Annual Report 2019
Stock Code: 688007 Stock Short Name: Appotronics
Appotronics Corporation Limited
Annual Report 2019
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Annual Report 2019
Laser focus on our long-term success
Dear Shareholders,
The year of 2019 is a significant year for Appotronics. In July 2019, we became one of
the first group of companies listed on the Shanghai Stock Exchange’s Sci-Tech Innovation
Board (“STAR Market”). The establishment of the STAR Market is a historic event of the
Chinese capital market in the past 30 years, which will provide technical innovation driven
companies, such as Appotronics, with a broader and high-quality development space
through combining the advantages of technology and capital.
The outbreak of Covid-19 throughout the world in 2020 has brought significant and
irrevocable changes to global economy, people’s daily life and production activities. Facing
the crisis, Appotronics believes that focusing on technical innovations, satisfying users’
basic demands and seeking stable and long-run profits will be the effective approach to
address the long-term social changes brought by the outbreak, and create higher value for
our investors.
We released our first corporate social responsibility report along with this annual
report. We believe that, by making unremitting efforts in technical innovations, we will
create value for the society, provide better services to the public, and effectively fulfill the
social responsibility as a corporate.
I. A review of our history: Basic technical innovations bring out long-term and
valuable returns
Appotronics was incorporated in Shenzhen in 2006. Since its establishment,
Appotronics has been focusing on the utilization of mature industry chain to create new
laser display technology architecture, form our proprietary intellectual properties (“IP”),
and master the design and manufacture technology of core devices. Through more than ten
years’ unremitting efforts, Appotronics has taken the lead in the world in overcoming the
shortcomings of traditional laser display technology, including high cost, low reliability and
inefficiency, invented the creative laser phosphor display architecture, and by giving full
play to this disruptive technical advantage, successfully overcome the barriers for
commercialization, and realized the driving forces of both technical innovation and
industrialization.
According to the Research Report on Chinese Laser Projector Market 2019 issued
by AVC, blue laser + phosphor powder technology (ALPD is a kind of such
technology), as the mainstream light source technology, occupies 98.6% of the
market share. The laser display industry is growing rapidly, and plays an important
role in the upgrading and transformation of the manufacturing industry. As a new
low energy-consumption display technology, laser display technology is developing
vigorously and will provide a good opportunity for our development.
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Since its establishment, Appotronics has persevered in investing in patents and other
IP rights. As of December 31, 2019, we had obtained 908 patents in total throughout
the world, and had another 756 patents pending. ALPD technology architecture
patent of Appotronics, as a basic patent for the laser phosphor display route, has
been quoted 416 times in the world. As a Leader Level Member of the Laser
Illuminated Projector Association (LIPA), Appotronics has participated in and led
the preparation of the international laser display standard.
In the process of industrialization in the past ten years, the advantages of ALPD
technology have been gradually reflected in high-end applications and other fields
of display application. Our revenue from ALPD technology has grown rapidly
from RMB 355 million in 2016 to nearly RMB 2 billion in 2019.
Since the installation of the first ALPD laser cinema projection system in the
world in 2014, we have been promoting laser cinema projection technology in the
world through cooperation with China Film and Barco of Belgium. At present, we
take the lead in the field of laser cinema projection in the world. The C5 laser
cinema projector launched in 2019 is not only the first Chinese product of the like
passing DCI certification of the U.S. Digital Cinema Projection Association, but
also the first laser cinema projector in the industry featuring non-manual operation,
muteness, no machine room and low operating cost.
Appotronics launched the first 100 inch laser TV in the world in cooperation with
LG in 2013, and the first 100 inch laser TV with a selling price of less than RMB
10,000 in cooperation with Xiaomi in 2017. In 2019, Appotronics occupied more
than 30% share of the laser TV market, ranking first in the industry, and launched a
portable mini projector with a selling price of less than RMB 3,000 in cooperation
with Xiaomi.
Through technical innovations, we enjoy unique opportunities as a pioneer. On the
cinema projector market, we take the lead in offering “Laser as a service” in the industry.
Under this “mode of laser light source lease”, the cinemas just need to pay rents according
to the length of use, without needing to purchase light sources, which will help the cinemas
not only effectively reduce equipment purchase costs, labor costs and maintenance costs,
but also improve their market competitiveness through the high luminance, wide color
gamut, high contrast and good picture quality and other technical advantages provided by
the laser light source of Appotronics. On the other hand, it will provide Appotronics with a
long-term and stable source of revenue, and promote the rapid application of ALPD
technology. As of the date of this report, Appotronics has supplied more than 17,000 sets of
ALPD laser projectors on the market, which have provided licensed services for more
than 100 million hours in total.
II. Prospects for 2020: Live in the present and focus on business and talent
development
The outbreak and spread of Covid-19 around the world in early 2020 has greatly
affected the economy, especially the cinema and other sectors featuring gathering of
crowds. We expect that our traditional laser projector business will be greatly affected for a
long time, and other business will also be affected due to the global economic recession, so
that the momentum of our rapid development may be hindered. Facing such severe
challenges, we have taken the following measures:
Just as before, we will continue to adhere to the pioneering spirit, maintain the
streamlined structure even after the listing of the Company, and uphold the virtue of
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saving and hard struggle, especially as the epidemic situation is still severe at
present.
We will enhance budget management, promptly make business analysis and adjust
the relevant budgets according to the development of the epidemic situation, closely
monitor the epidemic situation and adjust the relevant business plans in a timely
manner. During this process, we will enhance information disclosures, so that the
investors will fully understand our new strategies and be able to make their
judgments on our business plans.
We will take a more prudent approach toward employment and focus on those
talents who have pioneering spirit and will give support to the long-term
development of our core business. Just as before, we will continue to use share
incentive rather than cash as the main incentive approach. We wish this approach
will help us recruit more outstanding talents and enhance their sense of being the
master of their own affairs.
The completion of the IPO in 2019 laid a foundation for us to focus on business and
talent development. In 2019, our operating income was about RMB 1.979 billion,
up 42.82% year on year; the total assets reached RMB 3.1 billion, up 49.48% over
the opening of the period; the net cash flows from operating activities were RMB
243 million, up 106.33% year on year; and the R&D expenses were RMB 202
million, up 48.60% year on year.
III. Turn crisis into opportunities in the future
The consumers always seek portable large screen display technology, which will not be
changed by the epidemic situation. Even if the cinemas suffer a setback temporarily, after
the epidemic situation is eased or resolved, the cinemas will open again. However, the
video conference, online education and other new types of operation inspired by the
epidemic situation enhance the consumers’ expectation for large-screen and eye-care
displays. Our ALPD laser projector can effectively provide healthier large-screen and
eye-care displays. The unexpected epidemic situation makes us be clearly aware of users’
expectation for our laser projection technology.
Though the epidemic situation slows down the momentum of our rapid development in
the past few years, we find that it provides us with a good opportunity to adjust resources.
In the future, we will continue to listen to users’ demands, and focus on technology
development and services that can bring about long-term use value to users, rather than
product development or marketing catering to short-term market demands. We believe this
approach reflects the real customer-oriented concept, and we will bring about the best
long-term returns for our investors through continuous technology development.
Through accumulation of technologies in the past ten years, we have become a
technology leader in the industry. In comparison with our peers, we are stronger in
technology development and enjoy the head start advantage. Now we will extremely focus
on the target, just like laser. Though it seems that light is invisible and powerless, when
plenty of light, such as laser, focuses on an object, it can shoot through hard steel.
Therefore, we plan to do the following work:
Continue to be committed to disruptive innovations. Appotronics has been
committed to innovations in laser display technology, and created technology
reserves and patent portfolios covering the whole technology chain of laser display
from key system architecture, core devices to key algorithm. ALPD technology
architecture has been upgraded to the fourth generation. The performance of each
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generation of architecture platform has been improved in an all-round way as
compared to the previous generation, thereby enabling us to maintain the technical
and performance advantages in the industry. We will continuously increase
investments in technology reserves geared to the needs of the future, and improve
and extend the core industry chain, so as to build a sound patent protection system.
Focus on core devices. We will continuously strengthen our core device research,
development and manufacturing capability, as we will be unable to greatly improve
the performance of complete equipment without making breakthroughs in core
devices and architectures. We will consolidate and increase our advantages in core
devices, create the mode of open platform operation, and cooperate with the
industrial circles to jointly make the laser display industry bigger and stronger,
enrich the content of the industry, and expand the applications.
Persevere in the development direction of “software + hardware + service”. In the
future, we will be committed to providing better user experience and services to end
users through in-depth hardware and software integration, based on “hard-core
technology”, and supplemented by upgrading of software system. We will create a
stable and long-run mode of profit increase through continuous product services.
Fully respect to the emphasis on IP on the overseas market. We will expand our
overseas business and market through creating value for users.
The year of 2020 starts a new decade, witnesses great changes, and will go down in
history. Appotronics will continue to uphold the pioneering spirit, to face the unknown
challenges.
Thanks to all shareholders and friends following Appotronics.
Make unremitting efforts as God rewards those who work hard. Let time become our
friends.
LI Yi
Founder and Chairman of Appotronics
April 28, 2020
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Important Note
I. The Board of Directors, the Board of Supervisors, directors, supervisors and
senior officers of the Company hereby warrant that the information contained
in this Annual Report is true, accurate and complete and this Annual Report is
free from any misrepresentation, misleading statement or material omission,
and agree to assume joint and several liability for this Annual Report.
II. Alert of significant risks
During the reporting period, there has been no extremely significant risk that may
have a material effect on the production and operation of the Company. The Company has
described in detail the risks that may exist. Please refer to Section IV “Discussion and
Analysis of Business Situations” for the relevant risks.
III. All directors of the Company attended the meeting of the Board of Directors.
IV. Pan-China Certified Public Accountants (Special General Partnership) issued a
standard unqualified auditor’s report to the Company.
V. BO Lianming, Principal of the Company, ZHAO Ruijin, Person in Charge of
the Accounting Body and Chief Accountant WEI Yanlin hereby represent that
the financial statements contained in this Annual Report are true, accurate and
complete.
VI. Profit distribution proposal or proposal for capitalization of capital reserve
approved by the Board of Directors during the reporting period
The Company’s profit distribution proposal for the year of 2019 is as follows: On the
basis of the total share capital of the Company as at the record date for the dividend
distribution for the year of 2019, the Company will distribute a cash dividend of RMB 0.75
per 10 shares (inclusive of tax) to all shareholders. On the basis of 451,554,411 shares of
the Company as at December 31, 2019, RMB 33,866,580.83 of cash dividends is expected
to be distributed in total (inclusive of tax). The Company will not capitalize the capital
reserve or distribute bonus shares for the reporting period. The profit distribution proposal
for the year of 2019 is subject to approval by the general meeting of shareholders of the
Company.
VII. Is there any material event concerning any special arrangement of corporate
governance?
□ Applicable √ N/A
VIII. Risk statement regarding forward-looking statements
√Applicable □ N/A
The forward-looking statements contained herein regarding the future plans, development
strategies or other matters of the Company do not constitute any substantive covenant made
by the Company to the investors. The investors should be aware of the risk of investment.
IX. Is there any non-operational occupation of funds by the controlling shareholder
or its affiliates?
No
X. Is there any external guarantee provided in contravention of the stipulated
decision-making procedure?
No
XI. Other information
□ Applicable √ N/A
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Table of Contents
Section I Definitions .............................................................................................................. 8
Section II Company Profile and Financial Highlights ....................................................... 9
Section III Operational Highlights .................................................................................... 14
Section IV Discussion and Analysis of Business Situations ............................................. 32
Section V Significant Matters ............................................................................................ 49
Section VI Changes in Shares and Shareholders ........................................................... 117
Section VII Preferred Shares ........................................................................................... 127
Section VIII Directors, Supervisors, Senior Officers and Employees .......................... 128
Section IX Corporate Governance .................................................................................. 142
Section X Corporate Bonds .............................................................................................. 147
Section XI Financial Report ............................................................................................ 148
Section XII List of Documents Available for Inspection ............................................... 312
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Section I Definitions
I. Definitions
For purpose of this report, unless the context otherwise requires, the following terms shall
have the meanings indicated below:
Terms
Company or means Appotronics Corporation Limited
Appotronics
Appotronics Ltd. means Appotronics Corporation Ltd., the former name of the
Company
CINEAPPO means CINEAPPO Laser Cinema Technology (Beijing) Co.,
Ltd.
Fengmi means Fengmi (Beijing) Technology Co., Ltd.
Appotronics HK means Appotronics Hong Kong Limited
Yuanshi means Shenzhen Yuanshi Laser Industrial Investment
Consulting Partnership (LP)
Appotronics Daye means Shenzhen Appotronics Daye Investment Partnership
( LP)
Appotronics Deye means Shenzhen Appotronics Deye Consulting Partnership
(LP)
Appotronics Hongye means Shenzhen Appotronics Hongye Investment
Partnership ( LP)
Blackpine means Blackpine Investment Corp. Ltd
Jinleijing means Shenzhen Jinleijing Investment Limited Partnership
(LP)
Appotronics Chengye means Shenzhen Appotronics Chengye Consulting
Partnership (LP)
Appotronics Holdings means Shenzhen Appotronics Holdings Limited
Jiayuan I means Huatai Appotronics Employee Stock Ownership Plan
- Jiayuan I Collective Asset Management Plan
CINIONIC means Cinionic Limited (previously known as Barco
Cineappo Limited)
China Film means China Film Co., Ltd.
CFEC means China Film Equipment Co. Ltd
DonView Digital means Beijing DonView Digital Technology Co., Ltd.
Tianjin Jinmi means Tianjin Jinmi Investment Partnership (LP)
WUXGA means Widescreen Ultra eXtended Graphics Array, a
computer display mode, which provides a resolution
of 1920×1200 pixels.
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Section II Company Profile and Financial Highlights
I. Company profile
Chinese name 深圳光峰科技股份有限公司
Short name in Chinese 光峰科技
English name Appotronics Corporation Limited
Short name in English Appotronics
Legal representative BO Lianming
Registered address 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu
Road, Yuehai Street, Nanshan District, Shenzhen
Postal code of registered address 518052
Office address 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu
Road, Yuehai Street, Nanshan District, Shenzhen
Postal code of office address 518052
Website http://www.appotronics.com
Email ir@appotronics.cn
II. Contact person and contact information
Board Secretary (Domestic representative for
information disclosure)
Name XIAO Yangjian
Address 20-22/F, Hi-tech Zone Union Tower, No. 63 Xuefu
Road, Yuehai Street, Nanshan District, Shenzhen
Telephone 0755-32950536
Facsimile 0755-86186299
Email ir@appotronics.cn
III. Media for information disclosure and place for keeping the annual reports
Designated media for information China Securities Journal, Shanghai Securities
disclosure News, Securities Times, Securities Daily
Websites designated by the China www.sse.com.cn
Securities Regulation Commission for
publishing the annual reports
Place for keeping the annual reports Office of the Board of Directors
IV. Stock and depository receipts of the Company
(I) Stock of the Company
√Applicable □ N/A
Stock of the Company
Type of Stock exchange and Stock short name Stock code Former stock
stock board short name
A-shares Shanghai Stock Appotronics 688007 N/A
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Exchange, STAR
Market
(II) Depository receipts of the Company
□ Applicable √ N/A
V. Other related information
Name Pan-China Certified Public Accountants
(Special General Partnership)
Domestic accounting
Office address 9/F, No. 128 Xixi Road, Xihu District,
firm appointed by the
Hangzhou, Zhejiang
Company
Accountants signing YANG Kejing, ZOU Tiantian
the report
Name Huatai United Securities Co., Ltd.
Office address 5/F (01A, 02, 03 and 04), 17A, 18A, 24A,
25A and 26A, Hong Kong China Travel
Sponsor performing the Service Building, Central Plaza, Futian
duty of continuous District, Shenzhen
supervision within the Sponsor ZHANG Guanfeng, QIN Lin
reporting period representatives
signing the report
Period of continuous From July 22, 2019 to December 31,
supervision 2022
VI. Main accounting data and financial highlights in the past three years
(I) Main accounting data
In RMB
% Change (2019
Main accounting data 2019 2018 2017
v 2018)
Operating income 1,979,148,918.89 1,385,727,211.09 42.82 805,587,943.59
Net profit attributable 186,457,276.71 176,971,092.49 5.36 105,393,395.69
to shareholders of the
listed company
Net profit attributable 134,218,640.96 165,011,362.18 -18.66 132,015,218.32
to shareholders of the
listed company after
deduction of
non-recurring profit or
loss
Net cash flows from 243,000,903.71 117,773,454.30 106.33 -115,179,556.79
operating activities
December 31, December 31, % Change (2019 December 31,
2019 2018 v 2018) 2017
Net assets attributable 1,974,559,837.64 715,913,478.56 175.81 70,572,171.92
to shareholders of the
listed company
Total assets 3,099,508,090.85 2,073,471,490.56 49.48 1,037,660,589.99
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(II) Financial highlights
% Change (2019 v
Financial highlights 2019 2018 2017
2018)
Basic earnings per share 0.45 0.73 -38.36 -
(RMB/share)
Diluted earnings per share 0.45 0.73 -38.36 -
(RMB/share)
Basic earnings per share after 0.33 0.68 -51.47 -
deduction of non-recurring profit or
loss (RMB/share)
Weighted average return on net 14.84 41.25 -26.41 percentage 197.26
assets (%) points
Weighted average return on net 10.68 38.49 -27.81 percentage 531.94
assets after deduction of points
non-recurring profit or loss (%)
Proportion of R&D expenses to 10.19 9.79 +0.40 percentage 11.58
operating income points
Explanation about the main accounting data and financial highlights in the past three years
√Applicable □ N/A
1. The increase in operating income by 42.82% year on year was primarily due to the
increase in revenue from the sale of household To C products and cinema leases during
the reporting period.
2. The decrease in basic earnings per share by 38.36% year on year was primarily due to
the dilution of the earnings per share resulting from the increase in the share capital by
68,000,000 shares offered in the IPO of the Company.
3. The increase in total assets by 49.48% year on year was primarily due to the funds
raised through the IPO completed in the reporting period.
4. The decrease in net profit attributable to the owners of the parent company after
deduction of non-recurring profit or loss by 18.66% year on year was primarily due to
the rapid growth of expenses during the reporting period as the Company enhanced the
recruitment of talents in response to the larger scale of operation and increased
investments in technology research, development of new products and other areas.
5. The increase in net cash flows from operating activities by 106.33% year on year was
primarily due to the increase in the sales revenue received.
VII. Differences in accounting data arising from adoption of foreign and Chinese
accounting standards concurrently
(I) Differences in net profit and net assets attributable to shareholders of the listed
company disclosed on the financial statements according to the international
accounting standards and the Chinese accounting standards
□ Applicable √ N/A
(II) Differences in net profit and net assets attributable to shareholders of the listed
company disclosed on the financial statements according to the foreign accounting
standards and the Chinese accounting standards
□ Applicable √ N/A
(III) Explanation about the difference between foreign and Chinese accounting
standards
□ Applicable √ N/A
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VIII. Financial highlights in 2019 by quarter
In RMB
st nd rd th
1 quarter (Jan. - 2 quarter (Apr. 3 quarter (Jul. - 4 quarter (Oct. -
Mar.) - Jun.) Sep) Dec.)
Operating income 359,369,025.24 493,987,939.60 498,415,347.23 627,376,606.82
Net profit attributable to 27,848,207.29 38,731,366.77 57,550,852.99 62,326,849.66
shareholders of the listed
company
Net profit attributable to 17,279,140.15 24,325,503.60 48,553,875.07 44,060,122.14
shareholders of the listed
company after deduction of
non-recurring profit or loss
Net cash flows from operating -65,364,673.16 50,821,259.64 68,855,552.21 188,688,765.02
activities
Explanation about the difference between quarterly data and the data disclosed on regular
reports
□ Applicable √ N/A
IX. Items and amounts of non-recurring profit or loss
√Applicable □ N/A
In RMB
Note (if
Item of non-recurring profit or loss 2019 2018 2017
applicable)
Gain or loss on disposal of non-current -3,214,488.06 -1,711,797.47 -1,845,934.69
assets
Government grants recognized in profit or 25,782,112.48 24,032,705.76 9,606,112.65
loss for the current period (excluding
government grants that are closely related
to the business of the Company and are
provided in fixed amount or quantity
continuously according to the applicable
polices and standards of the country)
Net gain or loss on subsidiaries arising 23,321,528.06 18,765,375.86 -16,306,769.81
from business combinations involving
entities under common control from the
beginning of the reporting period till the
date of combination
Gain or loss on changes in fair value of 9,552,990.98
held-for-trading financial assets, derivative
financial assets, held-for-trading financial
liabilities, and derivative financial
liabilities and gain on disposal of
held-for-trading financial assets, derivative
financial assets, held-for-trading financial
liabilities, derivative financial liabilities
and other debt investments, except for
effective hedges held in the ordinary course
of business
Reversal of impairment loss on accounts 238,836.00
receivable tested for impairment
individually
Other non-operating income and expenses 2,981,778.07 1,182,062.52 386,740.42
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Other gains or losses meeting the definition -22,338,042.90 -6,846,741.55
of non-recurring profit or loss
Effect of minority interest -1,891,481.86 -3,860,005.15 -10,719,926.94
Effect of income tax -4,532,639.92 -4,110,568.31 -895,302.71
Total 52,238,635.75 11,959,730.31 -26,621,822.63
X. Items at fair value
√Applicable □ N/A
In RMB
Effect on profit for
Item Opening balance Closing balance Change
the current period
Held-for-trading 0 540,000,000.00 540,000,000.00 9,552,990.98
financial assets
Investment in other 0 11,975,419.38 11,975,419.38 0
equity instruments
Total 0 551,975,419.38 551,975,419.38 9,552,990.98
XI. Other information
□ Applicable √ N/A
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Section III Operational Highlights
I. Main business, business model, status of industry and R&D activities during the
reporting period
(I) Main business and main products or services
We are a leading laser display technology enterprise in the world owning proprietary
technologies and core patents and having core device research, development and
manufacturing capability. In the reporting period, we were mainly engaged in the research
and development, production and sale of core laser display devices and complete laser
display equipment, and provision of laser cinema projection services through lease of light
sources.
Since our establishment 14 years ago, we have been committed to technical
innovations, invented ALPD technology in 2007, created the new laser phosphor display
architecture, formed our proprietary IP, and mastered the design and manufacture
technology of core devices. We have upgraded ALPD technology continuously, and
relying on the advanced ALPD technology, promoted the industrial applications of laser
display, and gradually extended the application of laser display from laser cinema
projection and other high-end applications to large venue, business education, laser TV,
smart mini projector and other display applications. During this process, Appotronics has
consolidated its position as a leader and become a popular brand.
We have many types of products, which can be classified into core laser display
devices and complete laser display equipment, wherein the core devices can be further
classified into laser light source (cinema light source and large venue light source), laser
TV light generator and laser projection screen, and complete laser display equipment can
be further classified into laser cinema projector, large venue laser projector, laser video
wall, laser education projector, laser TV and smart mini projector, of which, the former
four products fall within the field of To B, while the latter two fall within the field of To C.
Our rich product lines reflect the great advantages of ALPD technology architecture as
the fundamental key architecture, and the good operating results achieved by us driven by
technical innovation and industrialization.
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Figure 1: Technical innovation and industrialization, the double driving forces of the
development of the Company
1. Core devices
Technical innovation is the foundation of business, while core devices are the basis of
development. We will be unable to greatly improve the performance of complete
equipment without making breakthroughs in core devices and architectures. Among our
three types of core devices, laser light source and laser TV light generator are stable and
mature products, which make great contributions to our operating results, including sale of
such devices separately or sale of complete equipment containing such devices; while laser
projection screen is one of our key new products under development, which will be used in
conjunction with laser TV and smart projectors, to provide better visual experience.
Our core devices reflect various advantages and characteristics of ALPD technology,
such as high luminance, wide color gamut, high contrast and relatively low cost. The
quality and performance of such products have received recognition of downstream
customers, which helps us establish our position as a core supplier on the industry chain of
laser display.
Figure 2: Laser light source and laser light generator
On the commercial market, we have entered into in-depth cooperation with China
Film and Barco in laser light source and promotion of laser cinema projection technology
throughout the world. We took the lead in launching “laser as a service”, the mode of laser
light source lease, in the industry, which can effectively help the cinemas reduce costs and
increase efficiency with the technical advantages of the light source provided by us and the
flexibility and convenience of the lease mode, and has helped us become the company
deploying the most laser cinema light source in China.
On the household market, we have cooperated with LG and Xiaomi to develop
customized laser TV light generators. In particular, the laser TV with a selling price of less
than RMB 10,000 launched by us in cooperation with Xiaomi has led the reform and
development of the entire laser TV market and stimulated the consumers to purchase laser
TV. At present, our laser TV light generators are not only used on Mijia products and our
own brand products, but also used for providing customized development services to Hola,
VAVA, Haier, ViewSonic and other companies. Its customer base is expanding gradually.
According to AVC, our laser TV light generators occupied the largest domestic market
share in 2019.
In the future, we will further consolidate the advantages of core devices, create an
open platform, and cooperate with the industrial circles to jointly make the laser display
industry bigger and stronger, enrich the content of the industry, and expand the
applications.
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Figure 3：Application of ALPD laser cinema light source
2. Complete equipment
(1) To B commercial market
On the basis of laser light source and light generators, we have further developed
complete equipment, which has been widely used in cinema projection, cultural and
tourism lighting, security and surveillance, education and training, and other commercial
applications, and become the mainstream choice for high-quality projection display
technology.
——In the field of cinema projection, we have created a product portfolio of laser
cinema light source covering multiple ranges of lumens, from 5,000 lumens to 51,000
lumens, which can satisfy the projection demands of different scenarios, including without
limitation high-end cinema, ordinary cinema and private cinema. Relying on the solid basis
of light source research and development, we have developed C5 laser cinema projector,
the first equipment of the like in China that meets the standard of DCI (Digital Cinema
Initiatives, LLC), which marks that we have become the fifth company in the world that is
able to develop and manufacture DCI compliant digital cinema projector, have the technical
capability to provide solutions to all laser cinemas of various specifications, and will
promote the advancement of digital cinema projection technology in China1.
1
https://www.dcimovies.com/compliant_equipment/KEIO-CINEAPPO-C5-20190830-ver3.html
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Figure 4：Certificate of DCI compliant equipment
——On the large venue display market, as the country continuously gives strong
support to the cultural and tourism industry, there are strong demands for large venue laser
projectors in the cultural, creative, exhibition, display and other fields. Due to its
remarkable advantages such as no damage to landscape and cultural relics, being
convenient to install and dismantle, low cost and recyclability, large venue laser projector
has been successfully used in the “future city” project of Shenzhen venue of 2019 Spring
Festival Gala, the “Light up the Forbidden City” at the night of the Lantern Festival 2019,
and the ski resort project of the Beijing Winter Olympics, which has greatly increased our
brand popularity and influence.
Figure 5: Effect of “Night of the Lantern Festival” at the Forbidden City and the ski
resort project of the Beijing Winter Olympics
——On the security and surveillance market, the laser video wall unit produced by us
features high reliability, 7x24 operation free of failure, high luminance, wide color gamut,
wide viewing angle, precise color reproduction and low power consumption, among others,
and has been widely used by the important State organs and large-sized enterprises and
institutions. In 2019, we provided laser video walls to the Tiananmen Public Bureau of
Beijing, the Nanshan District Administrative Service Hall of Shenzhen and the Inner
Mongolia Commanding Center for Electric Power Dispatch.
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Figure 6：Commanding Center for Electric Power Dispatch
——On the education projector market, our laser business education projector product
series cover ultra short throw, short throw, long throw and other focal lengths, and
luminance from 3,300 lumens to 5,000 lumens, support WUXGA images, have a service
life of 25,000 hours, can be widely used in various scenarios such as colleges, universities,
middle schools and primary schools, commercial exhibition and homes, replace traditional
business education projectors using bulbs or LED as light source, and provide a new idea
for eye protection.
(2) To C household market
In recent years, laser TV, smart mini projector and other household projector products
have been developing rapidly, due to the ever increasing acceptance of the new mode of
movie watching by the consumers, and rapid decrease of the costs and prices and better
performance of products. During the reporting period, Mijia laser TV, Fengmi laser TV and
Fengmi smart mini projector continue to maintain the lead on the market, and our
household equipment business also grows rapidly.
——In the laser TV business segment, we manufacture Mijia laser TV and own brand
laser TV products, of which, Mijia laser TV products are customized products
manufactured for Xiaomi, which are sold by Fengmi (our affiliate) to Xiaomi and then
distributed by Xiaomi to end consumers, and the own brand laser TV products are
distributed by Fengmi, which have a luminance slightly higher than that of Mijia laser TV,
and provide projection screen, subwoofer and other components for the consumers to
choose, thereby implementing a differential sales strategy with Mijia laser TV.
The laser TV launched by us in cooperation with Xiaomi was the first product of the
like with a selling price lower than RMB 10,000, thereby becoming a benchmark product in
the laser TV industry. Due to the application of ALPD technology, our products show
remarkable superiority in overall performance, including image quality, audio effect and
smart experience. In the future, we will increase R&D investment to develop laser TV
toward larger screen, higher resolution and lower cost, and enhance hardware and software
integration to provide the consumers with products with outstanding performance and a
high cost-performance ratio.
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Figure 7: Laser TV product
——In the smart mini projector business segment, our smart mini projector products
feature small size, portability, high efficiency and strong color performance compared with
general projectors, and are embedded with smart operating system and Wi-Fi module for
connection with cloud server, so they can provide the consumers with more convenient
information and resource sharing and huge volume of content.
As we are entering the era of 5G, the big bandwidth and low latency provided by 5G
technology will make the real-time transmission and broadcasting of ultra high definition
videos become a reality. Laser display features large size, high resolution and portability.
The combination of laser display and 5G transmission technology can solve the
contradiction between large screen and portability. Along with the increasingly strong
functions of mobile phones, portable laser mini projectors used in conjunction with mobile
phones are expected to become a new growth area.
Figure 8: Smart mini projector product
(II) Main business model
We are mainly engaged in the R&D, production, sale and lease of core laser display
devices and complete laser display equipment, and provision of customized R&D and
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manufacturing services to customers, and have an independent and complete procurement,
sales, production and service system.
1. R&D mode
We mainly adopt the independent R&D mode, and separate technology development
from product development in organization structure and development process.
Our technology development focuses on creating and mastering core and key
technologies. When a kind of technology becomes relatively mature, it will be applied in
product development. Our technology development team comprises a large number of
creative scientists, who follow up the progress of frontier technology in the industry, focus
on the key technical problems that urgently need to be solved in our business development,
and develop the technologies required for our products to be launched in the next three
years, to create the Company’s core competitive edge in technology.
Our product development is driven by product planning, and mainly divided into
stages of feasibility, EVT, DVT, PVT and MP. We set up product lines and product
development teams by market segment, and develop series products based on product
platform, to rapidly respond to market demands. Our product development team is
responsible for developing the products that will be put into mass production within about
one year. The product development team is divided into optical, structure, software,
hardware, thermal and other technical departments by profession. Such technical
departments share technologies and platforms with each other.
Through matrix management, we realize flexible allocation and sharing of human,
operating and other resources among different products, to optimize resource allocation and
improve R&D efficiency and professional and technical capability.
2. Procurement mode
Our Resources Development Department and Supply Chain Center Planning
Management Department are responsible for procurement, of which, the Resources
Development Department is responsible for the selection of suppliers, determination of
purchasing prices, building of business system and supply platform and other front-end
procurement affairs, and the Planning Management Department is responsible for the
preparation and implementation of procurement plans and other back-end procurement
affairs. We have formulated the Supplier Development, Management and Control Process
and other policies, to manage the development of suppliers, implementation of procurement
plans, inspection of incoming materials and other business.
3. Production mode
Our production mode relies on own production, supplemented by OEM, mainly
because of the different production capacity required by different manufacturing processes
and modes and consideration of cost-effectiveness. Our core devices sold or leased to
customers are manufactured by us. Laser TV and smart mini projector products are
assembled by OEMs. Other complete equipment products are also manufactured by us.
With respect to the products manufactured by us, we schedule production pursuant to
purchase orders, taking into account the requirement of safety stock. The production of
standard spare parts is scheduled according to the requirement of safety stock and relevant
production plans.
With respect to OEM products, we appoint third parties to manufacture PCBA,
coating and other semi-finished products, and assemble laser TV, smart mini projector and
other complete equipment.
4. Sales mode
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Our sales mode is classified into product sales and lease service, as described below:
(1) Product sales mode
Our products include core laser display devices and complete laser display equipment.
① Core devices are customized for and directly sold to customers. For example, we
developed a customized laser cinema light source for Barco and Cinionic (a company
jointly established by Barco and us), and sold the light source products to Barco and
Cinionic; and developed a customized laser TV light generator for Hola, and sold the laser
TV light generator products to Hola or its supply chain service providers.
② The sale of complete equipment has three modes, which are customized direct sale,
non-customized direct sale and distribution.
Xiaomi, DonView, CVTE, VAVA, Haier, ViewSonic and other companies purchase
customized complete equipment products developed by us for them.
Large venue laser projectors are sold mainly using the off-line direct sale mode, while
Fengmi branded laser TV and smart mini projector products are sold both at the online
retail stores on Tmall, JD, Youpin, Pinduoduo and other platforms, and off-line physical
stores.
Other complete equipment products are sold through distributors.
(2) Mode of lease service
We established CINEAPPO jointly with CFEC, a wholly owned subsidiary of China
Film. CINEAPPO purchases laser cinema light source from Appotronics, and then leases
such light source and provides laser cinema projection service to downstream cinema
customers (“Laser as a service”).
Such mode of light source lease was a first in the industry, under which CINEAPPO
charges service fees according to the length of use of light source by the cinemas (the fees
are charged by the hour or a certain period of time), while the cinemas do not need to
purchase light source equipment, thereby effectively easing their capital pressure and
reducing their labor and maintenance costs. CINEAPPO connects the leased light source
equipment with its remote information platform, uses IT technology to provide remote
license and smart timer services in respect of such light source, and gives support to
day-to-day operation of such light source, such as asset monitoring, inspection and
maintenance order and tracking.
The lease of light source by CINEAPPO to the cinemas is classified as operating lease.
5. Mode of joint venture
We believe that it is a reasonable business strategy to establish joint ventures with the
excellent companies on the market segments, and have established the following joint
ventures:
(1) We established CINEAPPO jointly with CFEC. CINEAPPO provides laser light
source lease services to the cinemas throughout the country. Appotronics supplies laser
light source to CINEAPPO, while China Film contributes its in-depth understanding of the
film industry and gives support to CINEAPPO through its cinema network operation
system. The parties initiated the business model of lease by the hour in the film projection
industry, and promoted such business model among the cinemas throughout the country.
(2) We established Fengmi jointly with Tianjin Jinmi and Shunwei Technology (both
are affiliates of Xiaomi Technology, a leading Internet company). Fengmi is engaged in
R&D, manufacturing and sale of laser TV sets, and Xiaomi Communications is its main
customer. Appotronics supplies laser TV light generators to Fengmi. Xiaomi
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Communications sells the laser TV products of Fengmi at home and abroad, by giving full
play to its advantages in sales channel and brand marketing capability.
(3) We established Orient Appotronics jointly with DonView, a well-known company
in the field of multi-media display. Orient Appotronics is engaged in the sale of laser
business education projectors supplied by Appotronics, and DonView is its customer.
DonView distributes such products through its powerful sales channels throughout the
country.
Such joint venture arrangements combine the respective advantages and resources of
the parties thereto, and are routine and reasonable commercial arrangements. Such joint
ventures enjoy superiority in talents, as the members of their management teams come from
first-class enterprises in the industry, and have expertise and rich experience in the
implementation of business strategies, and business and product innovations. Such joint
venture arrangements have greatly promoted our business development in the past. In the
future, we will continue to consolidate our relationship and closely cooperate with the
relevant joint venturers, jointly promote technical and product innovations and seek
development opportunities on the market with them, to promote the stable and healthy
development of such joint ventures.
(III) Industry in which the Company operates
1. Development stage, basic characteristics and main technical barriers of the
industry
1.1 Industry
According to the Industrial Classification for National Economic Activities
(GB/T4754-2017) published by the National Bureau of Statistics, we are classified into the
“display device manufacturing” industry (industrial code: C3974) of the “computer,
communication and other electronic equipment manufacturing” industry (industrial code:
C39). According to the Guidelines on the Industrial Classification for the Listed Companies
published by the China Securities Regulatory Commission, we are classified into the
“computer, communication and other electronic equipment manufacturing” industry
(industrial code: C39).
1.2 Development stage of the industry
(1) Laser display To B market: Growth stage in which the performance of
mature products is improved and the products are continuously upgraded
On the To B market, laser display technology is mainly applied in cinema projection
and large venue display, including cinema projection, security and surveillance, command
and control, theater performance, exhibition and display, artificial and virtual reality and
other scenarios. In recent years, due to its remarkable advantages such as stable
performance, long service life and rich color, laser display technology has been rapidly
replacing the traditional light source technology used in cinema projection and large venue
display equipment.
Since the launch of the first ALPD laser cinema projector jointly developed by
Appotronics, China Film and Barco in 2014, ALPD laser light source has been widely
applied in the cinemas throughout the country, and entered the overseas projector market.
According to the China Film Exhibition & Distribution Association, as of December 31,
2018, the domestic cinemas installed about 23,000 sets of laser projection systems; the
market penetration rate of laser projection system rapidly increased from 0% to 38% within
four years, and Appotronics is a leader on the laser cinema projector market. According to
the Research Report on Chinese Laser Projector Market 2019 issued by AVC, the sales of
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large venue laser projectors in 2019 increased by 30.5% year on year, which shows that the
laser display technology is rapidly penetrating into the large venue display market.
Though the growth of laser display on To B market is temporarily hindered by the
epidemic situation, laser display has great growth potentials due to its unique advantages.
We expect that after the epidemic situation is put under control, the demands for laser
display technologies and products on To B market will grow continuously and steadily, and
the laser display technologies and products for To B market will provide better
performance and more functions.
(2) Laser display To C market: As an emerging industry, it is at the early stage
of rapid development
The application of laser display technology in TV and other household products is a
wholly new creation. Based on the long-term accumulation of ALPD technology,
Appotronics has made a breakthrough in the application of core devices and imaging
solutions of laser display and achieved superiority in the field of household display,
including lower cost, higher efficiency and smaller size, among others, which makes laser
TV possible.
Since Appotronics launched the first 100 inch laser TV in the world and introduced
the concept of laser TV based on “ultra short throw front laser projector with anti-ambient
light screen” in 2013 in cooperation with LG, HiSense, Xiaomi, Changhong, Haier and
other well-known companies have been engaged in R&D, production and marketing of
laser TV products, promoting the rapid growth of the market size of laser TV and other
related household products. According to AVC, the sales of household laser display
products on the domestic market increased from 76,000 units in 2017 to 195,000 units in
2019, with a three-year compound growth rate of 60%.
Household laser display products have three unique advantages, which are large size,
eye care and portability. Along with the continuous development of the laser display
industry chain, the costs of core materials and devices will be further lowered and their
performance will be further improved. It is expected that household laser display products
will develop toward lower price, smaller size and better display effect in the next few years,
and become common household products.
1.3 Main technical barriers
(1) Technical barriers
The technical barriers for To B market are continuous upgrading of performance, and
the technical barriers for To C market are high efficiency, small size and low cost. After
fourth upgrading, our ALPD technology architecture has gained relatively solid technical
advantages in terms of performance, cost, efficiency and size, and formed a sound IP
protection system. In the future, certain companies in the industry may face the problems of
lack of R&D capability and core technology, and reliance on supply chain for core patents
and core devices, rendering them unable to compete with leading domestic or international
companies that have their proprietary IP or core technologies and core devices.
(2) Quality barriers
We have accumulated rich experience over the years and adopted strict quality
standards in respect of R&D, design, manufacturing, management system, quality control
standard, installation and operation, to ensure the stability of the internal optical
components and fluorescent materials of laser display products under prolonged laser
exposure. Any new enterprise wishing to enter the laser display industry must put in
enormous capital and accumulated experience in these areas, and may be unable to make an
outstanding product satisfying the demand of the market and having stable and reliable
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performance until a very long time has passed. Therefore, a new enterprise may face the
quality barriers of the laser display industry before its products become mature.
(3) Talent barriers
The display equipment industry is a knowledge and technology intensive industry,
requires the technologies in optical, semiconductor, material, mechanical, electronic,
software and other fields, and puts forward very high requirements for the overall R&D,
technology application, manufacturing and other capabilities of an enterprise, so it needs a
large number of professional and inter-disciplinary talents. Along with the continuous
development of the technological level of the industry, the consumers will have
increasingly higher requirements for the display quality of images. An enterprise must have
a high-quality R&D team with strong innovative capability, high R&D level and rich
product experience, so that it can continuously develop new technologies meeting the
market demands and maintain its competitive edge on the market.
Through ten years of development and fourth upgrading of ALPD technology
architecture, we have built and nurtured a team of laser display professionals having a firm
grounding in technology and rich R&D experience, which lays a solid foundation for the
continuous upgrading of our products and technologies and our long-term innovation and
development.
2. Analysis of the position of the Company in the industry and changes therein
At the beginning of the industrialization of laser display technology, as one of the
leading companies in the field of laser display, Appotronics has mastered core technologies.
We have not only created the fundamental key architecture for laser phosphor display
technology, but also built a proprietary IP protection system through patent applications in
China, the United States, Japan, Europe and other countries. Our leading position mainly
comes from technical performance and market applications.
2.1 ALPD architecture has become the mainstream technical route for laser
light source
ALPD technology architecture has been upgraded to the fourth generation. The
performance of each generation of architecture platform has been improved in an all-round
way as compared to the previous generation, thereby enabling us to maintain the technical
and performance advantages in the industry. In terms of luminance, our products can
realize 55,000 lumens of ultra high luminance output, taking the lead in the world. In terms
of color gamut, ALPD technology can provide a wide color gamut, which covers 98.5%
of REC.2020 color gamut, or 153% of NTSC color gamut, taking the lead in the world. In
terms of speckle, ALPD technology mixes speckle-free fluorescence with laser, thereby
remarkably reducing the effect of laser speckle and achieving the effect of no speckle in
vision. This technology has been widely applied in the world.
According to the Research Report on Chinese Laser Projector Market 2019 issued by
AVC, blue laser + phosphor powder technology architecture, represented by ALPD,
occupies 98.6% of the market share, and has become the mainstream technical route for the
laser display industry.
2.2 Our core devices are widely applied and occupy a high market share in the
field of film and TV
Appotronics has, on the basis of its core technologies, made available its technical
solutions for complete equipment application to the market, and entered into strategic
cooperation with CFGC, Xiaomi, Haier, Barco and other well-known domestic and foreign
companies, to provide light source, optical engine and other core devices and complete
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equipment application solutions, thereby rapidly promoting and expanding the application
of ALPD technology in cinema, household and other market segments.
On the cinema projector market, the first ALPD cinema laser light source installed
by us in June 2014 has operated stably for nearly six years. As of the end of 2019, we have
supplied more than 17,000 sets of ALPD laser projectors on the market, which have
provided licensed services for more than 100 million hours in total, both of which take the
lead on the market.
On the laser TV market, in addition to own brand laser TV products, we have made
available our optical engine products and complete equipment application technology to the
market, and launched laser TV products jointly with Xiaomi, Haier and other companies, to
expand the application of ALPD technology in the household field. In 2019, Appotronics
maintained the lead in terms of market share of laser TV light generators.
3. Development of new technologies, new industries, new types of operation and new
modes during the reporting period and future trend
3.1 Application of 5G technology will stimulate the market demands for laser
display products
(1) 5G video will stimulate the demands for larger sized display equipment. The
capacity and speed of video transmission using 5G technology will increase greatly. Larger
display capacity and higher resolution are more suitable for large screen. Laser display
products have exceptional technical and cost advantages in large screen, and are suitable
for the content presentation and experience of 5G videos. In light of portability, eye care
and other traditional advantages of laser display products, the market demands for laser
display products, in particular, household products, are expected to be further stimulated.
Appotronics will grasp the development opportunities brought about by the
commercialization of 5G technology, focus on forward-looking development of laser TV,
smart mini projector and other household products, to provide the consumers with a wholly
new experience in large-screen display and entertainment in the era of 5G.
(2) The popularization of 5G mobile phones will stimulate the potential demands
for peripheral laser display products. 5G mobile phones provide more functions, but
have some shortcomings, such as limitation of screen size, damage to eyes by the light
produced by the phones, poor experience and easy-to-fatigue if looking at the screen for a
long time. If the laser display products are used in conjunction with mobile phones, the
content exhibited on the small screen of the phone can be projected on an ultra high
definition and large screen that is comfortable to watch, which is expected to bring about
considerably potential market demands. Appotronics will insist on the development concept
of high efficiency, small size and low cost, continuously follow up the demands for the
development of peripheral products for mobile phones, and take active actions as we deem
appropriate.
3.2 The epidemic situation brings about the market opportunity for the
upgrading of the mode of “hardware + software + service”
(1) The cinema industry is turning to the asset-light business strategy that focuses
on operation. During the period that the epidemic situation persists, the domestic and
foreign cinemas are unable to do business, which makes them realize the importance of
cash flows. The “laser as service” provided by Appotronics can partially ease the cinemas’
capital pressure caused by purchasing of cinema equipment, so this mode is expected to
receive recognition by more cinemas in the days to come.
(2) To C market faces the opportunity to upgrade software and services. During
the period that the epidemic situation persists, the number of users, traffic, duration of
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watch time, ARPU value and other indicators in respect of online videos have increased
rapidly. The epidemic situation has promoted the habits of users to watch videos on line.
Appotronics is committed to in-depth hardware and software integration for To C products,
and improving software capability and service experience based on its “hard-core
technology”. For example, our subsidiary Fengmi has cooperated with iQiyi and other
video platforms, to provide users with content services. In the future, Appotronics will
continue to give full play to its software and hardware advantages in laser TV, smart mini
projector and large screen display, and provide richer and high quality experiences and
services to users.
(IV) Core technologies and progress in R&D of technologies
1. Core technologies and their advancement, and changes during the reporting
period
We have been committed in the breakthroughs, innovations, commercialization and
industrialization of laser display technology, and created technology reserves and patent
portfolios covering the whole technology chain of laser display from key system
architecture, core devices to key algorithm. ALPD technology architecture has been
upgraded to the fourth generation. The performance of each generation of architecture
platform has been improved in an all-round way as compared to the previous generation,
thereby enabling us to maintain the technical and performance advantages in the industry.
As a Leader Level Member of the Laser Illuminated Projector Association (LIPA), we have
participated in and led the preparation of the international laser display standard.
During the reporting period, we have poured substantial R&D resources in the
preparation and processing of thin film materials, micro- & nano- optical structure
technology, light source architecture, dynamic control, complete equipment structure,
machine perception and miniaturization of laser display system. The big data, algorithm
and reference designs accumulated by us over the years will enable us to rapidly develop
products and solutions meeting the requirements of different application scenarios, such as
cinema projection, home entertainment, outdoor exhibition, ultra large-sized display, and
immersive display.
In addition, we are developing laser display technology with high dynamic contrast
and high dynamic color gamut, battery-powered high-performance mini laser projector
technology and other technologies. Such new technologies have been continuously
validated and will be applied in our future products.
During the reporting period, we released ALPD 4.0, which has been applied in many
product series. At present, we are focusing on the development of ALPD 5.0. This
upgrading will not only increase the dynamic contrast and peak luminance of laser display
equipment, and reduce the luminance of dark field, but also maintain relatively high light
effect and high cost-performance ratio. The products for mass production applying ALPD
5.0 are expected to be launched on the market in 2021.
2. R&D achievements during the reporting period
In respect of technical innovation, we upgraded ALPD technology to Version 4.0 in
2019. This upgrading improved a lot of core indicators, such as light effect, reliability and
color gamut, and promoted the development of laser display products toward high
definition, miniaturization and higher efficiency.
In respect of product innovation, in 2019, we applied ALPD 4.0 in certain
new-generation laser display products, some of which have already been launched on the
market in consideration of different product demands. Please see “Section IV Discussion
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and Analysis of Business Situations - I. Discussion and analysis of business situations - (I)
Overall business situation during the reporting period”.
In respect of IP protection, we have established a sound IP protection system. As of
December 31, 2019, we obtained 908 patents throughout the world, including 682 domestic
patents and 226 foreign patents, had 756 domestic and foreign patents pending and 337
PCT patents pending, obtained 49 software copyrights, and owned 551 domestic and
foreign trademarks. In 2019, we obtained 163 new patents at home and abroad, including
113 patents for invention, and had 208 new domestic and foreign patents pending,
including 150 patents for invention. In addition, we were awarded the “22nd China Patent
Prize”, the “6th Gold Patent Prize of Guangdong” and the “Patent Prize 2019 of Shenzhen”,
and included in the “Top Ten IP Events of Shenzhen in 2018”.
3. R&D expenses
In RMB
R&D expenses expensed in the current period 201,697,766.26
R&D expenses capitalized in the current period -
Total R&D expenses 201,697,766.26
Proportion of R&D expenses to operating income (%) 10.19
Number of R&D staff 387
Proportion of R&D staff to total employees of the Company (%) 31.06
Proportion of R&D expenses capitalized (%) -
Note:
During the reporting period, our R&D expenses were RMB 202 million, accounting
for 10.19% of operating income. We have maintained R&D expenses at a high level,
because continuous technical innovations will enable us to maintain and increase our
technical advantages, and rapidly transform such technical advantages into product
advantages, thereby promoting our innovations and development.
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4. R&D projects
√Applicable □ N/A
In RMB
Investment in Progress or
Estimated total Aggregate Application
No. Project the current interim Goals Technological level
investment investment scenario
period results
1 Core devices 60,500,000.00 41,717,366.61 53,544,405.70 Mass Great improvement of Take the lead in the Upgrading of
production color gamut, contrast, light industry; the color light source for
effect, luminance and other gamut, contrast, light cinema
performance, to better effect, luminance and projectors, laser
satisfy the demands for other performance are TV and other
cinema, laser TV and other greatly improved, to fields.
high-end displays better satisfy the
demands of customers.
2 High 63,008,512.00 57,465,969.89 66,712,048.49 Mass 4K resolution laser TV 4K resolution laser TV 4K household
definition production takes the lead in the laser TV
laser TV industry.
3 Laser 48,985,000.00 24,101,039.59 34,972,284.37 Mass Laser cinema projector for The first proprietary DCI compliant
cinema production community cinema chains DCI compliant projector small cinema
projector and home theatres in China. projector
4 High-perfor 34,373,807.00 21,665,201.43 21,665,201.43 Mass High definition portable High definition portable Smart mini
mance smart production smart mini projector smart mini projector projector
mini takes the lead in the market
projector industry.
5 Other 48,750,000.00 45,528,606.83 45,528,606.83 Mass Large venue projector, Large venue projector Large venue
complete production business education and business education projector,
equipment projector and other projector with business
complete equipment with outstanding education
high luminance, large performance in projector and
screen and wide color luminance and color other fields.
gamut performance take the
lead in the industry.
6 Laser 34,000,000.00 5,342,814.91 6,224,971.65 Labor trial Development of laser The development of key Through
display lab phosphor display optical laser display technology transformation
engine, high-performance and devices based on of lab R&D
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fluorescent materials and laser phosphor results, develop
fluorescent components, technology takes the multiple laser
portable laser display lead in the industry. display terminal
technology, and laser products, and
display technology with promote the
high contrast and high development of
color reproduction the entire
display industry
chain.
7 Demonstrati 102,840,000.00 5,876,767.00 9,403,718.77 Prototype This project is a This project will greatly This project
on sub-project of the State promote the industrial will build a
production key R&D program titled upgrading of demonstration
line for “strategic advanced trichromatic laser production line
trichromatic electronic materials”, and display technology, and for trichromatic
laser display will research the gain international laser display
complete industrialization of the competitive edge for complete
equipment technology of trichromatic proprietary trichromatic equipment, with
laser with phosphor to laser display an annual
satisfy the market demands technology. production
for trichromatic laser capacity of
display, build a mass 200,000 sets of
production line for trichromatic
trichromatic laser display laser display
complete equipment, complete
acquire proprietary IP, and equipment, and
realize large-scale a yield ≥90%.
application of trichromatic
laser display products.
Total / 392,457,319.00 201,697,766.26 238,051,237.24 / / / /
Note:
None
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5. R&D staff
In RMB 0’000
Education
Academic background Number Percentage (%)
Doctor 28 7.24
Master 81 20.93
Undergraduate 206 53.23
College or below 72 18.60
Total 387 100.00
Age structure
Age Number Percentage (%)
25 years of age or below 53 13.69
26-35 years of age 224 57.88
36-45 years of age 96 24.81
46 years of age or above 14 3.62
Total 387 100.00
Compensation
Total compensation of R&D staff 11,805.40
Average compensation of R&D staff 30.50
6. Other issues
□ Applicable √ N/A
II. Material changes in the main assets during the reporting period
√Applicable □ N/A
During the reporting period, our total assets increased by 49.48%, primarily due to the
increase in cash and bank balances received through the IPO. Please see “Section IV
Discussion and Analysis of Business Situations - III. Main business activities during the
reporting period - (III) Analysis of assets and liabilities”.
Wherein, the overseas assets were RMB 326,727,855.34, representing 10.54% of the
total assets.
III. Analysis of core competitiveness during the reporting period
(I) Analysis of core competitiveness
√Applicable □ N/A
1. Advantage in proprietary technologies
Since we invented ALPD technology, the fundamental key technology architecture
has been gradually formed and improved. On the basis of this technology, we have
established rich product lines, which have a remarkable substitution effect on the traditional
products in cinema, TV, business education, large venue and other fields. ALPD
technology has become the mainstream technical route for laser display. By relying on
technical innovation rather than consumption of resources, we have realized rapid
development, continuously improved the performance and cost-performance ratio of our
products, and maintained the competitive advantages in the industry.
2. Sound IP protection system
Through years of R&D efforts, we have upgraded ALPD1.0 to ALPD4.0 and
accumulated a lot of proprietary technologies. As of December 31, 2019, we had obtained
908 patents throughout the world (including 487 patents for invention) and 337 PCT
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patents pending in respect of ALPD technology. Such patents jointly build our global
patent system, which is a united whole, and is hard to be simulated or broken by the
competitors. In addition to patented technologies, we also own multiple know-how
accumulated through R&D efforts over the years.
3. Advantage in product performance
Through more than ten years of R&D efforts, our technical advantages have been
given full play in cinema, household, large venue and other fields. Our products show
superior performance in luminance, service life, color gamut, removal of speckle and other
aspects. Through sufficient validation at R&D and quality labs and on-site use for a long
time, all types of our products have become mature. Since its installation in June 2014, the
first set of ALPD cinema light source has been stably operating for nearly six years. Our
products in other fields have also won trust on the market with their outstanding
performance and reliable quality.
4. Advantage in multiple product series
At present, our ALPD technology has certain demonstration effect in the field of
laser display, and its application covers professional market and mass market, and high-end
market and low-end market. Our multiple product series can satisfy the demands of various
scenarios. In addition, we have adopted the differential development strategy and upgraded
ALPD technology from multiple angles to satisfy the demands of different market
segments and applications.
5. Advantage in talents and teams
Our founder and Chairman, Dr. LI Yi, is a well-known expert in the field of laser
display. Our President, Dr. BO Lianming is a well-known leader in the display industry.
Before joining Appotronics, he held the posts of Chairman of Shenzhen Chinastar
Optoelectronic Co., Limited and President of TCL Group and other important posts, and
helped TCL become the third largest TV maker ranking only next to Samsung and LG in
terms of shipment in the global color TV market. Under the leadership of our outstanding
management team, we now have a sound corporate governance system and strong internal
controls, and have greatly improved our management level and risk prevention capability.
In addition, we have a group of high-quality R&D personnel, including a lot of doctors
graduated from famous domestic and foreign universities. Our R&D team has taken the
lead in the research of laser display technology in the industry. Through the combination of
technology and management, we are able to precisely catch the development trend of the
display industry, and continuously launch promising and new laser display products
meeting the market demands.
(II) Events occurred during the reporting period that have a material effect on the
Company’s core competitiveness, analysis of the effect and countermeasures
□ Applicable √ N/A
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Section IV Discussion and Analysis of Business Situations
I. Discussion and analysis of business situations
(I) Overall business situation during the reporting period
The year of 2019 is a significant year for Appotronics. On July 22, we became one of
the first group of companies listed on the STAR Market.
During the reporting period, we continued to expand the household market and cinema
market, and steadily develop the overseas market. The large-sized IP projects completed by
us and our listing on the STAR Market further increased our brand popularity and influence.
We were awarded the “Application Innovation Prize” by the China Video Industry
Association for the project “Night of the Lantern Festival” at the Forbidden City, the “22nd
China Patent Prize”, the “6th Gold Patent Prize of Guangdong” and the “Patent Prize 2019
of Shenzhen”, included in the “Top Ten IP Events of Shenzhen in 2018”, and selected by
the National Business Daily as one of the “Most Highly Praised STAR Market Listed
Companies on the List of Highly Praised Listed Companies in China in 2019”.
During the reporting period, our operating income was RMB 1.979 billion, up 42.82%
year on year; total profit was RMB 279 million, up 8.17% year on year; and the net cash
flows from operating activities were RMB 243 million, up 106.33% year on year.
(II) Completion of key tasks during the reporting period
1. Continue to increase investment in technology R&D and enhance innovations
in product application
Since our establishment, we have persevered in the research and development of
proprietary technologies and product innovations, and maintained R&D investments at a
high level. We have applied patents for our core technologies throughout the world,
continuously improved our IP protection system, and reasonably protected our proprietary
IP by legal means. In addition, we have developed high-performance products and a variety
of solutions, to satisfy the diversified demands of the market.
(1) Field of cinema projector
The C5 laser digital cinema projector launched by us filled a gap in the field of
projector manufacturing in China, made China become the fourth country in the world that
could produce projectors, broke the long-term monopoly by foreign manufacturers, and
promoted the development of China’s film and cultural industry. The overall design of C5
projector has taken into account the demands of the emerging cinema projector market, and
popularization, communitization, video on demand (VOD), home theater and other
development trends in cinema projection in China. C5 is the first laser cinema projector in
the industry featuring non-manual operation, muteness, no machine room and low
operating cost. In addition, the technical innovations of C5 greatly reduce the projection
cost, which makes C5 become the cheapest laser cinema projector, and the entry of laser
cinema projector into homes possible.
(2) Field of household TV
Our controlled subsidiary Fengmi, as our major subsidiary in the household business,
launched “4K laser projector TV cinema” during the reporting period, which has a 4K ultra
high definition, accommodates up to 150 inch screen, and adopts the diffuse reflection
imaging principle. According to the tests by professional institutions, this laser TV can
better protect eyes. This product has won a Good Design Award in Japan. In addition,
“Wemax One laser projector” jointly launched by Fengmi and iQiyi was the first equipment
in the industry that has passed the tests for billing system (software) and projection
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equipment (hardware), and provided a cost-effective solution for the standardized and
high-quality development of VOD cinemas throughout the country.
In the field of software, Fengmi launched Feng OS project, which aims to develop an
open operating system customized for smart laser TV with ultra large screen, and integrate
each smart laser TV terminal into the content eco-system. Through Feng OS integrated
application store, the end users will have access to smart content services and functions,
such as VOD, community interaction, game, entertainment, interactive education, real-time
information and tremendous applications. In addition, Feng OS will provide users with
innovative and concise large-screen, human-machine interaction experience, and a variety
of convenient online services, so as to lay a solid foundation for Fengmi to realize the
business model of “terminal sales + platform operation”.
(3) Field of smart mini projector
To enrich its product lines and fill in gaps on the market, Fengmi has launched two
projector products named SmartM055FCN and SmartLiteM055DCN, which focus on the
“mobile market” and are embedded with large-capacity batteries. In addition, during the
reporting period, Fengmi launched 1,500 lumens “Vogue smart projector M135FCN” and
2,400 lumens “Mijia laser mini projector”, which are designed for high-end users, and
embedded with Classmate AI App, support far-field voice recognition and Bluetooth link,
accommodate up to 150 inch screen, and feature high luminance, high definition and
intelligent control.
(4) Field of large venue projector
During the reporting period, in the field of outdoor lighting and display, Appotronics
provided a laser display solution with higher luminance (up to 51,000 lumens). The size of
single-equipment projection screen is up 300 square meters. It can guarantee the quality of
large venue projection to the maximum extent with the minimum equipment.
The laser video wall solutions provided by Appotronics for disease control and
prevention centers, rail transit, commanding and dispatch, security and surveillance, power
system and other sectors and fields feature high luminance, high definition and high
reliability, among others, are able to process multiple routes of signals with complicated
background, and realize centralized management, efficient processing and accurate display
of massive information, zoom-in and zoom-out of signals on any position in the form of
window, display on single or full screen, and visualization and rapid sharing of information,
and further improve the capability to make forecasts, give early warnings and prevent
security risks. At present, more than 6,000 sets of Appotronics ALPD laser video wall
have been installed.
(5) Field of education projector
Along with the popularization of education IT equipment, the schools have provided
more and more education equipment with display functions, which greatly increases the
students’ exposure to blue light and the chances of their eyes being damaged by blue light.
In August 2019, all six series of education projector products of Appotronics passed the
tests by the National Testing & Inspection Center for Radio & TV Products. The first group
of 11 products have passed the certification in respect of the Technical Standard for the
Certification of Display Performance and Vision Health of Display Equipment Part IV:
Laser Projector, which proves that our products provide the teachers and students with high
standard laser display solutions with outstanding display effect, rich image color, high
contrast and eye care.
2. Establish and improve our management system and management cycle, and
improve our process IT system
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We have preliminarily established and improved the management cycle led by
mechanism, guaranteed by system, guided by culture and supported by capacity, set up a
number of professional committees responsible for major strategies and business decision
making, improved our strategic planning capability, and emphasized on the building of core
capabilities, and implementation, management and control of our strategies. We have
continuously optimized our process system through creating the process map. In addition,
through informatization, we have developed and maintained a variety of management
systems, including database management, business process management, Slack R&D
platform, OA office and other IT systems, to improve our operation efficiency, realize
all-round information management, provide information support for the implementation of
our future development strategies, and promote the transition of our management style from
a start-up to a comprehensive group.
3. Enhance the building of marketing system and increase our brand influence
In terms of marketing, we have focused on both domestic and overseas markets, and
gradually formed a multi-level and all-round marketing mode combining online sales with
off-line sales, agent mode with direct sale mode, and sales on the domestic market with
exploitation of overseas market. We have focused on the development of channels and
market cooperation through exhibitions, product presentations, nation-wide partner
programs, channel training and other activities and measures. The three major projects
undertaken by us, “2019 Spring Festival Gala”, the “Light up the Forbidden City” at the
night of the Lantern Festival 2019, and “Shougang Ski Resort”, have become nationwide
hot events, and increased our brand influence.
In terms of online sales, we have enhanced the building of our online flagship stores
on Tmall, JD and other major e-retail platforms, actively cooperated with our strategic
customers in online sales, and formulated well-targeted sales strategies. In terms of off-line
sales, we have gradually created the mode of proactive sales for household laser display
products, and made breakthroughs in retail customers on smart audio & video, household
appliances, IT and other core channels. As of the end of the reporting period, we had 974
terminal exhibition stores, a 200% increase year on year.
4. Promote the mode of operation by integrated business units, and enhance team
building and talent incentives
During the reporting period, we have initially completed the adjustment of business
structure. In order to ensure the achievement of our strategic objectives, fully motivate all
business units and improve the efficiency of internal resource integration, we have adopted
the business unit system in an all-round way, broken down the overall sales targets, and
assessed the performance of all business units according to their contributions to operating
income and profits.
Our team building focuses on “talent recruitment, talent nurturing, talent incentives
and cultural building”. In terms of talent nurturing, we have conducted “star light - sharp
light - polar light” three-level talent training program, product operation training camp,
Appotronics auditorium and other training programs, to improve the abilities of our
employees.
In terms of talent incentives, we have enhanced our efforts to acquire and attract
talents, continuously recruited high-end talents from the market, established the profit
sharing mechanism and launched the medium-to-long term share incentive plans, to
implement the share ownership plan for key employees. After completion of the IPO, we
have explored the establishment of a long-term incentive mechanism relying on the capital
market. We have granted 4.4 million incentive shares to 169 key employees, and adopted a
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triple assessment system, to ensure the achievement of our strategic objectives in an
all-round way.
5. Upgrade our corporate culture system and define our enterprise spirit to
promote the development of the Company
In 2019, we created the model of our corporate culture, and defined our culture and
core values. Specifically, we have defined our mission as “new light, new life”,
development objective as “to become the pioneer in the display industry through disruptive
technical innovations and differential mode covering the entire value chain”, and core
values as “respect customers, guided by performance, live up to one’s words, criticism and
self-criticism”. We will enhance education on our employees about our corporate culture,
continuously publicize our corporate culture, promote the implementation of our corporate
culture, practice our core values, improve cultural awareness, and build us into an
“incentive and high-performance” organization.
6. Exploit the overseas market and enhance our influence on the professional
market
We have been committed to expanding cooperation on the overseas market and
providing solutions to high-end cinemas throughout the world. In January 2019, we
established Cinionic jointly with Barco, China Film and CITIC Private Equity Funds, to
promote the laser cinema projection technology and other advanced projection technologies
on the overseas market, and the increase of the sales proceeds of our laser light source on
the overseas market. In December 2019, we announced our plan to acquire 36% shares of
GDC Technology Limited (“GDC”), a global leading digital cinema server provider. We
and GDC will explore cooperation in R&D, sales of products, provision of solutions and
other areas in the field of digital cinema projection, and relying on our R&D and
manufacturing advantages in the light source of laser cinema projectors and complete laser
cinema projection equipment, and the global sales market of GDC, promote the sales of our
proprietary laser cinema projectors on the overseas market.
7. Use the funds raised through the IPO on the STAR Market in accordance with
the applicable regulations
In July 2019, we successfully entered the capital market and became one of the first
group of companies listed on the STAR Market. We issued 68 million RMB-denominated
ordinary shares (A-shares) to the public, and raised RMB 1,190,000,000 in total. During the
reporting period, we have deposited and used the raised funds in strict accordance with the
applicable laws and regulations. Subject to the normal implementation of the plan for the
use of the raised funds, we used certain raised funds that were idle for the time being to
purchase low-risk and liquid bank principal-protected wealth management products, to
increase the use efficiency of idle funds raised, which brought up an investment income of
RMB 9,553,000 in total in 2019.
8. Optimize internal controls and supervision, and improve the effect of internal
controls
We have strictly complied with the provisions of the Basic Standard for Internal
Controls of Enterprises and its supplementary guidelines, and other regulatory requirements
for internal controls, and established systemic internal controls and effective internal
supervision mechanism, to provide reasonable guarantee for the achievement of our
development strategies by ensuring legal and regulatory compliance of business activities,
achievement of business goals, reliability of information, operating efficiency, and security
of capital and assets, among others.
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Under the leadership of the Audit Committee and by reference to the good practices in
the industry, the Audit Department has completed the reform of internal audit process, and
effectively improved the quality and efficiency of audits; through regular audits on business
process, the Audit Department has objectively assessed and identified the internal control
risks of the Company, and led the fixation of responsibilities and close-loop improvement
in respect of the problems with internal control, to give support to the building of business
and honest environment in the Company, provide guidance to business management in
respect of risk control, improve their capability to proactively identify and manage business
risks, and reduce the operating risks of the Company.
II. Risk factors
(I) Risk of not making a profit
□ Applicable √ N/A
(II) Risk of significant decrease in operating performance or loss
□ Applicable √ N/A
(III) Risk related to core competitiveness
√Applicable □ N/A
Risk of the technology R&D falling short of expectations
The core of our development is technical innovation. If we fail to effectively judge the
direction of technical innovations, or to make continuous technical innovations, or to make
effective R&D investments due to limited funds, or to successfully commercialize the
technologies developed by us, our core competitiveness in technical innovation may be
impaired, and we may encounter technological risks in future development.
(IV) Operating risk
√Applicable □ N/A
1. Risk of unsustainability of rapid growth driven by the mode of cooperation
We adopt the business strategy of joint venture and cooperation, which combines the
advantages and resources of all partners. If our technical and product innovations slow
down and cannot satisfy the market demands, or our innovation capability decreases
continuously as a result of which our products are surpassed by our competitors, such
cooperation may bring lower benefits, or become unable to drive our rapid growth or
unable to continue.
2. Risks related to tax benefits and government grants
During the reporting period, we have received certain VAT reduction and government
grants pursuant to the applicable policies of the country. Along with the growth of our
operating performance, though the effect of tax benefits and government grants on our
current net profit decreases year by year, and our operating results do not rely on tax
benefits and government grants, such tax benefits and government grants still have certain
effect on our operating results. The decrease in our revenue from tax benefits and
government grants may affect our profit.
3. Risk related to the management of light source
In our light source lease service, we enter into an agreement with a customer, pursuant
to which, we charge a lease service fee on the customer based on the duration of use of the
light source, while the customer uses the light source and pays fees therefor, and is
responsible for the day-to-day safekeeping and maintenance of the light source and
damages thereto, but we do not collect any deposit or other similar fees for the light source.
The cinemas will use their best endeavors to maintain the light source in good condition in
order to ensure normal projection of films and continuity of their business operation.
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However, we still face the risk of impairment of assets due to damage or loss of light
source caused by improper safekeeping on the part of the cinemas. In particular, due to the
effect of the outbreak of Covid-19, most cinemas have closed down. If such situation
persists, some cinemas may go bankrupt, as a result of which our assets may fall into an
unsafe situation.
4. Risk of impairment of inventories
Our inventories mainly comprise raw materials and goods in stock. As of the end of
the reporting period, the carrying amount of our inventories was RMB 299,966,200. If any
significant change in the competition pattern of the industry, material innovation in laser
display technology and products or the persistence of Covid-19 results in a large quantity of
unsalable products, the recoverable amount of the inventories will be lower than their
carrying amount. The impairment of inventories will have a negative effect on our earnings.
5. Risk of impairment of accounts receivable
Our products are generally delivered after receiving the payment therefor. We give
certain credit period to some major customers. As of the end of the reporting period, the
carrying amount of our accounts receivable was RMB 176,035,200. In case of any material
adverse change in the business condition of our customers, we may be unable to recover
certain accounts receivable, which may have an adverse effect on our operating
performance in the future.
6. Risk of internal control
The increase of sales revenue and rapid growth of assets and number of employees put
forward challenges for our management level, structure of corporate governance and
effective implementation of internal controls. In the future, if our management fails to
effectively overcome the difficulties in management caused by rapid growth of sales
revenue and continuous expansion of the scale of operation, or to effectively implement
internal controls, we may face risks of internal control during rapid business development,
such as out-of-control in management, loss of assets, brain drain, and decrease in operating
performance.
7. Risk of IP litigation
IP protection and management includes protection of our proprietary and core
technologies, and prevention of infringement on third-party IP. On the one hand, the
process of patent application often lasts a long time and requires continuous and huge
investment. If any proprietary IP in the process of patent application is infringed by any
third party, it may have an adverse effect on our production and operation. On the other
hand, due to the increasingly fierce competition in the industry, many manufacturers wish
to gain competitive advantages through developing core laser phosphor display technology.
If we fail to effectively prevent infringement on our proprietary IP, or inadvertently
infringe on any IP of others during the development of products, we may face IP litigations
or disputes, which may have an adverse effect on our business development and financial
condition.
8. Risk of business development on the overseas market
As the outbreak of Covid-19 has not been effectively put under control in the world,
the stagnation of economic activities abroad will have certain effect on our export, the
business development of Cinionic and GDC on the overseas market, and the efficient
operation and marketing of our subsidiaries in Hong Kong and the United States, as a result
of which our business development abroad may fall short of expectations.
9. Risk related to the supply of important raw materials
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The key components of our products include laser devices, chips and lenses, which are
mainly purchased from some key suppliers of the United States and Japan. If such suppliers
significantly change the prices for such components, or are unable to supply such
components in a timely manner with both quality and quantity guaranteed, or fall into
difficulties in operation, or are unable to supply such components in a normal manner due
to trade dispute between the relevant countries or any other reason, it may have an adverse
effect on our production and operation.
(V) Industrial risk
√Applicable □ N/A
Risk of increasingly fierce market competition
Laser display is a new and thriving field in the display device industry. A lot of
international and domestic companies have entered the field, further heating up the market
competition. If we cannot maintain our competitive advantages in technology, product, cost,
service and other areas, or the competitors combine their advantages and resources through
acquisition and merger, or the top technology companies in the world increase their
investment in the field of laser display, we may face the risks of decrease in the amount or
growth rate of operating income, gross margin, profitability and market share.
(VI) Risk of macro-environment
√Applicable □ N/A
Covid-19 is still spreading in the world, and the epidemic situation does not look good.
The economic stagnation caused by the epidemic situation, in particular the shut-down of
cinemas, will have a direct effect on our revenue from cinema light source lease service.
Other businesses may also be affected by the shrinkage in consumer demands caused by
global economic recession. Therefore, our operating performance may decrease sharply.
(VII) Risk related to depository receipts
□ Applicable √ N/A
(VIII) Other significant risks
√Applicable □ N/A
1. Risk of outflow of key technical personnel
The laser display industry is a technology intensive industry. Along with the rapid
development of the laser display industry, the competition for high-end technical personnel
has been increasingly fierce. If we cannot maintain the stability of the existing R&D staff,
continuously train technical personnel, and attract outstanding talents in the world, we may
be unable to maintain our technical advantages in the industry, and the stability and
sustainability of our business operation. The outflow of key technical personnel may cause
disclosure of know-how, slow-down of R&D process, weakening of competitive advantage
and other risks, which may have an adverse effect on our ability to operate continuously.
2. Risk of loss on external investments
We attempt to expand our scale of operation through merger, acquisition or otherwise
according to the development situation of the industry, to continuously improve our overall
competitiveness. If the environments or policies in respect of the industry in which the
investee operates undergo any material change, or the technological level of the investee
falls short of our expectation, or the operating performance of the investee decreases
sharply due to poor management, the returns on investment in the investee may fall short of
expectation and we may need to recognize an impairment loss on the long-term equity
investment. If we fail to achieve a synergy effect through acquisition of the investee, our
strategic plan may be unable to be implemented as scheduled.
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III. Main business activities during the reporting period
During the reporting period, our revenue from main business was RMB 1,979,148,900,
a 42.82% increase compared to 2018, and the net profit attributable to the shareholders of
the listed company was RMB 186,457,300, a 5.36% increase compared to 2018.
(I) Analysis of main business
1. Analysis of changes in statement of income and statement of cash flows lines
In RMB
Item 2019 2018 % Change
Operating income 1,979,148,918.89 1,385,727,211.09 42.82
Operating costs 1,183,650,635.25 783,243,430.56 51.12
Sales expenses 151,760,111.00 102,349,110.00 48.28
Administration expenses 152,626,530.61 95,580,970.10 59.68
R&D expenses 201,697,766.26 135,730,450.92 48.60
Financial expenses 29,491,223.42 -2,652,161.71 N/A
Net cash flows from operating activities 243,000,903.71 117,773,454.30 106.33
Net cash flows from investment activities -772,857,910.07 -272,432,179.99 N/A
Net cash flows from financing activities 884,616,830.77 522,562,789.37 69.28
2. Analysis of revenue and costs
√Applicable □ N/A
During the reporting period, our operating income was RMB 1,979,148,900, a 42.82%
increase year on year as compared to RMB 593,421,700 in 2018, primarily due to the
increase in the revenue from the sale of household To C products and cinema leases;
operating cost was RMB 1,183,650,600, an increase of RMB 400,407,200 or 51.12% year
on year. Our overall gross margin was 40.19% in 2019, a decrease of 3.28 percentage
points compared to 2018.
(1) Main business by sector, product and region
In RMB 0’000
Main business by sector
Gross % Change in % Change in
Operating Operating % Change in
Sector margin operating operating
income cost gross margin
(%) income cost
Laser 197,914.89 118,365.06 40.19 42.82 51.12 Decrease by 3.28
display percentage points
Main business by product
Gross % Change in % Change in
Operating Operating % Change in
Product margin operating operating
income cost gross margin
(%) income cost
155,344.15 102,544.69 33.99 46.73 54.49 Decrease by 3.32
1. Sales percentage points
2. Lease 39,799.12 13,526.03 66.01 30.78 35.8 Decrease by 1.26
service percentage points
3. Other 2,771.62 2,294.34 17.22 21.93 15.32 Decrease by 4.74
business percentage points
Main business by region
Gross % Change in % Change in
Operating Operating % Change in
Region margin operating operating
income cost gross margin
(%) income cost
Domestic 178,039.72 111,260.78 37.51 42.81 51.56 Decrease by 3.61
percentage points
Overseas 19,875.17 7,104.28 64.26 42.91 44.61 Decrease by 0.42
percentage points
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Explanation about main business by sector, product and region
Our laser display products have been successfully applied in cinema projection, home
entertainment, education interaction, commercial applications, outdoor exhibition and other
fields. Due to the strong consumer demands on the domestic market and driven by the sales
of household To C products and cinema leases, our operating income in 2019 increased by
42.82% year on year.
Our overall gross margin was 40.19% in 2019, a decrease of 3.28 percentage points as
compared to 2018, primarily because that we have vigorously promoted the sales of To C
laser TV and smart mini projector products on the household consumer market to address
the strong demands on the household consumer market that has a large customer base, and
our overall gross margin decreased to certain extent due to the increase in the proportion of
revenue from To C products to the total operating income.
Our products are mainly sold on the domestic market, which accounts for 89.96% of
our total operating income. Revenue from the overseas market accounts for 10.04% of our
total operating income.
(2) Analysis of output and sales volume
√Applicable □ N/A
Sales % Change in % Change in % Change in
Main products Unit Output Stock
volume output sales volume stock
Core devices and Set 251,407 236,290 32,123 93.51 115.57 59.30
complete
equipment
Explanation about output and sales volume
We supplied part of laser light source produced under operating leases, which was not
included in the sales volume and stock, and used part of laser TV light generators produced
to manufacture laser TV products, which were not included in the production, sales volume
and stock.
(3) Analysis of costs
In RMB 0’000
Costs by sector
Components of % of total % of %
Sector 2019 2018 Remark
cost cost total cost change
Laser 118,365.06 100.00 78,324.34 100.00 51.12
display
Costs by product
Components of % of total % of %
Product 2019 2018 Remark
cost cost total cost change
1. Sales Direct materials 89,655.34 87.43 59,106.35 89.05 51.68
Direct labor 2,673.66 2.61 2,044.33 3.08 30.78
Manufacturing 10,215.69 9.96 5,223.66 7.87 95.57
expenses
Subtotal 102,544.69 100.00 66,374.34 100.00 54.49
2. Lease Depreciation of 6,759.98 49.98 4,338.06 43.55 55.83
service light source
Software 2,399.51 17.74 2,350.73 23.60 2.08
license fee
Technical 3,917.01 28.96 2,853.46 28.65 37.27
service fee
Labor cost 449.53 3.32 410.16 4.12 9.60
Others - - 8.01 0.08 -100.00
Subtotal 13,526.03 100.00 9,960.42 100.00 35.80
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Annual Report 2019
3. Other 2,294.34 100.00 1,989.58 100.00 15.32
businesses
Total 118,365.06 100.00 78,324.34 100.00 51.12
Explanation about cost analysis
We are primarily engaged in the sale of products. Sales costs mainly comprise direct
materials, direct labor and manufacturing expenses, of which, the costs of direct materials
account for 87.43%. Our cost composition has basically remained stable as compared to
2018.
(4) Main customers and main suppliers
A. Main customers
The sales to top 5 customers were RMB 966,911,600 in 2019, representing 48.85% of the
total annual sales, of which, the sales to related parties were RMB 798,507,600,
representing 40.35% of the total annual sales.
Top 5 customers
√Applicable □ N/A
In RMB 0’000
No. Customer Sales % of total annual sales
1 Customer 1 45,648.60 23.06
2 Customer 2 23,038.31 11.64
3 Customer 3 14,177.80 7.16
4 Customer 4 7,484.85 3.78
5 Customer 5 6,341.60 3.20
Total / 96,691.16 48.85
Other information:
None.
B. Main suppliers
The purchases from top 5 suppliers were RMB 491,154,600 in 2019, representing 34.31%
of the total annual purchase cost, of which, the purchases from related parties were RMB
213,613,000, representing 14.92% of the total annual purchase cost.
Top 5 suppliers
√Applicable □ N/A
In RMB 0’000
No. Supplier Purchase cost % of total annual purchase cost
1 Supplier 1 13,594.80 9.50
2 Supplier 2 12,755.85 8.91
3 Supplier 3 9,474.80 6.62
4 Supplier 4 7,766.50 5.42
5 Supplier 5 5,523.51 3.86
Total / 49,115.46 34.31
Other information:
None.
3. Expenses
√Applicable □ N/A
In RMB
Item 2019 2018 % Change
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Annual Report 2019
Sales expenses 151,760,111.00 102,349,110.00 48.28
Administration expenses 152,626,530.61 95,580,970.10 59.68
R&D expenses 201,697,766.26 135,730,450.92 48.60
Financial expenses 29,491,223.42 -2,652,161.71 N/A
Analysis of change in sales expenses: The increase in sales expenses in 2019 by RMB
49,411,000 or 48.28% as compared to 2018 was primarily due to the increase in sales
efforts, employee benefits, marketing costs resulting from enhancing promotion of new
products and brand advertising, and provision for after-sale expenses along with increase in
sales.
Analysis of change in administration expenses: The increase in administration
expenses in 2019 by RMB 57,045,600 or 59.68% as compared to 2018 was primarily due
to the increase in investment in human resources and employee benefits to address the need
of rapid business development, increase in lease expenses for the premises and office space
newly leased, and increase in the amortization of land use right in respect of the R&D
center located at Nanshan District, Shenzhen.
Analysis of change in R&D expenses: The increase in R&D expenses in 2019 by RMB
65,967,300 or 48.60% as compared to 2018 was primarily due to the increase in R&D
investment in new products and technologies, and the increase in employee benefits and
material costs.
Analysis of change in financial expenses: The increase in financial expenses in 2019
by RMB 32,143,400 as compared to 2018 was primarily due to the sharp decrease in
exchange gain and increase in interest expenses caused by decrease in interest subsidies
offered by the government.
4. Cash flows
√Applicable □ N/A
In RMB
Item 2019 2018 % Change
Net cash flows from operating activities 243,000,903.71 117,773,454.30 106.33
Net cash flows from investment activities -772,857,910.07 -272,432,179.99 N/A
Net cash flows from financing activities 884,616,830.77 522,562,789.37 69.28
Analysis of change in net cash flows from operating activities: Net cash flows from
operating activities in 2019 were RMB 243,000,900, an increase of RMB 125,227,400 as
compared to 2018, primarily due to the increase in the sales revenue received.
Analysis of change in net cash flows from investment activities: Net cash flows from
investment activities in 2019 were RMB -772,857,900, an increase of RMB 500,425,700 as
compared to 2018, primarily due to the increase in the structured deposits purchased in
2019.
Analysis of change in net cash flows from financing activities: Net cash flows from
financing activities in 2019 were RMB 884,616,800, an increase of RMB 362,054,000 as
compared to 2018, primarily due to the proceeds from the IPO on the STAR Market.
(II) Explanation about material change in profit due to non-main business
□ Applicable √ N/A
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Annual Report 2019
(III) Analysis of assets and liabilities
√Applicable □ N/A
1. Status of assets and liabilities
In RMB
Balance as at % of total Balance as at % of total
Item % Change Remark
December 31, 2019 assets December 31, 2018 assets
Cash and bank 875,858,784.58 28.26 484,169,208.44 23.35 80.90 Primarily due to the proceeds from the IPO
balances and net cash flows from operating activities
in the reporting period
Held-for-trading 540,000,000.00 17.42 Primarily due to the purchase of wealth
financial assets management products using the idle funds
raised in the reporting period
Notes receivable 4,042,559.63 0.13 35,903,632.13 1.73 -88.74 Primarily due to the decrease in the notes
received in the reporting period and
acceptance of matured notes
Receivables financing 1,980,500.00 0.06 Primarily due to the adoption of the new
accounting standard for financial instruments
in the accounting of receivables financing
according to our business mode for the
management of notes receivable
Accounts receivable 176,035,155.24 5.68 119,715,786.19 5.77 47.04 Primarily due to the increase in the accounts
receivable from customers along with the
increase in sales
Prepayments 35,070,999.13 1.13 22,909,249.21 1.10 53.09 Primarily due to the increase in prepayments
to suppliers along with the increase in
purchases
Long-term equity 139,534,371.94 4.50 Primarily due to the investment of USD 20
investments million in Cinionic and returns on investment
Construction in 20,132,004.07 0.65 30,953,213.42 1.49 -34.96 Primarily due to the decrease in the light
progress source installed in the reporting period
Long-term prepaid 16,908,070.34 0.55 6,400,455.04 0.31 164.17 Primarily due to the increase in the fit-out
expenses expenses of the production site and office
space
Other non-current 11,420,185.94 0.37 137,518,255.16 6.63 -91.70 Primarily due to the transfer of the investment
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Annual Report 2019
assets in Cinionic to long-term equity investments in
the reporting period
Short-term 76,765,319.05 2.48 124,440,000.00 6.00 -38.31 Primarily due to the repayment of short-term
borrowings borrowings in the reporting period
Employee benefits 50,586,932.71 1.63 38,184,612.34 1.84 32.48 Primarily due to the increase in employee
payable benefits in the reporting period
Other payables 14,364,076.43 0.46 185,661,537.24 8.95 -92.26 Primarily due to the payment of the
remaining land use fee in the reporting period
Non-current liabilities 64,968,795.02 2.10 28,609,163.00 1.38 127.09 Primarily due to the increase in the long-term
due within one year borrowings due within one year
Long-term borrowings 279,615,107.27 9.02 403,107,800.00 19.44 -30.64 Primarily due to the transfer of long-term
borrowings to non-current liabilities due
within one year
Long-term accounts 3,488,100.00 0.11 6,863,200.00 0.33 -49.18 Primarily due to the payment for intangible
payable assets in the reporting period
Provisions 27,072,676.49 0.87 9,449,087.12 0.46 186.51 Primarily due to the increase in provision for
after-sale expenses along with the increase in
sales
Other information:
None.
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Annual Report 2019
2. Encumbrances on assets as of the end of the reporting period
√Applicable □ N/A
In RMB
Item Amount Reason
Other cash and bank balances - security 15,831,289.87 Security deposit for notes and letters of
deposit credit
Bank deposits - frozen funds 30,000,000.00 Funds frozen in connection with
litigations
Bank deposits - deposit interest that has 238,006.85 Deposit interest that has not become due
not become due but has been recognized but has been recognized
Note: As of the date of this report, among the frozen funds stated above, RMB 10 million
has been released.
3. Other information
□ Applicable √ N/A
(IV) Analysis of operation information of the industry
□ Applicable √ N/A
(V) Analysis of investments
1. Overall analysis of external equity investments
√Applicable □ N/A
As of the end of the reporting period, the balance of long-term equity investments was
RMB 139,534,371.94. In addition, we plan to invest an additional USD 18.2 million in
Appotronics HK, for it to acquire 36% shares of GDC Technology Limited (a company
incorporated in British Virgin Islands) (“GDC”). As of the end of 2019, this investment had
not yet been made.
(1) Material equity investments
√Applicable □ N/A
In January 2019, we invested USD 20 million in Cinionic to acquire 20.00% of its
shares, for the purpose of promoting the laser cinema projection technology and other
advanced projection technologies on the overseas market, and the increase of the sales of
our laser light source on the overseas market.
On December 6, 2019, the 20th meeting of the 1st Board of Directors of the Company
adopted the Proposal for Capital Injection in the Wholly Owned Subsidiary and Investment
in GDC, approving the investment of an additional USD 18.2 million in Appotronics HK,
for it to acquire 36% shares of GDC. The relevant information was disclosed in the
Announcement No.2019-029 issued by us on www.sse.com.cn and the designated media
for information disclosure on December 7, 2019. In March 2020, we completed the
approval and filing procedures with the development and reform, commerce and other
competent government authorities in respect of this transaction. Upon satisfaction of the
conditions precedent to the closing of this transaction, we paid an amount equivalent to
USD 18.11 million as the consideration for such shares on April 9, 2020. As of the date of
this report, we legally held 93,071,822 shares in GDC, representing 36% of the total shares
of GDC.
(2) Material non-equity investments
□ Applicable √ N/A
(3) Financial assets at fair value
√Applicable □ N/A
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Annual Report 2019
As of December 31, 2019, the balance of held-for-trading financial assets was RMB
540,000,000.00, which was structured deposits; the balance of investment in other equity
instruments was RMB 11,975,419.38, which was investment in equity instruments not held
for trading. The change in fair value of such financial assets was RMB 0 in the reporting
period.
(VI) Sale of material assets and equities
□ Applicable √ N/A
(VII) Analysis of major investees
√Applicable □ N/A
In RMB 0’000
Company Main business Registered Shareholding Total assets Net assets Operating Net profit
capital percentage income
CINEAPPO Provision of cinema 10,000.00 55.20% 104,563.87 37,341.21 59,302.09 14,480.26
laser light source lease
service and sales of
projectors
Fengmi R&D and sale of 5,000.00 55% 26,194.25 -2,867.57 70,057.77 -4,748.11
household display
products
Appotronics R&D and sale of laser 3,536.40 100% 32,868.29 22,873.35 18,941.60 3,266.52
HK light source
(VIII) Structured entities controlled by the Company
□ Applicable √ N/A
IV. Discussion and analysis of future development of the Company
(I) Structure and trend of the industry
√Applicable □ N/A
(1) Main market spaces
1. Sector of laser TV
In the household field, the application scenarios for home drawing room are of great
value, and have remarkable advantages in large-screen content and human-machine
interaction. At present, there are more and more ultra high definition TV programs; some
films have their premiere on line; some online TV plays and entertainment programs are
exclusively broadcast on streaming media, and there’s rich content available. HiSense and
other TV makers have continuously launched new laser TV products. All of these indicate
that the sector of laser TV will face a new and key development period in the future.
According to AVC, 194,500 sets of laser TV were sold in 2019, a 29% increase year
on year, and the total sales reached RMB 3.775 billion, a 34.5% increase year on year. The
top 5 brands are the brands of household appliances and Internet TV, holding 81.5% market
share in total. Appotronics holds 31.9% market share, the highest in the industry, including
17% market share held by Mijia (whose products are manufactured by Appotronics) and
14.9% market share held by Fengmi. According to AVC, the sales volume of laser TV will
exceed 1 million sets on the Chinese market, so the outlook for the market is promising.
2. Sector of smart mini projector
With the help of smart projection technology, users can access the information they
need at any time. Smart projector is becoming a new information access terminal. Through
this “entertainment center”, users can search all kinds of network resources, hold remote
meetings, watch online videos and carry out other operations.
According to AVC, 3.592 million sets of smart projectors were sold in 2019 in China,
a 37.5% increase year on year, and the total sales reached RMB 8.26 billion, a 38.8%
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Annual Report 2019
increase year on year. At present, young consumers are the main users of smart projectors.
The market is still at the blue sea growth period and has great potentials.
(2) Development trend of the industry
1. As an emerging technology, laser display technology is upgrading and substituting
the traditional projection industry on cinema, large venue, education, business and other
markets. Laser light source has become increasingly popular. All projector manufacturers
have entered the era of laser.
2. The smart products have become more and more practical, and now can provide
rapid data transmission, unlimited connection with the Internet of Things, audio functions,
lossless audio transmission with high sound quality, and smart hi-fi system that provide
perfect audio & video experience. In addition, such products are embedded with app stores,
which offer a variety of entertainment applications for downloading. The smart products
also provide video conference system and apps, online education and other functions, so
they have gradually become popular consumer electronic products.
3. The industrial solutions have been well accepted. As experience economy has
become popular in the world, the mode of audio & video technology plus cultural IP is
more preferred for the strategy of cultural and tourism integration. The immersive
experience enables off-line space, and the concept of smart cultural and tourism integration
draws wide attention. The outlook for the high-quality image solutions is promising.
4. The software and hardware integration and cross boundary have become the trend.
Simple product functions cannot satisfy the demands of consumers, and must provide
content support. A channel from the content side to the technology side will provide core
competitiveness for a company.
(II) Development strategy of the Company
√Applicable □ N/A
In the future, Appotronics will be committed to its mission of “New light, New life”,
focus on the demands of customers, create value for users with high-quality products and
services, and strive to become the pioneer in the display industry through disruptive
technical innovations and differential mode covering the entire value chain.
We will focus on the technology development and services that can provide long-term
use value for users, based on core devices, create the mode of open platform operation,
develop toward the mode of “software + hardware + service”, and through in-depth
software and hardware integration, provide end users with better experience and services,
and expand the overseas market relying on our global IP protection system.
(III) Business plan
√Applicable □ N/A
Business plan for 2020
The outbreak of Covid-19 since the beginning of 2020 has caused global economic
recession, affected our businesses to different degrees, and hindered the momentum of our
rapid development. Facing the present crisis and challenges, we adopt the bottom-line
thinking method and prepare for worst-case scenarios. Meanwhile, we wish to grasp the
opportunities of the recovery of the domestic and overseas market, consolidate resources
and business, and minimize the effect of the epidemic situation.
In 2020, Appotronics will improve its capabilities in the following ways:
1. Improve R&D capabilities, integrate and optimize the R&D system, consolidate
resources, optimize development mode and R&D efficiency, orient on the market, explore
emerging market opportunities and spaces, rapidly enrich and extend the product lines,
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Annual Report 2019
ensure timely delivery of major and new products, improve the technological
competitiveness of products and achieve the goal to reduce the design cost of products.
2. Improve the platform support capabilities, strictly control all kinds of expenses and
implement the relevant budgets, increase working efficiency per capita and the internal
collaborative efficiency, enhance echelon building of personnel, improve organization
capability, promote corporate culture, optimize processes, upgrade IT system, and improve
the process architecture and system, operating efficiency of business processes, and the
ERP-based interconnected IT architecture.
3. Improve the capabilities of the supply chain, gradually build the manufacturing
center into a profit center, continuously implement the supply chain optimization project
and Lean Six Sigma production, build an industry leading supply chain team, manufacture
products with reliable quality and competitive costs, increase the flexibility of supply chain,
reduce the inventories and increase the inventory turnover ratio.
4. Improve the marketing capabilities, under the guidance of industry-leading business
strategy, penetrate into all market segments, explore industrial applications according to the
demands of the industry, design corresponding products and solutions, train a group of
industrial business experts, enhance marketing efforts and channel building, dig deep into
the market, realize online and off-line integration, and turn technical advantages into
market advantages.
(IV) Other information
□ Applicable √ N/A
V. Information not disclosed according to the standard due to inapplicability of the
standard, involving State secrets or trade secrets or other reasons, and
explanation about the relevant reasons
□ Applicable √ N/A
48 / 312
Annual Report 2019
Section V Significant Matters
I. Proposals for profit distribution on ordinary shares and capitalization of the
capital reserve
(I) Establishment, implementation or adjustment of the cash dividend policy
√Applicable □ N/A
1. Pursuant to our Articles of Association and the Statement of Appotronics
Corporation Limited Regarding the Initial Public Offering of RMB-denominated Ordinary
Shares (A-shares) and the Plan for Distribution of Dividends to Shareholders within Three
Years Following the Listing on the STAR Market, we will focus on long-term and
sustainable development, and establish a clear profit distribution policy taking into
consideration our strategic development plan, actual business situation, development
objectives, future profitability, status of cash flows, shareholder return, cost of social
capital, external financing environment and other relevant factors, and the balance between
the reasonable returns on investment for shareholders and our sustainable development, to
ensure the consistency and stability of the profit distribution policy and ensure that we are
able to operate continuously and healthily in the long run.
Subject to the satisfaction of the conditions for distributing cash dividends, we will
distribute not less than 10% of the distributable profit made in each year in cash.
The Board of Directors will adopt the following differential cash dividend policy
according to the procedures set forth in our Articles of Association, giving comprehensive
consideration to the characteristics of the industry in which we operate, our development
stage, business model and earnings, material capital expenditure arrangements and other
relevant factors:
(1) If we are at the mature stage and do not have any material capital expenditure
arrangement, at least 80% of the distributable profit will be distributed in cash;
(2) If we are at the mature stage and have certain material capital expenditure
arrangements, at least 40% of the distributable profit will be distributed in cash; or
(3) If we are at the growth stage and have certain material capital expenditure
arrangements, at least 20% of the distributable profit will be distributed in cash.
If it is hard to determine the development stage but there are certain material capital
expenditure arrangements, the policy set forth above may apply.
We will formulate or adjust the shareholder returns plan subject to the profit
distribution policy set forth above, according to our actual situations and the opinions of the
shareholders (in particular, the minority shareholders) and the independent directors.
2. Profit distribution proposal for the year of 2019: According to our consolidated
financial statements 2019 as audited by Pan-China Certified Public Accountants (Special
General Partnership), the net profit attributable to the shareholders of the listed company is
RMB 186,457,276.71, and the aggregate distributable profit of the parent company is RMB
211,573,548.42.
According to our overall business situations and development stage, we propose to
distribute a cash dividend of RMB 0.75 per 10 shares (inclusive of tax) to all shareholders
on the basis of our total share capital as at the record date for the dividend distribution for
the year of 2019. RMB 33,866,580.83 of cash dividends (inclusive of tax) is expected to be
distributed in total, representing 18.16% of the net profit attributable to the shareholders of
the listed company as reported on our consolidated financial statements 2019. We will not
capitalize the capital reserve or distribute bonus shares in the reporting period.
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Annual Report 2019
The amount of cash dividends stated in our profit distribution proposal for the year of
2019 was calculated on the basis of 451,554,411 shares in our total share capital at present.
The total amount of cash dividends actually distributed shall be calculated on the basis of
our total share capital as at the record date for the dividend distribution for the year of
2019.
The profit distribution proposal for the year of 2019 has been approved by the 21st
meeting of the 1st Board of Directors of the Company. The independent directors of the
Company have reviewed, expressed their independent opinions on and given explicit
consent to the proposal. The Board of Supervisors of the Company has reviewed and
expressed its opinions on the proposal. The proposal is still subject to approval by the
general meeting of shareholders. After the proposal has been approved by the general
meeting of shareholders, the Board of Directors shall distribute the cash dividends (or stock
dividends) (as applicable) within two months.
3. Reasons for distribution of cash dividends lower than 30% of the distributable profit
and actual use of the retained profit
The Board of Directors adopted the profit distribution proposal for the year of 2019
taking into account the provision of returns to shareholders and the requirements of the
Company’s steady growth. We plan to use the retained profit in R&D and market
development and to address the operating risks that might be brought about by the epidemic
situation, satisfy the working capital requirements in our R&D and marketing activities and
day-to-day management, and support the implementation of our medium-to-long term
development strategy and continuous and healthy development. In particular, we plan to
use the retained profit for the following purposes:
(1) The retained profit will be used to satisfy the capital requirements of R&D
activities to give support to our technical innovations and product innovations.
Our development strategy is to focus on technical innovations and product innovations,
to enhance our core competitiveness and ensure our sustainable development. We will
continue to maintain R&D investments in technical innovations and product innovations,
improve R&D capabilities in an all-round way, integrate and optimize R&D system,
consolidate resources, optimize development mode, increase R&D efficiency, and enhance
the competitiveness of our products. The retained profit will mainly be used in the
upgrading of core technologies, development of software platform and products for new
application scenarios, and other R&D activities.
(2) The retained profit will be used to satisfy the capital requirements of marketing
activities to give support to the development of the overseas market and brand building.
On the overseas market, we will adopt the internationalized thinking and management
standard, enhance the international orientation of our products, gradually build a global
marketing network, provide localized services, and increase the share of our products on
the overseas market. With respect to brand building, we will consolidate the position of
ALPD as proprietary technology in the field of laser display, and enhance the promotion
and advertising efforts on the domestic and overseas markets, to bring our products into the
mainstream market system in the world.
(3) The retained profit will be used to satisfy the capital requirements of day-to-day
management to address the uncertainties of the macro-environment caused by the outbreak
of Covid-19.
Due to the outbreak of Covid-19, the cinemas have shut down, resulting in the
suspension of our cinema light source lease service, which has a direct effect on our
revenue from cinema light source lease service and other related business. In addition, the
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Annual Report 2019
consumer demands are shrinking due to the effect of macro-environment. Therefore, our
operating performance may decrease sharply. We will keep cash reserves to address the
risk of uncertainties and satisfy the capital requirements of day-to-day management.
In the future, we will continue to emphasize on providing returns to the investors in
the form of cash dividends, and share our results of development with the investors in strict
accordance with the applicable laws and regulations and the provisions of our Articles of
Association, taking into consideration of all factors relating to profit distribution, to better
safeguard the long-term interests of all shareholders.
4. During the reporting period, we have strictly complied with the dividend principles
and policies in accordance with the provisions of our Articles of Association. Our dividend
distribution criteria and ratio are clear, and the relevant decision-making procedures and
mechanism are sound and transparent and comply with the applicable regulations. Our
independent directors have duly performed their duties in the review of the profit
distribution proposal by the Board of Directors, to ensure that the legitimate rights and
interests of the minority shareholders are fully protected.
(II) Proposals for profit distribution on ordinary shares and capitalization of the
capital reserve in the past three years (including the reporting period)
In RMB
Net profit
% of the net
attributable to
profit
the
Cash attributable to
Number of Number of shareholders of
dividends Amount of the shareholders
bonus shares ordinary shares
distributed cash of ordinary
shares distributed of the listed
Year per 10 dividends shares of the
distributed out of the company
shares (inclusive of listed company
per 10 capital reported in the
(inclusive tax) reported in the
shares reserve consolidated
of tax) consolidated
financial
financial
statements for
statements
the year
2019 0 0.75 0 33,866,580.83 186,457,276.71 18.16
2018 0 0 0 0 176,971,092.49 0
2017 0 0 0 0 105,393,395.69 0
(III) Repurchase of shares by cash included in cash dividends
□ Applicable √ N/A
(IV) If the Company made a profit in the reporting period and there’s profit
distributable by the parent company to the shareholders of its ordinary shares,
but the Company does not propose to distribute profits on ordinary shares in
cash, the Company shall explain the reason in detail and use of the
undistributed profit.
□ Applicable √ N/A
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Annual Report 2019
II. Fulfillment of covenants
(I) Covenants made by the actual controller, shareholders, affiliates and acquirer of the Company, the Company itself and other
related parties during the reporting period or the outstanding covenants made by them in the prior periods
√Applicable □ N/A
Whether the
Whether Action plan if
covenant Reason for failure
there’s a time failing to
Background of Type of Content of Validity period of has been to fulfill the
Covenantor limit for the fulfill the
covenant covenant covenant covenant strictly covenant on time
fulfillment of covenant on
fulfilled on (if applicable)
the covenant time
time
Covenant by the
controlling shareholder
regarding restriction on 36 months after
Restriction the sale of shares held by completion of the
Covenant
on the sale him, voluntary lock-up of Note 1 IPO and the Yes Yes N/A N/A
relating to IPO
of shares such shares, extension of extended period
lock-up period, intention stated below
to hold and dispose of
shares and other issues
Covenant by the actual 36 months after
controller regarding completion of the
restriction on the sale of IPO and the
Restriction shares held by him, extended period
Covenant
on the sale voluntary lock-up of such Note 2 stated below, and 6 Yes Yes N/A N/A
relating to IPO
of shares shares, extension of months after
lock-up period, intention termination of
to hold and dispose of employment with
shares and other issues the Company
Covenant by the concert
36 months after
parties of the actual
Restriction completion of the
Covenant controller regarding
on the sale Note 3 IPO and the Yes Yes N/A N/A
relating to IPO restriction on the sale of
of shares extended period
shares held by them,
stated below
voluntary lock-up of such
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Annual Report 2019
shares, extension of
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by the directors
regarding restriction on
12 months after
the sale of shares held by
Restriction completion of the
Covenant them, voluntary lock-up of
on the sale Note 4 IPO and the Yes Yes N/A N/A
relating to IPO such shares, extension of
of shares extended period
lock-up period, intention
stated below
to hold and dispose of
shares and other issues
Covenant by the
supervisors regarding
restriction on the sale of
Restriction shares held by them, 12 months after
Covenant
on the sale voluntary lock-up of such Note 5 completion of the Yes Yes N/A N/A
relating to IPO
of shares shares, extension of IPO
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by HU Fei, as a
12 months after
senior officer and member
completion of the
of key technical staff,
IPO and the
regarding restriction on
Restriction extended period
Covenant the sale of shares held by
on the sale Note 6 stated below, and 6 Yes Yes N/A N/A
relating to IPO him, voluntary lock-up of
of shares months after
such shares, extension of
termination of
lock-up period, intention
employment with
to hold and dispose of
the Company
shares and other issues
Covenant by the senior
12 months after
officers BO Lianming,
Restriction completion of the
Covenant WU Bin, LI Lu, ZHAO
on the sale Note 7 IPO and the Yes Yes N/A N/A
relating to IPO Ruijin and XIAO
of shares extended period
Yangjian regarding
stated below
restriction on the sale of
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shares held by them,
voluntary lock-up of such
shares, extension of
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by the key
technical staff YU Xin,
WU Xiliang, WANG Lin
12 months after
and GUO Zuqiang
completion of the
Restriction regarding restriction on
Covenant IPO and listing of
on the sale the sale of shares held by Note 8 Yes Yes N/A N/A
relating to IPO stock and the
of shares them, voluntary lock-up of
extended period
such shares, extension of
stated below
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by the holders
of more than 5% shares
regarding restriction on
12 months after
Restriction the sale of shares held by
Covenant completion of the
on the sale them, voluntary lock-up of Note 9 Yes Yes N/A N/A
relating to IPO IPO and listing of
of shares such shares, extension of
stock
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant by the other
shareholders regarding
restriction on the sale of
12 months after
Restriction shares held by them,
Covenant completion of the
on the sale voluntary lock-up of such Note 10 Yes Yes N/A N/A
relating to IPO IPO and listing of
of shares shares, extension of
stock
lock-up period, intention
to hold and dispose of
shares and other issues
Covenant Restriction Covenant by the senior at least 12 months
Note 11 Yes Yes N/A N/A
relating to IPO on the sale officers and key after completion of
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Annual Report 2019
of shares employees participating in the IPO and listing
the strategic allotment, LI of stock
Yi, BO Lianming, WU
Bin, LI Lu, GAO Lijing,
CHEN Xuxiang, LAI
Yongsai and GAO
Xiaohong, regarding
restriction on the sale of
shares held by him,
voluntary lock-up of such
shares, extension of
lock-up period, intention
to hold and dispose of
shares and other issues
Issuer’s plan for
stabilizing the Company’s 36 months after
Covenant stock price and covenant completion of the
Others Note 12 Yes Yes N/A N/A
relating to IPO regarding share repurchase IPO and listing of
measures within three stock
years after the listing
Controlling shareholder
and the actual controller’s
plan for stabilizing the 36 months after
Covenant Company’s stock price completion of the
Others Note 13 Yes Yes N/A N/A
relating to IPO and covenant regarding IPO and listing of
share repurchase measures stock
within three years after the
listing
Directors and senior
officers’ plan for
36 months after
stabilizing the Company’s
Covenant completion of the
Others stock price and covenant Note 14 Yes Yes N/A N/A
relating to IPO IPO and listing of
regarding share repurchase
stock
measures within three
years after the listing
Covenant Issuer’s covenant
Others Note 15 Permanent No Yes N/A N/A
relating to IPO regarding measures
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Annual Report 2019
against fraud in IPO
Controlling shareholder,
actual controller and their
Covenant
Others concert parties’ covenant Note 16 Permanent No Yes N/A N/A
relating to IPO
regarding measures
against fraud in IPO
Directors, supervisors and
Covenant senior officers’ covenant
Others Note 17 Permanent No Yes N/A N/A
relating to IPO regarding measures
against fraud in IPO
Issuer’s covenant
regarding remedial
Covenant
Others measures for diluted Note 18 Permanent No Yes N/A N/A
relating to IPO
earnings in the current
period
Controlling shareholder,
actual controller and their
concert parties’ covenant
Covenant
Others regarding remedial Note 19 Permanent No Yes N/A N/A
relating to IPO
measures for diluted
earnings in the current
period
Directors, supervisors and
senior officers’ covenant
Covenant regarding remedial
Others Note 20 Term of office No Yes N/A N/A
relating to IPO measures for diluted
earnings in the current
period
Issuer’s covenant
Covenant
Others regarding profit Note 21 Permanent No Yes N/A N/A
relating to IPO
distribution policy
Issuer’s covenant
regarding restraint
Covenant measures and liability for
Others Note 22 Permanent No Yes N/A N/A
relating to IPO compensation in the event
of failure to fulfill its
covenants
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Controlling shareholder,
actual controller and their
concert parties’ covenant
Covenant regarding restraint
Others Note 23 Permanent No Yes N/A N/A
relating to IPO measures and liability for
compensation in the event
of failure to fulfill their
covenants
Directors, supervisors and
senior officers’ covenant
regarding restraint
Covenant
Others measures and liability for Note 24 Term of office No Yes N/A N/A
relating to IPO
compensation in the event
of failure to fulfill their
covenants
Controlling shareholder’s
Resolve
covenant on avoiding
Covenant horizontal
horizontal competition and Note 25 Permanent No Yes N/A N/A
relating to IPO competition
regulating and reducing
issues
related-party transactions
Actual controller’s
Resolve
covenant on avoiding
Covenant related-party
horizontal competition and Note 26 Permanent No Yes N/A N/A
relating to IPO transaction
regulating and reducing
issues
related-party transactions
Covenant by the grantee
Covenant related
of share incentives
to share Others Note 27 Permanent No Yes N/A N/A
regarding information
incentives
disclosure documents
Covenant related Company’s covenant on
to share Others refraining from providing Note 28 Permanent No Yes N/A N/A
incentives financial assistance
Note 1:
Appotronics Holdings, as the controlling shareholder of the Company, hereby covenants that:
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Annual Report 2019
“1. With respect to the shares directly or indirectly held by us in the Company, we undertake:
(1) within 36 months after completion of the IPO and the extended period stated below (“Lock-up Period”), not to transfer or appoint any other
person to manage the shares held by us in the Company directly or indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or to
request the Company to repurchase such Pre-IPO Shares; and
(2) to comply with the applicable laws and regulations, the Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of the
Shanghai Stock Exchange and other business rules of the Shanghai Stock Exchange regarding share transfer by the controlling shareholder and
the actual controller of a listed company.
The foregoing covenants shall not apply to any transfer to any person who controls, is controlled by or is under common control with the
transferor within 12 months after completion of the IPO.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20 consecutive trading days within six
months after completion of the IPO, or on the date that is six months after completion of the IPO, the Lock-up Period for the shares held by us
in the Company shall be extended by an additional six months after the expiration of the initial Lock-up Period.
3. After the expiration of the Lock-up Period, if we dispose of any shares held by us in the Company, we will do so in strict accordance with the
applicable laws, rules, regulations and normative documents, through call auction on the secondary market, private transfer, allotment, block
trade or otherwise.
4. After the expiration of restriction on the sale of shares, if we dispose of any Pre-IPO Shares, we will ensure that the Company continues to
operate stably. If we transfer our control over the Company, we will ensure that such transfer is conducted on an arm’s length basis, without
prejudice to the legitimate rights and interests of the Company and other shareholders, and that we are free from the following circumstances
upon the transfer of our control over the Company:
(1) any illegal occupation by us of the funds of the Company;
(2) any obligation owed by us to the Company’s debt or any outstanding guarantee offered by the Company for us;
(3) any outstanding covenant made by us to the Company or any other shareholder; or
(4) any other circumstance on our part that has a material adverse effect on the interests of the Company or the minority shareholders.
5. If we dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the selling price shall not be lower than the
offering price of the IPO, as adjusted for any distribution of dividends or bonus shares, capitalization of the capital reserve or rights issue by the
Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to the applicable rules of the
Shanghai Stock Exchange. If we dispose of any Pre-IPO Shares two years after the expiration of the Lock-up Period, the selling price shall be
determined according to the market price of the Company’s stock then.
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Annual Report 2019
6. We will strictly comply with the applicable laws, rules, regulations and normative documents, and regulatory requirements, and will not
dispose of any shares held by us in the Company during the Lock-up Period. After the expiration of the Lock-up Period, we will formulate the
share disposal plan in a prudent manner, and dispose of the shares at such time as we deem fit in our sole discretion, taking into consideration
the situations of the stock market, movement of the Company’s stock price, and the relevant public information, subject to the applicable laws,
rules, regulations and normative documents.
7. If we dispose of any shares held by us in the Company within two years after the expiration of the Lock-up Period, we will do so in
accordance with the provisions of the China Securities Regulatory Commission and the Shanghai Stock Exchange regarding disposal of shares
by a shareholder and the relevant information disclosure.
8. If the Company meets the criteria for delisting due to any serious violation as set forth below, we will not dispose of any shares held by us in
the Company from the date that the relevant administration penalty or judicial judgment is imposed or made, till the date of delisting of the
Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information disclosure or otherwise seriously
disrupted the order of stock market, as a result of which its listing status is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security, ecological security, production safety or
public health, and such violation is of a serious nature, has seriously damaged the national interest or public interest, or seriously undermined its
listing status.
9. We will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect regarding the duties and obligations of a shareholder.
10. We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 2：
LI Yi, as the actual controller of the Company, hereby covenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, I undertake:
(1) within 36 months after completion of the IPO and the extended period stated below, and 6 months after termination of my employment with
the Company (“Lock-up Period”), not to transfer or appoint any other person to manage the shares held by me in the Company directly or
indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or to request the Company to repurchase such Pre-IPO Shares;
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Annual Report 2019
The foregoing covenants shall not apply to any transfer to any person who controls, is controlled by or is under common control with the
transferor within 12 months after completion of the IPO;
(2) within four years after the expiration of restriction on the sale of Pre-IPO shares, not to transfer more than 25% of the total Pre-IPO Shares
held by me in aggregate every year;
(3) so long as I remain a director of the Company, not to transfer more than 25% of the total shares held by me in the Company;
(4) within half a year after I retire from my post as director of the Company, not to transfer any shares held by me in the Company; and
(5) to comply with the applicable laws and regulations, the Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of the
Shanghai Stock Exchange and other business rules of the Shanghai Stock Exchange regarding share transfer by the actual controller, directors
or key technical staff of a listed company.
I will comply with foregoing covenants notwithstanding any change in my shareholding in the Company due to any equity distribution made by
the Company or otherwise.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20 consecutive trading days within six
months after completion of the IPO, or on the date that is six months after completion of the IPO, the Lock-up Period for the shares held by me
in the Company shall be extended by an additional six months after the expiration of the initial Lock-up Period.
3. After the expiration of the Lock-up Period, if I dispose of any shares held by me in the Company, I will do so in strict accordance with the
applicable laws, rules, regulations and normative documents, through call auction on the secondary market, private transfer, allotment, block
trade or otherwise.
4. After the expiration of restriction on the sale of shares, if I dispose of any Pre-IPO Shares, I will ensure that the Company continues to
operate stably. If I transfer my control over the Company, I will ensure that such transfer is conducted on an arm’s length basis, without
prejudice to the legitimate rights and interests of the Company and other shareholders, and that I’m free from the following circumstances upon
the transfer of my control over the Company:
(1) any illegal occupation by me of the funds of the Company;
(2) any obligation owed by me to the Company’s debt or any outstanding guarantee offered by the Company for me;
(3) any outstanding covenant made by me to the Company or any other shareholder; or
(4) any other circumstance on our part that has a material adverse effect on the interests of the Company or the minority shareholders.
5. If I dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the selling price shall not be lower than the
offering price of the IPO, as adjusted for any distribution of dividends or bonus shares, capitalization of the capital reserve or rights issue by the
Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to the applicable rules of the
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Annual Report 2019
Shanghai Stock Exchange. If I dispose of any Pre-IPO Shares two years after the expiration of the Lock-up Period, the selling price shall be
determined according to the market price of the Company’s stock then.
6. I will strictly comply with the applicable laws, rules, regulations and normative documents, and regulatory requirements, and will not dispose
of any shares held by me in the Company during the Lock-up Period. After the expiration of the Lock-up Period, I will formulate the share
disposal plan in a prudent manner, and dispose of the shares at such time as I deem fit in my sole discretion, taking into consideration the
situations of the stock market, movement of the Company’s stock price, and the relevant public information, subject to the applicable laws,
rules, regulations and normative documents.
7. During my employment with the Company, I will truthfully report the shares held by me in the Company and changes therein to the
Company on a regular basis (other than changes arising from any dividend distribution or capitalization of the capital reserve by the Company).
8. If I dispose of any shares held by me in the Company within two years after the expiration of the Lock-up Period, I will do so in accordance
with the provisions of the China Securities Regulatory Commission and the Shanghai Stock Exchange regarding disposal of shares by the actual
controller, directors or key technical staff and the relevant information disclosure.
9. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will not dispose of any shares held by me in
the Company from the date that the relevant administration penalty or judicial judgment is imposed or made, till the date of delisting of the
Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information disclosure or otherwise seriously
disrupted the order of stock market, as a result of which its listing status is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security, ecological security, production safety or
public health, and such violation is of a serious nature, has seriously damaged the national interest or public interest, or seriously undermined its
listing status.
10. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect regarding the duties and obligations of the actual controller, directors and
key technical staff.
11. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 3：
Each of the concert parties of the actual controller of the Company hereby covenants that:
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Annual Report 2019
“1. With respect to the shares directly or indirectly held by us in the Company, we undertake:
(1) within 36 months after completion of the IPO and the extended period stated below (“Lock-up Period”), not to transfer or appoint any other
person to manage the shares held by us in the Company directly or indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or to
request the Company to repurchase such Pre-IPO Shares; and
(2) to comply with the applicable laws and regulations, the Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of the
Shanghai Stock Exchange and other business rules of the Shanghai Stock Exchange regarding share transfer by the controlling shareholder and
the actual controller of a listed company.
The foregoing covenants shall not apply to any transfer to any person who controls, is controlled by or is under common control with the
transferor within 12 months after completion of the IPO.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20 consecutive trading days within six
months after completion of the IPO, or on the date that is six months after completion of the IPO, the Lock-up Period for the shares held by us
in the Company shall be extended by an additional six months after the expiration of the initial Lock-up Period.
3. After the expiration of the Lock-up Period, if we dispose of any shares held by us in the Company, we will do so in strict accordance with the
applicable laws, rules, regulations and normative documents, through call auction on the secondary market, private transfer, allotment, block
trade or otherwise.
4. If we dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the selling price shall not be lower than the
offering price of the IPO, as adjusted for any distribution of dividends or bonus shares, capitalization of the capital reserve or rights issue by the
Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to the applicable rules of the
Shanghai Stock Exchange. If we dispose of any Pre-IPO Shares two years after the expiration of the Lock-up Period, the selling price shall be
determined according to the market price of the Company’s stock then.
5. We will strictly comply with the applicable laws, rules, regulations and normative documents, and regulatory requirements, and will not
dispose of any shares held by us in the Company during the Lock-up Period. After the expiration of the Lock-up Period, we will formulate the
share disposal plan in a prudent manner, and dispose of the shares at such time as we deem fit in our sole discretion, taking into consideration
the situations of the stock market, movement of the Company’s stock price, and the relevant public information, subject to the applicable laws,
rules, regulations and normative documents.
6. If we dispose of any shares held by us in the Company within two years after the expiration of the Lock-up Period, we will do so in
accordance with the provisions of the China Securities Regulatory Commission and the Shanghai Stock Exchange regarding disposal of shares
by a shareholder and the relevant information disclosure.
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Annual Report 2019
7. If the Company meets the criteria for delisting due to any serious violation as set forth below, we will not dispose of any shares held by us in
the Company from the date that the relevant administration penalty or judicial judgment is imposed or made, till the date of delisting of the
Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information disclosure or otherwise seriously
disrupted the order of stock market, as a result of which its listing status is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security, ecological security, production safety or
public health, and such violation is of a serious nature, has seriously damaged the national interest or public interest, or seriously undermined its
listing status.
8. We will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect regarding the duties and obligations of a shareholder.
9. We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 4：
Each director of the Company, who is also a shareholder, hereby covenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months after completion of the IPO and the extended
period stated below (“Lock-up Period”), I will not transfer or appoint any other person to manage the shares held by me in the Company
directly or indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20 consecutive trading days within six
months after completion of the IPO, or on the date that is six months after completion of the IPO, the Lock-up Period for the shares held by me
in the Company shall be extended by an additional six months after the expiration of the initial Lock-up Period.
3. During my employment with the Company, I will truthfully report the shares held by me in the Company and changes therein to the
Company on a regular basis (other than changes arising from any dividend distribution or capitalization of the capital reserve by the Company).
4. If I dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the selling price shall not be lower than the
offering price of the IPO, as adjusted for any distribution of dividends or bonus shares, capitalization of the capital reserve, issuance of new
shares or rights issue by the Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to
the applicable rules of the Shanghai Stock Exchange. If the Company has distributed any dividends or bonus shares, capitalized the capital
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Annual Report 2019
reserve or made any rights issue during the period from the date of listing of the Company’s stock to the date of such disposal, the minimum
selling price and number of shares salable shall be adjusted accordingly.
5. If I retire from my post as director of the Company prior to the expiration of my term of office, I will comply with the following restrictive
provisions:
(1) so long as I remain a director of the Company, I will not transfer more than 25% of the total shares held by me in the Company; and
(2) within half a year after I retire from my post as director of the Company, I will not transfer any shares held by me in the Company.
I will comply with foregoing covenants notwithstanding any change in my shareholding in the Company due to any equity distribution made by
the Company or otherwise.
6. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will not dispose of any shares held by me in
the Company from the date that the relevant administration penalty or judicial judgment is imposed or made, till the date of delisting of the
Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information disclosure or otherwise seriously
disrupted the order of stock market, as a result of which its listing status is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security, ecological security, production safety or
public health, and such violation is of a serious nature, has seriously damaged the national interest or public interest, or seriously undermined its
listing status.
7. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect.
8. If I acquire any additional shares of the Company or become eligible to sell any shares held by me in the Company, I will strictly comply
with, and cooperate with the Company to comply with, all applicable information disclosure provisions and requirements regarding the dealings
in the Company’s shares.
I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith. If I fail to perform my duties and
obligations under the covenants set forth above, I will indemnify the Company and other shareholders or stakeholders of the Company for the
losses arising therefrom according to law, and surrender my gains from illegal disposal of the Company’s shares (if any) to the Company.”
Note 5：
Each supervisor of the Company, who is also a shareholder, hereby covenants that:
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“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months after completion of the IPO (“Lock-up
Period”), I will not transfer or appoint any other person to manage the shares held by me in the Company directly or indirectly issued prior to
the IPO of the Company (“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. During my employment with the Company, I will truthfully report the shares held by me in the Company and changes therein to the
Company on a regular basis (other than changes arising from any dividend distribution or capitalization of the capital reserve by the Company).
3. If I retire from my post as supervisor of the Company prior to the expiration of my term of office, I will comply with the following restrictive
provisions:
(1) so long as I remain a supervisor of the Company, I will not transfer more than 25% of the total shares held by me in the Company; and
(2) within half a year after I retire from my post as supervisor of the Company, I will not transfer any shares held by me in the Company.
I will comply with foregoing covenants notwithstanding any change in my shareholding in the Company due to any equity distribution made by
the Company or otherwise.
4. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will not dispose of any shares held by me in
the Company from the date that the relevant administration penalty or judicial judgment is imposed or made, till the date of delisting of the
Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information disclosure or otherwise seriously
disrupted the order of stock market, as a result of which its listing status is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security, ecological security, production safety or
public health, and such violation is of a serious nature, has seriously damaged the national interest or public interest, or seriously undermined its
listing status.
5. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect regarding the duties and obligations of a supervisor.
6. If I acquire any additional shares of the Company or become eligible to sell any shares held by me in the Company, I will strictly comply
with, and cooperate with the Company to comply with, all applicable information disclosure provisions and requirements regarding the dealings
in the Company’s shares.
7. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
Note 6：
HU Fei, as the deputy general manager and member of key technical staff of the Company, hereby covenants that:
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“1. With respect to the shares directly or indirectly held by me in the Company, I undertake:
(1) within 12 months after listing of the Company’s stock and the extended period stated below, and 6 months after termination of my
employment with the Company (“Lock-up Period”), not to transfer or appoint any other person to manage the shares held by me in the
Company directly or indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or to request the Company to repurchase such
Pre-IPO Shares;
(2) within four years after the expiration of restriction on the sale of Pre-IPO shares, not to transfer more than 25% of the total Pre-IPO Shares
held by me in aggregate every year;
(3) so long as I remain a senior officer of the Company, not to transfer more than 25% of the total shares held by me in the Company;
(4) within half a year after I retire from my post as senior officer of the Company, not to transfer any shares held by me in the Company; and
(5) to comply with the applicable laws and regulations, the Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of the
Shanghai Stock Exchange and other business rules of the Shanghai Stock Exchange.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20 consecutive trading days within six
months after completion of the IPO, or on the date that is six months after completion of the IPO, the Lock-up Period for the shares held by me
in the Company shall be extended by an additional six months after the expiration of the initial Lock-up Period.
3. If I dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the selling price shall not be lower than the
offering price of the IPO, as adjusted for any distribution of dividends or bonus shares, capitalization of the capital reserve, issuance of new
shares or rights issue by the Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to
the applicable rules of the Shanghai Stock Exchange. If the Company has distributed any dividends or bonus shares, capitalized the capital
reserve or made any rights issue during the period from the date of listing of the Company’s stock to the date of such disposal, the minimum
selling price and number of shares salable shall be adjusted accordingly.
4. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will not dispose of any shares held by me in
the Company from the date that the relevant administration penalty or judicial judgment is imposed or made, till the date of delisting of the
Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information disclosure or otherwise seriously
disrupted the order of stock market, as a result of which its listing status is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security, ecological security, production safety or
public health, and such violation is of a serious nature, has seriously damaged the national interest or public interest, or seriously undermined its
listing status.
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5. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect.
6. During my employment with the Company, I will truthfully report the shares held by me in the Company and changes therein to the
Company on a regular basis (other than changes arising from any dividend distribution or capitalization of the capital reserve by the Company).
If I acquire any additional shares of the Company or become eligible to sell any shares held by me directly or indirectly in the Company, I will
strictly comply with, and cooperate with the Company to comply with, all applicable information disclosure provisions and requirements
regarding the dealings in the Company’s shares.
7. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
Note 7：
Each of the senior officers of the Company other than HU Fei, who is also a shareholder, hereby covenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months after completion of the IPO and the extended
period stated below (“Lock-up Period”), I will not transfer or appoint any other person to manage the shares held by me in the Company
directly or indirectly issued prior to the IPO of the Company (“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. If the closing price of the Company’s stock has been lower than the offering price of the IPO for 20 consecutive trading days within six
months after completion of the IPO, or on the date that is six months after completion of the IPO, the Lock-up Period for the shares held by me
in the Company shall be extended by an additional six months after the expiration of the initial Lock-up Period.
3. During my employment with the Company, I will truthfully report the shares held by me in the Company and changes therein to the
Company on a regular basis (other than changes arising from any dividend distribution or capitalization of the capital reserve by the Company).
4. If I dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the selling price shall not be lower than the
offering price of the IPO, as adjusted for any distribution of dividends or bonus shares, capitalization of the capital reserve, issuance of new
shares or rights issue by the Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to
the applicable rules of the Shanghai Stock Exchange. If the Company has distributed any dividends or bonus shares, capitalized the capital
reserve or made any rights issue during the period from the date of listing of the Company’s stock to the date of such disposal, the minimum
selling price and number of shares salable shall be adjusted accordingly.
5. If I retire from my post as senior officer of the Company prior to the expiration of my term of office, I will comply with the following
restrictive provisions:
(1) so long as I remain a senior officer of the Company, I will not transfer more than 25% of the total shares held by me in the Company; and
(2) within half a year after I retire from my post as senior officer of the Company, I will not transfer any shares held by me in the Company.
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I will comply with foregoing covenants notwithstanding any change in my shareholding in the Company due to any equity distribution made by
the Company or otherwise.
6. If the Company meets the criteria for delisting due to any serious violation as set forth below, I will not dispose of any shares held by me in
the Company from the date that the relevant administration penalty or judicial judgment is imposed or made, till the date of delisting of the
Company’s stock:
(1) where the Company has committed fraud in IPO, seriously violated the laws regarding information disclosure or otherwise seriously
disrupted the order of stock market, as a result of which its listing status is seriously undermined; or
(2) where the Company has seriously violated the laws regarding national security, public security, ecological security, production safety or
public health, and such violation is of a serious nature, has seriously damaged the national interest or public interest, or seriously undermined its
listing status.
7. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect.
8. If I acquire any additional shares of the Company or become eligible to sell any shares held by me in the Company, I will strictly comply
with, and cooperate with the Company to comply with, all applicable information disclosure provisions and requirements regarding the dealings
in the Company’s shares.
9. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
Note 8：
Each of the members of key technical staff of the Company other than LI Yi and HU Fei, who is also a shareholder, hereby covenants that:
“1. Within 12 months after completion of the IPO and listing of stock (“the IPO”) and the extended period stated below (“Lock-up Period”), I
will not transfer or appoint any other person to manage the shares held by me in the Company directly or indirectly issued prior to the IPO of
the Company (“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. Within four years after the expiration of the Lock-up Period, I will not transfer more than 25% of the total Pre-IPO Shares held by me in
aggregate every year. If the Company has distributed any dividends or bonus shares, capitalized the capital reserve or made any rights issue
during such period, the number of shares salable shall be adjusted accordingly.
3. During my employment with the Company, I will truthfully report the shares held by me in the Company and changes therein to the
Company on a regular basis (other than changes arising from any dividend distribution or capitalization of the capital reserve by the Company).
If I acquire any additional shares of the Company or become eligible to sell any shares held by me in the Company, I will strictly comply with,
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and cooperate with the Company to comply with, all applicable information disclosure provisions and requirements regarding the dealings in
the Company’s shares.
4. I will strictly comply with the applicable laws and regulations, the Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of
the Shanghai Stock Exchange and other business rules of the Shanghai Stock Exchange, and the Articles of Association of Appotronics
Corporation Limited in effect.
5. I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
Note 9：
Each of the holders of more than 5% of the shares of the issuer hereby covenants that:
“1. With respect to the shares directly or indirectly held by us in the Company, within 12 months after completion of the IPO (“Lock-up
Period”), we will not transfer or appoint any other person to manage the shares held by us in the Company directly or indirectly issued prior to
the IPO of the Company (“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. After the expiration of the Lock-up Period, if we dispose of any shares held by me/us in the Company, we will do so in strict accordance with
the applicable laws, rules, regulations and normative documents, through call auction on the secondary market, private transfer, allotment, block
trade or otherwise.
3. If we dispose of any Pre-IPO Shares within two years after the expiration of the Lock-up Period, the selling price shall not be lower than the
offering price of the IPO, as adjusted for any distribution of dividends or bonus shares, capitalization of the capital reserve or rights issue by the
Company during the period from the date of listing of the Company’s stock to the date of such disposal pursuant to the applicable rules of the
Shanghai Stock Exchange. If we dispose of any Pre-IPO Shares two years after the expiration of the Lock-up Period, the selling price shall be
determined according to the market price of the Company’s stock then.
4. We will strictly comply with the applicable laws, rules, regulations and normative documents, and regulatory requirements, and will not
dispose of any shares held by us in the Company during the Lock-up Period. After the expiration of the Lock-up Period, we will formulate the
share disposal plan in a prudent manner, and dispose of the shares at such time as we deem fit in our sole discretion, taking into consideration
the situations of the stock market, movement of the Company’s stock price, and the relevant public information, subject to the applicable laws,
rules, regulations and normative documents.
5. If we dispose of any shares held by us in the Company within two years after the expiration of the Lock-up Period, we will do so in
accordance with the provisions of the China Securities Regulatory Commission and the Shanghai Stock Exchange regarding disposal of shares
by a shareholder and the relevant information disclosure.
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6. We will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect regarding the duties and obligations of a shareholder.
We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
Note 10：
Each of the other corporate shareholders hereby covenants that:
“1. With respect to the shares directly or indirectly held by us in the Company, within 12 months after completion of the IPO (“Lock-up
Period”), we will not transfer or appoint any other person to manage the shares held by us in the Company directly or indirectly issued prior to
the IPO of the Company (“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. We will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect regarding the duties and obligations of a shareholder.
3. If we acquire any additional shares of the Company or become eligible to sell any shares held by us in the Company, we will strictly comply
with, and cooperate with the Company to comply with, all applicable information disclosure provisions and requirements regarding the dealings
in the Company’s shares.
We will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
Each of the other natural-person shareholders hereby covenants that:
“1. With respect to the shares directly or indirectly held by me in the Company, within 12 months after completion of the IPO (“Lock-up
Period”), I will not transfer or appoint any other person to manage the shares held by me in the Company directly or indirectly issued prior to
the IPO of the Company (“Pre-IPO Shares”), or request the Company to repurchase such Pre-IPO Shares.
2. I will strictly comply with the provisions and requirements of the applicable laws, rules, regulations and normative documents, and the
Articles of Association of Appotronics Corporation Limited in effect regarding the duties and obligations of a shareholder.
3. If I acquire any additional shares of the Company or become eligible to sell any shares held by me in the Company, I will strictly comply
with, and cooperate with the Company to comply with, all applicable information disclosure provisions and requirements regarding the dealings
in the Company’s shares.
I will faithfully fulfill the covenants set forth above and assume the legal liabilities in connection therewith.”
Note 11：
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Each of the senior officers and key employees participating in the strategic allotment, namely LI Yi, BO Lianming, WU Bin, LI Lu, GAO
Lijing, CHEN Xuxiang, LAI Yongsai and GAO Xiaohong, hereby covenants that:
“1. I am the actual holder of the asset management plan, and have not participated in the strategic allotment on behalf of any other investor or
appointed any other investor to participate in the strategic allotment on my behalf;
2. I use my own funds to participate in the strategic allotment;
3. I believe in the long-term investment value of the Company, and agree with the asset management plan to subscribe for the shares available
to it through the strategic allotment at such offering price as finally determined;
4. I agree to accept such number of shares available through the strategic allotment as finally determined by the issuer and the lead underwriter,
subject to the number/amount of share that the asset management plan undertakes to subscribe for;
5. I will not participate in the online or off-line offering in connection with the IPO of the Company;
6. I will hold the shares acquired through the strategic allotment for a period of not less than 12 months, calculated from the date of listing of the
shares publically offered this time;
7. I will not transfer any shares held by me under the asset management plan during the Lock-up Period in any manner;
8. There isn’t any illegal benefit transfer between me and the Company or any other stakeholder.”
Note 12：
The issuer hereby covenants:
“I. Conditions for triggering and stopping the stock price stabilization measures
(I) Condition for triggering the measures
If, within 36 months after completion of the IPO and listing of the Company’s RMB-denominated ordinary shares (A-shares) on the STAR
Market (“IPO”), the closing price of the Company’s stock has been lower than its most recently audited net assets per share (as adjusted for any
distribution of dividends or bonus shares, capitalization of the capital reserve, issuance of new shares or rights issue by the Company) for 20
consecutive trading days (“Trigger Condition” or “Trigger Condition for Stabilization of Stock Price”), except for any event of force majeure,
the Company and the related persons shall take the following measures to stabilize the Company’s stock price subject to the provisions of the
China Securities Regulatory Commission (“CSRC”) and the Shanghai Stock Exchange (“SSE”) regarding share repurchase, acquisition of
additional shares and information disclosure and other applicable provisions:
(1) repurchase of shares by the Company;
(2) acquisition of additional shares of the Company by the controlling shareholder and the actual controller;
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(3) acquisition of additional shares of the Company by the directors and senior officers;
(4) other measures permitted by the applicable laws, rules, regulations and normative documents, and the CSRC and the SSE.
If the Company intends to repurchase shares upon satisfaction of the Trigger Condition, the Company shall hold a meeting of the Board of
Directors within 10 days and a general meeting of shareholders within 30 days, to review the specific proposal for stabilizing the stock price
and the period for implementing such proposal, and implement such proposal within five trading days after the same has been approved by the
general meeting of shareholders.
(2) Condition for stopping the measures
If, prior to or during the implementation of the stock price stabilization measures, the closing price of the Company’s stock has been higher than
its most recently audited net assets per share for 20 consecutive trading days, the Company shall stop the stock price stabilization measures to
the extent permitted by the applicable laws, rules, regulations and normative documents.
After the stock price stabilization measures have been completed or stopped, if the Trigger Condition is satisfied again, the Company shall
implement the stock price stabilization plan again.
II. Measures for stabilizing the stock price of the Company
Upon satisfaction of the Trigger Condition, the Company and its controlling shareholder, actual controller, directors and senior officers shall
promptly take all or part of the following measures to stabilize the stock price of the Company:
(I) Repurchase of shares by the Company
1. Any share repurchase by the Company for purpose of stabilizing its stock price shall comply with the Contract Law of the People’s Republic
of China, the Securities Law of the People’s Republic of China, the Administrative Measures for Repurchase by the Listed Companies of their
Public Shares (Tentative), the Supplementary Provisions on Repurchase by the Listed Companies of their Public Shares through Call Auction,
the Opinion on Supporting Repurchase by the Listed Companies of their Public Shares, the Rules of the Shanghai Stock Exchange for
Implementation of Share Repurchase by the Listed Companies, and other applicable laws, rules, regulations and normative documents.
2. Any share repurchase by the Company for purpose of stabilizing its stock price shall meet the following conditions:
(1) the Company’s stock has been listed for at least one year;
(2) after the completion of such share repurchase, the Company shall be solvent and have the ability to continue as a going concern;
(3) after the completion of such share repurchase, the shareholding structure of Company shall continue to meet the listing conditions; and
(4) such other conditions as may be set forth by the CSRC.
If the Company repurchases shares for purpose of stabilizing its stock price and reduces its registered capital accordingly, the Company may do
so even if its stock has been listed for less than one year.
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3. The share repurchase proposal requires the approval of the shareholders representing more than two thirds of the total votes present at the
general meeting of shareholders. The controlling shareholder and the actual controller of the Company undertake to vote for such share
repurchase proposal.
4. The general meeting of shareholders may authorize the Board of Directors to decide on the share repurchase proposal, provided that the
relevant resolution of the general meeting of shareholders shall specify the specific powers delegated to the Board of Directors and the
delegation period. The resolution of the Board of Directors on the share repurchase proposal requires the approval of more than two thirds of
the directors present at the meeting of the Board of Directors. The non-independent directors of the Company undertake to vote for the share
repurchase proposal (to the extent that they have the voting power).
5. After the share repurchase proposal has been approved by the general meeting of shareholders, the Company shall notify its creditors and
submit the relevant documents and go through the applicable approval or filing procedures with the CSRC, the SSE and other competent
authorities according to law, and may implement the share repurchase proposal only after the applicable approval, filing, information disclosure
and other procedures have been completed. If the share repurchase proposal fails to be approved by the general meeting of shareholders, the
Company shall procure the controlling shareholder and the actual controller to perform their obligations to acquire additional shares of the
Company as promised by them.
6. In addition to the requirements of the applicable laws, rules, regulations and normative documents, any share repurchase by the Company for
purpose of stabilizing its stock price shall also comply with the following provisions:
(1) the Company shall repurchase its shares on the secondary market through call auction or tender offer;
(2) the total amount used by the Company in the share repurchase shall not exceed 80% of its IPO net proceeds;
(3) the total number of shares repurchased by the Company within 12 consecutive months shall not exceed 2% of the total shares of the
Company as of the end of the preceding year; and
(4) the total amount used by the Company under a share repurchase plan shall not be lower than 5% and not be more than 10% of its audited net
profit attributable to the shareholders of the parent company for the preceding accounting year, or such other higher ratio may be applied as
approved by the Board of Directors;
In case of any conflict between the provisions of Paragraph (3) and Paragraph (4) above, Paragraph (3) shall prevail.
(5) the Company may use its own funds, proceeds from issuance of preferred shares or bonds, the excess funds raised through issuance of
ordinary shares beyond what is actually required, the surplus funds of the projects in which the funds raised invest, the funds raised that have
been permanently applied to replenish working capital according to law, loans from financial institutions and other legal funds to repurchase its
shares.
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7. The Board of Directors of the Company shall pay close attention to the Company’s capital position, solvency and ability to continue as a
going concern, draw up and implement the share repurchase plan prudently, and ensure that the number and amount of the shares repurchased
are appropriate for the actual financial condition of the Company.
The Company shall establish sound and effective internal controls in respect of share repurchase, draw up the detailed operation plans, prevent
insider trading and other unfair transactions, and shall not manipulate its stock price or make any illegal benefit transfer to any of its directors,
supervisors, senior officers, controlling shareholder or actual controller through any share repurchase.
(II) Acquisition of additional shares of the Company by the controlling shareholder and the actual controller
1. Upon satisfaction of the Trigger Condition, if the Company is unable to make share repurchase, the controlling shareholder and the actual
controller shall acquire additional shares of the Company, subject to the Administrative Measures for the Acquisition of the Listed Companies
and other applicable laws, rules, regulations and normative documents, provided that such transaction will not cause the shareholding structure
of Company to cease to meet the listing conditions and/or trigger obligation to make a tender offer by the controlling shareholder.
2. Subject to Paragraph 1 above, the controlling shareholder and the actual controller of the Company shall, within 10 trading days after
satisfaction of the Trigger Condition, notify the Company in writing of their plan to acquire additional shares, which shall specify, among others,
the scope of number of shares to be acquired, upper limit of the purchase price and time limit for such acquisition. The Company shall
announce such plan within 3 trading days prior to the implementation of such plan.
3. The controlling shareholder and the actual controller shall acquire additional shares of the Company on the secondary market through call
auction or otherwise legally.
4. The stock price stabilization plan implemented by the controlling shareholder and the actual controller shall also comply with the following
provisions:
(1) the amount used by the controlling shareholder and the actual controller in the acquisition of additional shares under a single plan shall not
be lower than 20% of the aggregate cash dividends (after tax) received by them from the Company after the listing of the Company;
(2) the total amount used by the controlling shareholder and the actual controller in the acquisition of additional shares under a single plan or
within 12 consecutive months shall not exceed 50% of the aggregate cash dividends (after tax) received by them from the Company after the
listing of the Company;
(3) the total number of additional shares acquired by the controlling shareholder and the actual controller under a single plan shall not exceed
2% of the total shares of the Company; and
(4) the purchase price paid by the controlling shareholder and the actual controller for the additional shares shall not exceed 100% of the most
recently audited net assets per share of the Company.
In case of any conflict between the provisions of Paragraph (1) and Paragraph (3) above, Paragraph (3) shall prevail.
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5. The controlling shareholder and the actual controller shall be jointly and severally liable for such acquisition of additional shares.
(III) Acquisition of additional shares of the Company by the directors and senior officers
1. Upon satisfaction of the Trigger Condition, if the Company is unable to make share repurchase, and the controlling shareholder and the actual
controller are unable to acquire additional shares of the Company, or fail to put forward or implement the plan to acquire additional shares of
the Company, the directors and senior officers shall acquire additional shares of the Company, subject to the Administrative Measures for the
Acquisition of the Listed Companies, the Management Rules for Shareholding by Directors, Supervisors and Senior Officers of Listed
Companies in the Companies and Changes in such Shareholding and other applicable laws, rules, regulations and normative documents,
provided that such transaction will not cause the shareholding structure of Company to cease to meet the listing conditions.
2. Subject to Paragraph 1 above, the directors and senior officers of the Company shall, within 10 trading days after satisfaction of the Trigger
Condition, notify the Company in writing of their plan to acquire additional shares, which shall specify, among others, the scope of number of
shares to be acquired, upper limit of the purchase price and time limit for such acquisition. The Company shall announce such plan within 3
trading days prior to the implementation of such plan.
3. The stock price stabilization plan implemented by the directors and senior officers shall also comply with the following provisions:
(1) the amount used by any director or senior officer in the acquisition of additional shares under a single plan shall not be lower than 20% of
the aggregate cash dividends, remunerations and subsidies (in each case, if any and after tax) received by such director or senior officer from
the Company in the preceding year;
(2) the total amount used by any director or senior officer in the acquisition of additional shares under a single plan or within 12 consecutive
months shall not exceed 50% of the aggregate cash dividends, remunerations and subsidies (in each case, if any and after tax) received by such
director or senior officer from the Company in the preceding year; and
(3) the purchase price paid by the directors and senior officers for the additional shares shall not exceed 100% of the most recently audited net
assets per share of the Company.
4. The Company shall request each new director or senior officer appointed within three years after completion of the IPO to sign a letter of
undertaking, warranting that he will fulfill the covenants made by the existing directors and senior officers in the IPO.
(IV) Other measures permitted by the applicable laws, rules, regulations and normative documents, and the CSRC and the SSE
The Company and the related persons may take one or more measures to stabilize the Company’s stock price according to the situations of the
Company and the market, provided that such measures shall be taken for purpose of safeguarding the listing status of the Company and
protecting the interests of the Company and the investors, and comply with the applicable laws, rules, regulations and normative documents,
and the relevant provisions of the SSE, and shall perform the relevant obligation of information disclosure.
III. Restraint mechanisms for stock price stabilization plan
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Upon satisfaction of the Trigger Condition, if the Company or any controlling shareholder, actual controller, director or senior officer fails to
take the stock price stabilization measures stated above, the Company and such person shall be bound by the following restraint mechanisms:
1. The Company or such controlling shareholder, actual controller, director or senior officer (as applicable) shall publicly explain the reason for
failure to take the stock price stabilization measures to the general meeting of shareholders of the Company and on the media for information
disclosure designated by the CSRC, and apologize to the shareholders of the Company and the investors, and the Company shall assume the
relevant legal liabilities.
2. If any controlling shareholder, actual controller, director or senior officer fails to fulfill his covenant regarding acquisition of additional
shares, the issuer may defer the payment of cash dividends (if any) for the year in which the obligation to acquire additional shares is triggered
and the following year and 50% of the total remuneration and subsidies for such year payable to him, and prohibit him from transferring the
shares held by him in the Company, until he has taken and completed the relevant stock price stabilization measures.
3. The Company shall remind and procure the directors and senior officers newly appointed in the future to fulfill the covenants made by the
existing directors and senior officers in the IPO regarding the stock price stabilization measures.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares) on the STAR Market.”
Note 13：
Appotronics Holdings, as the controlling shareholder of the Company, hereby covenants that:
“We will seriously perform our duties in accordance with the requirements of the Plan of Appotronics Corporation Limited on Stabilizing the
Stock Price of the Company if the Stock Price is Lower than the Net Assets per Share of the Company within Three Years after Completion of
the IPO and Listing of the Company’s RMB-denominated Ordinary Shares (A-shares) on the STAR Market, and ensure the implementation of
the Plan through the restraint mechanisms set forth therein, to maintain the stability of the Company’s stock price and protect the interests of the
investors.
We will actively support the Company in repurchasing shares according to law, and will not engage in any abuse of rights, insider trading,
market manipulation or other illegal acts to the detriment of the interests of the Company and other shareholders in connection with the share
repurchase by the Company.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
LI Yi, as the actual controller of the Company, hereby covenants that:
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“I will seriously perform my duties in accordance with the requirements of the Plan of Appotronics Corporation Limited on Stabilizing the
Stock Price of the Company if the Stock Price is Lower than the Net Assets per Share of the Company within Three Years after Completion of
the IPO and Listing of the Company’s RMB-denominated Ordinary Shares (A-shares) on the STAR Market, and ensure the implementation of
the Plan through the restraint mechanisms set forth therein, to maintain the stability of the Company’s stock price and protect the interests of the
investors.
I will actively support the Company in repurchasing shares according to law, and will not engage in any abuse of rights, insider trading, market
manipulation or other illegal acts to the detriment of the interests of the Company and other shareholders in connection with the share
repurchase by the Company. I will be honest, keep my promise, be assiduous in my duties, and safeguard the interests of the Company and the
legitimate rights and interests of the shareholders and creditors of the Company in the share repurchase by the Company. I covenant that the
share repurchase by the Company will not prejudice the Company’s solvency and ability to continue as a going concern.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 14：
Each of the directors and senior officers of the Company hereby covenants that:
“I will seriously perform my duties in accordance with the requirements of the Plan of Appotronics Corporation Limited on Stabilizing the
Stock Price of the Company if the Stock Price is Lower than the Net Assets per Share of the Company within Three Years after Completion of
the IPO and Listing of the Company’s RMB-denominated Ordinary Shares (A-shares) on the STAR Market, and ensure the implementation of
the Plan through the restraint mechanisms set forth therein, to maintain the stability of the Company’s stock price and protect the interests of the
investors.
I will be honest, keep my promise, be assiduous in my duties, and safeguard the interests of the Company and the legitimate rights and interests
of the shareholders and creditors of the Company in the share repurchase by the Company. I covenant that the share repurchase by the Company
will not prejudice the Company’s solvency and ability to continue as a going concern.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 15：
The issuer hereby covenants that:
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“1. If the competent securities regulatory authority or any other competent authority finds that the Company’s IPO prospectus contains any
misrepresentation or misleading statement or omits any material fact, which has a material and substantial effect on the determination of
whether the Company meets the conditions for IPO and listing set forth in the applicable laws, regulations and normative documents, the
Company undertakes to take the following measures to repurchase all new shares issued in the IPO according to law:
(1) subject to the applicable laws, regulations and normative documents, if such event occurs after completion of the IPO but prior to the listing
of the new shares of the Company, within 30 working days after the competent securities regulatory authority or any other competent authority
makes the relevant decision, the Company shall repurchase all new shares issued in the IPO from the investors who have successfully
subscribed for the new shares on line and the investors who have received the new shares allotted off the line at the offering price plus interest
at the bank deposit rate for the same period; and
(2) subject to the applicable laws, regulations and normative documents, if such event occurs after completion of the IPO and the listing of the
new shares of the Company, within 5 working days after the competent securities regulatory authority or any other competent authority makes
the relevant decision, the Company shall prepare a share repurchase plan and submit the same to the general meeting of shareholders for
approval, and after the plan has been approved by the general meeting of shareholders, repurchase all new shares issued in the IPO to the extent
practicable. The repurchase price shall be determined on the basis of the offering price, taking into account the relevant market factors. If the
Company has distributed any dividends or bonus shares, capitalized the capital reserve or made any rights issue after the listing of the Company,
the price and number of shares repurchased shall be adjusted accordingly.
2. If the Company’s IPO prospectus contains any misrepresentation or misleading statement or omits any material fact, the Company shall
indemnify the investors for the losses incurred in dealings in the stock of the Company resulting therefrom in the following manner according to
law: after the competent securities regulatory authority has found that the Company violated the law and issued an official decision on
administrative penalty, the Company shall arrange for registration of the investors who claim compensation from the Company, and after
verifying their qualifications and amount of losses, pay compensation to such investors in a timely manner.”
Note 16：
The controlling shareholder Appotronics Holdings, the actual controller LI Yi and their concert parties hereby covenant that:
“The Company’s IPO prospectus is free from any misrepresentation, misleading statement or material omission. If the prospectus contains any
misrepresentation or misleading statement or omits any material fact, which has been found to have a material and substantial effect on the
determination of whether the Company meets the conditions for IPO set forth in the applicable laws, we/I and the related persons will promptly
put forward proposals for compensation and conduct share repurchase according to law, vote for such proposals at the meeting of the Board of
Directors or general meeting of shareholders, and indemnify the investors for the losses incurred in dealings in the stock of the Company
resulting therefrom according to law.
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Procedures for compensation and criteria for determining the losses suffered by the investors: Within 20 working days after the competent
securities regulatory authority or any other competent authority finds that the Company’s IPO prospectus contains any misrepresentation or
misleading statement or omits any material fact, the procedures for compensating the losses of the investors shall be commenced. The losses of
the investors shall be determined through consultation with the investors, or in such manner as required by the competent securities regulatory
authority or judicial authority.”
Note 17：
Each of the directors, supervisors and senior officers of the Company hereby covenants that:
“The IPO prospectus is free from any misrepresentation, misleading statement or material omission. If the prospectus contains any
misrepresentation or misleading statement or omits any material fact, I will indemnify the investors for the losses incurred in dealings in the
stock of the Company resulting therefrom according to law.
Procedures for compensation and criteria for determining the losses suffered by the investors: Within 20 working days after the competent
securities regulatory authority or any other competent authority finds that the Company’s IPO prospectus contains any misrepresentation or
misleading statement or omits any material fact, the procedures for compensating the losses of the investors shall be commenced. The losses of
the investors shall be determined through consultation with the investors, or in such manner as required by the competent securities regulatory
authority or judicial authority.”
Note 18：
The issuer’s covenant regarding remedial measures for diluted earnings in the current period:
“(I) Focus on technology R&D and product innovations, and continuously improve the IP protection system
The Company will focus on technology R&D and product innovations relying on its technology R&D capabilities. Since its establishment, the
Company has obtained a lot of domestic and foreign patents in respect of laser display and related fields. In the future, the Company will
continue to consolidate and enhance its market competitive advantages through conforming to the development law of the industry, increasing
R&D investments, improving product functions and quality, optimizing product portfolio and other measures. In addition, the Company will
continue to improve its IP protection system, apply for patents in respect of its core technologies throughout the world, reasonably use legal
means to protect its proprietary IP, and promote the establishment of industrial technical standards and the harmonious and healthy
development of the laser display industry.
(II) Enhance the building of marketing system and improve profitability
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The Company will, based on the current marketing system, give full play to the advantages of the multi-level and all-round marketing mode
combining online sales with off-line sales, agent mode with direct sale mode, and sales on the domestic market with exploitation of overseas
market, to expand the market layout, and continuously optimize the sales service system and enhance brand influence relying on the advantages
of technologies and products, to realize synchronous and sound development of the base and quality of customers. In addition, the Company
will actively cultivate and develop overseas market, promote its laser display products with proprietary IP in the world based on its leading
technologies and outstanding products, and giving full play to the synergy effect with its strategic partners, to realize the continuous growth of
sales and improvement of profitability.
(III) Enhance internal controls and team building of talents, and improve management and operational efficiency in an all-round way
The Company has established relatively sound internal controls and management system, and will continue to improve its management and
operation level, revise and improve internal controls, control management and operating risks, and ensure the continuous and effective
implementation of internal controls. In addition, the Company will enhance the building of IT system and budget management, control costs
and expenses meticulously, improve the use efficiency of funds, and realize reduction of costs and improvement of efficiency. The Company
will also continuously improve the compensation and incentive mechanisms, recruit outstanding talents, motivate the employees to the
maximum extent, and give full play to the employees’ creative power and maximize their potentials. Through such measures, the Company will
improve its management and operational efficiency in an all-round way, and realize long-term, steady and healthy development.
(IV) Enhance management over the funds raised and strive to yield the desired results as soon as practicable
The projects in which the funds raised will invest orient on the main business of the Company and comply with the applicable industrial policies
of the country, and after being completed, will improve the Company’s technological level, increase its production scale and market share, and
improve its profitability, core competitiveness and sustainability.
After completion of the IPO, the Company will strictly manage the use and ensure the full and efficient use of the funds raised in accordance
with the Company Law, the Securities Law, the Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of the Shanghai Stock
Exchange, the Administrative Measures of the Shanghai Stock Exchange for Fund-raising by the Listed Companies, and other applicable laws,
rules, regulations and normative documents, and the Measures of Appotronics Corporation Limited for Management and Use of Funds Raised.
In addition, the Company will, according to the use and amount of the offering proceeds as promised, actively push forward the building and
implementation of the relevant projects, and have the projects yield the desired results as soon as practicable, to safeguard the interests of all
shareholders of the Company.
After receipt of the offering proceeds, the Company will actively push forward the investment in and building of the relevant projects, and fully
mobilize R&D, procurement, production, sales, administrative and other resources of the Company, to promptly and efficiently complete the
projects. In addition, the Company will ensure the availability of the relevant personnel, provide thorough and comprehensive skill trainings to
new employees, and through active market exploitation and sound communications with the customers, ensure that the products of the newly
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built projects will be launched on the market successfully. Through these all-round measures, the Company will procure the relevant investment
projects to reach the designed production capacity and yield the desired results as soon as practicable.
(V) Improve the profit distribution policy and enhance the mechanism of returns to investors
The general meeting of shareholders of the Company has adopted the Articles of Association of Appotronics Corporation Limited (draft) for the
IPO, which further specifies and improves the Company’s profit distribution principles and approaches, the respective conditions and
proportion of cash dividends and stock dividends, and improves the Company’s decision-making procedures and mechanisms with respect to
profit distribution, and decision-making procedures for the adjustment of the profit distribution policy.
In addition, the Company has formulated the Plan of Appotronics Corporation Limited on the Shareholder Returns within Three Years after
Completion of the IPO and Listing of the Company’s Shares on the STAR Market, to make specific arrangements for profit distribution within
three years after completion of the IPO. The Company will maintain the consistency and stability of its profit distribution policy, attach
importance to the reasonable returns to investors, enhance the protection of the investors’ rights and interests, and take into account both the
overall interest of all shareholders and the sustainable development of the Company.
The Company reminds the investors to be aware that the remedial measures for diluted earnings stated above do not mean any warranty made
by the Company as to its earnings in the future. After being approved by the general meeting of shareholders of the Company, this proposal will
take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary shares (A-shares) on the STAR
Market.
(VI) Covenants of the directors and senior officers regarding the serious implementation of the remedial measures for diluted earnings of the
Company
Pursuant to the relevant provisions of the CSRC, each of the directors and senior officers of the Company hereby covenants as follows with
respect to the remedial measures for diluted earnings of the Company:
1. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, or otherwise damage the interest of the
Company;
2. To exercise self-discipline in consumption in performing his duties;
3. Not to use the assets of the Company to engage in any investment or consumption activities not in connection with his duties;
4. To link the compensation system adopted by the Board of Directors or the Compensation Committee with the implementation of the
Company’s remedial measures for diluted earnings in the current period;
5. If the Company implements any share incentive plan in the future, to link the conditions to exercise rights under such share incentive plan
with the implementation of the Company’s remedial measures for diluted earnings in the current period; and
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6. To indemnify the Company or shareholders of the Company for the losses arising from any breach of or refusal to fulfill the covenants by
him according to law.
(VII) Controlling shareholder, actual controller and their concert parties
Note 19：
Each of controlling shareholder, actual controller and their concert parties hereby covenants as follows with respect to the serious
implementation of the remedial measures for diluted earnings of the Company:
1. Not to interfere with management and operation of the Company beyond its/his powers;
2. Not to infringe on the interest of the Company;
3. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, or otherwise damage the interest of the
Company; and
4. To indemnify the Company or shareholders of the Company for the losses arising from any breach of or refusal to fulfill the covenants by
it/him according to law.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
2. Covenants of the controlling shareholder and the actual controller regarding the remedial measures for diluted earnings in the current period
Each of the concert parties of the controlling shareholder Appotronics Holdings and the actual controller hereby undertakes:
“1. Not to interfere with management and operation of the Company beyond its powers;
2. Not to infringe on the interest of the Company;
3. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, or otherwise damage the interest of the
Company; and
4. To indemnify the Company or shareholders of the Company for the losses arising from any breach of or refusal to fulfill the covenants by it
according to law.
As one of the persons responsible for the remedial measures for diluted earnings, if we breach or refuse to fulfill the covenants set forth above,
we agree that the CSRC, the SSE and other securities regulatory authorities may mete out punishments on or take other administrative actions
against us pursuant to the relevant provisions and rules established or published by them.
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This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares). The covenants and warranties stated above shall remain in effect so long as we remain a concert party of the controlling
shareholder or the actual controller of the Company.”
LI Yi, as the actual controller of the Company, hereby undertakes:
“1. Not to interfere with management and operation of the Company beyond his powers;
2. Not to infringe on the interest of the Company;
3. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, or otherwise damage the interest of the
Company;
4. To indemnify the Company or shareholders of the Company for the losses arising from any breach of or refusal to fulfill the covenants by
him according to law;
5. To exercise self-discipline in consumption in performing his duties;
6. Not to use the assets of the Company to engage in any investment or consumption activities not in connection with his duties;
7. To link the compensation system adopted by the Board of Directors or the Compensation Committee with the implementation of the
Company’s remedial measures for diluted earnings in the current period; and
8. If the Company implements any share incentive plan in the future, to link the conditions to exercise rights under such share incentive plan
with the implementation of the Company’s remedial measures for diluted earnings in the current period.
As one of the persons responsible for the remedial measures for diluted earnings, if I breach or refuse to fulfill the covenants set forth above, I
agree that the CSRC, the SSE and other securities regulatory authorities may mete out punishments on or take other administrative actions
against me pursuant to the relevant provisions and rules established or published by them.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares). The covenants contained in Paragraphs 1 through 4 above shall remain in effect so long as I remain the actual controller of
the Company, and the covenants contained in Paragraphs 3 through 8 above shall remain in effect so long as I remain a director of the
Company.”
Note 20：
Each of the directors and senior officers of the Company hereby undertakes:
“1. Not to transfer benefits to any other entity or individual without compensation or on unfair terms, or otherwise damage the interest of the
Company;
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2. To exercise self-discipline in consumption in performing his duties;
3. Not to use the assets of the Company to engage in any investment or consumption activities not in connection with his duties;
4. To link the compensation system adopted by the Board of Directors or the Compensation Committee with the implementation of the
Company’s remedial measures for diluted earnings in the current period;
5. If the Company implements any share incentive plan in the future, to link the conditions to exercise rights under such share incentive plan
with the implementation of the Company’s remedial measures for diluted earnings in the current period; and
6. To indemnify the Company or shareholders of the Company for the losses arising from any breach of or refusal to fulfill the covenants by
him according to law.
As one of the persons responsible for the remedial measures for diluted earnings, if I breach or refuse to fulfill the covenants set forth above, I
agree that the CSRC, the SSE and other securities regulatory authorities may mete out punishments on or take other administrative actions
against me pursuant to the relevant provisions and rules established or published by them.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 21：
The issuer hereby covenants as follows with respect to the profit distribution policy of the Company:
“I. Considerations in the preparation of the shareholder returns plan
The Company focuses on the long-term and sustainable development, and in preparing the plan, has taken into consideration its strategic
development plan, actual business situation, development objectives, future profitability, status of cash flows, shareholder returns, cost of social
capital, external financing environment and other relevant factors, and established a clear profit distribution mechanism on the basis of the
balance between the reasonable returns on investment for shareholders and its sustainable development, to ensure the consistency and stability
of the profit distribution policy and that the Company is able to operate continuously and healthily in the long run.
II. Principles observed in the preparation of the shareholder returns plan
(I) To strictly observe the basic principles for profit distribution set forth in the Articles of Association of Appotronics Corporation Limited
(“AOA”);
(II) To give full consideration and listen to the opinions of the shareholders (especially the minority shareholders) and the independent
directors;
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(III) To strike a balance between the short-term interest and long-term development, and ensure that the profit distributions made by the
Company will not undermine its ability to continue as a going concern; and
(IV) To give priority to the distribution of cash dividends, attach importance to the provision of reasonable returns to investors, and ensure that
the profit distributions are made continuously and stably and comply with the applicable laws, rules, regulations and normative documents, and
the AOA.
III. Detailed shareholder returns plan within three years following completion of the IPO
(I) Intervals of profits distribution
The Company shall make profit distributions at least once a year to the extent there are distributable profits. The annual profit distributions shall
be made within two months following the relevant annual general meeting of shareholders. The Company may make interim profit distributions
in cash according to its production and business situations and capital requirements. Such interim profit distributions shall be proposed by the
Board of Directors according to the capital position of the Company, and made within two months after the same have been approved by the
general meeting of shareholders.
(II) Form of profit distribution
The Company may distribute its profits in the form of cash dividends, stock dividends or a combination of cash dividends and stock dividends
or otherwise permitted by the applicable laws, rules, regulations and normative documents, provided that cash dividends shall take precedence
over stock dividends. The Company shall distribute its profits in cash to the extent that the conditions for distribution of cash dividends are
satisfied.
The cash dividends shall be distributed once every year in principle, but the Board of Directors may propose the distribution of interim cash
dividends according to the earnings and capital position of the Company.
(III) Conditions for distribution of cash dividends
The Company shall distribute cash dividends for a year if:
(1) the Company has earned a distributable profit in such year (after making up for the losses in prior years and appropriating public reserves),
has sufficient cash flows, and will be able to continue as a going concern after such distribution of cash dividends;
(2) the Company’s accumulated distributable profit is positive;
(3) the Company’s auditor has issued a standard unqualified opinion on the Company’s financial report for such year;
(4) the Company does not have any material investment plan or material capital expenditures (except the projects in which the offering proceeds
invest);
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Material capital expenditures mean: (i) the aggregate amount of expenditures on external investments, acquisition of assets, purchase of
equipment or land or other transactions that the Company plans to conduct in the next 12 months is equal to or exceeds 50% of the most
recently audited net assets of the Company; or (ii) the aggregate amount of expenditures on external investments, acquisition of assets, purchase
of equipment or land or other transactions that the Company plans to conduct in the next 12 months is equal to or exceeds 30% of the most
recently audited total assets of the Company.
(5) there isn’t any special circumstance that makes the profit distribution unsuitable as approved by the general meeting of shareholders.
If the conditions set forth above are not satisfied, the Board of Directors shall determine whether or not to distribute cash dividends according to
the actual circumstances.
(IV) Ratio of cash dividends
Subject to the satisfaction of the conditions for distribution of cash dividends, the Company shall pay out at least 10% of the distributable profit
earned each year as cash dividends for such year.
A subsidiary shall prepare its distribution plans on the basis of the distributable profit reported in the financial statements of the parent company.
The Company shall determine the specific profit distribution ratio on the basis of the lower of the distributable profits reported in the
consolidated financial statements and the financial statements of the parent company, to avoid excess profit distribution.
If the Company has repurchased any shares by cash through tender offer or call auction in a year, the repurchase price paid by the Company
shall be deemed as the cash dividends already distributed by the Company, and taken into account in the calculation of the cash dividend ratio
for such year.
(V) Differential cash dividend policy
The Board of Directors will adopt the following differential cash dividend policy according to the procedures set forth in the AOA, giving
comprehensive consideration to the characteristics of the industry in which the Company operates, its development stage, business model and
earnings, material capital expenditure arrangements and other relevant factors:
(1) If the Company is at the mature stage and does not have any material capital expenditure arrangement, at least 80% of the distributable
profit will be distributed in cash;
(2) If the Company is at the mature stage and has certain material capital expenditure arrangements, at least 40% of the distributable profit will
be distributed in cash; or
(3) If the Company is at the growth stage and has certain material capital expenditure arrangements, at least 20% of the distributable profit will
be distributed in cash.
If it is hard to determine the development stage but there are certain material capital expenditure arrangements, the policy set forth above may
apply.
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The Company will formulate or adjust the shareholder returns plan subject to the profit distribution policy set forth above, according to its
actual situations and the opinions of the shareholders (in particular, the minority shareholders) and the independent directors.
(VI) Conditions for distribution of stock dividends
The Company may distribute profits in the form of stock dividends according to its earnings and cash flows in a given year and on the premise
of full distribution of cash dividends, to the extent that the Company maintains the minimum cash dividend ratio and reasonable share capital
and shareholding structure, and ensures that the increase in share capital keeps pace with the growth of its operating performance.
IV. Cycle for drawing up the shareholder returns plan and the relevant decision-making mechanism
(I) The Company shall review the shareholder returns plan at least once every three years, make appropriate and necessary amendments to its
profit distribution policy and decide on the shareholder returns plan for the giving period according to the opinions of the shareholders (in
particular, holders of public shares), the independent directors and supervisors, subject to the applicable laws, rules, regulations and normative
documents.
(II) The Board of Directors shall draw up the specific profit distribution proposal for each year according to the AOA, earnings, capital
requirements and shareholder returns plan of the Company, thoroughly discuss the reasonableness of such profit distribution proposal, seriously
analyze and discuss the timing, conditions, minimum ratio, conditions for adjustment, decision-making procedures and other issues in respect of
distribution of cash dividends, adopt a special resolution thereon, and submit the same to the general meeting of shareholders for consideration.
The independent directors shall explicitly express their opinions on such profit distribution proposal, and may solicit the opinions of minority
shareholders, and then directly submit a profit distribution proposal to the Board of Directors for consideration.
(III) In considering a specific cash dividend distribution proposal, the general meeting of shareholders shall actively communicate and exchange
with shareholders, in particular minority shareholders in various ways, including without limitation online voting and inviting minority
shareholders to participate in the general meeting of shareholders, fully listen to the opinions and claims of minority shareholders, and promptly
answer the questions raised by minority shareholders. The dividend distribution proposal requires the approval of the shareholders representing
a majority of the total votes present at the general meeting of shareholders in person or by proxy.
(V) The Board of Supervisors shall supervise the implementation of the Company’s profit distribution policy and shareholder returns plan by
the Board of Directors and the management of the Company and the relevant decision-making procedures, and if the Company makes a profit in
a year and does not intend to distribute profits, make an explanation and issue an opinion about the implementation of the relevant policies and
plans.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
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Note 22：
The issuer hereby covenants that:
“The Company will strictly perform all duties and obligations under all covenants made by it publicly in connection with the IPO (“Covenants”).
If the Company fails to perform all duties and obligations under the Covenants, the Company shall make a public explanation and apologize to
the shareholders and investors of public shares at the general meeting of shareholders and on the media for information disclosure designated by
the CSRC, disclose the reasons for failure to fulfill the relevant Covenants, make supplementary or alternate covenants, or put forward other
solutions, and assume the relevant legal liabilities and liability for compensation according to law. The shareholders and investors of public
shares shall have the right to take legal actions to request the Company to fulfill the Covenants.
The Company shall not increase the salaries or subsidies of the directors, supervisors and senior officers who assume personal liability for
failure of the Company to fulfill the Covenants in any manner until the Company has fully removed the adverse effect of its failure to fulfill the
Covenants.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares).”
Note 23：
The controlling shareholder Appotronics Holdings, the actual controller LI Yi and their concert parties hereby covenant that:
“1. We/I will strictly perform all duties and obligations under all covenants made by us/me publicly in connection with the IPO (“Covenants”).
2. If we/I fail to perform, or actually become unable to perform, or become unable to perform as scheduled all duties and obligations under the
Covenants (except those resulting from any change in the applicable laws, regulations and policies, natural disaster, event of force majeure or
any other objective circumstances beyond our/my control), we/I will:
(1) promptly and fully disclose the reasons for failure or inability to perform, or inability to perform as scheduled the relevant Covenants
through the Company, and make a public apology to other shareholders of the Company;
(2) make supplementary or alternate covenants to the Company and other shareholders of the Company, to protect their rights and interests to
the maximum extent practicable;
(3) submit such supplementary or alternate covenants to the general meeting of shareholders for consideration; and
(4) surrender all gains (if any) obtained from failure to perform the relevant Covenants to the Company, and indemnify the Company and other
shareholders of the Company for the losses arising therefrom according to law.
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3. If we/I fail to perform, or actually become unable to perform, or become unable to perform as scheduled the duties and obligations under the
Covenants due to any change in the applicable laws, regulations and policies, natural disaster, event of force majeure or any other objective
circumstances beyond our/my control, we/I will:
(1) promptly and fully disclose the reasons for failure or inability to perform, or inability to perform as scheduled the relevant Covenants
through the Company; and
(2) make supplementary or alternate covenants to the Company and other shareholders of the Company, to protect their rights and interests to
the maximum extent practicable.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares). The covenants set forth above shall remain in effect so long as we/I remain the controlling shareholder/actual
controller/concert party of the actual controller (as applicable) of the Company.”
Note 24：
Each of the directors, supervisors and senior officers of the Company hereby covenants that:
“1. I will strictly perform all duties and obligations under all covenants made by me publicly in connection with the IPO (“Covenants”).
2. If I fail to perform, or actually become unable to perform, or become unable to perform as scheduled all duties and obligations under the
Covenants (except those resulting from any change in the applicable laws, regulations and policies, natural disaster, event of force majeure or
any other objective circumstances beyond my control), I agree to surrender the gains obtained from breach of the Covenants to the Company,
and indemnify the Company or the investors for the losses arising therefrom according to law.
3. If I fail to perform, or actually become unable to perform, or become unable to perform as scheduled the duties and obligations under the
Covenants due to any change in the applicable laws, regulations and policies, natural disaster, event of force majeure or any other objective
circumstances beyond my control, I will:
(1) promptly and fully disclose the reasons for failure or inability to perform, or inability to perform as scheduled the relevant Covenants
through the Company; and
(2) make supplementary or alternate covenants to the Company and the shareholders of the Company, to protect their rights and interests to the
maximum extent practicable.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of the Company’s RMB-denominated ordinary
shares (A-shares). The covenants and warranties set forth above shall remain in effect so long as I remain a director/supervisor/senior officer (as
applicable) of the Company.”
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Note 25：
Appotronics Holdings, as the controlling shareholder of the issuer, hereby covenants that:
“I. We acknowledge that as of the date of this Letter of Undertaking, we and our subsidiaries have not, directly or indirectly, engaged in any
business or activity competing with the main business presently conducted by Appotronics in or outside China in any manner.
II. We covenant and warrant that so long as we remain the controlling shareholder of Appotronics, we and our subsidiaries will not engage in
any competing business that might have a material adverse effect on the main business of Appotronics.
III. We and our subsidiaries will avoid and reduce related-party transactions with Appotronics to the maximum extent practicable.
IV. With respect to the related-party transactions that are unavoidable or conducted with good reason:
1. We will abstain from the review of and voting on related-party transactions involving us in strict accordance with the applicable laws, rules,
regulations and normative documents, and the Articles of Association, the Policy on Related-party Transaction and other regulations of
Appotronics;
2. We will enter into contracts or agreements with Appotronics in respect of such related-party transactions according to the general commercial
principle of “fairness, free will and valuable consideration”, and ensure that the price for such related-party transactions is fair and does not
materially differ from the price or rate that will be offered by or to an independent third party on the market;
3. We will duly perform the applicable approval procedures and the obligation of information disclosure in connection with such related-party
transactions in accordance with the applicable laws, rules, regulations and normative documents; and
4. We will not transfer any profits or benefits through any related-party transaction or take advantage of our decision-making power over the
management of Appotronics to damage the legitimate rights and interests of Appotronics and the other shareholders of Appotronics.
V. We undertake to exercise the relevant rights and perform the relevant obligations in strict accordance with the applicable laws, rules,
regulations and normative documents, and the Articles of Association of Appotronics, and not to take advantage of our position and influence as
the controlling shareholder to seek illegal gains or damage the legitimate rights and interests of Appotronics and the other shareholders of
Appotronics.
VI. We will procure our subsidiaries to comply with the covenants set forth above, and indemnify Appotronics and the other shareholders of
Appotronics for damages to their legitimate rights and interests resulting from any breach by us or any of our subsidiaries of the covenants set
forth above.
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This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of Appotronics’s RMB-denominated ordinary
shares (A-shares). The covenants and warranties set forth above shall remain in effect so long as we remain the controlling shareholder of
Appotronics.”
Note 26：
LI Yi, as the actual controller of the issuer, hereby covenants that:
“I. I acknowledge that as of the date of this Letter of Undertaking, I and my subsidiaries have not, directly or indirectly, engaged in any business
or activity competing with the main business presently conducted by Appotronics in or outside China in any manner.
II. I covenant and warrant that so long as I remain the actual controller of Appotronics, I and my subsidiaries will not engage in any competing
business that might have a material adverse effect on the main business of Appotronics.
III. I and my subsidiaries and other business or economic entities in which I hold the post of director or senior officer (each an “Employer”) will
avoid and reduce related-party transactions with Appotronics to the maximum extent practicable.
IV. With respect to the related-party transactions that are unavoidable or conducted with good reason:
1. I will abstain from the review of and voting on related-party transactions involving me in strict accordance with the applicable laws, rules,
regulations and normative documents, and the Articles of Association, the Policy on Related-party Transaction and other regulations of
Appotronics;
2. I will enter into contracts or agreements with Appotronics in respect of such related-party transactions according to the general commercial
principle of “fairness, free will and valuable consideration”, and ensure that the price for such related-party transactions is fair and does not
materially differ from the price or rate that will be offered by or to an independent third party on the market;
3. I will duly perform the applicable approval procedures and the obligation of information disclosure in connection with such related-party
transactions in accordance with the applicable laws, rules, regulations and normative documents; and
4. I will not transfer any profits or benefits through any related-party transaction or take advantage of my decision-making power over the
management of Appotronics to damage the legitimate rights and interests of Appotronics and the other shareholders of Appotronics.
V. I undertake to exercise the relevant rights and perform the relevant obligations in strict accordance with the applicable laws, rules,
regulations and normative documents, and the Articles of Association of Appotronics, and not to take advantage of my position and influence as
the actual controller to seek illegal gains or damage the legitimate rights and interests of Appotronics and the other shareholders of Appotronics.
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VI. I will procure my subsidiaries and the Employers to comply with the covenants set forth above, and indemnify Appotronics and the other
shareholders of Appotronics for damages to their legitimate rights and interests resulting from any breach by me or any of my subsidiaries or
the Employers of the covenants set forth above.
This Letter of Undertaking shall take effect from the date of completion of the IPO and listing of Appotronics’s RMB-denominated ordinary
shares (A-shares). Unless otherwise agreed, the covenants and warranties set forth above shall remain in effect so long as I remain the actual
controller of Appotronics.”
Note 27：
Each of the grantees of share incentives of the Company hereby covenants that if the relevant information disclosure documents of the
Company contain any misrepresentation or misleading statement or omit any material fact, as a result of which that the grantee becomes
ineligible for the equities granted to him or the relevant equity attribution arrangement, the grantee shall surrender all benefits received by him
under the incentive plan to the Company after the relevant information disclosure documents of the Company have been found to contain any
misrepresentation or misleading statement or omit any material fact.
Note 28：
The Company undertakes not to provide loans or any other financial assistance to any grantee of restricted shares under the incentive plan,
including guarantee for any loan obtained by such grantee.
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(II) If the Company has made any profit forecast on its assets or project and the
reporting period falls within the period of such profit forecast, explanation
about whether the goal has been achieved and the relevant reasons
□ Reached □ Not reached √ N/A
(III) Fulfillment of performance covenant and the relevant effect on goodwill
impairment test
□ Applicable √ N/A
III. Occupation of funds during the reporting period and return of such funds
□ Applicable √ N/A
IV. Explanation about the modified audit opinion issued by the accounting firm
□ Applicable √ N/A
V. Explanation about the reasons and effect of changes in accounting policies and
accounting estimates and correction of material accounting errors
(I) Analysis of the reasons of changes in accounting policies and accounting estimates
and the relevant effect
√Applicable □ N/A
Please see “Section XI. Financial Report - V. Significant accounting policies and
accounting estimates - 41 Changes in significant accounting policies and accounting
estimates”.
(II) Explanation about the reasons and effect of correction of material accounting
errors
□ Applicable √ N/A
(III) Communication with the former accounting firm
□ Applicable √ N/A
(IV) Other information
□ Applicable √ N/A
VI. Appointment and termination of appointment of accounting firm
In RMB 0’000
Current accounting firm
Name of domestic accounting firm Pan-China Certified Public Accountants
(Special General Partnership)
Fee payable to domestic accounting firm 53
Audit period of domestic accounting firm 4 years
Name Fee
Sponsor Huatai United Securities Co., Ltd. /
Explanation about the appointment and termination of appointment of accounting firm
√Applicable □ N/A
The annual general meeting of shareholders of the Company for the year of 2018 approved
the resolution to continue to appoint Pan-China Certified Public Accountants (Special
General Partnership) as the auditor of the Company for the year of 2019 for a term of one
93 / 312
Annual Report 2019
year. Pan-China Certified Public Accountants (Special General Partnership) has issued
auditor’s reports for the Company between 2016 and 2018.
Explanation about re-appointment of accounting firm during the audit period
□ Applicable √ N/A
VII. Risk of delisting and the reason
□ Applicable √ N/A
VIII. Matters relating to bankruptcy and reorganization
□ Applicable √ N/A
94 / 312
Annual Report 2019
IX. Material litigations and arbitrations
√ The Company has been involved in material litigations and arbitration in this year □ The Company has not been involved in material
litigations and arbitration in this year
(I) Litigations and arbitrations already disclosed in interim announcements about which no new information is available
√Applicable □ N/A
Summary and type of case Reference
I. Cases of dispute over infringement on patents for invention [2019] Yue 73 Zhi Min Chu No. Please refer to the Announcement No.
663 and No. 664 2019-005 issued by the Company on
1. Parties www.sse.com.cn and the designated media
Plaintiff: Delta Electronics, Inc. for information disclosure on July 30, 2019.
Defendant 1: Appotronics Corporation Limited
Defendant 2: Futian SPN Projector & Video System Firm of Shenzhen
2. Background
The Plaintiff alleges that the production, sale and offer for sale of “Appotronics Laser
Projector AL-LX410UST” by Defendant 1 and Defendant 2 for purpose of production and
operation has infringed on the Plaintiff’s patent for invention and caused economic losses to
the Plaintiff.
3. Amount claimed: RMB 16,145,300.
4. The Guangzhou IP Court has issued Civil Rulings [2019] Yue 73 Zhi Min Chu No. 663 and
No. 664, ordering the seizure and freeze of an aggregate of RMB 10 million of deposit or other
properties in the equivalent amount of the Company.
II. Cases of dispute over infringement on patents for invention [2019] Yue 03 Min Chu No.s Please refer to the Announcement No.
2942-2951 2019-006 issued by the Company on
1. Parties www.sse.com.cn and the designated media
Plaintiff: Appotronics Corporation Limited for information disclosure on July 31, 2019.
Defendant 1: Delta Electronics Business Management (Shanghai) Co., Ltd.
95 / 312
Annual Report 2019
Defendant 2: Delta Video Display System (Wujiang) Limited
Defendant 3: Shenzhen Super Network Technology Co., Ltd.
2. Background
The Plaintiff alleges that it is the owner of the patents for invention ZL200810065225.X “a
phosphor-based light source structure for improving the efficiency of light conversion”, and
ZL200880107739.5 “a multi-color lighting apparatus using moving pattern plate containing
wavelength conversion material, and the production, sale and offer for sale of a variety of laser
projector products by Defendant 1, Defendant 2 and Defendant 3 for purpose of production
and operation has infringed on such patents for invention owned by the Plaintiff and caused
economic losses to the Plaintiff.
3. Amount claimed: RMB 56 million.
III. Case for changing the inventor of patent 19-cv-00466-RGD-LRL in the United States Please refer to the Announcement No.
District Court for the Eastern District of Virginia 2019-012 issued by the Company on
1. Parties www.sse.com.cn and the designated media
Plaintiff: Appotronics Corporation Limited for information disclosure on September 9,
2019.
Defendant: Delta Electronics, Inc.
2. Background
The Company brings a suit against Delta in the United States District Court for the Eastern
District of Virginia for breach of non-disclosure agreement, wrongful appropriation of the
technical solutions actually invented by the Company’s employees LI Yi and HU Fei, and
filing for patent application in the United States without authorization, and petitions the court
to order that the inventors of the patent-in-suit US 9,024,241 shall be changed from WANG
Bo, ZHANG Kesu and HUA Jianhao into LI Yi and HU Fei.
IV. Cases of dispute over infringement on patents for invention [2019] Jing 73 Min Chu No. Please refer to the Announcement No.
1275 and No. 1276 2019-014 issued by the Company on
1. Parties www.sse.com.cn and the designated media
Plaintiff: Delta Electronics, Inc. for information disclosure on September 21,
2019.
Defendant 1: Fengmi (Beijing) Technology Co., Ltd.
96 / 312
Annual Report 2019
Defendant 2: Appotronics Corporation Limited
2. Background
The Plaintiff alleges that it is the owner of the patents for invention ZL201410249663.7
“manufacturing method of light source module and color wheel” and ZL201610387831.8
“phosphor color wheel and its applicable light source system”, and the joint production and
sale of Mijia Laser Projector TV “MJJGTYDS01FM” by Defendant 1 and Defendant 2 has
infringed on such patents for invention owned by the Plaintiff and caused economic losses to
the Plaintiff.
3. Amount claimed: RMB 32.02 million.
V. Case of dispute over title to patents [2019] Yue 03 Min Chu No. 4309 Please refer to the Announcement No.
1. Parties 2019-028 issued by the Company on
Plaintiff: Appotronics Corporation Limited www.sse.com.cn and the designated media
for information disclosure on November 8,
Defendant: Delta Electronics, Inc.
2019.
2. Background
The Plaintiff brings a suit in the Shenzhen Intermediate People’s Court, alleging that the
Defendant filed a patent application in respect of the technical solution owned by the Plaintiff
and named WANG Bo, ZHANG Kesu and HUA Jianhao as the inventors of such technical
solution without authorization, thereby infringed on the technical achievements made by the
Plaintiff and the right of authorship of LI Yi and HU Fei, the actual inventors, and petitions the
court to declare that Plaintiff 1, Appotronics Corporation Limited owns the patent
ZL201610387831.8 “phosphor color wheel and its applicable light source system”, and that
Plaintiff 2, HU Fei and Plaintiff 3, LI Yi are the first and second inventors of the patent
ZL201610387831.8 “phosphor color wheel and its applicable light source system”.
(II) Litigations and arbitrations that have not been disclosed in interim announcements or about which there’s new information
available
√Applicable □ N/A
In RMB 0’000
97 / 312
Annual Report 2019
During the reporting period:
Whether
any
Party jointly Type of provision Enforcement
Plaintiff/ Defendant/ Amount Result and
and severally litigation/ Background is Status of judgment/
claimant respondent claimed effect
liable arbitration recognized award
and the
amount
Delta Appotronics Futian SPN Infringement In the case of dispute over 1,614.53 No Stayed, Stayed RMB 10
Electronics, Corporation Projector & on patent for infringement on patents for RMB 10 million has
Inc. Limited Video invention invention [2019] Yue 73 Zhi Min million been
System Firm Chu No. 662, the Plaintiff alleges has been released
of Shenzhen that it is the owner of the patent for released
invention ZL201610387831.8
“phosphor color wheel and its
applicable light source system”,
and the production, sale and offer
for sale of “Appotronics Laser
Projector AL-LX410UST” by
Defendant 1 and Defendant 2 for
purpose of production and
operation has infringed on such
patent for invention of the Plaintiff
and caused economic losses to the
Plaintiff.
Appotronics Dehao Shenzhen Infringement In the cases of dispute over 4,163.04 No Pending Judgment of Pending
Corporation Electronic Super on patent for infringement on patents for second first instance: second trial
Limited, and Technology Network invention invention [2018] Yue 03 Min Chu trial The
Shenzhen Ltd. Technology No.s 1891-1898, 1899-1907 and Defendant
YLX Co., Ltd. 1940, the Plaintiff alleges that the should stop
Technology production, sale and offer for sale its act of
Development of a variety of projector products infringement
Co., Ltd. by Defendant 1 and Defendant 2 and pay the
for purpose of production and Plaintiff for
operation has infringed on the the economic
Plaintiff’s patent for invention and losses and
caused economic losses to the reasonable
98 / 312
Annual Report 2019
Plaintiff. expenses,
RMB 35.6
million in
total.
Casio Appotronics AV Design Infringement In the cases of dispute over 2,049.95 No The Judgment of In the
Computer Corporation (Beijing) on patent for infringement on patents for Parties first instance: process of
Co., Ltd. Limited Technology invention invention [2016] Jing 73 Min Chu entered All claims withdrawing
Development No.s 59-60, the Plaintiff alleges into a made by the suit
Co., Ltd. that it is the owner of the patents mediation Casio
for invention 201210334155.X and agreement Computer
201010293730.7, and the in March Co., Ltd.
production, sale and offer for sale 2020. were
of Laser TV APUS-20(S) by dismissed.
Defendant 1 and Defendant 2 for The Parties
purpose of production and entered into a
operation has infringed on such mediation
patents for invention of the agreement in
Plaintiff and caused economic March 2020.
losses to the Plaintiff.
Appotronics Casio Casio Infringement In the cases of dispute over 760 No The The Parties In the
Corporation Computer (China) Co., on patent for infringement on patents for Parties entered into a process of
Limited Co., Ltd. Ltd. and invention invention [2018] Jing 73 Min Chu entered mediation withdrawing
Beijing No.s 1239 and 1240, the Plaintiff into a agreement in the suit
Hongyang alleges that it is the owner of the mediation March 2020.
Jiye patent for invention agreement
Technology ZL200810065225.X, and the in March
Co., Ltd. production, sale and offer for sale 2020.
of two laser projector products by
Defendant 1, Defendant 2 and
Defendant 3 for purpose of
production and operation has
infringed on such patent for
invention of the Plaintiff and
caused economic losses to the
Plaintiff.
99 / 312
Annual Report 2019
Note: In March 2020, the Company and Casio Computer Co., Ltd. entered into a Mediation Agreement, to finally settle the litigations
involving the Parties. After the execution of the Mediation Agreement, each party has begun to withdraw the suits instituted by it against the
other party, and will not lodge any claim against the other party or file any new petition for invalidation in respect of the relevant patents.
Please refer to the Announcement No. 2020-008 issued by the Company on www.sse.com.cn and the designated media for information
disclosure on March 21, 2020. As of the disclosure date of this report, the parties are going through the procedures for withdrawing their
respective suits.
(III) Other information
√Applicable □ N/A
As of December 31, 2019, the cases of petition for invalidation involving the Company that were pending trial by the State Intellectual
Property Office are as follows:
1. Cases of petition for invalidation brought against the Company as the patent assignee
No. Case No. Current Patent No. at issue Title of patent at issue Petitioner for Background Remark
patent invalidation
assignee
1 4W109289 Appotronics ZL200880107739.5 A multi-color lighting WEI Qun On July 25, 2019, the petitioner for On February 5, 2020,
4W109291 Corporation apparatus using moving invalidation filed a petition for the State Intellectual
Limited pattern plate containing invalidation of the patent for Property Office
wavelength conversion invention owned by the Company, decided that the patent
material which was found to comply with the at issue is valid. Please
relevant provisions of the Patent refer to our Interim
Law, the Rules for Implementation Announcement No.
of the Patent Law and the 2020-005.
Guidelines for Examination
according to prima facie
examination, and was accepted by
the State Intellectual Property Office
on August 5, 2019.
2 4W109439 Appotronics ZL200880107739.5 A multi-color lighting Delta On August 29, 2019, the petitioner The petitioner for
Corporation apparatus using moving Electronics for invalidation filed a petition for invalidation withdrew
Limited pattern plate containing Business invalidation of the patent for the petition in March
wavelength conversion Management invention 200880107739.5 titled “a 2020.
material (Shanghai) multi-color lighting apparatus using
100 / 312
Annual Report 2019
Co., Ltd. moving pattern plate containing
wavelength conversion material”
(“Patent 7739”) owned by the
Company, which was found to
comply with the relevant provisions
of the Patent Law, the Rules for
Implementation of the Patent Law
and the Guidelines for Examination
according to prima facie
examination, and was accepted by
the State Intellectual Property Office
on September 2, 2019.
3 4W108668 Appotronics ZL200810065225.X A phosphor-based light Dehao On March 27, 2019, the petitioner Pending trial
Corporation source structure for Electronic for invalidation filed a petition for
Limited improving the efficiency Technology invalidation of the patent for
of light conversion Ltd. invention 200810065225.X titled “a
phosphor-based light source
structure for improving the
efficiency of light conversion”
owned by the Company, which was
found to comply with the relevant
provisions of the Patent Law, the
Rules for Implementation of the
Patent Law and the Guidelines for
Examination according to prima
facie examination, and was accepted
by the State Intellectual Property
Office on April 4, 2019.
4 4W108847 Appotronics ZL200810065225.X A phosphor-based light WEI Qun On May 9, 2019, the petitioner for Pending trial
Corporation source structure for invalidation filed a petition for
Limited improving the efficiency invalidation of the patent for
of light conversion invention 200810065225.X titled “a
phosphor-based light source
structure for improving the
efficiency of light conversion”
owned by the Company, which was
found to comply with the relevant
101 / 312
Annual Report 2019
provisions of the Patent Law, the
Rules for Implementation of the
Patent Law and the Guidelines for
Examination according to prima
facie examination, and was accepted
by the State Intellectual Property
Office on June 5, 2019.
5 4W109440 Appotronics ZL200810065225.X A phosphor-based light Delta On August 29, 2019, the petitioner The petitioner for
Corporation source structure for Electronics for invalidation filed a petition for invalidation withdrew
Limited improving the efficiency Business invalidation of the patent for the petition in March
of light conversion Management invention 200810065225.X titled “a 2020.
(Shanghai) phosphor-based light source
Co., Ltd. structure for improving the
efficiency of light conversion”
owned by the Company, which was
found to comply with the relevant
provisions of the Patent Law, the
Rules for Implementation of the
Patent Law and the Guidelines for
Examination according to prima
facie examination, and was accepted
by the State Intellectual Property
Office on September 2, 2019.
2. Cases of petition for invalidation brought by the Company
No. Case No. Current patent Patent No. at issue Title of patent at Petitioner for Background Remark
assignee issue invalidation
1 4W109293 Delta Electronics, ZL201310017478.0 (1) Optical Appotronics On July 29, 2019, the Company filed a petition On February 5,
4W109294 Inc. ZL201310625063.1 system; (2) Corporation for invalidation of the patents for invention 2020, the State
Blu-ray Limited 201310017478.0 titled “optical system” and Intellectual
integration 201310625063.1 titled “blu-ray integration Property Office
method and method and system” owned by Delta decided that the
system Electronics, Inc. with the State Intellectual patent at issue is
Property Office, which was found to comply wholly invalid.
with the relevant provisions of the Patent Law, Please refer to
the Rules for Implementation of the Patent Law our Interim
102 / 312
Annual Report 2019
and the Guidelines for Examination according Announcement
to prima facie examination, and was accepted No. 2020-004.
by the State Intellectual Property Office on July
30, 2019.
2 4W109295 Delta Electronics, ZL201610387831.8 Phosphor color Appotronics On July 29, 2019, the Company filed a petition On December 9,
Inc. wheel and its Corporation for invalidation of the patent for invention 2019, the State
applicable light Limited 201610387831.8 titled “phosphor color wheel Intellectual
source system and its applicable light source system” owned Property Office
by Delta Electronics, Inc. with the State decided to
Intellectual Property Office, which was found suspend the trial
to comply with the relevant provisions of the from November
Patent Law, the Rules for Implementation of 7, 2019 to
the Patent Law and the Guidelines for November 7,
Examination according to prima facie 2020.
examination, and was accepted by the State
Intellectual Property Office on July 30, 2019.
3 4W109538 Delta Electronics, ZL201410249663.7 Manufacturing Appotronics On September 20, 2019, the Company filed a Pending trial
Inc. method of light Corporation petition for invalidation of the patent for
source module Limited invention 201410249663.7 titled
and color wheel “manufacturing method of light source module
and color wheel” owned by Delta Electronics,
Inc. with the State Intellectual Property Office,
which was found to comply with the relevant
provisions of the Patent Law, the Rules for
Implementation of the Patent Law and the
Guidelines for Examination according to prima
facie examination, and was accepted by the
State Intellectual Property Office on September
23, 2019.
103 / 312
Annual Report 2019
X. Penalties imposed on the listed company and its directors, supervisors, senior
officers, controlling shareholder, actual controller and acquirer and rectification
of the relevant violations
□ Applicable √ N/A
XI. Credit standing of the Company and its controlling shareholder and actual
controller during the reporting period
□ Applicable √ N/A
XII. Share incentive plan, employee stock ownership plan and other employee
incentive measures of the Company and their effect
(I) Incentives already disclosed in the interim announcements about which no new
information is available
√Applicable □ N/A
Summary Reference
On September 27, 2019, the Company held the 17th meeting of the Please refer to the relevant
1st Board of Directors and the 7th meeting of the 1st Board of announcement issued by the
Supervisors, which reviewed and approved the Proposal on the Company on www.sse.com.cn and the
2019 Restricted Share Incentive Plan (Draft) of the Company and designated media for information
Summary of the Plan and other related proposals. disclosure on September 28, 2019.
On October 14, 2019, the Company held the 6th extraordinary Please refer to the relevant
general meeting of shareholders in 2019, which reviewed and announcement issued by the
approved the Proposal on the 2019 Restricted Share Incentive Plan Company on www.sse.com.cn and the
(Draft) of the Company and Summary of the Plan and other related designated media for information
proposals. disclosure on October 15, 2019.
On October 14, 2019, the Company held the 18th meeting of the 1st Please refer to the relevant
Board of Directors and the 8th meeting of the 1st Board of announcement issued by the
Supervisors, which reviewed and approved the Proposal on the Company on www.sse.com.cn and the
Adjustment of the 2019 Restricted Share Incentive Plan and the designated media for information
Proposal on Initial Grant of Restricted Shares, pursuant to which, disclosure on October 15, 2019.
the Company initially granted 4.4 million shares to 169 persons at
the price of RMB 17.5 per share on October 14, 2019. The
Company’s independent directors expressed their independent
opinions on such proposals, and the Board of Supervisors expressed
its opinion after review of such proposals.
(II) Incentives that have not been disclosed in any interim announcement or about
which there’s new information available
Share incentives
□ Applicable √ N/A
Other information
□ Applicable √ N/A
Employee stock ownership plan
□ Applicable √ N/A
Other incentives
□ Applicable √ N/A
104 / 312
Annual Report 2019
XIII. Material related-party transactions
(I) Related-party transactions in connection with day-to-day operation
1. Matters already disclosed in the interim announcements about which no new
information is available
□ Applicable √ N/A
2. Matters already disclosed in the interim announcements about which there’s new
information available
□ Applicable √ N/A
3. Matters that have not been disclosed in any interim announcement
√Applicable □ N/A
In RMB 0’000
Reason for
% of the big
total amount difference
Subject Pricing Transaction Method of Market
Counterparty Relationship Type Amount of the same between the
matter principle price settlement price
type of transaction
transactions price and the
market price
Xiaomi Corporation Sale of Laser TV, Determined 45,648.60 23.06 Bank / N/A
Communications or other goods smart mini through settlement
Technologies organization projector consultation
Co., Ltd. and its holding on the basis
affiliates more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
CFEC and its Corporation Sale of Laser light Determined 14,177.80 7.16 Bank / N/A
affiliates or other goods, source, through settlement
organization lease and lease and consultation
holding services services on the basis
more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
Cinionic Corporation Sale of Laser light Determined 12,539.51 6.34 Bank / N/A
in which the goods source through settlement
actual consultation
controller or on the basis
a director of of market
/
the price
Company
holds the
post of
director
Beijing Donview Corporation Sale of Laser Determined 7,484.85 3.78 Bank / N/A
Education or other goods business through settlement
Technology Co., organization education consultation
Ltd. and its holding projector on the basis
affiliates more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
Xiaomi Corporation Purchase of Electronic Determined / 13,500.66 9.43 Bank / N/A
105 / 312
Annual Report 2019
Communications or other goods and components through settlement
Technologies organization materials consultation
Co., Ltd. and its holding on the basis
affiliates more than of market
10% shares price
in a
controlled
subsidiary
having
significant
influence on
the
Company
CFEC and its Corporation Purchase of Power Determined 3,814.97 2.66 Bank / N/A
affiliates or other goods and supply, through settlement
organization materials water consultation
holding cooling and on the basis
more than services of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
Xiaomi Corporation Acceptance Service Determined 94.14 0.07 Bank / N/A
Communications or other of services through settlement
Technologies organization consultation
Co., Ltd. and its holding on the basis
affiliates more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
CFEC and its Corporation Acceptance Service Determined 3,744.48 2.62 Bank / N/A
affiliates or other of services through settlement
organization consultation
holding on the basis
more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
Beijing Donview Corporation Acceptance Service Determined 7.03 0.00 Bank / N/A
Education or other of services through settlement
Technology Co., organization consultation
Ltd. and its holding on the basis
affiliates more than of market
10% shares price
in a
/
controlled
subsidiary
having
significant
influence on
the
Company
CFEC and its Corporation Property Property Determined 207.05 0.14 Bank / N/A
affiliates or other lease lease through settlement
organization consultation
holding on the basis
more than of market
10% shares price /
in a
controlled
subsidiary
having
significant
106 / 312
Annual Report 2019
influence on
the
Company
Total / / 101,219.09 / / / /
Large-sum returned sales N/A
Explanation about related-party transactions We conduct routine related-party transactions on an arm’ length basis,
according to the relevant market rules, for purpose of satisfying the
requirements of our business development, production and operation. The
proportion of related-party transactions to the same type of transactions is
calculated on the basis of total operating income if such transactions
involve sale of goods, or on the basis of total purchase cost if such
transactions involve purchase of goods.
(II) Related-party transactions involving acquisition or sale of assets or equities
1. Matters already disclosed in the interim announcements about which no new
information is available
□ Applicable √ N/A
2. Matters already disclosed in the interim announcements about which there’s new
information available
□ Applicable √ N/A
3. Matters that have not been disclosed in any interim announcement
□ Applicable √ N/A
4. Fulfillment of performance covenants (if any) during the reporting period
□ Applicable √ N/A
(III) Related-party transactions involving joint external investments
1. Matters already disclosed in the interim announcements about which no new
information is available
□ Applicable √ N/A
2. Matters already disclosed in the interim announcements about which there’s new
information available
□ Applicable √ N/A
3. Matters that have not been disclosed in any interim announcement
□ Applicable √ N/A
(IV) Accounts receivable from and payable to related parties
1. Matters already disclosed in the interim announcements about which no new
information is available
□ Applicable √ N/A
2. Matters already disclosed in the interim announcements about which there’s new
information available
□ Applicable √ N/A
3. Matters that have not been disclosed in any interim announcement
□ Applicable √ N/A
(V) Other information
□ Applicable √ N/A
XIV. Material contracts and performance thereof
(I) Trusteeship, contracting and lease
1. Trusteeship
□ Applicable √ N/A
107 / 312
Annual Report 2019
2. Contracting
□ Applicable √ N/A
3. Lease
□ Applicable √ N/A
108 / 312
Annual Report 2019
(II) Guarantees
√Applicable □ N/A
In RMB 0’000
External guarantees provided by the Company (excluding those provided for the subsidiaries)
Total amount of guarantees provided during the reporting period (excluding those provided for the subsidiaries) 0
Balance of guarantees at the end of the reporting period (excluding those provided for the subsidiaries) (A) 0
Guarantees provided by the Company or its subsidiaries for the subsidiaries of the Company
Relationship Relationship Whether the Whether the Amount of the Whether
Commencement date
between the between the Amount Effective date of Expiry date of Type of obligation obligation overdue there’s a
Guarantor Obligor of guarantee (signing
guarantor and the obligor and the guaranteed guarantee guarantee guarantee guaranteed has guaranteed has obligation counter
date of agreement)
listed company listed company been discharged become overdue guaranteed guarantee
Two years after the
Appotronics Joint and
Controlled due date for the
Corporation Headquarters CINEAPPO 80,000 November 28, 2018 November 28, 2018 several No No No
subsidiary obligations under
Limited liability
the master contract
Appotronics Joint and
Controlled
Corporation Headquarters CINEAPPO 6,000 June 27, 2019 June 27, 2019 June 26, 2023 several No No No
subsidiary
Limited liability
Appotronics Two years after the Joint and
Controlled
Corporation Headquarters Fengmi 16,500 October 21, 2019 October 21, 2019 due date for the several No No No
subsidiary
Limited obligations liability
Initial utilization Two years after the
Appotronics Joint and
Controlled date or actual date latest due date of
Corporation Headquarters Fengmi 10,000 November 23, 2018 several Yes No No
subsidiary of utilization under the loans under the
Limited liability
the financing letter financing letter
Total amount of guarantees provided for the subsidiaries during the reporting period 27,379
Balance of guarantees provided for the subsidiaries at the end of the reporting period (B) 41,024
Total amount of guarantees provided by the Company (including those provided for the subsidiaries)
Total amount guaranteed (A+B) 41,024
Proportion of total amount guaranteed to the net assets of the Company (%) 19.31
Where:
Total amount of guarantees provided for the shareholders, actual controller and their affiliates (C) 0
Total amount of debt guarantees directly or indirectly provided for the obligors whose equity-debt ratio exceeds 70% (D) 26,500
109 / 312
Annual Report 2019
Total amount guaranteed in excess of 50% of the net assets of the Company (E)
Total amount guaranteed (C+D+E) 26,500
Explanation about outstanding guarantees for which the Company may assume joint and several liability None
Explanation about guarantees None
Note: With respect to the guarantee provided by the Company for Fengmi in the amount of RMB 100 million as of the date of this Report, the
guarantee contract has been executed but the relevant bank loan has not been granted, so no liability for guarantee has been incurred.
(III) Entrusted cash asset management
1. Entrusted wealth management
(1) Overall situation of entrusted wealth management
√Applicable □ N/A
In RMB
Type Source of funds Total amount Outstanding amount Overdue amount
Bank wealth management amount Offering proceeds 859,000,000.00 540,000,000.00 0
Other information
□ Applicable √ N/A
(2) Single entrusted wealth management
□ Applicable √ N/A
Other information
□ Applicable √ N/A
110 / 312
Annual Report 2019
(3) Provision for impairment of entrusted wealth management products
□ Applicable √ N/A
2. Entrusted loans
(1) Overall situation of entrusted loans
□ Applicable √ N/A
Other information
□ Applicable √ N/A
(2) Single entrusted loans
□ Applicable √ N/A
Other information
□ Applicable √ N/A
(3) Provision for impairment of entrusted loans
□ Applicable √ N/A
3. Other information
□ Applicable √ N/A
(IV) Other material contracts
□ Applicable √ N/A
XV. Other significant matters
□ Applicable √ N/A
XVI. Active performance of social responsibilities
(I) Poverty alleviation of listed companies
□ Applicable √ N/A
(II) Performance of social responsibilities
1. Protection of the rights and interests of shareholders and creditors
√Applicable □ N/A
(1) Seriously safeguard the legitimate rights and interests of investors
During the reporting period, we have continuously improved our corporate governance
structure, and operated in strict accordance with the applicable laws and regulations. In
addition, we have reviewed our internal control and information systems, to improve our
management efficiency. We have defined the operating mechanisms of the Board of
Directors, the Board of Supervisors and the general meeting of shareholders in strict
accordance with the applicable laws and regulations. At the general meetings of
shareholders held after our listing on the STAR Market, the shareholders could cast their
votes at the venue of meeting or on line, so as to ensure that the minority shareholders can
exercise their voting rights. The proceedings of the Board of Directors, the Board of
Supervisors and the general meeting of shareholders comply with the applicable laws and
regulations, and the procedures of business transaction are legal and valid. The directors,
supervisors and senior officers have been assiduous in their duties, and seriously
safeguarded the legitimate rights and interests of the shareholders.
We have strictly complied with the Securities Law of the People’s Republic of China,
the Administrative Measures for Information Disclosure by the Listed Companies, the
Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of the Shanghai
Stock Exchange and other applicable laws and regulations, and performed the obligation of
information disclosure as a listed company. We have disclosed information on the principle
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of truthfulness, accuracy and completeness, to ensure the investors are informed of our
operational highlights and significant events in a timely manner.
We have actively carried out investor relations activities in various forms, and
subjected ourselves to the supervision of the investors, to increase the transparency of our
operation and enhance our corporate image. We have established the investor relations
management policy, and actively communicated with the investors by telephone, email, the
e-information platform of the SSE, investor briefing or otherwise, to enable the investors to
have a better understanding about our business situations and development directions. We
have also adopted the reasonable advice of the investors to promote our healthy
development.
(2) Seriously safeguard the legitimate rights and interests of creditors
We attach importance to the protection of the legitimate rights and interests of
creditors, through execution of contract or otherwise. We have duly performed our payment
obligation and other obligations in strict accordance with the relevant contracts. In addition,
we have enhanced communications and exchanges with our creditors, to enhance their
understanding about us.
2. Protection of the rights and interests of employees
√Applicable □ N/A
We have complied with the Labor Law, the Labor Contract Law and other applicable
laws, regulations and normative documents, and continuously improved our human
resources management system and compensation and incentive mechanisms. With a view
to complying with the applicable laws and regulations of the country and fully safeguarding
the rights, interests and benefits of the employees, we have established the Recruitment
Policy, the Training Policy, the Performance Assessment Policy, the Basic Personnel
Management Policy, the Employee Attendance Policy, the Employee Leave Policy, the
Employee Benefits Policy, and other human resources management regulations and
policies.
Main rights and interests of employees
In the recruitment and employment of the employees, we adhere to the principle of
equality and fairness, and comply with the applicable anti-discrimination regulations, and
will not treat differently, or show a bias or discrimination against any employee based on
age, sex, gender, ethnicity, race, national origin, color, disability or other characteristics.
Our production activities are free from any child labor or forced labor.
Our regular employees are entitled to all legal leaves stipulated by the country. In
addition, the bereavement leave, and (for the employees of our subsidiary in Hong Kong)
maternity leave, wedding leave and parenting leave granted by us to our employees are
more favorable than those stipulated by the governments of China and Hong Kong.
Compensation and benefits of employees
In order to establish a fair and equal compensation and incentive system, and ensure
the Company’s market competitiveness externally and effective incentive for employees
internally, we have designed a compensation system based on post, capability and
performance, according to the design concept and approaches of international
compensation system, and by reference to the compensation level on the market.
Our compensation system is based on position hierarchy, wherein different positions
and ranks correspond to different levels of compensation, so that the employees’
compensation corresponds to the value of their position and their capability and experience.
The employees’ compensation is also linked to their performance and contribution to the
Company, thereby establishing a performance-based compensation and incentive system.
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We adjust the salaries of all employees or promote certain employees to higher ranks or
positions or adjust the salaries of certain employees at multiple fixed points of time every
year. The adjustment of salaries is determined according to the compensation level on the
market, changes in the ranks of employees, performance and other relevant factors.
Share incentive plan
In order to further improve our long-term incentive mechanism, attract and retain
outstanding talents, enhance the sense of responsibility and mission of our management
team and key employees for the continuous and healthy development of the Company, and
ensure the achievement of our development objectives, we launched the 2019 share
incentive plan immediately after our listing on the STAR Market. The plan is designed to
fully motivate our business teams, effectively bind the interests of the shareholders and the
Company with their personal interests, procure all stakeholders to focus on our long-term
development, share the benefits of our development with the employees, and enhance the
competitiveness of the salaries of our employees.
Career development of employees
We stick to the philosophy of “pooling top talents, keeping company with outstanding
talents, and nurturing more talents”, continuously recruit outstanding talents, provide them
with broad development spaces, and continuously improve our compensation and benefit
system, talent training system and career development system.
With respect to the career development system, we have created two career
development routes oriented on profession and management respectively, and carried out
talent training plans for the professional line and management line respectively. In 2019,
we established Appotronics auditorium, which is a platform for employees to learn and
share. Through all-round talent training, we will promote and foster our corporate culture
and values, and realize both development of the Company and the personal development of
employees.
In order to promote talent development, Appotronics has established a fair, equal and
sound performance management system, formulated the Appotronics Performance Policy,
provided the employees with chances of promotion every year depending on their
performance, competence for their jobs and other qualifications for jobs, and designed a
sound promotion assessment process. In addition, we have provided the employees with
cross-position and cross-channel career development opportunities. We have also
established the complaint mechanism for the result of performance assessment, and
provided channels for the employees to raise their objections to the result of performance
assessment, so as to further ensure the fairness of performance assessment.
Diversified training mechanisms
We stick to the philosophy of “helping outstanding talents become more outstanding”,
focus on the development of the capabilities of key employees, and arouse their enthusiasm
for continuous innovation, to achieve our development objective “to become the pioneer in
the laser display industry through disruptive technical innovations and differential mode
covering the entire value chain”.
In 2019, we organized and implemented the “Polar Light Program”, the “Product
Operation Training Camp”, the “Star Light Program” and other talent development
programs, to help medium and high level managerial staff better implement our strategies,
lead their teams and achieve the goals of the organization; help the members of product
operation team understand product operation, enhance awareness of products and create
popular products of Appotronics; and help college graduates rapidly transit to their new
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roles, master the professional knowledge and skills required in their jobs, be competent for
their jobs within a short time, and create the highest value.
In 2019, we built and gradually improved a three-level training management system,
and achieved the initial goals. The three-level training management and course system
provides visual presentation of skill training courses, makes available learning channels and
satisfies the learning requirements for professional, non-professional and cross-department
knowledge. In 2019, we organized and shared more than 500 training courses, with nearly
20,000 class hours in total, which effectively satisfied the requirements for the
improvement of the employees’ personal capabilities and the organization capabilities.
Focus on safety and health of employees
Appotronics strictly complies with the provisions of the Labor Law regarding injuries
at work. In 2019, we did not have any accident involving injuries at work.
We advocate the philosophy of “happy work, healthy life”, and focus on the health of
employees. Our employees have physical examinations every year at the professional
institutions selected by us. The family members of employees who have physical
examinations will get the same discounts as those given to the Company. In addition, we
have purchased personal accident insurance and disease and mortality life insurance for all
of our employees at Ping An Insurance.
3. Protection of the rights and interests of suppliers, customers and consumers
√Applicable □ N/A
We have established the Supplier Development, Management and Control Process and
other relevant policies according to our actual circumstances, to strictly control the
development of suppliers, implementation of procurement plans, inspection of incoming
materials and other business. When selecting a new supplier, we will organize a group of
specialists comprising members from R&D, quality control, purchasing and other related
departments, to assess the processing, quality control, financial and other capabilities of the
supplier. We have established long-term and stable cooperation relationship with many
suppliers, and bound such suppliers by contract and standard in terms of date of delivery,
quality control and others issues in respect of the goods delivered by them.
We are committed to providing the customers with high-quality products through strict
quality control. Our production base has passed ISO9001 quality management system
certification. The contracts executed by us with the customers generally contain quality
assurance clauses, pursuant to which we have the obligation to repair the products sold by
us that are found to have quality problems during the warranty period (which is 1-3 years
generally) free of charge. We guarantee that the laser light source sold by us on the
domestic market will have a service life of 30,000 hours. We respond to customers’
requests rapidly. With respect to any service request made by a customer, our policy is to
respond within two hours, provide a solution within four hours, and solve the related
problems within the shortest possible time. In 2019, we passed “five-star” service
certification of the After-sale Service Assessment System.
We safeguard the legitimate rights and interests of the suppliers, customers and
consumers through the measures stated above.
4. Product safety
√Applicable □ N/A
We attach great importance to ensuring safety of products, and have passed the
following product safety certifications in the manufacturing field at home and abroad,
which provides assurance for the safety of our products.
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Abbreviation Description
China Compulsory Certification, a compulsory safety certification
CCC required by the Certification and Accreditation Administration of the
People’s Republic of China for the products covered.
Electrical Testing Laboratories, a generally accepted product safety
ETL
certification in the North America.
CE Conformite Europeenne, a compulsory certification required by EU.
Federal Communications Commission, a certification required by the
Federal Communications Commission for the radio products,
FCC
communication products and digital products entering the American
market.
Certification Bodies, a global system established by the International
CB Electrotechnical Commission (IECEE). CB test reports and CB test
certificates are recognized in all member states of IECEE.
Technischer berwachungs-Verein, a generally accepted safety
TUV
certification of electronic components in Germany and Europe.
5. Public relations and public welfare activities
√Applicable □ N/A
In the context that the country is vigorously promoting the building of education IT system,
the IT infrastructure is relatively weak in western China. Appotronics has closely
cooperated with the local education bureaus and sports bureaus to promote the development
of the educational undertakings, and enhanced cultural exchanges between Shenzhen and
Ganzi County, to actively help the western region improve the level of IT infrastructure.
We donated 10 sets of smart classroom solution with ALPD laser projector, worth RMB
300,000 in total, to Ganzi Tibet Autonomous Prefecture of Sichuan Province, which have
been installed and used in No.2 Six-grade Primary School of Chengguan in Ganzi County
and No. 4 Middle School of Luding County.
(III) Environment
1. Environmental protection information of the Company and its major subsidiaries
that are identified as major polluters by the environmental protection authority
□ Applicable √ N/A
2. Environmental protection information of the Company that is not identified as a
major polluter
√Applicable □ N/A
We have not been identified as a major polluter during the reporting period. We attach
importance to environmental protection and have taken the following environmental
protection measures to fulfill our social responsibility:
Disposal of solid wastes
Our solid wastes include consumer wastes, general industrial solid wastes and hazardous
wastes. The consumer wastes are collected and then handed over to the environmental
sanitation entity for centralized treatment. The general industrial solid wastes mainly
consist of leadless waste scruff and waste packing materials generated in the production
process, which are collected by category and then handed over to the relevant resource
recycling entities for recycling. The hazardous wastes mainly consist of waste active carbon
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generated in the waste gas treatment process, and wastes containing industrial alcohol and
waste packing materials containing cleaning agents that are generated in the production
process, which are collected and then handed over to the qualified entities for treatment.
Sewage treatment
Our sewage includes domestic sewage and industrial sewage. The domestic sewage is
pre-treated through septic tank or otherwise, and after meeting the relevant standard,
discharged to the municipal sewage treatment pipelines and sewage treatment plant. The
industrial sewage is handed over to the qualified entities for treatment. In addition, we have
optimized the technologies currently used to reduce the sewage discharged. We appoint a
third party to inspect our domestic sewage every year.
Waste gas treatment
Our waste gas mainly includes waste gas containing tin and organic waste gas generated in
the production process. We have built a waste gas treatment system, comprising UV
photolysis, active carbon adsorption plant, air purification equipment and other equipment.
The concentration of tin and NmHc in the waste gas discharged by us to the air meets the
local standard for Atmospheric Pollutant Emission Limit. We appoint a third party to
conduct the relevant inspections every year.
Certifications relating to environmental protection
We passed ISO14001 environmental management system certification in 2008, and has
maintained such certification to date. In 2019, we passed QC080000 hazardous substance
process management system certification. All of our products are green products and have
passed RoHS, REACH and China environmental labeling product certification, among
others.
3. Reason for failure to disclose environmental protection information of the
Company that is not identified as a major polluter
□ Applicable √ N/A
4. New information about the environmental protection information disclosed
during the reporting period
□ Applicable √ N/A
(IV) Other information
□ Applicable √ N/A
XVII. Convertible corporate bonds
□ Applicable √ N/A
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Annual Report 2019
Section VI Changes in Shares and Shareholders
I. Changes in ordinary shares
(I) Statement of changes in ordinary shares
1. Statement of changes in ordinary shares
Unit: Share
Before the change +/- After the change
Bonus Capitalization of
Number % New shares Others Subtotal Number %
shares capital reserves
I. Non-tradable shares 383,554,411 100.00 10,807,087 10,807,087 394,361,498 87.33
1. Shares held by the State
2. Shares held by State-owned corporations
3. Shares held by other domestic investors 232,858,375 60.71 10,807,087 10,807,087 243,665,462 53.96
Incl.: Shares held by domestic non-Stated-owned 222,808,836 58.09 10,807,087 10,807,087 233,615,923 51.73
corporations
Shares held by domestic natural persons 10,049,539 2.62 10,049,539 2.23
4. Shares held by foreign investors 150,696,036 39.29 150,696,036 33.37
Incl.: Shares held by foreign corporations 135,203,427 35.25 135,203,427 29.94
Shares held by foreign natural persons 15,492,609 4.04 15,492,609 3.43
II. Tradable shares 57,192,913 57,192,913 57,192,913 12.67
1. RMB-denominated ordinary shares 57,192,913 57,192,913 57,192,913 12.67
2. Foreign currency-denominated shares listed
domestically
3. Foreign currency-denominated shares listed
overseas
4. Others
III. Total ordinary shares 383,554,411 100.00 68,000,000 68,000,000 451,554,411 100.00
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Annual Report 2019
2. Explanation about changes in ordinary shares
√Applicable □ N/A
Upon approval by the CSRC through the Reply on Approving the Registration of the
Initial Public Offering of Appotronics Corporation Limited (Zheng Jian Xu Ke [2019] No.
1163) and by the SSE, we issued 68 million RMB-denominated ordinary shares (A-shares)
to the public at the offering price of RMB 17.5 per share. The total offering proceeds were
RMB 1,190,000,000, and the net offering proceeds were RMB 1,062,470,797.73 after
deducting the offering expense of RMB 127,529,202.27 (exclusive of tax), of which, RMB
68,000,000.00 was recorded in the share capital, and RMB 994,470,797.73 was recorded in
the capital reserve. Pan-China Certified Public Accountants (Special General Partnership)
examined our capital increase through IPO and issued the Capital Verification Report (Tian
Jian Yan [2019] No. 7-62) thereon.
3. Effect of the changes in ordinary shares on the earnings per share, net assets per
share and other financial indicators of the most recent year and the most recent
reporting period (if any)
√Applicable □ N/A
During the reporting period, we publicly issued A-shares on the SSE, as a result of which
our share capital increased by RMB 68,000,000.00 and capital reserve increased by RMB
994,470,797.73.
Unit: RMB per share
Item 2019 2019 (calculated on the same
basis) (Note)
Basic earnings per share 0.45 0.49
Diluted earnings per share 0.45 0.49
Net assets per share attributable to the 4.37 2.38
shareholders of ordinary shares of the listed
company
Note: The basic earnings per share, diluted earnings per share and net assets per share
attributable to the shareholders of ordinary shares of the listed company in 2019 calculated
on the same basis are calculated supposing that no shares were issued in 2019.
4. Other information disclosed as the Company deems necessary or required by the
securities regulatory authority
□ Applicable √ N/A
(II) Changes in non-tradable shares
√Applicable □ N/A
Unit: Share
Balance of Number of Balance of
Number of
non-tradable non-tradable non-tradable
non-tradable Reason for
Shareholder shares as at shares shares as at Unlock date
shares increased restriction
January 1, unlocked in December 31,
in 2019
2019 2019 2019
Appotronics Holdings 0 0 79,762,679 79,762,679 Non-tradable July 22, 2022
pre-IPO shares
SAIF IV Hong 0 0 62,980,676 62,980,676 Non-tradable July 22, 2020
Kong (China pre-IPO shares
Investments) Limited
CITIC PE Investment 0 0 41,774,562 41,774,562 Non-tradable July 22, 2020
(Hong Kong) 2016 pre-IPO shares
Limited
Fuzhou Haixia 0 0 25,064,737 25,064,737 Non-tradable July 22, 2020
Appotronics pre-IPO shares
Investment Partnership
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Annual Report 2019
(LP)
Yuanshi 0 0 24,139,500 24,139,500 Non-tradable July 22, 2022
pre-IPO shares
Appotronics Daye 0 0 20,430,250 20,430,250 Non-tradable July 22, 2022
pre-IPO shares
Green Future 0 0 16,504,518 16,504,518 Non-tradable July 22, 2020
Holdings Limited pre-IPO shares
Appotronics Hongye 0 0 15,662,374 15,662,374 Non-tradable July 22, 2022
pre-IPO shares
Jinleijing 0 0 12,353,106 12,353,106 Non-tradable July 22, 2022
pre-IPO shares
Changzhou Lisheng 0 0 11,667,635 11,667,635 Non-tradable July 22, 2020
Equity Investment pre-IPO shares
Partnership (LP)
Shenzhen Guochuang 0 0 10,443,640 10,443,640 Non-tradable July 22, 2020
Chenggu Capital pre-IPO shares
Management Co., Ltd.
- Shenzhen
Chengguhui Equity
Investment Partnership
(LP)
Appotronics Chengye 0 0 10,394,846 10,394,846 Non-tradable July 22, 2022
pre-IPO shares
CAI Kunliang 0 0 10,049,539 10,049,539 Non-tradable July 22, 2020
pre-IPO shares
CUI Jingtao 0 0 9,658,792 9,658,792 Non-tradable July 22, 2020
pre-IPO shares
Smart Team 0 0 6,799,660 6,799,660 Non-tradable July 22, 2020
Investment Limited pre-IPO shares
ZHENG Yongshi 0 0 5,833,817 5,833,817 Non-tradable July 22, 2020
pre-IPO shares
Shenzhen Liansong 0 0 5,833,817 5,833,817 Non-tradable July 22, 2020
Capital Management pre-IPO shares
Partnership (LP)
Shenzhen Shanqiao 0 0 5,320,000 5,320,000 Non-tradable July 22, 2020
Capital Management pre-IPO shares
Partnership (LP)
Jiayuan I 0 0 4,548,685 4,548,685 Non-tradable July 22, 2020
strategic
allotted shares
in IPO
Blackpine Investment 0 0 3,994,011 3,994,011 Non-tradable July 22, 2022
Corp. Limited pre-IPO shares
Light Zone Limited 0 0 3,150,000 3,150,000 Non-tradable July 22, 2020
pre-IPO shares
Huatai Venture 0 0 2,720,000 2,720,000 Non-tradable July 22, 2021
Capital Investment strategic
Co., Ltd. allotted shares
in IPO
SCGC Hongtu Angel 0 0 1,736,252 1,736,252 Non-tradable July 22, 2020
Investment pre-IPO shares
Management
(Shenzhen) Co., Ltd. -
Shenzhen Hongtu
Kongque Venture
Capital Investment
Co., Ltd.
Off-line allotment 0 0 3,538,402 3,538,402 Non-tradable January 22,
account off-line 2020
allotted shares
in IPO
Total 0 0 394,361,498 394,361,498 / /
Note：As of the end of the reporting period, Huatai Venture Capital Investment Co., Ltd.
held 2,720,000 non-tradable shares in total, including the shares lent out under refinancing
arrangement.
II. Issuance and listing of securities
(I) Securities issued during the reporting period
√Applicable □ N/A
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Annual Report 2019
Unit: Share, RMB
Offering Number of Termination
Type of shares Listing Number of
Issue date price (or shares date of
and derivatives date shares listed
interest rate) issued transaction
Type of ordinary shares
A-shares July 22, 17.5 68,000,000 July 22, 68,000,000 N/A
2019 2019
Explanation about the securities issued during the reporting period (in case of any
outstanding bonds with different interest rates, please explain separately):
√Applicable □ N/A
Upon approval by the CSRC through the Reply on Approving the Registration of the Initial
Public Offering of Appotronics Corporation Limited (Zheng Jian Xu Ke [2019] No. 1163)
and by the SSE, we issued 68 million RMB-denominated ordinary shares (A-shares) to the
public at the offering price of RMB 17.5 per share. The total offering proceeds were RMB
1,190,000,000. Such shares were listed on the STAR Market on July 22, 2019.
(II) Changes in total number of ordinary shares, shareholding structure, and
structure of assets and liabilities of the Company
√Applicable □ N/A
During the reporting period, we issued 68 million RMB-denominated ordinary shares
(A-shares) to the public , as a result of which the total number of shares in our share capital
increased from 383,554,411 shares to 451,554,411 shares.
III. Shareholders and actual controller
(I) Total number of shareholders
Total number of shareholders of ordinary shares as of the end of the 19,204
reporting period
Total number of shareholders of ordinary shares as of the end of the month 17,029
immediately prior to the issue date of this annual report
Total number of shareholders of preferred shares whose voting right has 0
been restituted as of the end of the reporting period
Total number of shareholders of preferred shares whose voting right has 0
been restituted as of the end of the month immediately prior to the issue
date of this annual report
Number of holders of depository receipts
□ Applicable √ N/A
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Annual Report 2019
(II) Shares held by top 10 shareholders and top 10 holders of tradable shares as of the end of the reporting period
Unit: Share
Shares held by top 10 shareholders
Balance of Number of Shares pledged or
Change shares held non-tradable shares frozen
Number of
during the as at the end held, including the Nature of
Shareholder % non-tradable
reporting of the shares lent out under shareholder
shares held Status of
period reporting the refinancing Number
period arrangement shares
Appotronics Holdings 0 79,762,679 17.66 79,762,679 79,762,679 0 Domestic non-stated
None
owned corporation
SAIF IV Hong Kong (China Investments) 0 62,980,676 13.95 62,980,676 62,980,676 0 Foreign corporation
None
Limited
CITIC PE Investment (Hong Kong) 2016 0 41,774,562 9.25 41,774,562 41,774,562 0 Foreign corporation
None
Limited
Fuzhou Haixia Appotronics Investment 0 25,064,737 5.55 25,064,737 25,064,737 0 Domestic non-stated
None
Partnership (LP) owned corporation
Yuanshi 0 24,139,500 5.35 24,139,500 24,139,500 0 Domestic non-stated
None
owned corporation
Appotronics Daye 0 20,430,250 4.52 20,430,250 20,430,250 0 Domestic non-stated
None
owned corporation
Green Future Holdings Limited 0 16,504,518 3.66 16,504,518 16,504,518 None 0 Foreign corporation
Appotronics Hongye 0 15,662,374 3.47 15,662,374 15,662,374 0 Domestic non-stated
None
owned corporation
Jinleijing 0 12,353,106 2.74 12,353,106 12,353,106 0 Domestic non-stated
None
owned corporation
Changzhou Lisheng Equity Investment 0 11,667,635 2.58 11,667,635 11,667,635 0 Domestic non-stated
None
Partnership (LP) owned corporation
Shares held by top 10 holders of tradable shares
Type and number of shares
Shareholder Number of tradable shares held
Type Number
National Social Security Fund Portfolio No. 102 1,742,168 RMB-denominated ordinary 1,742,168
share
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Annual Report 2019
UBS AG 1,546,625 RMB-denominated ordinary 1,546,625
share
WANG Danping 329,210 RMB-denominated ordinary 329,210
share
GAO Ermei 307,411 RMB-denominated ordinary 307,411
share
Shanghai Securities Co., Ltd. 300,000 RMB-denominated ordinary 300,000
share
LIU Qing’an 266,769 RMB-denominated ordinary 266,769
share
ZHANG Shangmin 244,000 RMB-denominated ordinary 244,000
share
ZHONG Haidi 201,967 RMB-denominated ordinary 201,967
share
GAO Mei 185,913 RMB-denominated ordinary 185,913
share
HE Ziheng 180,280 RMB-denominated ordinary 180,280
share
Affiliates or concert parties among the shareholders stated above 1. As of December 31, 2019, among our top 10 shareholders, Appotronics Holdings,
Yuanshi, Appotronics Daye, Appotronics Hongye and Jinleijing are concert parties. We
have not received any notice about affiliates or concert parties among other shareholders
stated above.
2. We are not aware whether there are affiliates or concert parties as defined in the
Administrative Measures for the Acquisition of the Listed Companies among the holders
of tradable shares.
Holders of preferred shares whose voting right has been restituted and the N/A
number of shares held by them
Top 10 holders of non-tradable shares and lock-up period
√Applicable □ N/A
Unit: Share
Unlocking of non-tradable shares
Number of non-tradable
No. Holder of non-tradable shares Number of shares Lock-up period
shares held Unlock date
newly unlocked
1 Appotronics Holdings 79,762,679 July 22, 2022 0 36 months after the listing date
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Annual Report 2019
2 SAIF IV Hong Kong (China Investments) Limited 62,980,676 July 22, 2020 0 12 months after the listing date
3 CITIC PE Investment (Hong Kong) 2016 Limited 41,774,562 July 22, 2020 0 12 months after the listing date
4 Fuzhou Haixia Appotronics Investment Partnership (LP) 25,064,737 July 22, 2020 0 12 months after the listing date
5 Yuanshi 24,139,500 July 22, 2022 0 36 months after the listing date
6 Appotronics Daye 20,430,250 July 22, 2022 0 36 months after the listing date
7 Green Future Holdings Limited 16,504,518 July 22, 2020 0 12 months after the listing date
8 Appotronics Hongye 15,662,374 July 22, 2022 0 36 months after the listing date
9 Jinleijing 12,353,106 July 22, 2022 0 36 months after the listing date
10 Changzhou Lisheng Equity Investment Partnership (LP) 11,667,635 July 22, 2020 0 12 months after the listing date
Affiliates or concert parties among the shareholders stated above As of December 31, 2019, among our top 10 shareholders, Appotronics Holdings, Yuanshi,
Appotronics Daye, Appotronics Hongye and Jinleijing are concert parties. We have not received any
notice about affiliates or concert parties among other shareholders stated above.
Statement of top 10 holders of domestic depository receipts as of the end of the reporting period
□ Applicable √ N/A
Number of non-tradable depository receipts held by top 10 holders and lock-up period
□ Applicable √ N/A
(III) Statement of top 10 shareholders by number of votes held as of the end of the reporting period
□ Applicable √ N/A
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(IV) Strategic investors or general corporations that become top 10 shareholders as a
result of allotment of new shares/ depository receipts
□ Applicable √ N/A
(V) Strategic allotment in IPO
1. Participation by any special asset management plan established by senior officers
and key employees in the strategic allotment in IPO
√Applicable □ N/A
Unit: Share
Number of shares/ Balance at the
Change during the
Shareholder depository receipts Unlock date end of the
reporting period
allotted reporting period
Jiayuan I 4,548,685 July 22, 2020 0 4,548,685
2. Participation by any subsidiary of the sponsor in the strategic allotment in IPO
√Applicable □ N/A
Unit: Share
Relationship Number of shares/ Change during Balance at the
Shareholder with the depository Unlock date the reporting end of the
sponsor receipts allotted period reporting period
Huatai Subsidiary of 2,720,000 July 22, 2021 0 2,720,000
Venture the sponsor
Capital
Investment
Co., Ltd.
IV. Controlling shareholder and actual controller
(I) Controlling shareholder
1 Corporation
√Applicable □ N/A
Name Appotronics Holdings
Principal or legal representative LI Yi
Date of establishment January 17, 2014
Main business Investment holding
Shares held in other domestic or foreign listed None
companies during the reporting period
Other information N/A
2 Natural person
□ Applicable √ N/A
3 Special explanation if the Company does not have a controlling shareholder
□ Applicable √ N/A
4 Reference to and date of change in the controlling shareholder during the
reporting period
□ Applicable √ N/A
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5 Block diagram of the controlling shareholder’s ownership of and control over the
Company
√Applicable □ N/A
Appotronics
Holdings
Appotronics
(II) Actual controller
1 Corporation
□ Applicable √ N/A
2 Natural person
√Applicable □ N/A
Name LI Yi
Nationality China
Whether or not have right of residence in Yes
any other country or region
Main occupation and title Chairman of Appotronics
Whether or not control any domestic or No
foreign listed company in the past 10 years
3 Special explanation if the Company does not have an actual controller
□ Applicable √ N/A
4 Reference to and date of change in the actual controller during the reporting
period
□ Applicable √ N/A
5 Block diagram of the actual controller’s ownership of and control over the
Company
√Applicable □ N/A
LI Yi
Appotronics Yuanshi Appotronics Appotronics Jinleijing Appotronics Jiayuan I
Holdings Daye Hongye Chengye
Appotronics
Note: The shareholding percentages of LI Yi in Yuanshi, Appotronics Daye, Appotronics
Hongye, Jinleijing and Appotronics Chengye indicated above include the shares held by
him in such companies directly and indirectly. LI Yi holds 28.78% of the shares of the
Company in total. In addition, LI Yi’s son indirectly holds 0.2521% of the shares of the
Company through Blackpine.
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Annual Report 2019
6 Control by the actual controller over the Company through trust or otherwise
□ Applicable √ N/A
(III) Other information about the controlling shareholder and the actual controller
□ Applicable √ N/A
V. Other corporate shareholders holding more than 10% shares
√Applicable □ N/A
In RMB
Principal or Main business or
Corporate Date of Organization Registered
legal management
shareholder establishment code capital
representative activity
SAIF IV Hong Kong YAN Yan August 9, N/A N/A Equity investment
(China Investments) Pak Tao Wan 2013
Limited
Explanation N/A
VI. Restrictions on the disposal of shares/ depository receipts
□ Applicable √ N/A
VII. Implementation of and changes in arrangements relating to depository receipts
during the reporting period
□ Applicable √ N/A
VIII. Shares with special voting rights
□ Applicable √ N/A
126 / 312
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Section VII Preferred Shares
□ Applicable √ N/A
127 / 312
Annual Report 2019
Section VIII Directors, Supervisors, Senior Officers and Employees
I. Changes in shareholding and remunerations
(I) Changes in shareholding and remunerations of current directors, supervisors, senior officers and key technical staff and the former
directors, supervisors, senior officers and key technical staff who left the Company during the reporting period
√Applicable □ N/A
Unit: Share
Total Whether or
remuneration not receive
(inclusive of any
Number of Number of
tax) received remuneration
Beginning Expiry date shares shares held Cause
Change in from the from any
Name Title (Note) Sex Age date of term of term of held as at as at of
shareholding Company affiliate of the
of office office January 1, December change
during the Company
2019 31, 2019
reporting
period (in
RMB 0’000)
LI Yi Chairman of the Male 49 July 18, 2018 July 17, 2021 / / / / 293.99 No
Board of Directors
& key technical
staff
YAN Yan Director Male 63 July 18, 2018 July 17, 2021 / / / / 0 Yes
WU BIN Director Male 49 July 18, 2018 July 17, 2021 / / / / 0 Yes
BO Director & Male 57 July 18, 2018 July 17, 2021 / / / / 332.4 No
Lianming General Manager
NING Independent Male 54 July 18, 2018 July 17, 2021 / / / / 15 No
Xiangdong director
TANG Independent Male 57 July 18, 2018 July 17, 2021 / / / / 15 No
Guliang director
ZHANG Independent Male 44 July 18, 2018 July 17, 2021 / / / / 15 No
Wei director
WU Bin Deputy General Male 56 October 19, July 17, 2021 / / / / 100 No
Manager 2018
ZENG Deputy General Male 44 April 16, January 23, / / / / 313.01 No
Luhai Manager 2019 2020
HU Fei Deputy General Male 40 July 18, 2018 July 17, 2021 / / / / 148.76 No
128 / 312
Annual Report 2019
Manager & key
technical staff
LI Lu Deputy General Male 49 October 19, July 17, 2021 / / / / 141.42 No
Manager 2018
ZHAO Financial Director Male 42 July 18, 2018 July 17, 2021 / / / / 85.28 No
Ruijin
XIAO Board Secretary & Male 34 July 18, 2018 July 17, 2021 / / / / 69.31 No
Yangjian Deputy General
Manager
GAO Chairman of the Female 40 July 18, 2018 July 17, 2021 / / / / 61.29 No
Lijing Board of
Supervisors
LIANG Supervisor Male 49 July 18, 2018 July 17, 2021 / / / / 52.87 No
Rong
WANG Supervisor Female 43 July 18, 2018 July 17, 2021 / / / / 29.78 No
Yanyun
YU Xin Key technical staff Male 40 / / / / / / 98.46 No
WU Key technical staff Male 45 / / / / / / 45.46 No
Xiliang
WANG Key technical staff Male 39 / / / / / / 58.59 No
Lin
GUO Key technical staff Male 30 / / / / / / 50.04 No
Zuqiang
total / / / / / / / / / 1,925.66 /
Note: None of the directors, supervisors, senior officers and key technical staff directly holds any share in the Company. As of the end of the
reporting period, their indirect shareholdings in the Company are as follows: Refer to “Section VI- IV(II) Actual controller” for the shares held
by LI Yi; YAN Yan indirectly holds shares in the Company through Light Zone; BO Lianming indirectly holds shares in the Company through
direct or indirect shareholding in Appotronics Daye; WU Bin indirectly holds shares in the Company through Appotronics Hongye, Liansong
Capital and Jinleijing; HU Fei, GAO Lijing, LIANG Rong, WANG Yanyun and WU Xiliang indirectly hold shares in the Company through
direct shareholding in Appotronics Hongye and indirect shareholding in Appotronics Daye; ZHAO Ruijin and XIAO Yangjian indirectly hold
shares in the Company through indirect shareholding in Appotronics Daye; YU Xin and GUO Zuqiang indirectly hold shares in the Company
through Appotronics Daye; and WANG Lin indirectly holds shares in the Company through Appotronics Hongye. There is no change in the
indirect shareholding stated above during the reporting period. During the reporting period, LI Yi, BO Lianming, WU Bin, LI Lu and GAO
Lijing participated in the strategic allotment in IPO through Jiayuan I.
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Annual Report 2019
Name Main work experience
LI Yi Mr. LI Yi holds a bachelor’s degree from Tsinghua University, and a master’s degree and a doctor’s degree from the University of Rochester. He
was previously CTO of O-Net Communications (HK) Limited. In October 2006, LI Yi founded Appotronics Corporation Ltd.. He has served as
Chairman of the Company since December 2010.
YAN Yan Mr. YAN Yan holds a master’s degree from Princeton University. He was previously Economist of Washington Headquarter of the World Bank,
researcher of American Thinker Hudson Institute, Director of Strategic Planning and Business Development of Sprint International Corporation in
Asia Pacific, Managing Director of Emerging Markets Partnership in the Management Company of AIG Asian Infrastructure Investment Fund and
Director of Hong Kong Office. He has served as Founding Managing Partner of SAIF Partners since October 2001. He has been a Director of the
Company since December 2016.
WU BIN Mr. WU BIN holds a master’s degree from Stanford University. He was previously Global Associate Director of McKinsey & Company and Chief
Inspector of Legend Holdings Corporation. He has served as Managing Director of CITIC Private Equity Funds since 2010. He has been a Director
of the Company since December 2016.
BO Lianming Mr. BO Lianming holds a doctor’s degree from Xi’an Jiaotong University. He was previously Chief Accountant of Shenzhen Airlines Co., Ltd.,
President and CEO of Shenzhen Chinastar Optoelectronic Co., Limited, Director and President of TCL Technology Group Corporation and
Chairman and CEO of TCL Multimedia Technology Holdings Limited.. He joined the Company in March 2018, responsible for the management
and operation of the Company. He has been a Director and General Manager of the Company since July 2018, and Legal Representative of the
Company since December 2018.
NING Xiangdong Mr. NING Xiangdong holds a doctor’s degree from Tsinghua University. He previously served as teaching assistant, lecturer and associate professor
at Tsinghua University and Executive Deputy Director of National Center for Economic Research, Tsinghua University, and currently is a professor
and doctoral tutor of Tsinghua University, School of Economic and Management. He has been an independent director of the Company since July
2018.
TANG Guliang Mr. TANG Guliang holds a doctor’s degree from Chinese Academy of Fiscal Sciences. He previously served as Dean and professor of Beijing
Technology and Business University, School of Accounting (formerly known as Beijing College of Commerce), and currently is a professor and
doctoral tutor of the Business School, University of International Business and Economics. He has been an independent director of the Company
since July 2018.
ZHANG Wei Mr. ZHANG Wei holds a doctor’s degree from Indiana University. He was previously Legal Director of Legend Holdings Corporation and General
Manager of the Legal Affairs Department of China Vanke Co., Ltd.. He has served as Vice President, Legal Affairs of Qifei International
Development Co., Limited since February 2019. He has been an independent director of the Company since July 2018.
WU Bin Mr. WU Bin holds a master’s degree from Party School of the CPC. He was previously a non-executive director of Shenzhen Gotonly Investment
Ltd. and Vice President of Shenzhen Lighting Institute. He has been Deputy General Manager of the Company since October 2018.
ZENG Luhai Mr. ZENG Luhai holds a bachelor’s degree from Nanyang Technological University and a master’s degree from University of Michigan. He was
previously Executive General Manager of the Department of Investment Bank, China International Capital Corporation Limited, and Managing
Director of the Department of Equity Market, CMB International Capital Limited. He served as Deputy General Manager of the Company between
130 / 312
Annual Report 2019
April 2019 and January 2020.
HU Fei Mr. HU Fei holds a bachelor’s degree and a master’s degree from Tsinghua University and a master’s degree from Rensselaer Polytechnic Institute.
He was previously a software engineer at Optical Research Associates, and Deputy President, R&D of Shenzhen YLX Technology Development
Co., Ltd. and Appotronics Ltd.. He has served as CTO of the Company since February 2018, and Deputy General Manager of the Company since
July 2018.
LI Lu Mr. LI Lu holds a master’s degree from Cheung Kong Graduate School of Business. He was previously Deputy President of TCL Multimedia
Technology Holdings Limited., General Manager of TCL (China) Sales Company, and General Manager of White Goods Business Division of TCL
Technology Group Corporation. He has been Deputy General Manager of the Company since October 2018, and Legal Representative and
Chairman of Fengmi since December 2018.
ZHAO Ruijin Mr. ZHAO Ruijin holds a master’s degree from Peking University. He was previously Financial Manager of ZTE Corporation, Financial Director
and Assistant to General Manager of Shenzhen ZNV Technology Co., Ltd.. He joined the Company in February 2018 as Director of the Department
of Financial Management, and has been Financial Director of the Company since July 2018.
XIAO Yangjian Mr. XIAO Yangjian holds a bachelor’s degree from Beijing Jiaotong University. He was previously Deputy General Manager and Board Secretary
of Vision Group and head of the Office of the Board of Directors of Appotronics Ltd.. He has been Deputy General Manager and Board Secretary of
the Company since July 2018.
GAO Lijing Ms. GAO Lijing holds a bachelor’s degree from Tianjin University of Technology and Education. She previously worked at Southern China IP
Office of Foxconn Technology Group, and Center for IP and Legal Affairs of Netac Technology Co., Ltd.. She has served as a supervisor of Netac
Technology Co., Ltd., and Director of IP and Legal Department of the Company since May 2017, and a Supervisor of the Company since July 2018.
LIANG Rong Mr. LIANG Rong holds a master’s degree from Shanghai University of Finance and Economics. He joined the Company in 2013, and served as
Assistant to Chairman of Appotronics Ltd.. He has been Director of Public Affairs of the Company since March 2018, and a Supervisor of the
Company since November 2017.
WANG Yanyun Ms. WANG Yanyun holds a bachelor’s degree from Tianjin University of Commerce. She has been a senior manager of the Company since July
2013, and a Supervisor of the Company since July 2018.
YU Xin Mr. YU Xin holds a doctor’s degree from Tsinghua University. He was previously a senior software engineer at Schlumberger Ltd. and senior
researcher at Shenzhen Lighting Institute. He has been a senior researcher and Software Director of the R&D Center of the Company since February
2018.
WU Xiliang Mr. WU Xiliang holds a bachelor’s degree from Huazhong University of Science and Technology. He served as R&D Manager and Technology
Director of the Company between 2007 and 2016, and has been Deputy General Manager of Fengmi since 2016.
WANG Lin Mr. WANG Lin holds a bachelor’s degree from University of Science and Technology of China, a master’s degree from Tsinghua University, and a
doctor’s degree from Universidad Politécnica de Madrid. He was previously a senior optical engineer at Shanghai Phillips Lighting (China)
Investment Co., Ltd.. He has been a senior optical research of the Company since February 2017.
GUO Zuqiang Mr. GUO Zuqiang holds a master’s degree from Tsinghua University. He was previously an optical engineer at Shenzhen YLX Technology
Development Co., Ltd.. He has been R&D Manager of the Company since March 2017.
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Annual Report 2019
Other information
□ Applicable √ N/A
(II) Share incentives granted to directors, senior officers and key technical staff during the reporting period
1. Share options
□ Applicable √ N/A
2. Type I restricted shares
□ Applicable √ N/A
3. Type II restricted shares
√Applicable □ N/A
Unit: Share
Number of
Number of Number of
restricted Number of Market price as
restricted shares Number of Exercise price of restricted
shares that restricted shares of the end of
already granted restricted shares the restricted shares actually
Name Title could be already granted as the reporting
as at the granted during the shares granted vested in the
vested in the of the end of the period (RMB
beginning of the reporting period (RMB per share) reporting
reporting reporting period per share)
reporting period period
period
BO Director & 0 100,000 17.5 0 0 100,000 27.7
Lianming General
Manager
WU Bin Deputy General 0 100,000 17.5 0 0 100,000 27.7
Manager
ZENG Deputy General 0 100,000 17.5 0 0 100,000 27.7
Luhai Manager
HU Fei Deputy General 0 100,000 17.5 0 0 100,000 27.7
Manager &
CTO
LI Lu Deputy General 0 100,000 17.5 0 0 100,000 27.7
Manager
ZHAO Financial 0 50,000 17.5 0 0 50,000 27.7
Ruijin Director
XIAO Board Secretary 0 30,000 17.5 0 0 30,000 27.7
Yangjian & Deputy
General
132 / 312
Annual Report 2019
Manager
YU Xin Key technical 0 50,000 17.5 0 0 50,000 27.7
staff
WANG Lin Key technical 0 50,000 17.5 0 0 50,000 27.7
staff
GUO Key technical 0 40,000 17.5 0 0 40,000 27.7
Zuqiang staff
WU Xiliang Key technical 0 30,000 17.5 0 0 30,000 27.7
staff
Total / 0 750,000 / 0 0 750,000 /
II. Posts held by current directors, supervisors and senior officers and the former directors, supervisors and senior officers who left
the Company during the reporting period
(I) Posts held at corporate shareholders of the Company
√Applicable □ N/A
Beginning date of term of Expiry date of term of
Name Corporate shareholder Posts held at corporate shareholder
office office
LI Yi Appotronics Holdings Executive Director & General January 2014 /
Manager
LI Yi Appotronics Daye Representative of Managing Partner October 2016 /
LI Yi Appotronics Hongye Representative of Managing Partner December 2015 /
LI Yi Jinleijing Representative of Managing Partner October 2016 /
LI Yi Yuanshi Representative of Managing Partner June 2016 /
LI Yi Appotronics Chengye Representative of Managing Partner July 2017 /
LI Yi Blackpine Investment Corp. Limited Director September 2018 /
YAN Yan SAIF IV Hong Kong Director August 2013
(China Investments) Limited
YAN Yan Light Zone Limited Director March 2017
WU BIN CITIC Private Equity Funds Managing Director January 2010
Explanation about the posts None
held at corporate shareholders
of the Company
133 / 312
Annual Report 2019
(II) Posts held at other entities
√Applicable □ N/A
Beginning date of Expiry date of
Name Other entity Posts held at other entity
term of office term of office
LI Yi Appotronics Deye Representative of Managing Partner May 2018
LI Yi Cinionic Director November 2018
LI Yi Shenzhen Appotronics Technical Consulting Co., Ltd. Executive Director & General October 2017
Manager
LI Yi Jiangsu Yisheng Technology Co., Ltd. Chairman September 2017
LI Yi Shenzhen YLX Technology Development Co., Ltd. Chairman January 2007
LI Yi Shenzhen Qingda Yifeng Equity Investment Fund General Manager & Executive January 2017
Management Enterprise (LP) Director
LI Yi Shenzhen Qingda Yifeng Investment Consulting Partnership Managing Partner October 2016
(LP)
LI Yi Shenzhen Lighting Institute Director & Sponsor November 2016
LI Yi APEX Fund Managed Limited Director November 2013
LI Yi Atria Light Ltd. Director April 2018
LI Yi Atria Light Hong Kong Limited Director April 2018
LI Yi Long Pine Investment Ltd. Director September 2016
LI Yi Longpines Financial Investment Ltd. Director May 2018
LI Yi YLX (Hong Kong) Limited Director June 2008
YAN Yan SAIF Partners Founding Managing Partner October 2001
YAN Yan Atria Light Ltd. Director May 2018
YAN Yan SAIF Investment Management Consulting (Shanghai) Co., General Manager June 2002
Ltd.
YAN Yan Beijing Daotong Changjing Investment Management Center Representative of Managing Partner July 2011
(LP)
YAN Yan Beijing SAIF Chuangyuan Investment Center (LP) Representative of Managing Partner August 2010
YAN Yan Beijing SAIF Hongyuan Investment Center (LP) Representative of Managing Partner October 2010
YAN Yan Beijing SAIF Ruiyi Investment Management Center (LP) Representative of Managing Partner July 2012 August 2019
YAN Yan Beijing SAIF Ruizhi Investment Center (LP) Representative of Managing Partner July 2012 August 2019
YAN Yan Beijing SAIF Xiangrui Investment Center (LP) Representative of Managing Partner April 2010
YAN Yan Changzhou SAIF High-Tech Venture Capital Center (LP) Representative of Managing Partner December 2009
YAN Yan Guangzhou SAIF Guangdong Fortune Radio and Television Representative of Managing Partner December 2011
Network Investment Limited Partnership (LP)
YAN Yan Hefei SAIF Heyuan Venture Capital Center (LP) Representative of Managing Partner January 2011
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Annual Report 2019
YAN Yan Qingdao Haier-Saifu Intelligent Family Venture Capital Representative of Managing Partner October 2014
Center (LP)
YAN Yan SAIF Songyuan (Shanghai) Equity Investment Fund Representative of Managing Partner September 2012
Partnership (LP)
YAN Yan Xiamen SAIF Equity Investment Partnership (LP) Representative of Managing Partner August 2012
YAN Yan Xiamen SAIF Keyuan Equity Investment Partnership (LP) Representative of Managing Partner August 2012
YAN Yan Xiamen SAIF Xiayuan Equity Investment Partnership (LP) Representative of Managing Partner November 2013 May 2019
YAN Yan Tianjin SAIF Venture Capital Fund (LP) Representative of Managing Partner July 2008
YAN Yan Tianjin SAIF Composite Equity Investment Center (LP) Representative of Managing Partner May 2010
YAN Yan Tianjin SAIF Hanyuan Equity Investment Partnership (LP) Representative of Managing Partner June 2010
YAN Yan Tianjin SAIF Shengyuan Investment Management Center Representative of Managing Partner July 2008
(LP)
YAN Yan Hefei SAIF Venture Capital Management Co. Ltd. Legal Representative & Executive November 2010
Director & General Manager
YAN Yan Nanjing SAIF Hengzhun Venture Capital Fund (LP) Representative of Managing Partner July 2017
YAN Yan China Resources Land Limited Independent Non-executive July 2006
Director
YAN Yan Shanghai SAIF Yanyuan Equity Fund Management Co. Ltd. Legal Representative & Executive January 2013
Director & General Manager
YAN Yan Tianjin Himalaya Investment Consulting Co. Ltd. Legal Representative & Executive June 2008
Director & Manager
YAN Yan Shanghai SAIF Xinpai Investment Management Co. Ltd. Legal Representative & Executive March 2014
Director
YAN Yan Qingdao SAIF Investment Management Co. Ltd. Legal Representative & Chairman September 2014
& General Manager
YAN Yan Changzhou SAIF High-Tech Venture Capital Management Legal Representative & Chairman October 2009
Co. Ltd.
YAN Yan Tianjin SAIF Zhongyuan Investment Advisory Co. Ltd. Legal Representative & Chairman July 2008
YAN Yan Shenzhen SAIF Qianyuan Equity Investment Fund Legal Representative & Chairman August 2013
Management Co. Ltd.
YAN Yan TCL Technology Group Corporation Independent Director March 2015
YAN Yan Beijing Blue Focus Brand Management Co. Ltd. Independent Director March 2014
YAN Yan Beijing Softbank SAIF Investment Advisory Co., Ltd. Chairman February 2001
YAN Yan Huangshan SAIF Fund Management Co., Ltd. Chairman November 2016
YAN Yan Youth Happy (Beijing) Business Management Co., Ltd. Chairman July 2012
YAN Yan Shanghai TopxGun Robotics Co., Ltd. Chairman September 2015
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Annual Report 2019
YAN Yan CYPA (Beijing) Investment Management Co., Ltd. Chairman June 2012
YAN Yan Foreign Tribes (Beijing) Business Management Consulting Chairman September 2012 September 2019
Co., Ltd.
YAN Yan Leqicheng Technology (Beijing) Co., Ltd. Vice Chairman June 2015 May 2019
YAN Yan Suzhou Beiang Technology Co., Ltd. Vice Chairman October 2013
YAN Yan Xi’an Maike Metal International Group Co., Ltd. Vice Chairman April 2014
YAN Yan Anqing SAIF Huanxin Auto Parts Co., Ltd. Director August 2015
YAN Yan SAIF IV Mauritius (China Investment) Ltd. Director July 2010
YAN Yan ATA Creativity Global Director March 2005
YAN Yan Anqing SAIF Huanxin Enterprise Management Consultant Director November 2014
Co., Ltd.
YAN Yan Beijing Hanyuan Capital Management Co., Ltd. Director December 2015
YAN Yan Beijing Xiaodu Entertainment Technology Co., Ltd. Director January 2018
YAN Yan Guangdong Cable Co., Ltd. Director February 2017
YAN Yan Guangzhou SAIF Heyin Asset Management Co., Ltd. Director August 2013
YAN Yan Guodian Technology & Environmental Protection Group Co., Non-executive Director June 2012
Ltd.
YAN Yan Hangzhou Geyun Technology Co., Ltd. Director February 2015 April 2016
YAN Yan Heilongjiang Dazheng Derun Investment Management Co., Director February 2017
Ltd.
YAN Yan Heilongjiang Dazheng SAIF Investment Management Co., Director November 2009
Ltd.
YAN Yan Pacoo (Beijing) Technology Co., Ltd. Director September 2016
YAN Yan Xiamen SAIF Venture Capital Management Co., Ltd. Director February 2012
YAN Yan Shanghai Wenxi Enterprise Management Co., Ltd. Director June 2017
YAN Yan Shanghai Yingxun Technology Co., Ltd. Director August 2017
YAN Yan Shenzhen Orbbec Technology Co., Ltd. Director May 2018
YAN Yan Xinyong Computing Information Technology (Shanghai) Co., Director September 2017
Ltd.
YAN Yan Zhejiang Daily Interaction Network Technology Co., Ltd. Director December 2015 May 2019
YAN Yan Gexin Interaction (Beijing) Network Technology Co., Ltd. Director October 2014 December 2016
YAN Yan COFCO Haiyou Trading Co., Ltd. Director July 2013
YAN Yan COFCO Womai Investment Co., Ltd. Director November 2018
YAN Yan Khorgos Big Color Information Technology Co., Ltd. Director November 2018 July 2019
YAN Yan Shenzhen Digital Media Technology Co., Ltd. Director October 2018
YAN Yan Yinda International Holding Company Limited Director August 2014
YAN Yan Wisers Information Holdings Company Limited Director May 2016
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Annual Report 2019
YAN Yan Haier Smart Home Co., Ltd. Director June 2019
YAN Yan Shanghai Welltech Automation Co., Ltd. Director June 2019
YAN Yan 360 Finance, Inc. Independent Director July 2019
YAN Yan COFCO Haiyou (Beijing) Co., Ltd. Director November 2018
YAN Yan COFCO Youcai Kitchen Food (Shanghai) Co., Ltd. Director November 2018
WU BIN Shaanxi Xifeng Liquor Co., Ltd. Director 2012
WU BIN Shaanxi Xifeng 15-Year and 6-Year Liquor Marketing Co., Director 2013
Ltd.
WU BIN Yunnan Green A Biological Project Co., Ltd. Director 2011
WU BIN Hangzhou BroadLink Electronic Technology Co., Ltd. Director 2018
NING Xiangdong Tsinghua University Professor & Doctoral Tutor 1990
NING Xiangdong Weichai Power Co., Ltd. Independent Director June 2018
NING Xiangdong Sinopec Sales Co., Ltd. Independent Director December 2018
NING Xiangdong China Life Asset Management Co., Ltd. Independent Director March 2018
NING Xiangdong Sinochem Energy Co., Ltd. Independent Director August 2018
NING Xiangdong Xiamen Bank Co., Ltd. Director July 2017
NING Xiangdong Shandong Heavy Industry Group Co., Ltd. Director January 2018
TANG Guliang University of International Business and Economics Professor March 2006
TANG Guliang China JIC Leasing Co., Ltd. Independent Director April 2017
TANG Guliang Three Gorges Capital Holdings Co., Ltd. Independent Director February 2018
TANG Guliang Shanghai Fosun Pharmaceutical (Group) Co., Ltd. Independent Director March 2019
ZHANG Wei Qifei International Development Co. Limited Deputy President, Legal Affairs February 2019
ZHANG Wei AVIC Vanke Co., Ltd. Director January 2018
ZHANG Wei Hengqin Vanke Cloudland Commercial Services Co., Ltd. Director & General Manager May 2017
ZHANG Wei Shenzhen Yingda Investment Fund Management Co., Ltd. Director April 2016
ZHANG Wei Tian’an Xincheng Development (Hengqin) Co., Ltd. Director July 2017
ZHANG Wei Shenzhen Wanhu Management Consulting Co., Ltd. Supervisor November 2017
ZHANG Wei Shenzhen Wanhu Quanyuan Management Consulting Co., Supervisor November 2017
Ltd.
ZHANG Wei Shenzhen Wanshuzhimiao Management Consulting Co., Ltd. Supervisor November 2017
ZHANG Wei Shenzhen Wanqing Management Consulting Co., Ltd. Supervisor November 2017
ZHANG Wei Shenzhen Wanmazhengxian Management Consulting Co., Supervisor November 2017
Ltd.
ZHANG Wei Dongguan Vanke Real Estate Co., Ltd. Supervisor October 2015
ZHANG Wei Lijiang Banyan Tree Property Services Co., Ltd. Director May 2018
ZHANG Wei Lijiang Banyan Tree Hotel Co., Ltd. Director March 2018
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Annual Report 2019
ZHANG Wei Lijiang Banyan Tree International Travel Agency Co., Ltd. Director March 2018
ZHANG Wei Lijiang Angsana Real Estate Development Co., Ltd. Director July 2018
ZHANG Wei Huangshan Banyan Tree Property Management Co., Ltd. Director September 2018
ZHANG Wei Huangshan Banyan Tree Tourism Development Co., Ltd. Director September 2018
ZHANG Wei Chengdu Banyan Tree No.1 Real Estate Co., Ltd. Director June 2018
ZHANG Wei Chengdu Banyan Tree No.3 Real Estate Co., Ltd. Director June 2018
ZHANG Wei Chengdu Banyan Tree No.4 Real Estate Co., Ltd. Director June 2018
ZHANG Wei Beijing 6.cn Technology Co., Ltd. Director December 2019
GAO Lijing Netac Technology Co., Ltd. Supervisor January 2008
LIANG Rong Shanghai QianKun Photoelectric Technology Co., Ltd. Supervisor May 2015 April 2019
WU Bin Shenzhen Shangzuo Charity Foundation Secretary-General November 2015
WU Bin Shenzhen Lighting Institute Director November 2016
Explanation about None
the posts held at
other entities
III. Remunerations of directors, supervisors, senior officers and key technical staff
√Applicable □ N/A
In RMB 0’000
Decision-making procedure regarding the Pursuant to the Company’s Articles of Association, the Compensation and Performance Assessment Committee
remunerations of directors, supervisors and senior consider and review the compensation policy and proposal for directors and senior officers; the compensation
officers proposal for senior officers is implemented after being approved by the Board of Directors; the compensation proposal
for directors is implemented after being adopted by the Board of Directors and then approved by the general meeting
of shareholders; and the compensation proposal for supervisors is implemented after being adopted by the Board of
Supervisors and then approved by the general meeting of shareholders.
Basis for determining the remunerations of The Company’s directors and supervisors who hold posts in the Company shall receive remunerations for such posts
directors, supervisors and senior officers pursuant to the relevant provisions of the Company, but will not receive remunerations in their capacity as director or
supervisor. Each independent director will receive a fixed amount of director’s emoluments. Non-independent
directors not holding posts in the Company will receive director’s emoluments pursuant to the compensation proposal
approved by the general meeting of shareholders. Remunerations paid to senior officers comprise basic salaries and
year-end bonuses, where the basic salaries are paid on a monthly basis according to the ranks and duties of the senior
officers, and the year-end bonuses are paid according to the operating results of the Company and their performance in
the given year.
Remunerations actually paid to directors, During the reporting period, the remunerations actually paid to directors, supervisors and senior officers are consistent
supervisors and senior officers with the relevant information disclosed by the Company.
138 / 312
Annual Report 2019
Total remunerations paid to directors, supervisors 1673.11
and senior officers as of the end of the reporting
period
Total remunerations paid to key technical staff as 695.30
of the end of the reporting period
IV. Changes in directors, supervisors, senior officers and key technical staff
√Applicable □ N/A
Name Position Change Cause of change
ZENG Luhai Deputy General Manager Left the Company Resigned
Explanation about the changes in directors, supervisors, senior officers and key technical staff:
1. The Company’s Deputy General Manager Mr. ZENG Luhai resigned from his position as Deputy General Manager of the Company due to
personal career development reasons on January 23, 2020, and will act as a consultant of the Company after resigning from the Company. The
Company issued an announcement regarding this event on January 23, 2020.
V. Penalties imposed by the securities regulatory authorities in the past three years
□ Applicable √ N/A
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VI. Employees of the parent company and major subsidiaries
(I) Employees
Number of active employees of the parent company 959
Number of active employees of major subsidiaries 287
Total number of active employees 1,246
Number of retired employees for whom the parent company 0
and major subsidiaries need to pay certain expenses
Profession
Category Number of employees
Production staff 473
Sales staff 166
R&D staff 387
Financial staff 33
Administrative staff 187
Total 1,246
Education
Level of education Number of employees
Doctor 29
Master 154
Undergraduate 486
College or below 577
Total 1,246
(II) Compensation policy
√Applicable □ N/A
In order to ensure the market competitiveness of our compensation level externally
and the fairness and equality internally, insist on performance-based compensation, adhere
to the corporate values of creating together and sharing by all, and fully motivate the
employees, we have designed a compensation system based on posts, capability and
performance, according to the design concept and approaches of international
compensation system, and by reference to the compensation level on the market. Our
compensation system is based on position hierarchy, wherein different positions and ranks
correspond to different levels of compensation, so that the employees’ compensation
corresponds to the value of their position and their capability and experience. The
employees’ compensation and bonuses are also linked to their performance and
contribution to the Company, thereby establishing a performance-based compensation and
incentive system. In addition to fixed salaries and bonuses, our employees enjoy a variety
of benefits. We adjust the salaries of all employees or promote certain employees to higher
ranks or positions or adjust the salaries of certain employees every year according to the
compensation level on the market, changes in the ranks of employees, performance and
other relevant factors.
Pursuant to the Company Law of the People’s Republic of China, the Securities Law of
the People’s Republic of China, the Rules Governing the Listing of Stocks on the Sci-tech
Innovation Board of the Shanghai Stock Exchange, the Administrative Measures for Share
Incentives of the Listed Companies, the Measures for the Continuous Supervision of
Companies Listed on the Sci-tech Innovation Board, the Memorandum on Information
Disclosure by the Listed Companies on the STAR Market No. 4 - Guide on Information
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Annual Report 2019
Disclosure Regarding Share Incentives, and other applicable laws, regulations and
normative documents, we launched the restricted share incentive plan in 2019 to further
improve our long-term incentive mechanism, attract and retain outstanding talents, enhance
the sense of responsibility and mission of our management team and key employees for the
continuous and healthy development of the Company, and ensure the achievement of our
development objectives. The plan is designed to fully motivate our business teams,
effectively bind the interests of the shareholders and the Company with their personal
interests, procure all stakeholders to focus on our long-term development, share the benefits
of our development with the employees, and enhance the competitiveness of the salaries of
our employees.
(III) Training programs
√Applicable □ N/A
The building of training system plays an important role in developing the capabilities
of the organization and employees, and promoting the sustainable development of the
organization.
In 2019, Appotronics built and gradually improved a three-level training management
system. Through providing plenty of opportunities for internal learning and high-quality
external education resources, the system has effectively satisfied the requirements for the
improvement of the employees’ personal capabilities and the organization capabilities, and
greatly aroused the employees’ enthusiasm for learning and growth. According to statistics,
in 2019, more than 7,000 personnel participated in the courses/sharing organized by the
company, with nearly 20,000 class hours in total. Nearly 200 internal and external lecturers
have given lectures at Appotronics auditorium, which lays a solid foundation for building a
learning-oriented organization.
We lay stress on the training of key talents: The “Polar Light Program” is designed to
help medium and high level managerial staff implement our strategies, lead their teams and
achieve the goals of the organization; the “Product Operation Training Camp” is designed
to help the product operation team form product-oriented thinking and create better
business ideas; and the “Star Light Program” is designed to help college graduates rapidly
transit to their new roles, successfully integrate with the team, rapidly improve their
professional knowledge and skills, and make outstanding contributions to the Company.
In 2020, our training programs will focus on accumulating internal knowledge,
consolidating the basis of the three-level training management system, training and
building a team of experienced internal trainers having aspiration and spirit of dedication in
a planned way, summing up the management and professional experience of the Company,
and studying external good practices, to create learning products with the characteristics of
Appotronics, and provide the employees with well-targeted learning services. In addition,
we will continue to train key talents through the Polar Light Program, the Sharp Light
Program and the Star Light Program. The growth of talents will inject vigor into the
Company, while the growth of the Company will bring about opportunities for the growth
of talents. Appotronics is committed to building a platform for the growth of outstanding
talents, so as to enter into a sound cycle of growth of both the Company and the talents.
(IV) Outsourced workers
√Applicable □ N/A
Total man-hours of outsourced workers 2,496 hours
Total remunerations paid to outsourced workers RMB102,816
VII. Other information
□ Applicable √ N/A
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Annual Report 2019
Section IX Corporate Governance
I. Corporate governance
√Applicable □ N/A
We have continuously improved our corporate governance structure and operated in
strict accordance with the requirement of the Company Law, the Securities Law and the
relevant rules and regulations of the CSRC and the SSE, taking into account our actual
business situations, and established a corporate governance structure comprising the
general meeting of shareholders, the Board of Directors, the Board of Supervisors and the
management, and a mechanism in which the highest authority, the decision-making body,
the supervisory body and the management coordinate with and hold up each other. We have
established a sound corporate governance system, to effectively protect the interests of
investors.
(I) Shareholders and general meeting of shareholders
The general meeting of shareholders is the highest authority of the Company. During
the reporting period, we have convened and held general meetings of shareholders in strict
accordance with our Articles of Association (“AOA”), the Rules of Procedure of the
General Meeting of Shareholders and other applicable laws and regulations. The notices,
convening, resolutions, voting, signing and information disclosures in respect of the general
meeting of shareholders comply with the relevant provisions of the Company Law, the
Securities Law, the CSRC and the SSE, and the resolutions of the general meeting of
shareholders are legal and valid. We have fully protected the rights of all shareholders,
especially the minority shareholders, and ensured that each shareholder can enjoy the right
to know and participate in the affairs of the Company and exercise his voting rights
according to law.
(II) Directors and the Board of Directors
The Board of Directors is the standing decision-making and management body of the
Company, and has set up four committees, namely the Strategy Committee, the
Compensation and Performance Assessment Committee, the Nomination Committee and
the Audit Committee. During the reporting period, the number of directors and the
composition of the Board of Directors comply with the requirements of the applicable laws
and regulations and the AOA; the Board of Directors has exercised its functions and
powers in strict accordance with the requirements of the applicable laws and regulations,
the AOA, the Rules of Procedure of the Board of Directors, and the Work Regulations for
Independent Directors, and each director has been assiduous in his duties and actively
received the relevant trainings. In order to improve the objectivity and scientificness of the
decisions made by the Board of Directors, we have appointed the independent directors to
participate in and supervise the decision-making process of the Board of Directors. The
independent directors have performed their duties independently, actively safeguarded the
interests of the Company and the shareholders, and expressed their opinions on important
and material matters of the Company. The committees of the Board of Directors have fully
exercised their relevant functions, to ensure that the Board of Directors makes scientific
and reasonable decisions for the Company.
(III) Supervisors and the Board of Supervisors
The Board of Supervisors is the supervisory body of the Company and comprises three
supervisors. The Board of Supervisors has exercised its functions and powers according to
the procedures set forth in the AOA and the Rules of Procedure of the Board of Supervisors,
effectively supervised the legal and regulatory compliance of the performance of duties by
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Annual Report 2019
the financial staff, directors and senior officers of the Company, and actively safeguarded
the interests of the Company and the shareholders.
(IV) Management of information disclosures
During the reporting period, we have disclosed the relevant information truthfully,
accurately, promptly, fairly and completely, and duly performed our obligation of
information disclosure in accordance with the Rules Governing the Listing of Stocks on the
Sci-tech Innovation Board of the Shanghai Stock Exchange, the Administrative Measures
for Information Disclosure by the Listed Companies and other applicable laws and
regulations, and our Information Disclosure Policy, to ensure that all shareholders and other
stakeholders have equal access to the information of the Company.
(V) Registration of insiders
During the reporting period, we have registered and filed the insiders in connection
with the matters disclosed in our regular reports in strict accordance with the applicable
laws and regulations and our Insider Management Policy.
During the reporting period, we have defined the respective responsibilities of the
general meeting of shareholders, the Board of Directors, the Board of Supervisors and the
management. According to the requirements of the Board of Directors, the management has
continuously improved the management cycle led by mechanism, guaranteed by system,
guided by culture and supported by capacity. Our management level and governance
capability have been improved remarkably, providing further assurance for our healthy and
sustainable development. The directors, supervisors and senior officers have been
assiduous in their duties, and seriously exercised the rights and performed the obligations
under the Company Law and the AOA, to ensure the safe, steady and sustainable
development of the Company and safeguard the interests of the shareholders to the
maximum extent practicable.
Explanation about the material deviations (if any) of the Company’s corporate governance
from the relevant requirements of the CSRC
□ Applicable √ N/A
II. General meetings of shareholders held
Reference to resolutions
Date of disclosure of
Session Date of meeting published on the
resolutions
designated website
1st extraordinary general February 26, 2019 N/A N/A
meeting of shareholders
in 2019
2nd extraordinary general March 18, 2019 N/A N/A
meeting of shareholders
in 2019
2018 annual general April 14, 2019 N/A N/A
meeting of shareholders
in 2019
3rd extraordinary general May 8, 2019 N/A N/A
meeting of shareholders
in 2019
4th extraordinary general May 24, 2019 N/A N/A
meeting of shareholders
in 2019
5th extraordinary general July 8, 2019 N/A N/A
meeting of shareholders
in 2019
6th extraordinary general October 14, 2019 www.sse.com.cn October 15, 2019
meeting of shareholders
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Annual Report 2019
in 2019
Explanation about the general meetings of shareholders
√Applicable □ N/A
The 1st, 2nd, 3rd, 4th and 5th extraordinary general meeting of shareholders in 2019 and
2018 annual general meeting of shareholders were held prior to the listing of the Company.
The convening, proceedings, qualification of the conveners, qualification of the participants
and voting procedures of such general meetings of shareholders comply with the relevant
provisions of the Company Law, the Rules of the General Meeting of Shareholders of the
Listed Company and other applicable laws and regulations and the AOA, and the
resolutions of such meetings are legal and valid.
III. Performance of duties by the directors
(I) Attendance by the directors of the meetings of the Board of Directors and
shareholders
Attendance of
the general
Attendance of the meetings of the Board of Directors
meetings of
shareholders
Whether or
Meetings
not an Whether the
Director Meetings Meetings from
independent director has General
the director Meetings attended Meetings which
director been absent meetings of
should have attended through attended the
from two shareholders
attended in in person communication by proxy director
consecutive attended
2019 equipment was
meetings
absent
LI Yi No 15 15 0 0 0 No 6
YAN Yan No 15 15 5 0 0 No 7
WU BIN No 15 15 5 0 0 No 7
BO No 15 15 0 0 0 No 7
Lianming
NING Yes 15 15 5 0 0 No 7
Xiangdong
TANG Yes 15 15 5 0 0 No 7
Guliang
ZHANG Yes 15 15 5 0 0 No 7
Wei
Explanation about absence from two consecutive meetings of the Board of Directors
□ Applicable √ N/A
Meetings of the Board of Directors held in 2019 15
Incl.: Face-to-face meetings 10
Meeting held through communication equipment 0
Meetings held both in the form of face-to-face meeting and 5
through communication equipment
(II) Objections raised by the independent directors to matters of the Company
□ Applicable √ N/A
(III) Other information
□ Applicable √ N/A
IV. Important opinions and suggestions put forward by the committees of the Board
of Directors during the reporting period and objections thereto (if any)
√Applicable □ N/A
The Board of Directors has set up the Strategy Committee, the Audit Committee, the
Compensation and Performance Assessment Committee, and the Nomination Committee.
Each committee has duly exercised its functions in strict accordance with the AOA, the
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Annual Report 2019
Rules of Procedure of the Board of Directors, the rules of procedure of such committee and
other relevant regulations. During the reporting period, the Strategy Committee has held
one meeting; the Audit Committee has held four meetings; the Compensation and
Performance Assessment Committee has held two meetings, and the Nomination
Committee has held one meeting. The members of each committee have actively attended
the meetings of such committee, been assiduous in their duties, duly exercised the functions
and powers delegated by the Board of Directors to such committee, put forward guidance
and advice for the proper functioning of such committee and the long-term development of
the Company, and played active roles in improving the corporate governance structure and
promoting the development of the Company.
During the reporting period, the members of the Strategy Committee have seriously
performed their duties, fully communicated with the management of the Company with
respect to the future development direction, external investments and other affairs of the
Company from the prospective of their profession and put forward reasonable suggestions
on the basis of the actual operations of the company; the Audit Committee has duly
exercised its functions, and played an active role in the appointment of the auditor, review
of regular financial reports, examination of related-party transactions, establishment of
internal controls, and other relevant affairs of the Company; the Compensation and
Performance Assessment Committee has assessed the performance of the senior officers of
the Company, examined the compensation proposal for the senior officers, and reviewed
and expressed its opinions on the 2019 restrictive share incentive plan of the Company; and
the Nomination Committee has examined the qualifications of the senior officers of the
Company, and reviewed and expressed its opinions on the criteria and procedures in respect
of the appointment of the senior officers. Each committee of the Board of Directors has
duly performed the duty of care.
V. Risks of the Company identified by the Board of Supervisors
□ Applicable √ N/A
VI. Give an explanation if the Company cannot guarantee its dependence and ability
to operate independently due to its relationship with the controlling shareholder
in business, personnel, assets, organization, financial and other affairs
□ Applicable √ N/A
Solutions to horizontal competition with the Company (if any) and the relevant progress
and subsequent action plans
□ Applicable √ N/A
VII. Performance assessment mechanism for senior officers and the establishment
and implementation of incentive mechanism for senior officers during the
reporting period
√Applicable □ N/A
The remunerations of the senior officers comprise salaries and bonuses. The
Compensation and Performance Assessment Committee of the Board of Directors is
responsible for formulating and implementing the compensation proposal and performance
assessment proposal for senior officers. The compensation proposal for senior officers has
been reviewed in accordance with the AOA and other relevant corporate governance
policies. During the reporting period, the remunerations paid to the senior officers of the
Company have been reviewed and approved by the Board of Directors. During the
reporting period, the senior officers have been assiduous in their duties in strict accordance
with the requirements of the Company Law and other applicable laws and regulations and
the AOA, and continuously enhanced internal management of the Company under the
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Annual Report 2019
guidance of the Board of Directors, to lay a solid foundation for future development of the
Company.
VIII. Whether a self-assessment report on internal controls has been disclosed
√Applicable □ N/A
Please see the 2019 Assessment Report on Internal Controls disclosed by us on
www.sse.com.cn on April 29, 2020.
Explanation about material loopholes in internal controls during the reporting period
□ Applicable √ N/A
IX. Explanation about the auditor’s report on internal controls
□ Applicable √ N/A
Whether an auditor’s report on internal controls has been disclosed: No.
X. Control structure by agreement and other special arrangements in respect of
corporate governance
□ Applicable √ N/A
XI. Other information
□ Applicable √ N/A
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Section X Corporate Bonds
□ Applicable √ N/A
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2019 Annual Report
Section XI Financial Report
I. Auditor's report
√Applicable □N/A
I. Opinion
We have audited the financial statements of Appotronics Corporation Limited
(“Appotronics”), which comprise the consolidated and the Parent Company's balance sheets
as at December 31, 2019, and the consolidated and the Parent Company's income statements,
the consolidated and the Parent Company's statements of cash flow and the consolidated and
the Parent Company's statements of changes in owners' equity for the year then ended, and
the notes to the relevant financial statements.
In our opinion, the accompanying financial statements of Appotronics are prepared and
present fairly, in all material respects, the consolidated and the Parent Company's financial
position as of December 31, 2019, and the consolidated and the Parent Company's results of
operations and cash flows for the year then ended in accordance with Accounting Standards
for Business Enterprises.
II. Basis for opinion
We conducted our audit in accordance with Chinese Standards on Audit. Our
responsibilities under those standards are further described in the “Auditor's Responsibilities
for the Audit of the Financial Statements” section of our report. We are independent of
Appotronics in accordance with the code of ethics for Chinese Certified Public Accountants,
and we have fulfilled our other ethical responsibilities in accordance with the Code. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our 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.
(I) Revenue recognition
1. Description
Details of relevant information are disclosed in V 36, VII 59, and XVI 6 of Section XI.
Appotronics is mainly engaged in research and development, production, sales and
leasing of laser display core devices and complete equipment. In 2019, the operating income
of Appotronics amounted to RMB1,979,148,900, of which the income from product sales
and lease services amounted to RMB 1,553,441,500 and RMB 397,991,200 respectively.
Relevant policies in terms of the revenue recognition are disclosed in V 36 of Section XI in
details. As the operating income is one of Appotronics's KPIs, there may be an inherent risk
that the management of Appotronics (hereinafter referred to as "management”) may
recognize the revenue inappropriately to achieve specific objectives or expectations.
Therefore, we identified revenue recognition as a key audit matter.
2. Description of how the key audit matter was addressed in the audit
For revenue recognition, our audit procedures include, inter alia:
(1) Understand the key internal controls related to revenue recognition, evaluate the
design of those controls, determine whether they are implemented, and test the operational
effectiveness of the relevant internal controls;
(2) Test general controls of information system and application controls related to the
revenue recognition process;
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2019 Annual Report
(3) Examine major sales contracts and lease contracts, understand the major provisions
or conditions thereof, and evaluate whether revenue recognition methods are appropriate;
(4) Implement analysis procedures for operating income and gross margin by month,
product, customer, etc., to identify whether there are significant or unusual fluctuations and
to find out the causes of such fluctuations;
(5) For sales income, sample supporting documents related to revenue recognition,
including sales contracts or orders, sales invoices, warehouse receipts, delivery notes,
transport information, customer signature forms, export declarations and electronic port
system information; for lease income, sample supporting documents including, among other
things, lease contracts, orders, installation orders, unit lease price per hour, and number of
hours consumed;
(6) In conjunction with accounts receivable confirmation procedures, send confirmation
to major customers to recognize the current sale volumes on a sample basis;
(7) Conduct the cut-off test on the operating incomes recognized on or after the balance
sheet date to evaluate whether the operating incomes are recognized during the appropriate
period;
(8) Obtain a record of sales returns after the balance sheet date to check if there is any
instance that conditions for revenue recognition were not met at the balance sheet date;
(9) Check whether information relative to operating income is properly presented in the
financial statements.
(II) Net realizable value of inventories
1. Description
Details of relevant information are disclosed in V 15 and VII 9 of Section XI.
As of December 31, 2019, the carrying amount of inventories of Appotronics amounted
to RMB 340,431,100, and provisions for decline in value of inventories amounted to RMB
40,464,900, hence the book value of inventories amounted to RMB 299,966,200.
At the balance sheet date, inventories are measured at the lower of cost and net
realizable value. If the net realizable value is below the cost of inventories, a provision for
decline in value of inventories is made. In view of the purpose of holding inventories, the
management determines the estimated selling price of inventories based on historical or
actual average selling prices, and the net realizable value of inventories in accordance with
the balance of the estimated selling price less the sum of the estimated costs of completion
and the estimated costs necessary to make the sale and relevant taxes. The amount of
inventories is material and the determination of the net realizable value of inventories
involves significant management judgment, therefore, we identified the determination of the
net realizable value of inventories as a key audit matter.
2. Description of how the key audit matter was addressed in the audit
For the net realizable value of inventories, our audit procedures include, inter alia:
(1) Understand the key internal controls related to the net realizable value of inventories,
evaluate the design of those controls, determine whether they are implemented, and test the
operational effectiveness of the relevant internal controls;
(2) Review the management's forecast of the estimated selling price of inventories on a
sample basis, comparing the estimated selling price with historical data and subsequent
situations, etc.;
(3) Evaluate the appropriateness of the management's estimates on the estimated costs
of completion of inventories and the estimated costs necessary to make the sale and relevant
taxes;
(4) Test the accuracy of the management's calculation on the net realizable value of
inventories;
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(5) Evaluate the reasonableness of the management's estimates on the net realizable
value of inventories by checking inventories recognized at the end of the period in terms of
long age, obsolescence, changes in technology or market demand in conjunction with
inventory monitoring;
(6) Check whether information relative to the net realizable value of inventories is
properly presented in the financial statements.
IV. Other information
The management is responsible for other information. The other information comprises
the information included in the annual report, but does not include the financial statements
and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do
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 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, 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 the management and those charged with governance for the
financial statements
The management is responsible for the preparation and fair presentation of the financial
statements in accordance with Accounting Standards for Business Enterprises, and designing,
implementing and maintaining internal control that is necessary to enable the financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing
Appotronics’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the
management either intends to liquidate Appotronics or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance of Appotronics (hereinafter referred to as “Those
Charged with Governance”) are responsible for overseeing Appotronics’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 China Standards
on Auditing 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 China Standards on Auditing, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than that
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2019 Annual Report
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the internal control.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.
(IV) Conclude on the appropriateness of the management's use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on Appotronics'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 Appotronics to cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements,
and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
(VI)Obtain sufficient and appropriate audit evidence regarding the financial
information of the entities or business activities within Appotronics to express an opinion on
the financial statements. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, 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 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.
Pan-China Certified Public Accountants Chinese Certified Public Accountant:
(Special General Partnership) (Partner in Charge)
Hangzhou, China Chinese Certified Public Accountant:
April 28, 2020
II. Financial statements
Consolidated Balance Sheet
At December 31, 2019
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2019 Annual Report
Prepared by: Appotronics Corporation Limited
In RMB
At December 31,
Item Note At December 31, 2018
2019
Current Assets:
Cash and bank balances 1 875,858,784.58 484,169,208.44
Balances with clearing
agencies
Placements with banks and
other financial institutions
Held-for-trading financial 2 540,000,000.00
assets
Financial assets at fair value
through profit or loss
Derivative financial assets
Notes receivable 3 4,042,559.63 35,903,632.13
Accounts receivable 4 176,035,155.24 119,715,786.19
Receivables financing 5 1,980,500.00
Prepayments 6 35,070,999.13 22,909,249.21
Premiums receivable
Amounts receivable under
reinsurance contracts
Reinsurer's share of insurance
contract reserves
Other receivables 7 9,618,750.08 12,543,543.59
Including: Interest receivable
Dividends receivable
Financial assets purchased
under resale agreements
Inventories 8 299,966,170.35 325,302,295.60
Held-for-sale assets
Non-current assets due within
one year
Other current assets 9 44,405,513.30 44,707,753.47
Total Current Assets 1,986,978,432.31 1,045,251,468.63
Non-current Assets:
Loans and advances
Debt investments
Available-for-sale financial 11,975,419.38
assets
Other debt investments
Held-to-maturity investments
Long-term receivables
Long-term equity investments 10 139,534,371.94
Other equity instrument 11 11,975,419.38
investments
Other non-current financial
assets
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2019 Annual Report
Investment properties
Fixed assets 12 471,204,340.95 399,651,937.13
Construction in progress 13 20,132,004.07 30,953,213.42
Bearer biological assets
Oil and gas assets
Use right assets
Intangible assets 14 332,331,324.07 342,227,766.06
Development expenditure
Goodwill
Long-term prepaid expenses 15 16,908,070.34 6,400,455.04
Deferred tax assets 16 109,023,941.85 99,492,975.74
Other non-current assets 17 11,420,185.94 137,518,255.16
Total Non-current Assets 1,112,529,658.54 1,028,220,021.93
Total assets 3,099,508,090.85 2,073,471,490.56
Current Liabilities:
Short-term borrowings 18 76,765,319.05 124,440,000.00
Loans from the central bank
Taking from banks and other
financial institutions
Held-for-trading financial
liabilities
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 19 37,335,841.79 39,051,466.05
Accounts payable 20 176,624,445.46 164,258,731.06
Receipts in advance 21 184,444,643.33 172,867,568.93
Financial assets sold under
repurchase agreements
Customer deposits and deposits
from banks and other financial
institutions
Funds from securities trading
agency
Funds from underwriting
securities agency
Employee benefits payable 22 50,586,932.71 38,184,612.34
Taxes payable 23 42,924,647.79 59,954,133.70
Other payables 24 14,364,076.43 185,661,537.24
Including: Interest payable
Dividends payable
Fees and commissions payable
Amounts payable under
reinsurance contracts
Held-for-sale liabilities
Non-current liabilities due 25 64,968,795.02 28,609,163.00
within one year
Other current liabilities
153 / 312
2019 Annual Report
Total Current Liabilities 648,014,701.58 813,027,212.32
Non-current Liabilities:
Insurance contract reserves
Long-term borrowings 26 279,615,107.27 403,107,800.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Leasing liabilities
Long-term payables 27 3,488,100.00 6,863,200.00
Long-term employee benefits
payable
Provisions 28 27,072,676.49 9,449,087.12
Deferred income 29 17,108,361.69 14,125,164.43
Deferred tax liabilities
Other non-current liabilities
Total Non-current Liabilities 327,284,245.45 433,545,251.55
Total Liabilities 975,298,947.03 1,246,572,463.87
Owners' (or Shareholders')
Equity:
Paid-in capital (or share 30 451,554,411.00 383,554,411.00
capital)
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 31 1,207,942,318.37 205,995,596.85
Less: Treasury shares
Other comprehensive income 32 3,287,063.85 1,044,703.00
Special reserve
Surplus reserve 33 22,800,224.13 12,695,712.93
General risk reserve
Retained profits 34 288,975,820.29 112,623,054.78
Total owners’ (or 1,974,559,837.64 715,913,478.56
shareholders’) equity attributable
to owners of the Parent Company
Minority interests 149,649,306.18 110,985,548.13
Total Owners’ (or 2,124,209,143.82 826,899,026.69
Shareholders’) Equity
Total Liabilities and 3,099,508,090.85 2,073,471,490.56
Owners’ (or Shareholders’)
Equity
Legal Representative: Person in Charge of the Accounting Body: Chief Accountant:
BO Lianming ZHAO Ruijin WEI Yanlin
154 / 312
2019 Annual Report
Balance Sheet of the Parent Company
At December 31, 2019
Prepared by: Appotronics Corporation Limited
In RMB
At December 31,
Item Note At December 31, 2019
2018
Current Assets:
Cash and bank balances 570,479,390.49 306,709,743.06
Held-for-trading financial 540,000,000.00
assets
Financial assets at fair value
through profit or loss
Derivative financial assets
Notes receivable 3,542,559.63 10,091,743.00
Accounts receivable 1 299,315,776.44 227,673,423.35
Receivables financing 442,500.00
Prepayments 6,410,257.48 12,293,204.18
Other receivables 2 67,227,575.21 34,226,930.38
Including: Interest receivable
Dividends receivable
Inventories 135,617,379.22 180,602,162.31
Held-for-sale assets
Non-current assets due within
one year
Other current assets 12,280,164.39
Total Current Assets 1,635,315,602.86 771,597,206.28
Non-current Assets:
Debt investments
Available-for-sale financial 7,075,419.38
assets
Other debt investments
Held-to-maturity investments
Long-term receivables
Long-term equity investments 3 257,795,276.13 219,365,735.89
Other equity instrument 7,075,419.38
investments
Other non-current financial
assets
Investment properties
Fixed assets 60,391,512.92 49,100,811.69
Construction in progress 1,385,496.59
Bearer biological assets
Oil and gas assets
Use right assets
Intangible assets 330,796,423.87 340,207,888.91
Development expenditure
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2019 Annual Report
Goodwill
Long-term prepaid expenses 12,771,126.83 4,155,925.64
Deferred tax assets 9,545,438.20 5,710,071.90
Other non-current assets 6,744,453.85 254,255.16
Total Non-current Assets 686,505,147.77 625,870,108.57
Total assets 2,321,820,750.63 1,397,467,314.85
Current Liabilities:
Short-term borrowings 10,217,738.36 124,440,000.00
Held-for-trading financial
liabilities
Financial liabilities at fair
value through profit or loss
Derivative financial liabilities
Notes payable 37,335,841.79 39,051,466.05
Accounts payable 162,596,838.45 140,069,264.80
Receipts in advance 11,116,659.11 35,062,546.75
Employee benefits payable 26,985,668.92 20,568,733.86
Taxes payable 1,534,242.70 18,958,729.81
Other payables 42,599,703.36 173,955,421.70
Including: Interest payable
Dividends payable
Held-for-sale liabilities
Non-current liabilities due
within one year
Other current liabilities
Total Current Liabilities 292,386,692.69 552,106,162.97
Non-current Liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Leasing liabilities
Long-term payables 3,488,100.00 6,863,200.00
Long-term employee benefits
payable
Provisions 14,631,273.00 9,449,087.12
Deferred income 15,724,174.30 5,125,274.76
Deferred tax liabilities
Other non-current liabilities
Total Non-current 33,843,547.30 21,437,561.88
Liabilities
Total Liabilities 326,230,239.99 573,543,724.85
Owners’ (or shareholders’)
equity:
Paid-in capital (or share 451,554,411.00 383,554,411.00
capital)
Other equity instruments
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2019 Annual Report
Including: Preferred shares
Perpetual bonds
Capital reserve 1,310,939,867.82 308,318,059.21
Less: Treasury shares
Other comprehensive income
Special reserve
Surplus reserve 21,522,683.40 11,418,172.20
Retained profits 211,573,548.42 120,632,947.59
Total Owners’ (or 1,995,590,510.64 823,923,590.00
Shareholders’) Equity
Total Liabilities and 2,321,820,750.63 1,397,467,314.85
Owners’(or Shareholders’)
Equity:
Legal Representative: Person in Charge of the Accounting Body: Chief Accountant:
BO Lianming ZHAO Ruijin WEI Yanlin
Consolidated Income Statement
January to December 2019
In RMB
Item Note 2019 2018
I. Total operating income 1,979,148,918.89 1,385,727,211.09
Including: Operating income 1 1,979,148,918.89 1,385,727,211.09
Interest income
Premiums earned
Fee and commission income
II. Total operating costs 1,726,836,417.68 1,127,865,623.06
Including: Operating costs 1 1,183,650,635.25 783,243,430.56
Interest expenses
Fee and commission
expenses
Surrenders
Claims and policyholder
benefits (net of amounts
recoverable from reinsurers)
Net withdrawal of insurance
contract reserves
Insurance policyholder
dividends
Expenses for reinsurance
accepted
Taxes and levies 2 7,610,151.14 13,613,823.19
Selling expenses 3 151,760,111.00 102,349,110.00
Administrative expenses 4 152,626,530.61 95,580,970.10
R&D expenses 5 201,697,766.26 135,730,450.92
Financial expenses 6 29,491,223.42 -2,652,161.71
Including: Interest expense 33,120,484.94 23,216,946.43
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2019 Annual Report
Interest income 4,079,231.03 2,204,490.11
Add: other income 7 34,124,614.12 20,937,327.12
Investment income (loss is 8 9,549,063.05
indicated by “-”)
Including: Income from -3,927.93
investments in associates and joint
ventures
Gains from
derecognition of financial assets at
amortized assets
Foreign exchange gains
(loss is indicated by “-”)
Gains from net exposure
hedges (loss is indicated by “-”)
Gains from changes in fair
values (loss is indicated by “-”)
Losses of credit impairment 9 -3,771,572.38
(loss is indicated by “-”)
Impairment losses of assets 10 -12,623,251.67 -20,002,303.09
(loss is indicated by “-”)
Gains from disposal of 11 41,420.84
assets (loss is indicated by “-”)
III. Operating profit (loss is 279,632,775.17 258,796,612.06
indicated by “-”)
Add: Non-operating income 12 3,926,066.73 1,315,412.86
Less: Non-operating expenses 13 4,200,197.56 1,845,147.81
IV. Total profits (total losses are 279,358,644.34 258,266,877.11
indicated by “-”)
Less: Income tax expenses 14 54,982,221.63 46,715,665.67
V. Net profits (net losses are 224,376,422.71 211,551,211.44
indicated by “-”)
(I) Categorized by the continuity of operation
1. Net profits from continuing 224,376,422.71 211,551,211.44
operations (net losses are indicated
by "-")
2. Net profits from
discontinued operations (net losses
are indicated by “-”)
(II) Categorized by the ownership
1.Net profits attributable to 186,457,276.71 176,971,092.49
shareholders of the Parent
Company(net losses are indicated
by "-")
2. Profits or losses attributable 37,919,146.00 34,580,118.95
to minority shareholders (net losses
are indicated by “-”)
VI. Other comprehensive income, 2,311,885.81 948,957.22
net of tax
(I) Other comprehensive income 2,242,360.85 1,044,936.22
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2019 Annual Report
that can be attributable to owners of
the Parent Company, net of tax
1. Other comprehensive
income that cannot be reclassified
subsequently to profit or loss
(1) Changes from remeasurement
of defined benefit plans
(2) Other comprehensive income
that cannot be reclassified to profit
or loss under the equity method
(3) Changes in fair value of
investments in other equity
instruments
(4) Changes in fair value of
enterprises’ own credit risks
2.Other comprehensive 2,242,360.85 1,044,936.22
income that will be reclassified to
profit or loss
(1) Other comprehensive income
that will be reclassified to profit or
loss under the equity method
(2) Changes in fair value of other
debt investments
(3) Profit or loss from changes in
the fair value of available-for-sale
financial assets
(4) Amount of financial assets
reclassified to other comprehensive
income
(5) Profit or loss arising from
reclassification of held-to-maturity
investments to available-for-sale
financial assets
(6) Provision for credit
impairment of other debt
investments
(7) Reserve for cash flow hedges
(Effective portion of profit or loss
from cash flow hedges)
(8) Exchange differences on 2,242,360.85 1,044,936.22
translation of financial statements
denominated in foreign currencies
(9) Others
(II) Other comprehensive income 69,524.96 -95,979.00
that can be attributable to minority
shareholders, net of tax
VII. Total comprehensive income 226,688,308.52 212,500,168.66
(I) Total comprehensive income 188,699,637.56 178,016,028.71
that can be attributable to owners of
159 / 312
2019 Annual Report
the Parent Company
(II) Total comprehensive income 37,988,670.96 34,484,139.95
that can be attributable to minority
shareholders
VIII. Earnings per share:
(I) Basic earnings per share 0.45 0.73
(RMB/share)
(II) Diluted earnings per share 0.45 0.73
(RMB/share)
For business combination involving entities under common control occurred during the
period, net profit of the acquiree generated before the business combination is nil, and net
profit of the acquiree generated in prior period is nil.
Legal Representative: Person in Charge of the Accounting Body: Chief Accountant:
BO Lianming ZHAO Ruijin WEI Yanlin
Income Statement of the Parent Company
January to December 2019
In RMB
Item Note 2019 2018
I. Operating income 1 1,070,365,243.34 1,175,915,671.75
Less: Operating costs 1 728,135,468.64 768,440,895.19
Taxes and levies 4,961,497.25 9,754,824.93
Selling expenses 82,052,362.77 93,799,707.78
Administrative expenses 104,579,027.77 69,895,078.82
R&D expenses 113,795,005.25 94,422,286.20
Financial expenses -5,955,117.03 -18,973,568.93
Including: Interest expense 4,340,274.90 8,376,479.52
Interest income 10,208,837.58 3,138,192.73
Add: other income 13,016,565.69 9,123,680.33
Investment income (loss is 2 55,488,448.65
indicated by “-”)
Including: Income from
investments in associates and joint
ventures
Gains from
derecognition of financial assets at
amortized assets
Gains from net exposure
hedges (loss is indicated by “-”)
Gains from changes in fair
values (loss is indicated by “-”)
Losses of credit impairment -1,682,540.09
(loss is indicated by “-”)
Impairment losses of assets -11,985,107.53 -35,920,615.46
(loss is indicated by “-”)
160 / 312
2019 Annual Report
Gains from disposal of
assets (loss is indicated by “-”)
II. Operating profit (loss is 97,634,365.41 131,779,512.63
indicated by “-”)
Add: Non-operating income 3,686,726.20 1,128,266.53
Less: Non-operating expenses 2,291,107.75 1,386,526.38
III. Total profits (total losses are 99,029,983.86 131,521,252.78
indicated by “-”)
Less: Income tax expenses -2,015,128.17 17,339,530.79
IV. Net profits (net losses are 101,045,112.03 114,181,721.99
indicated by “-”)
(I) Net profits from continuing 101,045,112.03 114,181,721.99
operations (net losses are indicated
by “-”)
(II) Net profits from
discontinued operations (net losses
are indicated by “-”)
V. Other comprehensive income,
net of tax
(I) Other comprehensive income
that cannot be reclassified
subsequently to profit or loss
1.Changes from
remeasurement of defined benefit
plans
2. Other comprehensive
income that cannot be reclassified
to profit or loss under the equity
method
3.Changes in fair value of
investments in other equity
instruments
4.Changes in fair value of
enterprises’ own credit risks
(II) Other comprehensive
income that will be reclassified to
profit or loss
1. Other comprehensive
income that will be reclassified to
profit or loss under the equity
method
2. Changes in fair value of
other debt investments
3. Profit or loss from changes
in the fair value of
available-for-sale financial assets
4. Amount of financial assets
reclassified to other comprehensive
income
161 / 312
2019 Annual Report
5. Profit or loss arising from
reclassification of held-to-maturity
investments to available-for-sale
financial assets
6. Provision for credit
impairment of other debt
investments
7. Reserve for cash flow
hedges (Effective portion of profit
or loss from cash flow hedges)
8. Exchange differences on
translation of financial statements
denominated in foreign currencies
9. Others
VI. Total comprehensive income 101,045,112.03 114,181,721.99
VII. Earnings per share:
(I) Basic earnings per share 0.25 0.47
(RMB/share)
(II) Diluted earnings per 0.25 0.47
share(RMB/share)
Legal Representative: Person in Charge of the Accounting Body: Chief Accountant:
BO Lianming ZHAO Ruijin WEI Yanlin
Consolidated Cash Flow Statement
January to December 2019
In RMB
Item Note 2019 2018
I. Cash Flows from
Operating Activities:
Cash receipts from the sale 2,141,322,935.57 1,689,416,835.44
of goods and the rendering of
services
Net increase in customer
deposits and deposits from
banks and other financial
institutions
Net increase in loans from
the central bank
Net increase in taking from
banks and other financial
institutions
Cash receipts from
premiums under direct
insurance contracts
Net cash receipts from
reinsurance business
162 / 312
2019 Annual Report
Net cash receipts from
policyholders’ deposits and
investment contract liabilities
Cash receipts from interest,
fees and commissions
Net increase in taking from
banks
Net increase in financial
assets sold under repurchase
arrangements
Net cash received from
securities trading agencies
Receipts of tax refunds 9,567,790.75 70,031,597.14
Other cash receipts relating 1 78,562,934.95 75,443,525.79
to operating activities
Sub-total of cash inflows 2,229,453,661.27 1,834,891,958.37
from operating activities
Cash payments for goods 1,318,597,298.92 1,168,397,115.69
purchased and services
received
Net increase in loans and
advances to customers
Net increase in balance with
the central bank and due from
banks and other financial
institutions
Cash payments for claims
and policyholders' benefits
under direct insurance
contracts
Net increase in placements
with banks and other financial
institutions
Cash payments for interest,
fees and commissions
Cash payments for
insurance policyholder
dividends
Cash payments to and on 285,393,667.92 206,733,872.64
behalf of employees
Payments of various types 125,550,662.05 159,832,368.26
of taxes
Other cash payments 2 256,911,128.67 182,155,147.48
relating to operating activities
Sub-total of cash 1,986,452,757.56 1,717,118,504.07
outflows from operating
activities
Net cash flow from 243,000,903.71 117,773,454.30
operating activities
163 / 312
2019 Annual Report
II. Cash Flows from
Investing Activities:
Cash receipts from 1,312,700,000.00 3,800,000.00
disposals and recovery of
investments
Cash receipts from 9,552,990.98
investment income
Net cash receipts from 257,846.73 4,525.88
disposals of fixed assets,
intangible assets and other
long-term assets
Net cash receipts from
disposals of subsidiaries and
other business units
Other cash receipts relating 85,426,350.80
to investing activities
Sub-total of cash inflows 1,322,510,837.71 89,230,876.68
from investing activities
Cash payments to acquire or 243,918,747.78 195,082,197.29
construct fixed assets,
intangible assets and other
long-term assets
Cash payments to acquire 1,851,450,000.00 149,439,419.38
investments
Net increase in pledged
loans receivables
Net cash payments for 17,141,440.00
acquisitions of subsidiaries
and other business units
Other cash payments
relating to investing activities
Sub-total of cash 2,095,368,747.78 361,663,056.67
outflows from investing
activities
Net cash flow from -772,857,910.07 -272,432,179.99
investing activities
III. Cash Flows from
Financing Activities:
Cash receipts from capital 1,094,215,094.34 451,406,814.28
contributions
Including: cash receipts 10,347,000.00
from capital contributions
from minority shareholders of
subsidiaries
Cash receipts from 405,787,875.56 446,934,500.00
borrowings
Other cash receipts relating 51,102,952.00
to financing activities
Sub-total of cash inflows 1,500,002,969.90 949,444,266.28
164 / 312
2019 Annual Report
from financing activities
Cash repayments of 541,704,799.90 337,789,537.00
borrowings
Cash payments for 34,285,290.48 31,772,229.05
distribution of dividends or
profits or settlement of interest
expenses
Including: payments for
distribution of dividends or
profits to minority
shareholders of subsidiaries
Other cash payments 39,396,048.75 57,319,710.86
relating to financing activities
Sub-total of cash 615,386,139.13 426,881,476.91
outflows from financing
activities
Net cash flow from 884,616,830.77 522,562,789.37
financing activities
IV. Effect of Foreign 2,521,113.05 24,581,322.48
Exchange Rate Changes on
Cash and Cash Equivalents
V. Net Increase in Cash and 357,280,937.46 392,485,386.16
Cash Equivalents
Add: Opening balance of 472,508,550.40 80,023,164.24
cash and cash equivalents
VI. Closing Balance of Cash 829,789,487.86 472,508,550.40
and Cash Equivalents
Legal representative: Person in Charge of the Accounting Body: Chief Accountant:
BO Lianming ZHAO Ruijin WEI Yanlin
Cash Flow Statement of the Parent Company
January to December 2019
In RMB
Item Note 2019 2018
I. Cash Flows from
Operating Activities:
Cash receipts from the sale 1,084,739,304.57 1,217,448,068.36
of goods and the rendering of
services
Receipts of tax refunds 4,102,468.55 2,600,794.13
Other cash receipts relating 76,574,005.12 62,940,850.96
to operating activities
Sub-total of cash inflows 1,165,415,778.24 1,282,989,713.45
from operating activities
Cash payments for goods 722,868,487.80 829,239,661.69
purchased and services
received
165 / 312
2019 Annual Report
Cash payments to and on 180,775,409.02 150,626,823.38
behalf of employees
Payments of various types 46,036,572.76 103,776,148.37
of taxes
Other cash payments 180,658,173.58 189,099,669.62
relating to operating activities
Sub-total of cash 1,130,338,643.16 1,272,742,303.06
outflows from operating
activities
Net cash flow from 35,077,135.08 10,247,410.39
operating activities
II. Cash Flows from
Investing Activities:
Cash receipts from 1,313,635,457.67 3,800,000.00
disposals and recovery of
investments
Cash receipts from 55,552,990.98
investment income
Net cash receipts from 117,985.66 1,775.89
disposals of fixed assets,
intangible assets and other
long-term assets
Net cash receipts from
disposals of subsidiaries and
other business units
Other cash receipts relating 124,900,000.00 147,432,129.81
to investing activities
Sub-total of cash inflows 1,494,206,434.31 151,233,905.70
from investing activities
Cash payments to acquire or 227,902,344.94 186,456,128.18
construct fixed assets,
intangible assets and other
long-term assets
Cash payments to acquire 1,886,364,000.00 162,409,419.38
investments
Net cash payments for
acquisitions of subsidiaries
and other business units
Other cash payments 166,020,000.00 51,200,000.00
relating to investing activities
Sub-total of cash 2,280,286,344.94 400,065,547.56
outflows from investing
activities
Net cash flow from -786,079,910.63 -248,831,641.86
investing activities
III. Cash Flows from
Financing Activities:
Cash receipts from capital 1,094,215,094.34 441,059,814.28
contributions
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2019 Annual Report
Cash receipts from 132,000,000.00 176,000,000.00
borrowings
Other cash receipts relating 114,000,000.00 1,167,254.48
to financing activities
Sub-total of cash inflows 1,340,215,094.34 618,227,068.76
from financing activities
Cash repayments of 246,440,000.00 141,560,000.00
borrowings
Cash payments for 5,416,064.64 7,758,293.09
distribution of dividends or
profits or settlement of interest
expenses
Other cash payments 110,396,048.75 5,248,465.69
relating to financing activities
Sub-total of cash 362,252,113.39 154,566,758.78
outflows from financing
activities
Net cash flow from 977,962,980.95 463,660,309.98
financing activities
IV. Effect of Foreign 2,638,810.20 23,568,697.81
Exchange Rate Changes on
Cash and Cash Equivalents
V. Net Increase in Cash and 229,599,015.60 248,644,776.32
Cash Equivalents
Add: Opening balance of 295,049,085.02 46,404,308.70
cash and cash equivalents
VI. Closing Balance of Cash 524,648,100.62 295,049,085.02
and Cash Equivalents
Legal Representative: Person in Charge of the Accounting Body: Chief Accountant:
BO Lianming ZHAO Ruijin WEI Yanlin
167 / 312
2019 Annual Report
Consolidated Statement of Changes in Owners’ Equity
January to December 2019
In RMB
2019
Equity attributable to owners of the Parent Company
Item Minority Total Owner's
Other equity instruments Gener interests Equity
Less: Other
Paid-in capital Special al risk Other
Capital reserve Treasury comprehensive Surplus reserve Retained profits Sub-total
(or share capital) Preferred Perpetual reserve reserv s
Others shares income
shares bonds e
I. Closing balance of the 383,554,411.00 205,995,596.85 1,044,703.00 12,695,712.93 112,623,054.78 715,913,478.56 110,985,548.13 826,899,026.69
preceding year
Add: Changes in accounting
policies
Corrections of prior
period errors
Business combination
involving entities under
common control
Others
II. Opening balance of the 383,554,411.00 205,995,596.85 1,044,703.00 12,695,712.93 112,623,054.78 715,913,478.56 110,985,548.13 826,899,026.69
current year
III. Changes for the year 68,000,000.00 1,001,946,721.52 2,242,360.85 10,104,511.20 176,352,765.51 1,258,646,359.08 38,663,758.05 1,297,310,117.13
(decrease is indicated by
“-”)
(I) Total comprehensive 2,242,360.85 186,457,276.71 188,699,637.56 37,988,670.96 226,688,308.52
income
(II) Owners’ contributions 68,000,000.00 1,001,946,721.52 1,069,946,721.52 675,087.09 1,070,621,808.61
and reduction in capital
1. Ordinary shares 68,000,000.00 994,470,797.73 1,062,470,797.73 1,062,470,797.73
contributed by owners
2. Capital contribution from
holders of other equity
instruments
3. Share-based payment 7,475,923.79 7,475,923.79 675,087.09 8,151,010.88
recognized in owners'
equity
4. Others
(III) Profit distribution 10,104,511.20 -10,104,511.20
1. Transfer to surplus 10,104,511.20 -10,104,511.20
reserve
2. Transfer to general risk
reserve
3. Distributions to owners
(or shareholders)
4. Others
(IV) Transfers within
owners’ equity
1.Capitalization of capital
reserve
2. Capitalization of capital
reserve
3. Loss offset by surplus
reserve
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4.Retained earnings carried
forward from changes in
defined benefit plans
5.Retained earnings carried
forward from other
comprehensive income
6.Others
(V) Special reserve
1. Transfer to special
reserve in the period
2. Amount utilized in the
period
(VI) Others
IV. Closing balance of the 451,554,411.00 1,207,942,318.37 3,287,063.85 22,800,224.13 288,975,820.29 1,974,559,837.64 149,649,306.18 2,124,209,143.82
current year
2018
Equity attributable to owners of the Parent Company
Item Minority Total Owner's
Other equity instruments Less: Genera interests Equity
Paid-in capital Other comprehensive Special
Capital reserve Treasury Surplus reserve l risk Retained profits Others Sub-total
(or share capital) income reserve
Preferred Perpetual shares reserve
Others
shares bonds
I. Closing balance of the 48,238,559.00 10,559,256.60 -233.22 9,630,943.39 2,143,646.15 70,572,171.92 60,901,980.61 131,474,152.53
preceding year
Add: Changes in accounting
policies
Corrections of prior
period errors
Business combination
involving entities under
common control
Others
II. Opening balance of the 48,238,559.00 10,559,256.60 -233.22 9,630,943.39 2,143,646.15 70,572,171.92 60,901,980.61 131,474,152.53
current year
III. Changes for the year 335,315,852.00 195,436,340.25 1,044,936.22 3,064,769.54 110,479,408.63 645,341,306.64 50,083,567.52 695,424,874.16
(decrease is indicated by “-”)
(I) Total comprehensive 1,044,936.22 176,971,092.49 178,016,028.71 34,484,139.95 212,500,168.66
income
(II) Owners’ contributions and 335,315,852.00 128,218,349.18 463,534,201.18 17,710,656.00 481,244,857.18
reduction in capital
1．Ordinary shares 335,315,852.00 105,743,962.28 441,059,814.28 17,847,000.00 458,906,814.28
contributed by owners
2.Capital contribution from
holders of other equity
instruments
3. Share-based payment 22,338,042.90 22,338,042.90 22,338,042.90
recognized in owners' equity
4. Others 136,344.00 136,344.00 -136,344.00
(III) Profit distribution 11,418,172.20 -11,418,172.20
1. Transfer to surplus reserve 11,418,172.20 -11,418,172.20
2. Transfer to general reserve
3. Distributions to owners (or
shareholders)
4. Others
(IV) Transfers within owners’ 65,664,628.79 -8,353,402.66 -57,311,226.13
equity
1.Capitalization of capital
reserve
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2. Capitalization of capital
reserve
3. Loss offset by surplus
reserve
4.Retained earnings carried
forward from changes in
defined benefit plans
5.Retained earnings carried
forward from other
comprehensive income
6.Others 65,664,628.79 -8,353,402.66 -57,311,226.13
(V) Special reserve
1. Transfer to special reserve
in the period
2. Amount utilized in the
period
(VI) Others 1,553,362.28 2,237,714.47 3,791,076.75 -2,111,228.43 1,679,848.32
IV. Closing balance of the 383,554,411.00 205,995,596.85 1,044,703.00 0 12,695,712.93 112,623,054.78 715,913,478.56 110,985,548.13 826,899,026.69
current year
Legal Representative: Person in Charge of the Accounting Body: Chief Accountant:
BO Lianming ZHAO Ruijin WEI Yanlin
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2019 Annual Report
Statement of Changes in Owners’ Equity of the Parent Company
January to December 2019
In RMB
2019
Other equity instruments Less: Other
Item Paid-in capital (or share Special
Capital reserve Treasury comprehensive Surplus reserve Retained profits Total Owner's Equity
capital) Preferred Perpetual reserve
Others shares income
shares bonds
I. Closing balance of the preceding year 383,554,411.00 308,318,059.21 11,418,172.20 120,632,947.59 823,923,590.00
Add: Changes in accounting policies
Corrections of prior period errors
Others
II. Opening balance of the current year 383,554,411.00 308,318,059.21 11,418,172.20 120,632,947.59 823,923,590.00
III. Changes for the year (decrease is 68,000,000.00 1,002,621,808.61 10,104,511.20 90,940,600.83 1,171,666,920.64
indicated by “-”)
(I) Total comprehensive income 101,045,112.03 101,045,112.03
(II) Owners’ contributions and 68,000,000.00 1,034,366,105.22 1,102,366,105.22
reduction in capital
1. Ordinary shares contributed by 68,000,000.00 1,026,215,094.34 1,094,215,094.34
owners
2.Capital contribution from holders of
other equity instruments
3. Share-based payment recognized in 8,151,010.88 8,151,010.88
owners' equity
4. Others
(III) Profit distribution 10,104,511.20 -10,104,511.20
1. Transfer to surplus reserve 10,104,511.20 -10,104,511.20
2. Distributions to owners (or
shareholders)
3. Others
(IV) Transfers within owners’ equity
1.Capitalization of capital reserve
2. Capitalization of capital reserve
3. Loss offset by surplus reserve
4.Retained earnings carried forward
from changes in defined benefit plans
5.Retained earnings carried forward
from other comprehensive income
6.Others
(V) Special reserve
1. Transfer to special reserve in the
period
2. Amount utilized in the period
(VI) Others -31,744,296.61 -31,744,296.61
IV. Closing balance of the current year 451,554,411.00 1,310,939,867.82 21,522,683.40 211,573,548.42 1,995,590,510.64
Item 2018
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2019 Annual Report
Other equity instruments
Paid-in capital (or share Less: Treasury Other comprehensive Special Surplus Retained Total Owner's
Capital reserve
capital) Preferred Perpetual shares income reserve reserve profits Equity
Others
shares bonds
I. Closing balance of the preceding year 48,238,559.00 114,571,425.24 8,353,402.66 75,180,623.93 246,344,010.83
Add: Changes in accounting policies
Corrections of prior period errors
Others
II. Opening balance of the current year 48,238,559.00 114,571,425.24 8,353,402.66 75,180,623.93 246,344,010.83
III. Changes for the year (decrease is indicated 335,315,852.00 193,746,633.97 3,064,769.54 45,452,323.66 577,579,579.17
by “-”)
(I) Total comprehensive income 114,181,721.99 114,181,721.99
(II) Owners’ contributions and reduction in 335,315,852.00 128,082,005.18 463,397,857.18
capital
1. Ordinary shares contributed by owners 335,315,852.00 105,743,962.28 441,059,814.28
2.Capital contribution from holders of other
equity instruments
3. Share-based payment recognized in owners' 22,338,042.90 22,338,042.90
equity
4. Others
(III) Profit distribution 11,418,172.20 -11,418,172.20
1. Transfer to surplus reserve 11,418,172.20 -11,418,172.20
2. Distributions to owners (or shareholders)
3. Others
(IV) Transfers within owners’ equity 65,664,628.79 -8,353,402.66 -57,311,226.13
1. Capitalization of capital reserve
2. Capitalization of capital reserve
3. Loss offset by surplus reserve
4.Retained earnings carried forward from
changes in defined benefit plans
5.Retained earnings carried forward from other
comprehensive income
6.Others 65,664,628.79 -8,353,402.66 -57,311,226.13
(V) Special reserve
1. Transfer to special reserve in the period
2. Amount utilized in the period
(VI) Others
IV. Closing balance of the current year 383,554,411.00 308,318,059.21 11,418,172.20 120,632,947.59 823,923,590.00
Legal Representative: BO Lianming Person in Charge of the Accounting Body: ZHAO Ruijin Chief Accountant: WEI Yanlin
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2019 Annual Report
III. Basic information
1. Profile
√Applicable □N/A
Appotronics Corporation Limited (hereinafter referred to as “Company” or “the
Company”), formally named as Appotronics Corporation Ltd.(hereinafter referred to as
“Appotronics Ltd.”), was jointly invested and established by LI Yi and XU Yanzheng and
registered in Nanshan Branch of Market Supervision and Regulation Bureau of Shenzhen
Municipality on October 24, 2006 with the business license numbered in 4403011245637.
Upon establishment, the registered capital of Appotronics Inc. was RMB 100,000. On May
31, 2018, the benchmark date, Appotronics Inc was changed into a company limited by
shares as a whole. On July 20, 2018, the Company completed the registration in Nanshan
Branch of Market Supervision and Regulation Bureau of Shenzhen Municipality and
headquartered in Shenzhen, Guangdong Province. The Company now holds the business
license with the unified social credit code of 91440300795413991N and has registered
capital amounted to RMB 451,554,411.00. The Company has 451,554,411 shares in total
(with the par value of RMB 1 per share), of which 394,361,498 shares were outstanding
shares under restrictions and 57,192,913 shares were outstanding shares without restrictions.
The Company’s shares were listed for trading on Shanghai Stock Exchange on July 22, 2019.
The Company can be classified into the computer, communication and other electronic
equipment manufacturing industry. It mainly engages in research and development,
production, sales and leasing of laser display core devices and complete equipment, and can
provide customers with technical research and development services and customized
products. Its products mainly include laser business education projectors, laser TV, laser
large venue projector and laser digital cinema projector.
This financial statements have been approved by the Company’s twenty-first session of
the first board of directors on April 28, 2020 for public disclosure.
2. Scope of consolidated financial statements
√Applicable □N/A
The Company has included 17 subsidiaries into the consolidated financial statements
for the current period, including Appotronics Timewaying (Beijing) Technology Co., Ltd.,
Shenzhen Appotronics Software Technology Co., Ltd., Shenzhen City Appotronics
Xiaoming Technology Co., Ltd., Beijing Orient Appotronics Technology Co., Ltd., Fengmi
(Beijing) Technology Co., Ltd., CINEAPPO Laser Cinema Technology (Beijing) Co., Ltd.,
Shenzhen Appotronics Laser Display Technology Co., Ltd., Shenzhen Appotronics Laser
Technology Co., Ltd., Qingda Appotronics (Xiamen) Technology Co., Ltd., Shenzhen
Appotronics Home Line Technology Co., Ltd., Appotronics Hong Kong Limited,
Appotronics USA, Inc., Fabulus Technology Hong Kong Limited, JoveAI Limited, JoveAI
Innovation,Inc., Appotronics Technology (Changzhou) Co., Ltd., FORMOVIE
TECHNOLOGY INC and other subsidiaries. Refer to descriptions in VIII and IX of Section
XI for details.
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2019 Annual Report
IV. Basis of preparation of financial statements
1. Basis of preparation
The Company’s financial statements are prepared on a going-concern basis.
2. Going concern
√Applicable □N/A
The Company has detected no events or circumstances that may cast significant doubt upon
its ability to continue as a going concern within 12 months from the reporting period.
V. Significant accounting policies and accounting estimates
Specific accounting policies and accounting estimates:
√Applicable □N/A
Important notes: The Company establishes the specific accounting policies and makes the
specific accounting estimates with respect to the impairment of financial instruments,
depreciation of fixed assets, amortization of intangible assets, recognition of revenues and
other transactions and events according to the actual production and operation characteristics
of the Company.
1. Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company conform to the requirements of the
Accounting Standards for Business Enterprises and truly and completely reflect the
Company’s financial position, operating results, changes in shareholders' equity, cash flows
and other related information.
2. Accounting period
The Company’s accounting year is from January 1 to December 31 of each calendar year.
3. Operating cycle
√Applicable □N/A
The Company has a relatively short operating cycle, and determines the liquidity of assets
and liabilities on the basis of 12 months.
4. Functional currency
The Company adopts RMB as its functional currency.
5. The accounting treatment of business combinations involving entities under
common control and not involving entities under common control
√Applicable □N/A
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2019 Annual Report
1. Accounting treatment of business combinations involving entities under common
control
Assets and liabilities acquired from a business combination by the Company are
measured at the carrying amounts of the assets and liabilities of the acquiree in the
consolidated financial statements of the ultimate controller at the date of combination. The
difference between the carrying amount of the owners’ equity of the acquiree as stated in the
consolidated financial statements of the ultimate controller and the carrying amount of the
total consideration paid or total par value of the shares issued in connection with the
combination is treated as an adjustment to the capital reserve. In case the capital reserve is
not sufficient to absorb the difference, the remaining balance is adjusted against the retained
earnings.
2. Accounting treatment of business combinations not involving entities under common
control
Where the cost of combination exceeds the Company’s interest in the fair value of the
acquiree’s identifiable net assets, the difference is recognized as goodwill. Where the cost of
combination is less than the Company’s interest in the fair value of the acquiree’s identifiable
net assets, the Company firstly reassesses the fair values of the acquiree’s identifiable assets,
liabilities and contingent liabilities and the measurement of the cost of combination. If after
that reassessment, the cost of combination is still less than the Company’s interest in the fair
value of the acquiree’s identifiable net assets, the acquirer recognizes the remaining
difference immediately in profit or loss for the current period.
6. Method of preparation of consolidated financial statements
√Applicable □N/A
The parent company includes all of its controlled subsidiaries in its consolidated
financial statements. The consolidated financial statements are prepared by the parent
company in accordance with the Accounting Standards for Business Enterprises No. 33 --
Consolidated Financial Statements, on the basis of the respective financial statements of the
parent company and its subsidiaries, by reference to other relevant data.
7. Classification of joint arrangements and accounting treatment of joint operations
√Applicable □N/A
1. Joint arrangements are classified into joint operations and joint ventures.
2. When the Company is a party to a joint operation, the Company recognizes the
following items relating to its interest in the joint operation:
(1) the assets individually held by the Company, and the Company’s share of the assets
held jointly;
(2) the liabilities incurred individually by the Company, and the Company’s share of the
liabilities incurred jointly;
(3) the Company’s revenue from the sale of its share of output of the joint operation;
(4) the Company’s share of revenue from the sale of assets by the joint operation; and
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2019 Annual Report
(5) the expenses incurred individually by the Company, and the Company’s share of the
expenses incurred jointly.
8. Recognition of cash and cash equivalents
Cash represented in the statement of cash flows comprises cash on hand and deposits
that can be readily withdrawn on demand. Cash equivalents are the Group's short-term,
highly liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.
9. Translation of transactions and financial statements denominated in foreign
currencies
√Applicable □N/A
1. Transactions denominated in foreign currencies
A foreign currency transaction is recorded in RMB, on initial recognition, by applying
the spot exchange rate on the date of the transaction. At the balance sheet date, foreign
currency monetary items are translated into RMB using the spot exchange rates at the
balance sheet date. Exchange differences arising from such translations are recognized in
profit or loss for the current period, except for those attributable to foreign currency
borrowings that have been taken out specifically for the acquisition or construction of
qualifying assets and accrued interest. Non-monetary items denominated in foreign
currencies that are measured at historical cost are translated using the foreign exchange rates
ruling at the transaction dates, without adjusting the amounts in RMB. Non-monetary items
denominated in foreign currencies that are measured at fair value are translated using the
foreign exchange rates prevailing at the dates when the fair value was determined, with
exchange differences arising from such translations recognized in profit or loss for the
current period or other comprehensive income.
2. Translation of financial statements denominated in foreign currencies
Asset and liability items on the balance sheet are translated at the spot exchange rate
prevailing at the balance sheet date; shareholders' equity items other than "retained profits”
are translated at the spot exchange rates at the dates on which such items arose; income and
expense items in the income statement are translated at the exchange rates that approximate
the actual spot exchange rates on the dates of the transactions. Exchange differences arising
from such translations are recognized in other comprehensive income.
10. Financial instruments
√Applicable □N/A
1. Classification of financial assets and financial liabilities
On initial recognition, the Company’s financial assets are classified into three categories,
including (1) financial assets at amortized cost; (2) financial assets at fair value through other
comprehensive income; and (3) financial assets at fair value through profit or loss for the
current period.
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2019 Annual Report
Upon initial recognition, the Company’s financial liabilities are classified into four
categories, including (1) financial liabilities at fair value through profit or loss for the current
period; (2) financial liabilities arising as a result of the transfer of financial assets not meeting
the criteria for derecognition or continuing involvement in the financial assets transferred; (3)
financial guarantee contracts not falling under Clauses (1) and (2), and loan commitments not
falling under Clause (1) and below market interest rate; and (4) financial liabilities at
amortized cost.
2. Recognition, measurement and derecognition of financial assets and financial
liabilities
(1) Recognition and initial measurement of financial assets and financial liabilities
When the Company becomes a party to a financial instrument contract, a financial asset
or liability is recognized. Financial assets and liabilities are initially measured at fair value.
Transaction costs relating to financial assets or liabilities at fair value through profit or loss
are directly recognized in profit or loss for the current period. Transaction costs relating to
other kinds of financial assets or liabilities are included in their initially recognized amount.
However, the accounts receivable, if do not contain any significant financing component or
are recognized by the Company without taking into consideration the financing components
under the contracts with a term of less than one year upon initial recognition, are initially
measured at transaction price.
(2) Subsequent measurement of financial assets
1) Financial assets at amortized cost
Financial assets at amortized cost are subsequently measured at amortized cost using the
effective interest method. Gains or losses arising from financial assets at amortized cost that
do not belong to any hedging relationship are recognized in profit or loss for the current
period upon derecognition, reclassification, amortization using the effective interest method
or recognition of impairment.
2) Investments in debt instruments at fair value through other comprehensive income
Investments in debt instruments at fair value through other comprehensive income are
subsequently measured at fair value. Interest, impairment losses or gains and exchange gains
or losses calculated using the effective interest method are recognized in profit or loss for the
current period, and other gains or losses are recognized in other comprehensive income.
Upon derecognition, the aggregate gains or losses previously recognized in other
comprehensive income are transferred to profit or loss for the current period.
3) Investments in equity instruments at fair value through other comprehensive income
Investments in equity instruments at fair value through other comprehensive income are
subsequently measured at fair value. Dividends received (other than those received as
recovery of investment cost) are recognized in profit or loss for the current period, and other
gains or losses are recognized in other comprehensive income. Upon derecognition, the
accumulated gains or losses previously recognized in other comprehensive income are
transferred to retained earnings.
4) Financial assets at fair value through profit or loss for the current period
Financial assets at fair value through profit or loss for the current period are
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2019 Annual Report
subsequently measured at fair value, with gains or losses arising therefrom, including interest
and dividend income, recognized in profit or loss for the current period, except the financial
assets belonging to any hedging relationship.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through profit or loss for the current period
Financial liabilities at fair value through profit or loss for the current period include
financial liabilities held for trading (including derivatives classified as financial liabilities),
and financial liabilities directly designated as at fair value through profit or loss for the
current period. Such financial liabilities are subsequently measured at fair value. Changes in
the fair value of financial liabilities designated as at fair value through profit or loss for the
period arising out of changes in the Company’s own credit risk are recognized in other
comprehensive income, unless such treatment will result in or increase any accounting
mismatch in profit or loss. Other gains or losses arising from such financial liabilities,
including interest expenses and changes in fair value not arising out of changes in the
Company’s own credit risk, are recognized in profit or loss for the current period, except the
financial liabilities belonging to any hedging relationship. Upon derecognition, the
accumulated gains or losses previously recognized in other comprehensive income are
transferred to retained earnings.
2) Financial liabilities arising as a result of the transfer of financial assets not meeting
the criteria for derecognition or continuing involvement in the financial assets transferred
Such financial liabilities are measured in accordance with the Accounting Standards for
Business Enterprises No. 23 -- Transfer of Financial Assets.
3)Financial guarantee contracts not falling under Clauses 1) and 2), and loan
commitments not falling under Clause 1) and below market interest rate
Such financial liabilities are subsequently measured at the higher of ① provision for
impairment losses determined according to the policy for impairment of financial
instruments; and ② balance of the initially recognized amount after deduction of the
accumulated amortization determined in accordance with the relevant policy.
4) Financial liabilities at amortized cost
Financial liabilities at amortized cost are subsequently measured at amortized cost using
the effective interest method. Gains or losses on financial liabilities at amortized cost that do
not belong to any hedging relationship are recognized in profit or loss for the current period
upon derecognition or amortization using the effective interest method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when:
① the contractual right to receive cash flows from the financial assets has expired; or
② the financial assets have been transferred and such transfer meets the criteria for
derecognition of financial assets as set forth in the Accounting Standards for Business
Enterprises No. 23 -- Transfer of Financial Assets.
2) A financial liability (or part thereof) is derecognized when all or part of the
outstanding obligations thereon have been discharged.
3. Recognition and measurement of financial assets transferred
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2019 Annual Report
When a financial asset of the Company is transferred, if substantially all the risks and
rewards incidental to the ownership of the financial asset have been transferred, the financial
asset is derecognized, and the rights and obligations incurred or retained in such transfer are
separately recognized as assets or liabilities (as the case may be); if substantially all the risks
and rewards incidental to the ownership of the financial asset have been retained, the
financial asset transferred continues to be recognized. If the Company neither transferred
nor retained a substantial portion of all risks and rewards incidental to the ownership of the
financial asset, then: (1) if the Company does not retain control over the financial asset, the
financial asset is derecognized, and the rights and obligations incurred or retained in such
transfer are separately recognized as assets or liabilities (as the case may be); and (2) if the
Company retains control over the financial asset, the financial asset continues to be
recognized to the extent of the Company’s continuing involvement in the financial asset
transferred, and a corresponding liability is recognized.
If an entire transfer of a financial asset meets the criteria for derecognition, the
difference between (1) the carrying amount of the financial asset transferred at the date of
derecognition; and (2) the sum of the consideration received from the transfer and the portion
of the accumulated amount of changes in fair value directly recorded as other comprehensive
income originally that corresponds to the part derecognized (where the financial asset
transferred is an investment in debt instruments at fair value through other comprehensive
income) is recognized in profit or loss for the current period. If part of a financial asset is
transferred and the part transferred entirely meets the criteria for derecognition, the total
carrying amount of the financial asset immediately prior to the transfer is allocated between
the part derecognized and the part not derecognized in proportion to their relative fair value
at the date of transfer, and the difference between (1) the carrying amount of the part
derecognized; and (2) the sum of the consideration received from the transfer of the part
derecognized and the portion of the accumulated amount of changes in fair value directly
recorded as other comprehensive income originally that corresponds to the part derecognized
(where the financial asset transferred is an investment in debt instruments at fair value
through other comprehensive income) is recognized in profit or loss for the current period.
4. Determination of fair value of financial assets and financial liabilities
The Company adopts the valuation techniques applicable to the current situations and
with sufficient data available and support of other information, to determine the fair value of
financial assets and financial liabilities. The Company classifies the inputs used by the
valuation techniques in the following levels and uses them in turn:
(1) Level 1 inputs: quoted market price (unadjusted) in an active market for an identical
asset or liability available at the date of measurement;
(2) Level 2 inputs: inputs other than inputs included within Level 1 that are observable
directly or indirectly. This category includes quoted prices for similar assets or liabilities in
active markets, quoted prices for identical or similar assets or liabilities in inactive markets,
observable inputs other than quoted prices (such as interest rate and yield curves observable
during regular intervals of quotation), and inputs validated by the market;
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(3) Level 3 inputs: inputs that are unobservable. This category includes interest rate or
stock volatility that cannot be directly observed or validated by observable market data,
future cash flows from retirement obligation incurred in business combinations, and financial
forecasts made using own data.
5. Impairment of financial instruments
(1) Measurement and accounting treatment of impairment of financial instruments
The Company determines the impairment and assesses provision for impairment losses
of financial assets at amortized cost, investments in debt instruments at fair value through
other comprehensive income, lease receivable, loan commitments other than financial
liabilities designated at fair value through profit or loss for the current period, and financial
guarantee contracts other than financial liabilities designated at fair value through profit or
loss for the current period and financial liabilities arising as a result of the transfer of
financial assets not meeting the criteria for derecognition or continuing involvement in the
financial assets transferred, on the basis of expected credit losses.
Expected credit loss is the weighted average of credit losses on financial instruments
taking into account the possibility of default. Credit loss is the difference between all
contractual cash flows receivable under the contract and estimated future cash flows
discounted at the original effective interest rate, i.e. the present value of all cash shortage,
wherein the Company’s purchased or originated financial assets that have become credit
impaired are discounted at their credit-adjusted effective interest rate.
With respect to purchased or originated financial assets that have become credit
impaired, at the balance sheet date, the Company recognizes a loss allowance equal to the
accumulated amount of changes in lifetime expected credit losses since initial recognition.
With respect to accounts receivable that do not contain any significant financing
component or are recognized by the Company without taking into consideration the
financing components under the contracts with a term of less than one year, the Company
uses the simple measurement method and recognizes a loss allowance equal to the lifetime
expected credit loss.
With respect to financial assets not using the measurement methods stated above, at
each balance sheet date, the Company assesses whether the credit risk has increased
significantly since initial recognition, and recognizes a loss allowance equal to the lifetime
expected credit loss if the credit risk has increased significantly since initial recognition, or to
the expected credit losses within the next 12 months if the credit risk has not increased
significantly since initial recognition.
The Company uses reasonable and supportable information, including forward-looking
information, and compares the possibility of default at the balance sheet date with the
possibility of default upon initial recognition, to determine whether the credit risk of the
financial instruments has increased significantly since initial recognition.
At the balance sheet date, if the Company determines that a financial instrument only
has low credit risk, the Company assumes that its credit risk has not increased significantly
since initial recognition.
The Company assesses expected credit risk and measures expected credit losses of
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2019 Annual Report
financial instruments individually or collectively. When assessing the financial instruments
collectively, the Company includes the financial instruments in different groups according to
their common risk characteristics.
At each balance sheet date, the Company re-assesses the expected credit losses, with the
amount of increase in or reversal of loss allowance recognized in profit or loss for the current
period as impairment losses or gains. With respect to a financial asset at amortized cost, its
carrying amount recorded in the balance sheet is written off against the loss allowance. With
respect to an investment in debt instruments at fair value through other comprehensive
income, the Company recognizes the loss allowance in other comprehensive income, without
reducing its carrying amount.
(2) Financial instruments for which expected credit risk is assessed and expected credit
losses are measured collectively
Item Basis for determining a Method for measuring
group expected credit losses
Other receivables - group By reference to historic
of deposit and security credit loss experience, and
receivable Nature of receivables taking into account the
Other receivables- group of current situations and
withholding receivable prediction of future
Other receivables - group economic conditions,
Receivables from related
of receivables from related calculate the expected
parties in the scope of
parties in the scope of credit losses according to
consolidation
consolidation the default risk exposure
and 12-month or rate of
Other receivables -
aging lifetime expected credit
grouping by aging
loss.
(3) Accounts receivable for which expected credit losses are measured collectively
1) Groups and method for measuring expected credit losses
Item Basis for determining a Method for measuring
group expected credit losses
Bank acceptance bills By reference to historic
receivable credit loss experience, and
Type of notes
Commercial acceptance taking into account the
bills receivable current situations and
prediction of future
economic conditions,
Accounts receivable -
Receivables from related calculate the expected
group of receivables from
parties in the scope of credit losses according to
related parties in the scope
consolidation the default risk exposure
of consolidation
and rate of lifetime
expected credit loss.
Accounts receivable - aging By reference to historic
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grouping by aging credit loss experience, and
taking into account the
current situations and
prediction of future
economic conditions,
prepare a comparison table
of the aging of accounts
receivable and rate of
lifetime expected credit
loss, and calculate the
expected credit losses.
2) Accounts receivable - comparison table of the age of accounts receivable and rate of
lifetime expected credit loss
Accounts receivable
Aging Rate of expected credit loss for accounts
receivable (%)
Within 1 year (including, the same below) 5.00
1-2 years 25.00
2-3 years 50.00
Over 3 years 100.00
6.Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are presented in the balance sheet separately,
without offsetting each other. However, the Company may represent the financial assets and
financial liabilities on a net basis in the balance sheet only if: (1) the Company has a legal
right that is currently enforceable to set off the recognized financial assets and financial
liabilities, and (2) the Company intends either to settle on a net basis, or to realize the
financial asset and settle the financial liability simultaneously.
With respect to the transfer of financial assets not meeting the criteria for derecognition,
the Company does not offset the financial assets transferred against the relevant liabilities.
11. Notes receivable
Method for recognition of expected credit losses of notes receivable and relevant
accounting treatments
√Applicable □N/A
The Company's method for recognition of expected credit losses of notes receivable and
relevant accounting treatments are disclosed in V10 of Section XI in details.
12. Accounts receivable
Method for recognition of expected credit losses of accounts receivable and relevant
accounting treatments
√Applicable □N/A
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The Company's method for recognition of expected credit losses of accounts receivable and
relevant accounting treatments are disclosed in V10 of Section XI in details.
13. Receivables financing
√Applicable □N/A
The Company's policies on receivables financing are disclosed in V10 of Section XI in
details.
14. Other receivables
Method for recognition of expected credit losses of other receivables and relevant
accounting treatments
√Applicable □N/A
The Company's method for recognition of expected credit losses of other receivables and
relevant accounting treatments are disclosed in V10 of Section XI in details.
15. Inventories
√Applicable □N/A
1. Categories of inventories
Inventories mainly include finished goods or commodities held for sale in the ordinary
course of businesses, work in progress in the process of production or materials and supplies
consumed in the process of production or rendering service.
2. Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the moving weighted
average method.
3. Basis for determining net realizable value of inventories
At the balance sheet date, inventories are measured at the lower of cost and net
realizable value. If the net realizable value is below the cost of inventories, a provision for
decline in value of inventories is made. For inventories directly used for sale, the net
realizable value is determined as the estimated selling price in the ordinary course of business
less the estimated costs necessary to make the sale and relevant taxes. For inventories
required for processing, the net realizable value is determined as the estimated selling price
of finished goods in the ordinary course of business less the estimated costs of completion,
and the estimated costs necessary to make the sale and relevant taxes. As at the balance sheet
date, if in the same item of inventories, some are agreed with contractual prices while the
others are not, the net realizable value for such inventories is determined separately, and
compared with the costs of the two parts of inventories distinctively, as to determine the
provisions or reversal of provisions for decline in value of inventories separately.
4. Inventory count system
The perpetual inventory system is maintained for stock system.
5. Amortization method for low cost and short-lived consumable items and packaging
materials
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(1) Low cost and short-lived consumable items
Low cost and short-lived consumable items are amortized using the immediate write-off
method.
(2) Packaging materials
Packaging materials are amortized using the immediate write-off method.
16. Held-for-sale assets
√Applicable □N/A
1. Categories of non-current assets or disposal group classified as held-for-sale
Non-current assets or disposal groups classified as held for sale are required to satisfy
the following conditions: (1) the assets or disposal groups are available for immediate sale in
its present condition subject only to terms that are usual and customary for sales of such asset
or disposal group; (2) the sale is highly probable, i.e. the Company has made a resolution
about selling plan and obtained a confirmed purchase commitment and the sale is expected to
be completed within one year.
Non-current assets or disposal groups acquired by the Company for resale only are
classified as held for sale at the acquisition date if the assets or disposal groups can satisfy the
condition that“ the sale is expected to be completed within one year” at the acquisition date
and are highly probable to meet other conditions for being classified as held for sale in a short
term (within 3 months in general).
Despite transactions between unrelated parties not completed within one year, the
Company continues to classify as held for sale the non-current assets or disposal groups that
the Company still undertakes to sell if the failure in completion is due to one of the following
reasons beyond the Company's control: (1) purchasers or other parties set conditions
unexpectedly, which has led to a sale deferral, but the Company has taken measures promptly
in response to such conditions and expects to solve the delay problem within one year from
date when conditions leading to the sale deferral are set; (2) there are rare circumstances
occurring, as a result of which non-current assets or disposal groups classified as held for sale
fail to be sold, but the Company has taken necessary measures in the initial year to address
these new circumstances to enable the non-current assets or disposal groups to satisfy
classification criteria of held-for-sale category.
2. Measurement of non-current assets or disposal groups classified as held for sale
(1) Initial and subsequent measurement
When the Company measures the non-current assets or disposal groups classified as held
for sale upon initial recognition or re-measures them at the balance sheet date, if their
carrying amount is higher than the net amount of their fair value less costs to sell, the
carrying amount should be reduced to the net amount of fair value less costs to sell, and such
reduction is recognized in impairment loss of assets and included in profit or loss for the
current period with a provision for impairment loss of held-for-sale assets made.
Non-current assets or disposal groups classified as held for sale at the acquisition date
are measured at the lower of their initial amount measured at the assumption of not being
classified as held for sale and the net amount of fair value less costs to sell. Except
non-current assets or disposal groups acquired through business combination, the balance of
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non-current assets or disposal groups incurred by recognizing the net amount of fair value
less costs to sell as the initial measurement amount is included in profit or loss for the current
period.
Impairment losses recognized in disposal groups classified as held for sale are firstly
offset against the carrying amount of goodwill in the disposal groups and then offset against
the carrying amount of each non-current asset in proportion to their shares in the disposal
groups.
When the non-current assets held for sale or in the disposal groups make no provision
of depreciation or amortization, the interests incurred by the liabilities and other expenses
in the disposal groups held for sale shall continue to be recognized.
(2) Accounting treatment for reversal of impairment loss of assets
When there is an increase in the net amount of fair value of non-current assets held for
sale less costs to sell at the balance sheet date subsequently, the original deduction should be
reversed in impairment loss of assets recognized after the classification of held-for-sale
category, and the reverse amount is included in profit or loss for the current period. No
reversion is made for the impairment loss of assets recognized before the classification of
held-for-sale category.
When there is an increase in the net amount of fair value of disposal groups held for sale
less costs to sell at the balance sheet date subsequently, the original deduction should be
reversed in impairment loss of non-current assets recognized after the classification of
held-for-sale category, and the reverse amount is included in profit or loss for the current
period. No reversion is made for the carrying amount of goodwill that has been offset and the
impairment loss of non-current assets recognized before the classification of held-for-sale
category.
The reversed amount of impairment loss of assets recognized in disposal groups held for
sale is added to the carrying amount of each non-current asset other than goodwill in
proportion to their shares in the disposal groups.
(3) Accounting treatment for discontinued classification of held for sale and
derecognition
When a non-current asset or disposal group ceases to be classified as held for sale since it
no longer meets the criteria for classification of held-for-sale category, or when a non-current
asset is removed from a disposal group classified as held for sale, the non-current asset or
disposal group is measured at the lower of: 1) the carrying amount recognized before
classification of held-for-sale category, subject to the amount adjusted according to
depreciation, amortization or impairment that would have been recognized if it had not been
classified as held for sale; and 2) the recoverable amount.
Gains or losses from derecognized non-current assets or disposal groups classified as
held for sale that have not been recognized are included in profit or loss for the current
period.
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17. Debt investments
(1). Method for recognition of expected credit losses of debt investments and
relevant accounting treatments
□Applicable √N/A
18. Other debt investments
(1). Method for recognition of expected credit losses of other debt investments and
relevant accounting treatments
□Applicable √N/A
19. Long-term receivables
(1). Method for recognition of expected credit losses of long-term receivables and
relevant accounting treatments
□Applicable √N/A
20. Long-term equity investments
√Applicable □N/A
1. Judgments on joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities of such arrangement require
unanimous consent of the parties sharing control. Significant influence is the power to
participate in the financial and operating policy making of an entity, but does not control or
jointly control over those policies.
2. Determination of investment cost
(1) In case of an equity investment acquired through a business combination involving
entities under common control, if the acquirer pays consideration for the business
combination by cash, transfer of non-monetary assets, assumption of liabilities or issuance of
equity securities, the initial investment cost of the long-term equity investment is the
Company’s share of the carrying amount of the owners’ equity of the acquiree in the
consolidated financial statements of the ultimate controller at the date of combination. The
difference between: (i) the initial investment cost of the long-term equity investment; and (ii)
the carrying amount of the consideration paid for the combination or the total par value of the
shares issued is treated as an adjustment to the capital reserve. In case the capital reserve is
not sufficient to absorb the difference, the remaining balance is adjusted against the retained
earnings.
For a long-term equity investment acquired through business combination involving
entities under common control and achieved through multiple transactions by steps, the
Company shall judge whether such transactions constitute a package deal. If such
transactions constitute a package deal, the Company accounts for such transactions as one
transaction to acquire control. If such transactions do not constitute a package deal, the initial
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investment cost is the Company’s share of the carrying amount of the owners’ equity of the
acquiree in the consolidated financial statements of the ultimate controller at the date of
combination. The difference between: (i) the initial investment cost of the long-term equity
investment at the date of combination; and (ii) the sum of the carrying amount of long-term
equity investment before the combination and the carrying amount of the consideration paid
for acquisition of the additional shares at the date of combination is adjusted against the
capital reserve.In case the capital reserve is not sufficient to absorb the difference, the
remaining balance is adjusted against the retained earnings.
(2) In case of an equity investment acquired through a business combination not
involving entities under common control, the initial investment cost is the fair value of the
carrying amount of the consideration paid for the combination at the date of acquisition.
For a long-term equity investment acquired through a business combination not
involving entities under common control and achieved through multiple transactions by steps,
the accounting treatment thereof in the separate financial statements is different from that in
the consolidated financial statements as stated below:
1) In the separate financial statements, the sum of the carrying amount of the equity
investment originally held in the acquiree and the additional investment cost incurred is
recorded as the initial investment cost of the equity investment changed into the cost method.
2) In the consolidated financial statements, it is required to judge whether such
transactions constitute a package deal. If such transactions constitute a package deal, the
Company accounts for such transactions as one transaction to acquire control. If such
transactions do not constitute a package deal, the Company re-measures the fair value of the
equity held in the acquiree prior to the date of acquisition, and records the difference between
the fair value and the carrying amount as investment income for the current period; if the
equity held in the acquiree prior to the date of acquisition involves other comprehensive
income under equity method, such other comprehensive income is transferred to the income
of the period in which the date of acquisition falls, except for other comprehensive income
arising from re-measurement of changes in net liabilities or net assets of defined benefit
plans.
(3) In case of an equity investment not acquired through business combination, the initial
investment cost is the purchase price actually paid if it is acquired by cash, or the fair value of
the equity securities issued if it is acquired through issuance of equity securities, or
determined in accordance with the Accounting Standards for Business Enterprises No. 12 --
Debt Restructuring if it is acquired through debt restructuring, or determined in accordance
with the Accounting Standards for Business Enterprises No. 7 -- Exchange of Non-monetary
Assets if it is acquired through exchange of non-monetary assets.
3. Subsequent measurement and recognition of profit or loss
Long-term equity investments in investees are measured using the cost method.
Long-term equity investments in associates and joint ventures are measured using the equity
method.
4. Disposal of investment in a subsidiary through multiple transactions by steps until loss
of control over the subsidiary
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(1) Separate financial statements
The difference between the carrying amount of the equity disposed of and the proceeds
of disposal actually received is recognized in profit or loss for the current period. If the
remaining equity empowers the Company to exercise significant influence or joint control
over the investee, the remaining equity is accounted for using the equity method; if the
remaining equity does not empower the Company to exercise control, joint control or
significant influence over the investee, the remaining equity is accounted for in accordance
with the Accounting Standards for Business Enterprises No. 22 -- Recognition and
Measurement of Financial Instruments.
(2) Consolidated financial statements
1) Disposal of investment in a subsidiary through multiple transactions by steps until
loss of control over the subsidiary which does not constitute a package deal
Prior to the loss of control, the difference between the proceeds from disposal and the
share owned by the Company in the net assets of the subsidiary in relation to the long-term
equity investment disposed of that is calculated continuously from the date of acquisition or
combination is adjusted against the capital reserve (capital premium). In case the capital
premium is not sufficient to absorb the difference, the remaining balance is adjusted against
the retained earnings.
When losing control over a subsidiary, the remaining equity is re-measured at its fair
value at the date of loss of control. The sum of the consideration received from the disposal
of the equity and the fair value of the remaining equity, net of the share owned by the
Company in the net assets of the subsidiary in relation to the long-term equity investment
disposed of as calculated continuously from the date of acquisition or combination according
to the previous shareholding ratio, is recognized in the investment income for the period in
which the control is lost, and the goodwill is reduced accordingly. Other comprehensive
income relating to the equity investment in the subsidiary is transferred to the investment
income for the period in which the control is lost.
2) Disposal of investment in a subsidiary through multiple transactions by steps until
loss of control over the subsidiary which constitutes a package deal
The Company accounts for such transactions as one transaction to dispose of and lose its
control over the subsidiary. However, the difference between the proceeds from each
disposal before loss of control and the share owned by the Company in the net assets of the
subsidiary in relation to the investment disposed of is recognized in other comprehensive
income in the consolidated financial statements, which is wholly transferred to the profit or
loss in the period in which the control is lost.
21. Investment properties
N/A
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22. Fixed assets
(1). Criteria for recognition
√Applicable □N/A
Fixed assets are tangible assets held for production of goods, rendering of service, lease or
operation and management with a useful life of more than one accounting year. A fixed asset
is recognized if the economic benefits relating to it are very likely to flow to the Company
and its cost can be reliably measured.
(2). Depreciation method
√Applicable □N/A
Annual
Method of Depreciation Residual value
Category depreciation rate
depreciation period(years) rate (%)
(%)
Machinery and Straight line 5 5.00% 19.00%
equipment method
Transportation Straight line 5 5.00% 19.00%
equipment method
Electronic Straight line 3-5 5.00% 19.00%-31.67%
equipment and method
others
Operating Straight line 3,7 5.00% 19.00%,13.57%
leased method
equipment
(3). Identification basis, valuation method and depreciation method for fixed assets
acquired under finance leases
□Applicable √N/A
23. Construction in progress
√Applicable □N/A
1. A construction in progress is recognized if the economic benefits relating to it are very
likely to flow to the Company and its cost can be reliably measured. A construction in
progress is measured at the actual cost incurred before it is completed and ready for intended
use.
2. When a construction in progress is ready for intended use, it is transferred to fixed
assets at its actual construction cost. A construction in progress that is ready for intended use
but the final settlement of which has not yet been completed is transferred to fixed assets at
estimated value first, and after the completion of final settlement, the estimated value is
adjusted according to the actual cost, but the accrued depreciation is not adjusted.
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24. Borrowing costs
□Applicable √N/A
25. Biological assets
□Applicable √N/A
26. Oil and gas assets
□Applicable √N/A
27. Use right assets
□Applicable √N/A
28. Intangible assets
(1). Measurement, service life and impairment test
√Applicable □N/A
1.Intangible assets include land use rights, patents, and software etc. and are measured at
cost initially.
2.An intangible asset with a finite useful life is amortized over its useful life in a
systematical and rational expected realization of economic benefits relative to the intangible
asset, or is amortized using the straight-line method if it is impossible to determine expected
realization reliably. Details for amortization period are set out as below:
Item Amortization period(years)
Land use rights 30
Patents 10
Software 3-5
(2). Accounting policy on internal research and development expenditures
□Applicable √N/A
29. Impairment of long-term assets
√Applicable □N/A
For long-term equity investments, fixed assets, construction in progress, intangible
assets with a finite useful life and other long-term assets, if there’s an indication of
impairment at the balance sheet date, the Company assesses their recoverable amount.
Goodwill arising from business combinations and intangible assets with an infinite useful life
are tested for impairment every year regardless of whether there’s an indication of
impairment. Goodwill is tested for impairment together with the relevant groups of assets or
combinations of groups of assets.
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If the recoverable amount of a long-term asset is less than its carrying amount, the
difference is measured as impairment loss of the asset and recognized in profit or loss for the
current period.
30. Long-term prepaid expenses
√Applicable □N/A
Long-term prepaid expenses are expenses that have already been incurred but should be
amortized over a period of more than one year (excluding one year). Long-term prepaid
expenses are stated as the amount actually incurred and shall be amortized evenly by stages
within the benefit period or specified period. If an item of long-term prepaid expenses will
not benefit the subsequent periods, the amortized value of the item that has not yet been
amortized is wholly transferred to profit or loss for the current period.
31. Employee benefits
(1). Accounting treatment of short-term employee benefits
√Applicable □N/A
1. Employee benefits include short-term benefits, post-employment benefits,termination
benefits and other long-term employee benefits.
2. Accounting treatment of short-term employee benefits
The short-term employee benefits actually incurred are recognized as liabilities in the
accounting period during which employee services are rendered, and included in profit or
loss for the current period or the cost of related assets.
(2). Accounting treatment of post-employment benefits
√Applicable □N/A
Post-employment benefits are classified into defined contribution plans and defined
benefit plans.
(1) In the accounting period during which employee services are rendered, the amount in
contribution as calculated according to the defined contribution plan is recognized as
liabilities and included in profit or loss for the current period or the cost of related assets.
(2) The accounting treatment of a defined benefit plan generally involves the following
steps:
1) According to the projected unit credit method, use the unbiased and consistent
actuarial assumptions to estimate demographic variables and financial variables, measure the
obligation arising from the defined benefit plan and determine the period to which the
relevant obligation belongs. Meanwhile, discount the obligation arising from the defined
benefit plan, in order to determine the present value of the benefit plan obligation and the
current service cost;
2) If the defined benefit plan has assets, the deficit or surplus resulting after reducing the
present value of the defined benefit plan obligation by the fair value of the defined benefit
plan is recognized as a net liability or asset of the defined benefit plan. If the defined benefit
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plan has a surplus, the net assets of the defined benefit plan are measured at the lower of
surplus in the defined benefit plan and asset ceiling;
3) At the end of the reporting period, the cost of employee benefits arising from the
defined benefit plan is recorded as service cost, net interest on the net liabilities or net assets
of the defined benefit plan, and changes arising from re-measurement of the net liabilities or
net assets of the defined benefit plan, wherein the service cost and the net interest on the net
liabilities or net assets of the defined benefit plan are included in profit or loss for the current
period or the cost of related assets, and the changes arising from re-measurement of the net
liabilities or net assets of the defined benefit plan are included in other comprehensive
income, which will not be reserved to profit or loss in subsequent periods, but may be
transferred within the scope of equity.
(3). Accounting treatment of termination benefits
√Applicable □N/A
When the Company can no longer withdraw the offer of termination benefits as a result
of termination of employment or redundancy, or recognizes the restructuring costs or
expenses relating to payment of termination benefits, whichever the earlier, the employee
benefit liabilities arising from recognition of termination benefits are recognized in profit or
loss for the current period.
(4). Accounting treatment of other long-term employee benefits
√Applicable □N/A
Other long-term employee benefits are accounted for in accordance with the provisions
applicable to defined contribution plans if they are qualified as defined contribution plans,
otherwise, are accounted for in accordance with the provisions applicable to defined benefit
plans. In order to simplify the accounting treatment, the total net amount of the cost of
employee benefits arising from the defined benefit plans that is recorded as service cost, net
interest on the net liabilities or net assets of other long-term employee benefits, changes
arising from re-measurement of the net liabilities or net assets of other long-term employee
benefits and other components is included in profit or loss for the current period or the cost of
related assets.
32. Leasing liabilities
□Applicable √N/A
33. Provisions
√Applicable □N/A
1. An obligation arising from any external guarantee, instigation, product quality
warranty, onerous contract or other contingencies is recognized as a provision if it is a present
obligation assumed by the Company, and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, and the amount of the
obligation can be reliably measured.
2.The amount recognized as a provision is the best estimate of the consideration required
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to settle the present obligation. The carrying amount of provisions is reviewed at the balance
sheet date.
34. Share-based payments
√Applicable □N/A
1. Categories of share-based payments
Share-based payments include equity-settled share-based payments and cash-settled
share-based payments
2. Accounting treatment for implementation, modification and termination of
share-based payment plan
(1) Equity-settled share-based payments
Equity-settled share-based payments in exchange for services rendered by employees
that can be executed immediately upon being granted, are measured at the fair value of the
equity instruments at the grant date, and recognized as related costs or expenses with a
corresponding adjustment to capital reserve. At each balance sheet date during the vesting
period, equity-settled share-based payments in exchange for services rendered by employees
that cannot be executed until services in the vesting period are completed or required
performance conditions are satisfied, are measured at the fair value of the equity instruments
at the grant date based on the best estimate of exercisable numbers of equity instruments, and
recognized as related costs or expenses with a corresponding adjustment to capital reserve.
For equity-settled share-based payments in exchange for services rendered by other
parties, if the fair value of services from other parties can be measured reliably, they are
measured at the fair value of services from other parties at the date when such services are
received. If the fair value of services from other parties cannot be measured reliably but the
fair value of the equity instruments can be measured reliably, they are measured at the fair
value of the equity instruments at the date when such services are received. The fair value of
the equity instruments are recognized as related costs or expenses, with a corresponding
increase in owners' equity.
(2) Cash-settled share-based payments
Cash-settled share-based payments in exchange for services rendered by employees that
can be executed immediately upon being granted, are recognized as related costs or expenses
based on the fair value of liabilities assumed by the Company at the grant date, with a
corresponding increase in liability. At each balance sheet date during the vesting period,
cash-settled share-based payments in exchange for services rendered by employees that
cannot be executed until services in the vesting period are completed or required
performance conditions are satisfied, are measured at the fair value of liabilities assumed by
the Company based on the best estimate of exercisable conditions, and recognized as related
costs or expenses and relevant liabilities.
(3) Modification and termination of share-based payment plan
In case the Company modifies a share-based payment plan, if the modification increases
the fair value of the equity instruments granted, the Company will include the incremental
fair value of the equity instruments granted in the measurement of the amount recognized for
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services received. If the modification increases the number of the equity instruments granted,
the Company will include the fair value of additional equity instruments granted in the
measurement of the amount recognized for services received. If the Company modifies the
exercisable conditions of the share-based payment plan in a manner beneficial to the
employee, the Company will consider the modified exercisable conditions when dealing with
exercisable conditions.
If the modification decreases the fair value of the equity instruments granted, the
Company will continue to measure the amount recognized for services received at the fair
value of the equity instruments at the grant date without including the decremental fair value
of the equity instruments. If the modification decreases the number of the equity instruments
granted, the Company will treat the decreased number as the cancelled number of equity
instruments granted. If the Company modifies the exercisable conditions in a manner
unbeneficial to the employee, the Company will not consider the modified exercisable
conditions when dealing with exercisable conditions.
If cancellation or settlement of the equity instruments granted occurs (not due to
unsatisfaction of exercisable conditions) during the vesting period, the Company will
account for the cancellation or settlement of the equity instruments granted as an acceleration
of vesting, and recognize immediately the amount that otherwise would have been
recognized over the remainder of the vesting period.
35. Preferred shares, perpetual bonds and other financial instruments
□Applicable √N/A
36. Revenue
√Applicable □N/A
1. Principles for revenue recognition
(1) Sale of goods
Revenue from sale of goods is recognized when: 1) the Company has transferred to the
buyer the significant risks and rewards incidental to the ownership of the goods; 2) the
Company retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold; 3) the amount of revenue can be
measured reliably; 4) it is probable that the economic benefits associated with the transaction
will flow to the Company; and 5) the costs incurred or to be incurred in respect of the
transaction can be measured reliably.
(2) Rendering of services
At the balance sheet date, if the outcome of a transaction involving the rendering of
services can be estimated reliably (which means that the amount of revenue can be measured
reliably; it is probable that the economic benefits associated with the transaction will flow to
the Company; the stage of completion of the transaction at the end of the reporting period can
be measured reliably, and the costs incurred for the transaction and the costs to complete the
transaction can be measured reliably), the revenue associated with the transaction is
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recognized using the percentage of completion method, and the stage of completion of the
transaction is determined according to the proportion of the service already rendered to the
estimated total services to be rendered. At the balance sheet date, if the outcome of a
transaction involving the rendering of services cannot be estimated reliably, the transaction is
accounted for as follows: if the service cost already incurred is expected to be recoverable,
the service cost already incurred is recognized as the revenue from rendering of services,
with an equal amount recorded as service cost; and if the service cost already incurred is
expected to be unrecoverable, the service cost already incurred is recognized in profit or loss
for the current period, without recognizing revenue from rendering of service.
(3) Transfer of use right of assets
Revenue from the transfer of use right of assets is recognized when it is probable that
the economic benefits associated with the transaction will flow to the Company and the
amount of revenue can be measured reliably. Interest income is recognized according to the
time of and effective interest rate for the use by others of the Company’s monetary capital.
Royalty revenue is recognized according to the time and method of payment as agreed in
relevant contracts or agreements.
2. Specific methods for revenue recognition
(1) Revenue from sales of goods
Goods sold to the domestic market: 1) Under the direct sale model and the distribution
mode, the Company recognizes the revenue when the goods sent have been delivered to
customers with customers' receipt given to the Company. For goods sold attached with return
conditions, the Company recognizes the revenue when the validity period of goods return
conditions expires; for goods required for installment and inspection after sales, the
Company recognizes the revenue when such goods have been installed and inspected with
customers' acceptance certificate given to the Company; for goods sold through a physical
store, the Company recognizes the revenue when such goods are delivered to customers with
payments received. If the Company shares profits from sales of product to downstream
customers, the Company recognizes the revenue when profits from sales of product are
realized. 2) Under the commissioned sales mode, the Company recognizes the revenue when
it receives the list of commissioned sales from the customer.
Goods exported to overseas markets: The Company mainly adopts FCA for export of
goods. Under this mode, the Company recognizes revenue when it delivers goods at the
designated location with export customs clearance procedures completed.
(2) Revenue from leasing services
For light source products of laser digital cinema projector leased by the Company with
technical services to customers, the Company recognizes the revenue by multiplying actual
hours in consumption by the agreed unit price at the end of each month if the rent is charged
by actual hours in consumption pursuant to contract provisions, or by apportioning over the
agreed service period at the end of each month (time proportion) if the rent is charged on a
monthly, quarterly or annual basis.
For other products leased by the Company, the Company recognizes the revenue by
apportioning over the service period pursuant to contract provisions.
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(3) Other incomes
For installation services provided by the Company, the Company recognizes the
revenue when it has completed the services and received customers’ acceptance certificate;
for repair and maintenance services provided by the Company, the Company recognizes the
revenue when it has completed the services and received payments; for technology
development services provided by the Company, the Company recognizes the revenue when
it has completed the services or when the agreed time point of service acceptance is reached.
37. Government grants
√Applicable □N/A
1. Government grants are recognized if (i) the Company meets the conditions attaching
to the government grants; and (ii) the Company will receive the government grants.
Government grants in the form of monetary assets are measured at the amount received or
receivable. Government grants in the form of non-monetary assets are measured at fair value,
or if their fair value is unavailable, at nominal amount.
2. Determination and accounting treatment of government grants related to assets
Government grants related to assets are government grants which are offered for
purchasing, constructing or otherwise acquiring long-term assets as provided by the
applicable government documents. In the absence of such express provision in the applicable
government documents, government grants related to assets are those with a primary
condition that the Company should purchase, construct or otherwise acquire long-term assets.
Government grants related to assets are offset against the carrying amount of the relevant
assets or recognized as deferred income. Government grants related to assets recognized as
deferred income shall be included in profit or loss over the service life of the relevant assets
on a reasonable and systemic basis. Government grants measured at nominal amount are
directly recognized in profit or loss for the current period. In case of sale, transfer, retirement
or damage of the relevant assets before the end of intended service life, the balance of the
unallocated deferred income is transferred to profit or loss for the period in which the assets
are disposed of.
3. Determination and accounting treatment of government grants related to income
Government grants related to income are government grants other than those related to
assets. Government grants related to both assets and income in which it is difficult to make a
distinction between the portion related to assets and the portion related to income are wholly
classified as government grants related to income. Government grants related to income as
compensation for expenses or losses to be incurred in subsequent periods are recognized as
deferred income and in the period for recognizing the relevant costs, expenses or losses,
included in profit or loss for the current period or offset against the relevant costs.
Government grants related to income as compensation for expenses or losses already
incurred are directly included in profit or loss for the current period or offset against the
relevant costs.
4. Government grants related to daily operations of the Company are recognized in
other income or offset against the relevant costs and expenses depending on the nature of
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economic business. Government grants not related to daily operations of the Company are
recognized in non-operating income or expenses.
5. Accounting treatment of policy preferential loans and interest subsidies
1) If the Ministry of Finance appropriates the interest subsidies to the lending bank, who
then grants the loan to the Company at the policy preferential rate, the loan is stated as the
amount actually received, and the borrowing cost is calculated according to the principal of
the loan and the policy preferential rate.
2) If the Ministry of Finance directly appropriates the interest subsidies to the Company,
the interest subsidies are offset against the borrowing cost.
38. Deferred tax assets and deferred tax liabilities
√Applicable □N/A
1. The difference between the tax base of an asset or liability and its carrying amount (or
in case of an item not recognized as asset or liability whose tax base can be determined
according to the applicable tax law, the difference between its tax base and carrying amount)
is recognized as a deferred tax asset or deferred tax liability according to the tax rate
applicable to the period in which the asset or liability is expected to be recovered or settled.
2. Deferred income tax assets are recognized to the extent of the amount of income tax
payable that will be available in future periods against which deductible temporary
differences are deductible. At the balance sheet date, deferred tax assets not recognized in
prior periods are recognized if there’s conclusive evidence that it is probable that sufficient
taxable income will be available in future periods against which the deductible temporary
differences are deductible.
3. At the balance sheet date, the carrying amount of deferred income tax assets is
reviewed and reduced to the extent that it is no longer probable that sufficient taxable income
will be available in future periods to allow the benefit of the deferred tax assets to be utilized.
If it is probable that sufficient taxable income will be available, the reduced amount is
reversed.
4. The income taxes and deferred income taxes are included in profit or loss for the
current period as income tax expenses or gains, except the income taxes arising from any: (i)
business combination; or (ii) transaction or event directly recognized in owners’ equity.
39. Leases
(1). Accounting treatment of operating leases
√Applicable □N/A
If the Company is a lessee, the rents paid by the Company are included in the costs of
the relevant assets or in profit or loss for the current period over the whole lease term on a
straight line basis. The initial direct cost incurred by the Company is directly recognized in
profit or loss for the current period. Contingent rents are recognized in profit or loss in the
period in which they are incurred.
If the Company is a lessor, the rents received by the Company are recognized in profit or
loss for the current period over the whole lease term on a straight line basis. The initial direct
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2019 Annual Report
cost incurred by the Company is directly recognized in profit or loss for the current period.
However, if such initial direct cost is of a large amount, the initial direct cost is capitalized
and recognized in profit or loss by installments. Contingent rents are recognized in profit or
loss in the period in which they are incurred.
(2). Accounting treatment of finance leases
√Applicable □N/A
If the Company is a lessee, the lower of the fair value of the leased asset at the inception
of the lease and the present value of the minimum lease payments is recorded as the carrying
amount of the rented assets, with the minimum lease payments as the carrying amount of
long-term payables and the difference charged to unrecognized financing fees at the
commencement date of the lease term. The initial direct cost incurred by the Company is
directly recognized in the value of the rented assets. In each period of the lease term, the
financing fees for the period is recognized by using the effective interest method.
If the Company is a lessor, the aggregate of the minimum lease receivable at the
inception of the lease and the initial direct costs is recognized as the carrying amount of the
finance lease receivable and the unguaranteed residual value is recorded at the same time at
the commencement date of the lease term; the difference between the aggregate of the
minimum lease receivable, the initial direct costs and the unguaranteed residual value, and
the aggregate of their present values is recognized as unearned financing income. In each
period of the lease term, the financing income for the period is recognized by using the
effective interest method.
(3). Method for determination and accounting treatments of lease under new lease
standards
□Applicable √N/A
40. Other significant accounting policies and accounting estimates
□Applicable √N/A
41. Changes in significant accounting policies and accounting estimates
(1). Changes in significant accounting policies
√Applicable □N/A
Remarks(name and amount
Changes in accounting
of line items in financial
policies and associated Approval procedures
statements that have been
reasons
materially affected)
Implementation of the Approved by the
Notice on Issuing the management of the Company
Revised Presentation of
Financial Statements for
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2019 Annual Report
General Business
Enterprises for 2019 issued
by the Ministry f Finance
Implementation of the Approved by the
Accounting Standard for management of the Company
Business Enterprises No.22
– Financial Instruments:
Recognition and
Measurement , the
Accounting Standard for
Business Enterprises No.23
– Transfer of Financial
Assets, the Accounting
Standard for Business
Enterprises No.24 – Hedge
Accounting and the
Accounting Standard for
Business Enterprises No.37
– Financial Instruments:
Presentation revised by the
Ministry of Finance
Other description
1）The Company prepared the financial statements of 2019 in accordance with the
Notice on Issuing the Revised Presentation of Financial Statements for General
Business Enterprises for 2019 (Cai Kuai [2019] No.6) and the Notice on Issuing the
Revised Presentation of Consolidated Financial Statements (2019) (Cai Kuai [2019]
No.16) issued by the Ministry of Finance and requirements of Accounting Standards for
Business Enterprises with retrospective adjustments subject to the changes in
accounting policies. The followings are significantly influenced line items and amounts
in the Company’s financial statements in 2018.
Original line items and amounts New line items and amounts
Notes 35,903,632.13
Notes and
receivable
accounts 155,619,418.32
Accounts 119,715,786.19
receivable
receivable
Notes 39,051,466.05
Notes and payable
203,310,197.11
accounts payable Accounts 164,258,731.06
payable
2) The Company has implemented the Accounting Standard for Business
Enterprises No.22 – Financial Instruments: Recognition and Measurement, the
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2019 Annual Report
Accounting Standard for Business Enterprises No.23 – Transfer of Financial Assets, the
Accounting Standard for Business Enterprises No.24 – Hedge Accounting and the
Accounting Standard for Business Enterprises No.37 – Financial Instruments:
Presentation (hereinafter referred to as “new financial instrument standards”) revised
by the Ministry of Finance since January 1, 2019. As required by transition provisions to
adopt these new financial instrument standards, information in the comparative period
is not adjusted, but the opening balances of retained earnings or other comprehensive
income in this report shall be adjusted retrospectively for any difference between the
balance subject to the new standards and the balance subject to the previous standards at
the first implementation date.
In accordance with the new financial instrument standards, classification and
measurement of financial assets are changed into three measurement categories:
amortized cost, fair value through other comprehensive income, and fair value through
current profit or loss. The Company adopts aforementioned classification on the basis
of its own business model and the contractual cash flow characteristics of financial
assets. Equity investments should be measured at fair value through current profit or
loss while equity investments not held for trading can be selected to be measured at fair
value through other comprehensive income at the initial recognition (in which the gains
or losses from disposal cannot be reversed to profit or loss, but the dividend income can
be recognized as the current profit or loss), but the selection is irrevocable.
In accordance with the new financial instrument standards, the “expected credit
loss model” has replaced the “incurred loss model” to measure the impairment of
financial assets, which is applicable to financial assets measured at amortized cost,
financial assets at fair value through other comprehensive income and lease receivable.
① The new financial instrument standards, when implemented, will mainly bring
the following influences to the Company’s financial statements as at January 1, 2019.
Balance sheet
Adjustment
influence of
Item At December new financial At January 1,
31, 2018 instrument 2019
standards
Notes receivable 35,903,632.13 -29,396,227.13 6,507,405.00
Receivables
29,396,227.13 29,396,227.13
financing
Available-for-sale 11,975,419.38 -11,975,419.38
financial assets
Other equity 11,975,419.38 11,975,419.38
instrument
investments
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2019 Annual Report
Other payables 185,661,537.24 -1,553,988.22 184,107,549.02
Short-term 125,194,728.10
124,440,000.00 754,728.10
borrowings
Non-current
liabilities due 28,609,163.00 56,654.43 28,665,817.43
within one year
Long-term
403,107,800.00 742,605.69 403,850,405.69
borrowings
② As at January 1, 2019, the comparison results of the classification and
measurement of the Company’s financial assets and liabilities under the previous and
new financial instrument standards are set out as below:
Previous financial instrument standards New financial instrument standards
Item Measurement Carrying Measurement Carrying
category amount category amount
Cash and bank Amortized cost (loans and 484,169,208.44 484,169,208
Amortized cost
balances receivables) .44
6,507,405.0
Amortized cost
0
Notes Amortized cost (loans and
35,903,632.13 At fair value through
receivable receivables) 29,396,227.
other comprehensive
13
income
Accounts Amortized cost (loans and 119,715,786.19 119,715,786
Amortized cost
receivable receivables) .19
Other Amortized cost (loans and 12,543,543.59 12,543,543.
Amortized cost
receivables receivables) 59
At fair value through other
Other equity At fair value through
comprehensive 11,975,419.
instrument 11,975,419.38 other comprehensive
income(assets classified as 38
investments income
available for sale )
Short-term Amortized cost (other 124,440,000.00 125,194,728
Amortized cost
borrowings financial liabilities) .10
Non-current 28,609,163.00
Amortized cost (other
liabilities due Amortized cost 28,665,817.43
financial liabilities)
within one year
Long-term Amortized cost (other 403,107,800.00
Amortized cost 403,850,405.69
borrowings financial liabilities)
Amortized cost (other 39,051,466.05 39,051,466.
Notes payable Amortized cost
financial liabilities) 05
Accounts Amortized cost (other 164,258,731.06 164,258,731
Amortized cost
payable financial liabilities) .06
Other payables Amortized cost (other 185,661,537.24 Amortized cost 184,107,549
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2019 Annual Report
Previous financial instrument standards New financial instrument standards
Item Measurement Carrying Measurement Carrying
category amount category amount
financial liabilities) .02
Long-term Amortized cost (other 6,863,200.00 6,863,200.0
Amortized cost
payables financial liabilities) 0
③ Reconciliation of the previous carrying amounts of the Company’s financial
assets and liabilities to the new carrying amounts of the Company’s financial assets and
liabilities classified and measured under the requirement of new financial instrument
standards as at January 1, 2019:
Carrying amount
Carrying amount presented presented subject
subject to the previous to the new
Item financial instrument Reclassification Remeasurement financial
standards (December 31, instrument
2018) standards (January
1, 2019)
A. Financial assets
a. Amortized cost
Cash and bank 484,169,208.44 484,169,208.44
balances
Notes receivable
Balance presented
under previous CAS 35,903,632.13
22
Less: amount
transferred to that at
-29,396,22
fair value through
7.13
other comprehensive
income (new CAS 22)
Balance presented
6,507,405.00
under new CAS 22
Accounts receivable 119,715,786.19 119,715,786.19
Other receivables 12,543,543.59 12,543,543.59
Total financial assets -29,396,22
652,332,170.35 622,935,943.22
at amortized cost 7.13
b. Financial assets at fair value through other comprehensive income
Receivables financing
Balance presented
under previous CAS
22
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2019 Annual Report
Add: amount 29,396,227.
transferred from 13
amortized cost
(previous CAS 22)
Balance presented 29,396,227.13
under new CAS 22
Available-for-sale
financial assets
Balance presented 11,975,419.38
under previous CAS
22
Less: amount
transferred to that at
fair value through -11,975,41
other comprehensive 9.38
income (new CAS
22)-designation
Balance presented
under new CAS 22
Other equity
instrument
investments
Balance presented
under previous CAS
22
Add: amount
transferred from
available-for-sale 11,975,419.
financial assets 38
(previous CAS
22)-designation
Balance presented
11,975,419.38
under new CAS 22
Total financial assets
at fair value through 29,396,227.
11,975,419.38 41,371,646.51
other comprehensive 13
income
B. Financial liabilities
a. Amortized cost
Other payables
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2019 Annual Report
Balance presented
under previous CAS 185,661,537.24
22
Less: amount
transferred to bank -1,553,988.
borrowings (interest 22
payable)
Balance presented 184,107,549.02
under new CAS 22
Notes payable 39,051,466.05 39,051,466.05
Accounts payable 164,258,731.06 164,258,731.06
Short-term borrowings
Balance presented
under previous CAS 124,440,000.00
22
Add: amount
transferred from other 754,728.
payables (interest 10
payable)
Balance presented
125,194,728.10
under new CAS 22
Non-current liabilities
due within one year
Balance presented
under previous CAS 28,609,163.00
22
Add: amount
transferred from other 56,654.4
payables (interest 3
payable)
Balance presented
28,665,817.43
under new CAS 22
Long-term borrowings
Balance presented
under previous CAS 403,107,800.00
22
Add: amount
transferred from other 742,605.
payables (interest 69
payable)
Balance presented
403,850,405.69
under new CAS 22
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2019 Annual Report
Long-term payables 6,863,200.00 6,863,200.00
Total financial
liabilities at amortized 951,991,897.35 951,991,897.35
cost
④ Reconciliation of the previous closing balance of the provision for impairment
of financial assets to the new balance of provision for impairment of financial assets
classified and measured under the requirement of new financial instrument standards as
at January 1, 2019:
Provision for losses made
subject to the previous
Provision for losses
financial instrument
made subject to the new
standards /estimated
Item Reclassification Remeasurement financial instrument
liabilities determined
standards (January 1,
subject to contingencies
2019)
standards (December 31,
2018)
Accounts
14,072,536.97 14,072,536.97
receivable
Other
699,901.69 699,901.69
receivables
(2). Changes in significant accounting estimates
□Applicable √N/A
(3). Description of adjustments in opening balances of line items in financial
statements of the year due to implementation of new financial instrument
standards, new revenue standard or new lease standard since 2019
√Applicable □N/A
Consolidated balance sheet
In RMB
At December At January 1, Adjusted
Item
31, 2018 2019 amount
Current Assets:
Cash and bank balances 484,169,208.44 484,169,208.44
Balances with clearing
agencies
Placements with banks and
other financial institutions
Held-for-trading financial
assets
Financial assets at fair value
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2019 Annual Report
through profit or loss
Derivative financial assets
Notes receivable 35,903,632.13 6,507,405.00 -29,396,227.13
Accounts receivable 119,715,786.19 119,715,786.19
Receivables financing 29,396,227.13 29,396,227.13
Prepayments 22,909,249.21 22,909,249.21
Premiums receivable
Amounts receivable under
reinsurance contracts
Reinsurer's share of
insurance contract reserves
Other receivables 12,543,543.59 12,543,543.59
Including: Interest receivable
Dividends receivable
Financial assets purchased
under resale agreements
Inventories 325,302,295.60 325,302,295.60
Held-for-sale assets
Non-current assets due
within one year
Other current assets 44,707,753.47 44,707,753.47
Total Current Assets 1,045,251,468.63 1,045,251,468.63
Non-current Assets:
Loans and advances
Debt investments
Available-for-sale financial 11,975,419.38 -11,975,419.38
assets
Other debt investments
Held-to-maturity investments
Long-term receivables
Long-term equity
investments
Other equity instrument 11,975,419.38 11,975,419.38
investments
Other non-current financial
assets
Investment properties
Fixed assets 399,651,937.13 399,651,937.13
Construction in progress 30,953,213.42 30,953,213.42
Bearer biological assets
Oil and gas assets
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2019 Annual Report
Use right assets
Intangible assets 342,227,766.06 342,227,766.06
Development expenditure
Goodwill
Long-term prepaid expenses 6,400,455.04 6,400,455.04
Deferred tax assets 99,492,975.74 99,492,975.74
Other non-current assets 137,518,255.16 137,518,255.16
Total Non-current Assets 1,028,220,021.93 1,028,220,021.93
Total assets 2,073,471,490.56 2,073,471,490.56
Current Liabilities:
Short-term borrowings 124,440,000.00 125,194,728.10 754,728.10
Loans from the central bank
Taking from banks and other
financial institutions
Held-for-trading financial
liabilities
Financial liabilities at fair
value through profit or loss
Derivative financial
liabilities
Notes payable 39,051,466.05 39,051,466.05
Accounts payable 164,258,731.06 164,258,731.06
Receipts in advance 172,867,568.93 172,867,568.93
Financial assets sold under
repurchase agreements
Customer deposits and
deposits from banks and other
financial institutions
Funds from securities trading
agency
Funds from underwriting
securities agency
Employee benefits payable 38,184,612.34 38,184,612.34
Taxes payable 59,954,133.70 59,954,133.70
Other payables 185,661,537.24 184,107,549.02 -1,553,988.22
Including: Interest payable
Dividends payable
Fees and commissions
payable
Amounts payable under
reinsurance contracts
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2019 Annual Report
Held-for-sale liabilities
Non-current liabilities due 28,609,163.00 28,665,817.43 56,654.43
within one year
Other current liabilities
Total Current Liabilities 813,027,212.32 812,284,606.63 -742,605.69
Non-current Liabilities:
Insurance contract reserves
Long-term borrowings 403,107,800.00 403,850,405.69 742,605.69
Bonds payable
Including: Preferred shares
Perpetual bonds
Leasing liabilities
Long-term payables 6,863,200.00 6,863,200.00
Long-term employee benefits
payable
Provisions 9,449,087.12 9,449,087.12
Deferred income 14,125,164.43 14,125,164.43
Deferred tax liabilities
Other non-current liabilities
Total Non-current 433,545,251.55 434,287,857.24 742,605.69
Liabilities
Total Liabilities 1,246,572,463.87 1,246,572,463.87
Owners’ (or Shareholders’) equity:
Paid-in capital (or share 383,554,411.00 383,554,411.00
capital)
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 205,995,596.85 205,995,596.85
Less: Treasury shares
Other comprehensive income 1,044,703.00 1,044,703.00
Special reserve
Surplus reserve 12,695,712.93 12,695,712.93
General risk reserve
Retained profits 112,623,054.78 112,623,054.78
Total owners’ (or 715,913,478.56 715,913,478.56
shareholders’) equity
attributable to owners of the
Company
Minority interests 110,985,548.13 110,985,548.13
Total Owners’(or 826,899,026.69 826,899,026.69
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2019 Annual Report
Shareholders’) Equity
Total Liabilities and 2,073,471,490.56 2,073,471,490.56
Owners’ (or Shareholders’)
Equity
Description of adjustments on each line item:
√Applicable □N/A
The Company has reclassified the equity investments not held for trading into other equity
instrument investments pursuant to the new financial instrument standards since it adopted
the new financial instrument standards on January 1, 2019. Adjusted amounts refer to
statements listed above for details.
The Parent Company's balance sheet
In RMB
At December 31, At January 1, Adjusted
Item
2018 2019 amount
Current Assets:
Cash and bank balances 306,709,743.06 306,709,743.06
Held-for-trading financial
assets
Financial assets at fair value
through profit or loss
Derivative financial assets
Notes receivable 10,091,743.00 6,507,405.00 -3,584,338.00
Accounts receivable 227,673,423.35 227,673,423.35
Receivables financing 3,584,338.00 3,584,338.00
Prepayments 12,293,204.18 12,293,204.18
Other receivables 34,226,930.38 34,226,930.38
Including: Interest receivable
Dividends receivable
Inventories 180,602,162.31 180,602,162.31
Held-for-sale assets
Non-current assets due
within one year
Other current assets
Total Current Assets 771,597,206.28 771,597,206.28
Non-current Assets:
Debt investments
Available-for-sale financial 7,075,419.38 -7,075,419.38
assets
Other debt investments
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2019 Annual Report
Held-to-maturity investments
Long-term receivables
Long-term equity 219,365,735.89 219,365,735.89
investments
Other equity instrument 7,075,419.38 7,075,419.38
investments
Other non-current financial
assets
Investment properties
Fixed assets 49,100,811.69 49,100,811.69
Construction in progress
Bearer biological assets
Oil and gas assets
Use right assets
Intangible assets 340,207,888.91 340,207,888.91
Development expenditure
Goodwill
Long-term prepaid expenses 4,155,925.64 4,155,925.64
Deferred tax assets 5,710,071.90 5,710,071.90
Other non-current assets 254,255.16 254,255.16
Total Non-current Assets 625,870,108.57 625,870,108.57
Total assets 1,397,467,314.85 1,397,467,314.85
Current Liabilities:
Short-term borrowings 124,440,000.00 125,194,728.10 754,728.10
Held-for-trading financial
liabilities
Financial liabilities at fair
value through profit or loss
Derivative financial
liabilities
Notes payable 39,051,466.05 39,051,466.05
Accounts payable 140,069,264.80 140,069,264.80
Receipts in advance 35,062,546.75 35,062,546.75
Employee benefits payable 20,568,733.86 20,568,733.86
Taxes payable 18,958,729.81 18,958,729.81
Other payables 173,955,421.70 173,200,693.60 -754,728.10
Including: Interest payable
Dividends payable
Held-for-sale liabilities
Non-current liabilities due
within one year
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2019 Annual Report
Other current liabilities
Total Current Liabilities 552,106,162.97 552,106,162.97
Non-current Liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Leasing liabilities
Long-term payables 6,863,200.00 6,863,200.00
Long-term employee benefits
payable
Provisions 9,449,087.12 9,449,087.12
Deferred income 5,125,274.76 5,125,274.76
Deferred tax liabilities
Other non-current liabilities
Total Non-current 21,437,561.88 21,437,561.88
Liabilities
Total Liabilities 573,543,724.85 573,543,724.85
Owners’ (or Shareholders’) equity:
Paid-in capital (or share 383,554,411.00 383,554,411.00
capital)
Other equity instruments
Including: preferred shares
Perpetual bonds
Capital reserve 308,318,059.21 308,318,059.21
Less: Treasury shares
Other comprehensive income
Special reserve
Surplus reserve 11,418,172.20 11,418,172.20
Retained profits 120,632,947.59 120,632,947.59
Total Owners’ (or 823,923,590.00 823,923,590.00
Shareholders’) Equity
Total Liabilities and 1,397,467,314.85 1,397,467,314.85
Owners’(or Shareholders’)
Equity
Description of adjustments on each line item:
√Applicable □N/A
The Company has reclassified the equity investments not held for trading into other equity
instrument investments pursuant to the new financial instrument standards since it adopted
the new financial instrument standards on January 1, 2019. Adjusted amounts refer to
statements listed above for details.
211 / 312
2019 Annual Report
(4). Description of retrospective adjustments in comparative data in prior periods
due to implementation of new financial instrument standards or new lease
standard in 2019
□Applicable √N/A
42. Others
□Applicable √N/A
VI. Taxes
1. Major categories of taxes and tax rates
Description of major categories of taxes and tax rates
√Applicable □N/A
Basis of
Category tax
Tax rate
of tax computatio
n
Value-adde Sales of 3%, 6%, 9%, 10%, 13%, 16%
d tax goods or
(VAT) rendering
of taxable
services
City Turnover 5%, 7%
maintenanc tax payable
e and
constructio
n tax
Education Turnover 3%
surcharges tax payable
Local Turnover 2%
education tax payable
surcharges
Enterprise Taxable 8.25%、8.70%、8.84%、12.5%、15%、16.5%、20%、21%
income tax income 、25%
Disclosure of taxpayers with different rates of enterprise income tax:
√Applicable □N/A
Taxpayer Rate of enterprise income tax(%)
Appotronics Corporation Limited 15.00
Fengmi (Beijing) Technology Co., Ltd. 15.00
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2019 Annual Report
Shenzhen Appotronics Software Technology 12.50
Co., Ltd.
Appotronics Hong Kong Limited 8.25,16.50
Beijing Orient Appotronics Technology Co., 20.00
Ltd.
Fabulus Technology Hong Kong Limited 16.50
JoveAI Innovation Inc. 8.70, 8.84, 21.00
Appotronics USA, Inc. 21.00
FORMOVIE TECHNOLOGY INC 21.00
JoveAI Limited Tax exemption
Other taxpayers except above 25.00
Note:
1. Appotronics Hong Kong Limited and Fabulus Technology Hong Kong Limited, as
domiciled in Hong Kong, one of which can apply the two-level income tax system, namely,
applying the tax rate of 8.25% for the first HKD 2 million taxable income and 16.5% for the
remaining taxable income.
2. JoveAI Limited, as domiciled in the Cayman Islands, is exempt from enterprise
income tax.
3. Appotronics USA, Inc., as domiciled in the United States, applies the federal
enterprise income tax rate of 21%.
4. JoveAI Innovation, Inc., as domiciled in the United States, applies the federal
enterprise income tax rate of 21%, the California state enterprise income tax rate of 8.84%,
and the Delaware state enterprise income tax rate of 8.70%.
5. FORMOVIE TECHNOLOGY INC, as domiciled in the United States, applies the
federal enterprise income tax rate of 21%.
6.According to the Announcement of the Ministry of Finance, the State Taxation
Administration and the General Administration of Customs on Relevant Policies for
Deepening the Value-Added Tax Reform (Announcement No.39 in 2019 by the Ministry of
Finance, the State Taxation Administration and the General Administration of Customs), for
taxable income from sales or exports of goods, the general tax payers shall apply the VAT at
a rate of 13% in exchange of 16%, or 9% in exchange of 10%.
2. Tax incentives
√Applicable □N/A
1. On December 9, 2019, the Company obtained the High-tech Enterprise Certificate
(Certificate No.: GR201944204257) jointly issued by Shenzhen Science and Technology
Innovation Commission, Shenzhen Finance Bureau and Shenzhen Tax Service of State
Taxation Administration with a valid term of three years. Therefore, the Company can pay
the enterprise income tax at a rate of 15% from 2019 to 2021.
213 / 312
2019 Annual Report
2. On November 30, 2018, Fengmi (Beijing) Technology Co., Ltd. obtained the
High-tech Enterprise Certificate (Certificate No.: GR201811009590) jointly issued by
Beijing Municipal Science and Technology Commission, Beijing Finance Bureau and
Beijing Tax Service of State Taxation Administration with a valid term of three years.
However, as Fengmi (Beijing) Technology Co., Ltd. failed to complete the registration in
competent authorities, it enjoyed no tax incentives in 2018. It can pay the enterprise income
tax at a rate of 15% since 2019.
3. In accordance with the Notice of the Ministry of Finance and the State Administration
of Taxation on Enterprise Income Tax Policies for Further Encouraging the Development of
Software and Integrated Circuit Industries (Cai Shui (2012) No.27), commencing from the
first year of earning profits prior to December 31,2017, a qualified company can be exempted
from the enterprise income tax for the first two years and enjoy a 50% tax reduction on the
statutory tax rate of 25% from the third to the fifth year until the tax incentive period expires.
Therefore, the Company’s subsidiary, Shenzhen Appotronics Software Technology Co., Ltd.,
is qualified for the tax incentive policy of “exemption from income tax for the first two years
and 50% reduction for next three years”, which means, it can be exempted from enterprise
income tax from 2016 to 2017, and pay the enterprise income tax at a rate of 12.5% from
2018 to 2020.
4. In accordance with the Notice of the Ministry of Finance and the State Administration
of Taxation on Value-added Tax Policies for Software Products ( Cai Shui [2011] No.100),
for self-developed and produced software products sold by general VAT taxpayers, the
tax-refund-upon-collection policy is applicable to the part of their actual VAT burden in
excess of 3% after the VAT has been collected at a tax rate of 17%. The Company’s
subsidiary Shenzhen Appotronics Software Technology Co., Ltd. is qualified for enjoying
such tax incentive from January 1, 2015.
5. In accordance with Article 1 (26) of Annex 3 of the Notice of the Ministry of Finance
and the State Administration of Taxation on Implementing the Pilot Program of Replacing
Business Tax with Value-Added Tax in an All-round Manner (Cai Shui [2016] No.36),
taxpayers are exempted from VAT if they provide technology transfer, technology
development, and technology consultation and services in connection therewith. The
Company is qualified for enjoying such tax incentive from January 26, 2018.
6. In accordance with the Notice of the Ministry of Finance and the State Administration
of Taxation on Implementing the Inclusive Tax Deduction and Exemption Policies for Micro
and Small Enterprises (Cai Shui [2019] No.13), the annual taxable income of a small
low-profit enterprise that is not more than RMB 1 million shall be levied with the enterprise
income tax rate at a discount of 25%, namely, for which the applicable enterprise income tax
rate is 20%. The Company’s subsidiary Beijing Orient Appotronics Technology Co., Ltd. is
qualified for enjoying such tax incentive from 2019.
3. Others
□Applicable √N/A
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2019 Annual Report
VII. Notes to items in the consolidated financial statements
1. Cash and bank balances
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Cash on hand 3,348.57 3,175.14
Bank deposits 857,708,997.58 470,309,528.51
Other monetary 18,146,438.43 13,856,504.79
funds
Total 875,858,784.58 484,169,208.44
Including: total 132,334,643.95 15,316,654.03
oversea deposits
Other description
In other monetary funds, an amount of RMB 15,831,289.87 is restricted for being used as
margins while in bank deposits, an amount of RMB30,000,000.00 is restricted for being
frozen due to litigation. The bank deposits include deposit interests amounting to
RMB238,006.85 which have been recognized yet not matured.
2. Held-for-trading financial assets
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Financial assets at fair value 540,000,000.00
through profit or loss
Including:
Structural deposits 540,000,000.00
Total 540,000,000.00
Other description:
□Applicable √N/A
3. Derivative financial assets
□Applicable √N/A
4. Notes receivable
(1). Categories of notes receivable
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Bank acceptances 3,891,456.00 6,507,405.00
Commercial acceptances 151,103.63
Total 4,042,559.63 6,507,405.00
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2019 Annual Report
[Note]: The difference between the opening balance of the year and the closing balance of the
prior year (as of December 31, 2018) can refer to V 41 of Section XI for details.
(2). Notes receivable pledged by the Company at the end of the period
□Applicable √N/A
(3). Notes receivable which are undue as at the balance sheet date but endorsed or
discounted by the Company at the end of the period
√Applicable □N/A
In RMB
Amount derecognized at the Amount not derecognized at
Item
end of the period the end of the period
Bank acceptances 2,791,456.00
Commercial acceptances 45,484.94
Total 2,836,940.94
(4). Notes transferred to accounts receivable due to drawer's failure in cashing at the
end of the period
□Applicable √N/A
(5). Disclosure by categories of provision for bad debts
√Applicable □N/A
In RMB
Closing balance Opening balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Proportion
Category Book value Proportion Book value
Proportion of Proportion
Amount Amount Amount Amount of provision
(%) provision (%)
(%)
(%)
Provision for
bad debts
made
individually
Including:
Provision for 4,050,512.45 100.00 7,952.82 0.20 4,042,559.63 6,507,405.00 100.00 6,507,405.00
bad debts
made by
group
Including:
Bank 3,891,456.00 96.07 3,891,456.00 6,507,405.00 100.00 6,507,405.00
acceptances
216 / 312
2019 Annual Report
Commercial 159,056.45 3.93 7,952.82 5.00 151,103.63
acceptances
Total 4,050,512.45 100.00 7,952.82 0.20 4,042,559.63 6,507,405.00 100.00 6,507,405.00
Provision for bad debts made individually:
□Applicable √N/A
Provision for bad debts made by group:
√Applicable □N/A
Item by group: commercial acceptance bills
In RMB
Closing balance
Name Proportion of
Notes receivable Bad debt provision
provision (%)
Commercial 159,056.45 7,952.82 5.00
acceptance bills
group
Total 159,056.45 7,952.82 5.00
Recognition criterion to make the bad debt provision by group and explanation
□Applicable √N/A
If a provision for bad debts of notes receivable is made in accordance with the general model
of expected credit losses (hereinafter refereed to as “ECL”), please disclose relevant
information subject to the disclosure of the bad debt provision for other receivables.
□Applicable √N/A
(6). Provision for bad debts
√Applicable □N/A
In RMB
Changes for the current period
Opening Closing
Category Recovery or Write off or
balance Provision balance
reversal cancellation
Commercial 7,952.82 7,952.82
acceptance
bills
Total 7,952.82 7,952.82
Including significant amounts recovered or reversed from the current provision for bad debts:
□Applicable √N/A
Other description:
None
217 / 312
2019 Annual Report
(7). Notes receivable actually canceled in the current period
□Applicable √N/A
Other description:
□Applicable √N/A
5. Accounts receivable
(1). Disclosure by aging
√Applicable □N/A
In RMB
Aging Closing balance of carrying amount
Within 1 year
Including: sub-items within 1 year
Sub-total of items within 1 year 179,597,137.86
1 to 2 years 6,188,114.04
2 to 3 years 1,553,577.49
Total 187,338,829.39
(2). Disclosure by categories of provision for bad debts
√Applicable □N/A
In RMB
Closing balance Opening balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Book value Book value
Proportion Proportion of Proportion Proportion of
Amount Amount Amount Amount
(%) provision (%) (%) provision (%)
Provision for bad 6,661,956.09 4.98 6,661,956.09 100.00
debts made
individually
Including:
Provision for bad 6,661,956.09 4.98 6,661,956.09 100.00
debts made
individually
Provision for bad 187,338,829.38 100 11,303,674.14 6.03 176,035,155.24 127,126,367.07 95.02 7,410,580.88 5.83 119,715,786.19
debts made by
group
Including:
218 / 312
2019 Annual Report
Accounts 187,338,829.38 100 11,303,674.14 6.03 176,035,155.24 127,126,367.07 95.02 7,410,580.88 5.83 119,715,786.19
receivable for
which the
provision for bad
debts is made by
aging group
Total 187,338,829.38 100.00 11,303,674.14 6.03 176,035,155.24 133,788,323.16 100.00 14,072,536.97 10.52 119,715,786.19
Provision for bad debts made individually:
□Applicable √N/A
Provision for bad debts made by group:
√Applicable □N/A
Item by group: aging group
In RMB
Closing balance
Name Proportion of
Accounts receivable Bad debt provision
provision (%)
Within 1 year 179,597,137.86 8,979,856.88 5.00
1-2 years 6,188,114.04 1,547,028.51 25.00
2-3 years 1,553,577.49 776,788.75 50.00
Total 187,338,829.39 11,303,674.14 6.03
Recognition criterion to make the bad debt provision by group and explanation
√Applicable □N/A
Recognition criterion to make the bad debt provision by group and explanation can refer to
V10 of Section XI for details.
If a provision for bad debts of accounts receivable is made in accordance with the general
model of ECL, please disclose relevant information subject to the disclosure of the bad debt
provision for other receivables.
□Applicable √N/A
(3). Provision for bad debts
√Applicable □N/A
In RMB
Opening Changes for the current period
Category Closing balance
balance Provision Recovery or Write off or Other
219 / 312
2019 Annual Report
reversal cancellation changes
Provision for 6,661,956.09 238,836.00 6,423,120.09
bad debts
made
individually
Provision for 7,410,580.88 3,904,459.26 11,366.00 11,303,674.14
bad debts
made by
group
Total 14,072,536.97 3,904,459.26 238,836.00 6,434,486.09 11,303,674.14
Including significant amounts recovered or reversed from the current provision for bad debts:
□Applicable √N/A
(4). Accounts receivable actually canceled in the current period
√Applicable □N/A
In RMB
Item Cancellation amount
Accounts receivable actually canceled 6,434,486.09
Accounts receivable actually canceled in the current period are RMB 6,434,486.09.
In which significant amounts canceled are described as below:
√Applicable □N/A
In RMB
Nature of Cancellation If arising from
Cancellation Cancellation
Entity accounts procedures related party
amount reason
receivable performed transactions
Beijing Goods 6,423,120.09 Expected to Approved by the No
Dayang payment be management
Huaying unrecoverable
Technology
& Culture
Co., Ltd.
Total / 6,423,120.09 / / /
Description of accounts receivable cancellation:
□Applicable √N/A
(5). Top five closing balances of accounts receivable categorized by debtors
√Applicable □N/A
In RMB
220 / 312
2019 Annual Report
Proportion to the
balance of
Entities Carrying amount Bad debt provision
accounts
receivable(%)
Xiaomi Communications 45,679,955.49 24.38 2,283,997.77
Technologies Co., Ltd. and its
affiliates
BARCO 44,783,875.39 23.91 2,239,193.77
China Film Equipment Co., Ltd. and 17,494,326.54 9.34 874,716.33
its affiliates
Beijing Jingdong Century Trading 14,737,368.94 7.87 736,868.45
Co., Ltd.
Beijing Donview Education 8,829,840.85 4.71 442,339.31
Technology Co., Ltd. and its
affiliates
Sub-total 131,525,367.21 70.21 6,577,115.63
(6). Accounts receivable derecognized due to transfer of financial assets
□Applicable √N/A
(7). Assets and liabilities arising from transfer of accounts receivable and
continued involvement
□Applicable √N/A
Other description:
□Applicable √N/A
6. Receivables financing
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Bank acceptance bills 1,980,500.00 29,396,227.13
receivable
Total 1,980,500.00 29,396,227.13
Changes in amount and fair value of receivables financing:
□Applicable √N/A
221 / 312
2019 Annual Report
If a provision for bad debts of receivables financing is made in accordance with the general
model of ECL, please disclose relevant information subject to the disclosure of the bad debt
provision for other receivables.
□Applicable √N/A
Other description:
√Applicable □N/A
Notes receivable which are undue as at the balance sheet date but endorsed by the Company
at the end of the period
Amount not
Amount
derecognized at the
Item derecognized at the
end of the period
end of the period
Bank acceptance bills 5,490,827.07
Sub-total 5,490,827.07
Considering it is less probable that the bank acceptances cannot be paid at maturity as
acceptors of bank acceptances are commercial banks with higher credit ratings, the Company
has derecognized the endorsed bank acceptances with higher credit ratings. However, if such
notes are unable to be paid at maturity, the Company will still be jointly and severally liable
to the noteholders pursuant to the Negotiable Instruments Law.
7. Prepayments
(1). Disclosure of prepayments by aging
√Applicable □N/A
In RMB
Closing balance Opening balance
aging
Amount Proportion(%) Amount Proportion(%)
Within 1 34,948,314.45 99.65 22,741,632.57 99.27
year
1 to 2 years 122,684.68 0.35 167,616.64 0.73
Total 35,070,999.13 100.00 22,909,249.21 100.00
Reasons for overdue settlement of prepayments with significant amounts aged more than 1
year:
There are no prepayments with significant amounts aged more than 1 year at the end of the
period.
(2). Top five closing balances of prepayments categorized by receivers
√Applicable □N/A
222 / 312
2019 Annual Report
Entities Carrying Proportion to the balance of
amount prepayments (%)
Guangzhou Shiyuan Electronic 13,743,559.40 39.19
Technology Company Limited
Shenzhen Global Digital Technology 3,804,627.44 10.85
Co., Ltd.
ACE (Shanghai) Film & TV 3,337,436.92 9.52
Equipment Co., Ltd.
China Film Equipment Co., Ltd. and 3,350,592.41 9.55
its affiliates
Shenzhen Puzhen Technology Co., 901,968.13 2.57
Ltd.
Sub-total 25,138,184.30 71.68
Other description
□Applicable √N/A
8. Other receivables
Presented by items
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Interest receivable
Dividends receivable
Other receivables 9,618,750.08 12,543,543.59
Total 9,618,750.08 12,543,543.59
Other description:
□Applicable √N/A
Interest receivable
(1). Categories of interest receivable
□Applicable √N/A
(2). Significant interests overdue
□Applicable √N/A
(3). Provision for bad debts
□Applicable √N/A
223 / 312
2019 Annual Report
Other description:
□Applicable √N/A
Dividends receivable
(1) Dividends receivable
□Applicable √N/A
(2) Dividends receivable with significant amounts aged more than 1 year
□Applicable √N/A
(3) Provision for bad debts
□Applicable √N/A
Other description:
□Applicable √N/A
Other receivables
(1). Disclosure by aging
√Applicable □N/A
In RMB
Aging Closing balance of carrying amount
Within 1 year
Including: sub-items within 1 year
Sub-total of items within 1 year 2,914,444.13
1 to 2 years 5,985,039.29
2 to 3 years 1,068,102.14
Over 3 years 90,300.00
Total 10,057,885.56
(2). Categories by the nature of other receivables
√Applicable □N/A
In RMB
Closing balance of carrying Opening balance of carrying
Nature of other receivables
amount amount
Deposits/margins/petty cash 8,772,420.22 8,496,423.15
Withholding 1,275,175.63 901,659.86
Receivables for transfer of 3,700,000.00
shares
Temporary receivables 10,289.71 145,362.27
Total 10,057,885.56 13,243,445.28
224 / 312
2019 Annual Report
(3). Provision for bad debts
√Applicable □N/A
In RMB
Stage I Stage II Stage III
Lifetime ECL
Bad debt provision 12-month ECL Lifetime ECL (with Total
(without credit
in the future credit impairment)
impairment)
Balance as at January 612,714.94 100.00 87,086.75 699,901.69
1, 2019
Balance as at January
1, 2019 in the current
period
--transferred to Stage
II
--transferred to Stage -30,000.00 -100.00 30,100.00
III
--reversed to Stage II
--reversed to Stage I
Provision -143,679.46 -143,679.46
Reversal
Write-off
Cancellation 117,086.75 117,086.75
Other changes
Balance at December 439,035.48 100.00 439,135.48
31, 2019
Description of significant changes in the balance of other receivables with changed provisions for losses in
the current period:
□Applicable √N/A
Basis for recognizing the amount of bad debt provisions and evaluating whether the credit
risk of financial instruments has been increased significantly in the current period:
□Applicable √N/A
(4). Provision for bad debts
√Applicable □N/A
In RMB
Category Opening Changes for the current period Closing
225 / 312
2019 Annual Report
balance Recovery balance
Write off or Other
Provision or
cancellation changes
reversal
Provision for 87,086.75 87,086.75
bad debts
made
individually
Provision for 612,814.94 -143,679.46 30,000.00 439,135.48
bad debts
made by
group
Total 699,901.69 -143,679.46 117,086.75 439,135.48
Including significant amounts recovered or reversed from the current provision for bad debts:
□Applicable √N/A
(5). Other receivables actually canceled in the current period
√Applicable □N/A
In RMB
Item Cancellation amount
Other receivables actually canceled 117,086.75
In which significant amounts canceled are described as below:
□Applicable √N/A
Description of other receivables cancellation:
□Applicable √N/A
(6). Top five closing balances of other receivables categorized by debtors
√Applicable □N/A
In RMB
Closing balance
Nature of Proportion to the
Closing of bad debt
Entities other Aging balance of other
balance provision
receivables receivables (%)
Shenzhen Margins 4,094,368.00 1-2 years 40.71 204,718.40
Meisheng
Industry Co.,
Ltd.
226 / 312
2019 Annual Report
Shenzhen Deposits 1,036,606.40 Within 1 10.31 51,830.32
Science and year, 1-2
Technology years, 2-3
Assessment years
Management
Center
Hong Kong Deposits 1,036,373.11 Within 1 10.30 51,818.66
Science & year
Technology
Parks
Corporation
WANG Deposits 300,000.00 Within 1 2.98 15,000.00
Shaogang year
China Film Deposits 290,866.00 Within 1 2.89 14,543.30
Equipment year, 1-2
Co., Ltd. and years, 2-3
its affiliates years
Total / 6,758,213.51 / 67.19 337,910.68
(7). Accounts receivable involving government grants
□Applicable √N/A
(8). Other receivables derecognized due to transfer of financial assets
□Applicable √N/A
(9). Assets and liabilities arising from transfer of other receivables and continued
involvement
□Applicable √N/A
Other description:
□Applicable √N/A
9. Inventories
(1). Categories of inventories
√Applicable □N/A
In RMB
Item Closing balance Opening balance
227 / 312
2019 Annual Report
Provision Provision
Carrying Carrying
for decline Book value for decline Book value
amount amount
in value in value
Raw materials 169,021,593.23 18,901,716.15 150,119,877.08 172,758,435.91 15,733,715.15 157,024,720.76
Work in 12,337,519.02 686,431.07 11,651,087.95 9,433,678.13 931,664.29 8,502,013.84
progress
Goods on hand 95,889,640.29 20,855,142.36 75,034,497.93 97,961,682.59 20,235,396.20 77,726,286.39
Goods upon 56,776,659.73 56,776,659.73 66,939,392.07 32,258.46 66,907,133.61
delivery
Materials for 6,405,637.99 21,590.33 6,384,047.66 17,775,800.60 2,633,659.60 15,142,141.00
consigned
processing
Total 340,431,050.26 40,464,879.91 299,966,170.35 364,868,989.30 39,566,693.70 325,302,295.60
(2). Provision for decline in value of inventories
(3). Provision for decline in value of inventories and impairment of contract
performance cost
√Applicable □N/A
In RMB
Increase Decrease
Opening Closing
Item Other Reversal or Other
balance Provision balance
s write-off s
Raw 15,733,715.1 14,992,560.9 11,824,559.9 18,901,716.1
materials 5 1 1 5
Work in 931,664.29 245,233.22 686,431.07
progress
Goods on 20,235,396.2 7,138,530.40 6,518,784.24 20,855,142.3
hand 0 6
Goods 32,258.46 32,258.46
upon
delivery
Materials 2,633,659.60 2,612,069.27 21,590.33
for
consigned
processin
g
Total 39,566,693.7 22,131,091.3 21,232,905.1 40,464,879.9
0 1 0 1
Specify reasons for specific determination basis of net realizable value, and reversal or
write-off of the provision for decline in value of inventories:
228 / 312
2019 Annual Report
Specific determination basis of net realizable value: for inventories directly used for sale,
the net realizable value is determined as the history or actual average selling price less the
estimated costs necessary to make the sale and relevant taxes; for inventories required for
processing, the net realizable value is determined as the history or actual average selling
price of finished goods less the estimated costs of completion, and the estimated costs
necessary to make the sale and relevant taxes.
The reason for reversal of the provision for decline in value of inventories for the period is
that, for the inventories of which a provision for decline in value has been made in prior
period, their net realizable values have increased.
The reason for write-off of the provision for decline in value of inventories for the period
is that the Company has consumed or sold the inventories of which a provision for decline in
value has been made.
(4). Description of capitalized amount of borrowing costs included in the closing
balance of inventories
□Applicable √N/A
(5). Completed but not yet billed assets arising from construction contracts at the
end of the period
□Applicable √N/A
Other description
□Applicable √N/A
10. Held-for-sale assets
□Applicable √N/A
11. Non-current assets due within one year
□Applicable √N/A
Debt investments and other debt investments with significant amounts at the end of the
period
□Applicable √N/A
Other description
None
12. Other current assets
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Input VAT to be deducted 40,317,187.39 44,692,236.45
Prepaid enterprise income tax 4,088,325.91 15,517.02
229 / 312
2019 Annual Report
Total 44,405,513.30 44,707,753.47
Other description
None
13. Debt investments
(1). Description of debt investments
□Applicable √N/A
(2). Debt investments with significant amounts at the end of the period
□Applicable √N/A
(3). Description of provision for impairment
□Applicable √N/A
Basis for recognizing the amount of provisions for impairment and evaluating whether the credit risk of
financial instruments has been increased significantly in the current period
□Applicable √N/A
Other description
□Applicable √N/A
14. Other debt investments
(1). Description of other debt investments
□Applicable √N/A
(2). Other debt investments with significant amounts at the end of the period
□Applicable √N/A
(3). Description of provision for impairment
□Applicable √N/A
Basis for recognizing the amount of provisions for impairment and evaluating whether the credit risk of
financial instruments has been increased significantly in the current period
□Applicable √N/A
Other description:
□Applicable √N/A
15. Long-term receivables
(1). Description of long-term receivables
□Applicable √N/A
230 / 312
2019 Annual Report
(2). Provision for bad debts
□Applicable √N/A
Basis for recognizing the amount of bad debt provisions and evaluating whether the credit risk of financial
instruments has been increased significantly in the current period
□Applicable √N/A
(3). Long-term receivables derecognized due to transfer of financial assets
□Applicable √N/A
(4). Assets and liabilities arising from transfer of long-term receivables and
continued involvement
□Applicable √N/A
Other description
□Applicable √N/A
16. Long-term equity investments
√Applicable □N/A
In RMB
Changes for the current period
Closing
Investment
Opening Adjustment in Declared Closing balance of
profit or Other Provision
Investees balance Additional Decreased other cash balance provision
loss under equity for Others
investment investment comprehensive dividends for
equity changes impairment
income or profits impairment
method
I. Joint venture
Sub-total
II. Associates
Cinionic 139,524,000.00 -3,927.93 14,299.87 139,534,371.94
Limited
Sub-total 139,524,000.00 -3,927.93 14,299.87 139,534,371.94
Total 139,524,000.00 -3,927.93 14,299.87 139,534,371.94
Other description
None
17. Other equity instrument investments
(1). Description of other equity instrument investments
√Applicable □N/A
231 / 312
2019 Annual Report
In RMB
Item Closing balance Opening balance
Shen Zhen Timewaying 7,075,419.38 7,075,419.38
Technology Co., Ltd.
Shenzhen Bevix Technology Co., 4,900,000.00 4,900,000.00
Ltd.
Total 11,975,419.38 11,975,419.38
[Note]: The difference between the opening balance of the year and the closing balance of
the prior year (as of December 31, 2018) can refer to V 42 of Section XI for details.
(2). Description of equity investments not held for trading
√Applicable □N/A
In RMB
Reasons for Reasons for
Dividends designating as transferring to
income Amounts to retained financial assets retained
Accumulated Accumulated
Item recognized for earnings from other at fair value earnings from
gains losses
the current comprehensive income through other other
period comprehensive comprehensive
income income
Shen Zhen Subject to the
Timewaying management's
Technology intention of
Co., Ltd. holding
Shenzhen Subject to the
Bevix management's
Technology intention of
Co., Ltd. holding
Other description:
√Applicable □N/A
The Company's equity investments in Shen Zhen Timewaying Technology Co., Ltd. and
Shenzhen Bevix Technology Co., Ltd. are mainly for promoting future business cooperation
rather than making transactions, hence they are designated as investments in equity
instruments at fair value through other comprehensive income.
18. Other non-current financial assets
□Applicable √N/A
Other description:
□Applicable √N/A
19. Investment properties
Measurement mode of investment properties
232 / 312
2019 Annual Report
N/A
20. Fixed assets
Presented by items
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Fixed assets 471,204,340.95 399,651,937.13
Disposal of fixed assets
Total 471,204,340.95 399,651,937.13
Other description:
√Applicable □N/A
None
Fixed assets
(1). Description of fixed assets
√Applicable □N/A
In RMB
Machinery Electronic Operating
Transportation
Item and equipment leased Total
equipment
equipment and others equipment
I. Cost:
1.Opening 66,913,542.97 304,096.46 22,897,002.28 404,727,717.92 494,842,359.63
balance
2. Increase 23,690,628.28 716,303.59 9,101,989.42 126,212,655.90 159,721,577.19
(1)Purchase 23,690,628.28 716,303.59 9,101,989.42 33,508,921.29
(2) Transfer 125,269,204.33 125,269,204.33
from construction
in progress
(3) Increase
due to business
combination
(4) Transfer
943,451.57 943,451.57
from inventories
3. Decrease 7,984,572.90 733,676.31 5,343,261.41 14,061,510.62
(1) Disposal 7,571,968.06 596,891.04 412,595.59 8,581,454.69
or retirement
(2) Transfer
412,604.84 136,785.27 4,930,665.82 5,480,055.93
to inventories
4.Closing 82,619,598.35 1,020,400.05 31,265,315.39 525,597,112.41 640,502,426.20
balance
233 / 312
2019 Annual Report
II. Accumulated
depreciation
1.Opening 21,928,764.07 211,823.44 7,857,607.14 65,192,227.85 95,190,422.50
balance
2. Increase 12,407,120.20 80,400.42 4,770,710.62 63,283,462.83 80,541,694.07
(1) 12,407,120.20 80,400.42 4,770,710.62 63,283,462.83 80,541,694.07
Provision
3. Decrease 4,944,463.91 544,758.80 944,808.61 6,434,031.32
(1) Disposal 4,921,838.79 487,937.15 77,504.20 5,487,280.14
or retirement
(2) Transfer 22,625.12 56,821.65 867,304.41 946,751.18
to inventories
4.Closing 29,391,420.36 292,223.86 12,083,558.96 127,530,882.07 169,298,085.25
balance
III. Provision for
impairment
1.Opening
balance
2. Increase
(1)
Provision
3. Decrease
(1) Disposal
or retirement
4.Closing
balance
IV. Book value
1. Closing 53,228,177.99 728,176.19 19,181,756.43 398,066,230.34 471,204,340.95
balance
2. Opening 44,984,778.90 92,273.02 15,039,395.14 339,535,490.07 399,651,937.13
balance
(2). Temporarily idle fixed assets
□Applicable √N/A
(3). Fixed assets rent under finance lease
□Applicable √N/A
(4). Fixed assets leased out under operating lease
√Applicable □N/A
In RMB
Item Closing balance of carrying amount
234 / 312
2019 Annual Report
Operating leased equipment 398,066,230.34
Total 398,066,230.34
(5). Fixed assets of which certificates of title have not been obtained
□Applicable √N/A
Other description:
□Applicable √N/A
Disposal of fixed assets
□Applicable √N/A
21. Construction in progress
Presented by items
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Construction in progress 20,132,004.07 30,953,213.42
Materials for construction
Total 20,132,004.07 30,953,213.42
Other description:
□Applicable √N/A
Construction in progress
(1). Description of Construction in progress
√Applicable □N/A
In RMB
Closing balance Opening balance
Provision Provision
Item Carrying for Carrying for
Book value Book value
amount impairmen amount impairmen
t t
Headquarte 1,385,496.59 1,385,496.59
r buildings
Light 18,746,507.4 18,746,507.4 30,953,213.4 30,953,213.4
sources to 8 8 2 2
be leased
235 / 312
2019 Annual Report
20,132,004.0 20,132,004.0 30,953,213.4 30,953,213.4
Total
7 7 2 2
(2). Changes in significant constructions in progress for the current period
√Applicable □N/A
In RMB
Amoun
t Amount Includi
Interest
injecte of ng:
Openin Amount Capitaliz
Other Closing d as a Construc accumul capitali
Budget g transferre ation rate Source
Project Increase decrea balance proport tion ated sed
amount balance d to fixed for the of funds
ses ion of progress capitaliz interest
assets period
budget ed for the
(%)
amount interest period
(%)
Headqu 534,635,2 1,385,496. 1,385,496 0.26 Self-fun
arter 00.00 59 .59 ded
building capital
s
Light 30,953,21 113,703,1 125,269,2 640,61 18,746,50 Self-fun
sources 3.42 14.75 04.33 6.36 7.48 ded
to be capital
leased
534,635,2 30,953,21 115,088,6 125,269,2 640,61 20,132,00 / / / /
Total
00.00 3.42 11.34 04.33 6.36 4.07
236 / 312
2019 Annual Report
(3). Provision for impairment losses for construction in progress in the current
period
□Applicable √N/A
Other description
□Applicable √N/A
Materials for construction
(4). Description of materials for construction
□Applicable √N/A
22. Bearer biological assets
(1). Bearer biological assets measured at cost
□Applicable √N/A
(2). Bearer biological assets measured at fair value
□Applicable √N/A
Other description
□Applicable √N/A
23. Oil and gas assets
□Applicable √N/A
24. Use right assets
□Applicable √N/A
25. Intangible assets
(1). Description of intangible assets
√Applicable □N/A
In RMB
Land use
Item Patents Software Total
rights
I. Cost
1.Opening 23,247,800.00 330,630,000.00 5,387,125.59 359,264,925.59
balance
2. Increase 4,809,423.19 4,809,423.19
(1) Purchase 4,809,423.19 4,809,423.19
(2)Internal
R&D
(3) Increase
due to business
combination
237 / 312
2019 Annual Report
3. Decrease
(1)Disposal
4.Closing balance 23,247,800.00 330,630,000.00 10,196,548.78 364,074,348.78
II. Accumulated
Amortization
1.Opening 10,210,710.02 5,510,500.02 1,315,949.49 17,037,159.53
balance
2. Increase 2,324,780.04 11,021,000.04 1,360,085.10 14,705,865.18
(1) Provision 2,324,780.04 11,021,000.04 1,360,085.10 14,705,865.18
3. Decrease
(1) Disposal
4.Closing 12,535,490.06 16,531,500.06 2,676,034.59 31,743,024.71
balance
III. Provision for
impairment
1.Opening
balance
2. Increase
(1) Provision
3. Decrease
(1) Disposal
4.Closing
balance
IV. Book value
1. Closing balance 10,712,309.94 314,098,499.94 7,520,514.19 332,331,324.07
2. Opening balance 13,037,089.98 325,119,499.98 4,071,176.10 342,227,766.06
The proportion of intangible assets generated by the Company's internal research and
development to the balance of intangible assets at the end of the period is 0.
(2). Land use rights of which certificates of title have not been obtained
□Applicable √N/A
Other description:
□Applicable √N/A
26. Development expenditure
□Applicable √N/A
238 / 312
2019 Annual Report
27. Goodwill
(1). Original book value of goodwill
□Applicable √N/A
(2). Impairment provision of goodwill
□Applicable √N/A
(3).Relevant information of groups of assets or combinations of groups of assets where
the goodwill is recognized
□Applicable √N/A
(4).Specify test procedure, key parameters of impairment of goodwill (such as
increase rate at the projection period, increase rate at the steady period, profit
rate, discount rate, and projection period upon the estimates of the presented
value of future cash flow) as well as recognition method for impairment loss
□Applicable √N/A
(5). Impacts on test of goodwill impairment
□Applicable √N/A
Other description
□Applicable √N/A
28. Long-term prepaid expenses
√Applicable □N/A
In RMB
Item Opening Increase Amortization Other Closing
balance decreases balance
Renovation 6,400,455.04 15,380,470.28 4,872,854.98 16,908,070.34
costs
Total 6,400,455.04 15,380,470.28 4,872,854.98 16,908,070.34
Other description:
None
29. Deferred tax assets / deferred tax liabilities
(1). Deferred tax assets that are not offset
√Applicable □N/A
In RMB
Closing balance Opening balance
Deducible Deducible
Item Deferred tax Deferred tax
temporary temporary
asset asset
difference difference
Provision 35,664,470.56 5,836,098.21 33,900,084.27 5,518,806.05
for
impairment
of assets
Unrealized 382,370,535.17 95,185,982.07 390,702,213.23 92,556,806.62
profits for
239 / 312
2019 Annual Report
inside
transactions
Deductible
losses
Provisions 25,267,517.71 4,667,623.73 9,449,087.12 1,417,363.07
Deferred 16,475,547.96 2,546,469.56
income
Share-based 4,987,200.41 787,768.28
payment
expenses
Total 464,765,271.81 109,023,941.85 434,051,384.62 99,492,975.74
(2). Deferred tax assets that are not offset
□Applicable √N/A
(3). Deferred tax assets and deferred tax liabilities that are presented at the net
amount after offset
□Applicable √N/A
(4). Details of unrecognized deferred tax assets
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Deducible temporary 32,593,450.49 40,272,087.80
difference
Deducible losses 164,006,561.21 77,808,102.32
Total 196,600,011.70 118,080,190.12
(5). Deductible losses, for which no deferred tax assets are recognized, will expire
in the following years
√Applicable □N/A
In RMB
Year Closing balance Opening balance Remark
2020 9,243,377.13 9,246,743.85
2021 9,487,530.31 9,488,980.32
2022 11,900,329.00 11,956,016.78
2023 47,115,450.59 47,116,361.37
2024 86,259,874.18
Total 164,006,561.21 77,808,102.32 /
Other description:
□Applicable √N/A
30. Other non-current assets
√Applicable □N/A
In RMB
Item Closing balance Opening balance
240 / 312
2019 Annual Report
Prepayment for purchase of 11,420,185.94 254,255.16
long-term assets
Prepayments for equity 137,264,000.00
investments
Total 11,420,185.94 137,518,255.16
Other description:
None
31. Short-term borrowings
(1). Categories of short-term borrowings
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Guaranteed loans 50,000,000.00 21,000,000.00
Interest payable 427,443.49 754,728.10
Credit loans 10,000,000.00
Guaranteed loans and loans 16,337,875.56 103,440,000.00
against collateral
Total 76,765,319.05 125,194,728.10
Description for categories of short-term borrowings:
[Note]: The difference between the opening balance of the year and the closing balance of the
prior year (as of December 31, 2018) can refer to V 41 of Section XI for details.
Banks Loan balance Guarantee way
Shenzhen Branch of 10,000,000.00 Credit loan without any guarantee
HSBC Bank (China)
50,000,000.00 Secured by the Company
Company Limited
Pledged by accounts receivable of the Company's subsidiary CINEAPPO
Beijing Branch of
Laser Cinema Technology (Beijing) Co., Ltd. from its downstream
China Minsheng 16,337,875.56
customers for conclusion of equipment sale contract, and secured by the
Banking Corp., Ltd.
Company meanwhile
(2). Short-term borrowings overdue but not yet repaid
□Applicable √N/A
Of which the significant overdue short-term borrowings are described as below:
□Applicable √N/A
Other description
□Applicable √N/A
32. Held-for-trading financial liabilities
□Applicable √N/A
33. Derivative financial liabilities
□Applicable √N/A
241 / 312
2019 Annual Report
34. Notes payable
(1). Presented by notes payable
√Applicable □N/A
In RMB
Category Closing balance Opening balance
Commercial
acceptance bills
Bank acceptance bills 37,335,841.79 39,051,466.05
Total 37,335,841.79 39,051,466.05
Total notes payable matured but not paid yet is RMB 0 at the end of the period.
35. Accounts payable
(1). Presented by accounts payable
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Amounts payable for 176,624,445.46 164,258,731.06
purchase
Total 176,624,445.46 164,258,731.06
(2). Accounts payable with significant amounts aged more than 1 year
□Applicable √N/A
Other description
□Applicable √N/A
36. Receipts in advance
(1). Presented by receipts in advance
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Receipts in advance for 184,444,643.33 172,867,568.93
goods
Total 184,444,643.33 172,867,568.93
(2). Receipts in advance with significant amounts aged more than 1 year
√Applicable □N/A
In RMB
Reasons for not repaid or
Item Closing balance
carried-forward
Jiangsu Happy Blue Sea 36,309,008.65 Lease payments received in
Cinema Development Co., advance
Ltd.
Total 36,309,008.65 /
242 / 312
2019 Annual Report
(3). Billed but not yet completed projects arising from construction contracts at the
end of the period
□Applicable √N/A
Other description
□Applicable √N/A
37. Employee benefits payable
(1). Presented by employee benefits payable
√Applicable □N/A
In RMB
Opening Closing
Item Increase Decrease
balance balance
1. Short-term benefits 38,026,064.83 284,772,146.34 272,463,863.09 50,334,348.08
2.Post-employment 158,547.51 11,168,186.21 11,086,585.82 240,147.90
benefits-defined contribution
plan
3. Termination benefits 2,073,708.19 2,061,271.46 12,436.73
Total 38,184,612.34 298,014,040.74 285,611,720.37 50,586,932.71
(2). Presented by short-term employee benefits
√Applicable □N/A
In RMB
Opening Closing
Item Increase Decrease
balance balance
I. Wages or salaries, 37,751,353.44 255,577,257.28 243,237,280.07 50,091,330.65
bonuses, allowances
and subsidies
II. Staff welfare 179,000.00 6,916,284.26 7,095,284.26
III. Social security 95,711.39 8,737,519.02 8,773,085.48 60,144.93
contributions
Including: Medical 85,298.60 8,099,156.96 8,137,672.57 46,782.99
insurance
Work injury 3,989.53 194,344.65 193,600.59 4,733.59
insurance
Maternit 6,423.26 444,017.41 441,812.32 8,628.35
y insurance
IV. Housing funds 12,723,152.42 12,721,039.42 2,113.00
V.Union running 817,933.36 637,173.86 180,759.50
costs and employee
education costs
VI. Short-term paid
leaves
VII.Short-term profit
sharing plan
Total 38,026,064.83 284,772,146.34 272,463,863.09 50,334,348.08
243 / 312
2019 Annual Report
(3). Presented by defined contribution plan
√Applicable □N/A
In RMB
Opening Closing
Item Increase Decrease
balance balance
1. Basic pensions 152,141.55 10,804,834.38 10,724,727.19 232,248.74
2. Unemployment 6,405.96 363,351.83 361,858.63 7,899.16
insurance
3.Enterprise annuity
contribution
Total 158,547.51 11,168,186.21 11,086,585.82 240,147.90
Other description:
□Applicable √N/A
38. Taxes payable
√Applicable □N/A
In RMB
Item Closing balance Opening balance
VAT 776,108.18 5,855,297.62
Enterprise income tax 39,874,754.97 51,685,951.01
Individual income tax 1,447,882.44 1,229,829.98
City maintenance and 364,569.72 632,330.24
construction tax
Education surcharges 156,244.17 273,030.65
Local education surcharges 104,162.78 182,020.43
Stamp duty 200,925.53 95,673.77
Total 42,924,647.79 59,954,133.70
Other description:
None
39. Other payables
Presented by items
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Interest payable
Dividends payable
Other payables 14,364,076.43 184,107,549.02
Total 14,364,076.43 184,107,549.02
Other description:
□Applicable √N/A
244 / 312
2019 Annual Report
Interest payable
(1). Presented by categories
□Applicable √N/A
Dividends payable
(1) Presented by categories
□Applicable √N/A
Other payables
(1). Other payables presented by nature
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Withholding 145,265.79 198,666.56
Deposits/margins 2,626,034.93 855,151.45
Withdrawals in advance 11,539,286.03 10,313,849.81
Payable equity investments 2,450,000.00
Temporary receipts payable 53,489.68 159,881.20
Land-transferring fees 170,130,000.00
payable
Total 14,364,076.43 184,107,549.02
(2). Other payables with significant amounts aged more than 1 year
□Applicable √N/A
Other description:
□Applicable √N/A
40. Held-for-sale liabilities
□Applicable √N/A
41. Non-current liabilities due within one year
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Interest payable 127,055.02 56,654.43
Guaranteed loans and loans 64,841,740.00 28,609,163.00
against collateral
Total 64,968,795.02 28,665,817.43
Other description:
[Note]: The difference between the opening balance of the year and the closing balance of the
prior year (as of December 31, 2018) can refer to V 41 of Section XI for details.
Bank Loan balance Guarantee way
245 / 312
2019 Annual Report
Bank Loan balance Guarantee way
Pledged by the right of collecting all rents from lease of
Shenzhen all laser light sources pursuant to contracts executed
Branch of between CINEAPPO Laser Cinema Technology
343,902,163.10
PingAn Bank (Beijing) Co., Ltd. and cinemas, secured by Shenzhen
Co., Ltd. YLX Technology Development Co., Ltd. and the Parent
Company and guaranteed by LI Yi personally
42. Other current liabilities
Description of other current liabilities
□Applicable √N/A
Changes in short-term bonds payable:
□Applicable √N/A
Other description:
□Applicable √N/A
43. Long-term borrowings
(1). Categories of long-term borrowings
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Interest payable 554,684.17 742,605.69
Guaranteed loans and loans 279,060,423.10 403,107,800.00
against collateral
Total 279,615,107.27 403,850,405.69
Description for categories of long-term borrowings:
[Note]: The difference between the opening balance of the year and the closing balance of the
prior year (as of December 31, 2018) can refer to V 41 of Section XI for details.
Borrowings are disclosed in VII 42 of Section XI in details.
Other description, including interest range:
□Applicable √N/A
44. Bonds payable
(1). Bonds payable
□Applicable √N/A
(2). Changes in bonds payable: (excluding other financial instruments such as
preference shares, perpetual bonds and others classified as financial liabilities)
□Applicable √N/A
(3). Description of converting terms and period of convertible corporate bonds
□Applicable √N/A
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2019 Annual Report
(4). Description of other financial instruments classified as financial liabilities
Basic information of other financial instruments including outstanding preferred shares and
perpetual bonds at the end of the period
□Applicable √N/A
Changes in financial instruments including outstanding preferred shares and perpetual bonds
at the end of the period
□Applicable √N/A
Other financial instruments classified as financial liabilities:
□Applicable √N/A
Other description:
□Applicable √N/A
45. Leasing liabilities
□Applicable √N/A
46. Long-term payables
Presented by items
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Long-term payables 3,488,100.00 6,863,200.00
Special payables
Total 3,488,100.00 6,863,200.00
Other description:
□Applicable √N/A
Long-term payables
(1). Long-term payables presented by nature
√Applicable □N/A
In RMB
Item Opening balance Closing balance
Purchase of patent use rights 6,863,200.00 3,488,100.00
by installment
Total 6,863,200.00 3,488,100.00
Other description:
None
Special payables
(2). Special payables presented by nature
□Applicable √N/A
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47. Long-term employee benefits payable
□Applicable √N/A
48. Provisions
√Applicable □N/A
In RMB
Item Opening balance Closing balance Reason
Products quality 9,449,087.12 27,072,676.49 Expenses for “three
warranty guarantees” services
Total 9,449,087.12 27,072,676.49 /
Other description, including significant assumptions and estimates relative to material
provisions:
None
49. Deferred income
Description of Deferred income
√Applicable □N/A
In RMB
Opening Closing
Item Increase Decrease Reason
balance balance
Government 14,125,164.43 13,605,700.00 10,622,502.74 17,108,361.69
grants
Total 14,125,164.43 13,605,700.00 10,622,502.74 17,108,361.69 /
[Note]: Government grants included in the current profit or loss or offset relevant cost are
disclosed in VII 83 of Section XI in details.
Projects relating to government grants:
√Applicable □N/A
In RMB
Amount Amount
recognized recognized in
Increased in other income for
Related to
Projects with government non-operati the current Other
Opening balance Closing balance assets/inco
liabilities grants for the ng income period changes
me
current period for the
current
period
Beijing Industrial 8,000,000.00 8,000,000.00 Related to
Development Fund assets
Allocation
8K Ultra High 2,000,000.00 2,000,000.00 Related to
Definition Laser assets
Display Technology
Engineering
Research Center
Research and 54,375.02 36,249.96 18,125.06 Related to
Development of income
High Performance
Resin and Composite
Materials
Preparation
Technique for
Additive
248 / 312
2019 Annual Report
Manufacturing
Key Enterprise 5,000,000.00 179,582.69 4,820,417.31 Related to
Laboratory for Laser income
Display in
Guangdong Province
Ultra-high 2,250,000.00 107,181.13 2,142,818.87 Related to
Brightness Laser income
Light Source
Engineering
Technology
Research Center
Trichromatic Laser 5,320,789.41 3,845,700.00 1,471,735.98 7,694,753.43 Related to
Display Complete income
Equipment
Production
Demonstration Line
Development of 750,000.00 750,000.00 Related to
Heavy 20170372 4k income
Ultra High
Definition Laser
Optical Engine Core
Technology
Key Technology of 510,000.00 77,752.98 432,247.02 Related to
Trichromatic Laser income
Display Complete
Equipment
Industrialization
14,125,164.43 13,605,700.00 - 10,622,502.74 17,108,361.69
Total
Other description:
□Applicable √N/A
50. Other non-current liabilities
□Applicable √N/A
51. Share capital
√Applicable □N/A
In RMB
Changes (+, -)
Opening balance New issue of Capitalization of Closing balance
Bonus
shares capital reserve Others Sub-total
issue
Total 383,554,411.00 68,000,000.00 68,000,000.00 451,554,411.00
shares
Other description:
According to resolutions of the seventh session of the first Board of Directors and the
second extraordinary general meeting of shareholders in 2019, the Company applied to
increase RMB 68,000,000.00 registered capital by issuing RMB ordinary shares (A shares)
to the public. After this change, the registered capital increased to RMB 451,554,411.00. As
approved by the Official Reply of China Securities Regulatory Commission on Approving the
Registration of IPO Stocks of Appotronics Corporation Limited (Zheng Jian Xu Ke [2019]
No.1163), the Company was approved to issue 68,000,000 shares of RMB ordinary shares
(A shares) with the par value at RMB 1 per share through public offering at an issue price of
RMB 17.50 per share, and able to raise funds of RMB 1,190,000,000.00 in total. After
deduction of underwriting fees and sponsor fees (excluding VAT) amounting to RMB
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2019 Annual Report
95,784,905.66, the funds raised were RMB 1,094,215,094.34, in which RMB 68,000,000.00
were charged to paid-up capital and RMB 1,026,215,094.34 to capital reserve (share
premium). Pan-China Certified Public Accountants (Special General Partnership) audited
this capital increase and issued a Capital Verification Report (Tian Jian Yan [2019] No.
7-62).
52. Other equity instruments
(1). Basic information of other financial instruments including outstanding
preferred shares and perpetual bonds at the end of the period
□Applicable √N/A
(2). Changes in financial instruments including outstanding preferred shares and
perpetual bonds at the end of the period
□Applicable √N/A
Changes of other equity instruments in the current period, reasons for such change and basis
for related accounting treatments:
□Applicable √N/A
Other description:
□Applicable √N/A
53. Capital reserve
√Applicable □N/A
In RMB
Opening
Item Increase Decrease Closing balance
balance
Capital 205,995,596.85 1,026,215,094.34 31,744,296.61 1,200,466,394.58
premium
(Share
premium)
Other capital 7,475,923.79 7,475,923.79
reserve
Total 205,995,596.85 1,033,691,018.13 31,744,296.61 1,207,942,318.37
Other description, including changes in the current period and reasons for changes:
1) The capital premium increased RMB 1,026,215,094.34, as detailed in the description
in VII 51 of Section XI of this report.
2) The issuance expenses (excluding VAT) of RMB 31,744,296.61 paid by the
Company which was used to offset the capital reserve (capital premium) included audit and
capital verification expenses of RMB 17,660,377.36, legal fees of RMB 8,200,000.00,
information disclosure expenses of RMB 4,462,264.15 and issuance expenses of RMB
1,421,655.10.
3) On October 14, 2019, the Company held the eighteenth session of the first board of
directors and the eighth session of the first board of supervisors, in which resolutions on
matters related to the 2019 Restricted Stock Incentive Plan were discussed and approved. As
the Company’s implementation of this incentive plan was approved in the general meeting of
shareholders, it was determined that 4.4 million shares of restricted shares were granted to
250 / 312
2019 Annual Report
169 incentive participants who met the grant conditions at a grant price of RMB 17.5 per
share on the grant date of October 14, 2019. The total expense of equity-settled share-based
payments amounted to RMB 8,151,010.88, in which RMB 7,475,923.79 were recognized in
the capital reserve and RMB 675,087.09 were charged to the amount attributable to minority
interests.
54. Treasury shares
□Applicable √N/A
55. Other comprehensive income
√Applicable □N/A
In RMB
Amount recognized in the current period
Less: Less: amount
amount previously
previously included in
included in other Attributa
Opening Attributable to Closing
Amount other comprehensiv ble to
Item balance Less: owners of the balance
incurred for comprehens e income and minority
Income tax parent
current period ive income transferred to sharehold
expenses company after
before tax and retained ers after
tax
transferred earnings for tax
to profit or the period
loss for the
period
I. Other
comprehensiv
e income that
cannot be
reclassified
subsequently
to profit or
loss
II. Other 1,044,703.00 2,311,885.81 2,242,360.85 69,524.96 3,287,063.
comprehensiv 85
e income that
will be
reclassified to
profit or loss
Provision
for credit
impairment of
other debt
investments
Exchange 1,044,703.00 2,311,885.81 2,242,360.85 69,524.96 3,287,063.
differences on 85
translation of
financial
statements
denominated
in foreign
currencies
Total other 1,044,703.00 2,311,885.81 2,242,360.85 69,524.96 3,287,063.
comprehensiv 85
e income
Other descriptions, including adjustments on transferring effective portion of cash flow
hedges to amount upon initial recognition of the hedged item:
None
251 / 312
2019 Annual Report
56. Special reserve
□Applicable √N/A
57. Surplus reserve
√Applicable □N/A
In RMB
Item Opening balance Increase Decrease Closing balance
Statutory 11,418,172.20 10,104,511.20 21,522,683.40
surplus reserve
Discretionary
surplus reserve
Reserve fund
Enterprise
development
fund
Others
Surplus reserve 1,277,540.73 1,277,540.73
recovered
through
business
combination
involving
entities under
common control
Total 12,695,712.93 10,104,511.20 22,800,224.13
Surplus reserve description, including changes in the current period and reasons for changes:
Increased surplus reserve for the current period refers to the appropriation to the statutory
surplus reserve by 10% of net profits achieved by the Parent Company for the current period.
58. Retained profits
√Applicable □N/A
In RMB
Item Current period Prior period
Retained profits at the end of prior 112,623,054.78 2,143,646.15
period before adjustment
Total adjusted retained profits at
the beginning of the period
(Add:+; Less: -)
Retained profits at the beginning 112,623,054.78 2,143,646.15
of the period after adjustment
Add: Net profit attributable to 186,457,276.71 176,971,092.49
owners of the Parent Company
for the period
Less: Appropriation to statutory 10,104,511.20 11,418,172.20
surplus reserve
252 / 312
2019 Annual Report
Appropriation to
discretionary surplus reserve
Appropriation to general risk
reserve
Declaration of dividends on
ordinary shares
Conversion of ordinary
shares' dividends into share
capital
Other appropriations -2,237,714.47
Capitalization of net assets 57,311,226.13
Retained profits at the end of the 288,975,820.29 112,623,054.78
period
Details of adjustments to retained profits at the beginning of the period:
1) As a result of the retrospective adjustment of the Accounting Standards for Business
Enterprises and related new regulations, retained profits at the beginning of the period were
affected by RMB 0.00.
2. Retained profits at the beginning of the period were affected by RMB 0.00 due to changes
in accounting policies.
3. Retained profits at the beginning of the period were affected by RMB 0.00 due to the
correction of significant accounting errors.
4. Retained profits at the beginning of the period were affected by RMB 0.00 due to changes
in the scope of consolidation resulting from business combination involving entities under
common control.
5. Retained profits at the beginning of the period were affected by RMB 0.00 in total due to
other adjustments.
59. Operating income and operating costs
(1). Description of operating income and operating costs
√Applicable □N/A
In RMB
2019 2018
Item
Revenue Cost Revenue Cost
Principal 1,979,148,918.89 1,183,650,635.25 1,385,727,211.09 783,243,430.56
activities
Total 1,979,148,918.89 1,183,650,635.25 1,385,727,211.09 783,243,430.56
Other description:
None
60. Taxes and levies
√Applicable □N/A
In RMB
Item 2019 2018
City maintenance and 3,070,823.26 6,621,885.65
construction tax
253 / 312
2019 Annual Report
Education surcharges 1,336,864.61 2,859,559.28
Local education surcharges 879,366.01 1,902,444.16
Others 2,323,097.26 2,229,934.10
Total 7,610,151.14 13,613,823.19
Other description:
None
61. Selling expenses
√Applicable □N/A
In RMB
Item 2019 2018
Employee benefits 52,472,593.05 39,790,394.64
Business travel expenses 6,806,740.43 4,569,693.99
Business entertainment
3,015,283.66 1,806,511.97
expenses
Marketing fees 36,724,064.18 26,380,592.80
Advertising costs and business
6,865,906.71 9,825,678.21
publicity expenses
After-sale repair expenses 17,690,062.80 10,475,066.52
Service fees 7,249,578.52 1,338,989.87
Other expenses 20,935,881.65 8,162,182.00
Total 151,760,111.00 102,349,110.00
Other description:
None
62. Administrative expenses
√Applicable □N/A
In RMB
Item 2019 2018
Employee benefits 70,126,183.15 37,225,413.50
Rent expense 15,153,597.68 4,642,844.52
Business travel expenses 3,940,279.50 2,236,127.72
Service fees 27,332,463.20 12,601,285.06
Depreciation and amortization fees 14,945,520.79 7,981,227.46
Share-based payment expenses 8,146,719.12 22,338,042.90
Other expenses 12,981,767.17 8,556,028.94
Total 152,626,530.61 95,580,970.10
Other description:
None
63. R&D expenses
√Applicable □N/A
In RMB
254 / 312
2019 Annual Report
Item 2019 2018
Employee benefits 118,054,037.18 78,544,787.69
Material consumption expenses 30,630,477.60 20,203,045.19
Rent expense 9,706,785.26 3,646,917.10
Service fees 10,229,627.72 10,396,474.88
Depreciation and amortization fees 8,883,535.17 7,840,300.41
Testing expenses 4,161,556.69 2,529,155.35
Patent fees 11,169,391.10 7,131,899.77
Other expenses 8,862,355.54 5,437,870.53
Total 201,697,766.26 135,730,450.92
Other description:
None
64. Financial expenses
√Applicable □N/A
In RMB
Item 2019 2018
Interest expenses (income) 29,041,253.91 21,012,456.32
Exchange profit or loss -799,344.64 -24,220,687.35
Service charges 1,249,314.15 556,069.32
Total 29,491,223.42 -2,652,161.71
Other description:
None
65. Other income
√Applicable □N/A
In RMB
Item 2019 2018
Government grants related to 8,000,000.00 4,000,000.00
assets
Government grants related to 22,467,052.33 16,937,327.12
income
Additional deduction of 3,657,561.79
input VAT
Total 34,124,614.12 20,937,327.12
Other description:
Government grants recognized in other income in the current period are disclosed in VII 82
of Section XI in details.
66. Investment income
√Applicable □N/A
In RMB
255 / 312
2019 Annual Report
Item 2019 2018
Long-term equity investment -3,927.93
accounted for using the equity
method
Investment income from disposal of 9,552,990.98
financial assets at fair value through
profit or loss
Total 9,549,063.05
Other description:
None
67. Income from net exposure hedges
□Applicable √N/A
68. Gains from changes in fair values
□Applicable √N/A
69. Losses of credit impairment
√Applicable □N/A
In RMB
Item 2019 2018
Bad debt losses -3,771,572.38
Total -3,771,572.38
Other description:
None
70. Impairment losses of assets
√Applicable □N/A
In RMB
Item 2019 2018
I.Bad debt losses -319,212.92
II.Decline in value of inventories -12,623,251.67 -19,683,090.17
Total -12,623,251.67 -20,002,303.09
Other description:
None
71. Gains on disposal of assets
√Applicable □N/A
256 / 312
2019 Annual Report
In RMB
Item 2019 2018
Gains on disposal of assets 41,420.84
Total 41,420.84
Other description:
None
72. Non-operating income
Description of non-operating income
√Applicable □N/A
In RMB
Amount included in
Item 2019 2018 non-recurring profit
or loss for the period
Total gains from
disposal of
non-current assets
Including: gains
from disposal of
fixed assets
Gains from
disposal of
intangible assets
Gains from debt
restructuring
Gains from
exchange of
non-monetary
assets
Donation receipts
Government grants
Amounts not 1,876,501.15 1,314,418.36 1,876,501.15
required for
payment
Indemnity 2,005,696.00 2,005,696.00
Others 43,869.58 994.50 43,869.58
Total 3,926,066.73 1,315,412.86 3,926,066.73
Government grants included in profit or loss for the period
□Applicable √N/A
Other description:
□Applicable √N/A
73. Non-operating expenses
√Applicable □N/A
In RMB
Item 2019 2018 Amount included in
257 / 312
2019 Annual Report
non-recurring profit
or loss for the period
Total losses from
disposal of
non-current assets
Including: losses
from disposal of
fixed assets
Losses
from disposal of
intangible assets
Losses from debt
restructuring
Losses from
exchange of
non-monetary
assets
External donations 715,387.87 715,387.87
Losses from 3,255,908.90 1,711,797.47 3,255,908.90
damage and
retirement of
non-current assets
Penalties and 212,581.48 133,350.32 212,581.48
overdue fines
Others 16,319.31 0.02 16,319.31
Total 4,200,197.56 1,845,147.81 4,200,197.56
Other description:
None
74. Income tax expense
(1). Statement of income tax expense
√Applicable □N/A
In RMB
Item 2019 2018
Income tax expense in the 64,508,782.78 80,669,735.12
current period
Deferred income tax expenses -9,526,561.15 -33,954,069.45
Total 54,982,221.63 46,715,665.67
(2). Reconciliation of income tax expenses to the accounting profit
√Applicable □N/A
In RMB
Item 2019
Total profit 279,358,644.34
Income tax expense calculated based on 41,903,796.65
258 / 312
2019 Annual Report
statutory/applicable tax rate
Effect of different tax rates of subsidiaries 14,819,386.38
operating in other jurisdictions
Effect of adjustment on income tax for the -768,791.21
period
Effect of non-taxable income -163,610.80
Effect of non-deductible cost, expense and 768,007.37
loss
Effect of utilizing deductible loss not -751,471.60
recognized for deferred tax assets for prior
period
Effect of deductible temporary difference 16,436,559.98
or deductible loss not recognized for
deferred tax assets for the current period
Effect of additional deduction of R&D -17,261,655.14
expenses
Income tax expense 54,982,221.63
Other description:
□Applicable √N/A
75. Other comprehensive income
√Applicable □N/A
See annex for details
Other comprehensive income net of tax has been disclosed in VII 55 of Section XI in details.
76. Items in cash flow statement
(1). Other cash receipts relating to operating activities
√Applicable □N/A
In RMB
Item 2019 2018
Government grants 28,765,309.74 23,017,245.19
Non-operating income 2,049,565.58 994.50
Interest income 3,841,224.18 2,204,490.11
Other monetary funds-margins 37,531,542.28 48,140,204.01
Receivables and payables 6,375,293.17 2,080,591.98
Total 78,562,934.95 75,443,525.79
Description of other cash receipts relating to operating activities:
None
(2). Other cash payments relating to operating activities
√Applicable □N/A
In RMB
Item 2019 2018
259 / 312
2019 Annual Report
Selling expenses paid in cash 75,178,450.72 59,397,046.56
Administrative and R&D 101,950,001.38 74,782,918.77
expenses paid in cash
Financial expenses paid in cash 1,249,314.15 556,069.32
Non-operating expenses 944,288.66 133,350.34
Other monetary funds-margins 41,702,174.11 40,750,627.38
Bank deposits-frozen funds due 30,000,000.00
to litigation
Receivables and payables 5,886,899.65 6,535,135.11
Total 256,911,128.67 182,155,147.48
Description of other cash payments relating to operating activities:
None
(3). Other cash receipts relating to investing activities
√Applicable □N/A
In RMB
Item 2019 2018
Fund transaction 85,426,350.80
Total 85,426,350.80
Description of other cash receipts relating to investing activities:
None
(4). Other cash payments relating to operating activities
□Applicable √N/A
(5). Other cash receipts relating to financing activities
√Applicable □N/A
In RMB
Item 2019 2018
Fund transaction 51,102,952.00
Total 51,102,952.00
Description of other cash receipts relating to financing activities:
None
(6). Other cash payments relating to financing activities
√Applicable □N/A
In RMB
Item 2019 2018
Fund transaction 53,856,591.99
Call loan interest 3,463,118.87
Issue expenses 39,396,048.75
Total 39,396,048.75 57,319,710.86
260 / 312
2019 Annual Report
Description of other cash payments relating to financing activities:
None
77. Supplementary information to the cash flow statement
(1). Supplementary information to the cash flow statement
√Applicable □N/A
In RMB
Supplementary information 2019 2018
1. Reconciliation of net profit to
cash flow from operating
activities:
Net profit 224,376,422.71 211,551,211.44
Add: Provision for impairment of 16,394,824.05 20,002,303.09
assets
Depreciation of fixed assets, 80,539,152.68 56,780,866.37
depletion of oil and gas assets,
depreciation of bearer biological
assets
Amortization of intangible assets 14,703,595.57 8,310,952.62
Amortization of long-term 4,870,707.84 2,678,955.07
prepaid expenses
Losses on disposal of fixed assets, -41,420.84
intangible assets and other
long-term assets (gains are
indicated by “－”)
Losses on retirement of fixed 3,255,908.90 1,711,797.47
assets (gains are indicated by
“－”)
Losses on changes in fair values
(gains are indicated by “－”)
Financial expenses (income is 33,561,732.74 9,967,160.17
indicated by “－”)
Investment losses (income is -9,549,063.05
indicated by “－”)
Decrease in deferred tax assets -9,530,966.11 -33,958,813.16
(increase is indicated by “-”)
Increase in deferred tax liabilities
(decrease is indicated by “-”)
Decrease in inventories (increase -101,935,742.75 -210,665,615.43
is indicated by “－”)
Decrease in receivables from -73,469,932.05 -59,597,514.17
operating activities (increase is
indicated by “－”)
Increase in payables from 51,678,964.90 88,654,107.93
operating activities (decrease is
indicated by “－”)
Others 8,146,719.12 22,338,042.90
Net cash flow from operating 243,000,903.71 117,773,454.30
261 / 312
2019 Annual Report
activities
2. Significant investing and
financing activities that do not
involve cash receipts and
payments:
Conversion of debt into capital
Convertible corporate bonds due
within one year
Fixed assets acquired under
finance leases
3. Net changes in cash and cash
equivalents:
Closing balance of cash 829,789,487.86 472,508,550.40
Less: Opening balance of cash 472,508,550.40 80,023,164.24
Add: Closing balance of Cash
Equivalents
Less: Opening balance of Cash
Equivalents
Net increase in cash and cash 357,280,937.46 392,485,386.16
equivalents
In the cash flow statement, the following are excluded from the scope of cash equivalents: the
margins of RMB 15,831,289.87 under restriction, the fund of RMB 30,000,000.00 frozen
due to litigation and the deposit interests of RMB 238,006.85 which have been recognized
yet not matured.
(2). Net cash paid to acquire subsidiaries for the current period
□Applicable √N/A
(3). Net cash receipts from disposal of subsidiaries for the current period
□Applicable √N/A
(4). Composition of cash and cash equivalents
√Applicable □N/A
In RMB
Item Closing balance Opening balance
I. Cash 829,789,487.86 472,508,550.40
Including: Cash on hand 3,348.57 3,175.14
Bank deposit that can 827,470,990.73 470,309,528.51
be paid at any time
Other monetary funds 2,315,148.56 2,195,846.75
that can be paid at any time
Deposits in the Central
Bank that can be used for
payments
Deposits made with
262 / 312
2019 Annual Report
other banks
Placements with banks
II. Cash equivalents
Including: Investments in debt
securities due within three
months
III. Closing balance of cash and 829,789,487.86 472,508,550.40
cash equivalents
Including: restricted cash and
cash equivalents of the Parent
Company or subsidiaries within
the Group
Other description:
□Applicable √N/A
78. Notes to items in the statement of changes in owners' equity
Describe matters such as the names and the adjustment amounts of the items included in
“others” in respect of adjustments to the closing balances of the prior year:
□Applicable √N/A
79. Assets with limited ownership or use right
√Applicable □N/A
In RMB
Item Closing balance of carrying Reason
amount
Other monetary funds 15,831,289.87 Margins
Bank deposits 30,000,000.00 Frozen due to litigation
Bank deposits 238,006.85 Deposit interests which
have been recognized yet
not matured
Total 46,069,296.72 /
Other description:
None
80. Foreign currency monetary items
(1). Foreign currency monetary items
√Applicable □N/A
In RMB
Closing balance of
Closing balance of
Item Exchange rate RMB equivalent
foreign currency
263 / 312
2019 Annual Report
Cash and bank balances - - 155,036,860.28
Including: USD 22,142,782.48 6.9762 154,472,479.14
GBP 365.96 9.1501 3,348.57
HKD 626,292.22 0.8958 561,032.57
Accounts receivable - - 42,083,074.57
Including: USD 6,032,377.88 6.9762 42,083,074.57
EUR
HKD
Accounts payable - - 34,480,943.20
Including: USD 4,798,988.06 6.9762 33,478,700.47
EUR 126,138.18 7.8155 985,832.94
HKD 18,318.59 0.8958 16,409.79
Other description:
None
(2). Description of overseas operating entities, including significant overseas
operating entities, of which the major operation place, functional currency and
choosing basis as well as the reason for change of functional currency should be
disclosed
□Applicable √N/A
81. Hedge
□Applicable √N/A
82. Government grants
(1). Basic government grants
√Applicable □N/A
In RMB
Amount recognized
Category Amount Item presented in current profit or
loss
Government grants 2,000,000.00 Deferred income 8,000,000.00
related to assets
Government grants 11,605,700.00 Deferred income 2,622,502.74
related to income and
used for
compensation of the
Company’s relevant
costs or losses in
subsequent periods
Government grants 19,844,549.59 Other income 19,844,549.59
related to income and
used for
compensation of the
264 / 312
2019 Annual Report
Company’s relevant
costs or losses that
have been incurred
Interest subsidies 720,000.00 Financial expenses 720,000.00
Description: the amount refers to government grants actually received in the current period.
1) Government grants related to assets
In RMB
Opening Closing
balance of balance of Amortization
Increase
Item deferred Amortization deferred Item Description
income income presented
Project Contract of
Beijing Industrial
Beijing Industrial
Development 8,000,000.00 8,000,000.00 Other income
Development Fund
Fund Allocation
Allocation
Project Contract of
8K Ultra High 8K Ultra High
Definition Laser Definition Laser
Display Display Technology
2,000,000.00 2,000,000.00 Other income
Technology Engineering
Engineering Research Center
Research Center (XMHT201901010
23)
Sub-total 8,000,000.00 2,000,000.00 8,000,000.00 2,000,000.00
(2) Government grants related to income and used for compensation of the Company’s
relevant costs or losses in subsequent periods
In RMB
Opening Closing
Carrying
balance of balance of
Increase Carrying forward
Item deferred deferred Description
forward Item
income income
presented
High Performance
Resin and
Research and
Composite
Development
Materials Other
54,375.02 36,249.96 18,125.06 Cooperation
Preparation income
Contract
Technique for
(2016YFB1100802)
Additive
Manufacturing
265 / 312
2019 Annual Report
Project Contract for
Science and
Technology Plan of
Key Laboratory of
Laser Display
Enterprises in
Guangdong
Key Enterprise
Province (Yue Ke
Laboratory for
Other Gui Cai Zi [2018]
Laser Display in 5,000,000.00 179,582.69 4,820,417.31
income No. 233), Notice of
Guangdong
Shenzhen Science
Province
and Technology
Innovation
Commission on the
Issuance of Grants
to Provincial Key
Laboratory in 2018
and 2019
The Project
Ultra-high Contract for
Brightness Laser Shenzhen
Light Source Other Municipality
2,250,000.00 107,181.13 2,142,818.87
Engineering income Science and
Technology Technology Plan
Research Center (Shen Ke Ji Chuang
Xin [2019] No. 33)
Notice on the
Establishment of
2018 Annual
Trichromatic
Projects for
Laser Display
Strategic Advanced
Complete
Other Electronic Materials
Equipment 5,320,789.41 3,845,700.00 1,471,735.98 7,694,753.43
income in the National Key
Production
Research and
Demonstration
Development
Line
Programs (Guo Ke
Gao Fa Ji Zi [2018]
No.41)
The Project
Development of Contract for
Heavy 20170372 Shenzhen
4k Ultra High Other Municipality
750,000.00 750,000.00
Definition Laser income Science and
Optical Engine Technology Plan
Core Technology (Shen Fa Gai [2017]
No. 713)
Task Statements for
Key Technology
Research and
of Trichromatic
Development
Laser Display Other
510,000.00 77,752.98 432,247.02 Program in Key
Complete income
Fields of
Equipment
Guangdong
Industrialization
Province
Sub-total 6,125,164.43 11,605,700.00 2,622,502.74 15,108,361.69
3) Government grants related to income and used for compensation of the Company’s
relevant costs or losses that have been incurred
In RMB
Item
Project Amount Description
presented
Other
VAT refunds upon collection 5,404,939.85
income
266 / 312
2019 Annual Report
Item
Project Amount Description
presented
Measures for Administration of
2018 Shunyi District Cultural and Creativity Other Special Funds for the Development
3,000,000.00
Fund Awards income of Cultural and Creative Industries in
Shunyi District (Revised)
Notice of Beijing Municipal Human
Resources and Social Security
Bureau，Beijing Municipal Finance
Bureau, Beijing Municipal
Refund of Unemployment Benefits from Shunyi Commission of Development and
Other
District Social Insurance Business Management 40,416.15 Reform, Beijing Municipal Bureau of
income
Center Economy and Information
Technology on Issues Related to
Unemployment Insurance and
Employment Stabilization (Jing Ren
She Jiu Fa [2019] No. 68 )
Prize Money for Shunyi Sub-contest Areas’ Invitation Letter for Participation in
Other
Winner of 2019 Beijing Culture and Creative 20,000.00 Shunyi Sub-Region of 2019 Beijing
income
Competition Culture and Creative Competition
Supplementary Announcement on
2019 Talent Housing Rent Allowance of Other
1,014,016.10 2019 Talent Housing Rent
Nanshan District income
Allowance of Nanshan District
Maternity allowance from Shenzhen Social Other Regulations on Employee Maternity
384,716.37
Insurance Fund Administration income Insurance of Guangdong Province
Disclosure of 2019 Subsidy for
Subsidy for maintaining job position from Other Maintaining Job Positions of
4,913.25
Shenzhen Social Insurance Fund Administration income Enterprises in Shenzhen
Municipality (First Batch)
Other Notice on Allocation of Funds for
Subsidies for high-tech qualifications 300,000.00
income Science and Technology Projects
Disclosure of the Forth Batch of
Enterprise Listing Financing Incentive Program Entities that Nanshan District
Other
of Economic Promotion Bureau of Nanshan 600,000.00 Independent Innovation Industry
income
District, Shenzhen Municipality Development Special Fund proposes
to support in 2018
2018 Award for the licensing of overseas List of Grant Allocation for
inventions for enhancing the competitiveness of Maintenance of Domestic Invention
Other
enterprises by the Market and Quality 92,000.00 Patent Annuities and Overseas
income
Supervision Commission of Shenzhen Invention Patent Licensing Awards
Municipality of Shenzhen Municipality in 2018
Disclosure of the First Batch of
Grants to the support program of cultivating and
Entities that Nanshan District
upgrading large industrial innovation capacity Other
1,000,000.00 Independent Innovation Industry
from the Bureau of Science and Technology of income
Development Special Fund proposes
Nanshan District, Shenzhen Municipality
to support in 2019
Disclosure of Shenzhen Science and
Technology Innovation Commission
The first batch of enterprise research and
Other on the First Batch of Enterprises
development grants from Shenzhen Science and 2,218,000.00
income proposed to be funded under 2018
Technology Innovation Commission
Enterprise Research and
Development Subsidy Scheme
Disclosure on the proposed funding
units for intellectual property
Intellectual property rights protection special protection funding for 2019 for
funds for science and technology innovation Other certain measures to support
500,000.00
from the Market and Quality Supervision income enterprises to enhance
Commission of Shenzhen Municipality competitiveness and certain
measures to promote technological
innovation
Disclosure of Guangdong
Supporting incentives of Twentieth China Patent Other Administration for Market
600,000.00
Award of Guangdong Province income Regulation on 2019 Special Fund
Allocation Plan
267 / 312
2019 Annual Report
Item
Project Amount Description
presented
Special funds for cultural industry development Award for Recognition of Excellent
Other
from the Culture Sports and Tourism 500,000.00 Cultural and Creative Enterprises in
income
Administration of Shenzhen Municipality Emerging Industries
Notice of the Market and Quality
Grants to the first batch of patent application Supervision Commission of
Other
from the Market and Quality Supervision 1,019,220.00 Shenzhen Municipality on the
income
Commission of Shenzhen Municipality in 2018 Allocation List of 2018 Shenzhen
Municipal Patent Awards
Notice on Implementing the
“Navigating Talents”academic training subsidy
Other Application of Project Grants
of the Human Resources Bureau of Nanshan 10,000.00
income through the Third Batch of Talent
District, Shenzhen Municipality Sub-funds in 2019
Notification of Shenzhen Bureau of
2019 Support Plan for Enterprises’ Production Industry and Information
Expansion and Efficiency Improvement of Other Technology on the Disclosure of
1,000,000.00
Shenzhen Bureau of Industry and Information income 2019 Proposed Subsidy Scheme for
Technology Enterprises’ Production Expansion
and Efficiency Improvement
Notification on the Disclosure of the
The first batch of oversea trademark registration Second Batch in 2017 and the First
funding projects of the Market and Quality Other Batch in 2018 of Oversea Trademark
52,000.00
Supervision Commission of Shenzhen income Registration Funding Projects of the
Municipality in 2018 Market Supervision and Regulation
Bureau of Shenzhen Municipality
Disclosure of the Second Batch of
Steady growth subsidy to top 100 industrial Entities that Nanshan District
Other
enterprises in Nanshan District, Shenzhen 40,700.00 Independent Innovation Industry
income
Municipality Development Special Fund proposes
to support in 2019
Notice of the Market Supervision and
Regulation Bureau of Shenzhen
Municipality on the Subsidy
The first batch of computer software grants in Other
8,100.00 Allocation List of the First Batch of
2018 income
Computer Software Copyright
Registration in Shenzhen
Municipality in 2018
Subsidy Application for Talent
Talent Quality Enhancement Project (Aurora Quality Enhancement Project by
Project- Layer Leadership Training Program) of Other Special Funds for Independent
118,600.00
the Human Resources Bureau of Nanshan income Innovation Industry Development in
District, Shenzhen Municipality Nanshan District, Shenzhen
Municipality (2019)
Notice on the Issuance of the First
Grants to the first batch of patent application in Other Batch of Patent Funding of Shenzhen
960,000.00
2019 income Intellectual Property Special Funds in
2019
Scientific research grants to the first batch of Disclosure of the List of Post Doctors
post doctors leaving work stations from the Other Leaving Work Stations Proposed to
100,000.00
Human Resources Bureau of Nanshan District, income be Granted with Scientific Research
Shenzhen Municipality in 2019 Grants (First Batch in 2019)
Notice of the Commerce Bureau of
Matters of supporting foreign trade SMEs to Shenzhen Municipality on the
expand markets funded by central governments Other Disclosure of Projects on Matters for
56,627.87
in 2018- Oversea Trademark Registration income Supporting Foreign Trade SMEs to
Project Expand Markets Funded by Central
Governments in 2018
Notice of the Market Supervision and
Regulation Bureau of Shenzhen
Municipality on the Disclosure of
Special funds of portfolio national intellectual
Other 2019 Project List (First Batch)
property operating service system for high value 500,000.00
income Proposed to be Funded by the
patent in 2019
Intellectual Property Special Funds
under the Approval System and the
Assessment System
268 / 312
2019 Annual Report
Item
Project Amount Description
presented
Notice of Headquartered Enterprises
Funds for introducing high-end talent from and High-end Talent Service Center
Headquartered Enterprises and High-end Talent Other for Airport Economy in Shunyi
300,000.00
Service Center for Airport Economy in Shunyi income District, Beijing on Supporting the
District, Beijing Verification of Introduced High-end
Talents (Shun Zu Fa [2017] No. 12)
Other
Beijing Municipal Patent Subsidy 300.00
income
Sub-total
19,844,549.59
4) Interest subsidies
In RMB
Opening
Closing Carrying
balance
Carrying balance of forward
Item of Increase Description
forward deferred item
deferred
income presented
income
Nanshan District
Independent Innovation
Industry Development
Technology
Special Fund - Science and
Finance Interest
Financial Technology Innovation
Subsidy Scheme 538,800.00 538,800.00
expenses Sub-Fund - Project
(2018 IP Pledge
Application for
Loan)
Technology Financial
Interest Subsidy Scheme
(2019)
Nanshan District
Independent Innovation
Industry Development
Technology
Special Fund - Science and
Finance Interest
Financial Technology Innovation
Subsidy Scheme 181,200.00 181,200.00
expenses Sub-Fund - Project
(2017 Combined
Application for
Credit Facility)
Technology Financial
Interest Subsidy Scheme
(2019)
Sub-total 720,000.00 720,000.00
Government grants included in profit or loss for the period amounted to RMB 31,187,052.33.
(2). Refund of government grants
□Applicable √N/A
Other description:
None
83. Others
□Applicable √N/A
VIII. Changes in scope of consolidation
1. Business combination not involving enterprises under common control
□Applicable √N/A
269 / 312
2019 Annual Report
2. Business combination involving entities under common control
□Applicable √N/A
3. Counter purchase
□Applicable √N/A
270 / 312
2019 Annual Report
4. Disposal of subsidiaries
Single disposal of investments in subsidiaries, i.e. the loss of control
□Applicable √N/A
Other description:
□Applicable √N/A
Disposal of investment in a subsidiary through multiple transactions by steps with loss of
control over the subsidiary in the current period
□Applicable √N/A
5. Changes in scope of consolidation for other reasons
Description of changes in the scope of consolidation for other reasons (e.g., new subsidiary
establishment and subsidiary liquidation, etc.) and the relevant information:
√Applicable □N/A
1. Increased scope of combination
Company name Proportion
Method of Time point of Capital
of
obtaining equity obtaining equity contribution
contribution
Appotronics Technology September RMB 2
Establishment 100.00%
(Changzhou) Co., Ltd. 2019 million
FORMOVIE
Establishment July 2019 55.00%
TECHNOLOGY INC
2. Decreased scope of combination
Net profits
from the
Time point of Net assets on
Method of beginning of
Company name disposing the disposal
disposing equity the period to
equity date
the disposal
date
Beijing Appotronics Xiaoming Deregistration February
937,767.91 -400.00
Technology Co., Ltd. 2019
Qingda Appotronics Deregistration February
(Shenzhen) Technology Co., 2019 0.00 0.00
Ltd.
United Technology Deregistration May 2019
92,291.20 0.00
Corporation
6. Others
□Applicable √N/A
271 / 312
2019 Annual Report
IX. Equity in other entities
1. Equity in subsidiaries
(1).Composition of enterprise group
√Applicable □N/A
Principal Proportion of Acquisition
Subsidiaries Registration shareholding (%)
operation Business nature method
place
place Direct Indirect
Appotronics Beijing Beijing Sales; technology 90 Establishment
Timewaying development,
(Beijing) consulting
Technology Co., Ltd.
Shenzhen Shenzhen Shenzhen Technology 100 Establishment
Appotronics development and
Software sales of computer
Technology Co., Ltd. software and
hardware
Beijing Orient Beijing Beijing Technology 59 Establishment
Appotronics promotion;
Technology Co., Ltd. computer
systems,
application
software services
Shenzhen Shenzhen Shenzhen Development, 100 Establishment
Appotronics consultation and
Xiaoming transfer of laser
Technology Co., Ltd. display
technology
Fengmi (Beijing) Beijing Beijing Technology and 55 Establishment
Technology Co., Ltd. software
development
Shenzhen Shenzhen Shenzhen R&D and sales of 100 Acquisition
Appotronics Laser laser display through business
Display Technology products combination
Co., Ltd. involving entities
under common
control
CINEAPPO Laser Beijing Beijing Research and 24.84 30.36 Acquisition
Cinema Technology development, through business
(Beijing) Co., Ltd. production, sales combination
and lease of laser involving entities
cinema projection under common
equipment control
Qingda Appotronics Beijing Xiamen Information 51 Establishment
(Xiamen) technology
Technology Co., Ltd. consulting
services
Shenzhen Shenzhen Shenzhen Software 100 Establishment
Appotronics Laser development for
Technology Co., Ltd. semiconductor
optoelectronic
devices
Shenzhen Shenzhen Shenzhen Software 100 Establishment
Appotronics Home development
Line Technology related to
Co., Ltd. semiconductor
optoelectronic
products
Appotronics Hong Hong Kong Hong Kong Information 100 Establishment
Kong Limited technology
consulting
services
Appotronics USA, USA USA R&D, 100 Acquisition
Inc. manufacture and through business
272 / 312
2019 Annual Report
sales of combination
semiconductor involving entities
optoelectronic under common
products control
Fabulus Technology Hong Kong Hong Kong R&D, 100 Establishment
Hong Kong Limited manufacture and
sales of screens
JoveAI Limited Cayman Cayman Island No specific 64.29 Establishment
Island business
conducted
JoveAI Innovation USA USA R&D of laser 64.29 Establishment
Inc. display software
system
Appotronics Changzhou Changzhou Technical 100 Establishment
Technology research and
(Changzhou) Co., development of
Ltd. projection
equipment, screen
and electronic
computer.
FORMOVIE No specific 55 Establishment
TECHNOLOGY business
INC conducted
Description of the difference between the proportion of shareholding and the proportion of
voting rights in a subsidiary:
None
Basis for holding half of the voting rights or below but still controlling the investee, and
holding over half voting right but having no control over the investee:
None
Basis for controls over significant structured entities included in consolidation scope:
None
Basis to determine the company acts as the agent or the principal:
None
Other description:
None
(2). Significant non-wholly subsidiaries
√Applicable □N/A
In RMB
Dividends
Shareholding Profit or loss
declared for
proportion by attributable to Closing balance
distribution to
Subsidiaries minority minority of minority
minority
shareholders shareholders for interests
shareholders in
the current period
the current period
Fengmi 45.00% -21,366,510.04 -12,904,049.48
(Beijing)
Technology
Co., Ltd.
CINEAPPO 44.80% 64,871,559.07 167,288,609.89
273 / 312
2019 Annual Report
Laser Cinema
Technology
(Beijing) Co.,
Ltd.
Description of the difference between the proportion of shareholding by minority
shareholders and their proportion of voting rights in a subsidiary:
□Applicable √N/A
Other description:
√Applicable □N/A
None
274 / 312
2019 Annual Report
(3).Significant financial information of significant non-wholly subsidiaries
√Applicable □N/A
In RMB
Closing balance Opening balance
Subsidiaries Non-current Non-current Non-current
Current assets Total assets Current liabilities Total Liabilities Current assets Non-current assets Total assets Current liabilities Total Liabilities
assets Liabilities Liabilities
Fengmi (Beijing) 253,973,931.39 7,968,567.46 261,942,498.8 288,180,191.85 2,437,972.51 290,618,164.36 169,863,293.93 3,285,377.69 173,148,671.62 154,545,487.96 501,666.67 155,047,154.63
Technology Co., 5
Ltd.
CINEAPPO 255,777,103.29 789,861,645. 1,045,638,748. 383,085,231.40 289,141,441.68 672,226,673.08 257,104,710.30 716,694,256.35 973,798,966.65 342,250,356.10 403,606,023.00 745,856,379.10
Laser Cinema 43 72
Technology
(Beijing) Co.,
Ltd.
2019 2018
Subsidiaries Total comprehensive Cash flow from Total comprehensive Cash flow from operating
Operating income Net profit Operating income Net profit
income operating activities income activities
Fengmi (Beijing) Technology Co., 700,577,662.64 -47,481,133.43 -47,481,133.43 -99,566,333.52 325,770,716.69 -22,748,600.79 -22,748,600.79 29,164,155.57
Ltd.
CINEAPPO Laser Cinema 593,020,861.03 144,802,587.21 144,802,587.21 173,475,022.15 377,779,539.47 103,750,837.96 103,750,837.96 -16,464,187.23
Technology (Beijing) Co., Ltd.
Other description:
None
275 / 312
2019 Annual Report
(4).Significant limitations on use of the group assets and paying off the group debts
□Applicable √N/A
(5). Financial or other support provided to structured entities included in
consolidated financial statements
□Applicable √N/A
Other description:
□Applicable √N/A
2. Changes of shares of owners' equity in subsidiaries but continue to remain control
over transactions of subsidiaries
□Applicable √N/A
3. Equity in joint ventures or associates
√Applicable □N/A
(1).Significant associates or joint ventures
□Applicable √N/A
(2).Major financial information of significant joint ventures
□Applicable √N/A
(3).Major financial information of significant associates
□Applicable √N/A
(4).Summary financial information of insignificant joint ventures and associates
√Applicable □N/A
In RMB 0’000
Closing balance/2019 Opening balance / 2018
Joint ventures:
Total carrying amount of
investments
Total amounts calculated
based on shareholding
proportions
--Net profit
--Other comprehensive
income
--Total comprehensive
income
Associates:
276 / 312
2019 Annual Report
Total carrying amount of 13,953.44
investments
Total amounts calculated 1.04
based on shareholding
proportions
--Net profit -0.39
--Other comprehensive 1.43
income
--Total comprehensive 1.04
income
Other description
Basic information of associates
Accounting
Principal Proportion of shareholding (%)
treatment
method for
Registration Business
Associates investments
operation place nature
Direct Indirect in joint
place ventures and
associates
Accounting
Sale of
Cinionic Europe and for under
Hong Kong cinema 20
Limited USA equity
projectors
method
(5). Descriptions of significant limitations over the ability of joint ventures or
associates to transfer funds to the Company
□Applicable √N/A
(6).Excessive loss of joint venture or associates
□Applicable √N/A
(7). Unrecognized commitment relating to investments in joint ventures
□Applicable √N/A
(8).Contingent liabilities relating to investments in joint ventures or associates
□Applicable √N/A
4. Significant joint operations
□Applicable √N/A
5. Interests in structured entities that are not included in consolidated financial
statements
Description of structured entities that are not included in consolidated financial statements:
277 / 312
2019 Annual Report
□Applicable √N/A
6. Others
□Applicable √N/A
X. Risks associated with financial instruments
√Applicable □N/A
The Company's risk management objectives are to achieve a proper balance between
risks and yield, minimize the adverse impacts of risks on the Company's operation
performance, and maximize the benefits of the shareholders and other stakeholders. Based on
these risk management objectives, the Company's basic risk management strategy is to
identify and analyze its exposure to various risks, establish an appropriate maximum
tolerance to risk, implement risk management, and monitor regularly and effectively these
exposures to ensure the risks are monitored at a certain level.
The Company is exposed to various risks associated with financial instruments in its
daily routines, primarily including credit risk, liquidity risk and market risk. The
management has reviewed and approved policies to manage these risks, summarized as
below.
(I)Credit risk
Credit risk refers to the risk that a party of the financial instrument will default on its
obligations resulting in financial loss to the counterparty.
1. Management of credit risk
(1) Evaluation of credit risk
The Company assesses at each balance sheet date whether the credit risk of the
underlying financial instruments has increased significantly since initial recognition. In
determining whether the credit risk has increased significantly since initial recognition, the
Company considers reasonable and supportable information that is available without undue
cost or effort, including quantitative and qualitative analysis based on historical data, ranking
of external credit risks and forward-looking information. The Company compares the risk of
a default occurring on a financial instrument as at the balance sheet date with the risk of a
default occurring on the financial instrument as at the date of initial recognition based on
individual financial instrument or a group of financial instruments with similar credit risk
characteristic, to determine the change of the risk of a default occurring on a financial
instrument over the expected life.
The Company considers the credit risk of financial instruments has increased
significantly when one or more of the following quantitative and qualitative criteria are met:
1) The quantitative criterion primarily refers to a certain percentage of increase in the
probability of default over the remaining life of the financial instruments as of the balance
sheet date when comparing with that at initial recognition of the financial instruments;
2) The qualitative criteria includes, inter alia, adverse material changes in business or
financial conditions that are expected to cause a significant decrease in the debtor's ability to
meet its debt obligations, and an actual or expected significant adverse change in the
technological, market, economic, or legal environment of the debtor that results in a
significant decrease in the debtor’s ability to meet its debt obligations.
(2) Definition of defaulted or credit-impaired assets
A financial asset is defined as defaulted when the financial instrument meets one or more
conditions stated as below, and the criteria of defining defaulted asset is consistent with that
of defining credit-impaired asset:
1) significant financial difficulty of the debtor;
278 / 312
2019 Annual Report
2) a breach of contract terms with binding force by the debtor;
3) it is becoming probable that the debtor will enter bankruptcy or other financial
reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the debtor’s
financial difficulty, has granted to the debtor a concession(s) that the creditor would not
otherwise consider.
2. Measurement of ECL
Key parameters to measure ECL include the probability of default, loss given default
and the exposure at default. The Company established models of the probability of default,
loss given default and the exposure at default on the basis of qualitative analysis on historical
statistical data (such as counterparty ranking, guarantee methods, collateral category, and
repayment way) and forward-looking information.
3. Details of reconciliation of the opening balance and the closing balance of provision
for impairment of financial instruments can refer to the description in VII 4, VII 5 and VII 8
of Section XI.
4. Credit risk exposure and credit risk concentration
The Company's credit risk is primarily from cash and bank balances and receivables. In
order to control the risks associated with aforementioned items, the Company has taken the
following measures.
(1) Cash and bank balances
The credit risk of the Company is limited because the Company has deposited bank
deposits and other monetary funds in banks with high credit ratings.
(2) Receivables
The Company regularly evaluates the creditworthiness of its customers with deals on
credit, and selects to deal with approved and creditworthy customers subject to the results of
the credit assessment with monitoring the balance of its receivables, so as to ensure that the
Company is not exposed to significant risk of bad debt.
No collaterals are required since the Company only deals with third parties that are
approved and creditworthy. The concentrated credit risks are managed by customers . As of
December 31, 2019, the Company is exposed to certain concentration of credit risks, as the
Company’s accounts receivable from top 5 customers have accounted for 70.21% of the total
balance of accounts receivable (December 31, 2018: 80.76%). The Company held no
collateral or other credit ranking measures for the balance of accounts receivable.
The maximum exposure to the Company is the carrying amount of each financial asset in
the balance sheet.
(II) Liquidity risk
Liquidity risk refers to the risk that the Company is in shortage of funds in performing
obligations that are settled by delivering cash or another financial asset. Liquidity risk may
arise from an inability to sell a financial asset at fair value as soon as possible, a
counterparty's inability to pay its contractual liabilities, the accelerated maturity of liabilities,
or an inability to generate expected cash flows.
In order to control this risk, the Company balances the continuity and flexibility of
financing by using various financing measures such as notes settlement and bank loans
comprehensively and adopting both long-term and short-term financing methods to optimize
the financing structure. The Company has received credit facilities from a number of
commercial banks to satisfy its working capital requirements and capital expenditures.
Financial liabilities classified by remaining maturity dates
Closing balance
Item Undiscounted Over 3
Book value Within 1 year 1-3 years
contract amount years
279 / 312
2019 Annual Report
Closing balance
Item Undiscounted Over 3
Book value Within 1 year 1-3 years
contract amount years
Bank 444,275,984.40 159,065,657.15 285,210,327.25
421,349,221.34
borrowings
Notes payable 37,335,841.79 37,335,841.79 37,335,841.79
Accounts 176,624,445.46 176,624,445.46 176,624,445.46
payable
Other payables 14,364,076.43 14,364,076.43 14,364,076.43
Long-term
3,488,100.00 3,488,100.00 3,488,100.00
payables
Sub-total 653,161,685.02 676,088,448.08 390,878,120.83 285,210,327.25
(Continued to above table)
Opening balance
Item Undiscounted Over 3
Book value Within 1 year 1-3 years
contract amount years
Bank
557,710,951.22 590,065,504.00 155,154,966.13 434,910,537.87
borrowings
Notes 39,051,466.05 39,051,466.05 39,051,466.05
payable
Accounts 164,258,731.06 164,258,731.06 164,258,731.06
payable
Other
184,107,549.02 184,107,549.02 184,107,549.02
payables
Long-term
6,863,200.00 6,863,200.00 6,863,200.00
payables
Sub-total 951,991,897.35 984,346,450.13 549,435,912.26 434,910,537.87
[Note]: The difference between the opening balance of the year and the closing balance
of the prior year (as of December 31, 2018) can refer to V 41 of Section XI for details.
(III) Market risk
Market risk refers to the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices. Market risk mainly includes
interest rate risk and currency risk.
1. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Company is
exposed to the risk of fair value interest rate due to financial instruments with a fixed interest
rate and to the risk of cash value interest rate due to financial instruments with a floating
interest rate. The Company determines the proportion between the fixed-rate financial
instruments and the floating-rate financial instruments based on market conditions, and
maintains appropriate portfolios of financial instruments through regular review and
monitoring. The cash flow interest rate risk exposed to the Company relates primarily to the
Company’s floating-rate interest-bearing bank borrowings.
As at December 31, 2019, the principal of the Company’s floating-rate interest-bearing
bank borrowings amounted to RMB 420,240,038.66 (December 31, 2018:
RMB556,156,963.00). On the basis of the assumption that the interest rate has changed 50
basic points, where all other variables are held constant, it will bring no material impacts on
the Company's total profits and shareholders' equity.
2. Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. The Company's exposure to the
currency risk is primarily associated with the Company’s monetary assets and liabilities
dominated in foreign currencies. If the monetary assets and liabilities dominated in foreign
280 / 312
2019 Annual Report
currencies are imbalanced in a short time, the Company will purchase and sell foreign
currencies at the market exchange rate to keep the net risk exposure acceptable.
The closing balance of the Company’s monetary assets and liabilities dominated in
foreign currencies are disclosed in VII 80 of Section XI in details.
XI. Disclosure of fair value
1. The closing balance of the fair value of assets and liabilities measured at fair value
√Applicable □N/A
In RMB
Closing balance of fair value
Item
Level 1 Level 2 Level 3 Total
I. Continuous fair
value measurement
(I) Held-for-trading 540,000,000.00 540,000,000.00
financial assets
1. Financial assets at 540,000,000.00 540,000,000.00
fair value through
profit or loss
(1) Investment in debt
instrument
(2) Investment in
equity instrument
(3)Derivative
financial assets
(4) Structural deposits 540,000,000.00 540,000,000.00
2. Designated as
financial assets at fair
value through profit
or loss
(1) Investment in debt
instrument
(2) Investment in
equity instrument
(II) Other debt
investments
(III) Other equity 11,975,419.38 11,975,419.38
instrument
investments
(IV) Investment
properties
1. Land use right for
leasing purpose
2. Buildings leased
3. Land use right held
for the purpose of
transfer after value
appreciation
(V) Biological assets
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2019 Annual Report
1. Consumable
biological assets
2. Bearer biological
assets
Total assets 551,975,419.38 551,975,419.38
continuously
measured at fair
value
(VI) Held-for-trading
financial liabilities
1. Financial liabilities
at fair value through
profit or loss
Including:
Held-for-trading
bonds issued
Derivative
financial liabilities
Others
2. Designated as
financial liabilities at
fair value through
profit or loss
Total liabilities
continuously
measured at fair
value
II. Non-continuous
fair value
measurement
(I) Held-for-sale
assets
Total assets that are
not continuously
measured at fair
value
Total liabilities that
are not continuously
measured at fair
value
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2019 Annual Report
2. Basis for determining the market price of continuous and non-continuous level 1
fair value measurement items
□Applicable √N/A
3. Valuation techniques and qualitative and quantitative information of key
parameters adopted for continuous and non-continuous level 2 fair value
measurement items
□Applicable √N/A
4. Valuation techniques and qualitative and quantitative information of key
parameters adopted for continuous and non-continuous level 3 fair value
measurement items
√Applicable □N/A
The fair value of short-term wealth management products of banks is determined based on
their par value . The fair value of investments in equity instruments is determined by using
the cost as the best estimate, since such investments are unlisted equity investments that do
not have quoted prices in active markets.
5. Reconciliation between opening and closing carrying amounts and sensitivity
analysis of unobservable parameters for continuous level 3 fair value measurement
items
□Applicable √N/A
6. Where transfers among levels occurred in the period, transfer reasons and policies
for determining transfer time point for continuous fair value measurement items
□Applicable √N/A
7. Changes in valuation techniques in the period and reasons for changes
□Applicable √N/A
8. Fair value of financial assets and financial liabilities not measured at fair value
□Applicable √N/A
9. Others
□Applicable √N/A
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2019 Annual Report
XII.Related-party relationships and transactions
1. Parent of the Company
√Applicable □N/A
In RMB 0’000
Proportion of Proportion of
the the Company's
Name of the Registration Business Registered
Company's voting right
parent place nature capital
shares held by held by the
the parent (%) parent (%)
Shenzhen Shenzhen R&D and 1,000.00 20.80 20.80
Appotronics sales of
Holdings semiconductor
Limited products
Description of the parent of the Company
None
The ultimate controlling party of the Company is LI Yi.
Other description:
None
2. Subsidiaries of the Company
Information of the significant subsidiaries of the Company are disclosed in the Annex.
√Applicable □N/A
Subsidiaries of the Company are disclosed in descriptions in IX 3 of Section XI in details.
3. Associates and joint ventures of the Company
Information of the significant joint ventures or associates of the Company are disclosed in the
Annex.
□Applicable √N/A
Details of other joint ventures or associates having related-party transactions and balances
with the Company in the period or in prior periods:
√Applicable □N/A
Name of associates or joint ventures Relationship with the Company
Cinionic Limited Participating company
Other description
□Applicable √N/A
4. Other related parties of the Company
√Applicable □N/A
Name of other related party Relationship between other related party and the
Company
Shenzhen YLX Technology Controlled by the same de facto controller
Development Co., Ltd.
Shenzhen Bevix Technology Co., Ltd. holding more than 5% of shares in the company
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2019 Annual Report
Shenzhen Lighting Institute Affiliates of the de facto controller
Shenzhen Fengye Investment Affiliates of the de facto controller
Consulting Limited Partnership (LP)
China Film Equipment Co., Ltd. and Minority shareholders holding more than 10%
its affiliates shares in the subsidiary and their affiliates
Xiaomi Communications Minority shareholders holding more than 10%
Technologies Co., Ltd. and its shares in the subsidiary and their affiliates
affiliates
Beijing Donview Education Minority shareholders holding more than 10%
Technology Co., Ltd. and its affiliates shares in the subsidiary and their affiliates
Other description
None
5. Related-party transactions
(1).Sales and purchase of goods, rendering and receipt of services
Purchase of goods/receipt of services
√Applicable □N/A
In RMB
Details of
Related party related-party 2019 2018
transaction
China Film Equipment Power, water cooling 75,594,510.73 58,306,727.65
Co., Ltd. and its and service
affiliates
Xiaomi Electronic 135,947,996.69 74,825,228.94
Communications components and
Technologies Co., Ltd. services
and its affiliates
Beijing Donview Services 70,302.92
Education Technology
Co., Ltd. and its
affiliates
Sub-total 211,612,810.34 133,131,956.59
Sales of goods/rendering of services
√Applicable □N/A
In RMB
Details of
Related party related-party 2019 2018
transaction
Shenzhen Bevix Laser TV and smart 191,843.14
Technology Co., Ltd. mini projector
Shenzhen Lighting Projectors 3,333.33
Institute
285 / 312
2019 Annual Report
Shenzhen YLX Large venue 35,897.44
Technology projector and
Development Co., Ltd. software
China Film Equipment laser cinema 141,777,980.65 90,546,834.84
Co., Ltd. and its projector light source
affiliates and lease service
Xiaomi Laser TV and smart 456,486,039.21 247,297,756.49
Communications mini projector
Technologies Co., Ltd.
and its affiliates
Beijing Donview Laser business 74,848,453.68 138,261,388.57
Education Technology education projectors
Co., Ltd. and its
affiliates
Cinionic Limited Laser light source 125,395,135.96
Sub-total 798,507,609.50 476,337,053.81
Description of sales and purchase of goods, rendering and receipt of services
□Applicable √N/A
(2).Details of trust with related parties/subcontracting and trust management/
contract-issuing
Details of trust / contracting where a group entity is the trustor / main contractor:
□Applicable √N/A
Description of trust/subcontracting with related parties
□Applicable √N/A
Details of trust / contracting where a group entity is the trustor / main contractor
□Applicable √N/A
Description of management/contract-issuing with related parties
□Applicable √N/A
(3). Leases with related parties
The Company as the lessor:
□Applicable √N/A
The Company as the lessee:
√Applicable □N/A
In RMB
Type of leased Lease fees recognized in Lease fees recognized in
Name of lessor
assets the current period the prior period
China Film Housing rent 2,070,494.22 1,462,547.83
Equipment Co.,
Ltd. and its
affiliates
Description of leases with related parties
□Applicable √N/A
286 / 312
2019 Annual Report
(4).Guarantees with related parties
The Company as a guarantor:
□Applicable √N/A
The Company as a guaranteed party:
√Applicable □N/A
In RMB
Whether execution
Guaranteed Inception date of Expiration date of
Guarantor of guarantee has
amount guarantee guarantee
been completed
Shenzhen YLX 758,318.00 July 4, 2017 January 4, 2020 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 333,318.00 July 4, 2017 January 4, 2020 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 1,750,000.00 July 27, 2017 January 27, 2020 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 2,250,000.00 August 18, 2017 February 17, No
Technology 2020
Development
Co., Ltd., LI Yi
Shenzhen YLX 11,874,986.00 September 13, March 13, 2020 No
Technology 2017
Development
Co., Ltd., LI Yi
Shenzhen YLX 624,986.00 September 15, March 15, 2020 No
Technology 2017
Development
Co., Ltd., LI Yi
Shenzhen YLX 10,958,327.00 November 21, May 21, 2020 No
Technology 2017
Development
Co., Ltd., LI Yi
Shenzhen YLX 1,374,994.00 December 20, June 15, 2020 No
Technology 2017
Development
Co., Ltd., LI Yi
Shenzhen YLX 14,291,661.00 January 17, 2018 July 17, 2020 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 5,962,500.00 March 26, 2018 September 23, No
Technology 2020
Development
Co., Ltd., LI Yi
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2019 Annual Report
Shenzhen YLX 3,712,500.00 March 26, 2018 September 23, No
Technology 2020
Development
Co., Ltd., LI Yi
Shenzhen YLX 5,150,158.00 April 25, 2018 October 25, 2020 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 3,150,000.00 June 1, 2018 December 1, No
Technology 2020
Development
Co., Ltd., LI Yi
Shenzhen YLX 2,649,992.00 June 27, 2018 December 26, No
Technology 2020
Development
Co., Ltd., LI Yi
Shenzhen YLX 4,456,660.00 August 17, 2018 February 17, No
Technology 2021
Development
Co., Ltd., LI Yi
Shenzhen YLX 6,379,372.00 September 27, March 26, 2021 No
Technology 2018
Development
Co., Ltd., LI Yi
Shenzhen YLX 18,866,458.10 November 1, April 30, 2021 No
Technology 2018
Development
Co., Ltd., LI Yi
Shenzhen YLX 11,085,412.00 November 30, April 29, 2021 No
Technology 2018
Development
Co., Ltd., LI Yi
Shenzhen YLX 58,227,196.00 December 19, December 19, No
Technology 2018 2021
Development
Co., Ltd., LI Yi
Shenzhen YLX 21,975,998.00 December 19, June 21, 2021 No
Technology 2018
Development
Co., Ltd., LI Yi
Shenzhen YLX 10,327,996.00 December 29, December 29, No
Technology 2018 2021
Development
Co., Ltd., LI Yi
Shenzhen YLX 26,516,665.00 January 30, 2019 January 30, 2022 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 10,152,000.00 March 1, 2019 March 1, 2022 No
288 / 312
2019 Annual Report
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 15,687,000.00 March 1, 2019 March 1, 2022 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 10,287,000.00 March 29, 2019 August 29, 2022 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 11,348,666.00 May 9, 2019 April 30, 2022 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 10,560,000.00 June 4, 2019 June 4, 2022 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 12,780,000.00 July 8, 2019 July 4, 2022 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 18,540,000.00 July 29, 2019 July 29, 2022 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 11,540,000.00 August 21, 2019 August 21, 2022 No
Technology
Development
Co., Ltd., LI Yi
Shenzhen YLX 20,330,000.00 September 18, September 18, No
Technology 2019 2022
Development
Co., Ltd., LI Yi
Description of guarantees with related parties
□Applicable √N/A
(5).Borrowings/loans with related parties
□Applicable √N/A
(6).Assets transfer/debt restructuring with related parties
□Applicable √N/A
(7).Compensation for key management personnel
√Applicable □N/A
In RMB 0’000
Item 2019 2018
Compensation for key 1,673.11 724.09
management personnel
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2019 Annual Report
(8). Other related-party transactions
□Applicable √N/A
6. Amounts due from / to related parties
(1).Amounts due from related parties
√Applicable □N/A
In RMB
Closing balance Opening balance
Item Related party Carrying Bad debt Carrying Bad debt
amount provision amount provision
China Film 17,494,326.54 874,716.33 27,317,201.02 1,365,860.05
Accounts Equipment Co.,
receivable Ltd. and its
affiliates
Beijing 8,829,840.85 442,339.31 6,674,446.36 333,722.32
Donview
Accounts Education
receivable Technology Co.,
Ltd. and its
affiliates
Xiaomi 45,679,955.49 2,283,997.77
Communications
Accounts
Technologies
receivable
Co., Ltd. and its
affiliates
Accounts Cinionic Limited 24,298,258.08 1,214,912.90
receivable
Sub-total 96,302,380.96 4,815,966.31 33,991,647.38 1,699,582.37
China Film 3,350,592.41 5,517.24
Equipment Co.,
Prepayments
Ltd. and its
affiliates
Sub-total 3,350,592.41 5,517.24
Shenzhen 3,700,000.00 185,000.00
Fengye
Other Investment
receivables Consulting
Limited
Partnership (LP)
China Film 290,866.00 14,543.30 266,046.00 13,302.30
Other Equipment Co.,
receivables Ltd. and its
affiliates
Xiaomi 100,000.00 5,000.00
Other Communications
receivables Technologies
Co., Ltd. and its
290 / 312
2019 Annual Report
affiliates
Sub-total 390,866.00 19,543.30 3,966,046.00 198,302.30
(2).Amounts due to related parties
√Applicable □N/A
In RMB
Item Related party Closing balance Opening
of carrying balance of
amount carrying
amount
Accounts China Film Equipment Co., Ltd. and its 11,595,819.93 30,428,997.91
payable affiliates
Accounts Xiaomi Communications Technologies Co., 20,751,194.86
payable Ltd. and its affiliates
Sub-total 11,595,819.93 51,180,192.77
Receipts in China Film Equipment Co., Ltd. and its 15,893,424.21 14,492,010.96
advance affiliates
Receipts in Xiaomi Communications Technologies Co., 6,000.00
advance Ltd. and its affiliates
Sub-total 15,893,424.21 14,498,010.96
Other China Film Equipment Co., Ltd. and its 9,645.00
payables affiliates
Sub-total 9,645.00
7. Related party commitments
□Applicable √N/A
8. Others
□Applicable √N/A
XIII. Share-based payments
1. Summary of share-based payments
√Applicable □N/A
Unit: Share, Currency: RMB
Total number of the Company's equity 4,400,000
instruments granted during the period
Total number of the Company's equity 0
instruments executed during the period
Total number of the Company's equity 0
instruments lapsed during the period
Range of exercise prices and remaining Grant date: October 14, 2019; grant price:
contractual life of the Company's share RMB 17.5/share; remaining contractual life:
options outstanding at the end of the period 10/22/34 months
Range of exercise prices and remaining None
291 / 312
2019 Annual Report
contractual life of the Company's other equity
instruments outstanding at the end of the
period
Other description:
The Company granted 4.4 million shares of restricted shares during the current period.
2. Equity-settled share-based payments
√Applicable □N/A
In RMB
The method of determining the fair value of Open market quotes
equity instruments at the grant date
The basis of determining the number of equity Actual grant amount
instruments expected to be executed
Reasons for the significant difference between None
the estimate in the current period and that in
the prior period
Amounts of equity-settled share-based 7,475,923.79
payments accumulated in capital reserve
Total expenses recognized arising from 8,146,719.12
equity-settled share-based payments
Other description:
The difference between the the total expenses recognized by equity-settled share-based
payments in the current period and the amount of share-based payments included in owners'
equity arises from the exchange rate translation difference.
3. Cash-settled share-based payments
□Applicable √N/A
4. Modification to and termination of share-based payments
□Applicable √N/A
5. Others
□Applicable √N/A
XIV. Commitments and contingencies
1. Significant commitments
√Applicable □N/A
Significant external commitments, and nature and amount thereof as of the balance sheet date
Significant lease contracts which the Company has entered into or will perform and
their financial impacts are disclosed in the following table:
Rent
Serial Rent Rent
Rent address area(square Rent period
No. purpose expense/year
meters)
Research
and From May 1,
20/F, 21/F, 22/F, United Headquarter
developmen 2018 to
1 Building, High-Tech Zone, No. 63 Xuefu 6,143.79 5,898,038.40
t, office December 31,
Road, Nanshan District, Shenzhen
administrati 2021
on
292 / 312
2019 Annual Report
Rent
Serial Rent Rent
Rent address area(square Rent period
No. purpose expense/year
meters)
From December
Yaochuan Industrial Zone, Tangwei
1, 2018 to
2 Community, Fuhai Street, Bao'an 23,765.57 Plant 13,751,023.67
November 30,
District, Shenzhen
2022
Room101, 1/F, Building 22E, Phase III Office From March 20,
3 of Hong Kong Science and Technology 1,138.25 administrati 2019 to March 3,289,377.60
Park on 19, 2022
2. Contingencies
(1).Significant contingencies as of the balance sheet date
√Applicable □N/A
As of the date of issue of the financial statements, there have been five civil litigations
where the Company was a defendant, with details as below:
Case Cause of
Plaintiffs Defendants Patents involved Progress
No. action
(2019)
Yue 73
Suspension
Zhi Min ZL201610387831.8
of hearing
Chu
No.662 Appotronics
(2019) Corporation
Yue 73 Limited; Futian
Zhi Min SPN Projector ZL201310017478.0 Pending
Chu & Video
No.663 System Firm of
(2019) Shenzhen
Infringement
Yue 73 Delta
of patent
Zhi Min Electronics, ZL20310625063.1 Pending
rights of
Chu Inc.
inventions
No.664
(2019)
Jing 73
Fengmi
Min ZL201410249663.7 Pending
(Beijing)
Chu
Technology
No.1275
Co., Ltd.;
(2019)
Appotronics
Jing 73
Corporation
Min ZL201610387831.8 Pending
Limited
Chu
No.1276
As of December 31, 2019, the Company has had RMB 30 million frozen a result of the
above litigation. As of the date of issue of the financial statements, the Guangzhou
Intellectual Property Court has released the Company's deposits amounting to RMB 10
million.
293 / 312
2019 Annual Report
(2).Description shall also be provided even if the Company has no significant
contingencies to be disclosed:
□Applicable √N/A
3. Others
√Applicable □N/A
As of the end of 2019, the principal balance of the Company's bank borrowings was RMB
420,240,038.66, including credit borrowings amounting to RMB 10,000,000.00, guaranteed
borrowings amounting to RMB 50,000,000.00, and guaranteed loans and loans against
collateral amounting to RMB 360,240,038.66. Guaranteed loans and loans against collateral
are disclosed in VII 18 and 25 of Section XI in details.
XV. Events after the balance sheet date
1. Material non-adjusting event
√Applicable □N/A
In RMB
Reasons for not
Effects on the
being able to
Item Content financial position
estimate such effects
and operating results
Significant external GDC Investments
investments
In the twentieth session of the first board of directors held on December 6, 2019, the
Proposal on Proposed Additional Capital Contribution to the Wholly-owned Subsidiary and
Foreign Investments in GDC was discussed and approved, according to which it was agreed
to make additional capital contribution of USD 18.2 million to the Company’s wholly-owned
subsidiary Appotronics Hong Kong Limited for acquisition of 36% shares of GDC
Technology Limited (British Virgin Islands). In March 2020, the Company completed the
approval and filing procedures for overseas investments by National Development and
Reform Commission and Ministry of Commerce and other competent authorities. After
meeting the precedent closing conditions of this acquisition, on April 9, 2020, the Company
paid the total consideration of approximately USD 18.11 million by its own funds. As of the
date of the approval issue of the financial statements, the Company has legally held
93,071,822 shares of GDC, accounting for 36% of total shares in GDC.
2. Profit distribution
√Applicable □N/A
In RMB
Proposed distributions of profits or 33,866,580.83
dividends
Profits or dividends declared for
distribution upon discussion and
approval
The Company's 2019 preliminary plan for profit distribution is disclosed as below: the
Company proposed to distribute to all shareholders a cash dividend of RMB 0.75 (including
tax) for every 10 shares on the basis of the total share capital as at the date of share
294 / 312
2019 Annual Report
registration for 2019 annual dividend distribution, according to which the total cash
dividends expected to be distributable would be RMB33,866,580.83; the Company would
neither capitalize its capital reserve nor grant bonus shares. The amount for cash dividends in
the aforesaid 2019 profit distribution plan is temporarily calculated based on the Company’s
current total share capital of 451,554,411 shares, but the actual amount for cash dividends in
total should be calculated subject to the basis of the total share capital as at the date of share
registration for 2019 annual dividend distribution. The Company’s 2019 preliminary plan for
profit distribution still needs to be approved by the general meeting of shareholders of the
Company.
3. Sales return
□Applicable √N/A
4. Description of other events after the balance sheet date
√Applicable □N/A
1. Effect of the pneumonia epidemic infected by COVID-19
With the breaking out of the pneumonia epidemic infected by COVID-19 (hereinafter
referred to as the COVID-19 epidemic) nationwide in January 2020, governments across the
country have introduced measures in order to prevent and control the COVID-19 epidemic.
The COVID-19 epidemic and the corresponding prevention and control measures have
brought certain impacts on the normal production and operation of the Company, with details
as below:
Effects on the financial position and
Specific effects
operating results
(1) Effect on production
The Company's main production and
operation place is located in Shenzhen
It is expected that the Company’s incomes
Municipality, Guangdong Province. As
from lease services will decline
affected by the COVID-19 epidemic, the
significantly on a year-on-year basis, and
Company resumed work on February 10,
incomes from other businesses will also
2020 instead of the planned date of
be affected to some extent with detailed
February 3, 2020 after the Spring Festival.
effects depending on specific situations
(2) Effect on sales
and duration period of epidemic
The COVID-19 epidemic has brought a
prevention and control as well as
certain impact on the economic
implementation of various epidemic
performance of Hubei and other
prevention and control measures by
provinces and cities as well as the country
governments.
as a whole, which may, to a certain extent,
affect the Company's cinema light source
lease business.
295 / 312
2019 Annual Report
Effects on the financial position and
Specific effects
operating results
(3) Effect on provision for credit losses of
receivables
The Company's downstream customers
are mainly engaged in the film, television
and education industry and located in
various regions of the country.
Considering the operating results and cash
flows of these industries were
significantly affected by the COVID-19
epidemic, the Company may be exposed
to increased expected credit risk of
receivables.
The Company will continue to closely monitor the development of the COVID-19 and
actively respond to its adverse impacts on the Company's financial positions and operating
results.
XVI. Other significant events
1. Corrections of prior period errors
(1).Retrospective application
□Applicable √N/A
(2).Prospective application
□Applicable √N/A
2. Debt restructuring
□Applicable √N/A
3. Asset swap
(1).Exchange of non-monetary assets
□Applicable √N/A
(2).Other asset swap
□Applicable √N/A
4. Annuity plan
□Applicable √N/A
5. Discontinued operations
□Applicable √N/A
6. Segment reporting
(1).Determination basis and accounting policies of reporting segments
□Applicable √N/A
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(2).Financial information of reporting segments
□Applicable √N/A
(3). If the Company has no reporting segments, or cannot disclose the total assets and
liabilities of reporting segments, specify the reasons.
□Applicable √N/A
(4).Other description
√Applicable □N/A
The Company has no reporting segments due to absence of diversified operations. A
breakdown of the Company's principal operating incomes and costs categorized by
businesses, products and regions is disclosed as below:
Categorized by businesses and products:
In RMB 0’000
2019 2018
Item Principal activity Principal activity Principal activity
Principal activity cost
income income cost
1. Sales 155,344.15 102,544.69 105,867.83 66,374.34
2.Lease service 39,799.12 13,526.03 30,431.71 9,960.42
3. Other business 2,771.62 2,294.34 2,273.18 1,989.58
Sub-total 197,914.89 118,365.06 138,572.72 78,324.34
Categorized by regions:
In RMB 0’000
2019 2018
Item Principal activity Principal activity Principal activity
Principal activity cost
income income cost
In China 178,039.72 111,260.78 124,664.87 73,411.52
Oversea 19,875.17 7,104.28 13,907.85 4,912.82
Sub-total 197,914.89 118,365.06 138,572.72 78,324.34
7. Other significant transactions and matters having an impact on the decisions of
investors
□Applicable √N/A
8. Others
□Applicable √N/A
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XVII. Notes to key items in the Parent Company's financial statements
1. Accounts receivable
(1).Disclosure by aging
√Applicable □N/A
In RMB
Aging Closing balance of carrying amount
Within 1 year
Including: sub-items within 1 year
Within 1 year 19,245,692.97
Sub-total of items within 1 year 19,245,692.97
1 to 2 years 1,764,101.36
2 to 3 years 141,469.65
Total 21,151,263.98
(2).Disclosure by categories of provision for bad debts
√Applicable □N/A
In RMB
Closing balance Opening balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Proportio Book value Proportion Book value
Proportion n of Proportio of
Amount Amount Amount Amount
(%) provision n(%) provision
(%) (%)
Provision
for bad debts
made
individually
Including:
Provision 300,789,821.26 100.00 1,474,044.82 0.49 299,315,776.44 229,538,979.01 100.00 1,865,555.66 0.81 227,673,423.35
for bad debts
made by
group
Including:
Group of 21,151,263.98 7.03 1,474,044.82 6.97 19,677,219.16 33,160,290.65 14.45 1,865,555.66 0.95 194,513,132.70
aging
Group of 279,638,557.28 92.97 279,638,557.28 196,378,688.36 85.55
receivables
from related
parties in the
scope of
consolidatio
n
Total 300,789,821.26 100.00 1,474,044.82 0.49 299,315,776.44 229,538,979.01 100.00 1,865,555.66 0.81 227,673,423.35
Provision for bad debts made individually:
□Applicable √N/A
Provision for bad debts made by group:
√Applicable □N/A
Item by group: aging group
In RMB
Closing balance
Name Proportion of
Accounts receivable Bad debt provision
provision (%)
Within 1 year 19,245,692.97 962,284.65 5.00
298 / 312
2019 Annual Report
1-2 years 1,764,101.36 441,025.34 25.00
2-3 years 141,469.65 70,734.83 50.00
Total 21,151,263.98 1,474,044.82 6.97
Recognition criterion to make the bad debt provision by group and explanation:
√Applicable □N/A
Recognition criterion to make the bad debt provision by group and explanation can refer to
V10 of Section XI for details.
If a provision for bad debts of accounts receivable is made in accordance with the general
model of ECL, please disclose relevant information subject to the disclosure of the bad debt
provision for other receivables.
□Applicable √N/A
(3).Provision for bad debts
√Applicable □N/A
In RMB
Changes for the current period
Opening Recovery Closing
Category Write off or Other
balance Provision or balance
cancellation changes
reversal
Provision 1,865,555.66 -380,144.84 11,366.00 1,474,044.82
for bad
debts
made by
group
Total 1,865,555.66 -380,144.84 11,366.00 1,474,044.82
Including significant amounts recovered or reversed from the current provision for bad debts:
□Applicable √N/A
(4).Accounts receivable actually canceled in the current period
√Applicable □N/A
In RMB
Item Cancellation amount
Accounts receivable actually canceled 11,366.00
In which significant amounts canceled are described as below:
□Applicable √N/A
(5).Top five closing balances of accounts receivable categorized by debtors
√Applicable □N/A
299 / 312
2019 Annual Report
Proportion to
the balance of Bad debt
Entities Carrying amount
accounts provision
receivable(%)
Fengmi (Beijing) Technology Co., Ltd. 129,613,544.52 43.09
Appotronics Hong Kong Limited 79,389,380.91 26.39
CINEAPPO Laser Cinema Technology 59,561,540.15 19.80
(Beijing) Co., Ltd.
Qingda Appotronics (Xiamen) 4,370,507.00 1.45
Technology Co., Ltd.
Barco Visual (Beijing) Electronics Co., 4,114,596.68 1.37 205,729.83
Ltd.
Total 277,049,569.26 92.11 205,729.83
(6).Accounts receivable derecognized due to transfer of financial assets
□Applicable √N/A
(7).Assets and liabilities arising from transfer of accounts receivable and continued
involvement
□Applicable √N/A
Other description:
□Applicable √N/A
2. Other receivables
Presented by items
√Applicable □N/A
In RMB
Item Closing balance Opening balance
Interest receivable
Dividends receivable
Other receivables 67,227,575.21 34,226,930.38
Total 67,227,575.21 34,226,930.38
Other description:
□Applicable √N/A
Interest receivable
(1). Categories of interest receivable
□Applicable √N/A
(2). Significant interests overdue
□Applicable √N/A
(3). Provision for bad debts
□Applicable √N/A
300 / 312
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Other description:
□Applicable √N/A
(1). Dividends receivable
□Applicable √N/A
(2). Dividends receivable with significant amounts aged more than 1 year
□Applicable √N/A
(3). Provision for bad debts
□Applicable √N/A
Other description:
□Applicable √N/A
Other receivables
(1). Disclosure by aging
√Applicable □N/A
In RMB
Aging Closing balance of carrying amount
Within 1 year
Including: sub-items within 1 year
Sub-total of items within 1 year 47,244,926.00
1 to 2 years 19,500,616.19
2 to 3 years 779,437.14
Over 3 years 20,300.00
Total 67,545,279.33
(2). Categories by the nature of other receivables
√Applicable □N/A
In RMB
Closing balance of carrying Opening balance of carrying
Nature of other receivables
amount amount
Deposits/margins/pettty cash 6,343,792.67 7,466,203.05
Withholding 650,484.24 650,484.24
Receivables from related 60,540,712.71 22,913,571.50
parties in the scope of
consolidation
Receivables for transfer of 3,700,000.00
shares
Temporary receivables 10,289.71 57,875.52
Total 67,545,279.33 34,788,134.31
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(3). Provision for bad debts
√Applicable □N/A
In RMB
Stage I Stage II Stage III
12-month Lifetime ECL Total
Bad debt provision Lifetime ECL (with
ECL in the (without credit
credit impairment)
future impairment)
Balance as at January 561,203.93 561,203.93
1, 2019
Balance as at January
1, 2019 in the current
period
--transferred to Stage
II
--transferred to Stage -30,000.00 30,000.00
III
--reversed to Stage II
--reversed to Stage I
Provision -213,499.81 -213,499.81
Reversal
Write-off
Cancellation 30,000.00 30,000.00
Other changes
Balance at December 317,704.12 317,704.12
31, 2019
Description of significant changes in the balance of other receivables with changed provisions for losses in
the current period:
□Applicable √N/A
Basis for recognizing the amount of bad debt provisions and evaluating whether the credit
risk of financial instruments has been increased significantly in the current period:
□Applicable √N/A
(4). Provision for bad debts
√Applicable □N/A
In RMB
Changes for the current period
Opening Recovery Closing
Category Write off or Other
balance Provision or balance
cancellation changes
reversal
Provision for 561,203.93 -213,499.81 30,000.00 317,704.12
bad debts made
by group
Total 561,203.93 -213,499.81 30,000.00 317,704.12
Including significant amounts recovered or reversed from the current provision for bad debts:
□Applicable √N/A
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(5). Other receivables actually canceled in the current period
√Applicable □N/A
In RMB
Item Cancellation amount
Other receivables actually canceled 30,000.00
In which significant amounts canceled are described as below:
□Applicable √N/A
Description of other receivables cancellation:
□Applicable √N/A
(6). Top five closing balances of other receivables categorized by debtors
√Applicable □N/A
In RMB
Nature of Proportion to the Closing balance
Closing
Entities other Aging balance of other of bad debt
balance
receivables receivables (%) provision
Fengmi Receivables 46,456,712.71 Within 1 year 68.78
(Beijing) from related
Technology parties
Co., Ltd.
Shenzhen Receivables 13,919,500.00 Within 1 year, 20.61
1-2 years,
Appotronics from related
Laser Display parties
Technology
Co., Ltd.
Shenzhen Margins 4,094,368.00 1-2 years 6.06 204,718.40
Meisheng
Industry Co.,
Ltd.
Shenzhen Deposits 983,006.40 1-2 years, 2-3 1.46 49,150.32
years
Science and
Technology
Assessment
Management
Center
WANG Deposits 300,000.00 Within 1 year 0.44 15,000.00
Shaogang
Total 65,753,587.11 97.35 268,868.72
(7). Accounts receivable involving government grants
□Applicable √N/A
(8). Other receivables derecognized due to transfer of financial assets
□Applicable √N/A
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2019 Annual Report
(9). Assets and liabilities arising from transfer of other receivables and continued
involvement
□Applicable √N/A
Other description:
□Applicable √N/A
3. Long-term equity investments
√Applicable □N/A
In RMB
Closing balance Opening balance
Provision Provision
Item Carrying Carrying Book
for Book value for
amount amount value
impairment impairment
303,680,560.40 45,885,284.27 257,795,276.13 265,251,020.16 45,885,284.27 219,365,735.89
Investments in
subsidiaries
Investments in
associates and joint
ventures
303,680,560.40 45,885,284.27 257,795,276.13 265,251,020.16 45,885,284.27 219,365,735.89
Total
(1). Investments in subsidiaries
√Applicable □N/A
In RMB
Provision Closing balance
Opening Closing
Investee Increase Decrease for of provision for
balance balance
impairment impairment
Appotronics 27,000,000.00 27,000,000.00 27,000,000.00
Timewaying
(Beijing)
Technology
Co., Ltd.
Shenzhen 100,000.00 416,813.05 516,813.05
Appotronics
Software
Technology
Co., Ltd.
Beijing Orient 5,900,000.00 5,900,000.00
Appotronics
Technology
Co., Ltd.
Beijing 1,000,000.00 1,000,000.00
Appotronics
Xiaoming
Technology
Co., Ltd.
Fengmi 27,500,000.00 703,950.93 28,203,950.93 6,057,491.48
(Beijing)
Technology
Co., Ltd.
Shenzhen 18,966,857.26 18,966,857.26
Appotronics
Laser Display
Technology
Co., Ltd.
CINEAPPO 30,100,162.90 666,900.88 30,767,063.78
304 / 312
2019 Annual Report
Laser Cinema
Technology
(Beijing) Co.,
Ltd.
Qingda 5,100,000.00 5,100,000.00 827,792.79
Appotronics
(Xiamen)
Technology
Co., Ltd.
Shenzhen 12,000,000.00 12,000,000.00 12,000,000.00
Appotronics
Xiaoming
Technology
Co., Ltd.
Appotronics 137,584,000.00 35,641,875.38 173,225,875.38
Hong Kong
Limited
Appotronics 2,000,000.00 2,000,000.00
Technology
(Changzhou)
Co., Ltd.
Total 265,251,020.16 39,429,540.24 1,000,000.00 303,680,560.40 45,885,284.27
Note: In the additional investments in Appotronics Hong Kong Limited by the Company
for the current period, an amount of RMB 277,875.38 is the expense of share-based
payments arising from stock ownership incentive.
(2). Investments in associates and joint ventures
□Applicable √N/A
Other description:
None
4. Operating income and operating costs
(1). Description of operating income and operating costs
√Applicable □N/A
In RMB
2019 2018
Item
Revenue Cost Revenue Cost
Principal 1,070,365,243.34 728,135,468.64 1,175,915,671.75 768,440,895.19
activities
Total 1,070,365,243.34 728,135,468.64 1,175,915,671.75 768,440,895.19
Other description:
None
5. Investment income
√Applicable □N/A
In RMB
Item 2019 2018
Gains from long-term equity 46,000,000.00
investment accounted for using the
cost method
Investment income from disposal of -64,542.33
305 / 312
2019 Annual Report
long-term equity investments
Investment income from financial
assets at fair value through profit or
loss during the holding period
Investment income from disposal of 9,552,990.98
financial assets at fair value through
profit or loss
Investment income from
held-to-maturity investments
during the holding period
Investment income from disposal of
held-to-maturity investments
Investment income from
available-for-sale financial assets
during the holding period
Investment income from disposal of
available-for-sale financial assets
Investment income from
held-for-trading financial assets
during the holding period
Dividend income from other equity
instrument investments during the
holding period
Interest income from debt
investments during the holding
period
Interest income from other debt
investments during the holding
period
Investment income from disposal of
held-for-trading financial assets
Investment income from disposal of
other equity instrument investments
Investment income from disposal of
debt investments
Investment income from disposal of
other debt investments
Total 55,488,448.65
Other description:
Description of dividend income from subsidiaries: in 2019, the Company’s wholly-owned
subsidiary, Shenzhen Appotronics Laser Technology Co., Ltd., distributed to the Company a
cash dividend amounting to RMB 46,000,000. As Shenzhen Appotronics Laser Technology
Co., Ltd. is a wholly-owned subsidiary included in the scope of the Company's consolidated
financial statements, the aforementioned distributed profits have been added to the net profits
disclosed in the Company’s financial statements in 2019 but not to the net profits disclosed in
the consolidated financial statements of the Company in 2019.
306 / 312
2019 Annual Report
6. Others
√Applicable □N/A
R&D expenses
In RMB
Item 2019 2018
Employee benefits 61,405,298.83 49,499,398.90
Material consumption expenses 17,246,073.81 16,877,135.28
Rent expense 8,730,216.56 3,100,298.35
Professional service fees 3,292,062.70 6,565,393.97
Depreciation and amortization fees 7,573,085.07 6,899,681.02
Patent fees 9,382,940.04 7,063,710.22
Other expenses 6,165,328.24 4,416,668.46
Total 113,795,005.25 94,422,286.20
XVIII. Supplementary information
1. Breakdown of non-recurring profit or loss for the current period
√Applicable □N/A
In RMB
Item Amount Description
Profit or loss on disposal of non-current -3,214,488.06
assets
Tax refunds or reductions with ultra
vires approval or without official
approval documents
Government grants recognized in profit 25,782,112.48
or loss (other than grants which are
closely related to the Company's
business and are either in fixed amounts
or determined under quantitative
methods in accordance with the national
standard)
Income earned from lending funds to
non-financial institutions and
recognized in profit or loss
The excess of attributable fair value of
identifiable net assets over the
consideration paid for the acquisition of
subsidiaries, associates and joint
ventures
Profit or loss on exchange of
307 / 312
2019 Annual Report
non-monetary assets
Profit or loss on entrusted investments
or assets management
Impairment losses on assets due to force
majeure events, e.g. natural disasters
Profit or loss on debt restructuring
Entity restructuring expenses, e.g.,
expenditure for layoff of employees,
integration expenses, etc.
Profit or loss attributable to the
evidently unfair portion of transaction
price, being transacted price in excess of
fair transaction price, of a transaction
Net profit or loss of subsidiaries from 23,321,528.06
the beginning of the period up to the
business combination date recognized
as a result of business combination of
enterprises involving enterprises under
common control
Profit or loss arising from contingencies
other than those related to normal
operating business
Profit or loss on changes in the fair 9,552,990.98
value of held-for-trading financial
assets, derivative financial assets,
held-for-trading financial liabilities and
derivative financial liabilities and
investment income on disposal of
held-for-trading financial assets,
derivative financial assets,
held-for-trading financial liabilities,
derivative financial liabilities and other
debt investments, other than those used
in the effective hedging activities
relating to normal operating business
Reversal of provision for accounts 238,836.00
receivable that are tested for impairment
losses individually
Profit or loss on entrusted loans
Profit or loss on changes in the fair
value of investment properties that are
subsequently measured using the fair
value model
Effects on profit or loss of one-off
adjustment to profit or loss for the
period according to the requirements of
laws and regulations in respect of tax,
accounting, etc.
Custodian fees earned from entrusted
308 / 312
2019 Annual Report
operation
Other non-operating income and 2,981,778.07
expenses other than the above
Other profit or loss items that meet the
definition of non-recurring profit or loss
Income tax effects -4,532,639.92
Effects attributable to minority interests -1,891,481.86
Total 52,238,635.75
It is required to specify the reason for defining items as non-recurring profit or loss items
according to Information Disclosure and Presentation Rules for Companies Making Public
Offering of Securities No. 1－Non-recurring Profit or Loss, and reasons for defining
non-recurring profit or loss items illustrated in Information Disclosure and Presentation
Rules for Companies Making Public Offering of Securities No. 1－Non-recurring Profit or
Loss as recurring profit or loss items.
□Applicable √N/A
2. Return on net assets and earnings per share
√Applicable □N/A
Weighted Earnings per share
Profit for the reporting
average return Basic earnings per Diluted earnings
period
on net assets (%) share per share
Net profit attributable to 14.84 0.45 0.45
ordinary shareholders of the
Company
Net profit after deduction of 10.68 0.33 0.33
non-recurring profits or
losses attributable to
ordinary shareholders of the
Company
1.Calculation process of weighted average return on net assets:
Item Serial No. 2019
Net profit attributable to ordinary shareholders of the Company A 186,457,276.71
Non-recurring profit or loss B 52,238,635.75
Net profit after deduction of non-recurring profits or losses
C=A-B 134,218,640.96
attributable to ordinary shareholders of the Company
Opening balance of net assets attributable to ordinary
D 715,913,478.56
shareholders of the Company
Net assets increased due to issue of new shares or
debt-to-equity swap that are attributable to ordinary E 1,062,470,797.73
shareholders of the Company
Accumulated months from the month following the addition of
F 5
net assets to the end of the reporting period
Net assets reduced by repurchases or cash dividends that are
G
attributable to ordinary shareholders of the Company
Accumulated months from the month following the reduction
H
of net assets to the end of the reporting period
309 / 312
2019 Annual Report
Item Serial No. 2019
Effect of share-based payments on net assets I1 7,475,923.79
Accumulated months from the month following the
addition or reduction of net assets to the end of the J1 6
reporting period
Others
Effect of translation of financial statements
I2 2,242,360.85
denominated in foreign currencies on net assets
Accumulated months from the month following the
addition or reduction of net assets to the end of the J2 6
reporting period
Months of reporting period K 12
L= D+A/2+
Weighted average net assets E×F/K-G×H/K±I×J/ 1,256,697,424.95
K
Weighted average return on net assets M=A/L 14.84%
Weighted average return on net assets after deduction of
N=C/L 10.68%
non-recurring profit or loss
2. Calculation process of basic and diluted earnings per share
(1) Calculation process of basic earnings per share
Serial
Item 2019
No.
186,457,
Net profits attributable to ordinary shareholders of the Company A
276.71
52,238,6
Non-recurring profit or loss B
35.75
Net profits after deduction of non-recurring profits or losses 134,218,
C=A-B
attributable to ordinary shareholders of the Company 640.96
383,554,
Total shares at the beginning of the period D
411.00
Shares increased due to issue of new shares or debt-to-equity swap E 68,000,0
00.00
Accumulated months from the month following the addition of shares
F 5
to the end of the reporting period
Months of reporting period G 12
H=D+E
Weighted average number of outstanding ordinary shares 411,887,
×F/G
744.33
Basic earnings per share I=A/L 0.45
Basic earnings per share after deduction of non-recurring profit or loss J=C/L
0.33
(1) Calculation process of diluted earnings per share
Item Serial No. 2019
Net profits attributable to ordinary shareholders of
A 186,457,276.71
the Company
Effect of diluted potential ordinary shares on net
B
profit
310 / 312
2019 Annual Report
Item Serial No. 2019
Net profits after dilution attributable to ordinary
C=A-B 186,457,276.71
shareholders of the Company
Non-recurring profit or loss D 52,238,635.75
Net profits after dilution and deduction of
non-recurring profits or losses attributable to E=C-D 134,218,640.96
ordinary shareholders of the Company
Weighted average number of outstanding ordinary
F 411,887,744.33
shares
Weighted average number of ordinary shares
added to warrants, share options, and convertible G 306,196.26
bonds, etc.
Weighted average number of outstanding ordinary
H=F+G 412,193,940.59
shares after dilution
Diluted earnings per share M=C/H 0.45
Diluted earnings per share after deduction of
N=E/H 0.33
non-recurring profit or loss
3. Differences in accounting data under Chinese Accounting Standards and Oversea
Accounting Standards
□Applicable √N/A
4. Others
□Applicable √N/A
311 / 312
2019 Annual Report
Section XII List of Documents Available for Inspection
List of Documents 1. 2019 Financial and Accounting Statements with seals and
Available for signatures of the principal of the Company, the person in charge of
Inspection the accounting body and the chief accountant.
List of Documents 2. The Auditor’s Report with seals of Pan-China Certified Public
Available for Accountants (Special General Partnership) and seals and signatures
Inspection of the certified public accountant.
List of Documents 3. All original documents and announcements of the Company
Available for publicly disclosed in the websites designated by the Company as of
Inspection the reporting period.
List of Documents 4. The above-mentioned documents are prepared in: Office of the
Available for Board of Directors of Appotronics Corporation Limited
Inspection
Chairman of the Board of Directors: LI Yi
Approval for submission by the Board of Directors: April 29, 2020
Revised information
□Applicable √N/A
312 / 312
