Balance in year-end | Balance at the end of last year |
| 2024 | 69,053,143.67 | 79,132,962.34 |
| 2025 | - | 16,680,938.23 |
| 2026 | 53,989,578.07 | 128,597,715.91 |
- 65 -
| 2027 | 10,067,397.50 | 12,155,889.69 |
| 2028 | 39,988,583.76 | 22,463,907.95 |
| 2029 | 129,732,249.98 | 129,766,788.98 |
| 2030 | 75,352,814.24 | 75,427,892.00 |
| 2031 | - | - |
| 2032 | - | - |
| 2033 | 64,079,904.08 | - |
| Total | 442,263,671.30 | 464,226,095.10 |
20 .Other non-current assets
In RMB
| Items | Balance in year-end | Balance in year-begin | ||||
| Book balance | Provision for devaluation | Book value | Book balance | Provision for devaluation | Book value | |
| Prepayment for engineering and equipment | 3,757,334.44 | - | 3,757,334.44 | 16,792,930.20 | - | 16,792,930.20 |
| Investment funds to be liquidated | 25,760,086.27 | - | 25,760,086.27 | 25,760,086.27 | - | 25,760,086.27 |
| Total | 29,517,420.71 | - | 29,517,420.71 | 42,553,016.47 | - | 42,553,016.47 |
- 66 -
21. Assets with restricted ownership or right of use
| Items | End of the year | End of the previous year | ||||||
| Book balance | Book value | Restricted type | Restricted circumstances | Book balance | Book value | Restricted circumstances | Restricted circumstances | |
| Monetary funds | 9,305,118.06 | 9,305,118.06 | Restricted right of use | Account Freezing and Margin | 116,990,685.31 | 116,990,685.31 | Restricted right of use | Account Freezing and Time Deposit Certificates |
| Notes receivable | 42,665,954.11 | 42,665,954.11 | Restricted right of use | The endorsement of the note is not terminated | 48,387,401.67 | 48,387,401.67 | Restricted right of use | The endorsement of the note is not terminated |
| Other receivables | - | - | / | / | 6,559,327.26 | 6,559,327.26 | Restricted right of use | Account Freezing |
| Fixed asset | 572,261,261.14 | 454,185,881.22 | Restricted right of use | Mortgage | 572,261,261.14 | 470,366,658.55 | Restricted right of use | Mortgage |
| Intangible asset | 44,770,083.00 | 32,092,525.33 | Restricted right of use | Mortgage | 44,770,083.00 | 32,984,090.65 | Restricted right of use | Mortgage |
| Total | 669,002,416.31 | 538,249,478.72 | / | / | 788,968,758.38 | 675,288,163.44 | / | / |
- 67 -
22. Short-term borrowings
In RMB
| Items | Balance in year-end | Balance in year-begin |
| Credit loans | 8,000,000.00 | 7,000,000.00 |
23.Notes payable
In RMB
| Items | Balance in year-end | Balance in year-begin |
| Bank acceptance Bill | 31,049,291.49 | - |
The Group has no notes payable due and unpaid at the end of the year.
24. Accounts payable
In RMB
| Items | Balance in year-end | Balance in year-begin |
| Payment for goods | 386,767,637.00 | 304,916,368.65 |
| Service charge | 13,817,610.72 | 11,386,158.86 |
| Loyalities | 2,207,166.50 | 4,609,134.50 |
| Subcontracting payment | 4,584,423.60 | 3,970,214.14 |
| Others | 1,171,298.42 | 2,167,997.55 |
| Total | 408,548,136.24 | 327,049,873.70 |
On December 31, 2023, the Group had no significant accounts payable with an aging of more than one year.
25.Advance account
In RMB
| Items | Balance in year-end | Balance in year-begin |
| Rent and other | 1,450,096.30 | 1,393,344.99 |
On December 31, 2023, the Group had no significant accounts payable with an aging of more than one year.
26.Contract liabilities
In RMB
| Items | Balance in year-end | Balance in year-begin |
| Goods | 1,436,943.34 | 4,274,109.40 |
On December 31, 2023, the Group had no significant contract liabilities with an aging of more than one year.
- 68 -
27.Payable Employee wage
(1) List of Payroll payable
In RMB
| Items | Balance in year-begin | Increase in this period | Payable in this period | Balance in year-end |
| Short-term compensation | 60,940,432.90 | 223,391,192.84 | 230,478,544.09 | 53,853,081.65 |
| Post-employment benefits - defined contribution plans | - | 17,698,860.49 | 17,698,860.49 | - |
| Dismissal benefits | 226,012.00 | 8,460,265.33 | 6,102,196.89 | 2,584,080.44 |
| Total | 61,166,444.90 | 249,550,318.66 | 254,279,601.47 | 56,437,162.09 |
（2）Short-term remuneration
In RMB
| Items | Balance in year-begin | Increase in this period | Decrease in this period | Balance in year-end |
| Wages, bonuses, allowances and subsidies | 57,472,981.87 | 196,563,582.14 | 203,551,752.29 | 50,484,811.72 |
| Employee welfare | 29,185.44 | 10,196,697.74 | 10,225,883.18 | - |
| Social insurance premiums | - | 3,800,816.39 | 3,800,816.39 | - |
| Including：Medical insurance | - | 3,098,787.68 | 3,098,787.68 | - |
| Maternity insurance | - | 296,157.78 | 296,157.78 | - |
| Work injury insurance | - | 405,870.93 | 405,870.93 | - |
| Public reserves for housing | 202,391.00 | 8,005,658.59 | 8,208,049.59 | - |
| Union funds and staff education fee | 3,235,874.59 | 4,824,437.98 | 4,692,042.64 | 3,368,269.93 |
| Total | 60,940,432.90 | 223,391,192.84 | 230,478,544.09 | 53,853,081.65 |
（3）Defined contribution plans listed
In RMB
| Items | Balance in year-begin | Increase in this period | Decrease in this period | Balance in year-end |
| Basic old-age insurance premiums | - | 14,207,148.80 | 14,207,148.80 | - |
| Unemployment insurance | - | 3,194,871.82 | 3,194,871.82 | - |
| Annuity payment | - | 296,839.87 | 296,839.87 | - |
| Total | - | 17,698,860.49 | 17,698,860.49 | - |
The Group participates in pension insurance and unemployment insurance plans established by governmentagencies according to regulations, and according to the plans, the Group pays fees to these plans according to theprescribed standards. In addition to the above-mentioned monthly deposit fees, the Group will no longer assume furtherpayment obligations. The corresponding expenses are included in the current profits and losses or the related asset costswhen incurred.This year, the Group shall pay RMB 14,207,148.80 and RMB 296,839.87(2022: RMB 13,593,639.21 andRMB303,261.11) to the pension insurance and unemployment insurance plans respectively. As of December 31, 2023,the Group has fully paid the amount of pension insurance and unemployment insurance plans payable during thereporting period.
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28.Tax Payable
In RMB
| Items | Balance in year-end | Balance in year-begin |
| Enterprise Income tax | 2,080,849.81 | 4,655,525.64 |
| Individual Income tax | 1,080,628.82 | 1,847,004.45 |
| VAT | 582,961.29 | 1,740,677.77 |
| Other | 596,455.22 | 654,104.65 |
| Total | 4,340,895.14 | 8,897,312.51 |
29.Other payable
(1) Other payables listed according to the payment nature
In RMB
| Items | Balance in year-end | Balance in year-begin |
| Engineering equipment payment | 67,176,881.34 | 83,337,092.31 |
| Current payment | 56,444,481.12 | 53,102,831.34 |
| Deposit and security deposit | 48,208,919.61 | 45,628,573.39 |
| Others | 12,698,062.48 | 15,276,958.33 |
| Total | 184,528,344.55 | 197,345,455.37 |
(2) On December 31, 2023, the Group had no significant other payable with an aging of more than one year.
30. Non-current liabilities due within 1 year
In RMB
| Items | Balance at the end of this year | Balance at the end of last year |
| Long-term loans due within one year(Note(V).32) | 102,612,497.53 | 97,182,080.19 |
| Lease liabilities due within one year(Note(V).、33) | 5,490,255.46 | 7,001,358.03 |
| Total | 108,102,752.99 | 104,183,438.22 |
31.Other current liabilities
In RMB
| Items | Balance at the end of this year | Balance at the end of last year |
| Endorsed and unexpired acceptance bill | 42,665,954.11 | 48,387,401.67 |
| Return payable | 37,244,449.90 | 44,558,340.11 |
| To be rescheduled | 172,073.21 | - |
| Total | 80,082,477.22 | 92,945,741.78 |
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32. Long-term loans
In RMB
| Items | Balance at the end of this year | Balance at the end of last year | Interest rate interval |
| Guaranteed loan (note) | 608,190,812.09 | 704,603,665.19 | 3.96-4.41% |
| Total | 608,190,812.09 | 704,603,665.19 | |
| Less: Long-term loans due within one year | 102,612,497.53 | 97,182,080.19 | |
| Less: Long-term loans due after one year | 505,578,314.56 | 607,421,585.00 |
Note: SAPO Photoelectric, a subsidiary of the Company, mortgaged its real estate rights such as the factorybuilding, and the Company and Hangzhou Jinjiang Group Co., Ltd. provided 60% and 40% joint guarantee for the loanrespectively.
33. Lease liabilities
In RMB
| Items | Balance at the end of this year | Balance at the end of last year |
| Lease liabilities | 12,177,572.68 | 15,630,030.74 |
| Subtotal | 12,177,572.68 | 15,630,030.74 |
| Less: Lease liabilities due within one year | 5,490,255.46 | 7,001,358.03 |
| Lease liabilities becoming due after one year | 6,687,317.22 | 8,628,672.71 |
The Group's lease liabilities are analysed by the maturity of the undiscounted remaining contractual obligations asfollows:
In RMB
| Within 1 month | 1 to 3 months | 3 to 12 months | 1 to 5 years | More than 5 years | Total | |
| Balance at the end of the year | 513,149.55 | 2,012,582.22 | 3,284,024.84 | 5,822,333.46 | 1,672,592.08 | 13,304,682.15 |
| Balance at the end of the previous year | 1,075,350.63 | 2,330,382.48 | 4,884,203.14 | 6,111,983.10 | 2,819,512.65 | 17,221,432.00 |
34. Deferred income
In RMB
| Items | Balance at the end of last year | Increase this year | Decrease this year | Balance at the end of this year | Reason |
| Government subsidies | 117,814,796.10 | 4,278,925.00 | 24,607,734.21 | 97,485,986.89 | Received the government subsidies |
35.Stock capital
In RMB
| Items | Year-beginning balance | Changed（+，-） | Balance in year-end | ||||
| Issuance of new share | Bonus shares | Capitalization of public reserve | Other | Subtotal | |||
| Total of capital shares | 506,521,849.00 | - | - | - | - | - | 506,521,849.00 |
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36. Capital reserves
In RMB
| Items | Year-beginning balance | Increase in the current period | Decrease in the current period | Year-end balance |
| Share premium | 1,826,482,608.54 | - | - | 1,826,482,608.54 |
| Other capital reserves | 135,117,216.09 | - | - | 135,117,216.09 |
| Total | 1,961,599,824.63 | - | - | 1,961,599,824.63 |
37. Other comprehensive income
In RMB
| Items | Year-beginning balance | Amount of current period | Year-end balance | |||||
| Amount incurred before income tax | Less：Amount transferred into profit and loss in the current period that recognized into other comprehensive income in prior period | Less：Prior period included in other composite income transfer to retained income in the current period | Less：Income tax expenses | After-tax attribute to the parent company | After-tax attribute to minority shareholder | |||
| I. Other comprehensive income that cannot be reclassified into profit or loss | 108,584,344.77 | (21,689,383.27) | - | - | (5,422,345.82) | (16,267,037.45) | - | 92,317,307.32 |
| 1. Changes in fair value of investment in other equity instruments | 108,584,344.77 | (21,689,383.27) | - | - | (5,422,345.82) | (16,267,037.45) | - | 92,317,307.32 |
| II. Other comprehensive income to be reclassified into profit or loss | 1,012,264.54 | 396,902.35 | - | - | - | 277,808.95 | 119,093.40 | 1,290,073.49 |
| 1. Changes in fair value of receivables financing | (178,640.10) | 297,733.50 | - | - | - | 178,640.10 | 119,093.40 | - |
| 2. Translation difference of foreign currency financial statements | 1,190,904.64 | 99,168.85 | - | - | - | 99,168.85 | - | 1,290,073.49 |
| Total of other comprehensive income | 109,596,609.31 | (21,292,480.92) | - | - | (5,422,345.82) | (15,989,228.50) | 119,093.40 | 93,607,380.81 |
38. Special reserves
In RMB
| Items | Year-beginning balance | Increase in the current period | Decrease in the current period | Year-end balance |
| Statutory surplus reserve | 100,909,661.32 | 3,352,654.32 | - | 104,262,315.64 |
39. Retained profits
In RMB
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| Items | Amount of current period | Amount of previous period |
| Undistributed profit at the end of last year before adjustment | 170,636,610.95 | 125,317,336.31 |
| Total undistributed profits adjusted at the beginning of the year | - | - |
| Adjusted undistributed profit at the beginning of the year | 170,636,610.95 | 125,317,336.31 |
| Add: Net profit attributable to shareholders of parent company this year | 79,268,250.45 | 73,309,182.94 |
| Less: Withdrawal of statutory surplus reserve | 3,352,654.32 | 2,663,815.85 |
| Distribution of common stock dividends ( | 30,391,310.94 | 25,326,092.45 |
| Year end undistributed profit | 216,160,896.14 | 170,636,610.95 |
Note: According to the resolution of the General Meeting of Shareholders on May 26, 2023, the Company distributed acash dividend of RMB 0.6 (including tax) for every 10 shares, totally RMB30,391,310.94 (including tax) based on theshare capital of 506,521,849 shares as of December 31, 2022.
40. Operating income and operating cost
(1) Operating income and operating cost
In RMB
| Items | Amount incurred this year | Amount incurred last year | ||
| Income | Cost | Income | Cost | |
| Main business | 3,031,175,008.58 | 2,560,743,931.49 | 2,802,203,439.94 | 2,373,407,000.36 |
| Other business | 48,503,366.87 | 887,913.04 | 35,784,824.42 | 598,896.07 |
| Total | 3,079,678,375.45 | 2,561,631,844.53 | 2,837,988,264.36 | 2,374,005,896.43 |
(2) Main business classified by product
In RMB
| Product type | Amount incurred this year | Amount incurred last year | ||
| Main business income | Main business cost | Main business income | Main business cost | |
| Polarizer sales | 2,885,625,542.77 | 2,499,416,729.45 | 2,693,787,636.62 | 2,317,793,097.44 |
| Property leasing and management | 145,549,465.81 | 61,327,202.04 | 108,415,803.32 | 55,613,902.92 |
| Total | 3,031,175,008.58 | 2,560,743,931.49 | 2,802,203,439.94 | 2,373,407,000.36 |
(3) Main business classified by region
InRMB
| Main business region | Amount incurred this year | Amount incurred last year | ||
| Main business income | Main business cost | Main business income | Main business cost | |
| Domestic | 2,914,588,072.35 | 2,464,223,583.43 | 2,686,847,406.83 | 2,278,271,215.01 |
| Overseas | 116,586,936.23 | 96,520,348.06 | 115,356,033.11 | 95,135,785.35 |
| Total | 3,031,175,008.58 | 2,560,743,931.49 | 2,802,203,439.94 | 2,373,407,000.36 |
(4) Description of performance obligations
The Group's goods sales are mainly the production and sales of polarizer and textile-related goods. For goods soldto customers, the Group recognizes income when the control of the goods is transferred, that is, when the goods aredelivered to the designated place of the other party and signed by the other party. Since the delivery of goods tocustomers represents the right to unconditionally receive the contract consideration, the maturity of the money onlydepends on the passage of time, so the Group recognizes a receivable when the goods are delivered to professionalcustomers. When the customer prepays the payment, the Group recognizes the transaction amount received as acontractual liability until the goods are delivered to the customer.The Group provides property and leasing services to customers, which is a performance obligation to be fulfilled withina certain period of time. The Group recognizes income in the process of providing property and leasing services. Forproperty services, the Group recognizes revenue in the course of providing property services, and for leasing services,the Group apportions the total rental amount on a straight-line basis throughout the lease term without deducting therent-free period and recognize rental income.
(5) Description of allocation to remaining performance obligations
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On December 31, 2023, the amount of contractual liabilities corresponding to the performance obligations that theGroup has signed but has not yet fulfilled or has not yet fully fulfilled is RMB 1,436,943.34, and the income will berecognized when the customer obtains the control of the goods.
41. Taxes and surcharges
In RMB
| Items | Amount incurred this year | Amount incurred last year |
| Property tax | 6,184,638.83 | 5,213,976.28 |
| Urban maintenance and construction tax | 555,230.22 | 366,211.93 |
| Surcharge for education | 400,403.17 | 237,396.39 |
| Other taxes | 2,153,350.91 | 2,089,542.31 |
| Total | 9,293,623.13 | 7,907,126.91 |
42. Sales expenses
In RMB
| Items | Amount incurred this year | Amount incurred last year |
| Employee compensation | 17,089,203.74 | 18,560,229.96 |
| Sales service charge | 10,639,607.95 | 10,661,049.94 |
| Business entertainment | 972,733.63 | 2,214,489.62 |
| Others | 5,494,125.29 | 4,526,759.83 |
| Total | 34,195,670.61 | 35,962,529.35 |
43. Management cost
In RMB
| Items | Amount incurred this year | Amount incurred last year |
| Employee compensation | 90,991,755.13 | 83,952,597.31 |
| Depreciation cost | 11,118,057.18 | 12,258,281.68 |
| Professional service fee | 8,841,449.74 | 7,197,534.84 |
| Amortization of intangible assets | 4,891,672.68 | 5,082,893.36 |
| Property leasing and utilities | 4,086,627.39 | 5,252,212.15 |
| Business entertainment | 1,439,231.97 | 1,557,382.87 |
| Others | 13,002,616.44 | 13,088,038.08 |
| Total | 134,371,410.53 | 128,388,940.29 |
44. R&D expenses
In RMB
| Items | Amount incurred this year | Amount incurred last year |
| Employee compensation | 14,827,264.16 | 16,349,423.75 |
| Material consumption | 85,216,243.35 | 58,840,560.48 |
| Depreciation cost | 3,389,328.35 | 3,518,432.27 |
| Others | 1,220,205.06 | 1,811,739.04 |
| Total | 104,653,040.92 | 80,520,155.54 |
Note: The Group has no R&D project development expenditure that meets the conditions for capitalization.
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45. Financial expenses
In RMB
| Items | Amount incurred this year | Amount incurred last year |
| Interest expense (note) | 27,339,804.17 | 31,131,112.38 |
| Less: capitalized interest expense | - | - |
| Less: interest income | 12,947,471.64 | 8,327,248.75 |
| Exchange difference | 4,332,702.63 | (14,569,863.53) |
| Handling fees and others | 5,674,466.00 | 4,709,606.47 |
| Total | 24,399,501.16 | 12,943,606.57 |
Note: The interest expense on lease liabilities in 2023 is RMB431,636.06.
46. Other income
In RMB
| Sources of other income | Amount incurred in the current period | Amount incurred in the previous period |
| Transfer-in of deferred income | 22,107,734.21 | 16,401,222.05 |
| Industry development support funds (Note 1) | 11,049,910.96 | 6,384,733.03 |
| Enterprise development support funds (Note 2) | 553,455.00 | 2,062,888.38 |
| Tax subsidy | 16,881,612.68 | 1,262,440.33 |
| Others | 147,651.06 | 238,927.10 |
| Total | 50,740,363.91 | 26,350,210.89 |
Note 1: The industry development support funds mainly include the subsidy for the incentive project for industrialenterprises to expand production capacity, the first batch of key new material industry support projects of theShenzhen Municipal Bureau of Industry and Information Technology in 2023, the special fund project for economicdevelopment in Pingshan District, and the subsidy for the emerging industry support plan (new materials) of theBureau of Industry and Information Technology.
Note 2: The enterprise development support funds mainly include the R&D subsidy for enterprises of the ShenzhenScience and Technology Innovation Commission, and the subsidy fund for the improvement of atmosphericenvironment quality of the Shenzhen Municipal Bureau of Ecology and Environment.
47. Investment income
In RMB
| Items | Amount incurred this year | Amount incurred last year |
| Long-term equity investment income calculated by equity method | (6,898,983.89) | 1,307,639.15 |
| Investment income of transactional financial assets during the holding period | 15,519,035.33 | 15,457,585.05 |
| Dividend income from investment in other equity instruments during the holding period | 2,208,584.12 | 2,618,127.67 |
| Total | 10,828,635.56 | 19,383,351.87 |
48. Income from changes in fair value
In RMB
| Sources of income from changes in fair value | Amount incurred this year | Amount incurred last year |
| Transactional financial assets | 2,151,780.82 | - |
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49. Credit impairment gain (loss)
In RMB
| Items | Amount incurred this year | Amount incurred last year |
| Impairment loss of notes receivable | - | 365,055.74 |
| Gain (loss) from impairment of accounts receivable | 4,133,136.51 | (11,584,551.67) |
| Gain (loss) from impairment of other receivables | 402,638.63 | 6,600,942.84 |
| Total | 4,535,775.14 | (4,618,553.09) |
50. Asset impairment gain (loss)
In RMB
| Items | Amount incurred this year | Amount incurred last year |
| Inventory depreciation loss | (126,089,709.42) | (183,706,022.57) |
| Impairment loss of fixed assets | - | (18,867,443.27) |
| Total | (126,089,709.42) | (202,573,465.84) |
51. Asset disposal income
In RMB
| Items | Amount incurred this year | Amount incurred last year |
| Gains & losses on foreign investment in fixed assets | 1.72 | 31,264.60 |
52. Non-Operation income
In RMB
| Items | Amount of current period | Amount of previous period | Recorded in the amount of the non-recurring gains and losses |
| Non-current asset Disposition loss | 768,398.45 | 6,334,444.97 | 768,398.45 |
| Compensation expenses | 252,000.00 | - | 252,000.00 |
| Insurance expenses | 193,275.48 | 7,652,845.40 | 193,275.48 |
| Other | 236,205.33 | 1,005,792.20 | 236,205.33 |
| Total | 1,449,879.26 | 14,993,082.57 | 1,449,879.26 |
53.Non-current expenses
In RMB
| Items | Amount of current period | Amount of previous period | The amount of non-operating gains & lossed |
| Non-current asset Disposition loss | 115,541.99 | 26,020.82 | 115,541.99 |
| Compensation expenses | 7,926,787.08 | 7,248,331.74 | 7,926,787.08 |
| Fine expenses | 42,319.72 | 778.86 | 42,319.72 |
| Other | 121,152.72 | 201,926.05 | 121,152.72 |
| Total | 8,205,801.51 | 7,477,057.47 | 8,205,801.51 |
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54.Income tax expenses
(1)Income tax expenses
In RMB
| Items | Amount of current period | Amount of previous period |
| Current income tax expense | 8,563,917.13 | 4,043,680.11 |
| Deferred income tax expense | 10,843,814.34 | (71,486,803.63) |
| Total | 19,407,731.47 | (67,443,123.52) |
(2)Reconciliation of account profit and income tax expenses
In RMB
| Items | Amount of current period | Amount of previous period |
| Total profits | 146,544,210.05 | 44,348,842.80 |
| Current income tax expense accounted by tax and relevant regulations | 36,636,052.51 | 11,087,210.70 |
| Influence of different tax rates applied by some subsidiaries | (14,393,929.80) | (2,715,451.54) |
| The impact of non-taxable income | (1,126,262.45) | (2,483,588.11) |
| Non-deductible costs, expenses and losses | 2,293,874.74 | 771,675.89 |
| Tax impact by the unrecognized deductible losses and deductible temporary differences in previous years | (25,587.79) | (66,704,686.87) |
| The tax impact of the deductible loss and the deductible temporary difference is not recognized | 10,154,045.89 | 2,931,982.20 |
| The tax rate adjustment leads to a change in the balance of deferred income tax assets / liabilities at the beginning of the period | (21,128.84) | - |
| ax impact of research and development fee plus deduction | (13,995,916.51) | (10,330,265.79) |
| Other | (113,416.28) | - |
| Income tax expenses | 19,407,731.47 | (67,443,123.52) |
55. Supplementary information to cash flow statement
(1) Cash related to operating activities
Other cash received relevant to operating activities
In RMB
| Items | Amount of current period | Amount of previous period |
| Letter of Credit Deposit | 37,450,879.69 | 167,866,753.31 |
| Interest income | 18,578,870.77 | 8,067,195.21 |
| Government Subsidy | 16,029,942.02 | 33,703,713.84 |
| Current account | 15,217,631.42 | 8,658,637.60 |
| Total | 87,277,323.90 | 218,296,299.96 |
Other cash paid related to operating activities
In RMB
| Items | Amount of current period | Amount of previous period |
| Payment of credit deposit | 34,639,361.27 | 25,106,708.19 |
| Cash | 71,894,532.84 | 87,642,432.49 |
| Current account and other | 10,910,080.05 | 9,199,351.73 |
| Total | 117,443,974.16 | 121,948,492.41 |
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(2) Cash related to investment activities
Cash received related to other investment activities
In RMB
| Items | Amount of current period | Amount of previous period |
| Structured deposits | 950,000,000.00 | 430,000,000.00 |
| Fixed deposit | 245,000,000.00 | 753,000,000.00 |
| Currency fund and others | 259,000,000.00 | 133,000,000.00 |
| Total | 1,454,000,000.00 | 1,316,000,000.00 |
Payments of cash in connection with significant investment activities
In RMB
| Items | Amount of current period | Amount of previous period |
| Structured deposits | 1,400,000,000.00 | 480,000,000.00 |
| Currency fund | 290,500,000.00 | 436,064,713.28 |
| Fixed deposit | 150,000,000.00 | 224,368,658.21 |
| Total | 1,840,500,000.00 | 1,140,433,371.49 |
Cash received in connection with significant investment activities
In RMBIn RMB
| Items | Amount of current period | Amount of previous period |
| Structured deposits, financial products, | 1,454,000,000.00 | 1,316,000,000.00 |
Cash paid related to other investment activities
In RMB
| Items | Amount of current period | Amount of previous period |
| Structured deposits, financial products, | 1,840,500,000.00 | 1,140,433,371.49 |
(3)Cash related to financing activities
Cash paid related with financing activities
In RMB
| Items | Amount of current period | Amount of previous period |
| Lease payment | 8,776,024.71 | 9,144,572.43 |
Changes in various liabilities arising from fund-raising activities
In RMB
| Item | Balance at the end of the previous year | Increase in the year | Decrease in the year | Balance at the end of the year | ||
| Changes in cash | Non-cash changes | Changes in cash | Non-cash changes | |||
| Short-term borrowing | 7,000,000.00 | 8,000,000.00 | - | 7,000,000.00 | - | 8,000,000.00 |
| Long-term borrowing | 704,603,665.19 | - | 26,908,168.11 | 123,321,021.21 | - | 608,190,812.09 |
| Lease liabilities | 15,630,030.74 | - | 5,323,566.65 | 8,776,024.71 | - | 12,177,572.68 |
| Total | 727,233,695.93 | 8,000,000.00 | 32,231,734.76 | 139,097,045.92 | - | 628,368,384.77 |
Note: Long-term borrowings and lease liabilities include those that are due within one year.
(4) The Group does not present cash flow on a net basis
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(5) The Group does not have any major activities or financial impacts that do not involve cash receipts and expendituresfor the current period but affect the financial position of the enterprise or may affect the cash flow of the enterprise in thefuture.
56. Supplement Information for cash flow statement
（1）Supplement Information for cash flow statement
In RMB
| Items | Amount of current period | Amount of previous period |
| I. Adjusting net profit to cash flow from operating activities | ||
| Net profit | 127,136,478.58 | 111,791,966.32 |
| Add: asset impairment provision | 126,089,709.42 | 202,573,465.84 |
| Credit loss preparation | (4,535,775.14) | 4,618,553.09 |
| Depreciation of fixed assets and investment property | 235,884,938.02 | 256,562,100.50 |
| Depreciation of right-of-use assets | 8,257,857.90 | 9,007,666.58 |
| Amortization of intangible assets | 4,891,672.68 | 5,082,893.36 |
| Amortization of Long-term deferred expenses | 2,160,430.42 | 1,819,286.52 |
| Loss on disposal of fixed assets, intangible assets and other long-term deferred assets | (1.72) | (31,264.60) |
| Fixed assets scrap loss | 113,290.32 | 26,020.82 |
| Loss on fair value changes | (2,151,780.82) | - |
| Financial cost | 26,883,671.86 | 29,183,633.15 |
| Loss on investment | (10,828,635.56) | (19,383,351.87) |
| Decrease of deferred income tax assets | 9,218,448.87 | (66,115,217.51) |
| Increased of deferred income tax liabilities | 1,625,365.47 | (5,371,586.12) |
| Decrease of inventories | (304,034,232.92) | 1,248,186.40 |
| Decease of operating receivables | (126,515,773.08) | (81,468,525.61) |
| Increased of operating Payable | 90,571,075.50 | 40,694,723.73 |
| Net cash flows arising from operating activities | 184,766,739.80 | 490,238,550.60 |
| II. Significant investment and financing activities that without cash flows: | ||
| End balance of cash equivalents | 461,420,457.33 | 874,474,834.46 |
| Less: Beginning balance of cash equivalents | 874,474,834.46 | 302,408,433.72 |
| Net increase of cash and cash equivalent | (413,054,377.13) | 572,066,400.74 |
(2) Component of cash and cash equivalents
In RMB
| Items | Year-end balance | Year-beginning balance |
| I. Cash | 461,420,457.33 | 874,474,834.46 |
| Including：Cash at hand | 1,710.40 | 3,980.56 |
| Demand bank deposit | 461,418,746.93 | 874,470,853.90 |
| Demand other monetary funds | - | - |
| II.Cash equivalents | - | - |
| III. Balance of cash and cash equivalents at the period end | 461,420,457.33 | 874,474,834.46 |
(3) During the reporting period, the Group does not have any presentation for those with restricted scope of use but stillpresented as cash and cash equivalents.
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(4) Monetary funds that are not cash or cash equivalents
In RMB
| Item | Amount incurred in the year | Amount incurred in the previous year | Reason |
| Bill margin | 5,905,118.06 | - | Cannot be used for payment at any time |
| Current interest and 7-day call deposit interest | 1,548,872.61 | 324,448.42 | Cannot be used for payment at any time |
| The principal and interest of certificates of deposit maturing more than three months | - | 115,719,927.09 | Cannot be used for payment at any time |
| Other | 3,400,000.00 | 1,270,758.22 | Account freezing |
| Total | 10,853,990.67 | 117,315,133.73 | / |
57. Foreign currency monetary items
(1) Foreign currency monetary items
In RMB
| Items | Closing foreign currency balance | Exchange rate | Closing convert to RMB balance |
| Monetary funds | 66,703,011.39 | ||
| Including：USD | 8,829,274.51 | 7.0827 | 62,535,102.56 |
| Yen | 68,513,734.89 | 0.0502 | 3,440,280.17 |
| HKD | 802,927.17 | 0.9062 | 727,628.66 |
| Account receivable | 28,289,108.51 | ||
| Including：USD | 3,958,508.14 | 7.0827 | 28,036,925.61 |
| HKD | 278,280.00 | 0.9062 | 252,182.90 |
| Other receivable | 498,404.86 | ||
| Including：USD | 70,369.33 | 7.0827 | 498,404.86 |
| Account payable | 319,354,807.51 | ||
| Including：USD | 4,335,058.95 | 7.0827 | 30,703,922.03 |
| Yen | 5,747,765,566.00 | 0.0502 | 288,612,552.37 |
| HKD | 42,300.00 | 0.9062 | 38,333.11 |
| Other payable | 6,587,005.74 | ||
| Including：USD | 860,536.00 | 7.0827 | 6,094,918.33 |
| Yen | 9,800,000.20 | 0.0502 | 492,087.41 |
58.Leasing
(1) As a lessee
The Group has leased a number of assets, including houses and buildings, with lease terms ranging from 1 to 10years. The above-mentioned right-of-use assets cannot be used for the purpose of loan mortgage, guarantee, etc.
The Group does not have variable lease payments that are not included in the measurement of lease liabilities.Lease expenses for simplified short-term leases: Simplified short-term lease expenses included in profit or loss forthe current period amounted to RMB558,957.38 (previous year: RMB653,461.86).
The total lease-related cash outflow for the year is RMB9,334,982.09 (previous year: RMB9,798,034.29).
(2) As a lessor
Operating lease as a lessor
In RMB
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| Item | Lease income | Thereinto: Income related to variable lease payments that are not included in lease receipts |
| Houses and buildings | 97,558,143.88 | - |
The Group's operating leases with it as lessor are related to premises and buildings with lease terms ranging from 1to 15 years.
The income related to operating leases for the year is RMB97,558,143.88 (previous year: RMB67,804,574.63), ofwhich the income related to variable lease payments that are not included in lease receipts is RMB0 (previous year:
RMB0).
In RMB
| Item | Undiscounted lease receipts | |
| Amount incurred in the year | Amount incurred in the previous year | |
| 1st year after the balance sheet date | 74,399,477.80 | 65,239,408.94 |
| 2nd year after the balance sheet date | 54,475,653.29 | 49,608,649.57 |
| 3rd year after the balance sheet date | 44,564,404.34 | 40,071,243.84 |
| 4th year after the balance sheet date | 29,708,115.33 | 33,797,303.21 |
| 5th year after the balance sheet date | 9,346,233.32 | 22,595,837.83 |
| Subsequent years | 7,327,310.40 | 5,527,129.80 |
| The total amount of undiscounted lease receipts | 219,821,194.48 | 216,839,573.19 |
(VI) R&D expenditures
（1） Presented by nature of expenses
In RMB
| Items | Amount incurred in the year | Amount incurred in the previous year |
| Employee remuneration | 14,827,264.16 | 16,349,423.75 |
| Material consumption | 85,216,243.35 | 58,840,560.48 |
| Depreciation | 3,389,328.35 | 3,518,432.27 |
| Others | 1,220,205.06 | 1,811,739.04 |
| Total | 104,653,040.92 | 80,520,155.54 |
| Thereinto: Expensed R&D expenditures | 104,653,040.92 | 80,520,155.54 |
| Capitalized R&D expenditures | - | - |
(2) The Group has no R&D project development expenditure eligible for capitalization.
(3) The Group has no significant outsourced R&D projects under development.
(VII) Change in the scope of consolidation
Shenzhen Shengjinlian Technology Co., Ltd. was deregistered on December 13, 2023, and other than that, the scope
of the Group's consolidation has not changed.
Note: Shenzhen Shengjinlian Technology Co., Ltd. was cancelled on December 13, 2023.
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(VIII). Equity in other subjects
1. Equity in subsidiaries
(1) Composition of the enterprise group
| Subsidiary name | Main place of business | Place of registration | Registered address | Business nature | Shareholding ratio % | Acquisition method | |
| Direct | Indirect | ||||||
| Shenzhen Lishi Industry Development Co., Ltd | Shenzhen | RMB 2,360,000.00 | Shenzhen | Property leasing | 100.00 | - | Establishment |
| Shenzhen Huaqiang Hotel | Shenzhen | RMB 10,005,300.00 | Shenzhen | Property leasing | 100.00 | - | Establishment |
| Shenzhen Shenfang Real Estate Management Co., Ltd. | Shenzhen | RMB 1,600,400.00 | Shenzhen | Property management | 100.00 | - | Establishment |
| Shenzhen Beauty Century Garment Co., Ltd. | Shenzhen | RMB 13,000,000.00 | Shenzhen | Textile production and sales | 100.00 | - | Establishment |
| Shenzhen Shenfang Sungang Real Estate Management Co., Ltd. | Shenzhen | RMB 1,000,000.00 | Shenzhen | Property management | 100.00 | - | Establishment |
| SAPO Photoelectric | Shenzhen | RMB 583,333,333.00 | Shenzhen | Polarizer production and sale | 60.00 | - | Acquisition |
| Shengtou (Hongkong) Co.,Ltd. | Hongkong | HKD 10,000.00 | Hongkong | Polarizer sales | - | 100.00 | Establishment |
| Shenzhen Shengjinlian Technology Co., Ltd. | Shenzhen | RMB 1,000,000.00 | Shenzhen | Polarizer production and sale, etc. | - | 100.00 | Establishment |
Note: Shenzhen Shengjinlian Technology Co., Ltd. was cancelled on December 13, 2023.
(2) Important non-wholly-owned subsidiaries
In RMB
| Subsidiary name | Minority 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 equity at the end of the period |
| Shenzhen SAPO Photoelectric Co., Ltd. | 40.00% | 47,868,228.13 | - | 1,229,765,091.74 |
(3) Major financial information of important non-wholly-owned subsidiaries
In RMB
| Items | SAPO Photoelectric | |
| Year-end balance/Amount incurred this year | Balance of the end of last year / amount of last year | |
| Current assets | 2,224,998,868.32 | 1,936,541,263.47 |
| Non-current assets | 2,215,651,449.74 | 2,419,432,602.01 |
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| Items | SAPO Photoelectric | |
| Year-end balance/Amount incurred this year | Balance of the end of last year / amount of last year | |
| Total assets | 4,440,650,318.06 | 4,355,973,865.48 |
| Current liabilities | 762,685,435.65 | 674,071,107.48 |
| Non-current liabilities | 608,912,888.60 | 732,819,068.02 |
| Total liabilities | 1,371,598,324.25 | 1,406,890,175.50 |
| Operating income | 2,944,147,907.27 | 2,735,055,209.89 |
| Net profit | 119,670,570.33 | 96,206,958.45 |
| Total comprehensive income | 119,968,303.83 | 95,909,224.95 |
| Cash flow from operating activities | 168,163,478.05 | 484,437,283.64 |
2 Equity in joint venture arrangements or joint venturesSummary financial information of unimportant joint ventures and associated enterprises
In RMB
| Items | Year-end balance/Amount incurred this year | Balance of the end of last year / amount of last year |
| Joint ventures Associated enterprise | ||
| Total book value of investment | 122,370,494.08 | 129,506,271.76 |
| Total of the following items calculated by shareholding ratio | ||
| -Net profit(Loss) | (7,135,777.68) | 1,292,045.22 |
| -Other comprehensive income | - | - |
| -Total comprehensive income | (7,135,777.68) | 1,292,045.22 |
| Associated enterprise | ||
| Total book value of investment | 5,311,526.62 | 4,975,563.98 |
| Total of the following items calculated by shareholding ratio | ||
| -Net profit | 236,793.79 | 15,593.93 |
| -Other comprehensive income | 99,168.85 | 151,869.82 |
| -Total comprehensive income | 335,962.64 | 167,463.75 |
(IX) Government subsidies
(1) As of December 31, 2023, the Group does not have any government subsidies recognized on the basis of receivables.
(2) Liabilities involving government subsidies
In RMB
| Liability item | The number at the beginning of the year | The amount of new subsidy added in the current year | The amount of non-operating income included in the current year | The amount of other income included in the current year | Other changes during the year | The number at the end of the year | Asset-related/ Earnings related |
| Deferred income | 111,814,796.10 | 4,278,925.00 | - | 16,107,734.21 | (2,500,000.00) | 97,485,986.89 | Asset-related |
| Deferred income | 6,000,000.00 | - | - | 6,000,000.00 | - | - | Income -related |
| Total | 117,814,796.10 | 4,278,925.00 | - | 22,107,734.21 | (2,500,000.00) | 97,485,986.89 | / |
(3) Government subsidies included in profit or loss for the current period
In RMB
| Subsidy Items | Amount incurred in the year | Amount incurred in the previous year |
| Other income | 33,711,100.17 | 24,848,843.46 |
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X. Risks related to financial instrumentsThe Group's main financial instruments include monetary funds, transactional financial assets, notes receivable,accounts receivable, accounts receivable financing, other receivables, other equity instruments investment, short-termloans, accounts payable, other payables, other current liabilities, long-term loans and lease liabilities, etc. At the end ofthis year, the financial instruments held by the Group are as follows. See Note (V) for details. The risks associated withthese financial instruments and the risk management policies adopted by the Group to reduce these risks are as follows.The management of the Group manages and monitors these risk exposures to ensure that the above risks are controlledwithin a limited range.In RMB
| Items | Amount incurred in the year | Amount incurred in the previous year |
| Financial assets | ||
| Measured at fair value, with its changes included in current profits and losses | ||
| Transactional financial assets | 821,946,114.68 | 319,605,448.44 |
| Measured at fair value, with its changes included in other comprehensive income | ||
| Receivable financing | 22,839,459.13 | 54,413,796.91 |
| Investment in other equity instruments | 145,988,900.00 | 167,678,283.27 |
| Measured in amortized cost | ||
| Monetary funds | 472,274,448.00 | 991,789,968.19 |
| Note receivable | 50,963,943.01 | 74,619,100.26 |
| Accounts receivable | 820,134,833.95 | 636,583,469.93 |
| Other receivables | 3,219,287.77 | 10,288,124.02 |
| Financial liabilities | ||
| Measured in amortized cost | ||
| Short-term loan | 8,000,000.00 | 7,000,000.00 |
| Notes payable | 31,049,291.49 | - |
| Accounts payable | 408,548,136.24 | 327,049,873.70 |
| Other payables | 184,528,344.55 | 197,345,455.37 |
| Other current liabilities | 42,665,954.11 | 92,945,741.78 |
| Long-term loans | 608,190,812.09 | 704,603,665.19 |
The Group uses sensitivity analysis technology to analyze the possible impact of reasonable and possible changesin risk variables on current profits and losses and shareholders' equity. Because any risk variable rarely changes inisolation, and the correlation between variables will have a great impact on the final amount of a risk variable change,the following contents are carried out under the assumption that each variable change is independent.
1. Risk management objectives, policies and procedures, and changes occurred during the year
The Group's goal in risk management is to strike a proper balance between risks and benefits, reduce thenegative impact of risks on the Group's operating performance to the lowest level, and maximize the interests ofshareholders and other equity investors. Based on this risk management goal, the basic strategy of the Group's riskmanagement is to identify and analyze all kinds of risks faced by the Group, establish an appropriate risk tolerancebottom line and conduct risk management, and timely and reliably supervise all kinds of risks to control the riskswithin a limited range.
1.1 Market risk
1.1.1 Foreign exchange risk
Foreign exchange risk refers to the risk of losses caused by exchange rate changes. The Group's foreign exchangerisks are mainly related to US dollars, Japanese yen, Hong Kong dollars and euros. Except for some import purchasesand export sales of the Group's companies located in Chinese mainland which are mainly settled in US dollars,Japanese yen, Hong Kong dollars and Euros, other major business activities of the Group are settled in RMB.
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As of 31 December 2023, the Group's assets and liabilities were all RMB balances, except for the monetary itemsin foreign currencies mentioned in Notes (V), (57). The foreign exchange risks arising from the assets and liabilitieswith foreign currency balances (converted into RMB) described in the table below may have an impact on the Group'soperating results.
In RMB
| Items | Balance at the end of this year | |
| Assets | Liabilities | |
| USD | 91,070,433.03 | 36,798,840.36 |
| Yen | 3,440,280.17 | 289,104,639.78 |
| HKD | 979,811.56 | 38,333.11 |
The Group pays close attention to the impact of exchange rate changes on the Group's foreign exchange risk. Atpresent, the Group has not taken any measures to avoid foreign exchange risks.
Sensitivity analysis of foreign exchange risk
Sensitivity analysis of foreign exchange risk assumes that all net investment hedging and cash flow hedging ofoverseas operations are highly effective.
On the basis of the above assumptions, with other variables unchanged, the pre-tax impact of possible reasonableexchange rate changes on current profits and losses and shareholders' equity is as follows:
In RMB
| Items | Changes in exchange rate | This year | Last Year | ||
| Impact on profits | Impact on shareholders' equity | Impact on profits | Impact on shareholders' equity | ||
| All foreign currencies | Appreciation of RMB by 5% | (11,522,564.42) | (11,522,564.42) | (10,266,787.69) | (10,266,787.69) |
| All foreign currencies | Depreciation of RMB by 5% | 11,522,564.42 | 11,522,564.42 | 10,266,787.69 | 10,266,787.69 |
1.1.2. Interest rate risk - risk of cash flow change
The Company's risk of cash flow changes of financial instruments caused by interest rate changes is mainly relatedto bank loans with floating interest rate. The Group continues to pay close attention to the impact of interest rate changeson the Group's interest rate risk. The Group's policy is to maintain floating interest rates on these loans, and there is nointerest rate swap arrangement at present.
Sensitivity analysis of interest rate risk
With other variables unchanged, the pre-tax impact of possible reasonable interest rate changes on current profitsand losses and shareholders' equity is as follows:
In RMB
| Items | Interest rate change | This year | Last Year | ||
| Impact on profits | Impact on shareholders' equity | Impact on profits | Impact on shareholders' equity | ||
| Floating-rate loan | Increase by 1% | (6,154,214.55) | (6,154,214.55) | (7,108,088.43) | (7,108,088.43) |
| Floating-rate loan | Decrease by 1% | 6,154,214.55 | 6,154,214.55 | 7,108,088.43 | 7,108,088.43 |
1.2. Credit risk
On December 31, 2023, the largest credit risk exposure that may cause the Group's financial losses mainly camefrom the loss of the Group's financial assets caused by the failure of the other party to the contract, including monetaryfunds, transactional financial assets, notes receivable, accounts receivable, receivables financing and other receivables.On the balance sheet date, the book value of the Group's financial assets has represented its maximum credit riskexposure.
In order to reduce the credit risk, the Group arranges special personnel to determine the credit limit, conduct creditapproval and implement other monitoring procedures to ensure that necessary measures are taken to recover overduedebts. In addition, the Group reviews the recovery of financial assets on each balance sheet date to ensure that sufficientcredit loss provision has been made for relevant financial assets. Therefore, the management of the Group believes thatthe credit risk assumed by the Group has been greatly reduced.
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The Group's monetary funds are deposited in banks with high credit ratings, so the monetary funds only have lowcredit risk.On December 31, 2023, the balance of accounts receivable of the Group to the top five customers wasRMB510,920,546.66, accounting for 59.16% of the balance of accounts receivable of the Group. In addition, the Grouphas no other significant credit risk exposure concentrated in a single financial asset or financial asset portfolio withsimilar characteristics.
1.3 Liquidity risk
When managing liquidity risk, the Group maintains sufficient cash and cash equivalents as deemed by themanagement and monitors them to meet the Group's business needs and reduce the impact of cash flow fluctuations. Themanagement of the Group monitors the use of bank loans and ensures compliance with the loan agreement.
On December 31, 2023, the Group's unused comprehensive bank credit line was RMB 111,896.00.
The financial liabilities held by the Group are analyzed according to the maturity of the undiscounted remainingcontractual obligations as follows:
In RMB
| Item | Within 1 year | 1-5 years | Over 5 years | Total |
| Short-term loan | 8,202,908.33 | - | - | 8,202,908.33 |
| Notes payable | 31,049,291.49 | - | - | 31,049,291.49 |
| Accounts payable | 408,548,136.24 | - | - | 408,548,136.24 |
| Other payables | 184,528,344.55 | - | - | 184,528,344.55 |
| Other current liabilities | 42,665,954.11 | - | - | 42,665,954.11 |
| Long-term loans | 121,051,052.09 | 543,134,195.76 | - | 664,185,247.85 |
| Lease liabilities | 5,809,756.61 | 5,822,333.46 | 1,672,592.08 | 13,304,682.15 |
2. Transfer of financial assets
2.1Classification of transfer methods
In RMB
| Transfer method | The nature of the transferred financial assets | The amount of financial assets transferred | Derecognition information | The basis for determining the situation of derecognition |
| Factoring | Accounts receivable | 634,780,309.98 | Derecognition | After the accounts receivable are factored, the factoring institution has no right to recover from the company, and it can be determined that the main risks and rewards of the accounts receivable have been transferred, so the recognition is terminated. |
| Endorsement transfer | Outstanding banker's acceptance bill that is classified as financings receivable | 59,520,699.22 | Derecognition | Since the credit risk and deferred payment risk of banker's acceptance bill in financingsreceivable are very small, and the interest rate risk related to the bill has been transferred to the bank, it can be determinedthat the main risks and rewards on the ownership of the note have been transferred, so the recognition is derecognized. |
| Endorsement transfer | Unexpired banker's acceptance bill classified as bills receivable | 42,665,954.11 | Non-derecognition | Not eligible for derecognition |
| Total | / | 736,966,963.31 |
2.2 Financial assets that have been derecognized as a result of transfer
In RMB
| Item | Method for the financial assets transferred | The amount of the financial asset derecognized | Gains or losses related to derecognition |
| Financings receivable | Endorsement transfer | 59,520,699.22 | - |
| Accounts receivable | Factoring | 634,780,309.98 | - |
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| Total | / | 694,301,009.20 | - |
2.3 Transferred financial assets that continue to be involved
In RMB
| Item | Asset transfer method | Amount of assets resulting from continued involvement | Amount of liability arising from continued involvement |
| Notes receivable | Transfer by endorsement | - | 42,665,954.11 |
| Total | / | - | 42,665,954.11 |
XI. Disclosure of fair value
1. Ending fair value of assets and liabilities measured at fair value
In RMB
| Items | Year-end fair value | |||
| Fair value measurement of Level 1 | Fair value measurement of Level 2 | Fair value measurement of Level 3 | Total | |
| Measured at fair value continuously | ||||
| (I) Transactional financial assets | - | 821,946,114.68 | - | 821,946,114.68 |
| (II) Receivable financing | - | - | 22,839,459.13 | 22,839,459.13 |
| (III) Investment in other equity instruments | - | - | 145,988,900.00 | 145,988,900.00 |
| Total assets continuously measured at fair value | - | 821,946,114.68 | 168,828,359.13 | 990,774,473.81 |
2. For Level 2 items measured at fair value continuously and non-continuously, the valuation techniques andqualitative and quantitative information of important parameters are adopted
In RMB
| Items | Fair value at the end of this year | Valuation technique | Input value |
| Transactional financial assets | 821,946,114.68 | Discounted cash flow technique | Expected yield |
3. For Level 3 items measured at fair value continuously and non-continuously, the valuation techniques andqualitative and quantitative information of important parameters are adopted
In RMB
| Items | Fair value at the end of this year | Valuation technique | Input value |
| Receivable financing | 22,839,459.13 | Discounted cash flow technique | Discount rate |
| Investment in other equity instruments | 145,988,900.00 | Comparison of listed companies | P/B ratio of similar listed companies |
| Comparable income method | Market price | ||
| Statement adjustment method | Book value |
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4. Fair value of financial assets and financial liabilities not measured at fair valueFinancial assets and liabilities not measured at fair value mainly include monetary funds, notes receivable, accountsreceivable, other receivables, short-term loans, accounts payable, other payables, long-term loans and lease liabilities.The management of the Group believes that the book values of financial assets and financial liabilities measured inamortized cost in the financial statements are close to their fair values.XII. Related parties and related party transactions
1. Information about the parent company of the Enterprise.
| Name of parent company | Place of registration | Business nature | Registered capital (RMB '0,000) | Shareholding ratio of the parent company to the Company % | Percentage of voting rights of the parent company to the Company % |
| Shenzhen Investment Holdings Co., Ltd | 18/F, Investment Building, Shennan Road, Futian District, Shenzhen | Equity investment, real estate development, etc | 3,235,900.00 | 46.21 | 46.21 |
Description of the parent company of the EnterpriseThe parent company of the Company is a wholly state-owned company approved and authorized by the ShenzhenMunicipal Government, and exercises the investor function for the state-owned enterprises within the authorized scopeaccording to law.During the reporting period, the changes in the registered capital of the parent company are as follows:
In RMB 10,000
| Balance at the end of last year | Increase this year | Decrease this year | Balance at the end of this year |
| 2,850,900.00 | 385,000.00 | - | 3,235,900.00 |
2. Information on subsidiaries of the Enterprise
Please refer to Notes (VII), 1 for details of the subsidiaries of the Enterprise.
3. Information on joint ventures and associated enterprises of the EnterpriseSee Notes (VII), 2 for details of the important joint ventures or associated enterprises of the Enterprise.
4. Information on other related parties
| Names of other related parties | Relationship between other related parties and the Enterprise |
| Shenzhen Xinfang Knitting Co., Ltd. | The Company's shareholding company and the chairman of the company are the employees of the Group |
| Shenzhen Dailishi Underwear Co., Ltd. | The Company's shareholding company and the chairman of the company are the employees of the Group |
| Hengmei Optoelectronics Co., Ltd | Minority shareholder of SAPO Photoelectric , a subsidiary of the Company, one of whose directors is a supervisor of SAPO Photoelectric |
| Shenzhen Shentou Property Development Co.Ltd | A subsidiary of Shenzhen Investment Holdings Limited, the parent company of the Company |
| Shenzhen Investment Building Hotel Co., Ltd. | A subsidiary of Shenzhen Investment Holdings Limited, the parent company of the Company |
| Shenzhen Investment Building Property Management Co., Ltd. | A subsidiary of Shenzhen Investment Holdings Limited, the parent company of the Company |
| Shenzhen SGE Longyan Energy Technology Co., Ltd. | A subsidiary of Shenzhen Investment Holdings Limited, the |
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parent company of the Company
5. Related party transactions
(1) Procurement of goods/acceptance of services
| Related party | Content of related party transaction | Amount incurred this year | Amount incurred last year |
| Hengmei Optoelectronics Co., Ltd | Optical film materials and processing | 4,540,435.30 | - |
| Shenzhen SGE Longyan Energy Technology Co., Ltd. | Purchasing electricity | 1,075,289.19 | - |
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | Interest expenses | 16,237.39 | 6,601.33 |
| Total | 5,631,961.88 | 6,601.33 |
(2) Sale of goods
In RMB
| Related party | Content of related party transaction | Amount incurred this year | Amount incurred last year |
| Hengmei Optoelectronics Co., Ltd | Polarizer | 4,744,631.12 | - |
| Shenzhen Shentou Property Development Co.Ltd | Textile | 65,634.51 | - |
| Shenzhen Investment Building Hotel Co., Ltd. | Textile | 163,729.20 | - |
| Shenzhen Investment Building Property Management Co., Ltd. | Textile | 35,522.12 | - |
| Shenzhen Investment Holdings Co., Ltd | Textile | 15,371.68 | - |
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | Textile | - | 8,849.56 |
| Total | 5,024,888.63 | 8,849.56 |
(3) Lending of related party funds
In RMB
| Related party | Borrowing amount | Start date | Due date | Description |
| Lending | ||||
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | 3,806,454.17 | 2019.07.30 | 2024.07.31 | The annual lending rate is 0.30% |
(4) Rewards for the key management personnel
In RMB
| Rewards for the key management personnel Items | Amount of current period | Amount of previous period |
| Rewards for the key management personnel | 8,557,258.00 | 11,966,067.00 |
6. Receivables and payables of related parties
（1）Receivables
In RMB
| Name | Related party | Amount at year end | Amount at year beginning | ||
| Balance of Book | Balance of Book | Balance of Book | Bad debt Provision | ||
| Other Account | Shenzhen Dailishi | 1,100,000.00 | 58,850.00 | 1,100,000.00 | 58,850.00 |
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| receivable | Underwear Co., Ltd. | ||||
| Other Account receivable | Shenzhen Guanhua Printing & Dyeing Co., Ltd. | 41,325.00 | - | - | - |
| Total | 1,141,325.00 | 58,850.00 | 1,100,000.00 | 58,850.00 |
（2）Payables
In RMB
| Name | Related party | Amount at year end | Amount at year beginning |
| Other payable | Yehui International Co.,Ltd. | 1,124,656.60 | 1,124,656.60 |
| Other payable | Shenzhen Changlianfa Printing & dyeing Co., Ltd. | 2,023,699.95 | 2,023,699.95 |
| Other payable | Shenzhen Guanhua Printing & dyeing Co., Ltd. | 3,811,272.20 | 3,806,454.17 |
| Other payable | Shenzhen Xinfang Knitting Co., Ltd. | 244,789.85 | 244,789.85 |
| Other payable | Shenzhen Investment Holdings Co., Ltd | 485,189.00 | 643,987.04 |
| Total | 7,689,607.60 | 7,843,587.61 |
XIII. Commitments and contingencies
1. Important commitments
(1) Capital commitment
In RMB
| Items | Amount at the end of this year | Amount at the end of last year |
| Contracted but not recognized in the financial statements | ||
| Commitment to purchase and build long-term assets | 2,413,823.52 | 3,761,094.00 |
2. Contingencies
As of December 31, 2023, the Group has no pending litigation, external guarantees and other contingencies that shall bedisclosed.XIV. Matters after the balance sheet date
1. Profit distribution after the balance sheet date
On March 26, 2024, the Board of Directors of the Company convened and adopted the profit distribution plan for2023. Based on the total number of shares entitled to profit distribution of 506,521,849 shares on December 31, 2023,the Company distributed RMB0.65 in cash (including tax) for every 10 shares, with a total cash dividend of RMB32,923,920.19元. The profit distribution plan has yet to be approved by the General Meeting of Shareholders of theCompany.
In RMB
| Items | Amount |
| Profits or dividends to be distributed | 32,923,920.19 |
| Profits or dividends declared after deliberation and approval |
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XV. Other important matters
1. Segment information
(1) Determination basis and accounting policy of reporting segment
According to the Group's internal organizational structure, management requirements and internal reporting system,the Group's business operations are divided into three business segments, and the management of the Group regularlyevaluates the operating results of these segments to determine the allocation of resources and evaluate the performance.On the basis of operating segments, the Group has identified the following three reporting segments: polarizer business,property leasing business and textile business.The information reported by each segment is disclosed according to the accounting policies and measurementstandards adopted by each segment when reporting to the management, and these measurement bases are consistent withthose used when preparing financial statements
(2) Financial information of reporting segment
In RMB
| This year or the end of this year | Polarizer | Property leasing | Offset | Total |
| Operating income: | ||||
| External transaction income | 2,885,625,542.77 | 194,052,832.68 | - | 3,079,678,375.45 |
| Inter-segment transaction income | - | 5,228,270.79 | (5,228,270.79) | - |
| Total operating income of segment | 2,885,625,542.77 | 199,281,103.47 | (5,228,270.79) | 3,079,678,375.45 |
| Operating expenses (note) | 2,740,034,558.58 | 133,409,869.35 | (4,899,337.05) | 2,868,545,090.88 |
| Operating profit | 127,113,090.17 | 36,505,509.79 | (10,318,467.66) | 153,300,132.30 |
| Net profit | 111,017,342.91 | 26,450,970.51 | (10,331,834.84) | 127,136,478.58 |
| Total assets of segment | 4,439,757,297.25 | 3,223,473,385.00 | (2,013,408,318.81) | 5,649,822,363.44 |
| Total liabilities of segment | 1,363,903,983.44 | 219,428,207.11 | (45,427,185.07) | 1,537,905,005.48 |
Note: This item includes operating costs, taxes and surcharges, management costs, R&D expenses, sales expenses andfinancial expenses.
2. Other important transactions and matters that have an impact on investors' decisions
(1) Major asset restructuring
On December 30, 2022, the "Proposal on the Purchase of Assets by Issuing Shares and Paying Cash and RaisingMatching Funds Namely the Related Party Transaction Plan" was deliberated and approved in the 19th meeting of the8th session of the board of directors of the Company, in which the Company intends to purchase 100% of the shares ofHengmei Optoelectronics Co., Ltd. held by 17 companies including Chimei Materials and Haosheng (Danyang) byissuing shares and paying cash. The cash consideration for this transaction is intended to be paid by the Companythrough self-raised funds such as M&A loans and raising matching funds, and the Company intends to raise matchingfunds from no more than 35 qualified specific investors through non-public issuance of shares. The total amount ofmatching funds raised shall not exceed 100% of the transaction price of the assets to be purchased by issuing shares,and the number of shares issued shall not exceed 30% of the total share capital of the listed company after thecompletion of the purchase of assets by issuing shares.
On November 17, 2023, the "Proposal on Shenzhen Textile (Holdings) Co., Ltd.’s Issuance of Shares and Payment ofCash to Purchase Assets and Raise Matching Funds Namely the Related Party Transaction Plan (Revised Draft) and itsSummary" wasdeliberated and approved in the 25th meeting of the 8th session of the Board of Directors of theCompany, the original counterparty Hangzhou Rencheng Trading Partnership (Limited Partnership) will no longerparticipate in this transaction, and add the new counterparty Kunshan Guochuang Investment Group Co., Ltd., and theunderlying assets will still be the 100% equity of the target company. Meanwhile, the transaction plan will be adjusted
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in accordance with the relevant system rules for the full implementation of the stock issuance registration systemissued by the China Securities Regulatory Commission.
The transaction will not result in a change of control of the Company, and the actual controller of the Company beforeand after the transaction is the State-owned Assets Supervision and Administration Commission of the ShenzhenMunicipal People's Government. As of the date of approval of the financial report, the transaction still needs to obtainrelevant approvals, filing and other procedures, the audit, evaluation, due diligence and other work involved in thetransaction are still in progress, and after the completion of the relevant work, the Company will once more conveneameeting of the board of directors to consider the relevant matters of the transaction.
(2) Real estate that has not yet been disposed of by Shenzhen Xieli Automobile Enterprise Co., Ltd. (hereinafter referredto as "Shenzhen Xieli").
Shenzhen Xieli, a sino-foreign joint venture invested and established by the Company and Hong Kong XieliMaintenance Company (hereinafter referred to as "Hong Kong Xieli"), was cancelled by the Shenzhen MunicipalAdministration for Market Regulation in March 2020, but there are still three properties under the name of ShenzhenXieli that need to be disposed of through consultation between the shareholders of both parties. In July 2020, theCompany filed an administrative act in the People's Court of Yantian District, Shenzhen, Guangdong Province to revokethe cancellation of Shenzhen Xieli approved by the Shenzhen Municipal Administration for Market Regulation.In December 2022, the People's Court of Yantian District, Shenzhen, Guangdong Province, rendered a judgment of firstinstance for retrial, revoking the administrative act of approving the cancellation of Shenzhen Xieli. In January 2023, thethird party of the original trial, Hong Kong Xie-li, appealed to the Intermediate People's Court of Shenzhen, GuangdongProvince, and later ruled that the appeal should be withdrawn by Hong Kong Xie-Li due to Hong KongXie-Li's failure topay the case acceptance fee in advancement schedule, and retrial of first instance judgment took effect on March 22,2023.XVI. Notes on main items of parent company's financial statements
1. Accounts receivable
(1) Disclosure by age
In RMB
| Aging | Amount at the end of this year | Amount at the end of last year |
| Within 1 year | 10,190,859.62 | 13,871,107.36 |
| 1-2 years | - | 2,485,076.00 |
| 2-3 years | 2,485,076.00 | - |
| Total | 12,675,935.62 | 16,356,183.36 |
(2) Classified disclosure by credit loss provision accrual method
In RMB
| Category | Balance at the end of this year | ||||
| Book balance | Bad debt provision | Book value | |||
| Amount | Proportion (%) | Amount | Accrual proportion (%) | ||
| Account receivable that withdrawal bad debt provision by single item | - | - | - | - | - |
| Account receivable withdrawal bad debt provision by portfolio | 12,675,935.62 | 100.00 | 4,311.97 | 0.03 | 12,671,623.65 |
| Total | 12,675,935.62 | 100.00 | 4,311.97 | / | 12,671,623.65 |
In RMB
| Amount at year-begin | |||||
| Category | Book balance | Bad debt provision | Book value | ||
| Amount | Proportion | Amount | Accrual proportion | ||
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| (%) | (%) | ||||
| Account receivable that withdrawal bad debt provision by single item | - | - | - | - | - |
| Account receivable withdrawal bad debt provision by portfolio | 16,356,183.36 | 100.00 | 713,159.25 | 4.36 | 15,643,024.11 |
| Total | 16,356,183.36 | 100.00 | 713,159.25 | / | 15,643,024.11 |
As of December 31, 2023, the credit risk and bad debt provision for Portfolio 1 accounts receivable are asfollows:
In RMB
| Category | Balance at the end of the year | |||
| )Expected average loss ratio (%) | Book balance | Provision for bad debts | Book value | |
| Within 1 year | 0.04 | 10,190,859.62 | 4,311.97 | 10,186,547.65 |
| 2-3 years | - | 2,485,076.00 | - | 2,485,076.00 |
| Total | / | 12,675,935.62 | 4,311.97 | 12,671,623.65 |
As ofDecember 31, 2023, the credit risk and bad debt provision of Portfolio 2 accounts receivableare as follows:
In RMB
| Bad Debt Reserves | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit loss over life (no credit impairment) | Expected credit losses for the entire duration (credit impairment occurred) | ||
| Balance as at January 1, 2023 | 713,159.25 | - | - | 713,159.25 |
| Balance as at January 1, 2023 in current | - | - | - | - |
| ——Transfer to stage II | - | - | - | - |
| ——Transfer to stage III | - | - | - | - |
| -- Reversal to the II stage | - | - | - | - |
| -- Reversal to the I stage | - | - | - | - |
| Provision in Current Year | - | - | - | - |
| Reversal in Current Year | (708,847.28) | - | - | (708,847.28) |
| Conversion in Current Year | - | - | - | - |
| Write off in Current Year | - | - | - | - |
| Other change | - | - | - | - |
| Balance as at 31 Dec. 2023 | 4,311.97 | - | - | 4,311.97 |
(3) Provision for bad debts
In RMB
| Category | Balance at the beginning of this year | Amount of change this year | Balance at the end of this year | |||
| Accrual | Recovery or reversal | Write-off or cancellation | Other changes | |||
| Provision for bad debts | 713,159.25 | - | 708,847.28 | - | - | 4,311.97 |
| Total | 713,159.25 | - | 708,847.28 | - | - | 4,311.97 |
There is no bad debt provision recovered or reversed with amounts significant during the year.
（4）There are no accounts receivable actually written off during the year.
（5）Top 5 of the closing balance of the accounts receivable collected according to the arrears party
In RMB
| Name | Balance in year-end | Proportion(%) | Bad debt provision |
| Total accounts receivable of the top five balances on December 31, | 12,652,340.62 | 99.81 | 3,073.24 |
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2023
2.Other receivable
(1) Disclosure by aging
In RMB
| Aging | Balance at the end of this year | Balance at the end of last year |
| Within 1 year | 1,683,810.52 | 3,408,892.46 |
| 1-2 years | 2,213,073.28 | 10,707,995.02 |
| 2-3 years | 10,100,800.01 | - |
| Over 3 years | 15,279,395.10 | 15,279,395.10 |
| Total | 29,277,078.91 | 29,396,282.58 |
| Less: Bad debt provision | 15,263,525.96 | 15,263,525.96 |
| book value | 14,013,552.95 | 14,132,756.62 |
(2) Disclosure by payment nature
In RMB
| Payment nature | Book balance at the end of this year | Book balance at the end of last year |
| Deposit and security deposit | 10,000.00 | 10,000.00 |
| External unit transactions | 15,349,339.97 | 15,349,339.97 |
| Related party transactions within the consolidation scope | 12,553,241.09 | 12,980,241.09 |
| Others | 1,364,497.85 | 1,056,701.52 |
| Total | 29,277,078.91 | 29,396,282.58 |
(3) Accrual of credit loss provision
As ofDecember 31, 2023, the provision for bad debts is made based on the general model of expected credit losses.
In RMB
| Bad Debt Reserves | Stage 1 | Stage 2 | Stage 3 | Total |
| Expected credit losses over the next 12 months | Expected credit loss over life (no credit impairment) | Expected credit losses for the entire duration (credit impairment occurred) | ||
| Balance as at January 1, 2023 | 59,301.12 | 3,018.92 | 15,201,205.92 | 15,263,525.96 |
| Balance as at January 1, 2023 in current | ||||
| ——Transfer to stage II | (442.69) | 442.69 | - | - |
| ——Transfer to stage III | - | - | - | - |
| -- Reversal to the II stage | - | - | - | - |
| -- Reversal to the I stage | - | - | - | - |
| Provision in Current Year | - | 5,529.83 | - | 5,529.83 |
| Reversal in Current Year | (5,529.83) | - | - | (5,529.83) |
| Conversion in Current Year | - | - | - | - |
| Write off in Current Year | - | - | - | - |
| Other change | - | - | - | - |
| Balance as at 31 Dec. 2023 | 53,328.60 | 8,991.44 | 15,201,205.92 | 15,263,525.96 |
As ofDecember 31, 2023, Accrual of credit loss provision
In RMB
| Stage | Year-end amount | |||
| Expected average | Book balance | Loss provision | Book value | |
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| loss rate (%) | ||||
| Other receivables for which credit loss provision is made according to the combination of credit risk characteristics | 52.13 | 29,277,078.91 | 15,263,525.96 | 14,013,552.95 |
As of December 31, 2023, the credit risk and bad debt provision for other receivables are as follows:
| 账龄 | Year-end amount | |||
| Expected average loss rate (%) | Book balance | Loss provision | Book value | |
| Within 1 year | 3.17 | 1,683,810.52 | 53,328.60 | 1,630,481.92 |
| 1-2 years | 0.04 | 2,213,073.28 | 902.24 | 2,212,171.04 |
| 2-3 years | 0.08 | 10,100,800.01 | 8,089.20 | 10,092,710.81 |
| Over 3 years | 99.49 | 15,279,395.10 | 15,201,205.92 | 78,189.18 |
| Total | 29,277,078.91 | 15,263,525.96 | 14,013,552.95 | |
(4) Changes in bad debt provisions
In RMB
| Category | Balance at the beginning of the year | Change amount for the year | Balance at the end of the year | |||
| Accrual | Recovery or reversal | Transfer or write off | Other changes | |||
| Bad debt provisions | 15,263,525.96 | 5,529.83 | (5,529.83) | - | - | 15,263,525.96 |
(5) There are no other accounts receivable actually written off during the year.
(6) Top five companies with year-end balance of other receivables collected by the defaulting party
In RMB
| Unit name | Payment nature | Year-end balance of other receivables | Aging | Proportion of total year-end balance of other receivables (%) | Year-end balance of credit loss provision |
| Total other receivables of the top five balances on December 31, 2023 | Current payment receivable between companies and internal current payment | 27,860,581.06 | Within 1 year, 1-2 years, 2-3 years, Over 3 years | 95.16 | 14,266,189.97 |
3. Long-term equity investment
In RMB
| Items | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investments in subsidiaries | 1,976,433,419.39 | 16,582,629.30 | 1,959,850,790.09 | 1,974,532,127.39 | 16,582,629.30 | 1,957,949,498.09 |
| Investments in joint ventures | 122,370,494.08 | - | 122,370,494.08 | 129,506,271.76 | - | 129,506,271.76 |
| Investments in associates company | 5,311,526.62 | - | 5,311,526.62 | 4,975,563.98 | - | 4,975,563.98 |
| Total | 2,104,115,440.09 | 16,582,629.30 | 2,087,532,810.79 | 2,109,013,963.13 | 16,582,629.30 | 2,092,431,333.83 |
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（1）Investment to the subsidiary
In RMB
| Name | Opening balance | Add investment | Decreased investment | Closing balance | Withdrawn impairment provision | Closing balance of impairment provision |
| SAPO Photoelectric | 1,924,663,070.03 | - | - | - | 1,924,663,070.03 | 14,415,288.09 |
| Shenzhen Lisi Industrial Development Co., Ltd. | 8,073,388.25 | - | - | - | 8,073,388.25 | - |
| Shenzhen Beauty Century Garment Co., Ltd. | 18,765,507.55 | 1,901,292.00 | - | - | 20,666,799.55 | 2,167,341.21 |
| Shenzhen Huaqiang Hotel | 15,489,351.08 | - | - | - | 15,489,351.08 | - |
| Shenzhen Shenfang Real Estate Management Co., Ltd. | 1,713,186.55 | - | - | - | 1,713,186.55 | - |
| Shenzhen Shenfang Sungang Real Estate Management Co., Ltd. | 5,827,623.93 | - | - | - | 5,827,623.93 | - |
| Total | 1,974,532,127.39 | 1,901,292.00 | - | - | 1,976,433,419.39 | 16,582,629.30 |
（2）Investment to joint ventures and associated enterprises
In RMB
| Name | Opening balance | Increase /decrease in reporting period | Chosing balance | Closing balance of impairment provision | |||||||
| Add investment | Decreased investment | Equity method affirmative profit and loss on investments | Adjustment of other comprehensive income | Other equity changes | Declaration of cash dividends or profit | Withdrawn impairment provision | Other | ||||
| I. Joint ventures | |||||||||||
| Shenzhen Guanhua Printing & Dyeing Co., Ltd. | 129,506,271.76 | - | - | (7,135,777.68) | - | - | - | - | - | 122,370,494.08 | - |
| Subtotal | 129,506,271.76 | - | - | (7,135,777.68) | - | - | - | - | - | 122,370,494.08 | - |
| II. Associated enterprises | |||||||||||
| Shenzhen Changlianfa Printing and dyeing Company | 3,105,796.55 | - | - | 252,320.54 | - | - | - | - | - | 3,358,117.09 | - |
| Yehui International Co., Ltd. | 1,869,767.43 | - | - | (15,526.75) | 99,168.85 | - | - | - | - | 1,953,409.53 | - |
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| Subtotal | 4,975,563.98 | - | - | 236,793.79 | 99,168.85 | - | - | - | - | 5,311,526.62 | - |
| Total | 134,481,835.74 | - | - | (6,898,983.89) | 99,168.85 | - | - | - | - | 127,682,020.70 | - |
深圳市纺织(集团)股份有限公司
财务报表附注2023年12月31日止年度
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4.Business income and Business cost
(1）Business income and Business cost
In RMB
| Items | Amount of current period | Amount of previous period | ||
| Business income | Business cost | Business income | Business cost | |
| Income from Main Business | 77,822,508.75 | 9,822,306.53 | 56,046,883.88 | 9,544,956.96 |
(2) Main business income and main business cost classified by product
In RMB
| Product | Amount incurred this year | Amount incurred last year | ||
| Main business income | Main business cost | Main business income | Main business cost | |
| Property leasing | 77,822,508.75 | 9,822,306.53 | 56,046,883.88 | 9,544,956.96 |
(3) Main business income and main business cost classified by area
In RMB
| Area | Amount incurred this year | Amount incurred last year | ||
| Main business income | Main business cost | Main business income | Main business cost | |
| Domestic | 77,822,508.75 | 9,822,306.53 | 56,046,883.88 | 9,544,956.96 |
5.Investment income
In RMB
| Items | Amount of current period | Amount of previous period |
| Income from long-term equity investment measured by adopting the equity method | (6,898,983.89) | 1,307,639.15 |
| Income from long-term equity investment measured by adopting the cost method | 9,989,533.92 | - |
| Investment income of trading financial assets during the holding period | 14,816,230.07 | 15,748,625.37 |
| Dividend income earned during investment holdings in other equity instruments | 1,393,735.85 | 1,599,735.85 |
| Tota | 19,300,515.95 | 18,656,000.37 |
深圳市纺织(集团)股份有限公司
补充资料2023年12月31日止年度
1. Particulars about current non-recurring gains and loss
In accordance with the provisions of the No. 1Explanatory Announcement on Information Disclosure of CompaniesOffering Securities to the Public-Non-Recurring Profit and Loss (Revised in 2023) (hereinafter referred to as the " No.1Explanatory Announcement") issued by the China Securities Regulatory Commission, the Group's non-recurring profitand loss for 2023 is as follows:
In RMB
| Items | Amount |
| Non-current asset disposal gain/loss(including the write-off part for which assets impairment provision is made) | 1.72 |
| Government subsidy recognized in current gain and loss(excluding those closely related to the Company’s business and granted under the state’s policies) | 19,927,836.02 |
| Losses/gains from changes of fair values occurred in holding trading financial assets and trading financial liabilities, and investment income obtaining from the disposal of trading financial assets, trading financial liability and financial assets available-for-sale, excluded effective hedging business relevant with normal operations of the Company | 2,151,780.82 |
| Reversal of the account receivable depreciation reserves subject to separate impairment test | 15,031,480.15 |
| Other non-business income and expenditures other than the above | (6,755,922.25) |
| Total non-recurring gains and losses | 30,355,176.46 |
| Less :Influenced amount of income tax | 3,478,333.83 |
| Net non-recurring gains and losses | 26,876,842.63 |
| Influenced amount of minor shareholders’ equity (after tax) | 9,937,259.91 |
| Non-recurring gains or losses attributable to the common shareholders of the Company | 16,939,582.72 |
Note: According to No. 1Explanatory Announcement, the impact on the Group's net non-recurring profit and loss in2022 is RMB13,006,395.30, and the impact on the non-recurring profit or loss attributable to ordinary shareholders ofthe Company is RMB7,803,837.18.
2. Return on net asset and earnings per share
This statement of return on net assets and earnings per share is prepared by the Group in accordance with the Rules forInformation Disclosure of Companies Issuing Securities to the Public No. 9- Calculation and Disclosure of Return onEquity and Earnings per Share (revised in 2010) issued by China Securities Regulatory Commission.
In RMB
| Profit of report period | Weighted average returns equity(%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to the Common stock shareholders of Company. | 2.77 | 0.16 | 0.16 |
| Net profit attributable to the Common stock shareholders of Company after deducting of non-recurring gain/loss. | 2.17 | 0.12 | 0.12 |