China Fangda Group Co., Ltd.
2019 Annual Report
April 2020
Chapter 1 Important Statement, Table of Contents and DefinitionsThe members of the Board and the Company guarantee that theannouncement is free from any false information, misleading statement ormaterial omission and are jointly and severally liable for the information’struthfulness, accuracy and integrity.
Mr. Xiong Jianming, the Chairman of Board, Mr. Lin Kebin, the ChiefFinancial Officer, and Mr. Wu Bohua, the manager of accounting departmentdeclare: the Financial Report carried in this report is authentic and completed.
All the Directors have attended the meeting of the board meeting at whichthis report was examined.
Forward-looking statements involved in this report including future plansdo not make any material promise to investors. Investors should pay attention toinvestment risks.
The Company needs to comply with disclosure requirements of theShenzhen Stock Exchange Industry Information Disclosure Guideline No.6 –Listed Companies Engaged in Decoration Business and disclosure requirementsof the Shenzhen Stock Exchange Industry Information Disclosure GuidelineNo.3 – Listed Companies Engaged in Property Development.
The Company has specified market, management and production andoperation risks in this report. Please review the potential risks and measures
mentioned in the discussion and analysis of future development in IV. OperationDiscussion and Analysis.
Based on the total share capital after the market close on the stockregistration day when the profit distribution plan is implemented, a cashdividend of RMB 0.50 (tax included) will be distributed to all shareholders forevery 10 shares, and no bonus shares will be sent or capital reserves will betransferred to increase capital.
The Company is currently implementing the Company's plan to repurchaseB shares in 2019. As of the date of the meeting of the board of directors to reviewthe 2019 profit distribution proposal, it has repurchased 2,705,700 shares of theCompany's shares through a centralized auction transaction through a specialaccount for share repurchase securities At the end of 2019, the Company's totalshare capital of 1,123,384,189 shares was deducted. The current share capitalafter repurchasing shares was 1,120,678,489 shares as the base. The estimatedtotal amount of cash dividends is RMB56,033,924.45 (including tax) (the actualtotal amount of dividends is registered as equity when the profit distributionplan is implemented. (The total share capital after the market closes on the dayis the total dividend calculated based on the base).
After the Company's profit distribution plan is announced andimplemented, if the total share capital changes, the total share capital after themarket close on the share registration date when the profit distribution plan isimplemented is used as the base. According to the "distributable cash dividend
of RMB 0.50 per 10 shares (including tax), no The principle of "change", in theannouncement of the Company’s profit distribution implementation, disclose thetotal amount of dividends calculated based on the total share capital after themarket close on the stock registration day when the Company’s profitdistribution plan is implemented (total stock capital after the market close onthe stock registration day = the Company’s total share capital at the end of 2019-The number of shares repurchased by the Company's plan to repurchase Bshares in 2019).
Table of Contents
Chapter I Difitions ...... 8
Chapter 2 About the Company and Financial Highlights ...... 13
Chapter 3 Business Introduction ...... 19
Chapter 4 Operation Discussion and Analysis ...... 43
Chapter 5 Significant Events ...... 58
Chapter 6 Changes in Share Capital and Shareholders ...... 65
Chapter 7 Preferred Shares ...... 65
Chapter 8 Information about the Company’s Convertible Bonds ...... 65Chapter 9 Particulars about the Directors, Supervisors, Senior Management and Employees ...... 66
Chapter 10 Corporation Governance ...... 67
Chapter 11 Information about the Company’s Securities ...... 73
Chapter 12 Financial Statements ...... 80
Chapter 13 Documents for Reference ...... 81
Definitions
| Terms | Refers to | Description |
| Fangda Group, company, the Company | Refers to | China Fangda Group Co., Ltd. |
| Articles of Association | Refers to | Articles of Association of China Fangda Group Co., Ltd. |
| Meeting of shareholders | Refers to | Meetings of shareholders of China Fangda Group Co., Ltd. |
| Board of Directors | Refers to | Board of Directors of China Fangda Group Co., Ltd. |
| Supervisory Committee | Refers to | Supervisory Committee of China Fangda Group Co., Ltd. |
| Banglin Technology | Refers to | Shenzhen Banglin Technologies Development Co., Ltd. |
| Shilihe Co. | Refers to | Gong Qing Cheng Shi Li He Investment Management Partnership Enterprise (limited partner) |
| Shengjiu Co. | Refers to | Shengjiu Investment Ltd. |
| Fangda Jianke | Refers to | Shenzhen Fangda Jianke Group Co., Ltd. |
| Fangda Zhichuang | Refers to | Fangda Zhichuang Science and Technology Co., Ltd. |
| Fangda New Material | Refers to | Fangda New Materials (Jiangxi) Co., Ltd. |
| Fangda New Resource | Refers to | Shenzhen Fangda New Energy Co., Ltd. |
| Fangda Property | Refers to | Shenzhen Fangda Property Development Co., Ltd. |
| Chengdu Fangda Jianke | Refers to | Chengda Fangda Construction Technology Co., Ltd. |
| Dongguan Fangda New Material | Refers to | Dongguan Fangda New Material Co., Ltd. |
| Kechuangyuan Software | Refers to | Shenzhen Qianhai Kechuangyuan Software Co., Ltd. |
| Kexunda Co. | Refers to | Shenzhen Kexunda Software Co., Ltd. |
| Fangda Property | Refers to | Shenzhen Fangda Property Management Co., Ltd. |
| Jiangxi Property | Refers to | Fangda (Jiangxi) Property Development Co., Ltd. |
| Hongjun Investment Company | Refers to | Shenzhen Hongjun Investment Co., Ltd. |
| Fangda Qingling | Refers to | Shanghai Fangda Qingling Technology Co., Ltd. |
| Fangda Cloud Rail | Refers to | Shenzhen Fangda Cloud Rail Technology Co., Ltd. |
| Jianke Australia | Refers to | Fangda Australia Pty Ltd |
| Automatic Hong Kong | Refers to | Fangda Automation (Hong Kong) Co., Ltd. |
| Shihui International | Refers to | Shihui International Holding Co., Ltd. |
| Fangda Southeast Asia | Refers to | Fangda Southeast Asia Co., Ltd. |
| Shenyang Fangda | Refers to | Shenyang Fangda Semi-conductor Lighting Co., Ltd. |
| Shenzhen Woke | Refers to | Shenzhen Woke Semi-conductor Lighting Co., Ltd. |
| SZSE | Refers to | Shenzhen Stock Exchange |
Chapter 2 About the Company and Financial Highlights
1. Company profiles
| Stock ID | Fangda Group, Fangda B | Stock code | 000055, 200055 |
| Modified stock ID (if any) | None | ||
| Stock Exchange | Shenzhen Stock Exchange | ||
| Chinese name | China Fangda Group Co., Ltd. | ||
| Chinese abbreviation | Fangda Group | ||
| English name (if any) | CHINA FANGDA GROUP CO., LTD. | ||
| English abbreviation (if any) | CFGC | ||
| Legal representative | Xiong Jianming | ||
| Registered address | Fangda Technology Building, Kejinan 12th Avenue, High-tech Zone, Hi-tech Park South Zone, Shenzhen, PR China. | ||
| Zip code | 518057 | ||
| Office address | 20F, Fangda Technology Building, Kejinan 12th Avenue, High-tech Zone, Hi-tech Park South Zone, Shenzhen, PR China. | ||
| Zip code | 518057 | ||
| Website | http://www.fangda.com | ||
| fd@fangda.com | |||
2. Contacts and liaisons
| Secretary of the Board | Representative of Stock Affairs | |
| PRINTED NAME | Zhou Zhigang | Guo Linchen |
| Address | 20F, Fangda Technology Building, Kejinan 12th Avenue, High-tech Zone, Hi-tech Park South Zone, Shenzhen, PR China. | 20F, Fangda Technology Building, Kejinan 12th Avenue, High-tech Zone, Hi-tech Park South Zone, Shenzhen, PR China. |
| Telephone | 86(755) 26788571 ext. 6622 | 86(755) 26788571 ext. 6622 |
| Fax | 86(755)26788353 | 86(755)26788353 |
| zqb@fangda.com | zqb@fangda.com |
3. Information disclosure and inquiring
| Press medias of information disclosure | China Securities Journal, Security Times, Shanghai Securities Daily, Hong Kong Commercial Daily |
| Website assigned by CSRC to release the online reports | http://www.cninfo.com.cn |
| Place for information inquiry | Secretarial Office of the Board |
4. Registration changes
| Organization code | None |
| Changes in main businesses since the listing of the Company | None |
| Changes in the controlling shareholders (if any) | None |
5. Other information
Public accountants employed by the Company
| Public accountants | RSM Thornton (limited liability partnership) |
| Address | 901-22 to 901-26, Foreign Trade Building, No.22, Fuchengmenwai Street, Xicheng District, Beijing, China |
| Signing accountant names | Chen Zhaoxin, Zeng Hui |
Sponsor engaged by the Company to perform continued supervision and guide during the reporting period
□ Applicable √ Inapplicable
Financial advisor engaged by the Company to perform continued supervision and guide during the reporting period
□ Applicable √ Inapplicable
6. Financial Highlight
Whether the Company needs to make retroactive adjustment or restatement of financial data of previous years
□ Yes √ No
| 2019 | 2018 | Increase/decrease | 2017 | |
| Turnover (yuan) | 3,005,749,558.66 | 3,048,680,152.06 | -1.41% | 2,947,470,813.58 |
| Net profit attributable to shareholders of the listed company (yuan) | 347,771,182.73 | 2,246,164,571.68 | -84.52% | 1,144,404,441.03 |
| Net profit attributable to the shareholders of the listed company and after deducting of non-recurring gain/loss (RMB) | 291,449,314.27 | 21,171,063.10 | 1,276.64% | 366,212,412.32 |
| Net cash flow generated by business operation (RMB) | -5,284,830.77 | 387,102,719.57 | -101.37% | 557,833,145.73 |
| Basic earnings per share (yuan/share) | 0.310 | 1.91 | -83.77% | 0.97 |
| Diluted Earnings per share (yuan/share) | 0.310 | 1.91 | -83.77% | 0.97 |
| Weighted average net income/asset ratio | 6.82% | 53.17% | -46.35% | 41.53% |
| End of 2019 | End of 2018 | Increase/decrease from the end of last year | End of 2017 | |
| Total asset (RMB) | 11,369,964,580.11 | 10,658,854,133.73 | 6.67% | 7,625,422,688.63 |
| Net profit attributable to the shareholders of the listed company (RMB) | 5,182,795,079.67 | 5,195,187,621.88 | -0.24% | 3,238,939,202.18 |
7. Differences in accounting data under domestic and foreign accounting standards
1. Differences in net profits and assets in financial statements disclosed according to the international andChinese account standards
□ Applicable √ Inapplicable
There is no difference in net profits and assets in financial statements disclosed according to the international and Chinese accountstandards during the report period.
2. Differences in net profits and assets in financial statements disclosed according to the overseas andChinese account standards
□ Applicable √ Inapplicable
There is no difference in net profits and assets in financial statements disclosed according to the international and Chinese accountstandards during the report period.
8. Financial highlights by quarters
In RMB
| Q1 | Q2 | Q3 | Q4 | |
| Turnover | 670,452,093.70 | 755,438,853.29 | 699,243,342.82 | 880,615,268.85 |
| Net profit attributable to the shareholders of the listed company | 69,998,533.09 | 58,583,221.92 | 27,468,258.38 | 191,721,169.34 |
| Net profit attributable to the shareholders of the listed company and after deducting of non-recurring gain/loss | 64,930,951.19 | 48,446,112.87 | 15,661,279.22 | 162,410,970.99 |
| Cash flow generated by business operations, net | -296,237,735.96 | -76,487,267.15 | -35,730,387.83 | 403,170,560.17 |
Where there is difference between the above-mentioned financial data or sum and related financial data in quarter report and interimreport disclosed by the Company
□ Yes √ No
9. Accidental gain/loss item and amount
√ Applicable □ Inapplicable
In RMB
| Item | 2019 | 2018 | 2017 | Notes |
| Non-current asset disposal gain/loss (including the write-off part for which assets impairment provision is made) | -101,676.86 | -5,080,792.02 | 89,483,320.53 | |
| Subsidies accounted into the current income account (except the government subsidy closely related to the enterprise’s business and based on unified national standard quota) | 5,411,736.29 | 5,931,937.15 | 5,637,910.24 | |
| Capital using expense charged to non-financial enterprises and accounted into the current income account | 585,760.51 | 922,330.10 | ||
| Gain from entrusted investment or assets management | 27,065,331.33 | 20,455,865.70 | ||
| Gain/loss from debt reorganization | -3,674,141.05 | |||
| Gain/loss from change of fair value of transactional financial asset and liabilities, and investment gains from disposal of transactional and derivative financial assets and liabilities and sellable financial assets, other than valid period value instruments related to the Company’s common businesses | 9,236,658.20 | -1,192,774.07 | 2,013,922.62 | |
| Write-back of impairment provision of receivables and contract assets for which impairment test is performed individually | 100,023.62 | |||
| Gain/loss from commissioned loans | 442,060.24 | |||
| Gain/loss from change of fair value of investment property measured at fair value in follow-up measurement | 42,608,311.58 | 2,916,598,485.48 | 889,708,083.34 |
| Other non-business income and expenditures other than the above | -1,108,687.74 | 1,675,521.71 | 4,054,553.86 | |
| Other gain/loss items satisfying the definition of non-recurring gain/loss account | -936,467.20 | |||
| Less: Influenced amount of income tax | 164,700.18 | 720,926,531.10 | 220,906,068.58 | |
| Influenced amount of minority shareholders’ equity (after-tax) | -248,850.00 | 8,581,417.95 | ||
| Total | 56,321,868.46 | 2,224,993,508.58 | 778,192,028.71 | -- |
Explanation statement should be made for accidental gain/loss items defined and accidental gain/loss items defined as regulargain/loss items according to the Explanation Announcement of Information Disclosure No. 1 - Non-recurring gain/loss mentioned.
□ Applicable √ Inapplicable
No circumstance that should be defined as recurrent profit and loss according to Explanation Announcement of InformationDisclosure No. 1 - Non-recurring gain/loss occurs in the report period.
Chapter 3 Business Introduction
1. Major businesses of the Company during the report period
The Company is headquartered in Nanshan District, Shenzhen. The stock was listed on the Shenzhen Stock Exchange onNovember 29, 1995. Currently, five major business subsidiaries of the Company are national high-tech enterprises with large modernproduction bases in Shenzhen, Shanghai, Chengdu, Nanchang, Dongguan and Foshan. The Company was engaged in the followingbusinesses in the report period.
1. High-end curtain wall system and material business:
(1) Main products and purpose
The Company’s main products include energy-saving curtain walls, photo-electricity curtain walls, LED color-display curtainwalls, PVDF aluminum plate and graphene aluminum plate materials. Construction curtain walls are mainly used on high-levelbuildings, large-area public venues such as airports, stations, cultural centers and exhibition centers, daylighting roof, shapedconstruction (ball-shaped and clock-shaped buildings) and buildings with external retaining and decoration functions.
(2) Macroeconomic situation of the industry, the impact of changes in the industrial policy environment on theCompany, and the countermeasures taken by the CompanyOver recent years, a series of industry policies will be issued to push forward the industry, providing a gold opportunity for thedevelopment of energy-saving curtain wall and material business. With the continuous advancement of the national urbanizationprocess, the economic development of first- and second-tier cities, governments at all levels in infrastructure such as municipalities,and investment in public buildings such as medical, education, sports, etc. have released a sustained demand for building curtainwalls. Therefore, the curtain wall system and material industry have a larger market capacity. In 2019, China's supply-side structuralreforms continued to deepen, and the national regional coordinated development strategy was further promoted. New urbanization,coordinated development of Beijing-Tianjin-Hebei, ―Belt and Road‖ construction, and Guangdong, Hong Kong, Macao and DawanDistrict development projects provided valuable opportunities for the development of the curtain wall systems and materials business.On February 18, 2019, the Central Committee of the Communist Party of China and the State Council issued the Outline of theGuangdong-Hong Kong-Macao Greater Bay Area Development Plan, which proposed optimizing and enhancing the central city,with Hong Kong, Macau, Guangzhou, and Shenzhen as the core engines of regional development. Comparative advantages makebetter and stronger, and enhance the role of radiation in the development of surrounding areas. On August 18, 2019, the CentralCommittee of the Communist Party of China and the State Council issued the Opinions on Supporting Shenzhen to Build aPioneering Socialist Demonstration Zone with Chinese Characteristics and cultural exchange activities, building a national teamtraining base, undertaking major home diplomatic activities, etc. As an important curtain wall market for the Company, Shenzhen, theabove-mentioned planning outline and opinions will bring further development space to the Company. Recently, governments at alllevels have issued plans to increase investment projects to hedge against the economic impact of the new coronary pneumoniaepidemic. The Company will seize the opportunity to further consolidate and increase market share.In 2019, the Company will continue to steadily hit the traditional high-quality markets such as the Guangdong-HongKong-Macao Greater Bay Area, the Yangtze River Delta, Beijing-Tianjin-Hebei and Chengdu-Chongqing regions, continue toincrease the expansion of overseas markets, establish a long-term development mechanism for teams, continue to enhance the brandimage, and focus on key customers , Enriching high-quality resources, establishing strategic alliances with outstanding enterprises,and increasing investment in hardware and software. The construction of the intelligent chemical plant in Dongguan Songshan Lakebase has achieved results. Intelligent glue application and intelligent electric welding have begun to be used in production, improvingefficiency and quality. "Towards intelligent manufacturing", the Chengdu Xinjin production base was put into operation, and theconstruction of the Shanghai Songjiang production base was completed by 70%, creating conditions for the Company to increase
production, increase income, and continue rapid development.
(3) Main business modes, specific risks and changes;
The projects implemented by the Company are mainly through the bidding method to obtain contract orders. Project design,material procurement, production and processing, and the construction and installation and after-sales service model are based on thecontract orders. The main risk of this mode is that it takes a long period of time from the completion of the order to the completion ofthe project, and it is highly dependent on raw materials and labor costs. It is greatly affected by the national industrial policy, rawmaterial prices, and labor market fluctuations. Different contract orders have different requirements, imposing high requirements ontechnology and production management. The main business model of the Company's curtain wall engineering is the entire industrychain, from design, process, material procurement, production and processing, to construction and after-sales service. The operationmode remained unchanged in the report period.
(4) Market competition pattern, cyclical characteristics of the Company's industry and the Company's market position
In recent years, with the increasing pressure of market competition, the industry has become more refined and standardized.Small businesses with fragmented operations, unqualified and weak competitive ability have been eliminated by the market, andmarket concentration has increased. The competition in the high-end market is dominated by the brand and strength of the curtainwall enterprises, and requires the participating enterprises to have complete qualifications, large scale, advanced technology,standardized management and deep talent reserve, and gradually form a certain competition threshold. At the same time, the totalnumber of employees in the curtain wall industry is declining, and the contradictions in human resources are more prominent. It alsoputs forward more urgent needs for intelligent manufacturing and management tool applications. There is no obvious periodicity inthe curtain wall industry.
The Company is a pioneer and first listed company in this industry. Over the past more than 20 years, the Company hasundertaken hundreds of large projects and received the highest award in the industry China Construction Luban Award and ZhanTianyou Civil Engineering Award for many times. The Company has also received nearly 100 provincial and above awards. TheCompany has been in the top 10 of ―China's top 100 building curtain wall industry‖ for many years, and has already had strong brandadvantages and competitiveness in the industry. The Company has a strong technology lead in the industry with 457 patents,including 38 intention patents and 11 software copyrights. The Company also took part in the preparation of more than 10 national orindustry standards including the Public Construction Energy Saving Design Standard, making 9 records among Chinese enterprises.The Company has a Class A qualification for building curtain wall engineering contracting and class A qualification for buildingcurtain wall engineering design. It is the highest level for curtain wall design and construction companies in China.
(5) Industry qualification types and validity period
During the reporting period, the Company's relevant qualifications have not changed significantly, and the validity period hasnot expired. For the detailed information about the qualifications obtained, please refer to the Chapter V, XIX, Explanation of OtherMajor Matters of this report.
(6) Quality control system, implementation standards, control measures and overall evaluation
Quality control system: The Company implements a comprehensive quality management system and has established a qualitymanagement system in accordance with ISO9001 from the aspects of design, procurement, storage, production, testing, delivery,installation, and after-sales service, and conduct regular reviews.
Implementation of the standard: In the process of building curtain wall business, the Company strictly complies withGB/T21086-2007 "Building Curtain Wall", JG/T231-2007 "Building Glass Lighting Roof" and other national and industrialstandards.
Control measures: The Company has established complete and effective quality control measures and quality managementbodies, and strictly implements various quality management and control measures.
Overall evaluation: The Company's products and project quality are in full compliance with the relevant requirements of therelevant national standards and standards, and maintain proper operation, providing customers with stable and reliable qualityproducts and engineering.
(7) Major project quality problem during the reporting period
None.
2. Rail transport equipment business:
The Company's main products in this sector are rail transport screen door systems and technical maintenance services, whichare a necessary part of modern subway system. It is installed at the edge of the subway platform and separates trains from theplatform. The business model is to order-based production, obtain contract orders through bidding (divided into open bidding and bidinvitation), design, process, purchase raw materials, factory production, construction and installation, and technical maintenanceservices according to the orders. The Company has built a complete industry chain that integrates designing, production, engineeringand after-sales services. The operation mode remained unchanged in the report period. The Company has established a qualitymanagement system from design, procurement, production, installation and after-sales service in accordance with ISO9001, and haspassed ISO9001, ISO14000 and international railway IRIS system certification. The Company has developed rail transport screendoor systems with independent intellectual property rights. The Company also prepared the first Rail Transport Station Screen DoorStandard. The Fangda screen door system with technical standards at the international advanced level has been used in rail transit in42 cities around the world. More than 10 million people use the Fangda screen door screen system every day, and the coverage rate indomestic metro operating cities exceeds 80%. The market share ranks first in the world for many years.
3. New energy industry: Solar PV power generation industry is largely supported by the Chinese government. The Company isone of the first companies that possess intellectual property rights in the designing, production and integration of solar PV systems. In2019, the grid-connected Jiangxi Pingxiang Xuanfeng Town Solar Photovoltaic Power Station, Nanchang Jiangxi Isuzu AutomobileCo., Ltd. Parking Shade Photovoltaic Power Station and Dongguan Songshan Lake Photovoltaic Power Station all operated smoothly,and the power generation efficiency was in line with the design. In 2019, it achieved sales revenue of RMB20.94 million, an increaseof 2.27% over the previous year, and an operating profit of RMB11.6568 million, an increase of 5.88% over the previous year. It willcontinue to bring long-term and stable income and profits to the Company in the future.
4. Real estate
The Company currently has one completed project: Fang Dacheng ("Fang Dacheng", the same below) project in NanshanDistrict, Shenzhen; one project under development: the Nanchang Phoenix Island Fangda Center project; Two: Fangda BangshenIndustrial Park project in Baoan District, Shenzhen, and urban renewal project in the area along the Dakang River in Henggang,Shenzhen.
For a detailed discussion of the Company’s business, please refer to “III. Analysis of Core Competencies” in this sectionof the report and Chapter VI “Operation Discussion and Analysis”.II. Major assets change
1. Major assets change
| Main assets | Major change |
| Equity assets | None |
| Fixed assets | None |
| Intangible assets | None |
| Construction in process | The construction in progress increased by 123.08% year-on-year, mainly due to the increased investment in the construction of the Shanghai East China Base project. |
| Investment real estate | None |
2. Major foreign assets
□ Applicable √ Inapplicable
3 Core Competitiveness Analysis
(1) Curtain wall system and material
1. Expertise and brand competitiveness
As the world's top five high-end curtain wall system suppliers and service providers, the Company has rich industry experience,professional technical team and excellent construction team. It is an outstanding domestic curtain wall enterprise and has builtthousands of high-quality projects at home and abroad, winning widespread praise from all walks of life. The industry and targetmarket of the Company have high requirements for the performance of participating enterprises which has formed certain thresholds.Especially in the super high-rise buildings, large public buildings and special-shaped external maintenance structures, the Companyhas rich experience in project implementation. It has established business contacts and cooperation with many large real estatedevelopment companies. The Company has a high reputation and strong market competitiveness.The Company has 457 patents (including 38 invention patents) and 11 software copyrights in the curtain wall system andmaterials industry which has created many firsts in the industry and is one of the high-end preferred brands in the Chinese curtainwall system materials industry. So far, four subsidiaries including Shenzhen Fangda Jianke Group Co., Ltd., Fangda New Material(Jiangxi) Co., Ltd., Dongguan Fangda New Material Co., Ltd., Chengdu Fangda Construction Technology Co., Ltd. have beenrecognized as hi-tech companies. FANGDA is a nationwide well-known trademark in China.
2. Focusing on the high-end market to edge out competitors
In the fierce market competition, the Company accurately positions the market in the field of high-end energy-saving curtainwall systems with high requirements for technology, service and management, and focuses its resources on high-end curtain wallprojects. Many of the curtain wall projects undertaken won the national "Luban Award", "Zhan Tianyou Civil Engineering Award","National Quality Engineering Award", "China Construction Engineering Decoration Award", "White Magnolia" Award and"Customer Satisfaction Project" awards, and Won the title of ―Top Ten Most Competitive in China's Curtain Wall Industry‖. TheCompany has built a leading brand and created a clear edge in the high-end curtain wall market.
3. Well-developed industry base landscape
Thanks to continued investment in facilities, the Company has established a national business landscape with Shenzhen as theheadquarters, Dongguan Songshanhu as the base in the south, Beijing in the north, Chengdu in the southwest and Shanghai andNanchang in the east. The Dongguan Songshanhu and Nanchang bases are the largest and most advanced curtain wall system andmaterial production bases in China and across the world, fueling the Company to increase its market share and competitiveness.
4. General solutions
The Company has integrated the design, production, management and engineering of curtain wall systems to enjoytechnological, cost, quality and service advantages.
5. Talent
The Company has trained a group of outstanding teams with strong marketing technical, management and financial experiencefrom a large number of project implementation experience. The core backbone personnel are stable, ensuring the execution ability oforders and bringing good user experience to customers.
6. Boost overseas market development to increase overseas orders
In recent years, the Company has increased its investment in overseas markets and gradually expanded its influence in Australiaand Southeast Asia. Thanks to good product quality and contract performance, it has continuously won the trust of new and old
customers and more orders. The overseas market orders are growing steadily.
(2) Rail transport equipment business
1. National development strategy
In September 2019, the "Outline for the Construction of a Powerful Transportation Country" issued by the Central Committeeof the Communist Party of China and the State Council proposed that by 2035, a transportation powerhouse will be basicallycompleted, and a "national 123 travel transportation circle" will be basically formed (one hour commuting in urban areas, two hoursin urban areas, 3 hours coverage in major cities nationwide). With the implementation of major national strategies such as theGuangdong, Hong Kong, and Macao Bay District, and the ―Belt and Road‖ Initiative, the region has radiated into Southeast Asia,South Asia, Central Asia, and West Asia, and has extended to Eastern Europe and North Africa with strong demand for infrastructureconstruction and interconnection. As the world's largest supplier of rail screen door systems, the Company will also take fulladvantage of technologies, brands, services, etc. to further consolidate and improve the domestic market share, and vigorouslyexpand overseas markets, especially the "Belt and Road" national market, to maintain overseas orders. Continuity and stability willallow the domestic and foreign markets to develop in a balanced manner and continue to ―lead‖ in the rail transit industry.
2. Expertise competitiveness
Through continued independent innovation, the Company has developed the global leading metro screen door system with fullintellectual property right and broken the monopoly of overseas competitors. The Company has also compiled the Rail TransportStation Screen Door Standard, which is the first of its kind in China. The standard was approved in April 2006 and implemented as anational standard on March 1, 2007. As the first standard in the industry in China, the standard has played a key role in guiding thedevelopment of China’s rail transport screen door industry and enabled the Company a dominant lead in the industry. In 2019,following the editor-in-chief of the Urban Rail Transit Platform Screen Door, the Company once again participated in the preparationof the Urban Rail Transit Energy Consumption and Emission Index Evaluation Method (GB / T 37420-2019) and officiallyimplemented it on December 1, 2019, highlighting the Company's technical strength and long-term leader status in the field of urbanrail transit. At present, the Company has 235 patents on subway shield doors, including 48 invention patents and 7 PCT patents. Thetotal number of patents accounts for more than half of the industry in China. At the same time, it has 7 computer software copyrights.Fangda Zhichuang Technology Co., Ltd. is engaged in the subway transportation shield door system industry as a state-levelhigh-tech enterprise.
3. Brand competitiveness
So far, the Company has undertaken railway screen door projects in more than 40 cities including Hong Kong, Singapore,Kuala Lumpur of Malaysia, Noida of India and Bangkok of Thailand. The Fangda subway screen door system has grasped a leadingmarket share and established incomparable brand influence thanks to its patents, standard and maintenance services. FANGDA is anationwide well-known trademark in China. The Company has become a leading railway screen door supplier in the world.
4. Industry chain advantage
As the first company to enter the subway screen door industry in China, the Company's subway screen doors have reached tomore than 80% of the subway cities in China, and many domestic subway screen doors have entered the maintenance period. TheCompany actively expands its industrial chain and takes the lead in the domestic market to provide metro maintenance services. TheCompany has a natural advantage in this high-end service industry. Our screen door system are independently developed by us, thusenabling us to provide prompt, overall, effective and standard maintenance services for our customers without other third parties. Asmore and more subways are opened, the business volume will continue to increase.
(3) New energy industry
The new energy business mainly comprises solar power PV application, PV construction and LED industry.
1. Technical advantage
With more than ten years’ experience in developing solar energy PV power generating curtain wall technology, the Company isthe earliest company that masters the intelligent property right in the designing, production and integration of solar energy PV curtainwall systems and is a pioneer in the application of PV curtain wall technology.
2. Relation with other industries
Distributed solar power PV power generation is closely related to the Company’s existing businesses. Most distributed solarpower PV systems are closely related to construction. Moreover, the Company has more than 10 years' experience in electricalproduct integration. The Company also has more than 20 years’ experience in construction management and has the level-1construction curtain wall engineering qualification and electrical installation engineering qualification.
(4) Real Estate
1. The Company is committed to the Guangdong-Hong KongMacao Bay District, focusing on the development of urbanrenewal projects in the core area of Shenzhen. Benefiting from the continued positive economic growth of Shenzhen and the rapideconomic development, it is expected that the Company's real estate sales and property leasing will continue to contribute profits tothe Company.
2. Although the Company is a later comer in the industry, the Shenzhen Fangda Town project was quickly recognized by themarket and the sales rate was faster. At the same time, the Company has been rated as ―Shenzhen Real Estate Development IndustryDevelopment Potential Enterprise‖ by Shenzhen Housing Association for three consecutive years. In two consecutive years, it hasbeen awarded ―Shenzhen Real Estate Development Industry Brand Value Enterprise‖ with professional operations for commercialand property management.
Chapter 4 Operation Discussion and Analysis
1. Summary
With the global economic growth rate at its lowest level in the past decade, the impact of Sino-US trade war has increased, andthe domestic economy has continued to decline, the Company has overcome many unfavorable factors and basically completed thegoals set at the beginning of the year. During the reporting period, the Company achieved operating income of RMB2,998,505,100, adecrease of 1.65% over the same period of the previous year; the net profit attributable to the parent Company’s owner wasRMB346,415,300, a decrease of 84.58% over the same period of the previous year. Net profit after recurring gains and losses wasRMB291,954,600, an increase of 1,279.03% over the same period of the previous year. The Company's net profit after deductingnon-recurring gains and losses increased significantly, reflecting the Company's main business has a strong profitability. As of theend of the reporting period, the Company's order reserve was RMB4,537,130,700 (excluding real estate sales), an increase of 7.71%compared with the beginning of the year, which was 1.51 times of the operating income in the first half of the year. Adequate orderreserve provided a strong guarantee for the Company's sustainable development.During the reporting period, the main reason for the decline in the Company's operating income and net profit was the highgross profit, and the sales area of the Shenzhen Fangda City project, which contributed much to the profit in the same period of theprevious year, was nearing completion. The year-on-year decrease was RMB392,124,500, a decrease of 56.09%, and the net profitwas RMB199,990,200, a decrease of RMB200,752,500, a decrease of 90.94% over the same period of the previous year. During thereporting period, except for the Fangda Town project with a larger profit contribution, the Company's operating income and net profitincreased significantly compared with the same period of last year, of which: operating income was RMB2,692,235,500, an increaseof RMB341,073,400, up 14.51%; net profit of RMB146,512,400, an increase of RMB107,775,800 over the same period last year, up
278.21%.
1. High-end curtain wall system and material business
On February 18, 2019, the Central Committee of the Communist Party of China and the State Council issued the Outline of theGuangdong-Hong Kong-Macao Greater Bay Area Development Plan, which proposed optimizing and enhancing the central city,with Hong Kong, Macau, Guangzhou, and Shenzhen as the core engines of regional development. Comparative advantages makebetter and stronger, and enhance the role of radiation in the development of surrounding areas. On August 18, 2019, the CentralCommittee of the Communist Party of China and the State Council issued the Opinions on Supporting Shenzhen to Build aPioneering Socialist Demonstration Zone with Chinese Characteristics and cultural exchange activities, building a national teamtraining base, undertaking major home diplomatic activities, etc. The Company is located in Shenzhen, the core area of theGuangdong-Hong Kong-Macao Greater Bay Area. The Guangdong-Hong Kong-Macao Greater Bay Area is an important curtain wallmarket for the Company. The above-mentioned planning outline and opinions bring further development space for the Company. TheCompany takes full advantage of Shenzhen, which is located in the core area of the Guangdong-Hong Kong-Macao Greater Bay Area,to further increase the market share of the Guangdong-Hong Kong-Macao Greater Bay Area. The Company has always practiced thebusiness philosophy of ―technology-based, innovation as the source‖, adheres to the spirit of ―Fangda Quality‖ with excellence andquality first, and with the core competitiveness of product quality, technical strength and brand influence. The quality and quantity ofthe newly signed orders in the first half of the year have remained at a high level. At the same time, the influence of Fangda's brandin overseas markets continues to expand, and overseas markets such as Australia, Southeast Asia, and the Middle East have achievedgood results. During the reporting period, the Company successively won contracts with Shenzhen Qianhai East Asia Kerry,Shenzhen Shangzhi Technology Park, Shenzhen Jinxiu Science Park Phase III, Shenzhen University of Technology, GuangzhouJianhua Center, Zhuhai Renhe Hengqin International Traditional Chinese Medicine Innovation Center, Shanghai Xuhui 188S-C-4,188S-D-1, WS5 Unit, Huangpu Jiangnan Extension of the District, Shanghai Qibao Vanke Ecological Business District Commercial
Office Project, Nanjing Vanke Shangdu Hui Project, Chengdu Tianfu Vanke Cloud City, Chengdu Tianfu International ConferenceCenter, Chongqing Longhu Shapingba Hub Project, Beijing Huoshen Temple Business Center, Changsha Ning'er Maternity HospitalPhase II Complex Building, Marriott Docklands Marriott Hotel Melbourne, Melbourne, Victoria Square, Melbourne, Australia, 89Victoria Street, Brisbane, Australia A large number of high-end curtain wall systems and materials projects, such as stations and theShanta Forum Tower project in Bangladesh, have a total amount of more than RMB2 billion. In the reporting period, the curtain wallsystem and materials industry realized operating income of RMB2,189,637,800, an increase of 8.9% over the same period of theprevious year; the net profit was RMB104,111,900, an increase of 7.25%, the gross margin was 15.16%, up 0.75 percentages fromthe same period of last year. As of the end of the reporting period, the Company's curtain wall system and materials industry ordersreserve was RMB2,713,325,800 which was 1.24 times of the operating income of the curtain wall system and materials industry in2019.
In order to meet the growing demand for orders, the Company has established new production bases in Chengdu Xinjin andShanghai Songjiang. This year the Fangda Western Headquarters Base of Chengdu Xinjin has been completed and put into operation.The base covers an area of 45,000 square meters and has a total construction area of about 21,000 square meters. In the first half of2019, the East China production base in Songjiang, Shanghai started construction and is planned to be completed and put into use in2020. The base covers an area of 23,800 square meters and the total construction area is about 43,000 square meters. After thecompletion of the two bases, the national industrial layout of the upgrade company will be improved and the production capacity ofthe Company's energy-saving and environmental protection curtain wall will be enhanced to provide guarantee for the Company'ssustained and rapid development. After completion, the Company's curtain wall system and materials industry are formed withShenzhen as the headquarters South China with Dongguan Songshan Lake and Foshan as the base Southwest China with Chengdu asthe base East China with Shanghai and Central China with Nanchang. As the base of the national industrial layout, it provides animportant guarantee for improving market share and comprehensive competitiveness.The Chinese economy is transitioning to high-quality development, and the Company continues to increase R & D efforts,starting with technological innovation, and actively promoting the introduction and application of advanced technologies such asintelligent manufacturing, robotics, Internet of Things, AI, VR + AR, and big data. Preliminary success. The construction of theintelligent chemical plant at the Songshan Lake base in Dongguan has achieved initial results. Intelligent glue application andintelligent electric welding have begun to be used in production, improving efficiency and quality, and gradually moving from"manufacturing" to "intelligent manufacturing".In 2019, three projects including the Chinese University of Hong Kong (Shenzhen) Teaching Building, Guangzhou BaosteelBuilding, and Chengdu Territory Global Financial Center, which were constructed by the Company, won the highest honor in theChinese construction industry-Luban Award, Fang Dacheng (Phase I) and Shenzhen Energy Five projects including the building wonthe China Construction Engineering Decoration Award and the 2019 Excellent Engineering Award; 11 curtain wall projects wonprovincial and municipal honorary awards respectively. The application of the Company's BIM technology in design was promotedin the industry by the China Construction Industry Association as a model. The Company was rated as an excellent partner bycustomers such as Vanke, R & F, Qianhai Life and other customers. Increased the Company's brand influence.
2. Rail transport screen door business
With the continuous advancement of domestic urban subway construction and the continuous implementation of the ―Belt andRoad‖ initiative, in 2019, the leading advantages of the Company's subway screen door industry continue to emerge, and theCompany's rail traffic screen door equipment industry is expanding at home and abroad. During the reporting period, the Companyhas successively obtained Mumbai Metro Line 3, Nanjing Metro Line 7, Zhengzhou Line 4, Ningbo Metro Line 1, Guiyang MetroLine 2 Phase 2, Jinan Rail Transit Line 2 Phase 1, Nanchang 3 Line (Part B), Taiyuan Metro Line 2, Wuhan Metro Line 5, Line 6Phase 2, Line 11 (Phase 2, Phase 3, Gedian Section), Xi'an Metro Line 5, Line 6 A large number of orders for shielded door systemssuch as railway lines, and also received orders for professional maintenance services for shielded doors of Wuhan Railway Bureau,Shenzhen Metro Line 9 and other projects, shielding of Shenzhen Metro Lines 1, 2, 3, 5, 7, 9, 11 For door installation projects, thetotal amount of newly signed orders was RMB874,811,600, a year-on-year increase of 20.52%. Among them, the Mumbai Metro
Line 3 project in India is the third project of the Company in the Indian market after the Noida subway in India and the Ahmedabadsubway project in India. Rapid development opportunities of the Indian subway construction. Speed up the overseas market layoutand further expand the Company's business landscape. In addition, with the development of a new generation of informationtechnology, the domestic subway has also entered the era of fully automated driving, and the technical requirements for screen doorshave also increased the threshold. With solid technical strength, the Company won 4 of the 5 subway autonomous driving projectsthat have been tendered in China (Nanjing Metro Line 7, Jinan Rail Transit R2 Phase 1, Taiyuan Metro Line 2, Wuhan City) MetroLine 5) orders for automatic driving screen doors have won opportunities for the continuous development of the intelligent screendoor market.
报告期内，公司轨道交通屏蔽门设备产业实现营业收入46,090.67万元，同比增长54.83%，实现净利润6,270.64万元，同比增长32.07%，毛利率25.4%，公司轨道交通屏蔽门设备产业具有持续较强的盈利能力。 As of the end of 2019, the Company'srail transit screen door equipment industry order reserve reached RMB182,380,490, which was 3.96 times the operating revenue ofthe rail transit screen door equipment industry during the reporting period. The Company's rail transit screen door equipment industryhas reached a new level, entering a new era of rapid development and continuing to lead the industry.During the reporting period, Wuhan Metro Line 2 South Extension Line, Line 8 Phase 3, Zhengzhou Metro Line 5 Phase 1,Lanzhou Metro Line 1 Phase I, Nanchang Metro Line 2 Houtong Section Line 1 of the Hohhot Metro Line has been opened foroperation. At present, the Fangda screen door system has been applied to rail transit in 42 cities around the world. More than 80subway lines and more than 10 million people use the Fangda rail transit screen door system every day, and the coverage rate indomestic metro operating cities exceeds 80 %, The market share ranks first in the world for many years.
With the end of the free maintenance period for more and more rail transit screen doors, the demand for specialized technicalmaintenance services continues to grow. In 2019, the Company achieved technical maintenance service income of RMB24.8462million yuan, an increase of 3.90% over the same period last year. The Company is a leading company that can provide the entireindustry chain technology and product services for subway screen doors. The added value of technical services is high. In the future,this business will become an important performance growth point for the Company. The Company will also strive to become a metroscreen door technology maintenance service expert.
As the world's leading supplier of screen doors, the Company has completely independent intellectual property rights of railtransit platform screen doors system, patents and copyrights account for more than half of the same industry in the world, and hasstrong technical strength in the field of screen doors. China's first railway platform shield door industry standard was edited by theCompany. Since its promulgation and implementation on March 1, 2007, it has played a good role in regulating and guiding thetechnological innovation and development of China's rail transit platform shield door industry. In recent years, with the increasingtechnological level of the industry, new materials, new technologies, and new technologies have continuously emerged in thepractical application of rail transit screen doors. The Ministry of Housing and Urban-Rural Development has initiated the revision ofthe industry standard for the City Rail Platform Screen Doors, the Company continues to undertake the main editing tasks. In October2019, the revised version of the standard was submitted for review, and was determined as the final version. On May 10, theCompany participated in the preparation of the national standard ―Evaluation Method for Urban Rail Transit Energy Consumptionand Emission Indicators‖ (GB/T 37420-2019), which was published in 2019 and formally implemented on December 1, 2019. TheCompany's participation in the preparation of the Urban Rail Transit Platform Screen Door, and in the standard compilation in thedomestic rail transit field reflect the Company's technology in the urban rail transit field.
3. New energy industry
During the reporting period, the Company's three solar photovoltaic power stations that have been connected to the grid havemaintained efficient, stable and safe operation. The annual sales revenue was RMB20.94 million, an increase of 2.27% over theprevious year, and the operating profit was RMB11.6568 million, an increase of 5.88% over the previous year, exceedingexpectations.
4. Real estate
(1) Changes in the macroeconomic situation and industry policy environment, the status of industry development and policy
situation in the city where the Company's main projectsIn 2019, the main theme of the national real estate market is still to maintain stability, not to speculate on housing, and togovern the city. The national real estate market continued to cool down, transaction volume decreased significantly, real estateinventories were high, and the pressure to de-market the market was high.
The main project locations of the Company are Shenzhen and Nanchang. Shenzhen is located in the core area of Guangdong,Hong Kong and Macau Bay, and the economy continues growing. The Company focuses on the development of urban renewalprojects in Shenzhen. With the rapid development of Shenzhen's economy, it is expected that there will still be some room fordevelopment in the real estate industry in Shenzhen and surrounding cities.Under the control policy of Nanchang Real Estate, the overall residential transactions have been stable, the prices and volumeof commercial and office buildings have fallen, and the pressure to remove inventory is high.Affected by macroeconomic and real estate industry regulation, the sales volume and business gross profit margin of theCompany's real estate sector will decrease, but it is expected that the Company's real estate sales and property leasing will still be animportant source of cash flow for the Company and will continue to contribute profits to the Company.
(2) The Company's main business model, business project format, real estate sales in the city where the main project is located,market position and competitive advantages of listed companies, main risks and countermeasures
The Company's real estate business mainly adopts a self-developed, partly sold and partly self-sustained business model,moving closer to holding commercial properties and asset-light operating models. At present, the products developed and sold aremainly offices, supporting businesses and apartments. The Company has established a professional team to operate and manage theCompany's businesses and properties.
The Fangda Town project developed by the Company is located in Nanshan District, Shenzhen. As of the end of the reportingperiod, the project sales rate was 91.83%. For specific sales, see ―(V) Main Project Sales‖ in this section; It is a small andmedium-sized commercial complex integrating office, apartment, shopping, leisure and entertainment. The project focuses on salesand rental. The pre-sale began on December 28, 2019. No sales were realized during the reporting period.
Although the Company is a late comer in the real estate industry, the Fangda Town project developed by the Company has beenquickly recognized by the market and the sales rate has been fast. At the same time, the Company has been rated as "Shenzhen RealEstate Development Industry Development Potential Enterprise" by the Shenzhen Real Estate Industry Association for threeconsecutive years. In two consecutive years, it was named "Shenzhen Real Estate Development Industry Brand Value Enterprise".With the influence of Fangda Brand and its strong professional level, the Company has gained a firm foothold in the marketcompetition and its market position has gradually increased.
Nanchang's commercial office buildings have a large inventory, and the volume and price are showing a downward trend.However, the location of the Company's Fangda Center project has obvious location advantages, and the products have good marketexpectations.
(3) New land reserve projects
| Land No. and project name | Land location | Purpose | Land area (m2) | Building area (m2) | Obtaining method | Interests percentage | Total land price (ten thousand yuan) | Equity consideration (ten thousand yuan) |
| None |
Total land reserve
| Project/region name | Floor area (10,000 m2) | Total building area (10,000 m2) | Remaining building area (10,000 m2) |
| Fangda Town | 3.53 | 21.24 | 0 |
| Nanchang Fangda Center | 1.66 | 6.64 | 0 |
| Total | 5.19 | 27.88 | 0 |
(4) Main production development status
| City/region | Project | Land location | Project form | Interests percentage | Starting time | Development progress | Completion rate | Land area (m2) | Planning construction area (m2) | Area completed in this phase (m2) | Total area completed in this phase (m2) | Estimated total investment (in RMB10,000) | Accumulated total investment (in RMB10,000) |
| Shenzhen Nanshan District | Fangda Town | No.2 Longzhu 4th Road | Office commercial complex | 100.00% | May 1, 2014 | 100% | 100.00% | 35,397.60 | 212,400.00 | 0 | 217,763.69 | 258,500 | 265,000 |
| Honggutan New District, Nanchang | Fangda Center | No.1516 Ganjiang North Avenue Fangda Center | Commercial | 100.00% | May 1, 2018 | 49% | 49.00% | 16,608.55 | 66,432.61 | 0 | 0 | 67,000 | 32,800 |
(5) Main production sales status
| City/region | Project | Land location | Project form | Interests percentage | Building area | Sellable area (m2) | Cumulative pre-sale (sales) area (m2) | Pre-sale (sales) area in this period (m2) | Amount of pre-sale (sales) in the current period (RMB10,000) | Cumulative settlement area (m2) | Settlement area in the current period (m2) | Settlement amount in this period (RMB10,000) |
| Shenzhen Nanshan District | Fangda Town | No.2 Longzhu 4th Road | Office commercial complex | 100.00% | 212,400 | 93,086.25 | 85,479.42 | 3,068.92 | 18,622.63 | 85,479.42 | 3,068.92 | 18,622.63 |
| Honggutan New District, Nanchang | Fangda Center | No.1516 Ganjiang North Avenue Fangda Center | Commercial | 100.00% | 65,388.42 | 32,460.11 | 0 | 0 | 0 | 0 | 0 | 0 |
(5) Main production lease status
| Project | Land location | Project form | Interests percentage | Leasable area (m2) | Cumulative leased area (m2) | Average lease ratio |
| Shenzhen Fangda Town | Shenzhen Nanshan District | Office commercial complex | 100.00% | 72,517.71 | 23,661.88 | 32.63% |
| Shenzhen Fangda Town | Shenzhen Nanshan District | Commercial shop | 100.00% | 22,775.52 | 22,455.31 | 98.59% |
| Jiangxi Nanchang Science and Technology Park | Nanchang, Jiangxi Province | Plant and office building | 100.00% | 33,362.20 | 33,362.20 | 100.00% |
| Fangda Building | Shenzhen Nanshan District | Office building | 100.00% | 17,792.47 | 15029.30 | 84.47% |
(7) First-level development of land
□ Applicable √ Inapplicable
(8) Financing source
| Financing source | Ending financing balance | Financing cost range / average financing cost | Term structure | |||
| Within 1 year | 1-2 years | 2-3 years | Over 3 years | |||
| Bank loan | 84,397.82 | During the same period, the benchmark interest rate of the loan was adjusted at the agreed rate of -6.175% | 40,000.00 | 29,397.82 | 15,000.00 | |
| Total | 84,397.82 | 40,000.00 | 29,397.82 | 15,000.00 | ||
(9) Development strategy and operation plan in the next year
In 2020, China will still be in an important period of strategic opportunities and a period of conversion of old and new kineticenergy. Urbanization is still the driving force for real estate development. Under continuous control, industry fluctuations are marketbehaviors. The Company continues to be optimistic about the future development of core urban real estate. In the future, theCompany will continue to expand the brand effect, deepen the product types, deepen the local market, and effectively improve theCompany's operating performance.
The sales and leasing of Shenzhen Fangda City and Nanchang Fangda Center are the top priorities of the Company's real estatework in 2020. It is necessary to fully realize the sales and leasing of office buildings in Fangda City and Nanchang Fangda Center.
In August 2019, the Company's Fangda Bangshen project has completed its updated project plan. In 2020, the Company willactively promote the special planning application of the Fangda Bangshen project, and strive to obtain the project's land use planninglicense by the end of the year. In 2019, the Shenzhen Henggang Dakang project has completed the solicitation of the renewal will,and started the demarcation of the update unit. In 2020, the Company will promote the application of the Henggang Dakang project.It is expected that the real estate sales and property leasing will continue to contribute profits to the Company in the future. In orderto achieve its business objectives, the Company will adhere to its strategic commitment, maintain a reasonable pace of development,
continue to increase sales efforts, strengthen sales receivables, rationally arrange financing, ensure the Company is safe and sound,and strive to achieve the Company's 2020 goals.
(10) Bank mortgage loan guarantee provided for commercial housing purchasers
√ Applicable □ Inapplicable
As of December 31, 2019, the balance of the Company's guarantee for commercial housing offenders due to bank mortgageloans was RMB849,195,100.
(11) Co-investment by directors, senior management and supervisors and listed company
□ Applicable √ Inapplicable
5. Innovation
The Company is committed to the research and development of independent intellectual property products and enhances itscore competitiveness. In 2019, the Company independently developed 25 new products, including "BIM digital process design,feeding system", "assembled roof curtain wall system", "graphene powder sprayed aluminum veneer research and development","platform door unmanned control system research and development". Intelligent production processes such as intelligent welding andintelligent glue application have begun to be used in production to promote product quality improvement, reduce labor intensity,reduce labor costs, improve work efficiency, and increase economic benefits.
As of the end of December 2019, the Company has obtained 826 patents, including 112 invention patents, 10 international PCTpatents, and 12 software copyrights. 44 patents applied for in 2019, 26 newly authorized patents (including 1 invention patent) Thewholly-owned subsidiary Fangda Jianke's invention patent "a building curtain wall structure" won the "Shenzhen Patent Award".
6. Awards
During the reporting period, the Company won the "National Advanced Enterprise of Wan Peng Helping Wan Cun" TargetedPoverty Alleviation Action, "May Day Labor Certificate of Guangdong Province", "2018 Shenzhen Quality and IntegrityDemonstration Unit", and "Outstanding Enterprise Performing Social Responsibilities" , "Shenzhen Top 100 Industry Leaders","2019 Shenzhen Top 500 Enterprises", "The 3rd Shenzhen Top 100 Quality Enterprises", "Shenzhen Quality Quality City KeyEnterprises", "2019 Shenzhen Private Leaders Key Enterprise" , Won the "Innovative China ? Top 100 Listed Companies" award,"2019 Guangdong-Hong Kong-Macao Greater Bay Area listed company social responsibility" five-star enterprises, "marketresponsibility" five-star enterprises two awards. For the fourth consecutive year, he was listed on the "Top 500 GuangdongEnterprises" list, and ranked 12th in the "A-share Listed Companies Growth List in the Past Five Years" and "2018 China ListedCompany Innovation Index 500". Chairman Xiong Jianming was named "2019 Annual Person of the Listed Companies in theGuangdong-Hong Kong-Macao Greater Bay Area".
Fangda Jianke Co., a wholly-owned subsidiary, was awarded ―2019 Shenzhen University Building Doors and Windows CurtainWall Industry Academic Exchange Advanced Unit‖. General Manager Wei Yuexing won the ―Innovative Talents‖ award in ShenzhenDecoration Industry and Zhang Jianhui, Regional Manager, won the ―Top Ten Outstanding Project Managers‖ award. Senior designerHu Guangzhou won the "Top Ten Young Designers" award and the curtain wall maker Xu Xiuhui won the "Top Ten Star Craftsmen"award. The three curtain wall projects of the Chinese University of Hong Kong (Shenzhen) Teaching Building, Guangzhou BaosteelBuilding and Chengdu Territory's Global Financial Center undertaken by the Company won the 2018-2019 China ConstructionEngineering Luban Award (National Quality Project). The four curtain wall projects including Fangda Town (Phase I), ShenyeShangcheng (Southern District) Tower 2, China Energy Storage Building and China Southern Power Grid Production and ResearchComprehensive Base undertaken by the Company won the ―China Construction Engineering Decoration Award‖. Shenzhen HanjingFinance curtain wall project was awarded ―My Favorite Curtain Wall Project‖.
Fangda Zhichuang Technology, a wholly-owned subsidiary, was awarded "Shenzhen Metro 2018 Excellent EquipmentSupplier", "Shenzhen Metro Phase III Excellent Equipment Supplier", and "Shenzhen Metro Line 7, 9 and 11 PerformanceEvaluation Excellent Unit" "2018 Xi'an Metro Construction Labor Competition Advanced Unit", employees Ouyang Kehua, ZhuZhenfei, Kong Debing were awarded "Shenzhen Baiyou Craftsman" and Tang Long was awarded "2018 Xi'an Subway ConstructionLabor Competition Advanced Individual".
Fangda Jiangxi New Material received titles including 2018 Nanchang High-Tech Industry Park Leading Enterprise, LeadingCompany in Standardization, and the title of "Excellent Brand" of aluminum veneer in China's metal composite industry.
After 2018, the wholly-owned subsidiary Fangda Real Estate Co., Ltd. was once again awarded the "Shenzhen Real EstateDevelopment Industry Brand Value Enterprise" award by the Shenzhen Real Estate Association.
2. Main business analysis
1. Summary
For details see Management Discussion and Analysis – 1. Profile
2. Income and costs
(1) Turnover composition
In RMB
| 2019 | 2018年 | YOY change (%) | |||
| Amount | Proportion in operating costs (%) | Amount | Proportion in operating costs (%) | ||
| Total turnover | 3,005,749,558.66 | 100% | 3,048,680,152.06 | 100% | -1.41% |
| Industry | |||||
| Metal production | 2,196,425,708.75 | 73.07% | 2,010,704,004.96 | 65.95% | 9.24% |
| Railroad industry | 460,906,724.26 | 15.33% | 297,686,976.09 | 9.76% | 54.83% |
| New energy industry | 20,103,218.63 | 0.67% | 19,625,478.18 | 0.64% | 2.43% |
| Real estate | 307,563,025.40 | 10.23% | 697,518,090.10 | 22.88% | -55.91% |
| Others | 20,750,881.62 | 0.69% | 23,145,602.73 | 0.76% | -10.35% |
| Product | |||||
| Curtain wall system and materials | 2,196,425,708.75 | 73.07% | 2,010,704,004.96 | 65.95% | 9.24% |
| Subway screen door and service | 460,906,724.26 | 15.33% | 297,686,976.09 | 9.76% | 54.83% |
| PV power generation products | 20,103,218.63 | 0.67% | 19,625,478.18 | 0.64% | 2.43% |
| Real estate sales | 307,563,025.40 | 10.23% | 697,518,090.10 | 22.88% | -55.91% |
| Others | 20,750,881.62 | 0.69% | 23,145,602.73 | 0.76% | -10.35% |
| District | |||||
| In China | 2,824,371,016.83 | 93.97% | 2,969,200,798.04 | 97.39% | -4.88% |
| Out of China | 181,378,541.83 | 6.03% | 79,479,354.02 | 2.61% | 128.21% |
(2) Industries, products or districts that take more than 10% of the Company’s business turnover or profit
In RMB
| Turnover | Operation cost | Gross margin | Year-on-year change in operating revenue | Year-on-year change in operating costs | Year-on-year change in gross margin | |
| Industry | ||||||
| Metal production | 2,196,425,708.75 | 1,863,604,889.99 | 15.15% | 9.24% | 8.29% | 0.74% |
| Real estate | 307,563,025.40 | -46,495,278.64 | 115.12% | -55.91% | -111.94% | 70.96% |
| Railroad industry | 460,906,724.26 | 343,840,705.71 | 25.40% | 54.83% | 56.44% | -0.77% |
| Product | ||||||
| Curtain wall system and materials | 2,196,425,708.75 | 1,863,604,889.99 | 15.15% | 9.24% | 8.29% | 0.74% |
| Real estate sales | 307,563,025.40 | -46,495,278.64 | 115.12% | -55.91% | -111.94% | 70.96% |
| Metro screen door | 460,906,724.26 | 343,840,705.71 | 25.40% | 54.83% | 56.44% | -0.77% |
| District | ||||||
| In China | 2,824,371,016.83 | 2,035,986,340.56 | 27.91% | -4.88% | -10.15% | 4.22% |
Main business statistics adjusted in the recent one year with the statistics criteria adjusted in the report period
□ Applicable √ Inapplicable
Different business types of the Company
In RMB
| Business type | Turnover | Operation cost | Gross margin |
| Curtain wall system and materials | 2,196,425,708.75 | 1,863,604,889.99 | 15.15% |
Whether the Company runs business through the Internet
□ Yes √ No
Whether the Company runs overseas projects
□ Yes √ No
(3) The physical sales revenue is high the labor service revenue
□ Yes √ No
(4) Performance of signed major sales contracts in the report period
√ Applicable □ Inapplicable
The Company must comply with disclosure requirements of the Shenzhen Stock Exchange Industry Information Disclosure
Guideline No.6 – Listed Companies Engaged in Decoration Business.
In RMB
| Project amount | Cumulative recognized output value | Amount of unfinished part | |
| Unfinished project | 4,750,451,208.87 | 2,153,095,289.73 | 2,597,355,919.14 |
Major unfinished project
√ Applicable □ Inapplicable
In RMB
| Project | Project amount | Construction period | Completion percentage | Income recognized in this period | Cumulative recognized income | Payment collection | Balance of accounts receivable |
| Tencent Digital Building curtain wall project | 314,399,189.26 | 2018.9.4-2019.11.20 (The construction period agreed in the construction contract is different from the actual construction situation. The customer has made corresponding adjustments to the construction period according to the actual situation. The current project is progressing smoothly). | 16.37% | 51,468,571.91 | 51,468,571.91 | 72,735,871.71 | 0.00 |
Other note
□ Applicable √ Inapplicable
In RMB
| Accumulative occurred costs | Accumulative recognized gross margin | Estimated loss | Settled amount | Balance of unpaid amount of finished project |
| Finished but not settled project | 7,392,748,379.74 | 1,043,964,750.79 | 1,430,361.92 | 8,340,112,030.03 | 95,170,738.58 |
Any major outstanding unsettled projects during the reporting perio.
□ Applicable √ Inapplicable
Other note
□ Applicable √ Inapplicable
(5) Operation cost composition
In RMB
| Industry | Item | 2019 | 2018年 | YOY change (%) | ||
| Amount | Proportion in operating costs (%) | Amount | Proportion in operating costs (%) | |||
| Metal production | Raw materials | 1,233,265,964.58 | 66.18% | 1,236,717,752.50 | 71.86% | -5.68% |
| Metal production | Installation and engineering costs | 422,121,605.36 | 22.65% | 357,806,657.79 | 20.79% | 1.86% |
| Metal production | Labor cost | 106,412,147.98 | 5.71% | 80,488,503.77 | 4.68% | 1.03% |
| Real estate | Construction and installation cost | 37,414,096.74 | -80.47% | 100,803,413.00 | 25.88% | -106.35% |
| Real estate | Land cost | -164,158,729.89 | 353.07% | 222,947,137.10 | 57.24% | 295.83% |
| Real estate | Loan interest | 3,308,860.53 | -7.12% | 8,022,581.23 | 2.06% | -9.18% |
| Real estate | Labor cost | 14,043,313.15 | -30.20% | 10,943,065.48 | 2.81% | -33.01% |
NotesThe Company must comply with disclosure requirements of the Shenzhen Stock Exchange Industry Information DisclosureGuideline No.6 – Listed Companies Engaged in Decoration Business.Main business cost
In RMB
| Cost composition | Business type | 2019 | 2018 | YOY change (%) | ||
| Amount | Proportion in operating costs (%) | Amount | Proportion in operating costs (%) | |||
| Raw materials | Curtain wall system and materials | 1,233,265,964.58 | 66.18% | 1,236,717,752.50 | 71.86% | -5.68% |
| Installation and engineering costs | Curtain wall system and materials | 422,121,605.36 | 22.65% | 357,806,657.79 | 20.79% | 1.86% |
| Labor cost | Curtain wall system and materials | 106,412,147.98 | 5.71% | 80,488,503.77 | 4.68% | 1.03% |
(6) Change to the consolidation scope in the report period
√ Yes □ No
(1) In the current period, three newly-controlled subsidiaries were established, namely Jianke Southeast Asia Company, ChengduCurtain Wall Company and Shanghai Fangda Jianzhi Company. Enterprises under non-common control merged with Zhongrong LitaiCompany.
(2) In the current period, Xiangdong New Energy Company and Ke Xunda Company were cancelled, and the consolidated statementsin this period decreased by 2 subsidiaries.
(7) Major changes or adjustment of business, products or services in the report period
□ Applicable √ Inapplicable
(8) Major sales customers and suppliers
Main customers
| Total sales amount to top 5 customers (RMB) | 677,036,356.44 |
| Proportion of sales to top 5 customers in the annual sales | 22.52% |
| Percentage of sales of related parties in top 5 customers in the annual sales | 0.00% |
Information of the Company's top 5 customers
| No. | Customer | Sales (RMB) | Percentage in the annual sales |
| 1 | No.1 | 245,814,211.52 | 8.18% |
| 2 | No.2 | 143,262,059.21 | 4.77% |
| 3 | No.3 | 114,965,326.77 | 3.82% |
| 4 | No.4 | 89,207,608.27 | 2.97% |
| 5 | No.5 | 83,787,150.67 | 2.79% |
| Total | -- | 677,036,356.44 | 22.52% |
Other information about major customers
□ Applicable √ Inapplicable
Main suppliers
| Purchase amount of top 5 suppliers (RMB) | 431,771,044.42 |
| Proportion of purchase amount of top 5 suppliers in the total annual purchase amount | 18.90% |
| Percentage of purchasing amount of related parties in top 5 customers in the annual purchasing amount | 0.00% |
Information of the Company’s top 5 suppliers
| No. | Supplier | Purchase amount (RMB) | Percentage in the annual purchase amount |
| 1 | No.1 | 107,048,701.42 | 4.68% |
| 2 | No.2 | 88,245,075.43 | 3.86% |
| 3 | No.3 | 84,267,798.83 | 3.69% |
| 4 | No.4 | 83,826,673.08 | 3.67% |
| 5 | No.5 | 68,382,795.66 | 2.99% |
| Total | -- | 431,771,044.42 | 18.90% |
Other information about major suppliers
□ Applicable √ Inapplicable
3. Expenses
In RMB
| 2019 | 2018 | YOY change (%) | Notes | |
| Sales expense | 57,584,186.20 | 49,833,945.89 | 15.55% | |
| Administrative expense | 170,443,795.50 | 140,002,624.79 | 21.74% | |
| Financial expenses | 82,608,834.38 | 82,328,388.89 | 0.34% | |
| R&D cost | 59,754,971.20 | 19,854,244.58 | 200.97% | Mainly due to the increase in R & D personnel and investment in R & D this year |
4. R&D investment
√ Applicable □ Inapplicable
The Company adheres to the business philosophy of "technology-based innovation" and the scientific and technologicalinnovation development path. Its independent innovation capabilities and technology level has always been at the forefront ofdomestic similar enterprises. The Company is committed to the research and development of independent intellectual propertyproducts and enhances its core competitiveness. In 2019, the Company independently developed 25 new products, including "BIMdigital process design, feeding system", "assembled roof curtain wall system", "graphene powder sprayed aluminum veneer researchand development", "platform door unmanned control system research and development". Intelligent production processes such asintelligent welding and intelligent glue application have begun to be used in production to promote product quality improvement,reduce labor intensity, reduce labor costs, improve work efficiency, and increase economic benefits.As of the end of December 2019, the Company has obtained 826 patents, including 112 invention patents, 10 international PCTpatents, and 12 software copyrights. 44 patents applied for in 2019, 26 newly authorized patents (including 1 invention patent) Thewholly-owned subsidiary Fangda Jianke's invention patent "a building curtain wall structure" won the "Shenzhen Patent Award".
R&D investment
| 2019 | 2018 | Change | |
| R&D staff number | 503 | 404 | 24.50% |
| R&D staff percentage | 18.91% | 18.31% | 0.60% |
| R&D investment amount (RMB) | 136,943,143.23 | 138,333,164.52 | -1.00% |
| Investment percentage in operation turnover | 4.56% | 4.54% | 0.02% |
| Capitalization of R&D investment amount (RMB) | 0.00 | 0.00 | |
| Percentage of capitalization of R&D investment in the R&D investment | 0.00% | 0.00% |
Reason for the increase in the percentage of R&D investment in the business turnover
□ Applicable √ Inapplicable
Explanation of the increase in the capitalization of R&D investment
□ Applicable √ Inapplicable
5. Cash flow
In RMB
| Item | 2019 | 2018 | YOY change (%) |
| Sub-total of cash inflow from business operations | 2,745,391,880.62 | 2,974,390,387.48 | -7.70% |
| Sub-total of cash outflow from business operations | 2,750,676,711.39 | 2,587,287,667.91 | 6.32% |
| Cash flow generated by business operations, net | -5,284,830.77 | 387,102,719.57 | -101.37% |
| Sub-total of cash inflow generated from investment | 7,065,603,083.05 | 7,678,717,862.02 | -7.98% |
| Subtotal of cash outflows | 7,520,260,799.17 | 7,471,021,595.30 | 0.66% |
| Cash flow generated by investment activities, net | -454,657,716.12 | 207,696,266.72 | -318.91% |
| Subtotal of cash inflow from financing activities | 1,094,836,280.53 | 708,000,000.00 | 54.64% |
| Subtotal of cash outflow from financing activities | 866,537,570.34 | 1,279,597,053.40 | -32.28% |
| Net cash flow generated by financing activities | 228,298,710.19 | -571,597,053.40 | 139.94% |
| Net increase in cash and cash equivalents | -230,920,987.78 | 24,905,355.13 | -1,027.19% |
Explanation of major changes in related data from the same period last year
√ Applicable □ Inapplicable
Explanation of major difference between the cash flow generated by operating activities and the net profit in the year
√ Applicable □ Inapplicable
3. Non-core business analysis
√ Applicable □ Inapplicable
In RMB
| Amount | Profit percentage | Reason | Whether continuous | |
| Investment income | -1,909,644.55 | -0.46% | Mainly due to investment losses in associates | No |
| Gain/loss caused by changes in fair value | 42,618,039.60 | 10.22% | Due to adjustment of fair value of investment real estate | No |
| Assets impairment | -34,299,815.12 | -8.22% | Mainly bad debt provision corresponding to accounts receivable | Yes |
| Non-operating revenue | 2,857,177.74 | 0.69% | No | |
| Non-business expenses | 3,965,865.48 | 0.95% | No |
4. Assets and liabilities
1. Major changes in assets composition
1. The first implementation of the new financial instruments guidelines, new income standards, new lease standards, adjustments thefirst implementation of the financial statements at the beginning of the year
√ Applicable □ Inapplicable
In RMB
| End of 2019 | Beginning of 2019 | Change (% ) | Notes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary capital | 1,209,811,978.95 | 10.64% | 1,389,062,083.76 | 13.09% | -2.45% | |
| Account receivable | 1,956,191,307.07 | 17.20% | 1,866,763,789.49 | 17.59% | -0.39% | |
| Inventory | 733,711,143.46 | 6.45% | 651,405,832.29 | 6.14% | 0.31% | |
| Investment real estate | 5,522,391,984.11 | 48.57% | 5,256,442,406.63 | 49.52% | -0.95% | |
| Long-term share equity investment | 57,222,240.83 | 0.50% | 70,105,657.88 | 0.66% | -0.16% | |
| Fixed assets | 477,332,830.92 | 4.20% | 455,274,241.83 | 4.29% | -0.09% | |
| Construction in process | 129,988,982.86 | 1.14% | 58,269,452.72 | 0.55% | 0.59% | |
| Short-term loans | 724,618,197.34 | 6.37% | 208,000,000.00 | 1.96% | 4.41% | |
| Long-term loans | 546,501,491.56 | 4.81% | 1,193,978,153.39 | 11.25% | -6.44% |
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
In RMB
| Item | Opening amount | Gain/loss caused by changes in fair value | Accumulative changes in fair value accounting into the income account | Impairment provided in the period | Amount purchased in the period | Amount sold in the period | Other change | Closing amount |
| Financial assets | ||||||||
| 1. Transactional financial assets (excluding derivative financial assets) | 10,330,062.18 | |||||||
| 4. Investment in other equity tools | 21,674,008.23 | -4,793,104.31 | -14,751,669.76 | 3,779,277.52 | 20,660,181.44 | |||
| Subtotal | 21,674,008.23 | -4,793,104.31 | -14,751,669.76 | 3,779,277.52 | 30,990,243.62 | |||
| Investment real estate | 5,230,896,067.50 | 42,608,311.58 | 11,675,404.61 | 32,611,981.04 | 5,306,116,360.12 | |||
| Other non-current financial assets | 9,728.02 | 5,000,000.00 | 5,009,728.02 | |||||
| Total | 5,252,570,075.73 | 37,824,935.29 | -3,076,265.15 | 5,000,000.00 | 36,391,258.56 | 5,342,116,331.76 | ||
| Financial liabilities | 1,625,725.00 | 96,767.62 |
Other change
(1) Other changes in investment in other equity instruments are due to the reclassification of the investment in Shenzhen HuihaiYirong Internet Financial Services Co., Ltd., because Shenzhen Huihai Yirong Internet Financial Services Co., Ltd. did not send anyof the Company’s On behalf of, the Company no longer has a significant impact on it, so it is reclassified from long-term equityinvestment to other equity instrument investment.
(2) Other changes in investment real estate are due to the increase in investment in investment real estate decoration in the currentperiod, which resulted in an increase in the value of real estate of RMB 48,231,706.04, and a change in the use of some real estatecaused a decrease of RMB 15,619,725.00.Major changes in the assets measurement property of the Company in the report period
□ Yes √ No
3. Right restriction of assets at the end of the period
| Item | Book value on December 31, 2019 (RMB) | Reason |
| Monetary capital | 458,472,225.51 | Margin, pledged deposits, etc. |
| Inventory | 99,936,207.50 | Loan by pledge |
| Fixed assets | 65,256,230.83 | Loan by pledge |
| Intangible assets | 20,550,703.78 | Loan by pledge |
| 100% stake in Fangda Property Development held by the Company | 200,000,000.00 | Loan by pledge |
| Investment real estate | 394,971,924.50 | Credit Mortgage, Mortgage Loan |
| Other current assets | 207,993,374.07 | Use structured deposit pledge to issue acceptance bills |
| Total | 1,447,180,666.19 |
5. Investment
1. General situation
□ Applicable √ Inapplicable
2. Major equity investment in the report period
√ Applicable □ Inapplicable
In RMB
| Invested company | Main business | Method of investment | Investment amount | Shareholding percentage | Capital source | Partner | Term of investment | Type of product | Progress as of the balance sheet date | Estimate return | Current investment profit and loss | Whether litigation is involved | Date of disclosure | Index for information disclosure |
| Shenzhen Zhongrong Litai Investment Co., Ltd. | Real estate development | Acquisition | 112,613,316.68 | 100.00% | Self-owned fund | Shenzhen Yikang Real Estate Co., Ltd., Shenzhen Qianhai Zhongzheng Dingfeng No. 6 Investment Enterprise (Limited Partnership) | Zhongrong Litai's actual operating period | Real estate development | 55% equity has been transferred and control has been transferred to the Company | 0.00 | -1,233,929.20 | No | None | None |
| Total | -- | -- | 112,613,316.68 | -- | -- | -- | -- | -- | -- | 0.00 | -1,233,929.20 | -- | -- | -- |
3. Major non-equity investment in the report period
□ Applicable √ Inapplicable
4. Financial assets investment
(1) Securities investment
□ Applicable √ Inapplicable
The Company made no investment in securities in the report period
(2) Derivative investment
√ Applicable □ Inapplicable
In RMB10,000
| Derivative investment operator | Relationship | Related transaction | Type | Initial amount | Start date | End date | Initial investment amount | Amount in this period | Amount sold in this period | Impairment provision (if any) | Closing investment amount | Proportion of closing investment amount in the closing net assets in the report period | Actual gain/loss in the report period |
| Shanghai Futures Exchange | No | No | Shanghai aluminum | 2,535.76 | July 13, 2018 | December 31, 2019 | 2,535.76 | 13,096.92 | 15,632.67 | 0.00% | 122.64 | ||
| Banks | No | No | Forward foreign exchange | January 1, 2019 | December 31, 2019 | 0.00 | 3,710.78 | 1,544.78 | 0.00 | 2,166.00 | 0.41% | 12.30 | |
| Total | 2,535.76 | -- | -- | 2,535.76 | 16,807.7 | 17,177.45 | 2,166 | 0.41% | 134.94 | ||||
| Capital source | Self-owned fund | ||||||||||||
| Lawsuit involved | None | ||||||||||||
| Disclosure date of derivative investment approval by the Board of Directors | October 31, 2017, November 30, 2019 | ||||||||||||
| Disclosure date of derivative investment approval by the shareholders’ meeting | None | ||||||||||||
| Risk analysis and control measures for the derivative holding in the report period (including without limitation market, liquidity, credit, operation and legal risks) | The Company's aluminum futures hedging and foreign exchange derivatives trading business are all derivatives investment business. The Company has established and implemented the "Derivatives Investment Business Management Measures" and "Commodity Futures Hedging Business Internal Control and Risk Management System". It has made clear regulations on the approval authority, business management, risk management, information disclosure and file management of derivatives trading business, which can effectively control the risk of the Company's derivatives holding positions. |
| Changes in the market price or fair value of the derivative in the report period, the analysis of the derivative’s fair value should disclose the method used and related assumptions and parameters. | Fair value of derivatives are measured at open prices in the open market |
| Material changes in the accounting policies and rules related to the derivative in the report period compared to last period | None |
| Opinions of independent directors on the Company’s derivative investment and risk controlling | None |
5. Use of raised capital
□ Applicable √ Inapplicable
The Company used no raised capital in the report period.
VI. Major assets and equity sales
1. Major assets sales
□ Applicable √ Inapplicable
The Company sold no assets in the report period.
2. Major equity sales
□ Applicable √ Inapplicable
VII. Analysis of major joint stock companies
√ Applicable □ Inapplicable
Major subsidiaries and joint stock companies affecting more than 10% of the Company’s net profit
In RMB
| Company | Type | Main business | Registered capital | Total assets | Net assets | Turnover | Operation profit | Net profit |
| Fangda Zhichuang | Subsidiaries | Subway screen door and service | 105,000,000.00 | 615,717,880.16 | 208,787,865.38 | 460,906,724.26 | 67,699,117.64 | 63,341,378.19 |
| Fangda Property | Subsidiaries | Real estate | 200,000,000.00 | 6,337,495,023.98 | 2,378,717,437.52 | 264,910,501.74 | 244,560,118.22 | 195,404,665.06 |
| Fangda Jianke | Subsidiaries | Curtain wall system and materials | 500,000,000.00 | 3,182,645,997.08 | 1,028,444,328.66 | 1,949,900,092.66 | 140,525,107.65 | 128,142,594.02 |
Acquisition and disposal of subsidiaries in the report period
√ Applicable □ Inapplicable
| Company | Acquisition and disposal of subsidiaries in the report period | Impacts on overall production, operation and performance |
| Fangda Southeast Asia Co., Ltd. | Newly set | None |
| Shanghai Fangda Jianzhi Technology Co., Ltd. | Newly set | None |
| Chengda Fangda Curtain Wall Technology Co., Ltd. | Newly set | None |
| Shenzhen Zhongrong Litai Investment Co., Ltd. | Consolidation of entities not under common control | None |
| Shenzhen Kexunda Software Co., Ltd. | Liquidation | None |
| Pingxiang Xiangdong Fangda New Energy Co., Ltd. | Liquidation | None |
Major joint-stock companies
VIII. Structural entities controlled by the Company
□ Applicable √ Inapplicable
IX. Future Prospect
(1) Competition map and development trned
1. Curtain wall and material system industry
The construction curtain wall industry has a high degree of marketization, and the competitive advantages of leading companiesin the industry continue to emerge, accelerating the survival of the fittest, and increasing industry concentration. In the high-endmarket, most of the national iconic and regional key curtain wall projects are mostly contracted by the top 50 curtain wall companiesin China, and the competition in the curtain wall industry is gradually becoming fierce. In recent years, China's supply-side structuralreforms continued to deepen, and the national regional coordinated development strategy was further promoted. New urbanization,
coordinated development of Beijing-Tianjin-Hebei, ―Belt and Road‖ construction, and Guangdong, Hong Kong, Macao and DawanDistrict development projects provided valuable opportunities for the development of the curtain wall systems and materialsbusiness.
2. Rail transport screen door business
As China's urbanization advances and population accelerates to central cities, China's urban rail transit has shown explosivegrowth in recent years. After the first operation of urban rail transit exceeded 500 kilometers in 2016, it exceeded 900 kilometers in2019. According to statistics from the China Urban Rail Transit Association, as of December 31, 2019, a total of 40 cities in mainlandChina have opened 6,730.27 kilometers of urban rail transit operating lines. In 2019, there will be a total of 5 new urban rail transitoperating cities in mainland China, and another 27 cities will have new lines (segments) put into operation. The length of the newoperating lines will total 968.77 kilometers, a record high. In September 2019, the "Outline for the Construction of a PowerfulTransportation Country" issued by the Central Committee of the Communist Party of China and the State Council proposed that by2035, a transportation powerhouse will be basically completed, and a "national 123 travel transportation circle" will be basicallyformed (one hour commuting in urban areas, two hours in urban areas, 3 hours coverage in major cities nationwide). With theimplementation of major national strategies such as the Guangdong, Hong Kong, and Macao Bay District, and the ―Belt and Road‖Initiative, the region has radiated into Southeast Asia, South Asia, Central Asia, and West Asia, and has extended to Eastern Europeand North Africa with strong demand for infrastructure construction and interconnection. The rail transit screen door industry willenter a new period of vigorous development.
3. New energy industry
The prospects for new energy development in 2020 are promising, and technology, policy and model innovation will continue toadvance. The 2020 photovoltaic policy will continue the tone of 2019 and develop toward "accelerating parity and strengtheningconsumption". As the cost of photovoltaics decreases, photovoltaics will continue to increase To achieve diversified applications inmultiple fields, "photovoltaic + energy storage" and green building BIPV are expected to become the future development trend.
4. Real estate
In 2020, China will still be in an important period of strategic opportunities and a period of conversion of old and new kineticenergy. Urbanization is still the fundamental driving force for real estate development. Under continuous control, industryfluctuations are market behavior, and the Company continues to be optimistic about the future development of the real estate industry.In the future, the Company will continue to expand the brand effect, deepen product types, and fully meet market demand. TheCompany will further enrich project resources, deepen the local market, increase market share, and effectively improve theCompany's operating performance.
(2) Company development strategy and business plan
2020 is an important year for the Company to start again. The energy-saving curtain wall and materials industry should continueto exert its brand advantages, deeply cultivate the "home door" markets in the Guangdong-Hong Kong-Macao Greater Bay Area, theYangtze River Delta, and Chengdu-Chongqing regions, actively expand overseas markets, and focus on key points Project and keyaccount management. The Company will strengthen the contract-centric management system and improve profitability with refinedcost management. The Company will continue to increase innovation, apply the BIM system to optimize the design workflow andimprove design efficiency, develop and apply a production management system (MES system), and further promote the constructionof curtain wall products and PVDF aluminum veneer intelligent factories. The Company will continue to strive to increase domesticmarket share of screen door products, further expand overseas markets, and insist on making overseas business bigger and stronger.The Company will actively promote the construction of "smart factories" and the information construction of management, increaseinvestment in technology research and development, and achieve breakthroughs and leadership in key technologies. The Companywill vigorously strengthen the promotion of technical maintenance business, and use 5G, big data, AI and other technical means tocompletely change the current human maintenance tactics of maintenance business. Shenzhen Fangda City and Nanchang FangdaCenter sales and leasing are the top priorities in 2020. It is necessary to make every effort to realize the sale and lease of officebuildings in Fangda City and Nanchang Fangda Center sales. The Company will continue to do a good job in investment and
operation of Fangdacheng business, build a regional commercial benchmark, and continuously improve Fangdacheng businessrevenue.
(3) Capital demand and source for projects in progress
To realize the business target in 2020, the Company will develop suitable financial and capital plans, accelerate the collection ofaccounts receivable, sales payment from sales of Fangda Town, expand financing channels, and use share issuance, bank loans andother financing products to meet the demand for capital.
(4) Risks and solutions
1. Market risks and measures
As the overall designing and engineering quality continues improving in the domestic construction curtain wall industry, curtainwall products will become increasingly standard, intensifying the market competition. In addition, the market concentration of first-and second-tier cities will increase, and regional competition will become more intense. The Company will continue to adopt aprudent management policy, refined management, and technological innovations to reduce management costs and accelerate thereturn of funds. Through new technologies and processes, we will improve product quality, lower costs and elevate earnings. Whileconsolidating the domestic market, the Company will step up the efforts in exploring overseas markets, thus elevating ourcompetitiveness in global markets and improving our resistance to risks.
2. Management risks and measures
In recent years, with the Company's curtain wall and material system industry, rail transit screen door industry orders increasingyear by year and the Company's real estate property sector increased, the Company's assets, business, personnel and other aspectshave expanded significantly, the organizational structure and management system will tend to Due to the complexity, the Companymay face the management risk of industrial scale expansion. The Company will continue to improve the management mode, integratebusiness management, optimize the business flow, seeking to build a high-efficient and solid management team. We will introducehigh-quality, professional technical and management talents in different fields to strengthen the Company's core competitiveness.
3. Production and operation risks and measures
The macro-economy and market demand have added to the fluctuation in prices of main raw materials such as aluminum andsteel and labor, affecting the Company’s profitability and creating additional production and operation risks for the Company. TheCompany has sought to lower the purchase and production costs, increase technical R&D, reduce consumption of raw materials,introduce automatic and intelligent production equipment, strengthen staff training to improve working efficiency.
4. Real estate industry risks and countermeasures
The real estate industry is obviously affected by the country 's macro-control, and the Company needs to review the situationand further strengthen the forward-looking research on the economic situation, policies and industry situation, and the capital market,enhance predictive power, improve the control and resilience of risk factors, and timely adjust business strategies to adapt to the neweconomic normal and new changes in the real estate industry. At the same time, the Company will increase its efforts to eliminate thecash and ensure that the Company continues to maintain stable operation and healthy development by withdrawing cash.X. Acceptance of surveys, negotiation and visits
1. Reception of investigations, communications, or interviews in the reporting period
√ Applicable □ Inapplicable
| Time/date | Way | Visitor | Disclosure of information |
| August 28, 2019 | Onsite investigation | Institution | Investor Relationship Record Form on http://www.cninfo.com.cn |
| December 19, 2019 | Others | Institution | Investor Relationship Record Form on http://www.cninfo.com.cn | |
| January 01, 2019 to December 31, 2019 | Written inquiry | Individual | Investor Q&A conducted on the interactive and e-platform of the Shenzhen Stock Exchange website (http://irm.cninfo.com.cn/) | |
| TIme | 46 | |||
| Number of institutes | 12 | |||
| Number of individuals | 44 | |||
| Number of other visitors | 0 | |||
| Disclosure of any non-public information | No | |||
Chapter 5 Significant EventsI. Profit distribution and reserve capitalization planEstablishment, implementation or adjustment of profit distribution policies especially the cash dividend policy during the reportperiod
√ Applicable □ Inapplicable
During the report period, the Company implemented the profit distribution plan for 2018. As reviewed and approved by the2018 Annual General Meeting of Shareholders held on February 19, 2019, the Company's 2018 profit distribution plan is: TheCompany takes the total share capital of 1,123,384,189 shares after canceling the B shares that have been repurchased on January 11,2019. For every 10 shares, a cash dividend of RMB 2.00 (including tax) will be distributed to all shareholders. No bonus shares willbe sent this year and no capital reserve will be transferred to increase capital. The plan has been implemented on March 13, 2019 (fordetails, please refer to the announcement of the implementation of the 2018 equity distribution 2019-21).
| Explanation of Cash Dividend Distribution Policies | |
| Comply with the Articles of Association or resolution made at the General Shareholders' Meeting | Yes |
| Clear and definite distribution standard and proportion | Yes |
| Decision-making procedure and mechanism | Yes |
| Independent directors fulfill their duties | Yes |
| Middle and small shareholders express their opinions and claims. There rights are well protected. | Yes |
| Cash dividend distribution policies are adjusted or revised according to law | Inapplicable |
Profit distribution and reserve capitalizing pre-plans or plans over the recent three years (including the reporting period)
2017: Based on the total share capital of 1,183,642,254 shares on December 31, 2017, the Company distributed a cash dividendof RMB1.50 (including tax) for every 10 shares to all shareholders, for a total of RMB177,546,338.10. No dividend share orcapitalization share was issued in the year.
2018: Based on the total share capital of 1,123,384,189 shares after the cancellation of the B shares repurchased on January 11,2019, the Company distributed a cash dividend of RMB2.00 (including tax) for every 10 shares to all shareholders, and a total ofRMB224,676,837.8. No dividend share or capitalization share was issued in the year.
2019: according to the principle of unchanged distribution ratio, based on the total share capital after the market close on theequity registration day when the profit plan is implemented, a cash dividend of RMB0.50 (including tax) is distributed to allshareholders for every 10 shares. No bonus shares will be sent and no capital reserve will be converted into share capital.
The Company is currently implementing the Company's plan to repurchase B shares in 2019. As of the date of this meeting ofthe Board of Directors, it has repurchased 2,705,700 shares of the Company through centralized bidding through a special account forshare repurchase securities. The cancellation of the share capital after the shares repurchased so far is 1,120,678,489 shares as thebase for calculation. The total amount of cash dividends is 56,033,924.45 yuan (including tax) (the actual total amount of dividends isbased on the total share capital after the market closes on the day of equity registration when the profit distribution plan is
implemented. The total amount of dividends calculated by the base shall prevail).After the Company's profit distribution plan is announced and implemented, if the total share capital changes, the total sharecapital after the market close on the equity registration date when the profit distribution plan is implemented is used as the base, andthe Company's profit distribution will be based on the principle of "fixed cash dividend ratio". The implementation announcementdiscloses the total amount of dividends calculated based on the total share capital after the market close on the stock registration daywhen the Company's profit distribution plan is implemented (total stock capital after the market close on the stock registration day =the Company's total share capital at the end of 2019-the Company's repurchase of B shares in 2019 The number of sharesrepurchased by the plan).
Distribution of cash dividend over the recent three years (including this period)
In RMB
| Year | Cash dividend (including tax) | Net profit attributable to shareholders in the consolidated financial statements | Cash Dividend proportion in the net project attributable to shareholders in the consolidated financial statements | Cash dividend paid in other manners (such as repurchase of shares) | Proportion of cash dividends in other ways in the consolidated statement of net profit attributable to shareholders of common stock of listed companies | Total cash dividend (including other manners) | The proportion of total cash dividends (including other methods) to the net profit attributable to shareholders of common shares of listed companies in the consolidated statement |
| 2019 | 56,033,924.45 | 347,771,182.73 | 16.11% | 81,918,508.26 | 23.56% | 137,952,432.71 | 39.67% |
| 2018 | 224,676,837.80 | 2,246,164,571.68 | 10.00% | 111,166,053.48 | 4.95% | 335,842,891.28 | 14.95% |
| 2017 | 177,546,338.10 | 1,144,404,441.03 | 15.51% | 0.00 | 0.00% | 177,546,338.10 | 15.51% |
Note: according to the principle of unchanged distribution ratio, based on the total share capital after the market close on theequity registration day when the profit plan is implemented, a cash dividend of RMB0.50 (including tax) is distributed to all
shareholders for every 10 shares. No bonus shares will be sent and no capital reserve will be converted into share capital. The amountof cash dividends (including tax) in the above table for 2019 is RMB56,033,924.45, which is calculated based on the Company’stotal share capital of 1,123,384,189 shares at the end of 2019 after the deduction of 2,705,700 shares as of the end of the current sharecapital of 1,120,678,489 shares. When the distribution plan is implemented, the total share capital after the market closes on the stockregistration day is the total amount of dividends calculated based on the base.Cash dividend proposed despite the Company records profits in the report period and a positive undistributed profit/
□ Applicable √ Inapplicable
II. Profit Distribution and Reserve Capitalization in the Report Period
√ Applicable □ Inapplicable
| Bonus shares for every ten shares | 0 |
| Cash dividend for every ten shares (yuan, tax-included) | 0.5 |
| Shares capitalized for every 10 shares | 0 |
| A total number of shares as the distribution basis | Not sure for now |
| Cash dividend (including tax) | Not sure for now |
| Cash dividend paid in other manners (such as repurchase of shares) | 81,918,508.26 |
| Proportion of cash dividend in the distributable profit (including other manners) | 100% |
| Cash dividend | |
| The Company is in a fast growth stage. Therefore, the cash dividend will reach 20% of the profit distribution at least. | |
| Details of profit distribution or reserve capitalization plan | |
III. Performance of promises
1. Commitments that have been fulfilled and not fulfilled by actual controller, shareholders, related parties,acquirers of the Company
□ Applicable √ Inapplicable
There is no commitment that has not been fulfilled by actual controller, shareholders, related parties, acquirers of the Company
2. Explanation and reason of profit forecasts on assets or projects that remain in the report period
□ Applicable √ Inapplicable
IV. Non-operating capital use by the controlling shareholder or related parties in thereporting term
□ Applicable √ Inapplicable
The controlling shareholder and its affiliates occupied no capital for non-operating purpose of the Company during the report period.V. Statement of the Board of Directors, Supervisory Committee and Independent Directors (ifapplicable) on the “non-standard auditors’ report” issued by the CPA on the current reportperiod
□ Applicable √ Inapplicable
VI. Statement of changes to accounting policies, estimates and audit methods compared withthe financial report of the previous year
√ Applicable □ Inapplicable
(1) Changes in accounting policies
On April 30, 2019, the Ministry of Finance issued the "Notice on Revising the Format of General Enterprise FinancialStatements for 2019" (Caihui [2019] No. 6), which requires that new financial instruments standards have been implemented but newincome standards and new Leasing companies should prepare financial statements as follows:
In the balance sheet, the line items "Bills receivable and accounts receivable" were split into "Bills receivable" and "Accountsreceivable"; the item "Finance receivables" was added to reflect fairness on the balance sheet Bills receivable and accounts receivable,whose value is measured and whose changes are included in other comprehensive income; split the "bills payable and accountspayable" line items into "bills payable" and "payables".
In the income statement, a detailed item of "financial asset derecognized gains (losses are listed with"-") measured atamortized cost is added under the investment income item.
On September 19, 2019, the Ministry of Finance issued the "Notice on Revising and Issuing the Format of ConsolidatedFinancial Statements (2019 Version)" (Caihui [2019] No. 16), which will be implemented in conjunction with Caihui [2019] No. 6.
The Company prepared comparative statements in accordance with the financial statement format specified in Caihui [2019]No. 6 and Caihui [2019] No. 16, and changed the presentation of relevant financial statements using the retroactive adjustmentmethod.
The Ministry of Finance issued "Accounting Standards for Enterprises No. 22-Recognition and Measurement of FinancialInstruments" (Caihui [2017] No. 7) and "Accounting Standards for Enterprises No. 23-Transfer of Financial Assets" (Cai Accounting[ 2017] No. 8), "Accounting Standards for Business Enterprises No. 24-Hedging Accounting" (Caihui [2017] No. 9), on May 2, 2017,the "Accounting Standards for Business Enterprises No. 37-Presentation of Financial Instruments" ( Caihui [2017] No. 14) (the abovestandards are hereinafter collectively referred to as "new financial instrument standards"). The domestic listed companies are requiredto implement the new financial instruments standards from January 1, 2019. The Company implemented the above new financialinstrument standards on January 1, 2019, and adjusted the relevant content of the accounting policy. For details, see Note III.9.
If the confirmation and measurement of financial instruments before January 1, 2019 are inconsistent with the requirements ofthe new financial instrument standards, the Company will retroactively adjust the classification and measurement (includingimpairment) of financial instruments in accordance with the provisions of the new financial instrument standards. The differencebetween the original book value of financial instruments and the new book value on the implementation date of the new financialinstruments standard (ie, January 1, 2019) is included in retained earnings or other comprehensive income on January 1, 2019. At thesame time, the Company has not adjusted the comparative financial statement data.
On May 9, 2019, the Ministry of Finance issued the "Accounting Standards for Business Enterprises No. 7-Exchange ofNon-Monetary Assets" (Caihui [2019] No. 8). According to the requirements, the Company Non-monetary asset exchanges that occurwill be adjusted in accordance with this standard. Retrospective adjustments will not be made for non-monetary asset exchanges thatoccurred before January 1, 2019. The Company will implement this standard on June 10, 2019.
On May 16, 2019, the Ministry of Finance issued the "Accounting Standards for Business Enterprises No. 12-DebtRestructuring" (Caihui [2019] No. 9). According to the requirements, the Company's debts that occurred between January 1 and theexecution date of 2019 The reorganization is adjusted according to this standard. The debt restructuring before January 1, 2019 willnot be retrospectively adjusted. The Company will implement this standard from June 17, 2019.
The cumulative impact of the above accounting policies is as follows:
Due to the implementation of the new financial instruments standards, the Company's consolidated financial statementsadjusted the deferred income tax assets of RMB6,594,359.90 on January 1, 2019 accordingly. The amount of related adjustmentsaffecting the parent company's equity in the consolidated financial statements of the Company is RMB-44,571,870.18, of which thesurplus reserve is 524,860.03, the undistributed profit is RMB-39,930,304.63, and other comprehensive income isRMB-5,166,425.58. Due to the implementation of the new financial instruments standards, the Company's consolidated financialstatements adjusted the deferred income tax assets of RMB-27,391.55 on January 1, 2019 accordingly. The amount of relatedadjustments affecting the owner ’s equity in the financial statements of the parent company of the Company was RMB82,174.65, ofwhich the surplus reserve was RMB524,860.03, undistributed profit was RMB4,723,740.20, and other comprehensive income wasRMB-5,166,425.58.
(2) Changes in major accounting estimates
During the reporting period, the Company had no significant changes in accounting estimates.VII. Statement of retrospective restatement of major accounting errors in the report period
□ Applicable √ Inapplicable
No retrospective restatement of major accounting errors in the report periodVIII. Statement of change in the financial statement consolidation scope compared with theprevious financial report
√ Applicable □ Inapplicable
(1) During the period, Fangda Southeast Asia Company Limited was newly established, and the merger of enterprises under the samecontrol increased Shenzhen Zhongrong Litai Investment Co., Ltd., adding 4 subsidiaries in the current consolidated statement.
(2) In the current period, Xiangdong New Energy Company and Ke Xunda Company were cancelled, and the consolidated statementsin this period decreased by 2 subsidiaries.IX. Engaging and dismissing of CPACPA engaged currently
| Domestic public accountants name | RSM Thornton (limited liability partnership) |
| Remuneration for the domestic public accountants (in RMB10,000) | 150 |
| Consecutive years of service by the domestic public accountants | 1 |
| Name of certified accountants of the domestic public accountants | Chen Zhaoxin, Zeng Hui |
| Consecutive years of service by the domestic public accountants | Chen Zhaoxin has provided the audit service for 3 years Zenghui for 2 year |
| Overseas public accountants name (if any) | None |
| Remuneration for the overseas public accountants (in RMB10,000) | 0 |
| Consecutive years of service by the overseas public accountants (if any) | None |
| Name of certified accountants of the overseas public accountants (if any) | None |
| Consecutive years of service by the domestic public accountants | None |
Whether the CPA is replaced
√ Yes □ No
Whether the CPA is replaced in the auditing period
□ Yes √ No
Whether the approval process is completed to replace the CPA
√ Yes □ No
Details of the CPA replacement and changeIn view of the Company's 2018 financial statements and internal control audit team leaving Zhitong Certified PublicAccountants (special general partnership) has now joined Huapu Tianjian Certified Public Accountants (special general partnership)(hereinafter referred to as "Huapu Tianjian"), and Huapu Tianjian accounting firm (special general partnership) was officiallyrenamed as Rongcheng Certified Public Accountants (special general partnership) on June 10, 2019. In order to maintain thecontinuity of the audit work, and based on the audit team's 2018 audit work and service awareness, professional ethics andperformance ability, the Company agreed to hire Rongcheng Certified Public Accountants (special general partnership) as theCompany's 2019 financial statements and internal The auditing agency is controlled with an audit fee of RMB 1.5 million and aone-year employment period. The independent directors of the Company issued independent opinions that were approved in advance,and had passed the 17th meeting of the eighth directors and the first extraordinary general meeting of 2019 held on August 16, 2019and December 16, 2019.
Engaging of internal control audit CPA, financial advisor and sponsor
√ Applicable □ Inapplicable
This year, the Company engaged RSM China (limited liability partnership) as the financial statement and internal control auditingCPA with a fee of RMB1.5 million.
X. Trade suspension and termination after the disclose of the annual report
□ Applicable √ Inapplicable
XI. Bankruptcy and capital reorganizing
□ Applicable √ Inapplicable
The Company has no bankruptcy or reorganization events in the report period.XII. Significant lawsuit and arbitration
□ Applicable √ Inapplicable
The Company has no significant lawsuit or arbitration affair in the report period.
XIII. Punishment and rectification
□ Applicable √ Inapplicable
The Company received no penalty and made no correction in the report period.XIV. Credibility of the Company, controlling shareholder and actual controller
√ Applicable □ Inapplicable
During the reporting period, the Company, its controlling shareholders, and actual controllers did not fail to fulfill the court'seffective judgment, and the large amount of debt due and unpaid.XV. Share incentive schemes, staff shareholding program or other incentive plans
□ Applicable √ Inapplicable
There is no share incentive schemes, staff shareholding program or other incentive plans in the report periodXVI. Material related transactions
1. Related transactions related to routine operation
□ Applicable √ Inapplicable
The Company made no related transaction related to daily operating in the report period.
2. Related transactions related to assets transactions
□ Applicable √ Inapplicable
The Company made no related transaction of assets or equity requisition and sales in the report period.
3. Related transactions related to joint external investment
□ Applicable √ Inapplicable
The Company made no related transaction of joint external investment in the report period.
4. Related credits and debts
□ Applicable √ Inapplicable
The Company had no related debt in the report period.
5. Other major related transactions
□ Applicable √ Inapplicable
The Company has no other significant related transaction in the report period.
XVII. Significant contracts and performance
1. Asset entrusting, leasing, contracting
(1) Asset entrusting
□ Applicable √ Inapplicable
The Company made no custody in the report period.
(2) Contracting
□ Applicable √ Inapplicable
The Company made no contract in the report period
(3) Leasing
√ Applicable □ Inapplicable
LeasingThe investment real estate is used as external leasing. The rental income in the report period is RMB74,929,720.58.
Projects that create gains accounting for over 10% of the Company’s total profit in the report period
□ Applicable √ Inapplicable
The Company leased no projects that create gains accounting for over 10% of the Company’s total profit in the report period.
2. Significant guarantee
√ Applicable □ Inapplicable
(1) Guarantee
In RMB10,000
| External guarantees made by the Company and subsidiaries (exclude those made for subsidiaries) | ||||||||
| None | ||||||||
| Guarantee provided to subsidiaries | ||||||||
| Guarantee provided to | Date of disclosure | Guarantee amount | Actual date | Actual amount of guarantee | Type of guarantee | Term | Completed or not | Related party |
| Fangda Jianke | April 24, 2018 | 30,000 | August 28, 2018 | 15,153.05 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Jianke | January 30, 2019 | 40,000 | April 17, 2019 | 22,872.02 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Jianke | January 30, 2019 | 30,000 | August 01, 2019 | 3,917.83 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Jianke, Fangda Zhichuang and the Company | January 30, 2019 | 90,000 | March 26, 2019 | 24,130.61 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Jianke | January 30, 2019 | 25,000 | August 20, 2019 | 9,991.92 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Jianke and Fangda Zhichuang | January 30, 2019 | 14,000 | December 18, 2019 | 9,153.71 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Jianke | January 30, 2019 | 10,000 | June 21, 2019 | 868.71 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Zhichuang | April 24, 2018 | 21,600 | August 06, 2018 | 25,827.06 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Zhichuang | January 30, 2019 | 20,000 | August 01, 2019 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes | |
| Fangda Zhichuang | January 30, 2019 | 15,000 | May 27, 2019 | 12,189.27 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda New Material | January 30, 2019 | 8,000 | April 24, 2019 | 1,291.14 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda New Material | January 30, 2019 | 6,500 | June 27, 2019 | 3,025.13 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Property | March 23, 2013 | 130,000 | February 3, 2015 | 69,397.82 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Fangda Property | January 30, 2019 | 20,000 | June 19, 2019 | 15,000 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Qingling Technology | January 30, 2019 | 8,000 | July 10, 2019 | 3,252.33 | Joint liability | since engage of contract to 2 years upon due of debt | No | Yes |
| Total of external guarantee approved in the report term (A1) | 468,100 | Total of external guarantee actually occurred in the report term (A2) | 194,087.55 | |||||
| Total of external guarantee approved as of end of report term (A3) | 468,100 | Total of external guarantee actually occurred as of end of report term (A4) | 216,070.6 | |||||
| Guarantee provided to subsidiaries | ||||||||
| Guarantee provided to | Date of disclosure | Guarantee amount | Actual date | Actual amount of guarantee | Type of guarantee | Term | Completed or not | Related party |
| Total of guarantee provided by the Company (total of the above three) | ||||||||
| Total of guarantee approved in the report term (A1+B1+C1) | 468,100 | Total of guarantee occurred in the report term (A2+B2+C2) | 194,087.55 | |||||
| Total of guarantee approved as of end of report term (A3+B3+C3) | 468,100 | Total of guarantee occurred as of the end of report term (A4+B4+C4) | 216,070.6 | |||||
| Percentage of the total guarantee occurred (A4+B4+C4) on net asset of the Company | 41.69% | |||||||
| Including: | ||||||||
| Note of immature guarantee with guarantee liabilities or possible joint damage liabilities in the report period | None | |||||||
| Statement of external guarantees violating the procedure (if any) | None | |||||||
(2) Incompliant external guarantee
□ Applicable √ Inapplicable
The Company made no incompliant external guarantee in the report period.
3. Entrusted cash capital management
(1) Wealth management
√ Applicable □ Inapplicable
Wealth management during the reporting period
In RMB10,000
| Type | Source of fund | Amount | Undue balance | Due balance to be recovered |
| Bank financial products | Self-owned fund | 54,828 | 1,033.01 | 0 |
| Total | 54,828 | 1,033.01 | 0 | |
Specific circumstances of high-risk entrusted financing with large individual amount or low security, poor liquidity, and no costprotection
□ Applicable √ Inapplicable
Entrusted financial management expected to fail to recover the principal or likely result in impairment
□ Applicable √ Inapplicable
(2) Trusted loans
√ Applicable □ Inapplicable
Overview of entrusted loans during the reporting period
In RMB10,000
| Total entrusted loans | Source of funds for entrusted loans | Undue balance | Due balance to be recovered |
| 2,000 | Self-owned fund | 0 | 0 |
Specific circumstances of high-risk entrusted loan with large individual amount or low security, poor liquidity, and no cost protection
□ Applicable √ Inapplicable
Entrusted loans expected to fail to recover the principal or likely result in impairment
□ Applicable √ Inapplicable
4. Other significant contract
□ Applicable √ Inapplicable
The Company entered into no other significant contract in the report.
XVI Social responsibilities
1. Fulfillment of social responsibilities
The Company has disclosed the "2019 Social Responsibility Report", the details of which were published on thehttp://www.cninfo.com.cn on April 18, 2020.
2. Performance of poverty relieving responsibilities
(1) Annual poverty relieving summary
In 2019, the Company used funds for precision poverty alleviation projects of RMB2,314,000 as follows:
1. donated RMB20,000 to two poverty-stricken villages in Luxi County, Pingxiang City, Jiangxi Province for the construction ofpublic facilities;
2. Donated RMB2,000 to the Social Assistance Center of Luxiang Town, Jinshan District, Shanghai for charity assistance activities.
3. Donated RMB100,000 to the Ganzhou Charity Federation of Jiangxi Province to fund the Ruijin City Charity Association topurchase defibrillators at the Red Spot;
4. The Company donated RMB15,000 to the poor students at Zhenglong village, Shahe county, Zhanggong district, Ganzhou city,Jiangxi province.
5. The Company donated RMB102,500 to the Jiangxi Kaixuan Foundation to help the poor students in Suichuan county, Ji'an cityand Jiangxi province.
6. The Company donated RMB1,500 to the CPC Shenzhen Property Management Industry Committee to purchase measureequipment for the health center in the Liangshan Yi Autonomous Prefecture, Sichuan province.
7. Donated RMB30,000 to the youth activities of Dakang Community in Longgang, Shenzhen, and donated RMB33,000 to elderlycaring activities.
8. Donated RMB500,000 to Pingxiang City Charity Association of Jiangxi Province for the development of lily industry in ShanbeiVillage, Liushi Township, Lianhua County, and Tianyu Village, Fanglou Town, Lianhua County.
9. Donated RMB1.5 million to the Nanshan District Charity Association of Shenzhen City, of which RMB500,000 were used fortargeted poverty alleviation projects in Tianyang County, Baise City, Guangxi Province.
10. Donated RMB20,000 to the Longgang District Charity Association of Shenzhen City for the installation of road lights inChenguang Town, Xunwu County, Jiangxi Province.
11. donated RMB20,000 to two poverty-stricken villages in Luxi County, Pingxiang City, Jiangxi Province for the construction ofpublic facilities;
(2) Result of targeted poverty alleviation
| Specifications | Unit | Qty/Description |
| 1. General situation | —— | —— |
| Including: 1. Fund | (in RMB10,000) | 231.4 |
| II. Investment | —— | —— |
| 1. Industry development poverty relief | —— | —— |
| Including: 1.1 Industry development projects | —— | Rural and forestry industry poverty allivetion |
| 1.2 Number of industry development projects | Item | 1 |
| 1.3 Amount of industry development fund | (in RMB10,000) | 50 |
| 2. Employment transfer | —— | —— |
| 3. Relocation | —— | —— |
| 4. Education | —— | —— |
| Including: 4.1 Sponsor to students from poor families | (in RMB10,000) | 11.75 |
| 4.2 Number of students | People | 16 |
| 5. Health care support | —— | —— |
| Including: 5.1 Contribution to health care sources in poor areas | (in RMB10,000) | 10.15 |
| 6. Eco-protection support | —— | —— |
| 7. Last-line guarantee | —— | —— |
| 8. Social poverty relieving | —— | —— |
| 8.2 Targeted poverty alleviation investment amount | (in RMB10,000) | 159.5 |
| 9. Others | —— | —— |
| III. Prizes | —— | —— |
(3) Further property relief plans
In early 2020, the Company donated RMB3 million to the Jiangxi Provincial Red Cross Foundation, Wuhan Red Cross Societyand other units for the prevention and control of the new coronary pneumonia epidemic, and to support medical personnel whostayed on the front line of the epidemic to purchase supplies and incentives for frontline medical staff. During the New CoronaryPneumonia epidemic, the Company reduced or exempted the rent for more than RMB2 million and donated 50,000 masks to theXinjian District of Nanchang.The Company will continue to fulfill its social responsibility for precision poverty alleviation, and make donations from time totime based on business development.
3. Environmental protection
Whether the Company and its subsidiaries are key polluting companies disclosed by the environmental protection authorityNoThe Company and its subsidiaries have earnestly implemented the Environmental Protection Law of the People's Republic ofChina, the Law of the People's Republic of China on Water Pollution Prevention and Control, the Law of the People's Republic ofChina on the Prevention and Control of Air Pollution, and the Law of the People's Republic of China on the Prevention and Controlof Solid Waste Pollution. In the environmental protection laws and regulations, there were no penalties for violations of laws andregulations during the reporting period.
XIX. Other material events
√ Applicable □ Inapplicable
1. On January 11, 2019, the Company's second repurchase of B shares of 32,097,497 shares in 2018 was completed. For details,please refer to the Company's publication on www.cninfo.com.cn on January 15, 2019 "Announcement on Completion ofCancellation of Share Repurchase".
2.The Company convened the 19th meeting of the eighth board of directors and the first extraordinary general meeting ofshareholders on November 28, 2019 and December 16, 2019 respectively. The plan for listing foreign shares (B shares) ", and thefirst repurchase was made on April 3, 2020. The specific content has been published on the www.cninfo.com.cn. For details, pleaserefer to the "Announcement on the Resolutions of the Nineteenth Meeting of the Eighth Board of Directors" on November 30, 2019,and on December 17, 2019 "Announcement on Resolutions of the First Extraordinary General Meeting of 2019" and "Announcementon the First Share Repurchase" on April 7, 2020.
The Company must comply with disclosure requirements of the Shenzhen Stock Exchange Industry Information DisclosureGuideline No.6 – Listed Companies Engaged in Decoration Business.
Qualifications in the decoration industry:
| No. | Qualification | Effectiveness |
| 1 | Construction curtain wall designing class A | Until April 16, 2020 |
| 2 | Construction curtain wall contracting class A | Until February 3, 2021 |
| 3 | Construction decoration contracting class B | Until March 4, 2021 |
| 4 | Steel structure engineering contracting class B | Until March 4, 2021 |
| 5 | Construction mechanical and electric equipment installation contracting class C | Until March 4, 2021 |
| 6 | City and road lighting engineering contracting class C | Until March 4, 2021 |
The Company's "Special Grade A in Architectural Curtain Wall Engineering Design" qualification expires on April 16, 2020.The Company has completed the extension on March 16, 2020 upon application, and the extension is valid until March 16, 2025. Inaddition, other qualifications do not exist when the validity period of 2020 expires.In the report period, the Company’s safety management is normal. The Company pays large attention to employees’ safetyawareness and capabilities of emergency processing. The Company has strengthened safety production and investigation of safetyrisks. The Company has formulated safety management guidelines to guide safety management. There was no significant safetyaccidents in the report period.
XX. Material events of subsidiaries
□ Applicable √ Inapplicable
Chapter VI Changes in Share Capital and ShareholdersI. Changes in shares
1. Changes in shares
In share
| Before the change | Change (+,-) | After the change | |||||||
| Quantity | Proportion | Issued new shares | Bonus shares | Transferred from reserves | Others | Subtotal | Quantity | Proportion | |
| I. Shares with trade restriction conditions | 1,417,243 | 0.12% | 14,325 | 14,325 | 1,431,568 | 0.13% | |||
| 3. Other domestic shares | 1,417,243 | 0.12% | 14,325 | 14,325 | 1,431,568 | 0.13% | |||
| Domestic natural person shares | 1,417,243 | 0.12% | 14,325 | 14,325 | 1,431,568 | 0.13% | |||
| II. Shares without trading limited conditions | 1,154,064,443 | 99.88% | -32,111,822 | -32,111,822 | 1,121,952,621 | 99.87% | |||
| 1. Common shares in RMB | 678,298,229 | 58.70% | -14,325 | -14,325 | 678,283,904 | 60.38% | |||
| 2. Foreign shares in domestic market | 475,766,214 | 41.17% | -32,097,497 | -32,097,497 | 443,668,717 | 39.49% | |||
| III. Total of capital shares | 1,155,481,686 | 100.00% | -32,097,497 | -32,097,497 | 1,123,384,189 | 100.00% | |||
Reasons
√ Applicable □ Inapplicable
1. The Company completed the second repurchase of B shares in 2018 through centralized bidding from December 19, 2018 toJanuary 3, 2019. The cumulative number of repurchases was 32,097,497 shares, and it was in China on January 11, 2019. TheShenzhen Branch of the Securities Registration and Clearing Co., Ltd. completed the share repurchase and cancellation procedures,and the total share capital was reduced from 1,155,481,686 shares to 1,123,384,189 shares.
2. Mr. Yin Changjian, the former employee representative supervisor of the Company, applied for resignation. On December 28,2018, Mr. Ye Zhiqing was elected as the employee representative supervisor of the eighth supervisory committee of the Company bythe employee meeting of the Company. He held 19,100 A shares of the Company since 2019. As of January 2, 14,325 shares of theexecutive lock-in shares were restricted, so the Company's restricted shares increased by 14,325 shares and non-restricted sharesdecreased by 14,325 shares.
Approval of the change
√ Applicable □ Inapplicable
1. For the Company's second repurchase of B shares in 2018, the tenth meeting of the eighth board of directors and the first
extraordinary general meeting of 2018 held on September 10, 2018 and September 27, 2018 Consideration by.
2. On December 28, 2018, Mr. Ye Zhiqing was elected as the employee representative supervisor of the Company's eighth session ofthe Supervisory Committee by the Company's employee meeting.
Share transfer
√ Applicable □ Inapplicable
1. The 32,097,497 B shares repurchased by the Company for the second time in 2018 have completed the share repurchasecancellation procedures at the China Securities Depository and Clearing Co., Ltd. Shenzhen Branch on January 11, 2019.
2. On December 28, 2018, Mr. Ye Zhiqing was elected as the employee representative supervisor of the Company's eighth boardof supervisors by the employee meeting of the Company. He held 19,100 A shares of the Company. Since January 2, 2019, 14,325shares have been Lock up shares with limited sales conditions.Progress in the implementation of share repurchase
√ Applicable □ Inapplicable
The 32,097,497 B shares repurchased by the Company for the second time in 2018 have completed the share repurchasecancellation procedures at the China Securities Depository and Clearing Co., Ltd. Shenzhen Branch on January 11, 2019.
| Period | Number of shares | Fund used | Highest price (HKD / share) | Lowest price (HKD / share) | Date of cancellation |
| From December 19, 2018 to January 3, 2019 | 32,097,497 | 113,012,632.21 | 3.58 | 3.24 | 2019-1-11 |
Progress in the implementation of the reduction of shareholding shares by means of centralized bidding
□ Applicable √ Inapplicable
Impacts on financial indicators including basic and diluted earnings per share, net assets per share attributable to commonshareholders of the Company in the most recent year and period
□ Applicable √ Inapplicable
Others that need to be disclosed as required by the securities supervisor
□ Applicable √ Inapplicable
2. Changes in conditional shares
√ Applicable □ Inapplicable
In share
| Shareholder name | Conditional shares at beginning of the period | Increased this period | Released this period | Conditional shares at end of the period | Reason of condition | Date of releasing |
| Ye Zhiqing | 0 | 14,325 | 0 | 14,325 | Newly elected employee representative supervisor | 25% of the annual shareholding is released from the sale |
| Total | 0 | 14,325 | 0 | 14,325 | -- | -- |
II. Share placing and listing
1. Securities issuance (excluding preference shares) during the report period
□ Applicable √ Inapplicable
2. Statement of changes in share number and shareholder structure, assets and liabilities structure
√ Applicable □ Inapplicable
1. The Company completed the second repurchase of B shares in 2018 through centralized bidding from December 19, 2018 toJanuary 3, 2019. The cumulative number of repurchases was 32,097,497 shares, and it was in China on January 11, 2019. TheShenzhen Branch of the Securities Registration and Clearing Co., Ltd. completed the share repurchase and cancellation procedures,and the total share capital was reduced from 1,155,481,686 shares to 1,123,384,189 shares.
2. Mr. Yin Changjian, the former employee representative supervisor of the Company, applied for resignation. On December 28,2018, Mr. Ye Zhiqing was elected as the employee representative supervisor of the eighth supervisory committee of the Company bythe employee meeting of the Company. He held 19,100 A shares of the Company since 2019. As of January 2, 14,325 shares of theexecutive lock-in shares were restricted, so the Company's restricted shares increased by 14,325 shares and non-restricted sharesdecreased by 14,325 shares.
3. Current employees’ shares
□ Applicable √ Inapplicable
III. Shareholders and the substantial controller of the Company
1. Shareholders and shareholding
In share
| Number of shareholders of common shares at the end of the report period | 67,777 | Total number of ordinary share shareholders at the end of the month before the disclosure date of the annual report | 63,114 | Number of shareholders of preferred stocks of which voting rights recovered in the report period | 0 | Total number of shareholders of preference shares of which voting rights resumed at the end of the month before the disclosure date of the annual report | 0 |
| Shareholders holding 5% of the Company's shares or top-10 shareholders | |||||||
| Shareholder name | Nature of shareholder | Shareholding percentage | Number of shares held at the end of the reporting period | Change in the reporting period | Conditional shares | Amount of shares without sales restriction | Pledging or freezing | |
| Share status | Quantity | |||||||
| Shenzhen Banglin Technologies Development Co., Ltd. | Domestic non-state legal person | 10.22% | 114,842,654 | 1,640,500 | 0 | 114,842,654 | Pledged | 32,860,000 |
| Shengjiu Investment Ltd. | Foreign legal person | 9.23% | 103,694,029 | 9,818,391 | 0 | 103,694,029 | ||
| Fang Wei | Domestic natural person | 3.12% | 35,045,539 | 434,086 | 0 | 35,045,539 | ||
| Gong Qing Cheng Shi Li He Investment Management Partnership Enterprise (limited partner) | Domestic non-state legal person | 2.38% | 26,791,488 | 0 | 0 | 26,791,488 | ||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | Foreign legal person | 0.71% | 7,946,483 | 0 | 0 | 7,946,483 | ||
| Shenwan Hongyuan Securities (Hong Kong) Co., Ltd. | Foreign legal person | 0.68% | 7,631,296 | -12,247,851 | 0 | 7,631,296 | ||
| SUN HUNG KAI INVESTMENT SERVICES LTD | Foreign legal person | 0.62% | 6,916,495 | -3,252,507 | 0 | 6,916,495 | ||
| VANGUARD TOTAL INTERNATIONAL STOCK | Foreign legal person | 0.52% | 5,872,007 | -153951 | 0 | 5,872,007 | ||
| INDEX FUND | |||||||||
| Essence International Securities (Hong Kong) Co., Ltd. | Foreign legal person | 0.42% | 4,727,707 | -742,293 | 0 | 4,727,707 | |||
| Qu Chunlin | Domestic natural person | 0.38% | 4,307,011 | 456,950 | 0 | 4,307,011 | |||
| A strategic investor or ordinary legal person becomes the Top10 shareholder due a stock issue. | None | ||||||||
| Notes to top ten shareholder relationship or "action in concert" | Among the shareholders, Shenzhen Banglin Technology Development Co., Ltd. and Shengjiu Investment Co., Ltd. are parties action-in-concert. Shenzhen Banglin Technology Development Co., Ltd. and Gong Qing Cheng Shi Li He Investment Management Partnership Enterprise are related parties. The Company is not notified of other action-in-concert or related parties among the other holders of current shares. | ||||||||
| Top 10 holders of unconditional shares | |||||||||
| Shareholder name | Amount of shares without sales restriction | Category of shares | |||||||
| Category of shares | Quantity | ||||||||
| Shenzhen Banglin Technologies Development Co., Ltd. | 114,842,654 | RMB common shares | 114,842,654 | ||||||
| Shengjiu Investment Ltd. | 103,694,029 | Foreign shares listed in domestic exchanges | 103,694,029 | ||||||
| Fang Wei | 35,045,539 | RMB common shares | 35,045,539 | ||||||
| Gong Qing Cheng Shi Li He Investment Management Partnership Enterprise (limited partner) | 26,791,488 | RMB common shares | 26,791,488 | ||||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | 7,946,483 | Foreign shares listed in domestic exchanges | 7,946,483 | ||||||
| Shenwan Hongyuan Securities (Hong Kong) Co., Ltd. | 7,631,296 | Foreign shares listed in domestic exchanges | 7,631,296 | ||||||
| SUN HUNG KAI INVESTMENT SERVICES LTD | 6,916,495 | Foreign shares listed in | 6,916,495 | ||||||
| domestic exchanges | |||
| VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND | 5,872,007 | Foreign shares listed in domestic exchanges | 5,872,007 |
| Essence International Securities (Hong Kong) Co., Ltd. | 4,727,707 | Foreign shares listed in domestic exchanges | 4,727,707 |
| Qu Chunlin | 4,307,011 | RMB common shares | 4,307,011 |
| No action-in-concert or related parties among the top10 unconditional shareholders and between the top10 unconditional shareholders and the top10 shareholders | Among the shareholders, Shenzhen Banglin Technology Development Co., Ltd. and Shengjiu Investment Co., Ltd. are parties action-in-concert. Shenzhen Banglin Technology Development Co., Ltd. and Gong Qing Cheng Shi Li He Investment Management Partnership Enterprise are related parties. The Company is not notified of other action-in-concert or related parties among the other holders of current shares. | ||
| Top-10 common share shareholders participating in margin trade | None | ||
Agreed re-purchasing by the Company’s top 10 shareholders of common shares and top 10 shareholders of unconditional commonshares in the report period
□ Yes √ No
No agreed re-purchasing by the Company’s top 10 shareholders of common shares and top 10 shareholders of unconditional commonshares in the report period
2. Profile of the controlling shareholders
Shareholder nature: natural person holdingType of shareholder: legal person
| Name of controlling shareholder | Legal representative/responsible person | Date of establishment | Organization code | Main business |
| Shenzhen Banglin Technologies Development Co., Ltd. | Chen Jinwu | Jun. 7, 2001 | 914403007298400552 | Industrial investment, developing of electronic products, technical consulting, domestic commerce, material trading |
Changes in the controlling shareholder in the reporting period
□ Applicable √ Inapplicable
No change in the controlling shareholder in the report period
3. Actual controller and persons acting in concert
Nature of actual controller: domestic natural personType of actual controller: natural person
| Name of substantial controller | Relationship with the actual controller | Nationality | Right of residence in another country or region |
| Xiong Jianming | Himself | Chinese | No |
| Job and position | Chairman of the Board and president of the Company over the past 5 years | ||
| Profiles of domestic and overseas listed companies in which the controller held shares | The controller held no share in other listed companies in the last ten years. | ||
Change in the actual controller in the report period
□ Applicable √ Inapplicable
No change in the actual shareholder in the report period
7. Chart of the controlling relationship
Controlling over the Company by the substantial controller through trust or other asset management
□ Applicable √ Inapplicable
4. Other legal person shareholders with over 10% of total shares
□ Applicable √ Inapplicable
5. Conditional decrease of shareholding by controlling shareholder, actual controller, reorganizer andother entities
□ Applicable √ Inapplicable
Chapter VII Preferred Shares
□ Applicable √ Inapplicable
The Company had no preferred share in the report period.
VIII. Information about the Company’s Convertible Bonds
□ Applicable √ Inapplicable
No convertible bonds in the report period
Chapter IX Particulars about the Directors, Supervisors, Senior
Management and Employees
I. Changes in shareholding of Directors, Supervisors and Senior Management
| PRINTED NAME | Position | Job status | Sex | Age | Starting date of the term | End date of the term | Number of shares held at beginning of the period | Increased shares in this period (share) | Decreased shares in this period (share) | Other increase and decrease (share) | Number of shares held at end of the period |
| Xiong Jianming | Chairman, president | In office | M | 62 | November 20, 1995 | 2020 | 1,889,657 | 1,889,657 | |||
| Lin Kebin | Director | In office | M | 42 | April 11, 2017 | 2020 | |||||
| Lin Kebin | Vice president | In office | M | 42 | June 06, 2008 | 2020 | |||||
| Zhou Zhigang | Director | In office | M | 57 | April 9, 2007 | 2020 | |||||
| Zhou Zhigang | Vice president | In office | M | 57 | April 11, 2017 | 2020 | |||||
| Zhou Zhigang | Secretary of the Board | In office | M | 57 | October 22, 2003 | 2020 | |||||
| Xiong Jianwei | Director | In office | M | 51 | April 16, 1999 | 2020 | |||||
| Guo Wanda | Independent director | In office | M | 54 | March 31, 2014 | 2020 | |||||
| Deng Lei | Independent director | In office | M | 41 | February 16, 2016 | 2020 | |||||
| Guo Jinlong | Independent director | In office | M | 58 | April 11, 2017 | 2020 |
| Dong Gelin | Supervisory Committee meeting convener | In office | M | 41 | December 28, 2018 | 2020 | |||||
| Dong Gelin | Supervisor | In office | M | 41 | April 11, 2017 | December 28, 2018 | |||||
| Cao Naisi | Supervisor | In office | F | 41 | April 11, 2017 | 2020 | |||||
| Ye Zhiqing | Supervisor | In office | M | 45 | December 28, 2018 | 2020 | 19,100 | 19,100 | |||
| Wei Yuexing | Vice president | In office | M | 51 | Jul. 29, 2011 | 2020 | |||||
| Total | -- | -- | -- | -- | -- | -- | 1,908,757 | 0 | 0 | 0 | 1,908,757 |
II. Changes in the Directors, Supervisors and Senior Executives
□ Applicable √ Inapplicable
III. Office Description
Professional background, work experience and main duties in the Company of existing directors, supervisors and senior management
1. Mr. Xiong Jianming: PHD Management; senior engineer; part-time professor of Beijing Institute of Civil Engineering andArchitecture and Nanchang University. He is now the chairman and CEO of the Company, representative of the 13th NationalPeople's Congress and the 6th Shenzhen People's Congress, president of the Shenzhen Semi-conductor Lighting Industry PromotionAssociation, chairman of Shenzhen Jiangxi Commerce Chamber, chairman of Shenzhen Nanshan District Industry and CommerceAssociation and honorary chairman of Shenzhen Nanshan District Charity. He was once employed by Jiangxi Provincial MachineryDesign Academe, Administration Bureau of Shekou District of Shenzhen government, etc, deputy to the 10th People’s Congress ofGuangdong Province, deputy to the 2nd and 3rd People’s Congress of Shenzhen City.
2. Mr. Lin Kebin holds a bachelor’s degree. At present he is a director, the Vice President and CFO of the Company.
3. Mr. Xiong Jianwei: MBA. He is a director of the Company, Chairman of the Board of Director of Fangda Jianke and a member ofthe 14th Nanchang CPPCC Standing Committee.
4. Mr. Zhou Zhigang, bachelor’s degree. He is currently a director, vice president, Secretary of Board. He was once the head of themarketing department, general manager of the corporate management center and general manager of the Human ResourceDepartment.
5. Mr. Guo Wanda: He is an Economics Ph. D and researcher. General development research institute (China) As the executivedeputy president of China Development Institute, he has studied in macro-economy, industry policies and enterprise developmentstrategies for years and provided consulting services. He is an independent director of the Company.
6. Mr. Deng Lei is a law Ph. D and post-doctor in the financial securities law of Shenzhen Stock Exchange. He is now a seniorpartner of Guangdong China Commercial Law Firm. He is an independent director of the Company. He was once the vice director ofCorporate Law Affair Commission of Shenzhen Lawyer Association.
7. Guo Jinlong: master's degree, CPA. He was a member of the fifth session of the CPPCC of Shenzhen City. He is currently thedeputy to the sixth session of the People's Congress of Shenzhen, vice chairman of Guangdong Certified Public Accountants
Association (limited liability partnership), partner of ShineWing Certified Public Account, and an independent director of theCompany. He was a former member of the 5th CPPCC Shenzhen.Mr. Dong Gelin: bachelor's degree, a senior engineer, the Supervisory Committee meeting convener and deputy technical director. Hewas once a designer of Shenzhen Fangda Jianke, a wholly-owned subsidiary of the Company, chief engineer of the designinginstitution, assistant to the general manager, and general manager of Beijing branch of Fangda Jianke. He is now the vice generalmanager of Fangda Jianke.
9. Ms. Cao Naisi: Bachelor's degree, intermediate economist, currently Supervisor of the Company and Deputy General Manager ofFangda Jianke. She once served as the securities affairs representative of the Company, the director of the audit and supervisiondepartment, the deputy director of the human resources department, the general manager of Fangda Jianke Beijing Branch, thegeneral manager of Fangda Jianke South China Branch and so on.
10. Mr. Ye Zhiqing holds a Bachelor degree and is a senior engineer. He is currently the Supervisor of the Company, Vice Minister ofEnterprise Management Department, and General Manager of Shanghai Branch of Fangda Jianke Company.
Offices held at shareholders entitie
√ Applicable □ Inapplicable
| Name | Shareholder entity | Office | Starting date of the term | End date of the term | Whether any remuneration is paid at the shareholder entity |
| Xiong Jianming | Shengjiu Investment Ltd. | Chairman | Oct. 6, 2011 | No | |
| Wei Yuexing | Gong Qing Cheng Shi Li He Investment Management Partnership Enterprise (limited partner) | Executive partner | December 20, 2016 | No | |
| Office description | None | ||||
Offices held at other entities
√ Applicable □ Inapplicable
| Name | Entity name | Office | Starting date of the term | End date of the term | Whether any remuneration is paid at the shareholder entity |
| Guo Wanda | General development research institute (Shenzhen, China) | Standing vice president | July 01, 2007 | Yes | |
| Guo Wanda | Shenzhen Baode Technology Group Co., Ltd. | Independent director | June 06, 2008 | Yes | |
| Guo Wanda | Hercules Logistics | Independent director | November 01, 2013 | Yes | |
| Guo Wanda | Shenzhen Aotexun Power Equipment Co. Ltd. | Independent director | March 27, 2017 | Yes |
| Guo Wanda | Meiyingsen Group Co., Ltd. | Independent director | November 25, 2019 | Yes | |
| Deng Lei | Guangdong China Commercial Law Firm | Senior partner | November 01, 2015 | Yes | |
| Deng Lei | Wuhan Gaode Infrared Co., Ltd. | Independent director | April 23, 2015 | Yes | |
| Deng Lei | Shenzhen Haimingrun Industrial Co., Ltd. | Independent director | November 18, 2014 | Yes | |
| Deng Lei | Shenzhen Huaqiang Industrial Co. Ltd. | Independent director | 13 April 2018 | Yes | |
| Deng Lei | Shenzhen Hongtao Decoration Engineering Co., Ltd. | Independent director | 22 May 2019 | Yes | |
| Deng Lei | Shenzhen Honey Network Technology Co., Ltd. | Supervisor | 16 August 2013 | No | |
| Guo Jinlong | ShineWing Certified Public Accountants (limited liability partnership) | Partner | 1 October 2005 | Yes | |
| Office description | The above-mentioned three are independent directors of the Company. | ||||
Penalties given by existing securities regulators on directors, supervisors and senior management and those who have resigned in thereport period
√ Applicable □ Inapplicable
Guo Jinlong, an independent director, was administratively punished by the CSRC in December 2017 for warning and $50,000fine.IV. Remunerations of the Directors, Supervisors and Senior ExecutivesDecision making procedures, basis and actual payment of remunerations of the Directors, Supervisors and Senior Executives
1. Remuneration schemes for directors and supervisors are proposed by the Remuneration and Assessment Committee of the Board,and implemented upon approval of the Board and the Shareholders’ Meetings; the remuneration schemes for executives are approvedand implemented by the Board.Remuneration for directors and supervisors are decided by the shareholders’ meeting. Remunerations for executives are composed ofwages and performance bonus as decided by the Board.Payment on monthly basis
Remunerations of the Directors, Supervisors and Senior Executives of the Company During the reporting period
In RMB10,000
| PRINTED NAME | Position | Sex | Age | Job status | Total remuneration | Remuneration from related parties |
| Xiong Jianming | Chairman, president | M | 62 | In office | 224.65 | No |
| Xiong Jianwei | Director | M | 51 | In office | 108.99 | No |
| Lin Kebin | Director, vice president | M | 42 | In office | 107.79 | No |
| Zhou Zhigang | Director, vice president secretary of the Board | M | 57 | In office | 83.93 | No |
| Guo Wanda | Independent director | M | 54 | In office | 8 | No |
| Deng Lei | Independent director | M | 41 | In office | 8 | No |
| Guo Jinlong | Independent director | M | 58 | In office | 8 | No |
| Dong Gelin | Supervisory Committee meeting convener | M | 41 | In office | 71.89 | No |
| Cao Naisi | Supervisor | F | 41 | In office | 59.68 | No |
| Ye Zhiqing | Supervisor | M | 45 | In office | 77.85 | No |
| Wei Yuexing | Vice president | M | 51 | In office | 106.83 | |
| Total | -- | -- | -- | -- | 865.61 | -- |
Equity incentive programs provided for the Directors, and Senior Executives of the Company during the reporting period
□ Applicable √ Inapplicable
5. Employees
1. Staff number, professional composition and education
| Staff number of the parent | 64 |
| Staff number of major subsidiaries | 2,113 |
| Total staff number | 2,395 |
| Number of employees receiving remuneration in the period | 2,395 |
| Resigned and retired staff number to whom the parent and major subsidiaries need to pay remuneration | 0 |
| Professional composition | |
| Categories of professions | Number of people |
| Production | 1,002 |
| Sales & Marketing | 85 |
| Technicians | 1,072 |
| Finance & Accounting | 65 |
| Administration | 171 |
| Total | 2,395 |
| Education | |
| Categories of education | Number of people |
| High school or below | 1,128 |
| College diploma | 435 |
| Bachelor | 814 |
| Master’s degree | 17 |
| Doctor’s degree | 1 |
| Total | 2,395 |
2. Remuneration policy
Staff remuneration policy: The Company’s staff remuneration comprises post wage, performance wage, allowance and annualbonus. The Company has set up an economic responsibility assessment system according to the annual operation target andresponsibility indicators for all departments. The performance wage is determined by the economic indicators, managementindicators, optimization indicators and internal control. The annual bonus is determined by the Company's annual profit andfulfillment of targets set for various departments. The staff remuneration and welfare will be adjusted according to the Company’sbusiness operation and changes in the local standard of living and price index.
3. Training program
Staff training plan: The Company has paid continuous attention to training and development of the staff and introducesinnovative learning as part of the long-term strategy. We provide training programs through different channels and in different fieldsfor different employees will help them fulfill their works, including new staff training, on-the-job training, operation andmanagement training programs. These programs have largely elevated capabilities of the staff and underpin the success of theCompany.
4. Labor outsourcing
√ Applicable □ Inapplicable
| Total number of hours of labor outsourcing | 13,243,551.92 |
| Total remuneration paid for labor outsourcing (RMB) | 426,978,757.21 |
Chapter X Corporation Governance
1. Overview
During the report period, the Company strictly complied with the Company Law, Securities Law, Governance Standards forListed Companies, Shenzhen Stock Exchange Share Listing Rules, Operation Regulations for Listed Companies in the Main Boardof Shenzhen Stock Exchange, continued to improve the legal person governance structure and has formulated a series of internalmanagement systems covering various aspects. The Company has set up a comprehensive and effective internal control system inimportant decision making, related transaction decision making, financial management, HR management, administration, purchase,production and sales management, confidentiality and information disclosure.
Major difference between the actual corporate governance and regulations on corporate governance of listed companies issued byCSRC
□ Yes √ No
There is no major difference between the actual corporate governance and regulations on corporate governance of listed companiesissued by CSRC.
2. Independence of the Company from the controlling shareholder in aspects of businesses,personnel, assets, organizations, and accounting
(1) In the aspect of business: the Company has its own purchasing, production, sales, and customer service system whichperforming independently. There is not any material related transactions occurred with the controlling shareholders.
(2) In personnel, the labor management, personnel and salary management are operated independently from the controllingshareholder. The senior managements take salaries from the Company and none of them takes senior management position in thecontrolling party.
(3) In assets, the Company owns its production, supplementary production system and accessory equipments independently, andpossesses its own industrial properties, non-patent technologies, and trademark.
(4) In organization, the production and business operation, executive management, and department setting are completelyindependent from the controlling shareholder. No situation of combined office exists. The Company adjusts its organizing structureonly for its own practical requirement of development and management.
(5) In accounting, the Company has its own independent accounting and auditing division, established independent andcompleted accounting system and management rules, has its own bank account, and exercise its liability of taxation independently.
3. Competition
□ Applicable √ Inapplicable
4. Annual and extraordinary shareholder meetings held during the report period
1. Annual shareholder meeting during the report period
| Meeting | Type | Participation of investors | Date | Date of disclosure | Index for information disclosure |
| 2018 Annual Shareholder Meeting | Annual shareholders’ meeting | 21.52% | 19 February 2019 | 20 February 2019 | Notice on Resolutions of the Annual Shareholders’ Meeting (2018) (2019-19) released on www.cninfo.com.cn |
| 1st Provisional Shareholders’ Meeting 2019 | Extraordinary shareholders’ meeting | 21.91% | 16 December 2019 | 17 December 2019 | Notice on Resolutions of the 1st Extraordinary Shareholders’ Meeting in 2019 (2019-47) |
2. Shareholders of preference shares of which voting right resume convening an extraordinaryshareholders’ meeting
□ Applicable √ Inapplicable
V. Performance of independent directors during the report period
1. Independent directors’ presenting of board meetings and shareholders’ meetings in the report period
| Independent directors’ presenting of board meetings and shareholders’ meetings in the report period | |||||||
| Name of independent director | Time of board meetings should have attended | Number of board meetings attended | Presented by telecom | Number of board meetings attended by proxy | Number of board meetings not attended | Absent for two consecutive meetings | Number of shareholders' meetings attended |
| Guo Wanda | 8 | 4 | 4 | 0 | 0 | No | 1 |
| Deng Lei | 8 | 4 | 4 | 0 | 0 | No | 2 |
| Guo Jinlong | 8 | 4 | 4 | 0 | 0 | No | 1 |
Statement for absence for two consecutive board meetingsNone
2. Objection raised by independent directors
Any objection raised by independent directors against the Company’s related issues
□ Yes √ No
Independent directors made no objection on related issued of the Company in the report period.
3. Other statement for performance of independent directors
Adoption of suggestion proposed by independent directors
√ Yes □ No
Statement for suggestion adopted or not by the CompanyDuring the reporting period, the Company’s independent directors strictly followed the relevant laws, regulations and the―Articles of Association‖ and paid attention to the Company’s operations, attended the Company’s Board of Directors andshareholders’ meeting, and all the independent directors carefully reviewed the various proposals of the Company’s Board ofDirectors and performed their duties conscientiously. The development decision has put forward constructive opinions or suggestions,and has issued independent opinions on the improvement of the Company's system and major business management matters,corporate guarantees, profit distribution, use of raised funds, etc. Independent directors have adopted the Company’s relevantrecommendations. It has played an active role in safeguarding the interests of the Company and small and medium shareholders.
VI. Performance of specific committees under the Board
(1) Performance of the Development Strategy Committee
During the report period, the Development Strategy Committee of the Company has performed its duties in accordance with theWorking Regulations for Development Strategy Committee and played its role in the decision-making process of the Company. Twomeetings were convened and details are disclosed as follows:
1. On January 28, 2019, the Company held the 4th meeting of the 8th Development Strategy Commission to listen to the reporton production and operation in 2018 and production and operation plan for 2019.
2. On August 16, 2019, the 5th meeting of the Development Strategy Committee of the 8th term of the Board was held to viewthe Company’s production and operation in the first half of 2019 and studied the fulfillment of the business plan in the first half of theyear and places to be improved in the second half.
(2) Performance of the Auditing Committee
During the report period, six Auditing Committee meetings are held to review issues including the arrangement of audit, regularfinancial reports, engaging the CFA, and foreign exchange derivatives trading. Details of the meetings are disclosed as follows:
1. On January 24, 2019, the 8th meeting of the Auditing Committee of the 8th term of the Board was held to review thefinancial statements with the initial opinion issued by the CFA for 2018 and approve the auditor report issued by the CFA. After theCFA issued to final auditor’s opinion, the Auditing Committee submitted the resolution on the annual financial statements to theBoard and issued the summary report on the auditing of the CFA for this year.
2. On January 28, 2019, the Company convened the ninth meeting of the 8th Board of Directors Audit Committee. The meetingheard the financial and internal audit reports for 2018 and considered and adopted (1) the audited financial and financial statementsfor 2018. (2) On the Company's 2018 internal audit work plan; (3) Report on the self-evaluation of the Company's internal control in2018. The audit committee suggests that the internal audit body should increase communication with the audit committee to help thecommittee better under the Company's condition and make higher requirements on the audit quality. The members of the auditcommittee gave professional advice on improving the Company's processes, optimizing the system, and risk prevention from variousperspectives based on their own experience in different industries. They also put forward higher requirements for the Company'sfuture internal control work.
3. On April 19, 2019, the Company convened the tenth meeting of the 8th Board of Directors Audit Committee to consider andapprove the financial and accounting statements of the Company in the first quarter of 2019.
4. On August 16, 2019, the Company held the 6th meeting of the Audit Committee of the 11th Board of Directors and reportedto the members on the financial work and internal audit work report for the first half of 2018. Reviewed and adopted (1) the
Company's financial statements for 2019; (2) The proposal of the Company to consider the appointment of audit institutions in 2019.
1. On October 24, 2019, the 12th meeting of the Auditing Committee of the 8th term of the Board was held to review thefinancial statements with the initial opinion issued by the CFA for 2019 and approve the auditor report issued by the CFA.
6. On 28 November 2019, the Company convened the thirteenth meeting of the 8th Board of Directors Audit Committee toconsider and adopt (1) the feasibility analysis report on foreign exchange derivatives trading; (2) A bill on the transaction of foreignexchange derivatives.
(3) Performance of the Remuneration and Assessment Committee
During the reporting period, the Remuneration and Appraisal Committee of the Board of Directors held the second meeting of theRemuneration and Appraisal Committee of the 8th Board of Directors on January 28, 2019 according to the "Working Rules of theRemuneration and Appraisal Committee" formulated by the Company and reviewed the proposal for 2018 annual remuneration ofsupervisors and senior management personnel.VII. Performance of Supervisory Committee
(1) Risks for the Company discovered by the Supervisory Committee
□ Yes √ No
No disagreement with supervisory issues by the Supervisory Committee during the report period.
(2) The Supervisory Committee’ Work Report 2019
In 2019, the Supervisory Committee performed its duties and obligations in supervision and protect shareholders’ and theCompany’s interests in accordance with the Company Law, Share Listing Rules, Articles of Association and Rules of the Procedureof the Supervisory Committee. The 2019 supervisory committee's work plan is as follows:
1. Opinions
(1) Legal compliance
In the report period, the Company has been operated in accordance with law. The convening of meeting of the Board and thedecision-making process are compliant with law, regulations and Articles of Association; the internal control system is solid.Directors and senior management have performed their obligations. No violation against law, regulations, Articles of Association andinterests of the Company and shareholders was discovered.
(2) Financial condition
During the period, the accounting management has been compliant with the Accounting Law, Enterprise Accounting Standard.No false, misleading statement or significant omission was found in financial statements. The financial reports of the Companyreflect the Company’s financial position, operation performance, cash flows and major risks truthfully, accurately and completely.The CPA has issued the standard auditor's report in 2019, which is objective, fair and truthful. It reflects the Company's financialposition and operation performance.
(3) Implementation of internal control
The design and operation of the internal control is effective and meets the Company's management and developmentrequirements. It can ensure the truthfulness, lawfulness, completeness of the financial materials and ensure the safety andcompleteness of the Company’s property. In 2019, there was no violation by the Company against the Operation Regulations forListed Companies in the Main Board of Shenzhen Stock Exchange and the Company’s internal control system. The 2019 InternalControl Self-evaluation Report truthfully and objectively reflects the establishment, implementation and improvement of theCompany’s internal control system. There are no significant or important problems in the financial and non-financial reports in thereport period.
2. Meetings and resolutions of the supervisory meeting in the report period:
Four meetings were held in 2019, all of which are on-site meetings. All proposal were approved and disclosed as required:
| No. | Meeting | Date | Convening | Topic |
| method | ||||
| 1 | 9th meeting of the 8th Supervisory Committee | 20.04.18 | On-site | 1. Consideration of the annual report of the Company on the work of its board of supervisors for 2018; 2. Consideration of the full text and summary of our annual report for 2018; 3. Consideration of the Company's financial accounts for 2018; 4. Consideration of the Company's bill on the distribution of profits for 2018; 5. Consideration of the Company's annual internal control self-evaluation report for 2018; 6. Consideration of the Company's bill on accounting policy changes; 7. Consideration of our proposal to amend the rules of procedure of the Supervisory Committee. |
| 2 | 10th meeting of the 8th Supervisory Committee | 19 April 2019 | On-site | 1. Consideration of the draft of the full text and body of our report for the first quarter of 2019; 2. Review the Company's bill on accounting policy changes. |
| 3 | 11th meeting of the 8th Supervisory Committee | 16 August 2019 | On-site | 1. Consideration of the full text and summary of the Company's 2019 semi-annual report; 2. Consideration of the Company's proposal to employ audit institutions in 2019; 3. Consideration of the Company's bill on accounting policy changes. |
| 4 | 12th meeting of the 8th Supervisory Committee | 24 October 2019 | On-site | Reviewing the 2019 Q3 Report and Text; |
VIII. Assessment and motivation of senior executivesThe Company has implemented a remuneration system that combines post wage and performance bonus. The wages and bonusare determined by on the assessment of senior executives’ innovation capabilities, general quality, performance, fulfillment of profitand payment collection targets according to the Company's annual performance assess and performance assess implementationmethods for wholly-owned subsidiaries.IX. Internal control
1. Major problems in internal control discovered in the report period
□ Yes √ No
2. Internal control self-evaluation report
| Date of disclosure of the internal control evaluation report | 18 April 2020 | |
| Disclosure of the internal control evaluation report | www.cninfo.com.cn | |
| Percentage of assets in the evaluation scope in the total assets in the consolidated financial statements | 95.69% | |
| Percentage of operation income in the evaluation scope in the total operation income in the consolidated financial statements | 97.72% | |
| Standard | ||
| Type | Financial report | Non-financial report |
| Standard | 1. The following problems are considered major problems: 1. Non-effective control environment; 2. corrupt practice by directors, supervisor and senior management, causing substantial loss and impacts for the Company; 3. Substantial mistakes in the financial statements in the period discovered by the CPA, which are not discovered by the internal control; 4. Ineffective supervision of the internal control by the Company’s auditing department 2. The following problems are considered significant problems: 1 accounting policies are selected and used without complying to widely accepted accounting standards; 2. No anti-corrupt and important balance system and control measures are taken; 3. Separate or multiple problems in the preparation of financial reports, which are serious enough to affecting the truthfulness and accuracy of the reports; no control system is established and no related compensation system is implemented for accounts of irregular or special transactions 3. Other problems are considered normal problems. | I. The following condition indicates significant problems in the internal control of non-financial reports: 1. Serious violation against national laws, regulations or specifications; 2. Serious business system problems and system ineffectiveness; 3. Major or important problems cannot be corrected; 4. Lack of internal control and poor management; 5. Loss of management personnel or key employees; 6. Safety and environmental accidents that cause major adverse impacts; 7. Other situations that cause major adverse impacts on the Company. II. The following situations indicate that there may be significant problems with the internal control: 1. business system problems and system ineffectiveness; 2. Major or important problems cannot be corrected; 3. Other situations that cause major adverse impacts on the Company III. The following situation indicate likely normal problems in the internal control: 1. Problems in the general business system; 2. Normal problems in the internal control supervision cannot be correctly promptly. |
| Standard | 1. Significant problem: 1 mistakes affecting 5% and more of the pre-tax profit and more than RMB5 million in the consolidated statements; 2. Mistakes affecting 5% and more of the consolidated assets and more than RMB5 million 2. Important problem: 1. Mistakes affecting 1%-5% of the pre-tax profit in the consolidated statements; 2. Mistakes affecting 1%-5% the consolidated assets. III. Normal problem: 1. Mistakes affecting less than 1% of the pre-tax profit and total assets of the consolidate statements. | See the recognition standard of the internal control problems for financial statements |
| Significant problems in financial statements | 0 | |
| Significant problems in non-financial statements | 0 | |
| Important problems in financial statements | 0 | |
| Important problems in non-financial statements | 0 | |
X. Internal control audit report
√ Applicable □ Inapplicable
| Comments in the internal control audit report | |
| We believe that China Fangda Group has maintained effective internal control on financial reports according to Basic Regulations on Enterprise Internal Control and related regulations on 31.12.18. | |
| Disclosure of internal auditor’s report | Disclosed |
| Date of disclosure of the internal control audit report | 18 April 2020 |
| Source of disclosure of the internal control audit report | www.cninfo.com.cn |
| Opinion type | Standard opinion auditor’s report |
| Problems in non-financial statements | No |
Non-standard internal control audit report by the CFA
□ Yes √ No
Consistency between the internal control audit report and self-evaluation report
√ Yes □ No
Chapter XI Information about the Company’s SecuritiesBonds publicly issued and listed in a securities exchange, immature or not fully paid by the approval date of the annual reportNo
Chapter XII Financial StatementsI. Auditor’s report
| Type | Standard opinion auditor’s report |
| Issued on | 16 April 2020 |
| Auditor | RSM Thornton (limited liability partnership) |
| CPA names | Chen Zhaoxin, Zeng Hui |
Auditors’ ReportII. Financial statements
Unit for statements in notes to financial statements: RMB yuan
1. Consolidated Balance Sheet
Prepared by: China Fangda Group Co., Ltd.
In RMB
| Item | 31 December 2019 | 31 December 2018 |
| Current asset: | ||
| Monetary capital | 1,209,811,978.95 | 1,389,062,083.76 |
| Settlement provision | ||
| Outgoing call loan | ||
| Transactional financial assets | 10,330,062.18 | |
| Financial assets measured at fair value with variations accounted into current income account | ||
| Derivative financial assets | ||
| Notes receivable | 305,070,930.97 | 140,139,692.84 |
| Account receivable | 1,956,191,307.07 | 1,920,075,031.85 |
| Receivable financing | 2,954,029.00 | |
| Prepayment | 21,327,109.18 | 46,454,844.74 |
| Insurance receivable | ||
| Reinsurance receivable | ||
| Provisions of Reinsurance contracts receivable |
| Other receivables | 139,947,655.35 | 139,990,188.26 |
| Including: interest receivable | ||
| Dividend receivable | ||
| Repurchasing of financial assets | ||
| Inventory | 733,711,143.46 | 651,405,832.29 |
| Contract assets | ||
| Assets held for sales | ||
| Non-current assets due in 1 year | ||
| Other current assets | 323,765,585.90 | 51,698,111.14 |
| Total current assets | 4,703,109,802.06 | 4,338,825,784.88 |
| Non-current assets: | ||
| Loan and advancement provided | ||
| Debt investment | ||
| Sellable financial assets | 21,674,008.23 | |
| Other debt investment | ||
| Investment held until mature | ||
| Long-term receivable | ||
| Long-term share equity investment | 57,222,240.83 | 70,105,657.88 |
| Investment in other equity tools | 20,660,181.44 | |
| Other non-current financial assets | 5,009,728.02 | |
| Investment real estate | 5,522,391,984.11 | 5,256,442,406.63 |
| Fixed assets | 477,332,830.92 | 455,274,241.83 |
| Construction in process | 129,988,982.86 | 58,269,452.72 |
| Productive biological assets | ||
| Gas & petrol | ||
| Use right assets | ||
| Intangible assets | 78,322,265.05 | 80,313,240.67 |
| R&D expense | ||
| Goodwill | ||
| Long-term amortizable expenses | 3,875,198.12 | 2,114,331.46 |
| Deferred income tax assets | 343,349,564.70 | 356,474,925.76 |
| Other non-current assets | 28,701,802.00 | 19,360,083.67 |
| Total of non-current assets | 6,666,854,778.05 | 6,320,028,348.85 |
| Total of assets | 11,369,964,580.11 | 10,658,854,133.73 |
| Current liabilities | ||
| Short-term loans | 724,618,197.34 | 208,000,000.00 |
| Loans from Central Bank | ||
| Call loan received | ||
| Transactional financial liabilities | ||
| Financial liabilities measured at fair value with variations accounted into current income account | ||
| Derivative financial liabilities | 96,767.62 | 1,625,725.00 |
| Notes payable | 578,816,027.44 | 507,864,518.19 |
| Account payable | 1,190,773,300.24 | 1,039,630,798.64 |
| Prepayment received | 136,340,104.73 | 278,577,848.54 |
| Contract liabilities | ||
| Selling of repurchased financial assets | ||
| Deposit received and held for others | ||
| Entrusted trading of securities | ||
| Entrusted selling of securities | ||
| Employees' wage payable | 55,847,134.20 | 44,513,062.17 |
| Taxes payable | 17,848,987.68 | 107,709,999.19 |
| Other payables | 701,432,408.28 | 813,118,699.84 |
| Including: interest payable | 2,098,971.44 | |
| Dividend payable | ||
| Fees and commissions payable | ||
| Reinsurance fee payable | ||
| Liabilities held for sales | ||
| Non-current liabilities due in 1 year | 922,346,563.72 | 200,000,000.00 |
| Other current liabilities | 181,694,574.47 | 9,328,682.25 |
| Total current liabilities | 4,509,814,065.72 | 3,210,369,333.82 |
| Non-current liabilities: | ||
| Insurance contract provision | ||
| Long-term loans | 546,501,491.56 | 1,193,978,153.39 |
| Bond payable |
| Including: preferred stock | ||
| Perpetual bond | ||
| Lease liabilities | ||
| Long-term payable | ||
| Long-term employees’ wage payable | ||
| Anticipated liabilities | 7,793,527.16 | 6,831,162.99 |
| Deferred earning | 10,817,247.40 | 10,401,161.30 |
| Deferred income tax liabilities | 1,063,833,159.00 | 1,042,086,700.35 |
| Other non-current liabilities | ||
| Total of non-current liabilities | 1,628,945,425.12 | 2,253,297,178.03 |
| Total liabilities | 6,138,759,490.84 | 5,463,666,511.85 |
| Owner’s equity: | ||
| Share capital | 1,123,384,189.00 | 1,155,481,686.00 |
| Other equity tools | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Capital reserves | 1,454,191.59 | 1,454,191.59 |
| Less: Shares in stock | 10,831,437.66 | |
| Other miscellaneous income | -475,409.25 | 7,382,087.59 |
| Special reserves | ||
| Surplus reserves | 159,805,930.34 | 120,475,221.40 |
| Common risk provisions | ||
| Retained profit | 3,898,626,177.99 | 3,921,225,872.96 |
| Total of owner’s equity belong to the parent company | 5,182,795,079.67 | 5,195,187,621.88 |
| Minor shareholders’ equity | 48,410,009.60 | |
| Total of owners’ equity | 5,231,205,089.27 | 5,195,187,621.88 |
| Total of liabilities and owner’s interest | 11,369,964,580.11 | 10,658,854,133.73 |
Legal representative: Xiong Jianming CFO: Lin Kebing Accounting Manager: Wu Bohua
2. Balance Sheet of the Parent Company
In RMB
| Item |
| Current asset: | ||
| Monetary capital | 175,591,953.63 | 410,118,157.55 |
| Transactional financial assets | ||
| Financial assets measured at fair value with variations accounted into current income account | ||
| Derivative financial assets | ||
| Notes receivable | 200,000,000.00 | |
| Account receivable | 297,813.76 | 471,039.12 |
| Receivable financing | ||
| Prepayment | 250,205.32 | 6,733,047.16 |
| Other receivables | 1,973,381,342.74 | 822,543,653.04 |
| Including: interest receivable | ||
| Dividend receivable | 100,000,000.00 | |
| Inventory | ||
| Contract assets | ||
| Assets held for sales | ||
| Non-current assets due in 1 year | ||
| Other current assets | 877,430.41 | 919,388.18 |
| Total current assets | 2,150,398,745.86 | 1,440,785,285.05 |
| Non-current assets: | ||
| Debt investment | ||
| Sellable financial assets | 21,674,008.23 | |
| Other debt investment | ||
| Investment held until mature | ||
| Long-term receivable | ||
| Long-term share equity investment | 963,508,253.00 | 983,339,494.35 |
| Investment in other equity tools | 18,604,010.22 | |
| Other non-current financial assets | 48,831,242.35 | |
| Investment real estate | 295,355,002.00 | 309,189,866.37 |
| Fixed assets | 67,361,529.52 | 53,784,811.23 |
| Construction in process | ||
| Productive biological assets | ||
| Gas & petrol | ||
| Use right assets |
| Intangible assets | 1,824,589.22 | 2,112,301.97 |
| R&D expense | ||
| Goodwill | ||
| Long-term amortizable expenses | 934,669.73 | 917,499.68 |
| Deferred income tax assets | 44,408,630.81 | 34,555,598.81 |
| Other non-current assets | ||
| Total of non-current assets | 1,440,827,926.85 | 1,405,573,580.64 |
| Total of assets | 3,591,226,672.71 | 2,846,358,865.69 |
| Current liabilities | ||
| Short-term loans | 300,442,988.19 | 200,000,000.00 |
| Transactional financial liabilities | ||
| Financial liabilities measured at fair value with variations accounted into current income account | ||
| Derivative financial liabilities | ||
| Notes payable | ||
| Account payable | 606,941.85 | 676,941.85 |
| Prepayment received | 746,761.55 | 733,274.16 |
| Contract liabilities | ||
| Employees' wage payable | 3,215,013.16 | 2,145,763.39 |
| Taxes payable | 312,647.89 | 341,004.65 |
| Other payables | 109,837,934.17 | 300,006,406.51 |
| Including: interest payable | 740,208.33 | |
| Dividend payable | ||
| Liabilities held for sales | ||
| Non-current liabilities due in 1 year | 520,872,206.95 | |
| Other current liabilities | ||
| Total current liabilities | 936,034,493.76 | 503,903,390.56 |
| Non-current liabilities: | ||
| Long-term loans | 70,000,000.00 | 500,000,000.00 |
| Bond payable | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Lease liabilities |
| Long-term payable | ||
| Long-term employees’ wage payable | ||
| Anticipated liabilities | ||
| Deferred earning | ||
| Deferred income tax liabilities | 64,351,075.92 | 64,130,617.41 |
| Other non-current liabilities | ||
| Total of non-current liabilities | 134,351,075.92 | 564,130,617.41 |
| Total liabilities | 1,070,385,569.68 | 1,068,034,007.97 |
| Owner’s equity: | ||
| Share capital | 1,123,384,189.00 | 1,155,481,686.00 |
| Other equity tools | ||
| Including: preferred stock | ||
| Perpetual bond | ||
| Capital reserves | 360,835.52 | 360,835.52 |
| Less: Shares in stock | 10,831,437.66 | |
| Other miscellaneous income | 1,287,629.38 | 8,756,553.46 |
| Special reserves | ||
| Surplus reserves | 159,805,930.34 | 120,475,221.40 |
| Retained profit | 1,236,002,518.79 | 504,081,999.00 |
| Total of owners’ equity | 2,520,841,103.03 | 1,778,324,857.72 |
| Total of liabilities and owner’s interest | 3,591,226,672.71 | 2,846,358,865.69 |
3. Consolidated Income Statement
In RMB
| Item | 2019 | 2018 |
| 1. Total revenue | 3,005,749,558.66 | 3,048,680,152.06 |
| Incl. Business income | 3,005,749,558.66 | 3,048,680,152.06 |
| Interest income | ||
| Insurance fee earned | ||
| Fee and commission received | ||
| 2. Total business cost | 2,601,531,253.53 | 2,782,649,142.36 |
| Incl. Business cost | 2,169,176,295.27 | 2,337,948,010.42 |
| Interest expense | ||
| Fee and commission paid | ||
| Insurance discharge payment | ||
| Net claim amount paid | ||
| Net insurance policy responsibility contract reserves provided | ||
| Insurance policy dividend paid | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 61,963,170.98 | 152,681,927.79 |
| Sales expense | 57,584,186.20 | 49,833,945.89 |
| Administrative expense | 170,443,795.50 | 140,002,624.79 |
| R&D cost | 59,754,971.20 | 19,854,244.58 |
| Financial expenses | 82,608,834.38 | 82,328,388.89 |
| Including: interest cost | 84,330,416.17 | 75,934,358.74 |
| Interest income | 10,770,653.40 | 9,255,120.60 |
| Add: other gains | 7,616,772.29 | 5,681,937.15 |
| Investment gains (―-‖ for loss) | -1,909,644.55 | 27,776,084.43 |
| Incl. Investment gains from affiliates and joint ventures | -2,152,583.08 | -836,397.74 |
| Financial assets derecognised as a result of amortized cost | -8,047,524.45 | |
| Exchange gains ("-" for loss) | ||
| Net open hedge gains (―-‖ for loss) | ||
| Gains from change of fair value (―-― for loss) | 42,618,039.60 | 2,913,858,560.57 |
| Credit impairment ("-" for loss) | -34,518,434.36 | |
| Investment impairment loss ("-" for loss) | 218,619.24 | -239,866,511.30 |
| Investment gains ("-" for loss) | -101,676.86 | -3,516,357.91 |
| 3. Operational profit ("-" for loss) | 418,141,980.49 | 2,969,964,722.64 |
| Plus: non-operational income | 2,857,177.74 | 3,712,594.09 |
| Less: non-operational expenditure | 3,965,865.48 | 3,846,202.80 |
| 4. Gross profit ("-" for loss) | 417,033,292.75 | 2,969,831,113.93 |
| Less: Income tax expenses | 70,271,688.45 | 723,666,542.25 |
| 5. Net profit ("-" for net loss) | 346,761,604.30 | 2,246,164,571.68 |
| (1) By operating consistency | ||
| 1. Net profit from continuous operation ("-" for net loss) | 347,246,227.22 | 2,246,384,786.08 |
| 2. Net profit from discontinuous operation ("-" for net loss) | -484,622.92 | -220,214.40 |
| (2) By ownership | ||
| 1. Net profit attributable to the owners of parent company | 347,771,182.73 | 2,246,164,571.68 |
| 2. Minor shareholders’ equity | -1,009,578.43 | |
| 6. After-tax net amount of other misc. incomes | -2,691,071.26 | -1,203,760.40 |
| After-tax net amount of other misc. incomes attributed to parent's owner | -2,691,071.26 | -1,203,760.40 |
| (1) Other misc. incomes that cannot be re-classified into gain and loss | -4,025,604.80 | |
| 1. Re-measure the change in the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to profit or loss under the equity method | ||
| 3. Fair value change of investment in other equity tools | -4,025,604.80 | |
| 4. Fair value change of the Company's credit risk | ||
| 5. Others | ||
| (2) Other misc. incomes that will be re-classified into gain and loss | 1,334,533.54 | -1,203,760.40 |
| 1. Other comprehensive income that can be transferred to profit or loss under the equity method | ||
| 2. Fair value change of other debt investment | ||
| 3. Change in the fair value of financial asset for sale | ||
| 4. Gains and losses from changes in fair value of available-for-sale financial assets |
| 5. Held-to-mature investment reclassified as gain and loss in the financial assets for sales | ||
| 6. Other credit investment credit impairment provisions | ||
| 7. Cash flow hedge reserve | 1,208,493.78 | -1,170,896.25 |
| 8. Translation difference of foreign exchange statement | 126,039.76 | -32,864.15 |
| 9. Others | ||
| After-tax net of other misc. income attributed to minority shareholders | ||
| 7. Total of misc. incomes | 344,070,533.04 | 2,244,960,811.28 |
| Total of misc. incomes attributable to the owners of the parent company | 345,080,111.47 | 2,244,960,811.28 |
| Total misc gains attributable to the minor shareholders | -1,009,578.43 | |
| 8. Earnings per share: | ||
| (1) Basic earnings per share | 0.310 | 1.91 |
| (2) Diluted earnings per share | 0.310 | 1.91 |
Net profit contributed by entities merged under common control in the report period was RMB , net profit realized byparties merged during the previous period is RMB .Legal representative: Xiong Jianming CFO: Lin Kebing Accounting Manager: Wu Bohua
4. Income Statement of the Parent Company
In RMB
| Item | 2019 | 2018 |
| 1. Turnover | 28,729,890.94 | 30,830,762.76 |
| Less: Operation cost | 773,571.29 | 1,604,559.26 |
| Taxes and surcharges | 1,348,489.24 | 1,342,603.83 |
| Sales expense | ||
| Administrative expense | 27,178,767.85 | 24,395,947.11 |
| R&D cost | ||
| Financial expenses | 38,854,726.68 | 25,450,212.15 |
| Including: interest cost | 34,985,463.24 | 23,822,633.36 |
| Interest income | 2,165,024.86 | 2,758,152.15 |
| Add: other gains | 408,311.72 | 368,589.30 |
| Investment gains (―-‖ for loss) | 1,087,133,456.16 | 124,133,997.29 |
| Incl. Investment gains from affiliates and joint ventures | ||
| Financial assets derecognised as a result of amortized cost ("-" for loss) | ||
| Net open hedge gains (―-‖ for loss) | ||
| Gains from change of fair value (―-― for loss) | 1,784,860.63 | 1,868,298.37 |
| Credit impairment ("-" for loss) | 40,817.64 | |
| Investment impairment loss ("-" for loss) | 7,597,228.84 | |
| Investment gains ("-" for loss) | -55,902.90 | |
| 2. Operational profit (―-‖ for loss) | 1,049,941,782.03 | 96,755,193.63 |
| Plus: non-operational income | 26,335.45 | 42,961.77 |
| Less: non-operational expenditure | 1,223,230.35 | 506,232.62 |
| 3. Gross profit (―-‖ for loss) | 1,048,744,887.13 | 96,291,922.78 |
| Less: Income tax expenses | -8,892,465.53 | -9,543,869.19 |
| 4. Net profit (―-‖ for net loss) | 1,057,637,352.66 | 105,835,791.97 |
| (1) Net profit from continuous operation ("-" for net loss) | 1,057,637,352.66 | 105,835,791.97 |
| (2) Net profit from discontinuous operation ("-" for net loss) | ||
| 5. After-tax net amount of other misc. incomes | -2,302,498.50 | |
| (1) Other misc. incomes that cannot be re-classified into gain and loss | -2,302,498.50 | |
| 1. Re-measure the change in the defined benefit plan | ||
| 2. Other comprehensive income that cannot be transferred to profit or loss under the equity method | ||
| 3. Fair value change of investment in other equity tools | -2,302,498.50 |
| 4. Fair value change of the Company's credit risk | ||
| 5. Others | ||
| (2) Other misc. incomes that will be re-classified into gain and loss | ||
| 1. Other comprehensive income that can be transferred to profit or loss under the equity method | ||
| 2. Fair value change of other debt investment | ||
| 3. Change in the fair value of financial asset for sale | ||
| 4. Gains and losses from changes in fair value of available-for-sale financial assets | ||
| 5. Held-to-mature investment reclassified as gain and loss in the financial assets for sales | ||
| 6. Other credit investment credit impairment provisions | ||
| 7. Cash flow hedge reserve | ||
| 8. Translation difference of foreign exchange statement | ||
| 9. Others | ||
| 6. Total of misc. incomes | 1,055,334,854.16 | 105,835,791.97 |
| 7. Earnings per share: | ||
| (1) Basic earnings per share | ||
| (2) Diluted earnings per share |
5. Consolidated Cash Flow Statement
In RMB
| Item | 2019 | 2018 |
| 1. Net cash flow from business operations: | ||
| Cash received from sales of products and providing of services | 2,648,185,771.07 | 2,865,682,841.59 |
| Net increase of customer deposits and capital kept for brother company | ||
| Net increase of loans from central bank | ||
| Net increase of inter-bank loans from other financial bodies | ||
| Cash received against original insurance contract | ||
| Net cash received from reinsurance business | ||
| Net increase of client deposit and investment | ||
| Cash received as interest, processing fee, and commission | ||
| Net increase of inter-bank fund received | ||
| Net increase of repurchasing business | ||
| Net cash received from trading securities | ||
| Tax refunded | 5,311,628.37 | 1,647,970.72 |
| Other cash received from business operation | 91,894,481.18 | 107,059,575.17 |
| Sub-total of cash inflow from business operations | 2,745,391,880.62 | 2,974,390,387.48 |
| Cash paid for purchasing products and services | 1,940,970,927.40 | 1,671,518,745.27 |
| Net increase of client trade and advance | ||
| Net increase of savings in central bank and brother company | ||
| Cash paid for original contract claim | ||
| Net increase in funds dismantled | ||
| Cash paid for interest, processing fee and commission | ||
| Cash paid for policy dividend | ||
| Cash paid to and for the staff | 330,737,740.20 | 274,922,323.91 |
| Taxes paid | 244,444,228.84 | 301,712,580.53 |
| Other cash paid for business activities | 234,523,814.95 | 339,134,018.20 |
| Sub-total of cash outflow from business operations | 2,750,676,711.39 | 2,587,287,667.91 |
| Cash flow generated by business operations, net | -5,284,830.77 | 387,102,719.57 |
| 2. Cash flow generated by investment: | ||
| Cash received from investment recovery | 6,993,386,864.50 | 7,573,967,278.99 |
| Cash received as investment profit | 59,694,513.21 | 86,864,507.03 |
| Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets | 12,519,211.48 | 17,886,076.00 |
| Net cash received from disposal of subsidiaries or other operational units | ||
| Other investment-related cash received | 2,493.86 | |
| Sub-total of cash inflow generated from investment | 7,065,603,083.05 | 7,678,717,862.02 |
| Cash paid for construction of fixed assets, intangible assets and other long-term assets | 201,244,475.00 | 199,604,502.80 |
| Cash paid as investment | 7,319,016,324.17 | 7,271,417,092.50 |
| Net increase of loan against pledge | ||
| Net cash paid for acquiring subsidiaries and other operational units | ||
| Other cash paid for investment | ||
| Subtotal of cash outflows | 7,520,260,799.17 | 7,471,021,595.30 |
| Cash flow generated by investment activities, net | -454,657,716.12 | 207,696,266.72 |
| 3. Cash flow generated by financing activities: | ||
| Cash received from investment | ||
| Incl. Cash received from investment attracted by subsidiaries from minority shareholders |
| Cash received from borrowed loans | 1,006,523,338.17 | 708,000,000.00 |
| Other cash received from financing activities | 88,312,942.36 | |
| Subtotal of cash inflow from financing activities | 1,094,836,280.53 | 708,000,000.00 |
| Cash paid to repay debts | 418,000,000.00 | 816,000,000.00 |
| Cash paid as dividend, profit, or interests | 320,109,344.09 | 264,157,464.17 |
| Incl. Dividend and profit paid by subsidiaries to minority shareholders | ||
| Other cash paid for financing activities | 128,428,226.25 | 199,439,589.23 |
| Subtotal of cash outflow from financing activities | 866,537,570.34 | 1,279,597,053.40 |
| Net cash flow generated by financing activities | 228,298,710.19 | -571,597,053.40 |
| 4. Influence of exchange rate changes on cash and cash equivalents | 722,848.92 | 1,703,422.24 |
| 5. Net increase in cash and cash equivalents | -230,920,987.78 | 24,905,355.13 |
| Plus: Balance of cash and cash equivalents at the beginning of term | 956,190,890.68 | 931,285,535.55 |
| 6. Balance of cash and cash equivalents at the end of the period | 725,269,902.90 | 956,190,890.68 |
6. Cash Flow Statement of the Parent Company
In RMB
| Item | 2019 | 2018 |
| 1. Net cash flow from business operations: | ||
| Cash received from sales of products and providing of services | 21,696,664.72 | 26,555,743.34 |
| Tax refunded | ||
| Other cash received from business operation | 3,227,285,187.16 | 1,976,545,022.66 |
| Sub-total of cash inflow from business operations | 3,248,981,851.88 | 2,003,100,766.00 |
| Cash paid for purchasing products and services | 1,693,694.68 | 2,060,345.12 |
| Cash paid to and for the staff | 17,754,587.59 | 15,053,325.83 |
| Taxes paid | 4,452,135.09 | 15,944,462.51 |
| Other cash paid for business activities | 4,620,509,035.31 | 2,263,461,863.27 |
| Sub-total of cash outflow from business operations | 4,644,409,452.67 | 2,296,519,996.73 |
| Cash flow generated by business operations, net | -1,395,427,600.79 | -293,419,230.73 |
| 2. Cash flow generated by investment: | ||
| Cash received from investment recovery | 2,696,000,000.00 | 2,646,355,978.40 |
| Cash received as investment profit | 1,187,133,456.16 | 197,678,018.89 |
| Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets | ||
| Net cash received from disposal of subsidiaries or other operational units | ||
| Other investment-related cash received | 10,000,000.00 | |
| Sub-total of cash inflow generated from investment | 3,883,133,456.16 | 2,854,033,997.29 |
| Cash paid for construction of fixed assets, intangible assets and other long-term assets | 254,183.30 | 1,125,745.40 |
| Cash paid as investment | 2,725,000,001.00 | 2,626,870,000.00 |
| Net cash paid for acquiring subsidiaries and other operational units | ||
| Other cash paid for investment | ||
| Subtotal of cash outflows | 2,725,254,184.30 | 2,627,995,745.40 |
| Cash flow generated by investment activities, net | 1,157,879,271.86 | 226,038,251.89 |
| 3. Cash flow generated by financing activities: | ||
| Cash received from investment | ||
| Cash received from borrowed loans | 400,000,000.00 | 700,000,000.00 |
| Other cash received from financing activities | 88,312,942.36 | |
| Subtotal of cash inflow from financing activities | 488,312,942.36 | 700,000,000.00 |
| Cash paid to repay debts | 10,000,000.00 | 250,000,000.00 |
| Cash paid as dividend, profit, or interests | 259,087,314.23 | 211,344,710.76 |
| Other cash paid for financing activities | 88,428,226.25 | 199,439,589.23 |
| Subtotal of cash outflow from financing activities | 357,515,540.48 | 660,784,299.99 |
| Net cash flow generated by financing activities | 130,797,401.88 | 39,215,700.01 |
| 4. Influence of exchange rate changes on cash and cash equivalents | 498,258.88 | -289,429.05 |
| 5. Net increase in cash and cash equivalents | -106,252,668.17 | -28,454,707.88 |
| Plus: Balance of cash and cash equivalents at the beginning of term | 281,594,621.80 | 310,049,329.68 |
| 6. Balance of cash and cash equivalents at the end of the period | 175,341,953.63 | 281,594,621.80 |
7. Statement of Change in Owners’ Equity (Consolidated)
Amount of the Current Term
In RMB
| Item | 2019 | ||||||||||||||
| Owners' Equity Attributable to the Parent Company | Minor shareholders’ equity | Total of owners’ equity | |||||||||||||
| Share capital | Other equity tools | Capital reserves | Less: Shares in stock | Other miscellaneous income | Special reserves | Surplus reserves | Common risk provisions | Retained profit | Others | Subtotal | |||||
| Preferred share | Perpetual bond | Others | |||||||||||||
| 1. Balance at the end of last year | 1,155,481,686.00 | 1,454,191.59 | 10,831,437.66 | 7,382,087.59 | 120,475,221.40 | 3,921,225,872.96 | 5,195,187,621.88 | 5,195,187,621.88 | |||||||
| Plus: Changes in accounting policies | -5,166,425.58 | 524,860.03 | -39,930,304.63 | -44,571,870.18 | -44,571,870.18 | ||||||||||
| Correction of previous errors | |||||||||||||||
| Consolidation of entities under common control | |||||||||||||||
| Others | |||||||||||||||
| 2. Balance at the beginning of current year | 1,155,481,686.00 | 1,454,191.59 | 10,831,437.66 | 2,215,662.01 | 121,000,081.43 | 3,881,295,568.33 | 5,150,615,751.70 | 5,150,615,751.70 | |||||||
| 3. Change amount in the current period (―-― for decrease) | -32,097,497.00 | -10,831,437.66 | -2,691,071.26 | 38,805,848.91 | 17,330,609.66 | 32,179,327.97 | 48,410,009.60 | 80,589,337.57 | |||||||
| (1) Total of misc. incomes | -2,691,071.26 | 347,771,182.73 | 345,080,111.47 | -1,009,578.43 | 344,070,533.04 | ||||||||||
| (2) Investment or decreasing of capital by owners | -32,097,497.00 | -10,831,437.66 | -66,957,886.36 | -88,223,945.70 | -88,223,945.70 | ||||||||||
| 1 Common shares invested by owners | -32,097,497.00 | -10,831,437.66 | -66,957,886.36 | -88,223,945.70 | -88,223,945.70 | ||||||||||
| 2. Capital contributed by other equity instrument holders | |||||||||||||||
| 3. Amount of shares paid and accounted as owners' equity |
| 4. Others | |||||||||||||||
| (3) Profit allotment | 105,763,735.27 | -330,440,573.07 | -224,676,837.80 | -224,676,837.80 | |||||||||||
| 1. Provision of surplus reserves | 105,763,735.27 | -105,763,735.27 | |||||||||||||
| 2. Common risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -224,676,837.80 | -224,676,837.80 | -224,676,837.80 | ||||||||||||
| 4. Others | |||||||||||||||
| (4) Internal transferring of owners’ equity | |||||||||||||||
| 1. Capitalizing of capital reserves (or share capital) | |||||||||||||||
| 2. Capitalizing of surplus reserves (or share capital) | |||||||||||||||
| 3. Surplus reserves used to cover losses | |||||||||||||||
| 4. Retained gain transferred due to change in set benefit program | |||||||||||||||
| 5. Other miscellaneous income | |||||||||||||||
| 6. Others | |||||||||||||||
| (5) Special reserves | |||||||||||||||
| 1. Provided this year |
| 2. Used this period | |||||||||||||||
| (6) Others | 49,419,588.03 | 49,419,588.03 | |||||||||||||
| 4. Balance at the end of this period | 1,123,384,189.00 | 1,454,191.59 | -475,409.25 | 159,805,930.34 | 3,898,626,177.99 | 5,182,795,079.67 | 48,410,009.60 | 5,231,205,089.27 |
Amount of the Previous Term
In RMB
| Item | 2018 | ||||||||||||||
| Owners' Equity Attributable to the Parent Company | Minor shareholders’ equity | Total of owners’ equity | |||||||||||||
| Share capital | Other equity tools | Capital reserves | Less: Shares in stock | Other miscellaneous income | Special reserves | Surplus reserves | Common risk provisions | Retained profit | Others | Subtotal | |||||
| Preferred share | Perpetual bond | Others | |||||||||||||
| 1. Balance at the end of last year | 1,183,642,254.00 | 72,829,484.96 | 8,585,847.99 | 110,690,396.65 | 1,863,191,218.58 | 3,238,939,202.18 | 3,238,939,202.18 | ||||||||
| Plus: Changes in accounting policies | |||||||||||||||
| Correction of previous errors | |||||||||||||||
| Consolidation of entities under common control | |||||||||||||||
| Others | |||||||||||||||
| 2. Balance at the beginning of current year | 1,183,642,254.00 | 72,829,484.96 | 8,585,847.99 | 110,690,396.65 | 1,863,191,218.58 | 3,238,939,202.18 | 3,238,939,202.18 | ||||||||
| 3. Change amount in the current period (―-― for decrease) | -28,160,568.00 | -71,375,293.37 | 10,831,437.66 | -1,203,760.40 | 9,784,824.75 | 2,058,034,654.38 | 1,956,248,419.70 | 1,956,248,419.70 | |||||||
| (1) Total of misc. incomes | -1,203,760.40 | 2,246,164,571.68 | 2,244,960,811.28 | 2,244,960,811.28 | |||||||||||
| (2) Investment or decreasing of capital by owners | -28,160,568.00 | -71,375,293.37 | 10,831,437.66 | -798,754.45 | -111,166,053.48 | -111,166,053.48 | |||||||||
| 1. Common shares invested by owners | -28,160,568.00 | -71,375,293.37 | 10,831,437.66 | -798,754.45 | -111,166,053.48 | -111,166,053.48 | |||||||||
| 2. Capital contributed by other equity instrument holders | |||||||||||||||
| 3. Amount of shares paid and accounted as owners' equity | |||||||||||||||
| 4. Others | |||||||||||||||
| (3) Profit allotment | 10,583,579.20 | -188,129,917.30 | -177,546,338.10 | -177,546,338.10 | |||||||||||
| 1. Provision of surplus reserves | 10,583,579.20 | -10,583,579.20 | |||||||||||||
| 2. Common risk provision | |||||||||||||||
| 3. Distribution to owners (or shareholders) | -177,546,338.10 | -177,546,338.10 | -177,546,338.10 | ||||||||||||
| 4. Others | |||||||||||||||
| (4) Internal transferring of owners’ equity |
| 1. Capitalizing of capital reserves (or share capital) | |||||||||||||||
| 2. Capitalizing of surplus reserves (or share capital) | |||||||||||||||
| 3. Surplus reserves used to cover losses | |||||||||||||||
| 4. Retained gain transferred due to change in set benefit program | |||||||||||||||
| 5. Other miscellaneous income | |||||||||||||||
| 6. Others | |||||||||||||||
| (5) Special reserves | |||||||||||||||
| 1. Provided this year | |||||||||||||||
| 2. Used this period | |||||||||||||||
| (6) Others | |||||||||||||||
| 4. Balance at the end of this period | 1,155,481,686.00 | 1,454,191.59 | 10,831,437.66 | 7,382,087.59 | 120,475,221.40 | 3,921,225,872.96 | 5,195,187,621.88 | 5,195,187,621.88 |
8. Statement of Change in Owners’ Equity (Parent Company)
Amount of the Current Term
In RMB
| Item | 2019 | |||||||||
| Share | Other equity tools | Capital | Less: | Other | Special | Surplus | Retaine | Others | Total of | |
| capital | Preferred share | Perpetual bond | Others | reserves | Shares in stock | miscellaneous income | reserves | reserves | d profit | owners’ equity | ||
| 1. Balance at the end of last year | 1,155,481,686.00 | 360,835.52 | 10,831,437.66 | 8,756,553.46 | 120,475,221.40 | 504,081,999.00 | 1,778,324,857.72 | |||||
| Plus: Changes in accounting policies | -5,166,425.58 | 524,860.03 | 4,723,740.20 | 82,174.65 | ||||||||
| Correction of previous errors | ||||||||||||
| Others | ||||||||||||
| 2. Balance at the beginning of current year | 1,155,481,686.00 | 360,835.52 | 10,831,437.66 | 3,590,127.88 | 121,000,081.43 | 508,805,739.20 | 1,778,407,032.37 | |||||
| 3. Change amount in the current period (―-― for decrease) | -32,097,497.00 | -10,831,437.66 | -2,302,498.50 | 38,805,848.91 | 727,196,779.59 | 742,434,070.66 | ||||||
| (1) Total of misc. incomes | -2,302,498.50 | 1,057,637,352.66 | 1,055,334,854.16 | |||||||||
| (2) Investment or decreasing of capital by owners | -32,097,497.00 | -10,831,437.66 | -66,957,886.36 | -88,223,945.70 | ||||||||
| 1. Common shares invested by owners | -32,097,497.00 | -10,831,437.66 | -66,957,886.36 | -88,223,945.70 | ||||||||
| 2. Capital contributed by other equity instrument holders | ||||||||||||
| 3. Amount of shares paid and accounted as owners' equity |
| 4. Others | ||||||||||||
| (3) Profit allotment | 105,763,735.27 | -330,440,573.07 | -224,676,837.80 | |||||||||
| 1. Provision of surplus reserves | 105,763,735.27 | -105,763,735.27 | ||||||||||
| 2. Distribution to owners (or shareholders) | -224,676,837.80 | -224,676,837.80 | ||||||||||
| 3. Others | ||||||||||||
| (4) Internal transferring of owners’ equity | ||||||||||||
| 1. Capitalizing of capital reserves (or share capital) | ||||||||||||
| 2. Capitalizing of surplus reserves (or share capital) | ||||||||||||
| 3. Surplus reserves used to cover losses | ||||||||||||
| 4. Retained gain transferred due to change in set benefit program | ||||||||||||
| 5. Other miscellaneous income | ||||||||||||
| 6. Others | ||||||||||||
| (5) Special reserves | ||||||||||||
| 1. Provided this year | ||||||||||||
| 2. Used this period | ||||||||||||
| (6) Others |
| 4. Balance at the end of this period | 1,123,384,189.00 | 360,835.52 | 1,287,629.38 | 159,805,930.34 | 1,236,002,518.79 | 2,520,841,103.03 |
Amount of the Previous Term
In RMB
| Item | 2018 | |||||||||||
| Share capital | Other equity tools | Capital reserves | Less: Shares in stock | Other miscellaneous income | Special reserves | Surplus reserves | Retained profit | Others | Total of owners’ equity | |||
| Preferred share | Perpetual bond | Others | ||||||||||
| 1. Balance at the end of last year | 1,183,642,254.00 | 71,736,128.89 | 8,756,553.46 | 110,690,396.65 | 586,376,124.33 | 1,961,201,457.33 | ||||||
| Plus: Changes in accounting policies | ||||||||||||
| Correction of previous errors | ||||||||||||
| Others | ||||||||||||
| 2. Balance at the beginning of current year | 1,183,642,254.00 | 71,736,128.89 | 8,756,553.46 | 110,690,396.65 | 586,376,124.33 | 1,961,201,457.33 | ||||||
| 3. Change amount in the current period (―-― for decrease) | -28,160,568.00 | -71,375,293.37 | 10,831,437.66 | 9,784,824.75 | -82,294,125.33 | -182,876,599.61 | ||||||
| (1) Total of misc. incomes | 105,835,791.97 | 105,835,791.97 | ||||||||||
| (2) Investment or decreasing of capital by owners | -28,160,568.00 | -71,375,293.37 | 10,831,437.66 | -798,754.45 | -111,166,053.48 | |||||||
| 1. Common shares invested by owners | -28,160,568.00 | -71,375,293.37 | 10,831,437.66 | -798,754.45 | -111,166,053.48 | |||||||
| 2. Capital contributed by other equity instrument holders | ||||||||||||
| 3. Amount of shares paid and accounted as owners' equity | ||||||||||||
| 4. Others | ||||||||||||
| (3) Profit allotment | 10,583,579.20 | -188,129,917.30 | -177,546,338.10 | |||||||||
| 1. Provision of surplus reserves | 10,583,579.20 | -10,583,579.20 | ||||||||||
| 2. Distribution to owners (or shareholders) | -177,546,338.10 | -177,546,338.10 | ||||||||||
| 3. Others | ||||||||||||
| (4) Internal transferring of owners’ equity | ||||||||||||
| 1. Capitalizing of capital reserves (or share capital) | ||||||||||||
| 2. Capitalizing of surplus reserves (or share capital) | ||||||||||||
| 3. Surplus reserves used to cover losses | ||||||||||||
| 4. Retained gain transferred due to change in set benefit program | ||||||||||||
| 5. Other miscellaneous income | ||||||||||||
| 6. Others |
| (5) Special reserves | ||||||||||||
| 1. Provided this year | ||||||||||||
| 2. Used this period | ||||||||||||
| (6) Others | ||||||||||||
| 4. Balance at the end of this period | 1,155,481,686.00 | 360,835.52 | 10,831,437.66 | 8,756,553.46 | 120,475,221.40 | 504,081,999.00 | 1,778,324,857.72 |
III. General Information
1. About the Company
China Fangda Group Co., Ltd. (hereinafter referred to as "the Company") was approved in October 1995 by the General Officeof the Shenzhen Municipal People's Government with the letter of Shenfu Office (1995) No. 194, in the original "Shenzhen FangdaBuilding Materials Co., Ltd." on the basis of the establishment of the fundraising method. The unified social credit code is:
91440300192448589C; registered address: Fangda Technology Building, Keji South 12th Road, South District, High-techIndustrial Park, Nanshan District, Shenzhen. Mr. Xiong Jianming is the legal representative.
The Company issued foreign currency shares (B shares) and local currency shares (A shares) and listed in November 1995 andApril 1996 respectively in Shenzhen Stock Exchange. The Company received the Reply to the Non-public Share Issuance of FangdaChina Group Co., Ltd. (CSRC License [2016] No.825) to allow the Company to conduct non-public issuance of 32,184,931 A-sharesin June 20116. According to the 2016 Annual Profit Allocation Scheme, which was approved by the 2016 Annual Shareholders'Congress, the Company has a total share capital of 789, 094, 836 shares as the basis and a capital reserve fund of 5 shares per 10shares to all shareholders. The registered capital was RMB 1,183,642,5#*@$ at the end of 2017, 28,160, 568.00 shares wererepurchased and cancelled in August 2018, and 32, 097, 497.00 shares were repurchased and cancelled in January 2019. The existingregistered capital was RMB 1,123,384, 189.00.
The Company has established a corporate governance structure that comprises shareholders’ meeting, board of directors andsupervisory committee. Currently, the Company sets up the President Office, Administrative Department, HR Department, EnterpriseManagement Department, Financial Department, Audit and Supervisory Department, Securities Department, Technology InnovationDepartment and IT Department and has established subsidiaries including Fangda Decoration, Fangda Chuangzhi, Fangda NewMaterial, Fangda Property and Fangda New Energy.
The business nature and main business operations of the Company and subsidiaries (―the Group‖) include (1) production andsales of curtain wall materials, design, production and installation of construction curtain walls; (2) assembly and production ofsubway screen doors; (3) development and operation of real estate projects on land, of which rights have been obtained lawfully; (4)R&D, installation and sales of PV devices, design and installation of PV power plants.
Date of financial statement approval: This financial statement is approved by the Board of Directors of the Company on April16, 2020.
2. Consolidation Scope and Change
This part of the simplified disclosure is as follows: The Company in the current period includes a total of 25 subsidiaries, ofwhich 4 have been added this year and 2 have been reduced this year. For details, please refer to "Note 6, Change of the scope ofmerger" and "Note 7, Rights and Interests in Other Subjects".
IV. Basis for the preparation of financial statements
1. Preparation basis
The Company prepares the financial statements based on continuous operation and according to actual transactions and events,with figures confirmed and measured in compliance with the Accounting Standards for Business Enterprises and other specificaccount standards, application guide and interpretations. The Company has also disclosed related financial information according tothe requirement of the Regulations of Information Disclosure No.15 – General Provisions for Financial Statements (Revised in 2014)issued by the CSRC.
2. Continuous operation
The Company assessed the continuing operations capability of the Company for the 12 months from the end of the reportingperiod. No matters were found that would affect the Company's ability to continue as a going concern. It is reasonable for theCompany to prepare financial statements based on continuing operations.
V. Significant Account Policies and EstimatesSpecific accounting policy and estimate prompt:
The following major accounting policies and accounting estimates shall be formulated in accordance with the accounting standardsof the enterprise. Unmentioned operations are carried out in accordance with the relevant accounting policies in the enterpriseaccounting standards.
1. Statement of compliance to the Enterprise Accounting Standard
These financial statements meet the requirements of the Accounting Standards for Business Enterprises and truly and fullyreflect the Company’s financial status, performance result, changes in shareholders’ equity and cash flows.
2. Fiscal Period
The Company's fiscal year starts on January 1 and ends on December 31 of the Gregorian calendar.
3. Operation period
Our normal business cycle is one year
4. Bookkeeping standard money
The Company's bookkeeping standard currency is Renminbi, and overseas subsidiaries are based on the currency of the maineconomic environment in which they operate.
5. Accounting treatment of the entities under common and different control
(1) Consolidation of entities under common control
The assets and liabilities acquired by the Company in a business combination are measured at the book value of the combinedparty in the consolidated financial statements of the ultimate controlling party on the date of combination. Among them, if theaccounting policy adopted by the merger party is different from that adopted by the Company before the merger, the accountingpolicy is unified based on the principle of importance, that is, the book value of the assets and liabilities of the merger party isadjusted according to the accounting policy of the Company. If there is a difference between the book value of the net assets obtainedby the Company in the merger and the book value of the consideration paid by the Company, if the balance of the capital reserve(capital premium or share capital premium) and the capital reserve (capital premium or share capital premium) is not offset enough,the surplus reserve and undistributed profits shall be offset in turn.
The accounting treatment method of enterprise merger under the same control through step-by-step transaction is given innotes 3 and 6 (6).
(2) Consolidation of entities under different control
All identifiable assets and liabilities acquired by the Company during the merger shall be measured at its fair value on the dateof purchase. Among them, if the accounting policy adopted by the merger party is different from that adopted by the Company beforethe merger, the accounting policy is unified based on the principle of importance, that is, the book value of the assets and liabilities ofthe merger party is adjusted according to the accounting policy of the Company. The merger cost of the Company on the date ofpurchase is greater than the fair value of the assets and liabilities recognized by the purchaser in the merger, and is recognized asgoodwill. If the merger cost is less than the difference between the identifiable assets and the fair value of the liabilities obtained bythe purchaser in the enterprise merger, the merger cost and the fair value of the identifiable assets and the liabilities obtained by thepurchaser in the enterprise merger are reviewed, and the merger cost is still less than the fair value of the identifiable assets andliabilities obtained by the purchaser after the review, the difference is considered as the profit and loss of the current period of themerger.
The accounting treatment method of enterprise merger under different control through step-by-step transaction is given innotes 3 and 6 (6).
(3) Treatment of related transaction fee in enterprise merger
Agency expenses and other administrative expenses such as auditing, legal consulting, or appraisal services occurred relatingto the merger of entities are accounted into current income account when occurred. The transaction fees of equity certificates orliability certificates issued by the purchaser for payment for the acquisition are accounted at the initial amount of the certificates.
6. Preparation of Consolidated Financial Statements
(1) Determination of consolidation scope
The consolidated scope of the consolidated financial statements is determined on a control basis and includes not onlysubsidiaries determined on the basis of voting rights (or similar voting rights) themselves or in conjunction with other arrangements,but also structured subjects determined on the basis of one or more contractual arrangements.Control means the power possessed by the Company on invested entities to share variable returns by participating in relatedactivities of the invested entities and to impact the amount of the returns by using the power. The subsidiary company is the subjectcontrolled by the Company (including the enterprise, the divisible part of the invested unit and the structured subject controlled bythe enterprise, etc.). The structured subject is the subject which is not designed to determine the controlling party by taking the votingright or similar right as the decisive factor.
(2) Preparation of Consolidated Financial Statements
The Company prepares consolidated financial statements based on the financial statements of itself and its subsidiaries andbased on other relevant information.
The Company compiles consolidated financial statements, regards the whole enterprise group as an accounting entity, reflectsthe overall financial status, operating results and cash flow of the enterprise group according to the confirmation, measurement andpresentation requirements of the relevant enterprise accounting standards, and the unified accounting policy and accounting period.
① Merge the assets, liabilities, owner's rights and interests, income, expenses and cash flow of parent company andsubsidiary company.
(2) Offset the long-term equity investment of the parent company to the subsidiary company and the share of the parentcompany in the ownership rights of the subsidiary company.
③ Offset the influence of internal transaction between parent company, subsidiary company and subsidiary company. Wherean internal transaction indicates a loss of impairment of the relevant assets, the loss shall be fully recognized.
④ adjust the special transaction from the angle of enterprise group.
（3） Processing of subsidiaries during the reporting period
(1) Increase subsidiary or business
A. Subsidiary or business increased by business combination under the same control
(A) When preparing the consolidated balance sheet, adjust the opening number of the consolidated balance sheet and adjustthe related items of the comparative statement. The same report entity as the consolidated balance sheet will exist from the time ofthe final control party.
(B) During the preparation of the consolidated profit statement, the revenue, expense and profit from the current period to theend of the reporting period will be included in the consolidated profit statement. At the same time, the related items of thecomparative statement will be adjusted. The same as the consolidated report entity will always exist since the time when the finalcontrol party starts to control it.
(C) When preparing the consolidated cash flow statement, the cash flows of the subsidiary and the business combination fromthe beginning of the current period to the end of the reporting period are included in the consolidated cash flow statement, and therelated items of the comparative statement are adjusted, which is regarded as the combined report body since the final The controller
has been there since the beginning of control.B. Subsidiaries or businesses added by business combinations not under the same control(A) When preparing the consolidated balance sheet, the opening number of the consolidated balance sheet is not adjusted.(B) When preparing the consolidated profit statement, include the income, expenses and profits of the subsidiary company andthe business purchase date to the end of the reporting period in the consolidated profit statement.(C) When preparing the consolidated cash flow statement, the cash flow from the purchase date of the subsidiary to the end ofthe reporting period is included in the consolidated cash flow statement.
② Disposal of subsidiaries or business
(A) When preparing the consolidated balance sheet, the opening number of the consolidated balance sheet is not adjusted.B. When preparing the consolidated profit statement, the income, expense and profit of the subsidiary company and thebusiness opening and disposal date shall be included in the consolidated profit statement.C. When preparing the consolidated cash flow statement, the cash flow of the subsidiary and the business opening to disposaldate will be included in the consolidated cash flow statement.
(4) Special considerations in consolidation offsets
① The long-term equity investment held by a subsidiary company shall be regarded as the inventory shares of the Companyas a subtraction of the owner's rights and interests, which shall be listed under the item of "subtraction: Stock shares" under the itemof owner's rights and interests in the consolidated balance sheet.The long-term equity investments held by the subsidiaries are offset by the shares of the shareholders of the subsidiaries.
② The "special reserve" and "general risk preparation" projects, because they are neither real capital (or share capital) norcapital reserve, but also different from the retained income and undistributed profits, are restored according to the ownership of theparent company after the long-term equity investment is offset by the ownership rights and interests of the subsidiary company.
③ If there is a temporary difference between the book value of assets and liabilities in the consolidated balance sheet and thetaxable basis of the taxpayer due to the offset of the unrealized internal sales gain or loss, the deferred income tax asset or thedeferred income tax liability is confirmed in the consolidated balance sheet, and the income tax expense in the consolidated profitstatement is adjusted, with the exception of the deferred income tax related to the transaction or event directly included in the owner'sequity and the merger of the enterprise.
(4) The unrealized internal transaction gains and losses incurred by the Company in selling assets to its subsidiaries shall beoffset in full by "net profits attributable to the owner of the parent company". The unrealized internal transaction gains and lossesincurred by a subsidiary company in selling its assets to the Company shall be offset between "net profits vested in the owner of theparent company" and "minority shareholders' gains and losses" according to the proportion of the Company's distribution to thesubsidiary company. The unrealized internal transaction gains and losses incurred in the sale of assets between subsidiaries shall beoffset between "net profits vested in the owners of the parent company" and "minority shareholders' gains and losses" according tothe proportion of the Company's distribution to the sellers' subsidiaries.
⑤ If the current loss shared by the minority shareholders of the subsidiary exceeds the share of the minority shareholders inthe owner ’s equity of the subsidiary at the beginning of the period, the balance should still be offset against the minorityshareholders ’equity.
(5) Accounting treatment of special transactions
① Purchase minority shareholders' equity
The Company purchases the shares of the subsidiaries owned by the minority shareholders of the subsidiaries. In theindividual financial statements, the investment costs of the newly acquired long-term investments of the minority shares shall bemeasured at the fair value of the price paid. In the consolidated financial statements, the difference between the newly acquiredlong-term equity investment due to the purchase of minority equity and the share of net assets that should be continuously calculatedby the subsidiary since the purchase date or the merger date should be adjusted according to the new shareholding ratio. The product(capital premium or equity premium), if the capital reserve is insufficient to offset, the surplus reserve and undistributed profits areoffset in turn.
② Step-by-step acquisition of control of the subsidiary through multiple transactions
A. Enterprise merger under common control through multiple transactions
On the date of the merger, the Company determines the initial investment cost of the long-term equity investment in theindividual financial statements based on the share of the subsidiary ’s net assets that should be enjoyed after the merger in the finalcontroller ’s consolidated financial statements; the initial investment cost and the The difference between the book value of thelong-term equity investment before the merger plus the book value of the consideration paid for new shares acquired on the mergerdate, the capital reserve (capital premium or equity premium) is adjusted, and the capital reserve (capital premium or equity premium)is insufficient to offset Reduced, in turn offset the surplus reserve and undistributed profits.
In consolidated financial statements, assets and liabilities obtained by the merging party from the merged party should bemeasured at the book value in the final controlling party’s consolidated financial statements other than the adjustment made due todifferences in accounting policies; adjust the capital surplus (share premium) according to the difference between the initialinvestment cost and the book value of the held investment before merger plus the book value of the consideration paid on the mergerdate. Where the capital surplus falls short, the retained income should be adjusted.
If the merging party holds the equity investment before acquiring the control of the merged party and is accounted foraccording to the equity method, the date of acquiring the original equity and the merging party and the merged party are in the sameparty's final control from the later date to the merger date The relevant gains and losses, other comprehensive income and otherchanges in owner's equity have been confirmed between them, and the retained earnings at the beginning of the comparativestatement period should be offset separately.
B. Enterprise merger not under common control through multiple transactions
On the merger day, in individual financial statements, the initial investment cost of the long-term equity investment on themerger day is based on the book value of the long-term equity investment previously held plus the sum of the additional investmentcosts on the merger day.
In the consolidated financial statements, the equity of the purchaser held prior to the date of purchase is revalued according tothe fair value of the equity at the date of purchase, and the difference between the fair value and its book value is credited to thecurrent investment income; If the shares held by the purchaser prior to the date of purchase involve other consolidated gains underthe equity law accounting, the other consolidated gains related thereto shall be converted to the current gains on the date of purchase,with the exception of the other consolidated gains arising from the remeasurement of the net assets or net liabilities of the mergedparty. The Company disclosed in the notes the fair value of the equity of the purchased party held before the purchase date and theamount of related gains or losses remeasured according to the fair value.
(3) The Company disposes of long-term equity investment in subsidiaries without losing control
The parent company partially disposes of the long-term equity investment in the subsidiary company without losing control. Inthe consolidated financial statements, the disposal price corresponds to the disposal of the long-term equity investment. Thedifference between the shares is adjusted for the capital reserve (capital premium or equity premium). If the capital reserve isinsufficient to offset, the retained earnings are adjusted.
④ The Company disposes of long-term equity investment in subsidiaries and loses controlA. One transaction dispositionIf the Company loses control over the Invested Party due to the disposal of part of the equity investment, it shall remeasure theremaining equity according to its fair value at the date of loss of control when compiling the consolidated financial statement. Thesum of the consideration obtained from the disposal of equity and the fair value of the remaining equity minus the difference betweenthe share of the original subsidiary 's net assets that should be continuously calculated from the purchase date or the merger date,calculated as the loss of control The investment income of the current period.Other comprehensive income and other owner's equity changes related to the equity investment of the atomic company aretransferred to the current profit and loss when the control is lost, except for other comprehensive income arising from theremeasurement of the net benefits or net assets of the defined benefit plan by the investee. .
B. Multi-transaction step-by-step dispositionIn consolidated financial statements, you should first determine whether a step-by-step transaction is a "blanket transaction".If the step-by-step transaction is not a "blanket transaction", in individual financial statements, for each transaction before theloss of subsidiary control, carry forward the book value of the long-term equity investment corresponding to each disposition share,and the difference between the obtained price and the book value of the disposition long-term equity investment is included in thecurrent investment income. In the consolidated financial statements, it shall be handled in accordance with the relevant provisions of"The parent company disposes of the long-term equity investment in the subsidiary without losing control".If a step-by-step transaction belongs to a "blanket transaction", the transaction shall be treated as a transaction that disposes ofthe subsidiary and loses control; In individual financial statements, the difference between each disposal price before the loss ofcontrol and the book value of the long-term equity investment corresponding to the equity being disposed of is first recognized asother consolidated gains and then converted to the current loss of control at the time of the loss of control; In the consolidatedfinancial statements, for each transaction prior to the loss of control, the difference between the disposition of the price and thedisposition of the investment corresponding to the share in the net assets of the subsidiary shall be recognized as other consolidatedgains and shall, at the time of the loss of control, be transferred to the loss of control for the current period.Where the terms, conditions, and economic impact of each transaction meet one or more of the following conditions, usuallymultiple transactions are treated as a "package deal":
(a) These transactions were concluded at the same time or in consideration of mutual influence.(b) These transactions can only achieve the business result as a whole;(c) The effectiveness of one transaction depends the occurrence of at least another transaction;(d) A single transaction is not economic and is economic when considered together with other transactions.
(5) Proportion of minority shareholders in factor companies who increase capital and dilute ownership of parent companiesOther shareholders (minority shareholders) of the subsidiary increase the capital of the subsidiary, thus diluting the share ratioof the parent to the subsidiary. In the consolidated financial statements, the share of the parent company in the net book assets of theformer subsidiary of the capital increase is calculated according to the share ratio of the parent company before the capital increase,the difference between the share and the net book assets of the latter subsidiary after the capital increase is calculated according to theshare ratio of the parent company, the capital reserve (capital premium or capital premium), the capital reserve (capital premium orcapital premium) is not offset, and the retained income is adjusted.
7. Classification of JV arrangements and accounting method
None
8. Recognition of cash and cash equivalents
Cash refers to cash in stock and deposits that can be used for payment at any time. Cash equivalents refer to investments with ashort holding period (generally referring to expiry within three months from the date of purchase), strong liquidity, easy to convert toa known amount of cash, and little risk of value change.
9. Foreign exchange business and foreign exchange statement translation
(1) Methods for determining conversion rates in foreign currency transactions
When the Company's foreign currency transactions are initially confirmed, they will be converted into the bookkeepingstandard currency at the spot exchange rate on the transaction date.
(2) Methods of conversion of foreign currency currency currency items on balance sheet days
At the balance sheet date, foreign currency items are translated on the spot exchange rate of the balance sheet date. Theexchange differences caused by the difference in exchange rates on the balance sheet date and initial recognizing date or previousbalance sheet date are included in the current profits and losses. Non-monetary items accounted in foreign currency and on historicalcosts are exchanged with the spot exchange rate on the transaction date. Non-monetary items accounted in foreign currency and onfair value are exchanged with the spot exchange rate on the determination date of the fair value. The exchange difference between theaccounting standard-currency amount and the original accounting standard-currency amount are included in the current profits andlosses.
(3) Foreign currency statement conversion method
Prior to the conversion of the financial statements of an enterprise's overseas operations, the accounting period and policy ofthe overseas operations should be adjusted to conform to the accounting period and policy of the enterprise. The financial statementsof the corresponding currency (other than the functional currency) should be prepared according to the adjusted accounting policyand the accounting period. The financial statements of the overseas operations should be converted according to the followingmethods:
① The assets and liabilities items in the balance sheet are translated at the spot exchange rate on the balance sheet date.Except for the "undistributed profits" items, the owner's equity items are translated at the spot exchange rate when they occur.
② The income and expense items in the profit statement are converted at the spot exchange rate on the transaction date or theapproximate exchange rate of the spot exchange rate.
③ The foreign currency cash flow and the foreign subsidiary's cash flow are converted using the immediate exchange rate orthe approximate exchange rate at the date of the cash flow. The impact of exchange rate changes on cash should be used as anadjustment item and presented separately in the cash flow statement.
④ During the preparation of the consolidated financial statements, the resulting foreign currency financial statementconversion variance is presented separately under the owner's equity item in the consolidated balance sheet.
When foreign operations are disposed of and the control rights are lost, the difference in foreign currency statements related tothe overseas operations that are listed in the shareholders' equity items in the balance sheet is transferred to the profit or loss for the
current period, either in whole or in proportion to the disposal of the foreign operations.
10. Financial instrument
As of 1 January 2019Financial instrument refers to a company’s financial assets and contracts that form other units of financial liabilities or equityinstruments.
(1) Recognition and de-recognition of financial instrument
The Company recognizes a financial asset or liability when it becomes one party in the financial instrument contract.Financial asset is derecognized when:
① The contractual right to receive the cash flows of the financial assets is terminated;
② The financial asset is transferred and meets the following derecognition condition.
If the current obligation of a financial liability (or part of it) has been discharged, the Company derecognises the financialliability (or part of the financial liability). When the Company (borrower) and lender enter into an agreement to replace the originalfinancial liabilities by undertaking new financial liabilities and the contract terms for the new financial liabilities are essentiallydifferent from those for the original one, the original financial liabilities will be derecognized and new financial liabilities will berecognized. Where the Company makes substantial amendments to the contract terms of the original financial liability (or partthereof), it shall terminate the original financial liability and confirm a new financial liability in accordance with the amended terms.
Financial asset transactions in regular ways are recognized and de-recognized on the transaction date. The conventional sale offinancial assets means the delivery of financial assets in accordance with the contractual terms and conditions, at the time set out inthe regulations or market practices. Trading date refers to the date on which the Company undertakes to buy or sell financial assets.
(2) Classification and subsequent measurement of financial assets
At initial recognition, the Company classifies financial assets into the following three categories based on the business modelof managing financial assets and the contractual cash flow characteristics of financial assets: financial assets measured at amortizedcost are measured at fair value and their changes are included in other financial assets with current profit and loss and financial assetsmeasured at fair value through profit or loss. Unless the Company changes the business model for managing financial assets, in thiscase, all affected financial assets are reclassified on the first day of the first reporting period after the business model changes,otherwise the financial assets may not be initially confirmed.
Financial assets are measured at the fair value at the initial recognition. For financial assets measured at fair value withvariations accounted into current income account, related transaction expenses are accounted into the current income. For otherfinancial assets, the related transaction expenses are accounted into the initial recognized amounts. Bills receivable and accountsreceivable arising from the sale of commodities or the provision of labor services that do not contain or do not consider significantfinancing components, the Company performs initial measurement according to the transaction price defined by the income standard.
The subsequent measurement of financial assets depends on their classification:
① Financial assets measured at amortized cost
Financial assets that meet the following conditions at the same time are classified as financial assets measured at amortizedcost: The Company ’s business model for managing this financial asset is to collect contractual cash flows as its goal; the contractterms of the financial asset stipulate that Cash flow is only the payment of principal and interest based on the outstanding principal
amount. For such financial assets, the actual interest rate method is used for subsequent measurement according to the amortized cost.The gains or losses arising from the termination of recognition, amortization or impairment based on the actual interest rate methodare included in the current profit and loss.
② Financial assets measured at fair value and whose changes are included in other comprehensive incomeFinancial assets that meet the following conditions at the same time are classified as financial assets measured at fair value andtheir changes are included in other comprehensive income: The Company's business model for managing this financial asset is toboth target the collection of contractual cash flows and the sale of financial assets. Objective; The contractual terms of the financialasset stipulate that the cash flow generated on a specific date is only for the payment of principal and interest based on theoutstanding principal amount. For such financial assets, fair value is used for subsequent measurement. Except for impairment lossesor gains and exchange gains and losses recognized as current gains and losses, changes in the fair value of such financial assets arerecognized as other comprehensive income. Until the financial asset is derecognized, its accumulated gains or losses are transferredto current gains and losses. However, the relevant interest income of the financial asset calculated by the actual interest rate method isincluded in the current profit and loss.The Company irrevocably chooses to designate a portion of non-tradable equity instrument investment as a financial assetmeasured at fair value and whose variation is included in other consolidated income. Only the relevant dividend income is includedin the current profit and loss, and the variation of fair value is recognized as other consolidated income.
③ Financial assets measured at fair value with variations accounted into current income accountThe above financial assets measured at amortized cost and other financial assets measured at fair value and whose changes areincluded in other comprehensive income are classified as financial assets measured at fair value and whose changes are included inthe current profit and loss. For such financial assets, fair value is used for subsequent measurement, and all changes in fair value areincluded in current profit and loss.
(3) Classification and measurement of financial liabilities
The Company classifies financial liabilities into financial liabilities measured at fair value and their changes included in thecurrent profit and loss, loan commitments and financial guarantee contract liabilities for loans below market interest rates, andfinancial liabilities measured at amortized cost.The subsequent measurement of financial liabilities depends on their classification:
① Financial liabilities measured at fair value with variations accounted into current income account
Such financial liabilities include transactional financial liabilities (including derivatives that are financial liabilities) andfinancial liabilities designated as at fair value through profit or loss. After the initial recognition, the financial liabilities aresubsequently measured at fair value. Except for the hedge accounting, the gains or losses (including interest expenses) are recognizedin profit or loss. However, for the financial liabilities designated as fair value and whose variations are included in the profits andlosses of the current period, the variable amount of the fair value of the financial liability due to the variation of credit risk of thefinancial liability shall be included in the other consolidated income. When the financial liability is terminated, the cumulative gainsand losses previously included in the other consolidated income shall be transferred out of the other consolidated income and shall beincluded in the retained income.
② Loan commitments and financial security contractual liabilities
The Loan Commitment is a commitment made by the Company to the Client during the period of commitment to the Clientunder the terms of the Contract. The loan undertakes to depreciate the loss in accordance with the expected credit loss model.
Financial Guarantee Contract means a contract in which the Company is required to indemnify the lost contract holder for a
specified amount when the specific debtor cannot pay the debt in accordance with the original or modified terms of the debtinstrument. The financial security contractual liabilities are subsequently measured on the basis of the reserve amount for lossdetermined on the basis of the impairment principle of the financial instrument and the balance of the initial recognition amount afterdeducting the accumulated amortization amount determined on the basis of the revenue recognition principle.
③ Financial liabilities measured at amortized cost
After initial recognition, other financial liabilities are measured at amortized cost using the effective interest method.Except in special circumstances, financial liabilities and equity instruments are distinguished according to the followingprinciples:
① If the Company cannot unconditionally avoid delivering cash or other financial assets to fulfill a contractual obligation, thecontractual obligation meets the definition of financial liability. While some financial instruments do not explicitly contain terms andconditions for the delivery of cash or other financial assets, they may indirectly form contractual obligations through other terms andconditions.If a financial instrument is required to be settled with or can be settled with the Company's own equity instruments, theCompany's own equity instrument used to settle the instrument needs to be considered as a substitute for cash or other financial assetsor for the holder of the instrument to enjoy the remaining equity in the assets after all liabilities are deducted. If it is the former, theinstrument is the financial liabilities of the issuer; if it is the latter, the instrument is the equity instrument of the issuer. In some cases,a financial instrument contract provides that the Company shall or may use its own instrument of interest, in which the amount of acontractual right or obligation is equal to the amount of the instrument of its own interest which may be acquired or deliveredmultiplied by its fair value at the time of settlement, whether the amount of the contractual right or obligation is fixed or is basedentirely or in part on a variation of a variable other than the market price of the instrument of its own interest, such as the rate ofinterest, the price of a commodity or the price of a financial instrument, the contract is classified as a financial liability.
(4) Derivative financial instruments and embedded derivatives
Derivative financial instruments are initially measured at the fair value of the day when the derivative transaction contract issigned, and are subsequently measured at their fair values. Derivative financial instruments with a positive fair value are recognizedas asset, and instruments with a negative fair value are recognized as liabilities.
The gains and losses arising from the change in fair value of derivatives are directly included in the profits and losses of thecurrent period, except that the part of the cash flow that is valid in the hedge is included in the other consolidated income andtransferred out when the hedged item affects the gain and loss of the current period.
For a hybrid instrument containing an embedded derivative instrument, if the principal contract is a financial asset, the hybridinstrument as a whole applies the relevant provisions of the financial asset classification. If the main contract is not a financial asset,and the hybrid instrument is not measured at fair value and its changes are included in the current profit and loss for accounting, theembedded derivative does not have a close relationship with the main contract in terms of economic characteristics and risks, and it isIf the instruments with the same conditions and exist separately meet the definition of derivative instruments, the embeddedderivative instruments are separated from the mixed instruments and treated as separate derivative financial instruments. If the fairvalue of the embedded derivative on the acquisition date or the subsequent balance sheet date cannot be measured separately, thehybrid instrument as a whole is designated as a financial asset or financial liability measured at fair value and whose changes areincluded in the current profit or loss.
(5) Impairment of financial instruments
The Company shall confirm the preparation for loss on the basis of expected credit loss for financial assets measured atamortization costs, creditor's rights investments measured at fair value, contractual assets, leasing receivables, loan commitments and
financial guarantee contracts, etc.
(1) Measurement of expected credit losses
The expected credit loss refers to the weighted average of the credit losses of financial instruments that are weighted by therisk of default. Credit loss refers to the difference between all contractual cash flows receivable from the contract and all cash flowsexpected to be received by the Company at the original actual interest rate, that is, the present value of all cash shortages. Amongthem, the financial assets which have been purchased or born by the Company shall be discounted according to the actual rate ofcredit adjustment of the financial assets.The expected lifetime credit loss is the expected credit loss due to all possible default events during the entire expected life ofthe financial instrument.Expected credit losses in the next 12 months are expected to result from possible defaults in financial instruments within 12months after the balance sheet date (or estimated duration of financial instruments if the expected duration is less than 12 months)Credit losses are part of the expected lifetime credit loss.On each balance sheet day, the Company measures the expected credit losses of financial instruments at different stages.Where the credit risk has not increased significantly since the initial confirmation of the financial instrument, it is in the first stage.The Company measures the preparation for loss according to the expected credit loss in the next 12 months. Where the credit risk hasincreased significantly since the initial confirmation but the credit impairment has not occurred, the financial instrument is in thesecond stage. Where a credit impairment has occurred since the initial confirmation of the financial instrument, it shall be in the thirdstage, and the Company shall prepare for measuring the expected credit loss of the whole survival period of the instrument.For financial instruments with lower credit risk at the balance sheet date, the Company assumes that its credit risk has notincreased significantly since the initial confirmation, and measures the preparation for loss based on the expected credit loss over thenext 12 months.The Company calculates interest income for financial instruments in the first and second stages, as well as for lower creditrisks, based on the book balance and actual interest rate it does not deduct from impairment. Interest income is calculated on the basisof the amortization costs and actual interest rates of the financial instruments in phase III, after their book balance is reduced by theaccrued impairment.Regarding bills receivable, accounts receivable and financing receivables, regardless of whether there is a significant financingcomponent, the Company measures the loss provision based on the expected credit losses throughout the duration.A Accounts receivableWhere there is objective evidence of impairment, as well as other receivable instruments, receivables, other receivables,receivables financing and long-term receivables applicable to individual assessments, separate impairment tests are performed toconfirm expected credit losses and prepare individual impairment. Where there is no objective evidence of impairment, such as billsreceivable, accounts receivable, other receivables, financing of accounts receivable and long-term receivables, or where a singlefinancial asset is unable to assess the expected credit loss at reasonable cost, the Company divides the instruments receivable,accounts receivable, other receivables, financing of accounts receivable and long-term receivables into a number of combinationsbased on the combination and determines the basis for the combination as follows:
The basis for determining the combination of notes receivable is as follows:
Notes Receivable Combination1 Commercial Acceptance Bill
Bill Receivable Combination2 Bank Acceptance Bill
For the bills receivable divided into a combination, we calculate the expected credit loss through the risk exposure of default
and the expected credit loss rate of the whole survival period based on the historical credit loss experience, the current situation andthe forecast of the future economic condition.The basis for determining the combination of accounts receivable is as follows:
Accounts receivable combination 1 Accounts receivable businessAccounts receivable combination 2 Associated party payments in the context of receivable consolidationAccounts receivable combination 3 Real Estate receivable businessAccounts receivable combination 4 Others receivable businessFor the accounts receivable divided into a combination, the Company refers to the historical credit loss experience, combinedwith the current situation and the forecast of the future economic situation, compiles the account receivable age and the wholeexpected credit loss rate table, and calculates the expected credit loss.The basis for determining the combination of other receivables is as follows:
Other receivable portfolio 1 Interest receivablePortfolio of other receivables 2 Dividends receivableOther combinations of receivables 3 Deposit and margin receivableOther receivable portfolio 4 Receivable advancesCombination of other receivables 5 Value-added tax receivable is increased and refundedOther receivable portfolio 6 Receivables from related parties within the scope of consolidationOther receivables portfolio 7 Other receivablesFor other receivables divided into portfolios, the Company refers to historical credit loss experience, combined with currentconditions and predictions of future economic conditions, and calculates through default risk exposure and expected credit loss ratewithin the next 12 months or the entire duration Expected credit losses.
The basis for determining the combination of receivables financing is as follows:
Receivables financing portfolio 1 bank acceptance billFor the receivable financing divided into portfolios, the Company refers to the historical credit loss experience, combined withthe current situation and the prediction of the future economic situation, and calculates the expected credit loss through the defaultrisk exposure and the expected credit loss rate for the entire duration.B Claims investments, other claims investmentsFor creditor's rights investment and other creditor's rights investment, the Company calculates the expected credit loss basedon the nature of the investment and the types of counterparty and risk exposure, through the default risk exposure and the expectedcredit loss rate over the next 12 months or the entire survival period.
② Lower credit risk
If the risk of default on financial instruments is low, the borrower’s ability to meet its contractual cash flow obligations in theshort term is strong, and even if the economic situation and operating environment are adversely changed over a long period of time,it may not necessarily reduce the receivables' performance of their contractual cash. The ability of the flow obligation, the financialinstrument is considered to have a lower credit risk.
③ Significant increase in credit risk
The Company compares the default probability of the financial instrument during the expected lifetime determined by thebalance sheet date with the default probability of the expected lifetime during the initial confirmation to determine the relativeprobability of the default probability of the financial instrument during the expected lifetime Changes to assess whether the creditrisk of financial instruments has increased significantly since initial recognition.In determining whether the credit risk has increased significantly since the initial recognition, the Company considersreasonable and evidenced information, including forward-looking information, that can be obtained without unnecessary additionalcosts or effort. The information considered by the Company includes:
A. Significant changes in internal price indicators resulting from changes in credit risk;
B. A negative change in the operational, financial or economic situation that is expected to lead to a significant change in thedebtor's ability to fulfil its obligations;
C. Whether there has been a significant change in actual or anticipated operating results of the debtor; (B) Whether there hasbeen a significant adverse change in the regulatory, economic or technological environment in which the debtor is located;
D. Whether there has been a significant change in the guaranteed price value as a mortgage or in the quality of guarantee orcredit escalation provided by third parties. These changes are expected to reduce the economic motivation of the debtor to repay theterm specified in the contract or affect the probability of default;
E. Whether there is a significant change in the economic motivation that is expected to reduce the debtor's contractual periodof repayment;
F. Expected changes to a loan contract, including exemptions or amendments to contractual obligations that are expected toresult from a breach of contract, waiver periods, interest rate leaps, requests for additional collateral or guarantees or other changes tothe contractual framework of financial instruments;
G. Whether the debtor's expected performance and repayment behavior have changed significantly;
H. Whether contractual payments are overdue for more than 30 days.
Based on the nature of financial instruments, the Company assesses whether credit risk has increased significantly on the basisof a single financial instrument or combination of financial instruments. When conducting an assessment based on a combination offinancial instruments, the Company can classify financial instruments based on common credit risk characteristics, such as overdueinformation and credit risk ratings.
If the overdue period exceeds 30 days, the Company has determined that the credit risk of financial instruments has increasedsignificantly. Unless the Company does not have to pay excessive costs or efforts to obtain reasonable and warranted information, itproves that although it has exceeded the time limit of 30 days agreed upon in the Contract, credit risks have not increasedsignificantly since the initial confirmation.
④ Financial assets with credit impairment
The Company assesses on the balance sheet date whether financial assets measured at amortized cost and credit investmentsmeasured at fair value and whose changes are included in other comprehensive income have undergone credit impairment. When oneor more events that adversely affect the expected future cash flows of a financial asset occur, the financial asset becomes a financialasset that has suffered a credit impairment. Evidence that credit impairment has occurred in financial assets includes the followingobservable information:
Major financial difficulties have occurred to the issuer or the debtor; Breach of contract by the debtor, such as payment ofinterest or default or overdue of principal; (B) The concession that the debtor would not make under any other circumstances foreconomic or contractual considerations relating to the financial difficulties of the debtor; The debtor is likely to be bankrupt or
undertake other financial restructuring; The financial difficulties of the issuer or debtor lead to the disappearance of the active marketfor the financial asset; To purchase or generate a financial asset at a substantial discount, which reflects the fact that a credit loss hasoccurred.
(5) Presentation of expected credit loss preparation
In order to reflect the changes in the credit risk of financial instruments since the initial recognition, the Company re-measuresthe expected credit losses on each balance sheet date, and the increase or reversal of the loss provision resulting therefrom is includedas an impairment loss or gain. Current profit and loss. For financial assets measured at amortized cost, the loss allowance offsets thebook value of the financial asset listed on the balance sheet; for debt investments measured at fair value and whose changes areincluded in other comprehensive income, the Company Recognition of its loss provisions in gains does not offset the book value ofthe financial asset.
⑥ Canceled
If it is no longer reasonably expected that the contract cash flow of the financial assets will be fully or partially recovered, thebook balance of the financial assets will be directly reduced. Such write-off constitute the derecognition of related financial assets.This usually occurs when the Company determines that the debtor has no assets or sources of income that generate sufficient cashflow to cover the amount that will be written down.
If the financial assets that have been written down are recovered in the future, the reversal of the impairment loss is included inthe profit or loss of the current period.
(6) Transfer of financial assets
The transfer of financial assets refers to the following two situations:
A. Transfer the contractual right to receive cash flow of financial assets to another party;
B. Transfers the financial assets to the other party in whole or in part, but reserves the contractual right to collect the cash flowof the financial assets and undertakes the contractual obligation to pay the collected cash flow to one or more recipients.
(A) Termination of the recognition of transferred financial assets
Those who have transferred almost all risks and rewards in the ownership of financial assets to the transferee, or have neithertransferred nor retained almost all the risks and rewards in the ownership of financial assets, but have given up control of thefinancial assets, terminate the confirmation The financial asset.
In determining whether control over the transferred financial asset has been waived, the actual capacity of the transferor to sellthe financial asset is determined. Where the transferor is able to unilaterally sell the transferred financial asset to an unrelated thirdparty in its entirety and there is no additional condition to limit the sale, the Company has waived control over the financial asset.
The Company pays attention to the essence of financial asset transfer when judging whether financial asset transfer meets thecondition of financial asset termination.
If the overall transfer of financial assets meets the conditions for termination confirmation, the difference between thefollowing two amounts shall be included in the current profit and loss period:
A. book value of transferred financial assets;
B. The sum of the amount received as a result of the transfer and the amount accrued as a result of the change in the fair valueof the transfer in respect of the termination recognized portion of the amount previously charged directly to the other consolidatedproceeds (the financial assets involved in the transfer are those classified in accordance with Article 18 of Enterprise AccountingStandard No. 22 - Financial Instruments Recognition and Measurement as measured by the fair value and whose change is charged to
the other consolidated proceeds).If the partial transfer of financial assets meets the conditions for termination of recognition, the book value of the whole of thetransferred financial assets shall be apportioned between the termination of recognition and the non-termination of recognition (inthis case, the reserved service assets shall be regarded as part of the continued recognition of financial assets) in accordance with therespective relative fair values of the transfer date, and the difference between the following two amounts shall be included in thecurrent profit and loss:
A. the book value of the termination confirmation portion at the termination confirmation date;B. The sum of the valuation of the termination recognition portion and the amount of the termination recognition portioncorresponding to the amount accrued as a result of the variation in the fair value previously credited to other consolidated proceeds(the financial assets involved in the transfer are those classified under Article 18 of the Accounting Standards for Enterprises No. 22 -Financial Instruments Recognition and Measurement as measured by the fair value and whose variation is credited to otherconsolidated proceeds).
(2) Continuing involvement in transferred financial assets
If neither transfer nor retain almost all the risks and rewards of the ownership of financial assets, and have not given up controlof the financial assets, the relevant financial assets should be confirmed according to the extent of their continued involvement in thetransferred financial assets, and the relevant liabilities should be recognized accordingly.The extent to which the transferred financial assets continue to be involved refers to the extent to which the enterpriseundertakes the risk or compensation of the value change of the transferred financial assets.(III) Continuing identification of transferred financial assetsWhere almost all risks and remuneration in relation to ownership of the transferred financial assets are retained, the whole ofthe transferred financial assets shall continue to be recognized and the consideration received shall be recognized as a financialliability.The financial asset and the recognized related financial liabilities shall not offset each other. In the subsequent accountingperiod, the enterprise shall continue to recognize the income (or gain) generated by the financial asset and the costs (or losses)incurred by the financial liability.
(7) Deduction of financial assets and liabilities
Financial assets and financial liabilities should be listed separately in the balance sheet, and cannot be offset against each other.However, if the following conditions are met, the net amount offset by each other is listed in the balance sheet:
The Company has a statutory right to offset the confirmed amount, and such legal right is currently enforceable;
The Company plans to settle the net assets or realize the financial assets and liquidate the financial liabilities at the same time.
The transferring party shall not offset the transferred financial assets and related liabilities if it does not meet the conditions forterminating the recognition.
（8） Methods for determining the fair value of financial instruments
See Note III. 10 for the recognition of fair value of financial assets and liabilities.
The following financial instruments accounting policies are applied in 2018 and earlier
(1) Measurement of financial assets
① Financial assets measured at fair value with variations accounted into current income account
These include transactional financial assets and financial assets directly designated as fair value and whose variations areincluded in the current profits and losses, the former mainly referring to the stocks, bonds, funds and derivatives investments held bythe Company for sale in the near future and not used as an effective hedging instrument. Such assets are initially measured as initialrecognized amounts based on their fair value at the time of acquisition, and the associated transaction costs are included in the currentprofit and loss at the time of occurrence. The payment contains declared but not yet issued cash dividends or interest on bonds paidbut not yet received, which are separately recognized as receivable items. Interest or cash dividends earned during the holding periodare recognized as investment gains. On the balance sheet date, the Company measured such financial assets at fair value and theirchanges are included in the current profit and loss. At the time of disposition of such financial assets, the difference between the fairvalue of such assets and the initial credited amount is recognized as the return on investment and the change in the fair value isadjusted.
② Investment held until mature
Mainly refers to fixed due date, fixed or determinable amount of recovered amount, and the Company has clear intention andability to hold to maturity of the national debt, corporate bonds, etc. Such financial assets are initially recognized in terms of the sumof fair value and related transaction costs at the time of acquisition. Interest on bonds that are due but have not yet been issued andare included in the payment is separately recognized as receivable items. Interest income is recognized on the basis of amortizationcosts and actual interest rates during the holding period for investments held to maturity and is included in the investment income.When disposing of an investment held to maturity, the difference between the price obtained and the carrying value of the investmentis included in the investment income.
③ Receivables
Receivables include receivable accounts, other receivables and prepayment. Accounts receivable means the accountsreceivable resulting from the sale of goods or the provision of services. Accounts receivable are initially recognized at the contract oragreement price receivable from the buyer.
④ Sellable financial assets
Mainly refers to the Company's financial assets that are not classified as fair value through profit or loss, held-to-maturityinvestments, loans and receivables. The sum of the fair value and related transaction costs of the financial assets available for saleshall be the initial recognized amount. Interest on outstanding bonds or declared unpaid cash dividends included in the payment isseparately recognized as receivable items. Interest or cash dividends obtained during the holding of available-for-sale financial assetsare included in investment income.
If the financial assets available for sale are of a foreign currency nature, the exchange gains and losses resulting from suchassets shall be taken into account in the current period. Interest on investments in available debt instruments calculated using theactual interest rate method is included in the current profit and loss; The cash dividends that can be invested in the instruments of salerights and interests shall be included in the current profit and loss period when the unit of investment declares that the dividend isissued. On the balance sheet date, available-for-sale financial assets are measured at fair value, and their changes are included inother comprehensive income. When disposing of a financial asset available for sale, the difference between the price obtained and thebook value of the financial asset is included in the investment income; At the same time, the amount corresponding to the disposalpart of the fair value change accrued from the original accrued amount of the owner's equity shall be transferred out into theinvestment income.
(2) Classification of financial liabilities
① Financial liabilities measured at fair value and whose changes are included in the current profit and loss, includingtransactional financial liabilities and financial liabilities designated as measured at fair value and whose changes are included in thecurrent profit and loss; such financial liabilities are measured at fair value when they are initially recognized The relevant transaction
costs are directly included in the current profit and loss, and the fair value changes are included in the current profit and loss on thebalance sheet date.
②Other financial liabilities refer to financial liabilities that are measured at fair value and whose changes are included in thecurrent profit and loss.
(3) The distinction between financial liabilities and equity instruments
Except in special circumstances, financial liabilities and equity instruments are distinguished according to the followingprinciples:
① If the Company cannot unconditionally avoid delivering cash or other financial assets to fulfill a contractual obligation, thecontractual obligation meets the definition of financial liability. While some financial instruments do not explicitly contain terms andconditions for the delivery of cash or other financial assets, they may indirectly form contractual obligations through other terms andconditions.
If a financial instrument is required to be settled with or can be settled with the Company's own equity instruments, theCompany's own equity instrument used to settle the instrument needs to be considered as a substitute for cash or other financial assetsor for the holder of the instrument to enjoy the remaining equity in the assets after all liabilities are deducted. If it is the former, theinstrument is the financial liabilities of the issuer; if it is the latter, the instrument is the equity instrument of the issuer. In some cases,a financial instrument contract provides that the Company shall or may use its own instrument of interest, in which the amount of acontractual right or obligation is equal to the amount of the instrument of its own interest which may be acquired or deliveredmultiplied by its fair value at the time of settlement, whether the amount of the contractual right or obligation is fixed or is basedentirely or in part on a variation of a variable other than the market price of the instrument of its own interest, such as the rate ofinterest, the price of a commodity or the price of a financial instrument, the contract is classified as a financial liability.
(4) Transfer of financial assets
The transfer of financial assets refers to the following two situations:
A. Transfer the contractual right to receive cash flow of financial assets to another party;
B. Transfers the financial assets to the other party in whole or in part, but reserves the contractual right to collect the cash flowof the financial assets and undertakes the contractual obligation to pay the collected cash flow to one or more recipients.
(A) Termination of the recognition of transferred financial assets
Those who have transferred almost all risks and rewards in the ownership of financial assets to the transferee, or have neithertransferred nor retained almost all the risks and rewards in the ownership of financial assets, but have given up control of thefinancial assets, terminate the confirmation The financial asset.
In determining whether control over the transferred financial asset has been waived, the actual capacity of the transferor to sellthe financial asset is determined. If the transferor is able to sell the transferred financial assets wholly to a third party that does nothave a relationship with them, and has no additional conditions to limit the sale, it indicates that the enterprise has waived controlover the financial assets.
The Company pays attention to the essence of financial asset transfer when judging whether financial asset transfer meets thecondition of financial asset termination.
If the overall transfer of financial assets meets the conditions for termination confirmation, the difference between thefollowing two amounts shall be included in the current profit and loss period:
A. book value of transferred financial assets;
B. The sum of the consideration received as a result of the transfer and the amount accrued as a result of the change in the fairvalue of the original direct accruing to the owner's interest (in cases where the transferred financial assets are available for sale).
If the partial transfer of financial assets meets the conditions for termination of recognition, the book value of the whole of thetransferred financial assets shall be apportioned between the termination of recognition and the non-termination of recognition (inthis case, the retained service assets shall be considered as part of the non-termination of recognition of financial assets) inaccordance with their respective relative fair values, and the difference between the following two amounts shall be included in thecurrent profit and loss:
A. Termination of the book value of the recognized portion;
B. The sum of the consideration of the termination recognition portion and the amount of the termination recognition portion(the financial assets involved in the transfer are the circumstances in which the financial assets are available for sale) correspondingto the fair value change accrued from the original direct incorporation of the owner's interest.
(2) Continuing involvement in transferred financial assets
If neither transfer nor retain almost all the risks and rewards of the ownership of financial assets, and have not given up controlof the financial assets, the relevant financial assets should be confirmed according to the extent of their continued involvement in thetransferred financial assets, and the relevant liabilities should be recognized accordingly.
The degree of continued involvement in the transferred financial assets refers to the level of risk that the financial asset valueexposes the Company to.
(III) Continuing identification of transferred financial assets
Where almost all risks and remuneration in relation to ownership of the transferred financial assets are retained, the whole ofthe transferred financial assets shall continue to be recognized and the consideration received shall be recognized as a financialliability.
The financial asset and the recognized related financial liabilities shall not offset each other. In the subsequent accountingperiod, the enterprise shall continue to recognize the income generated by the financial asset and the costs incurred by the financialliability. If the transferred financial assets are measured at amortized cost, the recognized related liabilities shall not be designated asfinancial liabilities measured at fair value and whose changes are included in the current profit and loss.
(5) De-recognition of financial liabilities
When partial or all of the current responsibilities attached to such financial liabilities, the partial or all of the financialliabilities are derecognized.
If the assets used to repay the financial liabilities are transferred to an institution or a trust is established and the currentobligation to repay the debts still exists, the recognition of the financial liabilities shall not be terminated or the recognition of theassets transferred out shall not be terminated.
When the Group (debtor) and creditor enter into an agreement to replace the existing financial liabilities by undertaking newfinancial liabilities and the contract terms for the new financial liabilities are essentially different from those for the existing one, theexisting financial liabilities will be derecognized and new financial liabilities will be recognized.
If substantial or all contractual terms of the existing financial liabilities are substantially modified, the recognition of theexisting financial liabilities or a part thereof shall be terminated, and the financial liabilities with the revised terms shall berecognized as a new financial liability.
If the financial liabilities are terminated in whole or in part, the difference between the book value of the terminationrecognized portion and the consideration paid (including the non-cash assets transferred out or the new financial liabilities assumed)
shall be included in the current profit and loss.
(6) Deduction of financial assets and liabilities
Financial assets and financial liabilities should be listed separately in the balance sheet, and cannot be offset against each other.However, if the following conditions are met, the net amount offset by each other is listed in the balance sheet:
The Company has a statutory right to offset the confirmed amount, and such legal right is currently enforceable;
The Company plans to settle the net assets or realize the financial assets and liquidate the financial liabilities at the same time.
The transferring party shall not offset the transferred financial assets and related liabilities if it does not meet the conditions forterminating the recognition.
(7) Impairment examination and providing of impairment provision of financial assets
① Objective evidence that can prove the impairment of the financial assets
A. Severe financial difficulties in the issuer or debtor;
B. The debtor violates the contract or defaults or delays the payment of the interest or principal;
C. The Group makes compromise to the debtor with financial difficulties due to economic or legal consideration;
D. The debtor may go bankruptcy or conduct other financial reorganization;
E. The financial assets can no longer be traded in an active market due to material financial difficulties in the issuer;
F. It cannot be recognized whether the cash flow of an asset in a group of financial assets has decreased. However, accordingto open data, it can be evaluated that the estimated future cash flow of the group of financial assets has decreased and the decreasecan be measured, including:
G. Significant adverse changes occurs to the technical, market, economic or legal environment of the debtor, leading to that theequity instrument investor may not be able to recover the investment;
H. Other objective evidence that can prove the impairment of the financial assets
(2) impairment testing of financial assets (excluding receivables)
A. Financial assets measured at amortized cost
If there is objective evidence proving impairment to the financial assets, the book value of the financial assets will be writtendown to the present value of the estimated future cash flow (excluding undiscovered future credit loss). The write-down amount isaccounted into the current gain/loss account.
The present value of the expected future cash flow is determined by discounting the original effective interest rate of theinvestment held to maturity, and taking into account the value of the relevant collateral (the cost of acquiring and selling the collateralis deducted). The original actual interest rate is the actual interest rate determined by the calculation of the initial confirmation of theholding until the expiration of the investment. For floating interest rate holdings to maturity investments, the current value of futurecash flow may be calculated using the current actual interest rate specified in the contract as the discount rate.
Impairment tests are performed separately on financial assets with significant single amounts. If objective evidence indicatesthat they have been impaired, impairment losses are recognized and included in the current profit and loss; for financial assets withinsignificant single amounts, separate impairment tests are included or included Conduct impairment tests in financial asset portfolioswith similar credit risk characteristics.
Separately test financial assets that have not been impaired (including individual financial assets with significant amounts and
non-significant amounts), including those that have similar credit risk characteristics and then conduct impairment tests; financialassets that have individually recognized impairment losses Does not include impairment testing in financial asset portfolios withsimilar credit risk characteristics.After the Company recognizes impair loss to financial assets measured by amortized cost, if there is object evidencesuggesting that the value of the financial assets is restored objectively due to an event after the loss, the recognized impairment losscan be reversed and accounted into the current gain/loss account. The book value after the reversal must not exceed the amortizedcost of the financial assets on the reversal date assuming that no impairment provision was made.B. Impairment test on available-for-sale financial assetsIn the event of impairment of the financial assets available for sale, the accumulated loss resulting from the reduction in thefair value of the rights and interests of the owner shall be transferred out to account for the impairment of the assets. After theimpairment of the financial assets of the available debt instruments occurs, the interest income is recognized by the discount rate usedto discounted the future cash flow as the interest rate when the impairment loss is determined.For the sellable debt instruments recognized as impaired, if the fair value increases in the following accounting periodobjectively due to an event after the original impair loss is recognized, the impairment loss will be reversed and accounted into thecurrent gain/loss account. Impairment loss incurred in investment of sellable equity instrument is not reversed through the gain/lossaccount.
(9) Recognition of fair value of financial assets and liabilities
See Note III. 10 for the recognition of fair value of financial assets and liabilities.
11. Notes receivable
See Section XII, V, Important Accounting Policies and Accounting Estimates 10. Financial Tools.
12. Account receivable
See Section XII, V, Important Accounting Policies and Accounting Estimates 10. Financial Tools.
The Company must comply with disclosure requirements of the Shenzhen Stock Exchange Industry Information DisclosureGuideline No.6 – Listed Companies Engaged in Decoration Business.
13. Receivable financing
See Section XII, V, Important Accounting Policies and Accounting Estimates 10. Financial Tools.
14. Other receivables
Methods for Determining Expected Credit Loss of Other Receivables and Accounting Processing MethodsSee Section XI, V, Important Accounting Policies and Accounting Estimates 10. Financial Tools.
15. Inventories
(1) Classification of inventories
Inventory refers to the finished products or commodities held by the Company for sale in its daily activities, the materials andmaterials consumed in the course of production, in the course of production or in the course of providing labor services, includingsubcontracting materials, raw materials, in-process products, finished products, finished products, inventories, turnover materials,development costs, development products and assets formed by construction contracts, etc.
(2) Valuation method for issuing inventory
Inventories are measured at cost when procured. Raw materials, products in process and commodity stocks in transit aremeasured by the weighted average method.
Inventory of real estate business mainly includes inventory materials, on-the-job development products, finished developmentproducts and development products that are intended to be sold and temporarily leased. Inventory is measured at the actual costswhen the fixed assets are obtained The actual costs of development products include land transfer payment, infrastructure and facilitycosts, installation engineering costs, borrows before completion of the development and other costs during the development process.The special maintenance funds collected in the first period are included in the development overheads. The actual costs of thedevelopment product is priced using the separate pricing method.
Construction contracts are measured by the effective cost, including direct and indirect expenses generated before the contractsare fulfilled. Costs generated and recognized accumulatively by construction in process and settled payment are listed in the balancesheet as offset net amounts. The excessive part of the sum of the generated costs and recognized gross profit (loss) over the settledpayment is listed inventories; the excessive part of the settled payment over the sum of the generated costs and recognized grossprofit (loss) is listed as the prepayment received.
Travel and bidding expenses generated by execution of contracts, if they can be separated and reliably measured and it is likelyto enter into contracts, are accounted as the contract cost when the contracts are entered into; or into the current gain/loss account ifthe conditions are not met.
(3) Inventory system
The Company inventory adopts the perpetual inventory system, counting at least once a year, the inventory profit and lossamount is included in the current year's profit and loss.
(4) Recognition of inventory realizable value and providing of impairment provision
On the balance sheet date, inventories are accounted depending on which is lower between the cost and the net realizable value.If the cost is higher than the net realizable value, the impairment provision will be made.
The realizable net value of inventory should be recognized based on solid evidence with the purpose of the inventory andafter-balance-sheet-date events taken into consideration.
(1) In the course of normal production and operation, the net realizable value of finished goods, commodities and materialsdirectly used for sale shall be determined by the estimated price of the inventory minus the estimated cost of sale and related taxes.The inventory held for the execution of a sales contract or a labor contract shall be measured on the basis of the contract price as itsnet realizable value; If the quantity held is greater than the quantity ordered under the sales contract, the net realizable value of theexcess inventory is measured on the basis of the general sales price. Materials used for sale, etc., are based on market prices as ameasure of their net realizable value.
②In the normal production and operation process, the inventory of materials that need to be processed is determined by the
amount of the estimated selling price of the finished product minus the estimated cost to be incurred at the time of completion,estimated sales expenses and related taxes Realize the net value. If the net realizable value of the finished product produced by it ishigher than the cost, the material is measured at cost; If the decrease in the price of the material indicates that the net realizable valueof the finished product is lower than the cost, the material is measured as the net realizable value and the inventory is prepared for adecrease based on its difference.
③ Depreciation preparation of inventory is generally based on a single inventory item; For a large number of inventories witha lower unit price, they are accrued by inventory type.
④ If the factors affecting the previous write-down of inventory value have disappeared on the balance sheet date, the amountof the write-down will be restored and transferred back within the amount of inventory depreciation reserve that has been accrued,and the amount returned will be included in the current profit and loss.
(5) Methods of amortization of swing materials
① Low-value consumables are amortized on on-off amortization basis at using.
② Packages are amortized on on-off amortization basis at using.
16. Contract assets
17. Contract costs
18. Assets held for sales
19. Debt investment
20. Other debt investment
21. Long-term receivables
22. Long-term share equity investment
The Group's long-term equity investment includes control on invested entities and significant impacts on equity investment.Invested entities on which the Group has significant impacts are associates of the Group.
(1) Basis for recognition of common control and major influence on invested entities
Common control refers to the common control of an arrangement in accordance with the relevant agreement, and the relevantactivities of the arrangement must be agreed upon by the participants who share control. In determining whether there is commoncontrol, the first step is to determine whether all or a group of participants collectively control the arrangement, which is consideredcollective control by all or a group of participants if all or a group of participants must act together to determine the activitiesassociated with the arrangement. Second, determine whether the decision on the activities related to the arrangement must be agreedupon by the participants in the collective control of the arrangement. If there are two or more combinations of participants that cancollectively control an arrangement, it does not constitute joint control. Protection rights are not considered when determiningwhether there is common control.
Major influence refers to the power to participate in decision-making of financial and operation policies of a company, butcannot control or jointly control the making of the policies. When considering whether the Company can impose significant impacts
on the invested entity, impacts of conversion of shares with voting rights held directly or indirectly by the investor and voting rightsthat can be executed in this period held by the investor and other party into shares of the invested entity should be considered.If the Company directly or through subsidiaries holds more than 20% (inclusive) but less than 50% of the shares with votingrights of the invested entity, unless there is clear evidence proving that the Company cannot participate the decision-making ofproduction and operation of the invested entity, the Company has major influence on the invested entity.
(2) Initial investment cost determination
1. Long-term equity investments formed by merger of enterprises shall be determined in accordance with the following provisions:
A. In the case of an enterprise merger under the same control, where the merging party makes a valuation of the mergerby payment of cash, transfer of non-cash assets or undertaking liabilities, the share of the book value of the owner's interest inthe final controlling party's consolidated financial statements as the initial investment cost of the long-term equity investment atthe date of the merger. The difference between the initial investment cost of long-term equity investment and the cash paid, thenon-cash assets transferred and the book value of the debt assumed, adjust the capital reserve; If the capital reserve isinsufficient to offset or reduce, the retained income shall be adjusted;B. In the case of an enterprise merger under the same control, where the merger party uses the issuance of interest-basedsecurities as the merger price, the amount of the book value in the final controlling party's consolidated financial statements asthe initial investment cost of the long-term equity investment on the date of the merger, in accordance with the interest of theowner of the merger party. Adjust the capital reserve according to the difference between the initial investment cost of long-termequity investment and the total face value of the issued shares. If the capital reserve is insufficient to offset or reduce, theretained income shall be adjusted;For merger of entities under different control, the merger cost is the fair value of the asset paid, liability undertaken, andequity securities issued for exchanging of control power over the entities at the day of acquisition. Agency expenses and otheradministrative expenses such as auditing, legal consulting, or appraisal services occurred relating to the merger of entities areaccounted into current income account when occurred.
1. Long-term equity investments formed by merger of enterprises shall be determined in accordance with the following provisions:
For long-term equity investment obtained by cash, the actually paid consideration is the initial investment cost. Initialinvestment costs include expenses, taxes and other necessary expenditures directly related to the acquisition of long-term equityinvestments;B. Long-term equity investments acquired from the issuance of interest securities are the initial investment costs based on thefair value of the issue interest securities;C. Long-term equity investments acquired through the exchange of non-monetary assets, if the exchange is commerciallysubstantial and can be reliably measured in terms of the fair value of the assets in exchange for or in exchange for the assets, thedifference between the fair value of the assets in exchange for the assets and the book value of the assets in exchange for the currentperiod is counted as the initial investment cost; If the above two conditions are met when the exchange of non-currency assets isdifferent, the book value and related taxes of the assets are used as the initial investment cost.D. Long-term equity investments acquired through debt restructuring determine their recorded value at the fair value of thewaived claims and other costs such as taxes directly attributable to the assets and account for the difference between the fair valueand the book value of the waived claims.
(3) Subsequent measurement and recognition of gain/loss
The Company uses the cost method to measure long-term share equity investment in which the Company can control the
invested entity; and uses the equity method to measure long-term share equity investment in which the Company has substantialinfluence on the invested entity.
① Cost
For the long-term equity investment measured on the cost basis, except for the announced cash dividend or profit included inthe practical cost or price when the investment was made, the cash dividends or profit distributed by the invested entity arerecognized as investment gains in the current gain/loss account.EquityGains from long-term equity investment measured by equityWhen the equity method is used to measure long-term equity investment, the investment cost will not be adjusted if theinvestment cost of the long-term equity investment is larger than the share of fair value of the recognizable assets of the investedentity. When it is smaller than the share of fair value of the recognizable assets of the invested entity, the book value will be adjustedand the difference is included in the current gains of the investment.When the equity method is used, the current investment gain is the share of the net gain realized in the current year that can beshared or borne, recognized as investment gain and other misc. income. The book value of the long-term equity investment isadjusted accordingly. The book value of the long-term equity investment should be accordingly decreased based on the share of profitor cash dividend announced by the invested entity; according to other changes in the owner’s equity except for net profit and loss,other misc income and profit distribution of the invested entity, adjust the book value of the long-term equity investment and record itin the capital surplus (other capital surplus). When the share of the net gains that can be enjoyed is recognized, it is recognized afterthe net profit of the invested entity is adjusted based on the fair value of the recognizeable assets of the invested entity according tothe Company's accounting policies and accounting period. Where the accounting policy and accounting period adopted by theInvested unit are inconsistent with the Company, the financial statements of the Invested unit shall be adjusted in accordance with theaccounting policy and accounting period of the Company, and the investment income and other consolidated income shall berecognized. Internal transaction gain not realized between the Company and affiliates is measured according to the shareholdingproportion and the investment gains is recoginzied after deduction. The unrealized internal transaction loss between the Companyand the invested entity is the impairment loss of transferred assets and should not be written off.Where substantial influence on invested entities is imposed or joint control is implemented due to increase in investment, thesum of the fair value of the original equity and increased investment on the conversion date is the initial investment cost under theequity method. The difference between the fair value and book value of the original equity on the conversion date and theaccumulative change in the fair value originally accounted in other misc. income should be transferred into the profit and loss of thecurrent period using the equity method.Where joint control or substantial influence on invested entities is lost due to disposal of part of investment, the remainingequity after the disposal should be treated according to the Enterprise Accounting Standard No.22 – Recognition and Measurement ofFinancial Instruments from the date of losing the joint control or substantial influence. The difference between the fair value andbook value should be accounted the profit and loss of the current period. For other misc. incomes of original share equity investmentdetermined using the equity method, when the equity method is no longer used, it should be treated based on the same basis of thetreatment of related assets or liability of the invested entities; the other owners' interests related to the original share equityinvestment should be transferred to gain/loss of the current period.
(4) Equity investment held for sale
For the remaining equity investments not classified as assets held for sale, the equity method is adopted for accountingtreatment.
Equity investments classified as held for sale to associates that are no longer eligible to hold classified assets for sale areretrospectively adjusted using the equity method starting from the date that they are classified as held for sale. The classification isadjusted to hold the financial statements for the period to be sold.
(5) Impairment examination and providing of impairment provision
See Note III. 19 for the assets impairment provision method for investment in subsidiaries and joint ventures.
XXIII. Investment real estatesMeasuring mode of investment real estateMeasurement at fair valueBasis of choosing the measurement at fair value
(1) Classification of investment real estate
Investment real estates are held for rent or capital appreciation, or both. These include, inter alia:
① Leased land using right
② the right to use the land that is transferred after holding and preparing for the increment.
③ Leased building
(2) Measurement of investment real estate
For investment real estates with an active real estate transaction market and the Company can obtain market price and otherinformation of same or similar real estates to reasonably estimate the investment real estates’ fair value, the Company will use the fairvalue mode to measure the investment real estates subsequently. Variations in fair value are accounted into the current gain/lossaccount.
The fair value of investment real estates is determined with reference to the current market prices of same or similar realestates in active markets; when no such price is available, with reference to the recent transaction prices and consideration of factorsincluding transaction background, date and district to reasonably estimate the fair value; or based on the estimated lease gains andpresent value of related cash flows.
For investment real estate under construction (including investment real estate under construction for the first time), if the fairvalue cannot be reliably determined but the expected fair value of the real estate after completion is continuously and reliablyobtained, the investment real estate under construction is measured by cost. When the fair value can be measured reliably or aftercompletion (the earlier one), it is measured at fair value. For an investment real estate whose fair value is proven unable to beobtained continuously and reliably by objective evidence, the real estate will be measured at cost basis until it is disposed and noresidual value remains as assumed.
If the cost model is adopted to measure the investment real estate, the depreciation or amortization shall be calculatedaccording to the straight line method after deducting the accumulated impairment and net residual value of the investment real estatecost. For the method of depreciation of the accrued assets, see notes 3 and 19.
The types of investment real estate, estimated economic useful life and estimated net residual value rate are determined asfollows:
| Category | Service year (year) | Residual value rate (%) | Annual depreciation rate (%) |
| Houses & buildings | 35-50 | 10.00 | 1.80-2.57 |
24. Fixed assets
(1) Recognition conditions
Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing services, lease or foroperation & management, and have more than one accounting year of service life. Fixed assets are recognized at the actual cost ofacquisition when the following conditions are met: (1) The economic benefits associated with the fixed assets are likely to flow intothe enterprise. ② The cost of the fixed assets can be measured reliably. Overhaul cost generated by regular examination on fixedassets is recognized as fixed assets costs when there is evidence proving that it meets fix assets recognition conditions. If not, it willbe accounted into the current gain/loss account.
(2) Depreciation method
| Type | Depreciation method | Service year | Residual rate | Annual depreciation rate % |
| Houses & buildings | Average age | 35-50 | 10% | 1.8%-2.57% |
| Mechanical equipment | Average age | 10 | 10% | 9% |
| Transportation facilities | Average age | 5 | 10% | 18% |
| Electronics and other devices | Average age | 5 | 10% | 18% |
| PV power plants | Average age | 20 | 5% | 4.75% |
(3) Recognition and pricing of financing leased fixed assets
The Company transfers all the risks and rewards attached to the asset at substantially transferred to the lessee, it is recognized asfinancial leasing, and the others are operational leasing. The cost of a fixed asset acquired by a financial lease is determined on thebasis of the lower of the fair value of the leased asset at the date of the lease and the present value of the minimum leased payment.The Group adopts the depreciation policy same as the self-owned fixed assets to made provision for depreciation of leased asssets.Depreciation shall be accrued within the life of the leased assets if it is possible to reasonably determine that the leased assets will beentitled to ownership upon the expiry of the lease term; Depreciation is accrued within a shorter period between the lease term andthe service life of the leased asset if it is unable to reasonably determine that the leased asset ownership can be acquired at the end ofthe lease term.
25. Construction in process
(1) Construction in progress is accounted for by project classification.
(2) Standard and timing for transferring construction in process into fixed assets
The full expenditure incurred on the construction-in-progress project as a fixed asset is recorded as the value of the assetbefore the asset is constructed to the intended usable state. This includes construction costs, the original cost of equipment, other
necessary expenditures incurred in order to enable the construction works to reach the intended usable status and the borrowing costsincurred for the specific borrowing of the project and the general borrowing expenses incurred before the assets reach the intendedusable status. Construction in process will be transferred to fixed assets when it reaches the preset service condition. The fixed assetsthat have reached the intended usable state but have not been completed shall be transferred to the fixed assets according to theestimated value according to the estimated value according to the estimated value according to the project budget, cost or actualproject cost, etc. The depreciation of the fixed assets shall be accrued according to the Company's fixed assets depreciation policy.The original estimated value shall be adjusted according to the actual cost after the completion.
26. Borrowing expenses
(1) Recognition principles for capitalization of borrowing expenses
Borrowing expenses occurred to the Company that can be accounted as purchasing or production of asset satisfying theconditions of capitalizing, are capitalized and accounted as cost of related asset.
(1) Asset expenditure has occurred;
② The borrowing expense has already occurred;
③ Purchasing or production activity, which is necessary for the asset to reach the useful status, has already started.
Other interest on loans, discounts or premiums and exchange differences are included in the income and loss incurred in thecurrent period.
If the construction or production of assets satisfying the capitalizing conditions is suspended abnormally for over 3 months,capitalizing of borrowing expenses shall be suspended. During the normal suspension period, borrowing expenses will be capitalizedcontinuously.
When the asset satisfying the capitalizing conditions has reached its usable or sellable status, capitalizing of borrowingexpenses shall be terminated.
(2) Calculation of the capitalization amount of borrowing expense
Interest expenses generated by special borrowings less the interests income obtained from the deposit of unused borrowings orinvestment gains from temporary investment is capitalized; the capitalization amount for general borrowing is determined based onthe capitalization rate which is the exceeding part of the accumulative assets expense over weighted average of the assets expense ofthe special borrowing/used general borrowing.
If the assets that are constructed or produced under the condition of capitalization occupy the general borrowing, the interestamount to be capitalized in the general borrowing shall be calculated and determined by multiplying the capital rate of the generalborrowing by the weighted average of the asset expenditure of the accumulated assets whose expenditure exceeds that of thespecialized borrowing. The capitalization ratio is the weighted average interest rate of general borrowings.
27. Biological assets
None
28. Petrolum assets
NoneUse right assetsNone
30. Intangible assets
(1) Pricing method, service life and depreciation test
(1) Pricing of intangible assets
Recorded at the actual cost of acquisition.Amortization of intangible assets
① Useful life of intangible assets with limited useful life
| Item | Estimated useful life | Basis |
| Land using right | Term | Use right assets |
| Trademarks and patents | 10 years | Reference to determine the lifetime of a company for which it can bring economic benefits |
| Proprietary technology | 10 years | Reference to determine the lifetime of a company for which it can bring economic benefits |
| Software | 5, 10 years | Reference to determine the lifetime of a company for which it can bring economic benefits |
At the end of each year, the Company will reexamine the useful life and amortization basis of intangible assets with limiteduseful life. Upon review, the service life and amortization methods of intangible assets at the end of the period are not different fromthose previously estimated.
② Intangible assets which cannot be foreseeable to bring economic benefits to enterprises shall be regarded as intangibleassets whose useful life is uncertain. For intangible assets whose service life is uncertain, the Company shall review the service lifeof intangible assets whose service life is uncertain at the end of each year. If the service life is uncertain after the review, theCompany shall conduct a impairment test on the balance sheet date.
③ Amortization of intangible assets
For intangible assets with limited service life, the Company shall determine their service life at the time of acquisition, andshall use the straight line method system to reasonably amortize their service life, and the amortization amount shall be included inthe profit and loss of the current period according to the beneficial items. The specific amortization amount is the amount after thecost is deducted from the estimated residual value. For fixed assets for which depreciation provision is made, the depreciation ratewill be determined after the accumulative depreciation provision amount is deducted. The residual value of an intangible asset withlimited useful life is treated as zero, except where a third party undertakes to purchase the intangible asset at the end of its useful lifeor to obtain expected residual value information based on the active market, which is likely to exist at the end of its useful life.
Intangible assets with uncertain service life will not be amortized. At the end of each year, the useful life of intangible assetswith uncertain useful life is reviewed, and if there is evidence that the useful life of intangible assets is limited, the useful life is
estimated and the system is reasonably amortized within the expected useful life.
(2) Accounting policies for internal R&D expenses
Specific standard for distinguish between research and development stageThe Company takes the information and related preparatory activities for further development activities as the research stage,and the intangible assets expenditure in the research stage is included in the current profit and loss period.
(2) The development activities carried out after the Company has completed the research stage as the development stage.Specific Conditions of Expenditure Capitalization in Development StageOnly when expenditures during the development phase meet the following conditions can they be recognized as intangibleassets:
A. completion of the intangible asset to enable it to be used or sold technically feasible;B. has the intention of completing the intangible asset and using or selling it;C. The means by which an intangible asset generates economic benefits, including the ability to demonstrate that the productproduced using the intangible asset is in the market or that the intangible asset itself is in the market, and that the intangible asset willbe used internally to demonstrate its usefulness;D. sufficient technical, financial and other resources to complete the development of the intangible asset and to be able to useor sell the intangible asset;E. Expenditures attributable to the development phase of the intangible assets can be reliably measured.
31. Assets impairment
The Group uses the cost mode to continue measuring the assets impairment to investment real estatement, fixed assetsconstruction in progress, intangible assets and goodwill (except for the inventories, investment real estate measured by the fair valuemode, deferred income tax assets and financial assets). The method is determined as follows:
The Company judges whether there is a sign of impairment to assets on the balance sheet day. If such sign exists, the Companyestimates the recoverable amount and conducts the impairment test. Impairment test is conducted annually for goodwill generated bymergers and intangible assets that have not reached the useful condition no matter whether the impairment sign exists.
The recoverable amount is determined by the higher of the net of fair value minus disposal expense and the present value ofthe predicted future cash flow. The Company estimates the recoverable amount on the individual asset item basis; whether it is hardto estimate the recoverable amount on the individual asset item basis, determine the recoverable amount based on the asset group thatthe assets belong to. The assets group is determined by whether the main cash flow generated by the group is independent from thosegenerated by other assets or assets groups.
When the recoverable amount of the assets or assets group is lower than its book value, the Company writes down the bookvalue to the recoverable amount, the write-down amount is accounted into the current income account and the assets impairmentprovision is made.
For goodwill impairment test, the book value of goodwill generated by mergers is amortized through reasonable measuressince the purchase day to related asset groups; those cannot be amortized to related assets groups are amortized to related
combination of asset groups. The related asset groups or combination of asset groups refer to those that can benefit from thesynergistic effect of mergers and must not exceed to the reporting range determined by the Company.
When the impairment test is conducted, if there is sign of impairment to the asset group or combination of asset groups relatedto goodwill, first perform impair test for asset group or combination of asset groups without goodwill and calculate the recoverableamount and recognize the related impairment loss. Then conduct impairment test on those with goodwill, compare the book valuewith recoverable amount. If the recoverable amount is lower than the book value, recognize the impairment loss of the goodwill.Once recognized, the asset impairment loss cannot be written back in subsequent accounting period.
32. Long-term amortizable expenses
The long-term outstanding expenses shall be accounted for all expenses incurred by the Company but which shall be borne bythe current and future periods for more than one year, and the long-term outstanding expenses shall be amortized averagely within thebenefit period.
Contract liabilities
34. Staff remuneration
(1) Accounting of operational leasing
① Basic salary of employees (salary, bonus, allowance, subsidy)
In the accounting period for which the staff and workers provide services, the Company shall confirm the actual short-termremuneration as liabilities and shall account for the current income and loss, except as required or permitted by other accountingstandards.
② Employee welfare
The employee benefits incurred by the Company shall be included in the current profit and loss or related asset costs accordingto the actual amount incurred. Where the employee's benefit is non-monetary, it shall be measured on the basis of fair value.
③ Social insurance premiums and housing accumulation funds such as health insurance premiums, work injury premiums,birth insurance premiums, trade union funds and staff and education funds
The Company pays the medical insurance premiums, work injury insurance premiums, birth insurance premiums, etc. socialinsurance premiums and housing accumulation funds for the staff and workers, as well as the union funds and the staff and workerseducation funds according to the regulations, in the accounting period for which the staff and workers provide services, thecorresponding salary amount of the staff and workers, and confirms the corresponding liabilities, which are included in the currentprofit and loss or related asset costs.
④ Short-term paid leave
The Company accumulates the salary of the employees who are absent from work with pay when the employees provideservice, thus increasing their future right of absence with pay. The Company confirms the salary of the employee related to theabsence of non-cumulative salary during the actual absence accounting period.
⑤ Short-term profit share program
If the profit-sharing plan meets the following conditions at the same time, the Company shall confirm the salary payable to thestaff and workers:
A. The legal or presumptive obligation of the enterprise to pay the remuneration of its employees as a result of past matters;
B. The amount of payroll obligations due to profit-sharing schemes can be reliably estimated.
(2) Accounting of post-employment welfare
The post-employment welfare of the Group is a defined plan, which means that the Company does not need to assume anyresponsibility after making fixed contribution to an independent fund. The defined plan includes basic pension and unemploymentinsurance. The contribution of the plan is recognized as liabilities and recorded in the profit and loss of this period or related assetscosts.
(3) Accounting of dismiss welfare
If the Company provides termination benefits to employees, the employee compensation liabilities arising from thetermination benefits shall be recognized at the earliest of the following two and shall be included in the current profit and loss:
(1) An enterprise may not unilaterally withdraw the resignation benefits provided for by the dismissal plan or reductionproposal;
(2) When the enterprise recognizes the costs or expenses related to the reorganization involving the payment of resignationbenefits.
(4) Accounting of other long-term staff welfare
None
35. Lease liabilities
None
36. Anticipated liabilities
（1） Confirmation of projected liabilities
When responsibilities occurred in connection to contingent issues, and all of the following conditions are satisfied, they arerecognized as expectable liability in the balance sheet:
① This responsibility is a current responsibility undertaken by the Company;
② Execution of this responsibility may cause financial benefit outflow from the Company;
③ Amount of the liability can be reliably measured.
（2） Methods of measurement of projected liabilities
Expected liabilities are initially measured at the best estimation on the expenses to exercise the current responsibility, and withconsiderations to the relative risks, uncertainty, and periodic value of currency. On each balance sheet date, review the book value ofthe estimated liabilities. Where there is conclusive evidence that the book value does not reflect the current best estimate, the bookvalue is adjusted to the current best estimate.
37. Share payment
None
38. Other financial instruments such as preferred shares and perpetuated debt
None
39. Revenue
Whether the new revenue guidelines are implemented
□ Yes □ No
The Company must comply with disclosure requirements of the Shenzhen Stock Exchange Industry Information DisclosureGuideline No.6 – Listed Companies Engaged in Decoration Business.
（1） Revenue from the sale of commodities
When all of the following conditions are satisfied, the sales of goods are recognized as sales income according to the contractamount received or receivable from the buyer: (1) Main risks and rewards attached to the ownership of the goods have beentransferred to the buyer; (2) No succeeding power of administration or effective control is reserved which are usually attached toownership; (3) Amount received can be reliably measured; (4) Related financial benefit may inflow to the Company; (5) Relativecosts, occurred or will occur, can be reliably measured.
(2) Revenue from the provision of services
If they are not in the same year, then use the estimation on percentage basis when it is possible. The completion percentage isthe costs occurred on the total cost.
The reliable estimation of the result of providing of labor service must meet the following conditions: A. the revenue can bereliably measured; B. the economic benefit is very likely to flow into the Company; C. the completion can be determined reliably; D.costs incurred or will be incurred can be reliably measured.
The Company shall determine the total revenue of the Services provided under the Contract or Agreement Price received orreceivable, unless the Contract or Agreement Price received or receivable is not fair. On the balance sheet date, the total income ofthe labor service provided in the current period shall be recognized by multiplying the total income of the labor service provided bythe balance sheet by the amount of the accumulated income of the service provided in the previous accounting period. At the sametime, the total estimated cost of the labor service provided is multiplied by the completion schedule by the amount of the accumulatedconfirmed labor service cost in the previous accounting period to carry forward the current labor service cost.
If the results of the labor service transaction provided on the balance sheet date cannot be reliably estimated, the followingcases shall be dealt with:
1. If the cost of the services already incurred is expected to be compensated, it shall be recognized as the amount of the costs
already incurredProvide service income and carry forward service costs at the same amount.
1. If the labor cost incurred is not expected to be compensated, the labor cost already incurred is included in the current profit andloss, and the income from providing labor services is not recognized.
(3) Asset tenure income
When the economic benefits related to the transaction are likely to flow into the enterprise, and the amount of income can bemeasured reliably, the amount of income from the transfer of asset use rights is determined in the following cases:
1. The amount of interest income shall be determined according to the time and the actual interest rate at which the money funds of
the enterprise are used by others.
2. The amount of royalty income shall be determined in accordance with the time and method of charge agreed upon in therelevant contract or agreement
(4) Construction contract income
On the balance sheet day, the Group recognizes the contract income and costs using the completion percentage method if theresult of the construction contract can be reliably estimated. The percentage of completion method recognizes income and costsbased on contract completion schedule. The competition percentage is determined by the share of the costs incurred in the total cost.
If not, such contracts are treated differently. If the contract cost can be recovered, the revenue is recognized according to theactual contract costs that can be recovered and the contract cost is recognized as the current expense; if not, the contract cost isrecognized as the current expense and no revenue is recognized.
If the estimated total costs exceed the total revenue, the Group recognizes the estimated loss as the current expense.
(5) Specific methods for revenue recognition
① Construction contracts
Metro screen door projects of the Company and Shenzhen Fangda Automatic System, and curtain wall project of FangdaJianke are individual construction contracts. They are accounted by the following means:
Construction contracts completed within a fiscal year are recognized for their income and cost upon completion.
Income and expenses of the construction contracts carried over-year are recognized on percentage basis at balance sheet daywhen all of the following conditions are satisfied: contract income can be reliably measured, relative financial benefit can inflow tothe Company; progress of the project and costs to complete the contract can be reliably recognized; cost occurred to complete thecontract can be clearly distinguished and reliably measured, which enables comparing of actual cost with predicted cost.
Contract costs are direct and indirect expenses occurred since the date when the contract is engaged till the completion day.The competition percentage is determined by the share of the costs incurred in the total cost.
Construction contracts completed in current term are recognized for income according to the actual total income of thecontract less income recognized in previous terms; meanwhile, the total costs of the contract less costs recognized in previous termsare recognized as current contract costs. If the total contract cost is predicted to be greater than the predicted total income, thepredicted loss shall be recognized as current cost instantly.
Parts of the curtain wall project under Fangda Jianke are outsourced, and administrative fees are collected at the agreed rate.For these construction contracts, income will be recognized when ongoing payment for the project is received and correspondingcosts are transferred.
② Sales product
Revenue of products for domestic sales is recognized when the Group delivers the products and receives the sales payment orobtains the payment voucher; revenue for products for overseas sales is recognized at departure of the products.
③ Real estate sales
Income from real estate sales is recognized when the contract is signed and performed, project is developed and completedwith the record for the completion acceptance, the handover procedure is completed or property is deemed accepted by the customeras per the property sales contract, the payment is received or it is believed that the payment can be received, and the cost can bemeasured reliably.
40. Government subsidy
(1) Recognition of government subsidies
Government subsidies are recognized when the following conditions are met:
(1) Requirements attached to government subsidies;
(2) The Company can receive government subsidies.
(2) Recognition of government subsidies
When a government subsidy is monetary capital, it is measured at the received or receivable amount. None monetary capitalare measured at fair value; if no reliable fair value available, recognized at RMB1.
(3) Recognition of government subsidies
Assets-related
Government subsidies related to assets are obtained by the Company to purchase, build or formulate in other mannerslong-term assets; or subsidies related to benefits. If the asset-related government subsidy is recognized as deferred gain, should berecorded in gain and loss in the service life. Government subsidy measured at the nominal amount is accounted into current incomeaccount. If the relevant assets are sold, transferred, scrapped or damaged before the end of their useful life, the unallocated relevantdeferred income balance shall be transferred to the profit and loss of the current period of disposition of the assets.
Gain-related government subsidy should be accounted as follows:
The Company divides government subsidies into assets-related and earnings-related government subsidies. Gain-relatedgovernment subsidy should be accounted as follows:
(1) Subsidy that will be used to compensate related future costs or losses should be recognized as deferred gain and recordedin the gain and loss of the current report and offset related cost;
(2) Subsidy that is used to compensate existing cost or loss should be recorded in the gain and loss of the current period oroffset related cost.
For government subsidies that include both asset-related and income-related parts, separate different parts for accountingtreatment; It is difficult to distinguish between the overall classification of government subsidies related to benefits.
Government subsidy related to routine operations should be recorded in other gains or offset related cost. Government subsidynot related to routine operations should be recorded in non-operating income or expense.
③ Policy preferential loan discount
The policy-based preferential loan obtained has interest subsidy. If the government allocates the interest-subsidy funds to thelending bank, the loan amount actually received will be used as the entry value of the loan, and the borrowing cost will be calculatedbased on the loan principal and policy-based preferential interest rate.
If the government allocates the interest-bearing funds directly to the Group, discount interest will offset the borrowing costs.
(2) Government subsidy refund
When a confirmed government subsidy needs to be returned, the book value of the asset is adjusted against the book value ofthe relevant asset at initial recognition. If there is a related deferred income balance, the book balance of the related deferred incomeis written off and the excess is credited to the current profit or loss; In other cases, it is directly included in the current profit and loss.
41. Differed income tax assets and differed income tax liabilities
The Company uses the temporary difference between the book value of the assets and liabilities on the balance sheet day andthe tax base and the liabilities method to recognize the deferred income tax. 26. Deferred income tax assets and deferred income taxliabilities
(1) Deferred income tax assets
For deductible temporary discrepancies, deductible losses and tax offsets that can be carried forward for future years, theimpact on income tax is calculated at the estimated income tax rate for the transfer-back period and the impact is recognized asdeferred income tax assets, provided that the Company is likely to obtain future taxable income for deductible temporarydiscrepancies, deductible losses and tax offsets.
At the same time, the impact on income tax of deductible temporary discrepancies resulting from the initial recognition ofassets or liabilities in transactions or matters with the following characteristics is inconclusive as deferred income tax assets:
A. The transaction is not an enterprise merger;
B. the transaction is not a merger and the transaction does not affect the accounting profit or taxable proceeds;
In the event of temporary discrepancy of deductible investment related to subsidiaries, joint ventures and joint ventures, andmeeting the following two conditions, the amount of impact (talent) on income tax shall be deemed as deferred income tax assets:
A. Temporary discrepancies are likely to be reversed in the foreseeable future;
B. The amount of taxable income to be used to offset temporary discrepancies is likely to be available in the future;
On the balance sheet date, there is conclusive evidence that sufficient taxable income is likely to be obtained during the futureperiod to offset the deductible temporary discrepancy, recognizing deferred income tax assets not recognized during the previousperiod.
On the balance sheet day, the Company re-exmaines the book value of the deferred income tax assets. If it is unlikely to haveadequate taxable proceeds to reduct the benefits of the deferred income tax assets, less the deferred income tax assets’ book value.When there is adequate taxable proceeds, the lessened amount will be reversed.
(2) Deferred income tax assets
All provisional differences in taxable income of the Company shall be measured on the basis of the estimated income tax ratefor the period of transfer-back and shall be recognized as deferred income tax liabilities, except that:
① The impact of temporary differences in taxable income on income tax arising from the following transactions or matters is
inconclusive as deferred income tax liabilities:
A. Initial recognition of goodwill;B. Initial recognition of goodwill, or of assets or liabilities generated in transactions with the following features: thetransaction is not a merger and the transaction does not affect the accounting profit or taxable proceeds;
② In the event of temporary discrepancy of deductible investment related to subsidiaries, Joint venture joint ventures, andmeeting the two conditions, the amount of impact (talent) on income tax shall be deemed as deferred income tax assets:
A. The Company is able to control the time of temporary discrepancy transfers;
B. The temporary discrepancy is likely not to be reversed in the foreseeable future.
(3) Deferred income tax assets
(1) Deferred income tax liabilities or assets associated with enterprise consolidation
Temporary difference of taxable tax or deductible temporary difference generated by enterprise merger under non-samecontrol. When deferred income tax liability or deferred income tax asset is recognized, related deferred income tax expense (orincome) is usually adjusted as recognized goodwill in enterprise merger.
② Amount of shares paid and accounted as owners' equity
Except for the adjustment goodwill generated by mergers or deferred income tax related to transactions or events directlyaccounted into the owners’ equity, income tax is accounted as income tax expense into the current gain/loss account. The effects oftemporary discrepancy on income tax include the following: Other integrated benefits such as fair value change of financial assetsavailable for sale, retroactive adjustment of accounting policy changes or retroactive restatement of accounting error correctiondiscrepancy to adjust the initial retained income, and mixed financial instruments including liabilities and equity.
(3) Compensation for losses and tax deductions
A. Compensable losses arising from the Company's own operations and tax deductions
Deductible loss refers to the amount of taxable income in the following years which is calculated and approved in accordancewith the provisions of the tax law. For uncompensated losses (deductible losses) and tax deductions that can be carried forward infuture years as stipulated in the tax law, the provisional discrepancy is treated as deductible. Where it is anticipated that adequatetaxable income is likely to be obtained during the future period in which compensable losses or tax credits are available, thecorresponding deferred income tax assets are identified, subject to the amount of taxable income likely to be obtained, and theincome tax costs in the current profit statement are reduced.
B. Uncompensable losses resulting from merger
In the course of enterprise merger, if the Company obtains the temporary discrepancy that can be deducted from the purchaser,it will not confirm if it does not meet the qualification of deferred income tax asset confirmation on the date of purchase. Within 12months after the date of purchase, if new or further information is obtained, it indicates that the relevant situation of the date ofpurchase has already existed, and the economic benefit of the expected buyer can be realized by deducting the temporary discrepancyon the date of purchase, the relevant deferred income tax assets are recognized, the goodwill is reduced, the goodwill is not offset, thedifference is recognized as the current profit and loss in part; In addition to the above, the deferred income tax assets related toenterprise merger shall be recognized and included in the current profit and loss period.
④ Temporary differences in the formation of combined offsets
In preparing the consolidated financial statements, if there is a temporary difference between the book value of assets andliabilities in the consolidated balance sheet and the taxable basis of the taxpayer due to the offset of the unrealized internal sales gain
or loss, the Company acknowledges the deferred income tax assets or deferred income tax liabilities in the consolidated balance sheet,and adjusts the income tax expenses in the consolidated profit and profit statement, with the exception of the deferred income taxrelated to the transaction or event directly included in the owner's equity and the merger of the enterprise.
⑤ Share payment settled by equity
If the tax law provides for allowable pre-tax deduction of expenses related to share payment, within the period for which thecost and expense are recognized in accordance with the accounting standards, the Company shall calculate the tax basis andtemporary discrepancy based on the estimated pre-tax deduction amount at the end of the accounting period and confirm the relevantdeferred income tax if it meets the conditions for confirmation. Of these, the amount that can be deducted before tax in the futureexceeds the cost related to share payment recognized in accordance with the accounting standards, and the excess income tax shall bedirectly included in the owner's equity.
42. Leasing
(1) Accounting of operational leasing
① The Company as the leasor: Rentals from operational leasing are recognized as current gains on straight basis to theperiods of leasing. Where the lessor provides a lease-free period, the total rent shall be apportioned within the whole lease-free periodwithout deducting the lease-free period according to the straight line method or other reasonable method, and the rent-free periodshall be recognized as well as the corresponding liabilities. In the event that the lessor undertakes certain expenses of the lessee, theCompany shall apportion the balance of the rent expenses deducted from the total rent expenses according to the expenses within thelease term.
Initial direct expenses are recorded to current income account. In the event of an agreement or rent, the current profit and lossshall be included in the actual occurrence.
(2) When the Company is the operating lessor, the rent received shall be recognized as income within the lease term by thestraight line method. Where the lessor provides a lease-free period, the total rent shall be apportioned within the whole lease-freeperiod without deducting the lease-free period according to the straight line method or other reasonable method, and the rent-freeperiod shall be recognized as well as the corresponding liabilities. If the charterer undertakes certain expenses, the Company shalldistribute the rent income balance deducted from the total rent income during the lease term.
Initial direct expenses are recorded to current income account. If the amount of capital is large, the current profit and loss shallbe counted on the same basis as recognized rent income during the entire operating lease period. In the event of an agreement or rent,the current profit and loss shall be included in the actual occurrence.
(2) Accounting of operational leasing
None
43. Other significant accounting policies and estimates
Accounting of hedging
As of 1 January 2019
(1) Classification of inventories
The Company's hedge is a cash flow hedge.Cash flow hedging refers to the hedging of cash flow risk. The change in cash flow is derived from specific risks associatedwith recognized assets or liabilities, expected transactions that are likely to occur, or with respect to the components of theabove-mentioned project and will affect the profits and losses of the enterprise.
(2) Hedging tools and hedged projects
Hedging means a financial instrument designated by the Company for the purpose of hedging, whose fair value or cash flowvariation is expected to offset the fair value or cash flow variation of the hedged item, including:
① Financial liabilities measured at fair value with variations accounted into current income account Check-out options canonly be used as a hedging tool if the option is hedged, including those embedded in a hybrid contract. Derivatives embedded in ahybrid contract but not split cannot be used as separate hedging tools.
(2) Non-derivative financial assets or non-derivative financial liabilities which are measured at fair value and whose variationsare taken into account as gains and losses in the current period, except those designated as fair value and whose variations are takeninto account as gains and losses in the current period and whose variations in fair value due to its own credit risk are taken intoaccount as other consolidated gains.
Self-interest instruments are not financial assets or financial liabilities and cannot be used as hedging instruments.
Hedged items refer to items that can be reliably measured that expose the Company to the risk of fair value or cash flowchange and are designated as hedged objects. The Company designates the following individual projects, portfolios or components ashedged projects:
(1) Assets or liabilities have been recognized.
(2) unconfirmed commitments. Determining a commitment means a legally binding agreement for the exchange of a specifiednumber of resources at agreed prices on a particular future date or period.
(3) Expected transactions that are most likely to occur. Expected transactions are transactions that have not been promised butare expected to occur.
(4) Net foreign investment.
The above-mentioned project components are those that are less than the whole fair value of the project or the change in cashflow. The Company designates the following project components or combinations thereof as hedged projects:
① Fair value or cash flow variation part (risk component) of a project's overall fair value or cash flow variation caused onlyby a particular risk or risks. Based on an assessment in a particular market environment, the risk component should be individuallyidentified and reliably measured. The risk component also includes a portion where the change in the fair value or cash flow of thehedged item is only above or below a particular price or other variable.
② One or more selected contractual cash flows.
③ The component of the nominal amount of the project, that is, the specific part of the whole amount or quantity of theproject, may be a certain proportion of the whole project, or may be a certain level of the whole project. If a hierarchy containsadvance repayment rights and the fair value of the advance repayment rights is affected by changes in the risk of the hedgedrepayment rights, the hierarchy shall not be designated as a hedged item of fair value, except where the effect of the advancerepayment rights is already included in the measurement of the fair value of the hedged item.
（3） Assessment of hedging relationships
When the hedging relationship is initially specified, the Group officially specifies the related hedging relationships withofficial documents recording the hedging relationships, risk management targets and hedging strategies. This document sets out thehedging tools, hedged items, the nature of hedged risks, and the Company's assessment of hedged effectiveness. Hedging means afinancial instrument designated by the Company for the purpose of hedging, whose fair value or cash flow variation is Offset offsetthe fair value or cash flow variation of the hedged item, including: Such hedges are continuously evaluated on and after the initialspecified date to meet the requirements for hedging validity.If the hedging instrument has expired, sold, terminated or has been exercised (but the extension or replacement as part of thehedging strategy is not treated as expired or terminated under the contract), or the risk management objective has changed, causingthe hedging relationship no longer to meet the risk management objective, or the economic relationship between the hedging itemand the hedging instrument ceases to exist, or the impact of the credit risk begins to dominate in the change in the value of theeconomic relationship between the hedging item and the hedging tool, or the hedging strategy has ceased to meet other conditions ofthe hedging accounting method, the Company terminates the hedging accounting.If the hedging relationship no longer meets the requirements for the validity of the hedging relationship due to the hedgingratio, but the specified risk management objective of the hedging relationship remains unchanged, the Company will rebalance thehedging relationship.
(4) Validation and measurement
If the strict conditions of the hedging accounting method are satisfied, the following methods shall be applied:
Cash flow hedging
The interest or loss in the hedging instrument is an effective part of the hedge and is recognized as a cash flow hedge reserveas other consolidated gains, which is an ineffective part of the hedge (i.e. deducting other gains or losses after taking into accountother consolidated gains or losses) and is included in the current profit and loss. The amount of the cash flow hedge reserve isdetermined according to the lower of the absolute amount of the following two items: ① Cumulative gain or loss of the hedge toolfrom the start of the hedge. The amount in the effective arbitrage is recognized by the accumulative gains or losses from the startingof arbitrage and accumulative changes to the current value of future forecast cash flows from the start of arbitrage.
If the expected transaction of the hedged asset is subsequently recognized as a non-financial asset or non-financial liability, orif the expected transaction of the non-financial asset or non-financial liability forms a defined commitment to the applicable fairvalue hedge accounting, the amount of the cash flow hedge reserve originally recognized in the other consolidated income istransferred out to account for the initial recognized amount of the asset or liability. The remaining cash flow hedges are transferredout of the cash flow hedge reserve recognized in the other consolidated income for the same period of time during which theexpected cash flow of the hedged period affects the gain or loss, as expected for sale.
following accounting policies are applied in 2018 and earlier
When the hedge relationship begins, the Group specifies the hedge relationship in writing to specify the follow: risksmanagement target and hedging strategy; nature of the hedged item and quantity; nature and quantity of hedging instruments, natureand identification of hedged risks; evaluation of the hedging effectiveness, including the economic relationship between the hedgeditem and hedging instrument, hedging ratio, analysis of the hedging ineffectiveness source; the beginning date of the specifiedhedging relationship.
Cash flow hedging
During the existence of the hedging relationship, the part of the cumulative gain or loss of the hedging instrument within thechange to the current value of the cumulative cash flow of the hedged item is included into other misc. incomes. The part that islower or larger than the cash flow change is included into the gain or loss of the current period.
When the hedging relationship ends and related inventory is recognized, the hedging instrument gain or loss recognized in―Other misc. income hedging reserve‖ will be transferred to ―Raw materials‖.Repurchase of the Company’s shares
（1） In the event of a reduction in the Company's share capital as approved by legal procedure, the Company shall reduce theshare capital by the total amount of the written-off shares, adjust the owner's equity by the difference between the price paid by thepurchased stocks (including transaction costs) and the total amount of the written-off shares, offset the capital reserve (share capitalpremium), surplus reserve and undistributed profits in turn; A portion of a capital reserve (share capital premium) that is less than thetotal face value and less than the total face value.
（2） The total expenditure of the repurchase shares of the Company, which is managed as an inventory share before they arecancelled or transferred, is converted to the cost of the inventory shares.
（3） Increase in the capital reserve (capital premium) at the time of transfer of an inventory unit, the portion of the transferincome above the cost of the inventory unit; Lower than the inventory stock cost, the capital reserve (share capital premium), surplusreserve, undistributed profits in turn.
Significant accounting judgment and estimate
The Company continuously reviews significant accounting judgment and estimate adopted for the reasonable forecast of futureevents based on its historical experience and other factors. Significant accounting judgment and assumptions that may lead to majoradjustment of the book value of assets and liabilities in the next accounting year are listed as follows:
Classification of financial assets
The major judgements involved in the classification of financial assets include the analysis of business model and contractcash flow characteristics.
The Company determines the business mode of managing financial assets at the level of financial asset portfolio, taking intoaccount such factors as how to evaluate and report financial asset performance to key managers, the risks that affect financial assetperformance and how to manage it, and how to obtain remuneration for related business managers.
When the Company assesses whether the contractual cash flow of financial assets is consistent with the basic borrowingarrangement, there are the following main judgments: whether the principal may change due to early repayment and other reasonsduring the duration of the period or the amount of change; whether the interest Including the time value of money, credit risk, otherbasic borrowing risks, and consideration of costs and profits. For example, whether the amount paid in advance reflects only theprincipal outstanding and interest on the basis of the principal outstanding and reasonable compensation due for the early terminationof the contract.
The Measurement of Expected Credit Loss of Accounts Receivable
The Company calculates the expected credit loss of accounts receivable through the risk exposure of accounts receivabledefault and the expected credit loss rate, and determines the expected credit loss rate based on the default probability and the defaultloss rate. In determining the expected credit loss rate, the Company uses the internal historical credit loss experience data and adjuststhe historical data in combination with the current situation and prospective information. When considering forward-lookinginformation, the Company uses indicators such as risk of economic downturn, external market environment, technologicalenvironment and changes in customer conditions. The Company regularly monitors and reviews the assumptions related to thecalculation of expected credit losses.
Deferred income tax assets
If there is adequate taxable profit to deduct the loss, the deferred income tax assets should be recognized by all the unused tax
loss. This requires the management to make a lot of judgment to forecast the time and amount of future taxable profit and determinethe amount of the deferred tax assets based on the taxation strategy.Construction contractsThe Group recognizes income based on the completion of individual construction contract. The management determines thecompletion percentage based on the actual cost in the total budget and forecasts the contract income. The starting and completiondates of construction contracts fall in different account periods. The Group will review and adjust contract income and costestimation in budgets (if the actual contract income is less than the estimate or actual contract cost, contract estimation loss provisionwill be made).Estimate of fair valueThe Group uses fair value to measure investment real estate and needs to estimate the fair value of investment real estate atleast quarterly. This requires the management to reasonably estimate the fair value of the investment real estate with the help ofvaluation experts.Development costFor property that has been handed over with income recognized, but whose public facilities have not been constructed or notbeen completed, the management will estimate the development cost for the part that has not been started according to the budget toreflect the operation result of the property sales.
44. Major changes in accounting policies and estimates
(1) Changes in accounting policies
√ Applicable □ Inapplicable
| Account policy changes and reasons | Approval procedure | Remark |
On April 30, 2019, the Ministry of Finance issued the "Notice onRevising the Format of General Enterprise Financial Statements for2019" (Caihui [2019] No. 6), which requires that new financialinstruments standards have been implemented but new incomestandards and new Leasing companies should prepare financialstatements as follows: In the balance sheet, the line items "Billsreceivable and accounts receivable" were split into "Bills receivable"and "Accounts receivable"; the item "Finance receivables" was addedto reflect fairness on the balance sheet Bills receivable and accountsreceivable, whose value is measured and whose changes are includedin other comprehensive income; split the "bills payable and accountspayable" line items into "bills payable" and "payables".Financial assets derecognised as a result of amortized cost ("-" forloss)On September 19, 2019, the Ministry of Finance issued the "Noticeon Revising and Issuing the Format of Consolidated FinancialStatements (2019 Version)" (Caihui [2019] No. 16), which will beimplemented in conjunction with Caihui [2019] No. 6.The Company prepared comparative statements in accordance withthe financial statement format specified in Caihui [2019] No. 6 andCaihui [2019] No. 16, and changed the presentation of relevantfinancial statements using the retroactive adjustment method.The Ministry of Finance issued "Accounting Standards forEnterprises No. 22-Recognition and Measurement of FinancialInstruments" (Caihui [2017] No. 7) and "Accounting Standards forEnterprises No. 23-Transfer of Financial Assets" (Cai Accounting[ 2017] No. 8), "Accounting Standards for Business Enterprises No.24-Hedging Accounting" (Caihui [2017] No. 9), on May 2, 2017, the"Accounting Standards for Business Enterprises No. 37-Presentationof Financial Instruments" ( Caihui [2017] No. 14) (the abovestandards are hereinafter collectively referred to as "new financialinstrument standards"). The domestic listed companies are required toimplement the new financial instruments standards from January 1,2019. The Company implemented the above new financial instrumentstandards on January 1, 2019, and adjusted the relevant content of theaccounting policy. For details, see Note III.9.If the confirmation and measurement of financial instruments beforeJanuary 1, 2019 are inconsistent with the requirements of the newfinancial instrument standards, the Company will retroactively adjustthe classification and measurement (including impairment) offinancial instruments in accordance with the provisions of the newfinancial instrument standards. The difference between the originalbook value of financial instruments and the new book value on theimplementation date of the new financial instruments standard (ie,January 1, 2019) is included in retained earnings or othercomprehensive income on January 1, 2019. At the same time, theCompany has not adjusted the comparative financial statement data.On May 9, 2019, the Ministry of Finance issued the "AccountingStandards for Business Enterprises No. 7-Exchange of Non-MonetaryAssets" (Caihui [2019] No. 8). According to the requirements, the
Accounting policychanges wereconsidered andapproved by resolutionsof the Eighth Board ofDirectors at itsseventeenth meeting, theEighth Board ofDirectors at its fifteenthmeeting and the EighthBoard of Directors at itstwenty-second meeting.
The first implementation of thenew financial instrumentsguidelines, new income standards,new lease standards, adjustmentsthe first implementation of thefinancial statements at thebeginning of the year
The cumulative impact of the above accounting policies is as follows:
Due to the implementation of the new financial instruments, the consolidated financial statements of the Company haveadjusted the deferred income tax assets of 6,594,#*@$9 Yuan on January 1, 2019. The amount of related adjustments affecting theparent company's equity in the consolidated financial statements of the Company is RMB-44,571,870.18, of which the surplusreserve is 524,860.03, the undistributed profit is RMB-39,930,304.63, and other comprehensive income is RMB-5,166,425.58. Thefinancial statements of our parent company are adjusted to -27, 391.55 yuan on January 1, 2019. The amount of related adjustmentsaffecting the owner ’s equity in the financial statements of the parent company of the Company was RMB82,174.65, of which thesurplus reserve was RMB524,860.03, undistributed profit was RMB4,723,740.20, and other comprehensive income wasRMB-5,166,425.58.
(2) Changes in major accounting estimates
□ Applicable √ Inapplicable
3. The first implementation of the new financial instruments guidelines, new income standards, new leasestandards, adjustments the first implementation of the financial statements at the beginning of the year
√ Applicable □ Inapplicable
Consolidated Balance Sheet
In RMB
| Item | 31 December 2018 | 1 January 2019 | Adjustment |
| Current asset: | |||
| Monetary capital | 1,389,062,083.76 | 1,389,062,083.76 | |
| Settlement provision | |||
| Outgoing call loan | |||
| Transactional financial assets | |||
| Financial assets measured at fair value with variations accounted into current income account | |||
| Derivative financial assets | |||
| Notes receivable | 140,139,692.84 | 138,239,692.84 | -1,900,000.00 |
| Account receivable | 1,920,075,031.85 | 1,866,763,789.49 | -53,311,242.36 |
| Receivable financing | 400,000.00 | 400,000.00 | |
| Prepayment | 46,454,844.74 | 46,454,844.74 | |
| Insurance receivable | |||
| Reinsurance receivable |
| Provisions of Reinsurance contracts receivable | |||
| Other receivables | 139,990,188.26 | 142,135,200.54 | 2,145,012.28 |
| Including: interest receivable | |||
| Dividend receivable | |||
| Repurchasing of financial assets | |||
| Inventory | 651,405,832.29 | 651,405,832.29 | |
| Contract assets | |||
| Assets held for sales | |||
| Non-current assets due in 1 year | |||
| Other current assets | 51,698,111.14 | 51,698,111.14 | |
| Total current assets | 4,338,825,784.88 | 4,287,659,554.80 | -51,166,230.08 |
| Non-current assets: | |||
| Loan and advancement provided | |||
| Debt investment | |||
| Sellable financial assets | 21,674,008.23 | -21,674,008.23 | |
| Other debt investment | |||
| Investment held until mature | |||
| Long-term receivable | |||
| Long-term share equity investment | 70,105,657.88 | 70,105,657.88 | |
| Investment in other equity tools | 21,674,008.23 | 21,674,008.23 | |
| Other non-current financial assets | |||
| Investment real estate | 5,256,442,406.63 | 5,256,442,406.63 | |
| Fixed assets | 455,274,241.83 | 455,274,241.83 | |
| Construction in process | 58,269,452.72 | 58,269,452.72 | |
| Productive biological assets |
| Gas & petrol | |||
| Use right assets | |||
| Intangible assets | 80,313,240.67 | 80,313,240.67 | |
| R&D expense | |||
| Goodwill | |||
| Long-term amortizable expenses | 2,114,331.46 | 2,114,331.46 | |
| Deferred income tax assets | 356,474,925.76 | 363,069,285.66 | 6,594,359.90 |
| Other non-current assets | 19,360,083.67 | 19,360,083.67 | |
| Total of non-current assets | 6,320,028,348.85 | 6,326,622,708.75 | 6,594,359.90 |
| Total of assets | 10,658,854,133.73 | 10,614,282,263.55 | -44,571,870.18 |
| Current liabilities | |||
| Short-term loans | 208,000,000.00 | 208,000,000.00 | |
| Loans from Central Bank | |||
| Call loan received | |||
| Transactional financial liabilities | |||
| Financial liabilities measured at fair value with variations accounted into current income account | |||
| Derivative financial liabilities | 1,625,725.00 | 1,625,725.00 | |
| Notes payable | 507,864,518.19 | 507,864,518.19 | |
| Account payable | 1,039,630,798.64 | 1,039,630,798.64 | |
| Prepayment received | 278,577,848.54 | 278,577,848.54 | |
| Contract liabilities | |||
| Selling of repurchased financial assets | |||
| Deposit received and held for others | |||
| Entrusted trading of securities | |||
| Entrusted selling of securities |
| Employees' wage payable | 44,513,062.17 | 44,513,062.17 | |
| Taxes payable | 107,709,999.19 | 107,709,999.19 | |
| Other payables | 813,118,699.84 | 813,118,699.84 | |
| Including: interest payable | 2,098,971.44 | 2,098,971.44 | |
| Dividend payable | |||
| Fees and commissions payable | |||
| Reinsurance fee payable | |||
| Liabilities held for sales | |||
| Non-current liabilities due in 1 year | 200,000,000.00 | 200,000,000.00 | |
| Other current liabilities | 9,328,682.25 | 9,328,682.25 | |
| Total current liabilities | 3,210,369,333.82 | 3,210,369,333.82 | |
| Non-current liabilities: | |||
| Insurance contract provision | |||
| Long-term loans | 1,193,978,153.39 | 1,193,978,153.39 | |
| Bond payable | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term employees’ wage payable | |||
| Anticipated liabilities | 6,831,162.99 | 6,831,162.99 | |
| Deferred earning | 10,401,161.30 | 10,401,161.30 | |
| Deferred income tax liabilities | 1,042,086,700.35 | 1,042,086,700.35 | |
| Other non-current liabilities | |||
| Total of non-current liabilities | 2,253,297,178.03 | 2,253,297,178.03 |
| Total liabilities | 5,463,666,511.85 | 5,463,666,511.85 | |
| Owner’s equity: | |||
| Share capital | 1,155,481,686.00 | 1,155,481,686.00 | |
| Other equity tools | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Capital reserves | 1,454,191.59 | 1,454,191.59 | |
| Less: Shares in stock | 10,831,437.66 | 10,831,437.66 | |
| Other miscellaneous income | 7,382,087.59 | 2,215,662.01 | -5,166,425.58 |
| Special reserves | |||
| Surplus reserves | 120,475,221.40 | 121,000,081.43 | 524,860.03 |
| Common risk provisions | |||
| Retained profit | 3,921,225,872.96 | 3,881,295,568.33 | -39,930,304.63 |
| Total of owner’s equity belong to the parent company | 5,195,187,621.88 | 5,150,615,751.70 | -44,571,870.18 |
| Minor shareholders’ equity | |||
| Total of owners’ equity | 5,195,187,621.88 | 5,150,615,751.70 | -44,571,870.18 |
| Total of liabilities and owner’s interest | 10,658,854,133.73 | 10,614,282,263.55 | -44,571,870.18 |
About the adjustmentBalance Sheet of the Parent Company
In RMB
| Item | 31 December 2018 | 1 January 2019 | Adjustment |
| Current asset: | |||
| Monetary capital | 410,118,157.55 | 410,118,157.55 | |
| Transactional financial assets | |||
| Financial assets measured at fair value with variations accounted into current income account | |||
| Derivative financial assets |
| Notes receivable | 200,000,000.00 | 200,000,000.00 | |
| Account receivable | 471,039.12 | 479,634.37 | 8,595.25 |
| Receivable financing | |||
| Prepayment | 6,733,047.16 | 6,733,047.16 | |
| Other receivables | 822,543,653.04 | 822,644,623.99 | 100,970.95 |
| Including: interest receivable | |||
| Dividend receivable | 100,000,000.00 | 100,000,000.00 | |
| Inventory | |||
| Contract assets | |||
| Assets held for sales | |||
| Non-current assets due in 1 year | |||
| Other current assets | 919,388.18 | 919,388.18 | |
| Total current assets | 1,440,785,285.05 | 1,440,894,851.25 | 109,566.20 |
| Non-current assets: | |||
| Debt investment | |||
| Sellable financial assets | 21,674,008.23 | -21,674,008.23 | |
| Other debt investment | |||
| Investment held until mature | |||
| Long-term receivable | |||
| Long-term share equity investment | 983,339,494.35 | 983,339,494.35 | |
| Investment in other equity tools | 21,674,008.23 | 21,674,008.23 | |
| Other non-current financial assets | |||
| Investment real estate | 309,189,866.37 | 309,189,866.37 | |
| Fixed assets | 53,784,811.23 | 53,784,811.23 | |
| Construction in process | |||
| Productive biological assets | |||
| Gas & petrol | |||
| Use right assets |
| Intangible assets | 2,112,301.97 | 2,112,301.97 | |
| R&D expense | |||
| Goodwill | |||
| Long-term amortizable expenses | 917,499.68 | 917,499.68 | |
| Deferred income tax assets | 34,555,598.81 | 34,528,207.26 | -27,391.55 |
| Other non-current assets | |||
| Total of non-current assets | 1,405,573,580.64 | 1,405,546,189.09 | -27,391.55 |
| Total of assets | 2,846,358,865.69 | 2,846,441,040.34 | 82,174.65 |
| Current liabilities | |||
| Short-term loans | 200,000,000.00 | 200,000,000.00 | |
| Transactional financial liabilities | |||
| Financial liabilities measured at fair value with variations accounted into current income account | |||
| Derivative financial liabilities | |||
| Notes payable | |||
| Account payable | 676,941.85 | 676,941.85 | |
| Prepayment received | 733,274.16 | 733,274.16 | |
| Contract liabilities | |||
| Employees' wage payable | 2,145,763.39 | 2,145,763.39 | |
| Taxes payable | 341,004.65 | 341,004.65 | |
| Other payables | 300,006,406.51 | 300,006,406.51 | |
| Including: interest payable | 740,208.33 | 740,208.33 | |
| Dividend payable | |||
| Liabilities held for sales | |||
| Non-current liabilities due in 1 year | |||
| Other current liabilities | |||
| Total current liabilities | 503,903,390.56 | 503,903,390.56 |
| Non-current liabilities: | |||
| Long-term loans | 500,000,000.00 | 500,000,000.00 | |
| Bond payable | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Lease liabilities | |||
| Long-term payable | |||
| Long-term employees’ wage payable | |||
| Anticipated liabilities | |||
| Deferred earning | |||
| Deferred income tax liabilities | 64,130,617.41 | 64,130,617.41 | |
| Other non-current liabilities | |||
| Total of non-current liabilities | 564,130,617.41 | 564,130,617.41 | |
| Total liabilities | 1,068,034,007.97 | 1,068,034,007.97 | |
| Owner’s equity: | |||
| Share capital | 1,155,481,686.00 | 1,155,481,686.00 | |
| Other equity tools | |||
| Including: preferred stock | |||
| Perpetual bond | |||
| Capital reserves | 360,835.52 | 360,835.52 | |
| Less: Shares in stock | 10,831,437.66 | 10,831,437.66 | |
| Other miscellaneous income | 8,756,553.46 | 3,590,127.88 | -5,166,425.58 |
| Special reserves | |||
| Surplus reserves | 120,475,221.40 | 121,000,081.43 | 524,860.03 |
| Retained profit | 504,081,999.00 | 508,805,739.20 | 4,723,740.20 |
| Total of owners’ equity | 1,778,324,857.72 | 1,778,407,032.37 | 82,174.65 |
| Total of liabilities and owner’s interest | 2,846,358,865.69 | 2,846,441,040.34 | 82,174.65 |
About the adjustment
(4) Description of the 2019 implementation of the new financial instrument criteria, new lease standardretrospective adjustment of the previous period comparison data
√ Applicable □ Inapplicable
(1) Financial asset classification and measurement table before and after implementation of the new financialinstruments guidelines on 1 January 2019A. Consolidated Financial Statement
| December 31, 2018 (original financial instruments standard) | January, 2019 (new financial instruments standard) | ||||
| Item | Measurement type | Book value | Item | Measurement type | Book value |
| Monetary capital | Amortized cost | 1,389,062,083.76 | Monetary capital | Amortized cost | 1,389,062,083.76 |
| Notes receivable | Amortized cost | 139,739,692.84 | Notes receivable | Amortized cost | 139,739,692.84 |
| Notes receivable | Amortized cost | 400,000.00 | Receivable financing | Reason for measurement at fair value with variations accounted into current income account | 400,000.00 |
| Account receivable | Amortized cost | 1,920,075,031.85 | Account receivable | Amortized cost | 1,866,763,789.49 |
| Other receivables | Amortized cost | 139,990,188.26 | Other receivables | Amortized cost | 142,135,200.54 |
| Sellable financial assets | Measured at cost (equity instruments) | 21,674,008.23 | Investment in other equity tools | Reason for measurement at fair value with variations accounted into current | 21,674,008.23 |
| income account | |||||
| Deferred income tax assets | Amortized cost | 356,474,925.76 | Deferred income tax assets | Amortized cost | 363,069,285.66 |
B. Financial Statements of the Parent
| December 31, 2018 (original financial instruments standard) | January, 2019 (new financial instruments standard) | ||||
| Item | Measurement type | Book value | Item | Measurement type | Book value |
| Monetary capital | Amortized cost | 410,118,157.55 | Monetary capital | Amortized cost | 410,118,157.55 |
| Notes receivable | Amortized cost | 200,000,000.00 | Notes receivable | Amortized cost | 200,000,000.00 |
| Account receivable | Amortized cost | 471,039.12 | Account receivable | Amortized cost | 479,634.37 |
| Other receivables | Amortized cost | 822,543,653.04 | Other receivables | Amortized cost | 822,644,623.99 |
| Sellable financial assets | Measured at cost (equity instruments) | 21,674,008.23 | Investment in other equity tools | Reason for measurement at fair value with variations accounted into current income account | 21,674,008.23 |
| Deferred income tax assets | Amortized cost | 34,555,598.81 | Deferred income tax assets | Amortized cost | 34,528,207.26 |
② On January 1, 2019, the book value of the original financial assets was adjusted to the book value of the new financialinstruments according to the new financial instruments guidelinesA. Consolidated Financial Statement
| Item | Book value on December 31, 2018 (original financial instruments standard) | Re-classification | Re-measurement | Book value on January 1, 2019 (new financial instruments standard) |
| 1. Financial assets measured at amortized cost under the new financial instruments standard | ||||
| Notes receivable (original financial instrument standard) | 140,139,692.84 | |||
| Less: transferred out to receivables financing | 400,000.00 | |||
| Re-measurement: expected credit loss | ||||
| Notes receivable (new financial instrument standard) | 139,739,692.84 | |||
| Receivable financing | 400,000.00 | 400,000.00 | ||
| Receivable account (original financial instrument standard) | 1,920,075,031.85 | |||
| Re-measurement: expected credit loss | 53,311,242.36 | |||
| Receivable account (original financial instrument standard) | 1,866,763,789.49 | |||
| Other receivables (original financial instrument standard) | 139,990,188.26 | |||
| Add: re-measurement: expected credit loss | -2,145,012.28 | |||
| Other receivables (new financial instrument standard) | 142,135,200.54 | |||
| 2. Financial assets measured at fair value under the new financial instruments standard and whose changes are included in other comprehensive income | ||||
| Tranfer from sellable financial assets | 21,674,008.23 | |||
| Add: re-measurement at fair value | ||||
| Investment in other equity instruments (amount listed according to the new financial instrument standard) | 21,674,008.23 | |||
B. Financial Statements of the Parent
| Item | Book value on December 31, 2018 (original financial instruments standard) | Re-classification | Re-measurement | Book value on January 1, 2019 (new financial instruments standard) |
| Receivable account (original financial instrument standard) | 471,039.12 | |||
| Add: re-measurement: | -8,595.25 |
| expected credit loss | ||||
| Receivable account (new financial instrument standard) | 479,634.37 | |||
| Other receivables (original financial instrument standard) | 822,543,653.04 | |||
| Add: re-measurement: expected credit loss | -100,970.95 | |||
| Other receivables (new financial instrument standard) | 822,644,623.99 |
③ On January 1, 2019, the new financial instruments standard will be implemented to adjust the original financial assetimpairment reserve to the adjustment table of the new financial instrument standard financial asset impairment reserve
A. Consolidated Financial Statement
| Measurement type | Impairment reserve accrued on December 31, 2018 (according to the original financial instrument standard) | Re-classification | Re-measurement | Impairment reserve accrued on January 1, 2019 (according to the new financial instruments standard) |
| (1) Financial assets measured at amortized cost | ||||
| Including: Provision for receivable account impairment | 366,424,083.34 | 53,311,242.36 | 419,735,325.70 | |
| Provision for impairment of other receivables | 40,885,037.45 | -2,145,012.28 | 38,740,025.17 |
| (2) Financial assets measured at fair value with variations accounted into current income account | ||||
| Provision for impairment of available-for-sale financial assets | 6,888,567.44 | -6,888,567.44 |
B. Financial Statements of the Parent
| Measurement type | Impairment reserve accrued on December 31, 2018 (according to the original financial instrument standard) | Re-classification | Re-measurement | Impairment reserve accrued on January 1, 2019 (according to the new financial instruments standard) |
| (1) Financial assets measured at amortized cost |
| Including: Provision for receivable account impairment | 14,568.22 | -8,595.25 | 5,972.97 | |
| Provision for impairment of other receivables | 14,042,899.68 | -100,970.95 | 13,941,928.73 | |
| (2) Financial assets measured at fair value with variations accounted into current income account | ||||
| Provision for impairment of available-for-sale financial assets | 6,888,567.44 | -6,888,567.44 |
VI. Taxation
1. Major taxes and tax rates
| Tax | Tax basis | Tax rate |
| VAT | Taxable income | 3, 5, 6, 9, 10, 11, 13, 16 |
| City maintenance and construction tax | Taxable turnover | 1, 5, 7 |
| Enterprise income tax | Taxable income | See the following table |
| Education surtax | Taxable turnover | 3 |
| Local education surtax | Taxable turnover | 2 |
Tax rates applicable for different tax payers
| Tax payer | Income tax rate |
| The Company | 25% |
| Shenzhen Fangda Jianke Co., Ltd. (hereinafter Fangda Jianke) | 15% |
| Fangda Zhichuang Technology Co., Ltd, (Fangda Zhichuang) | 15% |
| Fangda New Material (Jiangxi) Co., Ltd. (hereinafter Fangda New Material) | 15% |
| Dongguan Fangda New Material Co., Ltd. (hereinafter Dongguan New Material) | 15% |
| Shenzhen Kexunda Software Co., Ltd. (hereinafter Kexunda) | 25% |
| Chengdu Fangda Construction Technology Co., Ltd. (hereinafter Chengdu Fangda) | 15% |
| Shenzhen Fangda Property Development Co., Ltd. (hereinafter Fangda Property Development) | 25% |
| Shenzhen Fangda New Energy Co., Ltd. (hereinafter Fangda New Energy) | 25% |
| Shenzhen Fangda Property Development Co., Ltd. (hereinafter Fangda Property Development) | 25% |
| Jiangxi Fangda Property Development Co., Ltd. (hereinafter Jiangxi Property Development) | 25% |
| Pingxiang Fangda Luxin New Energy Co., Ltd. (hereinafter Luxin New Energy) | 25% |
| Pingxiang Xiangdong Fangda New Energy Co., Ltd. (hereinafter Xiangdong New Energy) | 25% |
| Nanchang Xinjian Fangda New Energy Co., Ltd. (hereinafter Xinjian New Energy) | 25% |
| Dongguan Fangda New Energy Co., Ltd. (hereinafter Dongguan New Energy) | 25% |
| Shenzhen QIanhai Kechuangyuan Software Co., Lt.d (hereinafter Kechuangyuan Software) | 25% |
| Fangda Automatic (Hong Kong) Co., Ltd. (hereinafter Automation Hong Kong) | 16.50% |
| Shihui International Holding Co., Ltd. (hereinafter Shihui International) | 16.50% |
| Shenzhen Hongjun Investment Co., Ltd. | 25% |
| Fangda Australia Pty Ltd (hereinafter Jianke Australia) | 30% |
| Shanghai Fangda Jingling Technology Co., Ltd. (hereinafter Jingling Technology) | 25% |
| Shenzhen Fangda Cloud Rail Technology Co., Ltd. (hereinafter Fangda Cloud Rail) | 25% |
| Shanghai Fangda Jianzhi Technology Co., Ltd. (hereinafter Shanghai Fangda Jianzhi) | 25% |
| Shenzhen Zhongrong Litai Investment Co. Ltd. (Zhongrong Litai) | 25% |
| Chengda Fangda Curtain Wall Technology Co., Ltd. | 25% |
| Fangda Southeast Asia Co., Ltd. | 20% |
2. Tax preference
(1) According to the Certification of High-tech Enterprise issued by Shenzhen Commission of Technological Innovation, ShenzhenCommission of Finance, Shenzhen National Tax Bureau, and Shenzhen Local Tax Bureau, Fangda Jianke was entitled to enjoy a taxpreference of enterprise income tax of 15% for three years (2018-2020) since the qualifications were awarded on October 16, 2018.
(2) According to the Certification of High-tech Enterprise issued by Shenzhen Commission of Technological Innovation, Shenzhen
Commission of Finance, Shenzhen National Tax Bureau, and Shenzhen Local Tax Bureau, Fangda Zhichuang was entitled to enjoy atax preference of enterprise income tax of 15% for three years (2018-2020) since the qualifications were awarded on October 16,2018.
(3) According to the Certification of High-tech Enterprise issued by Jiangxi Ministry of Science and Technology, Jiangxi Ministry ofFinance, Jiangxi National Tax Bureau, and Jiangxi Local Tax Bureau, Fangda New Material was entitled to enjoy a tax preference ofenterprise income tax of 15% for three years (2018-2020) since the qualifications were awarded on August 13, 2018.
（4） On November 7, 2014, the State Tax Bureau of Xinjin County of Sichuan Province approved by "zzy024", a subsidiary ofChengdu, a large company belonging to the industrial enterprises in the western region, shall implement the enterprise income taxconcession with application rate of 15 per cent as of January 1, 2014.
(4) On December 14, 2017, the subsidiary Chengdu Fangda Construction Technology Co., Ltd. obtained the ―High-tech EnterpriseCertificate‖ jointly issued by Sichuan Science and Technology Department, Sichuan Provincial Department of Finance, SichuanProvincial State Taxation Bureau and Sichuan Provincial Local Taxation Bureau, within three years after obtaining the qualificationof high-tech enterprises (2017 to 2019), the income tax is levied at 15%.
(6) On November 2, 2015, the Songshan Lake Taxation Bureau of the State Taxation Bureau of Dongguan City notified the―Songshan Lake National Taxation Pass [2015] No. 3305‖ that the photovoltaic power generation project undertaken by thesubsidiary Dongguan Fangda New Energy Co., Ltd. belongs to public infrastructure projects supported by the state will be exemptedfrom corporate income tax for three years and corporate income tax will be halved for three years. In 2015, the Company entered theexemption period.
(7) On March 2, 2016, according to the document issued by Luxi National Tax Bureau, the PV power generation project undertakenby Subsidiary Pingxiang Fangda Luxin New Energy Co., Ltd, became the infrastructure project supported by the central government.the Company enjoys a three-year enterprise income tax relief and 50% reduction for another three years. In 2016, the Companyentered the exemption period.
(8) On June 2, 2016, according to the document issued by Nanchang Xinjian District National Tax Bureau, the PV power generationproject undertaken by Subsidiary Nanchang Xinjian Fangda New Energy Co., Ltd, became the infrastructure project supported by thecentral government. the Company enjoys a three-year enterprise income tax relief and 50% reduction for another three years. In 2016,the Company entered the exemption period.
(9) According to the registration to Shenzhen National Tax Bureau, subsidiary Kechuangyuan Software became a newly establishedsoftware and integrated circuit designing company and can enjoy the two-year full exemption and three-year half-exemption of theenterprise income tax from the first year that the Company records profit. Kexunda started making profits in 2016 and therefore startsto enjoy the exemption.
(5) On November 30, 2016, the subsidiary Dongguan Fangda New Materials Co., Ltd. obtained the ―High-tech EnterpriseCertificate‖ jointly issued by Guangdong Science and Technology Department, Guangdong Provincial Department of Finance,Guangdong Provincial State Taxation Bureau and Guangdong Provincial Local Taxation Bureau. The income tax shall be levied at15% within three years after the qualification of the high-tech enterprise is recognized (2016 to 2018). On December 2, 2019, theOffice of the National High-tech Enterprise Certification Management Work Leading Group issued a notice on the high-techenterprise certification management work network on the announcement of the second batch of Guangdong Province's 2019approved high-tech enterprise lists. The publicity period is 10 On the working day, the subsidiary Dongguan New Materials Co., Ltd.
is on this public announcement list.
VII. Notes to the consolidated financial statements
1. Monetary capital
In RMB
| Item | Closing balance | Opening balance |
| Inventory cash: | 4,244.86 | 5,167.01 |
| Bank deposits | 755,440,390.76 | 994,706,369.72 |
| Other monetary capital | 454,367,343.33 | 394,350,547.03 |
| Total | 1,209,811,978.95 | 1,389,062,083.76 |
| Including: total amount deposited in overseas | 54,640,438.33 | 25,269,577.35 |
Other note
① The restricted funds used in bank deposits are RMB30,184, 637.23, of which RMB22,944,6#*@$ and RMB7,239, 903.87 arefrozen due to lawsuit; In other currency funds, 454,357,#*@$3 yuan is restricted in use, which mainly includes deposit of draft,deposit of stage guarantee and deposit of bond. In addition, there are no other funds in the monetary funds at the end of the periodthat have restrictions on use and potential recovery risks due to mortgages, pledges or freezing.
② In the preparation of the cash flow statement, the above-mentioned deposits and other restricted deposits are not used as cashand cash equivalents.
③ At the end of the period, the amount deposited by the Group overseas is equivalent to RMB 54,640,438.33.
2. Transactional financial assets
In RMB
| Item | Closing balance | Opening balance |
| Financial assets measured at fair value with variations accounted into current income account | 10,330,062.18 | |
| Including: | ||
| Investment in financial products | 10,330,062.18 | |
| Including: | ||
| Total | 10,330,062.18 |
Others:
3. Derivative financial assets
In RMB
| Item | Closing balance | Opening balance |
Others:
3. Notes receivable
(1) Classification of notes receivable
In RMB
| Item | Closing balance | Opening balance |
| Bank acceptance | 45,540,691.10 | 5,600,000.00 |
| Commercial acceptance | 259,530,239.87 | 134,139,692.84 |
| Total | 305,070,930.97 | 139,739,692.84 |
(2) The Group has no endorsed or discounted immature receivable notes at the end of the period.
In RMB
| Item | De-recognized amount | Not de-recognized amount |
| Bank acceptance | 22,141,658.40 | |
| Commercial acceptance | 121,102,597.35 | |
| Total | 143,244,255.75 |
4. Account receivable
(1) Account receivable disclosed by categories
In RMB
| Type | Closing balance | Opening balance | ||||||||
| Remaining book value | Bad debt provision | Book value | Remaining book value | Bad debt provision | Book value | |||||
| Amount | Proportion | Amount | Provision rate | Amount | Proportion | Amount | Provision rate | |||
| Account receivable for which bad debt provision is made by group | 127,405,670.07 | 5.30% | 127,405,670.07 | 100.00% | 127,037,156.92 | 5.55% | 127,037,156.92 | 100.00% | ||
| Including: | ||||||||||
| 1. Customer 1 | 54,873,223.21 | 2.28% | 54,873,223.21 | 100.00% | 54,442,394.96 | 2.38% | 54,442,394.96 | 100.00% | ||
| 2. Customer 2 | 21,739,381.96 | 0.90% | 21,739,381.96 | 100.00% | 21,801,697.06 | 0.95% | 21,801,697.06 | 100.00% | ||
| 3. Customer 3 | 15,239,752.83 | 0.63% | 15,239,752.83 | 100.00% | 15,239,752.83 | 0.67% | 15,239,752.83 | 100.00% | ||
| 4. Customer 4 | 23,857,146.77 | 0.99% | 23,857,146.77 | 100.00% | 23,857,146.77 | 1.04% | 23,857,146.77 | 100.00% | ||
| 4. Customer 5 | 9,071,535.95 | 0.38% | 9,071,535.95 | 100.00% | 9,071,535.95 | 0.40% | 9,071,535.95 | 100.00% | ||
| 6. Customer 6 | 2,624,629.35 | 0.12% | 2,624,629.35 | 100.00% | 2,624,629.35 | 0.11% | 2,624,629.35 | 100.00% | ||
| Account receivable for which bad debt provision is made by group | 2,277,394,066.06 | 94.70% | 321,202,758.99 | 14.10% | 1,956,191,307.07 | 2,159,461,958.27 | 94.45% | 292,698,168.78 | 13.55% | 1,866,763,789.49 |
| Including: | ||||||||||
| 1. Portfolio 1: Engineering operations section | 1,887,433,393.29 | 78.48% | 291,354,009.39 | 15.44% | 1,596,079,383.90 | 1,833,281,999.98 | 80.18% | 281,233,041.66 | 15.34% | 1,552,048,958.32 |
| 2. Portfolio 2: Real estate business payments | 262,363,696.03 | 10.91% | 26,082,207.48 | 9.94% | 236,281,488.55 | 198,838,152.16 | 8.70% | 8,432,719.59 | 4.24% | 190,405,432.57 |
| 3. Combination 3: Other business models | 127,596,976.74 | 5.31% | 3,766,542.12 | 2.95% | 123,830,434.62 | 127,341,806.13 | 5.57% | 3,032,407.53 | 2.38% | 124,309,398.60 |
| Total | 2,404,799,736.13 | 100.00% | 448,608,429.06 | 18.65% | 1,956,191,307.07 | 2,286,499,115.19 | 100.00% | 419,735,325.70 | 18.36% | 1,866,763,789.49 |
Separate bad debt provision: 127,405,670.0
In RMB
| Name | Closing balance | |||
| Remaining book value | Bad debt provision | Provision rate | Reason | |
| Customer 1 | 54,873,223.21 | 54,873,223.21 | 100.00% | Customer credit status deteriorates and is not expected to be recovered |
| Customer 2 | 21,739,381.96 | 21,739,381.96 | 100.00% | Customer credit status deteriorates and is not expected to be recovered |
| Customer 3 | 15,239,752.83 | 15,239,752.83 | 100.00% | Customer credit status deteriorates and is not expected to be recovered |
| Customer 4 | 23,857,146.77 | 23,857,146.77 | 100.00% | Customer credit status deteriorates and is not expected to be recovered |
| Customer 5 | 9,071,535.95 | 9,071,535.95 | 100.00% | Customer credit status deteriorates and is not expected to be recovered |
| Customer 6 | 2,624,629.35 | 2,624,629.35 | 100.00% | Customer credit status deteriorates and is not expected to be recovered |
| Total | 127,405,670.07 | 127,405,670.07 | -- | -- |
Provision for bad debts by combination:
In RMB
| Name | Closing balance | ||
| Remaining book value | Bad debt provision | Provision rate | |
| 1. Portfolio 1: Engineering operations section | 1,887,433,393.29 | 291,354,009.39 | 15.44% |
| 2. Portfolio 2: Real estate business payments | 262,363,696.03 | 26,082,207.48 | 9.94% |
| 3. Combination 3: Other business models | 127,596,976.74 | 3,766,542.12 | 2.95% |
| Total | 2,404,799,736.13 | 448,608,429.06 | -- |
If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, pleaserefer to the disclosure of other receivables to disclose information about bad debts:
□ Applicable √ Inapplicable
Account age
In RMB
| Age | Remaining book value |
| Within 1 year (inclusive) | 1,235,750,908.99 |
| 1-2 years | 486,039,555.45 |
| 2-3 years | 252,371,978.86 |
| Over 3 years | 430,637,292.83 |
| 3-4 years | 301,715,565.54 |
| 4-5 years | 46,607,024.54 |
| Over 5 years | 82,314,702.75 |
| Total | 2,404,799,736.13 |
The Company must comply with disclosure requirements of the Shenzhen Stock Exchange Industry Information DisclosureGuideline No.6 – Listed Companies Engaged in Decoration Business.
(2) Bad debt provision made, returned or recovered in the period
Bad debt provision made in the period:
In RMB
| Type | Opening balance | Change in the period | Closing balance | |||
| Provision | Written-back or recovered | Canceled | Others | |||
| Portfolio 1 | 409,118,562.99 | 28,491,817.79 | 18,232,975.72 | 419,377,405.06 | ||
| Portfolio 2 | 8,432,719.59 | 17,649,487.89 | 26,082,207.48 | |||
| Portfolio 3 | 2,184,043.12 | 964,773.40 | 3,148,816.52 | |||
| Total | 419,735,325.70 | 47,106,079.08 | 18,232,975.72 | 448,608,429.06 | ||
Including significant recovery or reversal:
In RMB
| Entity | Written-back or recovered amount | Method |
None
(3) Written-off account receivable during the period
In RMB
| Item | Amount |
| Account receivable written off | 18,232,975.72 |
Including significant account receivable:
In RMB
| Entity | Nature | Amount | Reason | Writing-off procedure | Related transaction |
| Unit 1 | Engineering payment | 6,896,403.74 | Customer credit status deteriorates and is not expected to be recovered | Approved by the management of the subsidiary | No |
| Unit 2 | Engineering payment | 6,443,255.99 | Customer credit status deteriorates and is not expected to be recovered | Approved by the management of the subsidiary | No |
| Unit 3 | Engineering payment | 966,290.26 | Customer credit status deteriorates and is not expected to be recovered | Approved by the management of the subsidiary | No |
| Unit 4 | Engineering payment | 868,760.00 | Customer credit status deteriorates and is not expected to be recovered | Approved by the management of the subsidiary | No |
| Unit 5 | Engineering payment | 730,419.36 | Customer credit status deteriorates and is not expected to be recovered | Approved by the management of the subsidiary | No |
| Unit 6 | Engineering payment | 505,538.09 | Customer credit status deteriorates and is not expected to be recovered | Approved by the management of the subsidiary | No |
| Unit 7 | Engineering payment | 502,241.17 | Customer credit status deteriorates and is not expected to be recovered | Approved by the management of the subsidiary | No |
| Total | -- | 16,912,908.61 | -- | -- | -- |
Notes to written-off account receivable
(4) Balance of top 5 accounts receivable at the end of the period
In RMB
| Entity | Closing balance of accounts receivable | Percentage (%) | Balance of bad debt provision at the end of the period |
| No.1 | 159,590,068.80 | 6.64% | 21,711,203.32 |
| No.2 | 67,935,405.34 | 2.83% | 2,247,382.21 |
| No.3 | 67,259,877.94 | 2.80% | 2,894,252.91 |
| No.4 | 65,764,510.41 | 2.73% | 12,370,476.19 |
| No.5 | 64,037,488.30 | 2.66% | 5,677,644.11 |
| Total | 424,587,350.79 | 17.66% |
(5) Receivables derecognized due to transfer of financial assets
| Item | Transfer of financial assets | De-recognized amount | Gain or loss related to the de-recognition |
| Customer 1 | Factoring | 23,048,938.62 | -1,462,983.06 |
| Customer 2 | Factoring | 20,338,120.14 | -1,533,687.91 |
| Factoring | 20,103,353.57 | -1,135,624.35 | |
| Customer 4 | Factoring | 19,704,976.52 | -990,327.18 |
| Customer 5 | Factoring | 12,375,458.36 | -242,521.86 |
| Customer 6 | Factoring | 11,608,125.63 | -520,450.62 |
| Customer 7 | Factoring | 9,786,608.08 | -536,962.38 |
| Customer 8 | Factoring | 7,170,682.31 | -335,279.03 |
| Customer 9 | Factoring | 5,475,028.16 | -275,784.75 |
| Customer 10 | Factoring | 5,339,932.64 | -310,890.88 |
| Customer 11 | Factoring | 4,319,526.06 | -280,769.19 |
| Customer 12 | Factoring | 3,158,454.06 | -183,490.39 |
| Customer 13 | Factoring | 2,222,688.84 | -124,726.18 |
| Customer 14 | Factoring | 1,411,003.10 | -64,515.62 |
| Customer 15 | Factoring | 1,045,271.98 | -49,511.05 |
| Total | 147,108,168.07 | -8,047,524.45 |
Note: At the end of the period, the Group factored out accounts receivable that did not have recourse, the factoring amount wasRMB147,108,168.07, and the book value of accounts receivable was derecognized as RMB137,219,054.17, of which: the bookbalance was RMB147,108,168.07, and the bad debt provision of RMB9,889,113.90.
(6) Amount of assets and liabilities formed by transferring accounts receivable and continuing to beinvolvedNoneOthers:
6. Receivable financing
In RMB
| Item | Closing balance | Opening balance |
| Notes receivable | 2,954,029.00 | 1,900,000.00 |
| Total | 2,954,029.00 | 1,900,000.00 |
Increase or decrease in the current period of receivables financing and changes in fair value
√ Applicable □ Inapplicable
If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, pleaserefer to the disclosure of other receivables to disclose information about bad debts:
□ Applicable √ Inapplicable
Others:
7. Prepayment
(1) Account age of prepayments
In RMB
| Age | Closing balance | Opening balance | ||
| Amount | Proportion | Amount | Proportion | |
| Less than 1 year | 14,025,617.54 | 65.77% | 43,589,102.44 | 93.82% |
| 1-2 years | 5,895,327.15 | 27.64% | 1,521,693.56 | 3.28% |
| 2-3 years | 473,487.72 | 2.22% | 444,183.24 | 0.96% |
| Over 3 years | 932,676.77 | 4.37% | 899,865.50 | 1.94% |
| Total | 21,327,109.18 | -- | 46,454,844.74 | -- |
Explanation of non-settlement of significant prepayments with an accounting age of more than 1 year:
| Entity | Closing balance of book value | Age | Reason |
| Guangdong Xingfa Aluminium Co., Ltd. | 4,677,146.90 | 1-2 years | Not mature |
(2) Balance of top 5 prepayments at the end of the period
The total of top-5 prepayments in terms of the prepaid entities in the period is RMB10,718,004.04, accounting for 50.26% ofthe total prepayments at the end of the period.
Others:
8. Other receivables
In RMB
| Item | Closing balance | Opening balance |
| Other receivables | 139,947,655.35 | 142,135,200.54 |
| Total | 139,947,655.35 | 142,135,200.54 |
1) Other receivables are disclosed by nature
In RMB
| By nature | Closing balance of book value | Opening balance of book value |
| Deposit | 103,782,569.80 | 113,697,386.43 |
| Construction borrowing and advanced payment | 34,052,644.05 | 32,493,474.69 |
| Staff borrowing and petty cash | 1,717,094.83 | 2,717,122.22 |
| Receivable refund of VAT | 548,129.42 | 1,334,691.51 |
| Debt by Luo Huichi | 12,992,291.48 | 13,030,000.00 |
| Others | 12,502,878.08 | 17,602,550.86 |
| Total | 165,595,607.66 | 180,875,225.71 |
2) Method of bad debt provision
In RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment) | Expected credit loss for the entire duration (credit impairment has occurred) | ||
| Balance on January 1, 2019 | 2,515,904.25 | 12,151.99 | 36,211,968.92 | 38,740,025.16 |
| Balance on January 1, 2019 in the current period | —— | —— | —— | —— |
| -- transferred to the second stage | -174.00 | 174.00 | 0.00 | 0.00 |
| -- transferred to the third stage | -517,700.00 | 0.00 | 517,700.00 | 0.00 |
| -- transferred back to second stage | 0.00 | 0.00 | 0.00 | 0.00 |
| -- transferred back to first stage | 0.00 | 0.00 | 0.00 | 0.00 |
| Provision | 342,952.36 | 449.10 | 105,516.00 | 448,917.46 |
| Transferred back in the current period | 371,088.64 | 6,186.00 | 12,659,287.54 | 13,036,562.18 |
| Written off in the current period | 0.00 | 0.00 | 0.00 | 0.00 |
| Canceled in the current period | 6,145.53 | 0.00 | 498,282.61 | 504,428.14 |
| Other change | 0.00 | 0.00 | 0.00 | 0.00 |
| Balance on December 31, 2019 | 2,113,622.44 | 6,415.10 | 23,527,914.77 | 25,647,952.31 |
Changes in book balances with significant changes in the current period
□ Applicable √ Inapplicable
Account age
In RMB
| Age | Remaining book value |
| Within 1 year (inclusive) | 32,007,446.84 |
| 1-2 years | 86,762,248.34 |
| 2-3 years | 21,891,764.38 |
| Over 3 years | 24,934,148.10 |
| 3-4 years | 3,715,375.50 |
| 4-5 years | 17,594,070.80 |
| Over 5 years | 3,624,701.80 |
| Total | 165,595,607.66 |
3) Bad debt provision made, returned or recovered in the period
Bad debt provision made in the period:
In RMB
| Type | Opening balance | Change in the period | Closing balance | |||
| Provision | Written-back or recovered | Canceled | Others | |||
| Other receivables and bad debt provision | 38,740,025.17 | 448,917.46 | 13,036,562.18 | 504,428.14 | 25,647,952.31 | |
| Total | 38,740,025.17 | 448,917.46 | 13,036,562.18 | 504,428.14 | 25,647,952.31 | |
Including significant recovery or reversal:
In RMB
| Entity | Written-back or recovered amount | Method |
No major bad debts are prepared to be recovered or transferred back in the current period.
4) Other receivable written off in the current period
In RMB
| Item | Amount |
| Other receivable written off | 504,428.14 |
5) Balance of top 5 other receivables at the end of the period
In RMB
| Entity | By nature | Closing balance | Age | Percentage (%) | Balance of bad debt provision at the end of the period |
| Shenzhen Yikang Real Estate Co. Ltd. | Deposit/advancement of service fee | 72,000,000.00 | Within 1 year: RMB2,000,000.00; 1-2 years: 70,000,000.00 | 43.48% | 1,072,800.00 |
| Bangshen Electronics (Shenzhen) Co., Ltd. | Deposit | 20,000,000.00 | 2-3 years | 12.08% | 298,000.00 |
| Luo Huichi | Debt by SOZN | 12,992,291.48 | 4-5 years | 7.85% | 12,992,291.48 |
| Shenzhen Henggang Dakang Co., Ltd. | Deposit | 8,044,000.00 | 1-2 years | 4.86% | 119,855.60 |
| Shenzhen Ganshang Joint Investment Co., Ltd. | Ganshang Joint Investment | 5,015,089.25 | Less than 1 year | 3.03% | 74,724.83 |
| Total | -- | 118,051,380.73 | -- | 71.29% | 14,557,671.91 |
6) Items involving government subsidies:
None
7) Receivables derecognized due to transfer of financial assets
None
8) Amounts of assets and liabilities involved continuously in securitization of other receivables
NoneOthers:
9. Inventories
Whether the new revenue guidelines are implemented
□ Yes √ No
(1) Classification of inventories
In RMB
| Item | Closing balance | Opening balance | ||||
| Remaining book value | Depreciation provision | Book value | Remaining book value | Depreciation provision | Book value | |
| Raw materials | 68,623,793.04 | 563,013.42 | 68,060,779.62 | 61,897,942.32 | 608,404.99 | 61,289,537.33 |
| Product in process | 59,444,230.45 | 59,444,230.45 | 24,655,294.74 | 24,655,294.74 | ||
| Finished goods in stock | 7,500,273.11 | 7,500,273.11 | 5,611,267.61 | 5,611,267.61 | ||
| Assets unsettled for finished construction contracts | 133,002,090.91 | 1,430,361.92 | 131,571,728.99 | 153,610,458.94 | 1,603,589.59 | 152,006,869.35 |
| Low price consumable | 146,018.01 | 146,018.01 | 25,215.87 | 25,215.87 | ||
| OEM materials | 2,022,252.83 | 2,022,252.83 | 2,640,270.67 | 2,640,270.67 | ||
| Development cost | 365,194,941.67 | 365,194,941.67 | 232,622,862.96 | 232,622,862.96 | ||
| Development products | 99,770,918.78 | 99,770,918.78 | 235,332,474.86 | 62,777,961.10 | 172,554,513.76 | |
| Total | 735,704,518.80 | 1,993,375.34 | 733,711,143.46 | 716,395,787.97 | 64,989,955.68 | 651,405,832.29 |
(2) Inventory depreciation provision
In RMB
| Item | Opening balance | Increase in this period | Decrease in this period | Closing balance | ||
| Provision | Others | Recover or write-off | Others | |||
| Raw materials | 608,404.99 | 45,391.57 | 563,013.42 | |||
| Assets unsettled for finished construction contracts | 1,603,589.59 | 173,227.67 | 1,430,361.92 | |||
| Development products | 62,777,961.10 | 62,777,961.10 | ||||
| Total | 64,989,955.68 | 62,996,580.34 | 1,993,375.34 | |||
The development product is the corresponding product has been sold, the corresponding impairment is prepared to be resold.
(3) Balance at the end of the period includes capitalization of borrowing expense
As at 31 December 2019, the amount of the capitalization of borrowing costs in the balance of the end-of-period inventory wasRMB7,112, 318.44.
(4) Assets unsettled for finished construction contracts at the end of the period
In RMB
| Item | Amount |
| Accumulative occurred costs | 7,968,551,626.71 |
| Accumulative recognized gross margin | 1,160,860,682.67 |
| Less: estimated loss | 1,430,361.92 |
| Settled amount | 8,996,410,218.47 |
| Assets unsettled for finished construction contracts | 131,571,728.99 |
Others:
10. Assets held for sales
In RMB
| Item | Closing balance of book value | Impairment provision | Closing book value | Fair value | Estimated disposal expense | Estimated disposal time |
Others:
11. Non-current assets due in 1 year
In RMB
| Item | Closing balance | Opening balance |
Other debt investment
In RMB
| Item | Closing balance | Opening balance | ||||||
| Par value | Interest rate | Interest rate (%) | Due date | Par value | Interest rate | Interest rate (%) | Due date | |
Others:
12. Other current assets
Whether the new revenue guidelines are implemented
□ Yes √ No
In RMB
| Item | Closing balance | Opening balance |
| Tax to be input | 25,724,810.99 | 12,498,193.14 |
| Prepaid income tax | 10,942,500.38 | 3,469.12 |
| Structural loan | 207,993,374.07 |
| Reclassification of VAT debit balance | 79,104,900.46 | 39,046,408.88 |
| Others | 150,040.00 | |
| Total | 323,765,585.90 | 51,698,111.14 |
Others:
Other current assets at the end of the period increased by 526.26% from the beginning of the period, mainly due to the large increasein the undue amount of structural deposits purchased and the balance of VAT debits.
13. Debt investment
□ Applicable √ Inapplicable
14. Other debt investment
□ Applicable √ Inapplicable
15. Long-term receivables
□ Applicable √ Inapplicable
16. Long-term share equity investment
In RMB
| Invested entity | Opening book value | Change (+,-) | Closing book value | Balance of impairment provision at the end of the period | |||||||
| Increased investment | Decreased investment | Investment gain and loss recognized using the equity method | Other miscellaneous income adjustment | Other equity change | Cash dividend or profit announced | Impairment provision | Others | ||||
| 1. Joint venture | |||||||||||
| 2. Associate | |||||||||||
| Shenzhen Ganshang Joint Investment Co., Ltd. (Shenzhen Ganshang) | 8,351,180.78 | 6,015,089.25 | 23,952.48 | 2,360,044.01 | |||||||
| Shenzhen Huihai Yirong Internet Service Co., Ltd. | 6,071,585.28 | -1,355,840.56 | -4,715,744.72 | ||||||||
| Jiangxi Business Innovative Property Joint Stock Co., Ltd. | 55,682,891.82 | -820,695.00 | 54,862,196.82 | ||||||||
| Subtotal | 70,105,657.88 | 6,015,089.25 | -2,152,583.08 | -4,715,744.72 | 57,222,240.83 | ||||||
| Total | 70,105,657.88 | 6,015,089.25 | -2,152,583.08 | -4,715,744.72 | 57,222,240.83 |
Other noteBecause Shenzhen Huihai Yirong Internet Financial Services Co., Ltd. did not send any of the Company’s On behalf of, theCompany no longer has a significant impact on it, so it is reclassified from long-term equity investment to other equity instrumentinvestment.
17. Investment in other equity tools
In RMB
| Item | Closing balance | Opening balance |
| (1) Investment in equity tools | 20,660,181.44 | 21,674,008.23 |
| Total | 20,660,181.44 | 21,674,008.23 |
Sub-disclosure of non-tradable equity instrument investment in the current period
In RMB
| Project | Dividend recognized in the period | Total gain | Total loss | Amount of other comprehensive income transferred to retained earnings | Reason for measurement at fair value with variations accounted into current income account | Reason for transfer of other miscellaneous into income |
| Shenyang Fangda | 9,958,565.45 | |||||
| Shenzhen Huihai Yirong Internet Service Co., Ltd. | 2,421,391.86 |
Others:
Other non-current financial assets
In RMB
| Item | Closing balance | Opening balance |
| Financial assets measured at fair value with variations accounted into current income account | 5,009,728.02 | |
| Total | 5,009,728.02 |
Others:
XXIII. Investment real estates
(1) Investment real estate measured at costs
□ Applicable √ Inapplicable
(2) Investment real estate measured at fair value
√ Applicable □ Inapplicable
In RMB
| Item | Houses & buildings | Land using right | Construction in process | Total |
| I. Opening balance | 5,256,442,406.63 | 5,256,442,406.63 | ||
| II. Change in this period | 265,949,577.48 | 265,949,577.48 | ||
| Add: external purchase |
| Transfer-in from inventory\fixed assets\construction in progress | ||||
| Increase due to enterprise merger | ||||
| Less: disposal | ||||
| Other transfer-out | 15,619,725.00 | 15,619,725.00 | ||
| Change in fair value | 42,608,311.58 | 42,608,311.58 | ||
| Other increases | 238,960,990.90 | 238,960,990.90 | ||
| III. Closing balance | 5,522,391,984.11 | 5,522,391,984.11 |
The Company must comply with disclosure requirements of the Shenzhen Stock Exchange Industry Information DisclosureGuideline No.3 – Listed Companies Engaged in Property Development.Whether there is new investment real estate measured at fair value in the report period
□ Yes √ No
Whether there is new investment real estate measured at fair value in the report period
□ Yes √ No
(3) Investment real estate without ownership certificate
In RMB
| Item | Book value | Reason |
| Jiangxi Phoenix Land project | 194,300,196.90 | Conditions for applying for property right are not met |
20. Fixed assets
In RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 477,332,830.92 | 455,274,241.83 |
| Total | 477,332,830.92 | 455,274,241.83 |
(1) Fixed assets
In RMB
| Item | Houses & buildings | Mechanical equipment | Transportation facilities | Electronics and other devices | PV power plants | Total |
| I. Original book value: | ||||||
| 1. Opening balance | 358,968,236.21 | 121,456,045.88 | 20,192,421.26 | 50,661,366.23 | 129,598,135.58 | 680,876,205.16 |
| 2. Increase in this period | 55,928,727.12 | 10,012,466.19 | 1,491,210.04 | 2,081,683.19 | 69,514,086.54 | |
| (1) Purchase | 11,013.19 | 1,383,165.64 | 1,422,170.22 | 1,811,519.85 | 4,627,868.90 | |
| (2) Transfer-in of construction in progress | 30,283,265.46 | 254,310.34 | 30,537,575.80 | |||
| (3) Increase due to enterprise merger | ||||||
| (4) Other increases | 25,634,448.47 | 8,629,300.55 | 69,039.82 | 15,853.00 | 34,348,641.84 | |
| 3. Decrease in this period | 17,407,839.09 | 1,789,335.28 | 324,288.61 | 8,134,341.08 | 1,700.74 | 27,657,504.80 |
| (1) Disposal or retirement | 17,407,839.09 | 1,789,335.28 | 219,760.12 | 791,531.59 | 20,208,466.08 | |
| (2) Other decrease | 104,528.49 | 7,342,809.49 | 1,700.74 | 7,449,038.72 | ||
| 4. Closing balance | 397,489,124.24 | 129,679,176.79 | 21,359,342.69 | 44,608,708.34 | 129,596,434.84 | 722,732,786.90 |
| II. Accumulative depreciation | ||||||
| 1. Opening balance | 64,933,358.20 | 97,725,735.85 | 14,703,576.75 | 27,741,708.68 | 16,053,677.73 | 221,158,057.21 |
| 2. Increase in this period | 11,166,828.09 | 5,297,213.64 | 1,382,050.23 | 2,050,725.30 | 6,155,238.25 | 26,052,055.51 |
| (1) Provision | 9,565,197.28 | 4,239,866.38 | 1,382,050.23 | 2,040,292.96 | 6,155,238.25 | 23,382,645.10 |
| (2) Other increases | 1,601,630.81 | 1,057,347.26 | 10,432.34 | 2,669,410.41 | ||
| 3. Decrease in this period | 522,267.50 | 827,976.90 | 451,107.20 | 1,363,194.64 | 3,164,546.24 | |
| (1) Disposal or retirement | 522,267.50 | 827,976.90 | 173,481.58 | 760,679.60 | 2,284,405.58 | |
| (2) Other decrease | 277,625.62 | 602,515.04 | 880,140.66 |
| 4. Closing balance | 75,577,918.79 | 102,194,972.59 | 15,634,519.78 | 28,429,239.34 | 22,208,915.98 | 244,045,566.48 |
| III. Impairment provision | ||||||
| 1. Opening balance | 3,089,516.62 | 1,354,389.50 | 4,443,906.12 | |||
| 2. Increase in this period | 56,767.69 | 56,767.69 | ||||
| (1) Provision | ||||||
| (2) Other increases | 56,767.69 | 56,767.69 | ||||
| 3. Decrease in this period | 3,089,516.62 | 56,767.69 | 3,146,284.31 | |||
| (1) Disposal or retirement | 3,089,516.62 | 3,089,516.62 | ||||
| (2) Other decrease | 56,767.69 | 56,767.69 | ||||
| 4. Closing balance | 1,297,621.81 | 56,767.69 | 1,354,389.50 | |||
| IV. Book value | ||||||
| 1. Closing book value | 321,911,205.45 | 26,186,582.39 | 5,724,822.91 | 16,122,701.31 | 107,387,518.86 | 477,332,830.92 |
| 2. Opening book value | 290,945,361.39 | 22,375,920.53 | 5,488,844.51 | 22,919,657.55 | 113,544,457.85 | 455,274,241.83 |
(2) Temporary idle fixed assets
None
(3) Fixed assets leased through financial leasing
None
(4) Fixed assets lend through financial leasing
None
(5) Fixed assets without ownership certificate
In RMB
| Item | Book value | Reason |
| Houses in Urumuqi for offsetting debt | 511,452.27 | Historical reasons |
| Yuehai Office Building C 502 | 130,633.89 | Historical reasons |
| Construction of Chengdu Xinjin Base | 30,117,254.37 | In the process of applying for property right certificate |
Other note
6. Disposal of fixed assets
None
21. Construction in process
In RMB
| Item | Closing balance | Opening balance |
| Construction in process | 129,988,982.86 | 58,269,452.72 |
| Total | 129,988,982.86 | 58,269,452.72 |
(1) Construction in progress
In RMB
| Item | Closing balance | Opening balance | ||||
| Remaining book value | Impairment provision | Book value | Remaining book value | Impairment provision | Book value | |
| Chengda Fangda’s Xinjin energy-saving green curtain wall project | 14,150,785.10 | 14,150,785.10 | ||||
| Construction and decoration of self-use part of Building 1 of Fangda Town | 54,275,503.95 | 54,275,503.95 | 42,648,816.23 | 42,648,816.23 | ||
| Fangda Group East China Construction Base Project | 75,473,740.65 | 75,473,740.65 | 1,368,127.25 | 1,368,127.25 | ||
| Pingxiang Xuanfeng Chayuan Photovoltaic Power Plant Network Security Protection and Increased Dispatching Data Network Technical Transformation Project | 101,724.14 | 101,724.14 | ||||
| Design of intelligent gluing robot | 23,242.53 | 23,242.53 | ||||
| Standard production line | 216,495.73 | 216,495.73 | ||||
| Total | 129,988,982.86 | 129,988,982.86 | 58,269,452.72 | 58,269,452.72 |
(2) Changes in major construction in process in this period
In RMB
| Project | Budget | Opening balance | Increase in this period | +Amount transfer-in to fixed assets in this period | Other decrease in this period | Closing balance | Proportion of accumulative engineering investment in the budget | Project progress | Accumulative capitalized interest | Including: capitalized interest for the current period | Interest capitalization rate | Capital source |
| Chengda Fangda’s Xinjin energy-saving green curtain wall project | 36,935,429.00 | 14,150,785.10 | 16,132,480.36 | 30,283,265.46 | 89.00% | Completed | 127,611.60 | 127,611.60 | 4.96% | Others |
| Construction and decoration of self-use part of Building 1 of Fangda Town | 74,270,000.00 | 42,648,816.23 | 11,626,687.72 | 54,275,503.95 | 78.76% | 78.76% | 3,253,136.04 | Others | ||||
| Fangda Group East China Construction Base Project | 102,586,625.00 | 1,368,127.25 | 74,105,613.40 | 75,473,740.65 | 73.57% | 78.00% | 387,840.67 | 387,840.67 | 5.46% | Others | ||
| Total | 213,792,054.00 | 58,167,728.58 | 101,864,781.48 | 30,283,265.46 | 129,749,244.60 | -- | -- | 3,768,588.31 | 515,452.27 | -- |
22. Productive biological assets
(1) Investment real estate measured at costs
□ Applicable √ Inapplicable
(2) Investment real estate measured at fair value
□ Applicable √ Inapplicable
23. Petrolum assets
□ Applicable √ Inapplicable
Use right assets
□ Applicable √ Inapplicable
25. Intangible assets
(1) Intangible assets
In RMB
| Item | Land using right | Patent | Software | Total | |
| I. Book value | |||||
| 1. Opening balance | 78,910,915.74 | 18,478,548.46 | 7,776,751.03 | 105,166,215.23 | |
| 2. Increase in this period | 36,380.38 | 10,116,113.46 | 10,152,493.84 | ||
| (1) Purchase | 36,380.38 | 1,773,903.09 | 1,810,283.47 | ||
| (2) Internal R&D | |||||
| (3) Increase due to enterprise merger | |||||
| (4) Other increases | 8,342,210.37 | 8,342,210.37 | |||
| 3. Decrease in this period | 159,433.45 | 9,548,062.79 | 9,707,496.24 | ||
| (1) Disposal | 159,433.45 | 9,548,062.79 | 9,707,496.24 | ||
| (2) Other decrease | |||||
| 4. Closing balance | 78,751,482.29 | 8,966,866.05 | 17,892,864.49 | 105,611,212.83 | |
| II. Accumulative amortization | |||||
| 1. Opening balance | 10,699,400.13 | 8,996,877.15 | 5,156,697.28 | 24,852,974.56 | |
| 2. Increase in this period | 2,262,269.60 | 608,338.58 | 1,301,458.86 | 4,172,067.04 | |
| (1) Provision | 2,262,269.60 | 608,338.58 | 930,650.91 | 3,801,259.09 | |
| (2) Other increases | 370,807.95 | 370,807.95 | |||
| 3. Decrease in this period | 159,433.45 | 1,576,660.37 | 1,736,093.82 | ||
| (1) Disposal | |||||
| (2) Other decrease | 159,433.45 | 1,576,660.37 | 1,736,093.82 | ||
| 4. Closing balance | 12,802,236.28 | 8,028,555.36 | 6,458,156.14 | 27,288,947.78 | |
| III. Impairment provision | |||||
| 1. Opening balance |
| 2. Increase in this period | |||||
| (1) Provision | |||||
| 3. Decrease in this period | |||||
| (1) Disposal | |||||
| 4. Closing balance | |||||
| IV. Book value | |||||
| 1. Closing book value | 65,949,246.01 | 938,310.69 | 11,434,708.35 | 78,322,265.05 | |
| 2. Opening book value | 68,211,515.61 | 9,481,671.31 | 2,620,053.75 | 80,313,240.67 |
Proportion of intangible asset formed by internal R&D of the period in the closing total book value of intangible assets.
(2) Failure to obtain the land use right certificates
□ Applicable √ Inapplicable
R&D expense
□ Applicable √ Inapplicable
27. Goodwill
(1) Original book value of goodwill
In RMB
| Invested entity or item of goodwill | Opening balance | Increase | Decrease | Closing balance | ||
| Enterprise merger | Disposal | |||||
| Total | ||||||
(2) Goodwill impairment provision
□ Applicable √ Inapplicable
28. Long-term amortizable expenses
In RMB
| Item | Opening balance | Increase in this period | Amortized amount in this period | Other decrease | Closing balance |
| Xuanfeng Chayuan village and Zhuyuan village land transfer compensation | 1,196,831.78 | 56,101.56 | 1,140,730.22 | ||
| Reconstruction project of sample room | 578,568.18 | 115,713.60 | 462,854.58 | ||
| Membership fee | 917,499.68 | 279,999.76 | 637,499.92 | ||
| 492,947.45 | 32,863.16 | 460,084.29 | |||
| Consultant costs | 1,018,867.92 | 117,315.88 | 901,552.04 | ||
| Reconstruction project of sample room | 302,752.29 | 30,275.22 | 272,477.07 | ||
| Total | 2,114,331.46 | 2,393,135.84 | 632,269.18 | 3,875,198.12 |
29. Differed income tax assets and differed income tax liabilities
(1) Non-deducted deferred income tax assets
In RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Assets impairment provision | 93,590,747.27 | 23,063,418.45 | 614,923,096.35 | 109,638,281.01 |
| Deductible loss | 271,310,599.01 | 67,626,700.92 | 116,934,707.17 | 28,982,381.41 |
| Unrealizable gross profit | 119,543,729.80 | 29,233,320.47 | 171,832,174.62 | 42,958,043.66 |
| Impairment provision | 473,809,506.79 | 75,229,494.57 | ||
| Provided unpaid taxes | 584,599,356.81 | 146,149,839.20 | 547,012,606.17 | 136,753,151.54 |
| Anticipated liabilities | 7,793,527.16 | 1,169,029.07 | 6,831,162.99 | 1,024,674.45 |
| Donation | 700,000.00 | 175,000.00 | 700,000.00 | 175,000.00 |
| Reserved expense | 1,742,978.53 | 261,446.78 | 172,319,511.23 | 42,910,136.64 |
| Deferred earning | 2,346,742.62 | 347,579.43 | 2,588,555.38 | 383,758.20 |
| Arbitrage gain and loss | 1,625,725.00 | 243,858.75 | ||
| Change in fair value | 96,767.62 | 14,515.14 | ||
| Advertisement fee | 316,882.69 | 79,220.67 | ||
| Total | 1,555,850,838.30 | 343,349,564.70 | 1,634,767,538.91 | 363,069,285.66 |
(2) Non-deducted deferred income tax liabilities
In RMB
| Item | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred income tax liabilities | Taxable temporary difference | Deferred income tax liabilities | |
| Change in fair value | 4,101,290,434.14 | 1,025,322,608.53 | 4,059,575,421.10 | 1,014,893,855.26 |
| Estimated gross margin when Fangda Town records income, but does not reach the taxable income level | 132,104,998.74 | 33,026,249.69 | 108,771,380.35 | 27,192,845.09 |
| 1,535,605.47 | 383,901.37 | |||
| Rental income in the report period | 20,401,597.60 | 5,100,399.41 | ||
| Total | 4,255,332,635.95 | 1,063,833,159.00 | 4,168,346,801.45 | 1,042,086,700.35 |
(3) Net deferred income tax assets or liabilities listed
In RMB
| Item | Deferred income tax assets and liabilities at the end of the period | Offset balance of deferred income tax assets or liabilities after offsetting | Deferred income tax assets and liabilities at the beginning of the period | Offset balance of deferred income tax assets or liabilities after offsetting |
| Deferred income tax assets | 343,349,564.70 | 363,069,285.66 | ||
| Deferred income tax liabilities | 1,063,833,159.00 | 1,042,086,700.35 |
(4) Details of unrecognized deferred income tax assets
In RMB
| Item | Closing balance | Opening balance |
| Deductible temporary difference | 446,874.58 | 144,013.55 |
| Deductible loss | 8,983,744.38 | 3,432,612.47 |
| Total | 9,430,618.96 | 3,576,626.02 |
(5) Deductible losses of the un-recognized deferred income tax asset will expire in the following years
In RMB
| Year | Closing amount | Opening amount | Remark |
| 2020 | 30,257.35 | ||
| 2021 | |||
| 2022 | 2,286,265.51 | 1,093,587.53 | |
| 2023 | 5,390,985.76 | 2,339,024.94 | |
| 2024 | 1,276,235.76 | ||
| Total | 8,983,744.38 | 3,432,612.47 | -- |
Others:
The unconfirmed deferred income tax asset amount at the end of the period increased by 161.72% compared with the beginning ofthe period, mainly due to the effect of the enterprise merger under the same control.
30. Other non-current assets
Whether the new revenue guidelines are implemented
□ Yes √ No
In RMB
| Item | Closing balance | Opening balance |
| Prepaid house and equipment amount | 28,446,802.00 | 19,296,006.00 |
| Prepayment of intangible assets | 64,077.67 | |
| Prepaid engineering amount | 255,000.00 | |
| Total | 28,701,802.00 | 19,360,083.67 |
Others:
Other non-current assets at the end of the period increased by 48.25% from the beginning of the period, mainly due to the increase inthe amount of prepaid housing and equipment.
31. Short-term borrowings
(1) Classification of short-term borrowings
In RMB
| Item | Closing balance | Opening balance |
| Loan by pledge | 200,318,605.55 | |
| Guarantee loan | 216,287,991.79 | |
| Credit borrow | 8,011,600.00 | 8,000,000.00 |
| The Group's internal acceptance bills discounted borrowings | 300,000,000.00 | 200,000,000.00 |
| Total | 724,618,197.34 | 208,000,000.00 |
Notes to classification of short-term borrowingsShort-term borrowing at the end of the period increased by 248.37% from the beginning of the period, mainly due to the increase inshort-term borrowing this year to supplement daily operating requirements.
(2) Mature but not repaid short-term borrowings
□ Applicable √ Inapplicable
32. Transactional financial liabilities
□ Applicable √ Inapplicable
33. Derivative financial liabilities
In RMB
| Item | Closing balance | Opening balance |
| Futures contracts | 1,625,725.00 | |
| Forward foreign exchange contract | 96,767.62 | |
| Total | 96,767.62 | 1,625,725.00 |
Others:
34. Notes payable
In RMB
| Type | Closing balance | Opening balance |
| Commercial acceptance | 129,241,328.76 | 89,593,075.92 |
| Bank acceptance | 449,574,698.68 | 418,271,442.27 |
| Total | 578,816,027.44 | 507,864,518.19 |
The total amount of payable bills that have matured but not been paid at the end of the period is RMB140,671.59.
35. Account payable
(1) Account payable
In RMB
| Item | Closing balance | Opening balance |
| Account repayable and engineering repayables | 811,680,369.67 | 735,661,625.17 |
| Construction payable | 75,375,776.11 | 17,976,531.41 |
| Payable installation and implementation fees | 297,516,473.34 | 280,338,258.89 |
| Others | 6,200,681.12 | 5,654,383.17 |
| Total | 1,190,773,300.24 | 1,039,630,798.64 |
(2) Significant payables aging more than 1 year
In RMB
| Item | Closing balance | Reason |
| Supplier 1 | 47,481,709.04 | Not mature |
| Supplier 2 | 17,655,833.07 | Not mature |
| Supplier 3 | 11,011,440.33 | Not mature |
| Supplier 4 | 8,018,282.54 | Not mature |
| Supplier 5 | 7,381,161.50 | Not mature |
| Total | 91,548,426.48 | -- |
Others:
36. Prepayment received
Whether the new revenue guidelines are implemented
□ Yes √ No
(1) Prepayment received
In RMB
| Item | Closing balance | Opening balance |
| Curtain wall and screen door engineering payment | 131,161,827.77 | 223,438,696.72 |
| Material loan | 825,494.07 | 3,988,573.19 |
| Real estate sales payment | 677,650.00 | 49,542,377.00 |
| Others | 3,675,132.89 | 1,608,201.63 |
| Total | 136,340,104.73 | 278,577,848.54 |
(2) Significant prepayment aged more than 1 year
None
(3) Assets settled for unfinished construction contracts at the end of the periodNoneContract liabilitiesNone
38. Employees’ wage payable
(1) Employees’ wage payable
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 1. Short-term remuneration | 44,497,660.77 | 329,715,829.47 | 318,678,845.90 | 55,534,644.34 |
| 2. Retirement pension program-defined contribution plan | 15,401.40 | 13,390,224.97 | 13,380,291.51 | 25,334.86 |
| 3. Dismiss compensation | 1,884,496.92 | 1,597,341.92 | 287,155.00 | |
| Total | 44,513,062.17 | 344,990,551.36 | 333,656,479.33 | 55,847,134.20 |
(2) Short-term remuneration
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 1. Wage, bonus, allowance and subsidies | 42,890,451.55 | 293,234,097.24 | 282,069,743.71 | 54,054,805.08 |
| 2. Employee welfare | 36,000.00 | 11,106,542.33 | 11,142,542.33 | |
| 3. Social insurance | 16,557,864.07 | 16,549,051.27 | 8,812.80 | |
| Including: medical insurance | 4,468,805.15 | 4,459,992.35 | 8,812.80 | |
| Labor injury insurance | 333,917.40 | 333,917.40 |
| Breeding insurance | 556,996.43 | 556,996.43 | ||
| Unemployment insurance | 11,198,145.09 | 11,198,145.09 | ||
| 4. Housing fund | 70,162.00 | 7,249,691.66 | 7,273,929.66 | 45,924.00 |
| 5. Labor union budget and staff education fund | 1,501,047.22 | 1,567,634.17 | 1,643,578.93 | 1,425,102.46 |
| Total | 44,497,660.77 | 329,715,829.47 | 318,678,845.90 | 55,534,644.34 |
(3) Defined contribution plan
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| 1. Basic pension | 15,401.40 | 12,970,116.94 | 12,960,183.48 | 25,334.86 |
| 2. Unemployment insurance | 420,108.03 | 420,108.03 | ||
| Total | 15,401.40 | 13,390,224.97 | 13,380,291.51 | 25,334.86 |
39. Taxes payable
In RMB
| Item | Closing balance | Opening balance |
| VAT | 5,138,273.83 | 7,964,966.19 |
| Enterprise income tax | 8,013,627.51 | 96,212,929.73 |
| Personal income tax | 1,111,213.06 | 793,577.50 |
| City maintenance and construction tax | 1,499,926.15 | 1,234,675.98 |
| Land using tax | 241,855.73 | 242,021.60 |
| Property tax | 265,016.74 | 248,910.70 |
| Education surtax | 736,138.35 | 609,781.62 |
| Local education surtax | 352,390.86 | 278,944.66 |
| Land VAT | 31,084.86 | |
| Others | 459,460.59 | 124,191.21 |
| Total | 17,848,987.68 | 107,709,999.19 |
Others:
The tax payable at the end of the period is 83.43% less than that at the beginning of the period, which is the result of the decrease ofenterprise income tax.
40. Other payables
In RMB
| Item | Closing balance | Opening balance |
| Interest payable | 2,098,971.44 | |
| Other payables | 701,432,408.28 | 811,019,728.40 |
| Total | 701,432,408.28 | 813,118,699.84 |
(1) Interest payable
In RMB
| Item | Closing balance | Opening balance |
| Long-term borrowing with interest installment and repayment of principal upon maturity | 2,087,371.44 | |
| Short-term borrowing interests payable | 11,600.00 | |
| Total | 2,098,971.44 |
(2) Other payables
1) Other payables presented by nature
In RMB
| Item | Closing balance | Opening balance |
| Performance and quality deposit | 46,117,111.79 | 47,749,632.53 |
| Deposit | 4,885,326.38 | 152,313.10 |
| Reserved expense | 17,194,987.92 | 182,260,114.71 |
| Tax withheld | 584,599,356.81 | 547,012,606.17 |
| Fangda Town pledge | 300,000.00 | 22,236,150.00 |
| Others | 48,335,625.38 | 11,608,911.89 |
| Total | 701,432,408.28 | 811,019,728.40 |
(2) Significant payables aging more than 1 year
In RMB
| Item | Closing balance | Reason |
| Shenzhen Yikang Real Estate Co. Ltd. | 13,488,805.10 | Affiliated party |
| Tax withheld | 543,439,064.17 | Land VAT |
| Total | 556,927,869.27 | -- |
Liabilities held for salesNone
42. Non-current liabilities due within 1 year
In RMB
| Item | Closing balance | Opening balance |
| Long-term loans due within 1 year | 922,346,563.72 | 200,000,000.00 |
| Total | 922,346,563.72 | 200,000,000.00 |
43. Other current liabilities
Whether the new revenue guidelines are implemented
□ Yes √ No
In RMB
| Item | Closing balance | Opening balance |
| (7) De-recognized account receivable | 169,688,481.80 | |
| Substituted money on VAT | 12,006,092.67 | 9,328,682.25 |
| Total | 181,694,574.47 | 9,328,682.25 |
44. Long-term borrowings
(1) Classification of long-term borrowings
In RMB
| Item | Closing balance | Opening balance |
| Loan by pledge | 293,978,153.39 | 693,978,153.39 |
| Loan by pledge | 182,523,338.17 | |
| Guarantee loan | 70,000,000.00 | |
| Credit borrow | 500,000,000.00 | |
| Total | 546,501,491.56 | 1,193,978,153.39 |
Notes to classification of long-term borrowings:
The above-mentioned borrowing is the 100% stock pledging of Fangda Property Development held by the Company.Other note, including interest rate range:
The interest rate period for long - term borrowing is adjusted at the agreed ratio -6.175%
45. Bond payable
NoneLease liabilitiesNone
47. Long-term payables
NoneLong-term employees’ wage payable
None
49. Anticipated liabilities
Whether the new revenue guidelines are implemented
□ Yes √ No
In RMB
| Item | Closing balance | Opening balance | Reason |
| Maintenance fee | 7,793,527.16 | 6,831,162.99 | Contract agreement |
| Total | 7,793,527.16 | 6,831,162.99 | -- |
50. Deferred earning
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance | Reason |
| Government subsidy | 10,401,161.30 | 800,000.00 | 383,913.90 | 10,817,247.40 | See the following table |
| Total | 10,401,161.30 | 800,000.00 | 383,913.90 | 10,817,247.40 | -- |
Items involving government subsidies:
In RMB
| Liabilities | Opening balance | Amount of new subsidy | Amount included in non-operating revenue | Other misc. gains recorded in this period | Costs offset in the period | Other change | Closing balance | Related to assets/earning |
| Railway transport screen door controlling system and information transmission technology | 96,558.17 | 18,904.32 | 77,653.85 | Assets-related | ||||
| Major investment project prize from Industry and Trade Development Division of Dongguan Finance Bureau | 1,680,952.70 | 57,142.80 | 1,623,809.90 | Assets-related | ||||
| Distributed PV power generation project subsidy sponsored by Dongguan Reform and Development Commission | 418,750.13 | 24,999.96 | 393,750.17 | Assets-related | ||||
| 181,004.51 | 3,725.64 | 177,278.87 | Assets-related | |||||
| Special subsidy for industrial transformation, upgrading and development | 800,000.00 | 800,000.00 | Assets-related |
| Shenzhen SME Service Bureau enterprise IT construction subsidy | 500,000.00 | 12,000.00 | -20,000.00 | 468,000.00 | Assets-related | |||
| National Industry Revitalization and Technology Renovation Project fund | 7,393,855.79 | 117,101.18 | 7,276,754.61 | Assets-related | ||||
| Shenzhen Science and Technology Innovation Committee Technology Innovation Subsidy | 130,040.00 | 130,040.00 | Earning-related |
Others:
51. Other non-current liabilities
Whether the new revenue guidelines are implemented
□ Yes √ No
None
52. Capital share
In RMB
| Opening balance | Change (+,-) | Closing balance | |||||
| Issued new shares | Bonus shares | Transferred from reserves | Others | Subtotal | |||
| Total of capital shares | 1,155,481,686.00 | -32,097,497.00 | -32,097,497.00 | 1,123,384,189.00 | |||
Others:
1. The decrease in share capital was due to the repurchase and cancellation of B shares by the Company during the reporting period.
2. As of June 30, 2019, there were 1,431,568 shares subject to sale restrictions at the end of the period, of which 1,431,568 were heldby natural persons.
Other equity toolsNone
54. Capital reserve
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| Capital premium (share capital premium) | 94.24 | 94.24 | ||
| Other capital reserves | 1,454,097.35 | 1,454,097.35 | ||
| Total | 1,454,191.59 | 1,454,191.59 |
55. Shares in stock
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| Less: Shares in stock | 10,831,437.66 | 88,223,945.70 | 99,055,383.36 | |
| Total | 10,831,437.66 | 88,223,945.70 | 99,055,383.36 |
Other note, including explanation about the reason of the change:
The Company held the 10th meeting of the 8th Board of Directors and the first extraordinary shareholders meeting of 2018 onSeptember 10 2018 and September 27 2018 respectively and reviewed and approved the repurchase of some domestically listedforeign shares (B shares). As at December 31, 2019, a total of 32,097,497 shares were repurchased by centralized bidding, and thehighest price was HK $3.58/share, the lowest price was HK $3.24/share, the actual cumulative payment was HK $113, 012, 632.21(including transaction costs), which was included in the inventory shares in the amount of HK $88,223, 945.70.
(2) 32,097,497 shares of share capital reduced as a result of the write-off of treasury shares;
In the current period, according to the relevant resolutions of the previous year, the repurchase and cancellation of treasury sharescontinued. The cost of canceled shares in stock was higher than the corresponding cost of equity, which offset the surplus reserve byRMB66,957,886.36.
56. Other miscellaneous income
In RMB
| Item | Opening | Amount occurred in the current period | Closing |
| balance | Amount before income tax | Less: amount written into other gains and transferred into gain/loss in previous terms | Less: amount written into other gains and transferred into gain/loss in previous terms | Less: Income tax expenses | After-tax amount attributed to the parent | After-tax amount attributed to minority shareholders | balance | |
| 1. Other misc. incomes that cannot be re-classified into gain and loss | -5,166,425.58 | -4,793,104.31 | -767,499.51 | -4,025,604.80 | -9,192,030.38 | |||
| Fair value change of investment in other equity tools | -5,166,425.58 | -4,793,104.31 | -767,499.51 | -4,025,604.80 | -9,192,030.38 | |||
| 2. Other misc. incomes that will be re-classified into gain and loss | 7,382,087.59 | 29,272.14 | -1,290,746.25 | -14,515.15 | 1,334,533.54 | 8,716,621.13 | ||
| Cash flow hedge reserve | -1,290,746.25 | -96,767.62 | -1,290,746.25 | -14,515.15 | 1,208,493.78 | -82,252.47 | ||
| Translation difference of foreign exchange statement | -83,719.62 | 126,039.76 | 126,039.76 | 42,320.14 | ||||
| Investment real estate measured at fair value | 8,756,553.46 | 8,756,553.46 | ||||||
| Other miscellaneous income | 2,215,662.01 | -4,763,832.17 | -1,290,746.25 | -782,014.66 | -2,691,071.26 | -475,409.25 |
57. Special reserves
None
58. Surplus reserves
In RMB
| Item | Opening balance | Increase | Decrease | Closing balance |
| Statutory surplus reserves | 121,000,081.43 | 105,763,735.27 | 66,957,886.36 | 159,805,930.34 |
| Total | 121,000,081.43 | 105,763,735.27 | 66,957,886.36 | 159,805,930.34 |
Note, including explanation about the reason of the change:
(1) The increase in the surplus reserve in the current period is the withdrawal of the statutory surplus reserve from the Company inaccordance with the Company Law and the relevant provisions of the Articles of Association.
Note: The decrease in the surplus reserve for the current period is due to the fact that the cost of the treasury shares cancelled ishigher than the corresponding cost of the share capital which is offset by the capital reserve and surplus reserve.
59. Retained profit
In RMB
| Item | Current period | Last period |
| Adjustment on retained profit of previous period | 3,921,225,872.96 | 1,863,191,218.58 |
| Total of retained profit at beginning of year adjusted (+ for increase, - for decrease) | -39,930,304.63 | |
| Retained profit adjusted at beginning of year | 3,881,295,568.33 | 1,863,191,218.58 |
| Plus: Net profit attributable to owners of the parent | 347,771,182.73 | 2,246,164,571.68 |
| Less: Statutory surplus reserves | 105,763,735.27 | 10,583,579.20 |
| Common share dividend payable | 224,676,837.80 | 177,546,338.10 |
| Closing retained profit | 3,898,626,177.99 | 3,921,225,872.96 |
Details of retained profit adjusted at beginning of the period
1) Retrospective adjustment due to adopting of the Enterprise Accounting Standard and related regulations, included the retainedprofit by RMB.
2) Variation of accounting policies, influenced the retained profit by RMB16,171,320.58.
3). Correction of material accounting errors, influenced the retained profit by RMB.
4) Change of consolidation range caused by merger of entities under common control, influenced the retained profit by RMB.
5) Other adjustment influenced the retained profit by RMB.
60. Operational revenue and costs
In RMB
| Item | Amount occurred in the current period | Occurred in previous period | ||
| Income | Cost | Income | Cost | |
| Main business | 2,908,727,515.24 | 2,153,447,678.94 | 2,987,575,699.48 | 2,314,151,985.65 |
| Other businesses | 97,022,043.42 | 15,728,616.33 | 61,104,452.58 | 23,796,024.77 |
| Total | 3,005,749,558.66 | 2,169,176,295.27 | 3,048,680,152.06 | 2,337,948,010.42 |
Whether the new revenue guidelines are implemented
□ Yes √ No
Other noteThe Company must comply with disclosure requirements of the Shenzhen Stock Exchange Industry Information DisclosureGuideline No.3 – Listed Companies Engaged in Property Development.Top-5 projects in terms of income received and recognized in the reporting period:
In RMB
| No. | Project | Balanace |
| 1 | Fangda Town | 307,563,025.40 |
61. Taxes and surcharges
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| City maintenance and construction tax | 6,853,739.29 | 7,984,304.25 |
| Education surtax | 5,044,690.90 | 5,756,258.86 |
| Property tax | 4,446,647.69 | 6,220,032.07 |
| Land using tax | 1,615,266.99 | 1,738,269.03 |
| Stamp tax | 1,978,440.89 | 1,946,004.29 |
| Land VAT | 41,191,377.50 | 128,891,545.18 |
| Others | 833,007.72 | 145,514.11 |
| Total | 61,963,170.98 | 152,681,927.79 |
Others:
The tax payable at the end of the period is 59.42% less than that at the beginning of the period, which is the result of the decrease ofenterprise income tax.
62. Sales expense
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Labor costs | 30,325,279.44 | 20,260,198.42 |
| Sales agency fee | 9,693,525.80 | 14,128,431.60 |
| Freight and miscellaneous charges | 6,262,470.96 | 5,041,135.44 |
| Entertainment expense | 2,614,670.15 | 1,991,769.30 |
| Travel expense | 2,159,434.19 | 1,852,326.67 |
| Advertisement and promotion fee | 2,060,937.53 | 917,550.20 |
| Rental | 898,832.44 | 781,210.79 |
| Office costs | 700,706.25 | 1,081,976.69 |
| Material consumption | 129,520.06 | 564,173.89 |
| Others | 2,738,809.38 | 3,215,172.89 |
| Total | 57,584,186.20 | 49,833,945.89 |
Others:
63. Management expenses
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Labor costs | 111,321,743.46 | 86,778,163.52 |
| Maintenance costs | 14,103,293.81 | 9,669,303.38 |
| Agencies | 12,038,870.33 | 8,486,136.13 |
| Depreciation and amortization | 9,361,818.02 | 11,119,225.43 |
| Office expense | 4,978,201.91 | 3,506,152.86 |
| Entertainment expense | 4,578,811.46 | 3,313,697.59 |
| Rental | 4,131,226.97 | 3,489,288.27 |
| Lawsuit | 2,774,432.84 | 463,766.14 |
| Travel expense | 2,440,786.53 | 2,518,992.57 |
| Property management fee | 2,232,683.37 | 689,894.03 |
| Water and electricity | 588,536.13 | 622,744.97 |
| Material consumption | 470,194.27 | 255,851.35 |
| Others | 1,423,196.40 | 9,089,408.55 |
| Total | 170,443,795.50 | 140,002,624.79 |
64. R&D cost
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Labor costs | 36,774,721.22 | 14,718,049.77 |
| Material costs | 11,283,307.86 | 1,596,850.18 |
| Rental | 2,372,103.83 | 1,770,437.76 |
| Depreciation costs | 883,118.20 | 397,092.74 |
| Agencies | 5,384,796.63 | 308,497.20 |
| Amortization of intangible assets | 508,353.71 | 88,515.55 |
| Travel expense | 162,799.41 | 99,589.29 |
| Maintenance costs | 144,199.46 | |
| Others | 2,385,770.34 | 731,012.63 |
| Total | 59,754,971.20 | 19,854,244.58 |
Others:
This year's R & D costs increased by 200.79% compared with the previous year, mainly due to increased R & D projects.
65. Financial expenses
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Interest expense | 90,149,816.27 | 83,226,880.85 |
| Less: interest capitalization | 5,819,400.10 | 7,292,522.11 |
| Less: discount government subsidies | 862,000.00 | 250,000.00 |
| Less: Interest income | 10,770,653.40 | 9,255,120.60 |
| Exchange gain/loss | -777,417.48 | -2,391,402.94 |
| Acceptant discount | 8,581,333.33 | 10,241,203.18 |
| Commission charges and others | 2,107,155.76 | 8,049,350.51 |
| Total | 82,608,834.38 | 82,328,388.89 |
66. Other gains
In RMB
| Source | Amount occurred in the current period | Occurred in previous period |
| Major investment project prize from Industry and Trade Development Division of Dongguan Finance Bureau | 57,142.80 | 57,142.80 |
| Distributed PV power generation project subsidy sponsored by Dongguan Reform and Development Commission | 24,999.96 | 24,999.96 |
| Massive production project of air-breathing double-layer hollow glass energy-saving curtain call | 117,101.18 | 123,987.24 |
| Shenzhen SME Service Bureau enterprise IT construction subsidy | 12,000.00 | |
| Railway transport screen door controlling system and information transmission technology | 18,904.32 | 28,507.00 |
| Luxi county Xuanfeng town government business introduction subsidy | 3,725.64 | 3,725.64 |
| Shenzhen Science and Technology Innovation Committee Technology Innovation Subsidy | 130,040.00 | 69,960.00 |
| VAT rebated into revenue | 3,067,768.44 | 2,280,640.07 |
| Second batch of the 2017 Corporate Research and Development Funding Scheme | 1,113,000.00 | |
| Nanchang High-tech Development Zone Management Committee Finance Bureau allocates industrial incentives | 300,000.00 | |
| National standard preparation subsidy | 300,000.00 | |
| Nanshan District independent innovation industry development special fund | 500,000.00 | |
| It is a national high-tech enterprise | 30,000.00 | |
| Integration sponsorship | 200,000.00 | |
| Nanchang hi-tech finance bureau industry development zone committee exhibition subsidy | 53,600.00 | |
| Nanchang Hi-tech Industry Park management committee, Finance Bureau | 100,000.00 | |
| Nanchang Hi-tech Industry Park management committee, Finance Bureau | 100,000.00 | |
| Nanchang High-Tech Development Zone Entrepreneurship Service Center National Standard Revision Supplement | 160,000.00 | |
| Technical Innovation Award for Scientific Research Staff of Nanchang High-tech Development Zone Entrepreneurship Service Center | 36,500.00 | |
| Nanchang Labor and Information Commission 2017 Single Champion Government Funds | 300,000.00 | |
| Nanshan District independent innovation industry development special fund | 508,000.00 | |
| Supporting Funds for Construction Enterprises in Shanghai Songjiang Jingkai District | 194,000.00 | |
| Subsidy for Multiplier Support Scheme for National High-tech Enterprises of Nanshan District Science and Technology Innovation Bureau of Shenzhen City | 200,000.00 | |
| Intellectual property right project subsidy by Shenzhen market and quality supervision and management committee | 102,000.00 |
| Shenzhen Science and Technology Innovation Committee | 696,000.00 | |
| Childbearing subsidy | 157,864.80 | |
| Employment subsidy | 260,737.20 | 238,968.31 |
| Income tax commission | 337,688.80 | 376,916.38 |
| Others | 248,699.15 | 764,089.75 |
67. Investment income
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Gains from long-term equity investment measured by equity | -2,152,583.08 | -836,397.74 |
| Investment income of trading financial assets during the holding period | 51,600,871.08 | 57,856,845.60 |
| Investment income from disposal of trading financial assets | -43,598,838.65 | -56,309,694.76 |
| Investment gain obtained from disposal of long-term equity investment | -8,047,524.45 | |
| Investment gain of financial products | 27,065,331.33 | |
| Others | 288,430.55 | |
| Total | -1,909,644.55 | 27,776,084.43 |
Net open hedge gains (“-” for loss)
None
69. Income from fair value fluctuation
In RMB
| Source of income from fluctuation of fair value | Amount occurred in the current period | Occurred in previous period |
| Investment real estate measured at fair value | 42,608,311.58 | 2,916,598,485.48 |
| Other non-current financial assets | 9,728.02 | |
| Effective part in the gain and loss of arbitrage of cash flow | -2,739,924.91 | |
| Total | 42,618,039.60 | 2,913,858,560.57 |
Credit impairment loss
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Bad debt loss of other receivables | 12,587,644.72 | |
| Bad debt of account receivable | -47,106,079.08 | |
| Total | -34,518,434.36 |
71. Assets impairment loss
Whether the new revenue guidelines are implemented
□ Yes √ No
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| 1. Bad debt loss | -164,953,654.42 | |
| 2. Inventory depreciation loss | 218,619.24 | -64,934,772.82 |
| 3. Impairment loss on available-for-sale financial assets | -6,888,567.44 | |
| 7. Fixed assets impairment loss | -3,089,516.62 | |
| Total | 218,619.24 | -239,866,511.30 |
72. Assets disposal gains
In RMB
| Source | Amount occurred in the current period | Occurred in previous period |
| Gain and loss from disposal of fixed assets ("-" for loss) | -101,676.86 | -3,516,357.91 |
73. Non-business income
In RMB
| Item | Amount occurred in the current period | Occurred in previous period | Amount accounted into the current accidental gain/loss |
| Penalty income | 778,191.18 | 605,723.88 | 778,191.18 |
| Compensation received | 13,377.69 | 2,993,898.33 | 13,377.69 |
| Others | 2,065,608.87 | 112,971.88 | 2,065,608.87 |
| Total | 2,857,177.74 | 3,712,594.09 | 2,857,177.74 |
74. Non-business expenses
In RMB
| Item | Amount occurred in the current period | Occurred in previous period | Amount accounted into the current accidental gain/loss |
| Donation | 2,272,000.00 | 622,950.00 | 2,272,000.00 |
| Loss from retirement os damaged non-current assets | 171,065.09 | 1,785,203.11 | 171,065.09 |
| Penalty and overdue fine | 117,548.22 | 827,560.09 | 117,548.22 |
| Others | 1,405,252.17 | 610,489.60 | 1,405,252.17 |
| Total | 3,965,865.48 | 3,846,202.80 | 3,965,865.48 |
75. Income tax expenses
(1) Details about income tax expense
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Income tax expenses in this period | 28,267,352.94 | 121,573,588.89 |
| Deferred income tax expenses | 42,004,335.51 | 602,092,953.36 |
| Total | 70,271,688.45 | 723,666,542.25 |
(2) Adjustment process of accounting profit and income tax expense
In RMB
| Item | Amount occurred in the current period |
| Total profit | 417,033,292.75 |
| Income tax expenses calculated based on the legal (or applicable) tax rates | 104,258,323.19 |
| Impacts of different tax rates applicable for some subsidiaries | -21,275,615.38 |
| Impacts of income tax before adjustment | 480,743.31 |
| Impact of non-taxable income | -12,919,217.76 |
| Impacts of non-deductible cost, expense and loss | 4,980,468.06 |
| Impacts of using deductible loss of unrecognized deferred income tax assets | -409,563.38 |
| Deductible temporary difference and deductible loss of unrecognized deferred income tax assets | 353,971.60 |
| Taxation impact of R&D expense | -6,852,260.04 |
| Profit and loss of associates and joint ventures calculated using the equity method | 1,654,838.85 |
| Income tax expenses | 70,271,688.45 |
Other noteThe tax payable at the end of the period is 90.29% less than that at the beginning of the period, which is the result of the decrease ofenterprise income tax.
76. Other miscellaneous income
See Note VII 57.
77. Notes to the cash flow statement
(1) Other cash inflow related to operation
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Interest income | 10,184,892.89 | 8,316,874.92 |
| Subsidy income | 8,478,772.29 | 5,681,937.15 |
| Retrieving of deposits for exchange bills | 40,000,000.00 | 32,714,226.95 |
| Retrieving of bidding deposits | 21,572,620.86 | 33,349,895.41 |
| Other operating accounts | 11,658,195.14 | 26,996,640.74 |
| Total | 91,894,481.18 | 107,059,575.17 |
Notes to other cash inflow related to operation:
(2) Other cash paid related to operation
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Sales expense | 26,841,869.91 | 29,750,837.95 |
| Administrative expense | 60,065,704.23 | 58,067,357.63 |
| Bidding deposit paid | 99,763,670.34 | |
| Net draft deposit net paid | 116,999,688.37 | 128,198,940.32 |
| Lawsuit freezing funds | 22,944,733.36 | |
| Other trades | 7,671,819.08 | 23,353,211.96 |
| Total | 234,523,814.95 | 339,134,018.20 |
Notes to other cash paid related to operation:
(3) Other cash received related to investment activities
NoneNotes to other cash received related to investment activities:
(4) Other cash paid related to investment activities
None
(5) Other cash received related to financing
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| B shares repurchased excess fund recovery | 88,312,942.36 | |
| Total | 88,312,942.36 |
Notes to other cash received related to financing:
(6) Other cash paid related to financing
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Repurchase amout of B shares | 88,428,226.25 | 111,166,053.48 |
| Payment note discounted loan guarantee | 40,000,000.00 | |
| B share account limited fund | 88,273,535.75 | |
| Total | 128,428,226.25 | 199,439,589.23 |
78. Supplementary data of cash flow statement
(1) Supplementary data of cash flow statement
In RMB
| Supplementary information | Amount of the Current Term | Amount of the Previous Term |
| 1. Net profit adjusted to cash flow related to business operations: | -- | -- |
| Net profit | 346,761,604.30 | 2,246,164,571.68 |
| Plus: Asset impairment provision | 34,299,815.12 | 239,866,511.30 |
| Fixed asset depreciation, gas and petrol depreciation, production goods depreciation | 24,226,272.74 | 24,664,826.19 |
| Use right assets | ||
| Amortization of intangible assets | 2,680,311.61 | 3,189,135.78 |
| Amortization of long-term amortizable expenses | 632,269.18 | 531,870.83 |
| Loss from disposal of fixed assets, intangible assets, and other long-term assets (―-― for gains) | 101,676.86 | 3,516,357.91 |
| Loss from fixed asset discard (―-― for gains) | 171,065.09 | 1,785,203.11 |
| Loss from fair value fluctuation (―-― for gains) | 42,618,039.60 | -2,913,858,560.57 |
| Financial expenses (―-― for gains) | 91,603,140.07 | 84,126,977.13 |
| Investment losses (―-― for gains) | -6,137,879.90 | -27,776,084.43 |
| Decrease of deferred income tax asset (―-― for increase) | 20,257,876.84 | -125,877,335.18 |
| Increase of deferred income tax asset (―-― for increase) | 21,746,458.65 | 727,763,659.79 |
| Decrease of inventory (―-― for increase) | -64,556,366.16 | 103,270,355.56 |
| Decrease of operational receivable items (―-― for increase) | -345,194,864.61 | -567,106,379.14 |
| Increase of operational receivable items (―-― for decrease) | 10,686,250.77 | 682,326,319.97 |
| Others | -99,944,421.73 | -95,484,710.36 |
| Cash flow generated by business operations, net | -5,284,830.77 | 387,102,719.57 |
| 2. Major investment and financing activities with no cash involved: | -- | -- |
| Debt transferred to assets | ||
| Convertible corporate bonds due within one year | ||
| Fixed assets under finance leases | ||
| 3. Net change in cash and cash equivalents: | -- | -- |
| Balance of cash at period end | 725,269,902.90 | 956,190,890.68 |
| Less: Initial balance of cash | 956,190,890.68 | 931,285,535.55 |
| Add: Ending balance of cash equivalents | ||
| Less: Ending balance of cash equivalents | ||
| Net increase in cash and cash equivalents | -230,920,987.78 | 24,905,355.13 |
(2) Net cash paid to subsidiaries acquired in the current period
In RMB
| Amount | |
| Cash or cash equivalents paid by the business combination in the current period | 61,937,324.17 |
| Including: | -- |
| Less: cash and cash equivalent held by subsidiaries on the date of purchase | 2,493.86 |
| Including: | -- |
| Cash or cash equivalents paid by the business combination in the current period | |
| Including: | -- |
| Net cash paid for acquiring subsidiaries | 61,934,830.31 |
Others:
(3) Net cash from disposal of subsidiaries received in this period
None
(4) Composition of cash and cash equivalents
In RMB
| Item | Closing balance | Opening balance |
| I. Cash | 725,269,902.90 | 956,190,890.68 |
| Including: Cash in stock | 4,244.86 | 5,167.01 |
| Bank savings can be used at any time | 725,255,753.53 | 953,231,178.60 |
| Other monetary capital can be used at any time | 9,904.51 | 2,954,545.07 |
| Bank savings can be used at any time | ||
| Net increase of savings in central bank and brother company | ||
| Dismantling of interbank funds | ||
| 2. Cash equivalents | ||
| Including: bond investment due within three months | ||
| III. Balance of cash and cash equivalents at end of term | 725,269,902.90 | 956,190,890.68 |
| Including: restricted cash and cash equivalent used by parent company or subsidiaries in the Group | 484,542,076.05 | 432,871,193.08 |
79. Notes to statement of change in owners’ equity
None
80. Ownership- or use-right-restricted assets
In RMB
| Item | Closing book value | Reason |
| Monetary capital | 484,542,076.05 | Margin, pledged deposits, etc. |
| Inventory | 99,936,207.50 | Credit guarantee |
| Fixed assets | 65,256,230.83 | Credit guarantee |
| Intangible assets | 20,550,703.78 | Credit guarantee |
| 100% stake in Fangda Property Development held by the Company | 200,000,000.00 | Loan by pledge |
| Investment real estate | 394,971,924.50 | Credit Mortgage, Mortgage Loan |
| Other current assets | 207,993,374.07 | Financing |
| Total | 1,473,250,516.73 | -- |
81. Foreign currency monetary items
(1) Foreign currency monetary items
In RMB
| Item | Closing foreign currency balance | Exchange rate | Closing RMB balance |
| Monetary capital | -- | -- | 57,765,564.37 |
| Including: USD | 2,126,259.48 | 6.9762 | 14,833,211.38 |
| Euro | |||
| HK Dollar | 35,573,204.80 | 0.8958 | 31,865,765.44 |
| INR | 9,554,598.90 | 0.0978 | 934,583.09 |
| Vietnam | 3,225,900,653.00 | 0.000301 | 971,173.94 |
| SGD | 0.30 | 5.1739 | 1.55 |
| AUD | 1,875,566.40 | 4.8843 | 9,160,828.97 |
| Account receivable | -- | -- | 62,789,565.94 |
| Including: USD | 7,764,144.49 | 6.9762 | 54,164,224.79 |
| Euro | |||
| HK Dollar | 2,155,386.72 | 0.8958 | 1,930,795.42 |
| INR | 26,439,727.61 | 0.0978 | 2,585,805.36 |
| AUD | 841,213.76 | 4.8843 | 4,108,740.37 |
| Long-term loans | -- | -- | |
| Including: USD | |||
| Euro | |||
| HK Dollar | |||
| Other receivables | 1,695,146.68 | ||
| Including: USD | 111,620.31 | 6.9762 | 778,685.61 |
| HK Dollar | 817,604.90 | 0.8958 | 732,410.47 |
| INR | 1,881,908.00 | 0.0978 | 184,050.60 |
| Account payable | 4,008,934.71 | ||
| Including: USD | 564,283.11 | 6.9762 | 3,936,551.83 |
| AUD | 14,819.50 | 4.8843 | 72,382.88 |
| Other payables | 89.58 | ||
| Including: HKD | 100.00 | 0.8958 | 89.58 |
(2) The note of overseas operating entities should include the main operation places, book keepingcurrencies and selection basis. Where the book keeping currency is changed, the reason should also beexplained.
□ Applicable √ Inapplicable
82. Hedging
Hedging items and related tools, qualitative and quantitative information about hedging risks:
Cash flow hedging Aluminum plate futures transaction Aluminum futures contract Rise on raw material prices, causingpurchase cost increase
83. Government subsidy
(1) Government subsidy profiles
In RMB
| Type | Amount | Item | Amount accounted into the current gain/loss |
| Assets-related | 10,817,247.40 | Deferred earning | 233,873.90 |
| Earning-related | 130,040.00 | Deferred earning | 130,040.00 |
| Earning-related | 6,915,169.59 | Other gains | 6,915,169.59 |
| Earning-related | 862,000.00 | Financial expenses | 862,000.00 |
(2) Government subsidy refund
□ Applicable √ Inapplicable
84. Others
VIII. Change to Consolidation Scope
1. Consolidation of entities not under common control
1. Merger of companies not under the common control during the report period
In RMB
| Purchased party name | When the equity is acquired | Equity acquisition cost | Shareholding ratio | Equity acquisition method | Purchase date | Basis for determining the purchase date | Revenue from the purchaser to the end of the period | Net profit of the purchaser from the date of purchase to the end of the period |
| Zhongrong Litai | 61,937,324.17 | 55.00% | Cash | Date of obtaining the actual control right of the acquired party | 39,105.50 | -2,243,507.63 |
Others:
According to the agreement on transfer of shares signed on 11 September 2018 between the Company and Shenzhen City YongkangHoldings Co., Ltd., Shenzhen City Qianhaizhong Certified Dingfeng No. 6 Investment Enterprise (limited partnership), ShenzhenCity Yongkang Holdings Co., Ltd., Shenzhen City Qianhaizhong Certified Dingfeng No. 6 Investment Enterprise (limited partnership)holds 100% share of Zhongfanlitai Corporation, divided into three purchases. As of December 31, 2019, the Company has paid thetransfer price for the first period of shares, has registered for industrial and commercial changes, enjoys the share of 55.00% and cancontrol it.
(2) Combination costs and goodwill
In RMB
| Combination costs | |
| --Cash | 61,937,324.17 |
| Total combination costs | 61,937,324.17 |
| Less: fair share of identifiable net assets acquired | 61,937,324.17 |
(3) Identifiable assets and liabilities of the purchased party on the purchase date
In RMB
| Fair value on the day of acquisition | Book value on the day of acquisition | |
| Monetary capital | 2,493.86 | 2,493.86 |
| Receivables | 36,513,600.01 | 36,513,600.01 |
| Inventory | 135,185,505.10 | 132,393,495.15 |
| Payable | 59,088,282.29 | 59,088,282.29 |
| Net assets | 112,613,316.68 | 109,821,306.73 |
| Less: minor shareholders’ equity | 50,675,992.51 | 49,419,588.03 |
| Acquired net assets | 61,937,324.17 | 60,401,718.70 |
(4) Gains or losses arising from the re-measurement of equity held before the date of purchase at fair value
Disposal of a subsidiary in multiple steps that lead to loss of control in the report period
□ Yes √ No
2. Consolidation of entities under common control
None
3. Reverse purchase
None
4. Disposal of subsidiaries
Single disposal of a subsidiary that may lead to loss of control
□ Yes √ No
Disposal of a subsidiary in multiple steps that lead to loss of control in the report period
□ Yes √ No
5. Change to the consolidation scope for other reasons
Change in the consolidation scope due to other reasons (such as new subsidiaries and liquidation of subsidiaries) and the situations:
(1) In the current period, three newly-controlled subsidiaries were established, namely Jianke Southeast Asia Company, ChengduCurtain Wall Company and Shanghai Fangda Jianzhi Company. Enterprises under non-common control merged with Zhongrong LitaiCompany.In this period, Shenzhen Kexunda Software Co., Ltd., an indirect controlled subsidiary, was canceled, so the current consolidatedstatement reduced one subsidiary.
6. Others
IX. Equity in Other Entities
1. Interests in subsidiaries
(1) Group Composition
| Company | Place of business | Registered address | Business | Shareholding percentage | Obtaining method | |
| Direct | Indirect | |||||
| Fangda Jianke | Shenzhen | Shenzhen | Designing, manufacturing, and installation of curtain walls | 98.39% | 1.61% | Incorporation |
| Fangda Zhichuang | Shenzhen | Shenzhen | Production, processing and installation of subway screen doors | 10.00% | 90.00% | Incorporation |
| Fangda New Material | Nanchang | Nanchang | Prodution and sales of new-type materialsm composite materials and production of curtain walls | 75.00% | 25.00% | Incorporation |
| Fangda Property | Shenzhen | Shenzhen | Real estate development and operation | 100.00% | Incorporation | |
| Fangda New Energy | Shenzhen | Shenzhen | Design and construction of PV power plants | 99.00% | 1.00% | Incorporation |
| Chengdu Fangda | Chengdu | Chengdu | Trusted processing of building curtain wall materials | 100.00% | Incorporation | |
| Shihui International | Virgin Islands | Virgin Islands | Investment | 100.00% | Incorporation | |
| Dongguan New Material | Dongguan | Dongguan | Installation and sales of building curtain walls | 100.00% | Incorporation | |
| Fangda Property Management | Shenzhen | Shenzhen | Property management | 100.00% | Incorporation | |
| Jiangxi Property Development | Nanchang | Nanchang | Real estate development and operation | 100.00% | Incorporation | |
| Luxin New Energy | Pingxiang | Pingxiang | Design and construction of PV power plants | 100.00% | Incorporation | |
| Xinjian New Energy | Nanchang | Nanchang | Design and construction of PV power plants | 100.00% | Incorporation | |
| Dongguan New Energy | Dongguan | Dongguan | Design and construction of PV power plants | 100.00% | Incorporation |
| Kechuangyuan Software | Shenzhen | Shenzhen | Software development | 100.00% | Incorporation | |
| Fangda Automation (Hong Kong) Co., Ltd. | Hong Kong | Hong Kong | Metro screen door | 100.00% | Incorporation | |
| Hongjun Investment Company | Shenzhen | Shenzhen | Investment | 98.00% | 2.00% | Incorporation |
| Fangda Australia Co., Ltd. | Australia | Australia | Designing, manufacturing, and installation of curtain walls | 100.00% | Incorporation | |
| Fang Qingling | Shanghai | Shanghai | Intelligent technology, new energy, automated technology | 30.00% | 70.00% | Incorporation |
| Fangda Cloud Rail | Shenzhen | Shenzhen | Design, development and sales of cloud rail transport equipment | 100.00% | Incorporation | |
| Chengdu Fangda | Chengdu | Chengdu | Construction and decor industry | 100.00% | Incorporation | |
| Fangda Southeast Asia | Vietnam | Vietnam | Designing, manufacturing, and installation of curtain walls | 100.00% | Incorporation | |
| Fangda Jianke | Shanghai | Shanghai | Designing, manufacturing, and installation of curtain walls | 100.00% | Incorporation | |
| Zhongrong Litai | Shenzhen | Shenzhen | Business service | 55.00% | Purchase |
Others:
1. Chengdu curtain wall company, founded on October 16, 2019, Fang Da Jianke company and Chengdu Fang large companysubscribe registered capital 50 million yuan, as of December 31, 2019, has not actually contributed capital.
2. Fonda Southeast Asia Corporation, incorporated in Vietnam on April 8, 2019, registered capital 10,000, 998,000.00 VietnameseShield, Fonda Jianke Corporation has paid sufficient capital.
3. Founded on September 27, 2019, Shanghai Fangda Jianzhi Co., Ltd. and Fangda Jianzhi Co., Ltd. have subscribed to the registeredcapital of RMB50 million and have not actually contributed capital as of December 31, 2019.
4. The Company holds 55.00% shares in Zhongfanlitai, which are incorporated into the merger. For details, see note 8 and 1 of thisnote.
(2) Major non wholly-owned subsidiaries
In RMB
| Company | Shareholding of minority shareholders | Profit and loss attributed to minority shareholders | Dividend to be distributed to minority shareholders | Interest balance of minority shareholders in the end of the period |
| Zhongrong Litai | 45.00% | -1,009,578.43 | 48,410,009.60 |
(3) Financial highlights of major non wholly owned subsidiaries
In RMB
| Company | Closing balance | Opening balance | ||||||||||
| Current asset | Non-current assets | Total of assets | Current liabilities | Non-current liabilities | Total liabilities | Current asset | Non-current assets | Total of assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Zhongrong Litai | 174,827,165.52 | 30,066.12 | 174,857,231.64 | 67,279,432.54 | 67,279,432.54 | |||||||
In RMB
| Company | Amount occurred in the current period | Occurred in previous period | ||||||
| Turnover | Net profit | Total of misc. incomes | Business operation cash flows | Turnover | Net profit | Total of misc. incomes | Business operation cash flows | |
| Zhongrong Litai | 39,105.50 | -2,243,507.63 | -2,243,507.63 | 4,267,633.70 | ||||
2. Change in the ownership share of the subsidiary and control of the transaction of the subsidiaryNone
3. Interests in joint ventures or associates
(1) Financial summary of insignificant joint ventures and associates
None
(2) Financial summary of insignificant joint ventures and associates
None
(3) Financial summary of joint ventures
None
(4) Financial summary of insignificant joint ventures and associates
In RMB
| Closing balance/amount occurred in this period | Opening balance/amount occurred in previous period | |
| Joint venture: | -- | -- |
| Total shareholding | -- | -- |
| Associate: | -- | -- |
| Total book value of investment | 57,222,240.83 | 70,105,657.88 |
| Total shareholding | -- | -- |
| Net profit | -2,152,583.08 | -836,397.74 |
| Total of misc. incomes | -2,152,583.08 | -836,397.74 |
4. Important co-operation
None
5. Financial support or other support provided to structural entities to be consolidated
None
6. Others
X. Risks of Financial Tools
The risks associated with the financial instruments of the Company arise from the various financial assets and liabilitiesrecognized by the Company in the course of its operations, including credit risks, liquidity risks and market risks.
The management objectives and policies of various risks related to financial instruments are governed by the management ofthe Company. Management is responsible for the daily risk management through the functional department (e.g. the Companyreviews credit sales business on a case-by-case basis). The internal audit department of the Company supervises the implementationof the policies and procedures of risk management of the Company on a daily basis, and reports the relevant findings to the auditcommittee of the Company in time.
The overall objective of risk management is to formulate risk management policies to minimize all types of risks related tofinancial instruments without compromising company competitiveness and resilience.
1. Credit risk
Credit risk is caused by the failure of one party of a financial instrument in performing its obligations, causing the risk offinancial loss for the other party. The credit risk of the Company mainly arises from currency funds, receivables, receivables, other
receivables and long-term receivables. The credit risk of these financial assets is derived from the counterparty default and themaximum exposure is equal to the carrying amount of these instruments.The Company's money and funds are mainly deposited in the commercial banks and other financial institutions. The Companybelieves that these commercial banks have higher reputation and asset status and have lower credit risk.For receivables, the Group sets up related policies to control the credit risk. The Group set the credit line and term for debtorsaccording to their financial status, external rating, and possibility of getting third-party guarantee, credit record and other factors. TheGroup regularly monitors debtors’ credit record. For those with poor credit record, the Group will send written payment reminders,shorten or cancel credit term to lower the general credit risk.
(1) Significant increases in credit risk
The credit risk of the financial instrument has not increased significantly since the initial confirmation. In determining whetherthe credit risk has increased significantly since the initial recognition, the Company considers reasonable and evidenced information,including forward-looking information, that can be obtained without unnecessary additional costs or effort. The Company determinesthe relative risk of default risk of the financial instrument by comparing the risk of default of the financial instrument on the balancesheet date with the risk of default on the initial recognition date to assess the credit risk of the financial instrument from initialrecognition.When triggering one or more of the following quantitative and qualitative criteria, we believe that the credit risk of thefinancial instruments has increased significantly: The quantitative criterion is mainly that the probability of default in the remainingperiod of the reporting date has increased by more than a certain proportion from the initial confirmation; The qualitative criteria aresignificant adverse changes in the operation or financial situation of the principal debtor.
(2) Definition of assets where credit impairment has occurred
In order to determine whether or not credit impairment occurs, the standard adopted by our company is consistent with thecredit risk management target for related financial instruments, and quantitative and qualitative indicators are considered.
Major financial difficulties have occurred to the issuer or the debtor; Breach of contract by the debtor, such as payment ofinterest or default or overdue of principal; (B) The concession that the debtor would not make under any other circumstances foreconomic or contractual considerations relating to the financial difficulties of the debtor; The debtor is likely to be bankrupt orundertake other financial restructuring; The financial difficulties of the issuer or debtor lead to the disappearance of the active marketfor the financial asset; To purchase or generate a financial asset at a substantial discount, which reflects the fact that a credit loss hasoccurred.
Credit impairment in financial assets may be caused by a combination of multiple events, not necessarily by events that can beidentified separately.
(3) Expected credit loss measurement
Depending on whether there is a significant increase in credit risk and whether a credit impairment has occurred, the Companyprepares different assets for a 12-month or full expected credit loss. The key parameters of expected credit loss measurement includedefault probability, default loss rate and default risk exposure. Taking into account the quantitative analysis and forward-lookinginformation of historical statistics (such as counterparty ratings, guaranty methods, collateral categories, repayment methods, etc.),the Company establishes the default probability, default loss rate and default risk exposure model.
Definition:
The probability of default refers to the possibility that the debtor will not be able to fulfil its obligation to pay in the next 12months or throughout the remaining period.
Breach Loss Rate means the extent of loss expected by the Company for breach risk exposure. Depending on the type ofcounterparty, the manner and priority of recourse, and the different collateral, the default loss rate is also different. The default lossrate is the percentage of risk exposure loss at the time of default, calculated on the basis of the next 12 months or the entire lifetime;Exposure to default is the amount payable to the Company at the time of default in the next 12 months or throughout theremaining life. Prospective information credit risks significantly increased and expected credit losses were calculated. Through theanalysis of historical data, the Company has identified the key economic indexes that affect the credit risk of each business type andthe expected credit loss.The largest credit risk facing the Group is the book value of each financial asset on the balance sheet. The Group makes noguarantee that may cause the Group credit risks.Among the Group’s receivables, accounts receivable from top 5 customers account for 17.66% of the total accounts receivable(2018: 18.60%); among other receivables, other receivables from top 5 customers account for 71.29% of the total other receivables(2018: 66.83%).
2. Liquidity risk
Liquidity risk is the risk of capital shortage when the Group needs to pay cash or settled with other financial assets. TheCompany is responsible for the cash management of its subsidiaries, including short-term investments in cash surpluses and loans tomeet projected cash requirements. The Company's policy is to regularly monitor short and long-term liquidity requirements andcompliance with borrowing agreements to ensure adequate cash reserves and readily available securities.
The expiry period of the Company's financial liabilities is as follows:
Contract amount: RMB
| December 31, 2019 | ||||
| Item | Less than 1 year | Within 1-3 years | Over 3 years | Total |
| Short-term loans | 72,461.82 | - | - | 72,461.82 |
| Notes payable | 57,881.60 | - | - | 57,881.60 |
| Account payable | 118,979.57 | 0.97 | 96.79 | 119,077.33 |
| Employees' wage payable | 5,584.71 | - | - | 5,584.71 |
| Other payables | 68,410.66 | 1,170.99 | 561.59 | 70,143.24 |
| Non-current liabilities due in 1 year | 92,234.66 | - | - | 92,234.66 |
| Other current liabilities | 18,169.46 | - | - | 18,169.46 |
| Long-term loans | - | 39,650.15 | 15,000.00 | 54,650.15 |
| Total liabilities | 433,722.48 | 40,822.11 | 15,658.38 | 490,202.97 |
The expiry period of the Company's financial liabilities is as follows:
Contract amount: RMB
| December 31, 2018 | ||||
| Item | Less than 1 year | Within 1-3 years | Over 3 years | Total |
| Short-term loans | 20,800.00 | - | - | 20,800.00 |
| Notes payable | 50,786.45 | - | - | 50,786.45 |
| Account payable | 89,201.31 | 14,588.41 | 173.36 | 103,963.08 |
| Employees' wage payable | 4,451.31 | - | - | 4,451.31 |
| Other payables | 25,200.85 | 55,107.77 | 1,003.25 | 81,311.87 |
| Non-current liabilities due in 1 year | 20,000.00 | - | - | 20,000.00 |
| Other current liabilities | 932.87 | - | - | 932.87 |
| Long-term loans | - | 119,397.82 | - | 119,397.82 |
| Total liabilities | 211,372.79 | 189,094.00 | 1,176.61 | 401,643.40 |
3. Market risks and measures
(1) Credit risks
The exchange rate risk of the Company mainly comes from the assets and liabilities of the Company and its subsidiaries inforeign currency not denominated in its functional currency. Except for the use of Hong Kong dollars, United States dollars,Australian dollars, Vietnamese shields, Indian rupees or Singapore currencies by its subsidiaries established in and outside the HongKong Special Administrative Region, other major businesses of the Company shall be denominated in Renminbi.As of December 31, 2019, the Company's ending foreign currency financial assets and foreign currency financial liabilities arelisted in Note 7 of this note item, 58 foreign currency monetary item description.The Company pays close attention to the impact of exchange rate changes on the Company's exchange rate risk. The Companycontinuously monitors the scale of foreign currency transactions and foreign currency assets and liabilities to minimize foreignexchange risks. To this end, the Company may avoid foreign exchange risks by signing forward foreign exchange contracts orcurrency swap contracts.
(2) Interest risk
The Group's interest rate risk mainly arises from long-term interest-bearing debts such as long-term bank loans. Financialliabilities with floating interest rate cause cash flow interest rate risk for the Group. Financial liabilities with fixed interest rate causefair value interest rate risk for the Group. The Group decides the proportion between fixed interest rate and floating interest rateaccording to the market environment and regularly reviews and monitors the combination of fixed and floating interest rateinstruments.
The Group Finance Department of the Company continuously monitors the Group interest rate level. The rising interest ratewill increase the cost of the new interest-bearing debt and the interest expenditure on interest-bearing debt which has not yet beenpaid by the Company at the floating rate, and will have a significant adverse effect on the Company's financial performance.Management will make adjustments in time according to the latest market conditions.
As of December 31, 2019, the current floating interest rate borrows 18.896 billion yuan. If the interest rate of the loan at thefloating interest rate rises or falls by 50 basis points, the net profit of the current year will fall or increase by 70.86 million yuan(December 31, 2018: 9.08 million yuan).
XI. Fair Value
1. Closing fair value of assets and liabilities measured at fair value
In RMB
| Item | Closing fair value | |||
| First level fair value | Second level fair value | Third level fair value | Total | |
| 1. Continuous fair value measurement | -- | -- | -- | -- |
| 1. Financial assets measured at fair value with variations accounted into current income account | 15,339,790.20 | 15,339,790.20 | ||
| (2) Investment in equity tools | 5,009,728.02 | 5,009,728.02 | ||
| 3. Derivative financial assets | 10,330,062.18 | 10,330,062.18 | ||
| (2) Other debt investment | 2,954,029.00 | 2,954,029.00 | ||
| (3) Investment in other equity tools | 20,660,181.44 | 20,660,181.44 | ||
| (4) Investment real estate | 5,306,116,360.12 | 5,306,116,360.12 | ||
| 2. Leased building | 5,306,116,360.12 | 5,306,116,360.12 | ||
| Total assets measured at fair value continuously | 5,306,116,360.12 | 38,954,000.64 | 5,345,070,360.76 | |
| (6) Transactional financial liabilities | 96,767.62 | 96,767.62 | ||
| Derivative financial liabilities | 96,767.62 | 96,767.62 | ||
| Total assets measured at fair value continuously | 96,767.62 | 96,767.62 | ||
| 2. Discontinuous fair value measurement | -- | -- | -- | -- |
2. Recognition basis of market value of continuous and discontinuous items measured at first level fairvalue
The Group determines the fair value using quotation in an active market for financial instruments traded in an active market;
3. Valuation technique and qualitative and quantitative information for key parameters of continuous anddiscontinuous second level fair value itemsFor investment in real estate similar with real estate transaction, the Group uses valuation techniques to determine its fair value. Thetechnique is comparison and earning method. Inputs include transaction date, status, region and other factors.
4. Valuation technique and qualitative and quantitative information for key parameters of continuous anddiscontinuous third level fair value itemsIf there is no active market, the Company uses evaluation techniques to determine the fair value. The valuation models are mainlycash flow discount model and market comparable company model. The input value of valuation technology mainly includes risk-freeinterest rate, benchmark interest rate, exchange rate, credit point difference, liquidity premium, lack of liquidity discount, etc.
5. Sensitivity analysis of adjusting information and unobservable parameters between the third level fairvalue item, the beginning and the end of the periodNone
6. Switch between different levels, switch reason and switching time policy
The Company takes the occurrence date of the events leading to the transition between levels as the time point to confirm thetransition between levels. In the period, there is no switch in the financial assets measured at fair value between the first and secondlevel or transfer in or out of the third level.
7. Changes in valuation techniques and reasons for such changes in the current periodNone
8. Fair value of financial assets and liabilities not measured at fair value
Financial assets and liabilities measured at amortized cost include: monetary capital, bills receivable, accounts receivable, otherreceivables, short-term borrowings, notes payable, accounts payables, other payables, and long-term payables.The difference between book value and fair value of financial assets and liabilities not measured at fair value is small.
9. Others
XII. Related Parties and Transactions
1. Parent of the Company
| Parent | Registered address | Business | Registered capital (in RMB10,000) | Share of the parent co. in the Company | Voting power of the parent company |
| Shenzhen Banglin Technologies Development Co., Ltd. | Shenzhen | Industrial investment | 3,000.00 | 10.22% | 10.22% |
| Gong Qing Cheng Shi Li He Investment Management Partnership Enterprise (limited partner) | Jiujiang | Industrial investment | 1,978.0992 | 2.38% | 2.38% |
| Shengjiu Investment Ltd. | Hong Kong | Industrial investment | HKD1.00 | 9.23% | 9.23% |
Particulars about the parent of the Company
(1) All of the investors of Shenzhen Banglin Technology Development Co., Ltd., the holding shareholder of the Company, are naturalpersons. Among them, Chairman Xiong Jianming is holding 85％ shares, and Mr. Xiong Xi – son of Mr. Xiong Jianming, is holding15% of the shares.
2. Among the top 10 shareholders, Shenzhen Banglin Technology Development Co., Ltd. and Shengjiu Investment Co., Ltd. areparties action-in-concert. Shenzhen Banglin Technology Development Co., Ltd. and Gong Qing Cheng Shi Li He InvestmentManagement Partnership Enterprise are related parties. The Company is not notified of other action-in-concert or related partiesamong the other holders of current shares.The final controller of the Company is Xiong Jianming.Others:
2. Subsidiaries of the Company
See Note IX. 1.
3. Joint ventures and associates
See Note IX. 3 for details of significant joint ventures and associates of the Company.Information about other joint ventures or associates with related transactions in this period or with balance generated by relatedtransactions in previous period:
| Joint venture or associate | Relationship with the Company |
| Shenzhen Ganshang Joint Investment Co., Ltd. | Associate |
4. Other associates
| Other related parties | Relationship with the Company |
| Ganshang Joint Investment | Associate |
| Jiangxi Business Innovative Property Joint Stock Co., Ltd. | Associate |
| Shenzhen Qijian Technology Co., Ltd. (Qijian Technology) | Common actual controller |
| Shenyang Fangda Semi-conductor Lighting Co., Ltd. (hereinafter Shenyang Fangda) | Subsidiary in liquidation |
| Zhongrong Litai | Controlled by the Group on 12 June 2019 to become a controlling subsidiary |
| Shenzhen Woke Semi-conductor Lighting Co., Ltd. (hereinafter Shenzhen Woke) | Subsidiary in liquidation |
| Shenzhen Fangda Property Development Co., Ltd. (hereinafter Fangda Property Development) | Controlled subsidiaries |
| Director, manager and secretary of the Board | Key management |
5. Related transactions
(1) Related transactions for purchase and sale of goods, provision and acceptance of servicesSales of goods and services
In RMB
| Affiliated party | Related transaction | Amount occurred in the current period | Occurred in previous period |
| Qijian Technology | Property service and sales of goods | 49,494.36 | 33,117.82 |
| Ganshang Joint Investment | Property service and sales of goods | 9,834.99 | 10,121.77 |
Related trust management / contracting and entrusted management / outsourcingNone
(3) Related leasing
The Company is the leasor:
In RMB
| Name of the leasee | Category of asset for lease | Rental recognized in the period | Rental recognized in the period |
| Qijian Technology | Houses & buildings | 414,732.00 | 303,164.32 |
| Ganshang Joint Investment | Houses & buildings | 121,872.30 | 131,516.47 |
(4) Related guarantees
The Company is the guarantor:
In RMB
| Beneficiary party | Amount guaranteed | Start date | Due date | Completed or not |
| Fangda Jianke | 300,000,000.00 | 18 August 2018 | 31 July 2020 | No |
| Fangda Zhichuang | 216,000,000.00 | 6 August 2018 | 12 July 2020 | No |
| Fangda Property | 1,300,000,000.00 | 3 February 2015 | 2 February 2023 | No |
| Fangda Jianke | 100,000,000.00 | 21 June 2019 | 20 June 2020 | No |
| Fangda Jianke | 250,000,000.00 | 20 August 2019 | 19 August 2020 | No |
| Fangda Jianke | 400,000,000.00 | 26 March 2019 | 26 March 2020 | No |
| Fangda Jianke | 300,000,000.00 | 1 August 2019 | 31 July 2020 | No |
| Fangda Jianke | 400,000,000.00 | 17 April 2019 | 17 April 2020 | No |
| Fangda New Material | 65,000,000.00 | 27 June 2019 | 27 June 2020 | No |
| Fangda New Material | 80,000,000.00 | 24 April 2019 | 23 April 2020 | No |
| Fang Qingling | 80,000,000.00 | 31 July 2019 | 10 July 2024 | No |
| Fangda Zhichuang | 150,000,000.00 | 27 May 2019 | 27 May 2020 | No |
| Fangda Zhichuang | 120,000,000.00 | 26 March 2019 | 26 March 2020 | No |
| Fangda Zhichuang | 200,000,000.00 | 1 August 2019 | 31 July 2020 | No |
| Jiangxi Property Development | 200,000,000.00 | 19 June 2019 | 23 June 2023 | No |
| Fangda Jianke and Fangda Zhichuang | 140,000,000.00 | 18 December 2019 | No |
The Company is the guarantied party:
In RMB
| Guarantor | Amount guaranteed | Start date | Due date | Completed or not |
| Fangda Jianke | 500,000,000.00 | 26 March 2019 | 26 March 2020 | No |
| Fangda Jianke, Fangda New Energy | 100,000,000.00 | 26 March 2019 | 20 March 2021 | No |
Note to related guarantees
1. The above-mentioned guarantees are all associated guarantees within interested entities of the Group.
2. HSBC has a total credit of RMB 140 million to the Company, Fangda Jianke and Fangda Zhichuang and has not yet agreed on thecredit expiration date. HSBC regularly evaluates the credit status. The restriction on the use of the credit is as follows:
The Company can use non-financial bank guarantees of up to 140 million yuan to grant credit;Fangda Jianke has non-committed combined revolving credits of not more than RMB140 million including revolving loans ofup to RMB90 million, non-financial bank guarantees of up to RMB140 million and bank acceptances of up to RMB140 million.Fangda Jianke has non-committed combined revolving credits of not more than RMB140 million including revolving loans ofup to RMB50 million, non-financial bank guarantees of up to RMB140 million and bank acceptances of up to RMB140 million.
（3） Xingye Bank total credit to this company, Fangda Jianke company, Zhixin technology company 90000 million yuan, of whichFangda Jianke company no more than 400 million yuan, Zhixin technology company no more than 12 million yuan, the Company nomore than 600 million yuan.
(5) Capital borrowing with related parties
None
(6) Asset transferring and debt reconstruction with related parties
None
(7) Remuneration of key management
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Directors, supervisors and senior management | 8,656,154.32 | 7,215,982.18 |
6. Receivable and payables due with related parties
(1) Receivable interest
In RMB
| Project | Affiliated party | Closing balance | Opening balance | ||
| Remaining book value | Bad debt provision | Remaining book value | Bad debt provision | ||
| Account receivable | Qijian Technology | 1,212.89 | 12.13 | 957.79 | 28.73 |
| Other receivables | Shenyang Fangda | 42,877.00 | 42,877.00 | 42,877.00 | 42,877.00 |
| Other receivables | Shenzhen Woke | 867,442.94 | 867,442.94 | 867,442.94 | 867,442.94 |
| Other receivables | Ganshang Joint Investment | 5,015,089.25 | 74,724.83 | ||
| Other receivables | Shenzhen Yikang Real Estate Co. Ltd. | 72,000,000.00 | 1,072,800.00 | ||
| Other receivables | Zhongrong Litai | 8,580,127.08 | 257,403.81 | ||
(2) Receivable interest
In RMB
| Project | Affiliated party | Closing balance of book value | Opening balance of book value |
| Other payables | Shenzhen Yikang Real Estate Co. Ltd. | 21,581,724.49 |
XIII. Share Payment
1. Overall share payment
□ Applicable √ Inapplicable
2. Share payment settled by equity
□ Applicable √ Inapplicable
3. Share payment settled by cash
□ Applicable √ Inapplicable
4. Revising and termination of share payment
NoneXIV. Commitment and Contingent Events
1. Major commitments
Major commitments that exist on the balance sheet day
Major commitments that exist on the balance sheet dayOn November 6, 2017, Fangda Real Estate Co., Ltd., a subsidiary of the Company, and Bangshen Electronics (Shenzhen) Co.,Ltd. signed the ―Joint Development Agreement on Fangda Bangshen Industrial Park (Temporary Name) Urban Renewal Project‖,and the two parties agreed to develop cooperatively. In order to develop urban renewing projects such as a ―renovation project‖,Fangda Real Estate provided Party A with property compensation through renovating and renovating the property allocation termsagreed upon by both parties, and obtained independent development rights of the project. As of December 31, 2019, Fangda RealEstate Co., Ltd. had paid a security deposit of RMB 20 million.
(2) In July 2018 ,the Company's subsidiary Fangda Real Estate Co. Ltd. (Party A) signed a contract with Shenzhen YikangReal Estate Co. Ltd. (Party B1) and Shenzhen Qianhai Zhongzheng Dingfeng No. 6 Investment Enterprise (Limited Partnership)(Party B2), "Shenzhen Henggang Dakang Village Project Cooperation Agreement". Party B agrees to transfer the entire equity of theproject company it holds and the entire development interest of the project to Party A. Party A shall pay Party B a total of RMB600million for the cooperation price. As of December 31, 2019, Fangda Real Estate Company had paid a deposit of RMB 50 million toParty B and the project company, and had paid a service fee of RMB 20 million.
(3) The sales contract of Fangda Plaza developed by Fangda Real Estate Co. Ltd., a subsidiary of the Company, stipulates thatif the buyer cannot obtain the "Property Certificate" according to the agreed time limit calculated from the date of the delivery of thehouse due to the seller's reasons, the seller shall bear the liability for breach of contract as of 2018. The number of sets that have notbeen issued for delivery on December 31, 2019 is 530 sets.
As of December 31, 2019, the Group did not have other commitments that should be disclosed.
2. Contingencies
(1) Significant contingencies on the balance sheet date
(1) Contingent liabilities formed by material lawsuit or arbitration, and their influences on the financial position
| Plaintiff | Defender | Case | Court | Target amount | Progress |
| 2019 | |||||
| Fangda Jianke | Fujian Huapu Real Estate Development Co., Ltd. | Engineering contract dispute | Fuzhou Taijiang District People's Court | RMB14,183,623.83 | At trial |
| Fangda Jianke | Defendant 1: Nanjing Suhao Real Estate Development Co., Ltd. Defendant 2: Nanjing Jingao Real Estate Development Co., Ltd. | Engineering contract dispute | People's Court of Jianye District, Nanjing | RMB7,799, 803.69 | At trial |
| Fangda Jianke | Changchun Hongtu Real Estate Development Co., Ltd. | Engineering contract dispute | The First Intermediate People's Court of Hainan Province | RMB10,101,853.29 | At trial |
| Fangda Jianke | Zhejiang Jiayue Industrial Co., Ltd. | Engineering contract dispute | People's Court of Coqiao District, Shaoxing City | RMB32,318,994.15 | At trial |
| Langfang Aomei Jiye Real Estate Development Co., Ltd. | Fangda Jianke | Engineering contract dispute | Langfang Development Zone People's Court | Claim: RMB19,721, 315.00 Counterclaim: RMB13,920, 000.70 | At trial |
Notes:
① In November 2018， Fangda Jianke a subsidiary of the Group sued Fujian Huapu Real Estate Development Co. Ltd. for apayment of RMB 13810243.67 and its overdue interest of RMB 373,380.16 totaling RMB 14,183,623.83 to the Taijiang DistrictPeople's Court of Fuzhou City. The case has not been decided. On 10 May 2019, the court ruled against the prosecution; On 16 May2019, Fang Da Jianke filed an appeal; On 26 August 2019, the court of second instance ordered the court of first instance to revokethe first instance decision; On 8 October 2019, it was sent back to the court of first instance, case number: (2019) Min 0103 Republicof China 4282. The trial is pending on the report date.
② In November 2019, Fangda Jianke Company sued Nanjing Soho Real Estate Development Co., Ltd. and Nanjing JingaoReal Estate Development Co., Ltd. against Nanjing Soho Real Estate Development Co., Ltd. for payment of RMB 7,431,277.40 forthe construction of Nanjing Jinrun Plaza Project and its overdue interest payment was provisionally RMB 368,526.29, totaling7,799,803.69 yuan. As of the present reporting date, the case has not yet been scheduled for trial.
In December ③2019, Fang Da Jianke Company sued Changchun Hongtu Real Estate Development Co., Ltd. of ChangchunCity to pay 10,101,8#*@$ yuan for Changchun Sea Navigation Time Center Project. As of this report date, the court of this case hasnot been scheduled for trial.
In December of ④2019, Fang Da Jianke Company paid 20,158, 046.00 yuan for the project of Shaoxing Jiayue Plaza to thepeople's court of Shaoxing Ke Qiao District, 4,660, 400.00 yuan for provisional interest, 3,699, 100.00 yuan for refund ofperformance bond, and 2,144, 400.00 yuan for damages, totalling 30,661, 900.00 yuan. Thereafter, Fang Da Jianke increased thenumber of claims, totalling 32,318, 994.15 yuan. Affected by epidemic, the court decided that the case had been suspended and that,as at the date of the present report, it had not yet been heard.
(5) Langfang Australian-American Foundation Real Estate Development Co., Ltd. filed a lawsuit on June 19, 2019, and filedan application for evaluation of quality, repair cost and unfinished construction cost on December 26, 2019; Fang Da Jianke filed acounterclaim on September 11, 2019 and submitted an application for cost appraisal on November 22, 2019. As of the date of thisreport, the case is still under appraisal procedure.As of December 31, 2019, the Fang Dacheng City Project developed by Fang Dacheng City has failed to handle the propertyrights certificate on time due to the provisions of "Shenzhen Municipal Industrial Building Transfer Management Measures (Trial)"and "Municipal Planning and Land Resources Commission Notice on Industrial Building Transfer Management" implemented by theShenzhen Municipal People's Government. Therefore, 36 Fang Dacheng Owners sued Fang Dacheng City Co., Ltd.
(2) Pending major lawsuits
On September 6, 2017, Chenghua District People's Court of Chengdu Municipality sentenced Sichuan Chuta HengyuanIndustrial Co., Ltd. to pay construction money to Fangda Jianke within 10 days from the date of the verdict 川0108民初1828号RMB10,242,182.99. As of the date of this report, Fangda Jianke has applied for execution and has not received the relevant payment.
On September 10, 2018, the People's Court of Lixia District of Jinan City sentenced Shandong Zhonghong Real Estate Co. Ltd.to the Company for payment of RMB5960429.45 within 10 days from the date of the effective date of the (2018) Lu 0102 Minchu5367 civil judgment. As of the date of this report, Fangda Jianke has applied for execution and has not received the relevant payment.
On November 15, 2019, Chenghua District People's Court of Chengdu (2019), Sichuan Province, Sichuan Province, SichuanProvince, Hengyuan Industrial Co., Ltd. decided to pay interest to the Company within ten days of the effective date of judgment(based on 6, 013, 841.233 yuan, from May 29, 2015 to the date of payment) 0108 Based on $841,#*@$7 3,235, from 28 May 2015 tothe date of payment. Based on $841, 876.3235, from 28 May 2016 to the date of payment). The Company has priority right to be paidfor the discounted or auctioned price of project C of Sichuan Tower Project (Television Culture Plaza) within the scope of7,697,4#*@$ Yuan.
(3) Contingent liabilities formed by providing of guarantee to other companies’ debts and their influences on financialsituation
As of June 30, 2019, the Company provided guarantees for the following unit loans:
| Name of guaranteed entity | Guarantee | Amount (in RMB10,000) | Term |
| Fangda Property | Pledge guarantee | 2,500.10 | 2016/4/27 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 1,157.69 | 2016/5/22 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 414.66 | 2016/5/30 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 3,113.99 | 2016/6/13 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 1,465.99 | 2016/6/24 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 4,415.64 | 2016/7/26 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 4,813.23 | 2016/8/15 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 5,519.40 | 2016/9/7 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 15,048.01 | 2016/10/8 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 7,628.15 | 2016/11/7 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 6,140.11 | 2016/11/30 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 9,889.21 | 2017/1/19 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 1,830.24 | 2017/5/31 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 2,581.45 | 2017/6/28 to 2023/2/11 |
| Fangda Property | Pledge guarantee | 2,879.95 | 2017/8/30 to 2023/2/11 |
| Fangda Jianke | Guarantor | 5,000.00 | 2019/6/4 to 2020/6/4 |
| Fangda Zhichuang | Guarantor | 5,000.00 | 2019/6/3 to 2020/6/3 |
| Fangda Zhichuang | Guarantor | 1,600.00 | 2019/8/7 to 2020/8/6 |
| Fangda Property | Credit/mortgage guarantee | 2,500.00 | 2019/7/22 to 2023/7/22 |
| Fangda Property | Credit/mortgage guarantee | 2,500.00 | 2019/9/12 to 2023/7/22 |
| Fangda Property | Credit/mortgage guarantee | 3,000.00 | 2019/9/26 to 2023/7/22 |
| Fangda Property | Credit/mortgage guarantee | 2,000.00 | 2019/9/29 to 2023/7/22 |
| Fangda Property | Credit/mortgage guarantee | 5,000.00 | 2019/10/31 to 2023/7/22 |
| Fang Qingling | Credit/mortgage guarantee | 723.78 | 2019/7/31 to 2024/7/10 |
| Fang Qingling | Credit/mortgage guarantee | 586.24 | 2019/8/27 to 2024/7/10 |
| Fang Qingling | Credit/mortgage guarantee | 211.98 | 2019/9/27 to 2024/7/10 |
| Fang Qingling | Credit/mortgage guarantee | 892.92 | 2019/11/18 to 2024/7/10 |
| Fang Qingling | Credit/mortgage guarantee | 837.41 | 2019/12/20 to 2024/7/10 |
| Fangda Group, the Company | Guarantor | 9,000.00 | 2019/3/26 to 2021/3/20 |
| Fangda Group, the Company | Guarantee | 10,000.00 | 2019/3/26 to 2020/3/26 |
| Total | 118,250.15 |
Note: Contingent liabilities caused by guarantees provided for other entities are all related guarantees between interested entitiesin the Group.
(4) Contingent liabilities formed by providing of guarantee to other companies’ debts and their influences on financial situationThe Group’s property business provides periodic mortgage guarantee for property purchasers. The term of the periodicguarantee lasts from the effectiveness of guarantee contracts to the completion of mortgage registration and transfer of housingownership certificates to banks. As of December 31, 2019, the Company assumed the above-mentioned phased guarantee amount ofRMB 849 million.
As of December 31, 2019, the Group did not have other commitments that should be disclosed.
(2) Significant contingent events that do not need to be disclosed should be explainedNo such significant contingent event
3. Others
As of December 31, 2019:
| Currency | Guarantee balance (original currency) | Deposit (RMB) | Credit line used (RMB) |
| RMB (CNY) | 540,518,870.28 | 3,332,385.95 | 430,113,680.82 |
| Indian rupee (INR) | 79,935,344.00 | - | 7,898,970.89 |
| HK $ (HKD) | 15,349,982.00 | - | 13,973,088.61 |
| United States dollars (USD) | 7,258,333.02 | - | 51,171,247.79 |
| Total | 643,062,529.30 | 3,332,385.95 | 503,156,988.11 |
XV. Post-balance-sheet events
1. Profit distribution
In RMB
| Profit or dividend to be distributed | 56,033,924.45 |
| Profit or dividend approved to be distributed | 56,033,924.45 |
2. Notes to other issues in post balance sheet period
The Company convened the Nineteenth Meeting of the Board of Directors on 28 November 2019 and the First ProvisionalShareholders' Meeting on 16 December 2019 to consider the proposal to repurchase some of the listed foreign shares (B shares) ofthe Company. On 3 April 2020, the Company first repurchased 2,705,700 shares of the Company's B shares by means of centralizedbid transaction, accounting for 0.24% of the total share capital of the Company. The highest purchase price is HK $2.67/share and thelowest purchase price is HK $2.45/share, with a total payment of HK $7,144 and HK $091.82 (excluding transaction costs).As of April 16, 2020 (the report date approved by the board of directors), the Company has no other matters that should be disclosedafter the balance sheet date.
XVI. Other material events
1. Suspension of operations
In RMB
| Item | Income | Expense | Total profit | Income tax expenses | Net profit | Suspended operation profit attributable to the owners of parent company |
| Suspension of operations | 484,622.92 | -484,622.92 | -484,622.92 | -484,622.92 |
Other note
(1) Kexunda completed tax write-off in November 2018 and business write-off on 28 January 2019. Xiangdong New Energy Co., Ltd.completed the business cancellation formalities on October 16, 2019.
(2) The net profit of discontinued operations in 2019 includes: Kexunda's net profit for the period is -6,517.75 yuan, and XiangdongNew Energy's net profit for the period is -478,105.17 yuan.
(3) The net profit from the end-of-business for 2018 includes -220, 214.40 for Kexunda and -1,990, 649.12 for Xiangdong NewEnergy.
2. Segment information
(1) Recognition basis and accounting policy for segment report
The Group divides its businesses into five reporting segments. The reporting segments are determined based on financialinformation required by routine internal management. The Group’s management regularly review the operating results of thereporting segments to determine resource distribution and evaluate their performance.The reporting segments are:
(1) Curtain wall segment, production and sales of curtain wall materials, construction curtain wall design, production andinstallation;
(2) Rail transport segment: assembly and processing of metro screen doors;
(3) Real estate segment: development and operating of real estate on land of which land use right is legally obtained by theCompany; property management;
(4) New energy segment: photovoltaic power generation, photovoltaic power plant sales, photovoltaic equipment R & D,installation, and sales, and photovoltaic power plant engineering design and installation
(5) Others
The segment report information is disclosed based on the accounting policies and measurement standards used by thesegments when reporting to the management. The policies and standards should be consistent with those used in preparing thefinancial statement.
(2) Financial information
In RMB
| Item | Curtain wall | Rail transport | Real estate | New energy | Others | Offset between segments | Total |
| Turnover | 2,199,329,773.25 | 460,906,724.26 | 310,874,583.95 | 20,940,031.18 | 29,161,893.98 | 15,463,447.96 | 3,005,749,558.66 |
| Including: external transaction income | 2,196,425,708.75 | 460,906,724.26 | 307,563,025.40 | 20,103,218.63 | 20,750,881.62 | 3,005,749,558.66 | |
| Inter-segment transaction income | 2,904,064.50 | 3,311,558.55 | 836,812.55 | 8,411,012.36 | 15,463,447.96 | ||
| Including: major business turnover | 2,173,281,981.69 | 458,089,958.23 | 260,633,776.12 | 20,940,031.18 | 4,218,231.98 | 2,908,727,515.24 | |
| Operation cost | 1,864,441,702.54 | 346,744,770.21 | -35,214,776.43 | 7,864,665.04 | 773,571.29 | 15,433,637.38 | 2,169,176,295.27 |
| Including: major business cost | 1,850,600,895.40 | 346,256,883.95 | -52,451,934.20 | 7,864,665.04 | 3,759,622.99 | 2,148,510,887.20 | |
| Operation cost | 155,885,519.11 | 43,885,586.68 | 109,356,557.87 | 1,433,890.94 | -1,025,817,686.77 | -1,148,195,785.49 | 432,939,653.32 |
| Operating profit/(loss) | 179,002,551.60 | 70,276,367.37 | 236,732,802.51 | 11,641,475.20 | 1,054,206,009.46 | 1,133,717,225.65 | 418,141,980.49 |
| Total assets | 3,395,698,923.00 | 619,628,096.80 | 6,647,256,206.91 | 169,902,100.46 | 3,621,887,549.78 | 3,084,408,296.84 | 11,369,964,580.11 |
| Total liabilities | 2,168,899,194.79 | 418,116,375.97 | 4,228,112,221.35 | 82,920,335.47 | 1,195,928,403.59 | 1,955,217,040.33 | 6,138,759,490.84 |
(3) If the Company has not reported a segment or cannot disclose the total assets and liabilities of segments,the Company should explain reasons.
None
(4) Others
The operating cost of the Real Estate Division in this period is a large negative number, according to the Shenzhen MunicipalPeople's Government Office's Regulations [2020]2 issued by Shenzhen Municipal People's Government Office on January 20, 2020,"Shenzhen Municipal People's Government Office's Office's Notice on the Administration of Industrial Building and AuxiliaryBuilding Transfer Measures", the Industrial Building and Auxiliary Building will no longer receive the value-added income, beforeimplementation, the Industrial Building or Auxiliary Building Transfer Agreement has been signed, but no value-added income will
be paid. In accordance with this provision, we shall refund the amount of value-added income accrued in the previous year in 2019.Since more than 90% of the Group’s revenue comes from Chinese customer and 90% of the Group’s assets are in China, no detailedregional information is needed.
XVII. Notes to Financial Statements of the Parent
1. Account receivable
(1) Account receivable disclosed by categories
In RMB
| Type | Closing balance | Opening balance | ||||||||
| Remaining book value | Bad debt provision | Book value | Remaining book value | Bad debt provision | Book value | |||||
| Amount | Proportion | Amount | Provision rate | Amount | Proportion | Amount | Provision rate | |||
| Including: | ||||||||||
| Account receivable for which bad debt provision is made by group | 301,522.49 | 100.00% | 3,708.73 | 1.23% | 297,813.76 | 485,607.34 | 100.00% | 5,972.97 | 1.23% | 479,634.37 |
| Including: | ||||||||||
| Recognition and providing of bad debt provisions on groups | 301,522.49 | 100.00% | 3,708.73 | 1.23% | 297,813.76 | 485,607.34 | 100.00% | 5,972.97 | 1.23% | 479,634.37 |
| Total | 301,522.49 | 100.00% | 3,708.73 | 1.23% | 297,813.76 | 485,607.34 | 100.00% | 5,972.97 | 1.23% | 479,634.37 |
Separate bad debt provision:
NoneProvision for bad debts by combination:
In RMB
| Name | Closing balance | ||
| Remaining book value | Bad debt provision | Provision rate | |
| Portfolio 3. Others | 301,522.49 | 3,708.73 | 1.23% |
| Total | 301,522.49 | 3,708.73 | -- |
If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, pleaserefer to the disclosure of other receivables to disclose information about bad debts:
□ Applicable √ Inapplicable
Account age
In RMB
| Age | Remaining book value |
| Within 1 year (inclusive) | 301,522.49 |
| Total | 301,522.49 |
(2) Bad debt provision made, returned or recovered in the period
Bad debt provision made in the period:
In RMB
| Type | Opening balance | Change in the period | Closing balance | |||
| Provision | Written-back or recovered | Canceled | Others | |||
| Portfolio 3. Others | 5,972.97 | 2,264.24 | 3,708.73 | |||
| Total | 5,972.97 | 2,264.24 | 3,708.73 | |||
Including significant recovery or reversal:
(3) Written-off account receivable during the period
No written-off account receivable during the period
(4) Balance of top 5 accounts receivable at the end of the period
In RMB
| Entity | Closing balance of accounts receivable | Percentage (%) | Balance of bad debt provision at the end of the period |
| Top five summary | 281,702.92 | 93.43% | 3,464.95 |
| Total | 281,702.92 | 93.43% |
2. Other receivables
In RMB
| Item | Closing balance | Opening balance |
| Dividend receivable | 100,000,000.00 | |
| Other receivables | 1,973,381,342.74 | 722,644,623.99 |
| Total | 1,973,381,342.74 | 822,644,623.99 |
(1) Receivable interest
□ Applicable √ Inapplicable
2. Receivable dividend
1) Receivable dividend
In RMB
| Item (or invested entity) | Closing balance | Opening balance |
| Fangda Property | 100,000,000.00 | |
| Total | 100,000,000.00 |
(2) Significant prepayment aged more than 1 year
□ Applicable √ Inapplicable
3) Method of bad debt provision
□ Applicable √ Inapplicable
(3) Other receivables
1) Other receivables are disclosed by nature
In RMB
| By nature | Closing balance of book value | Opening balance of book value |
| Deposit | 70,699.54 | 100,699.54 |
| Staff borrowing and petty cash | 15,881.12 | 52,722.64 |
| Debt by Luo Huichi | 12,992,291.48 | 13,030,000.00 |
| Others | 983,435.52 | 973,297.25 |
| Associate accounts | 1,973,222,410.41 | 722,429,833.29 |
| Total | 1,987,284,718.07 | 736,586,552.72 |
2) Method of bad debt provision
In RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit losses in the next 12 months | Expected credit loss for the entire duration (no credit impairment) | Expected credit loss for the entire duration (credit impairment has occurred) | ||
| Balance on January 1, 2019 | 3,248.79 | 13,938,679.94 | 13,941,928.73 |
| Balance on January 1, 2019 in the current period | —— | —— | —— | —— |
| Transferred back in the current period | 844.88 | 37,708.52 | 38,553.40 | |
| Balance on December 31, 2019 | 2,403.91 | 13,900,971.42 | 13,903,375.33 |
Changes in book balances with significant changes in the current period
□ Applicable √ Inapplicable
Account age
In RMB
| Age | Remaining book value |
| Within 1 year (inclusive) | 1,973,297,165.99 |
| 1-2 years | 15,881.12 |
| 2-3 years | 42,877.00 |
| Over 3 years | 13,928,793.96 |
| 3-4 years | 865,802.94 |
| 4-5 years | 12,992,291.48 |
| Over 5 years | 70,699.54 |
| Total | 1,987,284,718.07 |
3) Bad debt provision made, returned or recovered in the period
Bad debt provision made in the period:
In RMB
| Type | Opening balance | Change in the period | Closing balance | |||
| Provision | Written-back or recovered | Canceled | Others | |||
| Other receivables and bad debt provision | 13,941,928.73 | 38,553.40 | 13,903,375.33 | |||
| Total | 13,941,928.73 | 38,553.40 | 13,903,375.33 | |||
No major bad debts are prepared to be recovered or transferred back in the current period.
4) Other receivable written off in the current period
Other receivable written off in the current period
5) Balance of top 5 other receivables at the end of the period
In RMB
| Entity | By nature | Closing balance | Age | Percentage (%) | Balance of bad debt provision at the end of the period |
| Fangda Property | Associate accounts | 1,478,597,853.45 | Less than 1 year | 74.40% | |
| Fangda Jianke | Associate accounts | 387,976,958.47 | Less than 1 year | 19.52% | |
| Fangda New Energy | Associate accounts | 75,732,377.09 | Less than 1 year | 3.81% | |
| Shihui International | Associate accounts | 30,459,793.09 | Less than 1 year | 1.53% | |
| Luo Huichi | Debt by SOZN | 12,992,291.48 | 4-5 years | 0.65% | 12,992,291.48 |
| Total | -- | 1,985,759,273.58 | -- | 99.91% | 12,992,291.48 |
3. Long-term share equity investment
In RMB
| Item | Closing balance | Opening balance | ||||
| Remaining book value | Impairment provision | Book value | Remaining book value | Impairment provision | Book value | |
| Investment in subsidiaries | 963,508,253.00 | 963,508,253.00 | 983,339,494.35 | 983,339,494.35 | ||
| Total | 963,508,253.00 | 963,508,253.00 | 983,339,494.35 | 983,339,494.35 | ||
(1) Investment in subsidiaries
In RMB
| Invested entity | Opening book value | Change (+,-) | Closing book value | Balance of impairment provision at the end of the period | |||
| Increased investment | Decreased investment | Impairment provision | Others | ||||
| Fangda Jianke | 491,950,000.00 | 491,950,000.00 | |||||
| Fangda New Material | 74,496,600.00 | 74,496,600.00 | |||||
| Fangda Property | 200,000,000.00 | 200,000,000.00 | |||||
| Shihui International | 61,653.00 | 61,653.00 | |||||
| Fangda New Energy | 100,000,000.00 | 1,000,000.00 | 99,000,000.00 | ||||
| Hongjun Investment Company | 98,000,000.00 | 98,000,000.00 | |||||
| Fangda Zhichuang | 18,831,241.35 | -18,831,241.35 | |||||
| Total | 983,339,494.35 | 1,000,000.00 | -18,831,241.35 | 963,508,253.00 |
4. Operational revenue and costs
In RMB
| Item | Amount occurred in the current period | Occurred in previous period | ||
| Income | Cost | Income | Cost | |
| Other businesses | 28,729,890.94 | 773,571.29 | 30,830,762.76 | 1,604,559.26 |
| Total | 28,729,890.94 | 773,571.29 | 30,830,762.76 | 1,604,559.26 |
Whether the new revenue guidelines are implemented
□ Yes √ No
5. Investment income
In RMB
| Item | Amount occurred in the current period | Occurred in previous period |
| Gains from long-term equity investment measured by costs | 1,084,912,000.00 | 117,000,000.00 |
| Investment income of trading financial assets during the holding period | 23,142,680.38 | |
| Investment income from disposal of trading financial assets | 2,221,456.16 | -22,524,021.60 |
| Investment gain of financial products | 6,515,338.51 | |
| Total | 1,087,133,456.16 | 124,133,997.29 |
XVIII. Supplementary Materials
1. Detailed accidental gain/loss
√ Applicable □ Inapplicable
In RMB
| Item | Amount | Notes |
| Gain/loss of non-current assets | -101,676.86 | |
| Subsidies accounted into the current income account (except the government subsidy closely related to the enterprise’s business and based on unified national standard quota) | 5,411,736.29 | |
| Capital using expense charged to non-financial enterprises and accounted into the current income account | 585,760.51 | |
| Gain/loss from change of fair value of transactional financial asset and liabilities, and investment gains from disposal of transactional and derivative financial assets and liabilities and sellable financial assets, other than valid period value instruments related to the Company’s common businesses | 9,236,658.20 | |
| Write-back of impairment provision of receivables and contract assets for which impairment test is performed individually | 100,023.62 | |
| Gain/loss from commissioned loans | 442,060.24 | |
| Gain/loss from change of fair value of investment property measured at fair value in follow-up measurement | 42,608,311.58 | |
| Other non-business income and expenditures other than the above | -1,108,687.74 | |
| Other gain/loss items satisfying the definition of non-recurring gain/loss account | -936,467.20 | |
| Less: Influenced amount of income tax | 164,700.18 | |
| Influenced amount of minority shareholders’ equity | -248,850.00 | |
| Total | 56,321,868.46 | -- |
Explanation statement should be made for accidental gain/loss items defined and accidental gain/loss items defined as regulargain/loss items according to the Explanation Announcement of Information Disclosure No. 1 - Non-recurring gain/loss mentioned.
□ Applicable √ Inapplicable
2. Net income on asset ratio and earning per share
| Profit of the report period | Weighted average net income/asset ratio | Earning per share |
| Basic earnings per share (yuan/share) | Diluted Earnings per share (yuan/share) | ||
| Net profit attributable to common shareholders of the Company | 6.82% | 0.310 | 0.310 |
| Net profit attributable to the common owners of the PLC after deducting of non-recurring gains/losses | 5.72% | 0.26 | 0.26 |
3. Differences in accounting data under domestic and foreign accounting standards
□ Applicable √ Inapplicable
Chapter 13 Documents for Reference
1. The Annual Report 2019 and the Summary with signature of the legal representative (Chinese and English);
2. Accounting Statements with signatures and seals of the legal representative and financial principal and chief of accountingdepartment;
3. Original copy of the Auditors’ Report under the seal of the CPA and signed by and under the seal of certified accountants;
4. Originals of all documents and manuscripts of Public Notices of the Company disclosed in public in the newspapers as designatedby China Securities Regulatory Commission.