Shenzhen Textile (Holdings) Co., Ltd.
Financial Statements and Audit ReportFor Year Ended December 31, 2024
Financial Statements and Audit ReportFor Year Ended December 31, 2024
Content Page
Audit Report 1-4
Consolidated and parent company's balance sheet 5-7
Consolidated and parent company's income statement 8-9
Consolidated and parent company's statement of cash flows 10-11
Consolidated and parent company's statement of changes in shareholders' equity 12-15
Notes to the financial statements 16-102
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Audit Report
DSB (S) Z (25) No. P03605
(Page 1 of 4)
All shareholders of Shenzhen Textile (Holdings) Co., Ltd.
I. Audit opinions
We have audited the financial statements of Shenzhen Textile (Holdings) Co., Ltd. (hereinafter referred to as the"Shenzhen Textile"), including the consolidated and parent company's balance sheet as at December 31, 2024, theconsolidated and parent company's income statement, consolidated and parent company's statement of cash flows,consolidated and parent company's statement of changes in shareholders' equity and related notes to the financialstatements for the year then ended.
In our opinion, the attached financial statements are prepared, in all material respects, in accordance with theAccounting Standards for Business Enterprises, and fairly present the consolidated and the parent company'sfinancial position of Shenzhen Textile as at December 31, 2024 and the consolidated and the parent company'soperating results and cash flows for the year then ended.
II. Basis for the audit opinion
We have conducted our audit in accordance with the Chinese Auditing Standards for Certified Public Accountants.Our responsibilities under these standards are further described in the "Certified Public Accountant's Responsibilitiesfor the Audit of Financial Statements" section of the audit report. In accordance with the Code of Ethics for ChineseCertified Public Accountants, we are independent of Shenzhen Textile and have fulfilled other ethical responsibilities.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.
III. Key audit matters
Key audit matters are those matters that, in our professional judgment, are of most significance in our audit of thefinancial statements of the current year. These matters are addressed in the context of our audit of the financialstatements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters. We have identified the following matters as key audit matters to be communicated in the audit report.
1. Recognition of revenue from sales of polarizers
As described in the Note (V). 41 to the financial statements, in 2024, the operating revenue of Shenzhen Textile aspresented in the consolidated financial statements was RMB 3,335,283,008.68, of which the revenue from sales ofpolarizers was RMB 3,161,332,478.08, accounting for 94.78% of the total revenue. The revenue from sales ofpolarizers of Shenzhen Textile is recognized when the customer obtains control of the relevant goods. Due to theimportance of revenue from sales of polarizers to the consolidated financial statements as a whole, and the fact thatthe revenue is one of the key performance indicators of Shenzhen Textile, there is an inherent risk that managementmay manipulate the revenue recognition, in order to achieve specific goals or expectations. Therefore, we haveidentified the recognition of revenue from sales of polarizers as a key audit matter in the audit of the consolidatedfinancial statements.
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Audit Report - Continued
DSB (S) Z (25) No. P03605
(Page 2 of 4)III. Key audit matters - continued
1. Recognition of revenue from sales of polarizers - continued
In response to the above key audit matters, the audit procedures we performed mainly include:
? Test and evaluate the effectiveness of the operation of internal control related to the sales business of polarizer;
? Check the sales contracts signed with major customers, identify the terms and conditions of the contracts related tothe transfer of right of control of the goods, and evaluate whether the accounting policies for recognition of revenuefrom sales of polarizers meet the requirements of the Accounting Standards for Business Enterprises;
? Execute analytical procedures for the revenue from sales of polarizers by production line, product type andcustomer respectively, and analyze the rationality of the change in revenue from sales of polarizers in combination withmarket selling price and other factors;
? Extract samples to perform detail tests on the revenue from sales of polarizers, check the supporting documentssuch as invoices, delivery orders and receipts related to the recognition of revenue from sales of polarizers, and conductletter of confirmation on the sales amount of major customers to verify the authenticity of revenue from sales ofpolarizers;
? Select samples for sales transactions before and after the balance sheet date, check supporting documents such asdelivery orders, receipts and invoices, and evaluate whether the revenue from sales of polarizers is recorded in theappropriate accounting period.
2. Impairment of polarizer inventories
As described in Note (V). 8 to the Financial Statements, as of December 31, 2024, the book balance of inventories ofShenzhen Textile as presented in the consolidated financial statements was RMB 911,706,239.87, of which the bookbalance of polarizer inventories was RMB 905,482,857.11, accounting for 99.32% of the total inventories, and thecorresponding provision for inventory depreciation of polarizer was RMB 115,967,084.94. According to the accountingpolicies of Shenzhen Textile, the inventories are measured at the lower of cost or net realizable value at the end of theyear. When the net realizable value of the inventories is lower than the cost, the provision for inventory depreciationshall be made according to the difference. Since the provision for inventory depreciation involves significant estimatesof the management, we have identified the impairment of polarizer inventories as a key audit matter in the audit of theconsolidated financial statements.
In response to the above key audit matters, the audit procedures we performed mainly include:
? Test and evaluate the effectiveness of internal control related to the impairment of polarizer inventories;
? Evaluate the appropriateness of accounting policies related to the impairment of polarizer inventories;
? Implement the on-site monitoring procedures of polarizer inventories, check the inventory quantity of polarizerinventories and observe the status of polarizer inventories on the basis of sampling;
? Select samples, compare the data used in determining the net realizable value of the polarizer inventories with theactual cost of completion of products in progress and the actual selling prices incurred recently, and evaluate thereasonableness of the net realizable value of polarizer inventories.
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Audit Report - Continued
DSB (S) Z (25) No. P03605
(Page 3 of 4)IV. Other information
The management of Shenzhen Textile is responsible for other information. Other information includes informationcovered in the 2024 Annual Report of Shenzhen Textile, but excludes the financial statements and our audit report.
Our audit opinion on the financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of financial statements, our responsibility is to read the other information and, in doing so,consider whether the other information is materially inconsistent with financial statements or our knowledge obtainedduring the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other information, weare required to report that fact. We have nothing to report in this regard.
IV. Responsibilities of the management and those charged with governance for financial statements
The management of Shenzhen Textile is responsible for preparing the financial statements in accordance with therequirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and for designing,implementing and maintaining internal control that is necessary to ensure that the financial statements are free frommaterial misstatements, whether due to frauds or errors.
In preparing the financial statements, the management is responsible for assessing the going-concern ability of ShenzhenTextile, disclosing matters related to going concern (if applicable) and applying the going concern basis, unless themanagement plans to liquidate Shenzhen Textile, terminate its operations or has no other realistic alternative.
Those charged with governance are responsible for overseeing the financial reporting process of Shenzhen Textile.
VI. Responsibilities of certified public accountants for the audit of financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditstandards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of these financial statements.
We have exercised professional judgment and maintained professional skepticism in performing our audit under theauditing standards. At the same time, we also implement the following work:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
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Audit Report - Continued
DSB (S) Z (25) No. P03605
(Page 4 of 4)VI. Responsibilities of certified public accountants for the audit of financial statements - continued
(2) Understand the internal control related to the audit, so as to design appropriate audit procedures.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by the management.
(4) Draw conclusions on the appropriateness of the management's use of the going concern basis. At the same time,based on the audit evidence obtained, a conclusion is drawn as to whether there is a material uncertainty in events orcircumstances that may give rise to significant doubt about the going-concern ability of Shenzhen Textile. If weconclude that a material uncertainty exists, we are required to, in our audit report, draw attention of the users ofstatements to the related disclosures in the financial statements; if such disclosures are inadequate, we should modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our audit report. However, futureevents or circumstances may cause Shenzhen Textile to cease to continue as a going concern.
(5) Evaluate the overall presentation (including disclosures), structure and content of the financial statements, andwhether the financial statements fairly reflect the relevant transactions and matters.
(6) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or businessactivities within Shenzhen Textile to express an opinion on the financial statements. We are responsible for the direction,supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding the planned scope and timing of the audit, significantaudit findings and other matters, including any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and the related safeguards (if applicable).
From the matters communicated with those charged with governance, we have determined which matters are of mostsignificance to the audit of the financial statements in the current year and thus constitute the key audit matters. Wedescribe these matters in the audit report unless laws and regulations prohibit public disclosure of these matters, or inextremely rare circumstances, if it is reasonably expected that the negative consequences of communicating a matteroutweigh the benefits to the public interest in the audit report, we determine not to do so.
Deloitte Touche Tohmatsu Certified Public Accountants LLP Certified Public Accountant of China(Engagement partner)Shanghai, China
Certified Public Accountant of China
March 26, 2025
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Consolidated Balance SheetDecember 31, 2024
Consolidated Balance Sheet
RMB
| Notes | Balance as at the end of the current year | Balance as at the end of the previous year | |
| Current assets: | |||
| Monetary funds | (V). 1 | 340,961,443.82 | 472,274,448.00 |
| Financial assets held for trading | (V). 2 | 731,419,904.42 | 821,946,114.68 |
| Notes receivable | (V). 3 | 47,305,221.88 | 50,963,943.01 |
| Accounts receivable | (V). 4 | 863,731,936.89 | 820,134,833.95 |
| Receivables financing | (V). 5 | 6,804,603.68 | 22,839,459.13 |
| Advances to suppliers | (V). 6 | 8,176,724.70 | 19,499,886.80 |
| Other receivables | (V). 7 | 3,596,543.96 | 3,220,285.42 |
| Including: interest receivable | - | - | |
| Dividends receivable | - | - | |
| Inventories | (V). 8 | 789,756,700.88 | 736,392,172.27 |
| Other current assets | (V). 9 | 21,461,736.14 | 60,773,457.39 |
| Total current assets | 2,813,214,816.37 | 3,008,044,600.65 | |
| Non-current assets: | |||
| Long-term equity investments | (V). 10 | 114,828,026.04 | 127,682,020.70 |
| Other equity instrument investments | (V). 11 | 165,402,900.00 | 145,988,900.00 |
| Investment properties | (V). 12 | 115,993,390.19 | 125,603,207.18 |
| Fixed assets | (V). 13 | 1,873,552,843.91 | 2,066,006,237.73 |
| Construction in progress | (V). 14 | 5,814,012.03 | 31,307,060.74 |
| Right-of-use assets | (V). 15 | 15,338,117.86 | 11,999,466.57 |
| Intangible assets | (V). 16 | 35,207,791.95 | 39,564,422.80 |
| Goodwill | (V). 17 | - | - |
| Long-term deferred expenses | (V). 18 | 6,084,115.87 | 3,503,660.94 |
| Deferred tax assets | (V). 19 | 58,920,511.20 | 60,605,365.42 |
| Other non-current assets | (V). 20 | 27,793,871.91 | 29,517,420.71 |
| Total non-current assets | 2,418,935,580.96 | 2,641,777,762.79 | |
| Total assets | 5,232,150,397.33 | 5,649,822,363.44 |
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Consolidated Balance Sheet - ContinuedDecember 31, 2024
Consolidated Balance Sheet - Continued
RMB
| Notes | Balance as at the end of the current year | Balance as at the end of the previous year | |
| Current liabilities: | |||
| Short-term borrowings | (V). 22 | - | 8,000,000.00 |
| Derivative financial liabilities | (V). 23 | 1,278,559.35 | - |
| Notes payable | (V). 24 | 31,095,540.29 | 31,049,291.49 |
| Accounts payable | (V). 25 | 304,812,580.55 | 408,548,136.24 |
| Advances from customers | (V). 26 | 1,051,491.96 | 1,450,096.30 |
| Contract liabilities | (V). 27 | 490,562.97 | 1,436,943.34 |
| Employee compensation payable | (V). 28 | 56,685,289.92 | 56,437,162.09 |
| Taxes payable | (V). 29 | 6,853,730.84 | 4,340,895.14 |
| Other payables | (V). 30 | 160,296,989.98 | 184,528,344.55 |
| Including: interest payable | - | - | |
| Dividends payable | - | - | |
| Non-current liabilities maturing within one year | (V). 31 | 63,347,555.03 | 108,102,752.99 |
| Other current liabilities | (V). 32 | 54,072,022.27 | 80,082,477.22 |
| Total current liabilities | 679,984,323.16 | 883,976,099.36 | |
| Non-current liabilities: | |||
| Long-term borrowings | (V). 33 | 162,388,870.00 | 505,578,314.56 |
| Lease liabilities | (V). 34 | 9,496,564.12 | 6,687,317.22 |
| Deferred income | (V). 35 | 96,349,196.26 | 97,485,986.89 |
| Deferred tax liabilities | (V). 19 | 48,610,809.66 | 44,177,287.45 |
| Total non-current liabilities | 316,845,440.04 | 653,928,906.12 | |
| Total liabilities | 996,829,763.20 | 1,537,905,005.48 | |
| Shareholders' equity: | |||
| Equity | (V). 36 | 506,521,849.00 | 506,521,849.00 |
| Capital reserve | (V). 37 | 1,961,599,824.63 | 1,961,599,824.63 |
| Other comprehensive income | (V). 38 | 106,877,807.32 | 93,607,380.81 |
| Surplus reserves | (V). 39 | 104,262,315.64 | 104,262,315.64 |
| Undistributed profits | (V). 40 | 272,608,113.66 | 216,160,896.14 |
| Total equity attributable to shareholders of the parent company | 2,951,869,910.25 | 2,882,152,266.22 | |
| Minority interests | 1,283,450,723.88 | 1,229,765,091.74 | |
| Total shareholders' equity | 4,235,320,634.13 | 4,111,917,357.96 | |
| Total liabilities and shareholders' equity | 5,232,150,397.33 | 5,649,822,363.44 |
The notes are an integral part of the financial statements
_____________________ ______________________ ______________________Principal Chief Finance Officer Chief Accountant
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Balance Sheet of the Parent CompanyDecember 31, 2024
Balance Sheet of the Parent Company
RMB
| Notes | Balance as at the end of the current year | Balance as at the end of the previous year | |
| Current assets: | |||
| Monetary funds | 13,630,974.26 | 9,125,800.27 | |
| Financial assets held for trading | 731,419,904.42 | 741,243,309.42 | |
| Accounts receivable | (XVI). 1 | 13,028,987.63 | 12,671,623.65 |
| Advances to suppliers | 99,904.79 | - | |
| Other receivables | (XVI). 2 | 1,534,395.80 | 14,013,552.95 |
| Including: interest receivable | - | - | |
| Dividends receivable | - | - | |
| Inventories | 39,835.05 | 32,814.05 | |
| Total current assets | 759,754,001.95 | 777,087,100.34 | |
| Non-current assets: | |||
| Long-term equity investments | (XVI). 3 | 2,040,690,006.71 | 2,087,532,810.79 |
| Other equity instrument investments | 152,221,200.00 | 131,185,500.00 | |
| Investment properties | 94,773,462.23 | 102,430,682.27 | |
| Fixed assets | 2,099,585.67 | 2,522,229.44 | |
| Intangible assets | 83,350.98 | 191,875.56 | |
| Long-term deferred expenses | 4,448,190.05 | - | |
| Other non-current assets | 25,860,862.33 | 27,823,005.45 | |
| Total non-current assets | 2,320,176,657.97 | 2,351,686,103.51 | |
| Total assets | 3,079,930,659.92 | 3,128,773,203.85 | |
| Current liabilities: | |||
| Accounts payable | 411,743.57 | 411,743.57 | |
| Advances from customers | 540,673.07 | 540,673.07 | |
| Employee compensation payable | 17,955,509.70 | 15,810,919.71 | |
| Taxes payable | 5,619,509.34 | 3,115,369.56 | |
| Other payables | 87,029,351.12 | 106,722,393.87 | |
| Including: interest payable | - | - | |
| Dividends payable | - | - | |
| Total current liabilities | 111,556,786.80 | 126,601,099.78 | |
| Non-current liabilities: | |||
| Deferred income | 100,000.00 | 200,000.00 | |
| Deferred tax liabilities | 34,086,313.51 | 40,855,186.12 | |
| Total non-current liabilities | 34,186,313.51 | 41,055,186.12 | |
| Total liabilities | 145,743,100.31 | 167,656,285.90 | |
| Shareholders' equity: | |||
| Equity | 506,521,849.00 | 506,521,849.00 | |
| Capital reserve | 1,577,392,975.96 | 1,577,392,975.96 | |
| Other comprehensive income | 98,116,532.32 | 83,629,830.81 | |
| Surplus reserves | 104,262,315.64 | 104,262,315.64 | |
| Undistributed profits | 647,893,886.69 | 689,309,946.54 | |
| Total shareholders' equity | 2,934,187,559.61 | 2,961,116,917.95 | |
| Total liabilities and shareholders' equity | 3,079,930,659.92 | 3,128,773,203.85 |
The notes are an integral part of the financial statements
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Consolidated Income StatementFor Year Ended December 31, 2024
Consolidated Income Statement
RMB
| Notes | Amount for the current year | Amount for the previous year | |
| I. Operating revenue | (V). 41 | 3,335,283,008.68 | 3,079,678,375.45 |
| Less: operating costs | (V). 41 | 2,795,859,934.82 | 2,561,631,844.53 |
| Taxes and surcharges | (V). 42 | 10,235,505.65 | 9,293,623.13 |
| Selling and distribution expenses | (V). 43 | 42,260,603.47 | 34,195,670.61 |
| G&A expenses | (V). 44 | 134,347,821.58 | 134,371,410.53 |
| R&D expenses | (V). 45 | 103,811,822.91 | 104,653,040.92 |
| Financial expenses | (V). 46 | 12,121,156.05 | 24,399,501.16 |
| Including: interest expenses | 17,858,022.73 | 27,339,804.17 | |
| Interest income | 7,272,362.76 | 12,947,471.64 | |
| Plus: other income | (V). 47 | 41,484,107.53 | 50,740,363.91 |
| Investment (loss) income | (V). 48 | (165,313.89) | 10,828,635.56 |
| Including: investment losses in associates and joint ventures | (10,701,895.08) | (6,898,983.89) | |
| Gains from derecognition of financial assets measured at amortized costs | - | - | |
| Gains from changes in fair value | (V). 49 | 1,134,503.45 | 2,151,780.82 |
| Credit loss gains | (V). 50 | 5,100,446.66 | 4,535,775.14 |
| Asset impairment loss | (V). 51 | (132,423,108.75) | (126,089,709.42) |
| Gains from disposal of assets | - | 1.72 | |
| II. Operating profit | 151,776,799.20 | 153,300,132.30 | |
| Plus: non-operating revenue | (V). 52 | 1,805,086.92 | 1,449,879.26 |
| Less: non-operating expenses | (V). 53 | 698,017.71 | 8,205,801.51 |
| III. Total profit | 152,883,868.41 | 146,544,210.05 | |
| Less: income tax expenses | (V). 54 | 9,827,102.03 | 19,407,731.47 |
| IV. Net profit | 143,056,766.38 | 127,136,478.58 | |
| (I) Classified by operating sustainability: | |||
| 1. Net profit from continuing operations | 143,056,766.38 | 127,136,478.58 | |
| 2. Net profit from discontinued operations | - | - | |
| (II) Classified by ownership: | |||
| 1. Net profit attributable to shareholders of the parent company | 89,371,134.24 | 79,268,250.45 | |
| 2. Minority interests | 53,685,632.14 | 47,868,228.13 | |
| V. Net of tax of other comprehensive income | (V). 38 | 13,270,426.51 | (15,870,135.10) |
| Net of tax of other comprehensive income attributable to shareholders of the parent company | 13,270,426.51 | (15,989,228.50) | |
| (I) Other comprehensive income that cannot be reclassified into profit or loss | 14,560,500.00 | (16,267,037.45) | |
| 1. Changes in re-measurement of defined benefit plans | - | - | |
| 2. Other comprehensive income that cannot be transferred to profit or loss under the equity method | - | - | |
| 3. Changes in fair value of other equity instrument investments | 14,560,500.00 | (16,267,037.45) | |
| 4. Changes in fair value of the enterprise's own credit risk | - | - | |
| (II) Other comprehensive income that will be reclassified into profit or loss | (1,290,073.49) | 277,808.95 | |
| 1. Other comprehensive income that can be transferred to profit or loss under the equity method | - | - | |
| 2. Changes in fair value of other debt investments | - | 178,640.10 | |
| 3. Amount of financial assets reclassified and included in other comprehensive income | - | - | |
| 4. Provision for credit impairment of other debt investments | - | - | |
| 5. Reserves of cash flow hedges (effective portion of cash flow hedging profit or loss) | - | - | |
| 6. Differences arising from translation of foreign-currency financial statements | (1,290,073.49) | 99,168.85 | |
| 7. Others | - | - | |
| Net of tax of other comprehensive income attributable to minority shareholders | - | 119,093.40 | |
| VI. Total comprehensive income | 156,327,192.89 | 111,266,343.48 | |
| Total comprehensive income attributable to shareholders of the parent company | 102,641,560.75 | 63,279,021.95 | |
| Total comprehensive income attributable to minority shareholders | 53,685,632.14 | 47,987,321.53 | |
| VII. Earnings per share | |||
| Basic earnings per share (RMB/share) | 0.18 | 0.16 | |
| Dilute earnings per share (RMB/share) | 0.18 | 0.16 |
The notes are an integral part of the financial statements
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Income Statement of the Parent CompanyFor Year Ended December 31, 2024
Income Statement of the Parent Company
RMB
| Notes | Amount for the current year | Amount for the previous year | |
| I. Operating revenue | (XVI). 4 | 77,167,496.95 | 77,822,508.75 |
| Less: operating costs | (XVI). 4 | 10,205,157.84 | 9,822,306.53 |
| Taxes and surcharges | 3,069,369.36 | 3,193,559.74 | |
| Selling and distribution expenses | 476,938.50 | 233,086.71 | |
| G&A expenses | 46,124,842.97 | 46,901,768.72 | |
| Financial expenses | (1,179,537.25) | (3,418,990.44) | |
| Including: interest expenses | 422,950.59 | 356,264.79 | |
| Interest income | 1,698,292.14 | 3,838,789.68 | |
| Plus: other income | 164,150.75 | 153,012.52 | |
| Investment income | (XVI). 5 | 12,077,902.81 | 19,300,515.95 |
| Including: investment losses in associates and joint ventures | (10,701,895.08) | (6,898,983.89) | |
| Gains from derecognition of financial assets measured at amortized costs | - | - | |
| Gains from changes in fair value | 2,413,062.80 | 2,151,780.82 | |
| Credit impairment (loss) gains | (26,291,403.84) | 708,847.28 | |
| Asset impairment loss | (20,243,658.34) | - | |
| Gains from disposal of assets | - | - | |
| II. Operating (loss) profit | (13,409,220.29) | 43,404,934.06 | |
| Plus: non-operating revenue | 1,124,656.60 | 6,431.44 | |
| Less: non-operating expenses | 93,185.54 | 59,123.40 | |
| III. Total profit (loss) | (12,377,749.23) | 43,352,242.10 | |
| Less: income tax expenses | (3,885,606.10) | 9,825,698.88 | |
| IV. Net (loss) profit | (8,492,143.13) | 33,526,543.22 | |
| (I) Net (loss) profit from continuing operations | (8,492,143.13) | 33,526,543.22 | |
| (II) Net profit from discontinued operations | - | - | |
| V. Net of tax of other comprehensive income | 14,486,701.51 | (15,225,837.94) | |
| (I) Other comprehensive income that cannot be reclassified into profit or loss | 15,776,775.00 | (15,325,006.79) | |
| 1. Changes in re-measurement of defined benefit plans | - | - | |
| 2. Other comprehensive income that cannot be transferred to profit or loss under the equity method | - | - | |
| 3. Changes in fair value of other equity instrument investments | 15,776,775.00 | (15,325,006.79) | |
| 4. Changes in fair value of the enterprise's own credit risk | - | - | |
| 5. Others | - | - | |
| (II) Other comprehensive income that will be reclassified into profit or loss | (1,290,073.49) | 99,168.85 | |
| 1. Other comprehensive income that can be transferred to profit or loss under the equity method | - | - | |
| 2. Changes in fair value of other debt investments | - | - | |
| 3. Amount of financial assets reclassified and included in other comprehensive income | - | - | |
| 4. Provision for credit impairment of other debt investments | - | - | |
| 5. Reserves of cash flow hedges (effective portion of cash flow hedging profit or loss) | - | - | |
| 6. Differences arising from translation of foreign-currency financial statements | (1,290,073.49) | 99,168.85 | |
| 7. Others | - | - | |
| VI. Total comprehensive (loss) income | 5,994,558.38 | 18,300,705.28 |
The notes are an integral part of the financial statements
- 10 -
Consolidated Statement of Cash FlowsFor Year Ended December 31, 2024
Consolidated Statement of Cash Flows
RMB
| Notes | Amount for the current year | Amount for the previous year | |
| I. Cash flows from operating activities: | |||
| Cash received from sale of goods and rendering of services | 3,390,788,584.83 | 2,985,794,229.99 | |
| Refunds of taxes and surcharges received | 21,049,133.80 | 5,073,509.20 | |
| Other cash received related to operating activities | (V). 55(1) | 87,008,969.95 | 87,277,323.90 |
| Sub-total of cash inflows from operating activities | 3,498,846,688.58 | 3,078,145,063.09 | |
| Cash paid for purchase of goods and receipt of services | 2,842,864,632.73 | 2,466,252,261.73 | |
| Cash paid to and on behalf of employees | 238,890,310.33 | 255,045,680.87 | |
| Cash paid for taxes and surcharges | 32,071,014.09 | 54,636,406.53 | |
| Other cash paid related to operating activities | (V). 55(1) | 153,756,206.34 | 117,443,974.16 |
| Sub-total of cash outflows from operating activities | 3,267,582,163.49 | 2,893,378,323.29 | |
| Net cash flows from operating activities | (V). 56(1) | 231,264,525.09 | 184,766,739.80 |
| II. Cash flows from investing activities: | |||
| Cash received from recovery of investment | 1,349,489.37 | - | |
| Cash received from investment income | 11,747,113.36 | 13,769,440.75 | |
| Net cash received from disposal of fixed assets, intangible assets, and other long-term assets | (18.74) | 11,634.84 | |
| Net cash received from disposal of subsidiaries and other business units | - | - | |
| Other cash received related to investing activities | (V). 55(2) | 1,697,000,000.00 | 1,454,000,000.00 |
| Sub-total of cash inflows from investing activities | 1,710,096,583.99 | 1,467,781,075.59 | |
| Cash paid for the purchase of fixed assets, intangible assets, and other long-term assets | 29,441,167.62 | 64,069,967.97 | |
| Cash paid for investments | - | - | |
| Net cash paid to acquire subsidiaries and other business units | - | - | |
| Other cash paid related to investing activities | (V). 55(2) | 1,605,454,000.00 | 1,840,500,000.00 |
| Sub-total of cash outflows from investing activities | 1,634,895,167.62 | 1,904,569,967.97 | |
| Net cash flows from the investing activities | 75,201,416.37 | (436,788,892.38) | |
| III. Cash flows from financing activities: | |||
| Cash received from absorption of investments | - | - | |
| Including: cash received by subsidiaries from absorption of investments of minority shareholders | - | - | |
| Cash received from acquisition of borrowings | - | 8,000,000.00 | |
| Other cash received related to financing activities | - | - | |
| Sub-total of cash inflows from financing activities | - | 8,000,000.00 | |
| Cash paid for debt repayments | 406,216,304.56 | 103,387,387.94 | |
| Cash paid for distribution of dividends and profits or payment of interests | 50,633,653.38 | 57,324,944.21 | |
| Including: dividends and profits paid to minority shareholders by subsidiaries | - | - | |
| Other cash paid related to financing activities | (V). 55(3) | 9,508,462.57 | 8,776,024.71 |
| Sub-total of cash outflows from financing activities | 466,358,420.51 | 169,488,356.86 | |
| Net cash flows from financing activities | (466,358,420.51) | (161,488,356.86) | |
| IV. Effect of fluctuation in exchange rate on cash and cash equivalents | 556,861.07 | 456,132.31 | |
| V. Net increase (decrease) in cash and cash equivalents | (V). 56(1) | (159,335,617.98) | (413,054,377.13) |
| Plus: balance of cash and cash equivalents at the beginning of the year | (V). 56(2) | 461,420,457.33 | 874,474,834.46 |
| VI. Balance of cash and cash equivalents at the end of the year | (V). 56(2) | 302,084,839.35 | 461,420,457.33 |
The notes are an integral part of the financial statements
- 11 -
Statement of Cash Flows of the Parent CompanyFor Year Ended December 31, 2024
Statement of Cash Flows of the Parent Company
RMB
| Notes | Amount for the current year | Amount for the previous year | |
| I. Cash flows from operating activities: | |||
| Cash received from sale of goods and rendering of services | 80,553,754.68 | 79,719,541.58 | |
| Refunds of taxes and surcharges received | - | - | |
| Other cash received related to operating activities | 7,902,075.25 | 20,183,240.81 | |
| Sub-total of cash inflows from operating activities | 88,455,829.93 | 99,902,782.39 | |
| Cash paid for purchase of goods and receipt of services | 2,842,492.81 | 3,005,590.09 | |
| Cash paid to and on behalf of employees | 35,045,305.67 | 38,735,139.38 | |
| Cash paid for taxes and surcharges | 13,926,380.37 | 19,540,659.95 | |
| Other cash paid related to operating activities | 15,727,708.36 | 18,940,923.33 | |
| Sub-total of cash outflows from operating activities | 67,541,887.21 | 80,222,312.75 | |
| Net cash flows from operating activities | 20,913,942.72 | 19,680,469.64 | |
| II. Cash flows from investing activities: | |||
| Cash received from recovery of investment | 1,554,056.96 | - | |
| Cash received from investment income | 7,790,814.29 | 12,954,592.48 | |
| Net cash received from disposal of fixed assets, intangible assets, and other long-term assets | - | - | |
| Net cash received from disposal of subsidiaries and other business units | - | - | |
| Other cash received related to investing activities | 1,373,585,151.73 | 1,250,200,000.00 | |
| Sub-total of cash inflows from investing activities | 1,382,930,022.98 | 1,263,154,592.48 | |
| Cash paid for the purchase of fixed assets, intangible assets, and other long-term assets | 2,993,281.20 | 2,784,786.15 | |
| Cash paid for investments | - | - | |
| Net cash paid to acquire subsidiaries and other business units | - | - | |
| Other cash paid related to investing activities | 1,363,000,000.00 | 1,550,500,000.00 | |
| Sub-total of cash outflows from investing activities | 1,365,993,281.20 | 1,553,284,786.15 | |
| Net cash flows from the investing activities | 16,936,741.78 | (290,130,193.67) | |
| III. Cash flows from financing activities: | |||
| Cash received from absorption of investments | - | - | |
| Cash received from acquisition of borrowings | - | - | |
| Other cash received related to financing activities | - | - | |
| Sub-total of cash inflows from financing activities | - | - | |
| Cash paid for debt repayments | - | - | |
| Cash paid for distribution of dividends and profits or payment of interests | 33,346,867.31 | 30,747,575.73 | |
| Other cash paid related to financing activities | - | - | |
| Sub-total of cash outflows from financing activities | 33,346,867.31 | 30,747,575.73 | |
| Net cash flows from financing activities | (33,346,867.31) | (30,747,575.73) | |
| IV. Effect of fluctuation in exchange rate on cash and cash equivalents | 1,356.80 | 571.84 | |
| V. Net increase (decrease) in cash and cash equivalents | 4,505,173.99 | (301,196,727.92) | |
| Plus: balance of cash and cash equivalents at the beginning of the year | 9,125,800.27 | 310,322,528.19 | |
| VI. Balance of cash and cash equivalents at the end of the year | 13,630,974.26 | 9,125,800.27 |
The notes are an integral part of the financial statements
Consolidated Statement of Changes in Shareholders' EquityFor Year Ended December 31, 2024
Consolidated Statement of Changes in Shareholders' Equity
RMB
| Item | Amount for the current year | ||||||
| Equity attributable to shareholders of the parent company | Minority interests | Total shareholders' equity | |||||
| Equity | Capital reserve | Other comprehensive income | Surplus reserves | Undistributed profits | |||
| I. Balance as at the end of the previous year | 506,521,849.00 | 1,961,599,824.63 | 93,607,380.81 | 104,262,315.64 | 216,160,896.14 | 1,229,765,091.74 | 4,111,917,357.96 |
| Plus: changes in accounting policies | - | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - | - |
| Business combination under common control | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Balance at the beginning of the current year | 506,521,849.00 | 1,961,599,824.63 | 93,607,380.81 | 104,262,315.64 | 216,160,896.14 | 1,229,765,091.74 | 4,111,917,357.96 |
| III. Increase/decrease in the current year | - | - | 13,270,426.51 | - | 56,447,217.52 | 53,685,632.14 | 123,403,276.17 |
| (I) Total comprehensive income | - | - | 13,270,426.51 | - | 89,371,134.24 | 53,685,632.14 | 156,327,192.89 |
| (II) Capital contributed or reduced by shareholders | - | - | - | - | - | - | - |
| 1. Ordinary shares invested by shareholders | - | - | - | - | - | - | - |
| 2. Amount of share-based payments included in shareholders' equity | - | - | - | - | - | - | - |
| 3. Others | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | (32,923,916.72) | - | (32,923,916.72) |
| 1. Withdrawal of surplus reserves | - | - | - | - | - | - | - |
| 2. Profits distributed to shareholders | - | - | - | - | (32,923,916.72) | - | (32,923,916.72) |
| 3. Others | - | - | - | - | - | - | - |
| (IV) Internal transfer of shareholders' equity | - | - | - | - | - | - | - |
| 1. Conversion of capital reserve into share capital | - | - | - | - | - | - | - |
| 2. Conversion of surplus reserve into share capital | - | - | - | - | - | - | - |
| 3. Surplus reserves offsetting losses | - | - | - | - | - | - | - |
| 4. Transfer of other comprehensive income into retained earnings | - | - | - | - | - | - | - |
| 5. Others | - | - | - | - | - | - | - |
| (V) Special reserves | - | - | - | - | - | - | - |
| 1. Withdrawal in the current year | - | - | - | - | - | - | - |
| 2. Use in the current year | - | - | - | - | - | - | - |
| (VI) Others | - | - | - | - | - | - | - |
| IV. Balance as at the end of the current year | 506,521,849.00 | 1,961,599,824.63 | 106,877,807.32 | 104,262,315.64 | 272,608,113.66 | 1,283,450,723.88 | 4,235,320,634.13 |
- 13 -
Consolidated Statement of Changes in Shareholders' Equity - ContinuedFor Year Ended December 31, 2024
Consolidated Statement of Changes in Shareholders' Equity - Continued
RMB
| Item | Amount for the previous year | ||||||
| Equity attributable to shareholders of the parent company | Minority interests | Total shareholders' equity | |||||
| Equity | Capital reserve | Other comprehensive income | Surplus reserves | Undistributed profits | |||
| I. Balance as at the end of the previous year | 506,521,849.00 | 1,961,599,824.63 | 109,596,609.31 | 100,909,661.32 | 170,636,610.95 | 1,181,777,770.21 | 4,031,042,325.42 |
| Plus: changes in accounting policies | - | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - | - |
| Business combination under common control | - | - | - | - | - | - | - |
| Others | - | - | - | - | - | - | - |
| II. Balance at the beginning of the current year | 506,521,849.00 | 1,961,599,824.63 | 109,596,609.31 | 100,909,661.32 | 170,636,610.95 | 1,181,777,770.21 | 4,031,042,325.42 |
| III. Increase/decrease in the current year | - | - | (15,989,228.50) | 3,352,654.32 | 45,524,285.19 | 47,987,321.53 | 80,875,032.54 |
| (I) Total comprehensive income | - | - | (15,989,228.50) | - | 79,268,250.45 | 47,987,321.53 | 111,266,343.48 |
| (II) Capital contributed or reduced by shareholders | - | - | - | - | - | - | - |
| 1. Ordinary shares invested by shareholders | - | - | - | - | - | - | - |
| 2. Amount of share-based payments included in shareholders' equity | - | - | - | - | - | - | - |
| 3. Others | - | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | 3,352,654.32 | (33,743,965.26) | - | (30,391,310.94) |
| 1. Withdrawal of surplus reserves | - | - | - | 3,352,654.32 | (3,352,654.32) | - | - |
| 2. Profits distributed to shareholders | - | - | - | - | (30,391,310.94) | - | (30,391,310.94) |
| 3. Others | - | - | - | - | - | - | - |
| (IV) Internal transfer of shareholders' equity | - | - | - | - | - | - | - |
| 1. Conversion of capital reserve into share capital | - | - | - | - | - | - | - |
| 2. Conversion of surplus reserve into share capital | - | - | - | - | - | - | - |
| 3. Surplus reserves offsetting losses | - | - | - | - | - | - | - |
| 4. Transfer of other comprehensive income into retained earnings | - | - | - | - | - | - | - |
| 5. Others | - | - | - | - | - | - | - |
| (V) Special reserves | - | - | - | - | - | - | - |
| 1. Withdrawal in the current year | - | - | - | - | - | - | - |
| 2. Use in the current year | - | - | - | - | - | - | - |
| (VI) Others | - | - | - | - | - | - | - |
| IV. Balance as at the end of the current year | 506,521,849.00 | 1,961,599,824.63 | 93,607,380.81 | 104,262,315.64 | 216,160,896.14 | 1,229,765,091.74 | 4,111,917,357.96 |
The notes are an integral part of the financial statements
- 14 -
Statement of Changes in Shareholders' Equity of the Parent CompanyFor Year Ended December 31, 2024
Statement of Changes in Shareholders' Equity of the Parent Company
RMB
| Item | Amount for the current year | |||||
| Equity | Capital reserve | Other comprehensive income | Surplus reserves | Undistributed profits | Total shareholders' equity | |
| I. Balance as at the end of the previous year | 506,521,849.00 | 1,577,392,975.96 | 83,629,830.81 | 104,262,315.64 | 689,309,946.54 | 2,961,116,917.95 |
| Plus: changes in accounting policies | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - |
| Others | - | - | - | - | - | - |
| II. Balance at the beginning of the current year | 506,521,849.00 | 1,577,392,975.96 | 83,629,830.81 | 104,262,315.64 | 689,309,946.54 | 2,961,116,917.95 |
| III. Increase/decrease in the current year | - | - | 14,486,701.51 | - | (41,416,059.85) | (26,929,358.34) |
| (I) Total comprehensive income | - | - | 14,486,701.51 | - | (8,492,143.13) | 5,994,558.38 |
| (II) Capital contributed or reduced by shareholders | - | - | - | - | - | - |
| 1. Ordinary shares invested by shareholders | - | - | - | - | - | - |
| 2. Amount of share-based payments included in shareholders' equity | - | - | - | - | - | - |
| 3. Others | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | - | (32,923,916.72) | (32,923,916.72) |
| 1. Withdrawal of surplus reserves | - | - | - | - | - | - |
| 2. Profits distributed to shareholders | - | - | - | - | (32,923,916.72) | (32,923,916.72) |
| 3. Others | - | - | - | - | - | - |
| (IV) Internal transfer of shareholders' equity | - | - | - | - | - | - |
| 1. Conversion of capital reserve into share capital | - | - | - | - | - | - |
| 2. Conversion of surplus reserve into share capital | - | - | - | - | - | - |
| 3. Surplus reserves offsetting losses | - | - | - | - | - | - |
| 4. Transfer of other comprehensive income into retained earnings | - | - | - | - | - | - |
| 5. Others | - | - | - | - | - | - |
| (V) Special reserves | - | - | - | - | - | - |
| 1. Withdrawal in the current year | - | - | - | - | - | - |
| 2. Use in the current year | - | - | - | - | - | - |
| (VI) Others | - | - | - | - | - | - |
| IV. Balance as at the end of the current year | 506,521,849.00 | 1,577,392,975.96 | 98,116,532.32 | 104,262,315.64 | 647,893,886.69 | 2,934,187,559.61 |
- 15 -
Statement of Changes in Shareholders' Equity of the Parent Company - ContinuedFor Year Ended December 31, 2024
Statement of Changes in Shareholders' Equity of the Parent Company - Continued
RMB
| Item | Amount for the previous year | |||||
| Equity | Capital reserve | Other comprehensive income | Surplus reserves | Undistributed profits | Total shareholders' equity | |
| I. Balance as at the end of the previous year | 506,521,849.00 | 1,577,392,975.96 | 98,855,668.75 | 100,909,661.32 | 689,527,368.58 | 2,973,207,523.61 |
| Plus: changes in accounting policies | - | - | - | - | - | - |
| Correction of prior period errors | - | - | - | - | - | - |
| Others | - | - | - | - | - | - |
| II. Balance at the beginning of the current year | 506,521,849.00 | 1,577,392,975.96 | 98,855,668.75 | 100,909,661.32 | 689,527,368.58 | 2,973,207,523.61 |
| III. Increase/decrease in the current year | - | - | (15,225,837.94) | 3,352,654.32 | (217,422.04) | (12,090,605.66) |
| (I) Total comprehensive income | - | - | (15,225,837.94) | - | 33,526,543.22 | 18,300,705.28 |
| (II) Capital contributed or reduced by shareholders | - | - | - | - | - | - |
| 1. Ordinary shares invested by shareholders | - | - | - | - | - | - |
| 2. Amount of share-based payments included in shareholders' equity | - | - | - | - | - | - |
| 3. Others | - | - | - | - | - | - |
| (III) Profit distribution | - | - | - | 3,352,654.32 | (33,743,965.26) | (30,391,310.94) |
| 1. Withdrawal of surplus reserves | - | - | - | 3,352,654.32 | (3,352,654.32) | - |
| 2. Profits distributed to shareholders | - | - | - | - | (30,391,310.94) | (30,391,310.94) |
| 3. Others | - | - | - | - | - | - |
| (IV) Internal transfer of shareholders' equity | - | - | - | - | - | - |
| 1. Conversion of capital reserve into share capital | - | - | - | - | - | - |
| 2. Conversion of surplus reserve into share capital | - | - | - | - | - | - |
| 3. Surplus reserves offsetting losses | - | - | - | - | - | - |
| 4. Transfer of other comprehensive income into retained earnings | - | - | - | - | - | - |
| 5. Others | - | - | - | - | - | - |
| (V) Special reserves | - | - | - | - | - | - |
| 1. Withdrawal in the current year | - | - | - | - | - | - |
| 2. Use in the current year | - | - | - | - | - | - |
| (VI) Others | - | - | - | - | - | - |
| IV. Balance as at the end of the current year | 506,521,849.00 | 1,577,392,975.96 | 83,629,830.81 | 104,262,315.64 | 689,309,946.54 | 2,961,116,917.95 |
The notes are an integral part of the financial statements
Notes to the financial statementsYear ended December 31, 2024
- 16 -
（I） Basic information of the Company
1. Company profile
Shenzhen Textile (Holdings) Co., Ltd. (hereinafter referred to as "the Company") is a joint stock limited companyregistered in Guangdong Province. The Company was listed on Shenzhen Stock Exchange in August 1994. TheCompany has publicly issued RMB ordinary shares (A shares) and domestically listed foreign shares (B shares) to thedomestic and foreign public respectively, and listed for trading.
Headquartered in Shenzhen, Guangdong Province, the Company and its subsidiaries (hereinafter referred to as "theGroup") are principally engaged in the research and development, production and marketing of polarizers for liquidcrystal displays, as well as property management and textile and apparel businesses, which are mainly located in theprosperous commercial area of Shenzhen.
2. Approval date of financial statements
The consolidated and parent company's financial statements of the Company were approved by the Board of Directorson March 26, 2025.
（II） Basis for preparation of the financial statements
1. Basis for preparation
The Group implements the Accounting Standards for Business Enterprises and related provisions issued by the Ministryof Finance. In addition, the Group also discloses relevant financial information in accordance with the Rules for theCompilation and Reporting of Information Disclosure by Companies Issuing Securities to the Public No. 15 - GeneralProvisions on Financial Reports (Revised in 2023).
2. Going concern
The Group has evaluated its going-concern ability for 12 months from December 31, 2024 and has not found anymatters or circumstances that cast significant doubt on the going-concern ability. Therefore, the financial statementshave been prepared on the going concern basis.
3. Accounting basis and valuation principle
The accounting of the Group is based on the accrual basis. Except for certain financial instruments measured at fairvalue, the financial statements are measured at historical cost. In the event of any asset impairment, a provision forimpairment will be made in accordance with relevant provisions.
Under the historical cost measurement, assets are measured at the amount of cash or cash equivalents paid or the fairvalue of the consideration paid at the time of acquisition. Liabilities are measured at the amount of money or assetsactually received for assuming current obligations, or the contract amount of assuming current obligations, or theamount of cash or cash equivalents expected to be paid to repay liabilities in daily activities.
Fair value is the price received from the sale of an asset or paid for the transfer of a liability by a market participant in anorderly transaction occurring on the measurement date. Regardless of whether the fair value is observable or estimatedby using valuation techniques, the fair value measured and disclosed in these financial statements is determined on thisbasis.
Notes to the financial statementsYear ended December 31, 2024
- 17 -
(II) Basis for preparation of financial statements - continued
3. Accounting basis and valuation principle - continued
For financial assets where the transaction price is taken as the fair value at initial recognition and valuation techniquesinvolving unobservable input value are used in the subsequent measurement of fair value, the valuation techniques arecorrected during the valuation process to make the initial recognition result determined by the valuation techniques equalto the transaction price.
The fair value measurement is divided into three levels based on the observability of the input value of the fair value andthe importance of such input value to the fair value measurement as a whole:
? Level 1 input value is the unadjusted quoted price in active markets for identical assets or liabilities that are available on themeasurement date.? Level 2 input value is the directly or indirectly observable input value of the relevant assets or liabilities except for the level 1input value.? Level 3 input value is the unobservable input value of the relevant assets or liabilities.
（III） Significant accounting policies and accounting estimates
1. Statement in compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting Standards for BusinessEnterprises, and truly and completely reflect the Company's consolidated and parent company's financial position as atDecember 31, 2024, and the consolidated and parent company's operating results, changes in consolidated and parentcompany's shareholders' equity and consolidated and parent company's cash flows for the year then ended.
2. Accounting period
The Company adopts the Gregorian calendar year for its accounting year, that is, from January 1 to December 31 of eachyear.
3. Operating cycle
Operating cycle refers to the period from the purchase of assets for processing to the realization of cash or cashequivalents by the enterprise. The operating cycle of the Company is 12 months.
4. Recording currency
RMB is the currency in the main economic environment in which the Company and its domestic subsidiaries operate.The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company's overseas subsidiariesdetermine RMB as their recording currency based on the currency in the main economic environment in which theyoperate. The currency used by the Company in preparing these financial statements is RMB.
Notes to the financial statementsYear ended December 31, 2024
- 18 -
(III) Significant accounting policies and accounting estimates - continued
5. Importance criteria determination method and selection basis
| Item | Importance criteria |
| Significant accounts receivable with the provision for bad debts made on an individual basis | The individual book balance accounts for more than 0.5% of the total assets |
| Recovery or reversal amount of provision for bad debts of significant accounts receivable | The individual recovery or reversal amount accounts for more than 10% of the total amount of provision for bad debts recovery or reversal of the corresponding accounts receivable and the amount exceeds RMB 10 million |
| Advances to suppliers with aging over 1 year and of significant amount | Individual amount accounts for more than 0.5% of total assets |
| Important accounts payable, advances from customers, contract liabilities and other payables with aging over 1 year | Individual amount accounts for more than 0.5% of total assets |
| Other cash received related to significant investing activities | The amount exceeds RMB 50 million |
| Other cash paid related to significant investing activities | The amount exceeds RMB 50 million |
| Major non-wholly-owned subsidiaries | The total assets, total revenue or total profit of the non-wholly-owned subsidiary account for more than 10% of the amount of the corresponding items in the consolidated financial statements of the Group |
| Significant joint ventures or associates | The book value of the long-term equity investments of the enterprise at the end of the year accounts for more than 5% of the net assets of the consolidated financial statements of the Group |
6. Accounting treatment method of business combination under common control and not under commoncontrol
Business combinations are categorized into those under common control and those not under common control.
6.1 Business combinations under common control
If, before and after the business combination, all parties involved are ultimately controlled by the same party or the samegroup of parties and such control is not temporary, the combination is considered under common control.
The assets and liabilities obtained in the business combination are measured at their book value as recorded in theconsolidated financial statements of the ultimate controller on the combination date. Any difference between the bookvalue of the net assets acquired by the combining party and the book value of the consideration paid is adjusted againstthe share premium in capital reserve. If the equity premium is insufficient, the difference is adjusted against retainedearnings.
All direct expenses incurred for the purpose of the business combination are recognized in current profit or loss as theyoccur.
6.2 Business combinations not under common control and goodwill
When the entities involved in the combination are not under the ultimate control of the same party or the same group ofparties before and after the combination, it is considered a business combination not under common control.
The combination cost refers to the fair value of the assets paid, the liabilities incurred or assumed, and the equityinstruments issued by the acquirer to obtain the right of control of the acquiree. Any intermediary fees for businesscombination, including but not limited to audit, legal, and valuation consulting services, and other related G&Aexpenses incurred by the acquirer are charged to current profit or loss as they arise.
Any identifiable assets, liabilities, and contingent liabilities of the acquiree that meet the recognition criteria and areobtained by the acquirer in the combination are measured at fair value on the acquisition date.
Notes to the financial statementsYear ended December 31, 2024
- 19 -
(III) Significant accounting policies and accounting estimates - continued
6. Accounting treatments for business combination under common control and not under common control -continued
6.2 Business combination not under common control and goodwill - continued
If the combination cost exceeds the acquiree's fair value share of net identifiable assets obtained, this difference isrecognized as goodwill and initially measured at cost. If the combination cost is less than the acquiree's fair value shareof net identifiable assets obtained, the acquirer shall first reassess the fair values of all identifiable assets, liabilities, andcontingent liabilities of the acquiree, as well as the measurement of the combination cost. After reassessment, if thecombination cost is still less than acquiree's fair value share of net identifiable assets obtained, the difference is includedin current profit or loss.
Goodwill arising from a business combination is presented separately in the consolidated financial statements and ismeasured at cost less any accumulated provision for impairment.
7. Criteria for determining control and methods of preparing consolidated financial statements
7.1 Criteria for determining control
Control means that an investor has power over the investee, derives variable returns by participating in the investee'srelevant activities, and can use that power to affect the amount of returns. Whenever changes in relevant facts andcircumstances alter any element of this definition of control, the Group will reassess the situation.
7.2 Methods of preparing consolidated financial statements
The consolidation scope in the consolidated financial statements is determined on the basis of control.
A subsidiary is consolidated from the date the Group obtains the right of control over it until the date such right is lost.
For subsidiaries that the Group disposes of, operating results and cash flows prior to the disposal date (the date when theloss of control occurs) are appropriately included in the consolidated income statement and consolidated cash flowstatement.
For subsidiaries acquired in a business combination not under common control, their operating results and cash flowsfrom the acquisition date (the date when the right of control is obtained) are appropriately included in the consolidatedincome statement and consolidated cash flow statement.
For subsidiaries acquired in a business combination under common control, regardless of the point in time during thereporting period at which the combination takes place, the subsidiary is deemed to have been under the Group'sconsolidation scope from the date it came under the ultimate controller. Its operating results and cash flows from theearliest beginning date of the reporting period are appropriately included in the consolidated income statement andconsolidated cash flow statement.
The primary accounting policies and reporting periods adopted by the subsidiaries are determined in accordance with theuniform accounting policies and reporting periods set by the Company.
Notes to the financial statementsYear ended December 31, 2024
- 20 -
(III) Significant accounting policies and accounting estimates - continued
7. Judgment criteria for control measures and preparation of the consolidated financial statements - continued
7.2 Methods of preparing consolidated financial statements - continued
Any effects on the consolidated financial statements from intercompany transactions between the Company and itssubsidiaries, or among the subsidiaries themselves, are eliminated upon consolidation.
Any portion of the subsidiary's owners' equity not attributable to the parent company is recognized as non-controllinginterests and presented under "Minority Interests" in the shareholders' equity section of the consolidated balance sheet.The share of the subsidiary's current net profit or loss attributable to these minority interests is presented in theconsolidated income statement under the net profit item as "minority interest income".
If the losses borne by minority shareholders exceed the share of owners' equity they hold at the beginning of thesubsidiary's period, the excess continues to be deducted from the minority interests.
Transactions involving the purchase of a subsidiary's minority interests or the partial disposal of a subsidiary's equityinvestments without losing the right of control are accounted for as equity transactions. The book value of the parentcompany's owners' equity and the minority interests are adjusted to reflect the changes in their respective ownership inthe subsidiary. Any difference between the adjustment to minority interests and the fair value of the consideration paidor received is adjusted against the capital reserve. If the capital reserve is insufficient, the difference is adjusted againstretained earnings.
8. Joint venture arrangements
Joint venture arrangements are classified as either joint operations or joint ventures, based on the rights and obligationsof the parties—determined by factors such as the arrangement's structure, legal form, and contractual terms. A jointoperation is a joint arrangement in which the parties have rights to the related assets and obligations for the relatedliabilities. A joint operation refers to those joint venture arrangements under which the joint venture is entitled torelevant assets and be responsible for relevant liabilities. A joint venture is a joint venture arrangement in which theparties are entitled only to the arrangement's net assets.
The Group accounts for investments in joint ventures using the equity method. For further details, refer to Note (III),Section 17.3.2, "Long-term equity investments accounted for under the equity method."
9. Recognition of cash and cash equivalents
Cash refers to cash on hand and deposits readily available for payment. Cash equivalents refer to short-term (generallymaturing within three months from the purchase date), highly liquid investments held by the Group that are easilyconvertible into known amounts of cash and subject to an insignificant risk of value changes.
10. Translation of foreign currency transactions and financial statements denominated in foreign currency
10.1 Foreign currency transactions
Foreign currency transactions are initially recognized using an exchange rate approximating the spot exchange rate onthe transaction date, determined by a reasonable systematic method.
Notes to the financial statementsYear ended December 31, 2024
- 21 -
(III) Significant accounting policies and accounting estimates - continued
10. Foreign currency transactions and translation of foreign currency statements - continued
10.1 Foreign currency transactions - continued
At each balance sheet date, foreign currency monetary items are translated into RMB at the spot rate on that date. Anyexchange differences arising from changes in the spot exchange rate (compared to the rate at initial recognition or theprevious balance sheet date) are recognized in current profit or loss, except for: (1) exchange differences on foreign-currency-specific borrowings that qualify for capitalization, which are capitalized as part of the cost of the related assetduring the capitalization period; (2) exchange differences on hedging instruments used to hedge foreign exchange risk,which are accounted for under hedge accounting; (3) foreign exchange differences arising from changes in the bookbalance of monetary items classified as measured at fair value through other comprehensive income, except foramortized costs, are recognized in current profit or loss.
When preparing consolidated financial statements involving foreign operations, if a foreign currency monetary itemessentially constitutes a net investment in a foreign operation, any exchange differences arising from fluctuation inexchange rate are included under "Exchange differences on translation of foreign currency statements" in othercomprehensive income. Upon disposal of the foreign operation, these differences are recognized in profit or loss for thedisposal period.
Foreign currency non-monetary items measured at historical cost continue to be measured using the spot exchange ratein recording currency on the transaction date. For foreign currency non-monetary items measured at fair value, the spotexchange rate on the date the fair value is determined is used for translation. Any difference between the translatedamount in recording currency and the original currency is treated as a fair value change (including fluctuation inexchange rate) and is recognized in current profit or loss or other comprehensive income, as appropriate.
10.2 Translation of foreign-currency financial statements
To prepare consolidated financial statements, foreign-currency financial statements of overseas operations are translatedinto RMB as follows: all assets and liabilities in the balance sheet are translated at the spot exchange rate on the balancesheet date; shareholders' equity items are translated at the spot exchange rate on the date of occurrence; all items in theincome statement and items reflecting profit distribution are translated using an exchange rate approximating the spotexchange rate on the transaction date; any difference between the sum of translated assets and the sum of translatedliabilities plus equity items is recognized as other comprehensive income and included in shareholders' equity.
Foreign currency cash flows and the cash flows of overseas subsidiaries are translated using an exchange rateapproximating the spot exchange rate on the date of the cash flow. The impact of fluctuation in exchange rate on cashand cash equivalents is presented separately in the statement of cash flows under "Effect of exchange rate changes oncash and cash equivalents."
The figures for the prior year-end and the actual amounts for the previous year are presented according to the amountstranslated in the previous year's financial statements.
When the Group disposes of its entire owners' equity in a foreign operation or otherwise loses the right of control over aforeign operation—whether by partially disposing of equity investments or for any other reason—all differences ontranslation of foreign currency statements related to that foreign operation and presented under shareholders' equity(attributable to the parent company) in the balance sheet are transferred in full to profit or loss for the disposal period.
Notes to the financial statementsYear ended December 31, 2024
- 22 -
(III) Significant accounting policies and accounting estimates - continued
10. Foreign currency transactions and translation of foreign currency statements - continued
10.2 Translation of foreign-currency financial statements - continued
When disposing of part of an equity investments or in other circumstances that reduce the Group's ownership interest inan overseas operation without losing the right of control over that operation, any differences on translation of foreigncurrency statements related to the disposed portion are attributed to minority interests and are not transferred to profit orloss for the current period. When disposing of a portion of equity in an overseas operation that is classified as anassociate or a joint venture, the differences on translation of foreign currency statements related to that operation aretransferred to profit or loss in the disposal period, in proportion to the percentage of equity disposed.
11. Financial instruments
The Group recognizes a financial asset or financial liability when it becomes a party to the contractual provisions of afinancial instrument.
For purchases or sales of financial assets in the ordinary course of business, the Group recognizes the assets to bereceived and the liabilities to be assumed on the trade date, or derecognizes the assets sold on the trade date.
Financial assets and financial liabilities are measured at fair value upon initial recognition (see Note (II) "Basis ofaccounting and valuation principles" for details on determining fair value). For financial assets and liabilities measuredat fair value through profit or loss, transaction costs are recognized directly in profit or loss for the current period; forother categories of financial assets and liabilities, the relevant transaction costs are included in the initial recognitionamount. When the Group initially recognizes accounts receivable that do not include a significant financing component,or when the financing component of a contract not exceeding one year is disregarded under Accounting Standards forBusiness Enterprises No. 14 - Revenue (“Revenue Standard”), such receivables are initially measured at the transactionprice as defined in the Revenue Standard.
The effective interest method is the method used to calculate the amortized cost of a financial asset or liability and toallocate the interest income or interest expenses over the relevant accounting periods.
The effective interest rate is the rate that discounts the estimated future cash flows over the expected life of a financialasset or liability to the financial asset's book balance or the financial liability's amortized cost. In determining theeffective interest rate, the Group estimates expected cash flows based on all contractual terms of the financial asset orliability (e.g., early repayment, extension, call options, or other similar options), but does not factor in expected creditlosses.
The amortized cost of a financial asset or liability is the initial recognized amount minus any repaid principal, plus orminus the accumulated amortization of the difference between the initial recognized amount and the amount at maturityusing the effective interest method, and then minus the accumulated provision for losses (applicable only to financialassets).
Notes to the financial statementsYear ended December 31, 2024
- 23 -
(III) Significant accounting policies and accounting estimates - continued
11. Financial instruments - continued
11.1 Classification, recognition and measurement of financial assets
After initial recognition, the Group subsequently measures different categories of financial assets at amortized cost, atfair value through other comprehensive income, or at fair value through profit or loss.
If the contractual terms of a financial asset stipulate that, on specified dates, cash flows comprise solely payments ofprincipal and interest on the outstanding principal, and the Group's business model for managing this financial asset is tocollect the contractual cash flows, the Group classifies this financial asset as measured at amortized cost. Such financialassets mainly include monetary funds, notes receivable, accounts receivable, and other receivables.
If the contractual terms of a financial asset stipulate that, on specified dates, cash flows comprise solely payments ofprincipal and interest on the outstanding principal, and the Group's business model for managing the financial asset isboth to collect contractual cash flows and to sell the financial asset, then the Group classifies this asset as measured atfair value through other comprehensive income. Such financial assets with a maturity of more than one year from thedate of acquisition are presented as "Other debt investments," while those maturing within one year (inclusive) from thebalance sheet date are presented under "Non-current assets due within one year." Accounts receivable and notesreceivable classified upon acquisition as measured at fair value through other comprehensive income are presented under"Receivables financing," and any other items acquired with a maturity of one year (inclusive) or less are presented under"Other current assets."
At initial recognition, on an individual financial asset basis, the Group may irrevocably designate a non-trading equityinstrument investment, other than any contingent consideration recognized in a business combination not under commoncontrol, as measured at fair value through other comprehensive income. Such financial assets are presented as "Otherequity instrument investments."
If a financial asset meets any of the following conditions, it indicates that the Group holds this asset for trading purposes:
? The main purpose of acquiring the financial asset is to sell it in the near term.? Upon initial recognition, the financial asset is part of an identifiable portfolio of financial instruments that iscollectively managed, and there is objective evidence of a recent pattern of short-term profit-taking.? The financial asset is a derivative, except for derivatives that meet the definition of a financial guarantee contract orare designated as effective hedging instruments.
Financial assets measured at fair value through profit or loss include those classified as such and those designated assuch:
? Any financial asset that does not meet the classification criteria for measurement at amortized cost or at fair value throughother comprehensive income is classified as measured at fair value through profit or loss.? At initial recognition, to eliminate or significantly reduce accounting mismatches, the Group may irrevocablydesignate a financial asset as measured at fair value through profit or loss.
Notes to the financial statementsYear ended December 31, 2024
- 24 -
(III) Significant accounting policies and accounting estimates - continued
11. Financial instruments - continued
11.1 Classification, recognition and measurement of financial assets - continued
Financial assets measured at fair value through profit or loss are presented under "Financial assets held for trading."Those due in more than one year from the balance sheet date (or with no fixed maturity) and expected to be held formore than one year are presented under "Other non-current financial assets."
11.1.1 Financial assets measured by amortized cost
Financial assets measured at amortized cost are subsequently measured at amortized cost using the effective interestmethod, and any gain or loss arising from impairment or derecognition is recognized in profit or loss.
The Group recognizes interest income on financial assets measured at amortized cost using the effective interest method.For purchased or originated financial assets that are already credit-impaired, the Group determines interest income fromthe date of initial recognition based on the asset's amortized cost and a credit-adjusted effective interest rate. For all otherfinancial assets, the Group calculates interest income by multiplying the book balance of the asset by the effectiveinterest rate.
11.1.2 Financial assets measured at fair value through other comprehensive income
For a financial asset classified as measured at fair value through other comprehensive income, any impairment loss orgain and interest income calculated using the effective interest method are recognized in profit or loss, while all otherfair value changes are recognized in other comprehensive income. The amount recognized in profit or loss each period isthe same as if the asset had been measured at amortized cost throughout its life. When such a financial asset isderecognized, the cumulative gains or losses previously recognized in other comprehensive income are transferred fromother comprehensive income to profit or loss.
For a non-trading equity instrument investment designated as measured at fair value through other comprehensiveincome, fair value changes are recognized in other comprehensive income. When the financial asset is derecognized, thecumulative gains or losses previously recognized in other comprehensive income are transferred out of othercomprehensive income and into retained earnings. During the period the Group holds this non-trading equity instrumentinvestment, if the right to receive dividends is established, the related economic benefits are likely to flow to the Group,and the amount of dividends can be measured reliably, then the Group recognizes dividend income in profit or loss.
11.1.3 Financial assets measured at fair value through the current profit or loss
Financial assets measured at fair value through profit or loss are subsequently measured at fair value; gains or lossesarising from fair value changes, as well as any dividend and interest income related to these assets, are recognized inprofit or loss.
Notes to the financial statementsYear ended December 31, 2024
- 25 -
(III) Significant accounting policies and accounting estimates - continued
11. Financial instruments - continued
11.2 Impairment of financial instruments
The Group recognizes impairment allowances and provision for losses based on expected credit losses for financialassets measured at amortized cost, financial assets classified as fair value through other comprehensive income, andlease receivables.
For all notes receivable and accounts receivable arising from transactions governed by the Revenue Standard, as well asoperating lease receivables arising from transactions governed by Accounting Standards for Business Enterprises No. 21- Leases, the Group measures the provision for loss at an amount equal to the lifetime expected credit losses.
For other financial instruments, except for those purchased or originated with credit loss, the Group evaluates changes incredit risk since initial recognition at each balance sheet date. If the credit risk of such a financial instrument hassignificantly increased since initial recognition, the Group measures the provision for loss at an amount equal to thelifetime expected credit losses; if it has not significantly increased, the Group measures the provision for loss at anamount equal to the 12-month expected credit losses. Except for financial assets classified as fair value through othercomprehensive income, any increase or reversal of the provision for credit losses is recognized as an impairment loss orgain in the current period's profit or loss. For financial assets classified as fair value through other comprehensiveincome, the Group recognizes the provision for credit losses in other comprehensive income and records the impairmentloss or gain in profit or loss, without reducing the asset's book value in the balance sheet.
If, in a prior period, the Group measured the provision for loss at an amount equal to the lifetime expected credit losses(due to a significant increase in credit risk since initial recognition), but at the current balance sheet date that significantincrease in credit risk no longer applies, then the Group measures the provision for loss at an amount equal to the 12-month expected credit losses. The amount of any resulting reversal is recognized as an impairment gain in profit or loss.
11.2.1 Significant increase in credit risk
The Group uses reasonable and supportable forward-looking information to compare the risk of default on a financialinstrument at the balance sheet date with the risk of default at initial recognition, in order to determine whether the creditrisk has significantly increased since initial recognition.
Notes to the financial statementsYear ended December 31, 2024
- 26 -
(III) Significant accounting policies and accounting estimates - continued
11. Financial instruments - continued
11.2 Impairment financial instruments - continued
11.2.1 Significant increase in credit risk - continued
When the Group assesses whether credit risk has increased significantly, it considers the following factors:
(1) Whether internal price indicators resulting from changes in credit risk have undergone a significant change.
(2) Whether, if an existing financial instrument is effectively originated or issued as a new financial instrument on thebalance sheet date, there is a significant change in the interest rate or other terms of that instrument (e.g., more stringentcontractual terms, increased collateral or guarantees, or a higher yield).
(3) Whether external market indicators of credit risk for the same financial instrument, or similar instruments with thesame expected term, have changed significantly. Such indicators include credit spreads, credit default swap (CDS) pricesfor the borrower, the length of time and extent to which a financial asset's fair value is below its amortized cost, andother market information related to the borrower (e.g., changes in the prices of the borrower's debt or equity instruments).
(4) Whether the external credit rating of the financial instrument has actually changed or is expected to changesignificantly.
(5) Whether there has been a downgrade in the debtor's internal credit rating, either actual or anticipated.
(6) Whether there has been an adverse change in the debtor's business, financial, or economic conditions that is expectedto significantly affect the debtor's ability to meet its debt obligations.
(7) Whether the debtor's operating performance, whether actual or expected, has changed significantly.
(8) Whether the credit risk of other financial instruments issued by the same debtor has increased significantly.
(9) Whether there has been a significantly adverse change in the regulatory, economic, or technological environment inwhich the debtor operates.
(10) Whether the value of collateral securing the debt, or the quality of a third-party guarantee or credit enhancement,has changed significantly. Such changes are expected to reduce the debtor's economic incentive to repay under thecontractual schedule or affect the probability of default.
(11) Whether there has been a significant change in factors that would reduce the borrower's economic incentive torepay in accordance with the contractual terms.
(12) Whether the loan contract is expected to be modified, including the potential release or amendment of contractualobligations due to anticipated breaches of contract, granting interest-free periods, raising interest rates, requiringadditional collateral or guarantees, or otherwise modifying the contractual framework of the financial instrument.
(13) Whether there is a significant change in the debtor's expected performance or repayment behavior.
(14) Whether the Group's credit management approach for the financial instrument has changed.
Regardless of the outcome of the above assessment, if payments under the financial instrument's contract are more than(or equal to) 30 days past due, it indicates that the financial instrument's credit risk has increased significantly.
On the balance sheet date, if the Group concludes that a financial instrument has only low credit risk, it presumes thecredit risk has not increased significantly since initial recognition. A financial instrument is considered to have lowcredit risk if its risk of default is low, the borrower has a strong capacity to meet its contractual cash flow obligations inthe short term, and even over a longer period, adverse changes in economic and operating conditions would notnecessarily reduce the borrower's ability to meet those obligations.
Notes to the financial statementsYear ended December 31, 2024
- 27 -
(III) Significant accounting policies and accounting estimates - continued
11. Financial instruments - continued
11.2 Impairment financial instruments - continued
11.2.2 Financial assets with credit loss
When one or more events occur that the Group expects to adversely affect the future cash flows of a financial asset, thatasset is considered credit-impaired. Evidence for a credit-impaired financial asset includes the following observableinformation:
(1) The debtor breaches a contract, such as default or delinquency in interest or principal payments.
(2) The debtor breaches the contract, such as default or delay in repayment of interest or principal.
(3) The creditor grants concessions to the debtor in consideration of the debtor's financial difficulties that would nototherwise be offered under normal circumstances.
(4) The debtor is highly likely to go bankrupt or undertake other financial restructuring.
(5) The issuer's or debtor's financial difficulties lead to the disappearance of an active market for the financial asset.
(6) A financial asset is purchased or originated at a substantial discount, reflecting the fact that a credit loss hasoccurred.
Based on the Group's internal credit risk management, if internal recommendations or externally obtained informationindicates that the debtor of a financial instrument cannot fully repay all creditors, including the Group (regardless of anyguarantee obtained by the Group), the Group considers this a default event.
Regardless of the above assessment, if payments under the financial instrument's contract are more than (or equal to) 90days past due, the Group presumes the instrument is in default.
11.2.3 Determination of expected credit losses
For financial assets and lease receivables, the expected credit loss is the present value of the difference between thecontractual cash flows the Group is entitled to receive and the cash flows the Group actually expects to receive.
When measuring the expected credit losses on financial instruments, the Group's method reflects: an unbiased,probability-weighted average determined by evaluating a range of possible outcomes; the time value of money; andreasonable and supportable information about past events, current conditions, and forecasts of future economicconditions, available without undue cost or effort at the balance sheet date.
11.2.4 Write-off of financial assets
If the Group no longer reasonably expects to recover all or part of the contractual cash flows of a financial asset, theGroup writes off the book balance of the financial asset directly. This write-off constitutes derecognition of the relevantfinancial asset.
Notes to the financial statementsYear ended December 31, 2024
- 28 -
(III) Significant accounting policies and accounting estimates - continued
11. Financial instruments - continued
11.3 Transfer of financial assets
A financial asset is derecognized if one of the following conditions is met: (1) the contractual right to receive cash flowsfrom the financial asset expires; (2) the financial asset has been transferred and substantially all the risks and rewards ofownership of the asset have been transferred to the transferee; or (3) the financial asset has been transferred, andalthough the Group has neither transferred nor retained substantially all the risks and rewards of ownership, it has notretained control over the asset.
If the Group has neither transferred nor retained substantially all the risks and rewards of ownership of the financial assetbut retains control of it, the Group continues to recognize the transferred financial asset to the extent of its continuinginvolvement, and recognizes a corresponding liability. The Group measures that liability as follows:
? Where the transferred financial asset is measured at amortized cost, the book value of the related liability equals thebook value of the asset in which the Group continues to be involved minus the amortized cost of any rights retained bythe Group (if the Group retained such rights due to the transfer) and plus the amortized cost of any obligations assumedby the Group (if the Group assumed such obligations due to the transfer). Such liabilities are not designated as financialliabilities measured at fair value through profit or loss.? Where the transferred financial asset is measured at fair value, the book value of the related liability equals thebook value of the asset in which the Group continues to be involved minus the fair value of any rights retained by theGroup (if the Group retained such rights due to the transfer) and plus the fair value of any obligations assumed by theGroup (if the Group assumed such obligations due to the transfer). The fair values of such rights and obligations aremeasured on a stand-alone basis.
When the full transfer of a financial asset qualifies for derecognition, the difference between the book value of thetransferred financial asset on the derecognition date and the sum of the consideration received and the correspondingportion of the cumulative fair value changes previously recognized in other comprehensive income is recognized inprofit or loss. If the transferred asset by the Group is a non-trading equity instrument investment designated as measuredat fair value through other comprehensive income, any cumulative gains or losses previously recognized in othercomprehensive income are transferred out of other comprehensive income and into retained earnings.
When a partial transfer of a financial asset qualifies for derecognition, the book value of the original asset before transferis allocated between the portion being derecognized and the portion that continues to be recognized, based on therelative fair values of each portion on the transfer date. The difference between (a) the consideration received for thederecognized portion plus the corresponding portion of the cumulative fair value changes previously recognized in othercomprehensive income and (b) the book value of the derecognized portion on the derecognition date is recognized inprofit or loss. If the transferred asset by the Group is a non-trading equity instrument investment designated as measuredat fair value through other comprehensive income, any cumulative gains or losses previously recognized in othercomprehensive income are transferred out of other comprehensive income and into retained earnings.
If a full transfer of a financial asset does not satisfy the derecognition criteria, the Group continues to recognize theentire transferred financial asset and recognizes the consideration received as a liability.
Notes to the financial statementsYear ended December 31, 2024
- 29 -
(III) Significant accounting policies and accounting estimates - continued
11. Financial instruments - continued
11.4 Classification of financial liabilities and equity instruments
Based on the contractual terms and the economic substance of the issued financial instrument rather than merely its legalform and in conjunction with the definitions of financial liabilities and equity instruments, the Group classifies thefinancial instrument (or its components) as either a financial liability or an equity instrument at initial recognition.
11.4.1 Classification, recognition and measurement of financial liabilities
Upon initial recognition, financial liabilities are classified as financial liabilities measured at fair value through profit orloss or other financial liabilities.
11.4.1.1 Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss include financial liabilities held for trading (includingderivatives classified as financial liabilities) and those designated as measured at fair value through profit or loss. Exceptfor derivative financial liabilities, which are presented separately, financial liabilities measured at fair value throughprofit or loss are presented as financial liabilities held for trading.
If a financial liability meets any of the following conditions, it indicates that the Group has assumed this liability fortrading purposes:
? The primary purpose of assuming the financial liability is to repurchase it in the near term.? Upon initial recognition, the financial liability is part of an identifiable portfolio of financial instruments that iscollectively managed, and there is objective evidence of a recent pattern of short-term profit-taking.? The financial liability is a derivative, except for derivatives that meet the definition of a financial guarantee contractor are designated as effective hedging instruments.
At initial recognition, if any of the following conditions are met, the Group may designate a financial liability asmeasured at fair value through profit or loss: (1) the designation can eliminate or significantly reduce accountingmismatches; (2) under the Group's formally documented risk management or investment strategy, portfolios of financialliabilities or combined portfolios of financial assets and liabilities are managed and evaluated on a fair value basis, andthis is reported internally to key officers; or (3) it is part of an eligible hybrid contract containing an embeddedderivative.
Financial liabilities held for trading are subsequently measured at fair value, with any gains or losses arising from fairvalue changes, along with dividends or interest expenses related to these liabilities, recognized in profit or loss.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
11. Financial instruments - continued
11.4 Classification of financial liabilities and equity instruments - continued
11.4.1 Classification, recognition and measurement of financial liabilities - continued
11.4.1.1 Financial liabilities measured by fair value through the current profit or loss - continued
For a financial liability designated as measured at fair value through profit or loss, the portion of the fair value changeattributable to the Group's own credit risk is recognized in other comprehensive income, while other changes in fairvalue are recognized in profit or loss. When the financial liability is derecognized, the accumulated fair value changeattributable to changes in the Group's own credit risk that was previously recorded in other comprehensive income istransferred to retained earnings. Any dividends or interest expenses related to such financial liabilities are recognized inprofit or loss. If treating the effect of changes in the liability's own credit risk in this manner creates or enlarges anaccounting mismatch in profit or loss, the Group recognizes all gains or losses on the liability (including those related tochanges in its own credit risk) in profit or loss.
11.4.1.2 Other financial liabilities
Except for financial liabilities arising from the transfer of financial assets that do not meet derecognition criteria, orwhere the Group continues to be involved in transferred financial assets, other financial liabilities are classified asfinancial liabilities measured at amortized cost. They are subsequently measured at amortized cost, and any gains orlosses from derecognition or amortization are recognized in profit or loss.
If the Group modifies or renegotiates a contract with a counterparty, and it does not result in the derecognition of afinancial liability subsequently measured at amortized cost but leads to changes in the contractual cash flows, the Grouprecalculates the book value of the financial liability and recognizes any related gain or loss in profit or loss. Forrecalculated book value, the Group shall determine it by discounting the renegotiated or modified contractual cash flowsat the original effective interest rate of the financial liability. For any costs or fees incurred as a result of modifying orrenegotiating the contract, the Group shall adjust the book value of the modified financial liability and amortize themover the remaining term thereof.
11.4.2 Derecognition of financial liabilities
If the present obligation of a financial liability is fully or partially discharged, the liability (or the discharged portion) isderecognized. If the Group (as borrower) signs an agreement with a lender to replace the original financial liability witha new one, and the terms of the new liability differ substantially from those of the original liability, the Groupderecognizes the original liability and recognizes the new one.
When a financial liability is fully or partially derecognized, the difference between the book value of the derecognizedportion and the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) isrecognized in profit or loss for the current period.
Notes to the financial statementsYear ended December 31, 2024
- 31 -
(III) Significant accounting policies and accounting estimates - continued
11. Financial instruments - continued
11.4 Classification of financial liabilities and equity instruments - continued
11.4.3 Equity instruments
An equity instrument is a contract that evidences a residual interest in the Group's assets after deducting all liabilities.The Group treats the issuance (including refinancing), repurchase, sale, or cancellation of its equity instruments aschanges in equity. The Group does not recognize fair value changes in equity instruments. Transaction costs directlyattributable to equity transactions are deducted from equity.
The Group's distributions made to holders of equity instruments are treated as profit distribution, and any issued stockdividends do not affect the total shareholders' equity.
11.5 Derivatives
Derivatives, including forward foreign exchange contracts, are initially measured at fair value on the contract date andsubsequently measured at fair value.
11.6 Offsetting financial assets and financial liabilities
When the Group has a legal right to offset recognized financial assets and liabilities, and that right is currentlyenforceable, and the Group intends to settle on a net basis or to realize the asset and settle the liability simultaneously,the financial assets and liabilities are presented on the balance sheet at the net amount. Otherwise, financial assets andfinancial liabilities are presented separately in the balance sheet without offset.
12. Notes receivable
12.1 Method for determining expected credit losses on notes receivable and the related accounting treatments
For notes receivable with significantly increased credit risk, such as those past due and not accepted or where there isclear evidence that the acceptor is likely unable to fulfill its acceptance obligation, the Group evaluates credit losses onan individual basis. Other notes receivable are evaluated based on their credit risk characteristics as a group.
Any increase or reversal of the provision for expected credit losses on notes receivable is recognized as a credit loss orgain in profit or loss.
12.2 Combination categories and basis for determining provision for credit losses according to credit risk characteristiccombination
Apart from those notes receivable whose credit losses are determined on an individual basis, the Group classifies theremaining notes receivable into different groups based on shared credit risk characteristics:
| Combination category | Determination basis |
| Combination 1 | Bank acceptance bills |
| Combination 2 | Commercial acceptance bills |
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
13. Accounts receivable
13.1 Method for determining expected credit losses on accounts receivable and the related accounting treatments
The Group uses an impairment matrix at the group level to determine expected credit losses for accounts receivable. Anyincrease or reversal of the provision for expected credit losses of accounts receivable is recognized as a credit loss orgain in profit or loss.
13.2 Combination categories and basis for determining provision for credit losses according to credit risk characteristiccombination.
The Group classifies accounts receivable into Combination 1 and Combination 2 based on the credit risk characteristicsof counterparties under different business segments. Combination 1 refers to accounts receivable arising from thepolarizer business revenue, where provisions for credit losses are made based on overdue aging relative to the creditterm. Combination 2 refers to accounts receivable arising from property leasing and other business revenue, whereprovisions for credit losses are made based on natural aging.
13.3 Method for calculating aging when determining credit risk characteristic combination
The Group uses both the natural aging of accounts receivable and the overdue aging relative to the credit term as creditrisk characteristics, applying an impairment matrix to determine expected credit losses. Natural aging is calculatedstarting from the date of initial recognition of the accounts receivable, while overdue aging begins once the natural agingexceeds the credit term granted to the customer. If the terms and conditions of an accounts receivable are modified butdo not lead to derecognition, the aging continues to accumulate.
13.4 Criteria for individual assessment of provision for credit losses
The Group individually determines credit losses for accounts receivable where there is evidence of a significant increasein credit risk.
14. Receivables financing
14.1 Method for determining expected credit losses on receivables financing and the related accounting treatments
The Group determines credit losses for receivables financing on an individual-asset basis. The Group recognizes theprovision for credit losses for receivables financing in other comprehensive income and records any credit loss or gain inprofit or loss, without reducing the book value presented in the balance sheet.
14.2 Criteria for individual assessment of provision for credit losses
Based on the credit status of the accepting bank for bank acceptance bills, the Group individually assesses anddetermines credit losses for receivables financing.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
15. Other receivables
15.1 Method for determining expected credit losses on other receivables and the related accounting treatments
The Group determines credit losses for other receivables on a group basis. Any increase or reversal of the provision forexpected credit losses on other receivables is recognized as a credit loss or gain in profit or loss.
15.2 Combination categories and basis for determining provision for credit losses according to credit risk characteristiccombination
The Group divides other receivables into different combinations based on common credit risk characteristics. Commoncredit risk characteristics used by the Group include initial recognition date, remaining contract term, and length ofoverdue period.
15.3 Method for calculating aging when determining credit risk characteristic combination
The aging is calculated from the date of initial recognition. If the terms and conditions of other receivables are modifiedbut do not lead to derecognition, the aging continues to accumulate.
16. Inventories
16.1 Types of inventories, methods of costing for issuance, inventory system, and methods for amortizing low-valueconsumables and packaging materials
16.1.1 Types of inventories
The Group's inventories mainly include raw materials, work in progress, finished products, and materials processed onconsignment. Inventories are initially measured at cost, which includes purchase costs, processing costs, and otherexpenditures incurred to bring the inventories to their current location and condition.
16.1.2 Method of costing for issued inventories
When inventories are issued, the actual cost is determined using the weighted average method.
16.1.3 Inventory system
The Group uses a perpetual inventory system.
16.1.4 Amortization methods for low-value consumables and packaging materials
Low-value consumables and packaging materials are amortized using the straight-line method or are written off in full atonce.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
16. Inventories - continued
16.2 Criteria for recognizing and methods for making provision for inventory depreciation
On the balance sheet date, inventories are measured at the lower of cost and net realizable value. If net realizable value islower than cost, a provision for inventory depreciation is made.
Net realizable value is the estimated selling price of inventories in the ordinary course of business, less the estimatedcosts to complete, the estimated selling and distribution expenses, and related taxes. When determining the net realizablevalue of inventories, the Group uses conclusive evidence while considering the purpose of holding the inventories andthe impact of events after the balance sheet date.
After the provisions for the inventory depreciation are made, the factors causing any write-down of inventory value havedisappeared, leading to the net realizable values of inventories higher than its book value, the amount of write-downshall be resumed and be reversed from the original provision for inventory devaluation with the reversal being includedin current profit or loss.
Generally, provisions for inventory depreciation are made on an item-by-item basis.
17. Long-term equity investments
17.1 Criteria for determining common control and significant influence
Control means that an investor has power over the investee, derives variable returns by participating in the investee'srelevant activities, and can use that power to affect the amount of returns. Common control refers to shared control overan arrangement under relevant agreements, where decisions about the arrangement's relevant activities require theunanimous consent of the parties sharing the right of control. Significant influence refers to the power to participate indecisions on an investee's financial and operating policies, but not to control or commonly control the formation of thosepolicies. When determining whether the investor can exercise control or significant influence over the investee, thepotential voting rights arising from convertible corporate bonds or exercisable warrants currently held by the investor orother parties are taken into account.
17.2 Determination of initial investment cost
For a long-term equity investment acquired in a business combination under common control, the initial investment costis determined on the combination date based on the share of the book value of the acquiree's owners' equity in theultimate controller's consolidated financial statements. Any difference between the initial investment cost of the long-term equity investment and the book value of the cash paid, non-cash assets transferred, or liabilities assumed is adjustedagainst capital reserve. If the capital reserve is insufficient, the difference is adjusted against retained earnings. Whereequity securities are issued as consideration for the combination, on the combination date, the initial investment cost ofthe long-term equity investment is determined based on the share of the book value of the acquiree's owners' equity inthe ultimate controller's consolidated financial statements. The total par value of the issued shares is recognized as sharecapital, and any difference between the initial investment cost and the total par value of the shares issued is adjustedagainst capital reserve. If the capital reserve is insufficient, the difference is adjusted against retained earnings.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
17. Long-term equity investments - continued
17.2 Determination of initial investment cost - continued
For a long-term equity investment acquired in a business combination not under common control, on the acquisition datethe initial investment cost is determined based on the combination cost.
Audit, legal, valuation, consulting, and other related G&A expenses incurred by the acquirer or purchaser for thebusiness combination are recognized in profit or loss when they occur.
Long-term equity investments obtained through methods other than a business combination are initially measured at cost.Where an investor gains significant influence or common control but not control over an investee through additionalinvestment, the cost of the long-term equity investment is the sum of the fair value of the previously held equityinvestment (as determined in accordance with Accounting Standards for Business Enterprises No. 22 - Recognition andMeasurement of Financial Instruments) and the new investment cost.
17.3 Subsequent measurement and recognition method of profit or loss
17.3.1 Long-term equity investments accounted for under the cost method
In the parent company's financial statements, long-term equity investments in subsidiaries are measured using the costmethod. A subsidiary is an investee over which the Group can exercise control.
Under the cost method, long-term equity investments are measured at their initial investment cost. Any additionalinvestment or capital recovery adjusts the cost of the long-term equity investment. Current investment income isrecognized based on the amount of cash dividends or profits declared and distributed by the investee.
17.3.2 Long-term equity investments measured using the equity method
The Group applies the equity method to its investments in associates and joint ventures. An associate is an investee overwhich the Group has significant influence, and a joint venture is a joint venture arrangement under which the Group hasrights to the net assets of the arrangement.
Under the equity method, if the initial investment cost of the long-term equity investment exceeds the share of the fairvalue of the investee's identifiable net assets at the time of investment, the initial investment cost is not adjusted. If theinitial investment cost is less than the share of the fair value of the investee's identifiable net assets at the time ofinvestment, the difference is recognized in current profit or loss, and the cost of the long-term equity investment isadjusted accordingly.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
17. Long-term equity investments - continued
17.3 Subsequent measurement and recognition method of profit or loss - continued
17.3.2 Long-term equity investments measured using the equity method - continued
When the equity method is adopted for accounting, the Group, based on its attributable share of the net profit or loss andother comprehensive income realized by the investee, respectively recognize the investment income and othercomprehensive income, and simultaneously adjust the book value of the long-term equity investment. COOEC shallcalculate the shares according to profits or cash dividends declared by the investee and correspondingly reduce the bookvalue of long-term equity investments; As to any change in owners' equity of the investee other than net profit or loss,other comprehensive income and profit distribution, the Group shall adjust the book value of the long-term equityinvestment and include such change in capital reserves. When recoginzing the attributable share of net profit or loss ofthe investee, the Group shall, based on the fair value of identifiable net asset of the investee when it obtains theinvestment,recognize the net profits of the investee after adjustment. If accounting policies and accounting periodsadopted by the investee are inconsistent with those of the Company, the financial statements of the investee shall beadjusted according to the accounting policies and accounting periods of the Company and investment income and othercomprehensive income etc. shall be recognized on such basis. For transactions between the Group and associates andjoint ventures, if the invested or sold assets do not constitute business, the unrealized profit or loss from internaltransactions will be offset at the part attributable to the Group and the investment profit or loss will be recognized on thatbasis However, the unrealized losses from internal transactions between the Group and any investee shall not be offset ifthey belong to the losses from the impairment of the transferred assets.
When recognizing the net losses occurred in the investee that shall be shared, the reduction value of book value of long-term equity investments and other long-term equities that constitute net investments in the investee will be the limit untilit becomes zero. In addition, if the Group has the obligation to assume extra-amount losses for the investee, theestimated liabilities are recognized according to the estimated obligations and included in the current investment losses.Where the investee realizes net profits in the subsequent period, the Group shall restore the income shared after makingup for unrecognized losses undertaken by such income.
17.4 Disposal of long-term equity investments
When a long-term equity investment is disposed of, the difference between its book value and the actual proceeds isrecognized in current profit or loss. If a long-term equity investment has been accounted for using the equity method andthe remaining equity after disposal is still accounted for using the equity method, any other comprehensive incomepreviously recognized under the equity method is treated on the same basis as if the investee had directly disposed of therelated assets or liabilities, and is transferred proportionately. Any other changes in owners' equity of the investee, otherthan net profit or loss, other comprehensive income, and profit distribution, which were previously recognized, aretransferred proportionately to the current profit or loss. If a long-term equity investment is accounted for using the costmethod and the remaining equity after disposal continues to be accounted for using the cost method, any othercomprehensive income recognized before the Group gained control, under either the equity method or the accountingstandards for recognizing and measuring financial instruments, is treated on the same basis as if the investee had directlydisposed of the related assets or liabilities, and is transferred proportionately. Other changes in owners' equity other thannet profit or loss, other comprehensive income and profit distribution in net asset of the investee accounted for andrecognized by using the equity method shall be carried forward to the current profit or loss.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
17. Long-term equity investments - continued
17.4 Disposal of long-term equity investments - continued
Where the Group loses the control over the investee due to the disposal of part of the equity investments, when itprepares separate financial statements, the remaining equity after disposal that can commonly control or have significantinfluence on the investee will be measured under the equity method, and the remaining equity shall be deemed to havebeen adjusted under the equity method on acquisition. If the remaining equity after disposal can not exercise commoncontrol or significant influence on the investee, such equity will be changed to be accounted for according to recognitionand measurement standards of financial instruments and the difference between fair value and book value on the date ofloss of the control shall be included in the current profit or loss. For other comprehensive income recognized by usingthe equity method or financial instruments recognition and measurement standards before the Group obtains the controlover the investee, accounting treatment shall be made on the same basis as that for direct disposal of relevant assets orliabilities by the investee when the Group loses the control over the investee. Other changes in owners' equity other thannet profit or loss, other comprehensive income and profit distribution in net asset of the investee recognized by using theequity methodshall be carried forward to the current profit or loss when the control over the investee is lost. Where theremaining equities after disposal are accounted for under the equity method, the other comprehensive income and otherowners' equity shall be carried forward in proportion. If the remaining equity after disposal is changed to be accountedfor according to the recognition and measurement standards of the financial instruments, the other comprehensiveincome and other owner's equity shall be fully carried forward.
In case the common control or significant influence over the investee is lost for disposing part of equity investments, theremaining equity will be changed to be accounted for according to the recognition and measurement principles offinancial instruments. The difference between the fair value and the book value on the date of the loss of commoncontrol or significant influence shall be included in the current profit or loss. Any other comprehensive incomepreviously recognized under the equity method for the original equity investment is accounted for on the same basis as ifthe investee had directly disposed of related assets or liabilities once the equity method ceases to apply. All otherchanges in owners' equity recognized due to factors other than net profit or loss, other comprehensive income, and profitdistribution of the investee are transferred in full to current investment income when the equity method is no longerapplied.
Where the Group disposes of equity investments in subsidiaries through multiple transactions and by stages until loss ofcontrol, if the above transactions belong to a package of transactions, accounting treatment shall be made on thetransactions as a transaction to dispose equity investments of subsidiaries and lose the control. The difference betweeneach disposal cost and the book value of long-term equity investments corresponding to disposed equities before the lossof control shall be firstly recognized as other comprehensive income and then transferred into the current profit or loss atthe loss of control.
18. Investment properties
Investment property refers to property held to earn rentals or for capital appreciation, or both, and includes leased landuse rights and leased buildings.
Investment property is initially measured at cost. Subsequent expenses related to the investment property, if theeconomic benefits related to the asset are likely to flow in and the cost can be measured reliably, shall be included in thecost of the investment property. Other subsequent expenses shall be included in the current profit or loss when incurred.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
18. Investment properties - continued
The Group uses the cost model for subsequent measurement of investment property and provides for depreciation on astraight-line basis over its service life. The depreciation method, useful life, estimated residual value, and annualdepreciation rates for each category of investment property are as follows:
| Type | Depreciation method | Depreciation life (years) | Residual value rate (%) | Annual depreciation rate (%) |
| Houses and buildings | Straight-line method | 10-40 | 0.00-4.00 | 2.40-10.00 |
When an investment property is being disposed of or permanently withdraws from use without any economic benefitsexpected from the disposal, the investment property shall be derecognized.
The difference between the disposal proceeds of an investment property (through sale, transfer, retirement, or damage)and its book value, net of related taxes and fees, is recognized in current profit or loss.
19. Fixed assets
19.1 Recognition conditions
Fixed assets refer to tangible assets held for the purpose of producing goods, providing services, renting or operatingmanagement, with a service life exceeding one fiscal year. Fixed assets will only be recognized when the economicbenefits associated with such assets are likely to flow into the Group and the cost can be measured reliably. A fixed assetis initially measured at cost.
For the subsequent expenses related to the fixed assets, if the economic benefits related to the fixed assets are likely toflow in and the cost can be measured reliably, they shall be included in the cost of the fixed assets, and the book value ofthe replaced part shall be derecognized, Other subsequent expenses shall be included into the current profit or loss whenincurred.
19.2 Depreciation method
From the month following the date a fixed asset is in working condition for intended use, the Group depreciates the asseton a straight-line basis over its service life. The depreciation method, service year, estimated residual value, and annualdepreciation rates for each category of fixed assets are as follows:
| Type | Depreciation method | Depreciation life (years) | Residual value rate (%) | Annual depreciation rate (%) |
| Buildings and constructions | Straight-line method | 10-40 | 0.00-4.00 | 2.40-10.00 |
| Machinery equipment | Straight-line method | 10-14 | 4.00 | 6.86-9.60 |
| Transportation equipment | Straight-line method | 8 | 4.00 | 12.00 |
| Electronic equipment and others | Straight-line method | 5 | 4.00 | 19.20 |
Estimated net residual value refers to the amount obtained by the Group from the disposal of the fixed assets at presentafter deducting the estimated disposal expenses, assuming that the estimated service life of the fixed asset has expiredand the fixed asset is in the expected state at the end of its service life.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
19. Fixed assets - continued
19.3 Other explanations
When the fixed assets are disposed of or it is expected that no economic benefits can be generated through use ordisposal, the fixed assets shall be derecognized. The difference of the revenue from disposal of fixed assets such as sales,transfer, retirement or damage deducting their book value and related taxes shall be included into the current profit orloss.
The Group will review service life, estimated net residual value and depreciation methods of the fixed assets at the endof each year. Changes, if any, shall be handled as changes in accounting estimates.
20. Construction in progress
The construction in progress is measured at actual cost, which includes various project expenditures incurred during theconstruction period, capitalized borrowing costs before the project reaches working condition for intended use, and otherrelated costs. No depreciation is made for construction in progress.
The construction in progress shall be carried forward to the fixed assets after it reaches the working condition forintended use. The criteria and timing for the conversion of various types of construction in progress into fixed assets areas follows:
| Type | Criteria for conversion to fixed assets | Time point of conversion into fixed assets |
| Installation of machinery equipment | The machinery equipment shall be carried forward to the fixed assets when it has been accepted and the following conditions are met: (1) The machinery equipment and its supporting facilities have been installed; (2) After commissioning, the machinery equipment can maintain normal and stable operation or produce qualified products for a period of time. | Reach working condition for intended use |
21. Borrowing costs
The capitalization of the borrowing costs that can be directly attributable to the acquisition, construction or production ofassets that meet the capitalization conditions will start when the asset expenditure has incurred, the borrowing costs haveincurred, and the acquisition, construction or production activities necessary for the asset to reach the intended usable orsalable state have begun; The capitalization shall be ceased when the acquired and constructed or produced assetseligible for capitalization have reached their working condition for intended use or sales condition. The remainingborrowing costs are recognized as expenses on occurrence.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
22. Intangible assets
22.1 Service life and its basis for determination, estimate, amortization method or review procedure
Intangible assets include land use right, software and patent rights, etc.
The intangible assets shall be initially measured at the costs. For intangible assets with limited service life, the originalvalue shall be evenly amortized by straight-line method within the expected service life from the time when they areavailable for use. The intangible assets with uncertain service life shall not be amortized. The amortization method,service life and residual value rate of various intangible assets are as follows:
| Type | Amortization method | Service life (year) and basis of determination | Residual value rate (%) |
| Land use rights | Straight-line method | 50 (Determine the service life based on the statutory service life) | - |
| Software | Straight-line method | 5 (Determine the service life based on the period expected to bring economic benefits) | - |
| Patent right | Straight-line method | 15 (Determine the service life based on the period expected to bring economic benefits) | - |
At the end of the period, the service life and amortization method of intangible assets with limited service life shall bereviewed and adjusted if necessary.
22.2 The collection scope and related accounting treatments for research expenditures
The expenditures in research phase will be included in current profit or loss on occurrence.
Expenditures in the development stage will be recognized as intangible assets only when the following conditions aresimultaneously satisfied, and included in current profit or loss if the following conditions are not satisfied:
(1) It is technically feasible to complete the intangible assets so that it can be used or sold;
(2) It has the intention to complete the intangible assets and use or sell them;
(3) The manner in which an intangible asset generates economic benefits includes the ability to prove that there is amarket for the products produced through the use of this intangible asset or a market for the intangible asset itself. In thecase that the intangible asset will be used internally, its usefulness shall be proven.
(4) With the support of sufficient technology, financial resources and other resources, it is able to complete thedevelopment of the intangible assets, and it is able to use or sell the intangible assets;
(5) The expenditures attributable to the intangible assets in the development stage can be measured reliably.
Where the research expenditures and the development expenditures are indistinguishable, the COOEC shall includeresearch expenditures and development expenditures incurred in current profit or loss. The cost of the intangible assetsformed by internal development activities only includes the total expenditure incurred from the time when thecapitalization conditions are met to the time when the intangible assets reach the intended use. The expenses recognizedin profit or loss before meeting the capitalization conditions during the development for the same intangible asset willnot be adjusted.
The collection scope of R&D expenditures includes the wages, salaries and welfare expenses of the personnel directlyengaged in R&D activities, and the direct R&D activitiesThe depreciation cost of materials, fuel and power expenses, instruments and equipment for R&D activities, etc.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
23. Impairment of long-term assets
On each balance sheet date, the Group checks whether there is any indication that long-term equity investments,investment properties measured by the cost model, fixed assets, construction in progress, right-of-use assets andintangible assets with a definite service life may have impairment. If there are indications of impairment of such assets,the recoverable amount shall be estimated. Intangible assets with indefinite service life and intangible assets that havenot yet reached a usable state are subject to impairment testing every year regardless of whether there are indications ofimpairment.
The recoverable amount of the estimated asset is based on a single asset. If it is difficult to estimate the recoverableamount of a single asset, the recoverable amount of the asset group shall be determined on the basis of the asset group towhich the asset belongs. The recoverable amount is the higher of the net amount obtained by deducting the disposalexpenses from the fair value of an asset or an asset group and the present value of its expected future cash flows.
If the recoverable amount of the asset is lower than its book value, the provision for asset impairment shall be made atthe difference and included in the current profit or loss.
The goodwill shall be tested for impairment at least at the end of each year. The impairment test of goodwill shall becarried out in combination with the asset group or combination of asset groups related to it. That is, from the acquisitiondate, the book value of goodwill shall be allocated using a reasonable method to the asset group or portfolio of assetgroups that benefit from the synergies of the business combination. If the recoverable amount of the asset group or groupof asset groups including the allocated goodwill is lower than its book value, the corresponding impairment losses shallbe recognized. Amount of impairment losses shall be firstly used to deduct the book value of goodwill allocated to theasset group or portfolio of asset groups, and then deduct book value of other assets according to the proportion of thebook values of other assets (except for goodwill) in the asset group or portfolio of asset groups.
The above losses from assets impairment will not be reversed in subsequent accounting periods once recognized.
24. Long-term deferred expenses
Long-term deferred expenses refer to the expenses which have been already incurred but will be borne in the currentperiod and in the future with an amortization period of over 1 year. Long-term deferred expenses are amortized evenlyover the expected benefit period.
25. Contract liabilities
Contract liabilities refer to the obligation of the Group to transfer goods or services to customers for considerationreceived or receivable from customers. Contract assets and contract liabilities under the same contract are presented bytheir net amounts.
26. Employee compensation
26.1 Accounting treatments for short-term compensation
During the accounting period when employees provide services for the Group, the Group recognizes the short-termcompensation actually incurred as liabilities and includes it in the current profit or loss or related asset costs. Theemployee welfare expenses incurred by the Group shall be included in the current profit or loss or related asset costsaccording to the actual amount incurred. If the employee benefits are non-monetary benefits, they shall be measured atfair value.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
26. Employee employee compensation - continued
26.1 Accounting treatments for short-term compensation - continued
For the medical insurance premiums, work-related injury insurance premiums, maternity insurance premiums and othersocial insurance premiums and housing provident funds paid by the Group for employees, as well as the labor unionfunds and employee education expenses withdrawn by the Group in accordance with the provisions, the correspondingemployee compensation amount shall be calculated and determined according to the prescribed accrual basis and accrualratio during the accounting period when employees provide services for the Group, and the corresponding liabilitiesshall be recognized and included in the current profit or loss or related asset costs.
26.2 Accounting treatments for post-employment benefits
Post-employment benefits are all defined contribution plans.
During the accounting period when employees provide services for the Group, the Group recognizes the amount payablecalculated according to the defined contribution plans as a liability and includes it in the current profit or loss or relatedasset costs.
26.3 Accounting treatments for dismissal benefits
When the Group provides dismissal benefits to employees, the employee compensation liability arising from thedismissal benefits shall be recognized at the earlier of the following dates and included in the current profit or loss: whenthe Group cannot unilaterally withdraw the dismissal benefits provided due to the termination of labor relationship planor the layoff proposal; When the Group recognizes the costs or expenses related to the restructuring involving thepayment of dismissal benefits.
27. Estimated liabilities
When the obligation related to the contingency such as product quality guarantee is a current obligation of the Group,and the performance of such obligation is likely to result in the outflow of economic benefits, and the amount of suchobligation can be measured reliably, it is recognized as estimated liabilities.
On the balance sheet date, by considering the risks, uncertainty and time value of money and other factors related tocontingency, the estimated liabilities will be measured according to the best estimate of the required expenditures forperformace of relevant present obligation. If the time value of money is significant, the best estimate shall be determinedby the amount discounted by the estimated future cash flows.
28. Revenue
28.1 Accounting policies adopted for revenue recognition and measurement disclosed by business type
When the Group has fulfilled its performance obligations under the contract, that is, when the customer obtains right ofcontrol of the relevant goods or services, the revenue is recognized based on the transaction prices allocated to thespecific performance obligation. Performance obligations refer to the contractual commitments in which the Grouptransfers clearly distinguishable goods or services to the customers.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
28. Revenue - continued
28.1 Disclosure of accounting policies for revenue recognition and measurement by business type - continued
The Group evaluates the contract on the contract commencement date, identifies each individual performance obligationcontained in the contract, and determines whether each individual performance obligation is performed within a certainperiod of time or at a certain point in time. If one of the following conditions is met, it is a performance obligationperformed within a certain period of time, and the Group recognizes revenue within a certain period of time according tothe performance progress: (1) the customer obtains and consumes the economic benefits brought by the Group at thesame time as the Group performs the contract; (2) The customer is able to control the goods under construction in thecourse of the Group's performance; (3) The goods produced during the performance of the Group have irreplaceable uses,and the Group has the right to receive payment for the performance accumulated to date throughout the contract period.Otherwise, the Group recognizes the revenue at the point when the customer obtains the right of control of the relevantgoods or services.
For goods sold to customers, the Group recognizes revenue when the right of control of the goods is transferred, that is,when the goods are delivered to the designated place of the other party and signed by the other party. For propertyservice, the Group recognizes revenue in the course of providing property service.
Transaction prices refer to the amount of consideration that the Group is expected to be entitled to receive as a result ofthe transfer of goods or services to customers, but does not include the amount received on behalf of third parties and theamount expected to be returned to customers by the Group. When determining the transaction prices, the Groupconsiders the impact of variable consideration, significant financing components in the contract, non-cash consideration,consideration payable to customers and other factors.
If the contract contains two or more performance obligations, the Group shall, on the commencement date of thecontract, allocate the transaction prices to each individual performance obligation according to the relative ratio of theindividual selling price of the goods or services promised by each individual performance obligation. However, if thereis conclusive evidence that the contractual discount or variable consideration is only related to one or more (but not all)performance obligations in the contract, the Group shall allocate the contractual discount or variable consideration to therelevant one or more performance obligations. Individual selling price refers to the price at which the Group sells goodsor services to customers separately. If the individual selling price cannot be directly observed, the Group willcomprehensively consider all the information that can be reasonably obtained and estimate the individual selling priceby maximizing the use of observable input value.
For sales with sales return clauses, the Group recognizes revenue at the amount of consideration expected to be entitledto receive due to the transfer of goods to the customer (i.e., excluding the amount expected to be returned due to salesreturn) when the customer obtains the relevant control over goods, and recognizes liabilities at the amount expected tobe returned due to sales return; At the same time, the balance of the book value of the expected goods to be returned atthe time of transfer after deducting the expected cost of recovering the goods (including the impairment of the value ofthe returned goods) is recognized as an asset. The net amount after deducting the cost of the above asset will betransferred as cost based on the book value of the transferred goods.
For sales with quality assurance clauses, if the quality assurance provides a separate service in addition to assuring thecustomer that the goods or services sold meet the established standards, the quality assurance constitutes a singleperformance obligation. Otherwise, the Group shall conduct accounting treatment for the quality assurance liability inaccordance with the Accounting Standards for Business Enterprises No. 13 - Contingencies.
The Group determines whether it is the principal or the agent when engaging in transactions based on whether it has theright of control over the goods or services before transferring them to the customer. If the Group can control the goodsor services before transferring them to the customer, the Group is the main responsible person and recognizes therevenue according to the total consideration received or receivable; Otherwise, the Group is an agent and recognizesrevenue based on the expected commissions or service fee it is entitled to receive. This amount is determined bysubtracting the price payable to other related parties from the total consideration received or receivable.
Notes to the financial statementsYear ended December 31, 2024
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(III) Significant accounting policies and accounting estimates - continued
28. Revenue - continued
28.1 Disclosure of accounting policies for revenue recognition and measurement by business type - continued
If the Group receives payment in advance from customers for sales of goods or services, the payment is first recognizedas a liability and then transferred to revenue when the relevant performance obligations are fulfilled. When the Group'sadvances from customers do not need to be returned and the customer may waive all or part of its contractual rights, theGroup expects to be entitled to the amount related to the contractual rights waived by the customer, and recognizes theabove amount as revenue in ratio according to the mode of the customer's exercise of contractual rights; Otherwise, theGroup will only transfer the relevant balance of the above-mentioned liabilities to revenue when it is highly unlikely thatthe customer will request the fulfillment of the remaining performance obligations.
29. Government grants
Government grants refer to the monetary assets and non-monetary assets obtained by the Group from the government forfree. Government grants are recognized when they can meet the conditions attached to government grants and can bereceived.
The government grants considered as monetary assets are measured at the amount received or receivable.
29.1 Judgment basis and accounting treatments for government grants related to assets
The subsidies fro production line and equipment in the Group's government grants can form long-term assets, so suchgovernment grants are asset-related government grants.
Government grants related to assets are recognized as deferred income and included in the current profit or loss bystages according to the straight-line method within the service life of the relevant assets.
29.2 Judgment basis and accounting treatments for government grants related to income
The industry development support funds and enterprise development support funds in the Group's government grantscannot form long-term assets, so such government grants are income-related government grants.
Income-related government grants used to compensate for relevant costs and losses in subsequent periods are recognizedas deferred income and included in the current profit or loss in the period when the relevant costs or expenses arerecognized; If it is used to compensate the relevant costs and losses incurred, it shall be directly included in the currentprofit or loss.
Government grants related to the daily activities of the Group are included in other income according to the essence ofeconomic business. Government grants unrelated to the daily activities of the Group are included in the non-operatingrevenue.
When the recognized government grants need to be returned, if there is relevant deferred income balance, the bookbalance of relevant deferred income shall be offset, and the excess shall be included in the current profit or loss; If thereis no relevant deferred income, it shall be directly included in the current profit or loss.
Notes to the financial statementsYear ended December 31, 2024
- 45 -
(III) Significant accounting policies and accounting estimates - continued
30. Lease
Leases refers to a contract in which the lessor transfers the right of use of the asset to the lessee for consideration withina certain period of time.
At the commencement date of the contract, the Group assesses whether the contract is a lease contract or contains a lease.Unless the terms and conditions of the contract change, the Group does not reassess whether the contract is a leasecontract or contains a lease.
30.1 The Group as a lessee
30.1.1 Spin-off of the lease
When a contract contains one or more lease and non-lease parts, the Group will split the individual lease and non-leaseparts and allocate the contract consideration according to the relative ratio of the sum of the individual price of eachlease part and the individual price of the non-lease part.
30.1.2 Right-of-use assets
Except for short-term leases, the Group recognizes the right-of-use assets of the lease on the lease commencement date.The lease commencement date refers to the starting date when the lessor provides the leased assets for use by the Group.Right-of-use assets are initially measured at cost. The cost includes:
? The initial measurement amount of the lease liabilities;? The lease payments made on or before the lease commencement date, or the relevant amount after deducting the leaseincentive already enjoyed if any;?Initial direct costs incurred by the Group;? The costs to be incurred to the Group for demolishing and removing leased assets, restoring the site where the leasedassets are located, or restoring the leased assets to the state agreed in the lease terms.
The Group depreciates right right-of-use assets with reference to the depreciation provisions of Accounting Standardsfor Business Enterprises No. 4 - Fixed Assets. If the Group can reasonably determine that the ownership of leased assetswill be obtained at the expiration of the lease term, the right-of-use assets shall be depreciated within the remainingservice life of the leased assets. If it is not reasonably certain that ownership of leased assets will be obtained at theexpiration of the lease term, the depreciation shall be accrued during the shorter of the lease term and remaining servicelife leased assets.
The Group determines whether the right-of-use assets are impairment in accordance with the Accounting Standards forBusiness Enterprises No. 8 - Asset Impairment and performs accounting treatment on the identified impairment losses.
30.1.3 Lease liabilities
Except for short-term leases, the Group makes initial measurement of the lease liabilities on the lease commencementdate according to the present value of the lease payments that have not been paid on that date. When calculating thepresent value of lease payments, the Group uses the interest rate implicit in lease as the discount rate, and if the interestrate implicit in lease cannot be determined, the incremental borrowing rate is used as the discount rate.
Notes to the financial statementsYear ended December 31, 2024
- 46 -
(III) Significant accounting policies and accounting estimates - continued
30. Leases - continued
30.1 The Group as a lessee - continued
30.1.3 Lease liabilities - continued
Lease payments refer to the payments made by the Group to the lessor in connection with the right to use the leasedassets during the lease term, including:
?Fixed payment (including substantial fixed payment), and the relevant amount after deducting the lease incentive if any;?Variable lease payments depending on index or ratio;?The Group reasonably determines the exercise price of purchase option to be exercised;?Lease term reflects the amount that needs to be paid if the Group exercises the option to termination of leasestermination of leases;?The amount expected to be paid based on the residual value of guarantee provided by the Group.
After the lease commencement date, the Group calculates the interest expenses of the lease liabilities for each period ofthe lease term at a fixed cyclical interest rate and includes it in the current profit or loss or related asset costs.
After the lease commencement date, if any of the following circumstances occurs, the Group shall remeasure the leaseliabilities and adjust the corresponding right-of-use assets. If the book value of the right-of-use assets has been reducedto zero, but the lease liabilities still needs to be further reduced, the Group shall include the difference in the currentprofit or loss:
?If lease term changes or the valuation result of purchase option changes, the Group remeasures lease liabilities based onthe present value of the changed lease payments and the revised discount rate;?If there is a change in the estimated amount payable of the residual value of guarantee or the index or ratio used todetermine lease payments, the Group remeasures lease liabilities based on the changed lease payments and the presentvalue calculated using the original discount rate.
30.1.4 As the basis for judgment and accounting treatments for the simplified treatment of short-term leases by thelessee
The Group chooses not to recognize right-of-use assets and lease liabilities for short-term leases of some plants andsome leased warehouses. Short-term lease refers to a lease that lasts for no more than 12 months and includes nopurchase options at the lease commencement date. The Group includes the lease payments of short-term leases in thecurrent profit or loss or related asset costs according to the straight-line method in each period of the lease term.
30.1.5 Lease modification
If the lease is modified and the following conditions are met at the same time, the Group will account for the leasemodification as a separate lease:
? ? The lease modification expands the scope of the lease by adding one or more right of use of the leased assets;? ? The increased consideration is equivalent to the individual price of the expanded part adjusted according to thecontract.
Notes to the financial statementsYear ended December 31, 2024
- 47 -
(III) Significant accounting policies and accounting estimates - continued
30. Leases - continued
30.1 The Group as a lessee - continued
30.1.5 Lease modification - continued
If the lease modification is not accounted for as a separate lease, on the effective date of the lease modification, theGroup re-apportions the consideration of the modified contract, re-determines the lease term, and re-measures the leaseliabilities at the present value calculated according to the modified lease payments and the revised discount rate.
If the lease modification results in a reduction in the scope of the lease or the lease term, the Group shall reduce the bookvalue of the right-of-use assets accordingly, and include the relevant gains or losses of partial or complete termination ofleases into the current profit or loss. If the lease liabilities are remeasured due to other lease modification, the Groupshall adjust the book value of the right-of-use assets accordingly.
30.2 The Group as a lessor
30.2.1 Spin-off of the lease
If the contract contains both the lease and non-lease parts, the Group shall allocate the contract consideration accordingto the provisions of the revenue standards on the allocation of transaction prices, and the basis of allocation shall be theseparate price of the lease part and the non-lease part.
30.2.2 Classification criteria and accounting treatments as a lessor
Leases that substantially transfer substantially all of the risks and rewards associated with the ownership of leased assetsare financing leases Leases other than financing lease are operating leases.
30.2.2.1 The Group records operating leases as a lessor
During each period of the lease term, the Group recognizes the lease receipts of operating leases as rental income byusing the straight-line method. The initial direct costs incurred by the Group in connection with operating leases arecapitalized when incurred, amortized on the same basis as rental income recognition during the lease term, and includedin the current profit or loss in installments.
The variable lease receipts related to operating leases acquired by the Group and not included in the lease receipts areincluded in the current profit or loss when actually incurred.
30.2.3 Lease modification
If the operating lease is changed, the Group will account for it as a new lease from the effective date of the change, andthe advance or receivable lease receipts related to the lease before the change will be regarded as the receipt amount ofthe new lease.
Notes to the financial statementsYear ended December 31, 2024
- 48 -
(III) Significant accounting policies and accounting estimates - continued
31. Deferred tax assets and deferred tax liabilities
Income tax expenses include current income tax and deferred income tax.
31.1 Current income tax
On the balance sheet date, the current income tax liabilities (or assets) formed in the current and prior periods aremeasured at the expected income tax payable (or refundable) calculated in accordance with the tax law.
31.2 Deferred tax assets and deferred tax liabilities
For the difference between the book value of certain assets and liabilities and their tax bases, and the temporarydifferences arising from the difference between the book value and tax base of items that are not recognized as assetsand liabilities but whose tax bases can be determined in accordance with the tax law, the balance sheet liability methodis adopted to recognize deferred tax assets and deferred tax liabilities.
In general, the relevant deferred income taxes are recognized for all temporary differences. However, for deductibletemporary differences, the Group recognizes the relevant deferred tax assets to the extent of the taxable income that islikely to be obtained to offset the deductible temporary differences. In addition, deferred tax assets or liabilities are notrecognized for temporary differences associated with the initial recognition of goodwill and with the initial recognitionof assets or liabilities arising from transactions that are neither business combinations nor affect accounting profit ortaxable income (or deductible losses) and do not result in equal taxable temporary differences and deductible temporarydifferences.
For deductible loss and tax credits that can be carried forward to subsequent years, the corresponding deferred tax assetsarising therefrom are recognized to the extent that future taxable income will be probable to be available againstdeductible losses and tax credits.
The Group recognizes deferred tax liabilities arising from taxable temporary differences associated with subsidiaries,associates and investments in joint ventures, unless the Group is able to control the timing of the reversal of thetemporary differences and it is probable that the temporary differences will not be reversed in the foreseeable future. Fordeductible temporary differences related to subsidiaries, associates and investments in joint ventures, the Grouprecognizes deferred tax assets only if it is probable that the temporary differences will reverse in the foreseeable futureand it is probable that taxable income will be available to offset the deductible temporary differences in the future.
On the balance sheet date, deferred tax assets and deferred tax liabilities should be measured at the applicable tax rateduring the period of expected recovery of the relevant assets or liquidation of the relevant assets according to theprovisions of tax laws.
Except for the current income tax and deferred income taxes related to transactions and events directly included in othercomprehensive income or shareholders' equity, which are included in other comprehensive income or shareholders'equity, and the book value of deferred income taxes arising from business combination to adjust goodwill, the remainingcurrent income tax and deferred income tax expenses or income are included in the current profit or loss.
On the balance sheet date, the book value of the deferred tax assets shall be reviewed. If it is likely that sufficient taxableincome will not be available in the future to offset the benefits of the deferred tax assets, the book value of the deferredtax assets shall be written down. When it is likely to earn sufficient taxable income, the written down amount is reversed.
Notes to the financial statementsYear ended December 31, 2024
- 49 -
(III) Significant accounting policies and accounting estimates - continued
31. Deferred tax assets/deferred tax liabilities - continued
31.3 Offset of income tax
When the Group has a legal right to settle on a net basis and intends to settle with net amount or acquire assets and payoff liabilities simultaneously, the Group reports the net amount of current income tax assets and current tax liabilitiesafter offsetting.
When the Group has the legal right to settle current income tax assets and current income tax liabilities on a net basis,and the deferred tax assets and deferred tax liabilities are related to the income tax levied by the same tax collectionauthority on the same taxpayer or on different taxpayers, but in each important future period of reversal of deferred taxassets and liabilities, the involved taxpayer intends to settle current income tax assets and liabilities on a net basis or toobtain assets and settle liabilities at the same time, the deferred tax assets and deferred tax liabilities of the Group arepresented at the net amount after offset.
32. Changes in significant accounting policies and accounting estimates
32.1 Adjustments for changes in significant accounting policies
On October 25, 2023, the Ministry of Finance issued the Accounting Standards for Business Enterprises - InterpretationNo. 17 (hereinafter referred to as "Interpretation No. 17"). Interpretation No. 17 standardizes the classification of currentliabilities and non-current liabilities and the accounting treatment of sale and leaseback transactions, and will come intoeffect on January 1, 2024.
On December 6, 2024, the Ministry of Finance issued the Accounting Standards for Business Enterprises - InterpretationNo. 18" (hereinafter referred to as "Interpretation No. 18"). It regulates the subsequent measurement of investmentproperties held as underlying items under the floating charge method and the accounting treatment of warranty-typequality assurance that is not a single performance obligation. It will come into force from December 6, 2024, allowingenterprises to implement it ahead of the annual release.
After assessment, the Group believes that the adoption of the above provisions has no material impact on the Group'sfinancial statements.
32.2 Changes in accounting estimates
The Group has no significant changes in accounting estimates during the year.
Notes to the financial statementsYear ended December 31, 2024
- 50 -
（IV） Taxation
1. Main tax types and tax rates
| Tax type | Tax basis | Tax rate |
| Value-added tax | Balance of output tax minus deductible input tax; Tax exemption, offset and refund measures are applicable to the sales of export products | The output tax for domestic sales is calculated at 13%, 9%, 6%, and 5% of the sales amount according to relevant tax regulations, and the export product tax rebate rate is 13% |
| Urban maintenance and construction tax | Turnover tax payable | 7% |
| Education surcharge | Turnover tax payable | 3% |
| Local education surtax | Turnover tax payable | 2% |
| Corporate income tax | Taxable income | 25%、20%、15%、8.25% |
| Property taxes | THE RESIDUAL VALUE AFTER DEDUCTING 30% FROM THE ORIGINAL VALUE OF THE PROPERTY AT ONCE | 1.2% |
Notes to the taxpayers with different corporate income tax rates:
| Name of taxpayer | Income tax rate |
| The Company | 25% |
| Shenzhen Shenfang Property Management Co., Ltd. | 20% (Note 1) |
| Shenzhen MCENTURY Garment Co., Ltd. | 20% (Note 1) |
| Shenzhen Lisi Industrial Development Co., Ltd. | 20% (Note 1) |
| Shenzhen Shenfang Sungang Property Management Co., Ltd. | 20% (Note 1) |
| Shenzhen Huaqiang Hotel Co., Ltd. | 20% (Note 1) |
| SATO (Hong Kong) Limited | 8.25% (Note 2) |
| Shenzhen SAPO Photoelectric Co., Ltd. (hereinafter referred to as "SAPO Photoelectric") | 15% (Note 3) |
Note 1: See Note (IV) and 2(2) for details.
Note 2: according to the Inland Revenue Ordinance of Hong Kong, SATO (Hong Kong) Limited is subject to a two-tierprofits tax system. The first HKD 2 million of taxable profits shall taxed at a rate of 8.25%, and the profits generatedthereafter shall be taxed at a rate of 16.5%.
Note 3: See Note (IV) and 2(1) for details.
2. Tax incentives
(1) SAPO Photoelectric, a subsidiary of the Company, was jointly recognized as a high-tech enterprise in 2022 byShenzhen Science and Technology Innovation Commission, Finance Bureau of Shenzhen Municipality and ShenzhenTax Service, State Taxation Administration. The certification is valid for 3 years and the certificate number isGR202244204504. Since SAPO Photoelectric was recognized as a high-tech enterprise, it is eligible for the taxincentives for high-tech enterprises for three years. After filing with the competent tax bureau, SAPO Photoelectric haspaid corporate income tax at a tax rate of 15%.
Notes to the financial statementsYear ended December 31, 2024
- 51 -
(IV) Taxes - continued
2. Tax incentives - continued
(2) The Company's subsidiaries, Shenzhen MCENTURY Garment Co., Ltd., Shenzhen Huaqiang Hotel Co., Ltd.,Shenzhen Lisi Industrial Development Co., Ltd., Shenzhen Shenfang Sungang Property Management Co., Ltd. andShenzhen Shenfang Property Management Co., Ltd. are qualified small low-profit enterprises. According to theAnnouncement of the Ministry of Finance and the State Taxation Administration of Taxation on Further ImplementingPreferential Policies for Corporate Income Tax of Small and Micro Enterprises (No. 13, 2022) and the Announcement ofthe Ministry of Finance and the State Taxation Administration on Preferential Policies for Corporate Income Tax ofSmall and Micro Enterprises and Individual Industrial and Commercial Households (No. 6, 2023), the part of the annualtaxable income not exceeding RMB 3 million will be included in the taxable income after deducting 25%, and corporateincome tax will be paid at a tax rate of 20%.
(3) According to the relevant provisions of the Notice of the Ministry of Finance, the General Administration ofCustoms, and the State Taxation Administration on the Import Tax Policies for Supporting the Development of the NewDisplay Device Industry (CGS [2021] No. 19), SAPO Photoelectric, a subsidiary of the Company, meets the relevantconditions and will enjoy the policy of exemption from import duties on relevant products from January 1, 2021, toDecember 31, 2030.
(4) According to the Announcement on the Policy of Additional Value-Added Tax Deduction for Advanced
Manufacturing Enterprises (CZBSWZJGG [2023] No.43) issued by the Ministry of Finance and the State TaxationAdministration in September 2023, from January 1, 2023 to December 31, 2027, advanced manufacturing enterprises areallowed to deduct the value-added tax payable by 5% of the deductible input tax for the current period. SAPOPhotoelectric, a subsidiary of the Company, meets the relevant conditions and enjoyed the policy of additional deductionof value-added tax (VAT) in 2024.
（V） Notes to financial statements items
1. Monetary funds
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Cash on hand: | 4,751.69 | 1,710.40 |
| RMB | 4,691.50 | 1,651.50 |
| HKD | 60.19 | 58.90 |
| Bank deposits (Note 1): | 302,111,853.17 | 462,967,619.54 |
| RMB | 245,621,517.8 | 396,264,667.05 |
| USD | 40,462,152.89 | 62,535,102.56 |
| JPY | 15,265,963.38 | 3,440,280.17 |
| HKD | 762,219.10 | 727,569.76 |
| Other monetary funds (Note 2): | 38,844,838.96 | 9,305,118.06 |
| RMB | 10,920,461.06 | 9,305,118.06 |
| JPY | 27,924,377.90 | - |
| Total | 340,961,443.82 | 472,274,448.00 |
| Including: total amount deposited abroad | - | - |
Notes to the financial statementsYear ended December 31, 2024
- 52 -
(V) Notes to financial statements - continued
1. Monetary funds - continued
Note 1: bank deposits include interest income from current deposits and 7-day notice deposits amounting to RMB31,765.51 (2023: RMB 1,548,872.61).
Note 2: as of December 31, 2024, the Group's other monetary funds included RMB 3,401,500.00 (2023: RMB3,400,000.00) of restricted funds due to account freezes, and RMB 35,443,338.96 (2023: RMB 5,905,118.06) ofguarantee deposits for bills and letters of credit.
2. Financial assets held for trading
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Financial assets measured at fair value through current profit or loss | 731,419,904.42 | 821,946,114.68 |
| Including: money funds and structured deposits | 731,419,904.42 | 821,946,114.68 |
3. Notes receivable
(1) Classification of notes receivable
RMB
| Category | Balance as at the end of the current year | Balance as at the end of the previous year |
| Bank acceptance bills | 47,305,221.88 | 50,963,943.01 |
(2) As at December 31, 2024, the Group has no pledged notes receivable.
(3) As of December 31, 2024, notes receivable endorsed or discounted by the Group and not yet due on the balancesheet date at the end of the period
RMB
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Bank acceptance bill | - | 30,291,952.76 |
(4) Disclosure by provision method for bad debts
RMB
| Category | Balance as at the end of the current year | Balance as at the end of the previous year | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Ratio (%) | Amount | Provision ratio (%) | Amount | Ratio (%) | Amount | Provision ratio (%) | |||
| Provision for bad debts accrued on an individual basis | - | - | - | - | - | - | - | - | - | - |
| Provision for bad debts made by portfolio | 47,305,221.88 | 100.00 | - | - | 47,305,221.88 | 50,963,943.01 | 100.00 | - | - | 50,963,943.01 |
| Including: bank acceptance bills | 47,305,221.88 | 100.00 | - | - | 47,305,221.88 | 50,963,943.01 | 100.00 | - | - | 50,963,943.01 |
| Total | 47,305,221.88 | 100.00 | - | 47,305,221.88 | 50,963,943.01 | 100.00 | - | 50,963,943.01 | ||
(5) In 2024, the Group has no actual write-off of notes receivable.
Notes to the financial statementsYear ended December 31, 2024
- 53 -
(V) Notes to financial statements - continued
4. Accounts receivable
(1) Disclosure by aging
RMB
| Aging | Book balance at the end of the year | Book balance at the end of the previous year |
| Within 1 year | 888,265,598.53 | 848,526,236.04 |
| 1-2 years | 368,365.12 | 1,640,043.18 |
| 2 to 3 years | - | 618,907.34 |
| Over 3 years | 13,565,696.79 | 12,911,211.29 |
| Total | 902,199,660.44 | 863,696,397.85 |
(2) Disclosure by provision method for bad debts
RMB
| Category | Balance as at the end of the current year | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Ratio (%) | Amount | Provision ratio (%) | ||
| Provision for bad debts accrued on an individual basis | 35,622,829.91 | 3.95 | 17,870,018.37 | 50.16 | 17,752,811.54 |
| Provision for bad debts made by portfolio | 866,576,830.53 | 96.05 | 20,597,705.18 | 845,979,125.35 | |
| Including: portfolio 1 | 854,782,067.66 | 94.74 | 20,338,340.21 | 2.38 | 834,443,727.45 |
| Combination 2 | 11,794,762.87 | 1.31 | 259,364.97 | 2.20 | 11,535,397.90 |
| Total | 902,199,660.44 | 100.00 | 38,467,723.55 | 863,731,936.89 | |
RMB
| Category | Balance as at the end of the previous year | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Ratio (%) | Amount | Provision ratio (%) | ||
| Provision for bad debts accrued on an individual basis | 71,687,951.26 | 8.30 | 27,464,002.48 | 38.31 | 44,223,948.78 |
| Provision for bad debts made by portfolio | 792,008,446.59 | 91.70 | 16,097,561.42 | 775,910,885.17 | |
| Including: portfolio 1 | 779,372,185.30 | 90.24 | 15,882,600.54 | 2.04 | 763,489,584.76 |
| Combination 2 | 12,636,261.29 | 1.46 | 214,960.88 | 1.70 | 12,421,300.41 |
| Total | 863,696,397.85 | 100.00 | 43,561,563.90 | 820,134,833.95 | |
As of December 31, 2024, the Company has no significant accounts receivable with individual provision for bad debts.
As of December 31, 2024, the credit risk and provision for bad debts of accounts receivable of Portfolio 1 are as follows:
RMB
| Type | Balance as at the end of the current year | |||
| Expected average loss rate (%) | Book balance | Provision for bad debts | Book value | |
| Within the credit period | 2.11 | 796,842,757.97 | 16,786,953.04 | 780,055,804.93 |
| 1-30 days overdue | 3.10 | 53,503,516.30 | 1,656,637.60 | 51,846,878.70 |
| 31-60 days overdue | 26.63 | 3,418,979.10 | 910,571.37 | 2,508,407.73 |
| 61-90 days overdue | 96.70 | 989,164.17 | 956,528.08 | 32,636.09 |
| More than 90 days overdue (with impairment) | 100.00 | 27,650.12 | 27,650.12 | - |
| Total | 854,782,067.66 | 20,338,340.21 | 834,443,727.45 | |
Notes to the financial statementsYear ended December 31, 2024
- 54 -
(V) Notes to financial statements - continued
4. Accounts receivable - continued
(2) Disclosure by provision method for bad debts - continued
As of December 31, 2024, the credit risk and provision for bad debts of accounts receivable of Portfolio 2 are as follows:
RMB
| Aging | Balance as at the end of the current year | |||
| Expected average loss rate (%) | Book balance | Provision for bad debts | Book value | |
| Within 1 year | 1.44 | 11,460,139.05 | 165,377.59 | 11,294,761.46 |
| 1-2 years | 10.00 | 267,373.82 | 26,737.38 | 240,636.44 |
| Over 3 years | 100.00 | 67,250.00 | 67,250.00 | - |
| Total | 11,794,762.87 | 259,364.97 | 11,535,397.90 | |
As of December 31, 2024, provision for bad debts is made based on the simplified expected credit losses model
RMB
| Provision for bad debts | Whole duration Expected credit losses (No credit loss) | Whole duration Expected credit losses (With credit loss) | Total |
| Balance at the beginning of the year | 27,153,548.62 | 16,408,015.28 | 43,561,563.90 |
| Balance at the beginning of the year | |||
| - Transfer to credit loss incurred | - | - | - |
| - Reversal of credit loss not incurred | - | - | - |
| Withdrawal in the current year | 8,871,275.71 | 102,828.16 | 8,974,103.87 |
| Reversal in the current year | (11,196,138.79) | (2,871,805.43) | (14,067,944.22) |
| Charge-off in the current year | - | - | - |
| Write-off in the current year | - | - | - |
| Other changes | - | - | - |
| Balance as at the end of the current year | 24,828,685.54 | 13,639,038.01 | 38,467,723.55 |
(3) Provision for bad debts
RMB
| Type | Balance at the beginning of the year | Changes in the current year | Balance as at the end of the current year | |||
| Provision | Recovery or reversal | Resale or write-off | Other changes | |||
| Provision for bad debts | 43,561,563.90 | 8,974,103.87 | (14,067,944.22) | - | - | 38,467,723.55 |
There was no significant amount of provision for bad debts recovered or reversed this year.
(4) There are no accounts receivable with actual write-off this year.
Notes to the financial statementsYear ended December 31, 2024
- 55 -
(V) Notes to financial statements - continued
4. Accounts receivable - continued
(5) Top 5 accounts receivable in terms of the ending balances by debtors
RMB
| Entity name | Book balance at the end of the year | Proportion in accounts receivable Ratio of balance at the end of the year (%) | Provision for bad debts Balance as at the end of the current year |
| Customer 1 | 216,148,577.64 | 23.96 | 4,753,114.82 |
| Customer 2 | 102,082,718.13 | 11.31 | 2,184,024.62 |
| Customer 3 | 90,645,486.60 | 10.05 | 1,855,541.78 |
| Customer 4 | 84,618,742.39 | 9.38 | 1,841,371.17 |
| Customer 5 | 65,531,083.75 | 7.26 | 1,350,058.99 |
| Total | 559,026,608.51 | 61.96 | 11,984,111.38 |
5. Receivables financing
(1) Presentation of receivables financing by category
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Bank acceptance bills | 6,804,603.68 | 22,839,459.13 |
The Group believes that the bank acceptance bills it holds are issued by banks with high credit ratings and carry nosignificant credit risk; therefore, no provision for bad debts has been made.
(2) As at December 31, 2024, the Group has no pledged receivables financing.
(3) As of December 31, 2024, receivables financing endorsed or discounted by the Group and not yet due on the
balance sheet date at the end of the period
RMB
| Item | Amount derecognized at the end of the period | Amount not derecognized at the end of the period |
| Bank acceptance bills | 34,926,518.99 | - |
(4) In 2024, the Group has no receivables financing with actual write-off.
Notes to the financial statementsYear ended December 31, 2024
- 56 -
(V) Notes to financial statements - continued
6. Advances to suppliers
(1) Disclosure of advances to suppliers by aging
RMB
| Aging | Balance as at the end of the current year | Balance as at the end of the previous year | ||
| Amount | Ratio (%) | Amount | Ratio (%) | |
| Within 1 year | 7,233,035.70 | 88.46 | 16,927,119.84 | 86.81 |
| 1-2 years | 873,375.47 | 10.68 | 969,677.39 | 4.97 |
| 2 to 3 years | 8,227.73 | 0.10 | 1,603,089.57 | 8.22 |
| Over 3 years | 62,085.80 | 0.76 | - | - |
| Total | 8,176,724.70 | 100.00 | 19,499,886.80 | 100.00 |
As of December 31, 2024, the Group has no advances to suppliers with an aging of more than 1 year and an importantamount.
(2) Top 5 advances to suppliers in terms of the ending balances by prepayment objects
The total amount of the top five prepayments categorized by prepayment objects as of the end of the year was RMB5,657,262.47, accounting for 69.19% of the ending balance of advances to suppliers.
7. Other receivables
(1) Disclosure by aging
RMB
| Aging | Balance as at the end of the current year | Balance as at the end of the previous year |
| Within 1 year | 2,878,553.22 | 1,860,613.92 |
| 1-2 years | 227,729.90 | 548,779.55 |
| 2 to 3 years | 37,922.15 | 690,301.34 |
| Over 3 years | 18,436,540.75 | 18,115,521.40 |
| Total | 21,580,746.02 | 21,215,216.21 |
| Less: provision for bad debts | 17,984,202.06 | 17,994,930.79 |
| Book value | 3,596,543.96 | 3,220,285.42 |
(2) Disclosure by nature of payment
RMB
| Nature of payment | Book balance at the end of the year | Book balance at the end of the previous year |
| Current accounts | 15,422,685.97 | 15,350,589.97 |
| Guarantee and deposits | 2,523,551.88 | 2,000,722.80 |
| Export tax rebate | 709,028.48 | 710,026.13 |
| Petty cash and employee borrowings | 296,058.95 | 577,183.94 |
| Others | 2,629,420.74 | 2,576,693.37 |
| Total | 21,580,746.02 | 21,215,216.21 |
Notes to the financial statementsYear ended December 31, 2024
- 57 -
(V) Notes to financial statements - continued
7. Other receivables - continued
(3) Provision for bad debts
As of December 31, 2024, provision for bad debts is made based on general model of expected credit losses
RMB
| Provision for bad debts | Phase I | Phase II | Phase III | Total |
| Expected credit losses over the next 12 months | The entire expected credit loss over the life of the instruments (No credit loss) | The entire expected credit loss over the life of the instruments (With credit loss) | ||
| Balance at the beginning of the year | 73,918.97 | 268,296.26 | 17,652,715.56 | 17,994,930.79 |
| Balance at the beginning of the year | 73,918.97 | 268,296.26 | 17,652,715.56 | 17,994,930.79 |
| -Transfer to phase II | (12,183.55) | 12,183.55 | - | - |
| -Transfer to phase III | - | (187,095.88) | 187,095.88 | - |
| -Reversal to phase II | - | - | - | - |
| -Reversal to phase I | - | - | - | - |
| Withdrawal in the current year | 85,256.08 | - | - | 85,256.08 |
| Reversal in the current year | - | (54,177.15) | (37,685.24) | (91,862.39) |
| Charge-off in the current year | - | - | - | - |
| Write-off in the current year | - | - | (4,122.42) | (4,122.42) |
| Other changes | - | - | - | - |
| Balance as at the end of the current year | 146,991.50 | 39,206.78 | 17,798,003.78 | 17,984,202.06 |
As of December 31, 2024, provision for bad debts shall be made according to the credit risk characteristic combination
RMB
| Phase | Balance as at the end of the current year | |||
| Expected average loss rate (%) | Book balance | Provision for bad debts | Book value | |
| Provision for bad debts based on credit risk characteristic combination Provision for other receivables | 83.33 | 21,580,746.02 | 17,984,202.06 | 3,596,543.96 |
As of December 31, 2024, the credit risk and provision for bad debts of other receivables are as follows:
RMB
| Aging | Balance as at the end of the current year | |||
| Expected average loss rate (%) | Book balance | Provision for bad debts | Book value | |
| Within 1 year | 5.11 | 2,878,553.22 | 146,991.50 | 2,731,561.72 |
| 1-2 years | 7.69 | 227,729.90 | 17,521.25 | 210,208.65 |
| 2 to 3 years | 57.18 | 37,922.15 | 21,685.53 | 16,236.62 |
| Over 3 years | 96.54 | 18,436,540.75 | 17,798,003.78 | 638,536.97 |
| Total | 21,580,746.02 | 17,984,202.06 | 3,596,543.96 | |
Notes to the financial statementsYear ended December 31, 2024
- 58 -
(V) Notes to financial statements - continued
7. Other receivables - continued
(4) Provision for bad debts
RMB
| Type | Balance at the beginning of the year | Changes in the current year | Balance as at the end of the current year | |||
| Provision | Recovery or reversal | Resale or write-off | Other changes | |||
| Provision for bad debts | 17,994,930.79 | 85,256.08 | (91,862.39) | (4,122.42) | - | 17,984,202.06 |
There is no provision for bad debts recovery or reversal of significant amount in the current year.
(5) There are no other receivables with actual write-off this year.
(6) Top five entities in terms of ending balance of other receivables by debtors
RMB
| Other receivables | Balance as at the end of the current year | Ratio in ending balance of other receivables (%) | Nature of amount | Aging | Provision for bad debts Balance as at the end of the current year |
| Top five of the ending balance of the current year Total other receivables | 16,287,801.02 | 75.47 | Current accounts of receivables, etc. | Within 1 year, more than 3 years | 15,305,501.02 |
8. Inventories
(1) Classification of inventories
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year | ||||
| Book balance | Provision for inventory depreciation | Book value | Book balance | Provision for inventory depreciation | Book value | |
| Raw materials | 453,134,126.81 | 14,875,137.34 | 438,258,989.47 | 403,031,948.06 | 7,506,047.48 | 395,525,900.58 |
| Products in progress | 335,115,507.53 | 66,220,022.55 | 268,895,484.98 | 309,068,674.96 | 64,610,590.25 | 244,458,084.71 |
| Finished products | 121,746,047.85 | 40,357,658.59 | 81,388,389.26 | 137,596,740.37 | 43,501,540.31 | 94,095,200.06 |
| Entrusted processing materials | 1,710,557.68 | 496,720.51 | 1,213,837.17 | 2,406,793.65 | 93,806.73 | 2,312,986.92 |
| Total | 911,706,239.87 | 121,949,538.99 | 789,756,700.88 | 852,104,157.04 | 115,711,984.77 | 736,392,172.27 |
Note: as of December 31, 2024, the book balance of the polarizer inventories was RMB 905,482,857.11 (December 31,2023: RMB 838,447,375.39), with a corresponding provision for inventory depreciation of RMB 115,967,084.94(December 31, 2023: RMB 107,290,039.96).
(2) Provision for inventory depreciation
RMB
| Item | Balance at the beginning of the year | Increase in the current year | Decrease in the current year | Balance as at the end of the current year | ||
| Provision | Others | Reversal or write-off | Others | |||
| Raw materials | 7,506,047.48 | 10,509,078.42 | - | 3,139,988.56 | - | 14,875,137.34 |
| Products in progress | 64,610,590.25 | 28,883,121.41 | - | 27,273,689.11 | - | 66,220,022.55 |
| Finished products | 43,501,540.31 | 83,743,853.45 | - | 86,887,735.17 | - | 40,357,658.59 |
| Entrusted processing materials | 93,806.73 | 402,913.78 | - | - | - | 496,720.51 |
| Total | 115,711,984.77 | 123,538,967.06 | - | 117,301,412.84 | - | 121,949,538.99 |
Notes to the financial statementsYear ended December 31, 2024
- 59 -
(V) Notes to financial statements - continued
8. Inventories - continued
(2) Provision for inventory depreciation - continued
Specific basis for determining the net realizable value of inventories and the reasons for reversal or write-off of theprovision for inventory depreciation during the current year:
| Item | Specific basis for determining net realizable value | Reasons for reversing or writing off provision for inventory depreciation this year |
| Raw materials, goods in process and consigned processing materials | The net realizable value is determined by the estimated selling price of the relevant finished products minus the estimated cost to be incurred until completion, estimated selling and distribution expenses and relevant taxes. | Received or sold in the current year |
| Finished products | The net realizable value is determined by the estimated selling price of the inventories minus the estimated selling and distribution expenses and related taxes. | It is sold or market value is recovered in the current year |
(3) As of December 31, 2024, there is no amount in the balance of inventories used for guarantee and no amount ofcapitalization of borrowing costs.
9. Other current assets
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Value-added tax to be deducted and input tax to be certified | 2,100,314.86 | 27,399,897.46 |
| Prepaid income tax | 47,034.59 | 47,034.59 |
| Cost of return receivable | 19,314,386.69 | 33,326,525.34 |
| Total | 21,461,736.14 | 60,773,457.39 |
10. Long-term equity investments
RMB
| Investees | Balance at the beginning of the year | Changes in the current year | Balance as at the end of the current year | Provision for impairment Balance as at the end of the current year | |||||||
| Additional investment | Reduced investment | Investment profit or loss recognized under the equity method | Other comprehensive income adjustment | Other changes in equity | Cash dividends or profits declared to be paid | Provision Provision for impairment | Others | ||||
| I. Joint ventures | |||||||||||
| Shenzhen Guanhua Printing and Dyeing Co., Ltd. | 122,370,494.08 | - | - | (10,814,606.80) | - | - | - | - | - | 111,555,887.28 | - |
| Sub-total | 122,370,494.08 | - | - | (10,814,606.80) | - | - | - | - | - | 111,555,887.28 | - |
| II. Associates | |||||||||||
| Shenzhen Changlianfa Printing and Dyeing Co., Ltd. | 3,358,117.09 | - | - | 260,171.67 | - | - | (346,150.00) | - | - | 3,272,138.76 | - |
| Yehui International Co., Ltd. | 1,953,409.53 | - | (1,805,949.58) | (147,459.95) | - | - | - | - | - | - | - |
| Sub-total | 5,311,526.62 | - | (1,805,949.58) | 112,711.72 | - | - | (346,150.00) | - | - | 3,272,138.76 | - |
| Total | 127,682,020.70 | - | (1,805,949.58) | (10,701,895.08) | - | - | (346,150.00) | - | - | 114,828,026.04 | - |
Notes to the financial statementsYear ended December 31, 2024
- 60 -
(V) Notes to financial statements - continued
11. Other equity instrument investments
(1) Details of other equity instrument investments
RMB
| Item | Balance at the beginning of the year | Changes in the current year | Balance as at the end of the current year | Dividend income recognized in the current period | Accumulative gains accrued to other comprehensive income | Accumulative losses accrued to other comprehensive income | Reasons designated as being measured at fair value through other comprehensive income | ||||
| Additional investment | Reduced investment | Gains accrued to other comprehensive income in the current year | Loss accrued to other comprehensive income in the current year | Others | |||||||
| Hualian Development Co., Ltd. | 110,457,700.00 | - | - | 19,426,300.00 | - | - | 129,884,000.00 | 208,000.00 | 127,284,000.00 | - | The Group plans to hold it for a long time |
| Shenzhen Dailisi Underwear Co., Ltd. | 17,741,900.00 | - | - | 1,901,000.00 | - | - | 19,642,900.00 | 1,037,735.85 | 17,083,043.74 | - | The Group plans to hold it for a long time |
| Shenzhen Nanfang Textile Co.,Ltd. | 14,803,400.00 | - | - | - | (1,621,700.00) | - | 13,181,700.00 | 865,050.16 | 11,681,700.00 | - | The Group plans to hold it for a long time |
| Shenzhen Xinfang Knitting Factory Co., Ltd. | 2,985,900.00 | - | - | - | (291,600.00) | - | 2,694,300.00 | 200,000.00 | 2,170,300.00 | - | The Group plans to hold it for a long time |
| Jintian Industry (Group) Co., Ltd. | - | - | - | - | - | - | - | - | - | (14,831,681.50) | The Group plans to hold it for a long time |
| Total | 145,988,900.00 | - | - | 21,327,300.00 | (1,913,300.00) | - | 165,402,900.00 | 2,310,786.01 | 158,219,043.74 | (14,831,681.50) | |
(2) Description of derecognition in the current year
There is no derecognition of other equity instrument investments this year.
Notes to the financial statementsYear ended December 31, 2024
- 61 -
(V) Notes to financial statements - continued
12. Investment properties
(1) Investment properties measured at the cost mode
RMB
| Item | Houses and buildings |
| I. Total original book value | |
| 1. Balance at the beginning of the year | 350,367,442.40 |
| 2. Increase in the current year | - |
| (1) Outsourcing | - |
| (2) Transfer of fixed assets | - |
| 3. Decrease in the current year | - |
| (1) Disposal | - |
| (2) Other transfer-out | - |
| 4. Balance at the end of the year | 350,367,442.40 |
| II. Accumulated depreciation and accumulated amortization | |
| 1. Balance at the beginning of the year | 224,764,235.22 |
| 2. Increase in the current year | 9,609,816.99 |
| (1) Provision or amortization | 9,609,816.99 |
| (2) Transfer of fixed assets | - |
| 3. Decrease in the current year | - |
| (1) Disposal | - |
| (2) Other transfer-out | - |
| 4. Balance at the end of the year | 234,374,052.21 |
| III. Provision for impairment | |
| 1. Balance at the beginning of the year | - |
| 2. Increase in the current year | - |
| (1) Provision | - |
| 3. Decrease in the current year | - |
| (1) Disposal | - |
| 4. Balance at the end of the year | - |
| IV. Book value | |
| 1. Book value at the end of the year | 115,993,390.19 |
| 2. Book value at the beginning of the year | 125,603,207.18 |
(2) Investment properties without certificate of title
RMB
| Item | Book value | Reasons for failure to obtain the certificate of title |
| Houses and buildings | 11,556,252.96 | Warrants not obtained for historical reasons |
Notes to the financial statementsYear ended December 31, 2024
- 62 -
(V) Notes to financial statements - continued
13. Fixed assets
(1) Fixed assets
RMB
| Item | Buildings and constructions | Machinery equipment | Transportation equipment | Electronic equipment and others | Total |
| I. Total original book value | |||||
| 1. Balance at the beginning of the year | 727,679,833.94 | 2,711,433,903.98 | 17,090,895.87 | 44,539,622.55 | 3,500,744,256.34 |
| 2. Increase in the current year | 9,634,489.50 | 35,489,764.62 | 471,769.90 | 1,139,257.60 | 46,735,281.62 |
| (1) Purchase | - | 5,444,196.63 | 471,769.90 | 1,139,257.60 | 7,055,224.13 |
| (2) Transfer from construction in progress | - | 30,045,567.99 | - | - | 30,045,567.99 |
| (3) Other changes | 9,634,489.50 | - | - | - | 9,634,489.50 |
| 3. Decrease in the current year | - | 4,168,000.00 | 266,184.80 | 717,804.27 | 5,151,989.07 |
| (1) Disposal or scrapping | - | - | 266,184.80 | 717,804.27 | 983,989.07 |
| (2) Other changes | - | 4,168,000.00 | - | - | 4,168,000.00 |
| 4. Balance at the end of the year | 737,314,323.44 | 2,742,755,668.60 | 17,296,480.97 | 44,961,075.88 | 3,542,327,548.89 |
| II. Accumulated depreciation | |||||
| 1. Balance at the beginning of the year | 189,420,295.28 | 1,179,132,635.63 | 7,869,614.58 | 33,092,767.56 | 1,409,515,313.05 |
| 2. Increase in the current year | 23,097,751.05 | 198,886,428.20 | 2,046,425.49 | 4,076,907.22 | 228,107,511.96 |
| (1) Provision | 23,097,751.05 | 198,886,428.20 | 2,046,425.49 | 4,076,907.22 | 228,107,511.96 |
| (2) Other changes | - | - | - | - | - |
| 3. Decrease in the current year | - | - | 249,694.76 | 677,349.26 | 927,044.02 |
| (1) Disposal or scrapping | - | - | 249,694.76 | 677,349.26 | 927,044.02 |
| (2) Other changes | - | - | - | - | - |
| 4. Balance at the end of the year | 212,518,046.33 | 1,378,019,063.83 | 9,666,345.31 | 36,492,325.52 | 1,636,695,780.99 |
| III. Provision for impairment | |||||
| 1. Balance at the beginning of the year | 9,820,261.26 | 15,149,037.18 | 6,126.41 | 247,280.71 | 25,222,705.56 |
| 2. Increase in the current year | 99,508.16 | 6,572,870.85 | 1,102.16 | 189,993.37 | 6,863,474.54 |
| (1) Provision | 99,508.16 | 6,572,870.85 | 1,102.16 | 189,993.37 | 6,863,474.54 |
| 3. Decrease in the current year | - | - | - | 7,256.11 | 7,256.11 |
| (1) Disposal or scrapping | - | - | - | 7,256.11 | 7,256.11 |
| 4. Balance at the end of the year | 9,919,769.42 | 21,721,908.03 | 7,228.57 | 430,017.97 | 32,078,923.99 |
| IV. Book value | |||||
| 1. Book value at the end of the year | 514,876,507.69 | 1,343,014,696.74 | 7,622,907.09 | 8,038,732.39 | 1,873,552,843.91 |
| 2. Book value at the beginning of the year | 528,439,277.40 | 1,517,152,231.17 | 9,215,154.88 | 11,199,574.28 | 2,066,006,237.73 |
(2) Fixed assets without certificate of title
RMB
| Item | Book value | Reasons for failure to obtain the certificate of title |
| Houses and buildings | 10,815,790.07 | Warrants not handled for historical reasons |
(3) Fixed assets of mortgage and guarantee
As at December 31, 2024, the Group's fixed assets mortgaged for bank borrowings are detailed in Note (V) 21 "Assetswith Restricted Ownership or Right of Use".
Notes to the financial statementsYear ended December 31, 2024
- 63 -
(V) Notes to financial statements - continued
14. Construction in progress
14.1 Summary of construction in progress
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Construction in progress | 5,814,012.03 | 31,307,060.74 |
14.2 Construction in progress
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year | ||||
| Book balance | Provision for impairment | Net book value | Book balance | Provision for impairment | Net book value | |
| Installation of machinery equipment | 5,814,012.03 | - | 5,814,012.03 | 31,307,060.74 | - | 31,307,060.74 |
15. Right-of-use assets
RMB
| Item | Buildings and constructions | Machinery equipment | Total |
| I. Total original book value: | |||
| 1. Balance at the beginning of the year | 33,450,802.23 | - | 33,450,802.23 |
| 2. Increase in the current year | 11,214,565.00 | 1,799,631.64 | 13,014,196.64 |
| (1) Addition | 11,214,565.00 | 1,799,631.64 | 13,014,196.64 |
| 3. Decrease in the current year | 8,181,940.76 | - | 8,181,940.76 |
| (1) Termination of leases | 8,181,940.76 | - | 8,181,940.76 |
| 4. Balance at the end of the year | 36,483,426.47 | 1,799,631.64 | 38,283,058.11 |
| II. Accumulated depreciation | |||
| 1. Balance at the beginning of the year | 21,451,335.66 | - | 21,451,335.66 |
| 2. Increase in the current year | 8,105,002.79 | 1,546,340.96 | 9,651,343.75 |
| (1) Provision | 8,105,002.79 | 1,546,340.96 | 9,651,343.75 |
| 3. Decrease in the current year | 8,157,739.16 | - | 8,157,739.16 |
| (1) Termination of leases | 8,157,739.16 | - | 8,157,739.16 |
| 4. Balance at the end of the year | 21,398,599.29 | 1,546,340.96 | 22,944,940.25 |
| III. Provision for impairment | |||
| 1. Balance at the beginning of the year | - | - | - |
| 2. Increase in the current year | - | - | - |
| (1) Provision | - | - | - |
| 3. Decrease in the current year | - | - | - |
| 4. Balance at the end of the year | - | - | - |
| IV. Book value | |||
| 1. Book value at the end of the year | 15,084,827.18 | 253,290.68 | 15,338,117.86 |
| 2. Book value at the beginning of the year | 11,999,466.57 | - | 11,999,466.57 |
Notes to the financial statementsYear ended December 31, 2024
- 64 -
(V) Notes to financial statements - continued
16. Intangible assets
(1) Details of intangible assets
RMB
| Item | Land use rights | Software | Patent right | Total |
| I. Total original book value | ||||
| 1. Balance at the beginning of the year | 48,258,239.00 | 22,600,069.86 | 11,825,200.00 | 82,683,508.86 |
| 2. Increase in the current year | - | 219,057.84 | - | 219,057.84 |
| (1) Purchase | - | 219,057.84 | - | 219,057.84 |
| 3. Decrease in the current year | - | - | - | - |
| 4. Balance at the end of the year | 48,258,239.00 | 22,819,127.70 | 11,825,200.00 | 82,902,566.70 |
| II. Accumulated accumulation | ||||
| 1. Balance at the beginning of the year | 16,165,713.67 | 15,128,172.39 | 11,825,200.00 | 43,119,086.06 |
| 2. Increase in the current year | 891,565.32 | 3,684,123.37 | - | 4,575,688.69 |
| (1) Provision | 891,565.32 | 3,684,123.37 | - | 4,575,688.69 |
| 3. Decrease in the current year | - | - | - | - |
| 4. Balance at the end of the year | 17,057,278.99 | 18,812,295.76 | 11,825,200.00 | 47,694,774.75 |
| III. Provision for impairment | ||||
| 1. Balance at the beginning of the year | - | - | - | - |
| 2. Increase in the current year | - | - | - | - |
| 3. Decrease in the current year | - | - | - | - |
| 4. Balance at the end of the year | - | - | - | - |
| IV. Book value | ||||
| 1. Book value at the end of the year | 31,200,960.01 | 4,006,831.94 | - | 35,207,791.95 |
| 2. Book value at the beginning of the year | 32,092,525.33 | 7,471,897.47 | - | 39,564,422.80 |
As at December 31, 2024, for the intangible assets pledged by the Group due to bank borrowings, please refer to Note(V), 21 "Assets with restricted ownership or right of use" for details.
17. Goodwill
(1) Original book value of goodwill
RMB
| Name of the investees or matters forming goodwill | Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year |
| SAPO Photoelectric | 9,614,758.55 | - | - | 9,614,758.55 |
| Shenzhen MCENTURY Garment Co., Ltd. | 2,167,341.21 | - | - | 2,167,341.21 |
| Total | 11,782,099.76 | - | - | 11,782,099.76 |
Notes to the financial statementsYear ended December 31, 2024
- 65 -
(V) Notes to financial statements - continued
17. Goodwill - continued
(2) Provision for impairment of goodwill
RMB
| Name of the investees or matters forming goodwill | Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year |
| SAPO Photoelectric | 9,614,758.55 | - | - | 9,614,758.55 |
| Shenzhen MCENTURY Garment Co., Ltd. | 2,167,341.21 | - | - | 2,167,341.21 |
| Total | 11,782,099.76 | - | - | 11,782,099.76 |
18. Long-term deferred expenses
RMB
| Item | Balance at the beginning of the year | Increase in the current year | Amortization amount for the current year | Other decreases | Balance as at the end of the current year |
| Decoration and facility renovation costs | 3,503,660.94 | 5,515,370.67 | 2,934,915.74 | - | 6,084,115.87 |
19. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offset
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year | ||
| Deductible temporary differences | Deferred tax Assets | Deductible temporary differences | Deferred tax Assets | |
| Provision for credit losses | 55,500,808.39 | 9,874,641.13 | 59,994,128.15 | 10,538,054.68 |
| Provision for asset impairment | 146,194,722.68 | 21,929,208.40 | 132,512,745.52 | 19,876,911.83 |
| Unrealized profits of internal transactions | 2,056,848.93 | 308,527.34 | 2,145,963.47 | 321,894.52 |
| Employee compensation payable | 4,173,800.00 | 1,043,450.00 | 4,173,800.00 | 1,043,450.00 |
| Deferred income | 95,821,558.58 | 14,373,233.79 | 96,647,256.82 | 14,497,088.52 |
| Deductible losses | 96,771,113.52 | 14,515,667.03 | 127,769,387.40 | 19,165,408.11 |
| Fair value changes of investments in other equity instruments | 14,831,681.50 | 3,707,920.38 | 14,831,681.50 | 3,707,920.38 |
| Lease liabilities | 16,381,050.71 | 2,457,157.61 | 12,177,572.68 | 1,826,635.90 |
| Changes in fair value of derivative financial liabilities | 1,278,559.35 | 191,783.90 | - | - |
| Estimated liabilities | 9,451,090.40 | 1,417,663.56 | - | - |
| Total | 442,461,234.06 | 69,819,253.14 | 450,252,535.54 | 70,977,363.94 |
Based on the Group's profit forecast for the future periods, the Group believes that it is highly probable to obtainsufficient taxable income to utilize the above-mentioned deductible temporary differences and deductible losses in thefuture periods, so the relevant deferred tax assets are recognized.
Notes to the financial statementsYear ended December 31, 2024
- 66 -
(V) Notes to financial statements - continued
19. Deferred tax assets and deferred tax liabilities - continued
(2) Deferred tax liabilities without offset
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year | ||
| Taxable temporary differences | Deferred tax Liabilities | Taxable temporary differences | Deferred tax Liabilities | |
| Difference between initial recognition cost and tax base of long-term equity investments | 62,083,693.36 | 15,520,923.34 | 62,083,693.36 | 15,520,923.34 |
| Fair value changes of investments in other equity instruments | 158,219,043.74 | 39,554,760.94 | 138,805,043.74 | 34,701,260.94 |
| Rent receivable | 8,532,598.56 | 2,133,149.64 | 10,108,726.81 | 2,527,181.70 |
| Right-of-use assets | 15,338,117.86 | 2,300,717.68 | 11,999,466.57 | 1,799,919.99 |
| Total | 244,173,453.52 | 59,509,551.60 | 222,996,930.48 | 54,549,285.97 |
(3) Deferred tax assets or liabilities listed net amount after write-offs
RMB
| Item | Deduction amount of deferred tax assets and liabilities at the end of the current year | Balance of deferred tax assets or liabilities after offset at the end of the current year | Deduction amount of deferred tax assets and liabilities at the end of the previous year | Balance of deferred tax assets or liabilities after offset at the end of the previous year |
| Deferred tax assets | (10,898,741.94) | 58,920,511.20 | (10,371,998.52) | 60,605,365.42 |
| Deferred tax liabilities | (10,898,741.94) | 48,610,809.66 | (10,371,998.52) | 44,177,287.45 |
(4) Unrecognized deferred tax assets
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Deductible temporary differences | 15,750,990.01 | 14,740,965.97 |
| Deductible losses | 365,594,502.67 | 442,263,671.30 |
| Total | 381,345,492.68 | 457,004,637.27 |
(5) Deductible losses from unrecognized deferred tax assets will be expired in the following years
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Year 2024 | - | 69,053,143.67 |
| 2025 | - | - |
| 2026 | 83,168,900.37 | 53,989,578.07 |
| 2027 | 10,067,397.50 | 10,067,397.50 |
| 2028 | 13,479,346.66 | 39,988,583.76 |
| 2029 | 132,565,644.36 | 129,732,249.98 |
| 2030 | 75,352,814.24 | 75,352,814.24 |
| 2031 | - | - |
| 2032 | - | - |
| 2033 | 50,960,399.54 | 64,079,904.08 |
| 2034 | - | - |
| Total | 365,594,502.67 | 442,263,671.30 |
Notes to the financial statementsYear ended December 31, 2024
- 67 -
(V) Notes to financial statements - continued
20. Other non-current assets
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Advances for projects and equipment | 2,033,785.64 | - | 2,033,785.64 | 3,757,334.44 | - | 3,757,334.44 |
| Investment funds to be liquidated | 25,760,086.27 | - | 25,760,086.27 | 25,760,086.27 | - | 25,760,086.27 |
| Total | 27,793,871.91 | - | 27,793,871.91 | 29,517,420.71 | - | 29,517,420.71 |
Notes to the financial statementsYear ended December 31, 2024
- 68 -
(V) Notes to financial statements - continued
21. Assets with restrictions on the ownership or use right
| Item | At the end of current year | At the end of the previous year | ||||||
| Book balance | Book value | Restricted type | Restricted condition | Book balance | Book value | Restricted type | Restricted condition | |
| Monetary funds | 38,844,838.96 | 38,844,838.96 | Restricted right of use | Account freezing and guarantee | 9,305,118.06 | 9,305,118.06 | Restricted right of use | Account freezing and guarantee |
| Notes receivable | 30,291,952.76 | 30,291,952.76 | Restricted right of use | Bill endorsement has not been derecognized | 42,665,954.11 | 42,665,954.11 | Restricted right of use | Bill endorsement has not been derecognized |
| Fixed assets | 581,895,750.64 | 448,156,480.33 | Restricted right of use | Mortgage | 572,261,261.14 | 454,185,881.22 | Restricted right of use | Mortgage |
| Intangible assets | 44,770,083.00 | 31,200,960.01 | Restricted right of use | Mortgage | 44,770,083.00 | 32,092,525.33 | Restricted right of use | Mortgage |
| Total | 695,802,625.36 | 548,494,232.06 | 669,002,416.31 | 538,249,478.72 | ||||
Notes to the financial statementsYear ended December 31, 2024
- 69 -
(V) Notes to financial statements - continued
22. Short-term borrowings
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Credit borrowings | - | 8,000,000.00 |
23. Derivative financial liabilities
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Foreign exchange forward contract | 1,278,559.35 | - |
24. Notes payable
RMB
| Bill type | Balance as at the end of the current year | Balance as at the end of the previous year |
| Bank acceptance bills | 31,095,540.29 | 31,049,291.49 |
The Group had no notes payable due but unpaid at the end of the year.
25. Accounts payable
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Payment for goods | 282,510,771.35 | 386,767,637.00 |
| Service fee | 15,645,017.04 | 13,817,610.72 |
| Payment for outsourcing processing | 3,489,364.64 | 4,584,423.60 |
| Royalties | 2,006,578.00 | 2,207,166.50 |
| Others | 1,160,849.52 | 1,171,298.42 |
| Total | 304,812,580.55 | 408,548,136.24 |
As at December 31, 2024, the Group had no significant accounts payable with aging of over 1 year or overdue.
26. Advances from customers
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Rent and others | 1,051,491.96 | 1,450,096.30 |
As at December 31, 2024, the Group had no significant advances from customers with aging of over 1 year.
27. Contract liabilities
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Payment for goods | 490,562.97 | 1,436,943.34 |
As at December 31, 2024, the Group had no significant contract liabilities with aging of more than 1 year.
Notes to the financial statementsYear ended December 31, 2024
- 70 -
(V) Notes to financial statements - continued
28. Employee compensation payable
(1) Presentation of employee compensation payable
RMB
| Item | Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year |
| Short-term compensation | 53,853,081.65 | 213,903,704.48 | 214,130,906.81 | 53,625,879.32 |
| Post-employment benefits - defined contribution plans | - | 18,732,853.22 | 18,032,853.22 | 700,000.00 |
| Dismissal welfare | 2,584,080.44 | 6,172,694.98 | 6,397,364.82 | 2,359,410.60 |
| Total | 56,437,162.09 | 238,809,252.68 | 238,561,124.85 | 56,685,289.92 |
(2) Presentation of short-term compensation
RMB
| Item | Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year |
| Salaries, bonuses, allowances and subsidies | 50,484,811.72 | 190,224,348.48 | 189,308,677.27 | 51,400,482.93 |
| Employee welfare expenses | - | 6,936,747.83 | 6,936,747.83 | - |
| Social insurance premiums | - | 4,740,283.18 | 4,740,283.18 | - |
| Including: medical insurance premiums | - | 3,516,302.65 | 3,516,302.65 | - |
| Maternity insurance premiums | - | 572,355.25 | 572,355.25 | - |
| Work-related injury insurance premiums | - | 651,625.28 | 651,625.28 | - |
| Housing provident fund | - | 8,872,644.55 | 8,872,644.55 | - |
| Union funds and employee education funds | 3,368,269.93 | 3,129,680.44 | 4,272,553.98 | 2,225,396.39 |
| Total | 53,853,081.65 | 213,903,704.48 | 214,130,906.81 | 53,625,879.32 |
(3) Presentation of defined contribution plans
RMB
| Item | Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year |
| Basic endowment insurance premiums | - | 15,756,686.06 | 15,056,686.06 | 700,000.00 |
| Supplementary endowment insurance premiums | - | 2,765,981.24 | 2,765,981.24 | - |
| Unemployment insurance premium | - | 210,185.92 | 210,185.92 | - |
| Total | - | 18,732,853.22 | 18,032,853.22 | 700,000.00 |
The Group participates in the endowment insurance and unemployment insurance plans established by governmentagencies in accordance with the regulations. According to the plans, the Group makes contributions to such plans inaccordance with the prescribed standards. Except for the above monthly contributions, the Group has no further paymentobligations. The corresponding expenses are included in the current profit or loss or the cost of related assets whenincurred.
The Group shall pay RMB 15,756,686.06 and RMB 210,185.92 to the endowment insurance and unemploymentinsurance plans respectively for the current year (2023: RMB 14,207,148.80 and RMB 296,839.87). As at December 31,2024, the Group still had RMB 700,000.00 of payable contributions due but not paid to the endowment insurance planduring the reporting period, and the relevant payable contributions are expected to be paid after the reporting period.
Notes to the financial statementsYear ended December 31, 2024
- 71 -
(V) Notes to financial statements - continued
29. Taxes payable
RMB
| Taxation | Balance as at the end of the current year | Balance as at the end of the previous year |
| Corporate income tax | 4,720,967.29 | 2,080,849.81 |
| Individual income tax | 751,443.34 | 1,080,628.82 |
| Value-added tax | 592,143.28 | 582,961.29 |
| Other taxes | 789,176.93 | 596,455.22 |
| Total | 6,853,730.84 | 4,340,895.14 |
30. Other payables
(1) Other payables by nature of payment
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Engineering equipment payment | 56,213,373.95 | 67,176,881.34 |
| Current accounts | 53,333,604.97 | 56,444,481.12 |
| Guarantee and deposits | 37,775,687.75 | 48,208,919.61 |
| Others | 12,974,323.31 | 12,698,062.48 |
| Total | 160,296,989.98 | 184,528,344.55 |
(2) As at December 31, 2024, the Group had no significant other payables with aging of more than 1 year or overdue.
31. Non-current liabilities maturing within one year
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Long-term borrowings maturing within one year (Note (V), 33) | 47,011,978.04 | 102,612,497.53 |
| Lease liabilities maturing within one year (Note (V), 34) | 6,884,486.59 | 5,490,255.46 |
| Estimated liabilities due within one year | 9,451,090.40 | - |
| Total | 63,347,555.03 | 108,102,752.99 |
32. Other current liabilities
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Endorsed but undue acceptance bills | 30,291,952.76 | 42,665,954.11 |
| Payables for returned goods | 23,747,757.33 | 37,244,449.90 |
| Output tax to be carried forward in the value-added tax | 32,312.18 | 172,073.21 |
| Total | 54,072,022.27 | 80,082,477.22 |
Notes to the financial statementsYear ended December 31, 2024
- 72 -
(V) Notes to financial statements - continued
33. Long-term borrowings
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year | Interest rate range |
| Guaranteed borrowings (Note) | 209,400,848.04 | 608,190,812.09 | 3.36%-3.41% |
| Total | 209,400,848.04 | 608,190,812.09 | |
| Less: long-term borrowings maturing within one year | 47,011,978.04 | 102,612,497.53 | |
| Long-term borrowings due after one year | 162,388,870.00 | 505,578,314.56 |
Note: SAPO Photoelectric, a subsidiary of the Company, obtained the loan by mortgaging the real estate such as theplant it held, and the Company and Hengmei Optoelectronics Co., Ltd. provided 60% and 40% joint and several liabilityguarantee for the loan respectively.
34. Lease liabilities
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| Lease liabilities | 16,381,050.71 | 12,177,572.68 |
| Total | 16,381,050.71 | 12,177,572.68 |
| Less: Lease liability maturing within one year | 6,884,486.59 | 5,490,255.46 |
| Lease liabilities due after one year | 9,496,564.12 | 6,687,317.22 |
The Group's lease liabilities are presented as follows according to the maturity of undiscounted remaining contractualobligations:
RMB
| Within 1 month | 1- 3 months | 3 - 12 months | 1 - 5 years | Over 5 years | Total | |
| Balance as at the end of the current year | 1,105,714.51 | 2,425,877.50 | 3,879,671.64 | 7,808,943.06 | 3,098,158.97 | 18,318,365.68 |
| Balance as at the end of the previous year | 513,149.55 | 2,012,582.22 | 3,284,024.84 | 5,822,333.46 | 1,672,592.08 | 13,304,682.15 |
35. Deferred income
RMB
| Item | Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year | Formation causes |
| Government grants | 97,485,986.89 | 15,265,000.00 | 16,401,790.63 | 96,349,196.26 | Government grants received |
36. Equity
RMB
| Item | Balance at the beginning of the year | Changes in the current year | Balance as at the end of the current year | ||||
| New shares issued | Bonus issue | Conversion of provident fund into shares | Others | Sub-total | |||
| Total shares | 506,521,849.00 | - | - | - | - | - | 506,521,849.00 |
Notes to the financial statementsYear ended December 31, 2024
- 73 -
(V) Notes to financial statements - continued
37. Capital reserve
RMB
| Item | Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year |
| Equity premium | 1,826,482,608.54 | - | - | 1,826,482,608.54 |
| Other capital reserves | 135,117,216.09 | - | - | 135,117,216.09 |
| Total | 1,961,599,824.63 | - | - | 1,961,599,824.63 |
38. Other comprehensive income
RMB
| Item | Balance at the beginning of the year | Amount before income tax this year | Amount for the current year | Balance as at the end of the current year | ||||
| Less: the amount included in other comprehensive income in prior period and transferred to current profit or loss | Less: retained income included in other comprehensive income in prior periods and transferred to current profit or loss | Less: income tax expenses | Attributable to parent company after tax | Attributable to minority shareholders after tax | ||||
| I. Other comprehensive income that cannot be reclassified into profit or loss | 92,317,307.32 | 19,414,000.00 | - | - | 4,853,500.00 | 14,560,500.00 | - | 106,877,807.32 |
| 1. Changes in fair value of other equity instrument investments | 92,317,307.32 | 19,414,000.00 | - | - | 4,853,500.00 | 14,560,500.00 | - | 106,877,807.32 |
| II. Other comprehensive income to be reclassified into profit or loss later | 1,290,073.49 | - | 1,290,073.49 | - | - | (1,290,073.49) | - | - |
| 1. Changes in the fair value of other debt investments | - | - | - | - | - | - | - | - |
| 2. Translation differences of foreign currency financial statements | 1,290,073.49 | - | 1,290,073.49 | - | - | (1,290,073.49) | - | - |
| Total of other comprehensive income | 93,607,380.81 | 19,414,000.00 | 1,290,073.49 | - | 4,853,500.00 | 13,270,426.51 | - | 106,877,807.32 |
39. Surplus reserves
RMB
| Item | Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year |
| Statutory surplus reserve | 104,262,315.64 | - | - | 104,262,315.64 |
40. Undistributed profits
RMB
| Item | Current year | Previous year |
| Undistributed profits at the beginning of the year before adjustment | 216,160,896.14 | 170,636,610.95 |
| Total adjusted undistributed profits at the beginning of the year | - | - |
| Adjusted undistributed profit at the beginning of the year | 216,160,896.14 | 170,636,610.95 |
| Plus: net profit attributable to shareholders of the parent company in the current year | 89,371,134.24 | 79,268,250.45 |
| Less: Withdrawal of statutory surplus reserves | - | 3,352,654.32 |
| Distribution of dividends of ordinary shares (Note) | 32,923,916.72 | 30,391,310.94 |
| Undistributed profits at the end of the year | 272,608,113.66 | 216,160,896.14 |
Note: according to the resolution of the General Meeting on May 29, 2024, the Company distributed cash dividends ofRMB 0.65 (including tax) for every 10 shares based on the share capital of 506,521,849 shares as at December 31, 2023,with a total cash dividends of RMB 32,923,916.72 (tax inclusive).
Notes to the financial statementsYear ended December 31, 2024
- 74 -
(V) Notes to financial statements - continued
41. Operating revenue and operating costs
(1) Operating revenue and operating costs
RMB
| Item | Amount for the current year | Amount for the previous year | ||
| Revenue | Cost | Revenue | Cost | |
| Primary business | 3,275,150,434.05 | 2,748,312,498.75 | 3,031,175,008.58 | 2,524,464,550.09 |
| Other business | 60,132,574.63 | 47,547,436.07 | 48,503,366.87 | 37,167,294.44 |
| Total | 3,335,283,008.68 | 2,795,859,934.82 | 3,079,678,375.45 | 2,561,631,844.53 |
(2) Primary business by product
RMB
| Product type | Amount for the current year | Amount for the previous year | ||
| Income from primary business | Cost of primary business | Income from primary business | Cost of primary business | |
| Polarizer sales business | 3,161,332,478.08 | 2,720,719,735.99 | 2,885,625,542.77 | 2,463,137,348.05 |
| Property leasing and others | 113,817,955.97 | 27,592,762.76 | 145,549,465.81 | 61,327,202.04 |
| Total | 3,275,150,434.05 | 2,748,312,498.75 | 3,031,175,008.58 | 2,524,464,550.09 |
(3) Primary business by region
RMB
| Main business area | Amount for the current year | Amount for the previous year | ||
| Income from primary business | Cost of primary business | Income from primary business | Cost of primary business | |
| Domestic | 3,113,083,695.45 | 2,621,542,725.57 | 2,914,588,072.35 | 2,427,944,202.03 |
| Overseas | 162,066,738.60 | 126,769,773.18 | 116,586,936.23 | 96,520,348.06 |
| Total | 3,275,150,434.05 | 2,748,312,498.75 | 3,031,175,008.58 | 2,524,464,550.09 |
(4) Description of performance obligations
The Group's sales of goods are mainly the production and sales of polarizers and textiles-related goods. For goodssold to customers, the Group recognizes revenue when the right of control of the goods is transferred, that is, when thegoods are delivered to the designated place of the other party and signed by the other party. The Group recognizes areceivable when the goods are delivered to the customer because the delivery of the goods to the customer represents anunconditional right to receive the contractual consideration, and the maturity of the payment depends only on thepassage of time. When the customer makes a prepayment for goods, the Group recognizes the transaction amountreceived as a contract liability and recognizes the revenue when the goods are delivered to the customer.
The Group provides property services to customers, and such services represent performance obligations performed overa period of time. For property service, the Group recognizes revenue in the course of providing property service.
(5) Description of allocation to remaining performance obligations
As of December 31, 2024, the amount of contract liabilities corresponding to the performance obligations that the Grouphas already signed contracts for but has not yet fulfilled or has not fully fulfilled is RMB 490,562.97, which will berecognized as revenue when the customer obtains the control over goods.
Notes to the financial statementsYear ended December 31, 2024
- 75 -
(V) Notes to financial statements - continued
42. Taxes and surcharges
RMB
| Item | Amount for the current year | Amount for the previous year |
| Property taxes | 7,240,576.84 | 6,184,638.83 |
| Urban maintenance and construction tax | 397,643.06 | 555,230.22 |
| Education surcharge | 287,055.45 | 400,403.17 |
| Other taxes | 2,310,230.30 | 2,153,350.91 |
| Total | 10,235,505.65 | 9,293,623.13 |
43. Selling and distribution expenses
RMB
| Item | Amount for the current year | Amount for the previous year |
| Employee compensation | 15,245,568.88 | 17,089,203.74 |
| Sales service fee | 19,491,891.54 | 10,639,607.95 |
| Business entertainment expenses | 1,117,751.47 | 972,733.63 |
| Others | 6,405,391.58 | 5,494,125.29 |
| Total | 42,260,603.47 | 34,195,670.61 |
44. G&A expenses
RMB
| Item | Amount for the current year | Amount for the previous year |
| Employee compensation | 90,301,081.26 | 90,991,755.13 |
| Depreciation cost | 10,962,929.91 | 11,118,057.18 |
| Professional service fees | 10,520,874.85 | 8,841,449.74 |
| Amortization of intangible assets | 4,575,688.69 | 4,891,672.68 |
| Property leasing and utilities | 2,441,383.42 | 4,086,627.39 |
| Business entertainment expenses | 1,193,877.91 | 1,439,231.97 |
| Others | 14,351,985.54 | 13,002,616.44 |
| Total | 134,347,821.58 | 134,371,410.53 |
45. R&D expenses
RMB
| Item | Amount for the current year | Amount for the previous year |
| Employee compensation | 15,844,594.49 | 14,827,264.16 |
| Material consumption | 83,483,679.76 | 85,216,243.35 |
| Depreciation cost | 3,275,385.23 | 3,389,328.35 |
| Others | 1,208,163.43 | 1,220,205.06 |
| Total | 103,811,822.91 | 104,653,040.92 |
The Group has no development expenses of R&D projects that meet the capitalization requirements.
Notes to the financial statementsYear ended December 31, 2024
- 76 -
(V) Notes to financial statements - continued
46. Financial expenses
RMB
| Item | Amount for the current year | Amount for the previous year |
| Interest expenses (Note) | 17,858,022.73 | 27,339,804.17 |
| Less: interest income | 7,272,362.76 | 12,947,471.64 |
| Exchange differences | (3,772,940.12) | 4,332,702.63 |
| Service fee and others | 5,308,436.20 | 5,674,466.00 |
| Total | 12,121,156.05 | 24,399,501.16 |
Note: The interest expenses of the lease liabilities in 2024 is RMB 721,945.56.
47. Other income
RMB
| Classification by nature | Amount for the current year | Amount for the previous year |
| Transfer-in of deferred income | 16,401,790.63 | 22,107,734.21 |
| Support funds for industry development (Note 1) | 7,988,744.44 | 11,049,910.96 |
| Support funds for enterprise development (Note 2) | 989,098.49 | 553,455.00 |
| Tax incentives | 16,014,588.22 | 16,881,612.68 |
| Others | 89,885.75 | 147,651.06 |
| Total | 41,484,107.53 | 50,740,363.91 |
Note 1: The support funds for industry development mainly include the 2024 Special Science and TechnologyInnovation Funds (the first batch) funded by the Science and Technology Innovation Bureau of Pingshan District,Shenzhen City, the Foreign Trade Quality Growth Support Plan of the Bureau of Commerce, and the Industry StandardFormulation Project Subsidies of the Shenzhen Administration for Market Regulation.
Note 2: The support funds for enterprise development mainly include the Steady Growth Funds of Industry andInformation Technology Bureau of Shenzhen Municipality and the One-time Subsidy for Job Expansion of GuangdongProvincial Social Insurance Fund Administration.
48. Investment (loss) income
RMB
| Item | Amount for the current year | Amount for the previous year |
| Losses on long-term equity investments accounted for under equity method | (10,701,895.08) | (6,898,983.89) |
| Investment income from disposal of long-term equity investments | 833,613.28 | - |
| Investment income obtained during holding the financial assets held for trading | 13,846,181.90 | 15,519,035.33 |
| Investment income (loss) from derecognition of derivative financial liabilities | (6,454,000.00) | - |
| Dividend income from investments in other equity instrument during the holding period | 2,310,786.01 | 2,208,584.12 |
| Total | (165,313.89) | 10,828,635.56 |
Notes to the financial statementsYear ended December 31, 2024
- 77 -
(V) Notes to financial statements - continued
49. Gains from changes in fair value
RMB
| Sources of gains from changes in fair value | Amount for the current year | Amount for the previous year |
| Financial assets held for trading | 2,413,062.80 | 2,151,780.82 |
| Derivative financial liabilities | (1,278,559.35) | - |
| Total | 1,134,503.45 | 2,151,780.82 |
50. Credit loss gains
RMB
| Item | Amount for the current year | Amount for the previous year |
| Gains on impairment of accounts receivable (Note (V), 4 (2)) | 5,093,840.35 | 4,133,136.51 |
| Gains on impairment of other receivables (Note (V), 7 (3)) | 6,606.31 | 402,638.63 |
| Total | 5,100,446.66 | 4,535,775.14 |
51. Asset impairment loss
RMB
| Item | Amount for the current year | Amount for the previous year |
| Inventory depreciation loss | (123,538,967.06) | (126,089,709.42) |
| Fixed asset impairment loss | (6,863,474.54) | - |
| Other asset impairment loss | (2,020,667.15) | - |
| Total | (132,423,108.75) | (126,089,709.42) |
52. Non-operating revenue
RMB
| Item | Amount for the current year | Amount for the previous year | Amount included in the current non-recurring profit or loss |
| Gains from unclaimed payables | 1,439,654.31 | 768,398.45 | 1,439,654.31 |
| Liquidated damages | 275,672.99 | 252,000.00 | 275,672.99 |
| Insurance compensation | 24,911.31 | 193,275.48 | 24,911.31 |
| Gains from the damage and scrapping of non-current assets | 341.42 | - | 341.42 |
| Others | 64,506.89 | 236,205.33 | 64,506.89 |
| Total | 1,805,086.92 | 1,449,879.26 | 1,805,086.92 |
Notes to the financial statementsYear ended December 31, 2024
- 78 -
(V) Notes to financial statements - continued
53. Non-operating expenses
RMB
| Item | Amount for the current year | Amount for the previous year | Amount included in the current non-recurring profit or loss |
| Losses on scrapping of non-current assets | 51,361.87 | 115,541.99 | 51,361.87 |
| Amercement outlay | 44,000.00 | 42,319.72 | 44,000.00 |
| Compensation expenses | 468,146.00 | 7,926,787.08 | 468,146.00 |
| Other losses | 134,509.84 | 121,152.72 | 134,509.84 |
| Total | 698,017.71 | 8,205,801.51 | 698,017.71 |
54. Income tax expenses
(1) List of income tax expenses
RMB
| Item | Amount for the current year | Amount for the previous year |
| Income tax expenses for the current period | 8,562,225.60 | 8,563,917.13 |
| Deferred tax expenses | 1,264,876.43 | 10,843,814.34 |
| Total | 9,827,102.03 | 19,407,731.47 |
(2) Adjustment process of accounting profits and income tax expenses
RMB
| Item | Amount for the current year | Amount for the previous year |
| Total profits | 152,883,868.41 | 146,544,210.05 |
| Income tax expenses calculated at statutory tax rate | 38,220,967.10 | 36,636,052.51 |
| Influence of different tax rates applicable to subsidiaries | (15,431,945.83) | (14,393,929.80) |
| Influence of adjustments to the income tax for the prior years | (27,243.77) | 27,700.05 |
| Influence of non-taxable income | (3,079,800.79) | (1,126,262.45) |
| Influence of nondeductible costs, expenses and losses | 5,591,965.60 | 2,266,174.69 |
| Utilization of unrecognized deductible losses and deductible temporary differences from prior periods and their tax effects | (7,061,678.51) | (25,587.79) |
| Tax effects of unrecognized deductible losses and deductible temporary differences | 4,078,341.28 | 10,154,045.89 |
| Changes in deferred tax assets/liabilities at the beginning of the period due to tax rate adjustments | - | (21,128.84) |
| Additional deduction for R&D expenses | (12,458,381.02) | (13,995,916.51) |
| Others | (5,122.03) | (113,416.28) |
| Income tax expenses | 9,827,102.03 | 19,407,731.47 |
Notes to the financial statementsYear ended December 31, 2024
- 79 -
(V) Notes to financial statements - continued
55. Notes to items in statement of cash flows
(1) Cash related to operating activities
Other cash received related to operating activities
RMB
| Item | Amount for the current year | Amount for the previous year |
| Letter of credit guarantee and deposit | 30,652,489.87 | 37,450,879.69 |
| Interest income | 9,057,486.70 | 18,578,870.77 |
| Government grants | 24,242,842.93 | 16,029,942.02 |
| Current accounts and others | 23,056,150.45 | 15,217,631.42 |
| Total | 87,008,969.95 | 87,277,323.90 |
Other cash paid related to operating activities
RMB
| Item | Amount for the current year | Amount for the previous year |
| Letter of credit guarantee and deposit | 57,908,823.39 | 34,639,361.27 |
| Out-of-pocket expenses | 68,667,614.18 | 71,894,532.84 |
| Current accounts and others | 27,179,768.77 | 10,910,080.05 |
| Total | 153,756,206.34 | 117,443,974.16 |
(2) Cash related to investing activities
Other cash received related to significant investing activities
RMB
| Item | Amount for the current year | Amount for the previous year |
| Structural deposits | 950,000,000.00 | 950,000,000.00 |
| Monetary fund | 747,000,000.00 | 245,000,000.00 |
| Certificates of deposit and others | - | 259,000,000.00 |
| Total | 1,697,000,000.00 | 1,454,000,000.00 |
Other cash paid related to significant investing activities
RMB
| Item | Amount for the current year | Amount for the previous year |
| Structural deposits | 950,000,000.00 | 1,400,000,000.00 |
| Monetary fund | 649,000,000.00 | 290,500,000.00 |
| Foreign exchange forward contract | 6,454,000.00 | - |
| Certificates of deposit and others | - | 150,000,000.00 |
| Total | 1,605,454,000.00 | 1,840,500,000.00 |
Notes to the financial statementsYear ended December 31, 2024
- 80 -
(V) Notes to financial statements - continued
55. Notes to items in statement of cash flows - continued
(2) Cash related to investing activities - continued
Other cash received related to investing activities
RMB
| Item | Amount for the current year | Amount for the previous year |
| Wealth management investment and structured deposits | 1,697,000,000.00 | 1,454,000,000.00 |
Other cash paid related to investing activities
RMB
| Item | Amount for the current year | Amount for the previous year |
| Wealth management investment and structured deposits | 1,605,454,000.00 | 1,840,500,000.00 |
(3) Cash related to financing activities
Other cash paid related to financing activities
RMB
| Item | Amount for the current year | Amount for the previous year |
| Lease payments | 9,508,462.57 | 8,776,024.71 |
Changes in various liabilities arising from financing activities
RMB
| Item | Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year | ||
| Cash changes | Non-cash changes | Cash changes | Non-cash changes | |||
| Short-term borrowings | 8,000,000.00 | - | - | 8,000,000.00 | - | - |
| Long-term borrowings (Note) | 608,190,812.09 | - | 18,176,583.78 | 416,966,547.83 | - | 209,400,848.04 |
| Lease liabilities (Note) | 12,177,572.68 | - | 13,711,940.60 | 9,508,462.57 | - | 16,381,050.71 |
| Total | 628,368,384.77 | - | 31,888,524.38 | 434,475,010.40 | - | 225,781,898.75 |
Note: long-term borrowings and lease liabilities include those maturing within one year.
(4) The Group does not present cash flows on a net basis.
(5) The Group has no significant activities that do not involve current cash receipts and payments but affect thefinancial position of the enterprise or may affect the cash flows of the enterprise in the future.
Notes to the financial statementsYear ended December 31, 2024
- 81 -
(V) Notes to financial statements - continued
56. Supplementary information to statement of cash flows
(1) Supplementary information to the statement of cash flows
RMB
| Supplementary information | Amount for the current year | Amount for the previous year |
| 1. Adjustment of net profit to cash flows from operating activities: | ||
| Net profit | 143,056,766.38 | 127,136,478.58 |
| Plus: provision for assets impairment | 132,423,108.75 | 126,089,709.42 |
| Provision for credit losses (reversal) | (5,100,446.66) | (4,535,775.14) |
| Depreciation of fixed assets and investment properties | 237,717,328.95 | 235,884,938.02 |
| Amortization of right-of-use assets | 9,651,343.75 | 8,257,857.90 |
| Amortization of intangible assets | 4,575,688.69 | 4,891,672.68 |
| Amortization of long-term deferred expenses | 2,934,915.74 | 2,160,430.42 |
| Losses (gains) from disposal of fixed assets, intangible assets and other long-term assets | - | (1.72) |
| Losses (gains) on retirement of non-current assets | 51,020.45 | 113,290.32 |
| Losses from changes in fair value (income) | (1,134,503.45) | (2,151,780.82) |
| Financial expenses (income) | 17,301,161.66 | 26,883,671.86 |
| Investment loss (income) | 165,313.89 | (10,828,635.56) |
| Decrease (increase) in deferred tax assets | 1,684,854.22 | 9,218,448.87 |
| Increase (decrease) in deferred tax liabilities | (419,977.79) | 1,625,365.47 |
| Decrease (increase) in inventories | (176,903,495.67) | (304,034,232.92) |
| Decrease (increase) in operating receivables | 29,434,877.96 | (126,515,773.08) |
| Increase (decrease) in operating payables | (164,173,431.78) | 90,571,075.50 |
| Net cash flows from operating activities | 231,264,525.09 | 184,766,739.80 |
| 2. Net changes in cash and cash equivalents: | ||
| Ending balance of cash and cash equivalents | 302,084,839.35 | 461,420,457.33 |
| Less: beginning balance of cash and cash equivalents | 461,420,457.33 | 874,474,834.46 |
| Net increase (decrease) in cash and cash equivalents | (159,335,617.98) | (413,054,377.13) |
(2) Composition of cash and cash equivalents
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year |
| I. Cash | 302,084,839.35 | 461,420,457.33 |
| Including: cash on hand | 4,751.69 | 1,710.40 |
| Unrestricted bank deposits | 302,080,087.66 | 461,418,746.93 |
| Other unrestricted monetary funds | - | - |
| II. Cash equivalents | - | - |
| III. Balance of cash and cash equivalents at the end of the year | 302,084,839.35 | 461,420,457.33 |
(3) As of the end of the year, the Group had no cash and cash equivalents with restricted use that were still presented assuch.
Notes to the financial statementsYear ended December 31, 2024
- 82 -
(V) Notes to financial statements - continued
56. Supplementary information to the statement of cash flows - continued
(4) Monetary funds other than cash and cash equivalents
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year | Reason |
| Bill and L/C guarantee | 35,443,338.96 | 5,905,118.06 | Not available for payment at any time |
| Demand interest and 7-day notice deposit interest | 31,765.51 | 1,548,872.61 | Not available for payment at any time |
| Others | 3,401,500.00 | 3,400,000.00 | Account freezing |
| Total | 38,876,604.47 | 10,853,990.67 |
57. Monetary items in foreign currency
(1) Foreign currency monetary items
RMB
| Item | Foreign currency balance at the end of the current year | Exchange rate of conversion | Conversion at the end of the current year RMB balance |
| Monetary funds | 84,414,773.46 | ||
| Including: USD | 5,628,812.10 | 7.1884 | 40,462,152.89 |
| JPY | 934,188,594.29 | 0.0462 | 43,190,341.28 |
| HKD | 823,195.78 | 0.9260 | 762,279.29 |
| Accounts receivable | 38,996,397.54 | ||
| Including: USD | 5,389,057.25 | 7.1884 | 38,738,699.13 |
| HKD | 278,280.00 | 0.9260 | 257,698.41 |
| Other receivables | 506,973.56 | ||
| Including: USD | 70,526.62 | 7.1884 | 506,973.56 |
| Accounts payable | 165,329,381.79 | ||
| Including: USD | 2,549,681.14 | 7.1884 | 18,328,127.89 |
| JPY | 3,179,297,798.00 | 0.0462 | 146,988,475.10 |
| HKD | 13,800.00 | 0.9260 | 12,778.80 |
| Other payables | 6,609,813.60 | ||
| Including: USD | 879,786.00 | 7.1884 | 6,324,253.68 |
| JPY | 5,555,131.00 | 0.0462 | 256,830.37 |
| HKD | 31,025.43 | 0.9260 | 28,729.55 |
58. Lease
(1)As a lessee
The Group leases a number of assets, including houses and buildings, for lease terms of 1 to 10 years. The above right-of-use assets cannot be used for purposes such as borrowing mortgages, guarantees, etc.
The Group had no variable lease payments that were not included in the measurement of lease liabilities.
Notes to the financial statementsYear ended December 31, 2024
- 83 -
(V) Notes to financial statements - continued
58. Leases - continued
(1) As a lessee - continued
The short-term lease expenses subject to simplified accounting treatment and recognized in the current profit or loss inthis year amounted to RMB 950,508.89 (previous year: RMB 558,957.38).
The total cash outflows related to leases in the current year amounted to RMB 10,458,971.46 (previous year: RMB9,334,982.09).
(2) As a lessor
Operating lease as lessor
RMB
| Item | Lease income | Including: revenue related to variable lease payments not included in lease receipts |
| Buildings and constructions | 96,066,371.44 | - |
The operating leases of the Group as the lessor are related to houses and buildings, with lease terms ranging from 1 to 15years.
The revenue related to operating leases in the current year amounted to RMB 96,066,371.44 (previous year: RMB97,558,143.88), of which the revenue related to variable lease payments not included in the lease receipts amounted toRMB 0 (previous year: RMB 0).
RMB
| Item | Undiscounted lease receipts | |
| Amount at the end of current year | Amount at the end of the previous year | |
| The first year after the balance sheet date | 66,825,466.35 | 74,399,477.80 |
| The second year after the balance sheet date | 49,946,457.62 | 54,475,653.29 |
| The third year after the balance sheet date | 31,103,495.38 | 44,564,404.34 |
| The fourth year after the balance sheet date | 8,785,825.58 | 29,708,115.33 |
| The fifth year after the balance sheet date | 6,625,510.75 | 9,346,233.32 |
| Subsequent years | 5,106,929.55 | 7,327,310.40 |
| Total undiscounted lease receipts | 168,393,685.23 | 219,821,194.48 |
Notes to the financial statementsYear ended December 31, 2024
- 84 -
（VI） R&D expenditures
(1) Presented by nature of expenses
RMB
| Item | Amount for the current year | Amount for the previous year |
| Employee compensation | 15,844,594.49 | 14,827,264.16 |
| Material consumption | 83,483,679.76 | 85,216,243.35 |
| Depreciation cost | 3,275,385.23 | 3,389,328.35 |
| Others | 1,208,163.43 | 1,220,205.06 |
| Total | 103,811,822.91 | 104,653,040.92 |
| Including: expensed R&D expenditures | 103,811,822.91 | 104,653,040.92 |
| Capitalized R&D expenditures | - | - |
(2) The Group has no development expenses of R&D projects that meet the capitalization requirements.
(3) The Group has no significant outsourced projects under research.
（VII） Changes in the scope of consolidation
The consolidation scope of the Group has not changed.
（VIII） Equity in other entities
1. Interest in subsidiary
(1) Structure of the enterprise group
| Name of subsidiaries | Main premise | Registered capital (RMB) | Registration place | Business nature | Shareholding ratio of the Company (%) | Method of acquisition | |
| Direct | Indirect | ||||||
| Shenzhen Lisi Industrial Development Co., Ltd. | Shenzhen | RMB 2,360,000.00 | Shenzhen | Property leasing | 100.00 | - | Establishment |
| Shenzhen Huaqiang Hotel Co., Ltd. | Shenzhen | RMB 10,005,300.00 | Shenzhen | Property leasing | 100.00 | - | Establishment |
| Shenzhen Shenfang Property Management Co., Ltd. | Shenzhen | RMB 1,600,400.00 | Shenzhen | Property management | 100.00 | - | Establishment |
| Shenzhen MCENTURY Garment Co., Ltd. | Shenzhen | RMB 13,000,000.00 | Shenzhen | Production and sales of textiles | 100.00 | - | Establishment |
| Shenzhen Shenfang Sungang Property Management Co., Ltd. | Shenzhen | RMB 1,000,000.00 | Shenzhen | Property management | 100.00 | - | Establishment |
| SAPO Photoelectric | Shenzhen | RMB 583,333,333.00 | Shenzhen | Production and sales of polarizers | 60.00 | - | Acquisition |
| SATO (Hong Kong) Limited | Hong Kong | HKD 10,000.00 | Hong Kong | Polarizer sales | - | 100.00 | Establishment |
Notes to the financial statementsYear ended December 31, 2024
- 85 -
(VIII) Interests in other entities - continued
1. Interests in subsidiary - continued
(2) Significant non-wholly-owned subsidiaries
RMB
| Name of subsidiaries | Shareholding ratio by minority shareholders | Profit or loss attributable to minority shareholders in the current year | Dividends declared to be distributed to minority shareholders in the current year | Balance of minority interests at the end of the current year |
| SAPO Photoelectric | 40.00% | 53,685,632.14 | - | 1,283,450,723.88 |
(3) Key financial information of significant non-wholly-owned subsidiaries
RMB
| Item | SAPO Photoelectric | |
| Balance as at the end of the current year/ Amount for the current year | Balance as at the end of the previous year/ Amount for the previous year | |
| Current assets | 2,039,673,042.84 | 2,224,998,868.32 |
| Non-current assets | 1,998,903,130.31 | 2,215,651,449.74 |
| Total assets | 4,038,576,173.15 | 4,440,650,318.06 |
| Current liabilities | 567,603,106.30 | 762,685,435.65 |
| Non-current liabilities | 267,706,992.70 | 608,912,888.60 |
| Total liabilities | 835,310,099.00 | 1,371,598,324.25 |
| Operating revenue | 3,230,006,072.51 | 2,944,147,907.27 |
| Net profit | 134,214,080.34 | 119,670,570.33 |
| Total comprehensive income | 134,214,080.34 | 119,968,303.83 |
| Cash flows from operating activities | 205,666,636.23 | 168,163,478.05 |
2. Equity in joint ventures or associates
Summarized financial information of insignificant joint ventures and associates
RMB
| Item | Balance as at the end of the current year/ Amount for the current year | Balance as at the end of the previous year/ Amount for the previous year |
| Joint ventures: | ||
| Total of investment book value | 111,555,887.28 | 122,370,494.08 |
| Total amounts of the following items calculated at shareholding ratio | ||
| - Net profit (loss) | (10,814,606.80) | (7,135,777.68) |
| -Other comprehensive income | - | - |
| -Total comprehensive income | (10,814,606.80) | (7,135,777.68) |
| Associates: | ||
| Total of investment book value | 3,272,138.76 | 5,311,526.62 |
| Total amounts of the following items calculated at shareholding ratio | ||
| -Net profit | 112,711.72 | 236,793.79 |
| -Other comprehensive income | - | 99,168.85 |
| -Total comprehensive income | 112,711.72 | 335,962.64 |
Notes to the financial statementsYear ended December 31, 2024
- 86 -
（IX） Government grants
(1) As at December 31, 2024, the Group had no government grants recognized at the amount receivable.
(2) Liability items involving government grants
RMB
| Liabilities | Amount at the beginning of the year | New grants in the current year | Amount included in non-operating revenue in the current year | Amount included in other income in the current year | Other changes in the current year | Amount at the end of current year | Related to assets/ Related to income |
| Deferred income | 97,485,986.89 | 15,265,000.00 | 16,401,790.63 | - | 96,349,196.26 | Related to assets | |
| Total | 97,485,986.89 | 15,265,000.00 | - | 16,401,790.63 | - | 96,349,196.26 |
(3) Government grants included in the current profit or loss
RMB
| Grants | Amount for the current year | Amount for the previous year |
| Other income | 25,379,633.56 | 33,711,100.17 |
（X） Risks associated with financial instruments
The group's main financial instruments include monetary funds, financial assets held for trading, notes receivable,accounts receivable, receivables financing, other receivables, other equity instrument investments, short-termborrowings, derivative financial liabilities, notes payable, accounts payable, other payables, other current liabilities andlong-term borrowings, etc. At the end of the year, the financial instruments held by the group are as follows, and thedetails are described in note (v). Risks associated with these financial instruments and the risk management policiesadopted by the group to mitigate these risks are described below. The group's management manages and monitors theseexposures to ensure that the risks are controlled within certain limits.
Notes to the financial statementsYear ended December 31, 2024
- 87 -
(X) Risks related to financial instruments - continued
RMB
| Item | Amount at the end of current year | Amount at the end of the previous year |
| Financial assets | ||
| Measured at fair value through current profit or loss | ||
| Financial assets held for trading | 731,419,904.42 | 821,946,114.68 |
| Measured at fair value through other comprehensive income | ||
| Receivables financing | 6,804,603.68 | 22,839,459.13 |
| Other equity instrument investments | 165,402,900.00 | 145,988,900.00 |
| Measured at amortized costs | ||
| Monetary funds | 340,961,443.82 | 472,274,448.00 |
| Notes receivable | 47,305,221.88 | 50,963,943.01 |
| Accounts receivable | 863,731,936.89 | 820,134,833.95 |
| Other receivables | 3,596,543.96 | 3,219,287.77 |
| Financial liabilities | ||
| Measured at fair value through current profit or loss | ||
| Derivative financial liabilities | 1,278,559.35 | - |
| Measured at amortized costs | ||
| Short-term borrowings | - | 8,000,000.00 |
| Notes payable | 31,095,540.29 | 31,049,291.49 |
| Accounts payable | 304,812,580.55 | 408,548,136.24 |
| Other payables | 160,296,989.98 | 184,528,344.55 |
| Other current liabilities | 30,291,952.76 | 42,665,954.11 |
| Long-term borrowings | 209,400,848.04 | 608,190,812.09 |
The group uses sensitivity analysis techniques to analyze the possible impact of reasonable and possible changes in riskvariables on the current profit or loss and shareholders' equity. As any risk variable seldom changes in isolation, and thecorrelation between the variables will have a significant effect on the final affected amount of the change of a riskvariable, the following contents are carried out under the assumption that the change of each variable is independently:
1. Risk management objectives, policies and procedures, and changes in the current year
The group's objective in risk management is to achieve an appropriate balance between risk and return, minimize thenegative impact of risk on the group's operating performance, and maximize the interests of shareholders and otherequity investors. Based on this risk management objective, the basic strategy of the group's risk management is toidentify and analyze various risks faced by the group, establish an appropriate risk tolerance bottom line and conductrisk management, and timely and reliably supervise various risks to control risks within a limited scope.
Notes to the financial statementsYear ended December 31, 2024
- 88 -
(X) Risks related to financial instruments - continued
1. RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES, AND CHANGES IN THECURRENT YEAR - CONTINUED
1.1 MARKET RISK
1.1.1 FOREIGN EXCHANGE RISK
Foreign exchange risk refers to the risk of losses arising from the exchange rate fluctuation. The Group's exposure toforeign exchange risk is mainly related to the USD, the JPY and the HKD. Except for some of the Group's importpurchases and export sales in Chinese mainland, which were mainly settled in USD, JPY and HKD, the Group's othermajor business activities were settled in RMB.
As of December 31, 2024, except for the foreign currency monetary items in Note (V), 57, the assets and liabilities ofthe Group were all in RMB. The foreign currency balances of assets and liabilities (converted into RMB) listed in thetable below may expose the Group to foreign exchange risks that could impact its operating performance.
RMB
| Item | Balance as at the end of the current year | |
| Assets | Liabilities | |
| USD | 79,707,825.58 | 24,652,381.57 |
| JPY | 43,190,341.28 | 147,245,305.47 |
| HKD | 1,019,977.70 | 41,508.35 |
The Group closely monitors the impact of exchange rate changes on the Group's foreign exchange risk and will takemeasures to avoid foreign exchange risk according to the actual situation.
Sensitivity analysis of foreign exchange risk
With other variables unchanged, the pre-tax impact of reasonable changes in exchange rates on the current profit or lossand shareholders' equity is as follows:
RMB
| ITEM | FLUCTUATION IN EXCHANGE RATE | CURRENT YEAR | PREVIOUS YEAR | ||
| IMPACT ON PROFIT | IMPACT ON SHAREHOLDERS' EQUITY | IMPACT ON PROFIT | IMPACT ON SHAREHOLDERS' EQUITY | ||
| ALL FOREIGN CURRENCIES | REVALUATION AGAINST RMB BY 5% | (2,401,052.54) | (2,401,052.54) | (11,522,564.42) | (11,522,564.42) |
| ALL FOREIGN CURRENCIES | DEPRECIATION AGAINST RMB BY 5% | 2,401,052.54 | 2,401,052.54 | 11,522,564.42 | 11,522,564.42 |
1.1.2. Interest rate risk - risk of changes in cash flows
The Group's risk of changes in cash flows of financial instruments due to changes in interest rates is mainly related tobank borrowings with floating rates. The Group continues to closely monitor the impact of interest rate changes on theGroup's interest rate risk. The Group's policy is to maintain the floating rate of these borrowings, and there are currentlyno interest rate swap arrangements.
Notes to the financial statementsYear ended December 31, 2024
- 89 -
(X) Risks related to financial instruments - continued
1. RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES, AND CHANGES IN THECURRENT YEAR - CONTINUED
1.1 MARKET RISK - CONTINUED
1.1.2. Interest rate risk - risk of changes in cash flows - continued
SENSITIVITY ANALYSIS OF INTEREST RATE RISK:
WITH OTHER VARIABLES UNCHANGED, THE PRE-TAX IMPACT OF REASONABLE CHANGES ININTEREST RATES ON THE CURRENT PROFIT OR LOSS AND SHAREHOLDERS' EQUITY IS AS FOLLOWS:
RMB
| ITEM | FLUCTUATION IN EXCHANGE RATE | CURRENT YEAR | PREVIOUS YEAR | ||
| IMPACT ON PROFIT | IMPACT ON SHAREHOLDERS' EQUITY | IMPACT ON PROFIT | IMPACT ON SHAREHOLDERS' EQUITY | ||
| FLOATING RATE BORROWINGS | UP 1% | (2,092,051.50) | (2,092,051.50) | (6,154,214.55) | (6,154,214.55) |
| FLOATING RATE BORROWINGS | DOWN 1% | 2,092,051.50 | 2,092,051.50 | 6,154,214.55 | 6,154,214.55 |
1.2. Credit risk
As of December 31, 2024, the maximum credit risk exposure that may cause financial losses to the Group mainly comesfrom the losses of the Group's financial assets due to the failure of the other party to the contract to perform itsobligations, including: monetary funds, financial assets held for trading, notes receivable, accounts receivable,receivables financing and other receivables. On the balance sheet date, the book value of the Group's financial assetsrepresents its maximum credit risk exposure.
In order to reduce the credit risk, the Group arranges special personnel to determine the credit line, conduct creditapproval, and implement other monitoring procedures to ensure that necessary measures are taken to recover overduedebts. In addition, the Group reviews the recovery of financial assets on each balance sheet date to ensure that adequateprovision for credit losses has been made for the relevant financial assets. Therefore, the management of the Groupbelieves that the credit risk assumed by the Group has been greatly reduced.
The Group's monetary funds are deposited in banks with high credit ratings, so the monetary funds only have low creditrisk.
As of December 31, 2024, the balance of accounts receivable from the top five customers of the Group was RMB559,026,608.51, accounting for 61.96% of the balance of accounts receivable of the Group. In addition, the Group hasno other significant credit risk exposure concentrated in a single financial asset or a portfolio of financial assets withsimilar characteristics.
1.3. Liquidity risk
When managing liquidity risk, the Group maintains cash and cash equivalents that the management believes aresufficient and monitors them to meet the Group's operational needs and reduce the impact of fluctuations in cash flows.The Group's management monitors the use of bank borrowings and ensures compliance with loan agreements.
Notes to the financial statementsYear ended December 31, 2024
- 90 -
(X) Risks related to financial instruments - continued
1. RISK MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES, AND CHANGES IN THECURRENT YEAR - CONTINUED
1.3. Liquidity risk - continued
AS AT DECEMBER 31, 2024, THE UNUSED COMPREHENSIVE BANK CREDIT LINE OF THE GROUP WASRMB 1,380,340,000
THE GROUP'S FINANCIAL LIABILITIES HELD ARE PRESENTED AS FOLLOWS BASED ON THE MATURITYOF UNDISCOUNTED REMAINING CONTRACTUAL OBLIGATIONS:
RMB
| Item | Within 1 year | 1 - 5 years | Over 5 years | Total |
| Notes payable | 31,095,540.29 | - | - | 31,095,540.29 |
| Accounts payable | 304,812,580.55 | - | - | 304,812,580.55 |
| Other payables | 160,296,989.98 | - | - | 160,296,989.98 |
| Other current liabilities | 30,291,952.76 | - | - | 30,291,952.76 |
| Long-term borrowings | 52,192,649.82 | 169,663,448.78 | - | 221,856,098.60 |
| Lease liabilities | 7,411,263.65 | 7,808,943.06 | 3,098,158.97 | 18,318,365.68 |
| Derivative financial liabilities | 1,278,559.35 | - | - | 1,278,559.35 |
2. Transfer of financial assets
2.1 Classification of transfer methods
RMB
| Transfer method | Nature of transferred financial assets | Amount of transferred financial assets | Derecognition | Judgment basis for derecognition |
| Factoring | Accounts receivable | 59,923,300.74 | Derecognized | After the accounts receivable is factored, the factor has no right to recover from the Group, and almost all the risks and rewards of the ownership of the accounts receivable have been transferred |
| Transfer by endorsement | Outstanding bank acceptance bills classified as receivables financing | 34,926,518.99 | Derecognized | The credit risk level of the acceptance bank of the bank acceptance bill transferred by endorsement is relatively high, and almost all the risks and rewards of the ownership of the corresponding receivables financing have been transferred |
| Transfer by endorsement | Outstanding bank acceptance bills classified as notes receivable | 30,291,952.76 | Not derecognized | The credit risk level of the acceptance bank of the bank acceptance bill transferred by endorsement is not high, and almost all the risks and rewards of the ownership of the relevant notes receivable are retained |
| Total | 125,141,772.49 |
2.2 Financial assets derecognized due to transfer
RMB
| Item | Transfer method of financial assets | Amount of derecognized financial assets | Gains or losses related to derecognition |
| Receivables financing | Transfer by endorsement | 34,926,518.99 | - |
| Accounts receivable | Factoring | 59,923,300.74 | - |
| Total | 94,849,819.73 | - |
Notes to the financial statementsYear ended December 31, 2024
- 91 -
(X) Risks related to financial instruments - continued
2. Transfer of financial assets - continued
2.3 Transfer of financial assets with continued involvement
RMB
| Item | Asset transfer method | Amount of assets arising from continued involvement | Amount of liabilities arising from continued involvement |
| Notes receivable | Transfer by endorsement | 30,291,952.76 | 30,291,952.76 |
| Total | 30,291,952.76 | 30,291,952.76 |
（XI） Disclosure of fair value
1. Fair value of assets and liabilities measured at fair value at the end of the year
RMB
| Item | Fair value at the end of current year | |||
| Measured at the fair value of the 1st level | Measured at the fair value of the 2nd level | Measured at the fair value of the 3rd level | Total | |
| Continuous fair value measurement | ||||
| (I) Financial assets held for trading | - | 731,419,904.42 | - | 731,419,904.42 |
| (II) Receivables financing | - | - | 6,804,603.68 | 6,804,603.68 |
| (III) Other equity instrument investments | - | - | 165,402,900.00 | 165,402,900.00 |
| Total assets constantly measured at fair value | - | 731,419,904.42 | 172,207,503.68 | 903,627,408.10 |
| (IV) Derivative financial liabilities | - | 1,278,559.35 | - | 1,278,559.35 |
| Total liabilities constantly measured at fair value | - | 1,278,559.35 | - | 1,278,559.35 |
2. Qualitative and quantitative valuation techniques and important parameters of sustainable and non-sustainable items measured on the basis of fair value of level 2
RMB
| Item | Fair value at the end of current year | Valuation techniques | Input value |
| Financial assets held for trading | 731,419,904.42 | Discounted cash flow method | Expected rate of return |
| Derivative financial liabilities | 1,278,559.35 | Discounted cash flow method | The contracted delivery exchange rate under forward foreign exchange contracts and the market forward exchange rate as of the balance sheet date |
3. Qualitative and quantitative valuation techniques and important parameters of sustainable and non-sustainable items measured on the basis of fair value of level 3
RMB
| Item | Fair value at the end of current year | Valuation techniques | Input value |
| Receivables financing | 6,804,603.68 | Discounted cash flow method | Discount rate |
| Other equity instrument investments | 165,402,900.00 | Comparable Public Company Method | P/B ratio of similar listed companies |
| Comparable earnings method | Market price | ||
| Statement adjustment method | Book value |
Notes to the financial statementsYear ended December 31, 2024
- 92 -
(XI) Disclosure of fair valueDisclosure of fair value - continued
4. Condition of fair value of financial assets and financial liabilities not measured at fair value
Financial assets and liabilities not measured at fair value mainly include: monetary funds, notes receivable, accountsreceivable, other receivables, notes payable, accounts payable, other payables, other current liabilities and long-termborrowings, etc.
The Group's management believes that the book value of financial assets and financial liabilities measured at amortizedcosts in the financial statements is close to the fair value of such assets and liabilities.
（XII） Related parties and related party transactions
1. Parent company
| Name | Registration place | Business nature | Registered capital (RMB '0,000) | Parent company's shareholding ratio in the Company (%) | Proportion of voting rights of the parent company in the Company (%) |
| Shenzhen Investment Holdings Co., Ltd. | Floor 18, Investment Building, Shennan Road, Futian District, Shenzhen | Equity investments, real estate development, etc. | 3,318,600.00 | 46.21 | 46.21 |
Parent company of the Company: the parent company of the Company is a wholly state-owned company approved andauthorized by the Shenzhen Municipal Government, which exercises the functions of the investor in accordance with thelaw for the state-owned enterprises within the authorized scope.
During the reporting period, the registered capital of the parent company changed as follows:
RMB '0,000
| Balance at the beginning of the year | Increase in current year | Decrease in current year | Balance as at the end of the current year |
| 3,235,900.00 | 82,700.00 | - | 3,318,600.00 |
2. Subsidiaries
See Note (VIII), 1 for details of the subsidiary.
3. Joint ventures and associates of the Company
See Note (V), 10 for details of the Company's joint ventures and associates.
Notes to the financial statementsYear ended December 31, 2024
- 93 -
(XII) Related parties and related party transactions - continued
4. Other related parties of the Company
| Name of related party | Relationship with the Company |
| Shenzhen Xinfang Knitting Factory Co., Ltd. | The Company's participated company, whose chairman is appointed by the Group |
| Shenzhen Dailisi Underwear Co., Ltd. | The Company's participated company, whose chairman is appointed by the Group |
| Hengmei Optoelectronics Co., Ltd. | Minority shareholder of the Company's subsidiary SAPO Photoelectric; one of the directors of the company is a supervisor of SAPO Photoelectric |
| Shenzhen Shentou Property Development Co., Ltd. | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Seg Longyan Energy Technology Co., Ltd. | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Guoren P&C Insurance Co., Ltd. Shenzhen Branch | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Talent Service Center (Shenzhen Talent Market) | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Property Management Co., Ltd. | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Cultural Enterprise Development Co., Ltd. (Headquarters) | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Investment Holdings Development Co., Ltd. | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Investment Holdings Digital Technology Co., Ltd. | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Talent Recruitment International Co., Ltd. (Headquarters) | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Leaguer Education Co., Ltd. (Headquarters) | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Legal Training Center Co., Ltd. | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Investment Holdings Sports Event Development Co., Ltd. | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Investment Building Hotel Co., Ltd. | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
| Shenzhen Investment Building Property Management Co., Ltd. | Subsidiary of the parent company of the Company, Shenzhen Investment Holdings Co., Ltd. |
5. Related party transactions
(1) Procurement of goods/receipt of labor services
| Related party | Related party transactions | Amount for the current year | Amount for the previous year |
| Shenzhen Seg Longyan Energy Technology Co., Ltd. | Purchase of electricity | 1,146,803.41 | 1,075,289.19 |
| Guoren P&C Insurance Co., Ltd. Shenzhen Branch | Insurance premiums | 285,104.25 | - |
| Shenzhen Cultural Enterprise Development Co., Ltd. (Headquarters) | Exhibition fees | 136,298.00 | - |
| Shenzhen Talent Service Center (Shenzhen Talent Market) | Outsourcing service fee | 125,596.14 | - |
| Shenzhen Investment Holdings Sports Event Development Co., Ltd. | Marketing expenses | 80,000.00 | - |
| Shenzhen Investment Holdings Digital Technology Co., Ltd. | Information construction | 78,655.84 | - |
| Shenzhen Investment Holdings Development Co., Ltd. | Rental | 65,786.40 | - |
| Shenzhen Property Management Co., Ltd. | Property management fee | 47,258.75 | - |
| Shenzhen Legal Training Center Co., Ltd. | Training expenses | 34,597.00 | - |
| Shenzhen Leaguer Education Co., Ltd. (Headquarters) | Training expenses | 20,449.02 | - |
| Shenzhen Guanhua Printing and Dyeing Co., Ltd. | Interest expenses | 9,025.99 | 16,237.39 |
| Shenzhen Talent Recruitment International Co., Ltd. (Headquarters) | Training expenses | 7,000.00 | - |
| Hengmei Optoelectronics Co., Ltd. | Optical film materials and processing | 2,874.60 | 4,540,435.30 |
| Total | 2,039,449.40 | 5,631,961.88 |
Notes to the financial statementsYear ended December 31, 2024
- 94 -
(XII) Related parties and related party transactions - continued
5. Related party transactions - continued
(2) Sale of goods
RMB
| Related party | Related party transactions | Amount for the current year | Amount for the previous year |
| Hengmei Optoelectronics Co., Ltd. | Polarizer | - | 4,744,631.12 |
| Shenzhen Investment Building Hotel Co., Ltd. | Textiles | - | 163,729.20 |
| Shenzhen Shentou Property Development Co., Ltd. | Textiles | - | 65,634.51 |
| Shenzhen Investment Building Property Management Co., Ltd. | Textiles | - | 35,522.12 |
| Shenzhen Investment Holdings Co., Ltd. | Textiles | - | 15,371.68 |
| Total | - | 5,024,888.63 |
(3) Loans from and to related parties
RMB
| Related party | Amount borrowed | Start date | Maturity date | Notes |
| Borrowed from | ||||
| Shenzhen Guanhua Printing and Dyeing Co., Ltd. | 3,806,454.17 | 2019.07.30 | 2025.07.31 | Annual interest rate 0.15% |
(4) Remuneration of key officers
RMB
| Item | Amount for the current year | Amount for the previous year |
| Remuneration of key officers | 6,932,991.00 | 8,557,258.00 |
6. Accounts receivable, accounts payable to related parties and other unsettled items
(1) Receivables
RMB
| Project | Related party | Balance as at the end of the current year | Balance as at the end of the previous year | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Accounts receivable | Shenzhen Shentou Property Development Co., Ltd. | 6,027.00 | 602.70 | 6,027.00 | 602.70 |
| Other receivables | Shenzhen Dailisi Underwear Co., Ltd. | 1,100,000.00 | 55,000.00 | 1,100,000.00 | 58,850.00 |
| Other receivables | Shenzhen Investment Holdings Development Co., Ltd. | 73,096.00 | 3,910.64 | - | - |
| Other receivables | Shenzhen Guanhua Printing and Dyeing Co., Ltd. | - | - | 41,325.00 | - |
| Total | 1,173,096.00 | 58,910.64 | 1,141,325.00 | 58,850.00 | |
Notes to the financial statementsYear ended December 31, 2024
- 95 -
(XII) Related parties and related party transactions - continued
6. Accounts receivable, accounts payable to related parties and other unsettled items - continued
(2) Payables
RMB
| Project | Related party | Balance as at the end of the current year | Balance as at the end of the previous year |
| Other payables | Shenzhen Guanhua Printing and Dyeing Co., Ltd. | 3,816,981.88 | 3,811,272.20 |
| Shenzhen Changlianfa Printing and Dyeing Co., Ltd. | 2,281,299.95 | 2,023,699.95 | |
| Shenzhen Xinfang Knitting Factory Co., Ltd. | 244,789.85 | 244,789.85 | |
| Shenzhen Investment Holdings Co., Ltd. | - | 485,189.00 | |
| Shenzhen Investment Holdings Sports Event Development Co., Ltd. | 80,000.00 | - | |
| Shenzhen Investment Holdings Digital Technology Co., Ltd. | 37,735.84 | - | |
| Shenzhen Investment Holdings Development Co., Ltd. | 29,238.40 | - | |
| Shenzhen Property Management Co., Ltd. | 7,934.52 | - | |
| Yehui International Co., Ltd. | - | 1,124,656.60 | |
| Total | 6,497,980.44 | 7,689,607.60 |
（XIII） Commitments and contingencies
1. Important commitments
(1) Capital commitments
RMB
| Item | Amount at the end of current year | Amount at the end of previous year |
| Contracted but not recognized in the financial statements | ||
| - Commitment to purchase and construct long-term assets | 53,374.76 | 2,413,823.52 |
2. Contingencies
As of December 31, 2024, the Group had no contingencies such as pending litigations and external guarantees to bediscolsed.
Notes to the financial statementsYear ended December 31, 2024
- 96 -
（XIV） Events after the balance sheet date
1. Profit distribution after the balance sheet date
On March 26 2025, the profit distribution proposal for the year 2024 was approved by the Board of the Company. It isproposed that the Company distribute cash dividends of RMB 0.71 per share (tax inclusive) to all shareholders based onthe total share capital of 506,521,849 shares as of December 31, 2024, resulting in total cash dividends of RMB35,963,051.28 (tax inclusive). The profit distribution plan is subject to the consideration and approval of the Company'sGeneral Meeting.
RMB
| Item | Amount |
| Profit or dividend to be distributed | 35,963,051.28 |
| Profit or dividend declared to be granted upon deliberation and approval | - |
（XV） Other significant matters
1. Segment information
(1) Determination basis and accounting policies for reporting segments
According to the internal organizational structure, management requirements and internal reporting system of the Group,the Group's operating business is divided into two operating segments. The management of the Group regularlyevaluates the operating results of these segments to decide on the allocation of resources to them and evaluate theirperformance. On the basis of operating segments, the Group has identified the following two reporting segments,polarizer business, property leasing business and other business.
Information on segment reporting is disclosed according to the accounting policies and measurement standards adoptedby each segment when reporting to the management, and these measurement bases are consistent with the accountingand measurement bases when preparing the financial statements.
(2) Financial information of reporting segments
RMB
| Current year or end of current year | Polarizer | Property leasing and others | Offset | Total |
| Operating revenue: | ||||
| Revenue from external transactions | 3,219,211,416.65 | 116,071,592.03 | - | 3,335,283,008.68 |
| Revenue from transactions between segments | - | 4,239,345.09 | (4,239,345.09) | - |
| Total operating revenue of segments | 3,219,211,416.65 | 120,310,937.12 | (4,239,345.09) | 3,335,283,008.68 |
| Operating expenses (Note) | 3,007,500,292.36 | 95,037,109.98 | (3,900,557.86) | 3,098,636,844.48 |
| Operating profit | 136,015,568.69 | (20,628,307.04) | 36,389,537.55 | 151,776,799.20 |
| Net profit | 134,120,025.66 | (15,831,104.78) | 24,767,845.50 | 143,056,766.38 |
| Total assets of segments | 4,031,861,994.76 | 3,149,618,569.49 | (1,949,330,166.92) | 5,232,150,397.33 |
| Total liabilities of segments | 835,237,595.88 | 191,159,171.74 | (29,567,004.42) | 996,829,763.20 |
Note: this item includes operating costs, taxes and surcharges, G&A expenses, R&D expenses, selling and distributionexpenses and financial expenses.
Notes to the financial statementsYear ended December 31, 2024
- 97 -
(XV) Other significant events - continued
2. Other significant events affecting the decision-making of investors
(1) Real estate not yet disposed of by Shenzhen Xieli Automobile Enterprise Co., Ltd. (hereinafter referred to as"Shenzhen Xieli")
Our company has invested with Hong Kong Xieli Maintenance Company (hereinafter referred to as "Hong Kong Xieli")to establish a Sino foreign joint venture, Shenzhen Xieli Automobile Enterprise Co., Ltd. (hereinafter referred to as"Shenzhen Xieli"). In March 2020, Shenzhen Xieli was deregistered by the Shenzhen Municipal Administration forMarket Regulation. In July 2020, our company filed an administrative action with the Yantian District People's Court inShenzhen, Guangdong Province to revoke the approval of the Shenzhen Market Supervision Administration for thecancellation of Shenzhen Xieli.
In December 2022, the People's Court of Yantian District, Shenzhen, Guangdong Province, reviewed the first instancejudgment and revoked the administrative action approving the cancellation of Shenzhen Xieli's registration. In January2023, the third party in the original trial, Hong Kong Xieli, appealed to the Shenzhen Intermediate People's Court inGuangdong Province. Later, due to Hong Kong Xieli's failure to pay the case acceptance fee in advance, the ShenzhenIntermediate People's Court issued an administrative ruling, ruling that the appeal should be withdrawn by Hong KongXieli. The retrial judgment of the first instance has taken effect on March 22, 2023. At present, Shenzhen Xieli hasresumed its business registration status, but its future direction still needs to be negotiated among all shareholders.
（XVI） Notes to the main items of the parent company's financial statements
1. Accounts receivable
(1) Disclosure by aging
RMB
| Aging | Book balance at the end of the year | Book balance at the beginning of the year |
| Within 1 year | 10,649,986.34 | 10,190,859.62 |
| 1-2 years | - | - |
| 2 to 3 years | - | 2,485,076.00 |
| 3 - 4 years | 2,485,076.00 | - |
| Total | 13,135,062.34 | 12,675,935.62 |
(2) Disclosure by provision method for bad debts
RMB
| Category | Balance as at the end of the current year | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Ratio (%) | Amount | Provision ratio (%) | ||
| Provision for bad debts accrued on an individual basis | - | - | - | - | - |
| Provision for bad debts made by portfolio | 13,135,062.34 | 100.00 | 106,074.71 | 0.81 | 13,028,987.63 |
| Total | 13,135,062.34 | 100.00 | 106,074.71 | 13,028,987.63 | |
Notes to the financial statementsYear ended December 31, 2024
- 98 -
(XVI) Notes to the main items of the parent company's financial statements - continued
1. Accounts receivable - continued
(2) Disclosure by provision method for bad debts - continued
RMB
| Category | Balance as at the end of the previous year | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Ratio (%) | Amount | Provision ratio (%) | ||
| Provision for bad debts accrued on an individual basis | - | - | - | - | - |
| Provision for bad debts made by portfolio | 12,675,935.62 | 100.00 | 4,311.97 | 0.03 | 12,671,623.65 |
| Total | 12,675,935.62 | 100.00 | 4,311.97 | 12,671,623.65 | |
As of December 31, 2024, accounts receivable with provision for bad debts accrued on a portfolio basis:
RMB
| Aging | Balance as at the end of the current year | |||
| Expected average loss rate (%) | Book balance | Provision for bad debts | Book value | |
| Within 1 year | 1.00 | 10,649,986.34 | 106,074.71 | 10,543,911.63 |
| 3 - 4 years | - | 2,485,076.00 | - | 2,485,076.00 |
| Total | 13,135,062.34 | 106,074.71 | 13,028,987.63 | |
As of December 31, 2024, provision for bad debts is made based on the simplified expected credit losses model
RMB
| Provision for bad debts | Whole duration Expected credit losses (No credit loss) | Whole duration Expected credit losses (With credit loss) | Total |
| Balance at the beginning of the year | 4,311.97 | - | 4,311.97 |
| Balance at the beginning of the year | - | - | - |
| - Transfer to credit loss incurred | - | - | - |
| - Reversal of credit loss not incurred | - | - | - |
| Withdrawal in the current year | 101,762.74 | - | 101,762.74 |
| Reversal in the current year | - | - | - |
| Charge-off in the current year | - | - | - |
| Write-off in the current year | - | - | - |
| Other changes | - | - | - |
| Balance as at the end of the current year | 106,074.71 | - | 106,074.71 |
(3) Provision for bad debts
RMB
| Type | Balance at the beginning of the year | Changes in the current year | Balance as at the end of the current year | |||
| Provision | Recovery or reversal | Resale or write-off | Other changes | |||
| Provision for bad debts | 4,311.97 | 101,762.74 | - | - | - | 106,074.71 |
There was no significant amount of provision for bad debts recovered or reversed this year.
Notes to the financial statementsYear ended December 31, 2024
- 99 -
(XVI) Notes to the main items of the parent company's financial statements - continued
1. Accounts receivable - continued
(4) There are no accounts receivable with actual write-off this year.
(5) Top five entities in terms of the ending balance of accounts receivable by debtor
RMB
| Entity name | At the end of current year Book balance | Ratio in total accounts receivable (%) | Provision for bad debts Balance as at the end of the current year |
| Total amount of the top five accounts receivables as of December 31, 2024. | 13,003,135.50 | 99.00 | 100,734.39 |
2. Other receivables
(1) Disclosure by aging
RMB
| Aging | Balance as at the end of the current year | Balance as at the end of the previous year |
| Within 1 year | 15,129,726.66 | 1,683,810.52 |
| 1-2 years | 273,000.00 | 2,213,073.28 |
| 2 to 3 years | 2,204,641.09 | 10,100,800.01 |
| Over 3 years | 25,380,195.11 | 15,279,395.10 |
| Total | 42,987,562.86 | 29,277,078.91 |
| Less: provision for bad debts | 41,453,167.06 | 15,263,525.96 |
| Book value | 1,534,395.80 | 14,013,552.95 |
(2) Disclosure by nature of payment
RMB
| Nature of payment | Book balance at the end of the year | Book balance at the end of the previous year |
| Transactions with related parties within the consolidation scope | 26,189,641.10 | 12,553,241.09 |
| Transactions with external units | 15,422,435.97 | 15,349,339.97 |
| Guarantee and deposits | 10,000.00 | 10,000.00 |
| Others | 1,365,485.79 | 1,364,497.85 |
| Total | 42,987,562.86 | 29,277,078.91 |
(3) Provision for bad debts
As of December 31, 2024, provision for bad debts shall be made according to the credit risk characteristic combination
RMB
| Phase | Balance as at the end of the current year | |||
| Expected average loss rate (%) | Book balance | Provision for bad debts | Book value | |
| Provision for bad debts based on credit risk characteristic combination Provision for other receivables | 96.43 | 42,987,562.86 | 41,453,167.06 | 1,534,395.80 |
Notes to the financial statementsYear ended December 31, 2024
- 100 -
(XVI) Notes to the main items of the parent company's financial statements - continued
2. Other receivables - continued
(3) Provision for bad debts - continued
As of December 31, 2024, the credit risk and provision for bad debts of other receivables are as follows:
RMB
| Aging | Balance as at the end of the current year | |||
| Expected average loss rate (%) | Book balance | Provision for bad debts | Book value | |
| Within 1 year | 90.62 | 15,129,726.66 | 13,711,066.34 | 1,418,660.32 |
| 1-2 years | 100.00 | 273,000.00 | 273,000.00 | - |
| 2 to 3 years | 100.00 | 2,204,641.09 | 2,204,641.09 | - |
| Over 3 years | 99.54 | 25,380,195.11 | 25,264,459.63 | 115,735.48 |
| Total | 42,987,562.86 | 41,453,167.06 | 1,534,395.80 | |
(4) Changes in provision for bad debts
RMB
| Type | Balance at the beginning of the year | Changes in the current year | Balance as at the end of the current year | |||
| Provision | Recovery or reversal | Resale or write-off | Other changes | |||
| Provision for bad debts | 15,263,525.96 | 26,189,641.10 | - | - | - | 41,453,167.06 |
(5) There were no other receivables actually written off this year.
(6) Top five entities in terms of ending balance of other receivables by debtors
RMB
| Entity name | Nature of payment | Other receivables Balance as at the end of the current year | Aging | Ratio in the total ending balance of other receivables in the current year (%) | Provision for bad debts Balance as at the end of the current year |
| Total amount of the top five other receivables as of December 31, 2024. | Receivables from external entities and internal receivables | 41,496,981.06 | Within 1 year, 1 - 2 years, 2 - 3 years, over 3 years | 96.53 | 40,514,681.06 |
3. Long-term equity investments
RMB
| Item | Balance as at the end of the current year | Balance as at the end of the previous year | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in subsidiaries | 1,962,688,268.31 | 36,826,287.64 | 1,925,861,980.67 | 1,976,433,419.39 | 16,582,629.30 | 1,959,850,790.09 |
| Investments in joint ventures | 111,555,887.28 | - | 111,555,887.28 | 122,370,494.08 | - | 122,370,494.08 |
| Investments in associates | 3,272,138.76 | - | 3,272,138.76 | 5,311,526.62 | - | 5,311,526.62 |
| Total | 2,077,516,294.35 | 36,826,287.64 | 2,040,690,006.71 | 2,104,115,440.09 | 16,582,629.30 | 2,087,532,810.79 |
Notes to the financial statementsYear ended December 31, 2024
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(XVI) Notes to the main items of the parent company's financial statements - continued
3. Long-term equity investments - continued
(1) Investment in subsidiaries
RMB
| Investees | Balance at the beginning of the year | Increase in current year | Decrease in current year | Provision for impairment in the current year | Balance as at the end of the current year | Provision for impairment Balance as at the end of the current year |
| SAPO Photoelectric | 1,910,247,781.94 | - | - | - | 1,910,247,781.94 | 14,415,288.09 |
| Shenzhen Lisi Industrial Development Co., Ltd. | 8,073,388.25 | - | - | - | 8,073,388.25 | - |
| Shenzhen MCENTURY Garment Co., Ltd. | 18,499,458.34 | 1,744,200.00 | - | 20,243,658.34 | - | 22,410,999.55 |
| Shenzhen Huaqiang Hotel Co., Ltd. | 15,489,351.08 | - | 15,489,351.08 | - | - | - |
| Shenzhen Shenfang Property Management Co., Ltd. | 1,713,186.55 | - | - | - | 1,713,186.55 | - |
| Shenzhen Shenfang Sungang Property Management Co., Ltd. | 5,827,623.93 | - | - | - | 5,827,623.93 | - |
| Total | 1,959,850,790.09 | 1,744,200.00 | 15,489,351.08 | 20,243,658.34 | 1,925,861,980.67 | 36,826,287.64 |
(2) Investment in associates and joint ventures
RMB
| Investees | Balance at the beginning of the year | Changes in the current year | Balance as at the end of the current year | Provision for impairment Balance as at the end of the current year | |||||||
| Additional investment | Reduced investment | Investment profit or loss recognized under the equity method | Other comprehensive income adjustment | Other changes in equity | Cash dividends or profits declared to be paid | Provision Provision for impairment | Others | ||||
| Joint ventures | |||||||||||
| Shenzhen Guanhua Printing and Dyeing Co., Ltd. | 122,370,494.08 | - | - | (10,814,606.80) | - | - | - | - | - | 111,555,887.28 | - |
| Sub-total | 122,370,494.08 | - | - | (10,814,606.80) | - | - | - | - | - | 111,555,887.28 | - |
| Associates | |||||||||||
| Shenzhen Changlianfa Printing and Dyeing Co., Ltd. | 3,358,117.09 | - | - | 260,171.67 | - | - | 346,150.00 | - | - | 3,272,138.76 | - |
| Yehui International Co., Ltd. | 1,953,409.53 | - | 1,805,949.58 | (147,459.95) | - | - | - | - | - | - | - |
| Sub-total | 5,311,526.62 | - | 1,805,949.58 | 112,711.72 | - | - | 346,150.00 | - | - | 3,272,138.76 | - |
| Total | 127,682,020.70 | - | 1,805,949.58 | (10,701,895.08) | - | - | 346,150.00 | - | - | 114,828,026.04 | - |
Notes to the financial statementsFor the year ended December 31, 2023
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(XVI) Notes to the main items of the parent company's financial statements - continued
4. Operating revenue and operating costs
(1) Operating revenue and operating costs
RMB
| Item | Amount for the current year | Amount for the previous year | ||
| Revenue | Cost | Revenue | Cost | |
| Primary business | 77,167,496.95 | 10,205,157.84 | 77,822,508.75 | 9,822,306.53 |
(2) Income from primary business and cost of primary business by product
RMB
| Products | Amount for the current year | Amount for the previous year | ||
| Income from primary business | Cost of primary business | Income from primary business | Cost of primary business | |
| Property leasing | 77,167,496.95 | 10,205,157.84 | 77,822,508.75 | 9,822,306.53 |
(3) Income from primary business and cost of primary business by region
RMB
| Region | Amount for the current year | Amount for the previous year | ||
| Income from primary business | Cost of primary business | Income from primary business | Cost of primary business | |
| Domestic | 77,167,496.95 | 10,205,157.84 | 77,822,508.75 | 9,822,306.53 |
5. Investment income
RMB
| Item | Amount for the current year | Amount for the previous year |
| Long-term equity investment income calculated under the equity method | (10,701,895.08) | (6,898,983.89) |
| Income from long-term equity investments under cost method | 4,700,000.00 | 9,989,533.92 |
| Investment income from disposal of long-term equity investments | 5,838,587.94 | - |
| Investment income obtained during holding the financial assets held for trading | 10,795,474.10 | 14,816,230.07 |
| Dividend income from investments in other equity instrument during the holding period | 1,445,735.85 | 1,393,735.85 |
| Total | 12,077,902.81 | 19,300,515.95 |
Supplementary informationYear ended December 31, 2024
1. Breakdown of current non-recurring profit or loss
According to the Interpretive Announcement No. 1 on Information Disclosure of Companies Issuing Securities to thePublic - Non-recurring Profit or Loss (Revision 2023) (hereinafter referred to as "Interpretive Announcement No. 1")issued by the China Securities Regulatory Commission, the Group's non-recurring profit or loss for 2024 are as follows:
RMB
| Item | Amount for the current year |
| Profit or loss from disposal of non-current assets, including the writing-off part for which the asset impairment provision is made | 833,613.28 |
| Government grants included in the current profit or loss (except for those that are closely related to the Company's normal business operations, comply with national policies and regulations, are enjoyed according to determined standards, and have a sustained impact on the Company's profit or loss) | 10,454,530.12 |
| Profit or loss from changes in fair value of financial assets and liabilities held by non-financial enterprises and profit or loss from the disposal of financial assets and financial liabilities, except for effective hedging operations related to the Company's normal business operations | (5,319,496.55) |
| Reversal of provision for impairment of accounts receivable subject to separate impairment test | 13,927,792.63 |
| Non-operating revenue and expenses other than the above-mentioned items | 1,107,069.21 |
| Total non-recurring profit or loss | 21,003,508.69 |
| Less: income tax effect of non-recurring profit or loss | 2,998,978.10 |
| Net amount of non-recurring profit or loss | 18,004,530.59 |
| Less: net effect of non-recurring profit or loss attributable to minority shareholders (after tax) | 5,661,882.11 |
| Non-recurring profit or loss attributable to the Company's ordinary shareholders | 12,342,648.48 |
2. Return on net assets and earnings per share
This return on net assets and earnings per share table is prepared by Shenzhen Textile (Holdings) Co., Ltd. in accordancewith the Rules for the Compilation and Reporting of Information Disclosure by Companies Issuing Securities in Public(No. 9) - Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revision 2010) issued by theChina Securities Regulatory Commission.
RMB
| Profit in the reporting period | Weighted average rate of return on net assets | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to ordinary shareholders of the COOEC | 3.06 | 0.18 | 0.18 |
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring profit or loss | 2.64 | 0.15 | 0.15 |