Shenzhen China Bicycle Company (Holdings) Limited Semi-Annual Report 2020 Financial Report I. Audit reports Whether the semi-annual report was audited or not □ Yes √ No The financial report of this semi-annual report was unaudited. II. Financial statements Units in Notes of Financial Statements is RMB 1. Consolidated Balance Sheet Prepared by Shenzhen China Bicycle Company (Holdings) Limited 2020-06-30 In RMB Item 2020-6-30 2019-12-31 Current assets: Monetary funds 12,214,263.85 6,074,367.91 Settlement provisions Capital lent Tradable financial assets Derivative financial assets Note receivable 150,000.00 580,000.00 Account receivable 46,088,457.94 38,616,523.93 Receivable financing Accounts paid in advance 2,489,164.74 938,425.99 1 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Other account receivable 458,177.20 740,354.71 Including: Interest receivable Dividend receivable Buying back the sale of financial assets Inventories 4,125,856.91 6,078,330.30 Contractual assets Assets held for sale Non-current asset due within one year Other current assets 3,247,541.04 3,318,514.25 Total current assets 68,773,461.68 56,346,517.09 Non-current assets: Loans and payments on behalf Debt investment Other debt investment Long-term account receivable Long-term equity investment Investment in other equity instrument Other non-current financial assets Investment real estate Fixed assets 3,963,702.62 4,191,503.33 Construction in progress Productive biological asset Oil and gas asset Right-of-use assets Intangible assets 376,500.00 753,000.00 Expense on Research and Development Goodwill 2 Long-term expenses to be apportioned Deferred income tax asset 980,142.35 1,042,582.16 Other non-current asset 400,000.00 400,000.00 Total non-current asset 5,720,344.97 6,387,085.49 Total assets 74,493,806.65 62,733,602.58 Current liabilities: Short-term loans Loan from central bank Capital borrowed Trading financial liability Derivative financial liability Note payable Account payable 8,719,444.82 10,191,385.23 Accounts received in advance 1,739,953.80 Contractual liability 8,025,100.53 Selling financial asset of repurchase Absorbing deposit and interbank deposit Security trading of agency Security sales of agency Wage payable 582,921.26 599,962.73 Taxes payable 823,926.77 585,062.75 Other account payable 36,755,216.28 38,175,654.98 Including: Interest payable Dividend payable Commission charge and commission payable Reinsurance payable Liability held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 54,906,609.66 51,292,019.49 3 Non-current liabilities: Insurance contract reserve Long-term loans Bonds payable Including: Preferred stock Perpetual capital securities Lease liability Long-term account payable Long-term wages payable Accrual liability Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 0.00 0.00 Total liabilities 54,906,609.66 51,292,019.49 Owner’s equity: Share capital 551,347,947.00 551,347,947.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital public reserve 627,834,297.85 627,834,297.85 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus public reserve 32,673,227.01 32,673,227.01 Provision of general risk Retained profit -1,201,938,432.06 -1,204,736,075.56 Total owner’ s equity attributable to 9,917,039.80 7,119,396.30 parent company Minority interests 9,670,157.19 4,322,186.79 Total owner’ s equity 19,587,196.99 11,441,583.09 Total liabilities and owner’ s equity 74,493,806.65 62,733,602.58 4 Legal Representative: Li Hai Person in charge of Accounting Works: Sun Longlong Person in charge of Accounting Institution: Zhong Xiaojin 2. Balance Sheet of Parent Company In RMB Item 2020-6-30 2019-12-31 Current assets: Monetary funds 6,838,710.05 1,959,804.92 Trading financial assets Derivative financial assets Note receivable 150,000.00 580,000.00 Account receivable 29,017,233.11 32,843,536.70 Receivable financing Accounts paid in advance 1,497,198.05 76,937.00 Other account receivable 124,488.41 485,062.44 Including: Interest receivable Dividend receivable Inventories 223,422.27 1,333,374.72 Contractual assets Assets held for sale Non-current assets maturing within one year Other current assets 3,167,103.71 2,830,705.01 Total current assets 41,018,155.60 40,109,420.79 Non-current assets: Debt investment Other debt investment Long-term receivables Long-term equity investments 13,010,379.73 4,235,379.73 Investment in other equity instrument Other non-current financial assets 5 Investment real estate Fixed assets 3,650,474.41 3,813,708.80 Construction in progress Productive biological assets Oil and natural gas assets Right-of-use assets Intangible assets 376,500.00 753,000.00 Research and development costs Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets 400,000.00 400,000.00 Total non-current assets 17,437,354.14 9,202,088.53 Total assets 58,455,509.74 49,311,509.32 Current liabilities Short-term borrowings Trading financial liability Derivative financial liability Notes payable Account payable 5,835,192.76 9,002,524.60 Accounts received in advance 572,687.18 Contractual liability 7,625,884.18 Wage payable 486,086.77 507,738.35 Taxes payable 27,656.38 27,797.28 Other accounts payable 40,494,648.19 36,803,498.12 Including: Interest payable Dividend payable Liability held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 54,469,468.28 46,914,245.53 Non-current liabilities: Long-term loans 6 Bonds payable Including: preferred stock Perpetual capital securities Lease liability Long-term account payable Long term employee compensation payable Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 0.00 0.00 Total liabilities 54,469,468.28 46,914,245.53 Owners’ equity: Share capital 551,347,947.00 551,347,947.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 627,834,297.85 627,834,297.85 Less: Inventory shares Other comprehensive income Special reserve Surplus reserve 32,673,227.01 32,673,227.01 Retained profit -1,207,869,430.40 -1,209,458,208.07 Total owner’s equity 3,986,041.46 2,397,263.79 Total liabilities and owner’s equity 58,455,509.74 49,311,509.32 3. Consolidated Profit Statement In RMB Item 2020 semi-annual 2019 semi-annual I. Total operating income 42,656,355.21 38,274,433.02 Including: Operating income 42,656,355.21 38,274,433.02 7 Interest income Insurance gained Commission charge and commission income II. Total operating cost 40,013,244.72 39,540,757.20 Including: Operating cost 36,100,765.65 35,329,514.97 Interest expense Commission charge and commission expense Cash surrender value Net amount of expense of compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Tax and extras 19,899.04 36,587.77 Sales expense 1,478,378.78 1,875,723.61 Administrative expense 1,679,719.44 2,359,383.84 R&D expense 753,742.20 0.00 Financial expense -19,260.39 -60,452.99 Including: Interest expenses Interest income -31,929.72 -71,134.40 Add: other income 10,105.77 0.00 Investment income (Loss is listed with “-”) Including: Investment income on affiliated company and joint venture The termination of income recognition for financial assets measured by amortized cost(Loss is listed with “-”) Exchange income (Loss is listed with “-”) Net exposure hedging income (Loss is listed with “-”) Income from change of fair 8 value (Loss is listed with “-”) Loss of credit impairment 170,387.85 -17,479.82 (Loss is listed with “-”) Losses of devaluation of asset 40,616.29 (Loss is listed with “-”) Income from assets disposal 24,936.44 0.00 (Loss is listed with “-”) III. Operating profit (Loss is listed with 2,848,540.55 -1,243,187.71 “-”) Add: Non-operating income 744,788.91 148,627.00 Less: Non-operating expense 2,676.80 50.00 IV. Total profit (Loss is listed with “-”) 3,590,652.66 -1,094,610.71 Less: Income tax expense 170,038.76 -4,152.36 V. Net profit (Net loss is listed with “-”) 3,420,613.90 -1,090,458.35 (i) Classify by business continuity 1.continuous operating net profit 3,420,613.90 -1,090,458.35 (net loss listed with ‘-”) 2.termination of net profit (net loss listed with ‘-”) (ii) Classify by ownership 1.Net profit attributable to owner’s 2,797,643.50 -798,946.17 of parent company 2.Minority shareholders’ gains and 622,970.40 -291,512.18 losses VI. Net after-tax of other comprehensive income Net after-tax of other comprehensive income attributable to owners of parent company (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1.Changes of the defined benefit plans that re-measured 2.Other comprehensive income under equity method that cannot be transfer to gain/loss 3.Change of fair value of 9 investment in other equity instrument 4.Fair value change of enterprise's credit risk 5. Other (ii) Other comprehensive income items which will be reclassified subsequently to profit or loss 1.Other comprehensive income under equity method that can transfer to gain/loss 2.Change of fair value of other debt investment 3.Amount of financial assets re-classify to other comprehensive income 4.Credit impairment provision for other debt investment 5.Cash flow hedging reserve 6.Translation differences arising on translation of foreign currency financial statements 7.Other Net after-tax of other comprehensive income attributable to minority shareholders VII. Total comprehensive income 3,420,613.90 -1,090,458.35 Total comprehensive income 2,797,643.50 -798,946.17 attributable to owners of parent Company Total comprehensive income 622,970.40 -291,512.18 attributable to minority shareholders VIII. Earnings per share: (i) Basic earnings per share 0.0051 -0.0014 (ii) Diluted earnings per share 0.0051 -0.0014 Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and realized 0 Yuan at last period for combined party Legal Representative: Li Hai Person in charge of Accounting Works: Sun Longlong 10 Person in charge of Accounting Institution: Zhong Xiaojin 4. Profit Statement of Parent Company In RMB Item 2020 semi-annual 2019 semi-annual I. Operating income 15,950,824.42 25,404,378.84 Less: Operating cost 12,634,196.40 23,670,022.62 Taxes and surcharge 7,511.96 14,194.90 Sales expenses 256,975.98 240,105.59 Administration expenses 1,136,110.22 1,721,493.88 R&D expenses 753,742.20 0.00 Financial expenses -11,110.06 -13,583.08 Including: interest expenses Interest income -16,963.68 -18,497.84 Add: other income 8,595.12 0.00 Investment income (Loss is listed with “-”) Including: Investment income on affiliated Company and joint venture The termination of income recognition for financial assets measured by amortized cost (Loss is listed with “-”) Net exposure hedging income (Loss is listed with “-”) Changing income of fair value (Loss is listed with “-”) Loss of credit impairment 204,620.45 -39,523.02 (Loss is listed with “-”) Losses of devaluation of asset (Loss is listed with “-”) Income on disposal of assets 24,936.44 0.00 (Loss is listed with “-”) II. Operating profit (Loss is listed with 1,411,549.73 -267,378.09 “-”) Add: Non-operating income 177,227.94 148,627.00 11 Less: Non-operating expense III. Total Profit (Loss is listed with “-”) 1,588,777.67 -118,751.09 Less: Income tax IV. Net profit (Net loss is listed with 1,588,777.67 -118,751.09 “-”) (i)continuous operating net profit 1,588,777.67 -118,751.09 (net loss listed with ‘-”) (ii) termination of net profit (net loss listed with ‘-”) V. Net after-tax of other comprehensive income (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1.Changes of the defined benefit plans that re-measured 2.Other comprehensive income under equity method that cannot be transfer to gain/loss 3.Change of fair value of investment in other equity instrument 4.Fair value change of enterprise's credit risk 5. Other (II) Other comprehensive income items which will be reclassified subsequently to profit or loss 1.Other comprehensive income under equity method that can transfer to gain/loss 2.Change of fair value of other debt investment 3.Amount of financial assets re-classify to other comprehensive income 4.Credit impairment provision for other debt investment 5.Cash flow hedging 12 reserve 6.Translation differences arising on translation of foreign currency financial statements 7.Other VI. Total comprehensive income 1,588,777.67 -118,751.09 VII. Earnings per share: (i) Basic earnings per share (ii) Diluted earnings per share 5. Consolidated Cash Flow Statement In RMB Item 2020 semi-annual 2019 semi-annual I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 25,999,057.43 8,643,245.76 services Net increase of customer deposit and interbank deposit Net increase of loan from central bank Net increase of capital borrowed from other financial institution Cash received from original insurance contract fee Net cash received from reinsurance business Net increase of insured savings and investment Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Net cash received by agents in sale and purchase of securities 13 Write-back of tax received 10,712.11 57,448.96 Other cash received concerning 15,006,655.40 3,906,596.03 operating activities Subtotal of cash inflow arising from 41,016,424.94 12,607,290.75 operating activities Cash paid for purchasing commodities and receiving labor 25,572,959.40 7,104,453.81 service Net increase of customer loans and advances Net increase of deposits in central bank and interbank Cash paid for original insurance contract compensation Net increase of capital lent Cash paid for interest, commission charge and commission Cash paid for bonus of guarantee slip Cash paid to/for staff and workers 2,860,928.35 3,076,592.48 Taxes paid 263,658.94 5,517,601.44 Other cash paid concerning 10,968,482.31 5,809,899.76 operating activities Subtotal of cash outflow arising from 39,666,029.00 21,508,547.49 operating activities Net cash flows arising from operating 1,350,395.94 -8,901,256.74 activities II. Cash flows arising from investing activities: Cash received from recovering investment Cash received from investment income Net cash received from disposal of fixed, intangible and other long-term 64,500.00 0.00 assets Net cash received from disposal of subsidiaries and other units 14 Other cash received concerning investing activities Subtotal of cash inflow from investing 64,500.00 0.00 activities Cash paid for purchasing fixed, 0.00 16,814.16 intangible and other long-term assets Cash paid for investment Net increase of mortgaged loans Net cash received from subsidiaries and other units obtained Other cash paid concerning investing activities Subtotal of cash outflow from investing 0.00 16,814.16 activities Net cash flows arising from investing 64,500.00 -16,814.16 activities III. Cash flows arising from financing activities Cash received from absorbing 4,725,000.00 investment Including: Cash received from absorbing minority shareholders’ 4,725,000.00 investment by subsidiaries Cash received from loans Other cash received concerning 2,016,600.82 financing activities Subtotal of cash inflow from financing 4,725,000.00 2,016,600.82 activities Cash paid for settling debts Cash paid for dividend and profit distributing or interest paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning 0.00 2,000,000.00 financing activities Subtotal of cash outflow from financing 0.00 2,000,000.00 activities 15 Net cash flows arising from financing 4,725,000.00 16,600.82 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash 6,139,895.94 -8,901,470.08 equivalents Add: Balance of cash and cash 6,074,367.91 16,488,886.26 equivalents at the period -begin VI. Balance of cash and cash 12,214,263.85 7,587,416.18 equivalents at the period -end 6. Cash Flow Statement of Parent Company In RMB Item 2020 semi-annual 2019 semi-annual I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 7,581,014.00 2,949,631.00 services Write-back of tax received 9,110.82 57,448.96 Other cash received concerning 19,278,497.89 4,242,368.68 operating activities Subtotal of cash inflow arising from 26,868,622.71 7,249,448.64 operating activities Cash paid for purchasing commodities and receiving labor 2,063,572.76 721,217.50 service Cash paid to/for staff and workers 2,253,629.12 1,498,002.56 Taxes paid 229,400.44 5,319,908.09 Other cash paid concerning 8,732,615.26 4,418,229.99 operating activities Subtotal of cash outflow arising from 13,279,217.58 11,957,358.14 operating activities Net cash flows arising from operating 13,589,405.13 -4,707,909.50 activities II. Cash flows arising from investing activities: 16 Cash received from recovering investment Cash received from investment income Net cash received from disposal of fixed, intangible and other long-term 64,500.00 0.00 assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing 64,500.00 0.00 activities Cash paid for purchasing fixed, 0.00 16,814.16 intangible and other long-term assets Cash paid for investment 8,775,000.00 Net cash received from subsidiaries and other units obtained Other cash paid concerning investing activities Subtotal of cash outflow from investing 8,775,000.00 16,814.16 activities Net cash flows arising from investing -8,710,500.00 -16,814.16 activities III. Cash flows arising from financing activities Cash received from absorbing investment Cash received from loans Other cash received concerning financing activities Subtotal of cash inflow from financing activities Cash paid for settling debts Cash paid for dividend and profit distributing or interest paying Other cash paid concerning financing activities 17 Subtotal of cash outflow from financing activities Net cash flows arising from financing activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash 4,878,905.13 -4,724,723.66 equivalents Add: Balance of cash and cash 1,959,804.92 8,889,572.73 equivalents at the period -begin VI. Balance of cash and cash 6,838,710.05 4,164,849.07 equivalents at the period -end 7. Statement of Changes in Owners’ Equity (Consolidated) This Period In RMB 2020 semi-annual Owners’ equity attributable to the parent Company Other equity instrument Other Minori Total Item Perpe Less: compr Provisi ty owners Share Reaso Surplu Retain tual Capital Invent ehensi on of Subtot interes ’ capita Prefe nable s ed Other capit reserve ory ve genera al ts equity l rred Other reserve reserve profit al shares incom l risk stock secur e ities I. Balance at the 551,3 627,83 32,673 -1,204, 7,119, 4,322, 11,441 end of the last 47,94 4,297. ,227.0 736,07 ,583.0 396.30 186.79 year 7.00 85 1 5.56 9 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other 18 II. Balance at 551,3 627,83 32,673 -1,204, 7,119, 4,322, 11,441 the beginning of 47,94 4,297. ,227.0 736,07 ,583.0 396.30 186.79 this year 7.00 85 1 5.56 9 III. Increase/ Decrease in this 2,797, 2,797, 5,347, 8,145, year (Decrease 643.50 643.50 970.40 613.90 is listed with “-”) (i) Total 2,797, 2,797, 622,97 3,420, comprehensive 643.50 643.50 0.40 613.90 income (ii) Owners’ devoted and 4,725, 4,725, decreased 000.00 000.00 capital 1.Common 4,725, 4,725, shares invested 000.00 000.00 by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (III) Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (or shareholders) 4. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 19 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4.Carry-over retained earnings from the defined benefit plans 5.Carry-over retained earnings from other comprehensive income 6. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at 551,3 627,83 32,673 -1,201, 9,917, 9,670, 19,587 the end of the 47,94 4,297. ,227.0 938,43 ,196.9 039.80 157.19 report period 7.00 85 1 2.06 9 Last Period In RMB 2019 semi-annual Owners’ equity attributable to the parent Company Other equity instrument Other 所有者 Item Perp Less: compr Provisi 少数股 Share Reaso Surplu Retain 权益合 etual Capital Invent ehensi on of Subtot 东权益 capita Prefe nable s ed Other capit reserve ory ve genera al 计 l rred Other reserve reserve profit al shares incom l risk stock secur e ities I. Balance at 551,3 627,83 32,673 -1,197, 14,306 2,674,1 16,980, the end of the 47,94 4,297. ,227.0 549,16 ,301.9 62.80 464.74 last year 7.00 85 1 9.92 4 20 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at 551,3 627,83 32,673 -1,197, 14,306 2,674,1 16,980, the beginning 47,94 4,297. ,227.0 549,16 ,301.9 62.80 464.74 of this year 7.00 85 1 9.92 4 III. Increase/ Decrease in this -798,9 -798,9 -291,51 -1,090, year (Decrease 46.17 46.17 2.18 458.35 is listed with “-”) (i) Total -798,9 -798,9 -291,51 -1,090, comprehensive 46.17 46.17 2.18 458.35 income (ii) Owners’ devoted and decreased capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (III) Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk 21 provisions 3. Distribution for owners (or shareholders) 4. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4.Carry-over retained earnings from the defined benefit plans 5.Carry-over retained earnings from other comprehensive income 6. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at 551,3 627,83 32,673 -1,198, 13,507 2,382,6 15,890, the end of the 47,94 4,297. ,227.0 348,11 ,355.7 50.62 006.39 report period 7.00 85 1 6.09 7 8. Statement of Changes in Owners’ Equity (Parent Company) This Period 22 In RMB 2020 semi-annual Other equity instrument Perpet Other Item Capital Less: Reasona Total Share Preferr ual compreh Surplus Retaine public Inventor ble Other owners’ capital ed capital Other ensive reserve d profit reserve y shares reserve equity stock securiti income es I. Balance at the 551,34 627,834, 32,673,2 -1,209, 2,397,263. end of the last 7,947.0 458,20 297.85 27.01 79 year 0 8.07 Add: Changes of accounting policy Error correction of the last period Other II. Balance at the 551,34 627,834, 32,673,2 -1,209, 2,397,263. beginning of this 7,947.0 458,20 297.85 27.01 79 year 0 8.07 III. Increase/ Decrease in this 1,588,7 1,588,777. year (Decrease is 77.67 67 listed with “-”) (i) Total 1,588,7 1,588,777. comprehensive 77.67 67 income (ii) Owners’ devoted and decreased capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (III) Profit distribution 23 1. Withdrawal of surplus reserves 2. Distribution for owners (or shareholders) 3. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4.Carry-over retained earnings from the defined benefit plans 5.Carry-over retained earnings from other comprehensive income 6. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at 551,34 627,834, 32,673,2 -1,207, 3,986,041. the end of the 7,947.0 869,43 297.85 27.01 46 report period 0 0.40 Last period In RMB 2019 semi-annual Item Other equity Capital Less: Other Total Share Reasonab Surplus Retained instrument public Inventor compre Other owners’ capital le reserve reserve profit Preferr Perpet Other reserve y shares hensive equity 24 ed ual income stock capital securit ies I. Balance at the 551,34 627,834 32,673, -1,203,77 8,076,968.4 end of the last 7,947. ,297.85 227.01 8,503.40 6 year 00 Add: Changes of accounting policy Error correction of the last period Other II. Balance at 551,34 627,834 32,673, -1,203,77 8,076,968.4 the beginning 7,947. ,297.85 227.01 8,503.40 6 of this year 00 III. Increase/ Decrease in this -118,751. year (Decrease -118,751.09 09 is listed with “-”) (i) Total -118,751. comprehensive -118,751.09 09 income (ii) Owners’ devoted and decreased capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (III) Profit distribution 1. Withdrawal of surplus 25 reserves 2. Distribution for owners (or shareholders) 3. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4.Carry-over retained earnings from the defined benefit plans 5.Carry-over retained earnings from other comprehensive income 6. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at 551,34 627,834 32,673, -1,203,89 7,958,217.3 the end of the 7,947. ,297.85 227.01 7,254.49 7 report period 00 III. Company Profile 1. History and basic information 26 According to the Approval Document SFBF (1991) No. 888 issued by the People’s Government of Shenzhen, Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the Company) was reincorporated as the company limited by shares in November 1991. On 28 December 1991, upon the Approval Document SRYFZ(1991) No. 119 issued by Shenzhen Special Economic Zone Branch of the People’s Bank of China, the Company got listed on Shenzhen Stock Exchange. Registered of the Company amounted as 551,347,947.00 Yuan. Legal representative: Li Hai Location: No. 3008, Buxin Road, Luohu District, Shenzhen Certificate for Uniform Social Credit Code: 914403006188304524 2. Business nature and main operation activities The Company's industry: machinery manufacturing industry Main business activities: Research & development of the bicycles, electric bicycles, electric motorcycles, motorcycles, electric tricycles, electric four-wheelers, children's bicycles, exercise bikes, sports equipment, mechanical products, toys, electric toys, electronic products, new energy equipment and storage equipment (lithium batteries, batteries, etc.), household appliances and spare parts, and electronic components; wholesale, retail, import and export and related supporting business of above-mentioned products (excluding commodities subject to state trade management, handling the application according to the relevant national regulations for commodities involving quotas, license management and other special provisions and management,); fine chemical products (excluding dangerous goods), wholesale and retail of carbon fiber composite materials; technology development of computer software, transfer of self-developed technological achievements, and providing relevant technical information consultation; own property leasing; property management. (The above projects do not involve special administrative measures for the implementation access of national regulations, and those involving restricted projects and pre-existing administrative licenses must obtain the pre-existing administrative licensing documents before operation.) Purchase and sale of gold products, platinum jewelry, palladium jewelry, K-gold jewelry, silver jewelry, inlaid jewelry, jewelry, jade ware, gem-and-jade products, clocks and watches, precious metal materials, diamonds, jadeite, crafts (except ivory and its products), calligraphy and painting, collection (except for antiques, cultural relics, and items prohibited by national laws and administrative regulations). Main products and services provided so far: EMMELLE bicycles, electrical bicycles, lithium battery material and gold jewelry. 3. Release of the financial report The Financial Report released on 27 August 2020 after approved by 24th session of 10th BOD of the Company. Two subsidiaries included in consolidate scope in the period, found more in 1. carry in Note IX. Equity in other entity. IV. Compilation Basis of Financial Statement 1. Compilation Basis The financial statement is prepared based on continuing operation assumptions, and according to actual occurrence, in line with relevant accounting rules and follow important accounting policy and estimation. 27 2. Going concern On 11 May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12 October 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guosheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. On the last ten-day of October 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25 October 2012 according to (2012) Shenzhen Intermediate Court Po Zi No. 30-1 civil ruling, appointed King & Wood (Shenzhen) Mallesons and Shenzhen ZhengYuan Liquidation Affairs Co., Ltd. as the custodians of the Company. On the same day, Shenzhen Municipal Intermediate People's Court made (2012) Shenzhen Intermediate Court Po Zi No. 30-1 written decision, and approved the Company to manage property and business affairs by itself under the supervision of custodians according to the law. On 5 November 2013, the Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-6 Civil Ruling Paper judged that approved the reorganization plan of the Company. On 27 December 2013, the Civil Ruling Paper Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-10 ruled that the reorganization plan of CBC was completed and bankruptcy procedures of the Company closed down. The Company has solved the debt problem by reforming, realized the net assets with positive value, the main business of bicycle is able to be maintained and realizes the stable development. The Company has set up the conditions for introducing the recombination party in the reforming plan, and expects to restore the abilities of sustainable operation and sustained profitability by reorganization. The conditions of introducing the recombination party includes: the assessed value of net assets should be no less than 2 billion Yuan, the net assets in the same year for implementing the major reorganization should be no less than 200 million Yuan. The Company doesn’t have the recombination party at the moment. V. Main accounting policy and Accounting Estimate Tips for specific accounting policy and estimate: N/A 1. Declaration on compliance with accounting standards The financial statement prepared by the Company, based on follow compilation basis, is comply with the requirement of new accounting standards for business enterprise issued by Ministry of Finance and its application guide, commentate as well as other regulations (collectively referred to as Accounting Standards for Business Enterprise), which is reflect a real and truth financial status of the Company, as well as operation results and cash flow situations. Furthermore, the statement has reference to the listing and disclosure requirement from “Rules Governing the Disclosure of Information for Enterprise with Stock Listed No.15-general regulation of financial report” (2014 Revised) and “Notice on Implementation of New Accounting Standards for Listed Companies” (KJBH (2018) No. 453) 2. Accounting period Calendar year is the accounting period for the Company, which is starting from 1 January to 31 December. 28 3. Business cycles The business period for the Company, which is the Gregorian calendar starting from 1 January to 31 December 4. Recording currency The Company and its subsidiaries take RMB as the standard currency for bookkeeping. 5. Accounting treatment for business combinations under the same control and those not under the same control (1) Accounting treatment for business combinations under the same control and those not under the same control For a business merger that is under the same control and is achieved by the Company through one single transaction or multiple transactions, assets and liabilities obtained from that business combination shall be measured at their book value at the combination date as recorded by the party being absorbed in the consolidated financial statement of ultimate controlling party. Capital reserve shall be adjusted as per the difference between the book value of obtained net assets and the book value of paid consolidated consideration (or the nominal value of the issued shares) of the Company; retained earnings shall be adjusted if the capital reserve is not sufficient for offset. (2) Accounting treatment for Enterprise combine not under the same control The Company will validate the difference that the combined cost is more than the fair value of the net identifiable assets gained from the acquiree on the acquisition date as goodwill; where the combined cost is less than the fair value of net identifiable assets gained from the acquiree during business combination, the fair value and combined cost of various identifiable assets, liabilities and contingent liabilities from the acquiree must be rechecked. Where the combined cost is, after the recheck, still less than the fair value of net identifiable assets gained from the acquiree during business combination, the difference shall be charged to current profits and losses. As for business combination not under common control and realized through multiple transactions and by steps, the Company shall make accounting treatment as follows: 1) Adjust the initial investment cost of long-term equity investments. As for stock equities held before the acquisition date accounted according to the equity method, re-measurement is carried out according to the fair value of the equity on the acquisition date. The balance between the fair value and the book value is included in the current investment income. If the acquiree’s stock equities held before the acquisition date involves changes of other comprehensive incomes and other owner's equities under accounting with the equity method, the balance between the fair value and the book value is included in the current investment income on the acquisition date, excluding other comprehensive incomes incurred by changes due to re-measurement of net liabilities or net assets of the defined benefit plan. 2) Confirm the goodwill (or include the amount in the profits and losses). The initial investment cost of long-term equity investments adjusted in step 1 is compared with the fair value of net identifiable assets of the subsidiary shared on the acquisition date. If the former is greater than the latter, the balance is confirmed as goodwill; if the former is less than the latter, the balance is included in the current profits and losses. Loss of control of a subsidiary in multiple transactions in which it disposes equity interests of its subsidiary in stages (1)In determining whether to account for the multiple transactions as a single transaction 29 A parent shall consider all the terms and conditions of the transactions and their economic effects. One or more of the following may indicate that the parent should account for the multiple arrangements as a single transaction: 1) Arrangements are entered into at the same time or in contemplation of each other; 2) Arrangements work together to achieve an overall commercial effect; 3) The occurrence of one arrangement is dependent on the occurrence of at least one other arrangement; 4)One arrangement considered on its own is not economically justified, but it is economically justified when considered together with other arrangements. (2)Accounting treatment for each of the multiple transactions forming part of a bundled transactions which eventually results in loss of control the subsidiary during disposal of its subsidiary in stages If each of the multiple transactions forms part of a bundled transactions which eventually results in loss of control the subsidiary, these multiple transactions should be accounted for as a single transaction. In the consolidated financial statements, the difference between the consideration received and the corresponding percentage of the subsidiary’s net assets in each transaction prior to the loss of control shall be recognized in other comprehensive income and transferred to the profit or loss when the parent eventually loses control of the subsidiary. The remaining equity investment shall be re-measured at its fair value in the consolidated financial statements at the date when control is lost. The difference between the total amount of consideration received from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and the share of net assets of the former subsidiary calculated continuously from the acquisition date or combination date based on the previous shareholding proportion, shall be recognized as investment income for the current period when control is lost. The amount previously recognized in other comprehensive income in relation to the former subsidiary’s equity investment should be transferred to investment income for the current period when control is lost (3)Accounting treatment for each of the multiple transactions NOT forming part of a bundled transactions which eventually results in loss of control the subsidiary during disposal of its subsidiary in stages If the Company doesn't lose control of investee, the difference between the amount of the consideration received and the corresponding portion of net assets of the subsidiary shall be adjusted to the capital reserve (capital /equity premium) in the consolidated financial statements. If the Company loses control of investee, the remaining equity investment shall be re-measured at its fair value in the consolidated financial statements at the date when control is lost. The difference between the total amount of consideration received from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and the share of net assets of the former subsidiary calculated continuously from the acquisition date or combination date based on the previous shareholding percentage, shall be recognized as investment income for the current period when control is lost. The amount previously recognized in other comprehensive income in relation to the former subsidiary’s equity investment should be transferred to investment income for the current period when control is lost. 6. Compilation method of consolidated financial statement Consolidated financial statements are prepared by the Company in accordance with Accounting Standard for Business Enterprise No. 33-Consolidated Financial Statements and based on financial statements of parent company and its subsidiaries and other related information. 30 When consolidating the financial statements, the following items are eliminated: internal equity investment and owners’ equity of subsidiaries, proceeds on internal investments and profit distribution of subsidiaries, internal transactions, internal debts and claim. The accounting policies adopted by subsidiaries are the same as parent company. 7. Classification of joint venture arrangement and accounting treatment for joint control (1) Affirmation and classification of joint venture arrangement Joint arrangement refers to an arrangement controlled by two or more than two participants. Joint venture arrangement has the following characteristics: 1) Each participant is bound by the arrangement; 2) Two or more participants carry out joint control on implementation of the arrangement. Any participant cannot control the arrangement independently. Any participant for joint control can stop other participants or participant combinations to independently control the arrangement. Joint control refers to the sharing of control over certain arrangement under related agreements, and related activities of the arrangement must be determined only when obtaining the unanimous consent of the parties sharing control. Joint venture arrangement is classified in to joint operation and joint venture. Joint operation refers to an arrangement that a joint party enjoys assets related to the arrangement and bears liabilities related to the arrangement. Joint venture refers to an arrangement that a joint party only has the power governing net assets of the arrangement. (2) Accounting treatment of joint venture arrangement Joint venture participants should confirm the following items related to interest shares in joint venture and carry out accounting settlement according to relevant provisions of the Accounting Standards for Business Enterprises: 1) confirm the assets held separately and confirm the assets held jointly based on shares; 2) confirm the liabilities borne separately and confirm the liabilities borne jointly based on shares; 3) confirm the income incurred after selling its shares in joint venture output; 4) confirm the income after selling the joint venture outputs based on shares; 5) confirm the expenses incurred separately and confirm the expenses incurred in joint venture based on shares. Joint venture participants should carry out accounting settlement for investments of the joint venture according to provisions of Accounting Standards for Business Enterprises No.2–Long-term Equity Investments. 8. Recognition of cash and cash equivalents Cash in cash flow statement means the inventory cash and savings available for use anytime. Cash equivalents refer to the short-term (generally due within three months since the date of purchase) highly liquid investments that are readily convertible into known amounts of cash and that are subject to an insignificant risk of change in value. 9. Foreign currency transaction and financial statement conversion (1)Conversion for foreign currency transaction When initially recognized, the foreign currency for the transaction shall be converted into CNY amount according to the spot exchange rate on the date of transaction. For the foreign currency monetary items, conversion must be based on the spot exchange rate on the balance sheet date and the exchange difference incurred from different exchange rates, except for the exchange difference of principal and interest incurred due to foreign currency loan related to acquisition or construction of assets that qualify for capitalization, shall be charged to current profits and losses; foreign currency non-monetary items measured with historical cost are still converted as per the spot exchange rate on the transaction date and keep the RMB amount unchanged; foreign currency non-monetary items measured with fair value shall be converted as per the spot exchange rate on the date of determining the fair value and the difference shall be charged to current profits and losses or other comprehensive income. 31 (2)Conversion of financial statements presented in foreign currencies The asset and liability items in the balance sheet shall be converted at the spot exchange rate on the balance sheet date; the owner’s equity items, except for the items of “undistributed profit”, shall be converted at the spot exchange rate on the transaction date; the income and expenditure items in the profit statement shall be converted at the spot exchange rate on the transaction date. The translation difference of foreign financial statements conducted as above is recognized as other comprehensive incomes. 10. Financial instruments (1) Recognition and termination for financial instrument Financial assets or financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. When buying and selling financial assets in a conventional manner, recognize and derecognize them according to the accounting of the trading day. Buying and selling financial assets in a conventional manner refers to the collection or delivery of financial assets in accordance with the contract terms and within the period prescribed by regulations or prevailing practices. Trading day refers to the date when the Company promises to buy or sell financial assets. When meeting the following conditions, derecognize a financial asset (or part of a financial asset, or part of a group of similar financial assets), i.e. to write off from its account and balance sheet: 1) The right to receive cash flows from financial assets expires; 2) The right to receive cash flows of financial assets is transferred, or assume the obligation to pay the full amount of cash flows received to a third party in a timely manner under the “handover agreement”; and (a) virtually transferred almost all risks and rewards of the ownership of financial assets, or (b) although virtually neither transferred nor retained almost all risks and rewards of the ownership of financial assets, abandoned the control of the financial assets. (2) Classification and measurement of financial assets The Company’s financial assets are classified as financial assets measured at amortized cost, financial assets measured at fair value and whose changes are included in other comprehensive income, and financial assets measured at fair value and whose changes are included in the current profit and loss according to the Company’s business model for managing financial assets and the contractual cash flow characteristics of financial assets at initial recognition. The subsequent measurement of financial assets depends on their classification. The Company’s classification of financial assets is based on the Company’s business model for managing financial assets and the cash flow characteristics of financial assets. 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 amortized cost: the Company’s business model for managing this financial asset is to collect contractual cash flows; the contract terms of the financial asset stipulate that the cash flow generated on a specific date 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 based on amortized cost, and the gains or losses arising from amortization or impairment are included in the current profit and loss. 2) Debt instrument investments measured at fair value and whose changes are included in other comprehensive income Financial assets that meet the following conditions at the same time are classified as financial assets measured at fair value and whose changes are included in other comprehensive income: the Company’s business model for managing this financial asset is to both collect contractual cash flows and sell the financial assets; the contract terms of the financial asset stipulate that the cash flow generated on a specific date is only for the payment of principal and interest based on the outstanding principal amount. For such 32 financial assets, fair value is used for subsequent measurement. The discount or premium is amortized by using the actual interest method and is recognized as interest income or expenses. Except that the impairment loss and the exchange difference of foreign currency monetary financial assets are recognized as current gains and losses, changes in the fair value of such financial assets are recognized as other comprehensive income, until the financial asset is derecognized, its cumulative gains or losses are transferred to the current profit and loss. Interest income related to such financial assets is included in the current profit and loss. 3) Equity instrument investments measured at fair value and whose changes are included in other comprehensive income The Company irrevocably chooses to designate some non-trading equity instrument investments as financial assets measured at fair value and whose changes are included in other comprehensive income. Only relevant dividend income is included in the current profit and loss, and changes in fair value are recognized as other comprehensive income, until the financial asset is derecognized, its accumulated gains or losses are transferred to retained earnings. 4) Financial assets measured at fair value and whose changes are included in the current profit and loss Financial assets except for above financial assets measured at amortized cost and financial assets measured at fair value and whose changes are included in other comprehensive income are classified as financial assets measured at fair value and whose changes are included in the current profit and loss. During initial recognition, in order to eliminate or significantly reduce accounting mismatches, financial assets can be designated as financial assets measured at fair value and whose changes included in the current profit and loss. For such financial assets, fair value is used for subsequent measurement, and all changes in fair value are included in the current profit and loss. When and only when the Company changes its business model for managing financial assets, it will reclassify all affected related financial assets. For financial assets measured at fair value and whose changes are included in the current profit or loss, the related transaction costs are directly included in the current profit and loss, and the related transaction costs of other types of financial assets are included in the initial recognition amount. (3) Classification and measurement of financial liabilities The Company’s financial liabilities are classified as financial liabilities measured at amortized cost and financial liabilities measured at fair value and whose changes are included in the current profit and loss at initial recognition. Financial liabilities that meet one of the following conditions can be designated as financial liabilities measured at fair value and whose changes are included in current profit or loss during initial measurement: (1) This designation can eliminate or significantly reduce accounting mismatches; (2) According to the group risk management or investment strategies stated in official written documents, management and performance evaluation of financial liability portfolios or financial assets and financial liability portfolios are conducted based on fair value, and are reported to key management personnel within the group on this basis; (3) The financial liability includes embedded derivatives that need to be split separately. The Company determines the classification of financial liabilities at initial recognition. For financial liabilities that are measured at fair value and whose changes are included in the current profit or loss, the related transaction costs are directly included in the current profit and loss, and the related transaction costs of other financial liabilities are included in its initial recognition amount. The subsequent measurement of financial liabilities depends on their classification: 1) Financial liabilities measured at amortized cost For such financial liabilities, adopt actual interest rate method and make subsequent measurements based on amortized costs. 2) Financial liabilities measured at fair value and whose changes are included in the current profit and loss Financial liabilities that are measured at fair value and whose changes are included in the current profit or loss include trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated to be measured at fair value at the initial recognition and whose changes are included in the current profit or loss. 33 (4) Financial instruments offset If the following conditions are met at the same time, the financial assets and financial liabilities are listed in the balance sheet with the net amount after mutual offset: legal right to offset the confirmed amount, and this legal right is currently executable; Net settlement, or simultaneous realization of the financial assets and liquidation of the financial liabilities. (5) Impairment of financial assets The Company recognizes the loss provisions on the basis of expected credit losses for financial assets measured at amortized cost, debt instrument investments measured at fair value and whose changes are included in other comprehensive income and financial guarantee contracts. Credit loss refers to the difference between all contractual cash flows receivable under the contract and discounted according to original actual interest rate by the Company and all expected receivable cash flows, that is, the present value of all cash shortages. The Company considers all reasonable and evidence-based information, including forward-looking information, and estimates the expected credit loss of financial assets measured at amortized cost and financial assets measured at fair value and whose changes are included in other comprehensive income (debt instruments) in a single or combined manner. 1) General model of expected credit loss If the credit risk of the financial instrument has increased significantly since the initial recognition, the Company measures its loss provisions in accordance with the amount equivalent to the expected credit loss of the financial instrument for the entire duration; if the credit risk of the financial instrument has not significantly increased since the initial recognition, the Company measures its loss provisions in accordance with the amount equivalent to the expected credit loss of the financial instrument in the next 12 months. The resulting increased or reversed amount of the loss provisions is included in the current profit and loss as an impairment loss or gain. For the Company’s specific assessment of credit risk, please see details in Note IX. Risks Related to Financial Instruments”. Generally, the Company believes that the credit risk of the financial instrument has significantly increased when it exceeds 30 days after the due date, unless there is concrete evidence that the credit risk of the financial instrument has not increased significantly since initial recognition. Specifically, the Company divides the process of credit impairment of financial instruments of which no credit impairment has occurred at the time of purchase or origin into three stages. There are different accounting treatment methods for the impairment of financial instruments at different stages: Stage one: Credit risk has not increased significantly since initial recognition For a financial instrument at this stage, the enterprise should measure the loss provisions according to the expected credit losses in the next 12 months, and calculate the interest income based on its book balance (that is, without deducting provisions for impairment) and the actual interest rate (if the instrument is a financial asset, the same below). Stage two: Credit risk has increased significantly since initial recognition but no credit impairment has occurred For a financial instrument at this stage, the enterprise should measure the loss provisions according to the expected credit loss of the instrument for its entire duration, and calculate the interest income based on its book balance and actual interest rate. Stage three: Credit impairment occurs after initial recognition For a financial instrument at this stage, the enterprise should measure the loss provisions based on the expected credit losses of the instrument for its entire duration, but the calculation of interest income is different from the financial assets at the previous two stages. For financial assets that have suffered credit impairment, the enterprise should calculate interest income based on its amortized cost (book balance minus the provisions for impairment, i.e., book value) and the actual interest rate. For financial assets that have suffered credit impairment at the time of purchase or origin, the enterprise should only recognize changes in expected credit losses for the entire duration after initial recognition as loss provisions, and calculate the interest income 34 based on its amortized cost and credit-adjusted actual interest rate. 2) The Company chooses not to compare the financial instrument with lower credit risk on the balance sheet date with its credit risk at initial recognition, but directly makes the assumption that the credit risk of the instrument has not increased significantly since the initial recognition. If the enterprise confirms that the default risk of financial instruments is low, the borrower has a strong ability to fulfill its contractual cash flow obligations in the short term, and even if there are adverse changes in the economic situation and operating environment in a longer period of time, it will not necessarily reduce the borrower’s ability to fulfill its contractual cash flow obligations, then the financial instrument can be considered to have lower credit risk. 3) Accounts receivable and lease receivables The Company adopts the simplified model of expected credit loss for accounts receivables specified in “Accounting Standards for Business Enterprises No.14 - Revenue” and without containing significant financing components (including the case that the financing components in contracts that do not exceed one year are not considered according to the standards), that is, always measures their loss provisions according to the amount of expected credit loss during the entire duration. The Company makes accounting policy choices for the receivables containing significant financing components and the lease receivables specified in “Accounting Standards for Business Enterprises No.21 - Leases”, and chooses to adopt the simplified model of expected credit losses, that is, to measure the loss provisions in accordance with the amount of expected credit losses throughout the entire duration. (6) Transfer of financial assets Where the Company has transferred almost all the risks and rewards in the ownership of the financial asset to the transferee, the recognition of the financial assets shall be terminated; where almost all risks and rewards in the ownership of a financial asset are retained, the recognition of the financial assets are not terminated. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, it shall be accounted for as follows: the financial asset should be terminated if the Group waives control over the asset; it recognizes the financial asset to the extent of its continuing involvement in the transferred financial asset and recognizes an associated liability if the Group does not waives control over the asset. If the transferred financial assets continue to be involved by providing financial guarantee, the assets continue to be involved shall be recognized according to the lower of the book value of the financial assets and the amount of financial guarantee. The financial guarantee amount means the maximum amount of consideration received which will be required to be repaid. 11. Note receivable The Group adopts the simplified model of expected credit loss for the accounts receivables specified in “Accounting Standards for Business Enterprises No.14 - Revenue” and without containing significant financing components (including the case that the financing components in contracts that do not exceed one year are not considered according to the standards), that is, always measures their loss provisions according to the amount of expected credit loss during the entire duration, and the resulting increased or reversed amount of the loss provision is included in the current profit and loss as an impairment loss or gain. The accrual method is as follows: The Company divides the bills receivable into two types, i.e. bank acceptance bills and commercial acceptance bills portfolios, 35 according to the type of financial instruments. For bank acceptance bills, the accepting bank pays the determined amount to the taker or the bearer unconditionally due to the maturity of the bills, the overdue credit loss is low and has not increased significantly since the initial confirmation, the Company believes that the risk of overdue default is 0; for commercial acceptance bills, the Company believes that the probability of default is related to the aging, we use the aging analysis method to accrue bad debt provisions, for details of the accrual ratio, please refer to III-12 Accounting Policies and Estimates of Accounts Receivable. 12.Account receivable The Company adopts the simplified model of expected credit loss for accounts receivables specified in “Accounting Standards for Business Enterprises No.14 - Revenue” and without containing significant financing components (including the case that the financing components in contracts that do not exceed one year are not considered according to the standards), that is, always measures their loss provisions according to the amount of expected credit loss during the entire duration, and the resulting increased or reversed amount of the loss provision is included in the current profit and loss as an impairment loss or gain. For accounts receivable that contain a significant financing component, the Company chooses to use the simplified model of expected credit losses, that is, to always measure its loss provisions according to the amount of expected credit losses during the entire duration. 1. Simplified model of expected credit losses: always measure the loss provisions according to the amount of expected credit losses during the entire duration The Company considers all reasonable and well-founded information, including estimates of expected credit losses on accounts receivable in a single or combined manner. (1) Account receivable with single significant amount and withdrawal single item bad debt provision Basis or amount of judgment for account with single Withdrawal method for bad debt provision of account significant amount receivable with single significant amount Receivable commercial acceptance bill, account receivable Carry out impairment test separately, and withdraw bad and other receivables with single amount more than 5 million debt provision according to the difference between the yuan (including) present value of future cash flow and its book value (2)Receivables with provision for bad debts by portfolio Portfolio determine basis On the basis of the actual loss rate of the portfolio of receivables with similar credit risk characteristics which are the same or similar in the previous year, for the single Age analysis amount of non-material receivables, it is divided into several portfolios according to the credit risk characteristics together with the receivables without impairment after the separate test Other Bank acceptance In the combination, the proportion of bad debt provision withdrawn by aging analysis method is as follow: 36 Accrual proportion of Withdrawing Withdrawing proportion Account age commercial acceptance bill proportion of the of other receivable receivable account receivable Within one year(one year 0.3% 0.3% 0.3% included) 1~2 years (2-year included) 100% 0.3% 0.3% 2~3 years (3-year included) 100% 0.3% 0.3% Over 3 years 100% 100% 100% Including: determined to be Write off Write off Write off un-collectible (3) Account receivable with significant single amount and single provision for bad debts Basis or amount of judgment for account with single minor Withdrawal method for bad debt provision of account amount receivable with single minor amount Receivable commercial acceptance bill, account receivable Carry out impairment test separately, and withdraw bad and other receivables with single amount less than 5 million debt provision according to the difference between the yuan (including), and the probability of recall is small by present value of future cash flow and its book value nature 2. A general model of expected credit loss Found more in the Note V.- (10) Financial Instrument Note: well-explain according to specific condition of the Company 13. Account receivable financing N/A 14. Other account receivable Determining method and accounting treatment on the expected credit loss of other account receivable The Company adopts the simplified model of expected credit loss for accounts receivables specified in “Accounting Standards for Business Enterprises No.14 - Revenue” and without containing significant financing components (including the case that the financing components in contracts that do not exceed one year are not considered according to the standards), that is, always measures their loss provisions according to the amount of expected credit loss during the entire duration, and the resulting increased or reversed amount of the loss provision is included in the current profit and loss as an impairment loss or gain. 37 For accounts receivable that contain a significant financing component, the Company chooses to use the simplified model of expected credit losses, that is, to always measure its loss provisions according to the amount of expected credit losses during the entire duration. 1. Simplified model of expected credit losses: always measure the loss provisions according to the amount of expected credit losses during the entire duration The Company considers all reasonable and well-founded information, including estimates of expected credit losses on accounts receivable in a single or combined manner. (1) Account receivable with single significant amount and withdrawal single item bad debt provision Basis or amount of judgment for account with single Withdrawal method for bad debt provision of account significant amount receivable with single significant amount Receivable commercial acceptance bill, account receivable Carry out impairment test separately, and withdraw bad and other receivables with single amount more than 5 million debt provision according to the difference between the yuan (including) present value of future cash flow and its book value (2)Receivables with provision for bad debts by portfolio Portfolio determine basis Age analysis On the basis of the actual loss rate of the portfolio of receivables with similar credit risk characteristics which are the same or similar in the previous year, for the single amount of non-material receivables, it is divided into several portfolios according to the credit risk characteristics together with the receivables without impairment after the separate test Other Bank acceptance In the combination, the proportion of bad debt provision withdrawn by aging analysis method is as follow: Accrual proportion of Withdrawing Withdrawing proportion Account age commercial acceptance bill proportion of the of other receivable receivable account receivable Within one year(one year 0.3% 0.3% 0.3% included) 1~2 years (2-year included) 100% 0.3% 0.3% 2~3 years (3-year included) 100% 0.3% 0.3% Over 3 years 100% 100% 100% Including: determined to be Write off Write off Write off un-collectible (3) Account receivable with minor single amount and single provision for bad debts Basis or amount of judgment for account with single minor Withdrawal method for bad debt provision of account amount receivable with single minor amount 38 Receivable commercial acceptance bill, account receivable Carry out impairment test separately, and withdraw bad and other receivables with single amount less than 5 million debt provision according to the difference between the yuan (including), and the probability of recall is small by present value of future cash flow and its book value nature 2. A general model of expected credit loss Found more in the Note V.- (10) Financial Instrument Note: well-explain according to specific condition of the Company 15. Inventory The Company shall comply with the disclosure requirement of “Guidelines on Industry Information Disclosure of Shenzhen Stock Exchange No. 11- Listed Company Engaged in Jewelry-related Business” (1) Classification of inventory The inventory of the Company refers to such seven classifications as the raw materials, product in process, goods on hand, wrap page, low value consumables, materials for consigned processing and goods sold. (2) Valuation of inventories Inventories are initially measured at cost upon acquisition, which includes procurement costs, processing costs and other costs. The prices of inventories are calculated using weighted average method when they are delivered. (3) Provision for inventory impairment When a comprehensive count of inventories is done at the end of the period, provision for inventory impairment is allocated or adjusted using the lower of the cost of inventory and the net realizable value. The net realizable value of stock in inventory (including finished products, inventory merchandize and materials for sale) that can be sold directly is determined using the estimated saleable price of such inventory deducted by the cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of material in inventory that requires processing is determined using the estimated saleable price of the finished product deducted by the cost to completion, estimated cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of inventory held for performance of sales contract or labor service contract is determined based on the contractual price; in case the amount of inventory held exceeds the contractual amount, the net realizable value of the excess portion of inventory is calculated using the normal saleable price. Provision for impairment is made according to individual items of inventories at the end of the period; however, for inventories with large quantity and low unit price, the provision is made by categories; inventories of products that are produced and sold in the same region or with the same or similar purpose or usage and are difficult to be measured separately are combined for provision for impairment. If the factors causing a previous write-off of inventory value has disappeared, the amount written-off is reversed and the amount provided for inventory impairment is reversed and recognized in profit or loss for the period. (4)Inventory system Perpetual inventory system is adopted. 39 16.Contractual assets N/A 17.Contractual cost N/A 18. Assets held for sale The Company classifies such corporate components (or non-current assets) that meet the following criteria as held-for-sale: (1) Disposable immediately under current conditions based on similar transactions for disposals of such assets or practices for the disposal group; (2) Probable disposal; that is, a decision has been made on a plan for disposal and an undertaking to purchase has been obtained (the undertaking to purchase means a binding purchase agreement entered into by the Company and other parties, which contains transaction price, time and adequately strict punishments for breach of contract provisions, which renders the possibility of material adjustment or revocation of the agreement is extremely minor), and the disposal is expected to be completed within a year. Besides, approval from relevant competent authorities or regulatory authorities has been obtained as required by relevant rules. The expected net residual value of asset held for sale is adjusted by the Company to reflect its fair value less selling expense, provided that the net amount shall not exceed the original carrying value of the asset. In case that the original value is higher than the adjusted expected net residual value, the difference shall be recorded in profit or loss for the period as asset impairment loss, and allowance of impairment for the asset shall be provided. Impairment loss recognized in respect of the disposal group held for sale shall be used to offset the carrying value of the goodwill in the disposal group, and then offset the carrying value of the non-current assets within the disposal group based on their respective proportion of their carrying value. In respect of the non-current assets held for sale, if the net amount after their fair value less the selling expenses increased as at the subsequent balance date, the reduced amount before will be recovered and reversed in the assets impairment loss amount recognized after being classified as held for sale, and the reversed amount will be recorded in the current profits or loss. The impairment loss on assets recognized before being classified as held for sale will not be reversed. In respect of the disposal group held for sale, if the net amount after their fair value less the selling expenses increased as at the subsequent balance date, the reduced amount before will be recovered and reversed in the assets impairment loss amount recognized in non-current assets after being classified as held for sale, and the reversed amount will be recorded in the current profits or loss. The reduced book value of the goodwill as well as the impairment loss on assets recognized before the non-current assets are classified as held for sale will not be reversed. The subsequent reversed amount in respect of the impairment loss on assets recognized in the disposal group held for sale will increase the book value in proportion of the book value of each non-current assets (other than goodwill) in the disposal group. In respect of loss of control in a subsidiary arising from disposal of the investment in such subsidiary, the investment in a subsidiary shall be classified as held for sale in its entirety in the individual financial statement of the parent company, and all the assets and liabilities of the subsidiary shall be classified as held for sale in the consolidated financial statement subject to that the proposed disposal of investment in the subsidiary satisfies such conditions as required for being classified as held for sale notwithstanding part equity investment will be retained by the Company after such disposal. 40 19.Debt investment N/A 20.Other debt investment N/A 21.Long-term account receivable N/A 22. Long-term equity investment (1)Determination of investment costs 1) If it is formed by the business combination under the common control, and that the combining party takes cash payment, transfer of non-cash assets, assumption of debts or issuance of equity securities as the consolidation consideration, the shares of the book value of the owner’s equity obtained from the combined party on the date of combination in the ultimate controlling party’s consolidated financial statements shall be recognized as its initial investment cost. Capital reserves shall be adjusted according to the balance between the initial investment cost for long-term equity investment and the book value of paid consolidation consideration or the total face value of issued shares (capital premium or equity premium). If capital reserves are insufficient for offset, retained earnings shall be adjusted. As for business combination under the common control realized by the Company through several transactions, the initial investment cost of the investment shall be determined based on the share of the carrying value of the owners’ equity of the consolidated party as calculated according to the shareholding proportion on the consolidation date. Difference between initial investment cost and the carrying value of long-term equity investment before combination and the sum of carrying value of newly paid consideration for additional shares acquired on the date of combination is to adjust capital reserve (capital premium or equity premium). If the balance of capital reserve is insufficient, any excess is adjusted to retained earnings. 2) As for long-term equity investment formed from business combination not under common control, the fair value of the consolidated consideration paid shall be deemed as the initial investment cost on the acquisition date. 3) Except those ones formed by the business combination, for all items obtained by means of cash payment, actually paid acquisition costs shall be taken as the initial investment cost. For those ones obtained by the issuance of equity securities, the fair value of the issued equity securities shall be taken as the initial investment cost. For those ones invested by investors, the value agreed in the investment contract or agreement shall be taken as the initial investment cost, provided that the value agreed in the contract or agreement shall be fair. (2)Subsequent measurement and profit or loss recognition For a long-term equity investment where the Company can exercise control over the investee, the long-term investment is accounted for using the cost method in the Company’s financial statements. The equity method is adopted when the Group has joint control, or exercises significant influence on the investee. Under cost method, long term equity investment is measured at initial investment cost. Except for the price actually paid for obtaining the investment or the cash dividends or profits declared but not yet distributed which is included in the consideration, the Company recognizes cash dividends or profits declared by the investee as current investment gains, and determine whether there is impairment on long term investment according to relevant assets impairment policies. Under equity method, when the initial investment cost of the long-term equity investment exceeds the share of fair value in the net identifiable assets in the investee, the difference shall be included in initial investment cost of the long-term equity investment. When 41 the initial investment cost is lower than the share of fair value in the net identifiable asset in the investee, such difference is recognized in profit or loss for the period with adjustment of cost of the long-term equity investment. Under equity method, after the Company acquires a long-term equity investment, it shall, in accordance with its attributable share of the net profit or loss realized by the investee, recognize the investment profit or loss and adjust carrying value of the investment. The Group recognizes its share of the investee’s net profits or losses after making appropriate adjustments to the investee’s net profits and losses based on the fair value of the investee’s identifiable assets at the acquisition date, using the Group’s accounting policies and periods, and eliminating the portion of the profits or losses arising from internal transactions with its joint ventures and associates, attributable to the investing entity according to its shareholding proportion (but impairment losses for assets arising from internal transactions shall be recognized in full). The carrying amount of the investment is reduced based on the Group’s share of any profit distributions or cash dividends declared by the investee. The Group’s share of net losses of the investee is recognized to the extent the carrying amount of the investment together with any long-term interests that in substance form part of its net investment in the investee is reduced to zero, except that the Group has the obligations to assume additional losses. The Group adjusts the carrying amount of the long-term equity investment for any changes in owners’ equity of the investee (other than net profits or losses) and includes the corresponding adjustments in the owners’ equity of the Group. (3) Determination of control and significant influence on investee Control is the power over an investee. An investor must have exposure or rights to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investor’s returns. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control with other parties over those policies (4)Disposal of long-term equity investment 1) Partial disposal of long term investment in which control is retained When long term investment is been partially disposed but control is retained by the company, the difference between disposal proceeds and carrying amount of the proportion being disposed is accounted for through profit or loss. 2) Partial disposal of long term investment in which control is lost When long term investment is partially disposed and control is lost as a result, the carrying value of the long term invest on the stock right, the difference between carrying amount of the part being disposed and disposal proceeds should be recognized as profit or loss. The residual part should be treated as long term investment or other financial assets according to their carrying amount. After partial disposal, if the company is able to exert significant influence or common control over the investee, the investment should be measured according to cost method or equity method, in compliance with relevant accounting standards and regulations. (5)Impairment test and provision for impairment If there is objective evidence on the balance sheet date showing investment in subsidiaries, associates and joint ventures is impaired, provision of impairment shall be made against the difference between the carrying amount and the recoverable amount of the investment. 23. Investment real estate Measurement mode Measured by cost method Depreciation or amortization method (1) Investment property including land use right which has been rented out, land use right which is held for transfer upon appreciation and buildings which has been rented out. (2) Investment properties are initially measured at cost and subsequently measured as per the cost pattern, and relevant withdrawal of provision for depreciation or amortization is carried out by the same method for fixed assets and intangible assets. As of the balance sheet date, where there is any indication that an investment property experiences impairment, the relevant impairment provision shall 42 be provided for based on the difference between the carrying value and the recoverable amount. 24. Fixed assets (1) Recognition conditions Fixed assets refer to the tangible assets for production of products, provision of labor, lease or operation, and with a service life in excess of one financial year. (2) Depreciation methods Category Method Years of depreciation Scrap value rate Yearly depreciation rate Housing buildings Straight-line depreciation 20-year 10% 4.5% Machinery equipment Straight-line depreciation 10-year 10% 9% Means of transportation Straight-line depreciation 5-year 10% 18% Electronic equipment and Straight-line depreciation 5-year 10% 18% others Fixed assets are recorded at the actual cost at the time of acquisition, and depreciation is calculated and withdrawn using the average life method from the month after they reach the intended usable state (3) Recognition basis, valuation and depreciation method for financial lease assets Finance lease is determined when one or a combination of the following conditions are satisfied: (1) the ownership has been transferred to the lessee when the leasing term is due; (2) the lessee has the option to purchase the leasing asset at a price that is much lower than its fair value, so it can be reasonably determined that the lessee will take the option at the very beginning of the lease; (3) the leasing term accounts for most time of the useful life (ordinarily accounting for 75% or higher) even if the ownership does not transfer to the lessee; (4) the present value of the minimum amount of rent that the lessee has to pay at the first day of the lease amounts to 90% or higher of its fair value at the same date; or the present value of the minimum amount of rent that the lessor collects at the first day of the lease amounts to 90% or higher of its fair value at the same date; and/or (5) the leased assets are of such a specialized nature that only the lessee can use them without major modifications. Fixed assets rented-in under finance lease are recorded at the lower of fair value and the present value of the minimum lease payment at the inception of the lease, and are depreciated following the depreciation policy for self-owned fixed assets. 25. Construction in progress (1)When the construction in progress has reached the intended condition for use, it will be treated as fixed assets as per the actual construction cost. If the construction in progress has reached the intended condition for use but completion accounting is not carried out, the construction in progress should be first treated as fixed assets as per the estimated value. After completion accounting is carried out, the original estimated value should be adjusted as per the actual cost, but the provision for depreciation withdrawn should not be adjusted. (2)As of the balance sheet date, where there is any indication that a construction in process experiences impairment, the relevant 43 impairment provision shall be provided for based on the difference between the carrying value and the recoverable amount. 26. Borrowing expenses N/A 27.Biological assets N/A 28. Oil and gas asset N/A 29.Right-of-use asset N/A 30. Intangible assets (1) Valuation method, service life and impairment test (a)Intangible assets include land use right, patent right and non-patent technology, which should be initially measured at cost. (b)Intangible assets with limited service life should be amortized systematically and reasonably in their service lives as per the expected form of realization economic benefits relating to the said intangible assets. If the form of realization cannot be reliably determined, the intangible assets should be amortized on a straight-line basis. (c)At the balance sheet date, when there is any indication that the intangible assets with finite useful lives may be impaired, a provision for impairment loss is recognized on the excess of the carrying amounts of the assets over their recoverable amounts. Intangible assets with infinite useful lives and intangible assets not satisfying the condition for use yet are subject to impairment test each year notwithstanding whether the assets are impaired. (2) Internal accounting policies relating to research and development expenditures Expenditure incurred in the research phase of internal R&D shall be included in current gain/loss at the time of occurrence. Intangible assets recognized for expenditure in exploitation stage by satisfying the followed at same time: ①it is technically feasible that the intangible asset can be used or sold upon completion; ②there is intention to complete the intangible asset for use or sale; ③ the intangible asset can produce economic benefits, including there is evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset; ④there is sufficient support in terms of technology, financial resources and other resources in order to complete the development of the intangible asset, and there is capability to use or sell the intangible asset; ⑤the expenses attributable to the development phase of the intangible asset can be measured reliably. 44 31. Impairment of long-term assets N/A 32. Long-term expenses to be apportioned Long-term expenses to be apportioned are booked by actual amount occurred, and apportioned evenly during the benefit period or regulated period.In case that the long-term deferred expenses are not likely to benefit the subsequent accounting periods, the outstanding value of the item to be amortized shall be included in current profit or loss in full. 33.Contractual liability N/A 34. Employee compensation (1) Accounting treatment for short-term compensation During the accounting period when staff providing service to the Company, the actual short-term compensation occurred shall recognized as liabilities and reckoned into current gains/losses or relevant assets costs. The non-monetary welfare is measured by fair value. (2) Accounting treatment for post-employment benefit N/A (3) Accounting for retirement benefits Retirement benefits When the Company terminates the employment relationship with employees before the end of the employment contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, the Company shall recognize employee compensation liabilities arising from compensation for staff dismissal and included in profit or loss for the current period, when the Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labor relationship plans and employee redundant proposals; and the Company recognize cost and expenses related to payment of compensation for dismissal and restructuring, whichever is earlier. (4) Accounting for other long-term employee benefits Defined contribution plans The employees of the Company have participated in the basic social endowment insurance organized and implemented by the local labor and social security department. The Company pays the endowment insurance premium to the local basic social endowment insurance agency on a monthly basis based on the base and ratio of the local basic social endowment insurance payment. After the retirement of employees, the local labor and social security department has the responsibility to pay the social basic pension to the retired employees. During the accounting period in which employees provide services, the Company recognizes the amount payable 45 calculated according to the above social security insurance regulations as the liabilities and includes them in the current profit and loss or related asset costs. 35.Lease liabilities N/A 36. Accrual liability N/A 37. Share-based payment (1)Types of share-based payment Share-based payment comprises of equity-settled share-based payment and cash-settled share-based payment. (2)Determination of fair value of equity instruments 1)determined based on the price quoted in an active market if there exists active market for the instrument. 2)determined by adoption of valuation technology if there exists no active market, including by reference to the recent arm’s length market transactions between knowledgeable, willing parties, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. (3)Basis for determination of the best estimate of exercisable equity instruments To be determined based on the subsequent information relating to latest change of exercisable employees. (4)Accounting relating to implementation, amendment and termination of share-based payment schemes 1)Equity-settled share-based payment For equity instruments that may be exercised immediately after the grant, the fair value of such instrument shall, on the date of the grant, be recognized in relevant costs or expenses with the increase in the capital reserve accordingly. For equity-settled share-based payment made in return for the rendering of employee services that cannot be exercised until the services are fully rendered during vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the capital reserves at the fair value of such instruments on the date of the grant. For equity-settled share-based payment made in exchange for service from other parties, such payment shall be measured at the fair value of the service as of the acquisition date is the fair value can be measured reliably. And if the fair value of the service cannot be measured reliably while the fair value of the equity instrument can be measured reliably, it shall be measure at the fair value of the instrument as of the date on which the service is acquired, which shall be recorded in relevant cost or expense with increase in owners’ equity accordingly. 2)Cash-settled share-based payment For the cash-settled share-based payment that may be exercised immediately after the grant in exchange for render of service by employees, the fair value of the liability incurred by the Company shall, on the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For cash-settled share-based payment made in return for the rendering of employee services that cannot be exercised until the services are fully provided during vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the corresponding liabilities at the fair value of the liability incurred by the Company. 46 3)Revision and termination of share-based payment schemes If the revision results in an increase in the fair value of the equity instruments granted, the Company shall recognize the increase in the services rendered accordingly at the increased fair value of the equity instruments. If the revision results in an increase in the number of equity instruments granted, the Company will recognize the increase in the services rendered accordingly at the fair value of the increased number of equity instruments. If the Company revises the vesting conditions on terms favorable to the employees, the Company will take into consideration of the revised vesting conditions when dealing with the vesting conditions. If the revision results in a decrease in the fair value of the equity instruments granted, the Company shall continue recognize the amount of services rendered accordingly at the fair value of the equity instruments on the date of grant without considering the decrease in the fair value of the equity instruments. If the revision results in a decrease in the number of equity instruments granted, the Company will account for such decrease by reducing part of the cancellation of equity instruments granted. If the Company revises the vesting conditions on terms not favorable to the employees, the Company will not take into consideration of the revised vesting conditions when dealing with the vesting conditions. If the Company cancels the equity instruments granted or settles the equity instruments granted during the vesting period (other than cancellation as a result of failure to satisfy the vesting conditions), such cancellation or settlement will be treated as accelerated exercisable rights and the original amount in the remaining vesting period will be recognized immediately. 38. Other financial instruments including senior shares and perpetual bonds N/A 39. Revenue The Company shall comply with the disclosure requirement of “Guidelines on Industry Information Disclosure of Shenzhen Stock Exchange No. 11- Listed Company Engaged in Jewelry-related Business” (1) Sales of goods Income from sale of goods is recognized when the following conditions are met: 1)the Company has transferred the key risks and return on the ownership of the merchandize to the buyer; 2)the Company has not retained continued management rights associated with ownership and no longer exercises effective control on the merchandize sold; 3)the amount of income can be reliably measured; 4)the relevant economic benefits are very likely to flow to the enterprise; 5)the costs incurred or to be incurred can be reliably measured. Timing for recognition of revenue of the Company from products sales: revenue is recognized upon delivery of products to and confirmed by purchaser with signature. (2)Rendering of services When the outcome of the transaction can be estimated reliably, revenue from rendering of services is recognized using the percentage of completion method. When the outcome of the transaction cannot be estimated reliably at the balance sheet date, revenue is recognized based on the amount of the costs incurred and the costs incurred are charged off at the same amount when the costs incurred are expected to be recoverable; and no revenue is recognized and the costs incurred are charged off as an expense of the period when the costs incurred are not expected to be recovered. (3) Transfer of asset use right revenue 47 When the economic benefits related to the transaction is likely to flow to the company and the income amount can be reliably calculated, the company shall recognize income arising from transfer of asset use right. The income of interests is determined on basis of the time and real interest rate of the company’s cash funds which is utilized by other persons. The income of royalties is determined on basis of the chargeable time and method fixed under relevant agreement or contract. 40. Government Grants (1) Government grants including those relating to assets and relating to income (2)government grant, if granted as monetary assets, are measured at the amount received or receivable, and measured at fair value if granted as non-monetary assets. If the fair value can not be determined reliably, they shall be measured at nominal value. (3) Aggregate method for government grants: 1)government grants relating to assets are recognized as deferred income, which shall be recorded in profit or loss by installment reasonably and systematically within the useful life of the assets. If assets are sold, transferred, discarded as useless or damaged prior to expiration of the useful life, the remaining deferred income undistributed shall be transferred to profit or loss for the period in which the assets are disposed. 2)If government grants relating to income are used to compensate for relevant costs or loss for the subsequent periods, they shall be recognized as deferred income, and recorded in profit or loss for the period in which the relevant costs are recognized. If government grants relating to income are used to compensate for the relevant costs or loss occurred, they shall be recorded in profit or loss for the period directly. (4)Net method for government grants 1) Government grants relating to assets are used to write off the carrying value of the relevant assets; 2) If government grants relating to income are used to compensate for relevant costs or loss for the subsequent periods, they shall be recognized as deferred income, and recorded in profit or loss for the period in which offset against the relevant costs. If government grants relating to income are used to compensate for the relevant costs or loss occurred, they shall be offset against the relevant costs for the period directly. (5)The Company adopts aggregated accounting method for the government grants received. (6)As for the government grants comprising both portions relating to assets and income, separate accounting shall be made for different portion; in case it is hard to differentiate the portions, the grants will be recorded as related to income in general. (7)The Company realizes government grants relating to its normal activities as other income based on the substance of economic business, and if not related to its normal activities, realized as non-operating income and expenditure. (8)Subsidized loans from preferential policy obtained by the Company are classified based on whether subsidy funds are paid to the loaning bank or directly to the Company by the competent financial authorities and are treated based on the following principles: 1)Where subsidy funds are paid to the loaning bank by the competent financial authorities and the bank then provides loans to the Company at a preferential policy rate, accounting shall be made by the Company as follows: a. Recognizes the actual borrowing amount received as the carrying value of the loan, and calculates the relevant borrowing costs based on the principal and the preferential policy rate. b.Recognizes the fair value of the loan as the carrying value and calculates the borrowing cost under effective interest method, and recognizes the difference between the actual amount received and the fair value of the loan as deferred income. Deferred income is 48 amortized over the term of the loan under effective interest method and offset against the relevant borrowing costs. 2)Where subsidy funds are paid directly to the Company, the Company will offset the corresponding subsidy against the relevant borrowing expenses. 41. Deferred income tax assets/Deferred income tax liabilities (1) Deferred tax assets or deferred tax liabilities are calculated and recognized based on the difference between the carrying amount and tax base of assets and liabilities (and the difference of the carrying amount and tax base of items not recognized as assets and liabilities but with their tax base being able to be determined according to tax laws) and in accordance with the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled. (2)A deferred tax asset is recognized to the extent of the amount of the taxable income, which it is most likely to obtain and which can be deducted from the deductible temporary difference. At the balance sheet date, if there is any exact evidence that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized, the deferred tax assets unrecognized in prior periods are recognized. (3)At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carrying amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefit of the deferred tax asset to be utilized. Such reduction is subsequently reversed to the extent that it becomes probable that sufficient taxable income will be available. (4)The income tax and deferred tax for the period are treated as income tax expenses or income through profit or loss, excluding those arising from the following circumstances: ① business combination; and ② the transactions or items directly recognized in equity. 42. Lease (1)Accounting for operating lease N/A (2)Accounting for financing lease N/A 43. Other important accounting policy and estimation N/A 44. Changes of important accounting policy and estimation (1) Changes of important accounting policy √ Applicable □ Not applicable The contents and reasons of accounting Examination and approval procedures Note policy changes 49 According to the regulations of "Accounting Standards for Business Enterprises No. 14 - Revenue" of the Ministry of Finance, domestic listed companies are required to implement this Deliberated and approved by 24th session accounting standard from January 1, 2020. of 10th BOD The Company has implemented the "Accounting Standards for Business Enterprises No. 14 - Revenue" (CK [2017] No. 22) revised by the Ministry of Finance from January 1, 2020. In accordance with the relevant regulations for the connection of the old and new standards, no adjustments are made to comparable period information, and the cumulative impact of the implementation of the new standards adjusts the amount of retained earnings at the beginning of the period and other related items in the financial statements. The specific impact of the implementation of the new revenue standard on the Company is that the contract-related advance receipts are changed from the "advance receipts" item to the "contract liabilities" item in presentation. (2) Changes of important accounting estimation □ Applicable √ Not applicable (3)Adjust the financial statement items at beginning of the year when first implemented the New Revenue Standards and New Lease Standards since 2020 Applicable Whether adjusted the item of balance sheet at year-begin or not √Yes □No Consolidated balance sheet In RMB Item 2019-12-31 2020-01-01 Adjustment Current assets: Monetary funds 6,074,367.91 6,074,367.91 Settlement provisions Capital lent Tradable financial assets Derivative financial assets Note receivable 580,000.00 580,000.00 Account receivable 38,616,523.93 38,616,523.93 Receivable financing 50 Account paid in advance 938,425.99 938,425.99 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Other account 740,354.71 740,354.71 receivable Including: Interest receivable Dividend receivable Buying back the sale of financial assets Inventories 6,078,330.30 6,078,330.30 Contractual assets Assets held for sale Non-current asset due within one year Other current assets 3,318,514.25 3,318,514.25 Total current assets 56,346,517.09 56,346,517.09 Non-current assets: Loans and payments on behalf Debt investment Other debt investment Long-term account receivable Long-term equity investment Investment in other equity instrument Other non-current financial assets Investment real estate Fixed assets 4,191,503.33 4,191,503.33 Construction in progress 51 Productive biological asset Oil and gas asset Right-of-use assets Intangible assets 753,000.00 753,000.00 Expense on Research and Development Goodwill Long-term expenses to be apportioned Deferred income tax 1,042,582.16 1,042,582.16 asset Other non-current asset 400,000.00 400,000.00 Total non-current asset 6,387,085.49 6,387,085.49 Total assets 62,733,602.58 62,733,602.58 Current liabilities: Short-term loans Loan from central bank Capital borrowed Trading financial liability Derivative financial liability Note payable Account payable 10,191,385.23 10,191,385.23 Accounts received in 1,739,953.80 0.00 -1,739,953.80 advance Contract liability 1,539,782.12 1,539,782.12 Selling financial asset of repurchase Absorbing deposit and interbank deposit Security trading of agency Security sales of agency Wage payable 599,962.73 599,962.73 Taxes payable 585,062.75 785,234.43 200,171.68 52 Other account payable 38,175,654.98 38,175,654.98 Including: Interest payable Dividend payable Commission charge and commission payable Reinsurance payable Liability held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 51,292,019.49 51,292,019.49 Non-current liabilities: Insurance contract reserve Long-term loans Bonds payable Including: Preferred stock Perpetual capital securities Lease liability Long-term account payable Long-term wages payable Accrual liability Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 0.00 Total liabilities 51,292,019.49 51,292,019.49 Owner’s equity: Share capital 551,347,947.00 551,347,947.00 53 Other equity instrument Including: Preferred stock Perpetual capital securities Capital public reserve 627,834,297.85 627,834,297.85 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus public reserve 32,673,227.01 32,673,227.01 Provision of general risk Retained profit -1,204,736,075.56 -1,204,736,075.56 Total owner’ s equity attributable to parent 7,119,396.30 7,119,396.30 company Minority interests 4,322,186.79 4,322,186.79 Total owner’ s equity 11,441,583.09 11,441,583.09 Total liabilities and owner’ s 62,733,602.58 62,733,602.58 equity Explanation According to the new revenue standard, adjust the number of statements at the beginning of the year, based on the amount received in advance of the contract, amount excluding tax is adjusted from "Account receivable in advance" to "contract liabilities", and "amount of tax to be written off" is adjusted to "tax payable". Balance sheet of parent company In RMB Item 2019-12-31 2020-01-01 Adjustment Current assets: Monetary funds 1,959,804.92 1,959,804.92 Trading financial assets Derivative financial assets Note receivable 580,000.00 580,000.00 Account receivable 32,843,536.70 32,843,536.70 Receivable financing Account paid in advance 76,937.00 76,937.00 54 Other account 485,062.44 485,062.44 receivable Including: Interest receivable Dividend receivable Inventories 1,333,374.72 1,333,374.72 Contractual assets Assets held for sale Non-current assets maturing within one year Other current assets 2,830,705.01 2,830,705.01 Total current assets 40,109,420.79 40,109,420.79 Non-current assets: Debt investment Other debt investment Long-term receivables Long-term equity 4,235,379.73 4,235,379.73 investments Investment in other equity instrument Other non-current financial assets Investment real estate Fixed assets 3,813,708.80 3,813,708.80 Construction in progress Productive biological assets Oil and gas assets Right-of-use assets Intangible assets 753,000.00 753,000.00 Research and development costs Goodwill Long-term deferred expenses 55 Deferred income tax assets Other non-current assets 400,000.00 400,000.00 Total non-current assets 9,202,088.53 9,202,088.53 Total assets 49,311,509.32 49,311,509.32 Current liabilities Short-term borrowings Trading financial liability Derivative financial liability Notes payable Account payable 9,002,524.60 9,002,524.60 Accounts received in 572,687.18 0.00 -572,687.18 advance Contract liability 506,802.81 506,802.81 Wage payable 507,738.35 507,738.35 Taxes payable 27,797.28 93,681.65 65,884.37 Other accounts payable 36,803,498.12 36,803,498.12 Including: Interest payable Dividend payable Liability held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 46,914,245.53 46,914,245.53 Non-current liabilities: Long-term loans Bonds payable Including: preferred stock Perpetual capital securities Lease liability 56 Long-term account payable Long term employee compensation payable Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 0.00 Total liabilities 46,914,245.53 46,914,245.53 Owners’ equity: Share capital 551,347,947.00 551,347,947.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 627,834,297.85 627,834,297.85 Less: Inventory shares Other comprehensive income Special reserve Surplus reserve 32,673,227.01 32,673,227.01 Retained profit -1,209,458,208.07 -1,209,458,208.07 Total owner’s equity 2,397,263.79 2,397,263.79 Total liabilities and owner’s 49,311,509.32 49,311,509.32 equity Explanation According to the new revenue standard, adjust the number of statements at the beginning of the year, based on the amount received in advance of the contract, amount excluding tax is adjusted from "Account receivable in advance" to "contract liabilities", and "amount of tax to be written off" is adjusted to "tax payable". (4)Retrospective adjustment of the previous comparative data for first implemented the New Revenue Standards and New Lease Standards since 2020 57 □ Applicable √ Not applicable 45. Other N/A VI. Taxes 1. Main tax category and tax rate Tax category Tax calculation evidence Tax rate Sales of goods, taxable labor service Value added tax revenue, taxable income, intangible assets 5%, 6%, 13% income and income from property leasing Tax for maintaining and building cities Turnover tax payable 7% Enterprise income tax Taxable income 25%, 20% Educational surtax Turnover tax payable 3% Local educational surtax Turnover tax payable 2% Disclose reasons for different taxpaying body Taxpaying body Income tax rate Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. 20% 2. Tax preference According to the “Notice on the Implementation of the Inclusive Tax Reduction and Exemption Policy for Small and Micro Enterprises” (Caishui [2019] No.13), for the portion of the annual taxable income of small and micro-profit enterprises not exceeding 1 million yuan, of which 25% is reckoned in taxable income, and the corporate income tax is paid at a tax rate of 20%; for the portion of annual taxable income exceeding 1 million yuan but not exceeding 3 million yuan, of which 50% is reckoned in taxable income, and the corporate income tax is paid at a tax rate of 20%. 3. Other Nil VII. Notes to Items in Consolidated Financial Statements 1. Monetary fund In RMB Item Ending balance Opening Balance 58 Cash on hand 108,773.66 89,313.66 Cash in bank 12,105,490.19 5,979,003.60 Other monetary fund 6,050.65 Total 12,214,263.85 6,074,367.91 Other explanation At the end of the period, there are no mortgages, pledges, freezes, etc. that restrict the use of funds. At the end of the period, there are no funds deposited overseas or with potential recovery risks. 2. Trading financial assets In RMB Item Ending balance Opening Balance Including: Including: Other explanation: Nil 3. Derivative financial assets In RMB Item Ending balance Opening Balance Other explanation: Nil 4. Notes receivable (1) Category In RMB Item Ending balance Opening Balance Bank acceptance 150,000.00 580,000.00 Total 150,000.00 580,000.00 In RMB Ending balance Opening Balance Book balance Bad debt provision Book balance Bad debt provision Category Book Book Accrual Accrual Amount Ratio Amount value Amount Ratio Amount value ratio ratio Including: 59 Including: Total 0.00 0.00% 0.00 0.00% 0.00 0.00 0.00% 0.00 0.00% 0.00 Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Total 0.00 0.00 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Total 0.00 0.00 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Total 0.00 0.00 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Total 0.00 0.00 -- Explanation on portfolio basis: Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Total 0.00 0.00 -- Explanation on portfolio basis: Bad debt provision accrual on portfolio: In RMB 60 Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: If the provision for bad debts of notes receivable is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable (2) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening Balance Ending balance Accrual Collected or reversal Charge-off Including important amount of bad debt provision collected or reversal in the period: □Applicable √Not applicable (3) Note receivable pledged at period-end In RMB Item Amount pledged at period-end (4) Note receivable which have endorsed and discount at period-end and has not expired on balance sheet date In RMB Item Amount derecognition at period-end Amount not derecognition at period-end Bank acceptance 8,967,471.70 0.00 Total 8,967,471.70 0.00 (5) Notes transfer to account receivable due for failure implementation by drawer at period-end In RMB Item Amount transfer to account receivable at period-end Other explanation (6) Note receivable actually charge-off in the period In RMB Item Amount charge-off Including important note receivable charge-off: 61 In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Explanation on note receivable change-off: 5. Account receivable (1) Category In RMB Ending balance Opening Balance Book balance Bad debt provision Book balance Bad debt provision Category Book Accrual Accrual Book value Amount Ratio Amount value Amount Ratio Amount ratio ratio Account receivable with bad debt 5,786,60 4,073,81 1,712,796 9,421,186 4,477,656 4,943,530.7 11.51% 70.40% 21.81% 47.53% provision accrual by 7.45 1.33 .12 .95 .23 2 single basis Including: Accounts with single significant amount 5,035,603 1,510,681 3,524,922.6 but with bad debts 11.66% 30.00% .75 .13 2 provision accrued individually Accounts with single minor amount but 5,786,60 4,073,81 1,712,796 4,385,583 2,966,975 1,418,608.1 with bad debts 11.51% 70.40% 10.15% 67.65% 7.45 1.33 .12 .20 .10 0 provision accrued individually Account receivable with bad debt 44,509,1 133,527. 44,375,66 33,774,31 101,322.9 33,672,993. 88.49% 0.30% 78.19% 0.30% provision accrual by 89.39 57 1.82 6.16 5 21 portfolio Including: Aging analysis 44,509,1 133,527. 44,375,66 33,774,31 101,322.9 33,672,993. 88.49% 0.30% 78.19% 0.30% method 89.39 57 1.82 6.16 5 21 50,295,7 4,207,33 46,088,45 43,195,50 4,578,979 38,616,523. Total 100.00% 8.37% 100.00% 10.60% 96.84 8.90 7.94 3.11 .18 93 Bad debt provision accrual on single basis: The individual amount is not significant 62 In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Shijiazhuang Dasong Expected to be difficult 837,064.00 837,064.00 100.00% Tech. Co., Ltd to recover Sichuan Wanling Electric Expected to be difficult 1,102,072.20 1,102,072.20 100.00% Technology Co., Ltd. to recover Shanghai Swen Electric Expected to be difficult 304,867.50 243,894.00 80.00% Vehicle Co., Ltd. to recover Guangdong Xinlingjia Expected to be difficult 1,149,000.00 380,100.00 33.08% New Energy Co., Ltd. to recover Shenzhen Jiahaosong Expected to be difficult 2,393,603.75 1,510,681.13 63.11% Technology Co., Ltd. to recover Total 5,786,607.45 4,073,811.33 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Bad debt provision accrual on portfolio: Aging analysis In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Within one year (one year 40,519,515.84 121,558.55 0.30% included) 1-2 years (2 years included) 3,989,673.55 11,969.02 0.30% Total 44,509,189.39 133,527.57 -- Explanation on portfolio basis: Nil Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: If the provision for bad debts of account receivable is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable By account age 63 In RMB Account age Ending balance Within one year (one year included) 40,519,515.84 Within one year 40,519,515.84 1-2 years 7,496,552.80 2-3 years 468,148.50 Over 3 years 1,811,579.70 3-4 years 772,414.20 4-5 years 1,039,165.50 Total 50,295,796.84 (2) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening Balance Collected or Ending balance Accrual Charge-off Other reversal Bad debt provision for 4,578,979.18 33,996.70 201,743.40 202,101.50 4,207,338.90 accounts receivable Total 4,578,979.18 33,996.70 201,743.40 202,101.50 4,207,338.90 Including important amount of bad debt provision collected or reversal in the period: In RMB Enterprise Amount collected or reversal Collection way Shenzhen Boyineng Technology Co., Ltd. 201,743.40 Payment recovery Total 201,743.40 -- At the end of the previous year, for those estimated to be difficult to recover, 30% bad debt provision was accrued based on the insignificant single amount and a separate provision for bad debts. During this year, the company collected payment for several times and by various methods. After the impairment test, the possibility of recoverable was greatly increased, so the provision for bad debts that had been accrued was reversed. (3) Account receivables actually charge-off during the reporting period In RMB Item Amount charge-off The actual write-off of accounts receivable 202,101.50 64 Including major account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Shijiazhuang Dasong Goods payment 202,101.50 Unable to recover N Technology Co., Ltd. Total -- 202,101.50 -- -- -- Explanation on account receivable charge-off: Nil (4) Top five account receivables collected by arrears party at ending balance In RMB Ending balance of accounts Proportion of total closing balance Ending balance of bad bet Name receivable of accounts receivable provision Guangshui Jiaxu Energy 12,758,950.90 25.37% 38,276.85 Technology Co., Ltd. Zhengzhou Guiguan Tech. 5,218,756.80 10.38% 15,656.27 Trade. Co., Ltd Shenzhen Bi’ai Diamond 4,897,954.16 9.74% 14,693.86 Co., Ltd. Fuzhou Rongrun Jewelry 3,558,748.00 7.08% 10,676.24 Co., Ltd. Shenzhen Weiterui New Energy Technology Co., 3,424,471.05 6.81% 10,273.41 Ltd. Total 29,858,880.91 59.38% (5) Account receivable derecognition due to transfer of financial assets Nil (6) Assets and liability resulted by account receivable transfer and continuous involvement Nil Other explanation: Nil 65 6. Receivables financing In RMB Item Ending balance Opening Balance Change of receivables financing and fair value in the period □Applicable √Not applicable If the provision for bad debts of receivable financing is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable Other explanation: Nil 7. Account paid in advance (1) By account age In RMB Ending balance Opening Balance Account age Amount Ratio Amount Ratio Within one year 2,489,164.74 100.00% 938,425.99 100.00% Total 2,489,164.74 -- 938,425.99 -- Explanation on un-settlement in time for advance payment with over one year account age and major amounts: Nil (2) Top 5 advance payment at ending balance by prepayment object Enterprise Relationship Amount Account age Ratio in total with the Nature advance e Company payment (%) Taixing Suchi Electronics Co., Ltd. Non-related 830,000.00 Within 1 year Goods advance 33.34 party payment Shenzhen Jinming Artisan Jewelry Co., Non-related 610,658.49 Within 1 year Prepaid processing 24.53 Ltd. party fee Hubei Zhongyi Technology Co., Ltd. Non-related 360,000.00 Within 1 year Goods advance 14.46 party payment Shenzhen Zhuoyue New Times Non-related 284,400.00 Within 1 year Goods advance 11.43 Electronics Co., Ltd. party payment Huzhou Kunlun Power Battery Material Non-related 97,500.00 Within 1 year Goods advance 3.92 Co., Ltd. party payment Total 2,182,558.49 87.68 Other explanation: 66 Nil 8. Other account receivable In RMB Item Ending balance Opening Balance Other account receivable 458,177.20 740,354.71 Total 458,177.20 740,354.71 (1) Interest receivable 1) Category In RMB Item Ending balance Opening Balance 2) Important overdue interest In RMB Impairment (Y/N) and Borrower Ending balance Overdue time Overdue reason judgment basis Total 0.00 -- -- -- Other explanation: Nil 3) Accrual of bad debt provision □Applicable √Not applicable (2) Dividend receivable 1) Category In RMB Item (or invested company) Ending balance Opening Balance 2) Important dividend receivable with over one year aged In RMB Item (or invested Causes of failure for Impairment (Y/N) and Ending balance Account age company) collection judgment basis 67 Total 0.00 -- -- -- 3) Accrual of bad debt provision □Applicable √Not applicable Other explanation: Nil (3) Other account receivable 1) By nature In RMB Account nature Book Ending balance Book Opening Balance Deposit or margin 369,600.88 754,822.00 Payment for equipment 311,400.00 311,400.00 Personal loan of employees 130,254.99 28,060.45 Total 811,255.87 1,094,282.45 2) Accrual of bad debt provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on January 1, 353,927.74 353,927.74 2020 Balance on January 1, 2020 in the current —— —— —— —— period Current reversal 849.07 849.07 Balance on June 30, 2020 353,078.67 353,078.67 Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable By account age In RMB Account age Ending balance Within one year (one year included) 173,016.88 68 Within one year 173,016.88 1-2 years 116,338.99 2-3 years 170,200.00 Over 3 years 351,700.00 3-4 years 41,700.00 4-5 years 10,000.00 Over 5 years 300,000.00 Total 811,255.87 3) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening Balance Collected or Ending balance Accrual Write off Other reversal Bad debt provision for 353,927.74 849.07 353,078.67 other receivables Total 353,927.74 849.07 353,078.67 Nil Important amount of bad debt provision switch-back or collection in the period: In RMB Enterprise Amount switch-back or collection Collection way Total 0.00 -- Nil 4) Other account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major other account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Total -- 0.00 -- -- -- Other Explanation on account receivable charge-off 69 Nil 5) Top 5 other account receivable collected by arrears party at ending balance In RMB Proportion in total other account Ending balance of Enterprise Nature Ending balance Account age receivables at bad debt provision period-end Shenzhen Luwei Payment for Mechatronic 300,000.00 Over 5 years 36.98% 300,000.00 equipment Equipment Co., Ltd Alipay (China) Network Technology Margin or deposit 110,000.00 Within 3 years 13.56% 330.00 Co., Ltd. Shenye Pengji Rent deposit 107,194.00 Within 1 year 13.21% 321.58 (Group) Co., Ltd. Guangzhou Vipshop Margin or deposit 50,000.00 Within 2 years 6.16% 150.00 E-Business Co., Ltd. Quick Money Payment Clearing Margin or deposit 30,000.00 Within 2 years 3.70% 90.00 Information Co., Ltd. Total -- 597,194.00 -- 73.61% 300,891.58 6) Account receivable with government grants involved In RMB Time, amount and basis Enterprise Government grants Ending balance Ending account age of amount collection estimated Nil 7) Other account receivable derecognition due to financial assets transfer Nil 8) Assets and liability resulted by other account receivable transfer and continuous involvement Nil Other explanation: Nil 70 9. Inventory Does the company need to comply with the disclosure requirements of the real estate industry No (1) Category In RMB Ending balance Opening Balance Provision for Provision for inventory inventory depreciation or depreciation or Item Book balance contract Book value Book balance contract Book value performance cost performance cost impairment impairment provision provision Raw materials 839,565.85 839,565.85 2,183,259.92 2,183,259.92 Finished goods 1,308,177.98 134,889.09 1,173,288.89 1,542,282.57 521,083.05 1,021,199.52 Consigned processing 2,113,002.17 2,113,002.17 2,873,870.86 2,873,870.86 materials Total 4,260,746.00 134,889.09 4,125,856.91 6,599,413.35 521,083.05 6,078,330.30 The Company shall comply with the disclosure requirement of “Guidelines on Industry Information Disclosure of Shenzhen Stock Exchange No. 11- Listed Company Engaged in Jewelry-related Business” (2) Provision for inventory depreciation or contract performance cost impairment provision In RMB Current increased Current decreased Item Opening Balance Switch back or Ending balance Accrual Other Other charge-off Inventory 521,083.05 386,193.96 134,889.09 Total 521,083.05 386,193.96 134,889.09 Nil (3) Explanation on capitalization of borrowing costs at ending balance of inventory Nil 71 (4) Description of the current amortization amount of contract performance costs Nil 10. Contractual assets In RMB Ending balance Opening Balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Total 0.00 0.00 0.00 0.00 Book value of contract assets have major changes and causes: In RMB Item Amount changes Causes Total 0.00 —— If the provision for bad debts of contract asset is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable Accrual of impairment provision in the period In RMB Reversal/Charge-off in Item Accrual in the period Switch-back in the period Causes the period Total 0.00 0.00 0.00 -- Other explanation: Nil 11. Assets held for sale In RMB Book Ending Impairment Ending book Expected disposal Expected disposal Item Fair value balance provision value expenses time Total 0.00 0.00 0.00 0.00 0.00 -- Other explanation: Nil 12. Non-current asset due within one year In RMB Item Ending balance Opening Balance 72 Important creditors’ investment/other creditors’ investment In RMB Ending balance Opening Balance Creditor's rights Face value Coupon rate Actual rate Due date Face value Coupon rate Actual rate Due date Total 0.00 —— —— —— 0.00 —— —— —— Other explanation: Nil 13. Other current assets In RMB Item Ending balance Opening Balance Tax credit and input tax to be certified 3,191,727.71 3,188,649.68 Prepaid corporate income tax 55,813.33 129,864.57 Total 3,247,541.04 3,318,514.25 Other explanation: Nil 14. Creditors’ investment In RMB Ending balance Opening Balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Total 0.00 0.00 0.00 0.00 Important creditors’ investment In RMB Ending balance Opening Balance Creditor's rights Face value Coupon rate Actual rate Due date Face value Coupon rate Actual rate Due date Total 0.00 —— —— —— 0.00 —— —— —— Accrual of impairment provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on January 1, —— —— —— —— 2020 in the current 73 period Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable Other explanation: Nil 15. Other creditors’ investment In RMB Cumulative loss Change of Cumulative impairment Opening Accrued Ending Item fair value in Cost changes of recognized in Note Balance interest balance the period fair value other comprehensi ve income Total 0.00 0.00 0.00 0.00 0.00 —— Important other creditors’ investment In RMB Other creditors’ Ending balance Opening Balance investment Face value Coupon rate Actual rate Due date Face value Coupon rate Actual rate Due date Total 0.00 —— —— —— 0.00 —— —— —— Accrual of impairment provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on January 1, 2020 in the current —— —— —— —— period Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable Other explanation: Nil 74 16. Long-term account receivable (1) Long-term account receivable In RMB Ending balance Opening Balance Discount rate Item Bad debt Bad debt Book balance Book value Book balance Book value interval provision provision Total 0.00 0.00 0.00 0.00 -- Impairment of bad debt provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on January 1, 2020 in the current —— —— —— —— period Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable Nil (2) Long-term account receivable derecognized due to financial assets transfer Nil (3) Assets and liabilities resulted by long-term account receivable transfer and continues involvement Nil Other explanation Nil 17. Long-term equity investments In RMB Changes in the period (+, -) Ending Opening Investme Other Cash Accrual Ending balance The Additiona Balance nt gains comprehe Other dividend of balance of invested l Capital (Book recognize nsive equity or profit impairme Other (Book impairme entity investmen reduction value) d under income change announce nt value) nt t equity adjustmen d to provision provision 75 t issued I. Joint venture Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 II. Associated enterprise Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation Nil 18. Other equity instrument investment In RMB Item Ending balance Opening Balance Itemized the non-tradable equity instrument investment in the period In RMB Causes of those that designated Retained earnings measured by fair Cause of retained transfer from value and with its earnings transfer Dividend income Cumulative Item Cumulative gains other variation from other recognized losses comprehensive reckoned into comprehensive income other income comprehensive income Other explanation: Nil 19. Other non-current financial assets In RMB Item Ending balance Opening Balance Other explanation: Nil 20. Investment real estate (1) Investment real estate measured at cost □Applicable √Not applicable 76 (2) Investment real estate measured at fair value □Applicable √Not applicable (3) Investment real estate without property rights certificate In RMB Reasons for failing to complete the Item Book value property rights certificate Other explanation Nil 21. Fixed assets In RMB Item Ending balance Opening Balance Fixed assets 3,963,702.62 4,191,503.33 Total 3,963,702.62 4,191,503.33 (1) Fixed assets In RMB Housing and Machinery Means of Electronic Item Total buildings equipment transportation equipment and other I. original book value: 1.Opening 2,959,824.00 1,477,691.03 958,593.21 230,136.11 5,626,244.35 Balance 2.Current 4,455.45 4,455.45 increased (1) Purchase 4,455.45 4,455.45 (2) construction in process transfer-in (3) the increase in business combination 3.Current 63,210.26 63,210.26 decreased 77 (1) Disposal or 63,210.26 63,210.26 scrap 4.Ending balance 2,959,824.00 1,414,480.77 958,593.21 234,591.56 5,567,489.54 II. accumulated depreciation 1.Opening 466,172.28 217,943.02 586,406.73 164,218.99 1,434,741.02 Balance 2.Current 66,596.04 65,896.12 57,806.12 9,814.67 200,112.95 increased (1) Accrual 66,596.04 65,896.12 57,806.12 9,814.67 200,112.95 3.Current 31,067.05 31,067.05 decreased (1) Disposal or 31,067.05 31,067.05 scrap 4.Ending balance 532,768.32 252,772.09 644,212.85 174,033.66 1,603,786.92 III. Impairment provision 1.Opening Balance 2.Current increased (1) Accrual 3.Current decreased (1) Disposal or scrap 4.Ending balance IV. Book value 1.Ending book 2,427,055.68 1,161,708.68 314,380.36 60,557.90 3,963,702.62 value 2.Opening book 2,493,651.72 1,259,748.01 372,186.48 65,917.12 4,191,503.33 value 78 (2) Fixed assets temporary idle In RMB Accumulated Impairment Item Original book value Book value Note depreciation provision (3) Fixed assets leasing-in by financing lease In RMB Accumulated Item Original book value Impairment provision Book value depreciation (4) Fixed assets leasing-out by operational lease In RMB Item Ending book value (5) Fixed assets without property rights certificate In RMB Reasons for failing to complete the Item Book value property rights certificate The six properties of Lianxin Garden 7-20F with original value of 2,959,824.00 Yuan. The property purchasing refers to the indemnificatory housing for enterprise talent buying from Shenzhen Housing and Construction Bureau of Luohu District. Six properties in Lianxin Garden 2,493,651.72 According to the agreement, the enterprise shall not carrying any kind of property trading with any units or individuals except the government, and the company has no property certification on the above mentioned properties. Other explanation No accrual for impairment provision due to there was no evidence of impairment being found in fixed assets at period-end (6) Fixed assets disposal In RMB Item Ending balance Opening Balance Other explanation 79 Nil 22. Construction in progress In RMB Item Ending balance Opening Balance (1) Construction in progress In RMB Ending balance Opening Balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Total 0.00 0.00 0.00 0.00 (2) Changes in significant construction in progress In RMB Accumul including Proporti Fixed ated : interest Interest Other on of increased assets amount capitaliz capitaliz Opening decrease Ending project Sourceof Item Budget in the transfer-i Progress of ed ation rate balance d in the balance investme funds Period n in the interest amount of the Period nt in Period capitaliz of the year budget ation year Total 0.00 0.00 0.00 0.00 0.00 0.00 -- -- 0.00 0.00 0.00% -- (3) Depreciation reserves accrual In RMB Item Accrual in the period Reasons for accrual Total 0.00 Other explanation Nil (4) Engineering materials In RMB Ending balance Opening Balance Item Book balance Impairment Book value Book balance Impairment Book value 80 provision provision Total 0.00 0.00 0.00 0.00 Other explanation: Nil 23. Productive biological asset (1) Productive biological assets measured by cost □Applicable √Not applicable (2) Productive biological assets measured by fair value □Applicable √Not applicable 24. Oil and gas asset □Applicable √Not applicable 25. Right-of-use asset In RMB Item Total Other explanation: Nil 26. Intangible assets (1) Intangible assets In RMB Non-patent Item Land use right Patent Trademark Total technology I. Original book value 1.Opening 5,271,000.00 5,271,000.00 Balance 2.Current increased (1) Purchase (2) internal R 81 &D (3) the increase in business combination 3.Current decreased (1) Disposal 4.Ending 5,271,000.00 5,271,000.00 balance II. accumulated depreciation 1.Opening 4,518,000.00 4,518,000.00 Balance 2.Current 376,500.00 376,500.00 increased (1) Accrual 376,500.00 376,500.00 3.Current decreased (1) Disposal 4.Ending 4,894,500.00 4,894,500.00 balance III. Impairment provision 1.Opening Balance 2.Current increased (1) Accrual 3.Current decreased (1) Disposal 82 4.Ending balance IV. Book value 1.Ending book 376,500.00 376,500.00 value 2.Opening book 753,000.00 753,000.00 value Ratio of intangible assets resulted from internal R&D in balance of intangible assets at period-end (2) Land use right without certificate of title completed In RMB Reasons for failing to complete the Item Book value property rights certificate Other explanation: Nil 27. Expense on Research and Development In RMB Current increased Current decreased Opening Internal Confirmed as Transfer to Ending Item Balance development Other intangible current profit balance expenditure assets and loss Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation Nil 28. Goodwill (1) Original book value of goodwill In RMB Current increased Current decreased The invested Formed by Opening Balance Ending balance entity or items business Dispose combination 83 Total 0.00 0.00 0.00 0.00 0.00 0.00 (2) Impairment provision of goodwill In RMB Current increased Current decreased The invested Formed by Opening Balance Ending balance entity or items business Dispose combination Total 0.00 0.00 0.00 0.00 0.00 0.00 Information about the asset group or asset group combination in which the goodwill is located Nil Explain the method of confirming the goodwill impairment test process, key parameters (such as the forecast period growth rate, stable period growth rate, profit rate, discount rate, forecast period, etc. when estimating the present value of future cash flow), and the impairment loss of goodwill: Nil Impact of impairment test for goodwill Nil Other explanation Nil 29. Long-term expenses to be apportioned In RMB Amortized in the Item Opening Balance Current increased Other decrease Ending balance Period Total 0.00 0.00 0.00 Other explanation Nil 30. Deferred income tax assets/Deferred income tax liabilities (1) Deferred income tax assets without offset In RMB Ending balance Opening Balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Impairment provision of 980,142.35 3,920,569.42 1,042,582.16 4,170,328.65 84 assets Total 980,142.35 3,920,569.42 1,042,582.16 4,170,328.65 (2) Deferred income tax liabilities without offset In RMB Ending balance Opening Balance Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax differences liabilities differences liabilities Total 0.00 0.00 0.00 0.00 (3) Deferred income tax assets and deferred income tax liabilities listed after off-set In RMB Ending balance of Trade-off between the Opening balance of Trade-off between the deferred income tax deferred income tax deferred income tax Item deferred income tax assets or liabilities after assets and liabilities at assets or liabilities after assets and liabilities off-set period-begin off-set Deferred income tax 980,142.35 1,042,582.16 assets (4) Details of unrecognized deferred income tax assets In RMB Item Ending balance Opening Balance Total 0.00 0.00 (5) Deductible losses of un-recognized deferred income tax assets expired on the followed year In RMB Year Ending amount Opening amount Note Total 0.00 0.00 -- Other explanation: As stated under article 17 of the Enterprise Accounting Standards No.18-Income Tax, deferred income tax assets and deferred income tax liabilities shall be measured at the tax rate applicable in the period in which the assets are expected to be recovered or liabilities are expected to be settled according to relevant tax laws on the balance sheet date. The tax rate adopted by the Company in calculating deferred income tax assets is 25% for both parent company and subsidiaries. 85 31. Other non-current assets In RMB Ending balance Opening Balance Item Provision for Provision for Book balance Book value Book balance Book value impairment impairment Prepay for house purchase 400,000.00 400,000.00 400,000.00 400,000.00 Total 400,000.00 400,000.00 400,000.00 400,000.00 Other explanation: As of June 30, 2020, the Housing and Construction Bureau of Luohu District, Shenzhen City has not delivered houses for enterprise talents in Luohu District. 32. Short-term loans (1) Category In RMB Item Ending balance Opening Balance Explanation on short-term loans category: Nil (2) Overdue outstanding short-term loans Total 0.00 Yuan overdue outstanding short-term loans at period-end, including the followed significant amount: In RMB Borrower Ending balance Lending rate Overdue time Overdue rate Total 0.00 -- -- -- Other explanation: Nil 33. Trading financial liability In RMB Item Ending balance Opening Balance Including: Including: Other explanation: Nil 86 34. Derivative financial liability In RMB Item Ending balance Opening Balance Other explanation: Nil 35. Notes payable In RMB Category Ending balance Opening Balance Notes expired at period-end without paid was 0.00 Yuan. 36. Account payable (1) Account payable In RMB Item Ending balance Opening Balance Within one year (one year included) 8,103,743.89 9,575,684.30 1-2 years (2 years included) 487,016.93 487,016.93 2-3 years (3 years included) 7,099.50 7,099.50 3-4 years (4 years included) 118,380.50 118,380.50 4-5 years (5 years included) 2,366.00 2,366.00 Over 5 years 838.00 838.00 Total 8,719,444.82 10,191,385.23 (2) Important account payable with account age over one year In RMB Item Ending balance Reasons of un-paid or carry-over Total 0.00 -- Other explanation: The top five accounts payable at the end of the period Enterprise Relationship with Amount Aging Ratio in total the company accounts payable Nature (%) Tianjin Jianya Electronic Non-related party 2,777,584.30 Within 1 year 31.86 Goods payment 87 Technology Co., Ltd. Fujian Hengsheng Jewelry Co., Ltd. Non-related party 1,276,993.06 Within 1 year 14.65 Goods payment Baodao Vehicle Industry Group Non-related party 1,262,115.24 Within 1 year 14.47 Goods payment Co., Ltd. Changzhou Youyi Vehicle Non-related party 747,661.00 Within 1 year 8.57 Goods payment Technology Co., Ltd. Guangxi Shengdong New Energy Non-related party 649,600.00 Within 1 year 7.45 Goods payment Technology Co., Ltd. Total 6,713,953.60 77.00 37. Account received in advance (1) Account received in advance In RMB Item Ending balance Opening Balance Total 0.00 (2) Account received in advance with over one year book age In RMB Item Ending balance Reasons of un-paid or carry-over Total 0.00 -- Other explanation: Nil 38. Contract liability In RMB Item Ending balance Opening Balance Rent received in advance 6,982,666.68 Advance payment 1,042,433.85 1,539,782.12 Total 8,025,100.53 1,539,782.12 Book value has major changes in the period and causes In RMB Item Amount changes Causes Shenzhen Renhui Wooden 6,556,000.00 Rent in advance according to the contract Products Co., Ltd. Total 6,556,000.00 —— 88 39. Wage payable (1) Wage payable In RMB Item Opening Balance Current increased Current decreased Ending balance I. Short-term 599,962.73 2,948,339.49 2,965,380.96 582,921.26 compensation II. Post-employment benefit-Defined 96,178.27 96,178.27 contribution plan Total 599,962.73 3,044,517.76 3,061,559.23 582,921.26 (2) Short-term compensation In RMB Item Opening Balance Current increased Current decreased Ending balance 1. Wages, bonus, 593,459.94 2,651,491.52 2,669,044.65 575,906.81 allowances and subsidy 3. Social insurance 64,350.87 64,350.87 Including: Medical 56,780.88 56,780.88 insurance Work injury 1,396.27 1,396.27 insurance Maternity 6,173.72 6,173.72 insurance 4. Housing accumulation 193,066.56 192,406.56 660.00 fund 5. Labor union expenditure and 6,502.79 39,430.54 39,578.88 6,354.45 personnel education expense Total 599,962.73 2,948,339.49 2,965,380.96 582,921.26 (3) Defined contribution plan In RMB Item Opening Balance Current increased Current decreased Ending balance 1. Basic endowment 95,029.87 95,029.87 89 insurance 2. Unemployment 1,148.40 1,148.40 insurance Total 96,178.27 96,178.27 Other explanation: At the end of the period, there was no arrears in employee compensation. 40. Taxes payable In RMB Item Ending balance Opening Balance Value added tax 680,747.23 740,374.76 Corporate income tax 110,321.60 14,285.50 Individual income tax 22,317.11 21,755.56 Tax for maintaining and building cities 2,001.21 925.10 Educational surtax 1,392.64 623.21 Stamp tax 7,146.98 7,270.30 Total 823,926.77 785,234.43 Other explanation: Nil 41. Other account payable In RMB Item Ending balance Opening Balance Other account payable 36,755,216.28 38,175,654.98 Total 36,755,216.28 38,175,654.98 (1) Interest payable In RMB Item Ending balance Opening Balance Important interest overdue without paid: In RMB Borrower Amount overdue Overdue reason Total 0.00 -- Other explanation: Nil 90 (2) Dividend payable In RMB Item Ending balance Opening Balance Other explanation, including dividends payable with over one year age and disclosure un-payment reasons: Nil (3) Other account payable 1) By nature In RMB Item Ending balance Opening Balance Custodian and common benefit debts 18,707,866.44 18,764,512.80 Intercourse funds 6,500,000.00 6,500,000.00 Warranty and guarantee money 11,077,458.84 11,291,325.00 Other payable service charge (intermediary 255,083.95 876,599.88 services included) Other 214,807.05 743,217.30 Total 36,755,216.28 38,175,654.98 2) Significant other payable with over one year age In RMB Item Ending balance Reasons of un-paid or carry-over Custodian and common benefit debts 18,707,866.44 - Warranty and guarantee money 4,000,000.00 Performance bond Shenzhen Guosheng Energy Investment 6,500,000.00 Interest-free loans Development Co., Ltd. Total 29,207,866.44 -- Other explanation Top 5 other receivables at period-end Relationship with Aging Ratio in total other Enterprise Amount Nature the company receivables (%) Custodian and common benefit Non-related party 18,707,866.44 Over 5 years 50.90 Obligatory right of debts common benefit Shenzhen Guosheng Energy related party 6,500,000.00 Over 5 years 17.69 Interest-free loans Investment Development Co., Ltd. Wansheng Industrial Holdings Non-related party 2,000,000.00 Within 4 years 5.44 Cash deposit 91 (Shenzhen) Co., Ltd. Fuzhou Zuanjinsen Jewelry Co., related party 2,000,000.00 Within 1 year 5.44 Cash deposit Ltd. Shenzhen Bei’er High-tech Non-related party 1,500,000.00 Within 4 years 4.08 Cash deposit Enterprise (Limited Partnership) Total 30,707,866.44 83.55 42. Liability held for sale In RMB Item Ending balance Opening Balance Other explanation: Nil 43. Non-current liabilities due within one year In RMB Item Ending balance Opening Balance Other explanation: Nil 44. Other current liabilities In RMB Item Ending balance Opening Balance Changes of short-term bond payable: In RMB Accrual Premium/ Face Release Bond Issuing Opening Issued in interest discount Paid in Ending Bond value date period amount balance the Period by face amortizati the Period balance value on Total -- -- -- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation: Nil 45. Long-term loans (1) Category In RMB 92 Item Ending balance Opening Balance Explanation on category of long-term loans: Nil Other explanation, including interest rate section: Nil 46. Bonds payable (1) Bonds payable In RMB Item Ending balance Opening Balance (2) Changes of bonds payable (not including the other financial instrument of preferred stock and perpetual capital securities that classify as financial liability) In RMB Accrual Premium/ Face Release Bond Issuing Opening Issued in interest discount Paid in Ending Bond value date period amount balance the Period by face amortizati the Period balance value on Total -- -- -- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (3) Convertible conditions and time for shares transfer for the convertible bonds Nil (4) Other financial instruments classify as financial liability Basic information of the outstanding preferred stock and perpetual capital securities at period-end Nil Changes of outstanding preferred stock and perpetual capital securities at period-end In RMB Outstanding Period-begin Current increased Current decreased Period-end financial Amount Book value Amount Book value Amount Book value Amount Book value instrument Total 0 0.00 0 0.00 0 0.00 0 0.00 Basis for financial liability classification for other financial instrument Nil Other explanation 93 Nil 47. Lease liability In RMB Item Ending balance Opening Balance Other explanation Nil 48. Long-term account payable In RMB Item Ending balance Opening Balance (1) By nature In RMB Item Ending balance Opening Balance Other explanation: Nil (2) Special payable In RMB Item Opening Balance Current increased Current decreased Ending balance Causes of formation Total 0.00 0.00 -- Other explanation: Nil 49. Long-term wages payable (1) Long-term wages payable In RMB Item Ending balance Opening Balance (2) Changes of defined benefit plans Present value of the defined benefit plans: In RMB Item Current Period Last Period 94 Scheme assets: In RMB Item Current Period Last Period Net liability (assets) of the defined benefit plans In RMB Item Current Period Last Period Content of defined benefit plans and relevant risks, impact on future cash flow of the Company as well as times and uncertainty: Nil Major actuarial assumption and sensitivity analysis: Nil Other explanation: Nil 50. Accrual liability In RMB Item Ending balance Opening Balance Causes of formation Other explanation, including relevant important assumptions and estimation: Nil 51. Deferred income In RMB Item Opening Balance Current increased Current decreased Ending balance Causes of formation Total 0.00 0.00 -- Item with government grants involved: In RMB Amount Amount Cost Assets-relate Opening New grants reckoned in Other Ending Liability reckoned in reduction in d/income Balance in the Period non-operatio changes balance other income the period related n revenue Other explanation: Nil 52. Other non-current liabilities In RMB Item Ending balance Opening Balance Other explanation: 95 Nil 53. Share capital In RMB Changes in the period (+, -) Shares Opening New shares transferred Ending balance Balance Bonus share Other Subtotal issued from capital reserve Total shares 551,347,947.00 551,347,947.00 Other explanation: Nil 54. Other equity instrument (1) Basic information of the outstanding preferred stock and perpetual capital securities at period-end Nil (2) Changes of outstanding preferred stock and perpetual capital securities at period-end In RMB Outstanding Period-begin Current increased Current decreased Period-end financial Amount Book value Amount Book value Amount Book value Amount Book value instrument Total 0 0 0.00 0 0.00 0 Changes of other equity instrument, change reasons and relevant accounting treatment basis: Nil Other explanation: Nil 55. Capital public reserve In RMB Item Opening Balance Current increased Current decreased Ending balance Other capital reserve 627,834,297.85 627,834,297.85 1. Debt restructuring 482,580,588.23 482,580,588.23 income 2. Other 145,253,709.62 145,253,709.62 96 Total 627,834,297.85 627,834,297.85 Other explanation, including changes and reasons for changes: Among the other capital reserves, 135,840,297.18 Yuan refers to the payment for creditor from shares assignment by whole shareholders; majority shareholder Guosheng Energy donated 5,390,399.74 Yuan. 56. Treasury stock In RMB Item Opening Balance Current increased Current decreased Ending balance Total 0.00 0.00 Other explanation, including changes and reasons for changes: Nil 57. Other comprehensive income In RMB Current Period Less: Less: written written in in other other comprehensi comprehe ve income in nsive Account previous income in Belong to Belong to Opening before Ending Item period and previous Less: income parent minority Balance income tax balance carried period and tax expense company shareholders in the forward to carried after tax after tax period gains and forward to losses in retained current earnings in period current period Total other comprehensive income 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation, including the active part of the hedging gains/losses of cash flow transfer to initial recognition adjustment for the arbitraged items: Nil 58. Reasonable reserve In RMB Item Opening Balance Current increased Current decreased Ending balance Total 0.00 0.00 97 Other explanation, including changes and reasons for changes: Nil 59. Surplus public reserve In RMB Item Opening Balance Current increased Current decreased Ending balance Statutory surplus 32,673,227.01 32,673,227.01 reserves Total 32,673,227.01 32,673,227.01 Other explanation, including changes and reasons for changes: Nil 60. Retained profit In RMB Item Current period Last Period Retained profit at period-end before adjustment -1,204,736,075.56 -1,197,549,169.92 Retained profit at period-begin after adjustment -1,204,736,075.56 -1,197,549,169.92 Add: net profit attributable to shareholders of 2,797,643.50 -798,946.17 parent company for this period Retained profit at period-end -1,201,938,432.06 -1,198,348,116.09 Adjustment for retained profit at period-begin: 1) Retroactive adjustment due to the Accounting Standards for Business Enterprise and relevant new regulations, retained profit at period-begin has 0.00 Yuan affected; 2) Due to the accounting policy changes, retained profit at period-begin has 0.00 Yuan affected; 3) Due to the major accounting errors correction, retained profit at period-begin has 0.00 Yuan affected; 4) Consolidation range changed due to the same control, retained profit at period-begin has 0.00 Yuan affected; 5) Total other adjustment impacts 0.00 Yuan retained profit at period-begin 61. Operation revenue and operation cost In RMB Current Period Last Period Item Revenue Cost Revenue Cost Main business 36,004,701.56 32,454,948.30 33,834,135.17 32,088,349.25 Other business 6,651,653.65 3,645,817.35 4,440,297.85 3,241,165.72 Total 42,656,355.21 36,100,765.65 38,274,433.02 35,329,514.97 Information relating to revenue: 98 In RMB Category Branch 1 Branch 2 Total Product Types 25,097,387.76 17,558,967.45 42,656,355.21 Including: Jewelry gold 25,097,387.76 25,097,387.76 Bicycle lithium battery 17,558,967.45 17,558,967.45 materials and others Including: Including: Including: Including: Including: Including: Information relating to performance obligations: Nil Information related to the transaction price apportioned to the remaining performance obligations: The amount of income corresponding to the performance obligations that have been signed at the end of this reporting period but have not yet been fulfilled or have not done with fulfillment is 0.00 yuan, among them, yuan of revenue is expected to be recognized in YEAR, yuan of revenue is expected to be recognized in YEAR, and yuan of revenue is expected to be recognized in YEAR. Other explanation 62. Tax and extras In RMB Item Current Period Last Period Tax for maintaining and building cities 432.52 10,738.55 Educational surtax 308.94 8,298.22 Stamp tax 19,157.58 17,551.00 Total 19,899.04 36,587.77 Other explanation: Nil 63. Sales expenses In RMB Item Current Period Last Period Salary and Social Security Provident Fund 654,651.76 946,503.40 99 Online sales fee 420,049.56 246,947.49 Other 403,677.46 682,272.72 Total 1,478,378.78 1,875,723.61 Other explanation: Nil 64. Administrative expenses In RMB Item Current Period Last Period Salary and Social Security Provident Fund 1,474,643.26 1,941,131.64 Other 205,076.18 418,252.20 Total 1,679,719.44 2,359,383.84 Other explanation: Nil 65. R&D expenses In RMB Item Current Period Last Period Salary and Social Security Provident Fund 753,742.20 Total 753,742.20 0.00 Other explanation: Nil 66. Financial expenses In RMB Item Current Period Last Period Interest income -31,929.72 -71,134.40 Commission charge etc. 12,669.33 10,681.41 Total -19,260.39 -60,452.99 Other explanation: Nil 67. Other income In RMB 100 Sources Current Period Last Period Tax handling fee 10,105.77 68. Investment income In RMB Item Current Period Last Period Other explanation: Nil 69. Net exposure hedge gains In RMB Item Current Period Last Period Other explanation: Nil 70. Income from change of fair value In RMB Sources Current Period Last Period Other explanation: Nil 71. Credit impairment loss In RMB Item Current Period Last Period Bad debt loss of other account receivable 849.07 2,237.42 Bad debt losses of accounts receivable 169,538.78 -19,717.24 Total 170,387.85 -17,479.82 Other explanation: Nil 72. Losses of devaluation of asset In RMB Item Current Period Last Period II. Loss of inventory depreciation and loss 40,616.29 101 of contract performance cost impairment Total 40,616.29 Other explanation: 73. Income from assets disposal In RMB Sources Current Period Last Period Fixed asset disposal 24,936.44 74. Non-operating income In RMB Amount reckoned in current Item Current Period Last Period non-recurring gains/losses Other 744,788.91 148,627.00 744,788.91 Total 744,788.91 148,627.00 744,788.91 Government grants reckoned into current gains/losses: In RMB Subsidy impact The special Assets-relate Government Issuing Offering Amount in Amount in Nature current subsidy d/income-rela grants subject causes the Period last period gains/losses (Y/N) ted (Y/N) Other explanation: 75. Non-operating expenses In RMB Amount reckoned in current Item Current Period Last Period non-recurring gains/losses Other 2,676.80 50.00 2,676.80 Total 2,676.80 50.00 2,676.80 Other explanation: Nil 102 76. Income tax expenses (1) Income tax expenses In RMB Item Current Period Last Period Current income tax expense 107,598.95 Deferred income tax expense 62,439.81 -4,152.36 Total 170,038.76 -4,152.36 (2) Adjustment on accounting profit and income tax expenses In RMB Item Current Period Total Profit 3,590,652.66 Income tax measured by statutory/applicable tax rate 897,663.17 The impact of applying different tax rates to subsidiaries -293,865.24 Impact on deductible temporary differences or losses deductible -433,759.17 which was un-recognized as deferred income tax assets Income tax expenses 170,038.76 Other explanation Nil 77. Other comprehensive income Found more in Note 57 78. Items of cash flow statement (1) Other cash received in relation to operation activities In RMB Item Current Period Last Period Interest and Rent and utilities etc. 2,356,618.56 2,583,334.70 Deposit, security deposit, advance payment 10,556,000.00 received Other intercourse funds 2,094,036.84 1,323,261.33 Total 15,006,655.40 3,906,596.03 Explanation on other cash received in relation to operation activities: 103 Nil (2) Other cash paid in relation to operation activities In RMB Item Current Period Last Period Refund of deposit 4,000,000.00 Payment of period expenses, operating 6,968,482.31 5,809,899.76 expenses and common debts, etc. Total 10,968,482.31 5,809,899.76 Explanation on other cash paid in relation to operation activities: Nil (3) Cash received from other investment activities In RMB Item Current Period Last Period Explanation on cash received from other investment activities: Nil (4) Cash paid related with investment activities In RMB Item Current Period Last Period Explanation on cash paid related with investment activities Nil (5) Other cash received in relation to financing activities In RMB Item Current Period Last Period Bill margin received 2,016,600.82 Total 2,016,600.82 Explanation on other cash received in relation to financing activities: Nil (6) Cash paid related with financing activities In RMB Item Current Period Last Period 104 Payment of bill margin 2,000,000.00 Total 0.00 2,000,000.00 Explanation on cash paid related with financing activities: Nil 79. Supplementary information to statement of cash flow (1) Supplementary information to statement of cash flow In RMB Supplementary information Current period Last Period 1. Net profit adjusted to cash flow of -- -- operation activities: Net profit 3,420,613.90 -1,090,458.35 Add: Assets impairment provision -170,387.85 -23,136.47 Depreciation of fixed assets, consumption of oil assets and depreciation of productive 200,112.95 186,131.92 biology assets Amortization of intangible assets 376,500.00 376,500.00 Loss from disposal of fixed assets, intangible assets and other long-term assets (income is -24,936.44 listed with “-”) Decrease of deferred income tax asset 62,439.81 -4,152.36 (increase is listed with “-”) Decrease of inventory (increase is listed with 1,952,473.39 -693,780.13 “-”) Decrease of operating receivable accounts -8,239,522.04 -2,006,581.24 (increase is listed with “-”) Increase of operating payable accounts 3,773,102.22 -5,645,780.11 (decrease is listed with “-”) Net cash flow from operation activities 1,350,395.94 -8,901,256.74 2. Material investment and financing not -- -- involved in cash flow 3. Net change of cash and cash equivalents: -- -- Add: Ending balance of cash equivalents 12,214,263.85 7,587,416.18 Less: Opening balance of cash equivalents 6,074,367.91 16,488,886.26 Net increased amount of cash and cash 6,139,895.94 -8,901,470.08 equivalent 105 (2) Net cash paid for obtaining subsidiary in the Period In RMB Amount Including: -- Including: -- Including: -- Other explanation: Nil (3) Net cash received by disposing subsidiary in the Period In RMB Amount Including: -- Including: -- Including: -- Other explanation: Nil (4) Constitution of cash and cash equivalent In RMB Item Ending balance Opening Balance Including: Cash on hand 108,773.66 89,313.66 Bank deposit available for payment 12,105,490.19 5,979,003.60 at any time Other monetary fund available for 6,050.65 payment at any time II. Cash equivalents 12,214,263.85 6,074,367.91 Ⅲ. Balance of cash and cash equivalent at 12,214,263.85 6,074,367.91 period-end Other explanation: Nil 80. Notes of changes of owners’ equity Explain the name and adjusted amount in “Other” at end of last year: Nil 106 81. Assets with ownership or use right restricted In RMB Item Ending book value Restriction reasons Other explanation: Nil 82. Foreign currency monetary items (1) Foreign currency monetary items In RMB Ending foreign currency Item Convert rate Ending RMB balance converted balance Monetary fund -- -- Including: USD EURO HKD Account receivable -- -- Including: USD EURO HKD Long-term loans -- -- Including: USD EURO HKD Other explanation: Nil (2) Explanation on foreign operational entity, including as for the major foreign operational entity, disclosed main operation place, book-keeping currency and basis for selection; if the book-keeping currency changed, explain reasons □Applicable √Not applicable 107 83. Hedging Disclosed hedging items and relevant hedging instrument based on hedging’s category, disclosed qualitative and quantitative information for the arbitrage risks: Nil 84. Government grants (1) Government grants In RMB Amount reckoned into current Category Amount Item gains/losses (2) Government grants rebate □Applicable √Not applicable Other explanation: Nil 85. Other Nil VIII. Changes of consolidation range 1. Enterprise combined under different control (1) Enterprise combined under different control in the Period In RMB Income of Net profit of Standard to Time point Cost of Ratio of Acquired acquiree from acquiree from Purchasing determine the Acquiree for equity equity equity way Equity purchasing purchasing date purchasing obtained obtained obtained obtained way date to date to date period-end period-end Other explanation: Nil (2) Combination cost and goodwill In RMB 108 Combination cost Determination method for fair value of the combination cost and contingent consideration and changes: Nil Main reasons for large goodwill resulted: Nil Other explanation: Nil (3) Identifiable assets and liability on purchasing date under the acquiree In RMB Fair value on purchasing date Book value on purchasing date Determination method for fair value of the identifiable assets and liabilities: Nil Contingent liability of the acquiree bear during combination: Nil Other explanation: Nil (4) Gains or losses arising from re-measured by fair value for the equity held before purchasing date Whether it is a business combination realized by two or more transactions of exchange and a transaction of obtained control rights in the Period or not □Yes √No (5) On purchasing date or period-end of the combination, combination consideration or fair value of identifiable assets and liability for the acquiree are un-able to confirm rationally Nil (6) Other explanation Nil 2. Enterprise combine under the same control (1) Enterprise combined under the same control in the Period In RMB Equity ratio Basis of Standard to Income of the Net profit of Income of the Net profit of Combined Combination obtained in combined determine the combined the combined combined the combined 109 party combination under the date combination party from party from party during party during same control date period-begin period-begin the the of of comparison comparison combination combination period period to the to the combination combination date date Other explanation: Nil (2) Combination cost In RMB Combination cost Explanation on contingent consideration and its changes: Nil Other explanation: Nil (3) Assets and liability of the combined party on combination date In RMB Combination date At end of last period Contingent liability of the combined party bear during combination: Nil Other explanation: Nil 3. Counter purchase Basic transaction information, basis of counter purchase, whether making up business due to the assets and liability reserved by listed company and basis, determination of combination cost, amount and calculation on adjusted equity by equity transaction Nil 4. Subsidiary disposal Whether lost controlling rights while dispose subsidiary on one time or not □ Yes √ No Whether lost controlling rights in the Period while dispose subsidiary on two or more steps or not □ Yes √ No 110 5. Other reasons for consolidation range changed Reasons for changed on consolidation range (such as new subsidiary established, subsidiary liquidated etc.)And relevant information In August 2019, the Company and Shenzhen Zuankinson Jewelry and Gold Co., Ltd jointly established a Shenzhen Xinsen Jewelry and Gold Supply Chain Co., ltd. of which, the Company holds 65% equity, while 35% equity held by Shenzhen Zuankinson Jewelry and Gold Co., Ltd, the enterprise was included in the consolidate scope since establishment. 6. Other Nil IX. Equity in other entity 1. Equity in subsidiary (1) Constitute of enterprise group Main operation Share-holding ratio Subsidiary Registered place Business nature Acquired way place Directly Indirectly Shenzhen Emmelle Sales of bicycles Shenzhen Shenzhen 70.00% Investment Industrial Co., and spare parts Ltd. Shenzhen Xinsen Jewelry, Jewelry Gold Shenzhen Shenzhen diamonds, gold 65.00% Investment Supply Chain sales Co., Ltd. Explanation on share-holding ratio in subsidiary different from ratio of voting right: Nil Basis for controlling the invested entity with half or below voting rights held and without controlling invested entity but with over half and over voting rights Nil Controlling basis for the structuring entity included in consolidated range Nil Basis on determining to be an agent or consignor: Nil Other explanation: Nil (2) Important non-wholly-owned subsidiary In RMB 111 Dividend announced to Share-holding ratio of Gains/losses attributable Ending equity of Subsidiary distribute for minority in minority to minority in the Period minority the Period Shenzhen Emmelle 30.00% 109,033.70 2,063,280.92 Industrial Co., Ltd. Shenzhen Xinsen Jewelry Gold Supply Chain Co., 35.00% 513,936.70 7,606,876.27 Ltd. Explanation on share-holding ratio of minority different from ratio of voting right: Nil Other explanation: Nil (3) Main finance of the important non-wholly-owned subsidiary In RMB Ending balance Opening Balance Subsidia Non-curr Non-curr Non-curr Non-curr Current Total Current Total Current Total Current Total ry ent ent ent ent assets assets liability liabilities assets assets liability liabilities assets liability assets liability Shenzhe n Emmelle 15,124,7 1,291,40 16,416,2 9,538,60 9,538,60 15,468,8 1,418,41 16,887,2 10,373,0 10,373,0 0.00 0.00 Industria 98.09 9.58 07.67 4.61 4.61 11.90 5.71 27.61 70.21 70.21 l Co., Ltd. Shenzhe n Xinsen Jewelry 24,967,8 24,969,8 3,235,92 3,235,92 8,696,93 8,698,89 1,933,35 1,933,35 Gold 1,960.98 0.00 1,960.98 0.00 93.46 54.44 2.24 2.24 5.06 6.04 4.41 4.41 Supply Chain Co., Ltd. In RMB Current Period Last Period Cash flow Cash flow Total Total Subsidiary Operation from Operation from Net profit comprehensi Net profit comprehensi revenue operation revenue operation ve income ve income activity activity Shenzhen 1,638,684.75 363,445.66 363,445.66 -2,879,621.36 13,212,224.3 -971,707.26 -971,707.26 -4,193,347.24 112 Emmelle 4 Industrial Co., Ltd. Shenzhen Xinsen 25,097,387.7 Jewelry Gold 1,468,390.57 1,468,390.57 -9,359,387.83 6 Supply Chain Co., Ltd. Other explanation: (4) Major restriction on using corporate assets and liquidate corporate debts Nil (5) Financial or other supporting provided to structuring entity that included in consolidated financial statement Nil Other explanation: Nil 2. Transaction that has owners equity shares changed in subsidiary but still with controlling rights (1) Owners equity shares changed in subsidiary (2) Impact on minority’s interest and owners’ equity attributable to parent company In RMB Other explanation 3. Equity in joint venture and associated enterprise (1) Important joint venture or associated enterprise Joint venture or Share-holding ratio Main operation Accounting associated Registered place Business nature place Directly Indirectly treatment enterprise Share-holding ratio or shares enjoyed different from voting right ratio: Basis of the voting rights with 20% below but with major influence, or without major influence but with over 20% (20% included) voting rights hold: 113 (2) Main financial information of the important joint venture In RMB Ending balance/Current Period Opening Balance/Last Period Other explanation (3) Main financial information of the important associated enterprise In RMB Ending balance/Current Period Opening Balance/Last Period Other explanation (4) Financial summary for un-important joint venture or associated enterprise In RMB Ending balance/Current Period Opening Balance/Last Period Joint venture: -- -- Total numbers measured by share-holding -- -- ratio Associated enterprise: -- -- Total numbers measured by share-holding -- -- ratio Other explanation (5) Assets transfer ability has major restriction from joint venture or associated enterprise (6) Excess losses from joint venture or associated enterprise In RMB Un-confirmed losses not Joint venture or associated Cumulative un-confirmed Cumulative un-confirmed recognized in the Period (or net enterprise losses losses at period-end profit enjoyed in the Period) Other explanation 114 (7) Un-confirmed commitment with investment concerned with joint venture (8) Contingent liability with investment concerned with joint venture or associated enterprise 4. Co-runs operation Share-holding ratio/share enjoyed Name Main operation place Registered place Business nature Directly Indirectly Share-holding ratio or shares enjoyed different from voting right ratio: If the co-runs entity is the separate entity, basis of the co-runs classification Other explanation 5. Equity in structuring entity that excluding in the consolidated financial statement Relevant explanation 6. Other X. Risk related with financial instrument The major financial instruments of the Company consist of monetary fund, account receivable, other account receivable, account payable and other account payable, etc. details of these financial instruments are disclosed in the relevant notes. Risks relating to these financial instruments and risk management policies adopted by the Company to minimize these risks are detailed as follows. Management of the Company manages and monitors the risk exposures, to make sure they are under control. 1. Risk management targets and policies The objectives of the Company’s risk management is to balance the risk and income, reduce the negative risk impact of operating performance to the lowest level, maximize the interests of shareholders and other equity investors. Based on these objectives, the Company has established risk management policies to identify and analyze the risks faced by the Company, set adequate risk acceptable level and designed relevant internal control system to monitor the level of risks. The Company regularly reviews these policies and related internal control system to adapt to market development and change of operating activities of the Company. The major risks arising from the Company’s financial instruments are credit risk and liquidity risk. (1) Credit risk Credit risk represents the risk of financial loss suffered by a party to a financial instrument due to failure of performance obligation of another party. Credit risk of the Company is managed by category. Credit risk mainly arises from bank deposits and trade 115 receivables. Since the bank deposits of the Company are mainly placed with those banks of high credit rating, the Company expects no significant credit risk on bank deposits. As for trade receivables, the Company establishes relevant policies to control credit risk exposure. The Company, based on financial position of debtors, their credit records, market conditions and other factors, makes assessment on debtors’ credit quality and sets relevant limit on amount of debt and credit term. The maximum credit risk exposure assumed by the Company equals to the sum of carrying value of every financial asset in the balance sheet. The Company provides no guarantee that may lead it to be exposed to credit risks. (2) Liquidity risk Liquidity risk refers to the risk of capital shortage of the Company when performing settlement obligation via delivery of cash or other financial assets. When managing liquidity risk, the Company maintains and monitors such cash and cash equivalents as deemed adequate by the management, so as to satisfy its operation needs and minimize influence of fluctuation of cash flow. Management of the Company monitors application of bank borrowings to make sure it complies with relevant borrowing agreements. 2. Capital management The capital management policy of the Company is designed to ensure sustainable operation Of the Company so as to bring shareholders return and benefit other stakeholders, and to minimize capital cost by maintaining optimal capital structure. In order to maintain and adjust capital structure, the Company may adjust share dividend paid to shareholders or issue new shares. The Company monitors capital structure based on gearing ratio (total liabilities divided by total assets). As at 30 June 2020, the gearing ratio of the Company was 73.71% (31 December 2019: 81.76%) XI. Disclosure of fair value 1. Ending fair value of the assets and liabilities measured by fair value In RMB Ending fair value Item First-order Second-order Third-order Total I. Sustaining measured by -- -- -- -- fair value II. Non-sustaining -- -- -- -- measured by fair value 116 2. Recognized basis for the market price sustaining and non-persistent measured by fair value on first-order Nil 3. Valuation technique and qualitative and quantitative information on major parameters for the fair value measure sustaining and non-persistent on second-order Nil 4. Valuation technique and qualitative and quantitative information on major parameters for the fair value measure sustaining and non-persistent on third-order Nil 5. Adjustment information and sensitivity analysis of unobservable parameters for the fair value measure sustaining and non-persistent on third-order Nil 6. Sustaining items measured by fair value, as for the conversion between at all levels, reasons for conversion and policy for conversion time point Nil 7. Changes of valuation technique in the Period Nil 8. Financial assets and liability not measured by fair value Nil 9. Other Nil XII. Related party and related transactions 1. Parent company of the enterprise Share-holding ratio Voting right ratio on Parent company Registered place Business nature Registered capital on the enterprise for the enterprise parent company 117 Explanation on parent company of the enterprise The Company has no parent company so far Ultimate controller of the Company: nil Other explanation: Controlling shareholder and actual controller of the Company have changed on 20 February 2017. Before changed, the first majority shareholder of the Company was Shenzhen Guosheng Energy Investment Development Co., Ltd., actual controller was Mr. Ji Hanfei; the Company has no actual controller and controlling shareholder after changed. Found more in the Annual Report 2016 released on 27 April 2017 and “Reply on Surveillance Attention Letter on CBC from Shenzhen Stock Exchange” released on 26 May 2017 2. Subsidiary of the Enterprise Found more in Note IX-1 3. Associated enterprise and joint venture Found more in Note IX-3 Other associated enterprise and joint venture that have related transaction with the Company in the Period or occurred in previous period Joint venture or associated enterprise Relationship with the Company Other explanation 4. Other related party Other related party Relationship with the Company Shenzhen Guosheng Energy Investment Development Co., Ltd. The first majority shareholder Shenzhen Zuanjinsen Jewelry Co., Ltd. Subsidiary Xinsen Jewelry Shareholder Fuzhou Zuanjinsen Jewelry Co., Ltd. Subsidiary Xinsen Jewelry Shareholder Other explanation 11.52 percent shares of the Company are held by Shenzhen Guosheng Energy Investment Development Co., Ltd. Shenzhen Zuankinson Jewelry and Gold Co., Ltd. holds 35% equity of Shenzhen Xinsen Jewelry and Gold Supply Chain Co., Ltd., a subsidiary of the company. 5. Related transaction (1) Goods purchasing, labor service providing and receiving Goods purchasing/labor service receiving In RMB Transaction Approved transaction Whether more than Related party Current Period Last Period content amount the transaction amount 118 Goods sold/labor service providing In RMB Related party Transaction content Current Period Last Period Explanation on goods purchasing, labor service providing and receiving Nil (2) Related trusteeship/contract and delegated administration/outsourcing Trusteeship/contract In RMB Income from Client/ Entrusting party/ Yield pricing Assets type Starting date Maturity date trusteeship/contra contract-out party contractor basis ct Explanation on related trusteeship/contract Nil Delegated administration/outsourcing In RMB Pricing basis of trustee Client/ Entrusting party/ trustee fee/outsourcing Assets type Starting date Maturity date contract-out party contractor fee/outsourcing fee recognized in fee the Period Explanation on related administration/outsourcing Nil (3) Related lease As a lessor for the Company: In RMB Lease income in recognized in Lease income in recognized last Lessee Assets type the Period the Period As a lessee for the Company: In RMB Lease income in recognized in Lease income in recognized last Lessor Assets type the Period the Period Explanation on related lease Nil (4) Related guarantee As a guarantor for the Company 119 In RMB Guarantee completed Secured party Amount guarantee Starting date Maturity date (Y/N) As a secured party for the Company In RMB Guarantee completed Guarantor Amount guarantee Starting date Maturity date (Y/N) Explanation on related guarantee Nil (5) Borrowed funds of related party In RMB Related party Borrowed funds Starting date Due date Note Borrowing Lending (6) Assets transfer and debt restructuring of related party In RMB Related party Transaction content Current Period Last Period (7) Remuneration of key manager In RMB Item Current Period Last Period Remuneration of key manager 728,400.00 818,870.00 (8) Other related transactions The Company disclosed the "Announcement on the Estimated Daily Related Transactions" (Announcement No.: 2019-022) on December 17, 2019. According to the needs of business development, Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., a holding subsidiary of the Company, planned to purchase raw materials and sell goods to Shenzhen Zuankinson Jewelry and Gold Co., Ltd., it was estimated that the total amount of daily related transactions in the next 12 months would not exceed 10 million yuan (a single transaction amount would not exceed 3 million yuan). The total amount of related transactions between the company's subsidiary and Shenzhen Zuankinson Jewelry and Gold Co., Ltd. in 2019 was 2.75 million yuan, and there were no related transactions during the reporting period. As of the reporting period, the total amount of the related transactions quota was 2.75 million yuan, which did not exceed the announced quota. 120 6. Receivable/payable items of related parties (1) Receivable item In RMB Ending balance Opening Balance Item Related party Book balance Bad debt provision Book balance Bad debt provision (2) Payable item In RMB Item Related party Book Ending balance Book Opening Balance Shenzhen Guosheng Energy Other account payable Investment Development Co., 6,500,000.00 6,500,000.00 Ltd. Fuzhou Zuanjinsen Jewelry Other account payable 2,000,000.00 0 Co., Ltd. 7. Commitments of related party Nil 8. Other Nil XIII. Share-based payment 1. General share-based payment □Applicable √Not applicable 2. Share-based payment settled by equity □Applicable √Not applicable 3. Share-based payment settled by cash □Applicable √Not applicable 4. Revised and termination on share-based payment Nil 121 5. Other Nil XIV. Commitment or contingency 1. Important commitments Important commitments in balance sheet date Nil 2. Contingency (1) Contingency on balance sheet date Nil (2) For the important contingency not necessary to disclosed by the Company, explained reasons The Company has no important contingency that need to disclosed 3. Other Nil XV. Events after balance sheet date 1. Important non-adjustment items In RMB Impact on financial status and Reasons on un-able to estimated Item Content operation results the impact number 2. Profit distribution In RMB 3. Sales return Nil 4. Other events after balance sheet date Nil 122 XVI. Other important events 1. Previous accounting errors collection (1) Retrospective restatement In RMB Impact items of statement Correction content Treatment procedures Cumulative impacted number during a comparison (2) Prospective application Reasons for prospective application Correction content Approval procedures adopted 2. Debt restructuring Nil 3. Assets replacement (1) Non-monetary assets change Nil (2) Other assets replacement Nil 4. Pension plan Nil 5. Discontinued operations In RMB Discontinued operations profit Income tax Item Revenue Expenses Total Profit Net profit attributable to expenses owners of parent company Other explanation Nil 123 6. Segment (1) Recognition basis and accounting policy for reportable segment The reporting division of the company is a business unit that provides different products or services. Since various businesses require different technologies and market strategies, the company respectively and independently manages the production and operation activities of each reporting division and evaluates its operating results separately to determine the allocation of resources to it and evaluate its performance. The company has 2 reporting divisions, namely: —Group company business division. —Jewelry gold business division. Assets are allocated according to the operation of the divisions and the location of the assets, and liabilities are allocated according to the operation of the divisions. The company has established a special jewelry gold business subsidiary for this purpose. Accounting of income, costs, and expenses (2) Financial information for reportable segment In RMB Bicycle lithium battery Jewelry Gold Business Item materials and other Offset between segments Total Division business segments Main business income 25,097,387.76 17,558,967.45 42,656,355.21 Main business cost 22,650,522.20 13,450,243.45 36,100,765.65 The total profit 1,575,989.52 2,014,663.14 3,590,652.66 Income tax expense 107,598.95 62,439.81 170,038.76 Net profit 1,468,390.57 1,952,223.33 3,420,613.90 Total assets 24,969,854.44 74,871,717.41 25,347,765.20 74,493,806.65 Total liabilities 3,235,922.24 64,008,072.89 12,337,385.47 54,906,609.66 Shareholders' equity 21,733,932.20 10,863,644.52 13,010,379.73 19,587,196.99 Total (3) The Company has no reportable segments, or unable to disclose total assets and total liability for reportable segments, explain reasons Nil (4) Other explanation Nil 124 7. Major transaction and events makes influence on investor’s decision Nil 8. Other Nil XVII. Principle notes of financial statements of parent company 1. Account receivable (1) By category In RMB Ending balance Opening Balance Book balance Bad debt provision Book balance Bad debt provision Category Book Accrual Accrual Book value Amount Ratio Amount value Amount Ratio Amount ratio ratio Account receivable with bad debt 3,542,60 1,890,78 1,651,822 6,975,081 2,092,524 4,882,557.2 11.43% 53.37% 19.92% 30.00% provision accrual by 3.75 1.13 .62 .75 .53 2 single basis Including: Accounts with single significant amount 5,035,603 1,510,681 3,524,922.6 but with bad debts 14.38% 30.00% .75 .13 2 provision accrued individually Accounts with single minor amount but 3,542,60 1,890,78 1,651,822 1,939,478 581,843.4 1,357,634.6 with bad debts 11.43% 53.37% 5.54% 30.00% 3.75 1.13 .62 .00 0 0 provision accrued individually Account receivable with bad debt 27,447,7 82,343.2 27,365,41 28,045,11 27,960,979. 88.57% 0.30% 80.08% 84,135.34 0.30% provision accrual by 53.75 6 0.49 4.82 48 portfolio Including: Aging analysis 27,447,7 82,343.2 27,365,41 28,045,11 27,960,979. 88.57% 0.30% 80.08% 84,135.34 0.30% method 53.75 6 0.49 4.82 48 125 30,990,3 1,973,12 29,017,23 35,020,19 2,176,659 32,843,536. Total 100.00% 6.37% 100.00% 6.22% 57.50 4.39 3.11 6.57 .87 70 Bad debt provision accrual on single basis: The individual amount is not significant In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Guangdong Xinlingjia Expected to be difficult 1,149,000.00 380,100.00 33.08% New Energy Co., Ltd. to recover Shenzhen Jiahaosong Expected to be difficult 2,393,603.75 1,510,681.13 63.11% Technology Co., Ltd. to recover Total 3,542,603.75 1,890,781.13 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Bad debt provision accrual on portfolio: Aging analysis In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Within one year (one year 23,493,804.70 70,481.41 0.30% included) 1-2 years (two years included) 3,953,949.05 11,861.85 0.30% Total 27,447,753.75 82,343.26 -- Explanation on portfolio basis: Nil Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: If the provision for bad debts of account receivable is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable By account age In RMB Account age Ending balance 126 Within one year (one year included) 23,493,804.70 Within one year 23,493,804.70 1-2 years 7,496,552.80 Total 30,990,357.50 (2) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening Balance Collected or Ending balance Accrual Charge-off Other reversal Bad debt provision for 2,176,659.87 203,535.48 1,973,124.39 accounts receivable Total 2,176,659.87 203,535.48 1,973,124.39 Including important amount of bad debt provision collected or reversal in the period: In RMB Enterprise Amount collected or reversal Collection way Shenzhen Boyineng Technology Co., Ltd. 201,743.40 Bank debt collection Total 201,743.40 -- At the end of the previous year, for those estimated to be difficult to recover, 30% bad debt provision was accrued based on the insignificant single amount and a separate provision for bad debts. During this year, the company collected payment for several times and by various methods. After the impairment test, the possibility of recoverable was greatly increased, so the provision for bad debts that had been accrued was reversed. (3) Account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Explanation on account receivable charge-off: 127 (4) Top five account receivables collected by arrears party at ending balance In RMB Ending balance of accounts Proportion of total closing Ending balance of bad bet Name receivable balance of accounts receivable provision Guangshui Jiaxu Energy 12,758,950.90 41.17% 38,276.85 Technology Co., Ltd. Zhengzhou Guiguan Tech. 5,218,756.80 16.84% 15,656.27 Trade. Co., Ltd Shenzhen Weiterui New Energy 3,424,471.05 11.05% 10,273.41 Technology Co., Ltd. Jinan Yuxintai Sales Co., Ltd. 2,935,693.00 9.47% 8,807.08 Shenzhen Jiahaosong 2,393,603.75 7.73% 1,510,681.13 Technology Co., Ltd. Total 26,731,475.50 86.26% (5) Account receivable derecognition due to transfer of financial assets (6) Assets and liability resulted by account receivable transfer and continuous involvement Other explanation: 2. Other account receivable In RMB Item Ending balance Opening Balance Other account receivable 124,488.41 485,062.44 Total 124,488.41 485,062.44 (1) Interest receivable 1) Category In RMB Item Ending balance Opening Balance 2) Important overdue interest Impairment (Y/N) and Borrower Ending balance Overdue time Overdue reason judgment basis 128 Total 0.00 -- -- -- Other explanation: Nil 3) Accrual of bad debt provision □Applicable √Not applicable (2) Dividend receivable 1) Category In RMB Item (or invested company) Ending balance Opening Balance 2) Important dividend receivable with over one year aged In RMB Item (or invested Causes of failure for Impairment (Y/N) and Ending balance Account age company) collection judgment basis Total 0.00 -- -- -- 3) Accrual of bad debt provision □Applicable √Not applicable Other explanation: (3) Other account receivable 1) By nature In RMB Account nature Book Ending balance Book Opening Balance Deposit or margin 71,163.00 484,822.00 Payment for equipment 11,400.00 11,400.00 Reserve 54,000.00 2,000.00 Total 136,563.00 498,222.00 2) Accrual of bad debt provision In RMB 129 Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on January 1, 13,159.56 13,159.56 2020 Balance on January 1, 2020 in the current —— —— —— —— period Current reversal 1,084.97 1,084.97 Balance on June 30, 2020 12,074.59 12,074.59 Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable By account age In RMB Account age Ending balance Within one year (one year included) 124,663.00 Within one year 124,663.00 2-3 years 200.00 Over 3 years 11,700.00 3-4 years 11,700.00 Total 136,563.00 3) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening Balance Collected or Ending balance Accrual Write off Other reversal Bad debt provision for 13,159.56 1,084.97 12,074.59 other receivables Total 13,159.56 0.00 1,084.97 0.00 0.00 12,074.59 Nil Important amount of bad debt provision switch-back or collection in the period: In RMB Enterprise Amount switch-back or collection Collection way 130 Total 0.00 -- Nil 4) Other account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major other account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Total -- 0.00 -- -- -- Other Explanation on account receivable charge-off Nil 5) Top 5 other account receivable collected by arrears party at ending balance In RMB Proportion in total other account Ending balance of Enterprise Nature Ending balance Account age receivables at bad debt provision period-end Shenye Pengji Deposit or margin 60,222.00 Within 1 year 44.10% 180.67 (Group) Co., Ltd. Zeng Yuehua Reserve 20,000.00 Within 1 year 14.65% 60.00 Shenzhen Hongkang Instrument Equipment 11,400.00 3-4 years 8.35% 11,400.00 Technology Co., Ltd. Shenzhen Pengji Property Management Deposit or margin 10,441.00 Within 1 year 7.65% 31.32 Service Co., Ltd. Lin Weiwen Reserve 10,000.00 Within 1 year 7.32% 30.00 Total -- 112,063.00 -- 82.06% 11,701.99 6) Account receivable with government grants involved In RMB Time, amount and basis Enterprise Government grants Ending balance Ending account age of amount collection 131 estimated Nil 7) Other account receivable derecognition due to financial assets transfer Nil 8) Assets and liability resulted by other account receivable transfer and continuous involvement Nil Other explanation: Nil 3. Long-term equity investment In RMB Ending balance Opening Balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Investment for 14,400,000.00 1,389,620.27 13,010,379.73 5,625,000.00 1,389,620.27 4,235,379.73 subsidiary Total 14,400,000.00 1,389,620.27 13,010,379.73 5,625,000.00 1,389,620.27 4,235,379.73 (1) Investment for subsidiary In RMB Changes in the period (+, -) Opening Ending balance The invested Accrual of Ending balance Balance (Book Additional Capital of impairment entity impairment Other (Book value) value) investment reduction provision provision Shenzhen Emmelle 10,379.73 10,379.73 1,389,620.27 Industrial Co., Ltd. Shenzhen Xinsen Jewelry 4,225,000.00 8,775,000.00 13,000,000.00 Gold Supply Chain Co., Ltd. Total 4,235,379.73 8,775,000.00 0.00 0.00 0.00 13,010,379.73 1,389,620.27 132 (2) Investment for associates and joint venture In RMB Changes in the period (+, -) Ending Other Cash Opening Investme Accrual Ending balance Additiona comprehe dividend Funded Balance nt gains Other of balance of l Capital nsive or profit enterprise (Book recognize equity impairme Other (Book impairme investmen reduction income announce value) d under change nt value) nt t adjustmen d to equity provision provision t issued I. Joint venture Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 II. Associated enterprise Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (3) Other explanation Nil 4. Operation revenue and operation cost In RMB Current Period Last Period Item Revenue Cost Revenue Cost Main business 9,271,106.93 8,988,379.05 21,426,406.12 20,428,856.90 Other business 6,679,717.49 3,645,817.35 3,977,972.72 3,241,165.72 Total 15,950,824.42 12,634,196.40 25,404,378.84 23,670,022.62 Information relating to revenue: In RMB Category Branch 1 Branch 2 Total Including: Including: Including: Including: Including: Including: Including: 133 Information relating to performance obligations: Nil Information related to the transaction price apportioned to the remaining performance obligations: The amount of income corresponding to the performance obligations that have been signed at the end of this reporting period but have not yet been fulfilled or have not done with fulfillment is 0.00 yuan, among them, yuan of revenue is expected to be recognized in YEAR, yuan of revenue is expected to be recognized in YEAR, and yuan of revenue is expected to be recognized in YEAR. Other explanation: Nil 5. Investment income In RMB Item Current Period Last Period 6. Other Nil XVIII. Supplementary Information 1. Current non-recurring gains/losses √Applicable □Not applicable In RMB Item Amount Note Gains/losses from the disposal of 24,936.44 non-current asset Switch back of the impairment provision for account receivable with impairment test on 201,743.40 single basis and contract assets Other non-operating income and expenditure 742,112.11 except for the aforementioned items Less: Impact on income tax 242,197.99 Impact on minority shareholders’ equity 126,858.03 Total 599,735.93 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons □Applicable √Not applicable 134 2. ROE and EPS Earnings per share Profits during report period Weighted average ROE Basic earnings per share Diluted earnings per (RMB/Share) share (RMB/Share) Net profits belong to common stock 32.84% 0.0051 0.0051 stockholders of the Company Net profits belong to common stock stockholders of the Company after 25.80% 0.0040 0.0040 deducting nonrecurring gains and losses 3. Difference of the accounting data under accounting rules in and out of China (1) Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) □Applicable √Not applicable (2) Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) □Applicable √Not applicable (3) Explain accounting difference over the accounting rules in and out of China; as for the difference adjustment for data audited by foreign auditing organ, noted the name of such foreign organ Nil 4. Other Nil 135 Section XII. Documents available for reference 1. Accounting statement carrying the signatures and seals of the legal representative, person in charge of accounting and person in charge of accounting organ. 2. Originals documents of the Company and manuscripts of public notices that disclosed in the newspaper designated by CSRC in the report period. 3. English version of the Semi-Annual Report 2020. Board of Directors of Shenzhen China Bicycle Company (Holdings) Limited 27 August 2020 136