特力B：2020年半年度报告（英文版）

深圳市特力(集团)股份有限公司

SHENZHEN TELLUS HOLDING CO. LTD

Semi-Annual Report 2020

August 2020

Section I. Important Notice Content 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 Semi-Annual

Report 2020 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 Company has no plan of cash dividends carried out bonus issued and

capitalizing of common reserves either.Content

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

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

Section III. Summary of Company Business ...........................................................................................................................................9

Section IV Discussion and Analysis of the Operation ........................................................................................................................... 13

Section V. Important Events .................................................................................................................................................................. 24

Section VI. Changes in Shares and Particulars about Shareholders ....................................................................................................... 38

Section VII. Preferred Stock .................................................................................................................................................................. 42

Section VIII. Convertible Bonds ........................................................................................................................................................... 43

Section IX. Directors Supervisors and Senior Executives .................................................................................................................... 44

Section X. Corporate Bond .................................................................................................................................................................... 45

Section XI. Financial Report ................................................................................................................................................................. 46

Section XII. Documents Available for Reference ................................................................................................................................ 169

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 January to June of 2020

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

Zhongtian Company Refers to Shenzhen Zhongtian Industrial Co. Ltd.Huari Company Refers to

Shenzhen Huari Toyota Auto Sales Co. Ltd Shenzhen SDG Huari Auto

Enterprise Co. Ltd.

Huari Toyota Refers to Shenzhen Huari Toyota Auto Sales Co. Ltd

Zung Fu Tellus Refers to Shenzhen Zung Fu Tellus Auto Service Co. Ltd.

Dongfeng Company Refers to Shenzhen Dongfeng Motor 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.

SDG Refers to Shenzhen Special Development Group Co. Ltd.

Section II Company Profile and Main Financial Indexes

I. Company profile

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 if applicable)

特力 A

Foreign name of the Company

(if applicable)

Shenzhen Tellus Holding Co.Ltd

Legal representative Fu Chunlong

II. Person/Way to contact

Secretary of the Board Rep. of security affairs

Name Qi Peng Sun Bolun

Contact add.

3/F Tellus Building No.56 Shui Bei Er Road Luohu

District Shenzhen

3/F Tellus Building No.56 Shui Bei Er Road

Luohu District Shenzhen

Tel. (0755) 88394183 (0755)83989339

Fax. (0755)83989386 (0755)83989386

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

III. Others

1. Way of contact

Whether registrations address offices address and codes as well as website and email of the Company changed in reporting period or

not

√ Applicable □ Not applicable

Registrations address 3/F Tellus Building No.56 Shui Bei Er Road Luohu District Shenzhen

Codes of the registration address 518001

Office address 3/F 4/F Tellus Building No.56 Shui Bei Er Road Luohu District Shenzhen

Codes of the office address 518001

Website www.tellus.cn

E-mail ir@tellus.cn

Date for provisional notice inquiry on appointed

website (if applicable)

18 January 2020

Index for provisional notice inquiry on

appointed website (if applicable)

Juchao Website(www.cninfo.com.cn)

2. Information disclosure and preparation place

Whether information disclosure and preparation place changed in reporting period or not

□ Applicable √ Not applicable

The newspaper appointed for information disclosure website for semi-annual report publish appointed by CSRC and preparation

place for semi-annual report have no change in reporting period found more details in Annual Report 2019

IV. Main accounting data and financial indexes

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

□ Yes √ No

Current period Same period of last year Changes over last year

Operating income (RMB) 197051790.29 278268739.33 -29.19%

Net profit attributable to shareholders of

the listed Company (RMB)

25594985.78 44779948.60 -42.84%

Net profit attributable to shareholders of

the listed Company after deducting

non-recurring gains and losses (RMB)

21402820.83 40593359.72 -47.28%

Net cash flow arising from operating

activities (RMB)

17306322.20 27434059.30 -36.92%

Basic earnings per share (RMB/Share) 0.0594 0.1039 -42.83%

Diluted earnings per share (RMB/Share) 0.0594 0.1039 -42.83%

Weighted average ROE 1.99% 4.17% -2.18%

Period-end Period-end of last year

Changes over period-end of

last year

Total assets (RMB) 1576055264.66 1645782144.03 -4.24%

Net assets attributable to shareholder of

listed Company (RMB)

1278455832.36 1270965296.02 0.59%

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

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

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

□ Applicable √ Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report under either IAS (International

Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.

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

rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report under either foreign accounting rules or

Chinese GAAP (Generally Accepted Accounting Principles) in the period.

VI. Items and amounts of extraordinary profit (gains)/loss

√Applicable □ Not applicable

In RMB

Item Amount Note

Governmental subsidy reckoned into current gains/losses (not

including the subsidy enjoyed in quota or ration according to

national standards which are closely relevant to enterprise’s

business)

52846.70

Mainly refers to the individual

income tax returns

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

4003521.31 Income from financial products

Restoring of receivable a and contractual assets impairment

provision that tested individually

599201.43

Restoring of the bad debt

provision

Other non-operating income and expenditure except for the

aforementioned items

917047.44

Income from forfeiting the lease

deposit after the tenant returns

the lease in advance

Less: Impact on income tax 858601.74

Impact on minority shareholders’ equity (post-tax) 521850.19

Total 4192164.95 --

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

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

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

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

□ Applicable √ Not applicable

In reporting period the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of

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

the Public --- Extraordinary Profit/loss

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) Automobile sales testing maintenance and maintenance and accessories sales: In the first half of 2020 the

automobile market was greatly affected by the epidemic the overall consumption momentum was insufficient

and the consumption ability continued to weaken. Although there were government subsidy policies for

promotion it has not completely recovered. FAW Toyota’s marketing strategy plus the “increased oil incident”

affected the sales in the first half of the year and the impact of low prices caused by government subsidies and

auto shows still existed. During the reporting period under adverse circumstances affected by the market

environment the company carried out a variety of innovative marketing methods and other measures to increase

marketing efforts and realized automobile sales revenue of 98797500 yuan an increase of 24.67% over the same

period last year. The automobile inspection and maintenance and accessories sales revenue was 19138100 yuan

a decrease of 20.77% over the same period last year.

(2) Resources assets management: Due to the continuing impact of the epidemic in the first half of the year

demand in the property leasing market has dropped significantly the vacancy rate is expected to rise further and

the rents will continue to decline. At the same time with the rise of remote office mode commercial office leasing

is facing severe challenges. During the reporting period in response to the sluggish market on the one hand the

company improved the quality of old properties to consolidate the basic capabilities of commercial operations; on

the other hand it increased the activity promotions relied on professional institutions promoted internal

management improvements and combined the in-depth impact of the epidemic to promptly launch favourable

investment policies to seize the market. During the reporting period the company realized property rental and

services of 62152900 yuan a decrease of 20.08% over the same period last year.

(3) Jewelry service business: Due to the uncertain impact of the epidemic many merchants are lack of confidence

some stop losses quickly and some take a wait-and-see attitude on whether to continue to open stores. During the

reporting period in the face of the declining industry situation on the one hand the company took multiple

measures to deeply explore the extension of the third-party comprehensive services of jewelry and innovate

business models; on the other hand it strengthened risk monitoring to ensure the solid growth of state-owned

assets and investors increase. In order to reduce operating risks the company reduced the business scale of the

Sichuan Channel Platform Company coupled with the decline in the purchase quantity of jewelry customers

affected by the epidemic in the first half of 2020 the cumulative operating revenue was 16963300 yuan a

year-on-year decrease of 75615700 yuan a decrease of 81.68% 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 30 June 2020 amounting to 170700400

Yuan increased 8521900 Yuan over that of period beginning with 5.25% up mainly due

to the investment income from shareholding enterprise.

Fixed assets No major change

Intangible assets No major change

Construction in progress

Book value of the construction in progress as of 30 June 2020 amounting to 74408200

Yuan an increase of 26753800 Yuan over that of period-begin with 56.14% up. Mainly

due to the preliminary input for the project of Jinzuan Trading Building

Monetary fund

Book value of the monetary fund as of 30 June 2020 amounting to 333609300 Yuan a

decrease of 95242300 Yuan over that of period-begin with 22.21% down. Mainly

because pay the corporate income tax on equity transfer for year of 2019 and distributed

the cash dividend and purchasing financial products.Tradable financial assets

Book value of the tradable financial assets as of 30 June 2020 amounting to 115128600

Yuan an increase of 54642000 Yuan over that of period-begin with 90.34% up. Mainly

because purchase more financial products

Account receivable

Book value of account receivable as of 30 June 2020 amounting to 60519100 Yuan a

decrease of 52094100 Yuan over that of period-begin with -46.26% down mainly

because the wholesale credit for jewelry decreased in the period

Advance payment

Book value of advance payment as of 30 June 2020 amounting to 17088100 Yuan an

increase of 4404500 Yuan over that of period-begin with 34.73% up mainly due to the

increase of safe purchasing prepaid

Other non-current assets

Book value of other non-current assets as of 30 June 2020 amounting to 9517000 Yuan

an increase of 2627900 Yuan over that of period-begin with 38.15% up mainly due to

the payment of decoration for Tellus Building

2. Main overseas assets

□ Applicable √ Not applicable

III. Core Competitiveness Analysis

(1) Owns rich property resources and provides stable business income

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.This year due to the COVID-19 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

In the first half of 2020 the global spread of the novel coronavirus pneumonia epidemic severely hit international

business activities. The blockade and prevention and control measures of various countries have caused the

economy to stagnate or even decline and the prospects for recovery are not optimistic. In response to the impact

of the epidemic on the economy central banks have adopted the largest easing policies since the 2008 financial

crisis. According to the latest report of the World Bank the global economy is expected to decline by 5.2% in

2020. Under the impact of the novel coronavirus epidemic China's economy is gradually recovering along the

path of "production recovery - confidence rebuilding - demand recovery". Investment in new infrastructure has

increased industrial production has gradually rebounded PPI deflationary pressure has eased and real estate

automobiles and exports are bright. However demand for non-consumer goods is still sluggish and economic

recovery still needs time.In order to reduce the impact of the epidemic on the company our company has actively implemented the "six

stability" and "six guarantees" spirits fulfilled the responsibility of state-owned enterprises reduced rents and fees

of more than 25 million yuan fully tapped the potential strictly controlled various expenses and made a good

operational defense war in the first half of the year. During the reporting period the Company achieved a business

revenue of 197.0518 million yuan which decrease by 81.2169 million yuan or 29.19% compared with 278.2687

million yuan in the same period last year revenue declined mainly because responding to the government’s call

for rent relief for tenants the rental revenue decreased and as well as a decline in jewelry sales affected by the

epidemic. Total profit amounted to 33.219 million yuan which decrease by 17.8018 million yuan compared with

51.0208 million yuan in the same period last year; net profit attributable to parent company amounted to 25.595

million yuan which decrease by 19.1849 million yuan compared with 44.7799 million yuan in the same period

last year.II. Main business analysis

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

Change of main financial data on a y-o-y basis

In RMB

Current period Same period of last year y-o-y changes (+-) Reasons

Operation revenue 197051790.29 278268739.33 -29.19%

Responding to the

government’s call for

rent relief for tenants the

rental revenue decreased

and as well as a decline

in jewelry sales affected

by the epidemic

Operation costs 154774587.52 210494012.42 -26.47%

Cost reduced due to the

decline of jewelry sales

for epidemic

Sales expense 6776144.54 9358514.29 -27.59%

Management expense 17202000.61 16878629.26 1.92%

Financial expense -2202150.55 3757775.76

Interest expenses

declined due to the

decrease of bank loans

on a y-o-y basis

Income tax expense 6448306.06 6038256.76 6.79%

Net cash flow arising

from operation activities

17306322.20 27434059.30 -36.92%

1. Responding to the

government’s call for

rent relief for tenants; 2.cash flow paid for

enterprise income tax

declined

Net cash flow arising

from investment

activities

-88258570.72 54510161.97

1. purchasing of financial

products increased on a

y-o-y basis and 2.preliminary input for

Jinzuan Trading Building

project increased

Net cash flow arising

from financing activities

-24778202.09 -25551300.64

At same period last year

Zhongtain Company

return the borrowings of

projects the cash

out-flow declined on a

y-o-y basis and there

was no such event

occurred in the year

Net increase of cash and

cash equivalent

-95730362.19 56392930.47

Major changes on profit composition or profit resources in reporting period

□ Applicable √ Not applicable

No major changes on profit composition or profit resources occurred in reporting period

Constitution of operation revenue

In RMB

Current period Same period last year y-o-y changes (+-)

Amount

Ratio in operation

revenue

Amount

Ratio in operation

revenue

Total operation

revenue

197051790.29 100% 278268739.33 100% -29.19%

According to industries

Auto sales 98797491.83 50.14% 79247600.74 28.48% 24.67%

Auto inspection and

maintenance and

accessories sales

19138132.58 9.71% 24156408.72 8.68% -20.77%

Property rental and

service

62152861.68 31.54% 77764007.23 27.95% -20.08%

Wholesale and

retails of Jewelry

16963304.20 8.61% 97100722.64 34.89% -82.53%

According to products

Auto sales 98797491.83 50.14% 79247600.74 28.48% 24.67%

Auto inspection and

maintenance and

accessories sales

19138132.58 9.71% 24156408.72 8.68% -20.77%

Property rental and

service

62152861.68 31.54% 77764007.23 27.95% -20.08%

Wholesale and

retails of Jewelry

16963304.20 8.61% 97100722.64 34.89% -82.53%

According to region

Shenzhen 180088486.09 91.39% 181168016.69 65.11% -0.60%

Anhui 4521763.87 1.62% -100.00%

Sichuan 16963304.20 8.61% 92578958.77 33.27% -81.68%

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 98797491.83 96189360.80 2.64% 24.67% 23.45% 0.96%

Auto inspection

and maintenance

19138132.58 16287281.23 14.90% -20.77% -16.58% -4.28%

and accessories

sales

Property rental

and service

62152861.68 26287572.04 57.70% -20.08% 20.01% -14.13%

Wholesale and

retails of Jewelry

16963304.20 16010373.45 5.62% -82.53% -82.43% -0.51%

According to products

Auto sales 98797491.83 96189360.80 2.64% 24.67% 23.45% 0.96%

Auto inspection

and maintenance

and accessories

sales

19138132.58 16287281.23 14.90% -20.77% -16.58% -4.28%

Property rental

and service

62152861.68 26287572.04 57.70% -20.08% 20.01% -14.13%

Wholesale and

retails of Jewelry

16963304.20 16010373.45 5.62% -82.53% -82.43% -0.51%

According to region

Shenzhen 180088486.09 138764214.07 22.95% -0.60% 16.27% -28.85%

Anhui 0.00% -100.00% -100.00% -6.75%

Sichuan 16963304.20 16010373.45 5.62% -81.68% -81.58% -0.90%

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

latest one year’s scope of period-end

□ Applicable √ Not applicable

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

√Applicable □Not applicable

Affected by epidemic revenue and costs of the jewelry wholesale and retails declined.

III. Analysis of non-main business

√Applicable □ Not applicable

In RMB

Amount Ratio in total profit Note Whether be sustainable

Investment income 12881490.50 38.78%

Investment income from

shareholding enterprises and

financing income

Gain/loss of fair

value changes

-356102.35 -1.07%

Redeem the unmatured

wealth management income

at the end of 2019

Assets impairment 0.00 0.00% - N

Non-operation

revenue

946106.92 2.85%

1. Obtained government

subsidy due to the epidemic

and 2. Income from

forfeiting the lease deposit

after the tenant returns the

lease in advance

Non-operation

expenditure

29059.48 0.09% N

Credit impairment 599201.43 1.80%

Restoring of bad debt

provision

IV. Analysis of assets and liability

1. Major changes of assets composition

In RMB

Period-end Period-end of last year

Ratio

changes

Notes of major changes

Amount

Ratio in total

assets

Amount

Ratio in total

assets

Monetary fund

333609309.6

21.17% 225905191.16 13.20% 7.97%

Account

receivable

60519075.70 3.84% 113548299.77 6.63% -2.79%

Inventory 15113989.46 0.96% 16798362.97 0.98% -0.02%

Investment real

estate

545498309.3

34.61% 494163460.21 28.87% 5.74%

Transfer-in from the decoration amount

for Jewelry Building

Long-term equity

investment

170700410.8

10.83% 153819742.68 8.99% 1.84%

Fix assets

104203903.9

6.61% 109620846.65 6.40% 0.21%

Construction in

process

74408194.38 4.72% 22707214.36 1.33% 3.39%

the preliminary input for the project of

Jinzuan Trading Building

Short-term loans 0.00 0.00% 143000000.00 8.35% -8.35%

The borrowings are returned in total at

end of 2019

Long-term loans 0.00 0.00% 0.00 0.00% 0.00%

Dividend

receivable

39647732.42 2.52% 81600548.07 4.77% -2.25%

The profit distribution from

shareholding enterprises Dongfeng

Company and Pudong Development

Machinery

Assets held for 0.00% 85017251.77 4.97% -4.97% The former investment funds for

sale shareholding enterprise Xinglong

Company and completed the equity

transfer at end of 2019

Other current

assets

2970702.64 0.19% 42208745.54 2.47% -2.28%

Adjustment for implementation of the

New Financial Instrument Standard in

2019

Other account

payable

99453009.14 6.31% 271599091.34 15.87% -9.56%

The equity transfer funds of Xinglong

that to be recovered in the same period

of last year and no such event this year

2. Assets and liability measured by fair value

√ Applicable □Not applicable

In RMB

Items

Opening

amount

Changes of

fair value

gains/losses

in this period

Accumulative

changes of

fair value

reckoned into

equity

Impairment

accrual in the

Period

Amount of

purchase in

the period

Amount of

sale in the

period

Other

changes

Ending

amount

Financial

assets

1. Tradable

financial

assets

(excluding

derivative

financial

assets)

60486575.34

810800000.

755800000.

115128569

.86

4. Other

equity

instruments

Investment

10176617.20

10176617.

Above total 70663192.54 -358005.48

810800000.

755800000.

125305187

.06

Financial

liabilities

0.00 0.00 0.00

Content of other changes

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

□ Yes √No

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

Item Book value at period-end Restriction reasons

Monetary fund 28671414.00 (1)

Total 28671414.00

(1) End of 30 June 2020 the Company’s right to use of currency funds under restrictions is 28671414.00 Yuan which is the

supervision fund paid by the Company to Luohu District Urban Renewal Bureau of Shenzhen for the land plot 03 project of the

upgrading project of Tellus-Gman Gold Jewelry Industrial Park. The currency funds with restricted use rights at the end of last year

were 28183348.23 Yuan.V. Investment

1. Overall situation

□Applicable √ Not applicable

2. The major equity investment obtained in the reporting period

□Applicable √ Not applicable

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

□Applicable √ Not applicable

4.Financial assets measured by fair value

√Applicable □Not applicable

In RMB

Type

Initial

investment

cost

Gain/loss of

fair value

changes

Cumulative

change of fair

value reckoned

into equity

Amount

purchasing in

the Period

Amount

selling in

the Period

Cumulative

investment

income

Ending

amount

Capital

source

Other

70663192

.54

-358005.48 0.00 810800000.00

755800000

.00

598686.99

125305187

.06

Own funds

Total

70663192

.54

-358005.48 0.00 810800000.00

755800000

.00

598686.99

125305187

.06

5. Financial assets investment

(1) Securities investment

□ Applicable √ Not applicable

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

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

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

capital

Total assets Net assets

Operating

revenue

Operating

profit

Net profit

Shenzhen

Auto

Industry and

Trade

Corporation

Subsidiary

Sales of auto

and

accessories

RMB 58.96

million

373829523.

334882970.

6764801.62

3509253.

2581442.92

Shenzhen

SDG Huari

Auto

Enterprise

Co. Ltd.

Subsidiary

Auto

maintenance

and

production

and sales of

accessories

US$ 5

million

73717821.6

24954700.1

16003589.0

551747.46 549866.95

Shenzhen

Zhongtian

Subsidiary

Property

rental

RMB

366.2219

632478145.

410494812.

31003603.4

16864184

.62

13179700.32

Industrial

Co. Ltd.

million

Shenzhen

Huari Toyota

Auto Sales

Co. Ltd

Subsidiary

Automobile

Sales

RMB 2

million

67368569.3

4192036.40

119178692.

-213105.0

-3930.02

Shenzhen

Xinyongtong

Auto Vehicle

Inspection

Equipment

Co. Ltd.

Subsidiary

Manufacture

of inspection

equipment

for motor

vehicle

RMB 19.61

million

13505262.5

8326499.17 1937703.80 497695.37 472065.44

Shenzhen

Tellus

Xinyongtong

Automobile

Development

Co. Ltd

Subsidiary

Inspection

and repair of

motor

vehicle

RMB 32.9

million

84045236.1

65193283.1

4732830.21

3499323.

2683208.62

Sichuan

Tellus

Jewelry Tech.

Co. Ltd.

Subsidiary

Wholesale of

jewelry

RMB 150

million

154097291.

153415865.

16963304.2

2652318.

2017572.52

Shenzhen

Tellus

Chuangying

Tech. Co.Ltd.Subsidiary

Property

rental

RMB 14

million

15344257.3

12818879.7

1073816.65

-554343.6

-554344.35

Anhui Tellus

Starlight

Jewelry

Investment

Co. Ltd.

Subsidiary Jewelry sales

RMB 9.8

million

159280.75

-1228757.3

77034.65 77034.65

Shenzhen

Zung Fu

Tellus Auto

Service Co.Ltd.Joint stock

Company

Car sales and

maintenance

RMB 30

million

268923388.

102743982.

542501386.

13528433

.80

12502889.67

Shenzhen

Dongfeng

Motor Co.Ltd.Joint stock

Company

Manufacture

and

maintenance

automobile

RMB 100

million

647785962.

163979281.

154117515.

820711.18 -345684.65

Shenzhen

Tellus Gman

Investment

Co. Ltd.

Joint stock

Company

Investment in

industry

property

management

and leasing

RMB

123.70496

million

416200766.

148432955.

37081024.7

10769769

.93

8079274.57

Particular about subsidiaries obtained or disposed in report period

□Applicable √Not applicable

VIII. Structured vehicle controlled by the Company

□Applicable √Not applicable

IX. Prediction of business performance from January – September 2020

Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the

warning of its material change compared with the corresponding period of the last year and explanation on reason

□Applicable √ Not applicable

X. Risks and countermeasures

(1) The overall economic environment has a serious negative impact on company operations

Affected by the epidemic the jewelry industry has shown a trend of sharp decline in market demand a backlog of

upstream and downstream inventories and a decline in corporate performance. At the same time most of the

transportation channels for valuables from Hong Kong and other regions outside the country to China have

stagnated which has seriously affected the circulation and transactions of diamond jewelry.In response to this risk the company will actively take various preventive measures. The first is to continue to

strengthen management improve efficiency through scientific management tap potential and increase revenue

and comprehensively improve the profitability of the original business; the second sort out the business reduce

the business scale of regional platform with high risks and insist on making progress while maintaining stability;

the third 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 by transforming into new areas

In recent years the company has fully promoted the strategic goal of transforming into a third-party integrated

operation service provider in the jewelry industry and many transformation projects have been implemented and

achieved good results. However in the process of deeply cutting into the jewelry industry the company has

become more and more aware of the difficulties and risks that will be faced in the transition to a new business

area. Whether we can realize the innovative integration of the traditional characteristics of jewelry industry and

the new technology and new model how to meet the ever-changing individualized and diversified needs of

emerging consumer groups and how to make a path of innovative development in the industry environment with

more fierce competition in market segment these are all 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 transformation of business layout.In response to this risk on the one hand the company will continue to strengthen the transformation conviction in

accordance with the established overall development strategy and business strategy fully demonstrate prudently

make decisions carry out fine management make market-oriented operation ensure that 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 with the opportunity to complete the “Double Hundred Actions”

explore and improve the company's long-term incentive mechanism mobilize the enthusiasm of all employees

improve the management level and operational efficiency of the enterprise and effectively enhance the core

competitiveness of the enterprise.Section V. Important Events

I. AGM and extraordinary general meeting

1. AGM held in the period

Meeting Type

Participation ratio

for investors

Holding date Disclosure date Index

First Extraordinary

Shareholders

Meeting of 2020

Extraordinary

Shareholders

Meeting

66.01% 2020-03-23 2020-03-24

Notice No.:

2020-013 on

Securities Times

Hong Kong

Commercial Daily

and Juchao Website

(www.cninfo.com.cn

)

Annual General

Meeting 2019

AGM 65.97% 2020-04-24 2020-04-25

Notice No.:

2020-025 on

Securities Times

Hong Kong

Commercial Daily

and Juchao Website

(www.cninfo.com.cn

)

Second

Extraordinary

Shareholders

Meeting of 2020

Extraordinary

Shareholders

Meeting

65.57% 2020-06-17 2020-06-18

Notice No.:

2020-032 on

Securities Times

Hong Kong

Commercial Daily

and Juchao Website

(www.cninfo.com.cn

)

2. Request for extraordinary general meeting by preferred stockholders with rights to vote

□Applicable √ Not applicable

II. Profit distribution plan and capitalizing of common reserves in the period

□ Applicable √ Not applicable

III. Commitments that actual controller shareholder related parties buyer and committed

party as the Company etc. have fulfilled during the reporting period and have not yet fulfilled

by the end of reporting period

√Applicable □ Not applicable

Commitments

Commitmen

t party

Type of

commitme

nts

Content of commitments Commitment date

Commitm

ent term

Impleme

ntation

Commitments for

share merger reform

Commitments in

report of

acquisition or equity

change

Commitments in

assets reorganization

Commitments make in

initial public offering

or re-financing

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 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.

2014-10-17 Long-term

Impleme

nting

Equity incentive

commitment

Other commitments

for medium and small

shareholders

Shenzhen

Special

Developmen

t Group Co.Ltd. (SDG)

Horizontal

Competiti

In order to avoid the horizontal competition

the Company’s controlling shareholderShenzhen SDG has issued the “commitmentletter about the avoidance of horizontalcompetition” 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

2014-05-26 Long-term

Impleme

nting

Tellus Group.

From 2020 to 2022 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.

2. According to the "Company Law" and

other relevant laws and the provisions of the

Company’s "Articles of 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

2020-04-02

2022-12-3

Impleme

nting

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 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)

As for the

commitment out of the

commitment time

explain the specific

reasons and further

plans

Not applicable

IV. Appointment and non-reappointment (dismissal) of CPA

Whether the semi-annual financial report had been audited

□Yes √ No

The semi-annual report was not audited

V. Explanation on “Qualified Opinion” from CPA by the Board and Supervisory Committee

□ Applicable √ Not applicable

VI. Explanation from the Board for “Qualified Opinion” of last year’s

□ Applicable √ Not applicable

VII. Bankruptcy reorganization

□ Applicable √ Not applicable

No bankruptcy reorganization in Period.VIII. Lawsuits

Material lawsuits and arbitration

□ Applicable √ Not applicable

No material lawsuits and arbitration in the reporting

Other lawsuits

√Applicable □ Not applicable

The basic situation

of litigation

(Arbitration)

Amount of

money

involved (in

10 thousand

Yuan)

Predicted

liabilities (Y/N)

Advances in

litigation

(Arbitration

)

The results and

effects of litigation

(Arbitration)

Execution of

the litigation

(Arbitration)

Disclosure

date

Disclosure

index

Labor disputes

(Xie Jianguang)

52 No Case closed

The company paid

519000 yuan

compensation to the

appellant

Executed -

Labor disputes

(Ma Baohong)

47 No Case closed Company wins - -

Leasing Contract

dispute (Zhang

Ning)

2 No

Waiting for

the

scheduled

hearing

- - -

Disputes over

guarantee rights of

recovery (Jintian)

32.5

(Orders

include

427604 A

shares and

163886 B

shares)

Wait for the

verdict to

take effect

Jintian Company

paid 325000 yuan to

Tellus Group within

5 days from the

effective date of the

judgment and

delivered 427604 A

shares and 163886 B

shares of Jintian

Group.-

IX. Media questioning

□Applicable √Not applicable

During the reporting period the company had no media generally questioned matters.

X. Penalty and rectification

□ Applicable √ Not applicable

No penalty and rectification for the Company in reporting period.XI. 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.XII. 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.XIII. Major related transaction

1. Related transaction with routine operation concerned

√Applicable □ Not applicable

party

Relation

ship

Type of

transacti

Content

transacti

Pricing

principl

transacti

on price

transacti

amount

(in 10

thousan

d Yuan)

Proporti

on in

similar

transacti

ons (%)

Trading

limit

approve

d (in 10

thousan

d Yuan)

Whether

over the

approve

limited

or not

(Y/N)

Clearing

form for

transacti

Availabl

e similar

market

price

Date of

disclosu

Index

disclos

ure

Shenzhe

n Zung

Tellus

Auto

Service

Co.

Ltd.

Director

/Supervi

sor/ SE

serves

director

of the

Compan

Routine

transacti

ons

Providin

property

leasing

Referen

ce to

market

price

169.44 169.44 15.58% 545 N

contract

agreeme

169.44

Shenzhe

n SD

Tellus

Property

Manage

Subsidia

ry of the

controlli

sharehol

Routine

transacti

ons

Providin

property

leasing

Referen

ce to

market

price

2.54 2.54 0.23% 10 N

contract

agreeme

2.54

ment

Co.

Ltd.der

Shenzhe

n SDG

Petty

Loan

Co.

Ltd.Subsidia

ry of the

controlli

sharehol

der

Routine

transacti

ons

Providin

property

leasing

and

manage

ment

service

Referen

ce to

market

price

62.07 62.07 5.71% 140 N

contract

agreeme

62.07

Jewelry

Park

Branch

Shenzhe

n SDG

Service

Co.

Ltd.Sub-sub

sidiary

controlli

sharehol

der

Routine

transacti

ons

Offering

property

renal

Referen

ce to

market

price

89.80 89.8 8.26% 151.36 N

contract

agreeme

89.80

Shenzhe

n SDG

Enginee

ring

Manage

ment

Co. Ltd

Subsidia

ry of the

controlli

sharehol

der

Routine

transacti

ons

engineer

ing

supervis

ion

service

Referen

ce to

market

price

63.76 63.76 5.86% 532.02 N

contract

agreeme

63.76

Shenzhe

n SD

Tellus

Property

Manage

ment

Co.

Ltd.Subsidia

ry of the

controlli

sharehol

der

Routine

transacti

ons

Accepti

property

manage

ment

service

Referen

ce to

market

price

700.15 700.15 64.37% 1400.31 N

contract

agreeme

700.15

Total -- -- 1087.76 -- 2778.69 -- -- -- -- --

Detail of sales return with major

amount involved

N/A

Report the actual implementation of

the normal related transactions which

were projected about their total

amount by types during the reporting

Performing normally

period (if applicable)

Reasons for major differences

between trading price and market

reference price (if applicable)

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 has non-operational contact of credit and debts or not

√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.

Controlling

shareholder

Loans

interests of

Huari

Company

1738 7 1745

Shenzhen

Special

Development

Group Co.Ltd.

Controlling

shareholder

Loan

principal of

Huari

Company

300 300

Impact on operation results

and financial status

Total profit decreased 70000 Yuan due to the interest expenses increased in the Year

5. Other related transactions

□Applicable √Not applicable

No other related transaction in Period

XIV. Non-business capital occupying by controlling shareholders and its related parties

□ Applicable √ Not applicable

No non-business capital occupied by controlling shareholders and its related parties in Period

XV. 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

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening

Actual

guarantee limit

Guarantee

type

Guarantee

term

Implemen

ted (Y/N)

Guarante

e for

party

(Y/N)

Shenzhen Zung Fu

Tellus Auto

Service Co. Ltd.

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

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 and the subsidiaries

Name of the

Company

guaranteed

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening

Actual

guarantee limit

Guarantee

type

Guarantee

term

Implemen

ted (Y/N)

Guarante

e for

party

(Y/N)

Total amount of approving

guarantee for subsidiaries in

report period (B1)

Total amount of actual

occurred guarantee for

subsidiaries in report period

(B2)

Total amount of approved

guarantee for subsidiaries at the

end of reporting period (B3)

Total balance of actual

guarantee for subsidiaries at

the end of reporting period

(B4)

Guarantee of the subsidiaries and the subsidiaries

Name of the

Company

guaranteed

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening

Actual

guarantee limit

Guarantee

type

Guarantee

term

Implemen

ted (Y/N)

Guarante

e for

party

(Y/N)

Total amount of approving

guarantee for subsidiaries in

report period (C1)

Total amount of actual

occurred guarantee for

subsidiaries in report period

(C2)

Total amount of approved

guarantee for subsidiaries at the

end of reporting period (C3)

Total balance of actual

guarantee for subsidiaries at

the end of reporting period

(C4)

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

Total amount of approving

guarantee in report period

(A1+B1+C1)

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

The proportion of the total amount of actually guarantee in the

net assets of the Company (that is A4+ B4+C4)

2.74%

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)

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

(2) Guarantee outside against the regulation

□Applicable √ Not applicable

No guarantee outside against the regulation in Period.

3. Trust financing

√Applicable □Not applicable

In 10 thousand Yuan

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

Bank financing product Own funds 40300 11500 0

Total 40300 11500 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

4. Other material contracts

□ Applicable √ Not applicable

No other material contracts for the Company in reporting period.XVI. Social responsibility

1. Major environmental protection

Listed Company and its subsidiary belong to the key pollution enterprise listed by Department of Environmental Protection

2. Targeted poverty alleviation social responsibility

(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) Semi-annual poverty alleviation

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 Libai village. The project has begun on 29 December 2017 the project has been completed.

After the project is completed it will greatly facilitate the production and transportation of Libai villagers and the “difficulties inroads” that have plagued the villagers for many years will be thoroughly resolved.

(3) Results of targeted poverty alleviation

Target

Measurement

unit

Numbers/ implementation

i. Overall —— ——

ii. Invested by specific project —— ——

1. Industrial development poverty —— ——

2. Transfer employment —— ——

3.Relocation the poor —— ——

4.Education poverty —— ——

5.Health poverty alleviation —— ——

6.Ecological protection and poverty alleviation —— ——

7.Fallback protection —— ——

8.Social poverty alleviation —— ——

9. Other —— ——

iii. Awards (content and grade) —— ——

(4) Follow-up of targeted poverty alleviation

The road expansion and repair in Li Bai village

XVII. Explanation on other significant events

□ Applicable √ Not applicable

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

√Applicable □ Not applicable

Sichuan Channel Platform Company was established on July 3 2017 with a registered capital of 150 million yuan.Since 2020 due to various factors the scale of the business has continued to decline. In the first half of 2020 the

cumulative operating revenue was 16963300 yuan a year-on-year decrease of 75615700 yuan. The main

reasons for the sharp drop in revenue are: Firstly the outbreak of the epidemic at the end of 2019 has a

far-reaching impact on small and medium-sized enterprises. Most customer stores in Sichuan have been

suspended since the Spring Festival and cash flow has been extremely exhausted and the main customer groups

served by the company have a sharp decline in business demand. Secondly in recent years the market demand in

the jewelry industry has fallen sharply and the upstream and downstream inventory has been overstocked the

overall situation is not optimistic. Thirdly after the company’s comprehensive assessment in order to strictly

control risks Sichuan Channel Platform Company has been suspended from launching new business. On the one

hand we took the initiative to assume the social responsibilities of state-owned enterprises and gave up some

profits to help customers tide over difficulties.In the face of the above operating difficulties and challenges Sichuan Channel Platform Company will continue to

strictly control risks seek progress while maintaining stability and actively explore business model

transformation seize the low period of the jewelry industry caused by the epidemic and explore new cooperation

and profit models.Section VI. Changes in Shares and Particulars about Shareholders

I. Changes in Share Capital

1. Changes in Share Capital

In Share

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

Amount Ratio New issue

Bonus

Capitalizat

ion of

public

reserve

Other Subtotal Amount Ratio

Reasons for share changed

□Applicable √Not applicable

Approval of share changed

□Applicable √Not applicable

Ownership transfer of share changes

□Applicable √Not applicable

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 basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common

shareholders of Company in latest year and period

□Applicable √Not applicable

Other information necessary to disclose 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

□Applicable √ Not applicable

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

In Share

Total common stock

shareholders in reporting

period-end

49238

Total preference shareholders

with voting rights recovered at

end of reporting period (if

applicable) (found in note 8)

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

Full name of

Shareholders

Nature of

shareholder

Proportion

of shares

held

Total

sharehold

ers at the

end of

report

period

Changes in

report

period

Amount

restricted

held

Amount of

un-restricte

d shares

held

Number of share pledged/frozen

State of share Amount

Shenzhen

Special

Development

Group Co. Ltd.State-owned

corporation

49.09%

2115916

0 0

21159162

Shenzhen

Capital Fortune

Jewelry

Industry

Investment

Enterprise

(limited

partnership)

Domestic non

state-owned

corporate

15.89%

6847598

-8620885 0 68475986 0

GUOTAI

JUNAN

SECURITIES(

HONGKONG)

LIMITED

Foreign

corporation

0.41% 1746091 0 0 1746091 0

Hong Kong

Securities

Clearing

Company

Limited

Foreign

corporation

0.27% 1168065 +364717 0 1168065 0

Agricultural

Bank of China

Ltd. – CSI 500

ETF

Other 0.19% 836089 -171135 0 836089 0

# Huang

Xinchang

Domestic nature

person

0.15% 632608 +169043 0 632608 0

#Chen Yun

Domestic nature

person

0.12% 500000 +200000 0 500000 0

#Lu Xia

Domestic nature

person

0.12% 496195 +253500 496195 0

Li Guangxin

Domestic nature

person

0.11% 487181 0 487181 0

# Tang

Zhenxiong

Domestic nature

person

0.11% 461520 +461520 461520 0

Strategy investors or general

corporation comes top 10

shareholders due to rights issue (if

applicable) (see note 3)

N/A

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 consistent actionist 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 consistent actionist.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

211591621

Shenzhen Capital Fortune Jewelry

Industry Investment Enterprise

(limited partnership)

68475986

RMB ordinary

68475986

GUOTAI JUNAN

SECURITIES(HONGKONG)

LIMITED

1746091

Domestically

listed foreign

1746091

Hong Kong Securities Clearing

Company Limited

1168065

Domestically

listed foreign

1168065

Agricultural Bank of China Ltd. –

CSI 500 ETF

836089

RMB ordinary

836089

Huang Xinchang 632608

RMB ordinary

632608

Chen Yun 500000

RMB ordinary

500000

Lu Xia 496195

RMB ordinary

496195

Li Guangxin 487181

RMB ordinary

487181

Tang Zhenxiong 461520

RMB ordinary

461520

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 and other shareholders and they do not belong

to the consistent actionist 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 consistent actionist.

Explanation on shareholders

involving margin business about top

ten common shareholders with

un-restrict shares held (if

applicable) (see note 4)

Shareholder Huang Xinchang holds 632608 shares of the Company through security account

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

Shareholder Chen Yun holds 500000 shares of the Company through security account for

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

Shareholder Lu Xia holds 496195 shares of the Company through security account for credit

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

Tang Zhenxiong holds 461520 shares of the Company through security account for credit

transactions and holds 0 share of the Company via common security account 2090323

shares are held in total by Tang.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.IV. Changes of controlling shareholders or actual controller

Changes of controlling shareholders in reporting period

□ Applicable √ Not applicable

Changes of controlling shareholders had no change in reporting period.

Changes of actual controller in reporting period

□ Applicable √ Not applicable

Changes of actual controller in reporting period had no change in reporting period.

Section VII. Preferred Stock

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

The Company had no convertible bonds in the Period.Section IX. Directors Supervisors and Senior Executives

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

□Applicable √ Not applicable

Found more in annual report 2019 for the changes of shares held by directors supervisors and senior executives

II. Resignation and dismissal of directors supervisors and senior executives

□ Applicable √ Not applicable

No changes of directors supervisors and senior executives found more details in Annual Report 2019.Section X. Corporate Bond

Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when

semi-annual report approved for released or fail to cash in full on due

Section XI. Financial Report

I. Audit reports

Whether the semi-annual report was audited or not

□ Yes √ No

The financial report of this semi-annual report was unaudited

II. Financial statements

1. Consolidated balance sheet

2020-06-30

In RMB

Item 2020-6-30 2019-12-31

Current assets:

Monetary funds 333609309.62 428851606.04

Settlement provisions

Capital lent

Tradable financial assets 115128569.86 60486575.34

Derivative financial assets

Note receivable

Account receivable 60519075.70 112613224.27

Receivable financing

Accounts paid in advance 17088141.12 12683603.89

Insurance receivable

Reinsurance receivables

Contract reserve of reinsurance

receivable

Other account receivable 45617678.95 44908546.40

Including: Interest receivable

Dividend receivable 39647732.42 39647732.42

Buying back the sale of financial

assets

Inventories 15113989.46 21389602.83

Contractual assets

Assets held for sale

Non-current asset due within one

year

Other current assets 2970702.64 3403969.23

Total current assets 590047467.35 684337128.00

Non-current assets:

Loans and payments on behalf

Debt investment

Other debt investment

Long-term account receivable

Long-term equity investment 170700410.89 162178544.05

Investment in other equity

instrument

10176617.20 10176617.20

Other non-current financial assets

Investment real estate 545498309.35 554599503.55

Fixed assets 104203903.95 107119796.59

Construction in progress 74408194.38 47654393.55

Productive biological asset

Oil and gas asset

Right-of-use assets

Intangible assets 49968510.91 50561225.67

Expense on Research and

Development

Goodwill

Long-term expenses to be

apportioned

12895310.28 13606805.49

Deferred income tax asset 8639491.29 8658962.39

Other non-current asset 9517049.06 6889167.54

Total non-current asset 986007797.31 961445016.03

Total assets 1576055264.66 1645782144.03

Current liabilities:

Short-term loans 0.00

Loan from central bank

Capital borrowed

Trading financial liability

Derivative financial liability

Note payable

Account payable 67591547.16 69087430.42

Accounts received in advance 14416295.28 27299822.71

Contractual liability

Selling financial asset of

repurchase

Absorbing deposit and interbank

deposit

Security trading of agency

Security sales of agency

Wage payable 30992026.80 31204794.89

Taxes payable 13159531.35 71425267.61

Other account payable 99453009.14 101266802.49

Including: Interest payable

Dividend payable

Commission charge and

commission payable

Reinsurance payable

Liability held for sale

Non-current liabilities due within

one year

Other current liabilities

Total current liabilities 225612409.73 300284118.12

Non-current liabilities:

Insurance contract reserve

Long-term loans 0.00

Bonds payable

Including: Preferred stock

Perpetual capital

securities

Lease liability

Long-term account payable 3920160.36 3920160.36

Long-term wages payable

Accrual liability 2225468.76 2225468.76

Deferred income 139400.00 139400.00

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 6285029.12 6285029.12

Total liabilities 231897438.85 306569147.24

Owner’s equity:

Share capital 431058320.00 431058320.00

Other equity instrument

Including: Preferred stock

Perpetual capital

securities

Capital public reserve 431449554.51 431449554.51

Less: Inventory shares

Other comprehensive income 26422.00 26422.00

Reasonable reserve

Surplus public reserve 21007488.73 21007488.73

Provision of general risk

Retained profit 394914047.12 387423510.78

Total owner’ s equity attributable to

parent company

1278455832.36 1270965296.02

Minority interests 65701993.45 68247700.77

Total owner’ s equity 1344157825.81 1339212996.79

Total liabilities and owner’ s equity 1576055264.66 1645782144.03

Legal representative: Fu Chunlong Accounting Principal: Lou Hong Accounting Firm’s Principal: Liu Yuhong

2. Balance Sheet of Parent Company

In RMB

Item 2020-6-30 2019-12-31

Current assets:

Monetary funds 149476502.21 201885691.27

Trading financial assets 40324383.56

Derivative financial assets

Note receivable

Account receivable 2487958.11 206710.76

Receivable financing

Accounts paid in advance 16500.00 100000.00

Other account receivable 136039446.63 116037773.09

Including: Interest receivable

Dividend receivable 547184.35 547184.35

Inventories

Contractual assets

Assets held for sale

Non-current assets maturing within

one year

Other current assets 2304943.56 1419760.18

Total current assets 290325350.51 359974318.86

Non-current assets:

Debt investment

Other debt investment

Long-term receivables

Long-term equity investments 868070987.03 859355040.60

Investment in other equity

instrument

10176617.20 10176617.20

Other non-current financial assets

Investment real estate 38164135.64 39616602.02

Fixed assets 13680941.18 14012830.64

Construction in progress 50643962.68 35321704.26

Productive biological assets

Oil and natural gas assets

Right-of-use assets

Intangible assets 48418670.74 48953266.56

Research and development costs

Goodwill

Long-term deferred expenses 2460433.45 2639122.63

Deferred income tax assets 3538377.94 3557849.04

Other non-current assets 9417049.06 6789167.54

Total non-current assets 1044571174.92 1020422200.49

Total assets 1334896525.43 1380396519.35

Current liabilities

Short-term borrowings

Trading financial liability

Derivative financial liability

Notes payable

Account payable 14000.00 14000.00

Accounts received in advance 7849.53

Contractual liability

Wage payable 17856341.97 8199278.01

Taxes payable 677021.46 54684929.01

Other accounts payable 259193066.48 257260350.77

Including: Interest payable

Dividend payable

Liability held for sale

Non-current liabilities due within

one year

Other current liabilities

Total current liabilities 277748279.44 320158557.79

Non-current liabilities:

Long-term loans

Bonds payable

Including: preferred stock

Perpetual capital

securities

Lease liability

Long-term account payable

Long term employee compensation

payable

Accrued liabilities

Deferred income

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities

Total liabilities 277748279.44 320158557.79

Owners’ equity:

Share capital 431058320.00 431058320.00

Other equity instrument

Including: preferred stock

Perpetual capital

securities

Capital public reserve 428256131.23 428256131.23

Less: Inventory shares

Other comprehensive income

Special reserve

Surplus reserve 21007488.73 21007488.73

Retained profit 176826306.03 179916021.60

Total owner’s equity 1057148245.99 1060237961.56

Total liabilities and owner’s equity 1334896525.43 1380396519.35

3. Consolidated Profit Statement

In RMB

Item 2020 semi-annual 2019 semi-annual

I. Total operating income 197051790.29 278268739.33

Including: Operating income 197051790.29 278268739.33

Interest income

Insurance gained

Commission charge and

commission income

II. Total operating cost 177927309.69 243457096.79

Including: Operating cost 154774587.52 210494012.42

Interest expense

Commission charge and

commission expense

Cash surrender value

Net amount of expense of

compensation

Net amount of withdrawal of

insurance contract reserve

Bonus expense of guarantee slip

Reinsurance expense

Tax and extras 1376727.57 2968165.06

Sales expense 6776144.54 9358514.29

Administrative expense 17202000.61 16878629.26

R&D expense

Financial expense -2202150.55 3757775.76

Including: Interest

expenses

46986.20 4765937.06

Interest income 2453494.99 1152054.69

Add: other income 52846.70 6611.29

Investment income (Loss is

listed with “-”)

12881490.50 16711450.93

Including: Investment income

on affiliated company and joint venture

8521866.84 10775524.54

The termination of income

recognition for financial assets measured

by amortized cost(Loss is listed with “-”)

Exchange income (Loss is

listed with “-”)

Net exposure hedging income

(Loss is listed with “-”)

Income from change of fair

value (Loss is listed with “-”)

-356102.35

Loss of credit impairment

(Loss is listed with “-”)

599201.43 101666.14

Losses of devaluation of asset

(Loss is listed with “-”)

0.00

Income from assets disposal

(Loss is listed with “-”)

103159.68

III. Operating profit (Loss is listed with

“-”)

32301916.88 51734530.58

Add: Non-operating income 946106.92 119625.44

Less: Non-operating expense 29059.48 833400.00

IV. Total profit (Loss is listed with “-”) 33218964.32 51020756.02

Less: Income tax expense 6448306.06 6038256.76

V. Net profit (Net loss is listed with “-”) 26770658.26 44982499.26

(i) Classify by business continuity

1.continuous operating net profit(net loss listed with ‘-”)

26770658.26 44982499.26

2.termination of net profit (net loss

listed with ‘-”)

(ii) Classify by ownership

1.Net profit attributable to owner’s

of parent company

25594985.78 44779948.60

2.Minority shareholders’ gains and

losses

1175672.48 202550.66

VI. Net after-tax of other comprehensive

income

Net after-tax of other comprehensive

income attributable to owners of parent

company

(I) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

1.Changes of the defined

benefit plans that re-measured

2.Other comprehensive

income under equity method that cannot

be transfer to gain/loss

3.Change of fair value of

investment in other equity instrument

4.Fair value change of

enterprise's credit risk

5. Other

(ii) Other comprehensive income

items which will be reclassified

subsequently to profit or loss

1.Other comprehensive

income under equity method that can

transfer to gain/loss

2.Change of fair value of

other debt investment

3.Amount of financial assets

re-classify to other comprehensive

income

4.Credit impairment

provision for other debt investment

5.Cash flow hedging reserve

6.Translation differences

arising on translation of foreign currency

financial statements

7.Other

Net after-tax of other comprehensive

income attributable to minority

shareholders

VII. Total comprehensive income 26770658.26 44982499.26

Total comprehensive income

attributable to owners of parent Company

25594985.78 44779948.60

Total comprehensive income

attributable to minority shareholders

1175672.48 202550.66

VIII. Earnings per share:

(i) Basic earnings per share 0.0594 0.1039

(ii) Diluted earnings per share 0.0594 0.1039

Enterprise combine under the same control in the Period the combined party realized net profit of 0 Yuan before combination and

realized 0 Yuan at last period for combined party

Legal representative: Fu Chunlong Accounting Principal: Lou Hong Accounting Firm’s Principal: Liu Yuhong

4. Profit Statement of Parent Company

In RMB

Item 2020 semi-annual 2019 semi-annual

I. Operating income 13120854.52 19112054.55

Less: Operating cost 3857719.57 1774557.00

Taxes and surcharge 409089.36 786231.07

Sales expenses 1569961.98

Administration expenses 12509528.85 8507495.18

R&D expenses

Financial expenses -961656.89 2775796.55

Including: interest

expenses

3610643.70

Interest income 1050258.70 851734.70

Add: other income 21849.42

Investment income (Loss is

listed with “-”)

19230523.18 11794465.45

Including: Investment income

on affiliated Company and joint venture

8715946.43 8376471.67

The termination of

income recognition for financial assets

measured by amortized cost (Loss is

listed with “-”)

Net exposure hedging income

(Loss is listed with “-”)

Changing income of fair

value (Loss is listed with “-”)

-324383.56

Loss of credit impairment

(Loss is listed with “-”)

-18945.66

Losses of devaluation of asset

(Loss is listed with “-”)

Income on disposal of assets

(Loss is listed with “-”)

II. Operating profit (Loss is listed with

“-”)

14664200.69 17043494.54

Add: Non-operating income -18810.00 19425.71

Less: Non-operating expense

III. Total Profit (Loss is listed with “-”) 14645390.69 17062920.25

Less: Income tax -369343.18 764471.10

IV. Net profit (Net loss is listed with

“-”)

15014733.87 16298449.15

(i)continuous operating net profit(net loss listed with ‘-”)

15014733.87 16298449.15

(ii) termination of net profit (netloss listed with ‘-”)

V. Net after-tax of other comprehensive

income

(I) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

1.Changes of the defined

benefit plans that re-measured

2.Other comprehensive

income under equity method that cannot

be transfer to gain/loss

3.Change of fair value of

investment in other equity instrument

4.Fair value change of

enterprise's credit risk

5. Other

(II) Other comprehensive income

items which will be reclassified

subsequently to profit or loss

1.Other comprehensive

income under equity method that can

transfer to gain/loss

2.Change of fair value of

other debt investment

3.Amount of financial

assets re-classify to other

comprehensive income

4.Credit impairment

provision for other debt investment

5.Cash flow hedging

reserve

6.Translation differences

arising on translation of foreign

currency financial statements

7.Other

VI. Total comprehensive income 15014733.87 16298449.15

VII. Earnings per share:

(i) Basic earnings per share 0.0348 0.0378

(ii) Diluted earnings per share 0.0348 0.0378

5. Consolidated Cash Flow Statement

In RMB

Item 2020 semi-annual 2019 semi-annual

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor

services

263485972.58 275395004.65

Net increase of customer deposit

and interbank deposit

Net increase of loan from central

bank

Net increase of capital borrowed

from other financial institution

Cash received from original

insurance contract fee

Net cash received from reinsurance

business

Net increase of insured savings

and investment

Cash received from interest

commission charge and commission

Net increase of capital borrowed

Net increase of returned business

capital

Net cash received by agents in sale

and purchase of securities

Write-back of tax received

Other cash received concerning

operating activities

38218429.50 30288007.02

Subtotal of cash inflow arising from

operating activities

301704402.08 305683011.67

Cash paid for purchasing

commodities and receiving labor

service

142251999.24 212542573.51

Net increase of customer loans and

advances

Net increase of deposits in central

bank and interbank

Cash paid for original insurance

contract compensation

Net increase of capital lent

Cash paid for interest commission

charge and commission

Cash paid for bonus of guarantee

slip

Cash paid to/for staff and workers 24589002.12 26091445.73

Taxes paid 68873589.78 9452428.27

Other cash paid concerning

operating activities

48683488.74 30162504.86

Subtotal of cash outflow arising from

operating activities

284398079.88 278248952.37

Net cash flows arising from operating

activities

17306322.20 27434059.30

II. Cash flows arising from investing

activities:

Cash received from recovering

investment

755800000.00 965735585.20

Cash received from investment

income

4556873.60 5967222.92

Net cash received from disposal of

fixed intangible and other long-term

assets

6400.00 78500.00

Net cash received from disposal of

subsidiaries and other units

Other cash received concerning

investing activities

20870000.00

Subtotal of cash inflow from investing

activities

760363273.60 992651308.12

Cash paid for purchasing fixed

intangible and other long-term assets

37821844.32 34041146.15

Cash paid for investment 810800000.00 904100000.00

Net increase of mortgaged loans

Net cash received from

subsidiaries and other units obtained

Other cash paid concerning

investing activities

Subtotal of cash outflow from investing

activities

848621844.32 938141146.15

Net cash flows arising from investing

activities

-88258570.72 54510161.97

III. Cash flows arising from financing

activities

Cash received from absorbing

investment

20000000.00

Including: Cash received from

absorbing minority shareholders’

investment by subsidiaries

Cash received from loans 158020000.00

Other cash received concerning

financing activities

Subtotal of cash inflow from financing

activities

178020000.00

Cash paid for settling debts 2952372.85 198814887.55

Cash paid for dividend and profit

distributing or interest paying

21825829.24 4756413.09

Including: Dividend and profit of

minority shareholder paid by

subsidiaries

Other cash paid concerning

financing activities

Subtotal of cash outflow from financing

activities

24778202.09 203571300.64

Net cash flows arising from financing

activities

-24778202.09 -25551300.64

IV. Influence on cash and cash

equivalents due to fluctuation in

exchange rate

88.42 9.84

V. Net increase of cash and cash

equivalents

-95730362.19 56392930.47

Add: Balance of cash and cash

equivalents at the period -begin

400668257.81 142848120.69

VI. Balance of cash and cash

equivalents at the period -end

304937895.62 199241051.16

6. Cash Flow Statement of Parent Company

In RMB

Item 2020 semi-annual 2019 semi-annual

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor

services

4151391.53 14820726.01

Write-back of tax received 0

Other cash received concerning

operating activities

40826847.87 6580839.48

Subtotal of cash inflow arising from

operating activities

44978239.40 21401565.49

Cash paid for purchasing

commodities and receiving labor

service

239375.15

Cash paid to/for staff and workers 11892984.82 7850812.96

Taxes paid 54859179.71 1157332.91

Other cash paid concerning

operating activities

46163081.37 14812259.31

Subtotal of cash outflow arising from

operating activities

113154621.05 23820405.18

Net cash flows arising from operating

activities

-68176381.65 -2418839.69

II. Cash flows arising from investing

activities:

Cash received from recovering

investment

307000000.00 500000000.00

Cash received from investment

income

10641433.09 3996094.69

Net cash received from disposal of

fixed intangible and other long-term

assets

Net cash received from disposal of

subsidiaries and other units

Other cash received concerning

investing activities

20870000.00

Subtotal of cash inflow from investing

activities

317641433.09 524866094.69

Cash paid for purchasing fixed

intangible and other long-term assets

17257856.83 7675914.33

Cash paid for investment 267000000.00 487000000.00

Net cash received from

subsidiaries and other units obtained

Other cash paid concerning

investing activities

Subtotal of cash outflow from investing

activities

284257856.83 494675914.33

Net cash flows arising from investing 33383576.26 30190180.36

activities

III. Cash flows arising from financing

activities

Cash received from absorbing

investment

Cash received from loans 143000000.00

Other cash received concerning

financing activities

Subtotal of cash inflow from financing

activities

143000000.00

Cash paid for settling debts 143000000.00

Cash paid for dividend and profit

distributing or interest paying

18104449.44 3670662.11

Other cash paid concerning

financing activities

Subtotal of cash outflow from financing

activities

18104449.44 146670662.11

Net cash flows arising from financing

activities

-18104449.44 -3670662.11

IV. Influence on cash and cash

equivalents due to fluctuation in

exchange rate

V. Net increase of cash and cash

equivalents

-52897254.83 24100678.56

Add: Balance of cash and cash

equivalents at the period -begin

173702343.04 62172486.14

VI. Balance of cash and cash

equivalents at the period -end

120805088.21 86273164.70

7. Statement of Changes in Owners’ Equity (Consolidated)

Current period

In RMB

Item

2020 semi-annual

Owners’ equity attributable to the parent Company

Minori

interes

Total

owners

’

equity

capita

Other

equity instrument

Capital

reserve

Less:

Invent

ory

Other

compr

ehensi

incom

Reaso

nable

reserve

Surplu

reserve

Provisi

on of

genera

l risk

Retain

profit

Other

Subtot

al Prefe

rred

stock

Perpe

tual

capit

Other

secur

ities

I. Balance at the

end of the last

year

4310

5832

0.00

43144

9554.

26422

.00

21007

488.7

38742

3510.

1270

96529

6.02

68247

700.7

1339

21299

6.79

Add:

Changes of

accounting

policy

Error

correction of the

last period

Enterprise

combine under

the same

control

Other

II. Balance at

the beginning of

this year

4310

5832

0.00

43144

9554.

26422

.00

21007

488.7

38742

3510.

1270

96529

6.02

68247

700.7

1339

21299

6.79

III. Increase/

Decrease in this

year (Decrease

is listed with

“-”)

7490

536.34

7490

536.34

-2545

707.32

4944

829.02

(i) Total

comprehensive

income

25594

985.7

25594

985.7

1175

672.48

26770

658.2

(ii) Owners’

devoted and

decreased

capital

1.Common

shares invested

by shareholders

2. Capital

invested by

holders of other

equity

instruments

3. Amount

reckoned into

owners equity

with

share-based

payment

4. Other

(III) Profit

distribution

-1810

4449.

-1810

4449.

-3721

379.80

-2182

5829.

1. Withdrawal

of surplus

reserves

2. Withdrawal

of general risk

provisions

3. Distribution

for owners (or

shareholders)

-1810

4449.

-1810

4449.

-3721

379.80

-2182

5829.

4. Other

(IV) Carrying

forward internal

owners’ equity

1. Capital

reserves

conversed to

capital (share

capital)

2. Surplus

reserves

conversed to

capital (share

capital)

3. Remedying

loss with

surplus reserve

4．Carry-over

retained

earnings from

the defined

benefit plans

5．Carry-over

retained

earnings from

other

comprehensive

income

6. Other

(V) Reasonable

reserve

1. Withdrawal

in the report

period

2. Usage in the

report period

(VI)Others

IV. Balance at

the end of the

report period

4310

5832

0.00

43144

9554.

26422

.00

21007

488.7

39491

4047.

1278

45583

2.36

65701

993.4

1344

15782

5.81

Last period

In RMB

Item

2019 semi-annual

Owners’ equity attributable to the parent Company

Minorit

interest

Total

owners’

equity

capita

Other

equity instrument

Capital

reserve

Less:

Invent

ory

Other

compr

ehensi

incom

Reaso

nable

reserve

Surplu

reserve

Provisi

on of

genera

l risk

Retain

profit

Other

Subtot

al Prefe

rred

stock

Perp

etual

capit

secur

ities

Other

I. Balance at

the end of the

last year

2972

8160

0.00

56522

6274.

26422

.00

3139

918.14

18453

5322.

1050

20953

7.35

49072

678.52

10992

82215.

Add:

Changes of

accounting

policy

Error

correction of

the last period

Enterprise

combine

under the

same control

Other

II. Balance at

the beginning

of this year

2972

8160

0.00

56522

6274.

26422

.00

3139

918.14

18453

5322.

1050

20953

7.35

49072

678.52

10992

82215.

III. Increase/

Decrease in this

year (Decrease

is listed with

“-”)

1337

7672

0.00

-1337

76720

.00

44779

948.6

44779

948.6

20202

550.66

64982

499.26

(i) Total

comprehensive

income

44779

948.6

44779

948.6

202550

.66

44982

499.26

(ii) Owners’

devoted and

decreased

20000

000.00

20000

000.00

capital

1.Common

shares invested

by shareholders

20000

000.00

20000

000.00

2. Capital

invested by

holders of other

equity

instruments

3. Amount

reckoned into

owners equity

with

share-based

payment

4. Other

(III) Profit

distribution

1. Withdrawal

of surplus

reserves

2. Withdrawal

of general risk

provisions

3. Distribution

for owners (or

shareholders)

4. Other

(IV) Carrying

forward

internal

owners’ equity

1337

7672

0.00

-1337

76720

.00

1. Capital

reserves

conversed to

capital (share

capital)

1337

7672

0.00

-1337

76720

.00

2. Surplus

reserves

conversed to

capital (share

capital)

3. Remedying

loss with

surplus reserve

4．Carry-over

retained

earnings

from the

defined

benefit plans

5．Carry-over

retained

earnings from

other

comprehensive

income

6. Other

(V) Reasonable

reserve

1. Withdrawal

in the report

period

2. Usage in the

report period

(VI)Others

IV. Balance at

the end of the

report period

4310

5832

0.00

43144

9554.

26422

.00

3139

918.14

22931

5271.

1094

98948

5.95

69275

229.18

11642

64715.

8. Statement of Changes in Owners’ Equity (Parent Company)

Current period

In RMB

Item

2020 semi-annual

capital

Other equity instrument

Capital

public

reserve

Less:

Inventor

y shares

Other

compreh

ensive

income

Reasona

ble

reserve

Surplus

reserve

Retaine

d profit

Other

Total

owners’

equity

Preferr

stock

Perpet

ual

capital

securiti

Other

I. Balance at the

end of the last

year

43105

8320.0

428256

131.23

210074

88.73

17991

6021.6

1060237

961.56

Add:

Changes of

accounting

policy

Error

correction of the

last period

Other

II. Balance at the

beginning of this

year

43105

8320.0

428256

131.23

210074

88.73

17991

6021.6

1060237

961.56

III. Increase/ -3089 -3089715

Decrease in this

year (Decrease is

listed with “-”)

715.57 .57

(i) Total

comprehensive

income

15014

733.87

1501473

3.87

(ii) Owners’

devoted and

decreased capital

1.Common

shares invested

by shareholders

2. Capital

invested by

holders of other

equity

instruments

3. Amount

reckoned into

owners equity

with share-based

payment

4. Other

(III) Profit

distribution

-18104

449.44

-1810444

9.44

1. Withdrawal of

surplus reserves

2. Distribution

for owners (or

shareholders)

-18104

449.44

-1810444

9.44

3. Other

(IV) Carrying

forward internal

owners’ equity

1. Capital

reserves

conversed to

capital (share

capital)

2. Surplus

reserves

conversed to

capital (share

capital)

3. Remedying

loss with surplus

reserve

4．Carry-over

retained earnings

from the defined

benefit plans

5．Carry-over

retained earnings

from other

comprehensive

income

6. Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI)Others

IV. Balance at

the end of the

report period

43105

8320.0

428256

131.23

210074

88.73

17682

6306.0

1057148

245.99

Last period

In RMB

Item

2019 semi-annual

capital

Other equity

instrument

Capital

public

reserve

Less:

Inventor

y shares

Other

compre

hensive

income

Reasonab

le reserve

Surplus

reserve

Retained

profit

Other

Total

owners’

equity

Preferr

stock

Perpet

ual

capital

securit

ies

Other

I. Balance at the

end of the last

year

29728

1600.

562032

851.23

31399

18.14

1854585

0.31

88100021

9.68

Add:

Changes of

accounting

policy

Error

correction of

the last period

Other

II. Balance at

the beginning

of this year

29728

1600.

562032

851.23

31399

18.14

1854585

0.31

88100021

9.68

III. Increase/

Decrease in this

year (Decrease

is listed with

“-”)

13377

6720.

-13377

6720.0

1629844

9.15

16298449.

(i) Total

comprehensive

income

1629844

9.15

16298449.

(ii) Owners’

devoted and

decreased

capital

1.Common

shares invested

by shareholders

2. Capital

invested by

holders of other

equity

instruments

3. Amount

reckoned into

owners equity

with

share-based

payment

4. Other

(III) Profit

distribution

1. Withdrawal

of surplus

reserves

2. Distribution

for owners (or

shareholders)

3. Other

(IV) Carrying

forward internal

owners’ equity

13377

6720.

-13377

6720.0

1. Capital

reserves

conversed to

capital (share

capital)

13377

6720.

-13377

6720.0

2. Surplus

reserves

conversed to

capital (share

capital)

3. Remedying

loss with

surplus reserve

4．Carry-over

retained

earnings from

the defined

benefit plans

5．Carry-over

retained

earnings from

other

comprehensive

income

6. Other

(V) Reasonable

reserve

1. Withdrawal

in the report

period

2. Usage in the

report period

(VI)Others

IV. Balance at

the end of the

report period

43105

8320.

428256

131.23

31399

18.14

3484429

9.46

89729866

8.83

III. Basic situation of the company

Shenzhen Tellus Group Co. Ltd. (hereinafter referred to as Company or the Company) as authorized by the reply

relating to Shenzhen Machinery Industry Company transforming to Shenzhen Tellus Machinery Co.Ltd.(SFBF[1991]1012) issued by the Office of Shenzhen People Government Shenzhen Machinery Industry

Company was transformed to Shenzhen Tellus Machinery Co. Ltd. Registered in Shenzhen Administration for

Industry and Commerce on November 10 1986 Headquartered in Shenzhen Guangdong Province. The company

now holds a business license with a unified social credit code of 91440300192192210U the registered capital is

431058320.00 yuan and the total number of shares is 431058320 shares (each with a par value of 1 yuan).

Among them the tradable shares subject to sales restrictions: 0 A shares and 0 B shares; 392778320 A shares and

38280000 B shares subject to sales restrictions. The company’s shares were listed on the Shenzhen Stock

Exchange on June 21 1993. The company belongs to the wholesale industry and its main business activities

include automobile sales automobile maintenance and testing jewelry sales property leasing and services. This

financial statement is approved for disclosure by resolution from the Board dated 26 August 2020.There are 16 subsidiaries including Shenzhen Zhongtian Industrial Co. Ltd. Sichuan Tellus Jewelry Tech. Co.Ltd and Shenzhen Huari Toyota Auto Sales Service Co. Ltd included in the consolidate scope of the Company in

the Period found more in the explanation carry in Note VII and Note VIII.IV. Basis Preparation of the Financial Statements

1. Preparation base

Financial statement of the Company is prepared on a going concern basis.

2. Going concern

The Company does not have any events or circumstances that would cause significant doubt about its ability to

continue as a going concern within 12 months from the end of the reporting period.V. Important accounting policy & accounting estimation

Specific accounting policies and estimation attention:

Important tips: according to the characteristics of the actual production and operation the Company formulated

specific accounting policies and estimation for transactions or events such as impairment of financial instruments

depreciation of fixed assets amortization of intangible assets and revenue recognition.

1. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements prepared by the Company are in accordance to requirements of Accounting Standard for

Business Enterprise which truly and completely reflect the financial status of the Company as well as the

operation results and cash flows.

2. Accounting period

Accounting period of the Company is falls to the range starting from 1 January to 31 December.

3. Operating cycle

Operating cycle of the Company’s business is relatively short and 12 months is taken as the liquidity division

standard of assets and liabilities.

4. Standard currency

The Company and its subsidiaries take RMB as the standard currency for bookkeeping.

5. Accounting treatment method for business combination under the same control and business

combination not under the same control

1. Accounting treatment method for business combination under the same control

The assets and liabilities acquired by the company in a business combination shall be measured according to the

book value of the combined party in the consolidated financial statements of the ultimate controlling party on the

combination date. The company adjusts the capital reserve according to the difference between the book value

share of the combined party’s owner’s equity in the ultimate controlling party’s consolidated financial statements

and the book value of the combined consideration paid or the total face value of the issued shares; if the capital

reserve is insufficient to offset adjust the retained earnings.

2. Accounting treatment method for business combination not under the same control

The difference between the company’s combined cost and the fair value share of the acquiree’s identifiable net

assets acquired in the combination on the purchase date is recognized as goodwill; if the combination cost is less

than the fair value share of the acquiree’s identifiable net assets acquired in the combination review the fair value

of the acquiree’s identifiable assets liabilities and contingent liabilities and the measurement of the combination

cost in the first place. After the review if the combination cost is still less than the fair value of the acquiree’s

identifiable net assets obtained in the combination the difference is included in the current profit and loss.

6. Methods for preparation of consolidated financial statements

All subsidiaries controlled by the parent company are included in the consolidation scope of the consolidated

financial statements. The consolidated financial statements are based o the financial statements of the parent

company and its subsidiaries and prepared by the parent company in accordance with the Accounting Standards

for Business Enterprise No.33- Consolidated Financial Statement according to other relevant information.

7. Classification of joint venture arrangement and accounting for joint operations

1. Joint venture arrangements are divided into joint operations and joint ventures.

2. When the Company is a joint venture party of a joint venture arrangement recognizes its proportion of interests

in joint operation as related to the Company:

(1) To recognize separately-held assets and jointly-held assets under its proportion;

(2) To recognize separately-assumed liabilities and jointly-assumed liabilities under its proportion;

(3) To recognize revenue from disposal of the output which the Company is entitled to under the proportion;

(4) To recognize revenue from disposal of the output under the proportion;

(5) To recognize separately occurred expenses and to recognize expenses occurred for joint operations under its

proportion.

8. Recognition standards for cash and cash equivalents

The cash carry in cash flow statement refers to the stock cash and deposits available for payment at any time.

Cash equivalent refers to the investment featuring with the following characters: short term active liquidity easy

to convert to already-known cash and small value change risks.9. Foreign currency business and conversion of foreign currency statement

1.Conversion of foreign currency business

When foreign currency transactions are initially recognized the spot exchange rate on the transaction date shall be

used to convert the foreign currency transaction into RMB amount.On the balance sheet date foreign currency

monetary items are converted at the spot exchange rate on the balance sheet date. The exchange difference arising

from different exchange rates except for the exchange difference of the principal and interest of foreign currency

special borrowings related to the acquisition and construction of assets that meet the conditions for capitalization

is included in the current profit and loss; as for the foreign currency non-monetary items measured by historical

cost conversion is made with the spot exchange rate as of the business day with no change in RMB amount; as

for the foreign currency non-monetary items measured by fair value the amount is then converted into RMB

according to the spot exchange rate as of the confirmation day for fair value. And the conversion difference

occurred is recorded into current gains/losses or other comprehensive income.

2. Conversion of foreign currency financial statement

Spot exchange rate as of the balance sheet date is adopted for conversion of assets and liabilities in the balance

sheet; as for the items in statement of owners’ equity except for “Retained profit” conversion is made pursuant to

the spot exchange rate of business day; items of income and expenses in the profit statement shall be converted at

the spot exchange rate on the date of transaction. The balance of foreign currency financial statements generated

according to the above transaction shall be included in other comprehensive income.

10. Financial instruments

1. Categories of financial assets and financial liabilities

At initial recognition financial assets are classifies into three types: (1) the financial assets measured at amortized

cost; (2) the financial assets measured at fair value and whose changes are included in other comprehensive

income; and (3) the financial assets measured at fair value and whose changes are included in current gain/loss.

At the time of initial recognition financial liabilities are divided into the following four categories: (1) Financial

liabilities measured at fair value and whose changes are included in the current profit and loss; (2) Financial

liabilities formed as the transfer of financial assets does not meet the conditions for derecognition or continues to

be involved in the transferred financial assets; (3) Financial guarantee contracts that do not belong to

above-mentioned (1) or (2) and loan commitments that do not belong to above-mentioned (1) and are loaned at a

lower-than-market interest rate; (4) Financial liabilities measured at amortized cost.

2. Recognition basis measurement method and derecognition conditions of financial assets and financial

liabilities

(1) Recognition basis and initial measurement method of financial assets and financial liabilities

When a company becomes a party to a financial instrument contract a financial asset or financial liability is

recognized. When financial assets or financial liabilities are initially recognized they are measured at fair value;

for financial assets and financial liabilities that are measured at fair value and whose changes are included in the

current profits and losses the relevant transaction costs are directly included in the current profits and losses; for

other types of financial assets or financial liabilities related transaction costs are included in the initial recognition

amount. However if the account receivable initially recognized by the company does not contain a significant

financing component or the company does not consider the financing component in a contract that is less than one

year the initial measurement is made at the transaction price.

(2) Subsequent measurement methods of financial assets

1) Financial assets measured at amortized cost

The subsequent measurement is carried out according to the amortized cost by adopting the effective interest

method. The gains or losses arising from financial assets that are measured at amortized costs and are not part of

any hedging relationship are included in the current profits and losses when they are derecognized reclassified

amortized or recognized as impairment in accordance with the effective interest method.

2) Debt instrument investment measured at fair value and whose changes are included in other comprehensive

income

Use fair value for subsequent measurement. Interest impairment losses or gains and exchange gains and losses

calculated by using the effective interest rate method are included in the current profits and losses and other gains

or losses are included in other comprehensive income. When derecognized the accumulated gains or losses

previously included in other comprehensive income shall be transferred from other comprehensive income and

included in the current profits and losses.

3) Equity instrument investment measured at fair value and whose changes are included in other comprehensive

income

Use fair value for subsequent measurement. Dividends obtained (except those that are part of the recovery of

investment costs) are included in the current profits and losses and other gains or losses are included in other

comprehensive income. When derecognized the accumulated gains or losses previously included in other

comprehensive income are transferred from other comprehensive income and included in retained earnings.

4) Financial assets measured at fair value and whose changes are included in the current profits and losses

Use fair value for subsequent measurement and the resulting gains or losses (including interest and dividend

income) are included in the current profits and losses unless the financial asset is part of the hedging relationship.

(3) Subsequent measurement methods of financial liabilities

1) Financial liabilities measured at fair value and whose changes are included in the current profits and losses

Such financial liabilities include transactional financial liabilities (including derivative instruments that are

financial liabilities) and financial liabilities designated to be measured at fair value and whose changes are

included in the current profits and losses. For such financial liabilities subsequent measurement is made at fair

value. Changes in the fair value of financial liabilities designated to be measured at fair value and whose changes

are included in the current profits and losses caused by changes in the company’s own credit risk are included in

other comprehensive income unless the treatment will cause or enlarge the accounting mismatch in the profits

and losses. Other gains or losses arising from such financial liabilities (including interest expensesexcept for

changes in fair value due to changes in the company's own credit risk) are included in the current profits and

losses unless the financial liabilities are part of the hedging relationship. When derecognized the accumulated

gains or losses previously included in other comprehensive income are transferred from other comprehensive

income and included in retained earnings.

2) The transfer of financial assets does not meet the conditions for derecognition or continues to be involved in

financial liabilities formed by the transferred financial assets

Measure in accordance with the relevant provisions of the "Accounting Standards for Business Enterprises No.

23-Transfer of Financial Assets".

3) Financial guarantee contracts that do not belong to 1) or 2) above and loan commitments that do not belong to

1) above and loan at interest rates lower than market interest rates

After the initial recognition the subsequent measurement shall be carried out according to the higher of the

following two amounts: ① The amount of loss provisions determined in accordance with the impairment

provisions of financial instruments; ② The balance after deducting the accumulated amortization determined in

accordance with relevant regulations from the initial recognition amount.

4) Financial liabilities measured at amortized cost

Measure at amortized cost by using the effective interest method. The gains or losses arising from financial

liabilities that are measured at amortized cost and are not part of any hedging relationship are included in the

current profits and losses when they are derecognized and amortized according to the effective interest method.

(4) Derecognition of financial assets and financial liabilities

1) When meeting one of the following conditions the financial assets are derecognized:

① The contractual right to receive cash flow of financial assets has been terminated;

② The financial assets have been transferred and the transfer meets the requirements of the "Accounting

Standards for Business Enterprises No. 23-Transfer of Financial Assets" on the derecognition of financial assets.

2) When the current obligation of the financial liability (or part of it) has been discharged the financial liability

(or part of the financial liability) shall be derecognized accordingly.

3. Recognition basis and measurement method of financial asset transfer

If the company transfers almost all the risks and rewards related to the ownership of a financial asset derecognize

the financial asset and separately recognize the rights and obligations arising or retained during the transfer as

assets or liabilities; if almost all the risks and rewards related to the ownership of the financial assets are

retainedcontinue to recognize the transferred financial assets. If the company neither transfers nor retains almost

all the risks and rewards related to the ownership of the financial assets the following situations shall be dealt

with respectively: (1) If the control of the financial assets is not retained derecognize the financial assets and the

rights and obligations generated or retained during the transfer shall be separately recognized as assets or

liabilities; (2) If the control of the financial assets is retained the relevant financial assets are recognized

according to the degree of continued involvement in the transferred financial assets and the relevant liabilities are

recognized accordingly.If the overall transfer of financial assets meets the conditions for derecognition the difference between the

following two amounts is included in the current profit and loss: (1) the book value of the transferred financial

assets on the date of derecognition; (2) the sum of the consideration received due to the transfer of financial assets

and the amount corresponding to the derecognized portion of the accumulated amount of fair value changes

originally directly included in other comprehensive income (the financial assets involved in transfer are

investments in debt instruments that are measured at fair value and whose changes are included in other

comprehensive income). If a part of the financial asset is transferred and the entire transferred part meets the

conditions for derecognition the book value of the entire financial asset before the transfer will be allocated

between the derecognition part and the part continuing to recognize according to their respective relative fair

values on the transfer date and include the difference between the following two amounts in the current profits

and losses: (1) the book value of the derecognized part; (2) the sum of the consideration of the derecognized part

and the amount corresponding to the derecognized portion of the accumulated amount of fair value changes

originally directly included in other comprehensive income (the financial assets involved in transfer are

investments in debt instruments that are measured at fair value and whose changes are included in other

comprehensive income)..

4. Methods for determining the fair value of financial assets and financial liabilities

The company uses valuation techniques that are applicable under current circumstances and have sufficient data

and other supporting information to determine the fair value of relevant financial assets and financial liabilities.The company divides the input values used by valuation techniques into the following levels and uses them in

sequence:

(1) The first-level input value is the unadjusted quotation of the same asset or liability in the active market that can

be obtained on the measurement date;

(2) The second-level input value is the directly or indirectly observable input value of related assets or liabilities

other than the first-level input value including the quotes of similar assets or liabilities in the active market; the

quotes of the same or similar assets or liabilities in the inactive market; other observable input values other than

quotes such as interest rates and yield curves that are observable during the normal quote interval;

market-validated input values etc.;

(3) The third-level input value is the unobservable input value of the relevant asset or liability including interest

rates that cannot be directly observed or verified by observable market data stock volatility future cash flows of

abandoned obligations assumed in business combinations financial forecasts made by using own data etc.

5. Impairment of financial instruments

(1) Impairment measurement and accounting treatment of financial instruments

The company uses expected credit losses as the basis and makes impairment and recognizes loss provisions for

financial assets measured at amortized cost investment in debt instruments measured at fair value with changes

included in other comprehensive income lease receivables loan commitments other than financial liabilities that

are classified as financial liabilities measured at fair value with changes included in the current profits and losses

financial liabilities that are not measured at fair value and whose changes are included in the current profits and

losses or financial guarantee contracts of financial liabilities that do not meet the conditions for derecognition or

continue to be involved in the transferred financial assets.

Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted on the

risk of default. Credit loss refers to the difference between all contractual cash flows discounted by the company

at the original actual interest rate and receivable under the contract and all cash flows expected to be received that

is the present value of all cash shortages. Among them for the financial assets purchased or originated by the

company that have been credit-impaired they are discounted according to the credit-adjusted actual interest rate

of the financial assets.

For purchased or derived financial assets that have been credit-impaired the company only recognizes the

cumulative changes in expected credit losses during the entire duration after initial recognition as loss provisions

on the balance sheet date.

For accounts receivable that do not contain a significant financing component or the company does not consider

the financing component of a contract that does not exceed one year the company uses the simplified

measurement method to measure the loss provisions at the amount equivalent to the expected credit losses during

the entire duration.

For lease receivables and accounts receivable that contain major financing components the company uses the

simplified measurement method to measure loss provisions at the amount equivalent to expected credit losses

during the entire duration.

For a financial asset other than the above measurement methods the company assesses on each balance sheet date

whether its credit risk has increased significantly since the initial recognition. If the credit risk has increased

significantly since the initial recognition the company measures the loss provisions at the amount of expected

credit losses during the entire duration; if the credit risk has not increased significantly since the initial recognition

the company measures the loss provisions based on the amount of expected credit loss of the financial instrument

in the next 12 months.The company uses available reasonable and evidence-based information including forward-looking information

and determines whether the credit risks of financial instruments have increased significantly since the initial

recognition by comparing the risk of default of financial instruments on the balance sheet date with the risk of

default on the date of initial recognition.On the balance sheet date if the company judges that a financial instrument only has a low credit risk it is

assumed that the credit risk of the financial instrument has not increased significantly since the initial recognition.The company assesses expected credit risks and measures expected credit losses based on individual financial

instrument or a combination of financial instruments. When based on a combination of financial instruments the

company divides financial instruments into different combinations based on common risk characteristics.The company re-measures expected credit losses on each balance sheet date and the resulting increase in loss

reserves or the amount reversed is included in the current profits and losses as impairment losses or gains. For a

financial asset measured at amortized cost the loss provisions offset against the book value of the financial asset

listed in the balance sheet; for debt investments measured at fair value and whose changes are included in other

comprehensive income the company recognizes the loss provisions in other comprehensive income and does not

deduct the book value of the financial asset.

(2) Financial instrument that assesses expected credit risks and measures expected credit losses by portfolio

Item Basis for determining the portfolio Measuring methods for expected credit

losses

Other account receivable - related transaction

receivable in consolidate scope

Nature of the account With reference to historical credit loss

experience combined with current

conditions and forecasts of future economic

conditions the expected credit loss is

calculated through the default risk exposure

and the expected credit loss rate within the

next 12 months or the entire duration

Other account receivable - dividend receivable

Other account receivable - account age Account age

(3)Account receivable with expected credit loss measured at portfolio

1) Specific portfolio and methods on measuring the expected credit losses

Item Basis for determining the portfolio Measuring methods for expected credit

losses

Account receivable—account age account age With reference to historical credit loss

experience combined with current

conditions and forecasts of future economic

conditions the expected credit loss is

calculated by the comparison table prepared

between the account age of receivable and

the expected credit loss rate within the entire

duration

Account receivable - Jewelry sales business Account receivable with sales of jewelry

concerned

With reference to historical credit loss

experience combined with current

conditions and forecasts of future economic

conditions the expected credit loss is

calculated through the default risk exposure

and the expected credit loss rate within the

entire duration

2) Account receivable—comparison table between the account age (in portfolio) and expected credit loss rate

for the whole duration

Account age Expected credit loss rate of account

receivable (%)

Within one year (inclusive the same below) 1

1-2 years 5

2-3 years 20

Over 3 years 50

6. Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are listed separately in the balance sheet and do not offset each other.

However if the following conditions are met at the same time the company will list the net amount after

offsetting each other in the balance sheet: (1) The company has the statutory right to offset the recognized amount

and this statutory right is currently enforceable; 2) The company plans to settle on a net amount or realize the

financial assets and liquidate the financial liabilities at the same time.

For the transfer of financial assets that does not meet the conditions for derecognition the company does not

offset the transferred financial assets and related liabilities.

11.Note receivable

Not applicable

12.Account receivable

1. Account receivable with bad debt provision accrual on a single basis

Provision for bad debts on single basis: Bad debt provision shall be made on a single basis when there is evidence that the credit

risk of a single item of account receivable is large.

Accrual method for bad debt provision: Conduct impairment tests separately and make provision for bad debts according to the

difference between the present value of its future cash flow and its book value

2. Accounts receivable with provision for bad debts according to the combination of expected credit risk

characteristics

Except for the accounts receivable with bad debt provision accrual on a single basis the accounts receivable are

grouped according to the similarity and correlation of credit risk characteristics. These credit risks usually reflect

the debtor's ability to repay all due amounts in accordance with the contractual terms of the assets and are related

to the calculation of the future cash flow of the asset under inspection. The Group uses the aging of accounts

receivable as the combination of expected credit risk characteristics to make provisions for bad debts based on the

actual credit losses of previous years and the forward-looking information of the current year. The accounting

policies for bad debt provisions are as follows:

Account age Expected credit loss rate of account receivable (%)

Within one year 1

1-2 years 5

2-3 years 20

Over 3 years 50

13. Account receivable financing

Not applicable

14. Other account receivable

Determining method and accounting treatment on the expected credit loss of other account receivable

1. Other account receivable with bad debt provision accrual on a single basis

Provision for bad debts on single basis: Bad debt provision shall be made on a single basis when there is evidence that the credit

risk of a single item of other account receivable is large.

Accrual method for bad debt provision: Conduct impairment tests separately and make provision for bad debts according to the

difference between the present value of its future cash flow and its book value

2. Other accounts receivable with provision for bad debts according to the combination of expected credit risk

characteristics

Except for the other accounts receivable with single provision for bad debts the other receivable are grouped

according to the similarity and correlation of credit risk characteristics. These credit risks usually reflect the

debtor's ability to repay all due amounts in accordance with the contractual terms of the assets and are related to

the calculation of the future cash flow of the asset under inspection. The Group uses the aging of other accounts

receivable as the combination of expected credit risk characteristics to make provisions for bad debts based on the

actual credit losses of previous years and the forward-looking information of the current year. The accounting

policies for bad debt provisions are as follows:

Account age Expected credit loss rate of other account receivable (%)

Within one year 1

1-2 years 5

2-3 years 20

Over 3 years 50

15. Inventory

1. Classification

Inventory includes finished products or commodities held for sale in daily activities products in the production

process materials and supplies consumed in the production process or the process of providing labor services etc.

2. Valuation methods for delivery of inventory

The delivery of inventory shall be priced individually on a first-in first-out basis.

3. Recognition standards of the net realizable value for inventory

On the balance sheet date inventories are measured at the lower of cost and net realizable value and provision for

impairment of inventories is made based on the difference between the cost of a single inventory/inventory

category and the net realizable value. The net realizable value of the inventory directly used for sale is determined

in the normal production and operation process at the estimated selling price of the inventory minus the estimated

sales expenses and related taxes. The net realizable value of the inventory that needs to be processed is determined

by the estimated selling price of the finished product produced after subtracting the estimated cost estimated sales

expenses and related taxes and fees at the time of completion in the normal production and operation process. On

the balance sheet date for part of the same inventory has a contract price agreement while the other part does not

have a contract price the net realizable value shall be determined separately and the corresponding cost shall be

compared to respectively determine the amount of provision or reversal for inventory falling price reserves.

4. Inventory system

Inventory system is the perpetual inventory system.

5. Amortization of low-value consumables and packaging materials

(1) Low-value consumables

Amortization is carried out according to the number of times of use.

(2) Wrappage

Amortization is carried out according to the number of times of use.

16. Contractual asset

Not applicable

17. Contract cost

Not applicable

18. Assets held for sale

1. Classification of non-current assets or disposal groups held for sale

The Company classifies non-current assets or disposal groups that meet all of the following conditions as

held-for-sale: 1)according to the practice of selling this type of assets or disposal groups in a similar transaction

the non-current assets or disposal group can be sold immediately at its current condition; 2)The sale is likely to

occur that is the Company has made resolution on the selling plan and obtained definite purchase commitment

the selling is estimated to be completed within one year.The non-current assets or disposal group acquired by the company specifically for resale shall be classified as held

for sale on the date of acquisition if meets the condition of “expected to complete the sale within one year” on the

acquisition date and is likely to meet other classification conditions of held for sale in the short term (usually 3

months) .

Due to one of the following reasons beyond the company’s control the transaction among non-related parties

cannot be completed within one year and the company still promises to sell non-current assets or disposal groups

continue to classify non-current assets or disposal groups as held for sale: 1) The buyer or other parties

accidentally set the conditions that caused the sale to be delayed. The company has taken timely action against

these conditions and is expected to be able to smoothly resolve the delay factors within one year from the setting

of the conditions that caused the sale to be delayed; 2) Rare circumstances have caused the non-current assets held

for sale or the disposal group to fail to complete the sale within one year. The company has taken necessary

measures to address these new situations in the first year and has re-satisfied the classification conditions of the

held for sale categories.

2. Measurement of non-current assets or disposal groups held for sale

1) Initial measurement and subsequent measurement

When initially measuring and remeasuring the non-current assets or disposal groups held for sale on the balance

sheet date if the book value is higher than the net value of fair value minus selling expenses the book value shall

be written down to the net amount after deducting selling expenses from fair value the written-down amount is

recognized as asset impairment loss and included in the current profits and losses and provision for impairment

of assets held for sale is made.

For non-current assets or disposal groups classified as held-for-sale categories on the acquisition date compare

the initial measurement amount assuming that they are not classified as held-for-sale with the net amount after

deducting selling expenses from fair value at the initial measurement and measure the lower of the two. Except

for the non-current assets or disposal groups obtained in a business combination the difference arising from the

net amount of the non-current assets or disposal groups after deducting selling expenses from fair value and used

as the initial measurement amount is included in the current profit and loss.

For the amount of asset impairment losses confirmed by the disposal group held for sale the book value of the

goodwill in the disposal group is first offset and then the book value is offset in proportion based on the

proportion of the book value of each non-current asset in the disposal group.Non-current assets held for sale or non-current assets in the disposal group are not depreciated or amortized and

interest and other expenses on liabilities in the disposal group held for sale continue to be recognized.

2) Accounting treatment of asset impairment loss reversal

If the net amount of the fair value of the non-current assets held for sale increases after subtracting the selling

expenses on the subsequent balance sheet date the previously written-down amount shall be recovered and

reversed within the amount of the asset impairment losses recognized after being classified as held for sale and

the reversed amount is included in the current profits and losses. Asset impairment losses recognized before being

classified as held for sale shall not be reversed.On the subsequent balance sheet date if the net amount of the fair value of the disposal group held for sale

increases after subtracting the selling expenses the previously written-down amount shall be recovered and

reversed within the amount of the asset impairment losses recognized as non-current assets after being classified

as held for sale and the reversed amount is included in the current profits and losses. The book value of the

deducted goodwill and the asset impairment losses recognized before the non-current assets are classified as held

for sale shall not be reversed.

For subsequent reversal of the asset impairment losses confirmed by the disposal group held for sale its book

value is increased in proportion based on the proportion of the book value of each non-current asset in the disposal

group except for the goodwill.

3) Accounting treatment no longer being classified as held for sale and being derecognized

When non-current assets or disposal groups no longer continue to be classified as held for sale as they no longer

meet the classification conditions of the held for sale category or non-current assets are removed from the held for

sale disposal group measure based on the lower of the following two: a. Book value before being classified as

held for sale the amount adjusted according to the depreciation amortization or impairment that should have

been recognized under the assumption that it is not classified as held for sale; b. Recoverable amount.When derecognizing non-current assets or disposal groups held for sale the unrecognized gains or losses shall be

included in the current profits and losses.

19. Creditors’ investment

Not applicable

20. Other creditors’ investment

Not applicable

21. Long-term account receivable

Based on whether its credit risk has increased significantly since its initial recognition the Company uses an

amount equivalent to expected credit losses in the next 12 months or the entire duration to measure long-term

receivable impairment losses. Except for long-term receivables whose credit risk is assessed individually

impairment losses are accrued based on their credit risk characteristics.

22. Long-term equity investment

1. Judgment of joint control and significant influence

According to the relevant agreement there is mutual control over an arrangement and the relevant activities of

the arrangement must be agreed by the participants who share the control rights before making decisions and it is

deemed as joint control. Having the power to participate in decision-making on the financial and operating

policies of the invested entity but not being able to control or jointly control the formulation of these policies with

other parties it is deemed as a significant influence.

2. Determination of investment cost

(1) In the case of a business combination under the same control if the combining party pays cash transfers

non-cash assets assumes debts or issues equity securities as the merger consideration the share of the book value

of the acquired owner’s equity of the combined party in the consolidated financial statements of the ultimate

controlling party shall be used as its initial investment cost. The difference between the initial investment cost of

long-term equity investment and the book value of the combined consideration paid or the total face value of the

issued shares shall adjust the capital reserve; if the capital reserve is insufficient to offset adjust the retained

earnings.The company realizes the long-term equity investment formed by the business combination under the same

control step by step through multiple transactions and judges whether it is a "package deal". If it is a "package

deal" each transaction shall be accounted for as a transaction to obtain control for accounting treatment. If it is not

a "package deal" on the combining date the initial investment cost shall be determined based on the share of the

book value of the combined party's net assets in the ultimate controlling party's consolidated financial statements

after the combination. The difference between the initial investment cost of the long-term equity investment on

the combining date and the book value of the long-term equity investment before the combination plus the sum of

the book value of the consideration newly paid for further obtaining shares on the combining date shall adjust the

capital reserve; if the capital reserve is insufficient to offset adjust the retained earnings.

(2) In the case of a business combination not under the same control the fair value of the combined consideration

paid on the purchase date shall be the initial investment cost.The company realizes the long-term equity investment formed by business combination not under the same

control step by step through multiple transactions and separates individual financial statements and consolidated

financial statements for relevant accounting treatment:

1) In individual financial statements the sum of the book value of the equity investment originally held plus the

cost of the newly increased investment is used as the initial investment cost calculated by the cost method.

2) In the consolidated financial statements judge whether it is a "package deal". If it is a "package deal" each

transaction shall be accounted for as a transaction to obtain control for accounting treatment. If it is not a "package

deal" the equity of the acquiree held before the purchase date shall be remeasured at the fair value of the equity

on the purchase date and the difference between the fair value and its book value shall be included in the current

investment income.If the equity held by the acquiree before the purchase date involves other comprehensive income calculated by the

equity method the other comprehensive income related to it shall be converted to the current income on the

purchase date except for other comprehensive income arising from changes in net liabilities or net assets of

defined benefit plans remeasured by the investee.

(3) Except for the formation of a business combination for those obtained by paying cash the actual purchase

price paid shall be its initial investment cost; for those obtained by issuing equity securities the fair value of the

issued equity securities shall be its initial investment cost; for those acquired through debt restructuring the initial

investment cost shall be determined according to "Accounting Standards for Business Enterprises No. 12 - Debt

Restructuring"; for those acquired through non-monetary asset exchanges the initial investment cost shall be

determined in accordance with "Accounting Standards for Business Enterprises No. 7 - Non-monetary Asset

Exchanges".

3. Subsequent measurement and profit and loss confirmation methods

The long-term equity investment that controls the investee is accounted for by the cost method; the long-term

equity investment for associates and joint ventures is accounted for by the equity method.4. Handling method of disposing investments in subsidiaries step by step through multiple transactions until they

lose control

(1) Individual financial statements

For the disposed equity the difference between its book value and the actual purchase price shall be included in

the current profit and loss. For the remaining equity if it still has a significant impact on the invested entity or

performs joint control with other parties it shall be converted to equity method accounting; if the invested entity

can no longer be controlled jointly controlled or significantly affected it shall be calculated in accordance with

relevant regulations of the "Accounting Standards for Business Enterprises No. 22 - Recognition and

Measurement of Financial Instruments".

(2) Consolidated financial statements

1) Step-by-step disposal of investments in subsidiaries through multiple transactions to the loss of control and not

belonging to a "package deal"

Before the loss of control the difference between the disposal cost and the net asset share continuing to be

calculated from the date of purchase or combination by the subsidiary corresponding to the disposal of long-term

equity investment shall adjust the capital reserve (capital premium) if the capital reserve is insufficient to offset

adjust the retained earnings.When losing the control to the original subsidiary the remaining equity shall be remeasured at its fair value on the

date of loss of control. The difference between the sum of the consideration obtained from the disposal of the

equity and the fair value of the remaining equity and the share of the original subsidiary’s net assets calculated

continuously from the date of purchase or merger according to the original shareholding ratio is included in the

current investment income when the control is lost while offsets goodwill. Other comprehensive income related

to the equity investment of the original subsidiary shall be transferred to the current investment income when

losing the control.

2) Step-by-step disposal of investments in subsidiaries through multiple transactions to the loss of control and

belonging to a "package deal"

Take each transaction as a transaction that disposes of a subsidiary and loses control for accounting treatment.However before the loss of control the difference between each disposal cost and the share of the subsidiary’s net

assets corresponding to the disposal investment shall be recognized as other comprehensive income in the

consolidated financial statements and shall be transferred to the profit and loss of current period when losing the

control.

23. Investment real estate

1. The investment real estate includes the rented land use rights the land use rights which are held and prepared

for transfer after appreciation and the rented buildings.

2. Initial measurement of an investment real estate is based on the cost the subsequent measurement is based on

cost model and adopt the same method of depreciation or amortization as fixed assets and intangible assets.24. Fixed asset

(1) Recognition

Fixed assets is defined as the tangible assets which are held for the purpose of producing goods providing

services lease or for operation & management and have more than one year of service life. Fixed assets should be

recognized for qualified the followed conditions at the same time:1) It is probable that the economic benefits

associated with the assets will flow into the Company; and 2) The cost of the assets can be measured reliably.

(2)Depreciation methods

Category Method Years of depreciation Scrap value rate Yearly depreciation rate

House and buildings Straight-line depreciation 35-40 3 2.77-2.43

Machinery equipment Straight-line depreciation 12 3 8.08

Transport equipment Straight-line depreciation 7 3 13.86

Electronic equipment Straight-line depreciation 5-7 3 33.33-13.86

Office and other

equipment

Straight-line depreciation 7 3 13.86

Decoration fee for the

self-owned house

Straight-line depreciation 10 0 10.00

(3) Recognition measurement and depreciation of fixed assets held under finance lease

Not applicable

25. Construction in progress

1. The construction in progress is recognized when meet the follow conditions at the same time that is the

economic benefits are likely to flow in and the cost can be measured reliably. Construction in progress shall be

measured in terms of the actual cost incurred prior to the construction of such asset to its intended serviceable

state.

2. When the construction in progress reaches the expected serviceable state it will be transferred into fixed asses

according to the actual cost of the construction. Those who have reached the expected serviceable status but have

not yet processed the final account on completion shall be transferred to fixed assets according to the estimated

value first. The original temporary estimated value shall be adjusted according to the actual cost after the final

accounts for the completion have been processed but the previously accrued depreciation shall not be adjusted.

26. Borrowing expense

1. Recognition of capitalization of borrowing expenses

Borrowing expenses that attributed for purchasing or construction of assets that are complying start to be

capitalized and counted as relevant assets cost; other borrowing expenses reckoned into current gains and losses

after expenses recognized while occurred.

2. Period of capitalization

(1) Borrowing expenses start to be capitalized when all of the following conditions are met: 1) capital expenditure

has been occurred; 2) borrowing expenses have been occurred and 3) acquisition or construction necessary for the

assets to come into an expected serviceable state has been carried out.

(2) If an asset that meets the capitalization conditions is abnormally interrupted during the acquisition or

construction or in the production process and the interruption time exceeds 3 consecutive months the

capitalization of borrowing costs shall be suspended; the borrowing costs incurred during the suspension shall be

recognized as current expenses until the acquisition construction or production of assets restarts.

(3) When the purchased constructed or produced assets that meet the capitalization conditions reach the expected

usable or saleable state the capitalization of borrowing costs shall cease.

3. Capitalization rate and capitalization amount of borrowing costs

If special loans are borrowed for the purpose of purchasing constructing or producing assets that meet the

capitalization conditions the amount after subtracting the interest income obtained by depositing the unused

borrowing funds in the bank or the investment income obtained by making a temporary investment for the unused

borrowing funds from the interest expenses actually incurred during the period of the special loans (including the

amortization of discounts or premiums determined in accordance with the actual interest rate method) shall

determine the amount of interest that should be capitalized; if the general borrowing is occupied for the purchase

construction or production of assets that meet the capitalization conditions the amount of interest of general

borrowings that should be capitalized shall be calculated and determined by multiplying the weighted average

number of accumulated asset expenditures in excess of asset expenditures of special borrowings by the

capitalization rate of general borrowings.

27. Biological assets

Not applicable

28. Oil and gas assets

Not applicable

29. Right-of-use assets

Not applicable

30. Intangible assets

(1) Measurement use of life and impairment testing

1. Intangible assets of the Company including land use rights trademark and software which are initially

measured at cost.

2. Intangible assets with limited service life shall be amortized systematically and reasonably within their service

life in accordance with the expected realization method of the economic benefits related to the intangible assets. If

the expected realization method can not be reliably determined the straight-line method shall be adopted for

amortization. Specific year for amortization are as:

Item Period for amortization (Year)

Land use right 50

Trademark 10

Software 5

(2)Accounting policy of the internal R&D expenditure

Research expenditures for its internal R&D projects shall be recorded into the current gain/loss. Expenses incurred

during the development phase that satisfy the following condition at the same time are recognized as intangible

assets: 1)it is technically feasible that the intangible asset can be used or sold upon completion; 2)there is intention

to complete the intangible asset for use or sale; 3)the intangible asset can produce economic benefits including

there is evidence that the products produced using the intangible asset has a market or the intangible asset itself

has a market; if the intangible asset is for internal use there is evidence that there exists usage for the intangible

asset; 4) there is sufficient support in terms of technology financial resources and other resources in order to

complete the development of the intangible asset and there is capability to use or sell the intangible asset; and

5)the expenses attributable to the development phase of the intangible asset can be measured reliably.

31. Impairment of long term assets

For long-term equity investments investment real estate measured by the cost model fixed assets construction in

progress intangible assets with limited service life and other long-term assets if there are signs of impairment on

the balance sheet date estimate the recoverable amount. For goodwill formed by business combinations and

intangible assets with uncertain service life regardless of whether there are signs of impairment an impairment

test is conducted every year. Goodwill is tested for impairment in combination with its related asset groups or

combination of asset groups.If the recoverable amount of the aforementioned long-term assets is lower than its book value the asset

impairment provision shall be recognized according to the difference and included in the current profit and loss.32. Long-term prepaid expenses

General expenses that the long-term prepaid expenses have been accounted for and the amortization period is

more than 1 year (excluding 1 year). Long-term prepaid expenses are accounted for according to the actual

amount and amortized evenly in installments during the benefit period or the prescribed period. If the long-term

prepaid expense item cannot benefit the future accounting period all the amortized value of the item that has not

been amortized shall be transferred to the current profit and loss.

33. Contractual liabilities

Not applicable

34. Staff remuneration

(1) Accounting treatment of short term remuneration

In the period of employee services short-term benefits are actually recognized as liabilities and charged to profit

or loss or relevant assets costs.

(2) Accounting treatment for after-service benefits

After-service benefits are divided into defined contribution plan and defined benefit plan.

(1) During the accounting period when employees provide services to the company the amount of deposits

calculated according to the defined contribution plan is recognized as a liability and included in the current profit

and loss or the cost of related assets.

(2) The accounting treatment of defined benefit plans usually includes the following steps:

1) According to the expected cumulative welfare unit method use unbiased and mutually consistent actuarial

assumptions to estimate relevant demographic variables and financial variables measure the obligations arising

from the defined benefit plan and determine the period of the relevant obligations. At the same time the

obligations generated by the defined benefit plan are discounted to determine the present value of the defined

benefit plan obligations and current service costs;

2) If there are assets in a defined benefit plan the deficit or surplus formed by subtracting the fair value of the

defined benefit plan’s assets from the current value of the defined benefit plan's obligations shall be recognized as

a defined benefit plan’s net liabilities or net assets. If there is a surplus in the defined benefit plan the net assets of

the defined benefit plan shall be measured at the lower of the surplus of the defined benefit plan and the asset

ceiling;

3) At the end of the period the employee compensation costs generated by the defined benefit plans are

recognized as three parts i.e. service costs net interest of the net liabilities or net assets of the defined benefit

plans and changes in the remeasured net liabilities or net assets of the defined benefit plans of which the service

costs and the net interest of the net liabilities or net assets of the defined benefit plans are included in the current

profits and losses or the cost of related assets and the changes in the remeasured net liabilities or net assets of the

defined benefit plans are included in other comprehensive income and not allowed to switch back to profits or

losses in the subsequent accounting period but the amount recognized in other comprehensive income can be

transferred within the scope of equity.

(3)Accounting treatment for dismissal benefit

For dismissal benefit provided to employee the compensation liability resulting from dismissal benefits shall be

recognized as early as possible in the following two conditions and shall be recorded into current gain/loss:

1)when the company can not unilaterally withdraw severance benefits due to the labor relationship termination

plan or layoff proposal; 2) when the company recognizes the costs and expenses associated with a reorganization

involving the payment of severance benefits.

(4)Accounting treatment for other long term staff benefits

If other long term benefits provided to the employees meet the conditions of defined contribution plan accounting

treatment shall be conducted in line with relevant provisions of defined contribution plan; the accounting

treatment of other long term benefit beyond that shall be conducted in accordance with the relevant provision of

defined benefit plan in order to simplify relevant accounting treatment the employee compensation costs incurred

are recognized as service costs; the total net amount (includes net interest of the net liability (or net asset) of other

long term employee benefits and changes resulting from remeasuring the net liability (or net asset) of the long

term employee benefit) shall be recorded into current gain/loss or relevant assets costs.

35. Lease liability

Not applicable

36. Accrual liability

1. when the responsibility relating to contingencies such as guarantee litigation product warranties and loss

contract etc. are became the current responsibility undertaken by the Company the fulfilling of such responsibility

may lead to financial benefit outflow and such responsibility can be measured reliably for its value the

responsibility shall be recognized as an accrual liability.

2. Accrual liabilities shall conduct initial measurement by best estimation of expenditures needed by fulfillment of

current responsibilities and on balance sheet date review the book value of the accrual liability.

37. Share-based payment

Not applicable

38. Other financial instrument of preferred stocks and perpetual bond

Not applicable

39. Revenue

Accounting policy applicable for the revenue recognition and measurement

1. Revenue recognition principle

(1) Sale of goods

The income from the sale of goods is recognized when the following conditions are met at the same time: 1) The

main risks and rewards of the ownership of the goods are transferred to the purchaser; 2) The company no longer

retains the continued management rights normally associated with the ownership and no longer implements

effectively control of the goods sold; 3) The amount of revenue can be reliably measured; 4) The relevant

economic benefits are likely to flow in; 5) The related costs that have occurred and will occur can be reliably

measured.

(2) Provision of labor services

The result of the provision of labor service transaction can be reliably estimated (at the same time the amount of

income can be reliably measured the relevant economic benefits are likely to flow in the completion progress of

the transaction can be reliably determined and the costs that have occurred and will occur in the transaction can

be measured reliably) on the balance sheet date the percentage of completion method is used to confirm the

income from the provision of labor services and the completion progress of the labor services transaction is

determined according to the proportion of the labor services provided to the total labor services to be provided. If

the result of the provision of labor service transaction cannot be reliably estimated on the balance sheet date and

the labor costs incurred are expected to be compensated the labor service income shall be recognized at the

amount of labor costs incurred and the labor costs shall be carried forward at the same amount. If the labor costs

incurred are not expected to be compensated and the labor costs incurred are included in the current profit sand

losses and labor income shall not be recognized.

(3) Transfer of assets use rights

The income from the transfer of assets use rights is recognized when the relevant economic benefits are likely to

flow in and the amount of income can be reliably measured. Interest income is calculated and determined in

accordance with the time for others to use the Company's monetary funds and the actual interest rate; usage fee

income is calculated and determined in accordance with the charging time and method agreed in the relevant

contract or agreement.

2. Specific methods of revenue recognition

(1) Automobile sales revenue

The Company sells automobiles and recognizes sales revenue after the automobiles are delivered to customers in

accordance with the agreement and the payment is received or the right to receive payment is obtained.

(2) Jewellery retail and wholesale

The Company's revenue from the sale of jewellery 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

the payment has been collected. Wholesale revenue is realized when the physical goods have been delivered to the

customer and the customer has signed for confirmation and received the payment or obtained the proof of

claiming payment.

(3) Property rental income

The Company's property rental income is recognized as revenue on an accrual basis and sales revenue is

recognized when the leased assets are delivered to the lessee and the rent has been collected.

40. Government subsidy

1. Government subsidies are recognized when the following conditions are met at the same time: (1) The company

can meet the conditions attached to the government subsidies; (2) The company can receive government subsidies.If a government subsidy is a monetary asset it shall be measured at the amount received or receivable. If a

government subsidy is a non-monetary asset it shall be measured at its fair value; if its fair value cannot be

obtained reliably it shall be measured at its nominal amount.

2. Judgment basis and accounting treatment methods of government subsidies related to assets

Government documents stipulate that government subsidies used for purchase construction or other forms of

long-term assets shall be classified as asset-related government subsidies. If the government document doesn’t

stipulate judgment shall be made on the basis of the basic conditions that must be met to obtain the subsidies

those used for purchase construction or other forms of long-term assets shall be regarded as government subsidies

related to assets. Government subsidies related to assets are used to offset the book value of related assets or are

recognized as deferred income. If government subsidies related to assets are recognized as deferred income they

shall be included in profit and loss in installments within the useful life of the relevant assets in a reasonable and

systematic way. Government subsidies measured at their nominal amounts are directly included in the current

profits and losses. If the relevant asset is sold transferred scrapped or damaged before the end of its useful life

the undistributed deferred income balance shall be transferred to the current profits and losses of asset disposal.

3. Judgment basis and accounting treatment methods of government subsidies related to income

Government subsidies other than government subsidies related to assets are classified as government subsidies

related to income. For government subsidies that include both asset-related parts and income-related parts it is

difficult to distinguish between assets-related and income-related government subsidies and they are classified as

income-related government subsidies as a whole. If government subsidies related to income are used to

compensate related costs or losses in subsequent periods they are recognized as deferred income and included in

the current profits and losses or offset related costs during the period when related costs or losses are recognized

and they are directly included in the current profits and losses or offset related costs when being used to

compensate related costs or losses that have occurred.

4. Government subsidies related to the company's daily operating activities are included in other income or offset

related costs in accordance with the nature of the economic business. Government subsidies not related to the

company's daily activities are included in non-operating income and expenditure.

41. Deferred income tax assets and deferred income tax liabilities

1. According to the difference between the book value of assets and liabilities and their tax base (the tax base of

items that are not recognized as assets and liabilities can be determined in accordance with the tax law the

difference between the tax base and its book amount) the deferred income tax assets or deferred income tax

liabilities are calculated and recognized according to the applicable tax rate during the period when the asset is

expected to be recovered or the liability is settled.

2. Recognition of deferred income tax assets is limited to the amount of taxable income that is likely to be

obtained to offset deductible temporary differences. On the balance sheet date if there is conclusive evidence

showing that sufficient taxable income is likely to be obtained in the future to offset the deductible temporary

differences recognize the deferred income tax assets that have not been recognized in the previous accounting

period.

3. On the balance sheet date review the book value of deferred income tax assets. If it is likely that sufficient

taxable income cannot be obtained in the future to offset the benefits of deferred income tax assets the book value

of the deferred income tax assets shall be written down. When it is likely to obtain sufficient taxable income the

write-down amount shall be returned.

4. The company's current income taxes and deferred income taxes are included in the current profits and losses as

income tax expenses or income but not including income tax arising from the following situations: (1) business

combination; (2) transactions or events directly recognized in owner's equity.

42. Leasing

(1)Accounting treatment for operating lease

As a leassee for the Company rental expense of operating lease is included in the relevant asset costs or current

profits and losses through the straight-line method during every period. Initial direct costs shall be included in

profit or loss for the current period. Contingent rental shall be recorded in the current profits and losses in which

they actually arise.

As a lessor for the Company rental expense of operating lease is included in current profits and losses through the

straight-line method during every period. The initial direct expenses incurred are directly recorded into current

profit/loss except for those with a large amount to be capitalized and recorded into the profit/loss in stages.

Contingent rental shall be recorded in the current profits and losses in which they actually arise.

(2)Accounting treatment for financing lease

Not applicable

43. Other important accounting policy and estimation

Segmental (divisional) report

The Company determines operating divisions based on internal organizational structure management

requirements and internal reporting system. Operating divisions of the Company refers to the component that

meets the following conditions at the same time:

1. this component can generate income and incur expenses in the course of daily activities;

2. the management can evaluate the operating results of this component regularly to determine resources

allocation and evaluate its performance;

3. be able to obtain relevant accounting information such as the financial status operating results and cash flow of

the component through analysis.

44. Changes of important accounting policy and estimation

(1)Changes of important accounting policies

□Applicable √ Not applicable

(2) Changes of important accounting estimate

□Applicable √ Not applicable

(3)Adjustment on the relevant items of financial statement at beginning of the year when implemented the

new revenue standards and new leasing standards since 2020

□ Applicable √ Not applicable

Whether need to adjust the balance sheet items at the beginning of the year

□Yes √No

Explain the reasons of no need to adjust the balance sheet items at the beginning of the year

On 5 July 2017 the “Notice Concerning Amendments and Issuance” (Cai Kuai [2017] No.22) (hereinafter referred to as New

Revenue Standard) was issued by Ministry of Finance and requires the enterprises listed in China shall be implemented since 1 Jan.

2020. The Company prepare the disclosure of accounting statement in accordance with the New Revenue Standard since 1 Jan. 2020

and there is no need to retroactively adjust the comparability number in 2019 change of the accounting policy will not affect relevant

financial indicators of the Company for 2019.

(4) Retrospective adjustment of early comparison data description when implemented the new revenue

standards and new leasing standards since 2020

□ Applicable √ Not applicable

45. Other

VI. Taxes

1. Type of tax and rate for main applicable tax

Taxes Basis Rate

VAT Selling goods or providing taxable services 13% 11% 9% 5% 6% and 3%

Property tax

Price-based resource tax 1.2 percent of the

remaining value after deducting 30% of the

original value of the property;

1.2%

Urban maintenance and construction tax Turnover tax payable 7%

Educational surtax Turnover tax payable 3%

Local education surcharge Turnover tax payable 2%

Enterprise income tax Taxable income 20% 25%

Rate of income tax for different taxpaying body:

Taxpaying body Rate of income tax

Shenzhen Xinyongtong Motor Vehicle Testing Equipment Co.Ltd.

20%

Other taxpaying body than the above 25%

2. Tax preferential

According to the “Notice on Implementation of Preferential Tax-reduction & Exemption Policies for Small &Micro Enterprises”(Cai Shui [2019] No.13) issued by SAT (State Administration of Taxation) Shenzhen

Xinyongtong Automobile Inspection Equipment Co. Ltd enjoys the preferential tax policies for small & micro

enterprises with enterprise income tax at the rate of 20%.

3. Other

VII. Annotation to main items of consolidated financial statements

1. Monetary funds

In RMB

Item Ending balance Opening balance

Cash on hand 52095.50 120351.17

Cash in bank 333557214.12 428731254.87

Total 333609309.62 428851606.04

The total amount of money that 28671414.00 28183348.23

has restrictions on use due to mortgage