2021 Annual Report Shenzhen Textile (Holdings) Co., Ltd. 2021 Annual Report March 2022 2021 Annual Report I. Important Notice, Table of Contents and Definitions The Board of Directors , the Supervisory Committee, the directors, the supervisors, and executives of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. Ms. Zhang Jian, The Company leader, Mr. He Fei, Chief financial officer and the Ms.Zhu Jingjing, the person in charge of the accounting department (the person in charge of the accounting )hereby confirm the authenticity and completeness of the financial report enclosed in this annual report. All the directors attended the board meeting for the review of this Report. Concerning the forward-looking statements with future planning involved in the Report, they do not constitute a substantial commitment for investors, Investors and related persons shall keep sufficient risk awareness, and shall understand the differences between plans, forecasts and commitments, and remind investors of investment risks. The company has the macroeconomic risks, market competition risks and raw material risks. Investors are advised to pay attention to investment risks. For details, please refer to the possible risk factors that the company may face in the XI "Risks facing the Company and countermeasures " in the Section III "Management Discussion & Analysis". The company’s profit distribution plan approved by the board of directors this time is: based on 506,521,849 shares, a cash dividend of 0.50 yuan (tax included) will be distributed to all shareholders for every 10 shares, and 0 shares (tax included) will be given as bonus shares. The capital reserve will not be converted into share capital. This Report has been prepared in both Chinese and English. In case of any discrepancy, the Chinese version shall prevail. 2 2021 Annual Report Table of Contents I. Important Notice, Table of contents and Definitions II. Company Profile & Financial Highlights. III. Management Discussion & Analysis IV. Corporate Governance V. Environmental & Social Responsibility VI. Important Events VII. Change of share capital and shareholding of Principal Shareholders VIII. Situation of the Preferred Shares IX. Corporate Bond X. Financial Report 3 2021 Annual Report Documents available for inspection 1. Accounting statements carried with personal signatures and seals of legal representative, General Manager, Chief Financial officer. 2. Original of Auditors’ Report carried with the seal of Certified Public Accountants as well as personal signatures of certified Public accountants. 3. The texts of all the Company's documents publicly disclosed on the newspapers and periodicals designated by China Securities Regulatory Commission in the report period. The above documents were completely placed at the Office of Secretaries of the Board of Directors of the Company. 4 2021 Annual Report Definition Terms to be defined Refers to Definition Company/The Company/ Shen Textile Refers to Shenzhen Textile (Holdings) Co., Ltd Articles of Association Refers to Articles of Association of Shenzhen Textile (Holdings) Co., Ltd Actual controller / National Assets National Assets Regulatory Commission of Shenzhen Municipal Regulatory Commission of Shenzhen Refers to People's Government Municipal People's Government The Controlling shareholder/ Shenzhen Refers to Shenzhen Investment Holdings Co., Ltd. Investment Holdings Co., Ltd. Shenchao Technology Refers to Shenzhen Shenchao Technology Investment Co., Ltd. SAPO Photoelectric Refers to Shenzhen SOPO Photoelectric Co., Ltd. Jinjiang Group Refers to Hangzhou Jinjiang Group Co., Ltd. Nitto Denko Refers to Nitto Denko Corporation Beauty Century Refers to Shenzhen Beauty Century Garment Co., Ltd. Shenzhen Xieli Refers to Shenzhen Xieli Automobile Co., Ltd. Jinxin Investment Refers to Lanxi Jinxin Investment Management Co., Ltd. Changxing Junying Refers to Changxing Junying Eqkuity Investment Partnership(LP) Huaiji Investment Refers to Hangzhou Huaiji Investment Management Co., Ltd. Shenzhen Textile Import & Export Refers to Shenzhen Textile Import & Export Co., Ltd. Jinhang Investment Refers to Hangzhou Jinhang Investment Fund Partnership(LP) Advantage ford Refers to Suzhou Advantage ford Investment Center(LP) Line 4 Refers to T TFT-LCD polarizer II phase Line 4 project Line 5 Refers to TFT-LCD polarizer II phase Line 5 project Line 6 Refers to TFT-LCD polarizer II phase Line 6 project Line 7 Refers to Industrialization project of polaroid for super large size TV “CSRC” Refers to China Securities Regulatory Commission Company Law Refers to Company Law of the People’s Republic of China Securities Law Refers to Securities Law of the People’s Republic of China The Report Refers to 2021 Annual Report 5 2021 Annual Report II. Company Profile & Financial Highlights I. Company Profile Stock abbreviation Shen Textile A ,Shen Textile B Stock code 000045,200045 Stock exchange for listing Shenzhen Stock Exchange Name in Chinese 深圳市纺织(集团)股份有限公司 Chinese abbreviation (If any) 深纺织 English name (If any) SHENZHEN TEXTILE (HOLDINGS) CO., LTD English abbreviation (If any) STHC Legal Representative Zhang Jian Registered address 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen Postal code of the Registered Address 518031 Historical change of the company's No registered address Office Address 6/F, Shenfang Building, No.3 Huaqiang North Road, Futian District, Shenzhen Postal code of the office address 518031 Internet Web Site http://www.chinasthc.com E-mail szfzjt@chinasthc.com II. Contact person and contact manner Board secretary Securities affairs Representative Name Jiang Peng Li Zhenyu 6/F, Shenzhen Textile Building, No.3 Huaqiang 6/F, Shenzhen Textile Building, No.3 Huaqiang Contact address North Road, Futian District, Shenzhen North Road, Futian District, Shenzhen Tel 0755-83776043 0755-83776043 Fax 0755-83776139 0755-83776139 E-mail jiangp@chinasthc.com lizy@chinasthc.com III. Information disclosure and placed Newspapers selected by the Company for information Securities Times, China Securities, Shanghai Securities Daily and disclosure Hongkong Commercial Daily. Internet website designated by CSRC for publishing the www.cninfo.com.cn Annual report of the Company The place where the Annual report is prepared and placed Office of the Board of directors 6 2021 Annual Report IV. Changes in Registration Organization Code 19217374-9 In July 2012, The business scope of the company is changed to "production, textiles processing, knitwear, clothin g, upholstery fabrics, belts, trademark bands, handicrafts (without restrictions); general merchandise, the special equipment of the textile industry, textile equipment and accessories, instruments, standard parts, raw textile materials, dyes, electronic products, chemical products, mechanical and electrical equipment, light industrial products, office supplies and domestic trade (excluding the franchise, the control and the monopoly of goods) ; operation of import Changes in principal business and export business." activities since listing (if any) In December 2018, approved by Shenzhen Market Supervisory Authority, the company's business scope was changed to: production and operation of polarizers and other optical film products; hotel and property leasing and management; production and processing of textiles, knitwear, clothing, and decorative fabrics , Belts, trademark belts, handicrafts (excluding restricted items); department stores, special equipment for the textile industry, textile equipment and accessories, meters, standard parts, textile raw materials, dyes, electronic products, chemical products, electromechanical equipment, textile products, office Supplies and domestic trade (excluding franchise, control, and monopoly commodities); import and export business. In October 2004,In accordance with the Decision on Establishing Shenzhen Investment Holdings Co., Ltd. issued by State-owned Assets Administration Committee of Shenzhen Changes is the controlling Municipal People's Government (Shen Guo Zi Wei (2004) No. 223 Document), Shenzhen shareholder in the past (is any) Investment Management Co., Ltd., the controlling shareholder of the Company, and Shenzhen Construction Holding Company and Shenzhen Commerce and Trade Holding Company merged into Shenzhen Investment Holdings Co., Ltd. V. Other Relevant Information CPAs engaged Name of the CPAs Grant Thornton International Ltd(Special Geneaal Partnership) Office address: 5/F, Scitech Palace 22 Jianguomenwai Avenue, Chaoyang District, Beijing Names of the Certified Public Zhen Zhifang,Liu Duoqi Accountants as the signatories The sponsor performing persistent supervision duties engaged by the Company in the reporting period. □ Applicable√ Not applicable The Financial advisor performing persistent supervision duties engaged by the Company in the reporting period □ Applicable√ Not applicable VI.Summary of Accounting data and Financial index Whether it has retroactive adjustment or re-statement on previous accounting data □ Yes √ No 7 2021 Annual Report Changes of this period over same 2021 2020 2019 period of Last year(%) Operating income(Yuan) 2,293,747,892.06 2,108,964,687.80 8.76% 2,158,184,855.71 Net profit attributable to the shareholders 61,162,384.25 37,267,995.74 64.12% 19,679,910.43 of the listed company(Yuan) Net profit after deducting of non-recurring gain/loss attributable to the shareholders of 40,650,013.22 18,084,607.04 124.78% -41,179,849.56 listed company(Yuan) Cash flow generated by business operation, -4,436,980.35 1,930,932.76 -329.78% 383,145,788.50 net(Yuan) Basic earning per share(Yuan/Share) 0.12 0.07 71.43% 0.04 Diluted gains per share(Yuan/Share) 0.12 0.07 71.43% 0.04 Weighted average ROE(%) 2.19% 1.36% 0.83% 0.75% Changed over last End of 2021 End of 2020 End of 2019 year(%) Gross assets(Yuan) 5,496,647,107.83 4,969,547,552.23 10.61% 4,531,399,885.99 Net assets attributable to shareholders of 2,816,795,889.89 2,766,234,174.39 1.83% 2,727,764,144.36 the listed company(Yuan) The lower of the company’s net profit before and after the deduction of non-recurring gains and losses in the last three fiscal years is negative, and the auditor's report of the previous year shows that the Company’s going concern ability is uncertain. □ Yes √No The lower of the net profit before and after the deduction of the non-recurring gains and losses is negative. □ Yes √No VII. 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 No difference. 2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards. □ Applicable √Not applicable The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or Chinese GAAP(Generally Accepted Accounting Principles) in the period. 8 2021 Annual Report VIII. Main Financial Index by Quarters In RMB First quarter Second quarter Third quarter Fourth quarter Operating income 552,950,209.39 548,586,197.99 570,752,050.04 621,459,434.64 Net profit attributable to the shareholders of the 42,776,335.85 33,826,738.54 4,921,591.39 -20,362,281.53 listed company Net profit after deducting of non-recurring gain/loss attributable to the shareholders of listed 39,905,925.26 21,908,603.63 815,872.77 -21,980,388.44 company Net Cash flow generated by business operation -75,288,004.27 22,644,468.02 -14,976,407.55 63,182,963.45 Whether significant variances exist between the above financial index or the index with its sum and the financial index of the quarterly report as well as semi-annual report index disclosed by the Company. □Yes √No IX. Items and amount of non-current gains and losses √Applicable □Not applicable In RMB Items Amount (2021) Amount (2020) Amount (2019) Notes Non-current asset disposal gain/loss(including the write-off part for which assets impairment -961,982.35 273,229.58 54,895,878.65 provision is made) Other benefits of Government subsidy recognized in current government gain and loss(excluding those closely related 19,643,379.33 29,506,252.69 27,547,902.92 subsidies that are to the Company’s business and granted under confirmed related to the state’s policies) the main business. Switch back of provision for depreciation of account receivable which was singly taken 989,313.04 469,470.61 depreciation test. Other non-business income and expenditures 19,964,046.87 1,310,556.26 4,582,973.27 other than the above Less :Influenced amount of income tax 6,025,891.12 53,313.37 13,886,055.96 Influenced amount of minor shareholders’ 13,096,494.74 11,853,336.46 12,750,409.50 equity (after tax) Total 20,512,371.03 19,183,388.70 60,859,759.99 -- Details of other profit and loss items that meet the non-recurring profit and loss definition □ Applicable√ Not applicable 9 2021 Annual Report None For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No.1 on information disclosure for Companies Offering their Securities to the Public-Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No.1 on information Disclosure for Companies offering their securities to the public-non-recurring Gains and losses which have been defined as recurring gains and losses, it is necessary to explain the reason. □ Applicable√ Not applicable None of Non-recurring gain /loss items recorgnized as recurring gain /loss/items as defined by the information disclosure explanatory Announcement No.1- Non –recurring gain/loss in the report period. 10 2021 Annual Report III. Management Discussion & Analysis I. Industry information of the Company during the reporting period Polarizers are also known as polaroid, which can control the polarization direction of specific light beams. When natural light passes through the polarizer, the light whose vibration direction is perpendicular to the transmission axis of the polarizer will be absorbed, leaving only polarized light whose vibration direction is parallel to the transmission axis of the polarizer. The downstream polarizer is mainly used in the panel industry. According to different panel types, polarizers mainly include TN, STN, TFT and OLED. Currently, the global polarizer market is dominated by polarizers for TFT-LCD panels. Each LCD panel requires two polarizers. The Company is one of the major R&D, production and sales enterprises of polarizers in China, and the leading enterprise of polarizer industry in China. The Company's polarizer is one of the key basic materials in the display panel industry, and its demand is greatly affected by the fluctuation of the display panel market. In the first half of 2021, due to the strong terminal demand and the shortage of upstream raw materials of various display panels caused by telecommuting and distance learning, the display panel market showed a pattern of short supply, the panel price continued to rise, and the polarizer market witnessed a good prosperity. In the second half of 2021, with the increase of vaccination rate for COVID-19, the pandemic eased, the market demand gradually stabilized, and the supply of raw materials gradually recovered, the display panel market ended its upward cycle, the prices of different types of panels dropped successively, and the market demand for polarizers gradually stabilized. II.Main Business the Company is Engaged in During the Report Period (1)The company's main business The company's main business covered such the high and new technology industry as represented by LCD polarizer, its own property management business and the retained business of high-end textile and garment. During the reporting period, the Company's main business has not changed significantly. First, the Company focused on adjusting its marketing strategy, continuously promoting the optimization of customer and product structure, balancing the sales share of major panel customers, and enhancing the anti-risk and profitability; Second, it strengthened the production management, improved the production capacity and product quality, further speeded up the elevator, carried out equipment and technical transformation, improved the automation level in the later stage, and continuously improved the production capacity and product quality; Third, it controlled the cost and reduced the cost through a number of measures, such as the import of alternative raw materials and the broadening of procurement channels; Fourth, it continued to overcome the adverse effects of the COVID-19, and made every effort to promote the project construction and ramp up of Line 7. The Line 7 project was put into production in mid-July and entered the ramp up period, with a steady increase in yield and machine speed, laying a solid foundation for the rapid increase of oversized orders in the whole year of 2022 and the realization of production line profitability; Fifth, it built the R&D management system, strengthened the R&D efforts on new products, new materials, production processes and other aspects, and introduced more alternative raw materials, among which, the polarizer for OLED TV successfully achieved mass production, filling the domestic gap; Sixth, it effectively revitalized the existing assets. The Company implemented the transfer liquidation work for some subsidiaries and shareholding enterprises, and concentrated on developing the main business of polarizers; Seventh, it implemented the epidemic prevention and control work, paid attention to safe and green production, focused on rectification, safety and environmental protection issues, and promoted the safe and stable 11 2021 Annual Report development of enterprises. During the reporting period, the Company achieved operating income of RMB 2.294 billion, with a year-on-year increase of 8.76%; Realized a total profit of RMB 86.23 million with a year-on-year increase of 66.79%; And achieved a net profit attributable to shareholders of listed companies of RMB 61.16 million, with a year-on-year increase of 64.12%. During the reporting period, the net profit attributable to shareholders of listed companies increased significantly compared with the same period of last year. The main reasons are as follows: First, in 2021, the polarizer market was generally stable and improved, the Company further optimized the order structure, and the average gross profit margin increased steadily; Second, in order to cope with the COVID-19 in 2020 and support the enterprises to overcome the difficulties together, the Company actively responded to the call of Shenzhen Municipal Party Committee, Municipal Government and State-owned Assets Supervision and Administration Commission to reduce the rent for some tenants in February, March and November 2020, and the rent income of such period increased substantially year on year. (2)Main products and their purposes Currently, the Company has 7 mass production lines for polarizers, covering TN, STN, TFT, OLED, 3D, dye sheet, optical film for touch screen and other fields, mainly used in TV, NB, navigator, Monitor, vehicle, industrial control, instruments, smart phones, wearable devices, 3D glasses, sunglasses and other products,the company has become a mainstream panel company such as Huaxing Optoelectronics, BOE, Sharp, LGD, Shenzhen Tianma, Huike, etc. by continuously strengthening sales channel expansion and building its own brand. Qualified suppliers. The Company's main products made in each polarizer production line and their application are as follows: Line Place Product breadth Planned capacity Main projuct Line 1 Pingshan 500mm 600,000 m2 TN/STN/ Dye sheet Line 2 Pingshan 500mm 1.2 million m2 TN/STN/CSTN Line 3 Pingshan 650mm 1 million m2 TFT Line 4 Pingshan 1490mm 6 million m2 TFT Line 5 Pingshan 650mm 2 millin m2 TFT Line 6 Pingshan 1490mm 10 million m2 TFT/OLED Line 7 Pingshan 2500mm 32 millin m2 TFT/OLED (3)Company's business model The polarizer industry has gradually shifted from a traditional business model of R&D, production, and sales to a customer-centric, joint research and development, and comprehensive service business model. By understanding customer needs, joint research and develop, manage high-standard production, manufacture high-quality products, use advanced polarizer roll and attaching equipment to cooperate with downstream panel manufacturers' production lines, reduce production links, reduce production and transportation costs, and create value for customers, win-win. (4) Major factors for driving the Company's performance Refer to "III. Analysis on core competitiveness" in this section for details. (5)Market position of company products Currently, the Company is one of the major R&D, production and sales enterprises of polarizers in China, and is the leading enterprise in the domestic polarizer industry. The Company mainly focuses on medium and large-sized polarizer products, and meanwhile has the production capacity of multi-size and multi-series products. 12 2021 Annual Report In the future, the Company will further adjust and optimize the product structure and customer structure, improve the internal management level, optimize and upgrade the production technology level, improve the production efficiency and product quality, broaden the procurement channels, reduce the production cost and consolidate and improve the market competitiveness. (6) Advantages and disadvantages in competition 1. Competitive edge See "III. Analysis of core competitiveness" in this chapter for details. 2. Competitive disadvantage See "XI. Future development prospect of the Company (III) Possible risks" in this chapter for details. III. Analysis On core Competitiveness (1)Technology advantages. SAPO Photoelectric is the first domestic national high-tech company which entered into the R&D and production of the polarizer,We are one of the largest, most technical and professional polarizer R&D teams in the country and has more than 20 years of operating experience in the polarizer industry. Products include TN-type, STN-type, IPS-TFT-type, VA-TFT-type, OLED, vehicle-mounted industrial display, flexible display, 3D stereo and polarizer for sunglasses, and optical film for touch screens, etc.,We have proprietary technology for polarizers and new intellectual property rights for various new products. As of the end of this report , SAPO Photoelectric applied for 115 invention patents and was authorized with 89 items, among which: 36 domestic invention patents(16 patents got authorized); 72 domestic utility model patents(69 patents got authorized); 1 overseas invention patent(0 patents got authorized); 6 overseas utility model patents(4 patents got authorized). There were 4 national standards and 2 industrial standards that were developed by the company are approved and then will be implemented. will be implemented. SAPO Photoelectric has three innovative platforms: Guangdong Engineering Technology Research Center, Shenzhen Polarizing Materials and Technology Engineering Laboratory and Shenzhen Enterprise Technology Center. It focuses on the R&D and industrialization of LCD polarizer core production technology, the development and industrialization of OLED polarizer new products, and the localization research of polarizer raw materials, among which, mass production has been achieved for OLED TV polarizer products successfully, filling the domestic gap. By introducing all kinds of precision test equipment, it improves lab trial and pilot-scale test methods, and builds a collaborative innovation platform for Industry-University-Research cooperation, to enhance the R&D level comprehensively. (2)Talents advantages. The Company has a polarizer management team and a team of senior technicians with strong technical ability, long cooperation time, rich experience and international vision. By establishing a technical cooperation relationship with Nitto Denko Corporation, a world-class polarizer manufacturer, the Company learns advanced polarizer production management concepts, and meanwhile accumulates technical experience through independent innovation, improves its core competitiveness, and gradually accumulates its own brand, technology, operation management and other advantages. In 2021, the Company continued to deepen the market-oriented reform, practiced the concept of "Don't race horses", and set a good vane for talent selection and employment; It improved the talent growth channel, established the management method of employee promotion by rank, and helped employees grow and develop; It improved the incentive mechanism of assessment, and fully utilized the incentive and spur role of assessment; Actively explored the long-term incentive and restraint of the Company's management level, employee benefit award distribution mechanism, Employee Stock Ownership Plan (ESOP), etc., and built a value distribution mechanism of benefit sharing and risk pooling. (3)Market advantages. The company has good customer groups not only in domestic market but in foreign market, 13 2021 Annual Report compared with foreign advanced counterparts, the biggest advantage lies in the localization for supporting, close to the panel market, as well as the strong support of the national policy. In terms of market demand, with the mass production of the 10.5/11-generation TFT-LCD panel production lines under construction and planned for the next few years, the production capacity of high-generation TFT-LCD panels in mainland China will increase significantly in the next few years, the corresponding domestic polaroid film market demand has also increased, and the domestic market is the most important market for polaroid manufacturers, especially in the large-size polarizer market. Mainland polarizer manufacturers will usher in important industry opportunities; in terms of market development, the company takes production material control as the core, technology services as the guide, customer needs as the focus, organically combines production and sales, establishes a rapid response mechanism, fully exploits localization advantages, and uses its own accumulated technology and talents, does a good job of peer-to-peer professional services, forms a stable supply chain and increases market share. (4)Quality advantages. The company always adhered to the quality policy of "Satisfying customer demands and pursuing excellent quality" and focused on product quality control. The company strictly controls product performance indicators, standardizes inspection standards for incoming materials, starts with quality improvement and consumption reduction, and achieves simultaneous increase in output and quality; through the introduction of a modern quality management system, the products have passed ISO9001 Quality Management System and ISO14001 Environmental Management System, OHSAS18000 Occupational Health and Safety Management System, QCO80000 System Certification; the product is tested by SGS and meets the environmental protection ,The company had increased the automatic detecting and marking equipments in the beginning section and the ending section, strictly controlled the product quality and improved the product utilization rate and product management efficiency. (5)Management advantages. SAPO Photoelectric has accumulated rich management experiences in more than 20 years in the manufacturing of polarizer, possessing the home most advanced control technology of the production management process of the polarizer and quality management technology and the stable raw material procurement channel so forth management systems. The company had carried out comprehensive benchmarking work, organized the management personnel to learn advanced experiences from customers and peers to force the elevation of management ability, and drew on the foreign company’s management experiences of polarizer, optimized the company's organizational structure, reduced the managerial hierarchy and further enhanced the company's management efficiency. After the introduction of the strategic investor, Through close cooperation with Jinjiang Group, we complement each other's strengths, absorb the vitality of private enterprises, continue to implement advanced management systems, reasonable incentive mechanisms, etc., improve the efficiency of decision-making, enhance the speed of market response, improve the research and development incentive system, and also realize the deep integration of the value of the company and its employees and stimulates the new vitality of the business. (6)Policy advantages. Polarizer is seen as an essential part of the panel display industry and SAPO Photoelectric in its development has promoted the supply capacity of national polarizers, greatly lowered the dependence of national panel enterprises on imported polarizers, and safeguarded the national panel industry, which serves as a good facilitator to enhancing the overall competitiveness of China's panel industry chain and coordinated development of the whole industry chain of the panel display industry cluster in Shenzhen. Recognized as a national high-tech enterprise, the Company is entitled to the preferential policy for duty-free import of own productive raw materials that cannot be produced at home and frequently gained national, provincial and municipal policy and financial support in its polarizer projects. Meanwhile, the Company tightened supplier management, improved its overall purchasing strategy, and downsized suppliers while introducing a competitive mechanism, wherein focus was given to introduction of new materials at a competitive price, to further lower its 14 2021 Annual Report production cost and improve its product competitiveness. IV. Main business analysis (1)General 2021 is the first year of the 14th Five-Year Plan, and it is also a crucial year for the Company to deepen reform, transformation and development. In the past year, challenged by the severe and complicated economic situation, the Company has unified thoughts, strengthened confidence, worked hard together, overcame the difficulties, and made efforts to turn challenges into opportunities. It has made new progress in its project construction of Line 7, operation and management, and exploration in property leasing, laying a solid foundation for the Company's further transformation and development. During the reporting period, the Company achieved operating income of RMB 2.294 billion, with a year-on-year increase of 8.76%; Realized a total profit of RMB 86.23 million with a year-on-year increase of 66.79%; And achieved a net profit attributable to shareholders of listed companies of RMB 61.16 million, with a year-on-year increase of 64.12%. The company's operating income, total profit and net profit attributable to shareholders of listed companies all increased compared with the same period of last year. The main reasons are as follows: First, in 2021, the polarizer market was generally stable and improved, the Company further optimized the order structure, and the average gross profit margin increased steadily; Second, in 2020, in order to cope with the COVID-19 in 2020 and support the enterprises to overcome the difficulties together, the Company actively responded to the call of Shenzhen Municipal Party Committee, Municipal Government and State-owned Assets Supervision and Administration Commission to reduce the rent for some tenants in February, March and November 2020, and the rent income of such period increased year on year. Review of the company's key works carried out in 2021 as follows: 1. Achieved sustained profitability in its main polarizer business In 2021, first, the Company focused on adjusting its marketing strategy, continuously promoting the optimization of customer and product structure, balancing the sales share of major panel customers, and enhancing the anti-risk and profitability; Second, it strengthened the production management, improved the production capacity and product quality, further speeded up the elevator, carried out equipment and technical transformation, improved the automation level in the later stage, and continuously improved the production capacity and product quality; Third, it controlled the cost and reduced the cost through a number of measures, such as the substitution of raw materials and the broadening of procurement channels; Fourth, it increased the introduction and selection of talents and enhanced the competitiveness of the team. Meanwhile, the Company established the R&D management system, strengthened the R&D of new products, new materials, production processes and other aspects and the import of alternative raw materials, and developed, evaluated and promoted 93 kinds of materials in total. In 2021, it had 8 patent applications, including 4 national invention patents and 4 utility model patents; and it was granted with 10 patents, including 2 invention patents and 8 utility model patents. 2. Its textile business remained stable, and its property leasing and management business were steadily improving In 2021, the Company made great efforts to overcome the influence of exchange rate fluctuation, COVID-19 and rising raw material prices, and took effective measures to strengthen product R&D, expand new market areas, and realize sustained profitability of textile business. In 2021, the downturn of the real economy brought certain pressure to property leasing and its management business. The Company took the initiative to introduce high-quality new tenants, and strengthened property management, continuously improved service quality, paid close attention to the prevention and control of 15 2021 Annual Report COVID-19, and achieved a good situation of double 100% for both rental rate and rental recovery rate, with property leasing and its management business both growing steadily. 3. Strived to promote the construction and ramp up of Line 7 In March 2021, the Company set up a 100-day attack working group for Line 7 project, launched a special activity of "Production of 100 days to pay tribute to the 100th anniversary of the founding of the Party", accelerated the progress of chemical test run of Line 7 project, and finally completed the performance stability test run in July 2021, and started the test run ramp-up. In order to speed up the climbing process of Line 7 project, effectively promote technical upgrading and customer introduction, and achieve better operating results, the Company organized the special work of "Striving for 50 days" for mass production ramp up of Line 7 in mid-November, 2021, focusing on improving the main technical indicators such as speed and yield. As of December 31, 2021, Line 7 was in the stage of capacity ramp up, the main technical indicators such as speed and yield were continuously improved, and the introduction of major customer products was progressing steadily. 4.Organized epidemic prevention and control effectively, and achieved work safety in a stable and orderly manner In 2021, the Company attached great importance to epidemic prevention and control and work safety management, strengthened bottom-line thinking, overcame unawareness and fluke mind, and implemented it strictly and tightly. First, it organized the work safety inspection of third-party organizations to investigate and rectify the potential safety hazards of old property equipment assets. Second, it actively implemented the upgrading and transformation of safety and environmental protection, and practiced the sustainable development production concept of green environmental protection, energy saving and consumption reduction. SAPO Industrial Park won the "Outstanding Green Environment-friendly Factory Award" of "Green Asia Pacific 2021 Environmental Protection Achievement Award". Third, it continued to implement the normal management of epidemic prevention and control, strengthened organizational leadership, and built an epidemic prevention network in an all-round way. The epidemic prevention and control work special class conducted and coordinated the effective epidemic prevention mechanism level by level, ensured that all deployment measures were implemented solidly, and effectively protected the life safety of employees. 5. Insisted on strengthening the foundation, and constantly consolidated the grassroots party building work In 2021, under the strong leadership of the Party Committee of Shenzhen State-owned Assets Supervision and Administration Commission and the Party Committee of Shenzhen Investment Holdings, the Party Committee of the Company adhered to the guidance of Xi Jinping's new era socialism with Chinese characteristics, thoroughly implemented the spirit of the 19th National Congress of the Communist Party of China and its previous plenary sessions, firmly grasped the general requirements of party building in the new era, carried out in-depth study and education of party history, focused on warmly celebrating the 100th anniversary of the founding of the Communist Party of China (CPC), closely focused on the quality improvement actions of listed companies, solidly promoted the deployment and implementation of "six-degree party building", and the Company's high-quality development with high-quality party building. (2) Revenue and cost 1. Component of Business Income In RMB 2021 2020 Increase 16 2021 Annual Report Amount Proportion Amount Proportion /decrease Total operating revenue 2,293,747,892.06 100% 2,108,964,687.80 100% 8.76% On Industry Manufacturing 2,154,422,129.35 93.93% 2,012,255,019.03 95.41% 7.07% Lease and Management of Property 111,568,500.55 4.86% 85,177,866.03 4.04% 30.98% Other 27,757,262.16 1.21% 11,531,802.74 0.55% 140.70% On Products Lease and Management of Property 111,568,500.55 4.86% 85,177,866.03 4.04% 30.98% Textile 54,932,578.58 2.39% 60,503,325.78 2.87% -9.21% Polarizer sheet 2,099,489,550.77 91.53% 1,951,751,693.25 92.54% 7.57% Other 27,757,262.16 1.21% 11,531,802.74 0.55% 140.70% Area Domestic 2,039,625,757.16 88.92% 1,768,190,864.75 83.84% 15.35% Overseas 254,122,134.90 11.08% 340,773,823.05 16.16% -25.43% Sub-sale model Credit 2,154,422,129.35 93.93% 2,012,255,019.03 95.41% 7.07% Cash on sale 139,325,762.71 6.07% 96,709,668.77 4.59% 44.07% 2.Situation of Industry, Product and District Occupying the Company’s Business Income and Operating Profit with Profit over 10% √ Applicable □Not applicable In RMB Increase/decrea Increase/decrea Increase/decrea se of business se of gross se of revenue in Gross profit cost over the profit rate over Turnover Operation cost the same period rate(%) same period of the same period of the previous previous year of the previous year(%) (%) year (%) On Industry 2,154,422,129. 1,877,251,173. Manufacturing 12.87% 7.07% 5.10% 1.63% 35 50 Lease and Management of 111,568,500.55 22,996,155.29 79.39% 30.98% 5.04% 5.09% Property On Products Polarizer sheet 2,099,489,550. 1,828,737,245. 12.90% 7.57% 5.24% 1.95% 17 2021 Annual Report 77 98 Lease and Management of 111,568,500.55 22,996,155.29 79.39% 30.98% 5.04% 5.09% Property Textile 54,932,578.58 48,513,927.52 11.68% -9.21% 0.10% -8.21% Area 2,039,625,757. 1,692,710,152. Domestic 17.01% 15.35% 10.46% 3.67% 16 65 Overseas 254,122,134.90 215,809,260.63 15.08% -25.43% -23.44% -2.20% Sub-sale model 2,154,422,129. 1,877,251,173. Credit 12.87% 7.07% 5.10% 1.63% 35 50 Cash on sale 139,325,762.71 31,268,239.78 77.56% 44.07% 11.28% 6.61% Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on latest on year’s scope of period-end. □ Applicable √Not applicable 3. Whether the Company’s Physical Sales Income Exceeded Service Income √ Yes □ No Classification Items Unit 2021 2020 Changes Sales 10,000 square meters 2,517.63 2,131.28 18.13% Polarizer sheet Production 10,000 square meters 2,518.62 2,124.96 18.53% Stock 10,000 square meters 139.51 121.69 14.64% Sales 10,000 pieces 269 358 -24.86% Knitted clothing Production 10,000 pieces 280 385 -27.27% Stock 10,000 pieces 91 80 13.75% Explanation for a year-on –year change of over 30% □ Applicable √ Not applicable 4.Degree of Performance of the Significant Sales Contract Signed up to this Report Period □ Applicable √Not applicable 5.Component of business cost Industry category In RMB 2021 2020 Increase/D Industry Proportion in Proportion in Items ecrease classification Amount the operating Amount the operating (%) costs (%) costs (%) 18 2021 Annual Report Polarizer sheet, Manufacturing 1,877,251,173.50 98.36% 1,786,199,780.24 98.45% 5.10% Knitted clothing Lease and Rental, Management of 22,996,155.29 1.20% 21,892,925.24 1.21% 5.04% Accommodation Property Other Other 8,272,084.49 0.43% 6,205,689.54 0.34% 33.30% In RMB 2021 2020 Classification Proportion in Proportion in Increase/Decre Items of products Amount the operating Amount the operating ase (%) costs (%) costs (%) Direct 1,460,202,220. 1,469,416,728. Polarizer sheet 76.51% 80.99% -0.63% materials 50 04 Polarizer sheet Direct labor 56,423,729.38 2.96% 50,884,076.28 2.80% 10.89% Polarizer sheet Power cost 49,263,443.02 2.58% 44,834,128.46 2.47% 9.88% Manufacturing Polarizer sheet 262,847,853.08 13.77% 172,598,639.68 9.51% 52.29% cost Knitted Direct 29,157,370.18 1.53% 29,570,175.97 1.63% -1.40% clothing materials Knitted Direct labor 9,659,820.67 0.51% 10,388,237.67 0.57% -7.01% clothing Knitted Power cost 968,232.62 0.05% 1,256,258.98 0.07% -22.93% clothing Knitted Manufacturing 8,728,504.05 0.46% 7,251,535.16 0.40% 20.37% clothing cost Note None 6.Whether Changes Occurred in Consolidation Scope in the Report Period □ Yes √ No 7.Relevant Situation of Significant Changes or Adjustment of the Business, Product or Service in the Company’s Report Period □ Applicable √Not applicable 8.Situation of Main Customers and Main Supplier Information of Main Customers Total sales amount to top 5 customers (RMB) 1,600,042,900.00 Proportion of sales to top 5 customers in 69.76% Proportion of the sales volume to the top five customers 0.00% in the total sales to the related parties in the year 19 2021 Annual Report Information of the Company’s top 5 customers No Name Amount(RMB) Proportion(%) 1 Customer 1 673,734,600.00 29.37% 2 Customer 2 424,287,100.00 18.50% 3 Customer 3 256,965,400.00 11.20% 4 Customer 4 135,380,400.00 5.90% 5 Customer 5 109,675,400.00 4.78% Total -- 1,600,042,900.00 69.76% Other note □ Applicable √ Not applicable Principal suppliers Total purchase of top 5 Suppliers(RMB) 849,718,112.61 Percentage of total purchase of top 5 suppliers In total 44.50% annual purchase(% Proportion of purchase amount from the top 5 suppliers in the total purchase amount from the related parties in 0.00% the year Information about the top 5 suppliers No Name Amount(RMB) Proportion(%) 1 Supplier 1 226,545,838.65 11.86% 2 Supplier 2 191,071,560.06 10.01% 3 Supplier 3 151,236,748.24 7.92% 4 Supplier 4 147,731,715.41 7.74% 5 Supplier 5 133,132,250.24 6.97% Total -- 849,718,112.61 44.50% Other note □ Applicable √Not applicable (3)Expenses In RMB Increase/Dec 2021 2020 Notes rease(%) Mainly due to attributable to the purchase of new Sale expenses 37,973,336.39 28,644,230.87 32.57% material insurance and the increase in sales staff remuneration. Administrative 122,088,830.15 105,094,934.36 16.17% 20 2021 Annual Report expenses Financial Mainly due to the year-on-year increase in foreign -130,344.09 8,287,888.28 -101.57% expenses exchange gains. R&D Mainly due to the increase in research and 103,508,764.53 67,160,964.22 54.12% expenses development investment in the current period. (4) Research and Development √ Applicable □ Not applicable Expected impact on the Name of main R&D Project Project purpose Goal to be achieved future development of the project progress Company R&D of key Achieve mass production Realize mass production Enrich the company's technologies of of high-performance supply and application of product categories and high-performance completed polarizers for large-size domestically produced enhance the company's polarizer for large-size display panels TV products product competitiveness display panel With the continuous Some increase of 4K and 8K Development of POL products have products of panel to satisfy the market's complete client Products for TV with passed the manufacturers, the needs authentication large size and high PPI client optical development of this project verification can meet the market demand for such polarizers Improve market Development of thin To achieve large-scale Realize mass production completed competitiveness in NB products production of the product supply notebook computer field Stabilize the continuous production process, determine the production Improve the company's Product development Meet product entry-level completed process guideline, and product competitiveness of vehicle polarizers verification requirements meet the entry-level and meet customer needs verification requirements of the product Enrich the company's product categories and enhance the company's Development of OLED To achieve large-scale partially Realize mass production product competitiveness; TV products production of the product completed supply lay the foundation for the subsequent development of high-optical products 21 2021 Annual Report Research and Enrich the company's application of key To achieve large-scale Realize mass production product categories and technologies of completed production of the product supply enhance the company's polarizers for IPS product competitiveness mobile phone Technical indicators Promote the localization R&D of polarizer Have the production reach a certain level, process of polarizer technology for OLED completed capacity of this product with the production products for OLED mobile mobile phone capacity of the product phones Development of OLED to satisfy the market's Complete customer nhance the company's completed wearable application needs verification of a product product competitiveness Development of To achieve large-scale Realize mass production enhance the company's completed ultra-wide VA products production of the product supply product competitiveness Technical indicators Development of Have the production reach a certain level, enhance the company's ultra-wide IPS completed capacity of this product with the production product competitiveness products capacity of the product Product development Enrich the company's of black-and-white To achieve large-scale Realize mass production product categories and completed display polarizer and production of the product supply enhance the company's sunglasses product competitiveness Protect the health of employees and make due Development of Fulfill the social Complete product contributions to improving environment-friendly responsibility of completed development and put into the environment; can PSA adhesive environmental protection production use achieve stable supply to customers and relieve supply risks Increase production R&D of key capacity and reduce The process can meet technology for satisfy customer's request completed material costs; improve the mass production supply polarizer extension company's product performance Company's research and development personnel situation 2021 2020 Increase /decrease Number of Research and Development persons (persons) 145 169 -14.20% Proportion of Research and Development persons 10.61% 12.34% -1.73% Academic structure of R&D personnel —— —— —— Age composition of R&D personnel —— —— —— The Company's R & D investment situation 22 2021 Annual Report Increase 2021 2020 /decrease Amount of Research and Development Investment (In RMB) 103,508,764.53 67,160,964.22 54.12% Proportion of Research and Development Investment of Operation Revenue 4.51% 3.18% 1.33% Amount of Research and Development Investment Capitalization (In RMB) 0.00 0.00 Proportion of Capitalization Research and Development Investment of 0.00% 0.00% Research and Development Investment Reasons and influence of significant changes in R&D personnel composition of the Company □ Applicable √Not applicable The Reason of the Prominent Change in Total Amount of Research and Development Input Occupying the Business Income Year on Year □ Applicable √Not applicable Reasons for the drastic change of capitalization rate of R&D investment and its rationality explanation □ Applicable √Not applicable (5)Cash Flow In RMB Increase/Decrease( Items 2021 2020 %) Subtotal of cash inflow received from operation activities 2,433,304,906.36 2,067,129,172.79 17.71% Subtotal of cash outflow received from operation activities 2,437,741,886.71 2,065,198,240.03 18.04% Net cash flow arising from operating activities -4,436,980.35 1,930,932.76 -329.78% Subtotal of cash inflow received from investing activities 1,154,092,748.71 3,253,008,414.70 -64.52% Subtotal of cash outflow for investment activities 1,412,622,193.08 3,572,079,379.14 -60.45% Net cash flow arising from investment activities -258,529,444.37 -319,070,964.44 18.97% Subtotal cash inflow received from financing activities 339,219,000.00 342,660,000.00 -1.00% Subtotal cash outflow for financing activities 50,944,964.13 12,855,758.88 296.28% Net cash flow arising from financing activities 288,274,035.87 329,804,241.12 -12.59% Net increase in cash and cash equivalents 24,071,196.77 9,690,648.77 148.40% Notes to the year-on-year change of the relevant data □ Applicable √ Not applicable Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company √ Applicable □ Not applicable During the reporting period, the net cash flow from the Company's operating activities was -4,436,980.35 yuan. The net profit in the consolidated statement of the company was 75,114,666.20 yuan, with significant difference between the two, mainly due to use of credit sales in the form of sales. The difference During the 23 2021 Annual Report reporting period between the net cash flow generated by the company's operating activities and the net profit of the consolidated statement is detailed in Section 10, VII, 58 (1) "Supplementary Information on Cash Flow Statement" of this report. V.Analysis of Non-core Business √ Applicable □Not applicable In RMB Proportion in Sustainable (yes or Amount Explanation of cause total profit no) Obtaining dividends , contract fees and Have the Investment income 22,663,013.06 26.28% Money fund investment income, etc. sustainability Mainly due to the changes in the Gains and losses on Have the 2,150,943.40 2.49% non-current financial assets and Structural changes in fair value sustainability deposit value -83,508,720.3 Mainly from the provision of inventory Have the Impairment of assets -96.84% 3 depreciation loss. sustainability Non-operating income 21,285,786.64 24.68% Mainly insurance claims. Not sustainable. Mainly due to the loss of non-current Non-operating expense 1,686,263.35 1.96% Not sustainable. assets being destroyed and scrapped. Have the Other income 19,643,379.33 22.78% Mainly for government subsidies. sustainability VI.Condition of Asset and Liabilities (1)Condition of Asset Causing Significant Change In RMB End of 2021 End of 2020 Proport ion Proportion Proportion increas Notes to the significant change Amount in the total Amount in the total e/decre assets(%) assets(%) ase 302,472,828. 279,087,236. Monetary fund 5.50% 5.62% -0.12% 60 95 Accounts 479,998,708. 547,310,217. 8.73% 11.01% -2.28% receivable 57 90 667,461,447. 480,847,581. Inventories 12.14% 9.68% 2.46% 03 44 Investment real 106,217,779. 110,572,471. 1.93% 2.23% -0.30% estate 76 92 24 2021 Annual Report Long-term 133,022,325. 147,929,137. equity 2.42% 2.98% -0.56% 77 23 investment 2,424,741,25 790,183,905. Mainly due to the transfer of the Fixed assets 44.11% 15.90% 28.21% 2.86 38 Line 7 project. Construction in 71,482,031.0 1,301,750,14 -24.89 Mainly due to the transfer of the 1.30% 26.19% process 8 1.12 % Line 7 project. Use right assets 9,221,189.37 0.17% 0.17% Short-term 37,575,113.8 0.68% 0.68% borrowing 3 This was mainly due to the increase Contract 68,955.21 0.00% 279,631.27 0.01% -0.01% in loans borrowed for the Line 7 liabilities project during the year. Long-term 683,016,243. 343,100,174. 12.43% 6.90% 5.53% borrowing 25 35 Lease liabilities 4,243,855.71 0.08% 0.08% Transaction 586,540,735. 684,617,260. 10.67% 13.78% -3.11% financial assets 16 06 Mainly due to the payment of Other 140,185,750. 2.55% 5,265,002.71 0.11% 2.44% customs deposits for newly imported receivables 40 raw materials. Overseas assets account for a relatively high proportion. □ Applicable √ Not applicable (2)Asset and Liabilities Measured by Fair Value √Applicable □ Not applicable In RMB Gain/Loss on fair Cumulative Impairment Purchased Sold value fair value provisions amount in amount in Opening Other Closing Items change in change in the the the amount changes amount the recorded reporting reporting reporting reporting into equity period period period period Financial assets 1. Financial assets 684,617,260.0 712,000,000.0 810,076,524.9 586,540,73 measured at 6 0 0 5.16 fair value through 25 2021 Annual Report profit or loss (excluding derivative financial assets) 4.Other equity 190,607,427.5 186,033,82 -4,573,597.82 Instrument 4 9.72 Investment Subtotal of 875,224,687.6 712,000,000.0 810,076,524.9 772,574,56 financial -4,573,597.82 0.00 0.00 0 0 0 4.88 assets non-current 30,650,943. financial 30,650,943.40 2,150,943.40 2,150,943.40 40 assets 905,875,631.0 712,000,000.0 812,227,468.3 803,225,50 Total 2,150,943.40 -4,573,597.82 0.00 0.00 0 0 0 8.28 Financial 0.00 0.00 Liability Other changes None Did great change take place in measurement of the principal assets in the reporting period ? □ Yes √ No (3) Restricted asset rights as of the end of this Reporting Period Subsidiary SAPO Photoelectric uses part of its self-owned properties to apply for a mortgage loan from a syndicate with Bank of Communications Co., Ltd. Shenzhen Branch as the lead bank, and the company provides guarantees for the mortgage loan. For details, please refer to http://www.cninfo.com.cn .cninfo.com.cn) "Announcement on the Company's Application for Bank Mortgage Guarantees for Subsidiaries" (No. :2020-19), "Announcement on the Progress of the Company Providing Guarantees for Subsidiaries"(No.:2020-46) VII. Investment situation (1) General □ Applicable √Not applicable (2)Condition of Acquiring Significant Share Right Investment during the Report Period □ Applicable √Not applicable 26 2021 Annual Report (3)Situation of the Significant Non-equity Investment Undergoing in the Report Period □ Applicable √ Not applicable (4)Investment of Financial Asset 1.Securities investment □ Applicable √ Not applicable 2.Investment in Derivatives □ Applicable √ Not applicable The Company had no investment in derivatives in the reporting period. (5)Application of the raised capital √ Applicable □ Not applicable 1. General application of the raised funds √ Applicable □ Not applicable In RMB Propor Amount tion of of raised Total Total Accumulat raised Amount capital Amount Use and amount ive amount capital of the Total of which of the Whereas of the of raised of Raised Total amount the Unused outs of Year of Way of raised capital of which Fund raised of purpose Raised the raising raising fund which the the with capital Raised was Fund at Unused used at purpose purpos over 2 Funds changed the Raised the has been e has Years’ in the Current Fund period changed been Idling report Period chang period ed (%) Transfer to the compan y's own Non-pub 32.16 account 2013 96,175.1 0.26 76,261.7 0 30,927.22 1,228.01 lic issue % for permane nt replenis hment of 27 2021 Annual Report working capital 32.16 Total -- 96,175.1 0.26 76,261.7 0 30,927.22 1,228.01 -- 0 % Note to use of raised capital During the reporting period, the Company actually used the raised funds of 2,600 yuan, and the accumulated use of raised funds was 762.617 million yuan, of which 100 yuan of raised funds was actually used for the second phase of the line 6 project of TFT-LCD polarizer-and the accumulated use of raised funds for it was352.6635 million yuan; the actual use of the raised funds for the 7th line project was 2,500 yuan, with the accumulated use of raised funds for it was 409.9535 million yuan. 2. Promised projects of raised capital √ Applicable □ Not applicable I n RMB10,000 Date Accum Invest when Has ulated ment Project the any Total Total Amoun amount progres Has the change project Benefit materia raised invest t investe s ended predict d has realize l Committed capital ment investe d at the the ed (includi reached d in the change investment projects investe after d in the end of reporti result ng the reporti taken and investment d as adjust reporti the ng be partial predict ng place commit ment ng reporti period( realize change ed period in ted (1) period ng d ) applica feasibil period( %)(3)= ble ity 2) ( 2)(1) status Committed investment projects Phase-II project of 96,175. 35,266. June 6,337.6 polarizer sheet for Yes 70,034 0.01 50.36% No Yes 1 35 7,2018 3 TFT-LCD (Line 6) The utilization of the July Not 40,995. -10,718 surplus raised funds No 0.25 11,202 applica No 35 .52 (Line 7 project) 1 ble Subtotal of 96,175. 76,261. -4,380. committed -- 70,034 0.26 -- -- -- -- 1 7 89 investment projects Subtotal of committed investment None 96,175. 76,261. -4,380. Total -- 70,034 0.26 -- -- -- -- 1 7 89 28 2021 Annual Report Situation about not coming up to schemed progress or Not applicable expected revenue and the reason ( in specific project) According to the latest situation of the industry development, the original second phase construction scheme of the TFT-LCD polarizer was optimized, and then according to the results concluded by the experts, the company decided to continue to promote the construction of the No.6 line project. At the same time, in the light of there was a large funds gap between the actual raised capital and the planned Notes to significant raised capital for the second phase project, then by comprehensive considerations of the company’s change in feasibility production line scale and the operation pressure, the company decided to terminate the project of No.7 of the project line, and the corresponding amount of funds of 309.2722 million yuan(including interests) for No.7 line project shall be changed for permanently supplementing the liquidity. The Proposal on Alteration of the Use of Part of the Raised Capital for the Second Phase Project of TFT-LCD Polarizer was examined and approved in the 2015 annual shareholder meeting on April 21, 2016.. Amount, application and application Not appli8cable progress of the uncooked proceeds About the change of the implementation site of the projects Not appli8cable invested with the proceeds Adjustment of the implementation way Not appli8cable of investment funded by raised capital About the initial investment in the projects planned to Not appli8cable be invested with the proceeds and the replacement Using the idle proceeds to supplement the Not appli8cable working capital on temporary basis Balance of the Applicable proceeds in process 1.On August 31, 2018, in the company's second extraordinary shareholders’ meeting of 2018, the 29 2021 Annual Report of project “Proposal on the Use of Surplus Raised Funds to Invest in the Large-scale TV Polarizer Industrialization implementation and Project (Line 7)” was reviewed and approved, agreeing to continue to deposit 134.7172 million yuan in the cause the original special account of raised funds for the follow-up expenditure of line 6 project and the remaining surplus raised funds shall be used for the investment of line 7 project, with the amount shall be subject to the interest settlement of the bank on the day the funds are transferred out. According to the use arrangement for the surplus raised funds, on November 12, 2018, the Company transferred the surplus raised funds for the No. 6 line project by 405.8311 million yuan to the newly opened special account of raised funds for project of Line 7, which will be used for the ultra-large-size TV polarizer industrialization project (Line 7), and as of November 12, 2018, the balance of the special account for raised funds of line 6 was 80.3569 million yuan. The reasons for the surplus of the raised funds were as follows: 1. the interest income and the investment income of the bank wealth management products were generated during the deposit of the raised funds; 2.to grasp the opportunity of the rapid development of the domestic polarizer industry and accelerate the construction of the No. 6 line project, the Company had in advance invested some funds in the second phase of the polarizer project of Line 6, and in view of the fact that the funds raised at the time were in place, as there was a large funding gap between the actual raised funds and the planned and the original investment project needed to be re-demonstrated, the Company did not replace the advance investment in time after the raised funds were received; 3. the second phase of the polarizer project was subsidized by the National Development and Reform Commission and the Shenzhen Municipal Government after the project was established ,which had been all put into the project construction according to the requirements, thereby reduced the investment of the raised funds accordingly; 4. to ensure the original investment project to have a good market prospect and profitability, the Company optimized the construction plan of the original raised-funds investment project of No. 6 line, and it adopted the cost control, optimized the production process and took other measures to achieve reasonable savings under the premise of ensuring the original design and technical conditions of the project. 2. On March 10, 2021, the Company held the second meeting of the Eighth Board of Directors, which deliberated and approved the Proposal on the Permanent Replenishment of Working Capital with Surplus Raised Funds. In view of the completion of Line 6 of the phase II project of polarizer for TFT-LCD, the surplus raised funds of Line 6 of RMB 12,280,100 (including the accumulated net amount of bank deposit interest minus bank fees and RMB 7,307,100 of equipment balance) will be used to permanently replenish working capital for daily production and operation use. The reasons for the surplus of the raised funds are as follows: 1. During the implementation of Line 6 project, the Company strictly followed the relevant regulations on the use of raised funds, carefully used the raised funds, strengthened the cost control, supervision and management during the project construction and initial operation on the premise of ensuring the quality of raised investment projects, reasonably reduced the project investment amount and initial working capital, and saved the expenditure of raised funds; During the implementation of the project, idle raised funds generated certain interest income. By December 31, 2021, the Line 6 project had been closed, and the surplus raised funds of special About application account of RMB 12,280,100 was transferred to the Company's own account for permanent and status of the replenishment of working capital. On March 29, 2021, the bank cancellation procedure for special proceeds unused account of Line 6 was completed. All the raised funds in the special account of Line 7 project have been used as required, and the bank cancellation procedures for special account of Line 7 were completed on 30 2021 Annual Report March 29, 2021. By December 31, 2021, the phase II of Line 6 project had accumulated investment of RMB 699,544,200, Problems existing in accounting for 99.89% of the changed total investment of RMB 700,340,000, of which the actually paid application of the investment was RMB 689,650,000 (RMB 352,663,500 of raised funds and RMB 336,986,500 of proceeds and the self-owned funds and government funds). information By December 31, 2021, the accumulative investment contract amount of Line 7 project was RMB disclosure or other 2,091,244,100, and the actual payment was RMB 2,017,518,400 (RMB 409,953,500 of raised funds, issues RMB 1,607,564,900 of self-owned funds and government funds). 3. Changes of raised funds projects □ Applicable √ Not applicable None VIII. Sales of major assets and equity (1) Sales of major assets □ Applicable √ Not applicable The Company had no sales of major assets in the reporting period. (2)Sales of major equity □ Applicable √ Not applicable IX. Analysis of the Main Share Holding Companies and Share Participating Companies √ Applicable □ Not applicable Situation of Main Subsidiaries and the Joint-stock Company with over 10% net profit influencing to the Company In RMB Company Main Registered Total Operating Type Net assets Turnover Net Profit name business capital assets profit Domestic Shenzhen Trade, Lisi 2,360,000. 35,749,173 28,821,110 9,073,086. 2,255,295. 2,356,126. Subsidiary Property Industrial 00 .47 .35 79 59 60 manageme Co., Ltd. nt Accommo Shenzhen dation, 10,005,300 22,050,733 20,368,204 6,926,914. Huaqiang Subsidiary 298,548.24 285,092.35 business .00 .79 .89 89 Hotel center; 31 2021 Annual Report Shenzhen Shenfang Property 1,600,400. 11,649,993 6,951,045. 21,854,935 3,368,024. 2,518,397. Real Estate Subsidiary manageme 00 .83 03 .99 11 08 Manageme nt nt Co., Ltd. Production Shenzhen of fully Beauty electronic 13,000,000 46,067,490 18,072,122 55,169,650 Century Subsidiary jacquard 630,605.93 545,674.66 .00 .40 .93 .79 Garment knitting Co., Ltd. whole shape Production SAPO and sales 583,333,33 4,237,652, 2,858,788, 2,128,258, 38,497,930 40,484,325 Photoelectr Subsidiary of 3. 00 544.02 617.26 070.01 .46 .87 ic polarizer Shenzhen Operating Textile import and 5,000,000. -150,452.3 12,833,113 Import & Subsidiary 0.00 0.00 0.00 export 00 7 .61 Export Co., business Ltd. Shengtou Sales of HKD10,00 6,009,898. 5,984,077. -155,168.2 (HK)Co., Subsidiary 0.00 118,818.86 polarizer 0 07 83 0 Ltd. Shenzhen Shenfang Property Sungang 10,248,835 8,274,062. 4,297,226. 2,387,107. 2,222,849. Subsidiary manageme 1,000,000 Real Estate .38 49 09 59 16 nt Manageme nt Co., Ltd. Subsidiaries obtained or disposed in the reporting period √ Applicable □ Not applicable Means of acquisition and disposal of Impact on overall production, operation and Company name subsidiaries during the reporting period performance The purpose of this cancellation of the subsidiary is to improve the operational Shenzhen Textile Import Withdraw efficiency of state-owned assets, and the impact & Export Co., Ltd. on the current profit and loss of the company is 7.6999 million. Note The financial data of SAPO Photoelectric mentioned in the table above are the financial statements data of its 32 2021 Annual Report parent company and non-consolidated statements data. Shenzhen Textile Import & Export Co., Ltd. , Shengtou(HK) Co., Ltd.are SAPO Photoelectric. For details of the fluctuation of subsidiary SAPO Photoelectric's performance and the reasons for the change, please refer to "IV. Analysis of main business" in Section III Management Discussion and Analysis. X.Structured vehicle controlled by the Company □ Applicable √ Not applicable XI. Prospect for future development of the Company 1. The Development Trend of the Industry (1) Industry competition pattern Polarizer industry is a highly concentrated industry. Currently, there are about 10 major polarizer manufacturers worldwide, mainly in Japan, mainland China, South Korea and Taiwan Province of China. The main market share is occupied by Japanese and Chinese mainland manufacturers, while the overall production capacity of South Korea and Taiwan Province is low. (2) Industry trends In recent years, Chinese mainland's new display industry has always maintained positive growth, its overall growth rate has exceeded the global industrial growth rate for many years, its industrial structure has been constantly improved, and its market competitiveness has been steadily improved. Relying on several TFT-LCD panel production lines, the LCD panel industry in mainland China ranks first in the world in terms of revenue and shipping area. Compared with the rapid development of new display industry in mainland China, overseas manufacturers choose to gradually shrink and withdraw, for example, Samsung Display sells its LCD panel production line and LG Chem sells its LCD polarizer business. With the withdrawal of foreign manufacturers, high-quality industrial assets are transferred to mainland China, and the focus of the new display industry is accelerating to concentrate in mainland China. According to the latest research of Omdia, it is estimated that from 2023, the capacity area share of Chinese mainland manufacturers will reach more than 70% of the global total. Affected by this, the market demand for polarizers in Chinese mainland has increased rapidly in recent years. According to Omdia research, driven by the development of display panel industry, the global total demand area for polarizers is expected to increase from 574 million square meters in 2020 to 669 million square meters in 2025, and the domestic market demand area for polarizers will reach 480 million square meters by 2025, accounting for more than 70% of the global total demand. It is a good development opportunity for mainland polarizer manufacturers with market advantages, policy advantages and geographical advantages. 2. Company development strategy Relying on the existing business foundation, the Company will actively plan for business innovation and upgrading through two paths of tapping the potential of stock business and increasing business investment and empowerment, vigorously implement the "polarizer+" strategy, promote the core business of polarizers to become better and stronger, and meanwhile, choose the right opportunity to extend to upstream raw materials, promote the development of polarizer integration business, actively expand other advanced new material fields, and strive to build a world-class new material technology group. 3. Possible risks (1) Macro economic risk 33 2021 Annual Report As the COVID-19 is still spreading all over the world, there are still weak links in the prevention and control of domestic pandemic, the foundation of economic recovery is still not solid, the consumption of residents is still restricted, and the domestic demand economy will continue to be under pressure. As a member of the upstream manufacturers in the monitor market, the Company can't rule out the risk that unpredictable macroeconomic fluctuations may affect the Company's performance. (2) Market risk The polarizer industry is an important part of China's future manufacturing development. The demand for display panels and the development of corresponding technologies are changing quickly. However, the domestic substitution process of the polarizer industry is under way. With the gradual mass production of the 10.5 generation line, the super-large size market will usher in new changes. If the Company's technology and products can't respond to the needs of application fields in time, the wide polarizer products and applications fall short of expectations, or the market competition intensifies, which leads to the price reduction of display products and the upward transmission of the price reduction pressure to the polarizer market, it will have an adverse impact on the Company. (3) Risk of raw materials There is a high barrier in the core production technology of upstream materials of polarizers, which is basically monopolized by foreign manufacturers, with low localization rate. Currently, the key raw materials for manufacturing polarizers, such as PVA film and TAC film, are basically monopolized by Japanese enterprises, and the production line and production technology of upstream supporting raw materials are constrained by Japan, while the prices of major film materials are affected by the supplier's capacity, market demand and yen exchange rate, which affects the unit cost of the Company's products. (4) Work priorities in 2022 1. Continue to improve the profitability of the main business Vigorously implement the four measures of "capacity scale, product differentiation, innovation ecology, and lean management". First, further promote the oversized production capacity of the Company's polarizer business and improve the overall production capacity; Second, promote product differentiation, strengthen the technical research on OLED polarizers, vehicle polarizers and other products, and continuously optimize the product structure; Third, promote the ecological innovation and build a standardized and efficient market-oriented R&D management system; Fourth, promote lean management, improve product quality and production efficiency, and adopt diversified measures to reduce costs and increase efficiency. 2. Promote the ramp-up mass production process of Line 7 project Ensure the maximum continuous production of Line 7 project, make every effort to shorten the ramp up time of the production line, and promote the production with full activation of production line. First, strengthen market expansion and obtain orders for large-size products; Second, continuously improve speed and yield; Third, ensure the supply of raw materials. 3. Ensure the steady growth of property business and provide effective support for the development of the Company Property management enterprises shall closely follow the changes of the surrounding business types, operate around the rental rate and capital recovery rate, overcome the problems of old property, poor conditions and backward facilities, continue to tap potential and increase efficiency, improve service level and enhance operating 34 2021 Annual Report efficiency. 4. Carry out refined management in an all-round way, and create a resource-efficient enterprise Define the management goal of tapping potential and increasing efficiency, and fully implement refined management. For production, quality, inventory, sales and other aspects, refine management units, improve management methods, achieve refinement, quantification and standardization of management, steadily enhance the Company's market competitiveness, and create a resource-efficient enterprise with "high efficiency, low consumption and fine management". 5. Further deepen the market-oriented talent management mechanism Reorganize the echelon of reserve talents for key positions, improve the management mechanism of selection, training and assessment of reserve talents, introduce talents through multiple channels, train in multiple ways, conduct multi-directional assessment, innovate the talent management mechanism, build a platform for talent selection and employment, and provide sound human resources support for the sustainable development of the Group. 6. Well ensure epidemic prevention and control and work safety, and maintain the harmony and stability of the enterprise First, enhance employees' awareness of health protection, insist on fully ensuring epidemic prevention and dynamic data in key places, and well ensure normalized prevention and control of COVID-19 to ensure neglecting neither epidemic prevention nor production. Second, strengthen the boundary line awareness, firmly establish the concept of safe development, solidly carry out safety management, speed up the reform and innovation of safety supervision, implement the safety responsibility system to the letter, deepen the investigation and management of hidden dangers, continuously improve the Company's work safety management level, and build a strong safety management foundation. 7. Strengthen party building and innovate enterprise culture Guided by Xi Jinping's thought of socialism with Chinese characteristics in the new era, fully implement the spirit of the Sixth Plenary Session of the Nineteenth CPC Central Committee and the 20th CPC National Congress, continue to carry out in-depth study of party history, adhere to the guidance of high-quality party building to guarantee high-quality development unswervingly, and further push forward the "six-degree party building" work in a down-to-earth manner to protect the Company's sustained and healthy development. XII. Particulars about researches, visits and interviews received in this reporting period √ Applicable □Not applicable The main content of the Index of the basic Reception Reception The way of Object type of Reception discussion and situation of the time place reception reception person the survey information provided Meeting room The main For details, please March Great Wall on the sixth Field research Organization reasons for the refer to the "000045 18,2021 securities floor of the quarter-on-qua Shenzhen Textile A 35 2021 Annual Report Company rter increase in Research Activity the Company's Information gross profit 20210319" (No. margin in the 2021-01) by the first three company quarters and http://www.cninfo.c the price of om.cn. polarizers, the release of production capacity of Line 7, etc. The Company's provision for inventory depreciation, the Company's polarizer business gross profit margin, the Company's For details, please operating refer to the "000045 conditions in Shenzhen Textile A the first Meeting room Research Activity quarter, the March on the sixth The majority Information Other Other main reasons 25,2021 floor of the of investors 20210325" (No. for the Company 2021-02) by the increase in the company cost of http://www.cninfo.c polarizer om.cn. materials, and the impact of the epidemic on the Company's performance due to the reduction of rent affected by epidemic. Meeting room Asset For details, please Great Wall Aptil2,2021 on the sixth Field research Organization impairment refer to the "000045 securities floor of the information in Shenzhen Textile A 36 2021 Annual Report Company 2020 and Research Activity 2021, reasons Information for lower 20210406" (No. gross profit 2021-03) by the margins than company other http://www.cninfo.c companies, om.cn. and the progress of Line 7 production, etc. The Company's production capacity, the production For details, please progress of refer to the "000045 Line 7, the Shenzhen Textile A main products Meeting room Fuhua Research Activity produced by on the sixth Securities, Information April 8,2021 Field research Organization Line 7, the floor of the Sinolink 20210409" (No. Company's Company Securities 2021-04) by the advantages in company polarizer http://www.cninfo.c production, om.cn. and the overall supply and demand of the polarizer industry. The future development For details, please trend and refer to the "000045 price trend of Shenzhen Textile A the polarizer Meeting room Research Activity industry, on the sixth Great Wall Information July 15,2021 Field research Organization whether there floor of the securities 20210716" (No. will be excess Company 2021-05) by the production company capacity in the http://www.cninfo.c polarizer om.cn. industry, the Company's 37 2021 Annual Report measures to reduce costs, the price of upstream raw materials, the progress of Line 7, the progress of the Company's employee stock ownership plan, etc. The Company's operation in Great Wall the first half of securities,Chin the year, the a Merchants impact of For details, please Fund, panel prices refer to the "000045 Changsheng on the price of Shenzhen Textile A Fund, polarizers, Meeting room Research Activity Penghua whether September on the sixth Information By phone Organization Fund, polarizaers 1,2021 floor of the 20210902" (No. Shenwan will lead to Company 2021-06) by the Fund, China excess company Intemational production http://www.cninfo.c Fund, China capacity, the om.cn. Everwin Asset current and Dacheng product Fund. structure, and the customers of Line 7 products. The For details, please Company's refer to the "000045 positioning Shenzhen Textile A Meeting room Cedar capital, and Research Activity September on the sixth Rongwei Jiye development Field research Organization Information 7,2021 floor of the Asset direction in 20210908" (No. Company Management the next few 2021-07) by the years, the company impact of the http://www.cninfo.c decline in 38 2021 Annual Report panel prices om.cn. on the trend of polarizer prices, the reasons for the lower gross profit margin compared to other manufacturers, the Company's product structure, etc The situation of Line 7 and its main customers, For details, please suppliers of refer to the "000045 upstream raw Shenzhen Textile A Meeting room Fangzheng materials for Research Activity September on the sixth Securities, polarizers, Information Field research Organization 17,2021 floor of the Xinda Aoyin reasons for the 20210922" (No. Company Fund Company's 2021-08) by the low gross company profit margin, http://www.cninfo.c and the om.cn. Company's plan to change its name. The reasons why the Company's For details, please performance refer to the "000045 has increased Shenzhen Textile A significantly Meeting room Research Activity compared with September on the sixth Chuangjin Information Field research Organization previous 23,2021 floor of the Hexin Fund 20210926" (No. years, the Company 2021-09) by the reasons why company the Company's http://www.cninfo.c gross profit om.cn. margin is lower than that of 39 2021 Annual Report comparable manufacturers, the main factors that affect the relative high price of polarizers. The Company's measures to deal with the For details, please downward refer to the "000045 revision of the Shenzhen Textile A Great Wall panel market, Meeting room Research Activity securities, the Company's October on the sixth Information Field research Organization Yinhua Fund, main 27,2021 floor of the 202101029" (No. Xinda Aoyin customers, the Company 2021-10) by the Fund Company's company product http://www.cninfo.c structure, the om.cn. main products of Line 7, the progress of Line 7, etc. Operating conditions in the third Great Wall quarter of securities, 2021, the For details, please Yimin Fund, impact of the refer to the "000045 Zheshang panel price Shenzhen Textile A Securities , revision on the Meeting room Research Activity China Company's November on the sixth Information Field research Organization Everwin polarizer 2,2021 floor of the 20211103" (No. Asset, price, the Company 2021-11) by the Sinolink ramp-up company Securities, progress and http://www.cninfo.c Shenwan yield of Line om.cn. Assets 7, and the Management Company's development plan in the field of 40 2021 Annual Report polarizers. The Company's future plan for the development of the For details, please polarizer refer to the "000045 business, the Shenzhen Textile A specific Meeting room Research Activity products of November on the sixth Information Field research Organization Cedar capital the Company's 4,2021 floor of the 20211104" (No. polarizers for Company 2021-12) by the OLEDTV, the company research and http://www.cninfo.c development om.cn. progress of vehicle products, and the Company's cost reduction measures. Suppliers of upstream raw materials, For details, please measures refer to the "000045 taken by the Shenzhen Textile A Meeting room Company to Research Activity Runyingda, November on the sixth reduce costs, Information Field research Organization Zhengrui 23,2021 floor of the composition 20211125" (No. Huadao Company of B-end 2021-14) by the customers and company C-end http://www.cninfo.c customers of om.cn. downstream products, etc. The main For details, please reasons for the refer to the "000045 Meeting room Guotai Junan, improvement Shenzhen Textile A November on the sixth Field research Organization Lingzhan of the Research Activity 24,2021 floor of the Capital Company's Information Company operating 20211125" (No. performance, 2021-15) by the 41 2021 Annual Report the Company's company main http://www.cninfo.c customers and om.cn. product structure, the main matching panel production lines of Line 7, the relationship between panel prices and polarizer prices, etc. 42 2021 Annual Report IV. Corporate Governance I. General situation During the reporting period, the Company operated in strict accordance with the requirements of relevant laws, regulations and normative documents, such as Securities Law, Company Law, Governance Guidelines for Listed Companies, Guidelines for Self-discipline Supervision of Listed Companies in Shenzhen Stock Exchange No.1-Standard Operation of Listed Companies on Main Board, and strengthened risk management and control to ensure the healthy and stable development of the Company. At present, the Company is with basically sound governance systems, standardized operation, and refined corporate governance structure, which meets the requirements of the normative documents on the governance of listed companies issued by China Securities Regulatory Commission. In 2021, company held a total of 4 general meetings, convened general meetings, standardized voting procedures to safeguard the effectiveness and legality in strict accordance with the regulations and requirements of Corporation Law, Articles of Corporation and Rule of Procedure of Shareholders' Meeting. Companies actively protected the voting rights of minority investors, and general meetings were convened in the form of live network to adequately assure small investors of their rights to exercise. In 2021, the board of directors held 11 meetings, and the convening and voting procedures were all conducted in strict accordance with the Articles of Corporation and Rule of Procedure of Shareholders' Meeting. All the directors performed directors ' duties, exercise directors ’ rights, attended related meetings and actively participated in the training and became familiar with relevant laws and regulations with serious, diligent and honest attitudes. Independent directors independently performed their duties in strict accordance with Articles of Corporation, The independent director system and other relevant laws and regulations, expressed fully their independent opinions on corporate operation, decision-making, and important matters, etc. Strategy, audit, remuneration, evaluation, nomination committees were established under board of directors, all committees functioned properly, and performed duties such as internal audits, compensation assessment, nomination of senior management personnel, and provided scientific and professional advisory opinions for board of directors ’ decision-making. In 2021, the board of supervisors held 9 meetings. The board of supervisors strictly followed the requirements of Articles of Corporation and Rules of procedure of the board of supervisors and other relevant laws and regulations, supervised the legal compliance of the duties performed by company's financial personnel and directors, managers and other senior management personnel in the aim of maintaining the legitimate rights and interests of the company and its shareholders. All the supervisors fulfilled their obligations, exercised their rights according to the laws. The convening and voting procedures of the board of supervisors were legal, and the resolutions were legal and valid. The establishment and implementation of board of supervisors played an active role in improving corporate governance structure and regulating corporate operations. Moreover, the Company carried out the special work Blue Sky Action according to Notification on Implementing Special Work where Investors Protect Blue Sky Action published by Shenzhen Securities Bureau to enhance the quality of information disclosure as the key point, to continuously perfect the communication mechanism and to promote the normative development of the Company. various platforms were made full use of, such as telephone, e-mail, website, especially the interactive platform of investors in Shenzhen Stock Exchange, solved questions brought by investors, and communicated with medium and small investors interactively, and ensure all the investors obtained equal opportunities for informal access. Meanwhile, in the aim of improving the transparency of listed companies, company accepted investors’ on-site investigation to have comprehensive 43 2021 Annual Report understandings of the company's business situation through face-to-face communication with management, also urged the company established a responsibility to return on investors, improved and enhanced the corporate governance standards. Meanwhile, the Company continued to perfect the voting mechanism for minority investors. In 2021, the minority investors’ voting was counted separately at each of the 4 shareholder’ s meetings, and whose result was disclosed at the decision announcement at the shareholder’s meeting, which fully guaranteed the execution of power of the minority investors In 2021, according to the State Council's Opinions on Further Improving the Quality of Listed Companies (GF [2020] No.14) and the Shenzhen Securities Regulatory Bureau's Notice on Promoting Listed Companies in Jurisdiction to Implement Main Responsibilities, Improve Governance Level and Achieve High Quality Development (SZJGS Zi [2020] No.128), the Company actively formulated self-inspection work plans, organized directors, supervisors and senior management personnel of the Company and important subsidiaries to carry out special study, set up special working groups to implement self-inspection, found out potential risks and outstanding problems that restrict the quality improvement of the Company, and formulated feasible follow-up rectification plans. The Company has reported the Self-inspection Report and Rectification Plan on Implementing Main Responsibility, Improving Governance Level and Achieving High-quality Development to Shenzhen Securities Regulatory Bureau, and will push forward the quality improvement of listed companies according to the above rectification plan. Does there exist any difference in compliance with the corporate governance , the PRC Company Law and the relevant provisions of CSRC □ Yes √No There exist no difference in compliance with the corporate governance , the PRC Company Law and the relevant provisions of CSRC. II. Independence and Completeness in business, personnel , assets, organization and finance The code of conduct of the controlling shareholders of the company did not go beyond the general meetings directly or indirectly to interfere with the decision-making and business activities, the company had independent and complete business and autonomous operation capacity , achieved “five point separation” in respect of personnel, financial, asset, agencies, business. III. Competition situations of the industry □ Applicable √ Not Applicable IV. Annual General Meeting and Extraordinary Shareholders’ Meetings in the Reporting Period 1.Annual General Meeting Investor Sessions Type of meeting Meeting Date Disclosure date Disclosure index participation ratio The First Provisional http://www.cninfo. provisional shareholders’ 49.30% February 2,2021 February 3,2021 com.cn) shareholders’ General meeting Announcement 44 2021 Annual Report General meeting No.:2021-11 of 2021 The Second http://www.cninfo. provisional Provisional com.cn) shareholders’ shareholders’ 49.27% February 10,2021 February 10,2021 Announcement General meeting General meeting No.:2021-14 of 2021 http://www.cninfo. 2020 Annual com.cn) Shareholders’ Shareholders’ 49.31% April 7,2021 April 8,2021 Announcement general meeting General Meeting No.:2021-31 The Third http://www.cninfo. provisional Provisional com.cn) shareholders’ shareholders’ 49.46% June 9,2021 June 10,2021 Announcement General meeting General meeting No.:2021-40 of 2021 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore □ Applicable √Not applicable 45 2021 Annual Report V. Information about Directors, Supervisors and Senior Executives (1)Basic situation Num The Num ber Reas Num numb ber of ons Share ber er of of share for Starti Expir s of share share s Other incre ng y held restri s s Offic Stock reduc chan ase Nam Positi date date at the cted held held e Sex Age optio ed in ges(s or e ons of of year- share in the at the status ns the hares decre tenur tenur begin s curre end curre ) ase e e (shar grant nt of the nt of e) ed(sh perio perio perio share ares) d(sha d(sha d(sha s res) res) res) Boar d chair man n, Febru Febru Zhan Secre In Fema ary ary g 42 0 0 0 0 0 0 0 tary y office le 10,20 9,202 Jian of the 21 4 party com mitt ee Depu ty Secre tary of the Party Febru Zhu July com In ary 133,5 110,2 40,50 93,00 Meiz Male 57 9,201 0 0 0 mi office 9,202 00 50 0 0 hu 7 ttee, 4 Direc tor, Gene ra l Mang 46 2021 Annual Report er Direc tor ,D eputy Secre Dece Febru Ning tary In mber ary 36,60 36,60 36,60 Maoz Male 46 0 0 0 0 of the office 14,20 9,202 0 0 0 ai Party 17 4 com mitte e Febru Febru Yin Direc In ary ary Male 47 0 0 0 0 0 0 0 Kefei tor office 10,20 9,202 21 4 Janua Febru Direc He In ry ary tor ,C Male 44 0 0 0 0 0 0 0 Fei office 16,20 9,202 FO 20 4 Febru Febru Sun Direc In ary ary Ming Male 40 0 0 0 0 0 0 0 tor office 10,20 9,202 hui 21 4 Indep Febru He ende July In ary Zuow nt Male 59 19,20 0 0 0 0 0 0 0 office 9,202 en Direc 17 4 tor Indep Febru Cai ende July In ary Yuan nt Male 52 19,20 0 0 0 0 0 0 0 office 9,202 qing Direc 17 4 tor Indep Janua Febru ende Wang In ry ary nt Male 38 0 0 0 0 0 0 0 Kai office 16,20 9,202 Direc 20 4 tor Chair Janua Febru Ma man In ry ary Male 55 0 0 0 0 0 0 0 Yi of the office 16,20 9,202 super 20 4 47 2021 Annual Report visor y com mitte e, Secre tary of the Com missi on for Disci pline Inspe ction Share Janua Febru Yuan holde In ry ary Shuw rs' Male 41 0 0 0 0 0 0 0 office 16,20 9,202 en Super 20 4 visor Empl Febru Febru Zhan oyee In Fema ary ary 16,80 16,80 16,80 Lume 52 0 0 0 0 super office le 10,20 9,202 0 0 0 i visor 21 4 Senio Septe Febru Le r In mber ary 36,60 36,60 36,60 Kunji Male 58 0 0 0 0 advis office 24,20 9,202 0 0 0 u er 21 4 Febru Liu Depu Appo July ary 39,60 38,85 36,60 Hong ty intme Male 57 19,20 0 0 0 3,000 9,202 0 0 0 lei GM nt 17 4 Septe Febru Depu Guan In mber ary ty Male 36 0 0 0 0 0 0 0 Fei office 22,20 9,202 GM 21 4 Secre Janua Febru tary Jiang In Fema ry ary 30,00 30,00 30,00 to the 51 0 0 0 0 Peng office le 16,20 9,202 0 0 0 board 15 4 of 48 2021 Annual Report direct ors Boar Janua Febru Zhu d Dimi ry ary 41,10 41,10 41,10 Male 58 0 0 0 0 Jun chair ssion 16,20 10,20 0 0 0 man 15 21 Febru July Huan Direc Dimi ary Male 47 19,20 0 0 0 0 0 0 0 g Yu tor ssion 10,20 17 21 Septe Febru Wang Direc Dimi mber ary Chua Male 49 0 0 0 0 0 0 0 tor ssion 1,201 10,20 n 8 21 Zhan Empl Augu Febru g oyee Dimi st ary 46 5,300 0 0 0 0 0 0 Xiao super ssion Male 9,201 10,20 dong visor 3 21 339,5 310,2 238,2 96,00 Total -- -- -- -- -- -- 0 0 -- 00 00 00 0 During the reporting period, whether there is dismissal of directors and supervisors and decruitment of senior managers □ Yes √ No Changes of directors, supervisors and senior executives √ Applicable □ Not applicable Name Positions Types Date Reason Board Left for term February Zhu Jun The term of office expires chairman expiration 10,2021 Left for term February Huang Yu Director The term of office expires expiration 10,2021 Left for term February Wang Chuan Director The term of office expires expiration 10,2021 Zhang Employee Left for term February The term of office expires Xiaodong supervisor expiration 10,2021 Employee February The former employee supervisor Left for term Zhan Lumei Elected supervisor 10,2021 expiration September The term of the deputy general manager has expired, Le Kunjiu Senior adviser Appointment 22,2021 and he is hired as a senior consultant to continue 49 2021 Annual Report serving in the company and its subsidiaries (2)Posts holding Professional background, work experience and main duties in the Company of existing directors, supervisors and senior management 1. Director Zhang Jian, female, born in June 1979, master's degree, member of the Communist Party of China. She has served as an office clerk of the marketing department of Shenzhen Postal Savings and Foreign Exchange Reserves Bureau, deputy director of the Finance Department of Shenzhen Development and Reform Commission (formerly Shenzhen Development and Reform Bureau), Senior Staff Member, Principal Staff Member and Deputy Director of the Industrial Coordination Department of Shenzhen Development and Reform Commission, Deputy Director of the Economic System Reform Department of Shenzhen Development and Reform Commission, and Party Member and Deputy General Manager of Shenzhen Kunpeng Equity Investment Management Co., Ltd. She is currently Party Secretary and Chairman of the Company, and concurrently serves as Party Committee Member, Deputy General Manager and Secretary of the Board of Directors of Shenzhen SEG Group Co.,Ltd., Director of Shenzhen SEG Co., Ltd., Vice Chairman of Shenzhen Huakong SEG Co., Ltd., Chairman of Shenzhen Daming Electronics Co., Ltd., Chairman of Shenzhen SEG High-tech Investment Co., Ltd. and Chairman of SEG (Hong Kong) Co., Ltd., ; He is currently the Party secretary and Chairman of the Company. Zhu Meizhu, Male, Born in November 1964, Master degree, Senior engineer, once served successively as chief Deputy general Manager of Enterprise Management Dept of the Company, Director of R& D Center, Assistant General Manager and Deputy General Manager, He serves as director and General Manager of the Company, and Board Chairman of SAPO Photoelectric Co., Ltd. Ning Maozai, male, born in July 1975, bachelor degree, senior administration engineer, Chinese Communist Party member; he has served successively as the office clerk of Shenzhen Guomao Automobile Industry Co., Ltd, the clerk, principal staff member, associate director and director of party-mass office of Shenzhen Property Development (Group) Corp. and hold a concurrent post of deputy human resource Deputy manager and manager; At present he holds the position of company director and the party secretary of the Company. Yin Kefei, male, born in July 1974, master degree, engineer, member of the Communist Party of China. He has served as Technician and Deputy Director of Customer Service Center of Pipeline Gas Branch of Shenzhen Gas Group Co., Ltd.; Deputy Director, Director of Civil Service Department and Director of General Office of Pipeline Gas Customer Service Branch of Shenzhen Gas Group Co., Ltd.; Deputy General Manager of Shenzhen Gas Group Co., Ltd. Ganzhou Shenran Natural Gas Co., Ltd.; Member of the Party Group and Deputy Director of the State-owned Assets Supervision and Administration Commission of Dongguan City, Guangdong Province, and concurrently the Vice Chairman of Dongguan Water Investment Group Co., Ltd.; Deputy Secretary-General of Dongguan Municipal Government of Guangdong Province, Party Secretary and Director of Dongguan Municipal Government Liaison Office in Beijing, and concurrently Chairman of the Board of Supervisors of Dongguan Biotechnology Industry Development Co., Ltd.; Deputy Secretary of the Party Committee, Director and General Manager of Dongguan Financial Holding Group Co., Ltd., concurrently Director of Dongguan Bank and Director of Dongguan Asset Management Company; He is currently the Deputy General Manager of Shenzhen Investment Holdings Co., Ltd. and Director of the Company. He Fei, male, born in February 1978, master's degree, member of Communist Party of China, Chinese certified public accountant, accountant. He successively served as accountant of the Planning and Finance Department of Shenzhen Gas Group Co., Ltd., accountant of the Finance Department of Shenzhen Gas Investment Co., Ltd., 50 2021 Annual Report which is affiliated to Shenzhen Gas Group Co., Ltd., and manager of the Finance Department of Hubei Shengjie Clean Energy Co., Ltd., which is affiliated to Shenzhen Gas Investment Co., Ltd.; Director of General Finance Department of Shenzhen Convention & Exhibition Center Management Co., Ltd.; Vice Director of Finance Department (Settlement Center) of Shenzhen Investment Holding Co., Ltd. Currently, he is the company director and chief financial officer of the company and Supervisor of SAPO Photoelectric Co., Ltd. Sun Minghui, male, born in September 1981, master degree, accountant, member of the Communist Party of China. He has served as Staff Member of the Finance Department of Shenzhen Energy Finance Co., Ltd. and the Financial Management Department of Shenzhen Energy Group Co., Ltd., Finance Management Director of the Financial Budget Department of Shenzhen Investment Holdings Co., Ltd., Senior Director of the Finance Department and the Board Office, and Deputy Director of the Finance Department (Settlement Center). He is currently the Director of Finance Department (Settlement Center) of Shenzhen Investment Holdings Co., Ltd. and Director of the Company. He Zuowen, male, born in October 1962, MBA, associate professor in accountancy, charted certified accountant and certified tax agent in securities and futures industry. At present he acts as a partner of Da Hua Certified Public Accountants(Special General Partnership) and secretary of Party General Branch of Shenzhen Branch, meanwhile he holds the position of chairman of Shenzhen Tianye Certified Tax Agents Limited Corporation, consultancy expert of Internal Control Standard Committee of the Ministry of Treasury, judge of Guangdong Senior Accountant Evaluation Committee, member of CPC Shenzhen Social Organization Disciplinary Examination Committee, deputy secretary & secretary of Discipline Inspection Commission of CPC Shenzhen CPA Industry Board, director of Shenzhen Certified Tax Agents Association and independent director of Shenzhen JPT OPTO-ELECTRONICS Co., Ltd., Independent director of Shenzhen Yirui Biology Co., Ltd., the Company's independent directors,Independent director of Shenzhen Special Economic Zone Real Estate (Group) Co., Ltd., and Independent Director of the Company. Cai Yuanqing, born in 1969, Doctor of Laws of Hiroshima University, professor of Law School of Shenzhen University, director of Company Law Research Center and GSI(Graduate Student Instructor); Meanwhile, he acts as an arbitrator of Shenzhen Arbitration Commission ,independent director of Shenzhen Rongda Photosensitive Science & Technology Co., Ltd., Independent director of Shenzhen Oufei Technology Co., Ltd., Independent director of Ogilvy Medical Supplies Co., ltd. and independent directors of the Company. Wang Kai, male, born in 1983, Ph.D. of Huazhong University of Science and Technology, Member of the Communist Party of China, associate professor and researcher of Southern University of Science and Technology Department of Electronic and Electrical Engineering, and Outstanding Young Man of Guangdong Province. He has served as a member of the Technical Committee of Beijing Branch of Society for Information Display (SID), a member of the National Standardization Technical Committee of Flat Panel Display Devices, Deputy Director of the Key Laboratory of Energy Conversion and Storage Technology of the Ministry of Education, and Deputy Director of the Key Laboratory of Quantum Dot Advanced Display and Lighting in Guangdong Universities, and independent director of the Company. 2.Supervisor Ma Yi, male, born in August 1966, bachelor's degree, member of Communist Party of China, assistant economist. He has successively served as a cadre of the automobile manufacturing and distribution plant of Hainan automobile transportation corporation, director of the Business Department, assistant to the general manager and manager of the Transportation Department of Shenzhen Shenjiu International Logistics Co., Ltd. Guangzhou Branch, operation director of Cosco Logistics Guangzhou Antaida Logistics Co., Ltd., general manager of Shenzhen Shenjiu International Logistics Co., Ltd. Guangzhou Branch, director of Planning and Development Department, director assistant, chief of Futian station, deputy secretary of the Party Committee, director and general manager of Shenzhen highway passenger and freight transportation service center. He is the 51 2021 Annual Report current chairman of the board of supervisors and secretary of Discipline Inspection Committee of the Company.. Yuan Shuwen, male, born in May 1980, master's degree. He has successively served as chief of Shigu management station of Hengshan county rural management bureau, financial director of Shenzhen Fengcheng Iron Wire Products Co., Ltd., project manager of Shenzhen branch of BDO Accounting Firm Co., Ltd., general ledger accountant of Shenzhen Zhenye (Group) Co., Ltd., director of Financial Budget Department and senior director of Assessment and Distribution Department of Shenzhen Investment Holding Co., Ltd. Currently, he is vice director of Assessment and Distribution Department of Shenzhen Investment Holding Co., Ltd. and supervisor of the Company Zhan Lumei, female, born in June 1969, college degree, Senior Labor Relations Coordinator, Senior Career Instructor, member of the Communist Party of China. She has served as the Administrative Personnel Director of Shenzhen Hualang Garment Co., Ltd., Director and Manager of the Human Resources Department of the Company. Currently, she is the vice chairman of the Federation of Trade Unions, Director of the Party-mass Work Department, and Chairman of the Trade Union and the Employee Supervisor of the Company. 3.Senior Executives Le Kunjiu, male, born in May 1963, bachelor degree economist professional title and CPC member; he has served successively as the loan officer of the finance department of Zhejiang Ningbo International Trust and Investment Corporation, deputy director and director of the finance department of CITIC Group Corporation, Ningbo Branch, manager of the research department of Hainan Fudao Asset Management Co., Ltd, assistant manager of Shenzhen Leaguer Venture Capital Co., Ltd, vice president & chief financial officer of Shenzhen Leaguer Digital Television Co., Ltd, chairman & general manager of Shenzhen Oriscape Electronic Co., Ltd, vice president of Shenzhen International Technology Transfer Center, Tsinghua University, associate director of the industrial funds preparatory office of Shenzhen Investment Holdings Co., Ltd and Deputy general manager of Shentou Education; At present he acts as Deputy General Manager of the Company, and Director of SAPO Photoelectric Co., Ltd. He is the current a senior consultant ofthe Company.. Liu Honglei, male, born in May 1964, bachelor degree and CPC member, Senior engineer, He has served Technician , Work director, Deputy director of office of First film factory of Ministry of Chemical Engineering,Director of personnel Education Dept of Education Department of China Lekai Film Group, he has served as the deputy general manager and general manager of SAPO Photoelectric Co., Ltd from June 2012 to May 2013 and the head of the party-mass work department and the manager of the business management department of Shenzhen Textile (Holdings) Co., Ltd; At present he holds the position of deputy general manager of the company. He is also the secretary and director of the party branch of Shenzhen SAPO Photoelectric Technology Co., Ltd. Guan Fei, male, born in December 1985, in-service postgraduate degree, member of the Communist Party of China, intermediate economist. He has served as the Account Manager of Agricultural Bank of China Shenzhen Branch, Deputy Director of Sichuan Supervision Bureau of China Banking and Insurance Regulatory Commission, Senior Investment Manager of Sichuan Industrial Fund Group and Head of Strategic Investment Department (presiding), First General Manager of Sichuan Innovation and Development Investment Management Co., Ltd., and Deputy General Manager of Shenzhen Infrastructure Investment Fund Management Co., Ltd. He is currently the Deputy General Manager of the Company. Jiang Peng, Female, born in October 1970, Bachelor Degree, member of communist party, She has served as a Clerk and Deputy Section Chief of the office of Shandong Aquatic Enterprise Group Corporation, Section Chief of the Office of the Board of Directors of Shandong Zhonglu Ocean Fishery Co., Ltd., Deputy Director and Securities Affairs Representative. served as officer of the Secretary Office of Shandong Fishery Group Co.,Ltd., Deputy Director of the Secretary office and Securities affairs Representative of Shandong Zhonglu Oceanic 52 2021 Annual Report Fisheries Co., Ltd., Securities Representative of Huafu Holding Co., Ltd., Securities affairs representative and Officer of the Secretariat of the Board of the Company, now serves as the secretary of the Board of the Company Office taking in shareholder companies √Applicable □Not applicable Titles Does he /she Names of the engaged in receive Sharing date Expiry date of persons in Names of the shareholders the remuneration or of office term office term office shareholder allowance from s the shareholder Deputy January Yin Kefei Shenzhen Investment Holdings Co., Ltd. Yes GM 11,2021 Director of Financial November Sun Minghui Shenzhen Investment Holdings Co., Ltd. Yes Dept( Clear 11,2020 ing centre) Deputy Director of discipline September Yuan Shuwen Shenzhen Investment Holdings Co., Ltd. Yes Inspection 18,2017 & Supervision Offices taken in other organizations √Applicable □Not applicable Does he/she Titles receive Name of the engaged in Starting date Expiry date of remuneration or persons in Name of other organizations the other of office term office term allowance from office organizatio other ns organization Shenzhen Convention and Exhibition Yin Kefei Director April 23,2021 No Center Management Co., Ltd Shenzhen Environmental Technology Yin Kefei Director April 23,2021 No Group Co., Ltd. Yin kefei Shenzhen Wuzhou Guest House Director June 11,2021 No Director, August Yin Kefei Shenzhen Nanyou(Group)Co., Ltd. Vice No 16,2021 president China Nanshan Development (Group) October Sun Minghui Supervisor No Co., Ltd. 17,2017 Sun Minghui Shenzhen Highway Passenger & Cargo Supervisor June 16,2017 No 53 2021 Annual Report Transportation Service Center Co., Ltd. Sun Minghui CASTD Supervisor June 27,2017 No ULTRARICH INTERNATIONAL November Sun Minghui Director No LIMITED 11,2020 Shenzhen Special Economic Zone Real November Sun Minghui Director No Estate 11,2020 November Sun Minghui Southern Asset Management Co., Ltd. Supervisor April 28,2021 No 11,2020 Hubei Shentoukong Investment November Sun Minghui Director No Development Co., Ltd 11,2020 Shenzhen Shengang Technology October Sun Minghui Innovation Cooperation Zone Director No 18,2021 Development Co., Ltd. September Yuan Shuwen Shenzhen Textile(Holdings) Co., Ltd. Supervisor No 27,2019 Shenzhen International Tendering Co., October Yuan Shuwen Supervisor June 10,2020 No Ltd. 22,2017 Punishments to the current and leaving board directors, supervisors and senior managers during the report period by securities regulators in the recent three years □ Applicable √Not applicable (3) Remuneration to directors, supervisors and senior executives Decision-making procedures, basis for determination and actual payment of the remuneration to directors , supervisors and senior executives In the report period, The remuneration of directors and senior management paid by the company is determined by “Director Compensation Management System” and “Executive Compensation Management and Evaluation System ” , the remuneration of independent directors is determined as per the resolution of shareholders’ meeting, and the remuneration of supervisors paid by the company is determined by their position held in the company. Remuneration to directors, supervisors and senior executives in the reporting period In RMB10,000 Total Whether to get remuneration paid in the Name Positions Sex Age Office status received from company the Company related party Board Zhang Jian Female 42 In office 60.15 No Chairman Director, Zhu Meizhu General Male 57 In Office 140.29 No Manager 54 2021 Annual Report Director , Secretary of the Ning Maozai Male 46 In Office 127.16 No Party committee Yin Kefei Director Male 47 In office 0 Yes He Fei Director ,CFO Male 44 In Office 111.15 No Sun Minghui Director Male 40 In Office 0 Yes Independent He Zuowen Male 59 In Office 12 No Director Independent Cai Yuanqing Male 52 In Office 12 No Director Independent Wang Kai Male 38 In office 12 No Director Chairman of the supervisory committee, Ma Yi Secretary of the Male 55 In Office 100.62 No Commission for Discipline Inspection Shareholders' Yuan Shuwen Male 41 In Office 0 Yes Supervisor Employee Zhan Lumei Female 52 In office 57.69 No supervisor Le Kunjiu Senior adviser Male 58 In Office 126.51 No Liu Honglei Deputy GM Male 57 In Office 169.43 No Guan Fei Deputy GM Male 36 In Office 19.52 No Secretary to the Jiang Peng board of Female 51 In office 102.81 No directors Board Zhu Jun Male 58 Dimission 61.2 No chairman Zhang Employee Male 46 Dimission 2.75 Yes Xiaodong supervisor Huang Yu Director Male 47 Dimission 0 Yes Wang Chuan Director Male 49 Dimission 0 Yes Total -- -- -- -- 1,115.28 -- 55 2021 Annual Report VI. Performance of directors' duties during the reporting period (1) Information of the board meetings during the reporting period Session Convening date Disclosure date Meeting resolution http://www.cninfo.com.c The 35th meeting of the January 15,2021 January 16,2021 (Announcement seventh Board of Directors No.:2021-01) http://www.cninfo.com.c The 36th meeting of the January 25,2021 January 26,2021 (Announcement seventh Board of Directors No.:2021-07) http://www.cninfo.com.c The first meeting of the February 10,2021 February 10,2021 (Announcement Eighth Board of Directors No.:2021-151) http://www.cninfo.com.c The Second meeting of the March 10,2021 March 12,2021 (Announcement Eighth Board of directors No.:2021-17) http://www.cninfo.com.c The Third meeting of the April 26,2021 April 28,2021 (Announcement Eighth Board of directors No.:2021-33) http://www.cninfo.com.c The Fourth meeting of the May 24,2021 May 25,2021 (Announcement Eighth Board of directors No.:2021-37) http://www.cninfo.com.c The Fifth meeting of the July 13,2021 July 14,2021 (Announcement Eighth Board of directors No.:2021-44) http://www.cninfo.com.c The sixth meeting of the August 26,2021 August 28,2021 (Announcement Eighth Board of directors No.:2021-49) http://www.cninfo.com.c The 7th meeting of the Eighth September 22,2021 September 24,2021 (Announcement Board of directors No.:2021-55) http://www.cninfo.com.c The 8th meeting of the Eighth October 28,2021 October 30,2021 (Announcement Board of directors No.:2021-58) http://www.cninfo.com.c The 9th meeting of the Eighth December 31,2021 December 31,2021 (Announcement Board of directors No.:2021-61) 56 2021 Annual Report (2) Attendance of directors at the board meetings and the general meeting of shareholders Attendance of directors at the board meetings and the general meeting of shareholders Number of Number of Whether to board Number of board Number of Number of attend the General meetings board meetings board Name of board board meetings of attended meetings attended by meetings director meetings meeting in shareholders during the attended in means of attended by absent from person twice attended reporting person communicati proxy in a row period on Zhang Jian 9 9 0 0 0 No 4 Zhu Meizhu 11 11 0 0 0 No 4 Ning Maozai 11 11 0 0 0 No 4 Yin Kefei 9 9 0 0 0 No 1 He Fei 11 11 0 0 0 No 4 Sun Minghui 9 9 0 0 0 No 1 He Zhuowen 11 3 8 0 0 No 4 Cai Yunqing 11 3 8 0 0 No 4 Wang Kai 11 3 8 0 0 No 3 Zhu Jun 2 2 0 0 0 No 0 Wang Chuan 2 2 0 0 0 No 0 Huang Yu 2 2 0 0 0 No 0 Explanation of failure to attend the board meeting in person twice in a row None (3) Directors' objections to related matters of the Company Whether the director raises any objection to the relevant matters of the Company □ Yes √ No During the reporting period, the directors did not raise any objection to the relevant matters of the Company. (4) Other descriptions of directors' performance of duties Whether the directors' suggestions on the Company have been adopted √Yes □ No The director's statement on whether the relevant suggestions of the Company have been adopted or not During the reporting period, all directors of the Company worked diligently and conscientiously in strict accordance with the relevant regulations of China Securities Regulatory Commission and Shenzhen Stock Exchange, the Articles of Association, the Rules of Procedure of the Board of Directors and other systems of the Company, paid close attention to the Company's standardized operation and business situation, put forward 57 2021 Annual Report relevant opinions on the Company's major governance and business decisions according to the actual situation of the Company, reached a consensus after full communication and discussion, and resolutely supervised and promoted the implementation of the resolutions of the Board of Directors, so as to ensure scientific, timely and efficient decision-making, and protect the legitimate rights and interests of the Company and all shareholders. VII. Situation of special committees under the Board of Directors during the reporting period Put forward Other Number of Details of Committee Member Convening Meeting important information meetings objections (if name information date content opinions and of duty convened any) suggestions performance The Audit Committee It deliberated emphasized the 2020 the need to Audit Work strengthen Plan for the tracking Annual and Report, 2020 inspection of Main audit Financial rectification, Indicators enhance the Express of timeliness of the Group, internal January 2020 audit, and 12,2021 He Internal reduce the Zhuowen, Audit Work recurrence of Audit Cai 6 Summary problems Committee Yuanqing, and 2021 found in He Fei Internal audit, and Audit Work agreed to the Plan and 2020 2020 Audit financial Plan of statement Shenzhen indicator Textile. express and related work plan. The The Audit accountant of Committee February Grant worked in 5,2021 Thornton strict reported to accordance the Audit with the 58 2021 Annual Report Committee Company the progress Law, the of the audit regulatory of the 2020 rules of annual report China and the Securities problems Regulatory concerned in Commission the audit and the process, and Articles of the Audit Association Department and the Rules reported the of Procedure 2020 work of the Board summary and of Directors the 2021 in a diligent internal audit and dutiful work plan of manner, and the unanimously Company. passed The Audit relevant Committee proposals put forward after full suggestions communicati and on and requirements discussion. for the follow-up audit work. It deliberated The Audit the 2020 Committee Financial worked in Final strict Accounts accordance Report, the with the 2020 Profit Company March Distribution Law, the 5,2021 Plan, the regulatory Proposal on rules of Accounting China Policy Securities Change, the Regulatory Special Commission Report on the and the 59 2021 Annual Report Deposit and Articles of Use of Association Raised Funds and the Rules in 2020, and of Procedure the Proposal of the Board on the of Directors Permanent in a diligent Replenishme and dutiful nt of manner, and Working unanimously Capital with passed Surplus relevant Raised proposals Funds. after full communicati on and discussion. The Audit Committee recognized the internal It listened to audit work of the Internal the Risk Audit Work Control Summary for Audit the First Department Quarter and in the first the Internal quarter of Audit Work 2021, and Plan for the requested the April Second Risk Control 26,2021 Quarter of Audit 2021 Department reported by to continue the Audit to carry out Department, work and put according to forward the relevant requirements requirements of the annual . internal audit work plan for the second quarter of 60 2021 Annual Report 2021. The Audit Committee recognized It listened to the internal the Special audit work of Inspection the Risk Report on Control Standardized Audit Operation of Department Listed in the second Companies quarter of in the First 2021, and Half of 2021, requested the the Summary Risk Control of Internal Audit Audit Work Department in the Second to continue Quarter and to carry out the Internal work Audit Work according to Plan in the the August Third requirements No No 13,2021 Quarter of of the annual 2021, which internal audit were work plan for reported by the third the Audit quarter of Department, 2021. In deliberated 3 accordance proposals with the including the requirements Proposal on of enterprise Hiring Audit internal Institutions control in 2021 and standard put forward system and relevant relevant requirements regulations, for the audit the Company work. has maintained effective internal 61 2021 Annual Report control of financial report and non-financial report in all major aspects. It is unanimously agreed to pass the related proposal. The Audit Committee recognized the internal The Audit audit work of Committee the Risk listened to Control the Summary Audit of Audit Department Work in the in the third Third quarter of Quarter and 2021, and the Internal requested the Audit Work Risk Control Plan in the Audit Fourth October Department Quarter of 28,2021 to continue 2021 to carry out reported by work the Risk according to Control the Audit requirements Department, of the annual and put internal audit forward work plan for relevant the fourth requirements quarter of for internal 2021. In audit work. accordance with the requirements of enterprise 62 2021 Annual Report internal control standard system and relevant regulations, the Company has maintained effective internal control of financial report and non-financial report in all major aspects. The Remuneratio n and Appraisal Committee believed that since the repurchase and It deliberated cancellation matters of restricted related to Remuneratio He stocks were repurchase n and Zhuowen, January in 4 and No No Appraisal Wnag Kai, 8,2021 compliance cancellation Committee He Fei with the of some Administrati restricted ve Measures stocks. for Equity Incentives of Listed Companies, Memorandu m No.3 of Information Disclosure on Main 63 2021 Annual Report Board-Equity Incentives and Employee Stock Ownership Plan and the Company's 2017 Restricted Stock Incentive Plan (Draft) and other relevant regulations, and the repurchase and cancellation of the Company will not affect the Company's continuing operations or harm the interests of the Company and all shareholders, it is unanimously agreed to pass the proposal. It deliberated The matters Remuneratio related to n and March repurchase Appraisal 8,2021 and Committee cancellation believed that of some since this 64 2021 Annual Report restricted repurchase stocks. and cancellation were in compliance with the Administrati ve Measures for Equity Incentives of Listed Companies, Guidelines No.9 for Business Management of Listed Companies of Shenzhen Stock Exchange-Eq uity Incentives and the Company's 2017 Restricted Stock Incentive Plan and other relevant regulations, and it will not affect the Company's continuing operation or harm the interests of the Company and all shareholders, it is 65 2021 Annual Report unanimously agreed to repurchase and cancel such restricted stocks. The Remuneratio n and Appraisal Committee believed that the formulation of the 2020 Business Performance It deliberated Assessment the Proposal and on Remuneratio Formulating n the 2020 Management Annual Plan for Business Senior August Performance Managers 12,2021 Assessment conformed to and the relevant Remuneratio provisions of n the Management Governance Plan for Guidelines of Senior Listed Managers. Companies, the Articles of Association of the Company and the Working Regulations of the Remuneratio 66 2021 Annual Report n and Appraisal Committee of the Board of Directors; and it is agreed to submit the 2020 Business Performance Assessment and Remuneratio n Management Plan for Senior Managers to the Board of Directors of the Company for deliberation. The Remuneratio n and Appraisal Committee worked in It deliberated strict the Proposal accordance on with the October Remuneratio Company No No 9,2021 n Assessment Law, the of Senior regulatory Managers in rules of 2020. China Securities Regulatory Commission and the Articles of Association 67 2021 Annual Report and the Rules of Procedure of the Board of Directors in a diligent and dutiful manner, put forward relevant opinions according to the actual situation of the Company, and unanimously passed the proposal after full communicati on and discussion. The Nomination It deliberated Committee the Proposal members on worked in Nominating strict Candidates accordance for Deputy with the Cai General Articles of Yuanqing, Manager of Association Nomination August He Fei, He 2 the Company of the No No Committee 26,2021 Zhuowen, and the Company Wang Kai Proposal on and the Nominating Regulations Candidates on the Work for General of the Manager of Nomination the Committee Company. of the Board of Directors, reviewed the 68 2021 Annual Report qualifications of candidates and unanimously passed relevant proposals. The Nomination Committee members worked in strict accordance with the Articles of Association of the Company It deliberated and the the Regulations February nomination on the Work 10,2021 of senior of the managers. Nomination Committee of the Board of Directors, deliberated the qualifications of candidates and unanimously passed relevant proposals. VIII.The working status of the board of supervisors The board of supervisors finds out whether the company has risks during the monitoring activities during the repo rting period □ Yes √ No The Supervisory Committee has no objection to the supervision matters during the reporting period. 69 2021 Annual Report IX. Particulars about employees. (1)Number of staff, professional structure and educational background Number of in-service staff of the parent company(person) 56 Number of in-service staff of the main subsidiaries(person) 1,575 The total number of the in-service staff(person) 1,631 The total number of staff receiving remuneration in the current 1,631 period(person) Retired staff with charges paid by the parent company and 0 main subsidiaries (person) Professional Category Number of persons(person) Production 1,158 Sales 29 Technical 231 Financial 33 Administrative 180 Total 1,631 Education Category Number of persons(person) Holders of master’s degree or above 41 Graduates of regular university 265 Colleges 157 Mid-school or below 1,168 Total 1,631 (2) Remuneration policies In 2021, the Company carried out management for employees’ compensation in strict accordance with the state’s relevant laws and regulations and guaranteed the fairness and reasonability of the compensation, which offered relevant rewards and incentives to the employees, accelerate them to jointly develop with the Company , and simultaneously reflected humanistic care of the Company. (3)Training plan Combining with the Company's development strategy, it continued to strengthen the Company's talent training system to help employees and the company develop together. In 2021, it improved the systematic talent training system to provide solid support for the Company's strategic development. First, it organized the special training of 70 2021 Annual Report "Butterfly Change Breakthrough Win in Execution", comprehensively publicized and implemented the execution culture, and enhanced the execution and combat effectiveness of all employees. Second, it organized a case sharing activity of "Success in Details Win in Implementation", which enhanced the interaction among employees and cultivated the habit of active thinking and active learning among employees. Third, it organized a series activities of "Get to Know You Face-to-Face", in which the Chairman of the Company communicated with the core backbones of affiliated enterprises, so as to acquire a deep understanding of the actual situation and existing problems of enterprises and cadres, and better promote the sustained, healthy and high-quality development of the Group. Fourth, it organized the management of training points, established a learning organization, mobilized the enthusiasm of employees in learning and sharing, and promoted employees' active learning. In terms of training, the Company helped employees to open up new horizons of learning in multiple dimensions, and promote their practical work by applying theories. (4)Outsourcing situation □ Applicable √ No Applicable X. Specification of profit distribution and capitalizing of common reserves Formulation, implementation or adjustment of the profit distribution policy, especially the cash dividend policy during the reporting period √ Applicable □ Not applicable On April 7, 2021, the Company held the 2020 annual general meeting of shareholders to deliberate and pass the 2020 profit distribution plan. The 2020 profit distribution plan of the Company is as follows: based on the profit available for distribution in the consolidated statement, with the total share capital of 507,772,279 shares as the base as of December 31, 2020, a cash dividend of RMB 0.30 (including tax) will be distributed to all shareholders for every 10 shares, with a total cash dividend of RMB 15,233,168.37 (including tax), the remaining undistributed profits will be carried forward to the next year; No bonus shares will be given, and no capital reserve will be used to increase capital. If the total share capital of the Company changes before the implementation of the distribution plan, the total share capital of date of record will be taken as the base when the distribution plan is implemented in the future, and the specific amount will be subject to the actual distribution. The Company's shares held by the Company are not included in profit distribution. During the period from the disclosure of the distribution plan to its implementation, the total share capital of the Company was reduced from 507,772,279 shares to 506,521,849 shares due to the completion of cancellation procedure of restricted stock repurchase. According to the above profit distribution plan, the Company's 2020 profit distribution plan is adjusted as follows: based on the Company's existing total share capital of 506,521,849, a cash dividend of RMB 0.30 (including tax) will be distributed to all shareholders for every 10 shares. Special description of cash dividend policy Whether it meets the requirements of the Articles of Association or the resolution of the general meeting of Yes shareholders: Whether the dividend standard and proportion are explicit and Yes clear: Whether the relevant decision-making procedures and Yes mechanisms are complete: 71 2021 Annual Report Whether the independent directors have performed their duties Yes and played their due role: Whether the minority shareholders have the opportunity to fully express their opinions and demands, and whether their Yes legitimate rights and interests have been fully protected: Whether the cash dividend policy is adjusted or changed, and whether the conditions and procedures are compliant and Yes transparent: During the reporting period, the Company made a profit and the profit available to shareholders of the parent company was positive, but no cash dividend distribution plan was put forward. □ Applicable √ Not applicable Profit distribution and capitalization of capital reserve during the reporting period √ Applicable □ Not applicable Bonus shares for every ten shares(Shares) 0 Cash dividend for every ten shares 0.50 (Yuan)(Tax-included) A total number of shares as the distribution 506,521,849 basis(shares) Cash dividend amount (yuan, including tax 0.50 Other means (such as repurchase of shares) cash 0.00 dividend amount (yuan) Total cash dividend (yuan, including tax) 25,326,092.45 Distributable profit (yuan) 130,746,251.74 Proportion of cash dividend in the distributable 100% profit Cash dividend distribution policy When the company's development stage is in the growth period and there are major capital expenditure arrangements, when the profit distribution is carried out, the proportion of cash dividends in this profit distribution should be at least 20%. Detailed explanation of the profit distribution or capital reserve transfer plan Based on the distributable profits in the consolidated statement, with the total share capital of 506,521,849 shares as of December 31, 2021 as the base, a cash dividend of RMB 0.5 (including tax) was distributed to every 10 shares of all shareholders, with a total cash dividend of RMB 25,326,092.45 (including tax). XI. Implementation Situation of Stock Incentive Plan of the Company, Employee Stock Ownership Plan or Other Employee Incentive Measures √ Applicable □ Not applicable 72 2021 Annual Report (1) Equity incentive On November 27, 2017, the Proposal on the Company's Implementation Measures of Evaluation for the 2017 Restricted Stock Incentive Plan (Draft) and summary and the Proposal on the Company's Implementation Measures of Evaluation for the 2017 Restricted Stock Incentive Plan was examined and approved in the 7th board meeting of the company’s 7th session board of directors, and related proposals agreed to fulfill the relevant procedures and related proposals agreed to fulfill the relevant procedures. Please refer to Announcement No.:2017-57, 2017-58, 2017-62 on www.cninfo.com.cn. The progress during the reporting period is now explained as follows: 1. Regarding the repurchase and cancellation of some restricted stocks On January 15, 2021, the company held the 35th meeting of the 7th Board of Directors and the 25th meeting of the 7th Board of Supervisors. The board of directors deliberated and approved the "Proposal on Repurchase and Cancellation of Some Restricted Stocks", which intends to repurchase and cancel 7,950 restricted stocks held by an original incentive object who resigned due to personal reasons, at a repurchase price of RMB 5.73 per share; It is proposed to repurchase and cancel the 6,000 restricted shares held by a retired incentive object at a price of 6.23 yuan per share. On February 2, 2021, the company held the first extraordinary general meeting of shareholders in 2021 to consider and pass the "Proposal on Repurchase and Cancellation of Certain Restricted Stocks", agreeing to the company's total holdings of 1 original incentive object who resigned due to personal reasons 7,950 restricted stocks were repurchased and cancelled at a repurchase price of 5.73 yuan/share; agreed that the company would repurchase and cancel 6,000 restricted stocks held by a retired incentive object at a repurchase price of 6.14 yuan/share, in total 13,950 restricted stocks were repurchased and cancelled On May 13, 2021, the company completed the repurchase and cancellation procedures of the above-mentioned restricted stocks at the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd 2. Regarding the repurchase and cancellation of some restricted stocks and the repurchase and cancellation of the third phase of restricted stocks On March 10, 2021, the company held the second meeting of the eighth board of directors and the second meeting of the eighth board of supervisors. The "Proposal on Repurchase and Cancellation of Certain Restricted Stocks" was reviewed and passed, and the company agreed to provide incentives to 102 A total of 1,236,480 restricted stocks held in the third period that did not meet the conditions for lifting the restrictions were repurchased and cancelled. The repurchase price was calculated as the grant price of RMB 6.26 per share plus the interest on bank deposits during the same period. On April 7, 2021, the company held the 2020 Annual General Meeting of Shareholders to review and approve the Proposal on Repurchase and Cancellation of Some Restricted Stocks, and agreed that the company would repurchase and cancel 1,236,480 restricted stocks held by 102 incentive objects in the third issue that did not meet the conditions for lifting the restrictions on sales, and the repurchase price was RMB 6.26 per share. On May 13, 2021, the company completed the repurchase and cancellation procedures of the above-mentioned restricted stocks at the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. Equity incentives obtained by directors and senior managers of the Company □ Applicable √ Not applicable Evaluation mechanism and incentives of senior managers None 73 2021 Annual Report (2) Implementation of ESOP √ Applicable □ Not applicable All effective ESOPs during the reporting period Proportion of total Funding sources Scope of Quantity of Total number of Change share capital of for plan employees employees shares held information listed companies implementation Directors, supervisors, senior The Company managers and employees' legal other core remuneration, technical/business/ self-raised funds management 127 1403600 No 0.28% and other legal backbones of the ways permitted by Company laws and (including regulations. subsidiaries, the same below). Shareholding of directors, supervisors and senior managers in the ESOP during the reporting period Number of shares held Number of shares held Proportion of total Name Position at the beginning of the at the end of the share capital of listed reporting period reporting period companies Zhang Jian Chairman of the Board 0 114,206 0.02% Director, General Zhu Meizhu 0 114,206 0.02% Manager Director, Secretary of Party Committee and Ning Maozai Secretary of Discipline 0 28,551 0.01% Inspection Commission Le Kunjiu Deputy GM 0 57,103 0.01% Liu Honglei Deputy GM 0 57,103 0.01% He Fei Director, CFO 0 57,103 0.01% Jiang Peng Secretary of the Board 0 57,103 0.01% Zhan Lumei Employee supervisor 0 17,131 0.00% Changes in asset management institutions during the reporting period □ Applicable √Not applicable Changes in equity caused by holders' disposal of shares during the reporting period √ Applicable □ Not applicable During the reporting period, Huang Weiqi and He Guangdong, the original holders of the Company's first ESOP, 74 2021 Annual Report resigned for personal reasons. Upon confirmation by the management committee of the Company's first ESOP, they transferred their 50,000 shares in ESOP to Huo Zhifeng. After the transfer, Huo Zhifeng's share in the first ESOP of the Company was changed from 150,000 to 250,000 shares. Exercise of shareholders' rights during the reporting period During the reporting period, the Company's ESOP was not involved in the voting of the Company's general meeting of shareholders and exercise other shareholders' rights. Other relevant information and description of ESOP during the reporting period □ Applicable √Not applicable The membership of the ESOP Management Committee has changed. □ Applicable √Not applicable Financial impact of ESOP on listed companies in the reporting period and related accounting treatment □ Applicable √Not applicable Termination of ESOP during the reporting period □ Applicable √Not applicable Other note None (3) Other employee incentives □ Applicable √Not applicable XII. Construction and implementation of internal control system during the reporting period (1) Construction and implementation of internal control During the reporting period, the Company timely updated and improved the internal control system according to the Basic Standards for Enterprise Internal Control and its supporting guidelines, and established a scientific, concise, applicable and effective internal control system. The Audit Committee and the Risk Control Audit Department jointly formed the Company's risk internal control management organization system to supervise and evaluate the Company's internal control management. Through the operation, analysis and evaluation of the Company's internal control system, the risks in operation and management are effectively prevented, and the realization of internal control objectives is promoted. According to the identification of major internal control defects in the Company's financial report, there were no major internal control defects in the financial report on the base date of the internal control evaluation report. In accordance with the requirements of enterprise internal control standard system and relevant regulations, the Company has maintained effective internal control of financial reports in all major aspects. According to the identification of major defects in the internal control of the Company's non-financial reports, the Company found no major defects in the internal control of non-financial reports on the base date of the internal control evaluation report. (2)Details of major internal control defects found during the reporting period □ Yes √ No 75 2021 Annual Report XIII. Management and control of the Company's subsidiaries during the reporting period Problems Subsequent Integration Measures taken Solution Company name Integration plan encountered in planned progress for solution progress integration solution Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable XIV.Internal control self-evaluation report or internal control audit report (1)Self-evaluation report on internal control Disclosure date of appraisal report on internal control March 17,2022 Juchao Website:(http://www.cninfo.com.cn), Disclosure index of appraisal report on internal control Self-evaluation report of internal control in 2021 The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the 100.00% company's consolidated financial statements The ratio of the operating income of units included in the scope of evaluation accounting for the operating 100.00% income on the company's consolidated financial statements Standards of Defects Evaluation Category Financial Report Non-financial Report In the following circumstances, the company was identified as existing non-financial –reporting related significant defects of internal The defects related to financial reports were controlling defects: divided into general defects, important defects The business activities of the company seriously and significant defects according to their violated national laws and regulations; (2) The severity. Significant defects referred to one or decision-making process of "Three-Importance& multiple combinations of controlling defects, One-Large" were unscientific, leading to major which may lead to serious deviation from the decision errors, and causing major property loses controlling objectives. Important defects referred to the company; (3) Massive loss of key posts or Qualitative standard to one or multiple combinations of controlling technology talents; (4) The controlling system defects, and their severity and economic involving important business fields of the consequences were below significant defects, company failed; (5) It Caused serious negative but they could still lead to serious deviation from effects on business of the company, and the the controlling objectives. General defects effects couldn’t be eliminated; (6) The referred to other internal controlling defects evaluation results of internal control were which couldn't constitute significant defects or significant defects, and couldn’t get effective important defects. rectification. Important defects referred to one or multiple combinations of controlling defects, and their severity and economic consequences 76 2021 Annual Report were below significant defects, but they could still lead to serious deviation from the controlling objectives. General defects referred to other internal controlling defects which couldn't constitute significant defects or important defects. Misstatement amount of financial statement fell into the following intervals: significant defects: Misstatement amount ≥ 1.5% of total revenue; Misstatement amount ≥ 10% of gross profit; Misstatement amount ≥ 1% of total asset; Misstatement amount ≥ 5% of net asset. significant defects: 0.5% of Total revenue ≤Misstatement amount < 1.5% of total revenue; 5% of gross profit ≤Misstatement Quantitative criteria amount < 10% of gross profit; 0.5% of Total Not applicable asset ≤Misstatement amount < 1% of total revenue; 3% of Net assets ≤Misstatement amount < 5% of net assets. General defects:0% of total revenue <Misstatement amount<0.5% of Total revenue; 2% of gross profit <Misstatement amount<5% of total profit; 0% of total assets <Misstatement amount<0.5 of total assets; 0% of net assets < Misstatement amount<3% of net assets. Number of major defects in financial reporting(a) 0 Number of major defects in non financial reporting (a) 0 Number of important defects in financial reporting(a) 0 Number of important defects in non financial reporting(a) 0 (2) Internal Control audit report √ Applicable □Not applicable Review opinions in the internal control audit report o all shareholders of Shenzhen Textile (Holdings) Co., Ltd.: According to the relevant requirements of the “Audit Guideline of Enterprise Internal Control” and the Chinese CPA criteria, the company has audited the effectiveness of internal control of the financial statement of Shenzhen Textile (Holdings) Co., Ltd. (Shenzhen Textile) at the date of December 31, 2021. 1. The responsibility of enterprise for the internal control. According to the provisions of “Fundamental Norms for Enterprise Internal Control”, “Operation Guideline of Enterprise Internal Control” and “Evaluation Guideline of Enterprise Internal Control”, the company has established, perfected and effectively implemented the internal control, and made an evaluation for its effectiveness, which are the responsibilities of the Board of Directors of Shenzhen Textile. 77 2021 Annual Report 2. The responsibility of CPA. The company shall be responsible for the expression of audit opinions on the effectiveness of internal control in the financial statement and the disclosure of serious deficiency of internal control except for the financial statement on the basis of the implementation of audit. 3. The inherent limitation of internal control. There is the possibility of unpreventable errors. In addition, due to the change of situation, the inappropriate internal control is maybe shown, or the control policy and the abidance of procedure can be reduced. Based on the audit results of internal control, the future internal control is expected to have a certain risk. 4. The audit opinions of internal control in the financial statement. The company believes that Shenzhen Textile has maintained the effective internal control of the financial statement in all the major aspects according to “Fundamental Norms for Enterprise Internal Control” and the relevant provisions on December 31, 2021 Grant Thornton International Ltd.(Special General Partnership) Chinese C.P.A. Chen Zhifang Chinese C.P.A. Liu Duoqi March 15, 2022 Disclosure date of audit report Disclosure of internal control (full-text) Index of audit report of March 17,2022 internal control (full-text) Juchao Website: (http://www.cninfo.com.cn);Audit report of internal control of the Internal audit report’s opinion Company Type of audit report on internal Unqualified auditor’s report control Whether there is significant No defection non-financial report Has the CPAs issued a qualified auditor’s report of internal control . □ Yes √No Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of Directors √Yes □No XV. Rectification of self-examination problems in special governance actions of listed companies According to the deployment of China Securities Regulatory Commission, in 2021, the Company organized the self-inspection of special actions of listed companies' governance. During the self-inspection of governance, the following problems were found: 1. The Company's Board of Directors has not changed when due; 2. The number of independent directors in the Audit Committee of the Company does not exceed half of the total; 3. The directors, supervisors and senior managers of the Company failed to attend (or attend as a nonvoting delegate) or entrust others to attend general meeting of shareholders, meetings of board of Directors and Board of Supervisors as required. The rectification measures are as follows: 78 2021 Annual Report 1. Through communication with the controlling shareholder Shenzhen Investment Holdings Co., Ltd., it learned that Shenzhen Investment Holdings received a notice from the superior that in principle, the deliberation of cadre and personnel matters was suspended during the change of Shenzhen Municipal Party Committee. As the Chairman of the Company is appointed and managed by the State-owned Assets Supervision and Administration Commission of Shenzhen Municipal People's Government, and the re-election of Shenzhen Municipal Party Committee has not yet been completed, the postponement of the re-election of the Seventh Board of Directors and Board of Supervisors has been reported to Shenzhen Stock Exchange for records. On November 25, 2020, the Company started the change of office immediately after receiving the recommendation letter from the controlling shareholder, and on February 10, 2021, it completed the change of directors and supervisors; 2. The Audit Committee of the Seventh Board of Directors of the Company consists of 4 members, including 2 independent directors. In the past, the Company routinely added the Chief Financial Officer and the Secretary of the Commission for Discipline Inspection to the Audit Committee of the Board of Directors, resulting in less than half of the independent directors in the Audit Committee. The Audit Committee of the Eighth Board of Directors of the Company consists of 3 members, including 2 independent directors, which have been rectified; 3. When the Company's directors and supervisors are unable to attend the general meeting of shareholders, the meetings of the Board of Directors and the Board of Supervisors of the Company, they have all fulfilled the corresponding leave procedures, and there is no absence from the general meeting of shareholders without reason. 79 2021 Annual Report V. Environmental & Social Responsibility I. Significant environmental issues Whether the Company or any of its subsidiaries is identified as a key polluter by the environment authorities √ Yes □ No Main Emission Implemen Company pollutant Emission Verified Emission port ted Total Excessive or and Emission concentra total port distributi pollutant emission emission subsidiary specific way tion emission( number on emission condition name pollutant (mg/Nm3) Tons) condition standards name Shenzhen Open Beauty channel Northwes Effluents < Century discharge 1 t side of 60mg/L <2.43t/a 2.43t/a No :COD 60mg/L Garment after plant area Co., Ltd. treatment Prevention and control of pollution facilities construction and operation The Beauty Century Company wastewater treatment facilities adopt the treatment processes of regulation, hydrolysis acidification, coagulation and air flotation, contact oxidation, coagulation and sedimentation and filtration. It is with stable treatment process, and good effluent effect of wastewater treatment. The wastewater from the production process can meet the environmental protection requirements after being treated by wastewater treatment facilities. The Company invested RMB 960,000 to build the reuse system of reclaimed water, and now the reuse project of reclaimed water has been accepted and started operation. Situation of Construction project environmental impact assessment and other environmental protection administrative licenses The Company complied with relevant environmental protection regulations at such three stages as project design, construction and operation and obtained environmental protection approvals needed at each corresponding stage including EIA report, EIA approval, environmental protection acceptance decision and emission permit among others. Emergency Plan for Emergency Environmental Incidents According to the actual situation of the company, the preparation of the emergency plan for emergency environmental incidents was completed, and an emergency environmental emergency plan filing application Environmental Self-Monitoring Program According to the environmental management requirements of the pollutant discharge permit, the specific monitoring scheme is as follows: once every 6h for pH value of wastewater, once per day for chroma, once per day for suspended solids, once per week for biochemical oxygen demand in five days, once every 6h for chemical oxygen demand, once per day for total nitrogen, once per day total phosphorus, once per month for sulfide, once per month for aniline, once per year chlorine dioxide, and twice per year for waste gas at factory boundary (once every six months). Administrative penalties for environmental problems during the reporting period 80 2021 Annual Report Impact on the Company's Name of company Reasons for production and Violation situation Penalty result rectification or subsidiary punishment operation of listed measures companies No No No No No No Other Environmental Information That Should Be Disclosed None Measures and effects taken to reduce its carbon emissions during the reporting period √Applicable □ Not applicable The use of reclaimed water can effectively reduce wastewater discharge, and 2,500 tons of tap water have been saved in the reporting period. Other Environmental Related Information None II. Social responsibilities 1. Protection of shareholders' rights and interests During the reporting period, the Company abided by laws and regulations, operated in compliance with regulations, and constantly improved its governance structure and further standardized the Company's operation in strict accordance with the requirements of the Company Law, the Securities Law and the Governance Guidelines for Listed Companies and other laws and regulations. It adhered to the procedure system of general meeting of shareholders, Board of Directors, Board of Supervisors and independent directors as the core, further improved the corporate governance structure and various management systems, constantly improved the internal control system in the process of the Company's operation and management, took effective operational risk prevention measures, earnestly safeguarded and protected shareholders' rights and interests, and laid a solid foundation for the healthy and sustainable development of the Company. Independent directors paid close attention to the Company's operation, put forward many valuable professional suggestions for the Company's daily operation and key concerns, and played an important role in improving the supervision mechanism and safeguarding the legitimate rights and interests of the Company and all shareholders. The Company strictly fulfilled its obligation of information disclosure according to law, truly, accurately, completely, timely and fairly disclosed information that has a significant impact on investment decision-making. The disclosure content was concise and easy to understand, fully revealed risks, and facilitated all shareholders to consult. According to regulatory requirements, it further combed and improved relevant systems and enhanced the quality of information disclosure. During the reporting period, the Company further improved the information disclosure and information transparency, fulfilled the obligation of information disclosure in strict accordance with regulatory requirements, communicated with investors through various channels, answered questions raised by investors in a timely manner, and improved information transparency. Meanwhile, it cooperated with regulatory authorities to safeguard the rights and interests of investors, especially small and medium-sized investors, and realized the benign interaction and harmonious development between investors and listed companies. 2. Protection of employees' rights and interests According to the enterprise development strategy, the Company further revised and improved the human resource management system. It established labor relations by entering into labor contracts with employees, and implement necessary management for employees according to the Labor Law and relevant management regulations of the Company. The Company established a scientific assessment and distribution system according 81 2021 Annual Report to the classification of senior managers, department managers and employees, established a systematic and standardized performance assessment and evaluation system, and conducted a comprehensive, objective, fair and accurate assessment of employees' performance of duties and tasks, which is used as the basis for determining employees' remunerations, rewards and punishments and appointments. It conducted market-based selection and employment, created a good environment for talent development, and constantly stimulated innovation vitality and motivation. In 2021, the Company strived to create a good corporate culture atmosphere, strengthen the psychological care for employees, listen to their inner voices, and enhance employees' sense of gain and belonging; Meanwhile, it further enhanced the Group leaders' understanding of the mind state of grass-roots employees, better cared for and helped employees to grow into talents, and regularly organized face-to-face communication between the Company leaders and the core backbone of the Group employees and subordinate enterprises. In the meantime, the Company newly revised 3 human resource management systems, namely, the Management Measures of Shenzhen Textile Group's Rank Promotion, the Management System of Shenzhen Textile Group's Staff Performance Appraisal and the Interim Measures of Shenzhen Textile Group's Annual Advanced Selection, and optimized and improved the Company's personnel training, performance compensation management and rank promotion. It actively guided and assisted subordinate enterprises to promote various human resource management norms, and guided enterprises to strengthen remuneration performance management and make reasonable adjustments to employees' remuneration level according to the actual situation of each enterprise. It strengthened the scientific and standardized management of human resources, avoided labor risks, improved the level of human resources management, and further mobilized the enthusiasm of employees. 3. Environmental protection Striving to build a modern "green enterprise" is the Company's long-term positive responsibility. We insist on building the whole process of green cycle in the industrial chain, realizing the real green cycle economy, improving the quality of the Company's surrounding environment and escorting the Company's production. During the reporting period, the OSBL noise, industrial wastewater and waste gas emissions in the Company's production process all passed the monitoring of the environmental protection department, and complied with the standard requirements of relevant laws and regulations. During the reporting period, the Company's organic waste gas was treated by the rotary RTO treatment process, and the removal rate of VOCs in organic waste gas reached over 99%. On the basis of meeting the discharge standards, the pollutant discharge was further reduced, and no major environmental incidents occurred. In addition, the Company vigorously advocated green office, carried out various forms of environmental protection publicity and education activities, raised employees' awareness of energy conservation and emission reduction, realized the coordinated development of production & operation and environmental protection, and earnestly fulfilled social responsibilities. 4. Protection of consumers' rights and interests The Company has been adhering to the core values of "honesty oriented and responsibility first". Being responsible for customers is the source of our enterprise value. It is our unremitting pursuit to provide customers with professional, personalized and all-round products and services. With customer demand as the core, continuously innovating to serve customers, and continuously improving and enhancing product quality are the driving force for the Company to achieve good performance and sustainable development, and also an important guarantee to win customers' long-term trust. It has provided active attention to customer needs, quick response to customer feedback, sincere consideration for customers and promotion of long-term cooperative partnership. 82 2021 Annual Report III. Consolidate and expand the achievements of poverty alleviation and rural revitalization During the reporting year, the Company did not carry out targeted poverty alleviation work, nor did it have a follow-up targeted poverty alleviation plan. VI. Important Events I. Commitments to fulfill the situation 1.The fulfilled commitments in the reporting period and under-fulfillment commitments by the end of the reporting period made by the company, shareholder, actual controller, acquirer, director, supervisor, senior management personnel and other related parities. √Applicable □Not applicable Time of making Period of Commitment commitment Fulfillment Commitment Type Contents commitment maker As Shenzhen Investment Holdings Co., Ltd., the controlling shareholder of the company, committed when the restricted-for-sale shares from the shares restructuring were listed for circulation in the market: i. if they plan to sell the shares through the securities exchange system in the future, and the decrease of the Shenzhen Share shares they hold reaches 5% within Sustained Under Commitment Investment reduction August 4, 6 months after the first decrease, and Fulfillme on share reform Holdings Co., commitmen 2006 they will disclose an announcement effective nt Ltd. t indicating the sale through the company within two trading days before the first decrease; ii. They shall strictly observe the “Guidelines on Transfer of Restricted-for-sale Original Shares of Listed Companies” and the provisions of the relevant business principles of Shenzhen Stock Exchange. 83 2021 Annual Report Commitment in the acquisition report or the report on equity changes Commitment made upon the assets replacement Shenzhen Investment Holdings Co., Ltd. signed a “Letter of Commitment and Statement on Horizontal Competition Avoidance” when the company issued non-public stocks in 2009. Pursuant to the Letter of Commitment and Statement, Shenzhen Investment Holdings Co., Ltd. and its wholly owned subsidiary, subsidiaries under control or any other companies that have actual control of it shall not be involved in the Commitme business the same as or similar to nts on those Shenzhen Textile currently or Shenzhen horizontal will run in the future, or any Commitments Sustained Under Investment competition businesses or activities that may October 9, made upon and Fulfillme Holdings Co., , related constitute direct or indirect 2009 issuance effective nt Ltd. transaction competition with Shenzhen Textile; and capital if the operations of Shenzhen occupation Investment Holdings Co., Ltd. and its wholly owned subsidiaries, subsidiaries under control or other companies that have actual control of it compete with Shenzhen Textile in the same industry or contradict the interest of the issuer in the future, Shenzhen Investment Holdings Co., Ltd. shall urge such companies to sell the equity, assets or business to Shenzhen Textile or a third party; when the horizontal competition may occur due to the business expansion concurrently 84 2021 Annual Report necessary for Shenzhen Investment Holdings Co., Ltd. and its wholly owned subsidiaries, subsidiaries under control or other companies that have actual control of it and Shenzhen Textile, Shenzhen Textile shall have priority. The commitments during the period non-public issuance in 2012: 1. Shenzhen Investment Holdings, as the controlling shareholder of Shenzhen Textile, currently hasn't the production and business activities of inter-industry competition with Shenzhen Textile or its share-holding subsidiary. 2. Shenzhen Investment Holdings and its share-holding subsidiaries or other enterprises owned the actual control rights can't be directly and indirectly on behalf of any person, company or unit to engage in the Commitme same or similar business in any nts on districts in the future by the form of Shenzhen horizontal share-holding, equity participation, Sustained Under Investment competition July 14, joint venture, cooperation, and Fulfillme Holdings Co., , related 2012 partnership, contract, lease, etc., and effective nt Ltd. transaction ensure not to use the controlling and capital shareholder's status to damage the occupation legitimate rights and interests of Shenzhen Textile and other shareholders, or to gain the additional benefits. 3. If there will be the situation of inter-industry competition with Shenzhen Textile for Shenzhen Investment Holdings and its share-holding subsidiaries or other enterprises owned the actual control rights in the future, Shenzhen Investment Holdings will promote the related enterprises to avoid the inter-industry competition through the transfer of equity, assets, business and other ways. 4. 85 2021 Annual Report Above commitments will be continuously effective and irrevocable during Shenzhen Investment Holdings as the controlling shareholder of Shenzhen Textile or indirectly controlling Shenzhen Textile. 1.The company undertakes not to provide loans, loan guarantees, and any other forms of financial assistance to the incentive objects for obtaining the restricted stocks in Equity Shenzhen Other the incentive plan; 2. The company November May Complete incentive Textile(Holdi commitmen undertakes that there is no 27,2017 13,2021 d commitment ngs) Co., Ltd. t circumstance that the stock incentive shall be prohibited as stipulated in the provisions of Article 7 of the “Measures for the Management of Stock Incentives of Listed Companies”. Other commitments made to minority shareholders Executed Yes timely or not? If the commitments failed to complete the execution when expired, should specifically Not applicable explain the reasons of unfulfillment and the net stage of the working plan 86 2021 Annual Report 2.The existence of the company's assets or projects earnings forecasts and earnings reporting period is still in the forecast period, the company has assets or projects meet the original profit forecast made and the reasons explained □ Applicable √ Not applicable II. Particulars about the non-operating occupation of funds by the controlling shareholder □ Applicable √ Not applicable None III. Illegal provision of guarantees for external parties □ Applicable √ Not applicable None IV. Explanation of the Board of Directors on the latest "Non-standard Audit Report" □ Applicable √ Not applicable V.Notes for “non-standard audit report” of CPAs firm during the Reporting Period by board of directors and supervisory board □ Applicable √ Not applicable VI.Explain change of the accounting policy, accounting estimate and measurement methods as compared with the financial reporting of last year. □ Applicable √ Not applicable None VII.Explain change of the consolidation scope as compared with the financial reporting of last year. √ Applicable □ Not applicable As of December 31, 2021, the company has included 8 subsidiaries in the scope of consolidation. For details, please refer to Section 10-9, "Equity in Subsidiaries" of this report. The scope of the company’s consolidation this year has increased by one household compared to the previous year. For details, please refer to Section 10-8 "Changes in Consolidation Scope for Other Reasons" of this report. VIII. Engagement/Disengagement of CPAs CPAs currently engaged Name of the domestic CPAs Grant Thornton International Ltd ( Special General 87 2021 Annual Report Partnership) Remuneration for domestic accounting firm (Ten thousands 87.8 yuan) Successive years of the domestic CPAs offering auditing 1 services Name of CPA Chen Zhifang , Liu Duoqi Continuous years of audit services of certified public The continuous service life of Chen Zhifang's audit service is 1 accountants of domestic public accounting firms year, and that of Liu Duoqi's audit service is 0 year. Has the CPAs been changed in the current period □Yes √ No Description of the CPAs, financial adviser or sponsor engaged for internal control auditing √ Applicable □Not applicable During the reporting period, the company engaged Grant Thornton International Ltd (Special General Partnership) as the company's internal control audit agency for 2021, with an audit remuneration of RMB 878,000 (including travel expenses and other expenses). The related financial statement audit fee is RMB 650,000 (including tax), and the internal control audit fee is RMB 228,000 (including tax). IX.Situation of Facing Listing Suspension and Listing Termination after the Disclosure of the Yearly Report □Applicable √ Not applicable X. Relevant Matters of Bankruptcy Reorganization □Applicable √ Not applicable None XI. Matters of Important Lawsuit and Arbitration √ Applicable □ Not applicable Amount Implementati Whether to Litigation Litigation(arbit Basic situation of involved on of form (arbitratio ration)trial Disclosure Disclosure litigation(arbitrati (Ten litigation(arbi estimated n)progres results and date index on) thousand tration)judgm liabilities s impact yuan) ents For details of the The (I) Trial result: For details, Company's arbitratio Jinjiang Group please refer matters related to n case is exempted to the arbitration and was from the company's compensation of heard at performance March disclosure 24,478.38 No Ruled its subsidiaries' 9:30 on compensation 30,2021 on March 2019 annual Decembe obligation in 30, 2021.(. performance r 1, 2020 2019, and does (http://w commitments, in the not need to pay ww.cninfo. please refer to Seventh the com.cn) 88 2021 Annual Report "XVII. Major Arbitratio compensation (Announc matters of its n for the ement subsidiaries" in Tribunal performance No.:2021-2 "Section VI of the difference in 9) Important Arbitratio 2019 of RMB Matters". n 244,783,800 to Institute SAPO in Photoelectric; Shenzhen The arbitration Stock fee of RMB Exchange 2,682,011 and , and the the actual arbitratio expenses of the n tribunal arbitrator of made a RMB 8,000 in ruling on this case shall this case be borne by on March Jinjiang Group; 25, 2021. Other arbitration requests of Jinjiang Group are not supported. This award shall be final and take legal effect from the date it is made. (II) Impact: This arbitration shall be final, and the result of the arbitration will not affect the profit and loss of the Company or the production and operation of SAPO Photoelectric. The Company and Jinjiang 89 2021 Annual Report Group will continue to actively perform their shareholder duties based on the principle of mutual benefit and win-win, and effectively improve the production technology, management level and profitability of SAPO Photoelectric. XII. Situation of Punishment and Rectification □Applicable √ Not applicable None XIII. Credit Condition of the Company and its Controlling Shareholders and Actual Controllers √ Applicable □ Not applicable No such cases in the Reporting Period. XIV. Material related transactions 1. Related transactions in connection with daily operation □Applicable √ Not applicable None 2. Related-party transactions arising from asset acquisition or sale □Applicable √ Not applicable None 3. Related-party transitions with joint investments □Applicable √ Not applicable 90 2021 Annual Report None 4. Credits and liabilities with related parties □Applicable √ Not applicable None 5. Transactions with related finance company, especially one that is controlled by the Company □Applicable √ Not applicable None 6. Transactions between the financial company controlled by the Company and related parties □ Applicable √Not applicable There is no deposit, loan, credit or other financial business between the financial company controlled by the Company and related parties. 7. Other significant related-party transactions □Applicable √ Not applicable None XV.Significant contracts and execution 1.Entrustments, contracting and leasing (1)Entrustment □Applicable √ Not applicable No such cases in the reporting period. (2)Contracting □Applicable √ Not applicable No such cases in the reporting period. (3)Leasing □Applicable √ Not applicable No such cases in the reporting period. 91 2021 Annual Report 2.Significant Guarantees √ Applicable □ Not applicable In RMB10,000 Guarantee of the Company for the controlling subsidiaries (Exclude controlled subsidiaries) Relevant Guaran disclosur Date of tee e happenin Count Comple Amount for Name of date/No. g Actual er-gu te of Guarante Guaranty Guarant associat the of (Date of mount of arante implem Guarante e type (If any) ee term ed Company the signing guarantee e(If entation e parties guarantee agreemen any) or not (Yes or d t) no) amount Guarantee of the company for its subsidiaries Relevant Guaran disclosur Date of tee e happenin Count Comple Amount for Name of date/No. g Actual er-gu te of Guarante Guaranty Guarant associat the of (Date of mount of arante implem Guarante e type (If any) ee term ed Company the signing guarantee e(If entation e parties guarantee agreemen any) or not (Yes or d t) no) amount Two years from Guarante the date SAPO March Septembe 40,912.7 eing of of Photoelec 48,000 No No 18,2020 r 8,2020 4 joint expirati tric liabilities on of the princip al debt Total of actual Total of guarantee for guarantee for subsidiaries approved 0 20,353.14 subsidiaries in the in the period(B1) period (B2) Total of guarantee for Total of actual 48,000 40,912.74 subsidiaries approved guarantee for 92 2021 Annual Report at period-end(B3) subsidiaries at period-end(B4) Guarantee of the subsidiaries for the controlling subsidiaries Relevant Guaran disclosur Date of tee e happenin Count Comple Amount for Name of date/No. g Actual er-gu te of Guarante Guaranty Guarant associat the of (Date of mount of arante implem Guarante e type (If any) ee term ed Company the signing guarantee e(If entation e parties guarantee agreemen any) or not (Yes or d t) no) amount The Company’s total guarantee(i.e. total of the first three main items) Total amount of Total guarantee quota guarantee actually approved in the reporting 0 incurred in the 20,353.14 period(A1+B1+C1) reporting period (A2+B2+C2) Total guarantee quota already Total balance of the approved at the end of the actual guarantee at the 48,000 40,912.74 reporting period end of the reporting (A3+B3+C3) period(A4+B4+C4) The proportion of the total amount of actually guarantee in the net assets of the Company (that 14.52% is A4+B4+C4)% Including: Amount of guarantees provided for shareholders, the actual controller and their 0 related parties (D) Amount of debt guarantees provided directly or indirectly for entities with a liability-to-asset 0 ratio over 70% (E) Portion of the total guarantee amount in excess 0 of 50% of net assets (F) Total amount of the three kinds of guarantees 0 above (D+E+F) Description of the guarantee with complex method None 3.Situation of Entrusting Others for Managing Spot Asset 93 2021 Annual Report (1)Situation of Entrusted Finance √ Applicable □Not applicable Overview of entrusted wealth-management during the reporting period In RMB 10,000 Source of funds for The Occurred Amount Specific Un-recovered of entrusted financial of Entrusted Undue balance Amount overdue type overdue amount management Wealth-management Other Self fund 58,654.07 0 0 0 Total 58,654.07 0 0 0 The detailed information of entrusted wealth-management with significant amount or low safety, poor liquidity or high risk with no promise of principal √ Applicable □Not applicable In RMB10,000 Nam Type Prod Am Capi Start Expi Fun Met Refe Exp Act The Am Wh Wh Su e of of uct ount tal Date ry ds hod renc ecte ual actu ount ethe ethe mm Trus Trust Type Sour Date Allo of e d prof al of r r ary tee ee ce cati Rew Ann Inco it reco prov pass ther of Org Orga on ard uali me and very isio ed e is eve aniz nizat Dete zed (if loss of n the any nts atio ion( rmin Rate any) duri prof for stat entr and n (or or atio of ng it imp utor uste relat Trus Trust n Retu the and airm y d ed tee ee) rn repo loss ent proc fina sear Nam rting duri (if edur ncia ch e) peri ng any) e l inde od the plan x (if repo in any) rting the peri futu od re Sout Red hern emp Asse tion Sept Dec ts on T Not Mon 58,6 emb emb Not Man Self Oth day, 2.54 451. 451. appl Fund etary 54.0 er er expi Yes age fund er arriv % 91 91 icab fund 7 8,20 31,2 r ed men al le 20 021 t on Co., T+1 Ltd. day 58,6 451. 451. Total 54.0 -- -- -- -- -- -- -- -- -- -- 91 91 7 Entrusted financing appears to be unable to recover the principal or there may be other circumstances that may result in impairment 94 2021 Annual Report □ Applicable √ Not applicable (2)Situation of Entrusted Loans □ Applicable √ Not applicable None 4. Other significant contract √ Applicable □ Not applicable Com Com Contr Contr Book Asses Appr Base Prici Trans Whet Conn Exec Date Discl pany pany act act Value sed aisal Date ng actio her A ectio ution of osure Nam Nam Obje Signi of the Value Agen of Princ n Relat n Cond Discl Index e of e of ct ng Asset of the cy Asses iple Price ed Relat ition osure the the Date s Asset Nam smen (Ten Tract ion As Party Other Invol s e (If t (if thous ion Of Maki Party ved Invol Any) any) and) The ng of the by ved End the Contr the by Of contr act Contr the The act act Contr Repo (Ten act rting thous (Ten Perio and thous d yuan) and yuan) SAP Hang Nitto Nove Consi With In Nove zhou Denk mber no norm mber O derin Jinjia o 6, assoc al 7, Phot ng provi 2017 g the iation perfo 2017 Http: oelec Grou des form relati rman p polari onshi ce //ww tric ulatio Co., zer p w.cni Ltd., manu n of with nfo.c Kuns factur mark the han ing comp om.c et Zhiqi techn any n: mei ology price (Ann Mate and and ounc rial relate techn 86,90 Tech d No No emen ical 0 nolog corpo t y ration servi No. : Co., . ce Ltd., 2017- perio Japan 53)on Nitto d, the Nove Denk final o mber trans Corp 7, oratio actio 2017 n n price is 95 2021 Annual Report based on the com merci al negot iation result s of both partie s. XVI. Explanation on other significant events √ Applicable □Not applicable 1. Progress of polarizer industrialization project for ultra-large TV (Line 7) During the reporting period, the Company strengthened staffing and resource support, overcame the adverse effects caused by the pandemic, accelerated the progress of chemical test run of Line 7 project, and finally completed the performance stability test run and started trial production ramp up in July 2021. As of December 31, 2021, Line 7 was in the stage of capacity ramp up, the main technical indicators such as speed and yield were continuously improved, and the introduction of major customer products was progressing steadily, laying a solid foundation for the rapid increase of oversized orders in 2022 and the realization of production line profitability. On March 16, 2021, all the funds raised from the special account for raising funds of Line 7 project have been used up according to regulations, and the company has canceled the special account for raising funds. For details, please refer to Announcement No.:2021-30 of cninfo (http://www.cninfo.com.cn). As of December 31, 2021, the accumulated signed contract amount of Line 7 project was RMB 2,091.2441 million, and the actual payment was RMB 2,017.5184 million (with raised funds of RMB 409.9535 million, and its own funds and government funds of RMB 1,607.5649 million). 2. Regarding the investment in the construction of the RTS rear cutting production line During the reporting period, the company added investment in the construction of a cutting production line for the rear end of the RTS after careful evaluation. The total investment was controlled at 30 million yuan, and the source of funds was its own funds and bank loans. The main reasons for this investment: First, to meet the needs of downstream panel customers, increase the depth of customer cooperation, and seize the market share of high-margin large-size products; second, to improve the overall cutting capacity of the back end; third, to simplify the production process and improve production efficiency. reduce manufacturing cost. As of December 31, 2021, The Company is building 2 RTP production lines, one of which has been put into mass production, and the other one is subject to mass production ramp-up; 2 RTS production lines have been built,and 1 RTS production line is under construction. It is expected to achieve mass production before the first quarter of 2022. 3. The disposal of assets of the joint venture company Xieli Automobilemobile Co., Ltd. Shenzhen Xieli Automobilemobile Enterprise Co., Ltd. (hereinafter referred to as "Shenzhen Xieli") is a 96 2021 Annual Report Sino-foreign joint venture invested and established by the company and Hong Kong Xieli Maintenance Company in 1981, with a registered capital of 3.12 million yuan, and the company holds 50% of the equity. The company's operating period ended in 2008, and its business license was revoked in 2014. The company's main asset is real estate. The industrial and commercial license of Shenzhen Xieli was cancelled in March 2020, but there are still three properties under its name, the disposal of which is required to be resolved after further consultation between the shareholders of both parties. On July 26, 2021, the Company filed a lawsuit with Yantian District People's Court in Shenzhen City, Guangdong Province to revoke the cancellation of Shenzhen Xieli Automobilemobile Enterprise Co., Ltd. approved by Shenzhen Administration for Market Regulation on March 9, 2020, on which the court gave a judgment on November 21, 2021 to revoke the cancellation of Shenzhen Xieli Automobilemobile Enterprise Co., Ltd. approved by Shenzhen Administration for Market Regulation. XVII. Significant event of subsidiary of the Company √ Applicable □Not applicable 1.Matters concerning the company's compensation for arbitration and its subsidiaries' annual performance commitments in 2019 On March 9, 2020, the company received the Notice of Arbitration (No.452 -2) from Shenzhen International Arbitration Court and the Application for Arbitration submitted by Hangzhou Jinjiang Group Co., Ltd., which is the applicant of this arbitration while the company is the respondent. Hangzhou Jinjiang Group Co., Ltd. submitted the following arbitration requests: 1. The ruling made the following changes to the Cooperation Agreement: (1) Delete the original Article 3.1 of the Cooperation Agreement and the relevant unfulfilled rights and obligations will no longer be fulfilled (2) Delete the original Article 6.4 of the Cooperation Agreement, and the relevant unfulfilled rights and obligations will no longer be fulfilled; 2. The respondent shall bear the arbitration fee of the case and the actual expenses of the arbitral tribunal. The applicant reserves the right to further modify the arbitration request. For details, please refer to the Announcement of 2020-07 on the website of http://www.cninfo.com.cn. On March 26, 2020, the company received the Notice on Extending the Time Limit Appointed by Arbitrators (2020 SGZS No.452 -3) delivered by Shenzhen International Arbitration Court. Due to the complexity of the dispute and the special epidemic background, the applicant needs extra time to negotiate and communicate the procedural matters of the case with the respondent, so it applies to Shenzhen International Arbitration Court to extend the time limit for appointing arbitrators in this case. Shenzhen International Arbitration Court believes that the applicant's request is reasonable, and both parties are requested to notify Shenzhen International Arbitration Court in writing of the arbitrator's appointment result before March 30, 2020. Therefore, the company shall appoint an arbitrator before March 30, 2020 instead of within 15 days after receiving the arbitration notice on March 9, 2020, and notify the Shenzhen International Arbitration Court of the results in writing. For details, please refer to the Announcement of 2020-21 on the website of http://www.cninfo.com.cn. On April 17, 2020, the company received the Notice of Arbitral Tribunal Composition (2020 SGZS No.452-4) from Shenzhen International Arbitration Court. Both parties to the arbitration informed Shenzhen International Arbitration Court in writing of the results of arbitrator selection according to the arbitration procedure before March 30, 2020, and appointed 1 arbitrator respectively and 1 chief arbitrator together. On April 16, 2020, the arbitration tribunal was formed to hear the case. On December 1, 2020, the arbitration case was heard in the Seventh Arbitration Tribunal of the Court of Arbitration located at the Shenzhen Stock Exchange. On March 25, 2021, the company received the Award (2020 SGZC No.452) delivered by the arbitral tribunal, and made a ruling on this case: 1. The applicant was exempted from fulfilling the 2019 annual performance 97 2021 Annual Report compensation obligation stipulated in Article 3.1 of the Cooperation Agreement, and does not need to pay SAPO Photoelectric the compensation for the difference in performance in 2019 of RMB 244,783,800; 2. The arbitration fee of RMB 2,682,011 and the actual expenses of the arbitrator of RMB 8,000 shall be borne by the applicant; 3. The applicant's other arbitration requests are not supported. This award is final and shall come into force as of the date of its making. This arbitration is the final award, and the award result will not affect the company's profit and loss, nor will it affect the production and operation of SAPO Photoelectric. The company and Jinjiang Group will continue to actively perform their shareholders' duties based on the principle of mutual benefit and win-win, and effectively improve the production technology, management level and profitability of SAPO Photoelectric. For details, please refer to the Announcement on Arbitration Results of the Company on Juchao Information Network (http://www.cninfo.com.cn) (No.2021-29). 2.Progress in subsidiaries participating in the establishment of industrial funds On November 16, 2017, the company's controlling subsidiary SAPO Photoelectric signed the Changxing Junying Equity Investment Partnership (Limited Partnership) Agreement with the fund manager Huizhi Investment Management Co., Ltd, general partner Jinxin Investment Co., Ltd and other limited partners, and co-sponsored the establishment of an industrial fund, focusing on the optical film industry chain related projects related to the company's main business, with a fund size of 50 million yuan. SAPO Photoelectric, as one of the limited partners of the industrial fund, subscribed for a capital contribution of 28.5 million yuan. For details Juchao Website:(http://www.cninfo.com.cn. (Announcement No.2017--55). On February 10, 2018, Changxing Junying Equity Investment Partnership completed the industrial and commercial registration and completed the private equity investment fund registration on February 8, 2018. For details Juchao Website:(http://www.cninfo.com.cn. (Announcement No.2018--05). As of December 31, 2021, Changxing Junying had accumulated 3 investment projects with a total investment of 42 million yuan. Fund contribution No Name Investment (RMB 10,000) 1 Shenzhen Kaichuang Shijia Technology Co., Ltd. Optical Film 1,400 2 Shenzhen Shenfuyu Electronic Technology Co., Ltd. Optical Film 1,300 3 Shenzhen Hengbaoshun Technology Development Co., Ltd. Optical Film 1,500 3, Matters concerning the subsidiary's accreditation by Guangdong Engineering Technology Research Center On August 20, 2021, the Guangdong Provincial Department of Science and Technology issued the "Notice of the Guangdong Provincial Department of Science and Technology on Recognizing the 2021 Guangdong Engineering Technology Research Center" (Yue Ke Han San Zi [2021] No. 1021), according to the results of expert review , the "Guangdong Province Shengbo Optoelectronics Engineering Technology Research Center in the Field of New Materials" built by the company's holding subsidiary Shengbo Optoelectronics was identified as the "2021 Guangdong Engineering Technology Research Center". This recognition fully affirms the company's strong technological innovation and R&D strength, demonstrates the company's significant advantages in technological innovation, technology research and development and talent teams in the field of polarizers, and helps the company to continuously improve the level of scientific research and scientific and technological achievements. The ability to transform and enhance the company's market competitive advantage is the embodiment of the company's comprehensive strength. The company will continue to build the research center, combine the company's business strategy, deepen industry-university-research cooperation, cultivate scientific and technological innovation talents, vigorously promote technological innovation, and provide a favorable platform support for promoting the high-quality development of the polarizer business. 98 2021 Annual Report 4.Matters on the listing and leasing of some properties in Block C of Shenzhen Textile Building On July 13, 2021, the company held the fifth meeting of the eighth board of directors to review and approve the Proposal on Listing and Leasing Some Properties in Block C of Shenzhen Textile Building, and agreed that the company will publicly list and lease 6,100 square meters of properties of the 8F-10F and 1F lobby of Block C of Shenzhen Textile Building through Shenzhen United Property and Share Rights Co., Ltd., with a lease term of 10 years (including a rent-free period of 6 months), and the rental price is not lower than 85 yuan/ ㎡ /month (including property management fee). The rent will increase by 5% every three years from the date of contract conclusion, and the final transaction price will be determined according to the listing result. For details, please refer to the Announcement of Resolutions of the Fifth Meeting of the Eighth Board of Directors of the company (No.2021-44) on Juchao Information Network (http://www.cninfo.com.cn). On September 18, 2021, the Company received the Notice of Lease Result from Shenzhen United Property and Equity Exchange Co., Ltd., confirming that the lessee was Shenzhen Haizhiguang Hotel Management LTD, with a lease term of 10 years (including 6 months rent-free period), at a transaction price of 86 yuan/m2/month (including property management fee), and the rent will increase by 5% every three years since the signing of the contract; On September 17, 2021, the Company signed the contract with the lessee, and the follow-up leased property was planned to be used for the operation of Atour Hotel. Regarding partial premises in Block C of Shenzhen Textile Building for lease this time, it will transfer the market risk from self-operated hotels to brand hotel operators through overall external lease, which will help improve the overall operational efficiency of the Company's assets, reduce operational risks, bring stable rental income to the Company and help to maintain and increase the value of state-owned assets. 5. Matters on liquidation and cancellation of Shenzhen Textile Import & Export Co., Ltd. On July 13, 2021, the company held the fifth meeting of the eighth board of directors to review and approve the Proposal on Liquidation and Cancellation of Shenzhen Textile Import & Export Co., Ltd., and agreed on the Liquidation Report of Shenzhen Textile Import & Export Co., Ltd.. completed by the liquidation group, and liquidated and distributed its assets in accordance with legal procedures, and completed formalities such as industrial and commercial cancellation. The liquidation and cancellation of Shenzhen Textile Import & Export Co., Ltd. (hereinafter referred to as "Shenzhen Textile Import & Export") will change the scope of the company's consolidated financial statements, facilitate the disposal of inefficient assets, reduce management costs, and will not affect the company's production and operation. The impact of the cancellation of Shenzhen Textile Import & Export in this liquidation on the current profits and losses is estimated to be RMB 7.64 million, The annual audit of the audit institution has been confirmed. For details, please refer to the Announcement on Liquidation and Cancellation of Shenzhen Textile Import & Export. (No.2021-45) issued by Juchao Information Network (http://www.cninfo.com.cn). 6. Matters on waiver of preemption right and equity transfer of holding subsidiaries On November 27, 2020, the company received the "Letter" sent by Jinjiang Group, informing the company in writing that it intends to acquire the 40% equity of SAPO Photoelectric held by Hangzhou Jinhang Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to as "Jinhang Investment"); On December 21, 2020, the company received the Notice of Equity Transfer from Jinhang Investment, informing the company in writing that Jinhang Investment intends to transfer its 40% equity of SAPO Photoelectric, and according to the Company Law of the People's Republic of China and the Articles of Association of Shenzhen SAPO Photoelectric Technology Co., Ltd., it specially sought the company's opinions on the transfer matters. On December 25, 2020, after research and decision-making, the company formally replied to Jinhang Investment, and the company gave up the preemptive right to exercise the 40% equity of SAPO Photoelectric, the 99 2021 Annual Report holding subsidiary of the company held by Jinhang Investment. For details, please refer to the Announcement on Waiver of Preemptive Rights of Holding Subsidiaries (No.2020-57) on Juchao Information Network (http://www.cninfo.com.cn) on December 26, 2020. In July 2021, the company received the Letter from Jinjiang Group, informing the company about the progress of the above-mentioned equity transfer: Jinhang Investment and the intended transferee Suzhou Advantage Ford Investment Center (Limited Partnership) (hereinafter referred to as "Advantage Ford") have completed their internal decision-making examination and approval, and the delivery conditions for Advantage Ford to accept 100% of the partnership share of Jinhang Investment have been met, and both parties will promote the transfer of the partnership share. After the completion of the transfer procedure, Advantage Ford will directly hold 99.93333% of the partnership share of Jinhang Investment; Meanwhile, Zhejiang Hengjie Industrial Co., Ltd. indirectly holds a partnership share of 0.06667% of Jinhang Investment. As of July 28, 2021, for the above equity transfer, the industrial and commercial change registration procedures have been completed. After the completion of this equity transfer, the shareholders and equity ratio of SAPO Photoelectric, the holding subsidiary of the company, remain unchanged, and the scope of the consolidated statements of the company has not changed. Advantage Ford holds 40% equity of SAPO Photoelectric through Jinhang Investment, and the strategic investor of SAPO Photoelectric will be changed from Jinjiang Group to Advantage Ford. Advantage Ford has rich industrial resources, industrial investment and management experience, and both parties will give full play to their respective advantages to further improve and strengthen the main business of polarizer. For details, please refer to the Progress Announcement on Waiver of Preemptive Rights and Equity Transfer of Holding Subsidiaries (No.2021-47) on Juchao Information Network (http://www.cninfo.com.cn). 100 2021 Annual Report VII. Change of share capital and shareholding of Principal Shareholders I. Changes in share capital (1) Changes in share capital In shares Before the change Increase/decrease(+,-) After the Change Amount Proporti Capitali on zation Share of Bonus Quantit Proport allotme commo Other Subtotal shares y ion nt n reserve fund 1.Shares with conditional 1,326,4 -1,254,4 -1,254,4 0.26% 0 0 0 72,000 0.00% subscription 05 05 05 1.State -owned shares 0 0.00% 0 0 0 0 0 0 0.00% 2. State-owned legal person 0 0.00% 0 0 0 0 0 0 0.00% shares 1,326,4 -1,254,4 -1,254,4 3.Other domestic shares 0.26% 0 0 0 72,000 0.00% 05 05 05 Incl:Domestic legal person 0 0.00% 0 0 0 0 0 0 0.00% shares Domestic Natural Person 1,326,4 -1,254,4 -1,254,4 0.26% 0 0 0 72,000 0.00% shares 05 05 05 4.Foreign share 0 0.00% 0 0 0 0 0 0 0.00% Incl:Foreign legal person 0 0.00% 0 0 0 0 0 0 0.00% share Foreign Natural 0 0.00% 0 0 0 0 0 0 0.00% Person shares II.Shares with 506,445 506,44 99.74% 0 0 0 3,975 3,975 1.00% unconditional subscription ,874 9,849 457,017 457,02 1.Common shares in RMB 90.00% 0 0 0 3,975 3,975 0.90% ,874 1,849 2.Foreign shares in 49,428, 49,428, 9.74% 0 0 0 0 0 0.10% domestic market 000 000 3. Foreign shares in foreign 0 0.00% 0 0 0 0 0 0 0.00% market 4.Other 0 0.00% 0 0 0 0 0 0 0.00% III. Total of capital shares 507,772 100.00 0 0 0 -1,250,4 -1,250,4 506,52 100.00 101 2021 Annual Report ,279 % 30 30 1,849 % Reasons for share changed √ Applicable □Not applicable The company’s performance in 2020 did not meet the conditions for the release of the second sale restriction period stipulated in the 2017 Restricted Stock Incentive Plan, according to the company’s Restricted Stock Incentive Plan in 2017,Chapter VIII of the restricted stock grant conditions And the conditions for lifting the sales restriction ,If the conditions for lifting the sales restriction in the current period are not met, the company will repurchase the restricted stocks that can be released for the current year and cancel them in accordance with the provisions of this plan. The second phase held by the company for 102 incentive objects The 1,236,480 restricted stocks that did not meet the conditions for lifting the restrictions were repurchased and cancelled. Secondly , the company's original incentive object Jiang Shengyuan left due to personal reasons,. According to the relevant provisions of the Incentive Plan (Draft), the above-mentioned personnel no longer meet the incentive conditions, and the company shall repurchase and cancel the 7,950 restricted stocks that have been granted but not yet lifted. Thirdly, the company’s original incentive object, Mu Linying, retires. According to the company’s "2017 Restricted Stock Incentive Plan", this person no longer meets the incentive conditions, and the company has granted 6,000 restricted stocks that have not been lifted. Cancellation of repurchase. In summary, a total of 1,250,430 restricted stocks were repurchased and cancelled. For details, please refer to the "Announcement on Repurchase and Cancellation of Certain Restricted Stocks" (No. 2021-03 and 2021-25, 2021-30) of the company on www.cninfo.com.cn. On May 13, 2021, the company completed the repurchase and cancellation procedures of the above-mentioned restricted stocks at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. For details Juchao Website:(http://www.cninfo.com.cn. (Announcement No.2021--35). In addition, Zhang Xiaodong, the former employee supervisor of the company, resigned on February 10, 2021, and his 1,325 unrestricted shares were converted into restricted shares. On August 11, 2021, the sales restrictions were lifted, and they were converted into unrestricted shares. Approval of Change of Shares √ Applicable □ Not applicable The above repurchase and cancellation of some restricted stocks were approved by the 35th meeting of the seventh Board of Directors of the company, the 25th meeting of the seventh Board of Supervisors, the first provisional shareholders' general meeting of 2021, the second meeting of the eighth Board of Directors, the second meeting of the eighth Board of Supervisors, and the annual shareholders' general meeting of s 2020. For details Juchao Website:(http://www.cninfo.com.cn. (Announcement No.2021--01, 2021-02,2021-11,2021-17, 2021-18 and 2021-31). Ownership transfer of share changes √ Applicable □ Not applicable Regarding the transfer of the above restricted stocks, Peking Certified Public Accountants (special general partnership) verified some restricted stocks cancelled by the above repurchase and issued the capital verification report QXYZ/2021 0013. On May 13, 2021, the company completed the repurchase and cancellation procedures of the above-mentioned restricted stocks at the Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. For details Juchao Website:(http://www.cninfo.com.cn. (Announcement No.2021--35). Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period √ Applicable □ Not applicable 102 2021 Annual Report After the Company repurchased and cancelled some restricted stocks, the total capital of the Company was changed from 507,772,279 shares to 506,521,849 shares. The impact of this share change on the Company's financial indicators such as basic earnings per share and diluted earnings per share, net assets per share attributable to the company's common shareholders in the latest year and period is as follows: Items 2020 2021 According to the original According to the new According tot he new capital capital capital Basic earnings per share (yuan/share) 0.07 0.07 0.12 Diluted earnings per share 0.07 0.04 0.08 Net assets per share 5.45 5.46 5.56 Other information necessary to disclose for the company or need to disclosed under requirement from security regulators □ Applicable √Not applicable (2) Change of shares with limited sales condition In Shares Number of Number of Restricted Initial Date of Sharehold Unrestricted Increased Shares in the Reason for Restricted Restricted Restriction er Name Shares This Restricted Shares End of the Shares Shares Removal Term This Term Term Supervisors shall not transfer their shares in Zhang August 3,975 1,325 5,300 0 the company within the Xiaodong 11,2021 half year after resignation Total 3,975 1,325 5,300 0 -- -- II. Securities issue and listing 1.Explanation of the Situation of the Security Issue(No Preferred Shares) in the Report Period □ Applicable √ Not applicable 2.Change of asset and liability structure caused by change of total capital shares and structure √ Applicable □ Not applicable For details, please refer to "XI. Implementation of the Company's equity incentive plan, employee stock ownership plan or other employee incentive measures 1. Equity incentive" in "Section IV Corporate Governance" of this report. 103 2021 Annual Report 3.About the existing employees’ shares □Applicable √Not applicable III. Shareholders and actual controlling shareholder 1. Number of shareholders and shareholding In Shares Total preference shareholders Total number Total The total number with of common shareholders at of preferred shar voting rights shareholders the end of the eholders voting r recovered at at the end of 25,021 month from 24,982 0 0 ights restored at end the the date of period-end (if of last month reporting disclosing the any)(Note 8) before annual period annual report report disclosed(if any)(Note8) Particulars about shares held above 5% by shareholders or top ten shareholders Numbe Amoun Amount Number of share pledged/frozen Proport Change r of t of of ion of s in Nature of shares restrict un-restri Shareholders shares reportin shareholder held at ed cted State of share Amount held g period shares shares (%) period -end held held Shenzhen Investment State-owned 234,06 234,069 46.21% 0 Holdings Co., legal person 9,436 ,436 Ltd. Shenzhen Shenchao State-owned 16,129, 16,129, Technology 3.18% 0 Legal person 032 032 Investment Co., Ltd. Domestic 6,008,6 2,783,8 6,008,6 Sun Huiming 1.19% Nature person 53 86 53 Domestic 4,993,8 2,716,1 4,993,8 Deng Yan 0.99% Nature person 00 00 00 104 2021 Annual Report Domestic 2,823,0 2,823,0 Su Weipeng 0.56% 0 Pledge 2,800,000 Nature person 66 66 Domestic 2,792,4 2,792,4 2,792,4 Mao Yuxia 0.55% Nature person 00 00 00 China Construction Bank -Cinda Australia Bank 2,477,7 2,477,7 2,477,7 Other 0.49% New Energy 20 20 20 Industry Equity Securities Investment Fund Domestic 2,218,8 920,10 2,218,8 Qi Jianhong 0.44% Nature person 00 0 00 Domestic 2,082,9 484,20 2,082,9 Li Zengmao 0.41% Nature person 97 0 97 Domestic 1,808,8 1,808,8 1,808,8 Zhang Muxiu 0.36% Nature person 00 00 00 Strategy investors or general legal person becomes top 10 shareholders None due to rights issued (if applicable) (See Notes 3) Among the top 10 common shareholders, Shenzhen Investment Holdings Co., Ltd. and Shenzhen Shenchao Technology Investment Co., Ltd. do not constitute a concerted party Explanation on shareholders relationship. In addition, the company does not know whether there is an associated participating in the margin trading relationship among the top 10 ordinary shareholders, and between the top 10 ordinary business shareholders and the top 10 shareholders, or whether they are persons taking concerted action defined in Regulations on Disclosure of Information about Shareholding of Shareholders of Listed Company. Above shareholders entrusting or entrusted with voting rights, or None waiving voting rights Top 10 shareholders including the special account for repurchase (if None any) (see note 10) Shareholding of top 10 shareholders of unrestricted shares Quantity of unrestricted shares held at the end of Share type Name of the shareholder the reporting period Share type Quantity Shenzhen Investment Holdings Co., Common 234,069,436 234,069,436 Ltd. shares in RMB 105 2021 Annual Report Shenzhen Shenchao Technology Common 16,129,032 16,129,032 Investment Co., Ltd. shares in RMB Foreign shares Sun Huiming 6,008,653 in domestic 6,008,653 market Common Deng Yan 4,993,800 4,993,800 shares in RMB Common Su Weipeng 2,823,066 2,823,066 shares in RMB Common Mao Yuxia 2,792,400 2,792,400 shares in RMB China Construction Bank -Cinda Australia Bank New Energy Common 2,477,720 2,477,720 Industry Equity Securities shares in RMB Investment Fund Common Qi Jianhong 2,218,800 2,218,800 shares in RMB Common Li Zengmao 2,082,997 2,082,997 shares in RMB Common Zhang Muxiu 1,808,800 1,808,800 shares in RMB Explanation on associated Among the top 10 common shareholders, Shenzhen Investment Holdings Co., Ltd. and relationship or consistent action Shenzhen Shenchao Technology Investment Co., Ltd. do not constitute a concerted party among the top 10 shareholders of relationship. In addition, the company does not know whether there is an associated non-restricted negotiable shares and relationship among the top 10 ordinary shareholders, and between the top 10 ordinary that between the top 10 shareholders shareholders and the top 10 shareholders, or whether they are persons taking concerted of non-restricted negotiable shares action defined in Regulations on Disclosure of Information about Shareholding of and top 10 shareholders Shareholders of Listed Company. Explanation on shareholders participating in the margin trading None business(if any )(See Notes 4) Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period. □ Yes √ No The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy –back agreement dealing in reporting period. 2.Controlling shareholder Nature of Controlling Shareholders: Local state holding Type: Legal person 106 2021 Annual Report Name of the Legal Date of Organization Controlling representative/ Principal business activities incorporation code shareholder Leader Investment and acquisition of financial and similar financial stock rights such as bank, security, insurance, fund and guarantee; Engage in real estate development and management business within the limit of legally-acquired land use right; Carry out investment and service in the field of strategic emerging industry; Carry out investment, Shenzhen operation and management of state-owned stocks Investment October He Jianfeng 76756642-1 of wholly-owned, holding and joint-stock Holdings Co., 13,2004 company by reorganization & integration, capital Ltd. operation and asset disposal; Other businesses undertaken by authorization of municipal SASAC(State Asset Supervision and Administration Commission) (If the above business scope needs to be approved according to national regulations, the business can only be operated after the approvalis obtained) Shen PropertyA(000011),Quantity of shares 301.41 million,Shareholding ratio:50.57%;SPGA(000029), Quantity of shares 578.6 million,Shareholding ratio:57.19%;Shen Universe A(000023),Quantity of shares 9.59 million,Shareholding ratio:6.91%;Pingan (601318),Quantity of shares962.72 million,Shareholding Equity of other ratio:5.27%;Guosen Securities(002736),Quantity of shares 3,223.11 million,Shareholding ratio:33.53%; domestic/foreign Guotai Junan(601211),Quantity of A shares 609.43 million,Quantity of H shares 103.37 million,Total listed company shareholding ratio:8.00%;Telling Holding(000829),Quantity of shares 195.03 million,Shareholding with share ratio:19.03%;Shenzhen International(00152),Quantity of shares 985.64 million,Shareholding ratio: controlling and 43.48%;Beauty Star(002243),Quantity of shares 604.82 million,Shareholding ratio:49.96%;Hopewell share Highway(00737),Quantity of shares 2,213.45 million,Shareholding ratio:71.83%;Infinova(002528), participation by Quantity of shares 315.83 million, Shareholding ratio:26.35%;Eternal Asia(002183),Quantity of shares controlling 388.45 million, Shareholding ratio:14.96%;Shen Energy(000027),Quantity of shares 6.77 million, shareholder in Shareholding ratio:0.14%;Bank Communication(601328),Quantity of shares 9.52 million , Shareholding reporting period ratio:0.01%;Tehan Ecological(300197),Quantity of shares 113.98 million, Shareholding ratio:4.04%; China VANKE(02202),Quantity of shares 77.27 million,Shareholding ratio:0.66%;Shenzhen Water (301038),Quantity of shares 49.50 million,Shareholding ratio:37.50%. Changes of controlling shareholder in reporting period □ Applicable √ Not applicable No changes of controlling shareholder for the Company in reporting period. 3.Information about the controlling shareholder of the Company Actual controller nature:Local state owned assets management Actual controller type:Legal person 107 2021 Annual Report Legal Date of Name of the actual controller representative Organization code Principal business activities incorporation /Leader Performing the responsibilities State-owned Assets of investors on behalf of the Regulatory Commission of state and supervising and Wang Yongjian July 30,2004 K3172806-7 Shenzhen Municipal People's managing state-owned assets Government according to authorization and law. Equity of other domestic/foreign listed company with share It directly held 40.10% equity of Shenzhen Gas (601139); It directly held 21.93% equity of controlling and share Shenzhen Zhenye (000006); It directly held 43.91% equity of Shenzhen Energy (000027); participation by controlling shareholder in reporting period Changes of controlling shareholder in reporting period □ Applicable √ Not applicable No changes of controlling shareholder for the Company in reporting period Block Diagram of the ownership and control relations between the company and the actual controller The actual controller controls the company by means of trust or managing the assets in other way □Applicable √Not applicable 4.The cumulative number of shares pledged by the controlling shareholder or the largest shareholder of the company and its person acting in concert accounts for 80% of the number of shares held by the company □Applicable √Not applicable 108 2021 Annual Report 5.Particulars about other legal person shareholders with over 10% share held □Applicable √Not applicable 6.Situation of Share Limitation Reduction of Controlling Shareholders, Actual Controllers, Restructuring Party and Other Commitment Subjects □Applicable √Not applicable IV. Specific implementation of share repurchase during the reporting period Progress in implementation of share repurchase □ Applicable √Not applicable Implementation progress of reducing repurchased shares by centralized bidding □ Applicable √Not applicable 109 2021 Annual Report VIII. Situation of the Preferred Shares □Applicable √Not applicable The Company had no preferred shares in the reporting period. 110 2021 Annual Report IX. Corporate Bond □ Applicable √ Not applicable 111 2021 Annual Report X. Financial Report (1) Audit report Type of audit opinion Standard Unqualified opinion Date of signature of audit report March 15,2022 Name of audit firm Grant Thornton International Ltd.(Special General Partnership) The audit report number Zi Tong Shen Zi(2022)No.:441A002000 Names of the Certified Public Accountants Chen Zhifang, Liu Duoqi Auditors’ Report To all shareholders of Shenzhen Textile (Holdings) Co., Ltd.: I. 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, 2021, 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, 2021 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. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. (1) Recognition of revenue Please refer to Note V, 26 and Note VII, 42 to the financial statement for details of the relevant information disclosure. 1. Description of matters 112 2021 Annual Report The operating income of Shenzhen Textile in 2021 was RMB 2,293.7479 million, of which the main business income was RMB 2,265.9906 million, accounting for 98.79%. As revenue is one of the key performance indicators of Shenzhen Textile, there is inherent risk that the Company's management manipulates revenue recognition in order to achieve specific goals or expectations, and since the main business income is large, we identify revenue recognition as a key audit item. 2. Response to the audit For revenue recognition, we mainly implemented the following audit procedures: (1) Understand, evaluate and test the design effectiveness and operation effectiveness of internal control related to sales revenue cycle; (2) Obtain the main sales contracts according to the products and business types, check the relevant clauses related to revenue recognition, and interview the management to evaluate whether the revenue recognition meets the requirements of accounting standards; (3) Implement analytical procedures, compare the changes of income between this year and last year according to product types, observe the fluctuations of income between months and the changes of important customers in this period, and analyze the rationality of income changes based on factors such as the company's production capacity, market expansion and industry trends; (4) Perform detailed tests to check whether the basis related to sales revenue recognition is sufficient, including checking sales contracts or performing detailed tests, including checking sales contracts or orders, delivery orders, customs declarations and other supporting documents, evaluate the authenticity and accuracy of revenue recognition, and evaluate the authenticity and accuracy of revenue recognition; (5) Perform cut-off test to evaluate whether income is recorded in the proper accounting period; (6) Select samples from major customers on this recognition procedures, and perform alternative tests on the non-replied parts to judge the authenticity of sales revenue. (2) Inventory falling price reserves Please refer to Note V, 12 and Note VII, 8 to the financial statement for details of the relevant information disclosure. 1. Description of matters As of December 31, 2021, the balance of inventory depreciation reserve of Shenzhen Textile is RMB 98.0359 million. As the inventory depreciation reserve and its changes have a significant influence on the financial statements, the determination of the net realizable value of inventory involves the major judgment and estimation of the management, so we identify the inventory depreciation reserve as a key audit item. 2. Response to the audit The audit process implemented for inventory falling price reserves includes mainly: (1) Understand, evaluate and test the design and operation effectiveness of internal control related to inventory depreciation reserve; (2) Understand and evaluate the appropriateness of the Company's accrual policy for inventory depreciation reserve; (3) Understand and inquire about inventory storage location and inventory accounting method, and determine the scope of inventory supervision; Implement inventory supervision procedures to check whether the inventory is damaged, obsolete, outdated, defective, etc.; (4) Obtain the inventory year-end inventory age list, and carry out analytical review of inventory age according to the status of products to analyze whether the inventory depreciation reserve is reasonable; 113 2021 Annual Report (5) Review and evaluate the rationality of the major estimates made by the management when determining the net realizable value; (6) Obtain the calculation table of inventory depreciation reserve, check whether the accrual of inventory depreciation reserve is implemented according to relevant accounting policies, and recalculate the inventory depreciation reserve; Check the changes of inventory depreciation accrued in previous years, evaluate the rationality of estimated selling price and estimated related taxes and fees as key parameters of net realizable value, review the sufficiency of basis of estimated selling price, and analyze the rationality of inventory depreciation reserve. 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 2021, 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 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 114 2021 Annual Report 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 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. Grant Thornton International Ltd.(Special General Partnership) Chinese C.P.A. Chen Zhifang (Project Partner) Beijing China Chinese C.P.A. Liu Duoqi March 15, 2022 115 2021 Annual Report 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 December 31,2021 December 31,2020 Current asset: Monetary fund 302,472,828.60 279,087,236.95 Settlement provision Outgoing call loan Transactional financial assets 586,540,735.16 684,617,260.06 Derivative financial assets Note receivable 149,942,880.28 16,813,657.28 Account receivable 479,998,708.57 547,310,217.90 Financing of receivables 21,474,101.07 102,051,314.08 Prepayments 15,406,619.53 16,902,516.39 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Other account receivable 140,185,750.40 5,265,002.71 Including:Interest receivable Dividend receivable Repurchasing of financial assets Inventories 667,461,447.03 480,847,581.44 Contract assets Assets held for sales Non-current asset due within 1 year Other current asset 29,503,352.42 77,482,083.47 Total of current assets 2,392,986,423.06 2,210,376,870.28 Non-current assets: Loans and payment on other’s behalf disbursed Creditor's right investment Other creditor's right investment 116 2021 Annual Report Long-term receivable Long term share equity investment 133,022,325.77 147,929,137.23 Other equity instruments investment 186,033,829.72 190,607,427.54 Other non-current financial assets 30,650,943.40 30,650,943.40 Real estate investment 106,217,779.76 110,572,471.92 Fixed assets 2,424,741,252.86 790,183,905.38 Construction in progress 71,482,031.08 1,301,750,141.12 Production physical assets Oil & gas assets Use right assets 9,221,189.37 Intangible assets 48,635,160.00 36,048,978.91 Development expenses Goodwill Long-germ expenses to be amortized 5,387,295.94 2,876,561.53 Deferred income tax asset 3,708,596.78 5,243,425.26 Other non-current asset 84,560,280.09 143,307,689.66 Total of non-current assets 3,103,660,684.77 2,759,170,681.95 Total of assets 5,496,647,107.83 4,969,547,552.23 Current liabilities Short-term loans 37,575,113.83 Loan from Central Bank Borrowing funds Transactional financial liabilities Derivative financial liabilities Notes payable 16,682,324.12 Account payable 283,643,842.23 329,468,601.90 Advance receipts 1,805,311.57 3,542,394.33 Contract liabilities 68,955.21 279,631.27 Selling of repurchased financial assets Deposit taking and interbank deposit Entrusted trading of securities Entrusted selling of securities Employees’ wage payable 59,719,860.24 55,642,549.53 Tax payable 9,200,627.09 12,198,522.02 117 2021 Annual Report Other account payable 201,317,421.35 156,118,440.42 Including:Interest payable Dividend payable Fees and commissions payable Reinsurance fee payable Liabilities held for sales Non-current liability due within 1 year 5,175,393.52 Other current liability 27,523,903.58 Total of current liability 642,712,752.74 557,250,139.47 Non-current liabilities: Reserve fund for insurance contracts Long-term loan 683,016,243.25 343,100,174.35 Bond payable Including:preferred stock Sustainable debt Lease liability 4,243,855.71 Long-term payable Long-term remuneration payable to staff Expected liabilities 30,741,055.00 Deferred income 110,461,293.15 110,740,322.21 Deferred income tax liability 61,642,660.91 59,141,666.58 Other non-current liabilities Total non-current liabilities 890,105,108.02 512,982,163.14 Total of liability 1,532,817,860.76 1,070,232,302.61 Owners’ equity Share capital 506,521,849.00 507,772,279.00 Other equity instruments Including:preferred stock Sustainable debt Capital reserves 1,961,599,824.63 1,967,514,358.53 Less:Shares in stock 7,525,438.20 Other comprehensive income 119,682,119.05 116,605,932.42 Special reserve Surplus reserves 98,245,845.47 94,954,652.14 118 2021 Annual Report Common risk provision Retained profit 130,746,251.74 86,912,390.50 Total of owner’s equity belong to the parent 2,816,795,889.89 2,766,234,174.39 company Minority shareholders’ equity 1,147,033,357.18 1,133,081,075.23 Total of owners’ equity 3,963,829,247.07 3,899,315,249.62 Total of liabilities and owners’ equity 5,496,647,107.83 4,969,547,552.23 Legal Representative: Zhang Jian Person-in-charge of the accounting work:He Fei Person-in -charge of the accounting organ:Zhu Jingjing (2)Parent Company Balance Sheet In RMB Items December 31,2021 December 31,2020 Current asset: Monetary fund 130,270,313.58 113,560,327.21 Transactional financial assets 586,540,735.16 514,277,000.82 Derivative financial assets Note receivable Account receivable 7,935,911.24 1,461,400.20 Financing of receivables Prepayments 18,706.17 Other account receivable 14,383,631.68 7,450,934.40 Including:Interest receivable Dividend receivable Inventories 39,131.60 8,808.00 Contract assets Assets held for sales Non-current asset due within 1 year Other current asset Total of current assets 739,169,723.26 636,777,176.80 Non-current assets: Creditor's right investment 119 2021 Annual Report Other creditor's right investment Long-term receivable Long term share equity investment 2,089,070,531.86 2,103,977,343.32 Other equity instruments investment 169,974,388.84 177,142,433.45 Other non-current financial assets Real estate investment 98,174,132.57 101,644,481.93 Fixed assets 20,255,108.56 21,876,099.34 Construction in progress Production physical assets Oil & gas assets Use right assets Intangible assets 454,036.00 492,923.62 Development expenses Goodwill Long-germ expenses to be amortized Deferred income tax asset 3,672,545.57 5,097,360.00 Other non-current asset 55,790,497.23 96,871,196.43 Total of non-current assets 2,437,391,240.63 2,507,101,838.09 Total of assets 3,176,560,963.89 3,143,879,014.89 Current liabilities Short-term loans Transactional financial liabilities Derivative financial liabilities Notes payable Account payable 411,743.57 411,743.57 Advance receipts 639,024.58 2,875,936.58 Contract liabilities Employees’ wage payable 16,712,946.96 14,824,723.81 Tax payable 1,943,470.48 11,497,591.21 Other account payable 116,648,650.39 95,023,378.12 Including:Interest payable Dividend payable Liabilities held for sales Non-current liability due within 1 year 120 2021 Annual Report Other current liability Total of current liability 136,355,835.98 124,633,373.29 Non-current liabilities: Long-term loan Bond payable Including:preferred stock Sustainable debt Lease liability Long-term payable Long-term remuneration payable to staff Expected liabilities Deferred income 400,000.00 500,000.00 Deferred income tax liability 58,002,800.69 56,150,418.06 Other non-current liabilities Total non-current liabilities 58,402,800.69 56,650,418.06 Total of liability 194,758,636.67 181,283,791.35 Owners’ equity Share capital 506,521,849.00 507,772,279.00 Other equity instruments Including:preferred stock Sustainable debt Capital reserves 1,577,392,975.96 1,583,307,509.86 Less:Shares in stock 7,525,438.20 Other comprehensive income 108,762,538.39 107,632,186.85 Special reserve Surplus reserves 98,245,845.47 94,954,652.14 Retained profit 690,879,118.40 676,454,033.89 Total of owners’ equity 2,981,802,327.22 2,962,595,223.54 Total of liabilities and owners’ equity 3,176,560,963.89 3,143,879,014.89 (3)Consolidated Income statement In RMB Items Year 2021 Year 2020 I. Income from the key business 2,293,747,892.06 2,108,964,687.80 121 2021 Annual Report Incl:Business income 2,293,747,892.06 2,108,964,687.80 Interest income Insurance fee earned Fee and commission received II. Total business cost 2,182,483,548.35 2,030,833,538.40 Incl:Business cost 1,908,519,413.28 1,814,298,395.02 Interest expense Fee and commission paid Insurance discharge payment Net claim amount paid Net amount of withdrawal of insurance contract reserve Insurance policy dividend paid Reinsurance expenses Business tax and surcharge 10,523,548.09 7,347,125.65 Sales expense 37,973,336.39 28,644,230.87 Administrative expense 122,088,830.15 105,094,934.36 R & D costs 103,508,764.53 67,160,964.22 Financial expenses -130,344.09 8,287,888.28 Including:Interest expense 14,306,275.13 234,815.67 Interest income 1,655,853.59 3,702,735.59 Add: Other income 19,643,379.33 29,506,252.69 Investment gain(“-”for loss) 22,663,013.06 22,599,670.74 Incl: investment gains from affiliates 33,984.66 -3,446,613.86 Financial assets measured at amortized cost cease to be recognized as income Gains from currency exchange Net exposure hedging income Changing income of fair value 2,150,943.40 2,687,518.74 Credit impairment loss -4,981,560.53 -10,394,533.65 Impairment loss of assets -83,508,720.33 -72,412,477.63 Assets disposal income -597,458.77 276,544.73 III. Operational profit(“-”for loss) 66,633,939.87 50,394,125.02 Add :Non-operational income 21,285,786.64 1,445,662.38 Less: Non-operating expense 1,686,263.35 138,421.27 122 2021 Annual Report IV. Total profit(“-”for loss) 86,233,463.16 51,701,366.13 Less:Income tax expenses 11,118,796.96 8,203,720.98 V. Net profit 75,114,666.20 43,497,645.15 (I) Classification by business continuity 1.Net continuing operating profit 75,114,666.20 43,497,645.15 2.Termination of operating net profit (II) Classification by ownership 1.Net profit attributable to the owners of parent company 61,162,384.25 37,267,995.74 2.Minority shareholders’ equity 13,952,281.95 6,229,649.41 VI. Net after-tax of other comprehensive income 3,076,186.63 -3,131,850.89 Net of profit of other comprehensive income attributable to owners of the paren 3,076,186.63 -3,131,850.89 t company. (I)Other comprehensive income items that will not be reclassified into 3,275,250.36 -2,815,824.67 gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit plans of changes in net debt or net assets 2.Other comprehensive income under the equity method investee can not be rec lassified into profit or loss. 3. Changes in the fair value of investments in other equity instruments 3,275,250.36 -2,815,824.67 4. Changes in the fair value of the company’s credit risks 5.Other (II)Other comprehensive income that will be reclassified into profit or loss. -199,063.73 -316,026.22 1.Other comprehensive income under the equity method investee can be reclass ified into profit or loss. 2. Changes in the fair value of investments in other debt obligations 3. Other comprehensive income arising from the reclassification of financial assets 4.Allowance for credit impairments in investments in other debt obligations 5. Reserve for cash flow hedges 6.Translation differences in currency financial statements -199,063.73 -316,026.22 7.Other Net of profit of other comprehensive income attributable to Minority shareholders’ equity VII. Total comprehensive income 78,190,852.83 40,365,794.26 Total comprehensive income attributable to the owner of the parent company 64,238,570.88 34,136,144.85 Total comprehensive income attributable minority shareholders 13,952,281.95 6,229,649.41 VIII. Earnings per share 123 2021 Annual Report (I)Basic earnings per share 0.12 0.07 (II)Diluted earnings per share 0.12 0.07 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 RMB0.00. Legal Representative: Zhang Jian Person-in-charge of the accounting work:He Fei Person-in -charge of the accounting organ:Zhu Jingjing (4) Income statement of the Parent Company In RMB Items Year 2021 Year 2020 I. Income from the key business 78,159,686.19 61,296,888.21 Incl:Business cost 11,547,944.88 10,666,274.44 Business tax and surcharge 2,968,080.87 2,435,257.11 Sales expense 49,682.40 Administrative expense 45,821,418.49 38,680,586.21 R & D expense Financial expenses 283,692.12 -1,020,628.37 Including:Interest expenses 645,507.87 13,780.96 Interest income 359,182.13 1,012,329.64 Add:Other income 602,709.52 117,006.72 Investment gain(“-”for loss) 20,409,098.48 35,656,479.65 Including: investment gains from affiliates 33,984.66 -3,446,613.86 Financial assets measured at amortized cost cease to be recognized as income Net exposure hedging income Changing income of fair value 392,767.12 Credit impairment loss -710,513.74 -799,858.92 Impairment loss of assets -32,769.22 -95,343.40 Assets disposal income -386,933.41 286,963.56 II. Operational profit(“-”for loss) 37,370,459.06 46,093,413.55 Add :Non-operational income 283,354.84 562,910.99 Less:Non -operational expenses 27,244.40 III. Total profit(“-”for loss) 37,653,813.90 46,629,080.14 124 2021 Annual Report Less:Income tax expenses 5,900,206.38 7,746,152.13 IV. Net profit 31,753,607.52 38,882,928.01 1.Net continuing operating profit 2.Termination of operating net profit 31,753,607.52 38,882,928.01 V. Net after-tax of other comprehensive income 1,130,351.54 -3,131,850.89 (I)Other comprehensive income items that will not be reclassified into 1,329,415.27 -2,815,824.67 gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit plans of changes in net debt or net assets 2.Other comprehensive income under the equity method investee can not be reclassi fied into profit or loss. 3. Changes in the fair value of investments in other equity instruments 1,329,415.27 -2,815,824.67 4. Changes in the fair value of the company’s credit risks 5.Other (II)Other comprehensive income that will be reclassified into profit or loss -199,063.73 -316,026.22 1.Other comprehensive income under the equity method investee can be reclassified into profit or loss. 2. Changes in the fair value of investments in other debt obligations 3. Other comprehensive income arising from the reclassification of financial assets 4.Allowance for credit impairments in investments in other debt obligations 5. Reserve for cash flow hedges 6.Translation differences in currency financial statements -199,063.73 -316,026.22 7.Other VI. Total comprehensive income 32,883,959.06 35,751,077.12 VII. Earnings per share (I)Basic earnings per share 0 0 (II)Diluted earnings per share 0 0 (5) Consolidated Cash flow statement In RMB Items Year 2021 Year 2020 I.Cash flows from operating activities Cash received from sales of goods or rending of services 2,335,256,168.54 1,827,292,276.43 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 125 2021 Annual Report Cash received against original insurance contract Net cash received from reinsurance business Net increase of client deposit and investment Cash received from interest, commission charge and commission Net increase of inter-bank fund received Net increase of repurchasing business Net cash received by agent in securities trading Tax returned 9,423,408.29 116,428,895.93 Other cash received from business operation 88,625,329.53 123,408,000.43 Sub-total of cash inflow 2,433,304,906.36 2,067,129,172.79 Cash paid for purchasing of merchandise and services 1,860,349,920.78 1,742,576,211.51 Net increase of client trade and advance Net increase of savings in central bank and brother company Cash paid for original contract claim Net increase in financial assets held for trading purposes Net increase for Outgoing call loan Cash paid for interest, processing fee and commission Cash paid to staffs or paid for staffs 250,216,599.00 181,692,353.93 Taxes paid 101,786,653.96 43,712,017.07 Other cash paid for business activities 225,388,712.97 97,217,657.52 Sub-total of cash outflow from business activities 2,437,741,886.71 2,065,198,240.03 Net cash generated from /used in operating activities -4,436,980.35 1,930,932.76 II. Cash flow generated by investing Cash received from investment retrieving 10,817,803.07 6,437,640.00 Cash received as investment gains 14,881,941.03 2,908,856.94 Net cash retrieved from disposal of fixed assets, intangible assets, and other 83,520.00 2,800,914.39 long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received 1,128,309,484.61 3,240,861,003.37 Sub-total of cash inflow due to investment activities 1,154,092,748.71 3,253,008,414.70 Cash paid for construction of fixed assets, intangible assets and other long-term 447,622,193.08 564,014,103.94 assets Cash paid as investment Net increase of loan against pledge Net cash received from subsidiaries and other operational units 126 2021 Annual Report Other cash paid for investment activities 965,000,000.00 3,008,065,275.20 Sub-total of cash outflow due to investment activities 1,412,622,193.08 3,572,079,379.14 Net cash flow generated by investment -258,529,444.37 -319,070,964.44 III.Cash flow generated by financing Cash received as investment Including: Cash received as investment from minor shareholders Cash received as loans 339,219,000.00 342,660,000.00 Other financing –related cash received Sub-total of cash inflow from financing activities 339,219,000.00 342,660,000.00 Cash to repay debts Cash paid as dividend, profit, or interests 38,306,691.13 3,511,622.58 Including: Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities 12,638,273.00 9,344,136.30 Sub-total of cash outflow due to financing activities 50,944,964.13 12,855,758.88 Net cash flow generated by financing 288,274,035.87 329,804,241.12 IV. Influence of exchange rate alternation on cash and cash equivalents -1,236,414.38 -2,973,560.67 V.Net increase of cash and cash equivalents 24,071,196.77 9,690,648.77 Add: balance of cash and cash equivalents at the beginning of term 278,337,236.95 268,646,588.18 VI ..Balance of cash and cash equivalents at the end of term 302,408,433.72 278,337,236.95 (6) Cash Flow Statement of the Parent Company In RMB Items Year 2021 Year 2020 I.Cash flows from operating activities Cash received from sales of goods or rending of services 66,467,384.64 64,167,036.73 Tax returned Other cash received from business operation 42,417,781.16 6,524,378.62 Sub-total of cash inflow 108,885,165.80 70,691,415.35 Cash paid for purchasing of merchandise and services 13,344,258.31 4,462,365.49 Cash paid to staffs or paid for staffs 34,360,990.56 27,619,751.65 Taxes paid 23,084,768.18 34,788,061.46 Other cash paid for business activities 10,293,028.68 8,944,859.88 Sub-total of cash outflow from business activities 81,083,045.73 75,815,038.48 Net cash generated from /used in operating activities 27,802,120.07 -5,123,623.13 127 2021 Annual Report II. Cash flow generated by investing Cash received from investment retrieving 10,817,803.07 6,437,640.00 Cash received as investment gains 11,479,752.94 1,957,306.47 Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term 2,759,267.00 assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received 466,820,636.28 1,623,459,188.57 Sub-total of cash inflow due to investment activities 489,118,192.29 1,634,613,402.04 Cash paid for construction of fixed assets, intangible assets and other long-term assets 2,247,719.06 2,528,077.97 Cash paid as investment 3,555,968.96 Net cash received from subsidiaries and other operational units Other cash paid for investment activities 475,000,000.00 1,530,015,275.20 Sub-total of cash outflow due to investment activities 477,247,719.06 1,536,099,322.13 Net cash flow generated by investment 11,870,473.23 98,514,079.91 III. Cash flow generated by financing Cash received as investment Cash received as loans Other financing –related ash received 6,545,900.00 Sub-total of cash inflow from financing activities 6,545,900.00 Cash to repay debts Cash paid as dividend, profit, or interests 15,176,281.23 11,231.64 Other cash paid for financing activities 7,820,298.30 14,344,136.30 Sub-total of cash outflow due to financing activities 22,996,579.53 14,355,367.94 Net cash flow generated by financing -22,996,579.53 -7,809,467.94 IV. Influence of exchange rate alternation on cash and cash equivalents V.Net increase of cash and cash equivalents 16,676,013.77 85,580,988.84 Add: balance of cash and cash equivalents at the beginning of term 113,560,327.21 27,979,338.37 VI ..Balance of cash and cash equivalents at the end of term 130,236,340.98 113,560,327.21 (7) Consolidated Statement on Change in Owners’ Equity Amount in this period In RMB Year 2021 Owner’s equity Attributable to the Parent Company Min Tota Items Sha Other Equity Capi Less Othe Spec Surp Com Reta Othe Subt or l of re instrument tal : r ializ lus mon ined r otal shar own 128 2021 Annual Report Ca reser Shar Com ed reser risk profi ehol ers’ pita Pre Su ves es in preh reser ves prov t ders’ equit l fer stai stoc ensi ve ision equit y Ot red na k ve y her sto ble Inco ck de me bt 507 1,96 116, 94,9 86,9 2,76 1,13 3,89 I .Balance at ,77 7,52 7,51 605, 54,6 12,3 6,23 3,08 9,31 the end of last 2,2 5,43 4,35 932. 52.1 90.5 4,17 1,07 5,24 year 79. 8.20 8.53 42 4 0 4.39 5.23 9.62 00 Add: Change of accounti ng policy Correcting of previous errors Merger of entities under common control Other 507 II. Balance at 1,96 116, 94,9 86,9 2,76 1,13 3,89 ,77 7,52 the beginning 7,51 605, 54,6 12,3 6,23 3,08 9,31 2,2 5,43 of current 4,35 932. 52.1 90.5 4,17 1,07 5,24 79. 8.20 year 8.53 42 4 0 4.39 5.23 9.62 00 -1, -5,9 -7,5 43,8 50,5 13,9 64,5 III .Changed 250 3,07 3,29 14,5 25,4 33,8 61,7 52,2 13,9 in the current ,43 6,18 1,19 33.9 38.2 61.2 15.5 81.9 97.4 year 0.0 6.63 3.33 0 0 4 0 5 5 0 61,1 65,3 13,9 79,3 (1)Total 4,23 62,3 96,8 52,2 49,1 comprehensiv 4,51 84.2 96.6 81.9 78.6 e income 2.42 5 7 5 2 (II) -1, -5,9 -7,5 360, 360, Investment or 250 14,5 25,4 474. 474. decreasing of ,43 33.9 38.2 30 30 129 2021 Annual Report capital by 0.0 0 0 owners 0 1.Ordinary S hares invested by sharehold ers 2.Holders of other equity i nstruments in vested capital 3.Amount of shares paid and accounted as owners’ equity -1, -5,9 -7,5 250 360, 360, 14,5 25,4 4.Other ,43 474. 474. 33.9 38.2 0.0 30 30 0 0 0 -18, -15, -15, 3,17 (III)Profit 371, 195, 195, 5,36 allotment 016. 655. 655. 0.75 22 47 47 -3,1 1.Providing 3,17 75,3 of surplus 5,36 60.7 reserves 0.75 5 2.Providing of common risk provisions 3.Allotment -15, -15, -15, to the owners 195, 195, 195, (or 655. 655. 655. shareholders) 47 47 47 4.Other (IV) Internal -1,1 115, 1,04 transferring of 58,3 832. 2,49 owners’ 25.7 58 3.21 equity 9 130 2021 Annual Report 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.Change amount of defined benefit plans that carry forward Retained earnings 5.Other comprehensiv -1,1 115, 1,04 e income 58,3 832. 2,49 carry-over 25.7 58 3.21 retained 9 earnings 6.Other (V). Special reserves 1. Provided this year 2.Used this term (VI)Other 506 1,96 119, 98,2 130, 2,81 1,14 3,96 IV. Balance at ,52 1,59 682, 45,8 746, 6,79 7,03 3,82 the end of this 1,8 9,82 119. 45.4 251. 5,88 3,35 9,24 term 49. 4.63 05 7 74 9.89 7.18 7.07 00 131 2021 Annual Report Amount in last year In RMB Year 2020 Owner’s equity Attributable to the Parent Company Other Equity Othe Mino instrument Total Less r r Sha Spec Com of Capi : Com Surp Reta share Items Pr owne re Su ializ mon tal Shar preh lus ined Othe Subt holde efe rs’ Ca sta ed risk reser es in ensi reser profi r otal rs’ rre Oth equit pita ina reser prov ves stoc ve ves t equit d er y l ble ve ision k Inco y sto de ck me bt 509 1,97 16,1 119, 90,5 49,3 2,72 1,126 3,854 I .Balance at ,33 4,92 39,0 737, 96,9 07,7 7,76 ,851, ,615, the end of 8,4 2,24 03.4 783. 23.3 64.0 4,14 425.8 570.1 last year 29. 8.03 0 31 9 3 4.36 2 8 00 Add: Change of accounti ng policy Correcting of previous errors Merger of entities under common control Other 509 II.Balance at 1,97 16,1 119, 90,5 49,3 2,72 1,126 3,854 ,33 the beginning 4,92 39,0 737, 96,9 07,7 7,76 ,851, ,615, 8,4 of current 2,24 03.4 783. 23.3 64.0 4,14 425.8 570.1 29. year 8.03 0 31 9 3 4.36 2 8 00 -1, -7,4 -8,6 -3,1 37,6 38,4 III .Changed 4,35 6,229 44,69 566 07,8 13,5 31,8 04,6 70,0 in the current 7,72 ,649. 9,679 ,15 89.5 65.2 50.8 26.4 30.0 year 8.75 41 .44 0.0 0 0 9 7 3 132 2021 Annual Report 0 37,2 38,8 (1)Total 1,56 6,229 45,06 67,9 30,5 comprehensi 2,50 ,649. 0,153 95.7 04.3 ve income 8.59 41 .74 4 3 (II) -1, -7,4 -8,6 Investment or 566 -360 -360, 07,8 13,5 decreasing of ,15 ,474 474.3 89.5 65.2 capital by 0.0 .30 0 0 0 owners 0 1.Ordinary S hares investe d by sharehol ders 2.Holders of other equity i nstruments in vested capital 3.Amount of shares paid and accounted as owners’ equity -1, -7,4 -8,6 566 -360 -360, 07,8 13,5 4.Other ,15 ,474 474.3 89.5 65.2 0.0 .30 0 0 0 0 -3,8 3,88 (III)Profit 88,2 8,29 allotment 92.8 2.80 0 -3,8 1.Providing 3,88 88,2 of surplus 8,29 92.8 reserves 2.80 0 2.Providing of common risk provisions 133 2021 Annual Report 3.Allotment to the owners (or shareholders) 4.Other (IV) Internal -4,6 469, 4,22 transferring 94,3 435. 4,92 of owners’ 59.4 95 3.53 equity 8 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.Change amount of defined benefit plans that carry forward Retained earnings 5.Other comprehensi -4,6 469, 4,22 ve income 94,3 435. 4,92 carry-over 59.4 95 3.53 retained 8 earnings 6.Other (V). Special 134 2021 Annual Report reserves 1. Provided this year 2.Used this term (VI)Other 507 1,96 116, 94,9 86,9 2,76 1,133 3,899 IV. Balance ,77 7,52 7,51 605, 54,6 12,3 6,23 ,081, ,315, at the end of 2,2 5,43 4,35 932. 52.1 90.5 4,17 075.2 249.6 this term 79. 8.20 8.53 42 4 0 4.39 3 2 00 (8)Statement of change in owner’s Equity of the Parent Company Amount in this period In RMB Year 2021 Other Equity instrument Other Capita Less: Compr Specia Surplu Retai Share Total of Items l Shares ehensi lized s ned capit Prefe Sust Other owners’ Othe reserv in ve reserv reserv profi al rred aina equity r es stock Incom e es t stock ble e debt 676, I.Balance at 507,7 1,583, 107,63 94,954 7,525, 454, 2,962,59 the end of last 72,27 307,50 2,186. ,652.1 438.20 033. 5,223.54 year 9.00 9.86 85 4 89 Add: Change of accountin g policy Correcting of previous errors Other 676, II. Balance at 507,7 1,583, 107,63 94,954 7,525, 454, 2,962,59 the beginning 72,27 307,50 2,186. ,652.1 438.20 033. 5,223.54 of current year 9.00 9.86 85 4 89 III .Changed -1,25 -5,914, -7,525, 1,130, 3,291, 14,4 19,207,1 135 2021 Annual Report in the current 0,430 533.90 438.20 351.54 193.33 25,0 03.68 year .00 84.5 1 31,7 (I)Total 2,288, 53,6 34,042,2 comprehensive 677.33 07.5 84.85 income 2 (II) Investment -1,25 or decreasing -5,914, -7,525, 360,474. 0,430 of capital by 533.90 438.20 30 .00 owners 1.Ordinary Sh ares invested b y shareholders 2.Holders of o ther equity inst ruments invest ed capital 3.Amount of shares paid and accounted as owners’ equity -1,25 -5,914, -7,525, 360,474. 4.Other 0,430 533.90 438.20 30 .00 -18,3 (III)Profit 3,175, 71,0 -15,195, allotment 360.75 16.2 655.47 2 1.Providing of -3,17 3,175, surplus 5,36 360.75 reserves 0.75 2.Allotment -15,1 to the owners 95,6 -15,195, (or 55.4 655.47 shareholders) 7 3.Other (IV) Internal 1,04 -1,158, 115,83 transferring of 2,49 325.79 2.58 owners’ equity 3.21 136 2021 Annual Report 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.Change amount of defined benefit plans that carry forward Retained earnings 5.Other comprehensive 1,04 income -1,158, 115,83 2,49 carry-over 325.79 2.58 3.21 retained earnings 6.Other (V) Special reserves 1. Provided this year 2.Used this term (VI)Other 690, IV. Balance at 506,5 1,577, 108,76 98,245 879,1 2,981,80 the end of this 21,84 392,97 2,538. ,845.4 18.4 2,327.22 term 9.00 5.96 39 7 0 Amount in last year In RMB Items Year 2020 137 2021 Annual Report Other Equity Other instrument Shar Capit Less: Comp Surpl Pref Special Total of e al Share rehen us Retaine erre Sust ized Other owners’ Capi Othe reserv s in sive reserv d profit d aina reserve equity tal r es stock Incom es stoc ble e k debt 509, I.Balance at 1,589, 16,13 110,7 90,59 637,23 338, 2,921,66 the end of last 869,4 9,003. 64,03 6,923 4,475.1 429. 4,361.24 year 99.36 40 7.74 .39 5 00 Add: Change of accounti ng policy Correcting of previous errors Other II. Balance at 509, 1,589, 16,13 110,7 90,59 637,23 the beginning 338, 2,921,66 869,4 9,003. 64,03 6,923 4,475.1 of current 429. 4,361.24 99.36 40 7.74 .39 5 year 00 III. Changed -1,56 -6,561 -8,613 -3,131 4,357 39,219, 40,930,8 in the current 6,15 ,989.5 ,565.2 ,850.8 ,728. 558.74 62.30 year 0.00 0 0 9 75 (I)Total 1,562, 38,882, 40,445,4 comprehensiv 508.5 928.01 36.60 e income 9 (II) Investment or -1,56 -7,407 -8,613 -360,474. decreasing of 6,15 ,889.5 ,565.2 30 capital by 0.00 0 0 owners 1.Ordinary S hares investe d by sharehol ders 2.Holders of other equity i 138 2021 Annual Report nstruments in vested capital 3.Amount of shares paid and accounted as owners’ equity -1,56 -7,407 -8,613 -360,474. 4.Other 6,15 ,889.5 ,565.2 30 0.00 0 0 3,888 (III)Profit -3,888, ,292. allotment 292.80 80 1.Providing 3,888 -3,888, of surplus ,292. 292.80 reserves 80 2.Allotment to the owners (or shareholders) 3.Other (IV) Internal -4,694 transferring 469,4 4,224,9 ,359.4 of owners’ 35.95 23.53 8 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 139 2021 Annual Report reserves. 4.Change amount of defined benefit plans that carry forward Retained earnings 5.Other comprehensiv -4,694 e income 469,4 4,224,9 ,359.4 carry-over 35.95 23.53 8 retained earnings 6.Other (V) Special reserves 1. Provided this year 2.Used this term 845,9 845,900. (VI)Other 00.00 00 507, IV. Balance at 1,583, 7,525, 107,6 94,95 676,45 772, 2,962,59 the end of 307,5 438.2 32,18 4,652 4,033.8 279. 5,223.54 this term 09.86 0 6.85 .14 9 00 III. Basic Information of the Company Shenzhen Textile (Group) Co., Ltd. (hereinafter referred to as "Company" or "the Company") is a joint-stock company registered in Guangdong Province with a registered capital of RMB 506.521849 million and a unified social credit code of 91440300192173749Y. The Company has publicly issued RMB common shares (A shares) and domestic listed foreign shares (B shares) to the public at home and abroad, and listed and traded them. The Company is headquartered address are 6/F,Shenfang Building, No.3 Huaqiang Road. North, Futian District, Shenzhen. 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 (Group) Co., Ltd. , As of December 31, 2021, the Company has issued a total of 506,521,849.00 shares. The Company has established the corporate governance structure of General Meeting of Shareholders, Board of Directors and Board of Supervisors, and currently has the Board Office, Office, Strategic Development 140 2021 Annual Report Department, Operation and Management Department, Finance Department, Audit Department, Human Resources Department and other departments. 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. The financial statements have been authorized for issuance of the 11st meeting of the 8th Board of Directors of the Group on March 15, 2022. As of December 31, 2021, A total of 8 subsidiaries of the Company are included in the scope of consolidation. For details, please refer to Section X Financial Report ,IX "Rights and Interests in Other Subjects". IV.Basis for the preparation of financial statements (1)Basis for the preparation The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises promulgated by the Ministry of Finance and its application guidelines, interpretations and other relevant provisions (collectively referred to as the "Accounting Standards for Business Enterprises"). In addition, the Company also disclosed relevant financial information in accordance with the Rules No.15 for the Information Disclosure and Compilation of Companies Offering Securities Public Issuance - General Provisions on Financial Report (revised in 2014) issued by China Securities Regulatory Commission. The accounting of the Company is based on accrual basis. Except for some financial instruments, the financial statements are based on historical costs. In case of asset impairment, impairment provision shall be made in accordance with relevant regulations. (2)Continuation This financial statement is presented on the basis of going concern. V. Important accounting policies and estimations Specific accounting policies and accounting estimates tips: According to its own production and operation characteristics, the Company determines the policies of depreciation of fixed assets, amortization of intangible assets and revenue recognition. See Note V. 16, ,Note V,19 and Note V. 26 for specific accounting policies. 1. Statement on complying with corporate accounting standards This financial statement conforms to the requirements of Accounting Standards for Business Enterprises, and truly and completely reflects the combination and financial status of the Company on December 31, 2021, as well as the combination and operating results and cash flow 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 The operating cycle of the Company is 12 months. 4. Accounting standard money The Company and its domestic subsidiaries use RMB as their bookkeeping base currency. The overseas 141 2021 Annual Report subsidiaries of the Company determine RMB as their bookkeeping base currency according to the currency in the main economic environment in which they operate. The currency used by the Company in preparing the financial statements is RMB. 5. Accounting process method of enterprise consolidation under same and different controlling. (1)Enterprise merger under same control: For business combination under the same control, the assets and liabilities of the combined party acquired by the merging party during the combination shall be measured according to the book value of the combined party in the consolidated financial statements of the final controlling party on the combination date, except for the adjustment due to different accounting policies. The difference between the book value of the combination consideration and the book value of the net assets obtained in the combination adjusts the capital reserve. If the capital reserve is insufficient to offset, the retained earnings will be adjusted. Business combination under the same control shall be achieved step by step through multiple transactions In individual financial statements, the share of the book value of the net assets of the combined party in the consolidated financial statements of the ultimate controlling party shall be taken as the initial investment cost of the investment on the combination day calculated by the shareholding ratio on the combination day; Adjust the capital reserve for the difference between the initial investment cost and the book value of the investment held before the combination plus the book value of the consideration paid on the new day of the combination. If the capital reserve is insufficient to offset, adjust the retained earnings. In the consolidated financial statements, the assets and liabilities of the combined party acquired by the merging party in the combination shall be measured according to the book value in the consolidated financial statements of the ultimate controlling party on the combination date, except for the adjustment due to different accounting policies; The difference between the book value of the investment held before the combination plus the book value of the consideration paid on the new day of the combination and the book value of the net assets obtained during the combination will be adjusted for capital reserve. If the capital reserve is insufficient to offset, the retained earnings will be adjusted. For the long-term equity investment held by the merging party before obtaining the control right of the combined party, the relevant profits and losses, other comprehensive income and other changes in owner's equity have been recognized from the date of obtaining the original equity and the date when the merging party and the combined party are under the same final control to the combination date, and the initial retained earnings or current profits and losses during the comparative report period shall be offset respectively. (2) Business combination involving entities not under common control For business combination not under the same control, the combination cost refers to the assets paid, liabilities incurred or assumed, and fair value of the issued equity securities in order to gain control over the acquiree on the acquisition date. On the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree are recognized at fair value. The difference between the combination cost and the fair value share of identifiable net assets acquired in the combination is recognized as goodwill, and the accumulated impairment provision is deducted by cost for subsequent measurement; The difference between the combination cost and the fair value share of identifiable net assets acquired by the acquiree in the combination shall be recorded into the current profits and losses after review. Business combination under the same control shall be achieved step by step through multiple transactions In individual financial statements, the sum of the book value of the equity investment held by the acquiree 142 2021 Annual Report before the acquisition date and the new investment cost on the acquisition date is taken as the initial investment cost of the investment. Other comprehensive income recognized by the equity investment held before the acquisition date due to accounting by the equity method is not treated on the acquisition date, and accounting treatment is carried out on the same basis as that of the investee's direct disposal of related assets or liabilities; The owner's equity recognized due to the change of owner's equity of the investee except net profit and loss, other comprehensive income and profit distribution shall be transferred to the current profit and loss during the disposal period when the investment is disposed. If the equity investment held before the acquisition date is measured by fair value, the accumulated changes in fair value originally included in other comprehensive income will be transferred to the current profits and losses when accounting by cost method. In the consolidated financial statements, the consolidated cost is the sum of the consideration paid on the acquisition date and the fair value of the equity of the acquiree held before the acquisition date on the acquisition date. The equity of the acquiree held before the acquisition date shall be re-measured according to the fair value of the equity on the acquisition date, and the difference between the fair value and its book value shall be included in the current income; Equity of the acquiree held before the acquisition date involves other comprehensive income, and other changes in owner's equity are converted into current income on the acquisition date, except for other comprehensive income arising from the remeasurement of net liabilities or changes in net assets of the set income plan by the investee. (3) Treatment of transaction costs in business combination Intermediary expenses such as auditing, legal services, evaluation and consultation, and other related management expenses incurred for business combination are included in the current profits and losses when they occur. Transaction costs of equity securities or debt securities issued as combination consideration are included in the initial recognition amount of equity securities or debt securities. 6 Compilation method of consolidated financial statements (1)The scope of consolidation The consolidation scope of consolidated financial statements is determined on the basis of control. Control refers to that the company has the power over the investee, enjoys variable returns by participating in the related activities of the investee, and has the ability to use the power over the investee to affect its return amount. Subsidiaries refer to subjects controlled by the Company (including enterprises, divisible parts of investee, structured subjects, etc.). The consolidation scope of consolidated financial statements is determined on the basis of control. Control refers to that the company has the power over the investee, enjoys variable returns by participating in the related activities of the investee, and has the ability to use the power over the investee to affect its return amount. Subsidiaries refer to subjects controlled by the Company (including enterprises, divisible parts of investee, structured subjects, etc.). (2) Compilation method of consolidated financial statements The consolidated financial statements are based on the financial statements of the Company and its subsidiaries, and are prepared by the Company according to other relevant information. When preparing the consolidated financial statements, the accounting policies and accounting period requirements of the Company and its subsidiaries are consistent, and major transactions and current balances between companies are offset. During the reporting period, the subsidiaries and businesses increased due to the business combination under the same control shall be deemed to be included in the consolidation scope of the Company from the date when they 143 2021 Annual Report are controlled by the ultimate controller, and their operating results and cash flows from the date when they are controlled by the ultimate controller shall be included in the consolidated income statement and the consolidated cash flow statement respectively. During the reporting period, the income, expenses and profits of subsidiaries and businesses increased from the acquisition date to the end of the reporting period due to business combination not under the same control during the reporting period are included in the consolidated income statement, and their cash flows are included in the consolidated cash flow statement. The part of shareholders' equity of subsidiaries that is not owned by the Company is listed separately as minority shareholders' equity in the consolidated balance sheet; The share of minority shareholders' equity in the current net profit and loss of subsidiaries is listed as "minority shareholders' profit and loss" under the net profit item in the consolidated income statement. If the loss of subsidiary shared by minority shareholders exceeds the share enjoyed by minority shareholders in the initial owner's equity of such subsidiary, the balance still offsets minority shareholders' equity. (3) Acquisition of minority shareholders' equity of subsidiaries The capital reserve in the consolidated balance sheet shall be adjusted for the difference between the newly acquired long-term equity investment cost due to the acquisition of minority shares and the share of net assets continuously calculated by subsidiaries from the acquisition date or combination date, and the difference between the disposal price obtained from partial disposal of equity investment in subsidiaries without losing control and the share of net assets continuously calculated by subsidiaries from the acquisition date or combination date corresponding to the disposal of long-term equity investment. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. (4) Treatment of losing control over subsidiaries If the control over the original subsidiary is lost due to the disposal of part of the equity investment or other reasons, the remaining equity shall be re-measured according to its fair value on the date of loss of control; The sum of the consideration obtained from the disposal of equity and the fair value of remaining equity, minus the sum of the share of the original subsidiary's book value of net assets calculated continuously from the acquisition date and goodwill calculated according to the original shareholding ratio, and the difference formed is included in the investment income of the current period of loss of control. Other comprehensive income related to the original subsidiary's equity investment will be transferred to the current profits and losses when the control right is lost, except for other comprehensive income generated by the investee's remeasurement of the net liabilities or changes in net assets of the set income plan. 7.Joint venture arrangements classification and Co-operation accounting treatment Joint venture arrangement refers to an arrangement under the joint control of two or more participants. The joint venture arrangement of the Company is divided into joint operation and joint venture. (1) Joint operation Joint operation refers to the joint venture arrangement in which the Company is entitled to the assets related to the arrangement and bears the liabilities related to the arrangement. The Company recognizes the following items related to the share of interests in joint operation, and carries out accounting treatment in accordance with the relevant accounting standards for business enterprises: A. Recognize assets held separately and assets held jointly according to their shares; B. Recognize the liabilities undertaken separately, and recognize the liabilities jointly undertaken according 144 2021 Annual Report to their shares; C. Recognize the income generated from the sale of its share of joint operating output; D. Recognize the income generated by the sale of output from joint operation according to their shares; E. Recognize the expenses incurred separately, and recognize the expenses incurred in joint operation according to their shares. (2) Joint venture A joint venture refers to a joint venture arrangement in which the Company only has rights to the net assets of the arrangement. The Company shall carry out accounting treatment on the investment of the joint venture in accordance with the provisions on accounting of long-term equity investment by the equity method. 8.Recognition Standard of Cash & Cash Equivalents Cash refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents refer to investments held by the Company with short term, strong liquidity, easy conversion into known cash and little risk of value change. 9.Foreign currency transaction In case of foreign currency business of the Company, the exchange rate determined by a systematic and reasonable method which is similar to the spot exchange rate on the transaction date shall be used to convert it into the bookkeeping base currency amount. Balance sheet date: foreign currency monetary items shall be converted at the spot exchange rate on the balance sheet date. Exchange differences arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or the previous balance sheet date are included in the current profits and losses; For foreign currency non-monetary items measured at historical cost, the spot exchange rate on the transaction date is still adopted; Foreign currency non-monetary items measured at fair value are converted at the spot exchange rate on the fair value determination date, and the difference between the converted bookkeeping base currency amount and the original bookkeeping , According to the nature of non-monetary items, it is included in current profits and losses or other comprehensive income. 10.Financial instruments Financial instruments refer to contracts that form financial assets of one party and financial liabilities or equity instruments of other parties. (1) Recognition and derecognition of financial instruments When the Company becomes a party to a financial instrument contract, a financial asset or financial liability is recognized. Financial assets that meet one of the following conditions shall be derecognized: ① Termination of the contractual right to receive cash flow from the financial asset; ② The financial asset has been transferred and the following conditions for derecognition of financial asset transfer are met. If all or part of the current obligations of a financial liability have been discharged, the financial liability or part of it shall be derecognized. If the Company (debtor) signs an agreement with the creditor to replace the existing financial liabilities by assuming new financial liabilities, and the contract terms of the new financial liabilities are substantially different from those of the existing financial liabilities, the existing financial liabilities shall be 145 2021 Annual Report derecognized and the new financial liabilities shall be recognized at the same time. When trading the financial assets in a conventional way, accounting recognition and derecognition shall be carried out according to the trading day. (2) Classification and measurement of financial assets According to the business model of managing financial assets and the contractual cash flow characteristics of financial assets, the Company divides financial assets into the following three categories: financial assets measured at amortized cost, financial assets measured at fair value with changes included in other comprehensive income, and financial assets measured at fair value with changes included in current profits and losses. Financial assets measured at amortized cost The Company classifies the financial assets that meet the following conditions and are not designated to be measured at fair value with changes included in current profits and losses as financial assets measured at amortized cost: The Company's business model of managing such financial assets is to collect contract cash flow as the goal; According to the contract terms of the financial asset, the cash flow generated on a specific date is only the payment of principal and interest based on the unpaid principal amount. After initial recognition, such financial assets are measured in amortized cost by the effective interest rate method. Gains or losses arising from financial assets measured in amortized cost that are not part of any hedging relationship are included in current profits and losses when derecognition, amortization according to the effective interest rate method, or impairment recognition. Financial assets measured at fair value and changes included in other comprehensive income The Company classifies financial assets that meet the following conditions and are not designated to be measured at fair value with changes included in current profits and losses as financial assets measured at fair value with changes included in other comprehensive income: The company's business model of managing the financial assets aims at both collecting contract cash flow and selling the financial assets; According to the contract terms of the financial asset, the cash flow generated on a specific date is only the payment of principal and interest based on the unpaid principal amount. After initial recognition, the fair value of such financial assets is subsequently measured. Interest, impairment losses or gains and exchange gains and losses calculated by the effective interest rate method are included in the current profits and losses, while other gains or losses are included in other comprehensive income. Upon termination of recognition, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in current profits and losses. Financial assets measured at fair value with changes included in current profits and losses Except for the above financial assets measured at amortized cost and at fair value with changes included in other comprehensive income, the Company classifies all other financial assets as financial assets measured at fair value with changes included in current profits and losses. At the time of initial recognition, in order to eliminate or significantly reduce accounting mismatch, the Company irrevocably designated some financial assets that should have been measured at amortized cost or at fair value with changes included in other comprehensive income as financial assets measured at fair value with changes included in current profits and losses. After initial recognition, the financial assets are subsequently measured at fair value, and the resulting gains or losses (including interest and dividend income) are included in the current profits and losses, unless the financial assets are part of the hedging relationship. 146 2021 Annual Report However, for non-trading equity instrument investments, the Company can irrevocably designate them as financial assets measured at fair value with changes included in other comprehensive income upon initial recognition. The designation is made on the basis of a single investment, and the relevant investment conforms to the definition of equity instruments from the perspective of the issuer. After initial recognition, the fair value of such financial assets is subsequently measured. Dividend income that meets the requirements is included in profit or loss, and other gains or losses and changes in fair value are included in other comprehensive income. Upon termination of recognition, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in retained income. The business model of managing financial asset refers to how the Company manages financial assets to generate cash flow. The business model determines whether the cash flow of financial assets managed by the Company comes from contract cash flow, sale of financial assets or both. The Company determines the business model of managing financial assets based on objective facts and specific business objectives of managing financial assets decided by key management personnel. The Company evaluates the contractual cash flow characteristics of financial assets to determine whether the contractual cash flow generated by related financial assets on a specific date is only the payment of principal and interest based on the unpaid principal amount. Where, the principal refers to the fair value of financial assets at initial recognition; Interest includes consideration for the time value of money, credit risk related to the unpaid principal amount in a specific period, and other basic borrowing risks, costs and profits. In addition, the Company evaluates the contract clauses that may cause changes in the time distribution or amount of cash flow of financial assets contracts to determine whether they meet the requirements of the above-mentioned contract cash flow characteristics. Only when the Company changes its business model for managing financial assets, all affected financial assets shall be reclassified on the first day of the first reporting period after the business model changes, otherwise, financial assets shall not be reclassified after initial recognition. Financial assets are measured at fair value upon initial recognition. For financial assets measured at fair value, whose changes are included in current profits and losses, relevant transaction costs are directly included in current profits and losses; For other types of financial assets, relevant transaction costs are included in the initial recognition amount. Accounts receivable arising from the sale of products or the provision of labor services that do not include or take into account significant financing components are initially recognized by the Company in accordance with the amount of consideration that the Company is expected to be entitled to receive. (3) Classification and measurement of financial liabilities At initial recognition, the financial liabilities of the Company are classified into: financial liabilities measured at fair value with changes included in current profits and losses, and financial liabilities measured at amortized cost. For financial liabilities that are not classified as measured at fair value with changes included in current profits and losses, relevant transaction costs are included in their initial recognition amount. Financial liabilities measured at fair value with changes included in the current profits and losses Financial liabilities measured at fair value with changes included in current profits and losses include transactional financial liabilities and financial liabilities designated at fair value at initial recognition with changes included in current profits and losses. Such financial liabilities are subsequently measured according to fair value, and the gains or losses caused by changes in fair value and dividends and interest expenses related to such financial liabilities are included in current profits and losses. .Financial liabilities measured in amortized cost 147 2021 Annual Report Other financial liabilities are subsequently measured according to the amortized cost by the effective interest rate method, and the gains or losses arising from derecognition or amortization are included in the current profits and losses. Distinction between financial liabilities and equity instruments Financial liabilities refer to liabilities that meet one of the following conditions: ① Contract obligation to deliver cash or other financial assets to other parties. ② The contractual obligation to exchange financial assets or financial liabilities with other parties under potential unfavorable conditions. ③ Non-derivative contracts that need to be settled or can be settled by the enterprise's own equity instruments in the future, for which the enterprise will deliver a variable number of its own equity instruments according to this contract. ④ Derivative contracts that need to be settled or can be settled by the enterprise's own equity instruments in the future, except for derivative contracts that exchange a fixed amount of its own equity instruments for a fixed amount of cash or other financial assets. Equity instruments refer to contracts that can prove ownership of an enterprise's residual equity in assets after deducting all liabilities. If the Company can't unconditionally avoid delivering cash or other financial assets to fulfill a contractual obligation, the contractual obligation meets the definition of financial liabilities. If a financial instrument needs to be settled or can be settled by the Company's own equity instrument, it shall be considered whether its own equity instrument used to settle the instrument is a substitute for cash or other financial assets, or it is to enable the holder of such instrument to be entitled to the remaining equity in the assets after all liabilities are deducted by the issuer. In the former case, the instrument is the financial liability of the Company; In the latter case, the instrument is the equity instrument of the Company. (4) Derivative financial instruments and embedded derivative instruments Initially, it is measured at the fair value on the day when the derivative transaction contract is signed, and then measured at its fair value. Derivative financial instruments with positive fair value are recognized as an asset, while those with negative fair value are regarded as an liability. Any gains or losses arising from changes in fair value that do not meet the requirements of hedge accounting are directly included in the current profits and losses. For mixed instruments including embedded derivative, if the main contract is financial assets, the relevant provisions of financial asset classification shall apply to the mixed instruments as a whole. If the main contract is not a financial asset, and the mixed instrument is not measured at fair value with changes included in the current profits and losses for accounting treatment, the embedded derivative is not closely related to the main contract in terms of economic characteristics and risks, and has the same conditions as the embedded derivative, and if the independent instrument meets the definition of derivative, the embedded derivative is split from the mixed instrument and treated as a separate derivative financial instrument. If the embedded derivative cannot be separately measured at the time of acquisition or on the subsequent balance sheet date, the mixed instruments as a whole are designated as financial assets or financial liabilities measured at fair value with changes included in the current profits and losses. (5) Fair value of financial instruments See Note III. 11 for the determination method of the fair value of financial assets and financial liabilities. (6) Impairment of financial assets Based on the expected credit loss, the Company will carry out impairment accounting treatment on the 148 2021 Annual Report following items and recognize the loss reserve: ① Financial assets measured at amortized cost; ② Receivables and debt investments measured at fair value and included in other comprehensive income; ③ Lease receivables; ④ Financial guarantee contracts (except those which are measured at fair value with changes included in current profits and losses, in which the transfer of financial assets does not meet the conditions for derecognition, or those formed by continuing to involve the transferred financial assets). Measurement of expected credit loss Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between the cash flow of all contracts discounted according to the original real interest rate and the expected cash flow of all contracts receivable according to the contract, that is, the present value of all cash shortages. The Company takes into account reasonable and reliable information on historical events, current situation and future economic situation forecasts, and uses the risk of default as the weight to calculate the probability weighted amount of the present value of the difference between the cash flow receivable from the contract and the cash flow expected to be received to recognize the expected credit loss. The Company separately measures the expected credit losses of financial instruments at different stages. If the credit risk of financial instruments has not increased significantly since the initial recognition, it is in the first stage. The Company measures the loss reserve according to the expected credit loss in the next 12 months; If the credit risk of a financial instrument has increased significantly since its initial recognition but no credit impairment has occurred, it is in the second stage. The Company measures the loss reserve according to the expected credit loss of the instrument throughout the duration; If a financial instrument has suffered credit impairment since its initial recognition, it is in the third stage. The Company measures the loss reserve according to the expected credit loss of the instrument throughout the duration. For financial instruments with low credit risk on the balance sheet date, the Company assumes that their credit risk has not increased significantly since the initial recognition, and measures the loss reserve according to the expected credit loss in the next 12 months. The expected credit loss in the whole duration refers to the expected credit loss caused by all possible default events in the whole expected duration of financial instruments. The expected credit loss in the next 12 months refers to the expected credit loss caused by the financial instrument default event that may occur within 12 months after the balance sheet date (or within the expected duration if the expected duration of the financial instrument is less than 12 months), which is a part of the expected credit loss in the whole duration. When measuring the expected credit loss, the longest period that the Company needs to consider is the longest contract period during which the enterprise is subject to credit risk (including the option to renew the contract). For financial instruments in the first and second stages and with low credit risk, the Company calculates interest income based on the book balance before deducting impairment provisions and the actual interest rate. For financial instruments in the third stage, the interest income shall be calculated according to their book balance minus the amortized cost after impairment provision and the actual interest rate. For notes receivable and accounts receivable, regardless of whether there is significant financing component, the Company always measures the loss reserve according to the amount equivalent to the expected credit loss in the whole duration. When a single financial asset cannot evaluate the expected credit loss information at a reasonable cost, the Company divides the notes receivable and accounts receivable into portfolios according to the credit risk 149 2021 Annual Report characteristics, calculates the expected credit loss on the basis of the combinations, and determines the combination on the following basis: A. Notes receivable Notes receivable portfolio 1: bank acceptance bill Notes receivable portfolio 2: commercial acceptance bill B. Accounts receivable Accounts receivable portfolio 1: polarizer sales receivable Accounts receivable portfolio 2: textile and garment sales receivable Accounts receivable portfolio 3: operating funds receivable from self-own property Accounts receivable portfolio 4: other receivables For notes receivable divided into portfolios, the Company refers to the historical credit loss experience, and calculates the expected credit loss through the default risk exposure and the expected credit loss rate of the whole duration based on the current situation and forecasts the future economic situation. For accounts receivable divided into combinations, the Company refers to the historical credit loss experience, combines the current situation with the forecast of future economic situation, compiles a comparison table of aging/overdue days of accounts receivable and the expected credit loss rate for the whole duration, and calculates the expected credit loss. Other receivables The Company classifies other receivables into several combinations according to the credit risk characteristics, and calculates the expected credit losses based on the portfolios. The basis for determining the portfolio is as follows: Other receivables portfolio: aging portfolio For other receivables classified as portfolios, the Company calculates the expected credit loss through the default risk exposure and the expected credit loss rate in the next 12 months or the whole duration. Debt investment and other debt investment For creditor's rights investment and other creditor's rights investment, the Company calculates the expected credit loss according to the nature of the investment, the counterparty and various types of risk exposure and based on the expected credit loss rate in the next 12 months or the whole duration. Evaluation of significant increase in credit risk By comparing the risk of default of financial instruments on the balance sheet date with the risk of default on the initial recognition date, the Company determines the relative change of default risk of financial instruments in the expected duration, and evaluates whether the credit risk of financial instruments has increased significantly since initial recognition. When determining whether the credit risk has increased significantly since the initial recognition, the company considers to obtain reasonable and reliable information without unnecessary extra costs or efforts, including forward-looking information. Information considered by the Company includes: The debtor fails to pay the principal and interest according to the expiration date of the contract; Serious deterioration of external or internal credit rating (if any) of financial instruments that has occurred or is expected; Serious deterioration of the debtor's operating results that has occurred or is expected; Changes in existing or expected technology, market, economic or legal environment, and significant adverse effects on the debtor's repayment ability of the Company. 150 2021 Annual Report According to the nature of financial instruments, the Company assesses whether credit risks have increased significantly on the basis of individual financial instruments or financial instrument portfolios. When evaluating on the basis of financial instrument portfolio, the Company can classify financial instruments based on common credit risk characteristics, such as overdue information and credit risk rating. Financial assets with credit impairment On the balance sheet date, the Company evaluates whether the financial assets measured at amortized cost and the creditor's rights investments measured at fair value with changes included in other comprehensive income have suffered credit impairment. When one or more events that adversely affect the expected future cash flow of a financial asset occur, the financial asset becomes a financial asset with credit impairment. Evidence of credit impairment of financial assets includes the following observable information: The issuer or debtor has major financial difficulties; The debtor violates the contract, such as default or overdue payment of interest or principal; The Company gives concessions that the debtor will not make under any other circumstances due to economic or contractual considerations related to the debtor's financial difficulties; The debtor is likely to go bankrupt or undergo other financial restructuring; The financial difficulties of the issuer or debtor cause the active market of the financial assets to disappear. Presentation of expected credit loss provision In order to reflect the change of credit risk of financial instruments after initial recognition, the Company re-measures the expected credit loss on each balance sheet date, and the resulting increase or reversal amount of loss reserve shall be included in the current profits and losses as impairment losses or gains. For financial assets measured in amortized cost, the loss reserve shall be offset against the book value of the financial assets listed in the balance sheet; For creditor's rights investments measured at fair value with changes included in other comprehensive income, the Company recognizes its loss reserve in other comprehensive income, which does not offset the book value of the financial asset. Cancel after verification If the Company no longer reasonably expects the contract cash flow of financial assets to be fully or partially recovered, it will directly write down the book balance of the financial assets. This write-down constitutes the derecognition of related financial assets. It usually happens when the Company determines that the debtor has no assets or income sources to generate enough cash flow to repay the amount to be written down. However, according to the Company's procedures for recovering the due amount, the written-down financial assets may still be affected by the implementation activities. If the written-down financial assets are recovered later, they will be included in profits and losses of the current recovery period as the reversal of impairment losses. (7) Transfer of financial assets Transfer of financial assets refers to the transfer or delivery of financial assets to another party (transferee) other than the issuer of the financial assets. If the company has transferred almost all risks and rewards in the ownership of the financial asset to the transferee, the recognition of the financial asset shall be terminated; If almost all risks and rewards on the ownership of a financial asset are retained, the financial asset shall not be derecognized. If the Company has neither transferred nor retained almost all risks and rewards in the ownership of financial assets, it shall be dealt with as follows: if the control of the financial assets is abandoned, the financial assets shall be derecognized and the resulting assets and liabilities shall be recognized; If the control of the financial assets is 151 2021 Annual Report not abandoned, the relevant financial assets shall be recognized according to the extent of their continued involvement in the transferred financial assets, and the relevant liabilities shall be recognized accordingly. (8) Offset of financial assets and financial liabilities When the Company has the legal right to offset the recognized financial assets and financial liabilities, which can be enforced at present, and the Company plans to settle by net amount or at the same time realize such financial assets and pay off such financial liabilities, the financial assets and financial liabilities are listed in the balance sheet with the amount after offset. In addition, financial assets and financial liabilities are listed separately in the balance sheet and will not be offset against each other. 11. Notes receivable For notes receivable and accounts receivable, regardless of whether there is significant financing component, the Company always measures the loss reserve according to the amount equivalent to the expected credit loss in the whole duration. When a single financial asset cannot evaluate the expected credit loss information at a reasonable cost, the Company divides the notes receivable and accounts receivable into portfolios according to the credit risk characteristics, calculates the expected credit loss on the basis of the combinations, and determines the combination on the following basis: Notes receivable portfolio 1: bank acceptance bill Notes receivable portfolio 2: commercial acceptance bill For notes receivable divided into portfolios, the Company refers to the historical credit loss experience, and calculates the expected credit loss through the default risk exposure and the expected credit loss rate of the whole duration based on the current situation and forecasts the future economic situation. 12. Accounts receivable For notes receivable and accounts receivable, regardless of whether there is significant financing component, the Company always measures the loss reserve according to the amount equivalent to the expected credit loss in the whole duration. When a single financial asset cannot evaluate the expected credit loss information at a reasonable cost, the Company divides the notes receivable and accounts receivable into portfolios according to the credit risk characteristics, calculates the expected credit loss on the basis of the combinations, and determines the combination on the following basis: Accounts receivable portfolio 1: polarizer sales receivable Accounts receivable portfolio 2: textile and garment sales receivable Accounts receivable portfolio 3: operating funds receivable from self-own property Accounts receivable portfolio 4: other receivables For accounts receivable divided into combinations, the Company refers to the historical credit loss experience, combines the current situation with the forecast of future economic situation, compiles a comparison table of aging/overdue days of accounts receivable and the expected credit loss rate for the whole duration, and calculates the expected credit loss. 13. Receivable financing For bills receivable and accounts receivable classified as those measured at fair value and whose changes are included in other comprehensive income, the portion with self-financing period within one year (including one 152 2021 Annual Report year) is listed as receivables financing; If the period of self-acceptance is more than one year, it shall be listed as other creditor's rights investment. For relevant accounting policies, please refer to Note V, (10) "Financial Instruments" and Note V, (10) "Impairment of Financial instruments ". 14.Other account receivable Determination method and accounting treatment method of expected credit loss of other receivables The Company divides the other receivables into several portfolio according to the credit risk characteristics, and calculates the expected credit losses on the basis of determining the portfolio as follows: Other receivables portfolio: age portfolio: For accounts receivable divided into combinations, the Company refers to the historical credit loss experience, combines the current situation with the forecast of future economic situation, compiles a comparison table of aging/overdue days of accounts receivable and the expected credit loss rate for the whole duration, and calculates the expected credit loss. 15.Inventory 1.Investories class The Company's inventory includes raw materials, in-process products, low-value consumables, packaging materials, inventory goods, and issued goods. (2) Pricing method of issued inventory The Company's inventory is priced at the actual cost when it is acquired. The weighted average method is adopted when raw materials and inventory goods are issued. (3) Determination basis of net realizable value of inventory and accrual method of inventory depreciation reserve The net realizable value of inventory is the estimated selling price of inventory minus the estimated costs to be incurred upon completion, estimated sales expenses and related taxes. For determination of the net realizable value of inventories, the solid evidence shall serve as the basis, and the purpose of holding inventories and the influence of events after the balance sheet date shall be considered. On the balance sheet date, if the inventory cost is higher than its net realizable value, inventory depreciation reserve shall be made. The Company usually accrues the inventory depreciation reserve according to individual inventory items. On the balance sheet date, if the influencing factors of previous inventory value written down have disappeared, the inventory depreciation reserve will be returned within the originally accrued amount. (4) Inventory system of inventory Perpetual inventory system is adopted for the Company's inventory system. (5) Amortization method of low-value consumables and packaging materials Low-value consumables and packaging materials of the Company are amortized by one-time write-off method. 16.Contract assets The Company lists the customer's unpaid contract consideration for which the Company has fulfilled its performance obligations according to the contract, and which is not the right to collect money from customers unconditionally (that is, only depending on the passage of time) as a contract asset in the balance sheet. Contract assets and liabilities under the same contract are listed in net amount, while contract assets and liabilities under 153 2021 Annual Report different contracts are not offset. 17.Contract Costs Contract costs include incremental costs incurred for obtaining contracts and contract performance costs. The incremental cost incurred for obtaining the contract refers to the cost that the Company will not incur without obtaining the contract (such as sales commission, etc.). If the cost is expected to be recovered, the Company will recognize it as the contract acquisition cost as an asset. Other expenses incurred by the Company to obtain the contract except the incremental cost expected to be recovered are included in the current profits and losses when incurred. If the cost incurred for the performance of the contract does not fall within the scope of other accounting standards for enterprises such as inventory and meets the following conditions at the same time, the Company will recognize it as the contract performance cost as an asset: ① Such cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing expenses (or similar expenses), costs clearly borne by the customer, and other costs incurred only due to this contract; ② Such cost increases the resources of the Company for fulfilling its performance obligations in the future; ③ The cost is expected to be recovered. Assets recognized by contract acquisition cost and assets recognized by contract performance cost (hereinafter referred to as "Assets Related to Contract Cost") shall be amortized on the same basis as the revenue recognition of goods or services related to the assets, and shall be included in current profits and losses. When the book value of the assets related to the contract cost is higher than the difference between the following two items, the Company will accrue impairment provision of the excess and recognize it as the asset impairment loss: ① The remaining consideration expected to be obtained by the Company due to the transfer of goods or services related to the asset; ② The estimated cost to be incurred for transferring the related goods or services. The contract performance cost recognized as an asset shall be amortized for no more than one year or one normal business cycle at the time of initial recognition, which shall be listed in "Inventory", and the amortization period for more than one year or one normal business cycle at the time of initial recognition shall be listed in "Other Non-current Assets". The contract acquisition cost recognized as an asset shall be amortized for no more than one year or one normal business cycle at initial recognition, and shall be listed in "Other Current Assets". The amortization period for initial recognition shall exceed one year or one normal business cycle, and shall be listed in "Other Non-current Assets". 18.Held-for-sale assets (1) Classification and measurement of non-current assets or disposal groups held for sale When the book value of a non-current asset or disposal group is recovered by the Company mainly by selling it (including the exchange of non-monetary assets with commercial nation) rather than continuously using it, the non-current asset or disposal group is classified as held for sale. The above-mentioned non-current assets do not include investment real estate measured by fair value model, biological assets measured by net amount of fair value minus selling expenses, assets formed by employee compensation, financial assets, deferred income tax assets and rights arising from insurance contracts. 154 2021 Annual Report The disposal group refers to a group of assets disposed of together by sale or other means in a transaction as a whole, and liabilities directly related to these assets transferred in the transaction. Under certain circumstances, the disposal group includes goodwill obtained in business combination, etc. Meanwhile, non-current assets or disposal groups that meet the following conditions are classified as held-for-sale: according to the practice of selling such assets or disposal groups in similar transactions, the non-current assets or disposal groups can be sold immediately under the current situation; The sale is very likely to happen, that is, a resolution has been made on a sale plan and a certain purchase commitment has been obtained, and it is expected that the sale will be completed within one year. If the control over subsidiaries is lost due to the sale of investments in subsidiaries, whether or not the Company retains part of the equity investments after the sale, when the investment in subsidiaries to be sold meets the classification conditions of holding for sale, the investment in subsidiaries will be classified as held-for-sale as a whole in individual financial statements, and all assets and liabilities of subsidiaries will be classified as held-for-sale in consolidated financial statements. When the non-current assets or disposal groups held for sale are initially measured or re-measured on the balance sheet date, the difference between the book value and the net amount after deduction of the sales expenses from the fair value is recognized as the asset impairment loss. For the amount of asset impairment loss recognized by the disposal group held for sale, the book value of goodwill in the disposal group is offset first, and then the book value of non-current assets in the disposal group is offset proportionally. If the net amount of non-current assets held for sale or disposal group's fair value minus sales expenses increases on the subsequent balance sheet date, the previously written-down amount will be restored and reversed within the amount of asset impairment loss recognized after being classified as held-for-sale, and the reversed amount will be included in the current profits and losses. The book value of offset goodwill shall not be reversed. Non-current assets held for sale and assets in disposal group held for sale are not depreciated or amortized; Interest and other expenses of liabilities in disposal group held for sale continue to be recognized. All or part of the investments of associated enterprises or joint ventures classified as held for sale shall be accounted for by the equity method for those classified as held for sale, while those retained (not classified as held for sale) shall continue to be accounted for by the equity method; When the Company loses significant influence on the associated enterprises and joint ventures due to the sale, it shall stop using the equity method. If a certain non-current asset or disposal group is classified as held-for-sale, but the classification conditions of held-for-sale are no longer met, the Company will stop classifying it as held-for-sale and measure it according to the lower of the following two amounts: ① The book value of the asset or disposal group before it is classified as held-for-sale, and the amount adjusted according to the depreciation, amortization or impairment that should have been recognized without being classified as held-for-sale; ② Recoverable amount. 19.Creditor's rights investment Creditor's rights investment mainly accounts for bond investment measured by amortized cost, etc. The Company has measured the impairment loss based on the amount of expected credit losses in the next 12 months or the entire duration, based on whether the credit risk has increased significantly since the initial recognition. 20.Other Creditor's rights investment For creditor's rights investment and other creditor's rights investment, the Company calculates the expected credit loss according to the nature of the investment, the counterparty and various types of risk exposure and based on the expected credit loss rate in the next 12 months or the whole duration. 155 2021 Annual Report 21.Long-term account receivable None 22.Long-term equity investments Long-term equity investment includes equity investment in subsidiaries, joint ventures and associated enterprises. If the Company can exert significant influence on the investee, it is an associated enterprise of the Company. (1) Determination of initial investment cost Long-term equity investment forming business combination: the long-term equity investment obtained by business combination under the same control shall be taken as the investment cost according to the book value share of the owner's equity of the combined party in the consolidated financial statements of the final controlling party on the combination date; Long-term equity investment obtained by business combination not under the same control shall be regarded as the investment cost of long-term equity investment according to the combination cost. For long-term equity investment obtained by other means: For long-term equity investment obtained by payment in cash, the actual purchase price is taken as the initial investment cost; For long-term equity investment obtained by issuing equity securities, the fair value of issuing equity securities is taken as the initial investment cost. (2) Subsequent measurement and profit and loss recognition method Investment in subsidiaries shall be accounted by cost method, unless the investment meets the conditions of holding for sale; Investment in associated enterprises and joint ventures shall be accounted for by equity method. For the long-term equity investment calculated by the cost method, except for the cash dividends or profits that have been declared but not yet issued and that included in the actual payment or consideration, the cash dividends or profits declared and distributed by the investee are recognized as investment income and included in the current profits and losses. If the initial investment cost of long-term equity investment accounted by equity method is greater than the fair value share of identifiable net assets of the investee, the investment cost of long-term equity investment shall not be adjusted; If the initial investment cost is less than the fair value share of the identifiable net assets of the investee at the time of investment, the book value of the long-term equity investment shall be adjusted, and the difference shall be included in the profit and loss of the current investment period. In case of accounting by equity method, the investment income and other comprehensive income are recognized respectively according to the share of net profits and losses and other comprehensive income realized by the investee, and the book value of long-term equity investment is adjusted at the same time; According to the profit or cash dividend declared and distributed by the investee, the part to be entitled to shall be calculated, and the book value of long-term equity investment shall be reduced correspondingly; The investee adjusts the book value of long-term equity investment for other changes in owner's equity except net profits and losses, other comprehensive income and profit distribution and includes them in capital reserve (other capital reserve). When recognizing the share of the net profit and loss of the investee, the fair value of identifiable assets of the investee at the time of investment is taken as the basis, and the net profit of the investee is recognized after adjustment according to the accounting policies and accounting periods of the Company. If it can exert significant influence on the investee due to additional investment or implement joint control but does not constitute control, on the conversion date, the sum of the fair value of the original equity plus the new investment cost shall be taken as the initial investment cost calculated by the equity method instead. The difference between the fair value and book value of the original equity on the conversion date, as well as the 156 2021 Annual Report accumulated fair value changes originally included in other comprehensive income, are transferred to the current profits and losses accounted for by the equity method. If the joint control or significant influence on the investee is lost due to the disposal of some equity investments, the remaining equity after disposal shall be accounted for according to Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments on the date of loss of joint control or significant influence, and the difference between fair value and book value shall be included in the current profits and losses. Other comprehensive income recognized by the original equity investment due to the adoption of the equity method shall be accounted for on the same basis as the direct disposal of related assets or liabilities by the investee when the equity method is terminated; Changes in other owners' equity related to the original equity investment are transferred into current profits and losses. If the control over the investee is lost due to the disposal of part of equity investment, and the remaining equity after disposal can jointly control or exert significant influence on the investee, it shall be accounted for according to the equity method instead, and the remaining equity shall be regarded as being adjusted by the equity method when it is acquired; If the remaining equity after disposal cannot exercise joint control or exert significant influence on the investee, it shall be accounted for according to the relevant provisions of Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments, and the difference between its fair value and book value on the date of loss of control shall be included in the current profits and losses. If the Company's shareholding ratio decreases due to capital increase of other investors, causing loss of control, but it can exercise joint control or exert significant influence on the investee, the share of net assets increased by the investee due to capital increase and share expansion shall be recognized according to the new shareholding ratio, and the difference between the original book value of long-term equity investment corresponding to the decreased shareholding ratio shall be included in the current profits and losses; Then, according to the new shareholding ratio, it is regarded as being adjusted by the equity method when the investment is obtained. For unrealized internal transaction gains and losses between the Company and its associated enterprises and joint ventures, the portion attributable to the Company shall be calculated according to the shareholding ratio, and investment gains and losses shall be recognized on the basis of offset. However, if the unrealized internal transaction losses between the Company and the investee are the impairment losses of the transferred assets, they will not be offset. (3) Basis for determination of joint control and significant influence on the investee Joint control refers to the common control of an arrangement in accordance with the relevant agreement, and the relevant activities of such arrangement must be unanimously agreed by the participants who share the control rights before any decision is made. When judging whether there is common control, firstly, judge whether all participants or a combination of participants collectively control the arrangement, and secondly, judge whether the decision-making of activities related to the arrangement must be unanimously agreed by the participants who collectively control the arrangement. If all participants or a group of participants must act in concert to decide the relevant activities of an arrangement, it is considered that all participants or a group of participants collectively control the arrangement; If two or more participants can collectively control an arrangement, it does not constitute joint control. When judging whether it is joint control, the protective rights entitled to are not considered. Significant influence means that the investor has the right to participate in the decision-making on the financial and operating policies of the investee, but cannot control or jointly control the formulation of these policies with other parties. When determining whether it can exert significant influence on the investee, the 157 2021 Annual Report influence of the voting shares of the investee directly or indirectly held by the investor and the current executable potential voting rights held by the investor and other parties shall be considered, including the influence of the current convertible warrants, share options and convertible corporate bonds issued by the investee. When the Company directly or indirectly owns more than 20% (including 20%) but less than 50% of the voting shares of the investee, it is generally considered to have a significant influence on the investee, unless there is clear evidence that it cannot participate in the production and operation decisions of the investee under such circumstances, in which case it does not have a significant influence; When the Company owns less than 20% (excluding) of the voting shares of the investee, it is generally not considered to have a significant influence on the investee, unless there is clear evidence that it can participate in the production and operation decisions of the investee under such circumstances, in which case it has a significant influence. (4) Equity investment held for sale If all or part of the equity investment in an associated enterprise or joint venture is classified as assets held for sale, please refer to Note III. 13 for relevant accounting treatment. For the remaining equity investments that are not classified as assets held for sale, the equity method is adopted for accounting treatment. If the equity investment in an associated enterprise or joint venture that has been classified as held for sale no longer meets the classification conditions of assets held for sale, the equity method shall be used for retrospective adjustment from the date that it is classified as assets held for sale. (5) Test method for impairment and accrual method for impairment provision For investment in subsidiaries, associated enterprises and joint ventures, please refer to Note III. 21 for the accrual method for impairment provision. 23.Investment real estate The measurement mode of investment property The company shall adopt the cost mode to measure the investment property. Depreciation or Amortization Method Investment real estate refers to real estate held for rent or capital appreciation, or both. The Company's investment real estate includes leased land use rights, land use rights transferred after holding and preparing for appreciation, and leased buildings. The Company's investment real estate is initially measured according to the cost at the time of acquisition, and depreciation or amortization is accrued on schedule according to the relevant provisions of fixed assets or intangible assets. For investment real estate that is subsequently measured by cost model, please refer to Note III. 21 for the accrual method of asset impairment. The difference between the disposal income from the sale, transfer, scrapping or damage of investment real estate after deduction of its book value and related taxes shall be included in the current profits and losses. 24.Fixed assets (1) Recognition conditions of fixed assets The Company's fixed assets refer to tangible assets held for the production of commodities, provision of labor services, leasing or operation and management, with a service life exceeding one fiscal year. Only when the economic benefits related to the fixed assets are likely to flow into the enterprise and the cost of the fixed assets can 158 2021 Annual Report be measured reliably, can the fixed assets be recognized. The fixed assets of the Company are initially measured according to the actual cost at the time of acquisition. Subsequent expenditures related to fixed assets are included in the cost of fixed assets when the economic benefits related to them are likely to flow into the Company and the cost can be measured reliably; Daily repair expenses of fixed assets that do not meet the requirements for subsequent expenditures of capitalization of fixed assets are included in the current profits and losses or the cost of related assets according to the beneficiaries when they occur. For the replaced part, the book value is derecognized. (2) The method for depreciation The method for Expected useful life Estimated residual Category Depreciation depreciation (Year) value House and Straight-line method Building- 35 4.00% 2.74% Production House and Straight-line method Building-Non- 40 4.00% 2.40% Production Decoration of Straight-line method 10 10.00% Fixed assets Machinery and Straight-line method 10-14 4.00% 9.60%-6.86% equipment Transportation Straight-line method 8 4.00% 12.00% equipment Electronic equipment Straight-line method 8 4.00% 12.00% Other equipment Straight-line method 8 4.00% 12.00% For the fixed assets with the impairment provision withdrawn, the accumulative amount of the withdrawn fixed assets impairment provision shall be also deducted to calculate and determine the rate of depreciation. (3) Identification basis, valuation method and depreciation method of fixed assets leased by financing None 25.Construction in progress The cost of construction in progress of the Company is determined according to the actual project expenditure, including all necessary project expenditures incurred during the construction period, borrowing costs that should be capitalized before the project reaches the intended usable state, and other related expenses. Construction in progress is transferred to fixed assets when it reaches the scheduled usable state. See Note III. 21 for the method of depreciation of assets in construction in progress. 159 2021 Annual Report 26.Borrowing costs (1) Recognition principle of capitalization of borrowing costs If the borrowing costs incurred by the Company can be directly attributed to the purchase, construction or production of assets that meet the capitalization conditions, they will be capitalized and included in the relevant asset costs; Other borrowing costs, when incurred, are recognized as expenses according to the amount incurred, and included in current profits and losses. Borrowing costs shall be capitalized if they meet the following conditions at the same time: ① Asset expenditure has already occurred, including the expenditure incurred in the form of payment in cash, transfer of non-cash assets or assumption of interest-bearing debts for the purchase, construction or production of assets that meet the capitalization conditions; ② Borrowing costs have already occurred; ③ The purchase, construction or production activities necessary to make the assets reach the intended usable or saleable state have started. (2) Capitalization period of borrowing costs Capitalization of borrowing costs shall be stopped when assets eligible for capitalization acquired, constructed or produced by the Company reach the intended usable or saleable state. Borrowing costs incurred after the assets in line with the capitalization conditions reach the intended usable or saleable state shall be recognized as expenses according to the amount incurred when they occur, and shall be included in current profits and losses. If the assets that meet the capitalization conditions are abnormally interrupted in the process of purchase, construction or production, and the interruption lasts exceeds 3 months, the capitalization of borrowing costs shall be suspended; Borrowing costs during normal interruption period continue to be capitalized. (3) Capitalization rate of borrowing costs and calculation method of capitalization amount The interest expenses actually incurred in the current period of special borrowing shall be capitalized after deducting the interest income from the unused borrowing funds deposited in the bank or the investment income from temporary investment; The capitalization amount of general borrowings is determined by multiplying the weighted average of the accumulated asset expenditure over the special loan by the capitalization rate of the occupied general borrowings. Capitalization rate is calculated and determined according to the weighted average interest rate of general borrowings. During the capitalization period, all the exchange differences of special borrowings in foreign currency are capitalized; Exchange differences of general borrowings in foreign currency are included in current profits and losses. 27.Biological Assets None 28.Oil & Gas assets None 29. Right to use assets (1) Conditions for recognizing the right-to-use assets 160 2021 Annual Report The Company's right-to-use assets refers to the right of the Company as the lessee to use the leased assets during the lease term. On the start date of the lease term, the right-to-use assets is initially measured at cost. The cost includes: the initial measurement amount of lease liabilities; The lease payment amount issued on or before the start date of the lease term, where if there is a lease incentive, the amount related to the entitled lease incentive shall be deducted; The initial direct expenses incurred by the Company as the lessee; The cost expected to be incurred by the Company as the lessee to dismantle and remove the leased assets, restore the site where the leased assets are located or restore the leased assets to the state agreed in the lease terms. The Company, as the lessee, recognizes and measures the demolition and restoration costs in accordance with the Accounting Standards for Business Enterprises No.13-Contingencies. Subsequent adjustments shall be made to any remeasurement of lease liabilities. (2) Depreciation method of right-to-use assets The Company adopts the straight-line method to accrue depreciation. If the Company, as the lessee, can reasonably determine that the ownership of the leased assets is acquired at the expiration of the lease term, depreciation shall be accrued within the remaining service life of the leased assets. If it cannot be reasonably determined that the ownership of the leased assets can be obtained at the expiration of the lease term, depreciation shall be accrued during the lease term or the remaining service life of the leased assets, whichever is shorter. See Note V. 21 for the impairment test method of the right-to-use assets and the provision method for impairment. 30.Intangible assets (1) Valuation method, service life and impairment test The intangible assets of the Company include land use rights, proprietary technology and software. Intangible assets are initially measured at cost, and their service life is analyzed and judged when they are acquired. If the service life is limited, the intangible assets shall be amortized within the expected service life by the amortization method that can reflect the expected realization mode of the economic benefits related to the assets from the time when they are available for use; If it is impossible to reliably determine the expected realization mode, they shall be amortized by straight-line method; Intangible asset\s with uncertain service life are not amortized. Amortization methods of intangible assets with limited service life are as follows: Items Useful life(year) Amortization method Notes Land use right 50 Straight Special technology 15 Straight Software 5 Straight At the end of each year, the Company rechecks the service life and amortization method of intangible assets with limited service life, adjusts the original estimate if it is different from the previous estimate, and handles the change according to the accounting estimate. See Note V. 21 for the method of depreciation of assets for Intangible assets (2)Accounting Policy of Internal Research and Development Expenditure The Company divides the expenditure of internal research and development projects into expenditures in 161 2021 Annual Report research stage and expenditures in development stage. Expenditures in research stage are included in current profits and losses when they occurs. Expenditures in development stage can only be capitalized if they meet the following conditions: it is technically feasible to complete the intangible assets so that they can be used or sold; There is the intention to complete the intangible assets and use or sell them; The ways in which intangible assets generate economic benefits, including those that can prove the existence of market for products produced by the intangible assets or the existence of market for the intangible assets themselves, and that for the intangible assets that will be used internally, their usefulness can be proved; There are sufficient technical, financial and other resources to complete the development of the intangible assets and the ability to use or sell the intangible assets; Expenditures attributable to the development stage of the intangible assets can be measured reliably. Development expenditures that do not meet the above conditions are included in current profits and losses. The research and development project of the Company will enter the development stage after the above conditions are met and a project is approved through technical feasibility and economic feasibility study. Capitalized expenditures in development stage are listed as development expenditures on the balance sheet, and are converted into intangible assets from the date when the project reaches the intended purpose. 31.Long-term Assets Impairment The asset impairment of long-term equity investment of subsidiaries, associated enterprises and joint ventures, investment real estate, fixed assets, construction in progress, intangible assets, goodwill, etc. (except inventory, investment real estate measured according to fair value model, deferred income tax assets and financial assets) shall be determined according to the following methods: On the balance sheet date, judge whether there is any sign of possible impairment of assets. If there is any sign of impairment, the Company will estimate its recoverable amount and conduct impairment test. The goodwill formed by business combination, intangible assets with uncertain service life and intangible assets that have not yet reached the usable state are tested for impairment every year regardless of whether there is any sign of impairment. The recoverable amount is determined according to the higher of the net amount of the fair value of the asset minus the disposal expenses and the present value of the estimated future cash flow of the asset. The Company estimates its recoverable amount on the basis of individual assets; If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of the asset group shall be determined based on the asset group to which the asset belongs. The identification of asset group is based on whether the main cash inflow generated by asset group is independent of cash inflow of other assets or asset groups. When the recoverable amount of an asset or asset group is lower than its book value, the Company will write down its book value to the recoverable amount, and the written-down amount will be included in the current profits and losses, and the corresponding asset impairment provision will be accrued at the same time. As far as the impairment test of goodwill is concerned, the book value of goodwill formed by business combination is amortized to relevant asset groups according to a reasonable method from the acquisition date; If it is difficult to amortize to the related asset group, it shall be amortized to the related asset group portfolio. The related asset group or asset group portfolio is one that can benefit from the synergy effect of business combination, and is not larger than the reporting segment determined by the Company. In the impairment test, if there are signs of impairment in the asset group or asset group portfolio related to goodwill, firstly, the asset group or asset group portfolio without goodwill shall be tested for impairment, the recoverable amount shall be calculated, and the corresponding impairment loss shall be recognized. Then 162 2021 Annual Report impairment test shall be carried out on the asset group or asset group portfolio containing goodwill, and its book value shall be compared with the recoverable amount. If the recoverable amount is lower than the book value, the impairment loss of goodwill shall be recognized. Once the asset impairment loss is recognized, it will not be reversed in future accounting periods. 32.Long-term deferred expenses The long-term deferred expenses incurred by the Company are priced at actual cost and amortized equally according to the expected benefit period. For long-term deferred expense items that cannot benefit future accounting periods, all their amortized values are included in current profits and losses. 33.Contract liabilities Contract liabilities refer to the obligation of the Company to transfer goods to customers for the received or receivable consideration from customers. If the customer has paid the contract consideration or the Company has obtained the unconditional collection right before the Company transfers the goods to the customer, the Company will list the received or receivable amount as the contract liability at the earlier of the actual payment made by the customer and the due date for payment. Contract assets and liabilities under the same contract are listed in net amount, while contract assets and liabilities under different contracts are not offset. 34.Remuneration 1. Accounting Treatment Method of Short-term Compensation During the accounting period when employees provide services, the Company recognizes the actual wages, bonuses, social insurance premiums such as medical insurance premiums, work-related injury insurance premiums and maternity insurance premiums paid for employees and housing provident funds as liabilities, and includes them in current profits and losses or related asset costs. If the liability is not expected to be fully paid within twelve months after the end of the annual reporting period when employees provide relevant services, and the financial impact is significant, the liability will be measured at the discounted amount. 2. Accounting Treatment Method of Severance Benefit Plans After-service benefit plan includes defined contribution plan and defined benefit plans. Where the set deposit plan refers to the post-employment benefits plan in which the enterprise no longer undertakes further payment obligations after paying fixed fees to independent funds; Set benefit plan refers to the post-employment benefits plan except the set deposit plan. Set deposit plan The set deposit plan includes basic old-age insurance, unemployment insurance and enterprise annuity plan, etc. In addition to the basic old-age insurance, the Company establishes an enterprise annuity plan ("annuity plan") according to the relevant policies of the national enterprise annuity system, and employees can voluntarily participate in the annuity plan. Moreover, the Company has no other significant social security commitments for employees. During the accounting period when employees provide services, the amount that should be paid according to the set deposit plan is recognized as a liability and included in the current profits and losses or related asset costs. Set benefit plan For set benefit plans, an actuarial valuation is conducted by an independent actuary on the annual balance sheet date, and the cost of benefit provision is determined by the expected cumulative benefit unit method. The 163 2021 Annual Report employee remuneration cost caused by set benefit plans of the Company includes the following components: ① Service cost, including current service cost, past service cost and settlement gain or loss. Where: the current service cost refers to the increase of the present value of set benefit plan obligations caused by the employees providing services in the current period; Past service cost refers to the increase or decrease of the present value of set benefit plan obligations related to employee service in previous period caused by the modification of set benefit plans. ② The net interest of set benefit plan's net liabilities or net assets, including interest income of planned assets, interest expense of set benefit plan obligations and interest affected by asset ceiling. ③ Changes arising from remeasurement of net liabilities or net assets of set benefit plans. Unless other accounting standards require or allow employee benefit costs to be included in asset costs, the Company will include the above items ① and ② in current profits and losses; Include item ③ in other comprehensive income and such item will not be transferred back to profit or loss in the subsequent accounting period. When the original set benefit plan is terminated, all the parts originally included in other comprehensive income will be carried forward to undistributed profits within the scope of equity. 3. Accounting Treatment Method of Demission Welfare If the Company provides dismissal benefits to employees, the employee remuneration liabilities arising from the dismissal benefits shall be recognized and included in the current profits and losses on the earlier of the following dates: When the Company cannot unilaterally withdraw the dismissal benefits provided by the termination of labor relations plan or layoff proposal; When the Company recognizes the costs or expenses related to the reorganization involving the payment of dismissal benefits. If the employee's internal retirement plan is implemented, the economic compensation before the official retirement date is the dismissal benefit. From the day when the employee stops providing services to the normal retirement date, the wages of the retired employees and the social insurance premiums paid will be included in the current profits and losses at one time. Economic compensation after the official retirement date (such as normal pension) shall be treated as post-employment benefits. 4. Accounting Treatment Method of Other Long-term Employee Benefits If other long-term employee benefits provided by the Company to employees meet the conditions for the set deposit plan, they shall be handled in accordance with the above-mentioned relevant provisions on the set deposit plan. If it meets the set benefit plans, it shall be handled in accordance with the above-mentioned relevant regulations on set benefit plans, but the part of the related employee remuneration cost, which is "the change caused by remeasurement of set benefit plan's net liabilities or net assets", shall be included in the current profits and losses or related asset costs. 35.Lease liabilities None 36. Estimated Liabilities If the obligation related to contingencies meets the following conditions at the same time, the Company will recognize it as estimated liabilities: (1) Such obligation is the current obligation undertaken by the Company; (2) The performance of such obligation is likely to lead to the outflow of economic benefits from the Company; 164 2021 Annual Report (3) The amount of such obligation can be measured reliably. Estimated liabilities are initially measured according to the best estimate of expenditure required to fulfill relevant current obligations, and factors such as risks, uncertainties and time value of money related to contingencies are comprehensively considered. If the time value of money has great influence, the best estimate is determined by discounting the related future cash outflow. The Company rechecks the book value of the estimated liabilities on the balance sheet date, and adjusts the book value to reflect the current best estimate. If all or part of the expenses required to pay off the recognized estimated liabilities are expected to be compensated by a third party or other parties, the compensation amount can only be recognized as an asset when it is basically confirmed that it can be received. The recognized compensation amount shall not exceed the book value of the recognized liabilities. 37. Share payment (1) Types of share-based payment The share-based payment of the Company is divided into equity-settled share-based payment and cash-settled share-based payment. (2) Method for determining fair value of equity instruments The fair value of equity instruments such as options granted by the Company with active market is determined according to the quoted price in the active market. The fair value of granted equity instruments such as options without active market is determined by option pricing model. The selected option pricing model considers the following factors: A. The exercise price of options; B. The validity period of the option; C. The current price of the underlying shares; D. Estimated volatility of share price; E. Expected dividend of shares; F. Risk-free interest rate within the validity period of the option. (3) Basis for determining the best estimation of feasible equity instruments On each balance sheet date during the waiting period, the Company makes the best estimate based on the latest available follow-up information such as changes in the number of employees with feasible rights, and revises the estimated number of equity instruments with feasible rights. On the vesting date, the final estimated number of vesting rights and interests instruments shall be consistent with the actual number of vesting rights. (4) Accounting treatment related to implementation, modification and termination of share-based payment plan Equity-settled share-based payment is measured at the fair value of equity instruments granted to employees. If the right is exercised immediately after the grant, the relevant costs or expenses shall be included in the fair value of equity instruments on the grant date, and the capital reserve shall be increased accordingly. If the rights can be exercised only after the services within the waiting period are completed or the specified performance conditions are met, on each balance sheet date within the waiting period, based on the best estimate of the number of equity instruments available, the services obtained in the current period shall be included in the relevant costs or expenses and capital reserve according to the fair value on the grant date of equity instruments. After the vesting date, the recognized related costs or expenses and the total owner's equity will not be adjusted. Equity-settled share-based payment shall be measured according to the fair value of liabilities calculated and determined on the basis of shares or other equity instruments undertaken by the Company. If the right is exercised immediately after the grant, the fair value of the liabilities assumed by the Company shall be included in the relevant costs or expenses on the grant date, and the liabilities shall be increased accordingly. For cash-settled share-based payment that is feasible only after the service within the waiting period is completed or the specified performance conditions are met, on each balance sheet date within the waiting period, based on the best 165 2021 Annual Report estimation of the feasibility and according to the fair value of the liabilities assumed by the Company, the services obtained in the current period are included in the costs or expenses and corresponding liabilities. On each balance sheet date and settlement date before the settlement of related liabilities, the fair value of liabilities shall be re-measured, and the changes shall be included in the current profits and losses. When the Company modifies the share-based payment plan, if the fair value of the granted equity instruments is increased by modification, the increase of the services obtained shall be recognized according to the increase of the fair value of the equity instruments; If the number of granted equity instruments is increased by modification, the fair value of the increased equity instruments will be recognized as the increase in services obtained accordingly. The increase of fair value of equity instruments refers to the difference between the fair values of equity instruments before and after modification on the modification date. If the total fair value of share-based payment is reduced by modification or the terms and conditions of the share-based payment plan are modified in other ways that are unfavorable to employees, the accounting treatment of the obtained services will continue, as if with no changes unless the Company cancels some or all of the granted equity instruments. During the waiting period, if the granted equity instruments are cancelled (except those cancelled due to non-market conditions that do not meet the feasible rights conditions), the Company will treat the cancellation of the granted equity instruments as an accelerated exercise, and immediately record the amount to be recognized in the remaining waiting period into the current profits and losses, and recognize the capital reserve at the same time. If the employee or other party can choose to meet the non-feasible right condition but fails to meet it during the waiting period, the Company will treat it as a cancellation for granting equity instruments. 38. Other financial instruments such as preferred stocks and perpetual bonds None 39. Revenue Accounting policies adopted for income recognition and measurement (1) General principles The Company has fulfilled the performance obligation in the contract, that is, to recognize the revenue when the customer obtains the control right of related goods or services. If the contract contains two or more performance obligations, the Company will amortize the transaction price to each individual performance obligation according to the relative proportion of the individual selling price of the goods or services promised by each individual performance obligation on the contract start date, and measure the income according to the transaction price amortized to each individual performance obligation. When one of the following conditions is met, the Company will fulfill its performance obligations within a certain period of time; Otherwise, it performs the performance obligation at a certain time: ① The customer obtains and consumes the economic benefits brought by the Company's performance at the same time of the its performance. ② Customers can control the goods under construction during the performance of the Company. ③ The commodities produced during the performance of the Company have irreplaceable uses, and the Company has the right to collect payment for the performance part accumulated so far during the whole contract period. For the performance obligations performed within a certain period of time, the Company recognizes the income according to the performance progress within that period. If the performance progress cannot be reasonably determined, and the cost incurred of the Company is expected to be compensated, the income shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably 166 2021 Annual Report determined. For obligations performed at a certain time, the Company shall recognize the income at the time when the customer obtains control of the relevant goods or services. When judging whether a customer has obtained control of goods or services, the Company will consider the following signs: ① The Company has the current right to receive payment for the goods or services, that is, the customer has the current payment obligation for the goods or services. ② The Company has transferred the legal ownership of the goods to the customer, that is, the customer has the legal ownership of the goods. ③ The Company has transferred the physical goods to the customer, that is, the customer has physically taken possession of the goods. ④ The Company has transferred the main risks and rewards on the ownership of the goods to the customer, that is, the customer has obtained the main risks and rewards on the ownership of the goods. ⑤ The customer has accepted the goods. ⑥ Other signs that the customer has obtained control of the goods. The Company has transferred goods or services to customers and has the right to receive consideration (and the right depends on other factors except the passage of time) as contract assets, and the contract assets are depreciated on the basis of expected credit losses. The right of the Company to collect consideration from customers unconditionally (only depending on the passage of time) is listed as receivables. The obligation of the Company to transfer goods or services to customers for received or receivable consideration from customers shall be regarded as a contractual liability. Contract assets and contract liabilities under the same contract are listed in net amount. If the net amount is debit balance, they are listed in "Contract Assets" or "Other Non-current Assets" according to their liquidity; If the net amount is the credit balance, it shall be listed in "Contract Liabilities" or "Other Non-current Liabilities" according to its liquidity. (2) Specific method The specific method of revenue recognition of the Company is as follows: Polarizer/Textile and garment sales contract: Domestic sales: When the goods are delivered to the customer and the customer has accepted the goods, the customer obtains the control of the goods, and the Company recognizes the revenue. Export: A. When the customer receives goods in China, the revenue recognition is the same as "Revenue Recognition for Domestic Sales"; B. When the delivery place of customer is outside the country, the Company mainly adopts FOB. When the goods are delivered from the warehouse and have been exported for customs declaration, the Company recognizes the revenue. Revenue from property/accommodation services: In the process of property/accommodation service provision, the Company recognizes revenue by stages. The adoption of different business models in similar businesses leads to differences in accounting policies for income recognition None 40.Government subsidy Government subsidies are recognized when they meet the conditions attached to government subsidies and can be received. 167 2021 Annual Report Government subsidies for monetary assets shall be measured according to the amount received or receivable. Government subsidies for non-monetary assets are measured at fair value; If the fair value cannot be obtained reliably, it shall be measured according to the nominal amount RMB 1. Government subsidies related to assets refer to government subsidies obtained by the Company for purchasing and building or forming long-term assets in other ways; In addition, as a government subsidy related to income. Where the government documents do not specify the object of the subsidy, and the subsidy can form long-term assets, the part of the government subsidies corresponding to the value of the assets shall be regarded as the government subsidy related to the assets, and the rest shall be regarded as the government subsidies related to the income; where it is difficult to be distinguished, government subsidies as a whole are treated as income-related government subsidies. Government subsidies related to assets offset the book value of related assets, or are recognized as deferred income and included in profits and losses by stages according to a reasonable and systematic method within the service life of related assets. Government subsidies related to income, which are used to compensate related costs or losses that have occurred, are included in current profits and losses or offset related costs; If used to compensate related costs or losses in later periods, they will be included in the deferred income, and included in the current profits and losses or offset related costs during the recognition period of related costs or losses. Government subsidies measured in nominal amount are directly included in current profits and losses. The Company adopts a consistent approach to the same or similar government subsidy business. Government subsidies related to daily activities are included in other income or offset related costs according to the nature of economic business. Government subsidies irrelevant to routine activities shall be included into the non-operating receipt and disbursement. When the recognized government subsidy needs to be returned, if the book value of related assets is offset during initial recognition, the book value of assets will be adjusted; If there is a relevant deferred income balance, the book balance of the relevant deferred income will be offset, and the excess will be included in the current profits and losses; In other cases, it is directly included in the current profits and losses. For the discount interest of preferential policy loans, if the finance allocates the discount interest funds to the lending bank, the actually received loan amount is taken as the recorded value of the loan, and the borrowing costs are calculated according to the loan principal and preferential policy interest rate. If the finance directly allocates the discount interest funds to the Company, the discount interest will offset the borrowing costs. 41.The Deferred Tax Assets / The deferred Tax Liabilities Income tax includes current income tax and deferred income tax. Except for adjusted goodwill arising from business combination or deferred income tax related to transactions or matters directly included in owner's equity, they are all included in current profits and losses as income tax expenses. According to the temporary difference between the book value of assets and liabilities and the tax basis on the balance sheet date, the Company adopts the balance sheet liability method to confirm deferred income tax. All taxable temporary differences are recognized as related deferred income tax liabilities, unless the taxable temporary differences are generated in the following transactions: (1) Initial recognition of goodwill, or the initial recognition of assets or liabilities arising from transactions with the following characteristics: the transaction is not a business combination, and the transaction does not affect accounting profits or taxable income when it occurs; (2) For taxable temporary differences related to investments of subsidiaries, joint ventures and associated 168 2021 Annual Report enterprises, the time for the temporary differences to be reversed can be controlled and the temporary differences will probably not be reversed in the foreseeable future. For deductible temporary differences, deductible losses and tax deductions that can be carried forward to later years, the Company shall recognize the deferred income tax assets arising therefrom to the extent that it is likely to obtain the future taxable income used to offset the deductible temporary differences, deductible losses and tax deductions, unless the deductible temporary differences are generated in the following transactions: (1) The transaction is not a business combination, and it does not affect accounting profit or taxable income when the transaction occurs; (2) For deductible temporary differences related to investments of subsidiaries, joint ventures and associated enterprises, corresponding deferred income tax assets are recognized if the following conditions are met at the same time: temporary differences are likely to be reversed in the foreseeable future, and taxable income used to offset the deductible temporary differences is likely to be obtained in the future. On the balance sheet date, the Company measures deferred income tax assets and deferred income tax liabilities according to the applicable tax rate during the expected period of recovering the assets or paying off the liabilities, and reflects the income tax impact of the expected way of recovering the assets or paying off the liabilities on the balance sheet date. On the balance sheet date, the Company rechecks the book value of deferred income tax assets. If it is unlikely that sufficient taxable income will be obtained in the future period to offset the benefits of deferred income tax assets, the book value of deferred income tax assets will be written down. When sufficient taxable income is likely to be obtained, the written-down amount shall be reversed. 42.Lease (1) Accounting treatment method of operating lease For rent in operating lease, the Company shall recognize the current profits and losses according to the straight-line method in each period of the lease term. The initial direct expenses related to the operating lease shall be capitalized, apportioned on the same basis as the rental income during the lease term, and included in the current profits and losses by stages. The variable lease payment related to operating lease, which is not included in the lease collection amount, shall be included in the current profits and losses when actually incurred. (2) Accounting treatment method of financial lease In financial lease, at the beginning date of the lease term, the Company takes the net lease investment as the recorded value of the financial lease receivable, and the net lease investment is the sum of the unsecured residual value and the present value of the lease receipts that have not yet been received on the start date of the lease term discounted according to the interest rate of the lease. As the lessor, the Company calculates and recognizes the interest income of each period in the lease term according to the fixed periodic interest rate. The variable lease payments obtained by the Company as the lessor that are not included in the measurement of net lease investment are included in the current profits and losses when actually incurred. The derecognition and impairment of financial lease receivables shall be treated according to the provisions of Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments and Accounting Standards for Business Enterprises No.23-Transfer of Financial Assets. 169 2021 Annual Report 43. Other important accounting policies and accounting estimates (1)Change of main accounting policies Accounting policy changes caused by implementation of new financial instrument standards (2) Changes in accounting estimates No significant changes in accounting estimates have occurred in the current period. 44.Change of main accounting policies and estimations (1)Change of main accounting policies √ Applicable □Not applicable The content and reason for change of Approval process Remarks accounting policy In order to adapt to the development of market economy, it standardizes the accounting treatment of related economic business and improves the quality of accounting information. On December 7, 2018, the Ministry of Finance issued the Notice on Revision The examined and http://www.cninfo.com.cn On and Issuance of Accounting Standards Adopted at the 2nd meeting of the 8th March 12,2021(Announcement for Business Enterprises No.21-Leasing Board of Directors No.:2021-12) (CS [2018] No.35) (hereinafter referred to as the "New Leasing Standards"). According to the regulations, the Company will implement the New Leasing Standards from January 1, 2021 and adjust the relevant contents of accounting policies. ①New Leasing Standards In 2018, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No.21-Leasing (hereinafter referred to as "New Leasing Standards"), which shall come into effect on January 1, 2019 for enterprises listed at home and abroad and those listed overseas and using international financial reporting standards or accounting standards for business enterprises to prepare financial statement, and on January 1, 2021 for other enterprises that implement accounting standards for business enterprises. The Company has implemented the New Leasing Standards since January 1, 2021. According to the relevant provisions of the New Leasing Standards, the Company held the second meeting of the Eighth Board of Directors on March 10, 2021, approved the implementation of the New Leasing Standards from January 1, 2021, and adjusted the relevant contents of the accounting policy. See Notes III. 30 and 31 for the changed accounting policies. For the contracts existing before the first implementation date, the Company chooses not to re-evaluate whether they are leases or include leases on the first implementation date. For contracts signed or changed after the first implementation date, the Company evaluates whether the contract is a lease or includes a lease according to the definition of lease in the New Leasing Standards. 170 2021 Annual Report The definition of lease in the New Leasing Standards does not have any significant impact on the scope of contracts in which the Company meets the definition of lease. As lessee The New Leasing Standards require the lessee to recognize the right-to-use assets and lease liabilities for all leases, except for short-term leases and low-value asset leases that are simplified, and to recognize depreciation and interest expenses respectively. The New Leasing Standards allow the lessee to choose one of the following methods to perform connection accounting treatment on the lease: According to the Accounting Standards for Business Enterprises No.28-Accounting Policies, Changes in Accounting Estimates and Error Correction, retrospective adjustment method is adopted. According to the cumulative impact of the first implementation of these standards, the amount of retained earnings and other related items in the financial statements at the beginning of the first implementation of these standards are adjusted, and the information of comparable period is not adjusted. According to the New Leasing Standards, the Company has retroactively adjusted the difference between the first implementation date of New Leasing Standards and the current lease standards into the retained earnings at the beginning of 2021. At the same time, the Company has not adjusted the data of comparative financial statements. For the financial lease before the first implementation date, the Company measures the right-to-use assets and lease liabilities respectively according to the original book value of the financial lease assets and the financial lease payments payable; For the operating lease before the first implementation date, the Company measures the lease liabilities according to the present value of the remaining lease payment discounted at the incremental borrowing rate on the first implementation date, and for the lease of houses and buildings, it measures the right-to-use assets according to the amount equal to the lease liabilities, and makes necessary adjustments according to the prepaid rent. On the first implementation date, the Company conducts impairment test on the right-to-use assets and conducts corresponding accounting treatment according to Notes III. 31. The Company adopts simplified treatment for the operating lease whose leased assets are low-value assets before the first implementation date or the operating lease that will be completed within 12 months, without recognizing the right-to-use assets and lease liabilities. The Company adopts the following simplified treatment for the operating lease before the first implementation date: When measuring lease liabilities, the same discount rate can be adopted for leases with similar characteristics; The measurement of the right-to-use assets may not include the initial direct cost; If there is an option to renew or terminate the lease, the Company will determine the lease term according to the actual exercise of the option before the first implementation date and other latest information; As a substitute for the impairment test of the right-to-use assets, the Company evaluates whether the contract 171 2021 Annual Report including leases is an onerous contract before the first implementation date, and adjusts the right-to-use assets according to the loss reserve amount included in the balance sheet before the first implementation date; For the lease change before the first implementation date, the Company makes accounting treatment according to the final arrangement of the lease change. The impact of the implementation of the New Leasing Standards on the items of consolidated balance sheet as of January 1, 2021 is as follows: Items Book balance before Re Re-measurement Book balance after adjustment(December classificatio adjustment(January 1, 31,2020) n 2021) Assets: Right to use assets -- -- 13,762,176.74 13,762,176.74 Total of assets -- -- 13,762,176.74 13,762,176.74 Liabilities Non-current liabilities due within 1 -- -- 4,342,927.51 4,342,927.51 year Lease liabilities -- -- 9,419,249.23 9,419,249.23 Total of liabilities -- -- 13,762,176.74 13,762,176.74 For the unpaid minimum lease payment of major operating leases disclosed in the 2020 financial statements, the Company adjusted the unpaid minimum operating lease payment disclosed under the original lease standards to the lease liabilities recognized under the New Leasing Standards according to the incremental loan interest rate of the lessee on January 1, 2021, as follows: Minimum lease payment for major operating lease on December 31, 2020 A 14,740,264.72 Less: Short-term lease with simplified treatment B 42,452.83 Less: Lease of low-value assets with simplified treatment C -- Plus: Re-evaluated adjustment of the minimum lease payment in the lease term D -- Plus: Variable lease payment adjustment depending on index or ratio E -- Subtotal F=A-B-C+/-D+/-)E 14,697,811.89 Less:VAT G -- Adjusted operating lease commitment H=F-G 14,697,811.89 Present value of operating lease payment on January 1, 2021 I 13,762,176.74 Plus: Financial lease payable on December 31, 2020 J -- Lease liabilities on January 1st, 2021 K=I+J 13,762,176.74 Including: non-current liabilities due within one year 4,342,927.51 The book value of the right-to-use assets on January 1, 2021 is as follows: Items 2021.01.01 Right-to-use assets For the right-to-use assets recognized by the operating lease before the 13,762,176.74 first implementation date Financing leased assets recognized under the original lease standards -- 172 2021 Annual Report Total: 13,762,176.74 The impact of the implementation of the New Leasing Standards on the items of 2021 financial statement is as follows: Items of consolidated balance sheet Number of statements as of Assuming that according to Increase/decrease (-) December 31, 2021 the original lease standards Assets: Construction in process 71,482,031.08 71,510,678.35 -28,647.27 Right to use assets 9,221,189.37 -- 9,221,189.37 Total of assets 80,703,220.45 71,510,678.35 9,192,542.10 Liabilities Non-current liabilities due within 1 5,175,393.52 -- 5,175,393.52 year Lease liabilities 4,243,855.71 -- 4,243,855.71 Total of liabilities 9,419,249.23 -- 9,419,249.23 Items of consolidated income statement Number of statements in Assuming that according Increase/decrease (-) 2021 to the original lease standards Business costs 1,908,519,413.28 1,908,686,016.10 -166,602.82 Administration expenses 122,088,830.15 122,170,567.39 -81,737.24 Financial expenses -130,344.09 -605,391.28 475,047.19 As lessor According to the New Leasing Standards, the Company does not need to adjust its lease as a lessor according to the connection regulations, but it needs to make accounting treatment according to the New Leasing Standards from the date when the New Leasing Standards are first implemented. (2)Change of main accounting estimations □ Applicable √Not applicable (3)Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New Standards Governing Financial Instruments, Revenue or Leases from year 2021 √ Applicable □ Not applicable Whether need to adjust the balance sheet account at the beginning of the year □ Yes √ No No reason for adjusting the balance sheet account at the beginning of the year No related business. 173 2021 Annual Report (4)Retrospective Restatement of Previous Comparative Data due to the First Execution of any New Standards Governing Financial Instruments or Leases from year 2021 □ Applicable √ Not applicable 45.Other None VI. Taxes of the Company 1. Main taxes categories and tax rate Taxes Tax references Applicable tax rates VAT The taxable turnover 13%,6%,5% City construction tax Turnover tax to be paid allowances 7% Business income tax Turnover tax to be paid allowances 25%,20%,16.5%,15% Education surcharge Turnover tax to be paid allowances 3% Local education surcharge Turnover tax to be paid allowances 2% In case there exist any taxpayer paying corporate income tax at different tax rates, disclose the information Name of taxpayer Income tax rates 2. Tax preference .In accordance with relevant provisions of the Notice of Ministry of Finance, General Administration of Customs and State Taxation Administration Regarding Tax Preference Policies for Further Supporting the Development of New-type Display Device Industry (Cai Guan Shui (2021) No. 19),The Company manufactured key materials and parts for the upstream industry of new-type display devices including colorful light filter coating and polarizer sheet that comply with the planning for independent development of domestic industries may enjoy the preferentia l 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, 2021 and December 31, 2030. SAPO Photoelectric Co., Ltd. the subsidiary company of our company, has been qualified as national high-tech enterprise since 2019 ,High-tech and enterprise certificate No.: GR201944205666 ,The certificate is valid for three years, The enterprise income tax rate of this year is 15%. Shenzhen Beauty Century Garment Co., Ltd., Shenzhen Huaqiang Hotel Garment Co., Ltd. and Shenzhen Lisi Industrial Development Co., Ltd., subsidiaries of the Company, are all small and low-profit enterprises as stipulated in the Notice of the Ministry of Finance and the State Administration of Taxation on Implementing Inclusive Tax Concession Policy for Small and Micro Enterprises (CS [2019] No.13). For the part of the taxable income of this year that does not exceed RMB 1 million, the taxable income is reduced to 12.5%, and the enterprise income tax is paid at a rate of 20%; For the taxable income of this year that exceeds RMB 1 million but does not exceed RMB 3 million, the taxable income is reduced to 50% and the enterprise income tax is paid at a 174 2021 Annual Report rate of 20%. 3.Other None VII. Notes of consolidated financial statement 1.Monetary Capital In RMB Items Year-end balance Year-beginning balance Cash at hand 792.64 4,127.10 Bank deposit 302,472,035.96 271,085,025.10 Other monetary funds -- 7,998,084.75 Total 302,472,828.60 279,087,236.95 Including : The total amount of deposit abroad 6,009,898.07 7,829,822.78 Other note At the end of the period, there is no mortgage, pledge or freezing, or money deposited abroad with restricted repatriation. 2. Transactional financial assets In RMB Items Year-end balance Year-beginning balance Financial assets measured at their fair values and with the variation included in 586,540,735.16 684,617,260.06 the current profits and losses Including: Structure deposit 0.00 200,536,575.34 Monetary fund 586,540,735.16 484,080,684.72 Including Total 586,540,735.16 684,617,260.06 Other note: 3. Derivative financial assets 单位:元 Items Year-end balance Year-beginning balance Other note: 175 2021 Annual Report 4. Notes receivable (1) Notes receivable listed by category In RMB Items Year-end balance Year-beginning balance Bank acceptance 77,296,787.26 0.00 Commercial acceptance 72,646,093.02 16,813,657.28 Total 149,942,880.28 16,813,657.28 In RMB Amount in year-end Balance Year-beginning Bad debt Book Balance Book Book Balance Bad debt provision Book Category provision value value Amoun Proport Amoun Proport Amoun Proport Amount Proport t ion(%) t ion(%) t ion(%) ion(%) Of which: Accrual of bad 138,11 149,94 100.00 365,05 16,898, 100.00 84,490.7 16,813, debt provision by 0,166.1 0.24% 2,880.2 0.50% % 5.74 148.02 % 4 657.28 portfolio 7 8 Of which: Commercial 73,011, 48.57 365,05 72,646, 16,898, 100.00 84,490.7 16,813, 0.50% 0.50% acceptance 148.76 % 5.74 093.02 148.02 % 4 657.28 65,099, 47.14 65,099, Bank acceptance 0.00 0.00% 0.00 0.00% 0.00 0.00% 0.00 017.41 % 017.41 150,30 149,94 100.00 365,05 16,898, 100.00 84,490.7 16,813, Total 7,936.0 0.24% 2,880.2 0.50% % 5.74 148.02 % 4 657.28 2 8 Accrual of bad debt provision by single item: In RMB Amount in year-end Name Book Balance Bad debt provision Proportion(%) Reason Accrual of bad debt provision by portfolio: Commercial acceptance In RMB Amount in year-end Name Book balance Bad debt provision Proportion(%) Commercial acceptance 73,011,148.76 365,055.74 0.50% Note: Accrual of bad debt provision by portfolio: 176 2021 Annual Report In RMB Amount in year-end Name Book balance Bad debt provision Proportion(%) Note: Relevant information of the provision for bad debts will be disclosed with reference to the disclosure method of other receivables if the provision for bad debts of bills receivable is accrued according to the general model of expected credit loss: √ Applicable □ Not applicable None (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Amount of change in the current period Opening Reversed or Closing Category balance Accrual collected Write-off Other balance amount 84,490.74 280,565.00 365,055.74 Total 84,490.74 280,565.00 365,055.74 Of which the significant amount of the reversed or collected part during the reporting period □ Applicable √ Not applicable (3)Notes receivable pledged by the company at the end of the period In RMB Items Amount ( 4 ) Accounts receivable financing endorsed or discounted by the Company at the end of the period and not expired yet on the date of balance sheet In RMB Amount derecognized at the end of the Amount not yet derecognized at the end Items period of the period Bank acceptance 65,099,017.41 Total 65,099,017.41 177 2021 Annual Report (5)Accounts receivable financing transferred to accounts receivable by the Company at the end of the period due to failure of the drawer to perform In RMB Items Amount Other note At the end of the term, the Company has no notes to transfer the drawer to the receivables. (6)The Company had no accounts receivable financing actually written off in the period In RMB Items Amount 5. Account receivable (1)Classification account receivables. In RMB Amount in year-end Amount in year-begin Bad debt Book balance Book balance Bad debt provision Category provision Book Book Amoun Proport Amoun Proport value Amoun Proport Amoun Proport value t ion(%) t ion(%) t ion(%) t ion(%) Accrual of bad 13,260, 13,260, 100.00 20,641, 13,552, 7,088,13 debt provision by 2.57% 3.52% 65.66% 307.34 307.34 % 002.24 865.25 6.99 single item Including: Accrual of bad 502,84 479,99 565,27 97.43 22,849, 25,057, 540,222, debt provision by 8,549.9 4.54% 8,708.5 9,517.4 96.48% 4.43% % 841.40 436.56 080.91 portfolio 7 7 7 Including: 516,10 479,99 585,92 100.00 36,110, 100.00 38,610, 547,310, Total 8,857.3 7.00% 8,708.5 0,519.7 6.59% % 148.74 % 301.81 217.90 1 7 1 Accrual of bad debt provision by single item: In RMB Closing balance Name Book balance Bad debt provision Proportion Reason Dongguan Yaxing Beyond the credit Semiconductor Co., 2,797,016.81 2,797,016.81 100.00% period for a long time, Ltd. uncertain recovered. 178 2021 Annual Report Beyond the credit Dongguan Fair LCD 1,697,122.75 1,697,122.75 100.00% period for a long time, Co., Ltd. uncertain recovered. Guangdong Ruili Beyond the credit Baolai Technology 1,298,965.36 1,298,965.36 100.00% period for a long time, Co., Ltd. uncertain recovered. Huangshan Beyond the credit Zhongxianwei Electric 902,031.00 902,031.00 100.00% period for a long time, Co., Ltd. uncertain recovered. Shenzhen Gulida Beyond the credit Microelectronics Co., 422,178.00 422,178.00 100.00% period for a long time, Ltd. uncertain recovered. Beyond the credit Other 6,142,993.42 6,142,993.42 100.00% period for a long time, uncertain recovered. Total 13,260,307.34 13,260,307.34 -- -- Accrual of bad debt provision by single item: In RMB Closing balance Name Book balance Bad debt provision Proportion Reason Accrual of bad debt provision by portfolio: In RMB Closing balance Name Book balance Bad debt provision Proportion Within 1 year 502,848,447.18 22,849,816.11 4.55% 1-2 years 102.79 25.29 24.60% Total 502,848,549.97 22,849,841.40 -- Note: Accrual of bad debt provision by portfolio: In RMB Closing balance Name Book balance Bad debt provision Proportion Note: Relevant information of the provision for bad debts will be disclosed with reference to the disclosure method of other receivables if the provision for bad debts of bills receivable is accrued according to the general model of expected credit loss: □ Applicable √ Not applicable 179 2021 Annual Report Disclosure by aging In RMB Aging Closing balance Within 1 year(Including 1 year) 502,894,801.73 1-2 years 5,702.29 2-3 years 676,153.40 Over 3 years 12,532,199.89 3-4 years 103,011.28 4-5 years 389.73 Over 5 years 12,428,798.88 Total 516,108,857.31 (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Amount of change in the current period Opening Reversed or Closing Category balance Accrual collected Write-off Other balance amount 38,610,301.81 -1,531,351.49 968,801.58 36,110,148.74 Total 38,610,301.81 -1,531,351.49 968,801.58 36,110,148.74 Of which the significant amount of the reversed or collected part during the reporting period : In RMB Name Amount Way (3) The actual write-off accounts receivable In RMB Items Amount Of which the significant amount of the reversed or collected part during the reporting period : In RMB Whether the Verification money is Name Nature Amount Reason procedures generated by performed related party transactions Note: 180 2021 Annual Report None (4) Top 5 of the closing balance of the accounts receivable collected according to the arrears party In RMB Name Balance in year-end Proportion(%) Bad debt provision TCL CSOT 81,678,407.05 15.83% 3,700,031.84 CSOT 64,415,196.86 12.48% 2,918,008.42 Huijin(Shenzhen) 49,476,257.03 9.59% 2,241,274.45 Technology Co., Ltd. LG Display(China)Co., 36,387,596.37 7.05% 1,648,358.12 Ltd. LG Display 35,275,590.17 6.83% 1,597,984.24 (Guangzhou) Co., Ltd. Total 267,233,047.48 51.78% (5)Account receivable which terminate the recognition owning to the transfer of the financial assets None (6)The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable None 6.Receivable financing In RMB Items Closing balance Opening balance Note receivable 21,474,101.07 102,051,314.08 Total 21,474,101.07 102,051,314.08 Changes in current period and fair value of receivables financing √Applicable □Not applicable None Relevant information of the provision for bad debts will be disclosed with reference to the disclosure method of other receivables if the provision for bad debts of bills receivable is accrued according to the general model of expected credit loss: √Applicable □Not applicable None Other note: Some subsidiaries of the Company discount and endorse some bank acceptance bills according to the needs of their daily fund management, therefore the bank acceptance bills of the subsidiaries are classified as financial assets measured at fair value with changes included in other comprehensive income. There is no single bank acceptance bill with impairment provision of the Company. On December 31, 2021, 181 2021 Annual Report the Company considered that there was no significant credit risk in the bank acceptance bills held by it, and there would be no significant loss due to bank default. 7.Prepayments (1) List by aging analysis: In RMB Closing balance Opening balance Aging Amount Proportion % Amount Proportion % Within 1 year 15,157,623.27 98.38% 14,934,263.03 88.35% 1-2 years 248,996.26 1.62% 557,043.06 3.30% 2-3 years 540,748.42 3.20% Over 3 years 870,461.88 5.15% Total 15,406,619.53 -- 16,902,516.39 -- Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time On December 31, 2021, there was no large prepayment with an accounting age of more than one year in the balance of prepayment . (2)The ending balance of Prepayments owed by the imputation of the top five parties The top five ending balances of prepayments collected according to prepaid objects totaled RMB 7,270,639.80, accounting for 47.20 % of the total closing balances of prepayments. Other note:None 8.Other receivable In RMB Items Closing balance Opening balance Other accounts receivable 140,185,750.40 5,265,002.71 Total 140,185,750.40 5,265,002.71 (1)Interest receivable 1) Category of interest receivable 单位:元 Items Closing balance Opening balance Fixed deposit 0.00 0.00 Entrusted loan 0.00 0.00 Bond investment 0.00 0.00 182 2021 Annual Report 2) Significant overdue interest In RMB Whether with Balance in Reasons for Items Aging impairment and the year-end non-recovery judgment basis Other note: 3)The bad debt provision □ Applicable √ Not applicable (2)Dividend receivable 1)Dividend receivable In RMB Items Balance in year-end Balance Year-beginning 2)Significant dividend receivable aged over 1 year In RMB Whether with Balance in Reasons for Items Aging impairment and the year-end non-recovery judgment basis 3)The bad debt provision □ Applicable √ Not applicable Other note: (3) Other accounts receivable 1) Other accounts receivable classified In RMB Nature Closing book balance Opening book balance Reserve Funds and Employee Loans 293,128.97 379,477.97 Deposit and security deposit 144,954,822.31 2,585,585.87 Export tax rebate 1,698,919.82 1,658,146.29 183 2021 Annual Report Unit exchanges 16,402,902.33 16,369,395.10 Other 1,834,489.23 2,069,761.14 Total 165,184,262.66 23,062,366.37 2)Bad-debt provision In RMB Stage 1 Stage 2 Stage 3 Expected credit Expected credit loss over Expected credit losses for Bad Debt Reserves Total losses over the next life (no credit the entire duration (credit 12 months impairment) impairment occurred) Balance as at January 573,597.01 17,223,766.65 17,797,363.66 1, 2021 Balance as at January —— —— —— —— 1, 2021in current Provision in the current 7,221,660.06 7,221,660.06 period Balance as at 7,795,257.07 17,203,255.19 24,998,512.26 December 31,2021 Loss provision changes in current period, change in book balance with significant amount √ Applicable □Not applicable Disclosure by aging In RMB Aging Closing balance Within 1 year(Including 1 year) 146,289,172.36 1-2 years 931,075.99 2-3 years 411,482.57 Over 3 years 17,552,531.74 3-4 years 546,382.79 4-5 years 537,717.29 Over 5 years 16,468,431.66 Total 165,184,262.66 3) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Opening Amount of change in the current period Category Closing balance balance Accrual Reversed or Write-off Other 184 2021 Annual Report collected amount 17,797,363. 7,221,660.06 20,511.46 24,998,512.26 66 17,797,363. Total 7,221,660.06 20,511.46 24,998,512.26 66 Note Where the current bad debts back or recover significant amounts: In RMB Name Amount Mode 4) Other account receivables actually cancel after write-off In RMB Items Amount Of which the significant amount of the reversed or collected part during the reporting period : In RMB Whether the Verification money is Name Nature Amount Reason procedures generated by performed related party transactions Other note 5)Top 5 of the closing balance of the other accounts receivable collected according to the arrears party In RMB Portion in total Bad debt provision Name Nature Year-end balance Aging other of year-end receivables(%) balance Shenzhen Beauty Internal current Century Garment 143,101,258.40 1-3 years 86.63% 7,155,062.92 account Co., Ltd. Jiangxi Xuanli Unit account 11,389,044.60 Over 5 years 6.89% 11,389,044.60 Thread Co., Ltd. Anhui Huapeng Unit account 1,800,000.00 Over 5 years 1.09% 1,800,000.00 Textile Company Shenzhen Dailisi Underwear Co., Unit account 1,100,000.00 Within 1 year 0.67% 55,000.00 Ltd Shenzhen Xieli Unit account 1,018,295.37 2-5 years 0.62% 1,018,295.37 185 2021 Annual Report Automobile Repair Plant Total -- 158,408,598.37 -- 95.90% 21,417,402.89 6) Accounts receivable involved with government subsidies In RMB Name of the Time, amount and Name government subsidy Year-end balance Aging basis of the expected project collection The company has no government subsidies receivable. 7) Other account receivable which terminate the recognition owning to the transfer of the financial assets None 8) The amount of the assets and liabilities formed by the transfer and the continues involvement of other accounts receivable None Other note: 9. Inventories Whether the company need to comply with the disclosure requirements of the real estate industry No (1)Category of Inventory In RMB Closing book balance Opening book balance Items Provision for Provision for Book balance inventory Book value Book balance inventory Book value impairment impairment Raw materials 349,978,870.87 26,335,509.94 323,643,360.93 258,191,196.82 13,788,646.60 244,402,550.22 Processing 10,992,072.59 10,992,072.59 2,715,845.96 2,715,845.96 products Good in stock 118,034,342.61 36,750,396.02 81,283,946.59 132,780,479.72 43,914,789.90 88,865,689.82 Goods in transit 7,910,629.62 30,573.89 7,880,055.73 524,698.46 524,698.46 Semi-finished 270,743,032.26 34,298,745.28 236,444,286.98 131,069,647.77 14,613,640.62 116,456,007.15 Commissioned 7,838,404.74 620,680.53 7,217,724.21 31,040,280.45 3,157,490.62 27,882,789.83 materials Total 765,497,352.69 98,035,905.66 667,461,447.03 556,322,149.18 75,474,567.74 480,847,581.44 186 2021 Annual Report (2)Inventory falling price reserves and reserves for impairment of contract performance costs In RMB Increased in current period Decreased in current period Opening Reversed or Closing Items balance Accrual collected Write-off Other balance amount Raw materials 13,788,646.60 19,526,328.72 6,979,465.38 26,335,509.94 Good in stock 43,914,789.90 25,646,269.75 32,810,663.63 36,750,396.02 Semi-finished 14,613,640.62 37,652,098.22 17,966,993.56 34,298,745.28 Goods in transit 30,573.89 30,573.89 Commissioned 3,157,490.62 620,680.53 3,157,490.62 620,680.53 materials Total 75,474,567.74 83,475,951.11 60,914,613.19 98,035,905.66 (3)Description of The closing balance of inventories contain the amount of borrowing costs capitalized (4)Description of amortization amount of contract performance cost in the current period 10.Contract assets Relevant information of the provision for bad debts will be disclosed with reference to the disclosure method of other receivables if the provision for bad debts of contract assets is accrued according to the general model of expected credit loss: □ Applicable √Not applicable Provision for impairment of contract assets in the current period Other note 11. Assets divided as held-to-sold Not applicable Other note: 12. Non-current assets due within 1 year Not applicable Other note 13. Other current assets In RMB Items Year-end balance Year-beginning balance 187 2021 Annual Report After the deduction of input VAT 860,153.70 77,482,083.47 Advance payment of income tax 57,448.91 Returns receivable costs 28,585,749.81 Total 29,503,352.42 77,482,083.47 Other note: 14.Creditor's right investment In RMB Year-end balance Year-beginning balance Items Bad debt Bad debt Book balance Book value Book balance Book value provision provision Not applicable Loss provision changes in current period, change in book balance with significant amount □ Applicable √ Not applicable Other note: 15.Other creditor's rights investment Not applicable Loss provision changes in current period, change in book balance with significant amount □ Applicable √ Not applicable Other note 16. Long-term accounts receivable (1) List of long-term accounts receivable Not applicable Loss provision changes in current period, change in book balance with significant amount □ Applicable √ Not applicable Other note (2) Long-term accounts receivable which terminate the recognition owning to the transfer of the financial assets (3) The amount of the assets and liabilities formed by the transfer and the continues involvement of long-term accounts receivable Other note 188 2021 Annual Report 17. Long-term equity investment In RMB Increase /decrease Profits Closing and Cash Withdr balance losses bonus Openin on awal of of Investe Additio Decreas investm Other Change or Closing g impair impair es nal e in ents compre s in balance profits Other balance investm investm Recogn hensive other ment ment ent ent ized income equity announ provisi provisi under ced to the on on equity issue method I. Joint ventures Anhui Huapen g 10,797, 10,797, Textile 023.14 023.14 Co.,Ltd . Shenzh en Guanhu a 127,90 128,21 308,06 Printin 6,165.1 4,225.5 0.37 g& 7 4 Dyeing Co., Ltd. 138,70 128,21 Subtota 10,797, 308,06 3,188.3 4,225.5 l 023.14 0.37 1 4 2. Affiliated Company Shenzh en Changli anfa 2,706,2 265,94 2,972,2 Printin 62.38 0.59 02.97 g& dyeing Compa ny 189 2021 Annual Report Hongko ng Yehui 6,519,6 -540,01 -199,06 3,944,7 1,835,8 Internat 86.54 6.30 3.73 09.25 97.26 ional Co., Ltd. Subtota 9,225,9 -274,07 -199,06 3,944,7 4,808,1 l 48.92 5.71 3.73 09.25 00.23 147,92 133,02 10,797, 33,984. -199,06 3,944,7 Total 9,137.2 2,325.7 023.14 66 3.73 09.25 3 7 Other note 18. Other equity instruments investment In RMB Items Year-end balance Year-beginning balance Fuao auto parts Co., Ltd.(000030) 10,129,390.84 Shenzhen Dailishi Underwear Co., Ltd. 23,637,000.00 12,315,939.61 Union Development Group Co., Ltd. 144,109,485.84 152,469,200.00 Jintian Industry(Group)Co., Ltd. Shenzhen Xinfang Knitting Co., Ltd. 2,227,903.00 2,227,903.00 Shenzhen South Textile Co., Ltd. 16,059,440.88 13,464,994.09 Total 186,033,829.72 190,607,427.54 Itemized disclosure of the current non - trading equity instrument investment In RMB Reasons for Amount of being measured Reasons for other at fair value other Recognized comprehensive and whose comprehensive Accumulating Accumulating Name dividend income changes are income income losses income transferred to included in transferred to retained other retained earnings comprehensive earning income Fuao auto parts 414,007.80 1,158,325.79 1,158,325.79 Disposal 190 2021 Annual Report Co., Ltd. (000030) Shenzhen Dailishi 1,037,735.85 21,077,143.74 Underwear Co., Ltd. Union Development 208,000.00 141,509,485.84 Group Co., Ltd. Shenzhen Xinfang 1,703,903.00 Knitting Co., Ltd. Jintian Industry (Group)Co., 14,831,681.50 Ltd. Shenzhen South Textile 892,152.37 14,559,440.88 Co., Ltd. Other note: Note: The amount of the Company's investment in Jintian Industrial (Group) Co., Ltd. is all impaired. As the above items are investments that the Company plans to hold for a long time for strategic purposes, the Company designates them as financial assets measured at fair value with changes included in other comprehensive income. 19.Other non-current financial assets In RMB Items Year-end balance Year-beginning balance Financial assets measured at fair value with changes included in 30,650,943.40 30,650,943.40 current profits and losses Total 30,650,943.40 30,650,943.40 Other note: 20. Investment real estate (1) Investment real estate adopted the cost measurement mode √Applicable □ Not applicable In RMB 191 2021 Annual Report Construction in Items House, Building Land use right Total process I. Original price 1. Balance at 261,742,940.53 261,742,940.53 period-beginning 2.Increase in the 3,028,785.00 3,028,785.00 current period (1) Purchase 3,028,785.00 3,028,785.00 (2)Inventory\Fixed assets\ Transferred fr om construction in pro gress (3)Increased of Enterprise Combination 3.Decreased amount of 1,127,850.60 1,127,850.60 the period (1)Dispose 1,127,850.60 1,127,850.60 (2)Other out 4. Balance at 263,643,874.93 263,643,874.93 period-end II.Accumulated amortization 1.Opening 151,170,468.61 151,170,468.61 balance 2.Increased amount of 6,986,473.75 6,986,473.75 the period (1) Withdrawal 6,986,473.75 6,986,473.75 3.Decreased amount of 730,847.19 730,847.19 the period (1)Dispose 730,847.19 730,847.19 (2)Other out 4. Balance at 157,426,095.17 157,426,095.17 192 2021 Annual Report period-end III. Impairment provision 1. Balance at period-beginning 2.Increased amount of the period (1) Withdrawal 3.Decreased amount of the period (1)Dispose (2)Other out 4. Balance at period-end IV. Book value 1.Book value at period 106,217,779.76 106,217,779.76 -end 2.Book value at 110,572,471.92 110,572,471.92 period-beginning (2) Investment property adopted fair value measurement mode □Applicable√ Not applicable (3) Investment real estate without certificate of ownership In RMB Items Book balance Reason Unable to apply for warrants due to Houses and Building 10,658,816.07 historical reasons Other note 21. Fixed assets In RMB Items Year-end balance Year-beginning balance Fixed assets 2,424,741,252.86 790,183,905.38 193 2021 Annual Report Total 2,424,741,252.86 790,183,905.38 (1) List of fixed assets In RMB Houses & Machinery Items Transportations Other equipment Total buildings equipment I. Original price 1.Opening balance 545,896,931.25 1,017,693,432.96 11,379,729.08 42,420,673.14 1,617,390,766.43 2.Increased amount of the 258,765,257.28 1,535,123,033.22 3,899,262.59 12,891,530.11 1,810,679,083.20 period (1) Purchase 1,569,521.47 29,933,637.96 1,151,689.53 2,588,556.40 35,243,405.36 (2) Transferred fr om construction in 257,195,735.81 1,505,189,395.26 2,747,573.06 10,302,973.71 1,775,435,677.84 progress (3)Increased of Enterprise Combination 3.Decreased amount of the 2,149,210.94 4,933,091.35 7,082,302.29 period (1)Disposal 2,149,210.94 4,933,091.35 7,082,302.29 4. Balance at 804,662,188.53 2,550,667,255.24 15,278,991.67 50,379,111.90 3,420,987,547.34 period-end II. Accumulated depreciation 1.Opening balance 159,918,391.99 630,517,504.87 3,217,030.86 27,084,284.60 820,737,212.32 2.Increased amount of the 23,052,994.89 147,538,129.77 1,144,752.53 3,394,343.06 175,130,220.25 period (1) 23,052,994.89 147,538,129.77 1,144,752.53 3,394,343.06 175,130,220.25 Withdrawal 3.Decrease in 1,608,147.10 4,407,313.58 6,015,460.68 the reporting 194 2021 Annual Report period (1)Disposal 1,608,147.10 4,407,313.58 6,015,460.68 4.Closing balance 182,971,386.88 776,447,487.54 4,361,783.39 26,071,314.08 989,851,971.89 III. Impairment provision 1.Opening balance 6,373,080.81 96,567.92 6,469,648.73 2.Increase in the 32,769.22 32,769.22 reporting period (1)Withdrawal 32,769.22 32,769.22 3.Decrease in the reporting 11,527.44 96,567.92 108,095.36 period (1)Disposal 11,527.44 96,567.92 108,095.36 (2)Other decrease 4. Closing balance 6,361,553.37 32,769.22 6,394,322.59 IV. Book value 1.Book value of 621,690,801.65 1,767,858,214.33 10,917,208.28 24,275,028.60 2,424,741,252.86 the period-end 2.Book value of 385,978,539.26 380,802,847.28 8,162,698.22 15,239,820.62 790,183,905.38 the period-begin (2) Fixed assets temporarily idled In RMB Accumulated Impairment Items Original price Book value Remark depreciation provision ⑶Fixed assets leased out through operating leases In RMB Items Book value (4) Fixed assets without certificate of title completed In RMB 195 2021 Annual Report Items Book Value Reason Unable to apply for warrants due to Houses and Building 275,225,966.28 historical reasons Other note (5)Liquidation of fixed assets In RMB Items Year-end balance Year-beginning balance Other note 22. Construction in progress In RMB Items Year-end balance Year-beginning balance Construction in progress 71,482,031.08 1,301,750,141.12 Total 71,482,031.08 1,301,750,141.12 (1) List of construction in progress In RMB Year-end balance Year-beginning balance Items Book balance Provision for Book value Book balance Provision for Book value devaluation devaluation Industrializatio n project of polaroid for 1,301,693,689. 1,301,693,689. super large size 12 12 TV (Line 7) Other 56,452.00 56,452.00 Installation of machines and 71,482,031.08 71,482,031.08 equipment 1,301,750,141. 1,301,750,141. Total 71,482,031.08 71,482,031.08 12 12 196 2021 Annual Report (2)Changes of significant construction in progress In RMB Includi Capital ng: isation Curren Capital Amou Transf of t Increas Balanc isation nt at erred Other Propor Progre interes amoun Source e at e in of Name Budget year to decrea tion(% ss of t t of of this year-e interes beginn fixed se ) work accum capital funds period nd t ratio ing assets ulated ization (%) balanc of e interes t Industr ializati on Invest project ment of in Polaro 2,106, 1,301, 468,84 1,770, fixed 13,747 99.26 9,807, id for 698,40 693,68 4,861. 538,55 assets ,732.5 4.41% Other % 167.26 super 0.00 9.12 20 0.32 has 5 large been size transfe TV rred (Line 7) 2,106, 1,301, 468,84 1,770, 13,747 9,807, Total 698,40 693,68 4,861. 538,55 -- -- ,732.5 4.41% -- 167.26 0.00 9.12 20 0.32 5 (3)Impairment provision of construction projects Not applicable Other note (4)Engineering material In RMB Year-end balance Year-beginning balance Items Book balance Provision for Book value Book balance Provision for Book value devaluation devaluation Other note: 197 2021 Annual Report 23. Productive biological assets (1) Productive biological assets measured at cost methods □ Applicable √ Not applicable (2) Productive biological assets measured at fair value □ Applicable √ Not applicable 24. Oil and gas assets □ Applicable √ Not applicable 25. Right to use assets In RMB Items Total 1. Balance at year beginning 13,762,176.74 13,762,176.74 4. Year-end balance 13,762,176.74 13,762,176.74 2. Increase at this period 4,540,987.37 4,540,987.37 4. Year-end balance 4,540,987.37 4,540,987.37 1.Book value 9,221,189.37 9,221,189.37 Other note: None 26. Intangible assets (1) Information In RMB Non-proprietary Items Land use right Patent right Software Total technology I. Original price 1. Balance at 48,258,239.00 11,825,200.00 4,079,953.70 64,163,392.70 period-beginning 2.Increase in the 17,616,287.32 17,616,287.32 current period (1) Purchase 17,616,287.32 17,616,287.32 (2)Internal R & D (3)Increased of Enterprise 198 2021 Annual Report Combination 3.Decreased amount of the period (1)Disposal 4. Balance at 48,258,239.00 11,825,200.00 21,696,241.02 81,779,680.02 period-end II.Accumulated amortization 1. Balance at 13,487,191.27 11,825,200.00 2,802,022.52 28,114,413.79 period-beginning 2. Increase in the 895,391.76 4,134,714.47 5,030,106.23 current period (1) Withdrawal 895,391.76 4,134,714.47 5,030,106.23 3.Decreased amount of the period (1)Disposal 4. Balance at 14,382,583.03 11,825,200.00 6,936,736.99 33,144,520.02 period-end III. Impairment provision 1. Balance at period-beginning 2. Increase in the current period (1) Withdrawal 3.Decreased amount of the period (1)Disposal 199 2021 Annual Report 4. Balance at period-end 4. Book value 1.Book value at 33,875,655.97 0.00 14,759,504.03 48,635,160.00 period -end 2.Book value at 34,771,047.73 0.00 1,277,931.18 36,048,978.91 period-beginning The proportion the intangible assets formed from the internal R&D through the Company amount the balance of the intangible assets at the period-end. (2) Details of fixed assets failed to accomplish certification of land use right In RMB Items Book value Reason Other note: For intangible assets mortgaged by bank loans, please refer to VII Notes to consolidated financial statements "81. Assets with restricted ownership or use rights". 27. .Development expenses In RMB Increase in this period Decrease in this period Internal Recognize Transfer to Balance in developme Balance in Items d as current year-begin nt Other year-end intangible profit and expenditur assets loss e Total Other note 28. Goodwill (1) Original book value of goodwill In RMB Name of the Increase Decrease investees or the Opening Closing The merger of events formed balance disposition balance enterprises goodwill SAPO 9,614,758.55 9,614,758.55 200 2021 Annual Report Photoelectric Shenzhen Beauty Century 2,167,341.21 2,167,341.21 Garment Co., Ltd. Total 11,782,099.76 11,782,099.76 (2)Impairment of goodwill In RMB Balance in Increased at this period .Decreased at this period Closing Investee year-begin balance Provision disposition SAPO 9,614,758.55 9,614,758.55 Photoelectric Shenzhen Beauty Century 2,167,341.21 2,167,341.21 Garment Co., Ltd. Total 11,782,099.76 11,782,099.76 Information about an asset group or asset group portfolio Explain the goodwill impairment test process, key parameters (such as forecast period growth rate at expected future cash flow, stable period growth rate, profit margin, discount rate, forecast period, etc.) and the confirmation method of goodwill impairment loss Impact of the goodwill impairment test Other note 29. Long term amortize expenses In RMB Amortized Balance in Increase in this Balance in Items expenses Other loss year-begin period year-end Decoration fee 111,541.85 409,932.91 188,830.66 332,644.10 Renovation fee 1,264,954.74 3,224,534.02 714,221.68 3,775,267.08 Other 1,500,064.94 47,430.80 268,110.98 1,279,384.76 201 2021 Annual Report Total 2,876,561.53 3,681,897.73 1,171,163.32 5,387,295.94 Other note None 30. Deferred income tax assets/deferred income tax liabilities (1)Details of the un-recognized deferred income tax assets In RMB Balance in year-end Balance in year-begin Items Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Assets depreciation 5,766,782.71 1,440,192.90 18,865,669.84 4,709,761.70 reserves Unattained internal 2,324,192.50 348,628.88 2,413,307.05 361,996.06 sales profits Restricted stock 686,670.00 171,667.50 repurchase interest Salary payable to staff 7,679,100.00 1,919,775.00 Total 15,770,075.21 3,708,596.78 21,965,646.89 5,243,425.26 (2)Details of the un-recognized deferred income tax liabilities In RMB Closing balance Opening balance Items Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference liabilities difference liabilities Changes in fair value of investments in other 178,849,973.46 44,712,493.37 174,482,972.97 43,620,743.24 equity instruments The difference between the initial recognition cost and tax base of 62,083,693.36 15,520,923.34 62,083,693.36 15,520,923.34 long-term equity investment of Guanhua Company Difference in rent 5,636,976.78 1,409,244.20 receivable Total 246,570,643.60 61,642,660.91 236,566,666.33 59,141,666.58 202 2021 Annual Report (3) Deferred income tax assets or liabilities listed by net amount after off-set In RMB End balance of Trade-off between the Opening balance of Trade-off between the deferred income tax deferred income tax deferred income tax Items deferred income tax assets or liabilities assets and liabilities at assets or liabilities assets and liabilities after off-set period-begin after off-set Deferred income tax 3,708,596.78 5,243,425.26 assets Deferred income tax 61,642,660.91 59,141,666.58 liabilities (4)Details of income tax assets not recognized In RMB Items Balance in year-end Balance in year-begin Deductible temporary difference 151,027,647.77 122,887,462.20 Deductible loss 736,209,989.47 682,013,840.25 Total 887,237,637.24 804,901,302.45 (5)Deductible losses of the un-recognized deferred income tax asset will expire in the following years In RMB Year Balance in year-end Balance in year-begin Remark 2023 129,226,944.33 129,226,944.33 2024 148,095,898.11 148,095,898.11 2025 83,287,153.64 83,287,153.64 2026 120,820,767.06 120,820,767.06 2028 22,594,586.97 22,594,586.97 2029 100,351,965.47 100,351,965.47 2030 77,636,524.67 77,636,524.67 2031 54,196,149.22 Total 736,209,989.47 682,013,840.25 -- Other note: None 31 .Other non-current assets In RMB 203 2021 Annual Report Balance in year-end Balance in year-begin Items Book Provision Book value Book Provision Book value balance for balance for devaluation devaluation 28,769,782 28,769,782 47,483,219 47,483,219 Advance payment for equipment fund 0.00 0.00 .86 .86 .83 .83 Certificate of deposit for more than 1 30,030,410 30,030,410 70,064,383 70,064,383 0.00 0.00 year .96 .96 .56 .56 25,760,086 25,760,086 25,760,086 25,760,086 Shenzhen Xieli Automobile Co., ltd. 0.00 0.00 .27 .27 .27 .27 84,560,280 84,560,280 143,307,68 143,307,68 Total 0.00 0.00 .09 .09 9.66 9.66 Other note: None 32. Short-term borrowings (1)Categories of short-term loans In RMB Items Balance in year-end Balance Year-beginning Note: (2) Situation of Overdue Outstanding Short-Term Borrowing Not applicable Other note: 33. Transactional financial liabilities In RMB Items Balance in year-end Balance year-beginning Including: Including: Other note: 34. Derivative financial liability In RMB Items Balance in year-end Balance year-beginning 204 2021 Annual Report Other note: 35.Notes payable In RMB Type Balance in year-end Balance in year-begin Bank acceptance Bill 16,682,324.12 0.00 Total 16,682,324.12 The total note payable not due at the end of the period is 0.00 yuan. 36. Accounts payable (1) List of accounts payable In RMB Items Balance in year-end Balance in year-begin Within 1 year 280,210,281.65 325,354,275.46 1-2 years 1,122,451.76 1,912,000.86 2-3 years 496,309.68 96,543.25 3-4 years 44,629.53 1,093,369.87 4-5 years 983,598.33 37,402.40 Over 5 years 786,571.28 975,010.06 Total 283,643,842.23 329,468,601.90 (2) Significant advance from customers aging over one year In RMB Items Balance in year-end Reason Other note: None 37.Advance account (1) List of Advance account In RMB Items Balance in year-end Balance in year-begin Within 1 year 968,394.67 666,457.75 1-2 years 197,892.32 2,236,912.00 2-3 years 205 2021 Annual Report Over 3 years 639,024.58 639,024.58 Total 1,805,311.57 3,542,394.33 (2) Significant advance from customers aging over one year In RMB Items Balance in year-end Reason 38.Contract liabilities In RMB Items Balance in year-end Balance in year-begin Good 68,955.21 279,631.27 Less : Contractual liabilities charged to other non-current liabilities Total 68,955.21 279,631.27 Amount and reasons for the significant change in the book value during the reporting period In RMB Items Amount Reason 39.Payable Employee wage (1) List of Payroll payable In RMB Items Balance in year-begin Increase in this period Payable in this period Balance in year-end I. Short-term 55,642,549.53 235,951,646.92 231,874,336.21 59,719,860.24 compensation II.Post-employment be nefits - defined contrib 15,705,799.59 15,705,799.59 ution plans III. Dismissal benefits 2,636,463.20 2,636,463.20 Total 55,642,549.53 254,293,909.71 250,216,599.00 59,719,860.24 (2)Short-term remuneration In RMB Items Balance in year-begin Increase in this period Decrease in this period Balance in year-end 1.Wages, bonuses, 53,293,551.94 211,994,691.05 208,173,934.97 57,114,308.03 allowances and 206 2021 Annual Report subsidies 2.Employee welfare 41,093.20 8,393,472.90 8,434,566.10 3. Social insurance 2,723,153.85 2,723,153.85 premiums Including:Medical 2,254,940.97 2,254,940.97 insurance Work injury insurance 175,636.12 175,636.12 Maternity insurance 292,576.76 292,576.76 4. Public reserves for 7,339,217.34 7,339,217.34 housing 5.Union funds and 2,307,904.39 5,501,111.78 5,203,463.95 2,605,552.21 staff education fee Total 55,642,549.53 235,951,646.92 231,874,336.21 59,719,860.24 (3)Defined contribution plans listed In RMB Items Balance in year-begin Increase in this period Decrease in this period Balance in year-end 1. Basic old-age 13,082,445.90 13,082,445.90 insurance premiums 2.Unemployment 278,249.09 278,249.09 insurance 3. Annuity payment 2,345,104.60 2,345,104.60 Total 15,705,799.59 15,705,799.59 Other note: None 40.Tax Payable In RMB Items Balance in year-end Balance in year-begin VAT 6,334,093.50 286,928.75 Enterprise Income tax 1,804,277.95 11,219,726.43 Individual Income tax 866,274.38 469,169.71 City Construction tax 43,259.90 48,751.30 House property tax 102,146.02 102,146.02 Education surcharge 31,608.85 33,386.49 207 2021 Annual Report Stamp tax 18,966.49 36,370.02 Land use tax 0.00 2,043.30 Total 9,200,627.09 12,198,522.02 Other note: None 41.Other payable In RMB Items Balance in year-end Balance in year-begin Other payable 201,317,421.35 156,118,440.42 Total 201,317,421.35 156,118,440.42 (1)Interest payable Not applicable Other note: (2)Dividends payable In RMB Items Balance in year-end Balance Year-beginning (3) Other accounts payable (1) Other accounts payable listed by nature of the account In RMB Items Balance in year-end Balance in year-begin Engineering Equipment fund 91,213,156.89 32,713,413.76 Unit account 51,681,042.57 48,394,939.72 Deposit 43,277,481.38 36,130,306.12 Restrictive stock repurchase obligation 0.00 7,844,373.00 Other 15,145,740.51 31,035,407.82 Total 201,317,421.35 156,118,440.42 208 2021 Annual Report (2) Other significant accounts payable with aging over one year In RMB Items Balance in year-end Reason Other note None 42. Liabilities classified as holding for sale In RMB Items Balance in year-end Balance in year-begin Other note: 43. Non-current liabilities due within 1 year In RMB Items Balance in year-end Balance in year-begin Lease liabilities due within one year 5,175,393.52 0.00 Total 5,175,393.52 Other note: None 44.Other current liabilities In RMB Items Balance in year-end Balance in year-begin Did not terminate the confirmation bill 27,523,903.58 0.00 endorsement, discount Total 27,523,903.58 Other note: None 45. Long-term borrowing (1) List of Long-term borrowing In RMB Items Balance in year-end Balance in year-begin Mortgage-guaranteed loan 683,016,243.25 343,100,174.35 Less:Long-term borrowings due within 0.00 0.00 209 2021 Annual Report 1 year Total 683,016,243.25 343,100,174.35 Description of the long-term loan classification Other note, 46.Bond payable (1)Bond payable In RMB Items Balance year-end Year-beginning balance ( 2 ) Changes of bonds payable(Not including the other financial instrument of preferred stock and perpetual capital securities that classify as financial liability In RMB Overflo Withdr Name Openin The w Pay in Book Issue Issue aw Closing of the Period g current discoun current value date amount interest balance bond balance issue t period at par amount Total -- -- -- (3) Note to conditions and time of share transfer of convertible bonds (4)Other financial instruments that are classified as financial liabilities Basic situation of other financial instruments outstanding at the period-end such preferred shares and perpetual bonds Changes in financial instruments outstanding at the period-end such preferred shares and perpetual liabilities Other note 47. Lease liabilities In RMB Items Balance year-end Year-beginning balance lease liabilities 9,419,249.23 Less:Lease liabilities due within 1 year -5,175,393.52 Total 4,243,855.71 Other note 210 2021 Annual Report The accrued interest expense of lease liabilities in 2021 is RMB 475,000, which is included in the financial expense-interest expense. 48. Long-term payable In RMB Items Balance year-end Year-beginning balance (1)Statement of long-term payroll payable In RMB Items Balance year-end Year-beginning balance Other note: (2)Special payable In RMB Year-beginning Items Increase Decrease Balance year-end Reason balance Other note: 49. Long term payroll payable (1)Statement of long-term payroll payable Not applicable (2)Change of defined benefit plans Not applicable Other note: 50.Estimated liabilities In RMB Items Balance in year-end Balance in year-begin Reason Repayment payable 30,741,055.00 Total 30,741,055.00 -- Other note: 211 2021 Annual Report 51.Deferred income In RMB Decreased this Items Beginning of term Increased this term End of term Reason term Government 110,740,322.21 13,660,000.00 13,939,029.06 110,461,293.15 Subsidy Total 110,740,322.21 13,660,000.00 13,939,029.06 110,461,293.15 -- Details of government subsidies: In RMB Amount Other income Amount of Asset-related New subsidy Beginning of transferred to recorded in cost deducted Other or Items in current End of term term non-operatio the current in the current changes income-relate period nal income period period d Other note: For details of government subsidies included in deferred revenue, please refer to Note XIV. 2. Government subsidies. 52. . Other non-current liabilities In RMB Items Balance year-end Year-beginning balance Other note: 53.Stock capital In RMB Changed(+,-) Year-beginni Balance in Issuance of Capitalizatio ng balance Bonus shares Other Subtotal year-end new share n of public reserve Total of 507,772,279. -1,250,430.0 -1,250,430.0 506,521,849. capital shares 00 0 0 00 Other note: Note: This year, 1,250,430.00 restricted shares that have been granted but not yet unlocked were repurchased and cancelled, with a reduction of RMB 1,250,430.00, which has been verified by Peking Certified Public Accountants (special general partnership), and the capital verification report (QXY Zi (2021) No.0013) was issued 212 2021 Annual Report on April 27, 2021. 54. Other equity instruments (1) Basic information on the outstanding other financial instruments, including preferred shares, perpetual bonds, etc. at the end of the reporting period (2)Movement of the outstanding other financial instruments, including preferred shares, perpetual bonds, etc. at the end of the reporting period Other note: 55. Capital reserves In RMB Items Year-beginning Increase in the current Decrease in the current Year-end balance balance period period Share premium 1,832,397,142.44 5,914,533.90 1,826,482,608.54 Other capital reserves 135,117,216.09 135,117,216.09 Total 1,967,514,358.53 5,914,533.90 1,961,599,824.63 Other notes, including the note to its increase/decrease and the cause(s) of its movement in the reporting period: The change of capital stock premium in the current period is from the repurchase and cancellation of some restricted stocks granted by the Company's restricted stock incentive plan in 2017. 56.Treasury stock In RMB Year-beginning Decrease in the current Items Increase in the current Year-end balance balance period Treasury stock 7,525,438.20 7,525,438.20 0.00 Total 7,525,438.20 7,525,438.20 Other notes, including the note to its increase/decrease and the cause(s) of its movement in the reporting period: The change of capital stock premium in the current period is from the repurchase and cancellation of some restricted stocks granted by the Company's restricted stock incentive plan in 2017. 57. Other comprehensive income In RMB Amount of current period Year-e Year-begi Items nd nning Amount Less: Less: Less: After-ta After-ta balanc 213 2021 Annual Report balance incurred Amount Prior Income x x e before transferred period tax attribute attribute income into profit included expense to the to tax and loss in in other s parent minority the current composi compan sharehol period that te y der recognied income into other transfer comprehen to sive retained income in income prior in the period current period 1. Other comprehensive income 118,64 115,367,8 3,237,34 -847,23 809,337. 3,275,25 that cannot be reclassified in the 3,084. 33.87 9.34 8.36 34 0.36 loss and gain in the future 23 Changes in fair value of 118,64 115,367,8 3,237,34 -847,23 809,337. 3,275,25 investments in other equity 3,084. 33.87 9.34 8.36 34 0.36 instruments 23 2.Other comprehensive income 1,238,098 -199,06 -199,06 1,039, reclassifiable to profit or loss in .55 3.73 3.73 034.82 subsequent periods Translation differences of 1,238,098 -199,06 -199,06 1,039, financial statements .55 3.73 3.73 034.82 denominated Total of other comprehensive 119,68 116,605,9 3,038,28 -847,23 809,337. 3,076,18 income 2,119. 32.42 5.61 8.36 34 6.63 05 Other notes include the valid part of gain and loss of a cash-flow hedge converted into initial amount of arbitraged items for adjustment: None 58. Special reserves In RMB Items Year-beginning Increase in the current Decrease in the current Year-end balance balance period period 59. Surplus reserves In RMB 214 2021 Annual Report Items Year-beginning Increase in the current Decrease in the current Year-end balance balance period period Statutory surplus 94,954,652.14 3,291,193.33 98,245,845.47 reserve Total 94,954,652.14 3,291,193.33 98,245,845.47 Note to surplus reserve, including the note to its increase/decrease and the cause(s) of its movement in the reporting period: Note: The increase amount in the current period is RMB 3,291,193.33, including RMB 3,175,360.75 accrued according to 10% of the current net profit and RMB 115,832.57 accrued from other comprehensive income carry-over retained earnings. 60. Retained profits In RMB Items Amount of current period Amount of previous period Retained earnings before adjustments at the year 86,912,390.50 49,307,764.03 beginning Retained earnings after adjustments at the year 86,912,390.50 49,307,764.03 end Add: Net profit attributable to owners of the 61,162,384.25 37,267,995.74 Company for the period Less: Appropriation to statutory surplus reserve 3,175,360.75 3,888,292.80 Common stock dividend payable 15,195,655.47 Add:Other comprehensive earnings are carried 1,042,493.21 4,224,923.53 forward to retained earnings Retained profits at the period end 130,746,251.74 86,912,390.50 As regards the details of adjusted the beginning undistributed profits (1)As the retroactive adjustment on Enterprise Accounting Standards and its related new regulations, the affected beginning undistributed profits are RMB 0.00. (2) As the change of the accounting policy, the affected beginning undistributed profits are RMB 0.00. (3) As the correction of significant accounting error, the affected beginning undistributed profits are RMB 0.00 . (4) As the change of consolidation scope caused by the same control, the affected beginning undistributed profits are RMB 0.00. (5) Other adjustment of the total affected beginning undistributed profits are RMB 0.00 . 215 2021 Annual Report 61. Business income, Business cost In RMB Amount of current period Amount of previous period Items Income Cost Income Cost Main business 2,265,990,629.90 1,900,247,328.79 2,097,432,885.06 1,808,092,705.48 Other business 27,757,262.16 8,272,084.49 11,531,802.74 6,205,689.54 Total 2,293,747,892.06 1,908,519,413.28 2,108,964,687.80 1,814,298,395.02 Whether the net profit before and after deducting non-recurring gains and losses is negative after audit □ Yes √ No Income-related information: In RMB Type Division 1 Division 2 Total Of which Property lease management and 111,568,500.55 139,325,762.71 others Textile 54,932,578.58 54,932,578.58 Polarizer 2,099,489,550.77 2,099,489,550.77 Of which Domestic 2,039,625,757.16 2,039,625,757.16 Overseas 254,122,134.90 254,122,134.90 Of which Of which Of which Of which Of which Information related to performance obligations: None Information related to the transaction price apportioned to the residual performance obligation: The income corresponding to the performance obligations that have not been performed or have been performed incompletely but the contract has been signed at the end of the reporting period is RMB 0.00, of which RMB 0.00 is expected to be recognized as income in the year, RMB 0.00 is expected to be recognized as income in the year, and RMB 0.00 is expected to be recognized as income in the year. Other note: 216 2021 Annual Report 62.Taxes and surcharges In RMB Items Amount of current period Amount of previous period Urban construction tax 1,625,005.70 718,695.23 Education surcharge 1,169,628.61 517,483.70 Property tax 5,826,834.91 4,338,584.18 Other 1,902,078.87 1,772,362.54 Total 10,523,548.09 7,347,125.65 Other note: 63.Sales expenses In RMB Items Amount of current period Amount of previous period Wage 18,266,837.81 12,958,215.67 Business expenses 1,256,926.46 668,407.23 Sales service 12,684,139.28 12,697,476.62 Property insurance 2,716,981.13 Other 3,048,451.71 2,320,131.35 Total 37,973,336.39 28,644,230.87 Other note: None 64. Administrative expenses In RMB Items Amount of current period Amount of previous period Wage 80,805,949.97 74,790,949.11 Depreciation of fixed assets 10,728,532.58 9,794,203.66 Water and electricity 2,123,594.28 2,576,447.96 Intermediary organ 8,120,482.28 3,271,775.61 Intangible assets amortization 5,030,106.23 1,612,363.59 Travel expenses 468,553.20 408,221.21 Office expenses 1,192,408.92 946,055.89 Business entertainment 1,754,789.06 615,454.09 Lawsuit expenses 914,353.81 144,161.32 217 2021 Annual Report Repair charge 2,057,702.25 1,366,609.60 Property insurance 648,821.25 380,689.81 Other 8,243,536.32 9,188,002.51 Total 122,088,830.15 105,094,934.36 Other note: None 65.R & D costs In RMB Items Amount of current period Amount of previous period Wage 15,697,764.59 13,177,489.03 Material 83,197,051.56 49,679,847.18 Depreciation 3,326,098.79 2,984,978.79 Fuel & Power 976,547.62 1,017,795.21 Travel expenses 177,340.24 226,949.44 Other 133,961.73 73,904.57 Total 103,508,764.53 67,160,964.22 Other note: None 66.Financial Expenses In RMB Items Amount of current period Amount of previous period Interest expenses 24,113,442.39 4,175,380.96 Less:Interest capitalized 9,807,167.26 3,940,565.29 Interest income -1,655,853.59 -3,702,735.59 Exchange loss -20,976,430.83 8,108,404.80 Discount interest on acceptance bill 1,390,467.41 0.00 Fees and other 6,805,197.79 3,647,403.40 Total -130,344.09 8,287,888.28 Other note: None 218 2021 Annual Report 67.Other income In RMB Items Amount of current period Amount of previous period Amortization for subsidies for new production lines and purchase of 3,000,000.00 3,000,000.00 equipment for the Phase II project of polarizers for TFT-LCD Amortization of funds for the pilot project of regional agglomeration 2,500,000.08 2,500,000.00 development of strategic emerging industries in Guangdong Province Amortization of local matching funds for the second phase of TFT-LCD polarizer 1,500,000.00 1,500,000.00 project (Line 6) Amortization of subsidy funds for industrialization project of polarizers for 1,299,999.96 1,300,000.00 TFT-LCD Shenzhen Municipal Finance Committee’s polarizer industrialization 1,250,000.00 0.00 project for super-sized TVs Amortization of national subsidy for TFT-LCD polarizer phase II project 1,000,000.00 1,000,000.00 (Line 6) Amortization of subsidy funds for the narrow line (Line 5) of the first-phase 500,000.04 500,000.00 project of polarizer for TFT-LCD Amortization of Shenzhen Polarizing Materials and Technology Engineering 500,000.00 500,000.00 Laboratory Amortization of subsidy funds for R&D equipment for key technologies of 500,000.04 500,000.00 optical compensation films for polarizers Shenzhen Municipal Air Environment Quality Improvement Special Fund 494,931.57 468,931.57 Subsidy 2021 Special Major Project Award and Subsidy Support Plan for Technological 367,666.68 0.00 Transformation and Doubling Amortization of funding for technology 300,000.00 300,000.00 center construction 219 2021 Annual Report Amortization of subsidies for purchase 175,090.20 175,090.20 of imported equipment and technology Amortization of special funds for textiles 142,857.16 142,857.16 Amortization of capital subsidy for 142,255.72 142,255.72 change & renovation of old elevators Amortization of innovative and entrepreneurial funds for the first phase 50,000.04 50,000.00 of the TFT-LCD polarizer project Amortization of innovation and entrepreneurship funds of Shenzhen 50,000.04 50,000.00 Polarizing Materials and Technology Engineering Laboratory Amortization of innovative and entrepreneurial funds for the second 50,000.04 50,000.00 phase of the TFT-LCD polarizer project (Line 6) Dyeing project technical transformation 39,000.00 0.00 subsidy Amortization of energy-saving 27,172.70 29,642.93 renovation subsidy funds Subsidies for investment projects in special technological transformation and 19,000.00 11,083.33 doubling for technological transformation in 2020 Funding for key technology research and development of polarizers for ultra-thin 16,666.67 0.00 IPS smartphone terminals Amortization of Funds for Introducing 14,388.12 14,388.10 Advanced Technology Shenzhen Bureau of Industry and Information Technology's 2021 2,590,000.00 0.00 Industrial Enterprises Expansion Capacity Incentive Project Subsidy Shenzhen Science and Technology Innovation Committee 2020 Enterprise 1,018,000.00 0.00 R&D Subsidy Headquarters Economic Comprehensive Economic Contribution Award (Futian 500,000.00 0.00 District Enterprise Development Center) Shenzhen Pingshan District Finance 500,000.00 0.00 220 2021 Annual Report Bureau 2019 Pingshan District Harmonious Labor Relations Enterprise Award Fund The second batch of funding of the 2020 Science and Technology Innovation Special Fund of Shenzhen Pingshan 360,000.00 0.00 District Finance Bureau (standardized funding) The second batch of special funds of scientific and technological innovation in 2020 of Shenzhen Pingshan District 300,000.00 0.00 Finance Bureau (High-tech Enterprise Recognition Award) Stable Job Subsidy 118,832.69 160,712.86 Municipal Ecological Environment Bureau Cleaner Production Incentive 100,000.00 0.00 Support Subsidy The sixth batch of pre-job training subsidies by Longgang District of 68,000.00 0.00 Human Resources Bureau Shenzhen Pingshan District Human Resources Bureau’s one-time subsidy for 60,000.00 0.00 enterprises to absorb and file poor laborers Received subsidy from Longgang District Human Resources Bureau for 27,000.00 0.00 work-for-training Subsidy from Shenzhen Futian District Human Resources Bureau for 16,500.00 0.00 work-for-work training Subsidy from Luohu district for 15,500.00 0.00 work-for-work training Employee maternity benefits returned by 10,592.53 32,609.51 Social Security Administration Unpaid VAT (input plus deduction) 9,899.54 0.00 The second batch of special funds for scientific and technological innovation by Shenzhen Pingshan District Finance 4,800.00 0.00 Bureau in 2020 (Intellectual Property Award) 221 2021 Annual Report Tax office fee refund 5,225.51 24,898.73 Sewage fee refund 0.00 597,362.55 Shenzhen Industrial and Commercial 0.00 6,952,943.71 Electricity Cost Reduction Subsidy Social Security Administration premium 0.00 1,815.00 refund Pingshan District Finance Bureau's 759.00 Second Batch of Epidemic Subsidies 2019 Water-saving Carrier Award Fund 374,102.00 of Shenzhen Water Affairs Bureau Shenzhen Pingshan District Finance Bureau 2018 Harmonious Labor 1,000,000.00 Relations Enterprise Award Fund Shenzhen Science and Technology Innovation Committee 2018 Enterprise 1,278,000.00 R&D Subsidy Pingshan District Science and Technology Innovation Bureau's 2019 50,000.00 High-tech Enterprise Recognition Award Pingshan District Subsidy for 1,645,500.00 Work-for-Training Shenzhen Pingshan District Human 111,600.00 Resources Bureau trial training subsidy Shenzhen Pingshan District Finance Bureau subsidy support for the steady 1,200,000.00 growth of foreign trade in Pingshan District in 2020 Received refund of unemployment benefits for companies affected by the 2,709,874.84 epidemic from the Social Security Bureau Market Supervision Administration's Second Batch of Patent Subsidies in 9,000.00 2018 Government subsidizes for epidemic 10,000.00 protective supplies Cultural Tourism Stabilization Support 100,000.00 Subsidy The first batch of special funds for 966,000.00 222 2021 Annual Report scientific and technological innovation in 2019 Received subsidies from the Public Employment Service Center for 1,425.20 stabilizing jobs Received the reward for the epidemic prevention effect from the Bureau of 20,000.00 Industry and Information Technology Received subsidy for housing epidemic prevention at 145# Fenghuang Road 5,638.00 from Shenzhen Luohu District Housing and Construction Bureau Received the epidemic prevention subsidy for Shenzhen No. 52 Textile Compound, Tianbei 2nd Road from the 8,531.45 Housing and Construction Bureau of Luohu District Shenzhen Urban construction tax and surcharges 1,047.51 halved Stamp duty halved 183.32 Luohu District Epidemic Prevention 10,000.00 Subsidy 68. Investment income In RMB Items Amount of this period Amount of last period Long-term equity investment returns 33,984.66 -3,446,613.86 accounted for by equity method Investment income from the disposal of 20,779.93 0.00 long-term equity investment Dividend income earned during investment 2,551,896.02 2,946,592.79 holdings in other equity instruments Structured deposit interest 2,749,600.18 18,231,107.84 Interest income on term deposits over 1 year 2,350,000.00 853,205.47 Net monetary gains 14,956,752.27 4,015,378.50 Total 22,663,013.06 22,599,670.74 Other note: None 223 2021 Annual Report 69.Net exposure hedging income In RMB Items Amount of this period Amount of last period Other note: 70. Gains on the changes in the fair value In RMB Source Amount of this period Amount of last period Transaction financial assets 536,575.34 Other non-current financial assets 2,150,943.40 2,150,943.40 Total 2,150,943.40 2,687,518.74 Other note: None 71. Credit impairment loss In RMB Items Amount of this period Amount of last period Loss of bad debts in other receivables -7,201,148.60 -1,828,410.68 Loss of bad note receivable -280,565.00 -84,490.74 Loss of bad accounts receivable 2,500,153.07 -8,481,632.23 Total -4,981,560.53 -10,394,533.65 Other note: 72. Losses from asset impairment In RMB Items Amount of current period Amount of previous period II. Loss of inventory price and Impairment of contract performance -83,475,951.11 -65,942,828.90 costs V. Impairment loss of fixed assets -32,769.22 -6,469,648.73 Total -83,508,720.33 -72,412,477.63 Other note: 73. Asset disposal income 224 2021 Annual Report In RMB Items Amount of current period Amount of previous period I. Gains & losses on foreign investment -597,458.77 276,544.73 in fixed assets 74. Non-Operation income In RMB Items Amount of current period Amount of previous period Recorded in the amount of the non-recurring gains and losses Insurance compensation 3,477,438.60 3,477,438.60 Payable without payment 1,371,678.99 Liquidation profit and loss 17,140,459.60 17,140,459.60 Other 667,888.44 73,983.39 667,888.44 Total 21,285,786.64 1,445,662.38 Government subsidies recorded into current profits and losses: In RMB Whether the impact of Whether Amount of Amount of Assets-relate Issuing subsidies on Items Issuing body Nature special current previous d/income-rela reason the current subsidies period period ted profit and loss Other note: 75.Non-current expenses In RMB Amount of current period Amount of previous period The amount of non-operating Items gains & lossed Non-current asset Disposition 369,187.12 3,315.15 369,187.12 loss Fine expenses 1,309,172.27 115,314.20 1,309,172.27 Other 7,903.96 19,791.92 7,903.96 Total 1,686,263.35 138,421.27 Other note: 225 2021 Annual Report 76.Income tax expenses (1)Income tax expenses In RMB Items Amount of current period Amount of previous period Current income tax expense 8,174,724.28 8,422,038.43 Deferred income tax expense 2,944,072.68 -218,317.45 Total 11,118,796.96 8,203,720.98 (2)Reconciliation of account profit and income tax expenses In RMB Items Amount of current period Total profits 86,233,463.16 Current income tax expense accounted by tax and relevant 21,558,365.79 regulations Influence of different tax rates applied by some subsidiaries -7,491,633.67 Non-deductible costs, expenses and losses 4,571,839.81 Tax impact by the unrecognized deductible losses and 8,059,643.49 deductible temporary differences in previous years Profit and loss of joint venture and associated enterprises -53,103.78 accounted for by equity method Tax impact of research and development fee plus deduction -15,526,314.68 Income tax fee 11,118,796.96 Other note 77. Other comprehensive income Refer to the notes 57 78. Supplementary information to cash flow statement (1) Other cash received relevant to operating activities In RMB Items Amount of current period Amount of previous period Letter of Credit Deposit 35,875,977.74 95,971,397.61 Interest income 1,655,853.59 3,702,735.59 Government Subsidy 19,363,739.42 12,029,059.97 Current account 31,729,758.78 11,704,807.26 Total 88,625,329.53 123,408,000.43 226 2021 Annual Report Note to other cash received in connection with operating activities: None (2)Other cash paid related to operating activities In RMB Items Amount of current period Amount of previous period Payment of credit deposit 164,509,022.41 50,257,183.69 Cash 48,012,370.68 37,855,834.17 Current account and other 12,867,319.88 9,104,639.66 Total 225,388,712.97 97,217,657.52 Note to other cash paid in connection with operating activities: None (3)Cash received related to other investment activities In RMB Items Amount of current period Amount of previous period Structured deposits, financial products, 1,128,309,484.61 3,112,161,370.37 principal and income L/C margin for purchase of line 7 126,799,633.00 equipment Credit deposit for non-Line 7 equipment 1,900,000.00 Total 1,128,309,484.61 3,240,861,003.37 Note to other cash received related to other investment activities:None (4).Cash paid related to other investment activities In RMB Items Amount of current period Amount of previous period Structured deposits, financial products, 965,000,000.00 3,004,000,000.00 principal and income L/C margin for purchase of line 7 2,150,000.00 equipment Credit deposit for non-Line 7 equipment 1,900,000.00 Equity transaction expenses 15,275.20 Total 965,000,000.00 3,008,065,275.20 227 2021 Annual Report Note to other Cash paid related to other investment activities (5)Other cash received in relation to financing activities In RMB Items Amount of current period Amount of previous period (6)Cash paid related with financing activities In RMB Items Amount of current period Amount of previous period Restricted stock of stock repurchase 7,820,298.30 9,344,136.30 incentive object Lease payment 4,817,974.70 Total 12,638,273.00 9,344,136.30 Note to other Cash paid related with financing activities: 79. Supplement Information for cash flow statement (1)Supplement Information for cash flow statement In RMB Items Amount of current period Amount of previous period I. Adjusting net profit to cash flow from -- -- operating activities Net profit 75,114,666.20 43,497,645.15 Add: Impairment loss provision of assets 83,508,720.33 82,807,011.28 Depreciation of fixed assets, oil and gas 182,116,694.00 117,440,111.32 assets and consumable biological assets Depreciation of Use right assets 4,540,987.37 Amortization of intangible assets 5,030,106.23 1,612,363.59 Amortization of Long-term deferred 1,171,163.32 582,518.72 expenses Loss on disposal of fixed assets, intangible -597,458.77 -276,544.73 assets and other long-term deferred assets Fixed assets scrap loss 369,187.12 3,315.15 Loss on fair value changes -2,150,943.40 -2,687,518.74 Financial cost 14,306,275.13 455,850.38 228 2021 Annual Report Loss on investment -22,663,013.06 -22,599,670.74 Decrease of deferred income tax assets 1,534,828.48 374,601.17 Increased of deferred income tax liabilities 2,500,994.33 -10,802,679.08 Decrease of inventories -270,089,816.70 -39,880,044.30 Decease of operating receivables -58,547,894.61 -184,426,504.09 Increased of operating Payable -25,563,036.85 15,830,477.68 Other 4,981,560.53 Net cash flows arising from operating -4,436,980.35 1,930,932.76 activities II. Significant investment and financing -- activities that without cash flows: Conversion of debt into capital Convertible loan due within 1 year Financing of fixed assets leased 3.Movement of cash and cash equivalents: -- -- Ending balance of cash 302,408,433.72 278,337,236.95 Less: Beginning balance of cash 278,337,236.95 268,646,588.18 equivalents Add:End balance of cash equivalents Less: Beginning balance of cash equivalents Net increase of cash and cash equivalent 24,071,196.77 9,690,648.77 (2) Net Cash paid of obtaining the subsidiary In RMB Amount Of which: -- Of which: -- Of which: -- Other note: (3) Net Cash receive of disposal of the subsidiary In RMB Amount 229 2021 Annual Report Of which: -- Of which: -- Of which: -- Other note: (4) Component of cash and cash equivalents In RMB Items Year-end balance Year-beginning balance I. Cash 302,438,856.00 278,337,236.95 Including:Cash at hand 792.64 4,127.10 Demand bank deposit 302,407,641.08 271,085,025.10 Demand other monetary funds 7,248,084.75 III. Balance of cash and cash equivalents 302,408,433.72 278,337,236.95 at the period end Other note: 80. Note of statement of changes in the owner's equity Specify the description of the item "others" and the adjusted amount of the balance at the end of last year: 81. The assets with the ownership or use right restricted In RMB Book value at the end of the reporting Items Cause of restriction period Fixed assets 243,106,926.00 Mortgage Intangible assets 33,875,655.97 Mortgage Total 276,982,581.97 -- Other note: 82. Foreign currency monetary items (1) Foreign currency monetary items In RMB Closing foreign currency Closing convert to RMB Items Exchange rate balance balance Monetary funds -- -- Including:USD 3,396,814.97 6.3757 21,657,073.20 Euro HKD 806,319.92 0.8176 659,247.17 230 2021 Annual Report Yen 15,363,481.00 0.0554 851,136.85 Account payable -- -- Including:USD 9,987,772.57 6.3757 63,679,041.57 Euro HKD Prepayments Including:USD 588,809.23 6.3757 3,754,071.01 Yen 30,197,869.00 0.0554 1,673,414.91 Other receivables Including:USD 37,399.02 6.3757 238,444.93 accounts payable Including:USD 4,122,038.21 6.3757 26,280,879.02 Yen 3,043,388,138.00 0.0554 168,649,353.67 Other payables Including:USD 676,686.00 6.3757 4,314,346.93 Yen 3,381,984.00 0.0554 187,361.91 Euro 22,500.00 7.2197 162,443.25 Other note: (2) Note to overseas operating entities, including important overseas operating entities, witch should be disclosed about its principal business place, function currency for bookkeeping and basis for the choice. In case of any change in function currency, the cause should be disclosed. □ Applicable √ Not applicable 83. Hedging Arbitrage According to arbitrage category to disclose arbitrage item, relevant arbitrage tools and the arbitraged risk qualitative and quantitative information: 84. Government subsidies (1)Government subsidies confirmed in current period In RMB Amount included in current Items Amount Project profit and loss Funding subsidy for change and renovation of old 720,241.51 Other income 142,255.72 elevators 231 2021 Annual Report Textile special funds 142,857.09 Other income 142,857.16 Shenzhen Special Fund Subsidy for Atmospheric Environment Quality 442,000.00 Other income 52,000.00 Improvement- Shenzhen Beauty Century Subsidy for the technical transformation project of dyeing equipment by the 91,000.00 Other income 39,000.00 Bureau of Industry and Information Technology Subsidy funds for industrialization project of 433,333.39 Other income 1,299,999.96 polarizers for TFT-LCD Subsidy funds for the narrow line (Line 5) of the first-phase 499,999.96 Other income 500,000.04 project of polarizer for TFT-LCD Amortization of subsidies for purchase of imported 151,746.19 Other income 175,090.20 equipment and technology Innovative and entrepreneurial funds for the 49,999.94 Other income 50,000.04 first phase of the TFT-LCD polarizer project Introducing advanced 14,388.09 Other income 14,388.12 technology funding Innovation and entrepreneurship funds of Shenzhen Polarizing 162,499.96 Other income 50,000.04 Materials and Technology Engineering Laboratory Funding for technology 975,000.00 Other income 300,000.00 center construction Shenzhen Polarizing Materials and Technology 1,625,000.00 Other income 500,000.00 Engineering Laboratory Subsidy fund for R&D equipment of key technology 2,624,999.96 Other income 500,000.04 of optical compensation film for polarizer 232 2021 Annual Report Local matching funds for the second phase of TFT-LCD 9,750,000.00 Other income 1,500,000.00 polarizer project (Line 6) Funds for the pilot project of regional agglomeration development of strategic 16,249,999.92 Other income 2,500,000.08 emerging industries in Guangdong Province Local matching funds for the second phase of TFT-LCD 6,500,000.00 Other income 1,000,000.00 polarizer project (Line 6) Subsidies for new production lines and purchase of equipment for the Phase II 19,500,000.00 Other income 3,000,000.00 project of polarizers for TFT-LCD Innovative and entrepreneurial funds for the second phase of the 324,999.96 Other income 50,000.04 TFT-LCD polarizer project (Line 6) Investment funds within the central budget of the polarizer 28,750,000.00 Other income 1,250,000.00 industrialization project for super-large TVs (Line 7) Funding for key technology research and development of 1,983,333.33 Other income 16,666.67 polarizers for ultra-thin IPS smartphone terminals Shenzhen Municipal Finance Committee (2018N007 Major Research and development of 6,000,000.00 Other income key technologies for high-performance polarizers for large-size display panels) Shenzhen Special Fund Subsidy for Atmospheric Environment Quality 147,643.86 Other income 442,931.57 Improvement- SAPO Photoelectric Subsidies for investment 159,916.67 Other income 19,000.00 233 2021 Annual Report projects in special technological transformation for technological transformation and doubling in 2020 Funding by Shenzhen Municipal Bureau of Finance 2020N028 Key technology research and development 2,500,000.00 Other income project of low-color polarized circular polarizer for fixed-curvature AMOLED Awards support by 2021 special major projects of 10,662,333.32 Other income 367,666.68 technological transformation and doubling Subsidy funds for Other income 27,172.70 energy-saving renovation (2)Government subsidy return □ Applicable √ Not applicable Other note: 85.Other (1) Arbitration matters between the Company and Jinjiang Group At the end of 2016, the Company introduced Jinjiang Group as a strategic investor for the capital increase and share expansion of SAPO Photoelectric. The Company, SAPO Photoelectric, Jinjiang Group and Hangzhou Jinhang Equity Investment Fund Partnership (Limited Partnership), a limited partnership established by the former Jinjiang Group as the actual controller, jointly signed the Cooperation Agreement. Jinjiang Group made a commitment to the performance of SAPO Photoelectric from 2017 to 2019, and Jinjiang Group promised that if the promised income and net profit were not fulfilled, it would make a difference between the promised net profit and the actual profit. In 2018 and 2019, Jinjiang Group failed to fulfill its performance commitments as agreed, and the performance compensation in 2018 was received by the Company in 2019 as agreed, totaling RMB 197,268,700; For the performance compensation in 2019, Jinjiang Group believes that it can't lead the operation and management of SAPO Photoelectric, which leads to the failure to realize the contractual purpose of the Cooperation Agreement, and applies to Shenzhen Court of International Arbitration for arbitration. On March 25, 2021, the arbitration tribunal made the following ruling on this case: (I) The applicant is exempted from the performance compensation obligation in 2019 agreed in Article 3.1 of the Cooperation Agreement, and does not need to pay SAPO Photoelectric the compensation for the performance difference in 2019 of RMB 244,783,800; (II) The arbitration fee of RMB 2,682,011 and the actual expenses of the arbitrator of RMB 8,000 in 234 2021 Annual Report this case shall be borne by the applicant; (III) Other arbitration claims of the applicant are not supported. This award shall be final and take legal effect from the date it is made. (2) Shenzhen Xieli Automobile Enterprise Co., Ltd. (property not yet disposed of) Shenzhen Xieli AutomobilCo., Ltd. is a Sino-foreign joint venture invested by the Company and Hong Kong Xieli Maintenance Co. Ltd. in 1981, with a registered capital of RMB 3.12 million, 50% of whose equity is held the Company. The operating period of the Company ended in 2008, and its business license was revoked in 2014. The main assets of the Company are real estate. The industrial and commercial license of Shenzhen Xieli was cancelled in March 2020, but there are still three properties under its name, the disposal of which is required to be resolved after further consultation between the shareholders of both parties. On July 26, 2021, the Company filed a lawsuit with Yantian District People's Court in Shenzhen City, Guangdong Province to revoke the cancellation of Shenzhen Xieli Automobile Enterprise Co., Ltd. approved by Shenzhen Administration for Market Regulation on March 9, 2020, on which the court gave a judgment on November 21, 2021 to revoke the cancellation of Shenzhen Xieli Automobile Enterprise Co., Ltd. approved by Shenzhen Administration for Market Regulation. VIII. Changes of merge scope 1. Business merger not under same control (1) Business merger not under same control in reporting period In RMB Income of Net profits Time and Recognitio acquiree of acquiree Cost Proportion Way to place of Purchase n basis of during the during the Name gaining the of stock gain the gaining the date purchase purchase purchase stock rights rights stock rights stock right date date to date to period-end period-end Other note: (2)Combined cost and Goodwill In RMB Combined cost Other note (3) The identifiable assets and liabilities of acquiree at purchase date In RMB In RMB 235 2021 Annual Report Fair value of the purchase date Book value of the purchase date Other note (4) The profit or loss from equity held by the date before acquisition in accordance with the fair value measured again、 Whether there is a transaction that through multiple transaction step by step to realize enterprises merger and gaining the control during the reporting period □ Yes √ No (5) Note to merger could not be determined reasonable consideration or Identifiable assets, Fair value of liabilities of the acquiree at acquisition date or closing period of the merge (6)Other note 2. Business combination under the same control (1) Business combination under the same control during the reporting period Not applicable Other note: (2) Combination cost Not applicable Other note: (3) The book value of the assets and liabilities of the merged party on the date of consolidation Not applicable Other note: 3. Counter purchase Basic information of trading, the basis of transactions constitute counter purchase, the retain assets , liabilities of the listed companies whether constituted a business and its basis, the determination of the combination costs, the amount and calculation of adjusted rights and interests in accordance with the equity transaction process.Not applicable 4. The disposal of subsidiary Whether there is a single disposal of the investment to subsidiary and lost control □ Yes √No 236 2021 Annual Report Whether there are multiple transactions step by step dispose the investment to subsidiary and lost control in reporting period □ Yes √ No 5. Other reasons for the changes in combination scope Note to the change in the consolidation scope (e.g. new subsidiaries, liquidation subsidiaries, etc.) caused by other reasons and relevant information: 6.Other IX. Equity in other entities 1. Equity in subsidiary (1) The structure of the enterprise group Registered Share-holding ratio Subsidiary Main operation Business nature Acquired way place Directly Indirectly Shenzhen Lishi Domestic trade, Industry 100.00% Establish Shenzhen Shenzhen Property Development Management Co., Ltd Accommodatio Establish Shenzhen 100.00% Shenzhen Shenzhen n, restaurants, Huaqiang Hotel business center; Shenzhen Shenfang Real Property 100.00% Establish Estate Shenzhen Shenzhen Management Management Co., Ltd. Production of Establish Shenzhen fully electronic Beauty Century 100.00% Shenzhen Shenzhen jacquard Garment Co., knitting whole Ltd. shape Shenzhen Shenfang Sungang Real Property Shenzhen Shenzhen 100.00% Establish Estate Management Management Co., Ltd. SAPO Polarizer Shenzhen Shenzhen 60.00% Photoelectric production and 237 2021 Annual Report sales Shenzhen Establish Polarizer Shengjinlian Shenzhen Shenzhen production and 100.00% Technology sales Co., Ltd. Shengtou (Hongkong) Sales of 100.00% Establish Hongkong Hongkong polarizer Co.,Ltd. Explanation that the shareholding ratio in subsidiaries is different from the voting right ratio: None Basis for holding half or less voting rights but still controlling the investee, and holding more than half voting rights but not controlling the investee: None For the important structured subjects included in the scope of consolidation, the control basis is: None Basis for determining whether the company is an agent or a principal: None Other note:Note (2)Significant not wholly-owned subsidiaries In RMB Profit or loss Holding proportion of Dividend declared to Closing balance of Name attributable to non-controlling interest non-controlling interest non-controlling interest non-controlling interest SAPO Photoelectric 40.00% 15,173,715.28 1,142,495,431.83 Other note: None (3)Main financial information of significant not wholly-owned subsidiaries In RMB Closing balance Beginning balance Curren Non-c Curren Non-c Subsid Non-c Total Non-c Total Curren Total t urrent Curren Total t urrent iaries urrent liabilit urrent liabiliti t assets assets liabiliti Liabili t assets assets liabiliti Liabili assets ies assets es es ties es ties SAPO 1,622, 2,581, 4,204, 521,12 827,06 1,348, 1,493, 2,177, 3,670, 399,97 452,17 852,14 Photoe 715,94 716,14 432,09 7,167. 6,348. 193,51 320,59 130,75 451,34 5,943. 1,112. 7,055. lectric 7.38 8.26 5.64 55 51 6.06 0.48 6.68 7.16 39 38 77 In RMB Subsidiarie Amount of current period Amount of previous period s Operating Net profit Total Cash flow Operating Net profit Total Cash flow 238 2021 Annual Report revenue comprehen from revenue comprehen from sive operating sive operating income activities income activities SAPO 2,126,851, 37,934,288 37,934,288 -11,450,77 1,961,577, 16,768,253 16,768,253 -1,921,942. Photoelectr 011.63 .19 .19 1.90 740.37 .29 .29 93 ic Other note: None (4) Significant restrictions of using enterprise group assets and pay off enterprise group debt None (5) Provide financial support or other support for structure entities incorporate into the scope of consolidated financial statements None Other note: None 2. The transaction of the Company with its owner’s equity share changed but still controlling the subsidiary (1) Note to owner’s equity share changed in subsidiary None (2) The transaction’s influence to equity of minority shareholders and attributable to the owner's equity of the parent company Other note None 3. Equity in joint venture arrangement or associated enterprise (1) Significant joint venture arrangement or associated enterprise Shareholding Ratio (%) The accounting Name of Main Places of Registration Nature of treatment of Subsidiary Operation Place Business direct indirect investment in associates Joint venture: Shenzhen Property Guanhua Shenzhen Shenzhen 50.16% Equity method leasing Printing & 239 2021 Annual Report Dyeing Co.,Ltd. Anhui Huapeng Textile Co., Anhui Anhui Manufacturing 50.00% Equity method Ltd. Associated enterprise Shenzhen Changlianfa Property Printing and Shenzhen Shenzhen 40.25% Equity method leasing dyeing Company Jordan Garment Jordan Jordan Manufacturing 35.00% Equity method Factory Yehui International Hongkong Hongkong Manufacturing 22.75% Equity method Co., Ltd. Explanation that the shareholding ratio in the joint venture or associated enterprise is different from the voting right ratio: Basis for holding less than 20% of voting rights but with significant influence, or holding 20% or more of voting rights but without significant influence: (2)The Summarized Financial Information of Joint Ventures In RMB Year-end balance/ Amount of current Year-beginning balance/ Amount of period previous period Shenzhen Guanhua Printing & Dyeing Co.,Ltd. Current assets 37,787,147.72 19,854,144.21 Non-current assets 228,639,403.03 241,137,964.49 Total assets 266,426,550.75 260,992,108.70 Current liabilities 18,194,214.40 12,261,343.60 Non-current liabilities 35,190,853.69 37,356,444.69 Total liabilities 53,385,068.09 49,617,788.29 Attributable to shareholders of the parent 213,041,482.67 211,374,320.41 company 240 2021 Annual Report Share of net assets calculated by stake 106,861,607.70 106,025,359.12 --Goodwill 21,595,462.44 21,595,462.44 --Other 285,343.61 285,343.61 Operating income 21,404,639.29 14,623,800.97 Financial expenses -174,304.72 -39,339.28 Income tax expenses 499,490.10 -2,118,023.83 Net profit 614,155.44 -3,422,861.88 Total comprehensive income 614,155.44 -3,422,861.88 Other note (3) Main financial information of significant associated enterprise In RMB Year-end balance/ Amount of current Year-beginning balance/ Amount of period previous period Other note (4) Summary financial information of insignificant joint venture or associated enterprise In RMB Year-end balance/ Amount of current Year-beginning balance/ Amount of period previous period Joint venture: -- -- Total amount of the pro rata calculation of -- -- the following items Associated enterprise: -- -- Total amount of the pro rata calculation of -- -- the following items Other note (5) Note to the significant restrictions of the ability of joint venture or associated enterprise transfer funds to the Company (6) The excess loss of joint venture or associated enterprise Other note (7) The unrecognized commitment related to joint venture investment (8) Contingent liabilities related to joint venture or associated enterprise investment 241 2021 Annual Report 4. Significant common operation 5. Equity of structure entity not including in the scope of consolidated financial statements Related notes to structure entity not including in the scope of consolidated financial statements 6.Other X. Risks Related to Financial Instruments XI. The disclosure of the fair value 1. Closing fair value of assets and liabilities calculated by fair value In RMB Closing fair value Fir value Items Fir value measurement Fir value measurement measurement items at Total items at level 2 items at level 3 level 1 I. Consistent fair value -- -- -- -- measurement II Inconsistent fair value -- -- -- -- measurement XII. Related parties and related-party transactions 1.Parent company information of the enterprise The parent The parent Name Registered address Nature Registered capital company of the company of the Company's Company’s vote shareholding ratio ratio Equity 18/F, Investment Shenzhen investment , Building, Shennan Investment Real-estate 2,800,900.00 46.21% 46.21% Holdings Co.,Ltd. Road, Futian Development and District, Shenzhen Guarantee Note to the parent company: 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. Therefore, the Company’s ultimate controller is Shenzhen Investment Holdings Co., Ltd. Other note:None 242 2021 Annual Report 2.Subsidiaries of the Company For details of the subsidiary of the Company, see "Section X Financial Report IX. Interests in other subjects 3. Information on the joint ventures and associated enterprises of the Company For important joint ventures or joint ventures of the Company, see the notes to the joint venture and joint ventures of the Company. See " Section X Financial Report IX. Interests in other entities. Other note 4.Other Related parties information Other related party Relationship to the Company Shenzhen Tianma Microelectronics Co., Ltd. Chairman of the Board Is the Vice Chairman of the Company Suzhou Advantage Ford Investment Center (Limited The controlling party of SAPO Shareholder partnership) Shengto (HK) Co., Ltd. The Company Executives are Director of the company Sharing Company of Suzhou Advantage Ford Investment Hengmei Photoelectric Co., Ltd. Center (Limited partnership) Shenzhen Xinfang Knitting Co., Ltd. Sharing Company Shenzhen Dailishi Underwear Co., Ltd. Sharing Company Other note None 5. Related transactions. (1)Related transactions on purchasing goods and receiving services Acquisition of goods and reception of labor service In RMB Content of Amount of Amount of previous Over the trading Amount of last Related parties related limit or not? period transaction current period period Hengmei Technical Photoelectric Co., 0.00 0.00 No 1,415,263.58 service Ltd. Hengmei Polarized 0.00 0.00 No 204,282,036.36 Photoelectric Co., 243 2021 Annual Report Ltd. Related transactions on sale goods and receiving services In RMB Related party Content Amount of current period Amount of previous period Shenzhen Tianma Polarized 1,441,975.42 1,485,995.60 Microelectronics Co., Ltd. Hengmei Photoelectric Co., Polarized 0.00 110,545,214.28 Ltd. Note None (2) Related trusteeship/contract Not applicable (3) Information of related lease Not applicable (4) Related-party guarantee Related guarantee In RMB Whether the guarantee Guaranteed party Amount Guarantee start date Guarantee end date has been fulfilled SAPO photoelectric 409,127,400.00 September 8,2020 No The Company is the secured party Not applicable (5) Inter-bank lending of capital of related parties: In RMB Related party Amount Start date Expiring date Note Borrowing fund: Shenzhen Guanhua The annual lending Printing & Dyeing Co., 3,806,454.17 July 30,2019 interest rate is 0.30% Ltd. Loaned 244 2021 Annual Report (6) Related party asset transfer and debt restructuring (7) Rewards for the key management personnel In RMB Items Amount of current period Amount of previous period Rewards for the key management 11,152,800.00 9,175,000.00 personnel (8) Other related transactions 6. Receivables and payables of related parties (1)Receivables In RMB Amount at year end Amount at year beginning Name Related party Bad debt Balance of Book Balance of Book Balance of Book Provision Shenzhen Tianma Account Microelectronics 412,495.18 18,686.03 581,696.96 25,652.84 receivable Co., Ltd. Hengmei Account Photoelectric Co., 0.00 0.00 20,879,229.37 920,774.02 receivable Ltd. Other Account Anhui Huapeng 0.00 0.00 1,800,000.00 1,800,000.00 receivable Textile Company Shenzhen Dailishi Other Account Underwear Co., 1,100,000.00 55,000.00 0.00 0.00 receivable Ltd. (2)Payables In RMB Name Related party Amount at year end Amount at year beginning Hengmei Photoelectric Co., Account payable 170,977.53 35,787,643.44 Ltd. Shenzhen Xinfang Knitting Other payable 244,789.85 244,789.85 Co., Ltd. Other payable Shenzhen Changlianfa 2,023,699.95 1,580,949.95 245 2021 Annual Report Printing & dyeing Co., Ltd. Other payable Yehui International Co.,Ltd. 1,124,656.60 1,143,127.81 Shengtou (Hongkong)Co., Other payable 315,000.00 315,000.00 Ltd. Shenzhen Guanhua Printing Other payable 3,806,454.17 3,811,240.92 & dyeing Co., Ltd. 7. Related party commitment None 8.Other None XIII. Share payment 1. Overall situation of share payment √ Applicable □Not applicable In RMB Total amount of various equity instruments granted by the company 0.00 during the current period Total amount of various equity instruments that the company exercises 0.00 during the period Total amount of various equity instruments that have expired in the 1,250,430.00 current period The scope of executive price of the company’s outstanding share 0 yuan,0 year options at the end of the period and the remaining term of the contract The scope of executive price of the company’s other equity instruments 5.73 /yuan/share,1 year at the end of the period and the remaining term of the contract Other note Note :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 246 2021 Annual Report 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 The first restriction lifting operating revenue in 2018 compared with 2016 is not less than 70%, and is not lower than the period 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 The second restriction lifting operating revenue in 2019 compared with 2016 is not less than 130%, and is not lower than the period 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 The third restriction lifting operating revenue in 2020 is not less than 200% compared to 2016, and is not lower than the 75 period 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%. Note: Earnings per share=net profit/total capital stock attributable to common shareholders of the Company upon deduction of non-recurring profit and loss. On February 2, 2021, the company held the first extraordinary general meeting of shareholders in 2021 to consider and pass the "Proposal on Repurchase and Cancellation of Certain Restricted Stocks", agreeing to the company's total holdings of 1 original incentive object who resigned due to personal reasons 7,950 restricted stocks were repurchased and cancelled at a repurchase price of 5.73 yuan/share; It was agreed that the Company repurchase and cancel 6,000 restricted shares held by one original incentive object who had failed to meet the incentive conditions due to retirement at 6.23 yuan/share. On April 7, 2021, the company held the 2020 Annual General Meeting of Shareholders to review and approve the Proposal on Repurchase and Cancellation of Some Restricted Stocks, and agreed that the company would repurchase and cancel 1,236,480 restricted stocks held by 102 incentive objects in the third issue that did not meet the conditions for lifting the restrictions on sales, and the repurchase price was RMB 6.26 per share. 2. Equity-settled share-based payment √ Applicable □Not applicable In RMB 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 Reasons for the significant difference between the current period None estimate and the previous period estimate Equity-settled share-based payment is included in the 0.00 247 2021 Annual Report accumulated amount of capital reserve Total amount of fees confirmed by equity-settled share-based 0.00 payments in the current period Other note None 3. The Stock payment settled by cash □ Applicable √ Not applicable 4. Modification and termination of the stock payment None 5.Other None XIV. Commitments 1. Significant commitments Significant commitments at balance sheet date As of December 31,2021,The company does not disclose the pension plan undisclosed matter should exist. 2. Contingency (1) Significant contingency at balance sheet date As of December 31,2021,The company does not disclose the pension plan undisclosed matter should exist. (2) The Company have no significant contingency to disclose, also should be stated None 3.Other None XV. Events after balance sheet date 1. Significant events had not adjusted Not applicable 248 2021 Annual Report 2. Profit distribution Not applicable 3. Sales return None 4. Notes of other significant events As of December 31,2021,The company does not disclose the pension plan undisclosed matter should exist. XVI. Other significant events 1. Correction of the accounting errors in the previous period (1) Retroactive restatement (2) Prospective application 2. Liabilities restructuring None 3. Replacement of assets (1) Non-monetary assets exchange None (2) Other assets exchange None 4. Pension plan None 5. Discontinuing operation None 249 2021 Annual Report 6. Segment information (1) Basis for determining the reporting segments and accounting policy The Company determines its operating divisions based on its internal organizational structure, management requirements and internal reporting system. Based on the operating divisions, the Company confirms four reporting divisions, namely textiles, polarizer, trade and property leasing. Divisional reporting information is disclosed in accordance with the accounting policies and measurement standards adopted by each division when reporting to the management. These measurement basis are consistent with the accounting and measurement basis for financial statement preparation. (2)Financial information of the report division In RMB Property lease Offset between Items Polarizer Textile Trade Total and other divisions Operating income 2,117,717,019.48 129,445,842.10 55,169,650.79 -8,584,620.31 2,293,747,892.06 Including: revenue from foreign 2,117,717,019.48 121,098,294.00 54,932,578.58 0.00 2,293,747,892.06 transaction Revenue from inter-segment 0.00 8,347,548.10 237,072.21 -8,584,620.31 -8,584,620.31 transactions Including: revenue from main 2,099,489,550.77 114,363,911.23 55,169,650.79 -3,032,482.89 2,265,990,629.90 business Operating cost 1,828,378,235.90 38,998,238.06 48,686,874.43 -7,543,935.11 1,908,519,413.28 Including: main 1,828,378,235.90 26,709,964.52 48,686,874.43 -3,527,746.06 1,900,247,328.79 business cost Operating profit 28,041,538.58 53,280,168.22 815,378.80 -15,576,656.93 73,511.20 66,633,939.87 Total assets 4,204,357,864.87 3,296,896,012.57 46,233,785.98 -2,050,840,555.59 5,496,647,107.83 Total 1,380,985,834.98 211,828,635.06 27,995,367.47 -87,991,976.75 1,532,817,860.76 indebtedness (3) In case there is no reporting segment or the total assets and liabilities of the reporting segments cannot be disclosed, explain the reason None 250 2021 Annual Report (4)Other note None 7. Other significant transactions and matters that may affect investors' decision making None 8.Other None XVII. Notes of main items in the financial statements of the Parent Company 1. Accounts receivable (1) Accounts receivable classified by category In RMB Amount in year-end Amount in year-beginning Bad debt Book balance Book balance Bad debt provision Category provision Book Book Amoun Proport Amoun Proport value Amoun Proport Amoun Proport value t ion(%) t ion(%) t ion(%) t ion(%) Including: Accrual of bad 8,353,5 100.00 417,67 7,935,9 1,538,3 100.00 76,915. 1,461,40 debt provision by 5.00% 5.00% 90.78 % 9.54 11.24 16.00 % 80 0.20 portfolio Including: 8,353,5 100.00 417,67 7,935,9 1,538,3 100.00 76,915. 1,461,40 Total 5.00% 5.00% 90.78 % 9.54 11.24 16.00 % 80 0.20 Accrual of bad debt provision by single item In RMB Closing balance Name Book balance Bad debt provision Proportion Accrual of bad debt provision by portfolio: 417,679.54 yuan In RMB Closing balance Name Book balance Bad debt provision Proportion Within 1 year 6,815,274.78 340,763.74 5.00% 251 2021 Annual Report 1-2 years 1,538,316.00 76,915.80 5.00% Total 8,353,590.78 417,679.54 -- Accrual of bad debt provision by portfolio In RMB RMB Closing balance Name Book balance Bad debt provision Proportion Relevant information of the provision for bad debts will be disclosed with reference to the disclosure method of other receivables if the provision for bad debts of bills receivable is accrued according to the general model of expected credit loss: □ Applicable √ Not applicable Disclosure by aging In RMB Aging Closing balance Within 1 year(Including 1 year) 6,815,274.78 1-2 years 1,538,316.00 2-3 years 0.00 Over 3 years 0.00 3-4 years 0.00 Total 8,353,590.78 (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Amount of change in the current period Opening Reversed or Closing Category balance Accrual collected Write-off Other balance amount 76,915.80 340,763.74 417,679.54 Total 76,915.80 340,763.74 417,679.54 Total 76,915.80 66,116.12 143,031.92 Where the significant amount of the reserve for bad debt recovered or reversed: In RMB Name Amount Mode None 252 2021 Annual Report (3) The actual write-off accounts receivable In RMB Items Amount (4)The ending balance of other receivables owed by the imputation of the top five parties In RMB Name Closing balance Proportion % Balance of Bad debt provision Shenzhen Guangsheng Development Industry Co., 5,610,352.81 67.16% 280,517.64 Ltd. Shenzhen Beauty Century Garment Co., Ltd. 2,485,076.00 29.75% 124,253.80 Shenzhen Yuehao Hotel 245,621.97 2.94% 12,281.10 Management Co., Ltd. Cao Cheng 9,300.00 0.11% 465.00 Ma Yue 3,240.00 0.04% 162.00 Total 8,353,590.78 100.00% -- (5) Account receivable which terminate the recognition owning to the transfer of the financial assets None (6) The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable None 2. Other accounts receivable In RMB Items Closing balance Opening balance Other accounts receivable 14,383,631.68 7,450,934.40 Total 14,383,631.68 7,450,934.40 (1)Interest receivable 1)Category of interest receivable In RMB 253 2021 Annual Report Items Closing balance Opening balance 2) Significant overdue interest I n RMB Whether or not the Balance in Reasons for impairment and the Items) Aging year-end non-recovery basis for its determination Other note: 3)Bad-debt provision √Applicable □ Not applicable In RMB Stage 1 Stage 2 Stage 3 Expected credit losses Expected credit Expected credit loss Bad debt provision for the entire duration Total losses over the over life (no credit (credit impairment next 12 months impairment) occurred) Balance as at January —— —— —— —— 1,2021 In current Loss provision changes in current period, change in book balance with significant amount □ Applicable √ Not applicable (2)Dividend receivable 1) Category of Dividend receivable (2)Dividend receivable 1) Category of Dividend receivable In RMB Items Closing balance Opening balance 2) Significant dividends receivable with age exceeding 1 year I n RMB Whether or not the Balance in Reasons for Items) Aging impairment and the year-end non-recovery basis for its 254 2021 Annual Report determination 3)Bad-debt provision √Applicable □ Not applicable In RMB Stage 1 Stage 2 Stage 3 Expected credit Expected credit loss over Expected credit losses for Bad debt provision Total losses over the next life (no credit the entire duration (credit 12 months impairment) impairment occurred) Balance as at January 1,018,014.39 15,111,246.32 16,129,260.71 1,2021 Balance as at January —— —— —— —— 1,2021 In current Provision in the current 369,750.00 369,750.00 period Balance as at 1,387,764.39 15,111,246.32 16,499,010.71 December 31,2021 Loss provision changes in current period, change in book balance with significant amount □ Applicable √ Not applicable Other note: (3) Other accounts receivable 1) Other accounts receivable classified by the nature of accounts In RMB Nature Closing book balance Opening book balance Other receivable 14,383,631.68 7,450,934.40 Total 14,383,631.68 7,450,934.40 2)Bad-debt provision In RMB Stage 1 Stage 2 Stage 3 Expected credit Expected credit loss over Expected credit losses for Bad Debt Reserves Total losses over the next life (no credit the entire duration (credit 12 months impairment) impairment occurred) Balance as at January 1,018,014.40 15,111,246.32 16,129,260.71 1,2021 Balance as at January —— —— —— —— 1,2021 In current Provision in the current 369,750.00 369,750.00 255 2021 Annual Report period Balance as at 1,387,764.39 15,111,246.32 16,499,010.71 December 31,2021 Loss provision changes in current period, change in book balance with significant amount □ Applicable √ Not applicable Disclosure by aging In RMB Aging Closing balance Within 1 year(Including 1 year) 15,603,247.29 1-2 years 0.00 2-3 years 234,716.25 Over 3 years 15,044,678.85 3-4 years 328,819.35 4-5 years 454,759.77 Over 5 years 14,261,099.73 Total 30,882,642.39 3) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Amount of change in the current period Opening Reversed or Category Closing balance balance Accrual collected Write-off Other amount Internal current 877,680.00 365,000.00 1,242,680.00 account Deposit 5,000.00 5,000.00 Other 1,260.00 122.36 1,382.36 15,245,320. Unit account 4,627.64 15,249,948.35 71 16,129,260. Total 369,750.00 16,499,010.71 71 Where the significant amount of the provision for bad debt recovered or reversed In RMB Name Amount Mode 256 2021 Annual Report 4) Accounts receivable actually written off in the reporting period In RMB Items Amount Of which the significant amount of the reversed or collected part during the reporting period : In RMB Whether the Verification money is Name Nature Amount Reason procedures generated by performed related party transactions (5)Top 5 of the closing balance of the other accounts receivable collected according to the arrears party In RMB Portion in total Bad debt provision Name Nature Year-end balance Age other of year-end receivables(%) balance Shenzhen Beauty Internal current Century Garment 14,475,600.00 1-3 years 46.87% 1,242,680.00 account Co., Ltd. Jiangxi Xuanli Unit account 11,389,044.60 Over 5 years 36.88% 11,389,044.60 Thread Co., Ltd. Anhui Huapeng Unit account 1,800,000.00 Over 5 years 5.83% 1,800,000.00 Textile Company Shenzhen Dailisi Unit account 1,100,000.00 Within 1 year 3.56% 55,000.00 Underwear Co., Ltd Shenzhen Xieli Automobile Repair Unit account 1,018,295.37 2-5 years 3.30% 1,018,295.37 Plant Total -- 29,782,939.97 -- 96.44% 15,505,019.97 6) Accounts receivable involved with government subsidies In RMB Name of the Time, amount and Name government subsidy Year-end balance Aging basis of the expected project collection The company has no government subsidies receivable. 257 2021 Annual Report 7) Other account receivable which terminate the recognition owning to the transfer of the financial assets (8) The amount of the assets and liabilities formed by the transfer and the continues involvement of other accounts receivable Other note: 3. Long-term equity investment In RMB Closing balance Opening balance Items Provision for Provision for Book balance Book value Book balance Book value impairment impairment 1,972,630,835. 1,956,048,206. 1,972,630,835. 1,956,048,206. Investments in 16,582,629.30 16,582,629.30 subsidiaries 39 09 39 09 Investments in associates and 133,022,325.77 0.00 133,022,325.77 147,929,137.23 0.00 147,929,137.23 joint ventures 2,105,653,161. 2,089,070,531. 2,120,559,972. 2,103,977,343. 16,582,629.30 16,582,629.30 Total 16 86 62 32 (1)Investment to the subsidiary In RMB Increase /decrease in reporting period Closing Opening Withdrawn Closing balance of Name Add Decreased balance impairment Other balance impairment investment investment provision provision SAPO 1,910,247,78 1,910,247,78 14,415,288.0 Photoelectric 1.94 1.94 9 Shenzhen Lisi Industrial 8,073,388.25 8,073,388.25 Development Co., Ltd. Shenzhen Beauty 14,696,874.3 14,696,874.3 Century 2,167,341.21 4 4 Garment Co., Ltd. Shenzhen 15,489,351.0 15,489,351.0 Huaqiang 8 8 Hotel 258 2021 Annual Report Shenzhen Shenfang Real Estate 1,713,186.55 1,713,186.55 Management Co., Ltd. Shenzhen Shenfang Sungang Real 5,827,623.93 5,827,623.93 Estate Management Co., Ltd. 1,956,048,20 1,956,048,20 16,582,629.3 Total 6.09 6.09 0 (2)Investment to joint ventures and associated enterprises In RMB Increase /decrease in reporting period Closing Adjust Declara Withdr balance Openin Decreas Gain/lo ment of tion of awn of Add Other Closing Name g ed ss of other cash impair impair investm equity Other balance balance investm Investm compre dividen ment ment ent changes ent ent hensive ds or provisi provisi income profit on on I. Joint ventures Anhui Huapen g 10,797, 10,797, Textile 023.14 023.14 Co.,Ltd . Shenzh en Guanhu a 127,90 128,21 308,06 Printin 6,165.1 4,225.5 0.37 g& 7 4 Dyeing Co., Ltd. Subtota 138,70 10,797, 308,06 128,21 l 3,188.3 023.14 0.37 4,225.5 259 2021 Annual Report 1 4 II. Associated enterprises Shenzh en Changli anfa 2,706,2 265,94 2,972,2 Printin 62.38 0.59 02.97 g and dyeing Compa ny Jordan Garnent Factory Yehui Internat 6,519,6 -540,01 -199,06 3,944,7 1,835,8 ional 86.54 6.30 3.73 09.25 97.26 Co., Ltd. Subtota 9,225,9 -274,07 -199,06 3,944,7 4,808,1 l 48.92 5.71 3.73 09.25 00.23 147,92 133,02 Total 9,137.2 2,325.7 0.00 3 7 (3)Other note 4.Business income and Business cost In RMB Amount of current period Amount of previous period Items Business income Business cost Business income Business cost Income from Main 74,272,555.42 7,660,814.11 57,649,817.53 7,019,203.76 Business Other Business income 3,887,130.77 3,887,130.77 3,647,070.68 3,647,070.68 Total 78,159,686.19 11,547,944.88 61,296,888.21 10,666,274.44 Income-related information: In RMB Type Division 1 Division 2 Total Of which: Of which: 260 2021 Annual Report Of which: Of which: Of which: Of which: Of which: Information related to performance obligations: None Information related to the transaction price apportioned to the residual performance obligation: None At the end of the reporting period, the income amount corresponding to the performance obligations that have been signed but not fulfilled or completed is 0.00 yuan. Among them, RMB 0.00 is expected to be recognized as revenue in 0 year, RMB 0.00 is expected to be recognized as revenue in 0 year, and RMB 0.00 is expected to be recognized as revenue in 0 year. Other note: None 5.Investment income In RMB Items Amount of current period Amount of previous period Income from long-term equity investment 18,304,138.91 measured by adopting the Cost method Income from long-term equity investment 33,984.66 -3,446,613.86 measured by adopting the equity method Investment income from the disposal of 20,779.93 long-term equity investment Dividend income earned during investment holdings in other equity 1,659,743.65 1,995,042.32 instruments Structured deposit interest 4,036,968.43 14,919,678.58 Net monetary gains 14,657,621.81 3,884,233.70 Total 20,409,098.48 35,656,479.65 6.Other 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 -961,982.35 261 2021 Annual Report Government subsidy recognized in current Other benefits of government subsidies gain and loss(excluding those closely 19,643,379.33 that are confirmed related to the main related to the Company’s business and business. granted under the state’s policies) Switch back of provision for depreciation of account receivable which was singly 989,313.04 taken depreciation test. Other non-business income and 19,964,046.87 expenditures other than the above Less :Influenced amount of income tax 6,025,891.12 Influenced amount of minor 13,096,494.74 shareholders’ equity (after tax) Total 20,512,371.03 -- Details of other profit and loss items that meet the non-recurring profit and loss definition □ Applicable√ Not applicable 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 earnings per share Earnings per share Profit of report period Weighted average returns equity(%) Basic earnings per Diluted earnings per share(RMB/share) share(RMB/share) Net profit attributable to the Common stock shareholders of 2.24% 0.12 0.12 Company. Net profit attributable to the Common stock shareholders of 1.46% 0.08 0.08 Company after deducting of non-recurring gain/loss. 3. Differences between accounting data under domestic and overseas accounting standards ( 1 ) Simultaneously pursuant to both Chinese accounting standards and international accounting standards disclosed in the financial reports of differences in net income and net assets. □ Applicable□√ Not applicable 262 2021 Annual Report (2)Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards. □ Applicable□√ Not applicable (3)Explanation of the reasons for the differences in accounting data under domestic and foreign accounting standa rds. If the data that has been audited by an overseas audit institution is adjusted for differences, the name of the ov erseas institution should be indicated None 4.Other None The Board of Directors of Shenzhen Textile (Holdings) Co., Ltd. March 17, 2021 263