无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Weifu High-Technology Group Co., Ltd. Semi-Annual Report 2019 August 2019 1 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section I. Important Notice, Contents and Paraphrase Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Weifu High-Technology Group Co., Ltd. (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. Chen Xuejun, Principal of the Company, Ou Jianbin, person in charger of accounting works and Ou Jianbin, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2019 Semi-Annual Report is authentic, accurate and complete. All directors are attended the Board Meeting for report deliberation. In this report, details of relevant risks and countermeasures in operation have described, found more in relevant content in the Report. Concerning the forward-looking statements with future planning involved in the Report, they do not constitute a substantial commitment for investors. The China Securities Journal, Securities Times, Hong Kong Commercial Daily and Juchao Website (www.cninfo.com.cn)are the information disclosure media appointed by the Company, all information should be prevail on the above mentioned media, investors are advice to pay attention on investment risks. The Company has no plan of cash dividend distributed, no cash bonus and capitalizing of common reserves either carried out. 2 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Contents Section I Important Notice, Contents and Paraphrase ................................................................. 2 Section II Company Profile and Main Financial Indexes ............................................................. 5 Section III Summary of Company Business .................................................................................. 8 Section IV Discussion and Analysis of Operation ........................................................................ 11 Section V Important Events .......................................................................................................... 19 Section VI Changes in shares and particular about shareholders............................................... 30 Section VII Preferred Stock……………………………………………………………………….34 Section VIII Particulars about Directors, Supervisors and Senior Executives…. ..................... 35 Section IX Corporate Bonds ........................................................................................................... 36 Section X Financial Report ............................................................................................................. 37 Section XI Documents Available for Reference ........................................................................... 185 3 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Paraphrase Items Refers to Contents Company, The Company, Weifu Refers to Weifu High-Technology Group Co., Ltd. High-technology Weifu Group Refers to Wuxi Weifu Group Co., Ltd. Industry Group Refers to Wuxi Industry Development Group Co., Ltd. Robert Bosch, Robert Bosch Company Refers to Robert Bosch Co., Ltd, ROBERT BOSCH GMBH Bosch Automobile Diesel, Bosch Diesel Refers to Bosch Automobile Diesel System Co., Ltd. System Weifu Leader Refers to Wuxi Weifu Leader Catalytic Converter Co., Ltd. Weifu Jinning Refers to Nanjing Nanjing Weifu Jinning Co., Ltd. Co., Ltd. Weifu Environment Refers to Wuxi Weifu Environment Catalyst Co., Ltd. Weifu Precision Machinery Refers to Weifu Precision Machinery Manufacturing Co., Ltd. SPV Refers to Weifu Holding Aps IRD Refers to IRD Fuel Cells A/S Zhonglian Electronic Refers to Zhonglian Automobile Electronic Co., Ltd. CSRC Refers to China Securities Regulatory Commission SZ Stock Exchange Refers to Shenzhen Stock Exchange Reporting period Refers to 1 January 2019 to 30 June 2019 4 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section II. Company Profile and Main Financial Indexes I. Company information Short form of the stock Weifu High- Tech, Su Weifu-B Stock code 000581, 200581 Stock exchange for listing Shenzhen Stock Exchange Chinese name of the Company 无锡威孚高科技集团股份有限公司 Short form of the Company in 威孚高科 Chinese (if applicable) Foreign name of the Company WEIFU HIGH-TECHNOLOGY GROUP CO.,LTD. (if applicable) Short form of foreign name of WFHT the Company (if applicable) Legal representative Chen Xuejun II. Person/Way to contact Secretary of the Board Rep. of security affairs Name Zhou Weixing Yan Guohong Contact add. No.5, Huashan Road, Xin Wu District, Wuxi City No.5, Huashan Road, Xin Wu District, Wuxi City Tel. 0510-80505999 0510-80505999 Fax. 0510-80505199 0510-80505199 E-mail wfjt@public1.wx.js.cn wfjt@public1.wx.js.cn III. Others 1. Way of contact Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or not □ Applicable √ Not applicable Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period, found more details in Annual Report 2018. 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in reporting period or not □ Applicable √ Not applicable 5 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation place for semi-annual report have no change in reporting period, found more details in Annual Report 2018. IV. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data □ Yes √ No Current period Same period of last year Changes over last year Operating income (RMB) 4,403,444,346.05 4,960,801,890.99 -11.24% Net profit attributable to shareholders of 1,256,661,577.09 1,545,242,704.92 -18.68% the listed company (RMB) Net profit attributable to shareholders of the listed company after deducting 1,114,094,824.74 1,378,865,501.57 -19.20% non-recurring gains and losses (RMB) Net cash flow arising from operating 690,323,908.25 378,923,690.48 82.18% activities (RMB) Basic earnings per share (RMB/Share) 1.25 1.53 -18.30% Diluted earnings per share (RMB/Share) 1.25 1.53 -18.30% Weighted average ROE 7.60% 9.92% -2.32% Changes over period-end of last Period-end Period-end of last year year Total assets (RMB) 22,334,489,303.82 20,892,041,460.30 6.90% Net assets attributable to shareholder of 15,997,076,128.08 15,913,828,778.82 0.52% listed company (RMB) V. 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 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. 6 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 VI. Items and amounts of extraordinary profit (gains)/loss √Applicable □ Not applicable In RMB Item Amount Note Gains/losses from the disposal of non-current asset (including the write-off that 4,927,677.70 accrued for impairment of assets) Including the house land Governmental subsidy reckoned into current gains/losses (not including the expropriation and subsidy enjoyed in quota or ration according to national standards, which are 44,179,326.95 disposal incentives of closely relevant to enterprise’s business) Weifu Jingning Profit and loss of assets delegation on others’ investment or management 95,464,240.84 Held transaction financial asset, gains/losses of changes of fair values from transaction financial liabilities, and investment gains from disposal of transaction financial asset, transaction financial liabilities and financial asset available for 30,686,277.13 sales, exclude the effective hedging business relevant with normal operations of the Company Switch back of provision for depreciation of account receivable which was singly 200,000.00 taken depreciation test Other non-operating income and expenditure except for the aforementioned items 838,232.57 Less: Impact on income tax 26,626,210.20 Impact on minority shareholders’ equity (post-tax) 7,102,792.64 Total 142,566,752.35 -- 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 7 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section III. Summary of Company Business I. Main businesses of the company in the reporting period 1. The Company belongs to auto parts industry, and its main business products include diesel fuel injection system products, exhaust after-treatment system products and air management system products. 2. Main uses of the Company's products (1) The diesel fuel injection system products are widely used in different power diesel engines supporting all types of trucks, passenger cars, buses, construction machinery, marine, and generator sets. The company not only makes products matching with the main engines used at home but also exports some products to the Americas, Southeast Asia, and the Middle East. The products meet the needs of national emission standards. (2) The auto exhaust after-treatment system products: mainly support the major manufacturers of automobile, motorcycle and general machinery at home which meet the national emission standards. (3) The intake system products (supercharger): matches with most of the domestic small-bore diesel engine plants and some six-cylinder diesel engine manufacturers, and meet the needs of the light and heavy commercial vehicles and some passenger cars, and meets the national emission standards. 3. Business model of the Company The Company follows the operating philosophy of making competitive products, creating famous brands, striving for first choices, and creating value for the users, implements the business model that parent company unifies the management and subsidiaries decentralize the production. Namely, the group company is responsible for making strategic development planning and operation targets, and making the unified management, instruction and assessment for the finance, significant personnel management, core raw materials, quality control, and technology of the subsidiaries. The subsidiaries arrange production based on the order management model of market, which makes the subsidiaries keep the consistent quality with the company, helps keep abreast of customer needs and saving logistics costs, maintain the timeliness of products production and supply, and improve the company’s economic benefits. During the reporting period, the Company’s main business and business model have no significant changes. II. Major changes in main assets 1. Major changes in main assets 8 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Major assets Note of major changes Equity assets No major change Fixed assets No major change Intangible assets No major change Construction in progress The increase of investment in equipment for technology reformation 2. Main overseas assets √Applicable □ Not applicable The Whether proportion there are Specific Control measures Incom Locati Operatio of overseas significan content of the Cause of formation Asset size to guarantee asset e on n model assets to the t risks of asset security status company’s impairme net assets nt? The In order to accelerate the The company Company cultivation of the company's invested 7.26 established new business growth point and million and SPV (a accelerate the transformation gained control wholly-owne and upgrading of the company, of IRD Fuel d subsidiary) the 4th meeting of the Ninth Cells A/S. in Denmark Board of Directors reviewed The Company will to acquire a and approved the “Proposal on pay full attention 66% stake in the Company's Foreign to changes in the Danish IRD Investment”. The company industry and the Holding Fuel Cells established SPV (a Denm market, give play subsidiar N/A 0.57% No A/S wholly-owned subsidiary) in ark to its own y (hereinafter Denmark to acquire a 66% advantages, and referred to as stake in the Danish IRD with actively prevent “IRD”) with 7.26 million euros and resolve 7.26 million various risks. euros (IRD's valuation of 11 million euros). III. Core Competitiveness Analysis The Company is a high technology enterprise with a number of patented technologies. For years, based on the scientific research as National Enterprise Technical Center, Post-doctor Scientific Research Station, Jiangsu 9 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Provincial Engineering and Technology Research Center and Industrialization Base of National Hi-Tech Research and Development Achievement, we have become the backbone enterprise of the core parts of domestic automobile (power engineering) after 60 years of cultivation. 80% of the current core business of auto parts are matching with electronic control system and with electronic control realized, which owes a leading position in self-owned brand. The company lays emphasis on the manufacturing quality management, relies on WPS (Weifu production system) and manufacturing information platform with Weifu characteristics to continuously improve the production system structure, personnel organization, operation mode and market supply and demand relationship, and continues to carry out the process quality indicator quantitative management and process management, and improve production efficiency, product quality and product delivery capabilities, and the company’s manufacturing quality control capabilities are further improved. The company pays attention to the business operation quality of and lays emphasis on the resource integration. At present, the company has established a high-speed, stable and reliable network environment and an efficient data center, successfully built the ERP platform, opened up the value chain, and realized the integration of financial services, which made the information resources fully shared, and the company’s comprehensive operational management level has been further improved. The company pays attention to the construction of core talent system. At present, it has built a relatively complete human resource management platform to strive to build a high-quality core talent team, which provides a strong human resource guarantee for the long-term development of the company. Core competitiveness of the Company has no major changes in the Period. 10 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section IV. Discussion and Analysis of Operation I. Overview In the first half of 2019, the auto market was generally running at a low level, with a double-digit decline in the first half of the year. In the face of severe market conditions, the company faced difficulties and strived to seize market opportunities, took advantage of the trend, strengthened internal management, paid attention to risk management and control, and strive to ensure the stability of the company's overall economic operation. During the period, the Company achieved an operation revenue of 4.4 billion Yuan with a y-o-y decrease of 11.24%; profit amounted to 1.356 billion Yuan, a decrease of 19.3% from a year earlier; the net profit attributable to owners of parent company amounted as 1.257 billion Yuan, a decrease of 18.68% over same period of last year. Main work in the first half of the year 1. Figure out the situation, face difficulties, seek opportunities, strive to open up markets, focus on production and delivery, strive to maintain market share of key products, and ensure the continuous stability of related product markets. In the first half of the year, the production and sales volume of common rail pumps exceeded 900,000 units; 2. Focus on management quality, make full use of interconnection technologies, strengthen data interconnection and interoperability, and further enhance the abilities of data collection, analysis and prediction. Continuously improve manufacturing process management, strengthen flexible and agile production, and realize intelligent deployment capability of manufacturing process; continuously promote internal management of the company, sort out management duties, upgrade and optimize standardization of system processes, and optimize organization; strengthen the group information system security construction, continuously promote the construction of business project information management platform, and promote the financial sharing center construction, the procurement sharing platform project construction and the human resources management system platform construction. Constantly enhance the foundation of the company's development. 3. In order to accelerate the cultivation of the company's new business growth point and accelerate the transformation and upgrading of the company, the company established SPV (a wholly-owned subsidiary) in Denmark to acquire a 66% stake in Danish IRD Fuel Cells A/S held by FCCT ApS, equivalent to 7.26 million euros. By acquiring the equity of IRD, the company achieved the control of IRD, which is conducive to enhancing the company's competitiveness in the new energy business market and in line with the company's development strategy, and lays a good foundation for the company's sustainable, rapid and healthy development and transformation and upgrading. II. Main business analysis See the “I-Introduction” in “Discussion and Analysis of the Operation” Change of main financial data on a y-o-y basis 11 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 In RMB Same period of last y-o-y changes Current period Reasons year (+,-) Operation income 4,403,444,346.05 4,960,801,890.99 -11.24% Operation cost 3,405,386,504.44 3,889,590,289.69 -12.45% Sales expenses 104,270,647.40 106,347,559.85 -1.95% Salary and wage Administrative expenses 310,909,980.43 236,539,410.63 31.44% expenses have increased over that of last year Financial cost -29,492,795.58 -1,776,908.37 Income tax expense 81,382,654.54 102,927,297.96 -20.93% R&D investment 180,167,642.16 177,443,968.15 1.53% Cash paid by purchasing Net cash flow arising from operation 690,323,908.25 378,923,690.48 82.18% goods and accepting activities labor service declined Net cash flow arising from investment Cash paid for investment 314,744,349.46 -592,455,421.53 activities declined Net cash flow arising from financing -813,830,454.63 106,793,020.26 -862.06% Dividend distribution activities Net increase of cash and cash equivalent 191,652,992.77 -105,928,538.96 Major changes on profit composition or profit resources in reporting period □ Applicable √ Not applicable No major changes on profit composition or profit resources occurred in reporting period Constitution of main business In RMB Increase or Increase or Increase or decrease of decrease of decrease of gross Operating Operating cost Gross profit ratio operating revenue operating cost profit ratio over revenue over same period over same period same period of of last year of last year last year According to industries Auto parts 4,133,178,892.36 3,179,484,258.13 23.07% -12.54% -13.65% 4.46% According to products Auto fuel 2,538,597,772.47 1,806,427,276.08 28.84% -11.70% -12.70% 2.90% injection system Post-processing 1,354,791,563.22 1,192,914,112.31 11.95% -15.80% -17.12% 13.36% system Induction system 239,789,556.67 180,142,869.74 24.87% -0.84% 3.89% -12.10% According to region 12 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Domestic 3,966,974,100.14 3,023,685,102.13 23.78% -12.60% -13.57% 3.75% Overseas 166,204,792.22 155,799,156.00 6.26% -11.17% -15.06% 217.80% III. Analysis of non-main business √Applicable □Not applicable In RMB Ratio in total Amount Note Whether be sustainable profit Yes (The Company’s joint ventures Income mainly from the two joint Bosch Automobile Diesel and Zhonglian Investment ventures the Company (Bosch 888,216,680.48 65.48% Electronics’ joint venture- Lianhe income Automobile Diesel and Zhonglian Electronic have stable production and Electronic) operation both on a sustained basis) Gain/loss of Income from the change of shares fair value 30,686,277.13 2.26% of SDEC and Miracle Automation No changes that held by the Company Asset -1,500,885.27 -0.11% No impairment Non-operating 27,544,757.26 2.03% No income Non-operating 2,631,453.02 0.19% No expense IV. Assets and liability 1. Major changes of assets composition In RMB Period-end Period-end of last year Ratio Ratio in total Ratio in total Notes of major changes Amount Amount changes assets assets Monetary fund 2,689,698,577.33 12.04% 3,042,709,775.25 13.88% -1.84% Account 2,319,307,654.58 10.38% 2,374,955,337.33 10.83% -0.45% receivable Inventory 1,427,136,271.99 6.39% 1,241,695,545.38 5.66% 0.73% Investment 21,131,775.19 0.09% 22,761,528.91 0.10% -0.01% property Long-term equity 4,792,747,311.47 21.46% 4,261,256,191.08 19.44% 2.02% investment 13 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Fix assets 2,680,884,221.89 12.00% 2,625,557,400.23 11.98% 0.02% Investment of Construction in equipment for 259,557,105.61 1.16% 195,609,102.08 0.89% 0.27% process technology capacity expansion Short-term loans 321,055,399.28 1.44% 359,000,000.00 1.64% -0.20% Loans of subsidiary Long-term loans 22,500,000.00 0.10% 45,000,000.00 0.21% -0.11% decreased 2. Assets and liability measured by fair value √Applicable □Not applicable In RMB Devaluatio Amount Changes of fair Accumulative Amount at the n of of value changes of fair Amount of sale Amount at Items beginning withdrawi purchas gains/losses in value reckoned in the period period-end period ng in the e in the this period into equity period period Financial assets 1. Transactional financial assets 121,066,008.00 30,195,948.00 151,261,956.00 (excluding derivative financial assets) Subtotal of financial 121,066,008.00 30,195,948.00 151,261,956.00 assets Above total 121,066,008.00 30,195,948.00 151,261,956.00 Financial liabilities 490,329.13 490,329.13 0.00 Whether there have major changes on measurement attributes for main assets of the Company in report period or not □ Yes √No 3. The assets rights restricted till end of the period Book value at Item Restriction reasons period-end Monetary fund 158,280.00 Margin paid for the issuance of letter of guarantee Monetary fund 52,783,679.85 Cash deposit for bank acceptance Monetary fund 38,774,365.26 Selling equity of Protean Holdings Corp. Monetary fund 1,655,119.95 Court freeze Notes receivable 762,571,527.45 Notes pledge for bank acceptance 14 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 In accordance with the civil ruling No. (2016) Y03MC2490 and No.(2016) Y03MC2492 of Guangdong Shenzhen Intermediate People's Court(hereinafter referred to as " Shenzhen Intermediate Court"), the property with the value of 217 million Yuan under Transactional 141,199,062.12 the name of the Company and other seven respondents and the third party Shenzhen financial assets Hejun Chuangye Holdings Co., Ltd. (hereinafter referred to as " Hejun Company") was frozen. As of the end of the reporting period, 4.71 million shares of Miracle Logistics and 11,739,102 shares of SDEC held by the Company were frozen Total 997,142,034.63 -- V. Investment 1. Overall situation □ Applicable √ Not applicable 2. The major equity investment obtained in the reporting period □ Applicable √ Not applicable 3. The major non-equity investment doing in the reporting period □ Applicable √ Not applicable 4. Financial assets investment (1) Securities investment √Applicable □Not applicable Book Changes Cumulat Profit Account value at in fair Book ive fair Current and loss Capit Variety Short ing the value of Current value at Code of Initial value purchas in the Accountin al of form of securitie investm measure beginni the sales the end securitie securitie changes e Reporti g subject Sourc s ent cost s s ment ng of current amount of the in amount ng e model the profit period equity Period period and loss Domesti Transactio Measure c and 199,208 85,458, 19,221, 19,221, 104,680 nal Own 600841 SDEC d by fair foreign ,000.00 408.00 648.00 648.00 ,056.00 financial funds value stocks assets Domesti Transactio Miracle Measure c and 69,331, 35,607, 10,974, 10,974, 46,581, nal Own 002009 Automat d by fair foreign 500.00 600.00 300.00 300.00 900.00 financial funds ion value stocks assets 15 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 268,539 121,066 30,195, 30,195, 151,261 Total -- 0.00 0.00 0.00 -- -- ,500.00 ,008.00 948.00 948.00 ,956.00 Disclosure date of 2012-03-24 securities investment 2013-06-04 approval of the Board (2) Derivative investment □ Applicable √ Not applicable The Company has no derivatives investment in the Period VI. Significant asset and equity sales 1. Significant asset sales □ Applicable √ Not applicable No significant assets being sold in the Period 2. Significant equity sales □ Applicable √ Not applicable VII. Analysis of the main stock-jointly and controlling subsidiary √ Applicable □ Not applicable Main subsidiary and stock-jointly enterprise with over 10% influence on net profit of the Company In RMB Comp Main Register Operating any Type Total assets Net Assets Operating profit Net profit business capital revenue name Post Weifu Subsid processing 502,596,3 3,861,458,694.93 1,662,618,884.15 1,338,975,875.93 38,801,279.23 32,780,686.77 Leader iary system 00.00 products Weifu Fuel Subsid 346,286,8 Jinnin injection 1,396,248,740.28 1,049,513,354.38 328,481,669.39 48,557,515.93 75,516,399.57 iary 25.80 g system Bosch Joint-s Fuel Autom tock USD241,0 injection 13,175,089,849.44 7,999,369,712.26 7,690,808,970.61 2,084,188,035.10 1,827,071,096.33 obile compa 00,000.00 system Diesel ny Zhong Joint-s Gasoline 600,620,0 6,167,579,853.07 5,637,005,486.65 11,298,817.88 739,595,992.63 737,662,037.83 16 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 lian tock system 00.00 Electr compa onic ny Subsidiary obtained and disposed in the Period √ Applicable □ Not applicable The method of obtaining and handling The influence to the whole production and Company Name subsidiaries during the report period performance SPV Establishment No change IRD Fuel Cells A/S Acquisition No change Explanation on holding equity participation enterprise In the first half of this year, the auto market was generally running at a low level with a double-digit decline. The main business income and profit of the company, its holding subsidiaries and its shareholding subsidiaries were affected to varying degrees. VIII. The structured subject controlled by the Company □ Applicable √ Not applicable IX. Prediction of business performance from January – September 2019 Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its material change compared with the corresponding period of the last year and explanation on reason □ Applicable √ Not applicable X. Risks and countermeasures (1) Macro economy and market risks The macro-economy and market environment are still complex and severe, and many factors such as the automobile industry cycle and the automobile industry policy remain uncertain. The company will change its deterministic model thinking to cope with future uncertainties, rely on existing businesses, actively expand new fields, consolidate the existing business market position, and position in new business potential markets, and strive to improve the company's core competitiveness and overall risk resistance. (2) The risks of operation management and control With the rapid growth of the Company's assets and the continuous expansion of business scope, but there are still potential risks of operation management and control because of the large span and multiple links in personnel, business, finance, and capital management. The company will continue to promote the optimization and improvement of internal management, focus on strengthening compliance management, further improve the systems and processes, promote the institutionalization and standardization of company management, and control operational risks. 17 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (3) The risks of fluctuations in raw material prices The company's main raw materials include various grades of steel, aluminum, precious metals, etc., the continuous rise in prices will bring the risks of rising costs to the company. The company will pay close attention to the price trend of major raw materials, choose appropriate procurement opportunities, and make reasonable strategic reserves to resolve the risk of raw material price fluctuations. (4) Risks associated with financial instruments The major financial tools of the company includes equity investments, loans, account receivables & payables, etc.. The basic strategy of company risk management is to confirm and analyze various potential risks that may occur, strictly control the risks, so as to narrow the negative impact down to the minimum and make the shareholders’ and other investors’ interests to the maximum. 18 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section V. Important Events I. AGM and extraordinary general meeting 1. AGM held in the period Participation ratio Meeting Type Holding date Disclosure date Index for investors Annual General Notice No.: 2019-015 released on AGM 44.56% 2019-05-28 2019-05-29 Meeting of 2018 Juchao Website (www.cninfo.com.cn) 2. Request for extraordinary general meeting by preferred stockholders with rights to vote □ Applicable √ Not applicable II. Profit distribution plan and capitalizing of common reserves in the period □ Applicable √ Not applicable There are no cash dividend, bonus and capitalizing of common reserves carried out in the semi-annual III. Commitments that actual controller, shareholder, related parties, buyer and committed party as the Company etc. have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period □ Applicable √ Not applicable There are no commitments that the actual controller, shareholder, related parties, buyer and committed party as the Company etc. have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period IV. Appointment and non-reappointment (dismissal) of CPA Whether the semi-annual financial report had been audited □Yes √ No The semi-annual report was not audited V. Explanation on “Qualified Opinion” from CPA by the Board and Supervisory Committee □ Applicable √ Not applicable 19 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 VI. Explanation from the Board for “Qualified Opinion” of last year’s □ Applicable √ Not applicable VII. Bankruptcy reorganization □ Applicable √ Not applicable No bankruptcy reorganization in Period. VIII. Lawsuits Material lawsuits and arbitration □ Applicable √ Not applicable No material lawsuits and arbitration in the reporting Other lawsuits √Applicable □ Not applicable Amount Judgment Whether Trial Results Related Implementat Basic Situation of Formed Progress of Litigation and Effects of Disclosure Disclosure to the ion of Litigation (Arbitration) Accrued (Arbitration) Litigation Date Index Case (10 Litigation Liabilitie (Arbitration) thousan (Arbitration) s d Yuan) On March 6, 2017, the By the Company’s application company received the for reconsideration, Shenzhen civil ruling Intermediate People's Court No.(2016)Y03MC2490 deemed the total assets that and No.(2016) Cinda Company applied for Y03MC2492 from preservation to be RMB This litigation (Announceme Shenzhen Intermediate 217,027,697.23. The total will not affect nt No.: People's Court about the value of 15.3 million shares of the company’s Not yet 2017-03-0 2017-002) dispute case that the 21,703 N SDEC Stock and 4.71 million daily implemente 8 published on plaintiff applicant China shares of Miracle Automation operating d www.cninfo.c Cinda Asset held by the Company has activities for om.cn Management Co., Ltd. exceeded the total assets that the time being Shenzhen Branch Cinda Company applied for (hereinafter referred to preservation, therefore, as “Cinda Company”) 3,560,898 shares of SDEC appealed the respondent Stock held by the Company Weifu High Technology was unfrozen. Up to the end 20 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 and other seven of the reporting period, the respondents and the Company’s frozen assets were shareholders of the third as follows: 4.71 million shares party Hejun Company of Miracles Logistics held by damaged the interests of the Company and its fruits, corporate creditors, and 11,739,102 shares of which adopted the SDEC Stock held by the mandatory measures to company and its fruits. At freeze the assets with present, this litigation is in the value of RMB 217 first instance (First trail on 24 million under the name September 2017 and of the Company and follow-up session will held other seven respondents until further notice) and Hejun Company. Freeze 4.71 million shares of Miracle Automation and 15.3 million shares of SDEC Stock held by the company. The Company has applied to the Futian Court for compulsory liquidation of Hejun Company. Futian Court has made a civil ruling This event ((2017) Yue 0304 QS No. 5) will not affect (Announceme The Company applied to which ruled to execute the Relevant nt No.: the Futian Court for 2017-12-0 3,300 N compulsory liquidation to Company’s works still 2017-023) compulsory liquidation 6 Hejun Company. The daily in process published on of Hejun Company. Company will actively operating www.cninfo.c cooperate with the court to do activities om.cn the relevant liquidation work and safeguard the legitimate rights and interests of the Company. IX. Penalty and rectification □ Applicable √ Not applicable No penalty and rectification for the Company in reporting period. X. Integrity of the Company and its controlling shareholders and actual controllers □ Applicable √ Not applicable 21 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 XI. Implementation of the company’s stock incentive plan, employee stock ownership plan or other employee incentives √ Applicable □ Not applicable On 20 June 2014, the Company held the 2013 AGM which deliberated "the Company’s incentive fund implementation methods", the Company has implemented the medium and long term special incentive allocation for core talents during the reporting period XII. Major related transaction 1. Related transaction with routine operation concerned √ Applicable □ Not applicable Wheth Trading er over Availa Conte Related Type Relate Proporti limit the Clearing Index nt of transaction ble of Pricing d on in approve approv form for Date of of Related relate amount (in Relationship related principl transac similar related similar party d 10 transac e tion transacti d (in 10 ed transacti disclosure disclos transa thousand market tion price ons (%) thousan limited on ure ction Yuan) price d Yuan) or not (Y/N) Based Weifu on fair Based Precisio Notice Associated Procur Good value Marke on the Marke n 1,282.81 0.44% 4,000 N 2019-04-23 No.:20 company ement s of the t price contract t price Machine 19-009 market terms ry price Associated Based company, on fair Based Bosch Controlling Notice Procur Good value Marke on the Marke Diesel subsidiary of 833.27 0.29% 6,000 N 2019-04-23 No.:20 ement s of the t price contract t price System German 19-009 market terms Bosch price Company Based on fair Based Weifu Joint venture Notice Procur Good value Marke on the Marke Environ of Weifu 67,565.73 23.20% 200,000 N 2019-04-23 No.:20 ement s of the t price contract t price ment Leader 19-009 market terms price Robert Second Based Based Notice Procur Good Marke Marke Bosch largest on fair 6,680.14 2.29% 13,000 N on the 2019-04-23 No.:20 ement s t price t price Compan shareholder value contract 19-009 22 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 y of the of the terms Company market price Based Weifu on fair Based Precisio Good Notice Associated value Marke on the Marke n Sales s and 66.19 0.02% 300 N 2019-04-23 No.:20 company of the t price contract t price Machine labors 19-009 market terms ry price Associated Based company、 on fair Based Bosch Controlling Good Notice value Marke on the Marke Diesel subsidiary of Sales s and 148,782.26 33.79% 260,000 N 2019-04-23 No.:20 of the t price contract t price System German labors 19-009 market terms Bosch price Company Based on fair Based Weifu Joint venture Good Notice value Marke on the Marke Environ of Weifu Sales s and 1,023.14 0.23% 5,000 N 2019-04-23 No.:20 of the t price contract t price ment Leader labors 19-009 market terms price Based Second Robert on fair Based largest Good Notice Bosch value Marke on the Marke shareholder Sales s and 30,979.1 7.04% 90,000 N 2019-04-23 No.:20 Compan of the t price contract t price of the labors 19-009 y market terms Company price Associated Paym Based company、 ent of on fair Based Bosch Controlling techni Notice value Marke on the Marke Diesel subsidiary of Other cal 100.27 100 N 2019-04-23 No.:20 of the t price contract t price System German royalt 19-009 market terms Bosch ies, price Company etc. Paym Based Second ent of on fair Based largest techni Notice Robert value Marke on the Marke shareholder Other cal 112.23 300 N 2019-04-23 No.:20 Bosch of the t price contract t price of the royalt 19-009 market terms Company ies, price etc. 23 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Based on fair Based Weifu Joint venture Rent Notice value Marke on the Marke Environ of Weifu Other receiv 125.4 300 N 2019-04-23 No.:20 of the t price contract t price ment Leader able 19-009 market terms price Associated Based company、 Procu on fair Based Bosch Controlling reme Notice value Marke on the Marke Diesel subsidiary of Other nt of 572.09 1,000 N 2019-04-23 No.:20 of the t price contract t price System German fixed 19-009 market terms Bosch assets price Company Based Sales on fair Based Weifu Joint venture of value Marke on the Marke Environ of Weifu Other 1,048.52 Y fixed of the t price contract t price ment Leader assets market terms price Total -- -- 259,171.15 -- 580,000 -- -- -- -- -- Detail of sales return with major Not applicable amount involved After deliberated and approved by AGM of 2018, it is estimated that the routine related transaction for year of 2019 amounting to 5800 million Yuan, actually 2591.7115 million Yuan in total occurred in reporting period, including: Report the actual implementation of 1. It is estimated that purchasing goods and labors from related parties amounted as 2230 the normal related transactions which million Yuan at most for year of 2019, actually 763.6196 million Yuan occurred in reporting were projected about their total period; amount by types during the reporting 2. It is estimated that sales of goods and labors to related parties amounted as 3553 million period (if applicable) Yuan at most for year of 2019, actually 1808.5069 million Yuan occurred in reporting period; 3. It is estimated that other related transactions with related parties amounted as 17 million Yuan at most for year of 2019, actually 19.585 million Yuan occurred in reporting period; Reasons for major differences between trading price and market Not applicable reference price (if applicable) 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 24 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 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 The Company had no contact of related credit and debt in the reporting period. 5. Other related transactions √ Applicable □ Not applicable On June 4, 2019, the 7th meeting of the Ninth Board of Directors held by the company reviewed and approved the “Proposal on Joint Investment and Establishment of Companies and Related Transactions between the Company and Related Parties”. In the important period of innovation and upgrading of the technology industry in the auto industry, in order to conform to the new development trends (i.e. electromotion, intelligentization, network, and sharing) of the auto industry. The company and its major shareholders, Wuxi Industry Development Group Co., Ltd. (hereinafter referred to as "Industry Group"), Wuxi Taiji Industry Corporation limited (hereinafter referred to as "Taiji Industry"), Chuxin Semiconductor Technology Co., Ltd. (hereinafter referred to as "Chuxin Semiconductor"), Wuxi Spark Microelectronics Partnership (Limited Partnership) (hereinafter referred to as "Spark") jointly invested and established a company engaged in the design, development and sales of semiconductor devices and integrated circuits and the use of its own assets for external investment. (Wuxi Xichan Microchip Semiconductor Co., Ltd.). Wuxi Xichan Microchip Semiconductor Co., Ltd. (hereinafter referred to as “Xichan Microchip”) has been established and completed the industrial and commercial registration procedures, and obtained the “Business License” issued by Wuxi Xinwu District Market Supervision Administration. The registered capital of Xichan Microchip is RMB 2.11 billion. The shareholding structure is: the related party Industry Group invested RMB 910 million (accounting for 43.13%), and Spark invested RMB 600 million (accounting for 28.43%), Weifu High Tech invested RMB 200 million (accounting for 9.48%), related party Taiji Industry invested RMB 200 million (accounting for 9.48%), and Chuxin Semiconductor invested RMB 200 million (accounting for 9.48%). Related searches for disclosure website of interim report with major related transaction concerned Interim report Disclosure date Website for disclosure Proposal on Joint Investment and Establishment of More details were published on Juchao Website Companies and Related Transactions between the 2019-06-05 (http://www.cninfo.com.cn) (Notice No.: 2019-018) Company and Related Parties Progress of the Joint Investment and Establishment of More details were published on Juchao Website Companies and Related Transactions between the 2019-06-13 (http://www.cninfo.com.cn) (Notice No.: 2019-019) Company and Related Parties 25 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 XIII. Non-business capital occupying by controlling shareholders and its related parties □ Applicable √ Not applicable No non-business capital occupied by controlling shareholders and its related parties in Period XIV. 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 (1) Guarantees In 10 thousand Yuan Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries) Guarante Actual date of Name of the Related e for Guarant happening (Date Actual Guarantee Guarantee Implemen Company Announcement related ee limit of signing guarantee limit type term ted (Y/N) guaranteed disclosure date party agreement) (Y/N) Guarantee of the Company and the subsidiaries Related Guarante Actual date of Name of the Announce e for Guarantee happening (Date Actual Guarantee Guarantee Implemen Company ment related limit of signing guarantee limit type term ted (Y/N) guaranteed disclosure party agreement) date (Y/N) 26 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Ningbo Tianli Turbo charging Joint liability 2016-10-27 6,000 2016-11-11 3,750 5 N N Technology Co., guaranty Ltd. Total amount of actual Total amount of approving occurred guarantee for guarantee for subsidiaries in 0 3,750 subsidiaries in report period report period (B1) (B2) Total balance of actual Total amount of approved guarantee for subsidiaries at guarantee for subsidiaries at the 6,000 3,750 the end of reporting period end of reporting period (B3) (B4) Guarantee of the subsidiaries for the subsidiaries Related Guarante Actual date of Name of the Announce e for Guarantee happening (Date Actual Guarantee Guarantee Implemen Company ment related limit of signing guarantee limit type term ted (Y/N) guaranteed disclosure party agreement) date (Y/N) Total amount of guarantee of the Company( total of three abovementioned guarantee) Total amount of approving Total amount of actual guarantee in report period 0 occurred guarantee in report 3,750 (A1+B1+C1) period (A2+B2+C2) Total amount of approved Total balance of actual guarantee at the end of report 6,000 guarantee at the end of report 3,750 period (A3+B3+C3) period (A4+B4+C4) The proportion of the total amount of actually guarantee in the 0.23% net assets of the Company (that is A4+ B4+C4) Including: Amount of guarantee for shareholders, actual controller and its 0 related parties (D) The debts guarantee amount provided for the guaranteed parties whose assets-liability ratio exceed 70% directly or 0 indirectly (E) Proportion of total amount of guarantee in net assets of the 0 Company exceed 50% (F) Total amount of the aforesaid three guarantees (D+E+F) 0 Explanations on possibly bearing joint and several liquidating N/A responsibilities for undue guarantees (if applicable) Explanations on external guarantee against regulated N/A procedures (if applicable) 27 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Explanation on guarantee with composite way Nil (2) Guarantee outside against the regulation □ Applicable √ Not applicable No guarantee outside against the regulation in Period. 3. Other material contracts □ Applicable √ Not applicable No other material contracts for the Company in reporting period XV. Social responsibility 1. Major environmental issues The company and its subsidiaries don’t belong to the key pollutant discharging units published by the environmental protection department. Protecting the environment is the corporate mission of Weifu High Technology. The company’s main business is expanded around the energy saving and emission reduction of automobiles. At present, the company’s main products have all met the emission regulations required by the state, and the company is actively preparing products that can meet the requirements of more stringent emission regulations. Saving resources and reducing consumption are part of the core value of Weifu High Technology. On the one hand, it is conducive to the improvement of enterprise efficiency, and at the same time, it is conducive to improving the resource utilization rate of the whole society. Therefore, the company will continue to improve the resource utilization through technological innovation. The company resolutely implements the “three simultaneous” system of construction projects and strictly performs the procedures for environmental impact assessment, approval, and acceptance of construction projects. In the process of new project and technical transformation, the new and old pollution can be solved together according to the principle of technical feasibility and economic rationality, and the “three wastes” management project must be designed, constructed and accepted at the same time as the main project. 2. Precise poverty alleviation social responsibility There is no precise poverty alleviation carried out in the period and no follow plan either XVI. Explanation on other significant events √ Applicable □ Not applicable Matters relating to the sale of the equity interest in the joint-stock company Protean Holdings Corp. 28 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 In view of the fact that the majority shareholder of Protean Holdings Corp. exercised the “Drag-along right”, that is, the vast majority of Protean Holdings Corp.’s shareholders were in favor of the shareholding, and the Protean Holdings Corp. board of directors mostly agreed, which met the drag-along conditions, so Weifu High Tech must agree to sell its 9.61% stake in Protean Holdings Corp., and there were dozens of other shareholders who held the remaining 16.04% of the issued shares were dragged to sell their shares. After the sale, Weifu High Tech no longer holds a stake in Protean Holdings Corp. (This acquisition invoked 5.1“Drag-along right” in the fifth revision and the restatement of the shareholder agreement of Protean Holdings Corp., i.e. 5.1 (a) i. The most majority of shareholders agree with the shareholding ratio; ii. Oak Investment Partners XII LP ("Oak") with privilege and holding 64.77% of the issued shares agrees; iii. GSR Ventures ("GSR") with privilege and holding 9.58% of the issued shares agrees; iv. The majority of the board of directors of Protean Holdings Corp. agrees.) Since Protean Holdings Corp., which was invested by the company, was 100% acquired by Virtue Surge Limited, Virtue Surge Limited continues to exist after the merger, and Protean Holdings Corp. no longer exists. More details about “Notice of the sale of equity interest in the joint-stock company Protean Holdings Corp.” (No.: 2019-018) were published on Juchao Information Website (http://www.cninfo.com.cn). XVII. Significant event of subsidiary of the Company □ Applicable √ Not applicable 29 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Shares 1. Changes in Shares In Share Before the Change Increase/Decrease in the Change (+, -) After the Change Capitaliza New Bonus tion of Subtot Proportio Amount Proportion shares Others Amount shares public al n issued reserve I. Restricted shares 80,079 0.01% 80,079 0.01% 3. Other domestic shares 80,079 0.01% 80,079 0.01% Domestic nature 80,079 0.01% 80,079 0.01% person shares II. Unrestricted shares 1,008,870,491 99.99% 1,008,870,491 99.99% 1. RMB Ordinary shares 836,490,491 82.90% 836,490,491 82.90% 2. Domestically listed 172,380,000 17.09% 172,380,000 17.09% foreign shares III. Total shares 1,008,950,570 100.00% 1,008,950,570 100.00% Reasons for share changed □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 30 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 2. Changes of restricted shares □ Applicable √ Not applicable II. Securities issuance and listing □ Applicable √ Not applicable III. Amount of shareholders of the Company and particulars about shares holding In share Total common shareholders at Total preference shareholders with voting rights recovered at 60,037 0 period-end end of reporting period (if applicable) (see note 8) Particulars about shares held above 5% by common shareholders or top ten common shareholders Number of share Total common Amount of Amount of Proporti pledged/froze Nature of on of shareholders Changes in restrict un-restrict Full name of Shareholders n shareholder shares at the end of report period common common held State report period shares held shares held Amo of unt share Wuxi Industry Development State-owned 20.22% 204,059,398 0 204,059,398 Group Co., Ltd. corporate Foreign ROBERT BOSCH GMBH 14.16% 142,841,400 0 142,841,400 corporate Hong Kong Securities Foreign Clearing Company Ltd. 5.73% 57,857,357 17,375,313 57,857,357 corporate (HKSCC) BBH BOS S/A FIDELITY FD Foreign 1.84% 18,530,315 527,518 18,530,315 - CHINA FOCUS FD corporate Bank of Communication – HSBC Jixin Double Core Other 1.82% 18,331,307 -8,281,266 18,331,307 Strategy Mixed Securities Investment Fund Central Huijin Assets State-owned 1.27% 12,811,200 0 12,811,200 Management Co., Ltd. corporate China Life Insurance - traditional - general insurance Other 1.21% 12,238,898 12,238,898 12,238,898 products - 005L-CT001 Shen China Life Insurance- Bonus Other 1.14% 11,459,033 9,673,133 11,459,033 -Individual bonus - 31 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 -005L-FH002 Shen Tianda Assets Management Co., Ltd. - Tianda Global Foreign 0.97% 9,802,559 9,802,559 9,802,559 Strategy Fund - All China corporate equity fund (Exchange) Agricultural Bank of China - Other 0.69% 7,007,675 796,607 7,007,675 CS 500 ETF Strategy investors or general corporation comes top 10 shareholders due to rights Not applicable issue (if applicable) (see note 3) Among the top ten shareholders, there has no associated relationship between Wuxi Industry Development Croup Co., Ltd. and other shareholders, the first largest Explanation on associated relationship shareholder of the Company; and they do not belong to the consistent actionist among the aforesaid shareholders regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Company. Particular about top ten shareholders with un-restrict common shares held Amount of un-restrict Type of shares Shareholders’ name common shares held Type Amount at Period-end Wuxi Industry Development Group Co., Ltd. 204,059,398 RMB common shares 204,059,398 RMB common shares 115,260,600 ROBERT BOSCH GMBH 142,841,400 Domestically listed 27,580,800 foreign shares ROBERT BOSCH GMBH 57,857,357 RMB common shares 57,857,357 Domestically listed BBH BOS S/A FIDELITY FD - CHINA FOCUS FD 18,530,315 18,530,315 foreign shares Bank of Communication – HSBC Jixin Double Core Strategy Mixed 18,331,307 RMB common shares 18,331,307 Securities Investment Fund Central Huijin Assets Management Co., Ltd. 12,811,200 RMB common shares 12,811,200 China Life Insurance - traditional - general insurance products - 12,238,898 RMB common shares 12,238,898 005L-CT001 Shen China Life Insurance- Bonus -Individual bonus - -005L-FH002 Shen 11,459,033 RMB common shares 11,459,033 Tianda Assets Management Co., Ltd. - Tianda Global Strategy Fund - 9,802,559 RMB common shares 9,802,559 All China equity fund (Exchange) Agricultural Bank of China - CS 500 ETF 7,007,675 RMB common shares 7,007,675 Among the top ten shareholders, there has no associated Expiation on associated relationship or consistent actors within the relationship between Wuxi Industry Development Croup top 10 un-restrict common shareholders and between top 10 Co., Ltd. and other shareholders, the first largest shareholder un-restrict common shareholders and top 10 common shareholders of the Company; and they do not belong to the consistent 32 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 actionist regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Company. Explanation on top 10 shareholders involving margin business (if Not applicable applicable) (see note 4) Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period □ Yes √ No The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy-back agreement dealing in reporting period. IV. Changes of controlling shareholders or actual controller Changes of controlling shareholders in reporting period □ Applicable √ Not applicable Changes of controlling shareholders had no change in reporting period. Changes of actual controller in reporting period □ Applicable √ Not applicable Changes of actual controller in reporting period had no change in reporting period. 33 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section VII. Preferred Stock □ Applicable √ Not applicable The Company had no preferred stock in the reporting. 34 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section VIII. Directors, Supervisors and Senior Executives I. Changes of shares held by directors, supervisors and senior executives □ Applicable √ Not applicable No change of shares held by directors, supervisors and senior executives, found more details in Annual Report 2018. II. Resignation and dismissal of directors, supervisors and senior executives □ Applicable √ Not applicable No changes of directors, supervisors and senior executives, found more details in Annual Report 2018. 35 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section IX. Corporate Bond Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when semi-annual report approved for released or fail to cash in full on due No 36 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section X. Financial Report I. Audit report Whether the semi annual report is audited □ Yes √ No The company's semi annual financial report has not been audited. II. Financial statement Unit in note of financial statement refers to CNY: RMB (Yuan) 1. Consolidated balance sheet Prepared by Weifu High-Technology Group Co., Ltd 2019-6-30 In RMB Item 2019-6-30 2018-12-31 Current assets: Monetary funds 2,689,698,577.33 2,616,321,740.73 Settlement provisions Capital lent Tradable financial assets 4,409,469,555.43 Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial assets Note receivable 1,492,394,221.35 1,148,107,603.68 Account receivable 2,319,307,654.58 1,919,793,266.91 Receivable financing Accounts paid in advance 130,898,819.37 94,651,431.31 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Other account receivable 597,269,619.06 84,582,246.16 Including: Interest receivable 674,104.16 1,842,437.50 Dividend receivable 536,162,445.67 37 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Buying back the sale of financial assets Inventories 1,427,136,271.99 1,438,528,714.59 Contractual assets Assets held for sale Non-current asset due within one year Other current assets 59,554,852.86 4,632,137,600.26 Total current assets 13,125,729,571.97 11,934,122,603.64 Non-current assets: Loans and payments on behalf Debt investment Finance asset available for sales 255,975,176.91 Other debt investment Held-to-maturity investment Long-term account receivable Long-term equity investment 4,792,747,311.47 4,976,773,946.74 Investment in other equity instrument 180,940,000.00 Other non-current financial assets 368,800,000.00 Investment real estate 21,131,775.19 21,906,134.52 Fixed assets 2,680,884,221.89 2,707,374,678.61 Construction in progress 259,557,105.61 166,414,542.18 Productive biological asset Oil and gas asset Right-of-use assets Intangible assets 320,409,700.92 324,892,822.75 Expense on Research and Development Goodwill 55,591,347.00 1,784,086.79 Long-term expenses to be apportioned 18,905,250.00 16,637,652.31 Deferred income tax asset 214,153,685.24 234,697,139.58 Other non-current asset 295,639,334.53 251,462,676.27 Total non-current asset 9,208,759,731.85 8,957,918,856.66 Total assets 22,334,489,303.82 20,892,041,460.30 Current liabilities: Short-term loans 321,055,399.28 298,928,213.94 Loan from central bank 38 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Capital borrowed Transactional financial liability Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability 490,329.13 Note payable 1,591,019,357.36 1,018,367,533.74 Account payable 2,492,584,058.39 2,047,336,834.66 Accounts received in advance 53,037,864.67 41,329,857.80 Selling financial asset of repurchase Absorbing deposit and interbank deposit Security trading of agency Security sales of agency Wage payable 235,601,920.23 312,113,178.24 Taxes payable 73,450,696.65 74,271,613.92 Other account payable 430,239,321.47 64,448,723.52 Including: Interest payable 752,404.25 517,469.08 Dividend payable 369,352,725.60 Commission charge and commission payable Reinsurance payable Contractual liability Liability held for sale Non-current liabilities due within one year 15,000,000.00 15,000,000.00 Other current liabilities Total current liabilities 5,211,988,618.05 3,872,286,284.95 Non-current liabilities: Insurance contract reserve Long-term loans 22,500,000.00 30,000,000.00 Bonds payable Including: Preferred stock Perpetual capital securities Lease liability Long-term account payable 35,083,263.11 35,422,354.11 Long-term wages payable 74,679,175.36 74,679,175.36 Accrual liability 39 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Deferred income 415,418,074.89 425,769,854.13 Deferred income tax liabilities 6,386,620.12 1,912,744.40 Other non-current liabilities Total non-current liabilities 554,067,133.48 567,784,128.00 Total liabilities 5,766,055,751.53 4,440,070,412.95 Owner’s equity: Share capital 1,008,950,570.00 1,008,950,570.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital public reserve 3,416,022,795.14 3,416,022,795.14 Less: Inventory shares Other comprehensive income 261,591.54 -19,809,442.95 Reasonable reserve 2,535,660.69 1,618,490.50 Surplus public reserve 510,100,496.00 510,100,496.00 Provision of general risk Retained profit 11,059,205,014.71 10,996,945,870.13 Total owner’ s equity attributable to parent company 15,997,076,128.08 15,913,828,778.82 Minority interests 571,357,424.21 538,142,268.53 Total owner’ s equity 16,568,433,552.29 16,451,971,047.35 Total liabilities and owner’ s equity 22,334,489,303.82 20,892,041,460.30 Legal Representative: Chen Xuejun Person in charge of accounting works: Ou Jianbin Person in charge of accounting institute: Ou Jianbin 2. Balance Sheet of Parent Company In RMB Item 2019-6-30 2018-12-31 Current assets: Monetary funds 2,110,649,144.04 1,922,408,227.00 Transactional financial assets 4,109,469,555.43 Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial assets 40 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Note receivable 202,038,803.99 264,264,207.30 Account receivable 766,756,661.80 742,246,990.99 Receivable financing Accounts paid in advance 84,477,497.47 59,028,927.25 Other account receivable 712,698,500.83 196,849,092.13 Including: Interest receivable 30,570.83 188,682.78 Dividend receivable 517,216,193.24 Inventories 436,366,950.75 492,054,274.67 Contractual assets Assets held for sale Non-current assets maturing within one year Other current assets 26,252,619.45 4,576,688,553.49 Total current assets 8,448,709,733.76 8,253,540,272.83 Non-current assets: Debt investment Available-for-sale financial assets 180,035,176.91 Other debt investment Held-to-maturity investments Long-term receivables Long-term equity investments 5,637,526,395.41 5,739,110,426.55 Investment in other equity instrument 105,000,000.00 Other non-current financial assets 368,800,000.00 Investment real estate Fixed assets 1,497,920,785.67 1,534,109,106.80 Construction in progress 163,098,662.24 78,673,300.59 Productive biological assets Oil and natural gas assets Right-of-use assets Intangible assets 186,309,565.33 188,101,655.94 Research and development costs Goodwill Long-term deferred expenses Deferred income tax assets 119,906,203.71 140,286,756.70 Other non-current assets 224,004,875.34 184,208,090.40 41 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Total non-current assets 8,302,566,487.70 8,044,524,513.89 Total assets 16,751,276,221.46 16,298,064,786.72 Current liabilities Short-term borrowings 92,000,000.00 112,000,000.00 Transactional financial liability Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes payable 332,383,071.60 330,545,052.37 Account payable 953,466,419.74 823,693,469.51 Accounts received in advance 3,446,051.71 6,639,554.63 Contractual liability Wage payable 159,004,259.87 200,205,508.25 Taxes payable 58,256,869.09 39,193,425.15 Other accounts payable 411,692,830.03 12,142,596.68 Including: Interest payable 283,127.78 149,966.66 Dividend payable 369,352,725.60 Liability held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 2,010,249,502.04 1,524,419,606.59 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 63,962,762.93 63,962,762.93 Accrued liabilities Deferred income 370,269,926.04 381,609,056.40 Deferred income tax liabilities 4,529,392.20 Other non-current liabilities Total non-current liabilities 438,762,081.17 445,571,819.33 42 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Total liabilities 2,449,011,583.21 1,969,991,425.92 Owners’ equity: Share capital 1,008,950,570.00 1,008,950,570.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 3,488,221,286.39 3,488,221,286.39 Less: Inventory shares Other comprehensive income -19,809,442.95 Special reserve Surplus reserve 510,100,496.00 510,100,496.00 Retained profit 9,294,992,285.86 9,340,610,451.36 Total owner’s equity 14,302,264,638.25 14,328,073,360.80 Total liabilities and owner’s equity 16,751,276,221.46 16,298,064,786.72 3. Consolidated Profit Statement In RMB Item Semi-annual of 2019 Semi-annual of 2018 I. Total operating income 4,403,444,346.05 4,960,801,890.99 Including: Operating income 4,403,444,346.05 4,960,801,890.99 Interest income Insurance gained Commission charge and commission income II. Total operating cost 4,005,776,550.51 4,446,144,672.35 Including: Operating cost 3,405,386,504.44 3,889,590,289.69 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 34,534,571.66 38,000,352.40 Sales expense 104,270,647.40 106,347,559.85 43 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Administrative expense 310,909,980.43 236,539,410.63 R&D expense 180,167,642.16 177,443,968.15 Financial expense -29,492,795.58 -1,776,908.37 Including: Interest expenses 9,264,648.42 9,075,955.05 Interest income 48,416,919.83 11,684,097.62 Add: other income 17,632,117.95 14,032,459.71 Investment income (Loss is listed with “-”) 888,216,680.48 1,149,033,168.39 Including: Investment income on affiliated company and joint 790,465,131.05 968,640,145.91 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 “-”) 30,686,277.13 Loss of credit impairment (Loss is listed with “-”) -6,237,790.75 Losses of devaluation of asset (Loss is listed with “-”) -1,500,885.27 10,087.38 Income from assets disposal (Loss is listed with “-”) 5,107,848.45 1,588,185.36 III. Operating profit (Loss is listed with “-”) 1,331,572,043.53 1,679,321,119.48 Add: Non-operating income 27,544,757.26 3,881,128.87 Less: Non-operating expense 2,631,453.02 2,327,872.38 IV. Total profit (Loss is listed with “-”) 1,356,485,347.77 1,680,874,375.97 Less: Income tax expense 81,382,654.54 102,927,297.96 V. Net profit (Net loss is listed with “-”) 1,275,102,693.23 1,577,947,078.01 (i) Classify by business continuity 1.continuous operating net profit (net loss listed with ‘-”) 1,275,102,693.23 1,577,947,078.01 2.termination of net profit (net loss listed with ‘-”) (ii) Classify by ownership 1.Net profit attributable to owner’s of parent company 1,256,661,577.09 1,545,242,704.92 2.Minority shareholders’ gains and losses 18,441,116.14 32,704,373.09 VI. Net after-tax of other comprehensive income 271,537.20 -58,302,580.35 Net after-tax of other comprehensive income attributable to owners 261,591.54 -58,302,580.35 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 44 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 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 261,591.54 -58,302,580.35 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.gain/loss of fair value changes for available-for-sale financial -58,302,580.35 assets 4.Amount of financial assets re-classify to other comprehensive income 5.Gain/loss of held-to-maturity investments that re-classify to available-for-sale financial asset 6.Credit impairment provision for other debt investment 7.Cash flow hedging reserve 8.Translation differences arising on translation of foreign 261,591.54 currency financial statements 9.Other Net after-tax of other comprehensive income attributable to minority 9,945.66 shareholders VII. Total comprehensive income 1,275,374,230.43 1,519,644,497.66 Total comprehensive income attributable to owners of parent 1,256,923,168.63 1,486,940,124.57 Company Total comprehensive income attributable to minority shareholders 18,451,061.80 32,704,373.09 VIII. Earnings per share: (i) Basic earnings per share 1.25 1.53 (ii) Diluted earnings per share 1.25 1.53 Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and realized 0 Yuan at last period for combined party Legal Representative: Chen Xuejun Person in charge of accounting works: Ou Jianbin Person in charge of accounting institute: Ou Jianbin 45 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 4. Profit Statement of Parent Company In RMB Item Semi-annual of 2019 Semi-annual of 2018 I. Operating income 2,092,474,460.24 2,315,142,655.13 Less: Operating cost 1,471,971,514.70 1,698,516,522.90 Taxes and surcharge 17,510,903.97 20,760,852.64 Sales expenses 15,320,342.43 17,030,807.96 Administration expenses 211,000,027.34 145,983,978.35 R&D expenses 75,873,810.90 70,275,784.76 Financial expenses -41,092,188.59 -5,330,079.95 Including: interest expenses 3,597,363.92 3,589,658.32 Interest income 44,742,417.24 9,047,393.86 Add: other income 11,683,224.30 11,813,783.39 Investment income (Loss is listed with “-”) 840,215,361.66 1,137,350,229.02 Including: Investment income on affiliated Company and 742,463,812.23 894,788,126.54 joint venture The termination of income recognition for financial assets measured by amortized cost (Loss is listed with “-”) Net exposure hedging income (Loss is listed with “-”) Changing income of fair value (Loss is listed with “-”) 30,195,948.00 Loss of credit impairment (Loss is listed with “-”) -1,901,377.70 Losses of devaluation of asset (Loss is listed with “-”) -24,294.39 -468,622.39 Income on disposal of assets (Loss is listed with “-”) 1,844,051.48 698,843.73 II. Operating profit (Loss is listed with “-”) 1,223,902,962.84 1,517,299,022.22 Add: Non-operating income 15,034.36 26,550.35 Less: Non-operating expense 1,196,252.91 989,892.95 III. Total Profit (Loss is listed with “-”) 1,222,721,744.29 1,516,335,679.62 Less: Income tax 73,937,477.28 82,844,629.16 IV. Net profit (Net loss is listed with “-”) 1,148,784,267.01 1,433,491,050.46 (i)continuous operating net profit (net loss listed with ‘-”) 1,148,784,267.01 1,433,491,050.46 (ii) termination of net profit (net loss listed with ‘-”) V. Net after-tax of other comprehensive income -58,302,580.35 (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 46 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 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 -58,302,580.35 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.gain/loss of fair value changes for available-for-sale financial -58,302,580.35 assets 4.Amount of financial assets re-classify to other comprehensive income 5.Gain/loss of held-to-maturity investments that re-classify to available-for-sale financial asset 6.Credit impairment provision for other debt investment 7.Cash flow hedging reserve 8.Translation differences arising on translation of foreign currency financial statements 9.Other VI. Total comprehensive income 1,148,784,267.01 1,375,188,470.11 VII. Earnings per share: (i) Basic earnings per share (ii) Diluted earnings per share 5. Consolidated Cash Flow Statement In RMB Item Semi-annual of 2019 Semi-annual of 2018 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 4,275,001,010.93 4,321,753,642.57 services Net increase of customer deposit and interbank deposit Net increase of loan from central bank Net increase of capital borrowed from other financial institution Cash received from original insurance contract fee 47 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 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 25,327,532.10 28,784,608.45 Other cash received concerning operating activities 85,775,494.76 20,879,944.10 Subtotal of cash inflow arising from operating activities 4,386,104,037.79 4,371,418,195.12 Cash paid for purchasing commodities and receiving labor service 2,534,137,461.67 2,812,244,020.34 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 financial assets held for transaction purposes 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 681,756,769.56 683,701,600.44 Taxes paid 310,797,279.61 342,578,412.02 Other cash paid concerning operating activities 169,088,618.70 153,970,471.84 Subtotal of cash outflow arising from operating activities 3,695,780,129.54 3,992,494,504.64 Net cash flows arising from operating activities 690,323,908.25 378,923,690.48 II. Cash flows arising from investing activities: Cash received from recovering investment 3,686,500,000.00 5,361,095,457.96 Cash received from investment income 525,843,992.65 463,686,171.47 Net cash received from disposal of fixed, intangible and other 72,457,256.41 39,773,802.87 long-term assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing activities 4,284,801,249.06 5,864,555,432.30 Cash paid for purchasing fixed, intangible and other long-term 237,326,162.98 362,947,568.87 assets Cash paid for investment 3,658,800,000.00 6,084,063,284.96 Net increase of mortgaged loans Net cash received from subsidiaries and other units obtained 49,930,736.62 48 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Other cash paid concerning investing activities 24,000,000.00 10,000,000.00 Subtotal of cash outflow from investing activities 3,970,056,899.60 6,457,010,853.83 Net cash flows arising from investing activities 314,744,349.46 -592,455,421.53 III. Cash flows arising from financing activities Cash received from absorbing investment 13,880,037.60 Including: Cash received from absorbing minority shareholders’ 13,880,037.60 investment by subsidiaries Cash received from loans 393,249,222.11 330,000,000.00 Cash received from issuing bonds Other cash received concerning financing activities 5,470,000.00 Subtotal of cash inflow from financing activities 407,129,259.71 335,470,000.00 Cash paid for settling debts 378,622,036.77 219,000,000.00 Cash paid for dividend and profit distributing or interest paying 836,528,586.57 9,337,888.74 Including: Dividend and profit of minority shareholder paid by 174,600.00 subsidiaries Other cash paid concerning financing activities 5,809,091.00 339,091.00 Subtotal of cash outflow from financing activities 1,220,959,714.34 228,676,979.74 Net cash flows arising from financing activities -813,830,454.63 106,793,020.26 IV. Influence on cash and cash equivalents due to fluctuation in 415,189.69 810,171.83 exchange rate V. Net increase of cash and cash equivalents 191,652,992.77 -105,928,538.96 Add: Balance of cash and cash equivalents at the period -begin 2,404,674,139.49 2,948,439,354.22 VI. Balance of cash and cash equivalents at the period -end 2,596,327,132.26 2,842,510,815.26 6. Cash Flow Statement of Parent Company In RMB Item Semi-annual of 2019 Semi-annual of 2018 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 2,342,213,493.89 2,707,966,926.41 services Write-back of tax received Other cash received concerning operating activities 48,525,763.15 9,047,393.86 Subtotal of cash inflow arising from operating activities 2,390,739,257.04 2,717,014,320.27 Cash paid for purchasing commodities and receiving labor service 1,218,981,667.53 1,572,426,004.69 Cash paid to/for staff and workers 369,225,756.08 361,672,047.87 49 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Taxes paid 186,084,989.75 242,573,191.33 Other cash paid concerning operating activities 107,664,076.68 142,557,335.52 Subtotal of cash outflow arising from operating activities 1,881,956,490.04 2,319,228,579.41 Net cash flows arising from operating activities 508,782,767.00 397,785,740.86 II. Cash flows arising from investing activities: Cash received from recovering investment 3,521,500,000.00 5,174,745,373.00 Cash received from investment income 506,897,740.22 450,095,688.15 Net cash received from disposal of fixed, intangible and other 4,034,532.29 38,214,564.65 long-term assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities 215,512,158.54 Subtotal of cash inflow from investing activities 4,247,944,431.05 5,663,055,625.80 Cash paid for purchasing fixed, intangible and other long-term 158,044,430.36 187,935,182.03 assets Cash paid for investment 3,328,800,000.00 5,687,713,200.00 Net cash received from subsidiaries and other units obtained 82,156,428.71 Other cash paid concerning investing activities 187,880,372.33 173,000,000.00 Subtotal of cash outflow from investing activities 3,756,881,231.40 6,048,648,382.03 Net cash flows arising from investing activities 491,063,199.65 -385,592,756.23 III. Cash flows arising from financing activities Cash received from absorbing investment Cash received from loans 160,000,000.00 180,000,000.00 Cash received from issuing bonds Other cash received concerning financing activities Subtotal of cash inflow from financing activities 160,000,000.00 180,000,000.00 Cash paid for settling debts 180,000,000.00 78,000,000.00 Cash paid for dividend and profit distributing or interest paying 831,020,889.20 3,391,380.55 Other cash paid concerning financing activities Subtotal of cash outflow from financing activities 1,011,020,889.20 81,391,380.55 Net cash flows arising from financing activities -851,020,889.20 98,608,619.45 IV. Influence on cash and cash equivalents due to fluctuation in 593,522.94 761,175.27 exchange rate V. Net increase of cash and cash equivalents 149,418,600.39 111,562,779.35 Add: Balance of cash and cash equivalents at the period -begin 1,920,076,358.43 2,454,696,969.20 VI. Balance of cash and cash equivalents at the period -end 2,069,494,958.82 2,566,259,748.55 50 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 7. Statement of Changes in Owners’ Equity (Consolidated) Amount for current period In RMB Semi-annual of 2019 Owners’ equity attributable to the parent Company Other equity instrument Le Pr Pe ss: ov rp In isi et ve on Item Pr ua Other Ot Minority Total owners’ Capital nt Reasonable of Share capital efe l comprehensive Surplus reserve Retained profit he Subtotal interests equity reserve or reserve ge rre ca Ot income r y ne d pit her sh ral sto al ar ris ck se es k cu riti es I. Balance at the 1,008,950,5 3,416,022,7 end of the last -19,809,442.95 1,618,490.50 510,100,496.00 10,996,945,870.13 15,913,828,778.82 538,142,268.53 16,451,971,047.35 70.00 95.14 year Add: Changes of 19,809,442.95 -19,809,442.95 accounting policy Error correction of the last period Enterprise combine under the same control Other 51 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 II. Balance at the 1,008,950,5 3,416,022,7 beginning of this 0.00 1,618,490.50 510,100,496.00 10,977,136,427.18 15,913,828,778.82 538,142,268.53 16,451,971,047.35 70.00 95.14 year III. Increase/ Decrease in this 261,591.54 917,170.19 82,068,587.53 83,247,349.26 33,215,155.68 116,462,504.94 year (Decrease is listed with “-”) (i) Total comprehensive 1,256,661,577.09 1,256,661,577.09 18,451,061.80 1,275,112,638.89 income (ii) Owners’ devoted and 14,461,725.98 14,461,725.98 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 14,461,725.98 14,461,725.98 (III) Profit -1,174,592,989.56 -1,174,592,989.56 -1,174,592,989.56 distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for -1,210,740,684.00 -1,210,740,684.00 -1,210,740,684.00 owners (or 52 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 shareholders) 4. Other 36,147,694.44 36,147,694.44 36,147,694.44 (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 917,170.19 917,170.19 302,367.90 1,219,538.09 reserve 1. Withdrawal in 10,101,863.7 10,101,863.74 892,049.10 10,993,912.84 the report period 4 2. Usage in the 9,184,693.55 9,184,693.55 589,681.20 9,774,374.75 report period 53 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (VI)Others 261,591.54 261,591.54 261,591.54 IV. Balance at the 1,008,950,5 3,416,022,7 end of the report 261,591.54 2,535,660.69 510,100,496.00 11,059,205,014.71 15,997,076,128.08 571,357,424.21 16,568,433,552.29 70.00 95.14 period Amount for last year In RMB Semi-annual of 2018 Owners’ equity attributable to the parent Company Other Pr equity ov instrument Les isi Per s: on Item pet Inv Other Ot Minority Total owners’ Share Pre Capital Reasonable of ual ent comprehensiv Surplus reserve Retained profit he Subtotal interests equity capital ferr reserve reserve ge cap Ot ory e income r ed ne ital her sha sto ral sec res ck ris urit k ies I. Balance at the end 1,008,950,5 3,417,841,4 87,169,455.01 2,606.93 510,100,496.00 9,811,609,138.92 14,835,673,669.75 515,693,194.48 15,351,366,864.23 of the last year 70.00 02.89 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at the 1,008,950,5 3,417,841,4 beginning of this 87,169,455.01 2,606.93 510,100,496.00 9,811,609,138.92 14,835,673,669.75 515,693,194.48 15,351,366,864.23 70.00 02.89 year III. Increase/ -1,824,597. -58,302,580.3 1,116,994.8 334,502,004.92 275,491,821.99 4,374,207.74 279,866,029.73 54 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Decrease in this year 47 5 9 (Decrease is listed with “-”) (i) Total -58,302,580.3 comprehensive 1,545,242,704.92 1,486,940,124.57 32,704,373.09 1,519,644,497.66 5 income (ii) Owners’ -1,824,597. devoted and -1,824,597.47 -12,945,402.53 -14,770,000.00 47 decreased capital 1.Common shares invested by -12,945,402.53 -12,945,402.53 shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment -1,824,597. 4. Other -1,824,597.47 -1,824,597.47 47 (III) Profit -1,210,740,700.00 -1,210,740,700.00 -15,604,600.00 -1,226,345,300.00 distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (or -1,210,740,700.00 -1,210,740,700.00 -15,604,600.00 -1,226,345,300.00 shareholders) 4. Other (IV) Carrying forward internal owners’ equity 55 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 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 1,116,994.8 1,116,994.89 219,837.18 1,336,832.07 reserve 9 1. Withdrawal in the 10,050,468. 10,050,468.85 1,395,689.84 11,446,158.69 report period 85 2. Usage in the report 8,933,473.9 8,933,473.96 1,175,852.66 10,109,326.62 period 6 (VI)Others IV. Balance at the 1,008,950,5 3,416,016,8 1,119,601.8 end of the report 28,866,874.66 510,100,496.00 10,146,111,143.84 15,111,165,491.74 520,067,402.22 15,631,232,893.96 70.00 05.42 2 period 8. Statement of Changes in Owners’ Equity (Parent Company) Amount for current period In RMB 56 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Semi-annual of 2019 Other equity instrument Less: Perpetu Inven Other Item Preferr al Capital public Reasonable Oth Total owners’ Share capital tory comprehensive Surplus reserve Retained profit ed capital Other reserve reserve er equity share income stock securiti s es I. Balance at the end of 1,008,950,570.00 3,488,221,286.39 -19,809,442.95 510,100,496.00 9,340,610,451.36 14,328,073,360.80 the last year Add: Changes of 19,809,442.95 -19,809,442.95 accounting policy Error correction of the last period Other II. Balance at the 1,008,950,570.00 3,488,221,286.39 0.00 510,100,496.00 9,320,801,008.41 14,328,073,360.80 beginning of this year III. Increase/ Decrease in this year (Decrease is -25,808,722.55 -25,808,722.55 listed with “-”) (i) Total comprehensive 1,148,784,267.01 1,148,784,267.01 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 -1,174,592,989.56 -1,174,592,989.56 57 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 1. Withdrawal of surplus reserves 2. Distribution for -1,210,740,684.00 -1,210,740,684.00 owners (or shareholders) 3. Other 36,147,694.44 36,147,694.44 (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 1,474,547.80 1,474,547.80 report period 2. Usage in the report 1,474,547.80 1,474,547.80 period (VI)Others IV. Balance at the end of 1,008,950,570.00 3,488,221,286.39 0.00 510,100,496.00 9,294,992,285.86 14,302,264,638.25 the report period Amount for last year In RMB 58 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Semi-annual of 2018 Other equity instrument Less: Perpetu Inven Other Item al Capital public Reasonable Othe Total owners’ Share capital Preferre tory comprehensive Surplus reserve Retained profit capital Other reserve reserve r equity d stock share income securiti s es I. Balance at the end of 1,008,950,570.00 3,488,221,286.39 87,169,455.01 510,100,496.00 8,360,801,089.38 13,455,242,896.78 the last year Add: Changes of accounting policy Error correction of the last period Other II. Balance at the 1,008,950,570.00 3,488,221,286.39 87,169,455.01 510,100,496.00 8,360,801,089.38 13,455,242,896.78 beginning of this year III. Increase/ Decrease in this year (Decrease is -58,302,580.35 222,750,350.46 164,447,770.11 listed with “-”) (i) Total comprehensive -58,302,580.35 1,433,491,050.46 1,375,188,470.11 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 -1,210,740,700.00 -1,210,740,700.00 59 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 1. Withdrawal of surplus reserves 2. Distribution for -1,210,740,700.00 -1,210,740,700.00 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 3,751,960.6 3,751,960.66 report period 6 2. Usage in the report 3,751,960.6 3,751,960.66 period 6 (VI)Others IV. Balance at the end of 1,008,950,570.00 3,488,221,286.39 28,866,874.66 510,100,496.00 8,583,551,439.84 13,619,690,666.89 the report period 60 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 I I I . Basic information of the Company 1. Historical origin of the Company By the approval of STGS (1992) No. 130 issued by Jiangsu Economic Restructuring Committee, Weifu High-Technology Group Co., Ltd. (hereinafter referred to “the Company” or “Company”) was established as a company of limited liability with funds raised from targeted sources, and registered at Wuxi Administration for Industry & Commerce in October 1992. The original share capital of the Company totaled RMB 115.4355 million, including state-owned share capital amounting to RMB 92.4355 million, public corporate share capital amounting to RMB 8 million and inner employee share capital amounting to RMB 15 million. Between year of 1994 and 1995, the Company was restructured and became a holding subsidiary of Wuxi Weifu Group Co., Ltd (hereinafter referred to as “Weifu Group”). By the approval of Jiangsu ERC and Shenzhen Securities Administration Office in August 1995, the Company issued 68 million special ordinary shares (B-share) with value of RMB 1.00 for each, and the total value of those shares amounted to RMB 68 million. After the issuance, the Company’s total share capital increased to RMB 183.4355 million. By the approval of CSRC in June 1998, the Company issued 120 million RMB ordinary shares (A-share) at Shenzhen Stock Exchange through on-line pricing and issuing. After the issuance, the total share capital of the Company amounted to RMB 303.4355 million. In the middle of 1999, deliberated and approved by the Board and Shareholders’ General Meeting, the Company implemented the plan of granting 3 bonus shares for each 10 shares. After that, the total share capital of the Company amounted to RMB 394.46615 million, of which state-owned shares amounted to RMB 120.16615 million, public corporate shares RMB 10.4 million, foreign-funded shares (B-share) RMB 88.40 million, RMB ordinary shares (A-share) RMB 156 million and inner employee shares RMB 19.5 million. In the year 2000, by the approval of the CSRC and based upon the total share capital of 303.4355 million shares after the issuance of A-share in June 1998, the Company allotted 3 shares for each 10 shares, with a price of RMB 10 for each allotted share. Actually 41.9 million shares was allotted, and the total share capital after the allotment increased to RMB 436.36615 million, of which state-owned corporate shares amounted to RMB 121.56615 million, public corporate shares RMB 10.4 million, foreign-funded shares (B-share) RMB 88.4 million and RMB ordinary shares (A-share) RMB 216 million. In April 2005, Board of Directors of the Company has examined and approved 2004 Profit Pre-distribution Plan, and examined and approved by 2004 Shareholders’ General Meeting , the Company distributed 3 shares for each 10 shares to the whole shareholders totaling to 130,909,845 shares in 2005. 61 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 According to the Share Merger Reform Scheme of the Company that passed by related shareholders’ meeting of Share Merger Reform and SGZF [2006] No.61 Reply on Questions about State-owned Equity Management in Share Merger Reform of Weifu High-Technology Co., Ltd. issued by State-owned Assets Supervision & Administration Commission of Jiangsu Province, the Weifu Group etc. 8 non-circulating shareholders arranged pricing with granting 1.7 shares for each 10 shares to circulating A-share shareholders (totally granted 47,736,000 shares), so as to realize the originally non-circulating shares can be traded on market when satisfied certain conditions, the scheme has been implemented on April 5, 2006. On 27 May 2009, Weifu Group satisfied the consideration arrangement by dispatching 0.5 shares for each 10 shares based on the number of circulating A share as prior to Share Merger Reform, according to the aforesaid Share Merger Reform, with an aggregate of 14,039,979 shares dispatched. Subsequent to implementation of dispatch of consideration shares, Weifu Group then held 100,021,999 shares of the Company, representing 17.63% of the total share capital of the Company. Pursuant to the document (XGZQ(2009)No.46) about Approval for Merger of Wuxi Weifu Group Co., Ltd. by Wuxi Industry Development Group Co., Ltd. issued by the State-owned Assets Supervision and Administration Commission of Wuxi City Government, Wuxi Industry Development Group Co., Ltd. (hereinafter referred to as Wuxi Industry Group) acquired Weifu Group. After the merger, Weifu Group was then revoked, and its assets and credits & debts were transferred to be under the name of Wuxi Industry Group. Accordingly, Wuxi Industry Group became the first largest shareholder of the Company since then. In accordance with the resolutions of shareholders' meeting and provisions of amended constitution, and approved by [2012] No. 109 document of China Securities Regulatory Commission, in Feb., the Company issued RMB ordinary shares (A-share) of 112,858,000 shares to Wuxi Industry Groups and overseas strategic investor, Robert Bosch Co., Ltd. (ROBERT BOSCHGMBH) (hereinafter referred to as Robert Bosch Company), face value was ONE Yuan per share, added registered capital of RMB 112,858,000, and the registered capital after change was RMB 680,133,995. Wuxi Industry Group is the first majority shareholder of the Company, and Robert Bosch Company is the second majority shareholder of the Company. In March 2013, the profit distribution pre-plan for year of 2012 was deliberated and approved by the Board, and also passed in Annual General Meeting 2012 of the Company in May 2013. On basis of total share capital 680,133,995 shares, distribute 5-share for every 10 shares held by whole shareholders, 340,066,997 shares in total are distributed. Total share capital of the Company amounting RMB 1,020,200,992 up to 31 December 2013. Deliberated and approved by the company’s first extraordinary general meeting in 2015, the company has repurchased 11,250,422 shares of A shares from August 26, 2015 to September 8, 2015, and has finished the cancellation procedures for above repurchase shares in China Securities Depository and Clearing Corporation 62 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Limited Shenzhen Branch on September 16, 2015; after the cancellation of repurchase shares, the company’s paid-up capital (share capital) becomes 1,008,950,570 Yuan after the change. 2. Registered place, organization structure and head office of the Company Registered place and head office of the Company: No. 5 Huashan Road, New District, Wuxi Unified social credit code: 91320200250456967N The Company sets up Shareholders’ General Meeting, the Board of Directors and the Supervisory Committee. The Company sets up Administration Department, Technology Centre, organization & personnel department, Office of the Board, compliance department, IT department, Market & Strategy Department, Party-masses Department, Finance Department, Purchase Department, Manufacturing Quality Department, MS (Mechanical System) division, AC(Automobile Components) division and DS (Diesel System ) division etc. and subsidiaries such as Wuxi Weifu Leader Catalytic Converter Co., Ltd., Nanjing Weifu Jinning Co., Ltd. Etc 3. Business nature and major operation activities of the Company Operation scope of parent company: Technology development and consulting service in the machinery industry; manufacture of engine fuel oil system products, fuel oil system testers and equipment, manufacturing of auto electronic parts, automotive electrical components, non-standard equipment, non-standard knife tool and exhaust after-treatment system; sales of the general machinery, hardware & electrical equipment, chemical products & raw materials (excluding hazardous chemicals), automobile components and vehicles (excluding nine-seat passenger car); internal combustion engine maintenance; leasing of the own houses; import and export business in respect of diversified commodities and technologies (other than those commodities and technologies limited or forbidden by the State for import and export) by self-operation and works as agent for such business. (any projects that needs to be approved by laws can only be carried out after getting approval by relevant authorities) Major subsidiaries respectively activate in production and sales of engine accessories, automobile components, mufflers, and purifiers. 4. Relevant party offering approval reporting of financial statements and date thereof Financial statements of the Company were approved by the Board of Directors for reporting dated 27 August 2019 5. Scope of consolidate financial statement Shareholding ratio Registered (%) capital Statemen Proportion Short name of t Name of subsidiary of votes (in 10 Business scope subsidiary Indirectl consolid Directly (%) thousand y ate (Y/N) Yuan) Internal-combustio Nanjing Weifu Jinning Co., Ltd. Co., Ltd. Weifu Jinning 80.00 -- 80.00 34,628.70 n engine Y accessories Wuxi Weifu Leader Catalytic Converter Co., Purifier and Weifu Leader 94.81 -- 94.81 50,259.63 Y Ltd. muffler 63 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Internal-combustio Weifu Mashan Pump Glib Co., Ltd. Weifu Mashan 100.00 -- 100.00 16,500 n engine Y accessories Internal-combustio Weifu Wuxi Weifu Chang’an Co., Ltd. 100.00 -- 100.00 21,000 n engine Y Chang’an accessories Weifu Wuxi Weifu International Trade Co. Ltd. International 100.00 -- 100.00 3,000 Trade Y Trade Internal-combustio Wuxi Weifu ITM Supercharging Technique Weifu ITM 100.00 -- 100.00 16,000 n engine Y Co., Ltd. accessories Internal-combustio Wuxi Weifu Schmidt Power System Spare Weifu Schmidt 66.00 -- 66.00 7,600 n engine Y Parts Co., Ltd. accessories Internal-combustio Ningbo Weifu Tianli Supercharging Weifu Tianli 54.2295 -- 54.2295 11,136 n engine Y Technique Co., Ltd. accessories Wuxi Weifu-Autocam Fine Machinery Co. Weifu Automobile 51.00 -- 51.00 US$ 2,110 Y Ltd. Autocam components Wuxi Weifu Leader Catalytic Converter Weifu Leader Purifier and -- 60.00 60.00 1,000 Y (Wuhan) Co., Ltd. (Wuhan) muffler Weifu Leader (Chongqing) Automobile Weifu Leader Purifier and -- 100.00 100.00 5,000 Y components Co., Ltd (Chongqing) muffler Nanchang Weifu Leader Auto Parts & Weifu Leader Purifier and -- 100.00 100.00 5,000 Y Components Co., Ltd. (Nanchang) muffler Weifu Holding Aps SPV 100.00 100.00 DKK 2620.60 Y Fuel cell IRD Fuel Cells A/S IRD 66.00 66.00 DKK 4,160 Y components IV. Basis of preparation of financial statements 1. Preparation base The financial statement were stated in compliance with Accounting Standard for Business Enterprises –Basic Norms issued by Ministry of Finance, the specific 42 accounting rules revised and issued dated 15 February 2006 and later, the Application Instruments of Accounting Standards and interpretation on Accounting standards and other relevant regulations (together as “Accounting Standards for Business Enterprise”), as well as the Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15 – General Provision of Financial Report (Amended in 2014) issued by CSRC in respect of the actual transactions and proceedings, on a basis of ongoing operation. In line with relevant regulations of Accounting Standards of Business Enterprise, accounting of the Company is on accrual basis. Except for certain financial instruments, the financial statement measured on historical cost. Assets have impairment been found, corresponding depreciation reserves shall accrual according to relevant rules. 64 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 2. Going concern The Company comprehensively assessed the available information, and there are no obvious factors that impact sustainable operation ability of the Company within 12 months since end of the reporting period. V. Major Accounting Policies and Estimation Specific accounting policies and estimation attention: The Company and its subsidiaries are mainly engaged in the manufacture and sales of engine fuel oil system products, automobile components, mufflers and purifiers etc., in line with the real operational characteristics and relevant accounting standards, many specific accounting policies and estimation have been formulated for the transactions and events with revenue recognized concerned. As for the explanation on major accounting judgment and estimation, found more in Note V- Other major accounting policy and accounting estimation. 1. Statement on observation of Accounting Standard for Business Enterprises Financial statements prepared by the Company were in accordance with requirements of Accounting Standard for Business Enterprises, which truly and completely reflected the financial information of the Company during the reporting period such as financial position, operation achievements and cash flow. 2. Accounting period Accounting period of the Company consist of annual and mid-term, mid-term refers to the reporting period shorter than one annual accounting year. The company adopts Gregorian calendar as accounting period, namely form each 1 January to 31 December. 3. Business cycles Normal business cycle is the period from purchasing assets used for process by the Company to the cash and cash equivalent achieved. The Company’s normal business cycle was one-year (12 months). 4. Recording currency The Company’s reporting currency is the RMB Yuan. 5. Accounting Treatment Method for Business Combinations under the same/different control Business combination is the transaction or events that two or two above independent enterprises combined as a reporting entity. Business combination including enterprise combined under the same control and business combined under different control. 65 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (1) The business combination under the same control Enterprise combination under the same control is the enterprise who take part in the combination are have the same ultimate controller or under the same controller, the control is not temporary. The assets and liability acquired by combining party are measured by book value of the combined party on combination date. Balance of net asset’s book value acquired by combining party and combine consideration paid (or total book value of the shares issued), shall adjusted capital reserve (share premium); if the capital reserves (share premium) is not enough for deducted, adjusted for retained earnings. Vary directly expenses occurred for enterprise combination, the combining party shall reckoned into current gains/losses while occurring. Combination day is the date when combining party obtained controlling rights from the combined party. (2) Combine not under the same control A business combination not involving entities under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the combination. As a purchaser, fair value of the assets (equity of purchaser held before the date of purchasing included) for purchasing controlling right from the purchaser, the liability occurred or undertake on purchasing date less the fair value of identifiable net assets of the purchaser obtained in combination, recognized as goodwill if the results is positive; if the number is negative, the acquirer shall firstly review the measurement of the fair value of the identifiable assets obtained, liabilities incurred and contingent liabilities incurred, as well as the combination costs. After that, if the combination costs are still lower than the fair value of the identifiable net assets obtained, the acquirer shall recognize the difference as the profit or loss in the current period. Other directly expenses cost for combination shall be reckoned into current gains/losses. Difference of the fair value of assets paid and its book values, reckoned into current gains/losses. On purchasing date, the identifiable assets, liability or contingency of the purchaser obtained by the Company recognized by fair value, that required identification conditions; Acquisition date refers to the date on which the acquirer effectively obtains control of the purchaser. 6. Preparation method for consolidated financial statement (1) Recognition principle of consolidated scope On basis of the financial statement of the parent company and owned subsidiaries, prepared consolidated statement in line with relevant information. The scope of consolidation of consolidated financial statements is ascertained on the basis of effective control. Once certain elements involved in the above definition of control change due to changes of relevant facts or circumstances, the Company will make separate assessment. (2) Basis of control Control is the right to govern an invested party so as to obtain variable return through participating in the invested party’s relevant activities and the ability to affect such return by use of the aforesaid right over the invested party. Relevant activates refers to activates have major influence on return of the invested party’s. (3) Consolidation process Subsidiaries are consolidated from the date on which the company obtains their actual control, and are de-consolidated from the date that such control ceases. All significant inter-group balances, investment, transactions and unrealized profits are eliminated in the consolidated financial statements. For subsidiaries being 66 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 disposed, the operating results and cash flows prior to the date of disposal are included in the consolidated income statement and consolidated cash flow statement; for subsidiaries disposed during the period, the opening balances of the consolidated balance sheet would not be restated. For subsidiaries acquired from a business combination not under common control, their operating results and cash flows subsequent to the acquisition date are included in the consolidated income statement and consolidated cash flow statement, and the opening balances and comparative figures of the consolidated balance sheet would not be restated. For subsidiaries acquired from a business combination under common control, their operating results and cash flows from the date of commencement of the accounting period in which the combination occurred to the date of combination are included in the consolidated income statement and consolidated cash flow statement, and the comparative figures of the consolidated balance sheet would be restated. In preparing the consolidated financial statements, where the accounting policies or the accounting periods are inconsistent between the company and subsidiaries, the financial statements of subsidiaries are adjusted in accordance with the accounting policies and accounting period of the company. Concerning the subsidiary obtained under combination with different control, adjusted several financial statement of the subsidiary based on the fair value of recognizable net assets on purchased day while financial statement consolidation; concerning the subsidiary obtained under combination with same control, considered current status of being control by ultimate controller for consolidation while financial statement consolidation. The unrealized gains and losses from the internal transactions occurred in the assets the Company sold to the subsidiaries fully offset "the net profit attributable to the owners of the parent company". The unrealized gains and losses from the internal transactions occurred in the assets the subsidiaries sold to the Company are distributed and offset between "the net profit attributable to the owners of the parent company" and "minority interest" according to the distribution ratio of the Company to the subsidiary. The unrealized gains and losses from the internal transactions occurred in the assets sold among the subsidiaries are distributed and offset between "the net profit attributable to the owners of the parent company" and "minority interest" according to the distribution ratio of the Company to the subsidiary of the seller. The share of the subsidiary’s ownership interest not attributable to the Company is listed as “minority interest” item under the ownership interest in the consolidated balance sheet. The share of the subsidiary’s current profit or loss attributable to the minority interests is listed as "minority interest" item under the net profit item in the consolidated income statement. The share of the subsidiary’s current consolidated income attributable to the minority interests is listed as the “total consolidated income attributable to the minority shareholders” item under the total consolidated income item in the consolidated income statement. If there are minority shareholders, add the "minority interests" item in the consolidated statement of change in equity to reflect the changes of the minority interests. If the losses of the current period shared by a subsidiary’s minority shareholders exceed the share that the minority shareholders hold in the subsidiary ownership interest in the beginning of the period, the balance still charges against the minority interests. When the control over a subsidiary is ceased due to disposal of a portion of an interest in a subsidiary, the fair value of the remaining equity interest is re-measured on the date when the control ceased. The difference between the sum of the consideration received from disposal of equity interest and the fair value of the remaining equity 67 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 interest, less the net assets attributable to the company since the acquisition date, is recognized as the investment income from the loss of control. Other comprehensive income relating to original equity investment in subsidiaries shall be treated on the same basis as if the relevant assets or liabilities were disposed of by the purchaser directly when the control is lost, namely be transferred to current investment income other than the relevant part of the movement arising from re-measuring net liabilities or net assets under defined benefit scheme by the original subsidiary. Subsequent measurement of the remaining equity interests shall be in accordance with relevant accounting standards such as Accounting Standards for business Enterprises 2 – Long-term Equity Investments or Accounting Standards for business Enterprises 22 – Financial Instruments Recognition and Measurement. The company shall determine whether loss of control arising from disposal in a series of transactions should be regarded as a bundle of transactions. When the economic effects and terms and conditions of the disposal transactions met one or more of the following situations, the transactions shall normally be accounted for as a bundle of transactions: ①The transactions are entered into after considering the mutual consequences of each individual transaction; ② The transactions need to be considered as a whole in order to achieve a deal in commercial sense; ③The occurrence of an individual transaction depends on the occurrence of one or more individual transactions in the series; ④ The result of an individual transaction is not economical, but it would be economical after taking into account of other transactions in the series. When the transactions are not regarded as a bundle of transactions, the individual transactions shall be accounted as “disposal of a portion of an interest in a subsidiary which does not lead to loss of control” and “disposal of a portion of an interest in a subsidiary which lead to loss of control”. When the transactions are regarded as a bundle of transactions, the transactions shall be accounted as a single disposal transaction; however, the difference between the consideration received from disposal and the share of net assets disposed in each individual transactions before loss of control shall be recognized as other comprehensive income, and reclassified as profit or loss arising from the loss of control when control is lost. 7. Joint arrangement classification and accounting treatment for joint operations In accordance with the Company’s rights and obligation under a joint arrangement, the Company classifies joint arrangements into: joint ventures and joint operations. The company confirms the following items related to the share of interests in its joint operations, and in accordance with the provisions of the relevant accounting standards for accounting treatment: (1) Recognize the assets held solely by the Company, and recognize assets held jointly by the Company in appropriation to the share of the Company; (2) Recognize the obligations assumed solely by the Company, and recognize obligations assumed jointly by the Company in appropriation to the share of the Company; (3) Recognize revenue from disposal of the share of joint operations of the Company; (4) Recognize fees solely occurred by Company; (5) Recognize fees from joint operations in appropriation to the share of the Company. 68 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 8. Determining standards for cash and cash equivalent Cash refers to stock cash, savings available for paid at any time; cash and cash equivalent refers to the cash held by the Company with short terms(expired within 3 months since purchased), and liquid and easy to transfer as known amount and investment with minor variation in risks. 9. Foreign currency business and conversion The occurred foreign currency transactions are converted into the recording currency in accordance with the middle rate of the market exchange rate published by the People's Bank of China on the transaction date. Thereinto, the occurred foreign currency exchange or transactions involved in the foreign currency exchange are converted in accordance with the actual exchange rate in the transactions. At the balance sheet date, the account balance of the foreign currency monetary assets and liabilities is converted into the recording currency amount in accordance with the middle rate of the market exchange rate published by the People's Bank of China on the transaction date. The balance between the recording currency amount converted according to exchange rate at the balance sheet date and the original recording currency amount is disposed as the exchange gains or losses. Thereinto, the exchange gains or losses occurred in the foreign currency loans related to the purchase and construction of fixed assets are disposed according to the principle of capitalization of borrowing costs; the exchange gains and losses occurred during the start-up are included in the start-up costs; the rest is included in the current financial expenses. At the balance sheet date, the foreign currency non-monetary items measured with the historical costs are converted in accordance with the middle rate of the market exchange rate published by the People's Bank of China on the transaction date without changing its original recording currency amount; the foreign currency non-monetary items measured with the fair value are converted in accordance with the middle rate of the market exchange rate published by the People's Bank of China on the fair value date, and the generated exchange gains and losses are included in the current profits and losses as the gains and losses from changes in fair value. The following displays the methods for translating financial statements involving foreign operations into the statements in RMB: The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange rates on the balance sheet date. Among the owners’ equity items, the items other than “undistributed profits” are translated at the spot exchange rates of the transaction dates. The income and expense items in the income statements of overseas operations are translated at the average exchange rates of the transaction dates. The exchange difference arising from the above mentioned translation are recognized in other comprehensive income and is shown separately under owner’ equity in the balance sheet; such exchange difference will be reclassified to profit or loss in current year when the foreign operation is disposed according to the proportion of disposal. 69 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 The cash flows of overseas operations are translated at the average exchange rates on the dates of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement. 10. Financial instrument Financial instrument is the contract that taken shape of the financial asses for an enterprise and of the financial liability or equity instrument for other units. (1) Determination and termination of financial instrument A financial asset or liability is recognized when the group becomes a party to a financial instrument contract. The recognition of a financial assets shall be terminated if it meets one of the following conditions: ① the contractual right to receive the cash flow of the financial assets terminates; and ② the financial assets have been transferred and meets the following termination recognition conditions for the transfer of financial assets If all or part of the current obligations of a financial liability has been discharged, the financial liability or part of it is derecognized. When the Company (debtor) and the creditor sign an agreement to replace the existing financial liabilities with new financial liabilities, and the new financial liabilities and the existing financial liabilities are substantially different from the contract terms, derecognize the existing financial liabilities and recognize the new financial liabilities at the same time. Financial assets are traded in the normal way and their accounting recognition and derecognition proceed on a trade date basis. (2) Classification and measurement of financial assets At the initial recognition, according to the business model of managing financial assets and the contractual cash flow characteristics of financial assets, the Company classifies the financial assets into the financial assets measured at amortized cost, the financial assets measured at fair value and whose changes are included in other comprehensive income, and the financial assets measured at fair value and whose changes are included in current profit or loss. ① Financial assets measured at amortized cost The Company classifies the financial assets that meet the following conditions and haven’t been designated as financial assets measured at fair value and whose changes are included in current profit or loss as financial assets measured at amortized cost: A. the group's business model for managing the financial assets is to collect contractual cash flows; and B. the contractual terms of the financial assets stipulate that cash flow generated on a specific date is only paid for the principal and interest based on the outstanding principal amount. After initial recognition, such financial assets are measured at amortized cost by using the effective interest method. Gains or losses arising from financial assets which are measured at amortized cost and are not a component of any hedging relationship are included in current profit or loss when being derecognized, amortized by effective interest method, or impaired. 70 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 ② Financial assets measured at fair value and whose changes are included in other comprehensive income The Company classifies the financial assets that meet the following conditions and haven’t been designated as financial assets measured at fair value and whose changes are included in current profit or loss as financial assets measured at fair value and whose changes are included in other comprehensive income: A. the Group's business model for managing the financial assets is targeted at both the collection of contractual cash flows and the sale of financial assets; and B. the contractual terms of the financial asset stipulate that the cash flow generated on a specific date is only the payment of the principal and the interest based on the outstanding principal amount. After initial recognition, such financial assets are subsequently measured at fair value. Interests, impairment losses or gains and exchange gains and losses calculated by using the effective interest method are included in profit or loss for the period, and other gains or losses are included in other comprehensive income. When being derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred from other comprehensive income and included in current profit or loss. ③ Financial assets measured at fair value and whose changes are included in current profit or loss Except for the above financial assets measured at amortized cost and measured at fair value and whose changes are included in other comprehensive income, the Company classifies all other financial assets as financial assets measured at fair value and whose changes are included in current profit or loss. In the initial recognition, in order to eliminate or significantly reduce accounting mismatch, the Company irreversibly designates part of the financial assets that should be measured at amortized cost or measured at fair value and whose changes are included in the other comprehensive income as the financial assets measured at fair value and whose changes are included in current profit or loss. After the initial recognition, such financial assets are subsequently measured at fair value, and the gains or losses (including interests and dividend income) are included in the current profit and loss, unless the financial assets are part of the hedging relationship. However, for non-trading equity instrument investments, the Company irreversibly designates them as the financial assets that are measured at fair value and whose changes are included in other comprehensive income in the initial recognition. The designation is made based on a single investment and the relevant investment is in line with the definition of equity instruments from the issuer's perspective. After initial recognition, such financial assets are subsequently measured at fair value. Dividend income that meets the conditions is included in profit or loss, and other gains or losses and changes in fair value are included in other comprehensive income. When it is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred from other comprehensive income and included in retained earnings. The business model for managing financial assets refers to how the Company manages financial assets to generate cash flows. The business model determines whether the cash flow of financial assets managed by the Company is based on contract cash flow, selling financial assets or both. The Company determines the business model for managing financial assets based on objective facts and based on the specific business objectives of financial assets management determined by key management personnel. 71 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 The Company evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual cash flows generated by the relevant financial assets on a specific date are only payments for the principal and the interest based on the outstanding principal amount. The principal is the fair value of the financial assets at initial recognition; the interest includes the time value of money, the credit risk associated with the outstanding principal amount for a specific period, and other basic borrowing risks, costs and consideration of profit. In addition, the Company evaluates the contractual terms that may result in changes in the time distribution or the amount of contractual cash flows of the financial assets to determine whether they meet the requirements of the above contractual cash flow characteristics. Only when the Company changes its business model of managing financial assets, all affected financial assets are reclassified on the first day of the first reporting period after the business model changes, otherwise the financial assets are not allowed to be reclassified after initial recognition. . Financial assets are measured at fair value on initial recognition. For financial assets measured at fair value and whose changes are included in current profit or loss, the related transaction expenses are directly included in current profit or loss. For other types of financial assets, the related transaction costs are included in the initial recognition amount. For the accounts receivable or notes receivable arising from the sale of products or the provision of labor services that do not contain or consider the significant financing components, the Company uses the consideration amount that is expected to be received as the initial recognition amount. (3) Classification and measurement of financial liabilities The financial liabilities of the Company are classified as financial liabilities measured at fair value and whose changes are included in current profit or loss and financial liabilities measured at amortized cost at the initial recognition. For financial liabilities that are not classified as financial liabilities measured at fair value and whose changes are included in current profit or loss, the related transaction expenses are included in the initial recognition amount. ①Financial liability measured by fair value and with variation reckoned into current gains/losses Financial liability measured by fair value and with variation reckoned into current gains/losses including tradable financial liability and the financial liabilities that are designated as fair value in the initial recognition and whose changes are included in current profit or loss. For such financial liabilities, the subsequent measurement is based on fair value, and the gains or losses arising from changes in fair value and the dividends and interest expenses related to these financial liabilities are included in current profit or loss. ②Financial liability measured by amortized cost Other financial liabilities are subsequently measured at amortized cost by using the effective interest method. The gain or loss arising from derecognition or amortization is included in current profit or loss. ③Distinctions between financial liabilities and equity instruments Financial liabilities are liabilities that meet one of the following conditions: A. Contractual obligations to deliver cash or other financial assets to other parties. 72 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 B. Contractual obligations to exchange financial assets or financial liabilities with other parties under potentially adverse conditions. C. Non-derivative contracts that must be settled or that can be settled by the company's own equity instruments in the future, and the enterprise will deliver a variable amount of its own equity instruments according to the contract. D. Derivative contracts that must be settled or that can be settled by the company's own equity instruments in the future, except for derivatives contracts that exchange a fixed amount of cash or other financial assets with a fixed amount of their own equity instruments. An equity instrument is a contract that proves it has a residual equity in the assets of an enterprise after deducting all liabilities. If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or other financial assets, the contractual obligation is consistent with the definition of financial liability. If a financial instrument is required to be settled or can be settled by the Company's own equity instruments, it is necessary to consider whether the Company's own equity instruments used to settle the instrument are a substitute for cash or other financial assets, or to make the instrument holder enjoy the residual equity in the assets of the issuer after deducting all liabilities. In the former case, the instrument is the Company's financial liability; if it is the latter, the instrument is the Company's equity instrument. (4) Fair value of financial instruments The company uses valuation techniques that are applicable under current circumstances and that have sufficient available data and other information support to determine the fair value of related financial assets and financial liabilities. The company divides the input values used by valuation techniques into the following levels and uses them in sequence: ① The first-level input value is the unadjusted quotation of the same assets or liabilities that can be obtained on the measurement date in the active market; ② The second-level input value is the direct or indirect observable input value of the relevant assets or liabilities other than the first-level input value, including quotations of similar assets or liabilities in an active market; quotations of same or similar assets or liabilities in an active market; other observable input value other than quotations, such as interest rate and yield curves that are observable during the normal quote interval; market- validated input value, etc.; ③ The third-level input value is the unobservable input value of the relevant assets or liabilities, including the interest rate that cannot be directly observed or cannot be verified by observable market data, stock volatility, future cash flow of the retirement obligation assumed in the business combination, and financial forecasting made by its own data, etc. (5) Impairment of financial assets On the basis of expected credit losses, the Company performs impairment treatment on financial assets measured at amortized cost and creditors’ investment measured at fair value and whose changes are included in other comprehensive income and recognize the provisions for loss. 73 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 ①Measurement of expected credit losses Expected credit loss refers to the weighted average of credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between all contractual cash flows that the Company discounts at the original actual interest rate and are receivable in accordance with contract and all cash flows expected to be received, that is, the present value of all cash shortages. Among them, for the purchase or source of financial assets that have suffered credit impairment, the Company discounts the financial assets at the actual interest rate adjusted by credit. The Company measures the expected credit losses of financial instruments at different stages. If the credit risk of a financial instrument has not increased significantly since the initial recognition, the financial instrument is in the first stage, and the Company measures the loss provisions according to the expected credit losses in the next 12 months. If the credit risk of a financial instrument has increased significantly but the credit impairment has not yet occurred since the initial recognition, the financial instrument is in the second stage, and the Company measures the loss provisions according to the expected credit losses of the instrument for the entire duration. If the financial instrument has suffered credit impairment since the initial confirmation, it is in the third stage, the Company measures the loss provisions according to the expected credit losses of the instrument for the entire duration. For the financial instrument with lower credit risk on the balance sheet date, the Company assumes that its credit risk has not increased significantly since the initial recognition, and measures the loss provisions according to the expected credit losses in the next 12 months. The expected credit losses for the entire duration refer to the expected credit losses due to all possible credit events during the entire expected duration of the financial instrument. Expected credit losses in the next 12 months refer to the expected credit losses caused by the possible credit events of financial instrument that may occur within 12 months after the balance sheet date (if the expected duration of financial instrument is less than 12 months, it shall be the expected duration), which are part of the expected credit loss for the entire duration. When measuring expected credit losses, the maximum period that the Company needs to consider is the longest contract period for which the company is exposed to credit risk (including options for consideration of renewal). For notes receivable and accounts receivable, regardless of whether there is a major financing, the Company always measures its loss provisions according to the amount of expected credit losses for the entire duration. The Company divides the combination of the notes receivable and accounts receivable according to the credit risk characteristics, and calculates the expected credit losses on the basis of combinations, the basis for determining the combination is as follows: A. Note receivable Note receivable 1:Bank acceptance bill Note receivable 2:Trade acceptance B. Account receivable Account receivable 1:Receivables from internal related party 74 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Account receivable 2:Receivable from other clients For the notes receivable divided into combinations, the Company calculates the expected credit losses by referring to the historical credit loss experience, combing with the current situation and the forecast of future economic conditions, and through the default risk exposure and the expected credit loss rate for the entire duration. For the accounts receivable divided into combinations, the Company calculates the expected credit losses by referring to the historical credit loss experience, combing with the current situation and the forecast of future economic conditions, and compiling a comparison table of accounts receivable aging and the expected credit loss rate for the entire duration. C. Other receivables When a single other receivables cannot be used to estimate the expected credit loss at a reasonable cost, the Company divides other receivables into several combinations based on the credit risk characteristics, and calculates the expected credit losses based on a combination, the basis for determining the combination is as follows: Other account receivable 1:Receivables from internal related party Other account receivable 2:Receivable from other clients For other receivables classified as a combination, the Company calculates the expected credit loss through the default risk exposure and the expected credit loss rate over the next 12 months or the entire duration. D. Debt investment, other debt investment For debt investment and other debt investment, the Company calculates the expected credit losses according to the nature of the investment, according to various types of counter parties and risk exposures, and through default risk exposure and expected credit loss rate in the next 12 months or the entire duration. ②Assessment of a significant increase in credit risk: The Company determines the relative changes in default risk of the financial instrument occurred in the expected duration and assess whether the credit risks of financial instrument has increased significantly since the initial recognition by comparing the risk of default of the financial instrument on the balance sheet date with the risk of default of financial instrument on the initial recognition date. When determining whether the credit risk has increased significantly since the initial recognition, the Company considers reasonable and evidence-based information that can be obtained without unnecessary additional costs or effort, including forward-looking information. The information considered by the Company includes: A. The debtor fails to pay the principal and interest according to the contractual maturity date; B. Serious worsening of external or internal credit rating (if any) of the financial instruments that have occurred or are expected; C. Serious deterioration of the debtor’s operating results that have occurred or are expected; D. Changes in existing or anticipated technical, market, economic or legal circumstances that will have a material adverse effect on the debtor's ability to repay the company. Based on the nature of financial instruments, the Company assesses whether credit risk has increased significantly on the basis of a single financial instrument or combination of financial instruments. When conducting an 75 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 assessment based on a combination of financial instruments, the Company can classify financial instruments based on common credit risk characteristics, such as overdue information and credit risk ratings. The Company believes that financial assets are subject to default in the following circumstances: The debtor is unlikely to pay the full amount to the Company, and the assessment does not consider the Company to take recourse actions such as realizing collateral (if held). ③Financial assets with credit impairment On the balance sheet date, the Company assesses whether the credit of financial assets measured at amortized cost and the credit of debt investments measured at fair value and whose changes are included in other comprehensive income has been impaired. When one or more events that adversely affect the expected future cash flows of a financial asset occur, the financial asset becomes a financial asset that has suffered credit impairment. Evidence that credit impairment has occurred in financial assets includes the following observable information: A. The issuer or the debtor has significant financial difficulties; B. The debtor breaches the contract, such as default or overdue repayment of interest or principal; C. The Company gives concessions to the debtor that will not be made in any other circumstances for economic or contractual considerations relating to the financial difficulties of the debtor; D. The debtor is likely to go bankrupt or carry out other financial restructurings; E. The financial difficulties of the issuer or the debtor have caused the active market of the financial asset to disappear. ④ Presentation of expected credit loss provisions In order to reflect the changes in the credit risk of financial instruments since the initial recognition, the Company re-measures the expected credit losses on each balance sheet date, and the resulting increase or reversal of the loss provisions shall be included in current profit and loss as impairment losses or gains. For financial assets measured at amortized cost, the loss provisions are written off against the book value of the financial assets listed in the balance sheet; for debt investments measured at fair value and whose changes are included in other comprehensive income, the Company recognizes the loss provisions in other comprehensive income and does not deduct the book value of the financial asset. ⑤Write-off If the Company no longer reasonably expects that the financial asset contract cash flow can be fully or partially recovered, directly write down the book balance of the financial asset. Such write-downs constitute the derecognition of related financial assets. This usually occurs when the Company determines that the debtor has no assets or sources of income to generate sufficient cash flow to repay the amount that will be written down. However, according to the Company's procedures for recovering the due amount, the financial assets that have been written down may still be affected by the execution activities. If the financial assets that have been written down are recovered afterwards, they shall be included in the profit or loss of the period being recovered as the reversal of the impairment loss (6) Transfer of financial assets The transfer of financial assets refers to the transfer or delivery of financial assets to the other party (the transferee) 76 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 other than the issuer of the financial assets. For financial assets that the Company has transferred almost all risks and rewards of ownership of financial assets to the transferee, derecognize the financial assets; if almost all the risks and rewards of ownership of financial assets have been retained, do not derecognize the financial assets. If the Company has neither transferred nor retained almost all the risks and rewards of ownership of financial assets, dispose as following situations: If the control of the financial assets is abandoned, derecognize the financial assets and determine the resulting assets and liabilities. If the control of the financial assets is not abandoned, determine the relevant financial assets according to the extent to which they continue to be involved in the transferred financial assets, and determine the related liabilities accordingly. (7) Balance-out between the financial assets and liabilities As the Group has the legal right to balance out the financial liabilities by the net or liquidation of the financial assets, the balance-out sum between the financial assets and liabilities is listed in the balance sheet. In addition, the financial assets and liabilities are listed in the balance sheet without being balanced out. 11. Note receivable Found more in the impairment of financial instrument carried in Financial Instrument 12. Account receivable Found more in the impairment of financial instrument carried in Financial Instrument 13. Other account receivable Found more in the impairment of financial instrument carried in Financial Instrument 11. Note receivable The notes receivable settled by the Company are all bank acceptance and letters of credit, based on the credit risk characteristics of notes receivable, the credit risk of notes receivable is comprehensively evaluated, the Company does not make credit impairment losses for notes receivable. 12. Account receivable (1) Account Receivable withdrawal on single significant amount and with bad debt provision accrued for single item Determine basis or amount standards for single The Company’s account receivables with above RMB 1 million in single item is significant amount defined as account receivables with significant amount in single item. In line with the difference of present value of future cash flow lower its book Withdrawal method for account with single significant value, carried out impairment test independently and withdrawal the bad debt amount and withdrawal single item bad debt provision reserves 77 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (2) Receivables with bad debt provision accrual by credit portfolio Portfolio Bad debt provision accrual Classify to many combination based on credit portfolio for those receivables with minor account singly and Age analysis method those with major amount but has no impairment been found after testing independently; base on the actual loss ratio of the receivables of previous years, with same or similar credit portfolio, and combining actual condition accrual bad debt reserves. In portfolio, accounts whose bad debts provision was accrued by age analysis: √ Applicable □ Not applicable Account age Accrual ratio for account receivable Accrual ratio for other receivables Within 6 months 6 months to one year 10.00% 10.00% 1-2 years 20.00% 20.00% 2-3 years 40.00% 40.00% Over 3 years 100.00% 100.00% 3-4 years 100.00% 100.00% 4-5 years 100.00% 100.00% Over 5 years 100.00% 100.00% In portfolio, withdrawal proportion of bad debt provision based on balance proportion □ Applicable √ Not applicable In portfolio, withdrawal proportion of bad debt provision based on other methods: □ Applicable √ Not applicable (3) Account receivable with minor single amount but with withdrawal bad debt provision for single item Reasons for withdrawal single item The present value of future cash flow has major difference with the receivable group’s present bad debt provision value of future cash flow Withdrawal method for bad debt Carried out impairment test independently, accrual bad debt reserves according to the difference of provision present value of future cash flow lower its book value 13. Other account receivable Method for determining expected credit losses of other receivables and accounting treatment methods For other receivables, whether or not it contains significant financing components, the company always measures its loss provisions according to the amount of expected credit losses during the entire renewal period, and the resulting increase or reversal amount of loss provisions is included in the current profit and loss as an impairment loss. 78 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 The company classifies other receivables into several combinations based on similar credit risk characteristics, and calculates the expected credit losses based on all reasonable and evidenced information (including forward-looking information) on the basis of combination, the basis for determining the combination is as follows: Basis for determining Item Method of measuring expected credit loss portfolio Refer to the historical credit loss experience, combine with the current situation and Other account the forecast of future economic conditions, compile a comparison table of the age of Account age receivable other receivables and the expected credit loss rate of the entire renewal period, and calculate the expected credit losses. 14. Inventory Whether the Company needs to comply with the disclosure requirement of special industry N (1) Classification of inventories The Company’s inventories are categorized into stock materials, product in process and stock goods etc. (2) Pricing for delivered inventories A. Generally, stock materials are calculated at planned cost. Material cost difference is individually set according to classification of grant types. Pursuant to the difference between the planned cost of the received or delivered raw materials and the material cost the aforesaid cost should share after carrying forward at period-end, the Company adjusts the planned cost to effective cost; finished products are priced at effective costs, and carried forward to operating cost by weighted average method when being delivered; B. Products in process are priced at effective costs, and carried forward to finished products at actually occurred cost; C. Finished self-produced products are priced at effective costs, and carried forward to operating cost by weighted average method; external purchase goods (from import and export trades) are carried forward to sales cost by individual pricing method. (3) Recognition evidence for net realizable value of inventories and withdrawal method for inventory impairment provision Inventories as at period-end are priced at the lower of costs and net realizable values; at period end, on the basis of overall clearance about inventories, inventory impairment provision is withdrew for uncollectible part of costs of inventories which result from destroy of inventories, out-of-time of all and part inventories, or sales price lowering than cost. Inventory impairment provision for stock goods and quantity of raw materials is subject to the difference between costs of single inventory item over its net realizable value. As for other raw materials with large quantity and comparatively low unit prices, inventory impairment provision is withdrawn pursuant to categories. As for finished goods, commodities and materials available for direct sales, their net realizable values are determined by their estimated selling prices less estimated sales expenses and relevant taxes. For material inventories held for purpose of production, their net realizable values are determined by the estimated selling 79 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 prices of finished products less estimated costs, estimated sales expenses and relevant taxes accumulated till completion of production. As for inventories held for implementation of sales contracts or service contracts, their net realizable values are calculated on the basis of contract prices. In the event that inventories held by a company exceed order amount as agreed in sales contracts, net realizable values of the surplus part are calculated on the basis of normal sale price. (4) Inventory system Perpetual Inventory System is adopted by the Company and takes a physical inventory. (5) Amortization of low-value consumables and wrappage ①Low-value consumables The Company adopts one-off amortization method to amortize the low-value consumables. ②Wrappage The Company adopts one-off amortization method to amortize the wrappage at the time of receipt. 15. Assets held for sale The Company classifies non-current assets or disposal groups that meet all of the following conditions as held-for-sale: according to the practice of selling this type of assets or disposal groups in a similar transaction, the non-current assets or disposal group can be sold immediately at its current condition; The sale is likely to occur, that is, the Company has made resolution on the selling plan and obtained definite purchase commitment, the selling is estimated to be completed within one year. Those assets whose disposal is subject to approval from relevant authority or supervisory department under relevant requirements are subject to that approval. Where the Company loses control over its subsidiary due to disposal of investment in the subsidiary, whether or not the Company retains part equity investment after such disposal, investment in the subsidiary shall be classified in its entirety as held for sale in the separate financial statement of the parent company subject to that the investment in the subsidiary proposed to be disposed satisfies the conditions for being classified as held for sale, and all the assets and liabilities of the subsidiary shall be classified as held for sale in consolidated financial statement. The purchase commitment identified refers to the legally binding purchase agreement entered into between the Company and other parties, which sets out certain major terms relating to transaction price, time and adequately stringent punishment for default, which render an extremely minor possibility for material adjustment or revocation of the agreement. Assets held for sale are measured at the lower of heir carrying value and fair value less selling expense. If the carrying value is higher than fair value less selling expense, the excess shall be recognized as impairment loss and recorded in profit or loss for the period, and allowance for impairment shall be provided for in respect of the assets. In respect of impairment loss recognized for disposal group held for sale, carrying value of the goodwill in 80 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 the disposal group shall be deducted first, and then deduct the carrying value of the non-current assets within the disposal group applicable to this measurement standard on a pro rata basis according to the proportion taken by their carrying value. If the net amount of fair value of non-current assets held for sale less sales expense on subsequent balance sheet date increases, the amount previously reduced for accounting shall be recovered and reverted from the impairment loss recognized after the asset is classified under the category of held for sale, with the amount reverted recorded in profit or loss for the period. Impairment loss recognized before the asset is classified under the category of held for sale shall not be reverted. If the net amount of fair value of the disposal group held for sale on the subsequent balance sheet date less sales expenses increases, the amount reduced for accounting in previous periods shall be restored, and shall be reverted in the impairment loss recognized in respect of the non-current assets which are applicable to relevant measurement provisions after classification into the category of held for sale, with the reverted amount charged in profit or loss for the current period. The written-off carrying value of goodwill shall not be reverted. The non-current assets in the non-current assets or disposal group held for sale is not depreciated or amortized, and the debt interests and other fees in the disposal group held for sale continue to be recognized. If the non-current assets or disposal group are no longer classified as held for sale since they no longer meet the condition of being classified as held for sale or the non-current assets are removed from the disposal group held for sale, they will be measured at the lower of the following: (i) The amount after their book value before they are classified as held for sale is adjusted based on the depreciation, amortization or impairment that should have been recognized given they are not classified as held for sale; (ii) The recoverable amount. 16.Long-term equity investment Long-term equity investments refer to long-term equity investments in which the Company has control, joint control or significant influence over the invested party. Long-term equity investment without control or joint control or significant influence of the Group is accounted for as available-for-sale financial assets or financial assets measured at fair value with any change in fair value charged to profit or loss. (1) Determination of initial investment cost Investment costs of the long-term equity investment are recognized by the follow according to different way of acquirement: ①For a long-term equity investment acquired through a business combination involving enterprises under common control, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the cash paid, non-cash assets transferred as well as the book value of the debts borne by the absorbing party shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. If the consideration of the merger is satisfied by issue of equity securities, the initial 81 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. With the total face value of the shares issued as share capital, the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall be used to offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. (For business combination resulted in an enterprise under common control by acquiring equity of the absorbing party under common control through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a transaction in obtaining control. If they are not belong to “transactions in a basket”, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the aggregate of the carrying amount of the long-term equity investment before merging and the carrying amount the additional consideration paid for further share acquisition on the date of combination shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive income recognized as a result of the previously held equity investment accounted for using equity method on the date of combination or recognized for available-for-sale financial assets will not be accounted for.) ②For a long-term equity investment acquired through a business combination involving enterprises not under common control, the initial investment cost of the long-term equity investment shall be the cost of combination on the date of acquisition. Cost of combination includes the aggregate fair value of assets paid by the acquirer, liabilities incurred or borne and equity securities issued. (For business combination resulted in an enterprise not under common control by acquiring equity of the acquire under common control through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a transaction in obtaining control. If they are not belong to “transactions in a basket”, the initial investment cost of the long-term equity investment accounted for using cost method shall be the aggregate of the carrying amount of equity investment previously held by the acquire and the additional investment cost. For previously held equity accounted for using equity method, relevant other comprehensive income will not be accounted for. For previously held equity investment classified as available-for-sale financial asset, the difference between its fair value and carrying amount, as well as the accumulated movement in fair value previously included in the other comprehensive income shall be transferred to profit or loss for the current period.) plus the combination cost measured by costs which have directly connection with acquisition are considered as initial investment cost of such long-term equity investment. Realizable assets and liabilities undertaken by such assets (including contingent liabilities) of the party being combined as at the combination date are all measured at fair values, without consideration to amount of minority interests. The surplus of combination cost less fair value net realizable assets of the party being combined is recorded as goodwill, and the deficit is directly recognized in the consolidated statement of gains and losses. 82 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 ③Long-term investments obtained through other ways: A. Initial investment cost of long-term equity investment obtained through cash payment is determined according to actual payment for purchase; B. Initial investment cost of long-term equity investment obtained through issuance of equity securities is determined at fair value of such securities; C. Initial investment cost of long-term equity investment (exchanged-in) obtained through exchange with non-monetary assets, which is of commercial nature, is determined at fair value of the assets exchanged-out; otherwise determined at carrying value of the assets exchanged-out if it is not of commercial nature; D. Initial investment cost of long-term equity investment obtained through debt reorganization is determined at fair value of such investment. (2) Subsequent measurement on long-term equity investment ①Presented controlling ability on invested party, the investment shall use cost method for measurement. ②Long-term equity investments with joint control (excluding those constitute joint ventures) or significant influence on the invested party are accounted for using equity method. Under the equity method, where the initial investment cost of a long-term equity investment exceeds the investor’s interest in the fair value of the invested party’s identifiable net assets at the acquisition date, no adjustment shall be made to the initial investment cost. Where the initial investment cost is less than the investor’s interest in the fair value of the invested party’s identifiable net assets at the acquisition date, the difference shall be charged to profit or loss for the current period, and the cost of the long term equity investment shall be adjusted accordingly. Under the equity method, investment gain and other comprehensive income shall be recognized based on the Group’s share of the net profits or losses and other comprehensive income made by the invested party, respectively. Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carrying amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend distributed by the invested party. In respect of the other movement of net profit or loss, other comprehensive income and profit distribution of invested party, the carrying value of long-term equity investment shall be adjusted and included in the capital reserves. The Group shall recognize its share of the invested party’s net profits or losses based on the fair values of the invested party’s individual separately identifiable assets at the time of acquisition, after making appropriate adjustments thereto. In the event of inconformity between the accounting policies and accounting periods of the invested party and the Company, the financial statements of the invested party shall be adjusted in conformity with the accounting policies and accounting periods of the Company. Investment gain and other comprehensive income shall be recognized accordingly. In respect of the transactions between the Group and its associates and joint ventures in which the assets disposed of or sold are not classified as operation, the share of unrealized gain or loss arising from inter-group transactions shall be eliminated by the 83 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 portion attributable to the Company. Investment gain shall be recognized accordingly. However, any unrealized loss arising from inter-group transactions between the Group and an invested party is not eliminated to the extent that the loss is impairment loss of the transferred assets. In the event that the Group disposed of an asset classified as operation to its joint ventures or associates, which resulted in acquisition of long-term equity investment by the investor without obtaining control, the initial investment cost of additional long-term equity investment shall be the fair value of disposed operation. The difference between initial investment cost and the carrying value of disposed operation will be fully included in profit or loss for the current period. In the event that the Group sold an asset classified as operation to its associates or joint ventures, the difference between the carrying value of consideration received and operation shall be fully included in profit or loss for the current period. In the event that the Company acquired an asset which formed an operation from its associates or joint ventures, relevant transaction shall be accounted for in accordance with “Accounting Standards for Business Enterprises No. 20 “Business combination”. All profit or loss related to the transaction shall be accounted for. The Group’s share of net losses of the invested party shall be recognized to the extent that the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of the investor’s net investment in the invested party are reduced to zero. If the Group has to assume additional obligations, the estimated obligation assumed shall be provided for and charged to the profit or loss as investment loss for the period. Where the invested party is making profits in subsequent periods, the Group shall resume recognizing its share of profits after setting off against the share of unrecognized losses. ③Acquisition of minority interest Upon the preparation of the consolidated financial statements, since acquisition of minority interest increased of long-term equity investment which was compared to fair value of identifiable net assets recognized which are measured based on the continuous measurement since the acquisition date (or combination date) of subsidiaries attributable to the Group calculated according to the proportion of newly acquired shares, the difference of which recognized as adjusted capital surplus, capital surplus insufficient to set off impairment and adjusted retained earnings. ④Disposal of long-term equity investments In these consolidated financial statements, for disposal of a portion of the long-term equity investments in a subsidiary without loss of control, the difference between disposal cost and disposal of long-term equity investments relative to the net assets of the subsidiary is charged to the owners’ equity. If disposal of a portion of the long-term equity investments in a subsidiary by the parent company results in a change in control, it shall be accounted for in accordance with the relevant accounting policies as described in Note V.- 6 “Preparation Method of the Consolidated Financial Statements”. On disposal of a long-term equity investment otherwise, the difference between the carrying amount of the investment and the actual consideration paid is recognized through profit or loss in the current period. In respect of long-term equity investment accounted for using equity method with the remaining equity interest 84 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 after disposal also accounted for using equity method, other comprehensive income previously under owners’ equity shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by invested party on pro rata basis at the time of disposal. The owners’ equity recognized for the movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution of invested party) shall be transferred to profit or loss for the current period on pro rata basis. In respect of long-term equity investment accounted for using cost method with the remaining equity interest after disposal also accounted for cost equity method, other comprehensive income measured and reckoned under equity method or financial instrument before control of the invested party unit acquired shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by invested party on pro rata basis at the time of disposal and shall be transferred to profit or loss for the current period on pro rata basis; among the net assets of invested party unit recognized by equity method (excluding net profit or loss, other comprehensive income and profit distribution of invested party) shall be transferred to profit or loss for the current period on pro rata basis. In the event of loss of control over invested party due to partial disposal of equity investment by the Group, in preparing separate financial statements, the remaining equity interest which can apply common control or impose significant influence over the invested party after disposal shall be accounted for using equity method. Such remaining equity interest shall be treated as accounting for using equity method since it is obtained and adjustment was made accordingly. For remaining equity interest which cannot apply common control or impose significant influence over the invested party after disposal, it shall be accounted for using the recognition and measurement standard of financial instruments. The difference between its fair value and carrying amount as at the date of losing control shall be included in profit or loss for the current period. In respect of other comprehensive income recognized using equity method or the recognition and measurement standard of financial instruments before the Group obtained control over the invested party, it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by invested party at the time when the control over invested party is lost. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of invested party accounted for and recognized using equity method) shall be transferred to profit or loss for the current period at the time when the control over invested party is lost. Of which, for the remaining equity interest after disposal accounted for using equity method, other comprehensive income and other owners’ equity shall be transferred on pro rata basis. For the remaining equity interest after disposal accounted for using the recognition and measurement standard of financial instruments, other comprehensive income and other owners’ equity shall be fully transferred. In the event of loss of common control or significant influence over invested party due to partial disposal of equity investment by the Group, the remaining equity interest after disposal shall be accounted for using the recognition and measurement standard of financial instruments. The difference between its fair value and carrying amount as at the date of losing common control or significant influence shall be included in profit or loss for the current period. In respect of other comprehensive income recognized under previous equity investment using equity 85 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 method, it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by invested party at the time when equity method was ceased to be used. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of invested party accounted for and recognized using equity method) shall be transferred to profit or loss for the current period at the time when equity method was ceased to be used. The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions until the control over the subsidiary is lost. If the said transactions belong to “transactions in a basket”, each transaction shall be accounted for as a single transaction of disposing equity investment of subsidiary and loss of control. The difference between the disposal consideration for each transaction and the carrying amount of the corresponding long-term equity investment of disposed equity interest before loss of control shall initially recognized as other comprehensive income, and subsequently transferred to profit or loss arising from loss of control for the current period upon loss of control. (3) Impairment test method and withdrawal method for impairment provision Found more in Note V-”impairment of long-term investment” (4) Criteria of Joint control and significant influence Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevant activities of such arrangement must be decided by unanimously agreement from parties who share control. All the participants or participant group whether have controlling over such arrangement as a group or not shall be judge firstly, than judge that whether the decision-making for such arrangement are agreed unanimity by the participants or not. Significant influence is the power of the Company to participate in the financial and operating policy decisions of an invested party, but to fail to control or joint control the formulation of such policies together with other parties. While recognizing whether have significant influence by invested party, the potential factors of voting power as current convertible bonds and current executable warrant of the invested party held by investors and other parties shall be thank over. 17. Investment real estate Measurement mode Measured by cost method Depreciation or amortization method Investment real estate is stated at cost. During which, the cost of externally purchased properties held-for-investment includes purchasing price, relevant taxes and surcharges and other expenses which are directly attributable to the asset. Cost of self construction of properties held for investment is composed of necessary expenses occurred for constructing those assets to a state expected to be available for use. Properties 86 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 held for investment by investors are stated at the value agreed in an investment contract or agreement, but those under contract or agreement without fair value are stated at fair value. The Company adopts cost methodology amid subsequent measurement of properties held for investment, while depreciation and amortization is calculated using the straight-line method according to their estimated useful lives. The basis of provision for impairment of properties held for investment is referred to Note V-“Impairment of long-term assets” 18. Fixed assets (1) Confirmation conditions Fixed assets refer to the tangible assets for production of products, provision of labor, lease or operation, with a service life excess one year and has more unit value. (2) Depreciation methods Category Depreciation Method Years of depreciation Scrap value rate Yearly depreciation rate House and Building Straight-line depreciation 20~35 5 2.71~4.75 Machinery equipment Straight-line depreciation 10 5 9.50 Transportation Straight-line depreciation 4~5 5 19.00~23.75 equipment Electronic and other Straight-line depreciation 3~10 5 9.50~31.67 equipment (3) Recognition basis, valuation and depreciation method for financial lease assets The Company affirms those that conform to below one or several criteria as the finance lease fixed assets: ① Agreed in the lease contract (or made a reasonable judgment according to the correlated conditions on the lease commencement date), the ownership of lease fixed assets can be transferred to the Company after the expiry of the lease period; ② The Company has the option to purchase or lease the fixed assets, and the purchase price is estimated to be much less than the fair value of the lease of fixed assets when exercises the options, so whether the Company will exercise the option can be reasonably determined on the lease commencement date; ③ Even though the fixed asset ownership is not transferred, the lease term accounts for 75% of the service life of the lease fixed assets; ④ The present value of the Company’s of minimum lease payment on the lease commencement date is equivalent to 90% or more of the fair value of the lease fixed assets on the lease commencement date; the present value of the 87 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 leaser’s of minimum lease payment on the lease commencement date is equivalent to 90% or more of the fair value of the lease fixed assets on the lease commencement date; ⑤ The leased assets with special properties can only be used by the Company without major modifications. The fixed assets rented by finance leases is calculated as the book value according to the lower one between the fair value of leased assets on the lease commencement date and the present value of the minimum lease payments. (4) The impairment test method of fixed assets and the method of provision for impairment see Note V-20-“Long term asset impairment”. 19. Construction in progress From the date on which the fixed assets built by the Company come into an expected usable state, the projects under construction are converted into fixed assets on the basis of the estimated value of project estimates or pricing or project actual costs, etc. Depreciation is calculated from the next month. Further adjustments are made to the difference of the original value of fixed assets after final accounting is completed upon completion of projects. The basis of provision for impairment of properties held for construction in process is referred to Note V-“Impairment of long-term assets” 20. Borrowing costs (1) Recognition of capitalization of borrowing costs Borrowing costs comprise interest occurred, amortization of discounts or premiums, ancillary costs and exchange differences in connection with foreign currency borrowings. The borrowing costs of the Company, which incur from the special borrowings occupied by the fixed assets that need more than one year (including one year) for construction, development of investment properties or inventories or from general borrowings, are capitalized and recorded in relevant assets costs; other borrowing costs are recognized as expenses and recorded in the profit or loss in the period when they are occurred. Relevant borrowing costs start to be capitalized when all of the following three conditions are met: ① Capital expenditure has been occurred; ② Borrowing costs have been occurred; ③ Acquisition or construction necessary for the assets to come into an expected usable state has been carried out. (2) Period of capitalization of borrowing costs Borrowing costs arising from purchasing fixed asset, investment real estate and inventory, and occurred after such assets reached to its intended use of status or sales, than reckoned into assets costs while satisfy the above mentioned capitalization condition; capitalization of borrowing costs shall be suspended and recognized as current expenditure during periods in which construction of fixed assets, investment real estate and inventory are interrupted abnormally, when the interruption is for a continuous period of more than 3 months, until the 88 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 acquisition, construction or production of the qualifying asset is resumed; capitalization shall discontinue when the qualifying asset is ready for its intended use or sale, the borrowing costs occurred subsequently shall reckoned into financial expenses while occurring for the current period. (3) Measure of capitalization for borrowing cost In respect of the special borrowings borrowed for acquisition, construction or production and development of the assets qualified for capitalization, the amount of interests expenses of the special borrowings actually occurred in the period less interest income derived from unused borrowings deposited in banks or less investment income derived from provisional investment, are recognized. With respect to the general borrowings occupied for acquisition, construction or production and development of the assets qualified for capitalization, the capitalized interest amount for general borrowings is calculated and recognized by multiplying a weighted average of the accumulated expenditure on the assets in excess of the expenditure on the some assets of the special borrowings, by a capitalization rate for general borrowings. The capitalization rate is determined by calculation of the weighted average interest rate of the general borrowings. 21. Intangible assets (1) Measurement, use of life and impairment testing ① Measurement of intangible assets The intangible assets of the Company including land use rights, patented technology and non-patents technology etc. The cost of a purchased intangible asset shall be determined by the expenditure actually occurred and other related costs. The cost of an intangible asset contributed by an investor shall be determined in accordance with the value stipulated in the investment contract or agreement, except where the value stipulated in the contract or agreement is not fair. The intangible assets acquired through exchange of non-monetary assets, which is commercial in substance, is carried at the fair value of the assets exchanged out; for those not commercial in substance, they are carried at the carrying amount of the assets exchanged out. The intangible assets acquired through debt reorganization, are recognized at the fair value. ② Amortization methods and time limit for intangible assets: Land use right of the company had average amortization by the transfer years from the beginning date of transfer (date of getting land use light); Patented technology, non-patented technology and other intangible assets of the Company are amortized evenly with the shortest terms among expected useful life, benefit years regulated in the contract and effective age regulated by the laws. The amortization amount shall count in relevant assets costs and current gains/losses according to the benefit object. As for the intangible assets as trademark, with uncertain benefit terms, amortization shall not be carried. 89 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Impairment testing methods and accrual for depreciation reserves for the intangible assets found more in Note V-20-“Long-term assets impairment”. (2) Internal accounting policies relating to research and development expenditures Expenses incurred during the research phase are recognized as profit or loss in the current period; expenses incurred during the development phase that satisfy the following conditions are recognized as intangible assets (patented technology and non-patents technology): ① It is technically feasible that the intangible asset can be used or sold upon completion; ② there is intention to complete the intangible asset for use or sale; ③ The products produced using the intangible asset has a market or the intangible asset itself has a market; ④ there 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; ⑤ the expenses attributable to the development phase of the intangible asset can be measured reliably. If the expenses incurred during the development phase did not qualify the above mentioned conditions, such expenses incurred are accounted for in the profit or loss for the current period. The development expenditure reckoned in gains/losses previously shall not be recognized as assets in later period. The capitalized expenses in development stage listed as development expenditure in balance sheet, and shall be transfer as intangible assets since such item reached its expected conditions for service. 22. Impairment of long-term assets The Company will judge if there is any indication of impairment as at the balance sheet date in respect of non-current non-financial assets such as fixed assets, construction in progress, intangible assets with a finite useful life, investment properties measured at cost, and long-term equity investments in subsidiaries, joint controlled entities and associates. If there is any evidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwill, intangible assets with an indefinite useful life and intangible assets beyond working conditions will be tested for impairment annually, regardless of whether there is any indication of impairment. If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, the impairment provision will be made according to the difference and recognized as an impairment loss. The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset. An asset’s fair value is the price in a sale agreement in an arm’s length transaction. If there is no sale agreement but the asset is traded in an active market, fair value shall be determined based on the bid price. If there is neither sale agreement nor active market for an asset, fair value shall be based on the best available information. Costs of disposal are expenses attributable to disposal of the asset, including legal fee, relevant tax and surcharges, transportation fee and direct expenses incurred to prepare the asset for its intended sale. The present value of the future cash flows expected to be derived from the asset over 90 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 the course of continued use and final disposal is determined as the amount discounted using an appropriately selected discount rate. Provisions for assets impairment shall be made and recognized for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group shall determine the recoverable amount of the asset group to which the asset belongs. The asset group is the smallest group of assets capable of generating cash flows independently. For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financial statements shall be allocated to the asset groups or group of assets benefiting from synergy of business combination. If the recoverable amount is less than the carrying amount, the Group shall recognize an impairment loss. The amount of impairment loss shall first reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups, and then reduce the carrying amount of other assets (other than goodwill) within the asset group or set of asset groups, pro rata on the basis of the carrying amount of each asset. An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period in respect of the part whose value can be recovered. 23. Long-term deferred expenses Long-term expenses to be amortized of the Company the expenses that are already charged and with the beneficial term of more than one year are evenly amortized over the beneficial term. For the long-term deferred expense items cannot benefit the subsequent accounting periods, the amortized value of such items is all recorded in the profit or loss during recognition. 24. Employee compensation (1) Accounting treatment for short-term compensation During the accounting period when the staff providing service to the Company, the short-term remuneration actual occurred shall recognized as liability and reckoned into current gains/losses. 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, except for those in line with accounting standards or allow to reckoned into capital costs; the welfare occurred shall reckoned into current gains/losses or relevant asses costs while actually occurred. The employee compensation shall recognize as liabilities and reckoned into current gains/losses or relevant assets costs while actually occurred. The employee benefits that belong to non-monetary benefits are measured in accordance with the fair value; the social insurances including the medical insurance, work-injury insurance and maternity insurance and the housing fund that the enterprise pays for the employees as well as the labor union expenditure and employee education funds withdrawn by rule should be calculated and determined as the corresponding compensation amount and determined the corresponding liabilities in accordance with the specified withdrawing basis and proportion, and reckoned in the current profits and losses or relevant asset costs 91 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 in the accounting period that the employees provide services. (2) Accounting treatment for post-employment benefit The post-employment benefit included the defined contribution plans and defined benefit plans. Post-employment benefits plan refers to the agreement about the post-employment benefits between the enterprise and employees, or the regulations or measures the enterprise established for providing post-employment benefits to employees. Thereinto, the defined contribution plan refers to the post-employment benefits plan that the enterprise doesn’t undertake the obligation of payment after depositing the fixed charges to the independent fund; the defined benefit plans refers to post-employment benefits plans except the defined contribution plan. (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. The early retirement plan shall be accounted for in accordance with the accounting principles for compensation for termination of employment. The salaries or wages and the social contributions to be paid for the employees who retire before schedule from the date on which the employees stop rendering services to the scheduled retirement date, shall be recognized (as compensation for termination of employment) in the current profit or loss by the Group if the recognition principles for provisions are satisfied. (4)Accounting for other long-term employee benefits Except for the compulsory insurance, the Company provides the supplementary retirement benefits to the employees satisfying some conditions, the supplementary retirement benefits belong to the defined benefit plans, and the defined benefit liability confirmed on the balance sheet is the value by subtracting the fair value of plan assets from the present value of defined benefit obligation. The defined benefit obligation is annually calculated in accordance with the expected accumulated welfare unit method by the independent actuary by adopting the treasury bond rate with similar obligation term and currency. The service charges related to the supplementary retirement benefits (including the service costs of the current period, the previous service costs, and the settlement gains or losses) and the net interest are reckoned in the current profits and losses or other asset costs, the changes generated by recalculating the net liabilities of defined benefit plans or net assets should be reckoned in other consolidated income. 92 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 25. Accrual liabilities (1) Recognition principle An obligation related to a contingency, such as guarantees provided to outsiders, pending litigation or arbitration, product warranties, redundancy plans, onerous contracts, reconstructing, expected disposal of fixed assets, etc. shall be recognized as an estimated liability when all of the following conditions are satisfied: ① the obligation is a present obligation of the Company; ② it is Contingent that an outflow of economic benefits will be required to settle the obligation; ③ the amount of the obligation can be measured reliably. (2) Measurement method: Measure on the basis of the best estimates of the expenses necessary for paying off the contingencies 26. Revenue Whether the Company needs to comply with the disclosure requirement of special industry No Whether implemented the new revenue standards □ Yes √ No (1) Concrete judging criteria for time of recognized The major risks and remuneration entitled to the ownership of goods are transferred to buyer; neither retain the continued management right generally related to ownership, nor exercise effective control over the sold products; the relevant economic benefits are probable to flow into the Company; the relevant income and costs can be measured reliably. Concrete judging criteria for time of recognized the income from goods sales: The Company's domestic sales revenue recognition time: The company delivers goods as agreed, checks the goods that the buyers have received and inspected during the period of the last reconciliation date and this reconciliation date with the buyers on the reconciliation date as agreed, and transfers the risks and remunerations to the buyers after checking, the Company issues the invoices to the buyers in accordance with the recognized varieties, quantities and amounts and affirms the sales revenue realization on the reconciliation date. The Company's overseas sales revenue recognition time: After checking by the customs, the Company affirms the sales revenue realization according to the date of departure on the customs declaration. (2) Recognition of revenue of assets using right alienation Revenue from use by others of enterprise assets shall be recognized only when the associated economic benefit can flow into the Company, and the amount of revenue can be measured reliably, revenue measured by the follow: ① Interest income amount: calculated and determined in accordance with the time that others use the enterprises cash and the actual interest rate. ② Royalty revenue amount: calculated and determined in accordance with the charging time and method of the 93 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 relevant contract or agreement as agreed. The basis that the Company confirms the revenue from transferring the right to use assets. Rental income: the revenue realization is confirmed after collecting the rent on the date as agreed in the rental contract (or agreement). For the rent not received on the date as agreed in the contract or agreement but can be received, and of which the amount of revenue can be measured reliably can also be recognized as revenue. (3) When confirming the incomes of labor services and construction contracts according to the percentage of completion method, determine the basis and method of the contract completion plan. For the service transaction results can be estimated reliably on the balance sheet date, the service revenue is determined and recognized by adopting the percentage of completion method. The completion progress of service transaction is determined by the proportion of incurred costs in the estimated total cost. The total service revenue is determined by the received or receivable contract or agreement costs, except that the received or receivable contract or agreement costs are not fair. On the balance sheet date, the service revenue of the current period is determined by multiplying the total service revenue by the completion progress and deducting the amount accumulated in the previous accounting period and confirmed to render the service revenue. Meanwhile, the labor costs of the current period are carried forward by multiplying the total estimated costs of labor services by the completion progress and deducting the amount accumulated in the previous accounting period with confirmed service costs. For the service transaction results cannot be estimated reliably on the balance sheet date, respectively dispose as following circumstances: ①The incurred labor costs estimated to be compensated are confirmed to render the service revenue according to the incurred labor costs, and are carried forward by the equivalent amount. ②The incurred labor costs estimated not to be compensated are reckoned in the current profits or losses, and are not confirmed to render the service revenue. 27. Government grants (1) Types Government grants are transfer of monetary assets or non-monetary assets from the government to the Group at no consideration. Government grants are classified into government grants related to assets and government grants related to income. As for the assistance object not well-defined in government’s documents, the classification criteria for assets-related or income-related grants are as: whether the grants turn to long-term assets due to purchasing for construction or other means. (2) Recognition and measure The government grants shall be recognized while meet the additional conditions of the grants and amount is 94 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 actually can be obtained. If a government grant is in the form of a transfer of monetary asset, the item shall be measured at the amount received or receivable. If a government grant is in the form of a transfer of non-monetary asset, the item shall be measured at fair value. If the fair value can not be reliably acquired, than measured by nominal amount. (3) Accounting treatment A government grant related to an asset shall be recognized as deferred income, and reckoned into current gains/losses according to the depreciation process in use life of such assets. A government grant related to income, if they making up relevant expenses and losses for later period, than recognized deferred income, and should reckoned into current gain/loss during the period while relevant expenses are recognized; if they making up relevant expenses and losses that occurred, than reckoned into current gains/losses. A government grant related to daily operation activity of the Company should reckoned into other income; those without related to daily operation activity should reckoned into non-operation income and expenses. The financial discount funds received by the Company shall write down relevant borrowing costs. 28. Deferred income tax assets/Deferred income tax liabilities (1) Deferred income tax assets or deferred income tax liabilities are realized based on the difference between the carrying values of assets and liabilities and their taxation bases (as for the ones did not recognized as assets and liability and with taxation basis recognized in line with tax regulations, different between tax base and its book value) at the tax rates applicable in the periods when the Company recovers such assets or settles such liabilities. (2) Deferred income tax assets are realized to the extent that it is probable to obtain such taxable income which is used to set off the deductible temporary difference. As at the balance sheet date, if there is obvious evidence showing that it is probable to obtain sufficient taxable income to set off the deductible temporary difference in future periods, deferred income tax assets not realized in previous accounting periods shall be realized. (3) On balance sheet date, re-review shall be made in respect of the carrying value of deferred income tax assets. If it is impossible to obtain sufficient taxable income to set off the benefits of deferred income tax assets in future periods, then the carrying value of deferred income tax assets shall be reduced accordingly. If it is probable to obtain sufficient taxable income, then the amount reduced shall be switched back. (4) Current income tax and deferred income tax considered as income tax expenses or incomes reckoned into current gains/losses, excluding the follow income tax: ①Enterprise combination; ②Transactions or events recognized in owner’s equity directly 95 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 29. Lease (1) Accounting for operating lease The rental fee paid for renting the properties by the company are amortized by the straight-line method and reckoned in the current expenses throughout the lease term without deducting rent-free period. The initial direct costs related to the lease transactions paid by the company are reckoned in the current expenses. When the lessor undertakes the expenses related to the lease that should be undertaken by the company, the company shall deduct the expenses from the total rental costs, share by the deducted rental costs during the lease term, and reckon in the current expenses. Rental obtained from assets leasing, during the whole leasing period without rent-free period excluded, shall be amortized by straight-line method and recognized as leasing revenue. The initial direct costs paid with leasing transaction concerned are reckoned into current expenditure; the amount is larger is capitalized when incurred, and accounted for as profit or loss for the current period on the same basis as recognition of rental income over the entire lease period. When the company undertakes the expenses related to the lease that should be undertaken by the lessor, the company shall deduct the expenses from the total rental income, and distribute by the deducted rental costs during the lease term. (2) Accounting for financing lease Assets lease-in by financing: On the beginning date of the lease, the entry value of leased asset shall be at the lower of the fair value of the leased asset and the present value of minimum lease payment at the beginning date of the lease. Minimum lease payment shall be the entry value of long-term accounts payable, with difference recognized as unrecognized financing expenses. Unrecognized financing expenses shall be reckoned in financial expenses and amortized and using effective interest method during the leasing period. The initial direct costs incurred by the Company shall be reckoned into value of assets lease-in. Finance leased assets: on the lease commencement date, the company affirms the balance among the finance lease receivables, the sum of unguaranteed residual value and its present value as the unrealized financing income, and recognizes it as the rental income during the period of receiving the rent. For the initial direct costs related to the rental transaction, the company reckons in the initial measurement of the finance lease receivables, and reduces the amount of income confirmed in the lease term. 30. Other important accounting policy and accounting estimation In the process of applying the Company's accounting policies, due to the inherent uncertainty of business activities, 96 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 the Company needs to judge, estimate and assume the book value of the report items cannot be accurately measured. These judgments, estimates and assumptions are made on the basis of the historical experience of the Company’s management and by considering other relevant factors, which shall impact the reported amounts of income, expenses, assets and liabilities and the disclosure of contingent liabilities on the balance sheet date. However, the actual results caused by the estimated uncertainties may differ from the management's current estimates of the Company so as to carry out the significant adjustments to the book value of the assets or liabilities to be affected. The Company regularly reviews the aforementioned judgments, estimates and assumptions on the basis of continuing operations, the changes in accounting estimates only affect the current period, of which the impacts are recognized in the current period; the changes in accounting estimates not only affect the current period but also the future periods, of which the impacts are recognized in the current and future periods. On the balance sheet date, the important areas of the financial statements that the Company needs to judge, estimate and assume are as follows: (1) Provision for bad debts According to the accounting policies of the accounts receivable, the Company adopts the allowance method to calculate the bad debt losses. The impairment of receivables is based on the assessment to the collectability of the accounts receivable. The impairment of accounts receivable requires the management’s judgments and estimates. The actual results and the differences between the previously estimated results shall affect the book value of accounts receivable and the provision or return of the receivables’ bad debt reserves during the period estimated to be changed. (2) Inventory impairment According to the inventory accounting policies, the Company measures by the comparison between the cost and the net realizable value, if the cost is higher than the net realizable value and the old and unsalable inventories, the Company calculates and withdraws the inventory impairment. The inventory devalues to the net realizable value by evaluating the inventory’s vendibility and net realizable value. To identify the inventory impairment, the management needs to obtain the unambiguous evidences, and consider the purpose to hold the inventory, and judge and estimate the impacts of events after the balance sheet date. The actual results and the differences between the previously estimated results shall affect the book value of inventory and the provision or return of the inventory impairment during the period estimated to be changed. (3) Held-to-maturity investments The Company classifies the non-derivative financial assets that meet the requirements, have the fixed or ascertainable repayment amount and fixed due date, and that the Company has the positive intention and ability to hold to maturity as the held-to-maturity investment. This classification involves a lot of judgments. In the process of making the judgments, the Company will evaluate its willingness and ability to this held-to-maturity investment. 97 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Except in certain cases (such as the investments with insignificant sales amount when the maturity date comes), if the Company fails to hold these investments till the maturity date, then all the investments shall be reclassified to the available-for-sale financial assets which cannot be classified as the held-to-maturity investments in this fiscal year and the next two fiscal years. This kind of case may have a significant impact on the relevant financial assets value listed on the financial statements, and may affect the Company's financial instruments risk management strategy. (4) Impairment of held-to-maturity investments The Company determines that the impairment of held-to-maturity investments largely relies on management's judgments. The objective evidences of impairment include that the issuer has serious financial difficulties so that the financial assets cannot continue to be traded in an active market, or cannot be able to fulfill the contract terms (for example, breach the contract of paying the interests or principal), etc. In the process of making the judgments, the Company needs to evaluate the impact of the objective evidence of impairment to the expected future cash flows of the investment. (5) Impairment of financial assets available for sale The Company determines that the impairment of held-to-maturity investments largely relies on management's judgments and assumptions so as to determine whether it is needed to affirm its impairment loss in the profit statement. In the process of making the judgments and assumptions, the Company needs to evaluate the extent and duration when the fair value of the investment is less than the cost, as well as the financial situation and short-term business prospects of the invested party, including the industry conditions, technological change, credit rating, default rates, and risks of the counter party. (6) Preparation for the impairment of non-financial & non-current assets The Company checks whether the non-current assets except for the financial assets may decrease in value at the balance sheet date. For the intangible assets with indefinite service life, in addition to the annual impairment test, the impairment test is also needed when there is a sign of impairment. For the other non-current assets except for the financial assets, the impairment test is needed when it indicates that the book amounts may not be recoverable. When the book value of the asset or group of assets exceeds its recoverable amount, i.e. the higher between the net amount by subtracting the disposal costs from the fair value and the present value of expected future cash flows, it indicates the impairment. As for the net amount by subtracting the disposal costs from the fair value, refer to the sales agreement price similar to the assets in the fair trade or the observable market price, and subtract the incremental costs determination directly attributable to the disposal of the asset. When estimating the present value of the future cash flow, the Company needs to make significant judgments to 98 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 the output, price, and related operating expenses of the asset (or asset group) and the discount rate used for calculating the present value. When estimating the recoverable amount, the Company shall adopt all the relevant information can be obtained, including the prediction related to the output, price, and related operating expenses based on the reasonable and supportable assumptions. The Company tests whether its business reputation decreases in value every year, which requires to estimating the present value of the asset group allocated with goodwill or the future cash flow combined by the asset group. When estimating the present value of the future cash flow, the Company needs to estimate the future cash flows generated by the asset group or the combination of asset group, and select the proper discount rate to determine the present value of the future cash flows. (7) Depreciation and amortization The Company depreciates and amortizes the investment property, fixed assets and intangible assets according to the straight-line method in the service life after considering the residual value. The Company regularly reviews the service life to determine the depreciation and amortization expense amount to be reckoned in each reporting period. The service life is determined by the Company based on the past experience of similar assets and the expected technological updating. If the previous estimates have significant changes, the depreciation and amortization expense shall be adjusted in future periods. (8) Income tax In the Company’s normal business activities, the final tax treatment and calculation of some transactions have some uncertainties. Whether some projects can be disbursed from the cost and expenses before taxes requires needs to get approval from the tax authorities. If the final affirmation of these tax matters differs from the initially estimated amount, the difference shall have an impact on its current and deferred income taxes during the final identification period. (9) Early retirement benefits and supplementary retirement benefits The expenses of the Company's early retirement benefits and supplementary retirement benefits and the amount of liabilities are determined in accordance with various assumptions. These assumptions include the discount rate, the average growth rate of health care costs, the subsidy growth rate of the early retired personnel and retirees and the other factors. The differences between the actual results and assumptions will be immediately identified and included in the costs of the current year. Although the management thought the reasonable assumptions have been adopted, the changes in the actual experience and assumed conditions will impact the costs and liability balances of the Company's internal early retirement benefits and supplementary retirement benefits. 99 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 31. Changes of important accounting policy and estimation (1) Changes of major accounting policies √ Applicable □ Not applicable Approval Content and causes for changes of accounting policy Note procedures In 2017, the Ministry of Finance revised and issued the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments and Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets , Accounting Standards for Approved and Business Enterprises No. 24 - Hedge Accounting, and the Accounting Standards for Business deliberated by Notice No.: Enterprises No. 37 – Financial Instruments Presentation, and the domestic listed companies are 5th session of 2019-006 th required to put the relevant accounting standards of new financial instruments into force from 9 BOD January 1, 2019. The Company implement the above mentioned four accounting standards since 1 Jan. 2019 On April 2019, the Ministry of Finance issued No. 6 Document 2019-“Notice on Amending the 2019 Ministry of Annual Financial Statements of General Enterprises”, which revised the financial statement format of Finance No. 6 general enterprises in light of the relevant situation in the implementation of enterprise accounting Document standards. 2019 (2) Changes of important accounting estimate □ Applicable √ Not applicable (3) Adjustment the financial statements at the beginning of the first year of implementation of new financial instrument standards, new revenue standards and new leasing standards √ Applicable □ Not applicable Consolidate balance sheet In RMB/CNY Item 2018-12-31 2019-01-01 Adjustments Current assets: Monetary funds 2,616,321,740.73 2,616,321,740.73 Settlement provisions Capital lent Tradable financial assets 4,740,773,607.43 4,740,773,607.43 Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial assets 100 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Note receivable 1,148,107,603.68 1,148,107,603.68 Note receivable 1,919,793,266.91 1,919,793,266.91 Account receivable financing Account paid in advance 94,651,431.31 94,651,431.31 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Other account receivable 84,582,246.16 84,582,246.16 Including: Interest receivable 1,842,437.50 1,842,437.50 Dividend receivable Buying back the sale of financial assets Inventory 1,438,528,714.59 1,438,528,714.59 Contract assets Assets held for sale Non-current asset due within one year Other current assets 4,632,137,600.26 60,250,896.83 -4,571,886,703.43 Total current assets 11,934,122,603.64 12,103,009,507.64 168,886,904.00 Non-current assets: Loans and payments on behalf Creditors’ investment Available-for-sale financial assets 255,975,176.91 -255,975,176.91 Other creditors’ investment Held-to-maturity investments Long-term receivables Long-term equity investment 4,976,773,946.74 4,976,773,946.74 Other equity instrument investment 87,088,272.91 87,088,272.91 Other non-current financial assets Investment real estate 21,906,134.52 21,906,134.52 Fixed assets 2,707,374,678.61 2,707,374,678.61 Construction in progress 166,414,542.18 166,414,542.18 Productive biological assets Oil and gas assets Right-of-use asset Intangible assets 324,892,822.75 324,892,822.75 101 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Research and development costs Goodwill 1,784,086.79 1,784,086.79 Long-term deferred expenses 16,637,652.31 16,637,652.31 Deferred income tax assets 234,697,139.58 234,697,139.58 Other non-current assets 251,462,676.27 251,462,676.27 Total non-current assets 8,957,918,856.66 8,789,031,952.66 -168,886,904.00 Total assets 20,892,041,460.30 20,892,041,460.30 Current liabilities: Short-term borrowings 298,928,213.94 298,928,213.94 Loan from central bank Capital borrowed Tradable financial liability Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability 490,329.13 490,329.13 Note payable 1,018,367,533.74 1,018,367,533.74 Account payable 2,047,336,834.66 2,047,336,834.66 Accounts received in advance 41,329,857.80 41,329,857.80 Selling financial asset of repurchase Absorbing deposit and interbank deposit Security trading of agency Security sales of agency Employee compensation payable 312,113,178.24 312,113,178.24 Taxes payable 74,271,613.92 74,271,613.92 Other accounts payable 64,448,723.52 64,448,723.52 Including: Interest payable 517,469.08 517,469.08 Dividend payable Commission charge and commission payable Reinsurance payable Contract liability Liability held for sale Non-current liabilities due within one year 15,000,000.00 15,000,000.00 Other current liabilities Total current liabilities 3,872,286,284.95 3,872,286,284.95 Non-current liabilities: 102 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Insurance contract reserve Long-term loans 30,000,000.00 30,000,000.00 Bonds payable Including: preferred stock Perpetual capital securities Lease liability Long-term account payable 35,422,354.11 35,422,354.11 Long-term employee compensation payable 74,679,175.36 74,679,175.36 Accrual liabilities Deferred income 425,769,854.13 425,769,854.13 Deferred income tax liabilities 1,912,744.40 1,912,744.40 Other non-current liabilities Total non-current liabilities 567,784,128.00 567,784,128.00 Total liabilities 4,440,070,412.95 4,440,070,412.95 Owners’ equity: Share capital 1,008,950,570.00 1,008,950,570.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital reserve 3,416,022,795.14 3,416,022,795.14 Less: Inventory shares Other comprehensive income -19,809,442.95 19,809,442.95 Reasonable reserve 1,618,490.50 1,618,490.50 Surplus reserve 510,100,496.00 510,100,496.00 Provision of general risk Retained profit 10,996,945,870.13 10,996,945,870.13 -19,809,442.95 Total owners’ equity attributable to parent company 15,913,828,778.82 15,913,828,778.82 Minority interests 538,142,268.53 538,142,268.53 Total owners’ equity 16,451,971,047.35 16,451,971,047.35 Total liabilities and owner’s equity 20,892,041,460.30 20,892,041,460.30 Explanation In 2017, the Ministry of Finance revised and issued the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments and Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets , Accounting Standards for Business Enterprises No. 24 - Hedge Accounting, and the Accounting Standards for Business Enterprises No. 37 – Financial Instruments Presentation, and the domestic 103 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 listed companies are required to put the relevant accounting standards of new financial instruments into force from January 1, 2019. The Company implement the above mentioned four accounting standards since 1 Jan. 2019 (1) Add new item of “Tradable financial assets”, parts of the former “Other current assets” and “Available-for-sale financial assets” are re-classified for listing (2) Add new item of “Other equity instrument investment”, parts of the former “Available-for-sale financial assets” is re-classified for listing (3) Re-classify “Other comprehensive income” to “Retained profit” Balance sheet of parent company In RMB/CNY Item 2018-12-31 2019-01-01 Adjustments Current assets: Monetary funds 1,922,408,227.00 1,922,408,227.00 Tradable financial assets 4,740,773,607.43 4,740,773,607.43 Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial assets Note receivable 264,264,207.30 264,264,207.30 Note receivable 742,246,990.99 742,246,990.99 Account receivable financing Account paid in advance 59,028,927.25 59,028,927.25 Other account receivable 196,849,092.13 196,849,092.13 Including: Interest receivable 188,682.78 188,682.78 Dividend receivable Inventory 492,054,274.67 492,054,274.67 Contract assets Assets held for sale Non-current asset due within one year Other current assets 4,576,688,553.49 4,801,850.06 -4,571,886,703.43 Total current assets 8,253,540,272.83 8,422,427,176.83 168,886,904.00 Non-current assets: Creditors’ investment Available-for-sale financial assets 180,035,176.91 -180,035,176.91 Other creditors’ investment Held-to-maturity investments 104 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Long-term receivables Long-term equity investment 5,739,110,426.55 5,739,110,426.55 Other equity instrument investment 11,148,272.91 11,148,272.91 Other non-current financial assets Investment real estate Fixed assets 1,534,109,106.80 1,534,109,106.80 Construction in progress 78,673,300.59 78,673,300.59 Productive biological assets Oil and gas assets Right-of-use asset Intangible assets 188,101,655.94 188,101,655.94 Research and development costs Goodwill Long-term deferred expenses Deferred income tax assets 140,286,756.70 140,286,756.70 Other non-current assets 184,208,090.40 184,208,090.40 Total non-current assets 8,044,524,513.89 7,875,637,609.89 -168,886,904.00 Total assets 16,298,064,786.72 16,298,064,786.72 Current liabilities: Short-term borrowings 112,000,000.00 112,000,000.00 Tradable financial liability Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Note payable 330,545,052.37 330,545,052.37 Account payable 823,693,469.51 823,693,469.51 Accounts received in advance 6,639,554.63 6,639,554.63 Contract liability Employee compensation payable 200,205,508.25 200,205,508.25 Taxes payable 39,193,425.15 39,193,425.15 Other accounts payable 12,142,596.68 12,142,596.68 Including: Interest payable 149,966.66 149,966.66 Dividend payable Liability held for sale Non-current liabilities due within one year 105 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Other current liabilities Total current liabilities 1,524,419,606.59 1,524,419,606.59 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 63,962,762.93 63,962,762.93 Accrual liabilities Deferred income 381,609,056.40 381,609,056.40 Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 445,571,819.33 445,571,819.33 Total liabilities 1,969,991,425.92 1,969,991,425.92 Owners’ equity: Share capital 1,008,950,570.00 1,008,950,570.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital reserve 3,488,221,286.39 3,488,221,286.39 Less: Inventory shares Other comprehensive income -19,809,442.95 19,809,442.95 Reasonable reserve Surplus reserve 510,100,496.00 510,100,496.00 Retained profit 9,340,610,451.36 9,320,801,008.41 -19,809,442.95 Total owners’ equity 14,328,073,360.80 14,328,073,360.80 Total liabilities and owner’s equity 16,298,064,786.72 16,298,064,786.72 Explanation In 2017, the Ministry of Finance revised and issued the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments and Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets , Accounting Standards for Business Enterprises No. 24 - Hedge Accounting, and the Accounting Standards for Business Enterprises No. 37 – Financial Instruments Presentation, and the domestic listed companies are required to put the relevant accounting standards of new financial instruments into force from 106 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 January 1, 2019. The Company implement the above mentioned four accounting standards since 1 Jan. 2019 (1) Add new item of “Tradable financial assets”, parts of the former “Other current assets” and “Available-for-sale financial assets” are re-classified for listing (2) Add new item of “Other equity instrument investment”, parts of the former “Available-for-sale financial assets” is re-classified for listing (3) Re-classify “Other comprehensive income” to “Retained profit” (4) Retrospective adjustment of early comparison data description when initially implemented the new financial instrument standards and new leasing standards □ Applicable √ Not applicable 32. Other Nil VI. Taxation 1. Major taxes and tax rates Tax Basis Tax rate Tax rate of 17%, 16%, 13%, 11%, 10%, 9%, 6% and 5%, rate for exported commodities is stipulated by the state with declaration VAT Taxable income of export tax rebate, rate of tax may be “exempted, credited and refunded” City maintaining & construction tax Turnover tax payable 7% Corporation income tax Taxable income 25%, 22%, 15% Educational surtax Turnover tax payable 5%, 4.5% Disclose reasons for different taxpaying body Taxpaying body Income tax rate Weifu Mashan, Weifu Chang’an, Weifu International Trade, Weifu ITM, Weifu Schmidt, Weifu Leader 25% (Wuhan), Weifu Leader(Nanchang) The Company, Weifu Jinning, Weifu Leader, Weifu Tianli, Weifu Autocam, Weifu Leader(Chongqing) 15% SPV, IRD Fuel Cells A/S 22% 2. Tax preference On 17 November 2017, the Company got a “High-Tech Enterprise Certificate” issued jointly by Science & Technology Department of Jiangsu Province, Department of Finance of Jiangsu Province, Jiangsu Provincial Office, SAT and Jiangsu Local Taxation Bureau, certificate No.: GR201732000007. Corporate income tax of the 107 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Company shall be taxed by 15% in three years since 1 January 2017 in accordance with State regulations. On 27 December 2017, Weifu Jinning got a “High-Tech Enterprise Certificate” issued jointly by Science & Technology Department of Jiangsu Province, Department of Finance of Jiangsu Province, Jiangsu Provincial Office, SAT and Jiangsu Local Taxation Bureau, certificate No.: GR201732004010. Corporate income tax of the Weifu Jinning shall be taxed by 15% in three years since 1 January 2017 in accordance with State regulations. On 17 November 2017, Weifu Leader got a “High-Tech Enterprise Certificate” issued jointly by Science & Technology Department of Jiangsu Province, Department of Finance of Jiangsu Province, Jiangsu Provincial Office, SAT and Jiangsu Local Taxation Bureau, certificate No.: GR201732001828. Corporate income tax of the Weifu Leader shall be taxed by 15% in three years since 1 January 2017 in accordance with State regulations. On 29 November 2017, Weifu Tianli got a “High-Tech Enterprise Certificate” issued jointly by Science & Technology Bureau of Ningbo, Department of Finance of Ningbo, Ningbo Office, SAT and Ningbo, Zhejiang Provincial Local Taxation Bureau, certificate No.: GR201733100363. Corporate income tax of the Weifu Tianli shall be taxed by 15% in three years since 1 January 2017 in accordance with State regulations. On 17 November 2017, Weifu Autocam got a “High-Tech Enterprise Certificate” issued jointly by Science & Technology Department of Jiangsu Province, Department of Finance of Jiangsu Province, Jiangsu Provincial Office, SAT and Jiangsu Local Taxation Bureau, certificate No.: GR201732001043. Corporate income tax of the Weifu Autocam shall be taxed by 15% in three years since 1 January 2017 in accordance with State regulations. The State Administration of Taxation announced the first item of Announcement of the State Administration of Taxation on the Enterprise Income Tax Issues Concerning the Implementation of the Western Development Strategy No. 12 of 2012 that from January 1, 2011 to December 31, 2020, the enterprises located in the west region and mainly engaged in the industrial projects stipulated in the Catalogue of Encouragement Industries in the Western Region, and whose main business income accounting for more than 70% of the total income of the enterprise in the current year can pay the corporate income tax at the tax rate of 15%. In 2018, Weifu Leader (Chongqing) paid its corporate income tax at the tax rate of 15%. 108 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 VII. Notes to major items in consolidated financial statements 1.Monetary funds In RMB/CNY Item Ending balance Opening balance Cash on hand 71,791.03 194,161.03 Cash in bank 2,596,255,341.24 2,534,479,978.46 Other monetary funds 93,371,445.06 81,647,601.24 Total 2,689,698,577.33 2,616,321,740.73 Including: Total amount saving aboard 32,827,414.62 Other explanation Item 2019-06-30 2018-12-31 Bank acceptance bill, L/C and other collateral 52,783,679.85 80,765,732.67 Deposit for Letter of Guarantee 158,280.00 Frozen dividend 1,655,119.95 881,868.57 The currency funds in transit for selling the equity of 38,774,365.26 Protean Holdings Corp. Total 93,371,445.06 81,647,601.24 The frozen dividend of 1,655,119.95 Yuan represents the part of dividends distributed by SDEC (stock code:600841) and Miracle Automation (stock code:002009) for 2017, 2018 and 2019 held by the Company as tradable financial assets. According to the notices numbered Yue 03MC[2016]2490 and Yue 03MC[2016]2492 served by Guangdong Shenzhen Intermediate People’s Court, these dividends were frozen. The currency funds in transit for selling the equity of Protean Holdings Corp. is the equity selling money that sold by the Company, it is not available for relevant procedures are in process 2. Tradable financial assets In RMB/CNY Item Ending balance Opening balance Financial assets measured by fair value and with variation reckoned into 151,261,956.00 121,066,008.00 current gains/losses Including: SDEC 104,680,056.00 85,458,408.00 109 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Miracle Automation 46,581,900.00 35,607,600.00 Financial assets designated to be measured by fair value and with variation 4,258,207,599.43 4,619,707,599.43 reckoned into current gains/losses Including: Guolian Securities Shares 12,000,000.00 12,000,000.00 Shanghai Chengding Detong Equity Investment 35,820,896.00 35,820,896.00 Other: financial products 4,210,386,703.43 4,571,886,703.43 Total 4,409,469,555.43 4,740,773,607.43 Other explanation Implemented new financial instrument standards in 2019, the tradable financial assets was re-classified from former available-for-sale financial assets 3. Note receivable (1) Classification of notes receivable In RMB/CNY Item Ending balance Opening balance Bank acceptance bill 1,402,441,411.19 1,082,574,482.88 Trade acceptance bill 89,952,810.16 65,533,120.80 Total 1,492,394,221.35 1,148,107,603.68 (2) Bad debt provision accrual, collected or reversal in the period □ Applicable √ Not applicable (3) Note receivable that pledged at period-end In RMB/CNY Item Amount pledged at period-end Bank acceptance bill 762,571,527.45 Total 762,571,527.45 (4) Notes endorsement or discount and undue on balance sheet date In RMB/CNY Item Amount derecognition at period-end Amount not derecognition at period-end Bank acceptance bill 359,389,642.56 110 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Trade acceptance bill 4,190,000.00 Total 363,579,642.56 (5) Notes transfer to account receivable due for failure implementation by drawer at period-end In RMB/CNY Item Amount transfer to account receivable at period-end Trade acceptance bill 6,800,000.00 Total 6,800,000.00 Other explanation The Trade acceptance bills that the company transferred to the accounts receivable due to the failure of the drawer to perform the agreement at the end of the period were the bills of the subsidiaries controlled by Baota Petrochemical Group Co., Ltd. and the bills accepted by Baota Petrochemical Group Finance Co., Ltd. (hereinafter referred to as “BD bills”); as of June 30, 2019, these bills had expired. (6) Note receivable actually written-off in the period Nil 4. Account receivable (1) Classification of account receivable In RMB/CNY Ending balance Opening balance Book balance Bad debt reserve Book balance Bad debt reserve Category Book Accrual Accrual Book value Amount Ratio Amount value Amount Ratio Amount ratio ratio Account receivable with bad debt 8,552,24 8,552,24 8,685,110 8,685,110 0.36% 100.00% 0.44% 100.00% provision accrual on 2.26 2.26 .25 .25 a single basis Including: Account receivable with single 6,800,00 6,800,00 7,000,000 7,000,000 significant amount 0.29% 100.00% 0.36% 100.00% 0.00 0.00 .00 .00 and withdrawal bad debt provision on 111 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 single basis Account receivable with single minor amount but with bad 1,752,24 1,752,24 1,685,110 1,685,110 0.07% 100.00% 0.08% 100.00% debts provision 2.26 2.26 .25 .25 accrued on a single basis Account receivable with bad debt 2,356,86 37,552,6 2,319,307 1,951,016 31,222,95 1,919,793,2 99.64% 1.59% 99.56% 1.60% provision accrual on 0,269.31 14.73 ,654.58 ,221.14 4.23 66.91 portfolio Including: Account receivable with bad debt 2,356,86 37,552,6 2,319,307 1,951,016 31,222,95 1,919,793,2 99.64% 1.59% 99.56% 1.60% provision accrual on 0,269.31 14.73 ,654.58 ,221.14 4.23 66.91 age analysis 2,365,41 46,104,8 2,319,307 1,959,701 39,908,06 1,919,793,2 Total 100.00% 1.95% 100.00% 2.04% 2,511.57 56.99 ,654.58 ,331.39 4.48 66.91 Bad debt provision accrual on single basis: RMB 6,800,000.00. In RMB/CNY Ending balance Name Book balance Bad debt reserve Accrual ratio Accrual causes Have difficulty in BD bills 6,800,000.00 6,800,000.00 100.00% collection Total 6,800,000.00 6,800,000.00 -- -- Bad debt provision accrual on single basis: RMB 1,752,242.26 In RMB/CNY Ending balance Name Book balance Bad debt reserve Accrual ratio Accrual causes Account receivable with single minor amount but with bad Have difficulty in 1,752,242.26 1,752,242.26 100.00% debts provision accrued on a collection single basis Total 1,752,242.26 1,752,242.26 -- -- Bad debt provision accrual on portfolio: RMB 37,552,614.73. In RMB/CNY 112 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Ending balance Name Book balance Bad debt reserve Accrual ratio Account receivable with bad debt provision accrual on 2,356,860,269.31 37,552,614.73 1.59% age analysis Total 2,356,860,269.31 37,552,614.73 -- Explanation on portfolio determines: Excluding the account receivable accrual impairment provision separately; based on actual loss ratio of the receivable groups that owes same or similar risk features, which has classify by age in previous years, determine accrual ratio for bad debt provision combine with real condition If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, please refer to the disclosure of other receivables to disclose related information about bad-debt provisions: □ Applicable √ Not applicable By account age In RMB/CNY Account age Ending balance Within one year(One year included) 2,277,983,177.64 Within 6 months 2,116,062,868.00 6 months to one year 161,920,309.64 1-2 years 69,703,171.66 2-3 years 2,923,284.26 Over 3 years 6,250,635.75 3-4 years 6,250,635.75 Total 2,356,860,269.31 (2) Bad debt provision accrual, collected or reversal in the period Bad debt provision accrual in the period: In RMB/CNY Amount changed in the period Category Opening balance Collected or Ending balance Accrual Written-off reversal Bad debt provision accrual on credit 39,908,064.48 6,607,638.33 403,280.82 7,565.00 46,104,856.99 risk portfolio Total 39,908,064.48 6,607,638.33 403,280.82 7,565.00 46,104,856.99 Including major amount bad debt provision that collected or reversal in the period: In RMB/CNY 113 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Enterprise Amount collected or reversal Collection by BD bills 200,000.00 Collection Total 200,000.00 -- (3) Account receivable actually written-off in the period In RMB/CNY Item Amount written-off Retail enterprise 7,565.00 Including major account receivable written-off : nil (4) Top 5 account receivables at ending balance by arrears party Total period-end balance of top five receivables by arrears party amounting to 1,245,808,296.79 Yuan, takes 52.67 percent of the total account receivable at period-end, bad debt provision accrual correspondingly at year-end amounting as 7,579,746.83 Yuan. (5) Account receivable derecognition due to financial assets transfer Nil (6) Assets and liabilities resulted by account receivable transfer and continues involvement Nil 5. Account paid in advance (1) By account age In RMB/CNY Ending balance Opening balance Account age Amount Ratio Amount Ratio Within one year 123,926,769.78 94.67% 89,076,980.53 94.11% 1-2 years 5,312,592.60 4.06% 4,536,408.47 4.79% 2-3 years 1,569,872.98 1.20% 980,958.32 1.04% Over 3 years 89,584.01 0.07% 57,083.99 0.06% Total 130,898,819.37 -- 94,651,431.31 -- Explanation on reasons of failure to settle on important account paid in advance with age over one year: Nil 114 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (2) Top 5 account paid in advance at ending balance by prepayment object Total period-end balance of top five account paid in advance by prepayment object amounted to42,001,171.79 Yuan, takes 32.09 percent of the total advance payment at period-end. 6. Other account receivable In RMB/CNY Item Ending balance Opening balance Interest receivable 674,104.16 1,842,437.50 Dividend receivable 536,162,445.67 Other account receivable 60,433,069.23 82,739,808.66 Total 597,269,619.06 84,582,246.16 (1) Interest receivable 1) Category of interest receivable In RMB/CNY Item Ending balance Opening balance Time deposit 674,104.16 1,842,437.50 Total 674,104.16 1,842,437.50 2) Significant overdue interest: nil 3) Accrual of bad debt provision □ Applicable √ Not applicable (2) Dividend receivable 1) Category of dividend receivable In RMB/CNY Item (or invested enterprise ) Ending balance Opening balance SDEC 610,417.20 Guolian Securities Co., Ltd. 903,640.00 Zhonglian Electronic 105,200,000.00 Bosch Automobile Diesel 429,448,388.47 Total 536,162,445.67 2) Important dividend receivable with account age over one year: nil 115 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 3) Accrual of bad debt provision □ Applicable √ Not applicable (3) Other account receivable 1) By nature In RMB/CNY Nature Ending book balance Opening book balance Intercourse funds receivable from units 46,492,901.74 15,328,121.55 Compensation for assets disposal 67,981,726.00 receivable Receivable from the tax refund for 11,515,433.66 withholding the B-share Cash deposit 3,076,126.84 3,206,825.88 Staff loans and petty cash 4,656,003.60 1,172,017.93 Other 184,793.26 509,873.93 Total 65,925,259.10 88,198,565.29 2) Accrual of bad debt provision In RMB/CNY Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt reserve Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on Jan. 1, 2019 2,683,204.00 2,775,552.63 5,458,756.63 Balance of Jan. 1, 2019 —— —— —— —— in the period Current accrual 34,961.84 34,961.84 Current reversal 1,528.60 1,528.60 Balance on Jun. 30, 2019 2,716,637.24 2,775,552.63 5,492,189.87 Change of book balance of loss provision with amount has major changes in the period □ Applicable √ Not applicable By account age In RMB/CNY Account age Ending balance Within one year(One year included) 60,446,202.47 Within 6 months 60,122,838.05 116 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 6 months to one year 323,364.42 1-2 years 21,454.00 2-3 years 3,400.00 Over 3 years 2,678,650.00 3-4 years 2,678,650.00 Total 63,149,706.47 3) Bad debt provision accrual, collected or reversal in the period Bad debt provision accrual in the period: In RMB/CNY Amount changed in the period Category Opening balance Collected or Ending balance Accrual reversal Account receivable with single significant amount 2,775,552.63 2,775,552.63 and withdrawal bad debt provision on single basis Account receivable with bad debt provision accrual 2,683,204.00 34,961.84 1,528.60 2,716,637.24 on portfolio Total 5,458,756.63 34,961.84 1,528.60 5,492,189.87 Including major amount with bad debt provision reverse or collected in the period: nil 4) Other account receivable actually written-off in the period: nil 5) Top 5 other receivables at ending balance by arrears party In RMB/CNY Ratio in total ending Ending balance Enterprise Nature Ending balance Account age balance of other of bad debt receivables reserve Troowin Power System 36.40% Intercourse funds of unit 24,000,000.00 Within 6 months Technology Co., Ltd. Protean Holdings Corp. Amount from equity 15.93% 10,499,081.51 Within 6 months (Note) sales Robert Bosch Company Intercourse funds of unit 7,600,000.00 Within 6 months 11.53% Ningbo Jiangbei High-Tech 2.68% Industry Park Development Performance bond 1,767,000.00 Over three years 1,767,000.00 Construction Co., Ltd. American HESS Company Intercourse funds of unit 1,514,671.20 个别认定 2.30% 1,514,671.20 Total -- 45,380,752.71 -- 68.84% 3,281,671.20 117 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 6) Account receivables related to Government grants: nil 7) Other receivable for termination of confirmation due to the transfer of financial assets: nil 8) The amount of assets and liabilities that are transferred other receivable and continued to be involved: nil Other explanation Note: In June 2019, Protean Holdings Corp. which was invested by the company was 100% acquired by Virtue Surge Limited, Virtue Surge Limited continues to exist after the merger, and Protean Holdings Corp. no longer exists. This acquisition invoked 5.1 “Drag-along right” in the fifth revision and the restatement of the shareholder agreement of Protean Holdings Corp., i.e. 5.1 (a) i. The most majority of shareholders agree with the shareholding ratio; ii. Oak Investment Partners XII LP ("Oak") with privilege and holding 64.77% of the issued shares agrees; iii. GSR Ventures ("GSR") with privilege and holding 9.58% of the issued shares agrees; iv. The majority of the board of directors of Protean Holdings Corp. agrees. In view of the fact that the majority shareholder of Protean Holdings Corp. exercised the “Drag-along right”, that is, the vast majority of Protean Holdings Corp.’s shareholders were in favor of the shareholding, and the Protean Holdings Corp. board of directors mostly agreed, which met the drag-along conditions, so Weifu High Tech must agree to sell its 9.61% stake in Protean Holdings Corp., and there were dozens of other shareholders who held the remaining 16.04% of the issued shares were dragged to sell their shares. After the sale, the company no longer holds a stake in Protean Holdings Corp. In this M&A and sale of equity transactions, the company is expected to obtain US$7.17 million in revenue, of which the expected down payment of US$5,640,153.79 has been received at the end of June, and the remaining US$1.53 million will be used as a reserve guarantee for the M&A and is expected to be received in 12 months. 7. Inventory Whether implemented the new revenue standards □Yes √No (1) Category In RMB/CNY Ending balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserve reserve Raw materials 383,335,648.45 64,071,932.72 319,263,715.73 405,113,183.37 71,085,820.65 334,027,362.72 Goods in process 177,818,860.49 13,699,553.98 164,119,306.51 182,564,277.52 13,682,081.67 168,882,195.85 Finished goods 1,077,721,703.57 133,968,453.82 943,753,249.75 1,080,800,727.38 145,181,571.36 935,619,156.02 Total 1,638,876,212.51 211,739,940.52 1,427,136,271.99 1,668,478,188.27 229,949,473.68 1,438,528,714.59 118 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (2) Inventory depreciation reserve In RMB/CNY Current increased Current decreased Item Opening balance Reversal or Ending balance Accrual Other Other write-off Raw materials 71,085,820.65 1,422,322.52 8,436,210.45 64,071,932.72 Goods in process 13,682,081.67 17,472.31 13,699,553.98 Finished goods 145,181,571.36 61,090.44 11,274,207.98 133,968,453.82 Total 229,949,473.68 1,500,885.27 19,710,418.43 211,739,940.52 (3) Explanation on capitalization of borrowing costs at ending balance of inventory Nil (4) Assets completed without settlement from construction contract at period-end Nil 8. Other current assets Whether implemented the new revenue standards □Yes √No In RMB/CNY Item Ending balance Opening balance Entrusted financial product Export tax refund receivable 5,764,074.36 7,848,937.72 Prepaid tax fees and VAT retained 52,783,100.03 47,808,273.37 Input tax to be deducted and certified 420,338.49 3,420,317.46 Other 587,339.98 1,173,368.28 Total 59,554,852.86 60,250,896.83 9. Long-term equity investment In RMB/CNY Current changes (+,-) Endin The invested Ending g Opening balance Ad Cap Investment Other Othe Cash dividend Provisi Ot entity balance balan dit ital gain/loss compr r or profit on for her ce of 119 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 ion red recognized under ehensi equit announced to impair impai al ucti equity ve y issued ment rment inv on incom chan provi est e ge sion me adjust nt ment I. Joint venture Wuxi Weifu 577,229,858.9 Environment 565,646,086.93 11,583,772.04 7 Catalyst Co.,Ltd. Wuxi Weifu Electric Drive 54,742,375.02 -1,176,749.59 53,565,625.43 Tech. Co., Ltd. 630,795,484.4 Subtotal 620,388,461.95 10,407,022.45 0 II. Associated enterprise Bosch Automobile 2,966,945,647 Diesel System 3,207,122,893.40 618,719,531.29 858,896,776.94 .75 Co., Ltd. Zhonglian Automobile 1,128,808,363 1,086,475,955.72 147,532,407.57 105,200,000.00 Electronic Co., .29 Ltd. Weifu Precision Machinery 55,310,157.90 4,661,420.22 59,971,578.12 Manufacturing Co., Ltd. Shinwell Automobile Tech. 7,476,477.77 -1,250,239.86 6,226,237.91 (Wuxi) Co., Ltd. 4,161,951,827 Subtotal 4,356,385,484.79 769,663,119.22 964,096,776.94 .07 4,792,747,311 Total 4,976,773,946.74 780,070,141.67 964,096,776.94 .47 10. Other equity instrument investment In RMB/CNY Item Ending balance Opening balance Beijing Zhike Industry Investment Holding Group Co., Ltd. 75,940,000.00 75,940,000.00 120 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Wuxi Xidong Science & Technology Industrial Park Co., Ltd 5,000,000.00 5,000,000.00 Wuxi Xichang Microchip Semi-Conductor 100,000,000.00 Protean Holdings Corp. 6,148,272.91 Total 180,940,000.00 87,088,272.91 11. Other non-current financial assets In RMB/CNY Item Ending balance Opening balance Tradable financial assets holding for over one year 368,800,000.00 Total 368,800,000.00 12. Investment real estate (1) Investment real estate measured by cost √ Applicable □ Not applicable In RMB/CNY Construction in Item House and Building Land use right Total progress I. Original book value 1.Opening balance 61,677,335.83 61,677,335.83 2.Current increased (1) Outsourcing (2) Inventory\fixed assets\construction in process transfer-in (3) Increased by combination 3.Current decreased (1) Disposal (2) Other transfer-out 4.Ending balance 61,677,335.83 61,677,335.83 II. Accumulated depreciation and accumulated amortization 1.Opening balance 39,771,201.31 39,771,201.31 2.Current increased 774,359.33 774,359.33 (1) Accrual or amortization 774,359.33 774,359.33 121 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 3.Current decreased (1) Disposal (2) Other transfer-out 4.Ending balance 40,545,560.64 40,545,560.64 III. Depreciation reserves 1.Opening balance 2.Current increased (1) Accrual 3. Current decreased (1) Disposal (2) Other transfer-out 4.Ending balance IV. Book value 1. Ending book value 21,131,775.19 21,131,775.19 2. Opening book value 21,906,134.52 21,906,134.52 (2) Investment real estate measured at fair value □ Applicable √ Not applicable (3) Investment real estate without property certification held Nil 13. Fixed assets In RMB/CNY Item Ending balance Opening balance Fixed assets 2,680,884,221.89 2,707,374,678.61 Total 2,680,884,221.89 2,707,374,678.61 (1) Fixed assets In RMB/CNY Machinery Transportation Electronic and other Item House and Building Total equipment equipment equipment I. Original book value: 122 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 1.Opening balance 1,552,720,830.68 2,491,008,841.08 35,760,995.37 506,932,413.54 4,586,423,080.67 2.Current 50,785,697.90 67,996,785.02 27,287,346.56 146,069,829.48 increased (1) Purchase 27,350.00 2,194,645.89 1,218,137.82 3,440,133.71 (2) Construction in 50,758,347.90 38,117,012.08 25,682,906.08 114,558,266.06 progress transfer-in (3) Increased by 27,685,127.05 386,302.66 28,071,429.71 combination 3.Current 105,775.86 6,974,597.84 573,529.92 4,326,432.35 11,980,335.97 decreased (1) Disposal or 6,974,597.84 573,529.92 4,326,432.35 11,874,560.11 scrapping (2) Construction in progress transfer to 105,775.86 105,775.86 fixed assets 4.Ending balance 1,603,400,752.72 2,552,031,028.26 35,187,465.45 529,893,327.75 4,720,512,574.18 II. Accumulated depreciation 1.Opening balance 329,964,732.08 1,229,552,990.27 24,745,652.33 240,562,371.27 1,824,825,745.95 2.Current 22,965,941.24 107,544,181.46 1,368,053.76 38,029,254.26 169,907,430.72 increased (1) Accrual 22,965,941.24 87,891,862.13 1,368,053.76 37,680,059.40 149,905,916.53 (2) Increased by 19,652,319.33 349,194.86 20,001,514.19 combination 3.Current 83,749.27 5,091,489.41 475,772.49 2,802,789.50 8,453,800.67 decreased (1) Disposal or 83,749.27 5,091,489.41 475,772.49 2,802,789.50 8,453,800.67 scrapping 4.Ending balance 352,846,924.05 1,332,005,682.32 25,637,933.60 275,788,836.03 1,986,279,376.00 III. Depreciation reserves 1.Opening balance 46,869,092.62 73,319.90 7,280,243.59 54,222,656.11 2.Current increased (1) Accrual 3.Current 859,429.88 14,249.94 873,679.82 decreased (1) Disposal or 859,429.88 14,249.94 873,679.82 123 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 scrapping 4.Ending balance 46,009,662.74 73,319.90 7,265,993.65 53,348,976.29 IV. Book value 1. Ending book 1,250,553,828.67 1,174,015,683.20 9,476,211.95 246,838,498.07 2,680,884,221.89 value 2. Opening book 1,222,756,098.60 1,214,586,758.19 10,942,023.14 259,089,798.68 2,707,374,678.61 value (2) Temporarily idle fixed assets Nil (3) Fixed assets acquired by financing lease Nil (4) Fixed assets acquired by operating lease Nil (5) Fixed assets without property certification held In RMB/CNY Item Book value Reasons for without the property certification Boiler room and guard house of Weifu Jinning 2,640,467.55 Still in process of relevant property procedures Plant and office building of Weifu Chang’an 42,607,819.23 Still in process of relevant property procedures (6) Disposal of fixed assets Nil 14. Construction in progress In RMB/CNY Item Ending balance Opening balance Construction in progress 259,557,105.61 166,414,542.18 Total 259,557,105.61 166,414,542.18 (1) Construction in progress In RMB/CNY 124 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Weifu Tianli Technical 4,285,789.25 4,285,789.25 3,214,458.65 3,214,458.65 Transformation Project echnical Transformation 125,369,185.24 1,470,033.00 123,899,152.24 62,131,476.77 1,470,033.00 60,661,443.77 Project of parent company Technical transformation 33,251,718.48 33,251,718.48 64,861,621.60 64,861,621.60 of Weifu Autocam Other 100,216,788.26 2,096,342.62 98,120,445.64 39,773,360.78 2,096,342.62 37,677,018.16 Total 263,123,481.23 3,566,375.62 259,557,105.61 169,980,917.80 3,566,375.62 166,414,542.18 (2) Changes of major construction in progress in the period In RMB/CNY includin Accum Interes Proporti g: ulated t B Other on of Pr interest Amount amount capital ud Opening Current decreased project og capitali Source Item transfer-in Ending balance of ization ge balance increased in the investme res zed offunds fixed assets interest rate of t Period nt in s amount capitali the budget of the zation year year Weifu Tianli Technica 151,724.1 l 3,214,458.65 3,132,210.40 1,909,155.66 4,285,789.25 Other 4 Transfor mation Project Technica l Transfor 62,131,476.7 106,018,046. 42,780,337.7 125,369,185.24 Other mation 7 19 2 Project of parent company Technica 64,861,621.6 23,970,066.5 54,952,720.4 627,249.2 l 33,251,718.48 Other 0 9 6 5 transfor 125 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 mation of Weifu Autocam 130,207,557. 133,120,323. 99,642,213.8 778,973.3 Total 162,906,692.97 -- -- -- 02 18 4 9 (3) The provision for impairment of construction in progress Nil (4) Engineering material Nil 15. Intangible assets (1) Intangible assets In RMB/CNY Non-patent Trademark and Computer Item Land use right Patent Total technology trademark license software I. Original book value 1.Opening balance 381,203,520.00 3,539,793.05 41,597,126.47 52,996,879.28 479,337,318.80 2.Current increased 317,685.92 3,394,263.76 3,711,949.68 (1) Purchase 2,756,543.81 2,756,543.81 (2) Internal R&D (3) Increased by 317,685.92 637,719.95 955,405.87 combination 3.Current decreased (1) Disposal 4.Ending balance 381,203,520.00 3,857,478.97 41,597,126.47 56,391,143.04 483,049,268.48 II. Accumulated amortization 1.Opening balance 78,623,510.56 2,625,346.70 9,709,000.00 46,839,738.79 137,797,596.05 2.Current increased 4,176,430.34 178,718.30 3,839,922.87 8,195,071.51 (1) Accrual 4,176,430.34 176,988.96 3,416,558.52 7,769,977.82 (2) Increased by 1,729.34 423,364.35 425,093.69 combination 3.Current decreased 126 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (1) Disposal 4.Ending balance 82,799,940.90 2,804,065.00 9,709,000.00 50,679,661.66 145,992,667.56 III. Depreciation reserves 1.Opening balance 16,646,900.00 16,646,900.00 2.Current increased (1) Accrual 3.Current decreased (1) Disposal 4.Ending balance 16,646,900.00 16,646,900.00 IV. Book value 1. Ending book value 298,403,579.10 1,053,413.97 15,241,226.47 5,711,481.38 320,409,700.92 2. Opening book value 302,580,009.44 914,446.35 15,241,226.47 6,157,140.49 324,892,822.75 (2) Land use right without property certification held Nil 16. Goodwill (1) Original book value of goodwill In RMB/CNY The invested entity or matters forming Opening balance Current increased Current decreased Ending balance goodwill Weifu Tianli 1,784,086.79 1,784,086.79 IRD Fuel Cells A/S 53,807,260.21 53,807,260.21 Total 1,784,086.79 53,807,260.21 55,591,347.00 (2) Impairment provision for goodwill Nil Relevant information about the assets group or portfolio goodwill included ①Goodwill of the Weifu Tianli: the Company controlling and combine Weifu Tianli by increasing the capital, the goodwill is the number that combination cost greater than the fair value of identical net assets of Weifu Tianli. At the end of the period, the company conducted an impairment test on goodwill to estimate the present value of future cash flows and the recoverable amount of the goodwill-related asset group, that is to estimate the present value of future cash flow based on the management's financial budget for the next five years and the discount rate of 127 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 12.21%, the cash flow of the year after the five years of financial budget has remained stable. The asset group identified during the goodwill impairment test did not change. The key parameters determined by the goodwill impairment test are as follows: The current value of the expected future cash flow of the asset group related to goodwill is measured by using 20%~23% of gross profit margin and 9%~15% of the operating income growth rate in the forecast period as key parameters. The management determines these parameters based on historical conditions prior to the forecast period and forecasts of market development. After the above tests, the company's goodwill does not need to make provisions for impairment. ②IRD Fuel Cells A/S Goodwill: In 2019, the company established SPV (a wholly-owned subsidiary) in Denmark to acquire a 66% stake in Danish IRD Fuel Cells A/S (hereinafter referred to as "IRD") held by FCCTApS., which is equivalent to a total of 7.26 million euros, and CIRO's valuation is 11 million euros; goodwill is the part of the acquisition cost greater than the fair value of the IRD net identifiable assets. Instructions for goodwill impairments test process and key parameters (such as the forecast period growth rate, stable period growth rate, profit rate, discount rate, and forecast period when estimating the present value of the future cash flow), and the method of confirming the impairment loss of goodwill: Nil 17. Long-term deferred expenses In RMB/CNY Item Opening balance Current increased Amortized in the Period Other decrease Ending balance Remodeling costs etc. 16,637,652.31 3,766,419.71 1,498,822.02 18,905,250.00 Total 16,637,652.31 3,766,419.71 1,498,822.02 18,905,250.00 18. Deferred income tax assets/Deferred income tax liabilities (1) Deferred income tax assets that are not offset In RMB/CNY Ending balance Opening balance Deductible Item Deductible temporary Deferred income Deferred income temporary difference tax assets tax assets difference Bad debt reserve 50,810,260.67 7,783,655.00 44,576,998.51 6,770,470.23 Inventory depreciation reserve 191,893,925.45 30,139,509.60 210,088,809.57 32,942,217.43 Impairment provision for fixed assets 19,801,699.55 3,186,449.03 20,661,129.43 3,315,363.51 Impairment provision for construction in progress 3,566,375.62 534,956.34 3,566,375.62 534,956.34 Impairment provision for intangible assets 16,646,900.00 2,497,035.00 16,646,900.00 2,497,035.00 128 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Change of fair value of available-for-sale 23,305,227.00 3,495,784.05 financial assets Impairment provision for other equity instrument 10,000,000.00 1,500,000.00 investment Depreciation reserves of available-for-sale 155,994,927.09 23,399,239.06 financial asset Deferred income 410,876,651.99 61,631,497.80 422,215,782.35 63,332,367.36 Internal un-realized profit 61,587,106.96 9,238,066.05 33,204,053.14 6,439,903.29 Payable salary, accrued expenses etc. 602,725,422.49 95,239,575.84 539,804,494.87 85,801,436.71 Depreciation assets, amortization difference 29,138,524.33 4,748,000.87 53,624,344.54 8,439,877.52 Deductible loss of subsidiary 9,677,975.44 2,419,493.86 9,677,975.44 2,419,493.86 Change of fair value of derivative financial 490,329.13 73,549.37 liability Total 1,406,724,842.50 218,918,239.39 1,533,857,346.69 239,461,693.73 (2) Deferred income tax liabilities that are not offset In RMB/CNY Ending balance Opening balance Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax differences liabilities differences liabilities Asset evaluation increment for combination not under the same 12,381,519.47 1,857,227.92 12,751,629.44 1,912,744.40 control Change of fair value of other 30,195,948.00 4,529,392.20 creditors’ investment Change of fair value of other equity 31,763,694.33 4,764,554.15 31,763,694.33 4,764,554.15 instrument investment Total 74,341,161.80 11,151,174.27 44,515,323.77 6,677,298.55 (3) Deferred income tax assets and deferred income tax liabilities listed after off-set In RMB/CNY 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 -4,764,554.15 214,153,685.24 -4,764,554.15 234,697,139.58 129 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 assets Deferred income tax -4,764,554.15 6,386,620.12 -4,764,554.15 1,912,744.40 liabilities (4) Details of unrecognized deferred income tax assets In RMB/CNY Item Ending balance Opening balance Bad debt reserve 786,786.19 789,822.60 Inventory depreciation reserve 19,846,015.07 19,860,664.11 Loss from subsidiary 134,492,349.34 139,281,223.32 Impairment provision for fixed assets 33,547,276.74 33,561,526.68 Impairment provision for other equity 48,633,106.95 48,633,106.95 instrument investment Total 237,305,534.29 242,126,343.66 (5) Deductible losses of un-recognized deferred income tax assets expired on the followed year In RMB/CNY Maturity year Ending amount Opening amount Note 2019 13,864,159.93 25,671,694.55 Subsidiaries have operating losses 2020 44,795,747.87 44,795,747.87 Subsidiaries have operating losses 2021 46,080,956.48 46,080,956.48 Subsidiaries have operating losses 2022 10,503,882.86 10,503,882.86 Subsidiaries have operating losses 2023 4,188,264.45 12,228,941.56 Subsidiaries have operating losses 2024 3,249,606.38 Subsidiaries have operating losses Total 122,682,617.97 139,281,223.32 -- 19. Other non-current assets Whether implemented the new revenue standards □Yes √No In RMB/CNY Item Ending balance Opening balance Engineering equipment paid in advance 295,639,334.53 251,462,676.27 Total 295,639,334.53 251,462,676.27 130 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 20. Short-term borrowings (1) Category of short-term borrowings In RMB/CNY Item Ending balance Opening balance Debt of honor 321,055,399.28 298,928,213.94 Total 321,055,399.28 298,928,213.94 Explanation on category of short-term borrowings: nil (2) Overdue short-term loans without payment Nil 21. Derivative financial liability In RMB/CNY Item Ending balance Opening balance Derivative financial liability 490,329.13 Total 490,329.13 22. Note payable In RMB/CNY Category Ending balance Opening balance Bank acceptance bill 1,591,019,357.36 1,018,367,533.74 Total 1,591,019,357.36 1,018,367,533.74 Notes expired at year-end without paid was 0.00 Yuan. 23. Account payable (1) Account payable In RMB/CNY Item Ending balance Opening balance Within one year 2,349,278,569.14 1,957,672,043.76 1-2 years 96,290,673.62 10,208,129.49 2-3 years 10,696,107.46 7,830,950.08 131 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Over three years 36,318,708.17 71,625,711.33 Total 2,492,584,058.39 2,047,336,834.66 (2) Important account payable with account age over one year Nil 24. Accounts received in advance Whether implemented the new revenue standards □Yes √No (1) Accounts received in advance In RMB/CNY Item Ending balance Opening balance Within one year 51,239,061.80 33,337,169.03 1-2 years 935,180.49 6,544,805.44 2-3 years 64,130.40 425,759.63 Over three years 799,491.98 1,022,123.70 Total 53,037,864.67 41,329,857.80 (2) Important account received in advance with account age over one year Nil (3) Projects that settle without completed from construction contract at period-end Nil 25. Employee compensation payable (1) Employee compensation payable In RMB/CNY Item Opening balance Current increased Current decreased Ending balance I. Short-term compensation 167,414,050.82 531,926,552.27 549,654,450.68 149,686,152.41 II. Post-employment welfare- defined 32,505,677.48 72,803,533.28 84,157,402.12 21,151,808.64 contribution plans 132 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 III. Dismissed welfare 2,601,561.75 515,426.00 1,863,263.01 1,253,724.74 IV. Other welfare due within one 90,050,000.00 44,085,521.00 45,964,479.00 year V. Other short-term welfare-Housing subsidies, 19,541,888.19 1,996,132.75 17,545,755.44 employee benefits and welfare funds Total 312,113,178.24 605,245,511.55 681,756,769.56 235,601,920.23 (2) Short-term compensation In RMB/CNY Item Opening balance Current increased Current decreased Ending balance 1. Wages,bonuses,allowances and subsidies 148,435,979.41 428,283,206.11 444,745,192.60 131,973,992.92 2. Welfare for workers and staff 32,428,482.17 32,428,482.17 3. Social insurance 9,451,627.58 30,400,781.73 33,141,499.65 6,710,909.66 Including: Medical insurance 7,681,163.73 25,519,780.88 27,920,811.47 5,280,133.14 Work injury insurance 997,896.55 2,276,917.80 2,373,914.26 900,900.09 Maternity insurance 772,567.30 2,604,083.05 2,846,773.92 529,876.43 4. Housing accumulation fund 658,798.00 33,775,081.00 33,808,788.00 625,091.00 5. Labor union expenditure and 8,867,645.83 7,039,001.26 5,530,488.26 10,376,158.83 personnel education expense Total 167,414,050.82 531,926,552.27 549,654,450.68 149,686,152.41 (3) Defined contribution plans In RMB/CNY Item Opening balance Current increased Current decreased Ending balance 1. Basic endowment insurance 17,945,666.32 59,741,208.52 65,508,569.43 12,178,305.41 2. Unemployment insurance 581,515.16 1,649,534.04 1,792,887.85 438,161.35 3. Enterprise annuity 13,978,496.00 11,412,790.72 16,855,944.84 8,535,341.88 Total 32,505,677.48 72,803,533.28 84,157,402.12 21,151,808.64 26. Taxes payable In RMB/CNY 133 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Item Ending balance Opening balance VAT 11,847,039.81 15,332,751.18 Corporation income tax 53,460,184.87 48,855,330.99 Individual income tax 413,036.74 1,861,196.92 City maintaining & construction tax 1,053,237.23 884,819.63 Educational surtax 752,312.33 543,438.10 Other (including stamp tax and local funds) 5,924,885.67 6,794,077.10 Total 73,450,696.65 74,271,613.92 27. Other accounts payable In RMB/CNY Item Ending balance Opening balance Interest payable 752,404.25 517,469.08 Dividend payable 369,352,725.60 Other accounts payable 60,134,191.62 63,931,254.44 Total 430,239,321.47 64,448,723.52 (1) Interest payable In RMB/CNY Item Ending balance Opening balance Long-term borrowing interest for installment 90,312.50 90,312.50 Interest payable for short-term loans 662,091.75 420,478.58 Other 6,678.00 Total 752,404.25 517,469.08 Major overdue interest: nil (2) Dividend payable In RMB/CNY Item Ending balance Opening balance Ordinary stock dividends 369,352,725.60 Total 369,352,725.60 Other explanation, including important dividend payable over one year without payment, disclose reasons for un-paid: Nil 134 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (3) Other accounts payable 1) Other accounts payable by nature In RMB/CNY Item Ending balance Opening balance Deposit and margin 23,589,117.50 18,680,843.00 Social insurance and reserves funds that withholding 7,786,440.63 7,682,496.48 Intercourse funds of unit 25,512,145.98 30,982,145.98 Other 3,246,487.51 6,585,768.98 Total 60,134,191.62 63,931,254.44 2) Significant other payable with over one year age In RMB/CNY Item Ending balance Reasons for non-repayment or carry-over Nanjing Jidian Industrial Group Co., Ltd. 4,500,000.00 Intercourse funds Total 4,500,000.00 -- 28. Non-current liabilities due within one year In RMB/CNY Item Ending balance Opening balance Long-term loans due within one year 15,000,000.00 15,000,000.00 Total 15,000,000.00 15,000,000.00 29. Long-term loans (1) Category of long-term loans In RMB/CNY Item Ending balance Opening balance Guaranteed loan 22,500,000.00 30,000,000.00 Total 22,500,000.00 30,000,000.00 30. Long-term account payable In RMB/CNY Item Ending balance Opening balance Long-term account payable 16,818,181.00 17,157,272.00 135 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Special accounts payable 18,265,082.11 18,265,082.11 Total 35,083,263.11 35,422,354.11 (1) Long-term account payable by nature In RMB/CNY Item Ending balance Opening balance Hi-tech Branch of Nanjing Finance Bureau(note①) 1,140,000.00 1,140,000.00 Hi-tech Branch of Nanjing Finance Bureau(note②) 1,250,000.00 1,250,000.00 Hi-tech Branch of Nanjing Finance Bureau(note③) 1,230,000.00 1,230,000.00 Loan transferred from treasury bond (note④) 678,181.00 1,017,272.00 Hi-tech Branch of Nanjing Finance Bureau(note⑤) 2,750,000.00 2,750,000.00 Hi-tech Branch of Nanjing Finance Bureau(note⑥) 1,030,000.00 1,030,000.00 Hi-tech Branch of Nanjing Finance Bureau(note⑦) 960,000.00 960,000.00 Hi-tech Branch of Nanjing Finance Bureau(note⑧) 5,040,000.00 5,040,000.00 Hi-tech Branch of Nanjing Finance Bureau(note⑨) 2,740,000.00 2,740,000.00 Total 16,818,181.00 17,157,272.00 Other explanation note①:To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, the term is from 20 October 2005 to 20 October 2020. Provided that the operation period in the zone is less than 15 years, financial supporting capital will be reimbursed. note②:To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, the term is from 20 July 2006 to 20 July 2021. Provided that the operation period in the zone is less than 15 years, financial supporting capital will be reimbursed. note③:To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, the term is from 17 September 2007 to 17 September 2022. Provided that the operation period in the zone is less than 15 years, financial supporting capital will be reimbursed. note④:Loan transferred from treasury bond: Weifu Jinning received RMB1.87 million Yuan of special funds from budget of the central government, and RMB1.73 million Yuan of special funds from budget of the local government. The non-operating income transferred in was 1.87 million Yuan in 2011 which was confirmed not to return, if the Company pays back special funds of 3.73 million Yuan to the local government in 11 years since 2012, then the Company needs to repay the principal of 339,091.00 Yuan each year. note⑤:To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, 136 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 the term is from 10 November 2008 to 10 November 2023. Provided that the operation period in the zone is less than 15 years, financial supporting capital will be reimbursed. note⑥:To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, the term is from 27 October 2009 to 27 October 2024. Provided that the operation period in the zone is less than 15 years, financial supporting capital will be reimbursed. note⑦:To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, the term is from 27 December 2010 to 27 December 2025. Provided that the operation period in the zone is less than 15 years, financial supporting capital will be reimbursed. note⑧:To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, the term is from 28 December 2011 to 28 December 2026. Provided that the operation period in the zone is less than 15 years, financial supporting capital will be reimbursed. note⑨:To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone, financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use, the term is from 18 December 2013 to 18 December 2028. Provided that the operation period in the zone is less than 15 years, financial supporting capital will be reimbursed. (2) Special accounts payable In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Cause Removal compensation of 18,265,082.11 18,265,082.11 subsidiary Weifu Jinning Total 18,265,082.11 18,265,082.11 -- Other explanation In line with regulation of the house acquisition decision of People’s government of Xuanwu District, Nanjing City, Ning Xuan Fu Zheng Zi (2012) No.001, part of the lands and property of Weifu Jingning needs expropriation in order to carry out the comprehensively improvement of Ming Great Wall. According to the house expropriation and compensation agreement in state-owned lands signed between Weifu Jinning and House Expropriation Management Office of Xuanwu District, Nanjing City, RMB 19.7067 million in total are compensate, including operation losses from lessee RMB 1.4416 million in total. The above compensation was received in last period and is making up for the losses from lessee, and the above lands and property have not been collected up to 30 June 2019. 31. Long-term employee compensation payable (1) Long-term employee compensation payable In RMB/CNY 137 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Item Ending balance Opening balance II. Dismiss welfare 10,716,412.43 10,716,412.43 III. Other long-term welfare 63,962,762.93 63,962,762.93 Total 74,679,175.36 74,679,175.36 (2) Change of defined benefit plans Nil 32. Deferred income In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Cause Government grants 425,769,854.13 2,428,000.00 12,779,779.24 415,418,074.89 Financial allocation received Total 425,769,854.13 2,428,000.00 12,779,779.24 415,418,074.89 -- Item with government grants involved: In RMB/CNY Amount Amount Cost Assets New grants reckoned in reckoned into reductio Other Liability Opening balance Ending balance related/Incom in the Period non-operatio other income n in the changes e related n revenue in the period period Industrialization project for injection VE pump system with electronically 2,884,001.16 2,884,001.16 Assets related controlled high pressure for less-emission diesel used Appropriation on reforming of production line technology and R&D ability of 7,100,000.00 7,100,000.00 Assets related common rail system for diesel by distributive high-voltage Fund of industry 60,400,000.00 60,400,000.00 Income 138 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 upgrade(2012) related Fund of industry Income 60,520,000.00 60,520,000.00 upgrade(2013) related Appropriation on central basic 2,142,857.16 2,142,857.16 Assets related construction investment R&D and industrialization of the high pressure variable pump of the 8,413,809.44 8,413,809.44 Assets related common rail system of diesel engine for automobile Research institute of motor vehicle exhaust 2,472,471.21 2,472,471.21 Assets related aftertreatment technology Fund of industry Income 36,831,000.00 36,831,000.00 upgrade(2014) related New-built assets compensation 11,339,130.3 147,575,675.52 136,236,545.16 Assets related after the removal 6 of parent company Fund of industry Income 40,000,000.00 40,000,000.00 upgrade(2016) related Guiding capital for the technical reform from State 9,740,000.00 9,740,000.00 Assets related Hi-Tech Technical Commission Implementation of the variable cross-section 10,908,721.03 10,908,721.03 Assets related turbocharger for diesel engine Demonstration 1,450,030.10 1,450,030.10 Assets related project for 139 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 intelligent manufacturing Other 35,331,288.51 2,428,000.00 1,440,648.88 36,318,639.63 Assets related 12,779,779.2 Total 425,769,854.13 2,428,000.00 415,418,074.89 4 Other explanation (1) Appropriation on industrialization project of electrical control and high voltage jet VE system of low emissions diesel: in September 2009, Weifu Jinning signed “Project Contract of Technology Outcome Transferring Special Capital in Jiangsu Province” with Nanjing Technical Bureau, according to which Weifu Jinning received appropriation RMB 6.35 million in 2009, RMB 4.775 million received in 2010 and RMB 0.875 million received in 2011. According to the contract, the attendance date of this project was: from October of 2009 to March of 2012. This contract agreed 62% of newly increased investment in project would be spent in fixed assets investment which are belongs to the government grand with assets/income concerned. In 2013, accepted by the science & technology agency of Jiangsu Province, and RMB 4,789,997.04 with income related was reckoned into current operation revenue directly; the RMB 7,210,002.96 with assets related was amortized during the predicted service period of the assets, and RMB 721,000.30 amortized in the Period. (2) The appropriation for research and development ability of distributive high-pressure common rail system for diesel engine use and production line technological transformation project: according to XCJ No. [2010] 59, the Company has received special funds of 7.1 million Yuan appropriated by Finance Bureau of Wuxi New District in 2011 and used for the Company’s research and development ability of distributive high-pressure common rail system for diesel engine use and production line technological transformation project; this appropriation belongs to government subsidies related to assets, and will be amortized according to the depreciation process of the underlying assets when the project is completed. (3) Industry upgrading funds (2012): In accordance with the document Xi Xin Guanjing Fa [2012] No.216 and Document Xi Xin Guancai Fa [2012] No. 85, the Company received funds of 60.4 million Yuan appropriated for industry upgrading this year. (4) Industry upgrading funds (2013): In accordance with the document Xi Xin Guan Jing Fa [2013] No.379, Xi Xin Guan Jing Fa [2013] No.455, Xi Xin Guan Cai Fa [2013] No.128 and Xi Xin Guan Cai Fa [2013] No.153, the Company received funds of 60.52 million Yuan appropriated for industry upgrading in 2013. (5) Appropriation for investment of capital construction from the central government: In accordance with the document Xi Caijian [2012] No.43, the Company received appropriation of 5 million Yuan for investment of capital construction from the central government in 2012. The appropriation belongs to the government grants with assets related and will amortized according to relevant assets depreciation. 140 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (6) R&D and industrialization of the high pressure variable pump of the common rail system of diesel engine for automobile: the Company received appropriated for the project in 2013 with 8.05 million Yuan in line with documents of Xi Ke Ji [2013] No.186, Xi Ke Ji [2013] No.208, Xi Cai Gong Mao [2013] No.104, Xi Cai Gong Mao [2013] No.138, Xi Ke Ji [2014] No.125, Xi Cai Gong Mao [2014] No.58, Xi Ke Ji [2014] No. 246 and Xi Cai Gong Mao [2014] No.162. Received RMB 3 million in 2014 and RMB 0.45 million in 2015; and belongs to government grant with assets concerned, and shall be amortized according to the depreciation process. (7) Research institute of motor vehicle exhaust after-treatment technology: in 2012, the subsidiary Weifu Leader has applied for equipment purchase assisting funds to Wuxi Huishan Science and Technology Bureau and Wuxi Science and Technology Bureau for the vehicle exhaust after-treatment technology research institute project. This declaration has been approved by Wuxi Huishan Science and Technology Bureau and Wuxi Science and Technology Bureau in 2012, and the company has received appropriation of 2.4 million Yuan in 2012, and received appropriation of 1.6 million Yuan in 2013. This appropriation belongs to government subsidies related to assets and will be amortized according to the depreciation process. (8) Fund of industry upgrade(2014) : In accordance with the document Xi Xin Guan Jing Fa [2014] No.427 and Xi Xin Guan Cai Fa [2014] No.143, the Company received funds of 36.831 million Yuan appropriated for industry upgrading in 2014. (9) New-built assets compensation after the removal of parent company: policy relocation compensation received by the Company, and will be amortized according to the depreciation of new-built assets, amount of 11,339,130.36 Yuan amortize in the year. (10) Fund of industry upgrade(2016): In accordance with the document Xi Xin Guan Jing Fa [2016] No.585 and Xi Xin Fa [2016] No.70, the Company received funds of 40 million Yuan appropriated for industry upgrading in 2016. (11) Guiding capital for the technical reform from State Hi-Tech Technical Commission: In accordance with the document Xi Jing Xin ZH [2016] No.9 and Xi Cai GM [2016] No.56, the Company received a 9.74 million Yuan for the guiding capital of technical reform (1st batch) from Wuxi for year of 2016, which included in the government subsidy with assets-concerned, and will amortized according to the depreciation process after acceptance (12) Implementation of the variable cross-section turbocharger for diesel engine: In accordance with the document YCZ Fa[2016] NO.623 and “Strong Industrial Base Project Contract for year of 2016”, subsidiary Weifu Tianli received a specific subsidy of 16.97 million Yuan (760,000 Yuan received in the period), the fund supporting strong industrial base project (made-in-China 2025) of central industrial transformation and upgrading 2016 from Ministry of Industry and Information Technology; and belongs to government grant with assets concerned, and shall be amortized according to the depreciation process. 141 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (13) Demonstration project for intelligent manufacturing: under the Notice Relating to Selection of the Intelligent Manufacturing Model Project in Huishan District in 2016 (HJXF[2016]No.36), a fiscal subsidy of 3,000,000 Yuan was granted by relevant government authority in Huishan district to our subsidiary Weifu Leader in 2017 to be utilized for transformation and upgrade of Weifu Leader’s intelligent manufacturing facilities. This subsidy belongs to government grant related to assets which shall be amortized based on the depreciation progress of the assets. 33. Share capital In RMB/CNY Change during the year(+,-) Opening balance New shares Shares transferred Ending balance Bonus share Other Subtotal issued from capital reserve Total shares 1,008,950,570.00 1,008,950,570.00 34. Capital reserve In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Capital premium(Share capital premium) 3,370,828,806.22 3,370,828,806.22 Other capital reserve 45,193,988.92 45,193,988.92 Total 3,416,022,795.14 3,416,022,795.14 Other explanation, including changes in the period and reasons for changes: nil 35. Other comprehensive income In RMB/CNY Current period Less: Less: written in written in other other Openi comprehen comprehe Account Less : Belong to ng sive nsive Belong to Ending Item before income minority balanc income in income in parent company balance income tax tax shareholders e previous previous after tax in the year expense after tax period and period and carried carried forward to forward to gains and retained 142 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 losses in earnings in current current period period II. Other comprehensive income items which will be reclassified subsequently 271,537.20 261,591.54 9,945.66 261,591.54 to profit or loss Translation reserve 271,537.20 261,591.54 9,945.66 261,591.54 Total other comprehensive income 271,537.20 261,591.54 9,945.66 261,591.54 36. Reasonable reserve In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Safety production costs 1,618,490.50 9,658,567.54 8,741,397.35 2,535,660.69 Total 1,618,490.50 9,658,567.54 8,741,397.35 2,535,660.69 37. Surplus reserve In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Statutory surplus reserves 510,100,496.00 510,100,496.00 Total 510,100,496.00 510,100,496.00 38. Retained profit In RMB/CNY Item Current period Last period Retained profits at the end of last period before adjustment 10,996,945,870.13 9,811,609,138.92 Total retained profit at beginning of the adjustment (+ for increased, -19,809,442.95 -for decreased) Retained profits at the beginning of the period after adjustment 10,977,136,427.18 9,811,609,138.92 Add: The net profits belong to owners of patent company of this period 1,256,661,577.09 2,396,077,415.21 Common dividend payable 1,210,740,684.00 1,210,740,684.00 Impact earnings from other equity instrument investment disposal 36,147,694.44 Retained profit at period-end 11,059,205,014.71 10,996,945,870.13 Details about adjusting the retained profits at the beginning of the period: 1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulations affect the retained profits at the beginning of the period amounting to 0 Yuan. 2) The changes in accounting policies affect the retained profits at the beginning of the period amounting to 19,809,442.95 Yuan. 143 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 3) The major accounting error correction affects the retained profits at the beginning of the period amounting to 0 Yuan 4) Merge scope changes caused by the same control affect the retained profits at the beginning of the period amounting to 0 Yuan. 5) Other adjustments affect the retained profits at the beginning of the period amounting to 0 Yuan 39.Operating income and cost In RMB/CNY Current period Last Period Item Income Cost Income Cost Main operating 4,133,178,892.36 3,179,484,258.13 4,725,759,054.05 3,682,028,566.53 Other business 270,265,453.69 225,902,246.31 235,042,836.94 207,561,723.16 Total 4,403,444,346.05 3,405,386,504.44 4,960,801,890.99 3,889,590,289.69 Whether implemented the new revenue standards □Yes √No 40. Operating tax and extras In RMB/CNY Item Current period Last Period City maintaining & construction tax 12,840,319.07 15,131,214.76 Educational surtax 9,260,002.10 10,807,786.47 Property tax 7,976,886.64 7,130,285.13 Land use tax 3,000,765.60 3,243,530.28 Vehicle use tax 5,540.64 24,297.00 Stamp duty 1,349,389.57 1,578,877.86 Other taxes 101,668.04 84,360.90 Total 34,534,571.66 38,000,352.40 41. Sales expenses In RMB/CNY Item Current period Last Period Salary and fringe benefit 26,545,495.48 23,852,704.11 Consumption of office materials and business travel charge 5,902,212.14 5,767,944.92 Transportation charge 13,044,708.75 19,146,343.03 Warehouse charge 2,516,917.39 3,241,966.63 Three-guarantee fee 39,932,538.62 40,015,843.08 144 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Business entertainment fee 9,328,770.85 8,251,206.32 Other 7,000,004.17 6,071,551.76 Total 104,270,647.40 106,347,559.85 42. Administration expenses In RMB/CNY Item Current period Last Period Salary and fringe benefit 134,821,395.41 94,992,042.41 Depreciation charger and long-term assets amortization 17,239,939.30 24,091,878.82 Consumption of office materials and business travel charge 5,392,838.23 7,840,515.40 Incentive fund 35,940,000.00 64,279,800.00 Other 117,515,807.49 45,335,174.00 Total 310,909,980.43 236,539,410.63 43. R&D expenses In RMB/CNY Item Current period Last Period Technological development expenses 180,167,642.16 177,443,968.15 Total 180,167,642.16 177,443,968.15 44. Financial expenses In RMB/CNY Item Current period Last Period Interest expenses 9,264,648.42 9,075,955.05 Note discount interest expenses 6,867,326.37 409,282.24 Saving interest income -48,416,919.83 -11,684,097.62 Gains/losses from exchange 583,881.77 -491,644.75 Handling charges 2,208,267.69 913,596.71 Total -29,492,795.58 -1,776,908.37 45. Other income In RMB/CNY 145 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Source Current period Last Period Government grants with routine activities concerned 17,632,117.95 14,032,459.71 Total 17,632,117.95 14,032,459.71 46. Investment income In RMB/CNY Item Current period Last Period Income of long-term equity investment calculated based on equity 790,465,131.05 968,640,145.91 Investment income from holding tradable financial assets 2,287,308.59 Investment income from period of holding the financial assets 3,220,575.00 available for sale Investment income obtained from disposal of financial assets 17,370,816.75 available for sales Entrust financial income 95,464,240.84 159,801,630.73 Total 888,216,680.48 1,149,033,168.39 47. Income from change of fair value In RMB/CNY Sources Current period Last Period Tradable financial assets 30,195,948.00 Investment income from disposal of tradable financial 490,329.13 assets Total 30,686,277.13 48. Credit impairment loss In RMB/CNY Item Current period Last Period Bad debt loss of other account receivable -33,433.24 Bad debt loss of account receivable -6,204,357.51 Total -6,237,790.75 49. Assets impairment loss Whether implemented the new revenue standards □Yes √No 146 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 In RMB/CNY Item Current period Last Period I. Bad debt losses -2,192,563.70 II. Loss on inventory valuation -1,500,885.27 2,202,651.08 Total -1,500,885.27 10,087.38 50. Income from assets disposal In RMB/CNY Sources Current period Last Period Income from disposal of non-current assets 5,542,556.91 1,820,229.59 Losses from disposal of non-current assets -434,708.46 -232,044.23 Total 5,107,848.45 1,588,185.36 51. Non-operating income In RMB/CNY Amount reckoned into current Item Current period Last Period non-recurring gains/losses Government grants 26,547,209.00 3,667,570.46 26,547,209.00 Other 997,548.26 213,558.41 997,548.26 Total 27,544,757.26 3,881,128.87 27,544,757.26 Government grants reckoned into current gains/losses: In RMB/CNY Whether the Cause impact of Granti Whether Assets of Nature subsidies on Government grants ng special Current period Last period related/Incom distrib type the current subject subsidies e related ution profit and loss House land expropriation and Income disposal incentives of Weifu N N 26,547,209.00 related Jinning Income Stabilization subsidy in Wuxi N N 967,170.46 related Income Patent funding N N 621,500.00 related Funds for the intelligent N N 1,340,000.00 Income transformation project of common 147 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 rail pump production in Huishan related District Reward for the high-tech enterprise identification in Income N N 500,000.00 management committee of related Jiangbei District Discount reward for imported Income N N 103,000.00 equipment related Employment subsidy from Income Employment Administration N N 86,520.00 related Service of Ningbo City Special funds for 333 high-end Income N N 30,000.00 personnel training related Income Other N N 19,380.00 related Total 26,547,209.00 3,667,570.46 52. Non-operating expense In RMB/CNY Amount reckoned into current Item Current period Last Period non-recurring gains/losses Donations 43,500.00 43,500.00 Non-current assets disposal 180,170.75 167,094.34 180,170.75 losses Including: fixed assets disposal 180,170.75 167,094.34 180,170.75 losses Local fund 2,291,966.58 2,015,771.73 Other 115,815.69 145,006.31 115,815.69 Total 2,631,453.02 2,327,872.38 339,486.44 53. Income tax expense (1) Income tax expense In RMB/CNY Item Current period Last Period Payable tax in current period 52,525,690.93 102,952,291.92 Adjusted the previous income tax 3,839,633.55 -603,416.68 148 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Increase/decrease of deferred income tax assets 20,543,454.34 633,939.20 Increase/decrease of deferred income tax liability 4,473,875.72 -55,516.48 Total 81,382,654.54 102,927,297.96 (2) Adjustment on accounting profit and income tax expenses In RMB/CNY Item Current period Total profit 1,356,485,347.77 Income tax measured by statutory/applicable tax rate 203,472,802.17 Impact by different tax rate applied by subsidies 1,632,000.65 Adjusted the previous income tax 3,839,633.55 Impact by non-taxable revenue -122,975,551.11 Impact by the deductible losses of the un-recognized previous deferred income tax -3,707,613.33 The deductible temporary differences or deductible losses of the un-recognized deferred income 1,564,899.02 tax assets in the Period Other -2,443,516.40 Income tax expense 81,382,654.54 54. Other comprehensive income Found more in Note -35 55. Items of ash flow statement (1) Other cash received in relation to operation activities In RMB/CNY Item Current period Last Period Interest income from cash in bank 49,585,253.17 12,485,826.79 Government grants 33,827,547.71 8,212,570.46 Other 2,362,693.88 181,546.85 Total 85,775,494.76 20,879,944.10 (2) Other cash paid in relation to operation activities In RMB/CNY 149 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Item Current period Last Period Cash cost 158,648,871.84 147,328,558.66 Other 10,439,746.86 6,641,913.18 Total 169,088,618.70 153,970,471.84 (3) Cash received from other investment activities Nil (4) Cash paid related with investment activities In RMB/CNY Item Current period Last Period Borrowings paid to Baodun (Tianjin) Electro-mechanical 10,000,000.00 Borrowings paid to Wuhan Troowin 24,000,000.00 Total 24,000,000.00 10,000,000.00 (5) Other cash received in relation to financing activities In RMB/CNY Item Current period Last Period The borrowings/loans received by Weifu Leader from Wuxi 5,470,000.00 Industry Group Total 5,470,000.00 (6) Cash paid related with financing activities In RMB/CNY Item Current period Last Period Borrowings/loans paid to Industry Group by Weifu Leader 5,470,000.00 National debt paid transfer to loans 339,091.00 339,091.00 Total 5,809,091.00 339,091.00 56. Supplementary information to statement of cash flow (1) Supplementary information to statement of cash flow In RMB/CNY 150 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Supplementary information Current period Last Period 1. Net profit adjusted to cash flow of operation activities: -- -- Net profit 1,275,102,693.23 1,577,947,078.01 Add: Assets impairment provision 7,738,676.02 -10,087.38 Depreciation of fixed assets, consumption of oil assets and depreciation of 150,680,275.86 142,796,801.99 productive biology assets Amortization of intangible assets 7,769,977.82 8,927,389.15 Amortization of long-term deferred expenses 1,498,822.02 1,093,846.42 Loss from disposal of fixed assets, intangible assets and other long-term -5,107,848.45 -1,588,185.36 assets(gain is listed with “-”) Losses on scrapping of fixed assets (gain is listed with “-”) 180,170.75 167,094.34 Gain/loss of fair value changes (gain is listed with “-”) -30,686,277.13 Financial expenses (gain is listed with “-”) 8,918,152.92 8,265,783.22 Investment loss (gain is listed with “-”) -885,938,793.49 -1,149,683,398.46 Decrease of deferred income tax asset( (increase is listed with “-”) 17,047,670.29 633,939.20 Increase of deferred income tax liability (decrease is listed with “-”) -55,516.90 -55,516.48 Decrease of inventory (increase is listed with “-”) 9,891,557.33 241,085,663.64 Decrease of operating receivable accounts (increase is listed with “-”) -802,107,175.59 -606,831,311.20 Increase of operating payable accounts (decrease is listed with “-”) 934,171,985.46 154,832,323.82 Other 1,219,538.11 1,342,269.57 Net cash flows arising from operating activities 690,323,908.25 378,923,690.48 2. Material investment and financing not involved in cash flow -- -- 3. Net change of cash and cash equivalents: -- -- Balance of cash at period end 2,596,327,132.26 2,842,510,815.26 Less: Balance of cash equivalent at year-begin 2,404,674,139.49 2,948,439,354.22 Net increase of cash and cash equivalents 191,652,992.77 -105,928,538.96 (2) Net cash payment for the acquisition of a subsidiary in the period In RMB/CNY Amount Cash and cash equivalent paid in the period for enterprise combination occurred in the period 54,936,420.00 Including: -- Less: Cash and cash equivalent held by subsidiary on purchasing date 5,005,683.38 Including: -- 151 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Add: Cash and cash equivalent paid in the period for enterprise combination occurred previous 0.00 Including: -- Net cash paid for subsidiary obtained 49,930,736.62 (3) Net cash received from the disposal of subsidiaries Nil (4) Constitution of cash and cash equivalent Item Ending balance Opening balance I. Cash 2,596,327,132.26 2,404,674,139.49 Including: Cash on hand 71,791.03 194,161.03 Bank deposit available for payment at any time 2,596,255,341.25 2,404,479,978.46 I. Balance of cash and cash equivalents at the period-end 2,596,327,132.26 2,404,674,139.49 57. Note of the changes of owners’ equity Explain the items and amount at period-end adjusted for “Other” at end of the last year: nil 58. Assets with ownership or use right restricted In RMB/CNY Item Ending book value Restriction reason Monetary funds 52,783,679.85 A deposit paid for issuing a bank acceptance bill Note receivable 762,571,527.45 Notes pledge for bank acceptance Monetary funds 158,280.00 A deposit paid for issuance of a letter of guarantee Monetary funds 38,774,365.26 Sales of equity of Protean Holdings Corp. Monetary funds 1,655,119.95 Court freeze In accordance with the civil ruling No.(2016)Y03MC2490 and No.(2016) Y03MC2492 of Guangdong Shenzhen Intermediate People's Court , the property Tradable financial with the value of 217 million Yuan under the name of the Company and other seven 141,199,062.12 assets respondents and the third party Shenzhen Hejun Chuangye Holdings Co., Ltd. was frozen. As of the end of the reporting period, 4.71 million shares of Miracle Automation and 11,739,102 shares of SDEC held by the Company were frozen. Total 997,142,034.63 -- 152 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 59. Item of foreign currency (1) Item of foreign currency In RMB/CNY Item Closing balance of foreign currency Rate of conversion Ending balance of RMB converted Monetary funds -- -- Including: USD 26,561,237.88 6.8747 182,600,542.05 EUR 1,738,513.85 7.817 13,589,962.77 HKD 7,313.34 0.8797 6,433.55 DKK 29,426,919.41 1.0472 30,815,870.01 Account receivable -- -- Including: USD 3,330,199.22 6.8747 22,894,120.58 EUR 669,678.52 7.8170 5,234,876.99 HKD 10,720,574.00 0.8797 9,430,888.95 DKK 13,386,058.88 1.0472 14,017,880.86 Short-term borrowings -- -- Including: EUR 3,589,023.83 7.8170 28,055,399.28 Other account receivable -- -- Including: USD 1,527,205.77 6.8747 10,499,081.51 HKD 13,090,182.63 0.8797 11,515,433.66 Account payable -- Including: USD 37,466.64 6.8747 257,571.91 EUR 336,864.14 7.8170 2,633,266.98 HKD 21,899,376.00 0.063816 1,397,530.58 DKK 18,440,868.48 1.0472 19,311,277.48 (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 60. Hedging Disclosure of the qualitative and quantitative information on hedging items and related hedging instruments, hedging risks according to category: nil 153 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 61. Government grants (1) Government grants In RMB/CNY Amount reckoned in Category Amount Item current gain/loss Social security subsidy for newly recruited Social security subsidy for newly recruited college graduates by small and medium-size 95,577.00 college graduates by small and medium-size 95,577.00 enterprise in Ningbo City enterprise in Ningbo City Patent funding 27,150.00 Patent funding 27,150.00 Depreciation/amortization compensation for the Depreciation/amortization compensation for the assets newly established after parent company 11,339,130.36 assets newly established after parent company 11,339,130.36 relocated relocated Intellectual property subsidy 318,000.00 Intellectual property subsidy 318,000.00 The first district-level cash subsidy of special The first district-level cash subsidy of special 90,432.00 90,432.00 fund for facilitates adjustment in Ningbo City fund for facilitates adjustment in Ningbo City City-level funding for science and technology City-level funding for science and technology project from management committee of 32,000.00 project from management committee of 32,000.00 high-tech industrial partk in Ningbo City high-tech industrial partk in Ningbo City Subsidy for quality brand in Ningbo City 30,000.00 Subsidy for quality brand in Ningbo City 30,000.00 Industrialization project for injection VE pump Industrialization project for injection VE pump system with electronically controlled high 721,000.30 system with electronically controlled high 721,000.30 pressure for less-emission diesel used pressure for less-emission diesel used 2018 technology development plan and project 2018 technology development plan and project 2,000.00 2,000.00 funding funding Tax contribution award in Huishan District 30,000.00 Tax contribution award in Huishan District 30,000.00 Subsidy for the intelligent production line of Subsidy for the intelligent production line of automobile components process in Huishan 293,406.11 automobile components process in Huishan 293,406.11 District District Special funds for technological transformation Special funds for technological transformation 3,740,000.00 3,740,000.00 in Wuxi City in Wuxi City Award for strong quality zone in Xinwu District 50,000.00 Award for strong quality zone in Xinwu District 50,000.00 Grants for key laboratory in Wuxi City 35,000.00 Grants for key laboratory in Wuxi City 35,000.00 Key laboratory (engineering center) of the Key laboratory (engineering center) of the pollution control from motor vehicle exhausting 85,000.00 pollution control from motor vehicle exhausting 85,000.00 in Jiangsu province in Jiangsu province 154 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Supporting funds for technical improvement for Supporting funds for technical improvement for annual output as 140,000 pieces of packaging annual output as 140,000 pieces of packaging 129,500.00 129,500.00 line of catalytic reduction system for line of catalytic reduction system for commercial vehicles commercial vehicles Funds for technical improvement for annual Funds for technical improvement for annual output as 180,000 pieces of catalytic reduction output as 180,000 pieces of catalytic reduction 59,000.00 59,000.00 system for commercial vehicles - received in system for commercial vehicles - received in 2015 2015 Funds for technical improvement for annual Funds for technical improvement for annual output as 180,000 pieces of catalytic reduction output as 180,000 pieces of catalytic reduction 57,777.78 57,777.78 system for commercial vehicles - received in system for commercial vehicles - received in 2016 2016 Funds for the automatic construction of welding Funds for the automatic construction of welding 39,964.69 39,964.69 production line machine replacement project production line machine replacement project Condolence payments of government of the Condolence payments of government of the 20,000.00 20,000.00 Huishan District Huishan District Award for the development of high and new Award for the development of high and new 100,000.00 100,000.00 technology technology Other 337,179.71 Other 337,179.71 Total 17,632,117.95 Total 17,632,117.95 (2) Government grants rebate □ Applicable √ Not applicable 62. Other Nil VIII. Changes of consolidation scope 1. Enterprise combine not under the same control (1)Enterprise combine not under the same control occurred in the period In RMB/CNY Income of Net profit of Standard to purchaser purchaser Time point for Ratio of Acquired Cost of equity Purchasing determine the from from Purchaser equity equity way Equity obtained date purchasing purchasing purchasing obtained obtained obtained way date date to date to period-end period-end IRD Fuel Subject 2019-04-23 54,936,420.00 66.00% Purchasing 2019-04-23 6,274,812.54 -3,478,574.45 Cells A/S asset 155 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 delivery date (2) Combination cost and goodwill In RMB/CNY Combination cost IRD Fuel Cells A/S --Cash 54,936,420.00 Total combination cost 54,936,420.00 Less: shares of fair value of identifiable net assets acquired 1,129,159.79 Goodwill/merger cost is less than the shares of fair value of identifiable net assets acquired 53,807,260.21 Determination method for fair value of the combination cost and contingent consideration and changes: According to the agreement price confirmed Main reasons for large goodwill resulted: In 2019, the company established SPV (a wholly-owned subsidiary) in Denmark to acquire a 66% stake in Danish IRD Fuel Cells A/S (hereinafter referred to as "IRD") held by FCCTApS., which is equivalent to a total of 7.26 million euros, and CIRO's valuation is 11 million euros; goodwill is the part of the acquisition cost greater than the fair value of the IRD net identifiable assets. (3) Identifiable assets and liability on purchasing date under the purchaser In RMB/CNY IRD Fuel Cells A/S Fair value on purchasing date Book value on purchasing date Monetary funds 5,005,683.38 5,005,683.38 Account receivable 15,435,805.70 15,435,805.70 Inventory 10,402,853.98 10,402,853.98 Fixed assets 8,249,263.58 8,249,263.58 Intangible assets 484,979.88 484,979.88 Long-term deferred expenses 2,862,363.35 2,862,363.35 Account payable 40,730,101.70 40,730,101.70 Net assets 1,710,848.17 1,710,848.17 Less: Minority interests 581,688.38 581,688.38 Net assets acquired 1,129,159.79 1,129,159.79 Determination method for fair value of the identifiable assets and liabilities: The book value on the balance sheet Contingent liability of the purchaser bear during combination: Nil 156 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (4) Gains or losses arising from re-measured by fair value for the equity held before purchasing date Whether it is a business combination realized by two or more transactions of exchange and a transaction of obtained control rights in the Period or not □Yes √No (5)On purchasing date or period-end of the combination, combination consideration or fair value of identifiable assets and liability for the purchaser are unable to confirm rationally (6) Other explanation 2. Enterprise combine under the same control Nil 3. Reverse purchase Nil 4. Disposal of subsidiaries Nil 5.Other reasons for consolidation range changed Nil 6. Other Nil IX. Equity in other entity 1. Equity in subsidiary (1) Constitute of enterprise group Main Shareholding ratio Registered Name of subsidiary operation Business nature Acquired by place Directly Indirectly place Weifu Jinning Nanjing Nanjing Spare parts of 80.00% Enterprise combine under 157 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 internal-combustion the same control engine Automobile exhaust Enterprise combine under Weifu Leader Wuxi Wuxi 94.81% purifier, muffler the same control Spare parts of Weifu Mashan Wuxi Wuxi internal-combustion 100.00% Investment engine Spare parts of Weifu Chang’an Wuxi Wuxi internal-combustion 100.00% Investment engine Enterprise combine under Weifu International Trade Wuxi Wuxi Trade 100.00% the same control Spare parts of Enterprise combine not Weifu ITM Wuxi Wuxi internal-combustion 100.00% under the same control engine Spare parts of Weifu Schmidt Wuxi Wuxi internal-combustion 66.00% Investment engine Spare parts of Enterprise combine not Weifu Tianli Ningbo Ningbo internal-combustion 54.23% under the same control engine Spare parts of Enterprise combine not Weifu Autocam Wuxi Wuxi internal-combustion 51.00% under the same control engine Automobile exhaust Weifu Leader (Wuhan) Wuhan Wuhan 60.00% Investment purifier, muffler Automobile exhaust Weifu Leader(Chongqing) Chongqing Chongqing 100.00% Investment purifier, muffler Automobile exhaust Weifu Leader(Nanchang) Nanchang Nanchang 100.00% Investment purifier, muffler Enterprise combine under SPV Denmark Denmark 100.00% the same control IRD Fuel Cells A/S Denmark Denmark Fuel cell components 66.00% Acquisition Explanation on share-holding ratio in subsidiary different from ratio of voting right: nil Basis of the invested unit control by the Company though holds half or below voting rights; and the invested unit without controls by the Company but with over half voting rights hold: Explanation on equity method on Wuxi Weifu Electric Drive Tech. Co., Ltd. The Company holds 80% equity of Weifu Electric Drive; board of the Weifu Electric Drive has 5 directors, including 3 appointed by the Company; as for the important resolution of Weifu Electric Drive, the resolution can only be passed by unanimous vote of all 158 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 directors present, according to the above judges, the Company cannot control Weifu Electric Drive, the investment for Electric Drive should be regarded as the investment in joint venture, which shall be accounted by the equity method. Major structured entity included in consolidate statement: nil Basis of termination of agent or consignor: nil (2) Important non-wholly-owned subsidiary In RMB/CNY Name of Share-holding Gains/losses attributable to Dividend announced to distribute Ending equity of subsidiary ratio of minority minority in the Period for minority in the Period minority Weifu Jinning 20.00% 14,876,923.21 209,198,242.07 Weifu Schmidt 34.00% -15,264.15 9,466,515.29 Weifu Leader 5.19% 2,153,562.30 86,957,134.33 Weifu Tianli 45.77% 1,473,959.13 107,685,585.63 Weifu Autocam 49.00% 1,134,650.94 144,760,990.56 Total 19,623,831.43 558,068,467.88 Explanation on holding ratio different from the voting right ratio for minority shareholders: nil (3) Main finance of the important non-wholly-owned subsidiary In RMB/CNY Ending balance Name of Non-current subsidiary Current assets Non-current assets Total assets Current liabilities Total liabilities liabilities Weifu 1,070,400,181.05 325,848,559.23 1,396,248,740.28 297,272,709.50 49,462,676.40 346,735,385.90 Jinning Weifu 91,597,165.04 48,907,335.05 140,504,500.09 112,265,804.31 112,265,804.31 Schmidt Weifu 2,793,904,070.68 1,067,554,624.25 3,861,458,694.93 2,174,127,440.73 24,712,370.05 2,198,839,810.78 Leader Weifu Tianli 360,273,239.11 213,757,480.69 574,030,719.80 309,722,212.42 38,486,184.05 348,208,396.47 Weifu 212,762,612.00 315,260,086.73 528,022,698.73 235,328,512.60 235,328,512.60 Autocam Total 4,528,937,267.88 1,971,328,085.95 6,500,265,353.83 3,128,716,679.56 112,661,230.50 3,241,377,910.06 159 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Opening balance Name of Non-current subsidiary Current assets Non-current assets Total assets Current liabilities Total liabilities liabilities Weifu 994,953,012.95 342,560,339.76 1,337,513,352.71 313,381,459.40 50,522,767.70 363,904,227.10 Jinning Weifu 92,342,474.64 48,855,179.90 141,197,654.54 112,913,283.31 112,913,283.31 Schmidt Weifu 1,958,116,370.10 1,038,234,646.34 2,996,351,016.44 1,343,115,779.10 23,850,612.52 1,366,966,391.62 Leader Weifu 357,404,441.32 233,476,608.83 590,881,050.15 310,421,704.26 47,838,928.45 358,260,632.71 Tianli Weifu 242,022,679.84 310,989,080.94 553,011,760.78 262,647,739.06 262,647,739.06 Autocam Total 3,644,838,978.85 1,974,115,855.77 5,618,954,834.62 2,342,479,965.13 122,212,308.67 2,464,692,273.80 In RMB/CNY Current period Last Period Cash flow Cash flow Name of Total Total Operation from Operation from subsidiary Net profit comprehensi Net profit comprehensi Income operation Income operation ve income ve income activity activity Weifu 328,481,669. 75,516,399.5 75,516,399.5 33,455,248.4 345,257,893. 70,230,711.1 70,230,711.1 34,921,442.3 Jinning 39 7 7 0 56 8 8 1 Weifu 84,285,489.5 90,961,973.0 11,277,941.7 -45,675.45 -45,675.45 5,467,884.14 304,135.67 304,135.67 Schmidt 0 6 6 1,338,975,87 32,780,686.7 32,780,686.7 116,866,170. 1,589,176,18 76,364,083.4 76,364,083.4 -19,011,866.1 Weifu Leader 5.93 7 7 40 8.66 3 3 5 185,591,276. 37,008,735.0 196,673,863. Weifu Tianli 3,549,640.03 3,549,640.03 8,293,196.15 8,293,196.15 -9,491,657.17 52 5 48 Weifu 177,929,684. 33,593,148.8 234,675,435. 22,670,547.1 22,670,547.1 2,330,164.41 2,330,164.41 3,466,284.14 Autocam 84 7 40 5 5 2,115,263,99 114,131,215. 114,131,215. 226,391,186. 2,456,745,35 177,862,673. 177,862,673. 21,162,144.8 Total 6.18 33 33 86 4.16 58 58 9 (4) Significant restrictions on the use of enterprise group assets and pay off debts of the enterprise group Nil 160 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (5) Financial or other supporting offers to the structured entity included in consolidated financial statement range Nil 2. Transaction that has owners equity shares changed in subsidiary but still with controlling rights Nil 3. Equity in joint venture and associated enterprise (1) Important joint venture and associated enterprise Shareholding ratio Accounting treatment on Main Register investment for Joint venture or associated enterprise operation Business nature ed place Directly Indirectly joint venture and place associated enterprise I. Joint venture Wuxi Weifu Environment Catalyst Wuxi Wuxi Catalyst 49.00% Equity method Co.,Ltd. Wuxi Weifu Electric Drive Tech. Co., Ltd. Wuxi Wuxi Wheel-hub motor 80.00% Equity method II. Associated enterprise Bosch Automobile Diesel System Co., Internal-combustion Wuxi Wuxi 32.50% 1.50% Equity method Ltd. engine accessories Zhonglian Automobile Electronic Co., Shangha Internal-combustion Shanghai 20.00% Equity method Ltd. i engine accessories Weifu Precision Machinery Internal-combustion Wuxi Wuxi 20.00% Equity method Manufacturing Co., Ltd. engine accessories Shinwell Automobile Tech. (Wuxi) Co., Wuxi Wuxi Automobile components 45.00% Equity method Ltd. Holding shares ratio different from the voting right ratio: 1. Explanation on equity method for calculation of the investment for Weifu Electronic Drive The company holds 80.00% equity of Weifu Electronic Drive; the Board of Directors of Weifu Electronic Drive Board consists of 5 directors, 3 of whom are appointed by the company; Weifu Electronic Drive’s important board resolutions can only pass the resolution when being unanimously voted by all the present directors. According to this judgment, the company cannot control Weifu Electronic Drive, and its investment should be used as an investment in the joint venture, which adopts equity method for business accounting. 2. Explanation on equity method for calculation of the investment for Shinwell Automobile Tech. (Wuxi) Co., Ltd. The subsidiary Weifu International Trade holds a 45.00% stake in Shinwell Automobile Tech. (Wuxi); the Board of Directors of Shinwell Automobile Tech. (Wuxi) consists of 5 directors, 2 of whom are appointed by Weifu International Trade. 161 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Has major influence with less 20% voting rights hold, or has minor influence with over 20% (20% included) voting rights hold: Nil (2) Main financial information of the important joint venture In RMB/CNY Ending balance/Current period Opening balance/Last Period Weifu Environment Weifu Environment Current assets 2,247,248,921.76 2,524,886,121.93 Including: cash and cash equivalents 139,005,591.27 62,820,292.38 Non -current assets 306,699,383.10 312,633,597.82 Total assets 2,553,948,304.86 2,837,519,719.75 Current liabilities 1,348,578,184.48 1,658,404,950.50 Non-current liabilities 27,350,000.00 24,735,000.00 Total liabilities 1,375,928,184.48 1,683,139,950.50 Shareholders’ equity attributable to parent company 1,178,020,120.33 1,154,379,769.25 Share of net assets calculated by shareholding ratio 577,229,858.97 565,646,086.93 Book value of equity investment in joint ventures 577,229,858.97 565,646,086.93 Operation income 1,590,675,320.87 1,864,398,010.43 Financial expenses 40,646,719.18 47,189,696.29 Income tax expense 4,391,396.50 3,251,620.98 Net profit 23,640,351.13 92,057,072.82 Total comprehensive income 23,640,351.13 92,057,072.82 (3) Main financial information of the important associated enterprise In RMB/CNY Ending balance/Current period Opening balance/Last Period Bosch Diesel Zhonglian Weifu Precision Bosch Diesel Zhonglian Weifu Precision System Automobile Machinery System Automobile Machinery Current 10,553,293,855.65 688,825,448.29 293,992,324.65 10,042,409,061.04 153,125,575.56 281,266,308.21 assets Non -current 2,621,795,993.79 5,478,754,404.78 147,235,301.51 2,756,104,679.18 5,277,976,705.66 133,470,007.84 assets Total assets 13,175,089,849.44 6,167,579,853.07 441,227,626.16 12,798,513,740.22 5,431,102,281.22 414,736,316.05 Current 5,175,720,137.18 527,845,052.68 141,337,604.50 4,100,048,133.30 2,999,283.95 135,365,421.92 liabilities 162 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Non-current 2,729,313.74 2,759,548.45 liabilities Total 5,175,720,137.18 530,574,366.42 141,337,604.50 4,100,048,133.30 5,758,832.40 135,365,421.92 liabilities Attributable to parent company 7,999,369,712.26 5,637,005,486.65 302,709,734.20 8,698,465,606.92 5,425,343,448.82 279,370,894.13 shareholders ’ equity Share of net assets calculated 2,719,785,702.17 1,127,401,097.32 60,541,946.84 2,957,478,306.35 1,085,068,689.76 55,874,178.83 by shareholding ratio --Goodwill 267,788,761.35 1,407,265.96 267,788,761.35 1,407,265.96 --Unrealized profit of -20,628,815.49 -41,334.69 -18,144,174.02 -34,986.88 internal trading --Other -0.28 -529,034.03 -0.28 -529,034.05 Book value of equity investment 2,966,945,647.75 1,128,808,363.29 59,971,578.12 3,207,122,893.40 1,086,475,955.72 55,310,157.90 in associated enterprise Operation 7,690,808,970.61 11,298,817.88 144,654,208.76 8,713,485,959.51 12,091,114.45 190,093,280.56 income Net profit 1,827,071,096.33 737,662,037.83 23,338,840.07 2,076,330,091.90 1,059,760,956.40 34,760,623.80 Total comprehensi 1,827,071,096.33 737,662,037.83 23,338,840.07 2,076,330,091.90 1,059,760,956.40 34,760,623.80 ve income Dividends received from 429,448,388.47 105,200,000.00 303,884,540.74 associated enterprise in the year Other explanation adjustment item for other “-0.28”: the differential tail 163 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (4) Financial summary for non-important Joint venture and associated enterprise In RMB/CNY Ending balance/Current period Opening balance/Last Period Joint venture: -- -- Total book value of investment 53,565,625.43 54,742,375.02 Amount based on share-holding ratio -- -- --Net profit -1,176,749.59 --Other comprehensive income -1,176,749.59 Associated enterprise: -- -- Total book value of investment 6,226,237.91 7,476,477.77 Amount based on share-holding ratio -- -- --Net profit -1,250,239.86 --Other comprehensive income -1,250,239.86 54,742,375.02 (5) Major limitation on capital transfer ability to the Company from joint venture or associated enterprise Nil (6) Excess loss occurred in joint venture or associated enterprise Nil (7) Unconfirmed commitment with joint venture investment concerned Nil (8) Intangible liability with joint venture or associated enterprise investment concerned Nil 4. Major conduct joint operation Nil 5. Structured body excluding in consolidate financial statement Nil 164 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 6. Other Nil X. Risk related with financial instrument Main financial instrument of the Company including equity investment, loans, account receivable, account payable etc., more details of the financial instrument can be found in relevant items of Note V. Risks concerned with the above mentioned financial instrument, and the risk management policy takes for lower the risks are as follow: Aims of engaging in the risk management is to achieve equilibrium between the risk and benefit, lower the adverse impact on performance of the Company to minimum standards, and maximized the benefit for shareholders and other investors. Base on the risk management targets, the basic tactics of the risk management is to recognized and analyzed the vary risks that the Company counted, established an appropriate risk exposure baseline and caring risk management, supervise the vary risks timely and reliably in order to control the risk in a limited range. In business process, the risks with financial instrument concerned happen in front of the Company mainly including credit exposure, market risk and liquidity risk. BOD of the Company takes full charge of the risk management target and policy-making, and takes ultimate responsibility for the target of risk management and policy. Risk management department and financial control department manager and monitor those risk exposure to ensuring the risks are control in a limited range. 1. Credit Risk Credit risk refers to the one party fails to perform the obligation of the financial instruments, form the other party company mainly face credit risk for financial loss caused by the customer credit risks. In order to prevent the risks, the Company formulated an evaluation system for the new client’s credit and system to analyze the book credit for regular customer. The evaluation system for the new client’s credit aims at the new clients, the Company will conduct an background investigation based on the established process, with purpose of determine whether offer credit limit to the client and the amount of the credit and credit terms or not. Whereby, the Company setting a credit limits and credit period for every new client, and such limit is the maximum amount without additional approval. The system to analyze the book credit for regular customer refers to after purchase order received by regular customer, the Company will examine the order amount and outstanding balance, if the total over the credit limit, on the premise of additional approval, sales on account shall be realized, or prepayments for relevant amount shall be required. Furthermore, as for the sales on account occurred, the Company will guarantee the total credit risks in a controlling range by analyzed and review the monthly report of the risk attention for account receivables. 165 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 The maximum credit risk exposure of the Company is the book amount of such financial assets, till end of 30th June 2019, lists of the maximum credit risk exposure of the Company are as: Item Amount of merge Amount of parent company Note receivable 2,319,307,654.58 766,756,661.80 Other account receivable -Other account receivable 60,433,069.23 195,451,736.76 2. Market risk Market risk of the financial instrument refers to the fair value of financial instrument or future cash flow due to fluctuations in the market price changes and produce, mainly includes the IRR, FX risk and other price risk. (1) Interest rate risk (IRR) IRR refers to the fluctuate risks on Company’s financial status and cash flow arising from rates changes in market. IRR of the Company mainly related with the bank loans. In order to lower the fluctuate of IRR, the Company, in line with the anticipative change orientation, choose floating rate or fixed rate, that is the rate in future period will goes up prospectively, than choose fixed rate; if the rate in future period will decline prospectively, than choose the floating rate. In order to minor the bad impact from difference between the expectation and real condition, loans for liquid funds of the Company are choose the short-term period, and agreed the terms of prepayment in particular. (2) Foreign exchange (FX) risk FX risks refer to the losses arising from exchange rate movement. The FX risk sustain by the Company mainly related with the USD, EUR, SF, JPY and HKD, except for the USD, EUR, SF, JPY and HKD carried out for the machinery equipment purchasing of parent company and Autocam, material purchasing of parent company and paying the technical service fee and trademark usage charge and the import and export trading of Weifu International Trade, other main business of the Company are pricing and settle with RMB (Yuan). In consequence of the foreign financial assets and liabilities takes minor ratio in total assets, the Company has small FX risk of the financial instrument, considered by management of the Company. End as 30 June 2019, except for the follow assets or liabilities listed with foreign currency, assets and liabilities of the Company are carried with RMB ①Foreign currency assets of the Company till end of 30 June 2019: Ending RMB balance Item Ending foreign currency balance Convert rate Ratio in assets(%) converted Monetary funds -- -- Including: USD 26,561,237.88 6.8747 182,600,542.05 0.82% EUR 1,738,513.85 7.8170 13,589,962.77 0.06% HKD 7,313.34 0.8797 6,433.55 0.00% DKK 29,426,919.41 1.0472 30,815,870.01 0.14% Account receivable -- -- 166 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Including: USD 3,330,199.22 6.8747 22,894,120.58 0.10% EUR 669,678.52 7.8170 5,234,876.99 0.02% HKD 10,720,574.00 0.8797 9,430,888.95 0.04% DKK 13,386,058.88 1.0472 14,017,880.86 0.06% Other account receivable -- -- Including: USD 1,527,205.77 6.8747 10,499,081.51 0.05% HKD 13,090,182.63 0.8797 11,515,433.66 0.05% Total ratio in assets -- -- 1.35% ②Foreign currency liability of the Company till end of 31st December 2018: Ending foreign currency Ending RMB balance Item Convert rate Ratio in assets(%) balance converted Short-term borrowings -- -- Including: EUR 3,589,023.83 7.8170 28,055,399.28 0.48% Account payable -- -- Including: USD 37,466.64 6.8747 257,571.91 0.00% EUR 336,864.14 7.8170 2,633,266.98 0.05% JPY 21,899,376.00 0.063816 1,397,530.58 0.02% DKK 18,440,868.48 1.0472 19,311,277.48 0.33% Total ratio in assets -- -- 0.89% ③Other pricing risk Classification of the Company held is the equity investments in financial assets available for sale, and such investment can be measured by fair value on balance sheet date, thus, the Company owns a risk of stock market changes. Furthermore, on the premise of deliberated and approved by the BOD, the Company exercise entrust financing with the self-owned idle capital; therefore, the Company has the risks of collecting no principal due to entrust financial products default. Aims at such risk, the Company formulated a “Management Mechanism of Capital Financing”, and well-defined the authority approval, investment decision-making, calculation management and risk controls for the entrust financing in order to guarantee a security funds and prevent investment risk efficiently. In order to lower the adverse impact from unpredictable factors, the Company choose short-term and medium period for investment and investment product’s term is up to 3 years in principle; in variety of investment, the Company did not invested for the stocks, derivative products, security investment fund and the entrust financial products aims at security investment as well as other investment with securities concerned. 3. Liquidity risk Liquidity risk refers to the capital shortage risk occurred during the clearing obligation implemented by the enterprise in way of cash paid or other financial assets. The Company aims at guarantee the Company has rich capital to pay the due debts, therefore, a financial control department is established for collectively controlling 167 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 such risks. On the one hand, the financial control department monitoring the cash balance, the marketable securities which can be converted into cash at any time and the rolling forecast on cash flow in future 12 months, ensuring the Company, on condition of reasonable prediction, owes rich capital to paid the debts; on the other hand, building a favorable relationship with the banks, rationally design the line of credit, credit products and credit terms, guarantee a sufficient limit for bank credits in order to satisfy vary short-term financing requirements. XI. Disclosure of fair value 1. Ending fair value of the assets and liabilities measured by fair value In RMB/CNY Ending fair value Item First-order Second-order Third-order Total I. Sustaining measured by fair value -- -- -- -- (i) Tradable financial assets 151,261,956.00 151,261,956.00 1.Financial assets measured by fair value and with variation 151,261,956.00 151,261,956.00 reckoned into current gains/losses (2) Equity instrument investment 151,261,956.00 151,261,956.00 Total liability sustaining measured by fair value 151,261,956.00 151,261,956.00 II. Non-persistent measure -- -- -- -- 2. Recognized basis for the market price sustaining and non-persistent measured by fair value on first-order According to relevant requirement of accounting standards, the Company continues to measure the financial assets available for sale-equity instrument investment by fair value on balance sheet date. On 30 June 2019, the financial assets available for sale-equity instrument investment held by the Company refers to the SDEC (stock code: 600841) and Miracle Automation (Stock code: 002009), determining basis of the market price at period-end refers to the closing price of 28 June 2019, the 29 June 2019 and 30 June 2019 are nonworking days. 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 168 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Wuxi Industry Operation of 4720.6710 million Wuxi 20.22% 20.22% Group state-owned assets Yuan Explanation on parent company of the enterprise Wuxi Industry Development Group Co., Ltd was solely state-owned enterprise funded and established by Wuxi Municipal People’s Government which mainly took responsibility of authorizing the state-owned assets operation within a certain areas, investment management of significant project, investment and development of manufacturing and services and venture capital in high-tech achievement Ultimate controller of the Company is State-owned Assets Supervision & Administration Commission of Wuxi Municipality of Jiangsu Province. 2. Subsidiary of the Enterprise Found more in Note IX. 1.” Equity in subsidiary” 3. Joint venture and associated enterprise Found more in Note IX.3. “Equity in joint venture and associated enterprise” Other associated enterprise or joint ventures which has related transaction with the Company in the period or occurred previous: nil 4. Other Related party Other related party Relationship with the Enterprise Robert Bosch Company Second largest shareholder of the Company Key executive Director, supervisor and senior executive of the Company 5. Related transaction (1) Goods purchasing, labor service providing and receiving Goods purchasing/labor service receiving In RMB/CNY Whether more than Content of related Approved Related party Current period the transaction limit Last Period transaction transaction limit (Y/N) Weifu Precision Goods 12,828,147.72 40,000,000.00 N 22,934,380.54 Machinery Bosch Diesel System Goods 8,332,723.32 60,000,000.00 N 29,375,329.74 Weifu Environment Goods 675,657,317.56 2,000,000,000.00 N 946,283,103.47 Robert Bosch Company Goods 66,801,410.90 130,000,000.00 N 62,350,113.72 Goods sold/labor service providing In RMB/CNY 169 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Related party Content of related transaction Current period Last Period Weifu Precision Machinery Goods and labor 661,932.69 2,772,785.47 Bosch Diesel System Goods and labor 1,487,822,558.90 1,600,013,496.75 Weifu Environment Goods and labor 10,231,437.30 28,741,766.37 Robert Bosch Company Goods and labor 309,791,012.66 319,461,744.57 (2) Related trusteeship management/contract & entrust management/ outsourcing Nil (3) Related lease As a lessor: In RMB/CNY Lease income recognized in the Lease income recognized at last Lessee Assets type Period Period Weifu Environment Workshop 1,254,028.50 1,254,028.50 As a tenant: nil (4) Related guarantee Nil (5) Related party’s borrowed/lending funds In RMB/CNY Related party Loan amount Start date Maturity Note Borrowing Wuxi Industry Group 5,470,000.00 2018-02-13 2019-02-12 Return by Weifu Leader Funds lent (6) Related party’s assets transfer and debt reorganization Nil (7) Remuneration of key manager In RMB/CNY 170 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Item Current period Last Period Remuneration of key manager 2,570,000.00 2,400,000.00 (8) Other related transactions Item Related party Current period Last Period Purchase of fixed assets Bosch Diesel System 5,720,900.23 42,735.04 Technology royalties paid etc. Robert Bosch Company 1,122,250.34 2,805,114.55 Technology royalties paid etc. Bosch Diesel System 1,002,714.76 Sales of fixed assets Weifu Environment 10,485,153.25 6. Receivable/payable items of related parties (1)Receivable item In RMB/CNY Ending balance Opening balance Item Related party Bad debt Bad debt Book balance Book balance reserve reserve Account receivable Weifu Precision Machinery 197,525.88 77,477.41 Account receivable Bosch Diesel System 447,801,217.87 420,746,170.76 Account receivable Robert Bosch Company 122,663,619.56 132,830,976.56 Other account receivable Robert Bosch Company 12,285,081.81 Account received in advance Robert Bosch Company 27,359.50 Account paid in advance Robert Bosch Company 3,255.11 Account receivable Weifu Environment 8,491,872.63 1,233,580.22 Account received in advance Weifu Environment 184,592.07 Account paid in advance Bosch Diesel System 1,057,272.58 (2) Payable item In RMB/CNY Item Related party Ending book balance Opening book balance Account payable Weifu Precision Machinery 8,166,482.16 7,941,418.36 Account payable Weifu Environment 518,192,336.60 337,307,634.70 Account payable Bosch Diesel System 12,463,997.06 24,743,403.24 Account payable Robert Bosch Company 21,408,603.28 5,170,470.70 171 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Accounts received in advance Robert Bosch Company 754,552.15 Account paid in advance Robert Bosch Company 21,000,000.00 Other accounts payable Wuxi Industry Group 5,476,678.00 Account paid in advance Wuxi Industry Group 48,828.87 7. Commitments of related party Nil 8. Other Nil XIII. Share-based payment Nil XIV. Commitment or contingency 1. Important commitments Important commitments in balance sheet date Nil 2. Contingency (1) Contingency on balance sheet date Guarantees to subsidiary Whether Guarantee amount Guarantee guarantee Guarantee provided Debit bank (in 10 thousand Starting from Terminated dated received implemented or Yuan) not (Y/N) Weifu Jiangbei branch of High-Technology Weifu Tianli Bank of China in 3,750.00 2016-11-15 2021-11-10 N Group Co., Ltd. Ningbo (2) For the important contingency not necessary to disclosed by the Company, explained reasons The Company has no important contingency that need to disclosed 172 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 XV. Events after balance sheet date 1. Important non adjustment matters Nil 2. Profit distribution Nil 3. Sales return Nil 4. Other events after balance sheet date Nil XVI. Other important events 1. Previous accounting errors collection Nil 2. Debt restructuring Nil 3. Assets replacement Nil 4. Pension plan The Enterprise Annuity Plan under the name of WFHT has deliberated and approved by 8th session of 7th BOD: in order to mobilize the initiative and creativity of the employees, established a talent long-term incentive mechanism, enhance the cohesive force and competitiveness in enterprise, the Company carried out the above mentioned annuity plan since the date of reply of plans reporting received from labor security administration department. Annuity plans are: the annuity fund are paid by the enterprise and employees together; the amount paid by enterprise shall not over the 1/12 of the total salary of last years, amount paid by individual and enterprise shall not over the 1/6 of the total salary of last year, in accordance with the State’s annuity policy, the Company will adjusted the economic benefits in due time, in principle of responding to the economic strength of the 173 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 enterprise, the amount paid by the enterprise at current period control in the 8.33 percent of the total salary of last year, specific paying ratio later shall be adjust correspondingly in line with the operation condition of the Company. In December 2012, the Company received the Reply on annuity plans reporting under the name of WFHT from labor security administration department, later, the Company entered into the Entrusted Management Contract of the Annuity Plan of WFHT with PICC. 5. Discontinued operations Nil 6. Segment (1) Recognition basis and accounting policy for reportable segment Determine the operating segments in line with the internal organization structure, management requirement and internal reporting system. Operating segment of the Company refers to the followed components that have been satisfied at the same time: ①the component is able to generate revenues and expenses in routine activities; ②management of the Company is able to assess the operation results regularly, and determine resources allocation and performance evaluation for the component; ③being analyzed, financial status, operation results and cash flow of the components are able to required by the Company The Company mainly engaged in the manufacture of fuel system of internal combustion engine products, auto components, muffler and purifier etc., based on the product segment, the Company determine three reporting segment as auto fuel injection system, air management system and automotive post processing system. Accounting policy for the three reporting segments are shares the same policy state in Note V Segment assets exclude financial assets measured by fair value and with variation reckoned into current gains/losses, derivative instruments, dividends receivables, financial products due within one year, financial assets available for sale, long term equity investment and other undistributed assets, since these assets are not related to products operation. (2) Financial information for reportable segment In RMB/CNY Add: Product segment Product segment Product segment investment/incom of automobile of automotive of air e measured by Offset of segment Item Total fuel injection post processing management equity, income of system system system financial products or possession and 174 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 disposal income, the retained assets or gains/losses as the financial assets available for sale or possession and disposal income Operating income 2,887,472,034.84 1,338,975,875.93 249,872,942.78 72,876,507.50 4,403,444,346.05 Operating cost 2,106,502,659.22 1,184,686,948.46 186,025,785.22 71,828,888.46 3,405,386,504.44 Total Profit 409,096,576.45 18,760,424.74 13,369,919.27 916,625,070.62 1,366,643.31 1,356,485,347.77 Net profit 359,669,021.43 13,213,081.52 13,099,724.16 889,978,914.91 858,048.78 1,275,102,693.23 Total assets 22,334,489,303.8 9,432,703,846.25 3,130,358,394.74 810,868,051.46 9,964,372,961.66 1,003,813,950.29 2 Total liabilities 3,531,209,246.64 2,198,839,810.78 469,855,219.61 433,784,945.50 5,766,119,331.53 (3) If there are no segment in the Company, or the total assets and liabilities of the segment are un-able to disclosed, explain the reasons Not applicable 7. Major transaction and events makes influence on investor’s decision Nil XVII. Principle notes of financial statements of parent company 1. Account receivable (1) Category of account receivable In RMB/CNY Ending balance Opening balance Book balance Bad debt reserve Book balance Bad debt reserve Category Book Accrual Accrual Book value Amount Ratio Amount value Amount Ratio Amount ratio ratio Account receivable with bad debt 6,800,00 6,800,00 7,000,000 7,000,000 0.87% 100.00% 0.93% 100.00% provision accrual on 0.00 0.00 .00 .00 a single basis Including: Including: Account 6,800,00 6,800,00 7,000,000 7,000,000 receivable with 0.87% 100.00% 0.93% 100.00% 0.00 0.00 .00 .00 single significant 175 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 amount and withdrawal bad debt provision on single basis Account receivable with bad debt 772,349, 5,592,52 766,756,6 745,766,0 3,519,019 742,246,99 99.13% 0.72% 99.07% 0.47% provision accrual on 191.61 9.81 61.80 10.32 .33 0.99 portfolio Including: Account receivable with bad debt 617,175, 5,592,52 611,334,6 575,890,7 3,519,019 572,371,75 79.21% 0.91% 76.50% 0.61% provision accrual on 959.31 9.81 04.28 71.39 .33 2.06 age analysis 155,173, 155,422,0 169,875,2 169,875,23 Related party 19.92% 22.57% 232.30 57.52 38.93 8.93 779,149, 12,392,5 766,756,6 752,766,0 10,519,01 742,246,99 Total 100.00% 100.00% 1.40% 191.61 29.81 61.80 10.32 9.33 0.99 Accrual bad debt reserve on single basis: 6,800,000.00 Yuan In RMB/CNY Ending balance Item Book balance Bad debt reserve Accrual ratio Accrual causes BD bills 6,800,000.00 6,800,000.00 100.00% Have difficulty in collection Total 6,800,000.00 6,800,000.00 -- -- Bad debt reserve accrual by portfolio:5,592,529.81 Yuan In RMB/CNY Ending balance Item Book balance Bad debt reserve Accrual ratio Account receivable with bad debt provision 617,175,959.31 5,592,529.81 0.91% accrual on age analysis Total 617,175,959.31 5,592,529.81 -- Explanation on portfolio determines: Except for the receivables with impairment reserves accrual singly; base on the actual loss ratio of the receivables of previous years, with same or similar credit portfolio, and combining actual condition accrual bad debt reserves to determined the accrual ratio for bad debt reserves 176 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, please refer to the disclosure of other receivables to disclose related information about bad-debt provisions: □ Applicable √ Not applicable By account age In RMB/CNY Account age Ending balance Within one year(One year included) 610,306,392.05 Within 6 months 589,618,490.41 6 months to one year 20,687,901.64 1-2 years 3,713,401.89 2-3 years 625,176.83 Over 3 years 2,530,988.54 3-4 years 2,530,988.54 Total 617,175,959.31 (2) Bad debt provision accrual, collected or reversal in the period Bad debt provision accrual in the period: In RMB/CNY Amount changed in the period Category Opening balance Ending balance Accrual Collected or reversal Written-off Bad debt reserve of 10,519,019.33 2,081,075.48 200,000.00 7,565.00 12,392,529.81 account receivable Total 10,519,019.33 2,081,075.48 200,000.00 7,565.00 12,392,529.81 Including major amount bad debt provision that collected or reversal in the period: In RMB/CNY Enterprise Amount collected or reversal Collection by BD bills 200,000.00 Collected Total 200,000.00 -- (3) Account receivable actually written-off in the period In RMB/CNY Item Amount written-off Retail enterprise 7,565.00 177 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Including major account receivable written-off: nil (4) Top 5 account receivables at ending balance by arrears party Total receivables collected by arrears party for the Period amounting to 562,914,456.50 Yuan, takes 72.25 percent in closing balance of the account receivables; 638,572.32 Yuan are accrual correspondingly for bad debt reserves. (5) Account receivable derecognition due to financial assets transfer Nil (6) Assets and liabilities resulted by account receivable transfer and continues involvement Nil 2. Other account receivable In RMB/CNY Item Ending balance Opening balance Interest receivable 30,570.83 188,682.78 Dividend receivable 517,216,193.24 Other account receivable 195,451,736.76 196,660,409.35 Total 712,698,500.83 196,849,092.13 (1) Interest receivable 1) Category of interest receivable In RMB/CNY Item Ending balance Opening balance Interest receivable from unified loan and return 30,570.83 188,682.78 Total 30,570.83 188,682.78 2) Significant overdue interest Nil 3) Accrual of bad debt provision □ Applicable √ Not applicable (2) Dividend receivable 1) Category of dividend receivable In RMB/CNY 178 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Item (or invested enterprise) Ending balance Opening balance SDEC 610,417.20 Guolian Securities Co., Ltd. 903,640.00 Zhonglian Electronic 105,200,000.00 Bosch Automobile Diesel 410,502,136.04 Total 517,216,193.24 2) Important dividend receivable with account age over one year Nil 3) Accrual of bad debt provision □ Applicable √ Not applicable (3) Other account receivable 1) Other account receivable by nature In RMB/CNY Nature Ending book balance Opening book balance Intercourse funds receivable from units 34,499,081.51 Balance of related party in the consolidate scope 148,552,615.72 196,047,735.72 Receivable from the tax refund for withholding the B-share 11,515,433.66 Staff loans and petty cash 904,908.09 605,473.63 Other 7,200.00 Total 195,472,038.98 196,660,409.35 2) Accrual of bad debt provision Phase I Phase II Phase III Expected credit losses for Expected credit losses for Bad debt reserve Expected credit losses Total the entire duration (without the entire duration (with over next 12 months credit impairment occurred) credit impairment occurred) Current accrual 20,302.22 20,302.22 Balance on Jun. 30, 2019 20,302.22 20,302.22 Major change of book value for the loss impairment in the period □ Applicable √ Not applicable By account age In RMB/CNY Account age Ending balance Within one year(One year included) 20,302.22 Within 6 months 6 months to one year 20,302.22 Total 20,302.22 179 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 3) Bad debt provision accrual, collected or reversal in the period: Bad debt provision accrual was 20,302.22 Yuan; the amount collected or switches back amounting to 0 Yuan. 4) Other account receivable actually written-off in the period: nil 5) Top 5 other receivables at ending balance by arrears party: nil In RMB/CNY Ratio in total Ending ending balance Enterprise Nature Ending balance Account age balance of of bad other debt receivables reserve Balance of related party in the Within 6 Wuxi Weifu Chang’an Co., Ltd. 90,000,000.00 46.04% consolidate scope months Balance of related party in the Within 6 Weifu Mashan Pump Glib Co., Ltd. 34,552,615.72 17.68% consolidate scope months Wuxi Weifu Schmidt Power System Balance of related party in the Within 6 24,000,000.00 12.28% Spare Parts Co., Ltd. consolidate scope months Troowin Power System Technology Within 6 Intercourse funds of unit 24,000,000.00 12.28% Co., Ltd. months Receivable from the tax refund for Receivable from the tax refund for Within 6 11,515,433.66 5.89% withholding the B-share withholding the B-share months Total -- 184,068,049.38 -- 94.17% 6) Account receivable with government grand involved: nil 7) Other receivable for termination of confirmation due to the transfer of financial assets: nil 8) The amount of assets and liabilities that are transferred other receivable and continued to be involved: nil 3. Long-term equity investment In RMB/CNY Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Investment for 1,548,768,117.88 1,548,768,117.88 1,466,611,689.17 1,466,611,689.17 subsidiary Investment for associates and joint 4,088,758,277.53 4,088,758,277.53 4,272,498,737.38 4,272,498,737.38 venture Total 5,637,526,395.41 5,637,526,395.41 5,739,110,426.55 5,739,110,426.55 180 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 (1)Investment for subsidiary In RMB/CNY Provision for Ending balance of Current The invested entity Opening balance Current increased Ending balance impairment in the impairment decreased period provision Weifu Jinning 178,639,593.52 178,639,593.52 Weifu Leader 460,113,855.00 460,113,855.00 Weifu Mashan 168,693,380.51 168,693,380.51 Weifu Chang’an 220,902,037.30 220,902,037.30 Weifu 32,849,254.85 32,849,254.85 International Trade Weifu ITM 167,000,000.00 167,000,000.00 Weifu Schmidt 50,160,000.00 50,160,000.00 Weifu Tianli 105,799,100.00 105,799,100.00 Weifu Autocam 82,454,467.99 82,454,467.99 SPV 82,156,428.71 82,156,428.71 Total 1,466,611,689.17 82,156,428.71 1,548,768,117.88 (2) Investment for associates and joint venture In RMB/CNY Current changes (+,-) Endin g Other Other balan Additi Capit Investment compreh Cash dividend Provisi equit Ot ce of Enterprise Opening balance onal al gain/loss ensive or profit on for Ending balance y he impai invest reduc recognized income announced to impair chan r rment ment tion under equity adjustme issued ment ge provi nt sion I. Joint venture Wuxi Weifu Electric 54,742,375.02 -1,176,749.59 53,565,625.43 Drive Tech. Co., Ltd. Subtotal 54,742,375.02 -1,176,749.59 53,565,625.43 II. Associated enterprise 181 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Bosch Automobi le Diesel 3,076,037,410.12 591,431,846.91 821,004,272.08 2,846,464,984.95 System Co., Ltd. Zhonglian Automobi le 1,086,475,955.72 147,532,407.57 105,200,000.00 1,128,808,363.29 Electronic Co., Ltd. Weifu Precision Machiner y 55,242,996.52 4,676,307.34 59,919,303.86 Manufact uring Co., Ltd. Subtotal 4,217,756,362.36 743,640,561.82 926,204,272.08 4,035,192,652.10 Total 4,272,498,737.38 742,463,812.23 926,204,272.08 4,088,758,277.53 (3) Other explanation 4. Operating income and cost In RMB/CNY Current period Last Period Item Income Cost Income Cost Main business 1,895,457,557.71 1,303,140,646.02 2,136,258,034.82 1,533,313,082.59 Other business 197,016,902.53 168,830,868.68 178,884,620.31 165,203,440.31 Total 2,092,474,460.24 1,471,971,514.70 2,315,142,655.13 1,698,516,522.90 Whether implemented the new revenue standards □Yes √No 5. Investment income In RMB/CNY Item Current period Last Period Income of long-term equity investment calculated based on cost 62,418,400.00 Income of long-term equity investment calculated based on equity 742,463,812.23 894,788,126.54 182 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Investment income from period of holding the tradable financial assets 2,287,308.59 Investment income from period of holding the financial assets available for sale 3,220,575.00 Investment income obtained from disposal of financial assets available for sale 17,370,816.75 Entrust financial income 95,464,240.84 159,552,310.73 Total 840,215,361.66 1,137,350,229.02 XVIII. Supplementary Information 1. Current non-recurring gains/losses √ Applicable □ Not applicable In RMB/CNY Item Amount Note Gains/losses from the disposal of non-current asset 4,927,677.70 Governmental subsidy reckoned into current gains/losses (not including the 含 House land expropriation subsidy enjoyed in quota or ration according to national standards, which are 44,179,326.95 and disposal incentives of closely relevant to enterprise’s business) Weifu Jinning Profit and loss of assets delegation on others’ investment or management 95,464,240.84 Held transaction financial asset, gains/losses of changes of fair values from transaction financial liabilities, and investment gains from disposal of transaction financial asset, transaction financial liabilities and financial asset 30,686,277.13 available for sales, exclude the effective hedging business relevant with normal operations of the Company Switch back of provision for depreciation of account receivable and contract 200,000.00 assets which was singly taken depreciation test Other non-operating income and expenditure except for the aforementioned 838,232.57 items Less: Impact on income tax 26,626,210.20 Impact on minority shareholders’ equity 7,102,792.64 Total 142,566,752.35 -- 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 183 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 2. REO and earnings per share Earnings per share Weighted Profits during report period Basic earnings per share Diluted earnings per average ROE (RMB/Share) share (RMB/Share) Net profits belong to common stock stockholders of the 7.60% 1.25 1.25 Company Net profits belong to common stock stockholders of the 6.73% 1.10 1.10 Company after 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) Explanation on data differences under the accounting standards in and out of China; as for the differences adjustment audited by foreign auditing institute, listed name of the institute Not applicable 4. Other Nil 184 无锡威孚高科技集团股份有限公司 2019 年半年度报告全文 Section XI. Documents available for reference I. Financial statement carrying the signatures and seals of person in charge of the company, principal of the accounting works and person in charge of accounting organ (accounting Supervisor); II. Original documents of the Company and manuscripts of public notices that disclosed in the website Juchao (http://www.cninfo.com.cn) designated by CSRC in the report period; III. Semi-annual report published on China Securities Journal, Securities Times and Hong Kong Commercial Daily during the Period. BOD of Weifu High-Technology Group Co., Ltd. Chairman: Chen Xuejun August 27, 2019 185