无锡威孚高科技集团股份有限公司 Weifu High-Technology Group Co., Ltd. Semi-Annual Report 2020 August 2020 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Section I. Important Notice, Contents and Interpretation 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. Wang Xiaodong, 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 2020 Semi-Annual Report is authentic, accurate and complete. All directors are attend the Meeting for the 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 2020 年半年度报告全文 Contents Section I Important Notice, Contents and Interpretation .............................................................. 2 Section II Company Profile and Main Financial Indexes ............................................................. 5 Section III Summary of Business .................................................................................................... 8 Section IV Discussion and Analysis of Operation ......................................................................... 11 Section V Important Events .......................................................................................................... 22 Section VI Changes in shares and particular about shareholders ............................................... 33 Section VII Preferred Stock……………………………………………………………………….38 Section VIII Corporate Bonds ........................................................................................................ 39 Section IX Particulars about Directors, Supervisors and Senior Executives…. ........................ 40 Section X Corporate Bonds ............................................................................................................. 43 Section XI Financial Report ............................................................................................................ 44 Section XII Documents Available for Reference ......................................................................... 194 3 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Interpretation Items Refers to Contents Company, The Company, WFHT Refers to Weifu High-Technology Group Co., Ltd. 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 DS, Bosch Diesel System Refers to Bosch Automobile Diesel System Co., Ltd. Weifu Leader Refers to Wuxi Weifu Leader Catalytic Converter Co., Ltd. Weifu Jinning Refers to Nanjing Weifu Jinning 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 2020 to 30 June 2020 4 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Section II Company Profile and Main Financial Indexes I. Company profile Short form of the stock WFHT, Su Weifu-B Stock code 000581, 200581 Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in Chinese) 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 (if WEIFU HIGH-TECHNOLOGY GROUP CO.,LTD. applicable) Short form of foreign name of the WFHT Company (if applicable) Legal representative Wang Xiaodong II. Person/Way to contact Secretary of the Board Rep. of security affairs Name Zhou Weixing Yan Guohong Contact add. No.5 Huashan Road, Xinwu District, Wuxi No.5 Huashan Road, Xinwu District, Wuxi 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 2019. 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 2020 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 2019. 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) 6,594,403,624.56 4,403,444,346.05 49.76% Net profit attributable to shareholders of 1,326,344,424.98 1,256,661,577.09 5.55% the listed company (RMB) Net profit attributable to shareholders of the listed company after deducting 1,175,574,728.86 1,114,094,824.74 5.52% non-recurring gains and losses (RMB) Net cash flow arising from operating 437,657,072.41 690,323,908.25 -36.60% activities (RMB) Basic earnings per share (RMB/Share) 1.32 1.25 5.60% Diluted earnings per share (RMB/Share) 1.32 1.25 5.60% Weighted average ROE 7.80% 7.60% 0.20% Changes over period-end of Period-end Period-end of last year last year Total assets (RMB) 24,755,340,246.43 23,958,348,185.78 3.33% Net assets attributable to shareholder of 16,922,892,215.78 16,990,405,136.62 -0.40% 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 2020 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 accrued -543,370.99 for impairment of assets) Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to 43,932,417.68 enterprise’s business) Profit and loss of assets delegation on others’ investment or management 138,448,908.25 Gains/losses of fair value changes from holding the transaction financial asset, derivative financial assets, transaction financial liability and derivative financial liability and investment earnings obtained from disposing the transaction financial asset, derivative 258,157.65 financial assets, transaction financial liability, derivative financial liability and other debt investment, except for the effective hedging business related to normal operation of the Company Other non-operating income and expenditure except for the aforementioned items -2,840,670.20 Less: Impact on income tax 26,779,577.16 Impact on minority shareholders’ equity (post-tax) 1,706,169.11 Total 150,769,696.12 -- 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 2020 年半年度报告全文 Section III Summary of Business I. Main businesses of the company in the reporting period 1. The Company belongs to automobile components industry, and its main products include diesel fuel management system products, exhaust after-treatment system products and air management system products. 2. Main uses of the Company's products (1) The diesel fuel management system products:they 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 Air management system products (supercharger): matches with most of the domestic small-bore diesel engine plants and some 6-cyl 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 Major assets Note of major changes Equity assets The joint venture distributed dividend in reporting period Fixed assets No major change 8 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Intangible assets No major change Construction in progress No major change 2. Main overseas assets √Applicable □ Not applicable The Whether Control Inco proportion there are measures to Specific content of Operation me of overseas significan Cause of formation Asset size Location guarantee the asset model statu assets to the t risks of asset s company’s impairme security net assets nt(Y/N) In April 2019, the In order to accelerate the The The Company cultivation of the company Company established SPV (a company's new business invested will pay full wholly-owned growth point and 7.26 attention to subsidiary) in accelerate the million changes in Denmark. And to transformation and and gained the industry acquire 66% equity upgrading of the company, control of and the th of the Danish IRD on 26 March 2019, the 4 IRD Fuel Controlling market, give th Denmark N/A 1.07% N Fuel Cells A/S session of the 9 Board of Cells A/S. subsidiary play to its (hereinafter referred Directors reviewed and own to as “IRD”) with approved the “Proposal on advantages, 7.26 million euros the Company's Foreign and actively Investment” prevent and resolve various risks. 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 Provincial Engineering and Technology Research Center and Industrialization Base of National Hi-Tech Research and Development Achievement, we have became the backbone enterprise of the core parts of domestic automobile (power engineering) after more than 60 years of cultivation, 80 percent 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 9 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 2020 年半年度报告全文 Section IV Discussion and Analysis of the Operation I. Introduction (1) Overall situation This year, affected by the novel coronavirus pneumonia epidemic, the company and the industry are facing huge challenges. At the beginning of the epidemic, the government issued a series of policies to control the spread of the epidemic, which forced companies to suspend work and production, and the poor social logistics system seriously affected the supply of raw materials and components and the products sales of the company. In response to the above-mentioned difficulties and challenges, the company has taken corresponding measures to respond actively,when the local epidemic was initially controlled, it speeded up the resumption of work and production, and ensured to neglect neither prevention and control of the epidemic nor production and operation.From the formal resumption of work on February 10 to the end of February, the company's resumption rate reached 80%, which basically met the needs of production. After the epidemic was basically controlled, the state issued a series of policies to stimulate economic recovery, which strongly promoted the recovery of the industry. In the face of positive policy signals, the company seized the opportunity to quickly organize the purchase of imported raw materials and important parts required by the company, ensuring the company’s production and operation needs in the second quarter and enabling the company to effectively resist the negative impact of the epidemic. Compared with the same period last year, the company's various economic indicators maintained good growth. During the reporting period, the company achieved operating income of 6.594 billion yuan, an increase of 49.76% over the same period last year; realized profits of 1.404 billion yuan, an increase of 3.49% over the same period last year; realized net profit attributable to owners of the parent company of 1.326 billion yuan, an increase of 5.55%over the same period last year. (2) Main work carried out in the first half of the year 1. Actively responded to challenges, seized market opportunities, and ensured sales growth. The epidemic at the beginning of the year brought severe challenges to the industry and the company. The company adjusted its response strategies in a timely manner, actively promoted the implementation progress of key projects in key customers, increased the market shares of the three major business segments, and ensured the sales growth of the three major business products, and realized significant growth in operating income for the first half of the year. 2. Intensified technological research and development and promoted the development of new products. Gasoline supercharger products have gradually realized mass production in major customer projects; exhaust gas after-treatment system products have completed the encapsulation development of CN-VI GPF catalyst products for core customers on passenger cars, and achieved mass supply, and the development of WSP2.0 encapsulation platform have been in progress on commercial vehicles, all phases of tests were completed on schedule; the design, trial production and testing of functional samples of core components for new energy products were completed , 11 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 and we mastered the basic research and development capabilities. 3. Consolidated lean production and built an information-based manufacturing system. Actively improved the construction and in-depth application of Weifu's intelligent manufacturing platform, and promoted the large-scale application of cloud computing and 5G. Currently, uploading the application to the cloud is in the implementation process. The construction plan design of 5G factory has been completed, the construction of Aris process management platform has been completed, and the unified process modeling has been established, integrating various management elements to form an integrated and visual process management model. 4. Improved cost control capabilities, standardized and unified cost center setting rules, and clarified cost responsibility subjects and authorization approval mechanisms. Built an asset management system, optimized asset quality, optimized financial structure, reduced working capital, optimized credit management system, combined credit and customer ratings, and controlled bad debts from the source; deepened the construction of PSSC sharing platform: the optimization plans for all special subjects of indirect material business PSSC system were completed, the first phase of the company’s full coverage of the direct material business PSSC system has been completed and launched. Reorganized the entire procurement process, and initially established a process map of the entire procurement process. Established the bottom line of strict compliance, integrated risk management into process construction, and gradually realized the risk management concept of integrating risk control compliance elements into the process system by identifying key risk control points in the process and integrating the management process and management risk. 5. Improved the strategic planning system and actively deployed new businesses. Focusing on the company's strategic planning system, implemented strategic planning management functions, established strategic planning and investment specialized committees, strategic planning work organizations and expert database organizations, basically established the company's medium and long-term strategic development master plan, and decomposed, implemented, tracked and evaluated the strategic planning. Promoted the implementation of new business plans, initially formulated product plans for hydrogen fuel cells, conducted market research on key customers, and promoted IRD capacity planning. 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 In RMB Current period Same period of last year y-o-y changes (+,-) Reasons Sales of the after-treatment Operation income 6,594,403,624.56 4,403,444,346.05 49.76% products growth Operation cost 5,413,969,374.53 3,405,386,504.44 58.98% Sales of the after-treatment 12 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 products growth Sales of the after-treatment Sales expenses 138,394,171.31 104,270,647.40 32.73% products growth Administrative expenses 336,984,661.28 310,909,980.43 8.39% Financial cost -34,606,959.25 -29,492,795.58 17.34% Income tax expense 57,505,452.12 81,382,654.54 -29.34% R&D investment 211,531,953.72 180,167,642.16 17.41% Net cash flow arising 437,657,072.41 690,323,908.25 -36.60% from operation activities Net cash flow arising The joint venture distributed 1,445,525,014.63 314,744,349.46 359.27% from investment activities dividend Net cash flow arising -1,000,189,530.78 -813,830,454.63 22.90% The borrowings declined from financing activities Net increase of cash and 887,655,835.02 191,652,992.77 363.16% cash equivalent 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 operation revenue In RMB Current period Same period of lat year Ratio in Ratio in Increase/decrea Amount operation Amount operation se y-o-y(+,-) revenue revenue Total operation revenue 6,594,403,624.56 100% 4,403,444,346.05 100% 49.76% According to industries Automobile components 6,352,974,489.95 96.34% 4,133,178,892.36 93.86% 53.71% Other business 241,429,134.61 3.66% 270,265,453.69 6.14% -10.67% According to products Automobile fuel management 2,698,345,643.33 40.92% 2,538,597,772.47 57.65% 6.29% system Automobile after-treatment system 3,298,709,150.58 50.02% 1,354,791,563.22 30.77% 143.48% Air management system 355,919,696.04 5.40% 239,789,556.67 5.44% 48.43% Other business 241,429,134.61 3.66% 270,265,453.69 6.14% -10.67% According to region Domestic sales 6,479,404,165.51 98.26% 4,237,239,553.83 96.23% 52.92% Foreign sales 114,999,459.05 1.74% 166,204,792.22 3.77% -30.81% 13 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 The industries, products, or regions accounting for over 10% of the company’s operating revenue or operating profit √Applicable □ Not applicable In RMB Increase/decrease Increase/decrease Increase/decrease Gross profit Operating revenue Operating cost of operating of operating cost of gross profit ratio revenue y-o-y y-o-y ratio y-o-y According to industries Automobile 6,352,974,489.95 5,256,052,615.30 17.27% 53.71% 65.31% -5.80% components According to products Automobile fuel 2,698,345,643.33 1,969,941,183.98 27.00% 6.29% 9.05% -1.85% management system Automobile 3,298,709,150.58 3,035,602,808.52 7.98% 143.48% 154.47% -3.97% after-treatment system Air management 355,919,696.04 250,508,622.80 29.62% 48.43% 39.06% 4.75% system According to region Domestic sales 6,237,975,030.90 5,144,592,565.68 17.53% 57.25% 70.14% -6.25% Foreign sales 114,999,459.05 111,460,049.62 3.08% -30.81% -28.46% -3.18% Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on latest one year’s scope of period-end □ Applicable √ Not applicable Reasons for y-o-y relevant data with over 30% changes √Applicable □Not applicable Operating revenue has major growth mainly because sales of after-treatment system products growth and the price of main raw materials (precious metal) soaring. III. Analysis of non-main business √Applicable □Not applicable In RMB Amount Ratio in total profit Note Whether be sustainable (Y/N) Income mainly from the Y (The Company’s joint ventures Bosch two joint ventures the DS and Zhonglian Electronics’ joint Investment income 923,574,526.61 65.79% Company (Bosch DS venture- Lianhe Electronic have stable and Zhonglian production and operation both on a Electronic) sustained basis) 14 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Gain/loss of fair 258,157.65 0.02% value changes Asset impairment -52,807,909.47 -3.76% Non-operating 164,150.94 0.01% income Non-operating 4,124,451.68 0.29% expense IV. Assets and liability 1. Major changes of assets composition In RMB Period-end Period-end of last year Ratio in Ratio Ratio in Notes of major changes Amount total Amount changes(+,-) total assets assets Monetary fund 2,564,147,609.58 10.36% 2,689,698,577.33 12.04% -1.68% Sales revenue increased during Account 3,674,151,635.33 14.84% 2,319,307,654.58 10.38% 4.46% the reporting period, and the receivable short-term receivable increased Inventory 1,670,738,746.77 6.75% 1,427,136,271.99 6.39% 0.36% Investment 21,648,596.74 0.09% 21,131,775.19 0.09% property Long-term equity The joint venture distributed 3,977,690,136.49 16.07% 4,792,747,311.47 21.46% -5.39% investment dividend in reporting period Fix assets 2,875,000,573.89 11.61% 2,680,884,221.89 12.00% -0.39% Construction in 253,735,407.77 1.02% 259,557,105.61 1.16% -0.14% progress Short-term loans 328,308,738.00 1.33% 321,055,399.28 1.44% -0.11% Long-term loans 20,000,000.00 0.08% 22,500,000.00 0.10% -0.02% 2. Assets and liability measured by fair value √Applicable □Not applicable In RMB Deval Changes of Accumu uation Amo lative Amount of unt Amount at the fair value of Other Amount at Items changes withdr purchase in the of beginning period gains/losses in changes(+,-) period-end of fair awing period sale this period value in the in 15 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 reckone period the d into perio equity d Financial assets 1.Transaction financial asset(excluding 4,984,475,661.75 258,157.65 2,863,000,000.00 2,938,128,352.00 4,909,605,467.13 derivative financial assets) 4.Other equity instrument 285,048,000.00 285,048,000.00 investment Subtotal of 5,269,523,661.75 258,157.65 2,863,000,000.00 2,938,128,352.27 5,194,653,467.13 financial assets Above total 5,269,523,661.75 258,157.65 2,863,000,000.00 2,938,128,352.27 5,194,653,467.13 Financial 0.00 0.00 liabilities Other changes The purchased financial products are due for redemption 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 In RMB Item Book value at Restriction reason period-end Monetary funds 32,786,262.96 Cash deposit paid for bank acceptance Monetary funds 50,000,000.00 Amount of shares buy-back Monetary funds 2,206,857.75 Court freeze Note receivable 645,547,079.23 Notes pledge for bank acceptance 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 People's Court), the property with the value of 217 million Yuan under the name Transaction 117,947,240.94 of the Company and other seven respondents and the third party Shenzhen Hejun Chuangye financial asset 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 Automation& fruits and 11,739,102 shares of SDEC& fruits held by the Company were frozen. Total 848,487,440.88 -- 16 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 measured by fair value √Applicable □Not applicable In RMB Gains/loss of Cumulative Amount Cumulative Initial investment fair value changes in fair Amount sales in Amount at Capital Assets type purchased in the investment cost changes in value included the period period-end source period income the period in equity Stock 268,539,500.00 -1,204,560.00 -17,721,963.00 195,540,676.46 126,649,272.00 Fund 551,446,703.43 310,000,000.00 451,446,703.43 30,503,678.76 410,000,000.00 Bond 320,000,000.00 330,000,000.00 290,000,000.00 9,048,533.38 360,000,000.00 Trust 1,588,800,000.00 1,147,000,000.00 280,000,000.00 63,815,284.19 2,455,800,000.00 products Own Other 2,334,800,000.00 1,462,717.65 19,694,559.97 1,076,000,000.00 1,916,681,648.84 35,081,411.92 1,513,812,911.13 fund Other non-current 43,343,284.00 43,343,284.00 financial assets Other equity instrument 285,048,000.00 285,048,000.00 investment Total 5,391,977,487.43 258,157.65 1,972,596.97 2,863,000,000.00 2,938,128,352.27 333,989,584.71 5,194,653,467.13 -- 5. Financial assets investment (1) Securities investment √Applicable □Not applicable In RMB 17 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Book Curre Account Current Curr Variety Cod Short value at Cumulative nt Profit and Book Initial ing gain/loss ent of e of form of the fair value purch loss in the value at Accounting Capital investmen measure of fair sales securitie secu securiti beginning changes in ase Reporting the end of subject Source t cost ment value amo s rities es of the equity amou Period the period model changes unt period nt 600 199,208,0 91,822,33 -1,298,76 -18,734,6 -1,298,760 90,523,57 Domesti SDEC 841 00.00 Measure 2.00 0.00 13.00 .00 2.00 Transaction c and Own d by fair financial foreign Miracle funds 002 69,331,50 value 36,031,50 36,125,70 asset stocks Autom 94,200.00 1012650.00 94,200.00 009 0.00 0.00 0.00 ation 268,539,5 127,853,8 -1,204,56 -17,721,9 -1,204,560 126,649,2 Total -- 0.00 0.00 -- -- 00.00 32.00 0.00 63.00 .00 72.00 Disclosure date of 24 March 2012 securities investment approval of the Board 4 June 2013 (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 equity participation and controlling subsidiary √ Applicable □ Not applicable Main subsidiary and stock-jointly enterprise with over 10% influence on net profit of the Company In RMB 18 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Company Main Register Type Total assets Net assets Operating revenue Operating profit Net profit name business capital After-treat Weifu ment 502,596,3 Subsidiary 5,304,674,681.53 1,751,815,573.48 3,307,136,098.12 77,630,187.87 89,024,252.11 Leader system 00.00 products Fuel Weifu manageme 346,286,8 Subsidiary 1,432,851,061.86 960,422,691.54 352,597,870.12 73,854,249.53 71,027,425.74 Jinning nt system 25.80 products Equity Fuel participati manageme USD241,0 Bosch DS 13,204,305,600.74 5,790,299,088.97 7,807,711,867.16 1,972,088,160.35 1,764,998,863.92 on nt system 00,000.00 enterprise products Equity Gasoline Zhonglian participati 600,620,0 system 6,608,373,464.46 5,276,368,547.57 11,705,308.41 636,372,293.00 634,241,700.83 Electronic on 00.00 products enterprise Subsidiary obtained and disposed in the Period □Applicable √Not applicable Explanation on holding equity participation enterprise Operating revenue from Weifu Leader has major growth mainly because sales of after-treatment system products growth and the price of main raw materials (precious metal) soaring. VIII. The structured subject controlled by the Company □ Applicable √ Not applicable IX. Prediction of business performance from January – September 2020 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 Affected by the novel coronavirus epidemic, the macro economy and market environment are still complicated and severe, and the industry will still face greater pressure. If industry demand declines, it will have a certain impact on the company's production and operation and profitability. 19 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Countermeasures: The company will always pay attention to macroeconomic and industry development trends, consolidate its current business market position, actively expand new businesses, and strive to improve the company's core competitiveness and overall risk resistance. (2) Operating management and control risks As the company’s business scope continues to expand, especially in the new energy field, the management span is rather large and there are potential operating management and investment risks.The external environment was affected by the epidemic, the varying affected degree of customers and sales declines, restrictions on logistics and transportation areas, delayed payment by some customers, and increased pressure on fund quality and repayment has brought certain risks to the company’s business. Countermeasures: the company will continue to promote the optimization and improvement of internal management, perfect the procedures, further manage standardization and control the management risks; focus on the impact of market dynamics on the Company; continue to develop strategy customers, and gradually strengthen the new business market connection and new new products promotion. (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. Countermeasures: 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 company's main financial instruments include monetary funds, structured deposits, receivables, equity instrument investments, wealth management products, loans, payable, etc. In the operation process, the risks related to financial instruments faced by the company mainly include credit risk, market risk and liquidity risk. Countermeasures: confirm and analyze the various risks faced by the Company, establish an appropriate risk tolerance bottom line and carry out risk management, and timely and reliably monitor various risks to ensure that the risks are controlled within a limited range and the negative impact of the risks on the company’s operating performance is reduced to the minimum level to maximize the interests of shareholders and other investors. 20 无锡威孚高科技集团股份有限公司 2020 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 Notice No.: 2020-026 released Annual General AGM 48.39% 2020-05-28 2020-05-29 on Juchao Website Meeting of 2019 (www.cninfo.com.cn) 2020 First Extraordinary Extraordinary Notice No.: 2020-036 released General Meeting of general 44.80% 2020-06-18 2020-06-19 on Juchao Website Shareholders meeting (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 21 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 V. Explanation on “Qualified Opinion” from CPA by the Board and Supervisory Committee □ Applicable √ Not applicable 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 Whether Trial Results Judgment Related Basic Situation of Formed Progress of Litigation and Effects of Implementatio Disclosu Disclosure to the Litigation (Arbitration) Accrued (Arbitration) Litigation n of Litigation re Date Index Case (10 Liabilitie (Arbitration) (Arbitration) thousan 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 This litigation (Announceme and No.(2016) Cinda Company applied for will not affect nt No.: Y03MC2492 from preservation to be RMB the company’s Not yet 2017-03 2017-002) Shenzhen Intermediate 21,703 N 217,027,697.23. The total daily implemented -08 published on People's Court about the value of 15.3 million shares of operating www.cninfo.c dispute case that the SDEC Stock and 4.71 million activities for om.cn plaintiff applicant China shares of Miracle Automation the time being Cinda Asset held by the Company has Management Co., Ltd. exceeded the total assets that Shenzhen Branch Cinda Company applied for 22 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (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 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 3,300 N compulsory liquidation to Company’s works still in 2017-023) compulsory liquidation -06 Hejun Company. The daily 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. Media questioning □Applicable √Not applicable During the reporting period, the company had no media generally questioned matters. 23 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 X. Penalty and rectification □ Applicable √ Not applicable No penalty and rectification for the Company in reporting period. XI. Integrity of the Company and its controlling shareholders and actual controllers □ Applicable √ Not applicable XII. 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",during the reporting period, the company fully implemented and completed the mid-to-long-term special incentive distribution of core talents so as to mobilize the enthusiasm and creativity of employees to the greatest extent, stabilize the employees, attract high-quality talents, and enhance the cohesion force in enterprise. XIII. Major related transaction 1. Related transaction with routine operation concerned √ Applicable □ Not applicable Wheth Trading er over Avail Cleari Type Conte Relate Related Proporti limit the ng able Date Index of nt of d transaction on in approve approv form simila of of Related Pricing Relationship related related transac amount (in similar for party principle d (in 10 ed related r disclo disclos transac transac tion 10 thousand transacti tion tion price Yuan) ons (%) thousand limited transac marke sure ure tion Yuan) or not t price (Y/N) Based Weifu Based on fair Precisio Purcha on the Mark Notice Associated value of Marke 2020- n se Goods 1,483.36 0.23% 3,000 N contra et No.:20 company the t price 04-21 Machine goods ct price 20-014 market ry terms price Associated Based Based Bosch Purcha Mark Notice company, on fair Marke on the 2020- Diesel se Goods 1,226.18 0.19% 2,500 N et No.:20 Controlling value of t price contra 04-21 System goods price 20-014 subsidiary of the ct 24 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 German Bosch market terms Company price Based Based on fair Weifu Purcha on the Mark Notice Joint venture of value of Marke 2020- Environ se Goods 182,473.63 27.87% 320,000 N contra et No.:20 Weifu Leader the t price 04-21 ment goods ct price 20-014 market terms price Based Based Robert on fair Second largest Purcha on the Mark Notice Bosch value of Marke 2020- shareholder of se Goods 6,366.98 0.97% 15,300 N contra et No.:20 Compan the t price 04-21 the Company goods ct price 20-014 y market terms price Based Xingwei Based on fair Automot Purcha on the Mark Notice Associated value of Marke 2020- ive se Goods 88.19 0.01% 500 N contra et No.:20 company the t price 04-21 Technol goods ct price 20-014 market ogy terms price Based Weifu Based on fair Precisio Goods on the Mark Notice Associated Sales value of Marke 2020- n and 77.41 0.01% 200 N contra et No.:20 company Goods the t price 04-21 Machine labors ct price 20-014 market ry terms price Associated Based Based company, on fair Bosch Goods on the Mark Notice Controlling Sales value of Marke 2020- Diesel and 155,123.36 23.52% 250,000 N contra et No.:20 subsidiary of Goods the t price 04-21 System labors ct price 20-014 German Bosch market terms Company price Based Based on fair Weifu Goods on the Mark Notice Joint venture of Sales value of Marke 2020- Environ and 974.96 0.15% 3,000 N contra et No.:20 Weifu Leader Goods the t price 04-21 ment labors ct price 20-014 market terms price Robert Based Based Second largest Mark Notice Bosch Sales on fair Marke on the 2020- shareholder of Goods 27,634.81 4.19% 76,000 N et No.:20 Compan Goods value of t price contra 04-21 the Company price 20-014 y the ct 25 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 market terms price Based Xingwei Based on fair Automot on the Mark Notice Associated Sales value of Marke 2020- ive Goods 6.76 0.00% 200 N contra et No.:20 company Goods the t price 04-21 Technol ct price 20-014 market ogy terms price Associated Techni Based Based company, cal on fair Bosch on the Mark Notice Controlling service value of Marke 2020- Diesel Other 29.54 50 N contra et No.:20 subsidiary of fees the t price 04-21 System ct price 20-014 German Bosch payabl market terms Company e price Associated Based Trade Based company, on fair Bosch mark on the Mark Notice Controlling value of Marke 2020- Diesel Other using 100 N contra et No.:20 subsidiary of the t price 04-21 System expens ct price 20-014 German Bosch market e terms Company price Payme nt of Based Based Robert techni on fair Second largest on the Mark Notice Bosch cal value of Marke 2020- shareholder of Other 14.06 550 N contra et No.:20 Compan commi the t price 04-21 the Company ct price 20-014 y ssion market terms fees, price etc. Based Based on fair Weifu on the Mark Notice Joint venture of Rental value of Marke 2020- Environ Other 125.4 300 N contra et No.:20 Weifu Leader fees the t price 04-21 ment ct price 20-014 market terms price Associated Based Procur Based company, on fair Bosch ement on the Mark Controlling value of Marke Diesel Other of 16.27 Y contra et subsidiary of the t price System fixed ct price German Bosch market assets terms Company price Robert Second largest Sales Based Marke Based Mark Other 319.39 Y Bosch shareholder of of on fair t price on the et 26 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Compan the Company fixed value of contra price y assets the ct market terms price Based Weifu Based Sales on fair Precisio on the Mark Associated of value of Marke n Other 5 Y contra et company fixed the t price Machine ct price assets market ry terms price Based Based Sales on fair Weifu on the Mark Joint venture of of value of Marke Environ Other 903.63 Y contra et Weifu Leader fixed the t price ment ct price assets market terms price Based Based Payme on fair Wuxi The company's on the Mark nt of value of Marke Industry largest Other 0.53 Y contra et interes the t price Group shareholder ct price t market terms price Total -- -- 376,869.46 -- 671,700 -- -- -- -- -- Detail of sales return with major amount Not applicable involved After deliberated and approved by AGM of 2019, it is estimated that the routine related transaction for year of 2020 amounting to 6,717 million Yuan, actually 3,768,694,600 Yuan in total occurred in reporting period, including: Report the actual implementation of the 1. It is estimated that purchasing goods and labors from related parties amounted as normal related transactions which were 3,413 million Yuan at most for year of 2020, actually 1,916,383,400 Yuan occurred in projected about their total amount by reporting period; 2. It is estimated that sales of goods and labors to related parties types during the reporting period (if amounted as 3,294 million Yuan at most for year of 2020, actually 1,838,173,000 Yuan applicable) occurred in reporting period;3. It is estimated that other related transactions with related parties amounted as 10 million Yuan at most for year of 2020, actually 14.1382 million Yuan occurred in reporting period; Reasons for major differences between trading price and market reference price Not applicable (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 27 无锡威孚高科技集团股份有限公司 2020 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 The company held the 7th session of 9th board of directors on May 29, 2019, which deliberated and approved the "Proposal on Joint Investment and Establishment of Companies and Related Transactions Between the Company and Related Parties", the company and the major shareholder Industry Group, Wuxi Taiji Industry Co., Ltd., Chuxin Semiconductor Technology Co., Ltd., and Wuxi Spark Microelectronics Partnership (Limited Partnership) jointly invested in the establishment of Wuxi Xichan Microchip Semiconductor Co., Ltd. The company has a registered capital of 2,110 million yuan. The main business includes design, development and sales of semiconductor device and integrated circuit; research and development of electronic components; sales of mechanical equipment, computer software and hardware and external equipment; computer software development; technology development, technical consultation, technology service, and technology transfer in the field of semiconductor; import and export business of self-operated and agency goods and technology (except for goods and technologies that are restricted by the state or prohibited from import and export). For details, please refer to the company’s publication on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn on June 5 and June 13, 2019. Related announcements (Announcement No.: 2019-018, 2019-019). XIV. 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 XV. Significant contract and implementations 1. Trusteeship, contract and leasing (1) Trusteeship □ Applicable √ Not applicable No trusteeship for the Company in reporting period 28 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (2) Contract □ Applicable √ Not applicable No contract for the Company in reporting period (3) Leasing □ Applicable √ Not applicable No leasing for the Company in reporting period 2. Major guarantees □ Applicable √ Not applicable No major guarantees for the Company in Period. 3. Trust financing √ Applicable □ Not applicable In 10 thousand Yuan Specific type Sources of funds Amount occurred Undue balance Overdue amount Bank financing products Own funds 229,483 151,381.29 0 Financial products of securities firms Own funds 36,000 36,000 0 Trust financial products Own funds 245,580 245,580 0 Other type Own funds 59,145 41,000 0 Total 570,208 473,961.29 0 Details of the single major amount, or high-risk trust investment with low security, poor fluidity and non-guaranteed √ Applicable □ Not applicable In 10 thousand Yuan Amo unt Whe Sum Whe of ther mary ther reser has of the Crit Actual appr Capita ve entr items Sou eria Referen collect oved Trustee l Actual for ust and rce for ce Anticipat ed by institut Truste Amoun Start End invest gains/loss deva fina relate Type of fixi annual ed gains/l legal ion r e type t date date ment es in luati nce d fun ng rate of income osses proc name purpos period on plan query ds rew return in edur e of in index ard period e with the (if (Y/ draw futur applic N) ing e able) (if 29 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 appli cabl e) Collec Non-gu ted arantee Ow Financ accord d ned 2020-0 2021-0 ial 3.62% Bank Bank 107,600 2,387.96 3,508.14 ing to 0 Y Y floatin fun 1-09 6-25 produ -4.25% the g d cts contra income ct Collec Non-gu Collec Ref ted arantee Ow tive eren Securit Securi accord d ned 2020-0 2021-0 assets ce 4.2% ies ties 33,000 1,030.41 904.85 ing to 0 Y Y floatin fun 2-18 7-01 manag ann -6% trader trader the g d ement ual contra Notic income plan rate ct e No.: of Collec 2020- Non-gu retu ted 015 arantee Ow Collec rn accord d ned 2020-0 2022-0 tion by 5.1% Trust Trust 114,700 15,324.6 6,381.53 ing to 0 Y Y floatin fun 2-14 6-30 trust the -8.4% the g d plan cont contra income ract ct Collec Non-gu Fixed ted arantee Ow Other Other incom accord d ned 2020-0 2021-1 6% (Fund (Fund 31,000 e fund 2,534.76 3,050.37 ing to 0 Y Y floatin fun 1-10 2-16 -8.75% etc.) etc.) produ the g d cts contra income ct Total 286,300 -- -- -- -- -- -- 21,277.73 13,844.89 -- -- -- -- Entrust financial expected to be unable to recover the principal or impairment might be occurred □ Applicable √ Not applicable 4. Other material contracts □ Applicable √ Not applicable No other material contracts for the Company in reporting period 30 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 XV. Social responsibility 1. Major environmental issues The listed Company and its subsidiary whether belong to the key sewage units released from environmental protection department: No Protecting the environment is the corporate mission of WFHT. 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. Vigorously promote energy conservation and emission reduction, and strive to achieve green production. In the process of production and operation, the company strictly abides by relevant national and local environmental protection laws, regulations and rules, and obtains, updates and communicates relevant environmental protection laws, regulations and standards in a timely manner, and conducts internal daily environmental management on the basis of new regulations and standards, actively fulfills the environmental protection obligations,and implements the national energy conservation and emission reduction policies.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, the environmental protection facilities are designed, constructed and put into use at the same time as the main project of the construction project. 2. Precise poverty alleviation social responsibility There is no precise poverty alleviation carried out in the period and no follow plan either XVII. Explanation on other significant events The company held the eleventh meeting of the ninth board of directors on February 13, 2020, which deliberated and approved the "Proposal on Repurchasing Part of the Company's A Shares by Centralized Bidding". On February 21, 2020, it disclosed the "Repurchase Report on Repurchasing Part of the Company's A Shares by Centralized Bidding Transactions" (Announcement No.: 2020-005) on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn. On February 28, 2020, the company disclosed the "Announcement on the Initial Repurchase of the Company Shares" (Announcement No.: 2020-006), and it disclosed the “Announcement on the Progress of Repurchasing Part of A Shares” (Announcement Nos.: 2020-007, 2020-008, 2020-009, 2020-022, 2020-033) on March 3, March 16, April 1, May 7, and June 2, 2020. On July 1, 2007, the company disclosed the “Announcement on Adjusting the Price Cap for the Repurchase of A Shares and the Progress of Repurchasing Part of A Shares after the Implementation of the 2019 Annual Equity Distribution Plan” (Announcement No.: 2020-039).As of June 30, 2020, the company has repurchased 15,094,870 shares (A 31 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 shares) through centralized bidding transactions via a special securities repurchase account, accounting for 1.4961% of the company’s total share capital, of which the highest transaction price was RMB 21.06 per share and the lowest transaction price was RMB 17.95 per share, and the total amount paid was RMB 300,007,852.84 (including transaction costs).As of July 31, 2020, the company has repurchased 19,596,277 shares (A shares) through centralized bidding transactions via a special securities repurchase account, accounting for 1.9422% of the company’s total share capital, of which the highest transaction price was RMB 22.89 per share and the lowest transaction price was RMB 17.95 per share, and the total amount paid was RMB 400,017,180.33 (including transaction costs).The repurchase complies with relevant laws and regulations and complies with the established repurchase plan. XVIII. Significant event of subsidiary of the Company □ Applicable √ Not applicable 32 无锡威孚高科技集团股份有限公司 2020 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 Bon Capitaliz New us ation of Proporti Amount Proportion shares Others Subtotal Amount shar public on issued es reserve I. Restricted shares 80,080 0.01% 9,938 9,938 90,018 0.01% 1. State-owned shares 0 0 2. State-owned legal person’s 0 0 shares 3. Other domestic shares 80,080 0.01% 9,938 9,938 90,018 0.01% Domestic natural person’s 80,080 0.01% 9,938 9,938 90,018 0.01% shares 4. Foreign shares 0 0 II. Unrestricted shares 1,008,870,490 99.99% -9,938 -9,938 1,008,860,552 99.99% 1. RMB ordinary shares 836,490,490 82.90% -9,938 -9,938 836,480,552 82.90% 2. Domestically listed foreign 172,380,000 17.09% 172,380,000 17.09% shares 3. Overseas listed foreign shares 0 0 4. Others 0 0 III. Total shares 1,008,950,570 100.00% 0 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 The company held the eleventh meeting of the ninth board of directors on February 13, 2020, which deliberated and approved the "Proposal on Repurchasing Part of the Company's A Shares by Centralized Bidding". On 33 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 February 21, 2020, it disclosed the "Repurchase Report on Repurchasing Part of the Company's A Shares by Centralized Bidding Transactions" (Announcement No.: 2020-005) on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn. On February 28, 2020, the company disclosed the "Announcement on the Initial Repurchase of the Company Shares" (Announcement No.: 2020-006), and it disclosed the “Announcement on the Progress of Repurchasing Part of A Shares” (Announcement Nos.: 2020-007, 2020-008, 2020-009, 2020-022, 2020-033) on March 3, March 16, April 1, May 7, and June 2, 2020. On July 1, 2007, the company disclosed the “Announcement on Adjusting the Price Cap for the Repurchase of A Shares and the Progress of Repurchasing Part of A Shares after the Implementation of the 2019 Annual Equity Distribution Plan” (Announcement No.: 2020-039). As of June 30, 2020, the company has repurchased 15,094,870 shares (A shares) through centralized bidding transactions via a special securities repurchase account, accounting for 1.4961% of the company’s total share capital, of which the highest transaction price was RMB 21.06 per share and the lowest transaction price was RMB 17.95 per share, and the total amount paid was RMB 300,007,852.84 (including transaction costs). As of July 31, 2020, the company has repurchased 19,596,277 shares (A shares) through centralized bidding transactions via a special securities repurchase account, accounting for 1.9422% of the company’s total share capital, of which the highest transaction price was RMB 22.89 per share and the lowest transaction price was RMB 17.95 per share, and the total amount paid was RMB 400,017,180.33 (including transaction costs). The repurchase complies with relevant laws and regulations and complies with the established repurchase plan. Implementation progress of the reduction of repurchases shares by centralized bidding □ Applicable √ Not applicable Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period □Applicable √Not applicable Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators □Applicable √Not applicable 2. Changes of restricted shares √ Applicable □ Not applicable In Share Opening shares Shares released Restricted Shares Ending shares Shareholders Restricted reasons Date for released restricted in Period ncreased In the Period restricted Chen Xuejun 26,065 8,688 34,753 Leave office 2020-12-18 Dai Lizhong 1,500 500 2,000 Leave office 2020-11-28 Chen Ran 0 750 750 Elected supervisor According to the rules Total 27,565 0 9,938 37,503 -- -- 34 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 II. Securities issuance and listing □ Applicable √ Not applicable III. Amount of shareholders of the Company and particulars about shares holding In Share Total preference shareholders with voting rights Total common shareholders at period-end 59,709 0 recovered at end of reporting period (if applicable) Particulars about shares held above 5% by common shareholders or top ten common shareholders Number of Total common Amount of Amount of share Proportion shareholders Changes in restrict un-restrict Nature of pledged/frozen Full name of Shareholders of shares shareholder at the end of report period common common held State of Amo report period shares held shares held share unt 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. 5.60% 56,509,620 1,278,957 56,509,620 corporate (HKSCC) BBH BOS S/A FIDELITY FD Foreign 1.84% 18,530,315 0 18,530,315 - CHINA FOCUS FD corporate Central Huijin Assets State-owned 1.27% 12,811,200 0 12,811,200 Management Co., Ltd. corporate Monetary Authority of Macao Foreign 0.88% 8,923,416 2,721,307 8,923,416 - own fund corporate Basic Pension Insurance Other 0.83% 8,420,995 4,186,831 8,420,995 Fund- 1003 FIDELITY INVMT TRT Foreign FIDELITY INTL SMALL 0.77% 7,725,486 1,314,484 7,725,486 corporate CAP FUND NSSF - 413 Other 0.62% 6,300,027 1,515,049 6,300,027 NSSF - 103 Other 0.59% 5,999,932 5,999,932 5,999,932 Strategy investors or general corporation comes top 10 shareholders due to rights Not applicable issue (if applicable) Explanation on associated relationship Among the top ten shareholders, there has no associated relationship between Wuxi 35 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 among the aforesaid shareholders Industry Development Croup Co., Ltd. and other shareholders, the first largest shareholder of the Company; and they do not belong to the consistent actionist 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 foreign shares 27,580,800 Hong Kong Securities Clearing Company Ltd. 56,509,620 RMB common shares 56,509,620 (HKSCC) BBH BOS S/A FIDELITY FD - CHINA 18,530,315 Domestically listed foreign shares 18,530,315 FOCUS FD Central Huijin Assets Management Co., Ltd. 12,811,200 RMB common shares 12,811,200 Monetary Authority of Macao - own fund 8,923,416 RMB common shares 8,923,416 Basic Pension Insurance Fund- 1003 8,420,995 RMB common shares 8,420,995 FIDELITY INVMT TRT FIDELITY INTL 7,725,486 Domestically listed foreign shares 7,725,486 SMALL CAP FUND NSSF - 413 6,300,027 RMB common shares 6,300,027 NSSF - 103 5,999,932 RMB common shares 5,999,932 Expiation on associated relationship or Among the top ten shareholders, there has no associated relationship between consistent actors within the top 10 un-restrict Wuxi Industry Development Croup Co., Ltd. and other shareholders, the first common shareholders and between top 10 largest shareholder of the Company; and they do not belong to the consistent un-restrict common shareholders and top 10 actionist regulated by the Management Measure of Information Disclosure on common shareholders Change of Shareholding for Listed Company. Explanation on top 10 shareholders involving Not applicable margin business (if applicable) 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 36 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. 37 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Section VII. Preferred Stock □ Applicable √ Not applicable The Company had no preferred stock in the reporting. 38 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Section VIII. Convertible Bonds □ Applicable √ Not applicable The Company had no convertible bonds in the Period. 39 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Section IX. Directors, Supervisors and Senior Executives I. Changes of shares held by directors, supervisors and senior executives √ Applicable □ Not applicable Amount of Amount of Number of Number of Number of Shares shares shares Shares restricted restricted restricted Working held at increased decreased held at stocks granted Title stocks granted stocks granted Name status period-beg in this in this period-end at in the period at period-end in (Share) period period (Share) period-begin (shares) (shares) (Share) (Share) (shares) Wang Currently Chairman 20,781 20,781 Xiaodong in office Rudolf Vice Currently Maier Chairman in office Vice Xu Currently Chairman, 13,000 13,000 Yunfeng in office GM Director, standing deputy Currently Ou Jianbin General 10,000 10,000 in office Manager and financing Charger Zhang Currently Director Xiaogeng in office Chen Currently Director Yudong in office Hua Currently Director Wanrong in office Independent Currently Yu Xiaoli Director in office Lou Independent Currently Diming Director in office Jin Independent Currently Zhangluo Director in office Xu Independent Currently Xiaofang Director in office 40 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Chairman of Shi the Currently 12,673 12,673 Xingyuan Supervisory in office Committee Ma Currently Supervisor Yuzhou in office Currently Chen Ran Supervisor 1,000 1,000 in office Miao Currently Deputy GM 10,000 10,000 Yuming in office Currently Xu Sheng Deputy GM in office Currently Rong Bin Deputy GM in office Currently Liu Jinjun Deputy GM in office Currently Li Gang Chief engineer in office Zhou Secretary of Currently 3,565 3,565 Weixing the Board in office Chen Leave Chairman 34,753 34,753 Xuejun office Dai Leave Supervisor 2,000 2,000 Lizhong office Total -- -- 106,772 1,000 0 107,772 0 0 0 II. Resignation and dismissal of directors, supervisors and senior executives √ Applicable □ Not applicable Name Title Type Date Reason Wang Xiaodong Chairman Be elected 2020-05-28 Be elected Xu Yunfeng Vice Chairman Be elected 2020-06-18 Be elected Xu Yunfeng GM Appointment 2020-05-28 Appointment Xu Sheng Deputy GM Appointment 2020-05-28 Appointment Rong Bin Deputy GM Appointment 2020-05-28 Appointment Liu Jinjun Deputy GM Appointment 2020-05-28 Appointment Li Gang Chief engineer Appointment 2020-05-28 Appointment Chen Ran Supervisor Be elected 2020-05-28 Be elected 41 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Application for resignation due to Chen Xuejun Chairman Leave office 2020-05-28 work reasons Application for resignation due to Chen Xuejun Director Leave office 2020-06-18 work reasons Application for resignation due to Dai Lizhong Supervisor Leave office 2020-05-28 work reasons 42 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Section X. 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 43 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Section XI. 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 2020-06-30 In RMB Item 2020-6-30 2019-12-31 Current assets: Monetary funds 2,564,147,609.58 1,596,893,711.87 Settlement provisions Capital lent Transaction financial assets 3,186,262,183.13 3,940,885,674.32 Derivative financial assets Note receivable 985,930,905.61 1,812,141,371.94 Account receivable 3,674,151,635.33 2,310,666,475.89 Receivable financing 756,743,779.54 23,873,317.86 Accounts paid in advance 224,243,911.70 139,241,917.78 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Other account receivable 1,129,113,083.12 43,730,023.31 Including: Interest receivable 2,091,107.78 655,052.98 Dividend receivable 1,092,040,579.49 1,070,000.00 Buying back the sale of financial assets Inventories 1,670,738,746.77 2,418,744,835.82 44 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Contractual assets Assets held for sale Non-current asset due within one year Other current assets 547,477,135.79 1,012,055,605.74 Total current assets 14,738,808,990.57 13,298,232,934.53 Non-current assets: Loans and payments on behalf Debt investment Other debt investment Long-term account receivable Long-term equity investment 3,977,690,136.49 5,322,405,953.35 Investment in other equity instrument 285,048,000.00 285,048,000.00 Other non-current financial assets 1,723,343,284.00 1,043,589,987.43 Investment real estate 21,648,596.74 22,410,511.87 Fixed assets 2,875,000,573.89 2,845,176,078.20 Construction in progress 253,735,407.77 247,857,777.25 Productive biological asset Oil and gas asset Right-of-use assets Intangible assets 416,926,802.38 430,594,372.12 Expense on Research and Development Goodwill 1,784,086.79 1,784,086.79 Long-term expenses to be apportioned 22,170,795.30 18,536,000.25 Deferred income tax asset 229,081,360.18 212,476,501.54 Other non-current asset 210,102,212.32 230,235,982.45 Total non-current asset 10,016,531,255.86 10,660,115,251.25 Total assets 24,755,340,246.43 23,958,348,185.78 Current liabilities: Short-term loans 328,308,738.00 312,153,969.81 Loan from central bank Capital borrowed Trading financial liability Derivative financial liability Note payable 1,339,329,488.99 1,745,218,439.52 45 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Account payable 4,190,201,244.86 3,312,254,229.84 Accounts received in advance 1,873,510.34 113,737,432.61 Contractual liability 58,136,812.04 Selling financial asset of repurchase Absorbing deposit and interbank deposit Security trading of agency Security sales of agency Wage payable 243,039,308.55 314,343,737.66 Taxes payable 99,211,334.02 129,538,411.86 Other account payable 433,417,811.60 65,266,262.39 Including: Interest payable 5,348.44 Dividend payable 367,000,766.60 Commission charge and commission payable Reinsurance payable Liability held for sale Non-current liabilities due within one year Other current liabilities 147,739,169.58 Total current liabilities 6,841,257,417.98 5,992,512,483.69 Non-current liabilities: Insurance contract reserve Long-term loans 20,000,000.00 Bonds payable Including: Preferred stock Perpetual capital securities Lease liability Long-term account payable 35,108,263.11 35,108,263.11 Long-term wages payable 58,392,053.61 58,392,053.61 Accrual liability Deferred income 342,551,476.28 365,116,022.98 Deferred income tax liabilities 21,045,135.05 22,566,051.72 Other non-current liabilities Total non-current liabilities 477,096,928.05 481,182,391.42 Total liabilities 7,318,354,346.03 6,473,694,875.11 Owner’s equity: 46 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Share capital 1,008,950,570.00 1,008,950,570.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital public reserve 3,391,527,806.33 3,391,527,806.33 Less: Inventory shares 300,007,852.84 Other comprehensive income 137,919.77 134,871.67 Reasonable reserve 2,636,485.98 3,247,757.06 Surplus public reserve 510,100,496.00 510,100,496.00 Provision of general risk Retained profit 12,309,546,790.54 12,076,443,635.56 Total owner’ s equity attributable to parent company 16,922,892,215.78 16,990,405,136.62 Minority interests 514,093,684.62 494,248,174.05 Total owner’ s equity 17,436,985,900.40 17,484,653,310.67 Total liabilities and owner’ s equity 24,755,340,246.43 23,958,348,185.78 Legal Representative: Wang Xiaodong Person in charge of accounting works: OuJianbin Person in charge of accounting institute: OuJianbin 2. Balance Sheet of Parent Company In RMB Item 2020-6-30 2019-12-31 Current assets: Monetary funds 1,814,721,636.94 965,770,877.82 Trading financial assets 3,053,235,591.18 3,758,789,072.68 Derivative financial assets Note receivable 301,148,395.76 202,403,993.13 Account receivable 1,161,589,142.48 768,500,929.93 Receivable financing Accounts paid in advance 125,616,113.42 89,116,730.45 Other account receivable 1,404,402,207.25 250,014,956.74 Including: Interest receivable 2,280,037.26 804,929.68 47 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Dividend receivable 1,115,292,687.93 1,070,000.00 Inventories 460,669,652.62 565,144,234.49 Contractual assets Assets held for sale Non-current assets maturing within one year Other current assets 399,924,007.15 938,616,881.51 Total current assets 8,721,306,746.80 7,538,357,676.75 Non-current assets: Debt investment Other debt investment Long-term receivables Long-term equity investments 4,849,926,353.51 6,331,363,630.04 Investment in other equity instrument 209,108,000.00 209,108,000.00 Other non-current financial assets 1,723,343,284.00 1,043,589,987.43 Investment real estate Fixed assets 1,806,345,623.11 1,646,333,216.50 Construction in progress 145,355,080.49 136,573,912.28 Productive biological assets Oil and natural gas assets Right-of-use assets Intangible assets 211,198,062.84 203,663,423.60 Research and development costs Goodwill Long-term deferred expenses 260,105.36 Deferred income tax assets 112,121,048.86 105,137,877.84 Other non-current assets 137,027,549.83 172,646,721.05 Total non-current assets 9,194,685,108.00 9,848,416,768.74 Total assets 17,915,991,854.80 17,386,774,445.49 Current liabilities Short-term borrowings 156,224,237.11 116,126,459.33 Trading financial liability Derivative financial liability Notes payable 343,305,621.14 284,054,137.00 Account payable 1,174,285,272.28 930,273,146.35 48 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Accounts received in advance 12,010,730.30 Contractual liability 9,004,203.84 Wage payable 183,677,527.12 213,626,754.45 Taxes payable 56,030,565.60 56,540,307.59 Other accounts payable 378,353,017.16 11,976,576.21 Including: Interest payable Dividend payable 351,251,997.80 Liability held for sale Non-current liabilities due within one year Other current liabilities 105,837,709.56 Total current liabilities 2,406,718,153.81 1,624,608,111.23 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 50,058,386.76 50,058,386.76 Accrued liabilities Deferred income 301,626,400.33 322,971,778.82 Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 351,684,787.09 373,030,165.58 Total liabilities 2,758,402,940.90 1,997,638,276.81 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 3,481,221,286.39 3,488,221,286.39 Less: Inventory shares 300,007,852.84 Other comprehensive income Special reserve 49 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Surplus reserve 510,100,496.00 510,100,496.00 Retained profit 10,457,324,414.35 10,381,863,816.29 Total owner’s equity 15,157,588,913.90 15,389,136,168.68 Total liabilities and owner’s equity 17,915,991,854.80 17,386,774,445.49 3. Consolidated Profit Statement In RMB Item 2020 semi-annual 2019 semi-annual I. Total operating income 6,594,403,624.56 4,403,444,346.05 Including: Operating income 6,594,403,624.56 4,403,444,346.05 Interest income Insurance gained Commission charge and commission income II. Total operating cost 6,098,234,750.74 4,005,776,550.51 Including: Operating cost 5,413,969,374.53 3,405,386,504.44 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 31,961,549.15 34,534,571.66 Sales expense 138,394,171.31 104,270,647.40 Administrative expense 336,984,661.28 310,909,980.43 R&D expense 211,531,953.72 180,167,642.16 Financial expense -34,606,959.25 -29,492,795.58 Including: Interest expenses 5,800,553.09 9,264,648.42 Interest income 43,053,210.79 48,416,919.83 Add: other income 43,932,417.68 17,632,117.95 Investment income (Loss is listed with “-”) 923,574,526.61 888,216,680.48 Including: Investment income on affiliated company 785,533,710.72 790,465,131.05 and joint venture The termination of income recognition for -408,092.36 financial assets measured by amortized cost(Loss is listed with 50 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 “-”) Exchange income (Loss is listed with “-”) Net exposure hedging income (Loss is listed with “-”) Income from change of fair value (Loss is listed with 258,157.65 30,686,277.13 “-”) Loss of credit impairment (Loss is listed with “-”) -3,622,549.31 -6,237,790.75 Losses of devaluation of asset (Loss is listed with “-”) -52,807,909.47 -1,500,885.27 Income from assets disposal (Loss is listed with “-”) 232,499.55 5,107,848.45 III. Operating profit (Loss is listed with “-”) 1,407,736,016.53 1,331,572,043.53 Add: Non-operating income 164,150.94 27,544,757.26 Less: Non-operating expense 4,124,451.68 2,631,453.02 IV. Total profit (Loss is listed with “-”) 1,403,775,715.79 1,356,485,347.77 Less: Income tax expense 57,505,452.12 81,382,654.54 V. Net profit (Net loss is listed with “-”) 1,346,270,263.67 1,275,102,693.23 (i) Classify by business continuity 1.continuous operating net profit (net loss listed with ‘-”) 1,346,270,263.67 1,275,102,693.23 2.termination of net profit (net loss listed with ‘-”) (ii) Classify by ownership 1.Net profit attributable to owner’s of parent company 1,326,344,424.98 1,256,661,577.09 2.Minority shareholders’ gains and losses 19,925,838.69 18,441,116.14 VI. Net after-tax of other comprehensive income 4,618.33 271,537.20 Net after-tax of other comprehensive income attributable to 3,048.10 261,591.54 owners of parent company (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1.Changes of the defined benefit plans that re-measured 2.Other comprehensive income under equity method that cannot be transfer to gain/loss 3.Change of fair value of investment in other equity instrument 4.Fair value change of enterprise's credit risk 5. Other (ii) Other comprehensive income items which will be 3,048.10 261,591.54 reclassified subsequently to profit or loss 1.Other comprehensive income under equity method 51 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 that can transfer to gain/loss 2.Change of fair value of other debt investment 3.Amount of financial assets re-classify to other comprehensive income 4.Credit impairment provision for other debt investment 5.Cash flow hedging reserve 6.Translation differences arising on translation of 3,048.10 261,591.54 foreign currency financial statements 7.Other Net after-tax of other comprehensive income attributable to 1,570.23 9,945.66 minority shareholders VII. Total comprehensive income 1,346,274,882.00 1,275,374,230.43 Total comprehensive income attributable to owners of 1,326,347,473.08 1,256,923,168.63 parent Company Total comprehensive income attributable to minority 19,927,408.92 18,451,061.80 shareholders VIII. Earnings per share: (i) Basic earnings per share 1.32 1.25 (ii) Diluted earnings per share 1.32 1.25 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: Wang Xiaodong Person in charge of accounting works: OuJianbin Person in charge of accounting institute: OuJianbin 4. Profit Statement of Parent Company In RMB Item 2020 semi-annual 2019 semi-annual I. Operating income 2,336,262,373.08 2,092,474,460.24 Less: Operating cost 1,686,488,679.58 1,471,971,514.70 Taxes and surcharge 18,740,531.01 17,510,903.97 Sales expenses 13,053,690.12 15,320,342.43 Administration expenses 227,324,018.06 211,000,027.34 52 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 R&D expenses 90,410,044.71 75,873,810.90 Financial expenses -40,808,506.49 -41,092,188.59 Including: interest expenses 2,501,198.55 3,597,363.92 Interest income 39,756,148.10 44,742,417.24 Add: other income 35,239,425.50 11,683,224.30 Investment income (Loss is listed with “-”) 907,907,258.50 840,215,361.66 Including: Investment income on affiliated Company 708,709,791.17 742,463,812.23 and joint venture The termination of income recognition for financial assets measured by amortized cost (Loss is listed with “-”) Net exposure hedging income (Loss is listed with “-”) Changing income of fair value (Loss is listed with “-”) -403,481.50 30,195,948.00 Loss of credit impairment (Loss is listed with “-”) -1,033,980.28 -1,901,377.70 Losses of devaluation of asset (Loss is listed with “-”) -3,370,784.10 -24,294.39 Income on disposal of assets (Loss is listed with “-”) -174,293.98 1,844,051.48 II. Operating profit (Loss is listed with “-”) 1,279,218,060.23 1,223,902,962.84 Add: Non-operating income 22,947.75 15,034.36 Less: Non-operating expense 3,443,673.01 1,196,252.91 III. Total Profit (Loss is listed with “-”) 1,275,797,334.97 1,222,721,744.29 Less: Income tax 57,174,946.95 73,937,477.28 IV. Net profit (Net loss is listed with “-”) 1,218,622,388.02 1,148,784,267.01 (i)continuous operating net profit (net loss listed with ‘-”) 1,218,622,388.02 1,148,784,267.01 (ii) termination of net profit (net loss listed with ‘-”) V. Net after-tax of other comprehensive income (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1.Changes of the defined benefit plans that re-measured 2.Other comprehensive income under equity method that cannot be transfer to gain/loss 3.Change of fair value of investment in other equity instrument 4.Fair value change of enterprise's credit risk 5. Other (II) Other comprehensive income items which will be 53 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 reclassified subsequently to profit or loss 1.Other comprehensive income under equity method that can transfer to gain/loss 2.Change of fair value of other debt investment 3.Amount of financial assets re-classify to other comprehensive income 4.Credit impairment provision for other debt investment 5.Cash flow hedging reserve 6.Translation differences arising on translation of foreign currency financial statements 7.Other VI. Total comprehensive income 1,218,622,388.02 1,148,784,267.01 VII. Earnings per share: (i) Basic earnings per share (ii) Diluted earnings per share 5. Consolidated Cash Flow Statement In RMB Item 2020 semi-annual 2019 semi-annual I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 5,676,491,804.78 4,275,001,010.93 services Net increase of customer deposit and interbank deposit Net increase of loan from central bank Net increase of capital borrowed from other financial institution Cash received from original insurance contract fee Net cash received from reinsurance business Net increase of insured savings and investment Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Net cash received by agents in sale and purchase of securities 54 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Write-back of tax received 15,404,444.43 25,327,532.10 Other cash received concerning operating activities 70,801,912.94 85,775,494.76 Subtotal of cash inflow arising from operating activities 5,762,698,162.15 4,386,104,037.79 Cash paid for purchasing commodities and receiving labor 4,122,764,678.30 2,534,137,461.67 service Net increase of customer loans and advances Net increase of deposits in central bank and interbank Cash paid for original insurance contract compensation Net increase of capital lent Cash paid for interest, commission charge and commission Cash paid for bonus of guarantee slip Cash paid to/for staff and workers 630,754,424.71 681,756,769.56 Taxes paid 314,691,082.22 310,797,279.61 Other cash paid concerning operating activities 256,830,904.51 169,088,618.70 Subtotal of cash outflow arising from operating activities 5,325,041,089.74 3,695,780,129.54 Net cash flows arising from operating activities 437,657,072.41 690,323,908.25 II. Cash flows arising from investing activities: Cash received from recovering investment 4,008,128,352.27 3,686,500,000.00 Cash received from investment income 1,183,089,487.76 525,843,992.65 Net cash received from disposal of fixed, intangible and 25,781,114.63 72,457,256.41 other 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 5,216,998,954.66 4,284,801,249.06 Cash paid for purchasing fixed, intangible and other 218,473,940.03 237,326,162.98 long-term assets Cash paid for investment 3,553,000,000.00 3,658,800,000.00 Net increase of mortgaged loans Net cash received from subsidiaries and other units obtained 49,930,736.62 Other cash paid concerning investing activities 24,000,000.00 Subtotal of cash outflow from investing activities 3,771,473,940.03 3,970,056,899.60 Net cash flows arising from investing activities 1,445,525,014.63 314,744,349.46 III. Cash flows arising from financing activities Cash received from absorbing investment 13,880,037.60 55 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Including: Cash received from absorbing minority 13,880,037.60 shareholders’ investment by subsidiaries Cash received from loans 245,289,418.04 393,249,222.11 Other cash received concerning financing activities 5,470,000.00 Subtotal of cash inflow from financing activities 250,759,418.04 407,129,259.71 Cash paid for settling debts 203,192,671.61 378,622,036.77 Cash paid for dividend and profit distributing or interest 747,748,424.37 836,528,586.57 paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning financing activities 300,007,852.84 5,809,091.00 Subtotal of cash outflow from financing activities 1,250,948,948.82 1,220,959,714.34 Net cash flows arising from financing activities -1,000,189,530.78 -813,830,454.63 IV. Influence on cash and cash equivalents due to fluctuation in 4,663,278.76 415,189.69 exchange rate V. Net increase of cash and cash equivalents 887,655,835.02 191,652,992.77 Add: Balance of cash and cash equivalents at the period 820,498,653.85 2,404,674,139.49 -begin VI. Balance of cash and cash equivalents at the period -end 1,708,154,488.87 2,596,327,132.26 6. Cash Flow Statement of Parent Company In RMB Item 2020 semi-annual 2019 semi-annual I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 2,137,522,482.58 2,342,213,493.89 services Write-back of tax received Other cash received concerning operating activities 53,647,269.21 48,525,763.15 Subtotal of cash inflow arising from operating activities 2,191,169,751.79 2,390,739,257.04 Cash paid for purchasing commodities and receiving labor 1,258,667,867.50 1,218,981,667.53 service Cash paid to/for staff and workers 356,095,444.60 369,225,756.08 Taxes paid 199,611,845.20 186,084,989.75 Other cash paid concerning operating activities 107,303,419.41 107,664,076.68 Subtotal of cash outflow arising from operating activities 1,921,678,576.71 1,881,956,490.04 Net cash flows arising from operating activities 269,491,175.08 508,782,767.00 56 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 II. Cash flows arising from investing activities: Cash received from recovering investment 3,605,396,703.43 3,521,500,000.00 Cash received from investment income 1,141,100,004.91 506,897,740.22 Net cash received from disposal of fixed, intangible and 3,870,511.23 4,034,532.29 other long-term assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities 139,134,277.49 215,512,158.54 Subtotal of cash inflow from investing activities 4,889,501,497.06 4,247,944,431.05 Cash paid for purchasing fixed, intangible and other 113,826,331.79 158,044,430.36 long-term assets Cash paid for investment 3,070,448,157.81 3,328,800,000.00 Net cash received from subsidiaries and other units obtained 82,156,428.71 Other cash paid concerning investing activities 150,000,000.00 187,880,372.33 Subtotal of cash outflow from investing activities 3,334,274,489.60 3,756,881,231.40 Net cash flows arising from investing activities 1,555,227,007.46 491,063,199.65 III. Cash flows arising from financing activities Cash received from absorbing investment Cash received from loans 100,000,000.00 160,000,000.00 Other cash received concerning financing activities 21,620,000.00 Subtotal of cash inflow from financing activities 121,620,000.00 160,000,000.00 Cash paid for settling debts 60,000,000.00 180,000,000.00 Cash paid for dividend and profit distributing or interest 744,490,470.75 831,020,889.20 paying Other cash paid concerning financing activities 316,627,852.84 Subtotal of cash outflow from financing activities 1,121,118,323.59 1,011,020,889.20 Net cash flows arising from financing activities -999,498,323.59 -851,020,889.20 IV. Influence on cash and cash equivalents due to fluctuation in 4,152,072.50 593,522.94 exchange rate V. Net increase of cash and cash equivalents 829,371,931.45 149,418,600.39 Add: Balance of cash and cash equivalents at the period 532,115,862.26 1,920,076,358.43 -begin VI. Balance of cash and cash equivalents at the period -end 1,361,487,793.71 2,069,494,958.82 57 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 7. Statement of Changes in Owners’ Equity (Consolidated) This Period In RMB 2020 semi-annual Owners’ equity attributable to the parent Company Other Pr equity ov instrument isi Item Other on Perp Less: Ot Minority Total owners’ Share Pref Capital comprehen Reasonable of etual Inventory Surplus reserve Retained profit he Subtotal interests equity capital erre Ot reserve sive reserve ge capit shares r d he income ne al stoc r ral secu k ris rities k I. Balance at the 1,008,950, 3,391,527,8 134,871.67 3,247,757.06 510,100,496.00 12,076,443,635.56 16,990,405,136.62 494,248,174.05 17,484,653,310.67 end of the last year 570.00 06.33 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, 3,391,527,8 beginning of this 134,871.67 3,247,757.06 510,100,496.00 12,076,443,635.56 16,990,405,136.62 494,248,174.05 17,484,653,310.67 570.00 06.33 year III.Increase/ Decrease in this 300,007,85 3,048.10 -611,271.08 233,103,154.98 -67,512,920.84 19,845,510.57 -47,667,410.27 year (Decrease is 2.84 listed with “-”) 58 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (i) Total comprehensive 3,048.10 1,326,344,424.98 1,326,347,473.08 19,927,408.92 1,346,274,882.00 income (ii) Owners’ 300,007,85 devoted and -300,007,852.84 15,598,792.00 -284,409,060.84 2.84 decreased capital 1.Common shares invested by 15,598,792.00 15,598,792.00 shareholders 2. Capital invested by holders of other equity instruments 3.Amount reckoned into owners equity with share-based payment 300,007,85 4. Other -300,007,852.84 -300,007,852.84 2.84 (III)Profit -1,093,241,270.00 -1,093,241,270.00 -15,748,768.80 -1,108,990,038.80 distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (or -1,093,241,270.00 -1,093,241,270.00 -15,748,768.80 -1,108,990,038.80 shareholders) 4. Other (IV)Carrying forward internal owners’ equity 1. Capital reserves 59 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 -611,271.08 -611,271.08 68,078.45 -543,192.63 reserve 1. Withdrawal in 11,612,779.18 11,612,779.18 1,079,264.69 12,692,043.87 the report period 2. Usage in the 12,224,050.26 12,224,050.26 1,011,186.24 13,235,236.50 report period (VI)Others IV. Balance at the 1,008,950, 3,391,527,8 300,007,85 end of the report 137,919.77 2,636,485.98 510,100,496.00 12,309,546,790.54 16,922,892,215.78 514,093,684.62 17,436,985,900.40 570.00 06.33 2.84 period 60 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Last Period In RMB 2019 semi-annual Owners’ equity attributable to the parent Company Other equity Les Pro instrument s: visi Item Perpe Inv Other on Ot Minority Total owners’ Share Reasonable Surplus tual Capital reserve ent comprehensive of Retained profit he Subtotal interests equity capital Prefe O reserve reserve capita ory income gen r rred th l sha eral stock er securi res risk ties I. Balance at 1,008,950 3,416,022,795.1 510,100,496.0 the end of the -19,809,442.95 1,618,490.50 10,996,945,870.13 15,913,828,778.82 538,142,268.53 16,451,971,047.35 ,570.00 4 0 last year Add: Changes of accounting 19,809,442.95 -19,809,442.95 policy Error correction of the last period Enterprise combine under the same control Other II. Balance at 1,008,950 3,416,022,795.1 510,100,496.0 the beginning 0.00 1,618,490.50 10,977,136,427.18 15,913,828,778.82 538,142,268.53 16,451,971,047.35 ,570.00 4 0 of this year III. Increase/ Decrease in 261,591.54 917,170.19 82,068,587.53 83,247,349.26 33,215,155.68 116,462,504.94 this year (Decrease is 61 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 owners (or -1,210,740,684.00 -1,210,740,684.00 -1,210,740,684.00 shareholders) 62 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 10,101,863.74 10,101,863.74 892,049.10 10,993,912.84 in the report 63 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 period 2. Usage in the 9,184,693.55 9,184,693.55 589,681.20 9,774,374.75 report period (VI)Others 261,591.54 261,591.54 261,591.54 IV. Balance at 1,008,950 3,416,022,795.1 510,100,496.0 the end of the 261,591.54 2,535,660.69 11,059,205,014.71 15,997,076,128.08 571,357,424.21 16,568,433,552.29 ,570.00 4 0 report period 8. Statement of Changes in Owners’ Equity (Parent Company) This Period In RMB 2020 semi-annual Other equity instrument Other Item Preferr Perpetual Capital public Less: Inventory compreh Reasonable Oth Share capital Othe Surplus reserve Retained profit Total owners’ equity ed capital reserve shares ensive reserve er r stock securities income I. Balance at the end of 1,008,950,570 3,488,221,286.39 0.00 510,100,496.00 10,381,863,816.29 15,389,136,168.68 the last year .00 Add: Changes of accounting policy Error correction of the last period Other II. Balance at the 1,008,950,570 3,488,221,286.39 0.00 510,100,496.00 10,381,863,816.29 15,389,136,168.68 beginning of this year .00 III. Increase/ Decrease in this year (Decrease is -7,000,000.00 300,007,852.84 75,460,598.06 -231,547,254.78 listed with “-”) 64 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (i) Total comprehensive 1,218,622,388.02 1,218,622,388.02 income (ii) Owners’ devoted and 300,007,852.84 -49,920,519.96 -349,928,372.80 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 300,007,852.84 -49,920,519.96 -349,928,372.80 (III) Profit distribution -1,093,241,270.00 -1,093,241,270.00 1. Withdrawal of surplus reserves 2. Distribution for owners -1,093,241,270.00 -1,093,241,270.00 (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 65 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 6. Other (V) Reasonable reserve -1,177,442.02 -1,177,442.02 1. Withdrawal in the 2,924,878.27 2,924,878.27 report period 2. Usage in the report 4,102,320.29 4,102,320.29 period (VI)Others -7,000,000.00 1,177,442.02 -5,822,557.98 IV. Balance at the end of 1,008,950,570 3,481,221,286.39 300,007,852.84 0.00 510,100,496.00 10,457,324,414.35 15,157,588,913.90 the report period .00 Last period In RMB 2019 semi-annual Other equity instrument Less: Item Other Perpetual Capital public Invent Reasonable Oth Total owners’ Share capital Preferre comprehensive Surplus reserve Retained profit capital Other reserve ory reserve er equity d stock income securities shares I. Balance at the end of 1,008,950,570 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 .00 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 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 66 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 .00 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 1. Withdrawal of surplus reserves 2.Distribution for owners (or -1,210,740,684.00 -1,210,740,684.00 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 67 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 3,488,221,286.39 0.00 510,100,496.00 9,294,992,285.86 14,302,264,638.25 the report period .00 68 无锡威孚高科技集团股份有限公司 2020 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 115.4355 million Yuan, including state-owned share capital amounting to 92.4355 million Yuan, public corporate share capital amounting to 8 million Yuan and inner employee share capital amounting to 15 million Yuan. 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 1.00 Yuan for each, and the total value of those shares amounted to 68 million Yuan. After the issuance, the Company’s total share capital increased to 183.4355 million Yuan. 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 303.4355 million Yuan. 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 394.46615 million Yuan, of which state-owned shares amounted to 120.16615 million Yuan, public corporate shares 10.4 million Yuan, foreign-funded shares (B-share) 88.40 million Yuan, RMB ordinary shares (A-share) 156 million Yuan and inner employee shares 19.5 million Yuan. 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 10 Yuan for each allotted share. Actually 41.9 million shares was allotted, and the total share capital after the allotment increased to 436.36615 million Yuan, of which state-owned corporate shares amounted to 121.56615 million Yuan, public corporate shares 10.4 million Yuan, foreign-funded shares (B-share) 88.4 million Yuan and RMB ordinary shares (A-share) 216 million Yuan. 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. 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 69 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 February 2012, the Company issued RMB ordinary shares (A-share) of 112,858,000 shares to Wuxi Industry Groups and overseas strategic investor privately, Robert Bosch Co., Ltd. (ROBERT BOSCHGMBH) (hereinafter referred to as Robert Bosch Company), face value was ONE Yuan per share, added registered capital of 112,858,000Yuan, and the registered capital after change was 680,133,995Yuan. 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 1,020,200,992Yuan 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 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, Xinwu District, Wuxi Unified social credit code: 91320200250456967N The Company sets up Shareholders’ General Meeting, the Board of Directors (BOD) and the Board of Supervisors (BOS) The Company sets up Administration Department, Technology Centre, human resources, Office of the BOD, compliance department, IT department, Strategy& Market 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. and Nanjing Weifu Jinning Co., Ltd. 70 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. Engineering and technical research & experimental development; R&D of energy recovery system; manufacturing of auto parts and fittings; manufacture of general machinery(excluding manufacture of special equipment) .(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 report of the Company were approved by the Board of Directors for reporting dated 21 August 2020. 5. Scope of consolidate financial statement Shareholding ratio (%) Registered Proportion capital Statement Short name of Name of subsidiary of votes (in 10 Business scope consolidat subsidiary Directly Indirectly (%) thousand e (Y/N) Yuan) Internal-combustion Y Nanjing Weifu Jinning Co., Ltd. Weifu Jinning 80.00 -- 80.00 34,628.70 engine accessories Wuxi Weifu Leader Catalytic Y Weifu Leader 94.81 -- 94.81 50,259.63 Purifier and muffler Converter Co., Ltd. Weifu Mashan Pump Glib Co., Internal-combustion Y Weifu Mashan 100.00 -- 100.00 16,500 Ltd. engine accessories Internal-combustion Y Wuxi Weifu Chang’an Co., Ltd. Weifu Chang’an 100.00 -- 100.00 21,000 engine accessories Wuxi Weifu International Trade Weifu Y 100.00 -- 100.00 3,000 Trade Co. Ltd. International Trade Wuxi Weifu Schmidt Power Internal-combustion Y Weifu Schmidt 66.00 -- 66.00 7,600 System Spare Parts Co., Ltd. engine accessories Ningbo Weifu Tianli Weifu Tianli 98.83 1.17 100.00 11,136 Internal-combustion Y 71 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Supercharging Technique Co., engine accessories Ltd. Wuxi Weifu-Autocam Fine Automobile Y Weifu Autocam 51.00 -- 51.00 USD2,110 Machinery Co. Ltd. components Wuxi Weifu Leader Catalytic Weifu Leader Y -- 60.00 60.00 1,000 Purifier and muffler Converter (Wuhan) Co., Ltd. (Wuhan) Weifu Leader (Chongqing) Y Weifu Leader Automobile Components Co., -- 100.00 100.00 5,000 Purifier and muffler (Chongqing) Ltd Nanchang Weifu Leader Y Weifu Leader Automobile components Co., -- 100.00 100.00 5,000 Purifier and muffler (Nanchang) Ltd. Wuxi Weifu Electric Drive Weifu Electric Y 80.00 -- 80.00 USD2,000 Hub motor Technology Co., Ltd. Drive Weifu Holding ApS SPV 100.00 -- 100.00 DKK 37 Investment Y Fuel cell Y IRD Fuel Cells A/S IRD -- 66.00 66.00 DKK8,560 components Fuel cell Y IRD FUEL CELLS LLC IRD America -- 66.00 66.00 USD300 components Wuxi Weifu ITM Supercharging Technique Co., Ltd was absorbed and merged by the Company on January 1, 202 0. So, compared with the end of last year, it was not listed separately in Scope of consolidate financial statement. 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. 72 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. 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-32- Other important 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. 73 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. (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 74 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 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 75 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 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. 76 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. 8. Recognition 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. There into, 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. There into, 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 77 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. 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) Recognition 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; ②The financial asset has been transferred, and the Company has transferred almost all risks and rewards of the ownership of the financial asset to the transferee; ③The financial asset has been transferred. Although the Company has neither transferred nor retained almost all the risks and rewards of the ownership of the financial asset, it has given up the control of the financial asset. If all or part of the current obligations of a financial liability has been discharged, the financial liability or part of it is terminated for recognition. 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, terminated the recognition of 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 terminated the recognition of proceed on a trade date basis. 78 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (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. Financial assets are measured at fair value at initial recognition, but if the receivables or receivables financing arising from the sale of goods or the provision of services do not include a significant financing component or do not consider a financing component that does not exceed one year, it shall be initially measured in accordance with the transaction value. For financial assets measured at fair value and whose changes are included in the current profit or loss, related transaction costs are directly included in the current profit and loss; for other types of financial assets, related transaction costs are included in the initially recognized amount. 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. 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. 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 79 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. 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 terminate for recognition, the accumulated gains or losses previously included in other comprehensive income are transferred from other comprehensive income and included in current profit or loss. ③Financial 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 80 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. (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 Transaction 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 recognition termination 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. 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. 81 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. For the account receivable or receivable financing resulting by selling goods or providing services, if they contains no significant financing components or without consider the financing components no more than one year, the company always measures its loss provisions according to the amount of expected credit losses during the entire renewal period. 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 82 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. When measuring expected credit losses, the Company individually evaluates credit risk for financial assets with significantly different credit risks, such as receivables involving litigation and arbitration with the other party, or receivables having obvious indications that the debtor is likely to be unable to fulfill its repayment obligations, and so on. Except for the financial assets that separately assess the credit risks, the Company classified the account receivable according to their characteristic of risks, calculated the expected credit losses on basis of portfolio. Basis for determining the portfolio as follow: A - Note receivable Note receivable 1: bank acceptance Note receivable 2: trade acceptance B - Account receivable Account receivable 1: receivable from clients Account receivable 2: receivable from internal related party C-Other account receivables Other account receivables 1: receivable from internal related party Other account receivables 2: receivable from others As for the note receivable, account receivable and other account receivable classified in portfolio, by referring to the experience of historical credit loss, the expected credit loss is calculated by combining the current situation and the forecast of future economic conditions. On December 31, 2019, the company reviewed the appropriateness of the provision for bad debts of receivables of previous years.Based on the credit risk characteristics of bills receivable, comprehensively evaluated the credit risk of bills receivable, the Company did not accrue credit impairment losses for bills receivable.There was a correlation between the default probability of accounts receivable portfolio and other accounts receivable portfolio and the aging, the aging was still a sign of whether the credit risk of the Company’s receivables had increased significantly.Therefore, the Company’s credit loss risk from June 30, 2020 was estimated on the basis of the aging and based on the original loss ratio. Except for the above-mentioned financial assets adopting simplified metering method, the Company assesses at each balance sheet date whether its credit risk has increased significantly since initial recognition. If credit risk has not increased significantly since initial recognition, it is in the first stage, the Company measures the loss provisions based on the amount equivalent to the expected credit loss in the next 12 months; if the credit risk has 83 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 increased significantly since initial recognition but no credit impairment has occurred, it is in the second stage, the Company measures the loss provisions based on the amount equivalent to the expected credit loss for the entire duration; if credit impairment occurs after initial recognition, it is in the third stage, the Company measures the loss provisions based on the amount equivalent to the expected credit loss for the entire duration.For financial instruments with low credit risks at the balance sheet date, the Company assumes that their credit risks have not increased significantly since initial recognition. The Company evaluates the expected credit losses of financial instruments based on individual items and portfolios. The Company considers the credit risk characteristics of different customers and evaluates the expected credit losses of receivables based on the aging portfolios. When assessing expected credit losses, the Company considers reasonable and evidence-based information about past events, current conditions, and forecasts of future economic conditions. When the Company no longer reasonably expects to be able to fully or partially recover the contractual cash flow of a financial asset, the Company directly writes down the book balance of the financial asset. 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 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 84 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 termination of recognition for 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) other than the issuer of the financial assets. 85 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 For financial assets that the Company has transferred almost all risks and rewards of ownership of financial assets to the transferee, terminate the recognition of the financial assets; if almost all the risks and rewards of ownership of financial assets have been retained, do not terminate the recognition of 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, terminate the recognition of 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 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 (2) Receivables with bad debt provision accrual by credit portfolio Classify to many combination based on credit portfolio for those receivables with minor account singly and 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. ①Accrual ratio for bad debt provision of account receivable based on age analysis in account age portfolio: 86 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Account age Accrual ratio for account receivable Accrual ratio for other receivables Within 6 months Without accrual Without accrual 6 months to one year 10% 10% 1-2 years 20% 20% 2-3 years 40% 40% Over 3 years 100% 100% ②As for the receivable for parent company or the related party under the control of same parent company, no bad debt provision accrual. (3) Account receivable with minor single amount but with withdrawal bad debt provision for single item Reasons for accrual: The present value of future cash flow has major difference with the receivable group’s present value of future cash flow. Accrual method for bad debt provision: Carried out impairment test independently, accrual bad debt reserves according to the difference of present value of future cash flow lower its book value The recognition standards and accrual method for bad debt provision of account receivable found more in “10.Financial instrument”. 13.Account receivable financing The Company measures the loss provision for the financing of receivables at the amount equivalent to the expected credit loss during the entire duration, and the resulting increase or reversal of the loss provision is included in the current profit and loss as an impairment loss or profit. 14. Other account receivables 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. 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 Item determining Method of measuring expected credit loss portfolio Other account Account age Refer to the historical credit loss experience, combine with the current situation and the forecast 87 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 receivables of future economic conditions, compile a comparison table of the age of other receivables and the expected credit loss rate of the entire renewal period, and calculate the expected credit losses. 15. Inventory (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 The cost of inventory at the time of acquisition and delivery is calculated according to the standard cost method, and the difference in cost that it should bear is carried forward at the end of the period, and the standard cost is adjusted to the actual cost. (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 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. 88 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 ②Wrappage The Company adopts one-off amortization method to amortize the wrappage at the time of receipt. 16. 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 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 89 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. 17. 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 by fair value and with variation reckoned into current gains/losses. As for other accounting policies found more in “10. Financial instrument” in Note V. (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 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 90 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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, 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. 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. 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 91 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 in-conformity 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 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 92 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 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 93 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 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 94 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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-23.”impairment of long-term assets” (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. 18. 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 held for investment by investors are stated at the value agreed in an investment contract or agreement, but those 95 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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-“23.Impairment of long-term assets” 19. Fixed assets (1) Recognition 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 equipment Straight-line depreciation 4~5 5 19.00~23.75 Electronic and other equipment Straight-line depreciation 3~10 5 9.50~31.67 For the fixed assets with impairment provision, the depreciation amount shall be calculated after deducting the accumulated amount of impairment provision for fixed assets (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 96 无锡威孚高科技集团股份有限公司 2020 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-“23.Impairment of long-term assets”. 20. 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-“23.Impairment of long-term assets” 21. 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: ①Capital expenditure has been occurred; ②Borrowing 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 97 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 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. 22. 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 98 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. Impairment testing methods and accrual for depreciation reserves for the intangible assets found more in Note V-“23. Impairment of long-term assets”. (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): ①It is technically feasible that the intangible asset can be used or sold upon completion; ②there is intention to complete the intangible asset for use or sale; ③ The products produced using the intangible asset has a market or the intangible asset itself has a market; ④there is sufficient support in terms of technology, financial resources and other resources in order to complete the development of the intangible asset, and there is capability to use or sell the intangible asset; 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. 23. 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 99 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 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. 24. 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. 25. Contract liability The Company lists contract assets or contract liabilities in the balance sheet based on the relationship between performance obligations and customer payments. The Company offsets the contract assets and contract liabilities under the same contract and lists as a net amount. Contract liabilities refer to the obligations to transfer goods or services to customers for the consideration received or receivable from customers, such as the payment received by an enterprise before the transfer of promised goods or services. 100 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 26. 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 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 101 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. 27. 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 28. Revenue Accounting policies for recognition and measurement of revenue (applicable since 1 Jan. 2020) 1. Revenue recognition principle On the starting date of the contract, the company evaluates the contract, identifies each individual performance obligation contained in the contract, and determines whether each individual performance obligation is performed within a certain period of time or at a certain point in time. When one of the following conditions is met, it belongs to the performance obligation within a certain period of time, otherwise, it belongs to the performance obligation at a certain point in time: (1) The customer obtains and consumes the economic benefits brought by the company's performance while the company performs the contract; 102 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 ( 2) The customer can control the goods or services under construction during the company’s performance; (3) The goods or services produced during the company’s performance have irreplaceable uses, and the company has the right to collect payment for the performance part that has been completed so far during the entire contract period. For performance obligations performed within a certain period of time, the company recognizes revenue in accordance with the performance progress during that period. When the performance progress cannot be reasonably determined, if the cost incurred is expected to be compensated, the revenue shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined. For performance obligations performed at a certain point in time, revenue is recognized at the point when the customer obtains control of the relevant goods or services. When judging whether the customer has obtained control of the goods, the company considers the following signs: (1) The company has the current right to receive payment for the goods, that is, the customer has the current payment obligation for the goods; (2) The company has transferred the legal ownership of the goods to the customer, that is, the customer has the legal ownership of the goods; (3) The company has transferred the goods to the customer in kind, that is, the customer has physically taken possession of the goods; (4) The company has transferred the main risks and rewards of the ownership of the goods to the customer, that is, the customer has obtained the main risks and rewards of the ownership of the goods; (5) The customer has accepted the goods; (6) Other signs that the customer has obtained control of the goods. 2. Revenue measurement principle (1) The company measures revenue based on the transaction price allocated to each individual performance obligation. The transaction price is the amount of consideration that the company expects to be entitled to receive due to the transfer of goods or services to customers, and does not include payments collected on behalf of third parties and payments expected to be returned to customers. (2) If there is variable consideration in the contract, the company shall determine the best estimate of the variable consideration according to the expected value or the most likely amount, but the transaction price including the variable consideration shall not exceed the amount of cumulatively recognized revenue that is unlikely to be significantly turned back when the relevant uncertainty is eliminated. (3) If there is a significant financing component in the contract, the company shall determine the transaction price based on the amount payable that the customer is assumed to pay in cash when obtaining the control of the goods or services. The difference between the transaction price and the contract consideration shall be amortized by the effective interest method during the contract period. On the starting date of the contract, if the company expects that the customer pays the price within one year after obtaining control of the goods or services, the significant financing components in the contract shall not be considered. (4) If the contract contains two or more performance obligations, the company will allocate the transaction price to each individual performance obligation based on the relative proportion of the stand-alone selling price of the goods promised by each individual performance obligation on the starting date of the contract. 3. The specific method of revenue recognition (1) Goods sales 103 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 The company's sales of internal combustion engine accessories, purifiers, mufflers and other products belong to the performance obligations at a certain point in time. The following conditions must be met for the revenue recognition of domestic products: the company has delivered the product to the customer in accordance with the contract and the customer has accepted the product, the payment has been collected or the receipt of payment has been obtained, and the relevant economic benefits are likely to flow in, the main risks and rewards of the ownership of the goods have been transferred, the legal ownership of the goods has been transferred. The following conditions must be met to confirm the revenue of export products: the company has declared the product in accordance with the contract, obtained the bill of lading, collected the payment or obtained the receipt of payment, and related economic benefits are likely to flow in, and the main risks and rewards of the ownership of the goods have been transferred, and the legal ownership of the goods has been transferred. (2) Service delivery Revenue from the delivery of service contracts between the company and its customers, because the customer obtains and consumes the economic benefits brought about by the company’s performance at the same time when the company performs the contract, and the company has the right to collect the revenue payment from the completed performance during the entire contract period, the company regards it as a performance obligation performed within a certain period of time, and recognizes revenue according to the performance progress, unless the performance progress cannot be reasonably determined. The company determines theperformance progress of the service delivery according to the input method or output method. When the performance progress cannot be reasonably determined, if the company's incurred costs are expected to be compensated, the revenue shall be recognized according to the amount of the incurred costs until the performance progress can be reasonably determined. (3) Rental income Rental income of operating lease is recognized in accordance with the straight-line method during each period of the lease term, and contingent rentals are included in the current profit and loss when they actually occur. 29. 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 actually can be obtained. 104 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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. 30. 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 105 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 31. 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 un-guaranteed 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. 106 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 32. 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, 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 impactsare 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 The Company has used the expected credit loss model to assess the impairment of financial instruments since 2019. The application of the expected credit loss model requires significant judgement and estimates, and must consider all reasonable and evidence-based information, including forward-looking information.In making such judgments and estimates, the Company infers the expected changes in debtors’ credit risks based on historical repayment data combined with economic policies, macroeconomic indicators, industry risks and other factors. (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) 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 107 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 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. (4) 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. (5) Fair value of financial instrument Financial instruments that do not have active markets to provide quotes need to use valuation techniques to determine fair value.Valuation techniques include the latest transaction information, discounted cash flow methods, and option pricing models.The Company has established a set of work processes to ensure that qualified personnel are responsible for the calculation, verification and review of fair value.The valuation model used by the 108 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Company uses the market information as much as possible and uses the Company-specific information as little as possible.It should be noted that part of the information used in the valuation model requires management’s estimation (such as discount rate, target exchange rate volatility, etc.).The Company regularly reviews the above estimates and assumptions and makes adjustments if necessary. (6) 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. 33. Changes of important accounting policy and estimation (1) Changes of major accounting policies √ Applicable □ Not applicable In accordance with the relevant requirements of the Accounting Standards for Business Enterprises No. 14-Revenue (CK [2017] No. 22) issued by the Ministry of Finance on July 5, 2017, the company made corresponding changes and adjustments to the new revenue standards. The details are as follows: 1. Incorporate the current revenue and construction contract standards into a unified revenue recognition model; 2. Use the transfer of control rights instead of the transfer of risk rewards as the criterion for determining the point in time of revenue recognition; 3. Identify each individual performance obligation contained in the contract and recognize revenue separately when performing it; 4. Provide clearer guidance for the accounting treatment of contracts that include multiple transaction arrangements; 5. Regulations are explicitly stipulated for the revenue recognition and measurement of certain specific transactions (or events). (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 since 2020 Applicable Whether need to adjust the items in balance sheet at the beginning of the year 109 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 √Yes □No Consolidate balance sheet In RMB Item 2019-12-31 2020-01-01 Adjustments Current assets: Monetary funds 1,596,893,711.87 1,596,893,711.87 Settlement provisions Capital lent Transaction financial asset 3,940,885,674.32 3,940,885,674.32 Derivative financial assets Note receivable 1,812,141,371.94 1,812,141,371.94 Account receivable 2,310,666,475.89 2,406,712,915.10 96,046,439.21 Receivables financing 23,873,317.86 23,873,317.86 Account paid in advance 139,241,917.78 139,241,917.78 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Other account receivables 43,730,023.31 43,730,023.31 Including: Interest receivable 655,052.98 655,052.98 Dividend receivable 1,070,000.00 1,070,000.00 Buying back the sale of financial assets Inventory 2,418,744,835.82 2,418,744,835.82 Contract assets Assets held for sale Non-current asset due within one year Other current assets 1,012,055,605.74 1,012,055,605.74 Total current assets 13,298,232,934.53 13,394,279,373.74 96,046,439.21 Non-current assets: Loans and payments on behalf Creditors’ investment Other creditors’ investment Long-term account receivables Long-term equity investment 5,322,405,953.35 5,322,405,953.35 Other equity instrument investment 285,048,000.00 285,048,000.00 110 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Other non-current financial assets 1,043,589,987.43 1,043,589,987.43 Investment real estate 22,410,511.87 22,410,511.87 Fixed assets 2,845,176,078.20 2,845,176,078.20 Construction in progress 247,857,777.25 247,857,777.25 Productive biological assets Oil and gas assets Right-of-use asset Intangible assets 430,594,372.12 430,594,372.12 Research and development costs Goodwill 1,784,086.79 1,784,086.79 Long-term deferred expenses 18,536,000.25 18,536,000.25 Deferred income tax assets 212,476,501.54 212,476,501.54 Other non-current assets 230,235,982.45 230,235,982.45 Total non-current assets 10,660,115,251.25 10,660,115,251.25 Total assets 23,958,348,185.78 24,054,394,624.99 96,046,439.21 Current liabilities: Short-term borrowings 312,153,969.81 312,153,969.81 Loan from central bank Capital borrowed Transaction financial liability Derivative financial liability Note payable 1,745,218,439.52 1,745,218,439.52 Account payable 3,312,254,229.84 3,312,254,229.84 Accounts received in advance 113,737,432.61 1,493,602.00 -112,243,830.61 Contractual liability 112,243,830.61 112,243,830.61 Selling financial asset of repurchase Absorbing deposit and interbank deposit Security trading of agency Security sales of agency Employee compensation payable 314,343,737.66 314,343,737.66 Taxes payable 129,538,411.86 129,538,411.86 Other account payable 65,266,262.39 65,266,262.39 Including: Interest payable 111 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Dividend payable Commission charge and commission payable Reinsurance payable Liability held for sale Non-current liabilities due within one year Other current liabilities 96,046,439.21 96,046,439.21 Total current liabilities 5,992,512,483.69 6,088,558,922.90 96,046,439.21 Non-current liabilities: Insurance contract reserve Long-term borrowings Bonds payable Including: preferred stock Perpetual capital securities Lease liability Long-term account payable 35,108,263.11 35,108,263.11 Long-term employee compensation payable 58,392,053.61 58,392,053.61 Accrual liabilities Deferred income 365,116,022.98 365,116,022.98 Deferred income tax liabilities 22,566,051.72 22,566,051.72 Other non-current liabilities Total non-current liabilities 481,182,391.42 481,182,391.42 Total liabilities 6,473,694,875.11 6,569,741,314.32 96,046,439.21 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 3,391,527,806.33 3,391,527,806.33 Less: Inventory shares Other comprehensive income 134,871.67 134,871.67 Reasonable reserve 3,247,757.06 3,247,757.06 Surplus reserve 510,100,496.00 510,100,496.00 Provision of general risk 112 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Retained profit 12,076,443,635.56 12,076,443,635.56 Total owners’ equity attributable to parent 16,990,405,136.62 16,990,405,136.62 company Minority interests 494,248,174.05 494,248,174.05 Total owners’ equity 17,484,653,310.67 17,484,653,310.67 Total liabilities and owner’s equity 23,958,348,185.78 24,054,394,624.99 96,046,439.21 Balance sheet of parent company In RMB Item 2019-12-31 2020-01-01 Adjustments Current assets: Monetary funds 965,770,877.82 965,770,877.82 Transaction financial asset 3,758,789,072.68 3,758,789,072.68 Derivative financial assets Note receivable 202,403,993.13 202,403,993.13 Account receivable 768,500,929.93 836,014,968.93 67,514,039.00 Receivables financing Account paid in advance 89,116,730.45 89,116,730.45 Other account receivables 250,014,956.74 250,014,956.74 Including: Interest receivable 804,929.68 804,929.68 Dividend receivable 1,070,000.00 1,070,000.00 Inventory 565,144,234.49 565,144,234.49 Contract assets Assets held for sale Non-current asset due within one year Other current assets 938,616,881.51 938,616,881.51 Total current assets 7,538,357,676.75 7,605,871,715.75 67,514,039.00 Non-current assets: Creditors’ investment Other creditors’ investment Long-term account receivables Long-term equity investment 6,331,363,630.04 6,331,363,630.04 Other equity instrument investment 209,108,000.00 209,108,000.00 Other non-current financial assets 1,043,589,987.43 1,043,589,987.43 113 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Investment real estate Fixed assets 1,646,333,216.50 1,646,333,216.50 Construction in progress 136,573,912.28 136,573,912.28 Productive biological assets Oil and gas assets Right-of-use asset Intangible assets 203,663,423.60 203,663,423.60 Research and development costs Goodwill Long-term deferred expenses Deferred income tax assets 105,137,877.84 105,137,877.84 Other non-current assets 172,646,721.05 172,646,721.05 Total non-current assets 9,848,416,768.74 9,848,416,768.74 Total assets 17,386,774,445.49 17,454,288,484.49 67,514,039.00 Current liabilities: Short-term borrowings 116,126,459.33 116,126,459.33 Transaction financial liability Derivative financial liability Note payable 284,054,137.00 284,054,137.00 Account payable 930,273,146.35 930,273,146.35 Accounts received in advance 12,010,730.30 -12,010,730.30 Contract liability 12,010,730.30 12,010,730.30 Employee compensation payable 213,626,754.45 213,626,754.45 Taxes payable 56,540,307.59 56,540,307.59 Other account payable 11,976,576.21 11,976,576.21 Including: Interest payable Dividend payable Liability held for sale Non-current liabilities due within one year Other current liabilities 67,514,039.00 67,514,039.00 Total current liabilities 1,624,608,111.23 1,692,122,150.23 67,514,039.00 Non-current liabilities: Long-term borrowings 114 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Bonds payable Including: preferred stock Perpetual capital securities Lease liability Long-term account payable Long-term employee compensation payable 50,058,386.76 50,058,386.76 Accrual liabilities Deferred income 322,971,778.82 322,971,778.82 Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 373,030,165.58 373,030,165.58 Total liabilities 1,997,638,276.81 2,065,152,315.81 67,514,039.00 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 Reasonable reserve Surplus reserve 510,100,496.00 510,100,496.00 Retained profit 10,381,863,816.29 10,381,863,816.29 Total owners’ equity 15,389,136,168.68 15,389,136,168.68 Total liabilities and owner’s equity 17,386,774,445.49 17,454,288,484.49 67,514,039.00 (4) Retrospective adjustment of early comparison data description when initially implemented the new financial instrument standards and new leasing standards since 2020 □ Applicable √ Not applicable 34. Other Nil 115 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 VI. Taxation 1. Major taxes and tax rates Tax Basis Tax rate 16%, 13%, 6%, Collection rate 5%, 25%(IRD), rate for exported VAT Taxable income commodities is stipulated by the state with declaration 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 Income tax Taxpaying body rate Weifu Mashan, Weifu Chang’an, Weifu International Trade,, Weifu Schmidt, Weifu Leader (Wuhan), Weifu 25% Leader(Nanchang), Weifu Electronic Drive The Company, Weifu Jinning, Weifu Leader, Weifu Tianli, Weifu Autocam, Weifu Leader(Chongqing) 15% SPV、IRD 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 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 116 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 Industriesin 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%. 3. Other Nil 117 无锡威孚高科技集团股份有限公司 2020 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 76,486.27 93,165.33 Cash in bank 2,479,078,002.60 1,531,405,488.52 Other monetary funds 84,993,120.71 65,395,058.02 Total 2,564,147,609.58 1,596,893,711.87 Including: Total amount saving aboard 15,183,975.35 31,442,836.86 Other notes The ending balance of other monetary funds includes a bank acceptance bill deposit of RMB 32,786,262.96, a stock repurchase amount of RMB 50,000,000.00, and a frozen dividend of RMB 2,206,857.75.The frozen dividend of 2,206,857.75Yuan represents the part of dividends distributed by SDEC(stock code:600841) and Miracle Automation (stock code:002009) for 2017to 2019 held by the Company as Transaction 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. 2. Transaction financial assets In RMB/CNY Item Ending balance Opening balance Financial assets measured by fair value and with variation reckoned into current 3,186,262,183.13 3,940,885,674.32 gains/losses Including: Including:SDEC stock 90,523,572.00 91,822,332.00 Miracle Automation stock 36,125,700.00 36,031,500.00 financial products 3,059,612,911.13 3,813,031,842.32 Including: Total 3,186,262,183.13 3,940,885,674.32 3. Note receivable (1) Classification of notes receivable In RMB/CNY 118 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Item Ending balance Opening balance Bank acceptance bill 832,078,337.35 1,755,135,175.42 Trade acceptance bill 153,852,568.26 57,006,196.52 Total 985,930,905.61 1,812,141,371.94 In RMB/CNY Ending balance Opening balance Bad debt Bad debt Book balance Book balance reserve reserve Category Book Book Accr Accru Amo value Amou value Amount Ratio ual Amount Ratio al unt nt ratio ratio Note receivable with 985,930,9 1,812,141 bad debt provision 985,930,905.61 100.00% 1,812,141,371.94 100.00% 05.61 ,371.94 accrual on portfolio Including: Portfolio 1: bank 832,078,3 1,755,135 832,078,337.35 84.40% 1,755,135,175.42 96.85% acceptance bill 37.35 ,175.42 Portfolio 2: trade 153,852,5 57,006,19 153,852,568.26 15.60% 57,006,196.52 3.15% acceptance bill 68.26 6.52 985,930,9 1,812,141 Total 985,930,905.61 100.00% 1,812,141,371.94 100.00% 05.61 ,371.94 Bad debt provision accrual on a single basis: nil Bad debt provision accrual on portfolio: nil If the provision for bad debts of note 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 (2) Bad debt provision accrual collected or switch back □ Applicable √ Not applicable (3) Notes receivable already pledged by the Company at the end of the period In RMB/CNY Item Amount pledge at period-end Bank acceptance bill 632,125,894.23 Trade acceptance bill 13,421,185.00 Total 645,547,079.23 119 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (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 371,597,001.62 Trade acceptance bill 26,771,185.00 Total 398,368,186.62 (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 5,300,000.00 Total 5,300,000.00 Other explanation The trade acceptance bill that the company transferred to the accounts receivable due to in 2018 the failure of the drawer to perform the agreementat 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”); In 2018, the amount transferred to account receivable was 7 million yuan, and 1.7 million yuan has been recovered in 2019. (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 61,818,8 61,818,8 64,818,80 64,818,80 1.64% 100.00% 2.60% 100.00% provision accrual on 02.14 02.14 2.14 2.14 a single basis Including: 120 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Account receivable with bad debt 3,703,82 29,669,9 3,674,151 2,429,517 22,804,87 2,406,712,9 98.36% 0.80% 97.40% 0.94% provision accrual on 1,632.46 97.13 ,635.33 ,785.18 0.08 15.10 portfolio Including: 3,765,64 91,488,7 3,674,151 2,494,336 87,623,67 2,406,712,9 Total 100.00% 2.43% 100.00% 3.51% 0,434.60 99.27 ,635.33 ,587.32 2.22 15.10 Bad debt provision accrual on single basis: RMB 61,818,802.14 In RMB/CNY Ending balance Name Accrual Book balance Bad debt reserve Accrual causes ratio Hubei Meiyang Auto Industry Co., Ltd. 20,139,669.45 20,139,669.45 100.00% Have difficulty in collection Hunan Leopaard Auto Co., Ltd. 8,989,202.97 8,989,202.97 100.00% Have difficulty in collection Linyi Zotye Auto Parts Manufacturing Co., Ltd. 6,193,466.77 6,193,466.77 100.00% Have difficulty in collection Changchun FAW Sihuan Engine Manufacturing 5,852,415.65 5,852,415.65 100.00% Have difficulty in collection Co., Ltd. BD bills 5,300,000.00 5,300,000.00 100.00% Have difficulty in collection Tongling Ruineng Purchasing Co., Ltd. 4,199,674.50 4,199,674.50 100.00% Have difficulty in collection Zhejiang Zotye Auto Manufacturing Co., Ltd. 3,217,763.27 3,217,763.27 100.00% Have difficulty in collection Jiangsu Kawei Auto Industrial Group Co., Ltd. 1,932,476.26 1,932,476.26 100.00% Have difficulty in collection Wuxi Kipor Machinery Co., Ltd 1,220,384.74 1,220,384.74 100.00% Have difficulty in collection Fujian Zhao’an Country Minyue Bianjie 1,111,007.12 1,111,007.12 100.00% Have difficulty in collection Agricultural Machinery Auto Parts Co., Ltd. Other custom 3,662,741.41 3,662,741.41 100.00% Have difficulty in collection Total 61,818,802.14 61,818,802.14 -- -- Bad debt provision accrual on portfolio: RMB 29,669,997.13 In RMB/CNY Ending balance Name Book balance Bad debt reserve Accrual ratio Within 6 months 3,538,196,231.24 0.00 6 months to one year 116,206,384.18 11,620,638.42 10.00% 1-2 years 33,160,913.66 6,632,182.73 20.00% 2-3 years 8,068,212.31 3,227,284.91 40.00% 121 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Over 3 years 8,189,891.07 8,189,891.07 100.00% Total 3,703,821,632.46 29,669,997.13 -- 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 Book balance Within one year (One year included) 3,659,886,447.14 Including: within 6 months 3,542,172,732.40 6 months to one year 117,713,714.74 1-2 years 73,223,880.48 2-3 years 21,499,873.00 Over 3 years 11,030,233.98 3-4 years 11,030,233.98 Total 3,765,640,434.60 (2) Bad debt provision accrual collected or switch back 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 Other Bad debt 87,623,672.22 12,538,618.35 8,673,491.30 91,488,799.27 provision Total 87,623,672.22 12,538,618.35 8,673,491.30 91,488,799.27 Important bad debt provision collected or switch back: In RMB/CNY Enterprise Amount collected or switch back Collection way Hunan Leopard Automobile Co., Ltd. 3,000,000.00 Cash Total 3,000,000.00 -- (3) Account receivable actual charge off in the Period Nil 122 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (4) Top 5 receivables at ending balance by arrears party In RMB/CNY Ending balance of Ratio in total ending balance of Ending balance of bad debt Name account receivable account receivables reserve Bosch Automobile Diesel System Co., Ltd. 712,061,865.41 18.91% 868.90 Custom 1 308,560,656.96 8.19% 758,123.22 Custom 2 214,144,964.18 5.69% 1,097.47 Custom 3 174,254,129.96 4.63% 5,152,919.37 Custom 4 166,220,032.40 4.41% 369,367.22 Total 1,575,241,648.91 41.83% (5) Account receivable derecognition due to financial assets transfer Nil (6) Assets and liabilities resulted by account receivable transfer and continues involvement Nil 5. Receivables financing In RMB/CNY Item Ending balance Opening balance Note receivable 756,743,779.54 23,873,317.86 Including: bank acceptance bill 756,743,779.54 23,873,317.86 Total 756,743,779.54 23,873,317.86 Increase and decrease in current period and changes in fair value of receivables financing □ Applicable √ Not applicable If the bad debt provision for account receivable is calculated and withdrawn according to the general model of expected credit loss, please refer to the disclosure method of other account receivables in aspect of impairment provision: □ Applicable √ Not applicable 6. Account paid in advance (1) Account age of account paid in advance In RMB/CNY 123 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Ending balance Opening balance Account age Amount Ratio Amount Ratio Within one year 204,078,981.25 91.01% 118,030,952.47 84.77% 1-2 years 17,421,411.19 7.77% 19,644,713.49 14.11% 2-3 years 1,847,381.49 0.82% 683,098.16 0.49% Over 3 years 896,137.77 0.40% 883,153.66 0.63% Total 224,243,911.70 -- 139,241,917.78 -- Explanation on reasons of failure to settle on important advance payment with age over one year: Nil (2) Top 5 account paid in advance at ending balance by prepayment object Total year-end balance of top five account paid in advance by prepayment object amounted to 121,104,997.78 Yuan, takes 54.01 percent of the total advance payment at year-end. 7. Other account receivables In RMB/CNY Item Ending balance Opening balance Interest receivable 2,091,107.78 655,052.98 Dividend receivable 1,092,040,579.49 1,070,000.00 Other account receivables 34,981,395.85 42,004,970.33 Total 1,129,113,083.12 43,730,023.31 (1) Interest receivable 1) Category of interest receivable In RMB/CNY Item Ending balance Opening balance Interest of fund occupation 2,091,107.78 655,052.98 Total 2,091,107.78 655,052.98 2) Significant overdue interest Nil 124 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 Weifu Precision Machinery Manufacturing Co., Ltd. 1,070,000.00 Bosch Automobile Diesel System Co., Ltd. 900,840,579.49 Zhonglian Automobile Electronic Co., Ltd. 191,200,000.00 Total 1,092,040,579.49 1,070,000.00 2) Important dividend receivable with account age over one year Nil (3) Other account receivables 1) Other account receivables classification by nature In RMB/CNY Nature Ending book balance Opening book balance Intercourse funds from units 37,906,531.13 35,441,483.88 Equity disposal fund of Protean Holdings Corp. 10,654,092.89 Cash deposit 2,797,435.00 3,625,917.96 Staff loans and petty cash 2,947,266.36 1,346,241.81 Other 450,558.75 300,206.93 Total 44,101,791.24 51,367,943.47 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) 125 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Balance on Jan. 1, 2020 7,848,301.94 1,514,671.20 9,362,973.14 Balance of Jan. 1, 2020 —— —— —— —— in the period Current accrual 1,352,021.01 1,352,021.01 Current reversal 1,525,891.90 68,706.86 1,594,598.76 Balance on Jun. 30, 2020 7,674,431.05 1,445,964.34 9,120,395.39 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 Book balance Within one year (One year included) 15,141,754.76 Within 6 months 15,109,948.53 6 months to one year 31,806.23 1-2 years 24,798,127.14 2-3 years 7,200.00 Over 3 years 4,154,709.34 3-4 years 4,154,709.34 Total 44,101,791.24 3) Bad debt provision accrual, collected or switch back 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 Other Bad debt provision 9,362,973.14 1,352,021.01 1,594,598.76 9,120,395.39 Total 9,362,973.14 1,352,021.01 1,594,598.76 9,120,395.39 Including the important bad debt provision switch back or collected in the period: In RMB/CNY Name Reversal or recovery Recovery method Robert Bosch Company 1,520,000.00 Cash Total 1,520,000.00 -- 126 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 4) Other receivables actually written-off during the reporting period Nil 5) Top 5 other receivables at ending balance by arrears party In RMB/CNY Ratio in total ending Ending balance of Enterprise Nature Ending balance Account age balance of other bad debt reserve receivables Troowin Power System Technology Intercourse funds 24,000,000.00 1-2 years 54.42% 4,800,000.00 Co., Ltd. of unit Ningbo Jiangbei High-Tech Industry Park Development Performance bond 1,767,000.00 Over 3 years 4.01% 1,767,000.00 Construction Co., Ltd. Intercourse funds American HESS Company 1,445,964.34 Over 3 years 3.28% 1,445,964.34 of unit Nanjing Property Service Guidance Intercourse funds Within 6 1,301,567.91 2.95% 0.00 Center of unit months China Combustion City Gas deposit 575,640.00 Over 3 years 1.31% 575,640.00 Development Co., Ltd. Total -- 29,090,172.25 -- 65.96% 8,588,604.34 6) Other 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 8. Inventory (1) Category of inventory In RMB/CNY 127 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Ending balance Opening balance Inventory Inventory depreciation depreciation reserve or reserve or Item Provision for Provision for Book balance Book value Book balance Book value impairment of impairment of contract contract performance performance costs costs Raw materials 393,084,028.86 76,901,935.24 316,182,093.62 495,927,678.66 81,069,128.03 414,858,550.63 Goods in process 314,390,207.52 9,632,421.12 304,757,786.40 243,525,007.82 13,963,866.92 229,561,140.90 Finished goods 1,220,723,800.47 170,924,933.72 1,049,798,866.75 1,937,368,868.87 163,043,724.58 1,774,325,144.29 Total 1,928,198,036.85 257,459,290.08 1,670,738,746.77 2,676,821,555.35 258,076,719.53 2,418,744,835.82 (2) Inventory depreciation reserve and provision for impairment of contract performance costs In RMB/CNY Current increased Current decreased Item Opening balance Ending balance Accrual Other Switch back or write-off Other Raw materials 81,069,128.03 4,148,326.81 8,315,519.60 76,901,935.24 Goods in process 13,963,866.92 419,958.18 4,751,403.98 9,632,421.12 Finished goods 163,043,724.58 48,239,624.48 40,358,415.34 170,924,933.72 Total 258,076,719.53 52,807,909.47 53,425,338.92 257,459,290.08 ① Net realizable value of the inventory refers to: during the day-to-day activities, results of the estimated sale price less costs which are going to happen by estimation till works completed, sales price estimated and relevant taxes. ② Accrual basis for inventory depreciation reserve: Accrual basis for inventory impairment Cash on hand Specific basis for recognition provision The materials sold due to finished goods Results from the estimated sale price of such inventory less the Materials in stock manufactured, its net realizable value is cost what will happen, estimated sales expenses and relevant lower than the book value taxes till the goods completed The goods in process sold due to finished Results from the estimated sale price of such inventory less the Goods in process goods manufactured, its net realizable value cost what will happen, estimated sales expenses and relevant is lower than the book value taxes till the goods completed Accrual basis for inventory impairment Specific basis for recognition Cash on hand provision 128 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 ③ Reasons of write-off for inventory falling price reserves: Cash on hand Reasons of write-off Materials in stock Used for production and the finished goods are realized sales Goods in process Goods in process completed in the Period and corresponding finished goods are realized sales in the Period Finished goods Sales in the Period (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 9. Other current assets In RMB/CNY Item Ending balance Opening balance Structured deposits 525,000,000.00 965,000,000.00 Receivable export tax rebates 3,791,825.38 5,383,485.34 VAT refund receivable 1,648,669.86 Prepaid taxes and VAT retained 18,165,659.42 36,067,254.77 Input tax to be deducted and certification 188,191.44 764,895.21 Other 331,459.55 3,191,300.56 Total 547,477,135.79 1,012,055,605.74 10. Long-term equity investments In RMB/CNY Current changes (+, -) Ending Investment Other Cash Ending balance The Opening Additi Capital gain/loss comprehe Other dividend or Impair balance of invested balance onal (book depreciati entity (book value) invest reducti recognized nsive equity profit ment Other on under income change announced accrual value) on ment reserves equity adjustment to issued I. Joint venture Wuxi Weifu Environmen 578,366,832. 53,821,724. 632,188,5 t Catalyst 27 29 56.56 Co., Ltd. 129 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 578,366,832. 53,821,724. 632,188,5 Subtotal 27 29 56.56 II. Associated enterprise Bosch Automobile 3,417,092,13 600,783,01 1,801,681,1 2,216,193 Diesel 6.65 3.31 59.00 ,990.96 System Co., Ltd. Zhonglian Automobile 1,261,232,63 126,848,34 331,400,00 1,056,680 Electronic 5.30 0.16 0.00 ,975.46 Co., Ltd. Weifu Precision 61,536,602.8 7,644,513.8 69,181,11 Machinery 2 0 6.62 Manufacturi ng Co., Ltd. Shinwell Automobile -732,249.4 3,445,496 Tech. 4,177,746.31 2 .89 (Wuxi) Co., Ltd. 4,744,039,12 734,543,61 2,133,081,1 3,345,501 Subtotal 1.08 7.85 59.00 ,579.93 5,322,405,95 788,365,34 2,133,081,1 3,977,690 Total 3.35 2.14 59.00 ,136.49 11. Other equity instrument investment In RMB/CNY Item Ending balance Opening balance Wuxi Xidong Science & Technology Industrial Park 5,000,000.00 5,000,000.00 Beijing Zhike Industry Investment Holding Group Co., Ltd. 75,940,000.00 75,940,000.00 Rare earth Catalysis Innovation Research Institute (Dongying) Co., Ltd. 4,108,000.00 4,108,000.00 Wuxi Xichang Microchip Semi-Conductor 200,000,000.00 200,000,000.00 Total 285,048,000.00 285,048,000.00 130 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 12. Other non-current financial assets In RMB/CNY Item Ending balance Opening balance Transaction financial assets holding for over one year 1,680,000,000.00 1,000,246,703.43 Equity instrument investment 43,343,284.00 43,343,284.00 Total 1,723,343,284.00 1,043,589,987.43 13. Investment real estate (1) Investment real estate measured by cost √ Applicable □ Not applicable In RMB/CNY Item House and Building Land use right Construction in progress Total I. original book value 1.Opening balance 65,524,052.61 65,524,052.61 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 65,524,052.61 65,524,052.61 II. Accumulated depreciation and accumulated amortization 1.Opening balance 43,113,540.74 43,113,540.74 2.Current increased 761,915.13 761,915.13 (1) accrual or amortization 761,915.13 761,915.13 3.Current decreased (1) disposal (2) other transfer-out 4.Ending balance 43,875,455.87 43,875,455.87 III. Depreciation reserves 131 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 21,648,596.74 21,648,596.74 2.Opening Book value 22,410,511.87 22,410,511.87 (2) Investment real estate measured at fair value □ Applicable √ Not applicable (3) Investment real estate without property certification held Nil 14. Fixed assets In RMB/CNY Item Ending balance Opening balance Fixed assets 2,875,000,573.89 2,845,176,078.20 Total 2,875,000,573.89 2,845,176,078.20 (1) Fixed assets In RMB/CNY House and Machinery Transportation Electronic and other Item Total Building equipment equipment equipment I. original book value: 1.Opening balance 1,577,727,234.03 2,892,177,324.22 33,031,605.81 518,844,612.28 5,021,780,776.34 2.Current increased 16,580,464.39 156,035,593.57 54,194.02 59,652,213.15 232,322,465.13 (1) Purchase 1,019,898.68 1,019,898.68 (2) Construction in 16,580,464.39 156,035,593.57 54,194.02 58,632,314.47 231,302,566.45 progress transfer-in 132 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (3) increased by combination 3.Current decreased 4,451,607.84 33,908,468.53 531,811.45 9,601,849.61 48,493,737.43 (1) disposal or scrapping 4,451,607.84 33,908,468.53 531,811.45 9,601,849.61 48,493,737.43 4.Ending balance 1,589,856,090.58 3,014,304,449.26 32,553,988.38 568,894,975.82 5,205,609,504.04 II. Accumulated depreciation 1.Opening balance 373,468,771.98 1,466,289,636.27 24,572,383.79 259,549,999.99 2,123,880,792.03 2.Current increased 22,964,995.05 96,438,233.50 741,420.15 49,391,915.07 169,536,563.77 (1) accrual 22,964,995.05 96,438,233.50 741,420.15 49,391,915.07 169,536,563.77 3.Current decreased 10,373,103.90 483,657.79 4,595,144.28 15,451,905.97 (1) disposal or scrapping 10,373,103.90 483,657.79 4,595,144.28 15,451,905.97 4.Ending balance 396,433,767.03 1,552,354,765.87 24,830,146.15 304,346,770.78 2,277,965,449.83 III. Depreciation reserves 1.Opening balance 45,370,341.62 73,319.90 7,280,244.59 52,723,906.11 2.Current increased (1) accrual 3.Current decreased 80,425.79 80,425.79 (1) disposal or scrapping 80,425.79 80,425.79 4.Ending balance 45,289,915.83 73,319.90 7,280,244.59 52,643,480.32 IV. Book value 1.Ending Book value 1,193,422,323.55 1,416,659,767.56 7,650,522.33 257,267,960.45 2,875,000,573.89 2.Opening Book value 1,204,258,462.05 1,380,517,346.33 8,385,902.12 252,014,367.70 2,845,176,078.20 (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 133 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Item Book value Reasons for without the property certification Plant and office building of Weifu Chang’an 34,963,912.96 Still in process of relevant property procedures (6) Disposal of fixed assets Nil 15. Construction in progress In RMB/CNY Item Ending balance Opening balance Construction in progress 253,735,407.77 247,857,777.25 Total 253,735,407.77 247,857,777.25 (1) Construction in progress In RMB/CNY Ending balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Technical transformation 85,075,711.80 85,075,711.80 98,032,515.22 98,032,515.22 of parent company Technical transformation 47,416,945.57 47,416,945.57 44,412,832.62 44,412,832.62 of Weifu Autocam Technical transformation 26,198,395.28 26,198,395.28 25,051,156.03 25,051,156.03 of Weifu Leader Other item 95,044,355.12 95,044,355.12 80,361,273.38 80,361,273.38 Total 253,735,407.77 253,735,407.77 247,857,777.25 247,857,777.25 (2) Changes of major projects under construction In RMB/CNY 134 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 includin Accumu Intere Proportio g: Fixed lated st Other n of interest Bu assets amount capita Opening Current decreased Ending project Prog capitaliz Source Item dge transfer-in of lizatio balance increased in the balance investme ress ed offunds t in the interest n rate Period nt in amount Period capitaliz of the budget of the ation year year Technical transformation 98,032,515 160,045,12 173,001,93 85,075,711 Other of parent .22 7.43 0.85 .80 company Technical transformation 44,412,832 25,534,724 22,530,611 47,416,945 Other of Weifu .62 .10 .15 .57 Autocam Technical transformation 25,051,156 17,978,696 16,831,457 26,198,395 Other of Weifu .03 .63 .38 .28 Leader 167,496,50 203,558,54 212,363,99 158,691,05 Total -- -- -- 3.87 8.16 9.38 2.65 (3) The provision for impairment of construction projects Nil (4) Engineer material Nil 16. Intangible assets (1) Intangible assets In RMB/CNY Non-patent Computer Trademark and Item Land use right Patent Total technology software trademark license I. original book value 1.Opening balance 380,986,757.11 105,086,673.46 81,823,603.48 41,597,126.47 609,494,160.52 2.Current increased 30,091.08 0.00 0.00 5,763,026.69 0.00 5,793,117.77 135 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (1) Purchase 30,091.08 5,763,026.69 5,793,117.77 (2) internal R&D (3) increased by combination 3.Current decreased (1) disposal 4.Ending balance 381,016,848.19 0.00 105,086,673.46 87,586,630.17 41,597,126.47 615,287,278.29 II. accumulated amortization 1.Opening balance 88,200,675.16 9,823,965.21 54,519,248.03 9,709,000.00 162,252,888.40 2.Current increased 4,173,215.03 0.00 5,235,571.44 8,447,242.60 0.00 17,856,029.07 (1) accrual 4,173,215.03 5,235,571.44 8,447,242.60 17,856,029.07 3.Current decreased (1) disposal 4.Conversion of foreign currency 1,604,658.44 1,604,658.44 financial statement 5.Ending balance 92,373,890.19 0.00 16,664,195.09 62,966,490.63 9,709,000.00 181,713,575.91 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 288,642,958.00 0.00 88,422,478.37 24,620,139.54 15,241,226.47 416,926,802.38 2.Opening Book value 292,786,081.95 0.00 95,262,708.25 27,304,355.45 15,241,226.47 430,594,372.12 Ratio of the intangible assets from internal R&D in balance of intangible assets at period-end was 0%. (2) Land use right without property certification held Nil 136 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 17. Goodwill (1) Original book value of goodwill In RMB/CNY Current increased Current decreased The invested entity or Opening balance Formed by business Ending balance matters forming goodwill Disposal combination Weifu Tianli 1,784,086.79 1,784,086.79 Total 1,784,086.79 1,784,086.79 (2) Goodwill depreciation reserves Nil Information about the asset group or combination of asset groups where the goodwill is located In 2010, the company controlled and merged Weifu Tianli by means of cash capital increase, and the goodwill was the part of the merger cost greater than the fair value of Weifu Tianli's identifiable net assets. 18. Long-term deferred expenses In RMB/CNY Item Opening balance Current increased Amortized in the Period Other decrease Ending balance Remodeling costs etc. 18,536,000.25 5,851,016.31 2,216,221.26 22,170,795.30 Total 18,536,000.25 5,851,016.31 2,216,221.26 22,170,795.30 19. Deferred income tax assets/Deferred income tax liabilities (1) Deferred income tax assets that are not offset In RMB/CNY Ending balance Opening balance Item Deductible Deferred income tax Deductible Deferred income tax temporary difference assets temporary difference assets Bad debt reserve 98,150,512.49 14,890,245.91 94,527,571.76 14,302,572.39 Inventory depreciation reserve 244,900,480.12 39,024,354.66 237,900,564.04 38,773,864.59 Depreciation reserves of fixed assets 19,117,108.21 3,083,687.26 19,197,534.00 3,095,824.19 Depreciation reserves of intangible assets 16,646,900.00 2,497,035.00 16,646,900.00 2,497,035.00 Other equity instrument investment 10,000,000.00 1,500,000.00 10,000,000.00 1,500,000.00 137 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Change of fair value of transaction 17,721,963.00 2,658,294.45 16,517,403.00 2,477,610.45 financial asset Deferred income 341,129,475.72 51,573,421.36 362,993,022.12 54,664,953.32 Internal un-realized profit 41,257,493.69 6,365,502.03 22,481,656.04 4,568,190.39 Payable salary, accrued expenses etc. 752,208,481.53 115,559,690.71 622,348,855.94 96,720,511.00 Depreciation assets, amortization 39,437,881.45 6,311,625.21 49,220,776.87 7,779,059.56 difference Deductible loss of subsidiary 21,714,524.19 4,101,171.83 21,714,524.19 4,101,171.83 Total 1,602,284,820.40 247,565,028.42 1,473,548,807.96 230,480,792.72 (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 11,641,299.47 1,746,194.96 12,011,409.46 1,801,711.40 not under the same control The difference between the fair value and taxation basis of IRD assets in a merger not 87,722,454.97 19,298,940.09 94,383,365.10 20,764,340.32 under the same control Change of fair value of transaction financial 21,427,689.29 3,214,153.41 18,231,842.32 2,734,776.35 asset Accelerated depreciation of fixed assets 98,019,924.32 15,269,514.83 98,019,924.32 15,269,514.83 Total 218,811,368.05 39,528,803.29 222,646,541.20 40,570,342.90 (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 assets -18,483,668.24 229,081,360.18 -18,004,291.18 212,476,501.54 Deferred income tax liabilities -18,483,668.24 21,045,135.05 -18,004,291.18 22,566,051.72 138 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (4) Details of unrecognized deferred income tax assets In RMB/CNY Item Ending balance Opening balance Bad debt reserve 2,458,682.17 2,459,073.60 Inventory depreciation reserve 12,558,809.96 20,176,155.49 Loss from subsidiary 90,708,868.39 103,734,801.82 Depreciation reserves of fixed assets 33,526,372.11 33,526,372.11 Other equity instrument investment 46,600,000.00 48,633,106.95 Total 185,852,732.63 208,529,509.97 (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 2020 18,809,345.29 23,567,088.89 Subsidiaries have operating losses 2021 32,724,018.08 43,218,245.04 Subsidiaries have operating losses 2022 9,891,309.24 9,901,777.74 Subsidiaries have operating losses 2023 7,882,026.39 7,882,026.39 Subsidiaries have operating losses 2024 19,165,663.76 19,165,663.76 Subsidiaries have operating losses 2025 2,236,505.63 Subsidiaries have operating losses Total 90,708,868.39 103,734,801.82 -- 20. Other non-current assets In RMB/CNY Ending balance Opening balance Item Provision for Provision for Book balance Book value Book balance Book value impairment impairment Engineering equipment 210,102,212.32 210,102,212.32 230,235,982.45 230,235,982.45 paid in advance Total 210,102,212.32 210,102,212.32 230,235,982.45 230,235,982.45 21. Short-term borrowings (1) Category of short-term borrowings In RMB/CNY 139 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Item Ending balance Opening balance Credit loan 327,932,554.71 305,835,808.28 Bill financing 5,976,347.95 Accrued interest 376,183.29 341,813.58 Total 328,308,738.00 312,153,969.81 (2) Overdue short-term loans without payment Nil 22. Note payable In RMB/CNY Category Ending balance Opening balance Bank acceptance bill 1,339,329,488.99 1,745,218,439.52 Total 1,339,329,488.99 1,745,218,439.52 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 1 year 4,083,158,782.01 3,214,392,402.81 1-2 years 84,295,174.53 74,021,217.00 2-3 years 10,362,261.24 5,854,811.50 Over three years 12,385,027.08 17,985,798.53 Total 4,190,201,244.86 3,312,254,229.84 (2) Important account payable with account age over one year Nil 24. Accounts received in advance (1) Accounts received in advance In RMB/CNY 140 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Item Ending balance Opening balance Within 1 year 1,873,510.34 1,493,602.00 1-2 years 2-3 years Over three years Total 1,873,510.34 1,493,602.00 (2) Important accounts received in advance with account age over one year Nil 25. Contract liabilities In RMB/CNY Item Ending balance Opening balance Within 1 year 55,285,401.22 110,256,431.74 1-2 years 1,289,811.86 698,914.28 2-3 years 697,976.58 260,387.26 Over three years 863,622.38 1,028,097.33 Total 58,136,812.04 112,243,830.61 26. Wage payable (1) Wage payable In RMB/CNY Item Opening balance Current increased Current decreased Ending balance I. Short-term compensation 161,202,257.62 513,510,301.70 547,181,210.50 127,531,348.82 II. Post-employment welfare- defined 27,587,740.03 45,843,040.90 50,962,710.85 22,468,070.08 contribution plans III. Dismissed welfare 2,249,529.82 96,653.00 96,653.00 2,249,529.82 IV. Other welfare due within one 106,180,000.00 31,541,027.96 74,638,972.04 year V. Other short-term welfare-Housing subsidies, 17,124,210.19 972,822.40 16,151,387.79 employee benefits and welfare funds Total 314,343,737.66 559,449,995.60 630,754,424.71 243,039,308.55 141 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (2) Short-term compensation In RMB/CNY Item Opening balance Current increased Current decreased Ending balance 1. Wages, bonuses, allowances 141,247,196.85 424,901,003.55 454,531,155.68 111,617,044.72 and subsidies 2. Welfare for workers and staff 28,353,036.34 28,353,036.34 0.00 3. Social insurance 8,701,447.13 19,046,975.56 23,041,946.62 4,706,476.07 Including: Medical 7,575,173.65 15,378,319.54 18,984,989.97 3,968,503.22 insurance Work injury insurance 541,230.02 1,130,519.15 1,283,219.25 388,529.92 Maternity insurance 585,043.46 2,538,136.87 2,773,737.40 349,442.93 4. Housing accumulation fund 679,677.00 33,920,015.00 33,868,163.00 731,529.00 5. Labor union expenditure and 10,573,936.64 7,289,271.25 7,386,908.86 10,476,299.03 personnel education expense Total 161,202,257.62 513,510,301.70 547,181,210.50 127,531,348.82 (3) Defined contribution plans In RMB/CNY Item Opening balance Current increased Current decreased Ending balance 1. Basic endowment 9,782,749.83 31,942,527.72 30,034,012.54 11,691,265.01 insurance 2. Unemployment 412,974.22 807,532.44 942,478.37 278,028.29 insurance 3. Enterprise annuity 17,392,015.98 13,092,980.74 19,986,219.94 10,498,776.78 Total 27,587,740.03 45,843,040.90 50,962,710.85 22,468,070.08 27. Taxes payable In RMB/CNY Item Ending balance Opening balance Value-added tax 47,094,179.93 61,749,095.75 Corporation income tax 37,089,173.54 50,686,013.43 Individual income tax 449,693.94 2,689,642.51 City maintaining & construction tax 3,324,045.95 4,348,399.47 142 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Educational surtax 2,374,318.52 3,105,999.62 Other (including stamp tax and local funds) 8,879,922.14 6,959,261.08 Total 99,211,334.02 129,538,411.86 28. Other account payable In RMB/CNY Item Ending balance Opening balance Interest payable 5,348.44 Dividend payable 367,000,766.60 Other accounts payable 66,411,696.56 65,266,262.39 Total 433,417,811.60 65,266,262.39 (1) Interest payable In RMB/CNY Item Ending balance Opening balance Other 5,348.44 Total 5,348.44 (2) Dividend payable In RMB/CNY Item Ending balance Opening balance Common stock dividend 367,000,766.60 Total 367,000,766.60 (3) Other account payable 1) Classification of other accounts payable according to nature of account In RMB/CNY Item Ending balance Opening balance Deposit and margin 10,030,431.49 14,458,865.71 Social insurance and reserves funds that withholding 8,425,868.28 8,434,584.35 Intercourse funds of unit 38,960,145.98 37,055,997.50 Other 8,995,250.81 5,316,814.83 143 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Total 66,411,696.56 65,266,262.39 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 29. Other current liabilities In RMB/CNY Item Ending balance Opening balance Rebate payable 147,739,169.58 96,046,439.21 Total 147,739,169.58 96,046,439.21 30. Long-term borrowings (1) Category of Long-term borrowings In RMB/CNY Item Ending balance Opening balance Credit loan 20,000,000.00 Total 20,000,000.00 31. Long-term account payable In RMB/CNY Item Ending balance Opening balance Long-term account payable 16,843,181.00 16,843,181.00 Special accounts payable 18,265,082.11 18,265,082.11 Total 35,108,263.11 35,108,263.11 (1) Long-term account payable listed by nature In RMB/CNY 144 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Item Ending balance Opening balance Hi-tech Branch of Nanjing Finance Bureau (note ①) 1,140,000.00 1,140,000.00 Financial support funds (2005) Hi-tech Branch of Nanjing Finance Bureau (note ②) 1,250,000.00 1,250,000.00 Financial support funds (2006) Hi-tech Branch of Nanjing Finance Bureau (note ③) 1,230,000.00 1,230,000.00 Financial support funds (2007) Loan transferred from treasury bond (note ④) 678,181.00 678,181.00 Hi-tech Branch of Nanjing Finance Bureau (note ⑤) 2,750,000.00 2,750,000.00 Financial support funds (2008) Hi-tech Branch of Nanjing Finance Bureau (note ⑥) 1,030,000.00 1,030,000.00 Financial support funds (2009) Hi-tech Branch of Nanjing Finance Bureau (note ⑦) 960,000.00 960,000.00 Financial support funds (2010) Hi-tech Branch of Nanjing Finance Bureau (note ⑧) 5,040,000.00 5,040,000.00 Financial support funds (2011) Hi-tech Branch of Nanjing Finance Bureau (note ⑨) 2,740,000.00 2,740,000.00 Financial support funds (2013) Total 16,818,181.00 16,818,181.00 Other explanation: Note ①: 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. Note ②: 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. Note ③: 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. Note ④: Loan transferred from treasury bond: Weifu Jinning received RMB 1.87 million Yuan of special funds from budget of the central government, and RMB 1.73 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. Note ⑤: 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 10 November 2008 to 10 November 2023. Provided that the operation period in the zone is 145 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 less than 15 years, financial supporting capital will be reimbursed. Note ⑥: 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. Note ⑦: 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. Note ⑧: 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. Note ⑨: 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 of formation Removal compensation of 18,265,082.11 18,265,082.11 subsidiary Weifu Jinning Total 18,265,082.11 18,265,082.11 -- 32. Long-term wages payable (1) Long-term wages payable In RMB/CNY Item Ending balance Opening balance I. Post-employment benefits-defined 0 0 benefit plan net liabilities II. Dismiss welfare 8,333,666.85 8,333,666.85 III. Other long-term welfare 50,058,386.76 50,058,386.76 Total 58,392,053.61 58,392,053.61 (2) Changes in defined benefit plans Nil 146 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 33. Deferred income In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Cause of formation Financial allocation Government grand 365,116,022.98 14,454,400.00 37,018,946.70 342,551,476.28 received Total 365,116,022.98 14,454,400.00 37,018,946.70 342,551,476.28 -- Item with government grants involved: In RMB/CNY Amount Amount Cost New grants Other Assets reckoned in reckoned into reduction Item Opening balance in the chang Ending balance related/Inco non-operati other income in the Period es me related on revenue in the period period Industrialization project for injection VE pump system Assets with electronically related/ 2,163,000.86 721,000.30 1,442,000.56 controlled high Income pressure for related less-emission diesel used Appropriation on reforming of production line technology and R&D Assets 7,100,000.00 7,100,000.00 ability of common related rail system for diesel by distributive high-voltage Fund of industry Income 26,657,526.17 17,681,780.09 8,975,746.08 upgrade (2012) related Fund of industry Income 60,520,000.00 60,520,000.00 upgrade (2013) related Appropriation on central basic Assets 1,428,571.45 357,142.86 1,071,428.59 construction related investment 147 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 R&D and industrialization of the high-pressure Assets variable pump of the 6,870,714.16 771,547.64 6,099,166.52 related common rail system of diesel engine for automobile Research institute of motor vehicle Assets exhaust 1,836,712.58 304,455.15 1,532,257.43 related after-treatment technology Fund of industry Income 36,831,000.00 36,831,000.00 upgrade (2014) related New-built assets compensation after Assets 124,849,393.92 10,331,805.43 114,517,588.49 the removal of parent related company Fund of industry Income 40,000,000.00 40,000,000.00 upgrade (2016) related Guiding capital for the technical reform Assets from State Hi-Tech 8,147,430.27 973,816.75 7,173,613.52 related Technical Commission Implementation of the variable Assets cross-section 8,972,771.42 804,991.33 8,167,780.09 related turbocharger for diesel engine Demonstration Assets project for intelligent 1,148,441.34 135,174.43 1,013,266.91 related manufacturing Assets 14,454,400. related/ Other 38,590,460.81 4,937,232.72 48,107,628.09 00 Income related 14,454,400. Total 365,116,022.98 0.00 37,018,946.70 0.00 0.00 342,551,476.28 00 148 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 6.35 million Yuan in 2009, 4.775 million Yuan received in 2010 and 0.875 million Yuan 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 4,789,997.04 Yuan with income related was reckoned into current operation revenue directly; the 7,210,002.96 Yuan with assets related was amortized during the predicted service period of the assets, and 721,000.30 Yuan 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. Current write off: 17,681,780.09Yuan. (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 project has passed the acceptance check in current period, this appropriation should be amortized within the surplus service life of current assets, and amortization amount of current period is 357,142.86 Yuan. (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 3 million Yuan in 2014 and 0.45 million Yuan in 2015; and belongs to government grant with assets concerned, and shall be amortized according to the depreciation process, amount of 771,547.64 Yuan amortizes in the period. (7) Vehicle exhaust after-treatment technology research institute project: in 2012, the subsidiary Weifu Leader has applied for equipment purchase assisting funds to Wuxi Huishan Science and Technology Bureau and Wuxi 149 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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, amount of 304,455.15 Yuan amortizes in the period. (8) Industry upgrading funds (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 10,331,805.43 Yuan amortizes in the period. (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, and belongs to government grant with assets concerned, and shall be amortized according to the depreciation process, amount of 973,816.75 Yuan amortize in the period. (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 2018), 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, amount of 804,991.33 Yuan amortize in the period. (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. Amortization for the period amounts to 135,174.43 Yuan. 34. Share capital In RMB/CNY 150 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Changeduringthe 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 35. Capital reserve In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Capital premium (Share 3,346,333,817.41 3,346,333,817.41 capital premium) Other Capital reserve 45,193,988.92 45,193,988.92 Total 3,391,527,806.33 3,391,527,806.33 36. Treasury stock In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Stock repurchase 300,007,852.84 300,007,852.84 Total 300,007,852.84 300,007,852.84 37. Other comprehensive income In RMB/CNY Current period Less: Less: written written in in other other comprehensi comprehe ve income in nsive Less: Account previous income in Belong to Belong to Opening incom Ending Item before period and previous parent minority balance e tax balance income tax carried period and company after shareholder expens in the year forward to carried tax s after tax e gains and forward to losses in retained current earnings in period current period 151 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 II. Other comprehensive income items which will be reclassified 134,871.67 4,618.33 3,048.10 1,570.23 137,919.77 subsequently to profit or loss Conversion difference of foreign 134,871.67 4,618.33 3,048.10 1,570.23 137,919.77 currency financial statement Total other comprehensive income 134,871.67 4,618.33 3,048.10 1,570.23 137,919.77 38. Reasonable reserve In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Safety production costs 3,247,757.06 11,612,779.18 12,224,050.26 2,636,485.98 Total 3,247,757.06 11,612,779.18 12,224,050.26 2,636,485.98 39. Surplus reserve In RMB/CNY Item Opening balance Current increased Current decreased Ending balance Statutory surplus 510,100,496.00 510,100,496.00 reserves Total 510,100,496.00 510,100,496.00 40. Retained profit In RMB/CNY Item Current period Last period Retained profits at the end of last year before adjustment 12,076,443,635.56 10,996,945,870.13 Total retained profit at beginning of the adjustment (+ for increased, 1,584,556.37 -for decreased) Retained profits at the beginning of the year after adjustment 12,076,443,635.56 10,998,530,426.50 Add: The net profits belong to owners of patent company of this 1,326,344,424.98 2,268,026,432.78 period Common dividend payable 1,093,241,270.00 1,210,740,684.00 Add: Net effect of disposal other equity instrument investment 20,627,460.28 Retained profit at period-end 12,309,546,790.54 12,076,443,635.56 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. 152 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 2) The changes in accounting policies affect the retained profits at the beginning of the period amounting to 0 Yuan. 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 41. Operating income and cost In RMB/CNY Current period Last Period Item Income Cost Income Cost Main operating 6,352,974,489.95 5,256,052,615.30 4,133,178,892.36 3,179,484,258.13 Other business 241,429,134.61 157,916,759.23 270,265,453.69 225,902,246.31 Total 6,594,403,624.56 5,413,969,374.53 4,403,444,346.05 3,405,386,504.44 Information related to performance obligations: Nil Information related to the transaction price apportioned to the remaining performance obligations: At the end of the reporting period, the amount of revenue corresponding to the performance obligations that have been signed but not yet fulfilled or not yet completed is RMB 0.00. 42. Operating tax and extras In RMB/CNY Item Current period Last Period City maintaining & construction tax 11,315,610.47 12,840,319.07 Educational surtax 8,082,578.87 9,260,002.10 Property tax 8,136,007.34 7,976,886.64 Land use tax 2,258,583.38 3,000,765.60 Vehicle use tax 17,455.52 5,540.64 Stamp duty 2,074,390.19 1,349,389.57 Other taxes 76,923.38 101,668.04 Total 31,961,549.15 34,534,571.66 43. Sales expenses In RMB/CNY Item Current period Last Period Salary and fringe benefit 25,826,320.40 26,545,495.48 153 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Consumption of office materials and 3,267,626.29 5,902,212.14 business travel charge Transportation charge 22,287,326.77 13,044,708.75 Warehouse charge 7,320,422.39 2,516,917.39 Three guarantees cost 65,575,346.96 39,932,538.62 Business entertainment fee 8,669,963.79 9,328,770.85 Other 5,447,164.71 7,000,004.17 Total 138,394,171.31 104,270,647.40 44. Administration expenses In RMB/CNY Item Current period Last Period Salary and fringe benefit 125,724,396.50 134,821,395.41 Depreciation charger and long-term assets 30,914,703.59 17,239,939.30 amortization Consumption of office materials and 5,274,784.55 5,392,838.23 business travel charge Incentive fund 45,360,000.00 35,940,000.00 Other 129,710,776.64 117,515,807.49 Total 336,984,661.28 310,909,980.43 44. R&D expenses In RMB/CNY Item Current period Last Period Technological development expenses 211,531,953.72 180,167,642.16 Total 211,531,953.72 180,167,642.16 46. Financial expenses In RMB/CNY Item Current period Last Period Interest expenses 5,800,553.09 9,264,648.42 Note discount interest expenses 5,393,256.06 6,867,326.37 Deposit interest income -43,053,210.79 -48,416,919.83 Gains/losses from exchange -4,472,009.34 583,881.77 154 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Handling charges 1,724,451.73 2,208,267.69 Total -34,606,959.25 -29,492,795.58 47. Other income In RMB/CNY Sources of income generated Current period Last Period Government grants with routine operation 43,932,417.68 17,632,117.95 activity concerned Total 43,932,417.68 17,632,117.95 48. Investment income In RMB/CNY Item Current period Last Period Income of long-term equity investment calculated based 785,533,710.72 790,465,131.05 on equity Investment income from holding financial assets 2,287,308.59 available for sales Investment income of financial products 138,448,908.25 95,464,240.84 Other -408,092.36 Total 923,574,526.61 888,216,680.48 49. Net exposure hedge income Nil 50. Income from change of fair value In RMB/CNY Sources Current period Last Period Transaction financial asset 258,157.65 30,195,948.00 Investment income from disposal of 490,329.13 trading financial assets, etc. Total 258,157.65 30,686,277.13 51. Credit impairment loss In RMB/CNY 155 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Item Current period Last Period Bad debt losses on other receivables -33,433.24 Bad debt losses on accounts receivable -3,622,549.31 -6,204,357.51 Total -3,622,549.31 -6,237,790.75 52. Assets impairment loss In RMB/CNY Item Current period Last Period II. Loss of inventory fall in price and impairment loss -52,807,909.47 -1,500,885.27 of contract performance cost Total -52,807,909.47 -1,500,885.27 53. Income from assets disposal In RMB/CNY Sources Current period Last Period Income from disposal of non-current assets 503,005.53 5,542,556.91 Losses from disposal of non-current assets -270,505.98 -434,708.46 Total 232,499.55 5,107,848.45 54. Non-operating income In RMB/CNY Amount reckoned into current Item Current period Last Period non-recurring gains/losses Government subsidy 26,547,209.00 Other 164,150.94 997,548.26 164,150.94 Total 164,150.94 27,544,757.26 164,150.94 Government subsidies included in current profit and loss: nil 55. Non-operating expense In RMB/CNY Amount reckoned into current Item Current period Last Period non-recurring gains/losses Donation 3,003,503.70 43,500.00 3,003,503.70 Total non-current asset retirement losses 775,870.54 180,170.75 775,870.54 156 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Including: loss of fixed assets scrap 775,870.54 180,170.75 775,870.54 Local fund 343,760.00 2,291,966.58 Other 1,317.44 115,815.69 1,317.44 Total 4,124,451.68 2,631,453.02 3,780,691.68 56. Income tax expense (1) Income tax expense In RMB/CNY Item Current period Last Period Payable tax in current period 79,048,948.52 52,525,690.93 Adjusted the previous income tax -3,635,148.44 3,839,633.55 Increase/decrease of deferred income tax assets -16,387,431.29 20,543,454.34 Increase/decrease of deferred income tax liability -1,520,916.67 4,473,875.72 Total 57,505,452.12 81,382,654.54 (2) Adjustment on accounting profit and income tax expenses In RMB/CNY Item Current period Total profit 1,403,775,715.79 Income tax measured by statutory/applicable tax rate 210,566,357.37 Impact by different tax rate applied by subsidies 933,534.12 Adjusted the previous income tax -3,635,148.44 Impact by non-taxable revenue -117,889,611.93 Impact by the deductible losses of the un-recognized previous deferred income tax -736,289.69 The deductible temporary differences or deductible losses of the un-recognized -3,291,618.66 deferred income tax assets in the Period Impact on additional deduction -13,068,335.67 Other -15,373,434.98 Income tax expense 57,505,452.12 57. Other comprehensive income See Note 37 157 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 58. 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 bank deposits 43,053,210.79 49,585,253.17 Government grants 21,365,245.08 33,827,547.71 Other 6,383,457.07 2,362,693.88 Total 70,801,912.94 85,775,494.76 (2) Other cash paid in relation to operation activities In RMB/CNY Item Current period Last Period Cash cost 244,636,121.10 158,648,871.84 Other 12,194,783.41 10,439,746.86 Total 256,830,904.51 169,088,618.70 (3) Cash received from other investment activities Nil (4) Cash paid related with investment activities In RMB/CNY Item Current period Last Period Pay Wuhan Zhongyu loan 24,000,000.00 Total 24,000,000.00 (5) Other cash received in relation to financing activities In RMB/CNY Item Current period Last Period Weifu Leader receives loans from Wuxi 5,470,000.00 Industry Group Total 5,470,000.00 158 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (6) Cash paid related with financing activities In RMB/CNY Item Current period Last Period Weifu Leader pays loans from Wuxi Industry Group 5,470,000.00 Repayment of national debt into loan 339,091.00 Stock repurchase 300,007,852.84 Total 300,007,852.84 5,809,091.00 59. Supplementary information to statement of cash flow (1) Supplementary information to statement of cash flow In RMB/CNY Supplementary information Current period Last Period 1. Net profit adjusted to cash flow of operation activities: -- -- Net profit 1,346,270,263.67 1,275,102,693.23 Add: Assets impairment provision 56,430,458.78 7,738,676.02 Depreciation of fixed assets, consumption of oil assets and 170,298,478.93 150,680,275.86 depreciation of productive biology assets Amortization of intangible assets 17,856,029.07 7,769,977.82 Amortization of long-term deferred expenses 2,216,221.26 1,498,822.02 Loss from disposal of fixed assets, intangible assets and other -232,499.55 -5,107,848.45 long-term assets (gain is listed with “-”) Losses on scrapping of fixed assets (gain is listed with “-”) 775,870.54 180,170.75 Gain/loss of fair value changes (gain is listed with “-”) -258,157.65 -30,686,277.13 Financial expenses (gain is listed with “-”) 1,308,072.77 8,918,152.92 Investment loss (gain is listed with “-”) -923,574,526.61 -885,938,793.49 Decrease of deferred income tax asset ((increase is listed with “-”) -16,604,858.64 17,047,670.29 Increase of deferred income tax liability (decrease is listed with “-”) -1,520,916.67 -55,516.90 Decrease of inventory (increase is listed with “-”) 722,938,987.42 9,891,557.33 Decrease of operating receivable accounts (increase is listed with “-”) -1,396,333,918.08 -802,107,175.59 Increase of operating payable accounts (decrease is listed with “-”) 457,453,317.78 934,171,985.46 Other 634,249.39 1,219,538.11 Net cash flows arising from operating activities 437,657,072.41 690,323,908.25 2. Material investment and financing not involved in cash flow -- -- 159 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 3. Net change of cash and cash equivalents: -- -- Balance of cash at period end 1,708,154,488.87 2,596,327,132.26 Less: Balance of cash equivalent at year-begin 820,498,653.85 2,404,674,139.49 Net increase of cash and cash equivalents 887,655,835.02 191,652,992.77 (2) Net cash payment for the acquisition of a subsidiary in the period Nil (3) Net cash received from the disposal of subsidiaries Nil (4) Constitution of cash and cash equivalent In RMB/CNY Item Ending balance Opening balance I. Cash 1,708,154,488.87 820,498,653.85 Including: Cash on hand 76,486.27 93,165.33 Bank deposit available for payment 1,708,078,002.60 820,405,488.52 at any time III. Balance of cash and cash equivalents at 1,708,154,488.87 820,498,653.85 the period-end 60. 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 61. Assets with ownership or use right restricted In RMB/CNY Item Ending Book value Restriction reason Monetary funds 32,786,262.96 Cash deposit paid for bank acceptance Note receivable 645,547,079.23 Notes pledge for bank acceptance Monetary funds 2,206,857.75 Court freeze Monetary funds 50,000,000.00 Stock repurchase In accordance with the civil ruling No.(2016)Y03MC2490 and No.(2016) Transaction financial 117,947,240.94 Y03MC2492 of Guangdong Shenzhen Intermediate People's Court the property asset with the value of 217 million Yuan under the name of the Company and other 160 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 seven 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 and fruit held by the Company were frozen. Total 848,487,440.88 -- 62. Item of foreign currency (1) Item of foreign currency In RMB/CNY Closing balance of foreign Item Rate of conversion Ending RMB balance converted currency Monetary funds -- -- Including: USD 13,209,792.28 7.0795 93,518,724.44 EUR 1,436,642.82 7.961 11,437,113.50 HKD 11,049,573.90 0.9134 10,092,680.80 JPY 0.065808 0.00 DKK 6,375,259.14 1.0685 6,811,964.40 Account receivable -- -- Including: USD 1,080,383.61 7.0795 7,648,575.77 EUR 738,532.97 7.961 5,879,460.97 HKD 0.9134 0.00 JPY 3,645,361.00 0.065808 239,893.92 DKK 2,658,753.53 1.0685 2,840,878.15 Long-term borrowings -- -- Including: USD EUR HKD Short-term borrowings Including: EUR 5,644,084.25 7.961 44,932,554.71 Account payable Including: USD 318,270.52 7.0795 2,253,196.15 EUR 2,194,697.44 7.961 17,471,986.32 JPY 43,195,476.00 0.065808 2,842,607.88 CHF 153,260.54 7.4434 1,140,779.50 161 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 DKK 1,491,131.05 1.0685 1,593,273.53 Other account payable Including: USD 1,087.90 7.0795 7,701.79 DKK 4,005,904.09 1.0685 4,280,308.52 (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 63. Hedging Disclosure of the qualitative and quantitative information on hedging items and related hedging instruments, hedging risks according to category: nil 64. Government grants (1) Government grants In RMB/CNY Amount Category Amount Item reckoned in current gain/loss The second batch of provincial-level industrial and information industry transformation special funds in 5,000,000.00 Deferred income 2019 Wuxi City Key Technical Transformation Guide Fund 8,330,000.00 Deferred income, Other income 1,680,000.00 Project 2019 Wuxi Mayor Quality Award 1,000,000.00 Other income 1,000,000.00 Stable subsidy 3,505,660.57 Other income 3,505,660.57 Intelligent manufacturing and technological 955,000.00 Other income 955,000.00 transformation awards and supplementary funds Huishan District Science and Technology Development Support Project Reward and Subsidy 200,000.00 Other income 200,000.00 Funds 2019 Quality Award and Finalist Award 200,000.00 Other income 200,000.00 In 2019, the integration of industrialization and Other income 180,000.00 180,000.00 industrialization, and the provincial-level 162 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 segmentation project reward for enterprise cloud 2019 Work Award for Strong Quality District 150,000.00 Other income 150,000.00 Special fund for intellectual property 56,100.00 Other income 56,100.00 Training subsidy for smart employees 214,300.00 Other income 214,300.00 Other 1,574,184.51 Deferred income, Other income 1,334,184.51 Total 21,365,245.08 9,475,245.08 (2) Government grants rebate □ Applicable√ Not applicable 65. Other Nil VIII. Changes of consolidation scope 1. Enterprise combine not under the same control Nil 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 163 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 IX. Equity in other entity 1. Equity in subsidiary (1) Constitute of enterprise group Main operation Registered Share-holding ratio Subsidiary Business nature Acquired way place place Directly Indirectly Spare parts of Enterprise combine under Weifu Jinning Nanjing Nanjing 80.00% internal-combustion engine the same control Automobile exhaust purifier, Enterprise combine under Weifu Leader Wuxi Wuxi 94.81% muffler the same control Spare parts of Weifu Mashan Wuxi Wuxi 100.00% Investment internal-combustion engine Spare parts of Weifu Chang’an Wuxi Wuxi 100.00% Investment internal-combustion engine Weifu International Enterprise combine under Wuxi Wuxi Trading 100.00% Trade the same control Spare parts of Weifu Schmidt Wuxi Wuxi 66.00% Investment internal-combustion engine Spare parts of Enterprise combine not Weifu Tianli Ningbo Ningbo 98.83% 1.17% internal-combustion engine under the same control Spare parts of Enterprise combine not Weifu Autocam Wuxi Wuxi 51.00% internal-combustion engine under the same control Weifu Leader Automobile exhaust purifier, Wuhan Wuhan 60.00% Investment (Wuhan) muffler Weifu Leader Automobile exhaust purifier, Chongqing Chongqing 100.00% Investment (Chongqing) muffler Weifu Leader Automobile exhaust purifier, Nanchang Nanchang 100.00% Investment (Nanchang) muffler Weifu Electronic Enterprise combine not Wuxi Wuxi Hub motor 80.00% Drive under the same control SPV Denmark Denmark Investment 100.00% Investment Enterprise combine not IRD Denmark Denmark Fuel cell components 66.00% under the same control Enterprise combine not IRD America America America Fuel cell components 66.00% under the same control 164 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (2) Important non-wholly-owned subsidiary In RMB/CNY Dividend announced to Share-holding ratio of Gains/losses attributable Ending equity of Subsidiary distribute for minority in minority to minority in the Period minority the Period Weifu Jinning 20.00% 14,246,851.21 15,748,768.80 191,628,814.53 Weifu Schmidt 34.00% 1,643,010.32 12,856,509.10 Weifu Leader 5.19% 5,729,722.13 92,437,878.29 Weifu Autocam 49.00% 5,476,145.85 160,625,407.78 Total 27,095,729.51 15,748,768.80 457,548,609.70 (3) Main finance of the important non-wholly-owned subsidiary In RMB/CNY Ending balance Subsidiary Non-current Non-current Current assets Total assets Current liabilities Total liabilities assets liabilities Weifu Jinning 1,157,127,060.71 275,724,001.15 1,432,851,061.86 424,331,784.80 48,096,585.52 472,428,370.32 Weifu Schmidt 119,294,340.72 47,503,051.13 166,797,391.85 128,017,597.97 570,000.00 128,587,597.97 Weifu Leader 4,139,268,777.15 1,165,405,904.38 5,304,674,681.53 3,531,665,367.66 21,193,740.39 3,552,859,108.05 Weifu Autocam 246,210,818.77 332,438,683.70 578,649,502.47 253,736,607.36 253,736,607.36 Total 5,661,900,997.35 1,821,071,640.36 7,482,972,637.71 4,337,751,357.79 69,860,325.91 4,407,611,683.70 In RMB/CNY Opening balance Subsidiary Non-current Non-current Current assets Total assets Current liabilities Total liabilities assets liabilities Weifu Jinning 999,097,495.08 334,721,775.17 1,333,819,270.25 318,915,621.86 47,104,930.82 366,020,552.68 Weifu Schmidt 141,991,506.20 49,208,881.93 191,200,388.13 157,822,785.29 157,822,785.29 Weifu Leader 3,931,739,116.15 1,095,110,196.65 5,026,849,312.80 3,341,853,614.37 22,204,377.06 3,364,057,991.43 Weifu Autocam 245,057,798.53 323,114,477.06 568,172,275.59 254,234,583.00 254,234,583.00 Total 5,317,885,915.96 1,802,155,330.81 7,120,041,246.77 4,072,826,604.52 69,309,307.88 4,142,135,912.40 165 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 In RMB/CNY Current period Subsidiary Total comprehensive Cash flow from operation Operation Income Net profit income activity Weifu Jinning 352,597,870.12 71,027,425.74 71,027,425.74 13,549,394.41 Weifu Schmidt 98,614,059.14 4,832,191.04 4,832,191.04 -15,080,952.12 Weifu Leader 3,307,136,098.12 89,024,252.11 89,024,252.11 194,818,501.61 Weifu Autocam 174,153,210.61 10,975,202.52 10,975,202.52 -11,097,809.19 Total 3,932,501,237.99 175,859,071.41 175,859,071.41 182,189,134.71 In RMB/CNY Last Period Subsidiary Total comprehensive Cash flow from operation Operation Income Net profit income activity Weifu Jinning 328,481,669.39 75,516,399.57 75,516,399.57 33,455,248.40 Weifu Schmidt 84,285,489.50 -45,675.45 -45,675.45 5,467,884.14 Weifu Leader 1,338,975,875.93 32,780,686.77 32,780,686.77 116,866,170.40 Weifu Autocam 177,929,684.84 2,330,164.41 2,330,164.41 33,593,148.87 Total 1,929,672,719.66 110,581,575.30 110,581,575.30 189,382,451.81 (4) Significant restrictions on the use of enterprise group assets and pay off debts of the enterprise group Nil (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 166 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Share-holding ratio Accounting treatment on Main Registered investment for Joint venture or associated enterprise operation Business nature place Directly Indirectly joint venture and place associated enterprise I. Joint venture Wuxi Weifu Environment Catalyst Co., Wuxi Wuxi Catalyst 49.00% Equity method Ltd. 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., Internal-combustion Shanghai Shanghai 20.00% Equity method Ltd. engine accessories Weifu Precision Machinery Internal-combustion Wuxi Wuxi 20.00% Equity method Manufacturing Co., Ltd. engine accessories Shinwell Automobile Tech. (Wuxi) Co., Automobile Wuxi Wuxi 45.00% Equity method Ltd. components (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 4,313,646,477.87 3,285,078,665.28 Including: cash and cash equivalents 99,097,297.11 52,542,261.45 Non -current assets 316,807,824.61 323,188,749.54 Total assets 4,630,454,302.48 3,608,267,414.82 Current liabilities 3,314,035,548.28 2,401,381,614.27 Non-current liabilities 26,238,026.53 26,545,326.53 Total liabilities 3,340,273,574.81 2,427,926,940.80 Minority shareholders' equity Shareholders’ equity attributable to parent company 1,290,180,727.67 1,180,340,474.02 Share of net assets calculated by shareholding ratio 632,188,556.56 578,366,832.27 Adjustment matters --Goodwill 167 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 --Unrealized profits from internal transactions --Other Book value of equity investment in joint ventures 632,188,556.56 578,366,832.27 Fair value of equity investment in joint ventures with publicly quoted prices Operation income 3,456,176,529.08 1,590,675,320.87 Financial expenses 59,064,339.14 40,646,719.18 Income tax expense 20,282,165.19 4,391,396.50 Net profit 114,476,846.31 23,640,351.13 Net profit from discontinued operations Other comprehensive income Total comprehensive income 114,476,846.31 23,640,351.13 Dividends received from joint ventures this year (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 assets 10,321,893,175.35 1,514,193,827.44 401,699,746.42 10,878,760,988.82 175,292,101.34 321,631,869.85 Non -current 2,882,412,425.39 5,094,179,637.02 161,717,212.96 3,059,116,036.23 6,129,564,645.28 151,133,767.52 assets Total assets 13,204,305,600.74 6,608,373,464.46 563,416,959.38 13,937,877,025.05 6,304,856,746.62 472,765,637.37 Current liabilities 7,414,006,511.77 1,329,336,072.57 214,785,260.82 4,613,514,567.69 3,030,820.85 162,393,934.95 Non-current 2,668,844.32 2,699,079.03 liabilities Total liabilities 7,414,006,511.77 1,332,004,916.89 214,785,260.82 4,613,514,567.69 5,729,899.88 162,393,934.95 Minority shareholders' equity Attributable to parent company 5,790,299,088.97 5,276,368,547.57 348,631,698.56 9,324,362,457.36 6,299,126,846.74 310,371,702.42 shareholders’ 168 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 equity Share of net assets calculated 1,968,701,690.23 1,055,273,709.50 69,726,339.71 3,170,283,235.50 1,259,825,369.35 62,074,340.48 by shareholding ratio Adjustment matters --Goodwill 267,788,761.35 1,407,265.96 267,788,761.35 1,407,265.96 --Unrealized profit of internal -20,296,460.34 -16,189.06 -20,979,859.92 -8,703.61 trading --Other -0.28 -529,034.03 -0.28 -529,034.05 Book value of equity investment 2,216,193,990.96 1,056,680,975.46 69,181,116.62 3,417,092,136.65 1,261,232,635.30 61,536,602.82 in associated enterprise Fair value of equity investment in joint ventures with publicly quoted prices Operation income 7,807,711,867.16 11,705,308.41 205,853,869.35 7,690,808,970.61 11,298,817.88 144,654,208.76 Net profit 1,764,998,863.92 634,241,700.83 38,259,996.14 1,827,071,096.33 737,662,037.83 23,338,840.07 Net profit from discontinued operations Other comprehensive income Total comprehensive 1,764,998,963.92 634,241,700.83 38,259,996.14 1,827,071,096.33 737,662,037.83 23,338,840.07 income Dividends received from associated 900,840,579.51 140,200,000.00 1,070,000.00 429,448,388.47 105,200,000.00 enterprise in the year 169 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Other explanation ① Adjustment item for other “-0.28”: the differential tail; The dividend of 1.07 million yuan distributed by Weifu Precision Machinery on December 31, 2019 was received on way of bank acceptance bill. (4) Financial summary for non-important Joint venture and associated enterprise In RMB/CNY Ending balance/Current period Opening balance/Last Period Joint venture: -- -- Amount based on share-holding ratio -- -- --Net profit -1,176,749.59 --Total comprehensive income -1,176,749.59 Associated enterprise: -- -- Total book value of investment 3,445,496.89 4,177,746.31 Amount based on share-holding ratio -- -- --Net profit -732,249.42 -1,250,239.86 --Total comprehensive income -732,249.42 -1,250,239.86 (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 170 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 5. Structured body excluding in consolidate financial statement Nil 6. Other Nil X. Risk related with financial instrument Main financial instrument of the Company including monetary funds, structured deposits, account receivable, equity instrument investment, financial products, loans, and account payable etc., more details of the financial instrument can be found in relevant items of Note VII. 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 risk that one party of a financial instrument fails to perform its obligations, and resulting in the financial loss of other party. The company's credit risk mainly comes from monetary funds, structured deposits, note receivable, account receivable, other account receivables. The management has established an appropriate credit policy and continuously monitors the exposure to these credit risks. The monetary funds and structured deposits held by the Company are mainly deposited in financial institutions such as commercial banks, the management believes that these commercial banks have higher credit and asset status, and have lower credit risks.The Company adopts quota policies to avoid credit risks to any financial institutions. For accounts receivable, other receivables and bills receivable, the Company sets relevant policies to control the credit risk exposure. To prevent the risks, the company has formulated a new customer credit evaluation system and an existing customer credit sales balance analysis system. The new customer credit evaluation system aims at new customers, the company will investigate a customer’s background according to the established process to 171 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 determine whether to give the customer a credit line and the credit line size and credit period. Accordingly, the company has set a credit limit and a credit period for each customer, which is the maximum amount that does not require additional approval. The analysis system for credit sales balance of existing customers means that after receiving a purchase order from an existing customer, the company will check the order amount and the balance of the accounts owed by the customer so far,if the total of the two exceeds the credit limit of the customer, the company can only sell to the customer on the premise of additional approval, otherwise the customer must be required to pay the corresponding amount in advance. In addition, for the credit sales that have occurred, the company analyzes and audits the monthly statements for risk warning of accounts receivable to ensure that the company’s overall credit risk is within a controllable range. The maximum credit risk exposure of the Company is the carrying amount of each financial asset on the balance sheet. 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, HKD, DKK except for the USD, EUR, SF, JPY, HKD and DKK carried out for the equipment purchasing of parent company and Autocam, material purchasing of parent company, technical service and trademark usage costs of parent company, the import and export of Weifu International Trade and operation of IRD, 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 2020, except for the follow assets or liabilities listed with foreign currency, assets and liabilities of the Company are carried with RMB Foreign currency assets of the Company till end of 30 June 2020 172 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Cash on hand Ending foreign currency Ending RMB balance Convert rate Ratio in assets (%) balance converted Monetary funds Including: USD 13,209,792.28 7.0795 93,518,724.44 0.38% EUR 1,436,642.82 7.961 11,437,113.50 0.05% HKD 11,049,573.90 0.9134 10,092,680.80 0.04% DKK 6,375,259.14 1.0685 6,811,964.40 0.03% Account receivable Including: USD 1,080,383.61 7.0795 7,648,575.77 0.03% EUR 738,532.97 7.961 5,879,460.97 0.02% JPY 3,645,361.00 0.065808 239,893.92 0.00% DKK 2,658,753.53 1.0685 2,840,878.15 0.01% Total ratio in assets 0.56% Foreign currency liability of the Company till end of 30 June 2020: Cash on hand Ending foreign currency Ending RMB balance Convert rate Ratio in assets(%) balance converted Short-term borrowings Including: EUR 5,644,084.25 7.961 44,932,554.71 0.61% Account payable Including: USD 318,270.52 7.0795 2,253,196.15 0.03% EUR 2,194,697.44 7.961 17,471,986.32 0.24% JPY 43,195,476.00 0.065808 2,842,607.88 0.04% CHF 153,260.54 7.4434 1,140,779.50 0.02% DKK 1,491,131.05 1.0685 1,593,273.53 0.02% Other account payable Including: USD 1,087.90 7.0795 7,701.79 0.00% DKK 4,005,904.09 1.0685 4,280,308.52 0.06% Total ratio in liabilities 1.02% ③ Other pricing risk The equity instrument investment held by the Company with classification as transaction financial asset and other non-current financial assets are measured on fair value of the balance sheet date. The fluctuation of expected price for these investment will affect the gains/losses of fair value changes for the Company. Furthermore, on the premise of deliberated and approved in 10th session of 8th 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 173 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 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) Transaction financial asset 126,649,272.00 4,782,956,195.13 4,909,605,467.13 1.Financial assets measured at fair value and whose 126,649,272.00 4,782,956,195.13 4,909,605,467.13 changes are included in current profit or loss (1) Investment in debt instruments 4,739,612,911.13 4,739,612,911.13 (2) Equity instrument investment 126,649,272.00 43,343,284.00 169,992,556.00 (III) Other equity instrument investment 285,048,000.00 285,048,000.00 Total liability sustaining measured by fair value 126,649,272.00 5,068,004,195.13 5,194,653,467.13 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 2020, the 174 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 30 June 2020. 3. The qualitative and quantitative information for the valuation technique and critical parameter that sustaining and non-persistent measured by fair value on second-order 4. The qualitative and quantitative information for the valuation technique and critical parameter that sustaining and non-persistent measured by fair value on third-order (1) Fair value of wealth management products The fair value of wealth management products is determined by the Company using discounted cash flow valuation techniques.Among them, the important unobservable input values are mainly the expected annualized rate of return and the risk factor of wealth management products. (2) Fair value of equity instrument investment Due to the lack of market liquidity for this part of financial assets, the Company uses the replacement cost method to determine its fair value.Among them, the important unobservable input values mainly include the financial data of the invested company, etc. 5. Continuous third-level fair value measurement items, adjustment information between the opening and closing book value and sensitivity analysis of unobservable parameters Nil 6. Continuous fair value measurement items, if there is a conversion between various levels in the current period, the reasons for the conversion and the policy for determining the timing of the conversion Nil 7. Changes in valuation technology during the current period and reasons for the changes Nil 8. The fair value of financial assets and financial liabilities not measured by fair value Nil 9. Other Nil 175 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 XII. Related party and related party transactions 1. Parent company of the enterprise Share-holding ratio Voting right ratio on Parent company Registration place Business nature Registered capital on the enterprise for the enterprise parent company 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 area, 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 Content of related Approved Whether more than the Related party Current period Last Period transaction transaction limit transaction limit (Y/N) Weifu Precision Goods and labor 14,833,622.63 30,000,000.00 N 12,828,147.72 176 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Machinery Bosch Diesel System Goods and labor 12,261,781.92 25,000,000.00 N 8,332,723.32 Weifu Environment Goods 1,824,736,274.77 3,200,000,000.00 N 675,657,317.56 Robert Bosch Goods and labor 63,669,835.20 153,000,000.00 N 66,801,410.90 Company Shinwell Automobile Goods 881,887.67 5,000,000.00 N Tech. (Wuxi) Co., Ltd. Goods sold/labor service providing In RMB/CNY Related party Content of related transaction Current period Last Period Weifu Precision Machinery Goods and labor 774,094.06 661,932.69 Bosch Diesel System Goods and labor 1,551,233,591.58 1,487,822,558.90 Weifu Environment Goods and labor 9,749,595.04 10,231,437.30 Robert Bosch Company Goods and labor 276,348,061.10 309,791,012.66 Shinwell Automobile Tech. Goods 67,648.59 (Wuxi) Co., Ltd. (2) Related trusteeship management/contract & entrust management/ outsourcing Nil (3) Related lease As a lessor for the Company: In RMB/CNY Lessee Assets type Lease income recognized in the Period Lease income recognized at last Period Weifu Environment Workshop 1,254,028.50 1,254,028.50 As a tenant for the Company: nil (4) Related guarantee Nil (5) Related party’s borrowed/lending funds In RMB/CNY Related party Loan amount Start date Maturity Note Borrowing 177 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Wuxi Industry Group 5,470,000.00 2020-05-27 2021-05-26 (6) Related party’s assets transfer and debt reorganization Nil (7) Remuneration of key manager In RMB/CNY Item Current period Last Period Remuneration of key manager 3,050,000.00 2,570,000.00 (8) Other related transactions Related party Name Current period Last Period Bosch Diesel System Technology royalties paid etc. 295,419.00 1,002,714.76 Bosch Diesel System Purchase of fixed assets 162,692.06 5,720,900.23 Robert Bosch Company Technology royalties paid etc. 140,558.40 1,122,250.34 Robert Bosch Company Sales of fixed assets 3,193,888.25 Weifu Precision Machinery Purchase of fixed assets 50,000.00 Weifu Environment Sales of fixed assets 9036316.74 10,485,153.25 Wuxi Industry Group Interest paying 5,348.44 6. Receivable/payable items of related parties (1) Receivable item In RMB/CNY Ending balance Opening balance Item Related party Book balance Bad debt reserve Book balance Bad debt reserve Weifu Precision Account receivable 613,510.54 5,060.71 243,544.57 Machinery Other account Weifu Precision 1,070,000.00 receivables Machinery Account receivable Bosch Diesel System 719,914,621.09 868.90 478,258,447.23 Robert Bosch Account receivable 150,455,844.41 242,527.12 155,195,576.42 135,534.13 Company Other account Robert Bosch 7,600,000.00 1,520,000.00 receivables Company 178 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Account receivable Weifu Environment 2,070,205.71 3,925,564.95 Other non-current Weifu Precision 53,788.00 53,788.00 assets Machinery Account paid in Bosch Diesel System 316,400.00 advance Other non-current Bosch Diesel System 183,842.03 assets Account paid in Robert Bosch 3,169,268.92 5,954,823.56 advance Company Other non-current Robert Bosch 6,600,000.00 6,600,000.00 assets Company (2) Payable item In RMB/CNY Item Related party Ending book balance Opening book balance Account payable Weifu Precision Machinery 10,850,161.08 10,556,782.28 Other account payable Weifu Precision Machinery 58,000.00 29,000.00 Account payable Weifu Environment 1,502,979,560.03 553,049,630.17 Account payable Bosch Diesel System 4,161,496.23 5,664,266.10 Account payable Robert Bosch Company 6,513,666.71 12,297,410.48 Shinwell Automobile Tech. Account payable 2,212,768.26 (Wuxi) Co., Ltd. Other account payable Wuxi Industry Group 5,475,348.00 Accounts received in advance Robert Bosch Company 965,203.64 Accounts received in advance Weifu Environment 6,568,149.70 7. Undertakings of related party Nil 8. Other Nil XIII. Share-based payment Nil 179 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 XIV. Undertakings or contingency 1. Important undertakings Important undertakings on balance sheet date: Nil 2. Contingency (1) Contingency on balance sheet date Nil (2) For the important contingency not necessary to disclosed by the Company, explained reasons The Company has no important contingency that need to disclosed 3. Other Nil XV. Events after balance sheet date 1. Important non adjustment 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 180 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 annual fee paid by the enterprise shall not exceed 8% of the total wages of the employees of the enterprise, and the total payment of the enterprise and individual employees shall not exceed 12% of the total wages of the employees of the enterprise.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 enterprise, the amount paid by the enterprise at current period control in the 8 percent of the total salary of last year, the upper limit of the employee's annual distribution amount shall not exceed 5 times of the average distribution amount of the employee, and the excess part shall not be included in the distribution amount. Personal payment is controlled at 1% of one’s total salary of the previous 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. Discontinue business Not applicable 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: ① The component is able to generate revenues and expenses in routine activities; ② Management of the Company is able to assess the operation results regularly, and determine resources allocation and performance evaluation for the component; 181 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 1. Being analyzed, financial status, operation results and cash flow of the components are able to require 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 segments 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 transaction financial asset, other account receivables-dividend receivable, other non-current financial assets, other equity instrument investment, 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: investment/income measured by equity, income of financial Product segment products or possession Product segment Product segment of air and disposal income, Item of automobile fuel of automotive post Offset of segment Total management the retained assets or injection system processing system system gains/losses as the financial assets available for sale or possession and disposal income Operating 2,884,919,241.60 3,353,365,316.53 367,218,243.09 0 11,099,176.66 6,594,403,624.56 revenue Operating 2,112,277,641.32 3,057,877,036.69 257,511,025.81 0 13,696,329.29 5,413,969,374.53 cost Total Profit 396,026,063.17 27,683,155.85 50,779,020.28 923,574,526.61 -5,712,949.88 1,403,775,715.79 Net profit 358,143,312.49 39,108,123.71 41,853,822.90 902,864,689.87 -4,300,314.70 1,346,270,263.67 Total assets 13,720,083,175.35 5,250,929,645.58 936,428,814.30 4,863,472,372.43 15,573,761.23 24,755,340,246.43 Total 2,862,910,309.19 3,601,302,196.69 548,683,267.58 5,094,154.34 -300,364,418.23 7,318,354,346.03 liabilities 7. Major transaction and events makes influence on investor’s decision Nil 182 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 8. Other Nil XVII. Principle notes of financial statements of parent company 1. 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 Accr Accr Rati Book value Book value Amount Amount ual Amount Ratio Amount ual o ratio ratio Account receivable with 0.78 9,107,123.5 100. 1.07 100. bad debt provision 9,107,123.51 9,107,123.51 9,107,123.51 % 1 00% % 00% accrual on a single basis Including: Account receivable with 1,165,249,207 99.2 3,660,065.3 0.31 1,161,589,14 839,731,538.8 98.9 0.44 bad debt provision 3,716,569.87 836,014,968.93 .80 2% 2 % 2.48 0 3% % accrual on portfolio Including: Including: 1,046,293,741 89.1 3,660,065.3 0.35 1,042,633,67 703,497,750.1 82.8 0.53 receivables from 3,716,569.87 699,781,180.27 .78 0% 2 % 6.46 4 8% % customers Receivables from 118,955,466.0 10.1 118,955,466. 136,233,788.6 16.0 internal related 136,233,788.66 2 3% 02 6 5% parties 1,174,356,331 100. 12,767,188. 1.64 1,161,589,14 848,838,662.3 100. 12,823,693.3 1.64 Total 836,014,968.93 .31 00% 83 % 2.48 1 00% 8 % Bad debt provision accrual on single basis: RMB 9,107,123.51 In RMB/CNY 183 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Ending balance Name Book balance Bad debt reserve Accrual ratio Accrual causes BD bills 5,300,000.00 5,300,000.00 100.00% Have difficulty in collection Changchun FAW Sihuan Engine 1,475,731.65 1,475,731.65 100.00% Have difficulty in collection Manufacturing Co., Ltd Wuxi Kipor Machinery Co., Ltd 1,220,384.74 1,220,384.74 100.00% Have difficulty in collection Fujian Zhao’an Country Minyue Bianjie Agricultural Machinery 1,111,007.12 1,111,007.12 100.00% Have difficulty in collection Auto Parts Co., Ltd. Total 9,107,123.51 9,107,123.51 -- -- Bad debt provision accrual on portfolio: RMB 3,660,065.32 In RMB/CNY Ending balance Name Book balance Bad debt reserve Accrual ratio Within 6 months 1,030,687,162.07 6 months to one year 10,251,901.63 1,025,190.16 10.00% 1-2 years 2,289,715.54 457,943.11 20.00% 2-3 years 1,480,050.82 592,020.33 40.00% Over 3 years 1,584,911.72 1,584,911.72 100.00% Total 1,046,293,741.78 3,660,065.32 -- 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 Book balance Within one year (One year included) 1,159,894,529.72 Including: within 6 months 1,149,642,628.09 6 months to one year 10,251,901.63 1-2 years 8,589,951.39 2-3 years 3,034,031.36 Over 3 years 2,837,818.84 3-4 years 2,837,818.84 Total 1,174,356,331.31 184 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 (2) Bad debt provision accrual collected or switch back Bad debt provision accrual in the period: In RMB/CNY Amount changed in the period Opening Category Collected or Ending balance balance Accrual Written-off Other reversal Bad debt provision 12,823,693.38 314,240.74 257,736.19 12,767,188.83 Total 12,823,693.38 0.00 314,240.74 0.00 257,736.19 12,767,188.83 Important bad debt provision collected or switch back: nil (3) Account receivable actual charge off in the Period Nil (4) Top 5 receivables at ending balance by arrears party In RMB/CNY Ending balance of account Ratio in total ending balance of Ending balance of bad debt Name receivable account receivables reserve Bosch Diesel System 712,061,865.41 60.63% Weifu Leader 53,820,937.93 4.58% Custom 1 53,162,458.56 4.53% Custom 2 47,813,407.24 4.07% Weifu International Trade 45,964,164.41 3.91% Total 912,822,833.55 77.72% (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 receivables In RMB/CNY 185 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Item Ending balance Opening balance Interest receivable 2,280,037.26 804,929.68 Dividend receivable 1,115,292,687.93 1,070,000.00 Other account receivables 286,829,482.06 248,140,027.06 Total 1,404,402,207.25 250,014,956.74 (1) Interest receivable 1) Category of interest receivable In RMB/CNY Item Ending balance Opening balance Interest receivable of unified-borrowing & 188,929.48 149,876.70 unified-lending Interest of fund occupation 2,091,107.78 655,052.98 Total 2,280,037.26 804,929.68 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 Weifu Precision Machinery 1,070,000.00 Zhonglian Electronic 191,200,000.00 Bosch Diesel System 861,097,612.75 Weifu Jinning 62,995,075.18 Total 1,115,292,687.93 1,070,000.00 186 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 2) Important dividend receivable with account age over one year Nil 3) Accrual of bad debt provision □ Applicable √ Not applicable (3) Other account receivables 1) Other account receivables classification by nature In RMB/CNY Nature Ending book balance Opening book balance Staff loans and petty cash 812,073.33 462,664.16 Balance of related party in the consolidate scope 266,747,069.72 216,403,060.04 Intercourse funds of unit 24,000,000.00 24,000,000.00 Protean Holdings Corp. equity disposal fund 10,654,092.89 Other 116,289.05 117,939.00 Total 291,675,432.10 251,637,756.09 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 of Jan. 1, 2020 3,497,729.03 3,497,729.03 Balance of Jan. 1, 2020 —— —— —— —— in the period Current accrual 1,348,221.01 1,348,221.01 Balance on June 30, 2020 4,845,950.04 4,845,950.04 Change of book balance of loss provision with amount has major changes in the period □ Applicable √ Not applicable By account age In RMB/CNY 187 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Account age Ending balance Within one year (One year included) 196,018,701.27 Within 6 months 155,018,701.27 6 months to one year 41,000,000.00 1-2 years 95,552,695.72 2-3 years 96,835.11 Over 3 years 7,200.00 3-4 year 7,200.00 Total 291,675,432.10 3) Bad debt provision accrual, collected or switch back 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 Other Bad debt provision 3,497,729.03 1,348,221.01 4,845,950.04 Total 3,497,729.03 1,348,221.01 4,845,950.04 Including the important bad debt provision switch back or collected in the period: nil 4) Other receivables actually written-off during the reporting period Nil 5) Top 5 other receivables at ending balance by arrears party In RMB/CNY Ratio in total ending Ending balance of Enterprise Nature Ending balance Account age balance of other bad debt reserve receivables Balance of related party in Weifu Leader 100,000,000.00 Within 6 months 34.28% the consolidate scope Balance of related party in Weifu Tianli 41,000,000.00 6 months to 1 year 14.06% the consolidate scope Weifu Balance of related party in 76,194,454.00 Within 2 years 26.12% Chang’an the consolidate scope Balance of related party in Weifu Mashan 28,552,615.72 Within 2 years 9.79% the consolidate scope 188 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Troowin Power System Intercourse funds of unit 24,000,000.00 1-2 years 8.23% 4,800,000.00 Technology Co., Ltd. Weifu Balance of related party in 21,000,000.00 Within 2 years 7.20% Schmidt the consolidate scope Total -- 290,747,069.72 -- 99.68% 4,800,000.00 6) Other 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 3. Long-term equity investments In RMB/CNY Ending balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Investment for 1,595,262,165.92 1,595,262,165.92 1,731,814,008.11 1,731,814,008.11 subsidiary Investment for associates and 3,254,664,187.59 3,254,664,187.59 4,599,549,621.93 4,599,549,621.93 joint venture Total 4,849,926,353.51 4,849,926,353.51 6,331,363,630.04 6,331,363,630.04 (1) Investment for subsidiary In RMB/CNY Changes in Current Period Ending The invested Opening balance Provision for Ending balance balance of Additional Negative entity (book value) impairment Other (book value) depreciation Investment Investment loss reserves 189 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 International 32,849,254.85 32,849,254.85 Trade Weifu ITM 167,000,000.00 -167,000,000.00 Weifu Schmidt 50,160,000.00 50,160,000.00 Weifu Tianli 234,941,100.00 234,941,100.00 Weifu Autocam 82,454,467.99 82,454,467.99 Weifu Electronic 53,832,280.23 53,832,280.23 Drive SPV 82,228,038.71 30,448,157.81 112,676,196.52 Total 1,731,814,008.11 30,448,157.81 -167,000,000.00 1,595,262,165.92 (2) Investment for associates and joint venture In RMB/CNY Current changes (+, -) Other Ending Add compr Othe balance ition Investment ehensi r Impai Opening balance Capital Cash dividend or Ending balance of Enterpri al gain/loss ve equit rment (book value) reducti profit announced Other (book value) deprecia se inve recognized incom y accru on to issued tion stme under equity e chan al reserves nt adjust ge ment I. Joint venture II. Associated enterprise Bosch Diesel 3,276,853,986.35 574,193,295.98 1,722,195,225.51 2,128,852,056.82 System Zhonglia n 1,261,232,635.30 126,848,340.16 331,400,000.00 1,056,680,975.46 Automo bile Weifu 61,463,000.28 7,668,155.03 69,131,155.31 190 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Precisio n Machine ry Subtotal 4,599,549,621.93 708,709,791.17 2,053,595,225.51 3,254,664,187.59 Total 4,599,549,621.93 708,709,791.17 2,053,595,225.51 3,254,664,187.59 (3)Other note 4. Operating income and cost In RMB/CNY Current period Last Period Item Income Cost Income Cost Main business 2,175,655,866.58 1,548,552,431.71 1,895,457,557.71 1,303,140,646.02 Other business 160,606,506.50 137,936,247.87 197,016,902.53 168,830,868.68 Total 2,336,262,373.08 1,686,488,679.58 2,092,474,460.24 1,471,971,514.70 Information related to performance obligations: Nil Information related to the transaction price assigned to the residual performance obligations: At end of the reporting period, the amount of income corresponding to the performance obligation which has been signed but not yet performed or has not been fully performed is RMB 0.00. 5. Investment income In RMB/CNY Item Current period Last Period Investment income from holding transaction 2,287,308.59 financial asset Investment income in subsidiaries 62,995,075.18 Investment income in joint ventures and 708,709,791.17 742,463,812.23 associated enterprises Investment income of financial products 136,202,392.15 95,464,240.84 Total 907,907,258.50 840,215,361.66 191 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 -543,370.99 Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to 43,932,417.68 enterprise’s business) Profit and loss of assets delegation on others’ investment or management 138,448,908.25 Held transaction financial asset, gains/losses of changes of fair values from transaction financial liabilities, and investment gains from disposal of transaction financial asset, 258,157.65 transaction financial liabilities and financial asset available for sales, exclude the effective hedging business relevant with normal operations of the Company Other non-operating income and expenditure except for the aforementioned items -2,840,670.20 Less: Impact on income tax 26,779,577.16 Impact on minority shareholders’ equity 1,706,169.11 Total 150,769,696.12 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons □ Applicable √ Not applicable 2. ROE and earnings per share Earnings per share Weighted average Profits during report period Basic earnings per share Diluted earnings per ROE (RMB/Share) share (RMB/Share) Net profits belong to common stock stockholders of the 7.80% 1.32 1.32 Company Net profits belong to common stock stockholders of the 6.91% 1.17 1.17 Company after deducting nonrecurring gains and losses 192 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 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 4. Other Nil 193 无锡威孚高科技集团股份有限公司 2020 年半年度报告全文 Section XII. 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: Wang Xiaodong 25 August 2020 194