Shenzhen Textile (Holdings) Co. Ltd.Financial Statements and Audit Report For Year Ended December 31 2024Shenzhen Textile (Holdings) Co. Ltd.Financial Statements and Audit Report For Year Ended December 31 2024 Content Page Audit Report 1-4 Consolidated and parent company's balance sheet 5-7 Consolidated and parent company's income statement 8-9 Consolidated and parent company's statement of cash flows 10-11 Consolidated and parent company's statement of changes in shareholders' equity 12-15 Notes to the financial statements 16-102Shenzhen Textile (Holdings) Co. Ltd.Audit Report DSB (S) Z (25) No. P03605 (Page 1 of 4) All shareholders of Shenzhen Textile (Holdings) Co. Ltd.I. Audit opinions We have audited the financial statements of Shenzhen Textile (Holdings) Co. Ltd. (hereinafter referred to as the "Shenzhen Textile") including the consolidated and parent company's balance sheet as at December 31 2024 the consolidated and parent company's income statement consolidated and parent company's statement of cash flows consolidated and parent company's statement of changes in shareholders' equity and related notes to the financial statements for the year then ended.In our opinion the attached financial statements are prepared in all material respects in accordance with the Accounting Standards for Business Enterprises and fairly present the consolidated and the parent company's financial position of Shenzhen Textile as at December 31 2024 and the consolidated and the parent company's operating results and cash flows for the year then ended.II. Basis for the audit opinion We have conducted our audit in accordance with the Chinese Auditing Standards for Certified Public Accountants.Our responsibilities under these standards are further described in the "Certified Public Accountant's Responsibilities for the Audit of Financial Statements" section of the audit report. In accordance with the Code of Ethics for Chinese Certified Public Accountants we are independent of Shenzhen Textile and have fulfilled other ethical responsibilities.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.III. Key audit matters Key audit matters are those matters that in our professional judgment are of most significance in our audit of the financial statements of the current year. These matters are addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. We have identified the following matters as key audit matters to be communicated in the audit report. 1. Recognition of revenue from sales of polarizers As described in the Note (V). 41 to the financial statements in 2024 the operating revenue of Shenzhen Textile as presented in the consolidated financial statements was RMB 3335283008.68 of which the revenue from sales of polarizers was RMB 3161332478.08 accounting for 94.78% of the total revenue. The revenue from sales of polarizers of Shenzhen Textile is recognized when the customer obtains control of the relevant goods. Due to the importance of revenue from sales of polarizers to the consolidated financial statements as a whole and the fact that the revenue is one of the key performance indicators of Shenzhen Textile there is an inherent risk that management may manipulate the revenue recognition in order to achieve specific goals or expectations. Therefore we have identified the recognition of revenue from sales of polarizers as a key audit matter in the audit of the consolidated financial statements.- 1 -Shenzhen Textile (Holdings) Co. Ltd.Audit Report - Continued DSB (S) Z (25) No. P03605 (Page 2 of 4) III. Key audit matters - continued 1. Recognition of revenue from sales of polarizers - continued In response to the above key audit matters the audit procedures we performed mainly include: Test and evaluate the effectiveness of the operation of internal control related to the sales business of polarizer; Check the sales contracts signed with major customers identify the terms and conditions of the contracts related to the transfer of right of control of the goods and evaluate whether the accounting policies for recognition of revenue from sales of polarizers meet the requirements of the Accounting Standards for Business Enterprises; Execute analytical procedures for the revenue from sales of polarizers by production line product type and customer respectively and analyze the rationality of the change in revenue from sales of polarizers in combination with market selling price and other factors; Extract samples to perform detail tests on the revenue from sales of polarizers check the supporting documents such as invoices delivery orders and receipts related to the recognition of revenue from sales of polarizers and conduct letter of confirmation on the sales amount of major customers to verify the authenticity of revenue from sales of polarizers; Select samples for sales transactions before and after the balance sheet date check supporting documents such as delivery orders receipts and invoices and evaluate whether the revenue from sales of polarizers is recorded in the appropriate accounting period. 2. Impairment of polarizer inventories As described in Note (V). 8 to the Financial Statements as of December 31 2024 the book balance of inventories of Shenzhen Textile as presented in the consolidated financial statements was RMB 911706239.87 of which the book balance of polarizer inventories was RMB 905482857.11 accounting for 99.32% of the total inventories and the corresponding provision for inventory depreciation of polarizer was RMB 115967084.94. According to the accounting policies of Shenzhen Textile the inventories are measured at the lower of cost or net realizable value at the end of the year. When the net realizable value of the inventories is lower than the cost the provision for inventory depreciation shall be made according to the difference. Since the provision for inventory depreciation involves significant estimates of the management we have identified the impairment of polarizer inventories as a key audit matter in the audit of the consolidated financial statements.In response to the above key audit matters the audit procedures we performed mainly include: Test and evaluate the effectiveness of internal control related to the impairment of polarizer inventories; Evaluate the appropriateness of accounting policies related to the impairment of polarizer inventories; Implement the on-site monitoring procedures of polarizer inventories check the inventory quantity of polarizer inventories and observe the status of polarizer inventories on the basis of sampling; Select samples compare the data used in determining the net realizable value of the polarizer inventories with the actual cost of completion of products in progress and the actual selling prices incurred recently and evaluate the reasonableness of the net realizable value of polarizer inventories.- 2 -Audit Report - Continued DSB (S) Z (25) No. P03605 (Page 3 of 4) IV. Other information The management of Shenzhen Textile is responsible for other information. Other information includes information covered in the 2024 Annual Report of Shenzhen Textile but excludes the financial statements and our audit report.Our audit opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with financial statements or our knowledge obtained during the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of the other information we are required to report that fact. We have nothing to report in this regard.IV. Responsibilities of the management and those charged with governance for financial statements The management of Shenzhen Textile is responsible for preparing the financial statements in accordance with the requirements of Accounting Standards for Business Enterprises to achieve a fair presentation and for designing implementing and maintaining internal control that is necessary to ensure that the financial statements are free from material misstatements whether due to frauds or errors.In preparing the financial statements the management is responsible for assessing the going-concern ability of Shenzhen Textile disclosing matters related to going concern (if applicable) and applying the going concern basis unless the management plans to liquidate Shenzhen Textile terminate its operations or has no other realistic alternative.Those charged with governance are responsible for overseeing the financial reporting process of Shenzhen Textile.VI. Responsibilities of certified public accountants for the audit of financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an audit report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the audit standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.We have exercised professional judgment and maintained professional skepticism in performing our audit under the auditing standards. At the same time we also implement the following work: (1) Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.- 3 -Audit Report - Continued DSB (S) Z (25) No. P03605 (Page 4 of 4) VI. Responsibilities of certified public accountants for the audit of financial statements - continued (2) Understand the internal control related to the audit so as to design appropriate audit procedures. (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. (4) Draw conclusions on the appropriateness of the management's use of the going concern basis. At the same time based on the audit evidence obtained a conclusion is drawn as to whether there is a material uncertainty in events or circumstances that may give rise to significant doubt about the going-concern ability of Shenzhen Textile. If we conclude that a material uncertainty exists we are required to in our audit report draw attention of the users of statements to the related disclosures in the financial statements; if such disclosures are inadequate we should modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our audit report. However future events or circumstances may cause Shenzhen Textile to cease to continue as a going concern. (5) Evaluate the overall presentation (including disclosures) structure and content of the financial statements and whether the financial statements fairly reflect the relevant transactions and matters. (6) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within Shenzhen Textile to express an opinion on the financial statements. We are responsible for the direction supervision and performance of the group audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding the planned scope and timing of the audit significant audit findings and other matters including any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and the related safeguards (if applicable).From the matters communicated with those charged with governance we have determined which matters are of most significance to the audit of the financial statements in the current year and thus constitute the key audit matters. We describe these matters in the audit report unless laws and regulations prohibit public disclosure of these matters or in extremely rare circumstances if it is reasonably expected that the negative consequences of communicating a matter outweigh the benefits to the public interest in the audit report we determine not to do so.Deloitte Touche Tohmatsu Certified Public Accountants LLP Certified Public Accountant of China (Engagement partner) Shanghai China Certified Public Accountant of China March 26 2025 - 4 -Shenzhen Textile (Holdings) Co. Ltd.Consolidated Balance Sheet December 31 2024 Consolidated Balance Sheet RMB Balance as at the Balance as at the Notes end of the current end of the previous year year Current assets: Monetary funds (V). 1 340961443.82 472274448.00 Financial assets held for trading (V). 2 731419904.42 821946114.68 Notes receivable (V). 3 47305221.88 50963943.01 Accounts receivable (V). 4 863731936.89 820134833.95 Receivables financing (V). 5 6804603.68 22839459.13 Advances to suppliers (V). 6 8176724.70 19499886.80 Other receivables (V). 7 3596543.96 3220285.42 Including: interest receivable - - Dividends receivable - - Inventories (V). 8 789756700.88 736392172.27 Other current assets (V). 9 21461736.14 60773457.39 Total current assets 2813214816.37 3008044600.65 Non-current assets: Long-term equity investments (V). 10 114828026.04 127682020.70 Other equity instrument investments (V). 11 165402900.00 145988900.00 Investment properties (V). 12 115993390.19 125603207.18 Fixed assets (V). 13 1873552843.91 2066006237.73 Construction in progress (V). 14 5814012.03 31307060.74 Right-of-use assets (V). 15 15338117.86 11999466.57 Intangible assets (V). 16 35207791.95 39564422.80 Goodwill (V). 17 - - Long-term deferred expenses (V). 18 6084115.87 3503660.94 Deferred tax assets (V). 19 58920511.20 60605365.42 Other non-current assets (V). 20 27793871.91 29517420.71 Total non-current assets 2418935580.96 2641777762.79 Total assets 5232150397.33 5649822363.44 - 5 -Shenzhen Textile (Holdings) Co. Ltd.Consolidated Balance Sheet - Continued December 31 2024 Consolidated Balance Sheet - Continued RMB Balance as at the Balance as at the Notes end of the current end of the previous year year Current liabilities: Short-term borrowings (V). 22 - 8000000.00 Derivative financial liabilities (V). 23 1278559.35 - Notes payable (V). 24 31095540.29 31049291.49 Accounts payable (V). 25 304812580.55 408548136.24 Advances from customers (V). 26 1051491.96 1450096.30 Contract liabilities (V). 27 490562.97 1436943.34 Employee compensation payable (V). 28 56685289.92 56437162.09 Taxes payable (V). 29 6853730.84 4340895.14 Other payables (V). 30 160296989.98 184528344.55 Including: interest payable - - Dividends payable - - Non-current liabilities maturing within one year (V). 31 63347555.03 108102752.99 Other current liabilities (V). 32 54072022.27 80082477.22 Total current liabilities 679984323.16 883976099.36 Non-current liabilities: Long-term borrowings (V). 33 162388870.00 505578314.56 Lease liabilities (V). 34 9496564.12 6687317.22 Deferred income (V). 35 96349196.26 97485986.89 Deferred tax liabilities (V). 19 48610809.66 44177287.45 Total non-current liabilities 316845440.04 653928906.12 Total liabilities 996829763.20 1537905005.48 Shareholders' equity: Equity (V). 36 506521849.00 506521849.00 Capital reserve (V). 37 1961599824.63 1961599824.63 Other comprehensive income (V). 38 106877807.32 93607380.81 Surplus reserves (V). 39 104262315.64 104262315.64 Undistributed profits (V). 40 272608113.66 216160896.14 Total equity attributable to shareholders of the parent 2951869910.252882152266.22 company Minority interests 1283450723.88 1229765091.74 Total shareholders' equity 4235320634.13 4111917357.96 Total liabilities and shareholders' equity 5232150397.33 5649822363.44 The notes are an integral part of the financial statements _________________________________________________________________ Principal Chief Finance Officer Chief Accountant - 6 -Shenzhen Textile (Holdings) Co. Ltd.Balance Sheet of the Parent Company December 31 2024 Balance Sheet of the Parent Company RMB Balance as at the Balance as at the Notes end of the current end of the previous year year Current assets: Monetary funds 13630974.26 9125800.27 Financial assets held for trading 731419904.42 741243309.42 Accounts receivable (XVI). 1 13028987.63 12671623.65 Advances to suppliers 99904.79 - Other receivables (XVI). 2 1534395.80 14013552.95 Including: interest receivable - - Dividends receivable - - Inventories 39835.05 32814.05 Total current assets 759754001.95 777087100.34 Non-current assets: Long-term equity investments (XVI). 3 2040690006.71 2087532810.79 Other equity instrument investments 152221200.00 131185500.00 Investment properties 94773462.23 102430682.27 Fixed assets 2099585.67 2522229.44 Intangible assets 83350.98 191875.56 Long-term deferred expenses 4448190.05 - Other non-current assets 25860862.33 27823005.45 Total non-current assets 2320176657.97 2351686103.51 Total assets 3079930659.92 3128773203.85 Current liabilities: Accounts payable 411743.57 411743.57 Advances from customers 540673.07 540673.07 Employee compensation payable 17955509.70 15810919.71 Taxes payable 5619509.34 3115369.56 Other payables 87029351.12 106722393.87 Including: interest payable - - Dividends payable - - Total current liabilities 111556786.80 126601099.78 Non-current liabilities: Deferred income 100000.00 200000.00 Deferred tax liabilities 34086313.51 40855186.12 Total non-current liabilities 34186313.51 41055186.12 Total liabilities 145743100.31 167656285.90 Shareholders' equity: Equity 506521849.00 506521849.00 Capital reserve 1577392975.96 1577392975.96 Other comprehensive income 98116532.32 83629830.81 Surplus reserves 104262315.64 104262315.64 Undistributed profits 647893886.69 689309946.54 Total shareholders' equity 2934187559.61 2961116917.95 Total liabilities and shareholders' equity 3079930659.92 3128773203.85 The notes are an integral part of the financial statements - 7 -Shenzhen Textile (Holdings) Co. Ltd.Consolidated Income Statement For Year Ended December 31 2024 Consolidated Income Statement RMB Amount for the current Amount for the previous Notes year year I. Operating revenue (V). 41 3335283008.68 3079678375.45 Less: operating costs (V). 41 2795859934.82 2561631844.53 Taxes and surcharges (V). 42 10235505.65 9293623.13 Selling and distribution expenses (V). 43 42260603.47 34195670.61 G&A expenses (V). 44 134347821.58 134371410.53 R&D expenses (V). 45 103811822.91 104653040.92 Financial expenses (V). 46 12121156.05 24399501.16 Including: interest expenses 17858022.73 27339804.17 Interest income 7272362.76 12947471.64 Plus: other income (V). 47 41484107.53 50740363.91 Investment (loss) income (V). 48 (165313.89) 10828635.56 Including: investment losses in associates and joint ventures (10701895.08) (6898983.89) Gains from derecognition of financial assets measured at -- amortized costs Gains from changes in fair value (V). 49 1134503.45 2151780.82 Credit loss gains (V). 50 5100446.66 4535775.14 Asset impairment loss (V). 51 (132423108.75) (126089709.42) Gains from disposal of assets - 1.72 II. Operating profit 151776799.20 153300132.30 Plus: non-operating revenue (V). 52 1805086.92 1449879.26 Less: non-operating expenses (V). 53 698017.71 8205801.51 III. Total profit 152883868.41 146544210.05 Less: income tax expenses (V). 54 9827102.03 19407731.47 IV. Net profit 143056766.38 127136478.58 (I) Classified by operating sustainability: 1. Net profit from continuing operations 143056766.38 127136478.58 2. Net profit from discontinued operations - - (II) Classified by ownership: 1. Net profit attributable to shareholders of the parent company 89371134.24 79268250.45 2. Minority interests 53685632.14 47868228.13 V. Net of tax of other comprehensive income (V). 38 13270426.51 (15870135.10) Net of tax of other comprehensive income attributable to shareholders 13270426.51(15989228.50) of the parent company (I) Other comprehensive income that cannot be reclassified into profit 14560500.00(16267037.45) or loss 1. Changes in re-measurement of defined benefit plans - - 2. Other comprehensive income that cannot be transferred to -- profit or loss under the equity method 3. Changes in fair value of other equity instrument investments 14560500.00 (16267037.45) 4. Changes in fair value of the enterprise's own credit risk - - (II) Other comprehensive income that will be reclassified into profit (1290073.49)277808.95 or loss 1. Other comprehensive income that can be transferred to profit -- or loss under the equity method 2. Changes in fair value of other debt investments - 178640.10 3. Amount of financial assets reclassified and included in other -- comprehensive income 4. Provision for credit impairment of other debt investments - - 5. Reserves of cash flow hedges (effective portion of cash flow -- hedging profit or loss) 6. Differences arising from translation of foreign-currency (1290073.49)99168.85 financial statements 7. Others - - Net of tax of other comprehensive income attributable to minority -119093.40 shareholders VI. Total comprehensive income 156327192.89 111266343.48 Total comprehensive income attributable to shareholders of the parent 102641560.7563279021.95 company Total comprehensive income attributable to minority shareholders 53685632.14 47987321.53 VII. Earnings per share Basic earnings per share (RMB/share) 0.18 0.16 Dilute earnings per share (RMB/share) 0.18 0.16 The notes are an integral part of the financial statements - 8 -Shenzhen Textile (Holdings) Co. Ltd.Income Statement of the Parent Company For Year Ended December 31 2024 Income Statement of the Parent Company RMB Amount for the current Amount for the previous Notes year year I. Operating revenue (XVI). 4 77167496.95 77822508.75 Less: operating costs (XVI). 4 10205157.84 9822306.53 Taxes and surcharges 3069369.36 3193559.74 Selling and distribution expenses 476938.50 233086.71 G&A expenses 46124842.97 46901768.72 Financial expenses (1179537.25) (3418990.44) Including: interest expenses 422950.59 356264.79 Interest income 1698292.14 3838789.68 Plus: other income 164150.75 153012.52 Investment income (XVI). 5 12077902.81 19300515.95 Including: investment losses in associates and joint ventures (10701895.08) (6898983.89) Gains from derecognition of financial assets measured at -- amortized costs Gains from changes in fair value 2413062.80 2151780.82 Credit impairment (loss) gains (26291403.84) 708847.28 Asset impairment loss (20243658.34) - Gains from disposal of assets - - II. Operating (loss) profit (13409220.29) 43404934.06 Plus: non-operating revenue 1124656.60 6431.44 Less: non-operating expenses 93185.54 59123.40 III. Total profit (loss) (12377749.23) 43352242.10 Less: income tax expenses (3885606.10) 9825698.88 IV. Net (loss) profit (8492143.13) 33526543.22 (I) Net (loss) profit from continuing operations (8492143.13) 33526543.22 (II) Net profit from discontinued operations - - V. Net of tax of other comprehensive income 14486701.51 (15225837.94) (I) Other comprehensive income that cannot be reclassified into profit 15776775.00(15325006.79) or loss 1. Changes in re-measurement of defined benefit plans - - 2. Other comprehensive income that cannot be transferred to -- profit or loss under the equity method 3. Changes in fair value of other equity instrument investments 15776775.00 (15325006.79) 4. Changes in fair value of the enterprise's own credit risk - - 5. Others - - (II) Other comprehensive income that will be reclassified into profit (1290073.49)99168.85 or loss 1. Other comprehensive income that can be transferred to profit -- or loss under the equity method 2. Changes in fair value of other debt investments - - 3. Amount of financial assets reclassified and included in other -- comprehensive income 4. Provision for credit impairment of other debt investments - - 5. Reserves of cash flow hedges (effective portion of cash flow -- hedging profit or loss) 6. Differences arising from translation of foreign-currency (1290073.49)99168.85 financial statements 7. Others - - VI. Total comprehensive (loss) income 5994558.38 18300705.28 The notes are an integral part of the financial statements - 9 -Shenzhen Textile (Holdings) Co. Ltd.Consolidated Statement of Cash Flows For Year Ended December 31 2024 Consolidated Statement of Cash Flows RMB Amount for the current Amount for the Notes year previous year I. Cash flows from operating activities: Cash received from sale of goods and rendering of services 3390788584.83 2985794229.99 Refunds of taxes and surcharges received 21049133.80 5073509.20 Other cash received related to operating activities (V). 55(1) 87008969.95 87277323.90 Sub-total of cash inflows from operating activities 3498846688.58 3078145063.09 Cash paid for purchase of goods and receipt of services 2842864632.73 2466252261.73 Cash paid to and on behalf of employees 238890310.33 255045680.87 Cash paid for taxes and surcharges 32071014.09 54636406.53 Other cash paid related to operating activities (V). 55(1) 153756206.34 117443974.16 Sub-total of cash outflows from operating activities 3267582163.49 2893378323.29 Net cash flows from operating activities (V). 56(1) 231264525.09 184766739.80 II. Cash flows from investing activities: Cash received from recovery of investment 1349489.37 - Cash received from investment income 11747113.36 13769440.75 Net cash received from disposal of fixed assets intangible assets and other long-term assets (18.74) 11634.84 Net cash received from disposal of subsidiaries and other -- business units Other cash received related to investing activities (V). 55(2) 1697000000.00 1454000000.00 Sub-total of cash inflows from investing activities 1710096583.99 1467781075.59 Cash paid for the purchase of fixed assets intangible assets and other long-term assets 29441167.62 64069967.97 Cash paid for investments - - Net cash paid to acquire subsidiaries and other business units - - Other cash paid related to investing activities (V). 55(2) 1605454000.00 1840500000.00 Sub-total of cash outflows from investing activities 1634895167.62 1904569967.97 Net cash flows from the investing activities 75201416.37 (436788892.38) III. Cash flows from financing activities: Cash received from absorption of investments - - Including: cash received by subsidiaries from absorption of -- investments of minority shareholders Cash received from acquisition of borrowings - 8000000.00 Other cash received related to financing activities - - Sub-total of cash inflows from financing activities - 8000000.00 Cash paid for debt repayments 406216304.56 103387387.94 Cash paid for distribution of dividends and profits or 50633653.3857324944.21 payment of interests Including: dividends and profits paid to minority -- shareholders by subsidiaries Other cash paid related to financing activities (V). 55(3) 9508462.57 8776024.71 Sub-total of cash outflows from financing activities 466358420.51 169488356.86 Net cash flows from financing activities (466358420.51) (161488356.86) IV. Effect of fluctuation in exchange rate on cash and cash 556861.07456132.31 equivalents V. Net increase (decrease) in cash and cash equivalents (V). 56(1) (159335617.98) (413054377.13) Plus: balance of cash and cash equivalents at the beginning (V). 56(2) 461420457.33 874474834.46 of the year VI. Balance of cash and cash equivalents at the end of the year (V). 56(2) 302084839.35 461420457.33 The notes are an integral part of the financial statements - 10 -Shenzhen Textile (Holdings) Co. Ltd.Statement of Cash Flows of the Parent Company For Year Ended December 31 2024 Statement of Cash Flows of the Parent Company RMB Amount for the Amount for the Notes current year previous year I. Cash flows from operating activities: Cash received from sale of goods and rendering of 80553754.6879719541.58 services Refunds of taxes and surcharges received - - Other cash received related to operating activities 7902075.25 20183240.81 Sub-total of cash inflows from operating activities 88455829.93 99902782.39 Cash paid for purchase of goods and receipt of 2842492.813005590.09 services Cash paid to and on behalf of employees 35045305.67 38735139.38 Cash paid for taxes and surcharges 13926380.37 19540659.95 Other cash paid related to operating activities 15727708.36 18940923.33 Sub-total of cash outflows from operating activities 67541887.21 80222312.75 Net cash flows from operating activities 20913942.72 19680469.64 II. Cash flows from investing activities: Cash received from recovery of investment 1554056.96 - Cash received from investment income 7790814.29 12954592.48 Net cash received from disposal of fixed assets -- intangible assets and other long-term assets Net cash received from disposal of subsidiaries and -- other business units Other cash received related to investing activities 1373585151.73 1250200000.00 Sub-total of cash inflows from investing activities 1382930022.98 1263154592.48 Cash paid for the purchase of fixed assets intangible 2993281.202784786.15 assets and other long-term assets Cash paid for investments - - Net cash paid to acquire subsidiaries and other -- business units Other cash paid related to investing activities 1363000000.00 1550500000.00 Sub-total of cash outflows from investing activities 1365993281.20 1553284786.15 Net cash flows from the investing activities 16936741.78 (290130193.67) III. Cash flows from financing activities: Cash received from absorption of investments - - Cash received from acquisition of borrowings - - Other cash received related to financing activities - - Sub-total of cash inflows from financing activities - - Cash paid for debt repayments - - Cash paid for distribution of dividends and profits or 33346867.3130747575.73 payment of interests Other cash paid related to financing activities - - Sub-total of cash outflows from financing activities 33346867.31 30747575.73 Net cash flows from financing activities (33346867.31) (30747575.73) IV. Effect of fluctuation in exchange rate on cash and 1356.80571.84 cash equivalents V. Net increase (decrease) in cash and cash equivalents 4505173.99 (301196727.92) Plus: balance of cash and cash equivalents at the 9125800.27310322528.19 beginning of the year VI. Balance of cash and cash equivalents at the end of 13630974.269125800.27 the year The notes are an integral part of the financial statements - 11 -Shenzhen Textile (Holdings) Co. Ltd.Consolidated Statement of Changes in Shareholders' Equity For Year Ended December 31 2024 Consolidated Statement of Changes in Shareholders' Equity RMB Amount for the current year Equity attributable to shareholders of the parent company Item Total shareholders' Other comprehensive Minority interests Equity Capital reserve Surplus reserves Undistributed profits equity income I. Balance as at the end of the previous year 506521849.00 1961599824.63 93607380.81 104262315.64 216160896.14 1229765091.74 4111917357.96 Plus: changes in accounting policies - - - - - - - Correction of prior period errors - - - - - - - Business combination under ------- common control Others - - - - - - - II. Balance at the beginning of the current 506521849.001961599824.6393607380.81104262315.64216160896.141229765091.744111917357.96 year III. Increase/decrease in the current year - - 13270426.51 - 56447217.52 53685632.14 123403276.17 (I) Total comprehensive income - - 13270426.51 - 89371134.24 53685632.14 156327192.89 (II) Capital contributed or reduced by ------- shareholders 1. Ordinary shares invested by shareholders - - - - - - - 2. Amount of share-based payments included ------- in shareholders' equity 3. Others - - - - - - - (III) Profit distribution - - - - (32923916.72) - (32923916.72) 1. Withdrawal of surplus reserves - - - - - - - 2. Profits distributed to shareholders - - - - (32923916.72) - (32923916.72) 3. Others - - - - - - - (IV) Internal transfer of shareholders' equity - - - - - - - 1. Conversion of capital reserve into share ------- capital 2. Conversion of surplus reserve into share ------- capital 3. Surplus reserves offsetting losses - - - - - - - 4. Transfer of other comprehensive income ------- into retained earnings 5. Others - - - - - - - (V) Special reserves - - - - - - - 1. Withdrawal in the current year - - - - - - - 2. Use in the current year - - - - - - - (VI) Others - - - - - - - IV. Balance as at the end of the current year 506521849.00 1961599824.63 106877807.32 104262315.64 272608113.66 1283450723.88 4235320634.13Shenzhen Textile (Holdings) Co. Ltd.Consolidated Statement of Changes in Shareholders' Equity - Continued For Year Ended December 31 2024 Consolidated Statement of Changes in Shareholders' Equity - Continued RMB Amount for the previous year Equity attributable to shareholders of the parent company Item Total shareholders' Other comprehensive Minority interests Equity Capital reserve Surplus reserves Undistributed profits equity income I. Balance as at the end of the previous year 506521849.00 1961599824.63 109596609.31 100909661.32 170636610.95 1181777770.21 4031042325.42 Plus: changes in accounting policies - - - - - - - Correction of prior period errors - - - - - - - Business combination under ------- common control Others - - - - - - - II. Balance at the beginning of the current 506521849.001961599824.63109596609.31100909661.32170636610.951181777770.214031042325.42 year III. Increase/decrease in the current year - - (15989228.50) 3352654.32 45524285.19 47987321.53 80875032.54 (I) Total comprehensive income - - (15989228.50) - 79268250.45 47987321.53 111266343.48 (II) Capital contributed or reduced by ------- shareholders 1. Ordinary shares invested by shareholders - - - - - - - 2. Amount of share-based payments included ------- in shareholders' equity 3. Others - - - - - - - (III) Profit distribution - - - 3352654.32 (33743965.26) - (30391310.94) 1. Withdrawal of surplus reserves - - - 3352654.32 (3352654.32) - - 2. Profits distributed to shareholders - - - - (30391310.94) - (30391310.94) 3. Others - - - - - - - (IV) Internal transfer of shareholders' equity - - - - - - - 1. Conversion of capital reserve into share ------- capital 2. Conversion of surplus reserve into share ------- capital 3. Surplus reserves offsetting losses - - - - - - - 4. Transfer of other comprehensive income ------- into retained earnings 5. Others - - - - - - - (V) Special reserves - - - - - - - 1. Withdrawal in the current year - - - - - - - 2. Use in the current year - - - - - - - (VI) Others - - - - - - - IV. Balance as at the end of the current year 506521849.00 1961599824.63 93607380.81 104262315.64 216160896.14 1229765091.74 4111917357.96 The notes are an integral part of the financial statements - 13 -Shenzhen Textile (Holdings) Co. Ltd.Statement of Changes in Shareholders' Equity of the Parent Company For Year Ended December 31 2024 Statement of Changes in Shareholders' Equity of the Parent Company RMB Amount for the current year Item Other comprehensive Equity Capital reserve Surplus reserves Undistributed profits Total shareholders' equity income I. Balance as at the end of the previous year 506521849.00 1577392975.96 83629830.81 104262315.64 689309946.54 2961116917.95 Plus: changes in accounting policies - - - - - - Correction of prior period errors - - - - - - Others - - - - - - II. Balance at the beginning of the current 506521849.001577392975.9683629830.81104262315.64689309946.542961116917.95 year III. Increase/decrease in the current year - - 14486701.51 - (41416059.85) (26929358.34) (I) Total comprehensive income - - 14486701.51 - (8492143.13) 5994558.38 (II) Capital contributed or reduced by ------ shareholders 1. Ordinary shares invested by ------ shareholders 2. Amount of share-based payments ------ included in shareholders' equity 3. Others - - - - - - (III) Profit distribution - - - - (32923916.72) (32923916.72) 1. Withdrawal of surplus reserves - - - - - - 2. Profits distributed to shareholders - - - - (32923916.72) (32923916.72) 3. Others - - - - - - (IV) Internal transfer of shareholders' ------ equity 1. Conversion of capital reserve into ------ share capital 2. Conversion of surplus reserve ------ into share capital 3. Surplus reserves offsetting losses - - - - - - 4. Transfer of other comprehensive ------ income into retained earnings 5. Others - - - - - - (V) Special reserves - - - - - - 1. Withdrawal in the current year - - - - - - 2. Use in the current year - - - - - - (VI) Others - - - - - - IV. Balance as at the end of the current year 506521849.00 1577392975.96 98116532.32 104262315.64 647893886.69 2934187559.61 - 14 -Shenzhen Textile (Holdings) Co. Ltd.Statement of Changes in Shareholders' Equity of the Parent Company - Continued For Year Ended December 31 2024 Statement of Changes in Shareholders' Equity of the Parent Company - Continued RMB Amount for the previous year Item Other comprehensive Equity Capital reserve Surplus reserves Undistributed profits Total shareholders' equity income I. Balance as at the end of the previous year 506521849.00 1577392975.96 98855668.75 100909661.32 689527368.58 2973207523.61 Plus: changes in accounting policies - - - - - - Correction of prior period errors - - - - - - Others - - - - - - II. Balance at the beginning of the current 506521849.001577392975.9698855668.75100909661.32689527368.582973207523.61 year III. Increase/decrease in the current year - - (15225837.94) 3352654.32 (217422.04) (12090605.66) (I) Total comprehensive income - - (15225837.94) - 33526543.22 18300705.28 (II) Capital contributed or reduced by ------ shareholders 1. Ordinary shares invested by ------ shareholders 2. Amount of share-based payments ------ included in shareholders' equity 3. Others - - - - - - (III) Profit distribution - - - 3352654.32 (33743965.26) (30391310.94) 1. Withdrawal of surplus reserves - - - 3352654.32 (3352654.32) - 2. Profits distributed to shareholders - - - - (30391310.94) (30391310.94) 3. Others - - - - - - (IV) Internal transfer of shareholders' ------ equity 1. Conversion of capital reserve into ------ share capital 2. Conversion of surplus reserve ------ into share capital 3. Surplus reserves offsetting losses - - - - - - 4. Transfer of other comprehensive ------ income into retained earnings 5. Others - - - - - - (V) Special reserves - - - - - - 1. Withdrawal in the current year - - - - - - 2. Use in the current year - - - - - - (VI) Others - - - - - - IV. Balance as at the end of the current year 506521849.00 1577392975.96 83629830.81 104262315.64 689309946.54 2961116917.95 The notes are an integral part of the financial statements - 15 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 （I） Basic information of the Company 1. Company profile Shenzhen Textile (Holdings) Co. Ltd. (hereinafter referred to as "the Company") is a joint stock limited company registered in Guangdong Province. The Company was listed on Shenzhen Stock Exchange in August 1994. The Company has publicly issued RMB ordinary shares (A shares) and domestically listed foreign shares (B shares) to the domestic and foreign public respectively and listed for trading.Headquartered in Shenzhen Guangdong Province the Company and its subsidiaries (hereinafter referred to as "the Group") are principally engaged in the research and development production and marketing of polarizers for liquid crystal displays as well as property management and textile and apparel businesses which are mainly located in the prosperous commercial area of Shenzhen. 2. Approval date of financial statements The consolidated and parent company's financial statements of the Company were approved by the Board of Directors on March 26 2025.（II） Basis for preparation of the financial statements 1. Basis for preparation The Group implements the Accounting Standards for Business Enterprises and related provisions issued by the Ministry of Finance. In addition the Group also discloses relevant financial information in accordance with the Rules for the Compilation and Reporting of Information Disclosure by Companies Issuing Securities to the Public No. 15 - General Provisions on Financial Reports (Revised in 2023). 2. Going concern The Group has evaluated its going-concern ability for 12 months from December 31 2024 and has not found any matters or circumstances that cast significant doubt on the going-concern ability. Therefore the financial statements have been prepared on the going concern basis. 3. Accounting basis and valuation principle The accounting of the Group is based on the accrual basis. Except for certain financial instruments measured at fair value the financial statements are measured at historical cost. In the event of any asset impairment a provision for impairment will be made in accordance with relevant provisions.Under the historical cost measurement assets are measured at the amount of cash or cash equivalents paid or the fair value of the consideration paid at the time of acquisition. Liabilities are measured at the amount of money or assets actually received for assuming current obligations or the contract amount of assuming current obligations or the amount of cash or cash equivalents expected to be paid to repay liabilities in daily activities.Fair value is the price received from the sale of an asset or paid for the transfer of a liability by a market participant in an orderly transaction occurring on the measurement date. Regardless of whether the fair value is observable or estimated by using valuation techniques the fair value measured and disclosed in these financial statements is determined on this basis.- 16 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (II) Basis for preparation of financial statements - continued 3. Accounting basis and valuation principle - continued For financial assets where the transaction price is taken as the fair value at initial recognition and valuation techniques involving unobservable input value are used in the subsequent measurement of fair value the valuation techniques are corrected during the valuation process to make the initial recognition result determined by the valuation techniques equal to the transaction price.The fair value measurement is divided into three levels based on the observability of the input value of the fair value and the importance of such input value to the fair value measurement as a whole: Level 1 input value is the unadjusted quoted price in active markets for identical assets or liabilities that are available on the measurement date.Level 2 input value is the directly or indirectly observable input value of the relevant assets or liabilities except for the level 1 input value.Level 3 input value is the unobservable input value of the relevant assets or liabilities.（III） Significant accounting policies and accounting estimates 1. Statement in compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises and truly and completely reflect the Company's consolidated and parent company's financial position as at December 31 2024 and the consolidated and parent company's operating results changes in consolidated and parent company's shareholders' equity and consolidated and parent company's cash flows for the year then ended. 2. Accounting period The Company adopts the Gregorian calendar year for its accounting year that is from January 1 to December 31 of each year. 3. Operating cycle Operating cycle refers to the period from the purchase of assets for processing to the realization of cash or cash equivalents by the enterprise. The operating cycle of the Company is 12 months. 4. Recording currency RMB is the currency in the main economic environment in which the Company and its domestic subsidiaries operate.The Company and its domestic subsidiaries adopt RMB as the recording currency. The Company's overseas subsidiaries determine RMB as their recording currency based on the currency in the main economic environment in which they operate. The currency used by the Company in preparing these financial statements is RMB.- 17 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 5. Importance criteria determination method and selection basis Item Importance criteria Significant accounts receivable with the provision for bad debts The individual book balance accounts for more than 0.5% made on an individual basis of the total assets The individual recovery or reversal amount accounts for Recovery or reversal amount of provision for bad debts of more than 10% of the total amount of provision for bad significant accounts receivable debts recovery or reversal of the corresponding accounts receivable and the amount exceeds RMB 10 million Advances to suppliers with aging over 1 year and of significant Individual amount accounts for more than 0.5% of total amount assets Important accounts payable advances from customers Individual amount accounts for more than 0.5% of total contract liabilities and other payables with aging over 1 year assets Other cash received related to significant investing activities The amount exceeds RMB 50 million Other cash paid related to significant investing activities The amount exceeds RMB 50 million The total assets total revenue or total profit of the non- wholly-owned subsidiary account for more than 10% of the Major non-wholly-owned subsidiaries amount of the corresponding items in the consolidated financial statements of the Group The book value of the long-term equity investments of the enterprise at the end of the year accounts for more than 5% Significant joint ventures or associates of the net assets of the consolidated financial statements of the Group 6. Accounting treatment method of business combination under common control and not under common control Business combinations are categorized into those under common control and those not under common control. 6.1 Business combinations under common control If before and after the business combination all parties involved are ultimately controlled by the same party or the same group of parties and such control is not temporary the combination is considered under common control.The assets and liabilities obtained in the business combination are measured at their book value as recorded in the consolidated financial statements of the ultimate controller on the combination date. Any difference between the book value of the net assets acquired by the combining party and the book value of the consideration paid is adjusted against the share premium in capital reserve. If the equity premium is insufficient the difference is adjusted against retained earnings.All direct expenses incurred for the purpose of the business combination are recognized in current profit or loss as they occur. 6.2 Business combinations not under common control and goodwill When the entities involved in the combination are not under the ultimate control of the same party or the same group of parties before and after the combination it is considered a business combination not under common control.The combination cost refers to the fair value of the assets paid the liabilities incurred or assumed and the equity instruments issued by the acquirer to obtain the right of control of the acquiree. Any intermediary fees for business combination including but not limited to audit legal and valuation consulting services and other related G&A expenses incurred by the acquirer are charged to current profit or loss as they arise.Any identifiable assets liabilities and contingent liabilities of the acquiree that meet the recognition criteria and are obtained by the acquirer in the combination are measured at fair value on the acquisition date.- 18 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 6. Accounting treatments for business combination under common control and not under common control - continued 6.2 Business combination not under common control and goodwill - continued If the combination cost exceeds the acquiree's fair value share of net identifiable assets obtained this difference is recognized as goodwill and initially measured at cost. If the combination cost is less than the acquiree's fair value share of net identifiable assets obtained the acquirer shall first reassess the fair values of all identifiable assets liabilities and contingent liabilities of the acquiree as well as the measurement of the combination cost. After reassessment if the combination cost is still less than acquiree's fair value share of net identifiable assets obtained the difference is included in current profit or loss.Goodwill arising from a business combination is presented separately in the consolidated financial statements and is measured at cost less any accumulated provision for impairment. 7. Criteria for determining control and methods of preparing consolidated financial statements 7.1 Criteria for determining control Control means that an investor has power over the investee derives variable returns by participating in the investee's relevant activities and can use that power to affect the amount of returns. Whenever changes in relevant facts and circumstances alter any element of this definition of control the Group will reassess the situation. 7.2 Methods of preparing consolidated financial statements The consolidation scope in the consolidated financial statements is determined on the basis of control.A subsidiary is consolidated from the date the Group obtains the right of control over it until the date such right is lost.For subsidiaries that the Group disposes of operating results and cash flows prior to the disposal date (the date when the loss of control occurs) are appropriately included in the consolidated income statement and consolidated cash flow statement.For subsidiaries acquired in a business combination not under common control their operating results and cash flows from the acquisition date (the date when the right of control is obtained) are appropriately included in the consolidated income statement and consolidated cash flow statement.For subsidiaries acquired in a business combination under common control regardless of the point in time during the reporting period at which the combination takes place the subsidiary is deemed to have been under the Group's consolidation scope from the date it came under the ultimate controller. Its operating results and cash flows from the earliest beginning date of the reporting period are appropriately included in the consolidated income statement and consolidated cash flow statement.The primary accounting policies and reporting periods adopted by the subsidiaries are determined in accordance with the uniform accounting policies and reporting periods set by the Company.- 19 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 7. Judgment criteria for control measures and preparation of the consolidated financial statements - continued 7.2 Methods of preparing consolidated financial statements - continued Any effects on the consolidated financial statements from intercompany transactions between the Company and its subsidiaries or among the subsidiaries themselves are eliminated upon consolidation.Any portion of the subsidiary's owners' equity not attributable to the parent company is recognized as non-controlling interests and presented under "Minority Interests" in the shareholders' equity section of the consolidated balance sheet.The share of the subsidiary's current net profit or loss attributable to these minority interests is presented in the consolidated income statement under the net profit item as "minority interest income".If the losses borne by minority shareholders exceed the share of owners' equity they hold at the beginning of the subsidiary's period the excess continues to be deducted from the minority interests.Transactions involving the purchase of a subsidiary's minority interests or the partial disposal of a subsidiary's equity investments without losing the right of control are accounted for as equity transactions. The book value of the parent company's owners' equity and the minority interests are adjusted to reflect the changes in their respective ownership in the subsidiary. Any difference between the adjustment to minority interests and the fair value of the consideration paid or received is adjusted against the capital reserve. If the capital reserve is insufficient the difference is adjusted against retained earnings. 8. Joint venture arrangements Joint venture arrangements are classified as either joint operations or joint ventures based on the rights and obligations of the parties—determined by factors such as the arrangement's structure legal form and contractual terms. A joint operation is a joint arrangement in which the parties have rights to the related assets and obligations for the related liabilities. A joint operation refers to those joint venture arrangements under which the joint venture is entitled to relevant assets and be responsible for relevant liabilities. A joint venture is a joint venture arrangement in which the parties are entitled only to the arrangement's net assets.The Group accounts for investments in joint ventures using the equity method. For further details refer to Note (III) Section 17.3.2 "Long-term equity investments accounted for under the equity method." 9. Recognition of cash and cash equivalents Cash refers to cash on hand and deposits readily available for payment. Cash equivalents refer to short-term (generally maturing within three months from the purchase date) highly liquid investments held by the Group that are easily convertible into known amounts of cash and subject to an insignificant risk of value changes. 10. Translation of foreign currency transactions and financial statements denominated in foreign currency 10.1 Foreign currency transactions Foreign currency transactions are initially recognized using an exchange rate approximating the spot exchange rate on the transaction date determined by a reasonable systematic method.- 20 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 10. Foreign currency transactions and translation of foreign currency statements - continued 10.1 Foreign currency transactions - continued At each balance sheet date foreign currency monetary items are translated into RMB at the spot rate on that date. Any exchange differences arising from changes in the spot exchange rate (compared to the rate at initial recognition or the previous balance sheet date) are recognized in current profit or loss except for: (1) exchange differences on foreign- currency-specific borrowings that qualify for capitalization which are capitalized as part of the cost of the related asset during the capitalization period; (2) exchange differences on hedging instruments used to hedge foreign exchange risk which are accounted for under hedge accounting; (3) foreign exchange differences arising from changes in the book balance of monetary items classified as measured at fair value through other comprehensive income except for amortized costs are recognized in current profit or loss.When preparing consolidated financial statements involving foreign operations if a foreign currency monetary item essentially constitutes a net investment in a foreign operation any exchange differences arising from fluctuation in exchange rate are included under "Exchange differences on translation of foreign currency statements" in other comprehensive income. Upon disposal of the foreign operation these differences are recognized in profit or loss for the disposal period.Foreign currency non-monetary items measured at historical cost continue to be measured using the spot exchange rate in recording currency on the transaction date. For foreign currency non-monetary items measured at fair value the spot exchange rate on the date the fair value is determined is used for translation. Any difference between the translated amount in recording currency and the original currency is treated as a fair value change (including fluctuation in exchange rate) and is recognized in current profit or loss or other comprehensive income as appropriate. 10.2 Translation of foreign-currency financial statements To prepare consolidated financial statements foreign-currency financial statements of overseas operations are translated into RMB as follows: all assets and liabilities in the balance sheet are translated at the spot exchange rate on the balance sheet date; shareholders' equity items are translated at the spot exchange rate on the date of occurrence; all items in the income statement and items reflecting profit distribution are translated using an exchange rate approximating the spot exchange rate on the transaction date; any difference between the sum of translated assets and the sum of translated liabilities plus equity items is recognized as other comprehensive income and included in shareholders' equity.Foreign currency cash flows and the cash flows of overseas subsidiaries are translated using an exchange rate approximating the spot exchange rate on the date of the cash flow. The impact of fluctuation in exchange rate on cash and cash equivalents is presented separately in the statement of cash flows under "Effect of exchange rate changes on cash and cash equivalents." The figures for the prior year-end and the actual amounts for the previous year are presented according to the amounts translated in the previous year's financial statements.When the Group disposes of its entire owners' equity in a foreign operation or otherwise loses the right of control over a foreign operation—whether by partially disposing of equity investments or for any other reason—all differences on translation of foreign currency statements related to that foreign operation and presented under shareholders' equity (attributable to the parent company) in the balance sheet are transferred in full to profit or loss for the disposal period.- 21 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 10. Foreign currency transactions and translation of foreign currency statements - continued 10.2 Translation of foreign-currency financial statements - continued When disposing of part of an equity investments or in other circumstances that reduce the Group's ownership interest in an overseas operation without losing the right of control over that operation any differences on translation of foreign currency statements related to the disposed portion are attributed to minority interests and are not transferred to profit or loss for the current period. When disposing of a portion of equity in an overseas operation that is classified as an associate or a joint venture the differences on translation of foreign currency statements related to that operation are transferred to profit or loss in the disposal period in proportion to the percentage of equity disposed. 11. Financial instruments The Group recognizes a financial asset or financial liability when it becomes a party to the contractual provisions of a financial instrument.For purchases or sales of financial assets in the ordinary course of business the Group recognizes the assets to be received and the liabilities to be assumed on the trade date or derecognizes the assets sold on the trade date.Financial assets and financial liabilities are measured at fair value upon initial recognition (see Note (II) "Basis of accounting and valuation principles" for details on determining fair value). For financial assets and liabilities measured at fair value through profit or loss transaction costs are recognized directly in profit or loss for the current period; for other categories of financial assets and liabilities the relevant transaction costs are included in the initial recognition amount. When the Group initially recognizes accounts receivable that do not include a significant financing component or when the financing component of a contract not exceeding one year is disregarded under Accounting Standards for Business Enterprises No. 14 - Revenue (“Revenue Standard”) such receivables are initially measured at the transaction price as defined in the Revenue Standard.The effective interest method is the method used to calculate the amortized cost of a financial asset or liability and to allocate the interest income or interest expenses over the relevant accounting periods.The effective interest rate is the rate that discounts the estimated future cash flows over the expected life of a financial asset or liability to the financial asset's book balance or the financial liability's amortized cost. In determining the effective interest rate the Group estimates expected cash flows based on all contractual terms of the financial asset or liability (e.g. early repayment extension call options or other similar options) but does not factor in expected credit losses.The amortized cost of a financial asset or liability is the initial recognized amount minus any repaid principal plus or minus the accumulated amortization of the difference between the initial recognized amount and the amount at maturity using the effective interest method and then minus the accumulated provision for losses (applicable only to financial assets).- 22 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 11. Financial instruments - continued 11.1 Classification recognition and measurement of financial assets After initial recognition the Group subsequently measures different categories of financial assets at amortized cost at fair value through other comprehensive income or at fair value through profit or loss.If the contractual terms of a financial asset stipulate that on specified dates cash flows comprise solely payments of principal and interest on the outstanding principal and the Group's business model for managing this financial asset is to collect the contractual cash flows the Group classifies this financial asset as measured at amortized cost. Such financial assets mainly include monetary funds notes receivable accounts receivable and other receivables.If the contractual terms of a financial asset stipulate that on specified dates cash flows comprise solely payments of principal and interest on the outstanding principal and the Group's business model for managing the financial asset is both to collect contractual cash flows and to sell the financial asset then the Group classifies this asset as measured at fair value through other comprehensive income. Such financial assets with a maturity of more than one year from the date of acquisition are presented as "Other debt investments" while those maturing within one year (inclusive) from the balance sheet date are presented under "Non-current assets due within one year." Accounts receivable and notes receivable classified upon acquisition as measured at fair value through other comprehensive income are presented under "Receivables financing" and any other items acquired with a maturity of one year (inclusive) or less are presented under "Other current assets." At initial recognition on an individual financial asset basis the Group may irrevocably designate a non-trading equity instrument investment other than any contingent consideration recognized in a business combination not under common control as measured at fair value through other comprehensive income. Such financial assets are presented as "Other equity instrument investments." If a financial asset meets any of the following conditions it indicates that the Group holds this asset for trading purposes: The main purpose of acquiring the financial asset is to sell it in the near term.Upon initial recognition the financial asset is part of an identifiable portfolio of financial instruments that is collectively managed and there is objective evidence of a recent pattern of short-term profit-taking.The financial asset is a derivative except for derivatives that meet the definition of a financial guarantee contract or are designated as effective hedging instruments.Financial assets measured at fair value through profit or loss include those classified as such and those designated as such: Any financial asset that does not meet the classification criteria for measurement at amortized cost or at fair value through other comprehensive income is classified as measured at fair value through profit or loss.At initial recognition to eliminate or significantly reduce accounting mismatches the Group may irrevocably designate a financial asset as measured at fair value through profit or loss.- 23 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 11. Financial instruments - continued 11.1 Classification recognition and measurement of financial assets - continued Financial assets measured at fair value through profit or loss are presented under "Financial assets held for trading." Those due in more than one year from the balance sheet date (or with no fixed maturity) and expected to be held for more than one year are presented under "Other non-current financial assets." 11.1.1 Financial assets measured by amortized cost Financial assets measured at amortized cost are subsequently measured at amortized cost using the effective interest method and any gain or loss arising from impairment or derecognition is recognized in profit or loss.The Group recognizes interest income on financial assets measured at amortized cost using the effective interest method.For purchased or originated financial assets that are already credit-impaired the Group determines interest income from the date of initial recognition based on the asset's amortized cost and a credit-adjusted effective interest rate. For all other financial assets the Group calculates interest income by multiplying the book balance of the asset by the effective interest rate. 11.1.2 Financial assets measured at fair value through other comprehensive income For a financial asset classified as measured at fair value through other comprehensive income any impairment loss or gain and interest income calculated using the effective interest method are recognized in profit or loss while all other fair value changes are recognized in other comprehensive income. The amount recognized in profit or loss each period is the same as if the asset had been measured at amortized cost throughout its life. When such a financial asset is derecognized the cumulative gains or losses previously recognized in other comprehensive income are transferred from other comprehensive income to profit or loss.For a non-trading equity instrument investment designated as measured at fair value through other comprehensive income fair value changes are recognized in other comprehensive income. When the financial asset is derecognized the cumulative gains or losses previously recognized in other comprehensive income are transferred out of other comprehensive income and into retained earnings. During the period the Group holds this non-trading equity instrument investment if the right to receive dividends is established the related economic benefits are likely to flow to the Group and the amount of dividends can be measured reliably then the Group recognizes dividend income in profit or loss. 11.1.3 Financial assets measured at fair value through the current profit or loss Financial assets measured at fair value through profit or loss are subsequently measured at fair value; gains or losses arising from fair value changes as well as any dividend and interest income related to these assets are recognized in profit or loss.- 24 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 11. Financial instruments - continued 11.2 Impairment of financial instruments The Group recognizes impairment allowances and provision for losses based on expected credit losses for financial assets measured at amortized cost financial assets classified as fair value through other comprehensive income and lease receivables.For all notes receivable and accounts receivable arising from transactions governed by the Revenue Standard as well as operating lease receivables arising from transactions governed by Accounting Standards for Business Enterprises No. 21 - Leases the Group measures the provision for loss at an amount equal to the lifetime expected credit losses.For other financial instruments except for those purchased or originated with credit loss the Group evaluates changes in credit risk since initial recognition at each balance sheet date. If the credit risk of such a financial instrument has significantly increased since initial recognition the Group measures the provision for loss at an amount equal to the lifetime expected credit losses; if it has not significantly increased the Group measures the provision for loss at an amount equal to the 12-month expected credit losses. Except for financial assets classified as fair value through other comprehensive income any increase or reversal of the provision for credit losses is recognized as an impairment loss or gain in the current period's profit or loss. For financial assets classified as fair value through other comprehensive income the Group recognizes the provision for credit losses in other comprehensive income and records the impairment loss or gain in profit or loss without reducing the asset's book value in the balance sheet.If in a prior period the Group measured the provision for loss at an amount equal to the lifetime expected credit losses (due to a significant increase in credit risk since initial recognition) but at the current balance sheet date that significant increase in credit risk no longer applies then the Group measures the provision for loss at an amount equal to the 12- month expected credit losses. The amount of any resulting reversal is recognized as an impairment gain in profit or loss. 11.2.1 Significant increase in credit risk The Group uses reasonable and supportable forward-looking information to compare the risk of default on a financial instrument at the balance sheet date with the risk of default at initial recognition in order to determine whether the credit risk has significantly increased since initial recognition.- 25 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 11. Financial instruments - continued 11.2 Impairment financial instruments - continued 11.2.1 Significant increase in credit risk - continued When the Group assesses whether credit risk has increased significantly it considers the following factors: (1) Whether internal price indicators resulting from changes in credit risk have undergone a significant change. (2) Whether if an existing financial instrument is effectively originated or issued as a new financial instrument on the balance sheet date there is a significant change in the interest rate or other terms of that instrument (e.g. more stringent contractual terms increased collateral or guarantees or a higher yield). (3) Whether external market indicators of credit risk for the same financial instrument or similar instruments with the same expected term have changed significantly. Such indicators include credit spreads credit default swap (CDS) prices for the borrower the length of time and extent to which a financial asset's fair value is below its amortized cost and other market information related to the borrower (e.g. changes in the prices of the borrower's debt or equity instruments). (4) Whether the external credit rating of the financial instrument has actually changed or is expected to change significantly. (5) Whether there has been a downgrade in the debtor's internal credit rating either actual or anticipated. (6) Whether there has been an adverse change in the debtor's business financial or economic conditions that is expected to significantly affect the debtor's ability to meet its debt obligations. (7) Whether the debtor's operating performance whether actual or expected has changed significantly. (8) Whether the credit risk of other financial instruments issued by the same debtor has increased significantly. (9) Whether there has been a significantly adverse change in the regulatory economic or technological environment in which the debtor operates. (10) Whether the value of collateral securing the debt or the quality of a third-party guarantee or credit enhancement has changed significantly. Such changes are expected to reduce the debtor's economic incentive to repay under the contractual schedule or affect the probability of default. (11) Whether there has been a significant change in factors that would reduce the borrower's economic incentive to repay in accordance with the contractual terms. (12) Whether the loan contract is expected to be modified including the potential release or amendment of contractual obligations due to anticipated breaches of contract granting interest-free periods raising interest rates requiring additional collateral or guarantees or otherwise modifying the contractual framework of the financial instrument. (13) Whether there is a significant change in the debtor's expected performance or repayment behavior. (14) Whether the Group's credit management approach for the financial instrument has changed. Regardless of the outcome of the above assessment if payments under the financial instrument's contract are more than (or equal to) 30 days past due it indicates that the financial instrument's credit risk has increased significantly.On the balance sheet date if the Group concludes that a financial instrument has only low credit risk it presumes the credit risk has not increased significantly since initial recognition. A financial instrument is considered to have low credit risk if its risk of default is low the borrower has a strong capacity to meet its contractual cash flow obligations in the short term and even over a longer period adverse changes in economic and operating conditions would not necessarily reduce the borrower's ability to meet those obligations.- 26 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 11. Financial instruments - continued 11.2 Impairment financial instruments - continued 11.2.2 Financial assets with credit loss When one or more events occur that the Group expects to adversely affect the future cash flows of a financial asset that asset is considered credit-impaired. Evidence for a credit-impaired financial asset includes the following observable information: (1) The debtor breaches a contract such as default or delinquency in interest or principal payments. (2) The debtor breaches the contract such as default or delay in repayment of interest or principal. (3) The creditor grants concessions to the debtor in consideration of the debtor's financial difficulties that would not otherwise be offered under normal circumstances. (4) The debtor is highly likely to go bankrupt or undertake other financial restructuring. (5) The issuer's or debtor's financial difficulties lead to the disappearance of an active market for the financial asset. (6) A financial asset is purchased or originated at a substantial discount reflecting the fact that a credit loss has occurred.Based on the Group's internal credit risk management if internal recommendations or externally obtained information indicates that the debtor of a financial instrument cannot fully repay all creditors including the Group (regardless of any guarantee obtained by the Group) the Group considers this a default event.Regardless of the above assessment if payments under the financial instrument's contract are more than (or equal to) 90 days past due the Group presumes the instrument is in default. 11.2.3 Determination of expected credit losses For financial assets and lease receivables the expected credit loss is the present value of the difference between the contractual cash flows the Group is entitled to receive and the cash flows the Group actually expects to receive.When measuring the expected credit losses on financial instruments the Group's method reflects: an unbiased probability-weighted average determined by evaluating a range of possible outcomes; the time value of money; and reasonable and supportable information about past events current conditions and forecasts of future economic conditions available without undue cost or effort at the balance sheet date. 11.2.4 Write-off of financial assets If the Group no longer reasonably expects to recover all or part of the contractual cash flows of a financial asset the Group writes off the book balance of the financial asset directly. This write-off constitutes derecognition of the relevant financial asset.- 27 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 11. Financial instruments - continued 11.3 Transfer of financial assets A financial asset is derecognized if one of the following conditions is met: (1) the contractual right to receive cash flows from the financial asset expires; (2) the financial asset has been transferred and substantially all the risks and rewards of ownership of the asset have been transferred to the transferee; or (3) the financial asset has been transferred and although the Group has neither transferred nor retained substantially all the risks and rewards of ownership it has not retained control over the asset.If the Group has neither transferred nor retained substantially all the risks and rewards of ownership of the financial asset but retains control of it the Group continues to recognize the transferred financial asset to the extent of its continuing involvement and recognizes a corresponding liability. The Group measures that liability as follows: Where the transferred financial asset is measured at amortized cost the book value of the related liability equals the book value of the asset in which the Group continues to be involved minus the amortized cost of any rights retained by the Group (if the Group retained such rights due to the transfer) and plus the amortized cost of any obligations assumed by the Group (if the Group assumed such obligations due to the transfer). Such liabilities are not designated as financial liabilities measured at fair value through profit or loss.Where the transferred financial asset is measured at fair value the book value of the related liability equals the book value of the asset in which the Group continues to be involved minus the fair value of any rights retained by the Group (if the Group retained such rights due to the transfer) and plus the fair value of any obligations assumed by the Group (if the Group assumed such obligations due to the transfer). The fair values of such rights and obligations are measured on a stand-alone basis.When the full transfer of a financial asset qualifies for derecognition the difference between the book value of the transferred financial asset on the derecognition date and the sum of the consideration received and the corresponding portion of the cumulative fair value changes previously recognized in other comprehensive income is recognized in profit or loss. If the transferred asset by the Group is a non-trading equity instrument investment designated as measured at fair value through other comprehensive income any cumulative gains or losses previously recognized in other comprehensive income are transferred out of other comprehensive income and into retained earnings.When a partial transfer of a financial asset qualifies for derecognition the book value of the original asset before transfer is allocated between the portion being derecognized and the portion that continues to be recognized based on the relative fair values of each portion on the transfer date. The difference between (a) the consideration received for the derecognized portion plus the corresponding portion of the cumulative fair value changes previously recognized in other comprehensive income and (b) the book value of the derecognized portion on the derecognition date is recognized in profit or loss. If the transferred asset by the Group is a non-trading equity instrument investment designated as measured at fair value through other comprehensive income any cumulative gains or losses previously recognized in other comprehensive income are transferred out of other comprehensive income and into retained earnings.If a full transfer of a financial asset does not satisfy the derecognition criteria the Group continues to recognize the entire transferred financial asset and recognizes the consideration received as a liability.- 28 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 11. Financial instruments - continued 11.4 Classification of financial liabilities and equity instruments Based on the contractual terms and the economic substance of the issued financial instrument rather than merely its legal form and in conjunction with the definitions of financial liabilities and equity instruments the Group classifies the financial instrument (or its components) as either a financial liability or an equity instrument at initial recognition. 11.4.1 Classification recognition and measurement of financial liabilities Upon initial recognition financial liabilities are classified as financial liabilities measured at fair value through profit or loss or other financial liabilities. 11.4.1.1 Financial liabilities measured at fair value through profit or loss Financial liabilities measured at fair value through profit or loss include financial liabilities held for trading (including derivatives classified as financial liabilities) and those designated as measured at fair value through profit or loss. Except for derivative financial liabilities which are presented separately financial liabilities measured at fair value through profit or loss are presented as financial liabilities held for trading.If a financial liability meets any of the following conditions it indicates that the Group has assumed this liability for trading purposes: The primary purpose of assuming the financial liability is to repurchase it in the near term.Upon initial recognition the financial liability is part of an identifiable portfolio of financial instruments that is collectively managed and there is objective evidence of a recent pattern of short-term profit-taking.The financial liability is a derivative except for derivatives that meet the definition of a financial guarantee contract or are designated as effective hedging instruments.At initial recognition if any of the following conditions are met the Group may designate a financial liability as measured at fair value through profit or loss: (1) the designation can eliminate or significantly reduce accounting mismatches; (2) under the Group's formally documented risk management or investment strategy portfolios of financial liabilities or combined portfolios of financial assets and liabilities are managed and evaluated on a fair value basis and this is reported internally to key officers; or (3) it is part of an eligible hybrid contract containing an embedded derivative.Financial liabilities held for trading are subsequently measured at fair value with any gains or losses arising from fair value changes along with dividends or interest expenses related to these liabilities recognized in profit or loss.- 29 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 11. Financial instruments - continued 11.4 Classification of financial liabilities and equity instruments - continued 11.4.1 Classification recognition and measurement of financial liabilities - continued 11.4.1.1 Financial liabilities measured by fair value through the current profit or loss - continued For a financial liability designated as measured at fair value through profit or loss the portion of the fair value change attributable to the Group's own credit risk is recognized in other comprehensive income while other changes in fair value are recognized in profit or loss. When the financial liability is derecognized the accumulated fair value change attributable to changes in the Group's own credit risk that was previously recorded in other comprehensive income is transferred to retained earnings. Any dividends or interest expenses related to such financial liabilities are recognized in profit or loss. If treating the effect of changes in the liability's own credit risk in this manner creates or enlarges an accounting mismatch in profit or loss the Group recognizes all gains or losses on the liability (including those related to changes in its own credit risk) in profit or loss. 11.4.1.2 Other financial liabilities Except for financial liabilities arising from the transfer of financial assets that do not meet derecognition criteria or where the Group continues to be involved in transferred financial assets other financial liabilities are classified as financial liabilities measured at amortized cost. They are subsequently measured at amortized cost and any gains or losses from derecognition or amortization are recognized in profit or loss.If the Group modifies or renegotiates a contract with a counterparty and it does not result in the derecognition of a financial liability subsequently measured at amortized cost but leads to changes in the contractual cash flows the Group recalculates the book value of the financial liability and recognizes any related gain or loss in profit or loss. For recalculated book value the Group shall determine it by discounting the renegotiated or modified contractual cash flows at the original effective interest rate of the financial liability. For any costs or fees incurred as a result of modifying or renegotiating the contract the Group shall adjust the book value of the modified financial liability and amortize them over the remaining term thereof. 11.4.2 Derecognition of financial liabilities If the present obligation of a financial liability is fully or partially discharged the liability (or the discharged portion) is derecognized. If the Group (as borrower) signs an agreement with a lender to replace the original financial liability with a new one and the terms of the new liability differ substantially from those of the original liability the Group derecognizes the original liability and recognizes the new one.When a financial liability is fully or partially derecognized the difference between the book value of the derecognized portion and the consideration paid (including any non-cash assets transferred or new financial liabilities assumed) is recognized in profit or loss for the current period.- 30 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 11. Financial instruments - continued 11.4 Classification of financial liabilities and equity instruments - continued 11.4.3 Equity instruments An equity instrument is a contract that evidences a residual interest in the Group's assets after deducting all liabilities.The Group treats the issuance (including refinancing) repurchase sale or cancellation of its equity instruments as changes in equity. The Group does not recognize fair value changes in equity instruments. Transaction costs directly attributable to equity transactions are deducted from equity.The Group's distributions made to holders of equity instruments are treated as profit distribution and any issued stock dividends do not affect the total shareholders' equity. 11.5 Derivatives Derivatives including forward foreign exchange contracts are initially measured at fair value on the contract date and subsequently measured at fair value. 11.6 Offsetting financial assets and financial liabilities When the Group has a legal right to offset recognized financial assets and liabilities and that right is currently enforceable and the Group intends to settle on a net basis or to realize the asset and settle the liability simultaneously the financial assets and liabilities are presented on the balance sheet at the net amount. Otherwise financial assets and financial liabilities are presented separately in the balance sheet without offset. 12. Notes receivable 12.1 Method for determining expected credit losses on notes receivable and the related accounting treatments For notes receivable with significantly increased credit risk such as those past due and not accepted or where there is clear evidence that the acceptor is likely unable to fulfill its acceptance obligation the Group evaluates credit losses on an individual basis. Other notes receivable are evaluated based on their credit risk characteristics as a group.Any increase or reversal of the provision for expected credit losses on notes receivable is recognized as a credit loss or gain in profit or loss. 12.2 Combination categories and basis for determining provision for credit losses according to credit risk characteristic combination Apart from those notes receivable whose credit losses are determined on an individual basis the Group classifies the remaining notes receivable into different groups based on shared credit risk characteristics: Combination category Determination basis Combination 1 Bank acceptance bills Combination 2 Commercial acceptance bills - 31 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 13. Accounts receivable 13.1 Method for determining expected credit losses on accounts receivable and the related accounting treatments The Group uses an impairment matrix at the group level to determine expected credit losses for accounts receivable. Any increase or reversal of the provision for expected credit losses of accounts receivable is recognized as a credit loss or gain in profit or loss. 13.2 Combination categories and basis for determining provision for credit losses according to credit risk characteristic combination.The Group classifies accounts receivable into Combination 1 and Combination 2 based on the credit risk characteristics of counterparties under different business segments. Combination 1 refers to accounts receivable arising from the polarizer business revenue where provisions for credit losses are made based on overdue aging relative to the credit term. Combination 2 refers to accounts receivable arising from property leasing and other business revenue where provisions for credit losses are made based on natural aging. 13.3 Method for calculating aging when determining credit risk characteristic combination The Group uses both the natural aging of accounts receivable and the overdue aging relative to the credit term as credit risk characteristics applying an impairment matrix to determine expected credit losses. Natural aging is calculated starting from the date of initial recognition of the accounts receivable while overdue aging begins once the natural aging exceeds the credit term granted to the customer. If the terms and conditions of an accounts receivable are modified but do not lead to derecognition the aging continues to accumulate. 13.4 Criteria for individual assessment of provision for credit losses The Group individually determines credit losses for accounts receivable where there is evidence of a significant increase in credit risk. 14. Receivables financing 14.1 Method for determining expected credit losses on receivables financing and the related accounting treatments The Group determines credit losses for receivables financing on an individual-asset basis. The Group recognizes the provision for credit losses for receivables financing in other comprehensive income and records any credit loss or gain in profit or loss without reducing the book value presented in the balance sheet. 14.2 Criteria for individual assessment of provision for credit losses Based on the credit status of the accepting bank for bank acceptance bills the Group individually assesses and determines credit losses for receivables financing.- 32 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 15. Other receivables 15.1 Method for determining expected credit losses on other receivables and the related accounting treatments The Group determines credit losses for other receivables on a group basis. Any increase or reversal of the provision for expected credit losses on other receivables is recognized as a credit loss or gain in profit or loss. 15.2 Combination categories and basis for determining provision for credit losses according to credit risk characteristic combination The Group divides other receivables into different combinations based on common credit risk characteristics. Common credit risk characteristics used by the Group include initial recognition date remaining contract term and length of overdue period. 15.3 Method for calculating aging when determining credit risk characteristic combination The aging is calculated from the date of initial recognition. If the terms and conditions of other receivables are modified but do not lead to derecognition the aging continues to accumulate. 16. Inventories 16.1 Types of inventories methods of costing for issuance inventory system and methods for amortizing low-value consumables and packaging materials 16.1.1 Types of inventories The Group's inventories mainly include raw materials work in progress finished products and materials processed on consignment. Inventories are initially measured at cost which includes purchase costs processing costs and other expenditures incurred to bring the inventories to their current location and condition. 16.1.2 Method of costing for issued inventories When inventories are issued the actual cost is determined using the weighted average method. 16.1.3 Inventory system The Group uses a perpetual inventory system. 16.1.4 Amortization methods for low-value consumables and packaging materials Low-value consumables and packaging materials are amortized using the straight-line method or are written off in full at once.- 33 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 16. Inventories - continued 16.2 Criteria for recognizing and methods for making provision for inventory depreciation On the balance sheet date inventories are measured at the lower of cost and net realizable value. If net realizable value is lower than cost a provision for inventory depreciation is made.Net realizable value is the estimated selling price of inventories in the ordinary course of business less the estimated costs to complete the estimated selling and distribution expenses and related taxes. When determining the net realizable value of inventories the Group uses conclusive evidence while considering the purpose of holding the inventories and the impact of events after the balance sheet date.After the provisions for the inventory depreciation are made the factors causing any write-down of inventory value have disappeared leading to the net realizable values of inventories higher than its book value the amount of write-down shall be resumed and be reversed from the original provision for inventory devaluation with the reversal being included in current profit or loss.Generally provisions for inventory depreciation are made on an item-by-item basis. 17. Long-term equity investments 17.1 Criteria for determining common control and significant influence Control means that an investor has power over the investee derives variable returns by participating in the investee's relevant activities and can use that power to affect the amount of returns. Common control refers to shared control over an arrangement under relevant agreements where decisions about the arrangement's relevant activities require the unanimous consent of the parties sharing the right of control. Significant influence refers to the power to participate in decisions on an investee's financial and operating policies but not to control or commonly control the formation of those policies. When determining whether the investor can exercise control or significant influence over the investee the potential voting rights arising from convertible corporate bonds or exercisable warrants currently held by the investor or other parties are taken into account. 17.2 Determination of initial investment cost For a long-term equity investment acquired in a business combination under common control the initial investment cost is determined on the combination date based on the share of the book value of the acquiree's owners' equity in the ultimate controller's consolidated financial statements. Any difference between the initial investment cost of the long- term equity investment and the book value of the cash paid non-cash assets transferred or liabilities assumed is adjusted against capital reserve. If the capital reserve is insufficient the difference is adjusted against retained earnings. Where equity securities are issued as consideration for the combination on the combination date the initial investment cost of the long-term equity investment is determined based on the share of the book value of the acquiree's owners' equity in the ultimate controller's consolidated financial statements. The total par value of the issued shares is recognized as share capital and any difference between the initial investment cost and the total par value of the shares issued is adjusted against capital reserve. If the capital reserve is insufficient the difference is adjusted against retained earnings.- 34 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 17. Long-term equity investments - continued 17.2 Determination of initial investment cost - continued For a long-term equity investment acquired in a business combination not under common control on the acquisition date the initial investment cost is determined based on the combination cost.Audit legal valuation consulting and other related G&A expenses incurred by the acquirer or purchaser for the business combination are recognized in profit or loss when they occur.Long-term equity investments obtained through methods other than a business combination are initially measured at cost.Where an investor gains significant influence or common control but not control over an investee through additional investment the cost of the long-term equity investment is the sum of the fair value of the previously held equity investment (as determined in accordance with Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments) and the new investment cost. 17.3 Subsequent measurement and recognition method of profit or loss 17.3.1 Long-term equity investments accounted for under the cost method In the parent company's financial statements long-term equity investments in subsidiaries are measured using the cost method. A subsidiary is an investee over which the Group can exercise control.Under the cost method long-term equity investments are measured at their initial investment cost. Any additional investment or capital recovery adjusts the cost of the long-term equity investment. Current investment income is recognized based on the amount of cash dividends or profits declared and distributed by the investee. 17.3.2 Long-term equity investments measured using the equity method The Group applies the equity method to its investments in associates and joint ventures. An associate is an investee over which the Group has significant influence and a joint venture is a joint venture arrangement under which the Group has rights to the net assets of the arrangement.Under the equity method if the initial investment cost of the long-term equity investment exceeds the share of the fair value of the investee's identifiable net assets at the time of investment the initial investment cost is not adjusted. If the initial investment cost is less than the share of the fair value of the investee's identifiable net assets at the time of investment the difference is recognized in current profit or loss and the cost of the long-term equity investment is adjusted accordingly.- 35 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 17. Long-term equity investments - continued 17.3 Subsequent measurement and recognition method of profit or loss - continued 17.3.2 Long-term equity investments measured using the equity method - continued When the equity method is adopted for accounting the Group based on its attributable share of the net profit or loss and other comprehensive income realized by the investee respectively recognize the investment income and other comprehensive income and simultaneously adjust the book value of the long-term equity investment. COOEC shall calculate the shares according to profits or cash dividends declared by the investee and correspondingly reduce the book value of long-term equity investments; As to any change in owners' equity of the investee other than net profit or loss other comprehensive income and profit distribution the Group shall adjust the book value of the long-term equity investment and include such change in capital reserves. When recoginzing the attributable share of net profit or loss of the investee the Group shall based on the fair value of identifiable net asset of the investee when it obtains the investmentrecognize the net profits of the investee after adjustment. If accounting policies and accounting periods adopted by the investee are inconsistent with those of the Company the financial statements of the investee shall be adjusted according to the accounting policies and accounting periods of the Company and investment income and other comprehensive income etc. shall be recognized on such basis. For transactions between the Group and associates and joint ventures if the invested or sold assets do not constitute business the unrealized profit or loss from internal transactions will be offset at the part attributable to the Group and the investment profit or loss will be recognized on that basis However the unrealized losses from internal transactions between the Group and any investee shall not be offset if they belong to the losses from the impairment of the transferred assets.When recognizing the net losses occurred in the investee that shall be shared the reduction value of book value of long- term equity investments and other long-term equities that constitute net investments in the investee will be the limit until it becomes zero. In addition if the Group has the obligation to assume extra-amount losses for the investee the estimated liabilities are recognized according to the estimated obligations and included in the current investment losses.Where the investee realizes net profits in the subsequent period the Group shall restore the income shared after making up for unrecognized losses undertaken by such income. 17.4 Disposal of long-term equity investments When a long-term equity investment is disposed of the difference between its book value and the actual proceeds is recognized in current profit or loss. If a long-term equity investment has been accounted for using the equity method and the remaining equity after disposal is still accounted for using the equity method any other comprehensive income previously recognized under the equity method is treated on the same basis as if the investee had directly disposed of the related assets or liabilities and is transferred proportionately. Any other changes in owners' equity of the investee other than net profit or loss other comprehensive income and profit distribution which were previously recognized are transferred proportionately to the current profit or loss. If a long-term equity investment is accounted for using the cost method and the remaining equity after disposal continues to be accounted for using the cost method any other comprehensive income recognized before the Group gained control under either the equity method or the accounting standards for recognizing and measuring financial instruments is treated on the same basis as if the investee had directly disposed of the related assets or liabilities and is transferred proportionately. Other changes in owners' equity other than net profit or loss other comprehensive income and profit distribution in net asset of the investee accounted for and recognized by using the equity method shall be carried forward to the current profit or loss.- 36 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 17. Long-term equity investments - continued 17.4 Disposal of long-term equity investments - continued Where the Group loses the control over the investee due to the disposal of part of the equity investments when it prepares separate financial statements the remaining equity after disposal that can commonly control or have significant influence on the investee will be measured under the equity method and the remaining equity shall be deemed to have been adjusted under the equity method on acquisition. If the remaining equity after disposal can not exercise common control or significant influence on the investee such equity will be changed to be accounted for according to recognition and measurement standards of financial instruments and the difference between fair value and book value on the date of loss of the control shall be included in the current profit or loss. For other comprehensive income recognized by using the equity method or financial instruments recognition and measurement standards before the Group obtains the control over the investee accounting treatment shall be made on the same basis as that for direct disposal of relevant assets or liabilities by the investee when the Group loses the control over the investee. Other changes in owners' equity other than net profit or loss other comprehensive income and profit distribution in net asset of the investee recognized by using the equity methodshall be carried forward to the current profit or loss when the control over the investee is lost. Where the remaining equities after disposal are accounted for under the equity method the other comprehensive income and other owners' equity shall be carried forward in proportion. If the remaining equity after disposal is changed to be accounted for according to the recognition and measurement standards of the financial instruments the other comprehensive income and other owner's equity shall be fully carried forward.In case the common control or significant influence over the investee is lost for disposing part of equity investments the remaining equity will be changed to be accounted for according to the recognition and measurement principles of financial instruments. The difference between the fair value and the book value on the date of the loss of common control or significant influence shall be included in the current profit or loss. Any other comprehensive income previously recognized under the equity method for the original equity investment is accounted for on the same basis as if the investee had directly disposed of related assets or liabilities once the equity method ceases to apply. All other changes in owners' equity recognized due to factors other than net profit or loss other comprehensive income and profit distribution of the investee are transferred in full to current investment income when the equity method is no longer applied.Where the Group disposes of equity investments in subsidiaries through multiple transactions and by stages until loss of control if the above transactions belong to a package of transactions accounting treatment shall be made on the transactions as a transaction to dispose equity investments of subsidiaries and lose the control. The difference between each disposal cost and the book value of long-term equity investments corresponding to disposed equities before the loss of control shall be firstly recognized as other comprehensive income and then transferred into the current profit or loss at the loss of control. 18. Investment properties Investment property refers to property held to earn rentals or for capital appreciation or both and includes leased land use rights and leased buildings.Investment property is initially measured at cost. Subsequent expenses related to the investment property if the economic benefits related to the asset are likely to flow in and the cost can be measured reliably shall be included in the cost of the investment property. Other subsequent expenses shall be included in the current profit or loss when incurred.- 37 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 18. Investment properties - continued The Group uses the cost model for subsequent measurement of investment property and provides for depreciation on a straight-line basis over its service life. The depreciation method useful life estimated residual value and annual depreciation rates for each category of investment property are as follows: Depreciation method Depreciation life Residual value rate Annual depreciation Type (years) (%) rate (%) Houses and buildings Straight-line method 10-40 0.00-4.00 2.40-10.00 When an investment property is being disposed of or permanently withdraws from use without any economic benefits expected from the disposal the investment property shall be derecognized.The difference between the disposal proceeds of an investment property (through sale transfer retirement or damage) and its book value net of related taxes and fees is recognized in current profit or loss. 19. Fixed assets 19.1 Recognition conditions Fixed assets refer to tangible assets held for the purpose of producing goods providing services renting or operating management with a service life exceeding one fiscal year. Fixed assets will only be recognized when the economic benefits associated with such assets are likely to flow into the Group and the cost can be measured reliably. A fixed asset is initially measured at cost.For the subsequent expenses related to the fixed assets if the economic benefits related to the fixed assets are likely to flow in and the cost can be measured reliably they shall be included in the cost of the fixed assets and the book value of the replaced part shall be derecognized Other subsequent expenses shall be included into the current profit or loss when incurred. 19.2 Depreciation method From the month following the date a fixed asset is in working condition for intended use the Group depreciates the asset on a straight-line basis over its service life. The depreciation method service year estimated residual value and annual depreciation rates for each category of fixed assets are as follows: Depreciation life Residual value rate Annual depreciation Type Depreciation method (years) (%) rate (%) Buildings and constructions Straight-line method 10-40 0.00-4.00 2.40-10.00 Machinery equipment Straight-line method 10-14 4.00 6.86-9.60 Transportation equipment Straight-line method 8 4.00 12.00 Electronic equipment and Straight-line method 5 4.00 19.20 others Estimated net residual value refers to the amount obtained by the Group from the disposal of the fixed assets at present after deducting the estimated disposal expenses assuming that the estimated service life of the fixed asset has expired and the fixed asset is in the expected state at the end of its service life.- 38 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 19. Fixed assets - continued 19.3 Other explanations When the fixed assets are disposed of or it is expected that no economic benefits can be generated through use or disposal the fixed assets shall be derecognized. The difference of the revenue from disposal of fixed assets such as sales transfer retirement or damage deducting their book value and related taxes shall be included into the current profit or loss.The Group will review service life estimated net residual value and depreciation methods of the fixed assets at the end of each year. Changes if any shall be handled as changes in accounting estimates. 20. Construction in progress The construction in progress is measured at actual cost which includes various project expenditures incurred during the construction period capitalized borrowing costs before the project reaches working condition for intended use and other related costs. No depreciation is made for construction in progress.The construction in progress shall be carried forward to the fixed assets after it reaches the working condition for intended use. The criteria and timing for the conversion of various types of construction in progress into fixed assets are as follows: Time point of conversion Type Criteria for conversion to fixed assets into fixed assets The machinery equipment shall be carried forward to the fixed assets when it has been accepted and the following conditions are met: Installation of (1) The machinery equipment and its supporting facilities have been Reach working condition for machinery installed; intended use equipment (2) After commissioning the machinery equipment can maintain normal and stable operation or produce qualified products for a period of time. 21. Borrowing costs The capitalization of the borrowing costs that can be directly attributable to the acquisition construction or production of assets that meet the capitalization conditions will start when the asset expenditure has incurred the borrowing costs have incurred and the acquisition construction or production activities necessary for the asset to reach the intended usable or salable state have begun; The capitalization shall be ceased when the acquired and constructed or produced assets eligible for capitalization have reached their working condition for intended use or sales condition. The remaining borrowing costs are recognized as expenses on occurrence.- 39 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 22. Intangible assets 22.1 Service life and its basis for determination estimate amortization method or review procedure Intangible assets include land use right software and patent rights etc.The intangible assets shall be initially measured at the costs. For intangible assets with limited service life the original value shall be evenly amortized by straight-line method within the expected service life from the time when they are available for use. The intangible assets with uncertain service life shall not be amortized. The amortization method service life and residual value rate of various intangible assets are as follows: Amortization Residual value Type Service life (year) and basis of determination method rate (%) Straight-line 50 (Determine the service life based on the statutory service Land use rights - method life) Straight-line 5 (Determine the service life based on the period expected to Software - method bring economic benefits) Straight-line 15 (Determine the service life based on the period expected Patent right - method to bring economic benefits) At the end of the period the service life and amortization method of intangible assets with limited service life shall be reviewed and adjusted if necessary. 22.2 The collection scope and related accounting treatments for research expenditures The expenditures in research phase will be included in current profit or loss on occurrence.Expenditures in the development stage will be recognized as intangible assets only when the following conditions are simultaneously satisfied and included in current profit or loss if the following conditions are not satisfied: (1) It is technically feasible to complete the intangible assets so that it can be used or sold; (2) It has the intention to complete the intangible assets and use or sell them; (3) The manner in which an intangible asset generates economic benefits includes the ability to prove that there is a market for the products produced through the use of this intangible asset or a market for the intangible asset itself. In the case that the intangible asset will be used internally its usefulness shall be proven. (4) With the support of sufficient technology financial resources and other resources it is able to complete the development of the intangible assets and it is able to use or sell the intangible assets; (5) The expenditures attributable to the intangible assets in the development stage can be measured reliably. Where the research expenditures and the development expenditures are indistinguishable the COOEC shall include research expenditures and development expenditures incurred in current profit or loss. The cost of the intangible assets formed by internal development activities only includes the total expenditure incurred from the time when the capitalization conditions are met to the time when the intangible assets reach the intended use. The expenses recognized in profit or loss before meeting the capitalization conditions during the development for the same intangible asset will not be adjusted.The collection scope of R&D expenditures includes the wages salaries and welfare expenses of the personnel directly engaged in R&D activities and the direct R&D activities The depreciation cost of materials fuel and power expenses instruments and equipment for R&D activities etc.- 40 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 23. Impairment of long-term assets On each balance sheet date the Group checks whether there is any indication that long-term equity investments investment properties measured by the cost model fixed assets construction in progress right-of-use assets and intangible assets with a definite service life may have impairment. If there are indications of impairment of such assets the recoverable amount shall be estimated. Intangible assets with indefinite service life and intangible assets that have not yet reached a usable state are subject to impairment testing every year regardless of whether there are indications of impairment.The recoverable amount of the estimated asset is based on a single asset. If it is difficult to estimate the recoverable amount of a single asset the recoverable amount of the asset group shall be determined on the basis of the asset group to which the asset belongs. The recoverable amount is the higher of the net amount obtained by deducting the disposal expenses from the fair value of an asset or an asset group and the present value of its expected future cash flows.If the recoverable amount of the asset is lower than its book value the provision for asset impairment shall be made at the difference and included in the current profit or loss.The goodwill shall be tested for impairment at least at the end of each year. The impairment test of goodwill shall be carried out in combination with the asset group or combination of asset groups related to it. That is from the acquisition date the book value of goodwill shall be allocated using a reasonable method to the asset group or portfolio of asset groups that benefit from the synergies of the business combination. If the recoverable amount of the asset group or group of asset groups including the allocated goodwill is lower than its book value the corresponding impairment losses shall be recognized. Amount of impairment losses shall be firstly used to deduct the book value of goodwill allocated to the asset group or portfolio of asset groups and then deduct book value of other assets according to the proportion of the book values of other assets (except for goodwill) in the asset group or portfolio of asset groups.The above losses from assets impairment will not be reversed in subsequent accounting periods once recognized. 24. Long-term deferred expenses Long-term deferred expenses refer to the expenses which have been already incurred but will be borne in the current period and in the future with an amortization period of over 1 year. Long-term deferred expenses are amortized evenly over the expected benefit period. 25. Contract liabilities Contract liabilities refer to the obligation of the Group to transfer goods or services to customers for consideration received or receivable from customers. Contract assets and contract liabilities under the same contract are presented by their net amounts. 26. Employee compensation 26.1 Accounting treatments for short-term compensation During the accounting period when employees provide services for the Group the Group recognizes the short-term compensation actually incurred as liabilities and includes it in the current profit or loss or related asset costs. The employee welfare expenses incurred by the Group shall be included in the current profit or loss or related asset costs according to the actual amount incurred. If the employee benefits are non-monetary benefits they shall be measured at fair value.- 41 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 26. Employee employee compensation - continued 26.1 Accounting treatments for short-term compensation - continued For the medical insurance premiums work-related injury insurance premiums maternity insurance premiums and other social insurance premiums and housing provident funds paid by the Group for employees as well as the labor union funds and employee education expenses withdrawn by the Group in accordance with the provisions the corresponding employee compensation amount shall be calculated and determined according to the prescribed accrual basis and accrual ratio during the accounting period when employees provide services for the Group and the corresponding liabilities shall be recognized and included in the current profit or loss or related asset costs. 26.2 Accounting treatments for post-employment benefits Post-employment benefits are all defined contribution plans.During the accounting period when employees provide services for the Group the Group recognizes the amount payable calculated according to the defined contribution plans as a liability and includes it in the current profit or loss or related asset costs. 26.3 Accounting treatments for dismissal benefits When the Group provides dismissal benefits to employees the employee compensation liability arising from the dismissal benefits shall be recognized at the earlier of the following dates and included in the current profit or loss: when the Group cannot unilaterally withdraw the dismissal benefits provided due to the termination of labor relationship plan or the layoff proposal; When the Group recognizes the costs or expenses related to the restructuring involving the payment of dismissal benefits. 27. Estimated liabilities When the obligation related to the contingency such as product quality guarantee is a current obligation of the Group and the performance of such obligation is likely to result in the outflow of economic benefits and the amount of such obligation can be measured reliably it is recognized as estimated liabilities.On the balance sheet date by considering the risks uncertainty and time value of money and other factors related to contingency the estimated liabilities will be measured according to the best estimate of the required expenditures for performace of relevant present obligation. If the time value of money is significant the best estimate shall be determined by the amount discounted by the estimated future cash flows. 28. Revenue 28.1 Accounting policies adopted for revenue recognition and measurement disclosed by business type When the Group has fulfilled its performance obligations under the contract that is when the customer obtains right of control of the relevant goods or services the revenue is recognized based on the transaction prices allocated to the specific performance obligation. Performance obligations refer to the contractual commitments in which the Group transfers clearly distinguishable goods or services to the customers.- 42 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 28. Revenue - continued 28.1 Disclosure of accounting policies for revenue recognition and measurement by business type - continued The Group evaluates the contract on the contract commencement date identifies each individual performance obligation contained in the contract and determines whether each individual performance obligation is performed within a certain period of time or at a certain point in time. If one of the following conditions is met it is a performance obligation performed within a certain period of time and the Group recognizes revenue within a certain period of time according to the performance progress: (1) the customer obtains and consumes the economic benefits brought by the Group at the same time as the Group performs the contract; (2) The customer is able to control the goods under construction in the course of the Group's performance; (3) The goods produced during the performance of the Group have irreplaceable uses and the Group has the right to receive payment for the performance accumulated to date throughout the contract period.Otherwise the Group recognizes the revenue at the point when the customer obtains the right of control of the relevant goods or services.For goods sold to customers the Group recognizes revenue when the right of control of the goods is transferred that is when the goods are delivered to the designated place of the other party and signed by the other party. For property service the Group recognizes revenue in the course of providing property service.Transaction prices refer to the amount of consideration that the Group is expected to be entitled to receive as a result of the transfer of goods or services to customers but does not include the amount received on behalf of third parties and the amount expected to be returned to customers by the Group. When determining the transaction prices the Group considers the impact of variable consideration significant financing components in the contract non-cash consideration consideration payable to customers and other factors.If the contract contains two or more performance obligations the Group shall on the commencement date of the contract allocate the transaction prices to each individual performance obligation according to the relative ratio of the individual selling price of the goods or services promised by each individual performance obligation. However if there is conclusive evidence that the contractual discount or variable consideration is only related to one or more (but not all) performance obligations in the contract the Group shall allocate the contractual discount or variable consideration to the relevant one or more performance obligations. Individual selling price refers to the price at which the Group sells goods or services to customers separately. If the individual selling price cannot be directly observed the Group will comprehensively consider all the information that can be reasonably obtained and estimate the individual selling price by maximizing the use of observable input value.For sales with sales return clauses the Group recognizes revenue at the amount of consideration expected to be entitled to receive due to the transfer of goods to the customer (i.e. excluding the amount expected to be returned due to sales return) when the customer obtains the relevant control over goods and recognizes liabilities at the amount expected to be returned due to sales return; At the same time the balance of the book value of the expected goods to be returned at the time of transfer after deducting the expected cost of recovering the goods (including the impairment of the value of the returned goods) is recognized as an asset. The net amount after deducting the cost of the above asset will be transferred as cost based on the book value of the transferred goods.For sales with quality assurance clauses if the quality assurance provides a separate service in addition to assuring the customer that the goods or services sold meet the established standards the quality assurance constitutes a single performance obligation. Otherwise the Group shall conduct accounting treatment for the quality assurance liability in accordance with the Accounting Standards for Business Enterprises No. 13 - Contingencies.The Group determines whether it is the principal or the agent when engaging in transactions based on whether it has the right of control over the goods or services before transferring them to the customer. If the Group can control the goods or services before transferring them to the customer the Group is the main responsible person and recognizes the revenue according to the total consideration received or receivable; Otherwise the Group is an agent and recognizes revenue based on the expected commissions or service fee it is entitled to receive. This amount is determined by subtracting the price payable to other related parties from the total consideration received or receivable.- 43 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 28. Revenue - continued 28.1 Disclosure of accounting policies for revenue recognition and measurement by business type - continued If the Group receives payment in advance from customers for sales of goods or services the payment is first recognized as a liability and then transferred to revenue when the relevant performance obligations are fulfilled. When the Group's advances from customers do not need to be returned and the customer may waive all or part of its contractual rights the Group expects to be entitled to the amount related to the contractual rights waived by the customer and recognizes the above amount as revenue in ratio according to the mode of the customer's exercise of contractual rights; Otherwise the Group will only transfer the relevant balance of the above-mentioned liabilities to revenue when it is highly unlikely that the customer will request the fulfillment of the remaining performance obligations. 29. Government grants Government grants refer to the monetary assets and non-monetary assets obtained by the Group from the government for free. Government grants are recognized when they can meet the conditions attached to government grants and can be received.The government grants considered as monetary assets are measured at the amount received or receivable. 29.1 Judgment basis and accounting treatments for government grants related to assets The subsidies fro production line and equipment in the Group's government grants can form long-term assets so such government grants are asset-related government grants.Government grants related to assets are recognized as deferred income and included in the current profit or loss by stages according to the straight-line method within the service life of the relevant assets. 29.2 Judgment basis and accounting treatments for government grants related to income The industry development support funds and enterprise development support funds in the Group's government grants cannot form long-term assets so such government grants are income-related government grants.Income-related government grants used to compensate for relevant costs and losses in subsequent periods are recognized as deferred income and included in the current profit or loss in the period when the relevant costs or expenses are recognized; If it is used to compensate the relevant costs and losses incurred it shall be directly included in the current profit or loss.Government grants related to the daily activities of the Group are included in other income according to the essence of economic business. Government grants unrelated to the daily activities of the Group are included in the non-operating revenue.When the recognized government grants need to be returned if there is relevant deferred income balance the book balance of relevant deferred income shall be offset and the excess shall be included in the current profit or loss; If there is no relevant deferred income it shall be directly included in the current profit or loss.- 44 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 30. Lease Leases refers to a contract in which the lessor transfers the right of use of the asset to the lessee for consideration within a certain period of time.At the commencement date of the contract the Group assesses whether the contract is a lease contract or contains a lease.Unless the terms and conditions of the contract change the Group does not reassess whether the contract is a lease contract or contains a lease. 30.1 The Group as a lessee 30.1.1 Spin-off of the lease When a contract contains one or more lease and non-lease parts the Group will split the individual lease and non-lease parts and allocate the contract consideration according to the relative ratio of the sum of the individual price of each lease part and the individual price of the non-lease part. 30.1.2 Right-of-use assets Except for short-term leases the Group recognizes the right-of-use assets of the lease on the lease commencement date.The lease commencement date refers to the starting date when the lessor provides the leased assets for use by the Group.Right-of-use assets are initially measured at cost. The cost includes: The initial measurement amount of the lease liabilities; The lease payments made on or before the lease commencement date or the relevant amount after deducting the lease incentive already enjoyed if any; Initial direct costs incurred by the Group; The costs to be incurred to the Group for demolishing and removing leased assets restoring the site where the leased assets are located or restoring the leased assets to the state agreed in the lease terms.The Group depreciates right right-of-use assets with reference to the depreciation provisions of Accounting Standards for Business Enterprises No. 4 - Fixed Assets. If the Group can reasonably determine that the ownership of leased assets will be obtained at the expiration of the lease term the right-of-use assets shall be depreciated within the remaining service life of the leased assets. If it is not reasonably certain that ownership of leased assets will be obtained at the expiration of the lease term the depreciation shall be accrued during the shorter of the lease term and remaining service life leased assets.The Group determines whether the right-of-use assets are impairment in accordance with the Accounting Standards for Business Enterprises No. 8 - Asset Impairment and performs accounting treatment on the identified impairment losses. 30.1.3 Lease liabilities Except for short-term leases the Group makes initial measurement of the lease liabilities on the lease commencement date according to the present value of the lease payments that have not been paid on that date. When calculating the present value of lease payments the Group uses the interest rate implicit in lease as the discount rate and if the interest rate implicit in lease cannot be determined the incremental borrowing rate is used as the discount rate.- 45 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 30. Leases - continued 30.1 The Group as a lessee - continued 30.1.3 Lease liabilities - continued Lease payments refer to the payments made by the Group to the lessor in connection with the right to use the leased assets during the lease term including: Fixed payment (including substantial fixed payment) and the relevant amount after deducting the lease incentive if any; Variable lease payments depending on index or ratio; The Group reasonably determines the exercise price of purchase option to be exercised; Lease term reflects the amount that needs to be paid if the Group exercises the option to termination of leases termination of leases; The amount expected to be paid based on the residual value of guarantee provided by the Group.After the lease commencement date the Group calculates the interest expenses of the lease liabilities for each period of the lease term at a fixed cyclical interest rate and includes it in the current profit or loss or related asset costs.After the lease commencement date if any of the following circumstances occurs the Group shall remeasure the lease liabilities and adjust the corresponding right-of-use assets. If the book value of the right-of-use assets has been reduced to zero but the lease liabilities still needs to be further reduced the Group shall include the difference in the current profit or loss: If lease term changes or the valuation result of purchase option changes the Group remeasures lease liabilities based on the present value of the changed lease payments and the revised discount rate; If there is a change in the estimated amount payable of the residual value of guarantee or the index or ratio used to determine lease payments the Group remeasures lease liabilities based on the changed lease payments and the present value calculated using the original discount rate. 30.1.4 As the basis for judgment and accounting treatments for the simplified treatment of short-term leases by the lessee The Group chooses not to recognize right-of-use assets and lease liabilities for short-term leases of some plants and some leased warehouses. Short-term lease refers to a lease that lasts for no more than 12 months and includes no purchase options at the lease commencement date. The Group includes the lease payments of short-term leases in the current profit or loss or related asset costs according to the straight-line method in each period of the lease term. 30.1.5 Lease modification If the lease is modified and the following conditions are met at the same time the Group will account for the lease modification as a separate lease: * The lease modification expands the scope of the lease by adding one or more right of use of the leased assets; * The increased consideration is equivalent to the individual price of the expanded part adjusted according to the contract.- 46 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 30. Leases - continued 30.1 The Group as a lessee - continued 30.1.5 Lease modification - continued If the lease modification is not accounted for as a separate lease on the effective date of the lease modification the Group re-apportions the consideration of the modified contract re-determines the lease term and re-measures the lease liabilities at the present value calculated according to the modified lease payments and the revised discount rate.If the lease modification results in a reduction in the scope of the lease or the lease term the Group shall reduce the book value of the right-of-use assets accordingly and include the relevant gains or losses of partial or complete termination of leases into the current profit or loss. If the lease liabilities are remeasured due to other lease modification the Group shall adjust the book value of the right-of-use assets accordingly. 30.2 The Group as a lessor 30.2.1 Spin-off of the lease If the contract contains both the lease and non-lease parts the Group shall allocate the contract consideration according to the provisions of the revenue standards on the allocation of transaction prices and the basis of allocation shall be the separate price of the lease part and the non-lease part. 30.2.2 Classification criteria and accounting treatments as a lessor Leases that substantially transfer substantially all of the risks and rewards associated with the ownership of leased assets are financing leases Leases other than financing lease are operating leases. 30.2.2.1 The Group records operating leases as a lessor During each period of the lease term the Group recognizes the lease receipts of operating leases as rental income by using the straight-line method. The initial direct costs incurred by the Group in connection with operating leases are capitalized when incurred amortized on the same basis as rental income recognition during the lease term and included in the current profit or loss in installments.The variable lease receipts related to operating leases acquired by the Group and not included in the lease receipts are included in the current profit or loss when actually incurred. 30.2.3 Lease modification If the operating lease is changed the Group will account for it as a new lease from the effective date of the change and the advance or receivable lease receipts related to the lease before the change will be regarded as the receipt amount of the new lease.- 47 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 31. Deferred tax assets and deferred tax liabilities Income tax expenses include current income tax and deferred income tax. 31.1 Current income tax On the balance sheet date the current income tax liabilities (or assets) formed in the current and prior periods are measured at the expected income tax payable (or refundable) calculated in accordance with the tax law. 31.2 Deferred tax assets and deferred tax liabilities For the difference between the book value of certain assets and liabilities and their tax bases and the temporary differences arising from the difference between the book value and tax base of items that are not recognized as assets and liabilities but whose tax bases can be determined in accordance with the tax law the balance sheet liability method is adopted to recognize deferred tax assets and deferred tax liabilities.In general the relevant deferred income taxes are recognized for all temporary differences. However for deductible temporary differences the Group recognizes the relevant deferred tax assets to the extent of the taxable income that is likely to be obtained to offset the deductible temporary differences. In addition deferred tax assets or liabilities are not recognized for temporary differences associated with the initial recognition of goodwill and with the initial recognition of assets or liabilities arising from transactions that are neither business combinations nor affect accounting profit or taxable income (or deductible losses) and do not result in equal taxable temporary differences and deductible temporary differences.For deductible loss and tax credits that can be carried forward to subsequent years the corresponding deferred tax assets arising therefrom are recognized to the extent that future taxable income will be probable to be available against deductible losses and tax credits.The Group recognizes deferred tax liabilities arising from taxable temporary differences associated with subsidiaries associates and investments in joint ventures unless the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not be reversed in the foreseeable future. For deductible temporary differences related to subsidiaries associates and investments in joint ventures the Group recognizes deferred tax assets only if it is probable that the temporary differences will reverse in the foreseeable future and it is probable that taxable income will be available to offset the deductible temporary differences in the future.On the balance sheet date deferred tax assets and deferred tax liabilities should be measured at the applicable tax rate during the period of expected recovery of the relevant assets or liquidation of the relevant assets according to the provisions of tax laws.Except for the current income tax and deferred income taxes related to transactions and events directly included in other comprehensive income or shareholders' equity which are included in other comprehensive income or shareholders' equity and the book value of deferred income taxes arising from business combination to adjust goodwill the remaining current income tax and deferred income tax expenses or income are included in the current profit or loss.On the balance sheet date the book value of the deferred tax assets shall be reviewed. If it is likely that sufficient taxable income will not be available in the future to offset the benefits of the deferred tax assets the book value of the deferred tax assets shall be written down. When it is likely to earn sufficient taxable income the written down amount is reversed.- 48 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (III) Significant accounting policies and accounting estimates - continued 31. Deferred tax assets/deferred tax liabilities - continued 31.3 Offset of income tax When the Group has a legal right to settle on a net basis and intends to settle with net amount or acquire assets and pay off liabilities simultaneously the Group reports the net amount of current income tax assets and current tax liabilities after offsetting.When the Group has the legal right to settle current income tax assets and current income tax liabilities on a net basis and the deferred tax assets and deferred tax liabilities are related to the income tax levied by the same tax collection authority on the same taxpayer or on different taxpayers but in each important future period of reversal of deferred tax assets and liabilities the involved taxpayer intends to settle current income tax assets and liabilities on a net basis or to obtain assets and settle liabilities at the same time the deferred tax assets and deferred tax liabilities of the Group are presented at the net amount after offset. 32. Changes in significant accounting policies and accounting estimates 32.1 Adjustments for changes in significant accounting policies On October 25 2023 the Ministry of Finance issued the Accounting Standards for Business Enterprises - Interpretation No. 17 (hereinafter referred to as "Interpretation No. 17"). Interpretation No. 17 standardizes the classification of current liabilities and non-current liabilities and the accounting treatment of sale and leaseback transactions and will come into effect on January 1 2024.On December 6 2024 the Ministry of Finance issued the Accounting Standards for Business Enterprises - Interpretation No. 18" (hereinafter referred to as "Interpretation No. 18"). It regulates the subsequent measurement of investment properties held as underlying items under the floating charge method and the accounting treatment of warranty-type quality assurance that is not a single performance obligation. It will come into force from December 6 2024 allowing enterprises to implement it ahead of the annual release.After assessment the Group believes that the adoption of the above provisions has no material impact on the Group's financial statements. 32.2 Changes in accounting estimates The Group has no significant changes in accounting estimates during the year.- 49 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024（IV） Taxation 1. Main tax types and tax rates Tax type Tax basis Tax rate The output tax for domestic sales is Balance of output tax minus deductible input tax; calculated at 13% 9% 6% and 5% of the Value-added tax Tax exemption offset and refund measures are sales amount according to relevant tax applicable to the sales of export products regulations and the export product tax rebate rate is 13% Urban maintenance Turnover tax payable 7% and construction tax Education Turnover tax payable 3% surcharge Local education Turnover tax payable 2% surtax Corporate income Taxable income 25%、20%、15%、8.25% tax THE RESIDUAL VALUE AFTER Property taxes DEDUCTING 30% FROM THE ORIGINAL 1.2% VALUE OF THE PROPERTY AT ONCE Notes to the taxpayers with different corporate income tax rates: Name of taxpayer Income tax rate The Company 25% Shenzhen Shenfang Property Management Co. Ltd. 20% (Note 1) Shenzhen MCENTURY Garment Co. Ltd. 20% (Note 1) Shenzhen Lisi Industrial Development Co. Ltd. 20% (Note 1) Shenzhen Shenfang Sungang Property Management Co. Ltd. 20% (Note 1) Shenzhen Huaqiang Hotel Co. Ltd. 20% (Note 1) SATO (Hong Kong) Limited 8.25% (Note 2) Shenzhen SAPO Photoelectric Co. Ltd. (hereinafter referred to as 15% (Note 3) "SAPO Photoelectric") Note 1: See Note (IV) and 2(2) for details.Note 2: according to the Inland Revenue Ordinance of Hong Kong SATO (Hong Kong) Limited is subject to a two-tier profits tax system. The first HKD 2 million of taxable profits shall taxed at a rate of 8.25% and the profits generated thereafter shall be taxed at a rate of 16.5%.Note 3: See Note (IV) and 2(1) for details. 2. Tax incentives (1) SAPO Photoelectric a subsidiary of the Company was jointly recognized as a high-tech enterprise in 2022 by Shenzhen Science and Technology Innovation Commission Finance Bureau of Shenzhen Municipality and Shenzhen Tax Service State Taxation Administration. The certification is valid for 3 years and the certificate number is GR202244204504. Since SAPO Photoelectric was recognized as a high-tech enterprise it is eligible for the tax incentives for high-tech enterprises for three years. After filing with the competent tax bureau SAPO Photoelectric has paid corporate income tax at a tax rate of 15%.- 50 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (IV) Taxes - continued 2. Tax incentives - continued (2) The Company's subsidiaries Shenzhen MCENTURY Garment Co. Ltd. Shenzhen Huaqiang Hotel Co. Ltd. Shenzhen Lisi Industrial Development Co. Ltd. Shenzhen Shenfang Sungang Property Management Co. Ltd. and Shenzhen Shenfang Property Management Co. Ltd. are qualified small low-profit enterprises. According to the Announcement of the Ministry of Finance and the State Taxation Administration of Taxation on Further Implementing Preferential Policies for Corporate Income Tax of Small and Micro Enterprises (No. 13 2022) and the Announcement of the Ministry of Finance and the State Taxation Administration on Preferential Policies for Corporate Income Tax of Small and Micro Enterprises and Individual Industrial and Commercial Households (No. 6 2023) the part of the annual taxable income not exceeding RMB 3 million will be included in the taxable income after deducting 25% and corporate income tax will be paid at a tax rate of 20%. (3) According to the relevant provisions of the Notice of the Ministry of Finance the General Administration of Customs and the State Taxation Administration on the Import Tax Policies for Supporting the Development of the New Display Device Industry (CGS [2021] No. 19) SAPO Photoelectric a subsidiary of the Company meets the relevant conditions and will enjoy the policy of exemption from import duties on relevant products from January 1 2021 to December 31 2030. (4) According to the Announcement on the Policy of Additional Value-Added Tax Deduction for Advanced Manufacturing Enterprises (CZBSWZJGG [2023] No.43) issued by the Ministry of Finance and the State Taxation Administration in September 2023 from January 1 2023 to December 31 2027 advanced manufacturing enterprises are allowed to deduct the value-added tax payable by 5% of the deductible input tax for the current period. SAPO Photoelectric a subsidiary of the Company meets the relevant conditions and enjoyed the policy of additional deduction of value-added tax (VAT) in 2024.（V） Notes to financial statements items 1. Monetary funds RMB Balance as at the end of Balance as at the end of Item the current year the previous year Cash on hand: 4751.69 1710.40 RMB 4691.50 1651.50 HKD 60.19 58.90 Bank deposits (Note 1): 302111853.17 462967619.54 RMB 245621517.8 396264667.05 USD 40462152.89 62535102.56 JPY 15265963.38 3440280.17 HKD 762219.10 727569.76 Other monetary funds (Note 2): 38844838.96 9305118.06 RMB 10920461.06 9305118.06 JPY 27924377.90 - Total 340961443.82 472274448.00 Including: total amount deposited abroad - - - 51 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 1. Monetary funds - continued Note 1: bank deposits include interest income from current deposits and 7-day notice deposits amounting to RMB 31765.51 (2023: RMB 1548872.61). Note 2: as of December 31 2024 the Group's other monetary funds included RMB 3401500.00 (2023: RMB 3400000.00) of restricted funds due to account freezes and RMB 35443338.96 (2023: RMB 5905118.06) of guarantee deposits for bills and letters of credit. 2. Financial assets held for trading RMB Balance as at the end of Balance as at the end of Item the current year the previous year Financial assets measured at fair value through current 731419904.42821946114.68 profit or loss Including: money funds and structured deposits 731419904.42 821946114.68 3. Notes receivable (1) Classification of notes receivable RMB Balance as at the end of Balance as at the end of Category the current year the previous year Bank acceptance bills 47305221.88 50963943.01 (2) As at December 31 2024 the Group has no pledged notes receivable. (3) As of December 31 2024 notes receivable endorsed or discounted by the Group and not yet due on the balance sheet date at the end of the period RMB Amount derecognized at the Amount not derecognized at Item end of the period the end of the period Bank acceptance bill - 30291952.76 (4) Disclosure by provision method for bad debts RMB Balance as at the end of the current year Balance as at the end of the previous year Provision for bad Book balance Provision for bad debts Book balance debts Category Provisi Provisi Book value Book value Ratio on Ratio on Amount Amount Amount Amount (%) ratio (%) ratio (%)(%) Provision for bad debts accrued on an - - - - - - - - - - individual basis Provision for bad 100.047305221.8 debts made by 47305221.88 - - 50963943.01 100.00 - - 50963943.01 08 portfolio Including: bank 100.0 47305221.8 47305221.88--50963943.01100.00--50963943.01 acceptance bills 0 8 100.047305221.8 Total 47305221.88 - 50963943.01 100.00 - 50963943.01 08 (5) In 2024 the Group has no actual write-off of notes receivable. - 52 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 4. Accounts receivable (1) Disclosure by aging RMB Book balance at the end of Book balance at the end of Aging the year the previous year Within 1 year 888265598.53 848526236.04 1-2 years 368365.12 1640043.18 2 to 3 years - 618907.34 Over 3 years 13565696.79 12911211.29 Total 902199660.44 863696397.85 (2) Disclosure by provision method for bad debts RMB Balance as at the end of the current year Category Book balance Provision for bad debts Book value Amount Ratio (%) Amount Provision ratio (%) Provision for bad debts accrued 35622829.913.9517870018.3750.1617752811.54 on an individual basis Provision for bad debts made 866576830.5396.0520597705.18845979125.35 by portfolio Including: portfolio 1 854782067.66 94.74 20338340.21 2.38 834443727.45 Combination 2 11794762.87 1.31 259364.97 2.20 11535397.90 Total 902199660.44 100.00 38467723.55 863731936.89 RMB Balance as at the end of the previous year Category Book balance Provision for bad debts Book value Amount Ratio (%) Amount Provision ratio (%) Provision for bad debts accrued 71687951.268.3027464002.4838.3144223948.78 on an individual basis Provision for bad debts made 792008446.5991.7016097561.42775910885.17 by portfolio Including: portfolio 1 779372185.30 90.24 15882600.54 2.04 763489584.76 Combination 2 12636261.29 1.46 214960.88 1.70 12421300.41 Total 863696397.85 100.00 43561563.90 820134833.95 As of December 31 2024 the Company has no significant accounts receivable with individual provision for bad debts.As of December 31 2024 the credit risk and provision for bad debts of accounts receivable of Portfolio 1 are as follows: RMB Balance as at the end of the current year Type Expected average Provision for bad Book balance Book value loss rate (%) debts Within the credit period 2.11 796842757.97 16786953.04 780055804.93 1-30 days overdue 3.10 53503516.30 1656637.60 51846878.70 31-60 days overdue 26.63 3418979.10 910571.37 2508407.73 61-90 days overdue 96.70 989164.17 956528.08 32636.09 More than 90 days overdue 100.0027650.1227650.12- (with impairment) Total 854782067.66 20338340.21 834443727.45 - 53 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 4. Accounts receivable - continued (2) Disclosure by provision method for bad debts - continued As of December 31 2024 the credit risk and provision for bad debts of accounts receivable of Portfolio 2 are as follows: RMB Balance as at the end of the current year Aging Expected average Provision for bad Book balance Book value loss rate (%) debts Within 1 year 1.44 11460139.05 165377.59 11294761.46 1-2 years 10.00 267373.82 26737.38 240636.44 Over 3 years 100.00 67250.00 67250.00 - Total 11794762.87 259364.97 11535397.90 As of December 31 2024 provision for bad debts is made based on the simplified expected credit losses model RMB Whole duration Whole duration Provision for bad debts Expected credit losses Expected credit losses Total (No credit loss) (With credit loss) Balance at the beginning of 27153548.6216408015.2843561563.90 the year Balance at the beginning of the year - Transfer to credit loss --- incurred - Reversal of credit loss not --- incurred Withdrawal in the current 8871275.71102828.168974103.87 year Reversal in the current year (11196138.79) (2871805.43) (14067944.22) Charge-off in the current --- year Write-off in the current year - - - Other changes - - - Balance as at the end of the 24828685.5413639038.0138467723.55 current year (3) Provision for bad debts RMB Balance at the Changes in the current year Balance as at Type beginning of Recovery or Resale or write- the end of the Provision Other changes the year reversal off current year Provision 43561563.908974103.87(14067944.22)--38467723.55 for bad debts There was no significant amount of provision for bad debts recovered or reversed this year. (4) There are no accounts receivable with actual write-off this year. - 54 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 4. Accounts receivable - continued (5) Top 5 accounts receivable in terms of the ending balances by debtors RMB Proportion in accounts Provision for bad debts Book balance at the end of receivable Entity name Balance as at the end of the the year Ratio of balance at the end current year of the year (%) Customer 1 216148577.64 23.96 4753114.82 Customer 2 102082718.13 11.31 2184024.62 Customer 3 90645486.60 10.05 1855541.78 Customer 4 84618742.39 9.38 1841371.17 Customer 5 65531083.75 7.26 1350058.99 Total 559026608.51 61.96 11984111.38 5. Receivables financing (1) Presentation of receivables financing by category RMB Balance as at the end of the Balance as at the end of the Item current year previous year Bank acceptance bills 6804603.68 22839459.13 The Group believes that the bank acceptance bills it holds are issued by banks with high credit ratings and carry no significant credit risk; therefore no provision for bad debts has been made. (2) As at December 31 2024 the Group has no pledged receivables financing. (3) As of December 31 2024 receivables financing endorsed or discounted by the Group and not yet due on the balance sheet date at the end of the period RMB Amount derecognized at the Amount not derecognized at Item end of the period the end of the period Bank acceptance bills 34926518.99 - (4) In 2024 the Group has no receivables financing with actual write-off. - 55 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 6. Advances to suppliers (1) Disclosure of advances to suppliers by aging RMB Balance as at the end of the previous Balance as at the end of the current year Aging year Amount Ratio (%) Amount Ratio (%) Within 1 year 7233035.70 88.46 16927119.84 86.81 1-2 years 873375.47 10.68 969677.39 4.97 2 to 3 years 8227.73 0.10 1603089.57 8.22 Over 3 years 62085.80 0.76 - - Total 8176724.70 100.00 19499886.80 100.00 As of December 31 2024 the Group has no advances to suppliers with an aging of more than 1 year and an important amount. (2) Top 5 advances to suppliers in terms of the ending balances by prepayment objects The total amount of the top five prepayments categorized by prepayment objects as of the end of the year was RMB 5657262.47 accounting for 69.19% of the ending balance of advances to suppliers. 7. Other receivables (1) Disclosure by aging RMB Balance as at the end of Balance as at the end of Aging the current year the previous year Within 1 year 2878553.22 1860613.92 1-2 years 227729.90 548779.55 2 to 3 years 37922.15 690301.34 Over 3 years 18436540.75 18115521.40 Total 21580746.02 21215216.21 Less: provision for bad debts 17984202.06 17994930.79 Book value 3596543.96 3220285.42 (2) Disclosure by nature of payment RMB Book balance at the Book balance at the Nature of payment end of the previous end of the year year Current accounts 15422685.97 15350589.97 Guarantee and deposits 2523551.88 2000722.80 Export tax rebate 709028.48 710026.13 Petty cash and employee borrowings 296058.95 577183.94 Others 2629420.74 2576693.37 Total 21580746.02 21215216.21 - 56 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 7. Other receivables - continued (3) Provision for bad debts As of December 31 2024 provision for bad debts is made based on general model of expected credit losses RMB Phase I Phase II Phase III The entire expected The entire expected Expected credit credit loss over the credit loss over the Provision for bad debts Total losses over the next life of the life of the 12 months instruments instruments (No credit loss) (With credit loss) Balance at the beginning of the 73918.97268296.2617652715.5617994930.79 year Balance at the beginning of the 73918.97268296.2617652715.5617994930.79 year -Transfer to phase II (12183.55) 12183.55 - - -Transfer to phase III - (187095.88) 187095.88 - -Reversal to phase II - - - - -Reversal to phase I - - - - Withdrawal in the current year 85256.08 - - 85256.08 Reversal in the current year - (54177.15) (37685.24) (91862.39) Charge-off in the current year - - - - Write-off in the current year - - (4122.42) (4122.42) Other changes - - - - Balance as at the end of the 146991.5039206.7817798003.7817984202.06 current year As of December 31 2024 provision for bad debts shall be made according to the credit risk characteristic combination RMB Balance as at the end of the current year Expected Phase Provision for average loss rate Book balance Book value bad debts (%) Provision for bad debts based on credit risk characteristic 83.3321580746.0217984202.063596543.96 combination Provision for other receivables As of December 31 2024 the credit risk and provision for bad debts of other receivables are as follows: RMB Balance as at the end of the current year Aging Expected average Provision for bad Book balance Book value loss rate (%) debts Within 1 year 5.11 2878553.22 146991.50 2731561.72 1-2 years 7.69 227729.90 17521.25 210208.65 2 to 3 years 57.18 37922.15 21685.53 16236.62 Over 3 years 96.54 18436540.75 17798003.78 638536.97 Total 21580746.02 17984202.06 3596543.96 - 57 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 7. Other receivables - continued (4) Provision for bad debts RMB Balance at the Changes in the current year Balance as at Type beginning of Recovery or Resale or write- the end of the Provision Other changes the year reversal off current year Provision for bad debts 17994930.79 85256.08 (91862.39) (4122.42) - 17984202.06 There is no provision for bad debts recovery or reversal of significant amount in the current year. (5) There are no other receivables with actual write-off this year. (6) Top five entities in terms of ending balance of other receivables by debtors RMB Provision for bad Balance as at the debts Other receivables end of the current Ratio in ending Nature of amount Aging Balance as at the year balance of other end of the current receivables (%) year Top five of the ending balance of the current Current accounts of Within 1 year more 16287801.0275.4715305501.02 year receivables etc. than 3 years Total other receivables 8. Inventories (1) Classification of inventories RMB Balance as at the end of the current year Balance as at the end of the previous year Provision for Provision for Item Book balance inventory Book value Book balance inventory Book value depreciation depreciation Raw materials 453134126.81 14875137.34 438258989.47 403031948.06 7506047.48 395525900.58 Products in 335115507.5366220022.55268895484.98309068674.9664610590.25244458084.71 progress Finished 121746047.8540357658.5981388389.26137596740.3743501540.3194095200.06 products Entrusted processing 1710557.68 496720.51 1213837.17 2406793.65 93806.73 2312986.92 materials Total 911706239.87 121949538.99 789756700.88 852104157.04 115711984.77 736392172.27 Note: as of December 31 2024 the book balance of the polarizer inventories was RMB 905482857.11 (December 31 2023: RMB 838447375.39) with a corresponding provision for inventory depreciation of RMB 115967084.94 (December 31 2023: RMB 107290039.96). (2) Provision for inventory depreciation RMB Balance at the Increase in the current year Decrease in the current year Balance as at the Item beginning of the Reversal or end of the current Provision Others Others year write-off year Raw materials 7506047.48 10509078.42 - 3139988.56 - 14875137.34 Products in 64610590.2528883121.41-27273689.11-66220022.55 progress Finished 43501540.3183743853.45-86887735.17-40357658.59 products Entrusted processing 93806.73 402913.78 - - - 496720.51 materials Total 115711984.77 123538967.06 - 117301412.84 - 121949538.99 - 58 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 8. Inventories - continued (2) Provision for inventory depreciation - continued Specific basis for determining the net realizable value of inventories and the reasons for reversal or write-off of the provision for inventory depreciation during the current year: Reasons for reversing or writing off provision for Item Specific basis for determining net realizable value inventory depreciation this year The net realizable value is determined by the estimated selling price of the relevant finished Raw materials goods in process and Received or sold in the products minus the estimated cost to be incurred until consigned processing materials current year completion estimated selling and distribution expenses and relevant taxes.The net realizable value is determined by the It is sold or market value estimated selling price of the inventories minus the Finished products is recovered in the current estimated selling and distribution expenses and year related taxes. (3) As of December 31 2024 there is no amount in the balance of inventories used for guarantee and no amount of capitalization of borrowing costs. 9. Other current assets RMB Balance as at the end of Balance as at the end of Item the current year the previous year Value-added tax to be deducted and input tax to be certified 2100314.86 27399897.46 Prepaid income tax 47034.59 47034.59 Cost of return receivable 19314386.69 33326525.34 Total 21461736.14 60773457.39 10. Long-term equity investments RMB Changes in the current year Provision Other for comp Provisi impairme Cash Balance at the Addit rehen Other on Balance as at the nt Investment dividends or Investees beginning of the ional Reduced sive chang Provisi end of the Balance profit or loss profits Others year invest investment inco es in on for current year as at the recognized declared to be ment me equit impair end of the under the equity paid adjust y ment current method ment year I. Joint ventures Shenzhen Guanhua Printing 122370494.08--(10814606.80)-----111555887.28- and Dyeing Co. Ltd.Sub-total 122370494.08 - - (10814606.80) - - - - - 111555887.28 - II. Associates Shenzhen Changlianfa 3358117.09--260171.67--(346150.00)--3272138.76- Printing and Dyeing Co. Ltd.Yehui International Co. Ltd. 1953409.53 - (1805949.58) (147459.95) - - - - - - - Sub-total 5311526.62 - (1805949.58) 112711.72 - - (346150.00) - - 3272138.76 - Total 127682020.70 - (1805949.58) (10701895.08) - - (346150.00) - - 114828026.04 - - 59 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 11. Other equity instrument investments (1) Details of other equity instrument investments RMB Changes in the current year Gains accrued Dividend Accumulative Reasons designated as Balance at the Loss accrued to Balance as at the Accumulative gains to other income losses accrued to being measured at fair Item beginning of Additional Reduced other Others end of the current accrued to other comprehensive recognized in other value through other the year investment investment comprehensive year comprehensive income in the the current comprehensive comprehensive income income in the income current year period income current year The Group plans to hold Hualian Development Co. Ltd. 110457700.00 - - 19426300.00 - - 129884000.00 208000.00 127284000.00 - it for a long time The Group plans to hold Shenzhen Dailisi Underwear Co. Ltd. 17741900.00 - - 1901000.00 - - 19642900.00 1037735.85 17083043.74 - it for a long time The Group plans to hold Shenzhen Nanfang Textile Co.Ltd. 14803400.00 - - - (1621700.00) - 13181700.00 865050.16 11681700.00 - it for a long time Shenzhen Xinfang Knitting Factory Co. The Group plans to hold 2985900.00---(291600.00)-2694300.00200000.002170300.00- Ltd. it for a long time The Group plans to hold Jintian Industry (Group) Co. Ltd. - - - - - - - - - (14831681.50) it for a long time Total 145988900.00 - - 21327300.00 (1913300.00) - 165402900.00 2310786.01 158219043.74 (14831681.50) (2) Description of derecognition in the current year There is no derecognition of other equity instrument investments this year.- 60 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 12. Investment properties (1) Investment properties measured at the cost mode RMB Item Houses and buildings I. Total original book value 1. Balance at the beginning of the year 350367442.40 2. Increase in the current year - (1) Outsourcing - (2) Transfer of fixed assets - 3. Decrease in the current year - (1) Disposal - (2) Other transfer-out - 4. Balance at the end of the year 350367442.40 II. Accumulated depreciation and accumulated amortization 1. Balance at the beginning of the year 224764235.22 2. Increase in the current year 9609816.99 (1) Provision or amortization 9609816.99 (2) Transfer of fixed assets - 3. Decrease in the current year - (1) Disposal - (2) Other transfer-out - 4. Balance at the end of the year 234374052.21 III. Provision for impairment 1. Balance at the beginning of the year - 2. Increase in the current year - (1) Provision - 3. Decrease in the current year - (1) Disposal - 4. Balance at the end of the year - IV. Book value 1. Book value at the end of the year 115993390.19 2. Book value at the beginning of the year 125603207.18 (2) Investment properties without certificate of title RMB Reasons for failure to Item Book value obtain the certificate of title Warrants not obtained Houses and buildings 11556252.96 for historical reasons - 61 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 13. Fixed assets (1) Fixed assets RMB Buildings and Machinery Transportation Electronic Item Total constructions equipment equipment equipment and others I. Total original book value 1. Balance at the beginning 727679833.942711433903.9817090895.8744539622.553500744256.34 of the year 2. Increase in the current 9634489.5035489764.62471769.901139257.6046735281.62 year (1) Purchase - 5444196.63 471769.90 1139257.60 7055224.13 (2) Transfer from -30045567.99--30045567.99 construction in progress (3) Other changes 9634489.50 - - - 9634489.50 3. Decrease in the current -4168000.00266184.80717804.275151989.07 year (1) Disposal or scrapping - - 266184.80 717804.27 983989.07 (2) Other changes - 4168000.00 - - 4168000.00 4. Balance at the end of the 737314323.442742755668.6017296480.9744961075.883542327548.89 year II. Accumulated depreciation 1. Balance at the beginning 189420295.281179132635.637869614.5833092767.561409515313.05 of the year 2. Increase in the current 23097751.05198886428.202046425.494076907.22228107511.96 year (1) Provision 23097751.05 198886428.20 2046425.49 4076907.22 228107511.96 (2) Other changes - - - - - 3. Decrease in the current --249694.76677349.26927044.02 year (1) Disposal or scrapping - - 249694.76 677349.26 927044.02 (2) Other changes - - - - - 4. Balance at the end of the 212518046.331378019063.839666345.3136492325.521636695780.99 year III. Provision for impairment 1. Balance at the beginning 9820261.2615149037.186126.41247280.7125222705.56 of the year 2. Increase in the current 99508.166572870.851102.16189993.376863474.54 year (1) Provision 99508.16 6572870.85 1102.16 189993.37 6863474.54 3. Decrease in the current ---7256.117256.11 year (1) Disposal or scrapping - - - 7256.11 7256.11 4. Balance at the end of the 9919769.4221721908.037228.57430017.9732078923.99 year IV. Book value 1. Book value at the end of 514876507.691343014696.747622907.098038732.391873552843.91 the year 2. Book value at the 528439277.401517152231.179215154.8811199574.282066006237.73 beginning of the year (2) Fixed assets without certificate of title RMB Reasons for failure to obtain the Item Book value certificate of title Warrants not handled for Houses and buildings 10815790.07 historical reasons (3) Fixed assets of mortgage and guarantee As at December 31 2024 the Group's fixed assets mortgaged for bank borrowings are detailed in Note (V) 21 "Assets with Restricted Ownership or Right of Use".- 62 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 14. Construction in progress 14.1 Summary of construction in progress RMB Balance as at the end Balance as at the end Item of the current year of the previous year Construction in progress 5814012.03 31307060.74 14.2 Construction in progress RMB Balance as at the end of the current year Balance as at the end of the previous year Item Provision for Provision for Book balance Net book value Book balance Net book value impairment impairment Installation of 5814012.03-5814012.0331307060.74-31307060.74 machinery equipment 15. Right-of-use assets RMB Buildings and Machinery equipment Total Item constructions I. Total original book value: 1. Balance at the beginning of the 33450802.23-33450802.23 year 2. Increase in the current year 11214565.00 1799631.64 13014196.64 (1) Addition 11214565.00 1799631.64 13014196.64 3. Decrease in the current year 8181940.76 - 8181940.76 (1) Termination of leases 8181940.76 - 8181940.76 4. Balance at the end of the year 36483426.47 1799631.64 38283058.11 II. Accumulated depreciation 1. Balance at the beginning of the 21451335.66-21451335.66 year 2. Increase in the current year 8105002.79 1546340.96 9651343.75 (1) Provision 8105002.79 1546340.96 9651343.75 3. Decrease in the current year 8157739.16 - 8157739.16 (1) Termination of leases 8157739.16 - 8157739.16 4. Balance at the end of the year 21398599.29 1546340.96 22944940.25 III. Provision for impairment 1. Balance at the beginning of the --- year 2. Increase in the current year - - - (1) Provision - - - 3. Decrease in the current year - - - 4. Balance at the end of the year - - - IV. Book value 1. Book value at the end of the year 15084827.18 253290.68 15338117.86 2. Book value at the beginning of 11999466.57-11999466.57 the year - 63 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 16. Intangible assets (1) Details of intangible assets RMB Item Land use rights Software Patent right Total I. Total original book value 1. Balance at the beginning 48258239.0022600069.8611825200.0082683508.86 of the year 2. Increase in the current -219057.84-219057.84 year (1) Purchase - 219057.84 - 219057.84 3. Decrease in the current ---- year 4. Balance at the end of the 48258239.0022819127.7011825200.0082902566.70 year II. Accumulated accumulation 1. Balance at the beginning 16165713.6715128172.3911825200.0043119086.06 of the year 2. Increase in the current 891565.323684123.37-4575688.69 year (1) Provision 891565.32 3684123.37 - 4575688.69 3. Decrease in the current ---- year 4. Balance at the end of the 17057278.9918812295.7611825200.0047694774.75 year III. Provision for impairment 1. Balance at the beginning ---- of the year 2. Increase in the current ---- year 3. Decrease in the current ---- year 4. Balance at the end of the ---- year IV. Book value 1. Book value at the end of 31200960.014006831.94-35207791.95 the year 2. Book value at the 32092525.337471897.47-39564422.80 beginning of the year As at December 31 2024 for the intangible assets pledged by the Group due to bank borrowings please refer to Note (V) 21 "Assets with restricted ownership or right of use" for details. 17. Goodwill (1) Original book value of goodwill RMB Balance at the Balance as at the Increase in Decrease in Name of the investees or matters beginning of the end of the current year current year forming goodwill year current year SAPO Photoelectric 9614758.55 - - 9614758.55 Shenzhen MCENTURY Garment 2167341.21--2167341.21 Co. Ltd.Total 11782099.76 - - 11782099.76 - 64 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 17. Goodwill - continued (2) Provision for impairment of goodwill RMB Balance at the Balance as at the Increase in Decrease in Name of the investees or matters beginning of the end of the current year current year forming goodwill year current year SAPO Photoelectric 9614758.55 - - 9614758.55 Shenzhen MCENTURY Garment 2167341.21--2167341.21 Co. Ltd.Total 11782099.76 - - 11782099.76 18. Long-term deferred expenses RMB Balance at the Amortization Balance as at Increase in the Item beginning of amount for the Other decreases the end of the current year the year current year current year Decoration and facility renovation 3503660.94 5515370.67 2934915.74 - 6084115.87 costs 19. Deferred tax assets and deferred tax liabilities (1) Deferred tax assets without offset RMB Balance as at the end of the current Balance as at the end of the year previous year Item Deductible Deductible Deferred tax Deferred tax temporary temporary Assets Assets differences differences Provision for credit losses 55500808.39 9874641.13 59994128.15 10538054.68 Provision for asset impairment 146194722.68 21929208.40 132512745.52 19876911.83 Unrealized profits of internal 2056848.93308527.342145963.47321894.52 transactions Employee compensation payable 4173800.00 1043450.00 4173800.00 1043450.00 Deferred income 95821558.58 14373233.79 96647256.82 14497088.52 Deductible losses 96771113.52 14515667.03 127769387.40 19165408.11 Fair value changes of investments in 14831681.503707920.3814831681.503707920.38 other equity instruments Lease liabilities 16381050.71 2457157.61 12177572.68 1826635.90 Changes in fair value of derivative 1278559.35191783.90-- financial liabilities Estimated liabilities 9451090.40 1417663.56 - - Total 442461234.06 69819253.14 450252535.54 70977363.94 Based on the Group's profit forecast for the future periods the Group believes that it is highly probable to obtain sufficient taxable income to utilize the above-mentioned deductible temporary differences and deductible losses in the future periods so the relevant deferred tax assets are recognized.- 65 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 19. Deferred tax assets and deferred tax liabilities - continued (2) Deferred tax liabilities without offset RMB Balance as at the end of the current Balance as at the end of the previous year year Item Taxable Taxable Deferred tax Deferred tax temporary temporary Liabilities Liabilities differences differences Difference between initial 62083693.3615520923.3462083693.3615520923.34 recognition cost and tax base of long-term equity investments Fair value changes of investments 158219043.7439554760.94138805043.7434701260.94 in other equity instruments Rent receivable 8532598.56 2133149.64 10108726.81 2527181.70 Right-of-use assets 15338117.86 2300717.68 11999466.57 1799919.99 Total 244173453.52 59509551.60 222996930.48 54549285.97 (3) Deferred tax assets or liabilities listed net amount after write-offs RMB Deduction amount Deduction amount Balance of of deferred tax Balance of of deferred tax deferred tax assets assets and deferred tax assets assets and Item or liabilities after liabilities at the or liabilities after liabilities at the offset at the end of end of the current offset at the end of end of the the previous year year the current year previous year Deferred tax assets (10898741.94) 58920511.20 (10371998.52) 60605365.42 Deferred tax liabilities (10898741.94) 48610809.66 (10371998.52) 44177287.45 (4) Unrecognized deferred tax assets RMB Balance as at the end of Balance as at the end of Item the current year the previous year Deductible temporary differences 15750990.01 14740965.97 Deductible losses 365594502.67 442263671.30 Total 381345492.68 457004637.27 (5) Deductible losses from unrecognized deferred tax assets will be expired in the following years RMB Balance as at the end of Balance as at the end of Item the current year the previous year Year 2024 - 69053143.67 2025-- 202683168900.3753989578.07 202710067397.5010067397.50 202813479346.6639988583.76 2029132565644.36129732249.98 203075352814.2475352814.24 2031-- 2032-- 203350960399.5464079904.08 2034-- Total 365594502.67 442263671.30 - 66 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 20. Other non-current assets RMB Balance as at the end of the current year Balance as at the end of the previous year Item Provision for Provision for Book balance Book value Book balance Book value impairment impairment Advances for projects 2033785.64-2033785.643757334.44-3757334.44 and equipment Investment funds to be 25760086.27-25760086.2725760086.27-25760086.27 liquidated Total 27793871.91 - 27793871.91 29517420.71 - 29517420.71 - 67 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 21. Assets with restrictions on the ownership or use right At the end of current year At the end of the previous year Item Restricted Book balance Book value Restricted type Restricted condition Book balance Book value Restricted condition type Restricted Account freezing and Restricted Account freezing and Monetary funds 38844838.96 38844838.96 9305118.06 9305118.06 right of use guarantee right of use guarantee Restricted Bill endorsement has Restricted Bill endorsement has Notes receivable 30291952.76 30291952.76 42665954.11 42665954.11 right of use not been derecognized right of use not been derecognized Restricted Restricted Fixed assets 581895750.64 448156480.33 Mortgage 572261261.14 454185881.22 Mortgage right of use right of use Restricted Restricted Intangible assets 44770083.00 31200960.01 Mortgage 44770083.00 32092525.33 Mortgage right of use right of use Total 695802625.36 548494232.06 669002416.31 538249478.72 - 68 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 22. Short-term borrowings RMB Balance as at the end of Balance as at the end of Item the current year the previous year Credit borrowings - 8000000.00 23. Derivative financial liabilities RMB Balance as at the end of Balance as at the end of Item the current year the previous year Foreign exchange forward contract 1278559.35 - 24. Notes payable RMB Balance as at the end of Balance as at the end of Bill type the current year the previous year Bank acceptance bills 31095540.29 31049291.49 The Group had no notes payable due but unpaid at the end of the year. 25. Accounts payable RMB Balance as at the end of Balance as at the end of Item the current year the previous year Payment for goods 282510771.35 386767637.00 Service fee 15645017.04 13817610.72 Payment for outsourcing processing 3489364.64 4584423.60 Royalties 2006578.00 2207166.50 Others 1160849.52 1171298.42 Total 304812580.55 408548136.24 As at December 31 2024 the Group had no significant accounts payable with aging of over 1 year or overdue. 26. Advances from customers RMB Balance as at the end of Balance as at the end of Item the current year the previous year Rent and others 1051491.96 1450096.30 As at December 31 2024 the Group had no significant advances from customers with aging of over 1 year. 27. Contract liabilities RMB Balance as at the end of Balance as at the end of Item the current year the previous year Payment for goods 490562.97 1436943.34 As at December 31 2024 the Group had no significant contract liabilities with aging of more than 1 year.- 69 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 28. Employee compensation payable (1) Presentation of employee compensation payable RMB Balance at the Balance as at the Increase in Decrease in Item beginning of the end of the current current year current year year year Short-term compensation 53853081.65 213903704.48 214130906.81 53625879.32 Post-employment benefits - -18732853.2218032853.22700000.00 defined contribution plans Dismissal welfare 2584080.44 6172694.98 6397364.82 2359410.60 Total 56437162.09 238809252.68 238561124.85 56685289.92 (2) Presentation of short-term compensation RMB Balance at the Balance as at the Increase in Decrease in Item beginning of the end of the current current year current year year year Salaries bonuses allowances and 50484811.72190224348.48189308677.2751400482.93 subsidies Employee welfare expenses - 6936747.83 6936747.83 - Social insurance premiums - 4740283.18 4740283.18 - Including: medical insurance -3516302.653516302.65- premiums Maternity insurance premiums - 572355.25 572355.25 - Work-related injury insurance -651625.28651625.28- premiums Housing provident fund - 8872644.55 8872644.55 - Union funds and employee 3368269.933129680.444272553.982225396.39 education funds Total 53853081.65 213903704.48 214130906.81 53625879.32 (3) Presentation of defined contribution plans RMB Balance at the Balance as at the Increase in Decrease in Item beginning of the end of the current current year current year year year Basic endowment insurance -15756686.0615056686.06700000.00 premiums Supplementary endowment -2765981.242765981.24- insurance premiums Unemployment insurance -210185.92210185.92- premium Total - 18732853.22 18032853.22 700000.00 The Group participates in the endowment insurance and unemployment insurance plans established by government agencies in accordance with the regulations. According to the plans the Group makes contributions to such plans in accordance with the prescribed standards. Except for the above monthly contributions the Group has no further payment obligations. The corresponding expenses are included in the current profit or loss or the cost of related assets when incurred.The Group shall pay RMB 15756686.06 and RMB 210185.92 to the endowment insurance and unemployment insurance plans respectively for the current year (2023: RMB 14207148.80 and RMB 296839.87). As at December 31 2024 the Group still had RMB 700000.00 of payable contributions due but not paid to the endowment insurance plan during the reporting period and the relevant payable contributions are expected to be paid after the reporting period.- 70 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 29. Taxes payable RMB Balance as at the end of Balance as at the end of Taxation the current year the previous year Corporate income tax 4720967.29 2080849.81 Individual income tax 751443.34 1080628.82 Value-added tax 592143.28 582961.29 Other taxes 789176.93 596455.22 Total 6853730.84 4340895.14 30. Other payables (1) Other payables by nature of payment RMB Balance as at the end of the Balance as at the end of the Item current year previous year Engineering equipment payment 56213373.95 67176881.34 Current accounts 53333604.97 56444481.12 Guarantee and deposits 37775687.75 48208919.61 Others 12974323.31 12698062.48 Total 160296989.98 184528344.55 (2) As at December 31 2024 the Group had no significant other payables with aging of more than 1 year or overdue. 31. Non-current liabilities maturing within one year RMB Balance as at the end of Balance as at the end of Item the current year the previous year Long-term borrowings maturing within one year (Note 47011978.04102612497.53 (V) 33) Lease liabilities maturing within one year (Note (V) 6884486.595490255.46 34) Estimated liabilities due within one year 9451090.40 - Total 63347555.03 108102752.99 32. Other current liabilities RMB Balance as at the end of Balance as at the end of Item the current year the previous year Endorsed but undue acceptance bills 30291952.76 42665954.11 Payables for returned goods 23747757.33 37244449.90 Output tax to be carried forward in the value-added tax 32312.18 172073.21 Total 54072022.27 80082477.22 - 71 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 33. Long-term borrowings RMB Balance as at the end of Balance as at the end of Item Interest rate range the current year the previous year Guaranteed borrowings (Note) 209400848.04 608190812.09 3.36%-3.41% Total 209400848.04 608190812.09 Less: long-term borrowings 47011978.04102612497.53 maturing within one year Long-term borrowings due 162388870.00505578314.56 after one year Note: SAPO Photoelectric a subsidiary of the Company obtained the loan by mortgaging the real estate such as the plant it held and the Company and Hengmei Optoelectronics Co. Ltd. provided 60% and 40% joint and several liability guarantee for the loan respectively. 34. Lease liabilities RMB Balance as at the end of Balance as at the end of Item the current year the previous year Lease liabilities 16381050.71 12177572.68 Total 16381050.71 12177572.68 Less: Lease liability maturing within one year 6884486.59 5490255.46 Lease liabilities due after one year 9496564.12 6687317.22 The Group's lease liabilities are presented as follows according to the maturity of undiscounted remaining contractual obligations: RMB Within 1 month 1- 3 months 3 - 12 months 1 - 5 years Over 5 years Total Balance as at the end of the current 1105714.51 2425877.50 3879671.64 7808943.06 3098158.97 18318365.68 year Balance as at the end of the 513149.55 2012582.22 3284024.84 5822333.46 1672592.08 13304682.15 previous year 35. Deferred income RMB Balance at the Balance as at the Increase in Decrease in Item beginning of the end of the current Formation causes current year current year year year Government Government 97485986.8915265000.0016401790.6396349196.26 grants grants received 36. Equity RMB Changes in the current year Balance at the Conversion of Balance as at the Item beginning of the New shares provident end of the Bonus issue Others Sub-total year issued fund into current year shares Total shares 506521849.00 - - - - - 506521849.00 - 72 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 37. Capital reserve RMB Balance at the Balance as at the Increase in current Decrease in current Item beginning of the end of the current year year year year Equity premium 1826482608.54 - - 1826482608.54 Other capital reserves 135117216.09 - - 135117216.09 Total 1961599824.63 - - 1961599824.63 38. Other comprehensive income RMB Amount for the current year Less: retained income Less: the included amount in other Attribut included in compreh able to other Balance at the Amount before ensive minorit Balance as at the comprehensi Attributable to Item beginning of income tax this income Less: income y end of the current ve income in parent company the year year in prior tax expenses shareho year prior period after tax periods lders and and after transferred transferr tax to current ed to profit or loss current profit or loss I. Other comprehensive income that 106877807.32 92317307.3219414000.00--4853500.0014560500.00- cannot be reclassified into profit or loss 1. Changes in fair value of other equity 106877807.32 92317307.3219414000.00--4853500.0014560500.00- instrument investments II. Other comprehensive income to be 1290073.49-1290073.49--(1290073.49)-- reclassified into profit or loss later 1. Changes in the fair value of other debt -------- investments 2. Translation differences of foreign 1290073.49-1290073.49--(1290073.49)-- currency financial statements Total of other comprehensive income 93607380.81 19414000.00 1290073.49 - 4853500.00 13270426.51 - 106877807.32 39. Surplus reserves RMB Balance at the Balance as at the Increase in current Decrease in current Item beginning of the end of the current year year year year Statutory surplus reserve 104262315.64 - - 104262315.64 40. Undistributed profits RMB Item Current year Previous year Undistributed profits at the beginning of the 216160896.14170636610.95 year before adjustment Total adjusted undistributed profits at the -- beginning of the year Adjusted undistributed profit at the beginning 216160896.14170636610.95 of the year Plus: net profit attributable to shareholders of 89371134.2479268250.45 the parent company in the current year Less: Withdrawal of statutory surplus reserves - 3352654.32 Distribution of dividends of ordinary 32923916.7230391310.94 shares (Note) Undistributed profits at the end of the year 272608113.66 216160896.14 Note: according to the resolution of the General Meeting on May 29 2024 the Company distributed cash dividends of RMB 0.65 (including tax) for every 10 shares based on the share capital of 506521849 shares as at December 31 2023 with a total cash dividends of RMB 32923916.72 (tax inclusive).- 73 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 41. Operating revenue and operating costs (1) Operating revenue and operating costs RMB Amount for the current year Amount for the previous year Item Revenue Cost Revenue Cost Primary business 3275150434.05 2748312498.75 3031175008.58 2524464550.09 Other business 60132574.63 47547436.07 48503366.87 37167294.44 Total 3335283008.68 2795859934.82 3079678375.45 2561631844.53 (2) Primary business by product RMB Amount for the current year Amount for the previous year Product type Income from Cost of primary Income from Cost of primary primary business business primary business business Polarizer sales 3161332478.082720719735.992885625542.772463137348.05 business Property leasing and 113817955.9727592762.76145549465.8161327202.04 others Total 3275150434.05 2748312498.75 3031175008.58 2524464550.09 (3) Primary business by region RMB Amount for the current year Amount for the previous year Main business area Income from Cost of primary Income from Cost of primary primary business business primary business business Domestic 3113083695.45 2621542725.57 2914588072.35 2427944202.03 Overseas 162066738.60 126769773.18 116586936.23 96520348.06 Total 3275150434.05 2748312498.75 3031175008.58 2524464550.09 (4) Description of performance obligations The Group's sales of goods are mainly the production and sales of polarizers and textiles-related goods. For goods sold to customers the Group recognizes revenue when the right of control of the goods is transferred that is when the goods are delivered to the designated place of the other party and signed by the other party. The Group recognizes a receivable when the goods are delivered to the customer because the delivery of the goods to the customer represents an unconditional right to receive the contractual consideration and the maturity of the payment depends only on the passage of time. When the customer makes a prepayment for goods the Group recognizes the transaction amount received as a contract liability and recognizes the revenue when the goods are delivered to the customer.The Group provides property services to customers and such services represent performance obligations performed over a period of time. For property service the Group recognizes revenue in the course of providing property service. (5) Description of allocation to remaining performance obligations As of December 31 2024 the amount of contract liabilities corresponding to the performance obligations that the Group has already signed contracts for but has not yet fulfilled or has not fully fulfilled is RMB 490562.97 which will be recognized as revenue when the customer obtains the control over goods.- 74 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 42. Taxes and surcharges RMB Amount for the Amount for the Item current year previous year Property taxes 7240576.84 6184638.83 Urban maintenance and construction tax 397643.06 555230.22 Education surcharge 287055.45 400403.17 Other taxes 2310230.30 2153350.91 Total 10235505.65 9293623.13 43. Selling and distribution expenses RMB Amount for the Amount for the Item current year previous year Employee compensation 15245568.88 17089203.74 Sales service fee 19491891.54 10639607.95 Business entertainment expenses 1117751.47 972733.63 Others 6405391.58 5494125.29 Total 42260603.47 34195670.61 44. G&A expenses RMB Amount for the Amount for the Item current year previous year Employee compensation 90301081.26 90991755.13 Depreciation cost 10962929.91 11118057.18 Professional service fees 10520874.85 8841449.74 Amortization of intangible assets 4575688.69 4891672.68 Property leasing and utilities 2441383.42 4086627.39 Business entertainment expenses 1193877.91 1439231.97 Others 14351985.54 13002616.44 Total 134347821.58 134371410.53 45. R&D expenses RMB Amount for the Amount for the Item current year previous year Employee compensation 15844594.49 14827264.16 Material consumption 83483679.76 85216243.35 Depreciation cost 3275385.23 3389328.35 Others 1208163.43 1220205.06 Total 103811822.91 104653040.92 The Group has no development expenses of R&D projects that meet the capitalization requirements.- 75 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 46. Financial expenses RMB Amount for the current Amount for the previous Item year year Interest expenses (Note) 17858022.73 27339804.17 Less: interest income 7272362.76 12947471.64 Exchange differences (3772940.12) 4332702.63 Service fee and others 5308436.20 5674466.00 Total 12121156.05 24399501.16 Note: The interest expenses of the lease liabilities in 2024 is RMB 721945.56. 47. Other income RMB Amount for the current Amount for the previous Classification by nature year year Transfer-in of deferred income 16401790.63 22107734.21 Support funds for industry development (Note 1) 7988744.44 11049910.96 Support funds for enterprise development (Note 2) 989098.49 553455.00 Tax incentives 16014588.22 16881612.68 Others 89885.75 147651.06 Total 41484107.53 50740363.91 Note 1: The support funds for industry development mainly include the 2024 Special Science and Technology Innovation Funds (the first batch) funded by the Science and Technology Innovation Bureau of Pingshan District Shenzhen City the Foreign Trade Quality Growth Support Plan of the Bureau of Commerce and the Industry Standard Formulation Project Subsidies of the Shenzhen Administration for Market Regulation.Note 2: The support funds for enterprise development mainly include the Steady Growth Funds of Industry and Information Technology Bureau of Shenzhen Municipality and the One-time Subsidy for Job Expansion of Guangdong Provincial Social Insurance Fund Administration. 48. Investment (loss) income RMB Amount for the current Amount for the previous Item year year Losses on long-term equity investments accounted for (10701895.08)(6898983.89) under equity method Investment income from disposal of long-term equity 833613.28- investments Investment income obtained during holding the financial 13846181.9015519035.33 assets held for trading Investment income (loss) from derecognition of derivative (6454000.00)- financial liabilities Dividend income from investments in other equity 2310786.012208584.12 instrument during the holding period Total (165313.89) 10828635.56 - 76 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 49. Gains from changes in fair value RMB Amount for the Amount for the Sources of gains from changes in fair value current year previous year Financial assets held for trading 2413062.80 2151780.82 Derivative financial liabilities (1278559.35) - Total 1134503.45 2151780.82 50. Credit loss gains RMB Amount for the Amount for the Item current year previous year Gains on impairment of accounts receivable (Note (V) 4 (2)) 5093840.35 4133136.51 Gains on impairment of other receivables (Note (V) 7 (3)) 6606.31 402638.63 Total 5100446.66 4535775.14 51. Asset impairment loss RMB Amount for the Amount for the Item current year previous year Inventory depreciation loss (123538967.06) (126089709.42) Fixed asset impairment loss (6863474.54) - Other asset impairment loss (2020667.15) - Total (132423108.75) (126089709.42) 52. Non-operating revenue RMB Amount for the Amount for the Amount included in Item current year previous year the current non- recurring profit or loss Gains from unclaimed payables 1439654.31 768398.45 1439654.31 Liquidated damages 275672.99 252000.00 275672.99 Insurance compensation 24911.31 193275.48 24911.31 Gains from the damage and scrapping 341.42 341.42- of non-current assets Others 64506.89 236205.33 64506.89 Total 1805086.92 1449879.26 1805086.92 - 77 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 53. Non-operating expenses RMB Amount included in Amount for the Amount for the Item the current non- current year previous year recurring profit or loss Losses on scrapping of non-current 51361.87115541.9951361.87 assets Amercement outlay 44000.00 42319.72 44000.00 Compensation expenses 468146.00 7926787.08 468146.00 Other losses 134509.84 121152.72 134509.84 Total 698017.71 8205801.51 698017.71 54. Income tax expenses (1) List of income tax expenses RMB Amount for the current Amount for the Item year previous year Income tax expenses for the current period 8562225.60 8563917.13 Deferred tax expenses 1264876.43 10843814.34 Total 9827102.03 19407731.47 (2) Adjustment process of accounting profits and income tax expenses RMB Amount for the Amount for the Item current year previous year Total profits 152883868.41 146544210.05 Income tax expenses calculated at statutory tax rate 38220967.10 36636052.51 Influence of different tax rates applicable to subsidiaries (15431945.83) (14393929.80) Influence of adjustments to the income tax for the prior years (27243.77) 27700.05 Influence of non-taxable income (3079800.79) (1126262.45) Influence of nondeductible costs expenses and losses 5591965.60 2266174.69 Utilization of unrecognized deductible losses and deductible (7061678.51)(25587.79) temporary differences from prior periods and their tax effects Tax effects of unrecognized deductible losses and deductible 4078341.2810154045.89 temporary differences Changes in deferred tax assets/liabilities at the beginning of the -(21128.84) period due to tax rate adjustments Additional deduction for R&D expenses (12458381.02) (13995916.51) Others (5122.03) (113416.28) Income tax expenses 9827102.03 19407731.47 - 78 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 55. Notes to items in statement of cash flows (1) Cash related to operating activities Other cash received related to operating activities RMB Amount for the Amount for the Item current year previous year Letter of credit guarantee and deposit 30652489.87 37450879.69 Interest income 9057486.70 18578870.77 Government grants 24242842.93 16029942.02 Current accounts and others 23056150.45 15217631.42 Total 87008969.95 87277323.90 Other cash paid related to operating activities RMB Amount for the Amount for the Item current year previous year Letter of credit guarantee and deposit 57908823.39 34639361.27 Out-of-pocket expenses 68667614.18 71894532.84 Current accounts and others 27179768.77 10910080.05 Total 153756206.34 117443974.16 (2) Cash related to investing activities Other cash received related to significant investing activities RMB Amount for the Amount for the Item current year previous year Structural deposits 950000000.00 950000000.00 Monetary fund 747000000.00 245000000.00 Certificates of deposit and others - 259000000.00 Total 1697000000.00 1454000000.00 Other cash paid related to significant investing activities RMB Amount for the Amount for the Item current year previous year Structural deposits 950000000.00 1400000000.00 Monetary fund 649000000.00 290500000.00 Foreign exchange forward contract 6454000.00 - Certificates of deposit and others - 150000000.00 Total 1605454000.00 1840500000.00 - 79 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 55. Notes to items in statement of cash flows - continued (2) Cash related to investing activities - continued Other cash received related to investing activities RMB Amount for the Amount for the Item current year previous year Wealth management investment and structured deposits 1697000000.00 1454000000.00 Other cash paid related to investing activities RMB Amount for the Amount for the Item current year previous year Wealth management investment and structured deposits 1605454000.00 1840500000.00 (3) Cash related to financing activities Other cash paid related to financing activities RMB Amount for the Amount for the Item current year previous year Lease payments 9508462.57 8776024.71 Changes in various liabilities arising from financing activities RMB Balance at the Increase in current year Decrease in current year Balance as at the Item beginning of the Non-cash Non-cash end of the Cash changes Cash changes year changes changes current year Short-term 8000000.00--8000000.00-- borrowings Long-term 608190812.09-18176583.78416966547.83-209400848.04 borrowings (Note) Lease liabilities 12177572.68-13711940.609508462.57-16381050.71 (Note) Total 628368384.77 - 31888524.38 434475010.40 - 225781898.75 Note: long-term borrowings and lease liabilities include those maturing within one year. (4) The Group does not present cash flows on a net basis. (5) The Group has no significant activities that do not involve current cash receipts and payments but affect the financial position of the enterprise or may affect the cash flows of the enterprise in the future.- 80 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 56. Supplementary information to statement of cash flows (1) Supplementary information to the statement of cash flows RMB Amount for the Amount for the Supplementary information current year previous year 1. Adjustment of net profit to cash flows from operating activities: Net profit 143056766.38 127136478.58 Plus: provision for assets impairment 132423108.75 126089709.42 Provision for credit losses (reversal) (5100446.66) (4535775.14) Depreciation of fixed assets and investment properties 237717328.95 235884938.02 Amortization of right-of-use assets 9651343.75 8257857.90 Amortization of intangible assets 4575688.69 4891672.68 Amortization of long-term deferred expenses 2934915.74 2160430.42 Losses (gains) from disposal of fixed assets intangible -(1.72) assets and other long-term assets Losses (gains) on retirement of non-current assets 51020.45 113290.32 Losses from changes in fair value (income) (1134503.45) (2151780.82) Financial expenses (income) 17301161.66 26883671.86 Investment loss (income) 165313.89 (10828635.56) Decrease (increase) in deferred tax assets 1684854.22 9218448.87 Increase (decrease) in deferred tax liabilities (419977.79) 1625365.47 Decrease (increase) in inventories (176903495.67) (304034232.92) Decrease (increase) in operating receivables 29434877.96 (126515773.08) Increase (decrease) in operating payables (164173431.78) 90571075.50 Net cash flows from operating activities 231264525.09 184766739.80 2. Net changes in cash and cash equivalents: Ending balance of cash and cash equivalents 302084839.35 461420457.33 Less: beginning balance of cash and cash equivalents 461420457.33 874474834.46 Net increase (decrease) in cash and cash equivalents (159335617.98) (413054377.13) (2) Composition of cash and cash equivalents RMB Balance as at the end Balance as at the end Item of the current year of the previous year I. Cash 302084839.35 461420457.33 Including: cash on hand 4751.69 1710.40 Unrestricted bank deposits 302080087.66 461418746.93 Other unrestricted monetary funds - - II. Cash equivalents - - III. Balance of cash and cash equivalents at the end of the year 302084839.35 461420457.33 (3) As of the end of the year the Group had no cash and cash equivalents with restricted use that were still presented as such.- 81 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 56. Supplementary information to the statement of cash flows - continued (4) Monetary funds other than cash and cash equivalents RMB Balance as at the end Balance as at the end Item Reason of the current year of the previous year Not available for Bill and L/C guarantee 35443338.96 5905118.06 payment at any time Demand interest and 7-day notice Not available for 31765.511548872.61 deposit interest payment at any time Others 3401500.00 3400000.00 Account freezing Total 38876604.47 10853990.67 57. Monetary items in foreign currency (1) Foreign currency monetary items RMB Foreign currency Conversion at the end Exchange rate of Item balance at the end of of the current year conversion the current year RMB balance Monetary funds 84414773.46 Including: USD 5628812.10 7.1884 40462152.89 JPY 934188594.29 0.0462 43190341.28 HKD 823195.78 0.9260 762279.29 Accounts receivable 38996397.54 Including: USD 5389057.25 7.1884 38738699.13 HKD 278280.00 0.9260 257698.41 Other receivables 506973.56 Including: USD 70526.62 7.1884 506973.56 Accounts payable 165329381.79 Including: USD 2549681.14 7.1884 18328127.89 JPY 3179297798.00 0.0462 146988475.10 HKD 13800.00 0.9260 12778.80 Other payables 6609813.60 Including: USD 879786.00 7.1884 6324253.68 JPY 5555131.00 0.0462 256830.37 HKD 31025.43 0.9260 28729.55 58. Lease (1)As a lessee The Group leases a number of assets including houses and buildings for lease terms of 1 to 10 years. The above right- of-use assets cannot be used for purposes such as borrowing mortgages guarantees etc.The Group had no variable lease payments that were not included in the measurement of lease liabilities.- 82 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (V) Notes to financial statements - continued 58. Leases - continued (1) As a lessee - continued The short-term lease expenses subject to simplified accounting treatment and recognized in the current profit or loss in this year amounted to RMB 950508.89 (previous year: RMB 558957.38).The total cash outflows related to leases in the current year amounted to RMB 10458971.46 (previous year: RMB 9334982.09). (2) As a lessor Operating lease as lessor RMB Including: revenue related to variable lease payments Item Lease income not included in lease receipts Buildings and constructions 96066371.44 - The operating leases of the Group as the lessor are related to houses and buildings with lease terms ranging from 1 to 15 years.The revenue related to operating leases in the current year amounted to RMB 96066371.44 (previous year: RMB 97558143.88) of which the revenue related to variable lease payments not included in the lease receipts amounted to RMB 0 (previous year: RMB 0).RMB Undiscounted lease receipts Item Amount at the end of Amount at the end of the current year previous year The first year after the balance sheet date 66825466.35 74399477.80 The second year after the balance sheet date 49946457.62 54475653.29 The third year after the balance sheet date 31103495.38 44564404.34 The fourth year after the balance sheet date 8785825.58 29708115.33 The fifth year after the balance sheet date 6625510.75 9346233.32 Subsequent years 5106929.55 7327310.40 Total undiscounted lease receipts 168393685.23 219821194.48 - 83 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024（VI） R&D expenditures (1) Presented by nature of expenses RMB Amount for the current Amount for the previous Item year year Employee compensation 15844594.49 14827264.16 Material consumption 83483679.76 85216243.35 Depreciation cost 3275385.23 3389328.35 Others 1208163.43 1220205.06 Total 103811822.91 104653040.92 Including: expensed R&D expenditures 103811822.91 104653040.92 Capitalized R&D expenditures - - (2) The Group has no development expenses of R&D projects that meet the capitalization requirements. (3) The Group has no significant outsourced projects under research.（VII） Changes in the scope of consolidation The consolidation scope of the Group has not changed.（VIII） Equity in other entities 1. Interest in subsidiary (1) Structure of the enterprise group Shareholding ratio of Method Registered capital Registration the Company (%) of Name of subsidiaries Main premise Business nature (RMB) place acquisitio Direct Indirect n Shenzhen Lisi Industrial Establish Shenzhen RMB 2360000.00 Shenzhen Property leasing 100.00 - Development Co. Ltd. ment Shenzhen Huaqiang Hotel Establish Shenzhen RMB 10005300.00 Shenzhen Property leasing 100.00 - Co. Ltd. ment Shenzhen Shenfang Property Establish Shenzhen RMB 1600400.00 Shenzhen Property management 100.00 - Management Co. Ltd. ment Shenzhen MCENTURY Production and sales of Establish Shenzhen RMB 13000000.00 Shenzhen 100.00 - Garment Co. Ltd. textiles ment Shenzhen Shenfang Sungang Establish Property Management Co. Shenzhen RMB 1000000.00 Shenzhen Property management 100.00 - ment Ltd.Production and sales of Acquisiti SAPO Photoelectric Shenzhen RMB 583333333.00 Shenzhen 60.00 - polarizers on Establish SATO (Hong Kong) Limited Hong Kong HKD 10000.00 Hong Kong Polarizer sales - 100.00 ment - 84 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (VIII) Interests in other entities - continued 1. Interests in subsidiary - continued (2) Significant non-wholly-owned subsidiaries RMB Profit or loss Dividends declared to Balance of minority Name of Shareholding ratio by attributable to be distributed to interests at the end of subsidiaries minority shareholders minority shareholders minority shareholders the current year in the current year in the current year SAPO 40.00%53685632.14-1283450723.88 Photoelectric (3) Key financial information of significant non-wholly-owned subsidiaries RMB SAPO Photoelectric Balance as at the end Balance as at the end Item of the current year/ of the previous year/ Amount for the Amount for the current year previous year Current assets 2039673042.84 2224998868.32 Non-current assets 1998903130.31 2215651449.74 Total assets 4038576173.15 4440650318.06 Current liabilities 567603106.30 762685435.65 Non-current liabilities 267706992.70 608912888.60 Total liabilities 835310099.00 1371598324.25 Operating revenue 3230006072.51 2944147907.27 Net profit 134214080.34 119670570.33 Total comprehensive income 134214080.34 119968303.83 Cash flows from operating activities 205666636.23 168163478.05 2. Equity in joint ventures or associates Summarized financial information of insignificant joint ventures and associates RMB Balance as at the end Balance as at the end of the current year/ of the previous year/ Item Amount for the Amount for the current year previous year Joint ventures: Total of investment book value 111555887.28 122370494.08 Total amounts of the following items calculated at shareholding ratio - Net profit (loss) (10814606.80) (7135777.68) -Other comprehensive income - - -Total comprehensive income (10814606.80) (7135777.68) Associates: Total of investment book value 3272138.76 5311526.62 Total amounts of the following items calculated at shareholding ratio -Net profit 112711.72 236793.79 -Other comprehensive income - 99168.85 -Total comprehensive income 112711.72 335962.64 - 85 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024（IX） Government grants (1) As at December 31 2024 the Group had no government grants recognized at the amount receivable. (2) Liability items involving government grants RMB Amount at the Amount included in Amount included Other changes in Amount at the end of Related to assets/ Liabilities beginning of the New grants in the non-operating in other income the current year current year Related to income year current year revenue in the in the current current year year Deferred 97485986.89 15265000.00 16401790.63 - 96349196.26 Related to assets income Total 97485986.89 15265000.00 - 16401790.63 - 96349196.26 (3) Government grants included in the current profit or loss RMB Amount for the current Amount for the Grants year previous year Other income 25379633.56 33711100.17 （X） Risks associated with financial instruments The group's main financial instruments include monetary funds financial assets held for trading notes receivable accounts receivable receivables financing other receivables other equity instrument investments short-term borrowings derivative financial liabilities notes payable accounts payable other payables other current liabilities and long-term borrowings etc. At the end of the year the financial instruments held by the group are as follows and the details are described in note (v). Risks associated with these financial instruments and the risk management policies adopted by the group to mitigate these risks are described below. The group's management manages and monitors these exposures to ensure that the risks are controlled within certain limits.- 86 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (X) Risks related to financial instruments - continued RMB Amount at the end of Amount at the end of the Item current year previous year Financial assets Measured at fair value through current profit or loss Financial assets held for trading 731419904.42 821946114.68 Measured at fair value through other comprehensive income Receivables financing 6804603.68 22839459.13 Other equity instrument investments 165402900.00 145988900.00 Measured at amortized costs Monetary funds 340961443.82 472274448.00 Notes receivable 47305221.88 50963943.01 Accounts receivable 863731936.89 820134833.95 Other receivables 3596543.96 3219287.77 Financial liabilities Measured at fair value through current profit or loss Derivative financial liabilities 1278559.35 - Measured at amortized costs Short-term borrowings - 8000000.00 Notes payable 31095540.29 31049291.49 Accounts payable 304812580.55 408548136.24 Other payables 160296989.98 184528344.55 Other current liabilities 30291952.76 42665954.11 Long-term borrowings 209400848.04 608190812.09 The group uses sensitivity analysis techniques to analyze the possible impact of reasonable and possible changes in risk variables on the current profit or loss and shareholders' equity. As any risk variable seldom changes in isolation and the correlation between the variables will have a significant effect on the final affected amount of the change of a risk variable the following contents are carried out under the assumption that the change of each variable is independently: 1. Risk management objectives policies and procedures and changes in the current year The group's objective in risk management is to achieve an appropriate balance between risk and return minimize the negative impact of risk on the group's operating performance and maximize the interests of shareholders and other equity investors. Based on this risk management objective the basic strategy of the group's risk management is to identify and analyze various risks faced by the group establish an appropriate risk tolerance bottom line and conduct risk management and timely and reliably supervise various risks to control risks within a limited scope.- 87 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (X) Risks related to financial instruments - continued 1. RISK MANAGEMENT OBJECTIVES POLICIES AND PROCEDURES AND CHANGES IN THE CURRENT YEAR - CONTINUED 1.1 MARKET RISK 1.1.1 FOREIGN EXCHANGE RISK Foreign exchange risk refers to the risk of losses arising from the exchange rate fluctuation. The Group's exposure to foreign exchange risk is mainly related to the USD the JPY and the HKD. Except for some of the Group's import purchases and export sales in Chinese mainland which were mainly settled in USD JPY and HKD the Group's other major business activities were settled in RMB.As of December 31 2024 except for the foreign currency monetary items in Note (V) 57 the assets and liabilities of the Group were all in RMB. The foreign currency balances of assets and liabilities (converted into RMB) listed in the table below may expose the Group to foreign exchange risks that could impact its operating performance.RMB Balance as at the end of the current Item year Assets Liabilities USD 79707825.58 24652381.57 JPY 43190341.28 147245305.47 HKD 1019977.70 41508.35 The Group closely monitors the impact of exchange rate changes on the Group's foreign exchange risk and will take measures to avoid foreign exchange risk according to the actual situation.Sensitivity analysis of foreign exchange risk With other variables unchanged the pre-tax impact of reasonable changes in exchange rates on the current profit or loss and shareholders' equity is as follows: RMB CURRENT YEAR PREVIOUS YEAR FLUCTUATION IN ITEM IMPACT ON IMPACT ON IMPACT ON IMPACT ON EXCHANGE RATE PROFIT SHAREHOLDERS PROFIT SHAREHOLDERS ' EQUITY ' EQUITY ALL REVALUATION FOREIGN AGAINST RMB BY (2401052.54) (2401052.54) (11522564.42) (11522564.42) CURREN 5% CIES ALL DEPRECIATION FOREIGN AGAINST RMB BY 2401052.54 2401052.54 11522564.42 11522564.42 CURREN 5% CIES 1.1.2. Interest rate risk - risk of changes in cash flows The Group's risk of changes in cash flows of financial instruments due to changes in interest rates is mainly related to bank borrowings with floating rates. The Group continues to closely monitor the impact of interest rate changes on the Group's interest rate risk. The Group's policy is to maintain the floating rate of these borrowings and there are currently no interest rate swap arrangements.- 88 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (X) Risks related to financial instruments - continued 1. RISK MANAGEMENT OBJECTIVES POLICIES AND PROCEDURES AND CHANGES IN THE CURRENT YEAR - CONTINUED 1.1 MARKET RISK - CONTINUED 1.1.2. Interest rate risk - risk of changes in cash flows - continued SENSITIVITY ANALYSIS OF INTEREST RATE RISK: WITH OTHER VARIABLES UNCHANGED THE PRE-TAX IMPACT OF REASONABLE CHANGES IN INTEREST RATES ON THE CURRENT PROFIT OR LOSS AND SHAREHOLDERS' EQUITY IS AS FOLLOWS: RMB CURRENT YEAR PREVIOUS YEAR FLUCTUATION ITEM IN EXCHANGE IMPACT ON IMPACT ON IMPACT ON IMPACT ON RATE PROFIT SHAREHOLDER PROFIT SHAREHOLDER S' EQUITY S' EQUITY FLOATING RATE UP 1% (2092051.50) (2092051.50) (6154214.55) (6154214.55) BORROWINGS FLOATING RATE DOWN 1% 2092051.50 2092051.50 6154214.55 6154214.55 BORROWINGS 1.2. Credit risk As of December 31 2024 the maximum credit risk exposure that may cause financial losses to the Group mainly comes from the losses of the Group's financial assets due to the failure of the other party to the contract to perform its obligations including: monetary funds financial assets held for trading notes receivable accounts receivable receivables financing and other receivables. On the balance sheet date the book value of the Group's financial assets represents its maximum credit risk exposure.In order to reduce the credit risk the Group arranges special personnel to determine the credit line conduct credit approval and implement other monitoring procedures to ensure that necessary measures are taken to recover overdue debts. In addition the Group reviews the recovery of financial assets on each balance sheet date to ensure that adequate provision for credit losses has been made for the relevant financial assets. Therefore the management of the Group believes that the credit risk assumed by the Group has been greatly reduced.The Group's monetary funds are deposited in banks with high credit ratings so the monetary funds only have low credit risk.As of December 31 2024 the balance of accounts receivable from the top five customers of the Group was RMB 559026608.51 accounting for 61.96% of the balance of accounts receivable of the Group. In addition the Group has no other significant credit risk exposure concentrated in a single financial asset or a portfolio of financial assets with similar characteristics. 1.3. Liquidity risk When managing liquidity risk the Group maintains cash and cash equivalents that the management believes are sufficient and monitors them to meet the Group's operational needs and reduce the impact of fluctuations in cash flows.The Group's management monitors the use of bank borrowings and ensures compliance with loan agreements.- 89 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (X) Risks related to financial instruments - continued 1. RISK MANAGEMENT OBJECTIVES POLICIES AND PROCEDURES AND CHANGES IN THE CURRENT YEAR - CONTINUED 1.3. Liquidity risk - continued AS AT DECEMBER 31 2024 THE UNUSED COMPREHENSIVE BANK CREDIT LINE OF THE GROUP WAS RMB 1380340000 THE GROUP'S FINANCIAL LIABILITIES HELD ARE PRESENTED AS FOLLOWS BASED ON THE MATURITY OF UNDISCOUNTED REMAINING CONTRACTUAL OBLIGATIONS: RMB Item Within 1 year 1 - 5 years Over 5 years Total Notes payable 31095540.29 - - 31095540.29 Accounts payable 304812580.55 - - 304812580.55 Other payables 160296989.98 - - 160296989.98 Other current liabilities 30291952.76 - - 30291952.76 Long-term borrowings 52192649.82 169663448.78 - 221856098.60 Lease liabilities 7411263.65 7808943.06 3098158.97 18318365.68 Derivative financial 1278559.35--1278559.35 liabilities 2. Transfer of financial assets 2.1 Classification of transfer methods RMB Transfer Nature of transferred Amount of Derecognition Judgment basis for derecognition method financial assets transferred financial assets After the accounts receivable is factored the factor has no right to recover from the Group and almost Factoring Accounts receivable 59923300.74 Derecognized all the risks and rewards of the ownership of the accounts receivable have been transferred The credit risk level of the acceptance bank of the Transfer by Outstanding bank bank acceptance bill transferred by endorsement is endorsemen acceptance bills classified 34926518.99 Derecognized relatively high and almost all the risks and t as receivables financing rewards of the ownership of the corresponding receivables financing have been transferred The credit risk level of the acceptance bank of the Transfer by Outstanding bank bank acceptance bill transferred by endorsement is endorsemen acceptance bills classified 30291952.76 Not derecognized not high and almost all the risks and rewards of t as notes receivable the ownership of the relevant notes receivable are retained Total 125141772.49 2.2 Financial assets derecognized due to transfer RMB Amount of Gains or losses Transfer method Item derecognized related to of financial assets financial assets derecognition Transfer by Receivables financing 34926518.99 - endorsement Accounts receivable Factoring 59923300.74 - Total 94849819.73 - - 90 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (X) Risks related to financial instruments - continued 2. Transfer of financial assets - continued 2.3 Transfer of financial assets with continued involvement RMB Amount of assets Amount of Asset transfer arising from liabilities arising Item method continued from continued involvement involvement Transfer by Notes receivable 30291952.76 30291952.76 endorsement Total 30291952.76 30291952.76（XI） Disclosure of fair value 1. Fair value of assets and liabilities measured at fair value at the end of the year RMB Fair value at the end of current year Item Measured at the Measured at the Measured at the Total fair value of the fair value of the fair value of the 1st level 2nd level 3rd level Continuous fair value measurement (I) Financial assets held for trading - 731419904.42 - 731419904.42 (II) Receivables financing - - 6804603.68 6804603.68 (III) Other equity instrument --165402900.00165402900.00 investments Total assets constantly measured at -731419904.42172207503.68903627408.10 fair value (IV) Derivative financial liabilities - 1278559.35 - 1278559.35 Total liabilities constantly measured -1278559.35-1278559.35 at fair value 2. Qualitative and quantitative valuation techniques and important parameters of sustainable and non- sustainable items measured on the basis of fair value of level 2 RMB Fair value at the Item Valuation techniques Input value end of current year Financial assets held Discounted cash flow 731419904.42 Expected rate of return for trading method The contracted delivery exchange rate Derivative financial Discounted cash flow under forward foreign exchange contracts 1278559.35 liabilities method and the market forward exchange rate as of the balance sheet date 3. Qualitative and quantitative valuation techniques and important parameters of sustainable and non- sustainable items measured on the basis of fair value of level 3 RMB Fair value at the end Item Valuation techniques Input value of current year Receivables financing 6804603.68 Discounted cash flow method Discount rate P/B ratio of similar listed Comparable Public Company Method Other equity instrument companies 165402900.00 investments Comparable earnings method Market price Statement adjustment method Book value - 91 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (XI) Disclosure of fair value Disclosure of fair value - continued 4. Condition of fair value of financial assets and financial liabilities not measured at fair value Financial assets and liabilities not measured at fair value mainly include: monetary funds notes receivable accounts receivable other receivables notes payable accounts payable other payables other current liabilities and long-term borrowings etc.The Group's management believes that the book value of financial assets and financial liabilities measured at amortized costs in the financial statements is close to the fair value of such assets and liabilities.（XII） Related parties and related party transactions 1. Parent company Registered Proportion of voting Parent company's Name Registration place Business nature capital rights of the parent shareholding ratio in (RMB '0000) company in the the Company (%) Company (%) Floor 18 Investment Equity Shenzhen Investment Holdings Building Shennan investments 3318600.0046.2146.21 Co. Ltd. Road Futian District real estate Shenzhen development etc.Parent company of the Company: the parent company of the Company is a wholly state-owned company approved and authorized by the Shenzhen Municipal Government which exercises the functions of the investor in accordance with the law for the state-owned enterprises within the authorized scope.During the reporting period the registered capital of the parent company changed as follows: RMB '0000 Balance at the beginning Balance as at the end of Increase in current year Decrease in current year of the year the current year 3235900.0082700.00-3318600.00 2. Subsidiaries See Note (VIII) 1 for details of the subsidiary. 3. Joint ventures and associates of the Company See Note (V) 10 for details of the Company's joint ventures and associates.- 92 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (XII) Related parties and related party transactions - continued 4. Other related parties of the Company Name of related party Relationship with the Company The Company's participated company whose chairman is appointed by the Shenzhen Xinfang Knitting Factory Co. Ltd.Group The Company's participated company whose chairman is appointed by the Shenzhen Dailisi Underwear Co. Ltd.Group Minority shareholder of the Company's subsidiary SAPO Photoelectric; one of Hengmei Optoelectronics Co. Ltd.the directors of the company is a supervisor of SAPO Photoelectric Subsidiary of the parent company of the Company Shenzhen Investment Shenzhen Shentou Property Development Co. Ltd.Holdings Co. Ltd.Subsidiary of the parent company of the Company Shenzhen Investment Shenzhen Seg Longyan Energy Technology Co. Ltd.Holdings Co. Ltd.Subsidiary of the parent company of the Company Shenzhen Investment Guoren P&C Insurance Co. Ltd. Shenzhen Branch Holdings Co. Ltd.Subsidiary of the parent company of the Company Shenzhen Investment Shenzhen Talent Service Center (Shenzhen Talent Market) Holdings Co. Ltd.Subsidiary of the parent company of the Company Shenzhen Investment Shenzhen Property Management Co. Ltd.Holdings Co. Ltd.Shenzhen Cultural Enterprise Development Co. Ltd. Subsidiary of the parent company of the Company Shenzhen Investment (Headquarters) Holdings Co. Ltd.Subsidiary of the parent company of the Company Shenzhen Investment Shenzhen Investment Holdings Development Co. Ltd.Holdings Co. Ltd.Shenzhen Investment Holdings Digital Technology Co. Subsidiary of the parent company of the Company Shenzhen Investment Ltd. Holdings Co. Ltd.Shenzhen Talent Recruitment International Co. Ltd. Subsidiary of the parent company of the Company Shenzhen Investment (Headquarters) Holdings Co. Ltd.Subsidiary of the parent company of the Company Shenzhen Investment Shenzhen Leaguer Education Co. Ltd. (Headquarters) Holdings Co. Ltd.Shenzhen Legal Training Center Co. Ltd. Subsidiary of the parent company of the Company Shenzhen Investment Holdings Co. Ltd.Shenzhen Investment Holdings Sports Event Development Subsidiary of the parent company of the Company Shenzhen Investment Co. Ltd. Holdings Co. Ltd.Shenzhen Investment Building Hotel Co. Ltd. Subsidiary of the parent company of the Company Shenzhen Investment Holdings Co. Ltd.Shenzhen Investment Building Property Management Co. Subsidiary of the parent company of the Company Shenzhen Investment Ltd. Holdings Co. Ltd. 5. Related party transactions (1) Procurement of goods/receipt of labor services Amount for the Amount for the Related party Related party transactions current year previous year Shenzhen Seg Longyan Energy Technology Co. Ltd. Purchase of electricity 1146803.41 1075289.19 Guoren P&C Insurance Co. Ltd. Shenzhen Branch Insurance premiums 285104.25 - Shenzhen Cultural Enterprise Development Co. Ltd.Exhibition fees 136298.00 - (Headquarters) Shenzhen Talent Service Center (Shenzhen Talent Outsourcing service fee 125596.14 - Market) Shenzhen Investment Holdings Sports Event Marketing expenses 80000.00 - Development Co. Ltd.Shenzhen Investment Holdings Digital Technology Information construction 78655.84 - Co. Ltd.Shenzhen Investment Holdings Development Co. Ltd. Rental 65786.40 - Shenzhen Property Management Co. Ltd. Property management fee 47258.75 - Shenzhen Legal Training Center Co. Ltd. Training expenses 34597.00 - Shenzhen Leaguer Education Co. Ltd. (Headquarters) Training expenses 20449.02 - Shenzhen Guanhua Printing and Dyeing Co. Ltd. Interest expenses 9025.99 16237.39 Shenzhen Talent Recruitment International Co. Ltd.Training expenses 7000.00 - (Headquarters) Optical film materials and Hengmei Optoelectronics Co. Ltd. 2874.60 4540435.30 processing Total 2039449.40 5631961.88 - 93 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (XII) Related parties and related party transactions - continued 5. Related party transactions - continued (2) Sale of goods RMB Related party Amount for the Amount for the Related party transactions current year previous year Hengmei Optoelectronics Co. Ltd. Polarizer - 4744631.12 Shenzhen Investment Building Hotel Textiles - 163729.20 Co. Ltd.Shenzhen Shentou Property Textiles - 65634.51 Development Co. Ltd.Shenzhen Investment Building Textiles - 35522.12 Property Management Co. Ltd.Shenzhen Investment Holdings Co.Textiles - 15371.68 Ltd.Total - 5024888.63 (3) Loans from and to related parties RMB Amount Related party Start date Maturity date Notes borrowed Borrowed from Shenzhen Guanhua Printing and Dyeing Annual interest 3806454.172019.07.302025.07.31 Co. Ltd. rate 0.15% (4) Remuneration of key officers RMB Item Amount for the current year Amount for the previous year Remuneration of key officers 6932991.00 8557258.00 6. Accounts receivable accounts payable to related parties and other unsettled items (1) Receivables RMB Balance as at the end of the Balance as at the end of the current year previous year Project Related party Provision for Provision for Book balance Book balance bad debts bad debts Accounts Shenzhen Shentou Property 6027.00602.706027.00602.70 receivable Development Co. Ltd.Shenzhen Dailisi Underwear Other receivables 1100000.00 55000.00 1100000.00 58850.00 Co. Ltd.Shenzhen Investment Holdings Other receivables 73096.00 3910.64 - - Development Co. Ltd.Shenzhen Guanhua Printing and Other receivables - - 41325.00 - Dyeing Co. Ltd.Total 1173096.00 58910.64 1141325.00 58850.00 - 94 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (XII) Related parties and related party transactions - continued 6. Accounts receivable accounts payable to related parties and other unsettled items - continued (2) Payables RMB Balance as at the end of Balance as at the end of Project Related party the current year the previous year Shenzhen Guanhua Printing and Dyeing Other payables 3816981.88 3811272.20 Co. Ltd.Shenzhen Changlianfa Printing and 2281299.952023699.95 Dyeing Co. Ltd.Shenzhen Xinfang Knitting Factory Co. 244789.85244789.85 Ltd.Shenzhen Investment Holdings Co. Ltd. - 485189.00 Shenzhen Investment Holdings Sports 80000.00- Event Development Co. Ltd.Shenzhen Investment Holdings Digital 37735.84- Technology Co. Ltd.Shenzhen Investment Holdings 29238.40- Development Co. Ltd.Shenzhen Property Management Co. Ltd. 7934.52 - Yehui International Co. Ltd. - 1124656.60 Total 6497980.44 7689607.60（XIII） Commitments and contingencies 1. Important commitments (1) Capital commitments RMB Amount at the end of Amount at the end of Item current year previous year Contracted but not recognized in the financial statements - Commitment to purchase and construct long-term 53374.762413823.52 assets 2. Contingencies As of December 31 2024 the Group had no contingencies such as pending litigations and external guarantees to be discolsed.- 95 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024（XIV） Events after the balance sheet date 1. Profit distribution after the balance sheet date On March 26 2025 the profit distribution proposal for the year 2024 was approved by the Board of the Company. It is proposed that the Company distribute cash dividends of RMB 0.71 per share (tax inclusive) to all shareholders based on the total share capital of 506521849 shares as of December 31 2024 resulting in total cash dividends of RMB 35963051.28 (tax inclusive). The profit distribution plan is subject to the consideration and approval of the Company's General Meeting.RMB Item Amount Profit or dividend to be distributed 35963051.28 Profit or dividend declared to be granted upon deliberation and approval -（XV） Other significant matters 1. Segment information (1) Determination basis and accounting policies for reporting segments According to the internal organizational structure management requirements and internal reporting system of the Group the Group's operating business is divided into two operating segments. The management of the Group regularly evaluates the operating results of these segments to decide on the allocation of resources to them and evaluate their performance. On the basis of operating segments the Group has identified the following two reporting segments polarizer business property leasing business and other business.Information on segment reporting is disclosed according to the accounting policies and measurement standards adopted by each segment when reporting to the management and these measurement bases are consistent with the accounting and measurement bases when preparing the financial statements. (2) Financial information of reporting segments RMB Current year or end Property leasing and Polarizer Offset Total of current year others Operating revenue: Revenue from external 3219211416.65 116071592.03 - 3335283008.68 transactions Revenue from transactions - 4239345.09 (4239345.09) - between segments Total operating revenue of 3219211416.65 120310937.12 (4239345.09) 3335283008.68 segments Operating expenses 3007500292.3695037109.98(3900557.86)3098636844.48 (Note) Operating profit 136015568.69 (20628307.04) 36389537.55 151776799.20 Net profit 134120025.66 (15831104.78) 24767845.50 143056766.38 Total assets of 4031861994.763149618569.49(1949330166.92)5232150397.33 segments Total liabilities of 835237595.88191159171.74(29567004.42)996829763.20 segments Note: this item includes operating costs taxes and surcharges G&A expenses R&D expenses selling and distribution expenses and financial expenses.- 96 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (XV) Other significant events - continued 2. Other significant events affecting the decision-making of investors (1) Real estate not yet disposed of by Shenzhen Xieli Automobile Enterprise Co. Ltd. (hereinafter referred to as "Shenzhen Xieli") Our company has invested with Hong Kong Xieli Maintenance Company (hereinafter referred to as "Hong Kong Xieli") to establish a Sino foreign joint venture Shenzhen Xieli Automobile Enterprise Co. Ltd. (hereinafter referred to as "Shenzhen Xieli"). In March 2020 Shenzhen Xieli was deregistered by the Shenzhen Municipal Administration for Market Regulation. In July 2020 our company filed an administrative action with the Yantian District People's Court in Shenzhen Guangdong Province to revoke the approval of the Shenzhen Market Supervision Administration for the cancellation of Shenzhen Xieli.In December 2022 the People's Court of Yantian District Shenzhen Guangdong Province reviewed the first instance judgment and revoked the administrative action approving the cancellation of Shenzhen Xieli's registration. In January 2023 the third party in the original trial Hong Kong Xieli appealed to the Shenzhen Intermediate People's Court in Guangdong Province. Later due to Hong Kong Xieli's failure to pay the case acceptance fee in advance the Shenzhen Intermediate People's Court issued an administrative ruling ruling that the appeal should be withdrawn by Hong Kong Xieli. The retrial judgment of the first instance has taken effect on March 22 2023. At present Shenzhen Xieli has resumed its business registration status but its future direction still needs to be negotiated among all shareholders.（XVI） Notes to the main items of the parent company's financial statements 1. Accounts receivable (1) Disclosure by aging RMB Book balance at the end Book balance at the Aging of the year beginning of the year Within 1 year 10649986.34 10190859.62 1-2 years - - 2 to 3 years - 2485076.00 3 - 4 years 2485076.00 - Total 13135062.34 12675935.62 (2) Disclosure by provision method for bad debts RMB Balance as at the end of the current year Book balance Provision for bad debts Category Provision ratio Book value Amount Ratio (%) Amount (%) Provision for bad debts - - - accrued on an individual - - basis Provision for bad debts 13135062.34100.00106074.710.8113028987.63 made by portfolio Total 13135062.34 100.00 106074.71 13028987.63 - 97 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (XVI) Notes to the main items of the parent company's financial statements - continued 1. Accounts receivable - continued (2) Disclosure by provision method for bad debts - continued RMB Balance as at the end of the previous year Book balance Provision for bad debts Category Provision ratio Book value Amount Ratio (%) Amount (%) Provision for bad debts accrued on an individual - - - - - basis Provision for bad debts 12675935.62100.004311.970.0312671623.65 made by portfolio Total 12675935.62 100.00 4311.97 12671623.65 As of December 31 2024 accounts receivable with provision for bad debts accrued on a portfolio basis: RMB Balance as at the end of the current year Aging Expected average Provision for bad Book balance Book value loss rate (%) debts Within 1 year 1.00 10649986.34 106074.71 10543911.63 3 - 4 years - 2485076.00 - 2485076.00 Total 13135062.34 106074.71 13028987.63 As of December 31 2024 provision for bad debts is made based on the simplified expected credit losses model RMB Whole duration Whole duration Provision for bad debts Expected credit losses Expected credit losses Total (No credit loss) (With credit loss) Balance at the beginning of the 4311.97-4311.97 year Balance at the beginning of the --- year - Transfer to credit loss --- incurred - Reversal of credit loss not --- incurred Withdrawal in the current year 101762.74 - 101762.74 Reversal in the current year - - - Charge-off in the current year - - - Write-off in the current year - - - Other changes - - - Balance as at the end of the 106074.71-106074.71 current year (3) Provision for bad debts RMB Balance at the Changes in the current year Balance as at the Type beginning of the Recovery or Resale or write- end of the current Provision Other changes year reversal off year Provision for bad 4311.97101762.74---106074.71 debts There was no significant amount of provision for bad debts recovered or reversed this year.- 98 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (XVI) Notes to the main items of the parent company's financial statements - continued 1. Accounts receivable - continued (4) There are no accounts receivable with actual write-off this year. (5) Top five entities in terms of the ending balance of accounts receivable by debtor RMB Provision for bad At the end of debts Ratio in total Entity name current year Balance as at the accounts Book balance end of the current receivable (%) year Total amount of the top five accounts receivables as 13003135.5099.00100734.39 of December 31 2024. 2. Other receivables (1) Disclosure by aging RMB Balance as at the end Balance as at the end Aging of the current year of the previous year Within 1 year 15129726.66 1683810.52 1-2 years 273000.00 2213073.28 2 to 3 years 2204641.09 10100800.01 Over 3 years 25380195.11 15279395.10 Total 42987562.86 29277078.91 Less: provision for bad debts 41453167.06 15263525.96 Book value 1534395.80 14013552.95 (2) Disclosure by nature of payment RMB Book balance at the Book balance at the Nature of payment end of the previous end of the year year Transactions with related parties within the consolidation scope 26189641.10 12553241.09 Transactions with external units 15422435.97 15349339.97 Guarantee and deposits 10000.00 10000.00 Others 1365485.79 1364497.85 Total 42987562.86 29277078.91 (3) Provision for bad debts As of December 31 2024 provision for bad debts shall be made according to the credit risk characteristic combination RMB Balance as at the end of the current year Phase Expected average loss Provision for bad Book balance Book value rate (%) debts Provision for bad debts based on credit risk characteristic 96.4342987562.8641453167.061534395.80 combination Provision for other receivables - 99 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (XVI) Notes to the main items of the parent company's financial statements - continued 2. Other receivables - continued (3) Provision for bad debts - continued As of December 31 2024 the credit risk and provision for bad debts of other receivables are as follows: RMB Balance as at the end of the current year Aging Expected average Provision for bad Book balance Book value loss rate (%) debts Within 1 year 90.62 15129726.66 13711066.34 1418660.32 1-2 years 100.00 273000.00 273000.00 - 2 to 3 years 100.00 2204641.09 2204641.09 - Over 3 years 99.54 25380195.11 25264459.63 115735.48 Total 42987562.86 41453167.06 1534395.80 (4) Changes in provision for bad debts RMB Balance at the Changes in the current year Balance as at the Type beginning of the Recovery or Resale or end of the Provision Other changes year reversal write-off current year Provision for bad debts 15263525.96 26189641.10 - - - 41453167.06 (5) There were no other receivables actually written off this year. (6) Top five entities in terms of ending balance of other receivables by debtors RMB Other Provision for receivables bad debts Ratio in the total Entity name Nature of payment Balance as at Aging Balance as at ending balance of the end of the the end of the other receivables in current year current year the current year (%) Receivables from Total amount of the top five Within 1 year 1 - 2 external entities other receivables as of 41496981.06 years 2 - 3 years over 96.53 40514681.06 and internal December 31 2024. 3 years receivables 3. Long-term equity investments RMB Balance as at the end of the current year Balance as at the end of the previous year Item Provision for Provision for Book balance Book value Book balance Book value impairment impairment Investment in 1962688268.3136826287.641925861980.671976433419.3916582629.301959850790.09 subsidiaries Investments in joint 111555887.28-111555887.28122370494.08-122370494.08 ventures Investments in 3272138.76-3272138.765311526.62-5311526.62 associates Total 2077516294.35 36826287.64 2040690006.71 2104115440.09 16582629.30 2087532810.79 - 100 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements Year ended December 31 2024 (XVI) Notes to the main items of the parent company's financial statements - continued 3. Long-term equity investments - continued (1) Investment in subsidiaries RMB Provision for Provision for impairment Balance at the beginning Increase in Decrease in Balance as at the end of Investees impairment in the Balance as at the end of the of the year current year current year the current year current year current year SAPO Photoelectric 1910247781.94 - - - 1910247781.94 14415288.09 Shenzhen Lisi Industrial Development Co. 8073388.25---8073388.25- Ltd.Shenzhen MCENTURY Garment Co. Ltd. 18499458.34 1744200.00 - 20243658.34 - 22410999.55 Shenzhen Huaqiang Hotel Co. Ltd. 15489351.08 - 15489351.08 - - - Shenzhen Shenfang Property Management 1713186.55---1713186.55- Co. Ltd.Shenzhen Shenfang Sungang Property 5827623.93---5827623.93- Management Co. Ltd.Total 1959850790.09 1744200.00 15489351.08 20243658.34 1925861980.67 36826287.64 (2) Investment in associates and joint ventures RMB Changes in the current year Provision for Other Balance at the Investment profit Cash dividends Provision Balance as at impairment comprehensi Other Investees beginning of Additional Reduced or loss recognized or profits Provision Othe the end of the Balance as at ve changes in the year investment investment under the equity declared to be for rs current year the end of the income equity method paid impairment current year adjustment Joint ventures Shenzhen Guanhua Printing 122370494.08--(10814606.80)-----111555887.28- and Dyeing Co. Ltd.Sub-total 122370494.08 - - (10814606.80) - - - - - 111555887.28 - Associates Shenzhen Changlianfa Printing and Dyeing Co. 3358117.09 - - 260171.67 - - 346150.00 - - 3272138.76 - Ltd.Yehui International Co. 1953409.53-1805949.58(147459.95)------- Ltd.Sub-total 5311526.62 - 1805949.58 112711.72 - - 346150.00 - - 3272138.76 - Total 127682020.70 - 1805949.58 (10701895.08) - - 346150.00 - - 114828026.04 - - 101 -Shenzhen Textile (Holdings) Co. Ltd.Notes to the financial statements For the year ended December 31 2023 (XVI) Notes to the main items of the parent company's financial statements - continued 4. Operating revenue and operating costs (1) Operating revenue and operating costs RMB Amount for the current year Amount for the previous year Item Revenue Cost Revenue Cost Primary business 77167496.95 10205157.84 77822508.75 9822306.53 (2) Income from primary business and cost of primary business by product RMB Amount for the current year Amount for the previous year Products Income from Cost of primary Income from Cost of primary primary business business primary business business Property leasing 77167496.95 10205157.84 77822508.75 9822306.53 (3) Income from primary business and cost of primary business by region RMB Amount for the current year Amount for the previous year Region Income from Cost of primary Income from Cost of primary primary business business primary business business Domestic 77167496.95 10205157.84 77822508.75 9822306.53 5. Investment income RMB Amount for the Amount for the Item current year previous year Long-term equity investment income calculated under the equity (10701895.08)(6898983.89) method Income from long-term equity investments under cost method 4700000.00 9989533.92 Investment income from disposal of long-term equity investments 5838587.94 - Investment income obtained during holding the financial assets 10795474.1014816230.07 held for trading Dividend income from investments in other equity instrument 1445735.851393735.85 during the holding period Total 12077902.81 19300515.95 - 102 -Shenzhen Textile (Holdings) Co. Ltd.Supplementary information Year ended December 31 2024 1. Breakdown of current non-recurring profit or loss According to the Interpretive Announcement No. 1 on Information Disclosure of Companies Issuing Securities to the Public - Non-recurring Profit or Loss (Revision 2023) (hereinafter referred to as "Interpretive Announcement No. 1") issued by the China Securities Regulatory Commission the Group's non-recurring profit or loss for 2024 are as follows: RMB Amount for the Item current year Profit or loss from disposal of non-current assets including the writing-off part for which 833613.28 the asset impairment provision is made Government grants included in the current profit or loss (except for those that are closely related to the Company's normal business operations comply with national policies and 10454530.12 regulations are enjoyed according to determined standards and have a sustained impact on the Company's profit or loss) Profit or loss from changes in fair value of financial assets and liabilities held by non- (5319496.55) financial enterprises and profit or loss from the disposal of financial assets and financial liabilities except for effective hedging operations related to the Company's normal business operations Reversal of provision for impairment of accounts receivable subject to separate 13927792.63 impairment test Non-operating revenue and expenses other than the above-mentioned items 1107069.21 Total non-recurring profit or loss 21003508.69 Less: income tax effect of non-recurring profit or loss 2998978.10 Net amount of non-recurring profit or loss 18004530.59 Less: net effect of non-recurring profit or loss attributable to minority shareholders 5661882.11 (after tax) Non-recurring profit or loss attributable to the Company's ordinary shareholders 12342648.48 2. Return on net assets and earnings per share This return on net assets and earnings per share table is prepared by Shenzhen Textile (Holdings) Co. Ltd. in accordance with the Rules for the Compilation and Reporting of Information Disclosure by Companies Issuing Securities in Public (No. 9) - Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revision 2010) issued by the China Securities Regulatory Commission.RMB Earnings per share Weighted average Profit in the reporting period Basic earnings per Diluted earnings per rate of return on net share share assets Net profit attributable to ordinary 3.060.180.18 shareholders of the COOEC Net profit attributable to ordinary 2.640.150.15 shareholders of the Company after deducting non-recurring profit or loss