Shenzhen China Bicycle Company (Holdings) Limited Annual Report of 2020 April 2021 1 Section I. Important Notice, Contents and Interpretation Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents. Li Hai, Principal of the Company, Sun Longlong, person in charge of accounting works and Zhong Xiaojin, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2020 Annual Report is authentic, accurate and complete. All directors are attended the Board Meeting for report deliberation. The Company plans not to distribute cash dividends, not to send bonus shares, and no reserve capitalizing. 2 Content Section I Important Notice, Content and Interpretation ........................................ 2 Section II Company Profile and Main Financial Indexes ....................................... 5 Section III Summary of Company Business ........................................................... 10 Section IV Discussion and Analysis of the Operation ............................................ 16 Section V Important Events ..................................................................................... 33 Section VI Changes in shares and shareholders ..................................................... 44 Section VII Preferred Stock ...................................................................................... 53 Section VIII Convertible Bonds...............................................................................54 Section IXParticulars about Directors, Supervisors and Senior Executives ....... 55 Section X Corporate Governance ............................................................................ 63 Section XI Corporate Bond......................................................................................69 Section XII Financial report ..................................................................................... 70 Section XIII Documents available for reference .................................................. 220 3 Interpretation Items Refers to Contents 4 Section II. Company Profile and Main Financial Indexes I. Company information Short form of the stock *ST Zhonghua –A, *ST Zhonghua –B Code for share 000017, 200017 Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in 深圳中华自行车(集团)股份有限公司 Chinese) Short form of the Company 深中华 (in Chinese) Foreign name of the Company Shenzhen China Bicycle Company (Holdings) Limited (if applicable) Short form of foreign name of CBC the Company (if applicable) Legal representative Li Hai Registrations add. No. 3008, Buxin Rd., Shenzhen Code for registrations add 518019 Offices add. 501 Zhongxin Technology Building, No.31 Bagua Rd., Bagualing, Futian District, Shenzhen Codes for office add. 518029 Company’s Internet Web Site www.cbc.com.cn E-mail dmc@szcbc.com II. Person/Way to contact Secretary of the Board Rep. of security affairs Name Sun Longlong Yu Xiaomin, Zhong Xiaojin 501 Zhongxin Technology Building, No.31 501 Zhongxin Technology Building, No.31 Contact add. Bagua Rd., Bagualing, Futian District, Bagua Rd., Bagualing, Futian District, Shenzhen Shenzhen Tel. 0755-25516998,28181666 0755-25516998,28181666 Fax. 0755-28181009 0755-28181009 E-mail dmc@szcbc.com dmc@szcbc.com III. Information disclosure and preparation place Newspaper appointed for information disclosure Securities Times; Hong Kong Commercial Daily 5 Website for annual report publish appointed by CSRC Juchao Website (www.cninfo.com.cn) 501 Zhongxin Technology Building, No.31 Bagua Rd., Bagualing, Futian Preparation place for annual report District, Shenzhen IV. Registration changes of the Company Organization code 914403006188304524 Changes of main business since listing (if Main products or services provided at present: Emmelle bicycle, electric bicycle, applicable) lithium battery materials and gold jewelry. 1. In March 1992, the Stock of the Company was listed in Shenzhen Stock Exchange, and 23.28% equity of the Company was held by Shenzhen Lionda Holding Co., Ltd. and Hong Kong Dahuan Bicycle Co., Ltd respectively. 2. In March 2002, legal shares 13.58% A-stock of the Company was obtained by China Huarong Asset Management Co., Ltd. through court auction, and became the first majority shareholder of the Company. 3. On 13 November 2006, the 65,098,412 legal shears of CBC held by Huarong Company was acquired by Shenzhen Guosheng Energy Investment Development Co., Ltd. via the “Equity Transfer Agreement” signed, and first majority of the Company comes to Guosheng Energy. Guosheng Energy is the wholly-owned subsidiary of National Investment, actual controller was Zhang Yanfeng. 4. In January Previous changes for controlling 2011, controlling shareholder of Shenzhen Guosheng Energy Investment Development shareholders (if applicable) Co., Ltd.—Shenzhen National Investment Development Co., Ltd. entered into equity transfer agreement with Mr. Ji Hanfei, 100% equity of Guosheng Energy was transfer to Mr. Ji Hanfei with price of 70 million. Shenzhen Guosheng Energy Investment Development Co., Ltd. Shenzhen Guosheng Energy Investment Development Co., Ltd. holds 63,508,747 A-stock of the Company with 11.52% in total share capital of the Company. 5. On February 20, 2017, Ji Hanfei and Guosheng Energy made an “Explanation” to abandon the actual control of the Company, after Ji Hanfei made the declaration to abandon the actual control of the Company, the investment from CBC by Mr. Ji changed to general investment instead of actual controlling, and the actual controller of the Company changed from Ji Hanfei to no actual controller. V. Other relevant information CPA engaged by the Company Name of CPA Baker Tilly China Certified Public Accountants (LLP) Offices add. for CPA A-1 and A-5 of No.68 Building, No.19 Chegongzhuang West Road, Haidian District Beijing Signing Accountants Chen Zhigang, Zhang Lei Sponsor engaged by the Company for performing continuous supervision duties in reporting period □ Applicable √ Not applicable Financial consultant engaged by the Company for performing continuous supervision duties in reporting period □ Applicable √ Not applicable 6 VI. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data or not □ Yes √ No Changes over last year 2020 2019 2018 (+,-) Operating income (RMB) 117,857,480.17 76,022,687.75 55.03% 119,906,950.34 Net profit attributable to shareholders of the listed company 3,785,834.68 -7,186,905.64 155.44% -1,591,968.91 (RMB) Net profit attributable to shareholders of the listed company 3,071,751.90 -7,370,499.83 143.29% -1,837,914.46 after deducting non-recurring gains and losses (RMB) Net cash flow arising from 3,942,228.96 -13,791,941.34 128.58% -9,479,474.16 operating activities (RMB) Basic earnings per share 0.0069 -0.0130 155.38% -0.0029 (RMB/Share) Diluted earnings per share 0.0069 -0.0130 155.38% -0.0029 (RMB/Share) Weighted average ROE 42.01% -53.69% 95.70% -10.54% Changes over end of Year-end of 2020 Year-end of 2019 Year-end of 2018 last year (+,-) Total assets (RMB) 91,742,769.99 62,733,602.58 46.24% 73,242,960.17 Net assets attributable to shareholder of listed company 10,905,230.98 7,119,396.30 53.18% 14,306,301.94 (RMB) The lower of the company’s net profit before or after deduction of non-recurring profit (gain)/loss for the last three financial years is negative, and the audit report for the latest year indicates that there is uncertainty about the company’s ability to continue as a going concern □Yes √No The lower of the net profit before or after deduction of non-recurring profit (gain)/loss is negative □Yes √No VII. 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 7 The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period. 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 The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or Chinese GAAP (Generally Accepted Accounting Principles) in the period. VIII. Quarterly main financial index In RMB Q1 Q2 Q3 Q4 Operating income 7,434,449.73 35,221,905.48 40,216,980.94 34,984,144.02 Net profit attributable to -591,902.33 3,389,545.83 2,465,571.65 -1,477,380.47 shareholders of the listed company Net profit attributable to shareholders of the listed company -692,274.89 2,890,182.46 2,379,318.61 -1,505,474.28 after deducting non-recurring gains and losses Net cash flow arising from 459,865.86 890,530.08 1,866,001.79 725,831.23 operating activities Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial index disclosed in the company’s quarterly report and semi-annual report □Yes √ No IX. Items and amounts of extraordinary profit (gains)/loss √Applicable □ Not applicable In RMB Item 2020 2019 2018 Note Gains/losses from the disposal of non-current asset (including the write-off 24,936.44 -85,730.05 that accrued for impairment of assets) Switch-back of provision of impairment of account receivable and contractual assets 219,118.00 which are treated with separate depreciation test Other non-operating income and expenditure 754,370.46 194,691.02 261,141.96 except for the aforementioned items 8 Less: Impact on income tax 0.18 48,672.76 98,632.48 Impact on minority shareholders’ 65,223.94 -37,575.93 49,951.88 equity (post-tax) Total 714,082.78 183,594.19 245,945.55 -- 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 In reporting period, the Company has no particular about 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 9 Section III. Summary of Company Business I. Main businesses of the company in the reporting period 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” During the reporting period, the company’s main businesses were bicycles and lithium battery materials business, and jewelry gold business. (1) Bicycles and lithium battery materials business included the production, assembly, procurement, and sales of bicycles and electric bicycles, and purchase, sales, and commissioned processing of lithium battery materials, etc.; (2) The gold jewelry business mainly provided supply chain management and services in the vertical field of gold jewelry. The company connected with downstream gold jewelry brands, purchased gold and diamonds according to their product needs, and then commissioned gold jewelry processing plants for processing, made product certification for the processed finished products after passing the inspection, and delivered them to downstream customers. Through the integration of upstream supplier resources and downstream customer resources, the turnover rate of gold jewelry products in the upstream and downstream was improved, the cost of circulation links was reduced, and the overall competitive advantage of the upstream and downstream was formed. Since the company’s jewelry-related operating revenue in 2020 accounted for more than 30% of the company’s audited revenue for the most recent fiscal year, the company must comply with the disclosure requirements of "Shenzhen Stock Exchange Industry Information Disclosure Guidelines No. 11 - Listed Companies Engaged in Jewelry Related Business", the specific disclosure requirements are as follows: 1. The company's main business models during the reporting period 1.1 Procurement model The upstream raw material suppliers of the company’s gold jewelry supply chain business were mainly diamonds and gold, of which the diamond suppliers were mainly source producers or wholesalers from India or Hong Kong, and domestic mature diamond wholesalers (generally members of the Shanghai Diamond Exchange) ), gold was mainly purchased from the Shanghai Gold Exchange through the company's membership qualifications at Shanghai Gold Exchange. The company has established professional procurement department and team to be responsible for the procurement of diamond products and jewellery. The specific procurement models varied according to customer needs. 1.2. Production model By integrating upstream commissioned processing plants, the company outsourced the production of products ordered by customers to professional jewelry manufacturers to give full play to their professional and scale effect. In view of the current situation and characteristics of domestic jewelry processing enterprises, the company established a set of effective supplier management mechanisms and evaluation standards to achieve a benign interaction between the production system of outsourced manufacturers and the company's business development. 1.3 Sales model According to the annual order planning and regular procurement requirements of brand retailers, the company provided B-end 10 customers with various forms of supply chain management services such as spot procurement, order production, and customized development, so as to minimize product inventory and improve the supply chain effectiveness for customers. Spot procurement: Organized the goods through the integration of upstream factories and exhibition halls and suppliers' product styles and spot resources, and provided corresponding product structure according to the customer's brand characteristics and terminal market needs; Order production: Customers placed orders to the company according to their own needs, and the company purchased raw materials and subcontracted processing to form finished products and sell them to customers; Customized development: According to the characteristics of their own brands and future development needs, customers entrusted the company to develop and design the product styles, and produce finished products to sell to customers. 2. The development trend and competitive landscape of the industry in which the company is located Regarding the gold and jewelry industry, in the context of our country's sustained and rapid economic growth and rising per capital income, the consumption of jewelry not only meets the demand for value preservation, but also is the need for people to pursue fashion and show their individuality. At present, our country is one of the world's largest, most important, and fastest-growing jewelry markets. The consumption of many jewelry categories is in the front rank of the world, among them, the sales of gold, silver, platinum, jade, pearls and other products rank first in the world. Our country's jewellery gold industry market has formed a tripartite pattern of domestic, Hong Kong and foreign brands, and the market share continues to concentrate. At present, our country's per capital jewelry consumption is still far below that of developed countries, and our country's jewelry gold consumption market still has a lot of room for improvement, but the market is highly competitive. In August 2019, the company invested in the establishment of a holding subsidiary Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., and began to get involved in the jewelry gold supply chain business. 2.1. Industry development trend (1) The market scale is increasing year by year, and consumers in third- and fourth-tier cities have become a potential force in jewelry consumption The market scale of our country's jewelry industry has been increasing year by year, and the industry growth rate has shown a fluctuation trend. From 2014 to 2019, the market size of our country's jewelry industry increased from 567.4 billion yuan to 750.3 billion yuan. Since 2017, the growth rate of our country's jewelry industry has also increased year by year. In 2019, the growth rate of the jewelry industry reached 8%. According to Frost&Sullivan data, the growth rate of the jewelry market in third-tier and lower-tier cities from 2010 to 2015 reached up to 45.3%, far exceeding the level of 31.9% in first-tier cities. According to DeBeers data, in 2016, our country's total diamond consumption/total ratio in second-tier cities accounted for 37%/30%; the total diamond consumption/total ratio in third-tier cities accounted for 37%/43%, both exceeding the level of first-tier cities. In the future, third- and fourth-tier cities will have a vast market space and show huge growth potential, and the third- and fourth-tier cities will become the main market for the growth of jewelry companies in the future. The layout of the third- and fourth-tier jewelry terminal channels has become an important strategic choice for jewelry companies to broaden their performance territory, expand their brand influence, and enhance their company strength. (2) The gold and jewellery industry is in a mature stage, and there is still much room for improvement in domestic per capita consumption Observing from the growth rate of the industry scale, the global and domestic gold and jewelry industries are already in a period of obvious maturity. According to Euromonitor data, the global gold and jewelry industry scale in 2019 was US$352.5 billion/+0.6%, with a 5-year CAGR of 2.5%; during the same period, the domestic gold jewelry industry was US$109.7 billion, with a 5-year 11 CAGR of 4.7% (Affected by the epidemic in 2020, the scale of the industry has declined significantly, here is the calculation selected from 2014-2019). The scale of the global and domestic gold and jewelry industry is still growing, but the growth center has moved down significantly, and the industry is already in an obviously maturity period. Mainland China has become the world’s largest regional market for jewelry consumption, according to Euromonitor data, the scale of jewelry consumption in Mainland China reached US$109.7 billion in 2019, making it the world’s largest regional market, with the United States and India respectively accounting for US$73.1 billion/69.1 billion U.S. dollars came next. However, from the perspective of per capital jewelry consumption, the level in mainland China is still significantly lower. In 2019, the per capita jewelry consumption in mainland China was 73.4 US dollars, while the top three Hong Kong, China, the United States, and Canada were 785.9/222.6/163.6 US dollars respectively. The per capital consumption in Hong Kong, China reflects the ceiling that Chinese people who love jewelry can reach when their income is relatively high. If this is used as a time comparison, there is still a lot of room for improvement in per capital jewelry consumption in mainland China. From 2011 to 2019, the per capital consumption of jewellery in mainland China increased from US$44 to US$73.4, with a CAGR of 6.6% (Affected by the epidemic in 2020, per capital consumption has declined significantly, here is the calculation selected from 2014-2019). With the increase in the level of living income and the penetration of jewelry consumption concepts, there is still ample room for the future growth of the jewelry consumer market in mainland China. (3) Consumers learn about jewelry brands and products online, forming online and offline linkages The Internet era has provided a more convenient and more extensive way of sharing information, which has guided consumers' needs and choices. Jewelry brand companies provide customers with consumer strategies through major new media sharing platforms at home and abroad, such as Xiaohongshu, Instagram, Tik Tok, etc., so as to create consumer demand and realize consumer guidance. Realizing the effective combination of online and offline through information technology makes it easier for consumers to understand product information, share product experience, and have easy and convenient shopping. According to Taobao live broadcast data, in 2018, jewellery ranked first in the industry with the highest turnover driven by live broadcasts. The development of sharing platforms and e-commerce platforms has changed the consumption habits of consumers, especially the younger generation. Consumers can more easily understand product features and share user experience online, which has become an important trend in product promotion and future sales. (4) Brand and design capabilities will become the new growth engine of the jewelry industry As millennials gradually become an important force in the consumer market, changing consumer concepts are quietly affecting the trend of the jewelry market, and the consumer preferences of the new generation of consumer subjects are leading the market trend. Compared with traditional consumers, emerging consumer groups pay more attention to the design, craftsmanship, style and brand value of jewellery products, hoping to meet their needs to show their taste and personality. The daily consumption demand of such consumers for self-wearing and decoration and self-rewarding has increased. The demand for jewelry is not limited to major festivals or wedding celebrations, the younger generation prefers to use jewelry for self-rewarding, expressing love, or designing instead of whether it is full gold or not, consumer behavior tends to be more routine, which effectively increases the repurchase rate of jewelry products. By focusing on improving the decorative value of products, satisfying consumers' needs for aesthetic and individual expression, and seeking higher brand premiums and design premiums, branding and design are expected to bring new growth momentum to the jewelry industry. (5) Supply chain management will become an important operating method for jewelry companies From the perspective of the supply chain of the jewelry industry, it mainly involves raw material mining, processing and smelting, rough processing, jewelry making, warehousing, distribution and sales. In recent years, the division of labor in the jewelry industry has deepened and market competition has become increasingly fierce. The premiums for design and development, marketing networks and after-sales services have continued to increase, and more and more profits have been concentrated in the terminal. 12 Many companies optimize their supply chain by outsourcing production links with low gross profit margin and large investment, so as to achieve the purpose of shortening the cash turnover time and improving the overall profitability. Supply chain management has become an important means for jewellery companies to improve their operational capabilities. 2.2. The company's competitive advantages in the jewelry and gold business (1) High-quality upstream supplier system At present, the company has established relatively stable cooperative relationships with major domestic and foreign diamond suppliers and processors, and has advantages in raw material procurement costs, order production cycles and product quality control, and can continuously reduce supply chain costs and operational efficiency. (2) Diversified downstream market channels and customer resources The company is currently actively expanding its gold jewellery customers. In addition to clear order customers, it is currently negotiating business cooperation with a number of domestic jewellery brands. The above-mentioned customers include three types of customers, of which type A customers are well-known brand customers in the country, with more than 500 retail stores, type B customers are small and medium/regional/segmented brands, with 300-500 retail stores; type C customers are small and medium brands, with 50-100 retail stores. (3) Improve the industrial chain of production design The company has a one-stop industrial chain docking module of design, production, processing, testing, and wholesale. Brand owners can rely on our jewelry processing resource advantages and hand over lower value-added links such as manufacturing and distribution to the company, thus focus on the brand operation and sales section with higher added value. The outsourcing of production and design can improve the homogeneity of gold jewelry products. (4) Closed-loop business process and risk control system The company has formulated strict business internal control processes such as supplier access standards, customer evaluation systems, full-process order tracking systems, and purchase price comparison systems, achieved the three-flow closed-loop control of capital flow and information flow and logistics through the integrated service platform of the supply chain system and the integrated solutions to funds management, and realized multi-level risk control. In the bicycle and lithium battery materials industry, as a traditional manufacturing industry, the bicycle industry continues the dilemma of rising labor costs, manufacturing costs, capital costs, and material costs. The implementation of the new national standards for safety technical specifications of electric bicycle in April 2019 accelerated the reshuffle of the industry and formed a new round of industry shocks. In addition, on the basis of the violent shock of shared bicycles with capital advantages on the bicycle industry and upstream supply chain operations in the past few years, the aftershocks continue to impact the recovery of the industry due to the lack of profit model and capital chain problems. At the same time, the bicycle industry as a traditional manufacturing field has also ushered in an important opportunity to accelerate transformation and upgrading under the guidance of the "Made in China 2025" strategy of strengthening the country under the guidance of the basic policy of "innovation-driven, quality-first, green development, structural optimization, and talent-oriented", ushered in the development opportunities for the implementation of the new national standards for electric bicycles, and faced important opportunities and challenges of e-commerce development on channel impact, channel integration and Internet+. Our country is the world's largest country in the production and sales of electric bicycles. After years of development, electric bicycles have gradually become an important means of transportation for consumers' daily short-distance trips. At present, there are about 200 million vehicles in the whole society. Structural body, motor, power battery, and control system, as the core components of electric bicycles, Shenzhen China Bicycle has closely followed up and studied their technological development, application development and commercial value for a long time, and determined the list of qualified suppliers for core components year by year. As one of the core components of electric bicycle, lead-acid batteries have been mainly used as the power batteries in the past ten or twenty years. With the development and popularization of new energy technologies and new energy materials, it is expected that they will be replaced by lithium batteries on a large scale in the future. The implementation 13 of the new national standards for safety technical specifications of electric bicycle has comprehensively improved the safety performance of electric bicycles, adjusted and improved technical indicators such as speed limit, vehicle quality, and pedaling ability. The new standards that are close to the people's livelihood and serve the people's livelihood have increased the application space of lithium battery energy storage, and lithium battery electric bicycles will usher in a new stage of development. II. Major changes in main assets 1. Major changes in main assets Major assets Note of major changes Intangible assets Amortization ends for intangible assets in the Period Monetary fund The cooperation deposit and advance rent received from the Zhonghua Garden (Phase II) Account receivable Trade receivables increased from jewelry and gold business 2. Main overseas assets □ Applicable √ Not applicable III. Core Competitiveness Analysis Despite the fierce market competition in the bicycle industry as a conventional industry, the increased awareness of green commuting, leisure and exercises as a result of the development of China’s social economy and the change of people’s living concept creates structural development opportunity for the bicycle industry. The Company will continue to do better in various aspects of operation such as market development, product development, quality management and sales of e-commerce, extended and expansion the application of upstream & downstream industry for the industrial chain step by step, so as to maintain and improve the Company’s ability to continue as a going concern before the restructuring. During the reporting period, the Company newly develops jewelry and god supply chain business and expands the business dimensions. In August 2019, the Company and Shenzhen Zuankinson Jewelry Co., Ltd jointly established a Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd with contribution of 6.5 million yuan. Of which, the Company holds 65% equity, and is the controlling shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd, while 35% equity held by Zuankinson Jewelry. According to actual operation development, in February 2020, the two parties are decided to increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd to 20 million yuan in the same proportion. Relevant registration capital is fully funded in June 2020. In order to meet the future business development needs of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., it will enhance its financial strength, comprehensive competitiveness and anti-risk capabilities. In August 2020, the company and the joint venture partner, Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. decided to jointly increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. in the same proportion, increasing the registered capital from 20 million yuan to 200 million yuan, of which, the company newly increased capital of 117 million yuan, which was successively invested in accordance with its own funds and the availability of funds raised from the non-public issuance of A shares; Zuankinson Jewelry newly increased capital of 63 million yuan, a total of 180 million yuan increased. The above mentioned capital increase event has been deliberated and approved by the second extraordinary general meeting of shareholders of 2020 dated 21 August 2020. On the other hand, the Company sets the conditions for introducing the restructuring party in the reorganization plan, expecting to restore the sustainable operation ability and sustainable profitability through asset restructuring. 14 In addition, the Company is trying to carry out the issuance of non-public shares, hoping to improve the operating strength and development momentum. On May 15, 2020, the company held the first extraordinary general meeting of shareholders in 2020, which reviewed and approved the company's termination of the 2016 non-public issuance of shares and at the same time launched the plan for the 2020 non-public issuance of A shares, intending to raise funds of no more than 450 million yuan from 5 specific investors through non-public issuance of stocks, and all the raised funds would be used to supplement working capital after deducting the issuance costs. After the CSRC accepted and the company's intermediary agency responded to a feedback from the CSRC, at the end of November 2020, in view of the changes in relevant regulatory policies and the capital market environment, and comprehensively considering the actual situation and other factors and fully communicating and prudently demonstrating with relevant parties, the company decided to terminate the non-public offering and applied to the China Securities Regulatory Commission to withdraw the relevant application materials. On December 24, 2020, the China Securities Regulatory Commission decided to terminate the review of the administrative license application. On December 30, 2020, the company held the third extraordinary general meeting of shareholders in 2020, and reviewed and approved the new plan for non-public issuance of A shares, intending to raise funds from Wansheng Industrial Company through non-public issuance of shares not exceeding 293.6 million yuan, which would be used to supplement working capital after deducting issuance costs, this issuance would lead to changes in the company's right of control. After the Securities Regulatory Commission accepted and sent a feedback notice, the company and the intermediary agencies have completed the response work on April 21, 2021, and follow-up related work is in progress. 15 Section IV. Discussion and Analysis of the Business I. Introduction In 2020, the sudden epidemic brought serious threats to the lives and health of people in all countries, and caused severe impacts on the world economy. The social economy faced serious difficulties, the company's operations were blocked, and the upstream and downstream supply and sales links were blocked, the company’s operations faced special risks. In response to the epidemic, under the leadership of the party and government, the people of the whole country have taken effective prevention and control measures based on their own conditions and achieved positive results. While doing a good job in the prevention and control of the epidemic, the government, enterprises, and employees have made concerted efforts to restore economic and social development and enterprise production and operation. The government has taken multiple measures to stabilize people's livelihood and enterprises and employment, and the company increased revenue and cut expenditures to ensure business and stability and survival and development. The government's assistance measures for enterprises include extending holidays, returning social security to stabilize employment, issuing post-stabilization subsidies, exempting enterprise pension insurance, issuing anti-epidemic subsidies, providing loan discounts and liquidity support, etc. The company's measures include extending holidays, strengthening disinfection and epidemic prevention, home office, flexible office and other measures, doing everything possible to maintain upstream and downstream business, adopting capital vitalization, optimizing and adjusting business premises, and reducing expenses to ensure corporate cash flow, creating conditions to ensure the health of employees, the stability of the team, the stability of the society and the guarantee of employment, and contributing the enterprise’s strength for success of the epidemic prevention and control. With the joint efforts of the government, enterprises, and employees, the company’s operating business began to gradually recover at the end of the first quarter, and the business recovery and development in the second, third and fourth quarters were generally smooth. The annual revenue from jewelry gold business was 87.06 million yuan (accounting for about 74% of total operating revenue), and the business revenue from bicycle lithium battery materials was 30.8 million yuan (accounting for about 26% of total operating revenue). After endogenous development, the jewelry gold business has become the company's core main business in 2020. In 2020, the company was recognized as a high-tech enterprise (certificate number GR202044200651). According to the "Enterprise Income Tax Law of the People's Republic of China" and the relevant provisions of the country's preferential tax policies for high-tech enterprises, the company has enjoyed the relevant preferential tax policies for high-tech enterprises for three consecutive years (from 2020 to 2022) after being identified as a high-tech enterprise, namely pay corporate income tax at a tax rate of 15%. The company will continue to conscientiously do a good job in epidemic prevention and control and the development of enterprise production and operation. In 2020, combine actual condition of financially insecure after reorganization, on the one hand, we adhere to traditional business model development, in combination with the new national standard of safety technical specifications for electric bicycle, the Company carry out R&D works on the products. Optimize and adjust the product structure and sales mode transformation, actively expand the e-commerce business model in accordance with the e-commerce transformation of business team and controllable cost of internal & external connections, so as to realize the stable development of e-commerce for retail business; at the same time, based on the long-term process of the electric bicycle business, the follow-up research of related industrial projects and technology applications in the upstream and downstream of the industrial chain have been carried out accordingly, and on the basis of extensive business contacts and businesses in previous years, it continued to expand the lithium battery material business to enrich the main business. On the one hand, continued to promote the development of the jewelry gold supply chain business and expand the business dimension. In August 2019, the company and Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. jointly invested 6.5 million yuan to establish Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., the company holding 65% of the shares as the controlling shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., while Zuankinson Jewelry holding 35% of the 16 shares. According to the actual situation of business development, in February 2020, the two parties decided to increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. to 20 million yuan in the same proportion, and the relevant registered capital have been in place in June 2020. In order to meet the future operation and development needs of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., and enhance its financial strength, comprehensive competitiveness and anti-risk ability, the company signed a capital increase contract with the joint venture Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. in August 2020, and once again increased capital to Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. in the same proportion, and the registered capital was increased from 20 million yuan to 200 million yuan, of which the company increased capital of 117 million yuan, which would be successively invested in accordance with its own funds and the availability of funds raised from the non-public issuance of A shares; Zuankinson Jewelry newly increased capital of 63 million yuan, totaling 180 million yuan. On August 21, 2020, the company's 2020 second extraordinary general meeting of shareholders reviewed and approved the above capital increase. On the one hand, we strived to promote the selection of the company's restructuring party and plan for the non-public issuance of stocks, hoping to improve the company's business strength and development potential. In terms of planning for the non-public offering of shares, on 15 May 2020, the Company held the First Extraordinary Shareholders General Meeting of 2020 to considered and approved the termination of non-public offering of shares in 2016 and simultaneous launch the proposal for the non-public offering of A-share in 2020. that is raising funds by way of non-public offering of shares to five specific investors with fund not exceed 450 million yuan, which will be fully used to replenish the working capital after deducting the offering expenses. At the end of November 2020, after the CSRC accepted and intermediaries responded to the First Feedback of CSRC, the Company decided to terminate the non-public offering and applied to the CSRC to withdraw relevant application materials in view of the changes in relevant regulatory policies and capital market environment, taking into account the actual situation and other factors, and after sufficient communication and prudent argumentation with relevant parties. On 24 December 2020, the CSRC decided to terminate the review of the administrative license application. On 30 December 2020, the Company held the Third Extraordinary Shareholders General Meeting of 2020 to considered and approved the new non-public offering. The total amount of funds to be raised from Wansheng Industrial Company through non-public offering of shares shall not exceed 293.6 million yuan, which will be used to supplement the working capital after deducting offering expenses. The offering of shares this time will lead to a change in control right of the Company. After the CSRC accepted and sent a First Feedback Notice, the Company and intermediary institutions have completed the response works on 21 April 2021 and follow-up related works are in progress. In 2020, in order to promote the Phase II renovation of Zhonghua Garden and solve the historical legacy of licensing issues, the company and Shenzhen Jianzhi Industrial Co., Ltd. signed the "Urban renewal project of Zhonghua Garden (Phase II) Cooperation Contract". The contract has been reviewed and approved by the company's board meeting and the general meeting of shareholders and announced to take effect, and our company and Shenzhen Jianzhi Industrial Co., Ltd. Have established a working team to jointly promote contract performance and related affairs. Through various efforts to carry out, in 2020, the Company achieved an operation revenue of 117.8575 million yuan, net profit of 4.3757million yuan, and the net profit attributable to shareholder of listed company was3.7858million yuan. Period-end or Period-begin or last Y-o-y Item Note of major changes current period period changes (+,-) Operation revenue 117,857,480.17 76,022,687.75 55.03% Revenue from jewelry and gold business increased in the Period Operation cost 103,221,623.73 68,681,471.12 50.29% Costs from jewelry and gold business increased in the Period 17 Loss of credit impairment -603,180.13 -2,533,065.87 -76.19% Impairment of account receivable for the period (Loss is listed with “-”) declined compared with the previous period Net profit 4,375,706.59 -7,813,881.65 156.00% Revenue growth in the Period and gross profit increased, the expenses declined Net profit attributable to 3,785,834.68 -7,186,905.64 152.68% Revenue growth in the Period and gross profit shareholder of parent increased, the expenses declined company Net cash flow arising 3,942,228.96 -13,791,941.34 128.58% The deposit and advance rent received from the from operation activities Zhonghua Garden (Phase II) Net cash flow arising 46,381.18 -897,577.01 105.17% Acquisition of fixed assets in the previous period from investment activities Net cash flow arising 9,825,000.00 4,275,000.00 129.82% Received minority’s investment from the capital from financing activities increment of Xinsen Company Monetary fund 19,887,978.05 6,074,367.91 227.41% The deposit and advance rent received from the Zhonghua Garden (Phase II) Account receivable 55,031,424.70 38,616,523.93 42.51% Receivables from customers for jewelry and gold business increased in the Period Intangible assets 0.00 753,000.00 -100.00% Amortization ends for intangible assets in the Period Contract liability 15,254,713.38 1,739,953.80 776.73% Contract liability increased due to the deposit and advance rent received from Zhonghua Garden (Phase II) (Opening balance is reclassified from account received in advance at end of the last period) Wages payable 1,459,244.07 599,962.73 143.22% Wages payable increased in the Period Total owners attributable 10,905,230.98 7,119,396.30 53.18% Turing a loss into a profit in the Period to parent company Minority’s interest 14,737,058.70 4,322,186.79 240.96% 35% of the shareholding from minority’s due to the capital increment from subsidiary 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) Operation of the physical store in reporting period During the reporting period, gold and jewelry business of the Company mainly provides supply chain management and services in the vertical field of gold and jewelry, it connects with the downstream gold jewelry brand and does not have the physical stores. (2) Operation of the on-line sales in reporting period The Company does not have on-line sales in the Period (3) Inventory in the reporting period 18 As of end of the Period, balance of inventory from jewelry business amounted to 59,538,533,100 yuan, a 49.77% up compared with that of period-begin, types of the inventory includes: In RMB Item Types Amount Proportion Jewelry 443,189.84 7.44% Gold jewelry — — Finished goods Other — — Total 443,189.84 7.44% Gold — — Platinum — — Raw materials Diamond 1,298,565.61 21.81% Total 1,298,565.61 21.81% Wrappage 54,454.64 0.91% Goods in process 4,157,643.22 69.83% Total 5,953,853.31 100.00% II. Main business analysis 1. Introduction See the “I-Introduction” in “Discussion and Analysis of the Business” 2. Revenue and cost (1) Constitute of operation revenue In RMB 2020 2019 Ratio in operation Ratio in operation Y-o-y changes (+,-) Amount Amount revenue revenue Total operation 117,857,480.17 100% 76,022,687.75 100% 55.03% revenue According to industries Sales of bicycles and 16,435,436.09 13.95% 46,942,798.66 61.75% -64.99% spare parts Lithium battery 13,405,034.83 11.37% 24,460,850.63 32.18% -45.20% material 19 Jewelry and gold 87,064,073.74 73.87% 4,619,038.46 6.07% 1,784.90% Other 952,935.51 0.81% According to products Sales of bicycles and 16,435,436.09 13.95% 46,942,798.66 61.75% -64.99% spare parts Lithium battery 13,405,034.83 11.37% 24,460,850.63 32.18% -45.20% material Jewelry and gold 87,064,073.74 73.87% 4,619,038.46 6.07% 1,784.90% Other 952,935.51 0.81% According to region Domestic 117,857,480.17 100.00% 76,022,687.75 100.00% 55.03% (2) Industries, products or regions that account for more than 10% of the company’s operating revenue or operating profit √Applicable □ Not applicable In RMB Increase/decrease Increase/decrease Increase/decrease Operation Operation cost Gross profit ratio of operation of operation of gross profit revenue revenue y-o-y cost y-o-y ratio y-o-y According to industries Sales of bicycles 16,435,436.09 8,199,519.90 50.11% -64.99% -80.29% 38.72% and spare parts Lithium battery 13,405,034.83 13,191,331.01 1.59% -45.20% -42.22% -5.08% material Jewelry and gold 87,064,073.74 80,940,595.81 7.03% 1,784.90% 1,802.21% -0.85% Other 952,935.51 890,177.01 6.59% According to products Sales of bicycles 16,435,436.09 8,199,519.90 50.11% -64.99% -80.29% 38.72% and spare parts Lithium battery 13,405,034.83 13,191,331.01 1.59% -45.20% -42.22% -5.08% material Jewelry and gold 87,064,073.74 80,940,595.81 7.03% 1,784.90% 1,802.21% -0.85% Other 952,935.51 890,177.01 6.59% According to region Domestic 117,857,480.17 103,221,623.73 12.42% 55.03% 50.29% 2.76% Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on 20 latest one year’s scope of period-end □ Applicable √ Not applicable (3) Income from physical sales larger than income from labors √ Yes □ No Industries Item Unit 2020 2019 Y-o-y changes (+,-) Sales volume In 10 thousand 12.79 7.44 71.91% Bicycle, electric Output In 10 thousand 12.63 7.4 70.68% bicycle Inventory In 10 thousand 0.02 0.18 -88.89% Lithium battery Sales volume Ton 468 385 21.56% material Purchasing volume Ton 468 385 21.56% Sales volume Piece 43,673 2,317 1,784.89% Jewelry and gold Inventory Piece 3,019 2,015 49.83% Purchasing volume Piece 44,986 4,332 938.46% Reasons for y-o-y relevant data with over 30% changes √Applicable □Not applicable 1. Revenue from bicycle business mainly refers to the brand fee income earned based on the number of complete bicycles, proportion of traditional vehicle sales declined significantly. 2.The jewelry and gold business from subsidiary Xinsen are fully carried out in the year, last year, Xinsen was just starting up after establishment of the business. (4)Performance of the significant sales contracts entered into by the Company up to the current reporting period □ Applicable √ Not applicable (5) Constitute of operation cost Classification of industries In RMB 2020 2019 Y-o-y changes Industries Item Ratio in operation Ratio in operation Amount Amount (+,-) cost cost Sales of bicycles Sales of bicycles 8,199,519.90 7.94% 41,597,621.68 60.57% -80.29% and spare parts and spare parts Lithium battery Lithium battery 13,191,331.01 12.78% 22,828,770.32 33.24% -42.22% material material Jewelry and gold Jewelry and gold 80,940,595.81 78.41% 4,255,079.12 6.20% 1,802.21% 21 Other IT goods 890,177.01 0.86% Explanation Nil (6) Whether the changes in the scope of consolidation in Reporting Period √ Yes □No In July 2020, subsidiary of the Company (with 70% equity held by the Company) - Shenzhen Emmelle Industrial Co., Ltd invested in the establishment of Shenzhen Emmelle Cloud Technology Co., Ltd with 70% equity held. Changes in scope of consolidated statement of subsidiary have caused the changes in consolidated scope of the statement. (7) Major changes or adjustment in business, product or service of the Company in Reporting Period □ Applicable √ Not applicable (8) Major sales and main suppliers Major sales client of the Company Total top five clients in sales (RMB) 74,211,999.25 Proportion in total annual sales volume for top five clients 62.97% Ratio of related parties in annual total sales among the top 0.00% five clients Information of top five clients of the Company Serial Name Sales (RMB) Proportion in total annual sales 1 Client 1 27,726,702.18 23.53% 2 Client 2 12,616,798.91 10.71% 3 Client 3 12,298,840.20 10.44% 4 Client 4 10,921,810.37 9.27% 5 Client 5 10,647,847.59 9.03% Total -- 74,211,999.25 62.97% Other situation of main clients □ Applicable √ Not applicable Main suppliers of the Company Total purchase amount from top five suppliers (RMB) 32,778,924.84 Proportion in total annual purchase amount for top five 31.76% suppliers Ratio of related parties in annual total sales among the top 0.00% five suppliers 22 Information of top five suppliers of the Company Serial Name Purchase (RMB) Proportion in total annual purchase 1 Supplier 1 15,950,412.03 15.45% 2 Supplier 2 4,849,290.26 4.70% 3 Supplier 3 4,848,881.44 4.70% 4 Supplier 4 3,934,273.84 3.81% 5 Supplier 5 3,196,067.27 3.10% Total -- 32,778,924.84 31.76% Other notes of main suppliers □ Applicable √ Not applicable 3. Expenses In RMB Y-o-y changes 2020 2019 Note of major changes (+,-) Sales expenses 2,540,657.03 3,178,476.39 -20.07% Administrative expenses 4,783,608.32 6,409,465.59 -25.37% The financial expenses arising from Financial expenses 18,718.74 -95,401.17 -119.62% sales discount R&D expenses 2,506,877.57 2,753,277.72 -8.95% 4. R&D investment √ Applicable □ Not applicable More investment on R&D in jewelry and gold business. R&D investment of the Company 2020 2019 Change ratio (+,-) Number of R&D (people) 24 15 60% Ratio of number of R&D 36.92% 25.42% 11.50% R&D investment (Yuan) 2,506,877.57 2,753,277.72 -8.95% R&D investment accounted for 2.13% 3.62% -1.49% R&D income R&D investment capitalization 0.00 0.00 (Yuan) 23 Capitalization R&D investment 0.00% 0.00% accounted for R&D investment The reason of great changes in the proportion of total R&D investment accounted for operation income than last year □ Applicable √ Not applicable Reason for the great change in R&D investment capitalization rate and rational description □ Applicable √ Not applicable 5. Cash flow In RMB Item 2020 2019 Y-o-y changes (+,-) Subtotal of cash in-flow arising 121,626,558.28 42,717,223.29 184.72% from operation activity Subtotal of cash out-flow 117,684,329.32 56,509,164.63 108.26% arising from operation activity Net cash flow arising from 3,942,228.96 -13,791,941.34 -128.58% operating activities Subtotal of cash in-flow arising 64,500.00 from investment activity Subtotal of cash out-flow 18,118.82 897,577.01 -97.98% arising from investment activity Net cash flow arising from 46,381.18 -897,577.01 -105.17% investment activities Subtotal of cash in-flow arising 9,825,000.00 4,275,000.00 129.82% from financing activity Net cash flow arising from 9,825,000.00 4,275,000.00 129.82% financing activities Net increased amount of cash 13,813,610.14 -10,414,518.35 -232.64% and cash equivalent Main reasons for y-o-y major changes in aspect of relevant data √ Applicable □ Not applicable 1. Subtotal of cash in-flow arising from operation activity has a y-o-y growth of 184.72, mainly because the fully carry out of the jewelry and gold business from subsidiary Xinsen, received money from goods and received a security deposit and advance rent for Zhonghua Garden (Phase II) by parent company. 2. Subtotal of cash out-flow arising from operation activity has a y-o-y growth of 108.26%, mainly due to the payment of goods for fully carrying out of the jewelry and gold business from subsidiary Xinsen. 3. Subtotal of cash out-flow arising from investment activity has 97.98% down on a y-o-y basis, mainly because purchasing machinery equipment at same period last year. 4. Subtotal of cash in-flow arising from financing activity has a y-o-y growth of 129.82%, mainly because subsidiary Xinsen increase in capital and shares during the Period. 24 Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company □Applicable √Not applicable III. Analysis of the non-main business √ Applicable □ Not applicable In RMB Amount Ratio in total profit Note Whether be sustainable (Y/N) Assets impairment 198,181.03 4.16% Impairment provision N Revenue of the assets Non-operation management ready for 6,542,649.75 137.28% N revenue proposed in reorganization case Expenditure of the assets Non-operation management ready for 5,688,279.29 119.35% N expenditure proposed in reorganization case Credit impairment 603,180.13 12.66% Impairment provision N IV. Analysis of assets and liability 1. Major changes of assets composition Adjustment on the relevant items of financial statement at beginning of the year when implemented the new revenue standards or new leasing standards since 2020 Applicable In RMB Year-end of 2020 Year-begin of 2020 Ratio Ratio in total Ratio in total changes Note of major changes Amount Amount assets assets (+,-) The cooperation deposit and advance Monetary fund 19,887,978.05 21.68% 6,074,367.91 9.68% 12.00% rent received from the Zhonghua Garden (Phase II) Account 55,031,424.70 59.98% 38,616,523.93 61.56% -1.58% receivable Inventory 7,729,325.94 8.42% 6,078,330.30 9.69% -1.27% Fix assets 3,792,133.36 4.13% 4,191,503.33 6.68% -2.55% 25 2. Assets and liability measured by fair value □ Applicable √ Not applicable 3. Limited assets rights till end of the period 1.At the end of the current period, the total fixed output value included six suites of house properties at 7-20F Lianxin JiaYuan, Luohu District, Shenzhen purchased in 2016, with original value of 2,959,824.00 Yuan, which were affordable housing purchased from the Housing and Construction Bureau of Luohu District to provide to enterprise talents for living. The contract stipulated that the purchasing enterprise is not allowed to conduct any form of property rights transaction with any units or individual other than the government. V. Investment 1. Overall situation √ Applicable □ Not applicable Investment in the same period of last year Investment in reporting period (RMB) Change scope (RMB) 17,125,000.00 4,225,000.00 305.33% 2. The major equity investment obtained in the reporting period √ Applicable □ Not applicable In RMB Name Progres Profit/l Litigati of Date of Disclos Main Investm Investm Shareh s as at Anticip oss of on investe Capital Partner Time Product disclos ure busines ent ent olding balance ated current issues d sources s horizon type ure (if index s style amount ratio sheet income investm involve compan any) (if any) date ent d (Y/N) y Juchao Shenzh Shenzh website en en Supply Supply (http:// Zuanki Xinsen chain chain Capital www.c nson Jewelry busines Capital service increme ninfo.c 8,775,0 Owned Jewelry 122,45 122,45 2020-0 Gold s of increme 65.00% 20-year of nt N om.cn) 00.00 fund and 6.84 6.84 2-19 Supply jewelry nt jewelry complet , Notice Gold Chain and and ed No.: Supply Co., gold gold 2020-0 Chain Ltd 02, Co., 2020-0 26 Ltd. 03 Juchao Owned Shenzh website Shenzh fund en (http:// en Supply and Zuanki Supply www.c Xinsen chain funds nson chain ninfo.c Jewelry busines capital raising Jewelry service In om.cn) 117,000 1,632,7 1,632,7 2020-0 , Notice Gold s of increme 65.00% from and 20-year of progres N ,000.00 57.86 57.86 8-06 No.: Supply jewelry nt non-pu Gold jewelry s Chain and blic Supply and 2020-0 Co., gold offering Chain gold 32, Ltd of Co., 2020-0 A-share Ltd. 34 Engage d in the technol Shenzh ogy Shenzh en Softwar develop en Emmell e Establis ment Newly Zhenba e Cloud 1,400,0 Owned develop hed and 5,696.9 5,696.9 and establis 49.00% ngda 20-year N N/A N/A Technol 00.00 fund ment fully 9 9 service hed Technol ogy and paid up busines ogy Co., services s in Co., Ltd. field of Ltd. comput er 127,17 1,760,9 1,760,9 Total -- -- 5,000.0 -- -- -- -- -- -- -- -- -- 11.69 11.69 0 3. The major non-equity investment doing in the reporting period □ Applicable √ Not applicable 4. Financial assets investment (1) Securities investment □ Applicable √ Not applicable The company had no securities investment in the reporting period. 27 (2) Derivative investment □ Applicable √ Not applicable The Company has no derivatives investment in the Period 5. Application of raised proceeds □ Applicable √ Not applicable The company had no application of raised proceeds in the reporting period. VI. Sales of major assets and equity 1. Sales of major assets □ Applicable √ Not applicable The Company had no sales of major assets in the reporting period. 2. Sales of major equity □ Applicable √ Not applicable VII. Analysis of main holding company and stock-jointly companies √Applicable □ Not applicable Particular about main subsidiaries and stock-jointly companies net profit over 10% In RMB Company Main Register Operation Operating Type Total assets Net assets Net profit name business capital revenue profit Shenzhen Supply chain Xinsen business of 44,248,401.3 34,415,871.9 87,064,073.7 Jewelry Gold Subsidiary 200,000,000 2,806,059.26 2,700,330.30 jewelry and 1 3 4 Supply Chain gold Co., Ltd Shenzhen Distribution Emmelle of bicycles 14,820,153.6 -1,237,317.1 -1,203,910.7 Subsidiary 5,000,000 5,310,246.69 3,160,952.74 Industrial and spare 8 4 1 Co., Ltd. parts Particular about subsidiaries obtained or disposed in report period √ Applicable □ Not applicable The way of getting and treating subsidiary Influence on overall product and Company name in the reporting performance Shenzhen Emmelle Cloud Technology Co., Investment in new establishment Net profit attributable to parent company 28 Ltd. has 56.9699 million yuan increased in the period with minimal impact Notes of holding and shareholding companies 1.The Company holds 65 percent equity of the Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd, the balance of minority equity at period-end amounting to 12,538,055.17 Yuan. 2.The Company holds 70 percent equity of the Shenzhen Emmelle Industrial Co., Ltd., the balance of minority equity at period-end amounting to1,593,074.01 Yuan. 3. The Company indirectly holds 49 percent equity of the Shenzhen Emmelle Cloud Technology Co., Ltd., the balance of minority equity at period-end amounting to 605,929.52 Yuan. VIII. Structured vehicle controlled by the Company □ Applicable √ Not applicable IX. Future Development Prospects i. Development trend of the industry the Company operates in and market competition pattern it deals with: As a sector in the traditional manufacturing field, the bicycle industry continued the dilemma of rise in labor costs, manufacturing costs, capital costs, and material costs. In April 2019, the implementation of the new national standard of safety technical specifications for electric bicycles accelerated the industry reshuffle and resulted a new round of industry shock. In addition, in the past two years, the bike sharing has been violently oscillating the bicycle industry and the upstream supply chain operations with capital advantages, due to the lack of profit model and capital chain problems, its aftershocks continue to rattle the industry’s recovery. At the same time, as a traditional manufacturing industry, the bicycle industry also ushered in the “Made in China 2025” strategy, under the guidance of the basic principles of “Innovation Driven, Quality First, Green Development, Structure Optimization, and Talent Based”, took the important opportunity to speed up the transformation and upgrading, ushered in the development opportunity of the implementation of the new national standards for electric bicycles, and also faced with the important challenges of e-commerce development impacts on channels, channel integration and Internet+. China has the world’s largest production and marketing of electric bicycles, after years of development, electric bicycles have gradually become an important means of transportation for consumers on everyday short-distance trips, at present, there are about 200 million bicycles in the entire society. Structural body, motor, power battery, and control system are the core components of electric bicycles, CBC has been closely following up the research on their technological development, application development, and commercial value for a long period of time, and has determined the qualified suppliers for core components year by year. As one of the core components of electric bicycle, power batteries have been mainly lead-acid batteries in the past decade or two, with the development and popularization of new energy technologies and new energy materials, it is expected to be replaced by the lithium batteries in the future. The implementation of the new national standard for electric bicycle safety technical specifications has comprehensively improved the safety performance of electric bicycles, and adjusted and improved technical indicators such as speed limits, vehicle quality, and pedaling ability. The new standard is close to people’s livelihood and serving people’s livelihood, which improved the application space of lithium battery energy storage, and the lithium battery electric bicycle is ushering in a new stage of development. In the gold and jewelry industry, in the context of China’s sustained rapid economic growth and rising per capita income levels, in addition to meeting the need for keeping the value, the jewelry consumption is also a requirement for people to pursue fashion and show personality. At present, China is one of the world’s largest, most important, and fastest-growing jewellery markets, the 29 consumption of many jewellery categories ranks in the forefront of the world, among which the sales of gold, silver, platinum, jade, pearls and other products rank first in the world. China’s jewelry gold industry market has formed a three-legged pattern of domestic, Hong Kong and foreign brands, and the market shares continue to be concentrated. At present, China’s per capital jewelry consumption is still far lower than that of developed countries, and our jewelry gold consumption market still has a lot of room for improvement, but the market competition is fierce. In August 2019, the company invested in the establishment of a holding subsidiary, Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., and began to get involved in the supply chain business of jewelry and gold. ii. Future development opportunity and new yearly business plan of the Company: With the fierce market competition, new development opportunities are also formed. At the end of 2013, the Company completed the implementation of its restructuring plan and concluded its bankruptcy procedure, thereby improving the legal environment its business faces with. On the basis of business work over the past few years, the business plan of the Company for 2021 is: 1. Continue to actively cooperate with shareholders and the board of directors to promote the reorganization of the company and promote the planning of non-public offering of shares. 2. Reform and improve the internal management mechanism, decompose and implement the company's annual task to every subsidiaries, each distribution company and regional manager, take the manager responsibility system, follow p month by month, and roll the assessment. 3. In terms of gold and jewelry business, further establish supplier systems and expand customer resources, improve internal business processes and internal control system construction, promote the construction of a supply chain system platform to improve operational quality and efficiency, and strive to achieve greater growth in operating income. 4. In terms of electric bicycles, for key mature areas such as Shandong, Henan, Hebei, Jiangsu, etc., organize supply of goods, control quality, coordinate transportation and improve after sales order by order, and ensure stable order business; for other areas, actively strengthen communication and cooperation with ODM factories to give full play to ODM factories' regional advantages, use its existing sales network for distribution cooperation, expand the brand influence and distribution cooperation basis of the EMMELLE brand in the distribution team of other cooperative manufacturers, so as to promote the growth of orders. 5. In terms of the lithium battery materials and cloud technology business, in 2021, we will increase the business development force, forge talent teams, enrich product lines, develop new customers, promote the new technology applications and increase investment in new product development. Strive to achieve the rebound of lithium materials business, and strive for the development of cloud technology business with revenue increased over the previous year. 6. Continue to promote the cooperation matters of the urban renewal project of Zhonghua Garden (Phase II), facilitate the resolution of the certification issue of Zhonghua Garden (Phase II) left over from history, and realize the phased work returns at the same time. 7. Strengthen the background management and office automation, and improve the support degree of background departments to front desk business. iii. Risk factors adverse to the Company’s development: (1)The tough international economic situation: The domestic economy is at the structural adjustment stage in the course of development, structural problems and deep-seated conflicts are highlighted. The economic downturn pressure continues to increase, many unstable and uncertain factors exist, which affect and impact the traditional manufacturing industries and the social consumption structure demand. Since the domestic economy is at the structural adjustment stage, coupled with a difficult situation of continuously rising labor cost, manufacturing cost, financing cost and material cost the bicycle industry as a conventional manufacturing field recorded a decline in the market turnover. Due to the low entry threshold and numerous manufacturers, the competition in the market is extremely fierce. (2) Affected by the impact of COVID-19, the social economy entered a special dilemma, operation of the Company has been blocked, 30 upstream and downstream supply and sales links have been blocked. In the fave of the above problems, the central government and governments at all levels have taken multiple measures to stabilize the people’s livelihood, stabilize the enterprises and employment, the Company will strive to maintain stability and seek development through increase the income and reduce the expenditures. In 2020, combined with the actual situation on its own poor background after reorganization, on the one hand, we continued to adhere to traditional business model development, in combination with the new national standard of safety technical specifications for electric bicycle, the Company carry out R&D works on the products. Optimize and adjust the product structure and sales mode transformation, actively expand the e-commerce business model in accordance with the e-commerce transformation of business team and controllable cost of internal & external connections, so as to realize the stable development of e-commerce for retail business; At the same time, based on the long-term process of the electric bicycle business, the follow-up research of related industrial projects and technology applications in the upstream and downstream of the industrial chain have been carried out accordingly, and on the basis of extensive business contacts and businesses in previous years, it continued to expand the lithium battery material business to enrich the main business. On the one hand, continued to promote the development of the jewelry gold supply chain business and expand the business dimension. In August 2019, the company and Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. jointly invested 6.5 million yuan to establish Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., the company holding 65% of the shares as the controlling shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., while Zuankinson Jewelry holding 35% of the shares. According to the actual situation of business development, in February 2020, the two parties decided to increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. to 20 million yuan in the same proportion, and the relevant registered capital has been in place in June 2020. In order to meet the future operation and development needs of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., and enhance its financial strength, comprehensive competitiveness and anti-risk ability, the company signed a capital increase contract with the joint venture Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. in August 2020, and once again increased capital to Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. in the same proportion, and the registered capital was increased from 20 million yuan to 200 million yuan, of which the company increased capital of 117 million yuan, which would be successively invested in accordance with its own funds and the availability of funds raised from the non-public issuance of A shares; Zuankinson Jewelry newly increased capital of 63 million yuan, totaling 180 million yuan. On August 21, 2020, the company's 2020 second extraordinary general meeting of shareholders reviewed and approved the above capital increase. On the one hand, we strived to promote the selection of the company's restructuring party and plan for the non-public issuance of stocks, hoping to improve the company's business strength and development potential. In terms of planning for the non-public offering of shares, on 15 May 2020, the Company held the First Extraordinary Shareholders General Meeting of 2020 to considered and approved the termination of non-public offering of shares in 2016 and simultaneous launch the proposal for the non-public offering of A-share in 2020. that is raising funds by way of non-public offering of shares to five specific investors with fund not exceed 450 million yuan, which will be fully used to replenish the working capital after deducting the offering expenses. At the end of November 2020, after the CSRC accepted and intermediaries responded to the First Feedback of CSRC, the Company decided to terminate the non-public offering and applied to the CSRC to withdraw relevant application materials in view of the changes in relevant regulatory policies and capital market environment, taking into account the actual situation and other factors, and after sufficient communication and prudent argumentation with relevant parties. On 24 December 2020, the CSRC decided to terminate the review of the administrative license application. On 30 December 2020, the Company held the Third Extraordinary Shareholders General Meeting of 2020 to considered and approved the new non-public offering. The total amount of funds to be raised from Wansheng Industrial Company through non-public offering of shares shall not exceed 293.6 million yuan, which will be used to supplement the working capital after deducting offering expenses. The offering of shares this time will lead to a change in control right of the Company. After the CSRC accepted and sent a First Feedback Notice, the Company and intermediary institutions have completed the response works on 21 April 2021 and follow-up related works are in 31 progress. In 2020, in order to promote the Phase II renovation of Zhonghua Garden and solve the historical legacy of licensing issues, the company and Shenzhen Jianzhi Industrial Co., Ltd. signed the "Urban renewal project of Zhonghua Garden (Phase II) Cooperation Contract". The contract has been reviewed and approved by the company's board meeting and the general meeting of shareholders and announced to take effect, and our company and Shenzhen Jianzhi Industrial Co., Ltd. Have established a working team to jointly promote contract performance and related affairs. X. Reception of research, communication and interview 1. In the report period, reception of research, communication and interview √ Applicable □ Not applicable Main content Reception Basic situation index of Time Way Reception type Object and information location investigation provided Consulting Telephone Individual company Jan.-Mar. 2020 The Company Individual N/A communication investor restructuring problem Inquiry progress Telephone Individual April- June 2020 The Company Individual of the private N/A communication investor placement Inquiry the progress of urban renewal July - September Telephone Individual The Company Individual project of N/A 2020 communication investor Zhonghua Garden (Phase II) Inquiry progress October - Telephone Individual The Company Individual of the private N/A December 2020 communication investor placement Reception (times) 15 Number of hospitality 0 Number of individual reception 15 Number of other reception 0 Disclosed, released or let out major undisclosed N information 32 Section V. Important Events I. Profit distribution plan of common stock and capitalizing of common reserves plan Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during the Reporting Period □ Applicable √ Not applicable Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years (including the reporting period) Cash dividend of common stock in latest three years (including the reporting period) In RMB Ratio of the Ratio of the Ratio of the total cash Net profit cash bonus by cash bonus in bonus (other attributable to other ways in net profit ways included) common stock Proportion for net profit attributable to Total cash in net profit Amount for shareholders of cash bonus by attributable to Year for bonus common stock bonus attributable to cash bonus (tax listed company other ways(i.e. common stock shares shareholders of (including common stock included) in share shareholders of listed company other ways) shareholders of consolidation buy-backs) listed company contained in listed company statement for contained in consolidation contained in bonus year consolidation statement consolidation statement statement 2020 0.00 3,984,636.40 0.00% 0.00 0.00% 0.00 0.00% 2019 0.00 -7,186,905.64 0.00% 0.00 0.00% 0.00 0.00% 2018 0.00 -1,591,968.91 0.00% 0.00 0.00% 0.00 0.00% The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is positive but no plan of cash dividend proposed of common stock □ Applicable √ Not applicable II. Profit distribution plan and capitalizing of common reserves plan for the Period □ Applicable √ Not applicable The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for the year. 33 III. Implementation of commitment 1. Commitments completed in Period and those without completed till end of the Period from actual controller, shareholders, related parties, purchaser and companies □ Applicable √ Not applicable The Company has no commitments completed in Period and those without completed till end of the Period from actual controller, shareholders, related parties, purchaser and companies 2. Concerning assets or project of the Company, which has profit forecast, and reporting period still in forecasting period, explain reasons of reaching the original profit forecast □ Applicable √ Not applicable IV. Non-operational fund occupation from controlling shareholders and its related party □ Applicable √ Not applicable No non-operational fund occupation from controlling shareholders and its related party in period. V. Explanation from Board of Directors, Supervisory Committee and Independent Directors (if applicable) for “Qualified Opinion” that issued by CPA √ Applicable □ Not applicable On 11 May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment and 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 12th, Oct., 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. In late October, 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25th, Oct., 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. At the same time, 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 CBC 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. The Company will continue to carry out vary related works actively and promote the reorganization work with all efforts. 34 VI. Particulars about the changes in aspect of accounting policy, estimates and calculation method compared with the financial report of last year √ Applicable □ Not applicable 1.Change of accounting policy (1) The Company implemented the relevant regulations of Accounting Standards for Business Enterprises No. 14 - Revenue (Cai Kuai [2017] No.22) (hereinafter referred to as New Revenue Standard) since 1 January 2020. After implementation of the new revenue standard, the Company will not have an impact on the business model, contract terms, revenue recognition and other aspects. Impact from the implementation of the regulations on financial statement of the Company for year of 2020 is as follows: Content and reasons for accounting policy changes Item and amount impacted In consolidate balance sheet dated 31 December 2020, the account received in advance is shown in the amount of 0.00 yuan, the contract ”Account received in advance” presented as “Contract liability on 31 December 2020 is shown as 15254713.38 yuan. liability” In balance sheet of parent company dated 31 December 2020, the account received in advance is shown in the amount of 0.00 yuan, the contract liability on 31 December 2020 is shown as 14385423.04 yuan. VII. Major accounting errors within reporting period that needs retrospective restatement □ Applicable √ Not applicable No major accounting errors within reporting period that needs retrospective restatement for the Company in the period. VIII. Compare with last year’s financial report; explain changes in consolidation statement’s scope √ Applicable □ Not applicable On 21 July 2020, subsidiary Shenzhen Emmelle Industrial Co., Ltd contributes 70% and Shenzhen Zhenbangda Technology Co., Ltd contributes 30% together to established the Shenzhen Emmelle Cloud Technology Co., Ltd. The enterprise was included in consolidate statement scope since the date of established. IX. Appointment and non-reappointment (dismissal) of CPA Accounting firm appointed Name of domestic accounting firm Baker Tilly China Certified Public Accountants (LLP) Remuneration for domestic accounting firm (in 10 thousand 45 Yuan) Continuous life of auditing service for domestic accounting firm 5 35 Name of domestic CPA Chen Zhigang, Zhang Lei Continuous life of auditing service for domestic accounting firm 4 Re-appointed accounting firms in this period □ Yes √No Appointment of internal control auditing accounting firm, financial consultant or sponsor √ Applicable □ Not applicable In the year, the Company engaged Baker Tilly China Certified Public Accountants (LLP) as the auditing organ for internal control of the Company for year of 2020, charges amounted as 150,000 Yuan. X. Particular about delisting after annual report disclosed □ Applicable √ Not applicable XI. Bankruptcy reorganization □ Applicable √ Not applicable No bankruptcy reorganization for the Company in reporting period. XII. Significant lawsuits and arbitration of the Company □Applicable √Not applicable No significant lawsuits and arbitration occurred in the reporting period. XIII. Penalty and rectification □ Applicable √ Not applicable No penalty and rectification for the Company in reporting period. XIV. Integrity of the company and its controlling shareholders and actual controllers □ Applicable √ Not applicable XV. Implementation of the company’s stock incentive plan, employee stock ownership plan or other employee incentives □ Applicable √ Not applicable The Company had no implementation of the company’s stock incentive plan, employee stock ownership plan or other employee incentives in the reporting period. 36 XVI. Major related transaction 1. Related transaction with routine operation concerned □ Applicable √ Not applicable The Company had no related transaction with routine operation concerned occurred in the period 2. Related transactions by assets acquisition and sold □ Applicable √ Not applicable No related transactions by assets acquisition and sold for the Company in reporting period. 3. Main related transactions of mutual investment outside □ Applicable √ Not applicable No main related transactions of mutual investment outside for the Company in reporting period. 4. Contact of related credit and debt √ Applicable □ Not applicable Whether exist non-operating contact of related credit and debt or not √Yes □No Claim receivable from related party Whether Balance at Current has Current Current Balance at period-begi newly Related Relationshi Causes of non-busines recovery(10 interest(10 period-end(1 n(10 added(10 Interest rate party p formation s capital thousand thousand 0 thousand thousand thousand occupying Yuan) Yuan) Yuan) Yuan) Yuan) or not Debts payable to related party Current Balance at Current Current Balance at newly Causes of period-begin( recovery interest(10 period-end(10 Related party Relationship added(10 Interest rate formation 10 thousand (10 thousand thousand thousand thousand Yuan) Yuan) Yuan) Yuan) Yuan) Shenzhen Guosheng Subsidiary Energy Large Emmelle 650 0 0 0.00% 0 650 Investment shareholder loan Development Co., Ltd. 37 Influence on operation result and financial statue of the No influence Company from related debts 5. Other related transactions □ Applicable √ Not applicable The company had no other significant related transactions in reporting period. XVII. Significant contract and implementations 1. Trusteeship, contract and leasing (1) Trusteeship □ Applicable √ Not applicable No trusteeship for the Company in reporting period. (2) Contract □ Applicable √ Not applicable No contract for the Company in reporting period. (3) Leasing □ Applicable √ Not applicable No leasing for the Company in reporting period. 2. Major guarantees □ Applicable √ Not applicable No guarantee for the Company in reporting period. 3. Entrust others to cash asset management (1) Trust financing □ Applicable √ Not applicable No trust financing for the Company in reporting period. (2) Entrusted loans □ Applicable √ Not applicable The company had no entrusted loans in the reporting period. 38 4. Significant contracts for daily operations □ Applicable √ Not applicable 5. Other significant contracts √Applicable □ Not applicable The The assesse book d The The value Name Whethe value The The name name The of the of the r The of the base Bargain perform The of the of the date of assets evaluati Pricing connect Inciden index Contrac assets date price(R ance by date of contract contract signatur involve on principl ed ce of t object involve evaluati MB’00 the end disclos ing ed e of the d in the organiz es transact relation disclos d in the on (if 00) of the ure compan compan contract contract ation(if ion ure contract any) term y y (RMB’ any) (Y/N) (RMB’ 0000)(i 0000)(i f any) f any) ”Notice on Entered into the Shenzh Shenzh Urban Cooper en en renewal ation China Jianzhi project Agreem Bicycle Industri of Negotia No ent for 2020-0 Termin 2020-0 Compa al Zhongh 0 0 N/A N/A ted 3,000 N affiliati Urban 4-26 ated 4-28 ny Develo ua price on Renewa (Holdin pment Garden l gs) Co., (Phase Project Limited Ltd. II) ” Notice No.: 202001 3 Shenzh Shenzh Urban Approv ”Notice en en renewal ed and on China Jianzhi project effectiv Progres Negotia No Bicycle Industri of 2020-0 e at the 2020-0 s of the 0 0 N/A N/A ted 3,000 N affiliati Compa al Zhongh 8-04 AGM 8-05 Cooper price on ny Develo ua of the ation (Holdin pment Garden Compa Agreem gs) Co., (Phase ny ent for 39 Limited Ltd. II) dated Urban 21 Renewa August l 2020, Project relevant ” works Notice are in No.: progres 202003 s 3 XVIII. Social responsibility 1. Performance of social responsibility Nil 2. Execution of social responsibility of targeted poverty alleviation (1) Targeted poverty alleviation Nil (2) Summary of annual precision poverty alleviation Nil (3)Accuracy of poverty alleviation Target Measurement units Numbers/progress I. general condition —— —— II. Implemented by detail —— —— 1. Industrial development poverty —— —— 2.Transfer employment —— —— 3. Anti-poverty by relocating in other places —— —— 4. Education poverty —— —— 5. Health poverty alleviation —— —— 6. Ecological conservation —— —— 7. Fallback protection —— —— 8. Social poverty alleviation —— —— 9. Other —— —— 40 III. Awards (content and level) —— —— (4) Subsequent precision poverty alleviation program 3. Environmental protection Listed company and its subsidiary belongs to the key pollution enterprise listed by Department of Environmental Protection □Yes □No XIX. Explanation on other significant events √ Applicable □ Not applicable 1.Planning of non-public issue of shares On 15 May 2020, the Company held the First Extraordinary Shareholders General Meeting of 2020 to considered and approved the termination of non-public offering of shares in 2016 and simultaneous launch the proposal for the non-public offering of A-share in 2020. that is raising funds by way of non-public offering of shares to five specific investors with fund not exceed 450 million yuan, which will be fully used to replenish the working capital after deducting the offering expenses. At the end of November 2020, after the CSRC accepted and intermediaries responded to the First Feedback of CSRC, the Company decided to terminate the non-public offering and applied to the CSRC to withdraw relevant application materials in view of the changes in relevant regulatory policies and capital market environment, taking into account the actual situation and other factors, and after sufficient communication and prudent argumentation with relevant parties. On 24 December 2020, the CSRC decided to terminate the review of the administrative license application. On 30 December 2020, the Company held the Third Extraordinary Shareholders General Meeting of 2020 to considered and approved the new non-public offering. The total amount of funds to be raised from Wansheng Industrial Company through non-public offering of shares shall not exceed 293.6 million yuan, which will be used to supplement the working capital after deducting offering expenses. The offering of shares this time will lead to a change in control right of the Company. After the CSRC accepted and sent a First Feedback Notice, the Company and intermediary institutions have completed the response works on 21 April 2021 and follow-up related works are in progress. The non-public offering of share is subject to the approval from CSRC, there is uncertainty as to whether it will be approved and when it will finally be approved. Found more in the announcement released by the Board. 2. Capital increment for controlling subsidiary In August 2019, the company and Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd jointly invested 6.5 million yuan to establish Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., the company holding 65% of the shares as the controlling shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd.., while Zuankinson Jewelry holding 35% of the shares. According to the actual situation of business development, in February 2020, the two parties decided to increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. to 20 million yuan in the same proportion. On February 19, 2020, the company held the eighteenth (temporary) meeting of the tenth board of directors, reviewed and approved the "Proposal on Capital Increase in Holding Subsidiaries". After the completion of capital increased, the shareholding ratio of all parties remains unchanged, and the company remains the controlling shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. As of June 30, 2020, the registered capital of Xinsen Company has been paid in place, and various businesses have been carried out normally. In order to meet the future business development needs of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., it will enhance its 41 financial strength, comprehensive competitiveness and anti-risk capabilities. In August 2020, the company and the joint venture partner, Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. decided to jointly increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. in the same proportion, increasing the registered capital from 20 million yuan to 200 million yuan, of which, the company newly increased capital of 117 million yuan, which was successively invested in accordance with its own funds and the availability of funds raised from the non-public issuance of A shares; Zuankinson Jewelry newly increased capital of 63 million yuan, a total of 180 million yuan. The twenty-third (temporary) meeting of the tenth board of directors held by the company on August 5, 2020 and the second extraordinary general meeting of shareholders of 2020 held by the company on August 21, 2020 reviewed and approved the "Proposal on the Second Capital Increment in Controlling Subsidiaries". Found more in the Notice released by the Board. 3. Cooperation matters in urban renewal projects On April 26, 2020, the company held the twentieth meeting of the tenth board of directors and reviewed and approved the "Proposal on Signing the Cooperation Agreement for Zhonghua Garden Phase II Urban Renewal Project". According to the agreement, given that: 1. Jianzhi Industry failed to pay the company a security deposit of 2 million yuan on the date of signing the agreement. 2. Jianzhi Industry failed to pay the company 10 million yuan within 30 days after the signing of the agreement. On August 4, 2020, the company revised the original "Cooperation Agreement for Zhonghua Garden Phase II Urban Renewal Project" with Jianzhi Industry through friendly negotiations, and re-signed the "Cooperation Contract for Zhonghua Garden Phase II Urban Renewal Project". On the day of the signing of the contract, the company received 10 million yuan from Jianzhi Industry for the contract payment. The company held the twenty-third (temporary) meeting of the tenth board of directors on August 5, 2020 and the 2020 second extraordinary general meeting of shareholders held on August 21, 2020, reviewed and approved the "Proposal on Revising and Signing the Cooperation Contract for Zhonghua Garden Phase II Urban Renewal Project". Found more in the Notice released by the Board. XX. Significant event of subsidiary of the Company √Applicable □Not applicable 1. In August 2019, the Company and Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd jointly established a Shenzhen Xinsen Jewelry Gold Supply Chain Co., ltd. of which, the Company holds 65% equity and it is the controlling shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd, while 35% equity held by Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. According to the actual situation of business development, in February 2020, the two parties decided to increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. to 20 million yuan in the same proportion. On February 19, 2020, the company held the eighteenth (temporary) meeting of the tenth board of directors, reviewed and approved the "Proposal on Capital Increase in Holding Subsidiaries". After the completion of capital increased, the shareholding ratio of all parties remains unchanged, and the company remains the controlling shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. As of June 30, 2020, the registered capital of Xinsen Company has been paid in place, and various businesses have been carried out normally. In order to meet the future business development needs of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., it will enhance its financial strength, comprehensive competitiveness and anti-risk capabilities. In August 2020, the company and the joint venture partner, Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. decided to jointly increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. in the same proportion, increasing the registered capital from 20 million yuan to 200 million 42 yuan, of which, the company newly increased capital of 117 million yuan, which was successively invested in accordance with its own funds and the availability of funds raised from the non-public issuance of A shares; Zuankinson Jewelry newly increased capital of 63 million yuan, a total of 180 million yuan. The twenty-third (temporary) meeting of the tenth board of directors held by the company on August 5, 2020 and the second extraordinary general meeting of shareholders of 2020 held by the company on August 21, 2020 reviewed and approved the "Proposal on the Second Capital Increment in Controlling Subsidiaries". Found more in the announcement released by the Board. 2.Capital increase to the controlling subsidiary Shenzhen Emmelle Industrial Co., Ltd According to Chinese Accounting Standards and the audit report issued by Baker Tilly China Certified Public Accountants (LLP), as of December 31, 2019, Shenzhen Emmelle Industrial Co., Ltd had undistributed profits of 3,756,453.12 yuan. In accordance with the relevant provisions of the "Company Law" and the "Articles of Association", Shenzhen Emmelle Industry Co., Ltd. held the first extraordinary general meeting of shareholders in 2020 on September 2, 2020, and reviewed and approved a profit distribution of 3 million yuan to all shareholders, and used the distributed profits to increase the registered capital for the same proportion of capital increase. After the completion of capital increase, the registered capital of Shenzhen Emmelle Industrial Co., Ltd. increased from 2 million yuan to 5 million yuan, of which Shenzhen China Bicycle (Holdings) Co., Ltd. invested 2.1 million yuan, and the trade union committee of Shenzhen China Bicycle (Holdings) Co., Ltd. newly funded 900,000 yuan. At the same time, the meeting also deliberated and approved related matters such as changing the company's registered address, business scope, and amending the articles of association. As of September 30, 2020, Shenzhen Emmelle Industrial Co., Ltd. has completed the industrial and commercial change of this matter. 3. Matters concerning foreign investment and establishment of sub-subsidiary According to the relevant provisions of the "Company Law" and the "Articles of Association", on July 13, 2020, the company's holding subsidiary Shenzhen Emmelle Industrial Co., Ltd (hereinafter referred to as "Emmelle Industrial") held a board meeting, which reviewed and approved the "Proposal on the Establishment of a Holding Subsidiary for Foreign Investment", Emmelle Industry and Shenzhen Zhenbangda Technology Co., Ltd. (hereinafter referred to as "Zhenbangda Technology") jointly funded the establishment of Shenzhen Emmelle Cloud Technology Co., Ltd. with a registered capital of 2 million yuan, of which Emmelle Industry contributed 1.4 million yuan and Zhenbangda Technology contributed 600,000 yuan. After the completion of the industrial and commercial registration, Emmelle Industry holds 70% of the shares of Shenzhen Emmelle Cloud Technology Co., Ltd. and becomes the controlling shareholder of Shenzhen Emmelle Cloud Technology Co., Ltd. As of September 30, 2020, Shenzhen Emmelle Cloud Technology Co., Ltd. has completed the industrial and commercial registration of this matter. 43 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Share Capital 1. Changes in Share Capital In Share Before the Change Increase/Decrease in the Change (+, -) After the Change Capitaliza New Proportio Bonus tion of Proportio Amount shares Others Subtotal Amount n shares public n issued reserve I. Restricted shares 3,957 0.00% 3,957 0.00% 1. State-owned shares 0 0.00% 0 0.00% 2. State-owned legal person’s 0 0.00% 0 0.00% shares 3. Other domestic shares 3,957 0.00% 3,957 0.00% Including: Domestic legal 0 0.00% 0 0.00% person’s shares Domestic natural person’s 3,957 0.00% 3,957 0.00% shares 4. Foreign shares 0 0.00% 0 0.00% Including: Foreign legal 0 0.00% 0 0.00% person’s shares Foreign natural person’s 0 0.00% 0 0.00% shares 551,343,9 551,343,9 II. Unrestricted shares 100.00% 100.00% 90 90 302,981,0 302,981,0 1. RMB Ordinary shares 54.95% 54.95% 08 08 2. Domestically listed foreign 248,362,9 248,362,9 45.05% 45.05% shares 82 82 3. Overseas listed foreign 0 0.00% 0 0.00% shares 4. Others 0 0.00% 0 0.00% 551,347,9 551,347,9 III. Total shares 100.00% 100.00% 47 47 Reasons for share changed 44 □ Applicable √ Not applicable Approval of share changed □ Applicable √ Not applicable Ownership transfer of share changed □ Applicable √ Not applicable Progress of shares buy-back □Applicable √Not applicable Implementation progress of the reduction of repurchases shares by centralized bidding □Applicable √Not applicable Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period □ Applicable √ Not applicable Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators □ Applicable √ Not applicable 2. Changes of restricted shares □ Applicable √ Not applicable II. Securities issuance and listing 1. Security offering (without preferred stock) in Reporting Period □ Applicable √ Not applicable 2. Changes of total shares and shareholders structure as well as explanation on changes of assets and liability structure □ Applicable √ Not applicable 3. Existing internal staff shares □ Applicable √ Not applicable 45 III. Particulars about shareholder and actual controller of the Company 1. Amount of shareholders of the Company and particulars about shares holding In Share Total preference shareholders Total preference Total common with voting Total common shareholders with stock rights recovered stock voting rights shareholders at at end of last shareholders in 40,488 38,871 recovered at end of 0 0 end of last month month before reporting reporting period (if before annual annual report period-end applicable) (found report disclosed disclosed (if in note 8) applicable) (found in note 8) Particulars about shares held above 5% by shareholders or top ten shareholders Total Number of share pledged/frozen Amount Amount Proportio sharehold Changes of of Full name of Nature of n of ers at the in report restricted un-restrict Shareholders shareholder shares end of State of share Amount period shares ed shares held report held held period Shenzhen Guosheng Energy Domestic 63,508,74 63,508,74 Investment non-state-owned 11.52% 0 0 7 7 Development Co., legal person Ltd. UOB Koy Hian Foreign legal 15,907,85 15,907,85 (Hong Kong) Co., 2.89% 0 0 person 0 0 Ltd. Guosen Securities Foreign legal 13,909,42 13,909,42 (Hong Kong) 2.52% 0 0 person 5 5 brokerage Co., Ltd. Shenwan Hongyuan Foreign legal 1.51% 8,303,272 1677156 0 8,303,272 Securities (Hong person Kong) Co., Ltd. Lhasa Xingqing Domestic Network non-state-owned 1.10% 6,090,255 6090255 0 6,090,255 Technology Co., legal person Ltd. 46 Domestic nature Li Huili 0.71% 3,891,124 0 0 3,891,124 person LI SHERYN Foreign natural 0.63% 3,480,187 3480187 0 3,480,187 ZHAN MING person Domestic nature Xu Hongbo 0.58% 3,187,519 100 0 3,187,519 person Domestic nature Ge Zhiqiong 0.58% 3,177,952 316400 0 3,177,952 person CMS Hong Kong State-owned legal 0.56% 3,070,676 111988 0 3,070,676 Co., Ltd person Strategy investors or general corporation comes top 10 common N/A stock shareholders due to rights issue (if applicable) (see note 3) Li Huili, spouse of the Ji Hanfei, the actual controller of he Company- Shenzhen Guosheng Energy Investment Development Co., Ltd., holding B-share of the Company on behalf of Explanation on associated relationship Shenzhen Guosheng Energy Investment Development Co., Ltd., beyond that, the Company among the aforesaid shareholders has no idea of whether other circulated shareholders belong to concerted action persons ruled in the Administration Norms for Information Disclosure of Change on Shareholding of Shareholders of Listed Companies. Description of the above shareholders in relation to delegate/entrusted voting N/A rights and abstention from voting rights. Particular about top ten shareholders with un-restrict shares held Type of shares Shareholders’ name Amount of un-restrict shares held at Period-end Type Amount Shenzhen Guosheng Energy RMB common 63,508,747 63,508,747 Investment Development Co., Ltd. shares Domestically UOB Koy Hian (Hong Kong) Co., Ltd. 15,907,850 listed foreign 15,907,850 shares Domestically Guosen Securities (Hong Kong) 13,909,425 listed foreign 13,909,425 brokerage Co., Ltd. shares Domestically Shenwan Hongyuan Securities (Hong 8,303,272 listed foreign 8,303,272 Kong) Co., Ltd. shares Lhasa Xingqing Network Technology 6,090,255 RMB common 6,090,255 47 Co., Ltd. shares Domestically Li Huili 3,891,124 listed foreign 3,891,124 shares Domestically LI SHERYN ZHAN MING 3,480,187 listed foreign 3,480,187 shares Domestically Xu Hongbo 3,187,519 listed foreign 3,187,519 shares RMB common 691,300 shares Ge Zhiqiong 3,177,952 Domestically listed foreign 2,486,652 shares Domestically CMS Hong Kong Co., Ltd. 3,070,676 listed foreign 3,070,676 shares Li Huili, spouse of the Ji Hanfei, the actual controller of he Company- Shenzhen Guosheng Expiation on associated relationship or Energy Investment Development Co., Ltd., holding B-share of the Company on behalf of consistent actors within the top 10 Shenzhen Guosheng Energy Investment Development Co., Ltd., beyond that, the Company un-restrict shareholders and between has no idea of whether other circulated shareholders belong to concerted action persons top 10 un-restrict shareholders and top ruled in the Administration Norms for Information Disclosure of Change on Shareholding 10 shareholders of Shareholders of Listed Companies. Explanation on top 10 shareholders involving margin business (if N/A applicable) (see note 4) Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period □ Yes √ No The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no buy-back agreement dealing in reporting period. 2. Controlling shareholder of the Company Nature of controlling shareholders: No controlling subject Type of controlling shareholders: Non-existent The Company does not have the controlling shareholder. On 21 February 2017, we received a Letter of “Explanation on Relevant Event of CBC” from Shenzhen Guosheng Energy Investment Development Co., Ltd. the letter said: since obtained controlling rights of the Shenzhen Guosheng Energy Investment Development Co., Ltd. (hereinafter referred to as Guosheng Energy) on 3 Jan. 2011, in view of Ji Hanfei is the first majority 48 shareholder and largest creditor of CBC, and CBC facing a serious debt crisis, Ji Hanfei initiative seeking an actual controller of CBC, by actively participate the shareholders general meeting of CBC, showing major influence on CBC for achieving actually controls of the Company in purpose of resolving the debt crisis. On 11 May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment and 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 12th, Oct., 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. In second half year of 2013, on the basis of the investor interest adjustment scheme deliberated and approved by creditor’s meeting and investors’ conference, Shenzhen Intermediate People’s Court approved the reorganization plan for CBC, the reorganization plan of CBC completed on 27 December 2013 and close the bankruptcy proceedings of CBC. As a largest majority shareholder and largest creditor of the Company, Guosheng Energy vote in favor on creditor’s meeting and investors’ conference, in respect of the investor interest adjustment scheme, and provided 5.39 million Yuan to CBC for claims settlement and maintain the assets of main business of CBC. Debts of the CBC solved by reorganization, net assets of CBC turns to positive value, the main business of bicycle maintained and achieved a steady development. Currently, CBC is planning a private placement for business promotion and transformation, optimize asset structure, further to strengthen the Company and sustainable ability in development. Taking into account the debt problem of CBC has been resolved, the Company needs supports from all over the shareholders, and based on the actual condition of development of Guosheng Energy and share-holding ratio, Ji Hanfei and Guosheng Energy decided to change the actually controller state to general investment, that is Ji Hanfei and Guosheng Energy, will not participate in the operation management plan of CBC in future, and they have no plans to seeking an actual controlling rights of CBC in next 12 months either The Shenzhen Guosheng Energy Investment Development will hold stock of the CBC and exercise shareholders’ rights as a common investor. Changes of controlling shareholders in reporting period □Applicable √Not applicable Controlling shareholders of the Company has no changes in the period. 3. Actual controller and persons acting in concert of the Company Nature of actual controller: No actual controller Type of actual controller: Non-existent The company does not have the actual controller. (i) Facts and reasons for the company's determination of the actual controller's alteration On February 20, 2017, Ji Hanfei and Guosheng Energy made an “Explanation” to abandon the actual control of the Company, after Ji Hanfei made the declaration to abandon the actual control of the Company, the actual controller of the Company changed from Ji Hanfei to no actual control, the specific facts and reasons are as follows: 1. The voting rights of Ji Hanfei to actually control the shares of the Company According to the “Security Holder Roster” issued by China Securities Depository and Clearing Co., Ltd., Shenzhen Branch and the documents publicly disclosed by Shenzhen China Bicycle, up to December 31, 2016, Ji Hanfei held 63,508,747 shares of the Company’s A-Shares through Guosheng Energy, and his spouse, Li Huili, held 3,891,124 shares of the Company’s B-Shares, so Ji Hanfei totally controlled 67,399,871 shares of the Company’s voting shares, accounting for 12.22% of the total number of shares of 49 the Company. Ji Hanfei actually controlled no more than 30.00% of the Company’s voting rights and had no control over the Company's general meeting of shareholders. 2. Ji Hanfei’s control to the Company's board of directors According to the Resolution Announcement of the 18th session of 8th Board of Directors and the Resolution Announcement of the First Extraordinary General Meeting of 2013 publicly disclosed by the Company and confirmed by the Company and Guosheng Energy, the directors of the current board of directors of the Company should be nominated by the eighth session of board of directors, Guosheng Energy did not nominate the current board of directors for the Company. Therefore, Ji Hanfei has not restructured the board of directors of the Company by controlling the Company’s voting shares after obtaining the control power of Guosheng Energy, and has not actually dominated over half of the members of the board of directors of the Company. According to the Resolution Announcement of the 24th session of the 9th Board of Directors announced on April 27, 2017 by the Company, the ninth session of board of directors of the Company reviewed and passed the following proposals concerning the candidates for the tenth session of board of directors: (1) Passed the Proposal on Nominating Candidates for Directors of the Tenth Session of Board of Directors, agreed the current board of directors to nominate Mr. Li Hai, Mr. Yao Zhengwang, Mr. Cao Fang, Mr. Yang Fenbo, Mr. Sun Longlong and Mr. Zhong Hua as the candidates for the directors of the tenth session of board of directors of the company and participate in the election of the general shareholders’ meeting as the term of office of the director of the 9th session of board of directors of the company has expired. (2) (2) Passed the Proposal on Nominating Candidates for Independent Directors of the Tenth Session of Board of Directors, agreed the current board of directors to nominate Mr. Song Xishun, Mr. Zhang Zhigao and Ms. Yang Hao as the candidates for the independent directors of the tenth session of board of directors of the company as the term of office of the director of the 9 th session of board of directors of the company has expired, and submitted the proposal to the Shenzhen Stock Exchange for review, the candidates can only participate in the election of the general shareholders’ meeting when there is no objection to the review. According to the Company’s explanation and the announcement document of the 24 th session of 9th board of directors of the Company, the candidates for the tenth session of board of directors should be nominated by the ninth session of board of directors, the Company did not receive the nomination of candidates for the tenth session of board of directors from Guosheng Energy. According to the explanation of the Company and Guosheng Energy and the review to the resume of the director candidates announced by the ninth session of board of directors of the Company, in addition to Yao Zhengwang, serving as a supervisor of Guojun Energy, the above mentioned director candidates had no related relationships with Guosheng Energy and Ji Hanfei. In conclusion, even the stockholders’ meeting of the Company considered and agreed the above-mentioned director candidate to serve as the directors of the tenth session of the board of directors of the Company, Ji Hanfei and Guosheng Energy had not actually dominated over half of the members of the tenth session of board of directors of the Company. 3. Ji Hanfei’s significant influence on the general meeting of shareholders of the Company On October 12, 2012, the Shenzhen Intermediate People's Court issued the “Civil Ruling” of “(2012) SZFPZ No. 30” to accept the application for the reorganization of the Company by Guosheng Energy. On December 27, 2013, Shenzhen Intermediate People's Court issued the “Civil Ruling” of “(2012) SZFPZ No. 30-10”, which ruled that the implementation of the Company’s reorganization plan was completed and the Company’s bankruptcy proceedings ended. According to the explanation of Guosheng Energy and the 50 inspection of bankruptcy and restructuring documents, Guosheng Energy had actively participated in the meeting of creditors for the Company’s bankruptcy and reorganization and had provided interest-free loan support to the Company during the bankruptcy and reorganization, which had a significant influence on the Company’s general meeting of shareholders. On February 20, 2017, Ji Hanfei and Guosheng Energy issued the “Explanation”: “Since Ji Hanfei obtained the control power of Guoji Energy on January 3, 2011, in view of the fact that it was the Company’s largest shareholder and largest creditor and the Company faced serious debt crisis for a long time, Ji Hanfei actively sought the actual controller status of the Company and exerted a significant influence on the Company by actively participating in the Company’s general meeting of shareholders so as to realize the actual control of the Company and then strive to promote and solve the Company's debt crisis properly." Therefore, from January 3, 2011 to February 19, 2017, Ji Hanfei had a subjective purpose for actually controlling the Company. After Ji Hanfei made a clear declaration on Feb. 20, 2017 to abandon the actual control of the Company, Ji Hanfei did not subjectively attempt to influence the general meeting of stockholders of the Company by seeking the actual control rights. Objectively, the Company’s voting rights dominated by Ji Hanfei did not exceed 30.00% and he did not nominate more than half of the directors of the Company’s board of directors, Ji Hanfei could not effectively control the Company’s general meeting of shareholders and the board of directors. According to the “Announcement on the Resolutions of the 24th session of 9th Board of Directors” announced by the Company on April 27, 2017 and confirmed by the Company, Ji Hanfei and Guosheng Energy, Ji Hanfei and Guosheng Energy didn’t not nominate any candidate for the directors of the tenth session of board of directors to the Company after Ji Hanfei and Guosheng Energy made the declaration to abandon the control power. In view of the above, the Company considered that the proportion of the Company’s shares actually controlled by Ji Hanfei was relatively low, which was not sufficient to control the general meeting of shareholders or make a significant impact on the general meeting of shareholders, and he had promised to give up the right of control to the company, the Company has no actual controller since February 20, 2017. The sponsor institutions and law firms engaged by the company for the non-public offering of shares have checked this issue and made clear opinions to support. Whether has the shareholder with over 10% stock held in ultimate controlling standards or not √ Yes □ No Legal person Share holding in ultimate control standards Changes of actual controller in reporting period □Applicable √ Not applicable Actual controller of the Company has no changes in the period Property right and controlling relationship between the actual controller and the Company is as follow: Actual controller controlling the Company by entrust or other assets management □ Applicable √ Not applicable 51 4. Particulars about other legal person shareholders with over 10% shares held √Applicable □ Not applicable Legal person/person Shareholder Date of foundation Organization code Main operation business in charge of the unit Industry development, domestic commerce, Shenzhen Guosheng Energy materials supply and sale Investment Development Co., Ji Hanfei April 26, 2005 91440300774115792 (excluding specially run, Ltd. controlled and sold merchandises) 5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers, restructuring side and other commitment subjects □ Applicable √ Not applicable 52 Section VII. Preferred Stock □ Applicable √ Not applicable The Company had no preferred stock in the Period. 53 Section VIII. Convertible Bonds □ Applicable √ Not applicable The Company had no convertible bonds in the Period. 54 Section IX. Particulars about Directors, Supervisors, Senior Executives and Employees I. Changes of shares held by directors, supervisors and senior executives Amount Amount Shares Shares Start of shares of shares End date held at Other held at Working dated of increased decreased Name Title Sex Age of office period-be changes period-en status office in this in this term gin (share) d term period period (Share) (Share) (Share) (Share) Currently August June 28, Li Hai Director M 52 0 0 0 0 0 in office 26, 2010 2020 Currently Septembe June 28, Li Hai President M 52 0 0 0 0 0 in office r 26, 2013 2020 Currently April 15, June 28, Li Hai Chairman M 52 0 0 0 0 0 in office 2015 2020 Yao Currently August June 28, Zhengwa Director M 46 0 0 0 0 0 in office 26, 2010 2020 ng Currently August June 28, Cao Fang Director M 47 0 0 0 0 0 in office 26, 2010 2020 Yang Currently June 30, June 28, Director M 64 0 0 0 0 0 Fenbo in office 2006 2020 Sun Currently June 29, June 28, Director M 48 0 0 0 0 0 Longlong in office 2017 2020 Sun Secretary Currently May 17, June 28, M 48 0 0 0 0 0 Longlong of Board in office 2012 2020 Sun Currently May 22, June 28, CFO M 48 0 0 0 0 0 Longlong in office 2017 2020 Zhong Currently June 29, June 28, Director M 57 0 0 0 0 0 Hua in office 2017 2020 Independ Currently June 29, June 28, Yang Lan ent F 52 0 0 0 0 0 in office 2017 2020 director Independ Song Currently M 58 June 29, June 28, 0 0 0 0 0 ent 55 Xishun director in office 2017 2020 Independ Zhang Currently June 29, June 28, ent M 56 0 0 0 0 0 Zhigao in office 2017 2020 director The convener of the Currently June 27, February Li Xiang M 47 0 0 0 0 0 board of in office 2014 12, 2021 superviso rs Zheng Superviso Currently June 27, February Zhonghua M 59 5,276 0 0 0 5,276 r in office 2011 12, 2021 n Staff Currently May 22, February Li Jialin Superviso M 60 0 0 0 0 0 in office 2014 12, 2021 r Total -- -- -- -- -- -- 5,276 0 0 0 5,276 II. Changes of directors, supervisors and senior executives □ Applicable √ Not applicable III. Post-holding Professional background, major working experience and present main responsibilities in Company of directors, supervisors and senior executive Mr. Li Hai, born in 1969, graduated from Economic department of Shenzhen University in major of accounting; he took the turns of deputy manager of finance department, chief supervisor associate of finance department, secretary of the Board and vice president, etc. of the Company, and now he serves as chairman, legal representative and president of the Company. Mr. Yao Zhengwang, born in 1975, with bachelor degree of law, successively took the post of Supervisor of Supervision Office, Deputy Manager of Sales Department, and Deputy Manager of Legal Affairs Department of Shenzhen Guomin Investment Development Co. Ltd. and deputy general manager of Administration Center of Compliant Risk Control, as well as director, secretary of the Board and convener of supervisory committee of CBC; now he serves as director of the Company and Leshan City Commercial Bank Co., Ltd.. Mr. Cao Fang, born in 1974, master degree; since May of 2007, he took post of item manager of marketing and management department in headquarter of Life Insurance, associate of general manager of marketing and management headquarter as well as general manager of market and business department, he acted as member of 56 planning team of Life Insurance Branch in Guangdong. And subsequently served in strategy and development center, Office of the Chairman, Supervision office; he serves as deputy GM of Shanghai Branch of Life Insurance since March 2012 and person in charge of the sales management center in Funde Insurance Holding Mr. Yang Fenbo, born in 1957, China senior economist with master degree of MBA and engineer, held the position of minister of development department, concurrently minister of science and technology department, assistant general manager, assistant to chairman, deputy chief engineer and chief engineer at Shenzhen Lionda Group; took the chairman and concurrently general manager of Guangdong Sunrise Holding Co., Ltd.; now, he is the chairman of Shenzhen Liona Group Co., Ltd. and Shenzhen Qianhai Fu Rong Asset Management Co., Ltd. Mr. Sun Longlong, born in 1973, graduated from Shanghai University of Finance and Economics in 1995 with a bachelor degree, a bachelor of Economics. He successively worked as financial affairs in Shenzhen Qiongjiao Industry Co., Ltd. and Shenzhen Solar Pipe Co., Ltd., he worked in the Company since May 1999, and successively served as Deputy Manager of financial department, Manager, manager of comprehensive management department, manager of enterprise management department, now he serves as Director, CFO and secretary of the Board of the Company. Mr. Zhonghua, born in 1964, undergraduate college, has an engineer title. He worked in the period since December 1991, and have successively held the posts of director of the quality management dept., director of testing center, deputy GM and GM of the quality management dept., now he serves as director of the Company, director of OEM Management and Manager of Quality Control Department, and Chairman and General Manager of Shenzhen EMMELLE Industrial Co., Ltd. Ms. Yang Lan, born in 1969, is a master’s degree holder, a certified tax accountant, a certified appraiser, a certified public accountant, and an auditor. She successively served as a member of Guiyang Audit Bureau, the head of Zhuhai BDO China Shu Lun Pan Certified Public Accountants, the head of Shanghai Lixin Changjiang Certified Public Accountants, Zhuhai Branch, the head of Guangdong Lixin Changjiang Certified Public Accountants, and the senior manager of Pan-China Certified Public Accountants (LLP), Guangdong Branch; Investment Director of Guangzhou Securities Innovation Investment Company, deputy head of Guangdong Pujinxinghua Tax Agent Co., Ltd., and the deputy head of Guangdong Lixin Changjiang Certified Public Accountants. Since June 29, 2017, she has served as an independent director of the company. Mr. Song Xishun, born in 1963, holds a master’s degree in Chinese from Xiamen University. He once served as a teacher of PLA University of Foreign Language, took office at Public Security Bureau of Xiamen City, Xiamen City Bureau of Culture, served as the deputy dean of Cultural Industry School of Xiamen University of Technology and an arbitrator of Xiamen City Personnel Dispute Arbitration Committee. He has been teaching at Xiamen University of Technology since 2003, and currently serves as Independent director of the company, the deputy dean (worked since January 2013, part-time) of Cultural Development Institute of Xiamen University of Technology, a lawyer (part-time) of Zhong Yin (Xiamen) Law Firm, an independent director (part-time) of Dehua Hengyi Art Ceramics Co., Ltd and Ankee Food Co., Ltd., and the vice chairman (part-time) of Xiamen Language 57 Association. Mr. Zhang Zhigao, born in 1965, is a bachelor of laws from Fudan University, a certified public accountant and a certified appraiser; he has been serving as a partner lawyer of Shanghai Xuan Lun Law Firm since 2007. He used to be a technician of Shanghai Electrical Machinery Plant, a lecturer of Shanghai Lixin University of Commerce, and a partner lawyer of Shanghai Alshine Law Firm; served as a member of the twelfth session of CPPCC of Xuhui District, Shanghai, an independent director of Shanghai Kai Kai Industrial Co., Ltd., an independent director of Shanghai Norcent Technology Development Co., Ltd., and an independent director of Shanghai Xingye Real Estate Co., Ltd.; he currently serves as a supervisor (part-time) of Shanghai Lingqing Venture Capital Investment Management Co., Ltd., a director (part-time) of Shanghai Chengxi Asset Management Co., Ltd., and a director (part-time) of Zhongcheng Village Bank Co., Ltd. of Kuiwen District, Weifang City . Mr. Li Xiang, born in 1974, holds a master’s degree. He once served as the secretary of the party committee, the director of the organization department of the party committee, and the manager of the human resources department at Pacific Life Jiangxi Branch. Since March 2008, he has been serving as the deputy general manager of Shenzhen Guosheng Energy Investment Development Co., Ltd. Mr. Zheng Zhonghuan, born in 1962, holds a bachelor’s degree and an engineer title. He once worked at Shenzhen Light Textile Industry Company and Shenzhen Light Industry Company. Since October 1985, he has been working at Shenzhen China Bicycle Company (Holdings) Limited, and once served as the deputy manager and manager of planning department, the manager of material department, and the manager of manufacturing department; and he serves as a supervisor of the Company, Director of Lithium Battery and New Materials Business Department, and Director of holding subsidiary Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. Mr. Li Jialin, born in 1961, a master degree with a title of senior engineer. He successively served as senior engineer of the Company in electrical & mechanical engineering division, GM assistant of Hunan Guangdian Motorcycle Company, manager of the Company in H&R Dept. now he serves as Staff representative supervisor, commissioner of comprehensive office of the Company and person in charge of the labor union. Post-holding in shareholder’s unit √Applicable □ Not applicable Received Position in Start dated of End date of remuneration from Name Name of shareholder’s unit shareholder’s office term office term shareholder’s unit unit n (Y/N) Yao Shenzhen Guosheng Energy Investment October 09, Supervisor y Zhengwang Development Co., Ltd. 2006 Shenzhen Guosheng Energy Investment Deputy Li Xiang March 1, 2008 Y Development Co., Ltd. General 58 Manager Post-holding in other unit √Applicable □ Not applicable Received Position in Start dated of End date of office remuneration Name Name of other units other unit office term term from other unit (Y/N) January 10, Yao Zhengwang Leshan Commercial Bank Co., Ltd. Supervisor January 9, 2022 Y 2019 Funde Insurance Holdings sales Person in Cao Fang June 1, 2016 Y management center charge Shenzhen Xinsen Jewelry and Gold Supply August 23, Sun Longlong Chairman N Chain Co., Ltd. 2019 Chairman and Shenzhen EMMELLE Cloud Technology Zhong Hua General July 21, 2020 N Co., Ltd. Manager Senior September 12, Yang Fenbo Shenzhen Laiyingda Group Co., Ltd. Y consultant 2017 Guangdong Lixin Jiazhou Accounting Firm Vice director April 1, 2001 Y Independent Huadong Medicine Co., Ltd. June 9, 2019 June 5, 2022 Y Yang Lan Director Independent November 1, Shenzhen Zhongtian Hardcover Co., Ltd. October 30, 2022 Y Director 2019 Vice September 1, Xiamen University of Technology Y professor 2003 Part-time September 1, Song Xishun Zhong Yin (Xiamen) Law Firm Y lawyer 2003 Independent December 30, December 29, Ankee Food Co., Ltd Y director 2020 2023 Partner December 1, SHULUN & PARTNERS (SHANGHAI) Y lawyer 2007 Zhonggeng Fund Management Co., Ltd. Director July 21, 2009 N Shanghai Chengxi Asset Management Co., Director May 10, 2010 N Zhang Zhigao Ltd. Zhongcheng Villiage Bank Co., Ltd. of December 31, Director Y Kuiwen District, Weifang City 2013 Independent China Resources Micro April 24, 2019 April 23, 2022 Y director 59 Zheng Shenzhen Xinsen Jewelry and Gold Supply August 23, Director N Zhonghuan Chain Co., Ltd. 2019 Punishment of securities regulatory authority in recent three years to the company’s current and outgoing directors, supervisors and senior management during the reporting period □ Applicable √ Not applicable IV. Remuneration for directors, supervisors and senior executives Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives Decision procedure of remuneration of directors, According to relevant rules of the Article of Association, the general meeting of shareholders decides supervisors, senior remuneration of directors and supervisors. The Board of Directors decides senior management’s. management Confirmation basis of The Company refers to the position rank and comprehensive industry level. And then general meeting of remuneration of directors, shareholders approves compensation standard and allowance of independent directors. According to the supervisors and senior "Interim Measures to Annual Performance Assessment of Executives" and performance evaluation management standards the Company issues annual performance salary. Actual payment of The Company strictly paid remuneration of directors, supervisors and senior management accordingly remuneration of directors, with decision procedure and confirmation basis. Total payment for remuneration of directors, supervisors and senior supervisors and supervisors amounted to 1.6004 million yuan from January to December in 2019. management Remuneration for directors, supervisors and senior executives in reporting period In 10 thousand Yuan Total Whether remuneration remuneration Post-holding Name Title Sex Age obtained from the obtained from status Company (before related party of taxes) the Company Currently in Li Hai Director M 52 64.55 N office Currently in Sun Longlong Director M 48 26.08 N office Currently in Zhong Hua Director M 57 19.84 N office Zheng Currently in Supervisor M 59 17.11 N Zhonghuan office Currently in Li Jialin Staff Supervisor M 60 18.18 N office Yang Lan Independent F 52 Currently in 4.76 N 60 director office Independent Currently in Song Xishun M 58 4.76 N director office Independent Currently in Zhang Zhigao M 56 4.76 N director office Total -- -- -- -- 160.04 -- Delegated equity incentive for directors, supervisors and senior executives in reporting period □ Applicable √ Not applicable V. Particulars of workforce 1. Number of Employees, Professional composition, Education background Employee in-post of the parent Company (people) 44 Employee in-post of main Subsidiaries (people) 21 The total number of current employees (people) 65 The total number of current employees to receive pay (people) 65 Retired employee’ s expenses borne by the parent Company and 0 main Subsidiaries (people) Professional composition Category of professional composition Numbers of professional composition (people) Production personnel 14 Sales personnel 9 Technical personnel 24 Financial personnel 8 Administrative personnel 10 Total 65 Education background Category of education background Numbers (people) Undergraduate 25 Junior college 21 Below junior college 19 Total 65 2. Remuneration Policy Formulated the remuneration policy according to the position title and comprehensive industry salary standards 61 3. Training programs Formulated the remuneration policy according to the position title and comprehensive industry salary standards 4. Labor outsourcing □ Applicable√ Not applicable 62 Section X. Corporate Governance I. Corporate governance of the Company During the reporting period, the Company was strictly in accordance with the "Company Law", "Securities Law" as well as "Listing Corporation Management Standards" and other relevant laws, regulations and normative documents. We combined the actual situation, constantly improved the corporate governance structure, and strive to build a modern enterprise system. Operation, assembling and holding of general meeting of shareholders, the Board of Directors and board of supervisors were strictly with relevant rules of procedure. Thus we protected interests of the Company. The actual situation of corporate governance structure was in accordance with the release of normative documents about the listing Corporation management rules from China Securities Regulatory Commission. Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC? □Yes √ No There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC. II. Independent of the Company relative to controlling shareholders’ in aspect of businesses, personnel, assets, organization and finance The Company separate business, personnel, assets, institute and finance with largest shareholder or other related parties, owes independent and completed self-operation ability. III. Horizontal competition □ Applicable √ Not applicable IV. In the report period, the Company held annual shareholders’ general meeting and extraordinary shareholders’ general meeting 1. Annual Shareholders’ General Meeting in the report period Ratio of investor Session of meeting Type Date Date of disclosure Index of disclosure participation Notice of Resolution of First First Extraordinary Extraordinary Extraordinary shareholders general shareholders general 12.55% May 15, 2020 May 15, 2020 shareholders general meeting 2020 meeting meeting 2020 (No.: 2020021) 63 Notice of Resolution Annual General Annual General of Annual General 12.09% June 30, 2020 June 30, 2020 Meeting 2019 Meeting Meeting 2020 (No.: 2020028) Notice of Resolution Second of Second Extraordinary Extraordinary Extraordinary shareholders general 12.29% August 21, 2020 August 21, 2020 shareholders general shareholders general meeting meeting 2020 meeting 2020 (No.: 2020038) Notice of Resolution of Third Third Extraordinary Extraordinary Extraordinary shareholders general shareholders general 13.54% December 30, 2020 December 30, 2020 shareholders general meeting 2020 meeting meeting 2020 (No.: 2020059) 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore □ Applicable √ Not applicable V. Responsibility performance of independent directors 1. The attending of independent directors to Board meetings and general meeting The attending of independent directors to Board Meeting and general meeting Times of Times of Absent the attending Times of Times of Name of Board meeting Times of Times of Board Meeting Board meeting Board meeting attending independent supposed to Board meeting Board meeting for the second by entrusted shareholding director attend in the Presence Absence time in a row communicatio presence meeting report period (Y/N) n Yang Lan 10 0 10 0 0N 2 Song Xishun 10 0 10 0 0N 1 Zhang Zhigao 10 0 10 0 0N 1 Explanation of absent the Board Meeting for the second time in a row Nil 2. Objection for relevant events from independent directors Independent directors come up with objection about Company’s relevant matters 64 □Yes √No Independent directors have no objections for relevant events in reporting period. 3. Other explanation about responsibility performance of independent directors The opinions from independent directors have been adopted √ Yes □ No Explanation on advice that accepted/not accepted from independent directors Nil VI. Duty performance of the special committees under the board during the reporting period Board of directors set up audit commission and remuneration and appraisal commission taking responsibility based on Governance Rules of Listed Company, Article of Association as well as Procedure Rules of Board of Directors and other duties and rights various departments endowed. As for compiling and audit on annual financial report were checked and communicated by Audit commission in accordance with rules of Working Procedure of Annual Report of Audit Commission, and they submitted decision to board of directors for approval. Remuneration and appraisal commission of the Company, in reporting period, according to the “Interim Measure on Assessment Reward of Annual Performance for Senior Executives”, carry out evaluation on the management team members for operation works in 2020. VII. Works from Supervisory Committee The Company has risks in reporting period that found in supervisory activity from supervisory committee □ Yes √ No Supervisory committee has no objection about supervision events in reporting period. VIII. Examination and incentives of senior management The Company initially established the standard and incentive mechanism for open and transparent performance evaluation on directors, supervisors and management layer. The appointment of senior management staff was open and transparent, in accordance with provisions of the law. IX. Internal Control 1. Details of major defects in IC appraisal report that found in reporting period □Yes √ No 65 2. Appraisal Report of Internal Control Disclosure date of full internal control April 27, 2021 evaluation report Disclosure index of full internal control Appraisal Report of Internal Control 2020 of CBC released on Juchao website evaluation report The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the 100.00% company's consolidated financial statements The ratio of the operating income of units included in the scope of evaluation accounting for the operating income on the 100.00% company's consolidated financial statements Defects Evaluation Standards Category Financial Reports Non-financial Reports Material defect: (1) inefficiency of Material defect: (1) inefficiency of environment control; (2) inefficiency of environment control; (2) inefficiency of internal supervision; (3) direct impact on internal supervision; (3) direct impact on major mistakes of investment decisions; (4) major mistakes of investment decisions; directly make the significant error in the (4) directly make the significant error in financial statements; (5) violation of the the financial statements; (5) violation of laws, regulations, rules and other normative the laws, regulations, rules and other documents, resulting in investigation of the normative documents, resulting in central government and regulatory agencies, investigation of the central government and being sentenced to a fine or penalty, and regulatory agencies, and being being restricted industry exit, canceling sentenced to a fine or penalty, being business license and being forced the closure restricted industry exit, canceling Qualitative criteria of etc. Major defect: (1) indirect impact on business license and being forced the major mistakes of investment decisions; (2) closure of etc. Major defect: (1) indirect indirectly make the significant error in the impact on major mistakes of investment financial statements; (3) Lack of important decisions; (2) indirectly make the system; (4) violation of the laws, regulations, significant error in the financial rules and other normative documents, statements; (3) Lack of important resulting in investigation of the local system; (4) violation of the laws, government and regulatory agencies, and regulations, rules and other normative being sentenced to a fine or penalty, and documents, resulting in investigation of being ordered to suspend business for the local government and regulatory rectification and cause the Company’s agencies, and being sentenced to a fine business stop of etc. General defect: other or penalty, and being ordered to suspend 66 control defect besides material defect and business for rectification and cause the major defect. Company’s business stop of etc. General defect: other control defect besides material defect and major defect. 1. Potential loss or potential error of total 1. Potential loss or potential error of total profit: (1) General defect: less than or profit: (1) General defect: less than or equal equal to pre-tax total profit of 3%, (2) to pre-tax total profit of 3%, (2) Major Major defect: more than pre-tax total defect: more than pre-tax total profit of profit of 3%( and absolute amount more 3%( and absolute amount more than RMB than RMB 0.5 million), (3) Material 0.5 million), (3) Material defect:: more than defect:: more than 5% of pre-tax total 5% of pre-tax total profit and absolute profit and absolute amount more than amount more than RMB 1 million; 2. RMB 1 million; 2. Potential loss or Potential loss or potential error of operating potential error of operating income: (1) income: (1) General defect: less than or General defect: less than or equal to Quantitative standard equal to operating income of 1%, (2) Major operating income of 1%, (2) Major defect: more than 1% of operating income defect: more than 1% of operating and less than or equal to 3% of operation income and less than or equal to 3% of income, (3) Material defect:: more than 3% operation income, (3) Material defect:: of operating income; 3. Potential loss or more than 3% of operating income; 3. potential error of total assets: (1) General Potential loss or potential error of total defect: less than or equal to 1% of total assets: (1) General defect: less than or assets, (2) Major defect: more than 1% of equal to 1% of total assets, (2) Major total profit and less than or equal to 3% of defect: more than 1% of total profit and total profit, (3) Material defect:: more than less than or equal to 3% of total profit, 3% of total profit (3) Material defect:: more than 3% of total profit Amount of significant defects in financial 0 reports Amount of significant defects in 0 non-financial reports Amount of important defects in financial 0 reports Amount of important defects in 0 non-financial reports X. Auditing report of internal control √Applicable □ Not applicable Deliberations in Audit Report of Internal Control We considers that China Bicycle Company (Holdings) Limited, in line with Basic Norms of Internal Control and relevant regulations, shows an effectiveness internal control of financial report in all major aspects dated 31 December 2020. 67 Disclosure details of audit report of Disclosed internal control Disclosure date of audit report of April 27, 2021 internal control (full-text) Opinion type of auditing report of Standard unqualified IC Whether the non-financial report No had major defects Carried out modified opinion for internal control audit report from CPA □Yes √ No The internal control audit report, issued by CPA, has concerted opinion with self-evaluation report, issued from the Board √ Yes □ No 68 Section XI. Corporation Bonds Whether or not the Company public offering corporation bonds in stock exchange, which undue or without payment in full at maturity on the approval date for annual report disclosed No 69 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Section XII. Financial Report I. Audit report An unqualified audit report with significant uncertainty of going Type of audit opinion concern Signing date of audit report April 23, 2021 Name of audit institute Baker Tilly China CPA (LLP) Name of CPA Chen Zhigang, Zhang Lei Text of auditor’s Report II. Financial statement Unit in note of financial statement refers to CNY: RMB (Yuan) To all shareholders of Shenzhen China Bicycle Company (Holdings) Limited I. Auditing opinions We have audited the financial statement under the name of Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as CBC), including the consolidated and parent Company’s balance sheet of 31 December 2020 and profit statement, and cash flow statement, and statement on changes of shareholders’ equity for the year ended, and notes to the financial statements for the year ended. In our opinion, the Company’s financial statements have been prepared in accordance with the Enterprises Accounting Standards and Enterprises Accounting System, and they fairly present the financial status of the Company and of its parent company as of 31 December 2020 and its operation results and cash flows for the year ended. II. Basis of opinion We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of the auditor’s report. We are independent of the Company in accordance with the Certified Public Accountants of China’s Code of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 70 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 III. Major uncertainty with continuous operation concerned We bring to the attention of the users of the financial statements, as stated in note XV of the financial statements under the name of CBC, China Bicycle Company has completed implementation of the restructuring plan dated 27 December 2013 and terminate the bankruptcy proceedings, in which the condition of introduction of investors has been set out with a view to restoring its ability to continue as a going concern and its sustainable profitability through asset restructuring. Up to the reporting date of auditing, the Company has not introduced any investor, and maintain the ability of CBC to continue the business before the injection of the assets by only retaining the traditional business of selling electric bicycles and developing and selling new business such as lithium batteries and jewelry & gold. Considering that the net profit attributable to parent company for year of 2020 is 3.9846 million yuan, only turning a loss into a profit, these events or circumstances indicate that there are significant uncertainties that may cause significant doubts about the sustainable operation ability of China Bicycle Company. This matter does not affect the published audit opinion. IV. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matter we identified is as follows: Key audit matters Audit address 1. Revenue recognized CBC mainly engages in the sales of bicycles, electric vehicles, 1. Understand, test and evaluate the effectiveness of the internal relevant materials and jewelry accessories. In 2020, the main control design and operation related to the company’s sales and business income of Shenzhen China Bicycle Company was collections. 108,929,796.13 yuan, all of which were generated from domestic 2. Check the relevant provisions of customer contracts, and pay sales. Shenzhen China Bicycle Company took the point of attention to the changes in pricing methods, acceptance methods, revenue recognition when the product is shipped and signed for delivery locations and deadlines, settlement methods, etc., and by the customer. Due to the significant amount of operating assess whether the company’s recognition of income meets the income, the authenticity of the revenue and whether it should be requirements of the accounting standards and whether it is included in the appropriate accounting period had a significant consistent with the disclosed accounting policies. impact on the operating results of the company in 2020, and there might be potential misstatements. Therefore, we took the 3. Inquire and understand the background information of major recognition of income as a key audit matter. customers through open channels, such as business registration data, etc., confirm whether there are potential unrecognized related party relationships between the customer and the Please refer to the accounting policies said in “25. Revenue” of company and related parties. “Note III Main Accounting Policies and Accounting Estimate”, 4. Check the customer information (such as contact information, “22. Operation Revenue and Cost” of “Note VI Annotation of contact address, order time, etc.) of online marketing and Consolidate Financial Statement and “5. Operating Income and evaluate the authenticity and rationality of online marketing; Costs” of “Note XV Principle notes of financial statement of 71 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 parent company” of the financial statements annotation. examine the market price of main materials and analyze the rationality of gross profit rate fluctuation. 5.Inform the main customers of the current transaction amount and fund balance by confirmation letters, and visit important customers to verify the authenticity of the company’s revenue recognition. 6. Check the contracts, warehouse receipts, delivery notes and delivery receipt records of major customers 7. Check the delivery note within a certain period before and after the balance sheet date, pay attention to the date of receipt, and confirm whether the revenue recognition is included in the correct accounting period. 2. Impairment of account receivable As of December 31, 2020, the balance of accounts receivable of 1. Understand and test the effectiveness of the internal control Shenzhen China Bicycle Company was 60,001,774.73 yuan, and design and operation related to the accounts receivable the balance of bad debt provisions was 4,970,350.03 yuan. As management the balance of accounts receivable was significant and the 2. Review the rationality and consistency of accounting policies assessment of bad debt provision involved the significant of the bad debt provision for accounts receivable of the judgment of management, we regarded the impairment of management, and review the rationality of major standards of accounts receivable as a key audit matter. single amount determined by the management. 3. For the accounts receivable with separate provision for bad Please refer to the accounting policies said in “12. Accounts debts, select samples to obtain management’s basis for Receivables” of Note III Main Accounting Policies and estimating the estimated future recoverable amount, including Accounting Estimate, “3. Account receivable” of “Note VI customer credit record, default or delayed payment records, and Annotation of Consolidate Financial Statement ”, and “2. actual repayment after date, and review its rationality. Accounts Receivables” of “Note XV Principle notes of financial 4.For the accounts receivable with provision for bad debts statement of parent company” of the financial statements according to the aging analysis method, analyze the rationality of annotation. the accounting estimates for the bad-debt provision of the accounts receivable of China Bicycle Company, and select samples to test the accuracy of the ageing. V. Other information The management of CBC (the “Management”) is responsible for other information which includes the information covered in the Company’s 2020 annual report excluding the financial statement and our audit report. The audit opinion issued by us for the financial statement has not covered other information, for which we do not issue any form of assurance opinions. Considering our audit on financial statements, we are liable to read other information, during which, we shall consider whether other information differs materially from the financial statements or that we understand during 72 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 our audit, or whether there is any material misstatement. Based on the works executed by us, we should report the fact if we find any material misstatement in other information. In this regards, we have nothing to report. VI. Responsibilities of management and those charged with governance for the financial statements The management is responsible for the preparation of the financial statements in accordance with the Accounting Standards for Enterprise to secure a fair presentation, and for the design, establishment and maintenance of the internal control necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the management is responsible for assessing the Company’s ability to continue as a going concern, disclosing matters related to going concern and using the going concern assumption unless the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. VII. Responsibilities of the auditor for the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit report that includes our audit opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with the CAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: (1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. (2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. 73 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. (4) Conclude on the appropriateness of the management’s use of the going concern assumption and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by the CAS to draw users’ attention in audit report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify audit opinion. Our conclusions are based on the information obtained up to the date of audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. (5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. (6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express audit opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguard measures. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in the auditor’s report because of the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 1. Consolidated Balance Sheet Prepared by Shenzhen China Bicycle Company (Holdings) Limited December 31, 2020 In RMB Item December 31, 2020 December 31, 2019 74 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Current assets: Monetary funds 19,887,978.05 6,074,367.91 Settlement provisions Capital lent Trading financial assets Derivative financial assets Note receivable 580,000.00 Account receivable 55,031,424.70 38,616,523.93 Receivable financing Accounts paid in advance 816,541.52 938,425.99 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Other account receivable 576,770.36 740,354.71 Including: Interest receivable Dividend receivable Buying back the sale of financial assets Inventories 7,729,325.94 6,078,330.30 Contractual assets Assets held for sale Non-current asset due within one year Other current assets 2,715,425.31 3,318,514.25 Total current assets 86,757,465.88 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 75 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Investment real estate Fixed assets 3,792,133.36 4,191,503.33 Construction in progress Productive biological asset Oil and gas asset Right-of-use assets Intangible assets 753,000.00 Expense on Research and Development Goodwill Long-term expenses to be apportioned Deferred income tax asset 793,170.75 1,042,582.16 Other non-current asset 400,000.00 400,000.00 Total non-current asset 4,985,304.11 6,387,085.49 Total assets 91,742,769.99 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 9,606,144.94 10,191,385.23 Accounts received in advance 1,739,953.80 Contractual liability 15,254,713.38 Selling financial asset of repurchase Absorbing deposit and interbank deposit Security trading of agency Security sales of agency Wage payable 1,459,244.07 599,962.73 Taxes payable 722,321.02 585,062.75 Other account payable 37,882,805.52 38,175,654.98 76 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 1,175,251.38 Total current liabilities 66,100,480.31 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 1,175,251.38 Total liabilities 66,100,480.31 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 77 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Reasonable reserve Surplus public reserve 32,673,227.01 32,673,227.01 Provision of general risk Retained profit -1,200,950,240.88 -1,204,736,075.56 Total owner’ s equity attributable to 10,905,230.98 7,119,396.30 parent company Minority interests 14,737,058.70 4,322,186.79 Total owner’ s equity 25,642,289.68 11,441,583.09 Total liabilities and owner’ s equity 91,742,769.99 62,733,602.58 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 December 31, 2020 December 31, 2019 Current assets: Monetary funds 10,097,024.59 1,959,804.92 Trading financial assets Derivative financial assets Note receivable 580,000.00 Account receivable 24,274,935.96 32,843,536.70 Receivable financing Accounts paid in advance 800,000.00 76,937.00 Other account receivable 115,263.05 485,062.44 Including: Interest receivable Dividend receivable Inventories 550,421.78 1,333,374.72 Contractual assets Assets held for sale Non-current assets maturing within one year Other current assets 2,652,771.13 2,830,705.01 78 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Total current assets 38,490,416.51 40,109,420.79 Non-current assets: Debt investment Other debt investment Long-term receivables Long-term equity investments 19,960,379.73 4,235,379.73 Investment in other equity instrument Other non-current financial assets Investment real estate Fixed assets 3,530,501.40 3,813,708.80 Construction in progress Productive biological assets Oil and natural gas assets Right-of-use assets Intangible assets 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 23,890,881.13 9,202,088.53 Total assets 62,381,297.64 49,311,509.32 Current liabilities Short-term borrowings Trading financial liability Derivative financial liability Notes payable Account payable 748,604.24 9,002,524.60 Accounts received in advance 572,687.18 Contractual liability 14,685,423.04 Wage payable 1,146,371.58 507,738.35 Taxes payable 24,906.50 27,797.28 Other accounts payable 39,409,824.37 36,803,498.12 79 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Including: Interest payable Dividend payable Liability held for sale Non-current liabilities due within one year Other current liabilities 1,101,243.63 Total current liabilities 57,116,373.36 46,914,245.53 Non-current liabilities: Long-term loans 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 Total liabilities 57,116,373.36 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 -1,206,590,547.58 -1,209,458,208.07 80 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Total owner’s equity 5,264,924.28 2,397,263.79 Total liabilities and owner’s equity 62,381,297.64 49,311,509.32 3. Consolidated Profit Statement In RMB Item 2020 2019 I. Total operating income 117,857,480.17 76,022,687.75 Including: Operating income 117,857,480.17 76,022,687.75 Interest income Insurance gained Commission charge and commission income II. Total operating cost 113,179,555.62 80,986,694.86 Including: Operating cost 103,221,623.73 68,681,471.12 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 108,070.23 59,405.21 Sales expense 2,540,657.03 3,178,476.39 Administrative expense 4,783,608.32 6,409,465.59 R&D expense 2,506,877.57 2,753,277.72 Financial expense 18,718.74 -95,401.17 Including: Interest expenses Interest income 89,977.25 110,834.04 Add: other income 10,207.52 Investment income (Loss is 81 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 value (Loss is listed with “-”) Loss of credit impairment -603,180.13 -2,533,065.87 (Loss is listed with “-”) Losses of devaluation of asset -198,181.03 -499,175.17 (Loss is listed with “-”) Income from assets disposal 24,936.44 (Loss is listed with “-”) III. Operating profit (Loss is listed with 3,911,707.35 -7,996,248.15 “-”) Add: Non-operating income 6,542,649.75 6,259,839.85 Less: Non-operating expense 5,688,279.29 6,065,148.83 IV. Total profit (Loss is listed with “-”) 4,766,077.81 -7,801,557.13 Less: Income tax expense 390,371.22 12,324.52 V. Net profit (Net loss is listed with “-”) 4,375,706.59 -7,813,881.65 (i) Classify by business continuity 1.continuous operating net profit 4,375,706.59 -7,813,881.65 (net loss listed with ‘-”) 2.termination of net profit (net loss listed with ‘-”) (ii) Classify by ownership 1.Net profit attributable to owner’s 3,785,834.68 -7,186,905.64 of parent company 2.Minority shareholders’ gains and 589,871.91 -626,976.01 losses VI. Net after-tax of other comprehensive income 82 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 4,375,706.59 -7,813,881.65 Total comprehensive income 3,785,834.68 -7,186,905.64 83 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 attributable to owners of parent Company Total comprehensive income 589,871.91 -626,976.01 attributable to minority shareholders VIII. Earnings per share: (i) Basic earnings per share 0.0069 -0.0130 (ii) Diluted earnings per share 0.0069 -0.0130 As for the enterprise combined under the same control, net profit of 0 Yuan achieved by the merged party before combination while 0 Yuan achieved last period. Legal Representative: Li Hai Person in charge of Accounting Works: Sun Longlong Person in charge of Accounting Institution: Zhong Xiaojin 4. Profit Statement of Parent Company In RMB Item 2020 2019 I. Operating income 28,879,097.16 57,765,728.40 Less: Operating cost 21,700,690.24 52,957,470.16 Taxes and surcharge 15,043.36 30,534.64 Sales expenses 707,225.99 669,212.01 Administration expenses 2,851,678.89 5,274,201.03 R&D expenses 1,118,618.85 2,753,277.72 Financial expenses -60,879.85 -27,640.88 Including: interest expenses Interest income 69,527.04 36,142.99 Add: other income 8,595.12 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 “-”) 84 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Net exposure hedging income (Loss is listed with “-”) Changing income of fair value (Loss is listed with “-”) Loss of credit impairment -130,767.69 -2,150,073.55 (Loss is listed with “-”) Losses of devaluation of asset -118,780.98 (Loss is listed with “-”) Income on disposal of assets 24,936.44 (Loss is listed with “-”) II. Operating profit (Loss is listed with 2,330,702.57 -6,041,399.83 “-”) Add: Non-operating income 5,975,186.69 5,964,797.81 Less: Non-operating expense 5,438,228.77 5,603,102.65 III. Total Profit (Loss is listed with “-”) 2,867,660.49 -5,679,704.67 Less: Income tax IV. Net profit (Net loss is listed with 2,867,660.49 -5,679,704.67 “-”) (i) continuous operating net profit 2,867,660.49 -5,679,704.67 (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 85 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 VI. Total comprehensive income 2,867,660.49 -5,679,704.67 VII. Earnings per share: (i) Basic earnings per share (ii) Diluted earnings per share 5. Consolidated Cash Flow Statement In RMB Item 2020 2019 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 93,023,981.38 34,301,259.24 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 86 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 Write-back of tax received 78,290.48 Other cash received concerning 28,524,286.42 8,415,964.05 operating activities Subtotal of cash inflow arising from 121,626,558.28 42,717,223.29 operating activities Cash paid for purchasing commodities and receiving labor 96,741,787.34 33,526,465.17 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 5,937,846.01 6,068,095.14 Taxes paid 551,358.27 5,495,235.28 Other cash paid concerning 14,453,337.70 11,419,369.04 operating activities Subtotal of cash outflow arising from 117,684,329.32 56,509,164.63 operating activities 87 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Net cash flows arising from operating 3,942,228.96 -13,791,941.34 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 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 activities Cash paid for purchasing fixed, 18,118.82 897,577.01 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 18,118.82 897,577.01 activities Net cash flows arising from investing 46,381.18 -897,577.01 activities III. Cash flows arising from financing activities Cash received from absorbing 9,825,000.00 2,275,000.00 investment Including: Cash received from absorbing minority shareholders’ 9,825,000.00 2,275,000.00 investment by subsidiaries Cash received from loans Other cash received concerning 2,000,000.00 88 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 financing activities Subtotal of cash inflow from financing 9,825,000.00 4,275,000.00 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 financing activities Subtotal of cash outflow from financing activities Net cash flows arising from financing 9,825,000.00 4,275,000.00 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash 13,813,610.14 -10,414,518.35 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 19,887,978.05 6,074,367.91 equivalents at the period -end 6. Cash Flow Statement of Parent Company In RMB Item 2020 2019 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 17,674,623.95 20,912,867.52 services Write-back of tax received 4,239.24 Other cash received concerning 33,840,545.52 11,527,292.59 operating activities Subtotal of cash inflow arising from 51,519,408.71 32,440,160.11 operating activities 89 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Cash paid for purchasing commodities and receiving labor 9,546,863.96 15,697,313.54 service Cash paid to/for staff and workers 4,522,703.61 4,179,923.89 Taxes paid 296,782.94 5,298,670.25 Other cash paid concerning 13,337,219.71 9,071,443.23 operating activities Subtotal of cash outflow arising from 27,703,570.22 34,247,350.91 operating activities Net cash flows arising from operating 23,815,838.49 -1,807,190.80 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 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 activities Cash paid for purchasing fixed, 18,118.82 897,577.01 intangible and other long-term assets Cash paid for investment 15,725,000.00 4,225,000.00 Net cash received from subsidiaries and other units obtained Other cash paid concerning investing activities Subtotal of cash outflow from investing 15,743,118.82 5,122,577.01 activities Net cash flows arising from investing -15,678,618.82 -5,122,577.01 activities III. Cash flows arising from financing 90 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 8,137,219.67 -6,929,767.81 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 10,097,024.59 1,959,804.92 equivalents at the period -end 7. Statement of Changes in Owners’ Equity (Consolidated) Current period In RMB 2020 Owners’ equity attributable to the parent Company Other Other Minori Total equity instrument Less: compr Provisi Item Share Reaso Surplu Retain ty owners Perpe Capital Invent ehensi on of Subtot capita Prefe nable s ed Other interes ’ tual reserve ory ve genera al l rred Other reserve reserve profit ts equity capit shares incom l risk stock al e 91 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 secur ities I. Balance at the 551,3 627,83 32,673 -1,204, 11,441 7,119, 4,322, 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 II. Balance at 551,3 627,83 32,673 -1,204, 11,441 7,119, 4,322, 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 10,414 14,200 3,785, 3,785, year (Decrease ,871.9 ,706.5 834.68 834.68 is listed with 1 9 “-”) (i) Total 3,785, 3,785, 589,87 4,375, comprehensive 834.68 834.68 1.91 706.59 income (ii) Owners’ devoted and 9,825, 9,825, decreased 000.00 000.00 capital 1.Common 9,825, 9,825, shares invested 000.00 000.00 by shareholders 2. Capital invested by holders of other equity instruments 92 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4.Carry-over retained earnings from the defined benefit plans 93 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 -1,200, 10,905 14,737 25,642 the end of the 47,94 4,297. ,227.0 950,24 ,230.9 ,058.7 ,289.6 report period 7.00 85 1 0.88 8 0 8 Last period In RMB 2019 Owners’ equity attributable to the parent Company Other equity instrument Other Minorit Perp Less: compr Provisi Total Item Share Reaso Surplu Retain y etual Capital Invent ehensi on of Subtot owners’ capita Prefe nable s ed Other interest capit reserve ory ve genera al equity l rred Other reserve reserve profit s 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 Add: Changes of accounting policy Error correction of the last period 94 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 -7,186, -7,186, 1,648,0 -5,538, year (Decrease 905.64 905.64 23.99 881.65 is listed with “-”) (i) Total -7,186, -7,186, -626,97 -7,813, comprehensive 905.64 905.64 6.01 881.65 income (ii) Owners’ devoted and 2,275,0 2,275,0 decreased 00.00 00.00 capital 1.Common 2,275,0 2,275,0 shares invested 00.00 00.00 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 95 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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) 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 96 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 in the report period 2. Usage in the report period (VI)Others IV. Balance at 551,3 627,83 32,673 -1,204, 7,119, 4,322,1 11,441, the end of the 47,94 4,297. ,227.0 736,07 396.30 86.79 583.09 report period 7.00 85 1 5.56 8. Statement of Changes in Owners’ Equity (Parent Company) Current period In RMB 2020 Other equity instrument Perpet Other Capital Less: Reasona Total Item 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 -1,209, 627,834, 32,673,2 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 -1,209, 627,834, 32,673,2 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 2,867,6 2,867,660. year (Decrease is 60.49 49 listed with “-”) (i) Total 2,867,6 2,867,660. comprehensive 60.49 49 97 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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. 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 98 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 -1,206, 627,834, 32,673,2 5,264,924. the end of the 7,947.0 590,54 297.85 27.01 28 report period 0 7.58 Last period In RMB 2019 Other equity instrument Other Perpet Capital Less: Total Item Share compre Reasonab Surplus Retained Preferr ual public Inventor Other owners’ capital hensive le reserve reserve profit ed capital Other reserve y shares equity income stock 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 99 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 -5,679,70 -5,679,704. year (Decrease 4.67 67 is listed with “-”) (i) Total -5,679,70 -5,679,704. comprehensive 4.67 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 1. Withdrawal of surplus reserves 2. Distribution 100 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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, -1,209,45 2,397,263.7 101 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 the end of the 7,947. ,297.85 227.01 8,208.07 9 report period 00 III. Company Profile 1. History and basic information 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 operation activities: The production and assembly of various bicycles and spare parts, components, parts, mechanical product, sport machinery, fine chemicals, carbon fiber composites material, household electrical appliance and affiliated components (products management by license excluded). The majority of its products were previously exported, however, the sales volume sharply declined in recent years because of the anti-dumping litigation. Hence, the Company commences on the debt reorganization and the reorganization plan was completed on 27 December 2013 with bankruptcy proceedings terminated. Meanwhile, makes greater efforts to develop and research the new products, and creates a range of electrical bicycles to occupy the domestic market. 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 23 April 2021 after approved by 28th session of 10th BOD of the Company. Two subsidiaries and one sub-subsidiary included in consolidate statement scope in the period, that is Shenzhen 102 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Emmelle Industrial Co., Ltd and its subsidiaries Emmelle Cloud Technology Co., Ltd. and Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd, of which, the Shenzhen Emmelle Cloud Technology Co., Ltd is the newly established sub-subsidiary included in consolidate statements during the period. 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. 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. 103 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 V. Main accounting policy and Accounting Estimate Tips for specific accounting policy and estimate: 1. Declaration on compliance with accounting standards for business enterprise 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. 3. Business cycles The business period for the Company, which is the Gregorian calendar starting from 1 January to 31 December 4. Book-keeping 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 104 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 105 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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. 106 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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. 107 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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. (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. 108 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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. 109 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 110 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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. (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: 111 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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. 112 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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. 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” Nil 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, 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 a simplified model of expected credit losses, that is the allowance for losses is always measured at the amount of expected credit losses over the entire duration period. Proportion for accrual found more in the accounting policy and estimate for account receivable. 113 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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: 114 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 treatment in【Financial Instrument】 13. Receivable financing 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. The Company transfers the receivables held by discounting or endorsement, and such operations are more frequent with large amount involved. The management business models is essentially both the collection of contractual cash flows and the sales; in accordance with the relevant provision of financial instrument standards, classified them into the financial assets measured at fair value and with its variation reckoned into other comprehensive income. 14.Other account receivable Determination method and accounting treatment of the expected credit loss of other account receivable (1) Account receivable with single significant amount and withdrawal single item bad debt provision: 115 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Account with single significant amount: the single receivable has over 5 million yuan at end of the period At the end of the period, the receivables with significant single amount are tested separately for impairment. If there is objective evidence that they have been impaired, the impairment loss will be recognized and the provision for bad debts will be made based on the balance between the present value of future cash flows and its book value. (2)Account receivable with bad debt provision accrual by portfolio For the receivables with non significant single amount at the end of the period, they are divided into several combinations together with the receivables without impairment after independent test according to the account age as the credit risk feature. The impairment loss is calculated and determined according to a certain proportion of the ending balance of these receivables combinations (impairment test can be conducted separately), and the bad debt provision is withdrawn. In addition to the receivables for which impairment provision has been separately made, the company determines the following proportion of provision for bad debts based on the actual loss rate of the combination of receivables with account age as credit risk characteristics in the previous year, which is the same or similar to the receivables, in combination with the current situation: (2) Age analysis Accrual proportion of account Accrual proportion of other account Account age receivable receivable Within one year(one year included) 0.3% 0.3% 1~2 years (2-year included) 0.3% 0.3% 2~3 years (3-year included) 0.3% 0.3% Over 3 years 100% 100% Including: determined to be un-collectible Write off Write off Note: no provision is made for bad debt for inter-company receivables and other receivables with the scope of consolidation. (3) Account receivable with minor single amount but single provision for bad debts Reasons for provision of bad debt reserve on single base: The Company conducts impairment test separately for receivables that are not significant in single amount but have the following characteristics, if there is objective evidence that they have been impaired, the impairment loss will be recognized and the provision for bad debts will be made based on the balance between the present value of future cash flows and its book value; receivables that are in dispute with the other party or involving litigation or arbitration; there are clear signs indicating that the debtor is likely to be unable to fulfill the repayment obligations of the receivables. Provision method of bad debt reserve: If the impairment test is carried out separately and there is objective evidence that it has been impaired, the impairment loss will be recognized and the provision for bad debts will be made based on the balance between the present value of future cash flows and its book value. 116 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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. 16.Contract assets Nil 117 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 17.Contract cost Nil 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 118 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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. 19.Debt investment Nil 20.Other debt investment Nil 21.Long-term account receivable Nil 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. 119 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 120 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 be provided for based on the difference between the carrying value and the recoverable amount. 121 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 122 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 impairment provision shall be provided for based on the difference between the carrying value and the recoverable amount. 26. Borrowing expenses Nil 27.Biological assets Nil 28. Oil and gas asset Nil 29.Right-of-use asset Ni 30. Intangible assets (1) Valuation method, service life and impairment test 1.Intangible assets include land use right, patent right and non-patent technology, which should be initially measured at cost. 2.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. 3.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 123 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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; ③the 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. 31. Impairment of long-term assets Nil 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. Contract liability 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 The Company terminates the labor relationship with an employee before the employee labor contract expires, or proposes to offer a compensation to encourage an employee to voluntarily accept the downsizing. When the Company cannot unilaterally withdraw the labor relationship cancellation plan or the downsizing proposal nor confirm the relevant costs of the restructuring involving the payment of termination benefits, whichever is earlier, the liabilities arising from the compensation for the termination of the labor relationship with the employees are recognized and included in the current profit and loss. 124 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (3) Accounting for 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 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 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 Nil 36. Accrual liability Nil 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. 125 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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. 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 126 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 Nil 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) Recognition of revenue On the starting date of the contract, the company evaluates the contract, identifies each individual performance obligation contained in the contract, and determines whether each individual performance obligation is performed within a certain period of time or at a certain point in time. When meeting one of the following conditions, it belongs to the performance obligation within a certain period of time, otherwise, it belongs to the performance obligation at a certain point in time: 1) The customer obtains and consumes the economic benefits brought by the company's performance at the same time as the company performs the contract; 2) The customer can control the goods or services under construction during the company's performance; 3) The goods or services produced during the company's performance have irreplaceable uses, and the company has the right to collect payments for the accumulated performance part of the contract during the entire contract period . For performance obligations performed within a certain period of time, the company recognizes revenue in accordance with the performance progress during that period of time. When the performance progress cannot be reasonably determined, if the cost incurred is expected to be compensated, the revenue shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined. For performance obligations performed at a certain point in time, revenue is recognized at the point when the customer obtains control of the relevant goods or services. When judging whether the customer has obtained control of the goods, the company considers the following signs: 1) The company has the current right to receive payment for the goods, that is, the customer has the current payment obligation for the goods; 2) The company has transferred the legal ownership of the goods to the customer, that is, the customer has legal ownership of the 127 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 goods; 3) The company has transferred the product to the customer in kind, that is, the customer has physically taken possession of the product; 4) The company has transferred the major risks and rewards of the ownership of the goods to the customer, that is, the customer has obtained the main risks and rewards of the ownership of the goods; 5) the customer has accepted the goods; 6) Other signs indicate that the customer has obtained control of the goods. (2) Principles of income measurement 1) The company measures income based on the transaction price allocated to each individual performance obligation. The transaction price is the amount of consideration that the company expects to be entitled to receive due to the transfer of goods or services to the customer, and does not include the amount collected on behalf of a third party and the amount expected to be returned to the customer. 2) If there is variable consideration in the contract, the company shall determine the best estimate of the variable consideration based on the expected value or the amount most likely to incur, but the transaction price including the variable consideration shall not exceed the amount at which the accumulatively recognized income is most likely not be subject to a significant reversal when the relevant uncertainty is eliminated. 3) If there is a major financing component in the contract, the company shall determine the transaction price based on the amount payable in cash when the customer assumes control of the goods or services. The difference between the transaction price and the contract consideration shall be amortized by the effective interest method during the contract period. On the starting date of the contract, if the company expects that the interval between the customer's acquisition of control of the goods or services and the customer's payment of the price will not exceed one year, we will not consider the significant financing components in the contract. 4) If the contract contains two or more performance obligations, the company will allocate the transaction prices to each individual performance obligation in accordance with the relative proportion of the stand-alone selling price of the goods promised by each individual performance obligation on the commencement date of contract. (3) Specific method of revenue recognition: In accordance with the general principles of revenue recognition and the actual situation of the company's product sales, the company formulates a specific revenue recognition method that the products sold by the company to customers are recognized as revenue after the products are delivered to the customer and the customer carries out acceptance and inspection. 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: 128 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 129 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 When the Company is the lessee, lease payments are recognized as cost or profit or loss with straight-line method over the lease term. Initial expenses are recognized directly into profit or loss. Contingent rents are charged as profit or loss in the periods in which they are incurred. When the Company is the lessor, lease income is recognized as profit or loss with straight-line method over the lease term. Initial expenses, other than those with material amount and eligible for capitalization which are recognized as profit or loss by installments, are recognized directly as profit or loss. Contingent rents are charged into profit or loss in the periods in which they are incurred. (2)Accounting for financing lease When the company acts as lessee, at the inception of lease, the lower of fair value of leased assets at the inception of lease and the present value of minimum lease payment is recognized as the value of leased assets. The 130 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 minimum lease payment is recognized as the value of long-term payable. Their difference is recorded as unrecognized finance costs with any initial direct expense incurred recorded in the value of leased assets. For each period of the lease term, current finance cost is calculated using effective interest method. When the company acts as lessor, at the inception of lease, the sum of minimum lease income at the inception of lease and the initial direct expense is recognized as the value of finance lease payment receivable, with unsecured balance also recorded. The difference between the sum of minimum lease income, initial direct expense and unsecured balance and the sum of their present values is recognized as unrealized finance income. For each period of the lease term, current finance income is calculated using effective interest method. 43. Other important accounting policy and estimation Discontinued operation refers to the operation disposed or classified as held-for-sale by the Company and presented separately under operation segments and financial statements, which has fulfilled one of the following criteria: (1) it represents an independent key operation or key operating region; (2) it is part of the proposed disposal plan on an independent key operation or proposed disposal in key operating region; or (3) it only establishes for acquisition of subsidiary through disposal. The enterprise shall separately list profit and loss from continuing operations and profit and loss from discontinuing operations in the profit statement. For non-current assets held for sale or disposal groups that do not meet the definition of discontinuing operations, the impairment losses and reversal amounts and disposal gains and losses should be presented as profit or loss from continuing operations. Operational gains and losses and disposal profits and losses such as impairment losses and reversal amounts of discontinuing operations should be reported as profits or losses of discontinuing operations. 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 In consolidate balance sheet dated 31 ”Account received in advance” presented Deliberated and approved by 24th session December 2020, the account received in as “Contract liability” of 10th BOD dated 27 August 2020 advance is shown in the amount of 0.00 yuan, the contract liability on 31 December 131 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 2020 is shown as 16,429,964.76 yuan. (2) Changes of important accounting estimation □ Applicable √ Not applicable (3)Adjustment on the relevant items of financial statement at beginning of the year when implemented the new revenue standards and new leasing standards since 2020 Applicable Whether needs to adjust the balance sheet accounts at the beginning of the year √Yes □No Consolidated balance sheet In RMB Item 2019-12-31 2020-01-01 Adjustment Current assets: Monetary fund 6,074,367.91 6,074,367.91 Settlement provisions Capital lent Trading 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 Accounts paid in 938,425.99 938,425.99 advance 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 132 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 financial assets Inventories 6,078,330.30 6,078,330.30 Contract 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 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 133 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 -1,739,953.80 advance Contract liability 1,568,550.21 1,568,550.21 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 585,062.75 585,062.75 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 134 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Other current liabilities 171,403.59 171,403.59 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 Total liabilities 51,292,019.49 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 135 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 on adjustment The Company has implemented the new revenue standards from January 1, 2020, for the company's right to collect consideration for the goods that the company has transferred to customers, and this right depends on other factors other than the lapse of time, in response to the obligation to transfer goods to customers for the consideration that has been collected or receivable from customers, the contract consideration received in advance is adjusted from "accounts received in advance" to "contract liabilities." Balance sheet of parent company In RMB Item 2019-12-31 2020-01-01 Adjustment Current assets: Monetary fund 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 Accounts paid in 76,937.00 76,937.00 advance Other account 485,062.44 485,062.44 receivable Including: Interest receivable Dividend receivable Inventories 1,333,374.72 1,333,374.72 Contract assets 136 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Assets held for sale Non-current asset due 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 account receivable Long-term equity 4,235,379.73 4,235,379.73 investment 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 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 asset Other non-current asset 400,000.00 400,000.00 Total non-current asset 9,202,088.53 9,202,088.53 Total assets 49,311,509.32 49,311,509.32 Current liabilities: Short-term loans 137 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Trading financial liability Derivative financial liability Note payable Account payable 9,002,524.60 9,002,524.60 Accounts received in 572,687.18 -572,687.18 advance Contract liability 535,570.90 535,570.90 Wage payable 507,738.35 507,738.35 Taxes payable 27,797.28 27,797.28 Other account 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 37,116.28 37,116.28 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 Long-term account payable Long-term wages payable Accrual liability Deferred income Deferred income tax 138 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 liabilities Other non-current liabilities Total non-current liabilities Total liabilities 46,914,245.53 46,914,245.53 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 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 on adjustment The Company has implemented the new revenue standards from January 1, 2020, for the company's right to collect consideration for the goods that the company has transferred to customers, and this right depends on other factors other than the lapse of time, in response to the obligation to transfer goods to customers for the consideration that has been collected or receivable from customers, the contract consideration received in advance is adjusted from "accounts received in advance" to "contract liabilities." (4) Explanation on retrospective adjustment of prior period comparative data for the first implementation of new revenue standards and new leasing standards from 2020 □Applicable √Not applicable 45. Other Nil 139 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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%, 15% Disclose reasons for different taxpaying body Taxpaying body Income tax rate The Company 15.00% Shenzhen Emmelle Industry Co., Ltd. 25.00% Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. 20.00% Shenzhen Emmelle Cloud Technology Co., Ltd. 20.00% 2. Tax preference Note 1: The Company obtained the high-tech enterprise certificate "GR202044200651" jointly approved by the Shenzhen Science and Technology Innovation Commission, the Shenzhen Finance Bureau, and the Shenzhen Tax Service, State Taxation Administration on December 11, 2020, the validity period is from 2020 to 2022. Therefore, the company enjoys a preferential tax rate of 15% in 2020. Note 2: According to the "Enterprise Income Tax Law of the People's Republic of China" and its implementation regulations, the "Notice of the State Taxation Administration and Ministry of Finance on the Implementation of Inclusive Tax Relief Policies for Small and Micro Enterprises" (CS[2020] No. 13) and other provisions, from January 1, 2021 to December 31, 2021, the portion of the annual taxable income of small, low-profit enterprises that does not exceed 1 million yuan will be included in the taxable income by 25%, and the corporate income tax will be paid at a tax rate of 20%. The portion of the annual taxable income of small, low-profit enterprises exceeding 1 million yuan but not exceeding 3 million yuan will be included in the taxable income by50%, and the corporate income tax will be paid at a tax rate of 20%. Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. and Shenzhen Emmelle Cloud Technology Co., Ltd., the Company’s subsidiaries, are small and low-profit enterprises, so a preferential tax rate of 20% is applicable to them. 3. Other Nil 140 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 VII. Notes to Items in Consolidated Financial Statements 1. Monetary fund In RMB Item Ending balance Opening balance Cash on hand 21,530.26 89,313.66 Bank deposit 19,866,447.79 5,979,003.60 Other monetary fund 6,050.65 Total 19,887,978.05 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 580,000.00 Total 580,000.00 In RMB 141 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 Notes receivable of bad debt provision 0.00 0.00% 0.00 0.00% 0.00 0.00 0.00% 0.00 0.00% 0.00 accrual on single basis: Including: Notes receivable of 580,000.0 580,000.0 bad debt provision 0.00 0.00% 0.00 0.00% 0.00 100.00% 0.00 0.00% 0 0 accrual on portfolio Including: Bank acceptance 580,000.0 580,000.0 100.00% 0.00 0.00% draft 0 0 580,000.0 580,000.0 Total 0.00 0.00% 0.00 0.00% 0.00 100.00% 0.00 0.00% 0 0 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: Nil Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio 142 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 Collected or Ending balance Accrual Write off Other reversal Total 0.00 0.00 0.00 0.00 0.00 0.00 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 Total 0.00 (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 Total 0.00 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 Total 0.00 Other explanation (1) At the end of the period, there was no notes receivable with single provision for bad debts. (2) There is no pledge of notes receivable at the end of the period. (3) At the end of the period, there are no endorsed or discounted notes receivable that have not yet expired. (4) At the end of the period, there was no situation that the bills were converted into accounts receivable due to the inability of the 143 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 drawer to perform the contract. (6) Note receivable actually charge-off in the period In RMB Item Amount charge-off Including important note receivable 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 -- -- -- Explanation on note receivable change-off: Nil 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 10,400,5 4,821,54 5,579,011 9,421,186 4,477,656 4,943,530.7 17.33% 46.36% 21.81% 47.53% provision accrual by 57.65 6.38 .27 .95 .23 2 single basis Including: Accounts with single minor amount but 10,400,5 4,821,54 5,579,011 4,385,583 2,966,975 1,418,608.1 with bad debts 17.33% 46.36% 10.15% 67.65% 57.65 6.38 .27 .20 .10 0 provision accrued individually 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 Account receivable 49,601,2 82.67% 148,803. 0.30% 49,452,41 33,774,31 78.19% 101,322.9 0.30% 33,672,993. 144 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 with bad debt 17.08 65 3.43 6.16 5 21 provision accrual by portfolio Including: Account receivable withdrawal bad debt provision by group of 49,601,2 148,803. 49,452,41 33,774,31 101,322.9 33,672,993. credit risk 82.67% 0.30% 78.19% 0.30% 17.08 65 3.43 6.16 5 21 characteristics (Aging analysis method) 60,001,7 4,970,35 55,031,42 43,195,50 4,578,979 38,616,523. Total 100.00% 8.28% 100.00% 10.60% 74.73 0.03 4.70 3.11 .18 93 Bad debt provision accrual on single basis: Account receivable with significant single amount period-end but withdrawal bad debt provision on single basis In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Shenzhen Jiahaosong Expected to be difficult 2,393,603.75 718,081.13 30.00% Technology Co., Ltd. to recover Shenzhen Weiterui New Expected to be difficult Energy Technology Co., 1,670,971.05 501,291.32 30.00% to recover Ltd. Sichuan Wanling Electric Expected to be difficult 1,102,072.20 1,102,072.20 100.00% Technology Co., Ltd. to recover Zhengzhou Guiguan Expected to be difficult 1,007,233.79 302,170.14 30.00% Tech. Trade. Co., Ltd to recover Suzhou Jiaxin Economic Expected to be difficult 888,757.00 266,627.10 30.00% Trade Co., Ltd. to recover Shijiazhuang Dasong Expected to be difficult 837,064.00 837,064.00 100.00% Tech. Co., Ltd to recover Dongguan Daxiang New Expected to be difficult 816,902.94 245,070.88 30.00% Energy Co., Ltd. to recover Suzhou Daming Vehicle Expected to be difficult 652,372.42 326,186.21 50.00% Industry Co., Ltd. to recover Guangdong Xinlingjia Expected to be difficult 371,136.00 111,340.80 30.00% New Energy Co., Ltd. to recover Suzhou Daming Vehicle Expected to be difficult 355,067.00 106,520.10 30.00% Industry Co., Ltd. to recover 145 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Shanghai Swen Electric Expected to be difficult 304,867.50 304,867.50 100.00% Vehicle Co., Ltd. to recover Jinan Yuxintai Sales Co., Expected to be difficult 510.00 255.00 50.00% Ltd. to recover Total 10,400,557.65 4,821,546.38 -- -- 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: Accounts receivable with provision for bad debts by aging analysis method In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Within one year (one year 47,429,631.14 142,288.89 0.30% included) 1-2 years (2 years included) 2,171,585.94 6,514.76 0.30% Total 49,601,217.08 148,803.65 -- 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 Book balance Within one year (one year included) 47,429,631.14 Within one year 47,429,631.14 1-2 years 4,659,969.93 2-3 years 5,668,169.96 Over 3 years 2,244,003.70 3-4 years 304,867.50 146 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 4-5 years 1,102,072.20 Over 5 years 837,064.00 Total 60,001,774.73 (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 Write off Other reversal Bad debt provision for 4,578,979.18 593,472.35 202,101.50 4,970,350.03 accounts receivable Total 4,578,979.18 593,472.35 202,101.50 4,970,350.03 Including important amount of bad debt provision collected or reversal in the period: In RMB Enterprise Amount collected or reversal Collection way (2) Account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Goods receivable 202,101.50 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) According to the Debt settlement debt repayment Shijiazhuang Dasong agreement, company Goods payment 202,101.50 agreement, write off N Tech. Co., Ltd approval and the uncollectible confirmation payment Total -- 202,101.50 -- -- -- Explanation on account receivable charge-off: Nil 147 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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 16,308,000.33 27.18% 48,924.00 Technology Co., Ltd. Xi’an Grom Trading Co., 14,082,343.94 23.47% 42,247.03 Ltd. Shenzhen Yunshang 5,506,110.50 9.18% 16,518.33 Jewelry Co., Ltd. Cao Chuanfu 4,807,119.62 8.01% 14,421.36 Chengdu Shumao 2,903,671.06 4.84% 8,711.01 Diamond Co., Ltd. Total 43,607,245.45 72.68% (5) Account receivable derecognition due to transfer of financial assets No account receivable derecognition due to transfer of financial assets in the period (6) Assets and liability resulted by account receivable transfer and continuous involvement No transfer of accounts receivable and continued involvement in this period. Other explanation: There are no accounts receivable from shareholder units and other related parties that have more than 5% (including 5%) voting rights of the company in the accounts receivable at the end of the period. 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 148 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 7. Account paid in advance (1) By account age In RMB Ending balance Opening balance Account age Amount Ratio Amount Ratio Within one year 816,541.52 100.00% 938,425.99 100.00% Total 816,541.52 -- 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 Nature Ratio in total with the advance e Company payment (%) Yunnan Shengbihe New Material Co., Ltd. Non-related 800,000.00 Within one Material fee 97.97 party year financing Shenzhen Yaosheng Building Decoration Design Non-related 15,872.50 Within one Material fee 1.94 Engineering Co., Ltd. party year financing Shenzhen Huamao Gold Co., Ltd. Non-related 669.02 Within one Material fee 0.08 party year financing Total 816,541.52 100.00 Other explanation: At end of the period, there was no advance payment from shareholder unit and other related parties that holds 5% (included) voting rights of the Company among Advance Payment 8. Other account receivable In RMB Item Ending balance Opening balance Other account receivable 576,770.36 740,354.71 Total 576,770.36 740,354.71 149 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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 Total 0.00 -- -- -- 3) Accrual of bad debt provision □Applicable √Not applicable Other explanation: Nil 150 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (3) Other account receivable 1) By nature In RMB Account nature Ending book balance Opening book balance Deposit or margin 618,609.00 754,822.00 Payment for equipment 311,400.00 311,400.00 Personal loan of employees 10,396.88 28,060.45 Total 940,405.88 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 0.00 0.00 353,927.74 2020 January 1, 2020 balance —— —— —— —— in the current period --Transfer to the second 0.00 stage -- Transfer to the third 0.00 stage -- Reversal to the second 0.00 stage -- Reversal to the first 0.00 stage Accrued in this period 9,707.78 9,707.78 Reversal in Current 0.00 Period Conversion in Current 0.00 Period Write off in this period 0.00 Other changes 0.00 Balance on December 31, 363,635.52 0.00 0.00 363,635.52 151 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 2020 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 Book balance Within one year (one year included) 462,535.88 Within one year 462,535.88 1-2 years 62,000.00 2-3 years 53,970.00 Over 3 years 361,900.00 3-4 years 40,200.00 4-5 years 11,700.00 Over 5 years 310,000.00 Total 940,405.88 3) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Opening Category Collected or Ending balance balance Accrual Write off Other reversal Bad debt provision for other 353,927.74 9,707.78 363,635.52 receivables Total 353,927.74 9,707.78 0.00 0.00 0.00 363,635.52 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 152 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 There is no other account receivable actually written off in the current period 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 30.90% 300,000.00 equipment Equipment Co., Ltd Shenzhen Gangdelong Margin or deposit 216,840.00 Within one year 23.06% 650.52 Industrial Co., Ltd. Alipay (China) Network Technology Margin or deposit 170,000.00 Within 3 years 18.08% 510.00 Co., Ltd. customer reserve fund Shenye Pengji Margin or deposit 60,222.00 Within one year 6.40% 180.67 (Group) Co., Ltd. Shenzhen Haiyida Decoration Design Margin or deposit 34,550.00 Within one year 3.67% 103.65 Engineering Co., Ltd. Total -- 781,612.00 -- 83.11% 301,444.84 6) Account receivable with government grants involved In RMB Time, amount and basis Enterprise Government grants Ending Balance Ending account age of amount collection 153 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 estimated There was no account receivable involving government subsidies at the end of the period. 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: At the end of the period, other account receivables did not include shareholder units and other related parties holding 5% (including 5%) or more of the voting rights of the company. 9. Inventory Whether companies 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 1,298,565.61 1,298,565.61 2,183,259.92 2,183,259.92 Finished goods 2,545,994.24 278,533.53 2,267,460.71 1,542,282.57 521,083.05 1,021,199.52 Goods sold 5,656.40 5,656.40 Consigned processing 4,157,643.22 4,157,643.22 2,873,870.86 2,873,870.86 materials Total 8,007,859.47 278,533.53 7,729,325.94 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” 154 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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 Finished goods 521,083.05 198,181.03 440,730.55 278,533.53 Total 521,083.05 198,181.03 440,730.55 278,533.53 The net realizable value is determined by deducting the necessary expenses from the market price at the end of the period, the inventory falling price reserves reversed or written off in the current period are the sales of the inventory with impairment withdrawn in the current period. (3) Explanation on capitalization of borrowing costs at ending balance of inventory Nil (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 has major changes and causes: In RMB Item Amount changes Reason for change 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 Accrued in this period Switch-back in the period Causes the period Total 0.00 0.00 0.00 -- Other explanation: 155 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Nil 11. Assets held for sale In RMB Ending book 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 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 2,652,771.13 3,188,649.68 Prepaid corporate income tax 51,574.09 129,864.57 Prepaid input tax 11,080.09 Total 2,715,425.31 3,318,514.25 Other explanation: Nil 14. Creditors’ investment In RMB Ending balance Opening balance Item Book balance Impairment Book value Book balance Impairment Book value 156 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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, 0.00 2020 January 1, 2020 balance —— —— —— —— in the current period --Transfer to the second 0.00 stage -- Transfer to the third 0.00 stage -- Reversal to the second 0.00 stage -- Reversal to the first 0.00 stage Accrued in this period 0.00 Reversal in Current 0.00 Period Conversion in Current 0.00 Period Write off in this period 0.00 Other changes 0.00 Balance on December 31, 0.00 2020 Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable Other explanation: 157 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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, 0.00 2020 January 1, 2020 balance —— —— —— —— in the current period --Transfer to the second 0.00 stage -- Transfer to the third 0.00 stage -- Reversal to the second 0.00 stage -- Reversal to the first 0.00 stage Accrued in this period 0.00 Reversal in Current 0.00 Period 158 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Conversion in Current 0.00 Period Write off in this period 0.00 Other changes 0.00 Balance on December 31, 0.00 2020 Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable Other explanation: Nil 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, 0.00 0.00 0.00 0.00 2020 January 1, 2020 balance —— —— —— —— in the current period --Transfer to the second 0.00 stage -- Transfer to the third 0.00 stage -- Reversal to the second 0.00 stage -- Reversal to the first 0.00 stage 159 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Accrued in this period 0.00 Reversal in Current 0.00 Period Conversion in Current 0.00 Period Write off in this period 0.00 Other changes 0.00 Balance on December 31, 0.00 0.00 0.00 0.00 2020 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 Other Cash Opening Investme Accrual Ending balance The Additiona comprehe dividend Balance nt gains Other of Balance of invested l Capital nsive or profit (Book recognize equity impairme Other (Book impairme entity 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 0.00 0.00 0.00 Other explanation Nil 160 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 (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 161 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 21. Fixed assets In RMB Item Ending balance Opening balance Fixed assets 3,792,133.36 4,191,503.33 Total 3,792,133.36 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 balance 2,959,824.00 1,477,691.03 958,593.21 230,136.11 5,626,244.35 2.Current 18,118.82 18,118.82 increased (1) Purchase 18,118.82 18,118.82 (2) Construction in process transfer-in (3) The increase in business combination 3.Current 63,210.26 63,210.26 decreased (1) Disposal or 63,210.26 63,210.26 scrap 4.Ending balance 2,959,824.00 1,414,480.77 958,593.21 248,254.93 5,581,152.91 II. Accumulated depreciation 1.Opening balance 466,172.28 217,943.02 586,406.73 164,218.99 1,434,741.02 2.Current 133,192.08 129,547.84 104,557.24 18,048.42 385,345.58 increased (1) Accrual 133,192.08 129,547.84 104,557.24 18,048.42 385,345.58 162 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 3.Current 31,067.05 31,067.05 decreased (1) Disposal or 31,067.05 31,067.05 scrap 4.Ending balance 599,364.36 316,423.81 690,963.97 182,267.41 1,789,019.55 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 2,360,459.64 1,098,056.96 267,629.24 65,987.52 3,792,133.36 value 2.Opening book 2,493,651.72 1,259,748.01 372,186.48 65,917.12 4,191,503.33 value (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 163 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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 2,360,459.64 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 Nil 22. Construction in progress In RMB Item Ending balance Opening balance (1) Construction in progress In RMB Item Ending balance Opening balance 164 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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) Provision for impairment of construction in progress in the current period 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 Impairment Impairment Book balance Book value Book balance Book value 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 165 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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 1.Opening balance 0.00 2.Current increased 0.00 3.Current decreased 0.00 4.Ending balance 0.00 1.Opening balance 0.00 2.Current increased 0.00 (1) Accrual 0.00 3.Current decreased 0.00 (1) Disposal 0.00 4.Ending balance 0.00 1.Opening balance 0.00 2.Current increased 0.00 (1) Accrual 0.00 3.Current decreased 0.00 (1) Disposal 0.00 4.Ending balance 0.00 1.Ending book value 0.00 2.Opening book value 0.00 Other explanation: Nil 26. Intangible assets (1) Intangible assets In RMB 166 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 &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 753,000.00 753,000.00 increased (1) Accrual 753,000.00 753,000.00 3.Current decreased (1) Disposal 4.Ending 5,271,000.00 5,271,000.00 balance III. Impairment provision 167 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 1.Opening balance 2.Current increased (1) Accrual 3.Current decreased (1) Disposal 4.Ending balance IV. Book value 1.Ending book 0.00 0.00 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: There is no mortgage for intangible assets at the end of the period. 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 Other explanation Nil 168 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 Total 0.00 0.00 0.00 0.00 (2) Impairment provision of goodwill In RMB The invested Current increased Current decreased Opening balance Ending balance entity or items Accrual Dispose Total 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 169 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 4,308,692.80 1,077,173.20 4,170,328.65 1,042,582.16 assets Total 4,308,692.80 1,077,173.20 4,170,328.65 1,042,582.16 (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 793,170.75 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 170 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Total 0.00 0.00 -- Other explanation: Nil 31. Other non-current assets In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Advance payment for house 400,000.00 0.00 400,000.00 400,000.00 0.00 400,000.00 Total 400,000.00 0.00 400,000.00 400,000.00 0.00 400,000.00 Other explanation: As of December 31, 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: 171 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Including: Other explanation: Nil 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) 8,691,337.93 9,575,684.30 1-2 years (2 years included) 423,346.08 487,016.93 2-3 years (3 years included) 487,016.93 7,099.50 3-4 years (4 years included) 1,240.00 118,380.50 4-5 years (5 years included) 2,366.00 Over 5 years 3,204.00 838.00 Total 9,606,144.94 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: At the end of the reporting period, there were no accounts payable due to shareholder units and other related parties that hold 5% (including 5%) or more of the voting rights of the company. 172 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 At the end of the period, there is no important accounts payable with an aging of more than one year. 37. Account received in advance (1) Account received in advance In RMB Item Ending balance Opening balance (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 -- 38. Contract liability In RMB Item Ending balance Opening balance Cooperative received in advance 9,174,311.93 Rent received in advance 5,511,111.11 Goods received in advance 569,290.34 1,568,550.21 Total 15,254,713.38 1,568,550.21 Book value has major changes in the period and causes In RMB Item Amount changes Reason for change Cooperative received in 9,174,311.93 Receipt in advance for the second phase of Zhonghua Garden advance Rent received in advance 5,511,111.11 Receipt of Renhui Woodenware Rental in Advance Total 14,685,423.04 —— 39. Wage payable (1) Wage payable In RMB Item Opening balance Current increased Current decreased Ending balance I. Short-term 599,962.73 6,762,583.01 5,903,301.67 1,459,244.07 compensation 173 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 II. Post-employment benefit-Defined 36,187.52 36,187.52 contribution plan Total 599,962.73 6,798,770.53 5,939,489.19 1,459,244.07 (2) Short-term compensation In RMB Item Opening balance Current increased Current decreased Ending balance 1. Wages, bonus, 593,459.94 6,273,401.11 5,413,879.85 1,452,981.20 allowances and subsidy 2. Employee benefits 72,157.41 72,157.41 3. Social insurance 169,015.58 169,015.58 Including: Medical 155,322.88 155,322.88 insurance Work injury 396.76 396.76 insurance Maternity 13,295.94 13,295.94 insurance 4. Housing accumulation 171,624.98 171,624.98 fund 5. Labor union expenditure and 6,502.79 76,383.93 76,623.85 6,262.87 personnel education expense Total 599,962.73 6,762,583.01 5,903,301.67 1,459,244.07 (3) Defined contribution plan In RMB Item Opening balance Current increased Current decreased Ending balance 1. Basic endowment 34,569.96 34,569.96 insurance 2. Unemployment 1,617.56 1,617.56 insurance Total 36,187.52 36,187.52 Other explanation: At the end of the period, there were no arrears in employee compensation. 174 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 40. Taxes payable In RMB Item Ending balance Opening balance Value added tax 551,216.66 540,203.08 Corporate income tax 140,959.81 14,285.50 Individual income tax 23,398.74 21,755.56 Tax for maintaining and building cities 431.55 925.10 Stamp tax 6,043.60 7,270.30 Educational surtax 270.66 623.21 Total 722,321.02 585,062.75 Other explanation: Nil 41. Other account payable In RMB Item Ending balance Opening balance Other account payable 37,882,805.52 38,175,654.98 Total 37,882,805.52 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 (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 175 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (3) Other account payable 1) By nature In RMB Item Ending balance Opening balance Custodian and common benefit debts 18,728,866.44 18,764,512.80 Warranty and guarantee money 10,589,040.00 11,291,325.00 Intercourse funds 6,500,000.00 6,500,000.00 Other payable service charge (intermediary 832,359.55 876,599.88 services included) Collection and payment 654,997.35 Other 577,542.18 743,217.30 Total 37,882,805.52 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 18,728,866.44 Warranty and guarantee money 1,580,040.00 Performance bond Shenzhen Guosheng Energy Investment 6,500,000.00 Interest-free loans Development Co., Ltd. Total 26,808,906.44 -- Other explanation Nil 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: 176 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 Paid in Ending Bond interest discount value date period amount balance the Period the Period balance by face amortizati 177 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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: 178 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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: 179 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 Liability reckoned in reduction in Ending Balance d/income Balance in the Period non-operatio changes other income the period related n revenue Other explanation: Nil 52. Other non-current liabilities In RMB Item Ending balance Opening balance Other explanation: 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 180 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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 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 Opening Account Less: written Less: Belong to Belong to Ending Item Less: income balance before in otherwritten in tax expense parent minority balance income tax comprehensi other company shareholders 181 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 in the ve income in comprehe after tax after tax period previous nsive period and income in carried previous forward to period and gains and carried losses in forward to current retained period earnings in 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 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 0.00 0.00 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 -1,197,549,169.92 182 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Add: net profit attributable to shareholders of 3,785,834.68 -7,186,905.64 parent company for this year Retained profit at period-end -1,200,950,240.88 -1,204,736,075.56 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 108,929,796.13 100,882,228.24 71,095,404.57 67,928,471.12 Other business 8,927,684.04 2,339,395.49 4,927,283.18 753,000.00 Total 117,857,480.17 103,221,623.73 76,022,687.75 68,681,471.12 Whether the lower of the audited net profit before and after deduction of non-recurring gains and losses is negative □Yes √No Revenue: In RMB Contract type 1# Division 2# Division Total Product type 87,064,073.74 30,793,406.43 117,857,480.17 Including: Jewelry Gold 87,064,073.74 87,064,073.74 Bicycle lithium battery 30,793,406.43 30,793,406.43 materials and other Including: Including: Including: Including: Including: Including: Total 87,064,073.74 30,793,406.43 117,857,480.17 Information relating to performance obligation: 183 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Nil Information relating to the transaction price assigned to the remaining performance obligation: The amount of revenue corresponding to performance obligation that have been signed but have not been fulfilled or have not been fulfilled at the end of the period was 0.00 Yuan, including 0.00 Yuan is expected to be recognized as revenue in subsequent years, 0.00 Yuan is expected to be recognized as revenue in subsequent years, 0.00 Yuan is expected to be recognized as revenue in subsequent years. Other explanation Nil 62. Tax and extras In RMB Item Current Period Last Period Tax for maintaining and building cities 34,962.95 4,714.10 Educational surtax 24,973.54 8,179.47 Stamp tax 46,243.90 44,621.80 Other 1,889.84 1,889.84 Total 108,070.23 59,405.21 Other explanation: Nil 63. Sales expenses In RMB Item Current Period Last Period Employee compensation 1,078,110.71 1,301,441.35 Marketing promotion fees 1,193,544.17 792,290.55 Business entertainment 17,031.00 52,516.39 Business travel expenses 133,656.78 421,922.06 Lease fee 3,834.00 433,292.57 Other 114,480.37 177,013.47 Total 2,540,657.03 3,178,476.39 Other explanation: Nil 64. Administrative expenses In RMB 184 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Item Current Period Last Period Employee compensation 2,152,793.42 2,579,922.45 Intermediary service fee 1,427,424.80 3,149,023.50 Daily management expenses 911,300.72 327,050.29 Depreciation and amortization 292,089.38 353,469.35 Total 4,783,608.32 6,409,465.59 Other explanation: Nil 65. R&D expenses In RMB Item Current Period Last Period Employee compensation and benefits 1,675,573.59 1,409,100.34 Direct input 368,483.15 763,338.82 Factory rent and utilities 178,534.58 553,243.59 Depreciation of fixed assets 93,256.20 23,144.40 Other 191,030.05 4,450.57 Total 2,506,877.57 2,753,277.72 Other explanation: Nil 66. Financial expenses In RMB Item Current Period Last Period Interest income -89,977.25 -110,834.04 Commission charge etc. 20,827.96 15,432.87 Other 87,868.03 Total 18,718.74 -95,401.17 Other explanation: Nil 67. Other income In RMB Sources Current Period Last Period 185 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Processing fee from individual tax refund 10,207.52 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 -9,707.78 -39,386.50 Bad debt losses of accounts receivable -593,472.35 -2,493,679.37 Total -603,180.13 -2,533,065.87 Other explanation: Nil 72. Losses of devaluation of asset In RMB Item Current Period Last Period II. Loss of inventory falling price and loss -198,181.03 -499,175.17 of contract performance cost impairment 186 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Total -198,181.03 -499,175.17 Other explanation: Nil 73. Income from assets disposal In RMB Sources Current Period Last Period Dispose income of fixed assets 24,936.44 74. Non-operating income In RMB Amount reckoned in current Item Current Period Last Period non-recurring gains/losses Government subsidy 100,000.00 100,000.00 Other 6,442,649.75 6,259,839.85 6,442,649.75 Total 6,542,649.75 6,259,839.85 6,542,649.75 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) Subsidies received by the state to guarantee the supply of Anti-epidemi certain public Income-relate Government Subsidy N N 100,000.00 0.00 c subsidies utilities or d socially necessary products or price control functions Other explanation: 1. Non-operation revenue last period mainly due to the rental revenue settle with the custodian, that is 5,565,684.61 Yuan and compensation of 399,113.20 Yuan; 187 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 2. Non-operation revenue in current period mainly due to the rental revenue settle with the custodian, that is 5,662,149.79 Yuan and compensation of 312,266.98 Yuan; 75. Non-operating expenses In RMB Amount reckoned in current Item Current Period Last Period non-recurring gains/losses Litigation compensation, liquidated damages and late 498,050.00 188.00 498,050.00 fees, etc. Loss of old trademark scrap 461,858.18 Other 5,190,229.29 5,603,102.65 5,190,229.29 Total 5,688,279.29 6,065,148.83 5,688,279.29 Other explanation: In the period and last period, the operation assets for assets to be disposed are not allocated by management, relevant maintenance and management costs are paid by the revenue and loss compensation income from assets leasing (the assets to be disposed), reckoned into non-operating expenditure 76. Income tax expenses (1) Income tax expenses In RMB Item Current Period Last Period Current income tax expense 140,959.81 14,285.50 Deferred income tax expense 249,411.41 -1,960.98 Total 390,371.22 12,324.52 (2) Adjustment on accounting profit and income tax expenses In RMB Item Current Period Total Profit 4,766,077.81 Income tax measured by statutory/applicable tax rate 714,911.66 The impact of applying different tax rates to subsidiaries -191,529.43 Impact on cost, expenses and losses that unable to deducted 67,265.94 Impact by the deductible losses of the un-recognized previous -357,710.57 deferred income tax 188 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Impact on deductible temporary differences or losses deductible 387,397.65 which was un-recognized as deferred income tax assets The impact of R&D deductions -229,964.03 Income tax expenses 390,371.22 Other explanation 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, rent, utilities, etc. 10,999,135.69 6,348,431.90 Item cooperation 10,000,000.00 Deposits and guarantees received 7,388,109.00 1,916,551.74 Government subsidy and individual tax 110,207.52 handling fee refund Other 26,834.21 150,980.41 Total 28,524,286.42 8,415,964.05 Explanation on other cash received in relation to operation activities: Nil (2) Other cash paid in relation to operation activities In RMB Item Current Period Last Period Expenses such as rent and property 5,190,228.77 5,203,779.09 management maintenance fees Sales, management and R&D expenses 1,770,529.68 4,452,767.97 Deposits and security deposits paid 6,902,256.00 363,930.00 Litigation compensation, liquidated 498,050.00 damages and late fees, etc. Handling expenses 20,827.96 15,432.87 Other current accounts 1,232,265.94 189 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Other 71,445.29 151,193.17 Total 14,453,337.70 11,419,369.04 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 2,000,000.00 Total 2,000,000.00 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 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 190 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Supplementary information Current period Last Period 1. Net profit adjusted to cash flow of -- -- operation activities: Net profit 4,375,706.59 -7,813,881.65 Add: Assets impairment provision 801,361.16 3,032,241.04 Depreciation of fixed assets, consumption of oil assets and depreciation of 385,345.58 376,613.75 productive biology assets Depreciation of right-of-use assets Amortization of intangible assets 753,000.00 753,000.00 Amortization of long-term deferred expenses Loss from disposal of fixed assets, intangible assets and other long-term assets -24,936.44 (gain is listed with “-”) Losses on scrapping of fixed assets (gain is listed with “-”) Gain/loss of fair value changes (gain is listed with “-”) Financial expenses (gain is listed with “-”) Investment loss (gain is listed with “-”) Decrease of deferred income tax 249,411.41 -1,960.98 asset ((increase is listed with “-”) Increase of deferred income tax liability (decrease is listed with “-”) Decrease of inventory (increase is -1,849,176.67 -4,190,901.53 listed with “-”) Decrease of operating receivable -15,548,865.13 -808,843.28 accounts (increase is listed with “-”) Increase of operating payable accounts 14,800,382.46 -5,138,208.69 (decrease is listed with “-”) Other Net cash flows arising from operating 3,942,228.96 -13,791,941.34 activities 2. Material investment and financing not -- -- involved in cash flow 191 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Conversion of debt into capital Switching Company bonds due within one year financing lease of fixed assets 3. Net change of cash and cash equivalents: -- -- Balance of cash at period end 19,887,978.05 6,074,367.91 Less: Balance of cash equivalent at 6,074,367.91 16,488,886.26 year-begin Add: Balance at year-end of cash equivalents Less: Balance at year-begin of cash equivalents Net increase of cash and cash equivalents 13,813,610.14 -10,414,518.35 (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 192 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 I. Cash 19,887,978.05 6,074,367.91 Including: Cash on hand 21,530.26 89,313.66 Bank deposit available for payment 19,866,447.79 5,979,003.60 at any time Other monetary fund available for 6,050.65 payment at any time Ⅲ. Balance of cash and cash equivalent at 19,887,978.05 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 period: Nil 81. Assets with ownership or use right restricted In RMB Item Ending book value Restriction reasons Total 0.00 -- 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 193 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 Anti-epidemic subsidies 100,000.00 Non-operating income 100,000.00 (2) Government grants rebate □Applicable √Not applicable Other explanation: Nil 85. Other Nil 194 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 195 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 Income of the Net profit of combined the combined Income of the Net profit of party from party from Basis of Standard to combined the combined Equity ratio period-begin period-begin Combined combined Combination determine the party during party during obtained in of of party under the date combination the the combination combination combination same control date comparison comparison to the to the period period combination combination date date Other explanation: (2) Combination cost In RMB Combination cost Explanation on contingent consideration and its changes: Other explanation: (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: Other explanation: 196 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 5. Other reasons for consolidation range changed Reasons for changed on consolidation range (such as new subsidiary established, subsidiary liquidated etc.)And relevant information On 21 July 2020, subsidiary Shenzhen Emmelle Industrial Co., Ltd contributes 70% and Shenzhen Zhenbangda Technology Co., Ltd contributes 30% together to established the Shenzhen Emmelle Cloud Technology Co., Ltd. The enterprise was included in consolidate statement scope since the date of established. 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 Sales of bicycles Emmelle Industry Shenzhen Shenzhen 70.00% Investment and spare parts Co., Ltd. Shenzhen Xinsen Jewelry, Jewelry Gold Shenzhen Shenzhen diamonds, gold 65.00% Investment Supply Chain sales Co., Ltd. Shenzhen Software and Emmelle Cloud Shenzhen Shenzhen information 49.00% Investment Technology Co., technology 197 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Ltd. service sales 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 Subsidiary of the Company-Shenzhen Emmelle Industry Co., Ltd. (with 70% equity held by the Company) holds 70% equity of Shenzhen Emmelle Cloud Technology Co., Ltd 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 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% -361,173.21 1,593,074.01 Industry Co., Ltd. Shenzhen Xinsen Jewelry Gold Supply Chain Co., 35.00% 945,115.60 12,538,055.17 Ltd. Shenzhen Emmelle Cloud Technology Co., 51.00% 5,929.52 605,929.52 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 Current Non-curr Total Current Non-curr Total Current Non-curr Total Current Non-curr Total ry assets ent assets liability ent liabilities assets ent assets liability ent liabilities 198 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 assets liability assets liability Shenzhe n 12,402,5 2,418,25 14,820,7 9,510,50 9,510,50 15,468,8 1,418,41 16,887,2 10,373,0 10,373,0 Emmelle 0.00 0.00 02.99 0.69 53.68 6.99 6.99 11.90 5.71 27.61 70.21 70.21 Industry Co., Ltd. Shenzhe n Xinsen Jewelry 44,211,8 36,552.0 44,248,4 9,832,52 9,832,52 8,696,93 8,698,89 1,933,35 1,933,35 Gold 0.00 1,960.98 0.00 49.29 2 01.31 9.38 9.38 5.06 6.04 4.41 4.41 Supply Chain Co., Ltd. Shenzhe n Emmelle 2,037,69 2,037,69 26,068.0 26,068.0 Cloud 0.00 0.00 4.53 4.53 2 2 Technolo gy 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 Emmelle 15,470,013.0 3,160,952.74 -1,203,910.71 -1,203,910.71 -1,652,170.89 -2,399,718.61 -2,399,718.61 -6,376,002.30 Industry Co., 0 Ltd. Shenzhen Xinsen 87,064,073.7 -18,103,601.1 Jewelry Gold 2,700,330.30 2,700,330.30 4,619,038.46 265,541.63 265,541.63 -5,608,748.24 4 7 Supply Chain Co., Ltd. Shenzhen Emmelle Cloud 952,935.51 11,626.51 11,626.51 -117,837.47 Technology Co., Ltd. Other explanation: 199 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Nil (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 Nil (2) Impact on minority’s interest and owners’ equity attributable to parent company In RMB Other explanation Nil 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: Nil 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: Nil (2) Main financial information of the important joint venture In RMB 200 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Ending balance/Current Period Opening balance/Last Period Other explanation Nil (3) Main financial information of the important associated enterprise In RMB Ending balance/Current Period Opening balance/Last Period Other explanation Nil (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 Nil (5) Assets transfer ability has major restriction from joint venture or associated enterprise Nil (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 Nil 201 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (7) Un-confirmed commitment with investment concerned with joint venture Nil (8) Contingent liability with investment concerned with joint venture or associated enterprise Nil 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: Nil If the co-runs entity is the separate entity, basis of the co-runs classification Nil Other explanation Nil 5. Equity in structuring entity that excluding in the consolidated financial statement Relevant explanation Nil 6. Other Nil 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. 202 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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 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 31 December 2020, the gearing ratio of the Company was 72.05% (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 203 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 204 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 Nil 4. Other related party Other related party Relationship with the Company Supervisor of the Company Li Jialin is the legal person of the Shenzhen Huahui Tongda Industrial Co., Ltd. enterprise Shenzhen Zuanjinsen Jewelry Co., Ltd. Subsidiary Xinsen Jewelry Shareholder Shenzhen Guosheng Energy Investment Development Co., Ltd. The first majority 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. hold 35% equity of Shenzhen Xinsen Jewelry 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 205 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Transaction Approved transaction Whether more than Related party Current Period Last Period content amount the transaction amount Shenzhen Zuankinson Jewelry Purchase of raw 0.00 No 2,428,035.40 and Gold Supply materials Chain Co., Ltd. Goods sold/labor service providing In RMB Related party Transaction content Current Period Last Period Shenzhen Huahui Tongda Sales of goods 18,409.04 Industrial Co., Ltd. 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 206 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 1,600,350.50 1,439,685.05 (8) Other related transactions a. 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 207 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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. b. Fuzhou Zuankinson Jewelry Co., Ltd.,a wholly-owned subsidiary of Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. which is a shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd.,a subsidiary of the Company, participated in subscribing to the Company’s non-public offering of shares, paid performance bond of 2 million yuan to the Company during the reporting period. 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 Shenzhen Zuankinson Jewelry Other current assets 301,754.90 and Gold Supply Chain Co., Ltd. (2) Payable item In RMB Item Related party Ending book balance Opening book balance Shenzhen Guosheng Energy Other account payable Investment Development Co., 6,500,000.00 6,500,000.00 Ltd. 7. Commitments of related party 8. Other XIII. Share-based payment 1. General share-based payment □Applicable √Not applicable 208 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 209 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 2. Profit distribution In RMB 3. Sales return Nil 4. Other events after balance sheet date Nil 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 210 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 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 to the account 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 87,064,073.74 30,793,406.43 117,857,480.17 Main business cost 80,940,595.81 22,281,027.92 103,221,623.73 The total profit 2,806,062.52 1,960,015.29 4,766,077.81 Income tax expense 105,732.22 284,639.00 390,371.22 Net profit 2,700,330.30 1,675,376.29 4,375,706.59 Total assets 44,248,401.31 67,454,748.41 19,960,379.73 91,742,769.99 Total liabilities 9,832,529.38 56,267,950.93 66,100,480.31 Shareholders' equity 34,415,871.93 11,186,797.48 19,960,379.73 25,642,289.68 Total 211 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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 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 7,503,67 2,251,10 5,252,570 6,975,081 2,092,524 4,882,557.2 28.23% 30.00% 19.92% 30.00% provision accrual by 1.53 1.47 .06 .75 .53 2 single basis Including: Accounts with single minor amount but 7,503,67 2,251,10 5,252,570 1,939,478 581,843.4 1,357,634.6 with bad debts 28.23% 30.00% 5.54% 30.00% 1.53 1.47 .06 .00 0 0 provision accrued individually Accounts receivable with a significant 5,035,603 1,510,681 3,524,922.6 14.38% 30.00% single amount but a .75 .13 2 separate provision for 212 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 bad debts Account receivable with bad debt 19,079,6 57,238.8 19,022,36 28,045,11 27,960,979. 71.77% 0.30% 80.08% 84,135.34 0.30% provision accrual by 04.72 2 5.90 4.82 48 portfolio Including: Account receivable withdrawal bad debt provision by group of 19,079,6 57,238.8 19,022,36 28,045,11 27,960,979. credit risk 71.77% 0.30% 80.08% 84,135.34 0.30% 04.72 2 5.90 4.82 48 characteristics (Aging analysis method) 26,583,2 2,308,34 24,274,93 35,020,19 2,176,659 32,843,536. Total 100.00% 8.68% 100.00% 6.22% 76.25 0.29 5.96 6.57 .87 70 Bad debt provision accrual on single basis: Account receivable with significant single amount period-end but withdrawal bad debt provision on single basis In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Shenzhen Jiahaosong Expected to be difficult 2,393,603.75 718,081.13 30.00% Technology Co., Ltd. to recover Shenzhen Weiterui New Expected to be difficult Energy Technology Co., 1,670,971.05 501,291.32 30.00% to recover Ltd. Zhengzhou Guiguan Expected to be difficult 1,007,233.79 302,170.14 30.00% Tech. Trade. Co., Ltd to recover Dongguan Daxiang New Expected to be difficult 816,902.94 245,070.88 30.00% Energy Co., Ltd. to recover Suzhou Jiaxin Economic Expected to be difficult 888,757.00 266,627.10 30.00% Trade Co., Ltd. to recover Guangdong Xinlingjia Expected to be difficult 371,136.00 111,340.80 30.00% New Energy Co., Ltd. to recover Suzhou Daming Vehicle Expected to be difficult 355,067.00 106,520.10 30.00% Industry Co., Ltd. to recover Total 7,503,671.53 2,251,101.47 -- -- Bad debt provision accrual on single basis: In RMB Name Ending balance 213 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Book balance Bad debt provision Accrual ratio Accrual causes Bad debt provision accrual on portfolio: Account receivable withdrawal bad debt provision by group of credit risk characteristics (Aging analysis method) In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Within one year (one year 16,908,018.78 50,724.06 0.30% included) 1-2 years (2 years included) 2,171,585.94 6,514.76 0.30% Total 19,079,604.72 57,238.82 -- 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: Nil Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio 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: Nil Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: Nil Bad debt provision accrual on portfolio: 214 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 Book balance Within one year (one year included) 18,950,125.83 Within one year 18,950,125.83 1-2 years 7,633,150.42 Total 26,583,276.25 (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 Write off Other reversal Bad debt provision for 2,176,659.87 131,680.42 2,308,340.29 accounts receivable Total 2,176,659.87 131,680.42 0.00 0.00 0.00 2,308,340.29 Including important amount of bad debt provision collected or reversal in the period: In RMB Enterprise Amount collected or reversal Collection way Total 0.00 -- (2) Account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major account receivables charge-off: In RMB 215 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 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 -- -- -- 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 Ending balance of bad bet Name receivable balance of accounts receivable provision Guangshui Jiaxu Energy 16,308,000.33 61.35% 48,924.00 Technology Co., Ltd. Shenzhen Jiahaosong 2,393,603.75 9.00% 718,081.13 Technology Co., Ltd. Shenzhen Weiterui New Energy 1,670,971.05 6.29% 501,291.32 Technology Co., Ltd. Hubei Testun Electronic 1,145,000.00 4.31% 3,435.00 Technology Co., Ltd. Zhengzhou Guiguan Tech. 1,007,233.79 3.79% 302,170.14 Trade. Co., Ltd Total 22,524,808.92 84.74% (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 2. Other account receivable In RMB Item Ending balance Opening balance Other account receivable 115,263.05 485,062.44 Total 115,263.05 485,062.44 216 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (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 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: Nil 217 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (3) Other account receivable 1) By nature In RMB Account nature Ending book balance Opening book balance Deposit or margin 105,713.00 484,822.00 Payment for equipment 11,400.00 11,400.00 Reserve 10,396.88 2,000.00 Total 127,509.88 498,222.00 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, 13,159.56 13,159.56 2020 January 1, 2020 balance —— —— —— —— in the current period Reversal in Current 912.73 912.73 Period Balance on December 31, 12,246.83 12,246.83 2020 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 Book balance Within one year (one year included) 113,609.88 Within one year (one year included) 113,609.88 1-2 years 2,000.00 Over 3 years 11,900.00 3-4 years 200.00 4-5 years 11,700.00 Total 127,509.88 218 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 3) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Opening Category Collected or Ending balance balance Accrual Write off Other reversal Bad debt provision 13,159.56 912.73 12,246.83 for other receivables Total 13,159.56 912.73 12,246.83 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 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 one year 47.23% 180.67 (Group) Co., Ltd. 219 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Shenzhen Haiyida Decoration Design Deposit or margin 34,550.00 Within one year 27.10% 103.65 Engineering Co., Ltd. Shenzhen Hongkang Instrument Equipment 11,400.00 4-5 years 8.94% 11,400.00 Technology Co., Ltd. Shenzhen Pengji Property Management Deposit or margin 10,441.00 Within one year 8.19% 31.32 Service Co., Ltd. Wu Furong Reserve fund 2,000.00 Within one year 1.57% 6.00 Total -- 118,613.00 -- 93.02% 11,721.64 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: At the end of the period, other account receivables did not include shareholder units and other related parties holding 5% (including 5%) or more of the voting rights of the company. 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 21,350,000.00 1,389,620.27 19,960,379.73 5,625,000.00 1,389,620.27 4,235,379.73 subsidiary Total 21,350,000.00 1,389,620.27 19,960,379.73 5,625,000.00 1,389,620.27 4,235,379.73 220 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 (1) Investment for subsidiary In RMB Changes in the period (+, -) Opening Ending balance The invested Accrual of Ending Balance Balance Additional Capital of impairment entity impairment Other (Book value) (Book value) investment reduction provision provision Shenzhen Emmelle 10,379.73 10,379.73 1,389,620.27 Industry Co., Ltd. Shenzhen Xinsen Jewelry 4,225,000.00 15,725,000.00 19,950,000.00 Gold Supply Chain Co., Ltd. Total 4,235,379.73 15,725,000.00 19,960,379.73 1,389,620.27 (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 221 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Current Period Last Period Item Revenue Cost Revenue Cost Main business 20,057,964.04 19,427,326.43 54,012,420.29 52,204,470.16 Other business 8,821,133.12 2,273,363.81 3,753,308.11 753,000.00 Total 28,879,097.16 21,700,690.24 57,765,728.40 52,957,470.16 Revenue: In RMB Contract type 1# Division 2# Division Total Including: Including: Including: Including: Including: Including: Including: Information relating to performance obligation: Nil Information relating to the transaction price assigned to the remaining performance obligation: 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 222 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Item Amount Note Dispose profit and loss of non-current assets 24,936.44 Other non-operating income and expenditure 754,370.46 except for the aforementioned items Less: Impact on income tax 0.18 Impact on minority shareholders’ equity 65,223.94 Total 714,082.78 -- 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 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 42.01% 0.0069 0.0069 stockholders of the Company Net profits belong to common stock stockholders of the Company after 34.08% 0.0056 0.0056 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 223 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 4. Other Nil 224 深圳中华自行车(集团)股份有限公司 2020 年年度报告全文 Section XIII. 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. Original audit report with seal of the accounting firm and signature and seal of CPAs. 3. Originals documents of the Company and manuscripts of public notices that disclosed in the newspaper designated by CSRC in the report period. 4. English version of the Annual Report 2020 Board of Directors of Shenzhen China Bicycle Company (Holdings) Limited 23 April 2021 225