Zhejiang Dahua Technology Co., Ltd.
2019 Interim Report
August 2019
Section I Important Notes, Contents And Definitions
The Board of Directors, Board of Supervisors, Directors, Supervisors and Senior Managementof Zhejiang Dahua Technology Co., Ltd. (hereinafter referred to as the "Company") herebyguarantee that the information presented in this interim report shall be authentic, accurate andcomplete and free of any false records, misleading statements or material omissions, and they willbear joint and several liabilities for such information.
Fu Liquan, the Company's legal representative, Wei Meizhong, chief accountant, and XuQiaofen, person in charge of accounting institution (Accounting Officer) hereby declare and warrantthat the financial statements in this interim report are authentic, accurate and complete.
All directors attended the meeting of the Board of Directors for deliberation of this annualreport.
In the reporting period, there are no major changes in the risks faced by the Company, and theCompany has always been striving to identify all the risks, and actively taking the countermeasuresto avoid and lower the risks:
The Company invites each investor to carefully read the interim report and pay particularattention to the following risk factors:
1. Risk of technology upgrade
The video surveillance industry is a typical technology-intensive industry, which is changingextremely fast. The Company has always attached importance to technical innovation and R&D ofnew products, with a strong ability of continuous innovation. If the Company is unable to keep upwith development trends in the industry's technology, to pay full attention to customers' diversifiedindividual needs, and to be followed by sufficient R&D investments, it will still face the risk oflosing market competitiveness due to discontinuous innovation.
2. Risk of business model transformation
With the development of network communications, cloud computing, and big data, as well asthe upgrade of smart phones application, the business model in the IoT era may have an impact on
the traditional industry development model. If an enterprise cannot timely grasp opportunitiesbrought about by the business model transformation, it may face the risk that the original marketstructure becomes broken.
3. Risk of product information security
The Company attaches great importance to and continuously strengthens resource investmentto ensure safe and reliable operations of the security system so as to respond to the productinformation security risks on the Internet. However, there may still exist hackers, computer viruses,physical security vulnerabilities, natural disasters, accidents, power interruptions,telecommunications failures, and other terrorism or warfare events, which exert influences such assecurity vulnerabilities, system failures, or service interruptions.
4. Risk of intellectual property rights
The acceleration of the Company's globalization and self-owned brand strategy will likelybring intellectual property risks such as IP rights protection and patent infringement. Preventions ofand responses to the above risk such as rights claims or lawsuits, whether active or passive, allfeature high costs, long cycles and high uncertainty, and may bring about risks such as fluctuationsin business relations and public opinions environment, increased legal litigations and rising costs.
5. Risk of exchange rate
The Company's export transactions are mostly settled in United States Dollars ("USD"), whileoverseas sales have increased continuously. Therefore, fluctuations in the foreign exchange ratehave the potential to affect the profits of the Company.
6. Risk of decline in local fiscal spending power
At present, local fiscal revenues are declining, while the debt is relatively high. If the localfiscal paying capacity is reduced, it may lead to the slowdown in the growth of some industrydemands, extensions of project time, longer periods for companies to withdraw capital, andcustomers' payment delay.
7. Risk of international operation
The Company's products and solutions cover many overseas countries and regions.
International business operation may face trade protection, political conflict, debt problem, andlocalized operation compliance in the countries where they operate, which may bring negativeimpact on the Company's local business development.The Company plans not to distribute cash dividends, send bonus shares, and not to convertcapital reserves to share capital.
Contents
Section I Important Notes, Contents And Definitions ...... 2
Section II Company Profile and Main Financial Indicators ...... 12
Section III Corporate Business Overview ...... 15
Section IV Discussion and Analysis on Business Circumstance ...... 16
Section V Significant Events ...... 29
Section VI Changes in Shares and Information about Shareholders ...... 45
Section VII Information of Preferred Shares ...... 52
Section VIII Information about Directors, Supervisors and Senior Management ...... 53
Section IX Corporate Bonds ...... 55
Section X Financial Reports ...... 56
Section XI Documents Available for Inspection ...... 205
Definitions
| Item | Refers To | Definitions |
| Reporting Period | Refers To | From January 1, 2019 to June 30, 2019 |
| Dahua Technology | Refers To | Zhejiang Dahua Technology Co., Ltd. |
| Dahua System Engineering, System Engineering Company | Refers To | Zhejiang Dahua System Engineering Co., Ltd. |
| Dahua Vision Technology | Refers To | Zhejiang Dahua Vision Technology Co., Ltd. |
| Dahua Security Network, Operation Company | Refers To | Zhejiang Dahua Security Network Operation Service Co., Ltd. |
| Dahua Ju'an | Refers To | Zhejiang Dahua Ju'an Technology Co., Ltd. |
| Guangxi Dahua Information | Refers To | Guangxi Dahua Information Technology Co., Ltd. |
| Dahua Security | Refers To | Zhejiang Dahua Security Service Co., Ltd. |
| Guangxi Security | Refers To | Guangxi Dahua Security Service Co., Ltd. |
| Huatu Microchip | Refers To | Zhejiang Huatu Microchip Technology Co., Ltd. |
| Dahua Zhongzhi | Refers To | Guangxi Dahua Zhongzhi Technology Co., Ltd. |
| Xiaohua Technology, Hangzhou Xiaohua | Refers To | Hangzhou Xiaohua Technology CO., LTD. |
| Dahua Zhilian | Refers To | Zhejiang Dahua Zhilian Co., Ltd. |
| Tecomore Technology | Refers To | Hangzhou Tecomore Technology Co., Ltd. |
| Dahua Investment, Dahua Investment Management | Refers To | Zhejiang Dahua Investment Management Co., Ltd. |
| South North United | Refers | South North United Information Technology Co., Ltd. |
| To | ||
| Guangxi Zhicheng, Dahua Zhicheng | Refers To | Guangxi Dahua Zhicheng Co., Ltd. |
| Hangzhou Huacheng, Huacheng Network | Refers To | Hangzhou Huacheng Network Technology Co., Ltd. |
| Xinjiang Information | Refers To | Xinjiang Dahua Zhixin Information Technology Co., Ltd. |
| HuaRay Technology | Refers To | Zhejiang HuaRay Technology Co., Ltd. |
| Fuyang Hua'ao | Refers To | Hangzhou Fuyang Hua'ao Technology Co., Ltd. |
| Huafei Intelligent | Refers To | Zhejiang Huafei Intelligent Technology CO., LTD. |
| Huachuang Vision | Refers To | Zhejiang Huachuang Vision Technology Co., Ltd. |
| Guizhou Huayi | Refers To | Guizhou Huayi Shixin Technology Co., Ltd. |
| Xinjiang Dahua Information | Refers To | Xinjiang Dahua Information Technology Co., Ltd. |
| Xinjiang Intelligence | Refers To | Xinjiang Dahua Intelligence Technology Co., Ltd. |
| Guizhou Intelligence | Refers To | Guizhou Dahua Intelligence Technology Co., Ltd. |
| Xinjiang Zhihe | Refers To | Xinjiang Dahua Zhihe Information Technology Co., Ltd. |
| China Standard Intelligent Security | Refers To | China Standard Intelligent Security Technology Co., Ltd. |
| Guangxi Huacheng | Refers To | Guangxi Huacheng Technology Co., Ltd. |
| Meitan Dahua Technology | Refers To | Guizhou Meitan Dahua Information Technology Co., Ltd. |
| Inner Mongolia Zhimeng | Refers To | Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. |
| Xinjiang Zhitian | Refers To | Xinjiang Dahua Zhitian Information Technology Co., Ltd. |
| Xinjiang Xinzhi | Refers To | Xinjiang Dahua Xinzhi Information Technology Co., Ltd. |
| Xinjiang Huayue | Refers To | Xinjiang Dahua Huayue Information Technology Co., Ltd. |
| Dahua HK | Refers To | Dahua Technology (HK) Limited |
| Leapmotor Technology | Refers To | Zhejiang Leapmotor Technology Co., Ltd. |
| Leapmotor Automobile | Refers To | Leapmotor Automobile Co., Ltd. |
| Tianjin Dahua Information, Tianjin Dahua | Refers To | Tianjin Dahua Information Technology Co., Ltd. |
| Hunan Dahua Zhilong, Dahua Zhilong | Refers To | Hunan Dahua Zhilong Information Technology Co., Ltd. |
| Huaxiao Technology | Refers To | Zhejiang Huaxiao Technology Co., Ltd. |
| Vision Technology | Refers To | Zhejiang Fengshi Technology Co., Ltd. |
| Xi’an Dahua Zhilian, Xi’an Dahua | Refers To | Xi'an Dahua Zhilian Technology Co., Ltd. |
| Wuxi Ruipin | Refers To | Wuxi Dahua Ruipin Technology Co., Ltd. |
| Dahua Robot | Refers To | Zhejiang Dahua Robot Technology Co., Ltd. |
| Beijing Huayue | Refers To | Beijing Huayue Shangcheng Information Technology Service Co., Ltd. |
| Shanghai Huashang | Refers To | Shanghai Huashang Chengyue Information Technology Service Co., Ltd. |
| Dahua Jinzhi | Refers To | Zhejiang Dahua Jinzhi Technology Co., Ltd. |
| Dahua Guangxun | Refers To | Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. |
| Huajuan Technology | Refers To | Hangzhou Huajuan Technology Co., Ltd. |
| Dahua HK, Dahua Hong Kong | Refers To | Dahua Technology (HK) Limited |
| Zhoushan Operation | Refers To | Zhejiang Zhoushan Digital Development Operation Co., Ltd. |
| Dahua USA | Refers To | Dahua Technology USA Inc. |
| Dahua Europe | Refers To | Dahua Europe B.V. |
| Dahua Middle East | Refers To | Dahua Technology Middle East FZE |
| Dahua Mexico | Refers To | Dahua Technology Mexico S.A. DE C.V |
| Dahua Chile | Refers To | Dahua Technology Chile SpA |
| Dahua Malaysia | Refers To | Dahua Security Malaysia SDN. BHD. |
| Dahua Korea | Refers To | Dahua Technology Korea Company Limited |
| Dahua Indonesia | Refers To | PT. Dahua Vision Technology Indonesia |
| Dahua Colombia | Refers To | Dahua Technology Colombia S.A.S |
| Dahua Australia | Refers To | Dahua Technology Australia PTY LTD |
| Dahua Singapore | Refers To | Dahua Technology Singapore Pte. Ltd. |
| Dahua South Africa | Refers To | Dahua Technology South Africa Proprietary Limited |
| Dahua Peru | Refers To | Dahua Technology Perú S.A.C |
| Dahua Russia | Refers To | Dahua Technology Rus Limited Liability Company |
| Dahua Brazil | Refers To | DAHUA TECHNOLOGY BRASIL COM?RCIO E SERVI?OS EM SEGURAN?A ELETR?NICA LTDA |
| Dahua Canada | Refers To | Dahua Technology Canada INC. |
| Dahua Panama | Refers To | Dahua Technology Panama S.A. |
| Dahua Hungary | Refers To | Dahua Technology Hungary Kft |
| Dahua Poland | Refers To | Dahua Technology Poland Sp. z o.o. |
| Dahua Tunisia | Refers To | Dahua Technology Tunisia |
| Dahua Kenya | Refers To | Dahua Technology Kenya Limited |
| Dahua UK | Refers To | Dahua Technology UK Limited |
| Dahua Bulgaria | Refers To | Dahua Technology Bulgaria EOOD |
| Dahua Germany | Refers To | Dahua Technology GmbH |
| Dahua Serbia | Refers To | Dahua Technology SRB d.o.o. |
| Dahua India | Refers To | Dahua Technology India Private Limited |
| Dahua Turkey | Refers To | Dahua Guvenlik Teknolojileri Sanayi ve Ticaret A.S. |
| Dahua Czech | Refers To | Dahua Technology Czech s.r.o. |
| Dahua Argentina | Refers To | Dahua Argentina S.A. |
| Dahua Spain | Refers To | Dahua Iberia, S.L. |
| Dahua Kazakhstan | Refers To | Dahua Technology Kazakhstan LLP |
| Dahua Denmark | Refers To | Dahua Technology Denmark Aps. |
| Dahua France | Refers To | Dahua Technology France |
| American Lechange | Refers To | Lechange Inc. |
| Dahua Technology Holdings | Refers To | Dahua Technology Holdings Limited |
| Dahua New Zealand | Refers To | Dahua Technology New Zealand Limited |
| Dahua Netherlands | Refers To | Dahua Technology Netherlands B.V. |
| Dahua Morocco | Refers To | Dahua Technology Morocco SARL |
| Dahua Romania | Refers To | Dahua Technology S.R.L. |
| Dahua Uzbekistan | Refers To | DAHUA VISION LLC |
| Dahua Technology Italy | Refers To | Dahua Technology Italy S.R.L. |
| Dahua Lorex | Refers To | Dahua Technology Inc. |
| Dahua Bulgaria | Refers To | Dahua Technology Bulgaria EOOD |
| Dahua Sri Lanka | Refers To | Dahua Technology China (Pvt) LTD |
| Dahua Pakistan | Refers To | Dahua Technology Pakistan (private) Limited |
| Dahua Thailand | Refers To | Dahua Technology(Thailand) Co.,LTD. |
Section II Company Profile and Main Financial IndicatorsI. Corporate Information
| Stock Abbreviation | Dahua | Stock Code | 002236 |
| Stock Exchange Where the Shares of the Company are Listed | Shenzhen Stock Exchange | ||
| Company Name in Chinese | 浙江大华技术股份有限公司 | ||
| Abbr. of the Company Name in Chinese (If Any) | 大华股份 | ||
| Company Name in English (If Any) | ZHEJIANG DAHUA TECHNOLOGY CO.,LTD | ||
| Legal Representative | Fu Liquan | ||
II. Contacts and Contact Information
| Board Secretary | Securities Affairs Representative | |
| Name | Wu Jian | Lou Qiongyu |
| Address | No. 1199, Bin'an Road, Binjiang District, Hangzhou City, Zhejiang Province | No. 1199, Bin'an Road, Binjiang District, Hangzhou City, Zhejiang Province |
| Tel. | 0571-28939522 | 0571-28939522 |
| Fax | 0571-28051737 | 0571-28051737 |
| zqsw@dahuatech.com | zqsw@dahuatech.com |
III. Other Relevant Information
1. Contact information of the Company
Are there any changes in the registered address, office address, postal code, website and email of the Company during the reportingperiod
□ Applicable √ Not applicable
There are no changes in the registered address, office address, postal code, website and email of the Company during the reportingperiod. For details, refer to 2018 Annual Report.
2. Information disclosure and place of the report
Are there any changes in the information disclosure and place for report preparation during the reporting period
□ Applicable √ Not applicable
There are no changes in the newspaper designated by the Company for information disclosure, website specified by CSRC for releaseof the interim report and place for interim report preparation during the reporting period. For details, refer to 2018 Annual Report.IV. Key Accounting Data and Financial Indicators
Whether the Company requires retroactive adjustment or restatement of accounting data in prior years
□ Yes √ No
| Current Reporting Period | Corresponding Period of Last Year | YoY Change (%) | |
| Operating Revenue (RMB) | 10,806,566,370.89 | 9,814,041,352.48 | 10.11% |
| Net Profit Attributable to Shareholders of the Listed Company (RMB) | 1,238,880,948.74 | 1,081,916,886.52 | 14.51% |
| Net Profit Attributable to Shareholders of the Listed Company after Deducting Non-recurring Gains and Losses (RMB) | 1,138,651,748.03 | 1,107,484,389.00 | 2.81% |
| Net Cash Flow Generated by Operational Activities (RMB) | -870,467,092.88 | -1,096,356,837.00 | 20.60% |
| Basic Earnings per Share (RMB/Share) | 0.42 | 0.37 | 13.51% |
| Diluted Earnings per Share (RMB/Share) | 0.42 | 0.37 | 13.51% |
| Weighted Average ROE | 9.40% | 9.91% | -0.51% |
| At the End of the Current Reporting Period | End of Last Year | YoY Change (%) | |
| Total Assets (RMB) | 27,427,525,950.44 | 26,350,599,778.15 | 4.09% |
| Net Assets Attributable to Shareholders of the Listed Company (RMB) | 13,557,642,896.49 | 12,618,758,918.48 | 7.44% |
V. Differences in Accounting Data between Domestic and Overseas Accounting Standards
1. Difference in the financial report of net profits and net assets according to the disclosure of InternationalAccounting Standards and China Accounting Standards
□ Applicable √ Not applicable
There are no differences of net profits and net assets in the financial report disclosed according to the international accountingstandards and Chinese accounting standards during the reporting period.
2. Difference in the financial report of net profits and net assets according to the disclosure of OverseasAccounting Standards and China Accounting Standards
□ Applicable √ Not applicable
There are no differences of net profits and net assets in the financial reports disclosed according to the overseas accounting standards
and Chinese accounting standards during the reporting period.
VI. Items and Amounts of Non-recurring Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item Name | Amount | Note |
| Profits or Losses From Disposal of Non-Current Assets (Including the Write-Off for the Accrued Impairment of Assets) | 10,503,852.18 | |
| The Government Subsidies Included in the Current Profits and Losses (Excluding the Government Subsidies Closely Related to Regular Businesses of the Company and Issued in the Quota or Quantity Based on the National Standards | 79,439,313.69 | |
| Profits and Losses Resulting from the Changes in Fair Value for Holding Trading Financial Assets and Trading Financial Liabilities, and Investment Income from Disposal of Trading Financial Assets, Trading Financial Liabilities, and Financial Assets Available for Trading, Excluding the Effective Hedging Businesses Related to the Regular Business Operation of the Company | 30,141,194.90 | |
| Non-operating Revenue and Expenses Other Than the Above | 2,248,870.06 | |
| Other Gains and Losses Items that Fit the Definition of Non-recurring Gains and Losses | 18,436,697.18 | |
| Less: Impact of Income Tax | 3,667,332.94 | |
| Impact of Minority Equity (after tax) | 100,229,200.71 | -- |
For items defined as non-recurring gains and losses according to the No. 1 Explanatory Announcement on Information Disclosure forCompanies Offering Their Securities to Public - Non-recurring Gains and Losses, or non-recurring gains and losses items listed in thesaid document defined as recurring ones, please specify the reasons.
□ Applicable √ Not applicable
In the reporting period, the Company did not define any non-recurring gains and losses items defined and listed in the No. 1Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to Public - Non-recurring Gains andLosses, as recurring gains and losses items.
Section III Corporate Business Overview
I. The Principal Business of the Company during the Reporting PeriodThere are no significant changes in the principal business of the Company during the reporting period. For details, refer to 2018Annual Report.
II. Material Changes to Major Assets
1. Major changes in main assets
| Major Assets | Explanation of Material Changes |
| Equity Assets | No major changes. |
| Fixed Assets | No major changes. |
| Intangible Assets | No major changes. |
| Construction in Progress | Increase by 38.79% compared with the beginning of the year, mainly due to the increase in the investment of Phase II of Hangzhou Smart Manufacturing Base Project, Smart IoT solutions R&D and industrial projects. |
| Notes Receivable | Decrease by 48.79% compared with the beginning of the years, mainly due to the decrease of settlement of sales notes in this period. |
| Long-term Receivables | Increase by 41.88% compared with the beginning of the year, mainly due to the acceptance of installment payment for selling products. |
2. Major overseas assets
□ Applicable √ Not applicable
III. Core Competitiveness AnalysisThere are no significant changes in the core competitiveness of the Company during the reporting period. For details, refer to 2018Annual Report.
Section IV Discussion and Analysis on Business CircumstanceI. OverviewDuring the first half year of 2019, despite the complex environment at home and abroad, the Company has been focusing ontechnological innovation as the foundation, customer demands as the orientation and customer success as the goal. Supported by itsconstant technological innovation, extensive industry experience and wide customer coverage, the Company continuously improvesits video-centric smart IoT solutions, and proactively grasps the market and industry trends to promote stable growth of businessperformance. During the reporting period, the Company has achieved RMB 10.807 billion in operating revenue, a year-over-yearincrease of 10.11% and RMB 1.239 billion in net profits attributable to shareholders of the listed company, a year-over-year increaseof 14.51%.Main business strategies of the Company include:
1. Continuously increasing the investment in R&D, and improving the capabilities to come up with comprehensivesolutionsThe Company is committed to taking technological innovation as the core, facilitates the layout of artificial intelligence, cloudcomputing, big data, chip, machine vision, robots and other advanced technologies and continuously increases the investment inR&D. The Company gains deep insight into the industry and technology trends, constructs a differential technology system orientedtoward "Full Sensing, Full Intelligence, Full Computing and Full Ecosystem (4 Full)" and continuously improves the capability tocome up with comprehensive end-to-end solutions oriented to the pain points of customers; as well as strengthens the construction ofsoftware structuring competence and gradually establishes the operation capability for complete process from software development,sales to delivery.
2. Enhancing operation capability for value customers and improving systematic marketing ability
The Company further develops the customer interface, establishes and improves the tiered and hierarchical customermanagement strategies and refined customer management mechanisms, and enhances the operational capability for value customers.The Company focuses on the management of strategic opportunities, invests resources accurately, strengthens the planning andorganization capability of major projects and improves systematic marketing capability.
3. Further constructing the global marketing system and strengthening the global delivery and service capability
In the domestic market, the Company continuously promotes the construction of channel system and refined operation channel,establishes the tiered and hierarchical project management system and improves the project operation capability; in the overseasmarket, the Company persistently extends its global marketing network, strengthens channel extension and improves the coverage ofoverseas market and its brand awareness.
The Company constantly strengthens its end-to-end supply chain prediction capability and inventory management capability andimproves its supply capability oriented toward the global market with high efficiency and low cost. The Company deepens theintegration of organization, and establishes a systematic delivery and service capability through organization matching and servicesystem matching. The Company continues to improve the compliance operation system to support the sustainable development ofbusiness.
4. Continuously promoting systematic management reform and improving organizational capability and operationefficiency
The Company constantly carries out the systematic management reform, and improves internal management level and operationefficiency by carrying out LTC, IPD, ISD and ITR and other core business process reform projects to realize the smoothness ofend-to-end process and provide supports for subsequent high-;'.quality development.
II. Main Business AnalysisOverviewSee "I. Overview" in "Discussion and Analysis on Business Circumstance".Changes in key financial data over the corresponding period of last year
Unit: RMB
| Current Reporting Period | Corresponding Period of Last Year | YoY Change (%) | Reason of Changes | |
| Operating Revenue | 10,806,566,370.89 | 9,814,041,352.48 | 10.11% | |
| Operating Cost | 6,443,429,151.03 | 6,230,120,445.06 | 3.42% | |
| Sales Expenses | 1,539,714,255.33 | 1,252,741,900.83 | 22.91% | |
| Management Fees | 346,919,167.36 | 269,199,404.53 | 28.87% | |
| Financial Expenses | 11,045,548.40 | -22,880,395.85 | 148.28% | Mainly due to increase in exchange loss in the current period as a result of exchange rate fluctuation. |
| Income Tax Expense | 163,173,365.97 | 165,721,533.63 | -1.54% | |
| R&D Investment | 1,245,261,201.77 | 865,129,052.09 | 43.94% | Mainly due to increase in the investment in R&D |
| Net Cash Flow Generated by Operational Activities | -870,467,092.88 | -1,096,356,837.00 | 20.60% | |
| Net Cash Flow Generated by Investment Activities | -282,555,064.78 | -349,648,911.60 | 19.19% | |
| Net Cash Flow Generated by Financing Activities | 988,389,356.92 | 233,280,496.68 | 323.69% | Mainly due to the increase in bank loans in the current period |
| Net Additions to Balance of Equivalents | -157,333,633.07 | -1,197,623,717.25 | 86.86% | Mainly due to the increase in net cash flow generated by financing activities |
Significant changes in the profit structure or profit source of the Company in the reporting period
□ Applicable √ Not applicable
No significant changes in the profit structure or profit source of the Company in the reporting periodOperating income structure
Unit: RMB
| Current Reporting Period | Corresponding Period of Last Year | YoY Change (%) | |||
| Amount | Proportion to Operating Revenue | Amount | Proportion to Operating Revenue | ||
| Total Operating | 10,806,566,370.89 | 100% | 9,814,041,352.48 | 100% | 10.11% |
| Revenue | |||||
| Classified by Industry | |||||
| Security Industry | 10,806,566,370.89 | 100.00% | 9,814,041,352.48 | 100.00% | 10.11% |
| Classified by Product | |||||
| Solutions | 5,626,141,239.99 | 52.06% | 5,018,508,530.50 | 51.13% | 12.11% |
| Product | 4,537,889,480.14 | 41.99% | 4,054,905,104.84 | 41.32% | 11.91% |
| Others | 642,535,650.76 | 5.95% | 740,627,717.14 | 7.55% | -13.24% |
| Classified by Region | |||||
| Domestic | 7,087,773,045.42 | 65.59% | 6,375,294,969.60 | 64.96% | 11.18% |
| Overseas | 3,718,793,325.47 | 34.41% | 3,438,746,382.88 | 35.04% | 8.14% |
Industry, product, or region that accounts for over 10% of the Company's operating income or profit
√ Applicable □ Not applicable
Unit: RMB
| Operating Revenue | Operating Cost | Gross Profit Margin | Increase or Decrease of Operating Revenue over the Corresponding Period of the Last Year | Increase or Decrease of Operating Cost over the Corresponding Period of the Last Year | Increase or Decrease of Gross Profit over the Corresponding Period of the Last Year | |
| Classified by Industry | ||||||
| Security Industry | 10,806,566,370.89 | 6,443,429,151.03 | 40.37% | 10.11% | 3.42% | 3.85% |
| Classified by Product | ||||||
| Solutions | 5,626,141,239.99 | 3,144,638,108.68 | 44.11% | 12.11% | 8.00% | 2.13% |
| Product | 4,537,889,480.14 | 2,713,726,371.28 | 40.20% | 11.91% | 4.22% | 4.41% |
| Classified by Region | ||||||
| Domestic | 7,087,773,045.42 | 4,432,123,646.82 | 37.47% | 11.18% | 9.38% | 1.03% |
| Overseas | 3,718,793,325.47 | 2,011,305,504.21 | 45.92% | 8.14% | -7.66% | 9.26% |
When the statistical caliber of the Company's main business data is adjusted in the reporting period, the Company's main businessdata should be subject to the one after the statistical caliber at the end of the reporting period is adjusted in the most recent year.
□ Applicable √ Not applicable
Reasons for over 30% changes in related data on year-on-year basis
□ Applicable √ Not applicable
III. Non-main Business Analysis
□ Applicable √ Not applicable
IV. Analysis of Assets and Liabilities
1. Significant changes in assets composition
Unit: RMB
| At the End of the Current Reporting Period | At the End of the Corresponding Period of Last Year | Proportion Change | Note on Significant Changes | |||
| Amount | Proportion to Total Assets | Amount | Proportion to Total Assets | |||
| Cash and Bank Balances | 4,201,568,114.35 | 15.32% | 4,160,153,847.06 | 15.79% | -0.47% | No Significant Change |
| Accounts Receivable | 11,134,944,437.85 | 40.60% | 10,191,372,777.38 | 38.68% | 1.92% | No Significant Change |
| Inventory | 3,358,049,330.64 | 12.24% | 3,035,579,709.14 | 11.52% | 0.72% | No Significant Change |
| Investment Property | 344,460,740.53 | 1.26% | 346,831,376.55 | 1.32% | -0.06% | No Significant Change |
| Long-term Equity Investment | 165,358,482.24 | 0.60% | 185,872,021.58 | 0.71% | -0.11% | No Significant Change |
| Fixed Assets | 1,386,805,962.53 | 5.06% | 1,407,471,330.83 | 5.34% | -0.28% | No Significant Change |
| Construction in Progress | 313,934,611.81 | 1.14% | 226,191,587.11 | 0.86% | 0.28% | Mainly due to the increase in the investment of Phase II of Hangzhou Smart Manufacturing Base Project, Smart IoT solutions R&D and industrial projects |
| Short-term Loans | 3,084,859,034.59 | 11.25% | 1,851,709,561.83 | 7.03% | 4.22% | Mainly due to the increase in demands for short-term capital turnover |
| Long-term Loans | 154,000,000.00 | 0.56% | 179,000,000.00 | 0.68% | -0.12% | No Significant Change |
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
| Item Name | At the Beginning of the Reporting Period | Changes in Fair Value Gains and Losses in the Current Period | Cumulative Fair Value Changes in Equity | Impairment Loss of the Reporting Period | Purchase Amount of the Reporting Period | Sales Amount of the Reporting | At the End of the Reporting Period |
| Period | |||||||
| Financial Assets | |||||||
| 1. Trading Financial Assets (excluding Derivative Financial Assets) | |||||||
| 2. Derivative Financial Assets | 7,056,942.13 | 7,056,942.13 | |||||
| 3. Other Debt Investments | |||||||
| 4. Other Equity Instrument Investments | |||||||
| 5. Other Non-current Financial Assets | 82,970,227.00 | 1,000,000.00 | 83,970,227.00 | ||||
| Subtotal of Financial Assets | 82,970,227.00 | 7,056,942.13 | 1,000,000.00 | 91,027,169.13 | |||
| Investment Property | |||||||
| Productive Biological Assets | |||||||
| Others | |||||||
| Total | 82,970,227.00 | 7,056,942.13 | 1,000,000.00 | 91,027,169.13 | |||
| Financial Liabilities | 38,602,602.30 | 38,602,602.30 | 0 | ||||
Are there any significant changes in the measurement attributes of the company's main assets during the reporting period?
□ Yes √ No
3. Restrictions on asset rights as of the end of the reporting period
As of June 30, 2019, the Company pledged monetary funds of RMB 660,602,442.92 for bank borrowings and issuance of bankacceptance bill and letters of guarantee; pledged notes receivable of RMB 1,127,284,255.91 for issuance of bank acceptance bill;pledged long-term accounts receivable (including those due within one year) amounting of RMB 314,646,279.46 for bankborrowings.V. Investment analysis
1. Overview
√ Applicable □ Not applicable
| Investment during the Reporting Period (RMB) | Investment over the Corresponding Period of Last Year | Fluctuation (%) |
| 168,115,641.06 | 433,638,796.38 | -61.23% |
2. Significant equity investments acquired during the reporting period
□ Applicable √ Not applicable
3. Major non-equity investments underway during the reporting period
√ Applicable □ Not applicable
Unit: RMB
| Project Name | Investment Method | Fixed Assets Investment or not | Project industry | Investment during the Current Reporting Period | Cumulative Actual Investment by the End of Reporting Period | Source of funds | Project Progress | Anticipated Income | Cumulative Income by the End of the Reporting Period | Reasons for Unreached Planned Progress and Anticipated Income | Date of Disclosure (If Any) | Disclosure Index (If Any) |
| Phase I technological innovation project and Phase II construct | Self-construction | Yes | Video surveillance industry | 91,881,069.89 | 221,502,729.66 | Self-raised funds | 13.12% | N/A | August 17, 2019 | Juchao Information Website http://cninfo.com.cn/ |
| ion project of Hangzhou Smart Manufacturing Base | ||||||||||||
| Xi’an R&D Center Construction Project | Self-construction | Yes | Video surveillance industry | 5,042,764.00 | 40,702,970.46 | Self-raised funds | 3.48% | N/A | August 17, 2019 | Juchao Information Website http://cninfo.com.cn/ | ||
| Smart IoT solutions R&D and industrial projects | Self-construction | Yes | Video surveillance industry | 22,894,574.74 | 133,077,812.18 | Self-raised funds | 8.20% | N/A | August 17, 2019 | Juchao Information Website http://cninfo.com.cn/ | ||
| Total | -- | -- | -- | 119,818,408.63 | 395,283,512.30 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
4. Financial assets at fair value
√ Applicable □ Not applicable
Unit: RMB
| Asset Class | Initial Investment Cost | Changes in Fair Value Gains and Losses in the Current Period | Cumulative Fair Value Changes in Equity | Amount Purchased During the Reporting Period | Amount Sold During the Reporting Period | Cumulative Investment Income | Amount at the End of the Period | Capital Source |
| Financial derivative instruments | 45,449,188.16 | -26,055,180.12 | 343,735,000.00 | Equity Fund Capital | ||||
| Other non-current financial assets | 82,970,227.00 | 1,000,000.00 | 83,970,227.00 | Equity Fund Capital | ||||
| Total | 82,970,227.00 | 45,449,188.16 | 0.00 | 1,000,000.00 | 0.00 | -26,055,180.12 | 427,705,227.00 | -- |
5. Securities investments
□ Applicable √ Not applicable
No such case as securities investment during the reporting period.
6. Derivatives investments
√ Applicable □ Not applicable
Unit: ten thousand RMB
| Name of the Operator of Derivative Investment | Association | Affiliated Transaction or Not | Type of Derivative Investment | Initial Amount of Derivative Investment | Starting Date | Expiry Date | Opening Investment Amount | Provision for Impairment Accrued (If Any) | Closing Investment Amount | Ratio of Closing Investment Amount over the Company's Closing Net Asset at the End of the Reporting Period | Actual Amount of Gain or Loss during the Reporting Period |
| Bank | Non-associated | No | Exchange contract | 0 | May 29, 2018 | September 16, 2019 | 72,063.6 | 34,373.5 | 2.54% | 1,939.4 | |
| Total | 0 | -- | -- | 72,063.6 | 34,373.5 | 2.54% | 1,939.4 | ||||
| Source of derivative investment fund | Equity Fund | ||||||||||
| Legal Actions (If Applicable) | N/A | ||||||||||
| Disclosure Date of Derivative Investment Approval Announcement by Board of Directors (If Any) | May 9, 2018 | ||||||||||
| March 19, 2019 | |||||||||||
| Disclosure Date of Derivative Investment Approval Announcement by Board of Shareholders (If Any) | May 29, 2018 | ||||||||||
| April 10, 2019 | |||||||||||
| Analysis of Derivatives Position Risk and Control Measure Explanation during the Reporting Period (Including but Not Limited to Market Risk, Liquidity Risk, Credit Risk, Operation Risk, Legal Risk and so on) | Please see Announcement on Adjusting Foreign Exchange Hedging Transactions (announcement No.: 2018-040) disclosed on May 9, 2018, and Announcement on Carrying Out Foreign Exchange Hedging Transactions (announcement No.: 2019-010) disclosed on March 19, 2019 for details of risk analysis and control measures | ||||||||||
| As for Variations in Market Prices or Fair Values of the Invested Derivatives during | The Company’s accounting of derivatives’ fair value is mainly based on the unexpired future foreign exchange settlement contract between the Company and the bank during | ||||||||||
| the Reporting Period, Detailed Method Used and Related Presumptions and Indicator Settings Should Be Disclosed in the Analysis of Fair Value of Derivatives | the reporting period and the transactional financial assets or Transactional Financial Liabilities are confirmed by the difference between the closing contract price and future foreign exchange rate. |
| Is There Any Material Change in Accounting Polices and Specific Principles of Accounting Policies for the Company's Derivatives during the Reporting Period Compared with the Previous Reporting Period | N/A |
| Independent Director’s Opinion of the Company's Derivative Investment and Risk Control | N/A |
7. Use of raised funds
□ Applicable √ Not applicable
No use of funds in the reporting period of the Company
8. Significant non-fundraising investment during the reporting period
□ Applicable √ Not applicable
There are no significant non-fundraising investment projects during the reporting period
VI. Major Assets and Equity Sales
1. Major assets sales
□ Applicable √ Not applicable
No major assets sales in the reporting period of the Company
2. Major equity sales
□ Applicable √ Not applicable
VII. Analysis of Major Subsidiaries and Investees
√ Applicable □ Not applicable
Major subsidiaries and joint-stock companies with a net profit impact of over 10%.
Unit: RMB
| Company Name | Company Type | Main Business | Registered Capital | Total Assets | Net Assets | Operating Revenue | Operating Profit | Net Profit |
| Zhejiang Dahua System Engineering Co., Ltd. | Subsidiary Company | The development, production, installation and sales of electronic and communication products; the design, construction and installation of computer system integration and automated control engineering | 500,000,000.00 | 3,731,768,176.23 | 1,211,740,026.95 | 597,695,831.42 | 39,617,163.97 | 25,241,167.98 |
| Zhejiang Dahua Vision Technology Co., Ltd. | Subsidiary Company | The development, sales, and technical services related to computer software, as well as the design, development, production and sales of security equipment, electronic products and communications products | 646,810,000.00 | 17,092,368,395.54 | 1,027,834,040.33 | 8,002,043,279.73 | 21,717,612.72 | 17,785,796.20 |
| Zhejiang Dahua Zhilian Co., Ltd. | Subsidiary Company | Production and sales of electronic products and auxiliary equipment; | 1,110,000,000.00 | 4,973,473,917.23 | 1,051,985,336.72 | 1,851,529,943.89 | 56,203,379.91 | 42,284,567.30 |
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
technologicaldevelopment,technicalconsultationand services,achievementtransference ofcomputersoftware,electronicproducts,communications products,and digitalsecurityproducts;self-ownedhouse lease;cateringservice;import andexport ofgoods.
Company Name
| Company Name | Method of Acquisition and Disposal of Subsidiaries during the Reporting Period | Impact on Overall Production Management and Performance |
| Wuxi Dahua Ruide Electronic Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Hunan Dahua System Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Dahua Zhongcheng (Beijing) Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Dahua Italy S.R.L. | Deregistration | No significant impact on overall production, operation and performance |
| Zhejiang Zhoushan Digital Development Operation Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| China Standard Intelligent Security Technology Co., Ltd. | Equity transfer | No significant impact on overall production, operation and performance |
Major holding companies and joint stock companies
VIII. The structured entity controlled by the Company
□ Applicable √ Not applicable
IX. Estimation of the Company’s Business Performance from January 1
st
2019 to September
th2019Estimation of Company’s Business Performance from January 1
st2019 to September 30
th2019: net profits attributable toshareholders of the listed company are positive and they are not returning to profitability.
| Variation in Net Profits Attributable to Shareholders of the Company from January 1st 2019 to September 30th 2019 | 10.00% | to | 25.00% |
| Variation Scope in Net Profits Attributable to Shareholders of the Company (Ten Thousand RMB) from January 1st 2019 to September 30th 2019 | 172,004.95 | to | 195,460.17 |
| Net Profits Attributable to Shareholders of the Company (Ten Thousand RMB) from January 1st 2018 to September 30th 2018 | 156,368.14 | ||
| Reasons for Changes in Performance | With the Company's sales and operation revenue growing, it is forecasted that the net profits attributable to the owner of the parent company increase by 10%-25% compared with the corresponding period of last year. | ||
X. Risks of the Company and Risk Response SolutionsIn the reporting period, there are no major changes in the risks faced by the Company, and the Company has always beenstriving to identify all the risks, and actively taking the countermeasures to avoid and lower the risks:
1. Risk of technology upgrade: The video surveillance industry is a typical technology-intensive industry, which is changingextremely fast. If the Company is unable to keep up with development trends in the industry's technology, to pay full attention tocustomers' diversified individual needs, and to be followed by sufficient R&D investments, it will still face the risk of losing marketcompetitiveness due to discontinuous innovation. The Company continuously enhances researches on core technologies in AI, videocloud, chip design and other fields by enhancing R&D investment, reserves product, technology, management and talent resources togear to the broader market in the future, thus realizing sustained and steady development of the Company's businesses.
2. Risk of business model transformation: With the development of network communications, cloud computing, and big data, aswell as the popularity of smart phones, the business model in the IoT era may have an impact on the traditional industry developmentmodel. If an enterprise cannot timely grasp opportunities brought about by the business model transformation, it may face the riskthat the original market structure becomes broken. The Company pays constant attention to and studies the significant changes in theglobal economy, industry and technological fields, analyzes the development logics of the industry, continuously integrates theevolution and video technologies in the global security industry and IoT industry with the information communication technologiesand digital technologies, pre-judges diversification and uncertainty of customers' demands, consolidates the original advantagemarkets, actively explores and conducts experiments on new businesses and new business models, and makes layouts in businessesand technologies.
3. Risk of product information security: The Company attaches great importance to and continuously strengthens resourceinvestment to ensure safe and reliable operations of the security system so as to respond to the product information security risks onthe Internet. However, there may still exist hackers, computer viruses, physical security vulnerabilities, natural disasters, accidents,
power interruptions, telecommunications failures, and other terrorism or warfare events, which exert influences such as securityvulnerabilities, system failures, or service interruptions. The Company has set up a network security committee and a professionalnetwork security team as well as developed product security programs at the company level, ensuring safety across the whole processincluding demand, design, coding and testing. At the same time, actively carry out technical exchanges and cooperation with externalmainstream security manufacturers, security evaluation institutions and corresponding industry security associations to ensure theprovision of security products and solutions for customers.
4. Risk of intellectual property rights: The acceleration of the Company's globalization and self-owned brand strategy will likelybring intellectual property risks such as IP rights protection and patent infringement, and may bring risks of business relationship orpublic opinion environment fluctuations, increase of legal proceedings, rise of expenses and costs etc. The Company attaches greatimportance to technical innovation and has established the mechanisms for protection and management of innovation achievements,private brands, trade secrets and other intangible assets to constantly concentrate advantageous intellectual property right assets;established the system for compliance and risk control of the intellectual property rights to constantly enhance the Company's abilityin understanding and grasping the intellectual property right laws and regulations and administrative judicial environments in theregion where the Company's businesses are located.
5. Risk of exchange rate: The Company's export transactions are mostly settled in United States Dollars ("USD"), whileoverseas sales have increased continuously. Therefore, fluctuations in the foreign exchange rate have the potential to affect the profitsof the Company. As export transactions are mostly settled in United States Dollars ("USD"), the company hedges against and avoidsexchange rate risks through centralized management of foreign exchange funds, procurement payment hedging and other approaches.
6. Risk of decline in local fiscal spending power: At present, local fiscal earnings are declining, while debt is relatively high. Ifthe local fiscal spending power falls, it may lead to a slowdown in the growth of industry demand, extensions to project time, longperiods needed for companies to withdraw capital, and delays in customer' payments. The Company continuously improves internalcontrol system, optimizes project review methods, and reduces the risks of delay in payment by prudently selecting local engineeringprojects, systematically evaluating the project risks and reasonably conducting risk management and control.
7. Risk of international operation: The Company's products and solutions cover over one hundred overseas countries and regions.International business operation may face risks of trade protection in the countries and regions where they operate, which may bringnegative impact on the Company's local business development. The Company actively prevents and deals with internationaloperation risks, establishes overseas compliance and risk control system and continuously advances understanding and adaptability oflaws and regulations as well as political and economic environment in the regions where the Company’s business is involved.
Section V Significant Events
I. Annual General Meetings and Extraordinary General Meetings Convened during theReporting Period
1. The shareholders' meetings for this reporting period
| Meeting | Nature | Proportion of Participating Investors | Convened Date | Date of Disclosure | Disclosure Index |
| 2018 Annual General Meeting | Annual General Meeting | 48.60% | April 09, 2019 | April 10, 2019 | Juchao Information Website http://www.cninfo.com.cn/ |
| First Extraordinary General Meeting in 2019 | Extraordinary General Meeting | 48.29% | June 05, 2019 | June 06, 2019 | Juchao Information Website http://www.cninfo.com.cn/ |
2. Convening of the interim shareholders' general meetings upon request of the preferred stockholderswhose voting rights are restored
□ Applicable √ Not applicable
II. Conditions of Profit Distribution or Capitalization of Capital Reserves during theReporting Period
□ Applicable √ Not applicable
The Company plans not to distribute cash dividends, send bonus shares, and not to convert capital reserves to share capital.
III. Complete and Incomplete Commitments of the Company and Its Actual Controller,Shareholders, Related parties, Acquirers, and Other Related Parties by the End of theReporting Period
√ Applicable □ Not applicable
| Commitments | Giver of Commitments | Commitments Type | Details | Time | Term | Performance |
| Commitments Made during Initial | Fu Liquan, Zhu | Commit | The number of shares transferred each year during his/her term of service shall not exceed 25 percent of the total | July 15, 2007 | Long-term | As of the disclosure |
| Public Offerings or Refinancing | Jiangming, Chen Ailing, Wu Jun | ment on restricted shares | number of shares he/she holds in the Company; he/she shall not transfer his/her shares in the Company within half a year after he/she leaves the Company; within the next twelve months, the number of shares sold through the stock exchange listing transactions shall not exceed 50% of the total shares he/she holds. | date of this announcement, the aforementioned commitments are still in strict execution. | ||
| Other Commitments to Minority Shareholders of the Company | Fu Liquan, Chen Ailing | Commitment on horizontal competition | (1) He/she will not directly engage in operational activities that constitute horizontal competition with the stock company's business; (2) for companies he/she held or indirectly held, he/she will fulfill the obligations under this commitment through agencies and personnel (including but not limited to directors and managers); (3) if the stock company further expands its range of products and business scope, he/she and the company held by him/her will not compete with the expanded range of products or businesses of the stock company. | June 30, 2007 | Long-term | As of the disclosure date of this announcement, the aforementioned commitments are still in strict execution. |
| Whether the Commitment Is Fulfilled on Time | Yes | |||||
IV. Engagement and Dismissal of the CPA FirmWhether the interim report has been audited
□ Yes √ No
The interim report of the Company has not been audited.
V. Explanation Given by the Board of Directors and Supervisory Committee Regarding the“Non-standard Auditor’s Report” Issued by the CPA Firm for the Reporting Period
□ Applicable √ Not applicable
VI. Explanation Given by the Board of Directors Regarding the “Non-standard Auditor’sReport” Issued by the CPA Firm for the Prior Year
□ Applicable √ Not applicable
VII. Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such case as bankruptcy and reorganization related event during the reporting period.
VIII. Material Litigation and ArbitrationMajor lawsuits and arbitrations
□ Applicable √ Not applicable
During this reporting period, the Company has no major lawsuits or arbitrations. Other lawsuits that do not meet the criteria ofdisclosure for major lawsuits are as follows:
Zhejiang Dahua Technology Co., Ltd. signed a sales contract with Hangzhou Sailidi Import & Export Co., Ltd. (hereinafterreferred to as "Sailidi"), where Sailidi purchased products from Dahua Technology. As at June 30, 2019, the remaining amount wasnot paid. In August 2018, Dahua Technology filed a lawsuit to the People's Court of Binjiang District in Hangzhou, requesting SailidiCompany to pay the remaining amount and the liquidated damages for overdue payment and interests. In September 2018, DahuaTechnology applied to the People's Court of Binjiang District for property preservation, requesting to freeze the bank deposit ofRMB50 millions of Sailidi Company's legal representative Zhu Yuequan, or to seal up or seize property of corresponding value andprovide guarantee. The People's Court of Binjiang District granted the application for property preservation. The Binjiang DistrictPeople's Court of Hangzhou conducted a public trial on January 11, 2019, and issued (2018) Zhejiang 0108 Min Chu No.4451judgment on January 17, 2019, requiring Sailidi to pay Dahua Technology the overdue amount RMB 27,878,975.60 and interest lossRMB1,021,088.16 (temporarily calculated until December 31, 2018) upon the judgment took effect. Zhu Yuequan assumed the jointand several liabilities. Until the financial reporting date, this case was still in the execution stage. According to the inventory ofseized property, the Company's estimated recoverable amount is RMB10 million. The net realizable value of other seized property isof significant uncertainty, thus the Company makes provision for bad debts correspondingly based on the difference between thepresent value of estimated future cash flow and its book value.In July 2019, Salidi and Zhu Yuequan applied for a retrial to the Hangzhou Intermediate People’s Court ( Intermediate People’sCourt). The Company received the Notice of Acceptance of Civil Application for Retrial from the Intermediate Peoples’ Court onAugust 2, 2019, and the Intermediate People’s Court decided to file a case for review. The Company has submitted the answer brieffor retrial.IX. Media Queries
□ Applicable √ Not applicable
No such case as common challenge from media during the reporting period.
X. Punishments and Rectifications
□ Applicable √ Not applicable
No such case as penalty and rectification during the reporting period.XI. Integrity of the Company and Its Controlling Shareholder and Actual Controllers
□ Applicable √ Not applicable
XII. Implementation of the Company’s Equity Incentive Plan, Employee Stock Incentive Planor Other Incentive Plans
√ Applicable □ Not applicable
1. On May 16, 2017, the Company's 2016 Annual General Meeting of Shareholders reviewed and approved the Zhejiang Dahua
Technology Co., Ltd. Phase III Employee Stock Ownership Plan (Draft) and its summary, and decided to implement the Phase IIIEmployee Stock Ownership Plan. On June 1, 2017, the Company's Phase III employee stock ownership plan completed the stockpurchase through the "DAHUA No. 3 Directional Asset Management Plan of Caitong Securities Asset Management", with anaverage purchase price of RMB16.83 per share and total purchase amount of 47,000,000 shares.On November 12, 2018, the Company's 18th meeting of the 6th Board of Directors reviewed and approved the SuggestiveProposal on Extension of the Impending Expiration of the Company's Phase III Employee Stock Ownership Plan Duration. TheBoard of Directors agreed to extend the Company's Phase III employee stock ownership plan for one year according to the votingresults of the shareholders' meeting. That is, the duration was extended for one additional year on the basis of the original terminationdate, until May 15, 2020.
2. On December 27, 2018, the Company’s 5th extraordinary shareholders meeting in 2018 reviewed and approved the Proposalon Repurchase and Cancellation of Some Granted but Unlocked Restricted Stocks and agreed to buy back and cancel the 44,200restricted shares which are granted but not unlocked and held by the incentive targets who have left the Company and one deceasedpersonnel. The repurchase price was RMB 8.17 per share, and the registered capital was reduced accordingly. The above repurchaseand cancellation was completed on March 4, 2019 and the change of industrial and commercial registration was completed on April15, 2019.XIII. Significant Related-Party Transactions
1. Related transactions relevant to daily operations
□ Applicable √ Not applicable
No such case as significant related-party transactions connected with daily operations.
2. Related transactions in acquisition or sale of assets or equities
□ Applicable √ Not applicable
No such case as related-party transactions arising from the acquisition or sale of assets or equity.
3. Significant related-party transactions arising from joint investments on external parties
□ Applicable √ Not applicable
No such case as significant related-party transactions arising form joint investments on external parties.
4. Related-party creditor's rights and debts
□ Applicable √ Not applicable
No such case as significant related credits and debts during the reporting period.
5. Other major related transactions
□ Applicable √ Not applicable
No other major related transactions during the reporting period.
XIV. Significant Contracts and Their Execution
1. Matters on trusteeship, contracting, and leasehold
(1) Matters on trusteeship
□ Applicable √ Not applicable
No such case as custody during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No such case as contracting during the reporting period.
(3) Leasing
√ Applicable □ Not applicable
Explanations on leasesDuring the reporting period, some of the Company's own real estate properties were used for rental, and the leased real estateproperty was used for office, warehouse and production workshops. There were no other major real estate leasing.Cases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reporting period
□ Applicable √ Not applicable
No such leases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reportingperiod.
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: ten thousand RMB
| External Guarantees from the Company (Excluding Guarantees to the Subsidiaries) | ||||||||
| Guaranteed Party | Announcement Date of Disclosure of the Guarantee Cap | Guarantee Amount | Actual Occurrence Date (Date of Agreement Signing) | Actual Guarantee Amount | Type of Guarantee | Term of Guarantee | Due or Not | Guarantee for Related Parties or Not |
| Total Amount of External Guarantees Approved during the | Total Amount of External guarantees | |||||||
| Reporting Period (A1) | Actually Occurred during the Reporting Period (A2) | |||||||||
| Total Amount of External Guarantees Approved by the End of the Reporting Period (A3) | Total Balance of External Guarantees Actually Paid at the End of the Reporting Period (A4) | |||||||||
| Company's Guarantees to Subsidiaries | ||||||||||
| Guaranteed Party | Announcement Date of Disclosure of the Guarantee Cap | Guarantee Amount | Actual Occurrence Date (Date of Agreement Signing) | Actual Guarantee Amount | Type of Guarantee | Term of Guarantee | Due or Not | Guarantee for Related Parties or Not | ||
| Zhejiang Dahua Vision Technology Co., Ltd. | May 18, 2019 | 750,000.00 | January 15, 2018 | 11,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | Yes | ||
| May 4, 2018 | 30,000.00 | Joint liability guarantee | May 4, 2018 - April 16, 2019 | Yes | Yes | |||||
| August 2, 2018 | 2,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes | |||||
| June 6, 2016 | 29,000.00 | Joint liability guarantee | June 6, 2016-January 1, 2020 | No | Yes | |||||
| August 10, 2017 | 60,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||||
| October 13，2017 | 22,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||||
| March 27, 2018 | 50,000.00 | Joint liability | March 20, 2018 - March 19,2021 | No | Yes | |||||
| guarantee | |||||
| April 13, 2018 | 24,000.00 | Joint liability guarantee | April 13, 2018 - April 12, 2021 | No | Yes |
| July 25, 2018 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| August 1, 2018 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| August 21, 2018 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| September 3, 2018 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| September 21, 2018 | 27,498.80 (40 million US dollars) | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| November 26,2018 | 22,000.00 | Joint liability guarantee | November 26, 2018 - November 26, 2020 | No | Yes |
| January 3, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| January 17, 2019 | 30,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| March 20, 2019 | 10,312.05 (15 million US dollars) | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| March 21, 2019 | 20,000.00 | Joint liability | Three years after the maturity of the | No | Yes |
| guarantee | debts in the master contract | |||||||
| April 18, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| April 28, 2019 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| May 10, 2019 | 65,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| May 13, 2019 | 23,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| June 26, 2019 | 18,000.00 | Joint liability guarantee | June 26, 2019 - June 25, 2022 | No | Yes | |||
| Zhejiang Dahua Zhilian Co., Ltd. | May 18, 2019 | 600,000.00 | June 6, 2016 | 20,000.00 | Joint liability guarantee | June 6, 2016 - June 30, 2020 | No | Yes |
| September 1, 2018 | 50,000.00 | Joint liability guarantee | September 1, 2018 - September 1, 2020 | No | Yes | |||
| October 12,2018 | 30,000.00 | Joint liability guarantee | October 12, 2018 - October 12, 2020 | No | Yes | |||
| April 9, 2019 | 10,000.00 | Joint liability guarantee | One year after the maturity of the debts in the master contract | No | Yes | |||
| April 25, 2019 | 10,000.00 | Joint liability guarantee | One year after the maturity of the debts in the master contract | No | Yes | |||
| May 13, 2019 | 6,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master | No | Yes |
| contract | ||||||||
| Zhejiang Dahua System Engineering Co., Ltd. | May 18, 2019 | 50,000.00 | June 6, 2016 | 10,000.00 | Joint liability guarantee | June 6, 2016 - March 30, 2020 | No | Yes |
| October 10,2017 | 6,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| May 10, 2019 | 10,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| May 13, 2019 | 4,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| Dahua Technology (HK) Limited | May 18, 2019 | 200,000.00 | April 9, 2018 | 20,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | Yes |
| December 15, 2017 | 34,373.50 (50 million US dollars) | Joint liability guarantee | December 15, 2017 - December 15, 2020 | No | Yes | |||
| Dahua Technology USA Inc. | May 18, 2019 | 1,000.00 | March 4, 2019 | 206.24 (300 thousand US dollars) | Joint liability guarantee | March 9, 2019 - March 9, 2020 | No | Yes |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V | May 18, 2019 | 10,000.00 | March 26, 2019 | 2,150.34 (MXN 59.9731 million) | Joint liability guarantee | March 26, 2019 - March 26, 2020 | No | Yes |
| April 9, 2019 | 6,451.01 (MXN 179.9794 million) | Joint liability guarantee | April 9, 2019 - April 9, 2020 | No | Yes | |||
| Guangxi Dahua Information Technology Co., Ltd. | May 18, 2019 | 10,000.00 | No such case during the reporting period | |||||
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | May 18, 2019 | 100,000.00 | No such case during the reporting period | |||||
| Xi'an Dahua Zhilian | May 18, | 100,000.00 | No such case during the reporting period | |||||
| Technology Co., Ltd. | 2019 | ||
| Zhejiang Huafei Intelligent Technology CO., LTD. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Zhejiang Huachuang Vision Technology Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Zhejiang HuaRay Technology Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Hangzhou Xiaohua Technology CO., LTD. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Zhejiang Dahua Security Service Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Hangzhou Tecomore Technology Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Hangzhou Huacheng Network Technology Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Wuxi Dahua Ruipin Technology Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Zhejiang Huaxiao Technology Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Zhejiang Dahua Investment Management Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| Zhejiang Dahua Robot Technology Co., Ltd. | May 18, 2019 | 5,000.00 | No such case during the reporting period |
| DAHUA EUROPE B.V. | May 18, 2019 | 10,000.00 | No such case during the reporting period |
| Dahua Technology Singapore Pte.Ltd. | May 18, 2019 | 500.00 | No such case during the reporting period |
| Dahua Technology UK Limited | May 18, 2019 | 2,000.00 | No such case during the reporting period |
| Dahua Technology Poland sp.zo.o. | May 18, 2019 | 1,600.00 | No such case during the reporting period |
| Dahua Technology Hungary Kft | May 18, 2019 | 1,600.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY IND PVT LTD | May 18, 2019 | 3,500.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY BRASIL COMERCIO SERV EM SEGURANCA ELETRONICA LTDA | May 18, 2019 | 1,000.00 | No such case during the reporting period |
| DAHUA ITALY S.R.L. | May 18, 2019 | 350.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY MIDDLE EAST FZE | May 18, 2019 | 350.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PER? S.A.C | May 18, 2019 | 500.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY RUS LIMITED LIABILITY COMPANY | May 18, 2019 | 1,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY AUSTRALIA PTY LTD | May 18, 2019 | 500.00 | No such case during the reporting period |
| Dahua Technology South Africa Proprietary Limited | May 18, 2019 | 500.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY CANADA INC. | May 18, 2019 | 100.00 | No such case during the reporting period |
| DAHUA GUVENLIK | May 18, | 600.00 | No such case during the reporting period |
| TEKNOLOJILERI SANAYI VE TICARET ANONIM SIRKETI | 2019 | ||
| Dahua Technology SRB d.o.o. | May 18, 2019 | 300.00 | No such case during the reporting period |
| Dahua Technology Bulgaria EOOD | May 18, 2019 | 100.00 | No such case during the reporting period |
| DAHUA IBERIA, S.L. | May 18, 2019 | 200.00 | No such case during the reporting period |
| DAHUA SECURITY MALAYSIA SDN. BHD. | May 18, 2019 | 200.00 | No such case during the reporting period |
| Dahua Technology Kazakhstan LLP | May 18, 2019 | 200.00 | No such case during the reporting period |
| PT DAHUA VISION TECHNOLOGY INDONESIA | May 18, 2019 | 300.00 | No such case during the reporting period |
| Dahua Technology Korea Company Limited | May 18, 2019 | 100.00 | No such case during the reporting period |
| Dahua Technology S.R.L. | May 18, 2019 | 200.00 | No such case during the reporting period |
| Dahua technology France SAS | May 18, 2019 | 200.00 | No such case during the reporting period |
| Dahua vision LLc | May 18, 2019 | 200.00 | No such case during the reporting period |
| Dahua Technology New Zealand Limited | May 18, 2019 | 200.00 | No such case during the reporting period |
| Dahua Technology GmbH i.Gr. | May 18, 2019 | 300.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY COLOMBIA SAS | May 18, 2019 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PANAMA,S.A. | May 18, 2019 | 100.00 | No such case during the reporting period |
| Dahua Technology Chile SpA | May 18, 2019 | 100.00 | No such case during the reporting period |
| Dahua technology tunisia limited liability company | May 18, 2019 | 200.00 | No such case during the reporting period | ||
| DAHUA TECHNOLOGY KENYA LIMITED | May 18, 2019 | 100.00 | No such case during the reporting period | ||
| DAHUA TECHNOLOGY CHINA(PVT) LTD | May 18, 2019 | 200.00 | No such case during the reporting period | ||
| DAHUA TECHNOLOGY PAKISTAN (PRIVATE) LIMITED | May 18, 2019 | 200.00 | No such case during the reporting period | ||
| DAHUA TECHNOLOGY MOROCCO SARL | May 18, 2019 | 100.00 | No such case during the reporting period | ||
| DAHUA ARGENTINA S.A. | May 18, 2019 | 200.00 | No such case during the reporting period | ||
| Dahua Technology Czech s.r.o. | May 18, 2019 | 200.00 | No such case during the reporting period | ||
| Dahua Technology Denmark ApS | May 18, 2019 | 200.00 | No such case during the reporting period | ||
| Dahua Technology Netherlands B.V. | May 18, 2019 | 300.00 | No such case during the reporting period | ||
| DAHUA TECHNOLOGY (THAILAND) CO LTD | May 18, 2019 | 100.00 | No such case during the reporting period | ||
| DAHUA TECHNOLOGY ITALY S.R.L. | May 18, 2019 | 600.00 | No such case during the reporting period | ||
| LOREX TECHNOLOGY INC. | May 18, 2019 | 1,000.00 | No such case during the reporting period | ||
| LOREX CORPORATION | May 18, 2019 | 1,000.00 | No such case during the reporting period | ||
| Total Amount of Guarantees to Subsidiaries Approved during the Reporting Period (B1) | 1,912,300.00 | Total Amount of Guarantees to Subsidiaries Actually Occurred during the Reporting Period (B2) | 265,119.64 | ||
| Total Amount of Guarantees to Subsidiaries Approved by the End of the Reporting Period (B3) | 1,912,300.00 | Total Balance of Guarantees Actually Paid to Subsidiaries at the End of the Reporting Period (B4) | 699,991.94 | |||||||
| Subsidiaries' Guarantees to Subsidiaries | ||||||||||
| Guaranteed Party | Announcement Date of Disclosure of the Guarantee Cap | Guarantee Amount | Actual Occurrence Date (Date of Agreement Signing) | Actual Guarantee Amount | Type of Guarantee | Term of Guarantee | Due or Not | Guarantee for Related Parties or Not | ||
| Total Amount of Guarantees to Subsidiaries Approved during the Reporting Period (C1) | Total Amount of Guarantees to Subsidiaries Actually Occurred during the Reporting Period (C2) | |||||||||
| Total Amount of Guarantees to Subsidiaries Approved by the End of the Reporting Period (C3) | Total Balance of Guarantees Actually Paid toSubsidiaries at the End of the Reporting Period (C4) | |||||||||
| The total amount of the Company's guarantees (the total of the above three items) | ||||||||||
| Total Amount of Guarantees Approved during the Reporting Period (A1+B1+C1) | 1,912,300.00 | Total Amount of Guarantees Actually Occurred during the Reporting Period (A2+B2+C2) | 265,119.64 | |||||||
| Total Amount of Guarantees Approved by the End of the Reporting Period (A3+B3+C3) | 1,912,300.00 | Total Balance of Guarantees Actually Paid at the End of the Reporting Period (A4+B4+C4) | 699,991.94 | |||||||
| Total Amount of Actual Guarantees (A4+B4+C4) as a Percentage of the Company's Net Assets | 51.63% | |||||||||
| Including: | ||||||||||
| Balance of Guarantees to the Shareholders, Actual Controllers and Their Related Parties (D) | ||||||||||
| Balance of Debt Guarantees Directly or Indirectly Offered to Guaranteed Objects with Asset-liability Ratio Exceeding 70% (E) | 669,991.94 | |||||||||
| Amount of the Guarantees with the Total Volume Exceeding 50% of the Net Assets (F) | 22,109.80 | |||||||||
| Total Amount of the Above Three Guarantees (D+E+F) | 669,991.94 | |||||||||
| Notes on Possible Joint and Several Repayment Liability for | ||||||||||
| Unexpired Guarantees (If Any) | |
| Notes on Providing External Guarantees in Violation of Specified Procedures (If Any) |
(2) Illegal external guarantees
□ Applicable √ Not applicable
No illegal external guarantees during the reporting period.
3. Other significant contracts
□ Applicable √ Not applicable
No such case as other significant contract during the reporting period.XV. Social Responsibility
1. Significant environmental problems
The listed company and its subsidiaries do not belong to the key pollutant discharging units announced by the environmentalprotection department.
2. Social responsibility fulfillment regarding targeted poverty alleviation
In the reporting half-year of the Company, there has been no targeted poverty alleviation activity, or follow-up targeted povertyalleviation plan.XVI. Explanation of Other Significant Events
√ Applicable □ Not applicable
1. On January 24, 2017, the Company's holding sub-subsidiary, Nanbei United Information Technology Co., Ltd. and itswholly-owned subsidiary, Zhejiang Dahua System Engineering Co., Ltd. signed a Cooperation Agreement on PPP Investment in SafeCity Project of Shache County with the People's Government of Shache County in Kashgar, Xinjiang, which is just a frameworkagreement on the PPP project. The agreement stipulates that the service content is the pre-feasibility study of the project and thedesign of the project, etc. For the implementation of the specific project, it still needs to fulfill related decision-making and approvalprocedures, such as government procurement.sOn July 21, 2017, the Company received the Notification of Award issued by the project purchasing unit, which confirmed thatthe wholly-owned subsidiary Zhejiang Dahua System Engineering Co., Ltd. (the consortium leader), with the holding sub-subsidiaryNanbei United Information Technology Co., Ltd. (member of the consortium) is the winning bidder for the Safe City ConstructionProject (PPP) in Shache County. The winning bid amount of the project is RMB 4.31479 billion (the final amount is based on thesigned contract), which is the total amount for construction and operation within 10-year project cooperation period.On August 4, 2017, the Company's 34th session of the 5th Board of Directors' meeting reviewed and approved the Proposal onInvesting to Establish a PPP Project Company in Shache County, Xinjiang, and the Company submitted a bid based on therequirements for the Shache County City Construction Project (PPP). The winning consortium jointly funded the establishment of theproject company, with a registered capital of RMB 335,567,200. Among them, Zhejiang Dahua System Engineering Co., Ltd.
contributed RMB 234,897,040, accounted for 70% of the total contribution; Nanbei United Information Technology Co., Ltd.contributed RMB 100,670,160, accounted for 30%. In August 2017, the project company was established and the name of thecompany approved by the industrial and commercial bureau was Xinjiang Dahua Xinzhi Information Technology Co., Ltd.On April 18, 2018, the project winning bidder received the request from the Public Security Bureau of Shache County to stopthe implementation of the "Safe City Construction (PPP) Project in Shache County". Near a half of the construction progress in theproject construction period has been completed, but no expenses for subsequent equipment replacement, operation and maintenancehave been incurred. The actual investment in the construction period will be further accounted and confirmed with the government.The various activities and construction of this project engaged in by the winning bidder are in compliance with the requirementsin PPP-related laws and regulations, but the risk exists that the project will not be furthered and the identifiable income of theCompany in the future may be reduced. The Company will actively cooperate with relevant government departments in their work,and timely perform the obligation of information disclosure in accordance with the subsequent progress of the project and theprovisions in relevant laws and regulations and the Articles of Association.
2. The Company intends to repurchase the company's share with self-raised funds by centralized bidding, with the total amountof repurchase funds not less than RMB 200 million (inclusive) and not more than RMB 400 million (inclusive). The repurchase priceshall not exceed RMB 25.37 per share (inclusive). Based on the calculation of upper limit of repurchase price and amount, theestimated total number of repurchase shares are 15,766,653 shares, accounting for about 0.53% of the current capital shares of theCompany. The detailed number of repurchase shares and its ratio of the capital shares of the Company shall be subject to the actualrepurchase number of shares and the ratio upon expiration of the repurchase period. The implementation term of this repurchaseshares shall be within 12 months since the date when the Board of Directors agreed the repurchase program. As of June 30, 2019, theCompany has repurchased 6,149,480 company shares through the specialized security account for share repurchase by centralizedbidding, which accounts for 0.2051% of the total current capital shares of the Company. The highest transaction price is RMB14.03per share and the lowest RMB12.90 per share with total amount of RMB 80,733,758.44 (excluding transaction costs). TheAnnouncement on the Program of Company’s Shares Repurchase (Announcement No.: 2019-025) and the Announcement onProgress on Company’s Shares Repurchase (Announcement No.: 2019-041) have been published on April 26,2019 and July 3,2019respectively on the Securities Times and the website www. cninfocom.cn.
3. On June 5, 2019, the Company’s first extraordinary shareholders meeting in 2019 approved the "Proposal on the Company'sPublic Issuance of Convertible Corporate Bonds" and the "Feasibility Analysis on the Use of Funds Raised by the Company's PublicIssuance of Convertible Corporate Bonds" and others. (See the No. 2019-030 and No. 2019-038 announcements on the SecuritiesTimes and www.cninfocom.cn for details)XVII. Significant Events of the Company’s Subsidiaries
□ Applicable √ Not applicable
Section VI Changes in Shares and Information about ShareholdersI. Changes in Shares
1. Changes in shares
Unit: share
| Before the Change | Changes in the Period (+, -) | After the Change | |||||||
| Shares | Ratio | New Shares Issued | Bonus Share | Shares Transferred from Capital Reserves | Others | Sub-total | Shares | Ratio | |
| I. Shares Subject to Conditional Restrictions | 1,169,462,780 | 39.01% | 14,474,431 | 14,474,431 | 1,183,937,211 | 39.50% | |||
| 3. Other Domestic Shares | 1,169,410,780 | 39.01% | 14,474,431 | 14,474,431 | 1,183,885,211 | 39.50% | |||
| Shares Held by Domestic Matural Persons | 1,169,410,780 | 39.01% | 14,474,431 | 14,474,431 | 1,183,885,211 | 39.50% | |||
| 4. Foreign Shares | 52,000 | 0.00% | 52,000 | 0.00% | |||||
| Shares Held by Foreign Natural Persons | 52,000 | 0.00% | 52,000 | 0.00% | |||||
| II. Shares without Restrictions | 1,828,159,150 | 60.99% | -14,518,631 | -14,518,631 | 1,813,640,519 | 60.50% | |||
| 1. RMB Ordinary Shares | 1,828,159,150 | 60.99% | -14,518,631 | -14,518,631 | 1,813,640,519 | 60.50% | |||
| III. Total | 2,997,621,930 | 100.00% | -44,200 | -44,200 | 2,997,577,730 | 100.00% | |||
Reasons for changes in shares
√ Applicable □ Not applicable
1. At the beginning of each year, the number of shares locked by executives of the Company shall be revivified according to 75%of the total number of shares held by executives.
2. On March 4, 2019, the company has completed the repurchase and cancellation of total 44,200 restricted shares that havebeen granted but not unlocked from the resigned incentive targets and the deceased persons listed in the restricted share incentiveplan in 2018, reducing the total capital shares of the Company from 2,997,621,930 shares to 2,997,577,730 shares.
Approval for changes in shares
√ Applicable □ Not applicable
On December 27, 2018, the Company's 5th extraordinary shareholders meeting in 2018 reviewed and approved the Proposal onRepurchase and Cancellation of Some Granted but Unlocked Restricted Stocks, and decided to repurchase and cancel a total of44,200 restricted shares that have been granted but not unlocked from the resigned incentive targets and the deceased persons.
Transfer for changes in shares
√ Applicable □ Not applicable
After the repurchase and cancellation, the total capital shares of the Company reduced from 2,997,621,930 shares to2,997,577,730 shares. The above repurchase and cancellation has been completed on March 4, 2019 through verification andconfirmation by the Shenzhen Office of China Securities Depository and Clearing Corporation Limited.The progress on share buy-back
√ Applicable □ Not applicable
1. The 21
stmeeting of the 6th Board of Directors held on April 25, 2019 reviewed and approved the Proposal on the Program ofRepurchasing Company’s Shares, which intends to repurchase the Company’s partial issued public shares with self-raised funds bycentralized bidding; the total amount of repurchase funds are not less than RMB 200 million (inclusive) and not more than RMB 400million (inclusive), which is to be used for subsequent implementation of stock ownership incentive plan or employee stock optionplan; the repurchase unit price shall not exceed RMB25.37 per share (inclusive) and detailed repurchase number of shares shallsubject to that actual repurchase shares upon the expiration of repurchase period; implementation term of the repurchase shares shallbe within 12 months since the date when the Board of Directors agreed the repurchase program. For details, please refer to the Reporton Repurchasing Shares (No.: 2019-027) disclosed by the Company on May 11, 2019.
2. As of June 30, 2019, the Company has repurchased 6,149,480 company shares through the specialized security account forshare repurchase by centralized bidding, which accounts for 0.2051% of the total current capital shares of the Company. The highesttransaction price is RMB14.03 per share and the lowest RMB12.90 per share with total amount of RMB 80,733,758.44 (excludingtransaction costs). The repurchase of shares conforms to the requirements of relevant laws and regulations and is in line with therepurchase program. For details, please refer to the Announcement on the Progress of Repurchasing Shares (No.: 2019-041) disclosedby the Company on July 3, 2019.The progress on reduction of re-purchase shares by means of centralized bidding
□ Applicable √ Not applicable
Effects of changes in shares on the basic earnings per share ("EPS"), diluted EPS, net assets per share, attributable to commonshareholders of the Company, and other financial indexes over the last year and last period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or are required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted stocks
√ Applicable □ Not applicable
Unit: share
| Name of Shareholder | Opening Restricted Shares | Vested in Current Period | Increased in Current Period | Closing Restricted Shares | Note on Restricted Shares | Date of Unlocking |
| Fu Liquan | 841,961,985 | 7,225,575 | 834,736,410 | According to the relevant | According to the |
| provisions of executives shares management | relevant provisions of executives shares management | |||||
| Wu Jun | 52,003,164 | 65,000 | 51,938,164 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Zhu Jiangming | 116,671,117 | 23,175,000 | 139,846,117 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management | |
| Li Ke | 2,015,000 | 200,000 | 1,815,000 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Chen Ailing | 53,447,110 | 0 | 53,447,110 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management | |
| Chen Yuqing | 1,441,963 | 65,000 | 1,376,963 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Wu Jian | 1,279,501 | 132,500 | 1,147,001 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Wei Meizhong | 1,235,000 | 102,500 | 1,132,500 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Wu | 636,710 | 65,000 | 571,710 | Per relevant management | Per relevant |
| Yunlong | regulations of equity incentives and senior managers' shares | management regulations of equity incentives and senior managers' shares | ||||
| Xu Zhicheng | 530,000 | 0 | 530,000 | Per relevant management regulations of equity incentives | Per relevant management regulations of equity incentives | |
| Yan Gang | 537,262 | 82,500 | 454,762 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Ying Yong | 1,419,437 | 167,500 | 1,251,937 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Zhu Jiantang | 715,169 | 45,169 | 670,000 | Per relevant management regulations of equity incentives | Per relevant management regulations of equity incentives | |
| Zhang Wei | 880,625 | 140,625 | 740,000 | Per relevant management regulations of equity incentives | Per relevant management regulations of equity incentives | |
| Zhang Xingming | 1,588,560 | 327,500 | 1,261,060 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares | |
| Zhao Yuning | 740,000 | 0 | 740,000 | Per relevant management regulations of equity incentives | Per relevant management regulations of equity incentives and senior managers' shares | |
| Other | 92,075,800 | 44,200 | 92,031,600 | Per relevant management | Per relevant |
| equity incentive targets | regulations of equity incentives | management regulations of equity incentives and senior managers' shares | ||||
| Total | 1,169,178,403 | 8,663,069 | 23,175,000 | 1,183,690,334 | -- | -- |
II. Total Number of Shareholders and Their Shareholdings
Unit: share
| Total Number of Common Shareholders at the End of the Reporting Period | 127,017 | Total Number of Preferred Shareholders (If Any) (Refer to Note 8) Whose Voting Rights Have Been Recovered at the End of the Reporting Period | 0 | |||||||
| Particulars about Shares Held by Shareholders with a Shareholding Percentage over 5% or Top Ten Common Shareholders | ||||||||||
| Name of Shareholder | Nature of Shareholder | Shareholding Percentage | Total Shares Held at the End of the Reporting Period | Increase/Decrease during the Reporting Period | Number of Common Shares Held with Trading Restrictions | Number of Common Shares Held without Trading Restrictions | Pledged or Frozen | |||
| Status | Status | |||||||||
| Fu Liquan | Domestic Natural Person | 36.10% | 1,082,081,880 | -30900000 | 834,736,410 | 247,345,470 | Pledge | 178,652,000 | ||
| Zhu Jiangming | Domestic Natural Person | 6.22% | 186,461,490 | 30900000 | 139,846,117 | 46,615,373 | Pledge | 36,504,000 | ||
| Chen Ailing | Domestic Natural Person | 2.38% | 71,262,813 | 0 | 53,447,110 | 17,815,703 | ||||
| Wu Jun | Domestic Natural Person | 2.31% | 69,250,886 | 0 | 51,938,164 | 17,312,722 | ||||
| Hong Kong Securities Clearing Co. Ltd. | Overseas Legal Person | 2.21% | 66,113,777 | -17922294 | 0 | 66,113,777 | ||||
| One Zero Two Combination of National Social Security Fund | Others | 1.47% | 44,039,310 | 44039310 | 0 | 44,039,310 | ||||
| China Securities Finance Co., Ltd. | Domestic Non-state-owned Legal Person | 1.32% | 39,611,241 | 0 | 0 | 39,611,241 | ||||
| Central Huijin Asset | State-owned | 1.05% | 31,448,750 | 0 | 0 | 31,448,750 | ||||
| Management Co., Ltd. | Legal Person | ||||||||
| Shanghai Greenwoods Asset Management Ltd. － Greenwoods Global Funds | Others | 0.89% | 26,719,579 | 26719579 | 0 | 26,719,579 | |||
| Zhejiang Dahua Technology Co., Ltd. - Phase III Employee Stock Ownership Plan | Others | 0.88% | 26,247,928 | 0 | 0 | 26,247,928 | |||
| Information about Strategic Investors’ or General Legal Persons’ Becoming Top Ten Common Shareholders for Placement of New Shares (If Any) (Refer to Note 3) | N/A | ||||||||
| Explanation on Associated Relationship or Concerted Actions among the Above-Mentioned Shareholders | Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert. | ||||||||
| Particulars about Shares Held by Top Ten Common Shareholders Holding Shares That Are Not Subject to Trading Restrictions | |||||||||
| Name of Shareholder | Number of Common Shares Held without Restrictions at the End of the Reporting Period | Type of shares | |||||||
| Type | Number | ||||||||
| Fu Liquan | 247,345,470 | RMB common stock | 247,345,470 | ||||||
| Hong Kong Securities Clearing Co. Ltd. | 66,113,777 | RMB common stock | 66,113,777 | ||||||
| Zhu Jiangming | 46,615,373 | RMB common stock | 46,615,373 | ||||||
| One Zero Two Combination of National Social Security Fund | 44,039,310 | RMB common stock | 44,039,310 | ||||||
| China Securities Finance Co., Ltd. | 39,611,241 | RMB common stock | 39,611,241 | ||||||
| Central Huijin Asset Management Co., Ltd. | 31,448,750 | RMB common stock | 31,448,750 | ||||||
| Shanghai Greenwoods Asset Management Ltd. － Greenwoods Global Funds | 26,719,579 | RMB common stock | 26,719,579 | ||||||
| Zhejiang Dahua Technology Co., Ltd. - Phase III Employee Stock Ownership Plan | 26,247,928 | RMB common stock | 26,247,928 | ||||||
| Industrial and Commercial Bank of China － Guangfa Jufeng mixed securities investment funds | 21,702,684 | RMB common stock | 21,702,684 |
| Four One Eight Combination of National Social Security Fund | 18,373,500 | RMB common stock | 18,373,500 |
| Explanation of Associated Relationship or Concerted Actions among Top Ten Common Shareholders without Trading Restrictions, and among Top Ten Common Shareholders without Trading Restrictions and Top Ten Common Shareholders | Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert. | ||
| Explanation of Top Ten Common Shareholders’ Participation in Securities Margin Trading (If Any) (Refer to Note 4) | N/A | ||
Whether the Company's top ten common shareholders or top ten common shareholders without limited shares agree on anyrepurchase transaction in the reporting period
□ Yes √ No
None of the Company's top ten common shareholders or top ten common shareholders without limited shares agreed on repurchase inthe reporting period.III. Changes in Controlling Shareholders and Actual Controllers
Change of the controlling shareholders in the reporting period
□ Applicable √ Not applicable
No change has happened to the controlling shareholder in the reporting period of the CompanyChange of the actual controller in the reporting period
□ Applicable √ Not applicable
No change has happened to the actual controller in the reporting period
Section VII Information of Preferred Shares
□ Applicable √ Not applicable
There are no preferred shares in the reporting period.
Section VIII Information about Directors, Supervisors and Senior
Management
I. Shareholding Changes of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
| Name | Title | Tenure Status | Shares Held at the Beginning of the Period (Shares) | Shares Increased during the Period (Shares) | Shares Decreased during the Period (Shares) | Shares Held at the End of the Period (Shares) | Number of Restricted Shares Held at the Beginning of the Period (Shares) | Number of Restricted Shares Held during the Current Period (Shares) | Number of Restricted Shares Held at the End of the Period (Shares) |
| Fu Liquan | Chairman | Incumbent | 1,112,981,880 | 0 | -30,900,000 | 1,082,081,880 | 0 | 0 | 0 |
| Wu Jun | Vice Chairman, Vice President | Incumbent | 69,250,886 | 0 | 0 | 69,250,886 | 0 | 0 | 0 |
| Li Ke | Director, President | Incumbent | 2,420,000 | 0 | 0 | 2,420,000 | 0 | 0 | 0 |
| Zhu Jiangming | Director, Executive Vice President | Incumbent | 155,561,490 | 30,900,000 | 0 | 186,461,490 | 0 | 0 | 0 |
| Chen Ailing | Director | Incumbent | 71,262,813 | 0 | 0 | 71,262,813 | 0 | 0 | 0 |
| He Chao | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Wang Zexia | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Huang Siying | Independent Director | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Song Maoyuan | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Song Ke | Supervisor | Incumbent | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Zuo | Supervisor | Incum | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Pengfei | bent | ||||||||
| Chen Yuqing | Vice President | Incumbent | 1,835,951 | 0 | 0 | 1,835,951 | 0 | 0 | 0 |
| Wu Jian | Secretary of the Board, Vice President | Incumbent | 1,529,335 | 0 | 0 | 1,529,335 | 0 | 0 | 0 |
| Wei Meizhong | CFO, Vice President | Incumbent | 1,510,000 | 0 | 0 | 1,510,000 | 0 | 0 | 0 |
| Wu Yunlong | Vice President | Incumbent | 762,280 | 0 | 0 | 762,280 | 0 | 0 | 0 |
| Xu Zhicheng | Vice President | Incumbent | 530,000 | 0 | 0 | 530,000 | 0 | 0 | 0 |
| Yan Gang | Vice President | Incumbent | 606,349 | 0 | 0 | 606,349 | 0 | 0 | 0 |
| Ying Yong | Vice President | Incumbent | 1,669,250 | 0 | 0 | 1,669,250 | 0 | 0 | 0 |
| Zhu Jiantang | Vice President | Incumbent | 730,225 | 0 | 0 | 730,225 | 0 | 0 | 0 |
| Zhang Wei | Vice President | Incumbent | 927,500 | 0 | 0 | 927,500 | 0 | 0 | 0 |
| Zhang Xingming | Vice President | Incumbent | 1,681,413 | 0 | 0 | 1,681,413 | 0 | 0 | 0 |
| Zhao Yuning | Vice President | Incumbent | 740,000 | 0 | 0 | 740,000 | 0 | 0 | 0 |
| Total | -- | -- | 1,423,999,372 | 30,900,000 | -30,900,000 | 1,423,999,372 | 0 | 0 | 0 |
II. Changes of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
There are no changes in the directors, supervisors and senior management in the reporting period. For details, refer to 2018 AnnualReport.
Section IX Corporate BondsWhether the Company has corporate bonds which have been publicly issued and listed on the stock exchange, and are unexpired orexpired but not honored in full on the date approved for issuance of the interim reportNo
Section X Financial ReportsI. Audit ReportsWhether the interim report has been audited
□ Yes √ No
The interim financial report of the Company has not been audited.
II. Financial StatementsUnits of financial reports in the notes: RMB
1. Consolidated Balance Sheet
Prepared by: Zhejiang Dahua Technology Co., Ltd.
Unit: RMB
| Item Name | June 30, 2019 | December 31, 2018 |
| Current Assets: | ||
| Cash and Bank Balances | 4,201,568,114.35 | 4,160,153,847.06 |
| Deposit Reservation for Balance | ||
| Loans to Banks and Other Financial Institutions | ||
| Transactional Financial Assets | 7,056,942.13 | |
| Financial Liabilities at Fair Value through Profit or Loss | ||
| Derivative Financial Assets | ||
| Notes Receivable | 1,221,653,902.14 | 2,385,693,417.06 |
| Accounts Receivable | 11,134,944,437.85 | 10,191,372,777.38 |
| Accounts Receivable Financing | ||
| Prepayments | 153,805,389.06 | 126,891,259.00 |
| Premium Receivable | ||
| Reinsurance Accounts Receivable | ||
| Reinsurance Contract Reserves Receivable | ||
| Other Receivables | 361,774,470.14 | 398,170,769.40 |
| Including: interest receivable | 6,425,860.24 | 6,754,941.00 |
| Dividends Receivable | ||
| Buying Back the Sale of Financial Assets | ||
| Inventory | 3,358,049,330.64 | 3,035,579,709.14 |
| Contract Assets | ||
| Assets Held for Sale | ||
| Non-current Assets Due within 1 Year | 612,839,528.91 | 578,733,057.27 |
| Other Current Assets | 475,479,384.01 | 402,255,078.05 |
| Subtotal of Current Assets | 21,527,171,499.23 | 21,278,849,914.36 |
| Non-current Assets: | ||
| Granting of loans and advances | ||
| Debt Investment | ||
| Financial Assets Available for Sale | 82,970,227.00 | |
| Other Debt Investment | ||
| Held-to-maturity Investments | ||
| Long-term Receivables | 2,641,057,749.78 | 1,861,485,568.28 |
| Long-term Equity Investment | 165,358,482.24 | 185,872,021.58 |
| Investments in Other Equity Instruments | ||
| Other Non-current Financial Assets | 83,970,227.00 | |
| Investment Property | 344,460,740.53 | 346,831,376.55 |
| Fixed Assets | 1,386,805,962.53 | 1,407,471,330.83 |
| Projects under Construction | 313,934,611.81 | 226,191,587.11 |
| Productive Biological Assets | ||
| Oil and Gas Assets | ||
| Right-of-use Assets | ||
| Intangible Assets | 414,190,037.34 | 372,467,409.09 |
| Development Expenditure | ||
| Goodwill | 42,685,490.30 | 109,745,412.21 |
| Long-term Prepaid Expenses | 40,067,888.66 | 37,117,918.55 |
| Deferred Income Tax Assets | 455,446,742.43 | 425,319,406.98 |
| Other Non-current Assets | 12,376,518.59 | 16,277,605.61 |
| Subtotal of Non-current Assets | 5,900,354,451.21 | 5,071,749,863.79 |
| Total Assets | 27,427,525,950.44 | 26,350,599,778.15 |
| Current Liabilities: | ||
| Short-term Loan | 3,084,859,034.59 | 1,851,709,561.83 |
| Borrowings from the Central Bank | ||
| Borrowings from Banks and Other Financial Institutions | ||
| Transactional Financial Liabilities |
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | 38,602,602.30 | |
| Derivative Financial Liabilities | ||
| Notes Payable | 3,483,458,773.48 | 3,671,586,104.79 |
| Accounts Payable | 3,194,442,877.42 | 3,789,729,594.20 |
| Received Prepayments | 349,666,289.12 | 343,297,891.20 |
| Financial Assets Sold for Repurchase | ||
| Deposit Taking and Interbank Deposit | ||
| Receiving from Vicariously Traded Securities | ||
| Receiving from Vicariously Sold Securities | ||
| Payroll Payable | 825,786,554.13 | 1,124,358,611.94 |
| Tax Payable | 452,778,426.22 | 599,478,049.81 |
| Other Payables | 1,095,464,506.44 | 1,051,537,094.97 |
| Including: Interest Payable | 11,000,751.65 | 4,745,203.31 |
| Dividends Payable | 9,882,284.31 | |
| Service Charge and Commission Payable | ||
| Reinsurance Accounts Payable | ||
| Contract Liabilities | ||
| Holding for-sale Liabilities | ||
| Non-current Liabilities Due within 1 Year | 25,500,000.00 | 25,500,000.00 |
| Other Current Liabilities | 69,464,435.03 | 70,845,639.51 |
| Subtotal of Current Liabilities | 12,581,420,896.43 | 12,566,645,150.55 |
| Non-current Liabilities: | ||
| Insurance Contract Reserves | ||
| Long-term Loan | 154,000,000.00 | 179,000,000.00 |
| Bonds Payable | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | ||
| Long-term Payables | ||
| Long-term payroll payable | ||
| Expected Liabilities | 263,357,330.71 | 193,761,170.12 |
| Deferred Income | 84,562,221.66 | 58,693,533.40 |
| Deferred Income Tax Liabilities | 54,222,930.63 | 50,137,969.76 |
| Other Non-current Liabilities | 436,460,214.81 | 399,096,280.89 |
| Subtotal of Non-current Liabilities | 992,602,697.81 | 880,688,954.17 |
| Total Liabilities | 13,574,023,594.24 | 13,447,334,104.72 |
| Shareholders' Equity: | ||
| Share Capital | 2,997,577,730.00 | 2,997,621,930.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 1,572,198,377.82 | 1,501,180,862.83 |
| Less: Treasury Share | 878,223,946.13 | 807,733,586.00 |
| Other Comprehensive Incomes | 9,618,908.81 | 10,337,164.41 |
| Special Reserves | ||
| Surplus Reserves | 1,246,369,430.91 | 1,246,369,430.91 |
| General Risk Reserves | ||
| Undistributed Profits | 8,610,102,395.08 | 7,670,983,116.33 |
| Total Shareholders' Equity Attributable to the Parent Company | 13,557,642,896.49 | 12,618,758,918.48 |
| Minority Shareholders' Equity | 295,859,459.71 | 284,506,754.95 |
| Total Shareholders' Equity | 13,853,502,356.20 | 12,903,265,673.43 |
| Total Liabilities and Shareholders' Equity | 27,427,525,950.44 | 26,350,599,778.15 |
Legal representative: Fu Liquan Person in charge of accounting: Wei Meizhong Person in charge of the accountinginstitution: Xu Qiaofen
2. Balance Sheet of the Parent Company
Unit: RMB
| Item Name | June 30, 2019 | December 31, 2018 |
| Current Assets: | ||
| Cash and Bank Balances | 245,073,466.45 | 611,190,236.01 |
| Transactional Financial Assets | ||
| Financial Liabilities at Fair Value through Profit or Loss | ||
| Derivative Financial Assets | ||
| Notes Receivable | 1,275,996,301.42 | 952,572,702.92 |
| Accounts Receivable | 5,668,093,889.72 | 4,598,575,923.04 |
| Accounts Receivable Financing |
| Prepayments | 25,023,339.08 | 26,772,044.53 |
| Other Receivables | 6,573,741,249.72 | 6,954,655,863.03 |
| Including: Interest Receivable | 42,500.00 | |
| Dividends Receivable | ||
| Inventory | 128,043,339.19 | 120,181,267.85 |
| Contract Assets | ||
| Holding for-sale Assets | ||
| Non-current Assets Due within 1 Year | 52,447,313.43 | 50,793,137.80 |
| Other Current Assets | 18,513,295.06 | 24,858,982.78 |
| Subtotal of Current Assets | 13,986,932,194.07 | 13,339,600,157.96 |
| Non-current Assets: | ||
| Debt Investment | ||
| Financial Assets Available for Sale | 80,496,000.00 | |
| Other Debt Investment | ||
| Held-to-maturity Investments | ||
| Long-term Receivables | 150,094,217.59 | 160,299,143.83 |
| Long-term Equity Investment | 3,096,995,988.50 | 3,001,639,428.55 |
| Investments in Other Equity Instruments | ||
| Other Non-current Financial Assets | 81,496,000.00 | |
| Investment Property | 179,541,537.43 | 183,321,198.72 |
| Fixed Assets | 465,918,980.05 | 496,363,638.38 |
| Projects under Construction | 193,304,354.49 | 151,072,585.67 |
| Productive Biological Assets | ||
| Oil and Gas Assets | ||
| Right-of-use Assets | ||
| Intangible Assets | 166,222,752.00 | 170,879,747.04 |
| Development Expenditure | ||
| Goodwill | ||
| Long-term Prepaid Expenses | 29,875,429.30 | 28,927,258.54 |
| Deferred Income Tax Assets | 69,820,670.32 | 40,821,902.57 |
| Other Non-current Assets | 7,322,417.84 | 929,380.00 |
| Subtotal of Non-current Assets | 4,440,592,347.52 | 4,314,750,283.30 |
| Total Assets | 18,427,524,541.59 | 17,654,350,441.26 |
| Current Liabilities: |
| Short-term loan | 2,277,018,356.11 | 1,380,000,000.00 |
| Transactional Financial Liabilities | ||
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | ||
| Derivative Financial Liabilities | ||
| Notes Payable | 156,583,971.97 | 175,647,414.85 |
| Accounts Payable | 310,480,128.01 | 889,881,485.16 |
| Received Prepayments | 33,135,369.79 | 80,361,211.04 |
| Contract Liabilities | ||
| Payroll Payable | 577,017,944.06 | 817,723,936.19 |
| Tax Payable | 309,129,580.10 | 351,294,836.50 |
| Other Payables | 1,048,214,399.46 | 1,060,909,330.56 |
| Including: interest payable | 6,472,441.27 | 2,416,340.30 |
| Dividends Payable | 9,882,284.31 | |
| Holding for-sale liabilities | ||
| Non-current Liabilities Due within 1 Year | ||
| Other Current Liabilities | 5,959,914.87 | 6,464,333.12 |
| Subtotal of Current Liabilities | 4,717,539,664.37 | 4,762,282,547.42 |
| Non-current Liabilities: | ||
| Long-term Loan | ||
| Bonds Payable | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | ||
| Long-term Payables | ||
| Long-term payroll payable | ||
| Expected Liabilities | 2,435,103.64 | 3,396,100.00 |
| Deferred Income | ||
| Deferred Income Tax Liabilities | ||
| Other Non-current Liabilities | 17,802,512.51 | 23,684,423.74 |
| Subtotal of Non-current Liabilities | 20,237,616.15 | 27,080,523.74 |
| Total Liabilities | 4,737,777,280.52 | 4,789,363,071.16 |
| Shareholders' Equity: | ||
| Share Capital | 2,997,577,730.00 | 2,997,621,930.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 1,566,261,837.67 | 1,497,801,068.88 |
| Less: Treasury Share | 878,223,946.13 | 807,733,586.00 |
| Other Comprehensive Incomes | ||
| Special Reserves | ||
| Surplus Reserves | 1,246,369,430.91 | 1,246,369,430.91 |
| Undistributed Profits | 8,757,762,208.62 | 7,930,928,526.31 |
| Total Shareholders' Equity | 13,689,747,261.07 | 12,864,987,370.10 |
| Total Liabilities and Shareholders' Equity | 18,427,524,541.59 | 17,654,350,441.26 |
3. Consolidated Income Statement
Unit: RMB
| Item Name | 2019 Interim | 2018 Interim |
| I. Total Operating Revenue | 10,806,566,370.89 | 9,814,041,352.48 |
| Including: Operating Revenue | 10,806,566,370.89 | 9,814,041,352.48 |
| Interest Income | ||
| Earned Premiums | ||
| Service Charge and Commission Income | ||
| II. Total Operating Cost | 9,650,560,173.11 | 8,657,002,668.63 |
| Including: Operating Cost | 6,443,429,151.03 | 6,230,120,445.06 |
| Interest Expenditures | ||
| Service Charge and Commission Expenses | ||
| Surrender Value | ||
| Net Claims Paid | ||
| Net Amount Withdrawn for Insurance Contract Reserves | ||
| Policyholder Dividend Expense | ||
| Reinsurance Cost | ||
| Taxes and Surcharges | 64,190,849.22 | 62,692,261.97 |
| Sales Expenses | 1,539,714,255.33 | 1,252,741,900.83 |
| Administration expenses | 346,919,167.36 | 269,199,404.53 |
| Research and development expense | 1,245,261,201.77 | 865,129,052.09 |
| Financial Expenses | 11,045,548.40 | -22,880,395.85 |
| Including: interest expenses | 76,337,321.42 | 48,561,403.94 |
| Interest Income | 81,150,189.81 | 50,792,338.79 |
| Add: Other income | 426,921,517.08 | 284,916,998.93 |
| Investment Income (Mark "-" for Loss) | -5,691,002.29 | -20,867,876.31 |
| Including: Investment Income from Affiliates and Joint Ventures | -548,623.93 | -25,567,280.91 |
| Income of Financial Assets Recognition Termination Measured at Amortized Cost (Mark "-" for Loss) | ||
| Exchange Gains (Mark "-" for Losses) | ||
| Net Exposure Hedging Income (Mark "-" for Loss) | ||
| Incomes from changes in fair value (losses marked with "-") | 45,449,188.16 | -41,332,765.27 |
| Credit Impairment Loss (Mark "-" for Loss) | -163,681,506.49 | |
| Asset Impairment Loss (Mark "-" for Loss) | -98,774,186.62 | -128,296,022.40 |
| Asset Disposal Income (Mark "-" for Loss) | 448,615.83 | -13,024.74 |
| III. Operating Profit (Mark "-" for Loss) | 1,360,678,823.45 | 1,251,445,994.06 |
| Add: Non-operating Revenues | 8,513,835.06 | 5,234,299.09 |
| Less: Non-operating Expenses | 1,357,098.55 | 2,194,887.35 |
| IV. Total Profit (Mark "-" for Total Loss) | 1,367,835,559.96 | 1,254,485,405.80 |
| Less: Income Tax Expense | 163,173,365.97 | 165,721,533.63 |
| V. Net Profit (Mark "-" for Net Loss) | 1,204,662,193.99 | 1,088,763,872.17 |
| (I) Classified by Business Continuity | ||
| 1. Net Profit as a Going Concern (Mark "-" for Net Loss) | 1,204,662,193.99 | 1,088,763,872.17 |
| 2. Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| (II) Classified by Ownership | ||
| 1. Net Profit Attributable to the Parent Company's Owner | 1,238,880,948.74 | 1,081,916,886.52 |
| 2. Minority Shareholders' Profit and Loss | -34,218,754.75 | 6,846,985.65 |
| VI. Net Amount of Other Comprehensive Incomes after Tax | -718,205.48 | 8,393,760.02 |
| Net Amount of Other Comprehensive Incomes after Tax Attributable to the Parent Company's Owner | -718,255.60 | 8,393,760.02 |
| (1) Other comprehensive income that cannot be reclassified as P/L |
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method | ||
| 3. Changes in Fair Value of Investments in Other Equity Instruments | ||
| 4. Changes in Fair Value of the Company's Own Credit Risk | ||
| 5. Others | ||
| (2) Other comprehensive income that will be reclassified as P/L | -718,255.60 | 8,393,760.02 |
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in Fair Value of Other Debt Investment | ||
| 3. Profit or Loss Arising from Changes in the Fair Value of Financial Assets Available for Sale | ||
| 4. The Amount of Financial Assets Reclassified into Other Comprehensive Income | ||
| 5. Profit or Loss Arising from Reclassifying Investments Held to Maturity as Financial Assets Available for Sale | ||
| 6. Provision for Credit Impairment of Other Debt Investment | ||
| 7. Cash Flow Hedge Reserves | ||
| 8. Currency Conversion Difference | -718,255.60 | 8,393,760.02 |
| 9. Others | ||
| Net Amount of Other Comprehensive Incomes After Tax Attributable to Minority Shareholders | 50.12 | |
| VII. Total Comprehensive Income | 1,203,943,988.51 | 1,097,157,632.19 |
| Total Comprehensive Income Attributable to the Parent Company's Owner | 1,238,162,693.14 | 1,090,310,646.54 |
| Total Comprehensive Income Attributable to Minority Shareholders | -34,218,704.63 | 6,846,985.65 |
| VIII. Earnings per Share: | ||
| (I) Basic Earnings per Share | 0.42 | 0.37 |
| (II) Diluted Earnings per Share | 0.42 | 0.37 |
In the case of enterprise consolidation under the same control during this period, the net profit realized by consolidated party before
consolidation is: RMB. The net profit realized by the consolidated party during previous period is: RMB.Legal representative: Fu Liquan Person in charge of accounting: Wei Meizhong Person in charge of the accountinginstitution: Xu Qiaofen
4. Income Statement of the Parent Company
Unit: RMB
| Item Name | 2019 Interim | 2018 Interim |
| I. Operating Revenue | 3,281,203,959.86 | 3,784,147,825.87 |
| Less: Operating Cost | 369,348,403.98 | 1,167,353,125.94 |
| Taxes and Surcharges | 43,805,303.56 | 44,911,616.72 |
| Sales Expenses | 774,697,601.25 | 684,873,752.77 |
| Administration expenses | 194,508,500.94 | 124,907,951.12 |
| Research and development expense | 1,047,272,163.00 | 758,110,009.97 |
| Financial Expenses | 32,399,789.08 | -10,918,444.75 |
| Including: interest expenses | 51,929,211.84 | 16,615,717.39 |
| Interest Income | 21,971,107.71 | 27,789,833.90 |
| Add: Other income | 388,225,543.16 | 272,484,387.90 |
| Investment Income (Mark "-" for Loss) | 9,740,090.32 | -23,467,410.68 |
| Including: Investment Income from Affiliates and Joint Ventures | -7,096.54 | -24,852,586.71 |
| Income of Financial Assets Recognition Termination Measured at Amortized Cost (Mark "-" for Loss) | ||
| Net Exposure Hedging Income (Mark "-" for Loss) | ||
| Incomes from changes in fair value (losses marked with "-") | ||
| Credit Impairment Loss (Mark "-" for Loss) | -10,600,820.35 | |
| Asset Impairment Loss (Mark "-" for Loss) | -11,200,169.56 | |
| Asset Disposal Income (Mark "-" for Loss) | 230,024.34 | -13,523.79 |
| II. Operating Profit (Mark "-" for Loss) | 1,206,767,035.52 | 1,252,713,097.97 |
| Add: Non-operating Revenues | 2,476,092.90 | 2,920,994.67 |
| Less: Non-operating Expenses | 700,678.88 | 328,747.03 |
| III. Total Profit (Mark "-" for Total Loss) | 1,208,542,449.54 | 1,255,305,345.61 |
| Less: Income Tax Expense | 81,947,097.24 | 148,829,495.03 |
| IV. Net Profit (Mark "-" for Net Loss) | 1,126,595,352.30 | 1,106,475,850.58 |
| (I) Net Profit as a Going Concern (Mark "-" for Net | 1,126,595,352.30 | 1,106,475,850.58 |
| Loss) | ||
| (II) Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| V. Net Amount of Other Comprehensive Incomes After Tax | ||
| (1) Other comprehensive income that cannot be reclassified as P/L | ||
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method | ||
| 3. Changes in Fair Value of Investments in Other Equity Instruments | ||
| 4. Changes in Fair Value of the Company's Own Credit Risk | ||
| 5. Others | ||
| (2) Other comprehensive income that will be reclassified as P/L | ||
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in Fair Value of Other Debt Investment | ||
| 3. Profit or Loss Arising from Changes in the Fair Value of Financial Assets Available for Sale | ||
| 4. The Amount of Financial Assets Reclassified into Other Comprehensive Income | ||
| 5. Profit or Loss Arising from Reclassifying Investments Held to Maturity as Financial Assets Available for Sale | ||
| 6. Provision for Credit Impairment of Other Debt Investment | ||
| 7. Cash Flow Hedge Reserves | ||
| 8. Currency Conversion Difference | ||
| 9. Others | ||
| VI. Total Comprehensive Income | 1,126,595,352.30 | 1,106,475,850.58 |
| VII. Earnings per Share: | ||
| (I) Basic Earnings per Share | 0.39 | 0.38 |
| (II) Diluted Earnings per Share | 0.39 | 0.38 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item Name | 2019 Interim | 2018 Interim |
| I. Cash Flow Generated by Operational Activities: | ||
| Cash from Sales of Merchandise and Provision of Services | 10,826,094,759.86 | 9,194,169,425.67 |
| Net Increase in Customer's Bank Deposits and Interbank Deposits | ||
| Net Increase in Borrowings from the Central Bank | ||
| Net Increase in Borrowings from Other Financial Institutions | ||
| Cash Arising from Receiving Premiums for the Original Insurance Contract | ||
| Net Amount Arising from Reinsurance Business | ||
| Net Increase in Deposits and Investments from Policyholders | ||
| Cash Arising from Interests, Service Charges and Commissions | ||
| Net Increase in Borrowings from Banks and Other Financial Institutions | ||
| Net Increase in Repurchase Business Funds | ||
| Net Amount Received from Vicariously Traded Securities | ||
| Tax Refund | 824,424,362.86 | 721,443,953.84 |
| Other Received Cashes Related to Operational Activities | 182,265,336.17 | 69,273,319.56 |
| Subtotal of cash inflow from operational activities | 11,832,784,458.89 | 9,984,886,699.07 |
| Cash Paid for Merchandise and Services | 8,183,055,955.85 | 7,190,765,894.34 |
| Net Increase in Loans and Advances to Customers | ||
| Net Increase in Deposits with Central Bank and Other Financial Institutions | ||
| Cash Paid for Original Insurance Contract Claims | ||
| Net Increase in Financial Assets Held for Trading Purposes | ||
| Net Increase in Loans to Banks and Other Financial Institutions | ||
| Cash Paid for Interests, Service Charges and Commissions | ||
| Cash Paid for Policy Dividends | ||
| Cash Paid to and for Employees | 2,506,637,462.82 | 2,120,130,137.36 |
| Cash Paid for Taxes and Surcharges | 851,257,957.46 | 722,939,607.07 |
| Other Paid Cashes Related to Operational Activities | 1,162,300,175.64 | 1,047,407,897.30 |
| Subtotal of cash outflow from operational activities | 12,703,251,551.77 | 11,081,243,536.07 |
| Net cash flow generated by operating activities | -870,467,092.88 | -1,096,356,837.00 |
| II. Cash Flow from Investment Activities: | ||
| Cash Arising from Disposal of Investments | 140,950,000.00 | |
| Cash Arising from Investment Incomes | 9,387,186.86 | 1,604,974.66 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 4,361,781.86 | 330,762.69 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business Units | ||
| Other Received Cashes Related to Investment Activities | 4,052,392.39 | 2,404,123.87 |
| Subtotal of cash inflow from investment activities | 17,801,361.11 | 145,289,861.22 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 260,697,897.67 | 223,433,215.10 |
| Cash Paid for Investments | 13,200,000.00 | 139,300,000.00 |
| Net Increase in Pledge Loans | ||
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units | 56,408,605.39 | |
| Other Paid Cashes Related to Investment Activities | 26,458,528.22 | 75,796,952.33 |
| Subtotal of cash outflow from investment activities | 300,356,425.89 | 494,938,772.82 |
| Net amount of cash flow generated by investment activities | -282,555,064.78 | -349,648,911.60 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments | 43,114,250.00 | 28,410,000.00 |
| Including: Cash Arising from Subsidiaries Absorbing Investments by Minority Shareholders | 43,114,250.00 | 28,410,000.00 |
| Cash Arising from Borrowings | 3,995,334,621.50 | 2,967,492,895.90 |
| Cash Arising from Bonds Issue | ||
| Other Received Cashes Related to Financing Activities | 805,382,000.00 | 619,391,279.99 |
| Subtotal of cash inflow from financing activities | 4,843,830,871.50 | 3,615,294,175.89 |
| Cash Paid for Debts Repayment | 2,690,153,276.12 | 2,210,534,089.02 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 348,633,662.77 | 624,264,590.19 |
| Including: Dividends and Profits Paid to Minority Shareholders by Subsidiaries | ||
| Other Paid Cashes Related to Financing Activities | 816,654,575.69 | 547,215,000.00 |
| Subtotal of cash outflow from financing activities | 3,855,441,514.58 | 3,382,013,679.21 |
| Net cash flow generated by financing activities | 988,389,356.92 | 233,280,496.68 |
| IV. Impact of Fluctuation in Exchange Rate on Cash and Cash Equivalents | 7,299,167.67 | 15,101,534.67 |
| V. Net Increase in Cash and Cash Equivalents | -157,333,633.07 | -1,197,623,717.25 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 3,702,283,803.54 | 3,062,678,993.88 |
| VI. Cash and Cash Equivalents at the End of the Period | 3,544,950,170.47 | 1,865,055,276.63 |
6. Cash Flow Statement of the Parent Company
Unit: RMB
| Item Name | 2019 Interim | 2018 Interim |
| I. Cash Flow Generated by Operational Activities: | ||
| Cash from Sales of Merchandise and Provision of Services | 1,594,454,492.04 | 5,620,171,988.98 |
| Tax Refund | 327,192,023.88 | 271,139,112.45 |
| Other Received Cashes Related to Operational Activities | 98,858,726.98 | 5,648,274.89 |
| Subtotal of cash inflow from operational activities | 2,020,505,242.90 | 5,896,959,376.32 |
| Cash Paid for Merchandise and Services | 391,253,745.70 | 974,190,280.44 |
| Cash Paid to and for Employees | 1,597,070,311.21 | 1,369,457,901.39 |
| Cash Paid for Taxes and Surcharges | 534,095,073.85 | 538,414,539.67 |
| Other Paid Cashes Related to Operational Activities | 550,587,545.42 | 544,751,757.29 |
| Subtotal of cash outflow from operational activities | 3,073,006,676.18 | 3,426,814,478.79 |
| Net cash flow generated by operating activities | -1,052,501,433.28 | 2,470,144,897.53 |
| II. Cash Flow from Investment Activities: | ||
| Cash Arising from Disposal of Investments | 107,950,000.00 | |
| Cash Arising from Investment Incomes | 9,387,186.86 | 1,385,176.03 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 12,303,962.73 | 65,609,157.24 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business Units | ||
| Other Received Cashes Related to Investment Activities | 9,227,698.52 | 28,221,407.92 |
| Subtotal of cash inflow from investment activities | 30,918,848.11 | 203,165,741.19 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 102,347,243.84 | 35,814,739.74 |
| Cash Paid for Investments | 111,885,750.00 | 389,982,000.00 |
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units | ||
| Other Paid Cashes Related to Investment Activities | ||
| Subtotal of cash outflow from investment activities | 214,232,993.84 | 425,796,739.74 |
| Net amount of cash flow generated by investment activities | -183,314,145.73 | -222,630,998.55 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments | ||
| Cash Arising from Borrowings | 1,963,462,853.53 | 850,000,000.00 |
| Cash Arising from Bonds Issue | ||
| Other Received Cashes Related to Financing Activities | 2,541,785,779.17 | 110,534,201.15 |
| Subtotal of cash inflow from financing activities | 4,505,248,632.70 | 960,534,201.15 |
| Cash Paid for Debts Repayment | 1,066,444,497.42 | 300,000,000.00 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 329,177,945.46 | 592,580,560.69 |
| Other Paid Cashes Related to Financing Activities | 2,258,109,917.86 | 2,768,689,582.54 |
| Subtotal of cash outflow from financing activities | 3,653,732,360.74 | 3,661,270,143.23 |
| Net cash flow generated by financing activities | 851,516,271.96 | -2,700,735,942.08 |
| IV. Impact of Fluctuation in Exchange Rate on Cash and Cash Equivalents | -251,558.05 | -130,404.43 |
| V. Net Increase in Cash and Cash Equivalents | -384,550,865.10 | -453,352,447.53 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 603,430,209.42 | 524,670,812.68 |
| VI. Cash and Cash Equivalents at the End of the Period | 218,879,344.32 | 71,318,365.15 |
7. Consolidated Statement of Changes in Owners' Equity
Amount of this period
Unit: RMB
| Item Name | 2019 Interim | ||||||||||||||
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 2,997,621,930.00 | 1,501,180,862.83 | 807,733,586.00 | 10,337,164.41 | 1,246,369,430.91 | 7,670,983,116.33 | 12,618,758,918.48 | 284,506,754.95 | 12,903,265,673.43 | ||||||
| Add: Changes in Accounting Policies | |||||||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Consolidated under the Same Control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Start of This Year | 2,997,621,930.00 | 1,501,180,862.83 | 807,733,586.00 | 10,337,164.41 | 1,246,369,430.91 | 7,670,983,116.33 | 12,618,758,918.48 | 284,506,754.95 | 12,903,265,673.43 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -44,200.00 | 71,017,514.99 | 70,490,360.13 | -718,255.60 | 939,119,278.75 | 938,883,978.01 | 11,352,704.76 | 950,236,682.77 | |||||||
| (I) Total Comprehensive Income | -718,255.60 | 1,238,880,948.74 | 1,238,162,693.14 | -34,218,704.63 | 1,203,943,988.51 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | -44,200.00 | 103,583,714.04 | 80,372,644.44 | 23,166,869.60 | 43,114,250.00 | 66,281,119.60 | |||||||||
| 1． Common stock invested by the owner | -44,200.00 | -326,617.25 | 80,372,644.44 | -80,743,461.69 | 43,114,250.00 | -37,629,211.69 | |||||||||
| 2． Capital Invested by Holders of Other Equity Instruments |
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 103,910,331.29 | 103,910,331.29 | 103,910,331.29 | ||||||||||||
| 4． Others | |||||||||||||||
| (III) Profit Distribution | -9,882,284.31 | -299,761,669.99 | -289,879,385.68 | -289,879,385.68 | |||||||||||
| 1． Appropriation of Surplus Reserves | |||||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | -299,761,669.99 | -299,761,669.99 | -299,761,669.99 | ||||||||||||
| 4． Others | -9,882,284.31 | 9,882,284.31 | 9,882,284.31 | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity |
| 1． Capital Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses | |||||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | |||||||||||||||
| 5． Carry-forward Retained Earnings of Other Comprehensive Incomes | |||||||||||||||
| 6． Others | |||||||||||||||
| (V) Special Reserves | |||||||||||||||
| 1． Withdrawal |
| in this period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | -32,566,199.05 | -32,566,199.05 | 2,457,159.39 | -30,109,039.66 | |||||||||||
| IV. Balance at the End of This Period | 2,997,577,730.00 | 1,572,198,377.82 | 878,223,946.13 | 9,618,908.81 | 1,246,369,430.91 | 8,610,102,395.08 | 13,557,642,896.49 | 295,859,459.71 | 13,853,502,356.20 |
Amount of Previous Period
Unit: RMB
| Item Name | 2018 Interim | ||||||||||||||
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 2,898,756,130.00 | 593,340,751.52 | 6,660,189.04 | 971,547,268.36 | 5,996,130,036.27 | 10,466,434,375.19 | 126,795,637.30 | 10,593,230,012.49 | |||||||
| Add: Changes in Accounting | |||||||||||||||
| Policies | |||||||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Consolidated under the Same Control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Start of This Year | 2,898,756,130.00 | 593,340,751.52 | 6,660,189.04 | 971,547,268.36 | 5,996,130,036.27 | 10,466,434,375.19 | 126,795,637.30 | 10,593,230,012.49 | |||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -704,848.39 | 8,393,760.02 | 502,165,660.52 | 509,854,572.15 | 34,324,328.94 | 544,178,901.09 | |||||||||
| (I) Total Comprehensive Income | 8,393,760.02 | 1,081,916,886.52 | 1,090,310,646.54 | 6,846,985.65 | 1,097,157,632.19 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 27,410,000.00 | 27,410,000.00 | |||||||||||||
| 1． Common stock invested by the owner | 27,410,000.00 | 27,410,000.00 |
| 2． Capital Invested by Holders of Other Equity Instruments | |||||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | |||||||||||||||
| 4． Others | |||||||||||||||
| (III) Profit Distribution | -579,751,226.00 | -579,751,226.00 | -579,751,226.00 | ||||||||||||
| 1． Appropriation of Surplus Reserves | |||||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | -579,751,226.00 | -579,751,226.00 | -579,751,226.00 | ||||||||||||
| 4． Others |
| (IV) Internal Carry-forward of Shareholders' Equity | |||||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses | |||||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | |||||||||||||||
| 5． Carry-forward Retained Earnings of Other Comprehensive Incomes | |||||||||||||||
| 6． Others |
| (V) Special Reserves | |||||||||||||||
| 1． Withdrawal in this period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | -704,848.39 | -704,848.39 | 67,343.29 | -637,505.10 | |||||||||||
| IV. Balance at the End of This Period | 2,898,756,130.00 | 592,635,903.13 | 15,053,949.06 | 971,547,268.36 | 6,498,295,696.79 | 10,976,288,947.34 | 161,119,966.24 | 11,137,408,913.58 |
8. Statement of Changes in Owners' Equity of the Parent Company
Amount of this period
Unit: RMB
| Item Name | 2019 Interim | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 2,997,621,930.00 | 1,497,801,068.88 | 807,733,586.00 | 1,246,369,430.91 | 7,930,928,526.31 | 12,864,987,370.10 | ||||||
| Add: Changes in Accounting Policies | ||||||||||||
| Correction of Errors in the Previous Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 2,997,621,930.00 | 1,497,801,068.88 | 807,733,586.00 | 1,246,369,430.91 | 7,930,928,526.31 | 12,864,987,370.10 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -44,200.00 | 68,460,768.79 | 70,490,360.13 | 826,833,682.31 | 824,759,890.97 | |||||||
| (I) Total Comprehensive Income | 1,126,595,352.30 | 1,126,595,352.30 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | -44,200.00 | 101,026,967.84 | 80,372,644.44 | 20,610,123.40 | ||||||||
| 1． Common stock invested by the owner | -44,200.00 | -326,617.25 | 80,372,644.44 | -80,743,461.69 | ||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | ||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 101,353,585.09 | 101,353,585.09 | ||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | -9,882,284.31 | -299,761,669.99 | -289,879,385.68 | |||||||||
| 1． Appropriation of Surplus Reserves |
| 2． Distribution to Owners (or Shareholders) | -299,761,669.99 | -299,761,669.99 | ||||||||||
| 3． Others | -9,882,284.31 | 9,882,284.31 | ||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | ||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Carry-forward Retained Earnings of Other Comprehensive Incomes | ||||||||||||
| 6． Others | ||||||||||||
| (V) Special Reserves | ||||||||||||
| 1． Withdrawal in this period | ||||||||||||
| 2． Used in This Period |
| (VI) Others | -32,566,199.05 | -32,566,199.05 | ||||||||||
| IV. Balance at the End of This Period | 2,997,577,730.00 | 1,566,261,837.67 | 878,223,946.13 | 1,246,369,430.91 | 8,757,762,208.62 | 13,689,747,261.07 |
Amount of Previous Period
Unit: RMB
| Item Name | 2018 Interim | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 2,898,756,130.00 | 589,895,836.49 | 971,547,268.36 | 6,037,280,289.37 | 10,497,479,524.22 | |||||||
| Add: Changes in Accounting Policies | ||||||||||||
| Correction of Errors in the Previous Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 2,898,756,130.00 | 589,895,836.49 | 971,547,268.36 | 6,037,280,289.37 | 10,497,479,524.22 | |||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | -637,505.10 | 526,724,624.58 | 526,087,119.48 | |||||||||
| (I) Total Comprehensive Income | 1,106,475,850.58 | 1,106,475,850.58 | ||||||||||
| (II) Shareholders' | ||||||||||||
| Contribution and Reduction in Capital | ||||||||||||
| 1． Common stock invested by the owner | ||||||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | ||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | ||||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | -579,751,226.00 | -579,751,226.00 | ||||||||||
| 1． Appropriation of Surplus Reserves | ||||||||||||
| 2． Distribution to Owners (or Shareholders) | -579,751,226.00 | -579,751,226.00 | ||||||||||
| 3． Others | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | ||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) |
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Carry-forward Retained Earnings of Other Comprehensive Incomes | ||||||||||||
| 6． Others | ||||||||||||
| (V) Special Reserves | ||||||||||||
| 1． Withdrawal in this period | ||||||||||||
| 2． Used in This Period | ||||||||||||
| (VI) Others | -637,505.10 | -637,505.10 | ||||||||||
| IV. Balance at the End of This Period | 2,898,756,130.00 | 589,258,331.39 | 971,547,268.36 | 6,564,004,913.95 | 11,023,566,643.70 |
III. Basic Information about the CompanyZhejiang Dahua Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company") was incorporated under theofficial approval document No. 18 [2002] Zhejiang Enterprise Listing by Zhejiang Provincial People's Government Work LeadingGroup for Enterprise Listing in June 2002, and on the basis of overall change of the previous Hangzhou Dahua InformationTechnology Co., Ltd. It was an incorporated company initiated and established jointly by five natural persons, Fu Liquan, ChenAiling, Zhu Jiangming, Liu Yunzhen and Chen Jianfeng as initiators.On April 22, 2008, the Company issued 16.8 million shares of common stock in RMB to the general public for the first timeunder the approval document No. 573 [2008] Securities Regulatory Issuance, issued by China Securities Regulatory Commission("CSRC"). It was listed on Shenzhen Stock Exchange on May 20, 2008 with a registered capital of RMB 66.8 million and the changeregistration filed with Administration for Industry and Commerce was completed on May 23, 2008. The Company's unified socialcredit code is 91330000727215176K. The Company falls within the security video surveillance industry.As of June 30, 2019, the Company has issued a total of 2,997,577,730 shares, with a registered capital of RMB 2,997,577,730.The registered address is No. 1187, Bin'an Road, Binjiang District, Hangzhou, and the headquarters address is No. 1199, Bin'an Road,Binjiang District, Hangzhou.
The Company's main operational activities include the development, services & sales of computer software, the design,development, production, installation & sales of electronic products and communication products, the development, systemintegration & sales of network products, the design & installation of electronic engineering products, information technologyconsultation service, import & export businesses, etc. The actual controllers of the Company are Fu Liquan and Chen Ailing.This financial statement has been approved by Board of Directors on August 16, 2019.For details of the scope of the consolidated financial statement for the current period, refer to Note IX "Equities in OtherEntities"; for details of the changes in the scope of the consolidated financial statement for the current period, refer to Note VIII"Changes in the Scope of Consolidation".
IV. Basis for Preparing the Financial Statement
1. Basis for the preparation
The Company prepares the financial statement, as a going concern, based on transactions and matters that have actually occurred, inaccordance with Accounting Standards for Business Enterprises - Basic Standards issued by the Ministry of Finance and all specificaccounting standards, application guidelines for accounting standards for business enterprises, explanations on the accountingstandards for business enterprises and other related regulations (hereinafter referred to as "Accounting Standards for BusinessEnterprises" collectively), and the disclosure provisions in the Preparation Rules for Information Disclosures by Companies OfferingSecurities to the Public No. 15 - General Provisions on Financial Reports issued by CSRC.
2. Going concern
The Company has the capability to continue as a going concern for at least 12 months as of the end of current reporting period,without any significant item affecting the capability for continuing as a going concern.V. Significant Accounting Polices and Accounting EstimatesNotes to specific accounting policies and accounting estimates:
The following disclosures cover the specific accounting policies and accounting estimates formulated by the Companyaccording to the characteristics of its production and operation.
1. Statement on compliance with Accounting Standards for Business EnterprisesThe financial statements have been prepared by the Company in conformity with Chinese Accounting Standards for BusinessEnterprises, and present truly and completely the Company's financial position, operating results and cash flow, and other relatedinformation in the reporting period.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
The Company’s operating cycle is 12 months.
4. Functional currency
For the domestic operating entities of the Company and its overseas operating entity Dahua Technology (HK) Limited, thereporting currency is Renminbi ("RMB"). The remaining offshore operating entities use the local currency as the reporting currency.
5. The accounting treatment of business combinations involving enterprises under common control andbusiness combinations not involving enterprises under common control
Business combinations involving entities under common control: The assets and liabilities acquired by the Company in businesscombination shall be measured at the carrying value of the assets, liabilities of the acquiree (including goodwill incurred in theacquisition of the acquiree by ultimate controlling party) in the consolidated financial statements of the ultimate controlling party onthe date of combination. The difference between the carrying amount of the net assets obtained and the carrying amount of theconsideration paid for the combination (or total nominal value of the issued shares) is adjusted to capital premium in capital reserve.Adjustments shall be made to retained earnings in the event that the share premiums in the capital reserves are not sufficient forwrite-down.
Business combinations involving entities not under common control: The assets paid and liabilities incurred or committed as aconsideration of business combination by the Company were measured at fair value on the date of acquisition and the differencebetween the fair value and its carrying value shall be charged to the profit or loss for the period. Where the cost of combination ishigher than the fair value of the identifiable net assets acquired from the acquire in business combination, the Company shallrecognize such difference as goodwill; where the cost of combination is less than the fair value of the identifiable net assets acquiredfrom the acquiree in business combination, such difference shall be charged to the profit or loss for the current period.
The agency fee such as audit, legal service and evaluation consultation and other fees which are directly related to the abovematters shall be recognized as the profit or loss in the period when the costs are incurred; the transaction costs for the equitysecurities issued for corporate combination shall be written-off against equity.
6. Preparation method of consolidated financial statements
The scope of consolidation of the consolidated financial statements of the Company is based on controlling interests, and all thesubsidiaries (including separate entities of the investee controlled by the Company) are included in the consolidated financialstatements.
The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its
subsidiaries and in accordance with the other relevant information. In preparation of the Company's consolidated financial statements,the Company will treat the enterprise group as a single accounting entity. The Group's overall financial position, operating results andcash flow are reflected based on the relevant accounting standards, measurement and presentation requirements and in accordancewith the unified accounting policy.The subsidiaries that are within the scope of the consolidation shall have the same accounting policies and the accountingperiods with those of the Company. In preparing the consolidated financial statements, where the accounting policies and theaccounting periods are inconsistent between the Company and subsidiaries, the financial statements of subsidiaries are adjusted inaccordance with the accounting policies and accounting period of the Company. For subsidiaries acquired from a businesscombination involving entities not under common control, the individual financial statements of the subsidiaries are adjusted basedon the fair value of the identifiable net assets on the date of acquisition. For subsidiaries acquired from a business combinationinvolving entities under common control, the individual financial statements of the subsidiaries are adjusted based on the carryingvalue of the assets, liabilities of the acquiree (including goodwill incurred in the acquisition of the acquiree by ultimate controllingparty) in the financial statements of the ultimate controlling party.
The owner's equity, the net profit or loss and the comprehensive income attributable to minority shareholders of a subsidiary ofthe current period are presented separately under the owners' equity in the consolidated balance sheet, the net profit and the totalcomprehensive income in the consolidated income statement respectively. Where losses attributable to the minority shareholders of asubsidiary of the current period exceed the minority shareholders' interest entitled in the shareholders' equity of the subsidiary at thebeginning of the period, the excess is allocated against the minority shareholders interest.
(1) Acquisition of subsidiaries or business
For acquisition of subsidiaries or business due to business combination involving entities under common control during thereporting period, the opening balance of the consolidated balance sheet shall be adjusted; the revenue, expense and profit of suchsubsidiaries or business from the beginning to the end of the reporting period when the merger occurs are included in theconsolidated income statement; the cash flows of such subsidiaries or business from the beginning to the end of the reporting periodwhen the merger occurs are included in the consolidated cash flow statement, and the comparative figures of the financial statementsshould be adjusted simultaneously as if the consolidated reporting entity has been in existence since the beginning of the control bythe ultimate controlling party.
An investor that may impose control over the investee under joint control due to additional investment shall be deemed a partyparticipating in the combination, and shall be adjusted at current status when the ultimate controlling party begins the control. Theequity investment held before gaining the control of the combined party is recognized as relevant profit or loss, other comprehensiveincome and changes in other net assets at the later of the date of acquisition of the original equity and the date when the combiningand the combined parties are under joint control, and shall be written down to the opening balance retained earnings or current profitor loss in the comparative reporting period.
For acquisition of subsidiaries due to business combination involving entities not under common control during the reportingperiod, the opening balance of consolidated balance sheet needs not be adjusted; the revenue, expense and profit of such subsidiariesor business from the date of acquisition to the end of the reporting period are included in the consolidated income statement; the cashflows of such subsidiaries or business from the date of acquisition to the end of the reporting period are included in the consolidatedcash flow statement.
In connection with imposing control over the investee not under joint control due to additional investment and other reasons, theequity of acquiree held before acquisition date shall be remeasured by the Company at the fair value of such equity on the acquisitiondate and the difference between fair value and carrying amount shall be recognized as investment income in current period. If theacquiree's equity held before the acquiring date contains other comprehensive income and the other changes of owner's equity exceptfor net profits and losses, other comprehensive income and profit distributions under the equity method, the related othercomprehensive income and changes in other owner's equity shall be transferred to investment gains or losses on the date ofacquisition, excluding the other comprehensive income derived from changes of net liabilities or net assets due to re-measurement on
defined benefit plan by the investee.
(2) Disposal of subsidiaries or business
① General treatment
For disposal of subsidiaries or business during the reporting period, the revenue, expense and profit of such subsidiaries orbusiness from the beginning of the period to the date of disposal are included in the consolidated income statement; the cash flows ofsuch subsidiaries or business from the beginning of the period to the date of disposal are included in the consolidated cash flowstatement.When losing control of the investee due to partial disposal of the equity investment, or any other reasons, the remaining equityinvestment is remeasured at fair value at the date in which control is lost. The sum of consideration received from disposal of equityinvestment and the fair value of the remaining equity investment, net of the difference between the sum of the Company's previousshare of the subsidiary's net assets recorded from the acquisition date or combination date and the sum of goodwill, is recognized ininvestment income in the period in which control is lost. Other comprehensive income or net profit and loss related to the previousequity investment in the subsidiary, changes in equity except the other comprehensive income and profit distribution, are transferredto investment income of the current period when losing control, except the other comprehensive income as a result of the changesarising from the remeasurement of the net assets and net liabilities of the investee's defined benefit plan.In the event of losing control due to a decrease in the proportion of shares held by the Company as the capital increase insubsidiaries by other investors, the accounting treatment shall be conducted in accordance with the above principles.
② Disposal of subsidiary achieved by stages
When disposal of equity interests of subsidiaries through multiple transactions until the control is lost, generally transactions instages are treatment as a package deal in accounting if the transaction terms, conditions, and economic impact of disposal of thesubsidiary's equity interests comply with one or more of the following:
ⅰ. These transactions are achieved at the same time or the mutual effects on each other are considered;
ⅱ. A complete set of commercial results can be achieved with reference to the series of transactions as a whole;
ⅲ. Achieving a transaction depends on at least achieving of one of the other transaction;
ⅳ. One transaction recognized separately is not economical, but it is economical when considered together with othertransactions.
When losing control of a subsidiary in disposal of equity interests through multiple transactions is recognized as a package deals,these transactions shall be in accounting treated as loss control of a subsidiary in disposal of equity interests achieved. However, thedifferences between price on each disposal and disposal of investment on the subsidiary's net assets shall be recognized in othercomprehensive income in the consolidated financial statements, and included in profit or loss for the period when the control is lost.
If all transactions in disposal of equity interests of subsidiaries until losing control are not a package deals, accounting treatmentfor partial disposal of equity investments of subsidiary without losing control shall be applied before control is lost. When the controlis lost, general accounting treatment for disposal of a subsidiary shall be used.
(3) Acquisition of minority interest of subsidiaries
The Company shall adjust the share premium in the capital reserve of the consolidated balance sheet with respect to anydifference between the long-term equity investment arising from the purchase of minority interest and the net assets attributing to theparent company continuously calculated on the basis of the newly increased share proportion as of the acquisition date (or date ofcombination) or, adjust the retained earnings if the share premium in the capital reserve is insufficient for write-down.
(4) Partial disposal of equity investment in subsidiaries without losing control
The difference between disposal consideration of long-term equity investment in subsidiaries partially disposed without losingcontrol and the share of net assets calculated from the date of acquisition or combination date shall be adjusted to share premium inthe capital reserve in the consolidated balance sheet. Adjustments shall be made to retained earnings in the event that the sharepremiums in the capital reserves are not sufficient for write-down.
7. Recognition criteria of cash and cash equivalents
In preparing the cash flow statement, the cash on hand and deposits that are available for payment at any time of the Companyare recognized as cash. The short-term (due within 3 months of the date of purchase) and highly liquid investments that are readilyconvertible to known amounts of cash and which are subject to an insignificant risk of value change are recognized as cashequivalents.
8. Conversion of transactions and financial statements denominated in foreign currencies
(1) Foreign currency transactions
Foreign currency transactions shall be translated into RMB at the spot exchange rate on the day when the transactions occurred.
Balance sheet date foreign currency monetary items shall be translated using the spot exchange rate at the balance sheet date.The resulting exchange differences are recognized in profit or loss for the current period, except for those differences related to theprincipal and interest on a specific-purpose borrowing denominated in foreign currency for acquisitions, construction or productionof the qualified assets, which should be capitalized as cost of the assets.
(2) Translation of foreign currency financial statements
All assets and liabilities items in balance sheet are translated based on spot exchange rate on the balance sheet date; owners'equity items other than "undistributed profit" are translated at a spot exchange rate when accrued. Revenue and expense items in theincome statement are translated at a spot exchange rate at the transaction occurrence date.
For disposal of overseas operation, the translation difference as stated in the foreign currency financial statements relating tooverseas operation, is accounted for in the profit and loss account in the current period from owners' equity items.
9. Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
(1) Classification of the financial instruments
According to the business model of financial assets management of the Company and the contractual cash flow characteristicsof financial assets, the financial assets are classified at the initial recognition into: financial assets measured at amortized cost,financial assets at fair value through other comprehensive income (debt instruments) and financial assets at fair value through profitor loss.
Those classified into financial assets measured at amortized cost have the business model whose target is the collection ofcontractual cash flow and where the contractual cash flow is only the payment of the principal and the interest based on theoutstanding principal amount; those classified into financial assets at fair value through other comprehensive income (debtinstruments) have the business model whose target is the collection of contractual cash flow as well as selling such financial assetsand where the contractual cash flow is only the payment of the principal and the interest based on the outstanding principal amount;other financial assets other than the above are classified as financial assets at fair value through profit or loss.
For investments in non-transactional equity instruments, the Company defines it as financial assets at fair value through profit orloss at the initial recognition; Those due later than one year since the balance sheet date and expected to be held for more than oneyear are listed as other non-current financial assets. At the initial recognition, in order to eliminate or significantly reduce accountingmismatches, financial assets can be designated as financial assets at fair value through profit or loss. For such financial assets, theGroup uses fair value for subsequent measurement, with changes in fair value recorded in profit or loss for the period.
Financial liabilities are classified at the initial recognition into: financial liabilities at fair value through profit and loss andfinancial liabilities measured at amortized cost.
The financial liabilities meeting any of the following conditions can be designated as the financial liabilities at fair valuethrough profit and loss：
1) Such designation can eliminate or significantly reduce accounting mismatches.
2) According to corporate risk management or investment strategies as stated in formal written documents, the management andperformance evaluation of financial liability portfolios or combinations of financial assets and financial liabilities are based on fairvalue , and reported to key management personnel on this basis within the enterprise.
3) Such financial liabilities include embedded derivatives that need to be split separately.
(2) Recognition and measurement of financial instruments
① Financial assets measured at amortized cost
Financial assets measured at amortized cost include notes receivable, accounts receivable, other receivables, long-termreceivables, and debt investment, etc., which are initially measured at fair value, with related transaction costs included in the initialrecognition amount; The accounts receivable excluding major financing components and the accounts receivable where the companydecided not to consider the financing component of not more than one year are initially measured at the contract transaction price.
Interest calculated according to the effective interest rate during the period is recorded into profit and loss for the period.
Upon recovery or disposal of financial assets, the difference between the consideration obtained and the carrying amount ischarged to profit or loss for the period.
② Financial assets (debt instruments) at fair value through other comprehensive income
Financial assets (debt instruments) at fair value through other comprehensive income include receivables financing, other debtinvestments, etc., which are initially measured at fair value, with related transaction costs included in the initial recognition amount.The financial assets are subsequently measured at fair value, with changes in fair value included in other comprehensive incomeexcept for interest, impairment losses or gains and exchange gains or losses calculated using the effective interest rate.
When the recognition is terminated, the accumulated gain or loss previously included in other comprehensive income istransferred from other comprehensive income and included in profit or loss for the period.
③ Financial assets (equity instruments) at fair value through other comprehensive income
Financial assets (equity instruments) at fair value through other comprehensive income include other equity investments, etc.,which are initially measured at fair value, with related transaction costs included in the initial recognition amount. The financialassets are subsequently measured at fair value, with changes in fair value included in other comprehensive income. Dividendsobtained are recorded into profit or loss for the period.
When the recognition is terminated, the accumulated gain or loss previously included in other comprehensive income istransferred from other comprehensive income and included in retained earnings.
④ Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include transactional financial assets, derivative financial assets and othernon-current financial assets, which are initially measured at fair value, with related transaction costs included in profit and loss forthe period. The financial assets are subsequently measured at fair value, with changes in fair value included in profit and loss for theperiod.
When the recognition is terminated, the difference between the fair value and the amount of initial recognition shall berecognized as investment income; meanwhile, the profits and losses arising from the variation in fair value shall be adjusted.
⑤ Financial Liabilities at Fair Value through Profit or Loss
Financial Liabilities at Fair Value through Profit or Loss include Transactional Financial Liabilities, derivative financialliabilities, etc., which are initially measured at fair value, with related transaction costs included in profit and loss for the period. Thefinancial liabilities are subsequently measured at fair value, with changes in fair value included in profit and loss for the period.
When the recognition is terminated, the difference between the fair value and the amount of initial recognition shall berecognized as investment income; meanwhile, the profits and losses arising from the variation in fair value shall be adjusted.
⑥ Financial liabilities measured at amortized cost
Financial liabilities measured at amortized cost include short-term loans, bills payable, accounts payable, other payables,long-term borrowings, bonds payable, and long-term payables, which are initially measured at fair value, with related transaction
costs included in the initial recognition amount.Interest calculated according to the effective interest rate during the period is recorded into profit and loss for the period.When the recognition is terminated, the difference between the consideration paid and the carrying amount of the financialliabilities is charged to profit or loss for the period.
(3) Recognition basis and measurement of transfer of financial assets
A financial asset recognition shall be terminated while the Company has transferred nearly all the risks and rewards related tothe ownership of the financial asset to the transferee, and it shall not be terminated if the Company has retained nearly all the risksand rewards related to the ownerships of the financial asset.The substance-over-form principle shall be adopted while making judgment on whether the transfer of financial assets satisfiesthe above conditions for termination of recognition. The transfer of financial assets can be classified into entire transfer and partialtransfer. If the transfer of an entire financial asset satisfies the conditions for termination of recognition, the difference between thetwo amounts below shall be recorded into profit or loss for the period:
① The carrying amount of the financial asset transferred;
② The consideration received as a result of the transfer, plus the accumulative amount of the change in fair value previouslyrecorded into the owners' equities.
If the partial transfer of financial assets satisfies the conditions for termination of recognition, the overall carrying amount of thetransferred financial asset shall be apportioned according to their respective relative fair value between the recognition terminatedpart and the remaining part, and the difference between the two amounts below shall be recorded into profit or loss for the currentperiod:
① The carrying amount of the recognition terminated portion;
② The sum of consideration of the recognition terminated portion and the corresponding portion of accumulated change in fairvalue previously recorded into owners' equity.
Financial assets will still be recognized if they fail to satisfy the conditions for termination of recognition, with the considerationreceived recognized as a financial liability.
(4) Recognition conditions for termination of financial liabilities
When the current obligation under a financial liability is completely or partially discharged, the recognition of the whole orrelevant portion of the liability is terminated; an agreement is entered between the Company and a creditor to replace the originalfinancial liabilities with new financial liabilities with substantially different terms, terminate the recognition of the original financialliabilities as well as recognize the new financial liabilities.
If all or part of the contract terms of the original financial liabilities are substantially amended, the recognition of the originalfinancial liabilities will be terminated in full or in part, and the financial liabilities whose terms have been amended shall berecognized as a new financial liability.
When recognition of financial liabilities is terminated in full or in part, the difference between the carrying amount of thefinancial liabilities terminated and the consideration paid (including transferred non-cash assets or new financial liability) isrecognized in profit or loss for the current period.
Where the Company repurchases part of its financial liabilities, the carrying amount of such financial liabilities will be allocatedaccording to the relative fair value between the continued recognized part and terminated part on the repurchase date. The differencebetween the carrying amount of the financial liabilities terminated and the consideration paid (including transferred non-cash assetsor new financial liability) is recognized in profit or loss for the current period.
(5) Method of determining the fair values of financial assets and liabilities
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market.The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. TheCompany uses the valuation technique when it is applicable under current conditions and there are enough available data and otherinformation to support and the technique should maximize the use of relevant observable. It chooses the inputs which are consistent
with the asset or liability's characteristics considered by market participants in the transaction of the relevant asset or liability andmakes the maximum use of relevant observable inputs. Unobservable inputs are used under the circumstance that the relevantobservable inputs cannot be obtained or not feasible.
(6) Testing methodology and accounting treatment for impairment of financial assets (excluding accounts receivable)The Company estimates the expected credit losses of financial assets measured at amortized cost and financial assets (debtinstruments) at fair value through other comprehensive income on an individual or portfolio basis, taking into account all reasonableand evidence-based information including forward-looking information, The measurement of expected credit losses depends onwhether the credit risk of financial assets has increased significantly since the initial recognition.If the credit risk of the financial instrument has increased significantly since the initial recognition, the Company will measureits provision for loss based on the amount equivalent to the expected credit loss of such financial instrument over its entire duration;if the credit risk of the financial instrument has not increased significantly since the initial recognition, the Company will measure itsprovision for loss based on the amount equivalent to the expected credit loss of such financial instrument within the following 12months. The increase or reversal amount of the provision for loss resulted therefrom is included in the profit and loss of the period asan impairment loss or gain.Usually, once the financial instrument is overdue more than 30 days, the Company believes that the credit risk of the financialinstrument has increased significantly, unless there is conclusive evidence that the credit risk of the financial instrument has notincreased significantly since the initial recognition.If the credit risk of financial instrument is low on the balance sheet date, the Company believes that the credit risk of thefinancial instrument has not increased significantly since the initial recognition.
10. Notes Receivable
For notes receivable, whether significant financing is involved or not, the Company will always measure its provision for lossbased on the amount equivalent to the expected credit loss of its entire duration, and the increase or reversal amount of the provisionfor loss resulting therefrom is included in the profit and loss of the period as an impairment loss or gain.
11. Accounts Receivable
For accounts receivable, whether significant financing is involved or not, the Company will always measure its provision forloss based on the amount equivalent to the expected credit loss of its entire duration, and the increase or reversal amount of theprovision for loss resulting therefrom is included in the profit and loss of the period as an impairment loss or gain.
For accounts receivable for which there is objective evidence of impairment and which is applicable to individual assessments,it is individually tested for impairment, the expected credit loss is recognized, and individual impairment provision is made.
For accounts receivable that does not have objective evidence of impairment or when the expected credit loss of individualaccounts receivable cannot be assessed at a reasonable cost, the Company will combine the accounts receivable according to similarcredit risk characteristics.
The accounts receivable is combined based on the following criteria:
For accounts receivable classified into portfolio, the Company calculates the expected credit losses based on historical creditloss experience, in combination with current conditions and forecasts of future economic conditions.
The expected credit loss is combined as follows:
(1) Accounts Receivable which are individually insignificant but subject to separate bad debt provision
| Bases for Making Judgment and Standard for Calculation the Amount for | Within top five accounts receivable balances |
the Accounts Receivable That AreIndividually Significant
Recognition of Receivables withAmounts that are IndividuallySignificant and Subject to SeparateAssessment for Provision for Bad Debts
| Recognition of Receivables with Amounts that are Individually Significant and Subject to Separate Assessment for Provision for Bad Debts | When assessing provision for bad debts separately, if the objective evidence shows that the accounts receivable has been impaired, the provision for bad debts will be made according to the difference of the present value of the expected future cash flow below its book value. When separately assessing the accounts receivable that have not been devalued, it is classified into the corresponding combinations for bad debt provision. |
(2) Accounts Receivable for which provision of bad debts made by portfolio of credit risk characteristics
| Portfolio Name | Method of provision of bad debts |
| Portfolio 1: Related Parties Portfolio | Related party accounts receivable within the scope of the portfolio are not provided for bad debts |
| Portfolio 2: Aging Analysis Portfolio | Aging analysis |
For the Aging Analysis Portfolio, the Company estimates the accrual ratio of bad debt provision for accounts receivable basedon all reasonable and evidenced information, including forward-looking information, as shown below:
| Aging | Provision percentage for account receivables | Provision percentage for other receivables |
| Within 1 year (including 1 year) | 5.00% | 5.00% |
| 1-2 years | 10.00% | 10.00% |
| 2-3 years | 30.00% | 30.00% |
| 3-4 years | 50.00% | 50.00% |
| 4-5 years | 80.00% | 80.00% |
| 5 years or above | 100.00% | 100.00% |
(3) Accounts Receivable that are individually insignificant but are provided for bad debt on individual basis
| Reason for making bad debt provision individually | Long aging, with objective evidence of impairment |
| Method for bad debt provision | Impairment loss is recognized and bad debt provision is made by using the difference between the present value of estimated future cash flows and the book value of receivables |
12. Other receivables
Recognizing methods and accounting methods of the expected credit loss of other receivables
For interests receivable and dividends receivable, whether significant financing is involved or not, the Company will alwaysmeasure their provision for loss based on the amount equivalent to the expected credit loss of their entire duration, and the increase orreversal amount of the provision for loss resulting therefrom is included in the profit and loss of the period as an impairment loss or
gain; the impairment loss for other receivables is measured in accordance with the measurement method of impairment loss of theaforementioned receivables.
13. Inventories
(1) Category of inventory
Inventories are classified as raw materials, work in progress, turnover materials, goods in product, commissioned processingmaterials, etc.
(2) Determination of cost
Cost of inventories is determined using the weighted average method.
(3) Basis for the determination of net realizable value and provision method for decline in value of inventories
Net realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock, and held-for-sale raw materials,during the normal course of production and operation, shall be determined by their estimated sales less the related selling expensesand taxes; the net realizable value of material inventories, which need to be processed, during the normal course of production andoperation, shall be determined by the amount after deducting the estimated cost of completion, estimated selling expenses andrelevant taxes from the estimated selling price of finished goods; the net realizable value of inventories held for execution of salescontracts or labor contracts shall be calculated on the ground of the contracted price. If an enterprise holds more inventories than thequantity stipulated in the sales contract, the net realizable value of the exceeding part shall be calculated on the ground of generalselling price.
Decline in value of inventories is made on an item-by item basis at the end of the period. For large quantity and low value itemsof inventories, provision may be made based on categories of inventories; for items of inventories relating to a product line that isproduced and marketed in the same geographical area and with the same or similar end uses or purposes, which cannot be practicableevaluated separately from other items in that product line, provision for decline in value of inventories may be determined on anaggregate basis.
Unless the evidence clearly shows that abnormality in market price exists as of the balance sheet date, the net realizable value ofinventories is determined based on the market price as of the balance sheet date.
The net realizable value of inventories at the end of current period is determined based on the market price of the balance sheetdate.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization of low-value consumables and packaging materials
① Low-value consumables are amortized using the immediate write-off method;
② Packaging materials are amortized using the immediate write-off method.
14. Holding for-sale assets
A non-current asset or disposed group is classified by the Company as holding for sale if it meets the following criteria at thesame time:
(1) Immediate sale could be made under the current circumstances in accordance with the convention of selling such kind ofassets or disposal groups in similar transactions;
(2) Selling is extremely likely to occur, i.e. the Company has made a resolution on a selling plan and obtained confirmedpurchase commitments, and the selling is predicted to be completed within 1 year. If required by relevant provisions that selling shallonly be made after approved by the relevant competent authority or supervision department of the Company, such approval shouldhave been obtained.
15. Long-term equity investments
(1) Joint control or significant influence criterion
Joint control is the contractually agreed sharing of control of an arrangement, and exists only when requiring the unanimousconsent of the parties sharing control before making decisions about the relevant activities of the arrangement. The Companytogether with the other joint venture parties can jointly control over the investee and are entitled to the right of the net assets of theinvestee, as the investee is joint venture of the Company.Significant influence refers to the power to participate in making decisions on the financial and operating policies of anenterprise, but not the power to control, or jointly control, the formulation of such policies with other parties. Where the Companycan exercise significant influence over the investee, the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business combination of entities
For business combinations involving entities under common control: where the Company pays cash, transfers non-cash assets,bears debts or issues equity securities as consideration of combinations, the initial investment cost of long-term equity investmentsare the share with reference to the book value of the shareholders' equity of the combined party in the consolidated financialstatements of the ultimate controlling party on the date of combinations. In connection with imposing control over the investee underjoint control as a result of additional investment and other reasons, on the combination date, the initial cost of long-term equityinvestments shall be determined based on share of carrying amounts in the consolidated financial statement of the ultimatecontrolling party by net assets of the combined party after the combination. The difference between initial investment cost and thecarrying value of long term equity investment before combination and the sum of carrying value of newly paid consideration foradditional shares acquired on the date of combination is to adjust share premium. If the balance of share premium is insufficient, anyexcess is adjusted to retained earnings.
Business combinations involving entities not under common control: the cost of the combination ascertained on the date ofacquisition shall be taken as the initial investment cost of the long-term equity investments. In connection with imposing control overthe investee not under joint control as a result of additional investment and other reasons, the initial investment cost when changingto the cost method shall be the sum of the carrying value of the equity investment originally held and the newly increased initialinvestment cost.
② Long-term equity investments acquired by other means
The initial cost of a long-term equity investment obtained by cash payment shall be the purchase costs actually paid.
The initial cost of investment of a long-term equity investment obtained by means of issuance of equity securities shall be thefair value of the equity securities issued.
If the non-monetary assets transaction is commercial in nature and the fair value of the assets received or surrendered can bereliably measured, the initial cost of investment of a long-term equity investment received the non-monetary assets transaction, shallbe determined on the basis of the fair value of the assets surrendered and the related tax payable, unless there are concrete evidencesthat the fair value of the assets received is more reliable; For non-monetary assets transaction which does not meet the aboveconditions, the initial cost of a long-term equity investment received shall be the book value of the assets surrendered and the relevanttaxes payable.
The initial cost of a long-term equity investment through debt restructuring shall be ascertained based on their fair value.
(3) Subsequent measurement and recognition of profit or loss
① Long-term equity investment calculated by cost method
Long-term equity investment in subsidiaries of the Company is calculated by cost method, except for the actual considerationpaid for the acquisition of investment or the declared but not yet distributed cash dividends or profits which are included in theconsideration, investment gains are recognized as the Company' shares of the cash dividends or profits declared by the investee.
② Long-term equity investment accounted for by equity method
Long-term equity investments of associates and jointly controlled entities are calculated using equity method. Where the initialinvestment cost of a long-term equity investment exceeds the investor's interest in the fair value of the investee's identifiable netassets at the acquisition date, no adjustment shall be made to the initial investment cost; where the initial investment cost is less thanthe investor's interest in the fair value of the investee's identifiable net assets at the acquisition date, the difference shall be charged toprofit or loss for the current period.The Company recognizes the investment income and other comprehensive income according to the shares of net profit or lossand other comprehensive income realized by the investee which it shall be entitled or shared respectively, and simultaneously makesadjustment to the carrying value of long-term equity investments; The carrying value of long-term equity investment shall be reducedby attributable share of the profit or cash dividends for distribution declared by the investee. In relation to other changes of owner'sequity except for net profits and losses, other comprehensive income and profit distributions of the investee, the carrying value oflong-term equity investments shall be adjusted and included in owner's equity.When determining the amount of proportion of net profit or loss in the investee which it entitles, fair value of each identifiableassets of the investee at the time when the investment is obtained shall be used as basis, and according to the accounting policies andaccounting period of the Company, adjustment shall be made to the net profit of the investee. During the period of holdinginvestments, when preparing consolidated financial statements by the investee, the accounting shall be based on the amountsattributable to the investee in the net profit, other comprehensive income and other changes of the owner's equity in the consolidatedfinancial statements.The unrealized profit or loss resulting from transactions between the Company and its associates or joint venture shall beeliminated in portion to the investor's equity interest of investee, based on which investment income or loss shall be recognized. Anylosses resulting from transactions, which are attributable to impairment of assets, shall be fully recognized. Where transactions ofinvesting or selling the assets occur between the Company and the associated enterprises or joint ventures and that the assetsconstitute a business, account processing shall be conducted in accordance with the relevant policies disclosed in "The accountingtreatment of business combinations involving enterprises under common control and business combinations involving enterprisesunder common control" and " Method of preparation of consolidated financial statements" in this note.In recognition of share of losses in the investee, the Company treats it in the following order: Firstly, the Company will write offthe carrying value of long-term equity investments. Secondly, in the event the aforesaid carrying value is insufficient for write-off, itshall continue to recognize investment loss and write off carrying values of long-term receivables to the extent of the carryingamount of the long-term equity (Note: the specific contents and determining criteria of the long-term equity should be clearly defined)which substantively constitutes the net investment in the investee. Finally, after the above treatment, for the additional obligationswhich shall be still assumed by entities according to investment contract or agreement, the estimated liabilities shall be recognizedbased on the obligations which are expected to assume and included in the investment loss for the current period.
③ Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the book value and the consideration actually received shallbe included in the current profit or loss.
For the long-term equity investment under the equity method, when disposing of such investment, part of amounts that shall beoriginally included in other comprehensive income shall be accounted for in proportion by using the same basis as the investee usedfor direct disposal of relevant assets or liabilities. The owner's equity which is recognized due to other changes of owner's equityexcept for net profits and losses, other comprehensive income and profit distributions shall be transferred in proportion into thecurrent profit or loss, excluding the other comprehensive income derived from changes of net liabilities or net assets due tore-measurement on defined benefit plan by the investee.
When losing the controls or material influence over the investee due to partially disposal of equity investment and other reasons,the remaining equities shall be accounted for in accordance with the standards on recognition and measurement of financialinstruments, and the difference between the fair value and the carrying value at the date of losing control or material influence shallbe included in current profit or loss. For other comprehensive income recognized in the original equity investment due to the equity
method is adopted, it shall be treated using the same accounting basis as the investee used for direct disposal of relevant assets orliabilities when ceasing to use the equity method. All owner's equities which are recognized due to other changes of owner's equityexcept for net profits and losses, other comprehensive income and profit distributions shall be transferred into the current profit orloss when ceasing to use the equity method.When losing the controls over the investee due to partially disposal of equity investment and other reasons, the remainingequities after disposal shall be accounted for under equity method in preparation of individual financial statements provided thatcommon control or material influence over the investee can be imposed, and shall be adjusted as if such remaining equities has beenaccounted for under the equity method since they are obtained. Where the remaining equities after disposal cannot impose commoncontrol or material influence over the investee, it shall be accounted for according to relevant provisions of the standards onrecognition and measurement of financial instruments, and the difference between fair value and the carrying value on the date oflosing control shall be included in the current profit or loss.The disposed equity interest was acquired in a business combination as resulted from such as making additional investment, theremaining equity interest after disposal will be accounted for using cost method or equity method when preparing the separatefinancial statements. Other comprehensive income and other owners' equity recognized when the equity interests held on theacquisition date is accounted for using equity method and shall be transferred proportionally; For the remaining equity interest afterdisposal accounted for using the recognition and measurement standard of financial instruments, other comprehensive income andother owners' equity shall be fully transferred.
16. Investment property
Investment property measurement modelMeasurement by cost methodDepreciation or amortization methodInvestment property refers to the real estate held to generate rental income or capital appreciation, or both, including leased landuse rights, land use rights held for transfer after appreciation, and leased buildings (including buildings that are leased aftercompletion of self-construction or development activities and buildings in construction or development that are used for rental in thefuture).
The Company adopts the cost mode to measure the existing investment property. Investment property measured at cost -buildings held for leasing shall adopt the same depreciation policy for fixed assets of the company, land use rights held for leasingshall adopt the same amortization policy for the intangible assets.
17. Fixed assets
(1) Conditions for recognition of fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others, or foradministrative purposes; and have a service life of more than one accounting year. Fixed asset is recognized when it meets thefollowing conditions: ① It is probable that the economic benefits associated with the fixed asset will flow to the enterprise; ② Itscost can be reliably measured.
(2) Methods for depreciation
| Category | Depreciation method | Useful lives of depreciation | Residual Ratio | Annual depreciation rate |
| Housing and building | Straight-line method | 20 | 5% | 4.75% |
| Machinery and equipment | Straight-line method | 5-10 | 5% | 19.00%-9.50% |
| Means of transport | Straight-line method | 4-8 | 5% | 23.75%-11.88% |
| Electronic and other equipment | Straight-line method | 3-5 | 5% | 31.67%-19.00% |
Fixed assets are depreciated by categories using the straight-line method, and the annual depreciation rates are determined bycategories based upon their estimated useful lives and their estimated residual values. Where the parts of a fixed asset have differentuseful lives or cause economic benefits for the enterprise in different ways, different depreciation rates or depreciation methods shallapply, and each part is depreciated separately.
For fixed assets leased under finance lease, if it can be reasonably determined that the ownership of the leased asset can beacquired upon the expiry of the lease term, depreciation policies in line with the fixed assets will be adopted for depreciation duringthe remaining service life of the leased asset. If it cannot be reasonably determined that the ownership of the leased asset can beacquired upon the expiry of the lease term, depreciation policies in line with the fixed assets will be adopted for depreciation duringthe shorter of the lease term and the remaining service life of the leased asset.
(3) Recognition bases and measurement methods of fixed assets under finance lease
Where any one of the following conditions is provided in the lease agreement between the Company and the lesser, assets underfinance lease will be recognized: ① upon the expiry of lease, the ownership of the leased asset is transferred to the Company; ②the Company has the option to purchase the leased asset, the purchase consideration entered into is expected to be far less than thefair value of the leased asset upon the exercise of the option; ③ the lease term accounts for the majority of the service life of theleased asset; ④ the present value of the minimum lease payment upon the commencement of the lease is substantially the same asthe fair value of the leased asset. On the commencement of the lease, the leased asset shall be recorded at an amount equal to thelower of the fair value of the leased asset and the present value of the minimum lease payments, and the minimum lease paymentsshall be recorded as the carrying amount of long-term payables. The difference between the recorded amount of the leased asset andthe minimum lease payments shall be accounted for as unrecognized finance charge.
18. Construction in progress
Criteria and time point for construction in progress being transferred to the fixed asset Construction in progress is measured atall the expenditures incurred to bring the fixed assets ready for their intended use. If the construction in progress of fixed assetsconstructed are ready for their intended use but the final account of completed project has not been issued, it should be transferred tofixed assets at an estimated cost according to the construction budget, construction price or actual cost, and depreciation should beprovided according to deprecation policy for fixed assets from the date when the assets are ready for their intended use. When thefinal account of completed project is issued, the estimated cost will be adjusted according to the actual cost, while the originaldepreciation charge will not be adjusted.
19. Borrowing costs
(1) Criteria for recognition of capitalized borrowing costs
Borrowing costs refers to the borrowing interests, amortization of discounts or premiums, ancillary costs and exchangedifferences arising from foreign currency borrowings, etc.
For borrowing costs incurred by the Company that are directly attributable to the acquisition, construction or production ofassets qualified for capitalization, the costs will be capitalized and included in the costs of the related assets. Other borrowing costsshall be recognized as expense in the period in which they are incurred and included in profit or loss for the current period.Assets qualified for capitalization are assets (fixed assets, investment property, inventories, etc.) that necessarily take asubstantial period of time for acquisition, construction or production to get ready for their intended use or sale.Capitalization of borrowing costs begins when the following three conditions are fully satisfied:
① expenditures for the assets (including cash paid, transferred non-currency assets or expenditure for holding debt liability forthe acquisition, construction or production of assets qualified for capitalization) have been incurred;
② borrowing costs have been incurred;
③ acquisition, construction or production that are necessary to enable the asset reach its intended usable or salable conditionhave commenced.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessation of capitalization of borrowingcosts, excluding the period in which capitalization of borrowing costs is temporarily suspended.
Capitalization of borrowing costs shall be suspended during periods in which the qualifying asset under acquisition andconstruction or production ready for the intended use or sale.
If part of an asset being acquired, constructed or produced has been completed respectively and put into use individually,capitalization of borrowing costs should be suspended.
If different parts of the assets acquired, constructed or produced are completed separately, but such asset will not be ready forthe intended use or sale until all parts have been completed, then the borrowing costs will be capitalized until the completion of allparts of the said asset.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of aqualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months; if the interruptionis a necessary step for making the qualifying asset under acquisition and construction or production ready for the intended use or sale,the capitalization of the borrowing costs shall continue. The borrowing costs incurred during such period shall be recognized asprofits and losses of the current period. When the acquisition and construction or production of the asset resumes, the capitalizationof borrowing costs commences.
(4) Calculation of capitalization rate and amount of borrowing costs
Specific borrowings for the acquisition, construction or production of assets qualified for capitalization, borrowing costs of thespecific borrowings actually incurred in the current period minus the interest income earned on the unused borrowing loans as adeposit in the bank or as investment income earned from temporary investment will be used to determine the amount of borrowingcosts for capitalization.
General borrowings for the acquisition, construction or production of assets qualified for capitalization, the to-be-capitalizedamount of interests on the general borrowing shall be calculated and determined by multiplying the weighted average assetdisbursement of the part of the accumulative asset disbursements minus the specifically borrowed loans by the capitalization rate ofthe general borrowing used. The capitalization rate shall be calculated and determined according to the weighted average interest rateof the general borrowing.
20. Intangible Assets
(1) Valuation method, service life, impairment test
A. Valuation method of intangible assets
① Intangible assets are initially measured at cost upon acquisition
The costs of an externally purchased intangible asset include the purchase price, relevant taxes and expenses paid, and otherexpenditures directly attributable to putting the asset into condition for its intended use. If the payment for an intangible asset isdelayed beyond the normal credit conditions and it is of financing nature in effect, the cost of the intangible assets shall beascertained based on the present value of the purchase price.The amount of intangible assets acquired from debt restructuring should be recorded at the fair value of such intangible assets,and the difference between the carrying amount of the restructured debt and the fair value of the intangible assets acquired from debtrestructuring should be included in the profit or loss for the current period.If the non-monetary assets transaction is commercial in nature and the fair value of the assets received or surrendered can bereliably measured, the intangible assets received in the non-monetary assets transaction, shall be measured on the basis of the fairvalue of the assets surrendered, unless there are concrete evidence that the fair value of the assets received is more reliable; Fornon-monetary assets transaction which does not meet the above conditions, the cost of intangible assets received shall be the bookvalue of the assets surrendered and the relevant taxes and expenses payable, and the profit or loss will not be recognized.
② Subsequent measurement
The service life of intangible assets shall be analyzed and judged upon acquisition.
As for intangible assets with a finite service life, they are amortized using the straight-line method over the term in whicheconomic benefits are brought to the firm; If the term in which economic benefits are brought to the firm by an intangible assetcannot be estimated, the intangible asset shall be taken as an intangible asset with indefinite service life, and shall not be amortized.
B. Estimated useful lives for the intangible assets with finite service life:
| Item Name | Estimated useful lives | Basis |
| Land use rights | 50 years | Land use certificate |
| Non-patented technology | 5-10 years | Expected benefited period |
| Softwares | 2-5 years | Expected benefited period |
| Trademark rights | 6 years | Expected benefited period |
| Software copyright | 10 years | Expected benefited period |
For an intangible asset with a finite service life, review on its service life and amortization method is performed at the end ofeach end.
Upon review, service life and amortization method for the intangible assets are the same with the previous estimate at the end ofthis period.
C. The basis for the judgment of intangible assets with uncertain service life and the procedure for reviewing their service life:
As at the balance sheet date, the Company has no intangible assets with uncertain service life.
(2) Accounting policy for internal R&D expenditure
A. Specific criteria for the division of research phase and development phase:
The expenses for internal research and development projects of the Company are divided into expenses in the research phaseand expenses in the development phase.
Research phase: Scheduled innovative investigations and research activities to obtain and understand scientific or technologicalknowledge.
Development phase: Apply the research outcomes or other knowledge to a plan or design prior to a commercial production oruse in order to produce new or essentially-improved materials, devices, products, etc.
B. Specific criteria for development phase qualified for capitalization:
The expenses in the development phase for internal R&D are recognized as intangible assets if the following conditions arefulfilled:
① It is technically feasible to complete such intangible asset so that it will be available for use or for sale;
② There is intention to complete the intangible asset for use or sale;
③ The intangible asset can produce economic benefits, including there is evidence that the products produced using theintangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence thatthere exists usage for the intangible asset;
④ There is sufficient support in terms of technology, financial resources and other resources in order to complete thedevelopment of the intangible asset, and there is capability to use or sell the intangible asset;
⑤ The expenses attributable to the development stage of the intangible asset can be measured reliably.If the expenses in the development phase does not meet the above conditions, it shall be included in the profits and losses for thecurrent period at the time of occurrence. Expenses in the research phase are recorded into the profits and losses for the current periodwhen they occur.
21. Impairment of long-term assets
Long-term assets, such as long-term equity investment, investment properties, fixed assets, construction in progress, intangibleassets that measured at cost are tested for impairment if there is any indication that an asset may be impaired at the balance sheet date.If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision forimpairment and an impairment loss are recognized for the amount by which the asset's carrying amount exceeds its recoverableamount. The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flowsexpected to be derived from the asset. Provision for asset impairment is determined and recognized on the individual asset basis. If itis not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which theasset belongs to is determined. A group of assets is the smallest group of assets that is able to generate cash inflows independently.
Impairment test to goodwill and the intangible assets whose using life is not certain shall be carried out at least at the end ofeach year.
When the Company carry out impairment test to goodwill, the Company shall, as of the purchasing day, allocate on a reasonablebasis the carrying value of the goodwill formed by merger of enterprises to the relevant asset groups, or if there is a difficulty inallocation, to allocate it to the sets of asset groups. When the carrying value of goodwill is allocated to the related asset group or setsof asset group, the allocation shall be made based on the proportion of the fair value of each asset groups or sets of asset groups to thetotal fair value of the relevant assets groups or sets of asset group. If there is difficulty for the fair value to be reliably measured, theallocation shall be made based on the proportion of the carrying value of each asset groups or sets of asset groups to the total carryingvalue of the relevant assets groups or sets of asset groups.
For the purpose of impairment test on the relevant asset groups or the sets of asset groups containing goodwill, if any evidenceshows that the impairment of asset groups or sets of asset groups related to goodwill is possible, an impairment test will be made firston the asset groups or sets of asset groups not containing goodwill, thus calculating the recoverable amount and comparing it with therelevant carrying value so as to recognize the corresponding impairment loss. Then an impairment test will be made on the assetgroups or sets of asset groups containing goodwill, and compare the carrying value of these asset groups or sets of asset groups(including the carrying value of the goodwill allocated thereto) with the recoverable amount. Where the recoverable amount of therelevant assets or sets of the asset groups is lower than the carrying value thereof, it shall recognize the impairment loss of thegoodwill.
Once the above asset impairment loss is recognized, it will not be reversed in the subsequent accounting periods.
22. Long-term prepaid expenses
Long-term prepaid expenses are expenses which have occurred but will benefit over 1 year and shall be amortized over thecurrent period and subsequent periods. The long-term prepaid expenses of the Company include expenditures paid for improvementof fixed assets under operating lease.
(1) Amortization method
Long-term prepaid expenses are amortized evenly over the estimated benefit period
(2) Amortization period
Expenditures paid for improvement of fixed assets under operating lease, amortized evenly over the lease term or remainingservice life of the asset, whichever is shorter.
23. Employee compensation
(1) Accountant arrangement method of short-term remuneration
During the accounting period when the staff provides service, the Company will recognize the short-term remuneration actuallyincurred as liabilities, and the liabilities would be charged into current profits and loss or costs of assets.
The Company will pay social insurance and housing funds, and will make provision of trade union funds and staff educationcosts in accordance with the requirements. During the accounting period when the staff provides service, the Company willdetermine the relevant amount of employee benefits in accordance with the required provision basis and provision ratios.
Non-currency employee benefits will be accounted for in accordance with their fair value if they can be measured reliably.
(2) Accountant arrangement method of retirement benefit plan
① Defined contribution scheme
The Company will pay basic pension insurance and unemployment insurance in accordance with the relevant provisions of thelocal government for the staff. During the accounting period when the staff provides service, the Company will calculate the amountpayable in accordance with the local stipulated basis and proportions which will be recognized as liabilities, and the liabilities wouldbe charged into current profits and loss or costs of assets.
In addition to the basic pension insurance, the Company has also established an enterprise annuity payment system(supplementary pension insurance)/enterprise annuity plan based on the relevant policies of the national enterprise annuity system.The Company conducts payment/payment of annuity plan to local social insurance institutions according to certain proportion ofemployees' wages and corresponding expenditures are included in profit or loss for the period or relevant asset costs.
② Defined benefit scheme
The welfare responsibilities generated from defined benefit scheme based on the formula determined by projected unit credit methodwould be vested to the service period of the staff and charged into current profits and loss or costs of assets.
(3) Accountant arrangement method of termination benefits
The Company will pay termination benefits when the group can no longer withdraw the offer of termination plan or layoffproposal or when the Group recognizes costs for restructuring which involving the payment of termination benefits (whichever theearliest). The remuneration incurred by the termination benefits will be recognized as liabilities which would be charged into currentprofits and loss.
24. Estimated liabilities
Where the Company is involved in litigations, guarantees provided to debts, loss-making contracts, restructuring and after-salemaintenance cost, and if such matters are likely to require future assets delivery or the provision of labor services, the amount ofwhich can be reliably measured, such items shall be recognized as estimated liabilities.
(1) Recognition criteria for estimated liabilities
The Company shall recognize the obligations related to contingencies involving litigations, guarantees provided to debts,loss-making contracts, and restructuring as estimated liabilities, when all of the following conditions are satisfied:
① the obligation is a present obligation of the group;
② it is probable that an outflow of economic benefits will be required to settle the obligation;
③ the amount of the obligation can be measured reliably.
(2) Method of measuring the various estimated liabilities
Estimated liabilities shall be initially measured at the best estimate of the expenditure required to settle the related presentobligation.
Factors pertaining to a contingency such as risk, uncertainties, and time value of money shall be taken into account as a whole inreaching the best estimate. Where the effect of the time value of money is material, the best estimate shall be determined bydiscounting the related future cash outflow.
The best estimate will be dealt with separately in the following circumstances:
The expenses required have a successive range (or band), in which the possibilities of occurrence of each result are the same,and the best estimate should be determined as the middle value for the range, i.e. the average of the upper and lower limit.
The expenses required does not have a successive range (or band), or although there is a successive range (or band), thepossibilities of occurrence of each result are different, if the contingency is related to individual item, the best estimate should bedetermined as the most likely amount; where the contingency is related to a number of items, the best estimate should be calculatedand determined according to the possible results and the relevant possibilities.
Where some or all of the expenditure required to settle an estimated liability is expected to be reimbursed by a third party, thereimbursement is separately recognized as an asset when it is virtually certain that the reimbursement will be received. The amountrecognized for the reimbursement is limited to the carrying amount of the estimated liability.
25. Share-based payment
The Company's share-based payment refers to a transaction in which the Company determines the liabilities on the basis ofequity instruments granting or bearing for the acquisition of service from its employees. The Company's share-based payment isequity-settled.
Equity-settled share-based payment and equity instrument:
As to an equity-settled share-based payment in return for services of employees, calculation will be based on the fair value ofthe equity instrument granted to the employees. If the Company make the share-based payment by restricted shares, employees willsubscribe the share but those shares shall not be listed on the market or transferred before it fulfill the unlocking condition andunlocked. If the unlocking conditions stipulated in the equity incentive scheme cannot be fulfilled eventually, the Company willrepurchase those shares based on the predetermined price. Upon obtaining the payment for subscribing restricted shares made by theemployees, the Company will recognized the share capital and capital reserve (share capital premium) according to the payment itreceived, while fully recognize a liability for its repurchasing obligation as well as its treasury shares. On each balance sheet datewithin the vesting period, the Company will make the best estimation of the number of vested equity instruments based on thesubsequent information such as the updated changes in the number of executives and the achievement of performance standard.Based on the above results, the services received in the current period will be included in the relevant cost or expense based on thefair value on the date of grant, and the capital reserve will be increased accordingly. The recognized cost or expense and owners'
interest will not be adjusted after the vesting date. However, equity instruments vested immediately after the date of grant will beincluded in the relevant cost or expense based on its fair value on the date of grant, and the capital reserve will be increasedaccordingly.For the share-based payments that are not vested eventually, no cost or expense will be recognized, except the vesting conditionis market condition or non-exercisable condition. Under such circumstances, no matter whether the market condition ornon-exercisable condition can be fulfilled, the share-based payment will be deemed as vested as long as all the non-market conditionsin the vesting condition are fulfilled.
If the terms of the equity-settled share-based payment are amended, the Company shall recognize the services received at leastbased on the situation before the amendment was made. In addition, any amendment resulting in the increase of the fair value of theequity instrument granted or changes that are beneficial to the staff on the amendment date, will be recognized as an increase in theservice received.If the equity-settled share-based payment is canceled, it will be accounted for as accelerated exercise on the cancellation dateand the unrecognized amount will be recognized immediately. Employees and other parties are able to satisfy the non-vestingconditions. If the conditions are not fulfilled during the vesting period, the equity settled share-based payment will be deemed ascanceled. However, if new equity instruments are vested and they are verified at the vesting date of new equity instrument asalternatives vested to canceled equity instruments, the treatment on the new equity instrument is in conformity with the modifiedtreatment on disposal of equity instrument.
26. Revenue
Whether new revenue standards have been implemented
□ Yes √ No
(1) General principles for recognizing revenue from the sale of goods:
① Revenue from the sale of goods is recognized when all the significant risks and rewards of ownership of the goods havebeen transferred to the buyer;
② The Company does not retain either continuing managerial involvement to the degree usually associated with ownership oreffective control over the sold goods;
③ The amount of revenue can be reliably measured;
④ It is probable that the economic benefits associated will flow to the Company;
⑤ The relevant amount of costs incurred or to be incurred can be measured reliably.
(2) Specific principles
① Principle for recognizing domestic sales revenue for standard products: The Company's security standard products are sold,through both direct sale and distribution, to the project clients, dealers and other customers. The Company and customers sign salescontracts and send the goods to customers according to the contractual terms of delivery, or the customers pick up goods. Therevenue is recognized after the customer receives and accepts the goods and the Company obtains the receipt for proving the client'sreceipt of goods.
② Principle for recognizing overseas sales revenue for standard products: If the domestic company makes direct export, theFOB and CIF terms are generally adopted and the Company recognizes the sale income after the product is declared and exported. Ifa foreign subsidiary sells the goods abroad, the goods will be sent to the customer or the customer will collect the goods according tothe delivery method agreed with the customer, and the income will be recognized when the customer receives and accepts the goods.
③ Principle for recognizing system-integrated sales revenue: The sales of the system-integrated products of the Companyinclude providing the supporting services such as plan design, supporting products, installation, debugging and system trial operation.The sales income will be recognized upon acceptance.
④ Principle for recognizing the income from labor services: The income is recognized when the labor service is provided.
27. Government subsidies
(1) Type
Government grants are monetary assets and non-monetary assets acquired by the Company from the government free of charge.Government grants are classified into government grants related to assets and government grants related to revenue.
Government grants related to assets refer to government grants acquired by the Company for the purpose of purchasing orconstructing or otherwise forming long-term assets. Government grants related to revenue refer to the government grants other thanthose related to assets.
(2) Confirmation of time point
Government grants related to assets will be measured at the actual amount of money received at the time of receipt. The assets(bank deposits) and deferred income shall be period by period included in the profits and losses of the current period in a reasonableand systematic manner from the time the assets are available for use (those related to the Company's daily activities shall be includedin other income; those unrelated to the Company's daily activities shall be recognized as non-operating income). When the relevantassets are disposed of (sold, transferred, scrapped, etc.) at or before the end of their service life, the balance of the deferred incomethat has not yet been apportioned will be transferred to the current-period income from the disposal of the assets on an one-timemanner, and will not be deferred.
For government grants related to revenue, it will be recognized as non-Operating Revenue according to the amount receivablefor government subsidies obtained under fixed quota standards, otherwise it will be recognized as non-Operating Revenue when it isactually received.
(3) Accounting treatment
Government grants related to assets shall write off the book value of relevant assets or be recognized as deferred income. Whenrecognized as deferred income, the government grant related to assets will be period by period credited to the profits and losses of thecurrent period in a reasonable and systematic manner within the service life of relevant assets (those related to the Company's dailyactivities shall be recognized as other income; those unrelated to the Company's daily activities shall be recognized as non-operatingincome).
The revenue-related government grants shall be recognized as deferred income if they are used to compensate relevant expensesor losses in subsequent periods, and they shall be included in profit and loss of the current period (those related to Company's routineactivities shall be included in other income; those unrelated to the Company's routine activities shall be included in non-operatingincome) or used to offset relevant expenses or losses during the recognition of related expenses or losses; the grants used tocompensate related expenses or losses incurred shall be included in profit and loss of the current period (those related to Company'sroutine activities shall be included in other income; those unrelated to the Company's routine activities shall be included innon-operating income) or used to offset relevant expenses or losses.
28. Deferred income tax assets/liabilities
Deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be available againstwhich deductible temporary differences can be utilized. For deductible losses and tax credits that can be reversed in the future period,deferred tax assets shall be recognized to the extent that it is probable that taxable profit will be available in the future to offset thedeductible losses and tax credits.
Save as the exceptions, deferred income tax liabilities shall be recognized for the taxable temporary difference.
The exceptions for not recognition of deferred income tax assets and liabilities include: the initial recognition of the goodwill;other transactions or matters other than business combinations in which neither profit nor taxable income (or deductible loss) will be
affected when transactions occur.
After granted the legal rights of net settlement and with the intention to use net settlement or obtain assets and repay debt at thesame time, the net amount after offsetting its current income tax assets and current income tax liabilities shall be recorded.When the Company was granted the legal rights of net settlement of current income tax assets and current income tax liabilities,and deferred income tax assets and deferred income tax liabilities are related to income tax to be paid by the same entity liable to paytax to the same tax collection and management authority or related to different entities liable to pay tax, but the relevant entity liableto pay tax is intended to apply net settlement of current income tax assets and liabilities or, at the same time, obtain assets, repay debtwhenever every deferred income tax assets and liabilities with importance would be reversed in the future, the Company records thenet amount after offsetting its current income tax assets and current income tax liabilities.
29. Leases
(1) Accounting of operating lease
① As the lessee of operating leases, rental payments under operating leases are recognized as costs or expenses on a straightline basis over the lease term (including rent free periods). Initial direct costs that are attributable to an operating lease incurred bythe Company are charged to current profit and loss.
When the lesser bears the lease related expenses which should be undertaken by the Company, the Company shall deduct thispart of expense from the rent and amortize the net amount over the lease term.
② Leasing charges received by the Company for the assets leased out shall be amortized in a straight-line basis over the leaseterm without deducting the rent-free periods, and recognized as leasing income. The initial direct fee related to the leasingtransactions paid by the Company shall be charged to current expenses; if the mount is significant, it shall be capitalized and chargedto current income evenly on the same basis as the leasing income is recognized over the lease term.
When the Company bears the lease related expenses which should be undertaken by the lessee, the Company shall deduct thispart of expense from the rent income, and amortize the net amount over the lease term.
(2) Accounting of finance lease
① Assets acquired under finance leases: At the initiation date of the lessee, the leased asset is recorded at the amounts equal tothe lower of the fair value of the leased asset and the present value of the minimum lease payments. The balance is accounted for asunrecognized finance charge and is amortized using the effective interest method over the period of the lease. The Company, bymeans of the real interest method, amortizes the unacknowledged financial charges during the lease term of the assets and includesthem into financing expenses. Initial direct cost incurred by the Company will be included in the assets acquired under finance leases.
② Assets acquired under finance rents: At the initiation date of the lessee, the difference between the recorded amount of the leasedasset and the minimum lease receivables is accounted for as unrecognized finance income and is recognized as rental income over theperiod of the lease. Initial direct costs shall be included in the initial accounting of the lease payment receivables and deduct by therevenue recognized over the lease term.
30. Other significant accounting policies and accounting estimates
(1) Termination of operation
Termination of business is a separately distinguishable constituent part that satisfies one of the following conditions and that hasbeen disposed of or classified by the Company as held for sale:
①This constituent part represents an independent primary business or a separate principal operating area;
②This constituent part is part of an associated plan to dispose of for an independent primary business or a separate principaloperating area;
③This constituent part is a subsidiary acquired for resale.
(2) Repurchase of the Company's shares
The Company's shares repurchased by the Company for reducing the registered capital or rewarding employees shall be treatedas the treasury shares based on the actual amount paid, and shall be checked and registered at the same time. If the repurchasedshares are canceled, the difference between the actual amount paid for the repurchase and the total par value of shares calculated bythe par value of the canceled shares and the number of canceled shares will write off the capital reserve. If the capital reserve isinsufficient, the retained income will be written off; if the repurchased shares are awarded to the employees of the Company, it shallbe categorized as equity-settled share-based payment. When the Company receives the payment made by employees who exercisetheir rights to purchase such shares, the amount shall be used to write off the cost of treasury shares delivered to employees and thecapital reserve in the waiting period and meanwhile, the capital reserve (stock premium) shall be adjusted according to the difference.
31. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
√ Applicable □ Not applicable
| Content and Reasons for Change in Accounting Policies | Approval procedure | Notes |
| Revision of the financial statement format The Group has implemented the Notice on Revising the Format of 2019 General Enterprise Financial Statements (CaiKuai [2019] No. 6, hereinafter referred to as "CaiKuai No. 6") issued by the Ministry of Finance (MOC) on April 30, 2019 since the preparation of the 2019 interim financial statements. The CaiKuai No. 6 revised the general enterprise financial statement format , with the item "accounts receivable and notes receivable" split into items "accounts receivable" and "notes receivable", and "accounts payable and notes payable" into "accounts payable" and "notes payable", and the presented contents of subjects "interest income", "other income", "asset disposal income", "non-operating income" and "non-operating expenses" under the items "other receivables", "non-current assets due within one year", "other payables", "deferred income", "research and development" and "financial expenses" clarified or revised. For the enterprises that have implemented the new financial instrument standards, the "receivables financing" is added to reflect the notes receivable and accounts receivable that are measured at fair value through other comprehensive income under the new financial instrument standards; the "income of financial assets recognition termination measured at amortized cost" is added to reflect the gains or losses arising from the termination of recognition of financial assets measured at amortized cost due to transfer of the enterprise. For the above-mentioned changes in the presented items, the Company adopts the retrospective adjustment method to make accounting changes, and retrospectively adjusts the data in comparable accounting periods. | Approved on the meeting of the Board of Directors of the Company | N/A |
| The New Financial Instruments Standards The Group has implemented the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments", "Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets", "Accounting Standards for Business Enterprises No. 24 - Hedge Accounting" and "Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments" revised by the Ministry of Finance in 2017 (hereinafter referred to as "New Financial Instruments Standards") from January 1, | Approved on the meeting of the Board of Directors | N/A |
| 2019. In terms of the classification and measurement of financial assets, the New Financial Instruments Standards require that the financial assets shall be classified into three categories: "financial assets measured at amortized cost", "financial assets at fair value through other comprehensive income" and "financial assets at fair value through profit or loss" according to the contractual cash flow characteristics of financial assets and the business model of financial assets management of the Company, with the categories in the original financial instruments standards like loans and receivables, held-to-maturity investment and available-for-sale financial assets abandoned. Equity instrument investments are generally classified as financial assets at fair value through profit or loss. The non-transactional equity instrument investments can also be designated as financial assets at fair value through other comprehensive income, but such designation is irrevocable and the accumulated fair value changes previously recognized in other comprehensive income cannot be carried forward to profit or loss of the period. In respect of impairment, the requirements of the New Financial Instruments Standards for impairment apply to financial assets measured at amortized cost, financial assets at fair value through other comprehensive income, lease receivables and financial guarantee contracts. The require the use of the expected credit loss model, instead of the original credit loss model, for confirming the provision for credit lossNew Financial Instruments Standards. The new impairment model adopts a three-stage model. The provision for credit loss is accrued based on the expected credit loss within 12 months or the expected credit loss of the entire duration of an item, depending on whether the credit risk of such an item has increased significantly since the initial confirmation. For the total accounts receivable and long-term receivables formed by transactions regulated by the revenue standards, as well as the finance lease receivables formed by the transactions regulated by the Accounting Standards for Business Enterprises No. 21 - Leases, the Group measures the provision for loss according to the amount equivalent to that of the expected credit losses of the entire duration. For financial instruments to which the recognition and measurement inconsistent with the requirements of the New Financial Instruments Standards were applied before January 1, 2019, the Group will make retrospective adjustments in accordance with the requirements of the New Financial Instruments Standards. The Group does not make adjustments to previous comparative financial statements inconsistent with the requirements of the New Financial Instruments Standards. The difference between the original carrying value of the financial instrument and the new carrying value on the date of the implementation of the New Financial Instruments Standards is included in retained income or other comprehensive income on January 1, 2019. | of the Company |
(2) Changes in significant accounting estimates
□ Applicable √ Not applicable
(3) Adjustments to the first implementation of the financial statements at the beginning of the year at thefirst implementation of new financial instruments standards, new revenue standards, and new leasestandards
√ Applicable □ Not applicable
Consolidated Balance Sheet
Unit: RMB
| Item Name | December 31, 2018 | January 01, 2019 | Adjusted Amount |
| Current Assets: | |||
| Cash and Bank Balances | 4,160,153,847.06 | 4,160,153,847.06 | |
| Deposit Reservation for Balance | |||
| Loans to Banks and Other Financial Institutions | |||
| Transactional Financial Assets | |||
| Financial Liabilities at Fair Value through Profit or Loss | |||
| Derivative Financial Assets | |||
| Notes Receivable | 2,385,693,417.06 | 2,385,693,417.06 | |
| Accounts Receivable | 10,191,372,777.38 | 10,191,372,777.38 | |
| Accounts Receivable Financing | |||
| Prepayments | 126,891,259.00 | 126,891,259.00 | |
| Premium Receivable | |||
| Reinsurance Accounts Receivable | |||
| Reinsurance Contract Reserves Receivable | |||
| Other Receivables | 398,170,769.40 | 398,170,769.40 | |
| Including: interest receivable | 6,754,941.00 | 6,754,941.00 | |
| Dividends Receivable | |||
| Buying Back the Sale of Financial Assets | |||
| Inventory | 3,035,579,709.14 | 3,035,579,709.14 | |
| Contract Assets | |||
| Holding for-sale assets | |||
| Non-current Assets Due within 1 Year | 578,733,057.27 | 578,733,057.27 | |
| Other Current Assets | 402,255,078.05 | 402,255,078.05 | |
| Subtotal of Current Assets | 21,278,849,914.36 | 21,278,849,914.36 |
| Non-current Assets: | |||
| Granting of loans and advances | |||
| Debt Investment | |||
| Financial Assets Available for Sale | 82,970,227.00 | -82,970,227.00 | |
| Other Debt Investment | |||
| Held-to-maturity Investments | |||
| Long-term Receivables | 1,861,485,568.28 | 1,861,485,568.28 | |
| Long-term Equity Investment | 185,872,021.58 | 185,872,021.58 | |
| Investments in Other Equity Instruments | |||
| Other non-current financial assets | 82,970,227.00 | 82,970,227.00 | |
| Investment Property | 346,831,376.55 | 346,831,376.55 | |
| Fixed Assets | 1,407,471,330.83 | 1,407,471,330.83 | |
| Projects under Construction | 226,191,587.11 | 226,191,587.11 | |
| Productive Biological Assets | |||
| Oil and Gas Assets | |||
| Right-of-use Assets | |||
| Intangible Assets | 372,467,409.09 | 372,467,409.09 | |
| Development Expenditure | |||
| Goodwill | 109,745,412.21 | 109,745,412.21 | |
| Long-term Prepaid Expenses | 37,117,918.55 | 37,117,918.55 | |
| Deferred Income Tax Assets | 425,319,406.98 | 425,319,406.98 | |
| Other Non-current Assets | 16,277,605.61 | 16,277,605.61 | |
| Subtotal of Non-current Assets | 5,071,749,863.79 | 5,071,749,863.79 | |
| Total Assets | 26,350,599,778.15 | 26,350,599,778.15 |
| Current Liabilities: | |||
| Short-term loan | 1,851,709,561.83 | 1,851,709,561.83 | |
| Borrowings from the Central Bank | |||
| Borrowings from Banks and Other Financial Institutions | |||
| Transactional Financial Liabilities | 38,602,602.30 | 38,602,602.30 | |
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | 38,602,602.30 | -38,602,602.30 | |
| Derivative Financial Liabilities | |||
| Notes Payable | 3,671,586,104.79 | 3,671,586,104.79 | |
| Accounts Payable | 3,789,729,594.20 | 3,789,729,594.20 | |
| Received Prepayments | 343,297,891.20 | 343,297,891.20 | |
| Financial Assets Sold for Repurchase | |||
| Deposit Taking and Interbank Deposit | |||
| Receiving from Vicariously Traded Securities | |||
| Receiving from Vicariously Sold Securities | |||
| Payroll Payable | 1,124,358,611.94 | 1,124,358,611.94 | |
| Tax Payable | 599,478,049.81 | 599,478,049.81 | |
| Other Payables | 1,051,537,094.97 | 1,051,537,094.97 | |
| Including: interest payable | 4,745,203.31 | 4,745,203.31 | |
| Dividends Payable | |||
| Service Charge and Commission Payable | |||
| Reinsurance Accounts Payable | |||
| Contract Liabilities |
| Holding for-sale liabilities | |||
| Non-current Liabilities Due within 1 Year | 25,500,000.00 | 25,500,000.00 | |
| Other Current Liabilities | 70,845,639.51 | 70,845,639.51 | |
| Subtotal of Current Liabilities | 12,566,645,150.55 | 12,566,645,150.55 | |
| Non-current Liabilities: | |||
| Insurance Contract Reserves | |||
| Long-term Loan | 179,000,000.00 | 179,000,000.00 | |
| Bonds Payable | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Lease Liabilities | |||
| Long-term Payables | |||
| Long-term payroll payable | |||
| Expected Liabilities | 193,761,170.12 | 193,761,170.12 | |
| Deferred Income | 58,693,533.40 | 58,693,533.40 | |
| Deferred Income Tax Liabilities | 50,137,969.76 | 50,137,969.76 | |
| Other Non-current Liabilities | 399,096,280.89 | 399,096,280.89 | |
| Subtotal of Non-current Liabilities | 880,688,954.17 | 880,688,954.17 | |
| Total Liabilities | 13,447,334,104.72 | 13,447,334,104.72 | |
| Shareholders' Equity: | |||
| Share Capital | 2,997,621,930.00 | 2,997,621,930.00 | |
| Other Equity Instruments | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds |
| Capital Reserves | 1,501,180,862.83 | 1,501,180,862.83 | |
| Less: Treasury Share | 807,733,586.00 | 807,733,586.00 | |
| Other Comprehensive Incomes | 10,337,164.41 | 10,337,164.41 | |
| Special Reserves | |||
| Surplus Reserves | 1,246,369,430.91 | 1,246,369,430.91 | |
| General Risk Reserves | |||
| Undistributed Profits | 7,670,983,116.33 | 7,670,983,116.33 | |
| Total Shareholders' Equity Attributable to the Parent Company | 12,618,758,918.48 | 12,618,758,918.48 | |
| Minority Shareholders' Equity | 284,506,754.95 | 284,506,754.95 | |
| Total Shareholders' Equity | 12,903,265,673.43 | 12,903,265,673.43 | |
| Total Liabilities and Shareholders' Equity | 26,350,599,778.15 | 26,350,599,778.15 |
Balance Sheet of the Parent Company
Unit: RMB
| Item Name | December 31, 2018 | January 01, 2019 | Adjusted Amount |
| Current Assets: | |||
| Cash and Bank Balances | 611,190,236.01 | 611,190,236.01 | |
| Transactional Financial Assets | |||
| Financial Liabilities at Fair Value through Profit or Loss | |||
| Derivative Financial Assets | |||
| Notes Receivable | 952,572,702.92 | 952,572,702.92 | |
| Accounts Receivable | 4,598,575,923.04 | 4,598,575,923.04 | |
| Accounts Receivable Financing | |||
| Prepayments | 26,772,044.53 | 26,772,044.53 | |
| Other Receivables | 6,954,655,863.03 | 6,954,655,863.03 | |
| Including: interest receivable | 42,500.00 | 42,500.00 |
| Dividends Receivable | |||
| Inventory | 120,181,267.85 | 120,181,267.85 | |
| Contract Assets | |||
| Holding for-sale assets | |||
| Non-current Assets Due within 1 Year | 50,793,137.80 | 50,793,137.80 | |
| Other Current Assets | 24,858,982.78 | 24,858,982.78 | |
| Subtotal of Current Assets | 13,339,600,157.96 | 13,339,600,157.96 | |
| Non-current Assets: | |||
| Debt Investment | |||
| Financial Assets Available for Sale | 80,496,000.00 | -80,496,000.00 | |
| Other Debt Investment | |||
| Held-to-maturity Investments | |||
| Long-term Receivables | 160,299,143.83 | 160,299,143.83 | |
| Long-term Equity Investment | 3,001,639,428.55 | 3,001,639,428.55 | |
| Investments in Other Equity Instruments | |||
| Other non-current financial assets | 80,496,000.00 | 80,496,000.00 | |
| Investment Property | 183,321,198.72 | 183,321,198.72 | |
| Fixed Assets | 496,363,638.38 | 496,363,638.38 | |
| Projects under Construction | 151,072,585.67 | 151,072,585.67 | |
| Productive Biological Assets | |||
| Oil and Gas Assets | |||
| Right-of-use Assets | |||
| Intangible Assets | 170,879,747.04 | 170,879,747.04 | |
| Development Expenditure | |||
| Goodwill | |||
| Long-term Prepaid Expenses | 28,927,258.54 | 28,927,258.54 |
| Deferred Income Tax Assets | 40,821,902.57 | 40,821,902.57 | |
| Other Non-current Assets | 929,380.00 | 929,380.00 | |
| Subtotal of Non-current Assets | 4,314,750,283.30 | 4,314,750,283.30 | |
| Total Assets | 17,654,350,441.26 | 17,654,350,441.26 | |
| Current Liabilities: | |||
| Short-term loan | 1,380,000,000.00 | 1,380,000,000.00 | |
| Transactional Financial Liabilities | |||
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | |||
| Derivative Financial Liabilities | |||
| Notes Payable | 175,647,414.85 | 175,647,414.85 | |
| Accounts Payable | 889,881,485.16 | 889,881,485.16 | |
| Received Prepayments | 80,361,211.04 | 80,361,211.04 | |
| Contract Liabilities | |||
| Payroll Payable | 817,723,936.19 | 817,723,936.19 | |
| Tax Payable | 351,294,836.50 | 351,294,836.50 | |
| Other Payables | 1,060,909,330.56 | 1,060,909,330.56 | |
| Including: interest payable | 2,416,340.30 | 2,416,340.30 | |
| Dividends Payable | |||
| Holding for-sale liabilities | |||
| Non-current Liabilities Due within 1 Year | |||
| Other Current Liabilities | 6,464,333.12 | 6,464,333.12 | |
| Subtotal of Current Liabilities | 4,762,282,547.42 | 4,762,282,547.42 | |
| Non-current Liabilities: | |||
| Long-term Loan |
| Bonds Payable | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Lease Liabilities | |||
| Long-term Payables | |||
| Long-term payroll payable | |||
| Expected Liabilities | 3,396,100.00 | 3,396,100.00 | |
| Deferred Income | |||
| Deferred Income Tax Liabilities | |||
| Other Non-current Liabilities | 23,684,423.74 | 23,684,423.74 | |
| Subtotal of Non-current Liabilities | 27,080,523.74 | 27,080,523.74 | |
| Total Liabilities | 4,789,363,071.16 | 4,789,363,071.16 | |
| Shareholders' Equity: | |||
| Share Capital | 2,997,621,930.00 | 2,997,621,930.00 | |
| Other Equity Instruments | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Capital Reserves | 1,497,801,068.88 | 1,497,801,068.88 | |
| Less: Treasury Share | 807,733,586.00 | 807,733,586.00 | |
| Other Comprehensive Incomes | |||
| Special Reserves | |||
| Surplus Reserves | 1,246,369,430.91 | 1,246,369,430.91 | |
| Undistributed Profits | 7,930,928,526.31 | 7,930,928,526.31 | |
| Total Shareholders' Equity | 12,864,987,370.10 | 12,864,987,370.10 | |
| Total Liabilities and Shareholders' Equity | 17,654,350,441.26 | 17,654,350,441.26 |
(4) Retrospective adjustment to previous comparative data at the first implementation of the new financialinstruments standards and new lease standards
□ Applicable √ Not applicable
Ⅵ. Taxes
1. Major categories of taxes and tax rates
| Tax Type | Taxation basis | Tax rate |
| VAT | According to the provisions of the tax law, the sales tax shall be calculated on the basis of the income by selling goods and taxable services. After deducting the input tax that is allowed to be deducted from the sales tax in the current period, the difference shall be the value added tax | 16%, 13%, 11%, 10%, 9%, 6%, simple collection rate of 5% and simple collection rate of 3% |
| Urban Maintenance and Construction Tax | Calculated based on the deduction free amount, actual business tax, VAT, and consumption tax | 7%, 5% |
| Enterprise Income Tax | Calculated based on the taxable income | 15%, 16.5%, 25% |
| Education Surcharges | Calculated based on the deduction free amount, actual business tax, VAT, and consumption tax | 3% |
| Local Education Surcharges | Calculated based on the deduction free amount, actual business tax, VAT, and consumption tax | 2% |
If there are multiple taxpayers with different enterprise income tax rates, specify the situation
| Name of taxpayer | Income tax rate |
| Zhejiang Dahua Technology Co., Ltd. | 15% |
| Zhejiang Dahua System Engineering Co., Ltd. | 15% |
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | 15% |
| South North United Information Technology Co., Ltd. | 15% |
| Zhejiang Huatu Microchip Technology Co., Ltd. | 15% |
| Hangzhou Tecomore Technology Co., Ltd. | 15% |
| Zhejiang HuaRay Technology Co., Ltd. | 15% |
| Zhejiang Huachuang Vision Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhixin Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhihe Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhitian Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Huayue Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Xinzhi Information Technology Co., Ltd. | 15% |
| Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. | 15% |
| Dahua Technology (HK) Limited | 16.50% |
| Other domestic companies | 25% |
| Other overseas companies | Applicable to local tax rate |
2. Preferential tax rate
(1) In accordance with CaiShui [2011] No. 100 jointly issued by the Ministry of Finance (MOC) and the State Administration ofTaxation (SAT), our software sales with actual tax burden of more than 3% is subject to the policy of immediate refund right aftercollection after being reviewed and approved by the competent tax authorities. The policy of "tax exemption, offset and refund" isvalid for the value-added tax (VAT) on our export goods, with the tax refund rate of 16% and 13%.
(2) In accordance with the Letter of Reply on the Registration of First Batch of High-tech Enterprises of Zhejiang Province in2017 (GuoKeHuoZi [2017] No.201) issued by the Science and Technology Department of Zhejiang Province, the Company has beenre-certified as a high-tech enterprise with the High-tech Enterprise Certificate No.GR201733003264 issued on November 13, 2017with a validity period of three years. The Company's enterprise income tax in this period shall be calculated and paid at a tax rate of15%.
(3) In accordance with the Letter of Reply on the Registration of First Batch of High-tech Enterprises of Zhejiang Province in2015 (GuoKeHuoZi [2015] No.256) issued by the Leading High-tech Industry Development Center of the Science and TechnologyDepartment, the subsidiary - Zhejiang Dahua System Engineering Co., Ltd. - has been approved to be registered as a high-techenterprise, with the High-tech Enterprise Certificate No.GR201633001378. The enterprise income tax of the subsidiary - ZhejiangDahua System Engineering Co., Ltd. - in this period shall be calculated and paid at a tax rate of 15%.
(4) In accordance with the Letter of Reply on the Registration of First Batch of High-tech Enterprises of Zhejiang Province in2017 (GuoKeHuoZi [2017] No.201) issued by the Science and Technology Department of Zhejiang Province, the subsidiary -Zhejiang Dahua Security Network Operation Service Co., Ltd. - has been certified as a high-tech enterprise with the High-techEnterprise Certificate No.GR201733000226 issued on November 13, 2017 with a validity period of three years. The enterpriseincome tax of the subsidiary - Zhejiang Dahua Security Network Operation Service Co., Ltd. - in this period shall be calculated andpaid at a tax rate of 15%.
(5) In accordance with the Letter of Reply on the Registration of First Batch of High-tech Enterprises of Zhejiang Province in2017 (GuoKeHuoZi [2017] No.201) issued by the Science and Technology Department of Zhejiang Province, the subsidiary -South-North United Information Technology Co., Ltd. - has been certified as a high-tech enterprise, with the High-tech EnterpriseCertificate No.GR201733001886 issued on November 13, 2017 with a validity period of three years. The enterprise income tax of thesubsidiary - South-North United Information Technology Co., Ltd. - in this period shall be calculated and paid at a tax rate of 15%.
(6) In accordance with the Letter of Reply on the Registration of First Batch of High-tech Enterprises of Zhejiang Province in2018 (GuoKeHuoZi [2019] No.70) issued by the Science and Technology Department of Zhejiang Province, the subsidiary -Zhejiang Huatu Microchip Technology Co., Ltd. - has been certified as a high-tech enterprise, with the High-tech EnterpriseCertificate No.GR201833004098 issued on November 30, 2018 with a validity period of three years. The enterprise income tax of thesubsidiary - Zhejiang Huatu Microchip Technology Co., Ltd. - in this period shall be calculated and paid at a tax rate of 15%.
(7) In accordance with the Letter of Reply on the Registration of High-tech Enterprises of Zhejiang Province in 2018(GuoKeHuoZi [2019] No.70) issued by the Science and Technology Department of Zhejiang Province, the subsidiary - HangzhouTecomore Technology Co., Ltd. - has been certified as a high-tech enterprise, with the High-tech Enterprise Certificate
No.GR201833000036 issued on November 30, 2018 with a validity period of three years. The enterprise income tax of the subsidiary- Hangzhou Tecomore Technology Co., Ltd. - in this period shall be calculated and paid at a tax rate of 15%.
(8) In accordance with the Letter of Reply on the Registration of First Batch of High-tech Enterprises of Zhejiang Province in2018 (GuoKeHuoZi [2019] No.70) issued by the Science and Technology Department of Zhejiang Province, the subsidiary -Zhejiang HuaRay Technology Co., Ltd. - has been certified as a high-tech enterprise, with the High-tech Enterprise CertificateNo.GR201833002084 issued on November 30, 2018 with a validity period of three years. The enterprise income tax of the subsidiary- Zhejiang HuaRay Technology Co., Ltd. - in this period shall be calculated and paid at a tax rate of 15%.
(9) In accordance with the Letter of Reply on the Registration of First Batch of High-tech Enterprises of Zhejiang Province in2018 (GuoKeHuoZi [2019] No.70) issued by the Science and Technology Department of Zhejiang Province, the subsidiary -Zhejiang Huachuang Vision Technology Co., Ltd. - has been certified as a high-tech enterprise, with the High-tech EnterpriseCertificate No.GR201833000466 issued on November 30, 2018 with a validity period of three years. The enterprise income tax of thesubsidiary - Zhejiang Huachuang Vision Technology Co., Ltd. - in this period shall be calculated and paid at a tax rate of 15%.
(10) In accordance with CaiShui [2011] No.58 jointly issued by the Ministry of Finance (MOC), the State Administration ofTaxation (SAT) and the General Administration of Customs (GAC), the subsidiaries - Xinjiang Dahua Zhixin InformationTechnology LLC, Xinjiang Dahua Zhihe Information Technology Co., Ltd., Xinjiang Dahua Zhitian Information Technology Co.,Ltd., Xinjiang Dahua Huayue Information Technology Co., Ltd., Xinjiang Dahua Xinzhi Information Technology Co., Ltd., and InnerMongolia Dahua Zhimeng Information Technology Co., Ltd. - can enjoy the preferential tax policy for the development of thewestern region from 2011 to 2020; therefore, the corporate income tax for this year was calculated and paid at a rate of 15%.
(11) In accordance with CaiShui [2018] No.32 issued by the State Administration of Taxation (SAT), the tax rates for VATtaxable sales or imported goods by the taxpayer are adjusted from 17%, 11%, and 6% to 16%, 10%, and 6% respectively from May 1,2018.
(12) In accordance with Announcement [2019] No.39 jointly issued by the Ministry of Finance (MOC), the State Administrationof Taxation (SAT) and the General Administration of Customs (GAC), the tax rates for VAT taxable sales or imported goods by thetaxpayer are adjusted from 16%, 10%, and 6% to 13%, 9%, and 6% respectively from April 1, 2019.Ⅶ. Notes to the Items in the Consolidated Financial Statements
1. Cash and bank balances
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Cash on Hand | 3,401.03 | 3,981.79 |
| Bank Balance | 3,548,108,718.92 | 3,547,354,923.39 |
| Other Cash and Bank Balances | 653,455,994.40 | 612,794,941.88 |
| Total | 4,201,568,114.35 | 4,160,153,847.06 |
| Including: Total Amount Deposited in Overseas Banks | 943,660,689.93 | 838,640,436.81 |
The details of the cash and bank balances that are limited by mortgage, pledge or freeze are as follows:
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Documentary Credit Deposit | 235,550,000.00 | 308,844,000.00 |
| Bid/Performance Bond Deposit | 89,919,335.26 | 60,315,816.01 |
| Bank Acceptance/Commercial Acceptance Discount deposit | 100,000,000.00 | 100,000,000.00 |
| Bank Acceptance Bill Issuance Deposit | 235,133,107.66 | |
| Total | 660,602,442.92 | 469,159,816.01 |
2. Trading financial assets
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Financial Liabilities at Fair Value through Profit or Loss | 7,056,942.13 | |
| Including: | ||
| Including: Derivative Financial Assets | 7,056,942.13 | |
| Including: | ||
| Total | 7,056,942.13 |
3. Notes Receivable
(1) Categories of notes receivable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Bank Acceptance Notes | 1,221,653,902.14 | 2,385,693,417.06 |
| Total | 1,221,653,902.14 | 2,385,693,417.06 |
(2) Notes Receivable pledged by the Company at the closing of the reporting period
Unit: RMB
| Item Name | Pledged amount by the end of period |
| Bank Acceptance Notes | 1,127,284,255.91 |
| Total | 1,127,284,255.91 |
(3) Notes Receivable discounted or endorsed by the Company at the closing of the reporting period
Unit: RMB
| Item Name | Derecognised amount at the end of period | Not derecognised amount at the end of period |
| Bank Acceptance Notes | 111,187,456.29 |
| Total | 111,187,456.29 |
4. Accounts Receivable
(1) Disclosure of accounts receivable by categories
Unit: RMB
| Category | Balance at the End of the Period | Balance at the Commencement of the Period | ||||||||
| Book Balance | Bad Debt Provision | Book Value | Book Balance | Bad Debt Provision | Book Valu | |||||
| Amount | Percentage | Amount | Accrued Proportion | Amount | Percentage | Amount | Accrued Proportion | |||
| Accounts Receivable with Bad Debt Provision Accrued Based on Credit Risk Feature Combinations | 77,985,715.13 | 0.63% | 67,985,715.13 | 87.18% | 10,000,000.00 | 77,967,205.50 | 0.69% | 67,967,205.50 | 87.17% | 10,000,000.00 |
| Including: | ||||||||||
| Accounts Receivable that are individually insignificant but are provided for bad debt on individual basis | 77,985,715.13 | 0.63% | 67,985,715.13 | 87.18% | 10,000,000.00 | 77,967,205.50 | 0.69% | 67,967,205.50 | 87.17% | 10,000,000.00 |
| Accounts Receivables with the bad debts provision accrued on a portfolio basis | 12,283,449,865.04 | 99.37% | 1,158,505,427.19 | 9.43% | 11,124,944,437.85 | 11,197,400,451.31 | 99.31% | 1,016,027,673.93 | 9.07% | 10,181,372,777.38 |
| Including: | ||||||||||
| Portfolio 2: Aging Analysis Portfolio | 12,283,449,865.04 | 99.37% | 1,158,505,427.19 | 9.43% | 11,124,944,437.85 | 11,197,400,451.31 | 99.31% | 1,016,027,673.93 | 9.07% | 10,181,372,777.38 |
| Total | 12,361,435,580.17 | 100.00% | 1,226,491,142.32 | 11,134,944,437.85 | 11,275,367,656.81 | 100.00% | 1,083,994,879.43 | 10,191,372,777.38 | ||
Accrue bad debt provision individually:
Unit: RMB
| Name | Balance at the End of the Period | |||
| Accounts Receivable | Bad Debt Provision | Accrued Proportion | Accrual Reason | |
| Customer 1 | 66,920,644.38 | 56,920,644.38 | 85.06% | Estimated recoverable amount of RMB 10 |
| million | ||||
| Customer 2 | 11,065,070.75 | 11,065,070.75 | 100.00% | Expected to be unable to recover |
| Total | 77,985,715.13 | 67,985,715.13 | -- | -- |
Bad debts provision accrued on a portfolio basis:
Unit: RMB
| Name | Balance at the End of the Period | ||
| Accounts Receivable | Bad Debt Provision | Accrued Proportion | |
| Within 1 year (including 1 year) | 10,161,145,520.42 | 508,057,276.02 | 5.00% |
| 1 to 2 years | 1,067,170,249.76 | 106,717,024.98 | 10.00% |
| 2 to 3 years | 375,802,899.29 | 112,740,869.79 | 30.00% |
| 3 to 4 years | 446,875,591.11 | 223,437,795.56 | 50.00% |
| 4 to 5 years | 124,515,718.08 | 99,612,574.46 | 80.00% |
| 5 years or above | 107,939,886.38 | 107,939,886.38 | 100.00% |
| Total | 12,283,449,865.04 | 1,158,505,427.19 | -- |
Disclose by aging
Unit: RMB
| Aging | Balance at the End of the Period |
| Within 1 year (including 1 year) | 10,161,145,520.42 |
| Subtotal within 1 year | 10,161,145,520.42 |
| 1 to 2 years | 1,078,235,320.51 |
| 2 to 3 years | 442,723,543.67 |
| 3 years or above | 679,331,195.57 |
| 3 to 4 years | 446,875,591.11 |
| 4 to 5 years | 124,515,718.08 |
| 5 years or above | 107,939,886.38 |
| Total | 12,361,435,580.17 |
(2) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts accrued in this period:
Unit: RMB
| Category | Balance at the Start of the Period | Changed Amount of This Period | Balance at the End of the Period | |||
| Accrued | Recovered or reversed | Write off | Others | |||
| Accounts Receivables with the bad debts provision accrued individually | 67,967,205.50 | 18,509.63 | 67,985,715.13 | |||
| Accounts Receivables with the bad debts provision accrued on a portfolio basis | 1,016,027,673.93 | 156,164,494.82 | 13,065,074.63 | -621,666.93 | 1,158,505,427.19 | |
| Total | 1,083,994,879.43 | 156,164,494.82 | 13,065,074.63 | -603,157.30（Note 1） | 1,226,491,142.32 |
Note 1: The provision for bad debts derived from the translation of foreign currency statements was reduced by RMB 165,905.73,and the provision for bad debts derived from control loss was transferred out by RMB 437,251.57.
(3) Accounts Receivable of the top five closing balances collected by the arrearsThe accounts receivable of the top five closing balances collected by the arrears was summed up to RMB 1,342,666,234.74,accounting for 10.86% of the total closing balance of accounts receivable, and the ending balance of the provision for bad debtsaccrued was RMB 120,583,010.91 accordingly.
(4) Accounts Receivable derecognized due to transfer of financial assets
In accordance with the non-recourse purchase agreement on accounts receivables signed between the Company and BNPParibas, the Company transferred the accounts receivables under the export credit insurance to BNP Paribas. By June 30, 2019, therewas still a balance of USD 1,101,060.00, amount to RMB 7,569,457.18 The amount of accounts receivables was derecognised afterthe transfer.
(5) Assets/liabilities generated due to transferred accounts receivable that the Company still keeps recourseor retains part of corresponding rights or interestsThere are no assets/liabilities generated due to transferred accounts receivables that the Company still keeps recourse or retainspart of corresponding rights or interests.
5. Prepayments
(1) Aging analysis of prepayments is as follows
Unit: RMB
| Aging | Balance at the End of the Period | Balance at the Start of the Period | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 150,553,248.87 | 97.89% | 121,980,125.12 | 96.13% |
| 1 to 2 years | 1,474,224.58 | 0.96% | 2,958,954.04 | 2.33% |
| 2 to 3 years | 1,018,263.03 | 0.66% | 1,465,346.63 | 1.16% |
| 3 years or above | 759,652.58 | 0.49% | 486,833.21 | 0.38% |
| Total | 153,805,389.06 | -- | 126,891,259.00 | -- |
(2) Advance payment of the top five closing balances by prepayment partiesThe advance payment of the top five closing balances by the concentration of prepayment parties was summed up to RMB101,089,788.99, accounting for 65.73% of the total closing balance of the advance payment.
6. Other receivables
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Interest Receivable | 6,425,860.24 | 6,754,941.00 |
| Other Receivables | 355,348,609.90 | 391,415,828.40 |
| Total | 361,774,470.14 | 398,170,769.40 |
(1) Interests receivable
1) Category of interests receivable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Fixed Term Deposit | 6,425,860.24 | 6,754,941.00 |
| Total | 6,425,860.24 | 6,754,941.00 |
(2) Other receivables
1) Other receivables categorized by the nature of the funds
Unit: RMB
| Nature of the funds | Closing balance | Opening balance |
| Deposits | 138,490,328.39 | 133,533,949.06 |
| Prepaid or advance expense | 138,286,434.34 | 114,908,097.29 |
| Export refunds | 255,504.02 | 36,092,616.35 |
| Employee home loan | 122,012,923.34 | 130,870,460.98 |
| Others | 6,323,328.52 | 18,545,722.64 |
| Total | 405,368,518.61 | 433,950,846.32 |
2) Provision of bad debts
Unit: RMB
| Bad Debt Provision | The First Stage | The Second Stage | The Third Stage | Total |
| Expected credit losses in the next 12 months | Expected credit loss of the entire duration (no credit impairment) | Expected credit loss of the entire duration (credit impairment occurred) | ||
| Balance on January 01, 2019 | 36,481,554.61 | 5,278,676.24 | 774,787.07 | 42,535,017.92 |
| Balance in this period on January 01, 2019 | —— | —— | —— | —— |
| -- Transfer to the second stage | -345,540.59 | 345,540.59 | 0.00 | |
| Accrual of current period | 6,645,998.24 | 790,955.56 | 80,057.87 | 7,517,011.67 |
| Other variations | -32,120.88 | -32,120.88 | ||
| Balance on June 30, 2019 | 42,749,891.38 | 6,415,172.39 | 854,844.94 | 50,019,908.71 |
Disclose by aging
Unit: RMB
| Aging | Balance at the End of the Period |
| Within 1 year (including 1 year) | 242,269,744.92 |
| 1 to 2 years | 89,025,147.25 |
| 2 to 3 years | 52,079,070.45 |
| 3 years or above | 21,994,555.99 |
| 3 to 4 years | 14,724,712.18 |
| 4 to 5 years | 6,260,071.47 |
| 5 years or above | 1,009,772.34 |
| Total | 405,368,518.61 |
3) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts accrued in this period:
Unit: RMB
| Category | Balance at the Start of the Period | Changed Amount of This Period | Balance at the End of the Period | ||
| Accrued | Recovered or reversed | Others | |||
| Other receivables with the bad debts provision accrued individually | |||||
| Other receivables with bad debt provision accrued based on credit | 42,535,017.92 | 7,517,011.67 | -32,120.88 | 50,019,908.71 | |
| risk feature combinations | |||||
| Portfolio 2: Aging Analysis Portfolio | 42,535,017.92 | 7,517,011.67 | -32,120.88 | 50,019,908.71 | |
| Total | 42,535,017.92 | 7,517,011.67 | -32,120.88 (Note 1) | 50,019,908.71 |
Note 1: The provision for bad debts derived from the translation of foreign currency statements was increased by RMB 60,424.48,and the provision for bad debts derived from control loss was transferred out by RMB 92,545.36.
4) Other receivables of the top five closing balances collected by the arrears
Unit: RMB
| Name of Unit | Nature of the Funds | Balance at the End of the Period | Aging | As a Percentage of Total Other Accounts Receivable at the End of the Period | Bad Debt Provision at the End of the Period |
| Company 1 | Prepaid or advance expense | 16,971,374.03 | Within 1 year | 4.19% | 848,568.70 |
| Company 2 | Prepaid or advance expense | 14,687,654.09 | Within 1 year | 3.62% | 734,382.70 |
| Company 3 | Deposits | 12,000,000.00 | 2-3 years | 2.96% | 3,600,000.00 |
| Company 4 | Deposits | 8,829,412.20 | The amount within 1 year is RMB 93396 and the amount more than 1 year but not exceeding 2 years is RMB 8736016.2. | 2.18% | 878,271.42 |
| Company 5 | Deposits | 6,020,250.47 | Within 1 year | 1.49% | 301,012.52 |
| Total | -- | 58,508,690.79 | -- | 14.44% | 6,362,235.34 |
7. Inventories
Whether new revenue standards have been implemented
□ Yes √ No
(1) Categories of inventories
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book Balance | Provision for Decline in Price | Book Value | Book Balance | Provision for Decline in Price | Book Value | |
| Raw Materials | 1,222,882,603.83 | 9,174,244.38 | 1,213,708,359.45 | 641,393,743.67 | 641,393,743.67 | |
| Work-in-progress | 1,018,138,886.37 | 11,908,230.76 | 1,006,230,655.61 | 1,068,330,542.75 | 4,168,637.69 | 1,064,161,905.06 |
| Finished Goods | 1,089,856,047.97 | 57,772,253.00 | 1,032,083,794.97 | 1,347,394,898.29 | 72,990,967.51 | 1,274,403,930.78 |
| Outsourced work-in-progress | 106,026,520.61 | 106,026,520.61 | 55,620,129.63 | 55,620,129.63 | ||
| Total | 3,436,904,058.78 | 78,854,728.14 | 3,358,049,330.64 | 3,112,739,314.34 | 77,159,605.20 | 3,035,579,709.14 |
(2) Provision for decline in value of inventories
Unit: RMB
| Item Name | Balance at the Commencement of the Period | Increased in the Current Period | Decreased in the Current Period | Balance at the End of the Period | ||
| Accrued | Others | Reversals or Write-offs | Others | |||
| Raw Materials | 9,174,244.38 | 9,174,244.38 | ||||
| Work-in-progress | 4,168,637.69 | 7,739,593.07 | 11,908,230.76 | |||
| Finished Goods | 72,990,967.51 | 10,777,068.08 | 25,532,521.70 | 463,260.89 | 57,772,253.00 | |
| Total | 77,159,605.20 | 27,690,905.53 | 25,532,521.70 | 463,260.89 | 78,854,728.14 | |
The basis for determining the net realizable value is:
the estimated selling price minus the estimated cost of completion and the estimated selling expenses and relevant taxes;The reason for the write-off of inventory depreciation reserve in this period is: inventory use or sales.
8. Non-current assets due within 1 year
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Long-term accounts receivables due within 1 year | 612,839,528.91 | 578,733,057.27 |
| Total | 612,839,528.91 | 578,733,057.27 |
9. Other current assets
Whether new revenue standards have been implemented
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Deductible input tax | 444,455,881.07 | 367,528,033.48 |
| Prepaid enterprise income tax | 30,148,818.42 | 34,727,044.57 |
| Prepaid overseas miscellaneous taxes and dues | 874,684.52 | |
| Total | 475,479,384.01 | 402,255,078.05 |
10. Long-term receivables
(1) Long-term receivables
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | Range of Discount Rate | ||||
| Book Balance | Bad Debt Provision | Book Value | Book Balance | Bad Debt Provision | Book Value | ||
| Installment Payment for Selling Products | 2,641,057,749.78 | 2,641,057,749.78 | 1,861,485,568.28 | 1,861,485,568.28 | |||
| Including: Unrealized Financing Income | 358,548,910.83 | 358,548,910.83 | 364,590,421.98 | 364,590,421.98 | 3.03%-7.05% | ||
| Total | 2,641,057,749.78 | 2,641,057,749.78 | 1,861,485,568.28 | 1,861,485,568.28 | -- | ||
11. Long-term equity investment
Unit: RMB
| The Invested Entity | Opening Balance (Book Value) | Decrease/Increase in the Current Period | Closing Balance (Book Value) | Closing Balance of Provision for Decline in Value | |||||||
| Investments Increased | Investment Decreased | Investment Profit and Loss Recognized under the Equity Method | Adjustment on Other Comprehensive Income | Other Changes in Equity | Cash Dividends or Profit Declared to Distribute | Provision for Impairment Accrued | Others | ||||
| Ⅰ. Joint ventures | |||||||||||
| Ⅱ. Affiliates | |||||||||||
| Wenzhou Dahua Security Services Co., Ltd. | 734,265.47 | 87,636.80 | 821,902.27 | ||||||||
| Taizhou Dahua Security Services Co., Ltd. | 345,823.21 | 35,958.24 | 381,781.45 | ||||||||
| Ningbo Dahua Anbang | 1,157,423.01 | 50,241.46 | 1,207,664.47 | ||||||||
| Security Services Co., Ltd. | |||||||||||
| Lishui Dahua Intelligent Technology Co., Ltd. | 76,822.87 | -56,675.00 | 20,147.87 | ||||||||
| Zhoushan Dahua Technology Co., Ltd. | 705,482.95 | -8,181.26 | 697,301.69 | ||||||||
| Shaoxing Dahua Security Services Co., Ltd. | 547,439.30 | 3,801.16 | 551,240.46 | ||||||||
| Zhejiang Leapmotor Technology Co., Ltd. | 168,229,977.61 | -32,566,199.05 | 135,663,778.56 | ||||||||
| Shenzhen Conwin Security Electronics CO., Ltd. | 11,768,196.76 | -339,300.05 | 11,428,896.71 | ||||||||
| Zhejiang Dahua Zhian Internet of Things Technology Co., Ltd. | 2,700,777.50 | 699,647.58 | 3,400,425.08 | ||||||||
| Guangdong Dahua Zhishi Technology Co., | -394,187.10 | -7,096.54 | 401,283.64 | 0.00 |
| Ltd. | |||||||||||
| China Standard Intelligent Security Technology Co., Ltd. | 12,200,000.00 | -1,014,656.32 | 11,185,343.68 | ||||||||
| Subtotal | 185,872,021.58 | 12,200,000.00 | -548,623.93 | -32,566,199.05 | 401,283.64 | 165,358,482.24 | |||||
| Total | 185,872,021.58 | 12,200,000.00 | -548,623.93 | -32,566,199.05 | 401,283.64 | 165,358,482.24 |
12. Other non-current financial assets
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Non-transactional equity investment | 83,970,227.00 | 82,970,227.00 |
| Total | 83,970,227.00 | 82,970,227.00 |
13. Investment properties
(1) Investment properties measured by cost method
√ Applicable □ Not applicable
Unit: RMB
| Item Name | Buildings and constructions | Land use rights | Projects under Construction | Total |
| Ⅰ. Original Book Value | ||||
| 1. Opening Balance | 358,765,339.78 | 8,879,294.95 | 367,644,634.73 | |
| 2. Increased in the Current Period | 6,978,334.37 | 542,823.38 | 7,521,157.75 | |
| (1) Purchase | ||||
| (2) Inventories\Fixed Assets\Transferred from Construction in Progress | 6,978,334.37 | 542,823.38 | 7,521,157.75 | |
| (3) Acquisition | ||||
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out |
| 4. Closing Balance | 365,743,674.15 | 9,422,118.33 | 375,165,792.48 | |
| Ⅱ. Accumulated Depreciation and Amortization | ||||
| 1. Opening Balance | 19,658,323.89 | 1,154,934.29 | 20,813,258.18 | |
| 2. Increased in the Current Period | 9,760,178.30 | 131,615.47 | 9,891,793.77 | |
| (1) Accrual or Amortization | 8,638,363.58 | 92,713.13 | 8,731,076.71 | |
| (2) Transfer of fixed assets\intangible assets | 1,121,814.72 | 38,902.34 | 1,160,717.06 | |
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out | ||||
| 4. Closing Balance | 29,418,502.19 | 1,286,549.76 | 0.00 | 30,705,051.95 |
| Ⅲ. Provision for Impairment | ||||
| 1. Opening Balance | ||||
| 2. Increased in the Current Period | ||||
| (1) Accrual | ||||
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out | ||||
| 4. Closing Balance | ||||
| Ⅳ. Book Value | ||||
| 1. Closing Balance on Book Value | 336,325,171.96 | 8,135,568.57 | 344,460,740.53 | |
| 2. Opening Balance on Book Value | 339,107,015.89 | 7,724,360.66 | 346,831,376.55 |
(2) Investment properties measured at fair value
□ Applicable √ Not applicable
(3) Investment properties with certificates of title not granted
Unit: RMB
| Item Name | Book value | Reasons for Certificates of Title not Granted |
| Nanning marketable housing | 158,621,757.58 | In the process of obtaining the real estate |
14. Fixed assets
Unit: RMB
certificatesItem Name
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Fixed Assets | 1,386,805,962.53 | 1,407,471,330.83 |
| Total | 1,386,805,962.53 | 1,407,471,330.83 |
(1) Fixed assets
Unit: RMB
| Item Name | Housing and Building | Machinery and Equipment | Means of Transport | Electronic and Other Equipment | Total |
| Ⅰ. Original Book Value: | |||||
| 1. Opening Balance | 1,085,347,467.39 | 234,823,941.62 | 41,360,429.33 | 671,546,377.96 | 2,033,078,216.30 |
| 2. Increased in the Current Period | 6,156,948.32 | 48,347,748.25 | 366,240.70 | 41,803,860.81 | 96,674,798.08 |
| (1) Purchase | 4,832,517.50 | 46,571,751.95 | 366,240.70 | 41,803,860.81 | 93,574,370.96 |
| (2) Transferred from Construction in Progress | 1,324,430.82 | 1,775,996.30 | 3,100,427.12 | ||
| (3) Acquisition | |||||
| 3. Decreased in the Current Period | 6,978,334.37 | 361,906.41 | 2,442,944.23 | 6,061,773.02 | 15,844,958.03 |
| (1) Disposal or Scrapping | 361,906.41 | 2,442,944.23 | 5,148,334.50 | 7,953,185.14 | |
| (2) Transfer to Investment Real Estate | 6,978,334.37 | 6,978,334.37 | |||
| (3) Other Decreases | 913,438.52 | 913,438.52 | |||
| 4. Currency Translation Difference | -11,826.15 | -7,392.31 | 28,992.40 | 192,610.91 | 202,384.85 |
| 5. Closing Balance | 1,084,514,255.19 | 282,802,391.15 | 39,312,718.20 | 707,481,076.66 | 2,114,110,441.20 |
| II. Accumulated Depreciation | |||||
| 1. Opening Balance | 171,317,090.95 | 46,671,558.15 | 30,433,971.72 | 377,184,264.65 | 625,606,885.47 |
| 2. Increased in the Current Period | 25,657,653.91 | 11,643,151.60 | 2,227,281.50 | 68,901,973.07 | 108,430,060.08 |
| (1) Accrual | 25,657,653.91 | 11,643,151.60 | 2,227,281.50 | 68,901,973.07 | 108,430,060.08 |
| 3. Decreased in the Current Period | 1,121,814.72 | 20,568.89 | 2,042,601.02 | 3,596,123.60 | 6,781,108.23 |
| (1) Disposal or Scrapping | 20,568.89 | 2,042,601.02 | 3,419,397.18 | 5,482,567.09 | |
| (2) Transfer to Investment Real Estate | 1,121,814.72 | 1,121,814.72 | |||
| (3) Other decreases | 176,726.42 | 176,726.42 | |||
| 4. Currency Translation Difference | -1,246.15 | -5,953.93 | 12,550.84 | 43,290.59 | 48,641.35 |
| 5. Closing Balance | 195,851,683.99 | 58,288,186.93 | 30,631,203.04 | 442,533,404.71 | 727,304,478.67 |
| Ⅲ. Provision for Impairment | |||||
| 1. Opening Balance | |||||
| 2. Increased in the Current Period | |||||
| (1) Accrual | |||||
| 3. Decreased in the Current Period | |||||
| (1) Disposal or Scrapping | |||||
| 4. Closing Balance | |||||
| Ⅳ. Book Value | |||||
| 1. Closing Balance on Book Value | 888,662,571.20 | 224,514,204.22 | 8,681,515.16 | 264,947,671.95 | 1,386,805,962.53 |
| 2. Opening Balance on Book Value | 914,030,376.44 | 188,152,383.47 | 10,926,457.61 | 294,362,113.31 | 1,407,471,330.83 |
(2) Fixed assets with certificates of title not granted
Unit: RMB
| Item Name | Book value | Reasons for Certificates of Title Not Granted |
| Marketable housing | 21,391,737.48 | In the process of obtaining the real estate certificates |
15. Construction in progress
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Projects under Construction | 313,934,611.81 | 226,191,587.11 |
| Total | 313,934,611.81 | 226,191,587.11 |
(1) Details of construction in progress
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book Balance | Provision for Decline in Value | Book Value | Book Balance | Provision for Decline in Value | Book Value | |
| Equipment engineering | 0.00 | 0.00 | 1,382,497.31 | 1,382,497.31 | ||
| Commercial building under decoration | 59,080,800.53 | 59,080,800.53 | 55,859,895.45 | 55,859,895.45 | ||
| Smart IoT solutions R&D and industrial projects | 133,077,812.18 | 133,077,812.18 | 110,183,237.44 | 110,183,237.44 | ||
| Hangzhou Intelligent Manufacturing Base - Phase II Construction Project | 36,669,803.90 | 36,669,803.90 | 7,313,380.68 | 7,313,380.68 | ||
| Dahua Auxiliary and R&D Experimental Building Renovation Project | 53,009,042.69 | 53,009,042.69 | 33,893,914.76 | 33,893,914.76 | ||
| Phase I, Urban Intelligent Information Industry | 15,799,832.22 | 15,799,832.22 | 9,0900,975.91 | 9,090,975.91 | ||
| Construction Project | ||||||
| Xi’an R&D Center Construction Project | 6,073,340.46 | 6,073,340.46 | 1,030,576.46 | 1,030,576.46 | ||
| Xi'an Marketing Center Construction Project | 2,602,860.20 | 2,602,860.20 | 441,675.63 | 441,675.63 | ||
| Others | 7,621,119.63 | 7,621,119.63 | 6,995,433.47 | 6,995,433.47 | ||
| Total | 313,934,611.81 | 313,934,611.81 | 226,191,587.11 | 226,191,587.11 |
(2) Changes in significant construction in progress
Unit: RMB
| Item Name | Budget | Balance at the Commencement of the Period | Increased in the Current Period | Intangible Assets Transferred into the Company in the Current Period | Other Amounts Decreased in Current Period | Balance at the End of the Period | Project Accumulative Investment as a Percentage of the Budget | Project Progress | Accumulated Capitalized Interest Amount | Including: Capitalized Interest Amount in the Current Period | Capitalization Rate of the Interest in the Current Period | Capital Source |
| Smart IoT solutions R&D and industrial projects | 911,964,400.00 | 110,183,237.44 | 22,894,574.74 | 133,077,812.18 | 14.59% | 14.59% | Self-raised funds | |||||
| Hangzhou Intelligent Manufacturing Base - Phase II Construction | 827,063,700.00 | 7,313,380.68 | 29,356,423.22 | 36,669,803.90 | 4.43% | 4.43% | Self-raised funds |
| Project | ||||||||||||
| Dahua Auxiliary and R&D Experimental Building Renovation Project | 90,000,000.00 | 33,893,914.76 | 19,115,127.93 | 53,009,042.69 | 58.90% | 58.90% | Self-raised funds | |||||
| Phase I, Urban Intelligent Information Industry Construction Project | 50,000,000.00 | 9,090,975.91 | 6,708,856.31 | 15,799,832.22 | 31.60% | 31.60% | Self-raised funds | |||||
| Xi’an R&D Center Construction Project | 733,621,400.00 | 1,030,576.46 | 5,042,764.00 | 6,073,340.46 | 0.83% | 0.83% | Self-raised funds | |||||
| Xi'an Marketing Center Construction Project | 300,000,000.00 | 441,675.63 | 2,161,184.57 | 2,602,860.20 | 0.87% | 0.87% | Self-raised funds | |||||
| Commercial building under decoration | 55,859,895.45 | 3,220,905.08 | 59,080,800.53 | Self-raised funds | ||||||||
| Total | 2,912,649,500.00 | 217,813,656.33 | 88,499,835.85 | 306,313,492.18 | -- | -- | -- |
16. Intangible assets
(1) Details of intangible assets
Unit: RMB
| Item Name | Land Use Rights | Patent Rights | Non-patented Technology | Software | Trademark Rights | Software Copyright | Total |
| Ⅰ. Original Book Value | |||||||
| 1. Opening Balance | 306,095,351.00 | 62,876,510.59 | 105,683,361.47 | 2,700,670.40 | 6,381,122.62 | 483,737,016.08 | |
| 2. Increased in the Current Period | 52,100,000.00 | 8,456,930.86 | 60,556,930.86 | ||||
| (1) Purchase | 52,100,000.00 | 6,545,409.39 | 58,645,409.39 | ||||
| (2) Internal R&D | |||||||
| (3) Acquisition | |||||||
| (4) Transferred From Construction in Progress | 1,911,521.47 | 1,911,521.47 | |||||
| 3. Decreased in the Current Period | 542,823.38 | 858,707.87 | 1,401,531.25 | ||||
| (1) Disposal | 206.50 | 206.50 | |||||
| (2) Transfer to Investment Real Estate | 542,823.38 | 542,823.38 | |||||
| (3) Other Decreases | 858,501.37 | 858,501.37 | |||||
| 4. Currency Translation Difference | -1,515.00 | 41,498.43 | -1,454.40 | 38,529.03 | |||
| 5. Closing Balance | 357,651,012.62 | 62,876,510.59 | 113,323,082.89 | 2,699,216.00 | 6,381,122.62 | 542,930,944.72 |
| Ⅱ. Accumulated Amortization | |||||||
| 1. Opening Balance | 13,958,051.21 | 35,139,620.64 | 54,292,191.10 | 2,451,070.42 | 5,428,673.62 | 111,269,606.99 | |
| 2. Increased in the Current Period | 3,446,488.52 | 3,073,730.22 | 11,154,087.14 | 62,400.00 | 238,112.24 | 17,974,818.12 | |
| (1) Accrual | 3,446,488.52 | 3,073,730.22 | 11,154,087.14 | 62,400.00 | 238,112.24 | 17,974,818.12 | |
| 3. Decreased in the Current Period | 38,902.34 | 463,610.83 | 502,513.17 | ||||
| (1) Disposal | 206.50 | 206.50 | |||||
| (2) Transfer to Investment Real Estate | 38,902.34 | 38,902.34 | |||||
| (3) Other decreases | 463,404.33 | 463,404.33 | |||||
| 4. Currency Translation Difference | 449.84 | -1,454.40 | -1,004.56 | ||||
| 5. Closing Balance | 17,365,637.39 | 38,213,350.86 | 64,983,117.25 | 2,512,016.02 | 5,666,785.86 | 128,740,907.38 | |
| Ⅲ. Provision for Impairment | |||||||
| 1. Opening Balance | |||||||
| 2. Increased in the Current Period | |||||||
| (1) Accrual | |||||||
| 3. Decreased in the Current Period | |||||||
| (1) Disposal | |||||||
| 4. Closing Balance | |||||||
| Ⅳ. Book value | |||||||
| 1. Closing Balance on Book Value | 340,285,375.23 | 24,663,159.73 | 48,339,965.64 | 187,199.98 | 714,336.76 | 414,190,037.34 | |
| 2. Opening Balance on Book Value | 292,137,299.79 | 27,736,889.95 | 51,391,170.37 | 249,599.98 | 952,449.00 | 372,467,409.09 |
At the end of the period, the intangible assets generated from the internal research and development of the Company account for 0%of the balance of the intangible assets.
(2) Land use rights with certificates of title not granted
Unit: RMB
| Item Name | Book Value | Reasons for Certificates of Title Not Granted |
| Construction land for Fuyang | 52,013,166.67 | In the process of obtaining the real estate certificates |
17. Goodwill
(1) Original book value of goodwill
Unit: RMB
| The Investee or Matters Which Formed Goodwill | Balance at the Start of the Period | Increased in the Current Period | Decreased in the Current Period | Balance at the End of the Period | ||
| Generated from Business Combination | Disposal | |||||
| South North United Information Technology Co., Ltd. | 71,083,281.09 | 71,083,281.09 | ||||
| Dahua Technology Italy S.R.L. | 2,591,935.00 | 4,023,359.18 | 6,615,294.18 | |||
| Lorex Technology Inc. | 36,070,196.12 | 36,070,196.12 | ||||
| Total | 109,745,412.21 | 4,023,359.18 | 113,768,771.39 |
(2) Provision of impairment in goodwill
Unit: RMB
| The invested entity or matters which formed goodwill | Balance at the Start of the Period | Increased in the Current Period | Decreased in the Current Period | Balance at the End of the Period | ||
| Accrued | Disposal | |||||
| South North United Information Technology Co., Ltd. | 71,083,281.09 | 71,083,281.09 | ||||
| Total | 71,083,281.09 | 71,083,281.09 | ||||
Information about the asset group or asset group combination where the goodwill is located
| The invested entity or matters which formed goodwill | Amount of goodwill | Information about the asset group or asset group combination where it is located |
| South North United Information Technology Co., Ltd. | 71,083,281.09 | The asset group relating to the goodwill generated for the acquisition of South-North United Information Technology Co., Ltd., that is, the assets and liabilities of the asset group formed for SouthNorth United Information Technology Co., Ltd. on June 30, 2019. |
| Dahua Technology Italy S.R.L. | 6,615,294.18 | The asset group relating to the goodwill generated for the acquisition of Dahua Technology Italy S.R.L., that is, the assets and liabilities of the asset group formed for Dahua Technology Italy S.R.L. on June 30, 2019. |
| Lorex Technology Inc. | 36,070,196.12 | The asset group relating to the goodwill generated for the acquisition of Lorex Technology Inc., that is, the assets and liabilities of the asset group formed for Lorex Technology Inc. on June 30, 2019. |
Explain the goodwill impairment test process, key parameters (e.g. growth rate at forecast period, growth rate at steady period,profit rate, discount rate, forecast period, etc. when the present value of future cash flow is estimated) and the confirmation method ofgoodwill impairment loss:
South-North United Information Technology Co., Ltd.: At the end of the period, the Company recognized the entire South-NorthUnited as an asset group, and measured its recoverable amount through estimating the present value of future cash flows. The assetgroup is identical with the one recognized during the goodwill impairment test at the acquisition date and in previous years. Based onthe financial budget for the South-North United approved by the management, the Company estimated the cash flows of the next fiveyears and perpetual period, and took the discount rate of 13.51% to calculate the present value of future cash flows. The managementprepared the above financial budget on the basis of a comprehensive analysis of such factors as annual operating conditions in history,market competition, and estimated annual achievable project revenues after 2019.
Dahua Technology Italy S.R.L.: At the end of the period, the Company recognized the entire Dahua Technology Italy S.R.L. asan asset group, and measured its recoverable amount through estimating the present value of future cash flows. The asset group isidentical with the one recognized during the goodwill impairment test at the acquisition date and in previous year. Based on thefinancial budget for the Dahua Technology Italy S.R.L. approved by the management, the Company estimated the cash flows of the
next five years and perpetual period, and took the discount rate of 13.51% to calculate the present value of future cash flow. Themanagement prepared the above financial budget on the basis of a comprehensive analysis of annual operating conditions in history,market competition and other factors, it estimated that at Dahua Technology Italy S.R.L., the growth rate of the annual sales from2019to 2023 will be 5%, and that in 2024 and beyond will be flat with the year of 2023.Lorex Technology Inc.: at the end of the period, the Company recognized the entire Lorex Technology Inc. as an asset group,and measured its recoverable amount through estimating the present value of future cash flows. The asset group is identical with theone recognized during the goodwill impairment test at the acquisition date and in previous years. Based on the financial budget forLorex Technology Inc. approved by the management, the Company estimated the cash flows of the next five years and perpetualperiod, and took the discount rate of 13.51% to calculate the present value of future cash flow. The management prepared the abovefinancial budget on the basis of a comprehensive analysis of annual operating conditions in history, market competition and otherfactors, it estimated that at Lorex Technology Inc., the growth rate of the annual sales from 2019 to 2023will be 5%, and that in 2024and beyond will be flat with the year of 2023.Result of goodwill impairment testIt can be obtained from the test that, the goodwill of the asset group of North-South United Information Technology Co., Ltd.has been impaired, and the Company has made a full provision for impairment. The recoverable amounts of the asset groups ofDahua Technology Italy S.R.L. and Lorex Technology Inc. were higher than the book value, and no signs of goodwill impairment forthe asset groups were found.
18. Long-term prepaid expenses
Unit: RMB
| Item Name | Balance at the Commencement of the Period | Increased in the Current Period | Prepaid Expenses in This Period | Other Amounts Decreased | Balance at the End of the Period |
| Housing rent | 107,037.29 | 44,800.00 | 47,376.36 | 104,460.93 | |
| Improvement expenditure of fixed assets leased by operating lease | 37,010,881.26 | 17,208,426.73 | 13,850,853.25 | 405,027.01 | 39,963,427.73 |
| Total | 37,117,918.55 | 17,253,226.73 | 13,898,229.61 | 405,027.01 | 40,067,888.66 |
19. Deferred income tax assets/liabilities
(1) Deferred income tax assets not written off
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Commencement of the Period | ||
| Deductible Temporary Difference | Deferred Income Tax Assets | Deductible Temporary Difference | Deferred Income Tax Assets | |
| Provision for Impairment of Assets | 1,102,493,506.58 | 224,892,519.13 | 982,203,827.26 | 193,996,211.23 |
| Unrealized Profit from | 476,475,504.06 | 101,364,879.04 | 716,955,234.71 | 148,900,021.90 |
| Internal Transactions | ||||
| Deductible Losses | 109,729,261.70 | 17,324,813.59 | 92,044,909.04 | 16,363,887.53 |
| Expected Liabilities | 239,937,575.58 | 39,240,710.14 | 172,287,233.54 | 28,619,808.17 |
| Payroll Payable | 189,576,357.87 | 31,207,199.76 | 138,626,628.92 | 22,872,593.43 |
| Equity incentive expense | 202,176,538.35 | 31,544,216.77 | 27,235,019.84 | 4,337,560.56 |
| Costs from Tax Increase Due to Absence of Invoice | 47,756,409.76 | 9,872,404.00 | 41,376,609.34 | 9,172,826.12 |
| Amortization of Intangible Assets | 976,371.23 | 146,455.68 | ||
| Changes in fair value gains and losses | 3,640,169.45 | 910,042.36 | ||
| Total | 2,368,145,153.90 | 455,446,742.43 | 2,175,346,003.33 | 425,319,406.98 |
(2) Deferred income tax liabilities not written off
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | ||
| Taxable temporary difference | Deferred Income Tax Liabilities | Taxable temporary difference | Deferred Income Tax Liabilities | |
| The gross profit of sales by installments | 264,966,538.39 | 52,458,695.09 | 256,706,108.82 | 50,137,969.76 |
| Changes in fair values of derivative financial instruments | 7,056,942.16 | 1,764,235.54 | ||
| Total | 272,023,480.55 | 54,222,930.63 | 256,706,108.82 | 50,137,969.76 |
(3) Deferred Income Tax Assets or Liabilities Listed by Net Amount after Offset
Unit: RMB
| Item Name | Amount of Deferred Income Tax Assets Offset against Liabilities at the End of the Period | Balance of Deferred Income Tax Assets or Liabilities after Offset at the End of the Period | Amount of Deferred Income Tax Assets Offset against Liabilities at the Start of the Period | Balance of Deferred Income Tax Assets or Liabilities after Offset at the Start of the Period |
| Deferred Income Tax Assets | 455,446,742.43 | 425,319,406.98 | ||
| Deferred Income Tax Liabilities | 54,222,930.63 | 50,137,969.76 |
(4) Deferred income tax assets or liabilities listed by net amount after offset
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Deductible temporary difference | 293,312,789.30 | 247,169,565.91 |
| Deductible Losses | 286,395,821.61 | 172,253,137.74 |
| Total | 579,708,610.91 | 419,422,703.65 |
(5) Details of unrecognized deferred income tax assets
Unit: RMB
| Year | Amount at the end of the period | Opening balance | Notes |
| 2019 | 3,316,434.12 | 3,970,432.34 | Losses in 2014 and due in 2019 |
| 2020 | 10,533,721.21 | 11,057,227.29 | Losses in 2015 and due in 2020 |
| 2021 | 17,993,010.62 | 18,784,799.88 | Losses in 2016 and due in 2021 |
| 2022 | 27,603,685.60 | 40,598,242.37 | Losses in 2017 and due in 2022 |
| 2023 | 81,406,784.59 | 97,842,435.86 | Losses in 2018 and due in 2023 |
| 2024 | 145,542,185.47 | Losses in 2019 and due in 2024 | |
| Total | 286,395,821.61 | 172,253,137.74 | -- |
20. Other non-current assets
Whether new revenue standards have been implemented
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Prepayments for purchase of engineering equipments | 12,376,518.59 | 5,627,812.52 |
| Prepayments for acquisition of real estate | 10,649,793.09 | |
| Total | 12,376,518.59 | 16,277,605.61 |
21. Short-term loans
(1) Categories of short-term loan
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Pledged loans | 600,000,000.00 | |
| Guaranteed loans | 1,003,120,500.00 | 400,000,000.00 |
| Fiduciary loans | 1,377,018,356.11 | 1,380,000,000.00 |
| Pledged, guaranteed loans | 104,720,178.48 | 71,709,561.83 |
| Total | 3,084,859,034.59 | 1,851,709,561.83 |
22. Notes payable
Unit: RMB
| Types | Balance at the End of the Period | Balance at the Start of the Period |
| Commercial acceptance bill | 2,514,367,844.49 | 2,266,008,177.19 |
| Bank acceptance bill | 969,090,928.99 | 1,405,577,927.60 |
| Total | 3,483,458,773.48 | 3,671,586,104.79 |
23. Accounts payable
(1) Details of accounts payable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Payment for purchase of materials | 3,088,933,078.50 | 3,586,524,616.43 |
| Payment for engineering equipments | 105,509,798.92 | 203,204,977.77 |
| Total | 3,194,442,877.42 | 3,789,729,594.20 |
24. Received pre-payments
Whether new revenue standards have been implemented
□ Yes √ No
(1) Details of received pre-payments
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Payments for sales of goods | 168,348,805.14 | 200,172,889.06 |
| Pre-payments from construction projects | 181,317,483.98 | 143,125,002.14 |
| Total | 349,666,289.12 | 343,297,891.20 |
25. Payroll Payable
(1) Details of payroll payable
Unit: RMB
| Item Name | Balance at the Commencement of the Period | Increased in the Current Period | Decreased in the Current Period | Balance at the End of the Period |
| Ⅰ. Short-term remuneration | 1,102,043,457.78 | 2,130,832,637.83 | 2,429,424,979.78 | 803,451,115.83 |
| Ⅱ. Dimission benefits - defined contribution scheme | 22,315,154.16 | 87,600,080.43 | 87,579,796.29 | 22,335,438.30 |
| Ⅲ. Dismissal welfare | 9,603,573.66 | 9,603,573.66 | ||
| Others | 90,646,857.32 | 90,646,857.32 | ||
| Total | 1,124,358,611.94 | 2,318,683,149.24 | 2,617,255,207.05 | 825,786,554.13 |
(2) List of short-term remuneration
Unit: RMB
| Item Name | Balance at the Commencement of the Period | Increased in the Current Period | Decreased in the Current Period | Item Name |
| 1. Wages or Salaries, Bonuses, Allowances and Subsidies | 921,728,024.05 | 1,854,735,602.83 | 2,187,359,055.95 | 589,104,570.93 |
| 2. Staff Welfare | 54,756,336.00 | 54,756,336.00 | ||
| 3. Social Insurance Contributions | 18,100,292.05 | 62,659,224.03 | 62,884,498.79 | 17,875,017.29 |
| Including: Medical Insurance | 15,802,475.59 | 55,620,766.51 | 55,764,251.01 | 15,658,991.09 |
| Industrial Injury Insurance Premium | 676,267.78 | 1,640,306.68 | 1,656,653.26 | 659,921.20 |
| Maternity Insurance | 1,621,548.68 | 5,398,150.84 | 5,463,594.52 | 1,556,105.00 |
| 4. Housing Funds | 212,046.97 | 105,288,566.08 | 105,230,054.22 | 270,558.83 |
| 5. Labor Union and Education Funds | 162,003,094.71 | 53,392,908.89 | 19,195,034.82 | 196,200,968.78 |
| Total | 1,102,043,457.78 | 2,130,832,637.83 | 2,429,424,979.78 | 803,451,115.83 |
(3) Defined contribution scheme (Note)
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| 1. Basic Pension Insurance | 21,283,607.42 | 84,001,327.71 | 84,014,946.06 | 21,269,989.07 |
| 2. Unemployment Insurance | 1,031,546.74 | 3,598,752.72 | 3,564,850.23 | 1,065,449.23 |
| Total | 22,315,154.16 | 87,600,080.43 | 87,579,796.29 | 22,335,438.30 |
26. Taxes payable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| VAT | 180,251,151.74 | 280,098,796.36 |
| Enterprise Income Tax | 237,726,997.70 | 258,232,990.39 |
| Individual income tax | 13,221,276.77 | 12,298,554.78 |
| Urban Maintenance and Construction Tax | 8,722,037.98 | 18,878,589.21 |
| House property tax | 1,729,495.09 | 5,757,911.72 |
| Sales tax | 2,384,618.94 | 5,114,791.97 |
| Education surcharges (including local education surcharges) | 6,152,096.97 | 13,462,512.05 |
| Land usage tax | 312,844.02 | 2,099,648.89 |
| Stamp duty | 1,108,839.62 | 1,939,872.86 |
| Disabled security fund | 1,048,978.26 | 661,501.37 |
| Others | 120,089.13 | 932,880.21 |
| Total | 452,778,426.22 | 599,478,049.81 |
27. Other payables
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Interest Payable | 11,000,751.65 | 4,745,203.31 |
| Dividends Payable | 9,882,284.31 | |
| Other Payables | 1,074,581,470.48 | 1,046,791,891.66 |
| Total | 1,095,464,506.44 | 1,051,537,094.97 |
(1) Interests payable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Interest Payable for Short-Term Loan | 10,178,600.24 | 3,046,260.22 |
| Long-term Loan interest | 789,151.43 | 991,276.43 |
| Interest payable for national development fund | 32,999.98 | 707,666.66 |
| Total | 11,000,751.65 | 4,745,203.31 |
2. Dividends payable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Dividends for restricted shares | 9,882,284.31 | |
| Total | 9,882,284.31 |
(3) Other payables
1) Other payables listed by nature
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Deposits | 11,112,369.87 | 34,384,749.18 |
| Temporarily borrowed and advance payments | 253,607,277.94 | 164,250,303.45 |
| Special fund for talent incentive | 30,097,503.00 | |
| Restricted share repurchase obligations | 797,490,187.69 | 807,733,586.00 |
| Others | 12,371,634.98 | 10,325,750.03 |
| Total | 1,074,581,470.48 | 1,046,791,891.66 |
28. Non-current liabilities due within 1 year
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Long-term Loans Due within 1 Year | 25,500,000.00 | 25,500,000.00 |
| Total | 25,500,000.00 | 25,500,000.00 |
29. Other current liabilities
Whether new revenue standards have been implemented
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| To-be-transferred sales taxes in installments | 69,464,435.03 | 70,845,639.51 |
| Total | 69,464,435.03 | 70,845,639.51 |
30. Long-term Loans
(1) Categories of long-term loans
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Pledged Loans | 154,000,000.00 | 179,000,000.00 |
| Total | 154,000,000.00 | 179,000,000.00 |
31. Expected liabilities
Whether new revenue standards have been implemented
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | Causes |
| Product Quality Assurance | 262,956,047.07 | 193,761,170.12 | After-sales maintenance |
| Executory Loss-making Contract | 401,283.64 | Losses of invested company | |
| Total | 263,357,330.71 | 193,761,170.12 | -- |
32. Deferred income
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period | Causes |
| Government Subsidies | 58,693,533.40 | 27,455,000.00 | 1,586,311.74 | 84,562,221.66 | Received government subsidies related to assets |
| Total | 58,693,533.40 | 27,455,000.00 | 1,586,311.74 | 84,562,221.66 | -- |
Projects related to government subsidies:
Unit: RMB
| Liabilities | Balance at the Commencement of the Period | The Amount of New Subsidies in This Period | The Amount Recorded as Non-operating Revenue in This Period | The Amount Recorded as Other Income in This Period | The Amount Written off Costs in This Period | Other Variations | Balance at the End of the Period | Related to Assets/Related to Income |
| Special award for industrial park projects | 58,693,533.40 | 27,455,000.00 | 1,586,311.74 | 84,562,221.66 | Related to assets |
Other notes:
According to the FuJingGuan [2017] No.35, FuCaiQi [2017] No.506, FuJingGuan [2019] No.18, FuCaiQi [2019] No.286documents issued by Fuyang Economic and Technological Development Zone Management Committee and Hangzhou FuyangDistrict Finance Bureau, the Company received special subsidies for the Fuyang Dahua Intelligent (IoT) Industrial Park in 2015,2017 and 2019, respectively, RMB 31.66 million, RMB 31.66 million and RMB 27.455 million, totaling RMB 90.775 million. As thegovernment grant related to assets, it is recognized as deferred income and will be recognized as other income in installments basedon the estimated service life of the asset (20 years).
33. Other non-current liabilities
Whether new revenue standards have been implemented
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| To-be-transferred sales taxes in installments | 326,460,214.81 | 289,096,280.89 |
| Other loans | 110,000,000.00 | 110,000,000.00 |
| Total | 436,460,214.81 | 399,096,280.89 |
34. Share capital
Unit: RMB
| Balance at the Start of the Period | Increased or decreased amount in this period (+/-) | Balance at the End of the Period | |||||
| New Shares Issued | Bonus Shares | Shares Converted from Capital Reserves | Others | Subtotal | |||
| Total shares | 2,997,621,930. | -44,200.00 | -44,200.00 | 2,997,577,730. | |||
| 00 | 00 |
Other notes:
According to the "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" reviewed andapproved on the 5th interim shareholders' meeting in 2018 held on December 27, 2018, and the resolution at the 19th meeting of the6th Board of Directors held on December 10,2018, the Company bought back and canceled 44,200 granted but unlocked restrictedshares held by the equity incentive targets who have left the Company, reducing the registered capital by RMB 44,200.00. After thebuy-back and cancellation, the Company's registered capital was reduced to RMB 2,997,577,730.00 (2,997,577,730 capital shares).The above capital reduction was audited by Shu Lun Pan CPA Co., Ltd.(special general partnership) and verified by the capitalverification report XinKuaiShiBaoZi [2019 ] No.ZF10047 issued by Shu Lun Pan CPA Co., Ltd.
35. Capital reserves
Unit: RMB
| Item Name | Balance at the Commencement of the Period | Increased in the Current Period | Decreased in the Current Period | Balance at the End of the Period |
| Capital Premium (Capital Share Premium) | 1,301,563,581.94 | 326,617.25 | 1,301,236,964.69 | |
| Other Capital Reserves | 199,617,280.89 | 103,910,331.29 | 32,566,199.05 | 270,961,413.13 |
| Total | 1,501,180,862.83 | 103,910,331.29 | 32,892,816.30 | 1,572,198,377.82 |
Other notes, including increases or decreases in this period and their reasons:
(1) In this period, the Company bought back and canceled the granted but unlocked restricted shares held by the equity incentivetargets, amounting to 44,200 shares, reducing the capital shares by RMB 44,200 and the capital reserves (capital share premium) byRMB 316,914.00.
(2) The service fee for the share buy-back in the current period was RMB 9,703.25, and the capital reserve (share premium)decreased by RMB 9,703.25.
(3) In this period, the equity payment in return for services of employees amounted to RMB 92,818,059.13, and the employees'services payment reversed due to buy-back and cancellation of the granted but unlocked restricted shares held by equity incentivetargets amounted to RMB 2,171,201.81. The impact amount of the income tax on the part that the amount deductible before taxexceeded the share-based payment related cost which the accounting standards allow to recognize, is RMB 13,263,473.97, increasingother capital reserves by RMB 103,910,331.29 in total.
(4) Changes in equity recognized under the Equity Method reduced the capital reserve - other capital reserve by RMB32,566,199.05.
36. Treasury shares
Unit: RMB
| Item Name | Balance at the Commencement of the Period | Increased in the Current Period | Decreased in the Current Period | Balance at the End of the Period |
| Restricted shares | 807,733,586.00 | 10,243,398.31 | 797,490,187.69 |
| Share buy-back | 80,733,758.44 | 80,733,758.44 | ||
| Total | 807,733,586.00 | 80,733,758.44 | 10,243,398.31 | 878,223,946.13 |
Other notes, including increases or decreases in this period and their reasons:
(1) Due to the resignation of some employees, the Company bought back their restricted shares in the current period. A totalnumber of 44,200 restricted shares were bought back and the corresponding share capital was reduced by RMB 44,200, while thecapital reserve equity was reduced by RMB 316,914.00, and the corresponding amount of treasury shares was reduced by RMB361,114.00.
(2) The cash dividends allocated to the restricted shareholders in the current period reduced the treasury shares and relatedliabilities by RMB 9,882,284.31.
(3) The Company held the 21st meeting of the 6th Board of Directors on April 25,2019 to deliberate and approve the "Proposalon the Buy-back of the Company's Share", in which it planned to use self-raised funds to buy back part of the issued public shares bycentralized bidding and use them for subsequent implementation of equity incentives or employee share ownership plans. As of June30, 2019, the Company bought back6,149,480 shares of the company through a share buy-back special securities account bycentralized price bidding, with a total amount of RMB 80,733,758.44 (excluding transaction costs) and an increase of treasury sharesof RMB 80,733,758.44.
37. Other comprehensive incomes
Unit: RMB
| Item Name | Balance at the Start of the Period | This Period's Amount of Occurrence | Balance at the End of the Period | |||||
| Before tax balance in this period | Less: recorded into other comprehensive incomes in previous period and transferred to P/L in current period | Less: recorded into other comprehensive incomes in the previous period and transferred to retained earnings in the current period | Less: Income Tax Expense | Attributable to the Company after tax | Attributable to the minority shareholders after tax | |||
| Ⅱ. Other Comprehensive Incomes That Will Be Subsequently Reclassified as P/L | 10,337,164.41 | -718,205.48 | -718,255.60 | 50.12 | 9,618,908.81 | |||
| Currency Translation Difference | 10,337,164.41 | -718,205.48 | -718,255.60 | 50.12 | 9,618,908.81 | |||
| Other Comprehensive Incomes in Total | 10,337,164.41 | -718,205.48 | -718,255.60 | 50.12 | 9,618,908.81 | |||
38. Surplus reserves
Unit: RMB
| Item Name | Balance at the Commencement of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| Statutory Surplus Reserve | 1,246,369,430.91 | 1,246,369,430.91 | ||
| Total | 1,246,369,430.91 | 1,246,369,430.91 |
39. Undistributed profits
Unit: RMB
| Item Name | Current Period | Previous Period |
| Undistributed Profit before Adjustment at the End of Previous Period | 7,670,983,116.33 | 5,996,130,036.27 |
| Undistributed Profit after Adjustment at the Commencement of the Period | 7,670,983,116.33 | 5,996,130,036.27 |
| Add: Net Profit Attributable to the Parent Company's Owner in Current Period | 1,238,880,948.74 | 1,081,916,886.52 |
| Payable Dividends on Ordinary Shares | 299,761,669.99 | 579,751,226.00 |
| Undistributed Profit at the End of the Period | 8,610,102,395.08 | 6,498,295,696.79 |
40. Operating revenue and costs
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | ||
| Income | Cost | Income | Cost | |
| Main Business | 10,586,100,409.57 | 6,258,976,217.79 | 9,597,510,318.97 | 6,041,519,921.55 |
| Other businesses | 220,465,961.32 | 184,452,933.24 | 216,531,033.51 | 188,600,523.51 |
| Total | 10,806,566,370.89 | 6,443,429,151.03 | 9,814,041,352.48 | 6,230,120,445.06 |
Whether new revenue standards have been implemented
□ Yes √ No
41. Taxes and surcharges
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Urban Maintenance and Construction Tax | 33,452,748.45 | 32,066,569.98 |
| Education Surcharges | 23,819,218.33 | 22,903,099.13 |
| House property tax | 2,649,929.92 | 2,995,522.40 |
| Land usage tax | 323,227.12 | 193,609.37 |
| Stamp duty | 3,763,949.94 | 4,077,696.15 |
| Other taxes | 181,775.46 | 455,764.94 |
| Total | 64,190,849.22 | 62,692,261.97 |
42. Sales expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Labor cost | 765,103,249.42 | 563,186,092.82 |
| Transportation and vehicle expenses | 155,268,937.92 | 104,529,747.83 |
| After-sales service expense | 140,370,118.61 | 119,407,701.71 |
| Marketing expense | 111,187,209.88 | 130,875,092.15 |
| Administrative office expenses | 99,350,035.03 | 71,783,133.96 |
| Traveling expense | 73,216,422.53 | 103,878,867.37 |
| Business entertainment | 70,914,579.08 | 87,569,880.30 |
| Taxation and insurance expense | 28,293,533.06 | 21,103,973.64 |
| Communication expense | 25,917,363.58 | 21,288,480.22 |
| Knowledge resource fee | 12,443,137.92 | 10,915,939.24 |
| Depreciation cost and asset amortization | 10,375,898.37 | 7,441,470.43 |
| Others | 47,273,769.93 | 10,761,521.16 |
| Total | 1,539,714,255.33 | 1,252,741,900.83 |
43. Administration expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Labor cost | 224,951,022.47 | 143,961,035.47 |
| Administrative office expenses | 41,428,195.75 | 50,063,029.09 |
| Depreciation cost and asset amortization | 34,319,636.29 | 31,011,239.76 |
| Consumables and service fees | 7,304,727.49 | 4,738,524.32 |
| Knowledge resource fee | 14,562,057.39 | 13,316,478.35 |
| Transportation and vehicle expenses | 7,313,060.87 | 5,630,961.23 |
| Business entertainment | 5,786,555.52 | 7,490,485.48 |
| Traveling expense | 3,615,217.28 | 5,549,112.77 |
| Others | 7,638,694.30 | 7,438,538.06 |
| Total | 346,919,167.36 | 269,199,404.53 |
44. Research and development expense
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Labor cost | 1,087,040,550.89 | 712,441,258.21 |
| Research and development consumables and service fees | 87,539,009.16 | 83,036,573.62 |
| Depreciation cost and asset amortization | 23,016,431.23 | 18,416,375.99 |
| Traveling expense | 21,821,910.39 | 26,612,654.26 |
| Administrative office expenses | 10,606,482.20 | 6,401,731.20 |
| Communication expense | 8,105,366.86 | 6,123,257.97 |
| Others | 7,131,451.04 | 12,097,200.84 |
| Total | 1,245,261,201.77 | 865,129,052.09 |
45. Financial expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Interest Expenditures | 76,337,321.42 | 48,561,403.94 |
| Less: interest income | 81,150,189.81 | 50,792,338.79 |
| P/L on foreign exchange | 1,303,546.52 | -23,708,290.67 |
| Others | 14,554,870.27 | 3,058,829.67 |
| Total | 11,045,548.40 | -22,880,395.85 |
46. Other income
Unit: RMB
| Sources of other incomes | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| VAT refund | 352,500,448.39 | 281,985,411.74 |
| Special subsidies | 74,387,384.26 | 2,931,587.19 |
| VAT additional deduction | 33,684.43 | |
| Total | 426,921,517.08 | 284,916,998.93 |
47. Investment income
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Long-Term Equity Investment Income Measured by Equity Method | -548,623.93 | -26,273,850.83 |
| Investment Income from Disposal of Long-Term Equity Investment | 9,152,198.76 | 706,569.92 |
| Investment Income from Disposal of Financial Assets Measured in Fair Value with Its Changes Recorded into Current Profit or Loss | 10,747,186.86 | 1,005,008.70 |
| Investment Income from Possession of Available-for-sale Financial Assets | 1,013,416.14 | |
| Investment income from disposal of financial assets measured in fair value with its changes recorded into current profit or loss | -26,055,180.12 | 3,094,429.94 |
| Investment income from treasury bond reverse repurchase | 380,167.33 | |
| Investment income from financial products | 219,798.63 | |
| Total | -5,691,002.29 | -20,867,876.31 |
48. Profits from changes in fair values
Unit: RMB
| Source of the Income from Changes in Fair Value | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Transactional Financial Assets | 7,056,942.13 | |
| Including: income from the changes in fair value for derivative financial instruments | 7,056,942.13 | |
| Transactional Financial Liabilities | 38,392,246.03 | -41,332,765.27 |
| Total | 45,449,188.16 | -41,332,765.27 |
49. Credit impairment loss
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Losses on bad debts of other receivables | -7,517,011.67 |
| Losses on bad debts of accounts receivable | -156,164,494.82 | |
| Total | -163,681,506.49 |
50. Impairment losses of assets
Whether new revenue standards have been implemented
□ Yes √ No
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Ⅰ. Losses on bad debts | -127,463,091.69 | |
| Ⅱ. Losses on decline in price of inventories | -27,690,905.53 | -832,930.71 |
| III. Goodwill impairment losses | -71,083,281.09 | |
| Total | -98,774,186.62 | -128,296,022.40 |
51. Asset disposal incomes
Unit: RMB
| Sources of the asset disposal income | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Income from disposal of fixed assets | 448,615.83 | -13,024.74 |
| Total | 448,615.83 | -13,024.74 |
52. Non-operating revenue
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | Amount recorded into non-recurring profit and loss in current period |
| Government Subsidies | 5,018,245.00 | 762,526.13 | 5,018,245.00 |
| Total profits from disposal of non-current assets | 245,869.56 | 151,651.85 | 245,869.56 |
| Including: income from disposal of fixed assets | 245,869.56 | 151,651.85 | 245,869.56 |
| Others | 3,249,720.50 | 4,320,121.11 | 3,249,720.50 |
| Total | 8,513,835.06 | 5,234,299.09 | 8,513,835.06 |
Government subsidies recorded into current period P/L:
Unit: RMB
| Subsidy | Distributing | Distributing | Types of | Subsidies | Special | This Period's | Previous | Related to |
| Items | Entity | Reason | Nature | Influence Profit and Loss in the Current Year or Not | Subsidy or Not | Amount of Occurrence | Period's Amount of Occurrence | Assets/Related to Income |
| Award for encouraging the development and contribution of headquarters economy by Baise | Baise Municipal Investment Promotion Bureau | Award | Subsidies obtained due to compliance with local support policies of the local government such as investment promotion policy | Yes | No | 1,910,000.00 | Related to income | |
| National Intellectual Property Demonstration Enterprises and Superior Enterprises in 2016 (the third batch) | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies obtained for research and development, technology updating and renovation, etc. | Yes | No | 100,000.00 | Related to income | |
| Hangzhou backbone enterprises driving the industrial chain development | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 1,747,200.00 | Related to income | |
| Award for the | Bureau of | Award | Subsidies | Yes | No | 200,000.00 | Related to |
| Top 10 Meritorious Enterprises (Excellent Entrepreneurs) in 2018 | Economy and Information Technology, Fuyang District, Hangzhou | received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | income | |||||
| Support funds for the second batch of cross-border e-commerce in 2018 | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 150,000.00 | Related to income | |
| Subsidy for employment and entrepreneurship | Hangzhou Employment Management Service Bureau | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and | Yes | No | 6,600.00 | Related to income |
| regulations) | ||||||||
| Subsidy for old bangers in Hangzhou | Hangzhou Finance Bureau | Subsidy | Subsidies obtained due to compliance with local support policies of the local government such as investment promotion policy | Yes | No | 14,500.00 | Related to income | |
| Subsidy for High-tech Enterprises | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 800,000.00 | Related to income | |
| Other special subsidies | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and | Yes | No | 89,945.00 | 214,526.13 | Related to income |
| regulations) | ||||||||
| Key R&D of industrial Internet | Beijing University of Posts and Telecommunications | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 220,000.00 | Related to income | |
| Special subsidies for promoting employment | Hangzhou Vocational Skills Training and Guidance Center | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 18,000.00 | Related to income | |
| Award from Policies of Wuxi Intelligent Transportation Industry Park | Wuxi Taihu Town Management Committee | Award | Subsidies obtained due to compliance with local support policies of the local government such as investment promotion | Yes | No | 300,000.00 | Related to income |
| policy | ||||||||
| Award from 2017 Assessment of Service Trade by Binjiang District | Finance Bureau of Binjiang District, Hangzhou | Award | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 10,000.00 | Related to income | |
| Total | 5,018,245.00 | 762,526.13 |
53. Non-operating expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | Amount Recorded into Non-recurring Profit and Loss in Current Period |
| Donations | 42,664.36 | 630,000.00 | 42,664.36 |
| Gains and losses of non-current asset retirement | 356,248.11 | 1,114,169.94 | 356,248.11 |
| Including: losses from disposal of fixed assets | 356,248.11 | 1,114,169.94 | 356,248.11 |
| Water conservancy fund | 37,881.94 | ||
| Others | 958,186.08 | 412,835.47 | 958,186.08 |
| Total | 1,357,098.55 | 2,194,887.35 | 1,357,098.55 |
54. Income tax expenses
(1) Income tax expenses table
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Current income tax expense | 175,953,366.51 | 244,038,288.89 |
| Deferred income tax expense | -12,780,000.54 | -78,316,755.26 |
| Total | 163,173,365.97 | 165,721,533.63 |
(2) Reconciliation of accounting profits and income tax expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence |
| Total Profit | 1,367,835,559.96 |
| Income tax expenses calculated at legal/applicable tax rates | 205,175,333.99 |
| Impact by applying different tax rates to subsidiaries | 45,746,442.97 |
| Impact of the non-deductible costs, expenses and losses | 11,416,452.27 |
| Additional Deduction of the Research and Development Expenses | -132,787,622.74 |
| Others | 33,622,759.48 |
| Income tax expense | 163,173,365.97 |
55. Other comprehensive incomes
See notes.
56. Cash flow statement items
(1) Other cash receipts relating to operating activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Interest Income | 30,396,327.98 | 15,407,298.38 |
| Government subsidies | 105,134,372.52 | 2,107,801.58 |
| Tender and performance guarantee deposit | 43,658,924.94 | 49,216,241.74 |
| Others | 3,075,710.73 | 2,541,977.86 |
| Total | 182,265,336.17 | 69,273,319.56 |
(2) Other cash payments relating to operating activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Administrative office expenses | 128,926,539.93 | 164,117,578.16 |
| Communication expense | 19,528,790.65 | 25,790,697.07 |
| Business entertainment | 79,513,825.83 | 96,495,049.11 |
| Traveling expense | 103,427,522.52 | 151,526,241.43 |
| Marketing expense | 65,465,197.54 | 58,842,244.72 |
| Shipping expenses | 105,553,831.63 | 99,686,479.32 |
| Knowledge resource fee | 27,255,766.77 | 31,935,159.69 |
| Consumables and service fees | 157,130,890.63 | 67,764,671.31 |
| Research and development consumption and external inspection fee | 22,909,208.47 | 27,398,619.49 |
| Taxation and insurance expense | 12,067,545.99 | 5,281,488.11 |
| Deposits | 308,548,820.57 | 98,102,716.00 |
| Incomings and outgoings and advanced payments | 120,052,101.89 | 215,851,912.69 |
| Others | 11,920,133.22 | 4,615,040.20 |
| Total | 1,162,300,175.64 | 1,047,407,897.30 |
(3) Other cash receipts relating to investing activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Cash receipts related to trading financial assets | 354,648.07 | 1,295,000.00 |
| Receipts of loans from non-financial institutions | 3,697,744.32 | 1,109,123.87 |
| Total | 4,052,392.39 | 2,404,123.87 |
(4) Other cash payments related to investing activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Cash paid for forward exchange contracts | 26,458,528.22 | 892,770.06 |
| Cash paid for asset restructuring and acquisition | 74,904,182.27 | |
| Total | 26,458,528.22 | 75,796,952.33 |
(5) Other cash receipts related to financing activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Documentary Credit Deposit | 305,382,000.00 | 619,391,279.99 |
| Bill Discounting Deposit | 500,000,000.00 | |
| Total | 805,382,000.00 | 619,391,279.99 |
(6) Other cash payments related to financing activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Documentary Credit Deposit | 235,550,000.00 | 547,215,000.00 |
| Bill Discounting Deposit | 500,000,000.00 | |
| Share buy-back payouts | 81,104,575.69 | |
| Total | 816,654,575.69 | 547,215,000.00 |
57. Supplementary information about the cash flow statement
(1) Supplementary information about the Cash Flow Statement
Unit: RMB
| Supplementary Information | Amount of This period | Amount of Previous Period |
| 1. Reconciliation of Net Profit to Cash Flows from Operational Activities: | -- | -- |
| Net Profit | 1,204,662,193.99 | 1,088,763,872.17 |
| Add: Provision for Impairment of Assets | 262,455,693.11 | 128,296,022.40 |
| Depreciation of Fixed Assets, Oil and Gas Assets, Productive Biological Assets | 117,068,423.66 | 88,783,393.12 |
| Amortization of Intangible Assets | 18,067,531.25 | 15,655,020.87 |
| Amortization of Long-Term Prepaid Expenses | 13,898,229.61 | 3,088,553.94 |
| Losses on Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets (Mark "-" for Incomes) | -448,615.83 | 13,024.74 |
| Losses on Scrapping of Fixed Assets (Mark "-" for Incomes) | 110,378.55 | 962,518.09 |
| Losses on Fair Value Changes (Mark "-" for Incomes) | -45,449,188.16 | 41,332,765.27 |
| Financial Expenses (Mark "-" for Incomes) | 79,518,151.71 | 47,598,498.70 |
| Losses on Investment (Mark "-" for Incomes) | 5,691,002.29 | 20,867,876.31 |
| Decrease on Deferred Income Tax Assets (Mark "-" for Increases) | -17,043,861.48 | -89,302,479.47 |
| Increase on Deferred Income Tax Liabilities (Mark "-" for Decreases) | 4,084,960.87 | 8,229,683.89 |
| Decrease on Inventories (Mark "-" For Increases) | -324,164,744.44 | -580,085,558.07 |
| Decrease on Operational Receivables (Mark "-" for Increases) | -1,132,688,857.07 | -1,496,674,487.54 |
| Increase on Operational Payables (Mark "-" for Decreases) | -1,146,875,248.26 | -373,885,541.42 |
| Others | 90,646,857.32 | |
| Net Cash Flow Generated by Operational Activities | -870,467,092.88 | -1,096,356,837.00 |
| 2. Major Investing and Financing Activities Not Involving Cash Receipts and Payment: | -- | -- |
| 3. Net Changes in Cash and Cash Equivalents: | -- | -- |
| Closing Balance of Cash | 3,540,965,671.43 | 1,865,055,276.63 |
| Less: Opening Balance of Cash | 3,690,994,031.05 | 3,061,375,534.06 |
| Add: Closing Balance of Cash Equivalents | 3,984,499.04 | |
| Less: Opening Balance of Cash Equivalents | 11,289,772.49 | 1,303,459.82 |
| Net Additions to Balance of Equivalents | -157,333,633.07 | -1,197,623,717.25 |
(2) Composition of cash and cash equivalents
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Ⅰ. Cash | 3,540,965,671.43 | 3,690,994,031.05 |
| Including: cash on hand | 3,401.03 | 3,981.79 |
| Bank deposit for payment at any time | 2,977,425,611.26 | 3,547,354,923.39 |
| Other monetary capital for payment at any time | 563,536,659.14 | 143,635,125.87 |
| Ⅱ. Cash equivalents | 3,984,499.04 | 11,289,772.49 |
| Ⅲ. Closing balance of cash and cash equivalents | 3,544,950,170.47 | 3,702,283,803.54 |
58. Assets with restrictions in ownership or use rights
Unit: RMB
| Item Name | Book value at the end of the period | Cause of restrictions |
| Cash and Bank Balances | 660,602,442.92 | Various security deposit pledges for loans, issuance of guarantees, issuance of bank acceptance bills and discounts |
| Notes Receivable | 1,127,284,255.91 | Pledges are used to issue bank acceptance bills |
| Long-term Receivables | 280,851,984.00 | Pledges are used for bank loans |
| Non-current Assets Due within 1 Year | 33,794,295.46 | Pledges are used for bank loans |
| Total | 2,102,532,978.29 | -- |
59. Monetary items in foreign currencies
(1) Monetary items in foreign currencies
Unit: RMB
| Item Name | Closing Balance in Foreign Currencies | Exchange Rate for Conversion | Closing Balance Converted into RMB |
| Cash and Bank Balances | -- | -- | |
| Including: USD | 198,797,928.50 | 6.8747 | 1,366,676,119.06 |
| EUR | 23,364,847.16 | 7.8170 | 182,643,010.25 |
| HKD | 11,891,467.21 | 0.8797 | 10,460,923.70 |
| MXN | 152,913,113.09 | 0.3586 | 54,834,642.35 |
| AED | 23,814,776.73 | 1.8716 | 44,571,736.13 |
| ZAR | 42,596,282.89 | 0.4852 | 20,667,716.46 |
| RSD | 169,042,111.63 | 0.0663 | 11,207,492.00 |
| INR | 98,421,773.43 | 0.0996 | 9,802,808.63 |
| PLN | 4,230,935.44 | 1.8387 | 7,779,420.99 |
| THB | 19,177,380.80 | 0.2234 | 4,284,226.87 |
| KRW | 652,171,119.00 | 0.0059 | 3,847,809.60 |
| RUB | 33,603,395.37 | 0.1090 | 3,662,770.10 |
| BRL | 1,786,203.29 | 1.7999 | 3,214,987.30 |
| GBP | 317,083.25 | 8.7113 | 2,762,207.32 |
| CAD | 447,780.24 | 5.2490 | 2,350,398.48 |
| AUD | 462,166.38 | 4.8156 | 2,225,608.42 |
| HUF | 89,202,868.52 | 0.0242 | 2,158,709.42 |
| LKR | 46,018,010.00 | 0.0389 | 1,790,100.59 |
| COP | 849,368,276.33 | 0.0021 | 1,783,673.38 |
| ARS | 8,019,000.20 | 0.1610 | 1,291,059.03 |
| UZS | 1,369,834,859.43 | 0.0008 | 1,095,867.89 |
| KES | 16,109,443.80 | 0.0672 | 1,082,554.62 |
| MAD | 1,241,750.45 | 0.7176 | 891,080.12 |
| PKR | 20,672,756.00 | 0.0420 | 868,255.75 |
| CLP | 38,899,906.00 | 0.0101 | 392,889.05 |
| SGD | 72,317.62 | 5.0805 | 367,409.67 |
| PEN | 146,852.77 | 2.0893 | 306,819.49 |
| MYR | 183,069.87 | 1.6593 | 303,767.84 |
| RON | 153,325.74 | 1.6543 | 253,646.77 |
| NZD | 48,894.89 | 4.6077 | 225,292.98 |
| IDR | 400,934,316.42 | 0.0005 | 200,467.16 |
| BGN | 35,906.69 | 3.9959 | 143,479.54 |
| TND | 57,258.66 | 2.3899 | 136,842.47 |
| CZK | 437,190.06 | 0.3071 | 134,261.07 |
| TRL | 104,602.36 | 1.1909 | 124,570.95 |
| DKK | 78,475.99 | 1.0472 | 82,180.06 |
| UAH | 131,000.00 | 0.2628 | 34,426.80 |
| KZT | 1,128,156.21 | 0.0181 | 20,419.63 |
| Accounts Receivable | -- | -- | |
| Including: USD | 374,810,957.81 | 6.8747 | 2,576,712,891.66 |
| EUR | 32,851,947.48 | 7.8170 | 256,803,673.45 |
| HKD | |||
| PLN | 45,934,939.07 | 1.8387 | 84,460,572.47 |
| AED | 24,104,144.53 | 1.8716 | 45,113,316.90 |
| AUD | 6,710,323.67 | 4.8156 | 32,314,234.67 |
| CAD | 2,737,062.17 | 5.2490 | 14,366,839.33 |
| RSD | 205,533,056.86 | 0.0663 | 13,626,841.67 |
| ZAR | 19,754,024.95 | 0.4852 | 9,584,652.91 |
| KRW | 885,276,100.01 | 0.0059 | 5,223,128.99 |
| HUF | 127,977,212.47 | 0.0242 | 3,097,048.54 |
| RUB | 21,206,360.80 | 0.1090 | 2,311,493.33 |
| BRL | 1,006,759.27 | 1.7999 | 1,812,066.01 |
| KZT | 421,500.00 | 0.0181 | 7,629.15 |
| Long-term Loan | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Accounts Payable | -- |
| Including: USD | 142,653,750.92 | 6.8747 | 980,701,741.45 |
| EUR | 981,053.61 | 7.8170 | 7,668,896.07 |
| AUD | 322,243.29 | 4.8156 | 1,551,794.79 |
| BRL | 848,064.03 | 1.7999 | 1,526,430.45 |
| AED | 341,540.07 | 1.8716 | 639,226.40 |
| GBP | 58,843.62 | 8.7113 | 512,604.43 |
| RUB | 4,445,475.82 | 0.1090 | 484,556.86 |
| IDR | 572,080,454.55 | 0.0005 | 286,040.23 |
| PLN | 134,919.70 | 1.8387 | 248,076.85 |
| KRW | 24,100,000.00 | 0.0059 | 142,190.00 |
| INR | 1,139,025.76 | 0.0996 | 113,446.97 |
| HUF | 3,041,650.09 | 0.0242 | 73,607.93 |
| PEN | 34,205.80 | 2.0893 | 71,466.18 |
| DKK | 59,854.40 | 1.0472 | 62,679.53 |
| NZD | 10,530.00 | 4.6077 | 48,519.08 |
| MXN | 101,592.04 | 0.3586 | 36,430.91 |
| TRL | 22,416.90 | 1.1909 | 26,696.29 |
| RON | 13,502.13 | 1.6543 | 22,336.57 |
| RSD | 294,810.02 | 0.0663 | 19,545.90 |
| EGP | 32,500.00 | 0.4118 | 13,383.50 |
| COP | 5,474,483.00 | 0.0021 | 11,496.41 |
| UZS | 9,125,833.33 | 0.0008 | 7,300.67 |
| GEL | 2,010.00 | 2.4504 | 4,925.30 |
| BGN | 273.88 | 3.9959 | 1,094.40 |
| MYR | 301.89 | 1.6593 | 500.93 |
(2) Notes on overseas business entities, including that for the important overseas business entities, theoverseas main premises, functional currency and selection basis shall be disclosed. If there are changes onits functional currency, the causes for the changes shall be disclosed as well.
√ Applicable □ Not applicable
Since the Company's overseas business entity, Dahua Technology (HK) Limited, does not have autonomy over its businessactivities, which are the extension of the Company's business activities, for the part constituting the Company's business activities,RMB shall be used as its functional currency, and for the rest of the overseas entities, local currencies shall be used as its functionalcurrency.
60. Government subsidies
(1) Basic information about government subsidies
Unit: RMB
| Types | Amount | Items reported | Amount taken to current P&L |
| Special award for industrial park projects | 1,586,311.74 | Other Incomes | 1,586,311.74 |
| VAT refund | 352,500,448.39 | Other Incomes | 352,500,448.39 |
| VAT additional deduction | 33,684.43 | Other Incomes | 33,684.43 |
| Subsidies for R&D expenses of small and micro enterprises | 530,000.00 | Other Incomes | 530,000.00 |
| Core Electronics, High-End General-Purpose Chips and Basic Software Products special fund | 10,118,900.00 | Other Incomes | 10,118,900.00 |
| Service outsourcing development funds | 1,244,400.00 | Other Incomes | 1,244,400.00 |
| Special funds for foreign trade and economic development | 272,526.17 | Other Incomes | 272,526.17 |
| Special subsidies for the development of the integrated circuit industry | 4,140,000.00 | Other Incomes | 4,140,000.00 |
| Financial incentives for PPP projects in 2017 | 500,000.00 | Other Incomes | 500,000.00 |
| Social security refund for promoting employment | 54,681,846.35 | Other Incomes | 54,681,846.35 |
| Subsidies for undergraduate practical training | 13,400.00 | Other Incomes | 13,400.00 |
| Subsidies for factory IoT projects | 1,300,000.00 | Other Incomes | 1,300,000.00 |
| Special award for industrial park projects | 27,455,000.00 | Deferred Income | |
| Award for encouraging the development and contribution of headquarters economy by Baise | 1,910,000.00 | Non-operating Revenue | 1,910,000.00 |
| National Intellectual Property Demonstration Enterprises and Superior Enterprises in 2016 | 100,000.00 | Non-operating Revenue | 100,000.00 |
| (the third batch) | |||
| Hangzhou backbone enterprises driving the industrial chain development | 1,747,200.00 | Non-operating Revenue | 1,747,200.00 |
| Award for the Top 10 Meritorious Enterprises (Excellent Entrepreneurs) in 2018 | 200,000.00 | Non-operating Revenue | 200,000.00 |
| Support funds for the second batch of cross-border e-commerce in 2018 | 150,000.00 | Non-operating Revenue | 150,000.00 |
| Subsidy for employment and entrepreneurship | 6,600.00 | Non-operating Revenue | 6,600.00 |
| Subsidy for old bangers in Hangzhou | 14,500.00 | Non-operating Revenue | 14,500.00 |
| Subsidy for High-tech Enterprises | 800,000.00 | Non-operating Revenue | 800,000.00 |
| Other special subsidies | 89,945.00 | Non-operating Revenue | 89,945.00 |
| Total | 459,394,762.08 | 431,939,762.08 |
(2) Repayment of government subsidies
□ Applicable √ Not applicable
VIII. Changes in the Scope of Consolidation
1. Disposal of subsidiaries
Is there any situation where disposal of investment in subsidiaries in a single transaction causes loss of control
√ Yes □ No
Unit: RMB
| Name of Subsidiaries | Equity disposal price | Equity disposal proportion | Equity disposal method | Time of loss of control | Basis for determining the time of loss of control | The difference between the disposal price and the net assets of the | Proportion of the remaining equity on the date of loss of control | Book value of the remaining equity on the date of loss of control | Fair value of the remaining equity on the date of loss of control | Profits or losses from re-measurement of equity held before acquisition date | Method for determining the fair value of the remaining equity on the | Investment gains and losses transferred from other comprehensive incomes |
| subsidiary company shared by the corresponding investment disposal from the level of the consolidated financial statements | in fair value | date of loss of control and main assumptions | related to the original subsidiary company's equity investment | |||||||||
| China Standard Intelligent Security Technology Co., Ltd. | 7,200,000.00 | 36.00% | Equity transfer | January 01, 2019 | Signing of the equity transfer agreement and the handover of the property rights | 9,152,198.76 | 15.00% | -1,013,416.14 | 0.00 | 1,013,416.14 | Reference to the book value of net assets | 0.00 |
Is there any situation where disposal of investment in subsidiaries is achieved through multiple transactions in various stages, causingloss of control in this period
□ Yes √ No
2. Changes in the scope of consolidation for other reasons
Explanations on the changes in the scope of consolidation caused by other reasons (for example, newly established subsidiaries,subsidiaries clearing, etc.) and relevant information:
(1) The Company invested to establish Zhejiang Zhoushan Digital Development Operation Co., Ltd. in this period, withownership of 58.80% of its equity share and substantive control. This company has been included in the scope of consolidation sinceits establishment.
(2) The subsidiary companies, Electronic Technology Co., Ltd., Hunan Dahua System Technology Co., Ltd., Beijing DahuaZhongcheng Technology Co., Ltd., andDahua Italy S.R.L, were canceled in this period and will not be included in the scope ofconsolidation since the date of cancellation.
IX. Equity in Other Entities
1. Equity in Subsidiaries
(1) Composition of the enterprise group
| Name of Subsidiaries | Main Place of Business | Registered Address | Business Nature | Shareholding Percentage | Acquisition Method | |
| Direct | Indirect | |||||
| Dahua System Engineering | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Dahua Vision Technology | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Dahua Security Network | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Dahua Ju'an | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Guangxi Dahua Information | Qingxiu District, Nanning | Qingxiu District, Nanning | Electronics and information | 100.00% | Establishment | |
| Dahua Security | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Service | 100.00% | Establishment | |
| Guangxi Security | Qingxiu District, Nanning | Qingxiu District, Nanning | Service | 100.00% | Establishment | |
| Huatu Microchip | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Hangzhou Xiaohua | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 45.00% (Note 1) | Establishment | |
| Dahua Zhilian | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 90.09% (Note 2) | Establishment | |
| Tecomore Technology | West Lake District, Hangzhou | West Lake District, Hangzhou | Electronics and information | 51.00% | Business combination not under common control | |
| Dahua Investment Management | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Investment & investment management | 75.00% | Establishment | |
| South North United | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Business combination not under common control | |
| Guangxi | Youjiang District, | Youjiang District, | Electronics and | 65.00% | Establishment | |
| Zhicheng | Baise | Baise | information | |||
| Hangzhou Huacheng | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Xinjiang Information | High-tech Zone, Shihezi | High-tech Zone, Shihezi | Electronics and information | 92.00% | Establishment | |
| HuaRay Technology | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Sci-tech popularization and application services industry | 51.00% | Establishment | |
| Fuyang Hua'ao | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Huafei Intelligent | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 45.50% (Note 3) | Establishment | |
| Huachuang Vision | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Guizhou Huayi | Guanshanhu District, Guiyang | Guanshanhu District, Guiyang | Electronics and information | 45.00% (Note 4) | Establishment | |
| Xinjiang Dahua Information | Shihezi, Xinjiang | Shihezi, Xinjiang | Electronics and information | 100.00% | Establishment | |
| Xinjiang Intelligence | Changji, Changji Prefecture, Xinjiang | Changji, Changji Prefecture, Xinjiang | Electronics and information | 100.00% | Establishment | |
| Guizhou Intelligence | Guiyang, Guizhou | Guiyang, Guizhou | Electronics and information | 100.00% | Establishment | |
| Xinjiang Zhihe | Hetian County, Hetian, Xinjiang | Hetian County, Hetian, Xinjiang | Electronics and information | 97.00% | Establishment | |
| Guangxi Huacheng | Wuzhou, Guangxi | Wuzhou, Guangxi | Electronics and information | 90.00% | Establishment | |
| Meitan Dahua Technology | Zunyi, Guizhou | Zunyi, Guizhou | Electronics and information | 100.00% | Establishment | |
| Inner Mongolia Zhimeng | New District, Bai County, Chahar Right Wing Back Banner | New District, Bai County, Chahar Right Wing Back Banner | Electronics and information | 95.00% | Establishment | |
| Xinjiang Zhitian | Hetian County, Hetian, Xinjiang | Hetian County, Hetian, Xinjiang | Electronics and information | 97.00% | Establishment | |
| Xinjiang Xinzhi | Shache County, Kashgar District, Xinjiang | Shache County, Kashgar District, Xinjiang | Electronics and information | 100.00% | Establishment |
| Xinjiang Huayue | Kashgar, Xinjiang | Kashgar, Xinjiang | Electronics and information | 100.00% | Establishment | |
| Tianjin Dahua | Tianjin Binhai New Area | Tianjin Binhai New Area | Electronics and information | 65.00% | Establishment | |
| Dahua Zhilong | Shuangpai County, Yongzhou City | Shuangpai County, Yongzhou City | Electronics and information | 90.00% | Establishment | |
| Vision Technology | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Huaxiao Technology | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Xi'an Dahua | Xi'an City, Shaanxi Province | Xi'an City, Shaanxi Province | Electronics and information | 100.00% | Establishment | |
| Wuxi Ruipin | Wuxi City | Wuxi City | Electronics and information | 51.00% | Establishment | |
| Dahua Robot | Xiaoshan District, Hangzhou | Xiaoshan District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Beijing Huayue | Xicheng District, Beijing | Xicheng District, Beijing | Electronics and information | 100.00% | Establishment | |
| Shanghai Huashang | Putuo District, Shanghai | Putuo District, Shanghai | Electronics and information | 100.00% | Establishment | |
| Dahua Jinzhi | Wucheng District, Jinhua City | Wucheng District, Jinhua City | Electronics and information | 100.00% | Establishment | |
| Dahua Guangxun | Chengdu High-tech Zone | Chengdu High-tech Zone | Electronics and information | 100.00% | Business combination not under common control | |
| Huajuan Technology | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Zhoushan Operation | Zhoushan, Zhejiang Province | Zhoushan, Zhejiang Province | Electronics and information | 58.80% | Establishment | |
| Dahua Hong Kong | Hong Kong | Hong Kong | Electronics and information | 100.00% | Establishment | |
| Dahua USA | USA | USA | Electronics and information | 100.00% | Establishment | |
| Dahua Europe | Netherlands | Netherlands | Electronics and information | 100.00% | Establishment |
| Dahua Middle East | United Arab Emirates | United Arab Emirates | Electronics and information | 100.00% | Establishment | |
| Dahua Mexico | Mexico | Mexico | Electronics and information | 100.00% | Establishment | |
| Dahua Chile | Chile | Chile | Electronics and information | 100.00% | Establishment | |
| Dahua Colombia | Columbia | Columbia | Electronics and information | 100.00% | Establishment | |
| Dahua Australia | Australia | Australia | Electronics and information | 100.00% | Establishment | |
| Dahua Singapore | Singapore | Singapore | Electronics and information | 100.00% | Establishment | |
| Dahua South Africa | South Africa | South Africa | Electronics and information | 100.00% | Establishment | |
| Dahua Peru | Peru | Peru | Electronics and information | 100.00% | Establishment | |
| Dahua Brazil | Brazil | Brazil | Electronics and information | 100.00% | Establishment | |
| Dahua Russia | Russia | Russia | Electronics and information | 100.00% | Establishment | |
| Dahua Canada | Canada | Canada | Electronics and information | 100.00% | Establishment | |
| Dahua Panama | Panama | Panama | Electronics and information | 100.00% | Establishment | |
| Dahua Hungary | Hungary | Hungary | Electronics and information | 100.00% | Establishment | |
| Dahua Poland | Poland | Poland | Electronics and information | 100.00% | Establishment | |
| Dahua Tunisia | Tunisia | Tunisia | Electronics and information | 100.00% | Establishment | |
| Dahua Kenya | Kenya | Kenya | Electronics and information | 100.00% | Establishment | |
| Dahua UK | UK | UK | Electronics and information | 100.00% | Establishment | |
| Dahua Bulgaria | Bulgaria | Bulgaria | Electronics and information | 100.00% | Establishment | |
| Dahua Serbia | Serbia | Serbia | Electronics and information | 100.00% | Establishment |
| Dahua Germany | Germany | Germany | Electronics and information | 100.00% | Establishment | |
| Dahua Malaysia | Malaysia | Malaysia | Electronics and information | 100.00% | Establishment | |
| Dahua Korea | South Korea | South Korea | Electronics and information | 100.00% | Establishment | |
| Dahua Indonesia | Indonesia | Indonesia | Electronics and information | 100.00% | Establishment | |
| Dahua India | India | India | Electronics and information | 100.00% | Establishment | |
| Dahua Turkey | Turkey | Turkey | Electronics and information | 100.00% | Establishment | |
| Dahua Czech | Czech Republic | Czech Republic | Electronics and information | 100.00% | Establishment | |
| Dahua Argentina | Argentina | Argentina | Electronics and information | 100.00% | Establishment | |
| Dahua Spain | Spain | Spain | Electronics and information | 100.00% | Establishment | |
| Dahua Kazakhstan | Kazakhstan | Kazakhstan | Electronics and information | 100.00% | Establishment | |
| Dahua Denmark | Denmark | Denmark | Electronics and information | 100.00% | Establishment | |
| Dahua France | France | France | Electronics and information | 100.00% | Establishment | |
| American Lechange | USA | USA | Electronics and information | 100.00% | Establishment | |
| Dahua Technology Holdings | Hong Kong | Hong Kong | Electronics and information | 100.00% | Establishment | |
| Dahua Morocco | Morocco | Morocco | Electronics and information | 100.00% | Establishment | |
| Dahua Technology Italy | Italy | Italy | Electronics and information | 100.00% | Business combination not under common control | |
| Dahua Uzbekistan | Uzbekistan | Uzbekistan | Electronics and information | 100.00% | Establishment | |
| Dahua Netherlands | Netherlands | Netherlands | Electronics and information | 100.00% | Establishment |
| Dahua Sri Lanka | Sri Lanka | Sri Lanka | Electronics and information | 100.00% | Establishment | |
| Dahua Lorex | Canada | Canada | Electronics and information | 100.00% | Business combination not under common control | |
| Dahua Pakistan | Pakistan | Pakistan | Electronics and information | 100.00% | Establishment | |
| Dahua New Zealand | New Zealand | New Zealand | Electronics and information | 100.00% | Establishment | |
| Dahua Thailand | Thailand | Thailand | Electronics and information | 99.98% | Establishment | |
| Dahua Romania | Romania | Romania | Electronics and information | 100.00% | Establishment |
Explanations on the fact that the proportion of the shares held by a subsidiary differs from that of voting rights:
(1) The Company directly holds 45% equity in Hangzhou Xiaohua Technology Co., Ltd., and as agreed upon, Zhejiang HuashiInvestment Management Co., Ltd. grants its voting rights of 12% to the Company. The Company effectively holds 57% of the votingrights in Hangzhou Xiaohua Technology Co., Ltd., which constitutes working control so as to incorporate it into the scope ofconsolidation.
(2) Based on the industrial and commercial registration data, the CDB Development Fund holds equity in the Company.According to the cooperation agreement between the Company and CDB Development Fund, CDB Development Fund shall notappoint senior management personnel, such as directors and supervisors, to Dahua Zhilian; regarding its investment, the Companyshall pay an annual investment profit of 1.2% to CDB Development Fund through dividends, repurchase premiums, etc. In addition,the Company shall redeem the CDB Development Fund's equity in Dahua Zhilian period by period from 2022 to 2024, using itsamount of investment as other non-current liabilities. The Company effectively holds 100% voting rights and equity in DahuaZhilian.
(3) The Company directly holds 45.50% equity in Zhejiang Huafei Intelligence Technology Co., Ltd., and as agreed upon,Zhejiang Huashi Investment Management Co., Ltd. grants its voting rights of 16% to the Company. The Company effectively holds
61.50% of the voting rights in Zhejiang Huafei Intelligence Technology Co., Ltd., which constitutes working control so as toincorporate it into the scope of consolidation.
(4) The Company directly holds 45% equity in Guizhou Huayi Vision Technology Co., Ltd., and as agreed upon, Guizhou YiyunInvestment Management Co., Ltd. grants its voting rights of 6% to the Company. The Company effectively holds 51% of the votingrights in Guizhou Huayi Vision Technology Co., Ltd., which constitutes working control so as to incorporate it into the scope ofconsolidation.
2. Equity in joint venture arrangements or affiliates
(1) Financial summary of non-essential joint ventures and affiliates
Unit: RMB
| Balance at the End of the Period/Accrual | Balance at the Commencement of the |
| of Current Period | Period/Accrual of Previous Period | |
| Joint Ventures: | -- | -- |
| The Total Count of the Following Items Based on the Shareholding Ratios | -- | -- |
| Affiliates: | -- | -- |
| Total Book Value of Investments | 165,358,482.24 | 185,872,021.58 |
| The Total Count of the Following Items Based on the Shareholding Ratios | -- | -- |
| --Net Profit | -548,623.93 | -26,273,850.83 |
| --Other Comprehensive Income | -32,566,199.05 | -637,505.10 |
| --Total Comprehensive Income | -33,114,822.98 | -26,911,355.93 |
X. Risks Relating to Financial InstrumentsIn the business operation, the Company is facing with various financial risks: credit risk, market risk and liquidity risk.The overall objective of the Company's risk management is to formulate risk management policies that can minimize riskswithout affecting the Company's competitiveness and adaptability to changes too much.
(I)Credit RiskThe credit risk refers to the risk of one party of a financial instrument suffering financial losses due to that the other party fails toperform its obligations.. The Company is mainly facing with the customer credit risk arising from sales on account. Before signing anew contract, the Company will assess the new customer's credit risk, including external credit rating and the credibility letter from abank under some circumstances (if such information is available). The Company has set a credit limit for sales on account for eachcustomer. Such limit shall be the maximum amount with no additional approval needed.The Company ensures that the overall credit risk is within the controllable range through quarterly monitoring of credit ratingsof existing customers, and monthly review of aging analysis on accounts receivable. When monitoring customers' credit risk, theCompany groups them according to their credit characteristics. Customers rated as "high risk" will be placed on the restrictedcustomer list. The Company can provide them with O/A in the future period only when additional approval is obtained. Otherwisethey must make relevant payment in advance.
(II)Market RiskThe market risk of financial instruments refers to the risk of fluctuation in fair value of financial instruments or future cashflows with the change of market prices, including exchange rate risks and interest rate risks.
(1) Interest Rate Risk
The interest rate risk refers to the risk in which the fair value or future cash flow of financial instruments changes due to thechange of market interest rate. The interest rate risk faced with by the Company is mainly from bank loans. The Company's assetsand liabilities relating to interest rate are respectively bank deposits and short-term loans, whose interest rate risk is low.
(2) Exchange Rate Risk
The exchange rate risk refers to the risk in which the fair value or future cash flow of financial instruments changes due to thechange of foreign exchange rate. The Company will try its best to match the revenues with the expenses in foreign currency, to lowerthe exchange rate risk. In addition, the Company may also sign forward foreign exchange contracts or currency swap contracts toavoid exchange rate risks. On June 30,2019, the amount of the forward contracts that the Company has not delivered was $50million.
The exchange rate risk faced with by the Company is mainly from financial assets and liabilities in USD. The amounts of assetsand liabilities in foreign currencies and converted into RMB are listed as below:
| Item Name | Balance at the End of the Period | Balance at the Beginning of the Year | ||||
| USD | Other foreign currencies | Total | USD | Other foreign currencies | Total | |
| Accounts Receivable | 2,576,712,891.66 | 468,721,497.42 | 3,045,434,389.08 | 2,737,552,570.28 | 418,253,386.17 | 3,155,805,956.45 |
| Accounts Payable | 980,701,741.45 | 13,573,246.65 | 994,274,988.10 | 761,747,601.87 | 11,375,001.16 | 773,122,603.03 |
| Total | 3,557,414,633.11 | 482,294,744.07 | 4,039,709,377.18 | 3,499,300,172.15 | 429,628,387.33 | 3,928,928,559.48 |
(III)Liquidity Risk
Liquidity risk refers to the risk of a shortage of funds when an enterprise fulfills its obligation of settlement by cash or otherfinancial assets. The Company's policy is to ensure that there is sufficient cash to repay the liabilities due. The liquidity risk is underthe concentrated control of the Company's Financial Department. Through monitoring the balance of cash and securities cashable atany time and rolling forecasting the cash flow in the next 12 months, the Financial Department ensures that the Company hassufficient funds to repay its debts under all reasonable predictions.
The Company's major financial liabilities are listed by maturity dates as below:
| Item Name | Balance at the End of the Period | Balance at the Beginning of the Year | ||||
| Within 1 year | 1 year or above | Total | Within 1 year | 1 year or above | Total | |
| Short-term loan | 3,084,859,034.59 | 3,084,859,034.59 | 1,851,709,561.83 | 1,851,709,561.83 | ||
| Notes Payable | 3,483,458,773.48 | 3,483,458,773.48 | 3,671,586,104.79 | 3,671,586,104.79 | ||
| Accounts Payable | 3,194,442,877.42 | 3,194,442,877.42 | 3,789,729,594.20 | 3,789,729,594.20 | ||
| Non-current Liabilities Due within 1 Year | 25,500,000.00 | 25,500,000.00 | 25,500,000.00 | 25,500,000.00 | ||
| Long-term Loan | 154,000,000.00 | 154,000,000.00 | 179,000,000.00 | 179,000,000.00 | ||
| Total | 9,788,260,685.49 | 154,000,000.00 | 9,942,260,685.49 | 9,338,525,260.82 | 179,000,000.00 | 9,517,525,260.82 |
XI. Disclosure of Fair Values
1. Fair values of the assets and liabilities at the end of the period
Unit: RMB
| Item Name | Fair values at the End of the Period | |||
| First Level Measurement at Fair Value | Second Level Measurement at Fair Value | Third Level Measurement at Fair Value | Total | |
| I. Constant measurement at fair value | -- | -- | -- | -- |
| (I) Transactional financial assets | 7,056,942.13 | 83,970,227.00 | 91,027,169.13 | |
| 1. Financial assets at fair value through profit or loss | 7,056,942.13 | 83,970,227.00 | 91,027,169.13 | |
| (2) Investment in equity instruments | 83,970,227.00 | 83,970,227.00 | ||
| (3) Derivative financial assets | 7,056,942.13 | 7,056,942.13 | ||
| Total amount of assets constantly measured at their fair values | 7,056,942.13 | 83,970,227.00 | 91,027,169.13 | |
| II. Non-constant measurement at fair values | -- | -- | -- | -- |
2. Basis for determining the market price of items under first level constant and non-constant measurementat fair value
3. Items under second level constant and non-constant measurement at fair value, valuation techniqueadopted, and qualitative and quantitative information of important parameters
The fair value of forward foreign exchange contracts shall be measured by the leading bank's valuation.
4. Items under third level constant and non-constant measurement at fair value, valuation techniqueadopted, and qualitative and quantitative information of important parametersBased on the assets valued by the income approach and assets approach and the net book assets.
5. Items under third level constant measurement at fair value, information on the reconciliation betweenbook values at the start and the end of the period and sensitivity analysis on unobservable parameters
6. Items under constant measurement at fair value, and reasons for conversion and policies to determinethe conversion time point if there is any conversion among different levels in this period
7. Changes in valuation technique in this period and reasons
8. Fair values of the financial assets and liabilities that are not measured at fair value
The fair value of the financial assets and financial liabilities measured by the Company at amortized cost is equivalent to the bookvalue.
XII. Related Parties and Related-party Transactions
1. The Company's Parent Company
The final controllers of the Company are Mr. Fu Liquan and Ms. Chen Ailing.
2. Information about the Company's subsidiaries
For details of subsidiaries of the Company, see Note "IX. Equities in other entities".
3. Information about the Company's joint ventures and affiliates
For details of significant joint ventures and associates of the Company, see Note "IX. Equities in other entities".Here are the information about other joint ventures and affiliates that have related-party transactions with the Company in the currentperiod or have balance from related-party transactions with the Company in the previous period:
| Names of Joint Venture and Affiliate | Relationship with the Company |
| Taizhou Dahua Security Services Co., Ltd. | Affiliate |
| Ningbo Dahua Anbang Security Services Co., Ltd. | Affiliate |
| Lishui Dahua Intelligent Technology Co., Ltd. | Affiliate |
| Zhoushan Dahua Technology Co., Ltd. | Affiliate |
| Zhejiang Leapmotor Technology Co., Ltd. | Affiliate, and enterprise controlled by the Company's actual controller |
| Leapmotor Automobile Co., Ltd. | Associates, and subsidiaries controlled by actual controllers |
| Shenzhen Conwin Security Electronics CO., Ltd. | Affiliate |
| Zhejiang Dahua Zhian Internet of Things Technology Co., Ltd. | Affiliate |
| Guangdong Dahua Zhishi Technology Co., Ltd. | Affiliate |
| Ningbo Dahua-ZhiAn IOT Technology Co., Ltd. | Subsidiary of the affiliate |
| Wenzhou Dahua Security Services Co., Ltd. | Affiliate |
| China Standard Intelligent Security Technology Co., Ltd. | Affiliate |
4. Information about other related parties
| Names of Other Related Parties | Relationship between the Company and Other Related Parties |
| Zhejiang Lancable Technology Co., Ltd. | Enterprise controlled by the senior manager of the Company |
| Hangzhou Xintu Technology Co., Ltd. | Enterprise controlled by the senior manager of the Company |
| Ningxia Shendun Security Services Co., Ltd. | Subsidiary of a company with shares held by the Company |
| Hangzhou Xunwei Robotics Technology Co., Ltd. | Enterprise significantly influenced by the senior manager of the Company |
| Hangzhou Huayun Technology Co., Ltd. | Enterprise significantly influenced by the senior manager of the Company |
| Wangsu Technology Co., Ltd. | Enterprise with an independent director of the Company as the independent director |
| Gansu Aode Electronic Technology Co., Ltd. | Subsidiary of a company with shares held by the Company |
| Hangzhou Xiaoshan Weiyi Outpatient Co., Ltd. | Enterprises with any independent director of the Company being the director |
| Hangzhou Nuojia Technology Co., Ltd. | Enterprise controlled by the senior manager of the Company |
| Eastcom Co., Ltd. | Enterprise with an independent director of the Company as the independent director |
| Shanghai Yanhua Intelligent Technology (Group) Co., Ltd. | Enterprise with an independent director of the company as the independent director |
| Zhejiang Huanuokang Technology Co., Ltd. | Company controlled by the Company's actual controller |
5. Information about related-party transactions
(1) Related-party transactions involving purchase and selling of merchandise and provision and acceptanceof labor services
Merchandise purchase and acceptance of labor services
Unit: RMB
| Related Parties | Content of the Related-party Transaction | This Period's Amount of Occurrence | Approved Transaction Limit | Over the Transaction Limit or Not | Previous Period's Amount of Occurrence |
| Zhejiang Lancable Technology Co., Ltd. | Purchase of materials | No | 2,254,717.95 |
| Hangzhou Huayun Technology Co., Ltd. | Purchase of materials | 6,939.66 | No | 15,086.21 | |
| Zhejiang Leapmotor Technology Co., Ltd. | Purchase of materials | 375,334.00 | No | ||
| Wangsu Technology Co., Ltd. | Acceptance of services | No | 185,849.06 | ||
| Hangzhou Xiaoshan Weiyi Outpatient Co., Ltd. | Acceptance of services | 22,388.60 | No | ||
| Wenzhou Dahua Security Services Co., Ltd. | Acceptance of services | 2,031,266.17 | No |
Sales of merchandise and provision of services
Unit: RMB
| Related Parties | Content of the Related-party Transaction | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Ningbo Dahua Anbang Security Services Co., Ltd. | Sales of merchandise | 73,619.96 | |
| Lishui Dahua Intelligent Technology Co., Ltd. | Sales of merchandise | 188,679.25 | 32,812.06 |
| Zhoushan Dahua Technology Co., Ltd. | Sales of merchandise | 13,747.79 | |
| Wenzhou Dahua Security Services Co., Ltd. | Sales of merchandise | 70,338.15 | |
| Zhejiang Leapmotor Technology Co., Ltd. | Sales of merchandise | 618,128.82 | 285,505.92 |
| Hangzhou Xintu Technology Co., Ltd. | Sales of merchandise | 240,037.81 | 283,583.30 |
| Taizhou Dahua Security Services Co., Ltd. | Sales of merchandise | 56,206.89 | 3,247.86 |
| Shenzhen Conwin Security Electronics CO., Ltd. | Sales of merchandise | 338,007.21 | 410,974.88 |
| Guangdong Dahua Zhishi Technology Co., Ltd. | Sales of merchandise | 3,806,217.57 | 2,790,467.56 |
| Zhejiang Dahua Zhian Internet of Things Technology Co., Ltd. | Sales of merchandise | 943,396.23 | |
| Ningbo Dahua-ZhiAn IOT | Sales of merchandise | 3,879.30 |
| Technology Co., Ltd. | |||
| Hangzhou Xunwei Robotics Technology Co., Ltd. | Sales of merchandise | 14,918.51 | |
| Hangzhou Huayun Technology Co., Ltd. | Sales of merchandise | 595,835.37 | 929,722.63 |
| Eastcom Co., Ltd. | Sales of merchandise | 517,133.64 | 40,411.44 |
| Zhejiang Lancable Technology Co., Ltd. | Sales of merchandise | 1,024,715.92 | 48,844.82 |
| Hangzhou Nuojia Technology Co., Ltd. | Sales of merchandise | 314,418.61 | |
| Leapmotor Automobile Co., Ltd. | Sales of merchandise | 1,859,072.29 | |
| China Standard Intelligent Security Technology Co., Ltd. | Sales of merchandise | 1,662,980.56 | |
| Shanghai Yanhua Intelligent Technology (Group) Co., Ltd. | Sales of merchandise | 844,182.81 | |
| Zhejiang Huanuokang Technology Co., Ltd. | Sales of merchandise | 171,686.14 | |
| China Standard Intelligent Security Technology Co., Ltd. | Provision of services | 127,801.82 |
(2) Related-party leasing
The Company being the lessor:
Unit: RMB
| Name of the Lessee | Type of the Leased Sssets | Rental Income Confirmed in This Period | Rental Income Confirmed in the Previous Period |
| Zhejiang Leapmotor Technology Co., Ltd. | Buildings and constructions | 330,514.26 | |
| China Standard Intelligent Security Technology Co., Ltd. | Buildings and constructions | 94,999.87 |
(3) Related-party guarantee
The Company being the guarantor:
Unit: RMB
| Secured Parties | Guarantee Amount | Starting Date | Maturity Date | Guarantee Fulfilled Completely or Not |
| Zhejiang Dahua Vision | 110,000,000.00 | January 15, 2018 | Two years after the maturity of | Yes |
| Technology Co., Ltd. | the debts in the master contract | |||
| Zhejiang Dahua Vision Technology Co., Ltd. | 300,000,000.00 | May 4, 2018 | April 16, 2019 | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 20,000,000.00 | August 2, 2018 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 290,000,000.00 | June 6, 2016 | January 15, 2020 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 600,000,000.00 | August 10, 2017 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 220,000,000.00 | October 13, 2017 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 500,000,000.00 | March 27, 2018 | March 19, 2021 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 240,000,000.00 | April 13, 2018 | April 12, 2020 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | July 25, 2018 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | August 1, 2018 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | August 21, 2018 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | September 3, 2018 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Technology Co., Ltd. (guarantee currency is USD) | 40,000,000.00 | September 21, 2018 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 220,000,000.00 | November 26, 2018 | November 26, 2020 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | January 3, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 300,000,000.00 | January 17, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Technology Co., Ltd. (guarantee currency is USD) | 15,000,000.00 | March 20, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | March 21, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | April 18, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | April 28, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 650,000,000.00 | May 10, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 230,000,000.00 | May 13, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 180,000,000.00 | June 26, 2019 | June 25, 2022 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 200,000,000.00 | June 6, 2016 | June 30, 2020 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 500,000,000.00 | September 1, 2018 | September 1, 2020 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 300,000,000.00 | October 12, 2018 | October 12, 2021 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 100,000,000.00 | April 09, 2019 | One year after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 100,000,000.00 | April 25, 2019 | One year after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 60,000,000.00 | May 13, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 100,000,000.00 | June 6, 2016 | March 30, 2020 | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 60,000,000.00 | October 10, 2017 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 100,000,000.00 | May 10, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 40,000,000.00 | May 13, 2019 | Three years after the maturity of the debts in the master contract | No |
| Dahua Technology (HK) Limited | 200,000,000.00 | April 9, 2018 | Two years after the maturity of the debts in the master contract | Yes |
| Dahua Technology (Hong Kong) Co., Ltd. (guarantee currency is US dollar) | 50,000,000.00 | December 15, 2017 | December 15, 2020 | No |
| Dahua Technology USA Inc. (guarantee currency is US dollar) | 300,000.00 | March 4, 2019 | March 9, 2020 | No |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V (guarantee currency is Mexican | 59,973,141.38 | March 26, 2019 | March 26, 2020 | No |
| Peso) | ||||
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V (guarantee currency is Mexican Peso) | 179,919,424.15 | April 09, 2019 | April 9, 2020 | No |
(4) About related parties' asset transfer and debt restructuring
Unit: RMB
| Related Parties | Content of the Related - Party Transaction | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Eastcom Co., Ltd. | Selling of fixed assets | 4,273.50 | |
| China Standard Intelligent Security Technology Co., Ltd. | Selling of fixed assets | 1,659.82 |
(5) Remuneration to key management personnel
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Salary of key management personnel | 6,091,781.84 | 6,130,948.00 |
6. Receivables and payables of the related parties
(1) Receivables
Unit: RMB
| Item Name | Related Parties | Balance at the End of the Period | Balance at the Start of the Period | ||
| Book Balance | Bad Debt Provision | Book Balance | Bad Debt Provision | ||
| Accounts Receivable | Zhejiang Dahua Zhian Internet of Things Technology Co., Ltd. | 100,000.00 | 5,000.00 | 100,000.00 | 10,000.00 |
| Accounts Receivable | Guangdong Dahua Zhishi Technology Co., Ltd. | 5,444,311.16 | 294,660.31 | 3,227,876.00 | 161,393.80 |
| Accounts Receivable | Ningbo Dahua Anbang Security Services Co., Ltd. | 310,420.00 | 15,521.00 | ||
| Accounts Receivable | Taizhou Dahua Security Services Co., Ltd. | 148,000.00 | 7,400.00 | 133,200.00 | 6,660.00 |
| Accounts Receivable | Zhejiang Leapmotor Technology Co., Ltd. | 915,995.85 | 45,799.79 | 445,003.41 | 22,250.17 |
| Accounts | Hangzhou Xintu Technology Co., Ltd. | 52,193.04 | 2,609.65 | 47,676.81 | 2,383.84 |
| Receivable | |||||
| Accounts Receivable | Zhejiang Lancable Technology Co., Ltd. | 1,905,359.00 | 95,267.95 | 916,688.50 | 45,834.43 |
| Accounts Receivable | Shenzhen Conwin Security Electronics CO., Ltd. | 146,252.00 | 7,312.60 | 710,640.00 | 35,532.00 |
| Accounts Receivable | Hangzhou Huayun Technology Co., Ltd. | 2,069,785.00 | 103,489.25 | 2,998,896.00 | 149,944.80 |
| Accounts Receivable | Hangzhou Xunwei Robotics Technology Co., Ltd. | 9,400.00 | 555.00 | 9,400.00 | 470.00 |
| Accounts Receivable | Eastcom Co., Ltd. | 620,499.48 | 31,024.97 | 191,254.90 | 11,305.43 |
| Accounts Receivable | Hangzhou Nuojia Technology Co., Ltd. | 6,860,186.05 | 4,696,586.10 | 9,031,072.05 | 4,805,130.40 |
| Accounts Receivable | Leapmotor Automobile Co., Ltd. | 4,272,932.57 | 213,646.63 | 2,198,155.00 | 109,907.75 |
| Accounts Receivable | China Standard Intelligent Security Technology Co., Ltd. | 2,022,221.48 | 101,111.07 | ||
| Accounts Receivable | Shanghai Yanhua Intelligent Technology (Group) Co., Ltd. | 780,218.78 | 39,010.94 | ||
| Accounts Receivable | Zhejiang Huanuokang Technology Co., Ltd. | 194,005.36 | 9,700.27 |
(2) Payables
Unit: RMB
| Item Name | Related Parties | Balance at the End of the Period | Balance at the Commencement of the Period |
| Accounts Payable | Ningxia Shendun Security Services Co., Ltd. | 350,375.00 | 350,375.00 |
| Accounts Payable | Gansu Aode Electronic Technology Co., Ltd. | 365,420.00 | |
| Accounts Payable | Zhejiang Leapmotor Technology Co., Ltd. | 277,054.00 | 27,800.00 |
| Accounts Payable | Zhoushan Dahua Technology Co., Ltd. | 3,400.00 | |
| Accounts Payable | Hangzhou Huayun Technology Co., Ltd. | 45,500.00 | 100,450.00 |
| Accounts Payable | Wenzhou Dahua Security Services Co., Ltd. | 25,182.90 | |
| Accounts Payable | Hangzhou Nuojia Technology Co., Ltd. | 388,432.05 | 384,222.99 |
| Other Payables | Zhejiang Leapmotor Technology Co., Ltd. | 173,520.00 |
| Other Payables | Wangsu Technology Co., Ltd. | 30,000.00 |
XIII. Share-based payment
1. Overview of share-based payment
√ Applicable □ Not applicable
Unit: RMB
| Total amount of equity instruments granted by the Company in current period | 0.00 |
| Total amount of equity instruments exercised by the Company in current period | 0.00 |
| Total amount of equity instruments of the Company invalidated in current period | 44,200.00 shares of restricted stock |
| The range of the exercise prices of other outstanding equity instruments issued by Company at the end of the period and the remaining contractual term | 8.17 RMB/share and 44 months |
Other notes
According to the 2018 Restricted Stock Incentive Plan (Draft) approved and passed on the fourth extraordinary shareholders'meeting in 2018, which was held on September 14,2018, and the deliberation of the 17th meeting of the 6th Board ofDirectors,117,468,100 shares of restricted stock was proposed to be granted through the stock incentive plan of the Company, ofwhich 105,293,200 shares would be granted at the first granting and 12,174,900 shares would be reserved for the incentive objects.According to the deliberation of the 17th meeting of the 6th Board of Directors, the Company completed the first granting ofrestricted stocks on November 1,2018. The Company granted 98,865,800 restricted shares to 3,145 people, including seniormanagement, other managers and key business personnel, etc. The granting was done on November 1,2018, at the price of RMB
8.17.
This stock incentive plan has the valid period, lock-up period and unlocking period as follows: The valid period is 52 monthssince the first granting date of the underlying stock. The lock-up period is 16 months from the day when the restricted stock isgranted to the incentive objects; within this period, the restricted stock held by the incentive objects through the incentive plan shallbe locked up and shall not be transferred. The unlocking period is 36 months after the lock-up period. Within the unlocking period,the incentive objects can apply to unlock the underlying stock in 3 times, with 40%, 30% and 30% of the total shares of restrictedstock they gained being applied for unlocking 12 months, 24 months and 36 months since the granting date respectively, providedthat the unlocking condition specified in the incentive plan is fulfilled.
2. Situation of equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
| The method for determining the fair value of equity instruments on the day of granting | Determined based on the stock price at the grant date and the grant cost of the restricted stocks |
| The basis for determining the amount of exercisable equity instruments | Estimated according to equity instruments held by the employees |
| Reason for the significant difference between the estimation of current period and the previous period | N/A |
| The accumulated amount of equity-settled share-based payment counted into the capital reserve | 135,355,305.17 |
| Amount of equity-settled share-based payment confirmed in current period | 90,646,857.32 |
3. Situation of equity-settled share-based payment
□ Applicable √ Not applicable
XIV. Commitments and contingencies
1. Significant commitments
Important commitments on the balance sheet dayAs of June 30,2019, the pledge information of the company was as follows:
(1) The subsidiary, Zhejiang Dahua Technology Co., Ltd., pledged a deposit certificate of RMB 100 million and signed a PledgeContract (subordinate clause No.:07100ZJ191A0DY9) with Hangzhou Branch of Ningbo Bank Co., Ltd., to provide a guarantee forthe back acceptance bills of RMB 100 million.
(2) Zhejiang Dahua Technology Co., Ltd. and Hangzhou Branch of China Merchants Bank Co., Ltd. signed the CreditAgreement for Notes Pool Business, which promised a special credit line of RMB 2.6 billion from the notes pool to be allocated tothe subsidiary Zhejiang Dahua Technology, Co., Ltd., the subsidiary Zhejiang Dahua System Engineering Co., Ltd., the subsidiaryZhejaing Dahua Zhilian Co., Ltd and the subsidiary Hangzhou Huacheng Network Technology Co., Ltd. As of June 30,2019, RMB244,888,246.19 undue notes receivable (where RMB 230,000,000.00 was related party notes receivable that should be included in thescope of the consolidated financial statements) of the Company, RMB 225,987,342.02 undue notes receivables (where RMB60,000,000.00 was related party notes receivable that should be included in the scope of the consolidated financial statements) of thesubsidiary Zhejiang Dahua Technology Co., Ltd., RMB752,486.31 undue notes receivable of the subsidiary Zhejiang Dahua SystemEngineering Co., Ltd., where RMB 29,580,673.01 was related party notes receivable that should be included in the scope of theconsolidated financial statements) were pledged for the issuance of acceptance bills. Under the pledge, the Company issued RMB4,771,098.88 bank acceptance bills; the subsidiary Zhejiang Dahua Technology Co., Ltd. issued RMB 420,590,533.16 bankacceptance bills; the subsidiary Zhejiang Dahua System Engineering Co., Ltd. issued RMB 471,213.27 bank acceptance bills; and thesubsidiary Zhejiang Dahua Zhilian Co., Ltd. issued RMB 72,326,383.14 bank acceptance bills.
(3) On June 28,2019, Zhejiang Dahua Technology Co., Ltd. and Hangzhou Branch of Zheshang Bank Co., Ltd. entered into theZheShangZiChanChiZhiZi (2019) No.12373 Asset Pool Pledge and Guarantee Contract (ID No. 33100000), to provide a guaranteefor the Notes Pool Business Cooperation Agreement signed by the Company together with the subsidiary Zhejiang DahuaTechnology Co., Ltd., the subsidiary Zhejiang Dahua System Engineering Co., Ltd., the subsidiary Guangxi Dahua InformationTechnology Co., Ltd. and Zheshang Bank Co., Ltd. the financing amount for the fund pledge pool cannot be more than RMB 3billion.
Under the notes pool business, as of June 30 ,2019, RMB730,608,055.23 undue notes receivable (where RMB 715,000,000.00was related party notes receivable that should be included in the scope of the consolidated financial statements) of the Company,RMB 946,308,204.12 undue notes receivable (where RMB 52,470,112.89 was related party notes receivable that should be includedin the scope of the consolidated financial statements) of the subsidiary Zhejiang Dahua Technology Co., Ltd., RMB 6,455,439.92
undue notes receivable of the subsidiary Zhejiang Dahua System Engineering Co., Ltd., and RMB 173,922.00 undue notes receivableof the subsidiary Guangxi Dahua Information Technology Co., Ltd. were pledged for the issuance of acceptance bills. Under thepledge, the Company issued RMB 33,272,857.62 bank acceptance bills; the subsidiary Zhejiang Dahua Technology Co., Ltd. issuedRMB 1,883,770,297.91 bank acceptance bills; the subsidiary Zhejiang Dahua System Engineering Co., ltd. issued RMB 769,267.55bank acceptance bills; the subsidiary Guangxi Dahua Information Technology Co., Ltd. issued RMB 866,305.85 bank acceptancebills;
(4) The subsidiary Zhejiang Dahua Technology Co., Ltd. pledged its certificate of deposit amounting to RMB 134,600,000.00,to sign the Contract for Inward and Outward Documentary Bills with Hangzhou Branch of Bank of Ningbo, and provide guaranteefor Dahua Technology's documentary bills loan amounting to RMB 104,720,178.48. As of June 30,2019, the balance of the loanunder the pledge contract was RMB 104,720,178.48.
(5) The subsidiary Zhejiang Dahua Technology Limited pledged its certificate of deposit amounting to RMB 100,950,000.00, tosign the Contract for Inward and Outward Documentary Bills with Hangzhou Branch of Bank of Ningbo and provide guarantee forDahua Technology's documentary bills loan. As of June 30,2019, the balance of the loan under the pledge contract was RMB 0.
(6) On August 19,2016, the subsidiary Xinjiang Dahua Zhixin Information Technology LLC pledged its future accountsreceivable amounting to RMB 351,064,980.00 incurred from the available service fee under the Franchise Agreement for the Shihezi“Safe Shicheng"PPPProject, and signed the Fixed Assets Loan Contract (total contract amount: RMB 230,000,000.00, contractNo.:2016-01) with Shihezi Sub-Branch of the Construction Bank of China, to provide guarantee for the Company's loan (loancontract No.:2016-01), amounting to RMB 230,000,000.00 (Term of borrowing: from August 2016 to August 2027). As of June30,2019, the pledge of accounts receivable RMB 314,646,279.46, and the balance of loans under the guarantee contract was RMB179,500,000.00.
2. Contingencies
(1) Important contingent matters on the balance sheet day
Zhejiang Dahua Technology Co., Ltd. signed a sales contract with Hangzhou Sailidi Import & Export Co., Ltd. (hereinafterreferred to as "Sailidi"), where Sailidi purchased products from Dahua Technology. As at June 30, 2019, the remaining amount wasnot paid. In August 2018, Dahua Technology filed a lawsuit to the People's Court of Binjiang District in Hangzhou, requesting SailidiCompany to pay the remaining amount and the liquidated damages for overdue payment and interests. In September 2018, DahuaTechnology applied to the People's Court of Binjiang District for property preservation, requesting to freeze the bank deposit ofRMB50 millions of Sailidi Company's legal representative Zhu Yuequan, or to seal up or seize property of corresponding value andprovide guarantee. The People's Court of Binjiang District granted the application for property preservation. The Binjiang DistrictPeople's Court of Hangzhou conducted a public trial on January 11, 2019, and issued (2018) Zhejiang 0108 Min Chu No.4451judgment on January 17, 2019, requiring Sailidi to pay Dahua Technology the overdue amount RMB 27,878,975.60 and interest lossRMB1,021,088.16 (temporarily calculated until December 31, 2018) upon the judgment took effect. Zhu Yuequan assumed the jointand several liabilities. Until the financial reporting date, this case was still in the execution stage. According to the inventory ofseized property, the Company's estimated recoverable amount is RMB10 million. The net realizable value of other seized property isof significant uncertainty, thus the Company makes provision for bad debts correspondingly based on the difference between thepresent value of estimated future cash flow and its book value.
In July 2019, Salidi and Zhu Yuequan applied for a retrial to the Hangzhou Intermediate People’s Court ( Intermediate People’sCourt). The Company received the Notice of Acceptance of Civil Application for Retrial from the Intermediate Peoples’ Court onAugust 2, 2019, and the Intermediate People’s Court decided to file a case for review. The Company has submitted the answer brief
for retrial.
(2) If no important contingent matter to be disclosed by the Company, it should also be noted accordingly
No important contingent matter needs to be disclosed by the Company.
XV. Events after the Balance Sheet Date
1. Explanation of other matters after the balance sheet day
(1) The Company's 23rd meeting of the 6th Board of Directors held on July 29,2019, deliberated and approved the "Proposal onCapital Increase and Related Transactions of Holding Subsidiaries". The Company planned to cooperate with related parties,Zhejiang Huashi Investment Management. Co., Ltd. (hereinafter referred to as "Huashi Investment" to increase the capital of theholding subsidiary Zhejiang Dahua Robot Technology Co., Ltd. (hereinafter referred to as "the robot company"). The Companyincreased its capital by RMB 40.8 million with own funds and Huashi Investment increased its capital by RMB 39.2 million. Afterthe capital increase, the registered capital of the robot company will increase from RMB50million to RMB 130 million. Theshareholding ratio of the Company and Huashi Investment to the robot company remains unchanged.
(2) The Company held the 23rd meeting of the 6th Board of Directors on July 29,2019, deliberated and approved the "Proposalon Waiving the Same Proportion of Capital Increase and Related Transactions of Shareholding Companies", and agreed to waive thesame proportion of capital increase to Zhejiang Leap Motor Technology Co., Ltd. The amount of related transactions involved inwaiving the same proportion of capital increase was RMB 58.752 million.XVI. Other Significant Events
1. Subsection information
(1) Basis for determining the reporting subsection and the accounting policy
The Company determines the Operation Subsection according to the internal organization structure, management requirements,internal reporting system, etc. and has only one operation subsection, namely R&D, production and sale of security products. Theaccounting policy of the reporting subsection is consistent with that of the Company.
(2) Financial information of the reporting subsection
Subsection information by product or business
Unit: RMB
| Item Name | Current Period | The Corresponding Period of Last Year | ||
| Operating Income | Operating Cost | Operating Income | Operating Cost | |
| Solutions | 5,626,141,239.99 | 3,144,638,108.68 | 5,018,508,530.50 | 2,911,635,789.84 |
| Product | 4,537,889,480.14 | 2,713,726,371.28 | 4,054,905,104.84 | 2,603,756,661.09 |
| Others | 642,535,650.76 | 585,064,671.07 | 740,627,717.14 | 714,727,994.13 |
| Total | 10,806,566,370.89 | 6,443,429,151.03 | 9,814,041,352.48 | 6,230,120,445.06 |
Subsection information by revenue source or asset locationUnit:
RMB
| Item Name | Current Period | The Corresponding Period of Last Year | ||
| Operating income | Operating Cost | Operating income | Operating Cost | |
| Domestic Sale | 7,087,773,045.42 | 4,432,123,646.82 | 6,375,294,969.60 | 4,051,920,136.45 |
| Overseas Sale | 3,718,793,325.47 | 2,011,305,504.21 | 3,438,746,382.88 | 2,178,200,308.61 |
| Total | 10,806,566,370.89 | 6,443,429,151.03 | 9,814,041,352.48 | 6,230,120,445.06 |
2. Other important transactions and events that may affect the investment decision of the investors
(1) The Company intends to use self-raised funds to repurchase the company's shares by centralized bidding, with the totalamount of repurchase funds not less than RMB 200 million (inclusive)and not more than RMB 400 million (inclusive) Therepurchase price shall not exceed RMB 25.37 per share (inclusive). Based on the calculation of upper limit of repurchase price andamount, the estimated total number of repurchase shares are 15,766,653 shares, accounting for about 0.53% of the current capitalshares of the Company. The detailed number of repurchase shares and its ratio of the capital shares of the Company shall be subjectto the actual repurchase number of shares and the ratio upon expiration of the repurchase period. The implementation term of thisrepurchase shares shall be within 12 months since the date when the Board of Directors agreed the repurchase program. As of June30, 2019, the Company has repurchased 6,149,480 company shares through the specialized security account for share repurchase bycentralized bidding, which accounts for 0.2051% of the total current capital shares of the Company. The highest transaction price isRMB14.03 per share and the lowest RMB12.90 per share with total amount of RMB 80,733,758.44 (excluding transaction costs).
(2) On June 5, 2019, the Company's first extraordinary shareholders meeting in 2019 approved the "Proposal on the Company'sPublic Issuance of Convertible Corporate Bonds" and the "Feasibility Analysis on the Use of Funds Raised by the Company's PublicIssuance of Convertible Corporate Bonds" and others.XVII. Notes to Main Items in the Financial Statements of the Parent Company
1. Accounts Receivable
(1) Disclosure of accounts receivable by categories
Unit: RMB
| Category | Balance at the End of the Period | Balance at the Start of the Period | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Including: | ||||||||||
| Accounts Receivables with the bad debts provision | 5,763,187,801.91 | 100.00% | 95,093,912.19 | 1.65% | 5,668,093,889.72 | 4,689,003,520.41 | 100.00% | 90,427,597.37 | 1.93% | 4,598,575,923.04 |
| accrued on a portfolio basis | ||||||||||
| Including: | ||||||||||
| Portfolio 1: Related Parties Portfolio | 5,026,401,153.67 | 87.22% | 5,026,401,153.67 | 4,111,213,084.49 | 87.68% | 4,111,213,084.49 | ||||
| Portfolio 2: Aging Analysis Portfolio | 736,786,648.24 | 12.78% | 95,093,912.19 | 12.91% | 641,692,736.05 | 577,790,435.92 | 12.32% | 90,427,597.37 | 15.65% | 487,362,838.55 |
| Total | 5,763,187,801.91 | 100.00% | 95,093,912.19 | 5,668,093,889.72 | 4,689,003,520.41 | 100.00% | 90,427,597.37 | 4,598,575,923.04 |
Bad debts provision accrued on a portfolio basis:
Unit: RMB
| Name | Balance at the End of the Period | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Portfolio 1: Related Parties Portfolio | 5,026,401,153.67 | 0.00% | |
| Portfolio 2: Aging Analysis Portfolio | 736,786,648.24 | 95,093,912.19 | 12.91% |
| Total | 5,763,187,801.91 | 95,093,912.19 | -- |
Disclose by aging
Unit: RMB
| Aging | Balance at the End of the Period |
| Within 1 year (including 1 year) | 5,568,163,913.68 |
| Subtotal within 1 year | 5,568,163,913.68 |
| 1 to 2 years | 82,590,415.95 |
| 2 to 3 years | 19,857,612.85 |
| 3 years or above | 92,575,859.43 |
| 3 to 4 years | 21,108,000.26 |
| 4 to 5 years | 37,561,138.05 |
| 5 years or above | 33,906,721.12 |
| Total | 5,763,187,801.91 |
(2) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts accrued in this period:
Unit: RMB
| Category | Balance at the Start of the Period | Changed Amount of This Period | Balance at the End of the Period | ||
| Accrued | Recovered or | Write off | |||
| reversed | |||||
| Portfolio 2: Aging Analysis Portfolio | 90,427,597.37 | 4,666,314.82 | 95,093,912.19 | ||
| Total | 90,427,597.37 | 4,666,314.82 | 95,093,912.19 |
(3) Accounts Receivable of the top five closing balances collected by the arrears
The accounts receivable of the top five closing balances collected by the arrears was summed up to RMB 5,087,830,304.31,accounting for 88.28% of the total closing balance of accounts receivable, and the ending balance for the provision for bad debtsaccrued was RMB 4,766,472.89.
2. Other receivables
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Interest Receivable | 42,500.00 | |
| Other Receivables | 6,573,741,249.72 | 6,954,613,363.03 |
| Total | 6,573,741,249.72 | 6,954,655,863.03 |
(1) Interests receivable
1) Category of interests receivable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Fixed term deposit | 42,500.00 | |
| Total | 42,500.00 |
(2) Other receivables
1) Other receivables categorized by the nature of the funds
Unit: RMB
| Nature of the funds | Closing balance | Opening balance |
| Deposits | 31,676,641.20 | 40,101,577.35 |
| Prepaid or advance expense | 64,219,555.49 | 37,600,678.55 |
| Employee home loan | 100,376,650.34 | 107,390,998.98 |
| Incomings and outgoings | 6,398,956,365.53 | 6,789,622,721.45 |
| Others | 1,824,346.21 | 21,879.23 |
| Total | 6,597,053,558.77 | 6,974,737,855.56 |
2) Provision of bad debts
Unit: RMB
| Bad debt provision | The first stage | The second stage | The third phase | Total |
| Expected credit losses in the next 12 months | Expected credit loss of the entire duration (no credit impairment) | Expected credit loss of the entire duration (credit impairment occurred) | ||
| Balance on January 01, 2019 | 16,811,336.70 | 2,663,676.59 | 649,479.24 | 20,124,492.53 |
| Balance in this period on January 01, 2019 | —— | —— | —— | —— |
| -- Transfer to the second stage | -104,576.20 | 104,576.20 | ||
| Accrual of current period | 2,640,496.94 | 499,182.34 | 2,794,826.25 | 5,934,505.53 |
| Resale in the current period | ||||
| Write-off in the current period | 2,746,689.01 | 2,746,689.01 | ||
| Balance on June 30, 2019 | 19,347,257.44 | 3,267,435.13 | 697,616.48 | 23,312,309.05 |
Loss provisions for significant changes in book balances in the current period
□ Applicable √ Not applicable
Disclose by aging
Unit: RMB
| Aging | Balance at the End of the Period |
| Within 1 year (including 1 year) | 6,343,455,509.50 |
| Subtotal within 1 year | 6,343,455,509.50 |
| 1 to 2 years | 220,172,875.06 |
| 2 to 3 years | 23,114,416.25 |
| 3 years or above | 10,310,757.96 |
| 3 to 4 years | 8,766,428.76 |
| 4 to 5 years | 534,556.86 |
| 5 years or above | 1,009,772.34 |
| Total | 6,597,053,558.77 |
3) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts accrued in this period:
Unit: RMB
| Category | Balance at the Start of the Period | Changed Amount of This Period | Balance at the End of the Period | ||
| Accrued | Recovered or reversed | Write off | |||
| Other receivables with the bad debts provision accrued individually | |||||
| Other receivables with bad debt provision accrued based on credit risk feature combinations | 20,124,492.53 | 5,934,505.53 | 2,746,689.01 | 23,312,309.05 | |
| Portfolio 2: Aging Analysis Portfolio | 20,124,492.53 | 5,934,505.53 | 2,746,689.01 | 23,312,309.05 | |
| Total | 20,124,492.53 | 5,934,505.53 | 2,746,689.01 | 23,312,309.05 |
4) Actual write-off of accounts receivable during the reporting period
Unit: RMB
| Item Name | Write-off amount |
| Incomings and outgoings | 2,746,689.01 |
5) Other receivables of the top five closing balances collected by the arrears
Unit: RMB
| Name of Unit | Nature of the funds | Balance at the End of the Period | Aging | As a percentage of total other receivables at the end of the period | Bad debt provision at the end of the period |
| Company 1 | Incomings and outgoings | 2,266,774,537.19 | Within 1 year | 34.36% | |
| Company 2 | Incomings and outgoings | 1,866,182,904.93 | Within 1 year | 28.29% | |
| Company 3 | Incomings and outgoings | 1,160,294,225.50 | Within 1 year | 17.59% | |
| Company 4 | Incomings and outgoings | 764,847,726.99 | The amount within 1 year is RMB 613,395,533.11 and the amount more than 1 year but not exceeding 2 years is RMB 151,452,193.88. | 11.59% | |
| Company 5 | Incomings and outgoings | 163,967,340.39 | Within 1 year | 2.49% | |
| Total | -- | 6,222,066,735.00 | -- | 94.32% |
3. Long-term equity investment
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Provision for | Book value | Book balance | Provision for | Book value | |
| decline in value | decline in value | |||||
| Investment in subsidiaries | 2,961,332,209.94 | 2,961,332,209.94 | 2,833,803,638.04 | 2,833,803,638.04 | ||
| Investment in affiliates and joint ventures | 135,663,778.56 | 135,663,778.56 | 167,835,790.51 | 167,835,790.51 | ||
| Total | 3,096,995,988.50 | 3,096,995,988.50 | 3,001,639,428.55 | 3,001,639,428.55 |
(1) Investment in Subsidiaries
Unit: RMB
| The invested entity | Opening Balance (Book Value) | Decrease/Increase in the current period | Closing Balance (Book Value) | Closing balance of provision for decline in value | |||
| Investments increased | Investment decreased | Provision for impairment accrued | Others | ||||
| Zhejiang Dahua System Engineering Co., Ltd. | 509,413,298.82 | 5,081,472.23 | 514,494,771.05 | ||||
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | 26,244,774.40 | 321,555.84 | 26,566,330.24 | ||||
| Zhejiang Dahua Ju'an Technology Co., Ltd. | 5,100,000.00 | 5,100,000.00 | |||||
| Guangxi Dahua Information Technology Co., Ltd. | 5,399,419.60 | 451,800.23 | 5,851,219.83 | ||||
| Zhejiang Dahua Security Service Co., Ltd. | 46,179.54 | 31,487.64 | 77,667.18 | ||||
| Dahua Technology (HK) Limited | 262,000,000.00 | 262,000,000.00 | |||||
| Zhejiang Dahua | 649,784,323.16 | 4,551,556.77 | 654,335,879.93 | ||||
| Vision Technology Co., Ltd. | |||||||
| Wuxi Dahua Ruide Electronic Technology Co., Ltd. | 1,000,000.00 | 1,000,000.00 | 0.00 | ||||
| Guangxi Dahua Security Service Co., Ltd. | 20,002,580.76 | 20,002,580.76 | |||||
| Zhejiang Huatu Microchip Technology Co., Ltd. | 10,034,350.20 | 103,050.60 | 10,137,400.80 | ||||
| Hangzhou Xiaohua Technology CO., LTD. | 4,698,841.50 | 396,935.31 | 5,095,776.81 | ||||
| Zhejiang Dahua Zhilian Co., Ltd. | 1,000,011,450.06 | 34,350.18 | 1,000,045,800.24 | ||||
| Hangzhou Tecomore Technology Co., Ltd. | 5,210,047.78 | 317,421.02 | 5,527,468.80 | ||||
| Guangxi Dahua Zhicheng Co., Ltd. | 71,206,080.58 | 193,124.35 | 71,399,204.93 | ||||
| Hangzhou Huacheng Network Technology Co., Ltd. | 25,715,324.72 | 747,831.93 | 26,463,156.65 | ||||
| Xinjiang Dahua Zhixin Information Technology Co., Ltd. | 2,055.08 | 2,055.08 | |||||
| Zhejiang Dahua Investment Management | 62,175,000.00 | 62,175,000.00 |
| Co., Ltd. | |||||||
| Zhejiang Huachuang Vision Technology Co., Ltd. | 25,900,043.59 | 1,118,130.00 | 27,018,173.59 | ||||
| Zhejiang HuaRay Technology Co., Ltd. | 25,783,331.48 | 1,654,178.06 | 27,437,509.54 | ||||
| Xinjiang Dahua Intelligence Technology Co., Ltd. | 10,000,000.00 | 10,000,000.00 | |||||
| Hangzhou Fuyang Hua'ao Technology Co., Ltd. | 5,100,000.00 | 5,100,000.00 | |||||
| Zhejiang Huafei Intelligent Technology CO., LTD. | 21,850,966.90 | 877,265.40 | 22,728,232.30 | ||||
| Zhejiang Huaxiao Technology Co., Ltd. | 8,050,311.05 | 8,192,331.08 | 16,242,642.13 | ||||
| Xi'an Dahua Zhilian Technology Co., Ltd. | 56,000,000.00 | 74,822.92 | 56,074,822.92 | ||||
| Wuxi Dahua Ruipin Technology Co., Ltd. | 3,134,743.40 | 4,413,164.78 | 7,547,908.18 | ||||
| Zhejiang Dahua Robot Technology Co., Ltd. | 6,908,515.42 | 19,640,596.03 | 26,549,111.45 | ||||
| Beijing Huayue Shangcheng Information | 400,000.00 | 633,236.96 | 1,033,236.96 |
| Technology Service Co., Ltd. | |||||||
| Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. | 4,530,000.00 | 1,000,000.00 | 5,530,000.00 | ||||
| Dahua Technology Holdings Limited | 8,102,000.00 | 8,102,000.00 | |||||
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | 60,000,000.00 | 60,000,000.00 | |||||
| Shanghai Huashang Chengyue Information Technology Service Co., Ltd. | 1,054,260.57 | 1,054,260.57 | |||||
| Zhejiang Zhoushan Digital Development Operation Co., Ltd. | 17,640,000.00 | 17,640,000.00 | |||||
| Total | 2,833,803,638.04 | 128,528,571.90 | 1,000,000.00 | 2,961,332,209.94 |
(2) Investment in affiliates and joint ventures
Unit: RMB
| Name of Investees | Opening Balance (Book Value) | Decrease/Increase in the current period | Closing Balance (Book Value) | Closing balance of provision for decline in value | |||||||
| Investments increased | Investment decreased | Investment profit and loss recognized under the equity | Adjustment on other comprehensive income | Other changes in equity | Cash dividends or profit declared to distribute | Provision for impairment accrued | Others | ||||
| method | |||||||||||
| Ⅰ. Joint ventures | |||||||||||
| Ⅱ. Affiliates | |||||||||||
| Zhejiang Leapmotor Technology Co., Ltd. | 168,229,977.61 | -32,566,199.05 | 135,663,778.56 | ||||||||
| Guangdong Dahua Zhishi Technology Co., Ltd. | -394,187.10 | -7,096.54 | 401,283.64 | 0 | |||||||
| Subtotal | 167,835,790.51 | -7,096.54 | -32,566,199.05 | 401,283.64 | 135,663,778.56 | ||||||
| Total | 167,835,790.51 | -7,096.54 | -32,566,199.05 | 401,283.64 | 135,663,778.56 | ||||||
4. Operating income and operating costs
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | ||
| Income | Cost | Income | Cost | |
| Main Business | 3,262,438,993.53 | 356,954,385.57 | 3,766,723,773.94 | 1,152,884,368.36 |
| Other businesses | 18,764,966.33 | 12,394,018.41 | 17,424,051.93 | 14,468,757.58 |
| Total | 3,281,203,959.86 | 369,348,403.98 | 3,784,147,825.87 | 1,167,353,125.94 |
Whether new revenue standards have been implemented
□ Yes √ No
5. Investment income
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Long-term equity investment income measured by equity method | -7,096.54 | -25,559,156.63 |
| Investment income from disposal of long-term equity investment | -1,000,000.00 | 706,569.92 |
| Investment income from possession of available-for-sale financial assets | 10,747,186.86 | 1,005,008.70 |
| Investment income from treasury bond reverse repurchase | 380,167.33 | |
| Total | 9,740,090.32 | -23,467,410.68 |
XVIII. Supplementary Information
1. Breakdown of non-recurring gains and losses for this period
√ Applicable □ Not applicable
Unit: RMB
| Item Name | Amount | Note |
| Gains and losses from disposal of non-current assets | 10,503,852.18 | |
| The government subsidies included in the current profits and losses (excluding the government subsidies closely related to regular businesses of the Company and issued in the quota or quantity based on the national standards | 79,439,313.69 | |
| Profits and losses resulting from the changes in fair value for holding trading financial assets, derivative financial assets, trading financial liabilities and derivative financial liabilities, and investment income from disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities and other credit investment | 30,141,194.90 | |
| Non-Operating Revenue and expenses other than the above | 2,248,870.06 | |
| Less: Impact of income tax | 18,436,697.18 | |
| Impact of minority equity | 3,667,332.94 | |
| Total | 100,229,200.71 | -- |
For items defined as non-recurring gains and losses according to the No. 1 Explanatory Announcement on Information Disclosure forCompanies Offering Their Securities to Public - Non-recurring Gains and Losses, or non-recurring gains and losses items listed in thesaid document defined as recurring ones, please specify the reasons.
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
| Profit for the reporting period | Weighted Average ROE | Earnings per share | |
| Basic Earnings per Share (RMB/Share) | Diluted Earnings per Share (RMB/Share) | ||
| Net profit attributable to common shareholders of the Company | 9.40% | 0.42 | 0.42 |
| Net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses | 8.64% | 0.39 | 0.39 |
3. Differences in accounting data between domestic and overseas accounting standards
(1) Differences of net profits and net assets in the financial reports disclosed according to the internationalaccounting standards and Chinese accounting standards
□ Applicable √ Not applicable
(2) Differences of net profits and net assets in the financial reports disclosed according to the overseasaccounting standards and Chinese accounting standards
□ Applicable √ Not applicable
(3) Reasons for accounting data differences under domestic and overseas accounting standards. Fordifference adjustment on the data already audited by an overseas audit institution, name of the auditinstitution should be noted.
Section XI Documents Available for InspectionI. The financial statements signed and sealed by Fu Liquan, the Company's legal representative,Wei Meizhong, chief accountant, and Xu Qiaofen, person in charge of accounting institution.II. Original copies of all the Company's documents and announcements published on mediadesignated by China Securities Regulatory Commission within the reporting period.III. Other related materials.The said documents are prepared and placed at the Company's Securities InvestmentDepartment
Zhejiang Dahua Technology Co., Ltd.
Chairman: Fu LiquanAugust 17, 2019