Auditor’s Report

Su Gong W[2021]No. 443

To the Shareholders of Weifu High-Technology Group Co. Ltd.:

I. Auditing opinions

We have audited the financial statement under the name of Weifu High-Technology Group Co. Ltd. (hereinafter

referred to as WFHT) including the consolidated and parent Company’s balance sheet of 31 December 2020 and

profit statement and cash flow statement and statement on changes of shareholders’ equity for the year ended

and notes to the financial statements for the year ended.In our opinion the Company’s financial statements have been prepared in accordance with the Enterprises

Accounting Standards and Enterprises Accounting System and they fairly present the financial status of the

Company and of its parent company as of 31 December 2020 and its operation results and cash flows for the year

ended.II. Basis of opinion

We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Ourresponsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the

Financial Statements” section of the auditor’s report. We are independent of the Company in accordance with the

Certified Public Accountants of China’s Code of Ethics for Professional Accountants and we have fulfilled our

other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.III. Key audit matters

Key audit matters are those matters that in our professional judgment were of most significance in our audit of

the financial statements of the current period. These matters were addressed in the context of our audit of the

financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on

公证天业会计师事务所(特殊普通合伙)

Gongzheng Tianye Certified Public Accountants SGP

中国 . 江苏 . 无锡 Wuxi . Jiangsu . China

总机：86（510）68798988 Tel：86（510）68798988

传真：86（510）68567788 Fax：86（510）68567788

电子信箱：mail@gztycpa.cn E-mail：mail@gztycpa.cn

these matters.Revenue recognition is the key audit matter that we identified in auditing.

1. Matter description

As described in the 25. Revenue in Note III and 42. Operation revenue and operation cost in Note V carried in the

financial statement WFHT achieved an operation revenue of 12883826300 Yuan for year of 2020 46.67%

increase over year of 2019.

As one of the biggest source of profits for WFHT operating revenue has a significant effect on the general

financial statement in which there are certain of inherent risks existed for the reason that the management

manipulate the timing of recognition so as to achieve specific objectives or anticipations. Therefore we will take

the Revenue recognition as the key auditing matter.

2. The solution to the matter in auditing

(1)The Company has tested the design and execution of key internal control related to revenue recycling so as to

confirm the validity of internal control; (2) The Company should make sure whether the recognition condition and

method of major operating revenue are compliance with the accounting standards for business enterprise; it also

should pay an attention to that whether the cyclical and occasional revenue is compliance with the decided

revenue recognition principle and methods; (3) Combining with status and data of the industry where WFHT is

located the Company should make a judgment on the rationality of fluctuation of the revenue composition; (4)

The Company should carry out the procedure of account receivable and revenue letter of confirmation and make

a judgment on the rationality of the timing of revenue recognition; (5) Combining with the procedure of letter of

confirmation the Company should make a random inspection on sales contracts or orders delivery lists logistics

bills customs declaration sales invoices signing-off sheet and other documents related to revenue to verify the

authenticity of revenue; (6) Referring to the recorded revenue before and after the Balance Sheet Date the

Company should select some samples and check out the supportive documents such as delivery lists customs

declaration and receipt forms to make a judgment on whether the income has been recorded at the appropriate

accounting period.IV. Other information

The management of WFHT is responsible for other information which includes the information covered in the

Company’s 2020 annual report excluding the financial statement and our audit report.

Our audit opinions on the financial statements do not cover other information and we do not issue any form of

authentication conclusions on other information.In combination with our audit of the financial statements it is our responsibility to read other information and in

the process consider whether there is material inconsistency or material misstatement between the other

information and the financial statements or what we learned during the audit.

Based on the work we have carried out if we determine that there is a material misstatement of other information

we should report that fact and i this regard we have noting to report.V. Responsibilities of management and those charged with governance for the financial statements

The management is responsible for the preparation of the financial statements in accordance with the Accounting

Standards for Enterprise to secure a fair presentation and for the design establishment and maintenance of the

internal control necessary to enable the preparation of financial statements that are free from material

misstatement whether due to fraud or error.In preparing the financial statements the management is responsible for assessing the Company’s ability to

continue as a going concern disclosing matters related to going concern (if applicable) and using the going

concern assumption unless the management either intends to liquidate the Company or to cease operations or has

no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI. Responsibilities of the auditor for the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement whether due to fraud or error and to issue an audit report that includes our audit opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance

with the CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if individually or in the aggregate they could reasonably be expected to

influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with the CAS we exercise professional judgment and maintain professional

skepticism throughout the audit. We also:

(1) Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error

design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and

appropriate to provide a basis for audit 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.

(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances.

(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and

related disclosures made by the management.

(4) Conclude on the appropriateness of the management’s use of the going concern assumption and based on the

audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast

significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material

uncertainty exists we are required by the CAS to draw users’ attention in audit report to the related disclosures in

the financial statements or if such disclosures are inadequate to modify audit opinion. Our conclusions are based

on the information obtained up to the date of audit report. However future events or conditions may cause the

Company to cease to continue as a going concern.

(5) Evaluate the overall presentation structure and content of the financial statements and whether the financial

statements represent the underlying transactions and events in a manner that achieves fair presentation.

(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business

activities within the Company to express audit opinion on the financial statements. We are responsible for the

direction supervision and performance of the group audit. We remain solely responsible for audit opinion.We communicate with those charged with governance regarding among other matters the planned scope and

timing of the audit and significant audit findings including any significant deficiencies in internal control that we

identify during our audit.We also provide the governance with a statement of our compliance with the ethical requirements relating to our

independence and communicate with the governance on all relationships and other matters that may reasonably be

considered to affect our independence as well we the relevant precautions (if applicable).

From the matters communicated with those charged with governance we determine those matters that were of

most significance in the audit of the financial statements of the current period and are therefore the key audit

matters. We describe these matters in the auditor’s report unless law or regulation precludes public disclosure

about the matter or when in extremely rare circumstances we determine that a matter should not be

communicated in the auditor’s report because of the adverse consequences of doing so would reasonably be

expected to outweigh the public interest benefits of such communication.Jiangsu Gongzheng Tianye CPA Chinese CPA: Bai Lingjing

(Special General Partnership) (engagement partner)

Wuxi China Chinese CPA: Zhang Qianqian

16 April 2021

Financial Statement

Statement in Financial Notes are carried in RMB/CNY

1. Consolidated Balance Sheet

Prepared by Weifu High-Technology Group Co. Ltd.

December 31 2020

In RMB

Item December 31 2020 December 31 2019

Current assets:

Monetary funds 1963289832.33 1596893711.87

Settlement provisions

Capital lent

Transaction financial assets 3518432939.10 3940885674.32

Derivative financial assets

Note receivable 1657315723.56 1812141371.94

Account receivable 2824780352.41 2310666475.89

Receivable financing 1005524477.88 23873317.86

Accounts paid in advance 151873357.76 139241917.78

Insurance receivable

Reinsurance receivables

Contract reserve of reinsurance receivable

Other account receivable 54209580.88 43730023.31

Including: Interest receivable 655052.98

Dividend receivable 49000000.00 1070000.00

Buying back the sale of financial assets

Inventories 2877182174.64 2418744835.82

Contractual assets

Assets held for sale

Non-current asset due within one year

Other current assets 2137921113.61 1012055605.74

Total current assets 16190529552.17 13298232934.53

Non-current assets:

Loans and payments on behalf

Debt investment

Other debt investment

Long-term account receivable

Long-term equity investment 4801488290.97 5322405953.35

Investment in other equity instrument 285048000.00 285048000.00

Other non-current financial assets 1805788421.00 1043589987.43

Investment real estate 20886681.62 22410511.87

Fixed assets 2882230191.08 2845176078.20

Construction in progress 243795493.04 247857777.25

Productive biological asset

Oil and gas asset

Right-of-use assets

Intangible assets 454412947.69 430594372.12

Expense on Research and Development

Goodwill 257800696.32 1784086.79

Long-term expenses to be apportioned 15062171.09 18536000.25

Deferred income tax asset 198393501.50 212476501.54

Other non-current asset 195259441.73 230235982.45

Total non-current asset 11160165836.04 10660115251.25

Total assets 27350695388.21 23958348185.78

Current liabilities:

Short-term loans 302238600.05 312153969.81

Loan from central bank

Capital borrowed

Trading financial liability

Derivative financial liability

Note payable 2462592372.82 1745218439.52

Account payable 4100984240.39 3312254229.84

Accounts received in advance 4071236.87 113737432.61

Contractual liability 81717387.25

Selling financial asset of repurchase

Absorbing deposit and interbank deposit

Security trading of agency

Security sales of agency

Wage payable 332421811.82 314343737.66

Taxes payable 67493690.29 129538411.86

Other account payable 361556257.42 65266262.39

Including: Interest payable 4862.22

Dividend payable

Commission charge and commission payable

Reinsurance payable

Liability held for sale

Non-current liabilities due within one year 36914242.02

Other current liabilities 222871087.33

Total current liabilities 7972860926.26 5992512483.69

Non-current liabilities:

Insurance contract reserve

Long-term loans 3050640.97

Bonds payable

Including: Preferred stock

Perpetual capital securities

Lease liability

Long-term account payable 39479218.17 35108263.11

Long-term wages payable 181980293.94 58392053.61

Accrual liability

Deferred income 328204476.73 365116022.98

Deferred income tax liabilities 30653933.12 22566051.72

Other non-current liabilities

Total non-current liabilities 583368562.93 481182391.42

Total liabilities 8556229489.19 6473694875.11

Owner’s equity:

Share capital 1008950570.00 1008950570.00

Other equity instrument

Including: Preferred stock

Perpetual capital securities

Capital public reserve 3294242368.28 3391527806.33

Less: Inventory shares 303627977.74

Other comprehensive income 13916619.47 134871.67

Reasonable reserve 2333490.03 3247757.06

Surplus public reserve 510100496.00 510100496.00

Provision of general risk

Retained profit 13756102424.62 12076443635.56

Total owner’ s equity attributable to parent company 18282017990.66 16990405136.62

Minority interests 512447908.36 494248174.05

Total owner’ s equity 18794465899.02 17484653310.67

Total liabilities and owner’ s equity 27350695388.21 23958348185.78

Legal Representative: Wang Xiaodong

Person in charge of accounting works: Ou Jianbin

Person in charge of accounting institute: Ou Jianbin

2. Balance Sheet of Parent Company

In RMB

Item December 31 2020 December 31 2019

Current assets:

Monetary funds 1157684053.05 965770877.82

Trading financial assets 3452348980.19 3758789072.68

Derivative financial assets

Note receivable 422246979.39 202403993.13

Account receivable 982782279.22 768500929.93

Receivable financing

Accounts paid in advance 75650090.49 89116730.45

Other account receivable 197335714.63 250014956.74

Including: Interest receivable 897777.78 804929.68

Dividend receivable 1070000.00

Inventories 725276241.43 565144234.49

Contractual assets

Assets held for sale

Non-current assets maturing within one year

Other current assets 2057772839.50 938616881.51

Total current assets 9071097177.90 7538357676.75

Non-current assets:

Debt investment

Other debt investment

Long-term receivables

Long-term equity investments 5978128303.88 6331363630.04

Investment in other equity instrument 209108000.00 209108000.00

Other non-current financial assets 1805788421.00 1043589987.43

Investment real estate

Fixed assets 1758198856.53 1646333216.50

Construction in progress 154741266.85 136573912.28

Productive biological assets

Oil and natural gas assets

Right-of-use assets

Intangible assets 208112706.57 203663423.60

Research and development costs

Goodwill

Long-term deferred expenses

Deferred income tax assets 76508392.85 105137877.84

Other non-current assets 117013906.01 172646721.05

Total non-current assets 10307599853.69 9848416768.74

Total assets 19378697031.59 17386774445.49

Current liabilities

Short-term borrowings 102088888.89 116126459.33

Trading financial liability

Derivative financial liability

Notes payable 448901718.36 284054137.00

Account payable 1265845068.26 930273146.35

Accounts received in advance 12010730.30

Contractual liability 6209575.73

Wage payable 216870819.60 213626754.45

Taxes payable 32974322.59 56540307.59

Other accounts payable 339096991.12 11976576.21

Including: Interest payable

Dividend payable

Liability held for sale

Non-current liabilities due within one year

Other current liabilities 182611991.54

Total current liabilities 2594599376.09 1624608111.23

Non-current liabilities:

Long-term loans

Bonds payable

Including: preferred stock

Perpetual capital securities

Lease liability

Long-term account payable

Long term employee compensation payable 176245345.03 50058386.76

Accrued liabilities

Deferred income 285714239.98 322971778.82

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 461959585.01 373030165.58

Total liabilities 3056558961.10 1997638276.81

Owners’ equity:

Share capital 1008950570.00 1008950570.00

Other equity instrument

Including: preferred stock

Perpetual capital securities

Capital public reserve 3407732016.61 3488221286.39

Less: Inventory shares 303627977.74

Other comprehensive income

Special reserve

Surplus reserve 510100496.00 510100496.00

Retained profit 11698982965.62 10381863816.29

Total owner’s equity 16322138070.49 15389136168.68

Total liabilities and owner’s equity 19378697031.59 17386774445.49

3. Consolidated Profit Statement

In RMB

Item 2020 2019

I. Total operating income 12883826306.60 8784356960.30

Including: Operating income 12883826306.60 8784356960.30

Interest income

Insurance gained

Commission charge and commission income

II. Total operating cost 12193088999.51 7870700853.45

Including: Operating cost 10429284441.97 6670354380.54

Interest expense

Commission charge and commission expense

Cash surrender value

Net amount of expense of compensation

Net amount of withdrawal of insurance contract reserve

Bonus expense of guarantee slip

Reinsurance expense

Tax and extras 65323781.87 66634636.66

Sales expense 406353445.10 259650752.33

Administrative expense 782824422.63 514028451.76

R&D expense 532581209.78 417924908.28

Financial expense -23278301.84 -57892276.12

Including: Interest expenses 11466886.33 21770516.39

Interest income 51622216.58 79299239.77

Add: other income 80342497.11 91170663.57

Investment income (Loss is listed with “-”) 1964805688.57 1614540714.83

Including: Investment income on affiliated company and joint

venture

1659752704.14 1378264061.18

The termination of income recognition for financial assets

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

-946468.33 -2214159.11

Exchange income (Loss is listed with “-”)

Net exposure hedging income (Loss is listed with “-”)

Income from change of fair value (Loss is listed with “-”) 383325765.19 25019666.32

Loss of credit impairment (Loss is listed with “-”) -11184647.60 -52825875.25

Losses of devaluation of asset (Loss is listed with “-”) -178837472.85 -169460299.73

Income from assets disposal (Loss is listed with “-”) 11454408.60 32154460.21

III. Operating profit (Loss is listed with “-”) 2940643546.11 2454255436.80

Add: Non-operating income 66467021.62 2413561.54

Less: Non-operating expense 4158888.17 6126427.17

IV. Total profit (Loss is listed with “-”) 3002951679.56 2450542571.17

Less: Income tax expense 180215749.00 147805810.06

V. Net profit (Net loss is listed with “-”) 2822735930.56 2302736761.11

(i) Classify by business continuity

1.continuous operating net profit (net loss listed with ‘-”) 2822735930.56 2302736761.11

2.termination of net profit (net loss listed with ‘-”)

(ii) Classify by ownership

1.Net profit attributable to owner’s of parent company 2772769377.96 2268026432.78

2.Minority shareholders’ gains and losses 49966552.60 34710328.33

VI. Net after-tax of other comprehensive income 13839596.07 203603.86

Net after-tax of other comprehensive income attributable to owners of

parent company

13781747.80 134871.67

(I) Other comprehensive income items which will not be reclassified

subsequently to profit of loss

1.Changes of the defined benefit plans that re-measured

2.Other comprehensive income under equity method that cannot be

transfer to gain/loss

3.Change of fair value of investment in other equity instrument

4.Fair value change of enterprise's credit risk

5. Other

(ii) Other comprehensive income items which will be reclassified

subsequently to profit or loss

13781747.80 134871.67

1.Other comprehensive income under equity method that can transfer

to gain/loss

2.Change of fair value of other debt investment

3.Amount of financial assets re-classify to other comprehensive

income

4.Credit impairment provision for other debt investment

5.Cash flow hedging reserve

6.Translation differences arising on translation of foreign currency

financial statements

13781747.80 134871.67

7.Other

Net after-tax of other comprehensive income attributable to minority

shareholders

57848.27 68732.19

VII. Total comprehensive income 2836575526.63 2302940364.97

Total comprehensive income attributable to owners of parent

Company

2786551125.76 2268161304.45

Total comprehensive income attributable to minority shareholders 50024400.87 34779060.52

VIII. Earnings per share:

(i) Basic earnings per share 2.79 2.25

(ii) Diluted earnings per share 2.79 2.25

As for the enterprise combined under the same control net profit of 0 Yuan achieved by the merged party before

combination while 0 Yuan achieved last period

Legal Representative: Wang Xiaodong

Person in charge of accounting works: Ou Jianbin

Person in charge of accounting institute: Ou Jianbin

4. Profit Statement of Parent Company

In RMB

Item 2020 2019

I. Operating income 4536417803.79 3832925360.42

Less: Operating cost 3236311612.73 2641612915.27

Taxes and surcharge 38086034.27 31863942.28

Sales expenses 126442956.05 52567986.14

Administration expenses 533649297.97 292983915.45

R&D expenses 205001982.50 197574348.21

Financial expenses -34275071.44 -71470479.91

Including: interest expenses 4163923.00 6984512.71

Interest income 40948820.72 74450739.86

Add: other income 58782085.85 67874015.41

Investment income (Loss is listed with “-”) 1816759403.42 1646209064.39

Including: Investment income on affiliated Company and joint

venture

1457471604.06 1310687436.86

The termination of income recognition for financial assets

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

Net exposure hedging income (Loss is listed with “-”)

Changing income of fair value (Loss is listed with “-”) 383241806.28 22923064.68

Loss of credit impairment (Loss is listed with “-”) 2076529.99 -6132833.36

Losses of devaluation of asset (Loss is listed with “-”) -82232381.43 -43916712.41

Income on disposal of assets (Loss is listed with “-”) -520470.69 1887302.76

II. Operating profit (Loss is listed with “-”) 2609307965.13 2376636634.45

Add: Non-operating income 30937706.44 562276.63

Less: Non-operating expense 3493103.39 3810717.52

III. Total Profit (Loss is listed with “-”) 2636752568.18 2373388193.56

Less: Income tax 162713161.17 143606161.28

IV. Net profit (Net loss is listed with “-”) 2474039407.01 2229782032.28(i)continuous operating net profit (net loss listed with ‘-”) 2474039407.01 2229782032.28(ii) termination of net profit (net loss listed with ‘-”)

V. Net after-tax of other comprehensive income

(I) Other comprehensive income items which will not be reclassified

subsequently to profit of loss

1.Changes of the defined benefit plans that re-measured

2.Other comprehensive income under equity method that cannot be

transfer to gain/loss

3.Change of fair value of investment in other equity instrument

4.Fair value change of enterprise's credit risk

5. Other

(II) Other comprehensive income items which will be reclassified

subsequently to profit or loss

1.Other comprehensive income under equity method that can transfer

to gain/loss

2.Change of fair value of other debt investment

3.Amount of financial assets re-classify to other comprehensive

income

4.Credit impairment provision for other debt investment

5.Cash flow hedging reserve

6.Translation differences arising on translation of foreign currency

financial statements

7.Other

VI. Total comprehensive income 2474039407.01 2229782032.28

VII. Earnings per share:

(i) Basic earnings per share

(ii) Diluted earnings per share

5. Consolidated Cash Flow Statement

In RMB

Item 2020 2019

I. Cash flows arising from operating activities:

Cash received from selling commodities and providing labor services 11908396653.71 8145939987.84

Net increase of customer deposit and interbank deposit

Net increase of loan from central bank

Net increase of capital borrowed from other financial institution

Cash received from original insurance contract fee

Net cash received from reinsurance business

Net increase of insured savings and investment

Cash received from interest commission charge and commission

Net increase of capital borrowed

Net increase of returned business capital

Net cash received by agents in sale and purchase of securities

Write-back of tax received 32138413.08 51722970.47

Other cash received concerning operating activities 102573818.52 143912897.80

Subtotal of cash inflow arising from operating activities 12043108885.31 8341575856.11

Cash paid for purchasing commodities and receiving labor service 8277296527.38 5020827379.58

Net increase of customer loans and advances

Net increase of deposits in central bank and interbank

Cash paid for original insurance contract compensation

Net increase of capital lent

Cash paid for interest commission charge and commission

Cash paid for bonus of guarantee slip

Cash paid to/for staff and workers 1295921487.63 1222358828.87

Taxes paid 788150479.38 501167008.38

Other cash paid concerning operating activities 899929156.91 548552586.05

Subtotal of cash outflow arising from operating activities 11261297651.30 7292905802.88

Net cash flows arising from operating activities 781811234.01 1048670053.23

II. Cash flows arising from investing activities:

Cash received from recovering investment 8051178224.52 11384917612.00

Cash received from investment income 2462910424.30 1230657039.85

Net cash received from disposal of fixed intangible and other long-term

assets

42851678.36 147609697.19

Net cash received from disposal of subsidiaries and other units

Other cash received concerning investing activities 65102250.70 70025432.83

Subtotal of cash inflow from investing activities 10622042577.88 12833209781.87

Cash paid for purchasing fixed intangible and other long-term assets 492683539.12 589522818.28

Cash paid for investment 9246030000.00 13384156157.81

Net increase of mortgaged loans

Net cash received from subsidiaries and other units obtained 297302758.31 49930740.75

Other cash paid concerning investing activities 14579308.94 25115357.50

Subtotal of cash outflow from investing activities 10050595606.37 14048725074.34

Net cash flows arising from investing activities 571446971.51 -1215515292.47

III. Cash flows arising from financing activities

Cash received from absorbing investment 312640853.85 14022428.73

Including: Cash received from absorbing minority shareholders’

investment by subsidiaries

10161653.85 14022428.73

Cash received from loans 395691406.43 809517778.36

Other cash received concerning financing activities 5730135.13 845291.11

Subtotal of cash inflow from financing activities 714062395.41 824385498.20

Cash paid for settling debts 371154665.80 841746769.02

Cash paid for dividend and profit distributing or interest paying 1120464009.41 1258933561.00

Including: Dividend and profit of minority shareholder paid by

subsidiaries

15748768.80 26271705.11

Other cash paid concerning financing activities 449251421.46 146064936.00

Subtotal of cash outflow from financing activities 1940870096.67 2246745266.02

Net cash flows arising from financing activities -1226807701.26 -1422359767.82

IV. Influence on cash and cash equivalents due to fluctuation in exchange rate -2003139.41 5029521.42

V. Net increase of cash and cash equivalents 124447364.85 -1584175485.64

Add: Balance of cash and cash equivalents at the period -begin 820498653.85 2404674139.49

VI. Balance of cash and cash equivalents at the period -end 944946018.70 820498653.85

6. Cash Flow Statement of Parent Company

In RMB

Item 2020 2019

I. Cash flows arising from operating activities:

Cash received from selling commodities and providing labor services 4470039778.75 3928802469.74

Write-back of tax received

Other cash received concerning operating activities 61033856.80 77926941.80

Subtotal of cash inflow arising from operating activities 4531073635.55 4006729411.54

Cash paid for purchasing commodities and receiving labor service 2312159843.14 2163992101.67

Cash paid to/for staff and workers 730528257.00 645107564.57

Taxes paid 562371147.42 320098914.24

Other cash paid concerning operating activities 341484021.47 180660925.40

Subtotal of cash outflow arising from operating activities 3946543269.03 3309859505.88

Net cash flows arising from operating activities 584530366.52 696869905.66

II. Cash flows arising from investing activities:

Cash received from recovering investment 7324178224.52 10054917612.00

Cash received from investment income 2434385770.96 1289170321.39

Net cash received from disposal of fixed intangible and other long-term

assets

810004.53 42777932.53

Net cash received from disposal of subsidiaries and other units

Other cash received concerning investing activities 214831510.69 171801850.24

Subtotal of cash inflow from investing activities 9974205510.70 11558667716.16

Cash paid for purchasing fixed intangible and other long-term assets 262442259.33 360473332.45

Cash paid for investment 8853827446.85 11870526196.52

Net cash received from subsidiaries and other units obtained

Other cash paid concerning investing activities 112342336.68 204000000.00

Subtotal of cash outflow from investing activities 9228612042.86 12434999528.97

Net cash flows arising from investing activities 745593467.84 -876331812.81

III. Cash flows arising from financing activities

Cash received from absorbing investment 302479200.00

Cash received from loans 102000000.00 231500000.00

Other cash received concerning financing activities

Subtotal of cash inflow from financing activities 404479200.00 231500000.00

Cash paid for settling debts 116000000.00 227500000.00

Cash paid for dividend and profit distributing or interest paying 1097442763.44 1217748704.04

Other cash paid concerning financing activities 400017180.33

Subtotal of cash outflow from financing activities 1613459943.77 1445248704.04

Net cash flows arising from financing activities -1208980743.77 -1213748704.04

IV. Influence on cash and cash equivalents due to fluctuation in exchange rate -2070408.32 5250115.02

V. Net increase of cash and cash equivalents 119072682.27 -1387960496.17

Add: Balance of cash and cash equivalents at the period -begin 532115862.26 1920076358.43

VI. Balance of cash and cash equivalents at the period -end 651188544.53 532115862.26

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

Current Period

In RMB

Item

2020

Owners’ equity attributable to the parent Company

Minority

interests

Total owners’ equity

Share capital

Other

equity

instrumen

t

Capital reserve

Less:

Inventory

shares

Other

comprehensi

ve income

Reasonable

reserve

Surplus

reserve

Prov

ision

of

gene

ral

risk

Retained profit

Ot

he

r

Subtotal

Pr

ef

er

re

d

st

oc

k

Pe

rp

etu

al

ca

pit

al

se

cu

riti

es

Ot

he

r

I. Balance at

the end of the

last year

100895057

0.00

3391527806.

33

134871.67 3247757.06

510100496.0

0

12076443635.56 16990405136.62 494248174.05 17484653310.67

Add:

Changes of

accounting

policy

Error

correction of

the last period

Enterprise

combine under

the same

control

Other

II. Balance at

the beginning

of this year

100895057

0.00

3391527806.

33

134871.67 3247757.06

510100496.0

0

12076443635.56 16990405136.62 494248174.05 17484653310.67

III. Increase/

Decrease in

this year

(Decrease is

listed with

“-”)

-97285438.05

30362797

7.74

13781747.

80

-914267.03 1679658789.06 1291612854.04 18199734.31 1309812588.35

(i) Total

comprehensiv

e income

13781747.

80

2772769377.96 2786551125.76 50024400.87 2836575526.63

(ii) Owners’

devoted and

decreased

capital

-97285438.05

30362797

7.74

-400913415.79 -16046487.85 -416959903.64

1.Common

shares

-96389202.59

30247920

0.00

-398868402.59 25079496.04 -373788906.55

invested by

shareholders

2. Capital

invested by

holders of

other equity

instruments

3. Amount

reckoned into

owners equity

with

share-based

payment

6280461.58 6280461.58 204375.92 6484837.50

4. Other -7176697.04

1148777.7

4

-8325474.78 -41330359.81 -49655834.59

(III) Profit

distribution

-1095767216.49 -1095767216.49 -15748768.80 -1111515985.29

1. Withdrawal

of surplus

reserves

2. Withdrawal

of general risk

provisions

3. Distribution

for owners (or

shareholders)

-1093241270.00 -1093241270.00 -15748768.80 -1108990038.80

4. Other -2525946.49 -2525946.49 -2525946.49

(IV) Carrying

forward

internal

owners’ equity

1. Capital

reserves

conversed to

capital (share

capital)

2. Surplus

reserves

conversed to

capital (share

capital)

3. Remedying

loss with

surplus

reserve

4．Carry-over

retained

earnings from

the defined

benefit plans

5．Carry-over

retained

earnings from

other

comprehensiv

e income

6. Other

(V) -914267.03 -914267.03 -29409.91 -943676.94

Reasonable

reserve

1. Withdrawal

in the report

period

21673368.09 21673368.09 2158529.38 23831897.47

2. Usage in

the report

period

22587635.12 22587635.12 2187939.29 24775574.41

(VI)Others 2656627.59 2656627.59 2656627.59

IV. Balance at

the end of the

report period

100895057

0.00

3294242368.

28

30362797

7.74

13916619.

47

2333490.03

510100496.0

0

13756102424.62 18282017990.66 512447908.36 18794465899.02

Last Period

In RMB

Item

2019

Owners’ equity attributable to the parent Company

Minority

interests

Total owners’ equity Share

capital

Other

equity

instrument

Capital

reserve

Less:

Inventor

y shares

Other

comprehensive

income

Reasonable

reserve

Surplus

reserve

Prov

ision

of

gene

ral

risk

Retained profit

Ot

he

r

Subtotal

Prefe

rred

stock

Perp

etua

l

capi

tal

secu

ritie

s

Othe

r

I. Balance at

the end of the

last year

1008950

570.00

3416022

795.14

-19809442.95 1618490.50

510100496.0

0

10996945870.13 15913828778.82 538142268.53 16451971047.35

Add: Changes

of accounting

policy

19809442.95 1584556.37 21393999.32 21393999.32

Error

correction of

the last period

Enterprise

combine under

the same

control

Other

II. Balance at

the beginning

of this year

1008950

570.00

3416022

795.14

1618490.50

510100496.0

0

10998530426.50 15935222778.14 538142268.53 16473365046.67

III. Increase/

Decrease in

this year

(Decrease is

listed with

“-”)

-2449498

8.81

134871.67 1629266.56 1077913209.06 1055182358.48 -43894094.48 1011288264.00

(i) Total

comprehensiv

e income

134871.67 2268026432.78 2268161304.45 34779060.52 2302940364.97

(ii) Owners’

devoted and

decreased

capital

-2449498

8.81

567732.83 -23927255.98 -52813665.23 -76740921.21

1.Common

shares

invested by

shareholders

14022428.73 14022428.73

2. Capital

invested by

holders of

other equity

instruments

3. Amount

reckoned into

owners equity

with

share-based

payment

4. Other

-2449498

8.81

567732.83 -23927255.98 -66836093.96 -90763349.94

(III) Profit

distribution

-1210740684.00 -1210740684.00 -26271705.11 -1237012389.11

1. Withdrawal

of surplus

reserves

2. Withdrawal

of general risk

provisions

3. Distribution

for owners (or

shareholders)

-1210740684.00 -1210740684.00 -26271705.11 -1237012389.11

4. Other

(IV) Carrying

forward

internal

owners’ equity

1. Capital

reserves

conversed to

capital (share

capital)

2. Surplus

reserves

conversed to

capital (share

capital)

3. Remedying

loss with

surplus

reserve

4．Carry-over

retained

earnings from

the defined

benefit plans

5．Carry-over

retained

earnings from

other

comprehensiv

e income

6. Other

(V)

Reasonable

reserve

1061533.73 1061533.73 412215.34 1473749.07

1. Withdrawal

in the report

period

19156254.11 19156254.11 2508506.58 21664760.69

2. Usage in

the report

period

18094720.38 18094720.38 2096291.24 20191011.62

(VI)Others 20627460.28 20627460.28 20627460.28

IV. Balance at

the end of the

report period

1008950

570.00

3391527

806.33

134871.67 3247757.06

510100496.0

0

12076443635.56 16990405136.62 494248174.05 17484653310.67

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

Current Period

In RMB

Item

2020

Share capital

Other equity instrument

Capital public

reserve

Less: Inventory

shares

Other

comprehe

nsive

income

Reasonable

reserve

Surplus reserve Retained profit

Othe

r

Total owners’

equity

Preferred

stock

Perpetual

capital

securities

Other

I. Balance at the

end of the last year

1008950570.00 3488221286.39 510100496.00 10381863816.29 15389136168.68

Add: Changes

of accounting

policy

Error

correction of the

last period

Other

II. Balance at the

beginning of this

year

1008950570.00 3488221286.39 510100496.00 10381863816.29 15389136168.68

III. Increase/

Decrease in this

year (Decrease is

listed with “-”)

-80489269.78 303627977.74 1317119149.33 933001901.81

(i) Total

comprehensive

income

2474039407.01 2474039407.01

(ii) Owners’

devoted and

-80489269.78 303627977.74 -384117247.52

decreased capital

1.Common shares

invested by

shareholders

-96389202.59 302479200.00 -398868402.59

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

6484837.50 6484837.50

4. Other 9415095.31 1148777.74 8266317.57

(III) Profit

distribution

-1093241270.00 -1093241270.00

1. Withdrawal of

surplus reserves

2. Distribution for

owners (or

shareholders)

-1093241270.00 -1093241270.00

3. Other

(IV) Carrying

forward internal

owners’ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4．Carry-over

retained earnings

from the defined

benefit plans

5．Carry-over

retained earnings

from other

comprehensive

income

6. Other

(V) Reasonable

reserve

-1177442.02 -1177442.02

1. Withdrawal in

the report period

5849756.55 5849756.55

2. Usage in the

report period

7027198.57 7027198.57

(VI)Others 1177442.02 -63678987.68 -62501545.66

IV. Balance at the

end of the report

period

1008950570.00 3407732016.61 303627977.74 510100496.00 11698982965.62 16322138070.49

Last period

In RMB

Item

2019

Share capital

Other equity instrument

Capital public

reserve

Less:

Inventor

y shares

Other

comprehensive

income

Reasonable

reserve

Surplus reserve Retained profit

Othe

r

Total owners’

equity

Preferred

stock

Perpetual

capital

securities

Other

I. Balance at the end

of the last year

1008950570.00 3488221286.39 -19809442.95 510100496.00 9340610451.36 14328073360.80

Add: Changes of

accounting policy

19809442.95 1584556.37 21393999.32

Error correction

of the last period

Other

II. Balance at the

beginning of this

year

1008950570.00 3488221286.39 510100496.00 9342195007.73 14349467360.12

III. Increase/

Decrease in this

year (Decrease is

listed with “-”)

1039668808.56 1039668808.56

(i) Total

comprehensive

income

2229782032.28 2229782032.28

(ii) Owners’

devoted and

decreased capital

1.Common shares

invested by

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount reckoned

into owners equity

with share-based

payment

4. Other

(III) Profit

distribution

-1210740684.00 -1210740684.00

1. Withdrawal of

surplus reserves

2. Distribution for

owners (or

shareholders)

-1210740684.00 -1210740684.00

3. Other

(IV) Carrying

forward internal

owners’ equity

1. Capital reserves

conversed to capital

(share capital)

2. Surplus reserves

conversed to capital

(share capital)

3. Remedying loss

with surplus reserve

4．Carry-over

retained earnings

from the defined

benefit plans

5．Carry-over

retained earnings

from other

comprehensive

income

6. Other

(V) Reasonable

reserve

1. Withdrawal in the

report period

5898191.19 5898191.19

2. Usage in the

report period

5898191.19 5898191.19

(VI)Others 20627460.28 20627460.28

IV. Balance at the

end of the report

period

1008950570.00 3488221286.39 510100496.00 10381863816.29 15389136168.68

Notes to Financial Statement

I. Basic information of the Company

1. Historical origin of the Company

By the approval of STGS (1992) No. 130 issued by Jiangsu Economic Restructuring Committee Weifu

High-Technology Group Co. Ltd. (hereinafter referred to “the Company” or “Company”) was established as a

company of limited liability with funds raised from targeted sources and registered at Wuxi Administration for

Industry & Commerce in October 1992. The original share capital of the Company totaled 115.4355 million

Yuan including state-owned share capital amounting to 92.4355 million Yuan public corporate share capital

amounting to 8 million Yuan and inner employee share capital amounting to 15 million Yuan.

Between year of 1994 and 1995 the Company was restructured and became a holding subsidiary of Wuxi

Weifu Group Co. Ltd (hereinafter referred to as “Weifu Group”).

By the approval of Jiangsu ERC and Shenzhen Securities Administration Office in August 1995 the Company

issued 68 million special ordinary shares (B-share) with value of 1.00 Yuan for each and the total value of

those shares amounted to 68 million Yuan. After the issuance the Company’s total share capital increased to

183.4355 million Yuan.

By the approval of CSRC in June 1998 the Company issued 120 million RMB-ordinary shares (A-share) at

Shenzhen Stock Exchange through on-line pricing and issuing. After the issuance the total share capital of the

Company amounted to 303.4355 million Yuan.

In the middle of 1999 deliberated and approved by the Board and Shareholders’ General Meeting the

Company implemented the plan of granting 3 bonus shares for each 10 shares. After that the total share capital

of the Company amounted to 394.46615 million Yuan of which state-owned shares amounted to 120.16615

million Yuan public corporate shares 10.4 million Yuan foreign-funded shares (B-share) 88.40 million Yuan

RMB ordinary shares (A-share) 156 million Yuan and inner employee shares 19.5 million Yuan.

In the year 2000 by the approval of the CSRC and based upon the total share capital of 303.4355 million

shares after the issuance of A-share in June 1998 the Company allotted 3 shares for each 10 shares with a

price of 10 Yuan for each allotted share. Actually 41.9 million shares was allotted and the total share capital

after the allotment increased to 436.36615 million Yuan of which state-owned corporate shares amounted to

121.56615 million Yuan public corporate shares 10.4 million Yuan foreign-funded shares (B-share) 88.4

million Yuan and RMB ordinary shares (A-share) 216 million Yuan.

In April 2005 Board of Directors of the Company has examined and approved 2004 Profit Pre-distribution

Plan and examined and approved by 2004 Shareholders’ General Meeting the Company distributed 3 shares

for each 10 shares to the whole shareholders totaling to 130909845 shares in 2005.

According to the Share Merger Reform Scheme of the Company that passed by related shareholders’ meeting

of Share Merger Reform and SGZF [2006] No.61 Reply on Questions about State-owned Equity Management

in Share Merger Reform of Weifu High-Technology Co. Ltd. issued by State-owned Assets Supervision &

Administration Commission of Jiangsu Province the Weifu Group etc. 8 non-circulating shareholders arranged

pricing with granting 1.7 shares for each 10 shares to circulating A-share shareholders (totally granted

47736000 shares) so as to realize the originally non-circulating shares can be traded on market when

satisfied certain conditions the scheme has been implemented on April 5 2006.

On 27 May 2009 Weifu Group satisfied the consideration arrangement by dispatching 0.5 shares for each 10

shares based on the number of circulating A share as prior to Share Merger Reform according to the aforesaid

Share Merger Reform with an aggregate of 14039979 shares dispatched. Subsequent to implementation of

dispatch of consideration shares Weifu Group then held 100021999 shares of the Company representing

17.63% of the total share capital of the Company.

Pursuant to the document (XGZQ(2009)No.46) about Approval for Merger of Wuxi Weifu Group Co. Ltd. by

Wuxi Industry Development Group Co. Ltd. issued by the State-owned Assets Supervision and Administration

Commission of Wuxi City Government Wuxi Industry Development Group Co. Ltd. (hereinafter referred to

as Wuxi Industry Group) acquired Weifu Group. After the merger Weifu Group was then revoked and its

assets and credits & debts were transferred to be under the name of Wuxi Industry Group. Accordingly Wuxi

Industry Group became the first largest shareholder of the Company since then.In accordance with the resolutions of shareholders' meeting and provisions of amended constitution and

approved by [2012] No. 109 document of China Securities Regulatory Commission in February 2012 the

Company issued RMB ordinary shares (A-share) of 112858000 shares to Wuxi Industry Groups and overseas

strategic investor privately Robert Bosch Co. Ltd. (ROBERT BOSCHGMBH) (hereinafter referred to as

Robert Bosch Company) face value was ONE Yuan per share added registered capital of RMB 112858000

and the registered capital after change was RMB 680133995. Wuxi Industry Group is the first majority

shareholder of the Company and Robert Bosch Company is the second majority shareholder of the Company.In March 2013 the profit distribution pre-plan for year of 2012 was deliberated and approved by the Board

and also passed in Annual General Meeting 2012 of the Company in May 2013. On basis of total share capital

680133995 shares distribute 5-share for every 10 shares held by whole shareholders 340066997 shares in

total are distributed. Total share capital of the Company amounting RMB 1020200992 up to 31 December

2013.

Deliberated and approved by the company’s first extraordinary general meeting in 2015 the company has

repurchased 11250422 shares of A shares from August 26 2015 to September 8 2015 and has finished the

cancellation procedures for above repurchase shares in China Securities Depository and Clearing Corporation

Limited Shenzhen Branch on September 16 2015; after the cancellation of repurchase shares the company’s

paid-up capital (share capital) becomes 1008950570 Yuan after the change.

2. Registered place organization structure and head office of the Company

Registered place and head office of the Company: No.5 Huashan Road Xinwu District Wuxi

Unified social credit code: 91320200250456967N

The Company sets up Shareholders’ General Meeting the Board of Directors (BOD) and the Board of

Supervisors (BOS)

The Company sets up Administration Department Technology Centre organization & personnel department

Office of the Board compliance department IT department Strategy & new business Department market

development department Party-masses Department Finance Department Purchase Department

Manufacturing Quality Department MS (Mechanical System) division AC(Automobile Components) division

and DS (Diesel System ) division etc. and subsidiaries such as Wuxi Weifu Leader Catalytic Converter Co.Ltd. Nanjing Weifu Jinning Co. Ltd. IRD Fuel Cells A/S and Borit NV etc.

3. Business nature and major operation activities of the Company

Operation scope of parent company: Technology development and consulting service in the machinery

industry; manufacture of engine fuel oil system products fuel oil system testers and equipment manufacturing

of auto electronic parts automotive electrical components non-standard equipment non-standard knife tool

and exhaust after-treatment system; sales of the general machinery hardware & electrical equipment chemical

products & raw materials (excluding hazardous chemicals) automobile components and vehicles (excluding

nine-seat passenger car); internal combustion engine maintenance; leasing of the own houses; import and

export business in respect of diversified commodities and technologies (other than those commodities and

technologies limited or forbidden by the State for import and export) by self-operation and works as agent for

such business. Research and test development of engineering and technical; R&D of the energy recovery

system; manufacture of auto components and accessories; general equipment manufacturing (excluding special

equipment manufacturing) (any projects that needs to be approved by laws can only be carried out after

getting approval by relevant authorities)

Major subsidiaries respectively activate in production and sales of engine accessories automobile components

mufflers purifiers and fuel cell components etc.

4. Relevant party offering approval reporting of financial statements and date thereof

Financial statements of the Company were approved by the Board of Directors for reporting dated 16 April

2021.

5. Scope of consolidate financial statement

Name of subsidiary

Short

name of

subsidiary

Shareholding ratio

(%) Proportion

of votes

(%)

Registered

capital

(in 10

thousand

Yuan)

Business scope

Statement

consolidat

e (Y/N) Directly

Indire

ctly

Nanjing Weifu Jinning

Co. Ltd.

Weifu

Jinning

80.00 -- 80.00 34628.70

Internal-combustion

engine accessories

Y

Wuxi Weifu Leader

Catalytic Converter Co.

Ltd.Weifu

Leader

94.81 -- 94.81 50259.63 Purifier and muffler Y

Weifu Mashan Pump

Glib Co. Ltd.Weifu

Mashan

100.00 -- 100.00 16500

Internal-combustion

engine accessories

Y

Wuxi Weifu Chang’an

Co. Ltd.

Weifu

Chang’an

100.00 -- 100.00 21000

Internal-combustion

engine accessories

Y

Wuxi Weifu

International Trade Co.Ltd.Weifu

Internatio

nal Trade

100.00 -- 100.00 3000 Trade Y

Wuxi Weifu Schmidt

Power System Spare

Parts Co. Ltd.Weifu

Schmidt

66.00 -- 66.00 7600

Internal-combustion

engine accessories

Y

Ningbo Weifu Tianli

Supercharging

Technique Co. Ltd.Weifu

Tianli

98.83 1.17 100.00 11136

Internal-combustion

engine accessories

Y

Wuxi Weifu Autocam

Fine Machinery Co.

Ltd.Weifu

Autocam

51.00 -- 51.00 USD2110

Automobile

components

Y

Wuxi Weifu Leader

Catalytic Purifier

(Wuhan) Co. Ltd.Weifu

Leader

(Wuhan)

-- 60.00 60.00 1000 Purifier and muffler Y

Weifu Leader

(Chongqing)Automobil

e components Co. Ltd.Weifu

Leader

(Chongqin

g)

--

100.0

0

100.00 5000 Purifier and muffler Y

Nanchang Weifu Leader

Automobile

Components Co. Ltd

Weifu

Leader

(Nanchan

g)

--

100.0

0

100.00 5000 Purifier and muffler Y

Wuxi Weifu Autosmart

Seating System Co.Ltd.

Autosmart

Seating

-- 66.00 66.00 10000 Smart car device Y

Wuxi Weifu Electric

Drive Technology Co.

Ltd.Weifu

Electric

Drive

80.00 -- 80.00 USD2000 Wheel motor Y

Weifu Holding ApS SPV 100.00 -- 100.00 DKK38 Investment Y

IRD Fuel Cells A/S IRD --

100.0

0

100.00 DKK8560

Fuel cell

components

Y

IRD FUEL CELLS

LLC

IRD

America

--

100.0

0

100.00 USD300

Fuel cell

components

Y

Borit NV Borit --

100.0

0

100.00 EURO316.09

Fuel cell

components

Y

Name of subsidiary

Short

name of

subsidiary

Shareholding ratio

(%) Proportion

of votes

(%)

Registered

capital

(in 10

thousand

Yuan)

Business scope

Statement

consolidat

e (Y/N) Directly

Indire

ctly

Borit Inc. Borit Inc. --

100.0

0

100.00 USD0.1

Fuel cell

components

Y

Compared with the previous period the scope of consolidated financial statement have increase the follow enterprises including

Autosmart Seating Borit and Borit Inc. Of which the Autosmart Seating was the subsidiary jointly established by the Company

and Qiqiong Automobile Technology (Shanghai) Co. Ltd. Found more in the description of 5. Other reasons of change of

consolidation scope carried in Note VI; Borit is the subsidiary acquired in the Period through SPV found more in the description

of 1.Enterprise combine not under the same control carried in Note VI; and Borit Inc. is the wholly-owned subsidiary of Borit

established in the U.S.A.

On 1 January 2020 the former wholly-owned subsidiary - Wuxi Weifu ITM Supercharging Technique Co. Ltd was merger by

absorption.II. Basis of preparation of financial statements

1. Preparation base

The financial statement were stated in compliance with Accounting Standard for Business Enterprises –Basic

Norms issued by Ministry of Finance the specific 42 accounting rules revised and issued dated 15 February

2006 and later the Application Instruments of Accounting Standards and interpretation on Accounting

standards and other relevant regulations (together as “Accounting Standards for Business Enterprise”) as well

as the Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15 –

General Provision of Financial Report (Amended in 2014) issued by CSRC in respect of the actual

transactions and proceedings on a basis of ongoing operation.In line with relevant regulations of Accounting Standards of Business Enterprise accounting of the Company

is on accrual basis. Except for certain financial instruments the financial statement measured on historical cost.

Assets have impairment been found corresponding depreciation reserves shall accrual according to relevant

rules.

2. Going concern

The Company comprehensively assessed the available information and there are no obvious factors that

impact sustainable operation ability of the Company within 12 months since end of the reporting period.III. Major Accounting Policies and Estimation

Specific accounting policies and estimation attention:

The Company and its subsidiaries are mainly engaged in the manufacture and sales of engine fuel oil system

products automobile components mufflers purifiers and fuel cell components etc. in line with the real

operational characteristics and relevant accounting standards many specific accounting policies and estimation

have been formulated for the transactions and events with revenue recognized concerned. As for the

explanation on major accounting judgment and estimation found more in Note III- 31.Critical accounting

judgments and estimates

1. Statement on observation of Accounting Standard for Business Enterprises

Financial statements prepared by the Company were in accordance with requirements of Accounting Standard

for Business Enterprises which truly and completely reflected the financial information of the Company dated

31 December 2020 such as financial status operation achievements and cash flow for the year of 2020.

2. Accounting period

Accounting period of the Company consist of annual and mid-term mid-term refers to the reporting period

shorter than one annual accounting year. The company adopts Gregorian calendar as accounting period

namely form each 1 January to 31 December.

3. Business cycles

Normal business cycle is the period from purchasing assets used for process by the Company to the cash and

cash equivalent achieved. The Company’s normal business cycle was one-year (12 months).

4. Recording currency

The Company’s reporting currency is the RMB Yuan.

5. Accounting Treatment Method for Business Combinations under the same/different control

Business combination is the transaction or events that two or two above independent enterprises combined as a

reporting entity. Business combination including enterprise combined under the same control and business

combined under different control.

(1) The business combination under the same control

Enterprise combination under the same control is the enterprise who take part in the combination are have the

same ultimate controller or under the same controller the control is not temporary. The assets and liability

acquired by combining party are measured by book value of the combined party on combination date. Balance

of net asset’s book value acquired by combining party and combine consideration paid (or total book value of

the shares issued) shall adjusted capital reserve (share premium); if the capital reserves (share premium) is not

enough for deducted adjusted for retained earnings. Vary directly expenses occurred for enterprise

combination the combining party shall reckoned into current gains/losses while occurring. Combination day is

the date when combining party obtained controlling rights from the combined party.

(2) Combine not under the same control

A business combination not involving entities under common control is a business combination in which all of

the combining entities are not ultimately controlled by the same party or parties both before and after the

combination. As a purchaser fair value of the assets (equity of purchaser held before the date of purchasing

included) for purchasing controlling right from the purchaser the liability occurred or undertake on purchasing

date less the fair value of identifiable net assets of the purchaser obtained in combination recognized as

goodwill if the results is positive; if the number is negative the acquirer shall firstly review the measurement

of the fair value of the identifiable assets obtained liabilities incurred and contingent liabilities incurred as

well as the combination costs. After that if the combination costs are still lower than the fair value of the

identifiable net assets obtained the acquirer shall recognize the difference as the profit or loss in the current

period. Other directly expenses cost for combination shall be reckoned into current gains/losses. Difference of

the fair value of assets paid and its book values reckoned into current gains/losses. On purchasing date the

identifiable assets liability or contingency of the purchaser obtained by the Company recognized by fair value

that required identification conditions; Acquisition date refers to the date on which the acquirer effectively

obtains control of the purchaser.

6. Preparation method for consolidated financial statement

(1) Recognition principle of consolidated scope

On basis of the financial statement of the parent company and owned subsidiaries prepared consolidated

statement in line with relevant information. The scope of consolidation of consolidated financial statements is

ascertained on the basis of effective control. Once certain elements involved in the above definition of control

change due to changes of relevant facts or circumstances the Company will make separate assessment.

(2) Basis of control

Control is the right to govern an invested party so as to obtain variable return through participating in the

invested party’s relevant activities and the ability to affect such return by use of the aforesaid right over the

invested party. Relevant activates refers to activates have major influence on return of the invested party’s.

(3) Consolidation process

Subsidiaries are consolidated from the date on which the company obtains their actual control and are

de-consolidated from the date that such control ceases. All significant inter-group balances investment

transactions and unrealized profits are eliminated in the consolidated financial statements. For subsidiaries

being disposed the operating results and cash flows prior to the date of disposal are included in the

consolidated income statement and consolidated cash flow statement; for subsidiaries disposed during the

period the opening balances of the consolidated balance sheet would not be restated. For subsidiaries acquired

from a business combination not under common control their operating results and cash flows subsequent to

the acquisition date are included in the consolidated income statement and consolidated cash flow statement

and the opening balances and comparative figures of the consolidated balance sheet would not be restated. For

subsidiaries acquired from a business combination under common control their operating results and cash

flows from the date of commencement of the accounting period in which the combination occurred to the date

of combination are included in the consolidated income statement and consolidated cash flow statement and

the comparative figures of the consolidated balance sheet would be restated.In preparing the consolidated financial statements where the accounting policies or the accounting periods are

inconsistent between the company and subsidiaries the financial statements of subsidiaries are adjusted in

accordance with the accounting policies and accounting period of the company.

Concerning the subsidiary obtained under combination with different control adjusted several financial

statement of the subsidiary based on the fair value of recognizable net assets on purchased day while financial

statement consolidation; concerning the subsidiary obtained under combination with same control considered

current status of being control by ultimate controller for consolidation while financial statement consolidation.The unrealized gains and losses from the internal transactions occurred in the assets the Company sold to the

subsidiaries fully offset "the net profit attributable to the owners of the parent company". The unrealized gains

and losses from the internal transactions occurred in the assets the subsidiaries sold to the Company are

distributed and offset between "the net profit attributable to the owners of the parent company" and "minority

interest" according to the distribution ratio of the Company to the subsidiary. The unrealized gains and losses

from the internal transactions occurred in the assets sold among the subsidiaries are distributed and offset

between "the net profit attributable to the owners of the parent company" and "minority interest" according to

the distribution ratio of the Company to the subsidiary of the seller.The share of the subsidiary’s ownership interest not attributable to the Company is listed as “minority interest”

item under the ownership interest in the consolidated balance sheet. The share of the subsidiary’s current profit

or loss attributable to the minority interests is listed as "minority interest" item under the net profit item in the

consolidated income statement. The share of the subsidiary’s current consolidated income attributable to the

minority interests is listed as the “total consolidated income attributable to the minority shareholders” item

under the total consolidated income item in the consolidated income statement. If there are minority

shareholders add the "minority interests" item in the consolidated statement of change in equity to reflect the

changes of the minority interests. If the losses of the current period shared by a subsidiary’s minority

shareholders exceed the share that the minority shareholders hold in the subsidiary ownership interest in the

beginning of the period the balance still charges against the minority interests.When the control over a subsidiary is ceased due to disposal of a portion of an interest in a subsidiary the fair

value of the remaining equity interest is re-measured on the date when the control ceased. The difference

between the sum of the consideration received from disposal of equity interest and the fair value of the

remaining equity interest less the net assets attributable to the company since the acquisition date is

recognized as the investment income from the loss of control. Other comprehensive income relating to original

equity investment in subsidiaries shall be treated on the same basis as if the relevant assets or liabilities were

disposed of by the purchaser directly when the control is lost namely be transferred to current investment

income other than the relevant part of the movement arising from re-measuring net liabilities or net assets

under defined benefit scheme by the original subsidiary. Subsequent measurement of the remaining equity

interests shall be in accordance with relevant accounting standards such as Accounting Standards for business

Enterprises 2 – Long-term Equity Investments or Accounting Standards for business Enterprises 22 –

Financial Instruments Recognition and Measurement.

The company shall determine whether loss of control arising from disposal in a series of transactions should be

regarded as a bundle of transactions. When the economic effects and terms and conditions of the disposal

transactions met one or more of the following situations the transactions shall normally be accounted for as a

bundle of transactions: ①The transactions are entered into after considering the mutual consequences of each

individual transaction; ② The transactions need to be considered as a whole in order to achieve a deal in

commercial sense; ③The occurrence of an individual transaction depends on the occurrence of one or more

individual transactions in the series; ④ The result of an individual transaction is not economical but it would

be economical after taking into account of other transactions in the series. When the transactions are notregarded as a bundle of transactions the individual transactions shall be accounted as “disposal of a portion ofan interest in a subsidiary which does not lead to loss of control” and “disposal of a portion of an interest in asubsidiary which lead to loss of control”. When the transactions are regarded as a bundle of transactions the

transactions shall be accounted as a single disposal transaction; however the difference between the

consideration received from disposal and the share of net assets disposed in each individual transactions before

loss of control shall be recognized as other comprehensive income and reclassified as profit or loss arising

from the loss of control when control is lost.

7. Joint arrangement classification and accounting treatment for joint operations

In accordance with the Company’s rights and obligation under a joint arrangement the Company classifies

joint arrangements into: joint ventures and joint operations.The company confirms the following items related to the share of interests in its joint operations and in

accordance with the provisions of the relevant accounting standards for accounting treatment:

(1) Recognize the assets held solely by the Company and recognize assets held jointly by the Company in

appropriation to the share of the Company;

(2) Recognize the obligations assumed solely by the Company and recognize obligations assumed jointly by

the Company in appropriation to the share of the Company;

(3) Recognize revenue from disposal of the share of joint operations of the Company;

(4) Recognize fees solely occurred by Company;

(5) Recognize fees from joint operations in appropriation to the share of the Company.

8. Recognition standards for cash and cash equivalent

Cash refers to stock cash savings available for paid at any time; cash and cash equivalent refers to the cash

held by the Company with short terms(expired within 3 months since purchased) and liquid and easy to

transfer as known amount and investment with minor variation in risks.

9. Foreign currency business and conversion

The occurred foreign currency transactions are converted into the recording currency in accordance with the

middle rate of the market exchange rate published by the People's Bank of China on the transaction date.Thereinto the occurred foreign currency exchange or transactions involved in the foreign currency exchange

are converted in accordance with the actual exchange rate in the transactions.

At the balance sheet date the account balance of the foreign currency monetary assets and liabilities is

converted into the recording currency amount in accordance with the middle rate of the market exchange rate

published by the People's Bank of China on the transaction date. The balance between the recording currency

amount converted according to exchange rate at the balance sheet date and the original recording currency

amount is disposed as the exchange gains or losses. Thereinto the exchange gains or losses occurred in the

foreign currency loans related to the purchase and construction of fixed assets are disposed according to the

principle of capitalization of borrowing costs; the exchange gains and losses occurred during the start-up are

included in the start-up costs; the rest is included in the current financial expenses.

At the balance sheet date the foreign currency non-monetary items measured with the historical costs are

converted in accordance with the middle rate of the market exchange rate published by the People's Bank of

China on the transaction date without changing its original recording currency amount; the foreign currency

non-monetary items measured with the fair value are converted in accordance with the middle rate of the

market exchange rate published by the People's Bank of China on the fair value date and the generated

exchange gains and losses are included in the current profits and losses as the gains and losses from changes in

fair value.The following displays the methods for translating financial statements involving foreign operations into the

statements in RMB: The asset and liability items in the balance sheets for overseas operations are translated at

the spot exchange rates on the balance sheet date. Among the owners’ equity items the items other than

“undistributed profits” are translated at the spot exchange rates of the transaction dates. The income and

expense items in the income statements of overseas operations are translated at the average exchange rates of

the transaction dates. The exchange difference arising from the above mentioned translation are recognized in

other comprehensive income and is shown separately under owner’ equity in the balance sheet; such exchange

difference will be reclassified to profit or loss in current year when the foreign operation is disposed according

to the proportion of disposal.The cash flows of overseas operations are translated at the average exchange rates on the dates of the cash

flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.

10. Financial instrument

Financial instrument is the contract that taken shape of the financial asses for an enterprise and of the financial

liability or equity instrument for other units.

(1) Recognition and termination of financial instrument

A financial asset or liability is recognized when the group becomes a party to a financial instrument contract.

The recognition of a financial assets shall be terminated if it meets one of the following conditions:

① the contractual right to receive the cash flow of the financial assets terminates; and

② the financial assets is transferred and the company transfers substantially all the risks and rewards of

ownership of the financial asset to the transferring party;

③the financial asset was transferred and control although the company has neither transferred nor retained

almost all the risks and rewards of the ownership of a financial asset it relinquishes control over the financial

asset.If all or part of the current obligations of a financial liability has been discharged the financial liability or part of

it is terminated for recognition. When the Company (debtor) and the creditor sign an agreement to replace the

existing financial liabilities with new financial liabilities and the new financial liabilities and the existing

financial liabilities are substantially different from the contract terms terminated the recognition of the existing

financial liabilities and recognize the new financial liabilities at the same time.

Financial assets are traded in the normal way and their accounting recognition and terminated the recognition of

proceed on a trade date basis.

(2) Classification and measurement of financial assets

At the initial recognition according to the business model of managing financial assets and the contractual cash

flow characteristics of financial assets the Company classifies the financial assets into the financial assets

measured at amortized cost the financial assets measured at fair value and whose changes are included in other

comprehensive income and the financial assets measured at fair value and whose changes are included in

current profit or loss. Financial assets are measured at fair value at initial recognition but if the receivables or

receivables financing arising from the sale of goods or the provision of services do not include a significant

financing component or do not consider a financing component that does not exceed one year it shall be

initially measured in accordance with the transaction value. For financial assets measured at fair value and

whose changes are included in the current profit or loss related transaction costs are directly included in the

current profit and loss; for other types of financial assets related transaction costs are included in the initially

recognized amount.The business model for managing financial assets refers to how the Company manages financial assets to

generate cash flows. The business model determines whether the cash flow of financial assets managed by the

Company is based on contract cash flow selling financial assets or both. The Company determines the business

model for managing financial assets based on objective facts and based on the specific business objectives of

financial assets management determined by key management personnel.The Company evaluates the contractual cash flow characteristics of financial assets to determine whether the

contractual cash flows generated by the relevant financial assets on a specific date are only payments for the

principal and the interest based on the outstanding principal amount. The principal is the fair value of the

financial assets at initial recognition; the interest includes the time value of money the credit risk associated with

the outstanding principal amount for a specific period and other basic borrowing risks costs and consideration

of profit. In addition the Company evaluates the contractual terms that may result in changes in the time

distribution or the amount of contractual cash flows of the financial assets to determine whether they meet the

requirements of the above contractual cash flow characteristics.Only when the Company changes its business model of managing financial assets all affected financial assets

are reclassified on the first day of the first reporting period after the business model changes otherwise the

financial assets are not allowed to be reclassified after initial recognition.

① Financial assets measured at amortized cost

The Company classifies the financial assets that meet the following conditions and haven’t been designated as

financial assets measured at fair value and whose changes are included in current profit or loss as financial assets

measured at amortized cost:

A. the group's business model for managing the financial assets is to collect contractual cash flows; and

B. the contractual terms of the financial assets stipulate that cash flow generated on a specific date is only paid

for the principal and interest based on the outstanding principal amount.

After initial recognition such financial assets are measured at amortized cost by using the effective interest

method. Gains or losses arising from financial assets which are measured at amortized cost and are not a

component of any hedging relationship are included in current profit or loss when being terminated for

recognition amortized by effective interest method or impaired.

② Financial assets measured at fair value and whose changes are included in other comprehensive income

The Company classifies the financial assets that meet the following conditions and haven’t been designated as

financial assets measured at fair value and whose changes are included in current profit or loss as financial assets

measured at fair value and whose changes are included in other comprehensive income:

A. the Group's business model for managing the financial assets is targeted at both the collection of contractual

cash flows and the sale of financial assets; and

B. the contractual terms of the financial asset stipulate that the cash flow generated on a specific date is only

the payment of the principal and the interest based on the outstanding principal amount.

After initial recognition such financial assets are subsequently measured at fair value. Interests impairment

losses or gains and exchange gains and losses calculated by using the effective interest method are included in

profit or loss for the period and other gains or losses are included in other comprehensive income. When being

terminate for recognition the accumulated gains or losses previously included in other comprehensive income

are transferred from other comprehensive income and included in current profit or loss.

③Financial assets measured at fair value and whose changes are included in current profit or loss

Except for the above financial assets measured at amortized cost and measured at fair value and whose changes

are included in other comprehensive income the Company classifies all other financial assets as financial assets

measured at fair value and whose changes are included in current profit or loss. In the initial recognition in

order to eliminate or significantly reduce accounting mismatch the Company irreversibly designates part of the

financial assets that should be measured at amortized cost or measured at fair value and whose changes are

included in the other comprehensive income as the financial assets measured at fair value and whose changes are

included in current profit or loss.

After the initial recognition such financial assets are subsequently measured at fair value and the gains or losses

(including interests and dividend income) are included in the current profit and loss unless the financial assets

are part of the hedging relationship.However for non-trading equity instrument investments the Company irreversibly designates them as the

financial assets that are measured at fair value and whose changes are included in other comprehensive income

in the initial recognition. The designation is made based on a single investment and the relevant investment is in

line with the definition of equity instruments from the issuer's perspective. After initial recognition such

financial assets are subsequently measured at fair value. Dividend income that meets the conditions is included

in profit or loss and other gains or losses and changes in fair value are included in other comprehensive income.When it is terminated for recognition the accumulated gains or losses previously included in other

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

(3) Classification and measurement of financial liabilities

The financial liabilities of the Company are classified as financial liabilities measured at fair value and whose

changes are included in current profit or loss and financial liabilities measured at amortized cost at the initial

recognition. For financial liabilities that are not classified as financial liabilities measured at fair value and

whose changes are included in current profit or loss the related transaction expenses are included in the initial

recognition amount.

①Financial liability measured by fair value and with variation reckoned into current gains/losses

Financial liability measured by fair value and with variation reckoned into current gains/losses including

tradable financial liability and the financial liabilities that are designated as fair value in the initial recognition

and whose changes are included in current profit or loss. For such financial liabilities the subsequent

measurement is based on fair value and the gains or losses arising from changes in fair value and the dividends

and interest expenses related to these financial liabilities are included in current profit or loss.

②Financial liability measured by amortized cost

Other financial liabilities are subsequently measured at amortized cost by using the effective interest method.The gain or loss arising from recognition termination or amortization is included in current profit or loss.

③Distinctions between financial liabilities and equity instruments

Financial liabilities are liabilities that meet one of the following conditions:

A. Contractual obligations to deliver cash or other financial assets to other parties.

B. Contractual obligations to exchange financial assets or financial liabilities with other parties under potentially

adverse conditions.

C. Non-derivative contracts that must be settled or that can be settled by the company's own equity instruments

in the future and the enterprise will deliver a variable amount of its own equity instruments according to the

contract.

D. Derivative contracts that must be settled or that can be settled by the company's own equity instruments in the

future except for derivatives contracts that exchange a fixed amount of cash or other financial assets with a fixed

amount of their own equity instruments.

An equity instrument is a contract that proves it has a residual equity in the assets of an enterprise after deducting

all liabilities.If the Company cannot unconditionally avoid performing a contractual obligation by delivering cash or other

financial assets the contractual obligation is consistent with the definition of financial liability.If a financial instrument is required to be settled or can be settled by the Company's own equity instruments it is

necessary to consider whether the Company's own equity instruments used to settle the instrument are a

substitute for cash or other financial assets or to make the instrument holder enjoy the residual equity in the

assets of the issuer after deducting all liabilities. In the former case the instrument is the Company's financial

liability; if it is the latter the instrument is the Company's equity instrument.

(4) Fair value of financial instruments

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

available data and other information support to determine the fair value of related financial assets and financial

liabilities. The company divides the input values used by valuation techniques into the following levels and uses

them in sequence:

① The first-level input value is the unadjusted quotation of the same assets or liabilities that can be obtained on

the measurement date in the active market;

② The second-level input value is the direct or indirect observable input value of the relevant assets or liabilities

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

quotations of same or similar assets or liabilities in an active market; other observable input value other than

quotations such as interest rate and yield curves that are observable during the normal quote interval; market-

validated input value etc.;

③ The third-level input value is the unobservable input value of the relevant assets or liabilities including the

interest rate that cannot be directly observed or cannot be verified by observable market data stock volatility

future cash flow of the retirement obligation assumed in the business combination and financial forecasting

made by its own data etc.

(5) Impairment of financial assets

On the basis of expected credit losses the Company performs impairment treatment on financial assets

measured at amortized cost and creditors’ investment etc. measured at fair value and whose changes are

included in other comprehensive income and recognize the provisions for loss.①Measurement of expected credit losses

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

risk of default. Credit loss refers to the difference between all contractual cash flows that the Company

discounts at the original actual interest rate and are receivable in accordance with contract and all cash flows

expected to be received that is the present value of all cash shortages. Among them for the purchase or

source of financial assets that have suffered credit impairment the Company discounts the financial assets at

the actual interest rate adjusted by credit.When measuring expected credit losses the Company individually evaluates credit risk for financial assets

with significantly different credit risks such as receivables involving litigation and arbitration with the other

party or receivables having obvious indications that the debtor is likely to be unable to fulfill its repayment

obligations and so on.

Except for the financial assets that separately assess the credit risks the Company classified the account

receivable according to their characteristic of risks calculated the expected credit losses on basis of portfolio.

Basis for determining the portfolio as follow:

A - Note receivable

Note receivable 1: bank acceptance

Note receivable 2: trade acceptance

B - Account receivable

Account receivable 1: receivable from clients

Account receivable 2: receivable from internal related party

C-Receivable financing

Receivable financing 1: bank acceptance

Receivable financing 2: trade acceptance

D - Other account receivables

Other account receivables 1: receivable from internal related party

Other account receivables 2: receivable from others

As for the note receivable account receivable receivable financing and other account receivable classified in

portfolio by referring to the experience of historical credit loss the expected credit loss is calculated by

combining the current situation and the forecast of future economic conditions.

Except for the above-mentioned financial assets adopting simplified metering method the Company assesses

at each balance sheet date whether its credit risk has increased significantly since initial recognit ion. If credit

risk has not increased significantly since initial recognition it is in the first stage the Company measures the

loss provisions based on the amount equivalent to the expected credit loss in the next 12 months; if the credit

risk has increased significantly since initial recognition but no credit impairment has occurred it is in the

second stage the Company measures the loss provisions based on the amount equivalent to the expected credit

loss for the entire duration; if credit impairment occurs after initial recognition it is in the third stage the

Company measures the loss provisions based on the amount equivalent to the expected credit loss for the entire

duration. For financial instruments with low credit risks at the balance sheet date the Company assumes that

their credit risks have not increased significantly since initial recognition.The Company evaluates the expected credit losses of financial instruments based on individual items and

portfolios. When assessing expected credit losses the Company considers reasonable and evidence-based

information about past events current conditions and forecasts of future economic conditions.When the Company no longer reasonably expects to be able to fully or partially recover the contractual cash

flow of a financial asset the Company directly writes down the book balance of the financial asset.

②Assessment of a significant increase in credit risk:

The Company determines the relative changes in default risk of the financial instrument occurred in the expected

duration and assess whether the credit risks of financial instrument has increased significantly since the initial

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

default of financial instrument on the initial recognition date. When determining whether the credit risk has

increased significantly since the initial recognition the Company considers reasonable and evidence-based

information that can be obtained without unnecessary additional costs or effort including forward-looking

information. The information considered by the Company includes:

A. The debtor fails to pay the principal and interest according to the contractual maturity date;

B. Serious worsening of external or internal credit rating (if any) of the financial instruments that have occurred

or are expected;

C. Serious deterioration of the debtor’s operating results that have occurred or are expected;

D. Changes in existing or anticipated technical market economic or legal circumstances that will have a

material adverse effect on the debtor's ability to repay the company.

Based on the nature of financial instruments the Company assesses whether credit risk has increased

significantly on the basis of a single financial instrument or combination of financial instruments. When

conducting an assessment based on a combination of financial instruments the Company can classify financial

instruments based on common credit risk characteristics such as overdue information and credit risk ratings.The Company believes that financial assets are subject to default in the following circumstances:

The debtor is unlikely to pay the full amount to the Company and the assessment does not consider the

Company to take recourse actions such as realizing collateral (if held).

③Financial assets with credit impairment

On the balance sheet date the Company assesses whether the credit of financial assets measured at amortized

cost and the credit of debt investments measured at fair value and whose changes are included in other

comprehensive income has been impaired. When one or more events that adversely affect the expected future

cash flows of a financial asset occur the financial asset becomes a financial asset that has suffered credit

impairment. Evidence that credit impairment has occurred in financial assets includes the following observable

information:

A. The issuer or the debtor has significant financial difficulties;

B. The debtor breaches the contract such as default or overdue repayment of interest or principal;

C. The Company gives concessions to the debtor that will not be made in any other circumstances for economic

or contractual considerations relating to the financial difficulties of the debtor;

D. The debtor is likely to go bankrupt or carry out other financial restructurings;

E. The financial difficulties of the issuer or the debtor have caused the active market of the financial asset to

disappear.④ Presentation of expected credit loss provisions

In order to reflect the changes in the credit risk of financial instruments since the initial recognition the

Company re-measures the expected credit losses on each balance sheet date and the resulting increase or

reversal of the loss provisions shall be included in current profit and loss as impairment losses or gains. For

financial assets measured at amortized cost the loss provisions are written off against the book value of the

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

included in other comprehensive income the Company recognizes the loss provisions in other comprehensive

income and does not deduct the book value of the financial asset.⑤Write-off

If the Company no longer reasonably expects that the financial asset contract cash flow can be fully or partially

recovered directly write down the book balance of the financial asset. Such write-downs constitute the

termination of recognition for related financial assets. This usually occurs when the Company determines that

the debtor has no assets or sources of income to generate sufficient cash flow to repay the amount that will be

written down. However according to the Company's procedures for recovering the due amount the financial

assets that have been written down may still be affected by the execution activities.If the financial assets that have been written down are recovered afterwards they shall be included in the profit or

loss of the period being recovered as the reversal of the impairment loss

(6) Transfer of financial assets

The transfer of financial assets refers to the transfer or delivery of financial assets to the other party (the

transferee) other than the issuer of the financial assets.

For financial assets that the Company has transferred almost all risks and rewards of ownership of financial

assets to the transferee terminate the recognition of the financial assets; if almost all the risks and rewards of

ownership of financial assets have been retained do not terminate the recognition of the financial assets.If the Company has neither transferred nor retained almost all the risks and rewards of ownership of financial

assets dispose as following situations: If the control of the financial assets is abandoned terminate the

recognition of the financial assets and determine the resulting assets and liabilities. If the control of the financial

assets is not abandoned determine the relevant financial assets according to the extent to which they continue to

be involved in the transferred financial assets and determine the related liabilities accordingly.

(7) Balance-out between the financial assets and liabilities

As the Group has the legal right to balance out the financial liabilities by the net or liquidation of the financial

assets the balance-out sum between the financial assets and liabilities is listed in the balance sheet. In addition

the financial assets and liabilities are listed in the balance sheet without being balanced out.

11.Receivables financing

The note receivable and account receivable which are measured at fair value and whose changes are included

in other comprehensive income are classified as receivables financing within one year(including one year)

from the date of acquisition. Relevant accounting policy found more in 10. Financial Instrument in Note V.

12. Inventory

(1) Classification of inventories

The Company’s inventories are categorized into stock materials product in process and stock goods etc.

(2) Pricing for delivered inventories

The cost of inventory at the time of acquisition and delivery is calculated according to the standard cost

method and the difference in cost that it should bear is carried forward at the end of the period and the

standard cost is adjusted to the actual cost.

(3) Recognition evidence for net realizable value of inventories and withdrawal method for inventory

impairment provision

Inventories as at period-end are priced at the lower of costs and net realizable values; at period end on the

basis of overall clearance about inventories inventory impairment provision is withdrew for uncollectible part

of costs of inventories which result from destroy of inventories out-of-time of all and part inventories or sales

price lowering than cost. Inventory impairment provision for stock goods and quantity of raw materials is

subject to the difference between costs of single inventory item over its net realizable value. As for other raw

materials with large quantity and comparatively low unit prices inventory impairment provision is withdrawn

pursuant to categories.

As for finished goods commodities and materials available for direct sales their net realizable values are

determined by their estimated selling prices less estimated sales expenses and relevant taxes. For material

inventories held for purpose of production their net realizable values are determined by the estimated selling

prices of finished products less estimated costs estimated sales expenses and relevant taxes accumulated till

completion of production. As for inventories held for implementation of sales contracts or service contracts

their net realizable values are calculated on the basis of contract prices. In the event that inventories held by a

company exceed order amount as agreed in sales contracts net realizable values of the surplus part are

calculated on the basis of normal sale price.

(4) Inventory system

Perpetual Inventory System is adopted by the Company and takes a physical inventory.

(5) Amortization of low-value consumables and wrappage

①Low-value consumables

The Company adopts one-off amortization method to amortize the low-value consumables.②Wrappage

The Company adopts one-off amortization method to amortize the wrappage at the time of receipt.

13. Assets held for sale

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

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

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

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

commitment the selling is estimated to be completed within one year. Those assets whose disposal is subject

to approval from relevant authority or supervisory department under relevant requirements are subject to that

approval.Where the Company loses control over its subsidiary due to disposal of investment in the subsidiary whether

or not the Company retains part equity investment after such disposal investment in the subsidiary shall be

classified in its entirety as held for sale in the separate financial statement of the parent company subject to that

the investment in the subsidiary proposed to be disposed satisfies the conditions for being classified as held for

sale and all the assets and liabilities of the subsidiary shall be classified as held for sale in consolidated

financial statement.The purchase commitment identified refers to the legally binding purchase agreement entered into between the

Company and other parties which sets out certain major terms relating to transaction price time and

adequately stringent punishment for default which render an extremely minor possibility for material

adjustment or revocation of the agreement.

Assets held for sale are measured at the lower of heir carrying value and fair value less selling expense. If the

carrying value is higher than fair value less selling expense the excess shall be recognized as impairment loss

and recorded in profit or loss for the period and allowance for impairment shall be provided for in respect of

the assets. In respect of impairment loss recognized for disposal group held for sale carrying value of the

goodwill in the disposal group shall be deducted first and then deduct the carrying value of the non-current

assets within the disposal group applicable to this measurement standard on a pro rata basis according to the

proportion taken by their carrying value.If the net amount of fair value of non-current assets held for sale less sales expense on subsequent balance

sheet date increases the amount previously reduced for accounting shall be recovered and reverted from the

impairment loss recognized after the asset is classified under the category of held for sale with the amount

reverted recorded in profit or loss for the period. Impairment loss recognized before the asset is classified

under the category of held for sale shall not be reverted.If the net amount of fair value of the disposal group

held for sale on the subsequent balance sheet date less sales expenses increases the amount reduced for

accounting in previous periods shall be restored and shall be reverted in the impairment loss recognized in

respect of the non-current assets which are applicable to relevant measurement provisions after classification

into the category of held for sale with the reverted amount charged in profit or loss for the current period. The

written-off carrying value of goodwill shall not be reverted.The non-current assets in the non-current assets or disposal group held for sale is not depreciated or amortized

and the debt interests and other fees in the disposal group held for sale continue to be recognized.If the non-current assets or disposal group are no longer classified as held for sale since they no longer meet

the condition of being classified as held for sale or the non-current assets are removed from the disposal group

held for sale they will be measured at the lower of the following:

(i)The amount after their book value before they are classified as held for sale is adjusted based on the

depreciation amortization or impairment that should have been recognized given they are not classified as held

for sale;

(ii) The recoverable amount.

14. Long-term equity investment

Long-term equity investments refer to long-term equity investments in which the Company has control joint

control or significant influence over the invested party. Long-term equity investment without control or joint

control or significant influence of the Group is accounted for as available-for-sale financial assets or financial

assets measured by fair value and with variation reckoned into current gains/losses. As for other accounting

policies found more in “10. Financial instrument” in Note III.

(1) Determination of initial investment cost

Investment costs of the long-term equity investment are recognized by the follow according to different way of

acquirement:

①For a long-term equity investment acquired through a business combination involving enterprises under

common control the initial investment cost of the long-term equity investment shall be the absorbing party’s

share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate

controlling party on the date of combination. The difference between the initial cost of the long-term equity

investment and the cash paid non-cash assets transferred as well as the book value of the debts borne by the

absorbing party shall offset against the capital reserve. If the capital reserve is insufficient to offset the

retained earnings shall be adjusted. If the consideration of the merger is satisfied by issue of equity securities

the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the

carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling

party on the date of combination. With the total face value of the shares issued as share capital the difference

between the initial cost of the long-term equity investment and total face value of the shares issued shall be

used to offset against the capital reserve. If the capital reserve is insufficient to offset the retained earnings

shall be adjusted. For business combination resulted in an enterprise under common control by acquiring

equity of the absorbing party under common control through a stage-up approach with several transactions

these transactions will be judged whether they shall be treat as “transactions in a basket”. If they belong to

“transactions in a basket” these transactions will be accounted for a transaction in obtaining control. If they

are not belong to “transactions in a basket” the initial investment cost of the long-term equity investment shall

be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial

statements of the ultimate controlling party on the date of combination. The difference between the initial cost

of the long-term equity investment and the aggregate of the carrying amount of the long-term equity

investment before merging and the carrying amount the additional consideration paid for further share

acquisition on the date of combination shall offset against the capital reserve. If the capital reserve is

insufficient to offset the retained earnings shall be adjusted. Other comprehensive income recognized as a

result of the previously held equity investment accounted for using equity method on the date of combination

or recognized for available-for-sale financial assets will not be accounted for.

② For the long-term equity investment obtained by business combination not under the same control the fair

value of the assets involved the equity instruments issued and the liabilities incurred or assumed on the

transaction date plus the combined cost directly related to the acquisition is used as the initial investment cost

of the long-term equity investment. The identifiable assets of the combined party and the liabilities (including

contingent liabilities) assumed by the combined party on the combining date are all measured at fair value

regardless of the amount of minority shareholders’ equity. The amount of the combined cost exceeding the fair

value of the identifiable net assets of the combined party obtained by the Company is recorded as goodwill

and the amount below the fair value of the identifiable net assets of the combining party is directly recognized

in the consolidated income statement. (For business combination resulted in an enterprise not under common

control by acquiring equity of the acquire under common control through a stage-up approach with several

transactions these transactions will be judged whether they shall be treat as “transactions in a basket”. If they

belong to “transactions in a basket” these transactions will be accounted for a transaction in obtaining control.If they are not belong to “transactions in a basket” the initial investment cost of the long-term equity

investment accounted for using cost method shall be the aggregate of the carrying amount of equity investment

previously held by the acquire and the additional investment cost. For previously held equity accounted for

using equity method relevant other comprehensive income will not be accounted for. For previously held

equity investment classified as available-for-sale financial asset the difference between its fair value and

carrying amount as well as the accumulated movement in fair value previously included in the other

comprehensive income shall be transferred to profit or loss for the current period.)

③Long-term investments obtained through other ways:

A. Initial investment cost of long-term equity investment obtained through cash payment is determined

according to actual payment for purchase;

B. Initial investment cost of long-term equity investment obtained through issuance of equity securities is

determined at fair value of such securities;

C. Initial investment cost of long-term equity investment (exchanged-in) obtained through exchange with

non-monetary assets which is of commercial nature is determined at fair value of the assets exchanged-out;

otherwise determined at carrying value of the assets exchanged-out if it is not of commercial nature;

D. Initial investment cost of long-term equity investment obtained through debt reorganization is determined at

fair value of such investment.

(2) Subsequent measurement on long-term equity investment

①Presented controlling ability on invested party the investment shall use cost method for measurement.②Long-term equity investments with joint control (excluding those constitute joint ventures) or significant

influence on the invested party are accounted for using equity method.Under the equity method where the initial investment cost of a long-term equity investment exceeds the

investor’s interest in the fair value of the invested party’s identifiable net assets at the acquisition date no

adjustment shall be made to the initial investment cost. Where the initial investment cost is less than the

investor’s interest in the fair value of the invested party’s identifiable net assets at the acquisition date the

difference shall be charged to profit or loss for the current period and the cost of the long term equity

investment shall be adjusted accordingly.Under the equity method investment gain and other comprehensive income shall be recognized based on the

Group’s share of the net profits or losses and other comprehensive income made by the invested party

respectively. Meanwhile the carrying amount of long-term equity investment shall be adjusted. The carrying

amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend

distributed by the invested party. In respect of the other movement of net profit or loss other comprehensive

income and profit distribution of invested party the carrying value of long-term equity investment shall be

adjusted and included in the capital reserves. The Group shall recognize its share of the invested party’s net

profits or losses based on the fair values of the invested party’s individual separately identifiable assets at the

time of acquisition after making appropriate adjustments thereto. In the event of in-conformity between the

accounting policies and accounting periods of the invested party and the Company the financial statements of

the invested party shall be adjusted in conformity with the accounting policies and accounting periods of the

Company. Investment gain and other comprehensive income shall be recognized accordingly. In respect of the

transactions between the Group and its associates and joint ventures in which the assets disposed of or sold are

not classified as operation the share of unrealized gain or loss arising from inter-group transactions shall be

eliminated by the portion attributable to the Company. Investment gain shall be recognized accordingly.However any unrealized loss arising from inter-group transactions between the Group and an invested party is

not eliminated to the extent that the loss is impairment loss of the transferred assets. In the event that the Group

disposed of an asset classified as operation to its joint ventures or associates which resulted in acquisition of

long-term equity investment by the investor without obtaining control the initial investment cost of additional

long-term equity investment shall be the fair value of disposed operation. The difference between initial

investment cost and the carrying value of disposed operation will be fully included in profit or loss for the

current period. In the event that the Group sold an asset classified as operation to its associates or joint

ventures the difference between the carrying value of consideration received and operation shall be fully

included in profit or loss for the current period. In the event that the Company acquired an asset which formed

an operation from its associates or joint ventures relevant transaction shall be accounted for in accordance

with “Accounting Standards for Business Enterprises No. 20 “Business combination”. All profit or loss related

to the transaction shall be accounted for.The Group’s share of net losses of the invested party shall be recognized to the extent that the carrying amount

of the long-term equity investment together with any long-term interests that in substance form part of the

investor’s net investment in the invested party are reduced to zero. If the Group has to assume additional

obligations the estimated obligation assumed shall be provided for and charged to the profit or loss as

investment loss for the period. Where the invested party is making profits in subsequent periods the Group

shall resume recognizing its share of profits after setting off against the share of unrecognized losses.

③Acquisition of minority interest

Upon the preparation of the consolidated financial statements since acquisition of minority interest increased

of long-term equity investment which was compared to fair value of identifiable net assets recognized which

are measured based on the continuous measurement since the acquisition date (or combination date) of

subsidiaries attributable to the Group calculated according to the proportion of newly acquired shares the

difference of which recognized as adjusted capital surplus capital surplus insufficient to set off impairment

and adjusted retained earnings.

④Disposal of long-term equity investments

In these consolidated financial statements for disposal of a portion of the long-term equity investments in a

subsidiary without loss of control the difference between disposal cost and disposal of long-term equity

investments relative to the net assets of the subsidiary is charged to the owners’ equity. If disposal of a portion

of the long-term equity investments in a subsidiary by the parent company results in a change in control it

shall be accounted for in accordance with the relevant accounting policies as described in Note III.-6

“Preparation Method of the Consolidated Financial Statements”.On disposal of a long-term equity investment otherwise the difference between the carrying amount of the

investment and the actual consideration paid is recognized through profit or loss in the current period.In respect of long-term equity investment accounted for using equity method with the remaining equity interest

after disposal also accounted for using equity method other comprehensive income previously under owners’

equity shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant

asset or liability by invested party on pro rata basis at the time of disposal. The owners’ equity recognized for

the movement of other owners’ equity (excluding net profit or loss other comprehensive income and profit

distribution of invested party) shall be transferred to profit or loss for the current period on pro rata basis.In respect of long-term equity investment accounted for using cost method with the remaining equity interest

after disposal also accounted for cost equity method other comprehensive income measured and reckoned

under equity method or financial instrument before control of the invested party unit acquired shall be

accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability

by invested party on pro rata basis at the time of disposal and shall be transferred to profit or loss for the

current period on pro rata basis; among the net assets of invested party unit recognized by equity method

(excluding net profit or loss other comprehensive income and profit distribution of invested party) shall be

transferred to profit or loss for the current period on pro rata basis.In the event of loss of control over invested party due to partial disposal of equity investment by the Group in

preparing separate financial statements the remaining equity interest which can apply common control or

impose significant influence over the invested party after disposal shall be accounted for using equity method.Such remaining equity interest shall be treated as accounting for using equity method since it is obtained and

adjustment was made accordingly. For remaining equity interest which cannot apply common control or

impose significant influence over the invested party after disposal it shall be accounted for using the

recognition and measurement standard of financial instruments. The difference between its fair value and

carrying amount as at the date of losing control shall be included in profit or loss for the current period. In

respect of other comprehensive income recognized using equity method or the recognition and measurement

standard of financial instruments before the Group obtained control over the invested party it shall be

accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability

by invested party at the time when the control over invested party is lost. Movement of other owners’ equity

(excluding net profit or loss other comprehensive income and profit distribution under net asset of invested

party accounted for and recognized using equity method) shall be transferred to profit or loss for the current

period at the time when the control over invested party is lost. Of which for the remaining equity interest after

disposal accounted for using equity method other comprehensive income and other owners’ equity shall be

transferred on pro rata basis. For the remaining equity interest after disposal accounted for using the

recognition and measurement standard of financial instruments other comprehensive income and other

owners’ equity shall be fully transferred.In the event of loss of common control or significant influence over invested party due to partial disposal of

equity investment by the Group the remaining equity interest after disposal shall be accounted for using the

recognition and measurement standard of financial instruments. The difference between its fair value and

carrying amount as at the date of losing common control or significant influence shall be included in profit or

loss for the current period. In respect of other comprehensive income recognized under previous equity

investment using equity method it shall be accounted for in accordance with the same accounting treatment

for direct disposal of relevant asset or liability by invested party at the time when equity method was ceased to

be used. Movement of other owners’ equity (excluding net profit or loss other comprehensive income and

profit distribution under net asset of invested party accounted for and recognized using equity method) shall be

transferred to profit or loss for the current period at the time when equity method was ceased to be used.The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions until

the control over the subsidiary is lost. If the said transactions belong to “transactions in a basket” each

transaction shall be accounted for as a single transaction of disposing equity investment of subsidiary and loss

of control. The difference between the disposal consideration for each transaction and the carrying amount of

the corresponding long-term equity investment of disposed equity interest before loss of control shall initially

recognized as other comprehensive income and subsequently transferred to profit or loss arising from loss of

control for the current period upon loss of control.

(3) Impairment test method and withdrawal method for impairment provision

Found more in Note III-21.”impairment of long-term assets”

(4) Criteria of Joint control and significant influence

Joint control is the Company’s contractually agreed sharing of control over an arrangement which relevant

activities of such arrangement must be decided by unanimously agreement from parties who share control. All

the participants or participant group whether have controlling over such arrangement as a group or not shall be

judge firstly than judge that whether the decision-making for such arrangement are agreed unanimity by the

participants or not.Significant influence is the power of the Company to participate in the financial and operating policy decisions

of an invested party but to fail to control or joint control the formulation of such policies together with other

parties.While recognizing whether have significant influence by invested party the potential factors of voting

power as current convertible bonds and current executable warrant of the invested party held by investors and

other parties shall be thank over.

15. Investment real estate

Investment real estate is stated at cost. During which the cost of externally purchased properties

held-for-investment includes purchasing price relevant taxes and surcharges and other expenses which are

directly attributable to the asset. Cost of self construction of properties held for investment is composed of

necessary expenses occurred for constructing those assets to a state expected to be available for use. Properties

held for investment by investors are stated at the value agreed in an investment contract or agreement but

those under contract or agreement without fair value are stated at fair value.The Company adopts cost methodology amid subsequent measurement of properties held for investment

while depreciation and amortization is calculated using the straight-line method according to their estimated

useful lives.The basis of provision for impairment of properties held for investment is referred to Note III-“21.Impairmentof long-term assets”

16. Fixed assets

(1) Recognition conditions

Fixed assets refer to the tangible assets for production of products provision of labor lease or operation with

a service life excess one year and has more unit value.

(2) Depreciation methods

Category Years of depreciation (years) Scrap value rate(%) Yearly depreciation rate(%)

House and Building

20~35 5 2.71~4.75

Machinery equipment

10 5 9.50

Transportation equipment

4~5 5 19.00~23.75

Electronic and other

equipment

3～10 5 9.50～31.67

For the fixed assets with impairment provision the depreciation amount shall be calculated after deducting the

accumulated amount of impairment provision for fixed assets

(3) Recognition basis valuation and depreciation method for financial lease assets

The Company affirms those that conform to below one or several criteria as the finance lease fixed assets:

① Agreed in the lease contract (or made a reasonable judgment according to the correlated conditions on the

lease commencement date) the ownership of lease fixed assets can be transferred to the Company after the

expiry of the lease period;

② The Company has the option to purchase or lease the fixed assets and the purchase price is estimated to be

much less than the fair value of the lease of fixed assets when exercises the options so whether the Company

will exercise the option can be reasonably determined on the lease commencement date;

③ Even though the fixed asset ownership is not transferred the lease term accounts for 75% of the service life

of the lease fixed assets;

④ The present value of the Company’s of minimum lease payment on the lease commencement date is

equivalent to 90% or more of the fair value of the lease fixed assets on the lease commencement date; the

present value of the leaser’s of minimum lease payment on the lease commencement date is equivalent to 90%

or more of the fair value of the lease fixed assets on the lease commencement date;

⑤ The leased assets with special properties can only be used by the Company without major modifications.The fixed assets rented by finance leases is calculated as the book value according to the lower one between

the fair value of leased assets on the lease commencement date and the present value of the minimum lease

payments.

(4) The impairment test method of fixed assets and the method of provision for impairment see Note

III-“21.Impairment of long-term assets”.

17. Construction in progress

From the date on which the fixed assets built by the Company come into an expected usable state the projects

under construction are converted into fixed assets on the basis of the estimated value of project estimates or

pricing or project actual costs etc. Depreciation is calculated from the next month. Further adjustments are

made to the difference of the original value of fixed assets after final accounting is completed upon completion

of projects.The basis of provision for impairment of properties held for construction in process is referred to Note

III-“21.Impairment of long-term assets”

18. Contract assets and contract liabilities

Applicable from 1 Jan. 2020.

The Company presents the contract assets or contract liabilities in the balance sheet based on the relationship

between the performance obligation and the customer’s payment.

(1) Contract assets

Confirmation method and standard of contract assets: contract assets refer to the right of a company to receive

consideration after transferring goods or providing services to customers and this right depends on other

factors besides the passage of time. The company's unconditional (that is only depending on the passage of

time) right to collect consideration from customers are separately listed as receivables.Method for determining expected credit losses of contract assets: the method for determining expected credit

losses of contract assets is consistent with the method for determining expected credit losses of accounts

receivable.

Accounting treatment method of expected credit losses of contract assets: if the contract assets are impaired

the company shall debit the "asset impairment loss" subject and credit the "contract asset impairment

provision" subject according to the amount that should be written down. When reversing the provision for

asset impairment that has already been withdrawn make opposite accounting entries.

(2) Contract liabilities

The Company lists the obligation to transfer goods or provide labor services to customers for the consideration

received or receivable from customers as contract liabilities such as the amount that the company has received

before the transfer of the promissory goods.

19. Borrowing costs

(1) Recognition of capitalization of borrowing costs

Borrowing costs comprise interest occurred amortization of discounts or premiums ancillary costs and

exchange differences in connection with foreign currency borrowings. The borrowing costs of the Company

which incur from the special borrowings occupied by the fixed assets that need more than one year (including

one year) for construction development of investment properties or inventories or from general borrowings

are capitalized and recorded in relevant assets costs; other borrowing costs are recognized as expenses and

recorded in the profit or loss in the period when they are occurred. Relevant borrowing costs start to be

capitalized when all of the following three conditions are met:

①Capital expenditure has been occurred;

②Borrowing costs have been occurred;

③ Acquisition or construction necessary for the assets to come into an expected usable state has been carried

out.

(2) Period of capitalization of borrowing costs

Borrowing costs arising from purchasing fixed asset investment real estate and inventory and occurred after

such assets reached to its intended use of status or sales than reckoned into assets costs while satisfy the above

mentioned capitalization condition; capitalization of borrowing costs shall be suspended and recognized as

current expenditure during periods in which construction of fixed assets investment real estate and inventory

are interrupted abnormally when the interruption is for a continuous period of more than 3 months until the

acquisition construction or production of the qualifying asset is resumed; capitalization shall discontinue when

the qualifying asset is ready for its intended use or sale the borrowing costs occurred subsequently shall

reckoned into financial expenses while occurring for the current period.

(3) Measure of capitalization for borrowing cost

In respect of the special borrowings borrowed for acquisition construction or production and development of

the assets qualified for capitalization the amount of interests expenses of the special borrowings actually

occurred in the period less interest income derived from unused borrowings deposited in banks or less

investment income derived from provisional investment are recognized.With respect to the general borrowings occupied for acquisition construction or production and development

of the assets qualified for capitalization the capitalized interest amount for general borrowings is calculated

and recognized by multiplying a weighted average of the accumulated expenditure on the assets in excess of

the expenditure on the some assets of the special borrowings by a capitalization rate for general borrowings.The capitalization rate is determined by calculation of the weighted average interest rate of the general

borrowings.

20. Intangible assets

(1) Measurement use of life and impairment testing

① Measurement of intangible assets

The intangible assets of the Company including land use rights patented technology and non-patents

technology etc.The cost of a purchased intangible asset shall be determined by the expenditure actually occurred and other

related costs.The cost of an intangible asset contributed by an investor shall be determined in accordance with the value

stipulated in the investment contract or agreement except where the value stipulated in the contract or

agreement is not fair.The intangible assets acquired through exchange of non-monetary assets which is commercial in substance is

carried at the fair value of the assets exchanged out; for those not commercial in substance they are carried at

the carrying amount of the assets exchanged out.The intangible assets acquired through debt reorganization are recognized at the fair value.

② Amortization methods and time limit for intangible assets:

Land use right of the company had average amortization by the transfer years from the beginning date of transfer

(date of getting land use light); Patented technology non-patented technology and other intangible assets of the

Company are amortized by straight-line method with the shortest terms among expected useful life benefit

years regulated in the contract and effective age regulated by the laws. The amortization amount shall count in

relevant assets costs and current gains/losses according to the benefit object.

As for the intangible assets as trademark with uncertain benefit terms amortization shall not be carried.

Impairment testing methods and accrual for depreciation reserves for the intangible assets found more in Note

III-“21. Impairment of long-term assets”.

(2)Internal accounting policies relating to research and development expenditures

Expenses incurred during the research phase are recognized as profit or loss in the current period; expenses

incurred during the development phase that satisfy the following conditions are recognized as intangible assets

(patented technology and non-patents technology):

①It is technically feasible that the intangible asset can be used or sold upon completion;

②there is intention to complete the intangible asset for use or sale;

③ The products produced using the intangible asset has a market or the intangible asset itself has a market;

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

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

⑤ the expenses attributable to the development phase of the intangible asset can be measured reliably.If the expenses incurred during the development phase did not qualify the above mentioned conditions such

expenses incurred are accounted for in the profit or loss for the current period.The development expenditure

reckoned in gains/losses previously shall not be recognized as assets in later period. The capitalized expenses

in development stage listed as development expenditure in balance sheet and shall be transfer as intangible

assets since such item reached its expected conditions for service.

21. Impairment of long-term assets

The Company will judge if there is any indication of impairment as at the balance sheet date in respect of

non-current non-financial assets such as fixed assets construction in progress intangible assets with a finite

useful life investment properties measured at cost and long-term equity investments in subsidiaries joint

controlled entities and associates. If there is any evidence indicating that an asset may be impaired recoverable

amount shall be estimated for impairment test. Goodwill intangible assets with an indefinite useful life and

intangible assets beyond working conditions will be tested for impairment annually regardless of whether

there is any indication of impairment.If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount the

impairment provision will be made according to the difference and recognized as an impairment loss. The

recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the

future cash flows expected to be derived from the asset. An asset’s fair value is the price in a sale agreement in

an arm’s length transaction. If there is no sale agreement but the asset is traded in an active market fair value

shall be determined based on the bid price. If there is neither sale agreement nor active market for an asset fair

value shall be based on the best available information. Costs of disposal are expenses attributable to disposal

of the asset including legal fee relevant tax and surcharges transportation fee and direct expenses incurred to

prepare the asset for its intended sale. The present value of the future cash flows expected to be derived from

the asset over the course of continued use and final disposal is determined as the amount discounted using an

appropriately selected discount rate. Provisions for assets impairment shall be made and recognized for the

individual asset. If it is not possible to estimate the recoverable amount of the individual asset the Group shall

determine the recoverable amount of the asset group to which the asset belongs. The asset group is the smallest

group of assets capable of generating cash flows independently.

For the purpose of impairment testing the carrying amount of goodwill presented separately in the financial

statements shall be allocated to the asset groups or group of assets benefiting from synergy of business

combination. If the recoverable amount is less than the carrying amount the Group shall recognize an

impairment loss. The amount of impairment loss shall first reduce the carrying amount of any goodwill

allocated to the asset group or set of asset groups and then reduce the carrying amount of other assets (other

than goodwill) within the asset group or set of asset groups pro rata on the basis of the carrying amount of

each asset.

An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period in respect

of the part whose value can be recovered.

22. Long-term deferred expenses

Long-term expenses to be amortized of the Company the expenses that are already charged and with the

beneficial term of more than one year are evenly amortized over the beneficial term. For the long-term

deferred expense items cannot benefit the subsequent accounting periods the amortized value of such items is

all recorded in the profit or loss during recognition.

23. Employee compensation

(1) Accounting treatment for short-term compensation

During the accounting period when the staff providing service to the Company the short-term remuneration

actual occurred shall recognized as liability and reckoned into current gains/losses. During the accounting

period when staff providing service to the Company the actual short-term compensation occurred shall

recognized as liabilities and reckoned into current gains/losses except for those in line with accounting

standards or allow to reckoned into capital costs; the welfare occurred shall reckoned into current gains/losses

or relevant asses costs while actually occurred. The employee compensation shall recognize as liabilities and

reckoned into current gains/losses or relevant assets costs while actually occurred. The employee benefits that

belong to non-monetary benefits are measured in accordance with the fair value; the social insurances

including the medical insurance work-injury insurance and maternity insurance and the housing fund that the

enterprise pays for the employees as well as the labor union expenditure and employee education funds

withdrawn by rule should be calculated and determined as the corresponding compensation amount and

determined the corresponding liabilities in accordance with the specified withdrawing basis and proportion

and reckoned in the current profits and losses or relevant asset costs in the accounting period that the

employees provide services.

(2) Accounting treatment for post-employment benefit

The post-employment benefit included the defined contribution plans and defined benefit plans.Post-employment benefits plan refers to the agreement about the post-employment benefits between the

enterprise and employees or the regulations or measures the enterprise established for providing

post-employment benefits to employees. Thereinto the defined contribution plan refers to the

post-employment benefits plan that the enterprise doesn’t undertake the obligation of payment after depositing

the fixed charges to the independent fund; the defined benefit plans refers to post-employment benefits plans

except the defined contribution plan.

(3)Accounting for retirement benefits

When the Company terminates the employment relationship with employees before the end of the employment

contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy the

Company shall recognize employee compensation liabilities arising from compensation for staff dismissal and

included in profit or loss for the current period when the Company cannot revoke unilaterally compensation

for dismissal due to the cancellation of labor relationship plans and employee redundant proposals; and the

Company recognize cost and expenses related to payment of compensation for dismissal and restructuring

whichever is earlier.The early retirement plan shall be accounted for in accordance with the accounting

principles for compensation for termination of employment. The salaries or wages and the social contributions

to be paid for the employees who retire before schedule from the date on which the employees stop rendering

services to the scheduled retirement date shall be recognized (as compensation for termination of employment)

in the current profit or loss by the Group if the recognition principles for provisions are satisfied.

(4)Accounting for other long-term employee benefits

Except for the compulsory insurance the Company provides the supplementary retirement benefits to the

employees satisfying some conditions the supplementary retirement benefits belong to the defined benefit

plans and the defined benefit liability confirmed on the balance sheet is the value by subtracting the fair value

of plan assets from the present value of defined benefit obligation. The defined benefit obligation is annually

calculated in accordance with the expected accumulated welfare unit method by the independent actuary by

adopting the treasury bond rate with similar obligation term and currency. The service charges related to the

supplementary retirement benefits (including the service costs of the current period the previous service costs

and the settlement gains or losses) and the net interest are reckoned in the current profits and losses or other

asset costs the changes generated by recalculating the net liabilities of defined benefit plans or net assets

should be reckoned in other consolidated income.

24. Share-based payment

The Company’s share-based payment is a transaction that grants equity instruments or assumes liabilities

determined on the basis of equity instruments in order to obtain services provided by employees or other

parties. The Company’s share-based payment is classified as equity-settled share-based payment and

cash-settled share-based payment.

(1) Equity-settled share-based payment and equity instruments

Equity-settled share-based payment in exchange for services provided by employees shall be measured at the

fair value of the equity instruments granted to employees. If the Company uses restricted stocks for

share-based payment employees contribute capital to subscribe for stocks and the stocks shall not be listed for

circulation or transfer until the unlocking conditions are met and unlocked; if the unlocking conditions

specified in the final equity incentive plan are not met the Company shall repurchase the stocks at the

pre-agreed price. When the Company obtains the payment for the employees to subscribe for restricted stocks

it shall confirm the share capital and capital reserve (share capital premium) according to the obtained

subscription money and at the same time recognize a liability in full for the repurchase obligation and

recognize treasury shares. On each balance sheet date during the waiting period the Company makes the best

estimate of the number of vesting equity instruments based on the changes in the latest obtained number of

vested employees whether they meet the specified performance conditions and other follow-up information.On this basis the services obtained in the current period are included in related costs or expenses based on the

fair value on the grant date and the capital reserve shall be increased accordingly.

For share-based payments that cannot be vested in the end costs or expenses shall not be recognized unless

the vesting conditions are market conditions or non-vesting conditions. At this time regardless of whether the

market conditions or the non-vesting conditions are met as long as all non-market conditions in the vesting

conditions are met it is deemed as vesting.If the terms of equity-settled share-based payment are modified at least the services obtained should be

confirmed in accordance with the unmodified terms. In addition any modification that increases the fair value

of the equity instruments granted or a change that is beneficial to employees on the modification date is

recognized as an increase in services received.If the equity-settled share payment is cancelled it will be treated as an accelerated vesting on the cancellation

day and the unconfirmed amount will be confirmed immediately. If an employee or other party can choose to

meet the non-vesting conditions but fails to meet within the waiting period it shall be treated as cancellation of

equity-settled share-based payment. However if a new equity instrument is granted and it is determined on the

date of grant of the new equity instrument that the new equity instrument granted is used to replace the

cancelled equity instrument the granted substitute equity instruments shall be treated in the same way as the

modification of the original equity instrument terms and conditions.

(2) Cash-settled share-based payment and equity instruments

Cash-settled share-based payments are measured at the fair value of the liabilities calculated and determined

on the basis of shares or other equity instruments undertaken by the Company. If it’s vested immediately after

the grant the fair value of the liabilities assumed on the date of the grant is included in the cost or expense and

the liability is increased accordingly. If the service within the waiting period is completed or the specified

performance conditions are met the service obtained in the current period shall be included in the relevant

costs or expenses based on the best estimate of the vesting situation within the waiting period and the fair

value of the liabilities assumed to increase the corresponding liabilities. On each balance sheet date and

settlement date before the settlement of the relevant liabilities the fair value of the liabilities is remeasured

and the changes are included in the current profit and loss.

25. Accrual liabilities

(1) Recognition principle

An obligation related to a contingency such as guarantees provided to outsiders pending litigation or

arbitration product warranties redundancy plans onerous contracts reconstructing expected disposal of fixed

assets etc. shall be recognized as an estimated liability when all of the following conditions are satisfied:

① the obligation is a present obligation of the Company;

② it is Contingent that an outflow of economic benefits will be required to settle the obligation;

③ the amount of the obligation can be measured reliably.

(2) Measurement method: Measure on the basis of the best estimates of the expenses necessary for paying off

the contingencies

26. Revenue

Accounting policies applicable as of 1 January 2020:

(1)Accounting policies used in revenue recognition and measurement

1)Revenue recognition principle

On the starting date of the contract the company evaluates the contract 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.When one of the following conditions is met it belongs to the performance obligation within a certain period

of time otherwise it belongs to the performance obligation at a certain point in time: ① The customer

obtains and consumes the economic benefits brought by the company's performance while the company

performs the contract; ②The customer can control the goods or services under construction during the

company’s performance; ③The goods or services produced during the company’s performance have

irreplaceable uses and the company has the right to collect payment for the performance part that has been

completed so far during the entire contract period.

For performance obligations performed within a certain period of time the company recognizes revenue in

accordance with the performance progress during that period. When the performance progress cannot be

reasonably determined if the cost incurred is expected to be compensated the revenue shall be recognized

according to the amount of the cost incurred until the performance progress can be reasonably determined.

For performance obligations performed at a certain point in time revenue is recognized at the point when the

customer obtains control of the relevant goods or services. When judging whether the customer has obtained

control of the goods the company considers the following signs:① The company has the current right to

receive payment for the goods that is the customer has the current payment obligation for the goods; ②The

company has transferred the legal ownership of the goods to the customer that is the customer has the legal

ownership of the goods; ③The company has transferred the goods to the customer in kind that is the

customer has physically taken possession of the goods; ④ The company has transferred the main risks and

rewards of the ownership of the goods to the customer that is the customer has obtained the main risks and

rewards of the ownership of the goods; ⑤ The customer has accepted the goods; ⑥Other signs that the

customer has obtained control of the goods.

2)Revenue measurement principle

①The company measures revenue based on the transaction price allocated to each individual performance

obligation. The transaction price is the amount of consideration that the company expects to be entitled to

receive due to the transfer of goods or services to customers and does not include payments collected on

behalf of third parties and payments expected to be returned to customers.②If there is variable consideration in the contract the company shall determine the best estimate of the

variable consideration according to the expected value or the most likely amount but the transaction price

including the variable consideration shall not exceed the amount of cumulatively recognized revenue that is

unlikely to be significantly turned back when the relevant uncertainty is eliminated.③ If there is a significant financing component in the contract the company shall determine the transaction

price based on the amount payable that the customer is assumed to pay in cash when obtaining the control of

the goods or services. The difference between the transaction price and the contract consideration shall be

amortized by the effective interest method during the contract period. On the starting date of the contract if the

company expects that the customer pays the price within one year after obtaining control of the goods or

services the significant financing components in the contract shall not be considered.④If the contract contains two or more performance obligations the company will allocate the transaction price

to each individual performance obligation based on the relative proportion of the stand-alone selling price of

the goods promised by each individual performance obligation on the starting date of the contract.

(2) The Company's standard for the revenue recognition of the sales of goods and the specific judgment

standard for the confirmation time:

The time when the Company’s domestic sales revenue is confirmed: The company delivers the goods

according to the order. On the reconciliation date agreed with the buyer check the goods received and

inspected by the buyer during the period from the last reconciliation date to this reconciliation date with the

buyer and the risks and rewards are transferred to the buyer after checking the Company issues an invoice to

the buyer according to the type quantity and amount confirmed in the reconciliation and confirms the

realization of sales revenue on the reconciliation day.The time when the Company’s foreign sales revenue is confirmed: After the customs review is completed the

Company will confirm the realization of the sales revenue according to the export date specified on the

customs declaration.

Accounting policies applicable for year of 2019:

(1) Concrete judging criteria for time of recognized

The major risks and remuneration entitled to the ownership of goods are transferred to buyer; neither retain the

continued management right generally related to ownership nor exercise effective control over the sold

products; the relevant economic benefits are probable to flow into the Company; the relevant income and costs

can be measured reliably.

Concrete judging criteria for time of recognized the income from goods sales:

The Company's domestic sales revenue recognition time: The company delivers goods as agreed checks the

goods that the buyers have received and inspected during the period of the last reconciliation date and this

reconciliation date with the buyers on the reconciliation date as agreed and transfers the risks and

remunerations to the buyers after checking the Company issues the invoices to the buyers in accordance with

the recognized varieties quantities and amounts and affirms the sales revenue realization on the reconciliation

date.The Company's overseas sales revenue recognition time: After checking by the customs the Company affirms

the sales revenue realization according to the date of departure on the customs declaration.

(2) Recognition of revenue of assets using right alienation

Revenue from use by others of enterprise assets shall be recognized only when the associated economic benefit

can flow into the Company and the amount of revenue can be measured reliably revenue measured by the

follow:

① Interest income amount: calculated and determined in accordance with the time that others use the

enterprises cash and the actual interest rate.② Royalty revenue amount: calculated and determined in accordance with the charging time and method of the

relevant contract or agreement as agreed.The basis that the Company confirms the revenue from transferring the right to use assets.Rental income: the revenue realization is confirmed after collecting the rent on the date as agreed in the rental

contract (or agreement). For the rent not received on the date as agreed in the contract or agreement but can be

received and of which the amount of revenue can be measured reliably can also be recognized as revenue.

(3) When confirming the incomes of labor services and construction contracts according to the percentage of

completion method determine the basis and method of the contract completion plan.

For the service transaction results can be estimated reliably on the balance sheet date the service revenue is

determined and recognized by adopting the percentage of completion method. The completion progress of

service transaction is determined by the proportion of incurred costs in the estimated total cost.The total service revenue is determined by the received or receivable contract or agreement costs except that

the received or receivable contract or agreement costs are not fair. On the balance sheet date the service revenue

of the current period is determined by multiplying the total service revenue by the completion progress and

deducting the amount accumulated in the previous accounting period and confirmed to render the service

revenue. Meanwhile the labor costs of the current period are carried forward by multiplying the total estimated

costs of labor services by the completion progress and deducting the amount accumulated in the previous

accounting period with confirmed service costs.

For the service transaction results cannot be estimated reliably on the balance sheet date respectively dispose as

following circumstances:

①The incurred labor costs estimated to be compensated are confirmed to render the service revenue according

to the incurred labor costs and are carried forward by the equivalent amount.②The incurred labor costs estimated not to be compensated are reckoned in the current profits or losses and

are not confirmed to render the service revenue.

27. Government grants

(1) Types

Government grants are transfer of monetary assets or non-monetary assets from the government to the Group

at no consideration. Government grants are classified into government grants related to assets and government

grants related to income.

As for the assistance object not well-defined in government’s documents the classification criteria for

assets-related or income-related grants are as: whether the grants turn to long-term assets due to purchasing for

construction or other means.

(2) Recognition and measure

The government grants shall be recognized while meet the additional conditions of the grants and amount is

actually can be obtained.If a government grant is in the form of a transfer of monetary asset the item shall be measured at the amount

received or receivable. If a government grant is in the form of a transfer of non-monetary asset the item shall

be measured at fair value. If the fair value can not be reliably acquired than measured by nominal amount.

(3) Accounting treatment

A government grant related to an asset shall be recognized as deferred income and reckoned into current

gains/losses according to the depreciation process in use life of such assets.

A government grant related to income if they making up relevant expenses and losses for later period than

recognized deferred income and should reckoned into current gain/loss during the period while relevant

expenses are recognized; if they making up relevant expenses and losses that occurred than reckoned into

current gains/losses.

A government grant related to daily operation activity of the Company should reckoned into other income;

those without related to daily operation activity should reckoned into non-operation income and expenses.The financial discount funds received by the Company shall write down relevant borrowing costs.

28. Deferred income tax assets/Deferred income tax liabilities

(1) Deferred income tax assets or deferred income tax liabilities are realized based on the difference between

the carrying values of assets and liabilities and their taxation bases (as for the ones did not recognized as assets

and liability and with taxation basis recognized in line with tax regulations different between tax base and its

book value) at the tax rates applicable in the periods when the Company recovers such assets or settles such

liabilities.

(2) Deferred income tax assets are realized to the extent that it is probable to obtain such taxable income which

is used to set off the deductible temporary difference. As at the balance sheet date if there is obvious evidence

showing that it is probable to obtain sufficient taxable income to set off the deductible temporary difference in

future periods deferred income tax assets not realized in previous accounting periods shall be realized.

(3) On balance sheet date re-review shall be made in respect of the carrying value of deferred income tax

assets. If it is impossible to obtain sufficient taxable income to set off the benefits of deferred income tax assets

in future periods then the carrying value of deferred income tax assets shall be reduced accordingly. If it is

probable to obtain sufficient taxable income then the amount reduced shall be switched back.

(4) Current income tax and deferred income tax considered as income tax expenses or incomes reckoned into

current gains/losses excluding the follow income tax:

①Enterprise combination;

②Transactions or events recognized in owner’s equity directly

29. Lease

(1) Accounting for operating lease

The rental fee paid for renting the properties by the company are amortized by the straight-line method and

reckoned in the current expenses throughout the lease term without deducting rent-free period. The initial direct

costs related to the lease transactions paid by the company are reckoned in the current expenses.When the lessor undertakes the expenses related to the lease that should be undertaken by the company the

company shall deduct the expenses from the total rental costs share by the deducted rental costs during the

lease term and reckon in the current expenses.Rental obtained from assets leasing during the whole leasing period without rent-free period excluded shall

be amortized by straight-line method and recognized as leasing revenue. The initial direct costs paid with

leasing transaction concerned are reckoned into current expenditure; the amount is larger is capitalized when

incurred and accounted for as profit or loss for the current period on the same basis as recognition of rental

income over the entire lease period.When the company undertakes the expenses related to the lease that should be undertaken by the lessor the

company shall deduct the expenses from the total rental income and distribute by the deducted rental costs

during the lease term.

(2) Accounting treatment for financing lease

Assets lease-in by financing: On the beginning date of the lease the entry value of leased asset shall be at the

lower of the fair value of the leased asset and the present value of minimum lease payment at the beginning

date of the lease. Minimum lease payment shall be the entry value of long-term accounts payable with

difference recognized as unrecognized financing expenses. Unrecognized financing expenses shall be reckoned

in financial expenses and amortized and using effective interest method during the leasing period. The initial

direct costs incurred by the Company shall be reckoned into value of assets lease-in.

Finance leased assets: on the lease commencement date the company affirms the balance among the finance

lease receivables the sum of unguaranteed residual value and its present value as the unrealized financing

income and recognizes it as the rental income during the period of receiving the rent. For the initial direct

costs related to the rental transaction the company reckons in the initial measurement of the finance lease

receivables and reduces the amount of income confirmed in the lease term.

30.Changes of important accounting policy and estimation

(1)Changes of important accounting policies

Implementation of new revenue standard:

The Ministry of Finance revised the Accounting Standards for Business Enterprise No.14- Revenue in 2017

which go into effect on 1 January 2020. The revised standard requires that the cumulative impact of the first

implementation of the standard be adjusted by the amount of opening retained earnings and other related items

in the financial statement for the period of first-time implementation for comparable periods.Main impact on the financial statement of the Company on 1 Jan. 2020 while implementing the new revenue

standard:

Consolidated financial statement: In RMB/CNY

Item 2019-12-31 Reclassify Remeasurement 2020-1-1

Account receivable 2310666475.89 115015466.40 -- 2425681942.29

Other current liability -- 115015466.40 -- 115015466.40

--

Account received in

advance

113737432.61 -110874750.61 -- 2862682.00

Contract liability -- 98565613.54 -- 98565613.54

Other current liability -- 12309137.07 -- 12309137.07

Financial statement of parent company: In RMB/CNY

Item 2019-12-31 Reclassify Remeasurement 2020-1-1

Account receivable 768500929.93 79739079.11 -- 848240009.04

Other current liability -- 79739079.11 -- 79739079.11

Account received in

advance

12010730.30 -12010730.30 -- --

Contract liability -- 10628964.87 -- 10628964.87

Other current liability -- 1381765.43 -- 1381765.43

(2)Changes of important accounting estimate

Nil

(3) Adjustment the financial statements at the beginning of the first year of implementation of new financial

instrument standards since 2020:

Consolidate balance sheet

In RMB/CNY

Item 2019-12-31 2020-1-1 Adjustments

Current assets:

Monetary funds 1596893711.87 1596893711.87

Financial assets measured at fair value and whose

changes are included in current profit or loss

Transaction financial asset 3940885674.32 3940885674.32

Derivative financial assets

Note receivable 1812141371.94 1812141371.94

Account receivable 2310666475.89 2425681942.29 115015466.40

Receivables financing 23873317.86 23873317.86

Account paid in advance 139241917.78 139241917.78

Other account receivables 43730023.31 43730023.31

Inventory 2418744835.82 2418744835.82

Contract assets

Assets held for sale

Non-current asset due within one year

Other current assets 1012055605.74 1012055605.74

Total current assets 13298232934.53 13413248400.93 115015466.40

Non-current assets:

Creditors’ investment

Other creditors’ investment

Long-term account receivables

Long-term equity investment 5322405953.35 5322405953.35

Other equity instrument investment 285048000.00 285048000.00

Other non-current financial assets 1043589987.43 1043589987.43

Investment real estate 22410511.87 22410511.87

Fixed assets 2845176078.20 2845176078.20

Construction in progress 247857777.25 247857777.25

Productive biological assets

Oil and gas assets

Item 2019-12-31 2020-1-1 Adjustments

Intangible assets 430594372.12 430594372.12

Development expenses

Goodwill 1784086.79 1784086.79

Long-term deferred expenses 18536000.25 18536000.25

Deferred income tax assets 212476501.54 212476501.54

Other non-current assets 230235982.45 230235982.45

Total non-current assets 10660115251.25 10660115251.25

Total assets 23958348185.78 24073363652.18 115015466.40

Current liabilities:

Short-term borrowings 312153969.81 312153969.81

Financial liability measured by fair value and with

variation reckoned into current gains/losses

Transaction financial liability

Derivative financial liability

Note payable 1745218439.52 1745218439.52

Account payable 3312254229.84 3312254229.84

Account received in advance 113737432.61 2862682.00 -110874750.61

Contract liability 98565613.54 98565613.54

Employee compensation payable 314343737.66 314343737.66

Taxes payable 129538411.86 129538411.86

Other account payable 65266262.39 65266262.39

Liability held for sale

Non-current liabilities due within one year

Other current liability 127324603.47 127324603.47

Total current liabilities 5992512483.69 6107527950.09 115015466.40

Non-current liabilities:

Long-term borrowings

Bonds payable

Including: preferred stock

Perpetual capital securities

Long-term account payable 35108263.11 35108263.11

Long-term employee compensation payable 58392053.61 58392053.61

Accrual liabilities

Deferred income 365116022.98 365116022.98

Deferred income tax liabilities 22566051.72 22566051.72

Other non-current liabilities

Total non-current liabilities 481182391.42 481182391.42

Total liabilities 6473694875.11 6588710341.51 115015466.40

Item 2019-12-31 2020-1-1 Adjustments

Owners’ equity:

Paid-in capital (or share capital) 1008950570.00 1008950570.00

Other equity instrument

Including: preferred stock

Perpetual capital securities

Capital reserve 3391527806.33 3391527806.33

Less: Inventory shares

Other comprehensive income 134871.67 134871.67

Reasonable reserve 3247757.06 3247757.06

Surplus reserve 510100496.00 510100496.00

Retained profit 12076443635.56 12076443635.56

Total owners’ equity attributable to parent company 16990405136.62 16990405136.62

Minority interests 494248174.05 494248174.05

Total owners’ equity 17484653310.67 17484653310.67

Total liabilities and owner’s equity 23958348185.78 24073363652.18 115015466.40

Balance sheet of parent company

In RMB/CNY

Item 2019-12-31 2020-1-1 Adjustments

Current assets:

Monetary funds 965770877.82 965770877.82

Financial assets measured at fair value and

whose changes are included in current profit or loss

Transaction financial asset 3758789072.68 3758789072.68

Derivative financial assets

Note receivable 202403993.13 202403993.13

Account receivable 768500929.93 848240009.04 79739079.11

Receivables financing

Account paid in advance 89116730.45 89116730.45

Other account receivables 250014956.74 250014956.74

Inventory 565144234.49 565144234.49

Contract assets

Assets held for sale

Non-current asset due within one year

Other current assets 938616881.51 938616881.51

Total current assets 7538357676.75 7618096755.86 79739079.11

Non-current assets:

Creditors’ investment

Other creditors’ investment

Long-term account receivables

Item 2019-12-31 2020-1-1 Adjustments

Long-term equity investment 6331363630.04 6331363630.04

Other equity instrument investment 209108000.00 209108000.00

Other non-current financial assets 1043589987.43 1043589987.43

Investment real estate

Fixed assets 1646333216.50 1646333216.50

Construction in progress 136573912.28 136573912.28

Productive biological assets

Oil and gas assets

Intangible assets 203663423.60 203663423.60

Development expenses

Goodwill

Long-term deferred expenses

Deferred income tax assets 105137877.84 105137877.84

Other non-current assets 172646721.05 172646721.05

Total non-current assets 9848416768.74 9848416768.74

Total assets 17386774445.49 17466513524.60 79739079.11

Current liabilities:

Short-term borrowings 116126459.33 116126459.33

Financial liability measured by fair value and

with variation reckoned into current gains/losses

Transaction financial liability

Derivative financial liability

Note payable 284054137.00 284054137.00

Account payable 930273146.35 930273146.35

Account received in advance 12010730.30 -12010730.30

Contract liability 10628964.87 10628964.87

Employee compensation payable 213626754.45 213626754.45

Taxes payable 56540307.59 56540307.59

Other account payable 11976576.21 11976576.21

Liability held for sale

Non-current liabilities due within one year

Other current liability 81120844.54 81120844.54

Total current liabilities 1624608111.23 1704347190.34 79739079.11

Non-current liabilities:

Long-term borrowings

Bonds payable

Including: preferred stock

Perpetual capital securities

Long-term account payable

Long-term employee compensation payable 50058386.76 50058386.76

Accrual liabilities

Item 2019-12-31 2020-1-1 Adjustments

Deferred income 322971778.82 322971778.82

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 373030165.58 373030165.58

Total liabilities 1997638276.81 2077377355.92 79739079.11

Owners’ equity:

Paid-in capital (or share capital) 1008950570.00 1008950570.00

Other equity instrument

Including: preferred stock

Perpetual capital securities

Capital reserve 3488221286.39 3488221286.39

Less: Inventory shares

Other comprehensive income

Reasonable reserve

Surplus reserve 510100496.00 510100496.00

Retained profit 10381863816.29 10381863816.29

Total owners’ equity 15389136168.68 15389136168.68

Total liabilities and owner’s equity 17386774445.49 17466513524.60 79739079.11

31. Critical accounting judgments and estimates

In the process of applying the Company's accounting policies due to the inherent uncertainty of business

activities the Company needs to judge estimate and assume the book value of the report items cannot be

accurately measured. These judgments estimates and assumptions are made on the basis of the historical

experience of the Company’s management and by considering other relevant factors which shall impact the

reported amounts of income expenses assets and liabilities and the disclosure of contingent liabilities on the

balance sheet date. However the actual results caused by the estimated uncertainties may differ from the

management's current estimates of the Company so as to carry out the significant adjustments to the book value

of the assets or liabilities to be affected.The Company regularly reviews the aforementioned judgments estimates and assumptions on the basis of

continuing operations the changes in accounting estimates only affect the current period of which the impacts

are recognized in the current period; the changes in accounting estimates not only affect the current period but

also the future periods of which the impacts are recognized in the current and future periods.On the balance sheet date the important areas of the financial statements that the Company needs to judge

estimate and assume are as follows:

(1) Provision for bad debts

The Company has used the expected credit loss model to assess the impairment of financial instruments. The

application of the expected credit loss model requires significant judgements and estimates and must consider

all reasonable and evidence-based information including forward-looking information. In making such

judgments and estimates the Company infers the expected changes in debtors’ credit risks based on historical

repayment data combined with economic policies macroeconomic indicators industry risks and other factors.

(2) Inventory impairment

According to the inventory accounting policies the Company measures by the comparison between the cost and

the net realizable value if the cost is higher than the net realizable value and the old and unsalable inventories

the Company calculates and withdraws the inventory impairment. The inventory devalues to the net realizable

value by evaluating the inventory’s vendibility and net realizable value. To identify the inventory impairment

the management needs to obtain the unambiguous evidences and consider the purpose to hold the inventory

and judge and estimate the impacts of events after the balance sheet date. The actual results and the differences

between the previously estimated results shall affect the book value of inventory and the provision or return of

the inventory impairment during the period estimated to be changed.

(3) Preparation for the impairment of non-financial & non-current assets

The Company checks whether the non-current assets except for the financial assets may decrease in value at

the balance sheet date. For the intangible assets with indefinite service life in addition to the annual impairment

test the impairment test is also needed when there is a sign of impairment. For the other non-current assets

except for the financial assets the impairment test is needed when it indicates that the book amounts may not be

recoverable.When the book value of the asset or group of assets exceeds its recoverable amount i.e. the higher between the

net amount by subtracting the disposal costs from the fair value and the present value of expected future cash

flows it indicates the impairment.

As for the net amount by subtracting the disposal costs from the fair value refer to the sales agreement price

similar to the assets in the fair trade or the observable market price and subtract the incremental costs

determination directly attributable to the disposal of the asset.When estimating the present value of the future cash flow the Company needs to make significant judgments

to the output price and related operating expenses of the asset (or asset group) and the discount rate used for

calculating the present value. When estimating the recoverable amount the Company shall adopt all the

relevant information can be obtained including the prediction related to the output price and related operating

expenses based on the reasonable and supportable assumptions.The Company tests whether its business reputation decreases in value every year which requires to estimating

the present value of the asset group allocated with goodwill or the future cash flow combined by the asset

group. When estimating the present value of the future cash flow the Company needs to estimate the future

cash flows generated by the asset group or the combination of asset group and select the proper discount rate

to determine the present value of the future cash flows.

(4) Depreciation and amortization

The Company depreciates and amortizes the investment property fixed assets and intangible assets according

to the straight-line method in the service life after considering the residual value. The Company regularly

reviews the service life to determine the depreciation and amortization expense amount to be reckoned in each

reporting period. The service life is determined by the Company based on the past experience of similar assets

and the expected technological updating. If the previous estimates have significant changes the depreciation and

amortization expense shall be adjusted in future periods.

(5) Fair value of financial instrument

Financial instruments that do not have active markets to provide quotes need to use valuation techniques to

determine fair value. Valuation techniques include the latest transaction information discounted cash flow

methods and option pricing models. The Company has established a set of work processes to ensure that

qualified personnel are responsible for the calculation verification and review of fair value. The valuation

model used by the Company uses the market information as much as possible and uses the Company-specific

information as little as possible. It should be noted that part of the information used in the valuation model

requires management’s estimation (such as discount rate target exchange rate volatility etc.). The Company

regularly reviews the above estimates and assumptions and makes adjustments if necessary.

(6) Income tax

In the Company’s normal business activities the final tax treatment and calculation of some transactions have

some uncertainties. Whether some projects can be disbursed from the cost and expenses before taxes requires

needs to get approval from the tax authorities. If the final affirmation of these tax matters differs from the

initially estimated amount the difference shall have an impact on its current and deferred income taxes during

the final identification period.IV. Taxation

1. Major taxes and tax rates

Tax Basis Tax rate

VAT

General taxpayers of the company and domestic

subsidiaries calculate output tax at the tax rates of

13% 9% 6% and 5% of taxable income and

calculate and pay value-added tax based on the

difference after deducting the input VAT that is

allowed to be deducted in the current period.

13% 9% 6% Collection rate 5%

City

maintaining &

construction tax

Turnover tax payable 7%

Educational

surtax

Turnover tax payable 5%.4.5%

Corporation

income tax

Taxable income

Except for overseas subsidiaries which calculate

and pay the taxes according to the statutory tax rate

of the country or region where they are located the

corporate income tax of domestic companies is

calculated and paid at 15%、20% or 25% of thetaxable income.

2. Preferential taxation

The Company Weifu Jinning Weifu Leader and Weifu Tianli are accredited as a high-tech enterprise in 2020

and enjoy a preferential income tax rate of 15% from 1 January 2020 to 31 December 2022.The State Administration of Taxation announced the first item of Announcement of the State Administration of

Taxation on the Enterprise Income Tax Issues Concerning the Implementation of the Western Development

Strategy No. 12 of 2012 that from January 1 2011 to December 31 2020 the enterprises located in the west

region and mainly engaged in the industrial projects stipulated in the Catalogue of Encouragement Industriesin

the Western Region and whose main business income accounting for more than 70% of the total income of the

enterprise in the current year can pay the corporate income tax at the tax rate of 15%. In 2020 Weifu Leader

(Chongqing) paid its corporate income tax at the tax rate of 15%.

According to the provision of the State Administration of Taxation on the Announced the Cancellation of 22

Tax Non-administrative Review (No. 58 documents in 2015) dated 18 August 2015 the enterprise that benefit

from the 15% tax incentive for western development do not need to approve only to file and Weifu Leader

(Chongqing) has passed the tax filing audit in 2020.

In 2020 Weifu Leader (Wuhan) met the standards of small and low-profit enterprises and the part of taxable

income that did not exceed 1 million yuan was included in the taxable income at a reduced rate of 25% and

the corporate income tax was paid at the tax rate of 20%; while the part of the taxable income exceeding 1

million yuan but not exceeding 3 million yuan was included in the taxable income at a reduced rate of 50%

and the corporate income tax was paid at the tax rate of 20%.V. Note s to major it e ms in co nso lidate d f ina nc ial s tate me nts

(Monetary unit refers to RMB/CNY below unless otherwise specified.The end of the period refers to

December 31 2020 the beginning of the period refers to January 1 2020 the current period refers to

2020 and the last period refers to 2019.)

1. Monetary funds

Item Ending balance Opening balance

Cash on hand 507.66 93165.33

Cash in bank 1905945511.04 1531405488.52

Other Monetary funds 57343813.63 65395058.02

Total 1963289832.33 1596893711.87

Including: Total amount saving aboard 33723245.25 31442836.86

Total amount with restriction on

use for mortgage pledge or freeze

57343813.63 34946900.21

Other explanation:

The ending balance of other monetary funds includes bank acceptance bill deposit 51045344.11 yuan Mastercard deposit

215720.00 yuan in-transit foreign exchange funds 2656627.59 yuan letter of credit guarantee deposit 587241.00 yuan and

frozen dividends 2838880.93 yuan. The in-transit foreign exchange fund of 2656627.59 yuan is the final payment of the

investment in Protean Holding Corp; as of December 31 2020 the amount is still in the foreign exchange supervision

account.The frozen dividend of 2838880.93 Yuan represents the part of dividends distributed by SDEC(stock code:600841) and

Miracle Automation (stock code:002009) from 2017 to 2020 held by the Company as financial assets available for sale.

According to the notices numbered Yue 03MC [2016]2490 and Yue 03MC [2016]2492 served by Guangdong Shenzhen

Intermediate People’s Court these dividends were frozen.

2. Transaction financial asset

Item Ending balance Opening balance

Financial assets measured by fair value and with

variation reckoned into current gains/losses

3518432939.10 3940885674.32

Including: SDEC share 140395956.00 91822332.00

Miracle Automation share 47712300.00 36031500.00

Financial products 3330324683.10 3813031842.32

Other -- --

Total 3518432939.10 3940885674.32

3. Note receivable

(1) Classification of notes receivable:

Item Ending balance Opening balance

Bank acceptance bill 1312571695.46 1755135175.42

Trade acceptance bill 344744028.10 57006196.52

Total 1657315723.56 1812141371.94

Category

Ending balance

Book balance Bad debt reserve

Book value

Amount Ratio (%) Amount

Accrual ratio

(%)

Note receivable with bad debt

provision accrual on portfolio

1657315723.56 100.00 -- -- 1657315723.56

Portfolio 1: bank acceptance bill 1312571695.46 79.20 -- -- 1312571695.46

Portfolio 2: trade acceptance bill 344744028.10 20.80 -- -- 344744028.10

Total 1657315723.56 100.00 -- -- 1657315723.56

On December 31 2020 the company accrued bad debt provisions according to the expected credit losses for the entire duration

bank acceptance bills and trade acceptance bill do not need to accrue bad debt provisions.The company believed that the bank

acceptance bills held did not have significant credit risk and would not cause significant losses due to bank defaults.The trade

acceptance bill held by the Company did not have significant credit risk because these bills were mainly issued by large

state-owned enterprises and listed companies with good reputation and based on historical experience there had been no major

defaults so they did not accrue bad debt provisions for the receivable bank acceptance bills and trade acceptance bill.

(2) Notes receivable already pledged by the Company at the end of the period:

Item Amount pledge at period-end

Bank acceptance bill 677962881.14

Trade acceptance bill 203951495.81

Total 881914376.95

(3) Notes endorsement or discount and undue on balance sheet date

Item

Amount derecognition at

period-end

Amount not derecognition at

period-end

Bank acceptance bill 883989936.32 --

Trade acceptance bill 33750000.00 --

Total 917739936.32 --

(4) Notes transfer to account receivable due for failure implementation by drawer at period-end:

Item Amount transfer to account receivable at period-end

Trade acceptance bill 7300000.00

Other explanation:

The trade acceptance bill that the company transferred to the accounts receivable due to in 2018 the failure of the drawer to perform

the agreement at the end of the period were the bills of the subsidiaries controlled by Baota Petrochemical Group Co. Ltd. and the

bills accepted by Baota Petrochemical Group Finance Co. Ltd. (hereinafter referred to as “BDbills”); In 2018 the amount

transferred to account receivable was 7 million yuan and 1.7 million yuan has been recovered in 2019 this year an increase of 2

million yuan was added.

4. Account receivable

(1) Classification of account receivable:

Category

Ending balance

Book balance Bad debt reserve

Book value Amount Ratio (%) Amount Accrual ratio

(%)

Account receivable with bad

debt provision accrual on a

single basis

80362095.35 2.74 80362095.35 100.00 --

Account receivable with bad

debt provision accrual on

portfolio

2847529398.11 97.26 22749045.70 0.80 2824780352.41

Total 2927891493.46 100.00 103111141.05 3.52 2824780352.41

Category

Opening balance

Book balance Bad debt reserve

Book value Amount Ratio (%) Amount Accrual ratio

(%)

with bad debt provision

accrual on a single basis

64818802.14 2.58 64818802.14 100 --

with bad debt provision

accrual on portfolio

2448486812.37 97.42 22804870.08 0.93 2425681942.29

Total 2513305614.51 100.00 87623672.22 3.49 2425681942.29

①Bad debt provision accrual on single basis:

Account receivable(by unit)

Ending balance

Book balance

Bad debt

reserve

Accrual ratio

(%)

Accrual causes

Hubei Meiyang Auto Industry Co. Ltd. 20139669.45 20139669.45 100.00 Have difficulty in collection

Hunan Leopaard Auto Co. Ltd. 8910778.54 8910778.54 100.00 Have difficulty in collection

BD bills 7300000.00 7300000.00 100.00 Have difficulty in collection

Jiangxi Dorcen Automobile Industry Co.Ltd.

7287632.16 7287632.16 100.00 Have difficulty in collection

Linyi Zotye Automobile components 6193466.77 6193466.77 100.00 Have difficulty in collection

Account receivable(by unit)

Ending balance

Book balance

Bad debt

reserve

Accrual ratio

(%)

Accrual causes

Manufacturing Co. Ltd.

Changchun FAW Sihuan Engine

Manufacturing Co. Ltd

5852415.65 5852415.65 100.00 Have difficulty in collection

Tongling Ruineng Purchasing Co. Ltd. 4320454.34 4320454.34 100.00 Have difficulty in collection

Brilliance Automotive Group Holdings

Co. Ltd.

3469091.33 3469091.33 100.00 Have difficulty in collection

Zhejiang Zotye Auto Manufacturing Co.Ltd.

3217763.27 3217763.27 100.00 Have difficulty in collection

Jiangxi Dorcen Automobile Co. Ltd. 2518959.01 2518959.01 100.00 Have difficulty in collection

Dongfeng Chaoyang Diesel Co. Ltd. 1953054.31 1953054.31 100.00 Have difficulty in collection

Jiangsu Kawei Auto Industrial Group Co.Ltd.

1932476.26 1932476.26 100.00 Have difficulty in collection

Wuxi Kipor Machinery Co. Ltd 1820798.21 1820798.21 100.00 Have difficulty in collection

Fujian Zhao’an Country Minyue Bianjie

Agricultural Machinery Automobile

components Co. Ltd.

1111007.12 1111007.12 100.00 Have difficulty in collection

Jiangsu Jintan Automobile Industry Co.Ltd.

1059798.43 1059798.43 100.00 Have difficulty in collection

Other custom 3274730.50 3274730.50 100.00 Have difficulty in collection

Total 80362095.35 80362095.35 100.00

②Bad debt provision accrual on portfolio:

Account age

Ending balance

Book balance Bad debt reserve Accrual ratio (%)

Within 6 months 2708236852.25 -- --

6 months to one year 112424780.47 11242478.05 10.00

1-2 years 16733198.33 3346639.68 20.00

2-3 years 3291064.86 1316425.77 40.00

Over 3 years 6843502.20 6843502.20 100.00

Total 2847529398.11 22749045.70 0.80

③In the portfolio there is no account receivable bad debt reserves are accrued by other methods

④By account age (Including single provision and portfolio provision):

Account age Ending Book balance

Within one year 2822428153.44

Including: within 6 months 2708470485.40

6 months to one year 113957668.04

1-2 years 54617379.30

2-3 years 35820608.24

Over 3 years 15025352.48

Total 2927891493.46

(2) Bad debt provision accrual collected or switch back:

Category

Opening

balance

Amount changed in the period

Ending balance

Accrual

Collected or

reversal

Written-off

Conversion

of foreign

currency

financial

statement

Increase in

business

combination

Bad debt

reserve

87623672.22 17176890.53 931854.92 988058.21 23670.92 206820.51 103111141.05

Important bad debt provision collected or switch back: nil

(3) Account receivable actual charge off in the Period

Item Amount charge off Resulted by related transaction (Y/N)

Anhui Quanchai Power Co. Ltd. 143750.00 N

Zhejiang Gonow Automobile Co. Ltd. 138571.90 N

Chongqing Tuopu Diesel Engine Factory 134197.30 N

Fuzhou Haominxing Automobile

components Co. Ltd.

129739.47 N

Shanghai Yangma Generator Co. Ltd. 104496.00 N

Retail enterprise 337303.54 N

Total 988058.21

(4) Top 5 receivables at ending balance by arrears party

Name

Ending balance of account

receivable

Ratio in total ending

balance of account

receivables (%)

Ending balance of bad debt

reserve

Bosch Automobile Diesel System Co. Ltd. 549543387.12 18.77 --

Robert Bosch Company 205738695.62 7.03 84473.87

Custom 3 220253622.18 7.52 7236.15

Custom 4 183940277.82 6.28 85495.24

Custom 5 171736086.39 5.87 8253890.59

Total 1331212069.13 45.47 8431095.85

(5) Account receivable derecognition due to financial assets transfer

Nil

(6) Assets and liabilities resulted by account receivable transfer and continues involvement

Nil

5. Receivables financing

(1)Classification of receivables financing:

Item Ending balance Opening balance

Note receivable 1005524477.88 23873317.86

Including: bank acceptance bill 1005524477.88 23873317.86

Trade acceptance bill -- --

Total 1005524477.88 23873317.86

Other explanation: During the management of enterprise liquidity the company will discount or endorse

transfers before the maturity of some bills the business model for managing bills receivable is to collect

contractual cash flows and sell the financial asset so it is classified as financial assets measured at fair value

and whose changes are included in other comprehensive income which is listed in receivables financing.

(2) Notes receivable already pledged by the Company at the end of the period:

Item Amount pledge at period-end

Bank acceptance bill 646892501.28

Trade acceptance bill --

Total 646892501.28

6. Account paid in advance

(1) Account age of account paid in advance

Account age

Ending balance Opening balance

Amount Ratio (%) Amount Ratio (%)

Within one year 146877271.37 96.71 118030952.47 84.77

1-2 years 2799827.49 1.84 19644713.49 14.11

2-3 years 1254109.33 0.83 683098.16 0.49

Over 3 years 942149.57 0.62 883153.66 0.63

Total 151873357.76 100.00 139241917.78 100.00

Explanation on reasons of failure to settle on important advance payment with age over one year:

Nil

(2) Top 5 advance payment at ending balance by prepayment object

Total year-end balance of top five advance payment by prepayment object amounted to 61951950.89 Yuan

takes 40.79 percent of the total advance payment at year-end.

7. Other account receivables

Item Ending balance Opening balance

Interest receivable -- 655052.98

Dividend receivable 49000000.00 1070000.00

Other account receivables 5209580.88 42004970.33

Total 54209580.88 43730023.31

(1)Interest receivable

1) Category of interest receivable

Item Ending balance Opening balance

Time deposit -- --

Interest of fund occupation -- 655052.98

Total -- 655052.98

2) Significant overdue interest

Nil

(2) Dividend receivable

1) Category of dividend receivable

Invested enterprise Ending balance Opening balance

Wuxi Weifu Environment Catalyst Co. Ltd. 49000000.00 --

Weifu Precision Machinery Manufacturing Co. -- 1070000.00

Invested enterprise Ending balance Opening balance

Ltd.Total 49000000.00 1070000.00

2) Important dividend receivable with account age over one year

Nil

(3) Other account receivables

1) Other account receivables classification by nature

Nature Ending balance Opening balance

Intercourse funds from units -- 35441483.88

Protean Holdings Corp. equity disposal fund -- 10654092.89

Cash deposit 5650143.62 3625917.96

Staff loans and petty cash 766301.05 1346241.81

Other 1651737.93 300206.93

Total 8068182.60 51367943.47

2) Accrual of bad debt provision

Bad debt reserve

Phase I Phase II Phase III

Total Expected credit losses

over next 12 months

Expected credit losses

for the entire duration

(without credit

impairment occurred)

Expected credit losses

for the entire duration

(with credit impairment

occurred)

Balance on Jan. 1 2020 7848301.94 -- 1514671.20 9362973.14

Balance of Jan. 1 2020 in the

period

-- -- -- --

--transfer-in phase I -- -- -- --

--transfer-in phase II -- -- --

-- switch back phase II -- -- -- --

-- switch back phase I -- -- -- --

Current accrual 33302.78 -- 31823.40 65126.18

Current reversal 5056807.33 -- 68706.86 5125514.19

Current written-off -- -- 1445964.34 1445964.34

Other change 1980.93 -- -- 1980.93

Balance on Dec. 31 2020 2826778.32 -- 31823.40 2858601.72

By account age (Including single provision and portfolio provision)

Account age Ending Book balance

Within one year 5306591.79

Including: Within 6 months 4338058.39

6 months to one year 968533.40

1-2 years 80.00

2-3 years 47365.81

Over 3 years 2714145.00

Total 8068182.60

3) Bad debt provision accrual collected or switch back

Category

Opening

balance

Amount changed in the period

Ending balance

Accrual

Collected or

reversal

Written-off

Conversion

of foreign

currency

financial

statement

Increase in

business

combination

Bad debt

reserve

9362973.14 65126.18 5125514.19 1445964.34 1980.93 -- 2858601.72

4) Other receivables actually written-off during the reporting period

Item Amount charge off

American HESS Company 1445964.34

5) Top 5 other receivables at ending balance by arrears party

Name Nature Ending balance Account age

Ratio

(%)

Ending

balance of bad

debt reserve

Ningbo Jiangbei High-Tech Industry Park

Development Construction Co. Ltd.

Deposit margin 1767000.00 Over 3 years 21.90 1767000.00

Wuxi China Resources Gas Co. Ltd. Deposit margin 1026000.00

Within 6

months

12.73 --

Zhenkunxing Industrial Supermarket

(Shanghai) Co. Ltd.

Deposit margin 1000000.00

Within 6

months

12.39 --

Chongqing Airport Group Co. Ltd. Deposit margin 636710.00

6 months to one

year

7.89 63671.00

Nanjing Chimbusco City Gas

Development Co. Ltd.

Deposit margin 575640.00 Over 3 years 7.13 575640.00

Total 5005350.00 62.04 2406311.00

6) Other account receivables related to government grants: Nil

7) Other receivable for termination of confirmation due to the transfer of financial assets: Nil

8) The amount of assets and liabilities that are transferred other receivable and continued to be involved: Nil

8. Inventory

(1) Category of inventory

Item

Ending balance Opening balance

Book balance Depreciation

reserve

Book value Book balance Depreciation

reserve

Book value

Raw materials 584188987.86 73833368.32 510355619.54 495927678.66 81069128.03 414858550.63

Goods in process 415445852.86 14589096.65 400856756.21 243525007.82 13963866.92 229561140.90

Finished goods 2124817656.18 158847857.29 1965969798.89 1937368868.87 163043724.58 1774325144.29

Total 3124452496.90 247270322.26 2877182174.64 2676821555.35

258076719.53 2418744835.82

(2) Inventory depreciation reserve

Inventory

category

Opening

balance

Current increased

Ending balance

Increase in

business

combination

Accrual Resell Conversion of

foreign

currency

financial

statement

Raw materials 81069128.03 192731.93 32396791.38 39951549.94 126266.92 73833368.32

Goods in

process

13963866.92 -- 8567123.76 7941894.03 -- 14589096.65

Finished goods 163043724.58 -- 101436883.33 105666604.29 33853.67 158847857.29

Total 258076719.53 192731.93 142400798.47 153560048.26 160120.59 247270322.26

① Net realizable value of the inventory refers to: during the day-to-day activities results of the estimated sale

price less costs which are going to happen by estimation till works completed sales price estimated and

relevant taxes.

② Accrual basis for inventory depreciation reserve:

Item

Accrual basis for inventory

impairment provision

Specific basis for recognition

Raw materials

The materials sold due to finished

goods manufactured its net realizable

value is lower than the book value

Results from the estimated sale price of such inventory less the cost

what will happen estimated sales expenses and relevant taxes till

the goods completed

Goods in

process

The goods in process sold due to

finished goods manufactured its net

realizable value is lower than the

book value

Results from the estimated sale price of such inventory less the cost

what will happen estimated sales expenses and relevant taxes till

the goods completed

Finished goods

Accrual basis for inventory

impairment provision

Specific basis for recognition

③ Reasons of write-off for inventory falling price reserves:

Item Reasons of write-off

Raw materials Used for production and the finished goods are realized sales

Goods in process Goods in process completed in the Period and corresponding finished goods are realized sales in the Period

Finished goods Sales in the Period

(3) Explanation on capitalization of borrowing costs at ending balance of inventory

Nil

9. Other current assets

Item Ending balance Opening balance

Structured deposits 1925000000.00 965000000.00

Receivable export tax rebates 5286965.71 5383485.34

VAT refund receivable -- 1648669.86

Prepaid taxes and VAT retained 200524304.70 36067254.77

Input tax to be deducted and certification 178073.42 764895.21

Other 6931769.78 3191300.56

Total 2137921113.61 1012055605.74

10. Long-term equity investments

The invested

entity

Opening balance

Current changes (+ -)

Ending balance

Ending

balance of

depreciation

reserves

Additional

investment

Capital

reduction

Investment

gain/loss

recognized under

equity

Other

comprehensive

income

adjustment

Other

equity

change

Cash dividend or

profit announced

to issued

Provision

for

impairment

Other

Associated

enterprise

Wuxi Weifu

Environment

Catalyst Co. Ltd.

578366832.27 -- -- 147950344.01 -- -- 49000000.00 -- -- 677317176.28 --

Bosch

Automobile

Diesel System

Co. Ltd.

3417092136.65 -- -- 1185178731.75 -- -- 1801681159.00 -- -- 2800589709.40 --

Zhonglian

Automobile

Electronic Co.

Ltd.

1261232635.30 -- -- 307716221.01 -- -- 331400000.00 -- -- 1237548856.31 --

Weifu Precision

Machinery

Manufacturing

Co. Ltd.

61536602.82 -- -- 16917467.83 -- -- 3600000.00 -- -- 74854070.65 --

Shinwell

Automobile Tech.

(Wuxi) Co. Ltd.

4177746.31 -- -- -3194996.20 -- -- -- -- -- 982750.11 --

Changchun

Xuyang Weifu

Auto Parts

Technology Co.Ltd.

-- 10200000.00 -- -4271.78 -- -- -- -- -- 10195728.22 --

Total 5322405953.35 10200000.00 -- 1654563496.62 -- -- 2185681159.00 -- -- 4801488290.97 --

11. Other equity instrument investment

Item Ending balance Opening balance

Wuxi Xidong Science & Technology Industrial Park 5000000.00 5000000.00

Beijing Zhike Industry Investment Holding Group Co. Ltd. 75940000.00 75940000.00

Rare earth Catalysis Innovation Research Institute (Dongying)

Co. Ltd.

4108000.00 4108000.00

Wuxi Xichang Microchip Semi-Conductor 200000000.00 200000000.00

Total 285048000.00 285048000.00

12. Other non-current financial assets

Item Ending balance Opening balance

Tradable financial assets holding for over one year 1467000000.00 1000246703.43

Equity instrument investment 338788421.00 43343284.00

Total 1805788421.00 1043589987.43

13. Investment real estate

(1) Investment real estate measured by cost

Item House and Building Land use right

Construction

in progress

Total

I. original book value

1.Opening balance 65524052.61 -- -- 65524052.61

2.Current increased -- -- -- --

(1) outsourcing -- -- -- --

(2) Inventory\fixed assets\construction in

process transfer-in

-- -- -- --

(3) increased by combination -- -- -- --

3.Current decreased -- -- -- --

(1) disposal -- -- -- --

(2) other transfer-out -- -- -- --

4.Ending balance 65524052.61 -- -- 65524052.61

II. Accumulated depreciation and accumulated

amortization

1.Opening balance 43113540.74 -- -- 43113540.74

2.Current increased 1523830.25 -- -- 1523830.25

(1) accrual or amortization 1523830.25 -- -- 1523830.25

(2) Inventory\fixed assets\construction in

process transfer-in

-- -- -- --

3.Current decreased -- -- -- --

(1) disposal -- -- -- --

(2) other transfer-out -- -- -- --

4.Ending balance 44637370.99 -- -- 44637370.99

III. Depreciation reserves

Item House and Building Land use right

Construction

in progress

Total

1.Opening balance -- -- -- --

2.Current increased -- -- -- --

(1) accrual -- -- -- --

3. Current decreased -- -- -- --

(1) disposal -- -- -- --

(2) other transfer-out -- -- -- --

4.Ending balance -- -- -- --

IV. Book value

1.Ending Book value 20886681.62 -- -- 20886681.62

2.Opening Book value 22410511.87 -- -- 22410511.87

(2) Investment real estate measured at fair value

Nil

14. Fixed assets

(1) Fixed assets

Item

House and

Building

Machinery

equipment

Transportation

equipment

Electronic and

other equipment

Total

I. original book value

1.Opening balance 1577727234.03 2892177324.22 33031605.81 518844612.28 5021780776.34

2.Current increased 7563975.38 498442904.87 1083968.58 44140463.89 551231312.72

(1) Purchase -- 5768487.05 -- 5779483.65 11547970.70

(2) Construction in progress

transfer-in

7563975.38 406156147.42 1083968.58 26833999.90 441638091.28

(3) increased by combination -- 86518270.40 -- 11526980.34 98045250.74

3.Current decreased 696619.88 32375566.33 3834292.89 31182407.69 68088886.79

(1) disposal or scrapping 696619.88 32375566.33 3834292.89 31182407.69 68088886.79

(2)Other -- -- -- -- --

4.Conversion of foreign

currency financial statement

-- 1445729.23 -- 209033.22 1654762.45

5.Ending balance 1584594589.53 3359690391.99 30281281.50 532011701.70 5506577964.72

II. Accumulated depreciation

1.Opening balance 373468771.98 1466289636.27 24572383.79 259549999.99 2123880792.03

2.Current increased 47226786.07 341600542.42 1505443.82 50929896.22 441262668.53

(1) accrual 47226786.07 295932176.04 1505443.82 44560750.98 389225156.91

(2)Increase in business

combination

-- 45668366.38 -- 6369145.24 52037511.62

3.Current decreased 552514.41 7100470.77 3475517.46 19546483.92 30674986.56

(1) disposal or scrapping 552514.41 7100470.77 3475517.46 19546483.92 30674986.56

(2)Other -- -- -- -- --

Item

House and

Building

Machinery

equipment

Transportation

equipment

Electronic and

other equipment

Total

4.Conversion of foreign

currency financial statement

-- 833283.96 -- 135316.83 968600.79

5.Ending balance 420143043.64 1801622991.88 22602310.15 291068729.12 2535437074.79

III. Depreciation reserves

1.Opening balance -- 45370341.62 73319.90 7280244.59 52723906.11

2.Current increased -- 36436674.38 -- -- 36436674.38

(1) accrual -- 36436674.38 -- -- 36436674.38

(2)Other -- -- -- -- --

3.Current decreased 35943.60 -- 213938.04 249881.64

(1) disposal or scrapping -- 35943.60 -- 213938.04 249881.64

(2)Other -- -- -- -- --

4. Conversion of foreign

currency financial statement

-- -- -- -- --

5. Ending balance -- 81771072.40 73319.90 7066306.55 88910698.85

IV. Book value

1.Ending Book value 1164451545.89 1476296327.71 7605651.45 233876666.03 2882230191.08

2.Opening Book value 1204258462.05 1380517346.33 8385902.12 252014367.70 2845176078.20

(2) Temporarily idle fixed assets: nil

(3) Fixed assets acquired by financing lease:

Item Original book value

Accumulated

depreciation

Impairment provision Book value

Mechanical equipment 28328331.83 16449611.12 -- 11878720.71

(4) Fixed assets acquired by operating lease: nil

(5) Fixed assets without property certification held

Item Book value Reasons for without the property certification

Plant and office building of Weifu Chang’an 34117284.65 Still in process of relevant property procedures

15. Construction in progress

Item Ending balance Opening balance

Construction in progress 243795493.04 247857777.25

Engineering materials -- --

Total 243795493.04 247857777.25

(1) Construction in progress

Item

Ending balance Opening balance

Book balance

Depreciation

reserves

Book value Book balance

Depreciation

reserves

Book value

Technical transformation

of parent company

123249079.40 -- 123249079.40 98032515.22 -- 98032515.22

Technical transformation

of Weifu Autocam

20720304.97 -- 20720304.97 44412832.62 -- 44412832.62

Technical transformation

of Weifu Leader

27031547.25 -- 27031547.25 25051156.03 -- 25051156.03

Other Item 72794561.42 -- 72794561.42 80361273.38 -- 80361273.38

Total 243795493.04 -- 243795493.04 247857777.25 --

247857777.2

5

(2) Changes of major projects under construction

Item

Opening

balance

Current increased

Fixed assets

transfer-in in the

Period

Other decreased

in the Period

Ending balance

Technical transformation of

parent company

98032515.22 258248011.11 233031446.93 -- 123249079.40

Technical transformation of

Weifu Autocam

44412832.62 59344058.68 83036586.33 -- 20720304.97

Technical transformation of

Weifu Leader

25051156.03 49714021.24 47733630.02 -- 27031547.25

Total 167496503.87 367306091.03 363801663.28 -- 171000931.62

Cont.:

Item

Proportion

of project

investment

in budget

(%)

Progress

Accumulated

amount of

interest

capitalization

(%)

including:

interest

capitalized

amount of the

year

Interest

capitalization

rate of the

year (%)

Source of funds

Technical transformation

of parent company

-- -- -- -- --

Accumulated funds of

the company

Technical transformation

of Weifu Autocam

-- -- -- -- --

Accumulated funds of

the company

Technical transformation

of Weifu Leader

-- -- -- -- --

Accumulated funds of

the company

Total -- -- -- -- --

(3) The provision for impairment of construction projects

Nil

16. Intangible assets

(1) Intangible assets

Item Land use right Computer software

Trademark and

trademark license

Patent and

non-patent

technology

Total

I. original book value

1.Opening balance 380986757.11 81823603.48 41597126.47 105086673.46 609494160.52

2.Current increased 25763.33 15790128.41 -- 75384836.56 91200728.30

(1) Purchase -- 15019691.80 -- 2842372.92 17862064.72

(2) internal R&D -- -- -- -- --

(3)Increase in

business combination

-- 770436.61 -- 72542463.64 73312900.25

(4)Other 25763.33 -- -- -- 25763.33

3.Current decreased -- -- -- -- --

Item Land use right Computer software

Trademark and

trademark license

Patent and

non-patent

technology

Total

(1) Disposal or scrap -- -- -- -- --

(2)Other -- -- -- -- --

4.Conversion of

foreign currency

financial statement

-- 71130.87 -- 4607818.10 4678948.97

5.Ending balance 381012520.44 97684862.76 41597126.47 185079328.12 705373837.79

II. accumulated

amortization

1.Opening balance 88200675.16 54519248.03 9709000.00 9823965.21 162252888.40

2.Current increased 7052263.90 19718966.93 -- 44226916.11 70998146.94

(1) accrual 7052263.90 19034067.57 -- 11059695.32 37146026.79

(2)Increase in

business combination

-- 684899.36 -- 33167220.79 33852120.15

3.Current decreased -- -- -- -- --

(1) Disposal or scrap -- -- -- -- --

(2)Other -- -- -- -- --

4.Conversion of

foreign currency

financial statement

-- 35743.41 -- 1027211.35 1062954.76

5.Ending balance 95252939.06 74273958.37 9709000.00 55078092.67 234313990.10

III. Depreciation

reserves

1.Opening balance -- -- 16646900.00 -- 16646900.00

2.Current increased -- -- -- -- --

(1) accrual -- -- -- -- --

(2)Increase in

business combination

-- -- -- -- --

3.Current decreased -- -- -- -- --

(1) Disposal or scrap -- -- -- -- --

(2)Other -- -- -- -- --

4.Conversion of

foreign currency

financial statement

-- -- -- -- --

5.Ending balance -- -- 16646900.00 -- 16646900.00

IV. Book value

1.Ending Book value 285759581.38 23410904.39 15241226.47 130001235.45 454412947.69

2.Opening Book value 292786081.95 27304355.45 15241226.47 95262708.25 430594372.12

(2) Land use right without property certification held: nil

17. Goodwill

Item Opening balance

Increase in this period

Ending balance

Increase in business

combination under

different control

Conversion of foreign

currency financial

statement

Merged with Weifu Tianli 1784086.79 -- -- 1784086.79

Merged with Borit -- 247766648.21 8249961.32 256016609.53

Total 1784086.79 247766648.21 8249961.32 257800696.32

Other explanation:

(1) Goodwill formed by the merger of Weifu Tianli:

In 2010 the Company controlling and combine Weifu Tianli by increasing the capital the goodwill is the number that

combination cost greater than the fair value of identical net assets of Weifu Tianli. At the end of the period the company

conducted an impairment test on goodwill to estimate the present value of future cash flows and the recoverable amount of the

goodwill-related asset group that is to estimate the present value of future cash flow based on the management's financial budget

for the next five years and the discount rate of 15.05% the cash flow of the year after the five years of financial budget has remained

stable. The asset group identified during the goodwill impairment test did not change.The key parameters determined by the goodwill impairment test are as follows: The current value of the expected future cash flow

of the asset group related to goodwill is measured by using 20%~24% of gross profit margin and 4%~14% of the operating income

growth rate in the forecast period as key parameters. The management determines these parameters based on historical conditions

prior to the forecast period and forecasts of market development. After the above tests the company's goodwill does not need to

make provisions for impairment.

(2) Goodwill formed by the merger of Borit:

In this period the company acquired 100.00% equity of Borit in the form of cash purchase the goodwill was the part that the costof the merger was greater than the fair value share of the identifiable net assets of Borit.According to the “Assets AppraisalReport” (Wanlong PBZi (2021) No. 40016) issued by Wanlong (Shanghai) Assets Appraisal Co. Ltd appointed by the Company

the recoverable value of the assets group where the goodwill of the merged with Borit is 391332500 yuan higher than the

carrying value of 339171600 yuan and there is no impairment loss of goodwill.

18. Long-term deferred expenses

Item

Opening

balance

Increase in

business

combination

Current

increased

Amortized in

the Period

Conversion of

foreign

currency

financial

statement

Ending balance

Remodeling costs etc. 18536000.25 -- 9099137.73 12637958.88 64991.99 15062171.09

19. Deferred income tax assets/Deferred income tax liabilities

(1) Deferred income tax assets that are not offset

Item

Ending balance Opening balance

Deductible

temporary

difference

Deferred income

tax assets

Deductible

temporary

difference

Deferred income

tax assets

Bad debt reserve 104259030.38 15779756.63 94527571.76 14302572.39

Inventory depreciation reserve 225684043.14 35799261.60 237900564.04 38773864.59

Depreciation reserves of fixed assets 55397599.68 8523566.97 19197534.00 3095824.19

Depreciation reserves of intangible assets 16646900.00 2497035.00 16646900.00 2497035.00

Other equity instrument investment 10000000.00 1500000.00 10000000.00 1500000.00

Change of fair value of transaction financial asset -- -- 16517403.00 2477610.45

Deferred income 323924836.18 48935725.44 362993022.12 54664953.32

Item

Ending balance Opening balance

Deductible

temporary

difference

Deferred income

tax assets

Deductible

temporary

difference

Deferred income

tax assets

Internal un-realized profit 19551845.38 3457610.51 22481656.04 4568190.39

Payable salary accrued expenses etc. 981477549.10 151813641.23 622348855.94 96720511.00

Depreciation assets amortization difference 89867140.23 14608530.41 49220776.87 7779059.56

Deductible loss of subsidiary 9703095.17 2425773.79 21714524.19 4101171.83

Equity incentive 6330515.63 987908.92 -- --

Total 1842842554.89 286328810.50 1473548807.96 230480792.72

(2) Deferred income tax liabilities that are not offset

Item

Ending balance Opening balance

Taxable temporary

differences

Deferred income

tax liabilities

Taxable temporary

differences

Deferred income

tax liabilities

The difference between the fair value and

taxation basis of Weifeu Tianli assets in a

merger not under the same control

11271189.48 1690678.40 12011409.46 1801711.40

The difference between the fair value and

taxation basis of IRD assets in a merger

not under the same control

86905585.08 19119228.72 94383365.10 20764340.32

The difference between the fair value and

taxation basis of Borit assets in a merger

not under the same control

39376104.10 9844026.00 -- --

Change of fair value of available-for-sale

financial asset

366808362.19 55023506.38 18231842.32 2734776.35

Accelerated depreciation of fixed assets 211571729.76 32911802.62 98019924.32 15269514.83

Total 715932970.61 118589242.12 222646541.20 40570342.90

(3) Deferred income tax assets and deferred income tax liabilities listed after off-set

Item

Trade-off between the

deferred income tax

assets and liabilities

Ending balance of

deferred income tax

assets or liabilities

after off-set

Trade-off between the

deferred income tax

assets and liabilities at

period-begin

Opening balance of

deferred income tax

assets or liabilities

after off-set

Deferred income tax assets -87935309.00 198393501.50 -18004291.18 212476501.54

Deferred income tax liabilities -87935309.00 30653933.12 -18004291.18 22566051.72

(4) Details of unrecognized deferred income tax assets

Item Ending balance Opening balance Note

Bad debt reserve 1710712.39 2459073.60

There were uncertainties in the potential of

generating enough taxable income.Inventory depreciation reserve 21586279.12 20176155.49

There were uncertainties in the potential of

generating enough taxable income.Loss from subsidiary 193713240.35 103734801.82

There were uncertainties in the potential of

generating enough taxable income.

Depreciation reserves of fixed

assets

33513099.17 33526372.11

There were uncertainties in the potential of

generating enough taxable income.Item Ending balance Opening balance Note

Other equity instrument

investment

46600000.00 48633106.95

Uncertainty in obtaining evidence required by tax

authorities

Equity incentive 154321.87 --

There were uncertainties in the potential of

generating enough taxable income.Total 297277652.90 208529509.97

(5) Deductible losses of un-recognized deferred income tax assets expired on the followed year

Maturity year Ending balance Opening balance Note

2020 -- 23567088.89 Subsidiaries have operating losses

2021 12343844.69 43218245.04 Subsidiaries have operating losses

2022 3781066.93 9901777.74 Subsidiaries have operating losses

2023 1171973.53 7882026.39 Subsidiaries have operating losses

2024 18520699.71 19165663.76 Subsidiaries have operating losses

2025 12151503.80 -- Subsidiaries have operating losses

No expiration period 145744151.69 -- Oversea subsidiaries have operating losses

Total 193713240.35 103734801.82

20. Other non-current assets

Item Ending balance Opening balance

Engineering equipment paid in advance 195259441.73 230235982.45

21. Short-term borrowings

(1) Category of short-term borrowings

Item Ending balance Opening balance

Credit loan 301958184.49 305835808.28

Bill financing -- 5976347.95

Interest payable 280415.56 341813.58

Total 302238600.05 312153969.81

(2) Overdue short-term loans without payment

Overdue short-term loans without payment 0 yuan at period-end

22. Note payable

(1) Note payable

Type Ending balance Opening balance

Bank acceptance bill 2462592372.82 1745218439.52

Other explanation:

Margin saving 51045344.11 Yuan was provided for the bank acceptance bill 1528806878.23 Yuan was

pledge for not receivable.

(2) Notes expired at year-end without paid was 0.00 Yuan.

23. Account payable

Item Ending balance Opening balance

Within one year 3986993867.21 3214392402.81

1-2 years 87605077.14 74021217.00

Item Ending balance Opening balance

2-3 years 13824720.43 5854811.50

Over 3 years 12560575.61 17985798.53

Total 4100984240.39 3312254229.84

24. Accounts received in advance

(1) Accounts received in advance

Item Ending balance Opening balance

Within one year 4071236.87 2862682.00

Total 4071236.87 2862682.00

(2) Important accounts received in advance with account age over one year

Nil

25. Contract liabilities

(1) List of contract liabilities:

Item Ending balance Opening balance

Within one year 77554320.04 96736917.15

1-2 years 2763605.96 654710.65

2-3 years 255602.59 243585.27

Over 3 years 1143858.66 930400.47

Total 81717387.25 98565613.54

(2) Important contract liabilities with account age over 1 year:

Nil

26. Wage payable

(1) Wage payable

Item

Opening

balance

Increase in

business

combination

Withdraw

increase

Add:

reclassification

of long-term

staff

remuneration

payable

Payment in the

Period

Conversion

of foreign

currency

financial

statement

Ending balance

I. Short-term

compensation

161202257.62 2723108.82 1327754754.46 -223910852.76 1083683592.15 140646.32 184226322.31

II.Post-employment

welfare- defined

contribution

plans

27587740.03 81963.88 103295134.68 16441504.89 97479526.53 4280.47 49931097.42

III. Dismissed

welfare

2249529.82 -- 1061967.00 2598717.94 4264943.44 -- 1645271.32

IV. Other welfare

due within one

year

106180000.00 -- -- 81282389.60 103312389.60 -- 84150000.00

V. Other

short-term

welfare-Housing

subsidies

employee

17124210.19 -- 2525946.49 -- 7181035.91 -- 12469120.77

Item

Opening

balance

Increase in

business

combination

Withdraw

increase

Add:

reclassification

of long-term

staff

remuneration

payable

Payment in the

Period

Conversion

of foreign

currency

financial

statement

Ending balance

benefits and

welfare funds

Total 314343737.66 2805072.70 1434637802.63 -123588240.33 1295921487.63 144926.79 332421811.82

Reclassification of long-term staff remuneration payable:

①An amount of RMB 223910852.76 in short-term remuneration is reclassified into long-term staff remuneration payable

which represents the incentive fund of RMB 223910852.76 provided for in this period.

②An amount of RMB 97723894.49 is recorded in post office benefits - defined benefit plan and incentive fund payable within

one year which represents the difference between the incentive fund of RMB 101270000.00 expected to be paid in 2021 and

the beginning balance of incentive fund payable within one year post office benefits-defined benefit plan and the actual amount

paid in this period.

(2) Short-term compensation

Item

Opening

balance

Increase in

business

combinatio

n

Withdraw

increase in the

Period

Reclassificatio

n of long-term

staff

remuneration

payable

Payment in the

Period

Conversio

n of

foreign

currency

financial

statement

Ending

balance

1. Wages bonuses

allowances and

subsidies

141247196.

85

2048841.1

4

1106219433.65 -223910852.76 870419048.20

137619.9

4

155323190.6

2

2. Welfare for

workers and staff

-- 658404.45 75696847.48 -- 76356937.24 1797.66 112.35

3. Social insurance 8701447.13 -- 58977657.61 -- 50181099.40 80.34

17498085.6

8

Including:

Medical insurance

7575173.65 -- 49025390.01 -- 42349121.51 --

14251442.1

5

Work

injury insurance

541230.02 -- 3737026.16 -- 2616665.94 80.34 1661670.58

Maternity insurance

585043.46 -- 6215241.44 -- 5215311.95 -- 1584972.95

4. Housing

accumulation fund

679677.00 -- 70474436.00 --

70137926.00

-- 1016187.00

5. Labor union

expenditure and

personnel education

expense

10573936.6

4

-- 15609816.31 -- 15817413.27 749.88

10367089.5

6

6. Short-term paid

absences

-- 15863.23 776563.41 -- 771168.04 398.50 21657.10

Total 161202257.62 2723108.82 1327754754.46 -223910852.76 1083683592.15 140646.32 184226322.31

(3) Post-employment welfare- Defined contribution plans

Item

Opening

balance

Increase in

business

combination

Withdraw

increase in the

Period

Increase in

reclassification

of long-term

staff

remuneration

payable

Payment in

the Period

Conversion

of foreign

currency

financial

statement

Ending

balance

1. Basic

endowment

insurance

9782749.83 65608.24 73924898.32 -- 53932701.22 4280.47 29844835.64

2.

Unemployment

insurance

412974.22 -- 2215497.53 -- 1715942.59 -- 912529.16

3. Enterprise

annuity

17392015.98 16355.64 27154738.83 16441504.89 41830882.72 -- 19173732.62

Total 27587740.03 81963.88 103295134.68 16441504.89 97479526.53 4280.47 49931097.42

Post-employment welfare- defined contribution plans:

The Company participates in the pension insurance and unemployment insurance plans established by

government authorities by laws a certain percentage of the social security fee regulated by the government

will pay by the Company monthly for the plans.Other than the aforesaid monthly contribution the Company

takes no further payment obligation. The relevant expenditure is included in current profit or loss or cost ofrelevant assets when occurs. Found more of enterprise annuity in Note XIV-4.” Annuity plan”

(4) Dismiss welfare

The wages payable resulted from the implementation of inner retirement plan the amount paid in the year

2598717.94 yuan re-classified into the wage payable from long-term wages payable.

27. Taxes payable

Item Ending balance Opening balance

Value-added tax 28744351.90 61749095.75

Corporation income tax 21458320.79 50686013.43

City maintaining & construction tax 1983996.80 4348399.47

Educational surtax 1417140.56 3105999.62

Individual income tax 7184934.79 2689642.51

Other (including stamp tax and local

funds)

6704945.45 6959261.08

Total 67493690.29 129538411.86

28. Other account payable

Item Ending balance Opening balance

Interest payable 4862.22 --

Dividend payable -- --

Other account payable 361551395.20 65266262.39

Total 361556257.42 65266262.39

(1)Interest payable

Item Ending balance Opening balance

Other 4862.22 --

Total 4862.22 --

(2) Other account payable

1) Classification of other accounts payable according to nature of account

Item Ending balance Opening balance

Deposit and margin 12759592.29 14458865.71

Social insurance and reserves funds that withholding 8853543.93 8434584.35

Intercourse funds from units 30982145.98 37055997.50

Restricted stock repurchase obligations 302479200.00 --

Other 6476913.00 5316814.83

Total 361551395.20 65266262.39

2) Significant other payable with over one year age

Item Ending balance Note

Nanjing Jidian Industrial Group Co. Ltd. 4500000.00 Intercourse funds

29. Non-current liabilities due within one year

Item Ending balance Opening balance

Long-term loans due within one year 33271589.84 --

Finance lease payments due within one year 3615985.51 --

Interest payable 26666.67 --

Total 36914242.02 --

30. Other current liabilities

Item Ending balance Opening balance

Rebate payable 213477951.00 115015466.40

Pending sales tax 9393136.33 12309137.07

Total 222871087.33 127324603.47

31. Long-term borrowings

Item Ending balance Opening balance

Credit loan 3050640.97 --

Total 3050640.97 --

32. Long-term account payable

Item Ending balance Opening balance

Long-term account payable 15339090.00 16818181.00

Interest payable of long-term account payable 12793.00 25000.00

Special accounts payable 18265082.11 18265082.11

Finance lease payments 5862253.06 --

Total 39479218.17 35108263.11

(1) Long-term account payable listed by nature

Item Item Ending balance Opening balance

Hi-tech Branch of Nanjing Finance Bureau (note ①) Financial support funds (2005) -- 1140000.00

Hi-tech Branch of Nanjing Finance Bureau (note ②) Financial support funds (2006) 1250000.00 1250000.00

Hi-tech Branch of Nanjing Finance Bureau (note ③) Financial support funds (2007) 1230000.00 1230000.00

Loan transferred from treasury bond (note ④) 339090.00 678181.00

Hi-tech Branch of Nanjing Finance Bureau (note ⑤) Financial support funds (2008) 2750000.00 2750000.00

Hi-tech Branch of Nanjing Finance Bureau (note ⑥) Financial support funds (2009) 1030000.00 1030000.00

Hi-tech Branch of Nanjing Finance Bureau (note ⑦) Financial support funds (2010) 960000.00 960000.00

Hi-tech Branch of Nanjing Finance Bureau (note ⑧) Financial support funds (2011) 5040000.00 5040000.00

Hi-tech Branch of Nanjing Finance Bureau (note ⑨) Financial support funds (2013) 2740000.00 2740000.00

Total 15339090.00 16818181.00

Long-term payable explanation:

Note ①: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone

financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use

the term is from 20 October 2005 to 20 October 2020. Provided that the operation period in the zone is less

than 15 years financial supporting capital will be reimbursed. This support fund has expired fifteen years in

the current period so it is transferred to other income.Note ②: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone

financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use

the term is from 20 July 2006 to 20 July 2021. Provided that the operation period in the zone is less than 15

years financial supporting capital will be reimbursed.Note ③: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone

financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use

the term is from 17 September 2007 to 17 September 2022. Provided that the operation period in the zone is

less than 15 years financial supporting capital will be reimbursed.Note ④: Loan transferred from treasury bond: Weifu Jinning received 1.87 million Yuan of special funds from

budget of the central government and 1.73 million Yuan of special funds from budget of the local government.The non-operating income transferred in was 1.87 million Yuan in 2011 which was confirmed not to return if

the Company pays back special funds of 3.73 million Yuan to the local government in 11 years since 2012

then the Company needs to repay the principal of 339091.00 Yuan each year.Note ⑤: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone

financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use

the term is from 10 November 2008 to 10 November 2023. Provided that the operation period in the zone is

less than 15 years financial supporting capital will be reimbursed.Note ⑥: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone

financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use

the term is from 27 October 2009 to 27 October 2024. Provided that the operation period in the zone is less

than 15 years financial supporting capital will be reimbursed.Note ⑦: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone

financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use

the term is from 27 December 2010 to 27 December 2025. Provided that the operation period in the zone is

less than 15 years financial supporting capital will be reimbursed.Note ⑧: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone

financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use

the term is from 28 December 2011 to 28 December 2026. Provided that the operation period in the zone is

less than 15 years financial supporting capital will be reimbursed.Note ⑨: To encourage Weifu Jinning to enter Nanjing High-tech Technology Industry Development Zone

financial supporting capital is allotted by High-tech branch of Finance Bureau of Nanjing for supporting use

the term is from 18 December 2013 to 18 December 2028. Provided that the operation period in the zone is

less than 15 years financial supporting capital will be reimbursed.

(2) Special accounts payable

Item Ending balance Opening balance

Removal compensation of subsidiary Weifu Jinning 18265082.11 18265082.11

Other explanation: In line with regulation of the house acquisition decision of People’s government of Xuanwu District Nanjing

City Ning Xuan Fu Zheng Zi (2012) No.001 part of the lands and property of Weifu Jingning needs expropriation in order to

carry out the comprehensively improvement of Ming Great Wall. According to the house expropriation and compensation

agreement in state-owned lands signed between Weifu Jinning and House Expropriation Management Office of Xuanwu District

Nanjing City 19.7067 million yuan in total are compensate including operation losses from lessee 1.4416 million yuan in total.The above compensation was received in last period and is making up for the losses from lessee and the above lands and

property have not been collected up to 31 December 2020.

33. Long-term wages payable

Item Ending balance Opening balance

I. Post-employment welfare-defined contribution plans net indebtedness -- --

II. Dismiss welfare 5734948.91 8333666.85

III. Other long-term welfare - incentive fund 277515345.03 171888386.76

Less: incentive fund paid within one year 101270000.00 121830000.00

Other long-term benefits - incentive fund balances 176245345.03 50058386.76

Total 181980293.94 58392053.61

34. Deferred income

Item

Opening

balance

Increase in

this period

Increase in

business

combination

Decrease in this

period

Conversion of

foreign currency

financial

statement

Ending balance

Government grand 365116022.98 22969181.27 1197109.35 61127665.71 49828.84 328204476.73

Item with government grants involved:

Item

Opening

balance

New-added

government

subsidy

amount in

the period

Increase in

business

combination

Amount

reckoned in

other income

Conversion of

foreign

currency

financial

statement

Ending balance

Assets

related/In

come

related

Industrialization

project for injection

VE pump system

with electronically

controlled high

2163000.86 -- -- 721000.30 -- 1442000.56

Assets

related/In

come

related

Item

Opening

balance

New-added

government

subsidy

amount in

the period

Increase in

business

combination

Amount

reckoned in

other income

Conversion of

foreign

currency

financial

statement

Ending balance

Assets

related/In

come

related

pressure for

less-emission diesel

used

Appropriation on

reforming of

production line

technology and

R&D ability of

common rail system

for diesel by

distributive

high-voltage

7100000.00 -- -- -- -- 7100000.00

Assets

related

Fund of industry

upgrade (2012)

26657526.17 -- -- 26015356.44 -- 642169.73

Income

related

Fund of industry

upgrade (2013)

60520000.00 -- -- -- -- 60520000.00

Income

related

Appropriation on

central basic

construction

investment

1428571.45 -- -- 714285.72 -- 714285.73

Assets

related

R&D and

industrialization of

the high-pressure

variable pump of

the common rail

system of diesel

engine for

automobile

6870714.16 -- -- 1543095.28 -- 5327618.88

Assets

related

Research institute of

motor vehicle

exhaust

after-treatment

technology

1836712.58 -- -- 622985.37 -- 1213727.21

Assets

related

Fund of industry

upgrade (2014)

36831000.00 -- -- -- -- 36831000.00

Income

related

New-built assets

compensation after

the removal of

parent company

124849393.9

2

-- -- 20764119.52 -- 104085274.40

Assets

related

Fund of industry

upgrade (2016)

40000000.00 -- -- -- -- 40000000.00

Income

related

Guiding capital for

the technical reform

from State Hi-Tech

Technical

Commission

8147430.27 -- -- 1552110.44 -- 6595319.83

Assets

related

Implementation of

the variable

cross-section

turbocharger for

diesel engine

8972771.42 -- -- 1609982.67 -- 7362788.75

Assets

related

Item

Opening

balance

New-added

government

subsidy

amount in

the period

Increase in

business

combination

Amount

reckoned in

other income

Conversion of

foreign

currency

financial

statement

Ending balance

Assets

related/In

come

related

Demonstration

project for

intelligent

manufacturing

1148441.34 -- -- 299341.74 -- 849099.60

Assets

related

The 2

nd

batch of

provincial special

funds for industry

transformation of

industrial and

information in 2019

-- 5000000.00 -- -- -- 5000000.00

Assets

related

Municipal

technological

reform fund

allocation in 2020

-- 4770000.00 -- -- -- 4770000.00

Assets

related

Strategic

cooperation

agreement funding

for key enterprise of

smart

manufacturing in

high-tech zone

-- 4060000.00 -- -- -- 4060000.00

Assets

related

Other 38590460.81 9139181.27 1197109.35 7285388.23 49828.84 41691192.04

Assets

related/In

come

related

Total

365116022.9

8

22969181.2

7

1197109.35 61127665.71 49828.84 328204476.73

Other explanation:

(1) Appropriation on industrialization project of electrical control and high voltage jet VE system of lowemissions diesel: in September 2009 Weifu Jinning signed “Project Contract of Technology OutcomeTransferring Special Capital in Jiangsu Province” with Nanjing Technical Bureau according to which Weifu

Jinning received appropriation 6.35 million Yuan in 2009 4.775 million Yuan received in 2010 and 0.875

million Yuan received in 2011. According to the contract the attendance date of this project was: from October

of 2009 to March of 2012. This contract agreed 62% of newly increased investment in project would be spent

in fixed assets investment which are belongs to the government grand with assets/income concerned. In 2013

accepted by the science & technology agency of Jiangsu Province and 4789997.04 Yuan with income related

was reckoned into current operation revenue directly; the 7210002.96 Yuan with assets related was amortized

during the predicted service period of the assets and 721000.30 Yuan amortized in the Period.

(2) The appropriation for research and development ability of distributive high-pressure common rail system

for diesel engine use and production line technological transformation project: according to XCJ No. [2010] 59

the Company has received special funds of 7.1 million Yuan appropriated by Finance Bureau of Wuxi New

District in 2011 and used for the Company’s research and development ability of distributive high-pressure

common rail system for diesel engine use and production line technological transformation project; this

appropriation belongs to government subsidies related to assets and will be amortized according to the

depreciation process of the underlying assets when the project is completed.

(3) Industry upgrading funds (2012): In accordance with the document Xi Xin Guanjing Fa [2012] No.216 and

Document Xi Xin Guancai Fa [2012] No. 85 the Company received funds of 60.4 million Yuan appropriated

for industry upgrading this year. Current write off: 26015356.44 Yuan.

(4) Industry upgrading funds (2013): In accordance with the document Xi Xin Guan Jing Fa [2013] No.379 Xi

Xin Guan Jing Fa [2013] No.455 Xi Xin Guan Cai Fa [2013] No.128 and Xi Xin Guan Cai Fa [2013] No.153

the Company received funds of 60.52 million Yuan appropriated for industry upgrading in 2013.

(5) Appropriation for investment of capital construction from the central government: In accordance with the

document Xi Caijian [2012] No.43 the Company received appropriation of 5 million Yuan for investment of

capital construction from the central government in 2012. The project has passed the acceptance check in

current period this appropriation should be amortized within the surplus service life of current assets and

amortization amount of current period is 714285.71 Yuan.

(6) R&D and industrialization of the high pressure variable pump of the common rail system of diesel engine

for automobile: the Company received appropriated for the project in 2013 with 8.05 million Yuan in line with

documents of Xi Ke Ji [2013] No.186 Xi Ke Ji [2013] No.208 Xi Cai Gong Mao [2013] No.104 Xi Cai

Gong Mao [2013] No.138 Xi Ke Ji [2014] No.125 Xi Cai Gong Mao [2014] No.58 Xi Ke Ji [2014] No. 246

and Xi Cai Gong Mao [2014] No.162. Received 3 million Yuan in 2014 and 0.45 million Yuan in 2015; and

belongs to government grant with assets concerned and shall be amortized according to the depreciation

process amount of 1543095.28 Yuan amortizes in the year.

(7) Vehicle exhaust after-treatment technology research institute project: in 2012 the subsidiary Weifu Leader

has applied for equipment purchase assisting funds to Wuxi Huishan Science and Technology Bureau and

Wuxi Science and Technology Bureau for the vehicle exhaust after-treatment technology research institute

project. This declaration has been approved by Wuxi Huishan Science and Technology Bureau and Wuxi

Science and Technology Bureau in 2012 and the company has received appropriation of 2.4 million Yuan in

2012 and received appropriation of 1.6 million Yuan in 2013. This appropriation belongs to government

subsidies related to assets and will be amortized according to the depreciation process amount of 622985.37

Yuan amortizes in the year.

(8) Industry upgrading funds (2014): In accordance with the document Xi Xin Guan Jing Fa [2014] No.427

and Xi Xin Guan Cai Fa [2014] No.143 the Company received funds of 36.831 million Yuan appropriated for

industry upgrading in 2014.

(9) New-built assets compensation after the removal of parent company: policy relocation compensation

received by the Company and will be amortized according to the depreciation of new-built assets amount of

20764119.52 Yuan amortizes in the year.

(10) Fund of industry upgrade (2016): In accordance with the document Xi Xin Guan Jing Fa [2016] No.585

and Xi Xin Fa [2016] No.70 the Company received funds of 40 million Yuan appropriated for industry

upgrading in 2016.

(11) Guilding capital for the technical reform from State Hi-Tech Technical Commission: In accordance with

the document Xi Jing Xin ZH [2016] No.9 and Xi Cai GM [2016] No.56 the Company received a 9.74 million

Yuan for the guiding capital of technical reform (1st batch) from Wuxi for year of 2016 and belongs to

government grant with assets concerned and shall be amortized according to the depreciation process amount

of 1552110.44 Yuan amortize in the year.

(12) Implementation of the variable cross-section turbocharger for diesel engine: In accordance with the

document YCZ Fa[2016] NO.623 and “Strong Industrial Base Project Contract for year of 2016” subsidiary

Weifu Tianli received a specific subsidy of 16.97 million Yuan (760000 Yuan received in the period) the

fund supporting strong industrial base project (made-in-China 2025) of central industrial transformation and

upgrading 2016 from Ministry of Industry and Information Technology; and belongs to government grant with

assets concerned and shall be amortized according to the depreciation process amount of 1609982.67 Yuan

amortize in the year.

(13) Demonstration project for intelligent manufacturing: under the Notice Relating to Selection of the

Intelligent Manufacturing Model Project in Huishan District in 2016 (HJXF[2016]No.36) a fiscal subsidy of

3000000 Yuan was granted by relevant government authority in Huishan district to our subsidiary Weifu

Leader in 2017 to be utilized for transformation and upgrade of Weifu Leader’s intelligent manufacturing

facilities. This subsidy belongs to government grant related to assets which shall be amortized based on the

depreciation progress of the assets. Amortization for the year amounts to 299341.74 Yuan.

(14) The 2nd batch of provincial special funds for industry transformation of industrial and information in 2019:

according to XCGM [2019] No. 121 the Company received a special fund of 5 million yuan in 2020 this

subsidy wasrelated to the"Weifu High-Technology New Factory Internet Construction" projects and belonged

to government subsidies related to assets.

(15) Municipal technological reform fund allocation in 2020: according to XGXZH [2020] No. 16 the

Company received 4.77 million yuan of municipal technological transformation fund project allocation in

2020 which was related to key technological transformation projects and belonged to government subsidies

related to assets.

(16) Strategic cooperation agreement funding for key enterprise of smart manufacturing in high-tech zone:

according to XXGXF [2020] No. 61 the Company received a related grant of 4.06 million yuan in 2020 this

subsidy was related to the intelligent transformation project and belonged to the government subsidiesrelated

to assets.

35. Share capital

Item

Opening

balance

Change during the year (+ -)

Ending

balance

New shares

issued

Bonus

share

Shares transferred

from capital reserve

Other

-repurchase

Subtotal

Total shares 1008950570 -- -- -- -- -- 1008950570

36. Capital reserve

Item Opening balance Increase in this period Decrease in this period Ending balance

Share capital premium 3346333817.41 -- 103565899.63 3242767917.78

Other Capital reserve 45193988.92 6280461.58 -- 51474450.50

Total 3391527806.33 6280461.58 103565899.63 3294242368.28

Other explanation:

(1) Share capital premium has 103565899.63 yuan declined in the Period mainly due to the following:

①the difference between the long-term equity investment newly acquired by the company to purchase

minority of IRD and the net assets that the company should enjoy continuously calculated from the date of

purchase based on the newly increased shareholding ratio is 7176697.04 yuan;

② the difference between the repurchase cost of 398868402.59 yuan(19540000 shares repurchased for use

in the restricted share incentive plan) and the amount of subscription money 302479200.00 yuan is

96389202.59 yuan.

(2) Other Capital reserve increase 6280461.58 yuan in the period mainly resulted by the share payment

settled by equity 6484837.50 yuan deducted 204375.92 yuan attributable to minority’s shareholder.

37. Treasury stocks

Item Opening balance Increase in this period Decrease in this period Ending balance

Stock repurchases -- 400017180.33 398868402.59 1148777.74

Repurchase obligation of

restricted stock incentive plan

-- 302479200.00 -- 302479200.00

Total -- 702496380.33 398868402.59 303627977.74

Other explanation:

(1) Stock repurchase: increased 400017180.33 yuan in the Period mainly refers to the repurchase of 19596277.00 shares by

way of centralized competitive bidding for the implementation of restricted stock incentive plan; decreased 398868402.59 yuan

in the Period mainly refers to the 19540000.00 shares awarded to incentive object for the implementation of restricted stock

incentive plan.

(2) Repurchase obligation of restricted stock incentive plan: increased 302479200.00 yuan in the Period mainly refers to the

repurchase obligation recognized in accordance with the subscription paid by the incentive object for the implementation of

restricted stock incentive plan.

38. Other comprehensive income

Item

Opening

balance

Current period

Ending

balance

Account

before income

tax in the year

Less:

income

tax

expense

Belong to

parent

company after

tax

Belong to

minority

sharehold

ers after

tax

Other comprehensive income items

which will be reclassified

subsequently to profit or loss

134871.67 13839596.07 -- 13781747.80 57848.27 13916619.47

Including: Conversion difference of

foreign currency financial statement

134871.67 13839596.07 -- 13781747.80 57848.27 13916619.47

Total 134871.67 13839596.07 -- 13781747.80 57848.27 13916619.47

39. Reasonable reserve

Item Opening balance Accrual in the period Used in the period Ending balance

Safety production costs 3247757.06 21673368.09 22587635.12 2333490.03

Other explanation:

(1) Instructions for the withdrawing of special reserves (safe production cost): According to the CQ [2012] No. 16 - Administrative

Measures on the Withdrawing and Use of Enterprise Safety Production Expenses jointly issued by the Ministry of Finance and the

State Administration of Work Safety in the current period the Company adopted excess retreat method for quarterly withdrawal

by taking the actual operating income of the previous period as the withdrawing basis.

(2) Among the above safety production costs including the safety production costs accrual by the Company in line with

regulations and the parts enjoy by shareholders of the Company in safety production costs accrual by subsidiary in line with

regulations.

40. Surplus reserve

Item Opening balance Increase in this period Decrease in this period Ending balance

Statutory surplus reserves 510100496.00 -- -- 510100496.00

Withdrawal of the statutory surplus reserves: Pursuit to the Company Law and Articles of Association the Company extracted

statutory surplus reserve on 10 percent of the net profit. No more amounts shall be withdrawal if the accumulated statutory

surplus reserve takes over 50 percent of the registered capital.

41. Retained profit

Item Current period Last period

Ratio for withdrawal or

distribution

Retained profits at the end of last year before

adjustment

12076443635.56 10996945870.13 --

Total retained profit at beginning of the adjustment (+

for increased -for decreased)

-- 1584556.37 --

Retained profits at the beginning of the year after

adjustment

12076443635.56 10998530426.50 --

Add: The net profits belong to owners of patent

company of this period

2772769377.96 2268026432.78 --

Less: Withdraw legal surplus reserves -- -- --

Less: Withdraw employee motivation and welfare fund 2525946.49 -- --

Cash dividend payable 1093241270.00 1210740684.00

11 Yuan / 10-shares in the Year;

12 Yuan / 10-shares in last

Year

Common dividend transfer as share capital -- -- --

Add: Net effect of disposal other equity instrument

investment

2656627.59 20627460.28

Retained profit at period-end 13756102424.62 12076443635.56

42. Operating income and cost

Item

Current period Last Period

Income Cost Income Cost

Main operating 12430431489.90 10124574480.95 8354743964.67 6322810707.67

Other business 453394816.70 304709961.02 429612995.63 347543672.87

Total 12883826306.60 10429284441.97 8784356960.30 6670354380.54

43. Taxes and surcharges

Item Current period Last Period

City maintaining & construction tax 22768800.74 24124239.92

Educational surtax 16259673.98 17320175.67

Property tax 16993056.48 16236869.24

Land use tax 4516628.41 5991933.84

Vehicle use tax 29923.52 31410.44

Stamp duty 4508905.03 2720462.05

Other taxes 246793.71 209545.50

Total 65323781.87 66634636.66

44. Sales expenses

Item Current period Last Period

Salary and fringe benefit 58727035.03 53193376.14

Consumption of office materials and business travel

charge

9260423.14 12114381.29

Transportation charge -- 36110291.16

Warehouse charge 24982242.41 13540499.34

Three guarantees and quality cost 272364223.21 102034286.75

Business entertainment fee 25842735.05 26297874.14

Other 15176786.26 16360043.51

Total 406353445.10 259650752.33

45. Administration expenses

Item Current period Last Period

Salary and fringe benefit 295394722.09 261541676.32

Depreciation charger and long-term assets amortization 65638800.42 55145177.10

Consumption of office materials and business travel

charge

16772265.23 19603194.54

Incentive fund 187658444.76 71880000.00

Share-based payment 3878656.31 --

Other 213481533.82 105858403.80

Total 782824422.63 514028451.76

46. R&D expenses

Item Current period Last Period

Technological development expenses 532581209.78 417924908.28

Total 532581209.78 417924908.28

47. Financial expenses

Item Current period Last Period

Interest expenses 11466886.33 21770516.39

Note discount interest expenses 8075178.10 1205789.22

Less: interest income 51622216.58 79299239.77

Gains/losses from exchange 5138503.01 -5453798.20

Handling charges 3663347.30 3884456.24

Total -23278301.84 -57892276.12

48. Other income

Item Current period Last Period

Amount reckoned into

current non-recurring

gains/losses

Government grants with routine operation activity

concerned

80342497.11 91170663.57 80342497.11

Other -- -- --

Total 80342497.11 91170663.57 80342497.11

Government grant reckoned into other income:

Government grant item Current period Last Period Assets/Income related

Industrialization project for injection VE pump system with

electronically controlled high pressure for less-emission diesel used 721000.30 721000.30

Assets/Income related

Key laboratory (engineering center) of the pollution control from

motor vehicle exhausting in Jiangsu province 170000.00 170000.00

Assets/Income related

Grants for key laboratory in Wuxi City

70000.00 70000.00

Assets/Income related

Supporting funds for technical improvement for annual output as

140000 pieces of packaging line of catalytic reduction system for

commercial vehicles (2014)

259000.00 259000.00 Assets related

Technical transformation for annual output as 300000 sets of

four-cylinder engine supercharger 129710.11 179357.35 Assets related

Annual output of 150000 gasoline engine superchargers

96514.62 100000.00 Assets related

Depreciation/amortization compensation for the assets newly

established after parent company relocated 20764119.52

22726281.

60

Assets related

Central capital investment allocation from Wuxi Finance Bureau

(R&D center) 714285.72 714285.71 Assets related

Provincial special guiding funds for scientific and technological

innovation and achievement conversion 328571.44 328571.43 Assets related

Technical reform of catalytic reduction system for 180000

commercial vehicles annually 233555.56 233555.56 Assets related

Development and industrialization of high pressure variable pump

for common rail system of vehicle diesel engine 1543095.28

1543095.2

8

Assets related

Business development funds support allocation from Finance

bureau of the new district 200000.00 200000.00 Assets related

Demonstration of intelligent manufacturing

299341.74 301588.76 Assets related

Research institute of motor vehicle exhaust post-treatment

622985.37 635758.63 Assets related

Implementation scheme of the variable section turbocharger for

diesel engine 1609982.67

1935949.6

1

Assets related

Special funds for technical transformation

83794.37 91041.11

Assets/Income related

Funds for technical reform of boiler wheel supercharger for annual

output of 200000 gasoline engines 275572.17 420568.53 Assets related

Annual output of 150000 gasoline engine turbochargers 717082.83 700701.44 Assets related

Guiding capital for the technical reform from State Hi-Tech

Technical Commission

1552110.44

1592569.7

3

Assets related

National high-quality development fund for manufacturing industry

--

4850000.0

0

Income related

Government grant item Current period Last Period Assets/Income related

Industrial upgrading fund

26015356.44

33742473.

83

Income related

Financing for mergers and acquisition of IRD project

--

1370000.0

0

Income related

Funds for R&D of Science & Technology in Wuxi for 2015

420000.00

1020000.0

0

Assets/Income related

Intelligent transformation and technology transformation guiding

fund 3740000.00

5110000.0

0

Income related

Special fund for policy guidance

--

1000000.0

0

Income related

Stable subsidy

4125376.68

2291128.5

3

Income related

Weifu Jinning Financial Support Fund 1140000.00 -- Income related

Generation subsidy for distributed PV projects

968800.00 -- Income related

Wuxi City Intellectual Property Project Operation Service System

Construction Fund

1050000.00 -- Income related

"Work for training" subsidy 1269900.00 -- Income related

Wuxi Mayor Quality Award 1000000.00 -- Income related

e-store 1162700.27 -- Income related

Training subsidy 1005934.35 317400.00 Income related

Other 8053707.23

8546336.1

7

Assets/Income related

Total 80342497.11

91170663.

57

49. Investment income

Item Current period Last Period

Income of long-term equity investment calculated based on equity 1659752704.14 1378264061.18

Investment income of financial products 263460954.90 236832172.54

Investment income from holding financial assets available for sales 683211.60 1383668.59

Dividend income from holding other equity instrument investment -- 900000.00

Other 40908817.93 -2839187.48

Total 1964805688.57 1614540714.83

50. Income from change of fair value

Item Current period Last Period

Changes in the fair value of wealth management products 8223219.19 18231842.32

Changes in the fair value of the stocks of listed companies held-excluding the

stocks of listed companies that are included in other equity instrument

investments

375102546.00 6787824.00

Other -- --

Total 383325765.19 25019666.32

51. Credit impairment loss

Item Current period Last Period

Bad debt loss -11184647.60 -52825875.25

Total -11184647.60 -52825875.25

52. Assets impairment loss

Item Current period Last Period

Loss on inventory valuation -142400798.47 -169460299.73

Impairment loss on fixed assets -36436674.38 --

Total -178837472.85 -169460299.73

53. Income from assets disposal

Item Current period Last Period

Amount reckoned into current

non-recurring gains/losses

Income from disposal of non-current assets 12962146.98 34050815.11 12962146.98

Losses from disposal of non-current assets -1507738.38 -1896354.90 -1507738.38

Total 11454408.60 32154460.21 11454408.60

54. Non-operating income

Item Current period Last Period

Amount reckoned into current

non-recurring gains/losses

Periodic reduction or exemption of part of social

insurance premiums

60373772.69 -- 60373772.69

Periodic reduction of kinetic energy costs 5759525.46 -- 5759525.46

Other 333723.47 2413561.54 333723.47

Total 66467021.62 2413561.54 66467021.62

55. Non-operating expense

Item Current period Last Period

Amount reckoned into current

non-recurring gains/losses

Total non-current assets disposal losses 738248.83 3161855.50 738248.83

Including: fixed assets disposal losses 738248.83 3161855.50 738248.83

Intangible assets disposal losses -- -- --

Donation 3107003.70 73332.31 3107003.70

Local fund -- 2734286.52 --

Other 313635.64 156952.84 313635.64

Total 4158888.17 6126427.17 4158888.17

56. Income tax expense

(1) Income tax expense

Item Current period Last Period

Payable tax in current period 170925337.68 147179544.24

Adjusted the previous income tax -2349322.00 5674478.65

Increase/decrease of deferred income tax assets -54432577.63 -12918338.05

Item Current period Last Period

Increase/decrease of deferred income tax liability 66072310.95 7870125.22

Income tax expense 180215749.00 147805810.06

(2) Adjustment on accounting profit and income tax expenses

Item Current period

Total profit 3002951679.56

Income tax measured by statutory/applicable tax rate 450442751.93

Impact by different tax rate applied by subsidies 4347476.78

Adjusted the previous income tax -2349322.00

Impact by non-taxable revenue -248721266.24

Impact on cost expenses and losses that unable to deducted 37323520.03

Impact by the deductible losses of the un-recognized previous deferred income tax -34045025.55

The deductible temporary differences or deductible losses of the un-recognized deferred income tax

assets in the Period

11968364.43

Impact on additional deduction -41288278.77

Other 2537528.39

Total 181266656.28

57. Other comprehensive income

See Note V. 38 “Other comprehensive income”

58. Items of ash flow statement

(1) Refunds of taxes

Item Current period Last Period

VAT refund actually received for export commodities 28006851.01 40712905.08

Rebate of allowance for VAT 2805702.10 3171001.83

Rebate of income tax 1325859.97 7839063.56

Total 32138413.08 51722970.47

(2) Other cash received in relation to operation activities

Item Current period Last Period

Interest income 52277269.56 77690762.13

Government grants 41044012.67 30510895.39

Margin on operation bill -- 27804815.03

Other 9252536.29 7906425.25

Total 102573818.52 143912897.80

(3) Other cash paid in relation to operation activities

Item Current period Last Period

Cash cost 840363837.09 525923320.71

Other 59565319.82 22629265.34

Total 899929156.91 548552586.05

(4) Cash received from other investment activities

Item Current period Last Period

Received the disposal payment 10654092.89 --

Received investment funds in transit at the end of 2019 30448157.81 --

Import equipment letter of credit guarantee -- 1450000.00

Cash from Weifu Electronic Drive merger not under the same control -- 67622008.17

Intercourse funds from units 24000000.00 --

Other -- 953424.66

Total 65102250.70 70025432.83

(5) Cash paid related with investment activities

Item Current period Last Period

Margin paid by L/C for purchase of equipment 587241.00 --

Trading losses on forward foreign exchange and RMB options -- 1115357.50

Intercourse funds from units 13992067.94 24000000.00

Total 14579308.94 25115357.50

(6) Other cash received in relation to financing activities

Item Current period Last Period

Borrowings received by Weifu Leader 5470000.00 --

Borrowings received by IRD 260135.13 845291.11

Total 5730135.13 845291.11

(7) Cash paid related with financing activities

Item Current period Last Period

Account paid for purchasing minority equity of Weifu Tianli -- 132522000.00

Account paid for purchasing minority equity of IRD 48507056.85 --

National debt paid transfer to loans 351298.00 339091.00

Borrowing return by Weifu Leader -- 5470000.00

Borrowing return by IRD -- 7733845.00

Payments from finance leases 375886.28 --

Repurchase of A shares 400017180.33 --

Total 449251421.46 146064936.00

59. Supplementary information to statement of cash flow

(1) Supplementary information to statement of cash flow

Item Current period Last Period

1. Net profit adjusted to cash flow of operation activities:

Net profit 2822735930.56 2302736761.11

Add: Assets impairment provision 190022120.45 222286174.98

Depreciation of fixed assets consumption of oil assets and

depreciation of productive biology assets

390748987.16 315650455.35

Amortization of intangible assets 37146026.79 24276364.81

Amortization of long-term deferred expenses 12637958.88 6293470.69

Loss from disposal of fixed assets intangible assets and other

long-term assets

-11454408.60 -32154460.21

Losses on scrapping of fixed assets 738248.83 3161855.50

Gain/loss of fair value changes -383325765.19 -25019666.32

Financial expenses 17798991.04 15026154.36

Item Current period Last Period

Investment loss -1957024490.66 -1613945471.30

Decrease of deferred income tax asset -54432577.63 -12918338.05

Increase of deferred income tax liability 66072310.95 7870125.22

Decrease of inventory -591321045.44 -1130561363.05

Decrease of operating receivable accounts -1326286166.68 -1110387668.48

Increase of operating payable accounts 1562204812.18 2074881909.55

Other 5550301.37 1473749.07

Net cash flows arising from operating activities 781811234.01 1048670053.23

2. Net change of cash and cash equivalents :

Balance of cash at period end 944946018.70 820498653.85

Less: Balance of cash equivalent at year-begin 820498653.85 2404674139.49

Add: Balance of cash equivalent at year-end -- --

Less: Balance of cash equivalent at year-begin -- --

Net increase of cash and cash equivalents 124447364.85 -1584175485.64

(2) Net cash payment for the acquisition of a subsidiary in the period

Item Amount

Cash and cash equivalent paid in the period for enterprise combination occurred in the period 318708001.47

Less: Cash and cash equivalent held by subsidiary on purchasing date 21405243.16

Add: Cash or cash equivalent paid in the period arising from enterprise combination occurred

previous

--

Net cash paid for subsidiary obtained 297302758.31

(3) Constitution of cash and cash equivalent

Item Ending balance Opening balance

I. Cash 944946018.70 820498653.85

Including: Cash on hand 507.66 93165.33

Bank deposit available for payment at any time 944945511.04 820405488.52

Other monetary fund available for payment at any time -- --

II. Cash equivalent -- --

Including: bond investment due within 3 months -- --

III. Balance of cash and cash equivalents at the period-end 944946018.70 820498653.85

Including: Cash and cash equivalent with restricted in use for parent

company or subsidiary of the Group

-- --

Other explanation:

The difference between bank deposits available for payment at any time and the bank deposits in Note V. 1

"Monetary Funds" is the company's fixed deposits in the bank.

60. Assets with ownership or use right restricted

Item Ending Book value Restriction reason

Monetary funds 587241.00 Letter of Credit Margin

Monetary funds 51045344.11 Cash deposit paid for bank acceptance

Monetary funds 2838880.93 Court freeze

Monetary funds 215720.00 Mastercard deposit

Note receivable 881914376.95 Notes pledge for bank acceptance

Item Ending Book value Restriction reason

Receivables financing 646892501.28 Notes pledge for bank acceptance

Transactional financial assets 174611992.62

In accordance with the civil ruling No.(2016)Y03MC2490

and No.(2016) Y03MC2492 of Guangdong Shenzhen

Intermediate People's Court (Hereinafter referred to as

Shenzhen Intermediate People's Court) the property with

the value of 217 million Yuan under the name of the

Company and other seven respondents and the third party

Shenzhen Hejun Chuangye Holdings Co. Ltd. (Hereinafter

referred to as Hejun Company) was frozen. As of the end of

the reporting period 4.71 million shares of Miracle

Automation and 11739102 shares of SDEC held by the

Company were frozen.

Total 1758106056.89

61. Item of foreign currency

(1) Item of foreign currency

Item Closing balance of foreign currency Rate of conversion Ending RMB balance converted

Monetary funds

Including: USD 11596564.24 6.5249 75666419.10

EUR 3694505.41 8.025 29648405.15

HKD 11548347.98 0.84164 9719551.59

DKK 9616906.23 1.0786 10372795.06

Account receivable

Including: USD 2190411.21 6.5249 14292214.10

EUR 1290945.42 8.025 10359837.00

JPY 12179808.00 0.063236 770202.34

DKK 2239065.57 1.0786 2415056.12

Other account receivables

Including: EUR 70143.68 8.025 562903.03

DKK 462081.08 1.0786 498400.65

Short-term borrowings

Including: EUR 4981278.48 8.025 39974759.80

Account payable

Including: USD 812035.19 6.5249 5298448.41

EUR 1031866.82 8.025 8280731.24

JPY 15780699.00 0.063236 997908.28

CHF 103580.75 7.4006 766559.70

DKK 2865734.26 1.0786 3090980.97

GBP 59450.00 8.8903 528528.34

Other account payable

Including: EUR 255.00 8.025 2046.38

DKK 402113.23 1.0786 433719.33

(2) Explanation on foreign operational entity:

Subsidiary of the Company IRD was established in Denmark in 1996. The 66% equity of IRD were required

by the Company in cash in April 2019 and in October 2020 increasing the shareholding to 34.00% by cash

purchase. After the increase in holdings the company acquired 100.00% of the company's equity.

Book-keeping currency of IRD was Danish krone and IRD mainly engaged in the R&D production and sales

of fuel cell components.Subsidiary Borit was established in Belgium in 2010. the Company acquired 100% equity of Borit by cash

acquisition in November 2020. Borit is denominated in Euro and engaged in the R&D production and sales of

fuel cell components.

62. Government grants

(1) Government grants

Category Amount Item

Amount reckoned

in current gain/loss

The second batch of provincial-level industrial and information

industry transformation special funds in 2019

5000000.00 Deferred income --

Municipal technological reform fund allocation in 2020

Appropriations for Municipal Technical Reform Fund Projects in

2020

4770000.00 Deferred income --

Strategic cooperation agreement funding for key enterprise of smart

manufacturing in high-tech zone

Strategic cooperation agreement funds for key intelligent

manufacturing enterprises in the high-tech zone

4060000.00 Deferred income --

2020 Wuxi Science and Technology Development Fund 19th Batch

of Science and Technology Development Plan Project Funds

1000000.00 Deferred income --

Intelligent transformation of Automobile components

manufacturing process

1310000.00 Deferred income --

e-store 1162700.27

Deferred income

other income

1162700.27

Anione 1410199.51

Deferred income

other income

211192.07

Annual output of 150000 gasoline engine turbochargers 1095300.00

Deferred income

other income

717082.83

Neptune 918551.27 Deferred income --

Development of variable nozzle turbocharger meeting the

requirements of National VI B

800000.00 Deferred income --

Pegasus 528530.85

Deferred income

other income

528530.85

HighPem2 Gas 356327.63

Deferred income

other income

356327.63

Job stabilization subsidy 4125376.68 Other income 4125376.68

Intelligent transformation and technical transformation guidance

funds

3740000.00 Other income 3740000.00

Wuxi City Intellectual Property Project Operation Service System

Construction Fund

1050000.00 Other income 1050000.00

Category Amount Item

Amount reckoned

in current gain/loss

"Work for training" subsidy 1269900.00 Other income 1269900.00

Training subsidy 1005934.35 Other income 926294.35

2019 Wuxi Mayor Quality Award 1000000.00 Other income 1000000.00

Distributed photovoltaic project power generation subsidies 968800.00 Other income 968800.00

Service charge for three agencies 682632.28 Other income 682632.28

The second batch of supporting project funds (manufacturing

taxation top 30)

350000.00 Other income 350000.00

2019 Quality Special Award 350000.00 Other income 350000.00

Huishan District Support Fund 340000.00 Other income 340000.00

Special subsidies for enterprise vocational education in Binhu

District in the third quarter of 2019

324300.00 Other income 324300.00

Vocational Appraisal Guidance Center Collection 303600.00 Other income 303600.00

Technology plan subsidy 300000.00 Other income 300000.00

2020 Wuxi Smart Manufacturing Project Support Fund 300000.00 Other income 300000.00

Subsidies for manufacturing individual champion enterprises 200000.00 Other income 200000.00

Intellectual property reward 114670.00 Other income 114670.00

In 2019 the integration of industrialization and industrialization

and the provincial-level segmentation project reward for enterprise

cloud

180000.00 Other income 180000.00

2019 Huishan District "P ioneer Talent Program" Talent Award 150000.00 Other income 150000.00

2019 corporate postdoctoral subsidy funds 120000.00 Other income 120000.00

2019 tax contribution incentives for key enterprises 100000.00 Other income 100000.00

Supporting funding for key talent programs above the provincial

level

100000.00 Other income 100000.00

Other 1557189.83

Deferred income

other income

998816.62

Total 41044012.67

(2) Government grants rebate

Not applicable

VI. Changes of consolidation scope (unit: RMB)

1. Enterprise combine not under the same control

(1) Enterprise combine not under the same control occurred in the period

Purchaser

Time

point for

equity

obtained

Cost of equity

obtained

Ratio of

equity

obtained

Acquire

d way

Equity

obtained

way

Purchas

ing date

Standard to

determine the

purchasing

date

Income of

purchaser from

purchasing date

to period-end

Net profit of

purchaser from

purchasing date

to period-end

Borit

2020-11-3

0

318708001.47 100%

Cash

purchas

e

2020-11-

30

Obtained

controlling

rights

9143241.73 -5166510.61

(2) Combination cost and goodwill

Combination cost Borit

--Cash 318708001.47

--Fair value of the equity prior to the purchasing date --

Total combination cost 318708001.47

Less: shares of fair value of identifiable net assets acquired 70941353.26

Goodwill/merger cost is less than the shares of fair value of identifiable

net assets acquired

247766648.21

(3) Identifiable assets and liability on purchasing date under the purchaser

Item

Borit

Fair value on purchasing date Book value on purchasing date

Assets:

Monetary funds 21405243.16 21405243.16

Account receivable 2306622.48 2306622.48

Account paid in advance 478370.09 478370.09

Other account receivables 748859.12 748859.12

Inventory 12692549.70 11925135.80

Fixed assets 46007739.12 28314172.77

Construction in progress 950331.98 950331.98

Intangible assets 39460780.10 13349057.73

Deferred tax assets 1388436.59 1388436.59

Liability:

Account payable 7894432.49 7894432.49

Contract liabilities 3067697.93 3067697.93

Payroll payable 2805072.70 2805072.70

Taxes payable 273570.08 273570.08

Other account payable 13935900.17 13935900.17

Non-current liabilities due within one

year

872471.02 872471.02

Item

Borit

Fair value on purchasing date Book value on purchasing date

Long term loan 6201616.25 6201616.25

Long-term payables 7106533.43 7106533.43

Deferred income 1197109.35 1197109.35

Deferred income tax liabilities 11143175.66 --

Net assets 70941353.26 37511826.30

Less: Minority interests -- --

Net assets acquired 70941353.26 37511826.30

(4) Gains or losses arising from re-measured by fair value for the equity held before purchasing date

Not applicable.

2. Enterprise combine under the same control

Nil

3. Reverse purchase

Nil

4. Disposal of subsidiaries

Nil

5. Other reasons for consolidation range changed

In the reporting period Weifu Leader- subsidiary of the company established the Autosmart Seating jointly with Qiqiong

Automobile Technology (Shanghai) Co. Ltd. According to the Article of Association under the name of Autosmart Seating

Weifu Leader holds 66.00% equity of Autosmart Seating while 34.00% held by Qiqiong Automobile Technology (Shanghai) Co.Ltd.VII. Equity in other entity (Unit: RMB)

1. Equity in subsidiary

(1) Constitute of enterprise group

Subsidiary

Main

operation

place

Registered

place

Business nature

Directly

Share-holding

ratio (%)

Indirectly

Share-holding

ratio (%)

Proportion

of voting

rights (%)

Acquired way

Weifu

Jinning

Nanjing Nanjing

Spare parts of

internal-combustion

engine

80.00 -- 80.00

Enterprise

combines under

the same control

Weifu

Leader

Wuxi Wuxi

Automobile

exhaust purifier

muffler

94.81 -- 94.81

Enterprise

combines under

the same control

Weifu

Mashan

Wuxi Wuxi

Spare parts of

internal-combustion

engine

100.00 -- 100.00 Investment

Weifu

Chang’an

Wuxi Wuxi

Spare parts of

internal-combustion

100.00 -- 100.00 Investment

Subsidiary

Main

operation

place

Registered

place

Business nature

Directly

Share-holding

ratio (%)

Indirectly

Share-holding

ratio (%)

Proportion

of voting

rights (%)

Acquired way

engine

Weifu

International

Trade

Wuxi Wuxi Trading 100.00 -- 100.00

Enterprise

combines under

the same control

Weifu

Schmidt

Wuxi Wuxi

Spare parts of

internal-combustion

engine

66.00 -- 66.00 Investment

Weifu Tianli Ningbo Ningbo

Spare parts of

internal-combustion

engine

98.83 1.17 100.00

Enterprise

combines not

under the same

control

Weifu

Autocam

Wuxi Wuxi

Spare parts of

internal-combustion

engine

51.00 -- 51.00

Enterprise

combines not

under the same

control

Weifu

Leader

(Wuhan)

Wuhan Wuhan

Automobile

exhaust purifier

muffler

-- 60.00 60.00 Investment

Weifu

Leader

(Chongqing)

Chongqing Chongqing

Automobile

exhaust purifier

muffler

-- 100.00 100.00 Investment

Weifu

Leader

(Nanchang)

Nanchang Nanchang

Automobile

exhaust purifier

muffler

-- 100.00 100.00 Investment

Autosmart

Seating

Wuxi Wuxi

Smart car

equipment

-- 66.00 66.00 Investment

Weifu

Electric

Drive

Wuxi Wuxi Hub Motor 80.00 -- 80.00

Enterprise

combines not

under the same

control

SPV Denmark Denmark Investment 100.00 -- 100.00 Investment

IRD Denmark Denmark

Fuel cell

components

-- 100.00 100.00

Enterprise

combines not

under the same

control

IRD

America

America America

Fuel cell

components

-- 100.00 100.00

Enterprise

combines not

under the same

control

Borit Belgium Belgium

Fuel cell

components

-- 100.00 100.00

Enterprise

combines not

Subsidiary

Main

operation

place

Registered

place

Business nature

Directly

Share-holding

ratio (%)

Indirectly

Share-holding

ratio (%)

Proportion

of voting

rights (%)

Acquired way

under the same

control

Borit Inc. America America

Fuel cell

components

-- 100.00 100.00

Enterprise

combines not

under the same

control

(2) Important non-wholly-owned subsidiary

Subsidiary

Share-holding ratio

of minority (%)

Gains/losses attributable

to minority in the Period

Dividend announced to

distribute for minority in

the Period

Ending equity of minority

Weifu Jinning 20.00 21848100.90 15748768.80 199246408.99

Weifu Schmidt 34.00 4996898.99 -- 16239171.33

Weifu Leader 5.19 11252872.88 -- 107011846.40

Weifu Autocam 49.00 22118036.30 -- 177267298.23

Total 60215909.07 15748768.80 499764724.95

(3) Main finance of the important non-wholly-owned subsidiary

Subsidiary

Ending balance

Current assets

Non-current

assets

Total assets Current liabilities

Non-current

liabilities

Total liabilities

Weifu Jinning 1182876680.02 293436809.97 1476313489.99 433667329.34 42293914.58 475961243.92

Weifu

Schmidt

213435154.59 47533838.59 260968993.18 212812487.33 -- 212812487.33

Weifu Leader 4942039786.72 1200764541.57 6142804328.29 4204615377.36 20388995.29 4225004372.65

Weifu

Autocam

323378083.30 360083668.37 683461751.67 321531075.82 -- 321531075.82

Total 6661729704.63 1901818858.50 8563548563.13 5172626269.85 62682909.87 5235309179.72

Subsidiary

Opening balance

Current assets

Non-current

assets

Total assets Current liabilities

Non-current

liabilities

Total liabilities

Weifu Jinning 999097495.08 334721775.17 1333819270.25 318915621.86 47104930.82 366020552.68

Weifu

Schmidt

141991506.20 49208881.93 191200388.13 157822785.29 -- 157822785.29

Weifu Leader 3941739116.15 1095110196.65 5036849312.80 3351853614.37 22204377.06 3374057991.43

Weifu

Autocam

245057798.53 323114477.06 568172275.59 254234583.00 -- 254234583.00

Total 5327885915.96 1802155330.81 7130041246.77 4082826604.52 69309307.88 4152135912.40

Subsidiary

Current period

Operation Income Net profit

Total comprehensive

income

Cash flow from operation

activity

Weifu Jinning 685608389.43 110875256.44 110875256.44 42395588.51

Weifu Schmidt 252434907.65 14694274.89 14694274.89 -2270586.10

Weifu Leader 6427844701.00 245276849.88 245276849.88 41415937.03

Subsidiary

Current period

Operation Income Net profit

Total comprehensive

income

Cash flow from operation

activity

Weifu Autocam 485081038.09 50518929.75 50518929.75 86836060.40

Total 7850969036.17 421365310.96 421365310.96 168376999.84

Subsidiary

Last Period

Operation Income Net profit

Total comprehensive

income

Cash flow from operation

activity

Weifu Jinning 591679134.25 124990228.55 124990228.55 73403344.49

Weifu Schmidt 221352114.68 5093231.61 5093231.61 19622886.37

Weifu Leader 3020424650.65 33406696.55 33406696.55 112342744.56

Weifu Autocam 417638897.85 23573670.87 23573670.87 125547456.63

Total 4251094797.43 187063827.58 187063827.58 330916432.05

(4) Significant restrictions on the use of enterprise group assets and pay off debts of the enterprise group

Nil

2. Transaction that has owners’ equity shares changed in subsidiary but still with controlling rights

(1) Owners equity shares changed in subsidiary

In October 2020 the company purchased the equity held by minority shareholders of IRD with 48507056.85

yuan in cash. After this transaction the company's shareholding in IRD was changed from 66.00% to

100.00%.

(2) Impact on minority’s interest and owners’ equity attributable to parent company

Item IRD

Cost of acquisition——Cash 48507056.85

Less: Net assets share of the subsidiary calculated according to the equity ratio obtained 41330359.81

Balance 7176697.04

Including: Capital reserve adjustment 7176697.04

3. Equity in joint venture and associated enterprise

(1)Associated enterprise:

Associated enterprise

Enterprise

abbreviation

Main

operation

place

Registere

d place

Business nature

Share-holding ratio

(%)

Accounting

treatment

on

investment

for joint

venture and

associated

enterprise

Directly Indirectly

Wuxi Weifu Environment

Catalyst Co. Ltd.

Weifu

Environment

Wuxi Wuxi Catalyst -- 49.00

Equity

method

Bosch Automobile Diesel

System Co. Ltd.

Bosch Diesel

System

Wuxi Wuxi

Internal-combustion

engine accessories

32.50 1.50

Equity

method

Zhonglian Automobile

Electronic Co. Ltd.

Zhonglian

Automobile

Shanghai Shanghai

Internal-combustion

engine accessories

20.00 --

Equity

method

Weifu Precision

Machinery Manufacturing

Co. Ltd.

Weifu

Precision

Machinery

Wuxi Wuxi

Internal-combustion

engine accessories

20.00 --

Equity

method

Shinwell Automobile Shinwell Wuxi Wuxi Automobile -- 45.00 Equity

Associated enterprise

Enterprise

abbreviation

Main

operation

place

Registere

d place

Business nature

Share-holding ratio

(%)

Accounting

treatment

on

investment

for joint

venture and

associated

enterprise

Directly Indirectly

Tech. (Wuxi) Co. Ltd. Automobile

Tech. (Wuxi)

components method

Changchun Xuyang

Weifu Auto Parts

Technology Co. Ltd.

Changchun

Xuyang

Changchu

n

Changch

un

Automobile

components

-- 34.00

Equity

method

(2) Main financial information of the important associated enterprise

Item

Ending balance/Current period

Weifu Environmental Protection Bosch Diesel System Zhonglian Automobile

Current assets 4446438334.10 11965249225.12 201344601.39

Including: cash and cash equivalents 223157715.58 10675106.71 194215134.17

Non -current assets 363513166.84 2995027302.84 5985689857.38

Total assets 4809951500.94 14960276527.96 6187034458.77

Current liabilities 3251776146.44 7423648562.76 3687897.36

Non-current liabilities 175895402.90 -- 2638609.61

Total liabilities 3427671549.34 7423648562.76 6326506.97

Minority shareholders’ equity -- -- --

Attributable to parent company

shareholders’ equity

1382279951.60 7536627965.20 6180707951.80

Share of net assets calculated by

shareholding ratio

677317176.28 2562453508.17 1236141590.36

Adjustment items -- -- --

--Goodwill -- 267788761.35 1407265.96

--Unrealized profit of internal trading -- -29652559.84 --

--Other -- -0.28 -0.01

Book value of equity investment in

joint venture

677317176.28 2800589709.40 1237548856.31

Fair value of the equity investment of

joint ventures with public offers

concerned

-- -- --

Operation income 7458886474.12 15742669081.61 23790158.00

Financial expenses 173107842.23 41669303.63 -7539295.05

Income tax expense 27279920.00 678258481.92 4780141.71

Net profit 296484991.05 3511327740.19 1538581105.06

Net profit of the termination of

operation -- -- --

Other comprehensive income -- -- --

Total comprehensive income 296484991.05 3511327740.19 1538581105.06

Dividends received from joint venture

in the year

-- 1801681159.00 331400000.00

Other explanation: Adjustment item for other “-0.28”: the differential tail;

Item Opening balance/Last Period

Weifu Environmental Protection Bosch Diesel System Zhonglian Automobile

Current assets 3285078665.28 10878760988.82 175292101.34

Including: cash and cash

equivalents

52542261.45 36763894.06 27062362.95

Non -current assets 323188749.54 3059116036.23 6129564645.28

Total assets 3608267414.82 13937877025.05 6304856746.62

Current liabilities 2401381614.27 4613514567.69 3030820.85

Non-current liabilities 26545326.53 -- 2699079.03

Total liabilities 2427926940.80 4613514567.69 5729899.88

Minority shareholders’ equity -- -- --

Attributable to parent

company shareholders’ equity

1180340474.02 9324362457.36 6299126846.74

Share of net assets calculated

by shareholding ratio

578366832.27 3170283235.50 1259825369.35

Adjustment items -- -- --

--Goodwill -- 267788761.35 1407265.96

--Unrealized profit of internal

trading

-- -20979859.92 --

--Other -- -0.28 --

Book value of equity

investment in joint venture

578366832.27 3417092136.65 1261232635.31

Fair value of the equity

investment of joint ventures

with public offers concerned

-- -- --

Operation income 3729583492.29 14224084504.12 23049985.98

Financial expenses 105866567.08 4653984.37 -545753.01

Income tax expense -21899596.61 708163353.13 4124733.74

Net profit 26414017.30 3152063841.44 1399783397.92

Net profit of the termination

of operation

-- -- --

Other comprehensive income -- -- --

Total comprehensive income 26414017.30 3152063841.44 1399783397.92

Dividends received from joint

venture in the year

-- 858896776.94 105200000.00

(3) Excess loss occurred in joint venture or associated enterprise

Nil

(4) Unconfirmed commitment with joint venture investment concerned

Nil

(5) Intangible liability with joint venture or associated enterprise investment concerned

Nil

4. Financial summary for non-important Joint venture and associated enterprise

Item

Ending balance /

Current period

Opening balance /

Last Period

Joint venture:

Total book value of investment -- --

Amount based on share-holding ratio

Item

Ending balance /

Current period

Opening balance /

Last Period

--Net profit -- -910094.79

--Other comprehensive income -- --

--Total comprehensive income -- -910094.79

Associated enterprise：

Total book value of investment 86032548.98 65714349.12

Amount based on share-holding ratio

--Net profit 13773166.19 6501430.20

--Other comprehensive income -- --

--Total comprehensive income 13773166.19 6501430.20

5. Major conduct joint operation

Nil

6. Structured body excluding in consolidate financial statement

Nil

VIII. R isk re late d wit h f ina nc ial instrume nt

Main financial instrument of the Company including monetary funds structured deposits account receivable

equity instrument investment financial products loans and account payable etc. more details of the financial

instrument can be found in relevant items of Note V. Risks concerned with the above-mentioned financial

instrument and the risk management policy takes for lower the risks are as follow:

Aims of engaging in the risk management is to achieve equilibrium between the risk and benefit lower the

adverse impact on performance of the Company to minimum standards and maximized the benefit for

shareholders and other investors. Base on the risk management targets the basic tactics of the risk

management is to recognized and analyzed the vary risks that the Company counted established an appropriate

risk exposure baseline and caring risk management supervise the vary risks timely and reliably in order to

control the risk in a limited range.In business process the risks with financial instrument concerned happen in front of the Company mainly

including credit exposure market risk and liquidity risk. BOD of the Company takes full charge of the risk

management target and policy-making and takes ultimate responsibility for the target of risk management and

policy. Compliance department and financial control department manager and monitor those risk exposures to

ensuring the risks are control in a limited range.

1. Credit Risk

Credit risk refers to the risk that one party of a financial instrument fails to perform its obligations and

resulting in the financial loss of other party. The company's credit risk mainly comes from monetary funds

structured deposits note receivable account receivable other account receivables. The management has

established an appropriate credit policy and continuously monitors the exposure to these credit risks.The monetary funds and structured deposits held by the Company are mainly deposited in financial institutions

such as commercial banks the management believes that these commercial banks have higher credit and asset

status and have lower credit risks.The Company adopts quota policies to avoid credit risks to any financial

institutions.

For accounts receivable other receivables and bills receivable the Company sets relevant policies to control

the credit risk exposure. To prevent the risks the company has formulated a new customer credit evaluation

system and an existing customer credit sales balance analysis system. The new customer credit evaluation

system aims at new customers the company will investigate a customer’s background according to the

established process to determine whether to give the customer a credit line and the credit line size and credit

period. Accordingly the company has set a credit limit and a credit period for each customer which is the

maximum amount that does not require additional approval. The analysis system for credit sales balance of

existing customers means that after receiving a purchase order from an existing customer the company will

check the order amount and the balance of the accounts owed by the customer so farif the total of the two

exceeds the credit limit of the customer the company can only sell to the customer on the premise of

additional approval otherwise the customer must be required to pay the corresponding amount in advance. In

addition for the credit sales that have occurred the company analyzes and audits the monthly statements for

risk warning of accounts receivable to ensure that the company’s overall credit risk is within a controllable

range.The maximum credit risk exposure of the Company is the carrying amount of each financial asset on the

balance sheet.

2. Market risk

Market risk of the financial instrument refers to the fair value of financial instrument or future cash flow due to

fluctuations in the market price changes and produce mainly includes the IRR FX risk and other price risk.

(1) Interest rate risk (IRR)

IRR refers to the fluctuate risks on Company’s financial status and cash flow arising from rates changes in

market. IRR of the Company mainly related with the bank loans. In order to lower the fluctuate of IRR the

Company in line with the anticipative change orientation choose floating rate or fixed rate that is the rate in

future period will goes up prospectively than choose fixed rate; if the rate in future period will decline

prospectively than choose the floating rate. In order to minor the bad impact from difference between the

expectation and real condition loans for liquid funds of the Company are choose the short-term period and

agreed the terms of prepayment in particular.

(2) Foreign exchange (FX) risk

FX risks refer to the losses arising from exchange rate movement. The FX risk sustain by the Company mainly

related with the USD EUR SF JPY HKD DKK except for the USD EUR SF JPY HKD and DKK carried

out for the equipment purchasing of parent company and Autocam material purchasing of parent company

technical service and trademark usage costs of parent company the import and export of Weifu International

Trade operation of IRD and operation of Borit other main business of the Company are pricing and settle

with RMB (Yuan). In consequence of the foreign financial assets and liabilities takes minor ratio in total assets

the Company has small FX risk of the financial instrument considered by management of the Company.

End as 31st December 2020 except for the follow assets or liabilities listed with foreign currency assets and

liabilities of the Company are carried with RMB

① Foreign currency assets of the Company till end of 31st December 2020

Item

Ending foreign

currency balance

Convert rate

Ending RMB balance

converted

Ratio in assets (%)

Monetary funds

Including: USD 11596564.24 6.5249 75666419.10 0.28

EUR 3694505.41 8.025 29648405.15 0.11

HKD 11548347.98 0.84164 9719551.59 0.04

DKK 9616906.23 1.0786 10372795.06 0.04

Account receivable

Including: USD 2190411.21 6.5249 14292214.10 0.05

EUR 1290945.42 8.025 10359837.00 0.04

JPY 12179808.00 0.063236 770202.34 0.00

DKK 2239065.57 1.0786 2415056.12 0.01

Other account receivables

Including: USD 70143.68 8.025 562903.03 0.00

DKK 462081.08 1.0786 498400.65 0.00

Total ratio in assets 0.57

② Foreign currency liability of the Company till end of 31st December 2020:

Item

Ending foreign

currency balance

Convert rate

Ending RMB balance

converted

Ratio in assets(%)

Short-term borrowings

Including: EUR 4981278.48 8.025 39974759.80 0.47

Account payable

Including: USD 812035.19 6.5249 5298448.41 0.06

EUR 1031866.82 8.025 8280731.24 0.10

JPY 15780699.00 0.063236 997908.28 0.01

CHF 103580.75 7.4006 766559.70 0.01

DKK 2865734.26 1.0786 3090980.97 0.04

GBP 59450.00 8.8903 528528.34 0.01

Other account payable

Including: EUR 255.00 8.025 2046.38 0.00

DKK 402113.23 1.0786 433719.33 0.01

Total ratio in liabilities 0.71

③ Other pricing risk

The equity instrument investment held by the Company with classification as transaction financial asset and

other non-current financial assets are measured on fair value of the balance sheet date. The fluctuation of

expected price for these investments will affect the gains/losses of fair value changes for the Company.

Furthermore on the premise of deliberated and approved in 10th session of 8th BOD the Company exercise

entrust financing with the self-owned idle capital; therefore the Company has the risks of collecting noprincipal due to entrust financial products default. Aims at such risk the Company formulated a “ManagementMechanism of Capital Financing” and well-defined the authority approval investment decision-making

calculation management and risk controls for the entrust financing in order to guarantee a security funds and

prevent investment risk efficiently. In order to lower the adverse impact from unpredictable factors the

Company choose short-term and medium period for investment and investment product’s term is up to 3 years

in principle; in variety of investment the Company did not invest for the stocks derivative products security

investment fund and the entrust financial products aims at security investment as well as other investment with

securities concerned.

3. Liquidity risk

Liquidity risk refers to the capital shortage risk occurred during the clearing obligation implemented by the

enterprise in way of cash paid or other financial assets. The Company aims at guarantee the Company has rich

capital to pay the due debts therefore a financial control department is established for collectively controlling

such risks. On the one hand the financial control department monitoring the cash balance the marketable

securities which can be converted into cash at any time and the rolling forecast on cash flow in future 12

months ensuring the Company on condition of reasonable prediction owes rich capital to paid the debts; on

the other hand building a favorable relationship with the banks rationally design the line of credit credit

products and credit terms guarantee a sufficient limit for bank credits in order to satisfy vary short-term

financing requirements.IX. Disc los ure of fair value

1. Ending fair value of the assets and liabilities measured by fair value

In RMB/CNY

Item

Ending fair value

First-order Second-order Third-order Total

I. Sustaining measured by fair value

(I) Financial assets measured by fair value

and with variation reckoned into current

gains/losses

188108256.00 326848122.00 4809264982.10 5324221360.10

1. Transaction financial asset 188108256.00 -- 3330324683.10 3518432939.10

(1)financial products -- -- 3330324683.10 3330324683.10

(2) Equity instrument investment 188108256.00 -- -- 188108256.00

2. Other non-current financial assets -- 326848122.00 1478940299.00 1805788421.00

(1)financial products -- -- 1467000000.00 1467000000.00

(2) Equity instrument investment -- 326848122.00 11940299.00 338788421.00

Item

Ending fair value

First-order Second-order Third-order Total

(II) Financial assets measured by fair

value and with variation reckoned into

other comprehensive income

-- -- 1290572477.88 1290572477.88

1. Receivables financing -- -- 1005524477.88 1005524477.88

2. Other equity instrument investment -- -- 285048000.00 285048000.00

Total asset non-sustaining measured by

fair value

188108256.00 326848122.00 6099837459.98 6614793837.98

Total liability non-sustaining measured

by fair value

-- -- -- --

II. Non-persistent measure

Total asset non-sustaining measured by

fair value

-- -- -- --

Total liability non-sustaining measured

by fair value

-- -- -- --

2. Recognized basis for the market price sustaining and non-persistent measured by fair value on

first-order

On 31 December 2020 the financial assets available for sale-equity instrument investment held by the Company refers to the

SDEC (stock code: 600841) and Miracle Automation (Stock code: 002009) determining basis of the market price at period-end

refers to the closing price of 31 December 2020.

3. The qualitative and quantitative information for the valuation technique and critical parameter that

sustaining and non-persistent measured by fair value on second-order

On 31 December 2020 other non-current financial assets-equity instrument investment held by the Company refers to the

Guolian Securities (stock code: 601456) determining basis of the market price at period-end refers to the closing price and

liquidity discounts of 31 December 2020.

4. The sustaining and non-persistent measured by fair value on first-order

(1) Fair value of wealth management products

The fair value of wealth management products is determined by the Company using discounted cash flow

valuation techniques.Among them the important unobservable input values are mainly the expected

annualized rate of return and the risk factor of wealth management products.

(2) Financing of accounts receivable

For this part of financial assets the Company uses discounted cash flow valuation techniques to determine its

fair value. Among them important unobservable input values mainly include discount rate and contractual

cash flow maturity period. The cash flow with a contract expiration period of 12 months (inclusive) shall not

be discounted and the cost shall be regarded as its fair value.

(3) Fair value of equity instrument investment and other equity instrument investment

Due to the lack of market liquidity for this part of financial assets the Company uses the replacement cost

method to determine its fair value.Among them the important unobservable input values mainly include the

financial data of the invested company etc.X. Related party and related transactions

1. Parent company of the enterprise

Parent company Relationship Company

type

Registration

place

Legal

representative

Business nature Registered capital (in

10 thousand Yuan)

Wuxi Industry

Group

Parent

company

State-run

proprietorship

Wuxi

Jiang

Guoxiong

Operation of

state-owned assets

517265.71

Parent company

Share-holding ratio on

the enterprise for

parent company (%)

Voting right ratio on

the enterprise (%)

Ultimate controller of the enterprise

Uniform social credit

code

Wuxi Industry

Group

20.22 20.22

State-owned Assets Supervision &

Administration Commission of Wuxi

Municipality

913202001360026543

Explanation on parent company of the enterprise

Wuxi Industry Group is an enterprise controlled by the State-owned Assets Management Committee of Wuxi Municipal People’s

Government. Its business scope includes foreign investment by using its own assets house leasing services self-operating and acting

as an agent for the import and export business of various commodities and technologies (Except for goods and technologies that are

restricted by the state or prohibited for import and export) domestic trade (excluding national restricted and prohibited items).(Projects that are subject to approval in accordance with the law can be operated only after being approved by relevant departments).

2. Subsidiary of the Enterprise

Found more in Note VII. 1.” Equity in subsidiary”

3. Joint venture and associated enterprise

Found more in Note VII.3. “Equity in joint venture and associated enterprise”

Other associated enterprise or joint ventures which has related transaction with the Company in the period or

occurred previous: nil

4. Other related party

Other related party Relationship with the Enterprise

Robert Bosch Company Second largest shareholder of the Company

Key executive

Director supervisor and senior executive of the

Company

5. Related transaction

(1) Goods purchasing labor service providing and receiving

①Goods purchasing/labor service receiving

Related party Content of related transaction Current period Last Period

Weifu Precision Machinery Goods and labor 34570825.03 37649400.25

Bosch Diesel System Goods and labor 29740591.61 42492806.04

Weifu Environment Goods 3051418777.65 1663362526.18

Robert Bosch Company Goods and labor 150855622.37 173854905.98

Shinwell Automobile Tech. (Wuxi) Co. Ltd. Goods 1733572.01 11195174.16

②Goods sold/labor service providing

Related party

Content of related

transaction

Current period Last Period

Weifu Precision Machinery Goods and labor 6092391.01 1428332.05

Bosch Diesel System Goods and labor 2961684269.09 2670139591.68

Weifu Environment Goods and labor 29663885.81 29810340.60

Robert Bosch Company Goods and labor 860611502.90 730599270.85

Shinwell Automobile Tech. (Wuxi)

Co. Ltd.

Goods 103329.66 1241682.55

(2) Related trusteeship management/contract & entrust management/ outsourcing

Nil

(3) Related lease

①As a lessor for the Company:

Lessee Assets type

Lease income recognized in the

Period

Lease income recognized at last

Period

Weifu Environmental Protection Workshop 2508057.00 2508057.00

②Explanation on related lease

Weifu Leader entered into the house leasing contract with Weifu Environment as for the plant locates at No.9

Linjiang Road Wuxi new district owed by Weifu Leader rent-out to Weifu Environment agreements are

made as: Rental from 1 January 2020 to 31 December 2020 was 2508057.00 Yuan

(4) Related guarantee

Nil

(5) Related party’s borrowed/lending funds:

This year Weifu Lida received 5.47 million yuan of borrowed funds from Wuxi Industry Group.

(6) Related party’s assets transfer and debt reorganization

Nil

(7) Remuneration of key manager

Item Current period (in ten thousand yuan) Last Period (in ten thousand yuan)

Remuneration of key manager 1698.60 537.00

(8) Other related party transactions

Related party Name Current period Last Period

Weifu Precision Machinery Payable for technical services 54783.81 --

Weifu Precision Machinery Purchase of fixed assets 145200.00 --

Bosch Diesel System Payable for technical services 184740.27 337369.76

Bosch Diesel System Purchase of fixed assets 447692.06 5720900.23

Bosch Diesel System Technology royalties paid etc. 295419.00 --

Robert Bosch Company Technology royalties paid etc. 5072260.23 3489339.19

Robert Bosch Company Payable for technical services -- 702303.80

Robert Bosch Company Purchase of fixed assets 22927889.53 6150100.00

Weifu Environmental Protection House rental fee payable -- 214285.71

Weifu Environmental Protection Purchase of fixed assets 30000.00 148668.39

Weifu Environmental Protection Payable for technical services 64433.96 --

Weifu Environmental Protection Sales of fixed assets 9426.00 --

Wuxi Industry Group Interest paying 89564.40

6. Receivable/payable items of related parties

(1) Receivable item

Item Related party

Ending balance Opening balance

Book balance

Bad debt

reserve

Book balance

Bad debt

reserve

Account receivable Weifu Precision Machinery 160565.87 -- 243544.57 --

Other account receivables Weifu Precision Machinery -- -- 1070000.00 --

Account receivable Bosch Diesel System 549543387.12 547423047.70 --

Account receivable Robert Bosch Company 205738695.62 84473.87 155195576.42 135534.13

Other account receivables Robert Bosch Company -- -- 7600000.00 1520000.00

Account receivable

Weifu Environmental

Protection

642390.75 -- 3925564.95 --

Other account receivables

Weifu Environmental

Protection

49000000.00 -- -- --

(2) Item of payment in advance

Item Related party Ending balance Opening balance

Other non- current asset Weifu Precision Machinery -- 53788.00

Other non- current asset Bosch Diesel System -- 183842.03

Account paid in advance Robert Bosch Company 2970930.93 5954823.56

Other non- current asset Robert Bosch Company -- 6600000.00

(3) Payable item

Item Related party Ending balance Opening balance

Account payable Weifu Precision Machinery 12825011.74 10556782.28

Other account payable Weifu Precision Machinery 29000.00 29000.00

Account payable Weifu Environmental Protection 850384640.88 553049630.17

Account payable Bosch Diesel System 7178387.17 5664266.10

Account payable Robert Bosch Company 5370249.46 12297410.48

Account payable Shinwell Automobile Tech. (Wuxi) Co. Ltd. 19320.30 2212768.26

Other current liabilities Bosch Diesel System 169620804.78 69164600.47

Other current liabilities Weifu Precision Machinery 74778.76

Other account payable Wuxi Industry Group 5474862.22 --

(4) Advance payments and contract liabilities:

Item Related party Ending balance Opening balance

Contract liabilities Weifu Precision Machinery 619469.03 --

Contract liabilities Bosch Diesel System 0.36 --

Contract liabilities Robert Bosch Company 18094.85 854162.51

Contract liabilities Weifu Environmental Protection -- 5812521.86

7. Undertakings of related party

Nil

XI.S ha re -base d pay me nt

1. Overall situation of share-based payment

Total amount of various equity instruments granted by the

company in the current period Fair value on the grant date 509994000.00 yuan

Total amount of various equity instruments exercised by

the company in the current period --

Total amount of various equity instruments invalidated by

the company in the current period --

The scope of the exercise price of the stock options issued

by the company at the end of the period and the remaining

period of the contract

The grant price is 15.48 yuan per share; the exercise time is from the

first trading day 24 months after the completion of the registration of

the restricted stocks granted in the first tranche to the last trading day

within 60 months from the date of completion of the registration of

the restricted stock granted in the first tranche so the remaining

period of the contract is 4 years and 11 months.The scope of the exercise price of other equity instruments

issued by the company at the end of the period and the

remaining period of the contract

N/A

2. Share-based payment settled by equity

Method for determining the fair value of equity

instruments on the grant date

Determine based on the closing price of the restricted stock on the

grant date

Basis for determining the number of vesting equity

instruments

Unlocking conditions

Reasons for the significant difference between estimate in

the current period and estimate in the prior period

Not Applicable

Cumulative amount of equity-settled share-based payments

included in the capital reserve

6484837.50

Total amount of expenses confirmed by equity-settled

share-based payments in the current period

6484837.50

Other explanation:

This restricted stock incentive plan has been reviewed and approved by the company's second extraordinary general meeting of

shareholders in 2020. The overview of this restricted stock incentive plan is as follows:

(1) Stock source: the company's A-share common stock repurchased from the secondary market.

(2) Grant date: November 12 2020.

(3) Grant objects and number of grants: 19540000 restricted stocks were granted to 601 incentive objects of the company and its

subsidiaries.

(4) Grant price: 15.48 yuan/share.

(5) Grant registration completion date: December 4 2020.

(6) Lifting the restrictions on sales:

Unlock period Unlock time Ratio of unlocked quantity to granted

quantity

Phase I unlocked Starting from the first trading day 24 months after the 4/10

completion of the registration of the first grant and ending

on the last trading day within 36 months

Phase II unlocked Starting from the first trading day 36 months after the

completion of the registration of the first grant and ending

on the last trading day within 48 months

Phase III unlocked Starting from the first trading day 48 months after the

completion of the registration of the first grant and ending

on the last trading day within 60 months

(7) Performance appraisal requirements at the company level:

Unlock conditions Performance appraisal requirements

The first batch of

unlock conditions

1. the weighted average ROE for year of 2021 is not less than 10%;

2. the growth rate of self-operating profit in 2021 will not be less than 6% compared with the year of

2019 the absolute amount will not be less than 845 million yuan;

3. the cash dividends for year of 2021 shall be no less than 50% of the profit available for distribution of

the current year.The second batch of

unlocking conditions

1. the weighted average ROE for year of 2022 is not less than 10%;

2. the growth rate of self-operating profit in 2022 will not be less than 12% compared with the year of

2019 the absolute amount will not be less than 892 million yuan;

3. the cash dividends for year of 2022 shall be no less than 50% of the profit available for distribution of

the current year.The third batch of

unlocking conditions

1. the weighted average ROE for year of 2023 is not less than 10%;

2. the growth rate of self-operating profit in 2023 will not be less than 20% compared with the year of

2019 the absolute amount will not be less than 958 million yuan;

3. the cash dividends for year of 2023 shall be no less than 50% of the profit available for distribution of

the current year.Other explanation: self-operating profit refers to the net profit attributable to the owners of the parent company after deducting

non-recurring gains and losses and deducting the investment income from Bosch Diesel System and CNEMS.XII. U nde rtak ings or co nt inge ncy

1. Impo rtant undertakings

Important undertakings on balance sheet date

Nil

2. Contingency

Nil

XIII. Events after balance sheet date

1. Important non adjustment matters

Nil

2. Profit distribution

Profit or dividend plans to distributed

The profit distribution plan for 2020: with the total share capital of the

company at the end of 2020 (1008950570 shares) excluding the shares

already repurchased on the repurchase account (56277 shares of A-stock)

that is the 1008894293 shares as the base distribute 15.00 Yuan (tax

included) in cash for every 10 shares to all shareholders without bonus

shares and capitalization of capital reserve. (In accordance with the

Company Laws shares of the company held by a listed company through a

special securities account for repurchase shall not be entitled to participate

in profit distribution and capitalization of capital reserves).The remaining

undistributed profits will be carried forward to the next year. The proposed

cash dividend is 1513341400 Yuan (tax included)

Profit or dividend declare to distributed

which have been approved

The profit distribution plan needs to submit for deliberation on Annual General

Meeting

3. Sales return

Important sales returns: Nil

4. Other events after balance sheet date

(1)The Proposal on External Investment was deliberated and approved by the 22nd session of 9th BOD dated 26

Feb. 2021. the Company intends to invest in Qingdao Shangqi HuiZhu Zhanxing Industry Investment Fund

(Limited Partnership) with its own funds of 150 million yuan.

(2) According to the resolution of the 23rd session of the 9th board of directors of the company held on April 16

2021 the company plans to use its own idle funds for entrusted financial management in 2021 with the total

investment amount not exceeding 9.5 billion Yuan and the above amount can be rolled

XIV. Other important events

1. Previous accounting errors collection

Nil

2. Debt restructuring

Nil

3. Assets replacement

Nil

4. Pension plan

The Enterprise Annuity Plan under the name of WFHT has deliberated and approved by 8th session of 7th BOD:

in order to mobilize the initiative and creativity of the employees established a talent long-term incentive

mechanism enhance the cohesive force and competitiveness in enterprise the Company carried out the above

mentioned annuity plan since the date of reply of plans reporting received from labor security administration

department. Annuity plans are: the annuity fund are paid by the enterprise and employees together; the

enterprise’s contribution shall not exceed 8% of the gross salary of the employees of the enterprise per year

the combined contribution of the enterprise and the individual employee shall not exceed 12% of the total

salary of the employees of the enterprise. In accordance with the State’s annuity policy the Company will

adjusted the economic benefits in due time in principle of responding to the economic strength of the

enterprise the amount paid by the enterprise at current period control in the 8 percent of the total salary of last

year the maximum annual allocation to employees shall not exceed five times the average allocation to

employees and the excess shall not be counted towards the allocation. The individual contribution is limited to

1% of one’s total salary for the previous year. Specific paying ratio later shall be adjusted correspondingly in

line with the operation condition of the Company.

In December 2012 the Company received the Reply on annuity plans reporting under the name of WFHT

from labor security administration department later the Company entered into the Entrusted Management

Contract of the Annuity Plan of WFHT with PICC.

5. Segment

(1) Recognition basis and accounting policy for reportable segment

Determine the operating segments in line with the internal organization structure management requirement

and internal reporting system. Operating segment of the Company refers to the followed components that have

been satisfied at the same time:

① The component is able to generate revenues and expenses in routine activities;

② Management of the Company is able to assess the operation results regularly and determine resources

allocation and performance evaluation for the component;

③ Being analyzed financial status operation results and cash flow of the components are able to require by

the Company

The Company mainly engaged in the manufacture of fuel system of internal combustion engine and fuel cell

components products auto components muffler and purifier etc. based on the product segment the Company

determine three reporting segments as auto fuel injection system and fuel cell components air management

system and automotive post processing system. Accounting policy for the three reporting segments are shares

the same policy state in Note III

Segment assets exclude transaction financial asset other account receivables-dividend receivable other

non-current financial assets other equity instrument investment long term equity investment and other

undistributed assets since these assets are not related to products operation.

(2) Financial information for reportable segment

Item

Automotive fuel

injection system

and fuel cell parts

product division

Product segment

of automotive

post processing

system

Product segment

of air

management

system

Less: offset of

segment

Add:

investment/income

measured by

equity income of

financial products

or possession and

disposal income

the retained assets

or gains/losses as

the financial assets

available for sale

or possession and

disposal income

Total

Operating

revenue

5993310683.00 6427844701.00 697872646.74 235201724.14 -- 12883826306.60

Operating

cost

4448683801.55 5731947799.03 446496408.80 197843567.41 -- 10429284441.97

Total

Profit

524729824.97 96006636.11 71788594.68 -524839.83 2309901783.97 3002951679.56

Net profit 452179859.49 101778469.69 55671416.42 -393128.74 2212713056.22 2822735930.56

Total

assets

11471288383.40 5342888369.35 1013319278.74 881624474.24 10404823830.96 27350695388.21

Total

liabilities

3923773971.66 4225004372.65 592960211.88 186744801.93 1235734.93 8556229489.19

6. Major transaction and events makes influence on investor’s decision

Nil

XV. Note s to major it e ms in co nsol idate d f ina nc ial s tate me nts of pa re nt

co mpa ny

(Monetary unit refers to RMB/CNY below unless otherwise specified.The end of the period refers to

December 31 2020 the beginning of the period refers to January 1 2020 the current period refers to

2020 and the last period refers to 2019.)

1. Account receivable

(1) Classification of account receivable:

Category

Ending balance

Book balance Bad debt reserve

Book value

Amount Ratio (%) Amount Accrual ratio (%)

Account receivable with bad debt

provision accrual on a single basis

11107123.51 1.11 11107123.51 100.00 --

Account receivable with bad debt

provision accrual on portfolio

985882139.36 98.89 3099860.14 0.31 982782279.22

Including: receivables from

customers

836329626.26 83.89 3099860.14 0.37 833229766.12

Receivables from internal related

parties

149552513.10 15.00 -- -- 149552513.10

Total 996989262.87 100.00 14206983.65 1.42 982782279.22

Category

Opening balance

Book balance Bad debt reserve

Book value Amount Ratio (%) Amount Accrual ratio

(%)

Account receivable with bad debt

provision accrual on a single basis

9107123.51 1.06 9107123.51 100.00 --

Account receivable with bad debt

provision accrual on portfolio

851956578.91 98.94 3716569.87 0.44 848240009.04

Including: receivables from

customers

715722790.25 83.12 3716569.87 0.52 712006220.38

Receivables from internal related

parties

136233788.66 15.82 -- -- 136233788.66

Total 861063702.42 100.00 12823693.38 1.49 848240009.04

①Bad debt provision accrual on single basis:

Account receivable(by unit)

Ending balance

Account

receivable

Bad debt

reserve

Accrual ratio

(%)

Accrual causes

BD bills 7300000.00 7300000.00 100.00 Have difficulty in collection

Changchun FAW Sihuan Engine

Manufacturing Co. Ltd

1475731.65 1475731.65 100.00 Have difficulty in collection

Wuxi Kipor Machinery Co. Ltd 1220384.74 1220384.74 100.00 Have difficulty in collection

Fujian Zhao’an Country Minyue Bianjie

Agricultural Machinery Automobile

components Co. Ltd.

1111007.12 1111007.12 100.00 Have difficulty in collection

Account receivable(by unit)

Ending balance

Account

receivable

Bad debt

reserve

Accrual ratio

(%)

Accrual causes

Total 11107123.51 11107123.51 100.00

②Bad debt provision accrual on portfolio:

Account age

Ending balance

Book balance Bad debt reserve Accrual ratio (%)

Within 6 months 822921167.68 -- --

6 months to one year 8783211.93 878321.19 10.00

1-2 years 2434208.25 486841.65 20.00

2-3 years 760568.50 304227.40 40.00

Over 3 years 1430469.90 1430469.90 100.00

Total 836329626.26 3099860.14 0.37

③In the portfolio receivables from internal related parties

Name Amount Bad debt reserveAccrual ratio (%)

Weifu Leader 68976711.20 --

Weifu International Trade 22530615.85 --

Weifu Tianli 2563953.76 --

Weifu Schmidt 55481232.29 --

Total 149552513.10 --

④By account age (Including single provision and portfolio provision):

Account age Ending Book balance

Within one year 976000464.78

Including: within 6 months 965950994.85

6 months to one year 10049469.93

1-2 years 7690636.18

2-3 years 10292548.30

Over 3 years 3005613.61

Total 996989262.87

(2) Bad debt provision accrual collected or switch back:

Category

Opening

balance

Amount changed in the period

Ending balance

Accrual

Collected or

reversal

Written-off

Absorption and

merger increase

Bad debt

reserve

12823693.38 1336214.96 -- 210660.88 257736.19 14206983.65

Total 12823693.38 1336214.96 -- 210660.88 257736.19 14206983.65

Important bad debt provision collected or switch back: nil

(3) Account receivable actual charge off in the Period

Item Amount charge off Resulted by related transaction (Y/N)

Fuzhou Haominxing Automobile

components Co. Ltd.

129739.47 N

Kunming Yunnei Power Co. Ltd. 47449.10 N

Xinxiang Xincheng Machinery Equipment

Co. Ltd.

28895.81 N

Other customers 4576.50 N

Total 210660.88

(4) Top 5 receivables at ending balance by arrears party

Name

Ending balance of account

receivable

Ratio in total ending balance

of account receivables (%)

Ending balance of bad debt

reserve

Bosch Diesel System 548842896.72 55.05 --

Weifu Leader 68976711.20 6.92 --

Weifu Schmidt 55481232.29 5.56 --

Custom 4 49207860.47 4.94 703826.23

Custom 5 45023657.85 4.52 102723.13

Total 767532358.53 76.99 806549.36

2. Other account receivables

Item Ending balance Opening balance

Interest receivable 897777.78 804929.68

Dividend receivable -- 1070000.00

Other account receivables 196437936.85 248140027.06

Total 197335714.63 250014956.74

(1)Interest receivable

1) Category of interest receivable

Item Ending balance Opening balance

Interest receivable of unified-borrowing & unified-lending 897777.78 149876.70

Interest of fund occupation -- 655052.98

Total 897777.78 804929.68

2) Significant overdue interest

Nil

(2) Dividend receivable

1) Details of dividend receivable

The invested entity Ending balance Opening balance

Weifu Precision Machinery -- 1070000.00

2) Important dividend receivable with account age over one year

Ni

(3)Other account receivables

1) Other account receivables classification by nature

Nature Ending balance Opening balance

Staff loans and petty cash 483650.21 462664.16

Balance of related party in the consolidate scope 194745396.72 216403060.04

Margin 1030340.00 --

Intercourse funds of unit -- 24000000.00

Protean Holdings Corp. equity disposal fund -- 10654092.89

Other 263534.00 117939.00

Total 196522920.93 251637756.09

2) Accrual of bad debt provision

Bad debt reserve

Phase I Phase II Phase III

Total Expected credit losses

over next 12 months

Expected credit losses

for the entire duration

(without credit

impairment occurred)

Expected credit losses for

the entire duration (with

credit impairment

occurred)

Balance on Jan. 1 2020 3497729.03 -- -- 3497729.03

Balance of Jan. 1 2020 in the

period

-- -- -- --

--transfer-in phase I -- -- -- --

--transfer-in phase II -- -- -- --

-- switch back phase II -- -- -- --

-- switch back phase I -- -- -- --

Current accrual 52664.34 -- -- 52664.34

Current reversal 3465409.29 -- -- 3465409.29

Current written-off -- -- -- --

Other change -- -- -- --

Balance on Dec. 31 2020 84984.08 -- -- 84984.08

By account age (Including single provision and portfolio provision)

Account age Ending Book balance

Within one year 160889115.00

Including: Within 6 months 71626274.30

6 months to one year 89262840.70

1-2 years 35552695.72

2-3 years 43570.21

Over 3 years 37540.00

Total 196522920.93

3) Bad debt provision accrual collected or switch back

Category

Opening

balance

Amount changed in the period

Ending balance

Accrual

Collected or

reversal

Written-off

Conversion

different of

foreign currency

financial

statement

Bad debt

reserve

3497729.03 52664.34 3465409.29 -- -- 84984.08

Total 3497729.03 52664.34 3465409.29 -- -- 84984.08

4) Other receivables actually written-off during the reporting period

Nil

5) Top 5 other receivables at ending balance by arrears party

Item Nature Ending balance Account age

Ratio

(%)

Ending

balance of

bad debt

reserve

Weifu Leader

Balance of related party in

the consolidate scope

100000000.00 Within one year 50.88 --

Weifu Chang’an

Balance of related party in

the consolidate scope

54192781.00 Within one year 27.58 --

Weifu Schmidt

Balance of related party in

the consolidate scope

21000000.00 1-2 years 10.68 --

Weifu Mashan

Balance of related party in

the consolidate scope

19552615.72 Within 2 years 9.95 --

Zhenkunxing Industrial

Supermarket (Shanghai) Co. Ltd.Margin 1000000.00 Within 6 months 0.51 --

Total 195745396.72 99.60 --

6) Other account receivables related to government grants:

Nil

7) Other receivable for termination of confirmation due to the transfer of financial assets:

Nil

8) The amount of assets and liabilities that are transferred other receivable and continued to be involved:

Nil

无锡威孚高科技集团股份有限公司 2020 年度财务报表附注

3. Long-term equity investments

Item

Ending balance Opening balance

Book balance Depreciation reserves Book value Book balance Depreciation reserves Book value

Investment for subsidiary 1978302303.40 -- 1978302303.40 1731814008.11 -- 1731814008.11

Investment for associates and

joint venture

3999826000.48 -- 3999826000.48 4599549621.93 -- 4599549621.93

Total 5978128303.88 -- 5978128303.88 6331363630.04 -- 6331363630.04

(1) Investment for subsidiary

The invested entity Opening balance Increase in this period Decrease in this period Ending balance

Impairment accrual in

the period

Ending balance of

depreciation reserves

Weifu Jinning 178639593.52 569165.62 -- 179208759.14 -- --

Weifu Leader 460113855.00 731784.39 -- 460845639.39 -- --

Weifu Mashan 168693380.51 154321.87 -- 168847702.38 -- --

Weifu Chang’an 220902037.30 144365.63 -- 221046402.93 -- --

Weifu International Trade 32849254.85 59737.50 -- 32908992.35 -- --

Weifu ITM 167000000.00 -- 167000000.00 -- -- --

Weifu Schmidt 50160000.00 84628.12 -- 50244628.12 -- --

Weifu Tianli 234941100.00 243928.12 -- 235185028.12 -- --

Weifu Autocam 82454467.99 -- -- 82454467.99 -- --

Weifu Electronic Drive 53832280.23 54759.38 -- 53887039.61 -- --

SPV 82228038.71 411445604.66 -- 493673643.37 -- --

Total 1731814008.11 413488295.29 167000000.00 1978302303.40 -- --

(2) Investment for associates and joint venture

Enterprise

Nature

Opening balance Current changes (+ -) Ending balance

Ending balance of

depreciation reserves

Bosch Diesel System Associated enterprise 3276853986.35 -589329306.82 2687524679.53 --

无锡威孚高科技集团股份有限公司 2020 年度财务报表附注

Zhonglian Automobile Associated enterprise 1261232635.30 -23683778.99 1237548856.31 --

Weifu Precision Machinery Associated enterprise 61463000.28 13289464.36 74752464.64 --

Total Associated enterprise 4599549621.93 -599723621.45 3999826000.48 --

Current changes (+ -):

Item Bosch Diesel System Zhonglian Automobile Weifu Precision Machinery

Additional investment -- -- --

Capital reduction -- -- --

Investment gain/loss recognized under equity 1132865918.69 307716221.01 16889464.36

Other comprehensive income adjustment -- -- --

Other equity change -- -- --

Cash dividend or profit announced to issued -1722195225.51 -331400000.00 -3600000.00

Impairment accrual -- -- --

Other -- -- --

Total -589329306.82 -23683778.99 13289464.36

4. Operating income and cost

5. Investment income

Item Current period Last Period

Investment income in subsidiaries 62995075.18 105086820.44

Investment income in joint ventures and associated enterprises 1457471604.06 1310687436.86

Investment income from holding transaction financial asset 683211.60 1383668.59

Investment income from holding other equity instrument investment -- 900000.00

Investment income of financial products 258702394.98 228151138.50

Other 36907117.60 --

Total 1816759403.42 1646209064.39

Item

Current period Last Period

Income Cost Income Cost

Main business 4164444997.29 2955881019.87 3470103915.90 2330022370.30

Other business 371972806.50 280430592.86 362821444.52 311590544.97

Total 4536417803.79 3236311612.73 3832925360.42 2641612915.27

XV I. S upple me nta ry Informat io n

1. Current non-recurring gains/losses

Item Amount

Note

Gains/losses from the disposal of non-current asset

10719959.77

Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in

quota or ration according to national standards which are closely relevant to enterprise’s

business)

146475795.26

Profit and loss of assets delegation on others’ investment or management

271684174.09

Except for effective hedge business relevant to normal operation of the Company gains and

losses arising from fair value change of tradable financial assets and tradable financial liabilities

and investment income from disposal of tradable financial assets tradable financial liabilities

and financial assets available for sale

375102546.00

Switch-back of impairment of account receivable that practice impairment test independent

3078424.43

Other non-operating income and expenditure except for the aforementioned items

-3090715.87

Impact on income tax

-116175046.47

Impact on minority shareholders’ equity

-5011845.35

Total 682783291.86

Note: “+” refers to income and revenue while “-” stands for losses or expenses for the above mentioned numbers

2. ROE and earnings per share

Profits during report period

Weighted average

ROE (%)

Earnings per share (RMB)

Basic earnings per share

Diluted earnings per

share

Net profits belong to common stock stockholders of the

Company

15.78 2.79 2.79

Net profits belong to common stock stockholders of the

Company after deducting nonrecurring gains and losses

11.90 2.10 2.10

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

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

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

Not applicable

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

and Chinese GAAP (Generally Accepted Accounting Principles)

Not applicable

4. Supplementation for change of accounting policy

Found more in the explanation on 30. Change of the important accounting policy and estimation in Note III