Summary of 2022 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.Stock code: 000045,200045 Stock Abbreviation: Shen Textile A, Shen Textile B Announcement No. :2023-13
Summary of 2022 Annual Report of Shenzhen Textile
(Holdings) Co., Ltd.I. Important notesThe summary is abstract from full-text of annual report, for more details information , investors should found inthe full-text of annual report that published on website of Shenzhen Stock Exchange and other website appointedby CSRC.In addition to the following directors, other directors personally attended the Board meeting at which the Annual Report wasconsidered.
| Names of directors not present in person | Positions of directors not present in person | Reasons for not attending the meeting in person | Name of principal |
| Wang Chuan | Director | Going on business trip | Ning Maozai |
| Sun Minghui | Director | Going on business trip | Zhu Meizhu |
| Wang Kai | Independent director | Due to work | Cai Yuanqing |
Non-standard auditor’s opinion
□ Applicable √Not applicable
Preliminary plan for profit distribution to the common shareholders or turning the capital reserve into the sharecapital for the reporting period, which has been reviewed and approved at the board meeting
√Applicable □ Not applicable
The Company has plan of Converting provident fund to share capital .
□ Applicable √Not applicable
The company’s profit distribution plan approved by the board of directors this time is: based on 506,521,849shares, a cash dividend of 0.60 yuan (tax included) will be distributed to all shareholders for every 10 shares, and0 shares (tax included) will be given as bonus shares. The capital reserve will not be converted into share capital.The profit distribution plan for preferred stocks for the reporting period passed by the board of directors
□ Applicable √Not applicable
II. Basic information about the company
1. Company profile
| Stock abbreviation | Shen Textile A，Shen Textile B | Stock code | 000045，200045 | |
| Stock exchange for listing | Shenzhen Stock Exchange | |||
| Contact person and contact manner | Board secretary | Securities affairs Representative | ||
| Name | Jiang Peng | Li Zhenyu | ||
| Office Address | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen | 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen | ||
| Fax | 0755-83776139 | 0755-83776139 | ||
| Tel | 0755-83776043 | 0755-83776043 | ||
| jiangp@chinasthc.com | lizy@chinasthc.com | |||
2. Brief introduction to the main business or products in the reporting period
(1) The company's main business
The company's main business covered such the high and new technology industry as represented by LCDpolarizer, its own property management business and the retained business of high-end textile and garment.During the reporting period, the Company's main business has not changed significantly.First, the Company continued to optimize the product structure. Under the background of the significant reductionin production by terminal and panel customers in 2022, it adopted the route of product differentiation, optimizedthe customer structure, improved the ability to resist risks, implemented the "Production utilization guarantee"policy, and raced to seize the market share; Second, it spared no effort to implement the production and operationof Line 7, focused on improving production capacity, yield and management level, thus helped the Company'soverall business performance to be improved; The third was to continue to promote lean management, strictlycontrol manufacturing costs, reduce material loss, strengthen material recycling, and reduce costs and increaseefficiency in an all-round way; The fourth was to strengthen the innovation drive, create differentiated competitiveadvantages, focus on promoting the construction of SAPO's R&D management system, create a market-orientedinnovation mechanism, and strengthen the technical research; Fifth, it’s to focus on the security of raw materialsupply chain and the risk of price increases of chemical raw materials, and accelerate the evaluation and use ofchemical alternative raw materials; Sixth, actively fulfilled social responsibilities, and formulated animplementation plan for rent reduction of the Company's and its wholly-owned enterprises’ self-own propertiesbased on actual business conditions, thus to bridge over difficulties with market entities; The seventh was topromote the major asset restructuring matter, which’s planned to purchase all the equity or the controlling stake ofHengmei Optoelectronics by issuing shares and paying cash, and meanwhile raise supporting funds, thus tocoordinate system resources, make up for shortcomings, and enhance the core competitiveness of the Company.
(2) Main products and their purposes
Currently, the Company has 7 mass production lines for polarizers, covering TN, STN, TFT, OLED, 3D, dye sheet,optical film for touch screen and other fields, mainly used in TV, NB, navigator, Monitor, vehicle, industrialcontrol, instruments, smart phones, wearable devices, 3D glasses, sunglasses and other products，the company hasbecome a mainstream panel company such as Huaxing Optoelectronics, BOE, Sharp, LGD, Shenzhen Tianma,Huike, etc. by continuously strengthening sales channel expansion and building its own brand. Qualifiedsuppliers.The Company's main products made in each polarizer production line and their application are as follows:
| Line | Place | Product breadth | Planned capacity | Main projuct |
| Line 1 | Pingshan | 500mm | 600，000 m2 | TN/STN/ Dye sheet |
| Line 2 | Pingshan | 500mm | 1.2 million m2 | TN/STN/CSTN |
| Line 3 | Pingshan | 650mm | 1 million m2 | TFT |
| Line 4 | Pingshan | 1490mm | 6 million m2 | TFT |
| Line 5 | Pingshan | 650mm | 2 millin m2 | TFT |
| Line 6 | Pingshan | 1490mm | 10 million m2 | TFT/OLED |
| Line 7 | Pingshan | 2500mm | 32 millin m2 | TFT/OLED |
3.Major accounting data and financial indicators
(1)Major accounting data and financial indicators for the last three years
Whether it has retroactive adjustment or re-statement on previous accounting data
√Yes □ No
Retroactive adjustment or restatement of causesAccounting policy change and Correction of accounting errors
In RMB
| End of 2022 | End of 2021 | Changed over last year（％） | End of 2020 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Gross assets（Yuan） | 5,617,137,367.90 | 5,496,647,107.83 | 5,563,539,326.16 | 0.96% | 4,969,547,552.23 | 4,969,547,552.23 |
| Net assets attributable to shareholders of the listed company（Yuan） | 2,849,264,555.21 | 2,816,795,889.89 | 2,811,366,974.46 | 1.35% | 2,766,234,174.39 | 2,766,234,174.39 |
| 2022 | 2021 | Changes of this period over same period of Last year(%) | 2020 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Operating income（Yuan） | 2,837,988,264.36 | 2,293,747,892.06 | 2,330,061,681.00 | 21.80% | 2,108,964,687.80 | 2,108,964,687.80 |
| Net profit attributable to the shareholders of the listed company（Yuan） | 73,309,182.94 | 61,162,384.25 | 55,733,468.82 | 31.54% | 37,267,995.74 | 37,267,995.74 |
| Net profit after deducting of non-recurring gain/loss attributable to the shareholders of listed company（Yuan） | 54,148,057.50 | 40,650,013.22 | 35,221,097.79 | 53.74% | 18,084,607.04 | 18,084,607.04 |
| Cash flow generated by business operation, net（Yuan） | 490,238,550.60 | -4,436,980.35 | -4,436,980.35 | 11,148.92% | 1,930,932.76 | 1,930,932.76 |
| Basic earning per share(Yuan/Share) | 0.14 | 0.12 | 0.11 | 27.27% | 0.07 | 0.07 |
| Diluted gains per share(Yuan/Share) | 0.14 | 0.12 | 0.11 | 27.27% | 0.07 | 0.07 |
| Weighted average ROE(%) | 2.59% | 2.19% | 2.00% | 0.59% | 1.36% | 1.36% |
Reasons for changes in accounting policy and correction of accounting errors
①Reasons for changes in accounting policies
On December 30, 2021, the Ministry of Finance issued "Interpretation No. 15 of the Accounting Standards forBusiness Enterprises" (hereinafter referred to as "Interpretation No. 15"), which regulates the accountingtreatment for the external sales of products or by-products produced by enterprises before their fixed assets reachtheir intended usable state or during the research and development process.Interpretation No. 15 stipulates that if an enterprise sells products or by-products produced before the fixed assetsreach their intended usable status or during the research and development process, it should separately account forthe revenue and costs related to the trial operation sales in accordance with the revenue standards, AccountingStandards for Business Enterprises No. 1 - Inventory, and other provisions, and include them in the current profitand loss, The net amount of trial run sales related revenue after offsetting costs should not be used to offset fixedasset costs or research and development expenses. At the same time, enterprises should separately discloserelevant information such as the amount of revenue and cost related to trial run sales, specific reporting items, andimportant accounting estimates used to determine the costs related to trial run sales in the notes. This provisionshall come into force as of January 1, 2022. Retroactive adjustments shall be made to trial run sales that occurbetween the beginning of the earliest period in which financial statements are presented and January 1, 2022.The Company adopts the retroactive adjustment method for accounting treatment and restates the financialstatements of comparable years. For specific impacts, see "Section X Financial Report (IV) Changes in Important
Accounting Policies and Accounting Estimates and Correction of Prior Period Errors".
② Correction of accounting errors
Shenzhen Shengbo Optoelectronics Technology Co., Ltd. (hereinafter referred to as "Shengbo Optoelectronics"), asubsidiary of the company, found significant prior period errors in previous years this year. In accordance with therelevant provisions of "Accounting Standards for Business Enterprises No. 28 - Changes in Accounting Policiesand Accounting Estimates and Correction of Errors", the company has corrected relevant error matters andrestated the 2021 consolidated financial statements. For details, see "Section X Financial Reports - (IV) Changesin Significant Accounting Policies and Accounting Estimates and Correction of Prior Period Errors".
(2)Main Financial Index by Quarters
In RMB
| First quarter | Second quarter | Third quarter | Fourth quarter | |
| Operating income | 670,551,882.04 | 774,585,427.05 | 676,901,015.17 | 715,949,940.10 |
| Net profit attributable to the shareholders of the listed company | 17,625,745.18 | 24,807,779.92 | 14,115,950.48 | 16,759,707.36 |
| Net profit after deducting of non-recurring gain/loss attributable to the shareholders of listed company | 15,102,181.63 | 19,868,793.84 | 9,730,544.28 | 9,446,537.75 |
| Net Cash flow generated by business operation | -65,966,923.49 | 145,405,158.08 | 36,463,548.86 | 374,336,767.15 |
Whether significant variances exist between the above financial index or the index with its sum and the financialindex of the quarterly report as well as semi-annual report index disclosed by the Company.
□ Yes √No
4.Share capital and shareholders
(1)Number of holders of ordinary shares and preference shares with restored voting right and Top 10 shareholders
In shares
| Total number of common shareholders at the end of the reporting period | 38,145 | Total shareholders at the end of the month from the date of disclosing the annual report | 34,9751 | The total number of preferred shareholders voting rights restored at period-end(if any) | 0 | Total preferred shareholders at the end of the month from the date of disclosing the annual report(if any) | 0 | |||||
| Shareholdings of top 10 shareholders | ||||||||||||
| Shareholders | Nature of shareholder | Proportion of shares held(%) | Number of shares held at period -end | Amount of restricted shares held | Number of share pledged/frozen | |||||||
| State of share | Amount | |||||||||||
| Shenzhen Investment Holdings Co., Ltd. | State-owned legal person | 46.21% | 234,069,436 | |||||||||
| Shenzhen Shenchao Technology Investment Co., Ltd. | State-owned Legal person | 3.18% | 16,129,032 | |||||||||
| Sun Huiming | Domestic Nature person | 1.23% | 6,208,853 | |||||||||
| Su Weipeng | Domestic Nature person | 0.71% | 3,580,000 | Pledge | 2,800,000 | |||||||
| Chen Xiaobao | Domestic Nature person | 0.60% | 3,029,484 | |||||||||
| Zhangzhou Xiaotian Venture Investment Co., Ltd. | Domestic Non- State-owned Legal person | 0.58% | 2,924,500 | |||||||||
Due to the fact that the company has not yet obtained the number of shareholders with B shares from China SecuritiesDepository and Clearing Corporation Limited Shenzhen Branch as of March 31, 2023 (the issuance of the B shareshareholder list is 3 trading days behind the issuance of the A share shareholder list), the total number ofshareholders (34975) is the sum of the number of shareholders with A shares as of March 31, 2023 (30231) andthe number of shareholders with B shares as of March 20, 2023 (4744).
| Li Zengmao | Domestic Nature person | 0.44% | 2,224,397 | |||
| Qi Jianhong | Domestic Nature person | 0.28% | 1,433,800 | |||
| Shenzhen Pengkang Pharmaceutical Co., Ltd. | Domestic Non- State-owned Legal person | 0.28% | 1,429,200 | |||
| Peng Xun | Domestic Nature person | 0.27% | 1,359,700 | |||
| Related or acting-in-concert parties among shareholders above | Among the top 10 common shareholders, Shenzhen Investment Holdings Co., Ltd. and Shenzhen Shenchao Technology Investment Co., Ltd. do not constitute a concerted party relationship. In addition, the company does not know whether there is an associated relationship among the top 10 ordinary shareholders, and between the top 10 ordinary shareholders and the top 10 shareholders, or whether they are persons taking concerted action defined in Regulations on Disclosure of Information about Shareholding of Shareholders of Listed Company. | |||||
| Explanation on shareholders participating in the margin trading business(if any ) | None | |||||
(2)Number of the preference shareholders and the shareholdings of the top 10 of them
□ Applicable √Not applicable
No preference shareholders in the reporting period
(3)Relationship between the Company and its actual controller in the form of diagram
5. Corporation bonds
□ Applicable √Not applicable
III. Significant events(I) Issue shares to purchase assets and raise supporting fundsAccording to the relevant regulations of Shenzhen Stock Exchange, upon the application of the company, theshares of the company were suspended from trading on the morning of December 19, 2022. On December 30,2022, the company held the nineteenth meeting of the Eighth Board of Directors and the thirteenth meeting of theEighth Board of Supervisors, and deliberated and passed the Proposal on the "Plan for Shenzhen Textile (Group)Co., Ltd. to Issue Shares, Pay Cash to Purchase Assets and Raise Matching Funds and Related Party Transactions"and Its Summary and other proposals related to this transaction. The company's shares resumed trading on themorning of January 3, 2022. The Company intends to purchase 100% equity of Hengmei Optoelectronics Co., Ltd.by issuing shares and paying cash, and at the same time, it plans to raise matching funds from non-public offeringof shares to no more than 35 qualified specific targets (hereinafter referred to as "this transaction"). This
Summary of 2022 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.transaction constitutes a related party transaction and is expected to constitute a major asset restructuring, but itdoes not constitute a restructuring and listing, nor will it lead to the change of the actual controller of the company.This transaction is conducive to the company's strong alliance in the polarizer industry, rapidly increasing theproduction scale of polarizers, optimizing the layout of industrial chain and deepening the depth of technicalreserves, making the company move towards a new level of high-quality development. Meanwhile, this majorasset restructuring is in line with the relevant development strategies of the country and Shenzhen, and haspositive significance for ensuring the security of the national new display supply chain.Since the disclosure of this transaction plan, the company and relevant parties have actively promoted the work ofthis transaction. As of the disclosure date of this announcement, the audit, evaluation and due diligence involvedin this transaction are still in progress. After the relevant work is completed, the company will convene theboard meeting again to review the relevant matters on this transaction, and the company will perform the relevantfollow-up approval and information disclosure procedures in accordance with relevant laws and regulations.
(II) Progress of polarizer industrialization project for ultra-large TV (Line 7)During the reporting period, technical indicators such as yield and loss rates of Line 7 improved month by month,production capacity increased, and the company's operating performance improved month by month. The mainproducts of Line 7 have been verified by customers, the order volume has gradually increased, and the unitmanufacturing cost of the products has gradually decreased; The yield of the 65 inch large size has reached theadvanced level in the industry, and the product structure has been continuously optimized, driving theimprovement of the company's operating efficiency..
(III) Regarding the investment in the construction of the RTS rear cutting production lineIn 2021, the company will increase investment in the construction of a RTS rear cutting production line, with atotal investment of no more than 30 million yuan; As of December 31, 2022, the signed contract amount was
26.17 million yuan, and the actual payment was 24.02 million yuan. Currently, production operations are beingorderly promoted based on the overall market demand and customer order release, and the production line iscontinuously improving.
(IV) The disposal of assets of the joint venture company Xieli Automobilemobile Co., Ltd.Shenzhen Xieli Automobile mobile Enterprise Co., Ltd. (hereinafter referred to as "Shenzhen Xieli") is aSino-foreign joint venture invested and established by the company and Hong Kong Xieli Maintenance Companyin 1981, with a registered capital of 3.12 million yuan, and the company holds 50% of the equity. The company'soperating period ended in 2008, and its business license was revoked in 2014. The company's main asset is realestate. The industrial and commercial license of Shenzhen Xieli was cancelled in March 2020, but there are stillthree properties under its name, the disposal of which is required to be resolved after further consultation betweenthe shareholders of both parties.On July 26, 2021, the Company filed a lawsuit with Yantian District People's Court in Shenzhen City, GuangdongProvince to revoke the cancellation of Shenzhen Xieli Automobilemobile Enterprise Co., Ltd. approved byShenzhen Administration for Market Regulation on March 9, 2020, on which the court gave a judgment onNovember 21, 2021 to revoke the cancellation of Shenzhen Xieli Automobilemobile Enterprise Co., Ltd. approvedby Shenzhen Administration for Market Regulation. On December 3 and December 6,2021, Hong Kong Xili andShenzhen Market Supervision Administration submitted appeals to the Shenzhen Intermediate People's Court,respectively. On April 18, 2022, the Company received the notice of the second trial from Shenzhen IntermediatePeople's Court. The case was heard in the second instance on April 27, 2022. The Shenzhen Intermediate People'sCourt made the judgment on June 28, 2022: 1. Revoke the administrative judgment Y0308 XC No.1883 of thePeople's Court of Yantian District, Shenzhen City, Guangdong Province (2021); II. Remand to Yantian DistrictPeople's Court, Shenzhen City, Guangdong Province for retrial. On July 22, 2022, the Company received thesummons from Yantian District People's Court, Shenzhen City, Guangdong Province, and the trial of this case isscheduled on August 25, 2022.Yantian court made the first-instance judgment on December 30, 2022, which ruled that we won the case andcancelled the administrative act of registration cancellation of Shenzhen Xieli. The third person in the original trial,Hong Kong Xieli Maintenance Company, refused to accept it and appealed to the Shenzhen Intermediate People'sCourt on January 10, 2023. Later, because Hong Kong Xieli Maintenance Company did not pay the casesettlement fee as scheduled, Shenzhen Intermediate People's Court issued (2023) the final administrative DecisionNo. 387 of Yue 03 Line and ruled that the case should be dealt with as the appellant Hong Kong Xieli
Summary of 2022 Annual Report of Shenzhen Textile (Holdings) Co., Ltd.Maintenance Company withdrew the appeal..
(V)Matters concerning waiver of preemptive right and equity transfer of holding subsidiariesThe board of shareholders of SAPO Photoelectric, a holding subsidiary of the Company, agreed that HangzhouJinhang Equity Investment Fund Partnership (Limited Partnership) would transfer its 40% equity of SAPOPhotoelectric to Hengmei Optoelectronics Co., Ltd. For details, please refer to the announcement of the Company(No.2023-01) on CNINF (http://www.cninfo.com.cn). On January 19, 2023, SAPO Photoelectric obtained theNotice of Registration issued by Shenzhen Administration for Market Regulation, and the registration proceduresfor industrial and commercial changes have been completed for this equity transfer. After this change, theCompany still holds 60% equity of SAPO Photoelectric, and Hengmei Optoelectronics holds 40% equity of SAPOPhotoelectric. This equity transfer is conducive to the synergy of the advantages of both parties in the polarizerindustry, the integration of high-quality resources of both parties, the further enhancement of the main business ofpolarizers, and the better promotion of the core competitiveness of listed companies.
(VI)About the progress of the Company and its holding subsidiaries involved in litigationIn July and August 2022, the Company and its holding subsidiary SAPO Photoelectric received the legaldocuments such as Notice of Respondence to Action, and Summon, with case numbers of (2022) Y0310 MC No.3507, No.4013 and No.4336 served by Pingshan District People's Court, Shenzhen City, Guangdong Province,and were informed that the court had accepted Hangzhou Jinhang Equity Investment Fund Partnership (LimitedPartnership) (hereinafter referred to as "Jinhang Fund") v. SAPO Photoelectric for ① dissolution dispute, ②dispute over the confirmation of the validity of company resolutions and ③ dispute over shareholders' right toknow, and the Company was informed to participate in the lawsuit as a party to the case, and SAPO Photoelectricwas informed to respond as the defendant to the case. For details, please refer to the Company's AnnouncementNo. 2022-20 and No. 2022-25 on CNINF (http://www.cninfo.com.cn).The above three cases, namely, the dispute over dissolution, the dispute over the confirmation of the validity ofcompany resolutions and the dispute over shareholders' right to know, were heard in the People's Court ofPingshan District, Shenzhen City, Guangdong Province on July 15, 2022, September 22, 2022, and September 22,2022 respectively, and no judgment has yet been made.
(VII)Progress in subsidiaries participating in the establishment of industrial fundsOn November 16, 2017, the company's controlling subsidiary SAPO Photoelectric signed the Changxing JunyingEquity Investment Partnership (Limited Partnership) Agreement with the fund manager Huizhi InvestmentManagement Co., Ltd, general partner Jinxin Investment Co., Ltd and other limited partners, and co-sponsored theestablishment of an industrial fund, focusing on the optical film industry chain related projects related to thecompany's main business, with a fund size of 50 million yuan. SAPO Photoelectric, as one of the limited partnersof the industrial fund, subscribed for a capital contribution of 28.5 million yuan.For details Juchao Website:（http://www.cninfo.com.cn. (Announcement No.2017--55).On February 10, 2018, Changxing Junying Equity Investment Partnership completed the industrial andcommercial registration and completed the private equity investment fund registration on February 8, 2018. Fordetails Juchao Website:（http://www.cninfo.com.cn. (Announcement No.2018--05).In order to optimize the strategic layout and supplement the working capital, SAPO Photoelectric and HangzhouYuanzhen Investment Management Co., Ltd. (hereinafter referred to as Yuanzhen Investment) signed the TransferAgreement on Property Share of Changxing Junying Equity Investment Partnership (Limited Partnership) on July11, 2022, and transferred the share of Changxing Fund held by SAPO Photoelectric to Yuanzhen Investment at atransaction consideration of RMB 28.5 million. After this property share transfer, the Company will withdrawfrom Changxing Fund and no longer hold the partnership share of Changxing Fund. For details, please refer to theCompany's Announcement No.2022-21 on Juchao Information Network (http://www.cninfo.com.cn).
The Board of Directors of Shenzhen Textile (Holdings) Co., Ltd.April 4, 2023