SHENZHEN TELLUS HOLDING CO. LTD

Annual Report 2019

April 2020

Section I. Important Notice Contents and Interpretation

Board of Directors Supervisory Committee all directors supervisors and senior

executives of Shenzhen Tellus Holding Co. Ltd. (hereinafter referred to as the

Company) hereby confirm that there are no any fictitious statements misleading

statements or important omissions carried in this report and shall take all

responsibilities individual and/or joint for the reality accuracy and completion

of the whole contents.

Fu Chunlong Principal of the Company Lou Hong person in charge of

accounting works and Liu Yuhong person in charge of accounting organ

(accounting principal) hereby confirm that the Financial Report of Annual

Report 2019 is authentic accurate and complete.

All directors are attended the Board Meeting for report deliberation.

Securities Times Hong Kong Commercial Daily and Juchao Website

(www.cninfo.com.cn) are the media for information disclosure appointed by the

Company all information under the name of the Company disclosed on the

above said media shall prevail. Concerning the forward-looking statements with

future planning involved in the Report they do not constitute a substantial

commitment for investors and investors are advised to exercise caution of

investment risks.The profit distribution pre-plan deliberated and approved by the Board was:

distributed 0.42 Yuan (tax included) for every 10 shares held by whole

shareholders of the Company based on 431058320 shares in total 0 share bonus

(tax included) and no public reserve transfer into share capital.Content

Section I Important Notice Contents and Interpretation ............................................................ 2

Section II Company Profile and Main Financial Indexes ............................................................. 5

Section III Summary of Company Business ................................................................................ 10

Section IV Discussion and Analysis of Operation ......................................................................... 15

Section V Important Events .......................................................................................................... 40

Section VI Changes in shares and particular about shareholders ............................................... 57

Section VII Preferred Stock…………………………………………………… ...........................64

Section VIII Convertible Bond……………………………………………...................................65

Section IX Particulars about Directors SupervisorsSenior Executives and Employees .......... 66

Section X Corporate Governance ................................................................................................... 75

Section XI Corporate Bond ............................................................................................................. 85

Section XII Financial Report .......................................................................................................... 86

Section XIII Documents available for reference ...............................................................................Interpretation

Items Refers to Contents

CSRC Refers to China Securities Regulatory Commission

SZ Exchange Refers to Shenzhen Stock Exchange

Shenzhen Branch of SD&C Refers to

Shenzhen Branch of China Securities Depository & Clearing

Corporation Limited

Company the Company our Company Tellus

Group

Refers to Shenzhen Tellus Holding Co. Ltd.Reporting period this reporting period the year Refers to Year of 2019

Auto Industry and Trade Company Refers to Shenzhen Auto Industry and Trade Corporation

Zhongtian Company Refers to Shenzhen Zhongtian Industrial Co. Ltd.

GAC Refers to Gems & Jewelry Trade Association of China

Huari Company Refers to

Shenzhen Huari Toyota Auto Sales Co. Ltd Shenzhen SDG Huari

Auto Enterprise Co. Ltd.

Zung Fu Tellus Refers to Shenzhen Zung Fu Tellus Auto Service Co. Ltd.Tellus Starlight Refers to Anhui Tellus Starlight Jewelry Investment Co. Ltd.Tellus Starlight Jinzun Refers to Anhui Tellus Starlight Jinzun Jewelry Co. Ltd.Sichuan Channel Platform Company Sichuan

Jewelry Company

Refers to Sichuan Tellus Jewelry Tech. Co. Ltd.Xinglong Company Refers to Shenzhen Xinglong Machinery Mould Co. Ltd.Tellus Property Refers to Shenzhen SDG Tellus Property Management Co. Ltd.

SDG Refers to Shenzhen Special Development Group Co. Ltd.

Xinyongtong Tech. Company Refers to Shenzhen Xinyongtong Technology Co. Ltd.

Dongxiao Inspection Company Refers to Shenzhen Xinyongtong Dongxiao Auto. Inspection Co. Ltd.

Tellus Treasure Company Refers to Shenzhen Tellus Treasure Supply Chain Tech. Co. Ltd.

Dongfeng Company Refers to Shenzhen Dongfeng Motor Co. Ltd.

Section II Company Profile and Main Financial Indexes

I. Company information

Short form of the stock Tellus-A Tellus-B Stock code 000025 200025

Stock exchange for listing Shenzhen Stock Exchange

Name of the Company (in

Chinese)

深圳市特力(集团)股份有限公司

Short form of the Company

(in Chinese)

特力 A

Foreign name of the Company

(if applicable)

Shenzhen Tellus Holding Co.Ltd

Legal representative Fu Chunlong

Registrations add. 3/F Tellus Building Shui Bei Er Road Luohu District Shenzhen

Code for registrations add 518020

Offices add. 3/F-4/F Tellus Builsing Shui Bei Er Road Luohu District Shenzhen

Codes for office add. 518020

Company’s Internet Web Site www.tellus.cn

E-mail ir@tellus.cn

II. Person/Way to contact

Secretary of the Board Rep. of security affairs

Name Qi Peng Sun Bolun

Contact add.

3/F Tellus Building Shui Bei Er Road

Luohu District Shenzhen

3/F Tellus Building Shui Bei Er Road

Luohu District Shenzhen

Tel. (0755) 83989378 (0755) 83989339

Fax. (0755) 83989386 (0755) 83989386

E-mail ir@tellus.cn sunbl@tellus.cn

III. Information disclosure and preparation place

Newspaper appointed for information disclosure Securities Times (Shenzhen) and Hong Kong Commercial Daily(H.K.)

Website for annual report publish appointed by CSRC http://www.cninfo.com.cn

Preparation place for annual report Secretariat of the BOD of Shenzhen Tellus Holding Co. Ltd.IV. Registration changes of the Company

Organization code 91440300192192210U

Changes of main business since listing (if

applicable)

No changes during the period

Previous changes for controlling

shareholders (if applicable)

1. On 31 March 1997 the 159588000 state shares held by Shenzhen Investment

Management Co. Ltd. the only non-circulation shareholder were transfer to SDG;

total share capital of the Company was 220281600 shares while 159588000 state

shares held by SDG a 72.45% in total share capital. 2. On 4 January 2006 the

13717440 shares as the consideration of share merger reform were transfer to

account of A-shareholders from SDG. After share merger reform SDG holds 66.22% of

the total share capital of the Company. 3. On March 27 2015 the Company has

completed the non-public offering of A shares of 77000000 of which 6000000

shares are issued to the controlling shareholder - SDG and SDG holds 51.09% of the

Company's total shares after the issuance. 4. In 2016 SDG reduced part of the

company’s unrestricted outstanding shares by means of centralized bidding the

accumulatively reduced shareholdings accounted for 2% of the company’s total share

capital. As of the end of the reporting period SDG holds 49.09% of the Company’s

total shares and is still the controlling shareholder of the Company.V. Other relevant information

CPA engaged by the Company

Name of CPA Pan-China Certified Public Accountants (LLP)

Offices add. for CPA 6/F No.128 Xixi Rd. Xihu District Hangzhou Zhejiang Province

Signing Accountants Wang Huansen Qin Changming

Sponsor engaged by the Company for performing continuous supervision duties in reporting period

□Applicable √Not applicable

Financial consultant engaged by the Company for performing continuous supervision duties in reporting period

□ Applicable √ Not applicable

VI. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data or not

□ Yes √ No

2019 2018 Changes over last year 2017

Operating income (RMB) 571072893.90 414238778.96 37.86% 347237289.80

Net profit attributable to

shareholders of the listed

Company(RMB)

219669708.47 86924058.72 152.71% 66862772.68

Net profit attributable to

shareholders of the listed Company

after deducting non-recurring gains

and losses(RMB)

53738507.05 83286083.84 -35.48% 54431067.47

Net cash flow arising from

operating activities(RMB)

78911353.03 -6574979.97 -2093068.05

Basic earnings per share

(RMB/Share)

0.5096 0.2017 152.65% 0.2249

Diluted earnings per share

(RMB/Share)

0.5096 0.2017 152.65% 0.2249

Weighted average ROE 18.92% 8.63% 10.29% 7.20%

Year-end of 2019 Year-end of 2018

Changes over end of

last year

Year-end of 2017

Total assets (RMB) 1645782144.03 1658295531.00 -0.75% 1403314594.42

Net assets attributable to

shareholder of listed Company

(RMB)

1270965296.02 1050209537.35 21.02% 963259056.63

Total share capital of the Company as of the previous trading day before disclosure:

Total share capital of the Company as of the previous trading

day before disclosure(Share)

431058320

Fully diluted earnings per share based on new share capital

Preferred stock dividend paid 0

Fully diluted earnings per share calculated based on new

share capital(RMB/Share)

0.5096

VII. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report under both IAS (International

Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

2. Difference of the net profit and net assets disclosed in financial report under both foreign accounting

rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

3. Reasons for differences in accounting data under domestic and foreign accounting standards

□ Applicable √ Not applicable

VIII. Quarterly main financial index

In RMB

Q 1 Q 2 Q 3 Q 4

Operating income 119469426.49 158799312.84 147368783.52 145435371.05

Net profit attributable to

shareholders of the listed Company

18017619.19 26762329.41 19261241.23 155628518.64

Net profit attributable to

shareholders of the listed Company

after deducting non-recurring gains

and losses

15885705.01 24707654.71 17897653.01 -4752505.68

Net cash flow arising from

operating activities

2986868.23 24447191.07 30534366.60 20942927.13

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial

index disclosed in the Company’s quarterly report and semi-annual report

□ Yes √ No

IX. Items and amounts of non-recurring profit (gain)/loss

√Applicable □ Not applicable

Item 2019 2018 2017 Note

Gains/losses from the disposal of

non-current asset (including the write-off

that accrued for impairment of assets)

210897055.76 -4424801.74 5523267.93

Income from disposal

of Xinglong Equity

Governmental subsidy reckoned into current

gains/losses (not including the subsidy

enjoyed in quota or ration according to

national standards which are closely

relevant to enterprise’s business)

276907.09 3482.07 25753.22

An Industry support

funds received by

Sichuan Jewelry

Company

Fund possession cost reckoned into current

gains/losses charged from non-financial

business

47083.32 76041.64 76041.64

Gains/losses from entrust investment or

assets management

9611577.38 6606218.86

Gains/losses from contingency without

routine business concerned

-2225468.76

Except for effective hedge business relevant

to normal operation of the Company gains

and losses arising from fair value change of

tradable financial assets derivative financial

liabilities tradable financial liability and

derivative financial liability and investment

income from disposal of tradable financial

assets derivative financial liabilities

tradable financial liability derivative

financial liability and other debt investment

10684691.16 Financial income

Restoring of receivable a and contractual

assets impairment provision that tested

individually

935476.72 15000.00

Other non-operating income and expenditure

except for the aforementioned items

-744465.10 485180.13 690397.76

Other gain/loss that meet the definition of

non-recurring gain/loss

9378.94 Taxes refund

Less: Impact on income tax 55755620.55 -161206.61 59964.10

Impact on minority shareholders’

equity (post-tax)

419305.92 49242.45 445010.10

Total 165931201.42 3637974.88 12431705.21 --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies

Offering Their Securities to the Public --- Extraordinary Profit/loss and the items defined as recurring profit (gain)/loss according to

the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their

Securities to the Public --- Extraordinary Profit/loss explain reasons

□ Applicable √ Not applicable

Section III. Summary of Company Business

I. Main businesses of the Company in the reporting period

The main business of the Company during the reporting period was auto sales auto testing maintenance and

accessories sales; resource assets management and jewelry service business.

1. Auto sales auto testing maintenance and accessories sales: During the reporting period the company made

personnel structural reforms to Huari Company a holding subsidiary of the company through refined

management which alleviated corporate burdens significantly reduced the cost of human resources and laid a

good foundation for future development. At the same time through a series of measures such as comprehensively

strengthening market expansion insurance-linked drainage reconstruction of intelligent exhibition halls and

customer rest areas and other infrastructures the company’s performance was actively improved. In terms of car

sales Huari Company launched two new mid-to-high end models this year i.e. Avalon and Vellfire which

increased sales and achieved car sales revenue of 168.55 million yuan an increase of 37.89% over the same

period last year.

2. Resource assets management: In 2019 due to the slowdown of domestic and foreign economic development

and the complex economic situation the rental prices in overall market of Shenzhen were facing greater

downward pressure especially the commercial and plant rental prices were showing a downward trend. At the

same time due to the continued downturn in the market the willingness of the jewelry industry operators to open

new stores decreased significantly. In addition a large number of newly developed properties in the Shuibei area

have been put into use the company’s investment in properties held in this area faced severe challenges. Facing

the unfavorable situation on the one hand the company strengthened its management adopted more meticulous

and proactive business methods strengthened its service efforts maintained the large customers and performed

lease renewal work in advance to ensure stable rental rates. During the reporting period the first phase of the

Tellus Shuibei Jewelry Building was put into operation and the investment rate of towers and podiums reached

more than 90% merchants with large influence in the industry were introduced to settle in to ensure high

investment quality. On the other hand the company re-planed the packaging and reconstructed some old

properties enhanced the image and value of old properties made full use of the advantages of industry clusters

explored the company’s business layout and improved the level of resource assets management. Property leasing

and service income reached 161.19 million yuan an increase of 72.17% over the same period last year.

3. Jewelry service business: In 2019 China’s GDP growth slowed down and the downward pressure on economy

increased. Jewelry as an optional consumer product has been greatly affected by the economic downturn the

upstream jewelry merchants had a decrease in benefits due to the reduced customer purchases and the slowed

capital flow while in the middle and lower reaches of jewelry the terminal operators’ willingness to open new

stores decreased significantly and stop-loss measures such as closing stores accelerated and the industry

continued to make in-depth adjustments. During the reporting period the company’s jewelry regional channel

platform project Sichuan Jewelry Company continued to optimize and improve its existing business model

through in-depth exploration of retailer customers fully promoted the construction of IT platforms completed the

testing deployment and trial operation of optimized versions of supply chain systems retail systems and

wholesale systems and completed the development of the main body of the operation management system. At the

same time the company strengthened the construction of the big data center’s basic work and the data collection

and analysis and continuously improved the company’s risk control capabilities through data analysis and

conducted business under the premise of controllable risks. In the context of the overall decline of the jewelry

industry in order to reduce business risks Sichuan Jewelry Company proactively adopted various measures to

ensure stable operation it achieved jewelry business revenue of 193.38 million yuan throughout the year an

increase of 27.88% over the same period last year.II. Major changes in main assets

1. Major changes in main assets

Major assets Note of major changes

Equity assets

Book value of long-term equity investment as of 31 December 2019 amounting to

162178500 Yuan decreased 62466200 Yuan over that of period beginning with

27.81% down mainly due to the profit bonus from shareholding enterprise.

Fixed assets No major change

Intangible assets

Book value of intangible assets as of 31 December 2019 amounting to 50561200 Yuan

decreased 451100 Yuan over that of period beginning with 0.88% down mainly due to

the declined from land use right (Phase I of Tellus Shuibei Jewelry Building) transfer to

investment real estate and the increase of land premium for Tellus Jinzhuan Trading

Building (Phase II of Tellus Shuibei Jewelry Building).

Construction in progress

Book value of the construction in progress as of 31 December 2019 amounting to

47654400 Yuan an increase of 34810800 Yuan over that of period-begin with

271.04% up. Mainly due to the input for the preliminary project of Tellus Jinzhuan

Trading Building (Phase II of Shuibei Jewelry Building).Monetary fund

Book value of the monetary fund as of 31 December 2019 amounting to 428851600

Yuan an increase of 259339300 Yuan over that of period-begin with 152.99% up.Mainly due to the redemption of financial products and collection of equity transfer of

Xinglong Company.Tradable financial assets

Book value of the tradable financial assets as of 31 December 2019 amounting to

60486600 Yuan an increase of 60486600 Yuan over that of period-begin with

100.00% up. Mainly due to the adjustment for accounting item of financial products

based on new financial instrument standards.Account receivable

Book value of account receivable as of 31 December 2019 amounting to 112613200

Yuan an increase of 26508600 Yuan over that of period-begin with 30.79% up mainly

because the wholesale credit for jewelry from Sichuan Jewelry Company increased in the

period

Advance payment

Book value of advance payment as of 31 December 2019 amounting to 12683600 Yuan

an increase of 3571100 Yuan over that of period-begin with 39.19% up mainly due to

the vehicle and accessories procurement paid in advance to FAW-Toyota from Huari

Toyota increased.Other account receivable

Book value of other account receivable as of 31 December 2019 amounting to

44908500 Yuan increased 30425300 Yuan over that of period beginning with 210.07%

up mainly due to the profit bonus from shareholding enterprise Dongfeng Company and

Zung Fu Company

Inventory

Book value of inventory as of 31 December 2019 amounting to 21389600 Yuan

increased 9046700 Yuan over that of period beginning with 73.30% up mainly due to

the stock vehicle of Huari Company increased.

Assets held-for-sale

There are no assets held-for-sale as of 31 December 2019 decreased 85017300 Yuan

over that of period beginning with 100.00% down mainly due to the declined from 43%

equity of Xinglong Company transfer completed.Other current assets

Book value of other current assets as of 31 December 2019 amounting to 3404000

Yuan decreased 329028500 Yuan over that of period beginning with 98.98% down

mainly due to the redemption of financial products at period-end and decline by the

adjustment for accounting item of financial products based on new financial instrument

standards

Long-term deferred expenses

Book value of long-term deferred expenses as of 31 December 2019 amounting to

13606800 Yuan increased 7302200 Yuan over that of period beginning with 115.82%

up mainly due to the transfer-in from decoration of Innovation & Entrepreneurship Base

Deferred income tax assets

Book value of deferred income tax assets as of 31 December 2019 amounting to

8659000 Yuan decreased 15696100 Yuan over that of period beginning with 64.45%

down mainly resulting by the reversal of deductible temporary differences as previous

equity investment differences and impairment provision.Other non-current assets

Book value of other non-current assets as of 31 December 2019 amounting to 6889200

Yuan increased 3532200 Yuan over that of period beginning with 105.22% up mainly

due to the account paid in advance for decoration of Tellus Building

2. Main overseas assets

□ Applicable √ Not applicable

III. Core Competitiveness Analysis

1.Owns rich property resources provides stable business income and cash flow

The output value of Shenzhen jewelry accounts for more than 70% of the national jewelry industry and

Shuibei-Buxin area is the core gathering area of jewelry industry in Shenzhen its output value accounts for more

than 70% of the jewelry industry in Shenzhen.We has formed the largest cluster of gold jewelry enterprises in the

country covering the entire industry chain including raw material procurement production and processing and

wholesale sales and the economic and strategic position and the core aggregation effects of this area in jewelry

industry have remained stable for many years.

According to the “13th Five-Year” plan for urban renewal in Luohu District Shenzhen Shuibei-Buxin area will be

built into the jewellery fashion industrial zone of Luohu District Shuibei area is the international jewellery art

center and Buxin area is the jewellery intelligent high-end manufacturing center so as to form the Shuibei-Buxin

international jewellery eco-creative area. The company is the largest owner of the Tellus Gman Gold Jewellery

Industrial Park in Shuibei area Tellus Shuibei Jewellery Building phase I has been put into use and phase II

construction project has also been fully started. At the same time as the largest owner of land parcels 04 & 05 in

the urban renewal unit planning project of Buxin industrial zone the company will plan and construct an

innovative industrial project in line with the city district and the Company’s overall strategic layout in Buxin area

through the renovation method. The company will maintain the status of the largest owner of Shuibei and Buxin

areas and master the physical platform resource advantages of the core area of the jewelry industry.

At the same time the Company has a lot of property resources in various areas of Shenzhen on the basis of

maintaining the stability of the original leasing business the company will actively promote the improvement of

property quality and transform its old properties from the traditional method of simple lease to the direction of

property asset operation so as to fully enhance and tap the added value of the property brand bring stable business

income and cash flow to the company and provide a solid foundation for the company’s long-term development.

2. Make use of the advantages of status build industrial platforms and promote the development of the industry

In 2019 the release of the “Opinions of the State Council on Supporting Shenzhen to Build a Pioneering Socialist

Demonstration Zone with Chinese Characteristics” and the approval of the “Pilot Implementation Plan forShenzhen Regional State-owned Enterprises’ Comprehensive Reform” have created an unprecedented opportunity

for Shenzhen. As a state-owned holding enterprise group in Shenzhen Tellus Group has outstanding resource

advantages.In recent years due to the economic environment and other unfavorable factors the growth of the jewelry

industry has continued to slow down and the industry has continued to show a trend of bottom shocks and

undergo deep integration and shuffle. Under such circumstances the company’s identity advantages as a

state-owned enterprise and a listed company are highlighted it has good credit qualifications and credit

endorsement ability and also has good relations with government departments and effective communication

channels so that it can play the role of a platform enterprise in the jewelry industry aggregate the upstream and

downstream of the jewelry industry chain act as a bridge and bond among the government and the private jewelry

enterprises the overseas and the domestic suppliers and the distributors integrate industry needs solve industry

pain points and strive for various policy supports such as taxation trade and approval for industry enterprises

improve traditional model of the industry provide more comprehensive innovative services promote the healthy

development of the industry and achieve a win-win situation for all parties while achieving its own social

responsibility and rewarding the company’s shareholders.Section IV Discussion and Analysis of the Operation

I. Introduction

During the reporting period under the correct leadership of the party committee and the board of directors and

with the concerted efforts of management personnel and the joint efforts of all Tellus people Tellus Group upheld

the spirit of “fair diligent struggling and honest” striver optimized resource allocation intensively developed

existing businesses quickly advanced the implementation of various projects and ensured the smooth

implementation of the strategy. Significant results have been achieved in various tasks the total operating income

and profit of the whole year increased significantly on a year-on-year basis reaching a new high of nearly ten

years.① The first phase of Tellus Jewelry Building had a grand opening the investment rate of the towers and podiums

exceeded 90%. The introduction of jewelers with greater influence in the industry has increased the company’s

popularity in the industry and significantly increased the company’s operating income.② Tellus Gold and Diamond Trading Building namely the second phase project of Tellus Jewelry Building was

successfully put into construction. During the process of advancement the policy was reasonably controlled and

the capacity area was improved. At present the construction of the foundation pit and the main engineering piles

has been completed.③ Sichuan Jewelry Company thoroughly explored retail customers continuously optimized and improved

existing business models established and improved risk control systems strengthened data analysis capabilities

used data to control risks and stabilized business income.④ In order to reduce operating risks the retail platform project Tellus Xingguang Jinzun Company shut down.⑤ The dual creative base project has landed and 46 companies entrepreneurial teams and individuals have

settled. Currently it is still looking for innovative projects and will continue to provide value-added services and

cultivate high-quality innovative projects.

⑥ Deeply explored the extension of third-party integrated services for jewelry explored innovative business

models in practice and completed the investment approval of the Tellus Treasury supply chain project. The

project will create a third-party value-added service platform of jewelry industry that integrates precious metal

storage gold and diamond supply chain services and third-party safe deposit boxes and carries out gold supply

chain diamond supply chain safe deposit box and other businesses.⑦ The company strengthened the management of the participating companies urged some of the participating

companies to realize the undistributed profit dividends to recover cash and took an appropriate opportunity to

withdraw from the participating company Xinglong Company and received the entire equity transfer payment of

Xinglong Company which laid a solid foundation for the company’s key projects.

During the reporting period the company realized operating income of 571.07 million yuan increased by 156.83

million yuan compared with 414.24 million yuan in the same period of the previous year an increase of 37.86%.The main changes in revenue were ① The first phase of the Jewelry Building was comprehensively put into

operation this year and the revenue increased by 67.56 million yuan on a year-on-year basis an increase of

72.17%. ②Huari Company launched two new mid-to-high end models Avalon and Vellfire this year the sales

volume increased and the car sales revenue increased by 46.31 million yuan on a year-on-year basis an increase

of 37.89%.③ The scale of jewelry wholesale and retail business expanded this year and revenue increased by

42.16 million yuan on a year-on-year basis an increase of 27.88%. The total profit realized was 302.60 million

yuan an increase of 212.04 million yuan compared with 90.55 million yuan in the same period last year and the

net profit attributable to the parent company was 219.67 million yuan an increase of 132.75 million yuan from

86.92 million yuan in the same period of the previous year mainly due to the year-on-year increase in equity

transfer income. During the reporting period the company’s car sales income property leasing and service

income and jewelry service income all hit new highs in recent years and financing costs hit a record low.II. Main business analysis

1. Introduction

See the “I-Introduction” in “Discussion and Analysis of the Operation”

2. Revenue and cost

(1) Constitute of operation revenue

In RMB

2019 2018

y-o-y changes (+-)

Amount

Ratio in operation

revenue

Amount

Ratio in operation

revenue

Total operation

revenue

571072893.90 100% 414238778.96 100% 37.86%

According to industries

Auto sales 168551160.58 29.51% 122236609.61 29.51% 37.89%

Auto inspection and

maintenance and

accessories sales

47952488.50 8.40% 47153619.46 11.38% 1.69%

Property rental and

service

161185484.32 28.23% 93621443.04 22.60% 72.17%

Jewelry wholesale

and retails

193383760.50 33.86% 151227106.85 36.51% 27.88%

According to products

Auto sales 168551160.58 29.51% 122236609.61 29.51% 37.89%

Auto inspection and

maintenance and

accessories sales

47952488.50 8.40% 47153619.46 11.38% 1.69%

Property rental and

service

161185484.32 28.23% 93621443.04 22.60% 72.17%

Jewelry wholesale

and retails

193383760.50 33.86% 151227106.85 36.51% 27.88%

According to region

Shenzhen 377689133.40 66.14% 263011672.11 63.49% 43.60%

Anhui 4521763.87 0.79% 12849125.20 3.10% -64.81%

Sichuan 188861996.63 33.07% 138377981.65 33.41% 36.48%

(2) About the industries products or regions accounting for over 10% of the Company’s operating income

or operating profit

√Applicable □ Not applicable

In RMB

Operating

revenue

Operating cost Gross profit ratio

Increase/decrease

of operating

revenue y-o-y

Increase/decrease

of operating cost

y-o-y

Increase/decrease

of gross profit

ratio y-o-y

According to industries

Auto sales 168551160.58 156655616.45 7.06% 37.89% 34.32% 2.47%

Auto inspection

and maintenance

and accessories

sales

46766020.98 39663299.92 15.19% -0.82% 9.60% -8.06%

Property rental

and service

153247354.66 50778065.89 66.87% 78.71% 36.28% 10.81%

Jewelry

wholesale and

retails

193383760.50 181699948.40 6.04% 27.88% 30.23% -1.70%

According to products

Auto sales 168551160.58 156655616.45 7.06% 37.89% 34.32% 2.47%

Auto inspection

and maintenance

and accessories

sales

46766020.98 39663299.92 15.19% -0.82% 9.60% -8.06%

Property rental

and service

153247354.66 50778065.89 66.87% 78.71% 36.28% 10.81%

Jewelry

wholesale and

retails

193383760.50 181699948.40 6.04% 27.88% 30.23% -1.70%

According to region

Shenzhen 368564536.22 246591834.40 33.09% 44.46% 33.05% 11.20%

Anhui 4521763.87 4858397.11 -7.44% -64.81% -66.69% 6.07%

Sichuan 188861996.63 177346699.15 6.10% 36.48% 36.75% -0.18%

Under circumstances of adjustment in reporting period for statistic scope of main business data adjusted main business based on

latest one year’s scope of period-end

□ Applicable √ Not applicable

(3) Income from physical sales larger than income from labors

√ Yes □ No

Industries Item Unit 2019 2018 Y-o-y changes (+-)

Auto sales

Sales volume Set 1042 745 39.87%

Storage Set 108 64 68.75%

Reasons for y-o-y relevant data with over 30% changes

√Applicable □Not applicable

Sales volume increased mainly because in 2019 Huari Company launched two new medium and high-end models

as Avalon and Vellfire which have a better response in the market with sales increased.

Storage increase mainly because a large number of people buy cars and register vehicles for the early coming of

Spring Festival of 2019 there were many vehicles are not picked up at end of the year for the slow business

processing.

(4) Fulfillment of the Company’s signed significant sales contracts up to this reporting period

□ Applicable √ Not applicable

(5) Constitute of operation cost

Classification of industries

In RMB

Industries Item

2019 2018

Y-o-y changes

(+-) Amount

Ratio in operation

cost

Amount

Ratio in operation

cost

Auto sales Automobile 156655616.45 36.35% 116630283.37 35.09% 34.32%

Auto inspection

and maintenance

and accessories

sales

Accessory

maintenance and

detection

40564299.92 9.40% 36190699.86 10.89% 12.08%

Property rental

and service

Lease property

management and

other

52101447.87 12.09% 40006456.97 12.04% 30.23%

Jewelry operation

Retail and

wholesale of

jewelry

181699948.40 42.16% 139519914.92 41.98% 30.23%

Total 431021312.64 100.00% 332347355.12 100.00% 29.69%

Classification of products

In RMB

Products Item

2019 2018

Y-o-y changes

(+-) Amount

Ratio in operation

cost

Amount

Ratio in operation

cost

Auto sales Automobile 156655616.45 36.35% 116630283.37 35.09% 34.32%

Auto inspection

and maintenance

and accessories

sales

Accessory

maintenance and

detection

40564299.92 9.40% 36190699.86 10.89% 12.08%

Property rental

and service

Lease property

management and

other

52101447.87 12.09% 40006456.97 12.04% 30.23%

Jewelry operation

Retail and

wholesale of

jewelry

181699948.40 42.16% 139519914.92 41.98% 30.23%

Total 431021312.64 100.00% 332347355.12 100.00% 29.69%

(6) Whether the changes in the scope of consolidation in Reporting Period

√Yes □ No

Totally 16 enterprises included in consolidate statement for year of 2019 found more in the VI. Change of Consolidate Scope carry

in the annotation of financial statement in Auditing Report 2019 released on Juchao Website on the same date. One enterprise

increase in the consolidate statement by comparing with last year.

(7) Major changes or adjustment in business product or service of the Company in Reporting Period

□ Applicable √ Not applicable

(8) Major sales and main suppliers

Major sales client of the Company

Total top five clients in sales (RMB) 35362529.90

Proportion in total annual sales volume for top five clients 6.19%

Ratio of the sales from related parties in total annual sales

among the top five clients

0.00%

Information of top five clients of the Company

Serial Name Sales (RMB) Proportion in total annual sales

1 Client 1 7987838.74 1.40%

2 Client 2 7287047.67 1.28%

3 Client 3 7073415.00 1.24%

4 Client 4 6585916.21 1.15%

5 Client 5 6428312.28 1.13%

Total -- 35362529.90 6.19%

Other situation of main clients

□ Applicable √ Not applicable

Main suppliers of the Company

Total purchase amount from top five suppliers (RMB) 403709283.18

Proportion in total annual purchase amount for top five

suppliers

93.66%

Ratio of the purchase from related parties in total annual

purchase among the top five suppliers

0.00%

Information of top five suppliers of the Company

Serial Suppliers Procurement (RMB) Proportion in total annual procurement

1 Supplier 1 195008700.18 45.24%

2 Supplier 2 108172358.00 25.10%

3 Supplier 3 79030857.00 18.34%

4 Supplier 4 16488592.00 3.83%

5 Supplier 5 5008776.00 1.16%

Total -- 403709283.18 93.66%

Other notes of main suppliers of the Company

□ Applicable √ Not applicable

3. Expenses

In RMB

2019 2018

Increase/decrease

y-o-y

Note of major changes

Sales expense 23956102.30 19987406.50 19.86%

The costs of remuneration increased

for the implementation of

market-oriented recruitment from

Huari Company

Management expense 43668263.92 44231376.56 -1.27%

The costs of remuneration declined

from a year earlier due to the

implementation of market-oriented

recruitment of 2018 from the Group

Financial expense 4982765.55 6508114.19 -23.44%

Repayment of working capital loans by

the Company and the interest expenses

declined from a year earlier due to the

project loans repaid by Zhongtian

Company

4. R&D investment

□ Applicable √ Not applicable

5. Cash flow

In RMB

Item 2019 2018 Y-o-y changes (+-)

Subtotal of cash in-flow from

operation activity

668606354.87 446554238.53 49.73%

Subtotal of cash out-flow from

operation activity

589695001.84 453129218.50 30.14%

Net cash flow arising from

operating activities

78911353.03 -6574979.97

Subtotal of cash in-flow from

investment activity

2235119053.77 1283663305.04 74.12%

Subtotal of cash out-flow from

investment activity

1883237512.37 1261960622.90 49.23%

Net cash flow arising from

investment activity

351881541.40 21702682.14 1521.37%

Subtotal of cash in-flow from

financing activity

178020000.00 163082000.00 9.16%

Subtotal of cash out-flow from

financing activity

350992854.04 177155081.66 98.13%

Net cash flow arising from

financing activity

-172972854.04 -14073081.66

Net increased amount of cash

and cash equivalent

257820137.12 1054902.13 24340.19%

Main reasons for y-o-y major changes in aspect of relevant data

□Applicable √ Not applicable

Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company

√Applicable □Not applicable

Item 2019 2018

Y-o-y changes

(+-)

Note

Net cash flow arising from

operating activities

78911353.03 -6574979.97

The first phase of the Jewelry

Building was comprehensively put

into operation this year

Subtotal of cash in-flow from

investment activity

2235119053.77 1283663305.04 74.12%

The redemption of financial

products increased in the period and

received the equity transfer amount

of Xinglong Company and interest

Subtotal of cash out-flow from

investment activity

1883237512.37 1261960622.90 49.23%

Investment for financial products

increased and investment for Tellus

Jinzhuan Trading Building (Phase II

of Tellus Shuibei Jewelry Building).increased

Net cash flow arising from

investment activity

351881541.40 21702682.14 1521.37%

Receiving the equity transfer amount

of Xinglong Company and interest

Subtotal of cash in-flow from

financing activity

178020000.00 163082000.00 9.16%

New loans increased year-on-year

and minority shareholder’s

investment from Sichuan Jewelry

Company increased

Subtotal of cash out-flow from

financing activity

350992854.04 177155081.66 98.13%

Loan repayments increased

repayment of bank liquidity and

fixed loan principal and interest and

loans

Net cash flow arising from -172972854.04 -14073081.66 bank loan and loan repayment

financing activity amount increases year on year.III. Analysis of the non-main business

√Applicable □ Not applicable

In RMB

Amount Ratio in total profit Note Whether be sustainable

Investment income 240569654.98 79.50%

The 43% equity of Xinglong

Company was transferred

completed in the year

210.68 million yuan was

recognized as income.N

Gain/loss of fair

value changes

477394.67 0.16%

Change of the fair value for

un-matured financial

products

N

Assets impairment -608190.07 0.20%

Reversal of bad debt

reserves that accrual for

Xinglong equity loans and

the bad debt reserves for

intercourse funds are

reversed for the termination

of business from Tellus

Starlight Jinzun Company

N

Non-operation

revenue

304620.63 0.10%

Gains from retirement of

non-current assets and

overdue fine etc.N

Non-operation

expenditure

1049085.73 0.35%

Losses from retirement of

non-current assets and the

lease liquidated damages

recognized for off-lease in

advance of Tellus Starlight

Jinzun Company

N

IV. Assets and liability

1. Major changes of assets composition

In RMB

Year-end of 2019 Year-begin of 2019 Ratio

changes

Notes of major

changes Amount Ratio in total assets Amount Ratio in total assets

Monetary fund 428851606.04 26.06% 170235668.19 10.26% 15.80%

Account

receivable

112613224.27 6.84% 86104660.51 5.19% 1.65%

Inventory 21389602.83 1.30% 12342854.40 0.74% 0.56%

Investment real

estate

554599503.55 33.70% 503922413.70 30.37% 3.33%

Long-term equity

investment

162178544.05 9.85% 224644766.21 13.54% -3.69%

Fix assets 107119796.59 6.51% 112674017.53 6.79% -0.28%

Construction in

process

47654393.55 2.90% 12843571.97 0.77% 2.13%

Short-term loans 143232810.41 8.63% -8.63%

Long-term loans 34934887.55 2.11% -2.11%

Assets held for

sale

85017251.77 5.13% -5.13%

Other current

assets

60486575.34 3.68% 331523546.74 19.98% -16.3%

Taxes payable 71425267.61 4.34% 9377393.57 0.57% 3.77%

Other account

payable

101266802.49 6.15% 250198878.69 15.08% -8.93%

2. Assets and liability measured by fair value

√Applicable □Not applicable

In RMB

Items

Period-be

ginning

Gains/losses

of change of

fair value in

the period

Accumulative

changes of

fair value

reckoned into

equity

Impairmen

t accrual in

the period

Amount

of

purchase

in the

period

Amount

of sale

in the

period

Other changes Period-end

Financial assets

1. Tradable

financial assets

(excluding

derivative

financial assets)

60486575.34 60486575.34

2. Derivative

financial assets

3. Other creditor's

rights investment

4. Other equity

instruments

Investment

10176617.20 10176617.20

Subtotal of

financial assets

Investment Real

Estate

Productive

biological assets

Other

Above total 70663192.54 70663192.54

Financial

liabilities

Whether there have major changes on measurement attributes for main assets of the Company in report period or not

□ Yes √No

Explanation of major changes on measurement attributes for main asset and its impacts on operation results and financial status

3. Right of the assets restrained till end of the Period

Not applicable

found more in the V. (IV) An asset whose ownership or use is restricted carry in the annotation of financial statement in Auditing

Report 2019 released on Juchao Website on the same date.V. Investment

1. Overall situation

√Applicable □Not applicable

Investment amount in the period (RMB)

Investment amount at same period of last

year (RMB)

Changes

169530000.00 168971900.00 0.33%

2. The major equity investment obtained in the reporting period

√Applicable □Not applicable

In RMB

Name

of

investe

d

compan

y

Princip

al

busines

s

Method

of

investm

ent

Amoun

t of

investm

ent

Shareh

olding

Capital

sources

Partner

s

Term of

investm

ent

Type of

product

s

Status

as of

the

balance

sheet

date

Expecte

d return

Current

investm

ent

profit

and

loss

Whethe

r

litigatio

n

Date of

disclos

ure (if

applica

ble

)

Index

of

disclos

ure (if

applica

ble

)

Shenzh

en

Tellus

Treasur

e

Supply

Chain

Tech.

Co.

Ltd.Purchas

e sales

and

leasing

of gold

jewelry

and

preciou

s metal

product

s

coffer

lease

and

wareho

using

services

New

establis

hed

50000

000.00

100.00

%

Own

funds

N/A

No

fixed

deadlin

e

Purchas

e sales

and

leasing

of gold

jewelry

and

preciou

s metal

product

s

coffer

lease

and

wareho

using

services

Registr

ation

complet

ed

0.00

-11339

6.51

N

Found

more in

Notice

(No.:

31)

release

d on

Securiti

es

Times

Hong

Kong

Comme

rcial

Daily

and

Juchao

Website

27

Shenzh

en

Tellus

Chuang

ying

Tech.

Co.

Ltd.Jewelry

innovat

ion &

entrepr

eneursh

ip

Capital

Increas

ed

12000

000.00

100.00

%

Own

funds

N/A

To 30

June

2021

Jewelry

innovat

ion &

entrepr

eneursh

ip

Comple

ted the

changes

-87000

0.00

-1070

390.23

N

Found

more in

Notice

(No.:

68)

release

d on

Securiti

es

Times

Hong

Kong

Comme

rcial

Daily

and

Juchao

Website

Total -- --

62000

000.00

-- -- -- -- -- --

-87000

0.00

-1183

786.74

-- -- --

3. The major non-equity investment doing in the reporting period

√Applicable □Not applicable

In RMB

Project

Name

Investme

nt

Method

Invested

with

fixed

assets

(Y/N)

Industry

involved

in

Investme

nt

Projects

Investme

nt

Amount

in this

Reportin

g Period

Actual

Investme

nt

Amount

up to the

End of

Reportin

g Period

Capital

Source

Project

Schedule

Anticipat

ed

Income

Realized

Income

up to the

End of

Reportin

g Period

Reasons

for not

Reaching

the

Planned

Schedule

and

Anticipat

ed

Income

Date of

disclosur

e (if

applicabl

e

)

Index of

disclosur

e (if

applicabl

e

)

28

Phase II

of Tellus

Shuibei

Jewelry

Building

Self-built Y

Urban

renewal

pilot

project -

upgradin

g of the

gold

jewelry

industry

park

935300

00

106090

000

Raised

fund by

the

Compan

y

20.58% 0.00 0.00

Not

applicabl

e

2019-05-

28

Found

more in

Notice

(No.:

2)

released

on

Securitie

s Times

Hong

Kong

Commer

cial

Daily

and

Juchao

Website

Transfor

mation

&

upgradin

g project

of the

421

worksho

p in

Bagualin

g

Self-built Y

Redecora

tion

renovatio

n and

upgradin

g of the

worksho

p

140000

00

140000

00

Raised

fund by

the

Compan

y

46.67% 0.00 0.00

Not

applicabl

e

2019-03-

26

Found

more in

Notice

(No.:

6)

released

on

Securitie

s Times

Hong

Kong

Commer

cial

Daily

and

Juchao

Website

Total -- -- --

107530

000

120090

000

-- -- 0.00 0.00 -- -- --

4. Financial assets investment

(1) Securities investment

□ Applicable √ Not applicable

29

The Company had no securities investment in the reporting period.

(2) Derivative investment

□ Applicable √ Not applicable

The Company has no derivatives investment in the Period

5. Application of raised proceeds

□ Applicable √ Not applicable

The Company has no application of raised proceeds in the Period

VI. Sales of major assets and equity

1. Sales of major assets

□Applicable √Not applicable

The Company had no sales of major assets in the reporting period.

2. Sales of major equity

√Applicable □Not applicable

Counter

part

Equity

sold

Sales

day

Trading

price

(10

thousan

d Yuan)

Net

profit

contribu

ted by

the sold

equity

from

period-b

egin to

date for

sales (in

10

thousan

d Yuan)

Impact

on the

Compan

y

Ratio of

the net

profit

from

equity

sales

in total

net

profit of

the

Compan

y

Pricing

principa

l

Whether

it was a

related

transacti

on

(Y/N)

Relation

ship

with the

counter

party

Owners

hip

transferr

ed

complet

ely or

not

(Y/N)

Implem

ented on

schedul

e (Y/N)

explaine

d the

reasons

and

counter

measure

for not

complet

ed on

schedul

e

Disclos

ure day

Disclos

ure

index

30

Shenzhe

n Runhe

Unite

Investm

ent

Develop

ment

Co.

Ltd.

43%

equity

of

Shenzhe

n

Xinglon

g

Machin

ery

Mould

Co.

Ltd.

15 June

2018

28667 0

The

impact

on total

profit of

the

Compan

y

approxi

mately

amounte

d as

210.54

million

Yuan

72.16%

In

accorda

nce with

the

Assets

Apprais

al

Report

(Guozo

nglian

Ping

Bao Zi

920170

No.issued

by

Guozho

nglian

Land

Real

Estate

Assets

Apprais

al Co.

Ltd.- the

enterpri

se with

qualific

ation of

exercisi

ng

securitie

s and

futures

business

the

assessm

ent is

adopted

asset-ba

sed

N N/A Y

On

schedul

e

11 Oct.

2019

Notice

(No.:

7)

released

on

Securiti

es

Times

Hong

Kong

Comme

rcial

Daily

and

Juchao

Website

(www.c

ninfo.co

m.cn).31

VII. Analysis of main holding Company and stock-jointly companies

√Applicable □Not applicable

Particular about main subsidiaries and stock-jointly companies net profit over 10%

In RMB

Company

name

Type

Main

business

Register

capital

Total assets Net Assets

Operating

revenue

Operating

profit

Net profit

Shenzhen

Auto

Industry and

Trade

Corporation

Subsidi

ary

Sales of

auto and

accessorie

s

RMB

58.96

million

371059129.53 332301527.18 20661635.23 8693513.91 3013767.96

Shenzhen

SDG Huari

Auto

Enterprise

Co. Ltd.

Subsidi

ary

Auto

maintenan

ce and

production

and sales

of

accessorie

s

USD 5

million

72573962.20 24404833.16 38745157.90 -881988.55 -3089360.18

Shenzhen

Zhongtian

Industrial

Co. Ltd.

Subsidi

ary

Property

rental

RMB

366.2219

million

609604697.52 397315112.55 75637032.12 35439489.79 29623234.62

Shenzhen

Huari Toyota

Automobile

Sales Co. Ltd

Subsidi

ary

Auto sales

RMB 2

million

70989191.36 4195966.42 219302518.27 2710262.43 2099623.78

Shenzhen

Xinyongtong

Auto Vehicle

Inspection

Equipment

Co. Ltd.

Subsidi

ary

Manufactu

re of

inspection

equipment

for motor

vehicle

RMB

19.61

million

12631733.23 7854433.73 5372879.71 2225022.79 2135660.42

Shenzhen

Tellus

Xinyongtong

Automobile

Development

Co. Ltd

Subsidi

ary

Inspection

and repair

of motor

vehicle

RMB

32.90

million

82373581.53 62510074.57 13469910.73 8031527.80 6029940.85

32

Anhui Tellus

Starlight

Jewelry

Investment

Co. Ltd.

Subsidi

ary

Jewelry

sales

RMB 9.8

million

1050070.80 -1305792.00 4521763.87 -5164928.76 -5998228.76

Shenzhen

Tellus

Chuangying

Tech. Co.Ltd.Subsidi

ary

Property

rental

RMB 14

million

17227988.23 13373224.13 775506.85 -1070265.27 -1070390.23

Sichuan

Tellus

Jewelry Tech.

Co. Ltd.

Subsidi

ary

Jewelry

sales

RMB 150

million

165221011.49 163519977.52 188861996.63 10692798.70 7948058.00

Shenzhen

Zung Fu

Tellus Auto

Service Co.Ltd.Joint

stock

Compa

ny

Car sales

and

maintenan

ce

RMB 30

million

270537114.00 90241093.00

1146987875.0

0

39768334.00 30667317.00

Shenzhen

Dongfeng

Motor Co.Ltd.Joint

stock

Compa

ny

Manufactu

re and

maintenan

ce of

automobil

e

RMB 100

million

694315515.45 167760810.29 502282870.47 20239872.88 18741639.29

Shenzhen

Tellus Gman

Investment

Co. Ltd.

Joint

stock

Compa

ny

Investmen

t in

industry

property

manageme

nt and

leasing

RMB

123.70496

million

419980893.69 140310766.95 91769888.39 21705785.59 16232739.76

Particular about subsidiaries obtained or disposed in report period

√Applicable □Not applicable

Name Way to obtained and dispose in the Period

Impact on overall operation and

performance

33

Shenzhen Tellus Treasure Supply Chain

Tech. Co. Ltd.Newly established

An important part of the jewelry third party

operation service strategy of the Company

the Tellus Treasure Company is in progress

of construction in 2019 and with net profit

of -110000 yuan for 2019.Notes of holding and shareholding companies

During the reporting period the company did not disclose the information of important holding companies.

VIII. Structured vehicle controlled by the Company

Not applicable

IX. Future development prospects

(i) Industry pattern & development trend

In 2019 the economic situation at home and abroad was complex affected by factors such as the rise of trade

protectionism and increasing geopolitical uncertainty the global economic growth has continued to slow down

and growth in major world economic entities has been sluggish. In the domestic economy the downward pressure

on the economy increased due to factors such as Sino-US trade friction financial deleveraging and industrial

upgrading and transformation. China’s GDP increased by 6.1% over the previous year which was in line with

expectations but its economic growth slowed. At the beginning of 2020 the novel coronavirus pneumonia

epidemic spread rapidly across the country the country has adopted preventive measures such as home isolation

and prolonged resumption of labor and production which caused a significant impact on economic development

in the short term in the long run China’s economy will continue to maintain a stable and good trend.The gold jewelry industry experienced years of bottom shocks and the rise of consumption in 2017 brought

structural recovery in the industry. After entering 2019 due to the combined effects of the industry cycle and the

economic cycle gold consumption fell on a year-on-year basis the decline in benefits was obvious and domestic

gold consumption was generally weak. According to the “Operation of the Gold Industry in 2019” announced by

the Ministry of Industry and Information Technology the national gold consumption in 2019 was 1002.8 tons a

year-on-year decrease of 12.9% of which the consumption of gold jewelry was 676.2 tons a year-on-year

decrease of 8.2% the consumption of gold bars and gold coins was 225.8 tons a year-on-year decrease of 27%

the consumption in industry and other fields was 100.8 tons a year-on-year decrease of 4.9%. In the beginning of

2020 the outbreak of novel coronavirus pneumonia epidemic made a frontal attack on the Chinese jewelry retail

market the Spring Festival and Valentine’s Day were supposed to be the peak sales season of the year but the

sudden outbreak of epidemic caused the jewelry industry to be cold as an optional consumer product the jewelry

was greatly affected by the economic downturn. However in the long run due to the increase in per capita

disposable income of urban residents the growing size of young millennial consumers and emerging middle class

groups and the growth of risk aversion the gold jewelry industry has entered a recovery phase.34

(ii) Development strategy

Since formulated the strategic plan for transforming into a third-party integrated operation service provider in the

jewelry industry in 2014 Tellus has been steadily pushing forward its strategy in accordance with the established

strategy. In order to make the company bigger and stronger Tellus actively explored new industry fields while

deepening the jewelry’s third-party operation and service strategy. Based on its own resource endowment

conditions and capabilities Tellus chose to comply with the strategic development direction of the country and the

leading demonstration area developed relatively mature and stable industries that can make use of their own

characteristics and shareholders’ resources and implemented a diversified development strategy.

1. The third party operation service of jewelry

(1) Industry park services

Shuibei Jewelry Industrial Park Project: The physical platform is the core foundation of the company’s overall

strategy. As of the end of the reporting period the company’s projects located at the Tellus Gmen Gold Jewelry

Industrial Park included: the phase I project of Tellus Shuibei Jewellery Building built by the company’s

wholly-owned subsidiary and Shuibei Jinzuo Building project constructed by the joint venture are put into

operation; the phase II project of Tellus Shuibei Jewellery Building is under construction. Relying on the

above-mentioned physical platforms the company will give full play to its resource advantages make overall

planning for the business format and innovate the operation and management model provide basic property

services business butler services marketing promotion services talent services financial services testing

packaging catering innovation and entrepreneurship design creativity incubators warehousing gold leasing

supplying chain and other industries and services supporting value-added contents by grafting “Jinteli ICON”

jewelry business butler services innovation and entrepreneurship platforms Tellus treasury supplier chain

company projects create a jewelry industry innovation ecosystem and energize the transformation and

development of the jewelry industry.In the structural reform strategy and plan of the jewelry industry supply side in the Shuibei-Buxin area planned by

the Shenzhen Municipal Government and the Luohu District Government Buxin area is planned to be the jewelry

intelligent manufacturing base of Luohu District. The company has a number of properties in the Buxin industrial

zone and is the largest owner of the 04 and 05 subunits of the Buxin urban renewal unit planning project. The

company will actively promote the implementation of the reform project improve the quality of the company’s

assets and lay a solid foundation for the company’s strategic transformation under the established planning

scheme of Luohu District.

(2) Supplying chain services

①Sichuan Tellus Jewelry Tech. Co. Ltd.The company co-invested and established Sichuan Tellus Jewelry Tech. Co. Ltd. by cooperating with strong

distributors in Sichuan. After two years of operation Sichuan Jewelry Company has perfected and formed a set of

operating procedures and business process systems in line with the industry conditions in the business practice

the supply chain settlement supporting service system and the jewelry industry ERP system are operating the

35

company will continue to improve supply chain service management capabilities and conduct supply chain

service business under the premise of controllable risks.②Shenzhen Tellus Treasure Supply Chain Tech. Co. Ltd.

During the reporting period the company completed the investment approval of the Tellus Treasury supply chain

project and it would conduct jewelry supply chain services through Shenzhen Tellus Treasure Supply Chain Tech.

Co. Ltd. a wholly-owned subsidiary of Tellus which provides overall supply chain solutions and services for the

jewelry industry activates jewelry assets and injects vitality into upstream and downstream jewelry transactions

based on the real purchase and sales behavior of the jewelry industry chain and with the help of business data and

information resources of professional service platforms and based on data collection and analysis. By providing

supply chain services the company can get business revenue and industry data and expand influence.

(3) Innovative and entrepreneurial service

The innovation and entrepreneurship platform is based on the Tellus Jewelry Industrial Park integrates designers

metalworkers equipment manufacturers raw materials suppliers appraisers and trainers in the industrial chain

innovates flexible production and processing methods builds a design and entrepreneurship platform and

establish new industry structure to realize the upgrading of the jewelry industry. To this end Tellus Group has

invested in the creation of the “Jewelry Industry Innovation and Entrepreneurship Base” which is the first batch

of only licensed jewelry industry innovation and entrepreneurship base in Shenzhen.The innovative and entrepreneurial base will take “jewelers” “Jinchuang Tellus makers service” “new technologyand new materials R&D platform” “Xinggongchang designer platform” and “jewelry business incubationplatform” as five sub-platforms for construction accelerate the space renovation and upgrading

“Xinggongchang” innovative and entrepreneurial space jewelry industry financial incubation system new

technology and new materials laboratory jewelry testing platform and other key projects build the entire process

incubation acceleration system for the small and micro enterprises from makers’ training to entrepreneurship

entrepreneurial support product marketization to the development and listing of small and micro enterprises

which provides a rooted entrepreneurial platform for the makers so as to enhance the entrepreneurial success rate

of the jewelry industry and energize the industry innovation.

(4) Big data basic services

Sichuan Jewelry Company fully promoted the construction of IT platform completed the testing deployment and

trial operation of optimized versions of the supply chain system retail system and wholesale system and

completed the development of the main body of the operation management system. At the same time it

strengthened the construction of big data center basic work and the data collection and analysis continuously

improves data analysis capabilities and lays the foundation for big data basic services.

As a state-owned enterprise and a listed company the company has the public credibility and the ability to

36

effectively communicate and cooperate with government departments and can play the role of a third-party

platform enterprise in the jewelry industry it can rely on the free circulation concept of goods in the pilot

demonstration zone and the Greater Bay Area as a bridge and bond among the government and the private

jewelry enterprises the overseas and the domestic suppliers and the distributors it serves domestic and overseas

suppliers aggregates the upstream and downstream of the jewelry industry chain integrates industry needs solves

industry pain points provides bonded exhibition warehousing trading and other basic services for industry and

enterprise and coordinates government agencies to strive for various industry preferential policies to empower the

industry. At the same time transaction data is accumulated through business operations with the help of the

company’s IT platform operation management and data analysis capabilities it can provide a basis for the

company to develop big data services.

2. Exploration of new industry fields

Tellus will make use of its own resource advantages adhere to a diversified development pattern and seek to

create a “sustainable development ecosystem”. According to its own resources and management capabilities seek

and absorb industries that are in line with the strategic development direction of the country the Guangdong-Hong

Kong-Macao Greater Bay Area and the leading demonstration areas whose industry development is relatively

mature and stable and has a good industrial foundation and can make use of the platform of state-owned listed

companies so as to form an interaction with Tellus’ original resources or sectors to create new industrial growth

points for listed companies. New industries include but are not limited to ICT big data emerging information

industries new energy high-end equipment manufacturing big health biological industries energy conservation

and environmental protection and other industries. At present due to the complex economic situation and slowing

economic growth Tellus will seize the market opportunities brought by the economic cycle give play to its own

resources management capabilities and capital advantages cultivate and absorb high-quality assets in related

fields through the combination of multiple methods such as directly investing in mergers and acquisitions

initiating or participating in industrial funds and capital operations merge flows expand scale achieve qualitative

change and further strengthen the sustainable profitability of listed companies.(iii) The company’s 2020 annual business plan

2020 is the ending of the “13th Five-Year” strategic planning and the year to start drawing the blueprint of the

“14th Five-Year” strategic planning. Affected by the novel coronavirus pneumonia epidemic 2020 will be a more

difficult year. In order to cope with the epidemic the company has actively responded to the call of the Shenzhen

Municipal Government and the State-owned Assets Supervision and Administration Commission courageously

shouldered the social responsibility of state-owned enterprises shared the difficulties with customers and made

contributions to stable operations in Shuibei area and it has already waived rents exceeding 25 million yuan in the

first quarter which will have a corresponding impact on net profit in 2020. Facing the complicated situation the

company will face the difficulties strictly follow the work plan of the board of directors conscientiously

implement the “Double Hundred Actions” ensure the successful completion of the “13th Five-Year Plan” and

work hard to advance various tasks.1. in automobile business: on maintaining the scale of auto sales and service business actively exploit the

incremental new business model for Huari Company

2. Resource assets business: improve the quality of old properties scientifically design the layout of the business

transform and upgrade the original properties and improve asset quality and income levels.

3. Jewellery business:

(1) Continue to optimize and improve the business model of Sichuan Tellus Company clarify the path of

informatization construction face the systemic risks of the industry brought by the complex economic situation

and take risk control as the guide to strengthen risk control on the one hand and strengthen the supports on high

quality customers on the other hand to enable them to continue to survive and develop under difficult

circumstances and contribute to the stability of the industry.

(2) The first phase of the Tellus Shuibei Jewelry Building a key project on the physical platform has been opened.

It strives to maintain a stable and healthy daily operating status as a whole leverages various resource advantages

and actively explores innovative business models that rely on physical platforms to carry out multiple value-added

services so as to improve the comprehensive income of the project.

(3) Actively promote Tellus Gold and Diamond Trading Building namely the second phase of Shuibei Jewelry

Building and proceed steadily in accordance with the construction plan to ensure the progress of the project.

(4) Complete the overall construction of the Tellus Treasury supply chain project and pass the acceptance. The

safe deposit box business as a whole will be put into operation and the gold lease and jewelry supply chain

business will be developed at an appropriate time.

(5) Combine the formulation of the “14th Five-Year Plan” make use of its own resource advantages rely on the

industrial core regional advantages of Tellus Jewellery Building and Gold and Diamond Building and explore the

innovative platform project to offer bonded exhibition warehousing and trading functions based on the customs’

innovative bonded policies to empower the industry.

(6) For the urban renewal and transformation of the Buxin industrial zone strive for a clear industrial planning

opinion and submits the plan.

4. Management:

(1) Minimize the impact of the epidemic on operations firstly continue to implement various epidemic

prevention and control work “epidemic is the order prevention and control is the responsibility” and put the

epidemic prevention and control work in the first place; secondly plan ahead reverse the timetable and strive to

regain the progress of the work that has been affected by the epidemic situation; thirdly study the anti-epidemic

policies issued by the relevant units strive for subsidy support and reduce the impact of the epidemic on business

operations; fourthly strictly control general expenses develop a program to control expenditures increase income

and reduce expenditure.

(2) Actively promote the formulation of the “14th Five-Year Plan” establish a strategic management and control

mechanism clarify the path of special transformation thoroughly demonstrate strategic transformation projects

and optimize capital allocation through various methods such as the introduction of strategic investment the

introduction of funds and refinancing.(3) In terms of subordinate enterprise management continue to improve the management level optimize and

adjust the corporate structure maximize the value of participating companies exit loss-making enterprises clean

up zombie enterprises and improve corporate vitality.

(4) Establish and improve the talent training system increase the intensity of talent introduction deepen the

market-based exit mechanism and optimize the salary and performance management mechanism.

(5) Implement various tasks of informatization construction and complete the project construction of Sichuan IT

system phase III group operation decision analysis platform phase I and Gold Tellus information system in

accordance with the company’s overall business plan.

(6) Strengthen the construction of corporate culture further build the cultural orientation of “fair diligentstruggling and honest” striver and promote the healthy development of enterprises.

(7) Improve the quality of risk control work and promote the further normalization institutionalization and

standardization of company management.

(8) Thoroughly study and implement the spirit of the Nineteenth National Congress of the Communist Party of

China continue to carry out the “two studies one action” and anti-corruption work in a deep-going way and

strengthen the building of grassroots group organizations.

(9) Pay close attention to production safety implement the safety management responsibility system eliminate

hidden safety hazards and ensure safety without accidents.(iv) Possible risks and countermeasures

In the process of strategic transformation and project operation we will objectively and clearly recognize the

possible risks and take active and effective measures to prevent them:

1. Risks caused by fluctuations in the macroeconomic situation

Affected by Sino-U.S. trade friction financial deleveraging and other factors China’s economy has entered a

period of speed-shifting the domestic economic growth has slowed down and the pressure on industrial

restructuring has increased; at the beginning of 2020 the epidemic of novel coronavirus pneumonia quickly

spread to the whole country prevention and control measures such as home isolation and prolonged resumption of

work and production have been adopted which have had a significant impact on economic development. The

overall economic environment has brought an uncertain impact on the company’s operations.In response to this risk the company will actively take various preventive measures. The first is to continue to

strengthen management work hard improve efficiency through scientific management tap potential and increase

revenue and comprehensively improve the profitability of the original business; the second is to firmly promote

the pace of strategic transformation of the company promote the transformation of the project through innovative

business models expand the incremental market expand the scale of business look for new profit growth points

and provide a good foundation for the company’s long-term stable development.2. Risks brought about by transforming into new areas

In recent year the Company has made full efforts to promote the strategic goal of transformation several

transformation projects have been implemented successively however in the process of deeply ploughing into the

jewelry industry the company has become more and more aware of the difficulties and risks that may be faced in

the transformation to a new business area. The new field means a new business model technical characteristics

supply and demand relationship customer needs risk factors human resources requirements and how to identify

technological development capabilities how to meet the ever-changing individualized diversified needs of

emerging consumer groups and how to take the path of innovation and development in the more competitive

industry environment in the market segment are new challenges that the company needs to solve urgently and put

forward higher requirements for the company’s resource integration capabilities project management capabilities

and professional talent reserves in the layout of business transformation.In response to this risk on the one hand the company will continue to strengthen the transformation conviction

make full demonstration prudently make decisions elaborate management and carry out market-oriented

operation in accordance with the established overall development strategy and business strategy so as to ensure

that the transformation projects achieve good investment returns and actively respond to market competition; on

the other hand the company will steadily promote reform and innovation and take the opportunity of completing

the “Double Hundred Actions” to explore and improve the company’s long-term incentive mechanism mobilize

the enthusiasm of all employees improve the management level and operational efficiency of enterprises and

effectively enhance the core competitiveness of enterprises.X. Reception of research communication and interview

1. In the report period reception of research communication and interview

□ Applicable √Not applicable

No reception of research communication and interview in the Period

Section V. Important Events

I. Profit distribution plan of common stock and capitalizing of common reserves plan

Formulation Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during

the Reporting Period

√Applicable □Not applicable

The company attaches great importance to the reasonable returns for investors; the Articles of Association clearly

defines the standards and proportions of cash dividends the decision-making procedures and mechanisms and the

form of profit distribution. The company strictly complies with the Articles of Association and the resolutions of

the shareholders' general meeting the dividends standards and proportions are clear relevant decision-making

procedures and mechanisms are complete the independent directors are responsible and give play to their duties

the medium and small shareholders have the opportunities to express their opinions and demands and the

legitimate rights and interests of medium and small shareholders are fully maintained.Special description on cash dividend policy

Whether it meets the requirements of the Article of Association

or the Resolution of the General Meeting (Y/N):

Y

Whether the bonus standards and proportion is clear and

well-defined (Y/N):

Y

Whether has a completed relevant decision-making procedures

and mechanism (Y/N):

Y

Whether independent directors fulfill duties and play a due role

(Y/N):

Y

Minority shareholders whether has opportunity of full expression

and appeals the legal interest of the minority are being protected

totally (Y/N):

Y

As for the adjustment and change of cash bonus policy the

condition and procedures whether meets regulations and

transparent (Y/N):

Y

Distribution plan (pre-plan) for common stock dividends capitalization scheme of capital reserve (pre-plan) in latest three years

(including this period)

As of December 31 2017 the undistributed profit of the company’s consolidated statements was 97798595.80

yuan and the undistributed profit of the parent company was -1372862.05 yuan. The only subsidiary that had an

impact on the company’s consolidated undistributed net profit of more than 10% was Shenzhen Auto Industry and

Trade Corporation the main reason why the company had no dividend was because the company’s workingcapital was tight and there was no enough cash to pay dividends. According to Article 7.6.7 of the “Guidelines forStandardized the Operation of Listed Companies on Main Board of Shenzhen Stock Exchange (2015 Revised)

when a listed company formulates a profit distribution plan it should be based on the profit available for

distribution in the parent company’s statements. At the same time in order to avoid the situation of over-allocation

the company should determine the specific profit distribution ratio based on the lower profit available for

distribution either in the consolidated statement or in the parent company’s statement. Because the undistributed

profit of the parent company was negative the company did not distribute profits in 2017 nor increased the public

reserve fund.Profit distribution plan for year of 2018 are: carry out 4.5 additional shares for each 10 shares held by

shareholders are being converted by the capital reserve based on total share capital 297281600 shares on 31st

December 2018. Totally 133776720 shares are converted and the share capital of the Company increased to

431058320 after this conversion

Profit distribution plan for year of 2019 are: Distributed 0.42 yuan cash bonus (including tax) for every 10 shares

held by whole shareholders of the Company based on total share capital 431058320 shares on 31st December

2019 total 18104449.44 yuan are distributed in cash no bonus shares and no public reserve transfer into share

capital.

Cash dividend of common stock in latest three years (including the reporting period)

In RMB

Year for bonus

shares

Amount for

cash bonus (tax

included)

Net profit

attributable to

common stock

shareholders of

listed company

in

consolidation

statement for

bonus year

Ratio of the

cash bonus in

net profit

attributable to

common stock

shareholders of

listed company

contained in

consolidation

statement

Proportion for

cash bonus by

other ways(i.e.share

buy-backs)

Ratio of the

cash bonus by

other ways in

net profit

attributable to

common stock

shareholders of

listed company

contained in

consolidation

statement

Total cash

bonus

(including

other ways)

Ratio of the

total cash

bonus (other

ways included)

in net profit

attributable to

common stock

shareholders of

listed company

contained in

consolidation

statement

2019 年 18104449.44 219669708.47 8.24% 0.00 0.00% 18104449.44 8.24%

2018 0.00 86924058.72 0.00% 0.00 0.00% 0.00 0.00%

2017 0.00 66862772.68 0.00% 0.00 0.00% 0.00 0.00%

The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent Company is

positive but no plan of cash dividend proposed of common stock

□Applicable √Not applicable

II. Profit distribution plan and capitalizing of common reserves plan for the Period

√Applicable □Not applicable

Bonus shares for every 10-share (Share) 0

Dividends for every 10-share (RMB) (Tax

included)

0.42

Shares transferred from every 10 shares (Share) 0

Equity base of distribution plan (Share) 431058320

Cash bonus distribution (RMB) (Tax included) 18104449.44

Cash bonus distribution in other ways (i.e. share

buy-backs) (RMB)

0.00

Total cash bonus (including other ways) (RMB) 18104449.44

Distributable profits (RMB) 179916021.60

Ratio of total cash dividend (other ways included)

in total profit distribution

100%

Cash dividend

Explanation on profit distribution or capitalizing of capital reserves

Profit distribution plan for year of 2019 are: Distributed 0.42 yuan cash bonus (including tax) for every 10 shares

held by whole shareholders of the Company based on total share capital 431058320 shares on 31st December

2019 total 18104449.44yuan are distributed in cash no bonus shares and no public reserve transfer into share

capital.III. Implementation of commitment

1. Commitments that the actual controller shareholders related party buyers and the Company have

fulfilled during the reporting period and have not yet fulfilled by the end of reporting period

√Applicable □Not applicable

Commitments

Commitment

party

Type of

commit

ments

Content of commitments

Commitment

date

Comm

itment

term

Imple

ment

ation

Commitments for

share merger

reform

Commitments in

report of

acquisition or

equity change

Commitments in

assets

reorganization

Commitments

make in initial

public offering or

Shenzhen

Tellus Holding

Co. Ltd.

Other

The commitments to the fulfillment of information

disclosure about the Company business development

are as follows: except for the information has been

2014-10-17

Long-t

erm

Imple

menti

ng

re-financing disclosed publicly the Company has not had the

disclosed information about asset acquisition and

business development that has not been disclosed

within one year. In the future the Company shall

timely accurately and adequately disclose the relevant

information according to the progress of new business

and the related requirements.

Equity incentive

commitment

Other

commitments for

medium and small

shareholders

Shenzhen

Special

Development

Group Co.Ltd. (SDG)

Horizont

al

Competi

tion

In order to avoid the horizontal competition the

Company’s controlling shareholder Shenzhen SDG hasissued the “commitment letter about the avoidance ofhorizontal competition” on May 26 2014. The full

commitment letter is as follows: 1. The Company and

other enterprises controlled by the Company except

Tellus Group haven’t occupied in any business that

could substantially compete with the main businesses of

Tellus Group and have no horizontal competition

relationship with Tellus Group.

2014-05-26

Long-t

erm

Imple

menti

ng

Shenzhen

Tellus Holding

Co. Ltd.

Dividen

d

commit

ment

From 2017 to 2019 the Company’s profits will first be

used to cover the losses of previous years; after making

up for losses of previous years in the premise that the

Company’s profits and cash flow can meet the

Company's normal operations and long-term

development reward shareholders the Company will

implement positive profit distribution approaches to

reward the shareholders details are as follows: 1. The

Company’s profit distribution can adopt cash stock or

the combination of cash and stock or other methods

permitted by law. The foreign currency conversion rates

of domestically listed foreign shares dividend are

calculated according to the standard price of HK dollar

against RMB announced by People's Bank of China on

the first working day after the resolution date of the

shareholders' meeting. The Company prefers to adopt

the cash dividends to distribute profits. In order to

maintain the adaptability between capital expansion and

performance growth in the premise of ensuring the full

cash dividend distributions and the rationality of equity

scale and equity structure the Company can adopt the

stock dividend methods to distribute profits. 2.

According to the "Company Law" and other relevant

laws and the provisions of the Company’s "Articles of

2017-05-04

Imple

menti

ng

44

Association" following conditions should be satisfied

when the Company implements cash dividends: (1) the

Company's annual distributable profits (i.e. the after-tax

profits after making up for losses and withdrawing

accumulation funds) are positive value the

implementation of cash dividends will not affect the

Company's subsequent continuing operations; (2) the

audit institution issues the standard audit report with

clean opinion to the Company's annual financial report;

(3) the Company has no significant investment plans or

significant cash outlay (except for fund-raising

projects). Major investment plans or significant cash

outlay refer to: the accumulated expenditures the

Company plans to used for investments abroad

acquisition of assets or purchase of equipment within

the next 12 months reach or exceed 30% of the net

assets audited in the latest period. 3. In the premise of

meeting the conditions of cash dividends and ensuring

the Company’s normal operation and long-term

development the Company makes cash dividends once

a year in principle the Company’s board of directors

can propose the Company to make interim cash

dividends in accordance with the Company's

profitability and capital demand conditions. The

proportion of cash dividends in profits available for

distribution and in distribution of profits should meet

the following requirements: (1) in principle the

Company’s profits distributed in cash every year should

not be less than 10% of profit available for distribution

realized in the same year and the Company’s profits

accumulatively distributed in cash in the last three years

should not be less than 30% of the annual average profit

available for distribution realized in the last three years.

(2) if the Company’s development stage belongs to

mature stage and there is no significant capital

expenditure arrangement when distributing profits the

minimum proportion of cash dividends in this profit

distribution should be 80%; (3) if the Company’s

development stage belongs to mature stage and there

are significant capital expenditure arrangements when

distributing profits the minimum proportion of cash

dividends in this profit distribution should be 40%; (4)

if the Company’s development stage belongs to growth

stage and there are significant capital expenditure

45

arrangements when distributing profits the minimum

proportion of cash dividends in this profit distribution

should be 20%; when the Company's development

stage is not easy to be differed but there are significant

capital expenditure arrangements please handle

according to the preceding provisions. 4. On the

condition of meeting the cash dividend distribution if

the Company's operation revenue and net profit grow

fast and the board of directors considers that the

Company’s equity scale and equity structure are

reasonable the Company can propose and implement

the dividend distribution plans except proposing the

cash dividend distribution plans. When allocating stock

dividend every time the stock dividend per 10 shares

should be no less than 1 share. Stock allocation can be

implemented individually or in combination of cash

dividends. When confirming the exact amount of profit

distribution by stock the Company should fully

consider if the general capital after profit distribution by

stock matches with the Company’s current operation

scale and profit growth rate and consider the impact on

future financing so as to make sure the allocation plans

meet the overall interests of all shareholders.

Completed on

time(Y/N)

Y

As for the

commitment out

of the

commitment time

explain the

specific reasons

and further plans

Not applicable

2. Concerning assets or project of the Company which has profit forecast and reporting period still in

forecasting period explain reasons of reaching the original profit forecast

□Applicable √Not applicable

IV. Non-operational fund occupation from controlling shareholders and its related party

□ Applicable √ Not applicable

No non-operational fund occupation from controlling shareholders and its related party in period.V. Explanation from Board of Directors Supervisory Committee and Independent Directors

(if applicable) for “Qualified Opinion” that issued by CPA

□Applicable √Not applicable

VI. Particulars about the changes in aspect of accounting policy estimates and calculation

method compared with the financial report of last year

√Applicable □Not applicable

Since January 1 2019 the Company has implemented the revised Accounting Standards for Business Enterprises

No.22 - Recognition and Measurement of Financial Instruments Accounting Standards for Business Enterprises

No.23 - Transfer of Financial Assets and Accounting Standards for Business Enterprises No.24 - Hedging and

Accounting Standards for Business Enterprises No.37 - Presentation of Financial Instruments of the Ministry of

Finance adjusted the depreciation period of buildings and electronic equipment since April 1 2019 implemented

the revised Accounting Standards for Business Enterprises No.7 - Non-Monetary Assets Exchange since June 10

2019 and implemented the revised Accounting Standards for Business Enterprises No. 12 - Debt Restructuring

since June 17 2019 for details please refer to the Company’s “2019 Annual Audit Report” disclosed onwww.cninfo.com.cn on the same day Note III to the Financial Statements “Major Accounting Policies and

Accounting Estimates” (28) “Changes in Important Accounting Policies and Accounting Estimates”VII. Major accounting errors within reporting period that needs retrospective restatement

□ Applicable √ Not applicable

No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.VIII. Compare with last year’s financial report; explain changes in consolidation statement’s

scope

Totally 16 enterprises included in consolidate statement for year of 2019 found more in the VI. Change of consolidation scope in the

annotation of financial statement in Auditing Report 2019 released on Juchao Website on the same date. One enterprise increase in

the consolidate statement by comparing with last year.IX. Appointment and non-reappointment (dismissal) of CPA

Accounting firm appointed

Name of domestic accounting firm Pan-China Certified Public Accountants (LLP)

Remuneration for domestic accounting firm (in 10 thousand

Yuan)

72

Continuous life of auditing service for domestic accounting firm 0

Name of domestic CPA Wang Huansen Qin changming

Continuous life of auditing service for domestic accounting firm 0

Re-appointed accounting firms in this period

√ Yes □ No

Whether to change the accounting firm during the audit period

□ Yes √ No

Whether the change of accounting firm meets the approval procedure

√ Yes □ No

Detailed description of the re-appointed change of accounting firm

The company’s original auditing firm Ruihua Certified Public Accountants (LLP) (hereinafter referred to as

“Ruihua CPA”) adhered to the principle of independent auditing in its practice fairly and independently issued

audit opinions objectively fairly and accurately reflected the company’s financial situations and internal controls

and effectively fulfilled the responsibilities of the audit institution.In view of the fact that Ruihua CPA has provided audit services to the company for many years the company

intends to no longer hire Ruihua CPA as the company’s financial audit institution for 2019 and has communicated

with Ruihua CPA in advance regarding termination and related matters. The company expresses its sincere

gratitude to Ruihua CPA and its team for their diligence conscientiousness and good service during the provision

of audit services.

According to the company’s business development and future audit needs after careful consideration the

company intends to hire Pan-China Certified Public Accountants (LLP) as the company’s financial audit and

internal control audit institution for 2019 with a term of one year and the financial audit fee of 500000 yuan and

the internal control audit cost of 220000 yuan a total of 720000 yuan.

Appointment of internal control auditing accounting firm financial consultant or sponsor

√Applicable □ Not applicable

The Conpany appointed Pan-China Certified Public Accountants (LLP) as the internal control audit accounting

firm of the Company in 2019 with internal control audit of 220000 yuan.X. Particular about suspension and termination of listing after annual report disclosed

□Applicable √Not applicable

XI. Bankruptcy reorganization

□ Applicable √ Not applicable

No bankruptcy reorganization for the Company in reporting period

XII. Significant lawsuits and arbitration of the Company

√Applicable □Not applicable

found more in the XI. Commitments and contingencies in the annotation of financial statement in Auditing Report 2019 released on

Juchao Website on the same date.XIII. Penalty and rectification

□ Applicable √ Not applicable

No penalty and rectification for the Company in reporting period.XIV. Integrity of the Company and its controlling shareholders and actual controllers

√Applicable □ Not applicable

During the reporting period the Company and the controlling shareholders and the actual controllers have had

good reputation and there is no large amount due un-liquidated debt sentenced by the court.XV. Implementation of the Company’s stock incentive plan employee stock ownership plan

or other employee incentives

□ Applicable √ Not applicable

During the reporting period the Company has no stock incentive plan employee stock ownership plan or other employee incentives

that have not been implemented.XVI. Major related transaction

1. Related transaction with routine operation concerned

√Applicable □Not applicable

Related

party

Relation

ship

Type of

related

transacti

on

Content

of

related

transacti

on

Pricing

principl

e

Related

transacti

on price

Related

transacti

on

amount

(in 10

thousan

d Yuan)

Proporti

on in

similar

transacti

ons

Trading

limit

approve

d (in 10

thousan

d Yuan)

Whethe

r over

the

approve

d

limited

or not

(Y/N)

Clearin

g form

for

related

transacti

on

Availabl

e

similar

market

price

Date of

disclosu

re

Index

of

disclos

ure

Shenzhen

Zungfu

Tellus

Auto

Service

Co. Ltd

Director

supervis

or and

senior

executiv

es of the

Compan

y serves

director

of the

enterpri

se

Routine

related

transacti

on

Offering

property

renal

Referen

ce

market

pricing

504.76 504.76 3.11% 530 N

Agreed

by

contract

or

agreeme

nt

504.76

-02

Notice

No.:

11 on

Securiti

es

Times

Hong

Kong

Comme

rcial

Daily

and

Juchao

Website

(www.c

ninfo.c

om.cn)

Shenzhen

SDG

Tellus

Property

Managem

ent Co.Ltd.Subsidia

ry of the

controlli

ng

sharehol

der

Routine

related

transacti

on

Accept

property

manage

ment

services

Referen

ce

market

pricing

5.66 5.66 0.03% 10 N

Agreed

by

contract

or

agreeme

nt

5.66

Shenzhen

SDG

Petty

Loan Co.Ltd.Subsidia

ry of the

controlli

ng

sharehol

der

Routine

related

transacti

on

Offering

property

renal

and

manage

ment

service

Referen

ce

market

pricing

157.05 157.05 0.97% 140 Y

Agreed

by

contract

or

agreeme

nt

157.05

Jewelry

Park

Branch of

Shenzhen

SDG

Service

Co. Ltd.

Sub-sub

sidiary

of

controlli

ng

sharehol

der

Routine

related

transacti

on

Offering

property

renal

Referen

ce

market

pricing

101.45 101.45 0.62% 117 N

Agreed

by

contract

or

agreeme

nt

101.45

Shenzhen

SDG

Engineeri

ng

Managem

ent Co.Ltd

Subsidia

ry of the

controlli

ng

sharehol

der

Routine

related

transacti

on

Accept

engineer

ing

supervis

ion

service

Referen

ce

market

pricing

35.47 35.47 0.67% 43 N

Agreed

by

contract

or

agreeme

nt

35.47

50

Jewelry

Park

Branch of

Shenzhen

SDG

Service

Co. Ltd.

Sub-sub

sidiary

of

controlli

ng

sharehol

der

Routine

related

transacti

on

Accept

services

such as

clean

greening

and

transfor

mation

Referen

ce

market

pricing

33.60 33.60 0.63% 36 N 33.60

Shenzhen

SDG

Tellus

Property

Managem

ent Co.Ltd.Subsidia

ry of the

controlli

ng

sharehol

der

Routine

related

transacti

on

Accept

property

manage

ment

services

Referen

ce

market

pricing

1360.9

6

1360.9

6

25.68% 1370 N

Agreed

by

contract

or

agreeme

nt

1360.9

6

Total -- -- 2198.95 --

2220.5

2

-- -- -- -- --

Detail of sales return with major

amount involved

N/A

Report the actual implementation of

the daily related transactions which

were projected about their total

amount by types during the reporting

period (if applicable)

Performing normally

Reasons for major differences

between trading price and market

reference price

Not applicable

2. Related transactions by assets acquisition and sold

□ Applicable √ Not applicable

No related transactions by assets acquisition and sold for the Company in reporting period.

3. Main related transactions of mutual investment outside

□ Applicable √ Not applicable

No main related transactions of mutual investment outside for the Company in reporting period.

4. Contact of related credit and debt

√Applicable □Not applicable

Whether the Company had non-operating contact of related credit and debt

51

√ Yes □ No

Debts payable to related party

Related party Relationship Causes

Balance at

period-begin

(10 thousand

Yuan)

Current

newly added

(10 thousand

Yuan)

Current

recovery

(10 thousand

Yuan)

Interest rate

Current

interest

(10 thousand

Yuan)

Balance at

period-end

(10 thousand

Yuan)

Shenzhen

Special

Development

Group Co.Ltd. (SDG)

Controlling

shareholders

Loan

principal for

Hurari

Company

1719 19 19 1738

Shenzhen

Special

Development

Group Co.Ltd. (SDG)

Controlling

shareholders

Loan

principal for

Hurari

Company

589 289 300

Impact on operation results

and financial status

Total profit decreased 190000 Yuan due to the interest expenses increased in the Year

5. Other major related transactions

□Applicable √Not applicable

No other major related transaction in Period

XVII. Significant contract and implementations

1. Trusteeship contract and leasing

(1) Trusteeship

□Applicable √Not applicable

No trusteeship for the Company in reporting period

(2) Contract

□ Applicable √ Not applicable

No contract for the Company in reporting period

(3) Leasing

□ Applicable √ Not applicable

No leasing for the Company in reporting period

2. Major guarantees

√Applicable □Not applicable

(1) Guarantees

In 10 thousand Yuan

Particulars about the external guarantee of the Company and its subsidiary (Barring the guarantee for subsidiaries)

Name of the Company

guaranteed

Related

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening

Actual

guarantee

limit

Guarantee

type

Guarantee

term

Implemen

ted (Y/N)

Guarante

e for

related

party

(Y/N)

Shenzhen Zungfu

Tellus Auto Service

Co. Ltd

2014-09-30 3500 2007-04-17 3500 Pledged

To the expire

date of joint

venture

contract

N Y

Total approving external guarantee

in report period (A1)

0

Total actual occurred

external guarantee in report

period (A2)

3500

Total approved external guarantee

at the end of report period ( A3)

3500

Total actual balance of

external guarantee at the

end of report period (A4)

3500

Guarantee of the Company for subsidiaries

Name of the Company

guaranteed

Related

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening

Actual

guarantee

limit

Guarantee

type

Guarantee

term

Implemen

ted (Y/N)

Guarante

e for

related

party

(Y/N)

Total amount of approving

guarantee for subsidiaries in report

period (B1)

0

Total amount of actual

occurred guarantee for

subsidiaries in report period

(B2)

0

Total amount of approved

guarantee for subsidiaries at the

end of reporting period (B3)

0

Total balance of actual

guarantee for subsidiaries at

the end of reporting period

(B4)

0

Guarantee of the subsidiaries for subsidiaries

Name of the Company

guaranteed

Related

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening

Actual

guarantee

limit

Guarantee

type

Guarantee

term

Implemen

ted (Y/N)

Guarante

e for

related

party

(Y/N)

Total amount of approving

guarantee for subsidiaries in report

period (C1)

0

Total amount of actual

occurred guarantee for

subsidiaries in report period

(C2)

0

Total amount of approved

guarantee for subsidiaries at the

end of reporting period (C3)

0

Total balance of actual

guarantee for subsidiaries at

the end of reporting period

(C4)

0

Total amount of guarantee of the Company (total of three above mentioned guarantee)

Total amount of approving

guarantee in report period

(A1+B1+C1)

0

Total amount of actual

occurred guarantee in report

period (A2+B2+C2)

3500

Total amount of approved

guarantee at the end of report

period (A3+B3+C3)

3500

Total balance of actual

guarantee at the end of

report period (A4+B4+C4)

3500

Including:

Amount of guarantee for shareholders actual controller and its

related parties (D)

0

The debts guarantee amount provided for the guaranteed parties

whose assets-liability ratio exceed 70% directly or indirectly (E)

0

Proportion of total amount of guarantee in net assets of the

Company exceed 50% (F)

0

Total amount of the aforesaid three guarantees (D+E+F) 0

Explanations on possibly bearing joint and several liquidating

responsibilities for undue guarantees (if applicable)

N/A

Explanations on external guarantee against regulated procedures

(if applicable)

N/A

Explanation on guarantee with composite way

(2) Guarantee outside against the regulation

□Applicable √Not applicable

No guarantee outside against the regulation in Period.

3. Entrust others to cash asset management

(1) Trust financing

√Applicable □Not applicable

Trust financing in the reporting period

In 10 thousand Yuan

Type Capital resources Amount for entrust Balance un-expired Overdue amount

Bank financing product Own funds 36488.27 6000 0

Details of the single major amount or high-risk trust investment with low security poor fluidity and non-guaranteed

□Applicable √Not applicable

Entrust financial expected to be unable to recover the principal or impairment might be occurred

□Applicable √Not applicable

(2) Entrusted loans

□ Applicable √ Not applicable

The Company had no entrusted loans in the reporting period.

4. Other material contracts

□ Applicable √ Not applicable

No other material contracts for the Company in reporting period

XVIII. Social responsibility

1. Fulfill social responsibility

The Company has always taken the shareholders’ return employees’ achievements and social feedback as its own

duty. We adheres to the principle of fairness and actively safeguards the legitimate rights and interests of

shareholders; actively advocates achieving the self-worth while realizing the enterprise value and creates a

working environment that the enterprise cares for employees and employees love the enterprise so as to have a

harmonious development together; actively returns to the society and the public and commits itself to achieve the

harmonious and sustainable development of the Company and society.

2. Performance of taking targeted measures in poverty alleviation

(1) Targeted measures in poverty alleviation

During the period the Company participates in the targeted measures in poverty alleviation for Libai Village

Shangguang Town Dongyuan County Heyuan City Guangdong Province.

(2) Annual poverty alleviation in the Year

The Company is concerned about the mountainous areas takes the initiative to assume social responsibilities for

poverty alleviation. According to the arrangement the Company is responsible for the hard bottoming and

widening of village roads and the hard bottoming of roads for transporting of Li Bai village. The project has begun

on December 29 2017 currently the project has completed. After the project is completed it will greatly facilitate

the production and transportation of Li Bai villagers and the “difficulties in roads” that have plagued the villagers

for many years will be thoroughly resolved.(3) Follow-up of targeted poverty alleviation

Expansion and repair the road in Li Bai village

3. Environmental protection

The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department

No

XIX. Explanation on other significant events

□ Applicable √ Not applicable

The Company had no explanation on other significant events in the reporting period.XX. Significant event of subsidiary of the Company

□Applicable √Not applicable

Section VI. Changes in Shares and Particulars about Shareholder

I. Changes in Share Capital

1. Changes in Share Capital

In Share

Before change Increase/decrease in this time (+ - ) After change

Amount Ratio

New

shares

issued

Bonus

share

Capitalization

of public

reserve

Othe

r

Subtotal Amount Ratio

I. Restricted shares 0 0.00% 0 0 0 0 0 0 0.00%

1. State holding 0 0.00% 0 0 0 0 0 0 0.00%

2. State-owned corporation

shares

0 0.00% 0 0 0 0 0 0 0.00%

3. Other domestic shares 0 0.00% 0 0 0 0 0 0 0.00%

Including: domestic legal

person’s shares

0 0.00% 0 0 0 0 0 0 0.00%

Domestic natural

person’s shares

0 0.00% 0 0 0 0 0 0 0.00%

4. Foreigner’s shares 0 0.00% 0 0 0 0 0 0 0.00%

Including: foreign

corporation shares

0 0.00% 0 0 0 0 0 0 0.00%

Foreign natural

person’s shares

0 0.00% 0 0 0 0 0 0 0.00%

II. Un-restricted shares 297281600 100.00% 0 0 133776720 0 133776720 431058320 100.00%

1. RMB ordinary shares 270881600 91.12% 0 0 121896720 0 121896720 392778320 91.12%

2. Domestically listed foreign

shares

26400000 8.88% 0 0 11880000 0 11880000 38280000 8.88%

2. Foreign shares listed

aboard

0 0.00% 0 0 0 0 0 0 0.00%

3. Other 0 0.00% 0 0 0 0 0 0 0.00%

III. Total shares 297281600 100.00% 0 0 133776720 0 133776720 431058320 100.00%

Reasons for share changed

√Applicable □Not applicable

Profit distribution plan for year of 2018 are: carry out 4.5 additional shares for each 10 shares held by shareholders are being

converted by the capital reserve based on total share capital 297281600 shares on 31st December 2018. Totally 133776720 shares

are converted and the share capital of the Company increased to 431058320 after this conversion. The profit distribution plan was

implemented on 17 May 2019.

Approval of share changed

√Applicable □Not applicable

On 1 April 2019 the Profit Distribution Plan for year of 2018 was deliberated and approved by 2nd session of 9th BOD and 4th session

of 9th Supervisory Committee that is carry out 4.5 additional shares for each 10 shares held by shareholders are being converted by

the capital reserve based on total share capital 297281600 shares on 31st December 2018. totally 133776720 shares are converted

and the share capital of the Company increased to 431058320 after this conversion. The above mentioned Plan has deliberated and

approved by Shareholders General Meeting of 2018 and implemented on 17 May 2019.Ownership transfer of share changed

√Applicable □Not applicable

Total 133776720 shares are converted from public reserves including 121896720 A-share which has reckoned into the security

account of A-share of shareholders directly on 15 May 2019; and 11880000 B-share which has reckoned into the security account of

B-share of shareholders directly on 17 May 2019.

Progress of shares buy-back

□Applicable √Not applicable

Implementation progress of the reduction of repurchases shares by centralized bidding

√Applicable □Not applicable

Influence on the financial indexes of net assets per share attributable to common shareholders of Company in latest year and period

□ Applicable √ Not applicable

Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators

□ Applicable √ Not applicable

2. Changes of restricted shares

□ Applicable √ Not applicable

II. Securities issuance and listing

1. Security offering (without preferred stock) in Reporting Period

□Applicable √Not applicable

2. Changes of total shares and shareholders structure as well as explanation on changes of assets and

liability structure

□Applicable √Not applicable

3. Current internal staff shares

□ Applicable √ Not applicable

III. Particulars about shareholder and actual controller of the Company

1. Amount of shareholders of the Company and particulars about shares holding

In Share

Total common

stock

shareholders in

reporting

period-end

52691

Total common

stock

shareholders at

end of last month

before annual

report disclosed

48656

Total preference

shareholders with

voting rights

recovered at end of

reporting period (if

applicable) (found

in note 8)

0

Total preference

shareholders with

voting rights

recovered at end

of last month

before annual

report disclosed

(if applicable)

(found in note 8)

0

Particulars about shares held above 5% by shareholders or top ten shareholders

Full name of

Shareholders

Nature of

shareholder

Proportio

n of

shares

held

Total

shareholders

at the end

of report

period

Changes in

report period

Amount of

restricted

shares

held

Amount of

un-restricted

shares held

Number of share

pledged/frozen

State of

share

Amount

Shenzhen Special

Development

Group Co. Ltd.

(SDG)

State-owned

corporation

49.09% 211591621 0 0 211591621 0

Shenzhen Capital

Fortune Jewelry

Industry

Investment

Enterprise (LP)

Domestic non

state-owned

corporate

17.89% 77096871 -17155449 0 77096871 0

GUOTAI JUNAN

SECURITIES(HO

NGKONG)

LIMITED

Foreign

corporation

0.41% 1746091 10000 0 1746091 0

China CITIC Bank

Corporation

Limited -Jianxin

Securities 500

Index Enhanced

Investment Fund

Other 0.26% 1119075 922020 0 1119075 0

Agricultural Bank

of China Ltd. –

CSI 500 ETF

Other 0.23% 1007224 -122095 0 1007224 0

Hong Kong

Securities Clearing

Company Ltd.

Foreign

corporation

0.19% 803348 702406 0 803348 0

Zuo Min

Domestic nature

person

0.13% 551500 551500 0 551500 0

Li Guangxin

Domestic nature

person

0.11% 487181 -616502 0 487181 0

Huang Xinchang

Domestic nature

person

0.11% 463565 463565 0 463565 0

He Xing

Domestic nature

person

0.10% 444135 8990 0 444135 0

Strategy investors or general

corporation comes top 10 shareholders

due to rights issue (if applicable) (see

note 3)

Not applicable

Explanation on associated relationship

among the top ten shareholders or

consistent action

Among the top ten shareholders there exists no associated relationship between the

state-owned legal person’s shareholders SDG Ltd and other shareholders and they do not

belong to the persons acting in concert regulated by the Management Measure of

Information Disclosure on Change of Shareholding for Listed Companies. For the other

shareholders of circulation share the Company is unknown whether they belong to the

persons acting in concert.Particular about top ten shareholders with un-restrict shares held

Shareholders’ name Amount of un-restrict shares held at Period-end

Type of shares

Type Amount

Shenzhen Special Development Group

Co. Ltd.

211591621

RMB

ordinary

shares

21159162

1

Shenzhen Capital Fortune Jewelry

Industry Investment Enterprise (LP)

77096871

RMB

ordinary

shares

77096871

GUOTAI JUNAN

SECURITIES(HONGKONG)

LIMITED

1746091

Domesticall

y listed

foreign

shares

1746091

China CITIC Bank Corporation

Limited -Jianxin Securities 500 Index

Enhanced Investment Fund

1119075

RMB

ordinary

shares

1119075

Agricultural Bank of China Ltd. – CSI

500 ETF

1007224

RMB

ordinary

shares

1007224

Hong Kong Securities Clearing

Company Ltd.

803348

RMB

ordinary

shares

803348

Zuo Min 551500

RMB

ordinary

shares

551500

Li Guangxin 487181

Domesticall

y listed

foreign

shares

487181

Huang Xinchang 463565

RMB

ordinary

shares

463565

He Xing 444135

Domesticall

y listed

foreign

shares

444135

Expiation on associated relationship or

consistent actors within the top 10

un-restrict shareholders and between

top 10 un-restrict shareholders and top

10 shareholders

Among the top ten shareholders there exists no associated relationship between the

state-owned legal person’s shareholders SDG Ltd and other shareholders and they do not

belong to the persons acting in concert regulated by the Management Measure of

Information Disclosure on Change of Shareholding for Listed Companies. For the other

shareholders of circulation share the Company is unknown whether they belong to the

persons acting in concert.

Explanation on shareholders involving

margin business about top ten common

shareholders with un-restrict shares

held(if applicable) (see note 4)

Shareholder Zuo Min holds 551500 shares of the Company through security account for

credit transactions and holds 0 share of the Company via common security account

551500 shares are held in total by Huang. Shareholder Huang Xinchang holds 463565

shares of the Company through security account for credit transactions and holds 0 share of

the Company via common security account 463565 shares are held in total by Huang.Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back

agreement dealing in reporting period

□ Yes √ No

The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no

buy-back agreement dealing in reporting period.

2. Controlling shareholder of the Company

Nature of controlling shareholders: local state-owned holding

Type of controlling shareholders: legal person

Majority shareholder

Legal person/person

in charge of the unit

Date of foundation Organization code Main operation business

Shenzhen Special

Development Group Co. Ltd.

Zhang Junlin 1982-06-20 91440300192194195C

Investment in industry

(specific item should be

declaration); investment in

tourism industry;

development and operation

of the real estate; domestic

business material supply

and marketing industry

(excluding monopolized

commodity and commodity

under special government

control); economic

information(excluding

restricted projects); import

& export business

Equity of listed Company in

and out of China control and

hold by the majority

shareholder in the Period

Except the shares of the Company held by SDG SDG still holds 253935290 shares of Shenzhen

SDG Information Co. Ltd. (Stock name: SDGI Stock code: 000070) a 40.5% takes; holds

7985809 shares of Sichuan Jinlu Group Co. Ltd. (Stock name: Jinlu Group Stock code: 000510)

a 1.31% takes; and 9135174 shares of Huatai Securities Co. Ltd. (Stock name: Huatai Securities

Stock code: 601688) with 0.13% takes;through Shenzhen Capital Fortune Electronic Information

Investment Enterprise (limited partnership) holds 184 million shares of Shenzhen Microgate

Technology Co. Ltd. (Stock name: Microgate Technology securities code: 300319) with 26.44%

takes.

Changes of controlling shareholders in reporting period

□ Applicable √ Not applicable

The Company had no changes of controlling shareholders in reporting period

3. Actual controller of the Company and persons acting in concert

Nature of actual controller: local state-owned assets management

Type of actual controller: legal person

Actual controlling shareholders

Legal

person/person in

charge of the unit

Date of foundation Organization code Main operation business

Shenzhen Municipal People’s

Government State-owned

Assets Supervision and

Administration Commission

Yu Gang 2003-07-20 11440300K317280672 Not applicable

Equity of domestic/oversea

listed Company control by

actual controller in report period

Not applicable

Changes of actual controller in reporting period

□ Applicable √ Not applicable

No changes of actual controllers for the Company in reporting period.Property right and controlling relationship between the actual controller and the Company is as follow:

Actual controller controlling the Company by entrust or other assets management

□Applicable √Not applicable

4. Particulars about other legal person shareholders with over 10% shares held

√Applicable □Not applicable

Corporate shareholders

Legal rep./person in

charge of unit

Date of

foundation

Register capital

Main business or

management activity

Shenzhen Capital Fortune Jewelry

Industry Investment Enterprise

(LP)

Cheng Houbo 2014-04-18 620 million Yuan Equity investment

5. Limitation and reducing the holdings of shares of controlling shareholders actual controllers

restructuring side and other commitment subjects

□Applicable √Not applicable

Section VII. Preferred Stock

□ Applicable √ Not applicable

The Company had no preferred stock in the Period.Section VIII. Convertible Bonds

□ Applicable √ Not applicable

The Company had no convertible bonds in the Period.Section IX. Particulars about Directors Supervisors Senior

Executives and Employees

I. Changes of shares held by directors supervisors and senior executives

Name

Title

Working

status

Sex Age

Start dated

of office

term

End date

of office

term

Shares

held at

period-be

gin

(Share)

Amount

of shares

increased

in this

period

(Share)

Amount

of shares

decreased

in this

period

(Share)

Other

changes

(share)

Shares

held at

period-en

d

(Share)

Fu

Chunlong

Chairman

Currently

in office

M 47 2018-09-07

2021-09-

06

0 0 0 0 0

Yu Lei Director

Currently

in office

F 52 2012-06-06

2021-09-

06

0 0 0 0 0

Zhang

Quanxun

Director

Currently

in office

M 47 2015-05-20

2021-09-

06

0 0 0 0 0

Gu

Zhiming

Director

Currently

in office

M 49 2018-09-07

2021-09-

06

0 0 0 0 0

Lv Hang

Director

GM

Currently

in office

M 59 2018-09-07

2021-09-

06

0 0 0 0 0

Lou Hong Director

Currently

in office

F 52 2018-02-09

2021-09-

06

0 0 0 0 0

Lou Hong CFO

Currently

in office

F 52 2018-01-04

2021-09-

06

0 0 0 0 0

Hu

Yuming

Independ

ent

director

Currently

in office

M 55 2018-09-07

2021-09-

06

0 0 0 0 0

Jiang

Dinghang

Independ

ent

director

Currently

in office

M 57 2018-09-07

2021-09-

06

0 0 0 0 0

Zhang

Dong

Independ

ent

director

Currently

in office

M 46 2018-09-07

2021-09-

06

0 0 0 0 0

Guo

Xiaodong

Chairman

of the

Superviso

ry

Committe

e

Currently

in office

M 56 2018-09-07

2021-09-

06

0 0 0 0 0

Chen

Yangshen

g

Superviso

r

Currently

in office

M 57 2017-05-04

2021-09-

06

0 0 0 0 0

Yang

Jianping

Superviso

r

Currently

in office

F 48 2018-09-07

2021-09-

06

0 0 0 0 0

Liu

Haicheng

Superviso

r

Currently

in office

F 51 2018-09-07

2021-09-

06

0 0 0 0 0

Zhang

Zheng

Superviso

r

Currently

in office

M 36 2018-09-07

2021-09-

06

0 0 0 0 0

Tan

Zhong

Deputy

Party

secretary

Currently

in office

M 52 2018-09-07

2021-09-

06

0 0 0 0 0

Feng Yu

Deputy

GM

Currently

in office

M 53 2006-06-17

2021-09-

06

0 0 0 0 0

Xie Jing

Deputy

GM

Currently

in office

M 55 2018-10-25

2021-09-

06

0 0 0 0 0

Qi Peng

Secretary

of the

Board

Currently

in office

M 47 2015-12-28

2021-09-

06

0 0 0 0 0

Total -- -- -- -- -- -- 0 0 0 0 0

II. Changes of directors supervisors and senior executives

□Applicable √Not applicable

III. Post-holding

Professional background major working experience and present main responsibilities in Company of directors supervisors and

senior executive

Name Main work experience and holding the post

Fu Chunlong

Born in 1973 Master degree senior human resources manager. He ever took the Deputy Team Leader in Work Team

of Shenzhen SDG Huatong Packaging Co. Ltd. Business Deputy General Manager /GM and deputy

director/director of HR Department of Shenzhen SDG Co. Ltd. and supervisor of the Company. Now he is Deputy

GM of Shenzhen SDG Co. Ltd- controlling shareholder of the Company and Supervisor of Shenzhen State-Owned

Dutyfree Commodity (Group) Co. Ltd and Chairman of the Company

Yu Lei

Born in 1968 Master degree a certified real estate appraiser and real estate economist. She successively served as

secretary of the international project cooperation department of Beijing Chaoyan Vocation Education Training

Center deputy chief chief and deputy director of Luohu Branch the Bureau of Planning and Land of Shenzhen

Municipality the deputy director and director of State-owned Assets Supervision and Administration Commission of

the People’s Government of Shenzhen Municipality. Now she serves as deputy GM of the controlling shareholder of

the Company- SDG and Director of the Company

Zhang Quanxun

Born in 1973 Master degree he successively served as auditor and project manager in auditing department of

Shenzhen Zhixing CPA Office; the GM assistant of Xiamen Xingdao Feilu Investment Co. Ltd. secretary of the

Board GM assistant and staff director of Fujian Logistics Investment Financing Co. Ltd.; deputy director of Xiamen

Productivity Promotion Center; director of the plastic business department and strategy development department of

Shenzhen Tongchan Package Group and the director of strategy research and merger department of SZ Capital. Now

he serves as deputy president and member of the investment committee of Shenzhen Capital Fortune Investment

Management Co. Ltd. and Director of the Company

Gu Zhiming

Born in 1971 senior gold investment analyst once served as an employee of the business department of Guilin

Wanya Jewellery Co. Ltd. business director of Shenzhen Chenzhixin Jewellery Co. Ltd. business director of the

domestic division of Lukfook Group (International) Co. Ltd. general manager of Shenzhen Jinglon Jewellery Co.Ltd. and Chief Operating Officer of Shenzhen Xingguangda Jewellery Co. Ltd. and currently serves as the deputy

general manager of Shenzhen Yuepeng Gold Jewellery & Gold Co. Ltd. and a director of the Company.Lv Hang

Born in 1961 Master degree a senior political division. He successively served as lecturer and secretary of the

principal of Shenzhen University; the business manager deputy director and director of the office of the Party Dept.of Shenzhen SDG; chairman and GM of Shenzhen SDG Xiaomeisha Tourism Center; Director and GM of Shenzhen

Tellus Holding Co. Ltd; GM of Shenzhen SDG Property Management Co. Ltd and chairman of the Company etc.Lou Hong

Born in 1968 a Bachelor degree and senior account. Used to worked as staff of the financial dept. in Suzhou Silk

Industry Company and in Shenzhen Southeast Silk Co. Ltd.; staff of the accounting & financial dept. of Shenzhen

Special Economic Zone Development (Group) Company and worked in accounting management office; also worked

as deputy GM of Shenzhen SDG Liancheng Real Estate Development Co. Ltd.; manager of the financial dept. of

Shenzhen SDG Investment Co. Ltd.; the business manager and deputy director in accounting & financial dept. of

Shenzhen SDG Group Co. Ltd.; CFO of the Shenzhen SDG Real Estate Co. Ltd. and the deputy director of the

planning financial dept. Of Shenzhen SDG and Director and CFO of the Shenzhen SDG Xiaomeisha Investment

Development Co. Ltd. Currently works as the Director and CFO of the Company.

Hu Yuming

Born in 1965 a doctoral candidate and accounting professor. He successively served as a teaching assistant lecturer

and vice professor of Xiamen University associate professor of the school of management vice director and director

of accounting department of Jinan University the deputy dean of the school of international institute and school of

management of the Jinan University. Now he serves as the professor and doctoral supervisor of school of

management of the Jinan University and Independent director of the Company

Jiang Dinghang

Born in 1963 a master degree and a lawyer. He successively served as the minister of legal consultation department

of Shenzhen Social Security Bureau deputy director of Shenzhen Labor Bureau Office director of general office of

Shenzhen SDG GM of the Shenzhen SDG Songli Company GM of the Shenzhen Communications Industry Co.Ltd and apprentice lawyer of Guangdong Zhong An Laws Firm. Now he serves as senior partner of Shanghai

ALLBRIGHT (Shenzhen) Law Office and Independent director of the Company.

Zhang Dong

Born in 1974 a doctoral candidate postdoctoral economics and senior gold investment analyst. He successively

served as Deputy GM of Shenzhen Qiang Zhuang Computer Tech. Co. Ltd Deputy GM of Shenzhen Brain Age

Economic and Cultural Co. Ltd the assistant president of Hong Kong Leader Culture Media Co. Ltd GM of

Shenzhen Zhong Shi Advertising Co. Ltd GM of Heilongjiang Luk Kwai Fook Jewelry Limited and President of

Luk Kwai Fook Jewelry Group. No he serves as executive director of Shenzhen Yongtian Shengdao Investment

Development Co. Ltd and Independent director of the Company.

Guo Xiaodong

Born in 1964 a bachelor degree and senior economist. He successively served as assistant engineer of Shuangliao

Agricultural Machinery Bureau in Jilin Province engineer of Fourth Research Laboratory of Jilin Institute of

Agricultural Machinery manager of Gaodao industrial (Shenzhen) Co. Ltd. minister of the engineering dept.

deputy GM and GM of Shenzhen SDG Development Center Property Management Company deputy GM of

Shenzhen SDG Development Center Construction Supervision Company Director and GM of Shenzhen SDG

Development Center Property Management Company deputy GM of Shenzhen SDG Property Co. Ltd. Chairman

of the Supervisory Committee of Shenzhen SD Real Estate Co. Ltd and Chairman of the Supervisory Committee of

Shenzhen SD Xiaomeisha Tourism Development Co. Ltd. Now he serves as Chairman of Supervisory Committee of

the Company

Chen Yangsheng

Born in 1963 a postgraduate and senior accountant. He ever served as deputy director/director of the financial dept.

in Shenzhen Industrial Products Trade Group Company; deputy director/director/CFO of the financial dept. in

Shenzhen Aokangde Group Company; director and CFO of Shenzhen State-owned Duty-Free Commodity (Group)

Company; director and CFO of Shenzhen Agricultural Products Co. Ltd. and supervisor of Shenzhen Tagen Group

Co. Ltd.; now he serves as director and CFO of Shenzhen SDG Co. Ltd-controlling shareholder of the Company

and Supervisor of the Company.Yang Jianping

Born in 1972 a postgraduate and certified public accountant. He ever served as Business manager of accounting and

finance department of SDGI financial manager of Taike Branch financial manager of Guanglan Branch deputy

manager and manager of the accounting & finance dept; Director and CFO of Shenzhen Tellus Holding Co. Ltd.Now he serves as director of the accounting & finance dept of SDG-controlling shareholder of the Company and

Supervisor of the Company

Liu Haicheng

Born in 1969 a postgraduate and certified public accountant. She ever served as staff of design dept. of Dongfeng

Auto Wheel Co. Ltd. staff of technical dept. of Shenzhen Dongfeng Motor Co. Ltd. staff of the secretariat of

Shenzhen Automobile Association operations dept. staff of the automobile division of the Company staff of

enterprise management dept. and deputy manager of the Company. Now she serves as manager of the enterprise

management dept. and supervisor of the Company

Zhang Zheng

Born in 1984 a Bachelor degree. He successively served as senior auditor of Shenzhen Branch of Shenzhen

Zhongqin Wanxin Accountant Affairs the financing commissioner of planning & finance dept. of SDG deputy

manager of the planning & finance dept. of the Company. Now he serves as deputy manager of the audit supervision

department and supervisor of the Company

Tan Zhong

Born in 1968 has a bachelor’s degree and is qualified as a lawyer and a corporate legal consultant formerly served

as legal counsel and deputy manager of the Enterprise Management Department of Shenzhen Automobile Industry

and Trade Corporation deputy director of the board secretary legal affairs representative and manager of the

enterprise management department of the Company general manager and general Party branch secretary of

Shenzhen SD Huari Automobile Enterprise Co. Ltd. and currently serves as the full-time deputy secretary of the

Party Committee of the Company.

Feng Yu

Born in 1967 bachelor’s degree. He ever took the deputy director of Haicheng Foreign Economic and Trade

Commission of Liaoning Province director of liaison department of Youth President Committee of State-owned

Assets Administration Deputy GM of Shenzhen Xianke Real-estate Co. Ltd. Manager of Investment Department of

China Sports Group Industry Co. Ltd.; Deputy director and Director to the Office of General Manger of Shenzhen

SDG Co. Ltd; and Supervisor of the Company. Now he acts as Deputy General Manager of the Company

Xie Jing

Born in 1965 a citizenship of Canadian bachelor’s degree and a senior engineer national registered supervision

engineer. He successively served as structural engineer of Hunan Light Industry Design Institute engineer of the

Hunan Branch of Bank of China assistant GM of the real estate dept. and GM of Engineering department of SDG

deputy GM of Shenzhen Jincheng Real Estate Group Co. Ltd. the executive president of Shenzhen Jiaanda Group

and GM etc. of the land reserve center of Weiye Holding. Currently he serves as Deputy GM of the Company.Qi Peng

Born in 1973 master's degree economist he has obtained the qualification certificate of secretary of the board from

Shenzhen Stock Exchange. He successively served as secretary to the president and director in information center of

Shenzhen Special Economic Zone Development (Group) Co. Ltd.; deputy director in secretariat of the board and

deputy manager in enterprise development department and manager in automobile business department and

management department of Shenzhen Tellus(Group) Co. Ltd.; general manager of Shenzhen Tellus Automobile

Service Chain Co. Ltd.; general manager of Shenzhen Tellus New Yongtong Automobile Development Co. Ltd.;

director secretariat of the board of Shenzhen Tellus(Group) Co. Ltd.; and serves as secretary of the board of the

Company

Post-holding in shareholder’s unit

√Applicable □Not applicable

Name Name of shareholder’s unit

Position in

shareholder’s

unit n

Start dated of

office term

End date of

office term

Received

remuneration from

shareholder’s unit

(Y/N)

Fu Chunlong

Shenzhen Special Development Group Co.Ltd.

Deputy GM 2017-12-01 Y

Yu Lei

Shenzhen Special Development Group Co.Ltd.

Deputy GM 2011-08-01 Y

Chen

Yangsheng

Shenzhen Special Development Group Co.Ltd.

CFO 2016-12-01 Y

Yang Jianping

Shenzhen Special Development Group Co.Ltd.

Director of

planning &

finance dept.

2018-01-01 Y

Post-holding in

shareholder’s

unit

N/A

Post-holding in other unit

√Applicable □Not applicable

Name Name of other units

Position in

other unit n

Start dated of

office term

End date of office

term

Received

remuneration

from other unit

(Y/N)

Zhang Quanxun

Shenzhen Capital Fortune Investment

Management Co. Ltd.

Deputy

President

2013-02-01 Y

Gu Zhiming Shenzhen Yue Peng Jin Jewelry Co. Ltd Deputy GM 2011-05-01 Y

Hu Yuming Jinan University

professor of

school of

management

and doctoral

supervisor

2003-06-01 Y

Jiang Dinghang

Shanghai ALLBRIGHT (Shenzhen) Law

Office

Senior partner 2005-04-01 Y

Zhang Dong

Shenzhen Yongtian Shengdao Investment

Development Co. Ltd.

Executive

Director

2014-04-01 Y

Post-holding in

other unit

N/A

Punishment of securities regulatory authority in recent three years to the Company’s current and outgoing directors supervisors and

senior management during the reporting period

□Applicable √Not applicable

IV. Remuneration for directors supervisors and senior executives

Decision-making procedures recognition basis and payment for directors supervisors and senior executives

The Company executes in strict accordance with the "Salary Management System for Headquarters of Shenzhen

Tellus(Group) Co. Ltd. " "Staff Performance Management System for Headquarters of Shenzhen Tellus (Group)

Co. Ltd." "Implementing Rules of Remuneration and Appraisal Committee of the Board of Shenzhen

Tellus(Group) Co. Ltd." "Annual Performance Management Approaches for Leading Group Members of

Shenzhen Tellus(Group) Co. Ltd." and other relevant system regulations strictly implements the performance

appraisal and pay the remuneration in accordance with the assessment results.Remuneration for directors supervisors and senior executives in reporting period

In 10 thousand Yuan

Name Title Sex Age

Post-holding

status

Total

remuneration

obtained from the

Company (before

taxes)

Whether

remuneration

obtained from

related party of

the Company

Fu Chunlong Chairman M 47

Currently in

office

0 Y

Yu Lei Director F 52

Currently in

office

0 Y

Zhang Quanxun Director M 47

Currently in

office

0 N

Gu Zhiming Director M 49

Currently in

office

0 N

Lv Hang Director GM M 59

Currently in

office

94.74 N

Lou Hong Director CFO F 52

Currently in

office

80.58 N

Hu Yuming

Independent

director

M 55

Currently in

office

8 N

Jiang Dinghang

Independent

director

M 57

Currently in

office

8 N

Zhang Dong

Independent

director

M 46

Currently in

office

8 N

Guo Xiaodong

Chairman of the

Supervisory

Committee

M 56

Currently in

office

74.88 N

Chen Yangsheng Supervisor M 57

Currently in

office

0 Y

Yang Jianping Supervisor F 48

Currently in

office

0 Y

Liu Haicheng Supervisor F 51

Currently in

office

37.08 N

Zhang Zheng Supervisor M 36

Currently in

office

29.65 N

Tan Zhong

Deputy Party

secretary

M 52

Currently in

office

58.46 N

Feng Yu Deputy GM M 52

Currently in

office

101.79 N

Xie Jing Deputy GM M 55

Currently in

office

102.11 N

Qi Peng

Secretary of the

Board

M 47

Currently in

office

55.07 N

Total -- -- -- -- 658.36 --

Delegated equity incentive for directors and senior executives in reporting period

□Applicable √Not applicable

V. Particulars of workforce

1. Number of Employees Professional composition Education background

Employee in-post of the parent Company (people) 55

Employee in-post of main Subsidiaries (people) 270

The total number of current employees (people) 325

The total number of current employees to receive pay (people) 325

Retired employee’ s expenses borne by the parent Company and

main Subsidiaries (people)

0

Professional composition

Category of professional composition Numbers of professional composition (people)

Production personnel 41

Sales personnel 89

Technician 66

Financial staff 25

Administration staff 104

Total 325

Education background

Type of education background Numbers (people)

Master 25

Bachelor degree 86

Junior college 75

Other 139

Total 325

2. Remuneration Policy

The Company executes in strict accordance with the "Salary Management System for Headquarters of Shenzhen

Tellus Holding Co. Ltd. " "Staff Performance Management System for Headquarters of Shenzhen Tellus Holding

Co. Ltd. " and other relevant system regulations strictly implement.

3. Training programs

In 2020 the “One Four Five” plan has been implemented focusing on “one center four focuses and fiveimprovements” that is “taking corporate transformation and development as the center taking management skillsimprovement of managers new employee induction training fresh graduate training and internal trainer as the

focuses improving the effectiveness of training implementation improving the quality of grass-roots employees

improving the skills of professionals improving the capabilities of middle managers and improving the horizonsof senior managers” as the guiding ideology to formulate the 2020 annual human resources training plan

determine the main training items improve the training process strengthen the training management fully

mobilize the enthusiasm of all employees to actively participate in learning and carry out the training work in an

orderly manner.4. Labor outsourcing

√Applicable □Not applicable

Total hours of labor outsourcing (hours) 2000

Total remuneration paid for labor outsourcing (RMB) 109310.59

Section X. Corporate Governance

I. Corporate governance of the Company

During the reporting period the Company has been observing the laws and regulations as Company Law

Securities Law Governance Criteria of the Listed Companies Guidelines for Standardized Operation of Listed

Companies on the Main Board of Shenzhen Stock Exchange and relevant rules issued by the CSRC for the

purpose of improving its legal person governance structure setting up and improving the internal control system

and standardizing its operation level. According to the Articles of Association Procedure Rules of Shareholders

General Meeting Procedure Rules of Board of Directors Procedure Rules of Supervisory Committee Working

Rules of Independent Directors Working Rules of General Manager working rules of every committee of the

Board and a series of rules and regulations the Company maintained formal procedures clearly duties and

obligations of its general meeting board of directors supervisory committee each specialized committee of the

board and senior manager. Each of its directors supervisors and senior managers can perform their duties

earnestly.

In 2019 the Company have convened 4 shareholders general meetings 8 meetings of the Board 4 meeting of the

Supervisory Committee 3 meetings of Auditing Committee of the Board 3 meetings of Strategy Committee of

the Board and 2 meetings of Remuneration and Appraisal Committee of the Board; relevant governance

documents as Articles of Association Procedure Rules of Shareholders General Meeting Procedure Rules of

Board of Directors Working Rules of General Manager and Investment Management Regulations etc. are being

revised; in accordance with the principles of professionalization professionalism and marketization the company

completed the election of the board of directors the board of supervisors and the senior management. In order to

establish and improve the company’s standardized operation mechanism and improve the company’s internal

control system the company promoted the revision promulgation and abolition of the system in accordance with

the established system construction work plan and revised a number of rules and regulations throughout the year.

As of the end of the reporting period the actual situation of corporate governance was in line with the

requirements of the regulatory documents issued by the China Securities Regulatory Commission on the

governance of listed companies.Is there any difference between the actual condition of corporate governance and relevant regulations about

corporate governance for listed Company from CSRC?

□Yes √ No

There are no differences between the actual condition of corporate governance and relevant regulations about

corporate governance for listed Company from CSRC.II. Independent of the Company relative to controlling shareholders’ in aspect of businesses

personnel assets organization and finance

The Company has been independent from the controlling shareholders in terms of business personnel asset

institution and finance. The Company has independent and complete business and is able to operate

independently.(i) Business: the Company belongs to independent legal person entity. Being completely independent from

controlling shareholders it has independent and complete business system and is able to operate independently.The Company has independent production sales and service systems and its major business. There is no

inter-competition between the Company and its controlling shareholders and related parties.(ii) Personnel: the Company establishes complete labor human resources and salary management systems. Senior

executive as GM Deputy GM CFO and Secretary of the Board etc. are receives remuneration from the Company

since they are employed by the Company and no one takes position in the enterprises owned by shareholders.(iii) Assets: The Company independently and completely owns the business system and underlying assets related

to the operation and independently registers establishes accounts adjusts accounts and manages the assets and

the assets are independent of the controlling shareholders and other enterprises controlled by them.(iv) Finance: the Company has independent financial accounting department which set independent accounting

calculation system and finance management system. No controlling shareholder intervenes in the capital

application of the Company. The Company opens separate bank accounts. No capital is saved in the financial

Company or settlement center account controlled by substantial shareholder or other related parties; the Company

does not share bank account with controlling shareholders and other enterprise under their control. And The

Company pays taxes by law independently.

(v) Institution: the board the supervisory committee and other internal institutions of the Company operate

independently. All the institutions of the Company are set according to the standards requirements applicable to

listed Company and actual business natures of the Company. It has independent office location.III. Horizontal competition

□Applicable √Not applicable

IV. In the report period the Company held annual shareholders’ general meeting and

extraordinary shareholders’ general meeting

1. Annual Shareholders’ General Meeting in the report period

Session of meeting Type

Ratio of investor

participation

Meeting Date Date of disclosure Index of disclosure

First Extraordinary

General Meeting of

2019

Extraordinary

General Meeting

70.99% 2019-01-14 2019-01-15

”Resolution Notice

of First

Extraordinary

General Meeting of

2019” (No.:

2019-001) published

on Securities Times

Hong Kong

Commercial Daily

and Juchao Website

(www.cninfo.com.cn

Annual General

Meeting of 2018

Annual General

Meeting

69.99% 2019-04-23 2019-04-24“Resolution Notice

of Annual GeneralMeeting of 2018”

(No.: 2019-018)

published on

Securities Times

Hong Kong

Commercial Daily

and Juchao Website

(www.cninfo.com.cn

)

Second

Extraordinary

General Meeting of

2019

Extraordinary

General Meeting

68.02% 2019-09-17 2019-09-18

”Resolution Notice

of Second

Extraordinary

General Meeting of

2019” (No.:

2019-034) published

on Securities Times

Hong Kong

Commercial Daily

and Juchao Website

(www.cninfo.com.cn

Third Extraordinary

General Meeting of

2019

Extraordinary

General Meeting

67.43% 2019-11-18 2019-11-19

”Resolution Notice

of Third

Extraordinary

General Meeting of

2019” (No.:

2019-044) published

on Securities Times

Hong Kong

Commercial Daily

and Juchao Website

(www.cninfo.com.cn

2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore

□Applicable √Not applicable

V. Responsibility performance of independent directors

1. The attending of independent directors to Board meetings and general meeting

The attending of independent directors to Board Meeting and shareholders general meeting

Name of

independent

director

Times of

Board meeting

supposed to

attend in the

report period

Times of

Presence

Times of

attending by

communicatio

n

Times of

entrusted

presence

Times of

Absence

Absent the

Meeting for

the second

time in a row

(Y/N)

Times of

attending

shareholders’

meeting

Hu Yuming 8 1 7 0 0 N 2

Jiang Dinghang 8 1 7 0 0 N 2

Zhang Dong 8 1 7 0 0 N 3

Explanation of absent the Board Meeting for the second time in a row

2. Objection for relevant events from independent directors

Independent directors come up with objection about Company’s relevant matters

□Yes √No

Independent directors has no objections for relevant events in reporting period

3. Other explanation about responsibility performance of independent directors

The opinions from independent directors have been adopted

√ Yes □ No

Explanation on advice that accepted/not accepted from independent directors

In accordance with the provisions of the Company Law the Securities Law the Stock Listing Rules the

Independent Director System and other relevant laws and regulations the company’s independent directors paid

attention to the normalization of the company’s operations performed their duties independently diligently and

conscientiously did their duties the independent directors issued independent objective and fair opinions on the

funds occupation and external guarantees of related parties of the company profit distribution matters

self-evaluation of the company’s internal control daily related transactions in 2019 deposit and use of raised

funds in 2018 the use of surplus raised funds to permanently supplement working capital the use of idle

self-owned funds to purchase bank wealth management products changes in accounting estimates and accounting

policies changing audit institutions for 2019 purchase of listed company directors and supervisors high liability

insurance and other matters requiring independent opinions from independent directors during the reporting

period which played an active role in improving the company’s supervision mechanism and helping the board of

directors make scientific and objective decisions and played an important role in safeguarding the legitimate

rights and interests of the company and all shareholders.VI. Duty performance of the special committees under the board during the reporting period

Board of Director of the Company have three special committees as strategic committee auditing committee and

remuneration and appraisal committee and formulated implementation rules for the special committees

independently. During the reporting period all committees had clear responsibilities and the overall operations

were good which ensured efficient operation and scientific decision-making of the board of directors and there

were no other important opinions and suggestions.

1. Duty performance of the strategic committee

The strategic committee of the board is specially set-up according to the regulation of Governance Criteria of the

Listed Companies responsible for study on the long term development strategy and material investment decisions

and raising its recommendations. The committee comprised of 5 directors and the committee is chaired by

chairman of the Company. During the reporting period the committee actively performed its duties and carry out

works strictly in accordance with relevant rules of the CSRC Shenzhen Stock Exchange and Working Rules of

Strategic Committee with each of its members doing their best to perform the respective duties provides strategic

supports for the sustained and steady development of the Company.Three meeting was held by strategic committee in 2019 which including:

The first meeting of the board’s strategic committee in 2019 was held on March 25 2019 it reviewed the Proposal

on Investing in the Transformation and Upgrade Project of the Plant 421 in Bagualing; on May 21 2019 the

second meeting of the board’s strategic committee in 2019 was held on May 21 2019 the meeting reviewed the

Proposal on Investing in the Phase II Project of Tellus Shuibei Jewelry Building; on August 26 2019 the third

meeting of the board’s strategic committee in 2019 was held to consider the Proposal on Investing in Tellus

Treasury Supply Chain Project; each committee member made research on the investment project and offered

proposals which played an important role in strengthening the scientificity of investment decision and improving

the benefits and quality of investment decision..2. Duty performance of the audit committee

The audit committee of the board of directors is a specialized work organization set up by the board of directors in

accordance with the Guidelines for the Governance of Listed Companies and is mainly responsible for the

communication supervision and verification of internal and external audits of the company. The committee

comprised of 5 directors including 3 independent directors and the committee is chaired by independent director

of the Company. During the reporting period the committee actively performed its duties and carry out works

strictly in accordance with relevant rules of the CSRC Shenzhen Stock Exchange and Working Rules of Audit

Committee. Pay close attention to the company’s management financing and implementation of internal control

standards; strengthen the communication and contact with the company’s relevant responsible departments

review the validity assessment of the company’s internal control and enterprise risk management through

communication inspection reporting etc. and check whether the company’s operations financing and

accounting policies comply with laws and regulations and provide management and audit opinions.Three meetings were held by audit committee in 2019 which including:

(1) During the annual audit the audit committee took active attitude in relevant works. Prior to the official

involvement of Ruihua Certified Public Accountants (LLP) (hereinafter referred to as Ruihua) in the annual audit

on 24 January 2019 the audit committee held meeting and determined the working arrangement for annual report

after negotiation with Ruihua reviewed the financial statements prepared by the Company the committee agreed

to submit the financial statements and related information to Ruihua for audit.

(2) The audit committee held the second meeting of 2019 on 20 March 2019 to re-review the financial statements

and formed written opinions and resolutions in respect of the annual financial statements audit work summary

report.

(3)The The audit committee held the third meeting of 2019 on 24 October 2019 to review the proposal of

changing the annual auditing institution and agreed to submit for deliberation on the Board.

3. Duty performance of the remuneration and appraisal committee

The remuneration and appraisal committee of the board of directors is a specialized working organization set up

by the board of directors in accordance with the Guidelines for the Governance of Listed Companies it is mainly

responsible for formulating the assessment criteria for the company’s directors and senior management personnel

and making the assessment responsible for formulating and reviewing the pay policy and programs of the

company’s directors and senior management personnel and responsible for the board of directors. The committee

comprised of 5 directors including 3 independent directors and the committee is chaired by independent director

of the Company. During the reporting period the committee actively performed its duties and carry out works

strictly in accordance with relevant rules of the CSRC Shenzhen Stock Exchange and Working Rules of Audit

Committee. The committee comprised of 5 directors including 3 independent directors and the committee is

chaired by independent director of the Company. During the reporting period the committee actively performed

its duties and carry out works strictly in accordance with relevant rules of the CSRC Shenzhen Stock Exchange

and Working Rules of Audit Committee.Two meetings were held by remuneration and appraisal committee in 2019 which including:

The remuneration of the Board held the First meeting of 2019 on 28 April 2019 to review the proposal on

Management Methods on Team Member’s Remuneration and Performance. On 30 July 2019 the remuneration

and appraisal committee of the board of directors held the second meeting of 2019 and reviewed the annual

performance appraisal indicators and remuneration of the company’s directors supervisors and senior

management personnel. After review all members of the remuneration and appraisal committee considered that

the remuneration payment during the reporting period was in line with the company’s performance appraisal

system the remuneration of directors supervisors and senior executives were determined by the company’s

relevant system.VII. Works from Supervisory Committee

The Company has risks in reporting period that found in supervisory activity from supervisory committee

□ Yes √ No

Supervisory committee has no objection about supervision events in reporting period

VIII. Examination and incentives of senior management

In the reporting period the annual performance of senior executives of the Company have been evaluated by the

Board according to the Management Methods on Team Member’s Remuneration and Performance remuneration

shall be pay in line with the results.IX. Internal Control (IC)

1. Details of major defects in IC appraisal report that found in reporting period

□Yes √ No

2. Appraisal Report of Internal Control

Disclosure date of full internal control

evaluation report

2020-04-03

Disclosure index of full internal control

evaluation report

Juchao website for information disclosure appointed by Shenzhen Stock Exchange:

http://www.cninfo.com.cn

Defects Evaluation Standards

Category Financial Reports Non-financial Reports

Qualitative criteria

Significant defects: Individual defects or

together with other defects causing the

material misstatements in financial reports

cannot be timely prevented or found or

corrected. It is recognized as a significant

defect if following cases happen. ① Fraud

of management leading to material

misstatements of financial results or false

1. Major deficiencies: ① Great

decisions violate the Company’s

established procedure resulting in

significant losses to the Company; ②

Serious violation of laws and

regulations results in significant losses

to the Company; ③ Important

businesses are lack of system control or

financial reports which mislead users of

financial statements and result in

decision-making mistakes and litigation; ②

Ineffective control environment;③ Major

internal control deficiencies found and

reported to the management but haven’t been

corrected after a reasonable time; ④ The

decision-making of the Company’s major

matters has not fulfilled the corresponding

decision-making process resulting in

significant losses of the Company; ⑤

Important businesses involving the

Company’s production and management are

lack of effective control; ⑥ Other defects

that seriously mislead the correct judgments

made by the users of the statements

resulting in the company’s major

compensation.

1. Important defects: Individual defects or

together with other defects causing the

misstatements in financial reports cannot be

timely prevented or found or corrected

though the misstatements don’t reach and

exceed the importance level they should still

cause the management’s attention. It is

recognized as an important defect if

following cases happen. ① The selection

and application of accounting policies do not

follow the generally accepted accounting

principles; ② Anti-fraud programs and

control measures have been not established;

③ Corresponding control mechanism for

accounts handling of unconventional or

special transactions has not been established

or implemented and has no there is no

appropriate compensatory controls; ④ The

controls to the period-end financial reporting

process have one or more defects and cannot

reasonably ensure that the financial

statements prepared are true and accurate.

3. General deficiencies refer to the

deficiencies except for major and significant

deficiencies.system control fails; ④ Serious brain

drain of core management or core

technical staff; ⑤ Significant

deficiencies in the internal evaluation

results have not been corrected. ⑥

The failure of internal control to

information disclosure causes the

company to be publicly condemned by

the regulatory authorities.

2. Significant deficiencies: ① The

Company violates the enterprise

internal regulations and causes

significant losses; ② Serious brain

drain of business personnel in the

Company’s key positions; ③ The

Company’s significant business systems

have deficiencies; ④ The significant

deficiencies in the internal control of

the Company have not been corrected.

3. General deficiencies refer to

deficiencies except for major and

significant deficiencies.Quantitative standard 1. Major deficiencies: misstatement 1. Major deficiencies: loss amount >

amount > 10% of total profit and absolute

amount > 2 million Yuan;

2. Significant deficiencies: 5% of total

profit < misstatement amount ≤10% of total

profit and absolute amount > 1 million

Yuan; or 1 million Yuan < absolute amount

≤ 2 million Yuan and misstatement

amount > 5% of total profit.

3. General deficiencies: misstatement

amount ≤ 5% of total profit or absolute

amount ≤ 1 million Yuan

1.5% of owner's equity attributable to

parent Company and absolute

amount > 5 million Yuan;

2. Significant deficiencies: 0.5% of

owner's equity attributable to parent

Company < loss amount ≤ 1.5% of

owner's equity attributable to parent

Company or 1 million Yuan < absolute

amount ≤ 5 million Yuan;

3. General deficiencies: loss amount ≤

0.5% of owner's equity attributable to

parent Company or absolute amount ≤

1 million Yuan

Amount of significant defects in financial

reports

0

Amount of significant defects in

non-financial reports

0

Amount of important defects in financial

reports

0

Amount of important defects in

non-financial reports

0

X. Auditing report of internal control

√Applicable □Not applicable

Deliberations in Internal Control Audit Report

We consider that: in all major aspects Shenzhen Tellus Holding Co. Ltd. has efficiency in financial report of internal control dated

31 December 2019 according to Basic Standards of Internal Control for Enterprise and relevant regulations.

Disclosure details of audit report of

internal control

Disclosure

Disclosure date of audit report of

internal control (full-text)

2020-04-03

Index of audit report of internal

control (full-text)

Juchao website for information disclosure appointed by Shenzhen Stock Exchange:

http://www.cninfo.com.cn

Opinion type of auditing report of

IC

Standard without reserved reports

whether the non-financial report

had major defects

No

Carried out modified opinion for internal control audit report from CPA

□Yes √ No

The internal control audit report issued by CPA has concerted opinion with self-evaluation report issued from the Board

√ Yes □ No

Section XI. Corporate Bond

Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when

annual report approved for released or fail to cash in full on due

No

Section XII. Financial Report

一、Auditor’s Report

Type of audit opinion Standard unqualified opinion

Date of signing of audit report April 2 2020

Name of audit institution Pan-China Certified Public Accountants LLP

Number of audit report PCCPAAR [2020] No. 7-155

Chinese Certified Public Accountant Wang Huansen Qin Changming

Main body of audit report

To the Shareholders of Shenzhen Tellus Holding Co. Ltd.:

I. Audit Opinion

We have audited the accompanying financial statements of Shenzhen Tellus Holding

Co. Ltd. (the “Company”) which comprise the consolidated and parent company

balance sheets as at December 31 2019 the consolidated and parent company income

statements the consolidated and parent company cash flow statements and the

consolidated and parent company statements of changes in equity for the year then

ended as well as notes to financial statements.In our opinion the attached financial statements present fairly in all material respects

the financial position of the Company as at December 31 2019 and of its financial

performance and its cash flows for the year then ended in accordance with China

Accounting Standards for Business Enterprises.

II. Basis for Audit Opinion

We conducted our audit in accordance with China Standards on Auditing. 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 the Company in accordance with the China Code of Ethics for

Certified Public Accountants and we have fulfilled other ethical responsibilities. We

believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our audit opinion.III. Key Audit Matters

Key audit matters are those matters that in our professional judgment were of most

significance in our audit of the financial statements of the current period. These

matters were addressed in the context of our audit of the financial statements as a

whole and in forming our opinion thereon and we do not express a separate opinion

on these matters.(I) Revenue recognition

1. Key audit matters

Please refer to section V(II)1 and XIII of the notes to the financial statements for

details.The Company is mainly engaged in Car sales and repairs jewelry wholesale and retail

real estate leasing and services. In 2019 the operating revenue amounts to

571072893.90 yuan an increase of 37.86% over the same period last year.

As sales revenue is one of the key performance indicators of the Company which

would probably have inherent risks of being recognized inappropriately to achieve

specific target or expectation and revenue recognition involves complicated

information system and significant judgment of the Company’s management (the

“Management”) we have identified revenue recognition as a key audit matter.

2. Responsive audit procedures

Our main audit procedures for revenue recognition are as follows:

(1) We obtained understandings of key internal controls related to revenue recognition

assessed the design of these controls determined whether they have been executed

and tested the effectiveness of the operation;

(2) We checked major sale contracts identified clauses on the transfer of major risks

and rewards related to the ownership of goods and assessed whether the revenue

recognition policy complied with China Accounting Standards for Business

Enterprises;

(3) We performed substantive analysis procedure on operating revenue and gross

margin by month product client etc. so as to identify whether there are significant

or abnormal fluctuations and find out the reason of fluctuations;

(4) For revenue from domestic sales we checked supporting documents related to

revenue recognition by sampling method including sales contracts Real estate lease

contracts orders invoices outbound orders client acceptance receipts etc.

(5) We performed confirmation procedures on current sales amount by sampling

method in combination with confirmation procedure of accounts receivable;

(6) We checked whether information related to operating revenue had been presented

appropriately in the financial statements.(II) Investment income from equity transfer

1. Key audit matters

Please refer to section V(II)7 of the notes to the financial statements for details.

As of December 31 2019 the book balance of investment income to 240569654.98

yuan which was mainly derived from the investment income from the disposal of

long-term equity investments. The company transferred 43% of the equity of

Shenzhen Xinglong Machinery Mould Co. Ltd. to Shenzhen Runhe United

Investment Development Co. Ltd. at a disposal price of 286670000.00 yuan and

recognized an investment income of 210680848.23 from the disposal of long-term

equity investment. As the amount of investment income from equity transfer is

significant involves significant judgment of the Management we have identified

investment income from equity transfer as a key audit matter.

2. Responsive audit procedures

Our main audit procedures for investment income from equity transfer are as follows:

(1) We check the resolutions of shareholders' meetings and asset evaluation reports

related to the disposal of equity and judge whether the relevant decision-making

procedures are appropriate;

(2) We checked equity transfer contracts identified key clauses affecting the

accounting treatment such as payment of equity transfer payments and equity

transfers and checked them with the resolutions of the shareholders meeting and the

relevant information of the asset evaluation report;

(3) We check the relevant documents such as the receipt certificate of the equity

transfer price the equity transfer procedures etc. judge the time when the equity

transfer is realized and evaluate whether the long-term equity investment disposal

income is recognized in an appropriate period;

(4) We checked whether information related to investment income from equity

transfer had been presented appropriately in the financial statements.IV. Other Information

The Company’s management (the “Management”) is responsible for the other

information. The other information comprises the information included in the

Company’s 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 preparing and presenting fairly the financial

statements in accordance with China Accounting Standards for Business Enterprises

as well as designing implementing and maintaining internal control relevant to the

preparation of 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 the

Company’s ability to continue as a going concern disclosing as applicable matters

related to going concern and use the going concern basis of accounting unless the

Management either intend to liquidate the Company or to cease operations or have no

realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s

financial reporting process.VI. Certified Public Accountants’ Responsibility 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. Misstatement 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.We exercise professional judgment and maintain professional skepticism throughout

the audit performed in accordance with China Standards on Auditing. 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 for one 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 circumstances.(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 the

Company’s ability to continue as a going concern. If we conclude that a material

uncertainty exists we are required to draw attention in our auditor’s report to the

related disclosures in the financial statements or if such disclosures are inadequate to

modify our opinion. Our conclusions are based on the audit evidence obtained up to

the date of our auditor’s report. However future events or conditions may cause the

Company to cease to continue as a going concern.

(V) Evaluate the overall presentation structure and content of the financial statements

including the disclosures and whether the financial statements represent the

underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient and appropriate audit evidence regarding the financial

information of the entities or business activities within the Company to express an

opinion on the financial statements. We are responsible for the direction supervision

and performance of the group audit. We remain sole responsibility for our audit

opinion.We communicate with those charged with governance regarding the planned audit

scope time schedule and significant audit findings including any deficiencies in

internal control of concern that we identify during our audit.We also provide those charged with governance with a statement that we have

complied with relevant ethical requirements regarding independence and to

communicate with them all relationships and other matters that may reasonably be

thought to bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine

those matters that were of most significance in the audit of the financial statements of

the current period and are therefore the key audit matters. We describe these matters

in our auditor’s report unless law or regulation precludes public disclosure about the

matter or when in extremely rare circumstances we determine that a matter should

not be communicated in our report because the adverse consequences of doing so

would reasonably be expected to outweigh the public interest benefits of such

communication.Shenzhen Tellus Holding Co. Ltd.

Consolidated balance sheet as at December 31 2019

(Expressed in Renminbi Yuan)

Assets

Note

No.

Closing balance Opening balance

Current assets:

Cash and bank balances 1 428851606.04 169512260.69

Settlement funds

Loans to other banks

Held-for-trading financial assets 2 60486575.34

Financial assets at fair value through profit or loss

Derivative financial assets

Notes receivable

Accounts receivable 3 112613224.27 86104660.51

Receivables financing

Advances paid 4 12683603.89 9112473.27

Premiums receivable

Reinsurance accounts receivable

Reinsurance reserve receivable

Other receivables 5 44908546.40 14483208.41

Financial assets under reverse repo

Inventories 6 21389602.83 12342854.40

Contract assets

Assets classified as held for sale 7 85017251.77

Non-current assets due within one year

Other current assets 8 3403969.23 332432494.44

Total current assets 684337128.00 709005203.49

Non-current assets:

Loans and advances paid

Debt investments

Available-for-sale financial assets 10176617.20

Other debt investments

Held-to-maturity investments

Long-term receivable 9

Long-term equity investments 10 162178544.05 224644766.21

Other equity instrument investments 11 10176617.20

Other non-current financial assets

Investment property 12 554599503.55 503922413.70

Fixed assets 13 107119796.59 112674017.53

Construction in progress 14 47654393.55 12843571.97

Productive biological assets

Oil & gas assets

Right-of-use assets

Intangible assets 15 50561225.67 51012282.25

Development expenditures

Goodwill

Long-term prepayments 16 13606805.49 6304607.22

Deferred tax assets 17 8658962.39 24355086.71

Other non-current assets 18 6889167.54 3356964.72

Total non-current assets 961445016.03 949290327.51

Total assets 1645782144.03 1658295531.00

Shenzhen Tellus Holding Co. Ltd.

Consolidated balance sheet as at December 31 2019 (continued)

(Expressed in Renminbi Yuan)

Liabilities & Equity

Note

No.

Closing balance Opening balance

Current liabilities:

Short-term borrowings 19 143000000.00

Central bank loans

Loans from other banks

Held-for-trading financial liabilities

Financial liabilities at fair value through profit or loss

Derivative financial liabilities

Notes payable

Accounts payable 20 69087430.42 73365876.09

Advances received 21 27299822.71 15897763.97

Contract liabilities

Financial liabilities under repo

Absorbing deposit and interbank deposit

Deposit for agency security transaction

Deposit for agency security underwriting

Employee benefits payable 22 31204794.89 25802670.36

Taxes and rates payable 23 71425267.61 9377393.57

Other payables 24 101266802.49 250489094.47

Handling fee and commission payable

Reinsurance accounts payable

Liabilities classified as held for sale

Non-current liabilities due within one year

Other current liabilities

Total current liabilities 300284118.12 517932798.46

Non-current liabilities:

Insurance policy reserve

Long-term borrowings 25 34934887.55

Bonds payable

Including: Preferred shares

Perpetual bonds

Lease liabilities

Long-term payables 26 3920160.36 3920160.36

Long-term employee benefits payable

Provisions 27 2225468.76 2225468.76

Deferred income 28 139400.00

Deferred tax liabilities

Other non-current liabilities

Total non-current liabilities 6285029.12 41080516.67

Total liabilities 306569147.24 559013315.13

Equity:

Share capital/Paid-in capital 29 431058320.00 297281600.00

Other equity instruments

Including: Preferred shares

Perpetual bonds

Capital reserve 30 431449554.51 565226274.51

Less: Treasury shares

Other comprehensive income 31 26422.00 26422.00

Special reserve

Surplus reserve 32 21007488.73 3139918.14

General risk reserve

Undistributed profit 33 387423510.78 184535322.70

Total equity attributable to the parent company 1270965296.02 1050209537.35

Non-controlling interest 68247700.77 49072678.52

Total equity 1339212996.79 1099282215.87

Total liabilities & equity 1645782144.03 1658295531.00

Shenzhen Tellus Holding Co. Ltd.Parent company balance sheet as at December 31 2019

(Expressed in Renminbi Yuan)

Assets

Note

No.

Closing balance Opening balance

Current assets:

Cash and bank balances 201885691.27 88836626.14

Held-for-trading financial assets 40324383.56

Financial assets at fair value through profit or loss

Derivative financial assets

Notes receivable

Accounts receivable 1 206710.76 38274.00

Receivables financing

Advances paid 100000.00 604800.00

Other receivables 2 116037773.09 115782944.37

Inventories

Contract assets

Assets classified as held for sale 85017251.77

Non-current assets due within one year

Other current assets 1419760.18 195506958.35

Total current assets 359974318.86 485786854.63

Non-current assets:

Debt investments

Available-for-sale financial assets 10176617.20

Other debt investments

Held-to-maturity investments

Long-term receivable

Long-term equity investments 3 859355040.60 836283491.38

Other equity instrument investments 10176617.20

Other non-current financial assets

Investment property 39616602.02 44820151.69

Fixed assets 14012830.64 14824845.14

Construction in progress 35321704.26 12843571.97

Productive biological assets

Oil & gas assets

Right-of-use assets

Intangible assets 48953266.56 249731.94

Development expenditures

Goodwill

Long-term prepayments 2639122.63 2958817.65

Deferred tax assets 3557849.04 13830369.64

Other non-current assets 6789167.54

Total non-current assets 1020422200.49 935987596.61

Total assets 1380396519.35 1421774451.24

Shenzhen Tellus Holding Co. Ltd.Parent company balance sheet as at December 31 2019 (continued)

(Expressed in Renminbi Yuan)

Liabilities & Equity

Note

No.

Closing balance Opening balance

Current liabilities:

Short-term borrowings 143000000.00

Held-for-trading financial liabilities

Financial liabilities at fair value through profit or loss

Derivative financial liabilities

Notes payable

Accounts payable 14000.00 19800.00

Advances received 4742.51

Contract liabilities

Employee benefits payable 8199278.01 4858788.51

Taxes and rates payable 54684929.01 331909.65

Other payables 257260350.77 392558990.89

Liabilities classified as held for sale

Non-current liabilities due within one year

Other current liabilities

Total current liabilities 320158557.79 540774231.56

Non-current liabilities:

Long-term borrowings

Bonds payable

Including: Preferred shares

Perpetual bonds

Lease liabilities

Long-term payables

Long-term employee benefits payable

Provisions

Deferred income

Deferred tax liabilities

Other non-current liabilities

Total non-current liabilities

Total liabilities 320158557.79 540774231.56

Equity:

Share capital/Paid-in capital 431058320.00 297281600.00

Other equity instruments

Including: Preferred shares

Perpetual bonds

Capital reserve 428256131.23 562032851.23

Less: treasury shares

Other comprehensive income

Special reserve

Surplus reserve 21007488.73 3139918.14

Undistributed profit 179916021.60 18545850.31

Total equity 1060237961.56 881000219.68

Total liabilities & equity 1380396519.35 1421774451.24

Shenzhen Tellus Holding Co. Ltd.

Consolidated income statement for the year ended December 31 2019

(Expressed in Renminbi Yuan)

Items

Note

No.

Current period

cumulative

Preceding period

comparative

I. Total operating revenue 571072893.90 414238778.96

Including: Operating revenue 1 571072893.90 414238778.96

Interest income

Premium earned

Revenue from handling charges and commission

II. Total operating cost 509897504.26 409350865.02

Including: Operating cost 1 431021312.64 332347355.12

Interest expenses

Handling charges and commission expenditures

Surrender value

Net payment of insurance claims

Net provision of insurance policy reserve

Premium bonus expenditures

Reinsurance expenses

Taxes and surcharges 2 6269059.85 6276612.65

Selling expenses 3 23956102.30 19987406.50

Administrative expenses 4 43668263.92 44231376.56

R&D expenses

Financial expenses 5 4982765.55 6508114.19

Including: Interest expenses 7000636.08 8909350.20

Interest income 2317143.23 2755755.76

Add: Other income 6 292897.32 3482.07

Investment income (or less: losses) 7 240569654.98 88785468.69

Including: Investment income from associates and joint ventures 19134325.91 83051508.70

Gains from derecognition of financial assets at amortized cost

Gains on foreign exchange (or less: losses)

Gains on net exposure to hedging risk (or less: losses)

Gains on changes in fair value (or less: losses) 8 477394.67

Credit impairment loss 9 1270480.08

Assets impairment loss 10 -662290.01 -1384716.26

Gains on asset disposal (or less: losses) 11 216207.53

III. Operating profit (or less: losses) 303339734.21 92292148.44

Add: Non-operating revenue 12 304620.63 1739055.65

Less: Non-operating expenditures 13 1049085.73 3479344.28

IV. Profit before tax (or less: total loss) 302595269.11 90551859.81

Less: Income tax 14 83788034.93 4411880.45

V. Net profit (or less: net loss) 218807234.18 86139979.36

(I) Categorized by the continuity of operations

1. Net profit from continuing operations (or less: net loss) 218807234.18 86139979.36

2. Net profit from discontinued operations (or less: net loss)

(II) Categorized by the portion of equity ownership

1. Net profit attributable to owners of parent company (or less: net loss) 219669708.47 86924058.72

2. Net profit attributable to non-controlling shareholders (or less: net loss) -862474.29 -784079.36

VI. Other comprehensive income after tax 26422.00

Items attributable to the owners of the parent company 26422.00

(I) Not to be reclassified subsequently to profit or loss

1.Changes in remeasurement on the net defined benefit plan

2. Items under equity method that will not be reclassified to profit or loss

3. Changes in fair value of other equity instrument investments

4. Changes in fair value of own credit risk

5. Others

(II) To be reclassified subsequently to profit or loss 26422.00

1. Items under equity method that may be reclassified to profit or loss 26422.00

2. Changes in fair value of other debt investments

3. Profit or loss from changes in fair value of available-for-sale financial assets

4. Profit or loss from reclassification of financial assets into other comprehensive income

5. Profit or loss from reclassification of held-to-maturity investments as available-for-sale

financial assets

6. Provision for credit impairment of other debt investments

7.Cash flow hedging reserve (profit or loss on cash flow hedging)

8. Translation reserve

9. Others

Items attributable to non-controlling shareholders

VII. Total comprehensive income 218807234.18 86166401.36

Items attributable to the owners of the parent company 219669708.47 86950480.72

Items attributable to non-controlling shareholders -862474.29 -784079.36

VIII. Earnings per share (EPS):

(I) Basic EPS (yuan per share) 0.51 0.20

(II) Diluted EPS (yuan per share) 0.51 0.20

Shenzhen Tellus Holding Co. Ltd.Parent company income statement for the year ended December 31 2019

(Expressed in Renminbi Yuan)

Items

Note

No.

Current period

cumulative

Preceding period

comparative

I. Operating revenue 1 38042399.39 42607127.11

Less: Operating cost 1 3772642.43 12747839.01

Taxes and surcharges 1721718.43 1683760.67

Selling expenses

Administrative expenses 23285817.13 20609716.66

R&D expenses

Financial expenses 4032853.71 4850337.92

Including: Interest expenses 5767035.04 6902903.32

Interest income 1804555.52 2179149.78

Add: Other income

Investment income (or less: losses) 2 236551009.68 16298388.00

Including: Investment income from associates and joint ventures 19318549.22 14998084.49

Gains from derecognition of financial assets at amortized cost

Gains on net exposure to hedging risk (or less: losses)

Gains on changes in fair value (or less: losses) 324383.56

Gains on asset disposal (or less: losses)

Credit impairment loss 1057870.24

Assets impairment loss -117864.17

Gains on foreign exchange (or less: losses)

II. Operating profit (or less: losses) 243162631.17 18895996.68

Add: Non-operating revenue 33995.79 1253151.18

Less: Non-operating expenditures 4161.48

III. Profit before tax (or less: total loss) 243196626.96 20144986.38

Less: Income tax 64583369.44 38942.20

IV. Net profit (or less: net loss) 178613257.52 20106044.18

(I) Net profit from continuing operations (or less: net loss) 178613257.52 20106044.18

(II) Net profit from discontinued operations (or less: net loss)

V. Other comprehensive income after tax

(I) Not to be reclassified subsequently to profit or loss

1.Changes in remeasurement on the net defined benefit plan

2. Items under equity method that will not be reclassified to profit or loss

3. Changes in fair value of other equity instrument investments

4. Changes in fair value of own credit risk

5. Others

(II) To be reclassified subsequently to profit or loss

1. Items under equity method that may be reclassified to profit or loss

2. Changes in fair value of other debt investments

3. Profit or loss from changes in fair value of available-for-sale financial assets

4. Profit or loss from reclassification of financial assets into other

comprehensive income

5. Profit or loss from reclassification of held-to-maturity investments as

available-for-sale financial assets

6. Provision for credit impairment of other debt investments

7. Cash flow hedging reserve (profit or loss on cash flow hedging)

8. Translation reserve

9. Others

VI. Total comprehensive income 178613257.52 20106044.18

VII. Earnings per share (EPS):

(I) Basic EPS (yuan per share)

(II) Diluted EPS (yuan per share)

Shenzhen Tellus Holding Co. Ltd.

Consolidated cash flow statement for the year ended December 31 2019

(Expressed in Renminbi Yuan)

Items

Note

No.

Current period

cumulative

Preceding period

comparative

I. Cash flows from operating activities:

Cash receipts from sale of goods or rendering of services 620842167.97 426869708.10

Net increase of client deposit and interbank deposit

Net increase of central bank loans

Net increase of loans from other financial institutions

Cash receipts from original insurance contract premium

Net cash receipts from reinsurance

Net increase of policy-holder deposit and investment

Cash receipts from interest handling charges and commission

Net increase of loans from others

Net increase of repurchase

Net cash receipts from agency security transaction

Receipts of tax refund 3181.09

Other cash receipts related to operating activities 1 47761005.81 19684530.43

Subtotal of cash inflows from operating activities 668606354.87 446554238.53

Cash payments for goods purchased and services received 452350872.20 335367549.57

Net increase of loans and advances to clients

Net increase of central bank deposit and interbank deposit

Cash payments for insurance indemnities of original insurance contracts

Net increase of loans to others

Cash payments for interest handling charges and commission

Cash payments for policy bonus

Cash paid to and on behalf of employees 62812595.93 52732468.64

Cash payments for taxes and rates 23492145.22 23689718.46

Other cash payments related to operating activities 2 51039388.49 41339481.83

Subtotal of cash outflows from operating activities 589695001.84 453129218.50

Net cash flows from operating activities 78911353.03 -6574979.97

II. Cash flows from investing activities:

Cash receipts from withdrawal of investments 2177147001.00 1106320000.00

Cash receipts from investment income 54752103.23 68064559.78

Net cash receipts from the disposal of fixed assets intangible assets and other

long-term assets

834100.00 263520.00

Net cash receipts from the disposal of subsidiaries & other business units 1504125.26

Other cash receipts related to investing activities 3 2385849.54 107511100.00

Subtotal of cash inflows from investing activities 2235119053.77 1283663305.04

Cash payments for the acquisition of fixed assets intangible assets and other

long-term assets

124672512.37 31343082.90

Cash payments for investments 1758560000.00 1224884140.00

Net increase of pledged borrowings

Net cash payments for the acquisition of subsidiaries & other business units

Other cash payments related to investing activities 4 5000.00 5733400.00

Subtotal of cash outflows from investing activities 1883237512.37 1261960622.90

Net cash flows from investing activities 351881541.40 21702682.14

III. Cash flows from financing activities:

Cash receipts from absorbing investments 20000000.00 15000000.00

Items

Note

No.

Current period

cumulative

Preceding period

comparative

Including: Cash received by subsidiaries from non-controlling shareholders as

investments

20000000.00 15000000.00

Cash receipts from borrowings 143000000.00 148082000.00

Other cash receipts related to financing activities 5 15020000.00

Subtotal of cash inflows from financing activities 178020000.00 163082000.00

Cash payments for the repayment of borrowings 320934887.55 145943235.58

Cash payments for distribution of dividends or profits and for interest expenses 7095966.49 15066890.08

Including: Cash paid by subsidiaries to non-controlling shareholders as dividend

or profit

Other cash payments related to financing activities 6 22962000.00 16144956.00

Subtotal of cash outflows from financing activities 350992854.04 177155081.66

Net cash flows from financing activities -172972854.04 -14073081.66

IV. Effect of foreign exchange rate changes on cash & cash equivalents 96.73 281.62

V. Net increase in cash and cash equivalents 257820137.12 1054902.13

Add: Opening balance of cash and cash equivalents 142848120.69 141793218.56

VI. Closing balance of cash and cash equivalents 400668257.81 142848120.69

Shenzhen Tellus Holding Co. Ltd.Parent company cash flow statement for the year ended December 31 2019

(Expressed in Renminbi Yuan)

Items

Note

No.

Current period

cumulative

Preceding period

comparative

I. Cash flows from operating activities:

Cash receipts from sale of goods and rendering of services 39784268.51 42987480.31

Receipts of tax refund

Other cash receipts related to operating activities 28770832.18 26178276.09

Subtotal of cash inflows from operating activities 68555100.69 69165756.40

Cash payments for goods purchased and services received

Cash paid to and on behalf of employees 18387927.35 18738644.84

Cash payments for taxes and rates 3527628.11 4065009.38

Other cash payments related to operating activities 19992731.75 38903678.52

Subtotal of cash outflows from operating activities 41908287.21 61707332.74

Net cash flows from operating activities 26646813.48 7458423.66

II. Cash flows from investing activities:

Cash receipts from withdrawal of investments 1260187000.00 733500000.00

Cash receipts from investment income 24870415.22 59901381.01

Net cash receipts from the disposal of fixed assets intangible

assets and other long-term assets

Net cash receipts from the disposal of subsidiaries & other

business units

Other cash receipts related to investing activities 2385849.54 107511100.00

Subtotal of cash inflows from investing activities 1287443264.76 900912481.01

Cash payments for the acquisition of fixed assets intangible assets

and other long-term assets

75307375.89 10556123.04

Cash payments for investments 978253000.00 900636040.00

Net cash payments for the acquisition of subsidiaries & other

business units

Other cash payments related to investing activities 5733400.00

Subtotal of cash outflows from investing activities 1053560375.89 916925563.04

Net cash flows from investing activities 233882888.87 -16013082.03

III. Cash flows from financing activities:

Cash receipts from absorbing investments

Cash receipts from borrowings 143000000.00 143000000.00

Other cash receipts related to financing activities

Subtotal of cash inflows from financing activities 143000000.00 143000000.00

Cash payments for the repayment of borrowings 286000000.00 137278123.13

Cash payments for distribution of dividends or profits and for

interest expenses

5999845.45 12986470.41

Other cash payments related to financing activities

Subtotal of cash outflows from financing activities 291999845.45 150264593.54

Net cash flows from financing activities -148999845.45 -7264593.54

IV. Effect of foreign exchange rate changes on cash and cash

equivalents

Items

Note

No.

Current period

cumulative

Preceding period

comparative

V. Net increase in cash and cash equivalents 111529856.90 -15819251.91

Add: Opening balance of cash and cash equivalents 62172486.14 77991738.05

VI. Closing balance of cash and cash equivalents 173702343.04 62172486.14

Shenzhen Tellus Holding Co. Ltd.

Consolidated statement of changes in equity for the year ended December 31 2019

(Expressed in Renminbi Yuan)

Items

Current period cumulative

Equity attributable to parent company

Non-controlling

interest

Total equity Share capital/

Paid-in capital

Other equity instruments

Capital reserve

Less:

treasury

shares

Other

comprehensive

income

Special

reserve

Surplus

reserve

General

risk reserve

Undistributed

profit Preferred

shares

Perpetual

bonds

Others

I. Balance at the end of prior year 297281600.00 565226274.51 26422.00 3139918.14 184535322.70 49072678.52 1099282215.87

Add: Cumulative changes of accounting policies 6244.84 1079805.36 37496.54 1123546.74

Error correction of prior period

Business combination under common control

Others

II. Balance at the beginning of current year 297281600.00 565226274.51 26422.00 3146162.98 185615128.06 49110175.06 1100405762.61

III. Current period increase (or less: decrease) 133776720.00 -133776720.00 17861325.75 201808382.72 19137525.71 238807234.18

(I) Total comprehensive income 219669708.47 -862474.29 218807234.18

(II) Capital contributed or withdrawn by owners 20000000.00 20000000.00

1. Ordinary shares contributed by owners 20000000.00 20000000.00

2. Capital contributed by holders of other equity

instruments

3. Amount of share-based payment included in

equity

4. Others

(III) Profit distribution 17861325.75 -17861325.75

1. Appropriation of surplus reserve 17861325.75 -17861325.75

2. Appropriation of general risk reserve

3. Appropriation of profit to owners

4. Others

(IV) Internal carry-over within equity 133776720.00 -133776720.00

1. Transfer of capital reserve to capital 133776720.00 133776720.00

2. Transfer of surplus reserve to capital

3. Surplus reserve to cover losses

4. Changes in defined benefit plan carried over to

retained earnings

Items

Current period cumulative

Equity attributable to parent company

Non-controlling

interest

Total equity Share capital/

Paid-in capital

Other equity instruments

Capital reserve

Less:

treasury

shares

Other

comprehensive

income

Special

reserve

Surplus

reserve

General

risk reserve

Undistributed

profit Preferred

shares

Perpetual

bonds

Others

5. Other comprehensive income carried over to

retained earnings

6. Others

(V) Special reserve

1. Appropriation of current period

2. Application of current period

(VI) Others

IV. Balance at the end of current period 431058320.00 431449554.51 26422.00 21007488.73 387423510.78 68247700.77 1339212996.79

Shenzhen Tellus Holding Co. Ltd.

Consolidated statement of changes in equity for the year ended December 31 2019 (continued)

(Expressed in Renminbi Yuan)

Items

Preceding period comparative

Equity attributable to parent company

Non-controlling

interest

Total equity Share capital/

Paid-in capital

Other equity instruments

Capital reserve

Less:

treasury

shares

Other

comprehensive

income

Special

reserve

Surplus

reserve

General risk

reserve

Undistributed

profit Preferred

shares

Perpetual

bonds

Others

I. Balance at the end of prior year 297281600.00 565226274.51 2952586.32 97798595.80 34764517.26 998023573.89

Add: Cumulative changes of accounting policies

Error correction of prior period

Business combination under common control

Others

II. Balance at the beginning of current year 297281600.00 565226274.51 2952586.32 97798595.80 34764517.26 998023573.89

III. Current period increase (or less: decrease) 26422.00 187331.82 86736726.90 14308161.26 101258641.98

(I) Total comprehensive income 26422.00 86924058.72 -784079.36 86166401.36

(II) Capital contributed or withdrawn by owners 15092240.62 15092240.62

1. Ordinary shares contributed by owners 15000000.00 15000000.00

2. Capital contributed by holders of other equity

instruments

3. Amount of share-based payment included in

equity

4. Others 92240.62 92240.62

(III) Profit distribution 187331.82 -187331.82

1. Appropriation of surplus reserve 187331.82 -187331.82

2. Appropriation of general risk reserve

3. Appropriation of profit to owners

4. Others

(IV) Internal carry-over within equity

1. Transfer of capital reserve to capital

2. Transfer of surplus reserve to capital

3. Surplus reserve to cover losses

4. Changes in defined benefit plan carried over to

retained earnings

Items

Preceding period comparative

Equity attributable to parent company

Non-controlling

interest

Total equity Share capital/

Paid-in capital

Other equity instruments

Capital reserve

Less:

treasury

shares

Other

comprehensive

income

Special

reserve

Surplus

reserve

General risk

reserve

Undistributed

profit Preferred

shares

Perpetual

bonds

Others

5. Other comprehensive income carried over to

retained earnings

6. Others

(V) Special reserve

1. Appropriation of current period

2. Application of current period

(VI) Others

IV. Balance at the end of current period 297281600.00 565226274.51 26422.00 3139918.14 184535322.70 49072678.52 1099282215.87

Shenzhen Tellus Holding Co. Ltd.Parent company statement of changes in equity for the year ended December 31 2019

(Expressed in Renminbi Yuan)

Items

Current period cumulative

Share capital/

Paid-in capital

Other equity instruments

Capital reserve

Less:

treasury

shares

Other

comprehensive

income

Special

reserve

Surplus reserve

Undistributed

profit

Total equity Preferred

shares

Perpetual

bonds

Others

I. Balance at the end of prior year 297281600.00 562032851.23 3139918.14 18545850.31 881000219.68

Add: Cumulative changes of accounting policies 6244.84 618239.52 624484.36

Error correction of prior period

Others

II. Balance at the beginning of current year 297281600.00 562032851.23 3146162.98 19164089.83 881624704.04

III. Current period increase (or less: decrease) 133776720.00 -133776720.00 17861325.75 160751931.77 178613257.52

(I) Total comprehensive income 178613257.52 178613257.52

(II) Capital contributed or withdrawn by owners

1. Ordinary shares contributed by owners

2. Capital contributed by holders of other equity instruments

3. Amount of share-based payment included in equity

4. Others

(III) Profit distribution 17861325.75 -17861325.75

1. Appropriation of surplus reserve 17861325.75 -17861325.75

2. Appropriation of profit to owners

3. Others

(IV) Internal carry-over within equity 133776720.00 -133776720.00

1.Transfer of capital reserve to capital 133776720.00 -133776720.00

2.Transfer of surplus reserve to capital

3.Surplus reserve to cover losses

4. Changes in defined benefit plan carried over to retained

earnings

5. Other comprehensive income carried over to retained

earnings

6. Others

(V) Special reserve

1. Appropriation of current period

2. Application of current period

(VI) Others

IV. Balance at the end of current period 431058320.00 428256131.23 21007488.73 179916021.60 1060237961.56

Shenzhen Tellus Holding Co. Ltd.Parent company statement of changes in equity for the year ended December 31 2019 (continued)

(Expressed in Renminbi Yuan)

Items

Preceding period comparative

Share capital/

Paid-in capital

Other equity instruments

Capital reserve

Less:

treasury

shares

Other

comprehensive

income

Special

reserve

Surplus reserve

Undistributed

profit

Total equity Preferred

shares

Perpetual

bonds

Others

I. Balance at the end of prior year 297281600.00 562032851.23 2952586.32 -1372862.05 860894175.50

Add: Cumulative changes of accounting policies

Error correction of prior period

Others

II. Balance at the beginning of current year 297281600.00 562032851.23 2952586.32 -1372862.05 860894175.50

III. Current period increase (or less: decrease) 187331.82 19918712.36 20106044.18

(I) Total comprehensive income 20106044.18 20106044.18

(II) Capital contributed or withdrawn by owners

1. Ordinary shares contributed by owners

2. Capital contributed by holders of other equity

instruments

3. Amount of share-based payment included in equity

4. Others

(III) Profit distribution 187331.82 -187331.82

1. Appropriation of surplus reserve 187331.82 -187331.82

2. Appropriation of profit to owners

3. Others

(IV) Internal carry-over within equity

1.Transfer of capital reserve to capital

2.Transfer of surplus reserve to capital

3.Surplus reserve to cover losses

4. Changes in defined benefit plan carried over to

retained earnings

5. Other comprehensive income carried over to retained

earnings

6. Others

(V) Special reserve

1. Appropriation of current period

2. Application of current period

(VI) Others

IV. Balance at the end of current period 297281600.00 562032851.23 3139918.14 18545850.31 881000219.68

Fu chunlong

[Legal representative]

Lou hong

[Officer in charge of accounting]

Liu yuhong

[Head of accounting department]

Shenzhen Tellus Holding Co. Ltd.Notes to Financial Statements

For the year ended December 31 2019

Monetary unit: RMB Yuan

I. Company profile

Shenzhen Tellus Holding Co. Ltd. (by shares) (the “Company”) is established by Shenzhen Tellus Machinery Co.Ltd. under the approval from the General Office of Shenzhen Municipal People's Government on the

reorganization of Shenzhen Tellus Machinery Co. Ltd. into Shenzhen Tellus Holding Company Limited (Shen fu

ban fu [1991] No. 1012). The Company registered at Shenzhen Administration for Industry and Commerce/Market

Supervision and Administration Bureau on November 10 1986 and obtained a (corporate) business license/social

credit code numbered 91440300192192210U with registered capital of 431058320.00 yuan total share of

431058320 shares (each with par value of one yuan) of which 0 shares and 0 shares are restricted outstanding A

shares and B shares and 392778320 shares and 38280000 shares are unrestricted outstanding A shares and B

shares. The Company’s shares were listed at Shenzhen Stock Exchange respectively on 21 June 1993.The Company belongs to wholesale industry and is mainly engaged in automobile sales automobile maintenance

and testing jewelry sales property leasing and services and so on.The financial statements were approved and authorized for issue by the 6th meeting of the 9th session of the Board

of Directors dated April 2nd 2020.

The Company has brought 11 subsidiaries including Shenzhen Zhongtian Industrial Co. Ltd. Sichuan Tellus

Jewelry Technology Co. Ltd. Shenzhen Huari Toyota Auto Sales Co. Ltd into the consolidation scope. Please

refer to section VI and VII of notes to financial statements for details.II. Preparation basis of the financial statements

(I) Preparation basis

The financial statements have been prepared on the basis of going concern.(II) Assessment of the ability to continue as a going concern

The Company has no events or conditions that may cast significant doubts upon the Company’s ability to continue

as a going concern within the 12 months after the balance sheet date.III. Significant accounting policies and estimates

Important note:

The Company has set up accounting policies and estimates on transactions or events such as impairment of

financial instruments depreciation of fixed assets depreciation of right-of-use assets amortization of intangible

assets and revenue recognition etc. based on the Company’s actual production and operation features.(I) Statement of compliance

The financial statements have been prepared in accordance with the requirements of China Accounting Standards

for Business Enterprises (CASBEs) and present truly and completely the financial position results of operations

and cash flows of the Company.(II) Accounting period

The accounting year of the Company runs from January 1 to December 31 under the Gregorian calendar.(III) Operating cycle

The Company has a relatively short operating cycle for its business an asset or a liability is classified as current if

it is expected to be realized or due within 12 months.(IV) Functional currency

The Company’s functional currency is Renminbi (RMB) Yuan.(V) Accounting treatments of business combination under and not under common control

1. Accounting treatment of business combination under common control

Assets and liabilities arising from business combination are measured at carrying amount of the combined party

included in the consolidated financial statements of the ultimate controlling party at the combination date.

Difference between carrying amount of the equity of the combined party included in the consolidated financial

statements of the ultimate controlling party and that of the combination consideration or total par value of shares

issued is adjusted to capital reserve if the balance of capital reserve is insufficient to offset any excess is adjusted

to retained earnings.

2. Accounting treatment of business combination not under common control

When combination cost is in excess of the fair value of identifiable net assets obtained from the acquiree at the

acquisition date the excess is recognized as goodwill; otherwise the fair value of identifiable assets liabilities and

contingent liabilities and the measurement of the combination cost are reviewed then the difference is recognized

in profit or loss.(VI) Compilation method of consolidated financial statements

The parent company brings all its controlled subsidiaries into its consolidation scope. Theconsolidated financial statements are compiled by the parent company according to “CASBE 33 -

Consolidated Financial Statements” based on relevant information and the financial statements of

the parent company and its subsidiaries.(VII) Classification of joint arrangements and accounting treatment of joint operations

1. Joint arrangements include joint operations and joint ventures.

2. When the Company is a joint operator of a joint operation it recognizes in relation to its interest

in a joint operation:

(1) its assets including its share of any assets held jointly;

(2) its liabilities including its share of any liabilities incurred jointly;

(3) its revenue from the sale of its share of the output arising from the joint operation;

(4) its share of the revenue from the sales of the output by the joint operation; and

(5) its expenses including its share of any expenses incurred jointly.

(VIII) Recognition criteria of cash and cash equivalents

Cash as presented in cash flow statement refers to cash on hand and deposit on demand for

payment. Cash equivalents refer to short-term highly liquid investments that can be readily

converted to cash and that are subject to an insignificant risk of changes in value.(IX) Foreign currency translation

1. Translation of transactions denominated in foreign currency

Transactions denominated in foreign currency are translated into RMB yuan at the spot exchange

rate at the transaction date at initial recognition. At the balance sheet date monetary items

denominated in foreign currency are translated at the spot exchange rate at the balance sheet date

with difference except for those arising from the principal and interest of exclusive borrowings

eligible for capitalization included in profit or loss; non-cash items carried at historical costs are

translated at the spot exchange rate at the transaction date with its RMB amount unchanged;

non-cash items carried at fair value in foreign currency are translated at the spot exchange rate at

the date when the fair value was determined with difference included in profit or loss or other

comprehensive income.

2. Translation of financial statements measured in foreign currency

The assets and liabilities in the balance sheet are translated into RMB at the spot rate at the

balance sheet date; the equity items other than undistributed profit are translated at the spot rate

at the transaction date; the revenues and expenses in the income statement are translated into RMB

at the spot exchange rate at the transaction date. The difference arising from foreign currency

translation is included in other comprehensive income.(X) Financial instruments

1. Classification of financial assets and financial liabilities

Financial assets are classified into the following three categories when initially recognized: (1)

financial assets at amortized cost; (2) financial assets at fair value through other comprehensive

income; (3) financial assets at fair value through profit or loss.

Financial liabilities are classified into the following four categories when initially recognized: (1)

financial liabilities at fair value through profit or loss; (2) financial liabilities that arise when a

transfer of a financial asset does not qualify for derecognition or when the continuing involvement

approach applies; (3) financial guarantee contracts not fall within the above categories (1) and (2)

and commitments to provide a loan at a below-market interest rate which do not fall within the

above category (1) ; (4) financial liabilities at amortized cost.

2. Recognition criteria measurement method and derecognition condition of financial assets and financial

liabilities

(1) Recognition criteria and measurement method of financial assets and financial liabilities

When the Company becomes a party to a financial instrument it is recognized as a financial asset

or financial liability. The financial assets and financial liabilities initially recognized by the

Company are measured at fair value; for the financial assets and liabilities at fair value through

profit or loss the transaction expenses thereof are directly included in profit or loss; for other

categories of financial assets and financial liabilities the transaction expenses thereof are included

into the initially recognized amount. However at initial recognition for accounts receivable that

do not contain a significant financing component or contracts in which the financing components

with associated period less than one year are not considered the Company measures at their

transaction price in accordance with “CASBE14 – Revenues”.

(2) Subsequent measurement of financial assets

1) Financial assets measured at amortized cost

The Company measures its financial assets at the amortized costs using effective interest method.Gains or losses on financial assets that are measured at amortized cost and are not part of hedging

relationships shall be included into profit or loss when the financial assets are derecognized

reclassified through the amortization process or in order to recognize impairment gains or losses.

2) Debt instrument investments at fair value through other comprehensive income

The Company measures its debt instrument investments at fair value. Interests impairment gains

or losses and gains and losses on foreign exchange that calculated using effective interest method

shall be included into profit or loss while other gains or losses are included into other

comprehensive income. Accumulated gains or losses that initially recognized as other

comprehensive income should be transferred out into profit or loss when the financial assets are

derecognized.

3) Equity instrument investments at fair value through other comprehensive income

The Company measures its equity instrument investments at fair value. Dividends obtained (other

than those as part of investment cost recovery) shall be included into profit or loss while other

gains or losses are included into other comprehensive income. Accumulated gains or losses that

initially recognized as other comprehensive income should be transferred out into retained

earnings when the financial assets are derecognized.

4) Financial assets at fair value through profit or loss

The Company measures its financial assets at fair value. Gains or losses arising from changes in

fair value (including interests and dividends) shall be included into profit or loss except for

financial assets that are part of hedging relationships.

(3) Subsequent measurement of financial liabilities

1) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include held-for-trading financial liabilities

(including derivatives that are liabilities) and financial liabilities designated as at fair value

through profit or loss. The Company measures such kind of liabilities at fair value. The amount of

changes in the fair value of the financial liabilities that are attributable to changes in the

Company’s own credit risk shall be included into other comprehensive income unless such

treatment would create or enlarge accounting mismatches in profit or loss. Other gains or losses

on those financial liabilities (including interests changes in fair value that are attributable to

reasons other than changes in the Company’s own credit risk) shall be included into profit or loss

except for financial liabilities that are part of hedging relationships. Accumulated gains or losses

that originally recognized as other comprehensive income should be transferred out into retained

earnings when the financial liabilities are derecognized.

2) Financial liabilities that arise when a transfer of a financial asset does not qualify for

derecognition or when the continuing involvement approach appliesThe Company measures its financial liabilities in accordance with “CASBE23 – Transfer of

Financial Assets”.

3) Financial guarantee contracts not fall within the above categories 1) and 2) and commitments

to provide a loan at a below-market interest rate which do not fall within the above category 1)

The Company measures its financial liabilities at the higher of: a. the amount of loss allowances in

according to impairment requirements of financial instruments; b. the amount initially recognizedless the amount of accumulated amortization recognized in accordance with “CASBE14 –Revenues”.

4) Financial liabilities at amortized cost

The Company measures its financial liabilities at amortized cost using effective interest method.Gains or losses on financial liabilities that are measured at amortized cost and are not part of

hedging relationships shall be included into profit or loss when the financial liabilities are

derecognized and through the amortization process.

(4) Derecognition of financial assets and financial liabilities

1) Financial assets are derecognized when:

a. the contractual rights to the cash flows from the financial assets expire; o

b. the financial assets have been transferred and the transfer qualifies for derecognition in accordance with

“CASBE23 – Transfer of Financial Assets”.

2) Only when the underlying present obligations of a financial liability are relieved totally or partly may the

financial liability be derecognized accordingly.

3. Recognition criteria and measurement method of financial assets transfer

Where the Company has transferred substantially all of the risks and rewards related to the

ownership of the financial asset it derecognizes the financial asset and any right or liability

arising from such transfer is recognized independently as an asset or a liability. If it retained

substantially all of the risks and rewards related to the ownership of the financial asset it

continues recognizing the financial asset. Where the Company does not transfer or retain

substantially all of the risks and rewards related to the ownership of a financial asset it is dealt

with according to the circumstances as follows respectively: (1) if the Company does not retain its

control over the financial asset it derecognizes the financial asset and any right or liability arising

from such transfer is recognized independently as an asset or a liability; (2) if the Company retains

its control over the financial asset according to the extent of its continuing involvement in the

transferred financial asset it recognizes the related financial asset and recognizes the relevant

liability accordingly.If the transfer of an entire financial asset satisfies the conditions for derecognition the difference

between the amounts of the following two items are included in profit or loss: (1) the carrying

amount of the transferred financial asset as of the date of derecognition; (2) the sum of

consideration received from the transfer of the financial asset and the accumulative amount of the

changes of the fair value originally included in other comprehensive income proportionate to the

transferred financial asset (financial assets transferred refer to debt instrument investments at fair

value through other comprehensive income). If the transfer of financial asset partially satisfies the

conditions to derecognition the entire carry amount of the transferred financial asset is between

the portion which is derecognized and the portion which is not apportioned according to their

respective relative fair value and the difference between the amounts of the following two items

are included into profit or loss: (1) the carrying amount of the portion which is derecognized; (2)

the sum of consideration of the portion which is derecognized and the portion of the accumulative

amount of the changes in the fair value originally included in other comprehensive income which

is corresponding to the portion which is derecognized (financial assets transferred refer to debt

instrument investments at fair value through other comprehensive income).

4. Fair value determination method of financial assets and liabilities

(1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the

Company can access at the measurement date.

(2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or

liability either directly or indirectly. Level 2 inputs include: quoted prices for similar assets or liabilities in active

markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than

quoted prices that are observable for the asset or liability for example interest rates and yield curves observable at

commonly quoted intervals; market-corroborated inputs;

(3) Level 3 inputs are unobservable inputs for the asset or liability. Level 3 inputs include interest rate that is not

observable and cannot be corroborated by observable market data at commonly quoted intervals historical

volatility future cash flows to be paid to fulfill the disposal obligation assumed in business combination and

financial forecast developed using the Company’s own data etc.

5. Impairment of financial instruments

(1) Measurement and accounting treatment

The Company on the basis of expected credit loss recognizes loss allowances of financial assets at amortized cost

debt instrument investments contract assets or lease receivable at fair value through other comprehensive income

loan commitments other than financial liabilities at fair value through profit or loss financial guarantee contracts

not belong to financial liabilities at fair value through profit or loss or financial liabilities that arise when a transfer

of a financial asset does not qualify for derecognition or when the continuing involvement approach applies.

Expected credit losses refer to the weighted average of credit losses with the respective risks of a default occurring

as the weights. Credit loss refers to the difference between all contractual cash flows that are due to the Company

in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls)

discounted at the original effective interest rate. Purchased or originated credit-impaired financial assets are

discounted at the credit-adjusted effective interest rate.On the balance sheet date the Company shall only recognize the cumulative changes in the lifetime expected

credit losses since initial recognition as a loss allowance for purchased or originated credit-impaired financial

assets.

For accounts receivable do not contain a significant financing component or contracts in which the financing

components with associated period less than one year are not considered which result from transactions as

regulated in “CASBE14 - Revenues” the Company chooses simplified approach to measure the loss allowance at

an amount equal to lifetime expected credit losses.

For lease receivables accounts receivable and contract assets that result from transactions as regulated in

“CASBE14 - Revenues” and contain a significant financing component the Company chooses simplified approach

to measure the loss allowance at an amount equal to lifetime expected credit losses.

For financial assets other than the above on each balance sheet date the Company shall assess whether the credit

risk on the financial instrument has increased significantly since initial recognition. The Company shall measure

the loss allowance for the financial instrument at an amount equal to the lifetime expected credit losses if the credit

risk on that financial instrument has increased significantly since initial recognition; otherwise the Company shall

measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit loss.

Considering reasonable and supportable forward-looking information the Company compares the risk of a default

occurring on the 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 so as to assess whether the credit risk on the financial

instrument has increased significantly since initial recognition.The Company may assume that the credit risk on a financial instrument has not increased significantly since initial

recognition if the financial instrument is determined to have low credit risk on the balance sheet date.The Company shall estimate expected credit risk and measure expected credit losses on an individual or a

collective basis. When the Company adopts the collective basis financial instruments are grouped with similar

credit risk features.The Company shall remeasure expected credit loss on each balance sheet date and increased or reversed amounts

of loss allowance arising therefrom shall be included into profit or loss as impairment losses or gains. For a

financial asset measured at amortized cost the loss allowance reduce the carrying amount of such financial asset

presented in the balance sheet; for a debt investment measured at fair value through other comprehensive income

the loss allowance shall be recognized in other comprehensive income and shall not reduce the carrying amount of

such financial asset.

(2) Financial instruments with expected credit risk assessed and expected credit losses measured on a collective

basis

Items Basis for determination of

portfolio

Method for measuring expected

credit loss

Other receivables –Portfolio grouped with

related transactions within consolidation scope

Nature of receivables

Based on historical credit loss

experience the current situation

and the forecast of future

economic conditions calculate

expected credit loss through

exposure at default and

12-month or lifetime expected

credit loss rate.Other receivables – Portfolio grouped with

dividend receivables

Other receivables – Portfolio grouped with

aging receivables

Aging

(3) Accounts receivable and contract assets with expected credit losses measured on a collective basis

1) Specific portfolios and method for measuring expected credit loss

Items Basis for determination of

portfolio

Method for measuring expected

credit loss

Accounts receivable – Portfolio aging Aging

Based on historical credit loss

experience the current situation

and the forecast of future economic

conditions prepare the comparison

table of ages and lifetime expected

credit loss rate of accounts

receivable so as to calculate

expected credit loss.

Accounts receivable – Portfolio selling

jewelry

Accounts receivable about

selling jewelry

Based on historical credit loss

experience the current situation

and the forecast of future economic

conditions calculate expected

credit loss through exposure at

default and lifetime expected credit

loss rate.

2) Accounts receivable – comparison table of ages and lifetime expected credit loss rate of XX portfolio

Ages Expected credit loss rate (%)

Within 1 year (inclusive the same hereinafter) 1

1-2 years 5

2-3 years 20

Over 3 years 50

6. Offsetting financial assets and financial liabilities

Financial assets and financial liabilities are presented separately in the balance sheet and are not offset. However

the Company offsets a financial asset and a financial liability and presents the net amount in the balance sheet

when and only when the Company: (a) currently has a legally enforceable right to set off the recognized amounts;

and (b) intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.In accounting for a transfer of a financial asset that does not qualify for derecognition the Company does not

offset the transferred asset and the associated liability.(XI) Inventories

1. Classification of inventories

Inventories include finished goods or goods held for sale in the ordinary course of business work in process in the

process of production and materials or suppliers etc. to be consumed in the production process or in the rendering

of services.

2. Accounting method for dispatching inventories:

Inventories dispatched from storage are accounted for with FIFO method、specific identification method.

3. Basis for determining net realizable value

At the balance sheet date inventories are measured at the lower of cost or net realizable value; provisions for

inventory write-down are made on the excess of its cost over the net realizable value. The net realizable value of

inventories held for sale is determined based on the amount of the estimated selling price less the estimated selling

expenses and relevant taxes and surcharges in the ordinary course of business; the net realizable value of materials

to be processed is determined based on the amount of the estimated selling price less the estimated costs of

completion selling expenses and relevant taxes and surcharges in the ordinary course of business; at the balance

sheet date when only part of the same item of inventories have agreed price their net realizable value is

determined separately and is compared with their costs to set the provision for inventory write-down to be made or

reversed.

4. Inventory system

Perpetual inventory method is adopted.

5. Amortization method of low-value consumables and packages

(1) Low-value consumables

Low-value consumables are amortized with usage times.

(2) Packages

Packages are amortized with usage times.(XII) Non-current assets or disposal groups classified as held for sale

1. Classification of non-current assets or disposal groups as held for sale

Non-current assets or disposal groups are accounted for as held for sale when the following conditions are all met:

a. the asset must be available for immediate sale in its present condition subject to terms that are usual and

customary for sales of such assets or disposal groups; b. its sales must be highly probable i.e. the Company has

made a decision on the sale plan and has obtained a firm purchase commitment and the sale is expected to be

completed within one year.When the Company acquires a non-current asset or disposal group with a view to resale it shall classify thenon-current asset or disposal group as held for sale at the acquisition date only if the requirement of “expected tobe completed within one year” is met at that date and it is highly probable that other criteria for held for sale will

be met within a short period (usually within three months).

An asset or a disposal group is still accounted for as held for sale when the Company remains committed to its

plan to sell the asset or disposal group in the circumstance that non-related party transactions fail to be completed

within one year due to one of the following reasons: a. a buyer or others unexpectedly set conditions that will

extend the sale period while the Company has taken timely actions to respond to the conditions and expects a

favorable resolution of the delaying factors within one year since the setting; (2) a non-current asset or disposal

group classified as held for sale fails to be sold within one year due to rare cases and the Company has taken

action necessary to respond to the circumstances during the initial one-year period and the criteria for held for sale

are met.

2. Measurement of non-current assets or disposal groups as held for sale

(1) Initial measurement and remeasurement

For initial measurement and remeasurement as at the balance sheet date of a non-current asset or disposal group as

held for sale where the carrying amount is higher than the fair value less costs to sell the carrying amount is

written down to the fair value less costs to sell and the write-down is recognized in profit or loss as assets

impairment loss meanwhile provision for impairment of assets as held for sale shall be made.

For a non-current asset or disposal group classified as held for sale at the acquisition date the asset or disposal

group is measured on initial recognition at the lower of its initial measurement amount had it not been so classified

and fair value less costs to sell. Apart from the non-current asset or disposal group acquired through business

combination the difference arising from the initial recognition of a non-current asset or disposal group at the fair

value less costs to sell shall be included into profit or loss.The assets impairment loss recognized for a disposal group as held for sale shall reduce the carrying amount of

goodwill in the disposal group first and then reduce its carrying amount based on the proportion of each

non-current asset’s carrying amount in the disposal group.No provision for depreciation or amortization shall be made on non-current assets as held for sale or non-current

assets in disposal groups as held for sale while interest and other expenses attributable to the liabilities of a

disposal group as held for sale shall continue to be recognized.

(2) Reversal of assets impairment loss

When there is a subsequent increase in fair value less costs to sell of a non-current asset as held for sale at the

balance sheet date the write-down shall be recovered and shall be reversed not in excess of the impairment loss

that has been recognized after the non-current asset was classified as held for sale. The reversal shall be included

into profit or loss. Assets impairment loss that has been recognized before the classification is not reserved.When there is a subsequent increase in fair value less costs to sell of a disposal group as held for sale at the

balance sheet date the write-down shall be recovered and shall be reversed not in excess of the non-current assets

impairment loss that has been recognized after the disposal group was classified as held for sale. The reversal shall

be included into profit or loss. The reduced carrying amount of goodwill and non-current assets impairment loss

that has been recognized before the classification is not reserved.The subsequent reversal of the impairment loss that has been recognized in a disposal group as held for sale the

carrying amount is increased based on the proportion of carrying amount of each non-current assets (excluding

goodwill) in the disposal group.

(3) Non-current asset or disposal group that is no longer classified as held for sale and derecognized

A non-current asset or disposal group that does not met criteria for held for sale and no longer classified as held for

sale or a non-current asset that removed from a disposal group as held for sale shall be measured at the lower of: a.its carrying amount before it was classified as held for sale adjusted for any depreciation. Amortization or

impairment that would have been recognized had it not been classified as held for sale; and b. its recoverable

amount.When a non-current asset or disposal group classified as held for sale is derecognized unrecognized gains or

losses shall be included into profit or loss.(XIII) Long-term equity investments

1. Judgment of 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 require the unanimous consent of the parties sharing control. Significant influence is

the power to participate in the financial and operating policy decisions of the investee but is not control or joint

control of these policies.

2. Determination of investment cost

(1) For business combination under common control if the consideration of the combining party is that it makes

payment in cash transfers non-cash assets assumes its liabilities or issues equity securities on the date of

combination it regards the share of the carrying amount of the equity of the combined party included the

consolidated financial statements of the ultimate controlling party as the initial cost of the investment. The

difference between the initial cost of the long-term equity investments and the carrying value of the combination

consideration paid or the par value of shares issued offsets capital reserve; if the balance of capital reserve is

insufficient to offset any excess is adjusted to retained earnings.When long-term equity investments are obtained through business combination under common control achieved in

stages the Company determines whether it is a “bundled transaction”. If it is a “bundled transaction” stages as a

whole are considered as one transaction in accounting treatment. If it is not a “bundled transaction” investment

cost is initially recognized at the share of the carrying amount of net assets of the combined party included the

consolidated financial statements of the ultimate controlling party. The difference between the acquisition-date

investment cost of long-term equity investments and the carrying amount of the previously held long-term equity

investments plus the carrying amount of the consideration paid for the newly acquired equity is adjusted to capital

reserve; if the balance of capital reserve is insufficient to offset any excess is adjusted to retained earnings.

(2) For business combination not under common control investment cost is initially recognized at the

acquisition-date fair value of considerations paid.When long-term equity investments are obtained through business combination not under common control

achieved in stages the Company determined whether they are stand-alone financial statements or consolidated

financial statements in accounting treatment:

1) In the case of stand-alone financial statements investment cost is initially recognized at the carrying amount of

the previously held long-term equity investments plus the carrying amount of the consideration paid for the newly

acquired equity.

2) In the case of consolidated financial statements the Company determines whether it is a “bundled transaction”.

If it is a “bundled transaction” stages as a whole are considered as one transaction in accounting treatment. If it is

not a “bundled transaction” the carrying value of the acquirer’s previously held equity interest in the acquire is

re-measured at the acquisition-date fair value and the difference between the fair value and the carrying amount is

recognized in investment income; when the acquirer’s previously held equity interest in the acquire involves other

comprehensive income under equity method the related other comprehensive income is reclassified as income for

the acquisition period excluding other comprehensive income arising from changes in net liabilities or assets from

remeasurement of defined benefit plan of the acquiree.

(3) Long-term equity investments obtained through ways other than business combination: the initial cost of a

long-term equity investment obtained by making payment in cash is the purchase cost which is actually paid; that

obtained on the basis of issuing equity securities is the fair value of the equity securities issued; that obtained

through debt restructuring is determined according to “CASBE12 - Debt Restructuring”; and that obtained through

non-cash assets exchange is determined according to “CASBE7 - Non-cash Assets Exchange”.

3. Subsequent measurement and recognition method of gain or loss

For long-term equity investments with control relationship it is accounted for with cost method; for long-term

equity investments with joint control or significant influence relationship it is accounted for with equity method.

4. Disposal of a subsidiary in stages resulting in the Company’s loss of control

(1) Stand-alone financial statements

The difference between the carrying amount of the disposed equity and the consideration obtained thereof is

recognized in profit or loss. If the disposal does not result in the Company’s loss of significant influence or joint

control the remained equity is accounted for with equity method; however if the disposal results in the

Company’s loss of control joint control or significant influence the remained equity is accounted for according to

“CASBE 22 - Financial Instruments: Recognition and Measurement”.

(2) Consolidated financial statements

1) Disposal of a subsidiary in stages not qualified as “bundled transaction” resulting in the Company’s loss of

control

Before the Company’s loss of control the difference between the disposal consideration and the proportionate

share of net assets in the disposed subsidiary from acquisition date or combination date to the disposal date is

adjusted to capital reserve (capital premium) if the balance of capital reserve is insufficient to offset any excess is

adjusted to retained earnings.When the Company loses control the remained equity is re-measured at the loss-of-control-date fair value. The

aggregated value of disposal consideration and the fair value of the remained equity less the share of net assets in

the disposed subsidiary held before the disposal from the acquisition date or combination date to the disposal date

is recognized in investment income in the period when the Company loses control over such subsidiary and

meanwhile goodwill is offset correspondingly. Other comprehensive income related to equity investments in

former subsidiary is reclassified as investment income upon the Company’s loss of control.

2) Disposal of a subsidiary in stages qualified as “bundled transaction” resulting in the Company’s loss of control

In case of “bundled transaction” stages as a whole are considered as one transaction resulting in loss of control in

accounting treatment. Before the Company loses control the difference between the disposal consideration at each

stage and the proportionate share of net assets in the disposed subsidiary is recognized as other comprehensive

income at the consolidated financial statements and reclassified as profit or loss in the period when the Company

loses control over such subsidiary.(XIV) Investment property

1. Investment property includes land use right of rent-out property and of property held for capital appreciation and

buildings that have been leased out.

2. The initial measurement of investment property is based on its cost and subsequent measurement is made using

the cost model the depreciation or amortization method is the same as that of fixed assets and intangible assets.(XV) Fixed assets

1. Recognition principles of fixed assets

Fixed assets are tangible assets held for use in the production or supply of goods or services for rental to others or

for administrative purposes and expected to be used during more than one accounting year. Fixed assets are

recognized if and only if it is probable that future economic benefits associated with the assets will flow to the

Company and the cost of the assets can be measured reliably.

2. Depreciation method of different categories of fixed assets

Categories Depreciation method

Useful life

(years)

Estimated residual

value proportion

(%)

Annual

depreciation

rate (%)

Buildings and structures Straight-line method 35-40 3 2.77-2.43

General equipment Straight-line method 12 3 8.08

Transport facilities Straight-line method 7 3 13.86

Electronic equipment Straight-line method 5-7 3 33.33-13.86

Office and other equipment Straight-line method 7 3 13.86

Owner's renovation fee Straight-line method 10 0 10.00

(XVI) Construction in progress

1. Construction in progress is recognized if and only if it is probable that future economic benefits associated

with the item will flow to the Company and the cost of the item can be measured reliably. Construction in progress

is measured at the actual cost incurred to reach its designed usable conditions.

2. Construction in progress is transferred into fixed assets at its actual cost when it reaches its designed usable

conditions. When the construction completion cost reaches final estimating and auditing of the construction in

progress was not finished while it reaching the designed usable conditions it is transferred to fixed assets using

estimated value first and then adjusted accordingly when the actual cost is settled but the accumulated

depreciation is not to be adjusted retrospectively.(XVII) Borrowing costs

1. Recognition principle of borrowing costs capitalization

Where the borrowing costs incurred to the Company can be directly attributable to the acquisition

and construction or production of assets eligible for capitalization it is capitalized and included in

the costs of relevant assets; other borrowing costs are recognized as expenses on the basis of the

actual amount incurred and are included in profit or loss.

2. Borrowing costs capitalization period

(1) The borrowing costs are not capitalized unless they following requirements are all met: 1) the

asset disbursements have already incurred; 2) the borrowing costs have already incurred; and 3)

the acquisition and construction or production activities which are necessary to prepare the asset

for its intended use or sale have already started.

(2) Suspension of capitalization: where the acquisition and construction or production of a

qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months

the capitalization of the borrowing costs is suspended; the borrowing costs incurred during such

period are recognized as expenses and are included in profit or loss till the acquisition and

construction or production of the asset restarts.

(3) Ceasing of capitalization: when the qualified asset under acquisition and construction or

production is ready for the intended use or sale the capitalization of the borrowing costs is ceased.

3. Capitalization rate and capitalized amount of borrowing costs

For borrowings exclusively for the acquisition and construction or production of assets eligible for

capitalization the to-be-capitalized amount of interests is determined in light of the actual interest

expenses incurred (including amortization of premium or discount based on effective interest

method) of the special borrowings at the present period minus the income of interests earned on

the unused borrowings as a deposit in the bank or as a temporary investment; where a general

borrowing is used for the acquisition and construction or production of assets eligible for

capitalization the Company calculates and determines the to-be-capitalized amount of interests on

the general borrowing by multiplying the weighted average asset disbursement of the part of the

accumulative asset disbursements minus the general borrowing by the capitalization rate of the

general borrowing used.(XVIII) Intangible assets

1. Intangible asset includes land use right trademarks and software. The initial measurement of intangible asset is

based its cost.

2. For intangible assets with finite useful lives its amortization amount is amortized within its useful lives

systematically and reasonably if it is unable to determine the expected realization pattern reliably intangible assets

are amortized by the straight-line method with details as follows:

Items Amortization period (years)

Land use right 50

Trademarks 10

Software 5

3. Expenditures on the research phase of an internal project are recognized as profit or loss when it is incurred. An

intangible asset arising from the development phase of an internal project is recognized if the Company can

demonstrate all of the following: (1) the technical feasibility of completing the intangible asset so that it will be

available for use or sale; (2) its intention to complete the intangible asset and use or sell it; (3) how the intangible

asset will generate probable future economic benefits. Among other things the Company can demonstrate the

existence of a market for the output of the intangible asset or the intangible asset itself or if it is to be used

internally the usefulness of the intangible asset; (4) the availability of adequate technical financial and other

resources to complete the development and to use or sell the intangible asset; and (5) its ability to measure reliably

the expenditure attributable to the intangible asset during its development.(XIX) Impairment of part of non-current assets

For non-current assets such as long-term equity investments investment property at cost model

fixed assets construction in progress intangible assets with finite useful life etc. if at the balance

sheet date there is in dication of impairment the recoverable amount is estimated. For goodwill

recognized in business combination and intangible assets with indefinite useful life no matter

whether there is indication of impairment impairment test is performed annually. Impairment test

on goodwill is performed on related group of assets or a portfolio of groups of assets.When the recoverable amount of such non-current assets is lower than their carrying amount the difference is

recognized as assets impairment loss through profit or loss.(XX) Long-term prepayments

Long-term prepayments are expenses that have been recognized but with amortization period over one year

(excluding one year). They are recorded with actual cost and evenly amortized within its beneficiary period or

stipulated period. If items of long-term prepayments fail to be beneficial to the following accounting periods

residual values of such items are included in profit or loss.(XXI) Employee benefits

1. Employee benefits include short-term employee benefits post-employment benefits termination benefits and

other long-term employee benefits.

2. Short-term employee benefits

The Company recognizes in the accounting period in which an employee provides service short-term employee

benefits actually incurred as liabilities with a corresponding charge to profit or loss or the cost of a relevant asset.

3. Post-employment benefits

The Company classifies post-employment benefit plans as either defined contribution plans or defined benefit

plans.

(1) The Company recognizes in the accounting period in which an employee provides service the contribution

payable to a defined contribution plan as a liability with a corresponding charge to profit or loss or the cost of a

relevant asset.

(2) Accounting treatment by the Company for defined benefit plan usually involves the following steps:

1) In accordance with the projected unit credit method using unbiased and mutually compatible actuarial

assumptions to estimate related demographic variables and financial variables measure the obligations under the

defined benefit plan and determine the periods to which the obligations are attributed. The Company discounts

obligations under the defined benefit plan using the discount rate to determine the present value of the defined

benefit plan obligations and the current service cost;

2) When a defined benefit plan has assets the Company recognizes the deficit or surplus by deducting the present

value of the defined benefit plan obligation from the fair value of defined benefit plan assets as a net defined

benefit plan liability or net defined benefit plan asset. When a defined benefit plan has a surplus the Company

measures the net defined benefit plan asset at the lower of the surplus in the defined benefit plan and the asset

ceiling;

3) At the end of reporting period the Company recognizes the following components of employee benefits cost

arising from defined benefit plan: a. service cost; b. net interest on the net defined benefit plan liability (asset); and

c. Changes as a result of remeasurement of the net defined benefit liability (asset). Item a and item b are

recognized in profit or loss or the cost of a relevant asset. Item c is recognized in other comprehensive income and

is not to be reclassified subsequently to profit or loss. However the Company may transfer those amounts

recognized in other comprehensive income within equity.4. Termination benefits

Termination benefits provided to employees are recognized as an employee benefit liability for termination

benefits with a corresponding charge to profit or loss at the earlier of the following dates: a. when the Company

cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a

curtailment proposal; or b. when the Company recognizes cost or expenses related to a restructuring that involves

the payment of termination benefits.

5. Other long-term employee benefits

When other long-term employee benefits provided by the Company to the employees satisfied the conditions for

classifying as a defined contribution plan those benefits are accounted for in accordance with the requirements

relating to defined contribution plan. The Company recognizes and measures the net liability or net asset of other

long-term employee benefits in accordance with the requirements relation to defined benefit plan. At the end of the

reporting period the Company recognizes the components of cost of employee benefits arising from other

long-term employee benefits as the followings: a. service cost; b. net interest on the net liability or net assets of

other long-term employee benefits; and c. changes as a result of remeasurement of the net liability or net assets of

other long-term employee benefits. As a practical expedient the net total of the aforesaid amounts are recognized

in profit or loss or included in the cost of a relevant asset.(XXII) Provisions

1. Provisions are recognized when fulfilling the present obligations arising from contingencies

such as providing guarantee for other parties litigation products quality guarantee onerous

contract etc. may cause the outflow of the economic benefit and such obligations can be reliably

measured.

2. The initial measurement of provisions is based on the best estimated expenditures required in

fulfilling the present obligations and its carrying amount is reviewed at the balance sheet date.(XXIII) Revenue

1. Revenue recognition principles

(1) Sales of goods

For the sale of goods the realization of sales income shall be recognized under the following

conditions: 1) the main risks and rewards in the ownership of the goods are transferred to the

buyer; 2) the Company will no longer retain the continuous management rights normally

associated with ownership and effectively control the sold development products; 3) the amount of

income can be measured reliably; 4) relevant economic benefits are likely to flow in; 5) the

relevant costs that have occurred or will occur can be measured reliably.

(2) Providing labor services

If the provision of labor services can be reliably estimated (all the following conditions are met:

The amount of income can be measured reliably; The relevant economic benefits are likely to

inflow to the Company; The progress of the transaction can be reliably determined; The cost

incurred and to be incurred in the transaction can be measured reliably) it shall recognize the

revenue from providing services employing the percentage-of-completion method and confirm

the completion of labor service according to the costs incurred as a percentage of the total

estimated costs. If the Company can’t on the date of the balance sheet reliably estimate the

outcome of a transaction concerning the labor services it provides it shall be handled under the

following conditions: If the cost of labor services incurred is expected to be compensated the

revenue from the providing of labor services shall be recognized in accordance with the amount of

the cost of labor services incurred and the cost of labor services shall be carried forward at the

same amount; If the cost of labor services incurred is not expected to compensate the cost

incurred should be included in the current profits and losses and no revenue from the providing of

labor services may be recognized.

(3) Transferring the Right to Use Assets

The revenue of transferring the right to use assets may not be recognized unless the following

conditions are both met: the relevant economic benefits are likely to inflow to the Company; and

the revenue can be reliably measured. The interest income shall be recognized according to the

time and actual interest rate in which other people use the Company’s monetary funds. Royalty

revenue shall be recognized according to the chargeable time and method stipulated in related

contracts and agreements.

2. Revenue recognition method

(1) Car sales revenue

The company sells cars and recognizes the sales revenue after delivering the cars to customers in

accordance with the agreement collecting the cars or obtaining the right to collect the cars.

(2) Jewelry sales revenue

The company's jewelry sales revenue is divided into retail revenue and wholesale revenue

according to the sales method. Retail revenue is recognized when the physical goods have been

delivered to consumers and payment has been received. Wholesale income is confirmed when the

physical goods have been delivered to the customer and the customer confirms the receipt and

collects the payment or obtains the voucher for the payment.

(3) Property lease income

The company's property rental income is recognized on an accrual basis and sales income is

recognized when the leased assets are delivered to the lessee and the rent has been received.(XXIV) Government grants

1. Government grants shall be recognized if and only if the following conditions are all met: (1) the Company

will comply with the conditions attaching to the grants; (2) the grants will be received. Monetary government

grants are measured at the amount received or receivable. Non-monetary government grants are measured at fair

value and can be measured at nominal amount in the circumstance that fair value can’t be assessed.

2. Judgment basis and accounting treatment of Government grants related to assets

Government grants related to assets are government grants with which the Company construct or otherwise

acquire long-term assets under requirements of government. In the circumstances that there is no specific

government requirement the Company shall determine based on the primary condition to acquire the grants and

government grants related to assets are government grants whose primary condition is to construct or otherwise

acquire long-term assets. They offset carrying amount of relevant assets or recognized as deferred income. If

recognized as deferred income they are included in profit or loss on a systematic basis over the useful lives of the

relevant assets. Those measured at notional amount is directly included into profit or loss. For assets sold

transferred disposed or damaged within the useful lives balance of unamortized deferred income is transferred

into profit or loss of the year in which the disposal occurred.

3. Judgment basis and accounting treatment of Government grants related to income

Government grants related to income are government grants other than those related to assets. For government

grants that contain both parts related to assets and parts related to income in which those two parts are blurred and

thus collectively classified as government grants related to income. For government grants related to income used

for compensating the related future cost expenses or losses of the Company are recognized as deferred income and

are included in profit or loss or offset relevant cost during the period in which the relevant cost expenses or losses

are recognized; for government grants related to income used for compensating the related cost expenses or losses

incurred to the Company they are directly included in profit or loss or directly offset relevant cost.

4. Government grants related to the ordinary course of business shall be included into other

income or offset relevant cost based on business nature while those not related to the ordinary

course of business shall be included into non-operating revenue or expenditures.(XXV) Deferred tax assets/Deferred tax liabilities

1. Deferred tax assets or deferred tax liabilities are calculated and recognized based on the

difference between the carrying amount and tax base of assets and liabilities (and the difference of

the carrying amount and tax base of items not recognized as assets and liabilities but with their tax

base being able to be determined according to tax laws) and in accordance with the tax rate

applicable to the period during which the assets are expected to be recovered or the liabilities are

expected to be settled.

2. A deferred tax asset is recognized to the extent of the amount of the taxable income which it is

most likely to obtain and which can be deducted from the deductible temporary difference. At the

balance sheet date if there is any exact evidence that it is probable that future taxable profits will

be available against which deductible temporary differences can be utilized the deferred tax assets

unrecognized in prior periods are recognized.

3. At the balance sheet date the carrying amount of deferred tax assets is reviewed. The carrying

amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient

taxable profits will be available to allow the benefit of the deferred tax asset to be utilized. Such

reduction is subsequently reversed to the extent that it becomes probable that sufficient taxable

income will be available.

4. The income tax and deferred tax for the period are treated as income tax expenses or income

through profit or loss excluding those arising from the following circumstances: (a) business

combination; and (b) the transactions or items directly recognized in equity.(XXVI) Leases

Accounting Treatment of Operating Leas

As a Lessee the Company shall record the rent into relevant assets cost or recognize it as the

current profit or loss on a straight-line basis over the lease term. The initial direct costs incurred

shall be recognized as the current profit or loss; Contingent rents shall be charged into the current

profit or loss when they are incurred.

As a lessor the Company shall recognize the rent as the current profit or loss on a straight-line

basis over the lease term. Initial direct costs incurred by the lessor shall be directly recognized as

the current profit or loss except that costs with larger amounts shall be capitalized and recorded

into the current profit and loss by stages; Contingent rents shall be charged into the current profit

or loss when they are incurred.(XXVII) Segment reporting

Reportable segments are identified based on operating segments which are determined based on the structure of

the Company’s internal organization management requirements and internal reporting system. An operating

segment is a component of the Company that:

(1) engages in business activities from which it may earn revenues and incur expenses;

(2) whose financial performance are regularly reviewed by Management to make decisions about resource to be

allocated to the segment and assess its performance; and

(3) for which financial information regarding financial position financial performance and cash flows is available.

(XXVIII) Significant changes in accounting policies and estimates

1. Significant changes in accounting policies

(1) Changes in accounting policies arising from changes in CASBEs

1) The Company prepared the financial statements for the year ended December 31 2019 in accordance with“Notice of the Ministry of Finance on Revising and Issuing Financial Statement Templates for General

Enterprises” (numbered Cai Kuai [2019] 6) “Notice on Revising and Issuing the Format of Consolidated FinancialStatements (2019 Edition)” (Cai Kuai [2019] 16) and CASBEs and changes in accounting policies are applicable

to retrospective application method. Items of financial statement for the year ended December 31 2018

significantly affected and their amounts are as follows:

Original financial statement items and amounts Revised financial statement items and amounts

Notes receivable and

accounts receivable

86104660.51

Notes receivable

Accounts receivable 86104660.51

Notes payable and

accounts payable

73365876.09

Notes payable

Accounts payable 73365876.09

2) The Company has adopted “CASBE 23 - Transfer of Financial Assets” “CASBE 24 - Hedging and AccountingStandards for Business Enterprises” and “CASBE 37 - Presentation of Financial Instruments” (hereinafter referredto the new standards governing financial instruments) revised by Ministry of Finance of PRC since January 1

2019. Pursuant to regulations on convergence between old and new standards no adjustment shall be made on

comparable information and the difference arising from adoption on the adopting date shall be retrospectively

adjusted into retained earnings and other related financial statement items at the beginning of the reporting period.The new standards governing financial instruments changed the classification and measurement of financial assets

and identified three main measurement categories: amortized cost; measured at fair value and its changes included

in other comprehensive income; measured at fair value and its changes included in the current period profit and

loss. The company classifies financial assets based on its own business model and the contractual cash flow

characteristics of financial assets. Equity investments need to be measured at fair value and their changes included

in the current profit and loss but at the time of initial recognition they can be measured at fair value and their

changes included in other comprehensive income. (Included in the current profit and loss) and the choice is

irrevocable.The new standards governing financial instruments requires that the measurement of impairment of financial assets

be changed from the "incurred loss model" to the "expected credit loss model". It applies to financial assets

measured at amortized cost measured at fair value and whose changes are included in other comprehensive

income. Financial assets lease receivables.

A. Main effects on the financial statements for the year ended December 31 2019 due to adoption of financial

instruments standard are as follows:

Items

Balance sheet

Dec. 31 2018 Effect due to revised

lease standard

Jan. 1 2019

Available-for-sale financial assets 10176617.20 -10176617.20

Investments in other equity instruments 10176617.20 10176617.20

Other current assets 332432494.44 -330400000.00 2032494.44

Held-for-trading financial assets 331523546.74 331523546.74

Retained earnings 184535322.70 1079805.36 185615128.06

Surplus reserves 3139918.14 6244.84 3146162.98

Non-controlling interests 49072678.52 37496.54 49110175.06

B. Reconciliation of financial assets and financial liabilities of the Company classified and measured respectively

according to the new standards governing financial instruments at January 1 2019:

Item

Original standards New standards

Measurement

category

Carrying value Measurement category Carrying value

Monetary asset

Loans and accounts

receivable

169512260.69

Financial assets at

amortized cost

170235668.19

Accounts

receivable

Loans and accounts

receivable

86104660.51

Financial assets at

amortized cost

86104660.51

Item

Original standards New standards

Measurement

category

Carrying value Measurement category Carrying value

Other receivables

Loans and accounts

receivable

14483208.41

Financial assets at

amortized cost

13759800.91

Financial product

Available-for-sale

financial assets

330400000.00

Measured at fair value

through current profit

and loss

331523546.74

Non-trading

equity instrument

investment

Available-for-sale

financial assets

10176617.20

Measured at fair value

through other

comprehensive income

10176617.20

Short-term

borrowings

Financial liabilities 143000000.00

Financial liabilities at

amortized cost

143232810.41

Accounts payable

Other financial

liabilities

73365876.09

Financial liabilities at

amortized cost

73365876.09

Other payables

Other financial

liabilities

250489094.47

Financial liabilities at

amortized cost

250198878.69

Long-term

borrowings

Other financial

liabilities

34934887.55

Financial liabilities at

amortized cost

34992292.92

Long-term

payables

Other financial

liabilities

3920160.36

Financial liabilities at

amortized cost

3920160.36

C. The reconciliation statement of carrying value of original financial assets and financial liabilities of the

Company reclassified and remeasured according to the new standards governing financial instruments on 1

January 2019

Item

Carrying value listed

according to original

standards (31

December 2018)

Reclassified Remeasured

Carrying value listed

according to new

standards (1 January

2019)

A. Financial assets

a. Amortized cost

Monetary assets

Balance by original CAS22 and

balance by new CAS22

169512260.69 723407.50 170235668.19

Accounts receivable

Item

Carrying value listed

according to original

standards (31

December 2018)

Reclassified Remeasured

Carrying value listed

according to new

standards (1 January

2019)

Balance by original CAS22 and

balance by new CAS22

86104660.51 86104660.51

Other receivables

Balance by original CAS22 and

balance by new CAS22

14483208.41 -723407.50 13759800.91

Total financial assets at

amortized cost

270100129.61 270100129.61

b. Measured at fair value through current profit and loss

Other current assets- bank wealth

management products

Balance as shown in original

CAS22

330400000.00

Less: Transfer to fair value

measurement and its changes are

included in the current profit and

loss (new CAS22)

-330400000.00

Balance as shown in new CAS22

Held-for-trading financial assets

Balance as shown in original

CAS22

Balance as shown in new CAS22 330400000.00 1123546.74

Total financial assets at fair value

through profit or loss

331523546.74

330400000.00 1123546.74 331523546.74

c. Measured at fair value through other comprehensive income

Item

Carrying value listed

according to original

standards (31

December 2018)

Reclassified Remeasured

Carrying value listed

according to new

standards (1 January

2019)

Available-for-sale financial assets

Balance as shown in original

CAS22

10176617.20

Less: Transfer to fair value

measurement and its changes are

included in other comprehensive

income (new CAS22)

-10176617.20

Balance as shown in new CAS22

Investments in other equity

instruments

Balance as shown in original

CAS22

Plus: Transfer from

Available-for-sale financial assets

(formerly CAS22)

10176617.20

Balance as shown in new CAS22 10176617.20

Total financial assets at fair value

through other comprehensive

income

10176617.20 10176617.20

B. Financial liabilities

a. Amortized cost

Short-term borrowings

Balance by original CAS22 and

balance by new CAS22

143000000.00 232810.41 143232810.41

Accounts payable

Item

Carrying value listed

according to original

standards (31

December 2018)

Reclassified Remeasured

Carrying value listed

according to new

standards (1 January

2019)

Balance by original CAS22 and

balance by new CAS22

73365876.09 73365876.09

Other payables

Balance by original CAS22 and

balance by new CAS22

250489094.47 -290215.78 250198878.69

Long-term borrowings

Balance by original CAS22 and

balance by new CAS22

34934887.55 57405.37 34992292.92

Long-term payables

Balance by original CAS22 and

balance by new CAS22

3920160.36 3920160.36

Total financial liabilities at

amortized cost

505710018.47 505710018.47

D. The company's original financial asset impairment reserve period end amount adjustments are adjusted to the

new loss provisions classified and measured in accordance with the new financial instrument standards on January

1 2019；

Items

Provision for loss in

accordance with the

original financial

instrument standards

(December 31 2018)

Rearrange Remeasure

Provision for loss

according to the new

financial instrument

standard (January 1

2019)

Accounts receivable 49991339.01 49991339.01

Other receivable 53897224.40 53897224.40

3) The Company has adopted “CASBE 7 – Non-cash Assets Exchange” since June 10 2019 and “CASBE 12 –

Debt Restructuring” since June 17 2019 and changes in accounting policies are applicable to prospective

application method.

2. Significant changes in accounting estimates

(1) Contents and reasons for changes in accounting estimates

Contents and reasons Approval process

Effective

date

Re

marks

①Reason for change

With the completion of the first phase of the

company's Shuibei Jewelry Building the

company's houses and buildings have

undergone great changes; the company's

paperless office has been fully implemented

and electronic equipment has been upgraded at

a faster pace. The situation more accurately

reflects the period during which fixed assets

provide economic benefits to the enterprise and

the actual asset consumption in each period.Therefore the estimated useful lives of fixed

assets such as buildings buildings and

electronic equipment are changed.

②Contents for change

The estimated useful life of the buildings

before the change is 35 years the expected

useful life of the electronic equipment is 7

years the estimated useful life of the buildings

after the change is 35-40 years and the

expected useful life of the electronic equipment

is 5-7 years.

This change in accounting

estimates was reviewed

and approved at the 2nd

meeting of the 9th board

of directors of the

company.The change in

accounting

estimates will be

implemented from

April 1 2019 the

date of approval by

the board of

directors.

(2) Financial statement items and amounts significantly affected

Financial items significantly affected Amounts affected Remarks

Items of balance sheet as of December 31 2019

Fixed assets 1085653.06

Total equity attributable to the parent company 818735.29

Items of income statement of 2019

Operating cost 1085653.06

Financial items significantly affected Amounts affected Remarks

Profit before tax 1085653.06

Net profit -810912.72

Net profit attributable to owners of parent company 818735.29

IV. Taxes

(I) Main taxes and tax rates

Taxes Tax bases Tax rates

Value-added tax (VAT)

The taxable revenue from sales of

goods or rendering of services16%，13%，11%，9%，

5%，6%，3%

Housing property tax

For housing property levied on the basis of price

housing property tax is levied at the rate of 1.2% of

the balance after deducting 30% of the cost; for

housing property levied on the basis of rent housing

property tax is levied at the rate of 12% of rent

revenue.

1.2%、12%

Urban maintenance and

construction tax

Turnover tax payable 7%

Education surcharge Turnover tax payable 3%

Local education surcharge Turnover tax payable 2%

Enterprise income tax Taxable income 20%、25%

Different enterprise income tax rates applicable to different taxpayers:

Taxpayers Income tax rate

Shenzhen Xinyongtong Auto Vehicle Inspection

Equipment Co. Ltd.

20%

Taxpayers other than the above-mentioned 25%

(II) Tax preferential policies

According to the State Administration of Taxation Notice on the Implementation of Inclusive Tax

Relief Policy for Small and Micro Enterprises (Fiscal [2019] No.13) Shenzhen Xinyongtong Auto

Vehicle Inspection Equipment Co. Ltd. enjoys preferential tax policies for small and micro

enterprises and pays corporate income tax at a rate of 20%.V. Notes to items of consolidated financial statements

Remarks: “Opening balance” in this report refers to balances as at January 1 2019.(I) Notes to items of the consolidated balance sheet

1. Cash and bank balances

(1) Details

Items Closing balance Opening balance

Cash on hand 120351.17 84099.49

Cash in bank 428731254.87 170151568.70

Total 428851606.04 170235668.19

[Note]: For the difference between the opening number and the year-end number of the previous

year (December 31 2018) please refer to Note III (XXVIII) 1 (1) 2) of this financial statement for

details.

(2) Other remarks

As of December 31 2019 the company's currency funds with restricted use rights were RMB

26664140.00 which was the company's supervision funds for the development of the Tellus

Jimeng Gold Jewellery Industrial Park Upgrade and Renovation Project 03 plot project.

2. Held-for-trading financial assets

Items Closing balance Opening balance

Financial assets classified as at fair value

through profit or loss

60486575.34 331523546.74

Including: Debt instrument investments 60486575.34 331523546.74

Total 60486575.34 331523546.74

[Note]: For the difference between the opening number and the year-end number of the previous

year (December 31 2018) please refer to Note III (XXVIII) 1 (1) 2) of this financial statement for

details.

3. Accounts receivable

(1) Details

1) Details on categories

Categories

Closing balance

Book balance Provision for bad debts

Carrying

amount Amount

% to

total

Amount Provision

proportion (%)

Receivables with

provision made on an

individual basis

49125862.29 30.16 49125862.29 100.00

Receivables with

provision made on a

collective basis

113750731.59 69.84 1137507.32 1.00 112613224.27

Total 162876593.88 100.00 50263369.61 30.86 112613224.27

(Continued)

Categories

Opening balance

Book balance Provision for bad debts Carrying amount

Amount % to total Amount Provision

proportion (%)

Receivables with provision

made on an individual basis 135673534.32 99.69 49991339.01 36.85 85682195.31

Receivables with provision

made on a collective basis 422465.20 0.31 422465.20

Total

136095999.52 100.00 49991339.01 36.73 86104660.51

2) Accounts receivable with provision made on an individual basis

Debtors Book balance Provision for bad

debts

Provision

proportion

(%)

Reasons

Shenzhen Jinlu Trading Co.Ltd. 9846607.00 9846607.00 100.00

The aging is too

long to collect

Guangdong Zhanjiang Sanxing

Automobile Co.Ltd

4060329.44 4060329.44 100.00

The aging is too

long to collect

Changlong WANG 2370760.40 2370760.40 100.00

The aging is too

long to collect

Huizhou Jiandacheng Co.Ltd. 2021657.70 2021657.70 100.00

The aging is too

long to collect

Jiangling Automobile Factory 1191059.98 1191059.98 100.00

The aging is too

long to collect

Yangjiang Automobile Trading

Co.Ltd.

1150000.00 1150000.00 100.00

The aging is too

long to collect

Guangdong Province Commodity

Group

1862000.00 1862000.00 100.00

The aging is too

long to collect

Others 26623447.77 26623447.77 100.00

The aging is too

long to collect

Subtotal

49125862.29 49125862.29 100.00

3) Accounts receivable with provision for bad debts made on a collective basis

Items

Closing balance

Book balance Provision for bad debts

Provision proportion

(%)

Aging portfolio 12352039.14 123520.40 1.00

Jewellery Sales Portfolio 101398692.45 1013986.92 1.00

Subtotal

113750731.59 1137507.32 1.00

4) Account receivables based on aging portfolio for bad debt provision

Ages

Closing balance

Book balance Provision for bad debts

Provision proportion

(%)

Within 1 year 12352039.14 123520.40 1.00

Subtotal 12352039.14 123520.40 1.00

(2) Aging situation

Items Ending balance

Within 1 year 113750731.59

Over 3 years 49125862.29

Total 162876593.88

(3) Changes in provision for bad debts

Items Opening balance

Increase Decrease

Closing

balance Accrual Recovery Others Reversal Written

off

Others

Receivables with

provision made on

an individual

basis

49991339.01 865476.72 49125862.29

Receivables

with provision

made on a

collective basis

1137507.32 1137507.32

Subtotal 49991339.01 1137507.32 865476.72 50263369.61

(4) Details of the top 5 debtors with largest balances

Debtors Book balance

Proportion to the total

balance of accounts

receivable (%)

Provision for bad debts

Shenzhen Jinlu Trading Co.Ltd. 9846607.00 6.05 9846607.00

Guangdong Zhanjiang Sanxing

Antomobile Co.Ltd.

4060329.44 2.49 4060329.44

Hongcheng Zhang 3204215.14 1.97 32042.15

Zhenci Ye 3202999.50 1.97 32030.00

Shihui Zhou 3201911.47 1.97 32019.11

Subtotal 23516062.55 14.45 14003027.70

4. Advances paid

(1) Age analysis

Ages

Closing balance Opening balance

Book

balance

% to

total

Provision

for

impairment

Carrying

amount

Book

balance

% to

total

Provision

for

impairment

Carrying

amount

Within

1 year 12671077.95 99.90 12671077.95 9092219.33 99.78 9092219.33

years 632.00 0.01 632.00

Over 3

years 11893.94 0.09 11893.94 20253.94 0.22 20253.94

Total

12683603.89 100.00 12683603.89 9112473.27 100.00 9112473.27

(2) Details of the top 5 debtors with largest balances

Debtors Book balance Proportion to the total balance of

advances paid (%)

FAW Toyota Motor Sales Co. Ltd.

11390694.14 89.81

Toyota Motor (China) Investment Co. Ltd.

1114252.00 8.78

Xiaopeng Automobile Sales Co. Ltd.

39022.00 0.31

Aolaite Automotive Technology Co. Ltd.

11260.00 0.09

Meidisi Elevator Co. Ltd.

10290.00 0.08

Subtotal

12565518.14 99.07

5. Other receivables

(1) Details

1) Details on categories

Categories

Closing balance

Book balance Provision for bad debts

Carrying

amount Amount % to

total

Amount Provision

proportion (%)

Receivables with provision made

on an individual basis 49838895.16 51.24 49838895.16 100.00

Including: Interest receivable

Dividend receivable

Other receivables

49838895.16 51.24 49838895.16 100.00

Receivables with provision made

on a collective basis 47424364.96 48.76 2515818.56 5.30 44908546.40

Including: Interest receivable

145

Categories

Closing balance

Book balance Provision for bad debts

Carrying

amount Amount % to

total

Amount Provision

proportion (%)

Dividend receivable

39647732.42 40.76 39647732.42

Other receivables

7776632.54 8.00 2515818.56 32.35 5260813.98

Total

97263260.12 100.00 52354713.72 53.83 44908546.40

(Continued)

Categories

Opening balance[Note]

Book balance Provision for bad debts

Carrying

amount Amount % to

total

Amount Provision

proportion (%)

Receivables with provision made

on an individual basis 49895767.67 73.75 49895767.67 100.00

Including: Interest receivable

Dividend receivable

Other receivables

49895767.67 73.75 49895767.67 100.00

Receivables with provision made

on a collective basis 17761257.64 26.25 4001456.73 22.53 13759800.91

Including: Interest receivable

Dividend receivable

232683.74 0.34 232683.74

Other receivables

17528573.90 25.91 4001456.73 22.83 13527117.17

Total

67657025.31 100.00 53897224.40 79.66 13759800.91

[Note]: For details of the difference between the beginning of the year and the end of the previous year

(December 31 2018) please refer to Note III (VVXIII) 1 (1) 2) of this financial statement.

2) Other receivables with provision made on an individual basis

Debtors Book balance Provision for

bad debts

Provision

proportion

(%)

Reasons for

provision made

Other receivables

Zhongqi Huanan Automobile Sales

Co.Ltd. 9832956.37 9832956.37 100.00

It is too long to

collect

Shenzhen Nanfang Industry and

Trade Co.Ltd. 7359060.75 7359060.75 100.00

It is too long to

collect

Shenzhen Zhonghao (Group)

Co.Ltd. 5000000.00 5000000.00 100.00

It is too long to

collect

Debtors Book balance Provision for

bad debts

Provision

proportion

(%)

Reasons for

provision made

Jinbeili Household Company 2706983.51 2706983.51 100.00

It is too long to

collect

Shenzhen Xinxingtai Trading

Co.Ltd. 2418512.90 2418512.90 100.00

It is too long to

collect

Shenzhen Petrochemical Group 1920153.29 1920153.29 100.00

It is too long to

collect

Shenzhen Tefa Huatong Casing

Co.Ltd. 1212373.79 1212373.79 100.00

It is too long to

collect

Shenzhen Jinhe Mould Co.Ltd. 1023560.00 1023560.00 100.00

It is too long to

collect

Others 18365294.55 18365294.55 100.00

It is too long to

collect

Subtotal

49838895.16 49838895.16 100.00

3) Other receivables with provision made on a collective basis

Portfolios

Closing balance

Book balance

Provision for bad

debts

Provision

proportion (%)

Other receivables-ageing portfolio 7776632.54 2515818.56 32.35

Including: within 1 year 2120412.24 21204.12 1.00

1-2 years 663633.11 33181.65 5.00

2-3 years 116202.70 23240.54 20.00

over 3 years 4876384.49 2438192.25 50.00

Other receivables-portfolio of dividend

receivables

39647732.42

Subtotal 47424364.96 2515818.56 5.30

Remarks on the determination basis of portfolio:

(2) Age analysis

Items Closing book balance

Within 1 year

41768144.66

1-2 years

663633.11

2-3 years

116202.70

Over 3 years

54715279.65

Subtotal

97263260.12

(3) Changes in provision for bad debts

1) Details

Items

Phase I Phase II Phase III

Total 12?month

expected credit

losses

Lifetime

expected credit

losses (credit

not impaired)

Lifetime expected

credit losses

(credit impaired)

Opening balance

4001456.73 49895767.67 53897224.40

Opening balance in the

current period 4001456.73 49895767.67 53897224.40

--Transferred to phase II

--Transferred to phase III

--Reversed to phase II

--Reversed to phase I

Provision made in the

current period -1485638.17 13127.49 -1472510.68

Provision recovered in

current period 70000.00 70000.00

Provision reversed in

current period

Provision written-off in

current period

Other changes

Closing balance

2515818.56 49838895.16 52354713.72

(4) Other receivables categorized by nature

Nature of receivables Closing balance Opening balance

Dividends receivable 39647732.42 232683.74

Security deposit 35477.21 39535.50

Reserve 43385.72 63146.12

Receivable temporary payments 57536664.77 67321659.95

Total

97263260.12 67657025.31

(5) Details on dividend receivable

Items Closing balance Opening balance

China Pufa Machinery Industrial Co.Ltd. 547184.35

Shenzhen SDG Tellus Property Management Co. Ltd. 232683.74

Shenzhen Dongfeng Motor Co. Ltd. 39100548.07

Total

39647732.42 232683.74

(6) Details of the top 5 debtors with largest balances

Debtors Nature of

receivables

Book balance Ages

Proportion

to the total

balance of

other

receivables

(%)

Provision for

bad debts

Zhongqi Huanan Automobile

Sales Co. Ltd

Current

account

9832956.37

Over 3

years

10.11 9832956.37

Shenzhen Nanfang Industry and

Trade Co. Ltd

Current

account

7359060.75

Over 3

years

7.57 7359060.75

Shenzhen Zhonghao (Group)

Co. Ltd.

Current

account

5000000.00

Over 3

years

5.14 5000000.00

Shenzhen Kaifeng Special

Automobile Industry Co. Ltd.

Current

account

4413728.50

Over 3

years

4.54 4413728.50

Jinbeili electronics co. Ltd.

Current

account

2706983.51

Over 3

years

2.78 2706983.51

Subtotal 29312729.13 30.14 29312729.13

6. Inventories

(1) Details

Items

Closing balance Opening balance

Book

balance

Provision for

write-down

Carrying

amount

Book

balance

Provision for

write-down

Carrying

amount

Raw materials 15079409.32 14772382.17 307027.15 15047710.72 14772382.17 275328.55

Goods on hand 35204057.35 14121481.67 21082575.68 26169979.13 14102453.28 12067525.85

Total 50283466.67 28893863.84 21389602.83 41217689.85 28874835.45 12342854.40

(2) Provision for inventory write-down

Items Opening

balance

Increase Decrease

Closing

balance Provision Others Reversal or

written-off

Others

Raw materials 14772382.17 14772382.17

Items Opening

balance

Increase Decrease

Closing

balance Provision Others Reversal or

written-off

Others

Goods on hand 14102453.28 19028.39 14121481.67

Subtotal 28874835.45 19028.39 28893863.84

7. Assets as held for sale

Items

Closing balance Opening balance

Book

balance

Provision

for

impairment

Carrying

amount

Book

balance

Provision for

impairment

Carrying

amount

Long-term equity

investment

85017251.77 85017251.77

Total 85017251.77 85017251.77

[Note]: The company has completed the sale of 43% equity of Shenzhen Xinglong Machinery Mould Co. Ltd. in

this year. For details please refer to Note V (II) 7 of this financial statement.

8. Other current assets

(1) Details

Items Closing balance Opening balance[Note]

Deducted input VAT 3403969.23 2032494.44

Total

3403969.23 2032494.44

[Note]: For the difference between the opening number and the year-end number of the previous year (December

31 2018) please refer to Note III (XXVIII) 1 (1) 2) of this financial statement for details.

9. Long-term receivables

(1) Details

Items

Closing balance Opening balance

Discount

rate

range

Book

balance

Provision

for bad

debts

Carrying

amount

Book

balance

Provision

for bad

debts

Carrying

amount

Related transactions 2179203.68 2179203.68 2179203.68 2179203.68

Total 2179203.68 2179203.68 2179203.68 2179203.68

(2) Changes in provision for bad debts

Items Opening

balance

Increase Decrease

Closing

balance Accrual Recovery Others Reversed Written off Others

Provision made on

an individual basis

2179203.68 2179203.68

Subtotal 2179203.68 2179203.68

10. Long-term equity investments

(1) Categories

Items

Closing balance Opening balance

Book

balance

Provision for

impairment

Carrying

amount

Book

balance

Provision for

impairment

Carrying

amount

Investments in

associates

94822114.42 14644406.04 80177708.38 165996577.00 14644406.04 151352170.96

Investments in

joint ventures

82000835.67 82000835.67 73292595.25 73292595.25

Other equity

investments

8656000.00 8656000.00 8656000.00 8656000.00

Total 185478950.09 23300406.04 162178544.05 247945172.25 23300406.04 224644766.21

(2) Details

Investees Opening

balance

Increase/Decrease

Investments

increased

Investments

decreased

Investment income

recognized under

equity method

Adjustment in

other

comprehensive

income

Joint ventures

Shenzhen Tellus Jimeng Investment Co. Ltd. 62039013.62 8116369.88

Shenzhen Tellus Xing Investment Co. Ltd. 11253581.63 591870.54

Subtotal 73292595.25 8708240.42

Associates

Shenzhen Ren fu Tellus Automobiles Services

Co. Ltd.

40203423.40 10610308.80

Shenzhen Automobile Industrial Import and

Export Co. Ltd.

7482170.28 -5455762.30

Shenzhen Dongfeng Automobile Co. Ltd. 103666577.28 5271538.99

Shenzhen Xinyongtong Pump and

Environmental Protection Co. Ltd.

Shenzhen Xinyongtong Consulting Service

Co.Ltd.

Shenzhen Tellus Automobile Services Chain

Co. Ltd. [Note 3]

Shenzhen Xinyongtong Automobile Services

Co. Ltd. [Note 3]

Shenzhen Xinyongtong Dongxiao Automobile

Parts Sales Co. Ltd. [Note 3]

Shenzhen Yongtong Xinda Inspection

Eqiupment Co. Ltd [Note 3]

Hunan Changyang Industrial Co. Ltd. [Note 1]

Shenzhen Jiecheng Electronic Co. Ltd. [Note

1]

Shenzhen Xiandao Chemical Materials Co.Ltd[Note 1]

Investees Opening

balance

Increase/Decrease

Investments

increased

Investments

decreased

Investment income

recognized under

equity method

Adjustment in

other

comprehensive

income

China Automobile Shenzhen Trading Co. Ltd.

[Note 1]

Shenzhen General Standard Co. Ltd. [Note 1]

Zhongqi South China Automobile Sales Co.Ltd. [Note 1]

Shenzhen Bailiyuan Power Co. Ltd. [Note 1]

Shenzhen Yimin Automobile Trading Co. Ltd.[Note 1]

Shenzhen Torch Spark Plug Industrial Co. Ltd.[Note 1]

Subtotal 151352170.96 10426085.49

Shenzhen Hanli Hi-technology Ceramics Co.Ltd. [Note 1]

Nanfang Automobile Repairing Center [Note

1]

Subtotal

Total 224644766.21 19134325.91

(Continued)

Investees

Increase/Decrease

Closing balance

Closing balance of

provision for

impairment

Changes in

other equity

Cash

dividend/profit

declared for

distribution

Provision for

impairment

Others

Joint ventures

Shenzhen Tellus Jimeng Investment

Co. Ltd.

70155383.50

Shenzhen Tellus Xing Investment

Co. Ltd.

11845452.17

Subtotal 82000835.67

Associates

Shenzhen Ren fu Tellus Automobiles

Services Co. Ltd.

17500000.00 33313732.20

Shenzhen Automobile Industrial 2026407.98

Investees

Increase/Decrease

Closing balance

Closing balance of

provision for

impairment

Changes in

other equity

Cash

dividend/profit

declared for

distribution

Provision for

impairment

Others

Import and Export Co. Ltd.Shenzhen Dongfeng Automobile Co.Ltd.

64100548.07 44837568.20

Shenzhen Xinyongtong Pump and

Environmental Protection Co. Ltd.

127836.59

Shenzhen Xinyongtong Consulting

Service Co.Ltd.

41556.83

Shenzhen Tellus Automobile Services

Chain Co. Ltd. [Note 3]

Shenzhen Xinyongtong Automobile

Services Co. Ltd. [Note 3]

Shenzhen Xinyongtong Dongxiao

Automobile Parts Sales Co. Ltd.

[Note 3]

Shenzhen Yongtong Xinda Inspection

Eqiupment Co. Ltd [Note 3]

Hunan Changyang Industrial Co.Ltd. [Note 1]

1810540.70

Shenzhen Jiecheng Electronic Co.Ltd. [Note 1]

3225000.00

Shenzhen Xiandao Chemical

Materials Co. Ltd[Note 1]

4751621.62

China Automobile Shenzhen Trading

Co. Ltd. [Note 1]

400000.00

Shenzhen General Standard Co. Ltd.[Note 1]

500000.00

Zhongqi South China Automobile

Sales Co. Ltd. [Note 1]

2250000.00

Shenzhen Bailiyuan Power Co. Ltd.[Note 1]

1320000.00

Shenzhen Yimin Automobile Trading

Co. Ltd. [Note 1]

200001.10

Shenzhen Torch Spark Plug

Industrial Co. Ltd. [Note 1]

17849.20

Subtotal 81600548.07 80177708.38 14644406.04

Investees

Increase/Decrease

Closing balance

Closing balance of

provision for

impairment

Changes in

other equity

Cash

dividend/profit

declared for

distribution

Provision for

impairment

Others

Shenzhen Hanli Hi-technology

Ceramics Co. Ltd. [Note 1]

1956000.00

Nanfang Automobile Repairing

Center [Note 1]

6700000.00

Subtotal 8656000.00

Total 81600548.07 162178544.05 23300406.04

[Note 1]: Companies have been withdrawn so we have recognized 100% provision for the bad-debt.[Note 2]: The operating period of Shenzhen Hanli Hi-technology Ceramics Co. Ltd. starts from September 21

1993 to September 21 1998. The operating period of Nanfang Automobile Repairing Center starts from July 12

1994 to July 11 2002 As of now these companies have ceased operating activities for many years and have been

revoked for industrial and commercial registration because they did not participate in the annual industrial and

commercial inspection. The Company has been unable to exercise effective control over these companies. These

companies have not been included in the consolidated scope of the Company's consolidated financial statements.The book value of the Company's investment in these companies is zero.[Note 3]: The number of these companies' long-term equity investments is adjusted to RMB 0 through the

recognition of profit and loss adjustments in accordance with the equity method.

11. Other equity instrument investments

(1) Details

Items Closing

balance

Opening

balance

Dividend

income

Accumulated amount of

gains or losses

transferred from other

comprehensive income

to retained earnings

Amount Reasons

Shenzhen Ren fu Tellus

Automobiles Services Co. Ltd.

10176617.20 10176617.20 547184.35

Subtotal 10176617.20 10176617.20 547184.35

[Note]: Refer to Note III (XXVIII) 1 (1) 2) of the financial statements for the difference between beginning

balance and ending balance of prior period (31 December 2018) for details.

(2) Reasons for equity instrument investments designated as at fair value through other comprehensive income

The company's equity investment in China Pufa Machinery Industry Co. Ltd. is a non-trading equity instrument

investment so the company designated it as an equity instrument investment measured at fair value and whose

changes are included in other comprehensive income.12. Investment property

(1) Details

Items Buildings and

structures

Land use right Total

Cost

Opening balance 602025611.05 602025611.05

Increase 21761479.25 49079520.00 70840999.25

1) Transferred in from construction in

progress

21761479.25 21761479.25

2) Transferred in from land use right 49079520.00 49079520.00

Decrease 9546631.74 9546631.74

1) Disposal 9546631.74 9546631.74

Closing balance 614240458.56 49079520.00 663319978.56

Accumulated depreciation and amortization

Opening balance 98103197.35 98103197.35

Increase 16816270.10 1115443.68 17931713.78

1) Accrual 16816270.10 1115443.68 17931713.78

Decrease 7314436.12 7314436.12

1) Disposal 7314436.12 7314436.12

Closing balance 107605031.33 1115443.68 108720475.01

Provision for impairment

Carrying amount

Closing balance 506635427.23 47964076.32 554599503.55

Opening balance 503922413.70 503922413.70

(2) Investment property with certificate of titles being unsettled

Items Carrying amount Reasons for unsettlement

Shuibei Jewelry Building (Houses and

buildings)

443354678.36 Without settlemen

Building 12 Shaogang 17493.17 Reason left over by history

Twelfth Shop in Shaogang 54669.99 Reason left over by history

Subtotal 443426841.52

13. Fixed assets

(1) Fixed assets

1) Details

Items Buildings and structures General equipment Transport facilities Electronic equipment

Office and other

equipment

Owner's renovation

fee

Subtotal/

Total

Cost

Opening balance 266262162.27 11674073.65 5086600.26 9657434.32 2852584.72 2697711.99 298230567.21

Increase 476108.84 1356142.21 1297282.55 485737.96 3615271.56

1) Acquisition 476108.84 1356142.21 1297282.55 485737.96 3615271.56

Decrease 780181.00 1254807.13 1222374.88 308074.28 3565437.29

1) Disposal/scrap 780181.00 1254807.13 1222374.88 308074.28 3565437.29

Closing balance 266262162.27 11370001.49 5187935.34 9732341.99 3030248.40 2697711.99 298280401.48

Accumulated depreciation

Opening balance 156944286.41 8711585.77 3707548.67 7355334.20 2176012.31 2416329.26 181311096.62

Increase 7115184.69 348329.48 368787.41 614690.01 88846.99 8535838.58

1) Accrual 7115184.69 348329.48 368787.41 614690.01 88846.99 8535838.58

Decrease 695169.15 874550.34 1096673.00 265390.88 2931783.37

1) Disposal/scrap 695169.15 874550.34 1096673.00 265390.88 2931783.37

Closing balance 164059471.10 8364746.10 3201785.74 6873351.21 1999468.42 2416329.26 186915151.83

Provision for impairment

Items Buildings and structures General equipment Transport facilities Electronic equipment

Office and other

equipment

Owner's renovation

fee

Subtotal/

Total

Opening balance 3555385.70 319675.11 6165.00 17984.71 64859.81 281382.73 4245453.06

Increase

1) Provision made

Decrease

1) Disposal/scrap

Closing balance 3555385.70 319675.11 6165.00 17984.71 64859.81 281382.73 4245453.06

Carrying amount

Closing balance 98647305.47 2685580.28 1979984.60 2841006.07 965920.17 107119796.59

Opening balance 105762490.16 2642812.77 1372886.59 2284115.41 611712.60 112674017.53

2) Fixed assets rented-out under operating leases

Items Carrying amount

Buildings and structures 70985071.68

Subtotal 70985071.68

3) Fixed assets with certificate of titles being unsettled

Items Carrying amount Reasons for unsettlement

Yongtong building 33889931.83 Reason left over by history

Automobile building 16494771.49 Reason left over by history

Tellus building underground park 9504850.52 Unable to handle real estate license

Zhonghe building 4875483.21 Reason left over by history

The 1st 2nd 3rd factory building 3 to 5 layers 3778515.76 Reason left over by history

Tellus building conversion layer 1650422.60 Unable to handle real estate license

The 16th apartment house Taohua Yuan 1497225.36 Reason left over by history

Shuibei Zhongtian building 979977.78 Reason left over by history

Floor 1 of business housing Baoan 953535.81 Reason left over by history

Warehouse 883364.77 Reason left over by history

Warehouse of trading department 78463.81 Reason left over by history

Songquan apartment（Mix） 15864.02 Reason left over by history

Hostel at North Remin Road 5902.41 Reason left over by history

Subtotal 74608309.37 Reason left over by history

14. Construction in progress

(1) Construction in progress

1) Details

Projects

Closing balance Opening balance

Book

balance

Provision

for

impairment

Carrying

amount

Book

balance

Provision

for

impairment

Carrying

amount

Tellus shuibei Jewelry Building 35321704.26 35321704.26 12843571.97 12843571.97

421 plant decoration 8593316.07 8593316.07

Phase I and Phase II

underground connection project

3710247.00 3710247.00

Baoku project 29126.22 29126.22

Total 47654393.55 47654393.55 12843571.97 12843571.97

2) Changes in significant projects

Projects Budgets Opening balance Increase

Transferred to

fixed assets

Other

decrease

Closing balance

Tellus shuibei

Jewelry Building

515460000.00 12843571.97 22478132.29 35321704.26

421 plant decoration 29910000.00 8593316.07 8593316.07

Subtotal

(Continued)

Projects

Accumulated

investment to

budget

Completion

percentage

(%)

Accumulated

amount of

borrowing cost

capitalization

Amount of

borrowing cost

capitalization in

current period

Annual

capitalization rate

(%)

Fund

source

Tellus shuibei

Jewelry Building

6.85 6.85

private

capital

421 plant

decoration

28.73 28.73

private

capital

Subtotal

15. Intangible assets

(1) Details

Items Land use right Trademarks Software Total

Cost

Opening balance 56252774.80 128500.00 1093185.00 57474459.80

Increase 48693599.00 488960.00 49182559.00

1) Acquisition 48693599.00 488960.00 49182559.00

Decrease 54284923.80 54284923.80

1) Transfer to investment real estate 54284923.80 54284923.80

Closing balance 50661450.00 128500.00 1582145.00 52372095.00

Accumulated amortization

Opening balance 5490224.49 82674.35 889278.71 6462177.55

Increase 428195.15 6948.33 118952.10 554095.58

1) Accrual 428195.15 6948.33 118952.10 554095.58

Decrease 5205403.80 5205403.80

1) Transfer to investment real estate 5205403.80 5205403.80

Closing balance 713015.84 89622.68 1008230.81 1810869.33

Provision for impairment

Carrying amount

Closing balance 49948434.16 38877.32 573914.19 50561225.67

Opening balance 50762550.31 45825.65 203906.29 51012282.25

16. Long-term prepayments

(1) Details

Items Opening

balance

Increase Amortization Other

decreases

Closing balance

Renovation costs 6304607.22 10200338.82 2898140.55 13606805.49

Total 6304607.22 10200338.82 2898140.55 13606805.49

17. Deferred tax assets and deferred tax liabilities

(1) Deferred tax assets before offset

Items

Closing balance Opening balance

Deductible temporary

difference

Deferred tax asset

Deductible temporary

difference

Deferred tax asset

Provision for impairment of assets 34635849.55 8658962.39 78513371.56 19628342.90

Equity investment difference 14844139.31 3711034.83

Unrealized profit from internal

transactions

4062835.94 1015708.98

Total 34635849.55 8658962.39 97420346.81 24355086.71

(2) Details of unrecognized deferred tax assets

Items Closing balance Opening balance

Deductible temporary difference 127244422.02 92121330.08

Deductible losses 19619056.75 44070344.23

Subtotal 146863478.77 136191674.31

(3) Maturity years of deductible losses of unrecognized deferred tax assets

Maturity years Closing balance Opening balance Remarks

Year 2019 14499089.58

Year 2020 505851.30 505851.30

Year 2021 1484364.61 2121146.48

Year 2022 4702701.91 7146101.41

Year 2023 5499309.62 19798155.46

Year 2024 7426829.31

Subtotal 19619056.75 44070344.23

18. Other non-current assets

Items Closing balance Opening balance

Prepayment for engineering equipment 6789167.54 3256964.72

Others 100000.00 100000.00

Items Closing balance Opening balance

Total 6889167.54 3356964.72

19. Short-term borrowings

Items Closing balance Opening balance[Note]

Unsecured borrowings 143232810.41

Total 143232810.41

[Note]: For details of the difference between the beginning of the year and the end of the previous year (December 31 2018) please

refer to Note III (XXVIII) 1 (1) 2) of this financial statement.

20. Accounts payable

(1) Details

Items Closing balance Opening balance

Goods and services purchases 5671144.03 6658229.85

Engineering equipment 63416286.39 66707646.24

Total 69087430.42 73365876.09

(2) Significant accounts payable with age over one year

Items Closing balance Reasons for unsettlement

Shenzhen Yinglong Jian'an (Group) Co. Ltd. 31005631.14 Unsettled

Shenzhen Tefa Real Estate Co. Ltd. 6054855.46 Not repaid by related company

Shenzhen Yinuo Construction Engineering Co. Ltd. 4274022.22 Unsettled

Subtotal 41334508.82

21. Advances received

Items Closing balance Opening balance

Rent 491560.38 861528.49

Loan 26808262.33 15036235.48

Total 27299822.71 15897763.97

22. Employee benefits payable

(1) Details

Items Opening balance Increase Decrease Closing balance

Short-term employee benefits 24800605.87 60896075.10 55193502.81 30503178.16

Post-employment benefits - defined

contribution plan

1002064.49 4804069.08 5104516.84 701616.73

Termination benefits 4466316.47 4466316.47

Items Opening balance Increase Decrease Closing balance

Total 25802670.36 70166460.65 64764336.12 31204794.89

(2) Details of short-term employee benefits

Items Opening balance Increase Decrease Closing balance

Wage bonus allowance and subsidy 22536844.79 53619959.57 47978308.38 28178495.98

Employee welfare fund 757922.60 757922.60

Social insurance premium 6433.95 2048816.51 2046891.87 8358.59

Including: Medicare premium 5247.87 1795929.80 1794005.05 7172.62

Occupational injuries premium 513.72 38805.48 38805.48 513.72

Maternity premium 672.36 155852.91 155853.02 672.25

Other commercial insurance 58228.32 58228.32

Housing provident fund 2031964.30 3233399.36 3223715.32 2041648.34

Trade union fund and employee

education fund

225362.83 1235977.06 1186664.64 274675.25

Subtotal 24800605.87 60896075.10 55193502.81 30503178.16

(3) Details of defined contribution plan

Items Opening balance Increase Decrease Closing balance

Basic endowment insurance premium 130114.53 4734047.03 4721742.71 142418.85

Unemployment insurance premium 1263.01 47927.15 47838.13 1352.03

Company annuity payment 870686.95 22094.90 334936.00 557845.85

Subtotal 1002064.49 4804069.08 5104516.84 701616.73

23. Taxes and rates payable

Items Closing balance Opening balance

VAT 551626.76 1372624.04

Enterprise income tax 64461051.35 1914409.61

Individual income tax withheld for tax authorities 342986.08 261135.13

Urban maintenance and construction tax 134816.64 151417.42

Land appreciation tax 5362682.64 5362682.64

Housing property tax 266.04 266.04

Land use tax 26459.98 26459.98

Education surcharge 82529.27 89643.88

Local education surcharge 55019.51 59762.58

stamp duty tax 407829.34 93010.71

Items Closing balance Opening balance

Others 45981.54

Total 71425267.61 9377393.57

24. Other payables

(1) Details

Items Closing balance Opening balance[Note]

Interest payable

Other payables 101266802.49 250198878.69

Total 101266802.49 250198878.69

[Note]: For details of the difference between the beginning of the year and the end of the previous year (December 31 2018) please

refer to Note III (XXVIII) 1 (1) 2) of this financial statement.

(2) Other payables

Items Closing balance Opening balance

Deposits 29630854.41 22124264.01

Related accounts 28310337.10 37253591.77

Withholding payments 14218478.78 18263001.39

Payables due 29107132.20 172558021.52

Total 101266802.49 250198878.69

25. Long-term borrowings

Items Closing balance Opening balance[Note]

Mortgaged borrowings 34992292.92

Total 34992292.92

[Note]: For details of the difference between the beginning of the year and the end of the previous year (December 31 2018) please

refer to Note III (XXVIII) 1 (1) 2) of this financial statement.

26. Long-term payables

Items Closing balance Opening balance [Note]

Employee housing deposit 3908848.40 3908848.40

Technical innovation 11311.96 11311.96

Total 3920160.36 3920160.36

27. Provisions

Items Closing balance Opening balance Reasons for balance

Pending lawsuit 2225468.76 2225468.76

Items Closing balance Opening balance Reasons for balance

Total 2225468.76 2225468.76

[Note]: For details please refer to the note XI (I) 1 (2) in this financial statement.

28. Deferred income

(1) Details

Items Opening

balance

Increase Decrease Closing balance Reasons for balance

Government grants 139400.00 139400.00

Total 139400.00 139400.00

(2) Details of government grants

Items Opening

balance

Increase

Grants included into profit

or loss/offsetting relevant

cost [Note]

Closing balance

Related to

assets/income

Futian District Old Elevator

Renovation Working Group

Elevator Renewal Subsidy

Fund

139400.00 139400.00 Asset-related

Subtotal 139400.00 139400.00

[Note]: Please refer to section V (IV) 3 of notes to financial statements for details on grants included into profit or loss/offsetting

relevant cost.

29. Share capital

(1) Details

Items Opening balance

Movements

Closing balance

Issue of

new shares

Bonus

shares

Reserve transferred to

shares

Others Subtotal

Total 297281600.00 133776720.00 133776720.00 431058320.00

(2) Other remarks

According to the resolution of the 2nd meeting of the 9th board of directors of the company on April 1 2019 the company

transferred 4.5 shares for every 10 shares to all shareholders with capital reserves a total of 133776720 shares.

30. Capital reserve

(1) Details

Items Opening balance Increase Decrease Closing balance

Capital premium 559544773.35 133776720.00 425768053.35

Other capital reserve 5681501.16 5681501.16

Total 565226274.51 133776720.00 431449554.51

(2) Other remarks

For details of changes in capital reserve please refer to Note V (I) 29 of these financial statements.

31. Other comprehensive income (OCI)

Items Opening

balance

Current period cumulative

Closing

balance

Current period

cumulative

before income

tax

Less: OCI

carried

forward

transferred to

profit or loss

Less:

income

tax

Attributable to

parent company

Attributable to

non-controlling

shareholders

Items to be reclassified

subsequently to profit or

loss

26422.00 26422.00

Including: Other

comprehensive

income to be

transferred to profit or

loss under equity

method

26422.00 26422.00

Total 26422.00 26422.00

32. Surplus reserve

(1) Details

Items

Opening balance

[Note]

Increase Decrease Closing balance

Statutory surplus reserve 3146162.98 17861325.75 21007488.73

Total 3146162.98 17861325.75 21007488.73

[Note]: Please refer to section III (XXXVIII) 1 (1) 2) for details on the difference between the opening balance and the closing

balance of the preceding period (i.e. December 31 2018).

(2) Other remarks

The increase of the surplus reserves was due to the statutory surplus reserves withdrawn 10% of net profits.

33. Undistributed profit

(1) Details

Items Current period

cumulative

Preceding period

comparative

Balance before adjustment at the end of preceding period 184535322.70 97798595.80

Add: Increase due to adjustment (or less: decrease) 1079805.36

Opening balance after adjustment 185615128.06 97798595.80

Add: Net profit attributable to owners of the parent company 219669708.47 86924058.72

Less: Appropriation of statutory surplus reserve 17861325.75 187331.82

Closing balance 387423510.78 184535322.70

(2) Details of increase or decrease due to adjustment

Pursuant to related requirements stipulated in the CASBEs adjustments of 1079805.36 yuan are.(II) Notes to items of the consolidated income statement

1. Operating revenue/Operating cost

Items

Current period cumulative Preceding period comparative

Revenue Cost Revenue Cost

Main operations 561948296.72 428796930.66 406367890.86 329601886.66

Other operations 9124597.18 2224381.98 7870888.10 2745468.46

Total 571072893.90 431021312.64 414238778.96 332347355.12

2. Taxes and surcharges

Items Current period cumulative Preceding period comparative

Urban maintenance and construction tax 830132.08 656864.88

Education surcharge 355770.92 380476.03

Local education surtax 237180.61 253650.68

Stamp duty 764026.93 338855.21

Housing property tax 3364402.93 3631029.91

Land use tax 484217.61 465573.05

Vehicle and vessel use tax 5244.16 4938.18

Consumption tax 228084.61 545224.71

Total 6269059.85 6276612.65

3. Selling expenses

Items Current period cumulative Preceding period comparative

Employee’s remuneration 14630038.53 13414059.17

Advertisement 1703759.37 1764907.46

Depreciation 2943208.89 1174246.34

Utility bill 1056542.05 668104.46

Material consumption 852678.19 35736.84

Office expenses 617180.27 673424.89

Entertainment expenses 441467.35 418282.09

Others 1711227.65 1838645.25

Total 23956102.30 19987406.50

4. Administrative expenses

Items Current period cumulative Preceding period comparative

Employee’s remuneration 32664417.76 33404269.03

Items Current period cumulative Preceding period comparative

Consultation and service fee 3880477.15 3957788.47

Depreciation 2022219.63 1798242.55

Office expenses 1536671.33 1340677.75

Entertainment expenses 492374.20 724055.97

Advertising expenses 490165.08 817181.78

Travel expenses 353362.25 600746.40

Others 2228576.52 1588414.61

Total 43668263.92 44231376.56

5. Financial expenses

Items Current period cumulative Preceding period comparative

Interest expenses 7000636.08 8909350.20

Less: Interest income 2317143.23 2755755.76

Exchange difference 59540.03 106434.89

Others 239732.67 248084.86

Total 4982765.55 6508114.19

6. Other income

Items Current period

cumulative

Preceding period

comparative

Amount included in

non-recurring profit or loss

Government grants related to income [Note] 276907.09 3482.07 283518.38

Refund of handling fees for withholding individual

income tax

9378.94 9378.94

Additional deduction of VAT 6611.29

Total 292897.32 3482.07 292897.32

[Note]: Please refer to notes to government grants for details on grants included into other income.

7. Investment income

Items Current period cumulative

Preceding period

comparative

Investment income from long-term equity investments under equity

method

19134325.91 83051508.70

Investment income from long-term equity investments under cost

method[note]

210680848.23 -4424801.74

Items Current period cumulative

Preceding period

comparative

Investment income from financial instruments 10207296.49

Including: Financial assets classified as at fair value through profit or

loss

10207296.49

Financial liabilities designated as at fair value through profit or loss 547184.35

Investment income of available-for-sale financial assets during holding

period

10158761.73

Total 240569654.98 88785468.69

[Note]: On December 28 2017 the company's extraordinary shareholders meeting resolved to pass a proposal to sell 43% equity of

Shenzhen Xinglong Machinery Mould Co. Ltd. On June 15 2018 the company signed a equity transfer contract with Shenzhen

Runhe United Investment Development Co. Ltd. and the company transferred 43% equity of Shenzhen Xinglong Machinery Mould

Co. Ltd. to Shenzhen Runhe United Investment Development Co. Ltd. The transfer price was 286.67 million yuan. As of August 13

2019 the company has received all equity transfers of 268.67 million yuan and deferred payment of interest on equity transfers. On

October 8 2019 the equity transfer was processed for equity transfer. After the company carried forward the book value of assets

held for sale in 2015 to RMB 85017251.77 it recognized the investment income of RMB 210680848.23 for this equity transfer.

8. Gains on changes in fair value

Items Current period cumulative Preceding period comparative

Held-for-trading financial assets 477394.67

Including:Gains on changes in fair value

arising from financial assets designated

as at fair value through profit or loss

477394.67

Total 477394.67

9. Credit impairment loss

Items Current period cumulative

Bad debts 1270480.08

Total 1270480.08

10. Assets impairment loss

Items Current period cumulative Preceding period comparative

Bad debts -1379068.62

Inventory write-down loss -19028.39 -5647.64

Impairment losses on other assets -643261.62

Total -662290.01 -1384716.26

11. Gains on asset disposal

Items Current period cumulative

Preceding period

comparative

Amount included in

non-recurring profit or loss

Gains on disposal of fixed assets 216207.53 216207.53

Items Current period cumulative

Preceding period

comparative

Amount included in

non-recurring profit or loss

Total 216207.53 216207.53

12. Non-operating revenue

Items Current period

cumulative

Preceding period

comparative

Amount included in

non-recurring profit or loss

Gains on damage or retirement of

non-current assets

109998.46 109998.46

Accounts unpayable 180000.00

Other 194622.17 1559055.65 194622.17

Total 304620.63 1739055.65 304620.63

13. Non-operating expenditures

Items Current period

cumulative

Preceding period

comparative

Amount included in

non-recurring profit or loss

Losses on damage or retirement of

non-current assets

214918.34 1114134.90 214918.34

Estimated pending litigation losses 2225468.76

Fines and liquidated damages 834167.39 447.93 834167.39

Other 139292.69

Total 1049085.73 3479344.28 1049085.73

14. Income tax expenses

(1) Details

Items Current period cumulative Preceding period comparative

Current period income tax expenses 68071018.71 4182336.77

Deferred income tax expenses 15696124.32 38942.20

Previous income tax adjustment 20891.90 190601.48

Total 83788034.93 4411880.45

(2) Reconciliation of accounting profit to income tax expenses

Items Current period cumulative

Preceding period

comparative

Profit before tax 302595269.11 90551859.81

Income tax expenses based on tax rate applicable to the

parent company

75894191.34 22637964.95

Effect of different tax rate applicable to subsidiaries -116827.10

Effect of prior income tax reconciliation 20891.90 190601.48

Investment income recognised for associates and joint

ventures

-4920377.57 -20899673.26

Effect of non-deductible costs expenses and losses 187968.31 155355.07

Items Current period cumulative

Preceding period

comparative

Utilization of deductible losses not previously recognized -1432355.39 -5937697.16

Effect of deducible temporary differences or deductible

losses not recognized

14154543.44 8265329.37

Income tax expenses 83788034.93 4411880.45

15. Other comprehensive income net of income tax

Please refer to section V (I) 57 of notes to financial statements for details.(III) Notes to items of the consolidated cash flow statement

1. Other cash receipts related to operating activities

Items Current period cumulative Preceding period comparative

Security deposit 28834845.75 6028298.06

Interest income 1521342.50 2253581.14

Accounts and others 17404817.56 11402651.23

Total 47761005.81 19684530.43

2. Other cash payments related to operating activities

Items Current period cumulative Preceding period comparative

Cash payment 15604214.08 26950280.43

Security deposit 20695465.01 1337997.56

Penalty fine 834167.39 447.93

Accounts and others 13905542.01 13050755.91

Total 51039388.49 41339481.83

3. Other cash receipts related to investing activities

Items Current period cumulative Preceding period comparative

Receipt of equity transfer deposit 107511100.00

Related loans 2385849.54

Total 2385849.54 107511100.00

4. Other cash payments related to investing activities

Items Current period cumulative Preceding period comparative

Cash paid to Equity Transfer

Transaction Service Fee

5000.00 5733400.00

Total 5000.00 5733400.00

5. Other cash receipts related to financing activities

Items Current period cumulative Preceding period comparative

Non-financial institution borrowing 15020000.00

Total 15020000.00

6. Other cash payments related to financing activities

Items Current period cumulative Preceding period comparative

Repayment of loans from

non-financial institutions

22962000.00

Return advance rent in advance 16144956.00

Total 22962000.00 16144956.00

7. Supplement information to the cash flow statement

(1) Supplement information to the cash flow statement

Supplement information Current period cumulative

Preceding period

comparative

(1) Reconciliation of net profit to cash flow from operating activities:

Net profit 218807234.18 86139979.36

Add: Provision for assets impairment loss -608190.07 1384716.26

Depreciation of fixed assets oil and gas assets productive

biological assets

26429872.30 18356950.61

Amortization of intangible assets 229471.59 649475.55

Amortization of long-term prepayments 2898140.55 793975.37

Loss on disposal of fixed assets intangible assets and other

non-current assets (Less: gains)

-216207.53

Fixed assets retirement loss (Less: gains) 104919.88 1114134.90

Losses on changes in fair value (Less: gains) -477394.67

Financial expenses (Less: gains) 7060176.11 9015785.09

Investments losses (Less: gains) -240569654.98 -88785468.69

Decrease of deferred tax assets (Less: increase) 15696124.32 38942.20

Increase of deferred tax liabilities (Less: decrease)

Decrease in inventories (Less: increase) -9065776.82 297725.18

Decrease in operating receivables (Less: increase) -24176109.62 -45530744.97

Increase of operating payables (Less: decrease) 82798747.79 9949549.17

Others

Net cash flow from operating activities 78911353.03 -6574979.97

(2) Significant investing and financing activities not related to cash

receipts and payments:

Conversion of debt into share capital

Supplement information Current period cumulative

Preceding period

comparative

Convertible bonds due within one year

Fixed assets rented in under finance leases

(3) Net changes in cash and cash equivalents:

Cash at the end of the period 400668257.81 142848120.69

Less: Cash at the beginning of the period 142848120.69 141793218.56

Add: Cash equivalents at the end of the period

Less: Cash equivalents at the beginning of the period

Net increase of cash and cash equivalents 257820137.12 1054902.13

(2) Cash and cash equivalents

Items Closing balance Opening balance

1) Cash 400668257.81 142848120.69

Including: Cash on hand 120351.17 84099.49

Cash in bank on demand for payment 400547906.64 142764021.20

2) Cash equivalents

Including: Bond investments maturing within three months

3) Cash and cash equivalents at the end of the period 400668257.81 142848120.69

Including: Cash and cash equivalents of parent company or subsidiaries

with use restrictions

(IV) Others

1. Assets with title or use right restrictions

Items Closing carrying amount Reasons for restrictions

Cash and bank balances 28183348.23 refer to section V (I) 1 of notes

Total 28183348.23

2. Monetary items in foreign currencies

Items Closing balance in foreign

currencies

Exchange rate RMB equivalent

Cash and bank balances

Including: USD 856.00 6.9762 5971.63

3. Government grants

(1) Details

1) Government grants related to assets

① Gross method

Items

Opening balance

of deferred

income

Increase Amortization Closing balance of

deferred income

Amortization

presented under

Remarks

Elevator

Renewal Subsidy

FundFutian

139400.00 139400.00

Subtotal 139400.00 139400.00

2) Government grants related to income and used to compensate incurred relevant costs expenses or losses

Items Amounts Presented under Remarks

2018 Industrial Support Fund 268700.00 Other income

Stable post subsidy 8207.09 Other income

Subtotal 276907.09

VI. Changes in the consolidation scope

Entities brought into the consolidation scope

Entities Equity acquisition

method

Equity acquisition date Capital contribution

Capital contribution

proportion (%)

Shenzhen Tellus Baoku

Supply Chain Technology

Co. Ltd.

Establish September 16 2019 9253000.00 100.00%

VII. Interest in other entities

(I) Interest in significant subsidiaries

(1) Basis information

Subsidiaries Main operating

place

Place of

registration

Business

nature

Holding proportion

(%) Acquisition

method

Direct Indirect

Shenzhen Tellus Xinyongtong Automobile

Development Co.Ltd.

Shenzhen Shenzhen Business 100.00 Establish

Shenzhen Dongchang Yongtong

Automobile Inspection Co.Ltd.

Shenzhen Shenzhen Business 95.00 Establish

Shenzhen Baoan Shiquan Industrial

Co.Ltd.

Shenzhen Shenzhen Business 100.00 Establish

Shenzhen Tefa Tellus Real Estate Co.Ltd. Shenzhen Shenzhen Manufacture 100.00 Establish

Shenzhen Tellus Chuangying Technology

Co. Ltd.

Shenzhen Shenzhen Business 100.00 Establish

Shenzhen Xinyongtong Automobile

Inspection Equipment Co. Ltd

Shenzhen Shenzhen Business 51.00 Establish

Shenzhen Automobile Industry and Trading Shenzhen Shenzhen Business 100.00 Establish

Subsidiaries Main operating

place

Place of

registration

Business

nature

Holding proportion

(%) Acquisition

method

Direct Indirect

Co. Ltd.

Shenzhen Automobile Industry supply and

marketing Co. Ltd.Shenzhen Shenzhen Business 100.00 Establish

Shenzhen Tefa Huari Automobile

Enterprise Co.Ltd.

Shenzhen Shenzhen Business 60.00 Establish

Shenzhen Huari Anxin Automobile

Inspection Equipment Co. Ltd.Shenzhen Shenzhen Business 100.00 Establish

Shenzhen Zhongtian Industrial Co.Ltd. Shenzhen Shenzhen Business 100.00 Establish

Shenzhen Huari Toyota Automobile sales

and services Co. Ltd.Shenzhen Shenzhen Business 60.00 Establish

Anhui Tellus Star Jewelry Investment Co.

Ltd

Hefei Hefei Business 51.00 Establish

Anhui Tellus Xingguang Jinzun Jewelry

Co. Ltd

Hefei Hefei Business 60.00 Establish

Sichuan Anhui Tellus Xingguang Jinzun

Jewelry Co. LTD Tellus Jewelry

Technology Co. Ltd

Chengdu Chengdu Business 66.67 Establish

Shenzhen Tellus Baoku Supply Chain

Technology Co. Ltd.Shenzhen Shenzhen Business 100.00 Establish

2. Significant not wholly-owned subsidiaries

(1) Details