Shenzhen Textile (Holdings) Co., Ltd.
Auditor’s Report
Qin Xin Shen Zi[2018]No. 0393
Table of contents
Contents Page
Contents
I. Auditor’s Report 1-4
II. Audited Financial Statements
1.Consolidated Balance sheet 5-8
2．Parent company Balance sheet 9-11
3. Consolidated Income statement 12-14
4. Parent company Income statement 15-16
5. Consolidated Cash flow statement 17-19
6. Parent company Cash flow statement 20-21
7. Consolidated Statement on Change in Owners’ Equity 22-26
27-30
8. Statement of change in owner’s Equity of the Parent
Company
III. Notes to financial statements 31-140
Auditors’ Report
Qin Xin Shen Zi[2018]No. 0393
To all shareholders of Shenzhen Textile (Holdings) Co., Ltd.：
II. Auditors’ Opinion
We have audited the financial statements of Shenzhen Textile (Holdings) Co., Ltd . (hereinafter referred to as
"the Company"), which comprise the balance sheet as at December 31, 2017, and the income statement, the
statement of cash flows and the statement of changes in owners' equity for the year then ended and notes to the
financial statements.
In our opinion, the attached financial statements are prepared, in all material respects, in accordance with
Accounting Standards for Business Enterprises and present fairly the financial position of the Company as at
December 31, 2017 and its operating results and cash flows for the year then ended.
II. Basis for Our Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants in China.
Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of
the Financial Statements section of our report. According to the Code of Ethics for Chinese CPA, we are
independent of the Company in accordance with the Code of Ethics for Chinese CPA and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. KeyAudit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
(Ⅰ) Recognition of revenue
1. Description of matters
As indicated in Remark Ⅴ(35) of the financial statement, the revenues of the period of Shenzhen Textile
(Holdings) Co., Ltd is RMB1, 475, 545, 719.72, which are mainly sourced from sales revenue of diffuser and
textiles, rental income and trade income. As the revenue is one KPI of Shenzhen Textile (Holdings) Co., Ltd,
appropriate recognition of the revenue will have an effect on the company’s operating results and shall be
confirmed as one key item of audit.
2. Response to the audit
The audit process implemented for revenue recognition includes mainly: Test and evaluate the effectiveness
of internal control in relation to revenue recognition; re-check on the basis of product and business type the
1
consistency of accounting policy used for various revenue recognition with Accounting Standard for Business
Enterprises; perform analytical procedure on the revenue and evaluate the rationality of revenue recognition;
sample the recognized revenue and check sales contract, shipping order, sales invoice and other supportive
documents to evaluate if the revenue has been recognized according to revenue recognition policy; Sample the
revenue recognized before or after the balance sheet date and check relevant supportive documents to evaluate if
the revenue has been recognized in an appropriate period; Sample the recognized accounts receivable and revenue,
perform confirmation procedure to evaluate the veracity of the revenue.
(Ⅱ) Inventory falling price reserves
1. Description of matters
As indicated in Remark Ⅴ(7) of the financial statement, the balance of inventory falling price reserves of
Shenzhen Textile (Holdings) Co., Ltd at the end of the report period is RMB52, 018, 026.82; as the inventory
falling price reserves and any variation will play a great influence on the financial statement and the process of
confirming net realizable value of inventory will involve major judgment and estimate of the management, we
shall confirm inventory falling price reserves as one key item of audit.
2. Response to the audit
The audit process implemented for inventory falling price reserves includes mainly: Test and evaluate the
effectiveness of internal control in relation to inventory falling price reserves; Supervise inventory taking and
check the quantity, condition of inventory; get a year-end inventory list and conduct analytical review on the
conditions of various inventories; get the calculating table for inventory falling price reserves and check it; Check
any changes of the accrual of inventory falling price reserves in this period.
IV. Other information
The management of the Company is responsible for the other information. The other information comprises
information of the Company's annual report in 2017, but excludes the financial statements and our auditor's report.
Our opinion on the financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor's report, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard
V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
The Company's management is responsible for preparing the financial statements in accordance with the
requirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and for designing,
implementing and maintaining internal control that is necessary to ensure that the financial statements are free
from material misstatements, whether due to frauds or errors.
In preparing the financial statements, management of the Company is responsible for assessing the Company's
ability to continue as a going concern, disclosing matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no
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realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the audit standards will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, omissions,
misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management of the Company.
(4) Conclude on the appropriateness of using the going concern assumption by the management of the Company,
and conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the financial statements and bear all liability for the
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit matters, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key audit
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matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Peking Certified Public Accountants(Special General Partnership)
Chinese C.P.A. Li Yong
Chinese C.P.A. Lan Tao
March 27,2018
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II. Financial Statements
Statement in Financial Notes are carried in RMB/CNY
1. Consolidated balance sheet
Prepared by: Shenzhen Textile (Holdings) Co., Ltd.
In RMB
Items Notes At the end of term Beginning of term
Current asset：
Monetary fund (1) 1,165,048,108.83 933,856,912.73
Settlement provision
Outgoing call loan
Financial assets measured at fair value with
variations accounted into current income
account
Derivative financial assets
Bill receivable （2） 44,207,119.00 41,908,315.45
Account receivable （3） 192,503,077.70 220,222,019.41
Prepayments （4） 13,755,152.05 6,773,323.14
Insurance receivable
Reinsurance receivable
Provisions of Reinsurance contracts receivable
Interest receivable （5） 15,728,872.62 6,652,883.11
Dividend receivable
Other account receivable （6） 12,925,984.45 67,272,556.72
Repurchasing of financial assets
Inventories （7） 275,615,176.16 283,371,714.07
Assets held for sales
Non-current asset due in 1 year
Other current asset （8） 1,148,689,874.10 1,428,043,157.76
Total of current assets 2,868,473,364.91 2,988,100,882.39
Non-current assets：
Loans and payment on other’s behalf disbursed
Disposable financial asset （9） 66,035,733.04 41,565,777.96
Expired investment in possess
5
Long-term receivable
Long term share equity investment （10） 20,380,734.56 24,849,311.00
Property investment （11） 173,105,806.27 179,324,547.77
Fixed assets （12） 656,133,200.19 723,685,287.56
Construction in progress （13） 322,570,173.73 119,804,231.43
Engineering material
Fixed asset disposal
Production physical assets
Gas & petrol
Intangible assets （14） 38,870,673.40 39,698,654.32
R & D petrol
Goodwill （15）
Long-germ expenses to be amortized （16） 1,035,290.08 973,081.68
Deferred income tax asset （17） 1,974,536.90 1,584,492.36
Other non-current asset （18） 47,166,994.48
Total of non-current assets 1,327,273,142.65 1,131,485,384.08
Total of assets 4,195,746,507.56 4,119,586,266.47
Current liabilities
Short-term loans (19) 88,638,181.45 12,335,695.77
Loan from Central Bank
Deposit received and hold for others
Call loan received
Financial liabilities measured at fair value with
variations accounted into current income
account
Derivative financial liabilities
Bill payable
Account payable (20) 97,104,697.18 175,461,715.72
Advance payment (21) 34,952,567.83 30,297,446.49
Selling of repurchased financial assets
Fees and commissions receivable
Employees’ wage payable (22) 29,503,260.65 27,379,719.86
Tax payable (23) 6,935,262.57 13,995,726.19
Interest payable (24) 45,799,544.04 42,842,605.52
6
Dividend payable
Other account payable (25) 155,026,799.54 147,108,590.19
Reinsurance fee payable
Insurance contract provision
Entrusted trading of securities
Entrusted selling of securities
Liabilities held for sales
Non-current liability due in 1 year (26) 40,000,000.00 40,000,000.00
Other current liability
Total of current liability 497,960,313.26 489,421,499.74
Non-current liabilities：
Long-term loan (27) 40,000,000.00 80,000,000.00
Bond payable
Including：preferred stock
Sustainable debt
Long-term payable
Long-term payable employees’s remuneration
Special payable
Expected liabilities
Deferred income (28) 134,767,064.72 110,045,784.62
Deferred income tax liability
Other non-current liabilities
Total non-current liabilities 174,767,064.72 190,045,784.62
Total of liability 672,727,377.98 679,467,284.36
Owners’ equity
Share capital (29) 511,274,149.00 506,521,849.00
Other equity instruments
Including：preferred stock
Sustainable debt
Capital reserves (30) 1,866,001,475.17 1,837,205,251.95
Less：Shares in stock （31） 27,230,679.00
Other comprehensive income (32) 2,218,703.87 3,392,222.07
Special reserves
Surplus reserves (33) 77,477,042.19 73,710,682.05
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Common risk provision
Undistributed profit (34) -32,266,087.44 -81,275,828.76
Total of owner’s equity belong to the parent
2,397,474,603.79 2,339,554,176.31
company
Minority shareholders’ equity 1,125,544,525.79 1,100,564,805.80
Total of owners’ equity 3,523,019,129.58 3,440,118,982.11
Total of liabilities and owners’ equity 4,195,746,507.56 4,119,586,266.47
Legal Representative: Zhu Jun
Person-in-charge of the accounting work：Zhu Meizhu
Person-in -charge of the accounting organ：Mu Linying
8
2. Balance sheet of Parent Company
In RMB
Items Notes XV Year-end balance Year-beginning balance
Current asset：
Monetary fund 413,700,327.95 440,685,610.11
Financial assets measured at fair value with
variations accounted into current income
account
Derivative financial assets
Bill receivable 1,000,000.00
Account receivable (1) 449,536.21 492,974.01
Prepayments 10,000.00 120,000.00
Interest receivable 13,660,866.80 3,218,526.94
Dividend receivable
Other account receivable (2) 5,782,620.63 12,524,256.75
Inventories
Assets held for sales
Non-current asset due in 1 year
Other current asset 120,000,000.00 30,000,000.00
Total of current assets 553,603,351.59 488,041,367.81
Non-current assets：
Disposable financial asset 36,035,733.04 40,065,777.96
Expired investment in possess
Long-term receivable
Long term share equity investment (3) 1,984,849,008.23 1,989,073,077.61
Property investment 165,607,900.07 172,279,313.75
Fixed assets 28,119,990.58 27,403,189.39
Construction in progress
Engineering material
Fixed asset disposal
Production physical assets
Gas & petrol
Intangible assets 1,413,305.67 1,345,846.59
R & D petrol
9
Goodwill
Long-germ expenses to be amortized
Differed income tax asset 1,526,871.33 1,919,804.30
Other non-current asset 493,620.44
Total of non-current assets 2,218,046,429.36 2,232,087,009.60
Total of assets 2,771,649,780.95 2,720,128,377.41
Current liabilities
Short-term loans
Financial liabilities measured at fair value with
variations accounted into current income
account
Derivative financial liabilities
Bill payable
Account payable 411,743.57 411,743.57
Advance payment 639,024.58 639,024.58
Employees’ wage payable 8,495,538.21 6,533,138.24
Tax payable 3,247,028.64 4,398,387.25
Interest payable
Dividend payable
Other account payable 134,018,771.57 120,954,892.58
Liabilities held for sales
Non-current liability due in 1 year
Other current liability
Total of current liability 146,812,106.57 132,937,186.22
Non-current liabilities：
Long-term loan
Bond payable
Including：preferred stock
Sustainable debt
Long-term payable
Employees’ wage payable
Special payable
Expected liabilities
Differed income 800,000.00
10
Deferred income tax liability
Other non-current liabilities
Total of Non-current liabilities 800,000.00
Total of liability 147,612,106.57 132,937,186.22
Owners’ equity
Share capital 511,274,149.00 506,521,849.00
Other equity instrument
Including：preferred stock
Sustainable debt
Capital reserves 1,599,381,854.96 1,576,547,075.96
Less：Shares in stock 27,230,679.00
Other comprehensive income 2,218,703.87 3,392,222.07
Special reserves
Surplus reserves 77,477,042.19 73,710,682.05
Undistributed profit 460,916,603.36 427,019,362.11
Total of owners’ equity 2,624,037,674.38 2,587,191,191.19
Total of liabilities and owners’ equity 2,771,649,780.95 2,720,128,377.41
Legal Representative: Zhu Jun
Person-in-charge of the accounting work：Zhu Meizhu
Person-in -charge of the accounting organ：Mu Linying
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3.Consolidated Income statement
In RMB
Same period of the previous
Items Notes V Report period
year
I. Income from the key business 1,475,545,719.72 1,198,200,216.42
Incl：Business income (35) 1,475,545,719.72 1,198,200,216.42
Interest income
Insurance fee earned
Fee and commission received
II. Total business cost 1,455,500,581.34 1,296,343,917.53
Incl：Business cost (35) 1,299,603,719.37 1,128,134,488.54
Interest expense
Fee and commission paid
Insurance discharge payment
Net claim amount paid
Insurance policy dividend paid
Insurance policy dividend paid
Reinsurance expenses
Business tax and surcharge (36) 13,962,996.87 10,337,248.55
Sales expense (37) 9,940,696.87 10,161,699.85
Administrative expense (38) 114,356,601.65 106,901,733.12
Financial expenses (39) -31,171,160.81 -1,678,136.65
Asset impairment loss (40) 48,807,727.39 42,486,884.12
Add：Gains from change of fir value （“-”for
loss）
Investment gain（“-”for loss） (41) 53,555,819.95 5,223,413.76
Incl: investment gains from affiliates 1,101,479.62 1,467,403.29
Gains from currency exchange
Assets dispose loss
Other income (42) 12,567,426.98
III. Operational profit（“-”for loss） 86,168,385.31 -92,920,287.35
Add ：Non-operational income (43) 787,567.93 15,072,447.15
Less：Non business expenses (44) 2,015,456.96 138,691.94
12
IV.Total profit(“-”for loss) 84,940,496.28 -77,986,532.14
Less：Income tax expenses (45) 11,278,818.41 9,284,072.40
V. Net profit 73,661,677.87 -87,270,604.54
1.Net continuing operating profit 73,661,677.87 -87,270,604.54
2.Termination of operating net profit
Net profit attributable to the owners of parent
52,776,101.46 -87,270,604.54
company
Minority shareholders’ equity 20,885,576.41
VI. Other comprehensive income （46） -1,173,518.20 180,034.72
Net of profit of other comprehensive income att
-1,173,518.20 180,034.72
ributable to owners of the parent company.
（I）Other comprehensive income items that
will not be reclassified into gains/losses in the
subsequent accounting period
1.Re-measurement of defined benefit plans of c
hanges in net debt or net assets
2.Other comprehensive income under the equity
method investee can not be reclassified into pro
fit or loss.
（II）
Other comprehensive income that will be reclas -1,173,518.20 180,034.72
sified into profit or loss.
1.Other comprehensive income under the equity
method investee can be reclassified into profit
or loss.
2.Gains and losses from changes in fair value av
-288,326.89 -1,256,809.58
ailable for sale financial assets
3.Held-to-maturity investments reclassified to g
ains and losses of available for sale financial ass
ets
4.The effective portion of cash flow hedges and
losses
5.Translation differences in currency financial s
-885,191.31 1,436,844.30
tatements
6.Other
Net of profit of other comprehensive income att
ributable to Minority shareholders’ equity
13
VII. Total comprehensive income 72,488,159.67 -87,090,569.82
Total comprehensive income attributable to
51,602,583.26 -87,090,569.82
the owner of the parent company
Total comprehensive income attributable
20,885,576.41
minority shareholders
VIII. Earnings per share
（I）Basic earnings per share 0.10 -0.17
(II)Diluted earnings per share 0.10 -0.17
The current business combination under common control, the net profits of the combined party before achieved ne
t profit of RMB 0.00, last period the combined party realized RMB 0.00.
Legal Representative: Zhu Jun
Person in charge of accounting：Zhu Meizhu
Accounting Dept Leader: Mu Linying
14
15
4. Income statement of the Parent Company
In RMB
Notes XV Same period of the previous
Items Report period
year
I. Income from the key business 65,474,614.36 63,923,286.07
Incl：Business cost 14,205,521.55 12,754,930.31
Business tax and surcharge 5,875,973.65 3,823,490.12
Sales expense
Administrative expense 29,587,958.60 28,068,523.83
Financial expenses -13,663,222.04 -12,288,105.49
Asset impairment loss 5,554,598.81 -3,107,155.76
Add：Gains from change of fir value （“-”for
loss）
Investment gain（“-”for loss） 22,719,665.90 4,545,773.24
Incl: investment gains from affiliates 1,101,479.62 1,467,403.29
Assets disposal income
Other income 5,638.35
II. Operational profit（“-”for loss） 46,639,088.04 39,217,376.30
Add ：Non-operational income 1,510.00 23,692.50
Less：Non business expenses 477,949.40 117,153.06
III.Total profit(“-”for loss) 46,162,648.64 39,123,915.74
Less：Income tax expenses 8,499,047.25 7,410,293.85
IV. Net profit（“-”for net loss） 37,663,601.39 31,713,621.89
1.Net continuing operating profit 37,663,601.39 31,713,621.89
2.Termination of operating net profit
V.Net of profit of other comprehensive income -1,173,518.20 180,034.72
（I）Other comprehensive income items that
will not be reclassified into gains/losses in the
subsequent accounting period
1.Re-measurement of defined benefit plans of c
hanges in net debt or net assets
2.Other comprehensive income under the equity
method investee can not be reclassified into pro
fit or loss.
（ II ） -1,173,518.20 180,034.72
16
Other comprehensive income that will be reclas
sified into profit or loss.
1.Other comprehensive income under the equity
method investee can be reclassified into profit
or loss.
2.Gains and losses from changes in fair value av
-288,326.89 -1,256,809.58
ailable for sale financial assets
3.Held-to-maturity investments reclassified to g
ains and losses of available for sale financial ass
ets
4.The effective portion of cash flow hedges and
losses
5.Translation differences in currency financial s
-885,191.31 1,436,844.30
tatements
6.Other
VI. Total comprehensive income 36,490,083.19 31,893,656.61
VII. Earnings per share：
（I）Basic earnings per share
(II)Diluted earnings per share
Legal Representative: Zhu Jun
Person in charge of accounting：Zhu Meizhu
Accounting Dept Leader: Mu Linying
17
5. Consolidated Cash flow statement
In RMB
Same period of the previous
Items Notes V Report period
year
I.Cash flows from operating activities
Cash received from sales of goods or rending of
1,587,525,262.02 1,151,157,518.74
services
Net increase of customer deposits and capital
kept for brother company
Net increase of loans from central bank
Net increase of inter-bank loans from other
financial bodies
Cash received against original insurance
contract
Net cash received from reinsurance business
Net increase of client deposit and investment
Net increase of trade financial asset disposal
Cash received as interest, processing fee and
commission
Net increase of inter-bank fund received
Net increase of repurchasing business
Tax returned 47,028,145.81 69,122,511.24
Other cash received from business operation (47) 112,007,561.78 68,307,793.54
Sub-total of cash inflow 1,288,587,823.52
1,746,560,969.61
Cash paid for purchasing of merchandise and
1,511,459,801.99 1,085,677,364.56
services
Net increase of client trade and advance
Net increase of savings n central bank and
brother company
Cash paid for original contract claim
Cash paid for interest, processing fee and
commission
Cash paid for policy dividend
Cash paid to staffs or paid for staffs 133,551,583.94 129,329,006.02
Taxes paid 77,287,145.15 47,012,479.57
Other cash paid for business activities (47) 52,781,140.84 81,833,439.21
18
Sub-total of cash outflow from business
1,343,852,289.36
activities 1,775,079,671.92
Cash flow generated by business operation, net -55,264,465.84
-28,518,702.31
II.Cash flow generated by investing
Cash received from investment retrieving 2,366,612.87
Cash received as investment gains 5,921,598.83 3,633,486.12
Net cash retrieved from disposal of fixed assets,
6,740.00 160.00
intangible assets, and other long-term assets
Net cash received from disposal of subsidiaries
or other operational units
Other investment-related cash received (47) 3,566,066,407.98 845,568,256.74
Sub-total of cash inflow due to investment
3,571,994,746.81 851,568,515.73
activities
Cash paid for construction of
fixed assets, intangible assets 254,484,019.80 114,577,108.61
and other long-term assets
Cash paid as investment 28,500,000.00
Net increase of loan against pledge
Net cash received from subsidiaries and other
operational units
Other cash paid for investment activities (47) 3,093,000,000.00 1,766,000,000.00
Sub-total of cash outflow due to investment
3,375,984,019.80 1,880,577,108.61
activities
Net cash flow generated by investment 196,010,727.01 -1,029,008,592.88
III.Cash flow generated by financing
Cash received as investment 27,230,679.00 1,352,640,000.00
Incl: Cash received as investment from minor
1,352,640,000.00
shareholders
Cash received as loans 189,660,085.68 228,579,582.43
Cash received from bond placing
Other financing –related ash received 6.38
Sub-total of cash inflow from financing
216,890,764.68 1,581,219,588.81
activities
Cash to repay debts 150,340,039.30 315,726,235.45
Cash paid as dividend, profit, or interests 1,048,268.16 850,946.99
19
Incl: Dividend and profit paid by subsidiaries to
minor shareholders
Other cash paid for financing activities
Sub-total of cash outflow due to financing
151,388,307.46 316,577,182.44
activities
Net cash flow generated by financing 65,502,457.22 1,264,642,406.37
IV. Influence of exchange rate alternation on
-1,868,779.16 1,086,213.32
cash and cash equivalents
V.Net increase of cash and cash equivalents 231,125,702.76 181,455,560.97
Add: balance of cash and cash equivalents at the
930,114,436.57 748,658,875.60
beginning of term
VI ..Balance of cash and cash equivalents at the
1,161,240,139.33 930,114,436.57
end of term
Legal Representative: Zhu Jun
Person in charge of accounting：Zhu Meizhu
Accounting Dept Leader: Mu Linying
20
6. Cash Flow Statement of the Parent Company
In RMB
Items Notes XV Amount in this period Amount in last period
I.Cash flows from operating activities
Cash received from sales of goods or rending of
66,552,835.48 66,944,479.62
services
Tax returned
Other cash received from business operation 14,836,257.91 104,001,892.47
Sub-total of cash inflow 81,389,093.39 170,946,372.09
Cash paid for purchasing of merchandise and
5,055,450.06 6,013,836.98
services
Cash paid to staffs or paid for staffs 17,811,799.19 17,161,992.17
Taxes paid 18,156,899.52 20,714,808.63
Other cash paid for business activities 7,297,312.65 23,027,843.36
Sub-total of cash outflow from business
48,321,461.42 66,918,481.14
activities
Cash flow generated by business operation, net 33,067,631.97 104,027,890.95
II.Cash flow generated by investing
Cash received from investment retrieving
Cash received as investment gains 5,087,575.52 10,754,224.11
Net cash retrieved from disposal of fixed assets,
1,510.00
intangible assets, and other long-term assets
Net cash received from disposal of subsidiaries
or other operational units
Other investment-related cash received 262,490,733.61 326,615,158.57
Sub-total of cash inflow due to investment
267,579,819.13 337,369,382.68
activities
Cash paid for construction of
fixed assets, intangible assets 4,857,553.44 4,300,131.91
and other long-term assets
Cash paid as investment 208,000,000.00
Net cash received from subsidiaries and other
operational units
Other cash paid for investment activities 350,000,000.00 60,000,000.00
Sub-total of cash outflow due to investment
354,857,553.44 272,300,131.91
activities
21
Net cash flow generated by investment -87,277,734.31 65,069,250.77
III.Cash flow generated by financing
Cash received as investment 27,230,679.00
Cash received as loans
Cash received from bond placing
Other financing –related ash received 6.38
Sub-total of cash inflow from financing
27,230,679.00 6.38
activities
Cash to repay debts
Cash paid as dividend, profit, or interests
Other cash paid for financing activities
Sub-total of cash outflow due to financing
activities
Net cash flow generated by financing 27,230,679.00 6.38
IV. Influence of exchange rate alternation on
-5,858.82 5,712.98
cash and cash equivalents
V.Net increase of cash and cash equivalents -26,985,282.16 169,102,861.08
Add: balance of cash and cash equivalents at
440,685,610.11 271,582,749.03
the beginning of term
VI ..Balance of cash and cash equivalents at the
413,700,327.95 440,685,610.11
end of term
Legal Representative: Zhu Jun
Person in charge of accounting：Zhu Meizhu
Accounting Dept Leader: Mu Linying
22
7. Consolidated Statement on Change in Owners’ Equity
Amount in this period
In RMB
Amount in this period
Owner’s equity Attributable to the Parent Company
Other Equity
Minor
instrument Total of
Items Other Commo
Share Less: Speciali Attribut shareho
Capital Compre Surplus n risk owners’
Capita prefer Shares zed able lders’
Sustai reserves hensive reserves provisio equity
l red Other in stock reserve profit equity
nable Income n
stock
debt
506,52 1,837,2 1,100,5 3,440,1
I.Balance at the 3,392,2 73,710, -81,275,
1,849. 05,251. 64,805. 18,982.
end of last year 22.07 682.05 828.76
00 95 80 11
Add: Change of
accounting
policy
Correcting of
previous errors
Merger of entities
under common
control
Other
II.Balance at the 506,52 1,837,2 1,100,5 3,440,1
3,392,2 73,710, -81,275,
beginning of 1,849. 05,251. 64,805. 18,982.
22.07 682.05 828.76
current year 00 95 80 11
III.Changed in the 4,752, 28,796, 27,230, -1,173,5 3,766,3 49,009, 24,979, 82,900,
current year 300.00 223.22 679.00 18.20 60.14 741.32 719.99 147.47
（1）Total
-1,173,5 52,776, 20,885, 72,488,
comprehensive
18.20 101.46 576.41 159.67
income
（II）Investment
4,752, 22,762, 27,230, 284,491
or decreasing of
300.00 870.54 679.00 .54
capital by owners
1．Ordinary Share
4,752, 22,478, 27,230,
s invested by share
300.00 379.00 679.00
holders
2 ． Holders of oth
er equity instrume
nts invested capital
23
3．Amount of
shares paid and 284,491 284,491
accounted as .54 .54
owners’ equity
4．Other
（III）Profit 3,766,3 -3,766,3
allotment 60.14 60.14
1.Providing of 3,766,3 -3,766,3
surplus reserves 60.14 60.14
2.Providing of
common risk
provisions
3．Allotment to the
owners (or
shareholders)
4．Other
(IV) Internal
transferring of
owners’ equity
1. Capitalizing of
capital reserves (or
to capital shares)
2. Capitalizing of
surplus reserves
(or to capital
shares)
3．Making up
losses by surplus
reserves.
4. Other
(V). Special
reserves
1. Provided this
year
2．Used this term
6,033,3 4,094,1 10,127,
（VI）Other
52.68 43.58 496.26
IV. Balance at the 511,27 1,866,0 27,230, 2,218,7 77,477, -32,266, 1,125,5 3,523,0
end of this term 4,149. 01,475. 679.00 03.87 042.19 087.44 44,525. 19,129.
24
00 17 79 58
Amount in last year
In RMB
Amount in last year
Owner’s equity Attributable to the Parent Company
Other Equity
Minor
instrument Other Commo Total of
Items
Share Less: Speciali Attribut shareho
Capital Compre Surplus n risk owners’
Capita prefer Shares zed able lders’
Sustai reserves hensive reserves provisio equity
l red Other in stock reserve profit equity
nable Income n
stock
debt
506,52 1,585,1 2,174,5
I.Balance at the 3,212,1 70,539, 9,166,1
1,849. 30,051. 69,545.
end of last year 87.35 319.86 37.97
00 37 55
Add: Change of
accounting
policy
Correcting of
previous errors
Merger of entities
under common
control
Other
II.Balance at the 506,52 1,585,1 2,174,5
3,212,1 70,539, 9,166,1
beginning of 1,849. 30,051. 69,545.
87.35 319.86 37.97
current year 00 37 55
1,100,5 1,265,5
III.Changed in the 252,075 180,034 3,171,3 -90,441,
64,805. 49,436.
current year ,200.58 .72 62.19 966.73
80 56
（1）Total
180,034 -87,270, -87,090,
comprehensive
.72 604.54 569.82
income
（II）Investment 1,100,5 1,352,6
252,075
or decreasing of 64,805. 40,000.
,194.20
capital by owners 80 00
1．Ordinary Share
s invested by share
holders
2 ． Holders of oth
25
er equity instrume
nts invested capital
3．Allotment to the
owners (or
shareholders)
1,100,5 1,352,6
252,075
4．Other 64,805. 40,000.
,194.20
80 00
（III）Profit 3,171,3 -3,171,3
allotment 62.19 62.19
1.Providing of 3,171,3 -3,171,3
surplus reserves 62.19 62.19
2.Providing of
common risk
provisions
3．Allotment to the
owners (or
shareholders)
4．Other
(IV) Internal
transferring of
owners’ equity
1. Capitalizing of
capital reserves (or
to capital shares)
2. Capitalizing of
surplus reserves
(or to capital
shares)
3．Making up
losses by surplus
reserves.
4. Other
(V) Special
reserves
1. Provided this
year
2．Used this term
（VI）Other 6.38 6.38
26
506,52 1,837,2 1,100,5 3,440,1
IV. Balance at the 3,392,2 73,710, -81,275,
1,849. 05,251. 64,805. 18,982.
end of this term 22.07 682.05 828.76
00 95 80 11
Legal Representative: Zhu Jun
Person in charge of accounting：Zhu Meizhu
Accounting Dept Leader: Mu Linying
27
8.Statement of change in owner’s Equity of the Parent Company
Amount in this period
In RMB
Amount in this period
Other Equity instrument
Other
Less: Attribut Total of
Items Share Capital Compreh Specialize Surplus
preferre Sustain Shares in able owners’
Capital Other reserves ensive d reserve reserves
d stock able stock profit equity
Income
debt
I.Balance at the 506,521, 1,576,547 3,392,222 73,710,68 427,019 2,587,191
end of last year 849.00 ,075.96 .07 2.05 ,362.11 ,191.19
Add: Change of
accounting
policy
Correcting of
previous errors
Other
II.Balance at the
506,521, 1,576,547 3,392,222 73,710,68 427,019 2,587,191
beginning of
849.00 ,075.96 .07 2.05 ,362.11 ,191.19
current year
III.Changed in the 4,752,30 22,834,77 27,230,67 -1,173,51 3,766,360 33,897, 36,846,48
current year 0.00 9.00 9.00 8.20 .14 241.25 3.19
（I）Total
-1,173,51 37,663, 36,490,08
comprehensive
8.20 601.39 3.19
income
(II) Investment or
4,752,30 22,834,77 27,230,67 356,400.0
decreasing of
0.00 9.00 9.00 0
capital by owners
1．Ordinary Share
4,752,30 22,478,37 27,230,67
s invested by share
0.00 9.00 9.00
holders
2 ． Holders of oth
er equity instrume
nts invested capital
28
3.Amount of
shares paid and 356,400.0 356,400.0
accounted as 0 0
owners’ equity
4．Other
（III）Profit 3,766,360 -3,766,3
allotment .14 60.14
1.Providing of 3,766,360 -3,766,3
surplus reserves .14 60.14
2．Allotment to the
owners (or
shareholders)
3．Other
(IV)Internal
transferring of
owners’ equity
1. Capitalizing of
capital reserves (or
to capital shares)
2. Capitalizing of
surplus reserves
(or to capital
shares)
3．Making up
losses by surplus
reserves.
4. Other
(V) Special
reserves
1. Provided this
year
2．Used this term
（VI）Other
IV. Balance at the 511,274, 1,599,381 27,230,67 2,218,703 77,477,04 460,916 2,624,037
end of this term 149.00 ,854.96 9.00 .87 2.19 ,603.36 ,674.38
29
Amount in last year
In RMB
Amount in last year
Other Equity instrument
Other
Less: Attribut Total of
Items Share Capital Compreh Specialize Surplus
preferre Sustain Shares in able owners’
Capital Other reserves ensive d reserve reserves
d stock able stock profit equity
Income
debt
I.Balance at the 506,521, 1,576,547 3,212,187 70,539,31 398,477 2,555,297
end of last year 849.00 ,069.58 .35 9.86 ,102.41 ,528.20
Add: Change of
accounting
policy
Correcting of
previous errors
Other
II.Balance at the
506,521, 1,576,547 3,212,187 70,539,31 398,477 2,555,297
beginning of
849.00 ,069.58 .35 9.86 ,102.41 ,528.20
current year
III.Changed in the 180,034.7 3,171,362 28,542, 31,893,66
6.38
current year 2 .19 259.70 2.99
（I）Total
180,034.7 31,713, 31,893,65
comprehensive
2 621.89 6.61
income
(II) Investment or
decreasing of
capital by owners
1．Ordinary Share
s invested by share
holders
2 ． Holders of oth
er equity instrume
nts invested capital
3.Amount of
shares paid and
accounted as
owners’ equity
4．Other
30
（III）Profit 3,171,362 -3,171,3
allotment .19 62.19
1.Providing of 3,171,362 -3,171,3
surplus reserves .19 62.19
2．Allotment to the
owners (or
shareholders)
3．Other
(IV)Internal
transferring of
owners’ equity
1. Capitalizing of
capital reserves (or
to capital shares)
2. Capitalizing of
surplus reserves
(or to capital
shares)
3．Making up
losses by surplus
reserves.
4. Other
(V) Special
reserves
1. Provided this
year
2．Used this term
（VI）Other 6.38 6.38
IV. Balance at the 506,521, 1,576,547 3,392,222 73,710,68 427,019 2,587,191
end of this term 849.00 ,075.96 .07 2.05 ,362.11 ,191.19
Legal Representative: Zhu Jun
Person in charge of accounting：Zhu Meizhu
Accounting Dept Leader: Mu Linying
31
III. Basic Information of the Company
(1)Co mpa n y P rofile
1. Enterprise registration address, organization mode and headquarter address.
The company was previously the Shenzhen Textile Industry Company, on April 13, 1994, approved
by the Letter(1994)No.15 issued by Shenzhen Municipal People's Government, the Company was
restructured and named as Shenzhen Textile (Holdings) Co., Ltd. In the same year, approved by the
(1994) No.19 file of Shenzhenshi, the shares of the company were listed in Shenzhen Stock Exchange.
The company now holds a unified social credit code for the 91440300192173749Y business
license,Registration address and headquarter address are 6/F,Shenfang Building, No.3 Huaqiang Road.
North, Futian District, Shenzhen.
2.Enterprise’s business nature and major business operation.
At present, the Company is mainly engaged in high-tech industry focusing on R&D, production and
marketing of polarizers for liquid crystal display, management of properties in bustling business
districts of Shenzhen and reserved high-class textile and garment business.
3. Approval of the financial statements reported
The financial statements have been authorized for issuance by the Board of Directors of the Group on
March 27,2018.
(2)Scope of consolidated financial statements
1.As of the end of the reporting period, there are 7 subsidiaries companies included in the consolidate
d financial statements:Shenzhen Shengbo Optoelectronic Technology Co., Ltd., Shenzhen Lisi
Industrial Development Co., Ltd.,Shenzhen Huaqiang Hotel, Shenzhen Shenfang Property
Management Co., Ltd. Shenzhen Beaufity Garments Co., Ltd. ,Shzhen Shenfang Import & Export
Co., Ltd., and Shengtou (Hongkong) Co., Ltd.
2．The scope of consolidated financial statements this period did not change.
IV.Basis for the preparation of financial statements
（1）Basis for the preparation
This company’s financial statements is based on going-concern assumption and worked out
according to actual transactions and matters, Accounting Standard for Business Enterprises--Basic
Standard(issued by No.33 Decree of the Ministry of Finance and revised by No.76 Decree of the
Ministry of Finance) issued by the Ministry of Finance, 42 special accounting standards enacted and
revised on and after Feb 15, 2006, guideline for application of accounting standard for business
enterprises, ASBE interpretations and other relevant regulations(hereinafter collectively referred to as
“Accounting Standard for Business Enterprises”) and No.15 of Compilation Rules for Information
Disclosure by Companies Offering Securities to the Public-- General Provisions of Financial Reports
(revised in 2014) issued by China Securities Regulatory Commission.
(2)Continuation
There will be no such events or situations in the 12 months from the end of the reporting period that
32
will cause material doubts as to the continuation capability of the Company.
V. Important accounting policies and estimations
1. Statement on complying with corporate accounting standards
The financial statements prepared by the Company comply with the requirements of corporate
accounting standards. They truly and completely reflect the financial situations, operating results,
equity changes and cash flow, and other relevant information of the company.
2.Fiscal Year
The Company adopts the Gregorian calendar year commencing on January 1 and ending on
December 31 as the fiscal year.
3. Operating cycle
Normal business cycle is realized by the Companyin cash or cash equivalents from the purchase of
assets form pocessing until. Less than 1 year is for the normal operating cycle in the company.
With regard to less than 1 year for the normal operating cycle, the assets realized or the liabilities
repaid at maturity within one year as of the balance sheet date shall be classified into the current
assets or the current liabilities.
4. Accounting standard money
The Company takes RMB as the standard currency for bookkeeping.
5. Accounting process method of enterprise consolidation under same and different controlling.
（1）Enterprise merger under same control：
For a business combination involving enterprises under common control, the party that, on the
combination date, obtains control of another enterprise participating in the combination is the
absorbing party, while that other enterprise participating in the combination is a party being absorbed.
Combination date is the date on which the absorbing party effectively obtains control of the party
being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by the
enterprise being combined at the combination date. The difference between the carrying amount of
the net assets obtained and the carrying amount of consideration paid for the combination (or the total
face value of shares issued) is adjusted to the capital premium in the capital reserve. If the balance of
the capital premium is insufficient, any excess is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly attributable to
the combination shall be recognized as an expense through profit or loss for the current period when
incurred.
Accounting Treatment of the Consolidated Financial Statements:
The long-term equity investment held by the combining party before the combination will change if
the relevant profit and loss, other comprehensive income and other owner equity are confirmed
between the ultimate control date and the combining date for the combining party and the combined
33
party on the acquirement date, and shall respectively offset the initial retained incomes or the profits
and losses of the current period during the comparative statement.
(2)Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination in
which all of the combining enterprises are not ultimately controlled by the same party or parties both
before and after the business combination.For a business combination not involving enterprises under
common control, the party that, on the acquisition date, obtains control of another enterprise
participating in the combination is the acquirer, while that other enterprise participating in the
combination is the acquiree. Acquisition date is the date on which the acquirer effectively obtains
control of the acquiree.
The difference of the merger cost minus the fair value shares of identifiable net assets obtained by the
acquiree during the merger on the acquisition date, is recognized as the business reputation. While the
merger cost is less than the fair value shares of identifiable net assets obtained by the acquiree during
the merger, all the measurement on the identifiable assets, the liabilities, the fair value of liabilities
and the merger cost obtained by the acquiree should firstly be rechecked, and the difference shall be
recorded into the current profits and costs if the merger cost is still less than the fair value shares of
identifiable net assets obtained by the acquiree during the merger after rechecking.
Where the temporary difference obtained by the acquirer was not recognized due to inconformity
with the conditions applied for recognition of deferred income tax, if, within the 12 months after
acquisition, additional information can prove the existence of related information at acquisition date
and the expected economic benefits on the acquisition date arose from deductible temporary
difference by the acquiree can be achieved, relevant income tax assets can be recognized, and
goodwill offset. If the goodwill is not sufficient, the difference shall be recognized as profit of the
current period.
For a business combination not involving enterprise under common control, which achieved in
stages that involves multiple exchange transactions, according to “The notice of the Ministry of
Finance on the issuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and
Article51 of “Accounting Standards for Business Enterprises No.33 - Consolidated Financial
Statements” on the “package deal” criterion, to judge the multiple exchange transations whether they
are the"package deal". If it belong to the “package deal” in reference to the preceding paragraphs of
this section and “long-term investment” accounting treatment, if it does not belong to the “package
deal” to distinguish the individual financial statements and the consolidated financial statements
related to the accounting treatment:
In the individual financial statements, the total value of the book valueoftheacquiree's equity
investment before the acquisition date and the cost of new investment at the acquisition date, as the
initial cost of the investment, the acquiree's equity investment before the acquisition date involved in
other comprehensive income, in the disposal of the investment will be in other comprehensive
income associated with the use of infrastructure and the acquiree directly related to the disposal of
assets or liabilities of the same accounting treatment (that is, except in accordance with the equity
method of accounting in the defined benefit plan acquiree is remeasured net changes in net assets or
liabilities other than in the corresponding share of the lead, and the rest into the current investment
34
income).
In the combination financial statements, the equity interest in the acquiree previously held before the
acquisition date re-assessed at the fair value at the acquisition date, with any difference between its
fair value and its carrying amount is recorded as investment income.The previously-held equity
interest in the acquiree involved in other comprehensive income and other comprehensive income
associated with the purchase of the foundation should be used party directly related to the disposal of
assets or liabilities of the same accounting treatment (that is, except in accordance with the equity
method of accounting in the acquiree is remeasured defined benefit plans other than changes in net
liabilities or net assets due to a corresponding share of the rest of the acquisition date into current
investment income).
6.Preparation of the consolidated financial statements
(1)The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the basis of
control. Control is the power to govern the financial and operating policies of an enterprise so as to
obtain benefits from its operating activities. The relevant events refer to the activities that have
significant influence on the return to the invested party. In accordance with the specific conditions,
the relevant events of the invested party should conclude the sale and purchase of goods and services,
the management of the financial assets, the purchase and disposal of the assets, the research and
development activities, the financing activities and so on.
The scope of consolidation includes the Company and all of the subsidiaries. Subsidiary is an
enterprise or entity under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the relevant
elements involved in the control of the change, the company will be re-evaluated.
( 2)Preparation of the consolidated financial statements.
The Company based on its own and its subsidiaries financial statements, in accordance with other
relevant information, to prepare the consolidated financial statements.
For a subsidiary acquired through a business combination not under common control, the operating
results and cash flows from the acquisition (the date when the control is obtained) are included in the
consolidated income statement and consolidated statement of cash flows, as appropriated; no
adjustment is made to the opening balance and comparative figures in the consolidated financial
statements. Where a subsidiary and a party being absorbed in a merger by absorption was acquired
during the reporting period, through a business combination involving enterprises under common
control, the financial statements of the subsidiary are included in the consolidated financial
statements. The results of operations and cash flow are included in the consolidated balance sheet and
the consolidated income statement, respectively, based on their carrying amounts, from the date that
common control was established, and the opening balances and the comparative figures of the
consolidated financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from those of the
Company, the Company makes necessary adjustments to the financial statements of the subsidiary
based on the Company’s own accounting period or accounting policies. Where a subsidiary was
35
acquired during the reporting period through a business combination not under common control, the
financial statements was reconciliated on the basis of the fair value of identifiable net assets at the
date of acquisition.
Intra-Group balances and transactions, and any unrealized profit or loss arising from intra-Group
transactions, are eliminated in preparing the consolidated financial statements.
Minority interest and the portion in the net profit or loss not attributable to the Company are
presented separately in the consolidated balance sheet within shareholders’/ owners’ equity and net
profit. Net profit or loss attributable to minority shareholders in the subsidiaries is presented
separately as minority interest in the consolidated income statement below the net profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a
subsidiary exceeds the minority shareholders’ portion of the opening balance of shareholders’/equity
of the subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equity
investment or other reasons, the remaining equity investment is re-measured at its fair value at the
date when control is lost. The difference between 1) 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 2) the carrying amounts of the interest in the former subsidiary’s net assets
immediately before the loss of the control is recognized as investment income for the current period
when control is lost. Other comprehensive income related to the former subsidiary's equity
investment, using the foundation and the acquiree directly related to the disposal of the same assets or
liabilities are accounted when the control is lost(ie, in addition to the former subsidiary is remeasured
at the net defined benefit plan or changes in net assets and liabilities resulting from, the rest are
transferred to the current investment income). The retained interest is subsequently measured
according to the rules stipulated in the - “Chinese Accounting Standards for Business Enterprises
No.2 - Long-term equity investment” or “Chinese Accounting Standards for Business Enterprises
No.22 - Determination and measurement of financial instruments”.
The company through multiple transactions step deal with disposal of the subsidiary's equity
investment until the loss of control, need to distinguish between equity until the disposal of a
subsidiary's loss of control over whether the transaction is package deal. Terms of the transaction
disposition of equity investment in a subsidiary, subject to the following conditions and the economic
impact of one or more of cases, usually indicates that several transactions should be accounted for as
a package deal:①these transactions are considered。simultaneously, or in the case of mutual influence
made, ②these transactions as a whole in order to achieve a complete business results; ③the
occurrence of a transaction depends on occurs at least one other transaction; ④a transaction look
alone is not economical, but when considered together with other transaction is economical.
If they does not belong to the package deal, each of them separately, as the case of a transaction in
accordance with “without losing control over the disposal of a subsidiary part of a long-term equity
investments“principles applicable accounting treatment. Until the disposal of the equity investment
loss of control of a subsidiary of the transactions belonging to the package deal, the transaction will
be used as a disposal of a subsidiary and the loss of control of the transaction. However, before losing
control of the price of each disposal entitled to share in the net assets of the subsidiary 's investment
36
corresponding to the difference between the disposal, recognized in the consolidated financial
statements as other comprehensive income, loss of control over the transferred together with the loss
of control or loss in the period.
7.Joint venture arrangements classification and Co-operation accounting treatment
(1)Joint arrangement
A joint arrangement is an arrangement of which two or more partieshave joint control，depending of
the rights and obligation of the Company in the joint arrangement. A joint operation is a joint
arrangement whereby the Company has rights to the assets, andobligations for the liabilities, relating
to the arrangement. A joint venture is a joint arrangement whereby the Company has rights to the net
assets of thearrangement.
(2)Co-operation accounting treatment
When the joint venture company for joint operations, confirm the following items and share common
business interests related to:
（1）Confirm individual assets and common assets held based on shareholdings;
（2）Confirm individual liabilities and shared liabilities held based on shareholdings;
（3）Confirm the income from the sales revenue of co-operate business output
（4）Confirm the income from the sales of the co-operate business output based on shareholdings;
（5）Confirm the individual expenditure and co-operate business cost based on shareholdings.
(3)When a company is a joint ventures, joint venture investment will be recognized as long-term equi
ty investments .
8.Recognition Standard of Cash & Cash Equivalents
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and
investments having short holding term (normally will be due within three months from the day of
purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be
measured reliably and have low risks of change.
9.Foreign Currency Transaction
（1）Foreign Currency Transaction
The approximate shot exchange rate on the transaction date is adopted and translated as RMB amount
when the foreign currency transaction is initially recognized. On the balance sheet date, the monetary
items of foreign currency are translated as per the shot exchange rate on the balance sheet date, the
foreign exchange conversion gap due to the exchange rate, except for the balance of exchange
conversion arising from special foreign currency borrowings capitals and interests for the purchase
and construction of qualified capitalization assets, shall be recorded into the profits and losses of the
current period. The non-monetary items of foreign currency measured at the historical cost shall still
be translated at the spot exchange rate on the transaction date, of which the RMB amount shall not be
changed. The non-monetary items of foreign currency measured at the fair value shall be translated at
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the spot exchange rate on the fair value recognized date, the gap shall be recorded into the current
profits and losses or other comprehensive incomes.
(2) Translation Method of Foreign Currency Financial Statement
For the assets and liabilities in the balance sheet, the shot exchange rate on the balance sheet date is
adopted as the translation exchange rate. For the owner’s equity, the shot exchange rate on the
transaction date is adopted as the translation exchange rate, with the exception of “undistributed
profits”. The incomes and expenses in the income statement shall be translated at the spot exchange
rate or the approximate exchange rate on the transaction date. The translation gap of financial
statement of foreign currency converted above shall be listed in other comprehensive incomes under
the owner’s equity in the consolidated balance sheet.
10.Financial tools
One financial asset or financial liability shall be recognized when the company becomes the party in
the financial instrument contract. The financial assets and the financial liabilities are measured at the
fair value in the initial recognition. For the financial assets and liabilities that measured at the fair
values and the variation included in the current profits and losses, the relative transaction expenses
shall be directly recorded into the profits and losses. For the financial assets and liabilities of other
categories, the expenses related to transactions are recognized as initial amount.
1 Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction. For a financial instrument which has an
active market, the Company uses quoted price in the active market to establish its fair value. The
quoted price in the active market refers to the price that can be regularly obtained from exchange
market, agencies, industry associations, pricing authorities; it represents the fair market trading price
in the actual transaction. For a financial instrument which does not have an active market, the
Company establishes fair value by using a valuation technique. Valuation techniques include using
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.
2. Classification, recognition and measurement of financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date
basis. On initial recognition, the Company’s financial assets are classified into including financial
assets at fair value though profit or loss, held-to maturity investments, loans and receivables and
available-for-trade assets.
（1） Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value through profit or
loss.Financial asset held-for-trade is the financial asset that meets one of the following conditions:
A. the financial asset is acquired for the purpose of selling it in a short term;
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B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively
managed, and there is objective evidence indicating that the enterprise recently manages this portfolio
for the purpose of short-term profits;
C. the financial asset is a derivative, except for a derivative that is designated and effective hedging
instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by
delivery of an unquoted equity instrument (without a quoted price from an active market) whose fair
value cannot be reliably measured. For such kind of financial assets, fair values are adopted for
subsequent measurement.
Financial asset is designated on initial recognition as at fair value through profit or loss only when it
meets one of the following conditions:
A. the designation eliminates or significantly reduces the inconsistency in the measurement or
recognition of relevant gains or losses that would otherwise arise from measuring the financial
instruments on different bases.
B. a Group of financial instruments is managed and its performance is evaluated on a fair value basis,
and is reported to the enterprise’s key management personnels. Formal documentation regarding risk
management or investment strategy has prepared。
Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any
gains or losses arising from changes in the fair value and any dividends or interest income earned on
the financial assets are recognized in the profit or loss.
（2）Investment held-to maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturity that an entity has the positive intention and ability to hold to maturity. Such kind
of financial assets are subsequently measured at amortized cost using the effective interest method.
Gains or losses arising from derecognition, impairment or amortization are recognized in profit or
loss for the current period.
Effective interest rate is the rate that exactly discounted estimated future cash flows through the
expected life of the financial asset or financial liability or, where appropriate, a shorter period to the
net carrying amount of the financial asset or financial liability. When calculating the effective interest
rate, the Company shall estimate future cash flow considering all contractual terms of the financial
asset or financial liability without considering future credit losses, and also consider all fees paid or
received between the parties to the contract giving rise to the financial asset and financial liability that
are an integral part of the effective interest rate, transaction costs, and premiums or discounts, etc.
（3）Loans and receivables
Loans and receivables are non-derivative financial assets with fixed determinable payment that are
not quoted in an active market. Financial assets classified as loans and receivables by the Company
include note receivables, account receivables, interest receivable dividends receivable and other
receivables.
Loans and receivables are subsequently measured at amortized cost using the effective interest
method. Gain or loss arising from derecognition, impairment or amortization is recognized in profit
or loss.
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（4）Financial assets available-for-trade
Financial assets available-for-trade include non-derivative financial assets that are designated on
initial recognition as available for trade, and financial assets that are not classified as financial assets
at fair value through profit or loss, loans and receivables or investment held-to-maturity.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses
arising from changes in the fair value are recognized as other comprehensive income and included in
the capital reserve, except that impairment losses and exchange differences related to amortized cost
of monetary financial assets denominated in foreign currencies are recognized in profit or loss, until
the financial assets are derecognized, at which time the gains or losses are released and recognized in
profit or loss. Interests obtained and dividends declared by the investee during the period in which the
financial assets available-for-trade are held, are recognized in investment gains.
3. Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset except for
the financial assets that measured by the fair value. If there is objective evidence indicating a
financial asset may be impaired, a provision is provided for the impairment.
The company shall make an independent impairment test on the financial assets with significant
single amounts, and carry out an independent impairment test on the financial assets with
insignificant single amounts, or conduct an impairment-related test after they are included in a
combination of financial assets with similar credit risk features so as to carry out. Where, upon
independent test, the financial asset (including those financial assets with significant single amounts
and those with insignificant amounts) has not been impaired, it shall be included in a combination of
financial assets with similar risk features so as to conduct another impairment test. The financial
assets which have suffered from an impairment loss in any single amount shall not be included in any
combination of financial assets with similar risk features for any impairment test.
（1）Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the
estimated present value of future cash flow. The difference is recorded as impairment loss. If there is
objective evidence to indicate the recovery of value of financial assets after impairment, and it is
related with subsequent event after recognition of loss, the impairment loss recorded originally can be
reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the
amortized cost of the financial assets without provisions of impairment loss on the reserving date.
（2）Impairment loss on available-for-trade financial assets
Where the fair value of the equity instrument investment drops significantly or not contemporarily
according to the integrated relevant factors, an available-for-trade financial asset is impaired. The
"serious decline" refers to the cumulative fair value declines more than 30%; "non-temporary
decline" refers to the continuous decline in the fair value of time over 12 months.
When an available-for-trade financial asset is impaired, the cumulative loss arising from declining in
fair value thathad been recognized in capital reserve shall be removed and recognized in profit or loss.
The amount of the cumulative loss that is removed shall be difference between the acquisition cost
with deduction of recoverable amount less amortized cost, current fair value and any impairment loss
on that financial asset previously recognized in profit or loss.
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If, after an impairment loss has been recognized, there is objective evidence that the value of the
financial asset is recovered, and it is objectively related to an event occurring after the impairment
loss was recognized, the initial impairment loss can be reversed and the reserved impairment loss on
available-for-trade equity instrument is recorded in the profit or loss, the reserved impairment loss on
available-for-trade debt instrument is recorded in the current profit or loss.
The equity instrument where there is no quoted price in an active market, and whose fair value cannot
be reliably measured, or impairment loss on a derivative asset that is linked to and must be settled by
delivery of such an unquoted equity instrument shall not be reversed.
4. Recognition and measurement of financial assets transfer
The Group derecognizes a financial asset when one of the following conditions is met:
1) the rights to receive cash flows from the asset have expired;
2) the enterprise has transferred its rights to receive cash flows from the asset to a third party under a
pass-through arrangement; or
3) the enterprise has transferred its rights to receive cash flows from the asset and either has
transferred substantially all the risks and rewards of the asset, or has neither transferred norretained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial asset nor control over
the asset, the asset is recognized according to the extent it exists as financial asset, and correspondent
liability is recognized. The extent of existence refers the level of risk by the financial asset changes
the enterprise is facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, the carrying
amount of the financial asset transferred; and the sum of the consideration received from the transfer
and any cumulative gain or loss that had been recognized in other comprehensive income, is
recognized in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the
transferred financial asset is allocated between the part that continues to be recognized and the part
that is derecognized, based on the relative fair value of those parts. The difference between (a) the
carrying amount allocated to the part derecognized; and (b) the sum of the consideration received for
the part derecognized and any cumulative gain or loss allocated to the part derecognized which has
been previously recognized in other comprehensive income, is recognized in profit or loss.
The Company uses recourse sale financial assets, or financial assets held endorser, determine almost
all of the risks and rewards of ownership of the financial assets have been transferred if. Has
transferred the ownership of the financial assets of almost all the risks and rewards to the transferee,
the derecognition of the financial asset; retains ownership of the financial assets of almost all of the
risks and rewards of financial assets that are not derecognised; neither transfers nor retains ownership
of the financial assets of almost all of the risks and rewards, then continue to determine whether the
enterprise retains control of the assets and the accounting treatment in accordance with the principles
described in the preceding paragraphs.
5. Classification and measurement of financial liabilities
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The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair
value through profit or loss and other financial liabilities. For financial liabilities at fair value through
profit or loss, relevant transaction costs are immediately recognized in profit or loss for the current
period, and transaction costs relating to other financial liabilities are included in the initial recognition
amounts.
(1)Financial liabilities measured by the fair value and the changes recorded in profit or loss
The classification by which financial liabilities held-for-trade and financial liabilities designed at the
initial recognition to be measured by the fair value follows the same criteria as the classification by
which financial assets held-for-trade and financial assets designed at the initial recognition to be
measured by the fair value and their changes are recorded in the current profit or loss.For the
financial liabilities measured by the fair value and changes recorded in the profit or loss, fair values
are adopted for subsequent measurement. All the gains or losses on the change of fair value and the
expenses on dividends or interests related to these financial liabilities are recognized in profit or loss
for the current period.
（2）Other financial liabilities
Derivative financial liabilities that linked with equity instruments, which do not have a quoted price
in an active market and their fair value cannot be measured reliably, is subsequently measured by cost
Other financial liabilities are subsequently measured at amortized cost using the effective interest
method. Gains or losses arising from derecognition or amortization is recognized in profit or loss for
the current period.
6. Derecognition of financial liabilities
The Group derecognizes a financial liability (or part of it) when the underlying present obligation
(or part of it) is discharged or cancelled or has expired. An agreement between the Company (an
existing borrower) and existing lender to replace original financial liability with a new financial
liability with substantially different terms is accounted for as an extinguishment of the original
financial liability and the recognition of a new liability.
When the Company derecognizes a financial liability or a part of it, it recognizes the difference
between the carrying amount of the financial liability (or part of the financial liability) derecognized
the consideration paid (including any non-cash assets transferred or new financial liabilities assumed)
in profit or loss.
7. Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized
financial assets and financial liabilities, and intends either to settle on a net basis, or to realize the
financial asset and settle the financial liability simultaneously, a financial asset and a financial
liability shall be offset and the net amount is presented in the balance sheet. Except for the above
circumstances, financial assets and financial liabilities shall be presented separately in the balance
sheet and shall not be offset.
8. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities. The consideration received from issuing equity instruments, net of
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transaction costs, are added to shareholders’ equity. All types of distribution (excluding stock
dividends) made by the Company to holders of equity instruments are deducted from shareholders’
equity. The Group does not recognize any changes in the fair value of equity instruments.
11.Accounts Receivable
1.Accounts receivable with material specific amount and specific provisioned bad debt preparation.
The Client Identifies single amount of accounts receivable that
is not less than RMB 1 million as account receivable that are
Judgment criteria or amount standard of material specific individually significant in amount. The Client Identifies single
amount or amount criterial： amount of accounts receivable that is not less than RMB 0.5
million as account receivable that are individually significant in
amount.
Making an independent impairment test. If any objective
evidence shows that it has been impaired, the
impairment-related losses shall be recognized according to the
gap between its present value of future cash flow less than its
Provision method with material specific amount and
book value, and the several shall be determined to withdraw the
provision of specific bad debt preparation：
bad debt provision. If there exists no the impairment after the
impairment test, they shall be included in a combination of the
receivables with similar risk features so as to withdraw the bad
debt provision.
2.The accounts receivable of bad debt provisions made by credit risk Group
(1) Recognition Criteria for the Group and Withdrawing Method of Bad Debt Provision
Name Recognition Criteria Withdrawing Method
Aging Group Division by Aging Aging Analysis Method
(2)Accounts on age basis in the portfolio：
Aging Rate for receivables(%) Rate for other receivables(%)
Within 1 year（Included 1 year） 5.00 5.00
1－2 years 10.00 10.00
2－3 years 30.00 30.00
Over 3 years 50.00 50.00
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(3)Account receivable with non-material specific amount but specific bad debt preparation
Reasons of Withdrawing Individual Bad Debt
There is any objective evidence shows that it has been impaired.
Provision
The impairment-related losses shall be recognized according to the gap
Withdrawing Method of Bad Debt Provision
between its present value of future cash flow less than its book value.
12.Inventory
1.Investories class
Inventory shall include the finished products or goods available for sale during daily activities, the
products in the process of production, the stuff and material consumed during the process of
production or the services offered.
2．Valuation method of inventory issued
The company calculates the prices of its inventories according to the weighted averages method
3. Recognition Criteria for the Net Realizable Value of Different Category of Inventory and
Withdrawing Method of Inventory Falling Price Reserves
The inventory shall be measured by use of the lower between the cost and the net realizable value and
the inventory falling price reserves shall be withdrawn as per the gap of single inventory cost minus
the net realizable value at the balance sheet date. The net realizable value refers to the amounts that
the estimated sale price of inventory minus the estimated costs ready to happen till the completion of
works, the estimated selling expenses and the relevant expenses of taxation. The company shall
recognize the net realizable value of inventory based on the acquired unambiguous evidence and in
view of the purpose to hold the inventory, the influence of matters after the balance sheet date and
other factors.
The net realizable value of inventory directly for sale shall be recognized according to the amounts of
the estimated sale price of the inventory minus the estimated sale expenses and the relevant expenses
of taxation during the process of normal production and operation. The net realizable value of
inventory that required to conduct processing shall be recognized according to the amounts of the
estimated sale price of the finished products minus the estimated costs ready to happen till the
completion of works, the estimated selling expenses and the relevant expenses of taxation. On the
balance sheet date, the net realizable value shall be respectively defined for the partial agreed with the
contract price and others without the contract price in the same inventory, and the amounts of the
inventory falling price reserves withdrawn or returned shall be respectively recognized in comparison
with their corresponding costs.
4. Inventory System:Adopts the Perpetual Inventory System
5．Amortization method for low cost and short-lived consumable items and packaging materials
（1）Low cost and short-lived consumable items
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Low cost and short-lived consumable items are amortized using immediate write-off method。
（2）Packaging materials
Packaging materials are amortized using
13. Available-for-sale non-current asset and disposal group
If the company recovers its book value mainly by sale of non-current asset (including exchange
of non-monetary assets of commercial nature and similarly hereinafter) , instead of continued use of
one non-current asset or disposal group, which shall be included into available-for-sale. In specific
standards, the following conditions shall be met at the same time: One non-current asset or disposal
group is available for sale at all times under current status depending on standard practice of selling
them in similar transactions; the company has made a resolution on the sale plan and gained
definitive purchase commitments; the sale is expected to be finished within one year. In which, the
disposal group refers to one set of assets that may be disposed as a whole along with other assets by
sale or other ways in one deal and the liability transferred and related directly to such assets. If the
asset group or combination of asset group under account title disposal group amortizes the goodwill
obtained from business combination in accordance with No.8 of Accounting Standards for Business
Enterprises-- Asset Impairment, the disposal group shall include the goodwill amortized to it.
When the company’s initial measurement or re-measurement on the balance sheet date is
classified into available-for-sale non-current asset and disposal group, the book value shall be written
down to the net amount of fair value minus selling expenses if it is higher than the net amount of fair
value minus selling expenses, the write-down shall be confirmed as the assets impairment loss and
included in current profits and losses, meanwhile the available-for-sale asset depreciation reserves
shall be accrued. For the disposal group, the asset impairment loss shall be written off pro rata the
book value of each non-current asset that is applicable to No.42 of Accounting Standards for
Business Enterprises: Available-for-sale Non-current Assets, Disposal Group and Discontinued
Operations (hereinafter referred to as “Available-for-sale rule for measurement”) after deducting the
book value of goodwill in it.
If the net amount of the fair value of available-for-sale disposal group minus selling expenses
increases after the balance sheet date, the previous write-downs shall be recovered and reversed in
asset impairment loss of non-current assets that are applicable to available-for-sale rule for
measurement after being included into available-for-sale account title, the amount of reversal shall be
included in current profits and losses and increased pro rata its book value based on the proportion of
the book value of each non-current asset in the disposal group that is applicable to available-for-sale
rule for measurement except for goodwill; the book value of written-off goodwill and the asset
impairment loss confirmed before the non-current asset specified in available-for-sale rule for
measurement is classified into available-for-sale asset must not be reversed.
The available-for-sale non-current assets or the non-current assets in the disposal group shall not
be accrued depreciation or amortization, the interest of debit in available-for-sale disposal group and
other expenses shall continue to be confirmed.
The non-current asset will no longer be included into available-for-sale category or will be
removed from the available-for-sale disposal group if it or the disposal group has no longer satisfied
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the conditions for classifying available-for-sale assets and measured as per the lower of: (1) book
value of the non-current asset before being classified into available-for-sale asset adjusted on the
basis of the depreciation, amortization or impairment that shall be confirmed on the assumption that
the non-current asset is not included into available-for-sale account title; (2)Recoverable amount.
14.Long-term equity investments
Long-term equity investments referred to in this section refer to the Company invested entity has
control, joint control or significant influence over the long-term equity investments. The Company
invested does not have control, joint control or significant influence over the long-term equity
investments as financial assets available for sale or at fair value and the changes included financial
assets through profit or loss.
Joint control is the Company control over an arrangement in accordance with the relevant stipulations
are common, related activities and the arrangement must be after sharing control participants agreed
to the decision-making. Significant influence is the Company s financial and operating policies of the
entity has the right to participate in decision-making, but can not control or with other parties joint
control over those policies.
1. Determination of Investment cost
The cost of a long-term equity investment acquired through business combination under common
control is measured at the acquirer's share of the combination date book value of the acquiree's net
equity in the ultimate controller's consolidated financial statements. The difference between the cost
and book value of cash paid, non-monetary assets transferred and liabilities assumed is adjusted to
capital reserves, and to retained earnings if capital reserves is insufficient. If the consideration is
transferred by way of issuing equity instruments, the face value of the equity instruments issued is
recognised in share capital and the difference between the cost of the face value of the equity
instruments issued is adjusted to capital reserves, and to retained earnings if capital reserves is
insufficient.The cost of a long-term equity investment acquired through business combination not
under common control is the fair value of the assets transferred, liabilities incurred or assumed and
equity instruments issued. (For the equity of the combined party under common control obtained
step-by-step through multiple transactions and the business combination under common control
ultimately formed, the company should respectively dispose all the transactions if belong to the
package deal. For the package deal, all the transactions will be conducted the accounting treatment as
the deal with acquisition of control. For the non-package deal, the shares of the book value of the
stockholders’ equity/owners’ equity of the combined party in the consolidated financial statements of
the ultimate control party shall be as the initial investment cost of the long-term equity investment,
and the capital reserves shall be adjusted for the difference between the initial investment cost of
long-term equity investment and the sum of the book value of long-term equity investment before
merging and that of new consideration payment obtained on the merger date, or the retained earnings
shall be adjusted if the capital reserves are insufficient to offset. As for the equity investment held
before the merger date, the accounting treatment will not be conducted temporarily for other
comprehensive income accounted by equity method or confirmed for the financial assets available for
sale.)
All expenses incurred directly associated with the acquisition by the acquirer, including expenditure
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of audit, legal services, valuation and consultancy and other administrative expenses, are recognised
in profit or loss for the period during which the acquisition occurs. For the merger of enterprises not
under the same control through gaining the shares of the combined enterprise by multiple steps of
deals, it shall deal with it in the following two ways depending on that if it belongs to "a package
deal": if it belongs to "a package deal", it shall deal with all the deals as one obtaining the control
power; if it does not belong to "a package deal", it shall, on the date of merger, regard the sum of
book value of the owner’s original equity of the merged enterprise and the newly increased
investment cost as the initial cost of the long-term equity investment. For the shares originally held
by this enterprise accounted for by weighted equity method, the relevant other comprehensive income
shall not be accounted for temporarily.If the equity investment held originally can be classified as the
financial assets for sale, the difference between the fair value and the book value, and the variation in
the accumulative fair value of other comprehensive returns recorded originally will be transferred into
the current profits and losses.
All expenses incurred directly associated with the acquisition by the acquirer, including expenditure
of audit, legal services, valuation and consultancy and other administrative expenses, are recognised
in profit or loss for the period during which the acquisition occurs.
Long-term equity investments acquired not through business combination are measured at cost on
initial recognition. Depending on the way of acquisition, the cost of acquisition can be the total cash
paid, the fair value of equity instrument issued, the contract price, the fair value or book value of the
assets given away in the case of non-monetary asset exchange, or the fair value of the relevant
long-term equity investments. The cost of acquisition of a long-term equity investment acquired not
through business combination also includes all directly associated expenses, applicable taxes and fees,
and other necessary expenses. When the significant impact or the joint control but non-control on the
invested party can be implemented due to the additional investment, the long-term equity investment
cost is the sum of the fair value of the equity investment originally held and the new investment costs
based on the recognition of “Accounting Standards for Enterprises No.22 – Recognition and
Measurement of Financial Instruments”.
2. Subsequent Measurement
To be invested joint control ( except constitute common operator ) or long-term equity investments
significant influence are accounted for using the equity method. In addition, the Company's financial
statements using the cost method of accounting for long-term equity can exercise control over the
investee.
(1)Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial investment cost. Except
for cash dividends or profits declared but not yet paid that are included in the price or consideration
actually paid upon acquisition of the long-term equity investment, investment income is recognized in
the period in accordance with the attributable share of cash dividends or profit distributions declared
by the investee.
(2)Equity method of accounting for long-term equity investments
When using the equity method, the initial investment cost of long-term equity investment exceeds the
investor's net identifiable assets of the fair share of the investment value, do not adjust the initial inve
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stment cost of long-term equity investment; the initial investment cost is less than the investee unit sh
are of identifiable net assets at fair value, the difference is recognized in profit or loss, while the long-
term equity investment adjustment costs.
Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s
interest in the fair values of the investee’s identifiable net assets at the time of acquisition, no
adjustment shall be made to the initial investment cost. The carrying amount of an long-term equity
investment measured using the equity method is adjusted by the Company's share of the investee's net
profit and other comprehensive income, which is recognised as investment income and other
comprehensive income respectively. The carrying amount of an long-term equity investment
measured using the equity method is reduced by profit distribution or cash dividends announced by
the investee. The carrying amount of an long-term equity investment measured using the equity
method is also adjusted by the investee's equity movement other than net profit, other comprehensive
income and profit distribution, which is adjusted to capital reserves。The net profit of the investee is
adjusted by the fair value of the investee's identifiable assets as at acquistion. The financial statements
and hence the net profit and other comprehensive income of an investee which does not adopt
accounting policies or accounting period uniform with the Company is adjusted by the Company's
accounting policies and accounting period. The Company's share of unrealised profit or loss arising
from related party transactions between the Company and an associate or joint venture is deducted
from investment income. Unrealised loss arising from related party transactions between the
Company and an associate or joint venture which is associated with asset impairment is not adjusted.
Where assets transferred to an associate or joint venture which form part of the Company's
investment in the investee but which does not enable the Company obtain control over the investee,
the cost of the additional investment acquired is measured at the fair value of assets transferred and
the difference between the cost of the additional investment and the book value of the assets
transferred is recognised in profit or loss. Where assets transferred to an associate or joint venture
form an operation, the difference between the consideration received and the book value of the assets
transferred in recognised in profit or loss. Where assets transferred from an associate or joint venture
form an operation, the transaction is accounted for in accordance with CAS 20 - Business
Combination, any gain or loss is reocgnised in profit or loss.
The Company's share of an investee's net loss is limited by the sum of the book value of the
long-term equity investment and other net long-term investments in the investees. Where the
Company has obligation to share additional net loss of the investee, the estimatedshare of loss
recognised as accrued liabilities and investment loss. Where the Company has unrecognised share of
loss of the investee when the investee generates net profit, the Company's unrecognised share of loss
is reduced by the Company's share of net profit and when the Company's unrecognised share or loss
is eliminated in full, the Company's share of net profit, if any, is recognised as investment income.
(3)Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of minority interests
and portion of net asset cumulatively calculated from the acquisition date is adjusted as capital
reserve. If the capital reserve is not sufficient to absorb the difference, the excess are adjusted against
returned earnings.
(4)Disposal of long-term equity investment
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Where the parent company disposes long-term investment in a subsidiary without a change in control,
the difference in the net asset between the amount of disposed long-term investment and the amount
of the consideration paid or received is adjusted to the owner’s equity. If the disposal of long-term
investment in a subsidiary involves loss of control over the subsidiary, the related accounting policies
in Note applies. For disposal of long-term equity investments in any situation other than the
fore-mentioned situation, the difference between the book value of the investment disposed and the
consideration received is recognised in profit or loss.
The investee's equity movement other than net profit, other comprehensive income and profit
distribution is reocgnised in profit or loss proportionate to the disposal.
Where a long-term equity investment is measured by the equity method both before and after part
disposal of the investment, cumulative other comprehensive income relevant to the investment
recognised prior to the acquistion is treated in the same manner that the investee disposes the relevant
assets or liabilities proportionate to the disposal. The investee's equity movement other than net profit,
other comprehensive income and profit distribution is reocgnised in profit or loss proportionate to the
disposal.
Where a long-term equity investment is measured at cost both before and after part disposal of the
investment, cumulative other comprehensive income relevant to the investment recognised, as a result
of accounting by equity method or recognition and measurement principles applicable to financial
instruments, prior to the Company's acquisition of control over the investee is treated in the same
manner that the investee disposes the relevant assets or liabilities and recognised in profit or loss
proportionate to the disposal.The investee's equity movement other than net profit, other
comprehensive income and profit distribution, as a result of accounting by equity method, is
reocgnised in profit or loss proportionate to the disposal.
Where the Company's control over an investee is lost due to partial disposal of investment in the
investee and the Company continues to have significant influence over the investee after the partial
disposal, the investment in measured by the equity method in the Company's separate financial
statements; where the Company's control over an investee is lost due to partial disposal of investment
in the investee and the Company ceases to have significant influence over the investee after the
partial disposal, the investment in measured in accordance with the recognition and measurement
principles applicable to financial instruments in the Company's separate financialstatements and the
difference between the fair value and the book value of the remaining investment at the date of loss of
control is recognised in profit or loss. Cumulative other comprehensive income relevant to the
investment recognised, as a result of accounting by equity method or recognition and measurement
principles applicable to financial instruments, prior to the Company's acquisition of control over the
investee is treated in the same manner that the investee disposes the relevant assets or liabilities on
the date of loss of control. The investee's equity movement other than net profit, other comprehensive
income and profit distribution, as a result of accounting by equity method, is reocgnised in profit or
loss when control is lost. Where the remaining investment is measured by equity method, the
fore-mentioned other comprehensive income and other equity movement are recognised in profit or
loss proportionate to the disposal; Where the remaining investment is measured in accordance with
the recognition and measurement principles applicable to financial instruments, the fore-mentioned
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other comprehensive income and other equity movement are recognised in profit or loss in full.
Where the Company's joint control or significant influence over an investee is lost due to partial
disposal of investment in the investee,the remaining investment in the investee is measured in
accordance with the recognition and measurement principles applicable to financial instruments, the
difference between the fair value and the book value of the remaining investment at the date of loss of
joint control or significant influence is recognised in profit or loss.Cumulative other comprehensive
income relevant to the investment recognised, as a result of accounting by equity method, prior to the
partial disposal is treated in the same manner that the investee disposes the relevant assets or
liabilities on the date of loss of joint control or significant influence. The investee's equity movement
other than net profit, other comprehensive income and profit distribution is reocgnised in profit or
loss when joint control or significant influence is lost.
Where the Company's control over an investee is lost through multiple disposals and the multiple
disposals shall be viewed as one single transaction, the multiple disposals is accounted for one single
transaction which result in the Company's loss of control over the investee. Each difference between
the consideration received and the book value of the investment disposed is recognised in other
comprehensive income and reclassified in full to profit or loss at the time when control over the
investee is lost.
15.Investment property
1．The measurement mode of investment property
The investment property of the company includes the leased land use rights, the leased buildings, the
land use rights held and prepared to transfer after appreciation.
The company shall adopt the cost mode to measure the investment property.
2. Depreciation or Amortization Method by Use of Cost Mode
The leased buildings of the investment property in the company shall be withdrawn the depreciation
by the service life average method, and the depreciation policy is the same with that of the fixed
assets. The land use rights held and prepared to transfer after appreciation in the investment property
shall be amortized by the line method, and the specific accounting policy is same with that of the
intangible assets.
16.Fixed assets
1．The conditions of recognition
Fixed assets refers to the tangible assets that are held for the sake of producing commodities,
rendering labor service, renting or business management and their useful life is in excess of one fiscal
year. The fixed assets can be recognized when the following requirements are all met: (1) the
economic benefits relevant to the fixed assets will flow into the enterprise. (2) the cost of the fixed
assets can be measured reliably.
The fixed assets of the company include the houses and buildings, the decoration of the fixed assets,
the machinery equipment, the transportation equipment, the electronic instrument and other devices.
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2. Initial Measurement and Subsequent Measurement of the Fixed Assets
The fixed assets shall be book kept as per the acquired actual cost, and the depreciation shall be
withdrawn from the subsequent month after the usable status reserved and achieved.
3．The method for depreciation
The method for Expected useful Estimated residual
Category Depreciation
depreciation life（Year） value
House and Building- Straight-line
35 year 4% 2.74%
Production method
House and Building-Non- Straight-line
method 40 years 4% 2.40%
Production
Straight-line
Decoration of Fixed assets 10 years 10.00%
method
Straight-line
Machinery and equipment 10-14 years 4% 9.60%-6.86%
method
Straight-line
Transportation equipment 8 years 4% 12.00%
method
Straight-line
Electronic equipment 8 years 4% 12.00%
method
Straight-line
Other equipment 8 years 4% 12.00%
method
4．Cognizance evidence and pricing method of financial leasing fixed assets
(1) Recognition Criteria of the Fixed Assets under Financing Lease
The financing lease shall be recognized if the following one or several criteria are met: ① the
ownership of the leasing assets shall be transferred to the tenant when the expiration of lease term. ②
the tenant has the option to purchase the leasing assets, and the made purchase price is expected to be
far less than the fair value of the leasing assets in the implementation of the option. Thus, it can be
reasonably recognized that the tenant will implement the option on the lease date. ③ the ownership
of assets is not transferred, but the lease term shall be the most of the life of the lease assets. ④ the
least present value of the lease payment of the tenant and the least present value of the lease receipts
on the lease date almost equal to the fair value of the leasing assets on the lease date respectively. ⑤
the leasing assets have the special nature, and only the tenant can use if there is no major
modifications.
(2) Valuation of Fixed Assets Acquired under Finance Leases: the fixed assets acquired under finance
leases shall be book kept according to the lower between the fair value of the leasing assets and the
least lease payment on the lease date.
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(3) Depreciation Method of Fixed Assets Acquired under Finance Leases: the depreciation shall be
withdrawn for the fixed assets acquired under finance leases as per the depreciation policy of own
fixed assets.
17.Construction in progress
1. The projects under construction shall be recognized when the economic benefits may flow into and
the cost can be reliably measured. Meanwhile, the projects under construction shall be measured
according to the actual cost occurred before the assets are built to achieve the expected usable
condition.
2. The projects under construction shall be transferred into the fixed assets according to the actual
project costs when the expected usable condition achieved. For the expected usable condition
achieved while the final accounts for completed projects not handled yet, the projects shall be
transferred into the fixed assets as per the estimated value. After the final accounts for completed
projects handled, the original estimated value shall be adjusted as per the actual cost, but the original
withdrawn depreciation shall not be adjusted again.
18.Borrowing costs
1. Recognition principles for capitalizing of loan expenses
Borrowing expenses occurred to the Company that can be accounted as purchasing or
production of asset satisfying the conditions of capitalizing, are capitalized and accounted as cost of
related asset. Other borrowing expenses are recognized as expenses according to the occurred amount,
and accounted into gain/loss of current term.
2. Duration of capitalization of Loan costs
(1).When a loan expense satisfies all of the following conditions, it is capitalized:
1. Expenditures on assets have taken place.
2. Loan costs have taken place;
3. The construction or production activities to make assets to reach the intended use or sale of state
have begun.
（2）Capitalization of borrowing costs is suspended during periods in which the acquisition,
construction or production of a qualifying asset is interrupted by activities other than those necessary
to prepare the asset for its intended use or sale, when the interruption is for a continuous period of
more than 3 months. Borrowing costs incurred during these periods recognized as an expense for the
current period until the acquisition, construction or production is resumed.
（3）When the construction or production meets the intended use or sale of state of capitalization
conditions, the Loan costs should stop capitalization.
3. Computation Method for Capitalization Rate and Amount of Borrowing Costs
With regard to the special borrowings for the purchase and construction of qualified assets, the
capitalized interest amount shall be recognized according to the amount of the interest cost for the
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special borrowings actually occurred during the current period (including the amortization of discount
or premium recognized as per the effective interest method) minus the interest income acquired after
the borrowings deposit in bank or the investment income obtained from the temporary investment.
For the general borrowings for the purchase and construction of qualified assets, the capitalized
interest amount of the general borrowings shall be computed and recognized according to the
weighted average of accumulative asset expense beyond the expense of the special borrowings,
multiplying the capitalization rate of general borrowings.
19.Intangible assets
1. Valuation Method, Service Life and Impairment Test of Intangible Assets
(1) The intangible assets include the land use rights, the professional technology and the software,
which are conducted the initial measurement as per the cost.
(2) The service life of intangible assets is analyzed and judged when of the company acquires the
intangible assets. For the finite service life of the intangible assets, the years of service life or the
quantity of service life formed and the number of similar measurement unit shall be estimated. If the
term of economic benefits of the intangible assets brought for the company is not able to be foreseen,
the intangible assets shall be recognized as that with the indefinite service life.
(3) Estimation Method of Service life of Intangible Assets
1) For the intangible assets with the finite service life, the company shall generally consider the
following factors to estimate the service life: ① the normal service life of products produced with the
assets, and the acquired information of the service life of similar assets. ② the estimation of the
current stage conditions and the future development trends in the aspects of technology and craft. ③
the demand of the products produced by the assets or the offered services in the market. ④ the
expectation of actions adopted by current or potential competitors. ⑤ the expected maintenance
expense for sustaining the capacity to economic benefits brought by the assets and the ability to the
relevant expense expected. ⑥ the relevant law provision or the similar limit to the control term of the
assets, such as the licensed use term and the lease term. ⑦ the correlation with the service life of
other assets held by the company.
2) Intangible Assets with Indefinite Service Life, Judgment Criteria on Indefinite Service Life and
Review Procedure of Its Service Life
The company shall be unable to foresee the term of economic benefits brought by the assets for the
company, or the indefinite term of intangible assets recognized as the indefinite service life of
intangible assets.
The judgment criteria of Indefinite service life: ① as from the contractual rights or other legal rights,
but the indefinite service life of contract provision or legal provisions. ② unable to judge the term of
economic benefits brought by the intangible assets for the company after the integration of
information in the same industry or the relevant expert argumentation.
At the end of every year, the review should be made for the service life of the intangible assets with
the indefinite service life, and the relevant department that uses the intangible assets, shall conduct
the basic review by the method from up to down, in order to evaluate the judgment criteria of the
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indefinite service life if there is the change.
(4) Amortization Method of Intangible Assets Value
The intangible assets with the finite service life shall be systematically and reasonably amortized
according to the expected implementation mode of the economic benefits related to the intangible
assets during the service life, and the line method shall be adopted to amortize for the intangible
assets unable to reliably recognize the expected implementation mode. The specific service life is as
follows:
Items Amortization life time（Year）
Land use right 50 years
Proprietary technology 15 years
Software 5 years
The intangible assets with the indefinite service life shall not be amortized, and the company shall
make the review of the service life of the intangible assets during every accounting period.
(5) If there is the impairment for the intangible assets with the definite service life on the balance
sheet date, the corresponding impairment provision shall be withdrawn according to the difference
between the book value and the recoverable amount. The intangible assets with the indefinite service
life and without the usable condition shall be conducted the impairment test every year whether the
impairment exists.
2. Accounting Policy of Internal Research and Development Expenditure
The expenditure for internal research and development project in the study stage shall be recorded
into the current profits and losses when occurring. The expenditure for internal research and
development project in the development stage shall be recognized as the intangible assets when the
following requirements are simultaneously met: (1) the completion of the intangible assets is
available for use or sale, and feasible in the technology. (2) the intention to complete the intangible
assets and use or sale. (3) the method for the economic benefits produced by the intangible assets,
including the evidence that shows there exists the market for the products generated from the
intangible assets or the intangible assets have the market. The intangible assets are used internally
which shows the serviceability. (4) there are sufficient technology, financial resources and other
resources to support the completion of the development of the intangible assets, and there is ability to
use or sell the intangible assets. (5) the expenditure belong to the development stage of the intangible
assets can be reliably measured.
The specific criteria for the division of the internal research and development projects at the research
stage and the development stage of the company is as follows: (1) the investigation stage planned to
obtain the new technology and knowledge, shall be recognized as the research stage, which has the
features of planning and exploration. (2) before the commercial manufacture and use, the research
results or other knowledge should be applied for the plan or design, in order to produce the new or
improved stages with substantial materials, devices and products, which should be recognized as the
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development stage, and this stage has the features of pertinence and more possibility to create the
achievement.
20.Long-term Assets Impairment
The company shall make judgment of the long-term assets including the long-term equity investment,
the investment property measured by the cost mode, the fixed assets and the projects under
construction if there is possible impairment on the balance sheet date. If there exists the evidence
shows that the long-term assets have the impairment, the impairment test should be conducted, and
the recoverable amount should be estimated. The impairment shall be confirmed if there exists after
the comparison of the estimated recoverable amount of the assets and its book value, and if the assets
impairment provision shall be withdrawn to recognize the corresponding impairment losses. The
estimation of the recoverable amount of assets should be confirmed according to the higher one
between the net amount of the fair value minus the disposal costs and the present value of the cash
flow of assets expected in the future.
The company shall conduct the impairment test at least every year for the goodwill established by the
business combination and the intangible assets with the indefinite service life whether there exists the
impairment.
The impairment loss of long-term assets after recognized shouldn’t be reversed in the future
accounting period.
21.Long-term amortizable expenses
Deferred charges represent expenses incurred that should be borne and amortized over the current and
subsequent period (together of more than one year).
The long-term unamortized expense shall be bookkept as per the actual amount occurred, and shall be
averagely amortize within the benefit period or the specified period. If the long-term unamortized
expense can’t make the benefits for the future accounting period, the amortized value of the
unamortized project shall all be transferred into the current profits and losses.
22.Remuneration
The employee benefits of the company include short-term employee benefits, post-employment
benefits, termination benefits and other long-term employee benefits.
1. Accounting Treatment Method of Short-term Compensation
During the accounting period of service provision of staff, the company shall regard the actual
short-term compensation as the liability and record into the current profits and losses or the relevant
assets cost as per the beneficiary. Of which, the non-monetary welfare shall be measured as per the
fair value.
2. Accounting Treatment Method of Severance Benefit Plans
The severance benefit plans can be divided into the defined contribution plan and the defined benefit
plan according to the risk and obligation borne.
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(1) The Defined Contribution Plan
The contribution deposits that paid to the individual subject for the services provided by the staffs on
the balance sheet date during the accounting period, shall be recognized as the liability, and recorded
into the current profits and losses or the relevant asset costs as per the beneficiary.
(2) The Defined Benefit Plan
The defined benefit plan is the severance benefit plans with the exception of the defined contribution
plans.
1) Based on the expected cumulative welfare unit method, the company shall adopt unbiased and
mutually consistent actuarial assumptions to make evaluation of demographic variables and financial
variables, measure and define the obligations arising from the benefit plan, and determine the period
of the relevant obligations. The company shall discount all the defined benefit plan obligations,
including the obligation within twelve months after the end of the annual report during the expected
services provision of employee. The discount rate adopted in discounting shall be recognized
according to the bonds matched with the defined benefit plan obligation term and the currency at the
balance sheet date or the market return of high-quality corporate bonds in the active market.
2) If there exist the assets for the defined benefit plan, the deficit or surplus arising from the present
value of the defined benefit plan obligations minus the fair value of the defined benefit plan assets are
recognized as the net liability or the net assets of the defined benefit plan. If there exists the surplus of
the defined benefit plan, the lower one between the surplus of the define benefit plan and the upper
limit of assets shall be used to measure the net assets of the defined benefit plan. The upper limit of
assets refers to the present value of economic benefits obtained from the refund of the defined benefit
plans or the reduction of deposit funds of future defined benefit plans.
3) At the end of period, the employee’s payroll costs arising from the defined benefit plan are
recognized as the service costs, the net interests on the net liabilities or the net assets of the defined
benefit plan, and the changes caused by the net liabilities and the net assets of the defined benefit plan
that re-measured. Of which, the service costs and the net interests on the net liabilities or the net
assets of the defined benefit plan shall be recorded into the current profits and losses or the relevant
assets costs, the changes caused by the net liabilities and the net assets of the defined benefit plan that
re-measured shall be recorded into other comprehensive incomes, which should not be switched back
to the profits and losses during the subsequent accounting period, but the amount recognized from
other comprehensive incomes can be transferred within the scope of the rights and interests.
4) The profit or loss of one settlement shall be recognized when settling the defined benefit plan.
3. Accounting Treatment Method of Demission Welfare
The employee compensation liabilities generated by the demission welfare shall be recognized on the
early date and recorded into the current profits and losses: (1) when the company can’t withdraw the
demission welfare provided due to the rundown suggestion or the termination of labor relations plans.
(2) when the company recognizes the costs or the expenses related to the reorganization of demission
welfare payment.
The earlier one between when the company can’t withdraw the rundown suggestion or the
termination of labor relations plans at its side and when the costs relevant to the recombination of
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dismission welfare payment, shall be recognized as the liabilities arising from the compensation due
to the termination of labor relations with staff and shall be recorded into the current profits and losses.
Then company shall reasonably predict and recognize the payroll payable arising from the dismission
welfare. The dismission welfare, which is expected to finish the payment within twelve months after
the end of the annual report recognized, shall apply to the relevant provisions of short-term
compensation. The dismission welfare, which is expected to be unfinished for the payment within
twelve months after the end of the annual report recognized, shall apply to the relevant provisions of
short-term compensation, shall apply to the provisions related to other long-term employee benefits.
4. Accounting Treatment Method of Other Long-term Employee Benefits
If other long-term employee benefits of employees provided by the company meet the conditions of
the defined contribution plan, the accounting treatment shall be made in accordance with the defined
contribution plan. Except for these, other long-term benefits shall be made the accounting treatment
according to the defined benefit plan, but the changes arising from the re-measurement of net
liabilities or net assets of other long-term employee benefits shall be recorded into the current profits
and losses or the relevant assets costs.
23. Estimated Liabilities
1. Recognition Criteria of Estimated Liabilities
The liabilities shall be recognized when external guarantee, pending litigation or arbitration, product
quality assurance, staff reduction plan, loss contract, recombination obligation, disposal obligation of
the fixed assets and other pertinent businesses all meet the following requirements:
(1) The obligation is the current obligation borne by the company.
(2) The implementation of the obligation may cause the economic benefits out of the enterprise.
(3) The amount of the obligation can be measured reliably.
2. Measurement Method of Estimated Liabilities
The estimated liabilities shall be made the initial measurement according to the best estimate of the
expenditure required to settle the present obligation. There is the continuous scope for the required
expenditure, and the best estimate with the same possibilities resulted from various outcomes within
the scope shall be recognized as per the intermediate value. The best estimate should be recognize
according to the following methods:
(1) The best estimate shall be recognized as per the most possible amount if there are matters
involved in the single item.
(2) The best estimate shall be calculated and recognized as per the possible amount if there are
matters involved in the multiple item.
If the company pays all the expenses for paying off the estimated liabilities, or partial estimates are
compensated by the third party or other parties, the compensation amount should be separately
recognized as the assets when the receipt of the compensation amount is basically determined.
Meanwhile, the determined compensation amount shall not exceed the book value of the estimated
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liabilities recognized.
The company shall make review of the book value of estimated liabilities at the balance sheet date. If
there is conclusive evidence that the book value cannot really reflect the current best estimate, the
adjustment shall be made for the book value in accordance with the current best estimate.
24. Share payment
1.Accounting Treatment Methods of Share Payment
Share payment is a transaction which is for obtaining the service provided by employees or other
parties, where thus the equity instrument is granted , or for bearing the liability confirmed basing on
the equity instrument. Share payment is divided into the payment settled by equities and the payment
settled by cash.
(1)Shared Payment settled by Equities
The share payment settled by equities, which is used for exchanging the service provided by
employees, will be measured according to the fair value of the equity instrument granted to
employees on date of grant. The amount of such fair value, under the situation that the rights can only
be exercised after the service is finished and the set performance is achieved within the waiting
period, and basing on the optimum estimation for the number of equity instrument which exercise
rights within the waiting period, will be measured according to straight-line method and counted into
relevant costs and expenses. When the rights can be exercised immediately after being granted, the
payment will be counted into relevant costs and expenses, and the capital reserve will be increased
correspondingly.
On each and every balance sheet date within the waiting period, the Company will make optimum
estimations according to the newly-obtained subsequent information after the changes occurred in the
number of employees who exercise rights so as to modify the predicted number of the equity
instrument of exercising rights. The influence from above-mentioned estimations will be counted into
relevant costs and expenses at the current period, and the corresponding adjustment will be made for
the capital reserve.
If the fair value of the other parties’ service can be reliably measured, the share-based payment settled
by equities which is used for exchanging the service of other parties will be measured according to
that fair value on date of acquisition. If not, but the fair value of the equity instrument can be reliably
measured, the payment will be counted according to the fair value of the equity instrument on date of
service acquisition, and it will be counted into relevant costs and expenses, and the equity of the
shareholders will be increased correspondingly.
(2) Share Payment settled by Cash
The share payment settled by cash will be measured according to the fair value of the liability
confirmed basing on the shares borne by the Company and other equity instruments. If the rights can
be exercised immediately after being granted, the payment will be counted into relevant costs or
expenses and the liability will be increased correspondingly. If the rights can only be exercised after
the situation that service within the waiting period is completed and set performance is achieved, the
service obtained at the current period,according to the fair value amount of the liability borne by the
Company, and basing on the optimum estimation for the condition of exercising rights, will be
counted into costs or expenses on each and every balance sheet date during the waiting period, and
the liability will be increased correspondingly.
Each and every balance sheet date and settlement before relevant liability settlement, the fair
value of liability will be remeasured, of which changes occurred will be counted into the current
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period.
2.Relevant Accounting Treatment of Modification and Termination for Share-based Payment
Plan
When the Company modifies the share payment plan, if the fair value of the equity instrument
granted is increased after the modification, the increase in the service obtained will be
correspondingly confirmed according to the increase in the fair value of equity instrument. The
increase in the fair value of equity instrument means the balance between the equity instrument
before modification and the equity instrument after modification on modification date. If decrease
occurred in the total fair value of the equity instrument after the modification or methods which are
unbeneficial to employees are adopted in the modification, accounting treatment will still continue to
be made for the service obtained, and such changes will be regarded as changes that have never
occurred unless the Company has canceled partial or all equity instruments.
During the waiting period, if the granted equity instrument is cancelled, the company will treat
the cancelled equity instrument as the accelerated exercise of power, and immediately include the
balance that should be recognized in the remaining waiting period into the current profit and loss, and
simultaneously confirm the capital reserve. If the employee or other party can choose to satisfy the
non-exercisable condition but not satisfied in the waiting period, then the company will treat it as
cancellation of the granted equity instrument.
3. Accounting treatment involving the share payment transaction between the Company and the
shareholders or the actual controller of the Company
Where involves the share payment transaction between the Company and the shareholders or the
actual controller of the Company and one of the parties of the settlement company and the
service-accepting company is within the company and the other is not within the company, then the
company performs the accounting treatment in the consolidated financial statements of the company
according to the following provisions:
(1) If the settlement company settles in its own equity instrument, then it treats the equity
payment transaction as the equity-settled equity payment; otherwise, it treats as the cash-settled
equity payment.
If the settlement company is an investor to the service-accepting company, it shall be recognized
as a long-term equity investment in the service-accepting company in accordance with the fair value
of the equity instrument or the fair value of the liability it is assumed to bear on the grant date, and
the capital reserve (other capital reserve) or liabilities shall be recognized at the same time.
(2) If the service-accepting company has no settlement obligation or confers its own equity tools
on the employees of the company, then such equity payment transaction shall be treated as
equity-settled equity payment; if the service-accepting company has the settlement obligation and
confers the employees of the company with not its own equity instrument, then such equity payment
transaction shall be treated as cash-settled equity payment;
In the case of the equity payment transaction occurs between the companies within the company,
and the service-accepting company and the settlement company are not the same company, then the
confirmation and measurement of the equity payment transaction shall be carried out respectively in
the financial report of the service-accepting company and the settlement company, with the same
analogy of the above-said principle.
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25. Revenue
1. Recognition Principle of Revenue
(1) The Goods for Sale
The revenue of the goods for sale shall be recognized when the following requirements are met
simultaneously: the transfer of main risks and rewards on ownership of the goods to the buyers, the
continual management rights related to ownership no longer retained by the company and the
effective control of the sold goods no longer implemented, the reliable measurement of the revenue
amount, the possible inflow of the relevant economic benefits, and the reliable measurement of the
relevant costs incurred or to be incurred.
(2) The Service Provision
If the provided services transaction results can be reliably estimated at the balance sheet date (the
reliable measurement of the revenue amount, the possible inflow of the relevant economic benefits,
the reliable recognition of the completion schedule of transaction, and the reliable measurement of the
relevant costs incurred or to be incurred in the transaction), the company shall recognize the relevant
service incomes according to the completion percentage method and recognized the completion
schedule of the provided service transaction according to the proportion of the costs occurred
accounting for the total estimated costs. If the provided services transaction results cannot be reliably
estimated at the balance sheet date and the occurred service costs can be expected to have
compensation, the company shall recognize to provide the service revenue according to the occurred
service cost amount and transfer the service costs as per the same amount. If the occurred service
costs cannot be expected to have compensation, the occurred service costs shall be recorded into the
current profits and losses and not be recognized as the service revenue.
(3) The Abalienation of the Right to Use Assets
The revenue of abalienation of the right to use assets shall be recognized when the abalienation of the
right to use assets meets the requirements of the possible inflow of the relevant economic benefits and
the reliable measurement of revenue amount. The interest income shall be calculated and determined
according to time and actual interest rate of the monetary capital of the company used by others, and
the royalty revenue shall be measured and determined in accordance with the charging time and
method appointed in the relevant contract or agree.
2. The Specific Recognition Method of Revenue
The company mainly sells the polaroid, textiles and other products. The revenue of the sale of
products in domestic market shall be recognized after the following requirements are met: The
company has agreed to deliver the goods to the purchaser under the contract and the revenue amount
of product sales has been determined, the payment for goods has been withdrawn or the payment
vouchers has been obtained and related economic benefits are likely to inflow, and the costs related to
the products can be measured reliably. The revenue of the sale of products in foreign market shall be
recognized after the following requirements are met: The company has made customs clearance and
departure from port under the contract, the bill of landing has obtained and the revenue of the sale of
products has been recognized, the payment for goods has been withdrawn or the payment vouchers
has been obtained and related economic benefits are likely to inflow, and the costs related to the
products can be measured reliably.
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26.Government subsidy
Government grants are monetary assets and non-monetary assets that the company has obtained
free of charge from the government and are divided into government grants related to assets and
government grants related to income. Asset-related government grants refer to government grants
obtained by the company that are used to purchase or construct or otherwise form long-term assets.
Income-related government subsidies refer to government subsidies other than government subsidies
related to assets.
If there is evidence at the end of the period that the company is able to meet the relevant
conditions stipulated in the financial support policy and it is expected to receive financial support
funds, the government subsidies shall be recognized according to the amount receivable. In addition,
government grants are confirmed upon actual receipt.
Asset-related government grants are recognized as deferred income and are charged to profit or
loss for the current period in a reasonable and systematic manner over the useful life of the relevant
assets. Revenue-related government subsidies, which are used to compensate for the related costs or
losses of the Company in the future period, are recognized as deferred income, and are recognized in
the profits and losses of the current period in the period in which the relevant costs, expenses or
losses are recognized. The relevant costs, expenses or losses that have been used to compensate the
Company have been directly recorded in the current profits and losses. Government grants related to
the company's daily activities are included in other income; those unrelated to the daily activities of
the company are included in non-operating income.
For the policy-subsidized discounted loans obtained by the company, the accounting treatment is
divided into the following two cases: when the finance allocates the interest-subsidy funds to the loan
bank and the loan bank provides the company with a policy-based preferential interest rate, the
company uses the actual amount of the loan received as the entry value of the loan, and calculates the
relevant borrowing costs according to the loan principal and the preferential policy interest rate; if the
finance allocates the interest-free funds directly to the company, the company will reduce the relevant
borrowing costs by the corresponding discount interest.
27.The Deferred Tax Assets / The deferred Tax Liabilities
1. Temporary Difference
The temporary difference includes the difference of the book value of assets and liabilities and the tax
basis, and the difference of the book value and the tax basis that no confirmation of assets and
liabilities but able to confirm the tax basis as per the provisions of tax law. The temporary difference
can be classified into the taxable temporary difference and the deductible temporary difference.
2. Recognition Basis of Deferred Tax Assets
For the deductible temporary difference, the deductible loss and the tax payment offset, the company
shall recognize the deferred tax assets arising from the future taxable income that obtained to deduce
the deductible temporary difference, the deductible loss and the tax payment offset.
The deferred tax assets with the following features and arising from the initial recognition of assets or
liabilities in the transaction shall not be recognized: (1) the transaction is not the business
61
combination. (2) the transaction doesn’t influence the accounting profits and the taxable incomes (or
the deductible losses).
The company shall recognize the corresponding deferred tax assets for the deductible temporary
difference related to the investment of subsidiaries, cooperative enterprises and joint ventures if the
following requirements are simultaneously met: (1) the temporary difference is possible to be
reversed in the foreseeable future. (2) the taxable income used to offset the deductible temporary
difference is possible to be obtained in the future.
3. Recognition Basis of Deferred Tax Liabilities
All the taxable temporary differences shall be recognized as the deferred tax liabilities.
But the company shall not recognize the taxable temporary differences arising from the following
transactions as the deferred tax liabilities: (1) the initial recognition of goodwill. (2) the initial
recognition of assets or liabilities arising from the transactions with the following features: this
transaction is not the business combination, and the transaction doesn’t influence the accounting
profits and the taxable incomes (or the deductible losses).
The company shall recognize the corresponding deferred tax liabilities for the taxable temporary
difference related to the investment of subsidiaries, cooperative enterprises and joint ventures. Except
that the following requirements are simultaneously met: (1) the investment enterprise can control the
reversal time of the temporary difference. (2) the temporary difference is possible to not be reversed
in the foreseeable future.
4. Impairment of Deferred Tax Assets
The company shall review the book value of the deferred tax assets at the balance sheet date. If it is
not possible to obtain sufficient taxable income for the reduction of the benefit of the deferred tax
assets in the future, the book value of the deferred tax assets shall be deduced. Except that the
deferred tax assets and the reduction amount are recorded into the owner’s equity when the original
recognition, others shall be recorded into the current income tax expense. The book value of the
deferred tax assets reduced can be recovered when sufficient taxable income is possibly obtained.
5. Income Tax Expense
The income tax expense should include the current income tax and the deferred income tax.
Other comprehensive income or the current income tax and the deferred income tax related to the
transactions and items directly recorded into the stockholders’ equity, shall be recorded into other
comprehensive incomes or the stockholders’ equity, and the book value of goodwill shall be adjusted
by the deferred income tax arising from the business combination, but the rest of the current income
tax and the deferred income tax expense or income shall be recorded into the current profits and
losses.
28.Lease
1. Accounting Treatment Method of Operating Lease
When the company is as the tenant, the rental within the lease term shall be recorded into the relevant
assets cost or recognized as the current profits and losses as per the line method, and the initial direct
62
expense occurred shall be directly recorded into the current profit and loss. The contingent rental
shall be recorded into the current profit and loss once the actual occurrence.
When the company is as the leaser, the rental within the lease term shall be recognized as the current
profits and losses as per the line method, and the initial direct expense occurred shall be directly
recorded into the current profit and loss, except that the large amounts are capitalized and recorded
into the profit and loss by stages. The contingent rental shall be recorded into the current profit and
loss once the actual occurrence.
2. Accounting Treatment Method of Finance Lease
When the company is as the tenant, the company shall recognize the less one between the fair value
of leasing assets and the present value of minimum lease payment at the lease commencement date as
the book value of rented assets, recognize the minimum lease payment as the book value of the
long-term payables, and the undetermined fiancé expense of the difference and the initial direct costs
occurred shall be recorded into the leasing asset value. During each lease period, the current financing
charges shall be measured and recognized by the effective interest method.
When the company is as the leaser, the company shall recognize the sum of minimum lease
receivables and initial direct expense at the lease commencement date as the book value of finance
lease receivables, and record the unguaranteed residual value. Meanwhile, the company shall
recognize the difference between the sums of minimum lease receivables, minimum lease receivables
and unguaranteed minus the sum of the present value as the unrealized financing income. During
each lease period, the current financing charges shall be measured and recognized by the effective
interest method.
29.Change of main accounting policies and estimations
(1)Change of main accounting policies
On April 28, 2017, the Ministry of Finance issued the "No. 42 Accounting Standard for Business
Enterprises-Non-current Assets for Sale, Disposal Groups, and Termination of Operations", which
will take effect from May 28, 2017; On May 10, 2017, the Ministry of Finance issued the "No. 16
Accounting Standards for Business Enterprises-Government Grants (Revised in 2017)", which will
take effect from June 12, 2017; in 2017, the Ministry of Finance issued the“Notice on the Issuance of
the Revised Format of Financial Statements for General Enterprises”, which has revised the format
for the Financial Statements of General Enterprises, and thus it shall applied to the financial
statements in the year of 2017 and subsequent periods. The above changes in accounting policies
were adopted at the third meeting of the seventh board of directors and the tenth meeting of the
seventh board of directors of the company, therefore the Company began to implement the above
provisions in accordance with the time required by the Ministry of Finance.
The main impact of the Company's implementation of the above three provisions is as follows:
Amount
No Name
2017 2016
63
No Amount
Name
1 Non –operating income -12,567,426.98
2 Other income 12,567,426.98
（2）Change of main accounting estimations
Nil
VI.Taxes of the Company
1. Main taxes categories and tax rate
Taxes Tax references Applicable tax rates
VAT The taxable turnover 17%、5%
Business tax. The taxable turnover 5%
City construction tax Turnover tax to be paid allowances 7%
Education surcharge Turnover tax to be paid allowances 3%
Local education
Turnover tax to be paid allowances 2%
surcharge
Business income tax Taxable income 25%、15%
2. Tax preference and approval file
(1)Shenzhen Shengbo Optoelectronic Technology Co., Ltd., the subsidiary company of our company,
has been qualified as national high-tech enterprise since 2016 ,High-tech and enterprise certificate
No.: GR201644201276 ,The certificate is valid for three years, The enterprise income tax rate of this
year is 15%.
(2).In accordance with relevant provisions of the Notice of Ministry of Finance, General Administrati
on of Customs and State Taxation Administration Regarding Tax Preference Policies for Further Supp
orting the Development of New-type Display Device Industry (Cai Guan Shui (2016) No. 62), Shenz
hen Shengbo Optoelectronic Technology Co., Ltd. manufactured key materials and parts for the upstr
eam industry of new-type display devices including colorful light filter coating and polarizer sheet tha
t comply with the planning for independent development of domestic industries may enjoy the prefere
ntial policies of exemption from import tariff for the import of raw materials and consumables for the
purpose of self use and production that can not be produced domestically from January 1, 2016 and D
ecember 31, 2020.
VII. Notes of consolidated financial statement
64
Unless otherwise stated, the meaning of "B/f", "C/f", The beginning of the financial statements is the
number of financial statements as of January 1, 2017, and the end of the period is the number of
financial statements as at 31 December 2017. This term refers to January 1, 2017 - December 31,
2017,The same period refers to January 1, 2016 - December 31, 2016.
1.Monetary Capital
Items Year-end balance Year-beginning balance
Cash at hand 17,771.09 22,807.86
Bank deposit 1,163,010,967.65 932,021,522.23
Other monetary funds 2,019,370.09 1,812,582.64
Total 1,165,048,108.83 933,856,912.73
Including : The total amount of deposit 9,044,548.79 23,329,496.78
abroad
Notes :As of December 31, 2017，The fixed-term deposit balance of money fund is RMB
3,807,969.50 , this part will not be treated as closing cash or closing cash equivalent in preparing
cash flow statement. Monetary unit is RMB yuan
2.Bill receivables
(1). Classification Bill receivable
Items Year-end balance Year-beginning balance
Bank acceptance 44,207,119.00 41,908,315.45
Total 44,207,119.00 41,908,315.45
(2). As of December 31, 2016，The company has no Bill receivable pledged.
(3)Notes endorsement or discount and undue on balance sheet date
Items Amount derecognizing at period Amount derecognizing at
–end period-end
Bank acceptance 44,145,469.61
Total 44,145,469.61
(4)．Bill transferred to account receivable for the issuer is not able to execute the liability at the
end of period.
3. Account receivable
(1).Classification account receivables.
Amount in year-end
Classification
Book balance Bad debt provision Book value
65
Proportion
Amount Amount Proportion(%)
(%)
Accounts receivable of
individual significance and
6,301,057.07 2.97 3,998,803.02 63.46 2,302,254.05
subject to individual
impairment assessment
Accounts receivable subject to
impairment assessment by
199,198,855.51 93.99 10,386,734.84 5.21 188,812,120.67
credit risk characteristics of a
portfolio
Accounts receivable of
individual insignificance but
6,448,803.57 3.04 5,060,100.59 78.47 1,388,702.98
subject to individual
impairment assessment
Total 211,948,716.15 100.00 19,445,638.45 192,503,077.70
Amount in year-begin
Classification Book balance Bad debt provision
Proportion Book value
Amount Amount Proportion(%)
(%)
Accounts receivable of
individual significance and
6,302,912.11 2.61 4,000,658.05 63.47 2,302,254.06
subject to individual
impairment assessment
Accounts receivable subject to
impairment assessment by
228,090,819.33 94.56 11,596,924.13 5.08 216,493,895.20
credit risk characteristics of a
portfolio
Accounts receivable of
individual insignificance but
6,816,189.64 2.83 5,390,319.49 79.08 1,425,870.15
subject to individual
impairment assessment
Total 241,209,921.08 100.00 20,987,901.67 220,222,019.41
(1)Accounts receivable of individual significance and subject to individual impairment assessment.
Amount in year-end
Debtor Account Bad debt
Proportion(%) Reason for allowance
receivable provision
1,696,548.96 1,696,548.96 100.00 It has been included in the
Dongguan Fair LCD Co., Ltd.
list of national courts
66
dishonest debtor, unlikely to
recover.
Beyond the credit period for
Guangdong Ruili Baolai
1,348,965.36 674,482.68 50.00 a long time, uncertain
Technology Co., Ltd.
recovered.
Beyond the credit period for
Dongguan Yaxing
3,255,542.75 1,627,771.38 50.00 a long time, uncertain
Semiconductor Co., Ltd.
recovered.
Total 6,301,057.07 3,998,803.02
（2）Account receivable on which bad debt provisions are provided on age basis in the group
Balance in year-end
Aging
Account receivable Bad debt provision Proportion(%)
Within 1 year 194,367,620.15 9,718,381.00 5.00
1-2 years 4,221,077.13 422,107.71 10.00
2-3 years 294,164.88 88,249.46 30.00
Over 3 years 315,993.35 157,996.67 50.00
Total 199,198,855.51 10,386,734.84
(2)．Recognisation , recovery or reversal of allowance for bad debt：
（1）The account of allowance for bad debts recognised during the period is RMB-1,542,263.22, The
amount collected or switches back amounting to RMB332,073.93.
(3)The company has no account receivables written off this period.
(4).The ending balance of receivable owed by the imputation of the top five parties
Balance in Proportion(%) Bad debt
Name Nature Aging
year-end provision
Within 1
First Goods 84,934,396.47 40.07 4,246,719.82
year
Within 1
Second Goods 15,387,796.03 7.26 769,389.80
year
Within 1
Third Goods 11,842,590.55 5.59 592,129.53
year
Within 1
Fourth Goods 10,595,933.74 5.00 529,796.69
year
Within 1
Fifth Goods 7,931,696.50 3.74 396,584.83
year
Total 130,692,413.29 61.66 6,534,620.67
67
4.Prepayments
(1)．Disclosure by age
Balance in year-end Balance in year-begin
Aging
Amount Proportion（%） Amount Proportion（%）
Within 1 year 13,705,047.27 99.63 5,108,950.81 75.43
1-2 years 11,944.78 0.09 592,795.34 8.75
2-3 years 1,033,416.99 15.26
Over 3 years 38,160.00 0.28 38,160.00 0.56
Total 13,755,152.05 100.00 6,773,323.14 100.00
（2）The ending balance of Prepayments owed by the imputation of the top five parties
Name Balance in year-end Proportion
First 4,561,414.73 33.16
Second 2,021,331.57 14.70
Third 1,616,000.00 11.75
Fourth 1,500,000.00 10.91
Fifth 857,565.69 6.23
Total 10,556,311.99 76.75
5.Interest receivable
(1)Category of interest receivable
Items Amount in year-end Amount in year-begining
Trust income 1,627,397.26
Fixed deposit interest 12,676,572.40 4,925,279.45
Structure deposit interest 1,418,738.58 1,599,384.48
Other financing product 6,164.38 128,219.18
TotaL 15,728,872.62 6,652,883.11
68
6.Other receivable
(1)Category of Other receivable
Amount in year-end
Classification Book Balance Bad debt provision
Book value
Amount Proporti Amount Proportion(%)
on(%)
Other accounts receivable of
individual significance and
13,781,464.60 47.54 13,781,464.60 100.00
subject to individual
impairment assessment
Other accounts receivable
subject to impairment
14,596,383.53 50.35 1,670,399.08 11.44 12,925,984.45
assessment by credit risk
characteristics of a portfolio
Other accounts receivable of
individual insignificance but
611,820.77 2.11 611,820.77 100.00
subject to individual
impairment assessment
Total 28,989,668.90 100.00 16,063,684.45 12,925,984.45
Amount in year-beginning
Classification Book Balance Bad debt provision
Book value
Amount Proporti Amount Proportion(%)
on(%)
Other accounts receivable of
individual significance and
11,981,464.60 14.20 11,981,464.60 100.00
subject to individual
impairment assessment
Other accounts receivable
subject to impairment
71,842,367.36 85.19 4,569,810.64 6.36 67,272,556.72
assessment by credit risk
characteristics of a portfolio
69
Amount in year-beginning
Classification Book Balance Bad debt provision
Book value
Amount Proporti Amount Proportion(%)
on(%)
Other accounts receivable of
individual insignificance but
511,820.77 0.61 511,820.77 100.00
subject to individual
impairment assessment
Total 84,335,652.73 100.00 17,063,096.01 67,272,556.72
(1)Other receivable accounts with large amount and were provided had debt provisions
individually at end of period.
Amount in year-end
Unit
Other account Bad debt provision Withdrawal Reason for allowance
receivable proportion (%)
Jiangxi Xuanli String Co., No executable
11,389,044.60 11,389,044.60 100.00
Ltd. property, unlikely to
recover.
Anhui Huapeng Textile Estimated
1,800,000.00 1,800,000.00 100.00
Co.,Ltd. irrecoverable
Shenzhen Tianlong Has been conceled,
592,420.00 592,420.00 100.00
Induatry& Trade Co., Ltd. unlikely to recover
Total 13,781,464.60 13,781,464.60
(2)Other receivable accounts in Group on which bad debt provisions were provided on age analyze
basis：
Amount in year-end
Aging
Other receivable Bad debt provision Withdrawal proportion
Within 1 year 11,352,480.28 567,626.77 5.00
1-2 years 597,886.88 59,788.69 10.00
2-3 years 1,400,122.83 420,036.85 30.00
Over 3 years 1,245,893.54 622,946.77 50.00
Total 14,596,383.53 1,670,399.08
2.The current amount of provision for bad debts is RMB-999,411.56, no withdraw or return for bad
debts.
( 3)The company has no other receivables written off this period.
70
(4)Other accounts receivable classified by the nature of accounts
Category Year-end balance Year-beginning balance
Customs bond 1,454,781.62 44,643,087.38
Export rebate 7,804,119.33 18,179,211.88
Unit account 15,211,367.96 16,812,275.87
Deposit 1,752,199.92 1,858,126.16
Reserve fund and staff loans 849,212.52 900,116.01
Other 1,917,987.55 1,942,835.43
Total 28,989,668.90 84,335,652.73
(5).Top 5 of the closing balance of the other accounts receivable colleted according to the arrears
party
Proportion of Bad debt
the total year provision
Name Nature Closing balance Aging end balance of
the accounts Closing balance
receivable(%)
First Unit account 11,389,044.60 Over 5 years 39.29 11,389,044.60
Second Export rebate 7,095,090.85 Within 1 year 24.47 354,754.54
709,028.48 2-3 years 2.45 212,708.54
Third Unit account 1,800,000.00 1-2 years 6.21 1,800,000.00
Fourth
Deposit 1,209,290.24 Within 1 year 4.17 60,464.51
Fifth Deposit 980,461.06 Over 5 years 3.38 490,230.53
Total 23,182,915.23 79.97 14,307,202.72
7.Inventories
（1）Inventories types
Items Year-end balance Year-beginning balance
71
Book balance Provision for Book value Book balance Provision for Book value
bad debts bad debts
Raw materials 134,843,713.96 12,679,234.15 122,164,479.81 107,814,144.09 9,148,167.24 98,665,976.85
Processing
3,234,902.35 3,234,902.35 4,519,927.47 279,390.02 4,240,537.45
products
Finished product 108,902,736.97 24,036,100.64 84,866,636.33 139,369,316.72 32,193,843.63 107,175,473.09
Semi-finished
79,495,655.06 15,302,692.03 64,192,963.03 91,137,927.46 19,961,869.86 71,176,057.60
product
Consigned
1,156,194.64 1,156,194.64 2,113,669.08 2,113,669.08
processing
Total 327,633,202.98 52,018,026.82 275,615,176.16 344,954,984.82 61,583,270.75 283,371,714.07
（2）Inventory Impairment provision
Increased in current period Decreased in current period
Year-beginning Year-end
Items Transferred
balance Provision Other Other balance
back
Raw materials 9,148,167.24 10,916,215.70 7,385,148.79 12,679,234.15
Processing
32,193,843.63 23,435,920.64 31,593,663.63 24,036,100.64
products
Semi-finished
19,961,869.86 9,374,606.33 14,033,784.16 15,302,692.03
product
Finished
279,390.02 279,390.02
product
Total 61,583,270.75 43,726,742.67 53,291,986.60 52,018,026.82
8.Other current assets
Items Year-end balance Year-beginning balance
Structural Deposit 210,000,000.00 428,000,000.00
Trust financing 800,000,000.00
Other financing product 10,000,000.00 1,000,000,000.00
After the deduction of input VAT 128,689,874.10 43,157.76
Total 1,148,689,874.10 1,428,043,157.76
72
9.Available-for-sale financial assets
(1)Available-for-sale financial assets
Year-end balance Year-beginning balance
Items Bad debt Bad debt
Book balance Book value Book balance Book value
provision provision
Available-for-sale
equity 110,615,036.04 44,579,303.00 66,035,733.04 78,255,766.47 36,689,988.51 41,565,777.96
instruments
Measured by fair
7,994,294.63 7,994,294.63 8,378,730.50 8,378,730.50
value
Measured by cost 102,620,741.41 44,579,303.00 58,041,438.41 69,877,035.97 36,689,988.51 33,187,047.46
Total 110,615,036.04 44,579,303.00 66,035,733.04 78,255,766.47 36,689,988.51 41,565,777.96
(2)Available-for-sale financial assets measured by fair value at the period-end
Items Cost Fair value
Equity instrument available for sale
Fawer （000030） 8,940,598.31 7,994,294.63
Total 8,940,598.31 7,994,294.63
73
(3). Available-for-sale financial assets measured by cost at the period-end
Book balance Impairment provision Sharehol
ding
Cash bonus of
proportio
Investee the reporting
Decre Decre n among
Period-begin Increase Period-end Period-begin Increase Period-end period
ase ase the
investees
Shenzhen Jintian Industry 14,831,681.50 14,831,681.50 14,831,681.50 14,831,681.50 2.39
（Group） Co., Ltd.
Shenzhen Jiafeng Textile Co., 16,800,000.00 16,800,000.00 16,800,000.00 16,800,000.00 10.80
ltd.
Shenzhen Guan Hua Prnting & 5,491,288.71 5,491,288.71 5,058,307.01 5,058,307.01 45.00
dyeing Co., Ltd.
Shenzhen Union Development 2,600,000.00 2,600,000.00 2.87 208,000.00
Group Co., Ltd
Shenzhen Xiangjiang Trade 160,000.00 160,000.00 20.00 329,439.84
Co., Ltd.
Shenzhen Xinfang Knitting 524,000.00 524,000.00 20.00
Co., Ltd.
Shenzhen Dailisi Knitting Co., 2,559,856.26 2,559,856.26 30.00 894,510.00
Ltd.
Anhui Huapeng Textile Co., 25,410,209.50 25,410,209.50 7,622,659.50 7,622,659.50 50.00
Ltd.
Shenzhen South Textile Co., 1,500,000.00 1,500,000.00 9.84 834,023.31
Ltd.
Shenzhen Xieli Automobile
4,243,705.44 4,243,705.44 266,654.99 266,654.99 50.00
Co., \ltd.
Changxing Junying Investment
28,500,000.00 28,500,000.00 57.00
Partnership（LP）
74
Total 69,877,035.97 32,743,705.44 102,620,741.41 36,689,988.51 7,889,314.49 44,579,303.00 2,265,973.15
During the reporting period, Shenzhen Delis Underwear Co., Ltd. contracted for foreign operations. (2) On November 13, 2017, Anhui Huapeng Textile Co., Ltd.
convened the board of directors, and the original contractor proposed to terminate the contracting operation and adjust the proposal for joint operation of the
shareholders of the parties. Thereafter, the original contractor sent a letter to the company stating that it was unable to perform some of the terms of the contract, and
the company would further negotiate with the original contractor. (3) The business license of Shenzhen Xieli Automobile Enterprise Co., Ltd. has been revoked by
the industry and commerce department. The main asset of the company is the land use right. The liquidation group decided that the Hong Kong shareholders should
be responsible for the disposal of the company's asset package. The matter is still in progress at the end of the period.
75
(4)Changes of the impairment of the available-for-sale financial assets during the reporting
period
Available for sale equity Available for sale debts
Category Total
instruments instruments
Impairment amount at the beginning
36,689,988.51 36,689,988.51
period
Current provision 7,889,314.49 7,889,314.49
Including: Transferred from other
comprehensive income
Decreased of this period
Including:transferred from the
increased fair value
Impairment amount at the end of
44,579,303.00 44,579,303.00
period
76
10.Long-term equity investment
(1)Long-term equity investment
77
Increase/decrease
Withdra Closing
Add Adjustment of Cash bonus or wal of Closing balance of
Investees Opening balance Changes
inve other profits impairm balance impairment
of other Other
stme comprehensiv announced to ent provision
equity
nt e income issue provisio
n
I. Joint venture
Shenzhen Haohao Property 5,106,487.57 262,962.99 5,369,450.56
Leasing Co., Ltd.
Shenzhen Xieli Automobile 3,977,050.45 -3,977,050.45
Co., Ltd.
Subtotal 9,083,538.02 262,962.99 -3,977,050.45 5,369,450.56
2. Affiliated Company
Shenzhen Changlianfa 1,968,358.12 138,796.89 2,107,155.01
Printing & dyeing Company
2,574,327.77 -196,831.05 -143,594.08 2,233,902.64
Jordan Garment Factory
78
Increase/decrease
Withdra Closing
Add Adjustment of Cash bonus or wal of Closing balance of
Investees Opening balance Changes
inve other profits impairm balance impairment
of other Other
stme comprehensiv announced to ent provision
equity
nt e income issue provisio
n
Hongkong Yehui 10,670,226.3
11,223,087.09 896,550.79 -741,597.23 707,814.30
5
International Co., Ltd.
Subtotal 15,765,772.98 838,516.63 -885,191.31 707,814.30 15,011,284.0
0
Total 24,849,311.00 1,101,479.62 -885,191.31 707,814.30 -3,977,050.45 20,380,734.5
6
79
11.Investment real estate
（1）Measured by the cost of investment in real estate
Constructio
Items House, Building Land use right Total
n in process
I. Original price
1. Balance at period-beginning 304,648,938.91 304,648,938.91
2.Increase in the current period 1,817,783.00 1,817,783.00
3.Decrease in the current period
4 Year-end balance 306,466,721.91 306,466,721.91
II.Total accumulated depreciation
accumulated amortization
1. Year-begin balance 125,324,391.14 125,324,391.14
2.Increase in the current period 8,036,524.50 8,036,524.50
(1).Provision or amortization 8,036,524.50 8,036,524.50
3.Decrease in the current
period
4 Year-end balance 133,360,915.64 133,360,915.64
III. Impairment provision
1. Balance at period-beginning
2.Increased amount of the
period
3.Decrease in the current
period
4. Balance at period-end
IV.Book value
1.Book value at period -end 173,105,806.27 173,105,806.27
2.Book value at
179,324,547.77 179,324,547.77
period-beginning
80
（2）Investment real estate without certificate of ownership
Items Book value Reason for certificate not granted
Settlement audit has not been
Guan Hua Building 48,580,933.33
completed
12. Fixed assets
（1）Fixed assets
Houses & Machinery Transportation
Items Other Total
buildings equipment s
I. Original price
1.Opening balance 492,709,415.27 655,711,038.75 3,691,157.72 20,981,709.48 1,173,093,321.22
2.Increased amount ofthe
4,658,269.68 1,491,553.04 6,149,822.72
period
(1) Purchase 3,298,016.81 1,491,553.04 4,789,569.85
(2) Transferred from
1,360,252.87 1,360,252.87
construction in progress
3. Decrease in the current
212,667.94
period 1,067,412.90 1,280,080.84
（1）Disposal 22,331.61 211,426.19 233,757.80
4. Balance at period-end 492,709,415.27 659,301,895.53 3,691,157.72 22,260,594.58 1,177,963,063.10
II.Accumulated
amortization
1. Balance at
99,253,511.93 333,568,124.02 3,015,711.94 13,570,685.77 449,408,033.66
period-beginning
2. Increase in the current
14,310,487.48 56,345,813.18 252,738.72 1,687,676.23 72,596,715.61
period
(1) Withdrawal 14,310,487.48 56,345,813.18 252,738.72 1,687,676.23 72,596,715.61
3. Decrease in the current
12,014.27 162,872.09 174,886.36
period
（1）Disposal 12,014.27 162,872.09 174,886.36
4. Balance at period-end 113,563,999.41 389,901,922.93 3,268,450.66 15,095,489.91 521,829,862.91
81
Houses & Machinery Transportation
Items Other Total
buildings equipment s
III. Impairment provision
1. Balance at
period-beginning
2.Increased amount of
the period
3. Decrease in the current
period
4. Balance at period-end
IV.Book value
1.Book value at period
379,145,415.86 269,399,972.60 422,707.06 7,165,104.67
-end
656,133,200.19
2.Book value at 393,455,903.34 322,142,914.73 675,445.78 7,411,023.71 723,685,287.56
period-beginning
Current depreciation is RMB72,596,715.61 .
13.Project under construction
（1）Project under construction
Year-end balance Year-beginning balance
Items Book balance Provisi Book Net value Book balance Provis Book Net value
on for ion for
devalua devalu
TFT-LCD polarizing
315,430,810.41 tion 315,430,810.41 116,849,202.46 ation 116,849,202.46
film II project
2500mm width
500,168.25 500,168.25
production line
Engineering
4,629,218.20 4,629,218.20
transformation
Other 2,009,976.87 2,009,976.87 2,955,028.97 2,955,028.97
Total 322,570,173.73 322,570,173.73 119,804,231.43 119,804,231.43
82
（2）Changes of significant construction in progress
Including
Capitalisa
Transfer ：Current
Other tion of Capitalisation
Amount at year Increase at this red to Balance in Proportion( Progress amount of
Name Budget decreas interest of interest Source of funds
beginning period fixed year-end %) of work capitalizat
e accumulat ratio（%)
assets ion of
ed balance
interest
TFT-LCD
polarizing film II 700340 116,849,202.46 198,581,607.95 315,430,810.41 45.04 Collect and Self-
project
Total 116,849,202.46 198,581,607.95 315,430,810.41 45.04
83
14.Intangible assets
（1）List of intangible assets
Proprietary
Items Land use right Software Total
technology
I. Original price
1.Opening balance 48,822,064.61 11,825,200.00 2,143,580.00 62,790,844.61
2.Increased amount of the period 448,200.00 448,200.00
(1) Purchase 448,200.00 448,200.00
3.Decreased at thisperiod
4. Balance at period-end 48,822,064.61 11,825,200.00 2,591,780.00 63,239,044.61
II.Accumulated amortization
1. Balance at period-beginning 10,323,775.51 11,825,200.00 943,214.78 23,092,190.29
2. Increase in the current period 960,098.28 316,082.64 1,276,180.92
(1) Withdrawal 960,098.28 316,082.64 1,276,180.92
3.Decreased amount of the period
4. Balance at period-end 11,283,873.79 11,825,200.00 1,259,297.42 24,368,371.21
III. Impairment provision
1. Balance at period-beginning
2. Increase in the current period
3.Decreased amount of the period
4. Balance at period-end
IV. Book value
1.Book value at period -end 37,538,190.82 1,332,482.58 38,870,673.40
2.Book value at period-beginning 38,498,289.10 1,200,365.22 39,698,654.32
84
15.Goodwill
(1)Detail
Increased at this .Decreased at
Investee Balance in year-begin Balance in year-end
period this period
Shenzhen Beauty Century
2,167,341.21 2,167,341.21
Garment Co., Ltd.
Shenzhen Shenfang Import and
82,246.61 82,246.61
Export Co., Ltd.
Shenzhen Shengbo Optoelectronic
9,614,758.55 9,614,758.55
Technology Co., Ltd
Total
11,864,346.37 11,864,346.37
（2）Impairment of goodwill
Increased at this .Decreased at
Investee Balance in year-begin Balance in year-end
period this period
Shenzhen Beauty Century
2,167,341.21 2,167,341.21
Garment Co., Ltd.
Shenzhen Shenfang Import and
82,246.61 82,246.61
Export Co., Ltd.
Shenzhen Shengbo Optoelectronic 9,614,758.55 9,614,758.55
Technology Co., Ltd
Total 11,864,346.37 11,864,346.37
16. Long term amortize expenses
Amortized
Balance in Increase in this Balance in
Items expenses Other loss
year-begin period year-end
85
Renovation fee 735,718.08 372,906.32 266,911.17 841,713.23
Other 237,363.60 43,786.75 193,576.85
Total 973,081.68 372,906.32 310,697.92 1,035,290.08
17. Deferred income tax assets/deferred income tax liabilities
（1）Details of the un-recognized deferred income tax assets
Balance in year-end Balance in year-begin
Items Deductible Deferred income tax Deductible Deferred income tax
temporary difference assets temporary difference assets
Assets depreciation
5,190,838.04 1,297,709.51 4,114,242.48 1,028,560.61
reserves
Unattained internal sales
2,680,650.70 402,097.62 2,769,765.25 415,464.80
profits
Changes in fair value of
available for sale financial 946,303.68 236,575.93 561,867.81 140,466.95
assets
Temporary differences in
the formation of equity 152,615.37 38,153.84
incentives
Total 8,970,407.79 1,974,536.90 7,445,875.54 1,584,492.36
(2) Details of unrecognied deferred income tax assets
Items Balance in year-end Balance in year-begin
Deductible temporary difference 80,615,487.41 85,972,557.55
Deductible loss 486,014,140.23 620,306,699.39
Total 566,629,627.64 706,279,256.94
Due to the uncertainty which exists in whether sufficient taxable income can be obtained in the
future , therefore, delay-tax capital has not been confirmed.
（）Deductible losses of the un-recognized deferred income tax asset will expire in the following
years
Year Balance in year-end Balance in year-begin Remark
2017 134,292,559.16
86
Year Balance in year-end Balance in year-begin Remark
2018 129,226,944.33 129,226,944.33
2019 148,095,898.11 148,095,898.11
2020 83,990,395.00 83,990,395.00
2021 124,700,902.79 124,700,902.79
Total 486,014,140.23 620,306,699.39
18.Other non-current assets
Items Balance in year-end Balance in year-begin
Advance payment for equipment fund 2,772,114.56
dvance payment for technical services 44,394,879.92
Total 47,166,994.48
19. Short-term loan
（1）Categories of short-term loans
Items Balance in year-end Balance in year-Beginning
Credit loans 88,638,181.45 12,335,695.77
Total 88,638,181.45 12,335,695.77
20.Account payable
（1）Account payable
Items Balance in year-end Balance in year-begin
Within 1 year 96,043,721.23 174,417,235.90
1-2 years 37,402.40 57,989.27
2-3 years 37,083.00 300,642.80
3-4 years 300,642.80 37,090.00
4-5 years 37,090.00 161,238.93
Over 5 years 648,757.75 487,518.82
87
Total 97,104,697.18 175,461,715.72
21. Advance account
（1） Advance account
Items Balance in year-end Balance in year-begin
Within 1 year 33,708,344.84 29,225,153.57
1-2 years 240,275.96 433,268.34
2-3 years 364,922.45
Over 5 years 639,024.58 639,024.58
Total 34,952,567.83 30,297,446.49
22.Payable Employee wage
（1）Payable Employee wage
Balance in Increase in this Payable in this Balance in
Items
year-begin period period year-end
I. Short-term employee benefits 27,379,719.86 134,810,437.72 132,686,896.93 29,503,260.65
II. Post-employment benefits 10,035,108.48 10,035,108.48
III. Termination benefit 195,715.00 195,715.00
Total 27,379,719.86 145,041,261.20 142,917,720.41 29,503,260.65
（2）Short-term remuneration
Balance in Increase in this Payable in this Balance in
Items
year-begin period period year-end
1.Wages, bonuses, allowances and
25,906,098.18 117,837,482.42 115,897,239.12 27,846,341.48
subsidies
2.Employee welfare 6,463,527.44 6,463,527.44
3. Social insurance premiums 2,765,780.46 2,765,780.46
Including：Medical insurance 2,233,692.36 2,233,692.36
Work injury insurance 259,364.21 259,364.21
Maternity insurance 272,723.89 272,723.89
88
Balance in Increase in this Payable in this Balance in
Items
year-begin period period year-end
4. Public reserves for housing 4,994,974.05 4,994,974.05
5.Union funds and staff education fee 1,473,621.68 2,748,673.35 2,565,375.86 1,656,919.17
Total 27,379,719.86 134,810,437.72 132,686,896.93 29,503,260.65
（3）Defined contribution plans listed
Balance in Increase in this Payable in this Balance in
Items
year-begin period period year-end
1. Basic old-age insurance premiums 7,903,171.61 7,903,171.61
2.Unemployment insurance 335,333.49 335,333.49
3. Annuity payment 1,796,603.38 1,796,603.38
Total 10,035,108.48 10,035,108.48
23.Tax Payable
Items At end of term At beginning of term
VAT 548,014.78 6,142,344.63
City Construction tax 34,389.37 523,339.31
Enterprise Income tax 3,912,084.91 4,152,120.51
Individual Income tax 704,212.04 428,263.53
House property Tax 1,541,424.38 1,538,122.93
Education surcharge 22,055.75 373,812.63
Other 173,081.34 837,722.65
Total 6,935,262.57 13,995,726.19
24.Interest Payable
Items At end of term At beginning of term
Interest on long-term borrowings payable 45,570,662.08 42,805,384.31
Interest on short-term borrowings 228,881.96 37,221.21
89
Items At end of term At beginning of term
Total 45,799,544.04 42,842,605.52
25.Other payable
（1）Disclosure by nature
Items At end of term At beginning of term
Engineering Equipment fund 34,977,749.54 46,903,714.95
Unit account 48,697,613.74 49,538,660.22
Deposit 25,090,664.49 24,625,922.69
Restrictive stock repurchase obligation 27,230,679.00
Other 19,030,092.77 26,040,292.33
Total 155,026,799.54 147,108,590.19
26.Non-currentliabilitiesdue within 1 year
Items At end of term At beginning of term
Long-term borrowings due with in 40,000,000.00 40,000,000.00
1year
Total 40,000,000.00 40,000,000.00
The long-term borrowings at the end of period are the borrowings extended to the Company by
Pingan Bank.Shenzhen Jiangsu Building Branch. Entrusted by Shenzhen Shenchao Technology
Investment Co.,Ltd.
27.Long-term borrowings
（1）Long-term term borrowings
Items At end of term At beginning of term
Credit borrowings 40,000,000.00 80,000,000.00
Total 40,000,000.00 80,000,000.00
The long-term borrowings at the end of period are the borrowings enxtended to the Company by
Pingan Bank.Shenzhen Jiangsu Building Branch. Entrusted by Shenzhen Shenchao Technology
Investment Co.,Ltd.
28.Deferred income
Items Balance in Increase at this Decrease at this Balance in year-end
90
year-begin period period
Govemment Subsidy 110,045,784.62 31,488,137.00 6,766,856.90 134,767,064.72
Total 110,045,784.62 31,488,137.00 6,766,856.90 134,767,064.72
Details of govemment subsidy：
Profit and loss
New grants amount Other
Balance in Balance in Income related
Items amount of recorded in transfer
year-begin year-end to assets
this period the current amount
period
Related to
Textile special funds 857,142.88 142,857.15 714,285.73
assets
High-tech
Related to
Industrialization 600,000.00 200,000.00 400,000.00
assets
demonstration projects
National grant fundsfor
Related to
new flat panel display 3,000,000.00 1,000,000.00 2,000,000.00
assets
industry
Grant funds for
Related to
TFT-LCD polarizer 6,933,333.34 1,300,000.00 5,633,333.34
assets
industry project
Grant funds for
TFT-LCD polarizer Related to
3,000,000.00 500,000.00 2,500,000.00
narrow line (line 5) assets
project
Purchase of imported
Related to
equipment and 1,027,197.18 175,090.20 852,106.98
assets
technology
Innovation and venture
Related to
capital for TFT-LCD 300,000.00 50,000.00 250,000.00
assets
polarier I project
Shenzhen polarizing
materials and
Technology Related to
412,500.00 50,000.00 362,500.00
Engineering Laboratory assets
innovation venture
capital
Shenzzhen Engineering
laboratory polarizing Related to
4,125,000.00 500,000.00 3,625,000.00
material and technical assets
engineeting
91
Capital funding for Related to
2,475,000.00 300,000.00 2,175,000.00
Technology Center assets
Subsidy funds to suppor
Related to
t the introduction of adv 86,328.60 14,388.09 71,940.51
assets
anced technology
Grant funds for
TFT-LCD polarizer Related to
15,000,000.00 15,000,000.00
narrow line (line 6) assets
project
Grant funds for
TFT-LCD polarizer Related to
10,000,000.00 10,000,000.00
narrow line (line 6) assets
project
Grant funds for
TFT-LCD polarizer Related to
500,000.00 500,000.00
narrow line (line 6) assets
project
key technology
research and developme
Related to
nt projects of optical 5,000,000.00 375,000.00 4,625,000.00
assets
compensation film for
polarizer
Strategic industries
Related to
Development fund of 25,000,000.00 25,000,000.00
assets
Guangdong Province
Grants of Purchase
equipment of TFT-LCD Related to
30,000,000.00 30,000,000.00
polarizing film phase II assets
project
Energy saving
Related to
transformation grant 145,744.42 29,642.93 116,101.49
assets
funds
Polarization
Industrialization Project
Related to
for Super Large-sized 30,000,000.00 30,000,000.00
assets
TVs (Line 7) Central
Budget Investment
Old Elevator
Related to
Renovation Fund 1,218,640.00 276,843.33 941,796.67
assets
Subsidy
Related to
Loan interest 725,833.20 725,833.20
assets
92
Imported equipment
Related to
and technology discount 857,705.00 857,705.00
assets
funds
In 2016, the National
Foreign Trade and
Economic Cooperation Related to
269,497.00 269,497.00
Commission developed assets
a special fund to import
interest subsidies
Total 110,045,784.62 31,488,137.00 4,913,821.70 1,853,035.20 134,767,064.72
(1).According to the "Notice on National Development and Reform Commission to the General
Office of the textile project management of the special funds" (Faigaiban [2006]2841), on December
22, 2006, the Company received "Textile special" funds RMB 2,000,000.00 from Shenzhen Finance
Bureau. The company will use 14 years as asset depreciation period for amortization with the
corresponding equipment in current period. The amortization in accordance with the corresponding
equipment, The non-operating income in current period is RMB142,857.88, the ending balance of
uncompleted amortization is RMB714,285.73 .
(2).According to the document of Shenzhen Municipal Development and Reform Commission
【2009】 No. 416 that "The Notice On issued the Governmental Investment Plan in 2009 on Zhong
Ke New Industrial Internet Security Audit System and Other High-tech Industrialization
Demonstration Project and the Public Testing and Consultation Service of Information Security
Industry and other National High-tech Industrial Base Platform Projects”, on May 2009, the company
received the Shenzhen Municipal Development and Reform Commission high-tech industrialization
demonstration project supporting Capital RMB 2 million allocated by Shenzhen City Bureau of
Finance for the construction of “The Project of the Construction Line of Polaripiece for
TFT-LCD”.Our company will use 10 years as asset depreciation period for amortization in current
period. The non-operating income in current period is RMB 200,000.00 and the balance amount of
unfinished final amortization is RMB 400,000.00.
(3). According to the document of the Office of the State Development and Reform Commission
on "The Office of the State Development and Reform Commission on the Reply of New Flat-Panel
Display Industrialization Special Project” (Development and Reform Office High-Tech【2008】No.
2104), the company obtained the state subsidies RMB 10,000,000.00 from the State Development and
Reform Commission New Flat-Panel Display Industrialization Special Project for the construction of
“The Project of Polaripiece Industrialization for TFT-LCD”. On June 2009, December 2009 and April
2010, the company received the special subsidies of State Development and Reform Commission
RMB 10,000,000.00. Our company will use 10 years as asset depreciation period for amortization.
The non-operating income in current period is RMB100,000.00, the balance amount of unfinished
final amortization is RMB2,000,000.00.
(4). In accordance with the Notice of Forwarding the Reply of General Office of State
Development and Reform Commission Regarding Special Plan for Strategic Transformation and
Industrialization of Color TV Industry issued by Shenzhen Development and Reform Commission
93
(Shen Fa Gai (2011) No. 823), State Development and Reform Commission approved including the
project of industrialization of polarizer sheet for TFT-LCD of Shengbo Optoelectronic Company into
the special plan for strategic transformation and industrialization of color TV industry in 2010 and
appropriated national aid of RMB 10,000,000.00 to Shengbo Optoelectronic Company for the
research and development in the process of the project of industrialization and the purchase of
required software and hardware equipment. On June 2012 and September 2013, the company
received the national grants of RMB 10,000,000.00.. According to the Notice of Issuing the
Governmental Investment Plan for 2011 Regarding Demonstration Project of High-tech
Industrialization Including Specialized Services Such As Disaster Recovery of Financial Information
System issued by Shenzhen Development and Reform Commission (Shen Fa Gai (2012) No. 3), the
Company received subsidy of RMB 3,000,000.00 for the project of industrialization of polarizer sheet
for TFT-LCD in April 2012. Our company will use 10 years as asset depreciation period for
amortization in current period.The non-operating income in current period is RMB1,300,000.00. and
the balance amount of unfinished final amortization is RMB5,633,333.34.
(5). According to the Notice about the Plan for Supporting the Second Group of Enterprises in
Biological, Internet, New Energy and New Material Industries with Special Development Funds
(Shen Fa Gai (2011) No. 1782), the Company received subsidy of RMB 5,000,000.00 for the
narrow-width line (line 5) of phase-I project of polarizer sheet for TFT-LCD on February 2012. The
Company planned to amortize the subsidy over 10 years according to the depreciation period of
relevant assets. The non-operating income in current period is RMB5,000,000.00 and the balance
amount of unfinished final amortization is RMB2,500,000.00.
(6). On October 2013, The company received the grants for the purchase of imported equipment
and technology in 2012 of RMB 1,750,902.00, the Company planned to amortize the subsidy over 10
years according to the depreciation period of relevant assets.The non-operating income in current
period is RMB175,090.20 and the balance amount of unfinished final amortization is
RMB852,106.98.
(7). On December 2013，The company received the funds for innovation and entrepreneurship of
of TFT-LCD polarizing project from Pingshan New District Development and Finance Bureau of
RMB 500,000.00(matching funding category),the Company planned to amortize the subsidy over 10
years according to the depreciation period of relevant assets. The non-operating income in current
period is RMB50,000.00 and the balance amount of unfinished final amortization is RMB250,000.00.
(8)On December 2013，The company received the funds for innovation and entrepreneurship of
of TFT-LCD polarizing project from Pingshan New District Development and Finance Bureau of
RMB 500,000.00(matching funding category),the Company planned to amortize the subsidy over 10
years according to the depreciation period of relevant assets. The non-operating income in current
period is RMB50,000.00 and the balance amount of unfinished final amortization is RMB362,500.00.
(9). According to the Approval of Application of Shenzhen Shengbo Optoelectronic Technology
Co., Ltd. for Project Funds for Shenzhen Polarization Material and Technology Engineering
Laboratory (Shen Fa Gai (2012) No. 1385), Shenzhen Polarization Material and Technology
Engineering Laboratory was approved to be established on the strength of Shengbo Optoelectronic
with total project investment of RMB 24,390,000.00. As approved by Shenzhen Municipal People's
94
Government, this project was included in the plan for supporting the fourth group of enterprises with
special fund for the development of strategic new industries in Shenzhen in 2012 (new material
industry). According to the Notice of Issuing the Plan for Supporting the Fourth Group of Enterprises
with Special Fund for Development of Strategic New Industries in Shenzhen in 2012 (Shen Fa Gai
(2012) No. 1241), the Company received subsidy of RMB 5,000,000.00 on December 2012 for
purchasing instruments and equipment and improving existing technological equipment and test
conditions. The fund gap will be filled by the Company through raising funds by itself. the Company
planned to amortize the subsidy over 10 years according to the depreciation period of relevant assets.
The non-operating income in current period is RMB500,000.00 and the balance amount of unfinished
final amortization is RMB3,625,000.00.
(10). According to the “Announcement on the Identification of Technology Centers of 24
Enterprises including Shenzhen Yuanwanggu Information Technology Joint Stock Company Limited
as the Municipal Research and Development Centers (Technical Center)” (SJMXXJS [2013] No.137),
the research and development center of Shenzhen SAPO Photoelectric Co., Ltd. has been regarded as
2012 annual municipal R&D center. In December 2013, the company has received the funding
subsidy of RMB3 million for the construction of the technical center. the Company planned to
amortize the subsidy over 10 years according to the depreciation period of relevant assets. The
non-operating income in current period is RMB300,000.00 and the balance amount of unfinished
final amortization is RMB2,175,000.00.
(11)On March 2014 the company received the introduction of advanced technology import subsi
dy funds of RMB 143,881.00 from Shenzhen Finance Committee, the Company planned to amortize
the subsidy over 10 years according to the depreciation period of relevant assets. The non-operating
income in current period is RMB14,388.09 and the balance amount of unfinished final amortization is
RMB71,940.51.
(12). According to the "Shenzhen Municipal Development and Reform Commission Reply for
Shenzhen Shengbo Optoelectronic Technology Co., Ltd. application for local matching funds of
TFT-LCD polarizing film II project (Line 6) " (Shenzhen DRC [2013]No. 1771), the company
obtained TFT-LCD polarizing film II project (line 6) local matching funds of RMB 15,000,000.00 in
April 2014.The fund gap will be filled by the Company through raising funds by itself. The subsidy
will be amortized over the depreciation period from the day when relevant assets get ready for
intended use.
(13). According to "National Development and Reform Commission issued on industrial
transformation and upgrading projects (2nd industrial restructuring) notify the central budget for 2014
investment plan" (NDRC Investment [2014] No. 1280), the company obtained TFT- LCD polarizer II
project (line 6) state grants of RMB 10,000,000.00 in December 2014.The fund gap will be filled by
the Company through raising funds by itself. The subsidy will be amortized over the depreciation
period from the day when relevant assets get ready for intended use.
(14). In December 2014, the company received innovation venture capital (matching funding
category) for Ping Shan District Development and Finance Bureau of TFT-LCD polarizing film II
project (line 6) of RMB 500,000.00.The fund gap will be filled by the Company through raising funds
by itself. The subsidy will be amortized over the depreciation period from the day when relevant
95
assets get ready for intended use;
(15)On Jan. 2015, the company received RMB 5 million of grants for key technology
research and development projects of optical compensation film for polarizer from
Shenzhen Scientific and Technological Innovation Committee. The company has reached the
expected date of use of the assets., the Company planned to amortize the subsidy over 10 years
according to the depreciation period of relevant assets. The other income in current period is
RMB375,000.00 and the balance amount of unfinished final amortization is RMB4,625,000.00.
(16). According to “Reply on Congregating Development in Emerging Industrial Area Strategic
Pilot Implement Scheme of Guangdong Province ”(Reform and Development Office High-Tech
[2013] No.2552,On December 2015, the Company received RMB20 million of the pilot project
fund( period II project of TFT-LCD polarizer).On October 2016, the Company received RMB 5
million of Shenzhen strategic emerging industries and the future development of industrial
matching funds,The company will defer income share transferred in the current profit and loss on the
basis of depreciation life as of the date of the predetermined workability state the related assets
(17). According to Reform and Development Commission of Shenzhen Municipality sending the
notice of “Reply of National Reform and Development Office on Investing in Petrifaction and
Medicine Project within Central Budget of 2013 for Industry Structure Adjustment Special
Project”(Reform and Development Commission of Shenzhen Municipality [2013]No.1449) , the
Company received 30 million RMB of new production line of TFT-LCD polarizer project period II
and equipment purchase subsidy in August 2015 ,December 2015 and September 2016.The company
will defer income share transferred in the current profit and loss on the basis of depreciation life as of
the date of the predetermined workability state the related assets reach.
(18). In 2015 and In 2016, the Company received the subsidy funds of 202,608.00 RMB and
34,535.45 RMB on energy-saving reconstruction, amortized by 8-year depreciation life of the
relevant asset, the Other income was RMB 29,642.93 at the current period, the ending balance
without amortization was RMB 116,101.49.
19. According to the Notice of the Ministry of Industry and Information Technology of the
National Development and Reform Commission for Releasing the Central Budgetary Investment Plan
of the 2017 of the Technical Transformation of the Electronic Information Industry (NDRC
Investment {2017} No. 1649), the company received oversize TV for use in November 2017. In
November 2017, the company received an central budgetary investment of RMB 30,000,000.00 of
the oversized TV polarizer industry project. The company shall transfer the deferred income to the
current profit or loss for the period of depreciation from the date when the relevant assets are ready
for their intended use.
20. In 2017, the company received 1,218,640.00 yuan for the old elevator upgrade subsidy,
which was apportioned according to the depreciation period of the relevant assets. The current period
was included in other income of 276,843.33 yuan, and the unassessed balance at the end of the period
was 941,796.67 yuan.
96
29.Stock capital
Changed（+，-）
Year-beginning Capitali Year-end
balance Issuance of Bonus zation balance
Other Subtotal
new share shares of
public
reserve
Total shares 506,521,849.00 4,752,300.00 4,752,300.00 511,274,149.00
According to the Proposal on ‘2017 Restricted Stock Incentive Plan (Draft) and its Abstract of
Shenzhen Textile (Group) Co., Ltd.’ adopted by the company in the resolution of the 3rd
Extraordinary General Meeting of 2017, On December 14, 2017, the company granted 4,752,300
shares of restricted stock to the incentive target, and the grant price was 5.73 yuan/share. A total of
27,230,679.00 yuan of investment funds were received, of which 4,752,300.00 yuan was included in
share capital, 22,478,379.00 yuan was included in the capital reserve. Restricted stock incentive plans
will be lifted at the rates of 40%, 30%, and 30% for the 12 months, 24 months, and 36 months on the
first trading day after 24 months from the date of registration is granted. After the lifting of the
restricted sales, the company handles the lifting of sales restrictions for the incentive objects that
satisfy the conditions for releasing restrictions on sales, and the restricted stocks held by the incentive
objects that do not satisfy the conditions for lifting restrictions on sales are cancelled by the
company’s repurchase. As of December 31, 2017, the company confirmed that the restricted stock
treasury shares with repurchase obligations were RMB 27,230,679.00.
30.Capital reserve
Items Year-beginning Increase in the Decrease in the Year-end balance
balance current period current period
Share premium 1,826,482,608.54 22,478,379.00 1,848,960,987.54
Other 10,722,643.41 6,317,844.22 17,040,487.63
Total 1,837,205,251.95 28,796,223.22 1,866,001,475.17
The capital (equity) premium increased by RMB 22,478,379.00 in the current period, see Note 5
(29). The increase in other capital reserves includes: The increase in other capital reserves includes:
confirmation of 284,491.54 yuan of restricted stock incentive expenses of current period; an increase
of 6,033,352.68 yuan of other capital reserve due to changes in other equity of long-term equity
investment units.
31. Treasury stock
Items Year-beginning Increase in the Decrease in the Year-end balance
balance current period current period
Treasury stock 27,230,679.00 27,230,679.00
97
Items Year-beginning Increase in the Decrease in the Year-end balance
balance current period current period
Total 27,230,679.00 27,230,679.00
See to Note V(29)
98
32.Other Comprehensive income
Amount of current period
Year-beginnin Less： Year-end
Items After - tax attr
Amount for the pe Previously recognized After - tax attrib
g balance Less：Income ibutable to mi balance
riod before incom in profit or loss in oth utable to the par
tax nority shareho
e tax er comprehensive inc ent company
lders
ome
1.Other comprehensive income will be reclassified into
income or loss in the future
Including: remeasurement of net assets or net liabilities of
defined benefit plans
Share of other comprehensive income of the investee that
cannot be transferred to profit or loss accounted for using the
equity method
2.Other comprehensive income reclassifiable to profit or loss
3,392,222.07 -1,269,627.18 -96,108.98 -1,173,518.20 - 2,218,703.87
in subsequent periods
Including：Share of other comprehensive income of the
investee that cannot be transferred to profit or loss
accounted for using the equity method
Gains and losses from changes in fair value of financial
1,789,105.39 -384,435.87 -96,108.98 -288,326.89 1,500,778.50
assets available for sale
Held-to-maturity investment that is reclassified as financial
99
Amount of current period
Year-beginnin Less： Year-end
Items After - tax attr
Amount for the pe Previously recognized After - tax attrib
g balance Less：Income ibutable to mi balance
riod before incom in profit or loss in oth utable to the par
tax nority shareho
e tax er comprehensive inc ent company
lders
ome
assets available for sale
Effective gains(losses) arising from cash flow hedging
instruments
Translation differences of financial statements
1,603,116.68 -885,191.31 -885,191.31 717,925.37
denominated
Total of other comprehensive income
3,392,222.07 -1,269,627.18 -96,108.98 -1,173,518.20 2,218,703.87
100
Amount of current period
Year-beginnin Less： Year-end
Items After - tax attr
Amount for the pe Previously recognized After - tax attrib
g balance Less：Income ibutable to mi balance
riod before incom in profit or loss in oth utable to the par
tax nority shareho
e tax er comprehensive inc ent company
lders
ome
101
33.Surplus reserve
Items Year-beginning Increase in the Decrease in the Year-end balance
balance current period current period
Statutory surplus reserve 73,710,682.05 3,766,360.14 77,477,042.19
Total 73,710,682.05 3,766,360.14 77,477,042.19
The increase in the surplus reserves for the current period is caused by the legal surplus reserves
withdrawn as per 10% of the net profits of the parent company.
34.Retained profits
Items Amount of this period Amount of last period
Before adjustments: Retained profits at
-81,275,828.76 9,166,137.97
the period end
Adjustment: Total unappropriated profits
at the beginning of the year
After adjustments: Retained profits at the
-81,275,828.76 9,166,137.97
period beginning
Add: Net profit attributable to owners of
52,776,101.46 -87,270,604.54
the Company for the period
Less: Appropriation to statutory surplus
3,766,360.14 3,171,362.19
reserve
Appropriation to discretionary surplus
reserve
Appropriation to Common risk provision
Common stock dividend payable
Common stock dividends
Converted to shares
Retained profits at the period end -32,266,087.44 -81,275,828.76
35.Business income, Business cost
（1）Business income, Business cost
Items Amount of current period Amount of previous period
Income from Main Business 1,453,285,358.21 1,194,070,877.33
Other Business income 22,260,361.51 4,129,339.09
Total 1,475,545,719.72 1,198,200,216.42
Main business cost 1,294,313,208.94 1,124,006,316.97
Other business cost 5,290,510.43 4,128,171.57
102
Total 1,299,603,719.37 1,128,134,488.54
（2）Main business（Industry）
Amount of current period Amount of previous period
Name
Business income Business cost Business income Business cost
Domestic and foreign
490,391,227.85 481,342,760.55 335,055,650.00 331,069,725.53
trade
869,112,546.94 786,401,813.99 766,658,201.79 766,963,524.67
Manufacturing
Property management,
93,781,583.42 26,568,634.40 92,357,025.54 25,973,066.77
leasing
Total 1,453,285,358.21 1,294,313,208.94 1,194,070,877.33 1,124,006,316.97
（3）Main business（Production）
Amount of current period Amount of previous period
Name
Business income Business cost Business income Business cost
Property and rental
93,781,583.42 26,568,634.40 92,357,025.54 25,973,066.77
income
Textile income 41,273,987.57 37,280,504.80 29,011,426.03 29,754,708.71
Polaroid income 851,531,250.79 771,786,016.96 798,562,759.96 796,982,437.95
Trade income
466,698,536.43 274,139,665.80 271,296,103.54
458,678,052.78
Total 1,453,285,358.21 1,294,313,208.94 1,194,070,877.33 1,124,006,316.97
（4）Main Business（Area）
Amount of current period Amount of previous period
Name
Business income Business cost Business income Business cost
1,081,489,243.21 937,367,743.11 735,985,879.85 666,419,200.41
Domestic
371,796,115.00 356,945,465.83 458,084,997.48 457,587,116.56
Oversea
Total 1,453,285,358.21 1,294,313,208.94 1,194,070,877.33 1,124,006,316.97
（5）Operating income from top five clients
Name Income Proportion
First 331,163,008.11 22.44%
103
Second 239,193,499.55 16.22%
Third 160,533,333.31 10.88%
Fourth 94,020,137.88 6.37%
Fifth 53,901,190.74 3.65%
Total 878,811,169.59 59.56%
36.Business tax and subjoin
Items Amount of current period Amount of previous period
Business tax 2,582,286.91 1,715,285.95
Urban construction tax 2,614,191.92 1,661,949.35
Education surcharge 1,867,281.00 1,189,198.70
House taxes 5,654,961.18 4,255,454.46
Other 1,244,275.86 1,515,360.09
Total 13,962,996.87 10,337,248.55
According to the No. 53 Notice of SAT on Several Management Problems on Pilot of the Policy
to Replace the Business Tax with a Value-Added Tax of SAT at 2016, the company paid a sales tax of
2,582,286.91 yuan for the sale of stock, a city maintenance and construction tax of 180,760.08 yuan,
an additional education fee of 129,114.35 yuan for the local education fee.
37.Sales expenses
Items Amount of current period Amount of previous period
Wage 3,964,710.67 3,526,911.70
Transportation changes 3,658,484.53 3,597,049.16
Exhibition fee 128,319.69 144,038.99
Advertising expenses 1,028,166.65 1,500,682.28
Business expenses 546,124.92 658,449.42
Samples and product loss 614,890.41 734,568.30
Other 9,940,696.87 10,161,699.85
Total
104
38.Administrative expenses
Items Amount of current period Amount of previous period
Wage 47,129,961.42 37,908,622.64
Including ：Equity incentive fee 356,400.00
R&D 39,036,089.05 39,308,762.42
Depreciation of fixed assets 7,515,631.05 6,334,069.36
Water and electricity 3,207,271.84 3,691,710.81
Agency expenses 2,463,731.11 3,622,603.75
Intangible assets amortization 1,276,180.92 1,190,516.13
Travel expenses 1,200,930.15 1,263,416.46
Office expenses 1,056,086.57 1,275,950.04
Business entertainment 987,917.92 1,266,522.93
Lawsuit expenses 797,131.31 213,591.27
Repair charge 670,928.38 588,210.55
Property insurance 448,304.56 482,301.29
Low consumables amortization 205,480.20 39,235.00
Board fees 57,031.35 66,038.00
Other 8,303,925.82 7,388,191.76
Tax 2,231,023.75
Low consumables amortization 30,966.96
Total 114,356,601.65 106,901,733.12
39.Financial Expenses
Items Amount of current period Amount of previous period
Interest expenses 4,130,427.79 4,387,599.58
Interest income -34,831,809.25 -25,566,161.61
Exchange loss -2,979,397.55 17,779,034.00
Fees and other 2,509,618.20 1,721,391.38
Total -31,171,160.81 -1,678,136.65
105
40.Lsoss of assets impairment
Items Amount of current period Amount of previous period
I .Losses for bad debts -2,541,674.78 3,369,678.06
II. Losses for falling price of inventory 43,726,742.67 39,117,206.06
III. Impairment losses on financial assets available
7,622,659.50
for sale
Total 48,807,727.39 42,486,884.12
41.Investment income
(1).Detail
Items Amount of this period Amount of last period
Investment income from the disposal of long-term equity
1,101,479.62 1,467,403.29
investment
Hold the investment income during from available-for-sale
2,568,609.75 3,756,010.47
financial assets
Trust incme 49,885,730.58
Total 53,555,819.95 5,223,413.76
(2).Long-term equity investment income by Equity method
Name Amount of current period Amount of previous period
Shenzhen Haohao Property Leasing Co., Ltd. 262,962.99 708,646.69
Shenzhen Xieli Automobile Co., Ltd. 181,746.48
Shenzhen Changlianfa Printing and dyeing
138,796.89 96,981.03
Company
Jordan Garment Factory -196,831.05 -1,007,494.50
Yehui International Co., Ltd. 896,550.79 1,487,523.59
Total 1,101,479.62 1,467,403.29
42.Other income
Amount of current Amount of previous
Name
period period
106
Amount of current Amount of previous
Name
period period
Government subsidy 12,567,426.98
Total 12,567,426.98
Governmentsubsidy projects：
Assets-related/
Amount of this Amount of last
Items income
period period
-related
Subsidy amortization of the project of TFT-LCD Related to
1,300,000.00
polarizer industrialization assets
National grant fundsfor new flat panel display industry 1,000,000.00 Related to
assets
Grant funds for TFT-LCD polarizer narrow line (line 5) Related to
500,000.00
project assets
Related to
Shenzhen polarizing material and technical engineering 500,000.00
assets
Amortization of funds for the Development of key Related to
375,000.00
Technology of Optical compensation Film for Polarizer assets
Subsidy funds to support the introduction of advanced Related to
300,000.00
technolog assets
Related to
Old Elevator Renovation Fund Subsidy 276,843.33
assets
Related to
National grant fundsfor new flat panel display industry 200,000.00
assets
Imported equipment and technology discount Related to
175,090.20
funds assets
Related to
Textile special funds 142,857.15
assets
Innovation entrepreneurship fund amortization of
TFT-LCD polarizer period I project for Pingshan New 50,000.00 Related to
District Development and Finance Bureau assets
Shenzhen Engineering laboratory polarizing material and Related to
50,000.00
technical engineering assets
Related to
Energy saving transformation grant funds amortization 29,642.93
assets
Financing aid amortization of introducing advanced Related to
14,388.09
technique assets
2016 Finance Committee subsidies for productive Related to
4,027,500.00
utilities income
107
Related to
2016 Enterprise R & D funding 2,892,000.00
income
Shenzhen Science & Technology Innovation Committee
500,000.00 Related to
allocated 2016 annual science and technology award income
Related to
Stable employment subsidies 189,605.28
income
Related to
Patent funding 27,000.00
income
Related to
Subsidy of the exhibition 17,500.00
income
Total 12,567,426.98
43. Non-Operation income
1．Detail
Items Amount of current period Amount of previous Recorded in the amount of the
period non-recurring gains and losses
Total gains from disposal of
1,510.00 1,510.00
non-current assets
Including：Gains from disposal
1,510.00 1,510.00
of fixed assets
Government Subsidy 9,578,484.46
Other 786,057.93 5,493,962.69 786,057.93
Total 787,567.93 15,072,447.15 787,567.93
2．Government subsidy
Assets-related/
Amount of this Amount of last
Items income
period period
-related
Grant funds for TFT-LCD polarizer narrow line (line 5) Related to
500,000.00
project assets
Related to
Purchase of imported equipment and technology 175,090.20
assets
Related to
Textile special funds 142,857.14
assets
Related to
Government R & D subsidies 200,000.00
assets
108
Related to
High-tech Industrialization demonstration projects 1,000,000.00
assets
Loan subsidy interest allocated by Finance Commission Related to
241,944.44
of Shenzhen Municipality assets
Subsidy amortization of the project of TFT-LCD Related to
1,300,000.00
polarizer industrialization assets
Innovation entrepreneurship fund amortization of
TFT-LCD polarizer period I project for Pingshan New 50,000.00 Related to
District Development and Finance Bureau assets
Financing aid amortization of introducing advanced Related to
14,388.10
technique assets
Innovation entrepreneurship subsidy of Pingshan New Related to inc
177,600.00
District Development and Finance Bureau ome
Related to inc
Stable employment subsidies 770,617.05
ome
Related to inc
Longgang Bureau of subsidies 20,000.00
ome
Related to inc
Subsidy of the exhibition 27,300.00
ome
Related to inc
Interest subsidy 38,851.00
ome
Related to inc
Patent funding 2,000.00
ome
Related to inc
Financial subsidy funds for recycling projects in the park 89,000.00
ome
Related to inc
3,940,200.00
High-tech major projects Special funds ome
Shenzhen Engineering laboratory polarizing material and Related to
50,000.00
technical engineering assets
Related to
Shenzhen polarizing material and technical engineering 500,000.00
assets
Related to
300,000.00
Capital funding for Technology Center assets
Related to
Energy saving transformation grant funds amortization 38,636.53
assets
Total 9,578,484.46
44．Non-current expenses
Amount of current period Amount of previous The amount of non-operating
Items
period gains & lossed
Total of non-current asset
53,641.44 138,610.37 53,641.44
Disposition loss
109
Incl: loss of fixed assets
53,641.44 138,610.37 53,641.44
disposition
Other 1,961,815.52 81.57 1,961,815.52
Total 2,015,456.96 138,691.94 2,015,456.96
45.Income tax expenses
(1)Income tax expenses
Items Amount of current period Amount of previous period
Current income tax expense 11,572,753.97 8,465,565.16
Deferred income tax expense -293,935.56 818,507.24
Total 11,278,818.41 9,284,072.40
(2)Reconciliation of account profit and income tax expenses：
Items Amount of current period
Total profits 84,940,496.28
Income tax computed in accordance with the applicable tax rate 21,235,124.08
Effect of different tax rate applicable to the subsidiary Company -7,259,676.43
Influence of income tax before adjustment 19,332.03
Influence of non taxable income -595,469.40
Impact of non-deductible costs, expenses and losses 359,315.09
Affect the use of deferred tax assets early unconfirmed deductible
losses 3,479,680.00
The current period does not affect the deferred tax assets
recognized deductible temporary differences or deductible loss -1,080,138.26
Other -4,879,348.70
Income tax expense 11,278,818.41
46.Other comprehensive income
(1)．Other comprehensive income items and income tax effects and transferred to profit and loss
Items Amount of current period Amount of previous period
I. Net amount included in other comprehensive income
that cannot be transferred to profit or loss in the future
110
Items Amount of current period Amount of previous period
I.Share of other comprehensive income of the investee
that cannot be transferred to profit or loss accounted for
using the equity method
II. Net amount included in other comprehensive income
-1,173,518.20 180,034.72
that can be transferred to profit or loss in the future
1.Share of other comprehensive income of the investee
that can be transferred to profit or loss accounted for
using the equity method
Less：Previously recognized in other comprehensive
income, Profit or loss in current period
Subtotal
2. The income gains (losses) amount of available for
-384,435.87 -1,675,746.10
sale financial assets
Less： Recognized in other comprehensive income that
-96,108.98 -418,936.52
tax effect amount
Less：Previously recognized in other comprehensive
income, Profit or loss in current period
Subtotal -288,326.89 -1,256,809.58
3.Translation differences of financial statements
-885,191.31 1,436,844.30
denominated in foreign currencies
Less：Previously recognized in other comprehensive
income, Profit or loss in current period
Subtotal -885,191.31 1,436,844.30
III.Total of other comprehensive income -1,173,518.20 180,034.72
(2).Adjustment process of accounting profit and income tax expense
Gains and losses from Foreign currency
changes in fair value translation
Items Subtotal
of available for sale differences of
financial assets financial statements
I. Beginning balance last year 3,045,914.97 166,272.38 3,212,187.35
II.Changes in the amount last year -1,256,809.58 1,436,844.30 180,034.72
III.Beginning balance this year 1,789,105.39 1,603,116.68 3,392,222.07
IV.Changes in the amount this year -288,326.89 -885,191.31 -1,173,518.20
V.The year-end balance 1,500,778.50 717,925.37 2,218,703.87
111
47.Items of Cash flow statement
(1)Other cash received from business operation
Items Amount of current period Amount of previous period
Government Subsidy 39,141,742.28 20,100,103.50
Customs bonds 62,147,586.38
Bank deposit interest income and other 10,718,233.12 48,207,690.04
Total 112,007,561.78 68,307,793.54
(2).Other cash paid related to operating activities
Other cash paid relating to operating activities this period was 52,781,140.84, mainly for the payment of the cost of
sales and administration expenses and Customs bond.
(3).Other Cash received related to investment activities
Items Amount of current period Amount of previous period
Principal and income 3,566,066,407.98 819,808,170.47
Temporary transfer of Xieli assets 25,760,086.27
Total 3,566,066,407.98 845,568,256.74
(4)Cash paid related to other investment activities
Items Amount of current period Amount of previous period
Financing investment 3,093,000,000.00 1,766,000,000.00
Total 3,093,000,000.00 1,766,000,000.00
48.Supplement Information for cash flow statement
（1）Supplement Information for cash flow statement
Supplement Information Amount of current Amount of
period previous period
I. Adjusting net profit to cash flow from operating activities
Net profit 73,661,677.87 -87,270,604.54
Add: Impairment loss provision of assets -4,484,259.21 -2,760,742.85
112
Supplement Information Amount of current Amount of
period previous period
Depreciation of fixed assets, oil and gas assets and consumable biological
80,633,240.11 81,816,714.90
assets
Amortization of intangible assets 1,276,180.92 1,190,516.13
Amortization of Long-term deferred expenses 310,697.92 346,972.72
Loss on disposal of fixed assets, intangible assets and other long-term
deferred assets
Loss on scrap of fixed assets 52,131.44 138,610.37
Loss on fair value changes
Financial cost -13,705,106.94 -746,916.53
Loss on investment -53,555,819.95 -5,223,413.76
Decrease in deferred income tax assets -293,935.56 818,507.24
Increased of deferred income tax liabilities
Decrease of inventories 17,321,781.84 31,533,751.72
Decease of operating receivables 24,700,270.54 -76,300,478.05
Increased of operating Payable -165,297,549.09 1,192,616.81
Other 10,861,987.80
Net cash flows arising from operating activities -28,518,702.31 -55,264,465.84
II. Significant investment and financing activities that without cash flows:
Debt-to-capital conversion
Convertible loan due within 1 year
Fixed assets acquired under financial lease
3．Movement of cash and cash equivalents：
Ending balance of cash 1,161,240,139.33 930,114,436.57
Less: Beginning balance of cash equivalents 930,114,436.57 748,658,875.60
Add：Ending balance of cash equivalents
Less: Beginning balance of cash equivalents
113
Supplement Information Amount of current Amount of
period previous period
Net increase of cash and cash equivalents 231,125,702.76 181,455,560.97
(2)Composition of cash and cash equivalents
Items Year-end balance Year-beginning balance
I. Cash 1,161,240,139.33 930,114,436.57
Including：Cash at hand 17,771.09 22,807.86
Demand bank deposit 1,159,202,998.15 928,279,046.07
Demand other monetary funds 2,019,370.09 1,812,582.64
Payments to the central bank for payment
Depositing performs
Loan to performs
II. Cash equivalents
Including：Debt instrument matured within three months
III. Balance of cash and cash equivalents at the period end 1,161,240,139.33 930,114,436.57
49.Foreign currency monetary items
(1)Foreign currency monetary items
Items Closing foreign currency Exchange rate Closing convert to RMB
balance balance
Monetary funds
Including：USD 1,323,907.97 6.5342 8,650,679.46
JPY 2,281,957.00 0.057883 132,087.16
HKD 595,484.74 0.83591 497,766.68
Account receivable
Including：USD 3,331,963.34 6.5342 21,771,714.86
JPY 4,053,216.00 0.057883 234,612.30
HKD 278,280.00 0.83591 232,617.03
114
Other receivable
Including：USD 37,399.02 6.5342 244,372.68
Account payable
Including：USD 3,427,854.34 6.5342 22,398,285.81
JPY 823,311,943.13 0.057883 47,655,765.20
Other payable
Including：USD 17,980.00 6.5342 117,484.92
JPY 972,000.00 0.057883 56,262.28
Euro 22,500.00 7.8023 175,551.75
Short –term loans
Including：USD 1,688,052.20 6.5342 11,030,070.69
JPY 1,340,775,543.00 0.057883 77,608,110.76
Interest payable
Including：USD 7,781.28 6.5342 50,844.44
JPY 3,075,817.08 0.057883 178,037.52
VIII. Change in consolidation scope
No change of scope of consolidation from last year.
IX. Equity in other entity
1. Equity in subsidiary
（1）Constitute of enterprise group
Share-holding
ratio
Main Registered Acquir
Subsidiary Business nature
operation place Directl Indirec ed way
y tly
Establi
Shenzhen Lishi Industry Domestic trade, 100.00
Shenzhen Shenzhen
Development Co., Ltd Property Management sh
Accommodation, Establi
Shenzhen Huaqiang Hotel Shenzhen Shenzhen restaurants, business 100.00 sh
center;
Establi
Shenfang Property Management Co., 100.00
Shenzhen Shenzhen Property Management
Ltd. sh
115
Production of fully Establi
Shenzhen Beauty Century Garment 100.00
Shenzhen Shenzhen electronic jacquard sh
Co., Ltd.
knitting whole shape
Purcha
Shenzhen Shengbo Ophotoelectric Operating import and 60.00
Shenzhen Shenzhen se
Technology Co., Ltd export business
Establi
Shenzhen Shenfang Import & export Operating import and 100.00
Shenzhen Shenzhen
Co., Ltd. export business sh
Establi
Shengtou (Hongkong) Co.,Ltd. Production and sales 100.00
Hongkong Hongkong
of polarizer sh
(3).Equity in joint venture arrangement or associated enterprise
1．Joint venture or associated enterprise
Holding
The accounting
Place of Place of proportion(%)
treatment of
Joint venture or associated enterprise operatio registratio Nature
Direct Indirect investment in
n n
ly ly associates
Shenzhen Haohao Property Leasing Co., Shenzhe Property
Shenzhen 50.00 Equity method
Ltd. n leasing
Shenzhen Changlianfa Printing and Shenzhe Property Equity method
Shenzhen 40.25
dyeing Company n leasing
Jordan Garment Factory Manufact Equity method
Jordan Jordan 35.00
uring
Hongko Manufact Equity method
Yehui International Co., Ltd. Hongkong 22.75
ng uring
2.Key financial information of significant joint venture or associated enterprise
Year-beginning balance/
Year-end balance/ Amount
Amount of previous
of current period
period
Joint venture：
Total book value of the investment 5,369,450.56 9,083,538.02
Total amount of the pro rata calculation of the following
items
--Net profit 262,962.99 890,393.17
--Other Comprehensive income
--Total comprehensive income 262,962.99 890,393.17
116
Year-beginning balance/
Year-end balance/ Amount
Amount of previous
of current period
period
Dividends received from joint ventures this period
Associated enterprise：
Total book value of the investment 15,011,284.00 15,765,772.98
Total amount of the pro rata calculation of the following
items
--Net profit 838,516.63 577,010.12
--Other Comprehensive income -885,191.31 1,436,844.30
--Total comprehensive income -46,674.68 2,013,854.42
Dividends received from joint ventures this period 707,814.30 934,205.65
X. Risks Related to Financial Instruments
The company has the main financial instruments, such as bank deposits, receivables and payables,
investments, loans and so on. Please refer to the relevant disclosure in Notes for the details. The risks
associated with these financial instruments mainly include credit risk, market risk and liquidity risk.
The company’s management shall manage and monitor these risks and ensure above risks to be
controlled within certain scope.
（I）Credit Risk
The credit risk of the company is primarily attributable to bank deposits and receivables. Of which,
the bank deposits are mainly deposited in the medium and large commercial banks with strength, high
credibility. For the receivables, the company has developed the relevant policies to control the credit
risk, and set up the corresponding debt and credit limit after the credit status of debtor is evaluated
based on financial condition of debtor, credit history, external ratings, possibility of guarantee
obtained from the third party. Meanwhile, the company shall regularly monitor the debtor’s credit
history. With regard to the bad credit record for the debtor, the company shall adopt the written
reminder, shortening or cancel of credit period to ensure the overall credit risks within the
controllable scope.
（II）Market risk
Market risk of financial instrument arises from changes in fair value or future cash flow of financial
instruments affected by market price . Market risks includes foreign exchange risk and interest risk.
(1) Interest Rate Risk
The interest rate risk faced by the company is mainly from the bank borrowings. The company is
faced the interest rate risk of the cash flow due to the financial liability of the floating interest rate,
117
and faced the interest rate risk of the fair value due to the financial liability of the fixed interest rate.
The company shall determine the relative proportion in the fixed and floating interest rate contracts.
(2) Foreign Exchange Risk
The foreign exchange risks faced by the company are mainly from the financial assets and liabilities
based on the price of US dollar and JPY. The company matches the income and expenditure of
foreign currency as far as possible in order to reduce the foreign exchange risk.
（III）Liquidity risk
Liquidity risk refers to fund shortage problems when fulfilling obligations settled in cash or other
financial assets. The company shall guarantee to have the sufficient funds to repay the debts through
monitoring the cash balance, the marketable securities available to be cash and the rolling forecast for
the future cash flow.
XI. The disclosure of the fair value
1. Closing fair value of assets and liabilities calculated by fair value
Closing fair value
Items Fir value Fir value Fir value
measurement items at measurement items measurement items at Total
level 1 at level 2 level 3
I. Consistent fair value
measurement
(1).Available for sale financial
7,994,294.63 7,994,294.63
assets
1.Equity instrument
7,994,294.63 7,994,294.63
investment
Total of Consistent fair value
7,994,294.63 7,994,294.63
measurement
2. Market price recognition basis for consistent and inconsistent fair value measurement items at level
The fair value of financial assets available for sale at the end of period is measured based on the
closing price of Shenzhen Stock Exchange on December 29,2017.
XII. Related parties and related-party transactions
1.Parent company information of the enterprise
Registered The parent The parent
Name Registered address Nature company of the company of the
capital
Company's Company’s vote
118
（RMB’0000 shareholding ratio
） ratio
Equity
Shenzhen 18/F, Investment
investment ,
Investment Building, Shennan
Real-estate 2,158,000.00 45.78 48.94
Holdings Road, Futian
Co.,Ltd. Development
District, Shenzhen
and Guarantee
The company is authorized and approved to be state-owned independent company by Shenzhen
Government, and it Executes financial contributor function on state-owned enterprise within
authorization scope.
The finial control of the Company was Shenzhen People’s Govemment state owned assets
supervision & Administration Commission.
2.Subsidiaries of the Company
Details refer to the Note VII-1, Interest in the subsidiary
3. Information on the joint ventures and associated enterprises of the Company
Details refer to the Note VII-2, Interests in joint ventures or associates
4.Other Related parties information
Other related party Relationship to the Company
Shenzhen Shenchao Technology Investment Co., Ltd. Subject to the same party controls
Chairman of the Board Is the Vice Chairman of the
Shenzhen Tianma Microelectronics Co., Ltd.
Company
Shengbo （HK）Co., Ltd. The Company Executives are Director of the company
The controlling party of Shengbo Optoelectronics
Hangzhou Jinjiang Group Co., Ltd.
Shareholder
Kunshan Linlin Optoelectronic Material Co., Ltd. A subsidiary of Hangzhou Jinjiang Group Co., Ltd.
Zhejiang Jinhao Optoelectronic Material Co., Ltd. A subsidiary of Hangzhou Jinjiang Group Co., Ltd.
Lan Xi Jinxin Investment Management Co., Ltd. A subsidiary of Hangzhou Jinjiang Group Co., Ltd.
Zhejiang Hengjie Industry Co., Ltd. A subsidiary of Hangzhou Jinjiang Group Co., Ltd.
Shenzhen Xiangjiang Trade Co., Ltd. Sharing Company
Shenzhen Xinfang Knitting Co., Ltd. Sharing Company
119
Shenzhen Dailishi Underwear Co., Ltd. Sharing Company
Anhui Huapeng Textile Co., Ltd. Sharing Company
5. Related transactions.
1．Sales of goods and vendering of services
Amount of current Amount of previous period
Related party Content
period
Shenzhen Tianma
Sales polarizer sheet 4,835,900.92 1,546,092.92
Microelectronics Co., Ltd.
2. Providing services to related parties
The amount of the
Contents of related The amount of the
Related party current period (tax
transaction previous period
included)
Zhejiang Jinhao Optoelectronic Project construction service
13,000,000.00
Material Co., Ltd. fee
Kunshan Jinlin Optoelectronic Project construction service
15,000,000.00
Material Co., Ltd. fee
Total 28,000,000.00
Shenzhen Shengbo Optoelectronics Technology Co., Ltd. (hereinafter referred to as “Shengbo
Optoelectronics”), the company's subsidiary, provides construction services for the light guide plate
production line (Phase 1)of Kunshan Jinlin Optoelectronic Materials Co., Ltd. , and the liquid crystal
reflective film production line project (Phase 1) of Zhejiang Jinhao Optoelectronic Material Co., Ltd.
Shengbo Optoelectronics received a total construction service fee of 28,000,000.00 yuan in this
period. After deducting the output tax amount, 16,359,506.64 yuan was included in other business
income of Shengbo Optoelectronic, and 10,055,587.80 yuan was included in capital reserve of
Shengbo Optoelectronic. In addition, Shengbo Optoelectronics invested a total of 127,339,160.50
yuan in these two projects in this period, which was fully recovered by the end of the period.
3. Establishing an industrial fund together with related parties
On November 16, 2017, Shengbo Optoelectronics signed a Partnership Agreement of Changxing
Junying Equity Investment Partnership (limited partnership) with Hangzhou Huaiji Investment
Management Co., Ltd., Lanxi Jinxin Investment Management Co., Ltd. (hereinafter referred to as
Jinxin Investment) and other limited partners, and jointly initiated the establishment of Changxing
Junying Equity Investment Partnership (Limited Partnership). The total investment of the industrial
fund is 50,000,000.00 yuan, of which, the Jinxin Investment (general partner)subscribed for
6,500,000.00 yuan, accounting for 13.0% of the total; and Shengbo Optoelectronics (limited partner)
subscribed for 28,500,000.00 yuan, accounting for 57.00% of the total; others limited partners
subscribed for 15,000,000.00 yuan, accounting for 30.00% of the total. As of the end of the deadline,
Shengbo Optoelectronics had paid the capital of 28,500,000.00 yuan.
The distribution order of the partnership's income is as follows: (1) Shengbo Optoelectronics
120
obtains the actual capital contribution amount and expected annualized revenue (the expected
annualized return rate is 8%); (2) Jinxin Investment and other limited partners obtain the actual
capital contribution amount and expected investment income (excess income out of the annualized
rate of return 8%). In addition, according to the Balance Supplement Agreement signed by Shengbo
Optoelectronics and Zhejiang Hengjie Industrial Co., Ltd., if Shengbo Optoelectronics cannot obtain
investment equity funds after the expiration of the duration of the partnership business, Zhejiang
Hengjie Industrial Co., Ltd. unconditionally pays Shengbo Optoelectronics for its loss of the
investment principal and expected return differential.
4. Entrusted loans of related party
In order to carry out TFT-LCD polarizer project construction, the company signed an entrusted
loan contract with Shenzhen Shenchao Technology Investment Co., Ltd. and Shenzhen Jiangsu
Building Branch of Ping An Bank in 2010. The contract stipulates that Shenzhen Shenchao Science
& Technology Investment Co., Ltd. entrusts Shenzhen Jiangsu Building Branch of Ping An Bank to
loan 200,000,000.00 yuan to the Company. The term of the loan was 108 months from the date the
first entrusted loan was issued to the company's account. The entrusted loan interest rate was lowered
by 2% based on the 5-year commercial loan interest rate announced and issued by the People's Bank
of China. In case of adjustments to the 5-year commercial loan interest rate of the People's Bank of
China, from the first day of the next month of the benchmark interest rate adjustment, the entrusted
loan interest rate will be lowered by two percentage points according to the adjusted 5-year
commercial loan interest rate. As of December 31, 2017, the balance of the company's borrowings
was 80,000,000.00 yuan.
5. Rewards for the key management personnel
Items Amount of current period Amount of previous period
Rewards for the key management
482.48 million 3.8905 million
personnel
6. Receivables and payables of related parties
（1）Receivables
Amount at year end Amount at year beginning
Name Related party Balance of Bad debt Bad debt
Balance of Book
Book Provision Provision
Account Shenzhen Tianma
1,555,500.44 77,775.02 256,427.69 12,821.38
receivable Microelectronics Co., Ltd.
Other Account Anhui Huapeng Textile
1,800,000.00 1,800,000.00 3,600,000.00 270,000.00
receivable Company
Other Account Shenzhen Dailishi
440,508.46 22,025.42 300,048.12 15,002.41
receivable Underwear Co., Ltd.
121
（2）Payables
Name Related party Amount at year end Amount at year beginning
Shenzhen Xinfang Knitting Co.,
Other payable 244,789.85 244,789.85
Ltd.
Shenzhen Xiangjiang Trade Co.,
Other payable 40,000.00 40,000.00
Ltd.
Shenzhen Changlianfa Printing
Other payable 1,178,449.95 846,503.89
and dyeing Co., Ltd.
Shenzhen Haohao Property
Other payable 4,104,489.85 4,954,489.85
Leasing Co., Ltd.
Other payable Yehui International Co.,Ltd. 1,135,399.49 1,214,994.65
Other payable Shengbo （Hongkong）Co., Ltd. 315,000.00 315,000.00
Shenzhen Shenchao Technology
Interest payable 45,570,662.08 42,805,384.31
Investment Co., Ltd.
XIII.Share payment
1. Overall situation of share payment
Items Related content
Total amount of various equity instruments granted by the
4.7523 million shares
company during the current period
Total amount of various equity instruments that the company
exercises during the period
Total amount of various equity instruments that have expired
in the current period
The scope of executive price of the company’s outstanding
The company issued 4,752,300 restricted stocks at the end
share options at the end of the period and the remaining term
of the contract of the period, and the grant price was 5.73 yuan/share.
Restrictions shall be lifted at the rate of 40%, 30%, and
30% respectively after 12 months, 24 months, and 36
months after the first transaction date of 24 months after
The scope of executive price of the company’s other equity
the completion of the registration. The period of validity of
instruments at the end of the period and the remaining term of
the entire plan shall not exceed 60 months from the date of
the contract
granting the restricted stock to the date on which the
restricted stocks granted to the incentive object are all
released from restrictions on sale or cancelled by
122
Items Related content
repurchase.
On December 14, 2017, the company's 3rd Extraordinary General Meeting of Shareholders in
2017 passed the Proposal on ‘Shenzhen Textile (Group) Co., Ltd. 2017 Restricted Stock Incentive
Plan (Draft) and Abstract’; on December 14, 2017, the board of directors of the company reviewed
and passed the Proposal on Adjusting the List of Incentive Objects of Restricted Stock Incentive
Plans and the Number of Equity Granted of 2017, and the Proposal on Granting Restrictive Shares to
Incentive Objects. On December 14, 2017, the company granted 4,752,300 restricted shares to the
incentive object, the grant price was 5.73 yuan/share. Restrictions shall be lifted at the rate of 40%,
30%, and 30% respectively after 12 months, 24 months, and 36 months after the first transaction date
of 24 months after the completion of the registration. The company's performance assessment for the
restricted shares granted each period is as follows:
Restriction lifting period Performance assessment goals
In 2018, the earnings per share shall be no less than 0.07
yuan, and shall not be lower than the 75 fractiles level of the
comparable listed companies in the same industry; the
growth rate of operating revenue in 2018 compared with
The first restriction lifting period
2016 is not less than 70%, and is not lower than the 75
fractiles level of comparable listed companies in the same
industry; in 2018, the proportion of optical film business
such as polarizers to operating revenue is no less than 70%.
In 2019, earnings per share shall be no less than 0.08 yuan,
and shall not be lower than the 75 fractiles level of the
comparable listed companies in the same industry; the
growth rate of operating revenue in 2019 compared with
The second restriction lifting period
2016 is not less than 130%, and is not lower than the 75
fractiles level of comparable listed companies in the same
industry; in 2019, the proportion of optical film business
such as polarizers to operating revenue is not less than 75%.
In 2020, the earnings per share shall be no less than 0.20
yuan, and shall not be lower than the 75 fractiles level of
comparable listed companies in the same industry; the
growth rate of operating revenue in 2020 is not less than
The third restriction lifting period 200% compared to 2016, and is not lower than the 75
fractiles level of comparable listed companies in the same
industry. In 2020, the proportion of optical film business
such as polarizers to operating revenue will be no less than
80%.
2. Equity-settled share-based payment
123
Items Related contents
Determination method of the fair value of equity instruments on The closing price of the company's stock on grant date -
the grant date grant price
On each balance sheet date of the waiting period, it is
determined based on the latest information such as the
Determination basis of the number of vesting equity instruments
change in the number of people that can be released from
restrictions and the completion of performance indicators
The reasons for the significant difference between the current
estimate and the previous estimate
Equity-settled share-based payment is included in the
284,491.54
accumulated amount of capital reserve
Total amount of fees confirmed by equity-settled share-based
356,400.00
payments in the current period
XIV. Subsequent events
Nil
XV. Post-balance-sheet events
According to the dividend distribution preplan made by the board of directors of the Company, the
Company will neither distribute profits nor capitalize capital surplus for the current period.
XVI.Other Important matters
According to the cooperation agreement signed by the company with Hangzhou Jinjiang Group
Co., Ltd. and Hangzhou Jinhang Equity Investment Fund Partnership (Limited Partnership),
Hangzhou Jinjiang Group Co., Ltd. had made a performance commitment to Shenzhen Shengbo
Optoelectronics Technology Co., Ltd. that the 2017 annual performance was as follows: The sales
revenue and net profit in 2017 are not less than RMB 1.5 billion/50 million respectively. In principle,
the proportion of sales revenue of polarizers and related optical film products to total revenue will not
be less than 70% in 2017.
Sales revenue and net profit of Shenzhen Shengbo Optoelectronics Technology Co., Ltd. in 2017
were RMB1.338 billion / RMB53.325 million respectively, and sales ratio of polarizers and related
optical film products accounted for 61.89% of total revenue. Therefore, the 2017 net profit index has
already reached the performance commitment amount, the two performance indicators of sales
revenue and sales revenue of polarizers and related optical film products as a percentage of total
revenue were not fulfilled.
XVII. Notes s of main items in financial reports of parent company
（1）Account receivable
1.Classification account receivables.
124
Year-end balance
Classification Book balance Provision for bad debts
Proportion Book value
Amount Amount Proportion(%)
(%)
Accounts receivable of
individual significance and
subject to individual
impairment assessment
Accounts receivable subject to
impairment assessment by
473,196.00 100.00 23,659.79 5.00 449,536.21
credit risk characteristics of a
portfolio
Accounts receivable of
individual insignificance but
subject to individual
impairment assessment
Total 473,196.00 100.00 23,659.79 449,536.21
Year-beginning
Classification Book balance Provision for bad debts
Proportion Book value
Amount Amount Proportion(%)
(%)
Accounts receivable of
individual significance and
subject to individual
impairment assessment
Accounts receivable subject to
impairment assessment by
518,920.00 100.00 25,945.99 5.00 492,974.01
credit risk characteristics of a
portfolio
Accounts receivable of
individual insignificance but
subject to individual
impairment assessment
Total 518,920.00 100.00 25,945.99 492,974.01
In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
Balance in year-end
Aging
Account receivable Bad debt provision Proportion(%)
125
Balance in year-end
Aging
Account receivable Bad debt provision Proportion(%)
Within 1 year 473,196.00 23,659.79 5.00
2.Other receivable
(1)Category of Other receivable
Year-end balance
Classification Book balance Provision for bad debts
Proportion Book value
Amount Amount Proportion(%)
(%)
Other Accounts receivable of
individual significance and
13,781,464.60 67.70 13,781,464.60 100.00
subject to individual
impairment assessment
Other Accounts receivable
subject to impairment
6,262,767.01 30.77 480,146.38 7.67 5,782,620.63
assessment by credit risk
characteristics of a portfolio
Other Accounts receivable of
individual insignificance but
311,486.35 1.53 311,486.35 100.00
subject to individual
impairment assessment
Total 20,355,717.96 100.00 14,573,097.33 5,782,620.63
Year-beginning
Classification Book balance Provision for bad debts
Proportion Book value
Amount Amount Proportion(%)
(%)
Other Accounts receivable of
individual significance and
11,981,464.60 41.08 11,981,464.60 100.00
subject to individual
impairment assessment
Other Accounts receivable
subject to impairment
16,870,177.62 57.85 4,345,920.87 25.76 12,524,256.75
assessment by credit risk
characteristics of a portfolio
126
Year-beginning
Classification Book balance Provision for bad debts
Proportion Book value
Amount Amount Proportion(%)
(%)
Other Accounts receivable of
individual insignificance but
311,486.35 1.07 311,486.35 100.00
subject to individual
impairment assessment
Total 29,163,128.57 100.00 16,638,871.82 12,524,256.75
（1）Other Receivable accounts with large amount individually and bad debt provisions were
provided
Balance at year-end
Other receivable （Unit） Provision for bad
Other receivable Proportion% Reason
debts
No executable
Jiangxi Xuanli String Co.,
11,389,044.60 11,389,044.60 100.00 property, unlikely
Ltd.
to recover.
Anhui Huapeng Textile Estimated
1,800,000.00 1,800,000.00 100.00
Co.,Ltd. irrecoverable
Shenzhen Tianlong Has been conceled,
592,420.00 592,420.00 100.00
Induatry& Trade Co., Ltd. unlikely to recover
Total 13,781,464.60 13,781,464.60
（2）In the groups, other accounts receivable adopting aging analysis method to withdraw bad
debt provision:
Amount in year-end
Aging
Other receivable Bad debt provision Withdrawal proportion
Within 1 year 4,993,818.23 249,690.91 5.00
1-2 years 1,010,047.30 101,004.73 10.00
Over 3 year 258,901.48 129,450.74 50.00
Total 6,262,767.01 480,146.38
2.The amount of allowance for bad debt recovered or reversed during the current year is
RMB-2,065,774.49.
127
3.Other accounts receivable classified by the nature of accounts
Category Year-end balance Year-beginning balance
Internal current account 5,075,600.00 12,244,280.72
Unit account 15,206,367.96 16,806,675.87
Other 73,750.00 112,171.98
Total 20,355,717.96 29,163,128.57
4.The ending balance of other receivables owed by the imputation of the top five parties
Bad debt
Portion in total
Year-end provision
Name Nature Age other
balance Year-end
receivables(%)
balance
Over 5
First Unit account 11,389,044.60 55.95 11,389,044.60
years
Within 1
4,000,000.00 19.65 200,000.00
Internal year
Second current
1,000,000.00 1-2 years 4.91 100,000.00
Third account
Unit account Over 5
75,600.00 0.37 37,800.00
years
1,800,000.00 1-2 years 8.84 1,800,000.00
Over 5
Fourth Unit account 592,420.00 2.91 592,420.00
years
Withn 1
454,759.77 2.24 22,737.99
year
Fifth Unit account 19,311,824.37 94.87 14,142,002.59
Total
3.Long-term equity investment
Year-end balance Year-beginning balance
Items Bad debt Bad debt
Book balance Book value Book balance Book value
provision provision
128
Investment to
the 1,981,050,902.97 16,582,629.30 1,964,468,273.67 1,980,806,395.91 16,582,629.30 1,964,223,766.61
subsidiary
Investment to
joint ventures
20,380,734.56 20,380,734.56 25,115,965.99 266,654.99 24,849,311.00
and associated
enterprises
Total 2,001,431,637.53 16,582,629.30 1,984,849,008.23 2,005,922,361.90 16,849,284.29 1,989,073,077.61
（1）Investment to the subsidiary
Withdraw
n
impairme Closing
Decre nt balance of
Name Opening balance Increase Closing balance
ase provision impairment
in the provision
reporting
period
Shenzhen Shengbo
Optoelectrionc
1,924,663,070.03 179,771.15 1,924,842,841.18 14,415,288.09
Technology Co.,
Ltd.
Shenzhen Lisi
Industrial
8,073,388.25 7,199.55 8,080,587.80
Development Co.,
Ltd.
Shenzhen Beauty
Centruty Garment 30,867,400.00 27,988.23 30,895,388.23 2,167,341.21
Co., Ltd.
Shenzhen
15,489,351.08 10,079.36 15,499,430.44
Huaqiang Hotal
Shenfang Property
Management Co., 1,713,186.55 19,468.77 1,732,655.32
Ltd.
Total 1,980,806,395.91 244,507.06 1,981,050,902.97 16,582,629.30
129
（2）Investment to joint ventures and associated enterprises
Increase /decrease in reporting period
Withdra Closing
Opening Decre Adjustment of Other Declaration wn Closing balance of
Name Add ased Gain/loss of other equity of cash impairm
balance Other balance impairment
investment invest Investment comprehensiv chang dividends or ent provision
ment e income es profit provisio
n
I. Joint ventures
Shenzhen Haohao Property
5,106,487.57 262,962.99 5,369,450.56
Leasing Co., Ltd.
Shenzhen Xieli Automobile
3,977,050.45 -3,977,050.45
Co., Ltd.
Subtotal 9,083,538.02 262,962.99 -3,977,050.45 5,369,450.56
II. Associated enterprises
Shenzhen Changlianfa
Printing and dyeing 1,968,358.12 138,796.89 2,107,155.01
Company
Jordan Garnent Factory 2,574,327.77 -196,831.05 -143,594.08 2,233,902.64
Yehui International Co., Ltd. 11,223,087.09 896,550.79 -741,597.23 707,814.30 10,670,226.35
Subtotal 15,765,772.98 838,516.63 -885,191.31 707,814.30 15,011,284.00
130
Increase /decrease in reporting period
Withdra Closing
Opening Decre Adjustment of Other Declaration wn Closing balance of
Name Add ased Gain/loss of other equity of cash impairm
balance Other balance impairment
investment invest Investment comprehensiv chang dividends or ent provision
ment e income es profit provisio
n
Total 24,849,311.00 1,101,479.62 -885,191.31 707,814.30 -3,977,050.45 20,380,734.56
131
4.Business income and Business cost
（1）Business income and Business cost
Items Amount of current period Amount of previous period
Income from Main Business 61,363,107.31 59,795,114.50
Other Business income 4,111,507.05 4,128,171.57
Total 65,474,614.36 63,923,286.07
Cost from Main Business 10,094,014.49 8,626,758.74
Other Business cost 4,111,507.06 4,128,171.57
Total 14,205,521.55 12,754,930.31
（2）Main business（Industry）
Amount of current period Amount of previous period
Name
Business income Business cost Business income Business cost
Rental industry 61,363,107.31 10,094,014.49 59,795,114.50 8,626,758.74
Total 61,363,107.31 10,094,014.49 59,795,114.50 8,626,758.74
（3）Main business（Production）
Amount of current period Amount of previous period
Name
Business income Business cost Business income Business cost
Rental industry 61,363,107.31 10,094,014.49 59,795,114.50 8,626,758.74
Total 61,363,107.31 10,094,014.49 59,795,114.50 8,626,758.74
（4）Main business（Area）
Amount of current period Amount of previous period
Name
Business income Business cost Business income Business cost
Shenzhen 61,363,107.31 10,094,014.49 59,795,114.50 8,626,758.74
Total 61,363,107.31 10,094,014.49 59,795,114.50 8,626,758.74
（5）Operating income from top five clients
Name Business Income Proportion(%)
First 27,344,114.10 41.76%
132
Second 1,800,057.14 2.75%
Third 1,644,285.71 2.51%
Fourth4 1,230,190.72 1.88%
Fifth 1,165,515.60 1.78%
Total 33,184,163.27 50.68%
5.Investment income
1．Detail
Items Amount of current Amount of previous
period period
Income from long-term equity investment measured by adopting
19,883,599.84
the cost method
Income from long-term equity investment measured by adopting
1,101,479.62 1,467,403.29
the Equity method
Investment income received from holding of available-for –sale
1,734,586.44 3,078,369.95
financial assets
Total 22,719,665.90 4,545,773.24
6. Supplement information of Cash Flow Statement
Supplement information Amount of Amount of
current period previous period
I. Adjusting net profit to cash flow from operating activities
Net profit 37,663,601.39 31,713,621.89
Add : Impairment loss provision of assets 5,554,598.81 -3,107,155.76
Depreciation of fixed assets, oil and gas assets and consumable
9,163,495.84 8,930,779.65
biological assets
Amortization of intangible assets 380,740.92 295,076.13
Amortization of long-term deferred expenses
Loss on disposals of fixed assets, intangible assets and other
long-term assets(“-“for gains)
Loss on discard of fixed assets 15,020.65 117,153.06
Loss on fair value changes
Financial expenses -3,413,625.17 -3,555,607.51
133
Supplement information Amount of Amount of
current period previous period
Loss on investment -22,719,665.90 -4,545,773.24
Decrease of deferred income tax assets 489,041.95 776,788.94
Increase of deferred income tax assets
Decrease in inventories
Decrease of operating receivable -2,355,629.65 75,279,729.66
Increase of operating receivable 7,728,160.19 -1,876,721.87
Other 561,892.94
Net cash flows arising from operating activities 33,067,631.97 104,027,890.95
II. Significant investment and financing activities that without cash
flows
Debt-to –capital conversion
Convertible loan due within 1 year
Fixed assets acquired under financial lease
III. Net Changes of cash and cash equivalents
Ending balance of cash 413,700,327.95 440,685,610.11
Less: Beginning balance of cash 440,685,610.11 271,582,749.03
Add：End balance of cash equivalents
Less: Beginning balance of cash equivalents
Net increase of cash and cash equivalents -26,985,282.16 169,102,861.08
XVIII. Supplement information
1. Particulars about current non-recurring gains and loss
√ Applicable □ Not applicable
In RMB
Items Amount Notes
Non-current asset disposal gain/loss -52,131.44
Government subsidies recognized in current
gain and loss(excluding those closely related
12,567,426.98
to the Company’s business and granted
under the state’s policies)
134
Gain/loss on entrusting others with
49,885,730.58
investment or asset management
Single impairment test for impairment of
332,073.93
receivables transferred back to preparation
Net amount of non-operating income and
-1,175,757.59
expense except the aforesaid items
Other non-recurring Gains/loss items 23,068,858.53
Less: .Amount of influence of income tax 1,828,395.90
Amount of influence of minority interests 33,162,149.89
Total 49,635,655.20 --
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in
the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the
Public-Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said
explanatory announcement as a recurrent gain/loss item.
□ Applicable √Not applicable
2. Return on net asset and earnngs per share
Earningspershare
Profit of report period Weightedaverage retureon eqiuty(%) Basicearningspershare(R Diluted eqrnings per
MB/share） share(RMB/share)
Net profit attributable to the
Common stock shareholders of 2.23% 0.10 0.10
Company.
Net profit attributable to the
Common stock shareholders of
0.13% 0.01 0.01
Company after deducting of
non-recurring gain/loss.
3. Differences between accounting data under domestic and overseas accounting standards
(1) Differences of net profit and net assets disclosed in financial reports prepared under international and
Chinese accounting standards
□ Applicable √Not applicable
(1) Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √Not applicable
135
(2) Explain reasons for the differences between accounting data under domestic and overseas accounting
standards, for audit data adjusting differences had been foreign audited, should indicate the name of the
foreign institutions.
Shenzhen Textile (Holdings) Co., Ltd.
March 27, 2018
136
