Shenzhen China Bicycle Company (Holdings) Limited Semi-Annual Report 2021 August 2021 1 Section I. Important Notice, Contents and Interpretation Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents. Li Hai, Principal of the Company, Sun Longlong, person in charge of accounting works and Zhong Xiaojin, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2021 Semi-Annual Report is authentic, accurate and complete. All directors are attended the Board Meeting for report deliberation. The Company shall comply with the disclosure requirement of “Guidelines on Industry Information Disclosure of Shenzhen Stock Exchange No. 11- Listed Company Engaged in Jewelry-related Business” The Company plans not to distribute cash dividends, not to send bonus shares, and no reserve capitalizing. 2 Contents Section I. Important Notice, Contents and Interpretation ..................................... 2 Section III Management Discussion and Analysis .................................................. 9 Section IV Corporate Governance ........................................................................ 23 Section V Environmental and Social Responsibility ............................................ 24 Section VI Important Events ................................................................................. 27 Section VII. Changes in Shares and Particulars about Shareholders ................. 33 Section VIII. Preferred Stock ................................................................................ 38 Section IX. Corporate Bonds ................................................................................. 39 Section X. Financial Report ................................................................................... 40 3 Documents Available for Reference 1. Accounting statement carrying the signatures and seals of the legal representative, person in charge of accounting and person in charge of accounting organ. 2. Originals documents of the Company and manuscripts of public notices that disclosed in the newspaper designated by CSRC in the report period. 3. English version of the Semi-Annual Report 2021 4 Interpretation Items Refers to Contents 5 Section II. Company Profile and Main Financial Indexes I. Company profile Short form of the stock Zhonghua-A, Zhonghua-B Code for share 000017, 200017 The abbreviation of the N/A changed stock (if applicable) Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in 深圳中华自行车(集团)股份有限公司 Chinese) Short form of the Company 深中华 (in Chinese) (if applicable) Foreign name of the Company Shenzhen China Bicycle Company (Holdings) Limited (if applicable) Short form of foreign name of CBC the Company (if applicable) Legal representative Li Hai II. Person/Way to contact Secretary of the Board Rep. of security affairs Name Sun Longlong Yu Xiaomin, Zhong Xiaojin 501 Zhongxin Technology Building, No.31 501 Zhongxin Technology Building, No.31 Contact add. Bagua Rd., Bagualing, Futian District, Bagua Rd., Bagualing, Futian District, Shenzhen Shenzhen Tel. 0755-25516998,28181666 0755-25516998,28181666 Fax. 0755-28181009 0755-28181009 E-mail dmc@szcbc.com dmc@szcbc.com III. 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 The registrations address, offices address and codes as well as website and email of the Company have no changes in the Period, found more in Annual Report 2020. 6 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in reporting period or not □ Applicable √ Not applicable 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 2020. IV. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data or not □ Yes √ No Increase/decrease in this Current period Same period of last year report y-o-y Operating revenue (RMB) 54,130,317.60 42,656,355.21 26.90% Net profit attributable to shareholders of 1,365,493.34 2,797,643.50 -51.19% the listed company (RMB) Net profit attributable to shareholders of the listed company after deducting -416,594.29 2,197,907.57 -118.95% non-recurring gains and losses (RMB) Net cash flow arising from operating -2,447,126.82 1,350,395.94 -281.22% activities (RMB) Basic earnings per share (RMB/Share) 0.0025 0.0051 -50.98% Diluted earnings per share (RMB/Share) 0.0025 0.0051 -50.98% Weighted average ROE 11.78% 32.84% -21.06% Increase/decrease in this End of current period End of last year report-end over that of last period-end Total assets (RMB) 94,505,866.40 91,742,769.99 3.01% Net assets attributable to shareholder of 12,270,724.32 10,905,230.98 12.52% listed company (RMB) V. Difference of the accounting data under accounting rules in and out of China 1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not applicable The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period. 7 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. VI. Items and amounts of extraordinary profit (gains)/loss √ Applicable □ Not applicable In RMB Item Amount Note Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to 300,000.00 national standards, which are closely relevant to enterprise’s business) Switch-back of provision of impairment of account receivable and contract assets which are treated with separate depreciation 1,357,466.13 test Other non-operating income and expenditure except for the 157,664.40 aforementioned items Less: Impact on income tax - Impact on minority shareholders’ equity (post-tax) 33,042.90 Total 1,782,087.63 -- 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 8 Section III Management Discussion and Analysis I. Main businesses of the company in the reporting period During the reporting period, the company’s main businesses were bicycles and lithium battery materials business, and jewelry gold business. (1) Bicycles and lithium battery materials business included the production, assembly, procurement, and sales of bicycles and electric bicycles, and purchase, sales, and commissioned processing of lithium battery materials, etc.; (2) The gold jewelry business mainly provided supply chain management and services in the vertical field of gold jewelry. The company connected with downstream gold jewelry brands, purchased gold and diamonds according to their product needs, and then commissioned gold jewelry processing plants for processing, made product certification for the processed finished products after passing the inspection, and delivered them to downstream customers. Through the integration of upstream supplier resources and downstream customer resources, the turnover rate of gold jewelry products in the upstream and downstream was improved, the cost of circulation links was reduced, and the overall competitive advantage of the upstream and downstream was formed. The Company shall comply with the disclosure requirement of “Guidelines on Industry Information Disclosure of Shenzhen Stock Exchange No. 11- Listed Company Engaged in Jewelry-related Business” i. Industry trends and competitive landscape of the industry the Company operates In terms of the jewelry and gold industry, due to the impact of the pandemic and other factors, the global economic development is still facing many uncertainties in 2021, but the domestic economy shows a rapid recovery, the growth in retail industry is in prospect, and the development trend of the gold and jewelry industry is still positive. In recent years, with the growth of the middle class and the continuous rising of residents’ income, the constantly advancing of the domestic residents’ consumption upgrading, the popularity of the Internet and the rise of social media, a young generation of consumers is becoming a new force of consumption, the jewelry industry is evolving from the traditional “push supply chain” to the “demand pull”, and there is an obvious transition trend from material consumption to brand and design consumption, the integration of jewelry into the Internet, innovation and individuality are becoming the trend of the industry. The jewelry industry is facing an opportunity period of income growth and consumption upgrading, and the middle and high-end consumer markets represented by jewelry has entered a stage of rapid development. 1. Industry development trend (1) The per capital disposable income continues to rise, and the consumer group shifts to young consumers Benefiting from the continuous development of China's economy, the per capital disposable income of residents has been growing steadily. With the continuous increase of per capital disposable income of residents, consumers' 9 consumption ability and willingness to consume jewelry are expected to increase accordingly. At the same time, according to the age group of consumers, the "young millennials" aged between 21 and 25 and the "older millennials" aged between 26 and 39 are the absolute main force of global diamond jewelry consumption. According to the data, China's older millennials and younger millennials respectively contribute 69% and 10% of the diamond jewelry market, accounting for about 79% of the total market share. In terms of retail sales of diamond jewelry, older millennials and younger millennials contribute 70% and 8% respectively, accounting for about 78% of the market share in total. (2) Jewelry consumption concept tends to become daily Unlike the consumption habits of the middle-aged people who pursue the maintenance of value, with the improvement of people's living standards and the transformation of ideology, young consumers are more likely to consume jewelry as their daily wear, but not as traditional wealth or wear for important occasions. The demand for life oriented jewelry is increasing year by year. The younger generation pays more attention to the personalized design Goods in process selection, wearing jewelry is more used to meet the daily life requirements, reflects the personal style and personal taste, and jewelry consumption is becoming more daily. In addition, consumption reason expands from wedding to all kinds of Chinese and foreign festivals, love, friendship, family, and self-reward, which effectively improves the repurchase rate of jewelry products. (3) The demand for wedding market is stable, and the jewelry industry will remain sustainable in the future. Jewelry consumption in wedding market occupies an important position in the whole jewelry market. As of December 31, 2020, a total of 10,035,000 newborns had been registered with public security organs in 2020. In terms of marriage, 3,879,000 marriage couples registered in the first half of 2020, an increase of 149.1% on a month-over-month basis and a decrease of 22.1% on a year-over-year basis. In the first quarter of 2021, a total of 2,132,000 marriage couples registered nationwide, an increase of 575,000 couples compared with the same period last year. In the long run, China's consumption upgrading is still continuing, the jewelry industry and diamond jewelry markets will still maintain long-term prosperity and large space for growth in the future. (4) The specific needs of consumers drive the industry to gradually subdivide At present, China's jewelry industry is still in the period of broad brands, and enterprises provide more suitable products and services to core groups by studying the needs of segments. In the future, it will gradually move towards the era of brand segmentation, the jewelry enterprises need to constantly adapt to the new market environment and adapt to the development needs of the era of segmentation. (5) Form online and offline linkage channel sales The development of sharing platforms and e-commerce platforms has changed the consumption habits of consumers, especially the younger generation. Consumers can more easily understand the features of products and share the use experience through online, which has become an important trend of product promotion and future sales. 10 (6) Supply chain management has become an important means of operation for jewelry enterprises From the perspective of the supply chain of the jewelry industry, it mainly involves raw material mining, processing and smelting, blank processing, jewelry production, warehousing, distribution and sales. In recent years, more and more well-known domestic jewelry brands have outsourced part or all of the intermediate processing links with low profit and large investment, and focused on the front-end design, brand operation and back-end marketing network construction with high premium. Supply chain management has become an important means to improve the operation efficiency of jewelry enterprises. 2. Future development prospects (1) National industrial policy support In order to encourage and develop the jewelry and jade jewelry industry, the Chinese government has introduced many favorable policies and measures. In terms of macro policies, Shanghai Diamond Exchange and Shanghai Gold Exchange have been launched successively, and the markets of gold, silver and other precious metals and their products have been fully opened up. The Ministry of Commerce has issued the Guiding Opinions on Promoting Consumption in the 13th Five-Year Plan Period. The General Office of the State Council issued the Opinions of the General Office of the State Council on Promoting the Innovation and Transformation of Entity Retail and the Opinions of The General Office of the State Council on Accelerating the Development of Circulation and Promoting Commercial Consumption. (2) Industry self-regulation is constantly strengthened The country formulated and revised a series of industry standards and regulations, such as the Name of Jewelry and Jade, Identification of Jewelry and Jade, Classification of Diamonds, Regulations on Identification Management of Gold and Silver Jewelry, Regulations on the Purity of Precious Metals in Jewelry and Naming Methods, Classification and Code of Jewelry and Jade and Precious Metals and GB/T25071-2010 national standards, etc., which plays a positive role in improving the overall level of China's jewelry industry, promoting the sustainable and healthy development of the industry and participating in international competition. (3) Economic growth and rise in per capital disposable income With the growth of China's economy, the per capital disposable income of residents is also rising. With the increase of residents' disposable income, Chinese residents gradually increase their consumption of optional consumer goods on the basis of meeting their basic living needs. Jewelry as an optional consumer goods will continue to maintain rapid growth in China's market. 3. The company's competitive advantages in the jewelry and gold business (1) High-quality upstream supplier system At present, the company has established relatively stable cooperative relationships with major domestic and foreign diamond suppliers and processors, and has advantages in raw material procurement costs, order 11 production cycles and product quality control, and can continuously reduce supply chain costs and operational efficiency. (2) Diversified downstream market channels and customer resources The company is currently actively expanding its gold jewellery customers. In addition to clear order customers, it is currently negotiating business cooperation with a number of domestic jewellery brands. The above-mentioned customers include three types of customers, of which type A customers are well-known brand customers in the country, with more than 500 retail stores, type B customers are small and medium/regional/segmented brands, with 300-500 retail stores; type C customers are small and medium brands, with 50-100 retail stores. (3) Improve the industrial chain of production design The company has a one-stop industrial chain docking module of design, production, processing, testing, and wholesale. Brand owners can rely on our jewelry processing resource advantages and hand over lower value-added links such as manufacturing and distribution to the company, thus focus on the brand operation and sales section with higher added value. The outsourcing of production and design can improve the homogeneity of gold jewelry products. (4) Closed-loop business process and risk control system The company has formulated strict business internal control processes such as supplier access standards, customer evaluation systems, full-process order tracking systems, and purchase price comparison systems, achieved the three-flow closed-loop control of capital flow and information flow and logistics through the integrated service platform of the supply chain system and the integrated solutions to funds management, and realized multi-level risk control. ii. The company's main business models during the reporting period 1. Procurement model The upstream raw material suppliers of the company’s gold jewelry supply chain business were mainly diamonds and gold, of which the diamond suppliers were mainly source producers or wholesalers from India or Hong Kong, and domestic mature diamond wholesalers (generally members of the Shanghai Diamond Exchange) ), gold was mainly purchased from the Shanghai Gold Exchange through the company's membership qualifications at Shanghai Gold Exchange. The company has established professional procurement department and team to be responsible for the procurement of diamond products and jewellery. The specific procurement models varied according to customer needs. 2. Production model By integrating upstream commissioned processing plants, the company outsourced the production of products ordered by customers to professional jewelry manufacturers to give full play to their professional and scale effect. In view of the current situation and characteristics of domestic jewelry processing enterprises, the company 12 established a set of effective supplier management mechanisms and evaluation standards to achieve a benign interaction between the production system of outsourced manufacturers and the company's business development. 3 Sales model According to the annual order planning and regular procurement requirements of brand retailers, the company provided B-end customers with various forms of supply services such as spot procurement, order production, and customized development, so as to minimize product inventory and improve the supply chain effectiveness for customers. Order production: Customers placed orders to the company according to their own needs, and the company purchased raw materials and subcontracted processing to form finished products and sell them to customers; Customized development: According to the characteristics of their own brands and future development needs, customers entrusted the company to develop and design the product styles, and produce finished products to sell to customers. iii. Operation of the physical store in reporting period During the reporting period, gold and jewelry business of the Company mainly provides supply chain management and services in the vertical field of gold and jewelry, it connects with the downstream gold jewelry brand and does not have the physical stores. iv. Operation of the on-line sales in reporting period The Company does not have on-line sales in the Period v. Inventory in the reporting period As of end of the Period, balance of inventory from jewelry business amounted to 6,207,923.40 yuan, a 4.27% up compared with that of period-begin, types of the inventory includes: In RMB Item Types Amount Proportion Jewelry 1,370,407.91 22.08% Gold jewelry — — Finished goods Other — — Total 1,370,407.91 22.08% Gold 821,910.81 13.24% Platinum — — Raw materials Diamond 2,612,048.33 42.08% Total 3,433,959.14 55.32% 13 Wrappage 51,215.71 0.83% Goods in process 1,352,340.64 21.78% Total 6,207,923.40 100.00% In the bicycle and lithium battery materials industry, as a traditional manufacturing industry, the bicycle industry continues the dilemma of rising labor costs, manufacturing costs, capital costs, and material costs. The implementation of the new national standards for safety technical specifications of electric bicycle in April 2019 accelerated the reshuffle of the industry and formed a new round of industry shocks. In addition, on the basis of the violent shock of shared bicycles with capital advantages on the bicycle industry and upstream supply chain operations in the past few years, the aftershocks continue to impact the recovery of the industry due to the lack of profit model and capital chain problems. At the same time, the bicycle industry as a traditional manufacturing field has also ushered in an important opportunity to accelerate transformation and upgrading under the guidance of the "Made in China 2025" strategy of strengthening the country under the guidance of the basic policy of "innovation-driven, quality-first, green development, structural optimization, and talent-oriented", ushered in the development opportunities for the implementation of the new national standards for electric bicycles, and faced important opportunities and challenges of e-commerce development on channel impact, channel integration and Internet+. Our country is the world's largest country in the production and sales of electric bicycles. After years of development, electric bicycles have gradually become an important means of transportation for consumers' daily short-distance trips. At present, there are about 200 million vehicles in the whole society. Structural body, motor, power battery, and control system, as the core components of electric bicycles, Shenzhen China Bicycle has closely followed up and studied their technological development, application development and commercial value for a long time, and determined the list of qualified suppliers for core components year by year. As one of the core components of electric bicycle, lead-acid batteries have been mainly used as the power batteries in the past ten or twenty years. With the development and popularization of new energy technologies and new energy materials, it is expected that they will be replaced by lithium batteries on a large scale in the future. The implementation of the new national standards for safety technical specifications of electric bicycle has comprehensively improved the safety performance of electric bicycles, adjusted and improved technical indicators such as speed limit, vehicle quality, and pedaling ability. The new standards that are close to the people's livelihood and serve the people's livelihood have increased the application space of lithium battery energy storage, and lithium battery electric bicycles will usher in a new stage of development. Through carrying out various works diligently, in the first half of 2021, the Company achieved an operating revenue of 54.1303 million yuan, net profit amounted as 1.5778 million yuan, the net profit attributable to shareholders of listed company was 1.3655 million yuan and net profit attributable to shareholders of listed company after deduction of the non-recurring gains/losses was -416,600 yuan. II. Core Competitiveness Analysis Despite the fierce market competition in the bicycle industry as a conventional industry, the increased awareness 14 of green commuting, leisure and exercises as a result of the development of China’s social economy and the change of people’s living concept creates structural development opportunity for the bicycle industry. The Company will continue to do better in various aspects of operation such as market development, product development, quality management and sales of e-commerce, extended and expansion the application of upstream & downstream industry for the industrial chain step by step, so as to maintain and improve the Company’s ability to continue as a going concern before the restructuring. During the reporting period, the Company newly develops jewelry and god supply chain business and expands the business dimensions. In August 2019, the Company and Shenzhen Zuankinson Jewelry Co., Ltd jointly established a Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd with contribution of 6.5 million yuan. Of which, the Company holds 65% equity, and is the controlling shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd, while 35% equity held by Zuankinson Jewelry. According to actual operation development, in February 2020, the two parties are decided to increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd to 20 million yuan in the same proportion. Relevant registration capital is fully funded in June 2020. In order to meet the future business development needs of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., it will enhance its financial strength, comprehensive competitiveness and anti-risk capabilities. In August 2020, the company and the joint venture partner, Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. decided to jointly increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. in the same proportion, increasing the registered capital from 20 million yuan to 200 million yuan, of which, the company newly increased capital of 117 million yuan, which was successively invested in accordance with its own funds and the availability of funds raised from the non-public issuance of A shares; Zuankinson Jewelry newly increased capital of 63 million yuan, a total of 180 million yuan increased. The above mentioned capital increase event has been deliberated and approved by the second extraordinary general meeting of shareholders of 2020 dated 21 August 2020. On the other hand, the Company sets the conditions for introducing the restructuring party in the reorganization plan, expecting to restore the sustainable operation ability and sustainable profitability through asset restructuring. In addition, the Company is trying to carry out the issuance of non-public shares, hoping to improve the operating strength and development momentum. On 30 December 2020, the Company held the 3 rd extraordinary shareholders general meeting of 2020 to deliberated and approved the new plan of non-public issuance of shares. The Company plans to raising 293.6 million yuan in total at most to Wansheng Industrial Company, by means of non-public offering of shares, the funds will be used to replenish the working capital after deducting offering expenses, and the offering of shares will result in a changes in controlling rights of the Company. On March 12, 2021, the company received the Acceptance of Administrative License Application of China Securities Regulatory Commission (Acceptance No. 210576) issued by China Securities Regulatory Commission (hereinafter referred to as CSRC). CSRC reviewed the administrative license application materials submitted by the company for the Approval of Non-public Offering of Listed Companies (A-Share Motherboard, SMEs Board, and B-Share), and considered that all the application materials were complete and in line with the legal form, and decided to accept the application for administrative license. From March to May 2021, the company has respectively received the Notice of Feedback on the Review of Administrative License Project (No. 210576) and 15 the Letter on Making Preparation for the Meeting of the Issuance Examination Commission for the Non-Public Offering of Shares of Shenzhen China Bicycle Company (Holdings) Limited. issued by the CSRC. By the end of this report period, the company and the intermediary agencies have completed the reply work on time and submitted it to CSRC in time, and the follow-up work is in progress. The company's non-public offering of shares is still subject to the approval of the CSRC, whether the approval could be obtained and the final approval time is uncertain. The company will timely perform the information disclosure obligation in strict accordance with the provisions and requirements of relevant laws and regulations and according to the review progress of the application by the CSRC. Please invest rationally and pay attention to investment risk. III. Main business analysis See the “I-Main businesses of the Company in the reporting period” Y-o-y changes of main financial data In RMB Current period Same period last year y-o-y changes (+, -) Reasons The revenue from jewelry and gold Operating revenue 54,130,317.60 42,656,355.21 26.90% business growth in the Period The cost from jewelry Operating costs 48,590,120.12 36,100,765.65 34.60% and gold business growth in the Period Sales expenses 876,189.13 1,478,378.78 -40.73% The administrative expenses of jewelry and Administration expenses 2,619,117.48 1,679,719.44 55.93% gold business growth in the Period Finance expenses -49,422.51 -19,260.39 156.60% Income tax expenses 161,386.48 170,038.76 -5.09% The R&D expenses of jewelry and gold R&D investment 2,120,389.55 753,742.20 181.31% business growth in the Period The account received in Net cash flow arising advance was received in -2,447,126.82 1,350,395.94 -281.22% from operating activities the same period of the previous year Net cash flow arising -5,957.99 64,500.00 -109.24% from investment 16 activities Obtained the investment Net cash flow arising of minority shareholders 4,725,000.00 -100.00% from financing activities due to the capital increased prior period. The account received in Net increase of cash and advance was received in -2,453,084.81 6,139,895.94 -139.95% cash equivalent the same period of the previous year 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 operating revenue In RMB Current Period Same period last year Ratio in operating Ratio in operating Y-o-y changes (+,-) Amount Amount revenue revenue Total operating 54,130,317.60 100% 42,656,355.21 100% 26.90% revenue According to industries Jewelry and gold 40,728,749.57 75.24% 25,097,387.76 58.84% 62.28% Bicycle lithium battery material and 13,401,568.03 24.76% 17,558,967.45 41.16% -23.68% others According to products Jewelry and gold 40,728,749.57 75.24% 25,097,387.76 58.84% 62.28% Bicycle lithium battery material and 13,401,568.03 24.76% 17,558,967.45 41.16% -23.68% others According to region Domestic 54,130,317.60 100.00% 42,656,355.21 100.00% 26.90% Industries, products or regions that account for more than 10% of the operating revenue or operating profit of the Company √ Applicable □ Not applicable In RMB Increase/decrease Increase/decrease Increase/decrease Operating Operating costs Gross profit ratio of operating of operating cost of gross profit revenue revenue y-o-y y-o-y ratio y-o-y According to industries 17 Jewelry and gold 40,728,749.57 37,322,674.70 8.36% 62.28% 64.78% -1.39% Bicycle lithium battery material 13,401,568.03 11,267,445.42 15.92% -23.68% -16.23% -7.48% and others According to products Jewelry and gold 40,728,749.57 37,322,674.70 8.36% 62.28% 64.78% -1.39% Bicycle lithium battery material 13,401,568.03 11,267,445.42 15.92% -23.68% -16.23% -7.48% and others According to region Domestic 54,130,317.60 48,590,120.12 10.23% 26.90% 34.60% -5.13% 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 1. The operating revenue from jewelry and gold business has a growth of 62.28% from a year earlier, mainly because at same period last year, the revenue was affected by the epidemic. IV. Analysis of the non-main business □ Applicable √ Not applicable V. Assets and liability analysis 1. Major changes of assets composition In RMB End of current Period End of last year Ratio Ratio in total Ratio in total Notes of major changes Amount Amount changes assets assets Monetary fund 17,434,893.24 18.45% 19,887,978.05 21.68% -3.23% Account 55,552,419.15 58.78% 55,031,424.70 59.98% -1.20% receivable Inventory 7,601,075.77 8.04% 7,729,325.94 8.42% -0.38% Fix assets 3,612,186.01 3.82% 3,792,133.36 4.13% -0.31% Contract liability 16,699,148.73 17.67% 15,254,713.38 16.63% 1.04% 18 2. Main overseas assets □Applicable √Not applicable 3. Assets and liability measured by fair value □Applicable √Not applicable 4. Assets rights restricted till end of the period 1) At the end of the current period, the total fixed output value included six suites of house properties at 7-20F Lianxin JiaYuan, Luohu District, Shenzhen purchased in 2016, with original value of 2,959,824.00 Yuan, which were affordable housing purchased from the Housing and Construction Bureau of Luohu District to provide to enterprise talents for living. The contract stipulated that the purchasing enterprise is not allowed to conduct any form of property rights transaction with any units or individual other than the government. V. Investment analysis 1. Overall situation □ Applicable √ Not applicable 2. The major equity investment obtained in the reporting period □ Applicable √ Not applicable 3. The major non-equity investment doing in the reporting period □ Applicable √ Not applicable 4. Financial assets investment (1) Securities investment □ Applicable √ Not applicable The Company has no securities investment in the Period (2) Derivative investment □ Applicable√Not applicable The Company has no derivatives investment in the Period 19 VII. Sales of major assets and equity 1. Sales of major assets □ Applicable √Not applicable The Company had no sales of major assets in the reporting period. 2. Sales of major equity □ Applicable √Not applicable VIII. Analysis of main holding company and stock-jointly companies √Applicable □ Not applicable Particular about main subsidiaries and stock-jointly companies net profit over 10% In RMB Company Main Register Operating Operating Type Total assets Net assets Net profit name business capital revenue profit Shenzhen Xinsen Sales of Jewelry jewelry, 200,000,000. 45,073,976.8 35,575,705.0 40,728,749.5 1,321,219. Subsidiary 1,159,833.12 Gold Supply diamonds 00 0 5 7 59 Chain Co., and gold Ltd. Shenzhen Sales of Emmelle 14,483,832.6 -432,794.4 Subsidiary bicycles and 5,000,000.00 4,877,452.21 773,553.50 -432,794.48 Industry Co., 3 8 spare parts Ltd. Shenzhen Sales of Emmelle software and -125,014.0 Cloud Subsidiary information 2,000,000.00 3,636,331.59 1,886,612.45 332,743.53 -125,014.06 5 Technology technology Co., Ltd. services Particular about subsidiaries obtained or disposed in report period □ Applicable √ Not applicable Notes of holding and shareholding companies 1. The Company holds 65% equity of the Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., the balance of minority equity at period-end amounting to 12,943,996.76 Yuan. 2. The Company holds 70% equity of the Shenzhen Emmelle Industry Co., Ltd., the balance of minority equity at period-end amounting to 1,463,235.67 Yuan. 3.The Company holds 49% equity of Shenzhen Emmelle Cloud Technology Co., Ltd indirectly, the balance of minority equity at 20 period-end amounting to 542,172.35 yuan. IX. Structured vehicle controlled by the Company □ Applicable √ Not applicable X. Risks and countermeasures (1)The tough international economic situation: The domestic economy is at the structural adjustment stage in the course of development, structural problems and deep-seated conflicts are highlighted. The economic downturn pressure continues to increase, many unstable and uncertain factors exist, which affect and impact the traditional manufacturing industries and the social consumption structure demand. Since the domestic economy is at the structural adjustment stage, coupled with a difficult situation of continuously rising labor cost, manufacturing cost, financing cost and material cost the bicycle industry as a conventional manufacturing field recorded a decline in the market turnover. Due to the low entry threshold and numerous manufacturers, the competition in the market is extremely fierce. (2) Affected by the impact of COVID-19, the social economy entered a special dilemma with more uncertainty troubling factors. The Company’s operation and upstream & downstream supply and sales segment are affected by the impact from time to time. In the fave of the above problems, the central government and governments at all levels have taken multiple measures to stabilize the people’s livelihood, stabilize the enterprises and employment, the Company will strive to maintain stability and seek development through increase the income and reduce the expenditures. combined with the actual situation on its own poor background after reorganization, on the one hand, we continued to adhere to traditional business model development, in combination with the new national standard of safety technical specifications for electric bicycle, the Company carry out R&D works on the products. Optimize and adjust the product structure and sales mode transformation, actively expand the e-commerce business model in accordance with the e-commerce transformation of business team and controllable cost of internal & external connections, so as to realize the stable development of e-commerce for retail business; At the same time, based on the long-term process of the electric bicycle business, the follow-up research of related industrial projects and technology applications in the upstream and downstream of the industrial chain have been carried out accordingly, and on the basis of extensive business contacts and businesses in previous years, it continued to expand the lithium battery material business to enrich the main business. On the one hand, continued to promote the development of the jewelry gold supply chain business and expand the business dimension. In August 2019, the company and Shenzhen Zuankinson Jewelry Co., Ltd. jointly invested 6.5 million yuan to establish Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., the company holding 65% of the shares as the controlling shareholder of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., while Zuankinson Jewelry holding 35% of the shares. According to the actual situation of business development, in February 2020, the two parties decided to increase the capital of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. to 20 million yuan in the same proportion, and the relevant 21 registered capital has been in place in June 2020. In order to meet the future operation and development needs of Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., and enhance its financial strength, comprehensive competitiveness and anti-risk ability, the company signed a capital increase contract with the joint venture Shenzhen Zuankinson Jewelry and Gold Supply Chain Co., Ltd. in August 2020, and once again increased capital to Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. in the same proportion, and the registered capital was increased from 20 million yuan to 200 million yuan, of which the company increased capital of 117 million yuan, which would be successively invested in accordance with its own funds and the availability of funds raised from the non-public issuance of A shares; Zuankinson Jewelry newly increased capital of 63 million yuan, totaling 180 million yuan. On August 21, 2020, the company's 2020 second extraordinary general meeting of shareholders reviewed and approved the above capital increase. On the one hand, we strived to promote the selection of the company's restructuring party and plan for the non-public issuance of stocks, hoping to improve the company's business strength and development potential. In planning the non-public offering of shares, on 30 December 2020, the Company held the 3 rd extraordinary shareholders general meeting of 2020 to deliberated and approved the new plan of non-public issuance of shares. The Company plans to raising 293.6 million yuan in total at most to Wansheng Industrial Company, by means of non-public offering of shares, the funds will be used to replenish the working capital after deducting offering expenses, and the offering of shares will result in a changes in controlling rights of the Company. On March 12, 2021, the company received the Acceptance of Administrative License Application of China Securities Regulatory Commission (Acceptance No. 210576) issued by China Securities Regulatory Commission (hereinafter referred to as CSRC). CSRC reviewed the administrative license application materials submitted by the company for the Approval of Non-public Offering of Listed Companies (A-Share Motherboard, SMEs Board, and B-Share), and considered that all the application materials were complete and in line with the legal form, and decided to accept the application for administrative license. From March to May 2021, the company has respectively received the Notice of Feedback on the Review of Administrative License Project (No. 210576) and the Letter on Making Preparation for the Meeting of the Issuance Examination Commission for the Non-Public Offering of Shares of Shenzhen China Bicycle Company (Holdings) Limited issued by the CSRC. By the end of this report period, the company and the intermediary agencies have completed the reply work on time and submitted it to CSRC in time, and the follow-up work is in progress. 22 Section IV Corporate Governance I. In the report period, the Company held annual shareholders’ general meeting and extraordinary shareholders’ general meeting 1. Annual Shareholders’ General Meeting in the report period Ratio of investor Session of meeting Type Date Date of disclosure Resolutions participation Notice of Resolution Annual General Annual General of Annual General 12.41% 28 June 2021 28 June 2021 Meeting 2020 Meeting Meeting 2020 (No.: 2021026) 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore □ Applicable √ Not applicable II. Changes of directors, supervisors and senior executives □ Applicable √ Not applicable There were no changes in the directors, supervisors and senior executive of the Company during the Period, found more in the Annual Report 2020 III. Profit distribution plan and capitalizing of common reserves plan for the Period □ Applicable √ Not applicable The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for the year. IV. Implementation of the company’s stock incentive plan, employee stock ownership plan or other employee incentives □ Applicable √ Not applicable The Company had no implementation of the company’s stock incentive plan, employee stock ownership plan or other employee incentives in the reporting period. 23 Section V Environmental and Social Responsibility I. Major environmental protection The listed Company and its subsidiary whether belong to the key sewage units released from environmental protection department □Yes √No Administrative penalties imposed for environmental issues during the reporting period Impact on the production & Company/Subsidiary Reasons for penalty Violation situation Penalty results Corrective measures operation of the listed company Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Other environmental information disclosed with reference to the key emission units Not applicable Reasons for not disclosing other environmental information Not applicable II. Social responsibility During the reporting period, the company conscientiously fulfilled its corporate social responsibility, paid attention to protecting the interests of shareholders, especially minority shareholders, and paid attention to reasonable returns to investors; Treated suppliers, customers and consumers with integrity; Earnestly fulfilled the responsibilities and obligations to the society, shareholders, employees and other stakeholders, created a harmonious environment for enterprise development, and realized the common development of the enterprise and stakeholders. 1. Protection of shareholders' rights and interests The company strictly complies with the provisions of relevant laws and regulations such as the Company Law, the Securities Law and the Governance Code for Listed Companies, continuously improves the corporate governance structure, adheres to handing over the important matters to the resolutions of the shareholders' meeting, provides convenience for medium and small investors to participate in the shareholders' meeting, fully listens to the small and medium-sized investors’ reasonable advice on the company's development and governance, and safeguards the legitimate rights and interests of shareholders. In the first half of 2021, the board of directors of the company convened one shareholders' meeting, the meeting adopted the combination of on-site voting and online voting, the votes of small and medium investors were 24 counted separately, provided convenience for the majority of investors to participate in the voting at the shareholders' meeting, and ensured the participation right and supervision right of the small and medium-sized investors. In the first half of 2021, the company strengthened communication with investors, especially investors from the public, answered questions about which the public and investors concerned, and ensured the investors' right to know in line with the Information Disclosure Affairs Management System and Reception and Promotion Work System and by means of various forms such as the interactive platform of Shenzhen Stock Exchange, hotline of the company’s securities affairs department, and so on. On May 19, 2021, the company held the 2020 annual performance briefing, in which the company made online communication with investors on the company's performance, operating conditions, development prospects and other issues of interest to investors. A total of 19 questions were raised by investors during the briefing, which were answered by directors and senior management personnel. The company is committed to protecting the rights and interests of investors by improving the corporate governance structure, improving the level of information disclosure and investor relationship management, continuously rewarding shareholders and carrying out investor education, and guiding investors to form value investment concept through real and effective communication. In order to effectively ensure smooth service channels for investors, the company has arranged full-time personnel to answer investors' hotline calls and answer questions on the interactive platform, and relevant staff have patiently analyzed the announcement information for investors to help investors understand the company's situation in time. 2. Protection of workers' rights and interests The company adheres to the people-oriented, comprehensively implements the Labor Law and Labor Contract Law, attaches great importance to guarantee of the employees' rights and interests, at the same time, establishes good communication channels throughout the whole process of staff management and care, pays attention to staff growth, improves the staff overall quality, cultivates excellent internal training culture system, creates a good learning environment. Meanwhile, the company pays attention to enriching the spiritual life of employees, regularly carries out staff activities, and improves team cohesion. In accordance with the Labor Contract Law of the People's Republic of China and other relevant national and local labor laws and regulations, the company signs labor contracts with employees to protect their rights and interests. The company and its subsidiaries strictly implement the national employment system, labor protection system, social security system and medical security system, and pay the housing provident fund, medical insurance, endowment insurance, unemployment insurance, work-related injury insurance and maternity insurance for employees according to the state regulations. The company adheres to corporate culture of efficient coordination, people-oriented, on-demand training, training by level, and echelon training. The company establishes internal knowledge sharing system, promotes information and knowledge exchange among various modules of the company, and improves team coordination ability. It 25 encourages employees to participate in continuing education and enhances the knowledge structure optimization and professional quality promotion of workers at various positions. 3. Protection of rights and interests of suppliers, customers and consumers The company actively organizes and carries out customer management, takes measures to ensure the rights and interests of customers and actively promotes customer satisfaction and service excellence. It makes full use of the rich social resources in the market, and establishes a good partnership with suppliers. The company promises not to abuse or misuse consumer information for the protection of rights and interests of consumers. 26 Section VI Important Events I. Commitments that the actual controller, shareholders, related party, buyer and the Company have fulfilled during the reporting period and the overdue commitments as of the end of the reporting period □ Applicable √Not applicable There is no commitments that the actual controller, shareholders, related party, buyer and the Company have fulfilled during the reporting period and the overdue commitments as of the end of the reporting period II. Non-operational fund occupation from controlling shareholders and its related party □ Applicable √ Not applicable No non-operational fund occupation from controlling shareholders and its related party in period. III. External guarantee against the regulation □ Applicable √Not applicable No external guarantee against the regulation occurred in the period IV. Appointment and non-reappointment (dismissal) of CPA Whether the financial report has been audited or not □Yes √No The financial report has not been audited V. Explanation from Board of Directors and Supervisory Committee for “Qualified Opinion” that issued by CPA □ Applicable √ Not applicable VI. Explanation from the BOD for “Qualified Opinion” of last year √Applicable □ Not applicable On 11 May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment and Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12 th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guosheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. In late October 2012, Shenzhen Intermediate People's Court ruled that the Company would be restructured from October 25, 2012, and designated Beijing King & Wood (Shenzhen) Law Firm and Shenzhen Zhengyuan Liquidation Affairs Co., Ltd as the 27 administrators of the Company by virtue of Civil Ruling (2012) SZFPZ No. 30-1. At the same time, Shenzhen Intermediate People's Court issued the written decision (2012) SZFPZ No. 30-1 to approve the Company's self-management of property and business affairs under the supervision of the administrator. On November 5, 2013, Shenzhen Intermediate People's Court approved the company's reorganization plan by Civil Ruling (2012) SZFPZ No. 30-6. On December 27, 2013, Shenzhen Intermediate People's Court ruled the completion of reorganization plan of Shenzhen China Bicycle by Civil Ruling (2012) SZFPZ No. 30-10, and terminated the bankruptcy proceedings of Shenzhen China Bicycle. Through reorganization, the heavy debt problem of the company was solved, the net assets realized positive, and the main business of bicycle was retained and realized stable development. In the reorganization plan, the company has set the conditions for the introduction of the restructuring party, hoping to recover the sustainable operation ability and sustained profitability through the asset reorganization. The conditions for the company to introduce the restructuring party are that the assessed net assets value is not less than 2 billion yuan, and the net profit of the year when the material assets reorganization is implemented is not less than 2 00 million yuan. At present, the company does not yet have a restructuring party. The company will continue to work hard to develop its business through the restructuring process. VII. Bankruptcy reorganization □ Applicable √ Not applicable No bankruptcy reorganization for the Company in reporting period. VIII. Lawsuits Significant lawsuits and arbitration □ Applicable √ Not applicable No significant lawsuits and arbitration occurred in the reporting period Other lawsuits √ Applicable □Not applicable Amount Resulted an Lawsuits involved (in Trial result and Execution of Disclosure Disclosure accrual liability Progress (arbitration) 10 thousand influence judgment date index (Y/N) Yuan) Other litigation and arbitration that According to the did not meet the ruling, the disclosure standard company paid the Not Not of major litigation 8.07 N Adjudged Executed corresponding applicable applicable during the amount to the reporting period plaintiff (the company's subsidiary 28 Shenzhen Amini Industrial Co., Ltd. was the defendant) IX. Penalty and rectification □ Applicable √ Not applicable No penalty and rectification for the Company in reporting period. X. Integrity of the company and its controlling shareholders and actual controllers □ Applicable √ Not applicable XI. Major related transaction 1. Related transaction with routine operation concerned □ Applicable √ Not applicable The Company had no related transaction with routine operation concerned occurred in the period 2. Related transactions by assets acquisition and sold □ Applicable √ Not applicable No related transactions by assets acquisition and sold for the Company in reporting period. 3. Main related transactions of mutual investment outside □ Applicable √ Not applicable No main related transactions of mutual investment outside for the Company in reporting period. 4. Contact of related credit and debt √ Applicable □ Not applicable Whether exist non-operating contact of related credit and debt or not √Yes □No Claim receivable from related party: Whether has Balance at Current Balance at Current Current non-busines period-begin newly period-end( Related Causes of recovery(10 interest(10 Relationship s capital (10 added(10 Interest rate 10 party formation thousand thousand occupying thousand thousand thousand Yuan) Yuan) or not Yuan) Yuan) Yuan) Impact from related credit N/A on the results of the 29 operation and financial status of the Company Debts payable to related party: Current Balance at Current Current Balance at newly Causes of period-begin( recovery interest(10 period-end(1 Related party Relationship added(10 Interest rate formation 10 thousand (10 thousand thousand 0 thousand thousand Yuan) Yuan) Yuan) Yuan) Yuan) Shenzhen Guosheng The first Subsidiary Energy majority Emmelle 650 0 0 0.00% 0 650 Investment shareholder loan Development Co., Ltd. Influence on operation result and financial statue of the N/A Company from related debts 5. Transactions with related finance companies and finance companies controlled by the Company □ Applicable √ Not applicable No deposits, loans, credit or other financial operations occurred between the Company and related finance companies, the finance companies controlled by the Company and related parties in the period. 6. Other related transactions □ Applicable √ Not applicable The company had no other significant related transactions in reporting period. XII. Significant contract and implementations 1. Trusteeship, contract and leasing (1) Trusteeship □ Applicable √ Not applicable No trusteeship for the Company in reporting period. (2) Contract □ Applicable √ Not applicable No contract for the Company in reporting period. 30 (3) Leasing □ Applicable √ Not applicable No leasing for the Company in reporting period. 2. Major guarantees □ Applicable √ Not applicable No guarantee for the Company in reporting period. 3.Trust financing □ Applicable √ Not applicable No trust financing for the Company in reporting period. 4. Significant contracts for daily operations □ Applicable √ Not applicable 5. Other significant contracts □ Applicable √ Not applicable No other significant contract in reporting period. XIII. Explanation of other important events √ Applicable □ Not applicable 1. Planning the non-public offering of the shares On December 30, 2020, the company held the third extraordinary shareholders' meeting of 2020, which deliberated and approved the new plan of non-public offering of A-shares, the total amount of funds to be raised from Wansheng Industrial Company through non-public offering of shares will not exceed 293,600,000 yuan, which will be used to supplement working capital after deducting the issuance expenses. The offering will result in a change in control of the company. On March 12, 2021, the company received the Acceptance of Administrative License Application of CSRC (Acceptance No. 210576) issued by China Securities Regulatory Commission (hereinafter referred to as CSRC). CSRC reviewed the administrative license application materials submitted by the company for the Approval of Non-public Offering of Listed Companies (A-Share Motherboard, SMEs Board, and B-Share), and considered that all the application materials were complete and in line with the legal form, and decided to accept the application for administrative license. From March to May 2021, the company has respectively received the Notice of Feedback on the Review of Administrative License Project (No. 210576) and the Letter on Making Preparation for the Meeting of the Issuance Examination Commission for the Non-Public Offering of Shares of Shenzhen China Bicycle Company (Holdings) Limited issued by the CSRC. By the end of this report period, the company and the intermediary agencies have completed the reply work on time 31 and submitted it to CSRC in time, and the follow-up work is in progress. The company's non-public offering of shares is still subject to the approval of the CSRC, whether the approval could be obtained and the final approval time is uncertain. The company will timely perform the information disclosure obligation in strict accordance with the provisions and requirements of relevant laws and regulations and according to the review progress of the application by the CSRC. Please invest rationally and pay attention to investment risk. 2. Matters concerning the company's application for and recognition as a national high-tech enterprise Based on all work from 2017 to 2019, the company completed the preparation for applying for the national high-tech enterprise and formally submitted the application materials in 2020. In January 2021, the company received the High-tech Enterprise Certificate jointly issued by Shenzhen Science and Technology Innovation Commission, Shenzhen Finance Bureau and Shenzhen Taxation Bureau of the State Administration of Taxation (Certificate No.: GR202044200651, date of issue: December 11, 2020, valid for three years). According to the Enterprise Income Tax Law of the People's Republic of China and the relevant provisions of the state on preferential tax policies for high and new technology enterprises, the company enjoys relevant preferential tax policies for high and new technology enterprises for three consecutive years (2020-2022) after being recognized as a high and new technology enterprise, namely, the enterprise income tax shall be paid at the tax rate of 15% (the tax rate shall be reduced from 25% to 15%). XIV. Significant event of subsidiary of the Company □Applicable √Not applicable 32 Section VII. Changes in Shares and Particulars about Shareholders I. Changes in Share Capital 1. Changes in Share Capital In Share Before the Change Increase/Decrease in the Change (+, -) After the Change Public New reserve Bonus Proportio Amount Proportion shares transfer Others Subtotal Amount shares n issued into share capital I. Restricted shares 3,957 0.00% 3,957 0.00% 1. State-owned shares 0 0.00% 0 0.00% 2. State-owned legal 0 0.00% 0 0.00% person’s shares 3. Other domestic shares 3,957 0.00% 3,957 0.00% Including: Domestic 0 0.00% 0 0.00% legal person’s shares Domestic natural 3,957 0.00% 3,957 0.00% person’s shares 4. Foreign shares 0 0.00% 0 0.00% Including: Foreign legal 0 0.00% 0 0.00% person’s shares Foreign natural 0 0.00% 0 0.00% person’s shares 551,343,9 551,343,9 II. Unrestricted shares 100.00% 100.00% 90 90 302,981,0 302,981,0 1. RMB ordinary shares 54.95% 54.95% 08 08 2. Domestically listed 248,362,9 248,362,9 45.05% 45.05% foreign shares 82 82 3. Overseas listed foreign 0 0.00% 0 0.00% shares 4. Others 0 0.00% 0 0.00% III. Total shares 551,347,9 100.00% 551,347,9 100.00% 33 47 47 Reasons for share changed □ Applicable √ Not applicable Approval of share changed □ Applicable √ Not applicable Ownership transfer of share changed □ Applicable √ Not applicable Progress of shares buy-back □ Applicable √ Not applicable Implementation progress of reducing holdings of shares buy-back 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 or need to disclosed under requirement from security regulators □ Applicable √ Not applicable 2. Changes of lock-up stocks □ Applicable √ Not applicable II. Securities issuance and listing □ Applicable √ Not applicable III. Amount of shareholders of the Company and particulars about shares holding In Share Total preference shareholders Total common stock with voting rights recovered at shareholders in reporting 40,691 0 end of reporting period (if period-end applicable) (see note 8) Particulars about common shares held above 5% by shareholders or top ten common shareholders Amount Information of shares pledged, of Amount tagged or frozen Amount of common of Proportion Changes in common Full name of Nature of shares restricted of shares report shares held Shareholders shareholder held at the common held period without State of share Amount end of shares restriction reporting held period 34 Shenzhen Guosheng Domestic Energy 63,508,74 non-state-owned 11.52% 0 0 63,508,747 - - Investment 7 legal person Development Co., Ltd. UOB Koy Hian Foreign legal 15,907,85 (Hong Kong) 2.89% 0 0 15,907,850 - - person 0 Co., Ltd. Guosen Securities Foreign legal 13,909,42 (Hong Kong) 2.52% 0 0 13,909,425 - - person 5 brokerage Co., Ltd. Shenwan Hongyuan Foreign legal Securities 1.50% 8,283,272 -20000 0 8,283,272 - - person (Hong Kong) Co., Ltd. Lhasa Xingqing Domestic Network non-state-owned 0.83% 4,600,255 -1490000 0 4,600,255 - - Technology legal person Co., Ltd. Domestic nature Wu Xiaoping 0.74% 4,075,500 1515700 0 4,075,500 - - person Domestic nature Li Huili 0.71% 3,891,124 0 0 3,891,124 - - person Domestic nature Ge Zhiqiong 0.61% 3,389,252 211300 0 3,389,252 - - person LI SHERYN Foreign natural 0.60% 3,310,400 -169787 0 3,310,400 - - ZHAN MING person Domestic nature Xu Hongbo 0.58% 3,187,519 0 0 3,187,519 - - person Strategy investor or general legal person becoming the top 10 common shareholders by placing N/A new shares (if applicable) (see note 3) Explanation on associated Li Huili, spouse of the Ji Hanfei, the actual controller of he Company- Shenzhen Guosheng relationship among the aforesaid Energy Investment Development Co., Ltd., holding B-share of the Company on behalf of shareholders Shenzhen Guosheng Energy Investment Development Co., Ltd., beyond that, the Company 35 has no idea of whether other circulated shareholders belong to concerted action persons ruled in the Administration Norms for Information Disclosure of Change on Shareholding of Shareholders of Listed Companies. Description of the above shareholders in relation to N/A delegate/entrusted voting rights and abstention from voting rights. Special note on the repurchase account among the top 10 N/A shareholders (if applicable) (see note 11) Particular about top ten shareholders with un-lock up common stocks held Amount of common shares held without restriction at Type of shares Shareholders’ name Period-end Type Amount Shenzhen Guosheng Energy RMB common 63,508,747 63,508,747 Investment Development Co., Ltd. shares Domestically UOB Koy Hian (Hong Kong) Co., 15,907,850 listed foreign 15,907,850 Ltd. shares Domestically Guosen Securities (Hong Kong) 13,909,425 listed foreign 13,909,425 brokerage Co., Ltd. shares Domestically Shenwan Hongyuan Securities 8,283,272 listed foreign 8,283,272 (Hong Kong) Co., Ltd. shares Lhasa Xingqing Network RMB common 4,600,255 4,600,255 Technology Co., Ltd. shares RMB common Wu Xiaoping 4,075,500 4,075,500 shares Domestically Li Huili 3,891,124 listed foreign 3,891,124 shares RMB common 684,800 shares Ge Zhiqiong 3,389,252 Domestically listed foreign 2,704,452 shares Domestically LI SHERYN ZHAN MING 3,310,400 listed foreign 3,310,400 shares 36 Domestically Xu Hongbo 3,187,519 listed foreign 3,187,519 shares Expiation on associated relationship Li Huili, spouse of the Ji Hanfei, the actual controller of he Company- Shenzhen Guosheng or consistent actors within the top Energy Investment Development Co., Ltd., holding B-share of the Company on behalf of 10 un-lock up common shareholders Shenzhen Guosheng Energy Investment Development Co., Ltd., beyond that, the Company and between top 10 un-lock up has no idea of whether other circulated shareholders belong to concerted action persons ruled common shareholders and top 10 in the Administration Norms for Information Disclosure of Change on Shareholding of common shareholders Shareholders of Listed Companies. Explanation on top 10 common shareholders involving margin N/A business (if applicable) (see note 4) Whether top ten common stock shareholders or top ten common stock shareholders with un-lock up shares held have a buy-back agreement dealing in reporting period □ Yes √ No The top ten common stock shareholders or top ten common stock shareholders with un-lock up shares held of the Company have no buy-back agreement dealing in reporting period. IV. Changes of shares held by directors, supervisors and senior executives □ Applicable √ Not applicable Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report 2020. V. Changes in controlling shareholders or actual controllers Change of controlling shareholder during the reporting period □ Applicable √ Not applicable The Company had no change of controlling shareholder during the reporting period Change of actual controller during the reporting period □ Applicable √ Not applicable The Company had no change of actual controller during the reporting period 37 Section VIII. Preferred Stock □ Applicable √ Not applicable The Company had no preferred stock in the Period. 38 Section IX. Corporate Bonds □ Applicable √ Not applicable 39 Section X. Financial Report I. Audit report Whether the semi annual report is audited □ Yes √ No The company's semi annual financial report has not been audited II. Financial Statement Statement in Financial Notes are carried in RMB/CNY 1. Consolidated Balance Sheet Prepared by Shenzhen China Bicycle Company (Holdings) Limited June 30, 2021 In RMB/CNY Item June 30, 2021 December 31, 2020 Current assets: Monetary funds 17,434,893.24 19,887,978.05 Settlement provisions Capital lent Trading financial assets Derivative financial assets Note receivable Account receivable 55,552,419.15 55,031,424.70 Receivable financing Accounts paid in advance 4,382,245.09 816,541.52 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Other account receivable 654,021.99 576,770.36 Including: Interest receivable Dividend receivable Buying back the sale of financial 40 assets Inventories 7,601,075.77 7,729,325.94 Contractual assets Assets held for sale Non-current asset due within one year Other current assets 3,340,005.35 2,715,425.31 Total current assets 88,964,660.59 86,757,465.88 Non-current assets: Loans and payments on behalf Debt investment Other debt investment Long-term account receivable Long-term equity investment Investment in other equity instrument Other non-current financial assets Investment real estate Fixed assets 3,612,186.01 3,792,133.36 Construction in progress Productive biological asset Oil and gas asset Right-of-use assets Intangible assets Expense on Research and Development Goodwill Long-term expenses to be apportioned Deferred income tax asset 793,170.75 793,170.75 Other non-current asset 1,135,849.05 400,000.00 Total non-current asset 5,541,205.81 4,985,304.11 Total assets 94,505,866.40 91,742,769.99 Current liabilities: Short-term loans 41 Loan from central bank Capital borrowed Trading financial liability Derivative financial liability Note payable Account payable 9,986,504.06 9,606,144.94 Accounts received in advance Contractual liability 16,699,148.73 15,254,713.38 Selling financial asset of repurchase Absorbing deposit and interbank deposit Security trading of agency Security sales of agency Wage payable 813,937.14 1,459,244.07 Taxes payable 752,945.33 722,321.02 Other account payable 37,658,215.37 37,882,805.52 Including: Interest payable Dividend payable Commission charge and commission payable Reinsurance payable Liability held for sale Non-current liabilities due within one year Other current liabilities 1,374,986.67 1,175,251.38 Total current liabilities 67,285,737.30 66,100,480.31 Non-current liabilities: Insurance contract reserve Long-term loans Bonds payable Including: Preferred stock Perpetual capital securities Lease liability 42 Long-term account payable Long-term wages payable Accrual liability Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 67,285,737.30 66,100,480.31 Owner’s equity: Share capital 551,347,947.00 551,347,947.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital public reserve 627,834,297.85 627,834,297.85 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus public reserve 32,673,227.01 32,673,227.01 Provision of general risk Retained profit -1,199,584,747.54 -1,200,950,240.88 Total owner’ s equity attributable to 12,270,724.32 10,905,230.98 parent company Minority interests 14,949,404.78 14,737,058.70 Total owner’ s equity 27,220,129.10 25,642,289.68 Total liabilities and owner’ s equity 94,505,866.40 91,742,769.99 Legal Representative: Li Hai Person in charge of Accounting Works: Sun Longlong Person in charge of Accounting Institution: Zhong Xiaojin 2. Balance Sheet of Parent Company In RMB/CNY Item June 30, 2021 December 31, 2020 43 Current assets: Monetary funds 9,500,564.76 10,097,024.59 Trading financial assets Derivative financial assets Note receivable Account receivable 24,528,945.87 24,274,935.96 Receivable financing Accounts paid in advance 985,143.87 800,000.00 Other account receivable 129,953.19 115,263.05 Including: Interest receivable Dividend receivable Inventories 509,377.73 550,421.78 Contractual assets Assets held for sale Non-current assets maturing within one year Other current assets 2,978,772.76 2,652,771.13 Total current assets 38,632,758.18 38,490,416.51 Non-current assets: Debt investment Other debt investment Long-term receivables Long-term equity investments 19,960,379.73 19,960,379.73 Investment in other equity instrument Other non-current financial assets Investment real estate Fixed assets 3,400,670.61 3,530,501.40 Construction in progress Productive biological assets Oil and natural gas assets Right-of-use assets Intangible assets Research and development costs Goodwill 44 Long-term deferred expenses Deferred income tax assets Other non-current assets 1,135,849.05 400,000.00 Total non-current assets 24,496,899.39 23,890,881.13 Total assets 63,129,657.57 62,381,297.64 Current liabilities: Short-term borrowings Trading financial liability Derivative financial liability Notes payable Account payable 576,266.32 748,604.24 Accounts received in advance Contractual liability 15,134,353.38 14,685,423.04 Wage payable 609,508.72 1,146,371.58 Taxes payable 12,953.86 24,906.50 Other accounts payable 39,379,876.05 39,409,824.37 Including: Interest payable Dividend payable Liability held for sale Non-current liabilities due within one year Other current liabilities 1,175,960.12 1,101,243.63 Total current liabilities 56,888,918.45 57,116,373.36 Non-current liabilities: Long-term loans Bonds payable Including: Preferred stock Perpetual capital securities Lease liability Long-term account payable Long term employee compensation payable Accrued liabilities Deferred income 45 Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 56,888,918.45 57,116,373.36 Owners’ equity: Share capital 551,347,947.00 551,347,947.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital public reserve 627,834,297.85 627,834,297.85 Less: Inventory shares Other comprehensive income Special reserve Surplus reserve 32,673,227.01 32,673,227.01 Retained profit -1,205,614,732.74 -1,206,590,547.58 Total owner’s equity 6,240,739.12 5,264,924.28 Total liabilities and owner’s equity 63,129,657.57 62,381,297.64 3. Consolidated Profit Statement In RMB/CNY Item Semi-annual of 2021 Semi-annual of 2020 I. Total operating income 54,130,317.60 42,656,355.21 Including: Operating income 54,130,317.60 42,656,355.21 Interest income Insurance gained Commission charge and commission income II. Total operating cost 54,197,658.54 40,013,244.72 Including: Operating cost 48,590,120.12 36,100,765.65 Interest expense Commission charge and commission expense Cash surrender value Net amount of expense of 46 compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Tax and extras 41,264.77 19,899.04 Sales expense 876,189.13 1,478,378.78 Administrative expense 2,619,117.48 1,679,719.44 R&D expense 2,120,389.55 753,742.20 Financial expense -49,422.51 -19,260.39 Including: Interest expenses Interest income -74,408.45 -31,929.72 Add: Other income 2,516.00 10,105.77 Investment income (Loss is listed with “-”) Including: Investment income on affiliated company and joint venture The termination of income recognition for financial assets measured by amortized cost Exchange income (Loss is listed with “-”) Net exposure hedging income (Loss is listed with “-”) Income from change of fair value (Loss is listed with “-”) Loss of credit impairment 1,318,717.42 170,387.85 (Loss is listed with “-”) Losses of devaluation of asset 27,669.02 (Loss is listed with “-”) 47 Income from assets disposal 24,936.44 (Loss is listed with “-”) III. Operating profit (Loss is listed with 1,281,561.50 2,848,540.55 “-”) Add: Non-operating income 457,664.40 744,788.91 Less: Non-operating expense 2,676.80 IV. Total profit (Loss is listed with “-”) 1,739,225.90 3,590,652.66 Less: Income tax expense 161,386.48 170,038.76 V. Net profit (Net loss is listed with “-”) 1,577,839.42 3,420,613.90 (i) Classify by business continuity 1.continuous operating net profit 1,577,839.42 3,420,613.90 (net loss listed with ‘-”) 2.termination of net profit (net loss listed with ‘-”) (ii) Classify by ownership 1.Net profit attributable to owner’s 1,365,493.34 2,797,643.50 of parent company 2.Minority shareholders’ gains and 212,346.08 622,970.40 losses VI. Net after-tax of other comprehensive income Net after-tax of other comprehensive income attributable to owners of parent company (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1.Changes of the defined benefit plans that re-measured 2.Other comprehensive income under equity method that cannot be transfer to gain/loss 3.Change of fair value of investment in other equity instrument 48 4.Fair value change of enterprise's credit risk 5. Other (ii) Other comprehensive income items which will be reclassified subsequently to profit or loss 1.Other comprehensive income under equity method that can transfer to gain/loss 2.Change of fair value of other debt investment 3.Amount of financial assets re-classify to other comprehensive income 4.Credit impairment provision for other debt investment 5.Cash flow hedging reserve 6.Translation differences arising on translation of foreign currency financial statements 7.Other Net after-tax of other comprehensive income attributable to minority shareholders VII. Total comprehensive income 1,577,839.42 3,420,613.90 Total comprehensive income 1,365,493.34 2,797,643.50 attributable to owners of parent Company Total comprehensive income 212,346.08 622,970.40 attributable to minority shareholders VIII. Earnings per share: (i) Basic earnings per share 0.0025 0.0051 (ii) Diluted earnings per share 0.0025 0.0051 Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and realized 0 Yuan at last period for combined party Legal Representative: Li Hai Person in charge of Accounting Works: Sun Longlong 49 Person in charge of Accounting Institution: Zhong Xiaojin 4. Profit Statement of Parent Company In RMB/CNY Item Semi-annual of 2021 Semi-annual of 2020 I. Operating income 12,378,683.92 15,950,824.42 Less: Operating cost 10,513,040.90 12,634,196.40 Taxes and surcharge 6,780.60 7,511.96 Sales expenses 342,616.35 256,975.98 Administration expenses 1,308,649.65 1,136,110.22 R&D expenses 985,885.21 753,742.20 Financial expenses -56,817.01 -11,110.06 Including: Interest expenses Interest -65,092.61 -16,963.68 income Add: Other income 2,501.91 8,595.12 Investment income (Loss is listed with “-”) Including: Investment income on affiliated Company and joint venture The termination of income recognition for financial assets measured by amortized cost (Loss is listed with “-”) Net exposure hedging income (Loss is listed with “-”) Changing income of fair value (Loss is listed with “-”) Loss of credit impairment 1,209,451.29 204,620.45 (Loss is listed with “-”) Losses of devaluation of asset 27,669.02 50 (Loss is listed with “-”) Income on disposal of assets 24,936.44 (Loss is listed with “-”) II. Operating profit (Loss is listed with 518,150.44 1,411,549.73 “-”) Add: Non-operating income 457,664.40 177,227.94 Less: Non-operating expense III. Total Profit (Loss is listed with “-”) 975,814.84 1,588,777.67 Less: Income tax IV. Net profit (Net loss is listed with 975,814.84 1,588,777.67 “-”) (i) continuous operating net profit 975,814.84 1,588,777.67 (net loss listed with ‘-”) (ii) termination of net profit (net loss listed with ‘-”) V. Net after-tax of other comprehensive income (i) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1.Changes of the defined benefit plans that re-measured 2.Other comprehensive income under equity method that cannot be transfer to gain/loss 3.Change of fair value of investment in other equity instrument 4.Fair value change of enterprise's credit risk 5. Other (ii) Other comprehensive income items which will be reclassified subsequently to profit or loss 1.Other comprehensive income under equity method that can transfer to gain/loss 51 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 975,814.84 1,588,777.67 VII. Earnings per share: (i) Basic earnings per share (ii) Diluted earnings per share 5. Consolidated Cash Flow Statement In RMB/CNY Item Semi-annual of 2021 Semi-annual of 2020 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 56,072,881.75 25,999,057.43 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 52 Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Net cash received by agents in sale and purchase of securities Write-back of tax received 2,666.96 10,712.11 Other cash received concerning 8,732,027.81 15,006,655.40 operating activities Subtotal of cash inflow arising from 64,807,576.52 41,016,424.94 operating activities Cash paid for purchasing commodities and receiving labor 51,386,530.21 25,572,959.40 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 4,600,762.58 2,860,928.35 Taxes paid 606,781.27 263,658.94 Other cash paid concerning 10,660,629.28 10,968,482.31 operating activities Subtotal of cash outflow arising from 67,254,703.34 39,666,029.00 operating activities Net cash flows arising from operating -2,447,126.82 1,350,395.94 activities II. Cash flows arising from investing activities: Cash received from recovering investment 53 Cash received from investment income Net cash received from disposal of fixed, intangible and other long-term 64,500.00 assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing 64,500.00 activities Cash paid for purchasing fixed, 5,957.99 intangible and other long-term assets Cash paid for investment Net increase of mortgaged loans Net cash received from subsidiaries and other units obtained Other cash paid concerning investing activities Subtotal of cash outflow from investing 5,957.99 activities Net cash flows arising from investing -5,957.99 64,500.00 activities III. Cash flows arising from financing activities: Cash received from absorbing 4,725,000.00 investment Including: Cash received from absorbing minority shareholders’ investment by subsidiaries Cash received from loans Other cash received concerning financing activities Subtotal of cash inflow from financing 4,725,000.00 activities Cash paid for settling debts Cash paid for dividend and profit 54 distributing or interest paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning financing activities Subtotal of cash outflow from financing activities Net cash flows arising from financing 4,725,000.00 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash -2,453,084.81 6,139,895.94 equivalents Add: Balance of cash and cash 19,887,978.05 6,074,367.91 equivalents at the period -begin VI. Balance of cash and cash 17,434,893.24 12,214,263.85 equivalents at the period -end 6. Cash Flow Statement of Parent Company In RMB/CNY Item Semi-annual of 2021 Semi-annual of 2020 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 8,529,883.80 7,581,014.00 services Write-back of tax received 2,652.02 9,110.82 Other cash received concerning 8,894,920.39 19,278,497.89 operating activities Subtotal of cash inflow arising from 17,427,456.21 26,868,622.71 operating activities Cash paid for purchasing commodities and receiving labor 5,583,811.46 2,063,572.76 service Cash paid to/for staff and workers 3,163,849.78 2,253,629.12 Taxes paid 109,766.66 229,400.44 55 Other cash paid concerning 9,160,530.15 8,732,615.26 operating activities Subtotal of cash outflow arising from 18,017,958.05 13,279,217.58 operating activities Net cash flows arising from operating -590,501.84 13,589,405.13 activities II. Cash flows arising from investing activities: Cash received from recovering investment Cash received from investment income Net cash received from disposal of fixed, intangible and other long-term 64,500.00 assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing 64,500.00 activities Cash paid for purchasing fixed, 5,957.99 intangible and other long-term assets Cash paid for investment 8,775,000.00 Net cash received from subsidiaries and other units obtained Other cash paid concerning investing activities Subtotal of cash outflow from investing 5,957.99 8,775,000.00 activities Net cash flows arising from investing -5,957.99 -8,710,500.00 activities III. Cash flows arising from financing activities: Cash received from absorbing investment Cash received from loans Other cash received concerning 56 financing activities Subtotal of cash inflow from financing activities Cash paid for settling debts Cash paid for dividend and profit distributing or interest paying Other cash paid concerning financing activities Subtotal of cash outflow from financing activities Net cash flows arising from financing activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash -596,459.83 4,878,905.13 equivalents Add: Balance of cash and cash 10,097,024.59 1,959,804.92 equivalents at the period -begin VI. Balance of cash and cash 9,500,564.76 6,838,710.05 equivalents at the period -end 7. Statement of Changes in Owners’ Equity (Consolidated) Current Amount In RMB/CNY Semi-annual of 2021 Owners’ equity attributable to the parent Company Other equity instrument Other Minori Total Item Perpe Less: compr Provisi Share Reaso Surplu Retain ty owners tual Capital Invent ehensi on of Subtot capita Prefe nable s ed Other interes ’ capit reserve ory ve genera al l rred Other reserve reserve profit ts equity al shares incom l risk stock secur e ities I. The ending 551,3 627,83 32,673 -1,200, 10,905 14,737 25,642 balance of the 47,94 4,297. ,227.0 950,24 ,230.9 ,058.7 ,289.6 57 previous year 7.00 85 1 0.88 8 0 8 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. The 551,3 627,83 32,673 -1,200, 10,905 14,737 25,642 beginning 47,94 4,297. ,227.0 950,24 ,230.9 ,058.7 ,289.6 balance of the 7.00 85 1 0.88 8 0 8 current year III. Increase/ Decrease in the 1,365, 1,365, 212,34 1,577, period 493.34 493.34 6.08 839.42 (Decrease is listed with “-”) (i) Total 1,365, 1,365, 212,34 1,577, comprehensive 493.34 493.34 6.08 839.42 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 58 payment 4. Other (iii) Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (or shareholders) 4. Other (iv) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Carry-over retained earnings from the defined benefit plans 5. Carry-over retained earnings from other comprehensive income 59 6. Other (v) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (vi) Others IV. Balance at 551,3 627,83 32,673 -1,199, 12,270 14,949 27,220 the end of the 47,94 4,297. ,227.0 584,74 ,724.3 ,404.7 ,129.1 period 7.00 85 1 7.54 2 8 0 Amount of the previous period In RMB/CNY Semi-annual of 2020 Owners’ equity attributable to the parent Company Other equity instrument Other Minorit Perp Less: compr Provisi Total Item y Share Reaso Surplu Retain etual Capital Invent ehensi on of Subtot owners’ capita Prefe nable s ed Other interest capit reserve ory ve genera al equity l rred Other reserve reserve profit s al shares incom l risk stock secur e ities I. The ending 551,3 627,83 32,673 -1,204, 7,119, 4,322,1 11,441, balance of the 47,94 4,297. ,227.0 736,07 396.30 86.79 583.09 previous year 7.00 85 1 5.56 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other 60 II. The 551,3 627,83 32,673 -1,204, beginning 7,119, 4,322,1 11,441, 47,94 4,297. ,227.0 736,07 balance of the 396.30 86.79 583.09 7.00 85 1 5.56 current year III. Increase/ Decrease in the 2,797, 2,797, 5,347,9 8,145,6 period 643.50 643.50 70.40 13.90 (Decrease is listed with “-”) (i) Total 2,797, 2,797, 622,970 3,420,6 comprehensive 643.50 643.50 .40 13.90 income (ii) Owners’ devoted and 4,725,0 4,725,0 decreased 00.00 00.00 capital 1.Common 4,725,0 4,725,0 shares invested 00.00 00.00 by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (iii) Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (or 61 shareholders) 4. Other (iv) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Carry-over retained earnings from the defined benefit plans 5. Carry-over retained earnings from other comprehensive income 6. Other (v) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (vi) Others IV. Balance at 551,3 627,83 32,673 -1,201, 9,917, 9,670,1 19,587, 62 the end of the 47,94 4,297. ,227.0 938,43 039.80 57.19 196.99 period 7.00 85 1 2.06 8. Statement of Changes in Owners’ Equity (Parent Company) Current Amount In RMB/CNY Semi-annual of 2021 Other equity instrument Less: Other Item Perpet Reasona Total Share Capital compreh Surplus Retaine Inventor ble Other owners’ capital Preferr ual reserve ensive reserve d profit ed capital Other y shares reserve equity income stock securiti es I. The ending 551,34 -1,206, 627,834, 32,673,2 5,264,924. balance of the 7,947.0 590,54 297.85 27.01 28 previous year 0 7.58 Add: Changes of accounting policy Error correction of the last period Other II. The 551,34 -1,206, beginning 627,834, 32,673,2 5,264,924. 7,947.0 590,54 balance of the 297.85 27.01 28 0 7.58 current year III. Increase/ Decrease in the 975,81 975,814.8 period (Decrease 4.84 4 is listed with “-”) (i) Total 975,81 975,814.8 comprehensive 4.84 4 income (ii) Owners’ devoted and decreased capital 1.Common shares invested by shareholders 63 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (iii) Profit distribution 1. Withdrawal of surplus reserves 2. Distribution for owners (or shareholders) 3. Other (iv) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Carry-over retained earnings from the defined benefit plans 5. Carry-over retained earnings 64 from other comprehensive income 6. Other (v) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (vi) Others IV. Balance at 551,34 -1,205, 627,834, 32,673,2 6,240,739. the end of the 7,947.0 614,73 297.85 27.01 12 period 0 2.74 Amount of the previous period In RMB/CNY Semi-annual of 2020 Other equity instrument Less: Other Item Perpet Total Share Capital compre Reasonab Surplus Retained Inventor Other owners’ capital Preferr ual reserve hensive le reserve reserve profit ed capital Other y shares income equity stock securit ies I. The ending 551,34 627,834 32,673, -1,209,45 2,397,263.7 balance of the 7,947. ,297.85 227.01 8,208.07 9 previous year 00 Add: Changes of accounting policy Error correction of the last period Other II. The 551,34 beginning 627,834 32,673, -1,209,45 2,397,263.7 7,947. balance of the ,297.85 227.01 8,208.07 9 00 current year III. Increase/ 1,588,777 1,588,777.6 Decrease in the .67 7 65 period (Decrease is listed with “-”) (i) Total 1,588,777 1,588,777.6 comprehensive .67 7 income (ii) Owners’ devoted and decreased capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (iii) Profit distribution 1. Withdrawal of surplus reserves 2. Distribution for owners (or shareholders) 3. Other (iv) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share 66 capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Carry-over retained earnings from the defined benefit plans 5. Carry-over retained earnings from other comprehensive income 6. Other (v) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (vi) Others IV. Balance at 551,34 627,834 32,673, -1,207,86 3,986,041.4 the end of the 7,947. ,297.85 227.01 9,430.40 6 period 00 III. Company Profile 1. History and basic information According to the Approval Document SFBF (1991) No. 888 issued by the People’s Government of Shenzhen, Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the Company) was reincorporated as the company limited by shares in November 1991. On 28 December 1991, upon the Approval Document SRYFZ(1991) No. 119 issued by Shenzhen Special Economic Zone Branch of the People’s Bank of 67 China, the Company got listed on Shenzhen Stock Exchange. Registered of the Company amounted as 551,347,947.00 Yuan. Legal representative: Li Hai Location: No. 3008, Buxin Road, Luohu District, Shenzhen Certificate for Uniform Social Credit Code: 914403006188304524 2. Business nature and main operation activities The Company's industry: machinery manufacturing industry Main business activities: Research & development of the bicycles, electric bicycles, electric motorcycles, motorcycles, electric tricycles, electric four-wheelers, children's bicycles, exercise bikes, sports equipment, mechanical products, toys, electric toys, electronic products, new energy equipment and storage equipment (lithium batteries, batteries, etc.), household appliances and spare parts, and electronic components; wholesale, retail, import and export and related supporting business of above-mentioned products (excluding commodities subject to state trade management, handling the application according to the relevant national regulations for commodities involving quotas, license management and other special provisions and management,); fine chemical products (excluding dangerous goods), wholesale and retail of carbon fiber composite materials; technology development of computer software, transfer of self-developed technological achievements, and providing relevant technical information consultation; own property leasing; property management. (The above projects do not involve special administrative measures for the implementation access of national regulations, and those involving restricted projects and pre-existing administrative licenses must obtain the pre-existing administrative licensing documents before operation.) Purchase and sale of gold products, platinum jewelry, palladium jewelry, K-gold jewelry, silver jewelry, inlaid jewelry, jewelry, jade ware, gem-and-jade products, clocks and watches, precious metal materials, diamonds, jadeite, crafts (except ivory and its products), calligraphy and painting, collection (except for antiques, cultural relics, and items prohibited by national laws and administrative regulations). MaGoods in processs and services provided so far: EMMELLE bicycles, electrical bicycles, lithium battery material and gold jewelry. 3. Release of the financial report The Financial Report released on 25 August 2021 after approved by 31st session of 10th BOD of the Company. Two subsidiaries included in consolidate scope in the period, and one sub-subsidiary, found more in 1. carry in Note VIII. 68 IV. Compilation Basis of Financial Statement 1. Compilation Basis The financial statement is prepared based on continuing operation assumptions, and according to actual occurrence, in line with relevant accounting rules and follow important accounting policy and estimation. 2. Going concern On 11 May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12 October 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guosheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. On the last ten-day of October 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25 October 2012 according to (2012) Shenzhen Intermediate Court Po Zi No. 30-1 civil ruling, appointed King & Wood (Shenzhen) Mallesons and Shenzhen ZhengYuan Liquidation Affairs Co., Ltd. as the custodians of the Company. On the same day, Shenzhen Municipal Intermediate People's Court made (2012) Shenzhen Intermediate Court Po Zi No. 30-1 written decision, and approved the Company to manage property and business affairs by itself under the supervision of custodians according to the law. On 5 November 2013, the Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-6 Civil Ruling Paper judged that approved the reorganization plan of the Company. On 27 December 2013, the Civil Ruling Paper Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-10 ruled that the reorganization plan of CBC was completed and bankruptcy procedures of the Company closed down. The Company has solved the debt problem by reforming, realized the net assets with positive value, the main business of bicycle is able to be maintained and realizes the stable development. The Company has set up the conditions for introducing the recombination party in the reforming plan, and expects to restore the abilities of sustainable operation and sustained profitability by reorganization. The conditions of introducing the recombination party includes: the assessed value of net assets should be no less than 2 billion Yuan, the net assets in the same year for implementing the major reorganization should be no less than 200 million Yuan. The Company doesn’t have the recombination party at the moment. V. Main accounting policy and Accounting Estimate Tips for specific accounting policy and estimate: 69 1. Declaration on compliance with accounting standards for business enterprise The financial statement prepared by the Company, based on follow compilation basis, is comply with the requirement of new accounting standards for business enterprise issued by Ministry of Finance and its application guide, commentate as well as other regulations (collectively referred to as Accounting Standards for Business Enterprise), which is reflect a real and truth financial status of the Company, as well as operation results and cash flow situations. Furthermore, the statement has reference to the listing and disclosure requirement from “Rules Governing the Disclosure of Information for Enterprise with Stock Listed No.15-general regulation of financial report” (2014 Revised) and “Notice on Implementation of New Accounting Standards for Listed Companies” (KJBH (2018) No. 453) 2. Accounting period Calendar year is the accounting period for the Company, which is starting from 1 January to 31 December. 3. Business cycles The business period for the Company, which is the Gregorian calendar starting from 1 January to 31 December 4. Book-keeping currency The Company and its subsidiaries take RMB as the standard currency for bookkeeping. 5. Accounting treatment for business combinations under the same control and those not under the same control (1) Accounting treatment for business combinations under the same control and those not under the same control For a business merger that is under the same control and is achieved by the Company through one single transaction or multiple transactions, assets and liabilities obtained from that business combination shall be measured at their book value at the combination date as recorded by the party being absorbed in the consolidated financial statement of ultimate controlling party. Capital reserve shall be adjusted as per the difference between the book value of obtained net assets and the book value of paid consolidated consideration (or the nominal value of the issued shares) of the Company; retained earnings shall be adjusted if the capital reserve is not sufficient for offset. 70 (2) Accounting treatment for Enterprise combine not under the same control The Company will validate the difference that the combined cost is more than the fair value of the net identifiable assets gained from the acquiree on the acquisition date as goodwill; where the combined cost is less than the fair value of net identifiable assets gained from the acquiree during business combination, the fair value and combined cost of various identifiable assets, liabilities and contingent liabilities from the acquiree must be rechecked. Where the combined cost is, after the recheck, still less than the fair value of net identifiable assets gained from the acquiree during business combination, the difference shall be charged to current profits and losses. As for business combination not under common control and realized through multiple transactions and by steps, the Company shall make accounting treatment as follows: 1) Adjust the initial investment cost of long-term equity investments. As for stock equities held before the acquisition date accounted according to the equity method, re-measurement is carried out according to the fair value of the equity on the acquisition date. The balance between the fair value and the book value is included in the current investment income. If the acquiree’s stock equities held before the acquisition date involves changes of other comprehensive incomes and other owner's equities under accounting with the equity method, the balance between the fair value and the book value is included in the current investment income on the acquisition date, excluding other comprehensive incomes incurred by changes due to re-measurement of net liabilities or net assets of the defined benefit plan. 2) Confirm the goodwill (or include the amount in the profits and losses). The initial investment cost of long-term equity investments adjusted in step 1 is compared with the fair value of net identifiable assets of the subsidiary shared on the acquisition date. If the former is greater than the latter, the balance is confirmed as goodwill; if the former is less than the latter, the balance is included in the current profits and losses. Loss of control of a subsidiary in multiple transactions in which it disposes equity interests of its subsidiary in stages (1)In determining whether to account for the multiple transactions as a single transaction A parent shall consider all the terms and conditions of the transactions and their economic effects. One or more of the following may indicate that the parent should account for the multiple arrangements as a single transaction: 1) Arrangements are entered into at the same time or in contemplation of each other; 2) Arrangements work together to achieve an overall commercial effect; 3) The occurrence of one arrangement is dependent on the occurrence of at least one other arrangement; 4)One arrangement considered on its own is not economically justified, but it is economically justified when considered together with other arrangements. (2)Accounting treatment for each of the multiple transactions forming part of a bundled transactions which eventually results in loss of control the subsidiary during disposal of its subsidiary in stages 71 If each of the multiple transactions forms part of a bundled transactions which eventually results in loss of control the subsidiary, these multiple transactions should be accounted for as a single transaction. In the consolidated financial statements, the difference between the consideration received and the corresponding percentage of the subsidiary’s net assets in each transaction prior to the loss of control shall be recognized in other comprehensive income and transferred to the profit or loss when the parent eventually loses control of the subsidiary. The remaining equity investment shall be re-measured at its fair value in the consolidated financial statements at the date when control is lost. The difference between the total amount of consideration received from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and the share of net assets of the former subsidiary calculated continuously from the acquisition date or combination date based on the previous shareholding proportion, shall be recognized as investment income for the current period when control is lost. The amount previously recognized in other comprehensive income in relation to the former subsidiary’s equity investment should be transferred to investment income for the current period when control is lost (3)Accounting treatment for each of the multiple transactions NOT forming part of a bundled transactions which eventually results in loss of control the subsidiary during disposal of its subsidiary in stages If the Company doesn't lose control of investee, the difference between the amount of the consideration received and the corresponding portion of net assets of the subsidiary shall be adjusted to the capital reserve (capital /equity premium) in the consolidated financial statements. If the Company loses control of investee, the remaining equity investment shall be re-measured at its fair value in the consolidated financial statements at the date when control is lost. The difference between the total amount of consideration received from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and the share of net assets of the former subsidiary calculated continuously from the acquisition date or combination date based on the previous shareholding percentage, shall be recognized as investment income for the current period when control is lost. The amount previously recognized in other comprehensive income in relation to the former subsidiary’s equity investment should be transferred to investment income for the current period when control is lost. 6. Compilation method of consolidated financial statement Consolidated financial statements are prepared by the Company in accordance with Accounting Standard for Business Enterprise No. 33-Consolidated Financial Statements and based on financial statements of parent company and its subsidiaries and other related information. When consolidating the financial statements, the following items are eliminated: internal equity investment and owners’ equity of subsidiaries, proceeds on internal investments and profit distribution of subsidiaries, internal transactions, internal debts and claim. The accounting policies adopted by subsidiaries are the same as parent company. 72 7. Classification of joint venture arrangement and accounting treatment for joint control (1) Affirmation and classification of joint venture arrangement Joint arrangement refers to an arrangement controlled by two or more than two participants. Joint venture arrangement has the following characteristics: 1) Each participant is bound by the arrangement; 2) Two or more participants carry out joint control on implementation of the arrangement. Any participant cannot control the arrangement independently. Any participant for joint control can stop other participants or participant combinations to independently control the arrangement. Joint control refers to the sharing of control over certain arrangement under related agreements, and related activities of the arrangement must be determined only when obtaining the unanimous consent of the parties sharing control. Joint venture arrangement is classified in to joint operation and joint venture. Joint operation refers to an arrangement that a joint party enjoys assets related to the arrangement and bears liabilities related to the arrangement. Joint venture refers to an arrangement that a joint party only has the power governing net assets of the arrangement. (2) Accounting treatment of joint venture arrangement Joint venture participants should confirm the following items related to interest shares in joint venture and carry out accounting settlement according to relevant provisions of the Accounting Standards for Business Enterprises: 1) confirm the assets held separately and confirm the assets held jointly based on shares; 2) confirm the liabilities borne separately and confirm the liabilities borne jointly based on shares; 3) confirm the income incurred after selling its shares in joint venture output; 4) confirm the income after selling the joint venture outputs based on shares; 5) confirm the expenses incurred separately and confirm the expenses incurred in joint venture based on shares. Joint venture participants should carry out accounting settlement for investments of the joint venture according to provisions of Accounting Standards for Business Enterprises No.2–Long-term Equity Investments. 8. Recognition of cash and cash equivalents Cash in cash flow statement means the inventory cash and savings available for use anytime. Cash equivalents refer to the short-term (generally due within three months since the date of purchase) highly liquid investments that are readily convertible into known amounts of cash and that are subject to an insignificant risk of change in value. 73 9. Foreign currency transaction and financial statement conversion (1)Conversion for foreign currency transaction When initially recognized, the foreign currency for the transaction shall be converted into CNY amount according to the spot exchange rate on the date of transaction. For the foreign currency monetary items, conversion must be based on the spot exchange rate on the balance sheet date and the exchange difference incurred from different exchange rates, except for the exchange difference of principal and interest incurred due to foreign currency loan related to acquisition or construction of assets that qualify for capitalization, shall be charged to current profits and losses; foreign currency non-monetary items measured with historical cost are still converted as per the spot exchange rate on the transaction date and keep the RMB amount unchanged; foreign currency non-monetary items measured with fair value shall be converted as per the spot exchange rate on the date of determining the fair value and the difference shall be charged to current profits and losses or other comprehensive income. (2)Conversion of financial statements presented in foreign currencies The asset and liability items in the balance sheet shall be converted at the spot exchange rate on the balance sheet date; the owner’s equity items, except for the items of “undistributed profit”, shall be converted at the spot exchange rate on the transaction date; the income and expenditure items in the profit statement shall be converted at the spot exchange rate on the transaction date. The translation difference of foreign financial statements conducted as above is recognized as other comprehensive incomes. 10. Financial instruments (1) Recognition and termination for financial instrument Financial assets or financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. When buying and selling financial assets in a conventional manner, recognize and derecognize them according to the accounting of the trading day. Buying and selling financial assets in a conventional manner refers to the collection or delivery of financial assets in accordance with the contract terms and within the period prescribed by regulations or prevailing practices. Trading day refers to the date when the Company promises to buy or sell financial assets. When meeting the following conditions, derecognize a financial asset (or part of a financial asset, or part of a group of similar financial assets), i.e. to write off from its account and balance sheet: 1) The right to receive cash flows from financial assets expires; 2) The right to receive cash flows of financial assets is transferred, or assume the obligation to pay the full amount of cash flows received to a third party in a timely manner under the “handover agreement”; and (a) virtually transferred almost all risks and rewards of the ownership of financial assets, or (b) although virtually neither transferred nor retained almost all risks and rewards of the ownership of financial assets, abandoned the control of 74 the financial assets. (2) Classification and measurement of financial assets The Company’s financial assets are classified as financial assets measured at amortized cost, financial assets measured at fair value and whose changes are included in other comprehensive income, and financial assets measured at fair value and whose changes are included in the current profit and loss according to the Company’s business model for managing financial assets and the contractual cash flow characteristics of financial assets at initial recognition. The subsequent measurement of financial assets depends on their classification. The Company’s classification of financial assets is based on the Company’s business model for managing financial assets and the cash flow characteristics of financial assets. 1) Financial assets measured at amortized cost Financial assets that meet the following conditions at the same time are classified as financial assets measured at amortized cost: the Company’s business model for managing this financial asset is to collect contractual cash flows; the contract terms of the financial asset stipulate that the cash flow generated on a specific date is only the payment of principal and interest based on the outstanding principal amount. For such financial assets, the actual interest rate method is used for subsequent measurement based on amortized cost, and the gains or losses arising from amortization or impairment are included in the current profit and loss. 2) Debt instrument investments measured at fair value and whose changes are included in other comprehensive income Financial assets that meet the following conditions at the same time are classified as financial assets measured at fair value and whose changes are included in other comprehensive income: the Company’s business model for managing this financial asset is to both collect contractual cash flows and sell the financial assets; the contract terms of the financial asset stipulate that the cash flow generated on a specific date is only for the payment of principal and interest based on the outstanding principal amount. For such financial assets, fair value is used for subsequent measurement. The discount or premium is amortized by using the actual interest method and is recognized as interest income or expenses. Except that the impairment loss and the exchange difference of foreign currency monetary financial assets are recognized as current gains and losses, changes in the fair value of such financial assets are recognized as other comprehensive income, until the financial asset is derecognized, its cumulative gains or losses are transferred to the current profit and loss. Interest income related to such financial assets is included in the current profit and loss. 3) Equity instrument investments measured at fair value and whose changes are included in other comprehensive income The Company irrevocably chooses to designate some non-trading equity instrument investments as financial assets measured at fair value and whose changes are included in other comprehensive income. Only relevant dividend income is included in the current profit and loss, and changes in fair value are recognized as other comprehensive income, until the financial asset is derecognized, its accumulated gains or losses are transferred to retained earnings. 4) Financial assets measured at fair value and whose changes are included in the current profit and loss 75 Financial assets except for above financial assets measured at amortized cost and financial assets measured at fair value and whose changes are included in other comprehensive income are classified as financial assets measured at fair value and whose changes are included in the current profit and loss. During initial recognition, in order to eliminate or significantly reduce accounting mismatches, financial assets can be designated as financial assets measured at fair value and whose changes included in the current profit and loss. For such financial assets, fair value is used for subsequent measurement, and all changes in fair value are included in the current profit and loss. When and only when the Company changes its business model for managing financial assets, it will reclassify all affected related financial assets. For financial assets measured at fair value and whose changes are included in the current profit or loss, the related transaction costs are directly included in the current profit and loss, and the related transaction costs of other types of financial assets are included in the initial recognition amount. (3) Classification and measurement of financial liabilities The Company’s financial liabilities are classified as financial liabilities measured at amortized cost and financial liabilities measured at fair value and whose changes are included in the current profit and loss at initial recognition. Financial liabilities that meet one of the following conditions can be designated as financial liabilities measured at fair value and whose changes are included in current profit or loss during initial measurement: (1) This designation can eliminate or significantly reduce accounting mismatches; (2) According to the group risk management or investment strategies stated in official written documents, management and performance evaluation of financial liability portfolios or financial assets and financial liability portfolios are conducted based on fair value, and are reported to key management personnel within the group on this basis; (3) The financial liability includes embedded derivatives that need to be split separately. The Company determines the classification of financial liabilities at initial recognition. For financial liabilities that are measured at fair value and whose changes are included in the current profit or loss, the related transaction costs are directly included in the current profit and loss, and the related transaction costs of other financial liabilities are included in its initial recognition amount. The subsequent measurement of financial liabilities depends on their classification: 1) Financial liabilities measured at amortized cost For such financial liabilities, adopt actual interest rate method and make subsequent measurements based on amortized costs. 2) Financial liabilities measured at fair value and whose changes are included in the current profit and loss Financial liabilities that are measured at fair value and whose changes are included in the current profit or loss include trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated to be measured at fair value at the initial recognition and whose changes are included in the current profit or loss. (4) Financial instruments offset 76 If the following conditions are met at the same time, the financial assets and financial liabilities are listed in the balance sheet with the net amount after mutual offset: legal right to offset the confirmed amount, and this legal right is currently executable; Net settlement, or simultaneous realization of the financial assets and liquidation of the financial liabilities. (5) Impairment of financial assets The Company recognizes the loss provisions on the basis of expected credit losses for financial assets measured at amortized cost, debt instrument investments measured at fair value and whose changes are included in other comprehensive income and financial guarantee contracts. Credit loss refers to the difference between all contractual cash flows receivable under the contract and discounted according to original actual interest rate by the Company and all expected receivable cash flows, that is, the present value of all cash shortages. The Company considers all reasonable and evidence-based information, including forward-looking information, and estimates the expected credit loss of financial assets measured at amortized cost and financial assets measured at fair value and whose changes are included in other comprehensive income (debt instruments) in a single or combined manner. 1) General model of expected credit loss If the credit risk of the financial instrument has increased significantly since the initial recognition, the Company measures its loss provisions in accordance with the amount equivalent to the expected credit loss of the financial instrument for the entire duration; if the credit risk of the financial instrument has not significantly increased since the initial recognition, the Company measures its loss provisions in accordance with the amount equivalent to the expected credit loss of the financial instrument in the next 12 months. The resulting increased or reversed amount of the loss provisions is included in the current profit and loss as an impairment loss or gain. For the Company’s specific assessment of credit risk, please see details in Note IX. Risks Related to Financial Instruments”. Generally, the Company believes that the credit risk of the financial instrument has significantly increased when it exceeds 30 days after the due date, unless there is concrete evidence that the credit risk of the financial instrument has not increased significantly since initial recognition. Specifically, the Company divides the process of credit impairment of financial instruments of which no credit impairment has occurred at the time of purchase or origin into three stages. There are different accounting treatment methods for the impairment of financial instruments at different stages: Stage one: Credit risk has not increased significantly since initial recognition For a financial instrument at this stage, the enterprise should measure the loss provisions according to the expected credit losses in the next 12 months, and calculate the interest income based on its book balance (that is, without deducting provisions for impairment) and the actual interest rate (if the instrument is a financial asset, the same below). Stage two: Credit risk has increased significantly since initial recognition but no credit impairment has occurred For a financial instrument at this stage, the enterprise should measure the loss provisions according to the expected credit loss of the instrument for its entire duration, and calculate the interest income based on its book balance and actual interest rate. 77 Stage three: Credit impairment occurs after initial recognition For a financial instrument at this stage, the enterprise should measure the loss provisions based on the expected credit losses of the instrument for its entire duration, but the calculation of interest income is different from the financial assets at the previous two stages. For financial assets that have suffered credit impairment, the enterprise should calculate interest income based on its amortized cost (book balance minus the provisions for impairment, i.e., book value) and the actual interest rate. For financial assets that have suffered credit impairment at the time of purchase or origin, the enterprise should only recognize changes in expected credit losses for the entire duration after initial recognition as loss provisions, and calculate the interest income based on its amortized cost and credit-adjusted actual interest rate. 2) The Company chooses not to compare the financial instrument with lower credit risk on the balance sheet date with its credit risk at initial recognition, but directly makes the assumption that the credit risk of the instrument has not increased significantly since the initial recognition. If the enterprise confirms that the default risk of financial instruments is low, the borrower has a strong ability to fulfill its contractual cash flow obligations in the short term, and even if there are adverse changes in the economic situation and operating environment in a longer period of time, it will not necessarily reduce the borrower’s ability to fulfill its contractual cash flow obligations, then the financial instrument can be considered to have lower credit risk. 3) Accounts receivable and lease receivables The Company adopts the simplified model of expected credit loss for accounts receivables specified in “Accounting Standards for Business Enterprises No.14 - Revenue” and without containing significant financing components (including the case that the financing components in contracts that do not exceed one year are not considered according to the standards), that is, always measures their loss provisions according to the amount of expected credit loss during the entire duration. The Company makes accounting policy choices for the receivables containing significant financing components and the lease receivables specified in “Accounting Standards for Business Enterprises No.21 - Leases”, and chooses to adopt the simplified model of expected credit losses, that is, to measure the loss provisions in accordance with the amount of expected credit losses throughout the entire duration. (6) Transfer of financial assets Where the Company has transferred almost all the risks and rewards in the ownership of the financial asset to the transferee, the recognition of the financial assets shall be terminated; where almost all risks and rewards in the ownership of a financial asset are retained, the recognition of the financial assets are not terminated. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, it shall be accounted for as follows: the financial asset should be terminated if the Group waives control over the asset; it recognizes the financial asset to the extent of its continuing involvement in the transferred financial asset 78 and recognizes an associated liability if the Group does not waives control over the asset. If the transferred financial assets continue to be involved by providing financial guarantee, the assets continue to be involved shall be recognized according to the lower of the book value of the financial assets and the amount of financial guarantee. The financial guarantee amount means the maximum amount of consideration received which will be required to be repaid. The Company shall comply with the disclosure requirement of “Guidelines on Industry Information Disclosure of Shenzhen Stock Exchange No. 11- Listed Company Engaged in Jewelry-related Business” Nil 11.Note receivable The Group adopts the simplified model of expected credit loss for the accounts receivables specified in “Accounting Standards for Business Enterprises No.14 - Revenue” and without containing significant financing components (including the case that the financing components in contracts that do not exceed one year are not considered according to the standards), that is, always measures their loss provisions according to the amount of expected credit loss during the entire duration, and the resulting increased or reversed amount of the loss provision is included in the current profit and loss as an impairment loss or gain. The accrual method is as follows: The Company divides the bills receivable into two types, i.e. bank acceptance bills and commercial acceptance bills portfolios, according to the type of financial instruments. For bank acceptance bills, the accepting bank pays the determined amount to the taker or the bearer unconditionally due to the maturity of the bills, the overdue credit loss is low and has not increased significantly since the initial confirmation, the Company believes that the risk of overdue default is 0; for commercial acceptance bills, the Company believes that the probability of default is related to the aging, we use a simplified model of expected credit losses, that is the allowance for losses is always measured at the amount of expected credit losses over the entire duration period. Proportion for accrual found more in the accounting policy and estimate for account receivable. 12. Account receivable The Company adopts the simplified model of expected credit loss for accounts receivables specified in “Accounting Standards for Business Enterprises No.14 - Revenue” and without containing significant financing components (including the case that the financing components in contracts that do not exceed one year are not considered according to the standards), that is, always measures their loss provisions according to the amount of expected credit loss during the entire duration, and the resulting increased or reversed amount of the loss provision is included in the current profit and loss as an impairment loss or gain. For accounts receivable that contain a significant financing component, the Company chooses to use the 79 simplified model of expected credit losses, that is, to always measure its loss provisions according to the amount of expected credit losses during the entire duration. 1. Simplified model of expected credit losses: always measure the loss provisions according to the amount of expected credit losses during the entire duration The Company considers all reasonable and well-founded information, including estimates of expected credit losses on accounts receivable in a single or combined manner. (1) Account receivable with single significant amount and withdrawal single item bad debt provision Basis or amount of judgment for account with single Withdrawal method for bad debt provision of account significant amount receivable with single significant amount Receivable commercial acceptance bill, account receivable Carry out impairment test separately, and withdraw bad and other receivables with single amount more than 5 million debt provision according to the difference between the yuan (including) present value of future cash flow and its book value (2)Receivables with provision for bad debts by portfolio Portfolio determine basis On the basis of the actual loss rate of the portfolio of receivables with similar credit risk characteristics which are the same or similar in the previous year, for the single Age analysis amount of non-material receivables, it is divided into several portfolios according to the credit risk characteristics together with the receivables without impairment after the separate test Other Bank acceptance In the combination, the proportion of bad debt provision withdrawn by aging analysis method is as follow: Accrual proportion of Withdrawing Withdrawing proportion Account age commercial acceptance bill proportion of the of other receivable receivable account receivable Within one year(one year 0.3% 0.3% 0.3% included) 1~2 years (2-year included) 100% 0.3% 0.3% 2~3 years (3-year included) 100% 0.3% 0.3% Over 3 years 100% 100% 100% Including: determined to be Write off Write off Write off un-collectible 80 (3) Account receivable with significant single amount and single provision for bad debts Basis or amount of judgment for account with single minor Withdrawal method for bad debt provision of account amount receivable with single minor amount Receivable commercial acceptance bill, account receivable Carry out impairment test separately, and withdraw bad and other receivables with single amount less than 5 million debt provision according to the difference between the yuan (including), and the probability of recall is small by present value of future cash flow and its book value nature 2. A general model of expected credit loss Found more in the treatment in【10. Financial Instrument】 13. Receivable financing Financial assets that meet the following conditions at the same time are classified as financial assets measured at fair value and whose changes are included in other comprehensive income: the Company’s business model for managing this financial asset is to both collect contractual cash flows and sell the financial assets; the contract terms of the financial asset stipulate that the cash flow generated on a specific date is only for the payment of principal and interest based on the outstanding principal amount. The Company transfers the receivables held by discounting or endorsement, and such operations are more frequent with large amount involved. The management business models is essentially both the collection of contractual cash flows and the sales; in accordance with the relevant provision of financial instrument standards, classified them into the financial assets measured at fair value and with its variation reckoned into other comprehensive income. 14.Other account receivable Determination method and accounting treatment of the expected credit loss of other account receivable The Company adopts the simplified model of expected credit loss for accounts receivables specified in “Accounting Standards for Business Enterprises No.14 - Revenue” and without containing significant financing components (including the case that the financing components in contracts that do not exceed one year are not considered according to the standards), that is, always measures their loss provisions according to the amount of expected credit loss during the entire duration, and the resulting increased or reversed amount of the loss provision is included in the current profit and loss as an impairment loss or gain. 81 For accounts receivable that contain a significant financing component, the Company chooses to use the simplified model of expected credit losses, that is, to always measure its loss provisions according to the amount of expected credit losses during the entire duration. 1. Simplified model of expected credit losses: always measure the loss provisions according to the amount of expected credit losses during the entire duration The Company considers all reasonable and well-founded information, including estimates of expected credit losses on accounts receivable in a single or combined manner. (1) Account receivable with single significant amount and withdrawal single item bad debt provision Basis or amount of judgment for account with single Withdrawal method for bad debt provision of account significant amount receivable with single significant amount Receivable commercial acceptance bill, account receivable Carry out impairment test separately, and withdraw bad and other receivables with single amount more than 5 million debt provision according to the difference between the yuan (including) present value of future cash flow and its book value (2)Receivables with provision for bad debts by portfolio Portfolio determine basis On the basis of the actual loss rate of the portfolio of receivables with similar credit risk characteristics which are the same or similar in the previous year, for the single Age analysis amount of non-material receivables, it is divided into several portfolios according to the credit risk characteristics together with the receivables without impairment after the separate test Other Bank acceptance In the combination, the proportion of bad debt provision withdrawn by aging analysis method is as follow: Accrual proportion of Withdrawing Withdrawing proportion Account age commercial acceptance bill proportion of the of other receivable receivable account receivable Within one year(one year 0.3% 0.3% 0.3% included) 1~2 years (2-year included) 100% 0.3% 0.3% 2~3 years (3-year included) 100% 0.3% 0.3% Over 3 years 100% 100% 100% Including: determined to be Write off Write off Write off un-collectible 82 (3) Account receivable with minor single amount and single provision for bad debts Basis or amount of judgment for account with single minor Withdrawal method for bad debt provision of account amount receivable with single minor amount Receivable commercial acceptance bill, account receivable Carry out impairment test separately, and withdraw bad and other receivables with single amount less than 5 million debt provision according to the difference between the yuan (including), and the probability of recall is small by present value of future cash flow and its book value nature 2. A general model of expected credit loss Found more in the Note 【10. Financial Instrument 】 15. Inventory The Company shall comply with the disclosure requirement of “Guidelines on Industry Information Disclosure of Shenzhen Stock Exchange No. 11- Listed Company Engaged in Jewelry-related Business” (1) Classification of inventory The inventory of the Company refers to such seven classifications as the raw materials, product in process, goods on hand, wrap page, low value consumables, materials for consigned processing and goods sold. (2) Valuation of inventories Inventories are initially measured at cost upon acquisition, which includes procurement costs, processing costs and other costs. The prices of inventories are calculated using weighted average method when they are delivered. (3) Provision for inventory impairment When a comprehensive count of inventories is done at the end of the period, provision for inventory impairment is allocated or adjusted using the lower of the cost of inventory and the net realizable value. The net realizable value of stock in inventory (including finished products, inventory merchandize and materials for sale) that can be sold directly is determined using the estimated saleable price of such inventory deducted by the cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of material in inventory that requires processing is determined using the estimated saleable price of the finished product deducted by the cost to completion, estimated cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of inventory held for performance of sales contract or labor service contract is determined based on the contractual price; in case the amount of inventory held exceeds the contractual amount, the net realizable value of the excess portion of inventory is calculated using the normal saleable price. Provision for impairment is made according to individual items of inventories at the end of the period; however, for inventories with large quantity and low unit price, the provision is made by categories; inventories of products that are produced and sold in the same region or with the same or similar purpose or usage and are difficult to be 83 measured separately are combined for provision for impairment. If the factors causing a previous write-off of inventory value has disappeared, the amount written-off is reversed and the amount provided for inventory impairment is reversed and recognized in profit or loss for the period. (4)Inventory system Perpetual inventory system is adopted. 16.Contract assets 1. Confirmation method and standard of contract assets The Company lists contractual assets or contractual liabilities in the balance sheet based on the relationship between performance obligations and customer payments. The Company's right to receive consideration for goods or services transferred to the customer (And that right depends on factors other than the passage of time) is listed as contractual assets. Contractual assets and contractual liabilities under the same contract are listed as a net amount. The Company's right to receive consideration from customers unconditionally (only depends on the passage of time) is listed separately as a receivable. 2. Determination and accounting treatment of the expected credit loss for contract assets Determination and accounting treatment of the expected credit loss for contract assets found more in Note “10. Financial Instrument - impairment of financial assets” Nil 17.Contract cost Nil 18. Assets held for sale The Company classifies such corporate components (or non-current assets) that meet the following criteria as held-for-sale: (1) Disposable immediately under current conditions based on similar transactions for disposals of such assets or practices for the disposal group; (2) Probable disposal; that is, a decision has been made on a plan for disposal and an undertaking to purchase has been obtained (the undertaking to purchase means a binding purchase agreement entered into by the Company and other parties, which contains transaction price, time and adequately strict punishments for breach of contract provisions, which renders the possibility of material adjustment or revocation of the agreement is extremely minor), and the disposal is expected to be completed within a year. Besides, approval from relevant competent authorities or regulatory authorities has been obtained as required by relevant rules. The expected net residual value of asset held for sale is adjusted by the Company to reflect its fair value less 84 selling expense, provided that the net amount shall not exceed the original carrying value of the asset. In case that the original value is higher than the adjusted expected net residual value, the difference shall be recorded in profit or loss for the period as asset impairment loss, and allowance of impairment for the asset shall be provided. Impairment loss recognized in respect of the disposal group held for sale shall be used to offset the carrying value of the goodwill in the disposal group, and then offset the carrying value of the non-current assets within the disposal group based on their respective proportion of their carrying value. In respect of the non-current assets held for sale, if the net amount after their fair value less the selling expenses increased as at the subsequent balance date, the reduced amount before will be recovered and reversed in the assets impairment loss amount recognized after being classified as held for sale, and the reversed amount will be recorded in the current profits or loss. The impairment loss on assets recognized before being classified as held for sale will not be reversed. In respect of the disposal group held for sale, if the net amount after their fair value less the selling expenses increased as at the subsequent balance date, the reduced amount before will be recovered and reversed in the assets impairment loss amount recognized in non-current assets after being classified as held for sale, and the reversed amount will be recorded in the current profits or loss. The reduced book value of the goodwill as well as the impairment loss on assets recognized before the non-current assets are classified as held for sale will not be reversed. The subsequent reversed amount in respect of the impairment loss on assets recognized in the disposal group held for sale will increase the book value in proportion of the book value of each non-current assets (other than goodwill) in the disposal group. In respect of loss of control in a subsidiary arising from disposal of the investment in such subsidiary, the investment in a subsidiary shall be classified as held for sale in its entirety in the individual financial statement of the parent company, and all the assets and liabilities of the subsidiary shall be classified as held for sale in the consolidated financial statement subject to that the proposed disposal of investment in the subsidiary satisfies such conditions as required for being classified as held for sale notwithstanding part equity investment will be retained by the Company after such disposal. 19.Debt investment Nil 20.Other debt investment Nil 21.Long-term account receivable Nil 85 22. Long-term equity investment (1)Determination of investment costs 1) If it is formed by the business combination under the common control, and that the combining party takes cash payment, transfer of non-cash assets, assumption of debts or issuance of equity securities as the consolidation consideration, the shares of the book value of the owner’s equity obtained from the combined party on the date of combination in the ultimate controlling party’s consolidated financial statements shall be recognized as its initial investment cost. Capital reserves shall be adjusted according to the balance between the initial investment cost for long-term equity investment and the book value of paid consolidation consideration or the total face value of issued shares (capital premium or equity premium). If capital reserves are insufficient for offset, retained earnings shall be adjusted. As for business combination under the common control realized by the Company through several transactions, the initial investment cost of the investment shall be determined based on the share of the carrying value of the owners’ equity of the consolidated party as calculated according to the shareholding proportion on the consolidation date. Difference between initial investment cost and the carrying value of long-term equity investment before combination and the sum of carrying value of newly paid consideration for additional shares acquired on the date of combination is to adjust capital reserve (capital premium or equity premium). If the balance of capital reserve is insufficient, any excess is adjusted to retained earnings. 2) As for long-term equity investment formed from business combination not under common control, the fair value of the consolidated consideration paid shall be deemed as the initial investment cost on the acquisition date. 3) Except those ones formed by the business combination, for all items obtained by means of cash payment, actually paid acquisition costs shall be taken as the initial investment cost. For those ones obtained by the issuance of equity securities, the fair value of the issued equity securities shall be taken as the initial investment cost. For those ones invested by investors, the value agreed in the investment contract or agreement shall be taken as the initial investment cost, provided that the value agreed in the contract or agreement shall be fair. (2)Subsequent measurement and profit or loss recognition For a long-term equity investment where the Company can exercise control over the investee, the long-term investment is accounted for using the cost method in the Company’s financial statements. The equity method is adopted when the Group has joint control, or exercises significant influence on the investee. Under cost method, long term equity investment is measured at initial investment cost. Except for the price actually paid for obtaining the investment or the cash dividends or profits declared but not yet distributed which is included in the consideration, the Company recognizes cash dividends or profits declared by the investee as current investment gains, and determine whether there is impairment on long term investment according to relevant assets impairment policies. Under equity method, when the initial investment cost of the long-term equity investment exceeds the share of fair 86 value in the net identifiable assets in the investee, the difference shall be included in initial investment cost of the long-term equity investment. When the initial investment cost is lower than the share of fair value in the net identifiable asset in the investee, such difference is recognized in profit or loss for the period with adjustment of cost of the long-term equity investment. Under equity method, after the Company acquires a long-term equity investment, it shall, in accordance with its attributable share of the net profit or loss realized by the investee, recognize the investment profit or loss and adjust carrying value of the investment. The Group recognizes its share of the investee’s net profits or losses after making appropriate adjustments to the investee’s net profits and losses based on the fair value of the investee’s identifiable assets at the acquisition date, using the Group’s accounting policies and periods, and eliminating the portion of the profits or losses arising from internal transactions with its joint ventures and associates, attributable to the investing entity according to its shareholding proportion (but impairment losses for assets arising from internal transactions shall be recognized in full). The carrying amount of the investment is reduced based on the Group’s share of any profit distributions or cash dividends declared by the investee. The Group’s share of net losses of the investee is recognized to the extent the carrying amount of the investment together with any long-term interests that in substance form part of its net investment in the investee is reduced to zero, except that the Group has the obligations to assume additional losses. The Group adjusts the carrying amount of the long-term equity investment for any changes in owners’ equity of the investee (other than net profits or losses) and includes the corresponding adjustments in the owners’ equity of the Group. (3) Determination of control and significant influence on investee Control is the power over an investee. An investor must have exposure or rights to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investor’s returns. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control with other parties over those policies (4)Disposal of long-term equity investment 1) Partial disposal of long term investment in which control is retained When long term investment is been partially disposed but control is retained by the company, the difference between disposal proceeds and carrying amount of the proportion being disposed is accounted for through profit or loss. 2) Partial disposal of long term investment in which control is lost When long term investment is partially disposed and control is lost as a result, the carrying value of the long term invest on the stock right, the difference between carrying amount of the part being disposed and disposal proceeds should be recognized as profit or loss. The residual part should be treated as long term investment or other financial assets according to their carrying amount. After partial disposal, if the company is able to exert significant influence or common control over the investee, the investment should be measured according to cost method or equity method, in compliance with relevant accounting standards and regulations. 87 (5)Impairment test and provision for impairment If there is objective evidence on the balance sheet date showing investment in subsidiaries, associates and joint ventures is impaired, provision of impairment shall be made against the difference between the carrying amount and the recoverable amount of the investment. 23. Investment real estate Measurement mode Measured by cost method Depreciation or amortization method (1) Investment property including land use right which has been rented out, land use right which is held for transfer upon appreciation and buildings which has been rented out. (2) Investment properties are initially measured at cost and subsequently measured as per the cost pattern, and relevant withdrawal of provision for depreciation or amortization is carried out by the same method for fixed assets and intangible assets. As of the balance sheet date, where there is any indication that an investment property experiences impairment, the relevant impairment provision shall be provided for based on the difference between the carrying value and the recoverable amount. 24. Fixed assets (1) Recognition conditions Fixed assets refer to the tangible assets for production of products, provision of labor, lease or operation, and with a service life in excess of one financial year. Fixed assets are recorded at the actual cost at the time of acquisition, and depreciation is calculated and withdrawn using the average life method from the month after they reach the intended usable state (2) Depreciation methods Category Method Years of depreciation Scrap value rate Yearly depreciation rate Housing buildings Straight-line depreciation 20-year 10% 4.5% Machinery equipment Straight-line depreciation 10-year 10% 9% Means of transportation Straight-line depreciation 5-year 10% 18% Electronic equipment and Straight-line depreciation 5-year 10% 18% others Nil 88 (3) Recognition basis, valuation and depreciation method for financial lease assets Finance lease is determined when one or a combination of the following conditions are satisfied: (1) the ownership has been transferred to the lessee when the leasing term is due; (2) the lessee has the option to purchase the leasing asset at a price that is much lower than its fair value, so it can be reasonably determined that the lessee will take the option at the very beginning of the lease; (3) the leasing term accounts for most time of the useful life (ordinarily accounting for 75% or higher) even if the ownership does not transfer to the lessee; (4) the present value of the minimum amount of rent that the lessee has to pay at the first day of the lease amounts to 90% or higher of its fair value at the same date; or the present value of the minimum amount of rent that the lessor collects at the first day of the lease amounts to 90% or higher of its fair value at the same date; and/or (5) the leased assets are of such a specialized nature that only the lessee can use them without major modifications. Fixed assets rented-in under finance lease are recorded at the lower of fair value and the present value of the minimum lease payment at the inception of the lease, and are depreciated following the depreciation policy for self-owned fixed assets. 25. Construction in progress (1)When the construction in progress has reached the intended condition for use, it will be treated as fixed assets as per the actual construction cost. If the construction in progress has reached the intended condition for use but completion accounting is not carried out, the construction in progress should be first treated as fixed assets as per the estimated value. After completion accounting is carried out, the original estimated value should be adjusted as per the actual cost, but the provision for depreciation withdrawn should not be adjusted. (2)As of the balance sheet date, where there is any indication that a construction in process experiences impairment, the relevant impairment provision shall be provided for based on the difference between the carrying value and the recoverable amount. 26. Borrowing expenses Nil 27.Biological assets Nil 28. Oil and gas asset Nil 89 29.Right-of-use asset Ni 30. Intangible assets (1) Valuation method, service life and impairment test 1.Intangible assets include land use right, patent right and non-patent technology, which should be initially measured at cost. 2.Intangible assets with limited service life should be amortized systematically and reasonably in their service lives as per the expected form of realization economic benefits relating to the said intangible assets. If the form of realization cannot be reliably determined, the intangible assets should be amortized on a straight-line basis. 3.At the balance sheet date, when there is any indication that the intangible assets with finite useful lives may be impaired, a provision for impairment loss is recognized on the excess of the carrying amounts of the assets over their recoverable amounts. Intangible assets with infinite useful lives and intangible assets not satisfying the condition for use yet are subject to impairment test each year notwithstanding whether the assets are impaired. (2) Internal accounting policies relating to research and development expenditures Expenditure incurred in the research phase of internal R&D shall be included in current gain/loss at the time of occurrence. Intangible assets recognized for expenditure in exploitation stage by satisfying the followed at same time: ①it is technically feasible that the intangible asset can be used or sold upon completion; ②there is intention to complete the intangible asset for use or sale; ③the intangible asset can produce economic benefits, including there is evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset; ④there is sufficient support in terms of technology, financial resources and other resources in order to complete the development of the intangible asset, and there is capability to use or sell the intangible asset; ⑤the expenses attributable to the development phase of the intangible asset can be measured reliably. 31. Impairment of long-term assets Nil 32. Long-term expenses to be apportioned Long-term expenses to be apportioned are booked by actual amount occurred, and apportioned evenly during the benefit period or regulated period.In case that the long-term deferred expenses are not likely to benefit the 90 subsequent accounting periods, the outstanding value of the item to be amortized shall be included in current profit or loss in full. 33. Contract liability The Company lists contract assets or contract liabilities in the balance sheet based on the relationship between performance obligations and customer payments. The Company's obligations to transfer goods or provide services to customers for which consideration has been received or receivable are listed as contract liabilities. Contract assets and contract liabilities under the same contract are listed as a net amount. 34. Employee compensation (1) Accounting treatment for short-term compensation During the accounting period when staff providing service to the Company, the actual short-term compensation occurred shall recognized as liabilities and reckoned into current gains/losses or relevant assets costs. The non-monetary welfare is measured by fair value. (2) Accounting treatment for post-employment benefit The Company terminates the labor relationship with an employee before the employee labor contract expires, or proposes to offer a compensation to encourage an employee to voluntarily accept the downsizing. When the Company cannot unilaterally withdraw the labor relationship cancellation plan or the downsizing proposal nor confirm the relevant costs of the restructuring involving the payment of termination benefits, whichever is earlier, the liabilities arising from the compensation for the termination of the labor relationship with the employees are recognized and included in the current profit and loss. (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 91 earlier. (4) Accounting for other long-term employee benefits The employees of the Company have participated in the basic social endowment insurance organized and implemented by the local labor and social security department. The Company pays the endowment insurance premium to the local basic social endowment insurance agency on a monthly basis based on the base and ratio of the local basic social endowment insurance payment. After the retirement of employees, the local labor and social security department has the responsibility to pay the social basic pension to the retired employees. During the accounting period in which employees provide services, the Company recognizes the amount payable calculated according to the above social security insurance regulations as the liabilities and includes them in the current profit and loss or related asset costs. 35.Lease liabilities Nil 36. Accrual liability Nil 37. Share-based payment (1)Types of share-based payment Share-based payment comprises of equity-settled share-based payment and cash-settled share-based payment. (2)Determination of fair value of equity instruments 1)determined based on the price quoted in an active market if there exists active market for the instrument. 2)determined by adoption of valuation technology if there exists no active market, including by reference to the recent arm’s length market transactions between knowledgeable, willing parties, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. (3)Basis for determination of the best estimate of exercisable equity instruments To be determined based on the subsequent information relating to latest change of exercisable employees. (4)Accounting relating to implementation, amendment and termination of share-based payment schemes 1)Equity-settled share-based payment For equity instruments that may be exercised immediately after the grant, the fair value of such instrument shall, on the date of the grant, be recognized in relevant costs or expenses with the increase in the capital reserve accordingly. For equity-settled share-based payment made in return for the rendering of employee services that 92 cannot be exercised until the services are fully rendered during vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the capital reserves at the fair value of such instruments on the date of the grant. For equity-settled share-based payment made in exchange for service from other parties, such payment shall be measured at the fair value of the service as of the acquisition date is the fair value can be measured reliably. And if the fair value of the service cannot be measured reliably while the fair value of the equity instrument can be measured reliably, it shall be measure at the fair value of the instrument as of the date on which the service is acquired, which shall be recorded in relevant cost or expense with increase in owners’ equity accordingly. 2)Cash-settled share-based payment For the cash-settled share-based payment that may be exercised immediately after the grant in exchange for render of service by employees, the fair value of the liability incurred by the Company shall, on the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For cash-settled share-based payment made in return for the rendering of employee services that cannot be exercised until the services are fully provided during vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the corresponding liabilities at the fair value of the liability incurred by the Company. 3)Revision and termination of share-based payment schemes If the revision results in an increase in the fair value of the equity instruments granted, the Company shall recognize the increase in the services rendered accordingly at the increased fair value of the equity instruments. If the revision results in an increase in the number of equity instruments granted, the Company will recognize the increase in the services rendered accordingly at the fair value of the increased number of equity instruments. If the Company revises the vesting conditions on terms favorable to the employees, the Company will take into consideration of the revised vesting conditions when dealing with the vesting conditions. If the revision results in a decrease in the fair value of the equity instruments granted, the Company shall continue recognize the amount of services rendered accordingly at the fair value of the equity instruments on the date of grant without considering the decrease in the fair value of the equity instruments. If the revision results in a decrease in the number of equity instruments granted, the Company will account for such decrease by reducing part of the cancellation of equity instruments granted. If the Company revises the vesting conditions on terms not favorable to the employees, the Company will not take into consideration of the revised vesting conditions when dealing with the vesting conditions. If the Company cancels the equity instruments granted or settles the equity instruments granted during the vesting 93 period (other than cancellation as a result of failure to satisfy the vesting conditions), such cancellation or settlement will be treated as accelerated exercisable rights and the original amount in the remaining vesting period will be recognized immediately. 38. Other financial instruments including senior shares and perpetual bonds Nil 39. Revenue The Company shall comply with the disclosure requirement of “Guidelines on Industry Information Disclosure of Shenzhen Stock Exchange No. 11- Listed Company Engaged in Jewelry-related Business” (1) Recognition of revenue On the starting date of the contract, the company evaluates the contract, identifies each individual performance obligation contained in the contract, and determines whether each individual performance obligation is performed within a certain period of time or at a certain point in time. When meeting one of the following conditions, it belongs to the performance obligation within a certain period of time, otherwise, it belongs to the performance obligation at a certain point in time: 1) The customer obtains and consumes the economic benefits brought by the company's performance at the same time as the company performs the contract; 2) The customer can control the goods or services under construction during the company's performance; 3) The goods or services produced during the company's performance have irreplaceable uses, and the company has the right to collect payments for the accumulated performance part of the contract during the entire contract period . For performance obligations performed within a certain period of time, the company recognizes revenue in accordance with the performance progress during that period of time. When the performance progress cannot be reasonably determined, if the cost incurred is expected to be compensated, the revenue shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined. For performance obligations performed at a certain point in time, revenue is recognized at the point when the customer obtains control of the relevant goods or services. When judging whether the customer has obtained control of the goods, the company considers the following signs: 1) The company has the current right to receive payment for the goods, that is, the customer has the current payment obligation for the goods; 2) The company has transferred the legal ownership of the goods to the customer, that is, the customer has legal ownership of the goods; 3) The company has transferred the product to the customer in kind, that is, the customer has physically taken possession of the product; 4) The company has transferred the major risks and rewards of the ownership of the goods to the customer, that is, the customer has obtained the main risks and rewards of the ownership of the goods; 5) the customer has accepted the goods; 6) Other signs indicate that the customer has obtained control of the goods. 94 (2) Principles of income measurement 1) The company measures income based on the transaction price allocated to each individual performance obligation. The transaction price is the amount of consideration that the company expects to be entitled to receive due to the transfer of goods or services to the customer, and does not include the amount collected on behalf of a third party and the amount expected to be returned to the customer. 2) If there is variable consideration in the contract, the company shall determine the best estimate of the variable consideration based on the expected value or the amount most likely to incur, but the transaction price including the variable consideration shall not exceed the amount at which the accumulatively recognized income is most likely not be subject to a significant reversal when the relevant uncertainty is eliminated. 3) If there is a major financing component in the contract, the company shall determine the transaction price based on the amount payable in cash when the customer assumes control of the goods or services. The difference between the transaction price and the contract consideration shall be amortized by the effective interest method during the contract period. On the starting date of the contract, if the company expects that the interval between the customer's acquisition of control of the goods or services and the customer's payment of the price will not exceed one year, we will not consider the significant financing components in the contract. 4) If the contract contains two or more performance obligations, the company will allocate the transaction prices to each individual performance obligation in accordance with the relative proportion of the stand-alone selling price of the goods promised by each individual performance obligation on the commencement date of contract. (3) Specific method of revenue recognition: In accordance with the general principles of revenue recognition and the actual situation of the company's product sales, the company formulates a specific revenue recognition method that the products sold by the company to customers are recognized as revenue after the products are delivered to the customer and the customer carries out acceptance and inspection. 40. Government subsidy (1) government subsidy including those relating to assets and relating to income (2)government grant, if granted as monetary assets, are measured at the amount received or receivable, and measured at fair value if granted as non-monetary assets. If the fair value can not be determined reliably, they shall be measured at nominal value. (3) Aggregate method for government subsidy: 1)government subsidy relating to assets are recognized as deferred income, which shall be recorded in profit or loss by installment reasonably and systematically within the useful life of the assets. If assets are sold, transferred, discarded as useless or damaged prior to expiration of the useful life, the remaining deferred income undistributed shall be transferred to profit or loss for the period in which the assets are disposed. 95 2)If government subsidy relating to income are used to compensate for relevant costs or loss for the subsequent periods, they shall be recognized as deferred income, and recorded in profit or loss for the period in which the relevant costs are recognized. If government subsidy relating to income are used to compensate for the relevant costs or loss occurred, they shall be recorded in profit or loss for the period directly. (4)Net method for government subsidy 1) government subsidy relating to assets are used to write off the carrying value of the relevant assets; 2) If government subsidy relating to income are used to compensate for relevant costs or loss for the subsequent periods, they shall be recognized as deferred income, and recorded in profit or loss for the period in which offset against the relevant costs. If government subsidy relating to income are used to compensate for the relevant costs or loss occurred, they shall be offset against the relevant costs for the period directly. (5)The Company adopts aggregated accounting method for the government subsidy received. (6)As for the government subsidy comprising both portions relating to assets and income, separate accounting shall be made for different portion; in case it is hard to differentiate the portions, the grants will be recorded as related to income in general. (7)The Company realizes government subsidy relating to its normal activities as other income based on the substance of economic business, and if not related to its normal activities, realized as non-operating income and expenditure. (8)Subsidized loans from preferential policy obtained by the Company are classified based on whether subsidy funds are paid to the loaning bank or directly to the Company by the competent financial authorities and are treated based on the following principles: 1)Where subsidy funds are paid to the loaning bank by the competent financial authorities and the bank then provides loans to the Company at a preferential policy rate, accounting shall be made by the Company as follows: a. Recognizes the actual borrowing amount received as the carrying value of the loan, and calculates the relevant borrowing costs based on the principal and the preferential policy rate. b.Recognizes the fair value of the loan as the carrying value and calculates the borrowing cost under effective interest method, and recognizes the difference between the actual amount received and the fair value of the loan as deferred income. Deferred income is amortized over the term of the loan under effective interest method and offset against the relevant borrowing costs. 2)Where subsidy funds are paid directly to the Company, the Company will offset the corresponding subsidy against the relevant borrowing expenses. 96 41. Deferred income tax assets/Deferred income tax liabilities (1) Deferred tax assets or deferred tax liabilities are calculated and recognized based on the difference between the carrying amount and tax base of assets and liabilities (and the difference of the carrying amount and tax base of items not recognized as assets and liabilities but with their tax base being able to be determined according to tax laws) and in accordance with the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled. (2)A deferred tax asset is recognized to the extent of the amount of the taxable income, which it is most likely to obtain and which can be deducted from the deductible temporary difference. At the balance sheet date, if there is any exact evidence that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized, the deferred tax assets unrecognized in prior periods are recognized. (3)At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carrying amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefit of the deferred tax asset to be utilized. Such reduction is subsequently reversed to the extent that it becomes probable that sufficient taxable income will be available. (4)The income tax and deferred tax for the period are treated as income tax expenses or income through profit or loss, excluding those arising from the following circumstances: ① business combination; and ② the transactions or items directly recognized in equity. 42. Lease (1)Accounting for operating lease When the Company is the lessee, lease payments are recognized as cost or profit or loss with straight-line method over the lease term. Initial expenses are recognized directly into profit or loss. Contingent rents are charged as profit or loss in the periods in which they are incurred. When the Company is the lessor, lease income is recognized as profit or loss with straight-line method over the lease term. Initial expenses, other than those with material amount and eligible for capitalization which are recognized as profit or loss by installments, are recognized directly as profit or loss. Contingent rents are charged into profit or loss in the periods in which they are incurred. (2)Accounting for financing lease When the company acts as lessee, at the inception of lease, the lower of fair value of leased assets at the inception of lease and the present value of minimum lease payment is recognized as the value of leased assets. The 97 minimum lease payment is recognized as the value of long-term payable. Their difference is recorded as unrecognized finance costs with any initial direct expense incurred recorded in the value of leased assets. For each period of the lease term, current finance cost is calculated using effective interest method. When the company acts as lessor, at the inception of lease, the sum of minimum lease income at the inception of lease and the initial direct expense is recognized as the value of finance lease payment receivable, with unsecured balance also recorded. The difference between the sum of minimum lease income, initial direct expense and unsecured balance and the sum of their present values is recognized as unrealized finance income. For each period of the lease term, current finance income is calculated using effective interest method. 43. Other important accounting policy and estimation Discontinued operation refers to the operation disposed or classified as held-for-sale by the Company and presented separately under operation segments and financial statements, which has fulfilled one of the following criteria: (1) it represents an independent key operation or key operating region; (2) it is part of the proposed disposal plan on an independent key operation or proposed disposal in key operating region; or (3) it only establishes for acquisition of subsidiary through disposal. The enterprise shall separately list profit and loss from continuing operations and profit and loss from discontinuing operations in the profit statement. For non-current assets held for sale or disposal groups that do not meet the definition of discontinuing operations, the impairment losses and reversal amounts and disposal gains and losses should be presented as profit or loss from continuing operations. Operational gains and losses and disposal profits and losses such as impairment losses and reversal amounts of discontinuing operations should be reported as profits or losses of discontinuing operations. 44. Changes of important accounting policy and estimation (1) Changes of important accounting policy √ Applicable □ Not applicable The contents and reasons of accounting Examination and approval procedures Note policy changes According to the regulations of The changes in accounting policy will not "Accounting Standards for Business st Deliberated and approved by 31 session have a material impact on the financial Enterprises No. 21 - Lease" of the Ministry of 10th BOD status, operation results and cash flow of of Finance, the enterprise that are required the Company to be listed both domestically and 98 internationally and enterprises that are listed outside of China and adopt IFRS or ASBE to prepare their financial statements, will be effective from January 1, 2019. Other enterprises implementing the ASBEs will be effective from 1 Jan. 2021. The Company applies simplified treatment to lease and chooses not to recognize the right -of-use assets and lease liability, and in each period of lease term, charged to the cost of relevant assets or current gain/loss on a straight-line basis or other systematic and reasonable basis, no need to adjust the items of balance sheet at the beginning of the year. (2) Changes of important accounting estimation □ Applicable √ Not applicable (3)Adjust the financial statement items at beginning of the year when first implemented the New Lease Standards since 2021 Applicable Whether adjusted the item of balance sheet at year-begin or not □Yes √No Explanation of reasons for not requiring adjustment of the items of balance sheet at beginning of the year Mainly the short-term lease and low-value assets, the Company applies simplified treatment to lease and chooses not to recognize the right -of-use assets and lease liability, and in each period of lease term, charged to the cost of relevant assets or current gain/loss on a straight-line basis or other systematic and reasonable basis, no need to adjust the items of balance sheet at the beginning of the year. (4) Explanation on retrospective adjustment of prior period comparative data for the first implementation of new leasing standards from 2021 □Applicable √Not applicable 45. Other nil VI. Taxes 1. Main tax category and tax rate Tax category Tax calculation evidence Tax rate Sales of goods, taxable labor service Value added tax revenue, taxable income, intangible assets 5%, 6%, 13% income and income from property leasing 99 Tax for maintaining and building cities Turnover tax payable 7% Enterprise income tax Taxable income 2.5%, 10%, 15% Educational surtax Turnover tax payable 3% Local educational surtax Turnover tax payable 2% Disclose reasons for different taxpaying body Taxpaying body Income tax rate The Company 15.00% Shenzhen Emmelle Industry Co., Ltd. 2.5%, 10% Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd. 2.5%, 10% Shenzhen Emmelle Cloud Technology Co., Ltd. 2.5%, 10% 2. Tax preference 1) : The Company obtained the high-tech enterprise certificate "GR202044200651" jointly approved by the Shenzhen Science and Technology Innovation Commission, the Shenzhen Finance Bureau, and the Shenzhen Tax Service, State Taxation Administration on December 11, 2020, the validity period is from 2020 to 2022. Therefore, the company enjoys a preferential tax rate of 15% in 2020. 2) : According to the "Enterprise Income Tax Law of the People's Republic of China" and its implementation regulations, the "Notice of the State Taxation Administration and Ministry of Finance on the Implementation of Inclusive Tax Relief Policies for Small and Micro Enterprises" (CS[2019] No. 13) and Announcement of the Implementation of Preferential Income Tax Policies for Small & Micro Enterprises and Individual Entrepreneurs by the Ministry of Finance and the State Administration of Taxation (CS[2021] No.12) and other provisions, from January 1, 2021 to December 31, 2022, the portion of the annual taxable income of small, low-profit enterprises that does not exceed 1 million yuan will be included in the taxable income by 25%, and the corporate income tax will be paid at a tax rate of 20%. On the basis of this preferential policy, the tax will be halved (the effective tax rate is 2.5%); The part of annual taxable income exceeding 1 million yuan but not exceeding 3 million yuan shall be deducted by 50% and included in the taxable income, and the enterprise income tax shall be paid at the tax rate of 20% (the effective tax rate is 10%). Shenzhen Xinsen Jewelry Gold Supply Chain Co., Ltd., Shenzhen Emmelle Industry Co., Ltd., adn Shenzhen Emmelle Cloud Technology Co., Ltd., the Company’s subsidiaries, are small and low-profit enterprises, so the above preferential tax rate is applicable to them. 3. Other Nil VII. Notes to Items in Consolidated Financial Statements 1. Monetary fund In RMB Item Ending balance Opening balance Cash on hand 29,702.26 21,530.26 Cash in bank 17,405,190.98 19,866,447.79 100 Total 17,434,893.24 19,887,978.05 Other explanation Nil 2. Trading financial assets In RMB Item Ending balance Opening balance Including: Including: Other explanation: Nil 3. Derivative financial assets In RMB Item Ending balance Opening balance Other explanation: Nil 4. Notes receivable (1) Category In RMB Item Ending balance Opening balance In RMB Ending balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Book Book Accrual Accrual Amount Ratio Amount value Amount Ratio Amount value ratio ratio Including: Including: Total 0.00 0.00% 0.00 0.00% 0.00 0.00 0.00% 0.00 0.00% 0.00 Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes 101 Total 0.00 0.00 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Total 0.00 0.00 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Total 0.00 0.00 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: Nil Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: If the provision for bad debts of notes receivable is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable (2) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening balance Collected or Ending balance Accrual Charge-off Other reversal 102 Total 0.00 0.00 0.00 0.00 0.00 0.00 Including important amount of bad debt provision collected or reversal in the period: □Applicable √Not applicable (3) Note receivable pledged at period-end In RMB Item Amount pledged at period-end Total 0.00 (4) Note receivable which have endorsed and discount at period-end and has not expired on balance sheet date In RMB Item Amount derecognition at period-end Amount not derecognition at period-end Total 0.00 0.00 (5) Notes transfer to account receivable due for failure implementation by drawer at period-end In RMB Item Amount transfer to account receivable at period-end Total 0.00 Other explanation Nil (6) Note receivable actually charge-off in the period In RMB Item Amount charge-off Including important note receivable charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Total -- 0.00 -- -- -- Explanation on note receivable change-off: Nil 103 5. Account receivable (1) Category In RMB Ending balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Book Accrual Accrual Book value Amount Ratio Amount value Amount Ratio Amount ratio ratio Account receivable with bad debt 6,176,65 3,492,31 2,684,337 10,400,55 4,821,546 5,579,011.2 10.43% 56.54% 17.33% 46.36% provision accrual by 5.91 8.65 .26 7.65 .38 7 single basis Including: Accounts with single minor amount but 6,176,65 3,492,31 2,684,337 10,400,55 4,821,546 5,579,011.2 with bad debts 10.43% 56.54% 17.33% 46.36% 5.91 8.65 .26 7.65 .38 7 provision accrued individually Account receivable with bad debt 53,027,1 159,081. 52,868,08 49,601,21 148,803.6 49,452,413. 89.57% 0.30% 82.67% 0.30% provision accrual by 63.38 49 1.89 7.08 5 43 portfolio Including: Account receivable withdrawal bad debt provision by group of 53,027,1 159,081. 52,868,08 49,601,21 148,803.6 49,452,413. credit risk 89.57% 0.30% 82.67% 0.30% 63.38 49 1.89 7.08 5 43 characteristics (Aging analysis method) 59,203,8 3,651,40 55,552,41 60,001,77 4,970,350 55,031,424. Total 100.00% 6.17% 100.00% 8.28% 19.29 0.14 9.15 4.73 .03 70 Bad debt provision accrual on single basis: Account receivable with significant single amount period-end but withdrawal bad debt provision on single basis In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Sichuan Wanling Electric Expected to be difficult 1,102,072.20 1,102,072.20 100.00% Technology Co., Ltd. to recover 104 Zhengzhou Guiguan Expected to be difficult 1,007,233.79 302,170.14 30.00% Tech. Trade. Co., Ltd to recover Suzhou Jiaxin Economic Expected to be difficult 888,757.00 266,627.10 30.00% Trade Co., Ltd. to recover Shijiazhuang Dasong Expected to be difficult 797,064.00 797,064.00 100.00% Tech. Co., Ltd to recover Dongguan Daxiang New Expected to be difficult 746,734.00 224,020.20 30.00% Energy Co., Ltd. to recover Suzhou Daming Vehicle Expected to be difficult 552,596.42 276,298.21 50.00% Industry Co., Ltd. to recover Guangdong Xinlingjia Expected to be difficult 348,136.00 104,440.80 30.00% New Energy Co., Ltd. to recover Suzhou Daming Vehicle Expected to be difficult 449,195.00 134,758.50 30.00% Industry Co., Ltd. to recover Shanghai Swen Electric Expected to be difficult 284,867.50 284,867.50 100.00% Vehicle Co., Ltd. to recover Total 6,176,655.91 3,492,318.65 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Bad debt provision accrual on portfolio: Accounts receivable with provision for bad debts by aging analysis method In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Within one year (one year 50,855,577.44 152,566.73 0.30% included) 1-2 years (2 years included) 2,171,585.94 6,514.76 0.30% Total 53,027,163.38 159,081.49 -- Explanation on portfolio basis: Nil Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: If the provision for bad debts of account receivable is made in accordance with the general model of expected credit losses, please 105 refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable By account age In RMB Account age Ending balance Within one year (one year included) 46,671,675.70 Within one year 46,671,675.70 1-2 years 4,659,969.93 2-3 years 5,668,169.96 Over 3 years 2,204,003.70 3-4 years 304,867.50 4-5 years 1,102,072.20 Over 5 years 797,064.00 Total 59,203,819.29 (2) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening balance Collected or Ending balance Accrual Charge-off Other reversal Bad debt provision for 4,970,350.03 38,984.24 1,357,934.13 3,651,400.14 accounts receivable Total 4,970,350.03 38,984.24 1,357,934.13 3,651,400.14 Including important amount of bad debt provision collected or reversal in the period: In RMB Enterprise Amount collected or reversal Collection way Shenzhen Jiahaosong Technology Co., Ltd. 718,081.13 Bank transfer, payment of goods arrears Shenzhen Weterui New Energy 501,291.32 Bank transfer, payment of goods arrears Technology Co., Ltd. Total 1,219,372.45 -- After the Company sent a lawyer's letter, the other party offset arrears by part of the goods after negotiation, and the rest was paid by bank transfer. Because the customer has not paid the debt according to the time limit agreed in the contract, which is more than one year overdue, and the debt recovery is expected to be difficult, so the bad debt is set aside at 30% of impairment. 106 (3) Account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Explanation on account receivable charge-off: (4) Top five account receivables collected by arrears party at ending balance In RMB Ending balance of accounts Proportion of total closing balance Ending balance of bad bet Name receivable of accounts receivable provision Guangshui Jiaxu Energy 19,875,160.22 33.57% 59,625.48 Technology Co., Ltd. Shenzhen Yunshang 11,810,930.58 19.95% 35,432.79 Jewelry Co., Ltd. Fuzhou Rongrun Jewelry 10,254,982.87 17.32% 30,764.95 Co., Ltd. Xi’an Grom Trading Co., 5,178,103.39 8.75% 15,534.31 Ltd. Xi’an Zhongjinpu Trading 1,696,559.60 2.86% 5,089.68 Co., Ltd. Total 48,815,736.66 82.45% (5) Account receivable derecognition due to transfer of financial assets Nil (6) Assets and liability resulted by account receivable transfer and continuous involvement Nil Other explanation: Nil 6. Receivables financing In RMB 107 Item Ending balance Opening balance Change of receivables financing and fair value in the period □Applicable √Not applicable If the provision for bad debts of receivable financing is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable Other explanation: Nil 7. Account paid in advance (1) By account age In RMB Ending balance Opening balance Account age Amount Ratio Amount Ratio Within one year 4,382,245.09 100.00% 816,541.52 100.00% Total 4,382,245.09 -- 816,541.52 -- Explanation on un-settlement in time for advance payment with over one year account age and major amounts: Nil (2) Top 5 advance payment at ending balance by prepayment object Enterprise Relationship Amount Account age Nature Ratio in total with the advance e Company payment (%) Shenzhen Lianzhonghe Technology Co., Non-related 1,642,320.00 Within one Payment 37.48 Ltd. party year Shenzhen Guanhong Weiye Technology Non-related 721,000.00 Within one Payment 16.45 Co., Ltd. party year Shenzhen Qunli Information Technology Non-related 467,837.00 Within one Payment 10.67 Co., Ltd. party year Shenzhen Longrui Langshi Technology Non-related 400,000.00 Within one Payment 9.13 Development Co., Ltd. party year Liancheng Kedeyi New Energy Technology Non-related 322,600.00 Within one Payment 7.36 Co., Ltd. party year Total 3,553,757.00 81.09 Other explanation: Nil 108 8. Other account receivable In RMB Item Ending balance Opening balance Other account receivable 654,021.99 576,770.36 Total 654,021.99 576,770.36 (1) Interest receivable 1) Category In RMB Item Ending balance Opening balance 2) Important overdue interest In RMB Impairment (Y/N) and Borrower Ending Balance Overdue time Overdue reason judgment basis Total 0.00 -- -- -- Other explanation: Nil 3) Accrual of bad debt provision □Applicable √Not applicable (2) Dividend receivable 1) Category In RMB Item (or invested company) Ending balance Opening balance 2) Important dividend receivable with over one year aged In RMB Item (or invested Causes of failure for Impairment (Y/N) and Ending balance Account age company) collection judgment basis Total 0.00 -- -- -- 109 3) Accrual of bad debt provision □Applicable √Not applicable Other explanation: Nil (3) Other account receivable 1) By nature In RMB Account nature Ending book balance Opening book balance Deposit or margin 647,093.00 618,609.00 Payment for equipment 311,400.00 311,400.00 Personal loan of employees 59,396.96 10,396.88 Total 1,017,889.96 940,405.88 2) Accrual of bad debt provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on January 1, 363,635.52 363,635.52 2021 January 1, 2021 balance —— —— —— —— in the current period Accrued in this period 358.54 358.54 Reversal in Current 126.09 126.09 Period Balance on June 30, 2021 363,867.97 363,867.97 Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable By account age In RMB Account age Ending balance Within one year (one year included) 540,019.96 Within one year (one year included) 540,019.96 110 1-2 years 62,000.00 2-3 years 53,970.00 Over 3 years 361,900.00 3-4 years 40,200.00 4-5 years 11,700.00 Over 5 years 310,000.00 Total 1,017,889.96 3) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening balance Collected or Ending balance Accrual Charge-off Other reversal Bad debt provision for 363,635.52 358.54 126.09 363,867.97 other receivables Total 363,635.52 358.54 126.09 363,867.97 Nil Important amount of bad debt provision switch-back or collection in the period: In RMB Enterprise Amount switch-back or collection Collection way Total 0.00 -- Nil 4) Other account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major other account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Total -- 0.00 -- -- -- Other Explanation on account receivable charge-off Nil 111 5) Top 5 other account receivable collected by arrears party at ending balance In RMB Proportion in total other account Ending balance of Enterprise Nature Ending Balance Account age receivables at bad debt provision period-end Shenzhen Luwei Payment for Mechatronic 300,000.00 Over 5 years 29.47% 300,000.00 equipment Equipment Co., Ltd Shenzhen Gangdelong Margin or deposit 211,840.00 Within one year 20.81% 635.52 Industrial Co., Ltd. Shenye Pengji Margin or deposit 111,927.00 Within one year 10.99% 335.78 (Group) Co., Ltd. Alipay (China) Network Technology Margin or deposit 110,000.00 Within 3 years 10.81% 330.00 Co., Ltd. customer reserve fund Quick Money Payment Clearing Information Co., Margin or deposit 30,000.00 Within one year 2.95% 90.00 Ltd. Customer Reserve Fund Total -- 763,767.00 -- 75.03% 301,391.30 6) Account receivable with government grants involved In RMB Time, amount and basis Enterprise Government grants Ending Balance Ending account age of amount collection estimated Nil 7) Other account receivable derecognition due to financial assets transfer Nil 8) Assets and liability resulted by other account receivable transfer and continuous involvement Nil Other explanation: 112 Nil 9. Inventory Whether companies need to comply with the disclosure requirements of the real estate industry No (1) Category In RMB Ending balance Opening balance Provision for Provision for inventory inventory depreciation or depreciation or Item Book balance contract Book value Book balance contract Book value performance cost performance cost impairment impairment provision provision Raw materials 3,231,813.44 3,231,813.44 1,298,565.61 1,298,565.61 Inventory goods 3,065,640.50 250,864.51 2,814,775.99 2,545,994.24 278,533.53 2,267,460.71 Goods sold 5,656.40 5,656.40 Consigned processing 1,554,486.34 1,554,486.34 4,157,643.22 4,157,643.22 materials Total 7,851,940.28 250,864.51 7,601,075.77 8,007,859.47 278,533.53 7,729,325.94 The Company shall comply with the disclosure requirement of “Guidelines on Industry Information Disclosure of Shenzhen Stock Exchange No. 11- Listed Company Engaged in Jewelry-related Business” Item Category Amount(yuan) Percentage Finished product Jewelry 1,370,407.91 22.08% Gold jewelry — — Other — — Total 1,370,407.91 22.08% Raw materials Gold 821,910.81 13.24% Platinum — — Diamonds 2,612,048.33 42.08% Total 3,433,959.14 55.32% Packaging 51,215.71 0.83% Goods in process 1,352,340.64 21.78% Total 6,207,923.40 100.00% 113 (2) Provision for inventory depreciation or contract performance cost impairment provision In RMB Current increased Current decreased Item Opening balance Switch back or Ending balance Accrual Other Other charge-off Inventory goods 278,533.53 27,669.02 250,864.51 Total 278,533.53 27,669.02 250,864.51 Nil (3) Explanation on capitalization of borrowing costs at ending balance of inventory Nil (4) Description of the current amortization amount of contract performance costs Nil 10. Contractual assets In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Total 0.00 0.00 0.00 0.00 Book value of contract assets has major changes and causes: In RMB Item Amount changes Reason for change Total 0.00 —— If the provision for bad debts of contract asset is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable Accrual of impairment provision in the period In RMB Reversal in Current Reversal/Charge-off in Item Accrued in this period Causes Period the period Total 0.00 0.00 0.00 -- Other explanation: Nil 114 11. Assets held for sale In RMB 期末 Book Impairment Ending book Item 公允价值 预计处置费用 预计处置时间 balance provision value Total 0.00 0.00 0.00 0.00 0.00 -- Other explanation: Nil 12. Non-current asset due within one year In RMB Item Ending balance Opening balance Important creditors’ investment/Other creditors’ investment In RMB Ending balance Opening balance Creditor's rights Face value Coupon rate Actual rate Due date Face value Coupon rate Actual rate Due date Total 0.00 —— —— —— 0.00 —— —— —— Other explanation: Nil 13. Other current assets In RMB Item Ending balance Opening balance Tax credit and input tax to be certified 3,340,005.35 2,652,771.13 Prepaid corporate income tax 51,574.09 Prepaid input tax 11,080.09 Total 3,340,005.35 2,715,425.31 Other explanation: Nil 14. Creditors’ investment In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Total 0.00 0.00 0.00 0.00 115 Important creditors’ investment In RMB Ending balance Opening balance Creditor's rights Face value Coupon rate Actual rate Due date Face value Coupon rate Actual rate Due date Total 0.00 —— —— —— 0.00 —— —— —— Accrual of impairment provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) January 1, 2021 balance —— —— —— —— in the current period Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable Other explanation: Nil 15. Other creditors’ investment In RMB Cumulative loss Change of Cumulative impairment Opening Accrued Ending Item fair value in Cost changes of recognized in Note balance interest Balance the period fair value other comprehensi ve income Total 0.00 0.00 0.00 0.00 0.00 —— Important other creditors’ investment In RMB Other creditors’ Ending balance Opening balance investment Face value Coupon rate Actual rate Due date Face value Coupon rate Actual rate Due date Total 0.00 —— —— —— 0.00 —— —— —— Accrual of impairment provision In RMB Phase I Phase II Phase III Bad debt provision Total Expected credit Expected credit losses for Expected credit losses for 116 losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) January 1, 2021 balance —— —— —— —— in the current period Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable Other explanation: Nil 16. Long-term account receivable (1) Long-term account receivable In RMB Ending balance Opening balance Item Bad debt Bad debt 折现率区间 Book balance Book value Book balance Book value provision provision Total 0.00 0.00 0.00 0.00 -- Impairment of bad debt provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) January 1, 2021 balance —— —— —— —— in the current period Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable Nil (2) Long-term account receivable derecognized due to financial assets transfer (3) Assets and liabilities resulted by long-term account receivable transfer and continues involvement Other explanation 17. Long-term equity investments In RMB The Opening Changes in the period (+, -) Ending Ending 117 invested balance Other Cash Balance balance Investme Accrual entity (Book Additiona comprehe dividend (Book of nt gains Other of value) l Capital nsive or profit value) impairme recognize equity impairme Other investmen reduction income announce nt d under change nt t adjustmen d to provision equity provision t issued I. Joint venture Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 II. Associated enterprise Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation Nil 18. Other equity instrument investment In RMB Item Ending balance Opening balance Itemized the non-tradable equity instrument investment in the period In RMB Causes of those that designated Retained earnings measured by fair Cause of retained transfer from value and with its earnings transfer Dividend income Cumulative Item Cumulative gains other variation from other recognized losses comprehensive reckoned into comprehensive income other income comprehensive income Other explanation: Nil 19. Other non-current financial assets In RMB Item Ending balance Opening balance Other explanation: Nil 118 20. Investment real estate (1) Investment real estate measured at cost □Applicable √Not applicable (2) Investment real estate measured at fair value □Applicable √Not applicable (3) Investment real estate without property rights certificate In RMB Reasons for failing to complete the Item Book value property rights certificate Other explanation Nil 21. Fixed assets In RMB Item Ending balance Opening balance Fixed assets 3,612,186.01 3,792,133.36 Total 3,612,186.01 3,792,133.36 (1) Fixed assets In RMB Housing and Machinery Means of Electronic Item Total buildings equipment transportation equipment and other I. Original book value: 1.Opening balance 2,959,824.00 1,414,480.77 958,593.21 248,254.93 5,581,152.91 2.Current 5,272.56 5,272.56 increased (1) Purchase 5,272.56 5,272.56 (2) Construction in process transfer-in (3) The increase in business 119 combination 3.Current decreased (1) Disposal or scrap 4.Ending balance 2,959,824.00 1,414,480.77 958,593.21 253,527.49 5,586,425.47 II. Accumulated depreciation 1.Opening balance 599,364.36 316,423.81 690,963.97 182,267.41 1,789,019.55 2.Current 66,596.04 63,651.72 46,751.52 8,220.63 185,219.91 increased (1) Accrual 66,596.04 63,651.72 46,751.52 8,220.63 185,219.91 3.Current decreased (1) Disposal or scrap 4.Ending balance 665,960.40 380,075.53 737,715.49 190,488.04 1,974,239.46 III. Impairment provision 1.Opening balance 2.Current increased (1) Accrual 3.Current decreased (1) Disposal or scrap 4.Ending balance IV. Book value 1.Ending book 2,293,863.60 1,034,405.24 220,877.72 63,039.45 3,612,186.01 value 120 2.Opening book 2,360,459.64 1,098,056.96 267,629.24 65,987.52 3,792,133.36 value (2) Fixed assets temporary idle In RMB Accumulated Impairment Item Original book value Book value Note depreciation provision (3) Fixed assets leasing-out by operational lease In RMB Item Ending book value (4) Fixed assets without property rights certificate In RMB Reasons for failing to complete the Item Book value property rights certificate The six properties of Lianxin Garden 7-20F with original value of 2,959,824.00 Yuan. The property purchasing refers to the indemnificatory housing for enterprise talent buying from Shenzhen Housing and Construction Bureau of Luohu District. Six properties in Lianxin Garden 2,293,863.60 According to the agreement, the enterprise shall not carrying any kind of property trading with any units or individuals except the government, and the company has no property certification on the above mentioned properties. Other explanation Nil (5) Fixed assets disposal In RMB Item Ending balance Opening balance Other explanation Nil 121 22. Construction in progress In RMB Item Ending balance Opening balance (1) Construction in progress In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Total 0.00 0.00 0.00 0.00 (2) Changes in significant construction in progress In RMB Accumul including Proporti Fixed ated : interest Interest Other on of increased assets amount capitaliz capitaliz Opening decrease Ending project Sourceof Item Budget in the transfer-i Progress of ed ation rate balance d in the balance investme funds Period n in the interest amount of the Period nt in Period capitaliz of the year budget ation year Total 0.00 0.00 0.00 0.00 0.00 0.00 -- -- 0.00 0.00 0.00% -- (3) Provision for impairment of construction in progress in the current period In RMB Item Accrual in the period Reasons for accrual Total 0.00 -- Other explanation Nil (4) Engineering materials In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Total 0.00 0.00 0.00 0.00 122 Other explanation: Nil 23. Productive biological asset (1) Productive biological assets measured by cost □Applicable √Not applicable (2) Productive biological assets measured by fair value □Applicable √Not applicable 24. Oil and gas asset □Applicable √Not applicable 25. Right-of-use asset In RMB Item Total Other explanation: Nil 26. Intangible assets (1) Intangible assets In RMB Non-patent Item Land use right Patent Trademark Total technology I. Original book value 1.Opening 5,271,000.00 5,271,000.00 balance 2.Current increased (1) Purchase (2) Internal R &D (3) The increase in business 123 combination 3.Current decreased (1) Disposal 4.Ending 5,271,000.00 5,271,000.00 balance II. Accumulated depreciation 1.Opening 5,271,000.00 5,271,000.00 balance 2.Current increased (1) Accrual 3.Current decreased (1) Disposal 4.Ending 5,271,000.00 5,271,000.00 balance III. Impairment provision 1.Opening balance 2.Current increased (1) Accrual 3.Current decreased (1) Disposal 4.Ending balance IV. Book value 124 1.Ending book value 2.Opening book value Ratio of intangible assets resulted from internal R&D in balance of intangible assets at period-end (2) Land use right without certificate of title completed In RMB Reasons for failing to complete the Item Book value property rights certificate Other explanation: 1) There is no mortgage for intangible assets at the end of the period. 2) At the end of the period, no signs of impairment of intangible assets were found, and no impairment provision was made. 27. Expense on Research and Development In RMB Current increased Current decreased Opening Internal Confirmed as Transfer to Ending Item balance development Other intangible current profit balance expenditure assets and loss Total 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation Nil 28. Goodwill (1) Original book value of goodwill In RMB Current increased Current decreased The invested Formed by Opening balance Ending balance entity or items business Dispose combination Total 0.00 0.00 0.00 0.00 125 (2) Impairment provision of goodwill In RMB The invested Current increased Current decreased Opening balance Ending balance entity or items Accrual Dispose Total 0.00 0.00 0.00 0.00 Information about the asset group or asset group combination in which the goodwill is located Nil Explain the method of confirming the goodwill impairment test process, key parameters (such as the forecast period growth rat e, stable period growth rate, profit rate, discount rate, forecast period, etc. when estimating the present value of future cash flow), and the impairment loss of goodwill: Nil Impact of impairment test for goodwill Nil Other explanation Nil 29. Long-term expenses to be apportioned In RMB Amortized in the Item Opening balance Current increased Other decrease Ending balance Period Total 0.00 0.00 0.00 Other explanation Nil 30. Deferred income tax assets/Deferred income tax liabilities (1) Deferred income tax assets without offset In RMB Ending balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Impairment provision of 793,170.75 3,172,682.98 793,170.75 3,172,682.98 assets Total 793,170.75 3,172,682.98 793,170.75 3,172,682.98 126 (2) Deferred income tax liabilities without offset In RMB Ending balance Opening balance Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax differences liabilities differences liabilities (3) Deferred income tax assets and deferred income tax liabilities listed after off-set In RMB Ending balance of Trade-off between the Opening balance of Trade-off between the deferred income tax deferred income tax deferred income tax Item deferred income tax assets or liabilities after assets and liabilities at assets or liabilities after assets and liabilities off-set period-begin off-set Deferred income tax 793,170.75 793,170.75 assets (4) Details of unrecognized deferred income tax assets In RMB Item Ending balance Opening balance Total 0.00 0.00 (5) Deductible losses of un-recognized deferred income tax assets expired on the followed year In RMB Year Ending amount Opening amount Note Total 0.00 0.00 -- Other explanation: Nil 31. Other non-current assets In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Advance payment for house 400,000.00 0.00 400,000.00 400,000.00 0.00 400,000.00 Fixed increase intermediary fee 735,849.05 0.00 735,849.05 Total 1,135,849.05 0.00 1,135,849.05 400,000.00 0.00 400,000.00 127 Other explanation: As of June 30, 2021, the Housing and Construction Bureau of Luohu District, Shenzhen City has not delivered houses for enterprise talents in Luohu District. 32. Short-term loans (1) Category In RMB Item Ending balance Opening balance Explanation on short-term loans category: (2) Overdue outstanding short-term loans Total 0.00 Yuan overdue outstanding short-term loans at period-end, including the followed significant amount: In RMB Borrower Ending Balance Lending rate Overdue time Overdue rate Total 0.00 -- -- -- Other explanation: Nil 33. Trading financial liability In RMB Item Ending balance Opening balance Including: Including: Other explanation: Nil 34. Derivative financial liability In RMB Item Ending balance Opening balance Other explanation: Nil 35. Notes payable In RMB 128 种类 Ending balance Opening balance Notes expired at period-end without paid was 0.00 Yuan. 36. Account payable (1) Account payable In RMB Item Ending balance Opening balance Within one year (one year included) 9,071,697.05 8,691,337.93 1-2 years (2 years included) 423,346.08 423,346.08 2-3 years (3 years included) 487,016.93 487,016.93 3-4 years (4 years included) 1,240.00 1,240.00 4-5 years (5 years included) Over 5 years 3,204.00 3,204.00 Total 9,986,504.06 9,606,144.94 (2) Important account payable with account age over one year In RMB Item Ending balance Reasons of un-paid or carry-over Total 0.00 -- Other explanation: Nil 37. Account received in advance (1) Account received in advance In RMB Item Ending balance Opening balance (2) Account received in advance with over one year book age In RMB Item Ending balance Reasons of un-paid or carry-over Total 0.00 -- Other explanation: Nil 129 38. Contract liability In RMB Item Ending balance Opening balance Cooperative received in advance 9,174,311.93 9,174,311.93 Rent received in advance 5,306,666.67 5,511,111.11 Goods received in advance 2,218,170.13 569,290.34 Total 16,699,148.73 15,254,713.38 Book value has major changes in the period and causes In RMB Item Amount changes Reason for change Goods received in advance 1,648,879.79 Goods received in advance Total 1,648,879.79 —— 39. Wage payable (1) Wage payable In RMB Item Opening balance Current increased Current decreased Ending balance I. Short-term 1,459,244.07 3,442,252.67 4,087,559.60 813,937.14 compensation II. Post-employment benefit-Defined 263,291.38 263,291.38 contribution plan Total 1,459,244.07 3,705,544.05 4,350,850.98 813,937.14 (2) Short-term compensation In RMB Item Opening balance Current increased Current decreased Ending balance 1. Wages, bonus, 1,452,981.20 3,128,974.64 3,773,774.72 808,181.12 allowances and subsidy 3. Social insurance 109,324.60 109,324.60 Including: Medical 100,844.32 100,844.32 insurance Work injury 2,304.18 2,304.18 insurance 130 Maternity 6,176.10 6,176.10 insurance 4. Housing accumulation 167,955.60 167,955.60 fund 5. Labor union expenditure and 6,262.87 35,997.83 36,504.68 5,756.02 personnel education expense Total 1,459,244.07 3,442,252.67 4,087,559.60 813,937.14 (3) Defined contribution plan In RMB Item Opening balance Current increased Current decreased Ending balance 1. Basic endowment 259,342.82 259,342.82 insurance 2. Unemployment 3,948.56 3,948.56 insurance Total 263,291.38 263,291.38 Other explanation: At the end of the period, there were no arrears in employee compensation. 40. Taxes payable In RMB Item Ending balance Opening balance Value added tax 698,016.27 551,216.66 Corporate income tax 48,403.51 140,959.81 Individual income tax 2,497.35 23,398.74 Tax for maintaining and building cities 860.57 431.55 Stamp tax 2,552.93 6,043.60 Educational surtax 614.70 270.66 Total 752,945.33 722,321.02 Other explanation: Nil 41. Other account payable In RMB 131 Item Ending balance Opening balance Other account payable 37,658,215.37 37,882,805.52 Total 37,658,215.37 37,882,805.52 (1) Interest payable In RMB Item Ending balance Opening balance Important interest overdue without paid: In RMB Borrower Amount overdue Overdue reason Total 0.00 -- Other explanation: Nil (2) Dividend payable In RMB Item Ending balance Opening balance Other explanation, including dividends payable with over one year age and disclosure un-payment reasons: Nil (3) Other account payable 1) By nature In RMB Item Ending balance Opening balance Custodian and common benefit debts 18,728,866.44 18,728,866.44 Warranty and guarantee money 10,589,040.00 10,589,040.00 Intercourse funds 6,500,000.00 6,500,000.00 Other payable service charge (intermediary 832,359.55 832,359.55 services included) Collection and payment 654,997.35 654,997.35 Other 352,952.03 577,542.18 Total 37,658,215.37 37,882,805.52 132 2) Significant other payable with over one year age In RMB Item Ending balance Reasons of un-paid or carry-over Custodian and common benefit debts 18,728,866.44 - Warranty and guarantee money 1,580,040.00 Performance bond Shenzhen Guosheng Energy Investment 6,500,000.00 Interest-free loans Development Co., Ltd. Total 26,808,906.44 -- Other explanation Nil 42. Liability held for sale In RMB Item Ending balance Opening balance Other explanation: Nil 43. Non-current liabilities due within one year In RMB Item Ending balance Opening balance Other explanation: Nil 44. Other current liabilities In RMB Item Ending balance Opening balance Corresponding taxes of contract liability 1,374,986.67 1,175,251.38 Total 1,374,986.67 1,175,251.38 Changes of short-term bond payable: In RMB Accrual Premium/ Face Release Bond Issuing Opening Issued in interest discount Paid in Ending Bond value date period amount balance the Period by face amortizati the Period balance value on Other explanation: 133 Nil 45. Long-term loans (1) Category In RMB Item Ending balance Opening balance Explanation on category of long-term loans: Nil Other explanation, including interest rate section: Nil 46. Bonds payable (1) Bonds payable In RMB Item Ending balance Opening balance (2) Changes of bonds payable (not including the other financial instrument of preferred stock and perpetual capital securities that classify as financial liability) In RMB Accrual Premium/ Face Release Bond Issuing Opening Issued in interest discount Paid in Ending Bond value date period amount balance the Period by face amortizati the Period balance value on Total -- -- -- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (3) Convertible conditions and time for shares transfer for the convertible bonds Nil (4) Other financial instruments classify as financial liability Basic information of the outstanding preferred stock and perpetual capital securities at period-end Nil Changes of outstanding preferred stock and perpetual capital securities at period-end In RMB 134 Outstanding Period-begin Current increased Current decreased Period-end financial Amount Book value Amount Book value Amount Book value Amount Book value instrument Total 0 0.00 0 0.00 0 0.00 0 0.00 Basis for financial liability classification for other financial instrument Nil Other explanation Nil 47. Lease liability In RMB Item Ending balance Opening balance Other explanation Nil 48. Long-term account payable In RMB Item Ending balance Opening balance (1) By nature In RMB Item Ending balance Opening balance Other explanation: Nil (2) Special payable In RMB Item Opening balance Current increased Current decreased Ending balance Causes of formation Total 0.00 0.00 -- Other explanation: Nil 49. Long-term wages payable (1) Long-term wages payable In RMB 135 Item Ending balance Opening balance (2) Changes of defined benefit plans Present value of the defined benefit plans: In RMB Item Current Period Last Period Scheme assets: In RMB Item Current Period Last Period Net liability (assets) of the defined benefit plans In RMB Item Current Period Last Period Content of defined benefit plans and relevant risks, impact on future cash flow of the Company as well as times and uncertainty: Nil Major actuarial assumption and sensitivity analysis: Nil Other explanation: Nil 50. Accrual liability In RMB Item Ending balance Opening balance Causes of formation Other explanation, including relevant important assumptions and estimation: Nil 51. Deferred income In RMB Item Opening balance Current increased Current decreased Ending balance Causes of formation Total 0.00 0.00 -- Item with government grants involved: In RMB Amount Amount Cost Assets-relate Opening New grants reckoned in Other Ending Liability reckoned in reduction in d/income balance in the Period non-operatio changes Balance other income the period related n revenue Other explanation: 136 Nil 52. Other non-current liabilities In RMB Item Ending balance Opening balance Other explanation: Nil 53. Share capital In RMB Changes in the period (+, -) Shares Opening New shares transferred Ending balance balance Bonus share Other Subtotal issued from capital reserve Total shares 551,347,947.00 0.00 551,347,947.00 Other explanation: Nil 54. Other equity instrument (1) Basic information of the outstanding preferred stock and perpetual capital securities at period-end Nil (2) Changes of outstanding preferred stock and perpetual capital securities at period-end In RMB Outstanding Period-begin Current increased Current decreased Period-end financial Amount Book value Amount Book value Amount Book value Amount Book value instrument Total 0 0 0.00 0 0.00 0 Changes of other equity instrument, change reasons and relevant accounting treatment basis: Nil Other explanation: Nil 55. Capital public reserve In RMB 137 Item Opening balance Current increased Current decreased Ending balance Other capital reserve 627,834,297.85 627,834,297.85 Total 627,834,297.85 627,834,297.85 Other explanation, including changes and reasons for changes: Among the other capital reserves, 135,840,297.18 Yuan refers to the payment for creditor from shares assignment by whole shareholders; majority shareholder Guosheng Energy donated 5,390,399.74 Yuan. 56. Treasury stock In RMB Item Opening balance Current increased Current decreased Ending balance Total 0.00 0.00 Other explanation, including changes and reasons for changes: Nil 57. Other comprehensive income In RMB Current Period Less: Less: written written in in other other comprehensi comprehe ve income in nsive Account Belong to Belong to previous income in Opening before Ending Item period and previous Less: income parent minority balance income tax balance carried period and tax expense company shareholders in the after tax after tax forward to carried period gains and forward to losses in retained current earnings in period current period Total other comprehensive income 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation, including the active part of the hedging gains/losses of cash flow transfer to initial recognition adjustment for the arbitraged items: Nil 58. Reasonable reserve In RMB 138 Item Opening balance Current increased Current decreased Ending balance Total 0.00 0.00 Other explanation, including changes and reasons for changes: Nil 59. Surplus public reserve In RMB Item Opening balance Current increased Current decreased Ending balance Statutory surplus 32,673,227.01 32,673,227.01 reserves Total 32,673,227.01 32,673,227.01 Other explanation, including changes and reasons for changes: Nil 60. Retained profit In RMB Item Current period Last Period Retained profit at period-end before adjustment -1,200,950,240.88 -1,204,736,075.56 Retained profit at period-begin after adjustment -1,200,950,240.88 -1,204,736,075.56 Add: net profit attributable to shareholders of 1,365,493.34 2,797,643.50 parent company for this year Retained profit at period-end -1,199,584,747.54 -1,201,938,432.06 Adjustment for retained profit at period-begin: 1) Retroactive adjustment due to the Accounting Standards for Business Enterprise and relevant new regulations, retained profit at period-begin has 0.00 Yuan affected; 2) Due to the accounting policy changes, retained profit at period-begin has 0.00 Yuan affected; 3) Due to the major accounting errors correction, retained profit at period-begin has 0.00 Yuan affected; 4) Consolidation range changed due to the same control, retained profit at period-begin has 0.00 Yuan affected; 5) Total other adjustment impacts 0.00 Yuan retained profit at period-begin 61. Operation revenue and operation cost In RMB Current Period Last Period Item Revenue Cost Revenue Cost Main business 49,792,562.36 46,176,297.27 36,004,701.56 32,454,948.30 Other business 4,337,755.24 2,413,822.85 6,651,653.65 3,645,817.35 139 Total 54,130,317.60 48,590,120.12 42,656,355.21 36,100,765.65 Revenue: In RMB Contract type 1# Division 2# Division Total Product type 40,728,749.57 13,401,568.03 54,130,317.60 Including: Jewelry Gold 40,728,749.57 40,728,749.57 Bicycle lithium battery 13,401,568.03 13,401,568.03 materials and other Including: Including: Including: Including: Including: Including: Information relating to performance obligation: Nil Information relating to the transaction price assigned to the remaining performance obligation: The amount of revenue corresponding to performance obligation that have been signed but have not been fulfilled or have not been fulfilled at the end of the period was 0.00 Yuan, including 0.00 Yuan is expected to be recognized as revenue in subsequent years, 0.00 Yuan is expected to be recognized as revenue in subsequent years, 0.00 Yuan is expected to be recognized as revenue in subsequent years. Other explanation Nil 62. Tax and extras In RMB Item Current Period Last Period Tax for maintaining and building cities 10,660.81 432.52 Educational surtax 7,614.86 308.94 Stamp tax 22,989.10 19,157.58 Total 41,264.77 19,899.04 Other explanation: Nil 140 63. Sales expenses In RMB Item Current Period Last Period Salary and Social Security Provident Fund 483,485.38 654,651.76 Expenses of network sales 277,385.45 420,049.56 Other 115,318.30 403,677.46 Total 876,189.13 1,478,378.78 Other explanation: Nil 64. Administrative expenses In RMB Item Current Period Last Period Salary and Social Security Provident Fund 1,860,932.66 1,474,643.26 Other 758,184.82 205,076.18 Total 2,619,117.48 1,679,719.44 Other explanation: Nil 65. R&D expenses In RMB Item Current Period Last Period Salary and Social Security Provident Fund 1,564,057.10 753,742.20 Factory rent and utilities 253,115.15 Depreciation of fixed assets 46,628.10 Other 256,589.20 Total 2,120,389.55 753,742.20 Other explanation: Nil 66. Financial expenses In RMB Item Current Period Last Period Interest income -74,408.45 -31,929.72 141 Commission charge etc. 24,985.94 12,669.33 Total -49,422.51 -19,260.39 Other explanation: Nil 67. Other income In RMB Sources Current Period Last Period Individual tax withholding fee 2,516.00 10,105.77 68. Investment income In RMB Item Current Period Last Period Other explanation: Nil 69. Net exposure hedge gains In RMB Item Current Period Last Period Other explanation: Nil 70. Income from change of fair value In RMB Sources Current Period Last Period Other explanation: Nil 71. Credit impairment loss In RMB Item Current Period Last Period Bad debt loss of other account receivable -232.47 849.07 Bad debt losses of accounts receivable 1,318,949.89 169,538.78 Total 1,318,717.42 170,387.85 Other explanation: 142 Nil 72. Losses of devaluation of asset In RMB Item Current Period Last Period II. Loss of inventory falling price and loss 27,669.02 of contract performance cost impairment Total 27,669.02 Other explanation: Nil 73. Income from assets disposal In RMB Sources Current Period Last Period Dispose income of fixed assets 24,936.44 74. Non-operating income In RMB Amount reckoned in current Item Current Period Last Period non-recurring gains/losses 政府补助 300,000.00 300,000.00 Other 157,664.40 744,788.91 157,664.40 Total 457,664.40 744,788.91 457,664.40 Government grants reckoned into current gains/losses: In RMB Subsidy impact The special Assets-relate Government Issuing Offering Amount in Amount in Nature current subsidy d/income-rela grants subject causes the Period last period gains/losses (Y/N) ted (Y/N) Science and Subsidies Technology received due High-tech Innovation to enterprise Income-relate Bureau of Subsidy compliance N N 300,000.00 0.00 recognition d Luohu with local support fund District, government Shenzhen investment 143 promotion and other local support policies Other explanation: Nil 75. Non-operating expenses In RMB Amount reckoned in current Item Current Period Last Period non-recurring gains/losses Other 2,676.80 0.00 Total 2,676.80 0.00 Other explanation: Nil 76. Income tax expenses (1) Income tax expenses In RMB Item Current Period Last Period Current income tax expense 161,386.48 107,598.95 Deferred income tax expense 62,439.81 Total 161,386.48 170,038.76 (2) Adjustment on accounting profit and income tax expenses In RMB Item Current Period Total Profit 1,739,225.90 Income tax measured by statutory/applicable tax rate 161,386.48 Income tax expenses 161,386.48 Other explanation Nil 77. Other comprehensive income Found more in Note 57 144 78. Items of cash flow statement (1) Other cash received in relation to operation activities In RMB Item Current Period Last Period Interest, rent, utilities, etc. 1,443,148.59 2,356,618.56 Deposit, security deposit, advance payment 6,200,000.00 10,556,000.00 received Government subsidy 300,000.00 Other 788,879.22 2,094,036.84 Total 8,732,027.81 15,006,655.40 Explanation on other cash received in relation to operation activities: Nil (2) Other cash paid in relation to operation activities In RMB Item Current Period Last Period Deposits and security deposits paid 6,000,000.00 4,000,000.00 Payment of period expenses, operating 4,660,629.28 6,968,482.31 expenses and common debts, etc. Total 10,660,629.28 10,968,482.31 Explanation on other cash paid in relation to operation activities: Nil (3) Cash received from other investment activities In RMB Item Current Period Last Period Explanation on cash received from other investment activities: Nil (4) Cash paid related with investment activities In RMB Item Current Period Last Period Explanation on cash paid related with investment activities Nil 145 (5) Other cash received in relation to financing activities In RMB Item Current Period Last Period Explanation on other cash received in relation to financing activities: Nil (6) Cash paid related with financing activities In RMB Item Current Period Last Period Explanation on cash paid related with financing activities: Nil 79. Supplementary information to statement of cash flow (1) Supplementary information to statement of cash flow In RMB Supplementary information Current period Last Period 1. Net profit adjusted to cash flow of -- -- operation activities: Net profit 1,577,839.42 3,420,613.90 Add: Assets impairment provision -1,346,386.44 -170,387.85 Depreciation of fixed assets, consumption of oil assets and depreciation of 185,219.91 200,112.95 productive biology assets Depreciation of right-of-use assets Amortization of intangible assets 376,500.00 Amortization of long-term deferred expenses Loss from disposal of fixed assets, intangible assets and other long-term assets -24,936.44 (gain is listed with “-”) Losses on scrapping of fixed assets (gain is listed with “-”) Gain/loss of fair value changes (gain is listed with “-”) Financial expenses (gain is listed 146 with “-”) Investment loss (gain is listed with “-”) Decrease of deferred income tax 62,439.81 asset ((increase is listed with “-”) Increase of deferred income tax liability (decrease is listed with “-”) Decrease of inventory (increase is 128,250.17 1,952,473.39 listed with “-”) Decrease of operating receivable -4,177,306.87 -8,239,522.04 accounts (increase is listed with “-”) Increase of operating payable accounts 1,185,256.99 3,773,102.22 (decrease is listed with “-”) Other Net cash flows arising from operating -2,447,126.82 1,350,395.94 activities 2. Material investment and financing not -- -- involved in cash flow Conversion of debt into capital Switching Company bonds due within one year financing lease of fixed assets 3. Net change of cash and cash equivalents: -- -- Balance of cash at period end 17,434,893.24 12,214,263.85 Less: Balance of cash equivalent at 19,887,978.05 6,074,367.91 year-begin Add: Balance at year-end of cash equivalents Less: Balance at year-begin of cash equivalents Net increase of cash and cash equivalents -2,453,084.81 6,139,895.94 (2) Net cash paid for obtaining subsidiary in the Period In RMB Amount Including: -- Including: -- 147 Including: -- Other explanation: Nil (3) Net cash received by disposing subsidiary in the Period In RMB Amount Including: -- Including: -- Including: -- Other explanation: Nil (4) Constitution of cash and cash equivalent In RMB Item Ending balance Opening balance I. Cash 17,434,893.24 19,887,978.05 Including: Cash on hand 29,702.26 21,530.26 Bank deposit available for payment 17,405,190.98 19,866,447.79 at any time Ⅲ. Balance of cash and cash equivalent at 17,434,893.24 19,887,978.05 period-end Other explanation: Nil 80. Notes of changes of owners’ equity Explain the name and adjusted amount in “Other” at end of last period: Nil 81. Assets with ownership or use right restricted In RMB Item Ending book value Restriction reasons Total 0.00 -- Other explanation: Nil 148 82. Foreign currency monetary items (1) Foreign currency monetary items In RMB Ending foreign currency Item Convert rate Ending RMB balance converted balance Monetary fund -- -- Including: USD EURO HKD Account receivable -- -- Including: USD EURO HKD Long-term loans -- -- Including: USD EURO HKD Other explanation: Nil (2) Explanation on foreign operational entity, including as for the major foreign operational entity, disclosed main operation place, book-keeping currency and basis for selection; if the book-keeping currency changed, explain reasons □Applicable √Not applicable 83. Hedging Disclosed hedging items and relevant hedging instrument based on hedging’s category, disclosed qualitative and quantitative information for the arbitrage risks: Nil 149 84. Government grants (1) Government grants In RMB Amount reckoned into current Category Amount Item gains/losses High-tech enterprise 300,000.00 Non-operating income 300,000.00 recognition support fund (2) Government grants rebate □Applicable √Not applicable Other explanation: Nil 85. Other Nil VIII. Changes of consolidation range 1. Enterprise combined under different control (1) Enterprise combined under different control in the Period In RMB Income of Net profit of Standard to Time point Cost of Ratio of Acquired acquiree from acquiree from Purchasing determine the Acquiree for equity equity equity way Equity purchasing purchasing date purchasing obtained obtained obtained obtained way date to date to date period-end period-end Other explanation: Nil (2) Combination cost and goodwill In RMB Combination cost Determination method for fair value of the combination cost and contingent consideration and changes: Nil Main reasons for large goodwill resulted: 150 Nil Other explanation: Nil (3) Identifiable assets and liability on purchasing date under the acquiree In RMB Fair value on purchasing date Book value on purchasing date Determination method for fair value of the identifiable assets and liabilities: Nil Contingent liability of the acquiree bear during combination: Nil Other explanation: Nil (4) Gains or losses arising from re-measured by fair value for the equity held before purchasing date Whether it is a business combination realized by two or more transactions of exchange and a transaction of obtained control rights in the Period or not □Yes √No (5) On purchasing date or period-end of the combination, combination consideration or fair value of identifiable assets and liability for the acquiree are un-able to confirm rationally Nil (6) Other explanation Nil 2. Enterprise combine under the same control (1) Enterprise combined under the same control in the Period In RMB Income of the Net profit of Income of the Net profit of combined the combined Basis of Standard to combined the combined Equity ratio party from party from Combined combined Combination determine the party during party during obtained in period-begin period-begin party under the date combination the the combination of of same control date comparison comparison combination combination period period to the to the 151 combination combination date date Other explanation: (2) Combination cost In RMB Combination cost Explanation on contingent consideration and its changes: Other explanation: (3) Assets and liability of the combined party on combination date In RMB Combination date At end of last period Contingent liability of the combined party bear during combination: Other explanation: 3. Counter purchase Basic transaction information, basis of counter purchase, whether making up business due to the assets and liability reserved by listed company and basis, determination of combination cost, amount and calculation on adjusted equity by equity transaction 4. Subsidiary disposal Whether lost controlling rights while dispose subsidiary on one time or not □ Yes √ No Whether lost controlling rights in the Period while dispose subsidiary on two or more steps or not □ Yes √ No 5. Other reasons for consolidation range changed Reasons for changed on consolidation range (such as new subsidiary established, subsidiary liquidated etc.) and relevant information: 152 6. Other IX. Equity in other entity 1. Equity in subsidiary (1) Constitute of enterprise group Main operation Share-holding ratio Subsidiary Registered place Business nature Acquired way place Directly Indirectly Shenzhen Sales of bicycles Emmelle Industry Shenzhen Shenzhen 70.00% Investment and spare parts Co., Ltd. Shenzhen Xinsen Jewelry, Jewelry Gold Shenzhen Shenzhen diamonds, gold 65.00% Investment Supply Chain sales Co., Ltd. Shenzhen Software and Emmelle Cloud information Shenzhen Shenzhen 49.00% Investment Technology Co., technology Ltd. service sales Explanation on share-holding ratio in subsidiary different from ratio of voting right: Nil Basis for controlling the invested entity with half or below voting rights held and without controlling invested entity but with over half and over voting rights: Subsidiary of the Company-Shenzhen Emmelle Industry Co., Ltd. (with 70% equity held by the Company) holds 70% equity of Shenzhen Emmelle Cloud Technology Co., Ltd. Controlling basis for the structuring entity included in consolidated range Nil Basis on determining to be an agent or consignor: Nil Other explanation: Nil (2) Important non-wholly-owned subsidiary In RMB Dividend announced to Share-holding ratio of Gains/losses attributable Ending equity of Subsidiary distribute for minority in minority to minority in the Period minority the Period Shenzhen Emmelle 30.00% -129,838.34 1,463,235.67 153 Industry Co., Ltd. Shenzhen Xinsen Jewelry Gold Supply Chain Co., 35.00% 405,941.59 12,943,996.76 Ltd. Shenzhen Emmelle Cloud Technology Co., 51.00% -63,757.17 542,172.35 Ltd. Explanation on share-holding ratio of minority different from ratio of voting right: Nil Other explanation: Subsidiary of the Company-Shenzhen Emmelle Industry Co., Ltd. (with 70% equity held by the Company) holds 70% equity of Shenzhen Emmelle Cloud Technology Co., Ltd. (3) Main finance of the important non-wholly-owned subsidiary In RMB Ending balance Opening balance Subsidia Non-curr Non-curr Non-curr Non-curr Current Total Current Total Current Total Current Total ry ent ent ent ent assets assets liability liabilities assets assets liability liabilities assets liability assets liability Shenzhe n 12,115,6 2,368,13 14,483,8 9,606,38 9,606,38 12,402,5 2,418,25 14,820,7 9,510,50 9,510,50 Emmelle 0.00 98.50 4.13 32.63 0.42 0.42 02.99 0.69 53.68 6.99 6.99 Industry Co., Ltd. Shenzhe n Xinsen Jewelry 45,037,4 36,552.0 45,073,9 9,498,27 9,498,27 44,211,8 36,552.0 44,248,4 9,832,52 9,832,52 Gold 0.00 24.78 2 76.80 1.75 1.75 49.29 2 01.31 9.38 9.38 Supply Chain Co., Ltd. Shenzhe n Emmelle 3,636,33 3,636,33 1,749,71 1,749,71 2,037,69 2,037,69 26,068.0 26,068.0 Cloud 0.00 0.00 1.59 1.59 9.14 9.14 4.53 4.53 2 2 Technolo gy Co., Ltd. In RMB Subsidiary Current Period Last Period 154 Cash flow Cash flow Total Total Operation from Operation from Net profit comprehensi Net profit comprehensi revenue operation revenue operation ve income ve income activity activity Shenzhen Emmelle 773,553.50 -432,794.48 -432,794.48 -20,947.65 1,638,684.75 363,445.66 363,445.66 -2,879,621.36 Industry Co., Ltd. Shenzhen Xinsen 40,728,749.5 25,097,387.7 Jewelry Gold 1,159,833.12 1,159,833.12 -358,689.39 1,468,390.57 1,468,390.57 -9,359,387.83 7 6 Supply Chain Co., Ltd. Shenzhen Emmelle Cloud 332,743.53 -125,014.06 -125,014.06 -1,476,987.94 Technology Co., Ltd. Other explanation: Nil (4) Major restriction on using corporate assets and liquidate corporate debts Nil (5) Financial or other supporting provided to structuring entity that included in consolidated financial statement Nil Other explanation: Nil 2. Transaction that has owners equity shares changed in subsidiary but still with controlling rights (1) Owners equity shares changed in subsidiary Nil (2) Impact on minority’s interest and owners’ equity attributable to parent company In RMB 155 Other explanation Nil 3. Equity in joint venture and associated enterprise (1) Important joint venture or associated enterprise Joint venture or Share-holding ratio Main operation Accounting associated Registered place Business nature place Directly Indirectly treatment enterprise Share-holding ratio or shares enjoyed different from voting right ratio: Nil Basis of the voting rights with 20% below but with major influence, or without major influence but with over 20% (20% included) voting rights hold: Nil (2) Main financial information of the important joint venture In RMB Ending balance/Current Period Opening balance/Last Period Other explanation Nil (3) Main financial information of the important associated enterprise In RMB Ending balance/Current Period Opening balance/Last Period Other explanation Nil (4) Financial summary for un-important joint venture or associated enterprise In RMB Ending balance/Current Period Opening balance/Last Period Joint venture: -- -- Total numbers measured by share-holding -- -- ratio Associated enterprise: -- -- 156 Total numbers measured by share-holding -- -- ratio Other explanation Nil (5) Assets transfer ability has major restriction from joint venture or associated enterprise Nil (6) Excess losses from joint venture or associated enterprise In RMB Un-confirmed losses not Joint venture or associated Cumulative un-confirmed Cumulative un-confirmed recognized in the Period (or net enterprise losses losses at period-end profit enjoyed in the Period) Other explanation Nil (7) Un-confirmed commitment with investment concerned with joint venture Nil (8) Contingent liability with investment concerned with joint venture or associated enterprise Nil 4. Co-runs operation Share-holding ratio/share enjoyed Name Main operation place Registered place Business nature Directly Indirectly Share-holding ratio or shares enjoyed different from voting right ratio: Nil If the co-runs entity is the separate entity, basis of the co-runs classification Nil Other explanation Nil 5. Equity in structuring entity that excluding in the consolidated financial statement Relevant explanation Nil 157 6. Other Nil X. Risk related with financial instrument The major financial instruments of the Company consist of monetary fund, account receivable, other account receivable, account payable and other account payable, etc. details of these financial instruments are disclosed in the relevant notes. Risks relating to these financial instruments and risk management policies adopted by the Company to minimize these risks are detailed as follows. Management of the Company manages and monitors the risk exposures, to make sure they are under control. 1. Risk management targets and policies The objectives of the Company’s risk management is to balance the risk and income, reduce the negative risk impact of operati ng performance to the lowest level, maximize the interests of shareholders and other equity investors. Based on these objectives, the Company has established risk management policies to identify and analyze the risks faced by the Company, set adequate risk acceptable level and designed relevant internal control system to monitor the level of risks. The Company regularly reviews these policies and related internal control system to adapt to market development and change of operating activities of the Company. The major risks arising from the Company’s financial instruments are credit risk and liquidity risk. (1) Credit risk Credit risk represents the risk of financial loss suffered by a party to a financial instrument due to failure of performance obligation of another party. Credit risk of the Company is managed by category. Credit risk mainly arises from bank deposits and trade receivables. Since the bank deposits of the Company are mainly placed with those banks of high credit rating, the Company expects no significant credit risk on bank deposits. As for trade receivables, the Company establishes relevant policies to control credit risk exposure. The Company, based on financial position of debtors, their credit records, market conditions and other factors, makes assessment on debtors’ credit quality and sets relevant limit on amount of debt and credit term. The maximum credit risk exposure assumed by the Company equals to the sum of carrying value of every financial asset in the balance sheet. The Company provides no guarantee that may lead it to be exposed to credit risks. (2) Liquidity risk Liquidity risk refers to the risk of capital shortage of the Company when performing settlement obligation via delivery of cash or other financial assets. When managing liquidity risk, the Company maintains and monitors such cash and cash equivalents as deemed adequate by the management, so as to satisfy its operation needs and minimize influence of fluctuation of cash flow. Management of the Company monitors application of bank borrowings to make sure it complies with relevant borrowing agreements. 2. Capital management The capital management policy of the Company is designed to ensure sustainable operation Of the Company so as to bring shareholders return and benefit other stakeholders, and to minimize capital cost by maintaining optimal capital structure. 158 In order to maintain and adjust capital structure, the Company may adjust share dividend paid to shareholders or issue new shares. The Company monitors capital structure based on gearing ratio (total liabilities divided by total assets). As at 30 June 2021, the gearing ratio of the Company was 71.20 % (31 December 2020: 72.05%) XI. Disclosure of fair value 1. Ending fair value of the assets and liabilities measured by fair value In RMB Ending fair value Item First-order Second-order Third-order Total I. Sustaining measured by -- -- -- -- fair value II. Non-sustaining -- -- -- -- measured by fair value 2. Recognized basis for the market price sustaining and non-persistent measured by fair value on first-order Nil 3. Valuation technique and qualitative and quantitative information on major parameters for the fair value measure sustaining and non-persistent on second-order Nil 4. Valuation technique and qualitative and quantitative information on major parameters for the fair value measure sustaining and non-persistent on third-order Nil 5. Adjustment information and sensitivity analysis of unobservable parameters for the fair value measure sustaining and non-persistent on third-order Nil 6. Sustaining items measured by fair value, as for the conversion between at all levels, reasons for conversion and policy for conversion time point Nil 159 7. Changes of valuation technique in the Period Nil 8. Financial assets and liability not measured by fair value Nil 9. Other Nil XII. Related party and related transactions 1. Parent company of the enterprise Share-holding ratio Voting right ratio on Parent company Registered place Business nature Registered capital on the enterprise for the enterprise parent company Explanation on parent company of the enterprise The Company has no parent company so far Ultimate controller of the Company: nil Other explanation: Controlling shareholder and actual controller of the Company have changed on 20 February 2017. Before changed, the first majority shareholder of the Company was Shenzhen Guosheng Energy Investment Development Co., Ltd., actual controller was Mr. Ji Hanfei; the Company has no actual controller and controlling shareholder after changed. Found more in the Annual Report 2016 released on 27 April 2017 and “Reply on Surveillance Attention Letter on CBC from Shenzhen Stock Exchange” released on 26 May 2017 2. Subsidiary of the Enterprise Found more in Note IX-1 3. Associated enterprise and joint venture Found more in Note IX-3 Other associated enterprise and joint venture that have related transaction with the Company in the Period or occurred in previous period: Joint venture or associated enterprise Relationship with the Company Other explanation Nil 160 4. Other related party Other related party Relationship with the Company Shenzhen Guosheng Energy Investment Development Co., Ltd. The first majority shareholder Other explanation 11.52 percent shares of the Company are held by Shenzhen Guosheng Energy Investment Development Co., Ltd. 5. Related transaction (1) Goods purchasing, labor service providing and receiving Goods purchasing/labor service receiving In RMB Transaction Approved transaction Whether more than Related party Current Period Last Period content amount the transaction amount Goods sold/labor service providing In RMB Related party Transaction content Current Period Last Period Explanation on goods purchasing, labor service providing and receiving Nil (2) Related trusteeship/contract and delegated administration/outsourcing Trusteeship/contract In RMB Income from Client/ Entrusting party/ Yield pricing Assets type Starting date Maturity date trusteeship/contra contract-out party contractor basis ct Explanation on related trusteeship/contract Nil Delegated administration/outsourcing In RMB Pricing basis of Trustee Client/ Entrusting party/ trustee fee/outsourcing Assets type Starting date Maturity date contract-out party contractor fee/outsourcing fee recognized in fee the Period Explanation on related administration/outsourcing Nil 161 (3) Related lease As a lessor for the Company: In RMB Lease income in recognized in Lease income in recognized last Lessee Assets type the Period the Period As a lessee for the Company: In RMB Lease income in recognized in Lease income in recognized last Lessor Assets type the Period the Period Explanation on related lease Nil (4) Related guarantee As a guarantor for the Company In RMB Guarantee completed Secured party Amount guarantee Starting date Maturity date (Y/N) As a secured party for the Company In RMB Guarantee completed Guarantor Amount guarantee Starting date Maturity date (Y/N) Explanation on related guarantee Nil (5) Borrowed funds of related party In RMB Related party Borrowed funds Starting date Due date Note Borrowing Lending (6) Assets transfer and debt restructuring of related party In RMB Related party Transaction content Current Period Last Period 162 (7) Remuneration of key manager In RMB Item Current Period Last Period Remuneration of key manager 789,400.00 728,400.00 (8) Other related transactions Nil 6. Receivable/payable items of related parties (1) Receivable item In RMB Ending balance Opening balance Item Related party Book balance Bad debt provision Book balance Bad debt provision (2) Payable item In RMB Item Related party Ending book balance Opening book balance Shenzhen Guosheng Energy Other account payable Investment Development Co., 6,500,000.00 6,500,000.00 Ltd. 7. Commitments of related party Nil 8. Other Nil XIII. Share-based payment 1. General share-based payment □Applicable √Not applicable 2. Share-based payment settled by equity □Applicable √Not applicable 163 3. Share-based payment settled by cash □Applicable √Not applicable 4. Revised and termination on share-based payment Nil 5. Other Nil XIV. Commitment or contingency 1. Important commitments Important commitments in balance sheet date Nil 2. Contingency (1) Contingency on balance sheet date Nil (2) For the important contingency not necessary to disclosed by the Company, explained reasons The Company has no important contingency that need to disclosed 3. Other Nil XV. Events after balance sheet date 1. Important non-adjustment items In RMB Impact on financial status and Reasons on un-able to estimated Item Content operation results the impact number 2. Profit distribution In RMB 164 3. Sales return Nil 4. Other events after balance sheet date Nil XVI. Other important events 1. Previous accounting errors collection (1) Retrospective restatement In RMB Impact items of statement Correction content Treatment procedures Cumulative impacted number during a comparison (2) Prospective application Reasons for prospective application Correction content Approval procedures adopted 2. Debt restructuring 3. Assets replacement (1) Non-monetary assets change (2) Other assets replacement 4. Pension plan 5. Discontinued operations In RMB Discontinued operations profit Income tax Item Revenue Expenses Total Profit Net profit attributable to expenses owners of parent company Other explanation 165 6. Segment (1) Recognition basis and accounting policy for reportable segment The reporting division of the company is a business unit that provides different products or services. Since various businesses require different technologies and market strategies, the company respectively and independently manages the production and operation activities of each reporting division and evaluates its operating results separately to determine the allocation of resources to it and evaluate its performance. The company has 2 reporting divisions, namely: —Group company business division. —Jewelry gold business division. Assets are allocated according to the operation of the divisions and the location of the assets, and liabilities are allocated according to the operation of the divisions. The company has established a special jewelry gold business subsidiary to the account of income, costs, and expenses (2) Financial information for reportable segment In RMB Bicycle lithium battery Jewelry Gold Business Item materials and other Offset between segments Total Division business segments Main business income 40,728,749.57 13,401,568.03 54,130,317.60 Main business cost 37,322,674.70 11,267,445.42 48,590,120.12 The total profit 1,321,219.59 418,006.31 1,739,225.90 Income tax expense 161,386.47 0.01 161,386.48 Net profit 1,159,833.12 418,006.30 1,577,839.42 Total assets 45,073,976.80 69,392,269.33 19,960,379.73 94,505,866.40 Total liabilities 9,498,271.75 57,787,465.55 67,285,737.30 Shareholders' equity 35,575,705.05 11,604,803.78 19,960,379.73 27,220,129.10 Total (3) The Company has no reportable segments, or unable to disclose total assets and total liability for reportable segments, explain reasons Nil (4) Other explanation Nil 7. Major transaction and events makes influence on investor’s decision Nil 166 8. Other Nil XVII. Principle notes of financial statements of parent company 1. Account receivable (1) By category In RMB Ending balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Book Accrual Accrual Book value Amount Ratio Amount value Amount Ratio Amount ratio ratio Account receivable with bad debt 3,440,05 1,032,01 2,408,039 7,503,671 2,251,101 5,252,570.0 13.42% 30.00% 28.23% 30.00% provision accrual by 5.79 6.74 .05 .53 .47 6 single basis Including: Accounts with single minor amount but 3,440,05 1,032,01 2,408,039 7,503,671 2,251,101 5,252,570.0 with bad debts 13.42% 30.00% 28.23% 30.00% 5.79 6.74 .05 .53 .47 6 provision accrued individually Account receivable with bad debt 22,187,4 66,562.4 22,120,90 19,079,60 19,022,365. 86.58% 0.30% 71.77% 57,238.82 0.30% provision accrual by 69.22 0 6.82 4.72 90 portfolio Including: Account receivable withdrawal bad debt provision by group of 22,187,4 66,562.4 22,120,90 19,079,60 19,022,365. credit risk 86.58% 0.30% 71.77% 57,238.82 0.30% 69.22 0 6.82 4.72 90 characteristics (Aging analysis method) 25,627,5 1,098,57 24,528,94 26,583,27 2,308,340 24,274,935. Total 100.00% 4.29% 100.00% 8.68% 25.01 9.14 5.87 6.25 .29 96 Bad debt provision accrual on single basis: Account receivable with significant single amount period-end but withdrawal bad debt provision on single basis 167 In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Zhengzhou Guiguan Expected to be difficult 1,007,233.79 302,170.14 30.00% Tech. Trade. Co., Ltd to recover Dongguan Daxiang New Expected to be difficult 746,734.00 224,020.20 30.00% Energy Co., Ltd. to recover Suzhou Jiaxin Economic Expected to be difficult 888,757.00 266,627.10 30.00% Trade Co., Ltd. to recover Guangdong Xinlingjia Expected to be difficult 348,136.00 104,440.80 30.00% New Energy Co., Ltd. to recover Suzhou Daming Vehicle Expected to be difficult 449,195.00 134,758.50 30.00% Industry Co., Ltd. to recover Total 3,440,055.79 1,032,016.74 -- -- Bad debt provision accrual on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Accrual causes Bad debt provision accrual on portfolio: Account receivable withdrawal bad debt provision by group of credit risk characteristics (Aging analysis method) In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Within one year (one year 20,015,883.28 60,047.64 0.30% included) 1-2 years (2 years included) 2,171,585.94 6,514.76 0.30% Total 22,187,469.22 66,562.40 -- Explanation on portfolio basis: Nil Bad debt provision accrual on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: If the provision for bad debts of account receivable is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □Applicable √Not applicable 168 By account age In RMB Account age Ending balance Within one year (one year included) 20,015,883.28 Within one year 20,015,883.28 1-2 years 5,611,641.73 Over 3 years 0.00 Total 25,627,525.01 (2) Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening balance Collected or Ending balance Accrual Charge-off Other reversal Bad debt provision for 2,308,340.29 37,561.98 1,247,323.13 1,098,579.14 accounts receivable Total 2,308,340.29 37,561.98 1,247,323.13 1,098,579.14 Including important amount of bad debt provision collected or reversal in the period: In RMB Enterprise Amount collected or reversal Collection way Shenzhen Jiahaosong Technology Co., Ltd. 718,081.13 Bank transfer, payment of goods arrears Shenzhen Weterui New Energy Technology 501,291.32 Bank transfer, payment of goods arrears Co., Ltd. Total 1,219,372.45 -- After the Company sent a lawyer's letter, the other party offset arrears by part of the goods after negotiation, and the rest was paid by bank transfer. Because the customer has not paid the debt according to the time limit agreed in the contract, which is more than one year overdue, and the debt recovery is expected to be difficult, so the bad debt is set aside at 30% of impairment. (3) Account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major account receivables charge-off: In RMB 169 Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Total -- 0.00 -- -- -- Explanation on account receivable charge-off: Nil (4) Top five account receivables collected by arrears party at ending balance In RMB Ending balance of accounts Proportion of total closing Ending balance of bad bet Name receivable balance of accounts receivable provision Guangshui Jiaxu Energy 19,875,160.22 77.55% 59,625.48 Technology Co., Ltd. Hubei Testun Electronic 1,045,000.00 4.08% 3,135.00 Technology Co., Ltd. Zhengzhou Guiguan Tech. 1,007,233.79 3.93% 302,170.14 Trade. Co., Ltd Suzhou Jiaxin Economic Trade 888,757.00 3.47% 266,627.10 Co., Ltd. Dongguan Daxiang New 746,734.00 2.91% 224,020.20 Energy Co., Ltd. Total 23,562,885.01 91.94% (5) Account receivable derecognition due to transfer of financial assets Nil (6) Assets and liability resulted by account receivable transfer and continuous involvement Nil Other explanation: Nil 2. Other account receivable In RMB Item Ending balance Opening balance Other account receivable 129,953.19 115,263.05 Total 129,953.19 115,263.05 170 (1) Interest receivable 1) Category In RMB Item Ending balance Opening balance 2) Important overdue interest Impairment (Y/N) and Borrower Ending Balance Overdue time Overdue reason judgment basis Total 0.00 -- -- -- Other explanation: Nil 3) Accrual of bad debt provision □Applicable √Not applicable (2) Dividend receivable 1) Category In RMB Item (or invested company) Ending balance Opening balance 2) Important dividend receivable with over one year aged In RMB Item (or invested Causes of failure for Impairment (Y/N) and Ending balance Account age company) collection judgment basis Total 0.00 -- -- -- 3) Accrual of bad debt provision □Applicable √Not applicable Other explanation: Nil 171 (3) Other account receivable 1) By nature In RMB Account nature Ending book balance Opening book balance Deposit or margin 106,263.00 105,713.00 Payment for equipment 11,400.00 11,400.00 Reserve fund 24,846.88 10,396.88 Total 142,509.88 127,509.88 2) Accrual of bad debt provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on January 1, 12,246.83 12,246.83 2021 January 1, 2021 balance —— —— —— —— in the current period Accrued in this period 309.86 309.86 Balance on June 30, 2021 12,556.69 12,556.69 Change of book balance of loss provision with amount has major changes in the period □Applicable √Not applicable By account age In RMB Account age Ending balance Within one year (one year included) 128,609.88 Within one year (one year included) 128,609.88 1-2 years 2,000.00 Over 3 years 11,900.00 3-4 years 200.00 4-5 years 11,700.00 Total 142,509.88 172 3)Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening balance Collected or Ending balance Accrual Charge-off Other reversal Bad debt provision for 12,246.83 309.86 12,556.69 other receivables Total 12,246.83 309.86 12,556.69 Nil Important amount of bad debt provision switch-back or collection in the period: In RMB Enterprise Amount switch-back or collection Collection way Total 0.00 -- Nil 4) Other account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major other account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes of charge-off related transactions charge-off or not (Y/N) Total -- 0.00 -- -- -- Other Explanation on account receivable charge-off Nil 5) Top 5 other account receivable collected by arrears party at ending balance In RMB Proportion in total other account Ending balance of Enterprise Nature Ending Balance Account age receivables at bad debt provision period-end Shenye Pengji Deposit or margin 60,222.00 Within 2 years 42.26% 180.67 (Group) Co., Ltd. 173 Huang Zeqi Reserve fund 20,000.00 Within one year 14.03% 60.00 Chen Yanjun Reserve fund 15,000.00 Within one year 10.52% 45.00 Shenzhen Hongkang Payment for Instrument 11,400.00 4-5 years 8.00% 11,400.00 equipment Technology Co., Ltd. Shenzhen Pengji Property Management Deposit or margin 10,441.00 Within 2 years 7.33% 31.32 Service Co., Ltd. Total -- 117,063.00 -- 82.14% 11,716.99 6) Account receivable with government grants involved In RMB Time, amount and basis Enterprise Government grants Ending Balance Ending account age of amount collection estimated Nil 7) Other account receivable derecognition due to financial assets transfer Nil 8) Assets and liability resulted by other account receivable transfer and continuous involvement Nil Other explanation: Nil 3. Long-term equity investment In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Investment for 21,350,000.00 1,389,620.27 19,960,379.73 21,350,000.00 1,389,620.27 19,960,379.73 subsidiary Total 21,350,000.00 1,389,620.27 19,960,379.73 21,350,000.00 1,389,620.27 19,960,379.73 (1) Investment for subsidiary In RMB 174 Changes in the period (+, -) Opening Ending balance The invested Accrual of Ending Balance balance Additional Capital of impairment entity impairment Other (Book value) (Book value) investment reduction provision provision Shenzhen Emmelle 10,379.73 10,379.73 1,389,620.27 Industry Co., Ltd. Shenzhen Xinsen Jewelry 19,950,000.00 19,950,000.00 Gold Supply Chain Co., Ltd. Total 19,960,379.73 0.00 0.00 0.00 0.00 19,960,379.73 1,389,620.27 (2) Investment for associates and joint venture In RMB Changes in the period (+, -) Ending Other Cash Opening Investme Accrual Ending balance Additiona comprehe dividend Funded balance nt gains Other of Balance of l Capital nsive or profit enterprise (Book recognize equity impairme Other (Book impairme investmen reduction income announce value) d under change nt value) nt t adjustmen d to equity provision provision t issued I. Joint venture Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 II. Associated enterprise Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (3) Other explanation Nil 4. Operation revenue and operation cost In RMB Current Period Last Period Item Revenue Cost Revenue Cost Main business 8,037,060.02 8,099,218.05 9,271,106.93 8,988,379.05 175 Other business 4,341,623.90 2,413,822.85 6,679,717.49 3,645,817.35 Total 12,378,683.92 10,513,040.90 15,950,824.42 12,634,196.40 Revenue: In RMB Contract type 1# Division 2# Division Total Including: Including: Including: Including: Including: Including: Including: Information relating to performance obligation: Nil Information relating to the transaction price assigned to the remaining performance obligation: The amount of income corresponding to the performance obligations that have been signed at the end of this reporting period but have not yet been fulfilled or have not done with fulfillment is 0.00 yuan, among them, yuan of revenue is expected to be recognized in YEAR, yuan of revenue is expected to be recognized in YEAR, and yuan of revenue is expected to be recognized in YEAR. Other explanation: Nil 5. Investment income In RMB Item Current Period Last Period 6. Other Nil XVIII. Supplementary Information 1. Current non-recurring gains/losses √Applicable □Not applicable In RMB Item Amount Note Governmental subsidy reckoned into current 300,000.00 gains/losses (not including the subsidy 176 enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business) Switch back of the impairment provision for account receivable with impairment test on 1,357,466.13 single basis and contract assets Other non-operating income and expenditure 157,664.40 except for the aforementioned items (-)Impact on minority shareholders’ equity 33,042.90 Total 1,782,087.63 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons □Applicable √Not applicable 2. ROE and EPS Earnings per share Profits during report period Weighted average ROE Basic earnings per share Diluted earnings per (RMB/Share) share (RMB/Share) Net profits belong to common stock 11.78% 0.0025 0.0025 stockholders of the Company Net profits belong to common stock stockholders of the Company after -3.60% -0.0008 -0.0008 deducting nonrecurring gains and losses 3. Difference of the accounting data under accounting rules in and out of China (1) Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) □Applicable √Not applicable (2) Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) □Applicable √Not applicable 177 (3) Explain accounting difference over the accounting rules in and out of China; as for the difference adjustment for data audited by foreign auditing organ, noted the name of such foreign organ 4. Other Board of Directors of Shenzhen China Bicycle Company (Holdings) Limited 25 August 2021 178