Zhejiang Dahua Technology Co., Ltd.
2019 Annual Report
Stock code: 002236Stock Abbreviation: DahuaDate of Disclosure: April 2020
Section I Important Notes, Contents and DefinitionsThe Board of Directors, Board of Supervisors, Directors, Supervisors and SeniorManagement of Zhejiang Dahua Technology Co., Ltd. (hereinafter referred to as the"Company") hereby guarantee that the information presented in this report shall beauthentic, accurate and complete and free of any false records, misleading statements ormaterial omissions, and they will bear joint and several liability for such information.Fu Liquan, the Company's legal representative, Wei Meizhong, chief accountant, andXu Qiaofen, person in charge of accounting institution (Accounting Officer) hereby declareand warrant that the financial statements in the annual report are authentic, accurate andcomplete.All directors attended the meeting of the Board of Directors for deliberation of thisannual report.
1. Risk of technology upgrading: the video IoT industry is a typical technology-intensiveindustry, which is changing extremely fast. If the Company is unable to keep up withdevelopment trends in the industry's technology, to pay full attention to customers'diversified individual needs, and to be followed by sufficient R&D investments, it will stillface the risk of losing market competitiveness due to discontinuous innovation.
2. Risk of business model change: with the development of network communications,cloud computing, and big data, AI and other technologies, the business model in the IoT eramay have an impact on the traditional industry development. If an enterprise cannot graspopportunities brought about by the business model transformation in a timely manner, itmay face the risk that the original market structure becomes broken.
3. Risk of product safety: the Company attaches great importance to and continuouslystrengthens resource investment to ensure safe and reliable operations of the securitysystem so as to respond to the product security risks on the Internet. However, hackers’attacks, computer viruses, physical security vulnerabilities, natural disasters, accidents,
power interruptions, telecommunications failures, terrorism, and warfare events may stilloccur from time to time, resulting in security vulnerabilities, system failures, or serviceinterruptions.
4. Intellectual property risk: the promotion of the company's globalization andself-owned brand strategy will likely bring about intellectual property risks and patentinfringement, which may cause fluctuation in business relations and public opinions,increasing lawsuits and rising costs.
5. Risk of exchange rate: the company's export transactions are mostly settled inUnited States Dollars ("USD"), therefore, fluctuations in the exchange rate may affect theprofits of the Company.
6. Risk of declined local fiscal capacity: affected by the COVID-19 outbreak, we seethe rising uncertainty of macro-economic, more downward pressure in the global economy,decreased local fiscal revenues, and a high debt level. If the local fiscal paying capacity isreduced, it may lead to the slowdown in the growth of some industry demands, extensionsof project time, longer periods for companies to withdraw capitals, and customers' paymentdelay.
7. Risk of international operation: at present, the international political and economicsituation is complicated, and there are more uncertain and uncontrollable factors in theinternational market. The company's products and solutions cover 180 countries andregions, and international business may be exposed to the risks of trade protection in thecountries and regions where it is located; In October 2019, the company was listed on the"entity list" by the US Department of Commerce. If the trade friction between China and UScontinues to escalate or US trade protection policy intensifies in the future, it would bringsome uncertainty about the potential impact on the company's business; The COVID-19epidemic is still spreading overseas, which may slow down market demands, or will have anegative impact on the company's local business.
8. Risk of global COVID-19 epidemic: As COVID-19 epidemic is still spreading aroundthe world, many countries locks down cities and even borders. As a result, global demand
falls at the stage, customer demand is deferred or reduced, and export business will facethe risk of decline; In the domestic market, affected by the epidemic situation and controlmeasures since the Spring Festival, the staff has been delayed to return to work, which alsoaffect the upstream material supply and logistics operation. Therefore, there are still someuncertainties in the supply chain. The business of government and corporate customershas been affected to different degrees, and the total demand is insufficient. As it takes timeto resume normal social and economic activities after the epidemic, the Company may facedeclined domestic business.The above points might not be all-inclusive of all other potential risks, please payattention to the potential investment risk.
The profit distribution proposal approved by the board of directors is: Taking2,994,599,750 as the basis, RMB 1.33 (tax included) of cash dividend and 0 bonus share(tax included) for every 10 shares will be distributed to all shareholders, instead of commonreserve capitalizing.
Contents
Section I Important Notes, Contents and Definitions ...... 2
Section II Company Profile and Key Financial Indicators ...... 10
Section III Corporate Business Overview ...... 15
Section IV Discussion and Analysis on Business Circumstance ...... 52
Section V Significant Events ...... 75
Section VI Changes in Shares and Information about Shareholders ...... 100
Section VII Information of Preferred Shares ...... 110
Section VIII Convertible Corporate Bonds ...... 111
Section IX Directors, Supervisors, Senior Managers and Employees ...... 112
Section X Corporate Governance ...... 127
Section XI Corporate Bonds ...... 137
Section XII Financial Report ...... 138
Section XIII Documents Available for Reference ...... 318
Definitions
| Item | Refers To | Definitions |
| Reporting Period | Refers To | From January 1, 2019 to December 31, 2019 |
| Dahua, company, the company | Refers To | Zhejiang Dahua Technology Co., Ltd. |
| Dahua System Engineering, System Engineering Company | Refers To | Zhejiang Dahua System Engineering Co., Ltd. |
| Dahua Vision Technology | Refers To | Zhejiang Dahua Vision Technology Co., Ltd. |
| Dahua Security Network, Operation Company | Refers To | Zhejiang Dahua Security Network Operation Service Co., Ltd. |
| Dahua Ju'an | Refers To | Zhejiang Dahua Ju'an Technology Co., Ltd. |
| Guangxi Dahua Information | Refers To | Guangxi Dahua Information Technology Co., Ltd. |
| Dahua Security | Refers To | Zhejiang Dahua Security Service Co., Ltd. |
| Wuxi Ruide, Wuxi Dahua | Refers To | Wuxi Dahua Ruide Electronic Technology Co., Ltd. |
| Guangxi Security | Refers To | Guangxi Dahua Security Service Co., Ltd. |
| Huatu Microchip | Refers To | Zhejiang Huatu Microchip Technology Co., Ltd. |
| Dahua Zhongzhi | Refers To | Guangxi Dahua Zhongzhi Technology Co., Ltd. |
| Xiaohua Technology, Hangzhou Xiaohua | Refers To | Hangzhou Xiaohua Technology CO., LTD. |
| Dahua Zhilian | Refers To | Zhejiang Dahua Zhilian Co., Ltd. |
| Tecomore Technology | Refers To | Hangzhou Tecomore Technology Co., Ltd. |
| Dahua Investment, Dahua Investment Management | Refers To | Zhejiang Dahua Investment Management Co., Ltd. |
| South North United | Refers To | South North United Information Technology Co., Ltd. |
| Guangxi Zhicheng, Dahua Zhicheng | Refers To | Guangxi Dahua Zhicheng Co., Ltd. |
| Hangzhou Huacheng, Huacheng Network | Refers To | Hangzhou Huacheng Network Technology Co., Ltd. |
| Xinjiang Information | Refers To | Xinjiang Dahua Zhixin Information Technology Co., Ltd. |
| HuaRay Technology | Refers To | Zhejiang HuaRay Technology Co., Ltd. |
| Fuyang Hua'ao | Refers To | Hangzhou Fuyang Hua'ao Technology Co., Ltd. |
| Huafei Intelligent | Refers To | Zhejiang Huafei Intelligent Technology CO., LTD. |
| Huachuang Vision | Refers To | Zhejiang Huachuang Vision Technology Co., Ltd. |
| Guizhou Huayi | Refers To | Guizhou Huayi Shixin Technology Co., Ltd. |
| Hunan System Technology | Refers To | Hunan Dahua System Technology Co., Ltd. |
| Xinjiang Dahua Information | Refers To | Xinjiang Dahua Information Technology Co., Ltd. |
| Xinjiang Intelligence | Refers To | Xinjiang Dahua Intelligence Technology Co., Ltd. |
| Guizhou Intelligence | Refers To | Guizhou Dahua Intelligence Technology Co., Ltd. |
| Xinjiang Zhihe | Refers To | Xinjiang Dahua Zhihe Information Technology Co., Ltd. |
| China Standard Intelligent Security | Refers To | China Standard Intelligent Security Technology Co., Ltd. |
| Guangxi Huacheng | Refers To | Guangxi Huacheng Technology Co., Ltd. |
| Meitan Dahua Technology | Refers To | Guizhou Meitan Dahua Information Technology Co., Ltd. |
| Inner Mongolia Zhimeng | Refers To | Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. |
| Xinjiang Zhitian | Refers To | Xinjiang Dahua Zhitian Information Technology Co., Ltd. |
| Xinjiang Xinzhi | Refers To | Xinjiang Dahua Xinzhi Information Technology Co., Ltd. |
| Xinjiang Huayue | Refers To | Xinjiang Dahua Huayue Information Technology Co., Ltd. |
| Dahua Intelligence (IoT) Industrial Park | Refers To | Dahua Intelligent (IoT) Industrial Park Construction Project |
| Leapmotor Technology | Refers To | Zhejiang Leapmotor Technology Co., Ltd. |
| Leapmotor | Refers To | Leapmotor Automobile Co., Ltd. |
| Tianjin Dahua Information, Tianjin Dahua | Refers To | Tianjin Dahua Information Technology Co., Ltd. |
| Hunan Dahua Zhilong, Dahua Zhilong | Refers To | Hunan Dahua Zhilong Information Technology Co., Ltd. |
| Huaxiao Technology | Refers To | Zhejiang Huaxiao Technology Co., Ltd. |
| Vision Technology | Refers To | Zhejiang Fengshi Technology Co., Ltd. |
| Zhongcheng Technology | Refers To | Dahua Zhongcheng (Beijing) Technology Co., Ltd. |
| Xi'an Dahua Zhilian, Xi'an Dahua | Refers To | Xi'an Dahua Zhilian Technology Co., Ltd. |
| Wuxi Ruipin | Refers To | Wuxi Dahua Ruipin Technology Co., Ltd. |
| Dahua Robot | Refers To | Zhejiang Dahua Robot Technology Co., Ltd. |
| Beijing Huayue | Refers To | Beijing Huayue Shangcheng Information Technology Service Co., Ltd. |
| Shanghai Huashang | Refers To | Shanghai Huashang Chengyue Information Technology Service Co., Ltd. |
| Dahua Jinzhi | Refers To | Zhejiang Dahua Jinzhi Technology Co., Ltd. |
| Dahua Guangxun | Refers To | Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. |
| Huajuan Technology | Refers To | Hangzhou Huajuan Technology Co., Ltd. |
| Dahua Hong Kong, Dahua (HK) Limited | Refers To | Dahua Technology (HK) Limited |
| Zhoushan Operation | Refers To | Zhejiang Zhoushan Digital Development Operation Co., Ltd |
| Yunnan Zhili | Refers To | Yunnan Zhili Technology Co., Ltd |
| Guangxi Dahua Technology | Refers To | Guangxi Dahua Technology Co., Ltd. |
| Dahua USA | Refers To | Dahua Technology USA Inc. |
| Dahua Europe | Refers To | Dahua Europe B.V. |
| Dahua Middle East | Refers To | Dahua Technology Middle East FZE |
| Dahua Mexico | Refers To | Dahua Technology Mexico S.A. DE C.V |
| Dahua Chile | Refers To | Dahua Technology Chile SpA |
| Dahua Malaysia | Refers To | Dahua Security Malaysia SDN. BHD. |
| Dahua Korea | Refers To | Dahua Technology Korea Company Limited |
| Dahua Indonesia | Refers To | PT. Dahua Vision Technology Indonesia |
| Dahua Colombia | Refers To | Dahua Technology Colombia S.A.S |
| Dahua Australia | Refers To | Dahua Technology Australia PTY LTD |
| Dahua Singapore | Refers To | Dahua Technology Singapore Pte. Ltd. |
| Dahua South Africa | Refers To | Dahua Technology South Africa Proprietary Limited |
| Dahua Peru | Refers To | Dahua Technology Perú S.A.C |
| Dahua Russia | Refers To | Dahua Technology Rus Limited Liability Company |
| Dahua Brazil | Refers To | DAHUA TECHNOLOGY BRASIL COM?RCIO E SERVI?OS EM SEGURAN?A ELETR?NICA LTDA |
| Dahua Canada | Refers To | Dahua Technology Canada INC. |
| Dahua Panama | Refers To | Dahua Technology Panama S.A. |
| Dahua Hungary | Refers To | Dahua Technology Hungary Kft |
| Dahua Poland | Refers To | Dahua Technology Poland Sp. z o.o. |
| Dahua Italy | Refers To | Dahua Italy S.R.L. |
| Dahua Tunisia | Refers To | Dahua Technology Tunisia |
| Dahua Kenya | Refers To | Dahua Technology Kenya Limited |
| Dahua UK | Refers To | Dahua Technology UK Limited |
| Dahua Bulgaria | Refers To | Dahua Technology Bulgaria EOOD |
| Dahua Germany | Refers To | Dahua Technology GmbH |
| Dahua Serbia | Refers To | Dahua Technology SRB d.o.o. |
| Dahua India | Refers To | Dahua Technology India Private Limited |
| Dahua Turkey | Refers To | Dahua Guvenlik Teknolojileri Sanayi ve Ticaret A.S. |
| Dahua Czech | Refers To | Dahua Technology Czech s.r.o. |
| Dahua Argentina | Refers To | Dahua Argentina S.A. |
| Dahua Spain | Refers To | Dahua Iberia, S.L. |
| Dahua Kazakhstan | Refers To | Dahua Technology Kazakhstan LLP |
| Dahua Denmark | Refers To | Dahua Technology Denmark Aps. |
| Dahua France | Refers To | Dahua Technology France |
| Dahua Lorex (US) Corporation | Refers To | Lorex Corporation |
| Dahua Technology Holdings | Refers To | Dahua Technology Holdings Limited |
| Dahua New Zealand | Refers To | Dahua Technology New Zealand Limited |
| Dahua Netherlands | Refers To | Dahua Technology Netherlands B.V. |
| Dahua Morocco | Refers To | Dahua Technology Morocco SARL |
| Dahua Romania | Refers To | Dahua Technology S.R.L |
| Dahua Uzbekistan | Refers To | DAHUA VISION LLC |
| Dahua Technology Italy | Refers To | Dahua Technology Italy S.R.L. |
| Dahua Lorex (Canada) Corporation | Refers To | Lorex Technology Inc. |
| Dahua Bulgaria | Refers To | Dahua Technology Bulgaria EOOD |
| Dahua Sri Lanka | Refers To | Dahua Technology China (Pvt) LTD |
| Dahua Pakistan | Refers To | Dahua Technology Pakistan (private) Limited |
| Dahua Thailand | Refers To | Dahua Technology(Thailand) Co.,LTD. |
Section II Company Profile and Key Financial IndicatorsI. Company Information
| Stock Abbreviation | DAHUA | Stock Code | 002236 |
| Stock Exchange | Shenzhen Stock Exchange | ||
| Company Name in Chinese | 浙江大华技术股份有限公司 | ||
| Company Abbreviation in Chinese | 大华股份 | ||
| Company Name in Foreign Language (If any) | ZHEJIANG DAHUA TECHNOLOGY CO., LTD. | ||
| Legal Representative | Fu Liquan | ||
| Registered Address | 1187 Bin'an Road, Binjiang District, Hangzhou City, Zhejiang Province, China | ||
| Post Code of Registered Address | 310053 | ||
| Office Address | No. 1199 Binan Road, Binjiang District, Hangzhou City, Zhejiang Province | ||
| Post Code of Office Address | 310053 | ||
| Website | www.dahuatech.com | ||
| zqsw@dahuatech.com | |||
II. Contact Person and Contact Information
| Secretary of the Board | Representative of Securities Affairs | |
| Name | Wu Jian | Lou Qiongyu |
| Contact Address | No. 1199 Binan Road, Binjiang District, Hangzhou City, Zhejiang Province | No. 1199 Binan Road, Binjiang District, Hangzhou City, Zhejiang Province |
| Tel. | 0571-28939522 | 0571-28939522 |
| Fax | 0571-28051737 | 0571-28051737 |
| zqsw@dahuatech.com | zqsw@dahuatech.com |
III. Information Disclosure and Location
| The Media Selected by the Company for Disclosure | Securities Times |
| Website Designated by CSRC for Publishing Annual Report | http://www.cninfo.com.cn |
| Location for Annual Report of the Company | Securities Investment Department |
IV. Registration Change
| Organization Code | 91330000727215176K |
| Changes in Main Business Since Listing (If any) | No Change |
| Change of Controlling Shareholders (If any) | No Change |
V. Other Related InformationAccounting Firm Hired by the Company
| Name of the Accounting Firm | BDO China Shu Lun Pan CPAs (special general partnership) |
| Office Address of the Accounting Firm | 4/F, New Huangpu Financial Plaza, No.61, Nanjing East Road, Shanghai |
| Name of Certified Public Accountant | Zhong Jiandong, Du Na |
The sponsor institution hired by the company to perform the continuous supervision in the reporting period
□ Applicable √ Not applicable
The financial adviser hired by the company to perform the continuous supervision in the reporting period
□ Applicable √ Not applicable
VI. Key Accounting Data and Financial IndicatorsWhether the Company needs performed retroactive adjustment or restatement of accounting data in prior years or not
□ Yes √ No
| 2019 | 2018 | Increase/Decrease Compared with the Same Period of the Previous Year | 2017 | |
| Operating income (RMB) | 26,149,430,652.42 | 23,665,688,106.22 | 10.50% | 18,844,458,053.78 |
| Net profit attributable to shareholders of the listed Company (RMB) | 3,188,144,692.55 | 2,529,426,468.61 | 26.04% | 2,378,726,820.22 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB) | 3,016,953,888.25 | 2,495,121,029.76 | 20.91% | 2,340,407,357.44 |
| Net cash flow generated by operational activities (RMB) | 1,600,604,287.70 | 955,315,978.17 | 67.55% | 914,231,360.01 |
| Basic Earnings per Share (RMB/Share) | 1.10 | 0.87 | 26.44% | 0.82 |
| Diluted Earnings per Share (RMB/Share) | 1.10 | 0.87 | 26.44% | 0.82 |
| Weighted Average ROE | 22.74% | 22.16% | 0.58% | 25.47% |
| End of 2019 | End of 2018 | Increase/Decrease at the End of the Current Year Compared with the End of the Previous Year | End of 2017 | |
| Total assets (RMB) | 29,564,650,212.93 | 26,350,599,778.15 | 12.20% | 21,333,478,563.97 |
| Net assets attributable to shareholders of the listed company (RMB) | 15,643,007,027.91 | 12,618,758,918.48 | 23.97% | 10,466,434,375.19 |
Ⅶ. Differences in Accounting Data under Domestic and Foreign AccountingStandards
1. Differences of net profits and net assets in the financial reports disclosed according to theinternational accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
During the reporting period of the company, there is no difference between the net profits and net assets in the financialreports disclosed according to international accounting standards and Chinese accounting standards.
2. Differences between the net profits and net assets in the financial reports disclosed accordingto the overseas accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
During the reporting period of the company, there is no difference between the net profits and net assets in the financialreports disclosed according to overseas accounting standards and Chinese accounting standards.Ⅷ. Key Financial Indicators by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating income | 4,347,918,104.26 | 6,458,648,266.63 | 5,621,668,726.34 | 9,721,195,555.19 |
| Net profit attributable to shareholders of the listed company | 316,343,906.02 | 922,537,042.72 | 638,471,475.06 | 1,310,792,268.75 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 286,016,593.97 | 852,635,154.06 | 590,869,606.63 | 1,287,432,533.59 |
| Net cash flow generated by operating activities | -1,728,487,212.91 | 858,020,120.03 | 332,230,140.64 | 2,138,841,239.94 |
Whether the above financial indicators or their totals are significantly different from the financial indicators disclosed in theCompany’s quarterly and semi-annual reports
□ Yes √ No
Ⅸ. Non-recurring Gains and Losses Items and Their Amounts
√ Applicable □ Not applicable
Unit: RMB
| Item Name | Amount in 2019 | Amount in 2018 | Amount in 2017 | Note |
| Profits or losses from disposal of non-current assets (including the write-off for the accrued impairment of assets) | 10,755,526.46 | -257,185.57 | -8,066,035.13 | |
| The government subsidies included in the current profits and losses (excluding the government subsidies closely related to regular businesses of the Company and issued in the quota or quantity based on the national standards | 164,079,473.51 | 78,342,817.78 | 44,055,931.15 | |
| Profits and losses resulting from the changes in fair value for holding trading financial assets, derivative financial assets and trading financial liabilities, derivative financial liabilities and investment income from disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities, and other obligatory right investment, excluding the effective hedging businesses related to the regular business operation of the Company | 51,518,752.09 | -83,285,344.55 | 6,841,311.77 | |
| Reversal of the receivables and contract assets depreciation reserves for separate impairment test | 3,383,257.76 | |||
| Non-Operating Revenue and expenses other than the above | -2,958,714.67 | 68,947,139.26 | 4,327,600.51 | |
| Other gains and losses items that fit the definition of non-recurring gains and losses | 308,838.52 | 733,001.58 | 725,549.00 | |
| Less: Impact of income tax | 35,447,376.02 | 13,376,532.24 | 7,282,387.96 |
| Impact of minority equity (after tax) | 20,448,953.35 | 16,798,457.41 | 2,282,506.56 | |
| Total | 171,190,804.30 | 34,305,438.85 | 38,319,462.78 | -- |
For items defined as non-recurring gains and losses according to the No. 1 Explanatory Announcement on InformationDisclosure for Companies Offering Their Securities to Public - Non-recurring Gains and Losses, or non-recurring gainsand losses items listed in the said document defined as recurring ones, please specify the reasons.
□ Applicable √ Not applicable
In the reporting period, the Company did not define any non-recurring gains and losses items defined and listed in the No.1 Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to Public - Non-recurringGains and Losses, as recurring gains and losses items.
Section III Corporate Business Overview
I. The Main Businesses of the Company during the Reporting Period
(I) Main businesses and products
1. Main businesses
The Company is a world-leading provider and operator of video-centric smart IoT solutions and services. In 2019,based on the in-depth insight of the development trend of digital economy and smart IoT industry, the Companyaccelerated the development and implementation of "Dahua HOC (Heart of the City)" strategy and further put forward theconcept of smart twins. Dahua fully launched IoT system architecture with video as the core, provided innovativeapplications for the industry, established smart IoT PaaS (Platform-as-a-Service) platform, strengthenedterminal-edge-cloud synchronization, and accelerated the upgrading to platform and ecological architecture, providingcustomers with solutions centering on application scenarios and the closed-loop of data value. The smart IoT PaaSplatform is positioned as a big data platform, with the internal structure of "four" capabilities: namely, a data online network,to ensure that the managed data is always online and the efficient terminal-edge-cloud synchronization of computing; anintelligent view engine and an intelligent data engine that are based on artificial intelligence technology, to allow full play ofthe platform service capabilities of multi-algorithm, multi-intelligence scenarios, and data mining; a business applicationenabling platform that provides SaaS (software-as-a-service) services based on unified data capabilities for government,enterprises, and consumers.
Guided by the purpose of management efficiency improvement, overall cost reduction, and business processesreshaping, the Company focused on the smart IoT industry with video as the core. It continued to increase investment on
advanced technology, such as artificial intelligence, cloud computing and big data, 5G, and IoT, enhanced the ability oftechnology industrialization and commercialization, built the comprehensive system of ecological cooperation, andaccelerated the implementation of artificial intelligence and big data in all sectors, helping the government, enterprises,and consumers realize digital transformation and intelligent upgrading.
2. Solutions
Dahua constantly creates business values centering on the demands and pain points of customers, on the basis ofthe "Dahua HOC" architecture with the support of the "full sensing, full intelligence, full computing, and full ecosystem (4full) capabilities" and the guidance of customer demands.For G (Government) and city-level markets, the Company establishes smart decision-making centers and operationmanagement centers for cities, provides city-level business applications in five fields (governmental public services,economic regulation, market supervision, social governance, and ecological environmental protection), and sets upbusiness scenarios for the smart twins of cities, helping cities realize good governance, prosperous business, and benefitsto people.For B (Business) markets, Dahua goes deeper into the fields such as smart finance, smart park, smart community,smart manufacturing, smart logistics, smart retail, smart energy, smart education, smart hospital, and smart culturaltourism. From visible security protection to business operation and operating management, Dahua constantly seekinsights into customer demands, enriches and subdivides the scenario-based solutions, and leads industrial innovations.
For SMB (Small-Medium Business) markets, by relying on the Company's capability on technology and resourceintegration, and cooperating with channel partners, Dahua releases a series of one-stop intelligent micro solutions forvarious scenarios, such as perimeter, entrance and exit, park, parking lot, security check, safety fire control, constructionsite, retail, logistics, and transparent kitchen, and applies them onto channel markets, empowering development andgrowth of the industry and users.
For C (Consumer) markets, Dahua continues to improve the "three-in-one (intelligent hardware, intelligent technology,and intelligent cloud)" business ecosystem and provides consumers with smarter, safer and more convenient IoT services.Dahua joins hands with partners to develop more scenario-based applications and services, and builds the smart IoTecosystem.
2.1 To G Solutions
1) City-level business solutions
Government digital transformation is the process that the government takes the initiative to adapt to the digital era,give comprehensive, systematic and essential transformation to the governance concepts, methods, processes,measures, and tools, improve business collaboration through data sharing, and enhance the modernization of thegovernment's governance system and capacity.
"Dahua HOC" emphasizes the focus on customer scenarios and the in-depth understanding of business scenariosand customer demands. Based on the Big Data Platform, it can conduct real-time analysis of massive data through viewintelligence and data intelligence and build a smart decision-making center and an operation management center for a city.Through streamlining the core businesses of government sectors, centering on the targets of services and management,
Dahua breaks the barriers between different sectors and established city-level business applications covering 5 fields(governmental public services, economic regulation, market supervision, social governance, and ecological environmentalprotection). Through establishing the video-centric sensing and intelligent ability, based on the advantages of full-networkcomputing and intelligent algorithm, Dahua comprehensively and truthfully structures the business scenarios of the smarttwins of cities and realizes a closed loop of the data value chain.In 2019, when building “Digital Zhoushan”, Dahua combined the “1+2+N” smart city architecture of “Dahua HOC” withthe local reality of Zhoushan and promoted the digital transformation of the government led by and centering on the“Zhoushan brain”. "Digital Zhoushan" established "1117" Zhoushan brain systematic framework for digital transformation,which includes one city cockpit, one data resource supermarket, one set of safety standard system, and seven basicsupport platforms. Through data resource supermarket, 470 million pieces of government data and over 6,000 records ofvideo data from 34 departments across the city were converged and integrated, as well as more than 1,300 provincialshared data service interfaces are connected, laying the foundation of big data capability for Zhoushan government'sdigital transformation. By sorting out the core business processes of various government departments, businesscollaboration is achieved by breaking barriers among different levels of departments and obtaining comprehensive accessand sharing of data for services and managed targets. The first phase of the project covered more than ten typicalapplication scenarios of city brain, including Internet+government services, economic operation monitoring and analysis,maritime safety supervision platform, and whole-process payment supervision in the engineering field. By achievingcomprehensive access to city data and intelligent computing, efficiency of the Internet+government services is greatlyimproved, and capability of city emergency management and service is boosted enormously, helping the government withthe modernization of its governance system and governance capacity.Meanwhile, as a member of the National Standardization General Working Group on Smart City, Dahua hasparticipated in the formulation of 7 important standards of smart city and actively participated in the research andapplication of national projects. It has researched into three projects (high-quality development, digital economy, andcommunity with the integration of production, life, and ecosystem) and won 14 important awards in the smart city field.
2) Smart neighborhood (township) solutions
Dahua smart neighborhood (township) solutions reinforce the responsibilities of unified command and coordinationfor neighborhood (township). Practical application system for integrated smart neighborhood (township) withcomprehensive perception, intelligent warning, coordinated connection, and multidimensional visibility was established bythe exploration of the new neighborhood (township) governance model with "perception" + "intelligence" and "service" +"governance", giving full play to the role of neighborhood (township) in primary-level governance including discovery,
processing, and circulation of the events, and empowering the primary-level governance capability of neighborhood(township).The company collaborates with Ningwei street office of Xiaoshan District to build "Ningjulan" smart street governanceplatform, focusing on safe construction, urban operation, social affairs, livelihood services and other areas, in order tobuild the "1 + 7 + X smart application mode, namely a street-level smart platform, consists of seven application modules"smart security, smart firefighting, smart city management, smart community, smart governance, emergency command,livelihood service ", together with X application scenarios; Based on the real-time perception to the whole street, providevisual application for daily governance, emergency command and supporting decisions of the street office, to build anoperation management "operating system" for Ningwei. Among these, "X" application scenarios include 28 smartapplication scenarios such as safe village community, key site management, outside shop operation, fire alarm, wastesorting, and support information. Since the "Ning Ju Lan" smart neighborhood management platform was put intooperation, the daily task processing time of primary-level management and service personnel has been reduced by morethan 50%, the occurrence of fire disaster has dropped by 21%, the number of security incidents in the jurisdiction hasbeen reduced by 18% month-on-month, and the number of conflicts and disputes has been reduced by 27%, thus greatlyimproving the neighborhood management efficiency and resident livelihood service standard.
3) Smart policing solutions
Centering on the business scenarios of policing, focusing on the pain points of users, Dahua explored more than5000 scenarios of actual practices, summarized the key points of the features, goals, location, targets, and process ofeach scenario, and classified the business scenarios of policing into 6 big categories, 26 small categories, and 147sub-categories. Every scenario is equipped with a multi-dimensional awareness device. Dahua also established awhole-region smart analysis center to realize the harmonious distribution and reasonable allocation of computing powerand converted the business rules drawn from the police operation processes into data computing rules to get precise dataand realize the actual closed loop of the data value chain. Remarkable results were achieved in the actual combat ofpublic security. The police enthusiasm for the application was greatly mobilized, the numbers of major alerts weresignificantly reduced, and the efficiency of solving crimes increased substantially, resulting in continuous improvement inpublic sense of security and satisfaction.
Centering on the establishment of the prevention and control system for Ministry of Public Security, the Companymade full use of its experience accumulated over the years in the smart policing field, comprehensively participated in andled the formulation of part of standards of the prevention and control system, the building of several ministry-level pilotprojects, and the nationwide applications for city construction and review, which assisted the construction of data policingand smart public security, as well as promoted the reform on the quality, efficiency and power of public security work, byutilizing big data intelligence as the engine to promote innovation and development.
4) Smart judicature solutions
Dahua smart judicature solutions keep abreast of latest trends in judicial policy. Centering on the core applicationscenarios of departments and units at all levels in various sub-industries such as prison, supervision, procuratorate, andcourt, and relying on the Company's profound technical strength and complete product system in the field of IoTperception, the Company launched solutions focusing on the comprehensive coverage of series scenarios including lawenforcement, case handling, and community correction by cooperating with a number of ecological partners in the industry.Under the premise of continuing to expand business coverage, Dahua focused on the deep integration of the Company'sIoT perception technology in various sub-industry scenarios. In order to provide a strong guarantee for promoting thestandardization, intelligence, and high efficiency of judicial core business, the Company promoted solution value andservice efficiency through iterate improvement on fields such as customized service system, ecological cooperationsystem, and operation and maintenance support system.
5) Smart traffic control solutions
"The customer-oriented thought, the overall scheme thought, the intelligent thought, and the data thought" serve asthe design idea for the top-level planning of the smart traffic control solutions. Focusing on customer core businesses andsolutions, and centering on the overall goal of "safe, smooth, and convenient for people", Dahua proposed 5
sub-scenarios of traffic safety control in cities, in rural areas, on elevated freeways, and on high-speed roads, as well astraffic jam relief in cities, and 20 core business schemes by realizing effective coordination among people, vehicles, androads with comprehensive study and utilization of online perception, cloud computing and other technologies. On thebasis of the modern traffic management model and with the help of the multi-dimensional awareness of the IoT, big data,cloud computing, AI, and other technologies, the overall solution effectively integrated multiple business system capacitiesand the police forces of traffic control, energized traffic management capability, and promoted more accurate and efficienttraffic control work. By establishing strategic partnerships with over 30 traffic control departments, Dahua jointly exploredthe research and practice of intelligent traffic management and completed major project deliveries for several traffic policebattalions, promoting a new model of smart city traffic governance for the traffic control authorities.
6) Smart transportation solutions
Centering on the development goals of different fields of transportation (production safety guarantee, operationservice efficiency enhancement and convenient transportation of the public), Dahua established a comprehensive trafficdata sensing system, a precise security guarantee operation system, and a smart data analysis and decision-makingsystem to comprehensively improve the security guarantee and the public service level of comprehensive transportation.The smart expressway solutions are designed to "improve the informatization and intelligence of expressways,enhance the service guarantee for travels, and realize the operation of nationwide expressways like a ‘net’ and themonitoring of the road network". Based on its advanced video cloud architecture and abundant sensory devices, theCompany established a smartly linked expressway operation network and a smart monitoring system. Since China iscanceling toll stations at provincial boundaries, Dahua tried to realize the high-speed and unblocked traffic. It provided thesmart gate system solution, which can not only realize the license plate capturing of passing-by vehicles, but also realizeHD video monitoring and detection of incidents on the expressways. With multiple functions in one machine, the solutioncan satisfy the demands for vehicle inspection, toll collection, and HD road network monitoring.
Starting from security and efficiency, the smart airport solutions include solutions for different scenarios from thelandside, to the terminals and aircraft movement areas. Centering on the four core elements (passengers, vehicles,luggage, and aircraft), Dahua gave full play to its technical advantages in the field of video IoT and AI and dug the deepvalue of video data to solve the actual pain points of customers. The Company provided a big data platform for intelligentsecurity protection of smart airports, which can provide effective technical support to the fast positioning of passengersand the prediction of security risks.The smart rail traffic solution took advantage of the intensification of the security protection integration platform,enhanced the linked prevention and control formed by the smart identification and warning of prohibited goods and thesmart recognition and warning of persons on the blacklist. It integrated the command and deployment system of the publicsecurity system and applied the business data to form a three-dimensional prevention and control system, improving thelevel of safety assurance for rail transit in many aspects, such as violation inspection and control, personnel control,command operations, and intelligence analysis. Taking the subway of a city as an example, personnel deployment andalert handling can be rapidly realized through smart security inspection, portrait surveillance, flat command, and othermeasures, and the real-time overall situation can be grasped through the data curtain wall.The smart vehicle-mounting solution focused on the operation security and efficiency of commercial vehicles, suchas urban buses, shuttle buses, tourist-chartered buses, vehicles for dangerous goods, school buses, taxies, andonline-hailed cars. Taking the video and image processing technologies as the core, it integrated mobile communication,the IoT, face recognition, ADAS, and other technologies to comprehensively enhance the operational security and drivingand riding experience of vehicles. Meanwhile, cluster analysis is conducted for the big data of various road transportationsto fully dig the relations. The visibility of big data can be realized for different business demands so that the demands ofroad transportation enterprises for security production, cost reduction and efficiency enhancement and the regulationdemands of the industry can be satisfied.
7) Smart emergency solutions
Dahua smart emergency comprehensive solution is based on the national guideline of "giving priority to prevention,combining prevention with rescue, and unifying the normal disaster reduction and extraordinary disaster relief". Backed by
core technologies such as IoT, big data, AI, unified communication, video conference, robots, and UAVs, the solutionanalyzes deeply the emergency command center, the mobile command center and the disaster site, including 21sub-scenarios of urban firefighting, safe production, natural disasters, forests and grasslands. By considering potentialrisks, protection targets, shelter sites, emergency supplies, rescue teams, communication support, and video surveillance,a comprehensive emergency solution of "one map of resources, one map of detection, one map of decision-making, andone map of dispatch" was built to help emergency management departments to better discover and manage risks undernormal conditions, to enhance their ability to deal with incidents, to better grasp the overall situation under abnormalconditions, to seize key points, to conduct and make decisions efficiently, and finally to achieve the comprehensive goal of"disaster prevention, mitigation and relief".
8) Smart fire control solutions
Dahua smart fire control solution, guided by the national policy of "putting prevention first and combining preventionwith fire control", applies to the scenarios such as firefighting combat command, fire safety responsibility supervision, andreal-time convergence of fire safety status in key units. With the upgrading from traditional fire protection to intelligent fireprotection, the firefighting focuses on urban comprehensive rescue in addition to fire rescue. Relying on core technologiessuch as video monitoring, IoT, big data, and AI, Dahua has launched multi-level and multi-dimensional fire protection IoTsolution, fire protection big data supervision solution and fire protection combat command solution. Meanwhile, Dahua isthe first to launch an integrated IoT solution for fire safety and elimination based on fire protection scenarios and securityvideo AI technology. Video based detection of flame and smoke, temperature detection, blockage detection of fire corridorand channel, and violation detection of fire control room are introduced. The main responsibility of fire protection issupervised in long term, closed loop of fire safety responsibility is achieved, and the fire control status of units is reportedin real time. And all these have been applied to universities, health facilities, cultural relics and ancient buildings,complexes, financial premises, energy and other places.
9) Smart environmental protection solutions
Dahua smart environmental protection solution based on video IoT and AI aims to build a comprehensive ecologicalenvironment monitoring and sensing network by upgrading traditional monitoring equipment, and aggregate massivefront-end sensing data to form an ecological environment big data platform. For the eight business categories ofatmosphere, water, soil, pollution sources, nuclear radiation, ecological protection, monitoring and law enforcement, andcomprehensive office, we put forward this solution for 11 types of business applications with the IoT and big dataapplications as the core, thus realizing flat, intelligent and fine management of environment monitoring. Finally, we realizeaccurate overall supervision, scientific comprehensive decision-making, and convenient public services.
2.2 To B Solutions
1) Smart finance solutions
Dahua smart finance solution aims to build a financial security center and a financial business capability center basedon core technology capabilities of the Company. Centering on the typical business scenarios for banks, the solutionsdeeply integrate the technology implementation with the business requirements of the scenarios to construct an overall
solution capability set of smart finance, enabling financial security upgrading and promoting financial businesstransformation.With the smart security management platform as the core, financial security integrates businesses including basicsecurity networking, smart security, security management, and mobile security, and helps bank security to transform andupgrade from passive prevention and control to proactive prevention. It provides security managers with tools includingdecision analysis, and supervision and inspection, security operators with efficient, convenient, professional andcompliant operation tools, and business departments with more convenient products and services.In terms of financial technology business, Dahua has introduced innovative solutions such as intelligent banking,video compression, and video discussion. In the intelligent banking solution, multi-dimensional data of intelligent productssuch as face recognition and binocular behavior recognition are mined and analyzed to provide managers with datadecision support. In the video compression solution, Dahua independently develops the new generation of intelligentcoding algorithm and video compression equipment, which not only avoid the HD video lagging but also greatly save thecost. In the video conferencing solution, the security network is integrated with the professional video conferencing systemto further improve the efficiency of daily office work and emergency command.
2) Smart park solutions
Dahua smart park solutions focus on enterprise customers' core value demand of "cost reduction and efficiencyenhancement” and set up a network of "smart twin" of operation management for enterprises and the park that sorts outcore solutions for smart security, convenient access, and smart office from typical park scenarios including production,office, education, logistics, and tourism, helping enterprises to carry out fine management of security, propertymanagement, and enterprise operation, and promoting the realization of intelligent upgrading and digital transformationfor the park.
3) Smart community solutions
By constantly extending application scenarios in view of the actual demands from owners, property management,and property developers, and deeply integrating community management business and systems based on systemsincluding video intercom, video surveillance, access control, parking lot, and smart home, Dahua smart communitysolutions established the multi-platform integrated ecology with support from AI capability and the ability to providecustomers with integration of devices, community, and neighborhood at all levels through multiple IoT devices, localmanagement platform, and community cloud, realizing multi-system business integration and data integration, andcreating an integrated solutions for smart security, convenient access, and property management services. The solutionshelp to improve the life experience and quality for owners, increase the property management efficiency, create a safe,comfortable, and convenient community life for residents, and achieve greater value for developers and propertymanagement.
4) Smart manufacturing solutions
By integrating and upgrading traditional security and manufacturing business of enterprise, and working on top-leveldesign and layout implementation based on customer core value of "safety, efficient production and leading operation",Dahua smart manufacturing solutions promote the integration and upgrading of enterprise park infrastructure, automation
production lines, and industrial big data, and implement solutions such as intelligent warehouse logistics, productionvisualization and labor management, machine vision and various intelligent applications, creating value for manufacturingenterprise customers.The smart warehousing and logistics solution integrates AGV, WMS informatization, industrial vision, RFID, and bigdata to realize intelligent warehousing operations, intelligent material management and control and intelligentdecision-making. Thus, personnel costs and material overruns are reduced, and orders are increased. In addition, productmanagement, assets management, resource coordination and decision-making management are enhanced.The production visualization solution takes video monitoring, big data analysis and information interconnection asthe core, realizes real-time coverage of enterprise production and data management, and greatly improves the schedulingefficiency and decision-making level of production management.The machine vision solution mainly focuses on intelligent operations such as manufacturing detection, identification,positioning, measurement to ensure product quality and reduce work intensity of personnel.
5) Smart logistics solutions
Centering on the three major businesses of safety, work and operation, Dahua smart logistics solutions effectivelymanage "people, vehicle, goods, and yard" for the four major links of transportation, storage, transit and distribution in thelogistics industry by means of visualization, automation, and intelligence, helping logistics enterprises to improve securityand operational efficiency, as well as effectively reducing costs.
In terms of logistics operations, a logistics operation and management center for logistics enterprises is built throughadvanced technologies such as video, big data and AI. Meanwhile, through self-developed AI algorithm that goes deepinto logistics operations, flexible intelligent products and solutions are offered according to the business needs andconstruction conditions in different scenarios, helping logistics enterprises to realize precision management. Based on theaccumulation of technology in machine vision, the Company introduced the goods sorting solution featuring "quickhandling, piece-to-piece scanning, DWS, multi-sided code reading", which comprehensively improves the degree ofautomation and goods sorting efficiency for logistics enterprises. The video tracking solution enables quick query of thevideo of defective goods, which helps reduce the labor input of express delivery companies, improve the efficiency ofdamage liability determination, and promote customer satisfaction.
6) Smart retail solutions
With the construction goal of "making operation more effective and management more efficient", Dahua smart retailsolutions accurately start from offline perception, restore the precise relationship among "people, goods, and market" andintegrate data from the offline physical scenarios for businesses including supermarket chain, automotive retail, specialtystore, and department store, assisting customers in efficient operation, precision marketing, safety and loss prevention,and experience upgrading.
In 2019, based on the practical experience of retail digital transformation, the Company iterated and enriched itssolution system. The Company optimized the solution of shop inspection and evaluation and set up the supervision andmanagement tool with end-to-end logic closed loop to improve shop inspection efficiency and reduce personnel input; itprovided the solution for regional passenger flow to visually display the regional passenger flow attraction rate and
busyness level, energize inactive area, optimize the layout, and improve area-effectiveness, as well as the intelligentreplenishment solution to optimize replenishment business process, reduce customer waiting time, and acceleratecommodity circulation; The company also offered the solution of flow funnel to obtain data of offline customers' completeshopping path of pass shop-enter shop-browse-order-repeat purchase, providing effective data guidance for conversionincrease, event marketing, and new product arrival.
7) Smart Energy Solution
Dahua smart energy solution serves the energy enterprises of the industrial flow type in the electric power,petrochemical, mining, iron and steel. It focuses on production safety and operation efficiency, and business development.The Company utilizes technologies such as AI, robots, machine vision, 5G, big data to launch in-depth applicationsolutions such as large-scale video networking, smart substations, and smart supervision for the power industry, whichcan reduce the work load and improve the informatization level of power grid, thus facilitating State Grid Corporation ofChina in its strategic goals to build the state grid with “three types and two networks” and China Southern Power Grid in itsstrategic positioning of being “five players” and its strategic direction of “three providers”. In the petrochemical industry, theCompany keeps working in such solutions as smart oil fields, smart pipelines, digital petrochemicals, and smart gasstations to improve the production safety management and reduce accident rates, thus promoting the development of"smart factory". In the steel and coal industries, the Company expands the video and intelligent applications into theunderground of as deep as 1,000 meters. All of these efforts by the Company aims to provide continuous service to theindustrial production field and help build the operation and security center for the energy industry.
8) Smart Education Solution
In the context of the full implementation of the "Education Informationization 2.0 Action Plan", Dahua SmartEducation Solution is built upon the "Overall Smart Campus Framework", with the focus on the "teaching, learning,research" scenes. Through utilization of technologies such as multi-dimensional IoT sensing, whole network intelligentanalysis, big data, and cloud computing, the solution provides smart assessment, classroom inspection and supervision,interactive classroom and other services with classroom teaching as the core, aiming to serve teachers, students andeducation managers and promote the teaching environment, management and quality. At the same time, the Companyprovides services such as campus entrance control, campus AR, campus kitchen, smart dormitory management based onthe "people, vehicles, things, food, living, travel" aspects of the campus, which facilitates the all-round upgrading of smartcampus construction from aspects of traffic, food, consumption, accommodation, etc. and enhances the sense of securityand happiness for teachers and students.
9) Smart Hospital Solution
Following the development trend of the industry, Dahua has optimized its smart hospital solution on the basis of itsoriginal smart security, smart parking and other hospital security services, adding the 3D modeling-based "one map ofhospital logistics management" model to create a new smart hospital solution for real-time online management andmonitoring of security situation and logistics services. The solution uses mature AI intelligence, 3D visualization andInternet of Things technologies to connect multiple IoT sensing equipment and various system data in hospital logistic
services such as water, electricity, gas, firefighting, to achieve the standardized and intelligent hospital logistics workflowmanagement and control the hospital operating costs by the hospital fixed assets, common consumables, energyconsumption such as water and electricity, and expenditures by operation and maintenance personnel, thus ensuring theefficiency and quality of the daily hospital maintenance, security, transportation and other businesses, and offering anoperation management model with high efficiency and low consumption.10) Smart Cultural Tourism SolutionDahua smart cultural tourism solution takes tourist attractions and "cultural relics and ancient buildings" as its corebusiness scenarios. This solution combines passenger flow statistics, density detection of tourists, prevention of losttourists, perimeter prevention, information release, smart fire protection and other systems, and utilizes AI technologiestogether with face capture cameras, passenger statistics cameras, panoramic watchers, acousto-optic warning cameras,alarm posts, advertising machines, integrated smart management platforms on cultural travels. It provides uniformmanagement of security and fire protection in entrances and exits, popular scenic spots, squares, shops, catering places,dangerous areas and the like. Therefore, events in various systems and levels are timely and accurately scheduled andhandled, to eliminate potential safety hazards, and improve the O&M benefits.
2.3 To SMB Solution
Built for small and medium-sized businesses, Dahua SMB solution is driven by technology, policy, and businesstransformation and upgrade and oriented around business scenarios. The Company taps into the customer's valuedemands and provides the standardized solution with simple scenarios, standard applications, rapid response, and simpledelivery. The solution aims to work together with partners to deliver value to end users, reduce users' input into safety andsecurity operations, improve their overall efficiency, and promote business sustainability. The Company has releasedsolutions for small and medium scenes such as campus entrances and exits, park speed measurement, non-contactpass-through with health QR code, intelligent warnings for mask wearing in public places, denial of electric scooters'access to elevators, intelligent monitoring of community garbage classification, residential guard duty, unattended parkinglots, and straw burning detection.
2.4 To C Solutions
As a consumer-based smart IoT brand owned by Dahua, Imou Lechange, with focus on the security needs ofhouseholds and small and micro businesses, builds and improves the integrated business eco-system of smart hardware,smart technology and smart cloud to facilitate rapid business growth.
In 2019, Imou Lechange successively introduced a number of brand-new products such as "Smart Home IndoorCamera TC2/TP2/TP7S", "Smart Home Indoor Camera TP7i", "Smart Cat's Eye VD2" and "Visual Smart Cloud LockV6/P6", covering core scenarios inside or outside the home, entrances and exits. With intelligent algorithms andtechnologies such as "intelligent humanoid recognition", "abnormal sound detection" and "intelligent linkage", andevolution of supporting APPs, the user experience is further optimized, and Lechange products are more applicable inintrusion prevention, infant care and other scenarios. With the addition of more categories such as video doorbells, smart
home gateways, smart controls, etc., Imou Lechange will continue to expand the smart whole household ecosystemcentering around household security.In small and micro business scenarios, new products are introduced, including "Smart Waterproof Camera TF1T","Smart Acousto-optic Conch TE3" and "Wireless Network DVR S1E-W". With “wireless cascade" technology, the signalcoverage of Lechange wireless store solution is greatly improved. Supported by IMOU Cloud, APP and PC, the wirelessstore solution is favored by users for its easy deployment and use. Based on the characteristics of small and microbusinesses, Lechange will further launch light solutions that integrate hardware and platforms, and continue to expand thevalue of the small and micro business solutions through cloud components.As the core of Imou Lechange business, IMOU Cloud was invested in network security, intelligence and third-partycooperation in 2019. In addition, GDPR compliance was optimized and cloud intelligence commercialized, thus ensuringthat IMOU Cloud provides safe, stable and efficient services to more than 10 million users worldwide. Lechange willfurther open up its cloud capacity to facilitate third-party developers in their development of feature-rich scenarioapplications and provide easy-to-use, safe and customizable services to end users and partners for an intelligent IoTecosystem.
3. Cloud computing and big data products and services
Based on cloud computing and big data technology, the Company focuses on video IoT scenarios with business atthe center to build up data storage, calculation, analysis, modeling, and sharing capabilities with the goal to achieve onlinedata, value calculation, and business enabling. With the big data research institute as the carrier, the Company keeps upits investment into R&D of cloud computing and big data technology and product to drive the closed loop of data valuechain.The Company integrates the technical advantages of cloud computing and big data, componentized and flexiblearchitecture and deep insight into video IoT business, and also takes into consideration the layered decoupling andvertical closed-loop capabilities of the software architecture. Centering around the three key processes for realizing thevalue of data, namely, online data, value calculation, and business application, the video-centric smart IoT big dataplatform is constructed.
The big data platform realizes the dual central platform for both data and business through an online data network, asmart view engine, a smart data engine, and a business enabling platform, and provides the basic framework and supportfor industry software.An “online data network” builds a data network with a wide range of connections, high-reliable storage, andhigh-performance access through a unified and flexible architecture, which can enable efficient aggregation of IoT senseddata, improve network compatibility, and reduce management difficulty. Due to its different data attributes, the videoIoT-based data needs two types of computing engines, namely smart view engine and smart data engine. With thelarge-scale application of artificial intelligence in the field of video surveillance, the accuracy of algorithms has beengreatly improved.A "smart view engine" realizes the algorithm capability more applicable for business scenarios throughscenario-oriented algorithm iteration and smart scheduling; through uniform scheduling of smart algorithm capacity on theCloud-Edge-Terminal, it achieves the networked and harmonious distribution of algorithm capacity; through algorithmwarehouse software system, it realizes the complementary advantages of the multiple algorithm ecologies. Thescenario-based, networked, and ecological smart view engine effectively improves the calculation efficiency, algorithmutility, and investment conversion rate, and further facilitates the intelligent development of the industry. The high-valuedata generated through the calculation by the smart view engine, together with massive IoT sensing data and businessdata generated by information construction, constitute the main data set of the video IoT scenarios. The calculation ofdata value requires three core capabilities to drive data intelligence, namely, insight into industry business scenarios,in-depth data details, and construction of data development platform, data governance system, and multi-dimensionalalgorithm system.
A "smart data engine", which is based on the spatio-temporal big data calculation engine and a one-stop datadevelopment and operation platform, optimizes the spatio-temporal big data calculation efficiency and improves the
efficiency of data governance; the data governance service provides global governance covering sensing networks andinformation networks; the multi-dimensional sensing algorithm system drives data integration and value mining to realizedata calculation, analysis, modeling and sharing. Based on accumulated business practices in the video industry, deepunderstanding and experiences of Cloud native and full ecological concepts of openness and sharing, a "businessenabling platform" is constructed to accumulate the general basic capabilities of the video IoT business, build thebusiness central platform, and provide a basic micro-service framework for agile business iteration.Based on the big data platform architecture, the Company has launched a series of products and services withsignificant technological competitiveness and product advantages, and achieved great success in the global market. Theyhave empowered a variety of industry applications such as smart police, smart transportation, smart justice, emergencycommand, smart building, and facilitated implementation of the HOC strategy in various industries.
4. Industry Software
The Company's industry softwares are oriented towards three core businesses, namely, the city-level, industry-leveland consumer-level scenarios. With solutions to gain deep insight into the industries, and big data platform as coretechnical support, the Company builds a business enabling platform to support the scenario-based industry businesssoftware modules and schedule customer-oriented ecosystems and service capabilities, forming the three series ofindustry software products and services, namely, To G, To B and To SMB / To C. The To G industry software undertakesthe city-level and government-oriented (e.g., public security, transportation, emergency, etc.) industry softwaredevelopment and customized delivery, the To B industry software undertakes enterprise-oriented (e.g., enterprise,industrial park, building, etc.) industry-level softwares development and customized delivery, and the To SMB / To Cindustry software mainly provides software and customized delivery for small and micro businesses and consumermarkets.
The Company, through its To G, To B, and To SMB / To C industry softwares, continues to open up its video,intelligence, and big data capabilities, and iteratively upgrades platform software products for industries toward publicsecurity, justice, traffic control, transportation, emergency management, fire control, industrial park, finance, buildings,energy, education and others to provide all-round protection for the closed loop of customer data value chain. Dahua hasachieved a series of success through continuous practice and exploration in various fields to empower customers totransform and upgrade their business processes.
? System Structure
In the traditional horizontal layered decoupling architecture, the infrastructure links are usually interconnected, but theupper layer data and business systems are still independently constructed. For this model, basic services such as APIaccess to various platforms should be obtained from different links, which poses a huge obstacle to the rapid realization ofhigh-dimensional functions, resulting in low efficiency of online business application. The Company builds a businessenabling platform which can achieve horizontal layered decoupling and also vertical closed business loop. The businessenabling platform includes data services and intelligent services, and has combined years of Dahua's applicationexperiences and models. It can integrate various capabilities from the top down and provide various scenarios-orientedinterfaces from the bottom up to help efficiently build industry software applications.
The Company believes that opening-up and integration is the inevitable development trend of the industry and will bea new industrial state in the era with the internet of everything. With adherence to the concept of "full ecosystem" andflexible software architecture, the Company has established a complete open ecosystem, which can integrate partners'products and services at different levels such as basic platform, video capabilities, intelligence capabilities, datacapabilities, public services, industry capabilities, etc. The ecosystem provides a set of standard API interfaces to helppartners to quickly carry out the software research and development in the sub-industries based on the capabilitiesprovided by the Company, helping improve the customer value.? Organizational StructureIn order to further improve the response speed to the frontline customer demands and subdivide industry businessinto close loops in provinces, the Company further delegates the industry software research and development capabilitiesinto provinces and regions, and established software development centers in Zhejiang, Shandong, Jiangsu, Shanghai,Xi'an, Guangdong and Guangxi, and implement the "customer-centered" values to get closer to customers, strengthservice capabilities and improve customer satisfaction. It also speeds up the response to customer's individualizeddemands, and provide better technical services for partners in local provinces or regions.With the rapid development of overseas business, in order to further speed up the global layout and improve thesoftware competitiveness in the overseas markets, the Company established software R & D divisions in Europe andAmerica respectively to recruit local outstanding software talents and set up international R & D teams. The overseasdivisions stay closer to the first-line customers to carry out localization of the software platform, thus significantlyimproving customer demand response speed.
4.1 To G Industry Software
? Public Security Industry Platform
Dahua public security software platform utilizes the IoT big data technology and smart view business capabilities.Through data mining and evolution of models in practice, Dahua has released a series of industry-leading platformproducts in the smart police solution such as smart patrol, public security communities, checkpoints, smart urbanmanagement, and joint police logistics service, AR three-dimensional prevention and control, etc., which have broughtoutstanding practical results for police users.
For the smart police patrol platform: As the standard protocol maker for the Ministry of Public Security, the Companytakes the lead in creating a number of domestic trial points. For the public security community platform: With many yearsof practical experience, effective value is mined and refined out of the perceived data to help users carry out public
security management and control in a convenient and efficient manner. For the checkpoint platform: Through the meansof intelligent early warning and big data analysis, it can allow every vehicle and person to pass through safely and quickly,and also make suspicious vehicles and persons visible. For the smart urban management platform: The Company hascontinued to innovate in public health governance and public order control, and made great success in applicationsnation-wide. For joint police logistics service platform: It is integrated with the public security police system to managesocial security, handle emergencies, and make social security visible and manageable. For AR three-dimensionalprevention and control platform: By means of video maps, various municipal governance methods can be loaded toproactively prevent and control various acts that endanger social security and disrupt social order. In terms of sharingbasic capabilities, Dahua offers a high-performance engineering solution that provides the professional business modelapplication capabilities for portrait, vehicle and IoT data integration for application partners in integrated social governance.This solution helps build the governance ecosystem and stimulate active roles in social governance.Taking the Ningbo Public Security Bureau as an example, the Company developed a multi-dimensional integrationplatform which collected billions of perception data. The platform is built based on the big data platform and supported bythe business enabling platform. It provides powerful support for fighting against crime, prediction and early warning.
? Justice Industry PlatformDahua judicial software products have covered a number of sub-industries such as supervision, prisons, drugtreatment, procuratorates, and courts. The Company has participated in the formulation of multiple standards in theJustice Department, Public Security Department, and others. Through the construction of integrated software applicationplatform with "high definition, intelligence, IoT", the Company provides "full link" top-level plan and deep designapplications from the provincial departments of justice, prisons, commissions of discipline inspection, superior people'scourts, to municipal branches and intermediate people's courts, to county- and district-level detention centers and policestations. The security business platform covers multiple business application scenarios, such as basic security of theinstitutions, intelligent face recognition applications, basic crime case interrogation, disciplinary supervision by theCommissions for Discipline Inspection and remote escalation, etc.? Transportation Industry PlatformDahua smart transportation platform stays committed to the research and development concept of “stable foundation,strong platform and closing to business”, keeps on improving the industry software technological capabilities and industryapplication exploration and implementation. All of these aim to enhance the overall software system and capacity buildingfor the intelligent transportation industry.For the transportation networking convergence: The platform converges massive front-end videos, bayonets, trafficguidance screens, traffic semaphores, RFID, MAC and other smart IoT sensing devices to provide steady access to"human, vehicle, non-vehicle" structured data, and with improved video AI capabilities, provide basic industry dataservices such as traffic vehicles, traffic flow, traffic incidents, and others to industry users.Traffic big data center console: The platform integrates multi-source data from the industry, and by use of big datacomputing centers and industry algorithm centers, provides efficient and stable business data support services. Itintegrates data collection, integration, governance, and intelligent algorithm analysis, and provides data to industry
applications as services to improve business operation efficiency and promote continuous improvement of trafficmanagement capabilities.Transportation business application: Focusing on the four major scenarios of “urban, rural, overpass, andexpressway”, we will deploy and build traffic management application modules such as key vehicle control, rapidresponse to overpass vehicles, and green parking to support scenario customization for different individualized customerrequirements; Meanwhile, in the fields of airports, railways, transportation and other fields, with the goal of "safety,efficiency, and service", we continue to build and implement high-quality software and establish a smart transportationsoftware brand.In 2019, the Company led the construction of major traffic police detachment-level projects in the capitals and keycities of multiple provincial-level administrative regions, which have effectively improved the comprehensive transportationmanagement capacity. It also deployed and built smart transportation software products in airport and subway products inmultiple cities to support the transportation security and management.? Emergency Command PlatformThe smart emergency command platform covers emergency command business scenarios in over ten sub-sectorsincluding government emergency command, safety production supervision, energy, airports, maritime, justice, andeducation, etc. It supports the five major applications, i.e. supervision and management, monitoring and early warning,command and rescue, decision support and government affairs management, to prevent and monitor emergenciesbeforehand, command and overall coordination during the event, and post-event analysis, summary and comparison, andprovide individual charts for resource allocation, monitoring, dispatching and decision-making, thus achieving truesynergy.? Fire Industry PlatformThe smart fire control platform covers most application scenarios in fire prevention, control and rescue, including firecontrol IoT monitoring and early warning, fire control safety supervision, fire combat command, and others. Currently, theCompany has delivered multiple provincial and municipal application cases on smart fire control platform, and participatedin the formulation of standards for Fire Control and Rescue Bureau under Emergency Management Department, big datainterconnection in the Provincial Fire Corps, fire combat command in the Municipal Rescue Team, and the IoTinterconnection of fire operation units. Dahua launched the "Weixiaofang" system in the industry, which provides aconvenient and effective means for the autonomous management of fire safety in social units, and promotes the units'primary responsibility for fire protection. The Company also provides the street fire management platform anddistrict/county fire supervision platform for street and district/county fire brigades, which facilitates comprehensivemanagement and supervision of fire safety in the jurisdiction, real-time joint handling of fire alarms, fire prevention andearly warnings to minimize the loss of people's lives and property; It has launched the city-level big data fire controlplatform and emergency rescue combat command platform, which has integrated the city's fire control business data forbig data researches, thus facilitating the closed-loop management of early prediction, and judgment, fire control, andrescue.
4.2 To B Industry Software
? Enterprise Basic PlatformThe enterprise industry software platform is based on the common technical framework of the software platform. Withinsight into the business needs in production and sales, etc., and aiming to build the enterprise business operation centerand security management center, the Company launched industry applications for industrial parks and buildings, etc.,helping enterprises to reduce costs and increase efficiency and digital upgrade.The enterprise industry software platform series takes the enterprise basic platform as the baseline and supports thecompany's full range of equipment access and platform networking. In order to address the needs for people, vehicles,and property management in large, medium and small enterprise parks, the platform supports integrated management ofemployees' work attendance, convenient pass-through, parking management, security and fire control integration. It alsoprovides a wealth of secondary development interfaces which can seamlessly connect with internal enterprise ERP, CRMand other information systems, which helps resolve problems of isolated information, and facilitates data integration. Inorder to meet the network management needs of corporate headquarters and branches, the platform supports large-scalevideo networking, multi-type data aggregation, multi-user decentralized management and other functions. For example, inthe national platform networking project of a large state-owned bank, more than 300 platforms across the country havebeen connected, with access to more than 700,000 video channels and tens of thousands of various alarm, intercom, andaccess control devices.? Integrated Business PlatformIn order to meet the individualized business needs of multiple industries such as finance, energy, logistics, energy,retail, manufacturing, etc., the enterprise basic platform offers the capabilities to quickly connect with differentsub-systems and integrate self-developed or third-party business sub-systems, thus building industry business platformsand meeting the specific needs of different industries. For example, in the energy and power industry, through thedevelopment and integration of the intelligent power equipment inspection sub-system and the production processdecision support sub-system, the platform can help customers transform from visualized management to production,logistics, management, and decision digitalization.
4.3 To SMB / To C Cloud Service Software
To meet the needs of small and medium-sized enterprises and consumer markets, Imou Cloud has set up 19 datacenter nodes around the world, with access to around 30 million devices, providing secure, stable, and fast cloud servicesfor more than 10 million users worldwide. As per different factors such as construction costs, construction cycle, and datasecurity, Imou Cloud provides three deployment methods: public, hybrid, and proprietary deployment of AIoT platforms forcustomers of different levels.As for the cloud ecosystem, a "three-in-one" business system, namely, intelligent hardware, intelligent technology,and video cloud, is built to provide third-party partners with video-centric VPaaS capabilities, and open up its cloud access,cloud storage, and cloud forwarding, cloud live streaming, cloud intercom, cloud sharing, cloud analysis and other corefunctions. In addition, in order to better meet the fragmented application needs of user scenarios such as homes, shops,small and micro enterprises, the Imou Cloud open platform further opens the cloud AI algorithm, providing AI algorithmsfor face detection, face comparison, face search, and human shape, human attributes, vehicle attributes, and traffic
attribute recognition.The Company released multiple light Internet industry clouds based on Imou Cloud. Among them, retail cloud,construction site cloud, logistics cloud and other light cloud solutions have been implemented in the SMB industries, whichhave helped reduce users' investment in deployment and manual operating costs, and improve overall managementefficiency and customer loyalty. Imou Cloud business ecosystem has more than 35,000 third-party partners worldwide andmore than 1,100 active applications. By far, an open, sharing, and cooperative video network ecosystem has beenbasically set up.In terms of cloud security, in 2019, Imou Cloud obtained the first Rheinland Protected Privacy IoT Service certificate inthe security industry, and was recognized again by international authoritative certification institution. This represents thatImou Cloud is in compliance with international standards and stand ready to provide secure, stable and high-quality cloudservices for global customers.In terms of data operation, Le Orange further enriched and improved the five core functions in 2019, i.e. datastatistics, growth model, layered operation, key business analysis and business operations of the OMS data operationplatform to drive the reshaping of the sales pipeline in all directions, improve product competitiveness and optimize endproduct experience.
4.4 Overseas Business Software
With the rapid development of overseas business, the Company continued to increase investment in overseassoftware platforms, and launched a series of software platform products to meet the requirements of overseas markets.These products aim at the general security market and are built upon the underlying public capabilities of the softwareplatform. They share access to the Company's entire series of hardware products, ranging from video monitoring, accesscontrol, to alarm management and other common security scenario requirements. The products boast of characteristicssuch as cross-platform application, highly reliability, modularization, open access, and easy to use, etc. For the industrymarket, we fully absorbed and referenced the technologies and experience of excellent domestic software platforms,launched a series of industrial software platforms for vertical industries such as safe city, smart traffic management,parking management and vehicle monitoring to support the implementation of overseas industrial solutions and achievedmany successful cases.
5. Core Hardware Products
Relying on the comprehensive insight into customer needs, the in-depth understanding of the subdivision of theindustry and profound mining of industrial solutions, the Company comprehensively upgraded its products in perception,intelligence and computing capacity, deepened core technologies and product layout, and developed Ruijie series, Ruisiseries, Ruimou series, Ruichang series and other product families with super competitiveness in 2019.
1) Ruijie —— Smart Sensing Device
In 2019, the Company launched a new generation of "Ruijie" series of intelligent front-end products, including“Scenario Definition Smart Camera", "HDCVI6.0", "Dual-PTZ", "Dahua Lingjing", "Wu" series free-flow cameras, AIEnforcement Camera, Thermal Network Camera, "Panoramic Mobile PTZ Camera" and other products. These
applications can meet the customer requirements for their different scenarios, improve the video sensing capabilities offront-end products and expand their sensing domains.
? Video perception ability has been greatly improvedThe Company launched Hubble Panoramic PTZ Camera, Dahua Tianmu, 180°Multi-sensor Panoramic Camera, DualVari-Focal AI Camera, Dahua Tiantong, Dahua Aurora, Dahua Tianxian, Super DOF AI Camera and other"scenario-defining smart cameras". By relying on Dahua ’s leading technological breakthroughs in panoramic stitching,low-illuminance ISP algorithm, video codecs, and optical innovation, etc., we have solved industrial problems includinglarge-scenario monitoring, object extraction under low illumination, large aperture scene depth, wide dynamic motionshadow dragging, incompatibility between night license plate and face effects, etc. Therefore, more complete and detaileddata information can be collected for more accurate intelligent calculation and event reporting.Dual-PTZ dome camera utilizes the dual-PTZ "ring motion system”, which have significantly improved the deploymentand application experience of intelligent linkage products. By adopting the large target surface dual-sensor fusiontechnology and multi-spectral photosensitive imaging technology, the Aurora dome camera series can improve the effectof intelligent detection and capture in extremely low illumination. We launched the industry's first 45x optical imagestabilization dome camera that supports 4K high resolution, which can effectively improve the video effects of thetelephoto camera in the environment jitter scene thus to improve the accuracy of intelligent applications. Meanwhile, thePFA + 2.0 predictive focusing technology, which is the first in the dome industry, does not require human calibration andintervention, and can focus in one step.Coaxial products are based on industry-leading HDCVI6.0 technology, which breaks through the transmissionbottleneck of coaxial cables. The coaxial high-definition 4K real-time product solutions and two-way voice technologysolutions are launched to provide customers with ultra-clear, smooth, low-latency video experience and audio interactiveexperience.In the field of intelligent transportation, the Company launched the "Wu" series of high-speed free-flow cameras, thefirst of its kind in the industry to use a white-light-free flashing light solution, which not only effectively addresses thesecurity risks caused by white-light flashing, but also meets the identification requirements of non-stop electronic tollcollection in the highways. The Company also launched the Eco 2.0, which supports capturing of illegal behavior by"vehicles, non-vehicles, humans”, collection of traffic flow statistics, and traffic incident detection. The new generation ofintelligent semaphore has been launched as per the road signal control requirements, which, combined with theindustry-leading flow camera features, further improves the traffic capacity.? Comprehensive expansion of perceived frequency domainThe Company has been accelerating the business layout of 5G technology applications, and have launched 5Gultra-high-definition intelligent network cameras, which effectively solved the major issues posed by the traditional cellularnetwork cameras, such as poor transmission stability and high data streaming fees; meanwhile, they can be easilyinstalled and networked and widely applied in city governance, social public order maintenance, traffic jam control,emergency command and dispatch, emergency rescue and disaster relief, governmental services, and other fields, whichcam facilitate more reliable decision-making, faster response, and more intelligent city development.Industry leading thermal imaging series products have been launched in a comprehensive manner. TheHigh-precision body temperature measurement product, thermal imaging body thermometer, boasts of a measurement
accuracy of ±0.3°C for temperatures ranging 30°C to 45°C. This has contributed a lot to ensure resumption of productionand living and safeguard the health of the people during the COVID-19 epidemic period. The thermal network long-rangehybrid PTZ camera adopts an advanced cooling detector with a monitoring distance of up to 20KM and excellent imageeffect, which can be used in long-distance scenarios such as border defense and coastal defense. The thermal imagingseries products boast of high cost performance, and can achieve functions such as temperature measurement, firedetection, intelligent behavior analysis, human and vehicle differentiation, smoking detection, and phone call detection.They are widely used in the perimeters of the parks, hospitals, schools, gas stations, ancient buildings, charging piles,stations, shopping malls, etc.The Dual-PTZ Series Camera utilizes radar target detection and dome camera capturing to achieve all-weather andall-time three dimensional monitoring. The Panoramic Mobile PTZ Camera has built-in G-sensor, GPS/BeiDou, 4G/5Gand WIFI, and supports "vehicle, non-vehicle and human" detection, illegal parking capture, license plate/human faceblacklisting, which all work to provide better mobile deployment and patrol services.
| 5G 4K UHD Smart Camera | 5G Panoramic Mobile PTZ Camera Camera |
4K HDCVI IRBullet Camera
Camera
4K HDCVIHemi-dome Camera
4K HDCVIHemi-dome Camera
5G UHD Smart Camera and HDCVI6.0 4K Camera
5G UHD Smart Camera and HDCVI6.0 4K Camera
Hunter Dual-PTZ
Series Camera
| Hunter Dual-PTZ Series Camera | Dual-PTZ Series Camera | AI Enforcement Camera | |
Signal Controller
Dahua Smart Dome Camera and Traffic Products
Dahua Smart Dome Camera and Traffic Products
Hubble Panoramic
PTZ Camera
| Hubble Panoramic PTZ Camera | 180°Multi-sensor Panoramic Camera | Super DOF AI Camera | ||
Dual Vari-Focal
AI Camera
Dahua Scene-defined Camera
2) Ruisi —— Agile Edge Intelligence
In 2019, the Company focused on the promotion of intelligent edge product in various industries, and newly launchedthe "Ruisi" series of IVSS, EVS, network video recorder, intelligent coaxial HD DVRs, intelligent security screening servers,face recognition swing turnstile and intelligent vehicle-mounted standard all-in-one products.
For the IVSS series products, the Company keeps on optimizing the self-developed deep learning algorithms,detection and recognition accuracy and analysis performance, to better achieve functions such as optimal multi-facecapturing, facial attribute extraction, target classification, etc. Many other outstanding functions such as fast video targetretrieval and secondary intelligent video analysis have been launched, which not only enhance intelligence and ease ofuse, but also form a supporting scheme together with video cloud, laying the foundation for the implementation of theoverall solution.
The EVS series products integrate centralized storage data with intelligent analysis, and ensure the rapid retrievaland positioning of massive data through structured functions such as face, human body, vehicle, and behavior analysis.Through the extraction of effective data, the network bandwidth pressure during the "intermediate" and "central" datatransfer and interworking is reduced.
The intelligent NVR, on the basis of the original structured data of human face and perimeter, integrates Dahua'sexclusive SMD technology to accurately distinguish between people and vehicle alarm triggering, improving alarmaccuracy.
The intelligent coaxial high-definition DVR, built upon the HDCVI6.0 technology, has achieved 4K real-time preview,intelligent encoding and intelligent enhancement on the analog monitoring products. With integration of human face,perimeter and SMD, it pioneers a new era for the coaxial HD products.
The Intelligent Security Screening server, built upon the leading deep learning technology, can automaticallyrecognize the contraband by X-ray imaging and trigger sound and light alarms and at the same time report the results tothe platform through the network for post-event analysis and statistical report. It is compatible with interfaces of allmanufacturers' security inspection machines, and combined with its exclusive dual-view correlation technology, enhancingthe level of intelligence in the security inspection industry.
The Face Recognition Swing Turnstile adopts image processing technologies, such as wide dynamics, intelligentexposure, and noise reduction, topping the industry in aspects of face recognition speed, biological anti-counterfeitingcapabilities, and base warehouse storage capacity, greatly improving the pass-through efficiency and user experience. Atthe same time, it fully integrates multiple authentication methods such as fingerprints, passwords, QR codes, ID cards, ICcards, Bluetooth, and APP, and has a wide range of adaptability and ease of use.
| Thermal Network Long-range Hybrid PTZ Camera | Thermal Network Hybrid Speed Dome Camera | ||
| Thermal Network Value Hybrid Bullet Camera | Face Recognition and Temperature Measuring Camera | ||
Cooled PTZ and Thermal Imaging Camera with Temperature Measurement
The intelligent vehicle pass-through products, which integrate the license plate and vehicle structure based AIrecognition technology, have made the entrance and exit license plate recognition rate among the industry best. TheCompany has taken the lead in using millimeter-wave radar technology to achieve "decoilization", which effectivelyreduces the products' construction cycle and difficulty. Meanwhile, the products adopt the information separationtechnology and fast turnstile swing transmission mechanism to realize fast vehicle passing-through.
Intelligent vehicle-mounted standard all-in-one products integrate driving behavior analysis and assisted drivinganalysis functions, automatically identify drivers’ unsafe driving behaviors and send warnings so as to improve the safetytechnology support of vehicles and reduce road accidents caused by driver violations.
Smart clout information terminal products, relying on the new intelligent open platform and 4k resolution, andintegrated multi-point intelligent touch, face collection, population statistics, face recognition, voice noise reduction,fingerprint unlocking and other core technologies, are widely used in scenarios such as smart attendance recording,precise advertising, and local/remote meetings.
| Face Recognition Swing Turnstile Pass | Intelligent Security Screening | |
Smart Barrier Gate
Smart Export and Import Products
Smart Export and Import Products
Network Video Recorder
| Network Video Recorder | Digital Video Recorder | Mobile Video Recorder | ||
Universal Storage Products
Universal Storage Products
Embedded Video Storage
| Intelligent Video Surveillance Server | Embedded Video Storage | |
Compression Server
Centralized Storage Products
Centralized Storage ProductsFace Recognition Digital Signage
Face Recognition Digital Signage
Smart Board
| Smart Board | Small-space LED |
Commercial Display Products
3) Ruimou-A Powerful Computing Center
The computing center products are greatly enriched in 2019, forming a full range of product series includingcompetitive general-purpose servers, NPU computing cards, cognitive intelligence software, cognitive intelligencesoftware, labeling training software, etc.Comprehensive series of GPU server hardware support GPU computing cards of different architectures and NPUstandard PCIE computing cards to meet the needs of cloud computing infrastructure hardware construction for datacenters at all levels, including ministry, provinces, cities, districts and counties.Fully self-developed core technology NPU computing cards adopt standard PCIE plug-in cards, to achievebreakthrough in key technologies such as the single-card 64-channel video and picture stream AI parsing, single-card 2.5billion times/second violence comparison and 20 billion times/second index comparison.Perceptual intelligent software is fully serialized, supporting video cloud and cloud-based container deployment, andcompatible with various GPUs and NPUs. The cluster mode supports the analysis of 10,000 video streams and picturestreams, the retrieval of hundreds of billions of data in seconds, and the deepening of data by creating files for individualperson and vehicle. Support lightweight micro cloud single-machine deployment; integrate with access services, AIcomputing, database and basic SAAS to meet the application of small solutions.
Cognitive intelligent software meets various industry scenarios, including public place event detection, control placeevent detection, traffic incident detection, video quality diagnosis, traffic violation pre-examination, urban managementevent inspection, and water-related incident inspection, leading the event-based algorithms with significant social values.
4) Ruichang——Smooth Basic Network
The company launched a new "Rui Chang" series of products to create a complete basic network and is committed toproviding video-centric intelligent IoT professional network solutions. The basic network products accurately matchcustomer needs, with a full range of end-to-end full-scenario coverage, meeting wired and wireless integration networks of
Server Series Products
Server Series Products
1U Cloud Computing Server
| 1U Cloud Computing Server | 2U Cloud Computing Server | 4U Cloud Computing Server |
| AIX3000 Liaoyuan Compute Card | AIC1000 Liehuo Comparison Card |
Compute Card Series Products
all sizes, and substantially lowering network investment, operation and maintenance costs by giving full play to theadvantages of network-wide computing. Through full integration with the Company's industry solutions, our products canhelp customers build a complete set of safe, reliable, high-quality, sustainable-evolving smart IoT networks, and enablemore companies to realize digital transformation and smart network operation.
5) Video IoT Innovative Businesses and Products
? Industrial Internet
1) Machine vision products: The machine vision field focuses on intelligent manufacturing, particularly on thedevelopment of machine vision algorithm platforms, software and hardware products, and vision solutions. In terms ofhardware products, 65-megapixel and 150-megapixel industrial cameras have been released, 20-megapixel embedded
Core Layer Series Products
Core Layer Series Products
Core Switch
| Core Switch | iLinksView Network Management Platform (Minshi Series) |
| Quasi-industrial-level aggregation switch (Minyue Series) | Corporate-level Aggregation Switch (Minhui Series) |
Aggregation Layer Series Products
Aggregation Layer Series Products
Industrial AccessSwitch(Minrui Series)
Industrial AccessSwitch(Minrui Series)Corporate-levelAccess Switch(Minzhen Series)
| Corporate-level Access Switch (Minzhen Series) | Access Switch for Civil Use (Minyi Series) |
Wired Access Series Products
Wired Access Series Products
Wireless Router
| Wireless Router | Outdoor Bridge | Indoor AP | IoT Gateway | |||
Wireless Access Series Products
smart cameras have been rolled out, and OCR and other functions have been added to smart camera series. At the sametime, with the algorithm platform software as the core, it provides customers with machine vision products and segmentedindustry vision solutions, which are widely used in industries such as panels, food packaging, 3C and logistics, tocomplete machine vision applications such as defect detection, positioning guidance, identification and measurement.
Industrial Vision Products
2) Robots: The company continuously invested in products such as mobile robot and industrial robots, coretechnologies and industrial application systems, developed technologies such as robot cluster scheduling (RCS) system,vision navigation, laser navigation, autonomous drive and motion control , and completed the development of more than10 mobile robots and multiple industrial products which have been widely used in various industries such as intelligentmanufacturing and intelligent routing inspection.
? Vision Collaborative ProductsIn 2019, it optimized the existing integrated terminals, split terminals, digital omnidirectional microphones, multi-pointcontrol units and peripheral supporting equipment, and launched a new series of video conference interactive tabletproducts, complete cloud video solutions, and paperless office products, providing customers with complete videoconferencing solutions to support scenarios and applications such as emergency command, telemedicine, remoteeducation, and remote office collaboration. The core products and solutions for remote collaborative communicationdeveloped by Huachuang have been applied in various industries such as office, education, medical care, and operators,and have been widely recognized by customers for their advantages of stability, efficiency, and ease of use.? DronesIn 2019, the Company continuously invested in flight control algorithms, complete machine power system andindustrial intelligent application technologies, delivering effective results. It provides customers with various applications inthe aviation industry, including routing inspection of oil and gas fields, inspection tour of pipelines, police assistance, firecontrol, aerial photography, aerial monitoring, electric power line patrol, land mapping and surveying, security monitoring,forest fire control, maritime surveillance inspection, emergency relief, and geological survey.
6) Open Ecology of Dahua
Adhering to the customer value-oriented philosophy, the Company invites partners to jointly build an open ecosystem,forming a closed ecological value chain that integrates smart platforms, business platforms, and open product platforms.The AI platform provides the full process capability from annotation to online testing, helping partners quickly build
intelligent business applications; the hardware product open platform provides application services, computing power, andhardware resource sharing capabilities, helping partners quickly adapt to different scenarios; the business enabling openplatform provides basic services, intelligent services, and big data application capabilities, enabling partner businesses ina fast manner.
The AI platform covers the entire process of algorithm development, including automatic annotation, developmenttraining, transplantation simulation, algorithm integration, and online testing. Combined with scenarios of partners'demands, it provides the corresponding open subsystem capability, and independently delivers products of differentstages, with flexible match and lowered threshold of open algorithm development. The platform is privately deployed, theprocess can be traced back, and the intermediate deliverables can be tracked, effectively ensuring the security andreliability of training data and products.
The business enabling platform provides solid basic service capabilities, over 1 million channels of video/IoT deviceaccess capabilities, EB-level storage, 100 billion-level file management, and Erasure Code technology, so as to guarantee
the data reliability of up to 99.9999%. It provides diversified intelligent service capabilities, algorithm warehousecentralized management, decoupling of algorithm and computing power, and the entire network collaboration for theunified elastic Cloud-Edge-Terminal scheduling, thereby forming a diversified intelligent service ecosystem. It alsoenables the orchestration of big data application service capabilities, keeps working in industry applications to produce500+ business models and 500+ application interfaces based on enormous business scenarios supporting trillion-leveldata retrieval in seconds, fusion retrieval, and fresh data value.
The open product platform is equipped with comprehensive open business capability, open computing powercapability and complete infrastructure. After dissociating and precipitating the business scenarios of the year-longfragmented security market, it is able to open the full-service link nodes to partners’ applications on the complete securityproduct matrix, allowing them to flexibly customize and insert unique services in each link. The open intelligent hardwarecomputing power adopts normalized interfaces, shields platform differences, supports improving the efficiency of complexcomputing, and maximizes product performance. The open hardware resources such as DDR, Flash and peripherals canbe flexibly scheduled to complete high-level additional value-addition.The open product platform provides a complete tool chain to ensure that partners quickly concretize their businesson products. The micro-container architecture is adopted so that data between applications running on device isindependently isolated and resources are exclusively utilized, thus achieving security isolation. Core interests ofcustomers' development outcomes are protected through the security framework, and in the meanwhile, Dahua’s securitytechnology achievements on security products are shared to ensure the safety protection of equipment in the actual use ofend users. The reliable O&M framework lowers the failure rate of the equipment, and enables prompt trouble shooting andoperation recovery when a failure occurs.
6. Artificial intelligence and other core technologies
A. Artificial intelligence
Artificial intelligence, as one of the key core competitiveness of AIoT, has always been regarded as a core strategy ofour Company. In 2019, we continuously increased investment in resources, expand the construction of super-scalecomputing centers and data centers for training artificial intelligence algorithms and put emphasis on the studies of corealgorithms based on application scenarios to achieve industry-leading core competitiveness in multiple algorithm fields,realize commercial coverage of full series of intelligent products and solutions and accelerate the implementation ofindustrial application of artificial intelligence. At present, the company's artificial intelligence technology mainly focuses ontechnical fields such as face identification, intelligent transportation, behavior analysis, item analysis, navigation andpositioning, multi-dimensional perception, intelligent codec, and intelligent audio, and has been extensively applied inproviding industrial solutions for public security, transportation, finance, community, energy, education, etc.As an engine for building data, artificial intelligence needs to realize the requirements of real mapping, sceneconstruction and comprehensive expression. The company focused on algorithm upgrading and expansion to improvedata accuracy and data diversity, and conducting studies and applications combining products with solutions in 2019.Main achievements obtained in 2019 include:
1) Continuously strengthening basic capacity building of artificial intelligence and resource investment to improve theefficiency and quality of algorithm research and development.
In 2019, the Company launched a new generation of "Juling" artificial intelligence platform, a leading artificialintelligence development platform in the industry, which has integrated AI full link development elements includingcomputing centers, data centers, training centers with functions such as data management, algorithm training,cross-hardware platform optimization, integrated deployment and automated testing. It can provide the basic supports foralgorithm researches and applications improve the efficiency of artificial intelligence development and accelerate theindustrialization of end-to-end artificial intelligence.
2) Continuous innovation in algorithms, breakthroughs in key technologies, comprehensive performance upgrades,
and building industry-leading core competitiveness in artificial intelligence
In the field of intelligent transportation algorithm, we continued to strengthen basic technology research in 2019 toensure the sustained precedence of the algorithm in the industry and profoundly study customer needs and pain points toexpand the application scenarios and functions of the algorithm. Among the national high-speed free-flow projects, weinnovatively developed a high-frame-rate bayonet algorithm solution for high-speed scenes with a capture rate andrecognition rate up to 99.9%, and industrial leading algorithm effects. Specific to the development trend of non-motorvehicle control and behavior analysis of violations, we developed recognition algorithms for illegal behaviors such asnon-motor vehicle number plates, failure to drive at the specified lane, not wearing a helmet and overload to assistcustomers in management and control of non-motor vehicles; added management, control and analysis of muck trucks,hazardous goods transportation vehicles and so on, as well as the identification and analysis of driver behaviors. Orientedat overseas markets, we continuously developed general algorithms for license plate recognition, overseas vehicle colorrecognition, etc. The products have been applied in 48 countries and regions. In addition, we developed a generalalgorithm for Europe, South America, the Middle East, Asia, and Russian regions. The products have been applied atbayonets, parking lots, electric police and other scenarios. Based on years of technology accumulation in thetransportation industry algorithm, we have rapidly realized breakthroughs in airport intelligence, high-altitude traffic flow,intelligent gas stations, overseas parking lots and other new fields.We made key technological breakthroughs in the field of face algorithm in 2019. We have been at the industrialleading edge in face detection, recognition, attributes, living body, etc., and have developed competitive products andsolutions. In terms of face detection, we have realized integration snapshot of face and body and 10 pixel stable detectionof small objectives.
3) Accelerating the development of algorithms oriented at application scenarios, to assist the digital and intelligenttransformation of the industry
In the field of behavior analysis algorithm, based on the research of artificial intelligence algorithms for behaviorrecognition and combined with the needs of industry solutions, we accelerated the development of industry event analysisbusiness, such as launching smart logistics, high-rise littering, compliance behavior, wear analysis, perimetermanagement and other industrial intelligent solutions, and realized the implementation of urban management, education,finance, smart construction site and other solutions. In 2019, we continued to update Search by Image, video structuredanalysis and other technologies to keep the leading position in the industry, made major breakthroughs in researches onkey technologies, including 3D behavior analysis, sequential behavior analysis and human key point technology andmade breakthrough in embedded platform sequence behavior analysis technology for the first time; in terms ofcross-camera tracking technology, it innovatively launched the real-time cross-camera pedestrian tracking technology andrealized cross-viewing angle of pedestrian continuous tracking in the industry.
In the field of item analysis algorithm, it mainly focuses on the researches of intelligent algorithms for intelligentsecurity inspection. By adopting the deep learning algorithm, the dangerous materials passing the X-ray securityinspection machine can be identified, covering more than 10 common dangerous materials such as knives, guns, liquids,sprinklers and lighters. Due to its industrial precedence, it has been successfully applied to high-speed rails, subways andother places. In addition, artificial intelligence solutions have been applied in energy, environmental protection, retail andother fields. For example, they are used for identification of instruments and meters in the energy industry, intelligent
analysis of water level in water affairs industry and analysis of shelves and merchandises in retail industry.
4) Diversified layout and research of algorithms to fully support the business development of artificial intelligenceIn the field of multi-dimensional perception algorithms, multi-sensor integration applications have become the trendfor product development. Dahua closely follows this trend to carry out algorithm layout and R&D. In terms of multi-viewvideo fusion, the performance of the Panoramic mosaic algorithm has been comprehensively upgraded. The HubbleWatcher (PSDW series), global camera, Lingtong, Lingxi and other products launched in 2019 have significantly improvedthe performance and market competitiveness of the products. In terms of multi-type sensor intelligence, we successfullyexpanded the technical fields of 3D AR panorama, millimeter wave radar technology, intelligent audio processingtechnology, radar video fusion technology, real-time aerial stitching, intelligent analysis of remote sensing images, andintelligent smoke detection.In the field of intelligent codecs, we continued to study the core technology of video codecs to achieve keyperformance improvements. In 2019, we launched the AI + H.265 intelligent ultra-low code rate algorithm based onartificial intelligence technology, which significantly reduced the bandwidth of the code stream and enhanced night visioneffect. For researches of the next-generation coding technology, we participated in the formulation of H.266, AVS andother video standards and output technology patents.In the field of navigation and positioning algorithms, we expanded the business scope to robots and industrialmanufacturing, carried out researches and development of artificial intelligence technologies in laser navigation, binocularvision navigation, multi-mode fusion positioning, TOF target recognition, autonomous scheduling algorithm of large-scalerobots, among others, and realized applications including low-speed automatic traveling, and intelligent control of robotarms.B. 5G technology and applicationsThe Company further strengthens its 5G strategic layout to realize the innovation of products and solutionapplications. In 2019, the Company launched an ultra-high-definition network camera with integrated 5G, and achievedseveral breakthroughs in key technologies, including:
? High-performance broadband antenna technology: 5G is an ultra-complex wireless system with multiple bandsand multiple antennas. To achieve miniaturization integration in the monitoring equipment of all-metal housing, it isdifficult or both heat dissipation design and antenna design. Dahua took innovative measures by adopting spaceisolation, asymmetric antenna and other technologies, providing effective solutions to these tricky problems.
? Adaptive transmission technology: In 8K video transmission, the peak value of the code stream fluctuatesgreatly, causing peak congestion and thus frame loss in the ordinary network transmission, which is more prominenton 5G networks. The Company guarantees 8K real-time video transmission without jamming through independentdesign of technologies such as smooth code stream, adaptive encoding, and super-buffering.The Company has achieved pilot applications in a number of industries including finance, tourism and emergencyresponse. We cooperated with China Mobile and CCTV in using drones + 5G network to make close and livehigh-definition video of Qiantang River Tide for the first time. During the live broadcast of the construction of LeishenshanHospital in Wuhan, we adopted the "5G + HD Speed Dome" solution to enable the viewers across the country to witness
the construction progress through the live broadcast platform. At the "Second Bloom Cup 5G Application SolicitationContest" held by the Ministry of Industry and Information Technology of the People's Republic of China, the "5G SmartFire Control System" of the Company was awarded the only First Prize in Zhejiang and the national Third Prize in thesecurity industry.C. Cyber security systemData security is the foundation of the sustainable and healthy development of the Internet of Things. Cyber securityand privacy protection is one of Dahua's highest guidelines. The Company continues to invest special funds to ensure thesolid and steady advances of the security technology research, product security R&D and delivery, and the construction ofthe safety emergency response system. All the products of the Company should pass the strict tests at the Company'sOffensive and Defensive Test Laboratory before launches. Based on the HOC "1 + 2 + N" architecture of Dahua, theoverall architecture of the security center based on terminal security, network security, application security, data security,and security operation centers has been used in urban solutions and various industry solutions. At present, the Companyhas achieved substantial results in security technology areas such as trusted computing, data encryption, privacyprotection, and offensive and defensive test, and has integrated applications in a full range of products.Main achievements in the key security technology areas obtained in 2019 include:
? Trusted protection technology: We constructed a multi-dimensional trusted framework which has realized afull-process protection system for trusted upgrades, trusted startups, and trusted operations, and significantlyimproved the capability of equipment identification and active anti-malicious program. This technology hasbeen extensively applied in IPC, NVR and other products.? High-performance data encryption and decryption technology: While supporting the full-scale/lightweight
encryption and decryption of code stream, the encryption and decryption cooperative processing mechanism oflinkage hardware has significantly improved the encryption and decryption performance, and has beenimplemented in IPC, NVR and other products.? Privacy protection technology: The whole series of products integrated data encryption, face shielding andother key privacy protection technologies, and studied homomorphic encryption, differential privacy and othercutting-edge privacy protection technologies to further enhance the leading-edge predominance of privacyprotection in the industry.? Security testing technology: We constructed a security testing platform integrated with "standardization +tooling + automation” to realize mutual reinforcing between security test automation and expert offensive anddefensive test, ensure rapid security verification and default security before product launching.With the rapid development of the Company's smart IoT solution, the Company will further increase the investment inresearch and development of security solutions and continue to provide customers with more secure and reliable productsand solutions.
7. Key sales model and performance drivers
Relying on subsidiaries and offices for marketing in multiple countries and regions, Dahua offers products andsolutions to different end users like governments, enterprises, and consumers.
Major performance driving factors include:
Guided by customer demands and industry trends, Dahua has transformed its business model from selling singleproducts to providing comprehensive solutions, then to intelligent comprehensive urban services. In the process oftransformation, we understand deeply the customer business, and respond quickly to customer needs by relying on ourR&D, innovation ability and integration of supply chains. In the domestic market, the Company has been cultivatingmarkets of different cities, industries and consumer groups for many years, and has established a good reputation andbrand image. In addition, after years of development in overseas markets, and relying on the global marketing and servicenetwork, Dahua has been constantly improving its brand recognition and product reputation, achieving steady growth inboth domestic and overseas markets.In October 2019, Dahua was included in the Entity List by the U.S. Department of Commerce. For the products thatmay be affected by this List, Dahua timely introduced alternative solutions relying on its early technical reserves and R&Das well as the rapid integration of the supply chain. It further reviewed its products and solutions to ensure the safety of thesupply chain. Under the complex and ever-changing macro environment such as macroeconomic downturn and frequentinternational trade frictions in 2019, the Company adhered to an open and transparent, friendly and cooperative attitude,actively communicated with the external parties, actively explored markets, embraced the global industrial chain, andsticked to the internationalization path. In the long run, the development of the Company still depends on its technologicalinnovation and resource integration ability. As a leading platform R&D enterprise, the Company has been a reliablesecurity upholder in various aspects such as market, R&D, and supply chain. It can achieve rapid response to customerneeds and application scenarios based on its R&D innovative genes and supply chain integration capabilities, therebycreating new values.II. Material Changes to Major Assets
1. Major changes in main assets
| Major Assets | Explanation Of Material Changes |
| Equity assets | 164.02% higher than the beginning of the year, mainly due to the increase in equity acquisition. |
| Fixed Assets | No major changes. |
| Intangible Assets | No major changes. |
| Projects under Construction | 92.65% higher than that at the beginning of the year, mainly due to the increase of investment in the Phase II construction of the smart manufacturing base in Hangzhou and the R&D and industrialization of the smart IoT solutions. |
| Receivables Financing | 54.48% lower than that at the beginning of this year, mainly caused by the decrease of settlement of notes sold in the current reporting period. |
| Other Current Assets | 38.30% higher than that at the beginning of the year, mainly due to the increase of input tax that is not deducted. |
| Long-term Receivables | 37.98% higher than that at the beginning of this year, mainly due to the acceptance of goods with payment by installments. |
| Deferred Income Tax Assets | 57.07% higher than that at the beginning of the year, mainly due to increase of deductible temporary difference. |
2. Major overseas assets
□ Applicable √ Not applicable
III. Core Competitiveness Analysis(I) Precision investment in R&D to build core technology competitivenessInnovation is the important driving force and core competitiveness for Dahua's development. Dahua is always on thecutting edge of industrial technological development, to meet the changing demand of customers.
1. Cloud Computing and Big Data Products and Services
Based on cloud computing and big data technology and combined with the industry characteristics, Dahua has builtthe big data platform architecture focusing on video, and introduced a board range of products and services such as videocloud storage, cloud database, vector database, container cloud, view cloud intelligence, big data platform, datacomputing platform, and data mining. In collaboration with the edge and front-end perception products of Dahua, Dahuahas achieved the harmonious distribution of storage, computing, network and algorithm, which meets the customers' needfor computing and storage of different scenarios across the network. It's widely used in urban, industrial and consumermarkets such as smart policing, smart transportation, smart justice, emergency intelligence, smart buildings and smarthomes.
2. AI
Artificial intelligence is one of the company's core strategies. In 2019, Dahua increased its investment in expandingthe ultra-large computing center and data center for AI algorithm training. We focused on the research of core algorithmsbased on application scenarios, thus to achieve industry-leading core competitiveness in many algorithm fields. Inaddition, smart products and solutions throughout the system are commercially launched to accelerate theindustrialization of AI applications. At present, the company's artificial intelligence technology mainly focuses on faceidentification, intelligent transportation, behavior analysis, item analysis, navigation and positioning, multi-dimensionalperception, intelligent codec, and intelligent audio, and has been extensively applied in industrial solutions for publicsecurity, transportation, finance, community, energy, education and other industries.
3. Software Platform
The Company continues to increase its investment in software platforms, and expands into the software platforms ofsubdivided industry close to the industry business based on the integrated video IoT platform, and continues to upgradethe platform architecture based on a deep understanding of the business and the application of advanced technology. Atthe same time, the company continuously optimizes and enriches the software platforms and industrial public componentsand scenario kits, such as device management, rights management, user management, organization management, videomanagement, data management, intelligent analysis, multi-algorithm warehouse, deployment control and early warning,fusion retrieval and so on. In addition, it has also realized free combination of various basic capabilities through the unifiedpublic technology framework and specifications, to meet the application of large, medium and small scenarios in various
industries, and make complex end-to-end software solutions easy to implement with efficient and flexible delivery.(II) Optimizing the global marketing and service system to promote orderly the overseas business growth
With a global marketing and service network, the Company provides customers with end-to-end efficient and fastservices. With a global marketing and service network, Dahua has established more than 200 offices in 32 provinces andcities in China as well as 53 overseas branches in Asia Pacific, North America, Europe, Africa and other regions.In the domestic market, the Company has established a customer management system for strategic sand table, andconduct hierarchical and classified management of customers based on the sand table, in order to provide better service.The company makes intensive efforts in city-level market, industry-level market and consumer market, increase thebreadth and depth of customer coverage, and load resources for customers at frontlines with smooth process and rapidresponse.
In the overseas market, the company has further strengthened the coverage and construction of marketing servicenetwork, enhanced the ability of localized operation, refined the management and operation of distribution channels, andincreased the expansion of industrial customers. Meanwhile, the company has also worked out a series of smart IoTsolutions for the government, transportation, retail, energy and other industries, in order to keep the growth of overseasbusiness.(Ⅲ) Strengthen Capacity of Global Supply
Dahua will build a smart high-efficiency supply chain for cost-effective supply to the global markets. Based on theintegration plan, the market clients are covered for better supply distribution and flexibility. By improving predictionaccuracy, logistics timeliness, and inventory management capabilities, the links from finding business opportunities todelivery are well managed to improve customer satisfaction. In smart manufacturing, Dahua has improved its digital andinformation level of products and manufacturing on the strength of its smart manufacturing capability, ensuring betteroperation of supply chains. The interconnection of equipment systems and the capabilities of data collection and analysisare strengthened, and the standardization of product manufacturing improved for stable and controllable product quality.
In terms of supply safety, Dahua comprehensively sorts out all kinds of potential supply risks, strengthen thesustainable and safe supply of key materials, and enhance the safety of external and local supply, and base supply.
The Company continues to expand and upgrade Fuyang production base to ensure the stable development of thecompany's business. At present, Fuyang production base has comprehensively improved the automation andinformatization level of the factory to realize flexible production and rapid delivery with its own smart manufacturingcapabilities (including automatic production lines, robots, machine vision, industrial interconnection platform)（Ⅳ）Strengthening Construction of Talent Team and Supporting Sustainable Development of the Company
"Customer-centered and dedicated to success" is placed at the core of the corporate culture. The Company, throughcustomer-oriented business processes and organization construction, regards creation of customer value as the workguidance and performance evaluation criteria for every employee. Meanwhile, the Company adheres to the valueorientation of "dedicated to success" for continuous optimization of the performance evaluation and salary distribution
system and promotes diversified short-term and long-term incentive packages to award high-performance staff withsustainable salary and moral encouragement.In addition, Dahua has closely combined talent and business development and focusing on shaping and improvingcore competitiveness of employees. It offers diversified training for new employees and on-the-job employees, andimplements a training point’s management system to create a good internal learning atmosphere, which help improve thecomprehensive quality of employees and realize their personal value.(V) Continuously improving the level of compliance governance for better business continuity and steadydevelopment of businessDahua attaches great importance to business compliance operations, strengthens network security and dataprotection, optimizes the management of the product quality system. Therefore, it has established and improved acompliance system that complies with the export control regulations of major economies in the world. To ensure thehealthy and sustainable business development, Dahua has always maintained a sound management strategy andmanaged the compliance risks according to the policies in each country.
Section IV Discussion and Analysis on Business Circumstance
I. Overview
In 2019, the economic growth of the world’s major economies generally slowed down with frequent trade frictions.Against this background, the growth of the video IoT industry slowed down in the short term. However, with thedevelopment and application of AI, IoT, 5G, cloud computing, big data and other technologies, and the constant iterationand upgrading of video technologies, the value of smart products and solutions increased rapidly. Video capabilitiespenetrated into businesses of all industries. The market space of the video-centric smart IoT further expanded.In the complex situation with substantially rising domestic and international risks and challenges, the Companymaintained stable operations, strengthened refined management, optimized business structure, improved business quality,and further improved operating indicators such as profit margins and cash flow during the reporting period, with steadygrowth in performance. In 2019, the Company achieved RMB 26.149 billion in operating income, registering an increaseof 10.50% year-on-year; the net profit attributable to shareholders was RMB 3.188 billion, registering an increase of 26.04%year-on-year. The profitability of the Company continued to rise. Main business strategies of the Company include:
(1) Continuously enhance the targeted investments in R&D, constantly improve the capacity for technologicalinnovations, and improve the core technical strength
The Company insisted on taking technological innovation as the core and investing heavily in R&D. In 2019, theCompany invested RMB 2.794 billion in R&D, registering an increase of 22.35% year-on-year, and accounting for 10.69%of the operating income. Apart from maintaining investment in traditional video technologies, the Company continued toenhance research, development and productization of technical fields such as AI, big data and cloud computing, 5G,cyber security, software platforms, machine vision and robots, and multi-dimensional perception, providingdemand-oriented rapid response and iteration of technologies..
The company delved into the development trend of the industry and technologies, and continued to build a technicalsystem supported by "full sensing, full intelligence, full computing, and full ecology", so as to enhance the ability to providecomprehensive end-to-end solutions for customers’ pain points in business and application solutions for specific scenarios,and support the digital transformation and intelligence-based upgrades in various industries.
(2) Enhance the building and sinking of the software R&D ability and accelerate responses to individualizedcustomer needs
The Company further enhanced its software architecture capabilities, and launched industry software platforms formultiple scenarios in public security, judicature, emergency-handling, transportation, smart building, finance, and energy.In order to strengthen the ability of business segments in the front-line closed loop, to accelerate responses tocustomization needs, and to provide better technical services for partners in segments of different provinces and regions,the Company established software competence centers in Shanghai, Zhejiang, Shandong, Shaanxi, Sichuan, Guangdong,Guangxi and other provinces and regions, thus delivering software development support covering its own province as well
as surrounding provinces. Meanwhile, the Company also set up software R&D branches in Europe and Americarespectively, attracting excellent local software talent to form international R&D teams and stay close to customers.Software platforms were developed in a localized way, which largely accelerated the responses to customer needs.
(3) Get deep understanding of customer business, focus on the management of strategic opportunities, andenhance systematic marketing capabilitiesGuided by customer requirements, the Company deepened the understanding of customers’ businesses, graduallyestablished and completed the business and project operation ability based on the sand tables of customers, andprovided multi-level solutions to different types of customers. In the domestic market, the Company constantly pushed theability building for the marketing of technologies, established provincial and regional product and solution centers, andenhanced the go-to-market and management of products and solutions for customers and the front-line of businesses. Inthe overseas markets, the Company constantly implemented refined management, promoted channel sinking, enhancedindustry expansion capabilities, built a cooperative ecosystem, and deployed business in an orderly manner.The Company strengthened the management of strategic opportunities, identified and seized a series of newopportunities such as the high-speed free stream to rapidly develop and deliver targeted products and solutions, andachieved solid business value for customers. The company insisted that opening-up and integration is the inexorabledevelopment trend of the industry and will be a new industrial state in the era with the internet of everything. For theapplication in cross-industry scenarios, comprehensive solutions were found through ecological cooperation.
(4) Promote the building of a globalized marketing network, establish R&D branch centers, and deepen the layoutof global suppliesThe Company has a global business layout, and a wide marketing network and business coverage both in domesticand overseas markets.
In 2019, the sales network of the Company expanded to 51 countries, and 53 overseas branches in regions such asAsia Pacific, North America, Europe and Africa were established, with products covering nearly 180 countries and regionsaround the world. By fostering international marketing and management teams, and establishing localized marketing,R&D, supply, and service centers, the Company gradually improved the localized operation capabilities of overseassubsidiaries, continuously optimized the revenue structure, and further realized its expansion in the global market and theupgrading of businesses. Meanwhile, in the face of the complex internal and external environment, the Companycontinued to build its operation compliance system, safety system, and quality system, to ensure the standardizedoperation.In 2019, the Company established the Southwest Smart Base in Chengdu and gathered talent proficient in AI, bigdata, cloud computing, and other core technologies to satisfy its increasing business requirements. The Companyconstantly enhanced the refined operation of the supply chain and promoted the building of a global supply network.Besides the headquarters in Hangzhou, the Company has established regional supply centers in Hungary, Mexico, andother countries. In the core logistics distribution centers like Holland and Dubai, the Company established regional hubwarehouses. Dozens of new ecological RMA (Return Merchandise Authorization) stores were opened and dozens oftechnical service partners were authorized in the year to form a multi-level supply network and an ecological servicesystem.
(5) Constantly promote the development of innovative businesses and provide customers with more abundantand complete solutionsBased on the in-depth understanding of the diverse customer needs, the Company continued to develop emergingbusinesses including related businesses in the industrial Internet field, video collaboration, and professional drones.? Industrial Internet business: 1) Machine vision business: Led by the wave of smart manufacturing and based onthe Company’s years of AI technology accumulation in the video field and the IoT ecosystem, the Companyconstantly carried out software and hardware technology development for products and the iteration of algorithmplatform products, providing customers with end-to-end industrial vision product solutions and betterapplications with the algorithm platform software as the core, combining industrial cameras, smart cameras, linescan cameras, smart sensors, 3D cameras and lenses; 2) Robot business: The Company continued to developproducts such as mobile robots and industrial robots, core technologies, and industry application systems,which have been applied in various industries such as intelligent manufacturing and intelligent routinginspection.? Video collaboration businesses: Based on the in-depth understanding of the markets, the Company constantlyoptimized the products and further enriches the product lines to provide customers with complete videoconference solutions and support emergency command, remote health-care, remote education, remote officecollaboration, and other scenarios and applications.? Professional drone business: The Company continued to develop flight control algorithms, machine power
systems, and industry intelligent application technologies, achieving effective results. Currently, drones havebeen used in various fields such as oil and gas field inspections, petroleum pipeline inspections, policeassistance, firefighting, aerial photography, aerial monitoring, power line inspections, land mapping, securitymonitoring, forest fire prevention, maritime patrol, emergency relief, and geological survey.II. Main Business Analysis
1. Overview
See "I. Overview" in "Discussion and Analysis on Business Circumstance".
2. Income and Costs
(1) Operating income structure
Unit: RMB
| 2019 | 2018 | Year-on-year Increase or Decrease | |||
| Amount | Proportion in Operating Revenue | Amount | Proportion in Operating Revenue | ||
| Total Revenue | 26,149,430,652.42 | 100% | 23,665,688,106.22 | 100% | 10.50% |
| By Industry | |||||
| Security industry | 26,149,430,652.42 | 100.00% | 23,665,688,106.22 | 100.00% | 10.50% |
| By Product | |||||
| Solutions | 13,615,657,688.00 | 52.07% | 12,214,951,613.16 | 51.62% | 11.47% |
| Product | 10,649,410,791.29 | 40.72% | 9,762,853,684.85 | 41.25% | 9.08% |
| Others | 1,884,362,173.13 | 7.21% | 1,687,882,808.21 | 7.13% | 11.64% |
| By Region | |||||
| Domestic | 16,473,728,183.00 | 63.00% | 15,087,657,708.75 | 63.75% | 9.19% |
| Overseas | 9,675,702,469.42 | 37.00% | 8,578,030,397.47 | 36.25% | 12.80% |
(2) Industry, product, or region accounting for more than 10% of the company's operatingrevenue or profit
√ Applicable □ Not applicable
Unit: RMB
| Operating income | Operating Cost | Gross margin | Increase or Decrease of Operating Income Compared with the Same Period of Last Year | Increase and Decrease of Operating Cost over the Same Period of Last Year | Increase or Decrease of Gross Profit Compared with the Period of Last Year r | |
| By Industry | ||||||
| Security industry | 26,149,430,652.42 | 15,396,193,940.44 | 41.12% | 10.50% | 3.53% | 3.96% |
| By Product | ||||||
| Solutions | 13,615,657,688.00 | 7,514,681,636.66 | 44.81% | 11.47% | 4.34% | 3.77% |
| Product | 10,649,410,791.29 | 6,143,786,066.11 | 42.31% | 9.08% | 0.25% | 5.09% |
| By Region | ||||||
| Domestic | 16,473,728,183.00 | 10,217,525,331.58 | 37.98% | 9.19% | 4.02% | 3.09% |
| Overseas | 9,675,702,469.42 | 5,178,668,608.86 | 46.48% | 12.80% | 2.58% | 5.33% |
When the statistical caliber of the company's main business data is adjusted in the reporting period, the company's mainbusiness data should be subject to the one after the statistical caliber at the end of the reporting period is adjusted in themost recent year.
□ Applicable √ Not applicable
(3) Is the company's physical sales income greater than the labor income?
√ Yes □ No
| Industry Classification | Item Name | Unit | 2019 | 2018 | Year-on-year Increase or Decrease |
| Security industry | Sales volume | Unit/set | 55,096,437 | 54,750,353 | 0.63% |
| Production output | Unit/set | 56,227,073 | 57,109,913 | -1.55% |
Reasons for over 30% changes in related data on year-on-year basis
□ Applicable √ Not applicable
(4) Performance of major sales contracts signed by the Company as of the reporting period
□ Applicable √ Not applicable
(5) Operating Cost Structure
Industry and Product Classification
Unit: RMB
| Industry Classification | Item Name | 2019 | 2018 | Year-on-year Increase or Decrease | ||
| Amount | Proportion to Operating Cost | Amount | Proportion to Operating Cost | |||
| Security industry | Operating Cost | 15,396,193,940.44 | 100.00% | 14,871,181,066.69 | 100.00% | 3.53% |
Unit: RMB
| Product Classification | Item Name | 2019 | 2018 | Year-on-year Increase or Decrease | ||
| Amount | Proportion to Operating Cost | Amount | Proportion to Operating Cost | |||
| Solutions | Operating Cost | 7,514,681,636.66 | 48.81% | 7,201,889,474.98 | 48.43% | 4.34% |
| Product | Operating Cost | 6,143,786,066.11 | 39.90% | 6,128,694,957.17 | 41.21% | 0.25% |
| Others | Operating Cost | 1,737,726,237.67 | 11.29% | 1,540,596,634.54 | 10.36% | 12.80% |
(6) Has the scope of consolidation changed during the reporting period?
√ Yes □ No
1) In this period, the Company invested in and established three subsidiaries: Zhejiang Zhoushan Digital DevelopmentOperation Co., Ltd., Guangxi Dahua Technology Co., Ltd. and Yunnan Zhili Technology Co., Ltd., which have beenincorporated into the scope of merger as of the date of establishment.
2) The subsidiaries such as Wuxi Dahua Ruide Electronic Technology Co., Ltd., Hunan Dahua System Technology Co.,Ltd., Dahua Zhongcheng (Beijing) Technology Co., Ltd. and Dahua Italy S.R.L. were cancelled in this period and will nolonger be incorporated in the scope of merger since the date of cancellation.
3) In this period, the company transferred 36% of the shares of China Standard Intelligent Security Technology Co., Ltd.After that, the company remains holding 15% and has no control right over the company anymore, therefore it will not beincluded in the scope of merger in this period.
(7) Major changes or adjustments to the company's business, products, or services during thereporting period
□ Applicable √ Not applicable
(8) Major Clients and Suppliers
The Company's Major Clients
| Total sales amount of the top five customers | 2,128,422,264.59 |
| Proportion of the total sales amount of the top five customers to the total annual sales | 8.14% |
| Proportion of the total sales amount of the related parties in the top five customers to the total annual sales | 0.00% |
Profiles of the Company's top five customers
| No. | Name of Customer | Sales Amount (RMB) | Proportion to the Annual Sales |
| 1 | Company 1 | 574,978,063.97 | 2.20% |
| 2 | Company 2 | 533,658,027.46 | 2.04% |
| 3 | Company 3 | 405,759,071.03 | 1.55% |
| 4 | Company 4 | 355,898,317.14 | 1.36% |
| 5 | Company 5 | 258,128,784.99 | 0.99% |
| Total | -- | 2,128,422,264.59 | 8.14% |
Other Information Notes for Major Clients
□ Applicable √ Not applicable
Major suppliers
| Total Purchase Amount of Top Five Suppliers (RMB) | 4,029,626,765.91 |
| Proportion of the total purchase amount of top five suppliers to the total annual purchase amount | 24.19% |
| Proportion of the total purchase amount of the related parties in top five suppliers to the total annual purchase amount | 0.00% |
Profiles of the Company's top five suppliers
| No. | Supplier Name | Purchase amount (RMB) | Proportion to the total annual purchase amount |
| 1 | Company 1 | 1,664,180,686.62 | 9.99% |
| 2 | Company 2 | 729,913,015.41 | 4.38% |
| 3 | Company 3 | 616,300,606.36 | 3.70% |
| 4 | Company 4 | 579,007,576.44 | 3.48% |
| 5 | Company 5 | 440,224,881.08 | 2.64% |
| Total | -- | 4,029,626,765.91 | 24.19% |
Other Information Notes for Major Suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: RMB
| 2019 | 2018 | Year-on-year Increase or Decrease | Statement on Significant Changes | |
| Sales Expenses | 3,952,947,275.82 | 3,365,380,947.78 | 17.46% | |
| Administration expenses | 740,880,944.67 | 632,968,594.64 | 17.05% | |
| Financial Expenses | -70,077,580.11 | -123,167,962.74 | 43.10% | Mainly due to the decrease in exchange gains |
| Research and development expense | 2,794,219,504.28 | 2,283,872,502.53 | 22.35% |
4. R&D Investment
√ Applicable □ Not applicable
Company's R&D investment
| 2019 | 2018 | Change Ratio | |
| Number of R&D personnel | 7,161 | 6,880 | 4.08% |
| Percentage of R&D personnel | 52.43% | 50.56% | 1.87% |
| R&D investment (RMB) | 2,794,219,504.28 | 2,283,872,502.53 | 22.35% |
| The proportion of R&D investment to operating income | 10.69% | 9.65% | 1.04% |
| Capitalized R&D investment | 0.00 | 0.00 | 0.00% |
| Proportion of capitalized R&D investment to R&D investment | 0.00% | 0.00% | 0.00% |
The reason for the significant change in the proportion of the total amount of R&D investment to operating incomecompared with last year
□ Applicable √ Not applicable
Reasons and rational explanations on the substantial change in capitalization rate of R&D investment
□ Applicable √ Not applicable
5. Cash Flow
Unit: RMB
| Item Name | 2019 | 2018 | Year-on-year Increase or Decrease |
| Subtotal of cash inflow from operational activities | 27,289,772,534.99 | 23,648,130,137.58 | 15.40% |
| Subtotal of cash outflow from operational activities | 25,689,168,247.29 | 22,692,814,159.41 | 13.20% |
| Net cash flow generated by operating activities | 1,600,604,287.70 | 955,315,978.17 | 67.55% |
| Subtotal of cash inflow from investment activities | 3,543,722,034.42 | 170,142,702.70 | 1,982.79% |
| Subtotal of cash outflow from investment activities | 4,383,517,340.45 | 916,786,739.20 | 378.14% |
| Net amount of cash flow generated by investment activities | -839,795,306.03 | -746,644,036.50 | -12.48% |
| Subtotal of cash inflow from financing activities | 6,449,889,488.41 | 8,800,798,371.20 | -26.71% |
| Subtotal of cash outflow from financing activities | 8,223,765,887.21 | 8,424,286,645.98 | -2.38% |
| Net cash flow generated by financing activities | -1,773,876,398.80 | 376,511,725.22 | -571.13% |
| Net additions to balance of equivalents | -968,097,827.13 | 639,604,809.66 | -251.36% |
Description of the main factors affecting the significant changes in related data over the same period of last year
√ Applicable □ Not applicable
1. Cash inflow from investment activities increased 1982.79% year on year, which is mainly due to the increase ininvestment recovered from the reverse repurchase of treasury bonds in this period.
2. Cash outflow from investment activities saw year-on-year rise of 378.14%, which is mainly due to the increase ininvestment recovered from the reverse repurchase of treasury bonds and equity acquisition expenditure in this period.Reasons for the significant difference between the net cash flow generated by the company's operating activities in thereporting period and the net profit in the current year
□ Applicable √ Not applicable
III. Non-main Business Analysis
□ Applicable √ Not applicable
IV. Analysis of Assets and Liabilities
1. Significant changes in assets composition
The company implemented new financial instrument standards, new revenue standards or new leasing standards for thefirst time since 2019, and adjusted the items related to financial statements at the beginning of the year.
√ Applicable □ Not applicable
Unit: RMB
| End of 2019 | At the Beginning of 2019 | Proportion Increase and Decrease | Statement on Significant Changes | |||
| Amount | Proportion to Total Assets | Amount | Proportion to Total Assets | |||
| Cash and Bank Balances | 3,084,428,970.43 | 10.43% | 4,160,153,847.06 | 15.79% | -5.36% | No Significant Change |
| Accounts receivable | 13,241,196,380.65 | 44.79% | 10,191,372,777.38 | 38.68% | 6.11% | No Significant Change |
| Inventory | 3,839,810,704.33 | 12.99% | 3,035,579,709.14 | 11.52% | 1.47% | No Significant Change |
| Investment Property | 336,181,589.99 | 1.14% | 346,831,376.55 | 1.32% | -0.18% | No Significant Change |
| Long-term Equity Investment | 490,731,236.85 | 1.66% | 185,872,021.58 | 0.71% | 0.95% | Mainly due to the increase of equity acquisition |
| Fixed Assets | 1,522,463,368.83 | 5.15% | 1,407,471,330.83 | 5.34% | -0.19% | No Significant Change |
| Projects under Construction | 435,757,406.90 | 1.47% | 226,191,587.11 | 0.86% | 0.61% | It's mainly caused by the increase of investment in the Phase II construction of Hangzhou smart manufacturing base and the R&D and industrialization of the smart IoT solutions |
| Short-term loan | 400,323,888.90 | 1.35% | 1,851,709,561.83 | 7.03% | -5.68% | Mainly due to repayment of loans |
| Long-term loan | 153,500,000.00 | 0.52% | 179,000,000.00 | 0.68% | -0.16% | No Significant Change |
2. Assets and liabilities measured at fair value
√ Applicable □ Not applicable
Unit: RMB
| Item Name | At the beginning of the reporting period | Changes in fair value gains and losses in the current period | Cumulative fair value changes in equity | Impairment loss of the reporting period | Purchase amount of the reporting period | Sales amount of the reporting period | Other variations | At the end of the reporting period |
| Financial Assets | ||||||||
| 1. Other Illiquid Financial Assets | 76,614,852.22 | 3,462,993.57 | 2,500,000.00 | -15,364,356.36 | 67,213,489.43 | |||
| 2. Receivables Financing | 2,385,693,417.06 | 1,086,017,357.90 | ||||||
| Total | 2,462,308,269.28 | 3,462,993.57 | 2,500,000.00 | -15,364,356.36 | 1,153,230,847.33 | |||
| Financial liabilities | 38,602,602.30 | 38,392,246.03 | 210,356.27 | 0.00 | ||||
Are there any significant changes in the measurement attributes of the company's main assets during the reportingperiod?
□ Yes √ No
3. Restrictions on asset rights as of the end of the reporting periodAs of December 31, 2019, restricted assets of the Company are as follows:
| Item Name | Book Value at the End of the Period | Cause of Restrictions |
| Cash and Bank Balances | 346,461,821.88 | Deposit for Documentary Loan, Guarantee Deposit |
| Receivables Financing | 875,655,976.33 | Bill pledges are used to issue bank acceptance bills |
| Non-current Assets Due within 1 Year | 28,911,178.34 | Pledges to achieve long-term borrowings |
| Long-term Receivables | 213,118,026.26 | Pledges to achieve long-term borrowings |
| Total | 1,464,147,002.81 |
V. Investment analysis
1. Overview
√ Applicable □ Not applicable
| Investment in the Reporting Period (RMB) | Investment over the Corresponding Period of Last Year | Rate of Change |
| 1,384,120,881.15 | 573,964,874.71 | 141.15% |
2. Significant equity investments acquired during the reporting period
□ Applicable √ Not applicable
3. Major non-equity investments underway during the reporting period
√ Applicable □ Not applicable
Unit: RMB
| Item Name | Investment Mode | The Investment In The Fixed Assets Or Not | Involved industry in investment projects | Amount Invested In The Current Reporting Period | Cumulative Actual Investment As Of The End Of Reporting Period | Capital Source | Progress of Project | Anticipated Income | Cumulative Income As Of The End Of The Reporting Period | Reasons For Unreached Planned Progress And Anticipated Revenue | Disclosing Date (If Any) | Disclosing Index (If Any) |
| Phase I Technical Transformation and Phase II Construction Project of Hangzhou Smart Manufacturing Base | Self-construction | Yes | Video surveillance industry | 142,719,364.00 | 257,183,629.47 | Self-raised funds | 15.23% | N/A | August 17, 2019 | Juchao Information Website http://cninfo.com.cn/ | ||
| Construction Project of Xi'an R & D Center | Self-construction | Yes | Video surveillance industry | 54,158,347.57 | 89,818,554.03 | Self-raised funds | 7.68% | N/A | August 17, 2019 | Juchao Information Website http://cninfo.com.cn/ | ||
| Project of Smart IoT Solution R & D and Industrialization | Self-construction | Yes | Video surveillance industry | 84,835,937.57 | 195,019,175.01 | Self-raised funds | 12.01% | N/A | August 17, 2019 | Juchao Information Website http://cninfo.com.cn/ | ||
| Total | -- | -- | -- | 281,713,649.14 | 542,021,358.51 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
4. Financial assets at fair value
√ Applicable □ Not applicable
Unit: RMB
| Asset Class | Initial Investment Cost | Changes in fair value gains and losses in the current period | Cumulative fair value changes in equity | Amount purchased during the reporting period | Amount sold during the reporting period | Cumulative investment income | Other variations | Amount at the end of the period | Capital Source |
| Financial Derivatives | 38,392,246.03 | -7,508,380.12 | Equity Fund | ||||||
| Other Non-current Financial Assets | 76,614,852.22 | 3,462,993.57 | 3,462,993.57 | 2,500,000.00 | -15,364,356.36 | 67,213,489.43 | Equity Fund | ||
| Receivables Financing | 2,385,693,417.06 | 1,086,017,357.90 | Equity Fund | ||||||
| Total | 2,462,308,269.28 | 41,855,239.60 | 3,462,993.57 | 2,500,000.00 | -7,508,380.12 | -15,364,356.36 | 1,153,230,847.33 | -- |
5. Utilization of raised funds
□ Applicable √ Not applicable
No use of funds in the reporting period of the Company
VI. Major Assets and Equity Sales
1. Major assets sales
□ Applicable √ Not applicable
No major assets sales in the reporting period of the Company
2. Major equity sales
□ Applicable √ Not applicable
VII. Analysis of Major Subsidiaries and Investees
√ Applicable □ Not applicable
Major subsidiaries and joint-stock companies with a net profit impact of over 10%.
Unit: RMB
| Company Name | Company Type | Main Business | Registered Capital | Total Assets | Net Assets | Operating Income | Operating Profit | Net Profit |
| Zhejiang Dahua System Engineering Co., Ltd. | Subsidiary Company | The development, production, installation and sales of electronic and communication products; the design, construction and installation of computer system integration and automated control engineering | 500,000,000.00 | 4,497,816,474.26 | 1,284,863,064.09 | 1,725,903,257.75 | 35,040,431.57 | 37,457,300.09 |
| Zhejiang Dahua Vision Technology Co., Ltd. | Subsidiary Company | The development, sales, and technical services related to computer software, as well as the design, development, production and sales of security equipment, electronic products and communications products | 646,810,000.00 | 19,432,170,277.25 | 1,307,306,264.44 | 20,601,862,124.76 | 380,426,580.87 | 287,898,147.67 |
| Zhejiang Dahua Zhilian Co., Ltd. | Subsidiary Company | Production and sales of electronic products and auxiliary equipment; technological development, technical consultation and services, achievement transference of computer software, electronic products, communications products, and digital security products; self-owned house lease; catering service; import and export of goods. | 1,110,000,000.00 | 7,083,937,248.26 | 966,323,783.94 | 4,305,744,992.77 | -58,049,323.08 | -43,477,360.62 |
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
| Company Name | Method of acquisition and disposal of subsidiaries during the reporting period | Impact on overall production management and performance |
| Wuxi Dahua Ruide Electronic Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Hunan Dahua System Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Dahua Zhongcheng (Beijing) Technology Co., Ltd. | Deregistration | No significant impact on overall production, operation and performance |
| Dahua Italy S.R.L. | Deregistration | No significant impact on overall production, operation and performance |
| Zhejiang Zhoushan Digital Development Operation Co., Ltd | Established with investment | No significant impact on overall production, operation and performance |
| Yunnan Zhili Technology Co., Ltd | Established with investment | No significant impact on overall production, operation and performance |
| Guangxi Dahua Technology Co., Ltd. | Established with investment | No significant impact on overall production, operation and performance |
| China Standard Intelligent Security Technology Co., Ltd. | Equity transfer | No significant impact on overall production, operation and performance |
Major holding companies and joint stock companiesVIII. The structured entity controlled by the Company
□ Applicable √ Not applicable
IX. Prospects for the Future Development of the Company(I) Industry Development TrendIn 2019, the world economy slowed down with declining industry growth in the short term. The outbreak of COVID-19in early 2020 is expected to have a great impact on global economy. In the short term, the growth of government andenterprise investment may be restrained to some extent. Local governments have introduced a series of policies andmeasures to ensure the smooth operation of economy. In the long run, as the epidemic highlights the importance of publicsecurity and emergency management, both governments and enterprises will increase investment in public security. Withthe development and application of AI, cloud computing, big data, 5G, IoT and other new infrastructures, and continuousiteration and update of video technology, videos have been applied in business applications in all walks of life beyondmonitoring and security. IoT industry focusing on video presents a broad prospect.Following the outbreak of COVID 19 at the end of 2019, some projects initiated by governments and enterprises wasaffected. With the epidemic at home under control, domestic demand is expected to recover gradually. The country'sstimulus measures to economy, such as AI, cloud computing, big data, 5G, IoT, rail transit and other new infrastructureconstruction, will bring new growth space for the Company. At the same time, the epidemic makes the society pay moreattention to public safety and emergency management, and infrared thermometers and similar devices will also be morewidely used.Dahua has continuously clarified its business logic and boundaries in its development to focus on the fields with value.The company's rich customer resources accumulated in the professional video surveillance industry, deep understandingof subdivision industry, and the ability to rapidly develop and integrate the industrial chain, will also ensure that AI, big data,cloud computing and other advanced technologies can be effectively integrated into products and solutions, in support ofthe company's continuous promotion of its position in the smart IOT industry where video is most valued.(II) Development StrategyThe Company is the world's leading provider of video-centric smart IoT solutions and operation services. Based ontechnological innovations, with customer demands as orientation and customer success as the goal, the Companycreates values in city operation, enterprise management, as well as consumer life. Based on the Company's leadingposition in technical innovation, industry experience, and customer base, we aim to create a video ecosystem centered on
smart IoT information services to make society safer and life smarter.
Faced with the rapid development of new technologies, and people's aspirations and demands for a better life, theCompany will unswervingly increase investment in technological innovation to bring safe and intelligent digital experienceto cities, enterprises and individuals around the world. In the future, the Company will rely on the video-oriented IoTarchitecture to meet the needs of innovative applications, and accelerate the upgrade to a platform and ecology-orientedcompany.(III) Measures against COVID-19Since the epidemic outbreak in early 2020, consumption, services, transportation and other sectors have beengreatly challenged, and domestic economic growth is under considerable downward pressure. The Chinese governmenthas basically brought the epidemic under control with a series of strong measures to prevent and combat the epidemicand stabilize economic development. At present, the epidemic is still spreading in many regions around the world, causinga great impact on global economy.In this situation, the Company responded quickly by donating cash and equipment to help fight against the epidemic;Set up emergency team at the same time, organize supply chain, R & D, and the market teams to work closely. Relying onour mature security control scheme and advanced thermal imaging technology, we have rapidly developed thermalimaging temperature screening system, which is able to precisely and accurately identify the personnel with abnormalbody temperature without contact, providing strong support for identification and control of potential infected personnel;Huachuang video conference system, a subsidiary of Dahua, has helped the National Health Commission organize thevideo conference in multiple places with World Health Organization, and also played an important role in the globalepidemic prevention and control system.During the epidemic period, some projects were postponed in a short term, and affected by a series of problems suchas shortage of upstream raw materials, rising price of electronic components, failure of rework in time, and logisticsrestrictions. In the face of challenges, the Company actively develops potential suppliers, expands upstream supplychannels, and ensures the security of supply; Timely contact and open the special buses for sending workers back to thefactory in order to ensure their safe arrival and rapid recovery of production capacity. In addition, the company has rapidlytransformed and upgraded its overseas business model for some regions with severe epidemic situation, by adoptingonline office such as online promotion, sales, training and support in order to advance the sustainable and stable business.With the epidemic under control and the return to normal economic life, as well as follow-up stimulus policies for globaleconomy, the big data platform, 5G-related products, robots, unmanned retail, drones, community control and other areaswill become the subsequent opportunity for breakthroughs. In the future, the continuous growth of thermal imagingtemperature measurement products can be maintained by excavating more opportunities such as forest fire preventionand electric temperature measurement.The development of 5G will make IoT expand from consumer applications to industrial and industry-level applications,while sensors, cameras, network infrastructure, big data, cloud and AI technologies will be the key and core of IoT. Theindustry still maintains a good trend in the long run. After all, enterprises rely on their ability of technological innovation andresource integration for development. As the leading enterprise of R & D, Dahua has accumulated profound experience inmarketing, R & D, supply chain and other aspects. The advantages of Dahua platform will continue to reveal in the rapidly
changing market in the future.(IV) Key Works in 2020
1. Continuously increase the investment in R&D and facilitate technical innovation. The Company will further increasethe investment in advanced technologies, such as AI, cloud computing and big data, 5G and other future coretechnologies to enhance R&D capabilities.
2. The Company will enhance the software architecture ability and establish the full-process operation ability (fromthe development to the sales and delivery of software), to enhance the competitiveness of software products and furtherenhance the ability of overall solutions in satisfying the demands of customers.
3. The Company will continue to promote innovative business, integrate resources such as AI, cloud computing andbig data, IoT, and explore the application of those resources in the video IoT field.
4. The Company will adhere to the market orientation of "customer demands as orientation, customer success as thegoal" to drive the marketing, R&D and delivery, and build the capabilities of differentiated solution for customer scenarios.
5. Strengthen regional and front-line business, technology and service capabilities, explore market segment, quicklyrespond to and serve for customers to drive high-quality business growth.
6. Optimize the organizations by centering on businesses and customers, in order to effectively improve customerexperience, organizational efficiency, and per capita output.(V) Risks and Countermeasures
During the reporting period, there was no significant change in the risks faced by the Company. The Company hasbeen trying to identify all kinds of risks and actively take countermeasures to avoid and reduce the risks:
1. Risk of technology upgrading: the video IoT industry is a typical technology-intensive industry, which is changingextremely fast. If the Company is unable to keep up with development trends in the industry's technology, to pay fullattention to customers' diversified individual needs, and to be followed by sufficient R&D investments, it will still face therisk of losing market competitiveness due to discontinuous innovation.
By increasing R & D investment, the Company continues to strengthen research on core technologies in AI, videocloud and other fields, and reserves product, technology, management and talent resources for a broader market in thefuture, so as to achieve sustainable and steady development of business.
2. Risk of business model change: with the development of network communications, cloud computing, and big data,AI and other technologies, the business model in the IoT era may have an impact on the traditional industry development.If an enterprise cannot grasp opportunities brought about by the business model transformation in a timely manner, it mayface the risk that the original market structure becomes broken.
The Company continues to focus on and study the major changes in global economy, industry and technology,analyze the industry development logic, and predict the evolution of global security industry and IoT industry, thecontinuous integration of video, information communication and digital technologies, diversification and uncertainty ofcustomer demands. While consolidating the advantageous market, The Company actively explores and pilots newbusinesses and new commercial mode, and carry out business and technical layout.
3. Risk of product safety: the Company attaches great importance to and continuously strengthens resourceinvestment to ensure safe and reliable operations of the security system so as to respond to the product security risks onthe Internet. However, hackers attacks, computer viruses, physical security vulnerabilities, natural disasters, accidents,power interruptions, telecommunications failures, terrorism, and warfare events may still occur from time to time, resultingin security vulnerabilities, system failures, or service interruptions.The Company has founded a cyber-security committee, and set up a professional security team to developcompany-level product safety plan, ensuring product safety in whole process from requirements to design, coding, andtesting process. At the same time, the Company actively carry out technical exchanges and cooperation with mainstreamsafety enterprises, safety evaluation agencies and corresponding industry associations to provide customers with safeproducts and solutions.
4. Intellectual property risk: the promotion of the company's globalization and self-owned brand strategy will likelybring about intellectual property risks and patent infringement, which may cause fluctuation in business relations andpublic opinions, increasing lawsuits and rising costs.
The Company attaches great importance to technological innovation and has established protection andmanagement mechanism for intangible assets such as innovation achievements, self-owned brands, trade secrets, andconstantly gathers advantageous IP assets; With IP compliance risk control system, the Company continues to strengthenits ability to understand and grasp the IP laws and regulations, administrative and judicial environment of the region wherethe company's business is located in.
5. Risk of exchange rate: the company's export transactions are mostly settled in United States Dollars ("USD"),therefore, fluctuations in the exchange rate may affect the profits of the Company.
As US dollar is the settlement currency, the Company hedges and avoids the risk of exchange rates by centralizedmanagement of exchange capitals, purchase and payment hedging and other methods.
6. Risk of declined local fiscal capacity: affected by the COVID-19 outbreak, we see the rising uncertainty ofmacro-economic, more downward pressure in the global economy, decreased local fiscal revenues, and a high debt level.If the local fiscal paying capacity is reduced, it may lead to the slowdown in the growth of some industry demands,extensions of project time, longer periods for companies to withdraw capitals, and customers' payment delay.
With the epidemic under control in China, and work and production resumption on the "fast track", the company paysclose attention to the relevant government policies and conducts market trend research; Meanwhile, we continues toimprove our internal control system and optimize the project review methods, select local projects carefully and assessproject risks systematically, prudently assess the market logic and cash flow balance logic, control the risks reasonably,make plans to deal with cash flow shortage, project delay and other risks, and reduce the risk of delayed payment.
7. Risk of international operation: at present, the international political and economic situation is complicated, andthere are more uncertain and uncontrollable factors in the international market. The company's products and solutionscover 180 countries and regions, and international business may be exposed to the risks of trade protection in thecountries and regions where it is located in; In October 2019, the Company was listed on the "entity list" by the USDepartment of Commerce. If the trade friction between China and US continues to escalate or US trade protection policyintensifies in the future, it would bring some uncertainty about the potential impact on the company's business; TheCOVID-19 epidemic is still spreading overseas, market demand growth may slow down, or will have a negative impact on
the company's local business.The company actively prevents and responds to the risk of international operation by establishing an overseascompliance risk control system. There are several compliance groups under the company compliance committee toensure the full and effective implementation of compliance policies and control procedure of the Company: In terms ofexport control, the Company implemented compliance control in accordance with the export control compliance guidelinesissued by the US Department of Commerce and in combination with the company's situation; In the aspect of supply chain,the company adopts the strategy of standby suppliers. In addition to preparing strategic materials and key components,the Company also advances the preparation and revision of alternative solutions in an orderly manner. The Companycontinuously strengthens the understanding and adaptability of the laws and regulations as well as the political andeconomic environment of the regions where its business is involved, and formulates differentiated business strategiesbased on "one country, one policy" in accordance with the changes in politics and economy of different regions. Byadjusting the product structure, refining the customer interface, and continuous self-evolution, the Company has built upthe solution-oriented core ability; Meanwhile, it has invested resources to fully respond to the epidemic, communicate withupstream and downstream customers, and reduce the operational risks.
8. Risk of global COVID-19 epidemic: As COVID-19 epidemic is still spreading around the world, many countrieslocks down cities and even borders. As a result, global demand falls at the stage, customer demand is deferred orreduced, and export business will face the risk of decline; In the domestic market, affected by the epidemic situation andcontrol measures since the Spring Festival, the staff has been delayed to return to work, which also affect the upstreammaterial supply and logistics operation. Therefore, there are still some uncertainties in the supply chain. The business ofgovernment and corporate customers has been affected to different degrees, and the total demand is insufficient. As ittakes time to resume normal social and economic activities after the epidemic, the Company may face declined domesticbusiness.Since the outbreak of COVID-19, the Company has donated materials, funds and equipment in the first time to helpfight the epidemic, and has set up an emergency team to develop a thermal imaging temperature screening system withour ability in R & D, innovation and resource integration, in order to identify the potential infected persons and reduce therisks of epidemic spread; In addition, the technologies and innovative products such as video conference, drones, robotsand 5G equipment have been put into use during the epidemic control. At the same time, the Company actively developspotential suppliers, expands upstream supply channels, guarantee the safety of supply, arrange the return line to ensurethe safe arrival of personnel and recovery of production. For some overseas regions where the epidemic is severe, thecompany rapidly upgraded its business mode and adopted a variety of methods to promote the continuous and stableoperation of its business. As countries attach great importance to the epidemic control, major countries and governmentorgans are taking hedging measures and counter-cyclical adjustment policies to mitigate the impact of the epidemic onthe economy in the short term. The Company will pay close attention to the epidemic, as well as the changes of macrooperating environment and policies, and cope with the risks and challenges it brings.
X. Reception of research, communication, interviews and other activities
1. Registration Form for reception of research, communication, interviews and other activitiesduring the reporting period
√ Applicable □ Not applicable
| Reception Time | Reception Method | Reception Target Type | Index of the Basic Information of Research |
| January 29, 2019 | Field investigation, telephone communication | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| January 30, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| April 9, 2019 | Field Investigation | Institution, individual | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| May 08, 2019 | Field investigation, telephone communication | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| May 09, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| May 10, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| May 14, 2019 | Field investigation, telephone communication | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| June 11, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| June 12, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| June 13, 2019 | Telephone communication | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| June 17, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| June 18, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| June 19, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| June 25, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| June 26, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| June 27, 2019 | Field investigation, telephone communication | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| August 19, 2019 | Field Investigation | Institution, individual | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| September 05, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| September 10, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| September 12, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| September 25, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| September 26, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| September 27, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| October 9, 2019 | Telephone communication | Institution, individual | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| October 30, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| October 31, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| November 1, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| November 29, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
| December 20, 2019 | Field Investigation | Institution | For more information, please see the investor relations activity list in http://www.cninfo.com.cn |
Section V Significant EventsI. Distribution of Common Stock Profits of the Company and Capitalization of CapitalReservesDistribution policies of the common stock profits during the reporting period, especially the formulation, implementation oradjustment of the cash dividend policies
√ Applicable □ Not applicable
On June 5, 2019, the company's first provisional shareholders meeting in 2019 reviewed and approved theShareholder Return Planning for the Next Three Years (2019-2021), which clearly stipulates the decision-makingprocedures for dividend standards, proportions and profit distribution policies that will be executed in strict rotation,guaranteeing the continuity and stability of the profit distribution policies and adequately protecting the legitimate rightsand interests of small and medium investors.
| Special Notes on Cash Dividend Policies | |
| Whether they comply with the requirements of the Company's articles of incorporation or the resolutions of the General Meeting of Shareholders: | Yes |
| Whether the dividend standards and proportions are distinct and clear: | Yes |
| Whether the relevant decision-making procedures and mechanisms are complete: | Yes |
| Whether the independent directors performed their duties and played their due role: | Yes |
| Whether the minority shareholders have the opportunity to fully express their opinions and appeals, and whether their legitimate rights and interests have been fully protected: | Yes |
| Whether relevant conditions and procedures are compliant and transparent when the cash dividend policies are being adjusted or changed: | No adjustments or changes on cash dividend policies |
The Company's common stock dividends distribution plan (preplan) and capital reserve capitalization plan (preplan) in thepast three years (including this reporting period)
1. The plan for profit distribution of the Company in 2017 is: Based on total share capital of 2,898,756,130 shares asof December 31, 2017, cash dividend of RMB 2.00 (tax included) for each 10 shares was distributed to all shareholders,with a total amount of RMB 579,751,226.00, and no bonus share sent and no capitalization of capital reserves.
2. The plan for profit distribution of the Company in 2018 is: Based on total share capital of 2,997,621,930 shares asof December 31, 2018, cash dividend of RMB 1.00 (tax included) for each 10 shares was distributed to all shareholders,with a total amount of RMB 299,762,193.00, and no bonus share sent and no capitalization of capital reserves.
3. The plan for profit distribution of the Company in 2019 is: Based on 2,994,599,750 shares (excluding 13,391,480repurchased shares) of the Company's total share capital as of December 31, 2019, cash dividend of RMB 1.33 (taxincluded) for each 10 shares was distributed to all shareholders, with a total amount of RMB 398,281,766.75, and nobonus share will be given and no capitalization of capital reserves.The Company's cash dividends for common stocks in the past three years (including this reporting period)
Unit: RMB
| Bonus Year | Cash dividend amount (tax included) | Net profit attributable to common stock shareholders of listed companies in the consolidated financial statement of the year for dividend distribution | The ratio of cash dividends to the net profit attributable to ordinary shareholders of listed companies in the consolidated statements | The amount of cash dividends in other ways (such as share repurchase) | The proportion of cash dividends in other ways to the net profit attributable to ordinary shareholders of listed companies in the consolidated statements | Total amount of cash dividends (including other ways) | The ratio of total amount of cash dividends (including other ways) to the net profit attributable to ordinary shareholders of listed companies in the consolidated statements |
| 2019 | 398,281,766.75 | 3,188,144,692.55 | 12.49% | 203,499,400.44 | 6.38% | 601,781,167.19 | 18.88% |
| 2018 | 299,762,193.00 | 2,529,426,468.61 | 11.85% | 0.00 | 0.00% | 299,762,193.00 | 11.85% |
| 2017 | 579,751,226.00 | 2,378,726,820.22 | 24.37% | 0.00 | 0.00% | 579,751,226.00 | 24.37% |
The Company's profits during the reporting period and the parent company's distribution of common stock shareholders'profits are positive but a cash dividend distribution preplan for common stock is not proposed.
□ Applicable √ Not applicable
II. Profit Distribution and Capital Reserve Converted to Share Capital in theReporting Period
√ Applicable □ Not applicable
| Number of bonus shares per 10 shares (shares) | 0 |
| Number of dividend payout per 10 shares (RMB) (tax included) | 1.33 |
| Number of capitalized shares per 10 shares (shares) | 0 |
| Equity base in the distribution preplan (shares) | 2,994,599,750 |
| The amount of cash dividends (RMB) (including tax) | 398,281,766.75 |
| The amount of cash dividends (RMB) in other ways (such as share repurchase) | 203,499,400.44 |
| The total amount of cash dividends (including in other ways) (RMB) | 601,781,167.19 |
| Distributable profits (RMB) | 10,248,023,654.54 |
| The ratio of the total amount of cash dividends (including in other ways) to the total amount of profit distribution | 100% |
| Latest cash dividend | |
| If the Company's development stage is not easy to define but there are significant capital expenditure arrangements, when the profits are being distributed, the proportion of the cash dividends in this profit distribution should be at least 20% | |
| Details of the preplans on profit distribution or capitalization of capital reserves | |
Audited and confirmed by BDO China Shu Lun Pan Certified Public Accountants LLP (special general partnership),the net profit attributable to shareholders of the parent company in 2019 was RMB 3,188,144,692.55. According to theArticles of Incorporation, the statutory surplus reserve transferred was RMB 307,861,781.87; As of December 31, 2019,the actual profit available for distribution to shareholders is RMB 10,248,023,654.54, and the actual profit available fordistribution to shareholders from the parent company is RMB 10,397,488,836.58.
III. Performance of Commitments
1. Commitments made by the Company's controlling shareholders, shareholders, related parties,purchasers and purchasing companies and have been fulfilled during the reporting period andthose that have not been fulfilled by the end of the reporting period
√ Applicable □ Not applicable
The company's profit distribution plan in 2019 is: Based on the total capital of 2,994,599,750 shares (excluding13,391,480 repurchased shares) of the company as of December 31, 2019, the company will distribute RMB 1.33 (taxincluded) to all shareholders for every 10 shares, with a total cash dividend of RMB 398,281,766.75, and no bonus sharewill be given and no capitalization of capital reserves. The undistributed profits will be carried forward to the next year. Ifthe capital stock changes before implementation of the distribution plan, the company will adjust the amount ofdistribution according to the principle of unchanged distribution proportion.Commitments
| Commitments | Party making commitments | Commitment Type | Content | Time | Term | Performance |
| Commitments made during initial public offerings or refinancing | Fu Liquan, Zhu Jiangming, Chen Ailing, Wu Jun | Commitment on restricted shares | The number of shares transferred each year during his/her term of service shall not exceed 25 percent of the total number of shares he/she holds in the Company; he/she shall not transfer his/her shares in the Company within half a year after he/she leaves the Company; within the next twelve months, the number of shares sold through the stock exchange listing transactions shall not exceed 50% of the total shares he/she holds. | 15 July 2007 | Long-term | As of the disclosure date of this announcement, the aforementioned commitments are still in strict execution. |
| Other commitments to minority shareholders of the Company | Fu Liquan, Chen Ailing | Commitment on horizontal competition | (1) He/she will not directly engage in operational activities that constitute horizontal competition with the stock company's business; (2) for companies he/she held or indirectly held, he/she will fulfill the obligations under this commitment through agencies and personnel (including but not limited to directors and managers); (3) if the stock company further expands its range of products and business scope, he/she and the company held by him/her will not compete with the expanded range of products or businesses of the stock company. | 30 June 2007 | Long-term | As of the disclosure date of this announcement, the aforementioned commitments are still in strict execution. |
| Whether the commitment is fulfilled on time | Yes | |||||
2. If there is a profit forecast for the Company's assets or projects, and the reporting period isstill within the profit forecast period, the Company shall make an explanation on the fulfillmentand its reasons
□ Applicable √ Not applicable
IV. Non-operational Capital Occupation over Listed Companies by ControllingShareholders and Their Related Parties
□ Applicable √ Not applicable
During the reporting period, there is no non-operational capital occupation over listed companies by controllingshareholders and their related parties.V. Explanations Made by the Board of Directors, the Board of Supervisors andIndependent Directors (If Any) on the "Non-standard Audit Report" from theAccounting Firm during the Reporting Period
□ Applicable √ Not applicable
VI. Changes in Accounting Policies, Accounting Estimates and Accounting MethodsCompared with the Previous Year's Financial Report
√ Applicable □ Not applicable
Changes in significant accounting policies
(1) The Ministry of Finance issued the Notice on The Revision and Issuance of the 2019 Financial Statements Format forGeneral Enterprises (Financial Accounting (2019) No. 6) on April 30, 2019, and the Notice on the Revision and Issuanceof the Consolidated Financial Statements Format (2019 edition) (Financial Accounting (2019) No. 16) on September 19,2019, to revise the formats of financial statements for general enterprises. The Company has adjusted the format of itsfinancial statements and the presentation of some accounts in accordance with the requirements of the Ministry ofFinance in 2019.
(2) Implementation of new financial instrument standards
Since January 1st, 2019, the Company has been implementing the Accounting Standards for Enterprises No. 22 -Recognition and Measurement of Financial Instruments, the Accounting Standards for Enterprises No. 23 - Transfer ofFinancial Assets, the Accounting Standards for Enterprises No. 24 - Hedging and the Accounting Standards forEnterprises No. 37 - Presentation of Financial Instruments (hereinafter referred to as “New Financial Instruments RelatedStandards) revised in 2017. The revised standards stipulate that for financial instruments whose confirmation has notbeen terminated on the first implementation date, retrospective adjustments shall be made if the previous confirmationand measurement are inconsistent with the requirements of the revised standards. If the statistics related to thecomparative financial statements in the previous period is inconsistent with the revised standards, no adjustment isrequired. The Company will adjust the retained earnings and other comprehensive income at the beginning of the yeardue to the cumulative impact of retrospective adjustments.
(3) Implementation of new debt restructuring and non-monetary asset exchange guidelinesThe company will implement the revised Accounting Standards for Enterprises No. 7 - Exchange of Non - MonetaryAssets from June 10, 2019, and the revised Accounting Standards for Enterprises No. 12 - Debts Restructuring from June17, 2019. The accounting policy changes will be dealt with using the prospective application method, and thenon-monetary asset exchange and debt restructuring that occurred between January 1, 2019 and the implementationdate of the standards will be adjusted according to the standard provisions. The first implementation of the standards hasno financial implications on the Company.VII. Explanations on the Retroactive Restatement of Any Significant AccountingErrors during the Reporting Period
□ Applicable √ Not applicable
During the reporting period, there are no significant accounting error corrections that need to be retrospectively restated.
VIII. Changes in the Scope of Consolidated Financial Statements Compared with thePrevious Year's Financial Report
√ Applicable □ Not applicable
(1) The Company has invested in and established three subsidiaries, namely, Zhejiang Zhoushan Digital DevelopmentOperation Co., Ltd, Guangxi Dahua Technology Co., Ltd., and Yunnan Zhili Technology Co., Ltd., during this reportingperiod, all of which have been included in the scope of consolidation since their establishment dates.
(2) The Company's subsidiaries Wuxi Dahua Ruide Electronic Technology Co., Ltd., Hunan Dahua System Technology
Co., Ltd., Dahua Zhongcheng (Beijing) Technology Co., Ltd., and Dahua Italy SRL were canceled in this period, and willnot be included in the scope of consolidation since the date of cancellation.
(3) In this period, the Company transferred 36% of the equity of China Standard Intelligent Security Co., Ltd.. After thetransfer, it held 15% of its equity and no longer served as its controlling shareholder, so China Standard IntelligentSecurity was not included in the scope of consolidation in this period any more.IX. Appointment and Dismissal of Accounting FirmsCurrently appointed accounting firms
| Names of domestic accounting firms | BDO China Shu Lun Pan CPAs (special general partnership) |
| Remuneration to domestic accounting firms (Unit: ten thousand RMB) | 150 |
| Years of continuous audit service of domestic accounting firms | 16 |
| Names of Certified Public Accountants from domestic accounting firms | Zhong Jiandong, Du Na |
| The continuous period of audit service for certified public accountants in domestic accounting firms | Zhong Jiandong has been in service for 2 consecutive years, and Duna has been in service for 5 consecutive years |
Whether to reappoint accounting firms for current period
□ Yes √ No
Appointment of accounting firms, financial advisers or sponsors for internal control auditing
√ Applicable □ Not applicable
During the reporting period, the company hired BDO China Shu Lun Pan Certified Public Accountants LLP (specialgeneral partnership) as the internal control audit accounting firm, and the expenses were combined with the annual auditexpenses.X. Suspension of Listing and Termination of Listing after Disclosure of the AnnualReport
□ Applicable √ Not applicable
XI. Bankruptcy and restructuring
□ Applicable √ Not applicable
No such case as bankruptcy and reorganization related event during the reporting period.XII. Significant Lawsuits and Arbitrations
□ Applicable √ Not applicable
There is no major lawsuit or arbitration during this reporting period.
XIII. Penalties and Rectification
□ Applicable √ Not applicable
No such case as penalty and rectification during the reporting period.XIV. Integrity of the Company, Its Controlling Shareholder and Actual Controller
□ Applicable √ Not applicable
XV. Implementation of the Company's Equity Incentive Plan, Employee StockOwnership Plan or Other Employee Incentive Measures
√ Applicable □ Not applicable
1. On May 16, 2017, the Company's 2016 Annual General Meeting of Shareholders deliberated and approved theZhejiang Dahua Technology Co., Ltd. Phase III Employee Stock Ownership Plan (Draft) and its summary, and decided toimplement the Phase III Employee Stock Ownership Plan. On June 1, 2017, the Company's third employee stockownership plan completed the stock purchase through the "DAHUA No. 3 Directional Asset Management Plan of CaitongSecurities Asset Management", with an average purchase price of RMB 16.83 per share and total purchase amount of47,000,000 shares.On November 12, 2018, the Company's 18th meeting of the 6th Board of Directors deliberated and approved"Suggestive Proposal on Extension of the Impending Expiration of the Company's Third Employee Stock Ownership PlanDuration". The Board of Directors agreed to extend the Company's third employee stock ownership plan for one yearaccording to the voting results of the shareholders' meeting. That is, the duration was extended for one additional year onthe basis of the original termination date, until May 15, 2020.As of January 21, 2020, the company's shares held by CAITONG Securities in accordance with Dahua No. 3directional asset management plan have all been sold out, and the third phase of ESOP has been implemented andterminated.
2. On December 27, 2018, the Company's 5th interim shareholders' meeting in 2018 reviewed and approved the"Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed to buy back andcancel the 44,200 restricted shares held by the incentive targets who have left the Company and one deceased personnel.The buy-back price was RMB 8.17 per share, the same as the granting price, and the registered capital was reducedaccordingly. The aforesaid repurchase cancellation had been accomplished on March 4, 2019 and change of industrialand commercial registration had been accomplished on April 15, 2019.
3. On September 6, 2019, the Company's 25th session of the 6th Board of Directors' meeting reviewed and approvedthe Proposal on Granting Reserved Restricted Stocks to Incentive Targets. It was agreed to grant 11,380,400 reservedrestricted stocks to 789 eligible incentive targets at the price of RMB 8.75 per share.
On November 29, 2019, the Company disclosed "Announcement on Completion of Restricted Stocks Granting in2018". In view that some of the original incentive targets no longer met the incentive conditions due to their departure, andsome of them waived the restricted stocks that the company intended to grant for personal reasons, the Companyadjusted the number of incentive targets and the quantity of stocks to be granted. The number of incentive targets wasadjusted from 789 to 749, and the total number of restricted stocks was adjusted from 11,380,400 shares to 10,413,500shares. On December 3, 2019, the reserved shares of the company's restricted stock incentive plan of 2018 have beenlisted on Shenzhen Stock Exchange.
4. On November 4, 2019, the Company held the 27th meeting of the 6th board of directors and the 17th meeting of
the 6th board of supervisors to deliberate and approve "2018 Restricted Stock Incentive Plan (Revised Draft) > and ItsAbstract". On November 21, 2019, the Company held the second interim general meeting of shareholders in 2019 todeliberate and approve the "2018 Restricted Stock Incentive Plan (Revised Draft) > and Its Abstract".
5. On November 21, 2019 the Company's 2th interim shareholders meeting in 2019 reviewed and approved the"Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed to buy back andcancel 4,278,000 authorized but not unlocked restricted stocks held by the 191 incentive targets who have left theCompany at the price of RMB 8.17 per share, the same as the granting price, and reduce the registered capitalaccordingly. The repurchase is still in process.
6. On January 16, 2020, the first interim general meeting of shareholders in 2020 deliberated and approved the"Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed to buy back andcancel 437,100 authorized but not unlocked restricted stocks held by 16 incentive targets who have left the Company (ofwhich, 427,100 shares were first granted, with the repurchase price of RMB 8.17 per share; Reserved grant of 10,000shares at a repurchase price of RMB 8.75 per share), and reduce the registered capital accordingly. The repurchase is stillin process.
XVI. Significant Related-party Transactions
1. Related transactions relevant to daily operations
□ Applicable √ Not applicable
No such case as significant related-party transactions connected with daily operations.
2. Related transactions in acquisition or sale of assets or equities
□ Applicable √ Not applicable
No such case as related-party transactions arising from the acquisition or sale of assets or equity.
3. Significant related-party transactions arising from joint investments on external parties
√ Applicable □ Not applicable
For details, see "5. Other Significant Related-party Transactions" in this section.
4. Related-party creditor's rights and debts
□ Applicable √ Not applicable
No such case as significant related credits and debts during the reporting period.
5. Other major related transactions
√ Applicable □ Not applicable
1. On July 29, 2019, the 23rd Meeting of the 6th board of directors of the Company deliberated and approved theProposal on Giving up the Shareholding Company's Right to Increase Capital with the Same Percentage andRelated-party Transactions. It is agreed to give up the right of Jinhua CRRC Smart IoT New Energy Industry InvestmentCenter (limited partnership) to increase the capital of Zhejiang Leapmotor Technology Co., Ltd. with the same percentage.
The total amount of related-party transactions involved in giving up the right to increase the capital with the samepercentage is RMB 58,752,000. The change of industrial and commercial registrations for the above matter wascompleted in August 2019.
2. On July 29, 2019, the 23rd Meeting of the 6th board of directors of the Company deliberated and passed theProposal on Increasing Capital in Holding Subsidiaries and Related-party Transactions, in which the Company and therelated party Zhejiang Huashi Investment Management Co., Ltd. agreed to increase capital in the holding subsidiaryZhejiang Dahua Robot Technology Co., Ltd. with the same percentage. The Company would complete a capital increaseof RMB 40.8 million with its own funds and the related party Zhejiang Huashi Investment Management Co., Ltd. wouldcomplete a capital increase of RMB 39.2 million. After the capital increase, the registered capital of Zhejiang Dahua RobotTechnology Co., Ltd. would increase from RMB 50 million to RMB 130 million. The change of industrial and commercialregistrations for the above matter was completed in August 2019.Website for disclosing the interim report on significant related-party transactions
| Announcement name | Disclosure date | Website for the disclosure |
| The Announcement on Giving up the Shareholding Company's Right to Increase Capital with the Same Percentage and Related Transactions, and the Capital Increase in a Holding Subsidiary and the Related Transaction | July 30, 2019 | Juchao Information Website http://www.cninfo.com.cn/ |
XVII. Significant Contracts and Performance
1. Matters on trusteeship, contracting, and leasehold
(1) Matters on trusteeship
□ Applicable √ Not applicable
No such case as custody during the reporting period.
(2) Contracting
□ Applicable √ Not applicable
No such case as contracting during the reporting period.
(3) Leasing
√ Applicable □ Not applicable
Explanations on leasesDuring the reporting period, some of the Company's own real estate properties were used for rental, and the leased realestate property was used for office, warehouse and production workshops. There were no other major real estate leasing.Cases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reportingperiod
□ Applicable √ Not applicable
No such leases that brought the profit and loss accounted for more than 10% of the Company's total profit during the
reporting period.
2. Significant guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: ten thousand RMB
| External guarantees from the Company and its subsidiaries (excluding guarantees to the subsidiaries) | |||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not | |
| Total amount of guarantees approved during the reporting period (A1) | Total amount of guarantees actually occurred during the reporting period (A2) | ||||||||
| Total amount of guarantees approved by the end of the reporting period (A3) | Total balance of guarantees at the end of the reporting period (A4) | ||||||||
| Company's guarantees to subsidiaries | |||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not | |
| Zhejiang Dahua Vision Technology Co., Ltd. | November 05, 2019 | 900,000.00 | January 15, 2018 | 11,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | Yes | |
| May 04, 2018 | 30,000.00 | Joint liability guarantee | May 04, 2018- April 16, 2019 | Yes | Yes |
| August 02, 2018 | 2,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| July 25, 2018 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| August 01, 2018 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| August 21, 2018 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| September 03,2018 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| November 26, 2018 | 22,000.00 | Joint liability guarantee | November 26, 2018- November 26, 2020 | Yes | Yes |
| March 20,2018 | 10,464.30 (15 million US dollars) | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | Yes |
| April 28,2018 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | Yes | Yes |
| June 06, 2016 | 29,000.00 | Joint liability guarantee | June 06, 2016- January 15, 2020 | No | Yes |
| August 01, 2017 | 60,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| October 13, 2017 | 22,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| March 20, 2018 | 50,000.00 | Joint liability guarantee | March 20, 2018- March 19, 2021 | No | Yes |
| April 13, 2018 | 24,000.00 | Joint liability guarantee | April 13, 2018- April 12, 2020 | No | Yes |
| September 21, 2018 | 27,904.80 (40 million US dollars) | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| January 03, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| January 17, 2019 | 30,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| March 21, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| April 18, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| May 10, 2019 | 65,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| May 13,2019 | 23,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| June 26,2019 | 18,000.00 | Joint liability guarantee | June 26,2019- June 25,2022 | No | Yes |
| July 22, 2019 | 44,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| August 30, 2019 | 38,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| September 20, 2019 | 5,000.00 | Joint liability guarantee | Three years since the date on which the debt period of master contract expires or the date on which the secured claim is determined, whichever is later | No | Yes |
| September 26, 2019 | 14,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| September 29, 2019 | 20,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| October 22, 2019 | 10,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| December 10, 2019 | 50,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes | |||
| Zhejiang Dahua Zhilian Co., Ltd. | November 05, 2019 | 600,000.00 | April 25, 2019 | 10,000.00 | Joint liability guarantee | One years upon expiration of debt period of master contract | Yes | Yes |
| June 06, 2016 | 20,000.00 | Joint liability guarantee | June 06, 2016- June 30, 2016 | No | Yes | |||
| September 01,2018 | 50,000.00 | Joint liability guarantee | September 01,2018- September 01,2020 | No | Yes | |||
| October 12, 2018 | 30,000.00 | Joint liability guarantee | October 12, 2018- October 12, 2020 | No | Yes | |||
| April 09, 2019 | 10,000.00 | Joint liability guarantee | One years upon expiration of debt period of master contract | No | Yes | |||
| May 13, 2019 | 6,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| August 30, 2019 | 10,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| November 01, 2019 | 40,000.00 | Joint liability guarantee | One years upon expiration of debt period of master contract | No | Yes | |||
| December 12, 2019 | 20,000.00 | Joint liability guarantee | One years upon expiration of debt period of master contract | No | Yes | |||
| Zhejiang Dahua System Engineering Co., Ltd. | November 05, 2019 | 50,000.00 | October 10, 2017 | 6,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | Yes |
| June 06, 2016 | 10,000.00 | Joint liability guarantee | June 06, 2016- June 06, 2020 | No | Yes | |||
| May 10, 2019 | 10,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| May 13, 2019 | 4,000.00 | Joint liability guarantee | Three years after the maturity of the debts in the master contract | No | Yes |
| August 30, 2019 | 1,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| November 07, 2019 | 6,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| Dahua Technology (HK) Limited | November 05, 2019 | 205,000.00 | April 09, 2019 | 20,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | Yes | Yes |
| December 15, 2017 | 34,881.00 (50 million US dollars) | Joint liability guarantee | December 15, 2017- December 15, 2020 | No | Yes | |||
| November 25, 2019 | 4,883.34 (7 million US dollars) | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes | |||
| Dahua Technology USA Inc. | November 05, 2019 | 3,500.00 | March 09, 2019 | 209.29 (300 thousand US dollars) | Joint liability guarantee | March 09, 2019 March 09, 2020 | Yes | Yes |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V | November 05, 2019 | 20,000.00 | March 26, 2019 | 2,209.17 (59,973,100 MXN) | Joint liability guarantee | March 26, 2019- March 26, 2020 | No | Yes |
| April 09, 2019 | 6,627.51 (179,919,400 MXN) | Joint liability guarantee | April 09, 2019- April 09, 2020 | No | Yes |
| Hangzhou Huacheng Network Technology Co., Ltd. | November 05, 2019 | 5,000.00 | August 30, 2019 | 5,000.00 | Joint liability guarantee | Two years after the maturity of the debts in the master contract | No | Yes |
| Guangxi Dahua Information Technology Co., Ltd. | November 05, 2019 | 10,000.00 | No such case during the reporting period | |||||
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | November 05, 2019 | 100,000.00 | No such case during the reporting period | |||||
| Xi'an Dahua Zhilian Technology Co., Ltd. | November 05, 2019 | 100,000.00 | No such case during the reporting period | |||||
| Zhejiang Huafei Intelligent Technology CO., LTD. | November 05, 2019 | 5,000.00 | No such case during the reporting period | |||||
| Zhejiang Huachuang Vision Technology Co., Ltd. | November 05, 2019 | 5,000.00 | No such case during the reporting period | |||||
| Zhejiang HuaRay Technology Co., Ltd. | November 05, 2019 | 5,000.00 | No such case during the reporting period | |||||
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | November 05, 2019 | 5,000.00 | No such case during the reporting period | |||||
| Hangzhou Xiaohua Technology CO., LTD. | November 05, 2019 | 5,000.00 | No such case during the reporting period | |||||
| Zhejiang Dahua Security Service Co., Ltd. | November 05, 2019 | 5,000.00 | No such case during the reporting period | |||||
| Hangzhou Tecomore Technology Co., Ltd. | November 05, 2019 | 5,000.00 | No such case during the reporting period | |||||
| Wuxi Dahua Ruipin Technology Co., Ltd. | November 05, 2019 | 5,000.00 | No such case during the reporting period | |||||
| Zhejiang Huaxiao Technology Co., Ltd. | November 05, 2019 | 5,000.00 | No such case during the reporting period |
| Zhejiang Dahua Investment Management Co., Ltd. | November 05, 2019 | 5,000.00 | No such case during the reporting period |
| Zhejiang Dahua Robot Technology Co., Ltd. | November 05, 2019 | 5,000.00 | No such case during the reporting period |
| DAHUA EUROPE B.V. | November 05, 2019 | 14,000.00 | No such case during the reporting period |
| Dahua Technology Singapore Pte.Ltd. | November 05, 2019 | 500.00 | No such case during the reporting period |
| Dahua Technology UK Limited | November 05, 2019 | 2,000.00 | No such case during the reporting period |
| Dahua Technology Poland sp.zo.o. | November 05, 2019 | 1,600.00 | No such case during the reporting period |
| Dahua Technology Hungary Kft | November 05, 2019 | 1,600.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY INDIA PRIVATE LIMITED | November 05, 2019 | 3,500.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY BRASIL COMERCIO SERV EM SEGURANCA ELETRONICA LTDA | November 05, 2019 | 1,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY MIDDLE EAST FZE | November 05, 2019 | 350.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PER? S.A.C | November 05, 2019 | 1,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY RUS LIMITED | November 05, 2019 | 3,000.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY AUSTRALIA PTY LTD | November 05, 2019 | 500.00 | No such case during the reporting period |
| Dahua Technology South Africa Proprietary Limited | November 05, 2019 | 500.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY CANADA INC. | November 05, 2019 | 800.00 | No such case during the reporting period |
| DAHUA GUVENLIK TEKNOLOJILERI SANAYI VE TICARET ANONIM SIRKETI | November 05, 2019 | 1,100.00 | No such case during the reporting period |
| Dahua Technology SRB d.o.o. | November 05, 2019 | 300.00 | No such case during the reporting period |
| Dahua Technology Bulgaria EOOD | November 05, 2019 | 100.00 | No such case during the reporting period |
| DAHUA IBERIA, S.L.(U.) | November 05, 2019 | 200.00 | No such case during the reporting period |
| DAHUA SECURITY MALAYSIA SDN. BHD. | November 05, 2019 | 200.00 | No such case during the reporting period |
| Dahua Technology Kazakhstan LLP | November 05, 2019 | 200.00 | No such case during the reporting period |
| PT DAHUA VISION TECHNOLOGY INDONESIA | November 05, 2019 | 300.00 | No such case during the reporting period |
| Dahua Technology Korea Company Limited | November 05, 2019 | 100.00 | No such case during the reporting period |
| Dahua Technology S.R.L. | November 05, 2019 | 200.00 | No such case during the reporting period |
| Dahua technology France SAS | November 05, 2019 | 200.00 | No such case during the reporting period |
| Dahua vision LLc | November 05, 2019 | 200.00 | No such case during the reporting period |
| Dahua Technology New Zealand Limited | November 05, 2019 | 200.00 | No such case during the reporting period |
| Dahua Technology GmbH | November 05, 2019 | 300.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY COLOMBIA S.A.S. | November 05, 2019 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PANAMA S.A. | November 05, 2019 | 100.00 | No such case during the reporting period |
| Dahua Technology Chile SpA | November 05, 2019 | 100.00 | No such case during the reporting period |
| Dahua technology tunisia limited liability company | November 05, 2019 | 200.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY KENYA LIMITED | November 05, 2019 | 100.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY CHINA(PVT) LTD | November 05, 2019 | 200.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY PAKISTAN (PRIVATE) LIMITED | November 05, 2019 | 200.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY MOROCCO SARL | November 05, 2019 | 100.00 | No such case during the reporting period |
| DAHUA ARGENTINA S.A. | November 05, 2019 | 200.00 | No such case during the reporting period |
| Dahua Technology Czech s.r.o. | November 05, 2019 | 200.00 | No such case during the reporting period |
| Dahua Technology Denmark ApS | November 05, 2019 | 200.00 | No such case during the reporting period |
| Dahua Technology Netherlands B.V. | November 05, 2019 | 300.00 | No such case during the reporting period |
| DAHUA TECHNOLOGY (THAILAND) CO., LTD | November 05, 2019 | 100.00 | No such case during the reporting period | |||||
| DAHUA TECHNOLOGY ITALY S.R.L. | November 05, 2019 | 600.00 | No such case during the reporting period | |||||
| LOREX TECHNOLOGY INC | November 05, 2019 | 1,500.00 | No such case during the reporting period | |||||
| LOREX CORPORATION | November 05, 2019 | 1,500.00 | No such case during the reporting period | |||||
| Total amount of guarantees to subsidiaries approved during the reporting period (B1) | 2,088,150.00 | Total amount of guarantees to subsidiaries actually occurred during the reporting period (B2) | 533,393.61 | |||||
| Total amount of guarantees to subsidiaries approved by the end of the reporting period (B3) | 2,088,150.00 | Total balance of guarantees actually paid to subsidiaries at the end of the reporting period (B4) | 860,505.82 | |||||
| Subsidiaries' guarantees to subsidiaries | ||||||||
| Guaranteed party | Announcement date of disclosure of the guarantee cap | Guarantee amount | Actual occurrence date | Actual guarantee amount | Type of guarantee | Term of guarantee | Due or not | Guarantee for related parties or not |
| Total amount of guarantees to subsidiaries approved during the reporting period (C1) | Total amount of guarantees to subsidiaries actually occurred during the reporting period (C2) | |||||||
| Total amount of guarantees to subsidiaries approved at the end of the reporting period (C3) | Total of actual guarantee balance for subsidiaries at the end of the reporting period (C4) | |||||||
| Total amount of company guarantees (namely sum of the previous three major items) | ||||||||
| Total amount of guarantees approved during the reporting period (A1+B1+C1) | 2,088,150.00 | Total amount of guarantees actually occurred during the reporting period (A2+B2+C2) | 533,393.61 |
| Total amount of guarantees approved by the end of the reporting period (A3+B3+C3) | 2,088,150.00 | Total balance of guarantees actually paid at the end of the reporting period (A4+B4+C4) | 860,505.82 |
| Total amount of actual guarantees (A4+B4+C4) as a percentage of the Company's net assets | 55.01% | ||
| Including: | |||
| Balance of guarantees to the shareholders, actual controllers and their related parties (D) | |||
| Balance of debt guarantees directly or indirectly offered to guaranteed objects with asset-liability ratio exceeding 70% (E) | 851,669.14 | ||
| Amount of the guarantees with the total volume exceeding 50% of the net assets (F) | 78,355.47 | ||
| Total amount of the above three guarantees (D+E+F) | 851,669.14 | ||
| Notes on unexpired guarantees with guarantee responsibilities occurred or possible joint liabilities within the reporting period (if any) | |||
| Notes on providing external guarantees in violation of specified procedures (if any) | |||
(2) Illegal external guarantees
□ Applicable √ Not applicable
No illegal external guarantees during the reporting period.
3. Entrusting Others to Manage Cash Assets
(1) Entrusted Financing
□ Applicable √ Not applicable
No such case as entrusted financing during the reporting period.
(2) Entrusted Loans
□ Applicable √ Not applicable
No such case as entrusted loan during the reporting period.
4. Other Significant Contracts
□ Applicable √ Not applicable
No such case as other significant contract during the reporting period.XVIII. Social Responsibilities
1. Fulfillment of Social Responsibilities
In 2019, Dahua "Deepened reform and grew effectively" by constantly improving its corporate governance structure,promoting the level of corporate governance, caring for its employees, protecting the shareholders' rights and interests,and practicing social responsibility. In the new year, the Company will continue to adhere to the core concept of"Customer-centered and striving for the goal" and the values of "Integrity, dedication, responsibility, innovation,cooperation and openness" to pursue economic benefits and protect shareholders' interests; Meanwhile the Company willactively create value for its employees and get engaged in environmental public welfare endeavors to promote theharmonious integration of the Company, the society, interested parties and the environment. For details of the Company'ssocial responsibility fulfillment during the reporting period, refer to the "2019 Social Responsibility Report" and "2019Environmental, Social and Governance Report" published on www.cninfo.com.cn on the same day.
2. Social responsibility fulfillment regarding targeted poverty alleviationIn the reporting year of the Company, there has been no targeted poverty alleviation activity, or follow-up targeted povertyalleviation plan.
3.Environmental Protection-related Matters
Whether the listed company and its subsidiaries belong to the key pollutant discharging units announced by theenvironmental protection departmentNo
The Company does not belong to the key pollutant discharging units announced by the environmental protectiondepartment. For details, refer to Chapter 6 Green and Environmental Protection of “2019 Social Responsibility Report”published on www.cninfo.com.cn on the same day.
XIX. Explanations on Other Significant Matters
√ Applicable □ Not applicable
1. On April 25, 2019, the Company’s 21st meeting of the 6th board of directors reviewed and approved the “Proposalon the Scheme for the Repurchase of Shares”. The Company plans to buy back some shares with the funds raised byitself through centralized competitive bidding. The total amount of funds for the repurchase shall not be lower than RMB200 million (inclusive) and higher than RMB 400 million (inclusive). The price of the repurchase shall not exceed RMB
25.37 per share (inclusive). Calculated according to the purchase price and the upper limit for the repurchase, it’sestimated to buy back 15,766,653 shares. The repurchased shares will make up 0.53% of the current total share capital of
the Company. The specific amount of repurchased shares and the proportion in the total share capital of the Companyshall be subject to the actually repurchased number of shares and the actual proportion when the period of repurchaseexpires. The period for the implementation of repurchase shall be 12 months from the day the board of directors reviewsand approves the repurchase scheme.As of March 31, 2020, the Company bought back 13,391,480 shares with its special securities account throughcentralized competitive bidding, accounting for 0.4452% of the company's total share capital of 3,007,991,230 shares.The highest transaction price was RMB 17.88 per share and the lowest transaction price was RMB 12.9 per share. Thetotal amount of transactions was RMB 203,499,400.44 (excluding the transaction expenses). The “Announcement on theScheme for the Repurchase of Shares” (Announcement No.: 2019-025) and the “Announcement on the Progress of theRepurchase of Shares” (Announcement No.: 2020-031) had been respectively published on Securities Times andwww.cninfocom.cn on April 26, 2019 and April 3, 2020.
2. On June 5, 2019, the Company’s first interim shareholders’ general meeting reviewed and approved the “Proposalon the Public Offering of Convertible Corporate Bonds” and the “Feasibility Study Report on the Employment of FundsRaised by the Publicly Offered Convertible Corporate Bonds”. (For more details, see the announcements numbered2019-030 and 2019-038 published on Securities Times and www.cninfo.com.cn)
3. On December 25, 2019, the Company’s 28th meeting of the 6th board of directors reviewed and approved the"Proposal on the Construction of ‘Dahua Southwestern Smart Base’ in Chengdu" which agreed that the Company wouldinvest about RMB 2 billion in the project for which a planned area is about 85 acres, mainly used for R & D, office spaceand supporting facilities,. The investment will be made by stages according to the project implementation. "Announcementon the Construction of ‘Dahua Southwestern Smart Base’ in Chengdu” (Announcement No.: 2019-083) had beenpublished on Securities Times and www.cninfocom.cn on December 26, 2019.XX. Significant Events of the Company's Subsidiaries
□ Applicable √ Not applicable
Section VI Changes in Shares and Information about
ShareholdersI. Changes in Shares
1. Changes in shares
Unit: share
| Before the change | Increase or decrease in the change (+, -) | After the change | |||||||
| Number | Percentage | Shares newly issued | Bonus shares | Shares converted from capital reserves | Others | Subtotal | Number | Percentage | |
| I. Shares with limited sales condition | 1,169,462,780 | 39.01% | 10,413,500 | 14,474,431 | 24,887,931 | 1,194,350,711 | 39.71% | ||
| 3. Other domestic shares | 1,169,410,780 | 39.01% | 10,410,500 | 14,474,431 | 24,884,931 | 1,194,295,711 | 39.71% | ||
| Shares held by domestic natural persons | 1,169,410,780 | 39.01% | 10,410,500 | 14,474,431 | 24,884,931 | 1,194,295,711 | 39.71% | ||
| 4. Foreign shares | 52,000 | 0.00% | 3,000 | 0 | 3,000 | 55,000 | 0.00% | ||
| Shares held by foreign natural persons | 52,000 | 0.00% | 3,000 | 0 | 3,000 | 55,000 | 0.00% | ||
| II. Shares without restrictions | 1,828,159,150 | 60.99% | 0 | -14,518,631 | -14,518,631 | 1,813,640,519 | 60.29% | ||
| 1. RMB ordinary shares | 1,828,159,150 | 60.99% | 0 | -14,518,631 | -14,518,631 | 1,813,640,519 | 60.29% | ||
| III. Total | 2,997,621,930 | 100.00% | 10,413,500 | -44,200 | 10,369,300 | 3,007,991,230 | 100.00% | ||
Reasons for changes in shares
√ Applicable □ Not applicable
1. At the beginning of each year, the number of shares locked by executives of the Company shall be reverifiedaccording to 75% of the total number of shares held by executives.
2. On December 3, 2019, t10,413,500 reserved shares of 2018 restricted stock incentive plan granted by theCompany to 749 incentive targets in the form of private placements were listed on Shenzhen Stock Exchange.
3. In 2019, the Company bought back and canceled the granted but unlocked restricted shares held by the incentivetargets who have left the Company.Approval for changes in shares
√ Applicable □ Not applicable
1. On December 27, 2018, the Company's 5th interim shareholders' general meeting in 2018 reviewed and approvedthe "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed to buy backand cancel the 44,200 restricted shares held by the incentive targets who have left the Company and one deceasedpersonnel. The buy-back price was RMB 8.17 per share, the same as the granting price, and the registered capital wasreduced accordingly.
2. On September 6, 2019, the Company's 25th session of the 6th Board of Director reviewed and approved the“Proposal on Granting Reserved Restricted Stocks to Incentive Targets”. It was agreed to grant 11,380,400 reservedrestricted shares to 789 eligible incentive targets at the price of RMB 8.75 per share. The board of directors confirmed thegranting conditions and concluded that the conditions had been reached and decided to grant reserved restricted stocksto the incentive targets. The granting date was September 6, 2019.
3. On November 29, 2019, the Company disclosed the "Announcement on the Completion of Granting of ReservedShares of the Restricted Stock Incentive Plan in 2018". In view that some of the incentive targets no longer met theincentive conditions due to their demission, and some of them waived the restricted stocks that the company intended togrant for personal reasons, the Company adjusted the number of incentive targets and shares. The number of incentivetargets to whom the reserved restricted stocks were granted was adjusted from 789 to 749, and the number of reservedrestricted stocks to be granted was adjusted from 11,380,400 shares to 10,413,500 shares. On December 3, 2019, thereserved shares of the company's restricted stock incentive plan of 2018 have been listed on Shenzhen Stock Exchange.
1. On November 21, 2019, the Company's 2nd interim shareholders' general meeting in 2019 reviewed and approvedthe "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed to buy backand cancel the 4,278,000 restricted shares held by the 191 incentive targets who have left the Company. The buy-backprice was RMB 8.17 per share, the same as the granting price, and upon completion of the buy-back and cancellation, thetotal shares of the Company were reduced from 3,007,991,230 to 3,003,713,230. The repurchase is still in process.
1. On January 16, 2020, the Company's 1st interim shareholders' general meeting in 2020 reviewed and approvedthe "Proposal on Buy-back and Cancellation of Some Granted but Unlocked Restricted Stocks" and agreed to buy backand cancel the 437,100 restricted shares held by the 16 incentive targets who have left the Company, including 427,100shares granted for the first time, which would be bought back the price of RMB 8.17 per share, and 10,000 reservedshares, which would be bought back at the price of RMB 8.75 per share. Upon completion of the buy-back andcancellation, the total shares of the Company were reduced from 3,003,713,230 to 3,003,276,130. The repurchase is stillin process.Transfer for changes in shares
√ Applicable □ Not applicable
1. According to the resolution of the 5th interim shareholders' general meeting in 2018, the Company bought backand canceled the 44,200 restricted shares held by the incentive targets who have left the Company and one deceasedpersonnel, and the procedure was completed on March 4, 2019.
2. On December 3, 2019, t10,413,500 reserved shares of 2018 restricted stock incentive plan granted by theCompany to 749 incentive targets in the form of private placements were listed on Shenzhen Stock Exchange.The progress on share buy-back
√ Applicable □ Not applicable
On April 25, 2019, the Company’s 21st meeting of the 6th board of directors reviewed and approved the “Proposal onthe Scheme for the Repurchase of Shares”. The Company plans to buy back some shares with the funds raised by itselfthrough centralized competitive bidding. The total amount of funds for the repurchase shall not be lower than RMB 200million (inclusive) and higher than RMB 400 million (inclusive). The price of the repurchase shall not exceed RMB 25.37per share (inclusive). Calculated according to the purchase price and the upper limit for the repurchase, it’s estimated tobuy back 15,766,653 shares. The repurchased shares will make up 0.53% of the current total share capital of theCompany. The specific amount of repurchased shares and the proportion in the total share capital of the Company shallbe subject to the actually repurchased number of shares and the actual proportion when the period of repurchase expires.The period for the implementation of repurchase shall be 12 months from the day the board of directors reviews andapproves the repurchase scheme.As of March 31, 2020, the Company bought back 13,391,480 shares with its special securities account throughcentralized competitive bidding, accounting for 0.4452% of the company's total share capital of 3,007,991,230 shares.The highest transaction price was RMB 17.88 per share and the lowest transaction price was RMB 12.9 per share. Thetotal amount of transactions was RMB 203,499,400.44 (excluding the transaction expenses). The “Announcement on theScheme for the Repurchase of Shares” (Announcement No.: 2019-025) and the “Announcement on the Progress of theRepurchase of Shares” (Announcement No.: 2020-022) had been respectively published on Securities Times andwww.cninfocom.cn on April 26, 2019 and April 3, 2020.The progress on reduction of re-purchase shares by means of centralized bidding
□ Applicable √ Not applicable
Effects of changes in shares on the basic earnings per share ("EPS"), diluted EPS, net assets per share, attributable tocommon shareholders of the Company, and other financial indexes over the last year and last period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or are required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable
2. Changes in restricted stocks
√ Applicable □ Not applicable
Unit: share
| Name of Shareholder | Number Of Shares With Limited Sales Condition At The Beginning Of The Period | Number of increased shares with limited sales condition in current period | Number of unlocked shares with limited sales condition in current period | Number of shares with limited sales condition at the end of the period | Reasons for limited sales | Date of unlocking |
| Fu Liquan | 841,961,985 | 0 | 7,225,575 | 834,736,410 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management |
| Zhu Jiangming | 116,671,117 | 23,175,000 | 0 | 139,846,117 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management |
| Chen Ailing | 53,447,110 | 0 | 0 | 53,447,110 | According to the relevant provisions of executives shares management | According to the relevant provisions of executives shares management |
| Wu Jun | 52,003,164 | 0 | 65,000 | 51,938,164 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Li Ke | 2,015,000 | 0 | 200,000 | 1,815,000 | According to relevant management regulations of equity incentives and left senior managers' shares | According to relevant management regulations of equity incentives and left senior managers' shares |
| Chen Yuqing | 1,441,963 | 0 | 65,000 | 1,376,963 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Zhang Xingming | 1,588,560 | 0 | 327,500 | 1,261,060 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Ying Yong | 1,419,437 | 0 | 167,500 | 1,251,937 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Wu Jian | 1,279,501 | 0 | 132,500 | 1,147,001 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Wei Meizhong | 1,235,000 | 0 | 102,500 | 1,132,500 | Per relevant management regulations of equity incentives and senior managers' shares | Per relevant management regulations of equity incentives and senior managers' shares |
| Other senior executives and incentive targets | 96,115,566 | 10,282,883 | 0 | 106,398,449 | According to relevant management regulations of equity incentives and senior managers' shares, and restricted shares to be bought back and canceled | According to relevant management regulations of equity incentives and senior managers' shares, and restricted shares to be bought back and canceled |
| Total | 1,169,178,403 | 33,457,883 | 8,285,575 | 1,194,350,711 | -- | -- |
II. Issuance and listing of securities
1. Securities (excluding preferred share) issued in reporting period
√ Applicable □ Not applicable
| Name of the stock and its derivative securities | Issue Date | Issuance price (or interest rate) | Quantity of issuance | Listing date | Number of approved listed transactions | Transaction termination date |
| Stocks | ||||||
| DAHUA | September 6, 2019 | 8.75 | 10,413,500 | December 3, 2019 | 10,413,500 | |
Description of the issuance of securities (not including preferred stocks) during the reporting period
2. Explanation on changes in total number of the Company's shares & the structure ofshareholders and the structure of assets and liabilities
√ Applicable □ Not applicable
1. According to the resolution of the 5th interim shareholders' general meeting in 2018, the Company bought backand canceled the 44,200 restricted shares held by the incentive targets who have left the Company and one deceasedpersonnel, and the procedure was completed on March 4, 2019. The total shares of the Company were reduced from2,997,621,930 to 2,997,577,730.
2. On December 3, 2019, t10,413,500 reserved shares of 2018 restricted stock incentive plan granted by theCompany to 749 incentive targets in the form of private placements were listed on Shenzhen Stock Exchange. The totalnumber of shares were reduced from 2,997,577,730 to 3,007,991,230.
3. Existing shares held by internal staff of the Company
□ Applicable √ Not applicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholdings
Unit: share
| Total Number Of Common Shareholders At The End Of The Reporting Period | 107,595 | Total number of common shareholders at the end of previous month before the disclosure date of the annual report | 159,822 | Total Number of Preferred Shareholders (If Any) (Refer to Note 8) Whose Voting Rights have been Recovered at the End of the Reporting Period | 0 | Total number of preferred shareholders (if any) (refer to Note 8) with resumed voting rights at the end of previous month before the disclosure date of the annual report | 0 | |||||||
| Shareholding list of shareholders with over 5% shares or top ten shareholders | ||||||||||||||
| Name of Shareholder | Nature Of Shareholder | Shareholding Percentage | Number of shares held at the end of the reporting period | Changes in the reporting period | Number of shares held with limited sales conditions | Number of shares held without limited sales condition | Pledges or freezings | |||||||
| State Of Shares | Number | |||||||||||||
| Fu Liquan | Domestic Natural Person | 35.97% | 1,082,081,880 | -30,900,000 | 834,736,410 | 247,345,470 | Pledge | 210,242,000 | ||||||
| Zhu Jiangming | Domestic Natural Person | 6.20% | 186,461,490 | 30,900,000 | 139,846,117 | 46,615,373 | Pledge | 36,504,000 | ||||||
| Hong Kong Securities Clearing Co. Ltd. | Overseas Legal Person | 5.23% | 157,245,625 | 73,209,554 | 0 | 157,245,625 | ||||||||
| Chen Ailing | Domestic Natural Person | 2.37% | 71,262,813 | 0 | 53,447,110 | 17,815,703 | Pledge | 21,100,000 | ||||||
| Wu Jun | Domestic Natural Person | 2.30% | 69,250,886 | 0 | 51,938,164 | 17,312,722 | ||||||||
| China Securities Finance Co., Ltd. | Domestic Non-state-owned Legal Person | 1.32% | 39,611,241 | 0 | 0 | 39,611,241 | ||
| Central Huijin Asset Management Co., Ltd. | State-owned Legal Person | 1.05% | 31,448,750 | 0 | 0 | 31,448,750 | ||
| Shanghai Greenwoods Asset Management Co., Ltd. - Greenwoods Global Fund | Others | 0.96% | 28,978,386 | 28,978,386 | 0 | 28,978,386 | ||
| Zhejiang Dahua Technology Co., Ltd. - Phase III Employee Stock Ownership Plan | Others | 0.87% | 26,247,928 | 0 | 0 | 26,247,928 | ||
| Fidelity Investments Management (Hong Kong) Limited - funds of customers | Overseas Legal Person | 0.66% | 19,946,493 | 3,911,200 | 0 | 19,946,493 | ||
| Description of the association relationship or concerted action of above-mentioned shareholders | Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert. | |||||||
| Shareholding list of top ten shareholders without limited sales condition | ||||||||
| Name of Shareholder | Number of shares held without limited sales condition at the end of the reporting period | Type of shares | ||||||
| Type of shares | Number | |||||||
| Fu Liquan | 247,345,470 | RMB common stock | 247,345,470 | |||||
| Hong Kong Securities Clearing Co. Ltd. | 157,245,625 | RMB common stock | 157,245,625 | |||||
| Zhu Jiangming | 46,615,373 | RMB common stock | 46,615,373 | |||||
| China Securities Finance Co., Ltd. | 39,611,241 | RMB common stock | 39,611,241 |
| Central Huijin Asset Management Co., Ltd. | 31,448,750 | RMB common stock | 31,448,750 |
| Shanghai Greenwoods Asset Management Co., Ltd. - Greenwoods Global Fund | 28,978,386 | RMB common stock | 28,978,386 |
| Zhejiang Dahua Technology Co., Ltd. - Phase III Employee Stock Ownership Plan | 26,247,928 | RMB common stock | 26,247,928 |
| Fidelity Investments Management (Hong Kong) Limited - funds of customers | 19,946,493 | RMB common stock | 19,946,493 |
| Chen Ailing | 17,815,703 | RMB common stock | 17,815,703 |
| Wu Jun | 17,312,722 | RMB common stock | 17,312,722 |
| Explanation on associated relationship or persons acting in concert among top ten shareholders without limited shares, and between top ten shareholders without limited shares and top ten shareholders | Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In Concert. | ||
Whether the Company's top ten common shareholders or top ten common shareholders without limited shares agree onany repurchase transaction in the reporting period
□ Yes √ No
None of the Company's top ten common shareholders or top ten common shareholders without limited shares agreed onrepurchase in the reporting period.
2. Particulars about the controlling shareholder
Nature of the controlling shareholder: Natural person-ownedType of the controlling shareholder: Natural person
| Name of the controlling shareholder | Nationality | Whether he/she has obtained the right of residence in another country or region |
| Fu Liquan | China | Yes |
| Main occupation and title | Mr. Fu Liquan holds the position of the chairman and president of the Company. |
| Shares held in other listed companies by controlling or holding in the reporting period | N/A |
Change of the controlling shareholders in the reporting period
□ Applicable √ Not applicable
No change has happened to the controlling shareholder in the reporting period of the Company
3. The actual controller of the Company and persons acting in concertNature of the actual controller: Domestic natural personType of the actual controller: Natural person
| Name of the actual controller | Relationship with the actual controller | Nationality | Whether he/she has obtained the right of residence in another country or region |
| Fu Liquan | Himself | China | Yes |
| Chen Ailing | Acting in concert (including agreement, relatives, under same control) | China | Yes |
| Main occupation and title | Mr. Fu Liquan holds the position of the chairman and president of the Company; Ms. Chen Ailing holds the position of the director of the Company. | ||
| Information about other listed companies at home and abroad controlled in the last ten years | N/A | ||
Change of the actual controller in the reporting period
□ Applicable √ Not applicable
No change has happened to the actual controller in the reporting periodBlock Diagram for Property Right and Control Relationship between the Company and Actual Controllers
The actual controller controls the Company via trust or other ways of asset management
□ Applicable √ Not applicable
38.34%
2.37%
| 35.97% | 2.37% |
Zhejiang Dahua Technology Co., Ltd.Fu Liquan
| Fu Liquan | Chen Ailing |
4. Particulars about other corporate shareholders with shareholding proportion over 10%
□ Applicable √ Not applicable
5. Particulars on share reduction restricted for controlling shareholders, actual controller,restructuring party or other commitment entities
□ Applicable √ Not applicable
Section VII Information of Preferred Shares
□ Applicable √ Not applicable
There are no preferred shares in the reporting period.
Section VIII Convertible Corporate Bonds
□ Applicable √ Not applicable
There are no convertible corporate bonds in the reporting period.
Section IX Directors, Supervisors, Senior Managers and
Employees
I. Shareholding Changes of Directors, Supervisors and Senior Management
| Name | Post | Position status | Gender | Age | Starting date of tenure | Termination Date of tenure | Number of shares held at the beginning of the period (share) | Number of shares increased in the period (share) | Number of shares decreased in the period (share) | Other changes (share) | Number of shares held at the end of the period |
| Fu Liquan | Chairman, President | Incumbent | Male | 53 | April 01, 2005 | August 23, 2020 | 1,112,981,880 | -30,900,000 | 1,082,081,880 | ||
| Wu Jun | Vice Chairman, Vice President | Incumbent | Male | 48 | April 01, 2005 | August 23, 2020 | 69,250,886 | 69,250,886 | |||
| Zhu Jiangming | Director, Executive Vice President | Incumbent | Male | 53 | April 01, 2005 | August 23, 2020 | 155,561,490 | 30,900,000 | 186,461,490 | ||
| Chen Ailing | Director | Incumbent | Female | 53 | April 01, 2005 | August 23, 2020 | 71,262,813 | 71,262,813 | |||
| He Chao | Independent Director | Incumbent | Male | 61 | January 07, 2014 | August 23, 2020 | 0 | 0 | |||
| Wang Zexia | Independent Director | Incumbent | Female | 55 | January 07, 2014 | August 23, 2020 | 0 | 0 | |||
| Huang Siying | Independent Director | Incumbent | Female | 42 | May 22, 2017 | August 23, 2020 | 0 | 0 | |||
| Song Maoyuan | Supervisor | Incumbent | Female | 38 | April 03, 2008 | August 23, 2020 | 0 | 0 |
| Song Ke | Supervisor | Incumbent | Male | 42 | August 07, 2015 | August 23, 2020 | 0 | 0 | |||
| Zuo Pengfei | Supervisor | Incumbent | Female | 42 | April 03, 2008 | August 23, 2020 | 0 | 0 | |||
| Zhang Xingming | Executive President | Incumbent | Male | 43 | May 20, 2010 | August 23, 2020 | 1,681,413 | 1,681,413 | |||
| Wu Jian | Secretary of the Board, Vice President | Incumbent | Male | 46 | December 01, 2005 | August 23, 2020 | 1,529,335 | 1,529,335 | |||
| Wei Meizhong | CFO, Vice President | Incumbent | Male | 49 | November 01, 2007 | August 23, 2020 | 1,510,000 | 1,510,000 | |||
| Chen Yuqing | Vice President | Incumbent | Male | 46 | May 20, 2010 | August 23, 2020 | 1,835,951 | 1,835,951 | |||
| Jiang Xiaolai | Vice President | Incumbent | Male | 40 | February 27, 2020 | August 23, 2020 | 214,000 | 316,000 | 530,000 | ||
| Li Zhijie | Vice President | Incumbent | Male | 45 | February 27, 2020 | August 23, 2020 | 670,000 | 670,000 | |||
| Wu Yunlong | Vice President | Incumbent | Male | 64 | May 20, 2010 | August 23, 2020 | 762,280 | 762,280 | |||
| Xu Qiaofen | Vice President | Incumbent | Female | 48 | February 27, 2020 | August 23, 2020 | 530,000 | 530,000 | |||
| Xu Zhicheng | Vice President | Incumbent | Male | 54 | 22 March 2018 | August 23, 2020 | 530,000 | 530,000 | |||
| Yan Gang | Vice President | Incumbent | Male | 51 | December 06, 2012 | August 23, 2020 | 606,349 | 606,349 |
| Ying Yong | Vice President | Incumbent | Male | 51 | May 20, 2010 | August 23, 2020 | 1,669,250 | 1,669,250 | |||
| Zhu Jiantang | Vice President | Incumbent | Male | 38 | March 22 2018 | August 23, 2020 | 730,225 | 730,225 | |||
| Zhang Wei | Vice President | Incumbent | Male | 49 | December 06, 2012 | August 23, 2020 | 927,500 | 927,500 | |||
| Zhao Yuning | Vice President | Incumbent | Male | 43 | March 22 2018 | August 23, 2020 | 740,000 | 740,000 | |||
| Li Ke | Director, President | Resigned | Male | 48 | May 03, 2017 | February 27, 2020 | 2,420,000 | 2,420,000 | |||
| Total | -- | -- | -- | -- | -- | -- | 1,425,413,372 | 30,900,000 | -30,900,000 | 316,000 | 1,425,729,372 |
II. Changes of Directors, Supervisors and Senior Management
√ Applicable □ Not applicable
| Name | Title | Type | Date | Causes |
| Zhang Xingming | Executive President | Appointment and dismissal | February 27, 2020 | Appointed as Executive President and Resigned as Vice President |
| Jiang Xiaolai | Vice President | Appointment and dismissal | February 27, 2020 | Appointed As Vice President |
| Li Zhijie | Vice President | Appointment and dismissal | February 27, 2020 | Appointed As Vice President |
| Xu Qiaofen | Vice President | Appointment and dismissal | February 27, 2020 | Appointed As Vice President |
| Li Ke | Director, President | Resigned | February 27, 2020 | Left the Company Voluntarily |
III. Positions
Professional backgrounds, major work experiences and current main responsibilities in the Company for incumbentdirectors, supervisors and senior management of the CompanyMr. Fu Liquan, Chinese nationality, permanent residence in Cyprus, born in 1967, with master degree in EMBA ofZhejiang University. As one of the main founders of the Company, he now assumes the title of chairman and president ofthe Company. In 2018, his employment was renewed by China Security Association as an expert of the Expert Committee
of China Security & Protection Industry Association. He has won the honors of “Outstanding Figure Award of ChinaSecurity - Tribute to the 40 Years Anniversary of Reform and Opening Up”, “Top Ten Influential Zhejiang Entrepreneurs”,“Model Worker of Zhejiang Province”, “One of the 40 Figures of Industry Innovative Development of Zhejiang for the 40years Anniversary of Reform and Opening Up”, “Excellent Enterprise Operator with Outstanding Contributions to theInformation Economy”, “Excellent Constructer of Socialism with Chinese Characteristics in the New Era of Non-PublicEconomy in Zhejiang Province”, “Outstanding Contributions Award in ‘Ingenuity for a Safe China’”, Global SecurityContribution Award, Top Ten Figures in Security and Protection Industry, and the Best CEO of listed companies of Forbes.
Mr. Wu Jun, Chinese nationality, born in 1972, with a bachelor's degree, engineer, served as vice chairman and vicepresident of the Company and general manager of Zhejiang Dahua System Engineering Co., Ltd. in the recent five years.He now serves as vice chairman and vice president of the Company and executive director of Zhejiang Dahua SystemEngineering Co., Ltd.Mr. Zhu Jiangming, Chinese nationality, born in 1967, has the right of permanent residence in Cyprus, holds bachelordegree and works as an engineer. As one of the main founders of the Company, he served as vice chairman of theCompany and business operations director and general manager of Hangzhou Motorola Technologies Co., Ltd., and nowserves as director and executive vice president of the Company, executive director of Zhejiang Huatu MicrochipTechnology Co., Ltd. and chairman of Zhejiang Leap Technology Co., Ltd. He was awarded the title of advancedtechnology worker in Hangzhou in 2003-2004, and employed as "Zhejiang Provincial Security Technology ProtectionIndustry Expert" by Zhejiang Provincial Security Technology Protection Industry Association in 2006.Ms. Chen Ailing, Chinese nationality, born in 1967, has the right of permanent residence in Cyprus, and holdsbachelor degree. As one of the main founders of the Company, she served as director and CFO of the Company, and nowserves as director of the Company. She is the spouse of Mr. Fu Liquan, the controlling shareholder and actual controller ofthe Company.Mr. He Chao, Chinese nationality, born in 1959, holds postgraduate degree. He once served as president of Sir RunRun Shaw Hospital of School of Medicine in Zhejiang University, its Secretary of the Party Committee and Vice Presidentand a doctoral supervisor of Zhejiang University. He now serves as director of Zhejiang Nuojia Biotechnology Co., Ltd.,independent director of Lionco Pharmaceutical Group and independent director of the Company. He was awarded"Outstanding Professor of American TCM Association" in 2010, was listed into "Young and Middle-Aged OutstandingContribution Experts of Zhejiang Province" in 2011 by Zhejiang Provincial People's Government, and won specialallowance of the State Council in 2015.Ms. Wang Zexia, Chinese nationality, born in 1965, holds doctoral degree and now works as a professor. She onceserved as head of the accounting department of Hangzhou Dianzi University, vice-president and president of the School ofFinance and Economics, president of the School of Accounting. She is currently part-time director of Accounting Societyof China, vice director of the Auditing Professional Committee, president of the Higher Education Branch of AccountingSociety of China, vice chairman of the Accounting Society of Zhejiang Province, Executive Director of the ZhejiangAuditing Society, Independent Director of Zhejiang Weiming Environmental Protection Co., Ltd, Zhejiang Kaier NewMaterials Co., Ltd, and Independent Director of the Company.Ms. Wong Sze Wing, Hong Kong of China, born in 1978, obtained the degree of MBA from Hong Kong University anddegree of EMBA (Executive Master of Business Administration) from China Europe International Business School. She isthe certified public accountant and senior member of Hong Kong Institute of Certified Public Accountants. She has been
serving as the Chief Financial Officer of Yingde Gases Group Co., Ltd since July, 2010. She once served as vice ChiefFinancial Officer of Yingde Gases Group Co., Ltd and Secretary of Joint Company, Chief Financial Officer of ChengtianEntertainment Group (International) Holdings Limited and Aihui Music Video Production (China) Co., Ltd., Manager ofPricewaterhouseCoopers Ltd; She Currently serves as independent director of Chengtian Jiahe Entertainment Group(International) Holdings Limited, Rich Healthcare Holdings Co., Ltd, Wangsu Science and Technology Co., Ltd and JiangxiGanfeng Lithium Industry Co., Ltd, and independent director of the Company.Ms. Song Maoyuan, Chinese nationality, was born in 1982 and graduated from university. She has served assupervisor and secretary to president of the Company in the recent five years. She now serves as chairman of the Boardof Supervisors and secretary to president of the Company.Mr. Song Ke, Chinese nationality, born in 1978, holds a master degree, served as manager of IT Department ofHangzhou H3C Co., Ltd. He now serves as supervisor and general manager of Process IT Center of the Company.Ms. Zuo Pengfei, Chinese nationality, born in 1978, holds a bachelor degree, has served as supervisor and chairmanof the labor union of the Company in the recent five years. She is currently the supervisor of the Company, the chairman ofthe labor union, the director of human resources employee relations, and the supervisor of Hangzhou Xiaohua TechnologyCo., Ltd.Mr. Zhang Xingming, Chinese nationality, born in 1977, holds master degree, has served as vice president andgeneral manager of R&D Center of the Company in the recent five years. He is currently the executive president of theCompany and the general manager of the R&D Center, the general manager of Zhejiang Huatu Microchip Technology Co.,Ltd., and the general manager of Chengdu Dahua Information Technology Co., Ltd.Mr. Wu Jian, Chinese nationality, born in 1974, holds master degree, served as secretary of the Board of Directorsand vice president of the Company in the recent five years, and now serves as secretary of the Board of Directors andvice president of the Company, member of China Software Industry Association and vice chairman of Zhejiang SoftwareIndustry Association.Mr. Wei Meizhong, Chinese nationality, born in 1971, holds MBA degree of Central South University, is anInternational Certified Internal Auditor, Certified Tax Agent, Certified Public Valuer and Certified Public Accountant. He hasserved as CFO and vice president of the Company in the recent five years and now serves as CFO and vice president ofthe Company.
Mr. Chen Yuqing, Chinese nationality, born in 1974, with MBA degree, engineer, served as vice president and generalmanager of Overseas Sales Center of the Company and general manager of Zhejiang Dahua Technology Co., Ltd. in therecent five years. He is currently the vice president of the Company and the general manager of Zhejiang DahuaTechnology Co., Ltd.Mr. Jiang Xiaolai, Chinese nationality, was born in 1980, holds a bachelor degree, served as regional generalmanager of Domestic Marketing Center of the Company from January 2015 to December 2018, has been serving asgeneral manager of Domestic Marketing Center of the Company since January 2019, and now serves as vice presidentand general manager of the Domestic Marketing Center of the Company.
Mr. Li Zhijie, Chinese nationality, born in 1975, holds a master degree, served as technical engineer, director of theDelivery and Service Department of the Representative Office, national delivery representative, and president of RegionalDelivery Department of Huawei Technologies Co., Ltd. from March 2005 to August 2017, has been serving as generalmanager of the Delivery and Service Center of the Company since September 2017, and now serves as vice president
and general manager of the Delivery and Service Center of the Company.Mr. Wu Yunlong, Chinese nationality, born in 1956, has obtained bachelor degree from Xiamen University and EMBAdegree from Zhongnan University of Economics and Law, and he is a professor-level senior engineer. He is appointed byChina Security Association as an expert of the Expert Committee of China Security and Protection Industry Association;He serves as vice secretary-general of Zhejiang Security Technology Protection Industry Association and director of itsExpert Committee, Executive Director of China Security Association, Vice President and Expert of Zhejiang SecurityAssociation, Director of the Security and Technical Defense Committee, Vice President of Hangzhou Security Associationand Distinguished Professor of Zhejiang Police Officer Vocational College. He has served as vice president of theCompany and general manager of Zhejiang Dahua Security Connected Operation Services Co., Ltd. in the recent fiveyears. He now serves as vice president of the Company and general manager of Zhejiang Dahua Security ConnectedOperation Services Co., Ltd.Ms. Zu Qiaofen, Chinese nationality, born in 1972, holds a college degree, Served as chief financial officer of theCompany's Finance Center from January 2015 to January 2017; From January 2017 to December 2017,deputy generalmanager of the Company's Finance Center; The general manager of the Company's Finance Center since December2017 and now serves as vice president and general manager of the Company's Finance Center.Mr. Xu Zhicheng, Chinese nationality, was born in 1966. He successively served as deputy general manager ofmarketing, general manager and supervisor of the Company from September 2013 to June 2015, has been serving asgeneral manager of the Internal Audit Department of the Company since June 2015, and now serves as vice presidentand general manager of the Internal Audit Department of the Company.
Mr. Yan Gang, Chinese nationality, born in 1969, with master degree, has served as vice president, general managerof Quality and Customer Service Department and general manager of Production Guarantee Department of the Companyin the recent five years. He is currently the vice president of the Company and the general manager of the QualityManagement Center.Mr. Ying Yong, Chinese nationality, born in 1969, with MBA degree, has served as vice president, general manager ofDomestic Marketing Center and general manager of Human Resources Department of the Company in the recent fiveyears, and now serves as vice president and general manager of Human Resources Department of the Company.Mr. Zhu Jiantang, Chinese nationality, was born in 1982 and graduated from college with the bachelor degree. FromMarch 2012 to January 2015, he has successively served as Product Director of R&D and Deputy General Manager ofR&D Center. Since January 2015, he has been the general manager of the Company's Supply Chain Management Center.He is currently the vice president of the Company and the general manager of the Supply Chain Management Center.
Mr. Zhang Wei, Chinese nationality, born in 1971, served as president of Monitoring Product Department of WuhanJinglun Electronics Co., Ltd., product and marketing director of BOCOM Security (China) Co., Ltd., product director ofVimicro, general manager of Internet of Things Application Business Unit of Vimicro, and supervisor of the Fourth Board ofSupervisors of Zhejiang Dahua Technology Co., Ltd. He is currently the vice president of the Company.
Mr. Zhao Yuning, Chinese nationality, was born in 1977 and graduated from National University of Singapore with amaster degree in science. From July 2000 to June 2017, he has successively served as technical engineer, regional salesmanager, national general manager, vice president and president of regional sales department of Huawei TechnologiesCo., Ltd. He now serves as vice president of the Company and general manager of overseas marketing centerPosition held in shareholders entities
□ Applicable √ Not applicable
Position held in other entities
√ Applicable □ Not applicable
| Name | Name of other entity | Position held in other entities | Renumeration received from other entity or not |
| Fu Liquan | Zhejiang Dahua Security Network Operation Service Co., Ltd. | Chairman | No |
| Fu Liquan | Zhejiang Dahua Vision Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Guangxi Dahua Zhicheng Co., Ltd. | Chairman | No |
| Fu Liquan | Hangzhou Xiaohua Technology CO., LTD. | Executive Director | No |
| Fu Liquan | Zhejiang Dahua Zhilian Co., Ltd. | Executive Director and General Manager | No |
| Fu Liquan | Zhejiang Dahua Investment Management Co., Ltd. | Executive Director and General Manager | No |
| Fu Liquan | Zhejiang Leapmotor Technology Co., Ltd. | Director | No |
| Fu Liquan | Hangzhou Huacheng Network Technology Co., Ltd. | Chairman | No |
| Fu Liquan | Zhejiang Huashi Investment Management Co., Ltd. | Executive Director | No |
| Fu Liquan | Xinjiang Dahua Zhixin Information Technology Co., Ltd. | Chairman | No |
| Fu Liquan | Zhejiang Huafei Intelligent Technology CO., LTD. | Chairman | No |
| Fu Liquan | Guizhou Huayi Shixin Technology Co., Ltd. | Director | No |
| Fu Liquan | Zhejiang Dahua Security Service Co., Ltd. | Director | No |
| Fu Liquan | Zhejiang HuaRay Technology Co., Ltd. | Director | No |
| Fu Liquan | Leapmotor Automobile Co., Ltd. | Director | No |
| Fu Liquan | Xinjiang Dahua Zhihe Information Technology Co., Ltd. | Chairman | No |
| Fu Liquan | Guizhou Meitan Dahua Information Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Guangxi Huacheng Technology Co., Ltd. | Chairman | No |
| Fu Liquan | Xinjiang Dahua Information Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. | Chairman | No |
| Fu Liquan | Xinjiang Dahua Xinzhi Information Technology Co., Ltd. | Chairman | No |
| Fu Liquan | Xinjiang Dahua Intelligence Technology Co., Ltd. | Supervisor | No |
| Fu Liquan | Xinjiang Dahua Huayue Information Technology Co., Ltd. | Chairman | No |
| Fu Liquan | Zhejiang Fengshi Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Xi'an Dahua Zhilian Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Wuxi Dahua Ruipin Technology Co., Ltd. | Director | No |
| Fu Liquan | Beijing Huayue Shangcheng Information Technology Service Co., Ltd. | Executive Director | No |
| Fu Liquan | Zhejiang Dahua Robot Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Shanghai Huashang Chengyue Information Technology Service Co., Ltd. | Executive Director | No |
| Fu Liquan | Hangzhou Huajuan Technology Co., Ltd. | Executive Director and General Manager | No |
| Fu Liquan | Guangxi Dahua Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Chengdu Zhichuang Yunshu Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Chengdu Dahua Zhilian Information Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Chengdu Dahua Zhishu Information Technology Service Co., Ltd. | Executive Director | No |
| Fu Liquan | Chengdu Dahua Zhian Information Technology Service Co., Ltd. | Executive Director | No |
| Fu Liquan | Ningbo Huayang Investment Management Partnership Enterprise (Limited Partnership) | Executive Partner | No |
| Fu Liquan | Hangzhou Gulin Equity Investment Partnership (limited partnership) | Executive Partner | No |
| Fu Liquan | Ningbo Huaqi Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Fu Liquan | Zhejiang Dahua Storage Technology Co., Ltd. | Executive Director | No |
| Fu Liquan | Zhejiang Huaxiao Technology Co., Ltd. | Director | No |
| Wu Jun | Zhejiang Dahua System Engineering Co., Ltd. | Executive Director | No |
| Wu Jun | Zhejiang Dahua Security Service Co., Ltd. | Director | No |
| Wu Jun | Guangdong Dahua Zhishi Technology Co., Ltd. | Director | No |
| Wu Jun | Hangzhou Yuneng Technology Co., Ltd. | Executive Director | No |
| Wu Jun | Ningbo Huakun Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Zhu Jiangming | Zhejiang Leapmotor Automobile Marketing Service Co., Ltd. | Executive Director | No |
| Zhu Jiangming | Ningbo Jinghang Equity Investment Partnership (Limited Partnership) | Executive Partner | No |
| Zhu Jiangming | Hangzhou Xiaohi Technology Co., Ltd. | Supervisor | No |
| Zhu Jiangming | Leapmotor Automobile Co., Ltd. | Chairman | No |
| Zhu Jiangming | Zhejiang Leapmotor Technology Co., Ltd. | Chairman | No |
| Zhu Jiangming | Hangzhou Menghao Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Zhu Jiangming | Hangzhou Xunwei Robotics Technology Co., Ltd. | Director | No |
| Zhu Jiangming | Zhejiang Huatu Microchip Technology Co., Ltd. | Executive Director | No |
| Zhu Jiangming | South North United Information Technology Co., Ltd. | Director | No |
| Zhu Jiangming | Zhejiang Dahua Vision Technology Co., Ltd. | Supervisor | No |
| Zhu Jiangming | Zhejiang Dahua Security Service Co., Ltd. | Director | No |
| Zhu Jiangming | Hangzhou Xintu Technology Co., Ltd. | Executive Director and General Manager | No |
| Zhu Jiangming | Zhejiang Lancable Technology Co., Ltd. | Director | No |
| Chen Ailing | Zhejiang Lancable Technology Co., Ltd. | Director | No |
| Chen Ailing | Zhejiang Huashi Investment Management Co., Ltd. | General Manager | No |
| Chen Ailing | Zhejiang Huanuokang Technology Co., Ltd. | Executive Director | No |
| Chen Ailing | Ningbo Huaqi Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Hualing Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huali Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huayan Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huadi Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huaqian Investment Management Partnership (Limited Partnership) | Executive Partner | No |
| Chen Ailing | Ningbo Huagu Enterprise Management Partnership (Limited Partnership) | Executive Partner | No |
| He Chao | Zhejiang Nuojia Biotechnology Co., Ltd. | Director | No |
| He Chao | Lingkang Pharmaceutical Group Co., Ltd. | Independent Director | No |
| Wang Zexia | Zhejiang Kaier New Materials Co., Ltd. | Independent Director | No |
| Wang Zexia | Hangzhou Mingze Cloud Software Co., Ltd. | Chairman and General Manager | No |
| Wang Zexia | Zhejiang Weiming Environment Co., Ltd. | Independent Director | No |
| Huang Siying | Wangsu Technology Co., Ltd. | Independent Director | No |
| Huang Siying | Yingde Gases Group Company Limited | CFO | No |
| Huang Siying | Orange Sky Golden Harvest Entertainment (Holdings) Limited | Independent Director | No |
| Huang Siying | Rich Healthcare Holdings Limited | Independent Director | No |
| Huang Siying | Jiangxi Ganfeng Lithium Co., Ltd. | Independent Director | No |
| Huang Siying | Yingde Investment (Shanghai) Co., Ltd. | Supervisor | No |
| Song Maoyuan | Zhejiang Dahua System Engineering Co., Ltd. | Supervisor | No |
| Song Maoyuan | Hangzhou Maycur Technology Co., Ltd. | Supervisor | No |
| Song Maoyuan | Zhejiang Dahua Investment Management Co., Ltd. | Supervisor | No |
| Song Maoyuan | Guizhou Huayi Shixin Technology Co., Ltd. | Supervisor | No |
| Song Maoyuan | China Standard Intelligent Security Technology Co., Ltd. | Chairman of the Board of Supervisors | No |
| Song Maoyuan | Guangdong Dahua Zhishi Technology Co., Ltd. | Supervisor | No |
| Song Maoyuan | Xi'an Dahua Zhilian Technology Co., Ltd. | Supervisor | No |
| Song Maoyuan | Hangzhou Huajuan Technology Co., Ltd. | Supervisor | No |
| Song Maoyuan | Chengdu Zhichuang Yunshu Technology Co., Ltd. | Supervisor | No |
| Song Maoyuan | Chengdu Dahua Zhilian Information Technology Co., Ltd. | Supervisor | No |
| Song Maoyuan | Chengdu Dahua Zhian Information Technology Service Co., Ltd. | Supervisor | No |
| Song Maoyuan | Zhejiang Huaxiao Technology Co., Ltd. | Supervisor | No |
| Zuo Pengfei | Hangzhou Xiaohua Technology CO., LTD. | Supervisor | No |
| Zhang Xingming | Zhejiang Huatu Microchip Technology Co., Ltd. | General Manager | No |
| Zhang Xingming | Chengdu Dahua Zhilian Information Technology Co., Ltd. | Manager | No |
| Zhang Xingming | Hangzhou Jingbo Equity Investment Partnership (Limited Partnership) | Executive Partner | No |
| Zhang Xingming | Zhejiang Huachuang Vision Technology Co., Ltd. | Director | No |
| Zhang Xingming | Zhejiang HuaRay Technology Co., Ltd. | Chairman | No |
| Zhang Xingming | Zhejiang Huaxiao Technology Co., Ltd. | Director | No |
| Wei Meizhong | Sunyard System Engineering Co., Ltd. | Director | No |
| Wei Meizhong | Cein Biotechnology (Beijing) Co., Ltd. | Director | No |
| Wei Meizhong | Zhejiang Dahua Ju'an Technology Co., Ltd. | Executive Director | No |
| Wei Meizhong | Hangzhou Maycur Technology Co., Ltd. | Chairman | No |
| Wei Meizhong | Hangzhou Tecomore Technology Co., Ltd. | Executive Director | No |
| Wei Meizhong | Hangzhou Wanpuhua Internet Financial Services Co., Ltd. | Director | No |
| Wei Meizhong | Shenzhen Conwin Security Electronics CO., Ltd. | Director | No |
| Wei Meizhong | Zhejiang Dahua Zhiwang Technology Co., Ltd. | Chairman | No |
| Wei Meizhong | South North United Information Technology Co., Ltd. | Chairman | No |
| Wei Meizhong | China Standard Intelligent Security Technology Co., Ltd. | Vice Chairman | No |
| Wei Meizhong | Hangzhou Weixing Enterprise Management and Consulting Co., Ltd. | Executive Director and General Manager | No |
| Wei Meizhong | Hangzhou Qianhudao Meixin Investment Management Co., Ltd. | Executive Director and General Manager | No |
| Wei Meizhong | Zhejiang Fenglinwan Cultural Technology Co., Ltd. | Supervisor | No |
| Wei Meizhong | Hangzhou Maycur Cloud Technology Co., Ltd. | Chairman | No |
| Wei Meizhong | Hangzhou Advance Gearbox Group Co., Ltd. | Independent Director | No |
| Wei Meizhong | Hangzhou Thermal Power Group Co., Ltd. | Director | No |
| Wei Meizhong | Hangzhou Hexing Electrical Co., Ltd. | Independent Director | No |
| Chen Yuqing | Zhejiang Dahua Vision Technology Co., Ltd. | General Manager | No |
| Jiang Xiaolai | Chengdu Dahua Zhishu Information Technology Service Co., Ltd. | Manager | No |
| Jiang Xiaolai | Hangzhou Juhuanyan Network Technology Co., Ltd. | Director | No |
| Jiang Xiaolai | Zhejiang Dahua Jinzhi Technology Co., Ltd. | Manager | No |
| Jiang Xiaolai | Zhejiang Huachuang Vision Technology Co., Ltd. | Director | No |
| Jiang Xiaolai | Zhejiang HuaRay Technology Co., Ltd. | Director | No |
| Jiang Xiaolai | Chengdu Huishan Smart Network Technology Co., Ltd. | Director | No |
| Jiang Xiaolai | Zhejiang Huaxiao Technology Co., Ltd. | Director | No |
| Li Zhijie | Zhejiang Dahua System Engineering Co., Ltd. | General Manager | No |
| Wu Yunlong | Zhejiang Dahua Security Network Operation Service Co., Ltd. | General Manager | No |
| Wu Yunlong | Zhoushan Dahua Technology Co., Ltd. | Director | No |
| Wu Yunlong | Lishui Dahua Intelligent Technology Co., Ltd. | Director | No |
| Wu Yunlong | Shaoxing Dahua Security Services Co., Ltd. | Director | No |
| Wu Yunlong | Taizhou Dahua Security Services Co., Ltd. | Director | No |
| Wu Yunlong | Ningbo Dahua Anbang Security Services Co., Ltd. | Director | No |
| Wu Yunlong | Zhejiang Dahua Security Service Co., Ltd. | Chairman | No |
| Wu Yunlong | Wenzhou Dahua Security Services Co., Ltd. | Director | No |
| Xu Zhicheng | Hangzhou Fuyang Hua'ao Technology Co., Ltd. | Chairman | No |
| Xu Zhicheng | Zhejiang Dahua Security Network Operation Service Co., Ltd. | Director | No |
| Xu Zhicheng | Zhejiang Huaxiao Technology Co., Ltd. | Director | No |
| Ying Yong | Zhejiang Dahua Security Network Operation Service Co., Ltd. | Director | No |
| Ying Yong | Hangzhou Huacheng Network Technology Co., Ltd. | Director | No |
| Ying Yong | Zhejiang Huachuang Vision Technology Co., Ltd. | Chairman | No |
| Ying Yong | Zhejiang HuaRay Technology Co., Ltd. | Director | No |
| Zhang Wei | Guizhou Huayi Shixin Technology Co., Ltd. | Director | No |
| Positions held in other companies | N/A |
Incumbent or outgoing directors, supervisors and senior management in the reporting period that have been imposedadministrative penalties by CSRC in the last three years
□ Applicable √ Not applicable
IV. Remuneration of Directors, Supervisors and Senior ManagementThe following describes the decision-making program, determination basis and actual payment of remuneration fordirectors, supervisors and senior management.Top management of the Company shall be evaluated by the performance commitments of senior management andthe department managers and those above shall be evaluated by their work report at the end of the year. The managershave made business goal responsibility system in their term of office, and set up the evaluation approach combining KPIindex commitments at the level of the Company and individual performance commitments. They have achieved qualifiedevaluation indices, meaning that they can complete their respective tasks in the latest term of office. The Company willincrease their remuneration or adopt other incentive measures, as appropriate, based on their completion of goals.Remuneration of directors, supervisors and senior management in the reporting period of the Company
Unit: ten thousand RMB
| Name | Post | Gender | Age | Position status | Total remuneration from the Company before tax | Whether to receive remuneration from related parties or not |
| Fu Liquan | Chairman, President | Male | 53 | Incumbent | 88.66 | No |
| Wu Jun | Vice Chairman, Vice President | Male | 48 | Incumbent | 94.45 | No |
| Zhu Jiangming | Director, Executive Vice President | Male | 53 | Incumbent | 88.66 | No |
| Chen Ailing | Director | Female | 53 | Incumbent | 0 | No |
| He Chao | Independent Director | Male | 61 | Incumbent | 20 | No |
| Wang Zexia | Independent Director | Female | 55 | Incumbent | 20 | No |
| Huang Siying | Independent Director | Female | 42 | Incumbent | 20 | No |
| Song Maoyuan | Supervisor | Female | 38 | Incumbent | 47.38 | No |
| Song Ke | Supervisor | Male | 42 | Incumbent | 128.08 | No |
| Zuo Pengfei | Supervisor | Female | 42 | Incumbent | 63.71 | No |
| Zhang Xingming | Executive President | Male | 43 | Incumbent | 178.1 | No |
| Wu Jian | Secretary of the Board, Vice President | Male | 46 | Incumbent | 158.06 | No |
| Wei Meizhong | CFO, Vice President | Male | 49 | Incumbent | 108.34 | No |
| Chen Yuqing | Vice President | Male | 46 | Incumbent | 128.06 | No |
| Wu Yunlong | Vice President | Male | 64 | Incumbent | 90.08 | No |
| Xu Zhicheng | Vice President | Male | 54 | Incumbent | 158.06 | No |
| Yan Gang | Vice President | Male | 51 | Incumbent | 138.05 | No |
| Ying Yong | Vice President | Male | 51 | Incumbent | 158.06 | No |
| Zhu Jiantang | Vice President | Male | 38 | Incumbent | 158.05 | No |
| Zhang Wei | Vice President | Male | 49 | Incumbent | 130.14 | No |
| Zhao Yuning | Vice President | Male | 43 | Incumbent | 179.19 | No |
| Li Ke | Director, President | Male | 48 | Resigned | 209.19 | No |
| Total | -- | -- | -- | -- | 2,364.32 | -- |
Share incentives for the Company's directors, supervisors and senior executives in the reporting period
□ Applicable √ Not applicable
V. Employees in the Company
1. Number, profession composition and educational background of the employees
| Number of incumbent employees in the parent company (person) | 10,197 |
| Number of incumbent employees in major subsidiaries (person) | 3,461 |
| Total number of incumbent employees (person) | 13,658 |
| Number of employees receiving salaries in current period (person) | 13,658 |
| Number of retired employees requiring the parent company and major subsidiaries to bear their costs | 8 |
| Profession composition | |
| Type of profession composition | Number of employees for profession composition (person) |
| R&D staff | 7,161 |
| Sales | 2,693 |
| Supply chain | 2,143 |
| Administrative staff | 315 |
| Professional support staff | 1,346 |
| Total | 13,658 |
| Educational background | |
| Type of educational background | Number of employees (person) |
| Master and above | 2,171 |
| Bachelor | 7,795 |
| College, technical secondary school | 2,147 |
| Others | 1,545 |
| Total | 13,658 |
2. Remuneration policies
The Company has established complete remuneration management systems and incentive mechanisms to providethe employees with competitive remunerations in strict accordance with Labor Law, Labor Contract Law and otherrelevant laws and regulations, departmental rules and normative documents. The Company links its remuneration systemand performance appraisal system with the business performance of the Company, which fully arouses the enthusiasm ofthe employees and effectively improves the executive force and responsibility consciousness of employees, thus betterattracting and retaining talents and providing guarantee for sustainable, stable development of the Company in respect ofhuman resources.
3. Training plan
The Company has been dedicated to the building of employee education and training system, established the internallecturer management measures including new employee training and in-service employee training, implemented trainingcredits management system, improved the comprehensive quality of the Company's employees, created good leaningatmosphere, established learning organization and comprehensively helped employees to improve their ability to meetchallenges and reforms in the future, thus providing powerful talent guarantee and intellectual support for sustainable, fastgrowth of the Company and achieving joint development of employees and the Company.
4. Labor outsourcing
□ Applicable √ Not applicable
Section X Corporate GovernanceI. Basic Situation on Corporate Governance
During the reporting period, the Company constantly improved corporate governance structure, established andimproved internal control system, constantly improved the Company's standardized operation level, strictly performed theinformation disclosure obligations, and focused on protection of the investors’ interests by strictly following the provisionsof "Company Law", "Securities Law", "Code of Corporate Governance for Listed Companies", " Rules Governingthe Listing of Shares on Shenzhen Stock Exchange", "Guidelines of the Shenzhen Stock Exchange for the StandardOperation of Listed Companies on the Small and Medium-sized Enterprise Board" and other relevant laws and regulationsand regulatory documents. During the reporting period, the actual situation of corporate governance is basically in linewith the regulatory documents on the governance of listed companies issued by China Securities RegulatoryCommission.(I) Shareholders·and·General Meeting:
The·Company·standardizes·the·calling,·convening,·and·voting·procedures·of the shareholders’ general meetings inaccordance with·the·regulations·and·requirements·of·the CompanyLaw,·the·Articles·of·Association·and·the·Rules·of·Procedures·of·the·Shareholders’·General·Meeting, treats allshareholders equally, and ensures that shareholders, especially small and medium-sized shareholders, can fully exercisetheir rights by right of voting both on the site and online. The shareholders shall avoid from voting when deliberatingrelated matters at the general meeting. The related transactions are fair and reasonable, without damages to the interestsof the shareholders;; when voting on the proposals affecting the interests of small and medium investors, their votes shallbe counted separately. The·general·meetings·of·shareholders·have allbeen·convened·by·the·company's·board·of·directors·and·witnessed·by·the·lawyer.
II·The·company·and·the·controlling·shareholders:·The·company·is·independent·from·the·controlling·shareholders·in·terms·of·business,·personnel,·assets,·finance·and·organizations.·The·company's·board·of·directors,·board·of·supervisors·and·other·internal·agencies·operate·independently. The controlling shareholders of the Company were able to strictlyregulate his own behaviors, and there was no behavior that directly or indirectly interfered with the Company'sdecision-making and business activities outside of the shareholders' general meeting, and there was no non-operationalbehavior of appropriation of the capital of listed companies.
(III) Directors and Board of Directors: The Company elects the directors and appoints the independent directors instrict accordance with the selection and employment procedure specified in the “Company Law” and the“Articles·of·Association”. At present, the Company has seven directors, including three independent directors, all of whomare experts in corporate management and financial accounting and other fields. The number and composition of the boardof directors meet the requirements of relevant laws and regulations and the “Articles of Association”. There are fourspecial committees under the board of directors, including Audit Committee, Strategy Committee, Nomination Committeeand Remuneration and Appraisal Committee. With reasonable composition and structure of members, they have providedscientific and professional opinions and references for decision-making of the board of directors. The Board of Directorsconvened board meetings and implemented the resolutions of the shareholders' meeting in strict accordance with"Articles of Association" and "Rules of Procedure of the Board of Directors"; All the directors were able to perform theirdue duties and conscientiously attended the Board meetings and shareholders' meetings to safeguard the legitimaterights and interests of the Company and shareholders.
(IV) Supervisors and the Board of Supervisors: The Company strictly elects the supervisors by the election and
appointment procedures specified in the “Company Law” and the “Articles·of·Association”. The Company currently hasthree supervisors, including one chairman of the board supervisors. The number and composition of the board ofsupervisors meet the requirements of relevant laws and regulations and the “Articles of Association”. The Board ofSupervisors convened supervisor meetings in strict accordance with the provisions of "Articles of Association" and "Rulesof Procedure of the Board of Supervisors"; All the supervisors performed their duties conscientiously, and with integrity,diligence and conscientiousness, they effectively supervised and expressed independent opinions on company finance aswell as the legitimacy and compliance of the performance of job duties for directors and senior managers to safeguard thelegitimate rights and interests of the Company and shareholders.V·Performance·Appraisal·and·Incentive·and·Constraint·Mechanisms:·To·further·establish·and·improve·the·company's·incentive·mechanism·and·strengthen·the·company's·philosophy·of·sustainable·development·ofboth·management·and·core·employees,·the·company·implements·a·restricted·stock·incentive·plan·and·employee·stock·ownership·plan which reinforce the·interest·sharing and·restraint·mechanisms applied toshareholders·and·core·business·personnel. It has·maintained·the·stability·of·management·teams·and·business·leaders,guaranteed·the·realization of the company's·development·strategy·and·business·objectives,·and·ensured·the·company'ssound·long-term·development. The appointment of company executives is open, transparent and complies with laws andregulations.VI Stakeholders: The company fully respects and safeguards the legitimate rights and interests of relevantstakeholders. While striving to achieve a steady growth of the company's performance, the company also effectively treatsand protects the legitimate rights and interests of all stakeholders and continuously improves product quality, protects theenvironment, implements energy-saving and emission-reduction programs, etc. The company actively participates insocial charity and philanthropy to realize the balance of interests among shareholders, employees, society, etc., in order topromote sustainable, stable and healthy development of the company.(VII) Information Disclosure and Transparency: The Company performs obligations for truthful, accurate, timely, andcomplete information disclosure in strict accordance with the relevant laws and regulations and the Company's“Information Disclosure Management System”, and designates Securities Times and www.cninfo.com as the mediachannels for such disclosure; the Company strictly enforces the confidentiality of undisclosed information. According tothe Company's “Inside Information Confidentiality System”, registering and filing internal information insiders has beendone properly. The internal information insider filing system has been established and submitted to the regulatoryauthorities for record in time as required, and the behavior of submitting company information to external informationusers has been strictly regulated. In the process of receiving specific visitors, the company has strictly followed therelevant requirements, and performed careful reception. It also asks visitors to sign the Commitment Letter and promptlyuploads relevant research records to the Shenzhen Stock Exchange "Interaction Easy" for disclosure after the visits.During the reporting period, no incidence of stock trading based on insider information has occurred. At the same time, thecompany has opened an investor hotline and investor relations management column, and designated the personresponsible for timely communication with investors. In addition, the company also maintains active and timely contactand communication with the regulatory authorities to report on the company's related issues, in order to accurately graspthe regulatory requirements of information disclosure, and further improve the company's transparency and quality ofinformation disclosure. In strict accordance with the relevant requirements regarding content and format, the Companydisclosed information in an authentic, accurate, complete and timely manner to ensure that all shareholders have equalaccess to information.Whether the actual status of corporate governance significantly deviates from the regulatory documents issued by theChina Securities Regulatory Commission regarding the governance of listed companies.
□ Yes √ No
There is no significant difference between the actual situation of corporate governance and the regulatory documents on
the governance of listed companies issued by China Securities Regulatory Commission.II. The company's independence from the controlling shareholders in business,personnel, assets, organization, finance, etc.The company and the controlling shareholders are completely separated in terms of business, personnel, assets,organization, and finance, and has independent and complete businesses and capabilities of independent operation.
1. Business independence
The company's business is independent of the controlling shareholders, actual controllers and other enterprisesunder their control, and has an independent and complete R&D, production, procurement, and sales system; thetechnology required for production and operation is legal, independently owned, or licensed for use by the company withno asset disputes. The company has signed all external contracts independently, and has the ability to independentlymake production and operation decisions and engage in production and business activities. The company hasindependent spaces for production and operation and offices.
2. Staff independence
The company's personnel are independent from the controlling shareholders, actual controllers and other companiescontrolled by them. The company has an independent human resources department responsible for labor, personnel andpayroll management. The Company has established an independent labor, personnel, and salary management system.The production, operation, and administration are independent of the controlling shareholders, actual controllers, andother companies controlled by them; the recommendation, election, and appointment of directors, supervisors, and seniormanagers of the Company have all been conducted legally and independently; senior management personnel such as thepresident, executive president, vice president, board secretary, and finance director did not hold positions other thandirectors and supervisors for controlling shareholders, actual controllers, and other companies controlled by them orreceive salaries from them; the Company's financial staff do not have a part-time job with the controlling shareholders,actual controllers, and other companies controlled by them.
3. Asset independence
The company's assets are independent from the controlling shareholders, actual controllers and other companiescontrolled by them. The company's main assets include the ownership and use rights of complete land, plants, machineryand equipment, trademarks, patents, non-patented technology required for the main business, and an independent rawmaterial procurement and product sales system. The property rights of the above assets are clear and completelyindependent of the controlling shareholders and major shareholders. There was misappropriation of the company's assetsby the controlling shareholders and major shareholders.
4. Institutional independence
The company's organizations are independent from the controlling shareholders, actual controllers and othercompanies controlled by them. The Company has established shareholders' general meeting, board of directors andboard of supervisors, and other decision-making, implementation and supervision agencies. It has also appointed seniormanagers such as president, executive president, vice president, board secretary, and chief financial officer; the Companyhas set up specialized departments equipped with the necessary personnel independently responsible fordomestic/overseas sales, R&D, supply chain, delivery and service, quality and service, finance, legal affairs, securities,internal audit, human resources, administration, IT, and other functions. The internal organizations perform theirrespective operational management responsibilities under the leadership of the board of directors and the president inaccordance with the rules and regulations; there have been no cases in which the controlling shareholders, actualcontrollers, and other companies controlled by them are confused with their identities and duties; there has been noincidence of the controlling shareholders or actual controllers intervening in the establishment of the Company's
organizational setup.
5. Financial independence
The company's finance is independent from the controlling shareholders, actual controllers and other companiescontrolled by them. The company has established an independent financial department with full-time financial accountingpersonnel, and has established an independent financial accounting system for independent financial decisions. It has astandardized financial accounting system and financial management system for subsidiaries; the company hasindependently opened a basic deposit account so that there is no sharing of bank accounts with actual controllers,controlling shareholders, and other companies controlled by it; the company handled tax registrations with the ZhejiangProvincial State Tax Bureau and the Zhejiang Provincial Local Tax Bureau and paid taxes independently as required bylaw.III Horizontal competition
□ Applicable √ Not applicable
IV. Relevant Situation of the Annual General Meeting of Shareholders and theExtraordinary General Meeting of Shareholders Held in the Reporting Period
1. The shareholders' meetings for this reporting period
| Conference Session | Conference Type | Percentage of Investors Involved | Date of Conference | Date of Disclosure | Disclosure Index |
| Shareholders' General Meeting in 2018 | Annual General Meeting | 48.60% | April 9, 2019 | April 10, 2019 | CNINFO: http://www.cninfo.com.cn |
| First Interim Shareholders’ General Meeting in 2019 | Extraordinary General Meeting | 48.29% | June 5, 2019 | June 6, 2019 | CNINFO: http://www.cninfo.com.cn |
| Second Interim Shareholders' General Meeting in 2019 | Annual General Meeting | 59.61% | November 21, 2019 | November 22, 2019 | CNINFO: http://www.cninfo.com.cn |
2. Convening of the interim shareholders' general meetings upon request of the preferredstockholders whose voting rights are restored
□ Applicable √ Not applicable
V. The performance of the duties of independent directors during the reportingperiod
1. Attendance of independent directors in the board of directors and shareholders' meeting
| Attendance of independent directors at the BOD meeting and shareholders' general meetings | |||||||
| Name of independent director | Number of board meetings to attend during the reporting period | Number of on-site attendance of board meetings | Number of attendance of board meetings by means of telecommunications | Number of attendance of board meetings by entrustees | Number of absence at board meetings | Whether absent from board meetings in person for two consecutive times | Number of attendance of shareholders' general meetings |
| He Chao | 10 | 3 | 7 | 0 | 0 | No | 1 |
| Wang Zexia | 10 | 3 | 7 | 0 | 0 | No | 2 |
| Huang Siying | 10 | 2 | 8 | 0 | 0 | No | 1 |
2. Objections of independent directors to related issues of the companyWhether the independent directors challenge the company's related issues?
□ Yes √ No
During the reporting period, independent directors did not raise objections to the company's related matters.
3. Other information on independent directors' performance of dutiesWhether independent director's proposals on the company issues are accepted
√ Yes □ No
Note on the acceptance or rejection of independent director's proposals on company issues.
During the reporting period, the independent directors performed their duties with integrity, diligence,conscientiousness and loyalty according to the provisions of "Company Law", "Guiding Opinions on EstablishingIndependent Directors in Listed Companies", "Guidelines of the Shenzhen Stock Exchange for the Standard Operation ofListed Companies on the Small and Medium-sized Enterprise Board", "Articles of Association" and "Working Rules ofIndependent Directors" and relevant laws and regulations,, made full use of their professional advantages, paid closeattention to the Company's business condition, and took the opportunity of board meetings and other time to look into theCompany's production, operation and management conditions and actively communicate with other directors, supervisorsand administrative staff to timely grasp the Company's business trend, jointly analyze and study the problems confrontedby the Company, and use their own expertise to advice and suggest for the company's development Independentdirectors offered reasonable ideas and suggestions for the Company's business development from their respectiveprofessional perspectives, and issued their independent and just opinions on matters such as related transactions, profitdistribution, and foreign investment that require independent directors' opinions during the reporting period. They played adue role in safeguarding the interests of the Company and shareholders, especially the public shareholders. The companyhas adopted the opinions of independent directors.
VI. Performance of duties of the special committee under the board of directorsduring the reporting period
1. Strategy Committee
During the reporting period, the Strategy Committee discussed the corporate strategy, long-term development plan,the deepening of innovation and transformation, and global layout in accordance with the company's strategicdevelopment requirements, timely analyzed the market conditions and made corresponding adjustments. They proposedconstructive suggestions on the Company's business strategy and significant matters that may influence futuredevelopment of the Company, ensured the scientific nature of the Company's development planning and strategicdecision-making, and provided strategic support for the company's sustained and steady development.
2. Nomination Committee
During the reporting period, the Nomination Committee actively carried out its work in accordance with the “WorkingSystem of the Nomination Committee of the Board of Directors” and other relevant regulations and fulfilled its dutiesearnestly. The Nomination Committee gave prudent consideration to the qualifications and capabilities of the Company'sdirectors and senior managers, and conducted evaluation over the work of the Company's directors and senior managersaccording to the performance indicators set by the Company at the beginning of the year.
3. Audit Committee
During the reporting period, the Audit Committee fully played its supervisory role and maintained the independence ofauditing in accordance with the principle of due diligence. The Audit Committee held meetings as required and listenedcarefully to the management's report on operation condition, financial position and other significant matters of this year,and discuss and expressed opinions on the internal audit reports, self-evaluation on internal controls, and reappointmentof auditing institutions, submitted by the internal audit department. Earnestly urged the Company to conduct the annualreport audit, communicated with the accountants, summarized and evaluated the audit work of the audit institutions andreviewed the financial statements of the Company as required by the relevant laws and regulations and the internalcontrol system of the Company.
4. Remuneration and Appraisal Committee
During the reporting period, the Remuneration and Appraisal Committee, based on the Company's performance andindustry standards, carried out a review of the ranking of staff positions and assessment standards, and reviewed andconfirmed the Company's remuneration for directors, supervisors and senior management and other issues.
VII. Work of the Supervisory CommitteeHas the supervisory board discovered any risk in the company during the supervision in the reporting period
□ Yes √ No
The supervisory board had no objection to the supervisory matters in the report period.VIII. Evaluation and Incentive Mechanisms for Senior Management
The Company has established an assessment and incentive system for senior management personnel, formulated asenior management personnel selection, evaluation, incentive and restraint mechanism, and assessed fulfillment of theirduties and annual performance. At present, the assessment of the company's senior staff mainly involves promisedperformance-based evaluation for senior executives and the year-end performance debriefing of staff higher thandepartment managers. The managers have made business goal responsibility system in their term of office, and set upthe evaluation approach combining KPI index commitments at the level of the Company and individual performance
commitments. They have achieved qualified evaluation indices, meaning that they can complete their respective tasks inthe latest term of office. The Company will increase their remuneration or adopt other incentive measures, as appropriate,based on their completion of goals. In the future, the company will adopt a multi-level comprehensive incentive system toeffectively mobilize the management personnel, attract, and stabilize outstanding management talents and the backboneof technology and business.
During the reporting period, the Company further improved the incentive and constraint mechanism for seniorexecutives and other key employees of the Company, established and improved the middle and long term incentive andconstraint mechanism, which fully mobilized and facilitated the enthusiasm and creativity of the incentive objects andeffectively aligned the interests of shareholders and the Company with those of the employees to continuously promotethe Company's performance, and bring the benefits of the Company's development to all employees for the shareddevelopment. In 2019, the remuneration plan for the senior managers of the Company was implemented according to theremuneration appraisal system of the Company and reasonable, and the remuneration payment procedure wasconsistent with the provisions in the relevant laws, regulations and systems of the Company.IX. Internal Control Assessment Report
1. Details of material weakness in internal control found during the reporting period
□ Yes √ No
2. Internal control self-evaluation report
| Date of full-text disclosure for internal control assessment report | April 3, 2020 | |
| Full-text disclosure index for internal control assessment report | http://www.cninfo.com.cn | |
| Percentage of total asset from units included in the assessment out of the total asset from the company's consolidated financial statements | 100.00% | |
| The proportion of operating income of parties included in the assessment to the operating income from the Company's consolidated financial statements | 100.00% | |
| Defect identification criteria | ||
| Category | Financial Report | Non-financial reports |
| Qualitative standards | Signs of material weakness in financial reporting include: (1) Corrupt practices of directors, supervisors and senior managers of the Company; (2) Material misstatements in the current Financial Report discovered by the Certified Public Accountants but not recognized by the internal control of the Company; (3) Invalid internal control and supervision of the External Financial Report and the Financial Report of the Company by the Audit Committee and the Audit Department. Signs of significant deficiencies in financial reporting include: (1) Failure to select and apply the accounting policies in accordance with the accepted accounting standards; (2) Failure to establish anti-fraud procedure and control measures; (3) No appropriate control mechanism established or appropriate compensating control implemented for accounting treatment of irregular or special transactions; (4) There are one or more defects in the control of final financial reporting process, and no reasonable guarantee that the financial statements can achieve the goal of being true and complete. General deficiencies refer to the control deficiencies other than the material deficiencies and important deficiencies described above. | The identification of non-financial report defects is mainly determined by the extent of their influence on validity of business process and the probability of occurrence. Deficiencies are defined as general deficiencies if they are less likely to happen, and will lower the work efficiency or effect, or increase the uncertainty of the effect or make it deviate from the expected goal. |
| Quantitative standards | Losses which have been or may be incurred due to internal control deficiencies and are related to the profit statement should be measured by the operating income indicators. If the misreporting amount in the financial statement, which may be incurred by the deficiencies alone or together with other deficiencies, is less than 0.5% of the operating income, it is considered as a general deficiency; If it exceeds 0.5% of the operating income but is less than 1%, then it is an important deficiency; If it exceeds 1% of the operating income, then it is considered as a major deficiency. Losses which have been or may be incurred due to internal control deficiencies and are related to the asset management should be measured by the total asset indicators. If the misstated amount in the financial statement, which may be incurred by the deficiency alone or together with other deficiencies, is less than 0.5% of the total asset, it is considered as a general deficiency; If it exceeds 0.5% of the total asset but less than 1%, it is an important deficiency; If it exceeds 1% of the total asset, it is considered as a major deficiency. | The quantitative criteria is based on operating income and total assets. Losses which have been or may be incurred due to internal control deficiencies and are related to the profit statement should be measured by the operating income indicators If the misreporting amount in the financial statement, which may be incurred by the deficiencies alone or together with other deficiencies, is less than 0.5% of the operating income, it is considered as a general deficiency; If it exceeds 0.5% of the operating income but is less than 1%, then it is an important deficiency; If it exceeds 1% of the operating income, then it is considered as a major deficiency. Losses which have been or may be incurred due to internal control deficiencies and are related to the asset management should be measured by the total asset indicators. If the misstated amount in the financial statement, which may be incurred by the deficiency alone or together with other deficiencies, is less than 0.5% of the total asset, it is considered as a general deficiency; If it exceeds 0.5% of the total asset but is less than 1%, then it is considered as an important deficiency; If it exceeds 1% of the total asset, it is considered as a major deficiency. |
| Number of material weakness in financial reports | 0 | |
| Number of material weakness in non-financial reports | 0 | |
| Number of significant deficiency in financial reports | 0 | |
| Number of significant deficiency in non-financial report | 0 | |
X. Internal Control Audit Report or Assurance ReportInternal Control Assurance Report
| Deliberations Paragraph in the Internal Control Assurance Report | |
| In our opinion, Dahua has maintained effective internal control, in all material respects, with respect to the financial statements in accordance with the “Basic Norms of Enterprise Internal Control” and relevant regulations promulgated by the five ministries including the Ministry of Finance as at December 31, 2019. | |
| Disclosure in the Internal Control Assurance Report | Disclosure |
| Date of full-text disclosure for the internal control assurance report | April 3, 2020 |
| Full-text disclosure index for the internal control assurance report | http://www.cninfo.com.cn |
| Opinion type in the internal control assurance report | Standard unqualified opinion |
| Whether there are material deficiencies in the non-financial reports | No |
Whether the accounting firm has issued an internal control assurance report with modified opinions
□ Yes √ No
Whether the opinions in the internal control assurance report issued by the accounting firm are consistent with those in theself-evaluation report issued by the board of directors
√ Yes □ No
Section XI Corporate BondsWhether the Company has corporate bonds which have been publicly issued and listed on the stock exchange and havenot matured or are not fully redeemed at the approval date of annual reportNo
Section XII Financial ReportI. Audit Reports
| Audit opinion type | Standard Unqualified Opinion |
| Signature Date of audit report | April 2, 2020 |
| Name of audit institution | BDO China Shu Lun Pan CPAs (special general partnership) |
| Audit report ref. | Xin Kuai Shi Bao Zi [2020] No.ZF10121 |
| Name of Certified Public Accountant | Zhong Jiandong, Du Na |
Audit Report Text
To the shareholders of Zhejiang Dahua Technology Co., Ltd.:
I. OpinionWe have audited the financial statements of Zhejiang Dahua Technology Co., Ltd. (hereinafterreferred to as Dahua), including the parent company's and the consolidated balance sheet datedDecember 31, 2019, the parent company's and the consolidated income statement, the parentcompany's and the consolidated cash flow statement and the parent company's and the consolidatedstatement of changes in owners' equity in 2019, as well as the notes to relevant financial statements.
In our opinion, the attached financial statements are prepared, in all material respects, inaccordance with “Accounting Standards for Business Enterprises” , which fairly reflected the financialposition of the merged companies and the parent company as at December 31, 2019 and the operatingresults and cash flows of the merger and the parent company in 2019.
II. Basis for Our Opinion
We conducted our audit in accordance with the Auditing Standards for Certified PublicAccountants in China. Our responsibilities under those standards are further described in the CPA'sResponsibilities for the Audit of the Financial Statements section of our report. According to the “Code ofEthics for Chinese Certified Public Accountants”, we are independent of Dahua and have fulfilled ourother ethical responsibilities in accordance with the Code. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinions.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the financial statements of the current period. These matters were addressed in thecontext of our audit of the financial statements as a whole, and in forming our opinion thereon, and we donot provide a separate opinion on these matters. We have confirmed that the following matters are the
key audit matters that need to be communicated in the audit report.
| Key Audit Matters | How the matter was addressed in the audit |
| A. Recognition of revenue | |
| The operating revenue of Dahua in 2019 is RMB 26,149,430,652.42, which is an important part of Hahua's profit statement. For this reason, we determine that the revenue is a key audit matter. Based on the accounting policy of Dahua, the Company's main products include security standard products, system integration and other labor services. Among them, the security standard products for domestic market were delivered to customers or picked up by customers based on the contractual terms in the sales contract. The revenue was recognized after customers received and accepted the goods and the Company obtained the evidence proving the customers' receipt of goods; for the security standard products exported by domestic companies, the revenue was recognized after the goods were declared and exported, and for the security standard products sold overseas by overseas subsidiaries, the revenue was recognized after the customer received and accepted the goods; the revenue from the system integration sales was recognized after the acceptance of goods by customers; the revenue from the labor services sales was recognized when relevant labor services were provided. See Notes III (23) for details. | The main audit procedure we implemented for the above key audit matter includes: ① Understand the internal control system in relation to revenue recognition ,the design and implementation of the financial accounting system, and test the effectiveness of its operation; ② Check the agreements of relevant contracts for different sales types in accordance with the actual situation of the specific businesses, and evaluate whether the revenue recognition meets the requirements of Accounting Standards for Business Enterprises; ③ Perform an analytical procedures to judge the reasonableness of the changes in sales revenue and gross profit margin; ④ Perform confirmation procedures: send confirmation to customers for the annual sales amount and the outstanding at the end of the year, and the export sales income shall be certified by the customs; ⑤ Different types of income samples shall be tested: For standard products for domestic market and overseas sales of overseas subsidiaries, sample the out-of-stock records, shipping orders, customer countersign records, received payment records and so on.; for standard products exported by domestic companies, check the out-of-stock records, customs declaration, bill of lading, and received payment records; For system integration sales, check the product delivery records, shipping list and contract list, unpacking acceptance report, acceptance report for the completion of installation and commissioning, received payment records and so on. ⑥ Sample the transactions made before or after the balance sheet date and check their out-of-stock records, customs declaration, and other relevant supportive documents to confirm whether the revenues have been recognized in an appropriate accounting period. |
| B. Recoverability of accounts receivable | |
| At the end of 2019, Dahua's original value of receivables was RMB 14,710,269,418.60. The balance of bad debt provision was RMB 1,469,073,037.95. The management needs to make significant judgments about the identification of accounts receivable impairment accounts, the likelihood of | We evaluated the recoverability of accounts receivable by the following procedure: ① Understand the management and the internal control of key financial reporting related to credit control, account recovery and assessment of impairment provision for receivables, and evaluate the effectiveness of the design and operation of the internal control; ② Understand the Company's management procedures for customers' credit and the collection measures for overdue debts; ③ Review the |
| inward cash flows of future customers and the realization of the amount guaranteed. The management's estimates and assumptions are uncertain. Since the amount of accounts receivable is significant to the financial statements as a whole and the recoverability involves the estimation and judgment of future cash flows, we recognize the recoverability of accounts receivable as a key audit matter. | division by the Management of the combination with respect to the accounts receivable for which the expected credit loss is calculated according to the combination of credit risk characteristics, and assess the reasonableness of the expected credit loss rate based on the estimates including historical credit loss rate, current circumstance and prediction of the future economic condition. We assessed the reasonableness of the accrued proportion with reference to the historical audit experience and prospective information, tested the accuracy of the portfolio classification and aging division of the accounts receivable, and recalculated the accuracy of the accrued amount of the expected credit loss; we sampled the accounts receivable subject to separate bad debt provision, and reviewed the basis for the Management’s assessment of the expected credit loss based on the financial position and credit position of the customer, historical repayment records and prediction of the future economic condition. We validated the management's assessment against the evidence we have obtained during the audit process, including background information, past transaction history and payment status of the customer, and forward-looking considerations; ④ Test the payment received after the balance sheet date; ⑤ Perform the correspondence-based confirmation procedure and check whether the confirmation results are consistent; ⑥ Analyze whether there are amounts of accounts receivable that cannot be recovered and need to be written off. |
IV. Other InformationThe management of Dahua (hereinafter referred to as the Management) is responsible for theother information. The other information includes the information covered in Dahua's annual report in2019, but excludes the financial statements and our audit report.
Our opinion on the financial statements does not cover the other information and we do not andwill not express any form of assurance conclusion thereon.
In combination with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit, or otherwise appears to be materiallymisstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Management is responsible for preparing the financial statements in accordance with therequirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and fordesigning, implementing and maintaining necessary internal control to ensure that the financialstatements are free from material misstatements, whether due to frauds or errors.
In preparing the financial statements, the Management is responsible for assessing Dahua's abilityto continue operating, disclosing matters related to continuous operation (if applicable) and using thehypothesis of continuous operation unless there is a plan to liquidate, terminate operations or no otherrealistic options.
The management is responsible for supervising the financial reporting process of Dahua.
VI. CPA's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an audit reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee thatan audit conducted in accordance with the audit standards will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if, individually orin the aggregate, they could reasonably be expected to influence the economic decisions of users madeon the basis of these financial statements.
As part of an audit in accordance with the audit standards, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether dueto fraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Understand the internal control related to the audit in order to design appropriate auditprocedure.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the Management.
(4) Conclude on the appropriateness of using the going concern assumption by the Management.At the same time, draw a conclusion, based on the audit evidence obtained, on whether there issignificant uncertainty in matters or situations that may cause major doubts about Dahua's ability incontinuous operation. If we conclude that a material uncertainty exists, we are required to draw attentionin our audit report to the related disclosures in the financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the information available up to the dateof our audit report. However, future events or conditions may result in Dahua's inability to continueoperating.
(5) Evaluate the overall presentation (including the disclosures), structure and content of thefinancial statements, and whether the financial statements fairly reflect the relevant transactions and
events.
(6) Obtain sufficient and appropriate audit evidence regarding the financial information of theentities or business activities within Dahua to express an opinion on the financial statements. We areresponsible for guiding, supervising and implementing the group audit, and remain solely responsible forour audit opinion.
We have communicated with those charged with governance on such matters as the scope ofaudit as planned, the schedule and material audit findings, including the defects in the internal controlthat are worth paying attention to found in this audit.
We have also provided those charged with governance with a statement on observing theprofessional ethics related to independence, and communicated with those charged with governance onall the relationships and other matters that might be reasonably deemed to affect our independence, andrelevant preventative measures.
From the matters communicated with those charged with governance, we determine those mattersthat were of most significance in the audit of the financial statements of the current period and aretherefore the key audit matters. We describe these matters in our audit report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of such communication.
| BDO China Shu Lun Pan Certified Public Accountants LLP (Special general partnership) | Chinese CPA: Zhong Jiandong (Project partner) |
| Chinese CPA: Du Na | |
| Shanghai, China | April 2, 2020 |
II. Financial StatementsUnits of financial reports in the notes: RMB
1. Consolidated Balance Sheet
Prepared by: Zhejiang Dahua Technology Co., Ltd.
December 31, 2019
Unit: RMB
| Item Name | December 31, 2019 | December 31, 2018 |
| Current Assets: | ||
| Cash and Bank Balances | 3,084,428,970.43 | 4,160,153,847.06 |
| Deposit Reservation for Balance | ||
| Loans to Banks and Other Financial Institutions | ||
| Trading Financial Assets | ||
| Financial liabilities at fair value through profit or loss | ||
| Derivative Financial Assets | ||
| Notes receivable | 2,385,693,417.06 | |
| Accounts receivable | 13,241,196,380.65 | 10,191,372,777.38 |
| Receivables Financing | 1,086,017,357.90 | |
| Prepayments | 128,182,099.47 | 126,891,259.00 |
| Premium Receivable | ||
| Reinsurance Accounts Receivable | ||
| Reinsurance Contract Reserves Receivable | ||
| Other Receivables | 408,776,610.17 | 398,170,769.40 |
| Including: interest receivable | 6,754,941.00 | |
| Dividends Receivable | ||
| Buying Back the Sale of Financial Assets | ||
| Inventory | 3,839,810,704.33 | 3,035,579,709.14 |
| Contract Assets | ||
| Holding for-sale assets |
| Non-current Assets Due within 1 Year | 630,717,329.58 | 578,733,057.27 |
| Other Current Assets | 556,311,770.08 | 402,255,078.05 |
| Subtotal of Current Assets | 22,975,441,222.61 | 21,278,849,914.36 |
| Non-current Assets: | ||
| Granting of loans and advances | ||
| Investment in Creditor's Rights | ||
| Financial Assets Available for Sale | 82,970,227.00 | |
| Investment in Other Creditor's Rights | ||
| Held-to-maturity Investments | ||
| Long-term Receivables | 2,568,442,030.19 | 1,861,485,568.28 |
| Long-term Equity Investment | 490,731,236.85 | 185,872,021.58 |
| Investment in Other Equity Instruments | ||
| Other Non-current Financial Assets | 67,213,489.43 | |
| Investment Property | 336,181,589.99 | 346,831,376.55 |
| Fixed Assets | 1,522,463,368.83 | 1,407,471,330.83 |
| Projects under Construction | 435,757,406.90 | 226,191,587.11 |
| Productive Biological Assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | ||
| Intangible Assets | 411,758,785.31 | 372,467,409.09 |
| Development Expenditure | ||
| Goodwill | 42,685,490.30 | 109,745,412.21 |
| Long-term Prepaid Expenses | 37,311,198.19 | 37,117,918.55 |
| Deferred Income Tax Assets | 668,058,558.83 | 425,319,406.98 |
| Other Non-current Assets | 8,605,835.50 | 16,277,605.61 |
| Subtotal of Non-current Assets | 6,589,208,990.32 | 5,071,749,863.79 |
| Total Assets | 29,564,650,212.93 | 26,350,599,778.15 |
| Current Liabilities: | ||
| Short-term loan | 400,323,888.90 | 1,851,709,561.83 |
| Borrowings from the Central Bank |
| Borrowings from Banks and Other Financial Institutions | ||
| Transactional financial liabilities | ||
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | 38,602,602.30 | |
| Derivative Financial Liabilities | ||
| Notes Payable | 3,807,292,795.07 | 3,671,586,104.79 |
| Accounts Payable | 4,290,253,501.81 | 3,789,729,594.20 |
| Received Prepayments | 375,521,795.82 | 343,297,891.20 |
| Contract liabilities | ||
| Financial Assets Sold for Repurchase | ||
| Deposit Taking and Interbank Deposit | ||
| Receiving from Vicariously Traded Securities | ||
| Receiving from Vicariously Sold Securities | ||
| Payroll payable | 1,582,368,359.30 | 1,124,358,611.94 |
| Tax Payable | 813,357,471.37 | 599,478,049.81 |
| Other Payables | 1,163,915,713.24 | 1,051,537,094.97 |
| Including: interest payable | 4,745,203.31 | |
| Dividends Payable | 9,454,479.13 | |
| Service Charge and Commission Payable | ||
| Reinsurance Accounts Payable | ||
| Holding for-sale liabilities | ||
| Non-current Liabilities Due within 1 Year | 26,993,755.57 | 25,500,000.00 |
| Other Current Liabilities | 71,233,107.93 | 70,845,639.51 |
| Subtotal of Current Liabilities | 12,531,260,389.01 | 12,566,645,150.55 |
| Non-current Liabilities: | ||
| Insurance Contract Reserves | ||
| Long-term loan | 153,500,000.00 | 179,000,000.00 |
| Bonds Payable |
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | ||
| Long-term Payables | ||
| Long-term payroll payable | ||
| Expected Liabilities | 303,670,887.50 | 193,761,170.12 |
| Deferred Income | 117,210,761.34 | 58,693,533.40 |
| Deferred Income Tax Liabilities | 50,565,095.68 | 50,137,969.76 |
| Other Non-current Liabilities | 432,275,367.74 | 399,096,280.89 |
| Subtotal of Non-current Liabilities | 1,057,222,112.26 | 880,688,954.17 |
| Total Liabilities | 13,588,482,501.27 | 13,447,334,104.72 |
| Shareholders' Equity: | ||
| Share Capital | 3,003,713,230.00 | 2,997,621,930.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 1,882,855,119.53 | 1,501,180,862.83 |
| Less: Treasury Share | 1,057,584,258.31 | 807,733,586.00 |
| Other Comprehensive Incomes | 12,308,276.23 | 10,337,164.41 |
| Special Reserves | ||
| Surplus Reserves | 1,553,691,005.92 | 1,246,369,430.91 |
| General Risk Reserves | ||
| Undistributed Profits | 10,248,023,654.54 | 7,670,983,116.33 |
| Total Shareholders' Equity Attributable to the Parent Company | 15,643,007,027.91 | 12,618,758,918.48 |
| Minority Shareholders' Equity | 333,160,683.75 | 284,506,754.95 |
| Total Shareholders' Equity | 15,976,167,711.66 | 12,903,265,673.43 |
| Total Liabilities and Shareholders' Equity | 29,564,650,212.93 | 26,350,599,778.15 |
Legal representative: Fu Liquan Person in charge of accounting: Wei Meizhong Person in charge of theaccounting institution: Xu Qiaofen
2. Balance Sheet of the Parent Company
Unit: RMB
| Item Name | December 31, 2019 | December 31, 2018 |
| Current Assets: | ||
| Cash and Bank Balances | 890,598,735.62 | 611,190,236.01 |
| Trading Financial Assets | ||
| Financial liabilities at fair value through profit or loss | ||
| Derivative Financial Assets | ||
| Notes receivable | 952,572,702.92 | |
| Accounts receivable | 8,450,364,515.05 | 4,598,575,923.04 |
| Receivables Financing | 841,427,888.19 | |
| Prepayments | 30,501,431.44 | 26,772,044.53 |
| Other Receivables | 5,138,830,912.64 | 6,954,655,863.03 |
| Including: interest receivable | 42,500.00 | |
| Dividends Receivable | ||
| Inventory | 124,904,729.01 | 120,181,267.85 |
| Contract Assets | ||
| Holding for-sale assets | ||
| Non-current Assets Due within 1 Year | 53,952,526.19 | 50,793,137.80 |
| Other Current Assets | 21,919,487.88 | 24,858,982.78 |
| Subtotal of Current Assets | 15,552,500,226.02 | 13,339,600,157.96 |
| Non-current Assets: | ||
| Investment in Creditor's Rights | ||
| Financial Assets Available for Sale | 80,496,000.00 | |
| Investment in Other Creditor's Rights | ||
| Held-to-maturity Investments | ||
| Long-term Receivables | 137,284,594.67 | 160,299,143.83 |
| Long-term Equity Investment | 3,523,259,061.78 | 3,001,639,428.55 |
| Investment in Other Equity Instruments | ||
| Other Non-current Financial Assets | 62,979,387.68 | |
| Investment Property | 187,756,594.11 | 183,321,198.72 |
| Fixed Assets | 536,909,246.66 | 496,363,638.38 |
| Projects under Construction | 203,836,998.96 | 151,072,585.67 |
| Productive Biological Assets | ||
| Oil and gas assets | ||
| Right-of-use Assets | ||
| Intangible Assets | 168,215,377.39 | 170,879,747.04 |
| Development Expenditure | ||
| Goodwill | ||
| Long-term Prepaid Expenses | 26,687,122.32 | 28,927,258.54 |
| Deferred Income Tax Assets | 131,503,372.44 | 40,821,902.57 |
| Other Non-current Assets | 1,964,757.00 | 929,380.00 |
| Subtotal of Non-current Assets | 4,980,396,513.01 | 4,314,750,283.30 |
| Total Assets | 20,532,896,739.03 | 17,654,350,441.26 |
| Current Liabilities: | ||
| Short-term loan | 400,323,888.90 | 1,380,000,000.00 |
| Transactional financial liabilities | ||
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | ||
| Derivative Financial Liabilities | ||
| Notes Payable | 302,168,249.70 | 175,647,414.85 |
| Accounts Payable | 948,348,622.52 | 889,881,485.16 |
| Received Prepayments | 181,462,746.37 | 80,361,211.04 |
| Contract liabilities | ||
| Payroll payable | 1,078,396,381.39 | 817,723,936.19 |
| Tax Payable | 460,577,509.52 | 351,294,836.50 |
| Other Payables | 1,363,740,346.75 | 1,060,909,330.56 |
| Including: interest payable | 2,416,340.30 | |
| Dividends Payable | 9,454,479.13 | |
| Holding for-sale liabilities | ||
| Non-current Liabilities Due within 1 Year | ||
| Other Current Liabilities | 5,892,364.82 | 6,464,333.12 |
| Subtotal of Current Liabilities | 4,740,910,109.97 | 4,762,282,547.42 |
| Non-current Liabilities: | ||
| Long-term loan |
| Bonds Payable | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Lease Liabilities | ||
| Long-term Payables | ||
| Long-term payroll payable | ||
| Expected Liabilities | 9,735,157.34 | 3,396,100.00 |
| Deferred Income | ||
| Deferred Income Tax Liabilities | 1,297,719.64 | |
| Other Non-current Liabilities | 16,155,036.85 | 23,684,423.74 |
| Subtotal of Non-current Liabilities | 27,187,913.83 | 27,080,523.74 |
| Total Liabilities | 4,768,098,023.80 | 4,789,363,071.16 |
| Shareholders' Equity: | ||
| Share Capital | 3,003,713,230.00 | 2,997,621,930.00 |
| Other Equity Instruments | ||
| Including: Preferred Stocks | ||
| Perpetual Bonds | ||
| Capital Reserves | 1,867,489,901.04 | 1,497,801,068.88 |
| Less: Treasury Share | 1,057,584,258.31 | 807,733,586.00 |
| Other Comprehensive Incomes | ||
| Special Reserves | ||
| Surplus Reserves | 1,553,691,005.92 | 1,246,369,430.91 |
| Undistributed Profits | 10,397,488,836.58 | 7,930,928,526.31 |
| Total Shareholders' Equity | 15,764,798,715.23 | 12,864,987,370.10 |
| Total Liabilities and Shareholders' Equity | 20,532,896,739.03 | 17,654,350,441.26 |
3. Consolidated Income Statement
Unit: RMB
| Item Name | The Year Of 2019 | The Year Of 2018 |
| I. Total Operating Revenue | 26,149,430,652.42 | 23,665,688,106.22 |
| Including: Operating Revenue | 26,149,430,652.42 | 23,665,688,106.22 |
| Interest Income | ||
| Earned Premiums |
| Service Charge and Commission Income | ||
| II. Total Operating Cost | 22,996,746,203.46 | 21,222,616,479.48 |
| Including: Operating Cost | 15,396,193,940.44 | 14,871,181,066.69 |
| Interest Expenditures | ||
| Service Charge and Commission Expenses | ||
| Surrender Value | ||
| Net Claims Paid | ||
| Net Amount of Withdrawn Reserve for Insurance Liability Contract | ||
| Policyholder Dividend Expense | ||
| Reinsurance Cost | ||
| Taxes and Surcharges | 182,582,118.36 | 192,381,330.58 |
| Sales Expenses | 3,952,947,275.82 | 3,365,380,947.78 |
| Administration expenses | 740,880,944.67 | 632,968,594.64 |
| Research and development expense | 2,794,219,504.28 | 2,283,872,502.53 |
| Financial Expenses | -70,077,580.11 | -123,167,962.74 |
| Including: interest expenses | 133,656,681.06 | 114,335,785.04 |
| Interest Income | 197,576,570.81 | 113,966,942.24 |
| Add: Other income | 927,125,385.10 | 733,874,699.13 |
| Investment Income (Mark "-" for Loss) | -95,569,041.41 | -79,293,077.01 |
| Including: Investment Income from Affiliates and Joint Ventures | -115,707,007.32 | -36,049,906.26 |
| Profits from recognition Termination of Financial Assets at Amortized Cost | ||
| Exchange Gains (Mark "-" for Losses) | ||
| Profit of Net Exposure Hedging (Mark "-" for Loss) |
| Incomes from changes in fair value (losses marked with "-") | 41,855,239.60 | -38,602,602.30 |
| Credit Impairment Losses (Mark "-" for Loss) | -418,876,180.92 | |
| Asset Impairment Losses (Mark "-" for Loss) | -111,174,681.00 | -358,998,190.96 |
| Asset Disposal Income (Mark "-" for Loss) | 835,214.24 | 17,535.97 |
| III. Operating Profit (Mark "-" for Loss) | 3,496,880,384.57 | 2,700,069,991.57 |
| Add: Non-operating Revenues | 11,479,262.60 | 77,197,481.30 |
| Less: Non-operating Expenses | 9,796,489.66 | 4,112,201.74 |
| IV. Total Profit (Mark "-" for Total Loss) | 3,498,563,157.51 | 2,773,155,271.13 |
| Less: Income Tax Expense | 337,704,672.97 | 178,562,590.79 |
| V. Net Profit (Mark "-" for Net Loss) | 3,160,858,484.54 | 2,594,592,680.34 |
| i. Classified by operation continuity | ||
| 1. Net Profit as a Going Concern (Mark "-" for Net Loss) | 3,160,858,484.54 | 2,594,592,680.34 |
| 2. Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| ii. Classified by the attribution of ownership | ||
| 1. Net Profit Attributable to the Parent Company's Owner | 3,188,144,692.55 | 2,529,426,468.61 |
| 2. Minority Shareholders' Profit and Loss | -27,286,208.01 | 65,166,211.73 |
| VI. Net Amount of Other Comprehensive Incomes after Tax | 1,971,193.29 | 3,676,975.37 |
| Net Amount of Other Comprehensive Incomes after Tax Attributable to the Parent Company's Owner | 1,971,111.82 | 3,676,975.37 |
| (1) Other comprehensive income that cannot be reclassified as P/L | ||
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method |
| 3. Changes in the fair value of investment in other equity instruments | ||
| 4. Changes in the fair value of the credit risk of the enterprise | ||
| 5. Others | ||
| (2) Other comprehensive income that will be reclassified as P/L | 1,971,111.82 | 3,676,975.37 |
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in the fair value of investment in other creditor's rights | ||
| 3. Profit or Loss Arising from Changes in the Fair Value of Financial Assets Available for Sale | ||
| 4. Financial assets reclassified into other comprehensive income | ||
| 5. Profit or Loss Arising from Reclassifying Investments Held to Maturity as Financial Assets Available for Sale | ||
| 6. Provisions for the credit impairment of investment in other creditor's rights | ||
| 7. Cash flow hedge reserves | ||
| 8. Currency Translation Difference | 1,971,111.82 | 3,676,975.37 |
| 9. Others | ||
| Net Amount of Other Comprehensive Incomes After Tax Attributable to Minority Shareholders | 81.47 | |
| VII. Total Comprehensive Income | 3,162,829,677.83 | 2,598,269,655.71 |
| Total Comprehensive Income Attributable to the Parent Company's Owner | 3,190,115,804.37 | 2,533,103,443.98 |
| Total Comprehensive Income Attributable to Minority Shareholders | -27,286,126.54 | 65,166,211.73 |
| VIII. Earnings per Share: | ||
| (I) Basic Earnings per Share | 1.10 | 0.87 |
| (II) Diluted Earnings per Share | 1.10 | 0.87 |
In the case of enterprise consolidation under the same control during this period, the net profit realized by consolidatedparty before consolidation is: RMB. The net profit realized by the consolidated party during previous period is: RMB.Legal representative: Fu Liquan Person in charge of accounting: Wei Meizhong Person in charge of theaccounting institution: Xu Qiaofen
4. Income Statement of the Parent Company
Unit: RMB
| Item Name | The Year Of 2019 | The Year Of 2018 |
| I. Operating Revenue | 8,482,060,132.96 | 8,333,563,115.08 |
| Less: Operating Cost | 1,200,706,524.01 | 1,762,464,907.26 |
| Taxes and Surcharges | 121,881,528.62 | 114,691,360.49 |
| Sales Expenses | 1,826,394,447.02 | 1,826,106,099.37 |
| Administration expenses | 389,756,057.22 | 332,931,605.32 |
| Research and development expense | 2,306,679,313.62 | 2,000,658,797.75 |
| Financial Expenses | 24,933,907.79 | 29,935,660.08 |
| Including: interest expenses | 83,078,555.46 | 41,278,053.23 |
| Interest Income | 62,880,482.42 | 15,006,188.38 |
| Add: Other income | 799,333,571.65 | 676,054,269.34 |
| Investment Income (Mark "-" for Loss) | -99,305,651.23 | -35,043,814.25 |
| Including: Investment Income from Affiliates and Joint Ventures | -115,786,382.36 | -37,135,560.20 |
| Profits from Derecognition of Financial Assets at Amortized Cost (Mark "-" for Loss) | ||
| Profit of Net Exposure Hedging (Mark "-" for Loss) | ||
| Incomes from changes in fair value (losses marked with "-") | 1,703,118.82 |
| Credit Impairment Losses (Mark "-" for Loss) | -22,993,302.46 | |
| Asset Impairment Losses (Mark "-" for Loss) | 1,019,151.05 | -16,183,524.43 |
| Asset Disposal Income (Mark "-" for Loss) | 647,551.91 | 8,194.76 |
| II. Operating Profit (Mark "-" for Loss) | 3,292,112,794.42 | 2,891,609,810.23 |
| Add: Non-operating Revenues | 4,342,038.03 | 7,089,018.48 |
| Less: Non-operating Expenses | 1,506,697.13 | 820,867.93 |
| III. Total Profit (Mark "-" for Total Loss) | 3,294,948,135.32 | 2,897,877,960.78 |
| Less: Income Tax Expense | 216,330,316.67 | 149,656,335.29 |
| IV. Net Profit (Mark "-" for Net Loss) | 3,078,617,818.65 | 2,748,221,625.49 |
| (I) Net Profit as a Going Concern (Mark "-" for Net Loss) | 3,078,617,818.65 | 2,748,221,625.49 |
| (II) Net Profit of Discontinued Operation (Mark "-" for Net Loss) | ||
| V. Net Amount of Other Comprehensive Incomes After Tax | ||
| (1) Other comprehensive income that cannot be reclassified as P/L | ||
| 1. Re-measure the variation of the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to P/L under the equity method | ||
| 3. Changes in the fair value of investment in other equity instruments | ||
| 4. Changes in the fair value of the credit risk of the enterprise | ||
| 5. Others | ||
| (2) Other comprehensive income that will be reclassified as P/L |
| 1. Other comprehensive income that can be transferred to P/L under the equity method | ||
| 2. Changes in the fair value of investment in other creditor's rights | ||
| 3. Profit or Loss Arising from Changes in the Fair Value of Financial Assets Available for Sale | ||
| 4. Financial assets reclassified into other comprehensive income | ||
| 5. Profit or Loss Arising from Reclassifying Investments Held to Maturity as Financial Assets Available for Sale | ||
| 6. Provisions for the credit impairment of investment in other creditor's rights | ||
| 7. Cash flow hedge reserves | ||
| 8. Currency Translation Difference | ||
| 9. Others | ||
| VI. Total Comprehensive Income | 3,078,617,818.65 | 2,748,221,625.49 |
| VII. Earnings per Share: | ||
| (I) Basic Earnings per Share | 1.06 | 0.95 |
| (II) Diluted Earnings per Share | 1.06 | 0.94 |
5. Consolidated Cash Flow Statement
Unit: RMB
| Item Name | The Year Of 2019 | The Year Of 2018 |
| I. Cash Flow Generated by Operational Activities: | ||
| Cash from Sales of Merchandise and Provision of Services | 24,987,844,514.59 | 21,710,486,123.09 |
| Net Increase in Customer's Bank Deposits and Interbank Deposits |
| Net Increase in Borrowings from the Central Bank | ||
| Net Increase in Borrowings from Other Financial Institutions | ||
| Cash Arising from Receiving Premiums for the Original Insurance Contract | ||
| Net Amount Arising from Reinsurance Business | ||
| Net Increase in Deposits and Investments from Policyholders | ||
| Cash Arising from Interests, Service Charges and Commissions | ||
| Net Increase in Borrowings from Banks and Other Financial Institutions | ||
| Net Increase in Repurchase Business Funds | ||
| Net Amount of Cash Received from the Vicariously Traded Securities | ||
| Tax Refund | 1,765,101,617.55 | 1,613,409,298.19 |
| Other Received Cashes Related to Operational Activities | 536,826,402.85 | 324,234,716.30 |
| Subtotal of cash inflow from operational activities | 27,289,772,534.99 | 23,648,130,137.58 |
| Cash Paid for Merchandise and Services | 16,791,787,238.65 | 14,872,235,902.05 |
| Net Increase in Loans and Advances to Customers | ||
| Net Increase in Deposits with Central Bank and Other Financial Institutions | ||
| Cash Paid for Original Insurance Contract Claims | ||
| Net increase of funds lent | ||
| Cash Paid for Interests, Service Charges and Commissions | ||
| Cash Paid for Policy Dividends | ||
| Cash Paid to and for Employees | 4,669,876,392.04 | 4,224,457,856.42 |
| Cash Paid for Taxes and Surcharges | 1,724,636,831.64 | 1,631,045,797.74 |
| Other Paid Cashes Related to Operational Activities | 2,502,867,784.96 | 1,965,074,603.20 |
| Subtotal of cash outflow from operational activities | 25,689,168,247.29 | 22,692,814,159.41 |
| Net cash flow generated by operating activities | 1,600,604,287.70 | 955,315,978.17 |
| II. Cash Flow from Investment Activities: | ||
| Cash Arising from Disposal of Investments | 3,500,251,299.97 | 154,883,001.58 |
| Cash Arising from Investment Incomes | 11,205,093.27 | 1,005,008.70 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 5,958,809.09 | 6,708,368.55 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business Units | ||
| Other Received Cashes Related to Investment Activities | 26,306,832.09 | 7,546,323.87 |
| Subtotal of cash inflow from investment activities | 3,543,722,034.42 | 170,142,702.70 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 531,097,534.64 | 552,121,341.01 |
| Cash Paid for Investments | 3,825,759,977.62 | 144,300,000.00 |
| Net Increase in Pledge Loans | ||
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units | 80,777,002.35 | |
| Other Paid Cashes Related to Investment Activities | 26,659,828.19 | 139,588,395.84 |
| Subtotal of cash outflow from investment activities | 4,383,517,340.45 | 916,786,739.20 |
| Net amount of cash flow generated by investment activities | -839,795,306.03 | -746,644,036.50 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments | 165,554,375.00 | 902,573,370.84 |
| Including: Cash Arising from Subsidiaries Absorbing Investments by Minority Shareholders | 74,436,250.00 | 94,839,784.84 |
| Cash Arising from Borrowings | 5,043,403,113.41 | 6,623,290,520.36 |
| Other Received Cashes Related to Financing Activities | 1,240,932,000.00 | 1,274,934,480.00 |
| Subtotal of cash inflow from financing activities | 6,449,889,488.41 | 8,800,798,371.20 |
| Cash Paid for Debts Repayment | 6,505,580,678.17 | 6,579,048,362.00 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 402,855,499.39 | 693,036,283.98 |
| Including: Dividends and Profits Paid to Minority Shareholders by Subsidiaries | ||
| Other Paid Cashes Related to Financing Activities | 1,315,329,709.65 | 1,152,202,000.00 |
| Subtotal of cash outflow from financing activities | 8,223,765,887.21 | 8,424,286,645.98 |
| Net cash flow generated by financing activities | -1,773,876,398.80 | 376,511,725.22 |
| IV. Impact of Fluctuation in Exchange Rate on Cash and Cash Equivalents | 44,969,590.00 | 54,421,142.77 |
| V. Net Increase in Cash and Cash Equivalents | -968,097,827.13 | 639,604,809.66 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 3,702,283,803.54 | 3,062,678,993.88 |
| VI. Cash and Cash Equivalents at the End of the Period | 2,734,185,976.41 | 3,702,283,803.54 |
6. Cash Flow Statement of the Parent Company
Unit: RMB
| Item Name | The Year Of 2019 | The Year Of 2018 |
| I. Cash Flow Generated by Operational Activities: |
| Cash from Sales of Merchandise and Provision of Services | 5,327,099,927.44 | 9,535,966,439.28 |
| Tax Refund | 722,774,549.21 | 625,791,603.06 |
| Other Received Cashes Related to Operational Activities | 151,622,737.84 | 80,259,840.35 |
| Subtotal of cash inflow from operational activities | 6,201,497,214.49 | 10,242,017,882.69 |
| Cash Paid for Merchandise and Services | 586,206,758.70 | 1,600,482,018.59 |
| Cash Paid to and for Employees | 2,827,880,887.48 | 2,621,021,358.25 |
| Cash Paid for Taxes and Surcharges | 1,203,721,482.08 | 1,136,429,938.25 |
| Other Paid Cashes Related to Operational Activities | 1,208,505,156.52 | 1,148,233,582.00 |
| Subtotal of cash outflow from operational activities | 5,826,314,284.78 | 6,506,166,897.09 |
| Net cash flow generated by operating activities | 375,182,929.71 | 3,735,850,985.60 |
| II. Cash Flow from Investment Activities: | ||
| Cash Arising from Disposal of Investments | 3,500,300,000.00 | 108,330,167.33 |
| Cash Arising from Investment Incomes | 11,205,093.27 | 1,005,008.70 |
| Net Cash Arising from Disposal of Fixed Assets, Intangible Assets and Other Long-term Assets | 17,794,823.64 | 66,931,904.09 |
| Net Cash Arising from Disposal of Subsidiaries and Other Business Units | ||
| Other Received Cashes Related to Investment Activities | 7,155,384.02 | 3,559,123.87 |
| Subtotal of cash inflow from investment activities | 3,536,455,300.93 | 179,826,203.99 |
| Cash Paid for Purchase and Construction of Fixed Assets, Intangible Assets and Other Long-term Assets | 197,970,380.43 | 141,168,885.59 |
| Cash Paid for Investments | 4,031,514,450.00 | 484,916,250.00 |
| Net Cash Paid for Acquisition of Subsidiaries and Other Business Units | ||
| Other Paid Cashes Related to Investment Activities | ||
| Subtotal of cash outflow from investment activities | 4,229,484,830.43 | 626,085,135.59 |
| Net amount of cash flow generated by investment activities | -693,029,529.50 | -446,258,931.60 |
| III. Cash Flow from Financing Activities: | ||
| Cash Arising from Absorbing Investments | 91,118,125.00 | 807,733,586.00 |
| Cash Arising from Borrowings | 1,963,462,853.53 | 2,958,285,400.61 |
| Other Received Cashes Related to Financing Activities | 4,583,054,336.88 | 238,356,205.21 |
| Subtotal of cash inflow from financing activities | 6,637,635,315.41 | 4,004,375,191.82 |
| Cash Paid for Debts Repayment | 2,943,462,853.53 | 2,278,285,400.61 |
| Cash Paid for Distribution of Dividends and Profits or Payment of Interests | 375,050,392.54 | 619,291,774.55 |
| Other Paid Cashes Related to Financing Activities | 2,742,610,010.63 | 4,317,544,339.28 |
| Subtotal of cash outflow from financing activities | 6,061,123,256.70 | 7,215,121,514.44 |
| Net cash flow generated by financing activities | 576,512,058.71 | -3,210,746,322.62 |
| IV. Impact of Fluctuation in Exchange Rate on Cash and Cash Equivalents | -1,354,369.20 | -86,334.64 |
| V. Net Increase in Cash and Cash Equivalents | 257,311,089.72 | 78,759,396.74 |
| Add: Cash and Cash Equivalents at the Commencement of the Period | 603,430,209.42 | 524,670,812.68 |
| VI. Cash and Cash Equivalents at the End of the Period | 860,741,299.14 | 603,430,209.42 |
7. Consolidated Statement of Changes in Owners' Equity
Amount of this period
Unit: RMB
| Item Name | The Year Of 2019 | ||||||||||||||
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 2,997,621,930.00 | 1,501,180,862.83 | 807,733,586.00 | 10,337,164.41 | 1,246,369,430.91 | 7,670,983,116.33 | 12,618,758,918.48 | 284,506,754.95 | 12,903,265,673.43 | ||||||
| Add: Changes in Accounting Policies | -540,206.86 | -4,861,861.70 | -5,402,068.56 | -5,402,068.56 | |||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Consolidated under the Same Control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Start of This Year | 2,997,621,930.00 | 1,501,180,862.83 | 807,733,586.00 | 10,337,164.41 | 1,245,829,224.05 | 7,666,121,254.63 | 12,613,356,849.92 | 284,506,754.95 | 12,897,863,604.87 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 6,091,300.00 | 381,674,256.70 | 249,850,672.31 | 1,971,111.82 | 307,861,781.87 | 2,581,902,399.91 | 3,029,650,177.99 | 48,653,928.80 | 3,078,304,106.79 | ||||||
| (I) Total Comprehensive Income | 1,971,111.82 | 3,188,144,692.55 | 3,190,115,804.37 | -27,286,126.54 | 3,162,829,677.83 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 6,091,300.00 | 311,103,528.74 | 249,850,672.31 | 67,344,156.43 | 74,436,250.00 | 141,780,406.43 | |||||||||
| 1． Common stock invested by the owner | 6,091,300.00 | 49,690,015.79 | 249,850,672.31 | -194,069,356.52 | 74,436,250.00 | -119,633,106.52 |
| 2． Capital Invested by Holders of Other Equity Instruments | |||||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 261,413,512.95 | 261,413,512.95 | 261,413,512.95 | ||||||||||||
| 4． Others | |||||||||||||||
| (III) Profit Distribution | 307,861,781.87 | -607,195,646.68 | -299,333,864.81 | -299,333,864.81 | |||||||||||
| 1． Appropriation of Surplus Reserves | 307,861,781.87 | -307,861,781.87 | |||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | -299,333,864.81 | -299,333,864.81 | -299,333,864.81 | ||||||||||||
| 4． Others |
| (IV) Internal Carry-forward of Shareholders' Equity | |||||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses | |||||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan |
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special Reserves | |||||||||||||||
| 1． Withdrawal in this period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | 70,570,727.96 | 953,354.04 | 71,524,082.00 | 1,503,805.34 | 73,027,887.34 | ||||||||||
| IV. Balance at the End of This Period | 3,003,713,230.00 | 1,882,855,119.53 | 1,057,584,258.31 | 12,308,276.23 | 1,553,691,005.92 | 10,248,023,654.54 | 15,643,007,027.91 | 333,160,683.75 | 15,976,167,711.66 |
Amount of Previous Period
Unit: RMB
| Item Name | The Year of 2018 |
| Shareholders' Equity Attributable to the Parent Company's Owner | Minority Shareholders' Equity | Total Shareholders' Equity | |||||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | General Risk Reserves | Undistributed Profits | Others | Subtotal | |||||
| Preferred Stocks | Perpetual Bonds | Others | |||||||||||||
| I. Balance at the End of Last Year | 2,898,756,130.00 | 593,340,751.52 | 6,660,189.04 | 971,547,268.36 | 5,996,130,036.27 | 10,466,434,375.19 | 126,795,637.30 | 10,593,230,012.49 | |||||||
| Add: Changes in Accounting Policies | |||||||||||||||
| Correction of Errors in the Previous Period | |||||||||||||||
| Consolidated under the Same Control | |||||||||||||||
| Others | |||||||||||||||
| II. Balance at the Start of This Year | 2,898,756,130.00 | 593,340,751.52 | 6,660,189.04 | 971,547,268.36 | 5,996,130,036.27 | 10,466,434,375.19 | 126,795,637.30 | 10,593,230,012.49 | |||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 98,865,800.00 | 907,840,111.31 | 807,733,586.00 | 3,676,975.37 | 274,822,162.55 | 1,674,853,080.06 | 2,152,324,543.29 | 157,711,117.65 | 2,310,035,660.94 | ||||||
| (I) Total Comprehensive Income | 3,676,975.37 | 2,529,426,468.61 | 2,533,103,443.98 | 65,166,211.73 | 2,598,269,655.71 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 98,865,800.00 | 740,312,759.88 | 807,733,586.00 | 31,444,973.88 | 92,479,784.84 | 123,924,758.72 | |||||||||
| 1． Common stock invested by the owner | 98,865,800.00 | 708,867,786.00 | 807,733,586.00 | 92,479,784.84 | 92,479,784.84 | ||||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | |||||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 31,444,973.88 | 31,444,973.88 | 31,444,973.88 | ||||||||||||
| 4． Others | |||||||||||||||
| (III) Profit Distribution | 274,822,162.55 | -854,573,388.55 | -579,751,226.00 | -579,751,226.00 |
| 1． Appropriation of Surplus Reserves | 274,822,162.55 | -274,822,162.55 | |||||||||||||
| 2． Appropriation of General Risk Reserves | |||||||||||||||
| 3． Distribution to Owners (or Shareholders) | -579,751,226.00 | -579,751,226.00 | -579,751,226.00 | ||||||||||||
| 4． Others | |||||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | |||||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | |||||||||||||||
| 3． Surplus Reserves Covering Losses |
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | |||||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | |||||||||||||||
| 6． Others | |||||||||||||||
| (V) Special Reserves | |||||||||||||||
| 1． Withdrawal in this period | |||||||||||||||
| 2． Used in This Period | |||||||||||||||
| (VI) Others | 167,527,351.43 | 167,527,351.43 | 65,121.08 | 167,592,472.51 | |||||||||||
| IV. Balance at the End of This Period | 2,997,621,930.00 | 1,501,180,862.83 | 807,733,586.00 | 10,337,164.41 | 1,246,369,430.91 | 7,670,983,116.33 | 12,618,758,918.48 | 284,506,754.95 | 12,903,265,673.43 |
8. Statement of Changes in Owners' Equity of the Parent Company
Amount of this period
Unit: RMB
| Item Name | The Year Of 2019 | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 2,997,621,930.00 | 1,497,801,068.88 | 807,733,586.00 | 1,246,369,430.91 | 7,930,928,526.31 | 12,864,987,370.10 | ||||||
| Add: Changes in Accounting Policies | -540,206.86 | -4,861,861.70 | -5,402,068.56 | |||||||||
| Correction of Errors in the Previous Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 2,997,621,930.00 | 1,497,801,068.88 | 807,733,586.00 | 1,245,829,224.05 | 7,926,066,664.61 | 12,859,585,301.54 | ||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 6,091,300.00 | 369,688,832.16 | 249,850,672.31 | 307,861,781.87 | 2,471,422,171.97 | 2,905,213,413.69 | ||||||
| (I) Total Comprehensive Income | 3,078,617,818.65 | 3,078,617,818.65 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 6,091,300.00 | 299,118,104.20 | 249,850,672.31 | 55,358,731.89 | ||||||||
| 1． Common stock invested by the owner | 6,091,300.00 | 49,690,015.79 | 249,850,672.31 | -194,069,356.52 | ||||||||
| 2． Capital Invested by Holders of Other Equity Instruments | ||||||||||||
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 249,428,088.41 | 249,428,088.41 | ||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | 307,861,781.87 | -607,195,646.68 | -299,333,864.81 | |||||||||
| 1． Appropriation of Surplus Reserves | 307,861,781.87 | -307,861,781.87 | ||||||||||
| 2． Distribution to Owners (or Shareholders) | -299,333,864.81 | -299,333,864.81 | ||||||||||
| 3． Others | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity |
| 1． Capital Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | ||||||||||||
| 6． Others | ||||||||||||
| (V) Special Reserves | ||||||||||||
| 1． Withdrawal in this period |
| 2． Used in This Period | ||||||||||||
| (VI) Others | 70,570,727.96 | 70,570,727.96 | ||||||||||
| IV. Balance at the End of This Period | 3,003,713,230.00 | 1,867,489,901.04 | 1,057,584,258.31 | 1,553,691,005.92 | 10,397,488,836.58 | 15,764,798,715.23 |
Amount of Previous Period
Unit: RMB
| Item Name | The Year of 2018 | |||||||||||
| Share Capital | Other Equity Instruments | Capital Reserves | Less: Treasury Share | Other Comprehensive Incomes | Special Reserves | Surplus Reserves | Undistributed Profits | Others | Total Shareholders' Equity | |||
| Preferred Stocks | Perpetual Bonds | Others | ||||||||||
| I. Balance at the End of Last Year | 2,898,756,130.00 | 589,895,836.49 | 971,547,268.36 | 6,037,280,289.37 | 10,497,479,524.22 | |||||||
| Add: Changes in Accounting Policies | ||||||||||||
| Correction of Errors in the Previous Period | ||||||||||||
| Others | ||||||||||||
| II. Balance at the Start of This Year | 2,898,756,130.00 | 589,895,836.49 | 971,547,268.36 | 6,037,280,289.37 | 10,497,479,524.22 | |||||||
| III. Increases or Decreases in This Period (Mark "-" for Decreases) | 98,865,800.00 | 907,905,232.39 | 807,733,586.00 | 274,822,162.55 | 1,893,648,236.94 | 2,367,507,845.88 | ||||||
| (I) Total Comprehensive Income | 2,748,221,625.49 | 2,748,221,625.49 | ||||||||||
| (II) Shareholders' Contribution and Reduction in Capital | 98,865,800.00 | 740,312,759.88 | 807,733,586.00 | 31,444,973.88 | ||||||||
| 1． Common stock invested by the owner | 98,865,800.00 | 708,867,786.00 | 807,733,586.00 | |||||||||
| 2． Capital Invested by Holders of Other Equity Instruments |
| 3． Amount of Share-based Payments Recorded into Shareholders' Equity | 31,444,973.88 | 31,444,973.88 | ||||||||||
| 4． Others | ||||||||||||
| (III) Profit Distribution | 274,822,162.55 | -854,573,388.55 | -579,751,226.00 | |||||||||
| 1． Appropriation of Surplus Reserves | 274,822,162.55 | -274,822,162.55 | ||||||||||
| 2． Distribution to Owners (or Shareholders) | -579,751,226.00 | -579,751,226.00 | ||||||||||
| 3． Others | ||||||||||||
| (IV) Internal Carry-forward of Shareholders' Equity | ||||||||||||
| 1． Capital Reserves Transferred into Capital (or Share Capital) |
| 2． Surplus Reserves Transferred into Capital (or Share Capital) | ||||||||||||
| 3． Surplus Reserves Covering Losses | ||||||||||||
| 4． Carry-forward retained earnings of the variation of the defined benefit plan | ||||||||||||
| 5． Other Carry-forward Retained Earnings of the Comprehensive Income | ||||||||||||
| 6． Others | ||||||||||||
| (V) Special Reserves | ||||||||||||
| 1． Withdrawal in this period |
| 2． Used in This Period | ||||||||||||
| (VI) Others | 167,592,472.51 | 167,592,472.51 | ||||||||||
| IV. Balance at the End of This Period | 2,997,621,930.00 | 1,497,801,068.88 | 807,733,586.00 | 1,246,369,430.91 | 7,930,928,526.31 | 12,864,987,370.10 |
III. Basic Information about the CompanyZhejiang Dahua Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company") was incorporatedunder the official approval document No. 18 [2002] issued by Zhejiang Provincial People's Government Work LeadingGroup for Enterprise Listing in June 2002, a company established on the basis of overall change of the former HangzhouDahua Information Technology Co., Ltd. co-founded by five natural persons, Fu Liquan, Chen Ailing, Zhu Jiangming, LiuYunzhen and Chen Jianfeng.On April 22, 2008, the Company issued 16.8 million shares of common stock in RMB to the general public for the firsttime under the approval document No. 573 [2008] Securities Regulatory Issuance, issued by China Securities RegulatoryCommission ("CSRC"). It was listed on Shenzhen Stock Exchange on May 20, 2008 with a registered capital of RMB 66.8million and the change registration filed with Administration for Industry and Commerce was completed on May 23, 2008.The Company's unified social credit code is 91330000727215176K. The Company falls within the security videosurveillance industry.As of December 31, 2019, the Company has issued a total of 3,003,713,230 shares, with a registered capital of RMB3,003,713,230.00. The registered address is No.1187, Bin'an Road, Binjiang District, Hangzhou, and the headquartersaddress is No.1199, Bin'an Road, Binjiang District, Hangzhou. The Company's main operation activities include thedevelopment, services & sales of computer software, the design, development, production, installation & sales ofelectronic products and communication products, the development, system integration & sales of network products, thedesign & installation of electronic engineering products, information technology consulting service, import & exportbusinesses. (refer to the “Importer and Exporter Qualification” for the details of the scope). (For items subject to approvalaccording to law, business activities can only be carried out after approval by relevant departments)
The actual controllers of the Company are Fu Liquan and Chen Ailing.This financial statement has been approved by Board of Directors on April 2, 2020.For details of the scope of the consolidated financial statement for the current period, refer to Notes IX “Equity inOther Entities”, and for details of the changes in the scope of the consolidated financial statement for the current period,refer to Notes VIII “Changes in the Scope of Consolidation”.IV. Basis for Preparing the Financial Statement
1. Basis for the preparation
The Company prepares the financial statement, as a going concern, based on transactions and matters that haveactually occurred, in accordance with Accounting Standards for Business Enterprises - Basic Standards issued by theMinistry of Finance and all specific accounting standards, application guidelines for accounting standards for businessenterprises, explanations on the accounting standards for business enterprises and other related regulations (hereinafterreferred to as "Accounting Standards for Business Enterprises" collectively), and the disclosure provisions in thePreparation Rules for Information Disclosures by Companies Offering Securities to the Public No. 15 - General Provisionson Financial Reports issued by CSRC.
2. Going concern
The Company has the capability to continue as a going concern for at least 12 months as of the end of current reportingperiod, without any significant item affecting the capability for continuing as a going concern.
V. Significant Accounting Polices and Accounting EstimatesNotes to specific accounting policies and accounting estimates:
The following disclosures cover the specific accounting policies and accounting estimates formulated by the Companyaccording to the characteristics of its production and operation.
1. Statement on compliance with Accounting Standards for Business EnterprisesThis financial statement is in compliance with the requirements in the Accounting Standards for Business Enterprisespromulgated by the Ministry of Finance and presents truly and completely the financial position of the merged companiesand the parent company as at December 31, 2019 and the operating results and cash flows of the merger and the parentcompany in 2019.
2. Accounting period
The accounting period of the Company is from 1 January to 31 December of each calendar year.
3. Operating cycle
The Company's operating cycle is 12 months.
4. Functional currency
For the domestic operating entities of the Company and its overseas operating entity Dahua Technology (HK) Limited, thereporting currency is Renminbi ("RMB"). The remaining offshore operating entities use the local currency as the reportingcurrency.
5. The accounting treatment of business combinations involving enterprises under commoncontrol and business combinations not involving enterprises under common controlBusiness combination under common control: The assets and liabilities acquired by the merging party in businesscombination shall be measured at the book value of the assets, liabilities of the merged party (including goodwill incurredin the acquisition of the merged party by ultimate controlling party) in the consolidated financial statements of the ultimatecontrolling party on the date of combination. The difference between the carrying amount of the net assets obtained andthe carrying amount of the consideration paid for the combination (or total nominal value of the issued shares) is adjustedto capital premium in capital reserve. Adjustments shall be made to retained earnings in the event that the sharepremiums in the capital reserves are not sufficient for write-down.Business combinations involving entities not under common control: The assets paid and liabilities incurred orcommitted as a consideration of business combination by the merging party were measured at fair value on the date ofacquisition and the difference between the fair value and its book value shall be charged to the profit or loss for the period.Where the cost of combination is higher than the fair value of the identifiable net assets acquired from the merging party inbusiness combination, such difference shall be recognized as goodwill; where the cost of combination is less than the fairvalue of the identifiable net assets acquired from the merging party in business combination, such difference shall becharged to the profit or loss for the period.The fees which are directly related to the business combination shall be recognized as the profit or loss in the period
when the costs are incurred; the transaction expenses of issuing equity securities or debt securities for business mergershall be initially capitalized for equity securities or debt securities.
6. Preparation method of consolidated financial statements
(1) Scope of Consolidation
The scope of consolidation of the consolidated financial statements is based on controlling interests and includes theCompany and all the subsidiaries.
(2) Procedures of Consolidation
The consolidated financial statements are prepared by the Company based on the financial statements of theCompany and its subsidiaries and in accordance with the other relevant information. In preparation of the Company'sconsolidated financial statements, the Company will treat the enterprise group as a single accounting entity. The Group'soverall financial position, operating results and cash flow are reflected based on the relevant accounting standards,measurement and presentation requirements and in accordance with the unified accounting policy.
The subsidiaries that are within the scope of the consolidation shall have the same accounting policies and theaccounting periods with those of the Company. In preparing the consolidated financial statements, where the accountingpolicies and the accounting periods are inconsistent between the Company and subsidiaries, the financial statements ofsubsidiaries are adjusted in accordance with the accounting policies and accounting period of the Company. Forsubsidiaries acquired from a business combination involving entities not under common control, the individual financialstatements of the subsidiaries are adjusted based on the fair value of the identifiable net assets on the date of acquisition.For subsidiaries acquired from a business combination involving entities under common control, the individual financialstatements of the subsidiaries are adjusted based on the carrying value of the assets, liabilities of the acquiree (includinggoodwill incurred in the acquisition of the acquiree by ultimate controlling party) in the financial statements of the ultimatecontrolling party.
The owner's equity, the net profit or loss and the comprehensive income attributable to minority shareholders of asubsidiary of the current period are presented separately under the owners' equity in the consolidated balance sheet, thenet profit and the total comprehensive income in the consolidated income statement respectively. Where lossesattributable to the minority shareholders of a subsidiary of the current period exceed the minority shareholders' interestentitled in the shareholders' equity of the subsidiary at the beginning of the period, the excess is allocated against theminority shareholders interest.
① Acquisition of Subsidiaries or Business
For acquisition of subsidiaries or business due to business combination involving entities under common controlduring the reporting period, the opening balance of the consolidated balance sheet shall be adjusted; the revenue,expense and profit of such subsidiaries or business from the beginning to the end of the reporting period when the mergeroccurs are included in the consolidated income statement; the cash flows of such subsidiaries or business from thebeginning to the end of the reporting period when the merger occurs are included in the consolidated cash flow statement,and the comparative figures of the financial statements should be adjusted simultaneously as if the consolidated reportingentity has been in existence since the beginning of the control by the ultimate controlling party.
An investor that may impose control over the investee under joint control due to additional investment shall bedeemed a party participating in the combination, and shall be adjusted at current status when the ultimate controlling partybegins the control. The equity investment held before gaining the control of the combined party is recognized as relevantprofit or loss, other comprehensive income and changes in other net assets at the later of the date of acquisition of theoriginal equity and the date when the combining and the combined parties are under joint control, and shall be writtendown to the opening balance retained earnings or current profit or loss in the comparative reporting period.
For acquisition of subsidiaries due to business combination involving entities not under common control during thereporting period, the opening balance of consolidated balance sheet needs not be adjusted; the revenue, expense andprofit of such subsidiaries or business from the date of acquisition to the end of the reporting period are included in theconsolidated income statement; the cash flows of such subsidiaries or business from the date of acquisition to the end ofthe reporting period are included in the consolidated cash flow statement.In connection with imposing control over the investee not under joint control due to additional investment and otherreasons, the equity of acquiree held before acquisition date shall be remeasured by the Company at the fair value of suchequity on the acquisition date and the difference between fair value and carrying amount shall be recognized asinvestment income in current period. If the acquiree's equity held before the acquiring date contains other comprehensiveincome and the other changes of owner's equity except for net profits and losses, other comprehensive income and profitdistributions under the equity method, the related other comprehensive income and changes in other owner's equity shallbe transferred to investment gains or losses on the date of acquisition, excluding the other comprehensive income derivedfrom changes of net liabilities or net assets due to re-measurement on defined benefit plan by the investee.
② Disposal of Subsidiaries or Business
a. General Treatment
For disposal of subsidiaries or business during the reporting period, the revenue, expense and profit of suchsubsidiaries or business from the beginning of the period to the date of disposal are included in the consolidated incomestatement; the cash flows of such subsidiaries or business from the beginning of the period to the date of disposal areincluded in the consolidated cash flow statement.
When losing control of the investee due to partial disposal of the equity investment, or any other reasons, theremaining equity investment is remeasured at fair value at the date in which control is lost. The sum of considerationreceived from disposal of equity investment and the fair value of the remaining equity investment, net of the differencebetween the sum of the Company's previous share of the subsidiary's net assets recorded from the acquisition date orcombination date and the sum of goodwill, is recognized in investment income in the period in which control is lost. Othercomprehensive income or net profit and loss related to the previous equity investment in the subsidiary, changes in equityexcept the other comprehensive income and profit distribution, are transferred to investment income of the current periodwhen losing control, except the other comprehensive income as a result of the changes arising from the remeasurementof the net assets and net liabilities of the investee's defined benefit plan.
In the event of losing control due to a decrease in the proportion of shares held by the Company as the capitalincrease in subsidiaries by other investors, the accounting treatment shall be conducted in accordance with the aboveprinciples.
b. Disposal of Subsidiary Achieved by Stages
When disposal of equity interests of subsidiaries through multiple transaction until the control is lost, generallytransactions in stages are treatment as a package deal in accounting if the transaction terms, conditions, and economicimpact of disposal of the subsidiary's equity interests comply with one or more of the following:
ⅰ. These transactions are achieved at the same time or the mutual effects on each other are considered;
ⅱ. A complete set of commercial results can be achieved with reference to the series of transactions as a whole;
ⅲ. Achieving a transaction depends on at least achieving of one of the other transaction;
ⅳ. One transaction recognized separately is not economical, but it is economical when considered together withother transactions.
When losing control of a subsidiary in disposal of equity interests through multiple transactions is recognized as apackage deals, these transactions shall be in accounting treated as loss control of a subsidiary in disposal of equityinterests achieved. However, the differences between price on each disposal and disposal of investment on thesubsidiary's net assets shall be recognized in other comprehensive income in the consolidated financial statements, and
included in profit or loss for the period when the control is lost.
If all transactions in disposal of equity interests of subsidiaries until losing control are not a package deals, accountingtreatment for partial disposal of equity investments of subsidiary without losing control shall be applied before control islost. When the control is lost, general accounting treatment for disposal of a subsidiary shall be used.
③ Acquisition of Minority Interest of Subsidiaries
The Company shall adjust the share premium in the capital reserve of the consolidated balance sheet with respectto any difference between the long-term equity investment arising from the purchase of minority interest and the netassets attributing to the parent company continuously calculated on the basis of the newly increased share proportion asof the acquisition date (or date of combination) or, adjust the retained earnings if the share premium in the capital reserveis insufficient for write-down.
④ Partial Disposal of Equity Investment in Subsidiaries without Losing Control
The difference between disposal consideration of long-term equity investment in subsidiaries partially disposedwithout losing control and the share of net assets calculated from the date of acquisition or combination date shall beadjusted to share premium in the capital reserve in the consolidated balance sheet. Adjustments shall be made to retainedearnings in the event that the share premiums in the capital reserves are not sufficient for write-down.
7. Recognition criteria of cash and cash equivalents
In preparing the cash flow statement, the cash on hand and deposits that are available for payment at any time of theCompany are recognized as cash. The short-term (due within 3 months of the date of purchase) and highly liquidinvestments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of valuechange are recognized as cash equivalents.
8. Conversion of transactions and financial statements denominated in foreign currencies
(1) Foreign currency transactions
Foreign currency transactions shall be translated into RMB at the spot exchange rate on the day when the transactionsoccurred.Balance sheet date foreign currency monetary items shall be translated using the spot exchange rate at the balance sheetdate. The resulting exchange differences are recognized in profit or loss for the current period, except for thosedifferences related to the principal and interest on a specific-purpose borrowing denominated in foreign currency foracquisitions, construction or production of the qualified assets, which should be capitalized as cost of the assets.
2. Translation of foreign currency financial statements
All assets and liabilities items in balance sheet are translated based on spot exchange rate on the balance sheet date;owners' equity items other than "undistributed profit" are translated at a spot exchange rate when accrued. Revenue andexpense items in the income statement are translated at a spot exchange rate at the transaction occurrence date.
9. Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
(1) Classification of the financial instruments
According to the Company's business model for management of the financial assets and the contractual cash flowfeatures of the financial assets, the financial assets, when initially recognized, are classified as: financial assets atamortized cost, financial assets at fair value through other comprehensive income (debt instruments) and financial assetsat fair value through profit or loss.
The business model is designed to collect the contractual cash flow which is only used to pay the principal and theinterests based on the outstanding principal amount, and classified as financial assets at amortized cost; the businessmodel is designed to both collect the contractual cash flow and sell the financial assets, and the contractual cash flow isonly used to pay the principal and the interests based on the outstanding principal amount, and classified as financialassets at fair value through other comprehensive income (debt instruments); in addition, other financial assets areclassified as financial assets at fair value through profit or loss.For non-trading investments in equity instruments, the Company will determine, at the time of initial recognition, whetherto designate them as financial assets at fair value through other comprehensive income (equity instruments). At the timeof initial recognition, the financial assets can be designated as financial assets at fair value through profit or loss in orderto eliminate or significantly reduce the accounting mismatch.The financial liabilities, when initially recognized, are classified as: financial liabilities at fair value through profit or loss andfinancial liabilities at amortized cost.Financial liabilities which meet one of the following conditions will be, when initially measured, designated as financialliabilities at fair value through profit or loss:
① Such designation may be able to eliminate or significantly reduce the accounting mismatch.
② The portfolio of financial liabilities or the portfolio of financial assets and financial liabilities shall be subject tomanagement and performance evaluation on the basis of fair value according to the enterprise risk management orinvestment strategy contained in the formal documentations, and a report shall be made to the key managementpersonnel within the enterprise on this basis.
③ Such financial liabilities shall contain embedded derivatives to be split separately.Subject to the conditions above, the Company has no such designated financial liabilities.
(2) Recognition and measurement of financial instruments
① Financial assets at amortized cost
Financial assets at amortized cost include notes receivable, accounts receivable, other receivables, long-term receivablesand creditors investment, which shall be initially measured at fair value, and the relevant transaction expenses should beinitially capitalized; The accounts receivable that do not contain material financing compositions and those for which theCompany decides to not take into account the financing compositions of no more than one year shall be initially measuredat the contract transaction price.The interest calculated by effective interest method during the holding period is recorded into the current profit and loss.At the time of recovery or disposal, the difference between the price obtained and the book value shall be included in thecurrent profit or loss.
② Financial assets measured at fair value and its changes are included in other comprehensive income (debtinstruments)Financial assets measured at fair value and its changes are included in other comprehensive income (debt instruments)include receivables financing and investments in other creditor's rights. They are initially measured at fair value, and therelevant transaction expenses should be initially capitalized. These financial assets are subsequently measured at fairvalue, and the change in fair value, other than the interest, the impairment loss or profit and the profit or loss on foreignexchange, shall be included in other comprehensive income.Upon derecognition, the cumulative profits or losses previously included in other comprehensive income shall be removedfrom other comprehensive income and included in the profit or loss for the period.
③ Financial assets at fair value through other comprehensive income (equity instruments)Financial assets at fair value through other comprehensive income (equity instruments) include investment in other equityinstruments. They are initially measured at fair value, and the transaction expenses shall be initially capitalized. Thesefinancial assets are subsequently measured at fair value, and the change in fair value shall be included in other
comprehensive income. The dividends obtained shall be included in the profit or loss for the period.Upon derecognition, the cumulative profits or losses previously included in other comprehensive income shall be removedfrom other comprehensive income and included in the carry-forward retained earnings.
④ Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include trading financial assets, derivative financial assets and othernon-current financial assets. They are initially measured at fair value, and the transaction expenses related to them areincluded in the profit or loss for the period. These financial assets are subsequently measured at fair value, and thechange in fair value shall be included in the profit or loss for the period.
⑤ Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include trading financial liabilities and derivative financial liabilities.They are initially measured at fair value, and the transaction expenses related to them are included in the profit or loss forthe period. These financial liabilities are subsequently measured at fair value, and the change in fair value shall beincluded in the profit or loss for the period.Upon derecognition, the difference between their book value and the consideration paid is included in the profit or loss forthe period.
⑥ Financial liabilities at amortized cost
Financial liabilities at amortized cost include short-term loans, notes payable, accounts payable, other payables, long-termloans, bonds payable, and long-term payables. They are initially measured at fair value, and the transaction expensesshall be initially capitalized.The interest calculated by effective interest method during the holding period is recorded into the current profit and loss.Upon derecognition the difference between the consideration paid and the book value of these financial liabilities isincluded in the current profit or loss.
(3) Recognition basis and measurement of transfer of financial assets
A financial asset recognition shall be terminated while the Company has transferred nearly all the risks and rewardsrelated to the ownership of the financial asset to the transferee, and it shall not be terminated if the Company has retainednearly all the risks and rewards related to the ownerships of the financial asset.The substance-over-form principle shall be adopted while making judgment on whether the transfer of financial assetssatisfies the above conditions for termination of recognition.The transfer of financial assets can be classified into entire transfer and partial transfer. If the transfer of an entire financialasset satisfies the conditions for termination of recognition, the difference between the two amounts below shall berecorded into profit or loss for the period:
① The carrying amount of the financial asset transferred;
② The consideration received as a result of the transfer, plus the accumulative amount of the change in fair valuepreviously recorded into the owners' equities (in cases where the transferred financial assets are financial assets at fairvalue through other comprehensive income (debt instruments) or available-for-sale financial assets).If the partial transfer of financial assets satisfies the conditions for termination of recognition, the overall carrying amountof the transferred financial asset shall be apportioned according to their respective relative fair value between therecognition terminated part and the remaining part, and the difference between the two amounts below shall be recordedinto profit or loss for the current period:
① The carrying amount of the recognition terminated portion;
② The sum of consideration of the recognition terminated portion and the corresponding portion of accumulated changein fair value previously recorded into owners' equity (in cases where the transferred financial assets are financial assets atfair value through other comprehensive income (debt instruments) or situation in which financial assets are available forsale).
Financial assets will still be recognized if they fail to satisfy the conditions for termination of recognition, with theconsideration received recognized as a financial liability.
(4) Recognition conditions for termination of financial liabilities
When the current obligation under a financial liability is completely or partially discharged, the recognition of the whole orrelevant portion of the liability is terminated; an agreement is entered between the Company and a creditor to replace theoriginal financial liabilities with new financial liabilities with substantially different terms, terminate the recognition of theoriginal financial liabilities as well as recognize the new financial liabilities.If all or part of the contract terms of the original financial liabilities are substantially amended, the recognition of the originalfinancial liabilities will be terminated in full or in part, and the financial liabilities whose terms have been amended shall berecognized as a new financial liability.When recognition of financial liabilities is terminated in full or in part, the difference between the carrying amount of thefinancial liabilities terminated and the consideration paid (including transferred non-cash assets or new financial liability) isrecognized in profit or loss for the current period.Where the Company repurchases part of its financial liabilities, the carrying amount of such financial liabilities will beallocated according to the relative fair value between the continued recognized part and terminated part on therepurchase date. The difference between the carrying amount of the financial liabilities terminated and the considerationpaid (including transferred non-cash assets or new financial liability) is recognized in profit or loss for the current period.
(5) Method of determining the fair values of financial assets and liabilities
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the activemarket. The fair value of a financial instrument that is not traded in an active market is determined by using a valuationtechnique. The Company uses the valuation technique when it is applicable under current conditions and there areenough available data and other information to support and the technique should maximize the use of relevant observable.It chooses the inputs which are consistent with the asset or liability's characteristics considered by market participants inthe transaction of the relevant asset or liability and makes the maximum use of relevant observable inputs. Unobservableinputs are used under the circumstance that the relevant observable inputs cannot be obtained or not feasible.
(6) Test method and accounting treatment for impairment of financial assets
The Company estimates the expected credit loss on the financial assets at amortized cost and the financial assets at fairvalue through other comprehensive income (debt instruments), either alone or in combination, by taking into account allthe reasonable and well-founded information, including forward-looking information. Measurement of expected credit lossdepends on whether there is a significant increase in credit risk of financial assets since the initial recognition.If the credit risk of this financial instrument has been significantly increased upon initial recognition, the Companymeasures its loss provision in accordance with the amount equivalent to the expected credit loss of the financialinstrument throughout the duration; if the credit risk of this financial instrument is not significantly increased upon initialrecognition, the Company will measure the loss provision of this financial instrument by the amount of its expected creditloss in the 12 months to come. The increased or reversed amount of the loss provision resulting therefrom is included inthe current profit or loss as the impairment loss or profit.If the financial instrument becomes overdue for more than 30 days, the Company believes that the credit risk of thisfinancial instrument has been significantly increased, unless there are concrete evidences that the credit risk of thisfinancial instrument has not been significantly increased upon initial recognition.If the financial instrument carries low credit risk at the balance sheet date, the Company believes that the credit risk of thisfinancial instrument is not significantly increased upon initial recognition.If there are objective evidences showing that a certain financial asset has been subject to credit impairment, the Companywill accrue impairment provision for this financial asset on the individual asset basis.The Company will always measure the loss provision for the accounts receivable, whether they contain material financing
compositions or not, by the amount of the expected credit loss throughout the duration.a. Accounts receivable which are individually significant but subject to separate bad debt provisionBases for making judgment and standard for calculation of the amount for the accounts receivable that are individuallysignificant: Within top five accounts receivable balancesb. Accounts receivable for which provision of bad debts made by portfolio of credit risk characteristics
| Portfolio Name | Basis to Determine the Portfolio |
| Portfolio 1: Related Parties Portfolio | Receivables of related parties within the scope of the portfolio have similar credit risk characteristics |
| Portfolio 2: Aging Analysis Portfolio | Except for Portfolio 1, the receivables for which provision for impairment has been made separately and other receivables, the receivables of the same aging have similar credit risk characteristics |
c. The receivables with insignificant single amount and separate provision for bad debtsReason for making bad debt provision individually: Long aging, with objective evidence of impairmentThe Company will always measure the loss provision for the rents receivable and the long-term receivables formed in theCompany’s sale of goods or rendering of services by the amount of the expected credit loss throughout the duration.
10. Notes Receivable
Refer to Section XII Financial Report - V. Significant Accounting Polices and Accounting Estimates - 10. FinancialInstruments
11. Accounts Receivable
Refer to Section XII Financial Report - V. Significant Accounting Polices and Accounting Estimates - 10. FinancialInstruments
12. Receivables Financing
Refer to Section XII Financial Report - V. Significant Accounting Polices and Accounting Estimates - 10. FinancialInstruments
13. Other Receivables
Determination method and accounting treatment for the expected credit loss of other receivablesRefer to Section XII Financial Report - V. Significant Accounting Polices and Accounting Estimates - 10. FinancialInstruments
14. Inventories
(1) Category of inventory
Inventories are classified as raw materials, turnover materials, commodity stocks, products in progress and materialscommissioned for processing.
(2) Determination of cost
Cost of inventories is determined using the weighted average method.
(3) Basis for the determination of net realizable value and different type of inventoriesNet realizable value of held-for-sale commodity stocks, such as finished goods, goods-in-stock, and held-for-sale rawmaterials, during the normal course of production and operation, shall be determined by their estimated sales less therelated selling expenses and taxes; the net realizable value of material inventories, which need to be processed, duringthe normal course of production and operation, shall be determined by the amount after deducting the estimated cost ofcompletion, estimated selling expenses and relevant taxes from the estimated selling price of finished goods; the netrealizable value of inventories held for execution of sales contracts or labor contracts shall be calculated on the ground ofthe contracted price. If an enterprise holds more inventories than the quantity stipulated in the sales contract, the netrealizable value of the exceeding part shall be calculated on the ground of general selling price.Decline in value of inventories is made on an item-by item basis at the end of the period. For large quantity and low valueitems of inventories, provision may be made based on categories of inventories; for items of inventories relating to aproduct line that is produced and marketed in the same geographical area and with the same or similar end uses orpurposes, which cannot be practicable evaluated separately from other items in that product line, provision for decline invalue of inventories may be determined on an aggregate basis.Unless the evidence clearly shows that abnormality in market price exists as of the balance sheet date, the net realizablevalue of inventories is determined based on the market price as of the balance sheet date.The net realizable value of inventories at the end of current period is determined based on the market price of the balancesheet date.
(4) Inventory system
The perpetual inventory system is adopted.
(5) Amortization of low-value consumables and packaging materials
① Low-value consumables are amortized using the immediate write-off method;
② Packaging materials are amortized using the immediate write-off method.
15. Holding Assets for Sale
A non-current asset or disposed group is classified by the Company as holding for sale if it meets the following criteria atthe same time:
(1) Immediate sale could be made under the current circumstances in accordance with the convention of selling such kindof assets or disposal groups in similar transactions;
(2) Selling is extremely likely to occur, i.e. the Company has made a resolution on a selling plan and obtained confirmedpurchase commitments, and the selling is predicted to be completed within 1 year. If required by relevant provisions thatselling shall only be made after approved by the relevant competent authority or supervision department of the Company,such approval should have been obtained.
16. Long-term Equity Investment
(1) Joint control or significant influence criterion
Joint control is the contractually agreed sharing of control of an arrangement, and exists only when requiring theunanimous consent of the parties sharing control before making decisions about the relevant activities of the arrangement.The Company together with the other joint venture parties can jointly control over the investee and are entitled to the rightof the net assets of the investee, as the investee is joint venture of the Company.Significant influence refers to the power to participate in making decisions on the financial and operating policies of anenterprise, but not the power to control, or jointly control, the formulation of such policies with other parties. Where the
Company can exercise significant influence over the investee, the investee is an associate of the Company.
(2) Determination of initial investment cost
① Long-term equity investments formed through business combination of entities
For business combinations involving entities under common control: where the Company pays cash, transfers non-cashassets, bears debts or issues equity securities as consideration of combinations, the initial investment cost of long-termequity investments are the share with reference to the book value of the shareholders' equity of the combined party in theconsolidated financial statements of the ultimate controlling party on the date of combinations. In connection withimposing control over the investee under joint control as a result of additional investment and other reasons, on thecombination date, the initial cost of long-term equity investments shall be determined based on share of carrying amountsin the consolidated financial statement of the ultimate controlling party by net assets of the combined party after thecombination. The difference between initial investment cost and the carrying value of long term equity investment beforecombination and the sum of carrying value of newly paid consideration for additional shares acquired on the date ofcombination is to adjust share premium. If the balance of share premium is insufficient, any excess is adjusted to retainedearnings.Business combinations involving entities not under common control: the cost of the combination ascertained on the dateof acquisition shall be taken as the initial investment cost of the long-term equity investments. In connection with imposingcontrol over the investee not under joint control as a result of additional investment and other reasons, the initialinvestment cost when changing to the cost method shall be the sum of the carrying value of the equity investmentoriginally held and the newly increased initial investment cost.
② Long-term equity investments acquired by other means
The initial cost of a long-term equity investment obtained by cash payment shall be the purchase costs actually paid.The initial cost of investment of a long-term equity investment obtained by means of issuance of equity securities shall bethe fair value of the equity securities issued.When the non-monetary assets transaction is commercial in nature and the fair value of the assets received orsurrendered can be reliably measured, measurement shall be carried out on the basis of the fair value. If the fair value ofthe assets received and surrendered can be reliably measured, the initial cost of a long-term equity investment receivedshall be determined on the basis of the fair value of the assets surrendered and the related taxes payable, unless thereare concrete evidences that the fair value of the assets received is more reliable. If the non-monetary assets transaction isnot commercial in nature and the fair value of the assets received and surrendered cannot be reliably measured, the initialcost of a long-term equity investment received shall be the book value of the assets surrendered and the relevant taxespayable.The entry value of a long-term equity investment through debt restructuring shall be determined on the basis of the fairvalue of the creditor's rights abandoned, the tax directly attributable to this asset and other costs, and the differencebetween the fair value and book value of the creditor's rights abandoned shall be included in the profit or loss for theperiod.
(3) Subsequent measurement and recognition of profit or loss
① Long-term equity investment calculated by cost method
Long-term equity investment in subsidiaries of the Company is calculated by cost method, except for the actualconsideration paid for the acquisition of investment or the declared but not yet distributed cash dividends or profits whichare included in the consideration, investment gains are recognized as the Company' shares of the cash dividends orprofits declared by the investee.
② Long-term equity investment accounted for by equity method
Long-term equity investments of associates and jointly controlled entities are calculated using equity method. Where theinitial investment cost of a long-term equity investment exceeds the investor's interest in the fair value of the investee's
identifiable net assets at the acquisition date, no adjustment shall be made to the initial investment cost; where the initialinvestment cost is less than the investor's interest in the fair value of the investee's identifiable net assets at theacquisition date, the difference shall be charged to profit or loss for the current period.The Company recognizes the investment income and other comprehensive income according to the shares of net profit orloss and other comprehensive income realized by the investee which it shall be entitled or shared respectively, andsimultaneously makes adjustment to the carrying value of long-term equity investments; The carrying value of long-termequity investment shall be reduced by attributable share of the profit or cash dividends for distribution declared by theinvestee. In relation to other changes of owner's equity except for net profits and losses, other comprehensive income andprofit distributions of the investee, the carrying value of long-term equity investments shall be adjusted and included inowner's equity.When determining the amount of proportion of net profit or loss in the investee which it entitles, fair value of eachidentifiable assets of the investee at the time when the investment is obtained shall be used as basis, and according to theaccounting policies and accounting period of the Company, adjustment shall be made to the net profit of the investee.During the period of holding investments, when preparing consolidated financial statements by the investee, theaccounting shall be based on the amounts attributable to the investee in the net profit, other comprehensive income andother changes of the owner's equity in the consolidated financial statements.The unrealized profit or loss resulting from transactions between the Company and its associates or joint venture shall beeliminated in portion to the investor's equity interest of investee, based on which investment income or loss shall berecognized. Any losses resulting from transactions, which are attributable to impairment of assets, shall be fullyrecognized. Where the transactions involving investment or sales of assets between the Company and the associatedenterprises or joint ventures and that the assets constitute a business, account treatment shall be conducted inaccordance with the relevant policies disclosed in "The accounting treatment of business combinations involvingenterprises under common control and business combinations involving enterprises under common control" and "Methodof preparation of consolidated financial statements".In recognition of share of losses in the investee, the Company treats it in the following order: Firstly, the Company will writeoff the carrying value of long-term equity investments. Secondly, in the event the aforesaid carrying value is insufficient foroffset, the investment losses shall continue to be confirmed with the limit of the carrying amount of long-term equity whichsubstantially constitutes the net investment in the investee, to offset the carrying amount of long-term receivable. Finally,after the above treatment, for the additional obligations which shall be still assumed by entities according to investmentcontract or agreement, the estimated liabilities shall be recognized based on the obligations which are expected toassume and included in the investment loss for the current period.
③ Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between the book value and the consideration actuallyreceived shall be included in the current profit or loss.For the long-term equity investment under the equity method, when disposing of such investment, part of amounts thatshall be originally included in other comprehensive income shall be accounted for in proportion by using the same basisas the investee used for direct disposal of relevant assets or liabilities. The owner's equity which is recognized due toother changes of owner's equity except for net profits and losses, other comprehensive income and profit distributionsshall be transferred in proportion into the current profit or loss, excluding the other comprehensive income derived fromchanges of net liabilities or net assets due to re-measurement on defined benefit plan by the investee.When losing the controls or material influence over the investee due to partially disposal of equity investment and otherreasons, the remaining equities shall be accounted for in accordance with the standards on recognition and measurementof financial instruments, and the difference between the fair value and the carrying value at the date of losing control ormaterial influence shall be included in current profit or loss. For other comprehensive income recognized in the original
equity investment due to the equity method is adopted, it shall be treated using the same accounting basis as the investeeused for direct disposal of relevant assets or liabilities when ceasing to use the equity method. All owner's equities whichare recognized due to other changes of owner's equity except for net profits and losses, other comprehensive income andprofit distributions shall be transferred into the current profit or loss when ceasing to use the equity method.When losing the controls over the investee due to partially disposal of equity investment and other reasons, the remainingequities after disposal shall be accounted for under equity method in preparation of individual financial statementsprovided that common control or material influence over the investee can be imposed, and shall be adjusted as if suchremaining equities has been accounted for under the equity method since they are obtained. Where the remainingequities after disposal cannot impose common control or material influence over the investee, it shall be accounted foraccording to relevant provisions of the standards on recognition and measurement of financial instruments, and thedifference between fair value and the carrying value on the date of losing control shall be included in the current profit orloss.The disposed equity interest was acquired in a business combination as resulted from such as making additionalinvestment, the remaining equity interest after disposal will be accounted for using cost method or equity method whenpreparing the separate financial statements. Other comprehensive income and other owners' equity recognized when theequity interests held on the acquisition date is accounted for using equity method and shall be transferred proportionally;For the remaining equity interest after disposal accounted for using the recognition and measurement standard of financialinstruments, other comprehensive income and other owners' equity shall be fully transferred.
17. Investment Properties
Measurement Mode of Investment PropertyMeasured by cost methodDepreciation or amortization methodsInvestment property refers to the real estate held to generate rental income or capital appreciation, or both, includingleased land use rights, land use rights held for transfer after appreciation, and leased buildings (including buildings thatare leased after completion of self-construction or development activities and buildings in construction or developmentthat are used for rental in the future).The Company adopts the cost mode to measure the existing investment property. Investment property measured at cost -buildings held for leasing shall adopt the same depreciation policy for fixed assets of the company, land use rights held forleasing shall adopt the same amortization policy for the intangible assets.
18. Fixed Assets
(1) Conditions for recognition of fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others,or for administrative purposes; and have a service life of more than one accounting year. Fixed asset is recognized when itmeets the following conditions: ① It is probable that the economic benefits associated with the fixed asset will flow to theenterprise; ② Its cost can be reliably measured.
(2) Methods for depreciation
| Category | Depreciation method | Useful lives of depreciation | Residual Ratio | Annual depreciation rate |
| Housing and building | Straight-line method | 20 | 5% | 4.75% |
| Machinery and equipment | Straight-line method | 5-10 | 5% | 19.00%-9.50% |
| Means of transport | Straight-line method | 4-8 | 5% | 23.75%-11.88% |
| Electronic and other equipment | Straight-line method | 3-5 | 5% | 31.67%-19.00% |
Fixed assets are depreciated by categories using the straight-line method, and the annual depreciation rates aredetermined by categories based upon their estimated useful lives and their estimated residual values. Where the parts ofa fixed asset have different useful lives or cause economic benefits for the enterprise in different ways, differentdepreciation rates or depreciation methods shall apply, and each part is depreciated separately.For fixed assets leased under finance lease, if it can be reasonably determined that the ownership of the leased asset canbe acquired upon the expiry of the lease term, depreciation policies in line with the fixed assets will be adopted fordepreciation during the remaining service life of the leased asset. If it cannot be reasonably determined that the ownershipof the leased asset can be acquired upon the expiry of the lease term, depreciation policies in line with the fixed assets willbe adopted for depreciation during the shorter of the lease term and the remaining service life of the leased asset.
(3) Recognition bases and measurement methods of fixed assets under finance leaseWhere any one of the following conditions is provided in the lease agreement between the Company and the lessee, theleased assets can be recognized as fixed assets acquired under finance leases: ① The ownership of the leased assets,upon the expiry of lease term, belongs to the Company; ② The Company has the option to purchase the leased assets,the price is much lower than the fair value of the assets at the time of exercising the option; ③ The lease term accountsfor the majority of the service life of the leased asset; ④ There is no great difference between the minimum present leasevalue on the lease commencement date and the fair value of the assets. On the commencement of the lease, the leasedasset shall be recorded at an amount equal to the lower of the fair value of the leased asset and the present value of theminimum lease payments, and the minimum lease payments shall be recorded as the carrying amount of long-termpayables. The difference between the recorded amount of the leased asset and the minimum lease payments shall beaccounted for as unrecognized finance charge.
19. Construction in Progress
Criteria and time point for construction in progress being transferred to the fixed asset Construction in progress ismeasured at all the expenditures incurred to bring the fixed assets ready for their intended use. If the construction inprogress of fixed assets constructed are ready for their intended use but the final account of completed project has notbeen issued, it should be transferred to fixed assets at an estimated cost according to the construction budget,construction price or actual cost, and depreciation should be provided according to deprecation policy for fixed assetsfrom the date when the assets are ready for their intended use. When the final account of completed project is issued, theestimated cost will be adjusted according to the actual cost, while the original depreciation charge will not be adjusted.
20. Borrowing Costs
(1) Criteria for recognition of capitalized borrowing costs
Borrowing costs refers to the borrowing interests, amortization of discounts or premiums, ancillary costs and exchangedifferences arising from foreign currency borrowings, etc.For borrowing costs incurred by the Company that are directly attributable to the acquisition, construction or production ofassets qualified for capitalization, the costs will be capitalized and included in the costs of the related assets. Otherborrowing costs shall be recognized as expense in the period in which they are incurred and included in profit or loss forthe current period.Assets qualified for capitalization are assets (fixed assets, investment property, inventories, etc.) that necessarily take asubstantial period of time for acquisition, construction or production to get ready for their intended use or sale.Capitalization of borrowing costs begins when the following three conditions are fully satisfied:
① expenditures for the assets (including cash paid, transferred non-currency assets or expenditure for holding debtliability for the acquisition, construction or production of assets qualified for capitalization) have been incurred;
② borrowing costs have been incurred;
③ acquisition, construction or production that are necessary to enable the asset reach its intended usable or salablecondition have commenced.
(2) Capitalization period of borrowing costs
The capitalization period shall refer to the period between the commencement and the cessation of capitalization ofborrowing costs, excluding the period in which capitalization of borrowing costs is temporarily suspended.Capitalization of borrowing costs shall be suspended during periods in which the qualifying asset under acquisition andconstruction or production ready for the intended use or sale.If part of an asset being acquired, constructed or produced has been completed respectively and put into use individually,capitalization of borrowing costs should be suspended.If different parts of the assets acquired, constructed or produced are completed separately, but such asset will not beready for the intended use or sale until all parts have been completed, then the borrowing costs will be capitalized until thecompletion of all parts of the said asset.
(3) Suspension of capitalization period
Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production ofa qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months; if theinterruption is a necessary step for making the qualifying asset under acquisition and construction or production ready forthe intended use or sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred during suchperiod shall be recognized as profits and losses of the current period. When the acquisition and construction or productionof the asset resumes, the capitalization of borrowing costs commences.
(4) Calculation of capitalization rate and amount of borrowing costs
Specific borrowings for the acquisition, construction or production of assets qualified for capitalization, borrowing costs ofthe specific borrowings actually incurred in the current period minus the interest income earned on the unused borrowingloans as a deposit in the bank or as investment income earned from temporary investment will be used to determine theamount of borrowing costs for capitalization.General borrowings for the acquisition, construction or production of assets qualified for capitalization, theto-be-capitalized amount of interests on the general borrowing shall be calculated and determined by multiplying theweighted average asset disbursement of the part of the accumulative asset disbursements minus the specificallyborrowed loans by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated anddetermined according to the weighted average interest rate of the general borrowing.
21. Intangible Assets
(1) Valuation method, service life, impairment test
A. Valuation Method of Intangible Assets
① Intangible assets are initially measured at cost upon acquisition
The costs of an externally purchased intangible asset include the purchase price, relevant taxes and expenses paid, andother expenditures directly attributable to putting the asset into condition for its intended use. If the payment for anintangible asset is delayed beyond the normal credit conditions and it is of financing nature in effect, the cost of theintangible assets shall be ascertained based on the present value of the purchase price.The amount of intangible assets acquired from debt restructuring should be recorded at the fair value of such intangibleassets, and the difference between the carrying amount of the restructured debt and the fair value of the intangible assetsacquired from debt restructuring should be included in the profit or loss for the current period.If the non-monetary assets transaction is commercial in nature and the fair value of the assets received or surrenderedcan be reliably measured, the intangible assets received in the non-monetary assets transaction, shall be measured onthe basis of the fair value of the assets surrendered, unless there are concrete evidence that the fair value of the assetsreceived is more reliable; For non-monetary assets transaction which does not meet the above conditions, the cost ofintangible assets received shall be the book value of the assets surrendered and the relevant taxes and expenses payable,and the profit or loss will not be recognized.
② Subsequent measurement
The service life of intangible assets shall be analyzed and judged upon acquisition.As for intangible assets with a finite service life, they are amortized using the straight-line method over the term in whicheconomic benefits are brought to the firm; If the term in which economic benefits are brought to the firm by an intangibleasset cannot be estimated, the intangible asset shall be taken as an intangible asset with indefinite service life, and shallnot be amortized.B. Estimation of Service Life of the Intangible Assets with Limited Service Life:
| Item Name | Estimated useful lives | Basis |
| Land use rights | 50 years | Land use certificate |
| Non-patented technology | 5-10 years | Expected benefited period |
| Softwares | 2-5 years | Expected benefited period |
| Trademark rights | 6 years | Expected benefited period |
| Software copyright | 10 years | Expected benefited period |
For an intangible asset with a finite service life, review on its service life and amortization method is performed at the endof each end.Upon review, service life and amortization method for the intangible assets are the same with the previous estimate at theend of this period.C. The basis for the judgment of intangible assets with uncertain service life and the procedure for reviewing their servicelifeAs at the balance sheet date, the Company has no intangible assets with uncertain service life.
(2) Accounting policy for internal R&D expenditure
The expenses for internal research and development projects of the Company are divided into expenses in the researchphase and expenses in the development phase.Research phase: Scheduled innovative investigations and research activities to obtain and understand scientific ortechnological knowledge.Development phase: Apply the research outcomes or other knowledge to a plan or design prior to a commercialproduction or use in order to produce new or essentially-improved materials, devices, products, etc.B. Specific condition for capitalizing expenditure during the development phaseThe expenses in the development phase for internal R&D are recognized as intangible assets if the following conditionsare fulfilled:
① It is technically feasible to complete such intangible asset so that it will be available for use or for sale;
② There is intention to complete the intangible asset for use or sale;
③ The intangible asset can produce economic benefits, including there is evidence that the products produced using theintangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there isevidence that there exists usage for the intangible asset;
④ There is sufficient support in terms of technology, financial resources and other resources in order to complete thedevelopment of the intangible asset, and there is capability to use or sell the intangible asset;
⑤ The expenses attributable to the development stage of the intangible asset can be measured reliably.If the expenses in the development phase does not meet the above conditions, it shall be included in the profits andlosses for the current period at the time of occurrence. Expenses in the research phase are recorded into the profits andlosses for the current period when they occur.
22. Impairment of long-term assets
Long-term assets, such as long-term equity investment, investment properties, fixed assets, construction in progress,intangible assets that measured at cost are tested for impairment if there is any indication that an asset may be impairedat the balance sheet date. If the result of the impairment test indicates that the recoverable amount of the asset is lessthan its carrying amount, a provision for impairment and an impairment loss are recognized for the amount by which theasset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair valueless costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for assetimpairment is determined and recognized on the individual asset basis. If it is not possible to estimate the recoverableamount of an individual asset, the recoverable amount of a group of assets to which the asset belongs to is determined. Agroup of assets is the smallest group of assets that is able to generate cash inflows independently.Impairment test to goodwill and the intangible assets whose using life is not certain shall be carried out at least at the endof each year.When the Company carry out impairment test to goodwill, the Company shall, as of the purchasing day, allocate on areasonable basis the carrying value of the goodwill formed by merger of enterprises to the relevant asset groups, or ifthere is a difficulty in allocation, to allocate it to the sets of asset groups. When the carrying value of goodwill is allocated tothe related asset group or sets of asset group, the allocation shall be made based on the proportion of the fair value ofeach asset groups or sets of asset groups to the total fair value of the relevant assets groups or sets of asset group. Ifthere is difficulty for the fair value to be reliably measured, the allocation shall be made based on the proportion of thecarrying value of each asset groups or sets of asset groups to the total carrying value of the relevant assets groups or setsof asset groups.For the purpose of impairment test on the relevant asset groups or the sets of asset groups containing goodwill, if any
evidence shows that the impairment of asset groups or sets of asset groups related to goodwill is possible, an impairmenttest will be made first on the asset groups or sets of asset groups not containing goodwill, thus calculating the recoverableamount and comparing it with the relevant carrying value so as to recognize the corresponding impairment loss. Then animpairment test will be made on the asset groups or sets of asset groups containing goodwill, and compare the carryingvalue of these asset groups or sets of asset groups (including the carrying value of the goodwill allocated thereto) with therecoverable amount. Where the recoverable amount of the relevant assets or sets of the asset groups is lower than thecarrying value thereof, it shall recognize the impairment loss of the goodwill.Once the above asset impairment loss is recognized, it will not be reversed in the subsequent accounting periods.
23. Long-term prepaid expenses
Long-term prepaid expenses are expenses which have occurred but will benefit over 1 year and shall be amortized overthe current period and subsequent periods. The long-term prepaid expenses of the Company include expenditures paidfor improvement of fixed assets under operating lease.
(1) Amortization method
Long-term prepaid expenses are amortized evenly over the estimated benefit period
(2) Amortization period
Expenditures paid for improvement of fixed assets under operating lease, amortized evenly over the lease term orremaining service life of the asset, whichever is shorter.
24. Employee remuneration
(1) Accountant arrangement method of short-term remuneration
During the accounting period when the staff provides service, the Company will recognize the short-term remunerationactually incurred as liabilities, and the liabilities would be charged into current profits and loss or costs of assets.The Company will pay social insurance and housing funds, and will make provision of trade union funds and staffeducation costs in accordance with the requirements. During the accounting period when the staff provides service, theCompany will determine the relevant amount of employee benefits in accordance with the required provision basis andprovision ratios.Non-currency employee benefits will be accounted for in accordance with their fair value if they can be measured reliably.
(2) Accountant arrangement method of retirement benefit plan
① Defined contribution scheme
The Company will pay basic pension insurance and unemployment insurance in accordance with the relevant provisionsof the local government for the staff. During the accounting period when the staff provides service, the Company willcalculate the amount payable in accordance with the local stipulated basis and proportions which will be recognized asliabilities, and the liabilities would be charged into current profits and loss or costs of assets.In addition to the basic pension insurance, the Company has also established an enterprise annuity payment system(supplementary pension insurance)/enterprise annuity plan based on the relevant policies of the national enterpriseannuity system. The Company conducts payment/payment of annuity plan to local social insurance institutions accordingto certain proportion of employees' wages and corresponding expenditures are included in profit or loss for the period orrelevant asset costs.
② Defined benefit scheme
The welfare responsibilities generated from defined benefit scheme based on the formula determined by projected unitcredit method would be vested to the service period of the staff and charged into current profits and loss or costs ofassets.
(3) Accountant arrangement method of termination benefits
The Company will pay termination benefits when the group can no longer withdraw the offer of termination plan or layoffproposal or when the Group recognizes costs for restructuring which involving the payment of termination benefits(whichever the earliest). The remuneration incurred by the termination benefits will be recognized as liabilities whichwould be charged into current profits and loss.
25. Estimated liabilities
Where the Company is involved in litigations, guarantees provided to debts, loss-making contracts, restructuring andafter-sale maintenance cost, and if such matters are likely to require future assets delivery or the provision of laborservices, the amount of which can be reliably measured, such items shall be recognized as estimated liabilities.
(1) Recognition criteria for estimated liabilities
The Company shall recognize the obligations related to contingencies involving litigations, guarantees provided to debts,loss-making contracts, and restructuring as estimated liabilities, when all of the following conditions are satisfied:
① the obligation is a present obligation of the group;
② it is probable that an outflow of economic benefits will be required to settle the obligation;
③ the amount of the obligation can be measured reliably.
(2) Method of measuring the various estimated liabilities
Estimated liabilities shall be initially measured at the best estimate of the expenditure required to settle the related presentobligation.Factors pertaining to a contingency such as risk, uncertainties, and time value of money shall be taken into account as awhole in reaching the best estimate. Where the effect of the time value of money is material, the best estimate shall bedetermined by discounting the related future cash outflow.The best estimate will be dealt with separately in the following circumstances:
The expenses required have a successive range (or band), in which the possibilities of occurrence of each result are thesame, and the best estimate should be determined as the middle value for the range, i.e. the average of the upper andlower limit.The expenses required does not have a successive range (or band), or although there is a successive range (or band),the possibilities of occurrence of each result are different, if the contingency is related to individual item, the best estimateshould be determined as the most likely amount; where the contingency is related to a number of items, the best estimateshould be calculated and determined according to the possible results and the relevant possibilities.Where some or all of the expenditure required to settle an estimated liability is expected to be reimbursed by a third party,the reimbursement is separately recognized as an asset when it is virtually certain that the reimbursement will be received.The amount recognized for the reimbursement is limited to the carrying amount of the estimated liability.
26. Share-based payment
The Company's share-based payment refers to a transaction in which an enterprise determines the liabilities on the basisof equity instruments granting or bearing for the acquisition of service from its employees or other parties. The Company'sshare-based payment is equity-settled.
Equity-settled share-based payment and equity instrument:
As to an equity-settled share-based payment in return for services of employees, calculation will be based on the fairvalue of the equity instrument granted to the employees. If the Company make the share-based payment by restrictedshares, employees will subscribe the share but those shares shall not be listed on the market or transferred before it fulfillthe unlocking condition and unlocked. If the unlocking conditions stipulated in the equity incentive scheme cannot befulfilled eventually, the Company will repurchase those shares based on the predetermined price. Upon obtaining thepayment for subscribing restricted shares made by the employees, the Company will recognized the share capital andcapital reserve (share capital premium) according to the payment it received, while fully recognize a liability for itsrepurchasing obligation as well as its treasury shares. On each balance sheet date within the vesting period, the Companywill make the best estimation of the number of vested equity instruments based on the subsequent information such asthe updated changes in the number of executives and the achievement of performance standard. Based on the aboveresults, the services received in the current period will be included in the relevant cost or expense based on the fair valueon the date of grant, and the capital reserve will be increased accordingly. The recognized cost or expense and owners'interest will not be adjusted after the vesting date. However, equity instruments vested immediately after the date of grantwill be included in the relevant cost or expense based on its fair value on the date of grant, and the capital reserve will beincreased accordingly.For the share-based payments that are not vested eventually, no cost or expense will be recognized, except the vestingcondition is market condition or non-exercisable condition. Under such circumstances, no matter whether the marketcondition or non-exercisable condition can be fulfilled, the share-based payment will be deemed as vested as long as allthe non-market conditions in the vesting condition are fulfilled.If the terms of the equity-settled share-based payment are amended, the Company shall recognize the services receivedat least based on the situation before the amendment was made. In addition, any amendment resulting in the increase ofthe fair value of the equity instrument granted or changes that are beneficial to the staff on the amendment date, will berecognized as an increase in the service received.If the equity-settled share-based payment is canceled, it will be accounted for as accelerated exercise on the cancellationdate and the unrecognized amount will be recognized immediately. Employees and other parties are able to satisfy thenon-vesting conditions. If the conditions are not fulfilled during the vesting period, the equity settled share-based paymentwill be deemed as canceled. However, if new equity instruments are vested and they are verified at the vesting date ofnew equity instrument as alternatives vested to cancel equity instruments, the treatment on the new equity instrument is inconformity with the modified treatment on disposal of equity instrument.
27. Revenue
Has the new income standard been implemented?
□ Yes √ No
Accounting policies for revenue recognition and measurement
(1) General principles for the recognition of revenue from commodity sales
① Revenue from the sale of goods is recognized when all the significant risks and rewards of ownership of the goodshave been transferred to the buyer;
② The Company does not retain either continuing managerial involvement to the degree usually associated withownership or effective control over the sold goods;
③ The amount of revenue can be reliably measured;
④ It is probable that the economic benefits associated will flow to the Company;
⑤ The relevant amount of costs incurred or to be incurred can be measured reliably.
(2) Specific principles
①Principle for recognizing revenue from the domestic sales of standard products: The Company's security standardproducts are sold, through both direct sale and distribution, to the project clients, dealers and other customers. TheCompany and customers sign sales contracts and send the goods to customers according to the contractual terms ofdelivery, or the customers pick up goods. The revenue is recognized after the customer receives and accepts the goodsand the Company obtains the evidence proving the client's receipt of goods.
②Principle for recognizing revenue from the overseas sales of standard products: If the domestic company makes directexport, the FOB and CIF terms are generally adopted and the Company recognizes the sale income after the product isdeclared and exported. If a foreign subsidiary sells the goods abroad, the goods will be sent to the customer or thecustomer will collect the goods according to the delivery method agreed with the customer, and the income will berecognized when the customer receives and accepts the goods.
③ Principle for recognizing system-integrated sales revenue: The sales of the system-integrated products of theCompany include providing the supporting services such as plan design, supporting products, installation, debugging andsystem trial operation. The sales income will be recognized upon acceptance.
④ Principle for recognizing the income from labor services: The income is recognized when the labor service is provided.
28. Government grants
(1) Type
Government grants are monetary assets and non-monetary assets acquired by the Company from the government free ofcharge. Government grants are classified into government grants related to assets and government grants related torevenue.Government grants related to assets refer to government grants acquired by the Company for the purpose of purchasingor constructing or otherwise forming long-term assets. Government grants related to revenue refer to the governmentgrants other than those related to assets.
(2) Confirmation of time point
Government grants related to assets will be measured at the actual amount of money received at the time of receipt. Theassets (bank deposits) and deferred income shall be period by period included in the profits and losses of the currentperiod in a reasonable and systematic manner from the time the assets are available for use (those related to theCompany's daily activities shall be included in other income; those unrelated to the Company's daily activities shall berecognized as non-operating income). When the relevant assets are disposed of (sold, transferred, scrapped, etc.) at orbefore the end of their service life, the balance of the deferred income that has not yet been apportioned will betransferred to the current-period income from the disposal of the assets on an one-time manner, and will not be deferred.For government grants related to revenue, they will be recognized as profit and loss of the current period according to theamount receivable for government grants obtained under fixed quota standards, otherwise, they will be recognized asprofit and loss of the current period when it is actually received.
(3) Accounting treatment
Government grants related to assets shall write off the book value of relevant assets or be recognized as deferred income.When recognized as deferred income, the government grant related to assets will be period by period credited to theprofits and losses of the current period in a reasonable and systematic manner within the service life of relevant assets(those related to the Company's daily activities shall be recognized as other income; those unrelated to the Company'sdaily activities shall be recognized as non-operating income).The revenue-related government grants shall be recognized as deferred income if they are used to compensate relevantexpenses or losses in subsequent periods, and they shall be included in profit and loss of the current period (those related
to Company's routine activities shall be included in other income; those unrelated to the Company's routine activities shallbe included in non-operating income) or used to offset relevant expenses or losses during the recognition of relatedexpenses or losses; the grants used to compensate related expenses or losses incurred shall be included in profit andloss of the current period (those related to Company's routine activities shall be included in other income; those unrelatedto the Company's routine activities shall be included in non-operating income) or used to offset relevant expenses orlosses.
29. Deferred income tax assets/liabilities
Deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be availableagainst which deductible temporary differences can be utilized. For deductible losses and tax credits that can be reversedin the future period, deferred tax assets shall be recognized to the extent that it is probable that taxable profit will beavailable in the future to offset the deductible losses and tax credits.Save as the exceptions, deferred income tax liabilities shall be recognized for the taxable temporary difference.The exceptions for not recognition of deferred income tax assets and liabilities include: the initial recognition of thegoodwill; other transactions or matters other than business combinations in which neither profit nor taxable income (ordeductible loss) will be affected when transactions occur.After granted the legal rights of net settlement and with the intention to use net settlement or obtain assets and repay debtat the same time, the net amount after offsetting its current income tax assets and current income tax liabilities shall berecorded.When the Company was granted the legal rights of net settlement of current income tax assets and current income taxliabilities, and deferred income tax assets and deferred income tax liabilities are related to income tax to be paid by thesame entity liable to pay tax to the same tax collection and management authority or related to different entities liable topay tax, but the relevant entity liable to pay tax is intended to apply net settlement of current income tax assets andliabilities or, at the same time, obtain assets, repay debt whenever every deferred income tax assets and liabilities withimportance would be reversed in the future, the Company records the net amount after offsetting its current income taxassets and current income tax liabilities.
30. Lease
(1) Accounting of operating lease
① As the lessee of operating leases, rental payments under operating leases are recognized as costs or expenses on astraight line basis over the lease term (including rent free periods). Initial direct costs that are attributable to an operatinglease incurred by the Company are charged to current profit and loss.When the lesser bears the lease related expenses which should be undertaken by the Company, the Company shalldeduct this part of expense from the rent and amortize the net amount over the lease term.
② Leasing charges received by the Company for the assets leased out shall be amortized in a straight-line basis over thelease term without deducting the rent-free periods, and recognized as leasing income. The initial direct fee related to theleasing transactions paid by the Company shall be charged to current expenses; if the mount is significant, it shall becapitalized and charged to current income evenly on the same basis as the leasing income is recognized over the leaseterm.When the Company bears the lease related expenses which should be undertaken by the lessee, the Company shalldeduct this part of expense from the rent income, and amortize the net amount over the lease term.
(2) Accounting of finance lease
① Assets acquired under finance leases: At the initiation date of the lessee, the leased asset is recorded at the amountsequal to the lower of the fair value of the leased asset and the present value of the minimum lease payments. The balanceis accounted for as unrecognized finance charge and is amortized using the effective interest method over the period ofthe lease. The Company, by means of the real interest method, amortizes the unacknowledged financial charges duringthe lease term of the assets and includes them into financing expenses. Initial direct cost incurred by the Company will beincluded in the assets acquired under finance leases.
② Assets acquired under finance rents: At the initiation date of the lessee, the difference between the recorded amount ofthe leased asset and the minimum lease receivables is accounted for as unrecognized finance income and is recognizedas rental income over the period of the lease. Initial direct costs shall be included in the initial accounting of the leasepayment receivables and deduct by the revenue recognized over the lease term.
31. Other significant accounting policies and accounting estimates
(1) Termination of operation
Termination of business is a separately distinguishable constituent part that satisfies one of the following conditions andthat has been disposed of or classified by the Company as held for sale:
①This constituent part represents an independent primary business or a separate principal operating area;
②This constituent part is part of an associated plan to dispose of for an independent primary business or a separateprincipal operating area;
③This constituent part is a subsidiary acquired for resale.
(2) Repurchase of the Company's shares
The Company's shares repurchased by the Company for reducing the registered capital or rewarding employees shall betreated as the treasury shares based on the actual amount paid, and shall be checked and registered at the same time. Ifthe repurchased shares are canceled, the difference between the actual amount paid for the repurchase and the total parvalue of shares calculated by the par value of the canceled shares and the number of canceled shares will write off thecapital reserve. If the capital reserve is insufficient, the retained income will be written off; if the repurchased shares areawarded to the employees of the Company, it shall be categorized as equity-settled share-based payment. When theCompany receives the payment made by employees who exercise their rights to purchase such shares, the amount shallbe used to write off the cost of treasury shares delivered to employees and the capital reserve in the waiting period andmeanwhile, the capital reserve (stock premium) shall be adjusted according to the difference.
32. Changes in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
√ Applicable □ Not applicable
① Implementation: The Notice of the Ministry of Finance on Revising the Format of 2019 General Enterprise FinancialStatements, and The Notice on Revising the Format of Consolidated Financial Statements (2019)The Ministry of Finance issued The Notice of the Ministry of Finance on Revising the Format of 2019 General EnterpriseFinancial Statements (Finance (2019) No.6) on April 30, 2019, and The Notice on Revising the Format of ConsolidatedFinancial Statements (2019) (Finance (2019) No.16) on September 19, 2019. The documents revised the format of thefinancial statements for general enterprises. The above provisions have the following major effects on the Company:
| Content and Reasons for Change in Accounting Policies | Approval process | Note - Consolidated Subsidiaries | Note - Parent Company |
| (1) The "Notes receivable and accounts receivable" in the balance sheet is listed as "Notes receivable" and "Accounts receivable" in separate columns; The "Notes payable and accounts payable" is listed as "Notes payable" and "Accounts payable " in separate columns. Comparison data should be adjusted accordingly. | Approved by the Board of Directors | The "Notes receivable and accounts receivable" is listed as "Notes receivable" and "Accounts receivable" in separate columns. The balance of "Notes receivable" at the end of last year is RMB 2,385,693,417.06. The balance of "Accounts receivable" at the end of last year is 10,191,372,777.38; The "Notes payable and accounts payable" is listed as "Notes payable" and "Accounts payable" in separate columns. The balance of "Notes payable" at the end of last year is RMB 3,671,586,104.79. The balance of "Accounts payable" at the end of last year is RMB 3,789,729,594.20. | The "Notes receivable and accounts receivable" is listed as "Notes receivable" and "Accounts receivable" in separate columns. The balance of "Notes receivable" at the end of last year is RMB 952,572,702.92. The balance of "Notes receivable" at the end of last year is RMB 4,598,575,923.04; The "Notes payable and accounts payable" is listed as "Notes payable" and "Accounts payable" in separate columns. The balance of "Notes payable" at the end of last year is RMB 175,647,414.85. The balance of "Accounts payable" at the end of last year is RMB 889,881,485.16. |
| (2) "Credit impairment losses" is added to the income statement. The ''Bad debt losses'' originally under "Asset impairment losses" is reclassified to be under "Credit impairment losses" and listed separately. | Approved by the Board of Directors | The ''Bad debt losses'' originally under the "Asset impairment losses" is reclassified to be under "Credit impairment losses": The annual amount of 2019 is RMB -418,876,180.92. | The ''Bad debt losses'' originally under the "Asset impairment losses" is reclassified to be under "Credit impairment losses": The annual amount of 2019 is RMB -22,993,302.46. |
| (3) A new item "Capital invested by holders of other equity instruments" is added to the Statement of Changes in Owners' Equity; a new item "Retained earnings carried forward from other comprehensive income" is | Approved by the Board of Directors | No effect. | No effect. |
Note: Indicate the item names of the statements and the amounts that are significantly affected.
② Implementation: Accounting Standards for Business Enterprises No.22 - Recognition and Measurement of FinancialInstruments, Accounting Standards for Business Enterprises No.23 - Transfer of Financial Assets, Accounting Standardsfor Business Enterprises No.24 - Hedging Accounting, Accounting Standards for Business Enterprises No.37 -Presentation of Financial Instruments (2017 Edition)The Ministry of Finance revised the following documents in 2017: Accounting Standards for Business Enterprises No.22 -Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises No.23 - Transferof Financial Assets, Accounting Standards for Business Enterprises No.24 - Hedging Accounting, and AccountingStandards for Business Enterprises No.37 - Presentation of Financial Instruments The revised standards stipulate that forfinancial instruments whose confirmation has not been terminated on the first implementation date, retrospectiveadjustments shall be made if the previous confirmation and measurement are inconsistent with the requirements of therevised standards. If the statistics related to the comparative financial statements in the previous period is inconsistentwith the revised standards, no adjustment is required. The Company will adjust the retained earnings and othercomprehensive income at the beginning of the year due to the cumulative impact of retrospective adjustments.Based on the balance at the end of last year adjusted per CaiKuai [2019] No.6 and CaiKuai [2019] No.16, the above newfinancial instrument standards have the following main effects on the Company:
also added.
Content and Reasons forChange in Accounting Policies
| Content and Reasons for Change in Accounting Policies | Approval process | Note - Consolidated Subsidiaries | Note - Parent Company |
| (1) Due to the changes in the item name of statements, "Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss" is reclassified to be under "Transaction financial liabilities". | Approved by the Board of Directors | Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss: Decrease by RMB 38,602,602.30. Transaction financial liabilities: Increase by RMB 38,602,602.30. | N/A |
| (2) Investment of available-for-sale equity instruments is reclassified to be under 'Financial assets at fair value through profit or loss in this period''. | Approved by the Board of Directors | Available-for-sale financial assets: Decrease by RMB 82,970,227.00; other non-current financial assets: Increase by RMB 76,614,852.22; deferred income tax assets: Increase by RMB 953,306.22 Retained earnings: Decrease by RMB 5,402,068.56. | Available-for-sale financial assets: Decrease by RMB 80,496,000.00; other non-current financial assets: Increase by RMB 74,140,625.22; deferred income tax assets: Increase by RMB 953,306.22, retained earnings: Decrease by RMB 5,402,068.56. |
Based on the balance at the end of last year adjusted per CaiKuai [2019] No.6 and CaiKuai [2019] No.16, the following isa comparison of the classification and measurement results of various financial assets and financial liabilities in the caseof the previous and new standards for financial instrument recognition and measurement:
Consolidated Subsidiaries
| Previous Standards for Financial Instruments | New Standards for Financial Instruments | ||||
| Items reported | Measurement Category | Book value | Items reported | Measurement Category | Book value |
| Cash and Bank Balances | Amortized cost | 4,160,153,847.06 | Cash and Bank Balances | Amortized cost | 4,160,153,847.06 |
| Notes receivable | Amortized cost | 2,385,693,417.06 | Notes receivable | Amortized cost | |
| Receivables Financing | Measured at fair value through other comprehensive income | 2,385,693,417.06 | |||
| Accounts receivable | Amortized cost | 10,191,372,777.38 | Accounts receivable | Amortized cost | 10,191,372,777.38 |
| Receivables Financing | Measured at fair value through other comprehensive income | ||||
| Other Receivables | Amortized cost | 398,170,769.40 | Other Receivables | Amortized cost | 398,170,769.40 |
| Financial Assets Available for Sale (Including other current assets) | Measured at cost (equity instruments) | 82,970,227.00 | Trading Financial Assets | Measured at fair value through profit and loss | |
| Other Non-current Financial Assets | 76,614,852.22 | ||||
| Investment in Other Equity Instruments | Measured at fair value through other comprehensive income | ||||
| Long-term receivables (including non-current assets due within 1 year) | Amortized cost | 2,440,218,625.55 | Long-term Receivables | Amortized cost | 2,440,218,625.55 |
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | Measured at fair value through profit and loss | 38,602,602.30 | Transactional financial liabilities | Measured at fair value through profit and loss | 38,602,602.30 |
Parent company
| Previous Standards for Financial Instruments | New Standards for Financial Instruments | ||||
| Items reported | Measurement Category | Book value | Items reported | Measurement Category | Book value |
| Cash and Bank Balances | Amortized cost | 611,190,236.01 | Cash and Bank Balances | Amortized cost | 611,190,236.01 |
| Notes receivable | Amortized cost | 952,572,702.92 | Notes receivable | Amortized cost | |
| Receivables Financing | Measured at fair value through other comprehensive income | 952,572,702.92 |
| Accounts receivable | Amortized cost | 4,598,575,923.04 | Accounts receivable | Amortized cost | 4,598,575,923.04 |
| Receivables Financing | Measured at fair value through other comprehensive income |
| Other Receivables | Amortized cost | 6,954,655,863.03 | Other Receivables | Amortized cost | 6,954,655,863.03 |
| Financial Assets Available for Sale (Including other current assets) | Measured at cost (equity instruments) | 80,496,000.00 | Trading Financial Assets | Measured at fair value through profit and loss | |
| Other Non-current Financial Assets | 74,140,625.22 | ||||
| Investment in Other Equity Instruments | Measured at fair value through other comprehensive income |
| Long-term receivables (including non-current assets due within 1 year) | Amortized cost | 211,092,281.63 | Long-term Receivables | Amortized cost | 211,092,281.63 |
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | Measured at fair value through profit and loss | Transactional financial liabilities | Measured at fair value through profit and loss |
③ Implementation: Accounting Standards for Business Enterprises No.7 - Exchange of Non-Monetary Assets (2019Edition)The Ministry of Finance issued Accounting Standards for Business Enterprises No.7 - Exchange of Non-Monetary Assets(2019 Edition) (CaiKuai [2019] No.8) on May 9, 2019. The revised standard will come into effect on June 10, 2019.Non-monetary asset exchanges that occur between January 1, 2019 and the effective date of this standard shall beadjusted per this standard. For non-monetary asset exchanges that occurred before January 1, 2019, retrospectiveadjustments per the provisions of this standard are not required. The above standards have no significant effects on theCompany during the reporting period.
④ Implementation: Accounting Standards for Business Enterprises No.12 - Debt Restructuring (2019 Edition)The Ministry of Finance issued Accounting Standards for Business Enterprises No.12 - Debt Restructuring (2019 Edition)(CaiKuai (2019) No.9) on May 16, 2019. The revised standard will come into effect on June 17, 2019. Debt restructuringthat occurs between January 1, 2019 and the effective date of this standard shall be adjusted per this standard. For debt
reconstructing that occurred before January 1, 2019, retrospective adjustments per the provisions of this standard are notrequired. The above standards have no significant effects on the Company during the reporting period.
(2) Changes in significant accounting estimates
□ Applicable √ Not applicable
(3) Adjustments to items in the financial statements of the beginning of the year according to thenew standards for financial instruments, revenue or lease implemented from 2019
√ Applicable □ Not applicable
Consolidated Balance Sheet
Unit: RMB
| Item Name | December 31, 2018 | January 01, 2019 | Adjusted amount |
| Current Assets: | |||
| Cash and Bank Balances | 4,160,153,847.06 | 4,160,153,847.06 | |
| Deposit Reservation for Balance | |||
| Loans to Banks and Other Financial Institutions | |||
| Trading Financial Assets | |||
| Financial liabilities at fair value through profit or loss | |||
| Derivative Financial Assets | |||
| Notes receivable | 2,385,693,417.06 | -2,385,693,417.06 | |
| Accounts receivable | 10,191,372,777.38 | 10,191,372,777.38 | |
| Receivables Financing | 2,385,693,417.06 | 2,385,693,417.06 | |
| Prepayments | 126,891,259.00 | 126,891,259.00 | |
| Premium Receivable | |||
| Reinsurance Accounts Receivable | |||
| Reinsurance Contract Reserves Receivable | |||
| Other Receivables | 398,170,769.40 | 398,170,769.40 |
| Including: interest receivable | 6,754,941.00 | 6,754,941.00 | |
| Dividends Receivable | |||
| Buying Back the Sale of Financial Assets | |||
| Inventory | 3,035,579,709.14 | 3,035,579,709.14 | |
| Contract Assets | |||
| Holding for-sale assets | |||
| Non-current Assets Due within 1 Year | 578,733,057.27 | 578,733,057.27 | |
| Other Current Assets | 402,255,078.05 | 402,255,078.05 | |
| Subtotal of Current Assets | 21,278,849,914.36 | 21,278,849,914.36 | |
| Non-current Assets: | |||
| Granting of loans and advances | |||
| Investment in Creditor's Rights | |||
| Financial Assets Available for Sale | 82,970,227.00 | -82,970,227.00 | |
| Investment in Other Creditor's Rights | |||
| Held-to-maturity Investments | |||
| Long-term Receivables | 1,861,485,568.28 | 1,861,485,568.28 | |
| Long-term Equity Investment | 185,872,021.58 | 185,872,021.58 | |
| Investment in Other Equity Instruments | |||
| Other Non-current Financial Assets | 76,614,852.22 | 76,614,852.22 | |
| Investment Property | 346,831,376.55 | 346,831,376.55 | |
| Fixed Assets | 1,407,471,330.83 | 1,407,471,330.83 | |
| Projects under Construction | 226,191,587.11 | 226,191,587.11 |
| Productive Biological Assets | |||
| Oil and gas assets | |||
| Right-of-use Assets | |||
| Intangible Assets | 372,467,409.09 | 372,467,409.09 | |
| Development Expenditure | |||
| Goodwill | 109,745,412.21 | 109,745,412.21 | |
| Long-term Prepaid Expenses | 37,117,918.55 | 37,117,918.55 | |
| Deferred Income Tax Assets | 425,319,406.98 | 426,272,713.20 | 953,306.22 |
| Other Non-current Assets | 16,277,605.61 | 16,277,605.61 | |
| Subtotal of Non-current Assets | 5,071,749,863.79 | 5,066,347,795.23 | -5,402,068.56 |
| Total Assets | 26,350,599,778.15 | 26,345,197,709.59 | -5,402,068.56 |
| Current Liabilities: | |||
| Short-term loan | 1,851,709,561.83 | 1,851,709,561.83 | |
| Borrowings from the Central Bank | |||
| Borrowings from Banks and Other Financial Institutions | |||
| Transactional financial liabilities | 38,602,602.30 | 38,602,602.30 | |
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | 38,602,602.30 | -38,602,602.30 | |
| Derivative Financial Liabilities | |||
| Notes Payable | 3,671,586,104.79 | 3,671,586,104.79 | |
| Accounts Payable | 3,789,729,594.20 | 3,789,729,594.20 | |
| Received Prepayments | 343,297,891.20 | 343,297,891.20 | |
| Contract liabilities |
| Financial Assets Sold for Repurchase | |||
| Deposit Taking and Interbank Deposit | |||
| Receiving from Vicariously Traded Securities | |||
| Receiving from Vicariously Sold Securities | |||
| Payroll payable | 1,124,358,611.94 | 1,124,358,611.94 | |
| Tax Payable | 599,478,049.81 | 599,478,049.81 | |
| Other Payables | 1,051,537,094.97 | 1,051,537,094.97 | |
| Including: interest payable | 4,745,203.31 | 4,745,203.31 | |
| Dividends Payable | |||
| Service Charge and Commission Payable | |||
| Reinsurance Accounts Payable | |||
| Holding for-sale liabilities | |||
| Non-current Liabilities Due within 1 Year | 25,500,000.00 | 25,500,000.00 | |
| Other Current Liabilities | 70,845,639.51 | 70,845,639.51 | |
| Subtotal of Current Liabilities | 12,566,645,150.55 | 12,566,645,150.55 | |
| Non-current Liabilities: | |||
| Insurance Contract Reserves | |||
| Long-term loan | 179,000,000.00 | 179,000,000.00 | |
| Bonds Payable | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Lease Liabilities |
| Long-term Payables | |||
| Long-term payroll payable | |||
| Expected Liabilities | 193,761,170.12 | 193,761,170.12 | |
| Deferred Income | 58,693,533.40 | 58,693,533.40 | |
| Deferred Income Tax Liabilities | 50,137,969.76 | 50,137,969.76 | |
| Other Non-current Liabilities | 399,096,280.89 | 399,096,280.89 | |
| Subtotal of Non-current Liabilities | 880,688,954.17 | 880,688,954.17 | |
| Total Liabilities | 13,447,334,104.72 | 13,447,334,104.72 | |
| Shareholders' Equity: | |||
| Share Capital | 2,997,621,930.00 | 2,997,621,930.00 | |
| Other Equity Instruments | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Capital Reserves | 1,501,180,862.83 | 1,501,180,862.83 | |
| Less: Treasury Share | 807,733,586.00 | 807,733,586.00 | |
| Other Comprehensive Incomes | 10,337,164.41 | 10,337,164.41 | |
| Special Reserves | |||
| Surplus Reserves | 1,246,369,430.91 | 1,245,829,224.05 | -540,206.86 |
| General Risk Reserves | |||
| Undistributed Profits | 7,670,983,116.33 | 7,666,121,254.63 | -4,861,861.70 |
| Total Shareholders' Equity Attributable to the Parent Company | 12,618,758,918.48 | 12,613,356,849.92 | -5,402,068.56 |
| Minority Shareholders' Equity | 284,506,754.95 | 284,506,754.95 | |
| Total Shareholders' Equity | 12,903,265,673.43 | 12,897,863,604.87 | -5,402,068.56 |
| Total Liabilities and Shareholders' Equity | 26,350,599,778.15 | 26,345,197,709.59 | -5,402,068.56 |
Balance Sheet of the Parent Company
Unit: RMB
| Item Name | December 31, 2018 | January 01, 2019 | Adjusted amount |
| Current Assets: | |||
| Cash and Bank Balances | 611,190,236.01 | 611,190,236.01 | |
| Trading Financial Assets | |||
| Financial liabilities at fair value through profit or loss | |||
| Derivative Financial Assets | |||
| Notes receivable | 952,572,702.92 | -952,572,702.92 | |
| Accounts receivable | 4,598,575,923.04 | 4,598,575,923.04 | |
| Receivables Financing | 952,572,702.92 | 952,572,702.92 | |
| Prepayments | 26,772,044.53 | 26,772,044.53 | |
| Other Receivables | 6,954,655,863.03 | 6,954,655,863.03 | |
| Including: interest receivable | 42,500.00 | 42,500.00 | |
| Dividends Receivable | |||
| Inventory | 120,181,267.85 | 120,181,267.85 | |
| Contract Assets | |||
| Holding for-sale assets | |||
| Non-current Assets Due within 1 Year | 50,793,137.80 | 50,793,137.80 | |
| Other Current Assets | 24,858,982.78 | 24,858,982.78 | |
| Subtotal of Current Assets | 13,339,600,157.96 | 13,339,600,157.96 | |
| Non-current Assets: | |||
| Investment in Creditor's Rights | |||
| Financial Assets Available for Sale | 80,496,000.00 | -80,496,000.00 |
| Investment in Other Creditor's Rights | |||
| Held-to-maturity Investments | |||
| Long-term Receivables | 160,299,143.83 | 160,299,143.83 | |
| Long-term Equity Investment | 3,001,639,428.55 | 3,001,639,428.55 | |
| Investment in Other Equity Instruments | |||
| Other Non-current Financial Assets | 74,140,625.22 | 74,140,625.22 | |
| Investment Property | 183,321,198.72 | 183,321,198.72 | |
| Fixed Assets | 496,363,638.38 | 496,363,638.38 | |
| Projects under Construction | 151,072,585.67 | 151,072,585.67 | |
| Productive Biological Assets | |||
| Oil and gas assets | |||
| Right-of-use Assets | |||
| Intangible Assets | 170,879,747.04 | 170,879,747.04 | |
| Development Expenditure | |||
| Goodwill | |||
| Long-term Prepaid Expenses | 28,927,258.54 | 28,927,258.54 | |
| Deferred Income Tax Assets | 40,821,902.57 | 41,775,208.79 | 953,306.22 |
| Other Non-current Assets | 929,380.00 | 929,380.00 | |
| Subtotal of Non-current Assets | 4,314,750,283.30 | 4,309,348,214.74 | -5,402,068.56 |
| Total Assets | 17,654,350,441.26 | 17,648,948,372.70 | -5,402,068.56 |
| Current Liabilities: | |||
| Short-term loan | 1,380,000,000.00 | 1,380,000,000.00 | |
| Transactional financial liabilities |
| Financial Liabilities Measured in Fair Value with Changes Recorded into Current Profit and Loss | |||
| Derivative Financial Liabilities | |||
| Notes Payable | 175,647,414.85 | 175,647,414.85 | |
| Accounts Payable | 889,881,485.16 | 889,881,485.16 | |
| Received Prepayments | 80,361,211.04 | 80,361,211.04 | |
| Contract liabilities | |||
| Payroll payable | 817,723,936.19 | 817,723,936.19 | |
| Tax Payable | 351,294,836.50 | 351,294,836.50 | |
| Other Payables | 1,060,909,330.56 | 1,060,909,330.56 | |
| Including: interest payable | 2,416,340.30 | 2,416,340.30 | |
| Dividends Payable | |||
| Holding for-sale liabilities | |||
| Non-current Liabilities Due within 1 Year | |||
| Other Current Liabilities | 6,464,333.12 | 6,464,333.12 | |
| Subtotal of Current Liabilities | 4,762,282,547.42 | 4,762,282,547.42 | |
| Non-current Liabilities: | |||
| Long-term loan | |||
| Bonds Payable | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Lease Liabilities | |||
| Long-term Payables | |||
| Long-term payroll payable |
| Expected Liabilities | 3,396,100.00 | 3,396,100.00 | |
| Deferred Income | |||
| Deferred Income Tax Liabilities | |||
| Other Non-current Liabilities | 23,684,423.74 | 23,684,423.74 | |
| Subtotal of Non-current Liabilities | 27,080,523.74 | 27,080,523.74 | |
| Total Liabilities | 4,789,363,071.16 | 4,789,363,071.16 | |
| Shareholders' Equity: | |||
| Share Capital | 2,997,621,930.00 | 2,997,621,930.00 | |
| Other Equity Instruments | |||
| Including: Preferred Stocks | |||
| Perpetual Bonds | |||
| Capital Reserves | 1,497,801,068.88 | 1,497,801,068.88 | |
| Less: Treasury Share | 807,733,586.00 | 807,733,586.00 | |
| Other Comprehensive Incomes | |||
| Special Reserves | |||
| Surplus Reserves | 1,246,369,430.91 | 1,245,829,224.05 | -540,206.86 |
| Undistributed Profits | 7,930,928,526.31 | 7,926,066,664.61 | -4,861,861.70 |
| Total Shareholders' Equity | 12,864,987,370.10 | 12,859,585,301.54 | -5,402,068.56 |
| Total Liabilities and Shareholders' Equity | 17,654,350,441.26 | 17,648,948,372.70 | -5,402,068.56 |
Adjustment explanation
(4) Explanation of compared data before the retroactive adjustments according to the newstandards for financial instruments or lease implemented from 2019
□ Applicable √ Not applicable
Ⅵ. Taxes
1. Major categories of taxes and tax rates
| Tax Type | Taxation basis | Tax rate |
| VAT | According to the provisions of the tax law, the sales tax shall be calculated on the basis of the income by selling goods and taxable services. After deducting the input tax that is allowed to be deducted from the sales tax in the current period, the difference shall be the value added tax | 17%, 16%, 13%, 11%, 10%, 9%, 6%, simple collection rate of 5%, and simple collection rate of 3% |
| Urban Maintenance and Construction Tax | Calculated based on the deduction free amount, actual business tax, VAT, and consumption tax | 7%, 5% |
| Enterprise Income Tax | Calculated based on the taxable income | 12.5%、15%、16.5%、20%、25% |
| Education Surcharges | Calculated based on the deduction free amount, actual business tax, VAT, and consumption tax | 3% |
| Local Education Surcharges | Calculated based on the deduction free amount, actual business tax, VAT, and consumption tax | 2% |
If there are multiple taxpayers with different enterprise income tax rates, specify the situation
| Name of taxpayer | Income tax rate |
| Zhejiang Dahua Technology Co., Ltd. | 15% |
| Zhejiang Dahua System Engineering Co., Ltd. | 15% |
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | 15% |
| South North United Information Technology Co., Ltd. | 15% |
| Zhejiang Huatu Microchip Technology Co., Ltd. | 15% |
| Hangzhou Tecomore Technology Co., Ltd. | 15% |
| Zhejiang HuaRay Technology Co., Ltd. | 15% |
| Hangzhou Huacheng Network Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhixin Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhihe Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Zhitian Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Huayue Information Technology Co., Ltd. | 15% |
| Xinjiang Dahua Xinzhi Information Technology Co., Ltd. | 15% |
| Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd. | 15% |
| Zhejiang Dahua Ju'an Technology Co., Ltd. | 20% |
| Hangzhou Fuyang Hua'ao Technology Co., Ltd. | 20% |
| Guizhou Huayi Shixin Technology Co., Ltd. | 20% |
| Zhejiang Fengshi Technology Co., Ltd. | 20% |
| Zhejiang Huaxiao Technology Co., Ltd. | 20% |
| Zhejiang Dahua Robot Technology Co., Ltd. | 20% |
| Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. | 20% |
| Zhejiang Zhoushan Digital Development Operation Co., Ltd | 20% |
| Guangxi Dahua Technology Co., Ltd. | 20% |
| Hangzhou Huajuan Technology Co., Ltd. | 20% |
| Zhejiang Huachuang Vision Technology Co., Ltd. | 12.50% |
| Dahua Technology (HK) Limited | 16.50% |
| Other domestic companies | 25% |
| Other overseas companies | Applicable to local tax rate |
2. Preferential tax rate
(1) According to CaiShui [2011] No.100 jointly issued by the Ministry of Finance and State Administration of Taxation,for the sales revenue of software products, the actual tax burden of more than 3% is subject to the policy of immediaterefund right after collection after being reviewed and approved by the competent tax authorities; the policy of "taxexemption, offset, and refund" is valid for the value-added tax (VAT) on our export goods, with the tax refund rate of 16%and 13%. According to No.39 document of 2019 by the Ministry of Finance, State Administration of Taxation, and theGeneral Administration of Customs, the tax rates for VAT taxable sales or imported goods by the taxpayer was adjustedfrom 16%, 10%, and 6% to 13%, 9%, and 6% respectively from April 1, 2019.
(2) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2017"(Guo Ke Huo Zi [2017] No. 201) issued by the Office for the Administration of the Certification of National High-techEnterprises on December 15, 2017, the Company was certified as a high-tech enterprise, valid for 3 years. The corporateincome tax for this year was reduced at a rate of 15%.
(3) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2019"(Guo Ke Huo Zi [2020] No.32) issued by the Office for the Administration of the Certification of National High-techEnterprises on January 20, 2020, our subsidiary Zhejiang Dahua System Engineering Co., Ltd. was certified as ahigh-tech enterprise, valid for 3 years. The corporate income tax for this year was reduced at a rate of 15%.
(4) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2017"(Guo Ke Huo Zi [2017] No. 201) issued by the Office for the Administration of the Certification of National High-techEnterprises on December 15, 2017, our subsidiary Zhejiang Dahua Security Network Operations Services Co., Ltd. wascertified as a high-tech enterprise with the validation for 3 years. The corporate income tax for this year was reduced at arate of 15%.
(5) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2017"(Guo Ke Huo Zi [2017] No. 201) issued by the Office for the Administration of the Certification of National High-techEnterprises on December 15, 2017, our subsidiary South-North United Information Technology Co., Ltd. was certified as ahigh-tech enterprise, valid for 3 years. The corporate income tax for this year was reduced at a rate of 15%.
(6) According to the "Notice on Publicizing Zhejiang Province's List of Proposed High-tech Enterprises in 2018"issued by the Office for the Administration of the Certification of National High-tech Enterprises on November 30, 2018,our subsidiary Zhejiang Huatu Microchip Technology Co., Ltd. was preliminarily certified as a high-tech enterprise with thevalidation for 3 years. The corporate income tax for this year was reduced at a rate of 15%.
(7) According to the "Notice on Publicizing Zhejiang Province's List of Proposed High-tech Enterprises in 2018"issued by the Office for the Administration of the Certification of National High-tech Enterprises on November 30, 2018,our subsidiary Hangzhou Teconmore Technology Co., Ltd. was preliminarily certified as a high-tech enterprise with thevalidation for 3 years. The corporate income tax for this year was reduced at a rate of 15%.
(8) According to the "Notice on Publicizing Zhejiang Province's List of Proposed High-tech Enterprises in 2018"issued by the Office for the Administration of the Certification of National High-tech Enterprises on November 30, 2018,our subsidiary Zhejiang HuaRay Technology Co., Ltd. was preliminarily certified as a high-tech enterprise with thevalidation for 3 years. The corporate income tax for this year was reduced at a rate of 15%.
(9) According to the "Notice on Publicizing Zhejiang Province's List of Proposed High-tech Enterprises in 2018"issued by the Office for the Administration of the Certification of National High-tech Enterprises on November 30, 2018,our subsidiary Zhejiang Dahua Vision Technology Co., Ltd. was preliminarily certified as a high-tech enterprise with thevalidation for 3 years. The corporate income tax for this year was reduced at a rate of 15%.
(10) According to the "Reply on the Filing of the First Batch of High-tech Enterprises in Zhejiang Province in 2019"(Guo Ke Huo Zi [2020] No.32) issued by the Office for the Administration of the Certification of National High-techEnterprises on January 20, 2020, our subsidiary Hangzhou Huacheng Network Technology Co., Ltd. was certified as ahigh-tech enterprise, valid for 3 years. The corporate income tax for this year was reduced to a rate of 15%.
(11) According to The Notice on the Implementation of Inclusive Tax Reduction and Exemption Policies for Small andMicro-Enterprises (CaiShui [2019] No.13), the following subsidiaries should pay the enterprise income tax at a rate of 20%of their taxable income: Zhejiang Dahua Ju'an Technology Co., Ltd., Hangzhou Fuyang Hua'ao Technology Co., Ltd.,Guizhou Huayi Shixin Technology Co., Ltd., Zhejiang Vision Technology Co., Ltd., Zhejiang Huaxiao Technology Co., Ltd.,Zhejiang Dahua Robot Technology Co., Ltd., Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd., ZhejiangZhoushan Digital Development Operation Co., Ltd, Guangxi Dahua Technology Co. Ltd., Hangzhou Huajuan TechnologyCo., Ltd.
(12) According to the document CaiShui [2011] No.58 by the Ministry of Finance, the State Administration of Taxation,and the General Administration of Customs, the following subsidiaries can enjoy preferential tax policies related to theDevelopment of the West Regions Program from 2011 to 2020: Xinjiang Dahua Zhixin Information Technology Co., Ltd.,Xinjiang Dahua Zhihe Information Technology Co., Ltd., Xinjiang Dahua Zhitian Information Technology Co., Ltd., XinjiangDahua Huayue Information Technology Co., Ltd., Xinjiang Dahua Xinzhi Information Technology Co., Ltd., Inner MongoliaDahua Zhimeng Information Technology Co., Ltd. The corporate income tax for this year was reduced to a rate of 15%.
(13) According to the Announcement on the 2019 Evaluation of the Eighth Batch of Software Enterprises andSoftware Products issued by the Zhejiang Software Industry Association (September 10, 2019), our subsidiary ZhejiangHuachuang Vision Technology Co., Ltd. has been recognized as a software enterprise and obtained a software enterprisecertificate (Certificate No. Zhe RQ-2019-0217). According to the Notice on Corporate Income Tax Policy for FurtherEncouraging the Development of Software Industry and Integrated Circuit Industry" (CaiShui [2012] No.27), thepreferential period starts from the profitable year of software enterprises (2017). The enterprises are exempt fromcorporate income tax from the first year to the second year. From the third to fifth years, the corporate income tax isreduced by half from the statutory tax rate of 25%. The corporate income tax rate for our subsidiary Zhejiang HuachuangVision Technology Co., Ltd. was thus reduced by half from the statutory tax rate in 2019.
(14) According to the Announcement on the 2019 Evaluation of the Fifth Batch of Software Enterprises and SoftwareProducts issued by the Zhejiang Software Industry Association (June 4, 2019), our subsidiary Zhejiang Huarui Technology
Co., Ltd. has been recognized as a software enterprise and obtained a software enterprise certificate (Certificate No. ZheRQ-2019-0093). According to The Notice on Corporate Income Tax Policy for Further Encouraging the Development ofSoftware Industry and Integrated Circuit Industry" (CaiShui [2012] No.27), the preferential period starts from the profitableyear of software enterprises. The enterprises are exempt from corporate income tax from the first year to the second year.From the third to fifth years, the corporate income tax is reduced by half from the statutory tax rate of 25%.Ⅶ. Notes to the Items in the Consolidated Financial Statement
1. Cash and bank balances
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Cash on Hand | 117,289.25 | 3,981.79 |
| Bank Balance | 2,590,777,015.41 | 3,547,354,923.39 |
| Other Cash and Bank Balances | 493,534,665.77 | 612,794,941.88 |
| Total | 3,084,428,970.43 | 4,160,153,847.06 |
| Including: Total Amount Deposited in Overseas Banks | 875,156,010.72 | 838,640,436.81 |
| The total amount restricted for use due to mortgage, pledge or freeze | 346,461,821.88 | 469,159,816.01 |
The amount restricted for use due to mortgage, pledge or freeze:
| Item Name | Balance at the End of the Period | Balance at the beginning of the year |
| Documentary Credit Deposit | 244,167,000.00 | 308,844,000.00 |
| Commercial acceptance bill discount deposit | 100,000,000.00 | |
| Bid/performance bond | 102,294,821.88 | 60,315,816.01 |
| Total | 346,461,821.88 | 469,159,816.01 |
2. Accounts receivable
(1) Categorical disclosure of accounts receivable
Unit: RMB
| Category | Balance at the End of the Period | Balance at the Start of the Period | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Accounts receivables with the bad debt provision accrued based on single item | 64,978,308.37 | 0.44% | 64,978,308.37 | 100.00% | 77,967,205.50 | 0.69% | 67,967,205.50 | 87.17% | 10,000,000.00 | |
| Including: | ||||||||||
| Accounts receivable with insignificant single amount but accrued for separate provision of bad debt | 64,978,308.37 | 0.44% | 64,978,308.37 | 100.00% | 77,967,205.50 | 0.69% | 67,967,205.50 | 87.17% | 10,000,000.00 | |
| Accounts receivables with the bad debt provision accrued based on combinations | 14,645,291,110.23 | 99.56% | 1,404,094,729.58 | 9.59% | 13,241,196,380.65 | 11,197,400,451.31 | 99.31% | 1,016,027,673.93 | 9.07% | 10,181,372,777.38 |
| Including: | ||||||||||
| Portfolio 2: Aging Analysis Portfolio | 14,645,291,110.23 | 99.56% | 1,404,094,729.58 | 9.59% | 13,241,196,380.65 | 11,197,400,451.31 | 99.31% | 1,016,027,673.93 | 9.07% | 10,181,372,777.38 |
| Total | 14,710,269,418.60 | 100.00% | 1,469,073,037.95 | 13,241,196,380.65 | 11,275,367,656.81 | 100.00% | 1,083,994,879.43 | 10,191,372,777.38 |
Bad debt provision based on single item
Unit: RMB
| Name | Balance at the End of the Period | |||
| Book balance | Bad debt provision | Accrued proportion | Reason for making bad debt provision | |
| Customer 1 | 53,537,386.62 | 53,537,386.62 | 100.00% | Expected to be unable to recover |
| Customer 2 | 11,440,921.75 | 11,440,921.75 | 100.00% | Expected to be unable to recover |
| Total | 64,978,308.37 | 64,978,308.37 | -- | -- |
Bad debt provision based on combinations
Unit: RMB
| Name | Balance at the End of the Period | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Within 1 year | 11,466,659,430.14 | 573,332,971.51 | 5.00% |
| 1 to 2 years | 2,022,862,603.43 | 202,286,260.34 | 10.00% |
| 2 to 3 years | 492,028,606.68 | 147,608,582.01 | 30.00% |
| 3 to 4 years | 254,321,585.50 | 127,160,792.75 | 50.00% |
| 4 to 5 years | 278,563,807.56 | 222,851,046.05 | 80.00% |
| 5 years or above | 130,855,076.92 | 130,855,076.92 | 100.00% |
| Total | 14,645,291,110.23 | 1,404,094,729.58 | -- |
Notes on the basis to determine the combination:
Please refer to the disclosing methods of other receivables for the information disclosure of bad debts provisions, if thebad debt provisions of accounts receivable are made according to the general model of expected credit losses:
√ Applicable □ Not applicable
Disclosure by age
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 11,466,659,430.14 |
| 1 to 2 years | 2,022,862,603.43 |
| 2 to 3 years | 545,565,993.30 |
| 3 years or above | 675,181,391.73 |
| 3 to 4 years | 254,321,585.50 |
| 4 to 5 years | 278,563,807.56 |
| 5 years or above | 142,295,998.67 |
| Total | 14,710,269,418.60 |
(2) Provision for bad debts accrued, recovered or reversed in this periodProvision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Bad debt provision | 1,083,994,879.43 | 403,542,653.67 | 3,383,257.76 | 15,434,407.25 | 353,169.86 | 1,469,073,037.95 |
| Total | 1,083,994,879.43 | 403,542,653.67 | 3,383,257.76 | 15,434,407.25 | 353,169.86 | 1,469,073,037.95 |
(3) Accounts receivable actually written off in this period
Unit: RMB
| Item Name | Write-off amount |
| Accounts receivable actually written off | 15,434,407.25 |
(4) Accounts receivable of the top five closing balances collected by debtorsThe accounts receivable of the top five closing balances collected by the arrears was summed up to RMB1,314,705,080.22, accounting for 8.94% of the total closing balance of accounts receivable. and the ending balance of theprovision for bad debts accrued was RMB 208,285,190.53.
(5) Accounts receivable derecognized due to the transfer of financial assetsThere is no accounts receivable derecognized due to the transfer of financial assets in this period.
(6) Assets and liabilities generated due to transferred receivables that the Company still keepsrecourse or retains part of corresponding rights or interestsThere are no assets or liabilities generated due to transferred receivables that the Company still keeps recourse or retainspart of corresponding rights or interests.
3. Receivables financing
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Notes receivable | 1,086,017,357.90 | 2,385,693,417.06 |
| Total | 1,086,017,357.90 | 2,385,693,417.06 |
The increase and decrease of accounts receivable financing in the current period and the changes in the fair value.
√ Applicable □ Not applicable
The closing balances are all bank acceptance bills with short remaining maturity and whose book values are close to fairvalues.Please refer to the disclosing methods of other receivables for the information disclosure of depreciation provisions, if thedepreciation provisions of accounts receivable financing are made according to the general model of expected creditlosses:
□ Applicable √ Not applicable
(1) Notes receivable pledged by the Company at the end of the period
Unit: RMB
| Item Name | Pledged amount by the end of period |
| Bank Acceptance Notes | 875,655,976.33 |
| Total | 875,655,976.33 |
(2) Notes receivable that the Company has endorsed or discounted at the end of the period and that have not yetexpired on the balance sheet date
Unit: RMB
| Item Name | Derecognised amount at the end of period | Not derecognised amount at the end of period |
| Bank Acceptance Notes | 489,774,811.52 | |
| Total | 489,774,811.52 |
4. Prepayments
(1) Aging analysis of prepayments is as follows
Unit: RMB
| Aging | Balance at the End of the Period | Balance at the Start of the Period | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 124,497,411.77 | 97.13% | 121,980,125.12 | 96.13% |
| 1 to 2 years | 1,674,410.31 | 1.31% | 2,958,954.04 | 2.33% |
| 2 to 3 years | 762,597.42 | 0.59% | 1,465,346.63 | 1.16% |
| 3 years or above | 1,247,679.97 | 0.97% | 486,833.21 | 0.38% |
| Total | 128,182,099.47 | -- | 126,891,259.00 | -- |
(2) Advance payment of the top five closing balances by prepayment partiesThe advance payment of the top five closing balances by the concentration of prepayment parties was summed up toRMB 43,160,931.30, accounting for 33.67% of the total closing balance of the advance payment.
5. Other receivables
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Interest Receivable | 6,754,941.00 | |
| Other Receivables | 408,776,610.17 | 391,415,828.40 |
| Total | 408,776,610.17 | 398,170,769.40 |
(1) Interests receivable
1) Category of interests receivable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Fixed term deposit | 6,754,941.00 | |
| Total | 6,754,941.00 |
2) Bad debt provision
□ Applicable √ Not applicable
(2) Other receivables
1) Other receivables categorized by the nature of the funds
Unit: RMB
| Nature of the funds | Closing balance | Opening balance |
| Deposits | 186,488,490.93 | 133,533,949.06 |
| Prepaid or advance expense | 105,487,796.31 | 114,908,097.29 |
| Export refunds | 40,988,648.13 | 36,092,616.35 |
| Employee home loan | 130,509,023.60 | 130,870,460.98 |
| Alipay and e-wallet | 11,289,772.49 | |
| Others | 6,367,769.53 | 7,255,950.15 |
| Total | 469,841,728.50 | 433,950,846.32 |
2) Bad debt provision
Unit: RMB
| Bad debt provision | Phase One | Phase Two | Phase Three | Total |
| Expected credit losses in the next 12 months | Expected credit losses for the entire extension (without credit impairment) | Expected credit losses for the entire extension (with credit impairment) | ||
| Balance on January 1, 2019 | 36,481,554.61 | 5,278,676.24 | 774,787.07 | 42,535,017.92 |
| Balance of the current period on January 1, 2019 | —— | —— | —— | —— |
| --Transfer to phase two | -1,572,775.73 | 1,572,775.73 | ||
| --Transfer to phase three | -262,847.03 | -112,709.18 | 375,556.21 |
| Provisions of this period | 9,728,488.85 | 8,939,541.23 | 48,754.93 | 18,716,785.01 |
| Other variations | -186,684.60 | -186,684.60 | ||
| Balance on December 31, 2019 | 44,187,736.10 | 15,678,284.02 | 1,199,098.21 | 61,065,118.33 |
Book balance changes with significant changes in loss provision in the current period
□ Applicable √ Not applicable
Disclosure by age
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 290,495,618.18 |
| 1 to 2 years | 85,439,230.30 |
| 2 to 3 years | 65,856,385.43 |
| 3 years or above | 28,050,494.59 |
| 3 to 4 years | 14,938,203.33 |
| 4 to 5 years | 11,709,470.85 |
| 5 years or above | 1,402,820.41 |
| Total | 469,841,728.50 |
3) Provision for bad debts accrued, recovered or reversed in this period
Provision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Portfolio 2: Aging Analysis Portfolio | 42,535,017.92 | 18,716,785.01 | -186,684.60 | 61,065,118.33 | ||
| Total | 42,535,017.92 | 18,716,785.01 | -186,684.60 | 61,065,118.33 | ||
4) Accounts receivable actually written off in this period
There's no actual written-off accounts receivable in this period.
5) Other receivables of the top five closing balances collected by debtors
Unit: RMB
| Name of Unit | Nature of the funds | Balance at the End of the Period | Aging | As a percentage of total other receivables at the end of the period | Bad debt provision at the end of the period |
| Company 1 | Export refunds | 40,988,648.13 | Within 1 year | 8.72% | 2,049,432.41 |
| Company 2 | Deposits | 24,410,000.00 | Within 1 year | 5.20% | 1,220,500.00 |
| Company 3 | Prepaid or advance expense | 18,536,030.44 | Within 1 year | 3.95% | 926,801.52 |
| Company 4 | Deposits | 12,000,000.00 | 2-3 years | 2.55% | 3,600,000.00 |
| Company 5 | Deposits | 10,711,000.00 | Within 1 year | 2.28% | 535,550.00 |
| Total | -- | 106,645,678.57 | -- | 22.70% | 8,332,283.93 |
6) Accounts receivable not related to government subsidies
There are no other accounts receivable related to government subsidies.
7) Other accounts receivable derecognised due to transfer of financial assets
There are no other accounts receivable derecognized due to the transfer of financial assets.
8) Assets and liabilities generated due to other transferred receivables that the Company stillkeeps recourse or retains part of corresponding rights or interestsThere are no assets and liabilities generated due to other transferred receivables that the Company still keeps recourse orretains part of corresponding rights or interests.
6. Inventory
Has the new income standard been implemented?
□ Yes √ No
(1) Categories of inventories
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Provision for decline in price | Book value | Book balance | Provision for decline in price | Book value | |
| Raw materials | 1,322,280,135.63 | 9,174,244.38 | 1,313,105,891.25 | 641,393,743.67 | 641,393,743.67 | |
| Work-in-progress | 907,039,528.28 | 11,835,784.37 | 895,203,743.91 | 1,068,330,542.75 | 4,168,637.69 | 1,064,161,905.06 |
| Finished goods | 1,549,317,679.30 | 59,728,540.61 | 1,489,589,138.69 | 1,347,394,898.29 | 72,990,967.51 | 1,274,403,930.78 |
| Outsourced work-in-progress | 141,911,930.48 | 141,911,930.48 | 55,620,129.63 | 55,620,129.63 | ||
| Total | 3,920,549,273.69 | 80,738,569.36 | 3,839,810,704.33 | 3,112,739,314.34 | 77,159,605.20 | 3,035,579,709.14 |
(2) Provision for decline in value of inventories
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period | ||
| Accrued | Others | Reversals or write-offs | Others | |||
| Raw materials | 9,174,244.38 | 9,174,244.38 | ||||
| Work-in-progress | 4,168,637.69 | 8,758,744.12 | 1,153,626.72 | -62,029.28 | 11,835,784.37 | |
| Finished goods | 72,990,967.51 | 22,158,411.41 | 36,368,783.15 | -947,944.84 | 59,728,540.61 | |
| Total | 77,159,605.20 | 40,091,399.91 | 37,522,409.87 | -1,009,974.12 | 80,738,569.36 | |
The basis for determining the net realizable value:
Subtracting the estimated completion costs, estimated selling expenses, and related taxes from the selling price.The reason for the write-off of inventory depreciation reserve in this period is: inventory use or sales.
7. Non-current assets due within 1 year
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Long-term accounts receivables due within 1 year | 630,717,329.58 | 578,733,057.27 |
| Total | 630,717,329.58 | 578,733,057.27 |
Note: The amount of long-term receivables due within 1 year pledged by the Company at the end of the period is RMB28,911,178.34. See Note 58 for details.
8. Other current assets
Has the new income standard been implemented?
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Not deducted input tax | 538,283,444.00 | 367,528,033.48 |
| Prepaid enterprise income tax | 18,028,326.08 | 34,727,044.57 |
| Total | 556,311,770.08 | 402,255,078.05 |
Other notes:
9. Long-term receivables
(1) Long-term receivables
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | Range of discount rate | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | ||
| Installment Payment for Selling Products | 2,568,442,030.19 | 2,568,442,030.19 | 1,861,485,568.28 | 1,861,485,568.28 | |||
| Including: Unrealized Financing Income | 413,390,725.32 | 413,390,725.32 | 364,590,421.98 | 364,590,421.98 | 3.03%-7.62% | ||
| Total | 2,568,442,030.19 | 2,568,442,030.19 | 1,861,485,568.28 | 1,861,485,568.28 | -- | ||
Book balance changes with significant changes in loss provision in the current period
□ Applicable √ Not applicable
(2) Long-term receivables derecognised due to transfer of financial assetsThere are no long-term receivables derecognised due to transfer of financial assets.
(3) Assets/liabilities generated due to transferred long-term receivables that the Company stillkeeps recourse or retains part of corresponding rights or interests
There are no assets/liabilities generated due to transferred long-term receivables that the Company still keeps recourse orretains part of corresponding rights or interests.Other notesNote: The amount of long-term receivables due within 1 year pledged by the Company at the end of the period is RMB213,118,026.26. See Note 58 for details.
10. Long-term equity investment
Unit: RMB
| The invested entity | Balance at the Start of the Period (book value) | Decrease/Increase in the current period | Balance at the End of the Period (book value) | Closing balance of provision for decline in value | |||||||
| Investments increased | Investment decreased | Investment profit and loss recognized under the equity method | Adjustment on other comprehensive income | Other changes in equity | Cash dividends or profit declared to distribute | Provision for impairment accrued | Others | ||||
| Ⅰ. Joint ventures | |||||||||||
| Ⅱ. Affiliates | |||||||||||
| Zhejiang Leapmotor Technology Co., Ltd. | 168,229,977.61 | -115,735,671.92 | 70,570,727.96 | 123,065,033.65 | |||||||
| Guangdong Dahua Zhishi Technology Co., Ltd. | -394,187.10 | 138,092.47 | 256,094.63 | ||||||||
| Hangzhou Juhuanyan Information Technology Co., Ltd. | 1,000,000.00 | -188,802.91 | 811,197.09 | ||||||||
| Wenzhou Dahua Security Services Co., Ltd. | 734,265.47 | 71,908.38 | 806,173.85 | ||||||||
| Taizhou Dahua Security Services Co., Ltd. | 345,823.21 | 18,415.92 | 364,239.13 | ||||||||
| Ningbo Dahua Anbang Security Services Co., Ltd. | 1,157,423.01 | -55,050.65 | 1,102,372.36 | ||||||||
| Lishui Dahua Intelligent Technology Co., Ltd. | 76,822.87 | -71,273.06 | 5,549.81 | ||||||||
| Zhoushan Dahua Technology Co., Ltd. | 705,482.95 | -12,917.12 | 692,565.83 | ||||||||
| Shaoxing Dahua Security Services Co., Ltd. | 547,439.30 | 22,819.46 | 570,258.76 | ||||||||
| Zhejiang Dahua Zhian Internet of Things Technology Co., Ltd. | 2,700,777.50 | 1,253,907.62 | 3,954,685.12 | ||||||||
| Shenzhen Conwin Security Electronics CO., Ltd. | 11,768,196.76 | -342,160.36 | 11,426,036.40 |
| China Standard Intelligent Security Technology Co., Ltd. | 12,200,000.00 | -1,632,690.34 | 10,567,309.66 | ||||||||
| IntelbrasS.A. | 336,539,400.00 | 826,415.19 | 337,365,815.19 | ||||||||
| Subtotal | 185,872,021.58 | 349,739,400.00 | -115,707,007.32 | 70,826,822.59 | 490,731,236.85 | ||||||
| Total | 185,872,021.58 | 349,739,400.00 | -115,707,007.32 | 70,826,822.59 | 490,731,236.85 |
11. Other non-current financial assets
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Financial liabilities at fair value through profit or loss | 67,213,489.43 | 76,614,852.22 |
| Among which: Investment in equity instrument | 67,213,489.43 | 76,614,852.22 |
| Total | 67,213,489.43 | 76,614,852.22 |
12. Investment properties
(1) Investment properties measured by cost method
√ Applicable □ Not applicable
Unit: RMB
| Item Name | Buildings and constructions | Land use rights | Projects under Construction | Total |
| Ⅰ. Original book value | ||||
| 1. Opening Balance | 358,765,339.78 | 8,879,294.95 | 367,644,634.73 | |
| 2. Increased in the Current Period | 7,491,078.91 | 542,823.38 | 8,033,902.29 | |
| (1) Purchase |
| (2) Transfer of fixed assets\intangible assets | 7,491,078.91 | 542,823.38 | 8,033,902.29 | |
| (3) Acquisition | ||||
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out | ||||
| 4. Closing Balance | 366,256,418.69 | 9,422,118.33 | 0.00 | 375,678,537.02 |
| Ⅱ. Accumulated Depreciation and Amortization | ||||
| 1. Opening Balance | 19,658,323.89 | 1,154,934.29 | 20,813,258.18 | |
| 2. Increased in the Current Period | 18,505,609.10 | 178,079.75 | 18,683,688.85 | |
| (1) Accrual or Amortization | 17,383,794.38 | 139,177.41 | 17,522,971.79 | |
| (2) Transfer of fixed assets\intangible assets | 1,121,814.72 | 38,902.34 | 1,160,717.06 | |
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out | ||||
| 4. Closing Balance | 38,163,932.99 | 1,333,014.04 | 0.00 | 39,496,947.03 |
| Ⅲ. Provision for Impairment | ||||
| 1. Opening Balance | ||||
| 2. Increased in the Current Period | ||||
| (1) Accrual |
| 3. Decreased in the Current Period | ||||
| (1) Disposal | ||||
| (2) Other Transfer-out | ||||
| 4. Closing Balance | ||||
| Ⅳ. Book value | ||||
| 1. Closing Balance on Book Value | 328,092,485.70 | 8,089,104.29 | 336,181,589.99 | |
| 2. Opening Balance on Book Value | 339,107,015.89 | 7,724,360.66 | 346,831,376.55 |
(2) Investment properties measured at fair value
□ Applicable √ Not applicable
(3) Investment properties with certificates of title not granted
Unit: RMB
| Item Name | Book value | Reasons for Certificates of Title not Granted |
| Nanning marketable housing | 155,241,891.04 | The certificate of title has been granted on January 7, 2020. |
13. Fixed assets
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Fixed Assets | 1,522,463,368.83 | 1,407,471,330.83 |
| Total | 1,522,463,368.83 | 1,407,471,330.83 |
(1) Fixed assets
Unit: RMB
| Item Name | Housing and building | Machinery and equipment | Means of transport | Electronic and other equipment | Total |
| Ⅰ. Original book value: | |||||
| 1. Opening Balance | 1,085,347,467.39 | 234,823,941.62 | 41,360,429.33 | 671,546,377.96 | 2,033,078,216.30 |
| 2. Increased in the Current Period | 151,364,357.70 | 58,566,535.18 | 1,428,452.22 | 139,115,659.89 | 350,475,004.99 |
| (1) Purchase | 4,838,017.50 | 56,790,539.06 | 1,428,452.22 | 110,430,437.53 | 173,487,446.31 |
| (2) Transferred From Construction in Progress | 146,526,340.20 | 1,775,996.12 | 28,685,222.36 | 176,987,558.68 | |
| (3) Acquisition | |||||
| 3. Decreased in the Current Period | 7,491,078.91 | 374,816.08 | 7,110,193.07 | 20,721,869.61 | 35,697,957.67 |
| (1) Disposal or Scrapping | 374,816.08 | 7,110,193.07 | 19,808,431.09 | 27,293,440.24 | |
| (2) Transfer to investment real estate | 7,491,078.91 | 7,491,078.91 | |||
| (3) Disposal of subsidiaries | 913,438.52 | 913,438.52 | |||
| 4. Currency Translation Difference | -9,200.70 | 35,089.41 | 19,235.13 | -261,618.18 | -216,494.34 |
| 5. Closing Balance | 1,229,211,545.48 | 293,050,750.13 | 35,697,923.61 | 789,678,550.06 | 2,347,638,769.28 |
| II. Accumulated depreciation | |||||
| 1. Opening Balance | 171,317,090.95 | 46,671,558.15 | 30,433,971.72 | 377,184,264.65 | 625,606,885.47 |
| 2. Increased in the Current Period | 53,085,437.68 | 25,305,055.30 | 4,159,693.07 | 138,634,939.52 | 221,185,125.57 |
| (1) Accrual | 53,085,437.68 | 25,305,055.30 | 4,159,693.07 | 138,634,939.52 | 221,185,125.57 |
| 3. Decreased in the Current Period | 1,121,814.72 | 240,769.90 | 5,996,545.91 | 14,308,854.00 | 21,667,984.53 |
| (1) Disposal or Scrapping | 240,769.90 | 5,996,545.91 | 14,132,127.58 | 20,369,443.39 | |
| (2) Transfer to investment real estate | 1,121,814.72 | 1,121,814.72 | |||
| (3) Disposal of subsidiaries | 176,726.42 | 176,726.42 |
| 4. Currency Translation Difference | 3,188.14 | 17,926.22 | 1,094.65 | 29,164.93 | 51,373.94 |
| 5. Closing Balance | 223,283,902.05 | 71,753,769.77 | 28,598,213.53 | 501,539,515.10 | 825,175,400.45 |
| Ⅲ. Provision for Impairment | |||||
| 1. Opening Balance | |||||
| 2. Increased in the Current Period | |||||
| (1) Accrual | |||||
| 3. Decreased in the Current Period | |||||
| (1) Disposal or Scrapping | |||||
| 4. Closing Balance | |||||
| Ⅳ. Book value | |||||
| 1. Closing Balance on Book Value | 1,005,927,643.43 | 221,296,980.36 | 7,099,710.08 | 288,139,034.96 | 1,522,463,368.83 |
| 2. Opening Balance on Book Value | 914,030,376.44 | 188,152,383.47 | 10,926,457.61 | 294,362,113.31 | 1,407,471,330.83 |
(2) Fixed assets with certificates of title not granted
Unit: RMB
| Item Name | Book value | Reasons for certificates of title not granted |
| Nanning marketable housing | 60,491,251.80 | The certificate of title has been granted on January 7, 2020. |
14. Construction in progress
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Projects under Construction | 435,757,406.90 | 226,191,587.11 |
| Total | 435,757,406.90 | 226,191,587.11 |
(1) Details of construction in progress
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Book balance | Provision for decline in value | Book value | Book balance | Provision for decline in value | Book value | |
| Phase I, Urban Intelligent Information Industry Construction Project | 25,497,962.29 | 25,497,962.29 | 9,090,975.91 | 9,090,975.91 | ||
| Dahua Auxiliary and R&D Experimental Building Renovation Project | 33,893,914.76 | 33,893,914.76 | ||||
| The phase II construction project of the smart manufacturing base in Hangzhou | 122,432,129.02 | 122,432,129.02 | 7,313,380.68 | 7,313,380.68 | ||
| Construction Project of Xi'an R & D Center | 55,188,924.03 | 55,188,924.03 | 1,030,576.46 | 1,030,576.46 | ||
| The construction project of the marketing center in Xi'an | 25,256,304.13 | 25,256,304.13 | 441,675.63 | 441,675.63 | ||
| Commercial building under decoration | 55,859,895.45 | 55,859,895.45 | ||||
| Project of Smart IoT Solution R & D and Industrialization | 195,019,175.01 | 195,019,175.01 | 110,183,237.44 | 110,183,237.44 | ||
| Others | 12,362,912.42 | 12,362,912.42 | 8,377,930.78 | 8,377,930.78 | ||
| Total | 435,757,406.90 | 435,757,406.90 | 226,191,587.11 | 226,191,587.11 |
(2) Changes in significant construction in progress
Unit: RMB
| Item Name | Budget | Balance at the Start of the Period | Increased in the current period | Transfer amounts in this period | Other amounts decreased in current period | Balance at the End of the Period | Project accumulative investment as a percentage of the budget | Project Progress | Accumulated capitalized interest amount | Including: capitalized interest amount in the current period | Capitalization rate of the interest in the current period | Capital Source |
| Project of Smart IoT Solution R & D and Industrialization | 911,964,400.00 | 110,183,237.44 | 84,835,937.57 | 195,019,175.01 | 21.38% | 21.38% | Equity Fund | |||||
| The phase II construction project of the smart manufacturing base in Hangzhou | 827,063,700.00 | 7,313,380.68 | 115,118,748.34 | 122,432,129.02 | 14.80% | 14.8% | Equity Fund | |||||
| Construction Project of Xi'an R & D Center | 733,621,400.00 | 1,030,576.46 | 54,158,347.57 | 55,188,924.03 | 7.52% | 7.52% | Equity Fund | |||||
| The construction project of the marketing center in Xi'an | 300,000,000.00 | 441,675.63 | 24,814,628.50 | 25,256,304.13 | 8.42% | 8.42% | Equity Fund |
| Phase I, Urban Intelligent Information Industry Construction Project | 50,000,000.00 | 9,090,975.91 | 16,406,986.38 | 25,497,962.29 | 51.00% | 51% | Equity Fund | |||||
| Commercial building under decoration | 55,859,895.45 | 4,631,356.35 | 60,491,251.80 | 100.00% | Completed | Equity Fund | ||||||
| Dahua Auxiliary and R&D Experimental Building Renovation Project | 33,893,914.76 | 51,345,081.31 | 85,238,996.07 | 100.00% | Completed | Equity Fund | ||||||
| Total | 2,822,649,500.00 | 217,813,656.33 | 351,311,086.02 | 145,730,247.87 | 423,394,494.48 | -- | -- | -- |
15. Intangible assets
(1) Details of intangible assets
Unit: RMB
| Item Name | Land use rights | Patent right | Non-patented technology | Softwares | Trademark rights | Software copyright | Total |
| Ⅰ. Original book value | |||||||
| 1. Opening Balance | 306,095,351.00 | 62,876,510.59 | 105,683,361.47 | 2,700,670.40 | 6,381,122.62 | 483,737,016.08 | |
| 2. Increased in the Current Period | 53,689,050.00 | 26,533,688.57 | 80,222,738.57 | ||||
| (1) Purchase | 53,689,050.00 | 21,461,832.21 | 75,150,882.21 | ||||
| (2) Internal research and development | |||||||
| (3) Acquisition |
| (4) Transfer of construction in progress | 5,071,856.36 | 5,071,856.36 | |||||
| 3. Decreased in the Current Period | 542,823.38 | 1,083,380.85 | 1,626,204.23 | ||||
| (1) Disposal | 224,879.48 | 224,879.48 | |||||
| (2) Transfer to investment real estate | 542,823.38 | 542,823.38 | |||||
| (3) Disposal of subsidiaries | 858,501.37 | 858,501.37 | |||||
| 4. Currency Translation Difference | -1,590.00 | -1,897.81 | -1,526.40 | -5,014.21 | |||
| 5. Closing Balance | 359,239,987.62 | 62,876,510.59 | 131,131,771.38 | 2,699,144.00 | 6,381,122.62 | 562,328,536.21 | |
| Ⅱ. Accumulated amortization | |||||||
| 1. Opening Balance | 13,958,051.21 | 35,139,620.64 | 54,292,191.10 | 2,451,070.42 | 5,428,673.62 | 111,269,606.99 | |
| 2. Increased in the Current Period | 7,341,408.93 | 6,147,460.40 | 25,918,698.70 | 124,800.01 | 476,224.55 | 40,008,592.59 | |
| (1) Accrual | 7,341,408.93 | 6,147,460.40 | 25,918,698.70 | 124,800.01 | 476,224.55 | 40,008,592.59 | |
| 3. Decreased in the Current Period | 38,902.34 | 670,583.35 | 709,485.69 | ||||
| (1) Disposal | 207,179.02 | 207,179.02 | |||||
| (2) Transfer to investment real estate | 38,902.34 | 38,902.34 | |||||
| (3) Disposal of subsidiaries | 463,404.33 | 463,404.33 |
| 4. Currency Translation Difference | 2,563.41 | -1,526.40 | 1,037.01 | ||||
| 5. Closing Balance | 21,260,557.80 | 41,287,081.04 | 79,542,869.86 | 2,574,344.03 | 5,904,898.17 | 150,569,750.90 | |
| Ⅲ. Provision for Impairment | |||||||
| 1. Opening Balance | |||||||
| 2. Increased in the Current Period | |||||||
| (1) Accrual | |||||||
| 3. Decreased in the Current Period | |||||||
| (1) Disposal | |||||||
| 4. Closing Balance | |||||||
| Ⅳ. Book value | |||||||
| 1. Closing Balance on Book Value | 337,979,429.82 | 21,589,429.55 | 51,588,901.52 | 124,799.97 | 476,224.45 | 411,758,785.31 | |
| 2. Opening Balance on Book Value | 292,137,299.79 | 27,736,889.95 | 51,391,170.37 | 249,599.98 | 952,449.00 | 372,467,409.09 |
16. Goodwill
(1) Original book value of goodwill
Unit: RMB
| The invested entity or matters which formed goodwill | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period | ||
| Generated from business combination | Disposal | |||||
| South North United Information Technology Co., Ltd. | 71,083,281.09 | 71,083,281.09 | ||||
| Dahua Technology Italy S.R.L. | 2,591,935.00 | 4,023,359.18 | 6,615,294.18 | |||
| LorexTechnology Inc. | 36,070,196.12 | 36,070,196.12 | ||||
| Total | 109,745,412.21 | 4,023,359.18 | 113,768,771.39 |
(2) Provision of impairment in goodwill
Unit: RMB
| The invested entity or matters which formed goodwill | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period | ||
| Accrued | Disposal | |||||
| South North United Information Technology Co., Ltd. | 71,083,281.09 | 71,083,281.09 | ||||
| Total | 71,083,281.09 | 71,083,281.09 | ||||
Information about the asset group or asset group combination where the goodwill is located
| The invested entity name or matters which formed goodwill | Amount of goodwill | Information about the asset group or asset group combination where it is located |
| South-North United Information Technology Co., Ltd. | 71,083,281.09 | The asset group relating to the goodwill generated for the acquisition of the South-North United Information Technology Co., Ltd., that is, the long-term asset group, including fixed assets and intangible assets, formed for South-North United Information Technology Co., Ltd. on December 31, 2019. |
| Dahua Technology Italy S.R.L. | 6,615,294.18 | The asset group relating to the goodwill generated for the acquisition of the Dahua Technology Italy S.R.L., that is, the long-term asset group, including fixed assets and intangible assets, formed for Dahua Technology Italy S.R.L. on December 31, 2019. |
| Lorex Technology Inc. | 36,070,196.12 | The asset group relating to the goodwill generated for the acquisition of Lorex Technology Inc., that is, the long-term asset group, including fixed assets and intangible assets, formed for Lorex Technology Inc. on December 31, 2019. |
Explain the goodwill impairment test process, key parameters (e.g. growth rate at forecast period, growth rate atsteady period, profit rate, discount rate, forecast period, etc. when the present value of future cash flow is estimated) andthe confirmation method of goodwill impairment loss:
The recoverable amount is determined according to the present value of the expected future cash flow of the relevantasset group. Its future cash flow is determined based on the 5-year financial budget approved by management from 2020to 2024, with a discount rate of 15% to 18%. Cash flows over 5 years are calculated on the basis of zero growth rate. Thegrowth rate is determined based on the growth forecast of the relevant industry and does not exceed the long-termaverage growth rate of the industry. Future cash flow estimates are based on management’s estimated sales amount, costof sales, and operating expenses during the forecast period based on past performance and expectations of marketdevelopment.Result of goodwill impairment testThe Company assessed the recoverable amount of goodwill. Among them, the recoverable amount of the assetgroup of Dahua Technology Italy S.R.L. and Lorex Technology Inc. was higher than the book value. There was no sign ofimpairment of the goodwill of the asset group. The goodwill related to South-North United Information Technology Co., Ltd.has been impaired, so the impairment provision is fully provided for the goodwill of the relevant asset group, and theamount is RMB 71,083,281.09.
17. Long-term deferred expenses
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Prepaid Expenses in This Period | Other Amounts Decreased | Balance at the End of the Period |
| Housing rent | 107,037.29 | 591,670.75 | 43,805.23 | 654,902.81 | |
| Improvement expenditure of fixed assets leased by operating lease | 37,010,881.26 | 18,317,774.30 | 18,204,864.92 | 467,495.26 | 36,656,295.38 |
| Total | 37,117,918.55 | 18,909,445.05 | 18,248,670.15 | 467,495.26 | 37,311,198.19 |
18. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets not written off
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | ||
| Deductible temporary difference | Deferred Income Tax Assets | Deductible temporary difference | Deferred Income Tax Assets | |
| Provision for Impairment of Assets | 1,372,773,968.68 | 280,528,766.00 | 982,203,827.26 | 193,996,211.23 |
| Unrealized Profit from Internal Transactions | 547,077,611.01 | 104,177,416.44 | 716,955,234.71 | 148,900,021.90 |
| Deductible Losses | 112,428,262.35 | 22,790,464.62 | 92,044,909.04 | 16,363,887.53 |
| Expected Liabilities | 294,259,856.02 | 48,245,412.84 | 172,287,233.54 | 28,619,808.17 |
| Payroll payable | 186,486,020.88 | 30,804,008.79 | 138,626,628.92 | 22,872,593.43 |
| Equity incentive expense | 645,397,447.32 | 100,199,757.74 | 27,235,019.84 | 4,337,560.56 |
| Costs from Tax Increase Due to Absence of Invoice | 332,596,395.85 | 79,563,686.57 | 41,376,609.34 | 9,172,826.12 |
| Changes in fair value gains and losses | 4,652,255.96 | 697,838.39 | 9,995,544.23 | 1,863,348.58 |
| Others | 4,204,829.75 | 1,051,207.44 | 976,371.23 | 146,455.68 |
| Total | 3,499,876,647.82 | 668,058,558.83 | 2,181,701,378.11 | 426,272,713.20 |
(2) Deferred income tax liabilities not written off
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | ||
| Taxable temporary difference | Deferred Income Tax Liabilities | Taxable temporary difference | Deferred Income Tax Liabilities | |
| The gross profit of sales by installments | 274,935,901.68 | 50,565,095.68 | 256,706,108.82 | 50,137,969.76 |
| Total | 274,935,901.68 | 50,565,095.68 | 256,706,108.82 | 50,137,969.76 |
(3) Deferred Income Tax Assets or Liabilities Listed by Net Amount after Offset
Unit: RMB
| Item Name | Amount of Deferred Income Tax Assets Offset against Liabilities at the End of the Period | Balance of Deferred Income Tax Assets or Liabilities after Offset at the End of the Period | Amount of Deferred Income Tax Assets Offset against Liabilities at the Start of the Period | Balance of Deferred Income Tax Assets or Liabilities after Offset at the Start of the Period |
| Deferred Income Tax Assets | 668,058,558.83 | 426,272,713.20 | ||
| Deferred Income Tax Liabilities | 50,565,095.68 | 50,137,969.76 |
(4) Deferred income tax assets or liabilities listed by net amount after offset
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Deductible temporary difference | 288,540,182.92 | 247,169,565.91 |
| Deductible Losses | 426,612,969.56 | 172,253,137.74 |
| Total | 715,153,152.48 | 419,422,703.65 |
(5) Details of unrecognized deferred income tax assets
Unit: RMB
| Year | Amount at the end of the period | Opening balance | Notes |
| 2019 | 3,970,432.34 | Losses in 2014 and due in 2019 | |
| 2020 | 11,057,227.29 | 11,057,227.29 | Losses in 2015 and due in 2020 |
| 2021 | 39,382,442.56 | 18,784,799.88 | Losses in 2016 and due in 2021 |
| 2022 | 48,794,703.23 | 40,598,242.37 | Losses in 2017 and due in 2022 |
| 2023 | 87,817,547.48 | 97,842,435.86 | Losses in 2018 and due in 2023 |
| 2024 | 239,561,049.00 | Losses in 2019 and due in 2024 | |
| Total | 426,612,969.56 | 172,253,137.74 | -- |
19. Other non-current assets
Has the new income standard been implemented?
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Prepayments for purchase of engineering equipments | 8,605,835.50 | 5,627,812.52 |
| Prepayments for acquisition of real estate | 10,649,793.09 | |
| Total | 8,605,835.50 | 16,277,605.61 |
20. Short-term loans
(1) Categories of short-term loan
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Guaranteed loans | 400,000,000.00 | |
| Fiduciary loans | 400,000,000.00 | 1,380,000,000.00 |
| Interest payable for short-term loan | 323,888.90 | |
| Pledged, guaranteed loans | 71,709,561.83 | |
| Total | 400,323,888.90 | 1,851,709,561.83 |
21. Transactional financial liabilities
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Transactional financial liabilities | 38,602,602.30 | |
| Including: | ||
| Derivative Financial Liabilities | 38,602,602.30 | |
| Including: | ||
| Total | 38,602,602.30 |
Other notes:
22. Notes payable
Unit: RMB
| Types | Balance at the End of the Period | Balance at the Start of the Period |
| Commercial acceptance bill | 1,875,977,697.88 | 1,405,577,927.60 |
| Bank acceptance bill | 1,931,315,097.19 | 2,266,008,177.19 |
| Total | 3,807,292,795.07 | 3,671,586,104.79 |
23. Accounts payable
(1) Details of accounts payable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Payment for purchase of materials | 4,140,093,134.61 | 3,586,524,616.43 |
| Payment for engineering equipments | 150,160,367.20 | 203,204,977.77 |
| Total | 4,290,253,501.81 | 3,789,729,594.20 |
(2) Important accounts payable aged over 1 year
There is no significant accounts payable aged over 1 year.
24. Advance receipts
Has the new income standard been implemented?
□ Yes √ No
(1) Details of received pre-payments
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Payments for sales of goods | 207,337,743.83 | 200,172,889.06 |
| Pre-payments from construction projects | 168,184,051.99 | 143,125,002.14 |
| Total | 375,521,795.82 | 343,297,891.20 |
(2) Important advance receipts aged over 1 year
There is no significant advance receipts aged over 1 year.
25. Payroll payable
(1) Details of payroll payable
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| Ⅰ. Short-term remuneration | 1,102,043,457.78 | 4,926,144,161.95 | 4,452,451,024.11 | 1,575,736,595.62 |
| Ⅱ. Dimission benefits - defined contribution scheme | 22,315,154.16 | 185,323,588.78 | 201,006,979.26 | 6,631,763.68 |
| Ⅲ. Dismissal welfare | 16,418,388.67 | 16,418,388.67 | ||
| Total | 1,124,358,611.94 | 5,127,886,139.40 | 4,669,876,392.04 | 1,582,368,359.30 |
(2) List of short-term remuneration
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| 1. Wages or salaries, bonuses, allowances and subsidies | 921,728,024.05 | 4,330,780,797.92 | 3,890,739,205.45 | 1,361,769,616.52 |
| 2. Staff welfare | 121,582,527.25 | 121,582,527.25 | ||
| 3. Social insurance contributions | 18,100,292.05 | 126,564,192.63 | 138,767,779.77 | 5,896,704.91 |
| Including: medical insurance | 15,802,475.59 | 109,730,568.81 | 120,435,029.28 | 5,098,015.12 |
| Work injury insurance premium | 676,267.78 | 4,651,672.37 | 4,975,923.16 | 352,016.99 |
| Maternity insurance premium | 1,621,548.68 | 12,181,951.45 | 13,356,827.33 | 446,672.80 |
| 4. Housing funds | 212,046.97 | 217,431,757.08 | 217,354,159.91 | 289,644.14 |
| 5. Labor union and education funds | 162,003,094.71 | 129,784,887.07 | 84,007,351.73 | 207,780,630.05 |
| Total | 1,102,043,457.78 | 4,926,144,161.95 | 4,452,451,024.11 | 1,575,736,595.62 |
(3) Defined contribution scheme (Note)
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| 1. Basic pension insurance | 21,283,607.42 | 178,071,528.56 | 193,326,166.14 | 6,028,969.84 |
| 2. Unemployment insurance | 1,031,546.74 | 7,252,060.22 | 7,680,813.12 | 602,793.84 |
| Total | 22,315,154.16 | 185,323,588.78 | 201,006,979.26 | 6,631,763.68 |
26. Taxes payable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| VAT | 321,925,577.86 | 280,098,796.36 |
| Enterprise Income Tax | 419,841,639.86 | 258,232,990.39 |
| Individual income tax | 18,196,436.48 | 12,298,554.78 |
| Urban Maintenance and Construction Tax | 20,932,919.75 | 18,878,589.21 |
| House property tax | 10,840,683.16 | 5,757,911.72 |
| Education surcharges (including local education surcharges) | 14,952,034.15 | 13,462,512.05 |
| Stamp duty | 2,048,405.64 | 1,939,872.86 |
| Land usage tax | 2,099,648.89 | |
| Disabled security fund | 1,020,725.47 | 661,501.37 |
| Sales tax | 3,356,926.93 | 5,114,791.97 |
| Others | 242,122.07 | 932,880.21 |
| Total | 813,357,471.37 | 599,478,049.81 |
27. Other payables
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Interest Payable | 4,745,203.31 | |
| Dividends Payable | 9,454,479.13 | |
| Other Payables | 1,154,461,234.11 | 1,046,791,891.66 |
| Total | 1,163,915,713.24 | 1,051,537,094.97 |
(1) Interests payable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Interest payable for short-term loan | 3,046,260.22 | |
| Long-term loan interest | 991,276.43 | |
| Interest payable for national development fund | 707,666.66 | |
| Total | 4,745,203.31 |
(2) Dividends payable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Equity Incentive Restricted Stock Dividend | 9,454,479.13 | |
| Total | 9,454,479.13 |
(3) Other payables
1) Other payables listed by nature of funds
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Deposits | 51,615,269.84 | 34,384,749.18 |
| Temporarily borrowed and advance payments | 202,871,784.05 | 164,250,303.45 |
| Special fund for talent incentive | 58,413.00 | 30,097,503.00 |
| Restricted share repurchase obligations | 854,084,857.87 | 807,733,586.00 |
| Others | 45,830,909.35 | 10,325,750.03 |
| Total | 1,154,461,234.11 | 1,046,791,891.66 |
2) Significant other payables aged over 1 year
There are no significant other payables aged over 1 year
28. Non-current liabilities due within 1 year
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Long-term debt due within one year | 25,500,000.00 | 25,500,000.00 |
| Interest payable due within 1 year | 1,493,755.57 | |
| Total | 26,993,755.57 | 25,500,000.00 |
29. Other current liabilities
Has the new income standard been implemented?
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| To-be-transferred sales taxes in installments | 71,233,107.93 | 70,845,639.51 |
| Total | 71,233,107.93 | 70,845,639.51 |
30. Long-term loans
(1) Categories of long-term loans
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Pledged loans | 153,500,000.00 | 179,000,000.00 |
| Total | 153,500,000.00 | 179,000,000.00 |
31. Estimated liabilities
Has the new income standard been implemented?
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | Causes |
| Others | 256,094.63 | Loss-making contract | |
| Expected after-sales maintenance cost | 300,715,511.10 | 193,761,170.12 | After-sales maintenance |
| Expected return amount after the period | 2,699,281.77 | Expected sales return | |
| Total | 303,670,887.50 | 193,761,170.12 | -- |
32. Deferred income
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period | Causes |
| Government subsidies | 58,693,533.40 | 36,652,700.00 | 4,088,859.51 | 91,257,373.89 | Received government subsidies related to assets |
| Member points | 25,953,387.45 | 25,953,387.45 | Sales of merchandise | ||
| Total | 58,693,533.40 | 62,606,087.45 | 4,088,859.51 | 117,210,761.34 | -- |
Projects related to government subsidies:
Unit: RMB
| Liabilities | Balance at the Start of the Period | The amount of new subsidies in this period | Amount recorded as non-operating revenue in this period | The Amount Recorded as Other Income in This Period | The Amount Written off Costs in This Period | Other variations | Balance at the End of the Period | Related to assets/related to income |
| Special award for industrial park projects | 58,693,533.40 | 3,172,623.48 | 55,520,909.92 | Related to assets | ||||
| Phase I investment financial incentive fund for security video surveillance product production base project | 27,455,000.00 | 27,455,000.00 | Related to assets | |||||
| Funding for manufacturing enterprise technological transformation projects | 9,197,700.00 | 916,236.03 | 8,281,463.97 | Related to assets | ||||
| Total | 58,693,533.40 | 36,652,700.00 | 4,088,859.51 | 91,257,373.89 |
Other notes:
(1) According to the FuJingGuan [2017] No.35 document and the FuCaiQi [2017] No.506 document issued by EconomicDevelopment Zone Management Committee and the Finance Bureau of Fuyang District, Hangzhou, the Companyreceived the special subsidies for the Fuyang Dahua Intelligent (IoT) Industrial Park in 2015 and 2017, respectively, RMB
31.66 million each time, totaling RMB 63.32 million. As the government grant related to assets, it is recognized as deferredincome and will be recognized as other income in installments based on the estimated service life of the asset (20 years).
(2) According to the FuJingGuan [2019] No.18 document and the FuCaiQi [2019] No.286 document issued by FuyangEconomic Development Zone Management Committee and the Finance Bureau of Fuyang District, Hangzhou, in 2019,the Company received a financial incentive fund of RMB 27.455 million for the phase I investment of the production baseof security video surveillance products, which was recognized as deferred income as a government subsidy related to
assets.
(3) According to the FuJingXinCai [2019] No.49 document and the FuCaiQi [2019] No.804 document issued by Economicand Information Bureau of Fuyang District, Hangzhou and the Finance Bureau of Fuyang District, Hangzhou, In 2019, theCompany received a total of RMB 9.1977 million in 2019 from the first batch of funds for technical renovation projects ofmunicipal manufacturing enterprises as government subsidies related to assets, which were recognized as deferredincome, and recognized as other income in installments based on the estimated service life of the assets (15–111months).
33. Other non-current liabilities
Has the new income standard been implemented?
□ Yes √ No
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| To-be-transferred sales taxes in installments | 322,275,367.74 | 289,096,280.89 |
| Other loans | 110,000,000.00 | 110,000,000.00 |
| Total | 432,275,367.74 | 399,096,280.89 |
Other notes:
The Company and CDB Development Fund reached a cooperation intention to increase the capital of the Company'ssubsidiary Dahua Zhilian Co., Ltd. The capital increase agreement stipulates that CDB Development Fund will not sendsenior management personnel such as directors and supervisors to Dahua Zhilian; the Company shall pay an annualinvestment profit of 1.2% to CDB Development Fund through dividends and repurchase premium. The Company shallredeem the equity of CDB Development Fund in Dahua Zhilian from 2022 to 2024 as other non-current liabilities.
34. Share capital
Unit: RMB
| Balance at the Start of the Period | Increased or decreased amount in this period (+/-) | Balance at the End of the Period | |||||
| Shares newly issued | Bonus shares | Shares converted from capital reserves | Others | Subtotal | |||
| Total shares | 2,997,621,930.00 | 10,413,500.00 | -4,322,200.00 | 6,091,300.00 | 3,003,713,230.00 | ||
Other notes:
(1) According to the resolution of the 19th session of the 6th Board of Directors' meeting held by the Company onDecember 10, 2018 and the revised company Articles of Association and the resolution of the Company's 5thExtraordinary Shareholders' Meeting in 2018, the Company repurchased and canceled 44,200 shares of the granted butlocked restricted stock held by the resigned equity incentive targets, reducing the registered capital by RMB 44,200.00.After the repurchase cancellation, the Company's registered capital was reduced to RMB 2,997,577,730.00. The above
capital reduction has been verified through Xin Kuai Shi Bao Zi [2019] No.ZF10047 Verification Report issued by BDOChina Shu Lun Pan CPAs (special general partnership).
(2) According to the 2018 Restricted Stock Incentive Plan (Draft) reviewed and approved at the 4th Extraordinary GeneralMeeting of Shareholders held by the Company on September 14, 2018, and the decisions at the 25th session of the 6thBoard of Directors' meeting held by the Company on September 6, 2019, the restricted stocks were subscribed by 749restricted stock incentive targets, with the registered capital increased by RMB 10,413,500.00, and up to RMB3,007,991,230.00. The above capital contribution has been verified through Xin Kuai Shi Bao Zi [2019] No.ZF10785Verification Report issued by BDO China Shu Lun Pan CPAs (special general partnership).
(3) According to the resolution of the 27th session of the 6th Board of Directors' meeting held by the Company onNovember 4, 2019 and the revised company Articles of Association and the resolution of the Company's 2ndExtraordinary Shareholders' Meeting in 2019, the Company repurchased and canceled 4,278,000 shares of the grantedbut locked restricted stock held by the resigned equity incentive targets, reducing the registered capital by RMB4,278,000.00. After the repurchase cancellation, the Company's registered capital was reduced to RMB 3,003,713,230.00.The change registration of the above capital reduction matters is still in process.
35. Capital reserve
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| Capital premium (capital share premium) | 1,301,563,581.94 | 80,704,625.00 | 31,014,609.21 | 1,351,253,597.73 |
| Other capital reserves | 199,617,280.89 | 337,703,279.48 | 5,719,038.57 | 531,601,521.80 |
| Total | 1,501,180,862.83 | 418,407,904.48 | 36,733,647.78 | 1,882,855,119.53 |
Other notes, including increases or decreases in this period and their reasons:
1. According to the 2019 Restricted Stock Incentive Plan (Draft) reviewed and approved at the 2nd Extraordinary GeneralMeeting of Shareholders held by the Company on November 21, 2019, and the decisions at the 25th session of the 6thBoard of Directors' meeting held by the Company on September 6, 2019, 10,413,500 restricted stocks were subscribed by749 restricted stock incentive targets. The actual subscription amount paid by the restricted stock incentive targets wasRMB 91,118,125.00, which was recorded in the capital reserve (share premium) as RMB 80,704,625.00.
2. The amount of employee service exchanged by the share-based payment for this period was RMB 199,923,044.23 anddue to repurchase and cancellation, the granted but locked restricted shares from equity incentive targets reimbursedemployee service remuneration of RMB 5,719,038.57. The impact amount of the income tax on the part that the amountdeductible before tax exceeded the share-based payment related cost which the accounting standards allows torecognize, is RMB 67,209,507.29, increasing other capital reserves by RMB 267,132,551.52 in total, and reducing othercapital reserves by RMB 5,719,038.57;
3. In this period, the Company repurchased and canceled the granted but locked restricted shares from equity incentivetargets, amounting to 4,322,200 shares, reducing the capital shares by RMB 4,322,200.00, and reducing the capitalreserves (capital share premium) by RMB 30,990,174.00;
4. In this period, the impact of changes in other owners' equity of Zhejiang Leapmotor Technology Co., Ltd. that theCompany should enjoy under the Equity Method was recognized as the Capital Reserves - Other Capital Reserves RMB
70,570,727.96.
5. According to the resolution of the 21st session of the 6th Board of Directors' meeting on April 25, 2019, the Companyrepurchased its shares in a centralized competitive bidding with a total amount for repurchase of not less than RMB 200million (inclusive) and not more than RMB 400 million (inclusive), which will be used to implement equity incentives oremployee stock ownership plans later. In the current period, the Company repurchased 13,391,480 shares. The totalrepurchase cost was RMB 203,523,835.65 (including transaction costs of RMB 24,435.21), and the capital reserve (sharepremium) was reduced by RMB 24,435.21.
36. Treasury Share
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| Restricted shares | 807,733,586.00 | 91,118,125.00 | 44,766,853.13 | 854,084,857.87 |
| Share repurchase | 203,499,400.44 | 203,499,400.44 | ||
| Total | 807,733,586.00 | 294,617,525.44 | 44,766,853.13 | 1,057,584,258.31 |
Other notes, including increases or decreases in this period and their reasons:
1. The Company pays shares with restricted stocks. In the current period, 10,413,500 shares were granted to employees,with a grant price of RMB 8.75 per share. The subsidy actually received by the restricted stock incentive targets was RMB91,118,125.00. The amount of full recognition of liabilities and treasury shares in respect of repurchase was RMB91,118,125.00;
2. The Company repurchased restricted stocks of former employees in this period, and a total of 4,322,200 shares ofrestricted stocks were repurchased, which correspondingly reduced the share capital by RMB 4,322,200.00, reduced thecapital reserve capital premium by RMB 30,990,174.00, and at the same time reduced the corresponding treasury stocksamounting RMB 35,312,374.00.
3. The cash dividends allocated to restricted stock holders reduced treasury stocks and related liabilities by RMB9,882,284.31. Due to the departure of some employees, the cash dividends allocated to related former employees wererecovered by RMB 427,805.18, and treasury stocks and related liabilities were increased by RMB 427,805.18.
4. In the current period, the Company repurchased 13,391,480 shares. The total repurchase cost was RMB203,523,835.65 (including transaction costs of RMB 24,435.21), and treasury stocks increased by RMB 203,499,400.44.
37. Other comprehensive incomes
Unit: RMB
| Item Name | Balance at | This Period's Amount of Occurrence | Balance at |
| the Start of the Period | Before tax balance in this period | Less: recorded into other comprehensive incomes in previous period and transferred to P/L in current period | Less: Recorded into other comprehensive incomes in previous period and transferred to retained income in current period | Less: Income Tax Expense | Attributable to the Company after tax | Attributable to the minority shareholders after tax | the End of the Period | |
| II. Other comprehensive income that will be reclassified into P/L | 10,337,164.41 | 1,971,193.29 | 1,971,111.82 | 81.47 | 12,308,276.23 | |||
| Currency conversion difference | 10,337,164.41 | 1,971,193.29 | 1,971,111.82 | 81.47 | 12,308,276.23 | |||
| Other comprehensive incomes in total | 10,337,164.41 | 1,971,193.29 | 1,971,111.82 | 81.47 | 12,308,276.23 |
38. Surplus reserve
Unit: RMB
| Item Name | Balance at the Start of the Period | Increased in the current period | Decreased in the current period | Balance at the End of the Period |
| Statutory surplus reserve | 1,245,829,224.05 | 307,861,781.87 | 1,553,691,005.92 | |
| Total | 1,245,829,224.05 | 307,861,781.87 | 1,553,691,005.92 |
According to the regulations of the Company Law and the Articles of Association of the Company, the Company took thestatutory surplus reserve at 10% of the net profit of the parent company.
39. Undistributed profits
Unit: RMB
| Item Name | Current Period | Previous Period |
| Undistributed Profit before Adjustment at the End of Previous Period | 7,670,983,116.33 | 5,996,130,036.27 |
| Adjust the total undistributed profits at the start of the period (increase +, decrease -) | -4,861,861.70 | |
| Undistributed Profit after Adjustment at the Start of the Period | 7,666,121,254.63 | 5,996,130,036.27 |
| Add: net profit attributable to parent company's owner in current period | 3,188,144,692.55 | 2,529,426,468.61 |
| Less: withdrawal for statutory surplus reserve | 307,861,781.87 | 274,822,162.55 |
| Payable dividends on ordinary shares | 299,761,669.99 | 579,751,226.00 |
| Less: Other | -953,354.04 | |
| Add: Common stock dividends corresponding to repurchase and cancellation of restricted stocks | 427,805.18 | |
| Undistributed Profit at the End of the Period | 10,248,023,654.54 | 7,670,983,116.33 |
Undistributed profit after adjustment at the start of the period:
Note 1: Due to changes in accounting policies, the undistributed profit at the start of the period was affected by RMB-4,861,861.70.Note 2: In accordance with relevant Company Law, the Company is required to transfer 10% of its net profit reported in itsfinancial statements to statutory surplus reserve.Note 3: According to the resolution of the 2018 Annual General Meeting of Stockholders on April 9, 2019, based on thetotal share capital of the Company on December 31, 2018, a total of RMB 299,761,669.99 cash dividend was distributedto all shareholders, with RMB 1.000014 (including tax) for every 10 shares.
40. Operating income and operating costs
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | ||
| Income | Cost | Income | Cost | |
| Main Business | 25,603,307,543.53 | 14,980,864,723.86 | 23,191,615,559.35 | 14,470,491,985.75 |
| Other businesses | 546,123,108.89 | 415,329,216.58 | 474,072,546.87 | 400,689,080.94 |
| Total | 26,149,430,652.42 | 15,396,193,940.44 | 23,665,688,106.22 | 14,871,181,066.69 |
Has the new income standard been implemented?
□ Yes √ No
41. Taxes and surcharges
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Urban Maintenance and Construction Tax | 87,805,350.08 | 97,207,644.92 |
| Education Surcharges | 62,728,151.41 | 69,434,971.62 |
| House property tax | 14,052,113.20 | 11,836,830.04 |
| Land usage tax | 641,390.70 | 3,188,528.47 |
| Vehicle and vessel use tax | 85,627.14 | 89,710.39 |
| Stamp duty | 10,908,342.47 | 10,206,314.47 |
| Others | 6,361,143.36 | 417,330.67 |
| Total | 182,582,118.36 | 192,381,330.58 |
42. Selling expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Labor cost | 1,944,828,646.06 | 1,629,543,927.81 |
| Transportation and vehicle expenses | 346,725,573.69 | 304,231,861.10 |
| After-sales service expense | 430,530,438.74 | 224,209,671.79 |
| Marketing expense | 276,868,290.02 | 334,418,534.17 |
| Administrative expenses | 208,180,587.84 | 183,389,478.35 |
| Traveling expense | 193,657,631.39 | 284,309,308.39 |
| Business entertainment | 206,996,321.43 | 209,983,842.65 |
| Taxation and insurance expense | 184,911,624.99 | 29,709,202.53 |
| Communication expense | 51,182,330.83 | 38,273,229.13 |
| Knowledge resource fee | 40,321,555.97 | 16,884,932.08 |
| Depreciation cost and asset amortization | 24,458,378.82 | 18,452,085.97 |
| Others | 44,285,896.04 | 91,974,873.81 |
| Total | 3,952,947,275.82 | 3,365,380,947.78 |
43. Administration expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Labor cost | 494,253,814.89 | 363,927,940.64 |
| Administrative expenses | 71,895,061.09 | 92,425,584.47 |
| Depreciation cost and asset amortization | 68,436,576.06 | 66,357,497.12 |
| Consumables and service fees | 11,998,192.10 | 10,367,343.40 |
| Knowledge resource fee | 39,236,082.34 | 34,427,472.19 |
| Transportation and vehicle expenses | 12,545,706.61 | 10,071,892.58 |
| Business entertainment | 16,918,500.92 | 14,950,790.29 |
| Traveling expense | 13,182,818.36 | 10,790,701.94 |
| Others | 12,414,192.30 | 29,649,372.01 |
| Total | 740,880,944.67 | 632,968,594.64 |
44. R&D expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Labor cost | 2,459,488,778.94 | 1,934,011,719.44 |
| Research consumables and service fees | 152,977,333.53 | 192,582,688.73 |
| Depreciation cost and asset amortization | 46,419,091.31 | 39,157,143.81 |
| Traveling expense | 58,693,915.07 | 68,476,970.51 |
| Administrative expenses | 25,172,723.64 | 14,771,393.78 |
| Communication expense | 15,732,289.08 | 13,622,482.14 |
| Others | 35,735,372.71 | 21,250,104.12 |
| Total | 2,794,219,504.28 | 2,283,872,502.53 |
45. Financial expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Interest expense | 133,656,681.06 | 114,335,785.04 |
| Less: interest income | 197,576,570.81 | 113,966,942.24 |
| P/L on foreign exchange | -37,198,071.97 | -152,398,515.34 |
| Others | 31,040,381.61 | 28,861,709.80 |
| Total | -70,077,580.11 | -123,167,962.74 |
46. Other incomes
Unit: RMB
| Sources of other incomes | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Government subsidies | 927,125,385.10 | 733,874,699.13 |
| Total | 927,125,385.10 | 733,874,699.13 |
47. Investment income
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Long-term equity investment income measured by equity method | -115,707,007.32 | -36,049,906.26 |
| Investment income from disposal of long-term equity investment | 9,152,198.76 | 706,569.92 |
| Investment income from possession of available-for-sale financial assets | 17,171,892.61 | 1,005,008.70 |
| After losing control, the remaining equity is re-measured at fair value | 1,013,416.14 | |
| Investment income from disposal of financial assets measured in fair value with its changes recorded into current profit or loss | -7,508,380.12 | -45,687,750.95 |
| Investment income from treasury bond reverse repurchase | 308,838.52 | 380,167.33 |
| Investment income from financial products | 352,834.25 | |
| Total | -95,569,041.41 | -79,293,077.01 |
48. Income from changes at fair value
Unit: RMB
| Source of the income from changes in fair value | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Trading Financial Assets | 38,392,246.03 | |
| Including: gains from changes at fair value of derivative financial instruments | 38,392,246.03 |
| Transactional financial liabilities | -38,602,602.30 | |
| Other Non-current Financial Assets | 3,462,993.57 | |
| Total | 41,855,239.60 | -38,602,602.30 |
49. Credit impairment losses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Bad debt losses of other receivables | -18,716,785.01 | |
| Bad debt losses of accounts receivable | -400,159,395.91 | |
| Total | -418,876,180.92 |
50. Asset impairment losses
Has the new income standard been implemented?
□ Yes √ No
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Ⅰ. Losses on bad debts | -335,412,897.12 | |
| Ⅱ. Losses on decline in price of inventories | -40,091,399.91 | -23,585,293.84 |
| XIII. Goodwill impairment losses | -71,083,281.09 | |
| Total | -111,174,681.00 | -358,998,190.96 |
51. Asset disposal income
Unit: RMB
| Sources of the asset disposal income | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Income from disposal of fixed assets | 835,214.24 | 17,535.97 |
52. Non-operating revenue
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | Amount recorded into non-recurring profit and loss in current period |
| Government subsidies | 4,901,161.00 | 5,145,046.05 | 4,901,161.00 |
| Gains and losses of non-current asset retirement | 701,905.83 | 563,588.96 | 701,905.83 |
| No payment required | 62,450,000.00 | ||
| Others | 5,876,195.77 | 9,038,846.29 | 5,876,195.77 |
| Total | 11,479,262.60 | 77,197,481.30 | 11,479,262.60 |
Government subsidies recorded into current period P/L:
Unit: RMB
| Subsidy items | Distributing Entity | Distributing Reason | Types of Nature | Subsidies Influence Profit and Loss in the Current Year or not | Special Subsidy or not | This period's amount of occurrence | Previous period's amount of occurrence | Related to assets/related to income |
| Baise City's contribution award for encouraging the economic development of headquarters | Baise Municipal Investment Promotion Bureau | Reward | Subsidies obtained due to local support policies such as investment promotion by local governments | Yes | No | 1,910,000.00 | 2,890,000.00 | Related to income |
| 2016 (3rd batch) National Intellectual Property Demonstration Enterprise and Advantageous Enterprise | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies obtained for research and development, technological update and transformation | Yes | No | 100,000.00 | Related to income |
| Backbone enterprises in Hangzhou drive the development of the industrial chain | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 1,747,200.00 | Related to income | |
| 2018 Top Ten Merit Enterprise (Excellent Entrepreneur) Award | Economic and Information Bureau of Fuyang District, Hangzhou | Reward | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 200,000.00 | Related to income |
| The 2nd batch of cross-border E-commerce support funds in 2018 | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 150,000.00 | Related to income | |
| Employment and entrepreneurship subsidies | Hangzhou Employment Management Service Bureau | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 6,600.00 | Related to income | |
| Subsidy for the elimination of old vehicles in Hangzhou | Hangzhou Finance Bureau | Subsidy | Subsidies obtained due to local support policies such as investment promotion by local governments | Yes | No | 14,500.00 | Related to income |
| Other special subsidies | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 133,861.00 | 157,313.92 | Related to income |
| Patent grant subsidies | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies obtained for research and development, technological update and transformation | Yes | No | 99,000.00 | Related to income | |
| Enterprise Award for Outstanding Contribution to Employment Promotion | Finance Bureau of Binjiang District, Hangzhou | Reward | Subsidies obtained due to local support policies such as investment promotion by local governments | Yes | No | 100,000.00 | Related to income |
| Other special subsidies | Finance Bureau of Binjiang District, Hangzhou | Reward | Subsidies obtained due to local support policies such as investment promotion by local governments | Yes | No | 340,000.00 | Related to income | |
| Other special subsidies | Hangzhou Finance Bureau | Reward | Subsidies obtained due to local support policies such as investment promotion by local governments | Yes | No | 100,000.00 | Related to income | |
| Talent contribution award | Baise Municipal Investment Promotion Bureau | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 101,706.00 | Related to income |
| Major science and technology innovation funding | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 1,000,000.00 | Related to income | |
| Policy support award funding for Intelligent Transportation Industry Park | Wuxi Taihu Town Management Committee | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 640,000.00 | Related to income |
| Funding for central service trade innovation development pilot | Finance Bureau of Binjiang District, Hangzhou | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 264,526.13 | Related to income | |
| Other special subsidies | Hangzhou Vocational Skills Training and Guidance Center | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 18,000.00 | Related to income |
| Other special subsidies | Hangzhou Finance Bureau | Subsidy | Subsidies received due to engagement in specific industries and trades encouraged and supported by the State (obtained by national policies and regulations) | Yes | No | 73,500.00 | Related to income |
53. Non-operating expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence | Amount recorded into non-recurring profit and loss in current period |
| Donations | 6,642,338.61 | 630,000.00 | 6,642,338.61 |
| Gains and losses of non-current asset retirement | 947,208.51 | 1,544,880.42 | 947,208.51 |
| Water conservancy fund | 14,370.71 | 25,614.29 | |
| Others | 2,192,571.83 | 1,911,707.03 | 2,192,571.83 |
| Total | 9,796,489.66 | 4,112,201.74 | 9,782,118.95 |
54. Income tax expense
(1) Income tax expenses table
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Current income tax expense | 511,416,549.86 | 345,147,511.10 |
| Deferred income tax expense | -173,711,876.89 | -166,584,920.31 |
| Total | 337,704,672.97 | 178,562,590.79 |
(2) Reconciliation of accounting profits and income tax expenses
Unit: RMB
| Item Name | This Period's Amount of Occurrence |
| Total Profit | 3,498,563,157.51 |
| Income tax expense calculated at statutory/applicable tax rate | 510,880,419.94 |
| Impact by applying different tax rates to subsidiaries | -19,332,358.22 |
| Impact of income tax before adjustment in this period | -98,424,403.62 |
| Impact of the non-deductible costs, expenses and losses | 27,026,219.95 |
| Impact of additional deduction of the research and development expenses | -264,338,243.36 |
| Others | 181,893,038.28 |
| Income tax expense | 337,704,672.97 |
55. Other comprehensive incomes
See the notes in this section for details.
56. Items of Cash Flow Statement
(1) Other cash receipts relating to operating activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Interest Income | 82,401,795.69 | 43,728,828.20 |
| Government subsidies | 196,643,314.00 | 75,170,194.30 |
| Tender and performance guarantee deposit | 94,700,565.19 | 68,951,758.33 |
| Incomings and outgoings and advanced payments | 146,971,378.81 | 96,065,091.17 |
| Others | 16,109,349.16 | 40,318,844.30 |
| Total | 536,826,402.85 | 324,234,716.30 |
(2) Other cash payments relating to operating activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Administrative expenses | 306,574,162.66 | 280,484,946.63 |
| Communication expense | 71,681,329.78 | 55,457,740.91 |
| Business entertainment | 228,286,088.74 | 228,985,751.81 |
| Traveling expense | 265,534,364.82 | 308,771,285.09 |
| Marketing expense | 299,582,510.08 | 339,880,920.34 |
| Transportation and vehicle expenses | 362,488,189.68 | 292,384,473.18 |
| Knowledge resource fee | 84,036,298.54 | 88,659,768.32 |
| Research and development consumption and external inspection fee | 95,825,936.28 | 94,636,031.85 |
| Taxation and insurance expense | 186,262,881.16 | 30,257,054.94 |
| Tender and performance guarantee deposit | 172,403,592.27 | 50,577,789.33 |
| Incomings and outgoings and advanced payments | 150,234,904.04 | 114,257,759.78 |
| Consumables and service fees | 157,930,154.05 | 28,705,289.89 |
| Others | 122,027,372.86 | 52,015,791.13 |
| Total | 2,502,867,784.96 | 1,965,074,603.20 |
(3) Other cash receipts relating to investing activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Receipts of cash from forward exchange contracts | 19,151,448.07 | 3,987,200.00 |
| Receipts of loans from non-financial institutions | 7,155,384.02 | 3,559,123.87 |
| Total | 26,306,832.09 | 7,546,323.87 |
(4) Other cash payments related to investing activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Cash paid for forward exchange contracts | 26,659,828.19 | 49,674,950.95 |
| Cash paid for asset restructuring and acquisition | 89,913,444.89 | |
| Total | 26,659,828.19 | 139,588,395.84 |
(5) Other cash receipts related to financing activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Withdrawn documentary credit deposit | 1,240,932,000.00 | 1,274,934,480.00 |
| Total | 1,240,932,000.00 | 1,274,934,480.00 |
(6) Other cash payments related to financing activities
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Paid documentary credit deposit | 1,076,493,500.00 | 1,149,842,000.00 |
| Cash paid for share repurchases | 238,836,209.65 | |
| Cashes for purchasing minority equity | 2,360,000.00 | |
| Total | 1,315,329,709.65 | 1,152,202,000.00 |
57. Supplementary information about the Cash Flow Statement
(1) Supplementary information about the Cash Flow Statement
Unit: RMB
| Supplementary information | Amount of this period | Amount of Previous Period |
| 1． Reconciliation of net profit to cash flows from operational activities: | -- | -- |
| Net Profit | 3,160,858,484.54 | 2,594,592,680.34 |
| Add: provision for impairment of assets | 530,050,861.92 | 358,998,190.96 |
| Depreciation of fixed assets, oil and gas assets, productive biological assets | 238,708,097.36 | 197,491,957.49 |
| Amortization of Intangible Assets | 40,008,592.59 | 32,347,000.12 |
| Amortization of long-term prepaid expenses | 18,248,670.15 | 8,865,941.15 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets (mark "-" for incomes) | -835,214.24 | -17,535.97 |
| Losses on scrapping of fixed assets (mark "-" for incomes) | 245,302.68 | 981,291.46 |
| Losses on fair value changes (mark "-" for incomes) | -41,855,239.60 | 38,602,602.30 |
| Financial expenses (mark "-" for incomes) | 96,458,609.09 | -38,062,730.30 |
| Losses on investment (mark "-" for incomes) | 95,569,041.41 | 79,293,077.01 |
| Decrease on deferred income tax assets (mark "-" for increases) | -174,576,338.34 | -171,253,943.30 |
| Increase on deferred income tax liabilities (mark "-" for decreases) | 427,125.92 | 4,669,022.99 |
| Decrease on inventories (mark "-" for increases) | -839,739,327.83 | -29,181,801.03 |
| Decrease on operational receivables (mark "-" for increases) | -3,107,660,022.13 | -3,523,904,205.02 |
| Increase on operational payables (mark "-" for decreases) | 1,390,491,638.52 | 1,436,072,079.57 |
| Others | 194,204,005.66 | -34,177,649.60 |
| Net cash flow generated by operating activities | 1,600,604,287.70 | 955,315,978.17 |
| 2． Major investing and financing activities not involving cash receipts and payment: | -- | -- |
| 3． Net changes in cash and cash equivalents: | -- | -- |
| Closing balance of cash | 2,734,185,976.41 | 3,690,994,031.05 |
| Less: opening balance of cash | 3,690,994,031.05 | 3,061,375,534.06 |
| Add: closing balance of cash equivalents | 11,289,772.49 |
| Less: opening balance of cash equivalents | 11,289,772.49 | 1,303,459.82 |
| Net additions to balance of equivalents | -968,097,827.13 | 639,604,809.66 |
(2) Composition of cash and cash equivalents
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Ⅰ. Cash | 2,734,185,976.41 | 3,690,994,031.05 |
| Including: cash on hand | 117,289.25 | 3,981.79 |
| Bank deposit for payment at any time | 2,586,995,843.27 | 3,547,354,923.39 |
| Other monetary capital for payment at any time | 147,072,843.89 | 143,635,125.87 |
| Ⅱ. Cash equivalents | 11,289,772.49 | |
| Ⅲ. Closing balance of cash and cash equivalents | 2,734,185,976.41 | 3,702,283,803.54 |
58. Assets with restricted ownership rights or right to use
Unit: RMB
| Item Name | Book Value at the End of the Period | Cause of Restrictions |
| Cash and Bank Balances | 346,461,821.88 | Deposit for Documentary Loan, Guarantee Deposit |
| Long-term Receivables | 213,118,026.26 | Pledges to achieve long-term borrowings |
| Non-current Assets Due within 1 Year | 28,911,178.34 | Pledges to achieve long-term borrowings |
| Receivables Financing | 875,655,976.33 | Bill pledges are used to issue bank acceptance bills |
| Total | 1,464,147,002.81 | -- |
59. Monetary items in foreign currencies
(1) Monetary items in foreign currencies
Unit: RMB
| Item Name | Closing balance in foreign currencies | Exchange rate for conversion | Closing Balance Converted into RMB |
| Cash and Bank Balances | -- | -- | |
| Including: USD | 103,025,784.85 | 6.9762 | 718,728,480.27 |
| EUR | 32,339,507.76 | 7.8155 | 252,749,422.90 |
| HKD | 16,348,974.32 | 0.8958 | 14,645,025.59 |
| AED | 21,070,477.50 | 1.8992 | 40,016,840.16 |
| MXN | 87,340,456.20 | 0.3684 | 32,173,152.17 |
| ZAR | 58,416,223.50 | 0.4943 | 28,877,464.78 |
| Total amount of other currencies | 126,823,087.76 | ||
| Accounts receivable | -- | -- | |
| Including: USD | 479,424,455.59 | 6.9762 | 3,344,560,887.12 |
| EUR | 48,715,582.45 | 7.8155 | 380,736,634.64 |
| HKD | 3,878.00 | 0.8958 | 3,473.82 |
| MXN | 377,369,543.96 | 0.3684 | 139,009,667.35 |
| PLN | 63,415,275.85 | 1.8368 | 116,482,446.99 |
| AED | 46,658,371.16 | 1.8992 | 88,613,111.92 |
| Total amount of other currencies | 145,018,070.43 | ||
| Long-term loan | -- | -- | |
| Including: USD | |||
| EUR | |||
| HKD | |||
| Accounts Payable | |||
| USD | 148,659,877.69 | 6.9762 | 1,037,081,038.74 |
| EUR | 914,112.61 | 7.8155 | 7,144,247.10 |
| MXN | 33,483,440.61 | 0.3684 | 12,334,121.86 |
| BRL | 780,864.03 | 1.7356 | 1,355,259.80 |
| AED | 414,081.07 | 1.8992 | 786,418.63 |
| Total amount of other currencies | 4,623,845.02 |
Other notes:
(2) Notes on overseas business entities, including that for the important overseas businessentities, the overseas main premises, functional currency and selection basis shall be disclosed.If there are changes on its functional currency, the causes for the changes shall be disclosed aswell.
√ Applicable □ Not applicable
Since the overseas business entity of the Company, Dahua Technology (HK) Limited, does not have autonomy over itsbusiness activities, which are the extension of the business activities of the Company, constituting the business activitiesof the Company, RMB shall be used as its functional currency, and for the rest of the overseas entities, local currenciesshall be used as its functional currency.
60. Government subsidies
(1) Basic information about government subsidies
Unit: RMB
| Types | Amount | Items reported | Amount taken to current P&L |
| VAT refund | 767,947,072.59 | Other Incomes | 767,947,072.59 |
| Financial subsidy for science and technology R&D plan projects | 18,915,800.00 | Other Incomes | 18,915,800.00 |
| Core Electronics, High-End General-Purpose Chips and Basic Software Products special fund | 10,670,900.00 | Other Incomes | 10,670,900.00 |
| Special funds for foreign trade and economic development | 2,296,526.17 | Other Incomes | 2,296,526.17 |
| Rent subsidy | 1,535,300.00 | Other Incomes | 1,535,300.00 |
| Project subsidies | 1,299,000.00 | Other Incomes | 1,299,000.00 |
| Patent subsidies | 1,217,580.00 | Other Incomes | 1,217,580.00 |
| Subsidies for stable positions | 573,158.64 | Other Incomes | 573,158.64 |
| Subsidies for enterprise practical training | 240,107.00 | Other Incomes | 240,107.00 |
| Science and technology innovation award funding | 1,000,000.00 | Other Incomes | 1,000,000.00 |
| Export credit insurance premium subsidies | 1,250,000.00 | Other Incomes | 1,250,000.00 |
| Return from social security | 54,681,846.35 | Other Incomes | 54,681,846.35 |
| Special financial award funds | 28,110,000.00 | Other Incomes | 28,110,000.00 |
| District-level funding for the creation of an international software city | 20,000,000.00 | Other Incomes | 20,000,000.00 |
| Gazelle corporate funding | 2,523,600.00 | Other Incomes | 2,523,600.00 |
| Special subsidy for development of integrated circuit industry in Hangzhou | 4,140,000.00 | Other Incomes | 4,140,000.00 |
| High-tech enterprise subsidies | 2,400,000.00 | Other Incomes | 2,400,000.00 |
| Financial support funds for the pilot demonstration projects of the Factory Internet of Things and Industrial Internet | 1,300,000.00 | Other Incomes | 1,300,000.00 |
| Service outsourcing development fund reward | 1,244,400.00 | Other Incomes | 1,244,400.00 |
| Tertiary industry development subsidies | 500,000.00 | Other Incomes | 500,000.00 |
| Special funds for provincial market supervision and management | 400,000.00 | Other Incomes | 400,000.00 |
| Subsidy funds for safety production standardization construction | 100,000.00 | Other Incomes | 100,000.00 |
| VAT refund | 207,674.46 | Other Incomes | 207,674.46 |
| Science and Technology Progress Award | 200,000.00 | Other Incomes | 200,000.00 |
| Tax refund | 283,560.38 | Other Incomes | 283,560.38 |
| Baise City's contribution award for encouraging the economic development of headquarters | 1,910,000.00 | Non-operating Revenue | 1,910,000.00 |
| 2016 (3rd batch) National Intellectual Property Demonstration Enterprise and Advantageous Enterprise | 100,000.00 | Non-operating Revenue | 100,000.00 |
| Backbone enterprises in Hangzhou drive the development of the industrial chain | 1,747,200.00 | Non-operating Revenue | 1,747,200.00 |
| 2018 Top Ten Merit Enterprise (Excellent Entrepreneur) Award | 200,000.00 | Non-operating Revenue | 200,000.00 |
| The 2nd batch of cross-border E-commerce support funds in 2018 | 150,000.00 | Non-operating Revenue | 150,000.00 |
| Employment and entrepreneurship subsidies | 6,600.00 | Non-operating Revenue | 6,600.00 |
| Subsidy for the elimination of old vehicles in Hangzhou | 14,500.00 | Non-operating Revenue | 14,500.00 |
| Other special subsidies | 573,861.00 | Non-operating Revenue | 573,861.00 |
| Patent grant subsidies | 99,000.00 | Non-operating Revenue | 99,000.00 |
| Enterprise Award for Outstanding Contribution to Employment Promotion | 100,000.00 | Non-operating Revenue | 100,000.00 |
| Phase I investment financial incentive fund for security video surveillance product production base project | 27,455,000.00 | Deferred Income | |
| Funding for manufacturing enterprise technological transformation projects | 9,197,700.00 | Deferred Income |
(2) Repayment of government subsidies
□ Applicable √ Not applicable
VIII. Changes in the Scope of Consolidation
1. Disposal of subsidiaries
Is there any situation where disposal of investment in subsidiaries in a single transaction causes loss of control
√ Yes □ No
Unit: RMB
| Name of Subsidiaries | Equity disposal price | Equity disposal ratio | Methods of equity disposal | Time-point of loss of control | Basis for determining the time-point of loss of control | At the level of consolidated financial statement corresponding to the disposal price and the disposal of investment, the difference in the net asset share of the subsidiary shall be gained | Percentage of remaining equity on the date of loss of control | Book value of remaining equity on the date of loss of control | Fair value of remaining equity on the date of loss of control | Gains or losses from re-measurement of remaining equity at fair value | The determination method and main assumptions of the fair value of remaining equity on the date of loss of control | The amount of other comprehensive incomes related to the equity investment of the original subsidiary transferred into investment profits and losses |
| China Standard Intelligent Security Technology Co., Ltd. | 7,200,000.00 | 36.00% | Equity transfer | January 2019 | Signed Equity Transfer Agreement and completed the delivery of property rights | 9,152,198.76 | 15.00% | -1,013,416.14 | 0.00 | 1,013,416.14 | Reference book net assets | 0.00 |
Is there any situation where disposal of investment in subsidiaries is achieved through multiple transactions in variousstages, causing loss of control in this period
□ Yes √ No
2. Changes in the scope of combination for other reasons
Explanations on the changes in the scope of consolidation caused by other reasons (for example, newly established
subsidiaries, subsidiaries clearing, etc.) and relevant information:
(1) The Company has invested in and established three subsidiaries, namely, Zhejiang Zhoushan Digital DevelopmentOperation Co., Ltd, Guangxi Dahua Technology Co., Ltd., and Yunnan Zhili Technology Co., Ltd., during this reportingperiod, all of which have been included in the scope of consolidation since their establishment dates.
(2) The Company's subsidiaries Wuxi Dahua Ruide Electronic Technology Co., Ltd., Hunan Dahua System TechnologyCo., Ltd., Dahua Zhongcheng (Beijing) Technology Co., Ltd., and Dahua Italy SRL were canceled in this period, and willnot be included in the scope of consolidation since the date of cancellation.IX. Equity in Other Entities
1. Equity in Subsidiaries
(1) Composition of the enterprise group
| Name of Subsidiaries | Main Place of Business | Registered Address | Business Nature | Shareholding Percentage | Acquisition Method | |
| Direct | Indirect | |||||
| Dahua System Engineering | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Dahua Vision Technology | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Dahua Security Network | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Dahua Ju'an | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Guangxi Dahua Information | Qingxiu District, Nanning | Qingxiu District, Nanning | Electronics and information | 100.00% | Establishment | |
| Dahua Security | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Service | 100.00% | Establishment | |
| Guangxi Security | Qingxiu District, Nanning | Qingxiu District, Nanning | Service | 100.00% | Establishment | |
| Huatu Microchip | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 100.00% | Establishment | |
| Hangzhou Xiaohua | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 45% (Note 1) | Establishment | |
| Dahua Zhilian | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 90.09% (Note 2) | Establishment | |
| Tecomore Technology | West Lake District, Hangzhou | West Lake District, Hangzhou | Electronics and information | 51.00% | Business combination not under common control | |
| Dahua investment management | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Investment & investment management | 75.00% | Establishment | |
| South North United | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Business combination not under common control | |
| Guangxi Zhicheng | Youjiang District, Baise | Youjiang District, Baise | Electronics and information | 65.00% | Establishment | |
| Hangzhou Huacheng | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Xinjiang Information | High-tech Zone, Shihezi | High-tech Zone, Shihezi | Electronics and information | 92.00% | Establishment | |
| HuaRay Technology | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Sci-tech popularization and application services industry | 51.00% | Establishment | |
| Fuyang Hua'ao | Fuyang District, Hangzhou | Fuyang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Huafei Intelligent | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 45.50% (Note 3) | Establishment | |
| Huachuang Vision | Binjiang District, Hangzhou | Binjiang District, Hangzhou | Electronics and information | 51.00% | Establishment | |
| Guizhou Huayi | Guanshanhu District, Guiyang | Guanshanhu District, Guiyang | Electronics and information | 45.00% (Note 4) | Establishment | |
| Xinjiang Dahua Information | Shihezi, Xinjiang | Shihezi, Xinjiang | Electronics and information | 100.00% | Establishment | |
| Xinjiang Intelligence | Changji, Changji Prefecture, Xinjiang | Changji, Changji Prefecture, Xinjiang | Electronics and information | 100.00% | Establishment | |
| Guizhou Intelligence | Guiyang, Guizhou | Guiyang, Guizhou | Electronics and information | 100.00% | Establishment | |
| Xinjiang Zhihe | Hetian County, Hetian, Xinjiang | Hetian County, Hetian, Xinjiang | Electronics and information | 97.00% | Establishment | |
| Guangxi Huacheng | Wuzhou, Guangxi | Wuzhou, Guangxi | Electronics and information | 90.00% | Establishment |
| Meitan Dahua Technology | Zunyi, Guizhou | Zunyi, Guizhou | Electronics and information | 100.00% | Establishment | |
| Inner Mongolia Zhimeng | New District, Bai County, Chahar Right Wing Back Banner | New District, Bai County, Chahar Right Wing Back Banner | Electronics and information | 95.00% | Establishment | |
| Xinjiang Zhitian | Hetian County, Hetian, Xinjiang | Hetian County, Hetian, Xinjiang | Electronics and information | 97.00% | Establishment | |
| Xinjiang Xinzhi | Shache County, Kashgar District, Xinjiang | Shache County, Kashgar District, Xinjiang | Electronics and information | 100.00% | Establishment | |
| Xinjiang Huayue | Kashgar, Xinjiang | Kashgar, Xinjiang | Electronics and information | 100.00% | Establishment | |
| Tianjin Dahua | Tianjin Binhai New Area | Tianjin Binhai New Area | Electronics and information | 65.00% | Establishment | |
| Dahua Zhilong | Shuangpai County, Yongzhou City | Shuangpai County, Yongzhou City | Electronics and information | 90.00% | Establishment | |
| Vision Technology | Fuyang District, Hangzhou City, Zhejiang Province | Fuyang District, Hangzhou City, Zhejiang Province | Electronics and information | 100.00% | Establishment | |
| Huaxiao Technology | Fuyang District, Hangzhou City, Zhejiang Province | Fuyang District, Hangzhou City, Zhejiang Province | Electronics and information | 51.00% | Establishment | |
| Xi'an Dahua | Xi'an City, Shaanxi Province | Xi'an City, Shaanxi Province | Electronics and information | 100.00% | Establishment | |
| Wuxi Ruipin | Wuxi City | Wuxi City | Electronics and information | 51.00% | Establishment | |
| Dahua Robot | Xiaoshan District, Hangzhou City, Zhejiang Province | Xiaoshan District, Hangzhou City, Zhejiang Province | Electronics and information | 51.00% | Establishment | |
| Beijing Huayue | Xicheng District, Beijing | Xicheng District, Beijing | Electronics and information | 100.00% | Establishment | |
| Shanghai Huashang | Putuo District, Shanghai | Putuo District, Shanghai | Electronics and information | 100.00% | Establishment |
| Dahua Jinzhi | Wucheng District, Jinhua City, Zhejiang Province | Wucheng District, Jinhua City, Zhejiang Province | Electronics and information | 100.00% | Establishment | |
| Dahua Guangxun | Chengdu High-tech Zone | Chengdu High-tech Zone | Electronics and information | 100.00% | Business combination not under common control | |
| Huajuan Technology | Binjiang District, Hangzhou City, Zhejiang Province | Binjiang District, Hangzhou City, Zhejiang Province | Electronics and information | 100.00% | Establishment | |
| Zhoushan Operation | Zhoushan City, Zhejiang Province | Zhoushan City, Zhejiang Province | Electronics and information | 59.00% | Establishment | |
| Yunnan Zhili | Lijiang City, Yunnan Province | Lijiang City, Yunnan Province | Electronics and information | 90.00% | Establishment | |
| Guangxi Dahua Technology | Liuzhou City, Guangxi Zhuang Autonomous Region | Liuzhou City, Guangxi Zhuang Autonomous Region | Electronics and information | 100.00% | Establishment | |
| Dahua Hong Kong | Hong Kong | Hong Kong | Electronics and information | 100.00% | Establishment | |
| Dahua USA | USA | USA | Electronics and information | 100.00% | Establishment | |
| Dahua Europe | Netherlands | Netherlands | Electronics and information | 100.00% | Establishment | |
| Dahua Middle East | United Arab Emirates | United Arab Emirates | Electronics and information | 100.00% | Establishment | |
| Dahua Mexico | Mexico | Mexico | Electronics and information | 100.00% | Establishment | |
| Dahua Chile | Chile | Chile | Electronics and information | 100.00% | Establishment | |
| Dahua Colombia | Columbia | Columbia | Electronics and information | 100.00% | Establishment | |
| Dahua Australia | Australia | Australia | Electronics and information | 100.00% | Establishment |
| Dahua Singapore | Singapore | Singapore | Electronics and information | 100.00% | Establishment | |
| Dahua South Africa | South Africa | South Africa | Electronics and information | 100.00% | Establishment | |
| Dahua Peru | Peru | Peru | Electronics and information | 100.00% | Establishment | |
| Dahua Brazil | Brazil | Brazil | Electronics and information | 100.00% | Establishment | |
| Dahua Russia | Russia | Russia | Electronics and information | 100.00% | Establishment | |
| Dahua Canada | Canada | Canada | Electronics and information | 100.00% | Establishment | |
| Dahua Panama | Panama | Panama | Electronics and information | 100.00% | Establishment | |
| Dahua Hungary | Hungary | Hungary | Electronics and information | 100.00% | Establishment | |
| Dahua Poland | Poland | Poland | Electronics and information | 100.00% | Establishment | |
| Dahua Tunisia | Tunisia | Tunisia | Electronics and information | 100.00% | Establishment | |
| Dahua Kenya | Kenya | Kenya | Electronics and information | 100.00% | Establishment | |
| Dahua UK | UK | UK | Electronics and information | 100.00% | Establishment | |
| Dahua Bulgaria | Bulgaria | Bulgaria | Electronics and information | 100.00% | Establishment | |
| Dahua Serbia | Serbia | Serbia | Electronics and information | 100.00% | Establishment | |
| Dahua Germany | Germany | Germany | Electronics and information | 100.00% | Establishment | |
| Dahua Malaysia | Malaysia | Malaysia | Electronics and information | 100.00% | Establishment | |
| Dahua Korea | South Korea | South Korea | Electronics and information | 100.00% | Establishment | |
| Dahua Indonesia | Indonesia | Indonesia | Electronics and information | 100.00% | Establishment | |
| Dahua India | India | India | Electronics and information | 100.00% | Establishment |
| Dahua Turkey | Turkey | Turkey | Electronics and information | 100.00% | Establishment | |
| Dahua Czech | Czech Republic | Czech Republic | Electronics and information | 100.00% | Establishment | |
| Dahua Argentina | Argentina | Argentina | Electronics and information | 100.00% | Establishment | |
| Dahua Spain | Spain | Spain | Electronics and information | 100.00% | Establishment | |
| Dahua Kazakhstan | Kazakhstan | Kazakhstan | Electronics and information | 100.00% | Establishment | |
| Dahua Denmark | Denmark | Denmark | Electronics and information | 100.00% | Establishment | |
| Dahua France | France | France | Electronics and information | 100.00% | Establishment | |
| Dahua Lorex (US) Corporation | USA | USA | Electronics and information | 100.00% | Establishment | |
| Dahua Technology Holdings | Hong Kong | Hong Kong | Electronics and information | 100.00% | Establishment | |
| Dahua Morocco | Morocco | Morocco | Electronics and information | 100.00% | Establishment | |
| Dahua Technology Italy | Italy | Italy | Electronics and information | 100.00% | Business combination not under common control | |
| Dahua Uzbekistan | Uzbekistan | Uzbekistan | Electronics and information | 100.00% | Establishment | |
| Dahua Netherlands | Netherlands | Netherlands | Electronics and information | 100.00% | Establishment | |
| Dahua Sri Lanka | Sri Lanka | Sri Lanka | Electronics and information | 100.00% | Establishment | |
| Dahua Lorex (Canada) Corporation | Canada | Canada | Electronics and information | 100.00% | Business combination not under common control | |
| Dahua Pakistan | Pakistan | Pakistan | Electronics and information | 100.00% | Establishment |
| Dahua New Zealand | New Zealand | New Zealand | Electronics and information | 100.00% | Establishment | |
| Dahua Thailand | Thailand | Thailand | Electronics and information | 100.00% | Establishment | |
| Dahua Romania | Romania | Romania | Electronics and information | 100.00% | Establishment |
Explanations on the fact that the proportion of the shares held by a subsidiary differs from that of voting rights:
(1) The Company directly holds 45% equity in Hangzhou Xiaohua Technology Co., Ltd., and as agreed upon, ZhejiangHuashi Investment Management Co., Ltd. grants its voting rights of 12% to the Company. The Company effectively holds57% of the voting rights in Hangzhou Xiaohua Technology Co., Ltd., which constitutes working control so as to incorporateit into the scope of consolidation.
(2) Based on the industrial and commercial registration data, the CDB Development Fund holds equity in the Company.According to the cooperation agreement between the Company and CDB Development Fund, CDB Development Fundshall not appoint senior management personnel, such as directors and supervisors, to Dahua Zhilian; regarding itsinvestment, the Company shall pay an annual investment profit of 1.2% to CDB Development Fund through dividends,repurchase premiums, etc. In addition, the Company shall redeem the CDB Development Fund's equity in Dahua Zhilianperiod by period from 2022 to 2024, using its amount of investment as other non-current liabilities. The Companyeffectively holds 100% voting rights and equity in Dahua Zhilian.
(3) The Company directly holds 45.5% equity in Zhejiang Huafei Intelligence Technology Co., Ltd., and as agreed upon,Zhejiang Huashi Investment Management Co., Ltd. grants its voting rights of 16% to the Company. The Companyeffectively holds 61.50% of the voting rights in Zhejiang Huafei Intelligence Technology Co., Ltd., which constitutesworking control so as to incorporate it into the scope of consolidation.
(4) The Company directly holds 45% equity in Guizhou Huayi Vision Technology Co., Ltd., and as agreed upon, GuizhouYiyun Investment Management Co., Ltd. grants its voting rights of 6% to the Company. The Company effectively holds 51%of the voting rights in Guizhou Huayi Vision Technology Co., Ltd., which constitutes working control so as to incorporate itinto the scope of consolidation.
2. Equity in joint venture arrangements or affiliates
(1) Financial summary of non-essential joint ventures and affiliates
Unit: RMB
| Closing balance / accrual of current period | Opening balance / accrual of previous period | |
| Joint ventures: | -- | -- |
| The total count of the following items based on the shareholding ratios | -- | -- |
| Affiliates: | -- | -- |
| Total book value of investments | 490,731,236.85 | 185,872,021.58 |
| The total count of the following items based on the shareholding ratios | -- | -- |
| --Net profit | -115,707,007.32 | -36,049,906.26 |
| --Other comprehensive income | 70,570,727.96 | 168,229,977.61 |
| --Total comprehensive income | -45,136,279.36 | 132,180,071.35 |
X. Risks Relating to Financial Instruments
In the business operation, the Company is facing with various financial risks: credit risk, market risk and liquidity risk.The overall objective of the Company's risk management is to formulate risk management policies that can minimizerisks without affecting the Company's competitiveness and adaptability to changes too much.
(I) Credit risk
The credit risk refers to the risk of one party of a financial instrument suffering financial losses due to that the otherparty fails to perform its obligations.. The Company is mainly facing with the customer credit risk arising from sales onaccount. Before signing a new contract, the Company will assess the new customer's credit risk, including external creditrating and the credibility letter from a bank under some circumstances (if such information is available). The Company hasset a credit limit for sales on account for each customer. Such limit shall be the maximum amount with no additionalapproval needed.The Company ensures that the overall credit risk is within the controllable range through quarterly monitoring of creditratings of existing customers, and monthly review of aging analysis on accounts receivable. When monitoring customers'credit risk, the Company groups them according to their credit characteristics. Customers rated as "high risk" will beplaced on the restricted customer list. The Company can provide them with O/A in the future period only when additionalapproval is obtained. Otherwise they must make relevant payment in advance.For overseas customers, the Company mainly uses wire transfer as a payment method. According to the creditevaluation of each customer, the Company gives different credit lines and credit account periods, and agrees on thepayment method and account period in the commodity procurement contract between the two parties. After the sales ofproducts, the Company has a dedicated person responsible for tracking, reconciliation, and payment reminding. Inaddition, the Company introduced export credit insurance to ensure that the return risk from overseas customers is withincontrollable range.(II) Market riskThe market risk of financial instruments refers to the risk of fluctuation at fair value of financial instruments or futurecash flows with the change of market prices, including exchange rate risks and interest rate risks.
1. Interest rate risk
The interest rate risk refers to the risk in which the fair value or future cash flow of financial instruments changes dueto the change of market interest rate. The interest rate risk faced with by the Company is mainly from bank loans. TheCompany's assets and liabilities relating to interest rate are respectively bank deposits and short-term loans, whoseinterest rate risk is low.
2. Exchange rate risk
The exchange rate risk refers to the risk in which the fair value or future cash flow of financial instruments changesdue to the change of foreign exchange rate. The Company will try its best to match the revenues with the expenses inforeign currency, to lower the exchange rate risk. In addition, the Company may also sign forward foreign exchangecontracts or currency swap contracts to avoid exchange rate risks.The exchange rate risk faced with by the Company is mainly from financial assets and liabilities in USD. The amountsof assets and liabilities in foreign currencies and converted into RMB are listed as below:
| Item Name | Balance at the End of the Period | Balance at the end of the previous year | ||||
| USD | Other foreign currencies | Total | USD | Other foreign currencies | Total | |
| Accounts receivable | 3,344,560,887.12 | 869,863,405.15 | 4,214,424,292.27 | 2,737,552,570.28 | 418,253,386.17 | 3,155,805,956.45 |
| Accounts Payable | 1,037,081,038.74 | 26,243,892.41 | 1,063,324,931.15 | 761,747,601.87 | 11,375,001.16 | 773,122,603.03 |
| Total | 4,381,641,925.86 | 896,107,297.56 | 5,277,749,223.42 | 3,499,300,172.15 | 429,628,387.33 | 3,928,928,559.48 |
(III) Liquidity riskLiquidity risk refers to the risk of a shortage of funds when an enterprise fulfills its obligation of settlement by cash orother financial assets. The Company's policy is to ensure that there is sufficient cash to repay the liabilities due. Theliquidity risk is under the concentrated control of the Company's Financial Department. Through monitoring the balance ofcash and securities cashable at any time and rolling forecasting the cash flow in the next 12 months, the FinancialDepartment ensures that the Company has sufficient funds to repay its debts under all reasonable predictions.The financial liabilities of the Company are listed as follows based on the undiscounted contractual cash flow:
| Item Name | Balance at the end of the year | ||
| Within 1 year | 1 years or above | Total | |
| Short-term loan | 400,323,888.90 | 400,323,888.90 | |
| Notes Payable | 3,807,292,795.07 | 3,807,292,795.07 | |
| Accounts Payable | 4,290,253,501.81 | 4,290,253,501.81 | |
| Other Payables | 1,163,915,713.24 | 1,163,915,713.24 | |
| Non-current Liabilities Due within 1 Year | 26,993,755.57 | 26,993,755.57 | |
| Long-term loan | 153,500,000.00 | 153,500,000.00 | |
| Total | 9,688,779,654.59 | 153,500,000.00 | 9,842,279,654.59 |
| Item Name | Balance at the end of the previous year | ||
| Within 1 year | 1 years or above | Total | |
| Short-term loan | 1,851,709,561.83 | 1,851,709,561.83 | |
| Notes Payable | 3,671,586,104.79 | 3,671,586,104.79 | |
| Accounts Payable | 3,789,729,594.20 | 3,789,729,594.20 | |
| Other Payables | 1,051,537,094.97 | 1,051,537,094.97 | |
| Non-current Liabilities Due within 1 Year | 25,500,000.00 | 25,500,000.00 | |
| Long-term loan | 179,000,000.00 | 179,000,000.00 | |
| Total | 10,390,062,355.79 | 179,000,000.00 | 10,569,062,355.79 |
XI. Disclosure of Fair Values
1. Fair values of the assets and liabilities at the end of the period
Unit: RMB
| Item Name | Fair values at period-end | |||
| First level measurement at fair value | Second level measurement at fair value | Third level measurement at fair value | Total | |
| I. Constant measurement at fair value | -- | -- | -- | -- |
| (I) Receivables financing | 1,086,017,357.90 | 1,086,017,357.90 | ||
| (II) Other non-current financial assets | 67,213,489.43 | 67,213,489.43 | ||
| Total assets constantly measured at fair value | 1,086,017,357.90 | 67,213,489.43 | 1,153,230,847.33 | |
| II. Non-constant measurement at fair values | -- | -- | -- | -- |
2. For the continuous and non-continuous second-level fair value measurement items, thevaluation techniques adopted and the qualitative and quantitative information of importantparametersDue to the short remaining term of the receivables financing, the book value is close to the fair value, and the nominalamount is used as the fair value.
3. For the continuous and non-continuous third-level fair value measurement items, the valuationtechniques adopted and the qualitative and quantitative information of important parametersEvaluate the value and net book assets based on the income method and asset-based method.
4. The fair value of financial assets and financial liabilities not measured at fair valueThe fair value of financial assets and financial liabilities measured by the Company at amortized cost is equivalent to thebook value.
XII. Related Parties and Related-party Transactions
1. The Company's Parent Company
| Name of parent company | Registered Address | Business Nature | Registered Capital | Relation with related party | Shareholding ratio of the parent company | Proportion of voting rights of the parent company |
| Fu Liquan | The controlling shareholder and actual controller | 35.97% | 35.97% | |||
| Chen Ailing | The actual controller | 2.37% | 2.37% |
The final controllers of the Company are Mr. Fu Liquan and Ms. Chen Ailing.
2. Information about the Company's subsidiaries
For details of subsidiaries of the Company, see Note "IX. Equities in other entities".
3. Information about the Company's joint ventures and affiliates
For details of significant joint ventures and associates of the Company, see Note "IX. Equities in other entities".Here are the information about other joint ventures and affiliates that have related-party transactions with the Company inthe current period or have balance from related-party transactions with the Company in the previous period:
| Names of joint ventures and affiliates | Relationship with the Company |
| Taizhou Dahua Security Services Co., Ltd. | Affiliate |
| Ningbo Dahua Anbang Security Services Co., Ltd. | Affiliate |
| Lishui Dahua Intelligent Technology Co., Ltd. | Affiliate |
| Zhoushan Dahua Technology Co., Ltd. | Affiliate |
| Zhejiang Leapmotor Technology Co., Ltd. | Affiliate, and enterprise controlled by the Company's actual controller |
| Leapmotor Automobile Co., Ltd. | Associates, and subsidiaries controlled by actual controllers |
| Shenzhen Conwin Security Electronics CO., Ltd. | Affiliate |
| Zhejiang Dahua Zhian Internet of Things Technology Co., Ltd. | Affiliate |
| Guangdong Dahua Zhishi Technology Co., Ltd. | Affiliate |
| Ningbo Dahua-ZhiAn IOT Technology Co., Ltd. | Subsidiary of the affiliate |
| Wenzhou Dahua Security Services Co., Ltd. | Affiliate |
| China Standard Intelligent Security Technology Co., Ltd. | Affiliate |
| Shaoxing Dahua Security Services Co., Ltd. | Affiliate |
| Intelbras S.A. | Affiliate |
| Zhejiang Youchong Amperex Technology Co., Ltd | Associates, and subsidiaries controlled by actual controllers |
| Zhejiang Leapmotor Automobile Marketing Service Co., Ltd. | Associates, and subsidiaries controlled by actual controllers |
| Quzhou Dahua Zhian IOT Technology Co., Ltd. | Subsidiary of the affiliate |
4. Information about other related parties
| Names of other related parties | Relationship between the Company and other related parties |
| Zhejiang Lancable Technology Co., Ltd. | Enterprise controlled by the senior manager of the Company |
| Hangzhou Xintu Technology Co., Ltd. | Enterprise controlled by the senior manager of the Company |
| Ningxia Shendun Security Services Co., Ltd. | Subsidiary of a company with shares held by the Company |
| Hangzhou Xunwei Robotics Technology Co., Ltd. | Enterprise significantly influenced by the senior manager of the Company |
| Hangzhou Huayun Technology Co., Ltd. (Note 1) | Enterprise which has been significantly influenced by the senior manager of the Company |
| Wangsu Technology Co., Ltd (Note 2) | Enterprise with any independent director of the Company being the independent director |
| Gansu Aode Electronic Technology Co., Ltd. | Subsidiary of a company with shares held by the Company |
| Hangzhou Xiaoshan Weiyi Outpatient Co., Ltd. (Note 3) | Enterprise with any independent director of the Company being the director |
| Hangzhou Nuojia Technology Co., Ltd. | Enterprise controlled by the senior manager of the Company |
| Shanghai Yanhua Intelligent Technology (Group) Co., Ltd. (Note 4) | Enterprise with any senior manager of the Company being the independent director |
| Zhejiang Huanuokang Technology Co., Ltd. | Company controlled by the Company's actual controller |
| Zhejiang Huashi Investment Management Co., Ltd. | Company controlled by the Company's actual controller |
Other notesNote 1: Hangzhou Huayun Technology Co., Ltd. was an enterprise significantly influenced by the senior manager of thecompany. The senior manager of the company had transferred the equity of the company in March 2019. The companyand Hangzhou Huayun Technology Co., Ltd. ended their relationship in March 2019;Note 2: Wangsu Technology Co., Ltd. was an enterprise with the independent director of the company that used to be anindependent director. The independent director of the company resigned as the independent director of the company inApril 2019. The company and Wangsu Technology Co., Ltd. ended their relationship in April 2019;Note 3: Hangzhou Xiaoshan Weiyi Outpatient Co., Ltd. was an enterprise with the independent director of the companythat used to be an independent director. The independent director of the company resigned as independent director inSeptember 2019. The company and Hangzhou Xiaoshan Weiyi Outpatient Co, Ltd ended the relationship in September2019;
Note 4: Shanghai Yanhua Intelligent Technology (Group) Co., Ltd. was an enterprise with the senior manager of thecompany used to be the independent director. The senior manager of the company resigned as the independent directorin December 2019. The company and Shanghai Yanhua Intelligent Technology ended the relationship in December 2019.
5. Information about related-party transactions
(1) Related-party transactions involving purchase and selling of merchandise and provision andacceptance of labor servicesMerchandise purchase and acceptance of labor services
Unit: RMB
| Related parties | Content of the related - party transaction | This Period's Amount of Occurrence | Approved transaction limit | Over the transaction limit or not | Previous Period's Amount of Occurrence |
| Zhejiang Lancable Technology Co., Ltd. | Purchase of materials | 2,254,717.95 | |||
| Hangzhou Huayun Technology Co., Ltd. | Purchase of materials | 6,939.66 | No | 86,594.83 | |
| Zhejiang Leapmotor Technology Co., Ltd. | Purchase of materials | 1,315,899.80 | No | 23,965.51 | |
| Wangsu Technology Co., Ltd. | Acceptance of services | 462,869.81 | |||
| Hangzhou Xiaoshan Weiyi Outpatient Co., Ltd. | Acceptance of services | 95,331.90 | No | 1,568.58 | |
| Zhoushan Dahua Technology Co., Ltd. | Acceptance of services | 3,090.91 | |||
| Wenzhou Dahua Security Services Co., Ltd. | Acceptance of services | 2,460,733.11 | No | 25,182.90 | |
| Hangzhou Nuojia Technology Co., Ltd. | Acceptance of services | 1,698,113.21 | No | 33,468.20 | |
| Zhejiang Huanuokang Technology Co., Ltd. | Purchase of materials | 955,752.22 | No | ||
| Leapmotor Automobile Co., Ltd. | Purchase of materials | 1,473,403.32 | No |
Sales of merchandise and provision of services
Unit: RMB
| Related parties | Content of the related - party transaction | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Ningbo Dahua Anbang Security Services Co., Ltd. | Sales of merchandise | 161,522.62 | 424,949.12 |
| Lishui Dahua Intelligent Technology Co., Ltd. | Sales of merchandise and provision of services | 188,679.25 | 32,812.06 |
| Zhoushan Dahua Technology Co., Ltd. | Sales of merchandise | 326,391.14 | 81.89 |
| Wenzhou Dahua Security Services Co., Ltd. | Sales of merchandise | 70,338.15 | |
| Zhejiang Leapmotor Technology Co., Ltd. | Sales of merchandise | 773,488.67 | 1,000,350.67 |
| Hangzhou Xintu Technology Co., Ltd. | Sales of merchandise and provision of services | 632,251.60 | 569,735.39 |
| Taizhou Dahua Security Services Co., Ltd. | Sales of merchandise | 56,206.89 | 158,907.33 |
| Shenzhen Conwin Security Electronics CO., Ltd. | Sales of merchandise | 1,579,928.49 | 1,598,876.61 |
| Guangdong Dahua Zhishi Technology Co., Ltd. | Sales of merchandise | 11,442,110.68 | 3,364,854.53 |
| Zhejiang Dahua Zhian Internet of Things Technology Co., Ltd. | Sales of merchandise and provision of services | 943,396.23 | |
| Ningbo Dahua-ZhiAn IOT Technology Co., Ltd. | Sales of merchandise | 28,879.30 | |
| Hangzhou Xunwei Robotics Technology Co., Ltd. | Sales of merchandise | 48,849.56 | 21,556.45 |
| Hangzhou Huayun Technology Co., Ltd. | Sales of merchandise | 595,835.37 | 3,633,397.66 |
| Zhejiang Lancable Technology Co., Ltd. | Sales of merchandise | 1,082,238.04 | 843,783.23 |
| Quzhou Dahua Zhian IOT Technology Co., Ltd. | Sales of merchandise | 86,206.90 | |
| Hangzhou Nuojia Technology Co., Ltd. | Sales of merchandise | 673,544.27 | 4,574,431.42 |
| Leapmotor Automobile Co., Ltd. | Sales of merchandise and provision of services | 6,839,109.07 | 1,905,827.85 |
| China Standard Intelligent Security Technology Co., Ltd. | Sales of merchandise | 2,047,376.15 | |
| Zhejiang Huanuokang Technology Co., Ltd. | Sales of merchandise | 316,796.38 | |
| Shanghai Yanhua Intelligent Technology (Group) Co., Ltd | Sales of merchandise | 6,752,608.19 | |
| IntelbrasS.A. | Sales of merchandise | 108,640,714.53 | |
| Shaoxing Dahua Security Services Co., Ltd. | Sales of merchandise and provision of services | 47,169.81 | |
| Zhejiang Youchong Amperex Technology Co., Ltd | Sales of merchandise | 6,743.36 | |
| Zhejiang Leapmotor Automobile Marketing Service Co., Ltd. | Sales of merchandise | 940.18 |
(2) Related leasing
The Company being the lessor:
Unit: RMB
| Name of the lessee | Type of the leased assets | Rental income confirmed in this period | Rental income confirmed in the previous period |
| Zhejiang Leapmotor Technology Co., Ltd. | Buildings and constructions | 688,311.51 | |
| China Standard Intelligent Security Technology Co., Ltd. | Buildings and constructions | 209,258.66 |
(3) Related guarantee
The Company being the guarantor:
Unit: RMB
| Secured parties | Guarantee Amount | Starting date | Maturity date | Guarantee fulfilled completely or not |
| Zhejiang Dahua Vision Technology Co., Ltd. | 110,000,000.00 | January 15, 2018 | Two years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 300,000,000.00 | May 04, 2018 | April 16, 2019 | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 20,000,000.00 | August 02, 2018 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | July 25, 2018 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | August 01, 2018 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | August 21, 2018 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | September 03, 2018 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 220,000,000.00 | November 26, 2018 | November 26, 2020 | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. (guarantee currency is US dollar) | 15,000,000.00 | March 20, 2019 | Two years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | April 28, 2019 | Three years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua Vision Technology Co., Ltd. | 290,000,000.00 | June 06, 2016 | January 15, 2020 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 600,000,000.00 | August 10, 2017 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 220,000,000.00 | October 13, 2017 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 500,000,000.00 | March 27, 2018 | March 19, 2021 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 240,000,000.00 | April 13, 2018 | April 12, 2020 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. (guarantee currency is US dollar) | 40,000,000.00 | September 21, 2018 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | January 03, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 300,000,000.00 | January 17, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | March 21, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | April 18, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 650,000,000.00 | May 10, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 230,000,000.00 | May 13, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 180,000,000.00 | June 26, 2019 | June 25, 2022 | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 440,000,000.00 | July 22, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 380,000,000.00 | August 30, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 50,000,000.00 | September 20, 2019 | Three years since the date on which the debt period of master contract expires or the date on which the secured claim is determined, whichever is later | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 140,000,000.00 | September 26, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 200,000,000.00 | September 29, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 100,000,000.00 | October 22, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Vision Technology Co., Ltd. | 500,000,000.00 | December 10, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 100,000,000.00 | April 25, 2019 | One years upon expiration of debt period of master contract | Yes |
| Zhejiang Dahua Zhilian Co., Ltd. | 200,000,000.00 | June 06, 2016 | June 30, 2020 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 500,000,000.00 | September 01, 2018 | September 01, 2020 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 300,000,000.00 | October 12, 2018 | October 12, 2021 | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 100,000,000.00 | April 9, 2019 | One years upon expiration of debt period of master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 60,000,000.00 | May 13, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 100,000,000.00 | August 30, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 400,000,000.00 | November 1, 2019 | One years upon expiration of debt period of master contract | No |
| Zhejiang Dahua Zhilian Co., Ltd. | 200,000,000.00 | December 12, 2019 | One years upon expiration of debt period of master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 60,000,000.00 | October 10, 2017 | Two years after the maturity of the debts in the master contract | Yes |
| Zhejiang Dahua System Engineering Co., Ltd. | 100,000,000.00 | June 06, 2016 | March 30, 2020 | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 100,000,000.00 | May 10, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 40,000,000.00 | May 13, 2019 | Three years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 10,000,000.00 | August 30, 2019 | Two years after the maturity of the debts in the master contract | No |
| Zhejiang Dahua System Engineering Co., Ltd. | 60,000,000.00 | November 07, 2019 | Two years after the maturity of the debts in the master contract | No |
| Dahua Technology (HK) Limited | 200,000,000.00 | April 09, 2018 | Two years after the maturity of the debts in the master contract | Yes |
| Dahua Technology (HK) Limited (guarantee currency is US dollar) | 50,000,000.00 | December 15, 2017 | December 15, 2020 | No |
| Dahua Technology (HK) Limited (guarantee currency is US dollar) | 7,000,000.00 | November 25, 2019 | Two years after the maturity of the debts in the master contract | No |
| Dahua Technology USA Inc. (guaranteed currency is US dollar) | 300,000.00 | March 04, 2019 | March 09, 2020 | Yes |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V (guaranteed currency is Mexican Peso) | 59,973,141.38 | March 26, 2019 | March 26, 2020 | No |
| DAHUA TECHNOLOGY MEXICO S.A. DE C.V (guaranteed currency is Mexican Peso) | 179,919,424.15 | April 9, 2019 | April 09, 2020 | No |
| Hangzhou Huacheng Network Technology Co., Ltd. | 50,000,000.00 | August 30, 2019 | Two years after the maturity of the debts in the master contract | No |
(4) Asset transfer and debt restructuring of related parties
Unit: RMB
| Related parties | Content of the related - party transaction | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Zhejiang Huashi Investment Management Co., Ltd. | Equity transfer | 1,360,000.00 | |
| China Standard Intelligent Security Technology Co., Ltd. | Selling of fixed assets | 1,659.82 |
(5) Remuneration to key management personnel
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Salary of key management personnel | 23,643,285.50 | 22,692,922.08 |
(6) Other related-party transactions
| (1) On July 29, 2019, the Company's 23rd session of the 6th Board of Directors' meeting reviewed and approved the Proposal on Increasing Capital in Holding Subsidiaries and Related-party Transactions. The Company and the related party Zhejiang Huashi Investment Management Co., Ltd. (hereinafter referred to as "Huashi Investment") increased capital in the holding subsidiary Zhejiang Dahua Robot Technology Co., Ltd. (hereinafter referred to as "Robot Technology") with the same percentage. The Company would complete a capital increase of RMB 40.8 million with its own funds and the related party Huashi Investment would complete a capital increase of RMB 39.2 million. After the capital increase, the registered capital of Robot Technology would increase from RMB 50 million to RMB 130 million. The shareholding ratio remains unchanged. The change of industrial and commercial registrations for the above matter was completed in August 2019. |
| (2) On July 29, 2019, the Company's 23rd session of the 6th Board of Directors' meeting reviewed and approved the Proposal on Relinquishment of Equity Capital Increase Rights and Related Transactions of Participating Companies. The Company holds 16.32% of the equity of Zhejiang Leapmotor Technology Co., Ltd (hereinafter referred to as "Leapmotor Technology" or "the subject company"), and the Company's controlling shareholder Fu Liquan holds 16.54% of the equity. Jinhua CRRC Smart IOT New Energy Industry Investment Center (Limited Partnership) (hereinafter referred to as "Jinhua CRRC Fund") intends to make A-2 round of capital increase for Leapmotor Technology, with a total capital increase of RMB 360 million. The newly increased registered capital of Leapmotor Technology is RMB 29,357,798 and the newly increased capital reserve of Leapmotor Technology is RMB 330,642,202. In this capital increase, the Company gives up the right to increase the capital in the same proportion. Upon completion of the capital increase, the registered capital of Leapmotor Technology will increase from RMB 551,355,760 to RMB 580,713,558. The proportion of Leapmotor Technology’s equity held by the Company will decrease from 16.32% to 15.50%. The change of industrial and commercial registrations for the above matter was completed in August 2019. |
6. Receivables and payables of the related parties
(1) Receivables
Unit: RMB
| Item Name | Related parties | Balance at the End of the Period | Balance at the Start of the Period | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Accounts receivable | Zhejiang Dahua Zhian Internet of Things Technology Co., Ltd. | 100,000.00 | 5,000.00 | 100,000.00 | 10,000.00 |
| Accounts receivable | Guangdong Dahua Zhishi Technology Co., Ltd. | 12,553,692.95 | 627,684.65 | 3,227,876.00 | 161,393.80 |
| Accounts receivable | Ningbo Dahua Anbang Security Services Co., Ltd. | 310,420.00 | 15,521.00 | ||
| Accounts receivable | Taizhou Dahua Security Services Co., Ltd. | 133,200.00 | 6,660.00 | ||
| Accounts receivable | Zhejiang Leapmotor Technology Co., Ltd. | 674,210.13 | 33,710.51 | 445,003.41 | 22,250.17 |
| Accounts receivable | Hangzhou Xintu Technology Co., Ltd. | 3,379.63 | 168.98 | 47,676.81 | 2,383.84 |
| Accounts receivable | Zhejiang Lancable Technology Co., Ltd. | 676,259.00 | 33,812.95 | 916,688.50 | 45,834.43 |
| Accounts receivable | Shenzhen Conwin Security Electronics CO., Ltd. | 207,500.00 | 10,375.00 | 710,640.00 | 35,532.00 |
| Accounts receivable | Hangzhou Huayun Technology Co., Ltd. | 2,998,896.00 | 149,944.80 | ||
| Accounts receivable | Hangzhou Xunwei Robotics Technology Co., Ltd. | 9,400.00 | 470.00 | ||
| Accounts receivable | Hangzhou Nuojia Technology Co., Ltd. | 2,902,026.06 | 1,421,211.26 | 9,031,072.05 | 4,805,130.40 |
| Accounts receivable | Leapmotor Automobile Co., Ltd. | 9,340,735.86 | 574,240.05 | 2,198,155.00 | 109,907.75 |
| Accounts receivable | Zhoushan Dahua Technology Co., Ltd. | 217,168.00 | 10,858.40 | ||
| Accounts receivable | China Standard Intelligent Security Technology Co., Ltd. | 1,025,951.05 | 51,297.55 | ||
| Accounts receivable | Zhejiang Huanuokang Technology Co., Ltd. | 357,980.05 | 17,899.00 | ||
| Accounts receivable | Intelbras S.A. | 123,762,782.51 | 6,188,139.13 | ||
| Accounts receivable | Shaoxing Dahua Security Services Co., Ltd. | 50,000.00 | 2,500.00 | ||
| Accounts receivable | Zhejiang Leapmotor Automobile Marketing Service Co., Ltd. | 1,062.40 | 53.12 |
(2) Payables
Unit: RMB
| Item Name | Related parties | Closing balance | Opening balance |
| Accounts Payable | Ningxia Shendun Security Services Co., Ltd. | 350,375.00 | 350,375.00 |
| Accounts Payable | Gansu Aode Electronic Technology Co., Ltd. | 365,420.00 | |
| Accounts Payable | Zhejiang Leapmotor Technology Co., Ltd. | 706,019.53 | 27,800.00 |
| Accounts Payable | Zhoushan Dahua Technology Co., Ltd. | 3,400.00 | |
| Accounts Payable | Hangzhou Huayun Technology Co., Ltd. | 100,450.00 | |
| Accounts Payable | Wenzhou Dahua Security Services Co., Ltd. | 25,182.90 |
| Accounts Payable | Hangzhou Nuojia Technology Co., Ltd. | 2,019,656.96 | 384,222.99 |
| Accounts Payable | Zhejiang Huanuokang Technology Co., Ltd. | 1,079,999.99 | |
| Accounts Payable | Leapmotor Automobile Co., Ltd. | 1,521,631.91 | |
| Other Payables | Zhejiang Leapmotor Technology Co., Ltd. | 173,520.00 |
XIII. Share-based payment
1. Overview of share-based payment
√ Applicable □ Not applicable
Unit: RMB
| Total amount of equity instruments granted by the Company in current period | 10,413,500 shares of restricted stock |
| Total amount of equity instruments exercised by the Company in current period | 0 |
| Total amount of equity instruments of the Company invalidated in current period | 4,322,200 shares of restricted stock |
| The range of the exercise prices of other outstanding equity instruments issued by Company at the end of the period and the remaining contractual term | The grant price of the restricted stock for the first time is RMB 8.17/share, and the remaining period of the contract is 38 months; the reserved price of the granted restricted stock is RMB 8.75/share, and the remaining period of the contract is 38 months. |
2. Situation of equity-settled share-based payment
√ Applicable □ Not applicable
Unit: RMB
| The method for determining the fair value of equity instruments on the day of granting | Determined based on the stock price at the grant date and the grant cost of the restricted stocks |
| The basis for determining the amount of exercisable equity instruments | Estimated according to equity instruments held by the employees |
| Reason for the significant difference between the estimation of current period and the previous period | N/A |
| The accumulated amount of equity-settled share-based payment counted into the capital reserve | 225,648,979.54 |
| Amount of equity-settled share-based payment confirmed in current period | 194,204,005.66 |
3. Situation of cash-settled share-based payment
□ Applicable √ Not applicable
4. Modification and termination of share-based payment
According to the resolution of the 27th session of the 6th Board of Directors' meeting of the Company held on
November 4, 2019, the Company reviewed and approved the 2018 Restricted Stock Incentive Plan (Draft Revision) andits summary, and adjusted the performance conditions that the Company had to meet to unlock the incentive objects of thegranted restricted stock. The adjusted performance conditions are as follows:
(1) Restricted stocks granted for the first time are unlocked three times when meeting the following performanceconditions:
| Unlocking time | Performance conditions |
| Unlocking condition for the first time | Indicator 1: The compound annual revenue growth rate of the previous year before the unlocking time is not less than 23% compared to the previous year of the granting time, and the weighted average ROE attributable to the Company's common stock shareholders as of December 31, 2019 is not less than 17%. Indicator 2: The growth rate of the net profit attributable to the parent company at the time before the unlocking time is not less than 32% compared to the year before the granting time, and the weighted average ROE attributable to the Company's common stock shareholders as of December 31, 2019 is not less than 19%; |
| Unlocking condition for the second time | Indicator 1: The compound annual revenue growth rate of the previous year before the unlocking time is not less than 23% compared to the previous year of the granting time, and the weighted average ROE attributable to the Company’s common stock shareholders as of December 31, 2020 is not less than 18%. Indicator 2: The growth rate of the net profit attributable to the parent company at the time before the unlocking time is not less than 60% compared to the year before the granting time, and the weighted average ROE attributable to the Company's common stock shareholders as of December 31, 2020 is not less than 19%; |
| Unlocking condition for the third time | Indicator 1: The compound annual revenue growth rate of the year before the unlocking time is not less than 23% compared with the year before the granting time, and the weighted average ROE attributable to the Company's common stock shareholders as of December 31, 2021 is not less than 19%. Indicator 2: The growth rate of the net profit attributable to the parent company at the time before the unlocking time is not less than 90% compared to the year before the granting time, and the weighted average ROE attributable to the Company's common stock shareholders as of December 31, 2021 is not less than 19%; |
(2) The reserved restricted stocks are unlocked in twice when meeting the following performance conditions:
| Unlocking time | Performance conditions |
| Unlocking condition for the first time | Indicator 1: The compound annual revenue growth rate of the previous year before the unlocking time is not less than 23% compared to the previous year of the granting time, and the weighted average ROE attributable to the Company's common stock shareholders as of December 31, 2020 is not less than 18%. Indicator 2: The growth rate of the net profit attributable to the parent company at the time before the unlocking time is not less than 60% compared to the year before the granting time, and the weighted average ROE attributable to the Company's common stock shareholders as of December 31, 2020 is not less than 19%; |
| Unlocking condition for the second time | Indicator 1: The compound annual revenue growth rate of the previous year before the unlocking time is not less than 23% compared to the previous year of the granting time, and the weighted average ROE attributable to the Company's common stock shareholders as of December 31, 2021 is not less than 19%. Indicator 2: The growth rate of the net profit attributable to the parent company at the time before the unlocking time is not less than 90% compared to the year before the granting time, and the weighted average ROE attributable to the Company's common stock shareholders as of December 31, 2021 is not less than 19%; |
XIV. Commitments and contingencies
1. Significant commitments
Important commitments on the balance sheet dayAs of December 31, 2019, the pledge information of the Company was as follows:
(1) On August 19, 2016, the subsidiary Xinjiang Dahua Zhixin Information Technology LLC pledged its futureaccounts receivable amounting to RMB 351,064,980.00 incurred from the available service fee under the FranchiseAgreement for the Shihezi "Safe Shicheng" PPP Project, and signed the Fixed Assets Loan Contract (total contractamount: RMB 230,000,000.00, contract No.: 2016-01) with Shihezi Sub-Branch of the Construction Bank of China, toprovide guarantee for the Company's loan (loan contract No.: 2016-01) amounting to RMB 230,000,000.00 (Term ofborrowing: from August, 2016 to August, 2027). As of December 31, 2019, the pledge receivables amounted to RMB242,029,204.60 (including the long-term receivable balance RMB 213,118,026.26, and the balance of the non-currentassets mature within one year RMB 28,911,178.34). The loan balance under the guarantee contract was RMB179,000,000.00 (where the long-term loan balance RMB 153,500,000.00, and the balance of non-current liabilities maturewithin one year RMB 25,500,000.00).
(2) On October 23, 2018, Zhejiang Dahua Technology Co., Ltd. and Hangzhou Branch of Zheshang Bank Co., Ltd.entered into the ZSZCCZ (2018) No. 22518 Asset Pool Pledge and Guarantee Contract (ID No. 33100000), to provide aguarantee for the Notes Pool Business Cooperation Agreement signed by the Company together with the subsidiaryZhejiang Dahua Technology Co., Ltd., the subsidiary Zhejiang Dahua System Engineering Co., Ltd., this subsidiaryGuangxi Dahua Information Technology Co., Ltd., Zhejiang Dahua Zhilian Co., Ltd., and Zheshang Bank Co., Ltd. Thefinancing amount for the fund pledge pool cannot be more than RMB 2.5 billion.Under this notes pool business, as of December 31, 2019, RMB 692,260,000.00 undue notes receivable (wherein RMB675,000,000.00 was related party notes receivable that should be included in the scope of the consolidated financialstatements) of Zhejiang Dahua Technology Co., Ltd., RMB 885,388,425.60 undue notes receivable (wherein RMB150,559,660.48 was related party bills that should be included in the scope of the consolidated financial statements) of thesubsidiary Zhejiang Dahua Vision Co., Ltd., RMB 2,245,121.04 undue notes of the subsidiary Zhejiang Dahua SystemEngineering Co., Ltd. was used to issue acceptance bills. Under this pledge, the bank acceptance bill issued by ZhejiangDahua Technology Co., Ltd. was RMB 16,544,083.64, the bank acceptance bill issued by the subsidiary Zhejiang DahuaVision Co., Ltd. was RMB 1,540,931,553.99, and the bank acceptance bill issued by Zhejiang Dahua System EngineeringCo., Ltd. was RMB 212,024.16.
(3) Zhejiang Dahua Technology Co., Ltd. and Hangzhou Branch of China Merchants Bank Co., Ltd. signed theSpecial Credit Agreement for Notes Pool Business, which promised a special credit limit of RMB 2.5 billion for the notespool, and allocated the same limit to the subsidiary Zhejiang Dahua Vision Co., Ltd., the subsidiary Zhejiang Dahua
System Engineering Co., Ltd., the subsidiary Zhejiang Dahua Zhilian Co., Ltd., and the subsidiary Hangzhou HuachengNetwork Technology Co., Ltd. As of December 31, 2019, Zhejiang Dahua Technology Co., Ltd. had pledged RMB144,672,194.20 undue notes receivable (of which RMB 140,000,000.00 was related party notes that should be included inthe scope of the consolidated financial statements), the subsidiary Zhejiang Dahua Vision Co., Ltd. had RMB194,660,137.78 undue notes receivable (of which RMB 110,000,000.00 was related party bills that should be included inthe scope of the consolidated financial statements), the subsidiary Zhejiang Dahua System Engineering Co., Ltd. hadRMB 396,701.61 undue notes receivable, the subsidiary Zhejiang Dahua Zhilian Co., Ltd. had RMB 28,154,865.32 unduenotes receivable, and the subsidiary Hangzhou Huacheng Network Technology Co., Ltd. had RMB 3,438,191.26 unduenotes receivable for issuing bank acceptance bills. Under the pledge, Zhejiang Dahua Technology Co., Ltd. issued RMB13,384,947.47 bank acceptance bill; the subsidiary Zhejiang Dahua Vision Co., Ltd. issued RMB 285,758,633.83 bankacceptance bill; the subsidiary Zhejiang Dahua System Engineering Co., Ltd. issued RMB 979,643.16 bank acceptancebill; the subsidiary Zhejiang Dahua Zhilian Co., Ltd. issued RMB 36,859,352.03 bank acceptance bill; and the subsidiaryHangzhou Huacheng Network Technology Co., Ltd. issued RMB 33,888,639.18 bank acceptance bill.
(4) The subsidiary Zhejiang Dahua Vision Co., Ltd. pledged a deposit certificate of US$35 million and signed anImport and Export Documentary Bill Contract with Hangzhou Branch of Ningbo Bank Co., Ltd.. As of December 31, 2019,there is no corresponding loan for the time being under the pledge contract
2. Contingencies
(1) If no important contingent matter to be disclosed by the Company, it should also be notedaccordinglyNo important contingent matter needs to be disclosed by the Company.
XV. Events after the Balance Sheet Date
1. Important non-adjustment issue
Since January 2020, COVID-19 broke out in China and the world, which has had an adverse impact on the entiremacro economy. The Company actively responds to and strictly implements the regulations and requirements forepidemic prevention and control of the local government. The Company anticipates that the COVID-19 epidemic andprevention and control measures will cause a certain degree of temporary impact on the Company's production andoperations. The degree of impact depends on the progress and duration of global epidemic prevention and control, andthe implementation of prevention and control policies in various regions. The Company will pay close attention to thedevelopment of the global epidemic and constantly evaluate the impact on the performance of the Company.
2. Profit distribution
According to the Company's resolution on the 33rd session of the 6th Board of Directors' meeting on April 2, 2020,the Company's profit distribution preplan for the year of 2018 was: On the basis of the Company's 2,994,599,750 shares(excluding 13,391,480 repurchased shares) in total capital by December 31, 2019, all shareholders will be distributedRMB 1.33 in cash (including tax) for each 10 shares, and the total amount of cash dividends is RMB 398,281,766.75, withno bonus shares and no capitalization of capital reserves. The remaining undistributed profit after the distribution ofdividends will be carried forward to the next year. The matter shall be implemented after being approved by the generalmeeting of shareholders.
3. Other events after the balance sheet date
(1) On February 25, 2020, the 31st session of the 6th Board of Directors' meeting held by the Company reviewed andapproved the "Proposal on Joint Investment with Related Parties to Establish a Holding Subsidiary and Related PartyTransactions", the Company and its related legal person Zhejiang Leapmotor Technology Co., Ltd, Ningbo HualingInvestment Management Partnership (Limited Partnership), and Ningbo Huaqi Enterprise Management Partnership(Limited Partnership) jointly invested RMB 150 million to establish Zhejiang Dahua Automotive Technology Co., Ltd.Among them, Dahua invested RMB 76.5 million with its own funds, accounting for 51% of the registered capital. TheCompany is a holding subsidiary of a listed company.
(2) On February 25, 2020, the 31st session of the 6th Board of Directors' meeting held by the Company reviewed andapproved the "Proposal on Investment in Establishing a Joint Venture Company". The Company and Tianjin RongyuEnterprise Management Partnership (Limited Partnership), Tianjin Qushi Management Consulting Partnership (LimitedPartnership), and Huzhou Xubo Smart City Technology Partnership (Limited Partnership) signed a "Joint VentureAgreement" to jointly invest in the establishment of Zhongruixin Digital Technology Co., Ltd.. With a registered capital ofRMB 800 million, the Company's shareholding accounted for 20%.
(3) On February 4, 2020, the 30th session of the 6th Board of Directors' meeting held by the Company reviewed andapproved the "Proposal on Joint Investment and Related Party Transactions with Related Persons". the Company and itsrelated legal person Ningbo Huagu Enterprise Management Partnership (Limited Partnership) and Ningbo HualingInvestment Management Partnership (Limited Partnership) jointly invested RMB 50 million to establish Zhejiang DahuaStorage Technology Co., Ltd. Among them, Dahua invested RMB 25.5 million with its own funds, accounting for 51% ofthe registered capital. The Company is a holding subsidiary of a listed company.XVI. Other Significant Events
1. Subsection information
(1) Basis for determining the reporting subsection and the accounting policyThe Company determines the operation subsection based on internal organization structure, management requirements,internal reporting system, etc. The Company has only one operation subsection, namely the R&D, production and sales ofsecurity products. The accounting policy of the reporting subsection is consistent with that of the Company.
(2) Financial information of the reporting subsection
Regional subsection
Unit: RMB
| Item Name | Operating income | Operating Cost |
| Domestic | 16,473,728,183.00 | 10,217,525,331.58 |
| Overseas | 9,675,702,469.42 | 5,178,668,608.86 |
| Total | 26,149,430,652.42 | 15,396,193,940.44 |
Product subsection
Unit: RMB
| Item Name | Operating income | Operating Cost |
| Solutions | 13,615,657,688.00 | 7,514,681,636.66 |
| Product | 10,649,410,791.29 | 6,143,786,066.11 |
| Others | 1,884,362,173.13 | 1,737,726,237.67 |
| Total | 26,149,430,652.42 | 15,396,193,940.44 |
XVII. Notes to Main Items in the Financial Statements of the Parent Company
1. Accounts receivable
(1) Categorical disclosure of accounts receivable
Unit: RMB
| Category | Balance at the End of the Period | Balance at the Start of the Period | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Percentage | Amount | Accrued proportion | Amount | Percentage | Amount | Accrued proportion | |||
| Accounts receivables with the bad debt provision accrued based on combinations | 8,553,841,772.05 | 100.00% | 103,477,257.00 | 1.21% | 8,450,364,515.05 | 4,689,003,520.41 | 100.00% | 90,427,597.37 | 1.93% | 4,598,575,923.04 |
| Including: | ||||||||||
| Portfolio 1: Related Parties Portfolio | 7,626,134,745.39 | 89.15% | 7,626,134,745.39 | 4,111,213,084.49 | 87.68% | 4,111,213,084.49 | ||||
| Portfolio 2: Aging Analysis Portfolio | 927,707,026.66 | 10.85% | 103,477,257.00 | 11.15% | 824,229,769.66 | 577,790,435.92 | 12.32% | 90,427,597.37 | 15.65% | 487,362,838.55 |
| Total | 8,553,841,772.05 | 100.00% | 103,477,257.00 | 8,450,364,515.05 | 4,689,003,520.41 | 100.00% | 90,427,597.37 | 4,598,575,923.04 | ||
Bad debt provision based on combinations
Unit: RMB
| Name | Balance at the End of the Period | ||
| Book balance | Bad debt provision | Accrued proportion | |
| Within 1 year | 748,093,619.86 | 37,404,680.98 | 5.00% |
| 1 to 2 years | 96,343,651.28 | 9,634,365.13 | 10.00% |
| 2 to 3 years | 28,155,781.89 | 8,446,734.57 | 30.00% |
| 3 to 4 years | 7,960,613.64 | 3,980,306.82 | 50.00% |
| 4 to 5 years | 15,710,952.47 | 12,568,761.98 | 80.00% |
| 5 years or above | 31,442,407.52 | 31,442,407.52 | 100.00% |
| Total | 927,707,026.66 | 103,477,257.00 | -- |
Please refer to the disclosing methods of other receivables for the information disclosure of bad debts provisions, if thebad debt provisions of accounts receivable are made according to the general model of expected credit losses:
□ Applicable √ Not applicable
Disclosure by age
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 8,327,140,531.04 |
| 1 to 2 years | 105,324,126.66 |
| 2 to 3 years | 38,830,163.25 |
| 3 years or above | 82,546,951.10 |
| 3 to 4 years | 7,960,613.64 |
| 4 to 5 years | 17,286,952.47 |
| 5 years or above | 57,299,384.99 |
| Total | 8,553,841,772.05 |
(2) Provision for bad debts accrued, recovered or reversed in this periodProvision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Accrued by aging analysis | 90,427,597.37 | 13,049,659.63 | 103,477,257.00 | |||
| Total | 90,427,597.37 | 13,049,659.63 | 103,477,257.00 | |||
(3) Accounts receivable of the top five balances at the end of the period collected by the arrearsThe accounts receivable of the top five balances at the end of the period collected by the arrears was summed up to RMB7,700,844,305.16, accounting for 90.03% of the total balance at the end of the period of accounts receivable. The balanceat the end of the period for bad debt provision accrued was RMB 6,034,794.03 accordingly.
(4) Accounts receivable derecognized due to the transfer of financial assetsThere are no accounts receivable derecognized due to the transfer of financial assets in this period.
(5) The amount of assets and liabilities generated due to transferred receivables that theCompany still keeps recourse or retains part of corresponding rights or interestsIn this period, there is no assets and liabilities generated due to transferred receivables that the Company still keepsrecourse or retains part of corresponding rights or interests
2. Other receivables
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Interest Receivable | 42,500.00 | |
| Other Receivables | 5,138,830,912.64 | 6,954,613,363.03 |
| Total | 5,138,830,912.64 | 6,954,655,863.03 |
(1) Interests receivable
1) Category of interests receivable
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period |
| Fixed term deposit | 42,500.00 | |
| Total | 42,500.00 |
2) Bad debt provision
□ Applicable √ Not applicable
(2) Other receivables
1) Other receivables categorized by the nature of the funds
Unit: RMB
| Nature of the funds | Closing balance | Opening balance |
| Deposits | 34,668,226.17 | 40,101,577.35 |
| Prepaid or advance expense | 60,885,579.94 | 37,600,678.55 |
| Employee home loan | 104,094,000.60 | 107,390,998.98 |
| Incomings and outgoings | 4,966,265,220.25 | 6,789,622,721.45 |
| Others | 239,332.03 | 21,879.23 |
| Total | 5,166,152,358.99 | 6,974,737,855.56 |
2) Bad debt provision
Unit: RMB
| Bad debt provision | Phase One | Phase Two | Phase Three | Total |
| Expected credit losses in the next 12 months | Expected credit losses for the entire extension (without credit impairment) | Expected credit losses for the entire extension (with credit impairment) | ||
| Balance on January 1, 2019 | 16,811,336.70 | 2,663,676.59 | 649,479.24 | 20,124,492.53 |
| Balance of the current period on January 1, 2019 | —— | —— | —— | —— |
| --Transfer to phase two | -529,345.05 | 529,345.05 | ||
| --Transfer to phase three | -2,826,597.45 | -10,000.00 | 2,836,597.45 | |
| Provisions of this period | 9,483,383.76 | 458,748.66 | 1,510.41 | 9,943,642.83 |
| Write off in this period | 2,746,689.01 | 2,746,689.01 | ||
| Balance on December 31, 2019 | 22,938,777.96 | 3,641,770.30 | 740,898.09 | 27,321,446.35 |
Book balance changes with significant changes in loss provision in the current period
□ Applicable √ Not applicable
Disclosure by age
Unit: RMB
| Aging | Book balance |
| Within 1 year (including 1 year) | 4,563,520,940.63 |
| 1 to 2 years | 542,935,178.44 |
| 2 to 3 years | 46,328,875.39 |
| 3 years or above | 13,367,364.53 |
| 3 to 4 years | 9,748,103.16 |
| 4 to 5 years | 2,502,107.84 |
| 5 years or above | 1,117,153.53 |
| Total | 5,166,152,358.99 |
3) Provision for bad debts accrued, recovered or reversed in this periodProvision for bad debts in the current period:
Unit: RMB
| Category | Balance at the Start of the Period | Amount of Changes in the Current Period | Balance at the End of the Period | |||
| Accrued | Recovered or Reversed | Written Off | Others | |||
| Portfolio 2: Aging Analysis Portfolio | 20,124,492.53 | 9,943,642.83 | 2,746,689.01 | 27,321,446.35 | ||
| Total | 20,124,492.53 | 9,943,642.83 | 2,746,689.01 | 27,321,446.35 | ||
4) Accounts receivable actually written off in this period
Unit: RMB
| Item Name | Write-off amount |
| Other accounts receivable actually written off | 2,746,689.01 |
5) Other receivables of the top five closing balances collected by debtors
Unit: RMB
| Name of Unit | Nature of the funds | Balance at the End of the Period | Aging | As a percentage of total other receivables at the end of the period | Bad debt provision at the end of the period |
| Company 1 | Incomings and outgoings | 2,209,112,698.78 | Within 1 year | 42.76% | |
| Company 2 | Incomings and outgoings | 1,170,288,886.84 | Within 1 year | 22.66% | |
| Company 3 | Incomings and outgoings | 776,098,658.59 | The amount within 1 year is RMB 526,857,735.15 and the amount in 1–2 years is RMB 249,240,923.44. | 15.02% |
| Company 4 | Incomings and outgoings | 437,191,320.50 | Within 1 year | 8.46% | |
| Company 5 | Incomings and outgoings | 168,477,788.59 | The amount within 1 year is RMB 9,052,406.35 and the amount in 1–2 years is RMB 159,425,382.24. | 3.26% | |
| Total | -- | 4,761,169,353.30 | -- | 92.16% |
3. Long-term equity investment
Unit: RMB
| Item Name | Balance at the End of the Period | Balance at the Start of the Period | ||||
| Book balance | Provision for decline in value | Book value | Book balance | Provision for decline in value | Book value | |
| Investment in subsidiaries | 3,399,382,831.04 | 3,399,382,831.04 | 2,833,803,638.04 | 2,833,803,638.04 | ||
| Investment in affiliates and joint ventures | 123,876,230.74 | 123,876,230.74 | 167,835,790.51 | 167,835,790.51 | ||
| Total | 3,523,259,061.78 | 3,523,259,061.78 | 3,001,639,428.55 | 3,001,639,428.55 | ||
(1) Investment in Subsidiaries
Unit: RMB
| The invested entity | Balance at the Start of the Period (book value) | Decrease/Increase in the current period | Balance at the End of the Period (book value) | Closing balance of provision for decline in value | |||
| Investments increased | Investment decreased | Provision for impairment accrued | Others | ||||
| Zhejiang Dahua System Engineering Co., Ltd. | 509,413,298.82 | 12,069,740.11 | 521,483,038.93 | ||||
| Zhejiang Dahua Security Network Operation Service Co., Ltd. | 26,244,774.40 | 647,938.36 | 26,892,712.76 | ||||
| Zhejiang Dahua Ju'an Technology Co., Ltd. | 5,100,000.00 | 5,100,000.00 | |||||
| Guangxi Dahua Information Technology Co., Ltd. | 5,399,419.60 | 922,668.28 | 6,322,087.88 | ||||
| Zhejiang Dahua Security Service Co., Ltd. | 46,179.54 | 72,628.64 | 118,808.18 | ||||
| Dahua Technology (HK) Limited | 262,000,000.00 | 346,628,700.00 | 608,628,700.00 | ||||
| Zhejiang Dahua Vision Technology Co., Ltd. | 649,784,323.16 | 9,430,626.82 | 659,214,949.98 | ||||
| Wuxi Dahua Ruide Electronic Technology Co., Ltd. | 1,000,000.00 | 1,000,000.00 | |||||
| Guangxi Dahua Security Service Co., Ltd. | 20,002,580.76 | 20,002,580.76 | |||||
| Zhejiang Huatu Microchip Technology Co., Ltd. | 10,034,350.20 | 206,101.20 | 10,240,451.40 | ||||
| Hangzhou Xiaohua Technology CO., LTD. | 4,698,841.50 | 756,657.93 | 5,455,499.43 |
| Zhejiang Dahua Zhilian Co., Ltd. | 1,000,011,450.06 | 90,903.04 | 1,000,102,353.10 | ||||
| Hangzhou Tecomore Technology Co., Ltd. | 5,210,047.78 | 400,752.00 | 5,610,799.78 | ||||
| Guangxi Dahua Zhicheng Co., Ltd. | 71,206,080.58 | 7,951.45 | 71,214,032.03 | ||||
| Hangzhou Huacheng Network Technology Co., Ltd. | 25,715,324.72 | 2,062,097.11 | 27,777,421.83 | ||||
| Xinjiang Dahua Zhixin Information Technology Co., Ltd. | 2,055.08 | 13,675.56 | 15,730.64 | ||||
| Zhejiang Dahua Investment Management Co., Ltd. | 62,175,000.00 | 62,175,000.00 | |||||
| Zhejiang Huachuang Vision Technology Co., Ltd. | 25,900,043.59 | 2,524,266.68 | 28,424,310.27 | ||||
| Zhejiang HuaRay Technology Co., Ltd. | 25,783,331.48 | 3,735,441.12 | 29,518,772.60 | ||||
| Xinjiang Dahua Intelligence Technology Co., Ltd. | 10,000,000.00 | 10,000,000.00 |
| Hangzhou Fuyang Hua'ao Technology Co., Ltd. | 5,100,000.00 | 5,100,000.00 | |||||
| Zhejiang Huafei Intelligent Technology CO., LTD. | 21,850,966.90 | 1,567,357.76 | 23,418,324.66 | ||||
| Zhejiang Huaxiao Technology Co., Ltd. | 8,050,311.05 | 19,288,749.75 | 27,339,060.80 | ||||
| Xi'an Dahua Zhilian Technology Co., Ltd. | 56,000,000.00 | 85,489.52 | 56,085,489.52 | ||||
| Wuxi Dahua Ruipin Technology Co., Ltd. | 3,134,743.40 | 6,528,460.40 | 9,663,203.80 | ||||
| Zhejiang Dahua Robot Technology Co., Ltd. | 6,908,515.42 | 41,200,661.38 | 48,109,176.80 | ||||
| Beijing Huayue Shangcheng Information Technology Service Co., Ltd. | 400,000.00 | 3,874,772.43 | 4,274,772.43 | ||||
| Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd. | 4,530,000.00 | 1,000,000.00 | 5,530,000.00 | ||||
| DahuaTechnologyHoldingsLimited | 8,102,000.00 | 8,102,000.00 |
| Shanghai Huashang Chengyue Information Technology Service Co., Ltd. | 1,276,408.38 | 1,276,408.38 | |||||
| Zhejiang Dahua Jinzhi Technology Co., Ltd. | 60,000,000.00 | 60,000,000.00 | |||||
| Guangxi Huacheng Technology Co., Ltd. | 33,786.68 | 33,786.68 | |||||
| Dahua Technology CanadaInc. | 13,358.40 | 13,358.40 | |||||
| Zhejiang Zhoushan Digital Development Operation Co., Ltd | 17,640,000.00 | 17,640,000.00 | |||||
| Guangxi Dahua Technology Co., Ltd. | 30,000,000.00 | 30,000,000.00 | |||||
| Yunnan Zhili Technology Co., Ltd | 4,500,000.00 | 4,500,000.00 | |||||
| Total | 2,833,803,638.04 | 566,579,193.00 | 1,000,000.00 | 3,399,382,831.04 |
(2) Investment in affiliates and joint ventures
Unit: RMB
| Name of | Balance at | Decrease/Increase in the current period | Balance at | Closi |
| Investees | the Start of the Period (book value) | Investments increased | Investment decreased | Investment profit and loss recognized under the equity method | Adjustment on other comprehensive income | Other changes in equity | Cash dividends or profit declared to distribute | Provision for impairment accrued | Others | the End of the Period (book value) | ng balance of provision for decline in value |
| Ⅰ. Joint ventures | |||||||||||
| Ⅱ. Affiliates | |||||||||||
| Zhejiang Leapmotor Technology Co., Ltd. | 168,229,977.61 | -115,735,671.92 | 70,570,727.96 | 123,065,033.65 | |||||||
| Guangdong Dahua Zhishi Technology Co., Ltd. | -394,187.10 | 138,092.47 | 256,094.63 | ||||||||
| Hangzhou Juhuanyan Information Technology Co., Ltd. | 1,000,000.00 | -188,802.91 | 811,197.09 | ||||||||
| Subtotal | 167,835,790.51 | 1,000,000.00 | -115,786,382.36 | 70,826,822.59 | 123,876,230.74 | ||||||
| Total | 167,835,790.51 | 1,000,000.00 | -115,786,382.36 | 70,826,822.59 | 123,876,230.74 | ||||||
4. Operating income and operating costs
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Income | Cost | Income | Cost | |
| Main Business | 8,439,490,160.11 | 1,168,930,845.23 | 8,306,049,467.16 | 1,743,136,622.36 |
| Other businesses | 42,569,972.85 | 31,775,678.78 | 27,513,647.92 | 19,328,284.90 |
| Total | 8,482,060,132.96 | 1,200,706,524.01 | 8,333,563,115.08 | 1,762,464,907.26 |
Has the new income standard been implemented?
□ Yes √ No
5. Investment income
Unit: RMB
| Item Name | This Period's Amount of Occurrence | Previous Period's Amount of Occurrence |
| Long-term equity investment income measured by equity method | -115,786,382.36 | -37,135,560.20 |
| Investment income from disposal of long-term equity investment | -1,000,000.00 | 706,569.92 |
| Investment income from possession of available-for-sale financial assets | 17,171,892.61 | 1,005,008.70 |
| Investment income from treasury bond reverse repurchase | 308,838.52 | 380,167.33 |
| Total | -99,305,651.23 | -35,043,814.25 |
XVIII. Supplementary Information
1. Breakdown of non-recurring gains and losses for this period
√ Applicable □ Not applicable
Unit: RMB
| Item Name | Amount | Note |
| Gains and losses from disposal of non-current assets | 10,755,526.46 | |
| The government subsidies included in the current profits and losses (excluding the government subsidies closely related to regular businesses of the Company and issued in the quota or quantity based on the national standards | 164,079,473.51 |
| Profits and losses resulting from the changes in fair value for holding trading financial assets, derivative financial assets and trading financial liabilities, derivative financial liabilities and investment income from disposal of trading financial assets, derivative financial assets, trading financial liabilities, derivative financial liabilities, and other obligatory right investment, excluding the effective hedging businesses related to the regular business operation of the Company | 51,518,752.09 | |
| Reversal of the receivables and contract assets depreciation reserves for separate impairment test | 3,383,257.76 | |
| Non-Operating Revenue and expenses other than the above | -2,958,714.67 | |
| Other gains and losses items that fit the definition of non-recurring gains and losses | 308,838.52 | |
| Less: Impact of income tax | 35,447,376.02 | |
| Impact of minority equity | 20,448,953.35 | |
| Total | 171,190,804.30 | -- |
For items defined as non-recurring gains and losses according to the No. 1 Explanatory Announcement on InformationDisclosure for Companies Offering Their Securities to Public - Non-recurring Gains and Losses, or non-recurring gainsand losses items listed in the said document defined as recurring ones, please specify the reasons.
□ Applicable √ Not applicable
2. Return on net assets and earnings per share
| Profit for the reporting period | Weighted Average ROE | Earnings per share | |
| Basic Earnings per Share (RMB/Share) | Diluted Earnings per Share (RMB/Share) | ||
| Net profit attributable to common shareholders of the Company | 22.74% | 1.10 | 1.10 |
| Net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses | 21.52% | 1.04 | 1.04 |
3. Differences in accounting data between domestic and overseas accounting standards
(1) Differences of net profits and net assets in the financial reports disclosed according to theinternational accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
(2) Differences of net profits and net assets in the financial reports disclosed according to theoverseas accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
Section XIII Documents Available for ReferenceI. The financial statements signed and sealed by Fu Liquan, the Company's legal representative, Wei Meizhong, chiefaccountant, and Xu Qiaofen, person in charge of accounting institution.II. The original copy of the Audit Report with the seal of the Accounting Firm and signed and stamped by Certified PublicAccountants;III. Original copies of all the Company's documents and announcements published on media designated by ChinaSecurities Regulatory Commission within the reporting period.IV. Other related materials.The said documents are prepared and placed at the Company's Securities Investment Department
Zhejiang Dahua Technology Co., Ltd.
Legal representative: Fu Liquan
April 3, 2020