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Annual Report 2019 of Zhejiang Supor Co., Ltd.

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Zhejiang Supor Co., Ltd.

Annual Report 2019

April 2020


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SECTION I IMPORTANT NOTES, TABLE OF CONTENTS AND

DEFINITIONS

The Board of Directors and the Board of Supervisors of Zhejiang Supor Co.,

Ltd. (hereinafter referred to as the “Company”) and all its directors, supervisors

and senior executives warrant that this annual report is true, accurate and

complete, and does not contain any fictitious statements, misleading information

or significant omissions; all directors, supervisors and senior executives of the

Company undertake, separately and jointly, all responsibilities in relation to the

truth, accuracy and completeness hereof.

Mr. Thierry de LA TOUR D’ARTAISE, Chairman of the Board of

Directors, and Mr. Xu Bo, Chief Financial Officer of the Company, hereby

confirm that the financial statement enclosed in this Annual Report is true,

accurate and complete.

All directors have attended the Board Meeting in person, in which the

current report was reviewed and approved.

This annual report relating to such forward-looking statement as future

plan does not form any substantive commitment to investors. It is of great

uncertainty, for whether it can be realized or not depends on multiple factors,

including market change and effort of management team. Please be careful of

investment risks.


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As for the risk factors confronted by the Company, see Part 9 “Prospects

for Future Development” of Section IV “Business Operation Discussion &

Analysis”.

The profit distribution plan adopted at this Board Meeting specifies that:

based on 821,099,910(total capital stock of 821,119,910 shares at the end of 2019

deducted by 20,000 shares in the Company’s special securities account for

repurchase) the Company will distribute all shareholders at the price of RMB

13.3 per 10 shares (tax-inclusive) as the cash dividends, issue 0 bonus shares (tax

included) and will not convert capital reserves to capital.

During the period from the disclosure of this profit distribution preplan to

the actual implementation date, if the Company’s capital stock changes due to

conversion of convertible bonds into stocks, share repurchases, equity incentive

exercise, and refinancing and new share listing, it will be executed based on the

changed capital stock, and the above distribution ratio remains unchanged.


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Table of Contents

SECTION I IMPORTANT NOTES, TABLE OF CONTENTS AND DEFINITIONS ............................................................................2

SECTION II COMPANY FILE AND MAJOR FINANCIAL INDICATORS .........................................................................................6

SECTION III ABSTRACT FOR COMPANY BUSINESSES ............................................................................................................... 10

SECTION IV BUSINESS OPERATION DISCUSSION AND ANALYSIS ......................................................................................... 13

SECTION V SIGNIFICANT EVENTS ................................................................................................................................................ 27

SECTION VI CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHAREHOLDERS .............................................. 50

SECTION VII INFORMATION ON PREFERRED STOCK................................................................................................................ 59

SECTION VIII COMPANY’S CONVERTIBLE BONDS .................................................................................................................... 60

SECTION IX PARTICULARS ABOUT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT STAFFS ........................ 61

SECTION X CORPORATION GOVERNANCE ................................................................................................................................. 70

SECTION XI COMPANY’S BONDS ................................................................................................................................................... 80

SECTION XII FINANCIAL REPORT.................................................................................................................................................. 81

SECTION XIII CATALOG OF REFERENCE DOCUMENTS .......................................................................................................... 203


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Definitions

Items to be Defined means Definitions

SZSE means Shenzhen Stock Exchange

CSRC means China Securities Regulatory Commission

CSDCC means Shenzhen Branch of China Securities Depository and Clearing

Corporation Limited

The Company/this Company means Zhejiang Supor Co., Ltd.

SEB Internationale means SEB INTERNATIONALE S.A.S

SEB Group means SEB S.A.

Zhejiang Supor Electrical means Zhejiang Supor Electrical Appliance Manufacturing Co., Ltd

Shaoxing Supor means Zhejiang Shaoxing Supor Domestic Electrical Appliances Co., Ltd.

Supor Vietnam means Supor (Vietnam) Co., Ltd

Wuhan Recycling means Wuhan Supor Recycling Co., Ltd

Wuhan Cookware means Wuhan Supor Cookware Co., Ltd.

Wuhan PC means Wuhan Supor Pressure Cooker Co., Ltd.

Omegna means Hangzhou Omegna Commercial Trade Co., Ltd.

Shanghai Marketing means Shanghai Supor Cookware Marketing Co., Ltd.

P&R means Zhejiang Supor Plastic & Rubber Co., Ltd

Wuhan Supor means Wuhan Supor Co., Ltd.

Yuhuan Sales Company means Yuhuan Supor Cookware Sales Co., Ltd.

SEADA means SOUTH EAST ASIA DOMESTIC APPLIANCES PTE. LTD.

AFS means AFS VIETNAM MANAGEMENT CO.LTD.

Shanghai WMF means Shanghai WMF Enterprise Development Co., Ltd.

Shanghai SEB/SSEAC means Shanghai SEB Electrical Appliances Co., Ltd.

Zhejiang WMF means Zhejiang WMF Housewares Co., Ltd.

Shaoxing Supor Housewares means Zhejiang Shaoxing Supor Housewares Co., Ltd.

Supor LKA means Zhejiang Supor Large Kitchen Appliance Co., Ltd.

Supor Water Heater means Zhejiang Supor Water Heater Co., Ltd.

GSIM or Indonesian Company means PT Groupe SEB Indonesia MSD

Equity Incentive Plan for 2017 means 2017 Restricted Stock Incentive Plan (Revised Draft)


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SECTION II COMPANY FILE AND MAJOR FINANCIAL INDICATORS

II. Company Information

Short Form of the Stock: Supor Stock Code 002032

Stock Exchange for Stock Listing Shenzhen Stock Exchange

Chinese Name of the Company Zhejiang Supor Co., Ltd.

Abbreviated Chinese Name of the Company Supor

English Name of the Company (if any) ZHEJIANG SUPOR CO., LTD.

Abbreviated English Name of the Company

(if any) SUPOR

Legal Representative Thierry de LA TOUR D’ARTAISE

Registration Place Damaiyu Economic Development Zone, Yuhuan, Zhejiang

Postal Code 317604

Office Address 15F of Supor Building, No.1772 Jianghui Road, New & High Tech Development

Zone, Hangzhou, China

Postal Code 310051

Website www.supor.com.cn

Email [email protected]

II. Contact Person and Contact Information

Board Secretary Representative of Securities Affairs

Name Ye Jide Fang Lin

Address

Securities Department at 23F of Supor Building,

No.1772 Jianghui Road, New & High Tech

Development Zone, Hangzhou, China

Securities Department at 23F of Supor Building,

No.1772 Jianghui Road, New & High Tech

Development Zone, Hangzhou, China

Tel.: 0571-86858778 0571-86858778

Fax: 0571-86858678 0571-86858678

Email [email protected] [email protected]

III. Place for Information Disclosure and Archiving

Papers appointed by the Company for information

disclosure: Securities Times, Securities Daily and China Securities Journal


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Website appointed by CSRC for information

disclosure www.cninfo.com.cn

Place for archiving of the Company’s annual report: Securities Department of the Company

IV. Changes of Registration

Organization Code Unified social credit code: 913300007046976861

Change of main business since listing of the

Company (if any) No change

Change of controlling shareholders (if any) No change

V. Other Relevant Information

Certified Public Accountants engaged by the Company

Name of the Certified Public Accountants: Union Power Certified Public Accountants (Special General Partnership)

Office Address of the Certified Public Accountants: No. 169, Donghu Road, Wuchang District, Wuhan City

Name of the Signatory Accountants Li Wei, Li Huihui

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

□ Applicable √ Not-applicable

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


VI. Major Accounting Data and Financial Indicators

Does the company need to retroactively adjust or restate previous year’s accounting data?

□ Yes √ No

2019 2018 Increase/ decrease (%) 2017

Operating income (Yuan) 19,853,477,882.97 17,851,264,801.72 11.22% 14,542,193,769.70

Net profit attributable to shareholders of

listed company (Yuan) 1,919,914,191.25 1,669,873,440.00 14.97% 1,326,195,778.24


listed company with non-recurring

profit or loss deducted (Yuan)

1,734,302,272.66 1,512,687,605.44 14.65% 1,207,290,206.76

Net cash flows from operating activities

(Yuan) 1,732,940,977.12 2,013,658,744.84 -13.94% 1,101,068,593.63

Basic earnings per share (Yuan/share) 2.347 2.041 14.99% 1.623

Diluted earnings per share (Yuan/share) 2.338 2.033 15.00% 1.615

Weighted average return on net assets 30.54% 28.84% +1.70pts 26.15%


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2019 year end 2018 year end Increase/decrease in

the period (%) 2017 year end

Total assets (Yuan) 11,847,953,986.45 10,633,161,177.21 11.42% 9,462,215,289.52

Net assets attributable to shareholders

of listed company (Yuan) 6,836,417,032.56 5,907,337,461.81 15.73% 5,407,071,353.16

VII. Financial Data Difference on Principle of Domestic and Oversea Accounting

1. Net profit and net assets discrepancies in financial statements disclosed separately under International

Accounting Standards and Chinese Accounting Standards


No net profit and net assets discrepancies in financial statements disclosed separately under International Accounting Standards and

Chinese Accounting Standards existed in the reporting period

2. Net profit and net assets discrepancies in financial statements disclosed separately under Overseas

Accounting Standards and Chinese Accounting Standards


No net profit and net assets discrepancies in financial statements disclosed separately under Overseas Accounting Standards and

Chinese Accounting Standards existed in the reporting period.

VIII. Quarter-based Major Financial Indicators

Unit: Yuan

The 1st quarter The 2nd quarter The 3rd quarter The 4th quarter

Total sales 5,473,577,143.92 4,362,006,544.86 5,060,731,903.21 4,957,162,290.98

Net profit attributable to

shareholders of listed company 514,945,858.67 323,197,939.26 410,255,559.78 671,514,833.53

Net profit attributable to

shareholders of listed company

deducted by non-recurring profit or

loss

498,562,959.33 318,146,512.78 405,075,621.41 512,517,179.14

Net cash flows from operating

activities -118,659,387.09 91,273,566.62 216,040,859.11 1,618,285,938.48

Any difference between financial indicators or the total and relevant financial indicators disclosed in quarter-based report or

semiannual report

□ Yes √ No

IX. Non-recurring Profit or Loss Items and Amount

√ Applicable □ Not-applicable


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Unit: Yuan

Item Amount in 2019 Amount in 2018 Amount in 2017 Notes

Profit and loss on disposal of non-current assets

(including the write-off of provision for asset

impairment)

-2,105,177.52 501,295.73 -506,059.42

Government subsidy included in current profit or

loss (excluding government subsidies closely

related to operating activities of the Company and

subject to uniform national standards on amount

and quantity)

165,824,087.78 109,921,377.76 82,544,040.78

Net profit or loss from enterprise merger under the

same control of a subsidiary in current period from

the beginning of the period to the date of merger

3,663,853.29

Except the effective hedging business related to the

normal operation of the company, the gain and loss

in FV changes from trading financial assets、

derivative financial assets、trading financial

liability、derivative financial liability and disposal

of trading financial assets、derivative financial

assets、trading financial liability、derivative

financial liability and investment revenue from

other liability investment

66,972,830.91

Turn-over of provision for impairment of

receivables undergoing impairment test separately

and contract assets

1,052,556.44

Other non-operating revenues or expenditures

except for the foregoing items -21,635,004.92 142,393.13 -8,252,542.47

Other profit or loss conforming to the definition of

non-recurring profit or loss 12,102,997.12 73,410,582.93 68,438,195.04

Minus: income tax impact 35,547,895.67 31,506,588.26 23,293,125.16

Effects on minority interest (after tax) -80.89 -363.54 24,937.29

Total 185,611,918.59 157,185,834.56 118,905,571.48 --

The Company should state reason for defining “non-recurring profit or loss items” defined in the Explanatory Announcement No.1

on Disclosure of the Information of Companies Offering Their Securities to the Public -- Non-recurring Profit or Loss and

non-recurring profit or loss items listed in the Explanatory Announcement No.1 on Disclosure of the Information of Companies

Offering Their Securities to the Public -- Non-recurring Profit or Loss as recurring profit or loss items.


The Company did not define any non-recurring profit and loss that is defined and listed the Explanatory Announcement No.1 on

Disclosure of the Information of Companies Offering Their Securities to the Public -- Non-recurring Profit or Loss as recurring profit

and loss.


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SECTION III ABSTRACT FOR COMPANY BUSINESSES

I. Main business during reporting period

As China’s famous cookware R&D and manufacturing company, Zhejiang Supor Co., Ltd. (hereinafter referred to as “the

Company”) is a China’s leading manufacturer of small kitchen electrical appliances and also the first listed company in China’s

cookware industry. Established in 1994, the headquarters of the Company locates in Hangzhou owning 5 R&D and manufacture

bases located in Yuhuan City, Wuhan City, Hangzhou City, Shaoxing City and Ho Chi Minh City with more than 12,000 employees.

Developed strategic cooperation relationship with the Company since 2006, SEB Group is the actual controller of the Company.

By the end of the reporting period, SEB Group held 81.19% shares of the Company. With a long history of more than 160 years, SEB

Group is the world’s famous cookware R&D manufacturer and small home appliance manufacturer with about 350 million products

sold to more than 150 countries worldwide per year.

Supor’s main businesses include: CW, SDA, Large Kitchen Appliance and H&PC products.

(1) The CW mainly includes wok, pressure cooker, fry pan, sauce pan, steamer, pottery pot, kettle, knife, spatula, thermal pot,

thermos& flask, kitchen gadgets, crisper, etc.

(2) The SDA mainly includes: electric rice cooker, electric pressure cooker, induction hob, soymilk maker, electric kettle, juice

extractor, slow cooker, electric steamer, electric chafing dish, food processor, baking pan, bread maker, noodle maker, electric frying

pan, etc.

(3) The Large Kitchen Appliance mainly includes: range hood, gas cooker, sterilizer, water purifier, embedded steaming oven,

etc.

(4) The H&PC mainly includes: air purifier, garment steamers, dust cleaner and electric iron.

The Company’s cookware and small kitchen electrical appliances have been exported to more than 50 countries such as Japan,

European and American countries through SEB Group.

II. Significant Changes in Main Assets

1. Significant changes in main assets

Main assets Descriptions of major changes

Equity assets No significant change

Fixed assets No significant change

Intangible assets No significant change

Construction in progress Increased by 430.46% mainly due to the increase in construction-in-progress project of the Company

and its subsidiaries.

Transactional financial

assets

Increased by 100.00% mainly due to the inclusion of the amount in “financial assets measured at fair

value through current profit or loss” in the corresponding period and in the current item in the current

period subject to the adoption of the new financial instruments standards during the reporting period.


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Financial assets held at fair

value through profit or loss

Decreased by 100.00% mainly due to the inclusion of the amount in the current item in the

corresponding period and in the “transactional financial assets” in the current period subject to the

adoption of the new financial instruments standards during the reporting period.

Notes receivable

Decreased by 100.00% mainly due to the inclusion of the amount in the current item in the

corresponding period and in the “receivables financing” in the current period subject to the adoption

of the new financial instruments standards during the reporting period.

Financing of receivables

Increased by 100.00% mainly due to the inclusion of the amount in the “notes receivable” in the

corresponding period and in the current item in the current period subject to the adoption of the new

financial instruments standards during the reporting period.

Other receivables Decreased by 90.07%, which was mainly caused by the receipt in current period of the insurance

proceed receivable and export VAT refund receivable.

Deferred income tax assets Increased by 35.00%, attributable to increase in temporary difference caused by the fees payables of

subsidiaries.

2. Main overseas assets


III. Core competitiveness analysis

1. Outstanding product innovation capability

As a company long time devoted to R&D, manufacturing and selling of CW and kitchen SDA products, Supor has an acute

observation and scientific research of the needs of Chinese consumers and has developed a systematic innovation system to

ceaselessly launch new products in the market.

After 1994 when Supor launched the domestic first safety pressure cooker, the Company also launched the first electric rice

cooker with ceramic crystal liner in 2005, pioneered the uncoated stainless iron pan technology in 2007, successfully introduced SEB

flaming dot patented technology in 2009, launched the industrial first IH electric rice cooker in 2011, pioneered the spherical liner in

2013, ceremoniously launched the industrial first steam IH electric rice cooker with spherical liner in 2015, innovated technology of

electric rice cooker liner and launched the Shallow Pot IH Rice Cooker in 2018 and launched the first detachable high speed blender

and low-GI rice cooker in 2019. Supor continues leading the industry. Besides, the Company’s innovative differential products such

as the Clipso Efficient Yueti Pressure Cooker and ceramic pot are very popular among customers.

According to the market data of China’s 30 key cities monitored by GFK in 2019, the Company’s cookware market shares

ranked the first; according to the data of China’s offline small household appliance market monitored by CMM in 2019, the market

shares of the Company’s 9 categories of small household appliances ranked the second in total.

2. Well-developed dealers network

Supor has stable dealer teams, and maintained good cooperative relationship with them. The relatively high coverage rate and

density of its sales network ensure the uninterrupted supply of Supor products.

3. Strong R&D and manufacturing capacity of CW and SDA

Supor has built up five production bases, respectively in Yuhuan, Wuhan, Hangzhou, Shaoxing and Vietnam. In particular, the

annual production scale of Wuhan Base and Shaoxing Base ranked the top in the industry. The strong R&D power and the highly

professional R&D team provide a powerful guarantee for the quality and innovation capacity of Supor products.

4. Synergistic effect of integration with SEB

Since 2006, the Company has started to establish strategic cooperation relationship with SEB which owns a long history of more


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than 160 years with leading market shares of cookware and small household appliances worldwide. The powerful cooperation

between Supor and SEB has brought stable export orders to the Company, and increased its overall business size and manufacturing

capacity. Meanwhile, the cooperation in aspects of R&D and management will surely enhance the core competitiveness of the

Company.

5. Professional advantage of multiple brands and varieties in kitchen field

In addition to Supor brand, the Company also introduced a lot of high-end brands under SEB, such as LAGOSTINA, KRUPS

and WMF so as to fully cover the high-end brands in kitchen field. The Company’s open fire cookware and small kitchen household

appliances rank the first class nationwide. It also explores new varieties actively such as large kitchen appliance and kitchen utensils.

The Company has formed its special competition advantages over other rivals due to its layout of multiple brands and varieties in

kitchen field.


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SECTION IV BUSINESS OPERATION DISCUSSION AND

ANALYSIS

I. Overview

In 2019, the global economic environment was still complicated and severer. However, the domestic sales and exports of the

Company had been growing steadily due to consumption upgrading in China and continuous transfer of overseas SEB orders. During

reporting period, the Company saw its business income reaching RMB 19,853,477,882.97, with a YoY growth of 11.22%, and total

profits reaching RMB 2,273,457,833.79, increasing by 14.73% on a YoY basis. The earnings per share were RMB 2.347 with a YoY

growth of 14.99%. In particular, annual main business income of CW was RMB 6,139,116,531.65, with a 5.49% YoY growth; annual

main business income of electric appliance was RMB 13,524,375,233.08, increasing by 13.98% on a YoY basis. In the whole year,

the Company realized main business income of RMB 14,571,549,991.86 in domestic sales, with a 12.44% YoY growth, and

harvested RMB 5,109,929,961.99 in export business, a 7.75% YoY growth.

1. Domestic sales in the reporting period

(1) Product strategy

During the reporting period, Supor kept making ingenuous innovations with product innovation as its core and based on the

exploration of consumer needs using Internet and big data, continuously introducing innovative, smart and ingenious products with

healthy and nutritious cooking functions; kept enriching and expanding product categories based on traditional Chinese cooking and

eating habits to meet young consumers’ needs.

In terms of CW, according to data regarding cookware market share of 30 Chinese big cities as monitored by GFK, the market

shares of Supor’s seven categories of products in the whole year of 2019 reached 47.8% and still took the leading status in the market.

In terms of new product development, the Company kept expediting the development and launch of new products and the increase of

their market shares: firstly, Supor launched Thermal-Spot Titanium Pro Fumeless Wok, and the X-Crystal stainless wok in 2019,

driving the sales increase of medium-to-high-end frying pans; launched the Modern-times series and Woodson series of Northern

Europe styles for young consumers; and also developed the new Little-meow series baby food pots, which are dedicated and

professional pots for mothers. Secondly, Supor realized dual growth of offline retail and online E-commerce channels in new

categories of kitchen utensils through continuous innovation and upgrading and brand promotion for water cup category.

In terms of SDA, Supor launched new products constantly and took the lead in industrial development. It put multiple

innovative products into market, such as “low-GI rice cooker”, “double-valve pressure cooker”, “detachable high speed blender”,

“elevation-type steam frying machine”, and “COCO-IH multi-purpose cooking pot”, all of which were popular in market. Meanwhile,

Supor enriched and expanded product categories and developed new products such as electric oven, electric lunch box, mother and

baby series and portable rechargeable juice machine so as to drive new product category growth point. As shown by monitoring data

of CMM, a market survey company, Supor had accumulated offline market shares of nine categories (electric rice cooker, electric

pressure cooker, electric kettle, soymilk maker, juice extractor, blender, electric baking pan and electric slow cooker) reaching 30.1%,

ranking the second in the industry. Supor developed its household appliance business continuously and steadily. In 2019, the

Company expanded product lines of garment steamer, dust collector and air purifier constantly. According to monitoring data of

market survey company CMM, Supor’s offline market share of garment steamer category reached 30.9% in 2019, taking the first

place in the industry.

(2) Channel strategy

During the reporting period, Supor focused on balanced development of online and offline retail modes based on the Internet


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development trend, and still insists on the operating strategy of winning consumers’ trust with high-quality product and dealers’ and

retailers’ support with strong new product development ability and considerate service.

In terms of expansion of the third-tier and fourth-tier markets, Supor continued implementing and further deepening

development strategy of third and fourth markets. With respect to personnel allocation, product R&D, market resources and channel

customer support, Supor improved outlet coverage rate and density and sales output of single store.

In e-commerce channel construction, Supor still strengthened the construction of e-commerce channel, and launched social

e-commerce business by opening live streaming. The sales volume of e-commerce channel in its overall sales volume kept increasing

constantly. In T-mall’s November 11 Promotion Activity, the sales volumes of Supor’s several single products from different

categories ranked the first. According to market shares data monitored by AVC, Supor’s total market shares of nine major categories

of kitchen SDA (small domestic appliances) stood firmly in the second place in 2019.

(3) Brand building

During the reporting period, the Company witnessed the constant improvement of brand popularity and preference by

maintaining the brand value of “quality” and “innovative” and advancing brand building continuously. In 2019, the Company

employed Zhang Junning as a brand spokesman to improve cognition of potential categories (e.g. cup, H&PC appliance and large

kitchen appliance) dramatically. In addition, the Company realized operating management of the brand’s own users by setting up the

Supor Membership Center platform.

According to 2019 research report of Nelson, the Company’s unaided brand awareness in both main brand in small kitchen

electrical appliances and naked flame cooker ranked the first in the industry. The unaided awareness of SDA was still leading in the

industry after occupying the first place for the first time in 2016. Meanwhile, Supor had been listed to BrandZ’s Top 100 Most

Valuable Chinese Brands for 7 years, with growth rate of brand value reaching 40%.

2. Export sales

Though trade frequent friction in international market during reporting period, the Company’s main business income of export

sales showed a 7.75% YoY growth as a whole, which was attributed to the continuous transfer of SEB Group’s orders.

3. Progress of SEB Integration Project

In reporting period, SEB integration project ran smoothly and synergistic effect was further intensified. Both parties’ integration

in R&D, design and manufacturing was further deepened and the Company’s overall competitiveness was further improved.

II. Main Business Analysis

1. Overview

In reporting period, the Company harvested main business income of RMB 19,681,479,953.85, with a YoY increase of RMB

1,979,102,089.54 and increasing range of 11.18%, which was mainly attributed to its business increase of domestic sales and export

sales. The Company’s main operating costs were RMB 13,519,174,731.86, increased by RMB 1,318,135,149.82 above that of the

corresponding period of last year, with an increase of 10.80%. The gross profit margin of main business was 31.31% with increase of

0.23% compared with the same period of the last year, which was mainly due to continuous optimization of the Company’s product

structure.

2. Income and Costs

(1) Contents of total sale

Unit: Yuan

2019 2018 Increase / decrease


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Amount Percentage to total

operating income Amount

Percentage to total

operating income

YoY (%)

Total operating

income 19,853,477,882.97 100% 17,851,264,801.72 100% 11.22%

By Industry

Cookware 6,139,116,531.65 30.92% 5,819,354,838.15 32.60% 5.49%

Electrical appliances 13,524,375,233.08 68.12% 11,865,914,456.06 66.47% 13.98%

Plastic & rubber 17,988,189.12 0.09% 17,108,570.10 0.10% 5.14%

Others 171,997,929.12 0.87% 148,886,937.41 0.83% 15.52%

By Products

Electric pots 4,859,761,871.46 24.48% 4,241,166,335.58 23.76% 14.59%

Others 14,993,716,011.51 75.52% 13,610,098,466.14 76.24% 10.17%

By Areas

Domestic sales 14,743,547,920.98 74.26% 13,108,849,974.15 73.43% 12.47%

Export sales 5,109,929,961.99 25.74% 4,742,414,827.57 26.57% 7.75%

1) If income is calculated by industries, income of “cookware, electrical appliances and plastic & rubber” is main business income.

Income in “others” column is other business income;

2) Among the “Domestic sales” of the income by areas: the main business income in 2019 was RMB 14,571,549,991.86, and the

income of other business was RMB 171,997,929.12; in 2018, the main business income was RMB 12,959,963,036.74 and the other

business income was RMB 148,886,937.41.

3) If income is calculated by products, income in “others” column includes other business income; of which, income in 2019 is RMB

171,997,929.12 and income in 2018 is RMB 148,886,937.41.

(2) The Company’s industry, products or area with occupying more than 10% of total sales or operating

profits


Unit: Yuan

Total sales Operating cost Gross

Margin

Increase /

decrease YoY

(%) for total

operating

income

Increase /

decrease YoY

(%) for

operating cost

Increase /

decrease YoY

(%) for gross

profit

By Industry

Cookware 6,139,116,531.65 3,993,149,204.58 34.96% 5.49% 5.81% -0.19%

Electrical

appliance 13,524,375,233.08 9,512,065,792.45 29.67% 13.98% 13.03% 0.59%

By Products


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Electric pots 4,859,761,871.46 3,445,666,382.43 29.10% 14.59% 14.48% 0.07%

By Areas

Domestic sales 14,743,547,920.98 9,520,184,777.44 35.43% 12.47% 12.40% 0.04%

Export sales 5,109,929,961.99 4,148,043,618.52 18.82% 7.75% 7.12% 0.48%

If the statistical caliber of the Company’s operation business data is adjusted in the reporting period, the main operation business data

for the latest year after the statistical caliber is adjusted.


(3) Practical sales income greater than labor income

√ Yes □ No

Industrial

classification Item Unit 2019 2018

Increase / decrease

YoY (%)

Cookware

Sales volume pcs/set 66,285,102 62,368,608 6.28%

Output pcs/set 44,921,055 44,156,093 1.73%

Stock pcs/set 10,207,960 12,707,855 -19.67%

Electrical appliances


Output pcs/set 58,826,004 57,858,832 1.67%

Stock pcs/set 9,652,867 9,293,815 3.86%

Total


Output pcs/set 103,747,059 102,014,925 1.70%

Stock pcs/set 19,860,827 22,001,670 -9.73%

Descriptions of cause with above 30% change of relevant data on a YoY basis


(4) Performance of important sales contracts signed till this reporting period


(5) Structure of operating costs

Category of industry and product

Unit: Yuan

Industrial

classification Item

2019 2018 Increase /

decrease YoY

(%) Amount

Proportion of

operating cost Amount

Proportion of

operating cost

Cookware Operating cost 3,993,149,204.58 29.21% 3,774,064,262.06 30.58% 5.81%


17

Electrical

appliance Operating cost 9,512,065,792.45 69.59% 8,415,184,860.38 68.18% 13.03%

Plastic & rubber Operating cost 13,959,734.83 0.10% 11,790,459.60 0.10% 18.40%

Others Operating cost 149,053,664.10 1.09% 140,899,383.89 1.14% 5.79%

Subtotal Operating cost 13,668,228,395.96 100.00% 12,341,938,965.93 100.00% 10.75%

Unit: Yuan

Category of

product Item

2019 2018 Increase /

decrease YoY

(%) Amount

Proportion of

operating cost Amount

Proportion of

operating cost

Electric pots Operating cost 3,445,666,382.43 25.21% 3,009,938,151.33 24.39% 14.48%

Others Operating cost 10,222,562,013.53 74.79% 9,332,000,814.60 75.61% 9.54%

Subtotal Operating cost 13,668,228,395.96 100.00% 12,341,938,965.93 100.00% 10.75%

Notes

1) The cost of “cookware, electrical appliance and rubber and plastic products” calculated by industries belongs to the Company’s

main business cost while the cost of “others” belongs to the Company’s other business cost;

2) The cost of “others” calculated by products includes other business cost, with RMB 149,053,664.10 in 2019and 140,899,383.89 in

2018 respectively.

(6) Change of combination scope during reporting period

√ Yes □ No

For details, please see “VIII. Change on consolidation scope” of SECTION XII FINANCIAL STATEMENT.

(7) Important change or adjustment for the Company’s businesses, products or services in the reporting

period


(8) Main sales clients and suppliers

Main sales clients

Total amount of sales to top 5 customers (RMB) 6,638,615,002.52

Proportion in the year’s total sales (%) 33.44%

Proportion for associated party’s sales amount of sales amount

for the top five clients in annual total sales amount 23.04%

Information of the Company’s five major customers

SN Customer Sales amount (RMB) Proportion in the total sales amount of the

year (%)

1 SEB ASIA LTD. 4,574,513,658.82 23.04%


18

2 Customer 2 769,120,046.08 3.87%

3 Customer 3 496,219,705.35 2.50%

4 Customer 4 439,280,161.75 2.21%

5 Customer 5 359,481,430.52 1.81%

Total -- 6,638,615,002.52 33.44%

Instruction for main clients’ other cases


The Company’s main supplier

Total purchasing value from top 5 suppliers (RMB) 1,321,702,334.26

Proportion in the year’s total purchasing value 10.39%

Proportion for associated party’s purchase amount of purchase

amount for the top five suppliers in annual total purchase

amount

2.75%

The top 5 suppliers’ information

SN Supplier Purchasing value (RMB) Proportion in the total purchasing amount

of the year

1 Wuhan Anzai Cookware Co., Ltd. 349,766,797.87 2.75%

2 Supplier 2 324,274,590.54 2.55%

3 Supplier 3 236,071,728.38 1.86%

4 Supplier 4 208,126,718.96 1.64%

5 Supplier 5 203,462,498.51 1.60%

Total -- 1,321,702,334.26 10.39%

Instruction for main suppliers’ other cases


3. Expenses

Unit: Yuan

2019 2018

Increase /

decrease YoY

(%)

Cause of change

Selling expenses 3,206,043,042.00 2,813,288,857.74 13.96%

Administrative

expenses 345,732,916.45 344,810,539.64 0.27%

Financial expenses -43,325,692.27 -5,544,796.46 -681.38% Mainly due to the increase in interest income

of bank deposits during the period.


19

Research and

development

expenses

452,560,910.68 402,632,732.79 12.40%

4. R&D investment


Oriented by consumers’ demand, the Company engages in R & D of the differential products that meet kitchen demand and

local eating and life habits. The Company lays emphasis on R & D investment, boosts technical innovation actively, further explores

product category and adds product additional value; respects customer’s experience and focuses on all details of consumer use in

order to realize safe, environmentally friendly, convenient and fashionable products. R & D expenditure in this year accounts for

6.61% and 2.28% of net assets and business income audited in the recent period.

R&D investment of the Company

2019 2018 Change proportion

Qty. of R & D persons (person) 1,414 1,332 6.16%

Proportion of R & D personnel 11.50% 10.41% 1.09%

Amount of R&D input (RMB) 452,560,910.68 402,632,732.79 12.40%

Proportion of R&D input in total sale 2.28% 2.26% 0.02%

Capitalization amount of R&D input (RMB) 0.00 0.00 0.00%

Proportion of Capitalization R&D input in

R&D input 0.00% 0.00% 0.00%

Reason for large change for proportion of R&D input in total sale compared with that of last year


Reason and rational introduction for large capitalization change of R&D input


5. Cash flow

Unit: Yuan

Item 2019 2018 Increase / decrease

YoY (%)

Sub-total of cash inflows from operating activities 21,548,615,719.66 19,088,688,883.76 12.89%

Subtotal of cash outflows from operating activities 19,815,674,742.54 17,075,030,138.92 16.05%

Net cash flows from operating activities 1,732,940,977.12 2,013,658,744.84 -13.94%

Subtotal of cash inflows from investing activities 2,398,037,111.20 2,319,271,825.96 3.40%

Sub-total of cash outflow from investing activities 3,264,911,537.10 2,823,333,289.54 15.64%

Net cash flow from investing activities 866,874,425.90 -504,061,463.58 71.98%

Sub-total of cash inflows from financing activities 12,747,688.67 100.00%


20

Subtotal of cash outflows from financing activities 1,050,955,948.54 968,565,192.80 8.51%

Net cash flows from financing activities -1,038,208,259.87 -968,565,192.80 -7.19%

Net increase in cash and cash equivalents -166,629,917.67 547,182,683.62 -130.45%

Instruction for main influence factors of relevant data with YoY (%) changed seriously


Change reasons:

1. The net cash flows from investing activities decreased by 71.98% compared with that of the same period last year, which was

mainly attributable to increase of cash outflow from investing activities and time deposits.

2. Net increase in cash and cash equivalents decreased by 130.45% compared with that of the same period last year, which was

attributable to the decrease in net amount of cash flows from investing activities in the current period.

Reason for great change between net cash flow caused by operation activities and annual net profits


III. Analysis on non-primary business


IV. Analysis on Assets and Liabilities

1. Significant changes in assets

Unit: Yuan

2019 year end 2019 year beginning Increase/d

ecrease in

proportio

n

Cause of change Amount

Percentage

to total

assets

Amount

Percentage

to total

assets

Cash and bank

balances 1,308,132,657.16 11.04% 1,416,762,574.83 13.32% -2.28%

No significant change in the reporting

period.

Accounts

receivable 1,796,909,432.40 15.17% 1,727,619,712.96 16.25% -1.08%


period.

Inventories 2,247,612,900.00 18.97% 2,361,653,181.94 22.21% -3.24% No significant change in the reporting

period.

Long-term equity

investment 61,917,730.62 0.52% 60,646,438.46 0.57% -0.05%


period.

Fixed assets 908,982,690.72 7.67% 868,297,081.06 8.17% -0.50% No significant change in the reporting

period.

Construction in

progress 215,167,399.12 1.82% 40,562,136.79 0.38% 1.44%

Mainly due to the increase in

construction-in-progress projects of the

Company and its subsidiaries.


21

Transactional

financial assets 1,264,563,042.79 10.67% 10.67%

Mainly due to the inclusion of the

amount in “financial assets measured at

fair value through current profit or

loss” in the corresponding period and

in the current item in the current period

subject to the adoption of the new

financial instruments standards during

the reporting period.

Financial assets

held at fair value

through profit or

loss

435,241,736.40 4.09% -4.09%


amount in the current item in the

corresponding period and in the

“transactional financial assets” in the

current period subject to the adoption

of the new financial instruments

standards during the reporting period.

Notes receivable 701,179,379.24 6.59% -6.59%


amount in the current item in the

corresponding period and in the

“receivables financing” in the current

period subject to the adoption of the

new financial instruments standards

during the reporting period.

Receivables

Financing 1,186,980,101.71 10.02% 10.02%


amount in the “notes receivable” in the

corresponding period and in the the

current item in the current period

subject to the adoption of the new

financial instruments standards during


Other receivables 14,230,736.62 0.12% 143,352,998.18 1.35% -1.23 %

Mainly caused by the receipt in current

period of the insurance proceed

receivable and export VAT refund

receivable.

Deferred income

tax assets 364,211,946.59 3.07% 269,780,914.15 2.54% 0.53%

Attributable to increase in temporary

difference caused by the fees payables

of subsidiaries.

2. Assets and liabilities measured at the fair value


Unit: Yuan


22

Item Opening

balance

Profit and

loss from fair

value changes

in the current

period

Accumulated

fair value

changes

included in

equity

Impairment

loss of the

current period

Amount of

purchasing of

the current

period

Amount of

selling of the

current period

Other

changes

Ending

balance

Financial

assets

1.

Transactional

financial

assets

(excluding

derivative

financial

assets)

435,241,736.4

0 4,563,042.79

1,390,000,000

.00

565,241,736.4

0

1,264,563,0

42.79

2.Receivables

Financing

1,186,980,1

01.71

1,186,980,1

01.71

Total 435,241,736.4

0 4,563,042.79

1,390,000,000

.00

565,241,736.4

0

1,186,980,1

01.71

2,451,543,1

44.5

Financial

debts 0.00 0.00 0.00

Content of other changes

As the demand of daily fund management, the Group will discount or transfer an endorsed bill, the management mode of related

bank bill including not only collect contract cash flow but sales as the target, so reclass the bank bill as financial assets measured at

FV and its change in OCI.

Are there any major changes about the valuation attribute of Company’s main assets in the reporting period?

□ Yes √ No

3. Restrictions of assets and rights by the end of reporting period

Please see the detail in section XII “Financial report” VII “Notes to items of consolidated financial statement” 47、Assets with title

or use right restrictions.

V. Analysis on Investment

1. General conditions


Investment in the reporting period (in

RMB Yuan)

Investment over the same year last year (In

RMB Yuan) Fluctuation

0.00 274,000,000.00 -100.00%


23

2. Significant equity investment to be acquired in the reporting period


3. Significant non-equity investment to be handled in the reporting period


4. Financial assets measured at the fair value


Unit: Yuan

Catego

ry of

assets

Initial

investment

costs

Profit and loss

from fair

value changes

in the current

period

Accumulate

d fair value

changes

included in

equity

Purchase amount

during the

reporting period

Sales amount

during the

reporting period

Accumulated

investment

income

Closing

amount

Capital

source

Others 60,000,000.00 4,563,042.79 0.00 1,390,000,000.00 560,000,000.00 5,241,736.40 1,264,563,042

.79

Self-own

ed capital

Total 60,000,000.00 4,563,042.79 0.00 1,390,000,000.00 560,000,000.00 5,241,736.40 1,264,563,042

.79 --

5. Application of capital raised


No capital raised was used in reporting period

VI. Sales for Major Assets and Equity

1. Sales for major assets


The Company did not sell major assets till the end of this period.

2. Sales for major equities


VII. Analysis for Main Holding Companies and Joint Stock Companies


Status of main subsidiaries and joint stock companies with influence on the Company’s net profit exceeding 10%

Unit: Yuan


24

Company name Company

type

Main

business

Registered

capital Total assets Net assets Total sales

Operating

profit Net profit

Wuhan Supor

Cookware Co.,

Ltd.

Subsidiary Cookware 91.16 million

Yuan

1,762,067,650

.40

1,087,996,715

.00

3,953,304,2

74.67

278,866,460

.64

207,704,884.

66

Zhejiang Supor

Electrical

Appliance

Manufacturing

Co., Ltd

Subsidiary Electrical

appliances

133.6971

million Yuan

1,483,981,271

.27

893,366,365.4

9

4,122,379,8

58.54

249,631,191

.34

172,638,788.

60

Zhejiang

Shaoxing Supor

Domestic

Electrical

Appliances Co.,

Ltd.

Subsidiary

Small

appliance,

kitchen

appliance

610 million

Yuan

3,771,665,428

.34

2,655,431,426

.46

8,058,606,5

21.91

1,295,371,2

46.73

1,142,537,95

7.02

Zhejiang

Shaoxing Supor

Housewares

Co., Ltd.

Subsidiary Electrical

appliances

50 million

Yuan

1,705,044,094

.70

-39,931,574.6

1

4,408,929,4

71.80

-119,124,73

7.19

-89,681,547.0

2

Acquiring/disposing subsidiary during reporting period


Company name Company obtaining and disposal mode in

the reporting period

Influence on overall production, operation

and performance

Zhejiang Supor Large Kitchen Appliance

Co., Ltd. Newly-establishment

Under capital construction without

production and operation activities during


Zhejiang Supor Water Heater Co., Ltd. Newly-establishment

Only industry and commerce registration

formalities were completed without

production and operation activities during


XIII. Structural Subject under the Company’s Control


IX. Outlook of the Company

1. Future development strategy and operation plan of the Company

Though macro-economy and industrial growth are influenced to a certain extent by the epidemic in 2020, it is still promising in

the long run, the strong magnetic attractive force of huge market scale in domestic demands in China still exist and middle class and

young consumers will continue to drive the consumption growth.


25

In 2020, the Company will implement the established strategic route firmly, advance product innovation and fine works

strategies constantly according to consumers’ demands and keep improving the Company’s development strategy of multiple brands

and categories; seize the opportunity of consumption upgrading, cultivate new business and new category and promote development

of sub-divisional category.

In terms of channel building, the Company will continue improving the service level and efficiency in the major retail systems

in China and in international shopping market to strive to become the strategic supplier of more key retail channels, continue to

develop the tier-3 and 4 markets, improve coverage rate and density of outlets, enlarge single store output, greatly develop

E-commerce, continuously strengthen cooperation efficiency and resource input with major online retailers, innovate promotion

patterns and continuously improve online sales scale and market share. Besides implementing the established channel strategy firmly,

it will embrace channel innovation actively and develop innovative marketing model, to conform to the further integration of online

and offline channels.

With respect to brand building, the Company will advance the construction of younger brand image, strengthen Supor’s brand

building in such emerging businesses as kitchen utensils, H&PC appliances and large kitchen appliances and understand users by

means of the more accurate and sub-divisional digital media.

In terms of export business, the Company, regardless of uncertain international situation aggravated by the epidemic, will keep

advancing the cooperation with SEB in links such as R&D, design and manufacturing, enlarge production scale, acquire scale-based

competitive advantage and improve core competence in virtue of internal order transfer advantage of SEB.

With regard to industrial aspect, the Company will further conduct cost optimization and lean economy program, actively

respond to adverse effect caused by price rise of raw materials, strengthen basic management over research and development,

promote market’s rapid response capacity of industrial system, and continuously improve cost competitiveness. On the basis of

emphasizing work safety, Supor will ensure the implementation of prevention and control measures and the safety and health of

employees during the outbreak of Coronavirus disease (COVID-19). Meanwhile, new bases of large kitchen appliance and high-end

business in Shaoxing and Yuhuan will be officially put into use this year, to conform to rapid development of emerging business.

In terms of talent training, the Company will strengthen talent echelon construction and improve long-term incentive mechanism

continuously; improve management level of basic and medium management personnel, enhance subjective initiative of employees

and build an active and efficient working atmosphere for employees.

2. Possible risks and countermeasures

1) Risk from macroeconomic fluctuation

With the global spreading of the COVID-19, many challenges against global economic recovery arise. If macro economy

fluctuates or national macro-control policy changes, especially if national economy and household disposable income slows down in

growing, people’s willingness and capacity to consume will be directly affected. Consequently, the CW and SDA industry that Supor

is in will slow down in growing, and the sales growth of relevant products may thus be affected.

For the possible macroeconomic fluctuation risks, Supor is actively developing new categories and cultivating new growth point.

Meanwhile Supor is actively transferring SEB orders and ensuring the balanced development of domestic and overseas sales.

2) Risk from production element price change

The main raw materials used by Supor for producing CW and SDA are the aluminum, copper, stainless steel and plastics. If the

raw material price grows highly, the production cost will rise rapidly, so it will affect the business performance of the Company.

Meanwhile the CW and SDA business belong to the labor-intensive industry; the rapid growth of labor cost in a short time will cause

certain influence to the business performance of the Company.

In order to cope with the risks caused by the fluctuation of production element price, Supor is actively improving the internal

labor productivity and pushing to implement the lean projects to reduce the negative impacts caused by the rise in price of raw

materials on the production costs. Besides the Company is actively boosting the automation of production line, improving the per

capita labor output, and reduce the impact caused by rise in labor cost.


26

3) Risk of intensifying market competitiveness

As the operating cost of enterprise rises, industry brand concentration will be further improved, and there is the risk of

intensifying market competition in the field of cookware and small domestic appliances (SDA). In order to seize market share,

high-end brand will continue to sink channel and regulate product and price strategy, and some high-end brand will enter shopping

market channels by the way of point redemption to participate in high-end market competition, which will further intensify the

competitiveness of industry.

The Company will keep on insisting in the strategy to take product innovation as the core, and keep on improving innovation

ability to create more products with high additional value. The Company will give full play to the competitive edge of multiple

brands and multiple product categories of Supor, and continue to improve market shares and profitability of Supor.

4) Overseas market expansion risks

Currently, Supor has the production base in Vietnam, and is continuously expand the market in Southeast Asia. The overseas

market expansion may change significantly due to the unstable political and economic situation, legal system and regulatory system

of the local area. Besides, the huge rise in production cost will bring unanticipated risks.

The Company will keep close eyes on the political and economic situation in Southeast Asia, especially the Vietnam, and will

make every endeavor to make a timely advanced adjustment and formulate the corresponding countermeasures.

5) Product export and exchange loss caused by exchange rate fluctuation

The foreign trade business is about 20% of the overall business of the Company. The fluctuation in foreign exchange is possible

to bring benefits, or the adverse influence, so it will cause the exchange loss to the Company in the end.

For exchange gain or loss risk, the Company will actively push the Renminbi settlement of export business to SEB, reduce

exchange risk, and meanwhile reduce exchange loss risk by forward settlement of exchange.

X. Reception of Investigation & Research, Communication and Interview Activities in the

Reporting Period

1. Registration form for reception of investigation& research, communication and interview activities in the

reporting period


Reception time Reception manner Type of reception object Index for basic condition of investigation

and survey

September 3, 2019 On-site investigation and

research Institution

See Record Form for Investor Relation

Activity on September 4, 2019 disclosed by

the Company in http://www.cninfo.com.cn

on September 4, 2019 for details.


27

SECTION V SIGNIFICANT EVENTS

I. Profit Distribution of the Company’s Common Shares and Turning Add Equity Capital

Accumulation Fund

According to profit distribution policy for common shares in the reporting period, especially establishment, execution or adjustment

for cash dividend policy


The profit distribution plan for the Company’s common shares (preparedness) and turning add equity capital accumulation fund

(preparedness) for the latest 3 years.

1. Profit distribution plan for 2017

Based on the total capital stock of 820,817,960 shares (total capital stock of 821,287,610 shares at the end of 2017 deducted by

43,650 shares of Restricted Stock will be repurchased and canceled and 426,000 shares of Reserved Restricted Stock without the

profit distribution rights), the Company will distribute all shareholders at the price of RMB 7.20 per 10 shares (tax-inclusive) and the

total cash dividends is RMB 590,988,931.20. The plan has been implemented.

2. Semiannual profit distribution plan for 2018

Based on the 820,817,960 shares at the end of June in 2018 (total capital stock of 821,243,960 shares on June 30, 2018 deducted

by 426,000 shares of Reserved Restricted Stock without the profit distribution rights), the Company distributes cash dividend of

RMB 4.60 per 10 shares (tax-inclusive) to all shareholders and the total cash dividends is RMB 377,576,261.60. The plan has been

implemented.

3. Profit distribution plan for 2018

Based on the total capital stock of 821,243,960 shares at the end of 2018, the Company distributes cash dividend of RMB 10.20

(tax-inclusive) per 10 shares to all shareholders, with total cash dividends distributed of RMB 837,668,839.20. The plan has been

implemented.

4. Semiannual profit distribution plan for 2019

Based on the 821,119,910 shares at the end of June in 2019 (total capital stock of 821,243,960 shares on June 30, 2018 deducted

by 124,050 shares of Reserved Restricted Stock repurchased and canceled), the Company distributes cash dividend of RMB 2.58 per

10 shares (tax-inclusive) to all shareholders and the total cash dividends is RMB 211,848,936.78. The plan has been implemented.

5. Profit distribution preplan for 2019

Based on the 821,099,910 shares at the end of 2019 (total capital stock of 821,119,910 shares at the end of 2019 deducted by

20,000 shares in the Company’s special securities account for repurchase), the Company distributes cash dividend of RMB13.30 per

10 shares (tax-inclusive) to all shareholders and the total cash dividends is RMB 1,092,062,880.30 .No bonus share will be

distributed or conversion from capital reserves to share capital is made this year. This proposal shall be submitted to the Annual

General Meeting of Shareholders for 2019 Fiscal Year for approval after adopted by the Board of Directors.

During the period from the disclosure of this profit distribution preplan to the actual implementation date, if the Company’s

capital stock changes due to conversion of convertible bonds into stocks, share repurchases, equity incentive exercise, and

refinancing and new share listing, it will be executed based on the changed capital stock, and the above distribution ratio remains

unchanged.

Distribution of cash dividends of ordinary shares over the past 3 years (including this reporting period)

Unit: Yuan


28

Year of

dividends

Amount of cash

dividends

(tax-inclusive)

Net profit in the

consolidated

statement

attributable to the

common

shareholders of the

listed company

Proportion of

cash dividends

in net profit in

the

consolidated

statement

attributable to

the common

shareholders of

the listed

company

Amount of

cash dividends

by other means

(e.g. shares

repurchase)

Proportion of

amount of cash

dividends by

other means in

net profit in the

consolidated

statement

attributable to

the common

shareholders of

the listed

company

Total cash

dividends

(including cash

dividends by

other means)

Proportion of

total cash

dividends in

net profit in the

consolidated

statement

attributable to

the common

shareholders of

the listed

company

2019 1,303,911,817.0

8 1,919,914,191.25 67.92% 1,438,172.56 0.07%

1,305,349,989.

64 67.99%

2018 1,215,245,100.8

0 1,669,873,440.00 72.77% 0.00 0.00%

1,215,245,100.

80 72.77%

2017 590,988,931.20 1,326,195,778.24 44.56% 0.00 0.00% 590,988,931.20 44.56%

Note: Total dividends (tax-inclusive) RMB 1,303,911,817.08 in 2019 including the RMB 211,848,936.78 cash dividends distributed

under the 2019 semiannual profit distribution plan, and RMB 1,092,062,880.30 under the 2019 annual profit distribution preplan.

Information on profit-making in the reporting period and positive undistributed profit of parent company for common shareholders

but without cash dividends plan for common shares


II. Profit Distribution and Conversion of Capital Reserve to Capital During the Reporting

Period


Number of bonus stock per 10 shares (shares) 0

Amount of dividend (RMB) per 10 shares (tax-inclusive) 13.30

Number of Conversion per 10 shares (shares) 0

Equity base in distribution plan (shares) 821,099,910

Amount of cash dividends (RMB, tax-inclusive) 1,092,062,880.30

Amount of cash dividends realized in other modes (such as repurchased shares) (RMB) 1,438,172.56

Total cash dividends (including other modes) (RMB) 1,093,501,052.86

Distributable profits (RMB) 1,100,501,967.73

Proportion of total cash dividends (including other modes) in total distribution of profits 100.00%

Cash Dividends of This Time

Others

Detailed information on profit distribution and conversion of capital reserve to capital pre-proposal


29

In accordance with the standard unqualified audit report provided by Union Power Certified Public Accountants (Special

General Partnership), the parent company Zhejiang Supor Co., Ltd. realized the net profit of RMB 1,099,724,133.81 in 2019, and

could distribute profits of RMB 1,100,501,967.72 to shareholders at the end of the year based on relevant provisions of Company

Law and the Articles of Association, after allocating RMB 0 as legal surplus reserve (note: the amount is 50% of capital stock), plus

the undistributed profit of RMB 1,050,295,609.89 at the beginning of this reporting period, deducting the cash dividends for 2018

of RMB 837,668,839.20 distributed on May 24, 2019 and semiannual cash dividends for 2019 of RMB 211,848,936.78 distributed

on October 25, 2019.

The 2019 annual profit distribution preplan: based on the 821,099,910 shares at the end of 2019 (total capital stock of

821,119,910 shares at the end of 2019 deducted by 20,000 shares in the Company’s special securities account for repurchase), the

Company distributes cash dividend of RMB 13.30 per 10 shares (tax-inclusive) to all shareholders and the total cash dividends is

RMB 1,092,062,880.30 No bonus share will be distributed or conversion from capital reserves to share capital is made this year.

During the period from the disclosure of this profit distribution preplan to the actual implementation date, if the Company’s

capital stock changes due to conversion of convertible bonds into stocks, share repurchases, equity incentive exercise, and

refinancing and new share listing, it will be executed based on the changed capital stock, and the above distribution ratio remains

unchanged.

III. Fulfillment of Commitments

1. Commitments that were fulfilled in the reporting period and had not been fulfilled till the end of

reporting period by actual controller, shareholder, associated party, purchaser and other commitment

parties of the Company


Cause of commitment

Commitm

ent made

by

Type of

commitme

nt

Content of commitment Time of

commitment

Term of

commitment Fulfillment

Commitment on non-tradable

shares reform

Commitments in acquisition

report or equity change report

SEB

Internation

ale

Other

commitme

nts

SEB Internationale commits

in Acquisition Report signed

on October 19, 2011: retain

25% of Supor’s existing or

any future capital stock in

ten years.

October 19,

2011

December 22,

2011 -

December 21,

2021

Performed

strictly

Commitments made during

assets reorganization

Commitments made during

initial public offering and

refinancing

Share incentive commitments


30

Other commitments to medium

and small shareholders of the

Company

SEB

Internation

ale

Commitm

ents for

share

restriction

SEB Internationale finished

receiving 50,000,000 Supor

shares held by Supor Group

Co., Ltd. in form of

agreement transfer on June

23, 2016 and committed not

to transfer or entrust others

to manage 50,000,000

Supor shares held or ask

Supor to repurchase such

shares within thirty six

months upon acquiring the

strategic investment

50,000,000 Supor shares.

June 23, 2016

From June 23,

2016 to June

22, 2019

Fulfilled

Has the commitments been

fulfilled timely? Yes

Reason of un-fulfillment and

next plans (if any) if the

commitments cannot be fulfilled

timely.

Not-applicable

2. Where assets or projects of the Company are expected to make profit, and the expected profiting period

is in the reporting period, the Company hereby explains profiting expectation and reasons


IV. Occupied Non-business Capital of Listed Company for Shareholders and Affiliated

Company


There was no non-operating occupation of capital of listed companies by controlling shareholders and their affiliates of the Company

during the reporting period.

V. Explanation of the Board of Directors, the Board of Supervisors and Independent

Directors (if applicable) of the “Non-standard Audit Report”


VI. Change of Accounting Policy, Accounting Estimate and Calculation Method Compared

with Last Year’s Financial Statement


1. Change of accounting policies caused by the adoption of the new financial instruments standards

The Ministry of Finance promulgated the Accounting Standards for Business Enterprises No. 22 - Recognition and


31

Measurement of Financial Instruments (Revised Version 2017) (C.K. [2017] No. 7), the Accounting Standards for Business

Enterprises No. 23 - Transfer of Financial Assets (Revised Version 2017) (C.K. [2017] No. 8), and the Accounting Standards for

Business Enterprises No. 24 - Hedging Accounting (Revised Version 2017) (C.K. [2017] No. 9) on March 31, 2017 and the

Accounting Standards for Business Enterprises No. 37 - Financial Instruments Presentation (Revised Version 2017) (C.K. [2017] No.

14) on May 2, 2017 (the foregoing standards are collectively referred to as “new financial instruments standards”), requiring that

listed enterprises in China shall implement the new financial instruments standards from January 1, 2019.

The Group began to implement the new financial instruments standards from January 1, 2019.

All identified financial assets under the new financial instruments standards are subsequently measured at amortized cost or fair

value. On the implementation of the new financial instruments standards, the Group evaluated the business model for managing

financial assets based on the actual facts and situation on the day and evaluated the contracted cash flow features of financial assets

based on the facts and situation during the preliminary identification of financial assets, and divided the financial assets into:

financial assets measured by amortized cost, financial assets at fair value through other comprehensive income and, financial assets at

fair value through current profit or loss. For equity equipment investment at fair value through other comprehensive income, at the

time of derecognition of such financial asset, accumulative gains or losses previously included in other comprehensive income should

be transferred from other comprehensive income and included in retained earnings instead, and not included in current profit or loss.

Under the new financial instruments standards, the Group made provision for impairment reserve and identified credit

impairment loss for financial assets measured at amortized cost and financial security contracts based on expected credit losses.

The Group adopted the new financial instruments standards in a retroactive manner and chose not to make a restatement on the

inconsistency between classification and measurement (including decrease in value) in previous financial statements and in financial

statements prepared under the new financial instruments standards. Therefore, with regards to the accumulated amount affected by

the first implementation of the standards, the Group adjusted the amount of retained earnings or other comprehensive income and

other related items in the financial statements at the beginning of 2019, and did not make a restatement in the financial statements of

2018.

For details, please refer to “V. Critical accounting policies and estimates” and “27. Change of important accounting policies and

accounting estimates” of SECTION XII FINANCIAL STATEMENT.

VII. Instruction for Important Financial Errors, Correction and Restatement in Reporting

Period


No necessary restatement on the correction of important financial errors in the reporting period.

VIII. Information on Change of the Scope of Consolidated Statement Compared with the

Previous Year’s Financial Statements


For details, please see “VIII. Change on consolidation scope” of SECTION XII FINANCIAL STATEMENT.

IX. Employment and Disengagement of Certified Public Accountants

Certified public accountants engaged at the moment

Name of domestic certified public accountants: Union Power Certified Public Accountants (Special General

Partnership)


32

Reward for domestic certified public accountants (RMB 10,000) 160

Service years of audit for the Company 4

Names of CPAs from domestic certified public accountants Li Wei, Li Huihui

Service years of audit of the CPAs Li Wei 4 years、Li Huihui 1 year

Intension of changing certified public accountants

□ Yes √ No

Employment of internal control counting firm, financial consultant or sponsor


X. Suspension of Listing or Delisting after Disclosure of Annual Report


XI. Bankruptcy or Reorganization


There was no bankruptcy, reorganization or related matters in the Company in the reporting period.

XII. Significant Litigations and Arbitrations


There was no significant litigation and arbitration occurred in the reporting period.

XIII. Punishment and Rectification


There was no punishment and rectification in the reporting period.

XIV. Integrity of the Company, its Controlling Shareholders and Actual Controllers


XV. Implementation of Company’s Equity Incentive Plan, Employee Equity Holding Plan or

Other Employee Incentive Measures


1. On March 26, 2019, the 11th Session of the Sixth Board of Directors reviewed and adopted the Proposal on Unlocking of

Restricted Stock within the Second Unlock Period and the Reserved Restricted Stock within the First Unlock Period of 2017

Restricted Stock Incentive Plan, agreeing to unlock the Restricted Stock for 221 qualified Incentive Objects in the second unlock

period as well as unlock Reserved Restricted Stock in the first unlock period. Totally 840,600 shares of restricted stock will be

unlocked, in which the Restricted Stock unlocked during the second unlock period is 756,400 shares and Reserved Restricted Stock

unlocked during the first unlock period is 84,200 shares. The Restricted Stock in the second unlock period was listed on December 30,

2019, and the Reserved Restricted Stock in the first unlock period was listed on November 15, 2019.


33

For detailed contents, see Announcement of Unlocking of Restricted Stock within the Second Unlock Period and the Reserved

Restricted Stock t of the First Unlock Period of 2017 Restricted Stock Incentive Plan, the Suggestive Announcement on Listing of

Reserved Restricted Stock Unlockable during the First Unlock Period of 2017 Restricted Stock Incentive Plan and the Suggestive

Announcement on Listing of Restricted Stock Unlockable during the Second Unlock Period of 2017 Restricted Stock Incentive Plan

disclosed on Securities Times, China Securities Journal, Securities Daily, and cninfo.com.cn on March 28, 2019, November 12, 2019

and December 25, 2019.

2. On March 26, 2019, the 11th Session of the Sixth Board of Directors reviewed and adopted Proposal on Repurchasing and

Canceling a Part of Restricted Stock. For disqualification of three Incentive Objects due to their resignation, the Company has

decided to repurchase and cancel 84,900 shares of Restricted Stock at the price of 1 yuan per share. On August 29, 2018, the 8th

Session of the Sixth Board of Directors reviewed and adopted Proposal on Repurchasing and Canceling a Part of Restricted Stock.

For disqualification of six Incentive Objects due to their resignation, the Company has decided to repurchase and cancel 39,150

shares of Restricted Stock at the price of 1 yuan per share, totally 124,050 shares of Restricted Stock shall be repurchased and

canceled. The Proposal on Repurchasing and Canceling a Part of Restricted Stock has been adopted by the Annual General Meeting

of Shareholders for 2018 Fiscal Year held on April 19, 2019. The Company has repurchased and canceled 124,050 shares of

Restricted Stock at the price of RMB 1 per share and paid totally RMB 124,050 to the above incentive objects. After confirmed by

Shenzhen Branch of CSDCC, the Company completed purchase and cancellation work on July 15, 2019.

For detailed contents, see Announcement of Repurchasing and Canceling a Part of Restricted Stock and Announcement of

Completion Repurchasing and Canceling a Part of Restricted Stock disclosed on Securities Times, China Securities Journal,

Securities Daily, and cninfo.com.cn dated August 30, 2018, March 28, 2019 and July 16, 2019.

3. On August 29, 2018, the 14th Session of the Sixth Board of Directors reviewed and adopted Proposal on Repurchasing and

Canceling a Part of Restricted Stock. For disqualification of one Incentive Object due to her resignation, the Company has decided to

repurchase and cancel 3,500 shares of Restricted Stock at the price of 1 yuan per share. This proposal shall be submitted to the

Annual General Meeting of Shareholders for 2019 Fiscal Year for approval.

For detailed contents, see Announcement of Repurchasing and Canceling a Part of Restricted Stock disclosed on Securities

Times, China Securities Journal, Securities Daily, and cninfo.com.cn dated August 30, 2019.

XVI. Significant Connected Transactions

1. Connected transaction related to daily business


Connecte

d party

Correlat

ed

relation

Type of

connect

ed

transacti

on

Contents

of

connecte

d

transacti

on

Pricing

principl

e of

connect

ed

transacti

on

Price of

connect

ed

transacti

on

Amount

of

connect

ed

transacti

on

(RMB1

0,000)

Percent

age to

amount

of same

transacti

on

Approv

ed

transacti

on limit

(RMB1

0,000)

Exceedi

ng

approve

d limit

or not

Means

of

paymen

ts of

connect

ed

transacti

on

Market

price of

availabl

e same

transacti

on

Date of

disclosu

re

Referen

ce for

disclos

ure

Wuhan

Anzai

Cookware

Co., Ltd.

Associat

ed

enterpri

se

Purchas

e of

commo

dity

Finished

products

Contract

price --

24,522.

1 1.93% 0 No

Bank

transfer

or notes

0


34

Wuhan

Anzai

Cookware

Co., Ltd.

Associat

ed

enterpri

se

Purchas

e of

commo

dity

Accesso

ries

Market

price --

10,454.

58 0.82% 0 No

Bank

transfer

or notes

0

GROUPE

SEB

EXPORT

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price --

1,124.2

5 0.09% 0 No

Bank

transfer

or notes

0

S.A.S.

GROUPE

SEB

MOULIN

EX

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Accesso

ries

Market

price -- 849.26 0.07% 0 No

Bank

transfer

or notes

0

LAGOST

INA

S.P.A.

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price -- 131.02 0.01% 0 No

Bank

transfer

or notes

0

TEFAL

S.A.S.

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Accesso

ries

Market

price -- 679.82 0.05% 0 No

Bank

transfer

or notes

0


35

CALOR

SAS

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Accesso

ries

Market

price -- 890.32 0.07% 0 No

Bank

transfer

or notes

0

EMSA

GmbH

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price -- 876.05 0.07% 0 No

Bank

transfer

or notes

0

GROUPE

SEB

SINGAP

ORE

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price -- 244.47 0.02% 0 No

Bank

transfer

or notes

0

GROUPE

SEB

THAILA

ND

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price -- 222.27 0.02% 0 No

Bank

transfer

or notes

0

SEB

ASIA

LTD.

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price -- 98.52 0.01% 0 No

Bank

transfer

or notes

0

Heshan

Demei

Tablewar

e Co.,

Ltd.

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price -- 43.57 0.00% 0 No

Bank

transfer

or notes

0

WMF

Group

Gmbh

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price --

2,750.0

6 0.22% 0 No

Bank

transfer

or notes

0


36

Emsa

Taicang

Co., Ltd.

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price -- 373.72 0.03% 0 No

Bank

transfer

or notes

0

WMF

Consumer

Goods

(Shanghai

) Co, Ltd.

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price -- 489.28 0.04% 0 No

Bank

transfer

or notes

0

SEB

INTERN

ATIONA

L

SERVICE

S.A.S.

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Finished

products

Contract

price -- 121.03 0.01% 0 No

Bank

transfer

or notes

0

ETHERA

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Accesso

ries

Market

price -- 379.25 0.03% 0 No

Bank

transfer

or notes

0

SEB

ASIA

LTD.

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price --

457,156

.79 23.03% 0 No

Bank

transfer

or notes

0

SEB

ASIA

LTD.

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Accesso

ries

Contract

price -- 294.57 0.01% 0 No

Bank

transfer

or notes

0


37

S.A.S.

SEB

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price --

2,150.4

3 0.11% 0 No

Bank

transfer

or notes

0

S.A.S.

SEB

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Sale of

commo

dities

Accesso

ries

Contract

price -- 111.78 0.01% 0 No

Bank

transfer

or notes

0

TEFAL

S.A.S.

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price -- 828.39 0.04% 0 No

Bank

transfer

or notes

0

TEFAL

S.A.S.

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Sale of

commo

dities

Accesso

ries

Contract

price --

1,101.3

2 0.06% 0 No

Bank

transfer

or notes

0


38

S.A.S.

GROUPE

SEB

MOULIN

EX

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price --

2,711.1

4 0.14% 0 No

Bank

transfer

or notes

0

CALOR

SAS

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price --

3,200.7

8 0.16% 0 No

Bank

transfer

or notes

0

Supor

Group

Compan

y

controll

ed by

related

natural

person

Sale of

commo

dities

Finished

products

Market

price -- 479.27 0.02% 0 No

Bank

transfer

or notes

0

SEB

INTERN

ATIONA

L

SERVICE

S.A.S.

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price -- 849.2 0.04% 0 No

Bank

transfer

or notes

0


39

SEB

INTERN

ATIONA

L

SERVICE

S.A.S.

Same

controlli

ng

sharehol

der with

the

controlli

ng

sharehol

der

Sale of

commo

dities

Accesso

ries

Contract

price -- 185.73 0.01% 0 No

Bank

transfer

or notes

0

ALL-CL

AD

METALC

RAFTER

S LLC

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price -- 63.94 0.00% 0 No

Bank

transfer

or notes

0

LAGOST

INA

S.P.A.

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price -- 15.82 0.00% 0 No

Bank

transfer

or notes

0

LAGOST

INA

S.P.A.

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Accesso

ries

Contract

price -- 146.2 0.01% 0 No

Bank

transfer

or notes

0

GROUPE

SEB

CANAD

A IN

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price --

1,437.3

6 0.07% 0 No

Bank

transfer

or notes

0

IMUSA

USA LLC

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price -- 303.76 0.02% 0 No

Bank

transfer

or notes

0

WMF

Consumer

Goods

(Shanghai

) Co, Ltd.

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price -- 101.69 0.01% 0 No

Bank

transfer

or notes

0


40

WMF

Groupe

Gmbh

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price --

1,265.6

5 0.06% 0 No

Bank

transfer

or notes

0

WMF

CONSU

MER

ELECTRI

C GMBH

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price -- 10.45 0.00% 0 No

Bank

transfer

or notes

0

VIETNA

M FAN

JOINT

STOCK

COMPA

NY

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Finished

products

Contract

price --

2,184.8

3 0.11% 0 No

Bank

transfer

or notes

0

VIETNA

M FAN

JOINT

STOCK

COMPA

NY

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Accesso

ries

Contract

price -- 1.96 0.00% 0 No

Bank

transfer

or notes

0

Groupe

Seb

Andean

S.A

Same

controlli

ng

sharehol

der

Sale of

commo

dities

Accesso

ries

Contract

price -- 27.04 0.00% 0 No

Bank

transfer

or notes

0

Wuhan

Anzai

Cookware

Co., Ltd.

Associat

ed

enterpri

se

Sale of

commo

dities

Finished

products

Contract

price -- 78.04 0.00% 0 No

Bank

transfer

or notes

0

SEB

ASIA

LTD.

Same

controlli

ng

sharehol

der

Purchas

e of

commo

dity

Accesso

ries

Contract

price -- 36.74 0.00% 0 No

Bank

transfer

or notes

0

Total -- -- 518,992

.45 -- 0 -- -- -- -- --

Details of large sales return Not applicable


41

Actual implementation of estimated

total amount of connected transaction

by category incurred during the period

in the report period (if any)

In 2019, the annual daily connected transaction amount between the Company and SEB as

well as its related parties was estimated to be RMB 5,233,940,000 and the actual daily

connected transaction amount was RMB 4,834,584,600, decreasing by RMB 399,355,400.

(See Announcement on Estimated Annual Daily Connected Transactions of 2019 disclosed

on Securities Daily, Securities Times, China Securities Daily and cninfo.com.cn on March

28, 2019.

Reason for the big difference between

transacted price and market reference

price (if applicable)

Not applicable

2. Connected transactions from purchase and sales for assets or equity


There were no connected transactions from purchase and sales for assets or equity in the reporting period.

3. Connected transaction for co-investment abroad


Parties to

co-investment

Correlated

relation

Name of

invested

company

Main business

items of

invested

company

Registered

capital of

invested

company

Total assets

(RMB 10,000) of

invested

company

Net assets (RMB

10,000) of

invested

company

Net profits (RMB

10,000) of

invested

company

Supor Group

Enterprises

controlled by

the

Company’s

director Mr.

Su Xianze

Zhejiang

Supor Water

Heater Co.,

Ltd.

Manufacture,

sales and

installation of

electric water

heater, gas

water heater,

solar water

heater, and

water heater

accessories.

100 million

Yuan

Progress of major

construction in progress of

the invested company (if

applicable)

As of the end of this reporting period, the procedures of registration of Zhejiang Supor Water Heater

Co., Ltd. have been completed and its business license has been obtained.

4. Connected creditor’s rights and debts


There were no related creditor’s rights and debts in the reporting period


42

5. Other important Connected transactions


There were no significant connected transactions in the reporting period.

XVII. Significant Contracts and Performance

1. Custody, contracting, and leasing

(1) Custody


No custody was made in the reporting period.

(2) Contracting


No contracting was made in the reporting period.

(3) Leasing


No leasing existed in the reporting period.

2. Important guarantee


No guarantee was made in the reporting period.

3. Entrusting others for cash asset management

(1) Entrustment for financial management


Overview of entrusted financing in the reporting period

Unit: CNY10,000

Specific type Source of fund for

entrusted financing

Amount incurred of

entrusted financing Undue balance

Overdue amount

unclaimed

Bank financial products Self-owned capital 153,000.00 126,000.00 0

Total 153,000.00 126,000.00 0

Financial products purchased during reporting period and corresponding principal collection and income are shown below:

1) See the Announcement of Short-term Investment Using Excessive Cash (No. 2019-017), the Announcement of Progress of Using

Excessive Cash to Purchase Financial Products (No. 2019-023), the Announcement of Progress of Using Excessive Cash to Purchase


43

Financial Products (No. 2019-043), the Announcement of Progress of Using Excessive Cash to Purchase Financial Products (No.

2019-062) and the Announcement of Progress of Using Excessive Cash to Purchase Financial Products (No. 2020-004) disclosed at

http://www.cninfo.com.cn for details of bank financial products purchased in 2019.

2) During the year 2019, the Money Market Fund and China Treasury Bond Repo invested have been disclosed at

http://www.cninfo.com.cn: Announcement of Using Excessive Cash to Invest in Money Market Fund and China Treasury Bond Repo

(2018-012) and Announcement of Progress of Using Excessive Cash to Invest in Money Market Fund and China Treasury Bond

Repo (2019-024).

Specific description for high-risk entrusted finance with single significant amount, low security, poor liquidity and unguaranteed

principal


Circumstances in which principal of entrusted financing may not be recovered or which may result in decrease in value:


(2) Entrustment for loan


No entrustment for loan was made in the reporting period.

4. Other important contracts


There were no other important contracts involved in the Company in the reporting period.

XVIII. CSR Building

1. CSR fulfillment for accurate poverty alleviation

During the reporting period, the Company kept running the “Supor primary school” charity project to carry out charity activities

of aiding the education in villages of middle and west China’s remote mountainous areas, build school buildings to improve the

environment of schools, train teachers to upgrade capacities of rural schools, etc. Meanwhile, the Company organized the first

“Charity Boost +” activity within the Company, providing financial support for the charity projects participated by 4 employees in

terms of elderly care, student subsidy, care for children with autism, and other aspects. In addition, the Company held the fifth

“Charity Week” within the Company to call on employees to donate nearly one thousand portions of food to poverty-stricken families

through the food bank and as a result, 7 employees volunteered to give care to children in Supor primary schools in mountainous

areas in Yunnan province personally.

2. Performance of the social responsibility of targeted poverty alleviation

(1) Targeted poverty alleviation plan

“Letting children in remote mountainous areas get fair education opportunities” is the purpose aim that the Company has upheld

for more than 10 years. At present, the Company has been joining hand with local governments to improve the environment of the

schools in remote and backward villages, promote village teacher teams to grow, care stay-at-home children, etc. with the hope to

change the education situation in these areas through continuous efforts. The Company was also proactive in encouraging and


44

supporting employees to take part in charity activities to contribute to the social progress.

(2) Overview of annual targeted poverty alleviation

In the reporting period, the Company continued donating resources to middle and west China’s remote mountainous areas to

improve the schooling conditions, constructed Supor primary schools and supported the following development of these schools. At

present, the Company’s commonweal map has covered the mountainous areas in 12 provinces and autonomous regions, including

Qinghai, Yunnan, Guizhou, Sichuan, Hubei, Jiangxi, Hunan, Guangxi, Shaanxi, Gansu and Hebei; it now has built 26 schools. In

addition to school buildings, the Company built “NenYaEr” libraries, constructed “LiLiXiang” canteens, provided training and

overseas study opportunities for the teachers of Supor primary schools, and introduced live online courses of music, fine arts and

English to rural primary schools that lack teacher resources, fully improving their philosophy of schooling and schooling level and

enabling children in villages to have faire education opportunities.

In the reporting period, the Company completed building 1 Supor primary school, organized 1 training for villages teachers of

Supor primary schools, once rewarded excellent teachers with awards and study opportunities, dispatched volunteer teachers to the

demanding schools, organized volunteers to visit the schools, provided resource support and aided poor students financially as it

planned. Besides, it introduced Internet live online art course to 4 rural schools to enrich vision of rural teachers and students.

(3) Effects of targeted poverty alleviation

Indicator Measurement unit Quantity/fulfillment

Amount invested to aid poor students RMB 10,000 4

Number of aid poor students Person 40

Amount invested to improve the education

resources in poor areas RMB 10,000 260

(4) Subsequent targeted poverty alleviation plan

In the future, the Company will continue implementing Supor primary school project and donating to build primary schools in

the villages in mountainous areas, so as to improve their schooling conditions. By estimate, there will be 2 Supor primary schools

built in 2020. At the same time, the Company will invest more to help teachers of these schools to grow, and cooperate with relevant

organizations to carry out activities that can benefit their development.

3. Environmental protection related situations

Do the listed company and its subsidiary company belong to key pollutant discharging unit posted by the environmental protection

department?

Yes

Name of the

Company or

subsidiary

Name of

main

pollutant or

specific

pollutant

Discharge

mode

Number of

discharge

ports

Distribution

of discharge

ports

Discharge

concentratio

n

Executive

pollutant

discharge

standard

Total

discharge

amount

Total

discharge

amount

checked

Excessive

discharge


45

Zhejiang

Supor Co.,

Ltd.

COD

Included

into urban

pipeline

after

pollutants

are treated

up to

standards

2

Wastewater

discharge

port of the

wastewater

station in

plant area

≤30mg/L

(count

according to

the indexes

of design

parameters

of effluent

quality of

Damaiyu

Wastewater

Station in

Yuhuan

after

discharging

into piping)

“Quasi-IV”

standards in

the Table of

Effluent

Indexes and

Standard

Limits for

Urban

Sewage

Treatment

Stations in

Taizhou”

8.96547 t 20.32 t None

Ammoniaca

l nitrogen 2

≤1.5mg/L

(count

according to

the indexes

of design

parameters

of effluent

quality of

Damaiyu

Wastewater

Station in

Yuhuan

after

discharging

into piping)

0.44827 t 3.05 t None


46

Zhejiang

Supor

Electrical

Appliance

Manufacturi

ng Co.,

Ltd

COD 1

Wastewater

discharge

port of the

wastewater

station in

plant area

50mg/L

(count

according to

the indexes

of design

parameters

of effluent

quality of

Qianjiang

Wastewater

Station in

Xiaoshan

after

discharging

into piping)

Grade I-A

in the

Discharge

Standard of

Pollutants

for

Municipal

Wastewater

Treatment

Plant

(GB18918-

2002)

14.0261 t 14.6 t None

Ammoniaca

l nitrogen 1

5mg/L

(count

according to

the indexes

of design

parameters

of effluent

quality of

Qianjiang

Wastewater

Station in

Xiaoshan

after

discharging

into piping)

Indirect

Discharge

for

Emission

Limitation

of Nitrogen

and

Phosphorus

for

Industrial

Wastewater

(DB33/887-

2013)

0.6631 t 0.73 t None


47

Zhejiang

Shaoxing

Supor

Domestic

Electrical

Appliances

Co., Ltd.

COD 1

Wastewater

discharge

port of the

wastewater

station in

plant area

28 mg/L

(count

according to

the indexes

of design

parameters

of effluent

quality of

Qianjiang

Wastewater

Station in

Xiaoshan

after

discharging

into piping)

Grade III in

Form 4 of

the

Integrated

Wastewater

Discharge

Standard

(GB8978-1

996)

18.679444 25.83 t None

Ammoniaca

l nitrogen 1

1.6 mg/L

(count

according to

the indexes

of design

parameters

of effluent

quality of

Wastewater

Station of

Shaoxing

Water

Treatment

Developme

nt Co.,

Ltd.after

discharging

into piping)

Indirect

Discharge

for

Emission

Limitation

of Nitrogen

and

Phosphorus

for

Industrial

Wastewater

(DB33/887-

2013)

1.0673968 5.38 t None

Wuhan

Supor

Cookware

Co., Ltd.

COD Continuity 1

Wastewater

discharge

port of the

sewage

treatment

station in

plant area

67mg/L

(Entering

sewage

plant of the

park after

being

discharged

into

municipal

network)

Grade III in

the

Integrated

Wastewater

Discharge

Standard

(GB8978-1

996)

5.9951 t 10.34 t None


48

Construction and operation of pollution prevention facilities

Under special sewage treatment mechanism in the Company, all wastewater generated will gather at this station for central

treatment. After chemical precipitation and autocatalyzed oxidation, wastewater will meet the first grade discharge standards and then

be discharged into urban wastewater pipes. At the same time, the Company has reclaimed water reuse facilities that can arrange water

treatment plan according to water quality. The production wastewater is first treated at the sewage treatment station and then disposed

through the reclaimed water system for production. After that, part of the sanitary sewage after combined treatment enters municipal

sewage network. In reporting period, the environmental protection department monitored the wastewater treatment station online and

found it operating normally and discharging water up to standard.

Environmental impact assessment of construction projects and other administrative permissions for environmental protection

During the reporting period, the new plant construction project of Zhejiang Large Kitchen Appliance Co., Ltd., a wholly-owned

subsidiary, was implemented in Binhai Industrial Zone, Keqiao District, Shaoxing, Zhejiang Province. The project meets the local

planning requirements on the environmental function zones; the national and provincial pollutant discharge standards and total

discharge control requirements; the local environmental assessment requirements of the land use planning and coastal industrial zone

planning; the industrial policies; the requirements of “Three Lines and One List”.

Environmental emergency plan

Environmental Emergency Plan of Zhejiang Supor Co., Ltd.

Environmental monitoring scheme

(1) Monitoring contents

Discharge of water pollutants;

(2) Monitoring mode

Self-monitoring is completed through auto monitoring and manual monitoring.

(3) Monitoring indicators, monitoring frequency and monitoring method

1. Main monitoring indicators: pH, suspended matters, chemical oxygen demand, five daybod, oils, ammoniacal nitrogen,

copper, zinc, lead, nickel and fluorides;

2. The pH value of wastewater treatment station is monitored 24 hours per day; suspended matters and chemical oxygen demand

are analyzed once a week; oils, ammoniacal nitrogen, copper, zinc, lead, nickel and fluorides is tested once year by a third-party

environmental protection institution.

Other environmental information that should be made public

None

Other environmental protection related information

Zhejiang Shaoxing Supor Housewares Co., Ltd., the wholly-owned subsidiary of the Company, received a decision on

administrative penalty issued by Yuecheng District (High-tech Area) Branch of Shaoxing Municipal Environmental Protection

Bureau on November 5, 2018 that Zhejiang Shaoxing Supor Housewares Co., Ltd. was imposed the administrative penalty of RMB

250,000 Yuan due to violation of the environment law. It has taken corrective measures as required and fully paid the penalty. As

confirmed by related authority, related problem has been corrected as required. The Company has required related subsidiaries to

enhance the learning of related environmental protection laws and the knowledge of environmental protection, and to work according

to related procedures so as to avoid such kinds of problem. The Company will also continue to upgrade internal management and

control level, improve environment management policies, observe environmental protection laws and regulations and perform

environmental protection responsibilities.

XIX. Introduction for Other Important Matters



49

There were no other important contracts to be noted in the reporting period.

XX. Significant Event of the Company’s Subsidiaries


1. On June 28th, 2018, there was a fire accident happened in the rented warehouse, which is located out of its production site in

Yiqiao Town, Xiaoshan District, Hangzhou, of Zhejiang Supor Electrical Appliance Manufacturing Co., Ltd.. There was no loss of

life and personal injury during this fire accident and also no damage to the workshops and production equipment of the subsidiary.

For detailed contents, please see the Announcement of Fire Accident in Warehouse of Wholly-owned Subsidiary disclosed on

Securities Daily, Securities Times, China Securities Daily and cninfo.com.cn dated June 28, 2018. As of the end of the reporting

period, the insurance company has paid the claims to Zhejiang Supor Electrical Appliance Manufacturing Co., Ltd. This fire accident

did not have a significant impact on the Company's operations and performance.

2. The Proposal on Increasing Registered Capital of Subsidiary as Connected Transaction was reviewed and adopted by the 13th

Session of the Sixth Board of Directors. The Company increased its capital investment to its holding subsidiary SOUTH EAST ASIA

DOMESTIC APPLIANCES PTE. LTD. by SGD 1,963,500 (equivalent to RMB 10,201,800) with its own capital. As of the end of the

reporting period, the capital increase procedures were completed and the Business Profile issued by the Accounting and Corporate

Regulatory Authority of Singapore was obtained.

For detailed contents, please see the Announcement of Increasing Registered Capital of Subsidiary as Connected Transaction

and the Announcement of the Progress of Increasing Registered Capital of Subsidiary as Connected Transaction disclosed on

Securities Daily, Securities Times, China Securities Daily and cninfo.com.cn dated June 1, 2019 and January 8, 2020.

3. The Proposal on Establishing a Joint Venture as Connected Transaction was reviewed and adopted by the 14th Session of the

Sixth Board of Directors. The Company plans to establish a Joint Venture Zhejiang Supor Water Heaters Co., Ltd. with self-owned

cash CNY 52 million together with connected party Supor Group Co., Ltd. who is intended to invest CNY 48 million. As of the end

of this reporting period, the procedures of industrial and commercial registration for the joint venture have been completed and its

business license has been obtained.

For detailed contents, please see the Announcement of the Establishing a Joint Venture as Connected Transaction and the

Announcement of the Progress of Establishing a Joint Venture as Connected Transaction (No.: 2019-050 and 2019-075) disclosed on

Securities Daily, Securities Times, China Securities Daily and cninfo.com.cn dated August 30, 2019 and December 14, 2019.

4. Zhejiang Supor Electrical Appliance Manufacturing Co., Ltd. received a decision on administrative penalty issued by the Market

Supervision and Administration of Yangpu District, Shanghai on November 6, 2019 that Zhejiang Supor Electrical was imposed the

fine of RMB 3,843,100 because the advertisement for one of its blender products violated the provisions of Item (II), Paragraph II,

Article 28 of the Advertisement Law of the People’s Republic of China. Zhejiang Supor Electrical has taken corrective measures as

required and fully paid the penalty, but such product has no quality problems.


50

SECTION VI CHANGES IN SHARE CAPITAL AND

PARTICULARS ABOUT SHAREHOLDERS

I. Changes in Share Capital

1. Changes in share capital

Unit: share

Before change Increase/decrease in the period (+ , -) After change

Share

number Ratio

New

shares

Shares

bonus

Convert

ed

capital

Others Subtotal Share

number Ratio

I. Restricted outstanding

shares 277,007,426 33.73% -66,629,759 -66,629,759 210,377,667 25.62%

1. Shares held by the State 0 0.00% 0 0 0 0.00%

2. Shares held by state-owned

legal entities 0 0.00% 0 0 0 0.00%

3. Shares held by other

domestic investors 5,639,836 0.69% -1,629,759 -1,629,759 4,010,077 0.49%

Including: Shares held by

domestic legal entities 0 0.00% 0 0 0 0.00%

Shares held by

domestic natural persons 5,639,836 0.69% -1,629,759 -1,629,759 4,010,077 0.49%

4. Shares held by foreign

investors 271,367,590 33.04% -65,000,000 -65,000,000 206,367,590 25.13%

Including: Shares held by

foreign legal entities 271,367,590 33.04% -65,000,000 -65,000,000 206,367,590 25.13%

Shares held by foreign

natural persons 0 0.00% 0 0 0 0.00%

II. Non-restricted outstanding

shares 544,236,534 66.27% 66,505,709 66,505,709 610,742,243 74.38%

1. RMB common shares 544,236,534 66.27% 66,505,709 66,505,709 610,742,243 74.38%

2. Domestically listed foreign

shares 0 0.00% 0 0 0 0.00%

3. Overseas listed foreign

shares 0 0.00% 0 0 0 0.00%


51

4. Others 0 0.00% 0 0 0 0.00%

III. Total shares 821,243,960 100.00

% -124,050 -124,050 821,119,910

100.00

%

Reasons for share capital change


1. Top management of the Company unlocked 25% of the shares registered under their names on the last trading day of the previous

year.

2. On January 3, 2019, totally 387,400 shares of Restricted Stock unlockable in the first unlock period under the restricted stock

incentive plan 2017 were unlocked and circulated on the market.

3. On June 27, 2019, the 65 million shares of restricted stock of SEB Internationale, the controlling shareholder of the Company,

through strategic investment in 2016 were unlocked and circulated on the market.

4. On July 15, 2019, totally 124,050 shares of restricted stock that have been granted to resigned incentive objects but have not been

unlocked from restriction in 2017 restricted stock incentive plan were repurchased and cancelled. Upon the repurchase and

cancellation, the Company’s total capital stock decreased from 821,243,960 to 821,119,910 shares.

5. On November 15, 2019, totally 84,200 shares of the Reserved Restricted Stock unlockable in the first unlock period under the

restricted stock incentive plan 2017 were unlocked and circulated on the market.

6. On December 30, 2019, totally 756,400 shares of Restricted Stock unlockable in the second unlock period under the restricted

stock incentive plan 2017 were unlocked and circulated on the market.

Approval of change in stock


1. On March 29, 2018, the 6th Session of the Sixth Board of Directors reviewed and adopted the Proposal on Unlocking of Restricted

Stock within the First Unlock Period of 2017 Restricted Stock Incentive Plan, agreeing to unlock the Restricted Stock for 181

qualified Incentive Objects in the first unlock period. The number of restricted stock unlocked is 387,400. The shares of restricted

stock unlockable in the first unlock period were circulated on January 3, 2019.

2. The lockup period of 36 months for the 65 million shares held by SEB Internationale, the controlling shareholder of the Company,

through strategic investment in 2016 expired and these shares were unlocked and circulated on June 27, 2019 after confirmed by

Shenzhen Branch of CSDCC.

3. On August 29, 2018, the 8th Session of the Sixth Board of Directors reviewed and adopted the Proposal on Repurchasing and

Canceling a Part of Restricted Stock. Since six incentive objects cannot meet incentive conditions due to their resignation, totally

39,150 shares of restricted stock failing in reaching unlocking conditions are to be repurchased and canceled at the price of RMB 1

per share. On March 26, 2019, the 11th Session of the Sixth Board of Directors reviewed and adopted Proposal on Repurchasing and

Canceling a Part of Restricted Stock. Since three incentive objects cannot meet incentive conditions due to their resignation, totally

84,900 shares of restricted stock failing in reaching unlocking conditions are to be repurchased and canceled at the price of RMB 1

per share. The repurchase and cancellation was approved upon deliberation by Annual General Meeting of Shareholders for 2018

Fiscal Year and totally 124,050 Restricted Stock granted to these nine resigned incentive objects that failed in reaching unlocking

conditions were repurchased and cancelled at the price of RMB 1 per share. After confirmed by Shenzhen Branch of CSDCC, the

Company completed repurchase and cancellation work on July 15, 2019.

4. On March 26, 2019, the 11th Session of the Sixth Board of Directors reviewed and adopted the Proposal on Unlocking of

Restricted Stock within the Second Unlock Period and the Reserved Restricted Stock within the First Unlock Period of 2017

Restricted Stock Incentive Plan, agreeing to unlock the Restricted Stock for 221 qualified Incentive Objects in the second unlock

period as well as unlock Reserved Restricted Stock in the first unlock period. Totally 840,600 shares of restricted stock will be

unlocked, in which the Restricted Stock unlocked during the second unlock period is 756,400 shares and Reserved Restricted Stock

unlocked during the first unlock period is 84,200 shares. The Restricted Stock in the second unlock period was listed on December 30,


52

2019, and the Reserved Restricted Stock in the first unlock period was listed on November 15, 2019.

5. On August 29, 2018, the 14th Session of the Sixth Board of Directors reviewed and adopted Proposal on Repurchasing and

Canceling a Part of Restricted Stock. Since one incentive object cannot meet incentive conditions due to her resignation, totally 3,500

shares of Restricted Stock failing in reaching unlocking conditions were repurchased and cancelled at the price of RMB 1 per share.

This proposal shall be submitted to the Annual General Meeting of Shareholders for 2019 Fiscal Year for approval.

Transfer of shares changed


Progress in the implementation of share repurchase


The Proposal on Public Shares Repurchase Plan was reviewed and approved by the 14th Session of the Sixth Board of Directors

held on August 29, 2019. With the confidence in the Company’s future development, in order to effectively protect the interests of

shareholders and enhance investor confidence, and in consideration of the Company’s overall financial situation, the Company

planned to repurchase the Company’s shares with self-owned capital for reducing registered capital and implementing equity

incentive. The Company will repurchase the shares of the Company from parallel market through centralized bidding with the

highest price of RMB 75.48 per share (adjusted to RMB75.22 per share after Profit Distribution or First Half Year of 2019), and

number of shares repurchased not less than 4,105,600 shares (inclusive) and not more than 8,211,199 shares (inclusive). As of the end

of the reporting period, the Company has repurchased 20,000 shares accounting for 0.002% of the total shares of the Company at the

price of RMB 71.90 per share with the payment of RMB 1,438,200 (excluding transaction fee).

This Share Repurchase Plan has been approved by the Second Interim General Meeting of Shareholders in 2019 held on

September 23, 2019 and the Repurchase Report on Public Shares was published on September 25, 2019. For detailed contents, please

see the Repurchase Report on Public Shares (Announcement No.: 2019-058), Announcement on Adjusting Share Price for Public

Shares Repurchase Plan (Announcement No.: 2019-064), Announcement on the Progress of Public Shares Repurchase

(Announcement No.: 2019-059, 2019-070, 2019-074 and 2020-001) and the Announcement on the First Share Repurchase

(Announcement No.: 2019-073) disclosed on Securities Times, China Securities Daily, Securities Daily, and

http://www.cninfo.com.cn.

Progress in the reduction of shareholding of repurchased shares through auction


Influence of shares change on basic earnings per share and diluted earnings per share in latest year and period, net assets per share

owned by the Company’s ordinary shareholder and other financial indexes.


Since tiny influence on basic EPS and diluted EPS, the 124,050 restricted shares repurchased and cancelled in this period

generate no effect on other financial indicators (e.g. net assets per share belonging to the Company’s common stockholder).

The other contents the company thinks fit to disclose or the securities regulatory authority requires to disclose


2. Changes of Restricted Stock


Unit: share


53

Name

Restricted

outstanding

stocks at

year-begin

Restricted

outstanding

stocks

increased in

current

period

Restricted

outstanding

stocks

unlocked in

period-period

Restricted

outstanding

stocks at

period-end

Restriction reason Date of unlocking

restriction

SEB

INTERNATIONALE

S.A.S

271,367,590 0 65,000,000 206,367,590 Restricted strategic

investment shares

Totally 65,000,000

non-tradable shares were

unlocked on June 27, 2019;

rest part of shares will be

unlocked on December 21,

2021.

Su Xianze 1,152,324 0 288,081 864,243 Locked stocks of

top management

Unlocking 25% of the

stocks registered under his

name on the last trading

day of the previous year

Xu Bo 177,450 35,000 27,700 184,750 Locked stocks of

top management





Ye Jide 53,712 14,000 23,928 43,784 Locked stocks of

top management





Su Ming-Jui 0 13,000 0 13,000 Locked stocks of

top management






54

Incentive objects of

Equity Incentive Plan

2017

4,256,350 0 1,352,050 2,904,300

124,050 shares of

restricted stock were

repurchased and

cancelled in

consideration that

parts of incentive

objects resigned.

Under the 2017 stock

incentive plan, the 387,400

restricted stock that can be

unlocked in the first unlock

period was listed and

circulated on January 3,

2019, and the 84,200

shares of Reserved

Restricted Stock in the first

unlock period was listed

and circulated on

November 15, 2019, and

the 756,400 restricted stock

that can be unlocked in the

second unlock period was

listed and circulated on

December 30, 2019.

Total 277,007,426 62,000 66,691,759 210,377,667 -- --

II. Security Offering and Listing Information

1. Security offering (excluding preferred stock) in the reporting period


2. Total shares of the Company, change of shareholder structure, and changes of the Company’s assets and

liabilities structure


On July 15, 2019, totally 124,050 shares of restricted stock that have been granted to resigned incentive objects but have not

been unlocked from restriction in 2017 restricted stock incentive plan were repurchased and cancelled. Upon the repurchase and

cancellation, the Company’s total capital stock decreased from 821,243,960 to 821,119,910 shares.

3. Staff shares


III. Shareholders and the Actual Controller

1. Number of shareholders of the Company and share-holding conditions

Unit: share


55

Total number

of common

shareholders at

the end of the

reporting

period

9,435

Number of

common

shareholders at

the end of last

month before

the disclosure

date of the

annual report

9,904

Total number

of preferred

shareholder

whose voting

right is

recovered at

the end of

reporting

period (if any)

(refer to Note

8)

0

Total number

of preferred

stockholders

with restored

voting right at

the end of last

month before

the disclosure

date of the

annual report

(if any) (see

Note 8)

0

Information on shareholders holding more than 5% shares or information on top 10 shareholders

Name Nature

Sharehol

ding

ratio

Number of

shares held

at

period-end

Increase/dec

rease in the

reporting

period

Number of

restricted

shares

Number of

non-restricte

d

outstanding

shares

Pledged or frozen

Status of

share Share number

SEB INTERNATIONALE

S.A.S

Foreign

legal entity 81.19% 666,681,904 0 206,367,590 460,314,314

Hong Kong Securities

Clearing Company Ltd.

Foreign

legal entity 6.01% 49,335,017 10,919,482 0 49,335,017

Bank of China -E Fund

Medium and Small Cap

Complex Securities

Investment Fund

Others 1.52% 12,500,000 4,699,991 0 12,500,000

BNP Paribas - own funds Foreign

legal entity 0.68% 5,585,446 -737,350 0 5,585,446

China Construction Bank -

E-Fund New Silk Road

Flexible Complex Securities

Investment Fund

Others 0.68% 5,549,250 0 0 5,549,250

Fidelity Mutual Fund &

Investment Management -

clients' capital

Foreign

legal entity 0.67% 5,472,437 -3,277,101 0 5,472,437

Agricultural Bank of China

- E-fund Consumption

Industry Securities

Investment Fund

Foreign

legal entity 0.60% 4,919,542 0 0 4,919,542

Central Huijin Asset

Management Co., Ltd.

State-owned

legal person 0.54% 4,423,640 0 0 4,423,640


56

China Construction Bank -

Xingquan Social

Responsibility Complex

Securities Investment Fund

Others 0.48% 3,972,702 2,107,039 0 3,972,702

National Social Security

Fund No. 109 Others 0.29% 2,400,065 2,400,065 0 2,400,065

Strategic investor or general corporate

investor who becomes top 10 shareholder

as a result of rights issue (if any) (see

Note 3)

None

Description on the above-mentioned

shareholder relationships or concerted

actions

The company is not aware of whether the top ten shareholders are associated with each

other, and whether they are persons acting in concert as stipulated in the Measures for

the Administration of the Acquisition of Listed Companies.

Shareholdings of top 10 shareholders holding non-restricted shares

Name

Number of non-restricted

outstanding shares held at

period-end

Type of share

Type of share Share number

SEB INTERNATIONALE S.A.S 460,314,314 RMB common share 460,314,314

Hong Kong Securities Clearing Company Ltd. 49,335,017 RMB common share 49,335,017

Bank of China -E Fund Medium and Small Cap Complex

Securities Investment Fund 12,500,000 RMB common share 12,500,000

BNP Paribas - own funds 5,585,446 RMB common share 5,585,446

China Construction Bank - E-Fund New Silk Road Flexible

Complex Securities Investment Fund 5,549,250 RMB common share 5,549,250

Fidelity Mutual Fund & Investment Management - clients' capital 5,472,437 RMB common share 5,472,437

Agricultural Bank of China - E-fund Consumption Industry

Securities Investment Fund 4,919,542 RMB common share 4,919,542

Central Huijin Asset Management Co., Ltd. 4,423,640 RMB common share 4,423,640

China Construction Bank - Xingquan Social Responsibility

Complex Securities Investment Fund 3,972,702 RMB common share 3,972,702

National Social Security Fund No. 109 2,400,065 RMB common share 2,400,065

Connected relationship or concerted parties among the top 10

shareholders holding non-restricted outstanding shares, and

between the top 10 shareholders holding non-restricted

outstanding shares and top 10 shareholders

The company is not aware of whether the top ten shareholders

are associated with each other, and whether they are persons

acting in concert as stipulated in the Measures for the

Administration of the Acquisition of Listed Companies.

Information on top 10 common shareholders involved in

securities margin trading business (if any) (see Note 4) None

Did the top 10 common shareholders and the top 10 common shareholders holding non-restricted shares conduct the agreed

repurchase transaction during the reporting period?


57

□ Yes √ No

The top 10 common shareholders and the top 10 common shareholders holding non-restricted shares did not conduct the agreed

repurchase transaction during the reporting period.

2. The controlling shareholder

Property of controlling shareholder: foreign-controlled shareholding

Type of controlling shareholder: legal entity

Name of controlling

shareholder

Legal

representative/person

in charge

Date of

establishment

Organization

Code Main business

SEB INTERNATIONALE

S.A.S

Thierry de LA TOUR

D’ARTAISE December 26, 1978 None

Financial participation for all kinds of

French and overseas enterprises, i.e.,

purchasing and subscribing stock, bond,

share and interests, securities and

negotiable securities, transfer of such

securities, participation in all financial

activities related to the aforesaid financial

participation, purchasing, manufacturing

and sales of all kinds of household

devices for the purpose of marketing and

involvement in related service; all

activities for helping realize the

Company’s operation either directly or

indirectly, particularly the activities in

personal estate, real estate, finance,

commerce and industrial field.

Shareholding of other

overseas listed companies

by the Company’s

controlling shareholder in

the reporting period

None

Change of controlling shareholder in the reporting period


No change of controlling shareholder occurred in the reporting period.

3. Actual controller and persons acting in concert

Property of actual controller: other foreign organization

Type of actual controller: legal entity

Name of the actual

controller Legal representative/person in charge Date of establishment Organization Code Main business


58

SEB S.A. Thierry de LA TOUR D’ARTAISE December 28, 1973 None

Holding or equity

participation and

management for various

enterprises

Holding of other

overseas listed

companies by the

Company’s actual

controller in the

reporting period

None

Change of actual controller in the reporting period


No change of actual controller occurred in the reporting period.

Property right and controlling relationship diagram between the Company and the actual controller

Actual controller controlling the Company by trust or other assets management types


4. Other corporate shareholders holding more than 10% shares


5. Share restriction reduction of commitment subjects such as controlling shareholder, actual controller

and the recombination party



59

SECTION VII INFORMATION ON PREFERRED STOCK


No preferred stock existed in the reporting period.


60

SECTION VIII COMPANY’S CONVERTIBLE BONDS


No convertible bonds existed in the reporting period.


61

SECTION IX PARTICULARS ABOUT DIRECTORS,

SUPERVISORS AND SENIOR MANAGEMENT STAFFS

I. Changes in Share Holding Status of Directors, Supervisors and Senior Management Staffs

Name Position Position

status

Gende

r Age

Comme

ncement

date of

term of

office

Expiry

date of

term of

office

Beginnin

g quantity

of stocks

Quantity

of

increased

stocks in

this

period

Quantity

of

decreased

stocks in

this

period

Number

of other

shares

increased

or

reduced

(shares)

Closing

quantity

of stocks

Thierry de LA

TOUR D’ARTAISE

Board

Chairma

n

On-service Male 65 April 20,

2017

April 19,

2020 0 0 0 0 0

Su Xianze Director on-service Male 52 April 20,

2017

April 19,

2020 1,152,324 0 288,081 0 864,243

Harry TOURET Director on-service Male 65 April 20,

2017

April 19,

2020 0 0 0 0 0

Vincent LEONARD Director Retiremen

t Male 59

April 20,

2017

Septemb

er 30,

2019

0 0 0 0 0

Stanislas de

GRAMONT Director on-service Male 55

January

03, 2019

April 19,

2020 0 0 0 0 0

Nathalie LOMON Director on-service Femal

e 49

Novemb

er 18,

2019

April 19,

2020 0 0 0 0 0

Tai Wai Chung Director on-service Male 60 April 19,

2018

April 19,

2020 0 0 0 0 0

Frederic BERAHA

Indepen

dent

director

Retiremen

t Male 69

April 20,

2017

February

26, 2019 0 0 0 0 0

Xiaoqing

PELLEMELE

Indepen

dent

director

Retiremen

t

Femal

e 63

April 20,

2017

February

26, 2019 0 0 0 0 0


62

Wang Baoqing

Indepen

dent

director

on-service Male 56 April 20,

2017

April 19,

2020 0 0 0 0 0

Hervé

MACHENAUD

Indepen

dent

director


2019

April 19,

2020 0 0 0 0 0

Jean-Michel

PIVETEAU

Indepen

dent

director


2019

April 19,

2020 0 0 0 0 0

Philippe SUMEIRE

Chairma

n of

Board of

Supervis

ors


2017

April 19,

2020 0 0 0 0 0

Zhang Junfa Supervis

or on-service Male 43

April 07,

2017

April 06,

2020 0 0 0 0 0

Lu Lanhua Supervis

or on-service

Femal

e 42

April 07,

2017

April 06,

2020 0 0 0 0 0

Su Ming-Jui General

Manager on-service Male 52

October

18, 2017

April 19,

2020 260,000 0 26,000 0 234,000

Xu Bo

Chief

Financia

l Officer


2017

April 19,

2020 411,600 0 102,850 0 308,750

Ye Jide

Vice

General

Manager

,

secretary

of the

board

On-service Male 44 April 20,

2017

April 19,

2020 123,712 0 30,928 0 92,784

Total -- -- -- -- -- -- 1,947,636 0 447,859 0 1,499,777

II. Change of directors, supervisors and senior management staffs


Name Position Type Date Cause

Frederic BERAHA Independent

director

Retired after

the expiry of

term of

office

February 26, 2019 Six-year term of office expired


63

Xiaoqing PELLEMELE Independent

director

Retired after

the expiry of

term of

office

February 26, 2019 Six-year term of office expired

Vincent LEONARD Director Retirement September 30, 2019 Resign from the post of director of the Sixth

Board of Directors due to personal reason

III. Incumbency of Office

Professional backgrounds, main working experiences, and main responsibilities in the Company of present directors, supervisors and

senior management staffs

1. Directors

Mr. Thierry de LA TOUR D’ARTAISE: Board Chairman, Master of Management of Paris ESCP; chartered accountant.

Chairman and CEO of Group SEB; has served previously as Deputy Chairman of Group SEB, Chairman of CALOR, CFO and CEO

of CROISIERES PAQUET, audit manager of Coopers & Lybrand.

Mr. Harry TOURET: Director, post-graduate diplomas in management science and corporate organizational development,

currently Senior Executive Vice President of HR for SEB Group. He was former Executive VP HR WW of Aventis CropScience.

Mr. Stanislas de GRAMONTL Director, graduated from ESSEC Business School (Paris); COO of SEB Group. He has served

previously as top manager of Danone and president of Suntory Beverage & Food Limited (Europe).

Ms. Nathalie LOMON: Director, graduated from NEOMA Business School; chief financial officer of SEB Group. She has

served previously as executive vice president and financial director of Ingenico, France, financial executive of Rio Tinto Alcan, etc.

Mr. Su Xianze, Director, CEIBS EMBA, engineer; board chairman and general manager of Supor Group Co. Ltd., executive

partner of Hangzhou Ruifeng Equity Investment Management Partnership (Limited Partnership), executive director of Supor

Investment Co., Ltd., executive director of Hangzhou Supor Equity Investment Co., Ltd. and chairman of Zhejiang Supor Water

Heater Co., Ltd. He has severed as board chairman of the Company from 2001 to April, 2014, concurrently general manager of this

Company from 2001 to March, 2010.

Mr. Tai Wai Chung: Director, graduated from Industrial Engineering Specialty of University of Hong Kong. Executive vice

president of Asia region of SEB Group. He has served previously as board chairman and general manager of Apple (China), CMO of

Electrolux, board chairman of SEB Shanghai and general manager of the Company.

Mr. Wang Baoqing: Independent director of the Company, master of economics (accounting major) of Zhongnan University of

Economics and Law. Professor of Zhejiang Gongshang University, master tutor; now peer reviewer of professorate senior accountant

of Zhejiang Province, China CPA (non-practicing member), director of Zhejiang Audit Society, managing director of Zhejiang

Institute of Internal Audit, independent director of listed company.

Mr. Hervé MACHENAUD: Independent director, graduated from Sciences Po; currently president of Hong Ma Consulting

Services (Beijing) Co., Ltd., chairman of Paris Innovation Review and partner of Trail Capital. He formerly served as leader of EDF

Group Delegation to China, senior executive vice president of EDF, director in charge of EDF Generation and Engineering (DPI) and

Asia-Pacific director.

Mr. Jean-Michel PIVETEAU: Independent director, doctor of business administration, and mater of political science; currently

the chief representative of the Beijing Representative Office of X-PM Transition Partners, France, senior partner of B & A

Investment Bank, chairman of the Supervisory Board of MicroCred China, vice-chairman of the Supervisory Board of BAOBAB,

Holding, Paris, and board member of the French Trade Advisor Global Council-CNCCEF. He formerly served as Adviser for China

to BNP Paribas Chairman, Senior Adviser to BNP Paribas for China, Country Head of Paribas Bank in numerous Asian

counties, President Emeritus of the “French Trade Advisor Council” of China

2. Supervisors


64

Mr. Philippe SUMEIRE: Supervisor, graduated from Aix-en-Provence Law School with PHD’s degree of Private Law and

Comparative Law. He is Vice President Legal Affairs of Groupe SEB and Board Secretary. He has worked first for PEUGEOT S.A.

and ATOCHEM (chemical industry) and then held the position of General Counsel and Company Secretary for CLUB MED, GIAT

INDUSTRIES and MOULINEX S.A.

Mr. Zhang Junfa: Supervisor, graduated from Northwestern Polytechnical University. Chairman of the Trade Union of the

Company and office head of Yuhuan Site, he was working for security section, and then worked in legal affairs department and

office.

Ms. Lu Lanhua: Supervisor, graduated from Shanghai University of Finance and Economics and MBA of University of

Manchester, member of ACCA. Financial planning& analysis manager; has worked for Greif Flexible Products & Service (China) as

accounting manager, UNSA (Hangzhou) Packaging Manufacturing Ltd. as financial manager.

3. Top management

Mr. Su Ming-Jui: General Manager, enterprise management master of National Chengchi University and bachelor of

electromechanical engineering of National Chiao Tung University. He has served successively as CEO of F&B Business Division of

Ting Hsin International Group, president of YongHe King and executive deputy president of Tesco Supermarket (China).

Mr. Xu Bo: CFO, graduated from Central University of Finance and Economics; member of CICPA and ACCA; previously

worked successively as the senior auditing manager of Shenzhen Zhonghua Certified Public Accountants, CFO of Yue Sai Kan

Cosmetics Limited, CFO of Molex Interconnect (Shanghai) Co., Ltd, CFO of Microsoft China.

Mr. Ye Jide: Secretary of Board of Directors, vice president, and manager of securities department, CEIBS EMBA. Independent

director of Energy Explorer Electric Power Co., Ltd. since May, 2015, has worked successively the chief of equipment sector, office

head and assistant of general manager of the Company.

Post information in shareholders’ companies


Name Shareholding

company

Post in the shareholding

company

Commencement

date of term of

office

Expiry date of

term of office

Payment or

allowance from the

shareholding

company

Thierry de LA TOUR

D’ARTAISE SEB Group Chairman & CEO May 01, 2000 Yes

Philippe SUMEIRE SEB Group

Vice President Legal

Affairs of Groupe SEB

and Board Secretary

December 10,

2001 Yes

Harry TOURET SEB Group Senior Executive VP of

HR

September 01,

2002 Yes

Nathalie LOMON SEB Group Chief Financial Officer September 30,

2019 Yes

Stanislas de GRAMONT SEB Group Chief Operating Officer

(COO)

December 03,

2018 Yes

Tai Wai Chung SEB Group Senior Executive VP of

Asia Continental Division October 01, 2017 Yes

Post information in other companies



65

Name Name of other unit Post in the other

companies

Commencemen

t date of term of

office

Expiry date of

term of office

Payment or

allowance from

other companies

Su Xianze Supor Group

Board chairman

and general

manager

March 08, 2018 Yes

Su Xianze

Hangzhou Ruifeng Equity Investment

Management Co., Ld. (limited

partnership)

Executive partner November 17,

2015 No

Su Xianze Supor Investment Co., Ltd. Executive

director

February 26,

2019 No

Su Xianze Hangzhou Supor Equity Investment

Co., Ltd.

Executive

director June 17, 2019 No

Su Xianze Zhejiang Supor Water Heater Co.,

Ltd. Board Chairman

November 15,

2019 No

Wang Baoqing Zhejiang Gongshang University Professor July 30, 1996 Yes

Wang Baoqing ZHEFU Holding Group Independent

director March 17, 2017 March 16, 2020 Yes

Wang Baoqing Hangzhou Advance Gearbox Group

Co., Ltd.

Independent

director

September 07,

2017

September 06,

2019 Yes

Hervé

MACHENAUD

Hongma Consulting Services

(Beijing) Co., Ltd. President

January 01,

2017 Yes

Jean-Michel

PIVETEAU

Beijing Representative Office of

Bozhi Transition Partners, France

Chief

representative

January 01,

2004 Yes

Ye Jide Energy Explorer Electric Power Co.,

Ltd.

Independent

director May 25, 2018 May 24, 2021 No

Punishment of securities regulatory commission on directors, supervisors and senior management staffs of the Company at present or

leaving in the reporting period


IV. Remuneration for Directors, Supervisors and Senior Management Staffs

Decision-making procedures, determination basis of remuneration and actual payment for directors, supervisors and senior

management staffs

Decision-making

procedures of

remuneration for directors,

supervisors and senior

management staffs

The remuneration for directors, supervisors and top managers of the Company shall be in strict

compliance with the Rules of Procedures for the Board of Directors and the Rules of Procedure of the

Shareholders Meeting, as well as the regulations of the Company’s Articles of Association and the

Company Law.

Determination basis of The directors, supervisors and senior management staffs of Company are paid according to their


66

remuneration for directors,

supervisors and senior

management staffs

positions and corresponding responsibilities and the Company’s remuneration system, with an annual

bonus based on the performance evaluated.

Remuneration for Directors, Supervisors and Senior Management Staffs in the Reporting Period

Unit: CNY10,000

Name Position Gender Age Position

status

Remuneration

receivable from

the Company

Remuneration

receivable from

shareholding

company

Thierry de LA TOUR D’ARTAISE Board Chairman Male 65 On-service

Harry TOURET Director Male 65 On-service

Vincent LEONARD Director Male 59 Retiremen

t

Stanislas de GRAMONT Director Male 55 On-service

Nathalie LOMON Director Female 49 On-service

Su Xianze Director Male 52 On-service

Tai Wai Chung Director Male 60 On-service

Wang Baoqing Independent director Male 56 On-service 15.00 No

Frederic BERAHA Independent director Male 69 Retiremen

t 3.75 No

Xiaoqing PELLEMELE Independent director Female 63 Retiremen

t 3.75 No

Hervé MACHENAUD Independent director Male 73 On-service 11.25 No

Jean-Michel PIVETEAU Independent director Male 73 On-service 11.25 No

Philippe SUMEIRE Chairman of Board of

Supervisors Male 60 On-service

Zhang Junfa Supervisor Male 43 On-service 40.20 No

Lu Lanhua Supervisor Female 42 On-service 69.77 No

Su Ming-Jui General Manager Male 52 On-service 776.62 No

Xu Bo Chief Financial Officer Male 52 On-service 260.84 No

Ye Jide Vice General Manager,

secretary of the board Male 44 On-service 93.65 No

Total -- -- -- -- 1,286.08 --

Equity incentives for directors, supervisors and senior management staffs in the reporting period


Unit: share


67

Name Position

Shares

which can

be

exercised

in the

reporting

period

Shares

exercised

in the

reporting

period

Exercise

price of

exercised

shares in

the

reporting

period

(RMB/shar

e)

Market

price at the

end of

reporting

period

(RMB/shar

e)

Restricted

stock held

at the

beginning

of period

Shares

unlocked

in current

period

Restricted

stock

newly

granted in

the

reporting

period

Granting

price of

restricted

stock

(RMB/shar

e)

Restricted

stock held

at the end

of period

Su

Ming-Jui

General

Manager 0 0 0 0 260,000 78,000 182,000

Xu Bo

Chief

Financial

Officer

0 0 0 0 175,000 51,000 124,000

Ye Jide

Vice

General

Manager,

secretary

of the

board

0 0 0 0 70,000 21,000 49,000

Total -- 0 0 -- -- 505,000 150,000 0 -- 355,000

Remarks (if any)

General Manager Mr. Su Ming-Jui: Under the 2017 stock incentive plan, the 26,000 Restricted Stock that

can be unlocked in the first unlock period was listed and circulated on January 3, 2019, and the 52,000

Restricted Stock that can be unlocked in the second unlock period was listed and circulated on December

30, 2019.

Chief Financial Officer Mr. Xu Bo: Under the 2017 stock incentive plan, the 16,000 Restricted Stock that

can be unlocked in the first unlock period was listed and circulated on January 3, 2019, and the 32,000

shares of Restricted Stock in the second unlock period was listed and circulated on December 30, 2019, and

the 3,000 Reserved Restricted Stock that can be unlocked in the first unlock period was listed and

circulated on November 15, 2019.

Vice General Manager and Secretary of Board of Directors Mr. Ye Jide: Under the 2017 stock incentive

plan, the 7,000 Restricted Stock that can be unlocked in the first unlock period was listed and circulated on

January 3, 2019, and the 14,000 Restricted Stock that can be unlocked in the second unlock period was

listed and circulated on December 30, 2019.

V. Staffing Information

1. Number of Personnel, Professional and Education Conditions

Number of employees in parent company (person) 1,977

Number of employees in subsidiaries (person) 10,315


68

Total number of personnel (person) 12,292

Total number of personnel paid during current period (person) 12,292

Retired employees for whom the Company should cover

expenses (person) 0

Profession composition

Job description Qty. (person)

Production personnel 7,551

Sales personnel 1,652

Technician 2,028

Financial personnel 170

Administrative personnel 891

Total 12,292

Education

Education Qty. (person)

Postgraduate and above 121

Junior college or university 4,015

Technical secondary school or high school 3,328

Others 4,828

Total 12,292

2. Compensation and Benefit Policy

The Company adopts floating salary system for all employees. Salary that we provide to employees includes pre-tax basic salary

and performance salary in the form of currency; we also offer various non-monetary welfares such as training, internal development

and comfortable working environment.

We provide employees with competitive salary and welfare to keep a certain degree of competitiveness and absorb talents; while

in the Company, to stabilize those key employees, embody the Company’s value orientation, motivate self-improvement of employee

and create high performance.

3. Training Program

1) Supor is highly concerned with ability development of talents. We execute internally various trainings for specialized and

general knowledge and skills and leadership actively based on the requirements of talent echelon construction. We also pay much

attention to promotion, implementation and cultivation of the Company’s core values and enterprise culture; our core values have

become the benchmark for leading employees to exploit and innovate constantly. Meanwhile, Supor strengthens the summary and

inheritance of organizational experience based on the Company’s business value chain such as strategic markets, industrial

development, marketing and other professional areas.

2) In order to coordinate the Company’s development strategy and integrate management wisdoms from home and abroad and

the Company’s practical experience, we integrate internal and external resources, and organize various business departments and


69

responsible centers to execute different levels and grades of diversified and colorful trainings under the leadership of Supor

university; where necessary, we will go out for trans-border learning. The all-round, multi-level and multi-channel talent

development system enables our comprehensive quality and working ability to continuously meet the needs of the Company to

expand its businesses.

3) According to justice and fairness principle, we provide employees with targeted training opportunity based on employees’

assessments, individual career development expectations and actual work demands; we also provide instructor and tutor resources

mainly from internal management to employees to improve the competence and speed up the growth of employees and practice our

talent building and development policies.

4. Labor Outsourcing



70

SECTION X CORPORATION GOVERNANCE

I. Basic Situation

In the reporting period, the Company further standardized the operation of the Company and improved the governance by

continuously building up and strengthening the corporate governance system, improving the internal control and management system,

and deepening the governing process strictly in accordance with the Company Law, the Securities Law and the Rules on the

Corporate Governance of Listed Companies, Stocks Listing Rules of Shenzhen Stock Exchange and the Guidelines for Standardized

Operation of Listed Companies on the Small and Medium-sized Enterprise Board of Shenzhen Stock Exchange as well as other

regulations of CSRC. By the end of the reporting period, the actual governance of the Company was basically in compliance with the

relevant regulations of corporate governance of listed companies issued by the CSRC and Shenzhen Stock Exchange, and with the

rules of established systems of the Company. No administrative regulation measures were taken by regulatory department upon the

Company.

(i) Relating to Shareholders and the General Meeting of Shareholders

The Company has convened and held the General Meetings of Shareholders strictly according to the Rules for the General

Meetings of Shareholders of Listed Companies, Rules of Procedures of Shareholders Meeting, and other rules and requirements, and

ensured the legality and validity of the convening. According to the Implementing Rules for the Online Voting at the Shareholders’

Assembly of Listed Companies of Shenzhen Stock Exchange, the Company clearly defined the specific process of online voting and

completely implemented online voting of general meeting of shareholders, in order to involve medium and small investors in the

online voting more effectively, and guarantee the legitimate rights and interests of all shareholders, especially of the minority

shareholders.

During reporting period, four general meetings of shareholders were held. The convening and holding procedures, qualifications

of attended persons, voting procedures, voting results and resolution contents of the meeting conformed to laws and regulations and

Articles of Association.

(ii) Relating to the Company and the Controlling Shareholder

In the reporting period, the Company was autonomous in business and operation, and kept independent of its controlling

shareholder in terms of assets, business, personnel, organization and finance. The Board of Directors, the Board of Supervisors and

other internal organizations operate independently. The Controlling Shareholder of the Company exercised its rights through the

General Meeting of Shareholders, and did not directly or indirectly intervene with the Company’s decision-making or business

activities. The connected transaction between the Company and its Controlling Shareholder was fair and reasonable; the

decision-making rules were in compliance with the relevant provisions; no fund occupation by the Controlling Shareholder existed.

(iii) Relating to Directors and the Board of Directors

The Company elected directors strictly according to the procedures stipulated in the Company Law and the Articles of

Association, and ensured the open, fair, equitable and independent appointment and election of directors, and the number and

composition of the Board of Directors follow relevant laws and regulations. Now the Company has three independent directors,

representing 1/3 of its directors. All directors have actively participated in the Company’s operation and decision-making activities,

performed their duties, attended the relevant training sessions organized by supervisory departments, pursuant to the Company Law,

the Guidelines for Standardized Operation of Listed Companies on the Small and Medium-sized Enterprise Board of Shenzhen Stock

Exchange, the Articles of Association and the Rules of Procedures for the Board of Directors. The Board of Directors consists of

Strategy Committee, Audit Committee and Payment and Appraisal Committee with independent directors fully exerting their

specialties, which further improves the working efficiency and decision-making level of the Board of Directors and plays significant

roles in the Company’s normative operation.


71

During the reporting period, five meetings of Board of Directors were held totally. The convening and holding procedures,

qualifications of attended persons, voting procedures, voting results and resolution contents of the meeting conformed to laws and

regulations and Articles of Association.

(iv) Relating to Supervisors and the Board of Supervisors

The Company elected supervisors strictly according to the provisions under the Company Law and the Articles of Association.

The number of supervisors and composition of the Board of Supervisors met the requirement of relevant laws and regulations. All

supervisors have performed their duties as required by the Regulations of Procedure of the Board of Supervisors, effectively

supervised the legality and regulatory compliance of significant events, connected transactions, financial conditions, and duty

fulfillment of directors and top management staffs of the Company, and maintained the legitimate rights and interests of the

Company and its shareholders.

During the reporting period, five meetings of Board of Supervisors were held totally. The convening and holding procedures,

qualifications of attended persons, voting procedures, voting results and resolution contents of the meeting conformed to laws and

regulations and Articles of Association.

(v) Relating to performance appraisal and the incentive and restraining mechanism

The Company established and constantly improved the performance appraisal system and the incentive restraining mechanism

for supervisors, directors and top management staffs. The appointment and payment for directors, supervisors and top management

staffs of the Company are open, clear and in line with relevant laws and regulations. During the reporting period, the Company

unlocked the restricted stock allowed to be unlocked in the second unlocking period and the remaining restricted stock unlockable in

the first unlocking period which are granted to top managers who have restricted stocks in accordance with the 2017 Restricted Stock

Incentive Plan (Revised Draft) so as to achieve effective incentives for senior managers.

(vi) Relating to information disclosure and transparency

The Securities Department of the Company is responsible for information disclosure and investor’s relationship management.

Abiding by requirements of the CSRC and Shenzhen Stock Exchange and provisions on compilation of periodic reports in good faith,

the department, in association with the Financial Department of the Company, has timely and accurately compiled and submitted the

2018 Annual Report, First Quarterly Report 2019, Semiannual Report 2019 and Third Quarterly Report 2019, based on the strict

compliance with the non-disclosure rules before the disclosure of the reports.

The Securities Department of the Company disclosed, after review and adoption by the Board of Directors or the General

Meeting of Shareholders, the routine information (Board Meetings and Supervisors’ Meetings), fatal information (external

investments, connected transactions), and significant events truly, accurately, completely, timely and fairly. In the reporting period,

the Company has published 76 announcements on the basis of strict compliance with non-disclosure rules before the disclosure and

kept the files in order after the disclosure. Information disclosure of the Company in the reporting period was timely, true, accurate,

complete and fair, and has never been questioned by any related supervisory authorities. Besides, the Company will, in strict

accordance with the requirements of Management System on Investors’ Relationship, regulate the investor acceptance procedure and

disclose the activity record of investors’ relationship upon the completion of investor’s relationship activity timely; actively receive

the visiting and consulting shareholders and designate special person to be liable for replying the investors’ questions on the

interaction platform so as to ensure all shareholders of the Company, particularly the small and medium-sized investors can get

access to the Company’s information equality.

Is there any significant different between the actual situation of company governance and the regulations of corporate governance of

listed companies issued by CSRC?

□ Yes √ No

There is no significant difference between the actual situation of company governance and the regulations of corporate governance of

listed companies issued by CSRC.


72

II. Independence between the Company and Controlling Shareholders Regarding Business,

Personnel, Assets, Organization and Finance

In the reporting period, the Company was totally separated from its controlling shareholder in terms of business, personnel, assets,

organization and finance. The production and business operation of the Company were stable; the organization was well structured

and functioning independently.

(i) Independent and complete assets structure

The Company had its production and business operation place independent from that of the controlling shareholder, and had

independent and complete assets structure, independent production system, auxiliary production system and supporting facilities,

land using right, housing ownership, as well as independent purchasing and selling systems.

(ii) Independence of personnel

In terms of personnel, labor, personnel and salary management, the Company was completely independent. Such top

management as the General Manager, Secretary of the Board of Directors and CFO did not hold any position concurrently in

controlling shareholder or other subsidiaries excepting director and supervisors, nor receive any remuneration from the controlling

shareholder or other subsidiaries.

(iii) Independence of finance

The Company has an independent financial department, has established independent accounting system and financial

management system, and makes financial decisions independently. It has opened independent bank accounts and pays taxes

independently.

(iv) Independence of organization

The Company has set up the organization independent from the controlling shareholder completely, and there exists no mixed

operation or management. It adopts a BU management system, and has departments directly under the Head Office and three BUs

(cookware, electrical appliance and kitchen appliances Bus) and high-end business modules. Neither controlling shareholder nor any

other company or individual has intervened with the organization structuring of the Company. No “superior and subordinate

relationship” exists between the controlling shareholder and its functional departments on the one hand, and the Company and its

functional departments on the other hand.

(v) Independence of business operation from shareholders or other related parties

The Company is mainly engaged in designing, producing and selling cookware, small domestic appliances, large kitchen

appliances and H&PC products, which are not produced by the controlling shareholder or any of its subsidiaries for the Chinese

market. The Company has an independent “procurement, production and sales” system. It operates business independently from

shareholders or any other related party.

III. Horizontal Competition


IV. General Meeting of Shareholders and Interim General Meeting of Shareholders Held in

the Reporting Period

1. General Meeting of Shareholders in the Reporting Period

Session Meeting type

Proportion of

participated

investors

Convening date Date of disclosure Reference for disclosure


73

First Interim General

Meeting of Shareholders

2019

Interim General

Meeting of

Shareholders

4.85% January 03, 2019 January 04, 2019

References can be made to

the Announcement of

Resolution of the First

Interim General Meeting of

Shareholders 2019

(2019-001) disclosed on

http://www.cninfo.com.cn

The Annual General

Meeting of Shareholders for

2018 Fiscal Year

Annual General

Meeting of

Shareholders

4.68% April 19, 2019 April 20, 2019


the Announcement of

Resolution of the Annual

General Meeting of

Shareholders for 2018

Fiscal Year (2019-027)

disclosed on


Second Interim General


2019

Interim General

Meeting of

Shareholders

9.21% September 23,

2019

September 24,

2019


the Announcement of

Resolution of the Second


Shareholders 2019



Third Interim General


2019

Interim General

Meeting of

Shareholders

9.05% November 18,

2019

November 19,

2019


the Announcement of

Resolution of the Third


Shareholders 2019



2. Interim General Meeting held at the request of preferred stockholders with restored voting right


V. Duty Performance of Independent Directors in the Reporting Period

1. Attendance of Board Meeting and Shareholders’ Meeting by independent directors

Attendance of board meeting and shareholders’ meeting


74

Name of

independent

directors:

Due

attendance

board meetings

(times)

Presence in

on-site board

meetings

(times)

Presence via

communicatio

n on board

meetings

(times)

Presence by

entrustment on

board

meetings(times

)

Absence on

board meetings

(times)

Absent for

twice

continuously

on board

meetings?

Attendance of

shareholders’

meeting

Wang Baoqing 5 2 3 0 0 No 4

Frederic

BERAHA 1 1 0 0 0 No 0

Xiaoqing

PELLEMELE 1 1 0 0 0 No 0

Hervé

MACHENAUD 4 1 3 0 0 No 0

Jean-Michel

PIVETEAU 4 1 3 0 0 No 0

Explanations of absence for twice continuously

2. Objections by independent directors to company issue

Were there any objections raised by independent directors to company issues?

□ Yes √ No

There was no objection raised by any independent director to company issues in the reporting period.

3. Other explanations of duty performance of independent director

Was there any advice raised by independent directors to company issues adopted by the Company?

√ Yes □ No

Explanations of adoption or non-adoption of the advice

During the reporting period, all independent directors of the Company were responsible and diligent. They paid close attention

to the reports about Company news by press and on the Internet and understood progress of the Company’s major matters timely.

They reviewed the information reports provided by the Company periodically, and gave relevant comments and advices. They

exerted their specialties fully, performed the duties as independent directors actively and maintained the legitimate rights and

interests of the Company and minority shareholders.

VI. Duty Performance of Special Committees under the Board of Directors

1. Strategy Committee

The Strategy Committee is composed of Mr. Su Xianze, Mr. Thierry de LA TOUR D’ARTAISE and Mr. Tai Wai Chung, with

Mr. Su Xianze serving as convener of the committee. Strategy Committee convened two meetings totally, on which all committee

members communicated with the top management of the Company regarding topics such as company operation, industrial

development trend, and future strategic plan of the Company, and researched and proposed suggestions for the long-term

development strategy and significant investment decisions of the Company.

2. Audit Committee


75

During the reporting period, the term of office of Mr. Frederic BERAHA, the former independent director, expired and Mr.

Vincent LEONARD, former director, resigned due to personal reasons, so Mr. Jean-Michel PIVETEAU was appointed as the new

member of the Committee. Audit Committee consist of Mr. Wang Baoqing and Mr. Jean-Michel PIVETEAU; of which, Mr. Wang

Baoqing is convener of the committee. During the reporting period, Audit Committee convened four meetings totally (two on-site

meetings), in order to supervise the establishment and implementation of internal audit plan, check and approve internal audit

execution and annual work report, and urge the audit of important items such as connected transactions, purchasing business, etc.

Besides, the Committee shall supervise preparatory work for compliance of internal control; pay close attention to implementation of

internal control, preparation and implementation of financial system and shared center process. Before the coming of certified

accountants for annual auditing and after the issuing of preliminary auditing opinions, the Audit Committee would communicate with

the accountants and urge the related certified accountants to timely submit the auditing report.

3. Compensation Committee

During the reporting period, the term of office of Ms. Xiaoqing PELLEMELE and Frederic BERAHA, former independent

directors, expired. The Company appointed Mr. Hervé MACHENAUD and Mr. Jean-Michel PIVETEAU as the members of the

Committee. Compensation Committee consists of Mr. Hervé MACHENAUD, Mr. Jean-Michel PIVETEAU and Mr. Harry TOURET;

of which, Mr. Hervé MACHENAUD is convener of the Committee. During the reporting period, Compensation Committee convened

two meetings totally, to review payment and appraisal for the Company’s directors, supervisors and top managers. In addition, the

committee checked whether to meet the unlocking condition of 2017 Restricted Stock Incentive Plan for Restricted Stock in the

second unlocking period and the Reserved Restricted Stock in the first unlocking period and ratified list of incentive objects.

VII. Work of the Board of Supervisors

In the reporting period, did the Board of Supervisors find any risk about the Company?

□ Yes √ No

The Board of Supervisors held no objection to the issues supervised in the reporting period.

VIII. Appraisal of and Incentives for Top Management

The Company has established a perfect performance appraisal system and salary system for top management staff, which

directly connects the work performance of top management staffs with their salary. Based on the indicators of the KPI system

established at the beginning of 2018, the Company has conducted the year-end appraisal in January, 2020 of top management staffs

of their working abilities, duty performance and target fulfillment, meanwhile, distributed annual performance salary.

During the reporting period, the Company unlocked the Restricted Stock allowed to be unlocked in the second unlocking period

and the Reserved Restricted Stock unlockable in the first unlocking period which are granted to top management who have Restricted

Stock in accordance with the 2017 Restricted Stock Incentive Plan (Revised Draft). The Compensation Committee of the Board of

Directors, as the special committee under the Board of Directors, reviewed the appraisal result.

IX. Evaluation Report of Internal Control

1. Significant internal control defects of internal control found in the reporting period

□ Yes √ No


76

2. Self-evaluation report of internal control

Date of disclosure of full text of Evaluation

Report of Internal Control April 29, 2020

Reference for full text of Evaluation

Report of Internal Control

Reference can be made to Self-Evaluation Report on Internal Control 2019 published

in Securities Times, China Securities Journal, Securities Daily and

http://www.cninfo.com.cn.

The proportion of total unit assets involved

in evaluation scope in total assets of

financial statement

100.00%

The proportion of operating revenue

involved in evaluation scope in operating

revenue of financial statement

100.00%

Defect Identification Standard

Categories Financial report Non-financial report


77

Qualitative standard

1) Identification standard of significant

defects: fraud of directors, supervisors and

top management of the Company;

modification of financial statement having

been published; any material misstatement of

the current period financial statement found

by CPA but having not been found during

internal control; and invalid supervision by

the Audit Committee, the Board of

Supervisors and internal audit authority for

internal control. 2) Identification standard of

important defects: selection and application

of accounting policies violating accepted

accounting criteria; one or several defect(s)

on the control of closing financial statement,

and failure of reasonably guarantee the

prepared financial statement is true and

accurate; no check-and-balance system and

control measures preventing fraud

established. 3) General defects refer to other

internal control defects not constituting the

standards of significant defects and

important defects.


defects: unscientific decision procedure

of the Company, such as significant

decision-making mistakes which cause

the M &A of significant enterprise

project to fail in reaching expected

objectives; violation of national laws and

regulations, such as heavy losses of

enterprise caused by non-conforming

products; significant adverse influence

existing in the production and operation

of enterprise caused by severe loss of

medium and senior management persons

and senior technicians; and lack of

system control or systematic invalidation

for important business. 2) Identification

standard of important defects: defects on

important business systems; failure of

rectification for important defects found

during internal control and internal

supervision; and severe loss of business

persons on key posts. 3) Identification

standard of general defects: defects on

general business systems; failure of

rectification for general defects found

during internal control and internal

supervision; and severe loss of business

persons on general posts.


78

Quantitative standard


defects: potential misstatement of total

profit≥5% of total profit; potential

misstatement of total operating revenue≥2%

of total operating revenue; and potential

misstatement of total assets≥2% of total

assets. 2) Identification standard of

important defects: 3% of total profit

≤potential misstatement of total profit<5% of

total profit; 1% of total operating revenue

≤potential misstatement of total operating

revenue ≤2% of total operating revenue; and

1% of total assets ≤potential misstatement of

total assets ≤2% of total assets. 3)

Identification standard of general defects:

potential misstatement of total profit<3% of

total profit; potential misstatement of total

operating revenue <1% of total operating

revenue; and potential misstatement of total

assets<1% of total assets.


defects: direct property loss amount

taking above (including) 0.5% in total

assets, and causing significant adverse

influence on the Company. 2)

Identification standard of important

defects: direct property loss amount

taking above (including) 0.1% but no

more than 0.5% in total assets, and

causing no significant adverse influence

on the Company. 3) Identification

standard of general defects: direct

property loss amount taking below 0.1%

in total assets and causing no significant

adverse influence on the Company.

Qty. of significant defects in financial

statement (pcs) 0

Qty. of significant defects in non-financial

statement (pcs) 0

Qty. of important defects in financial

statement (pcs) 0

Qty. of important defects in non-financial

statement (pcs) 0

X. Audit Report or Authentication Report of Internal Control

Evaluation Report of Internal Control

Deliberations in the Evaluation Report of Internal Control

We think that Supor has maintained effective internal control related to financial statements in all significant aspects according to

the Basic Standards for Internal Control of Enterprises and related provisions on December 31, 2019

Disclosure of Evaluation Report of

Internal Control Disclosed

Date of disclosure of full text of

Evaluation Report of Internal

Control

April 29, 2020


79

Index of disclosure of full text of

Evaluation Report of Internal

Control

Reference can be made to the Evaluation Report on Internal Control 2019 published in

Securities Times, China Securities Journal, Securities Daily and http://www.cninfo.com.cn.

Opinion type of Evaluation Report

of Internal Control Standard opinions with no reservation

Significant defect in non-financial

statements No

Did the accounting firm issue the Evaluation Report of Internal Control with non-standard opinions

□ Yes √ No

Is the Evaluation Report of Internal Control issued by the accounting firm consistent with the opinions in self-evaluation report of the

board of directors

√ Yes □ No


80

SECTION XI COMPANY’S BONDS

Does the Company have company bonds that are issued publicly, listed in stock exchange, immature at the submission date of annual

report or cannot be cashed totally after maturity?

No


81

SECTION XII FINANCIAL REPORT

I. Audit report

Type of audit opinion Standard opinions with no reservation

Date of signature of audit report April 28th ,2020

Name of audit organization Union Power Certified Public Accountants (Special General

Partnership)

Audit report document No. ZHSZ No. [2020]010382

Name of certified accountants Li Wei, Li Huihui

Main Text of Audit Report

(i) Audit opinions

We audited the financial statements of Zhejiang Supor Co., Ltd. (hereinafter referred to as “the Company”), including the

Consolidated and Parent Company’s Balance Sheet as of December 31, 2019, Consolidated and Parent Company’s Profit Statement

2019, Consolidated and Parent Company’s Cash Flow Statement 2019, Consolidated and Parent Company’s Statement of Change in

Stockholder Equity 2019 and related Footnotes to Financial Statements 2019.

We think the attached financial statement was prepared according to the ASBE (Accounting Standards for Business Enterprises)

on all important aspects, and reflected fairly the consolidated and parent company’s financial status of Supor by December 31, 2019,

the consolidated and parent company’s business performance and cash flow of Supor in 2019.

(ii) Basis of forming audit opinions

We implemented our audit works strictly according to the stipulations of Auditing Standard of Chinese Certified Public

Accountants. The content of “Responsibility of Certified Public Accountant for Audit of Financial Statement” in the Audit Report

further describes our responsibility under these standards. According to the code of professional ethics of Chinese Certified Public

Accountants, we are independent of Supor, and we have fulfilled the other responsibilities on the aspects of professional ethics. We

believe the audit evidences acquired by us are sufficient and appropriate, and provide a basis for expressing our audit opinions.

(iii) Key Audit Items

The key audit items are from our professional judgment; from our perspective, the key audit items are most important to the

audit of financial statement. The key audit items will be audited under the background that the financial statement will be wholly

audited to form audit opinions; we do not express independent opinions on these items. We confirm that the following items are key

audit items to be discussed in the audit report.

1. Recognition of income

Key Audit Items Countermeasures

See the accounting policy described by “V. Critical

Accounting Policy and Accounting Estimate” (22 – Income) and

“VII. Annotations to Items in Consolidated Financial Statement”

(29 – Operating Income/Cost) in Footnotes to Financial

Statements.

Supor is specially engaged in the R&D, production and

distribution of kitchenware, stainless steel products, metalware,

1. Understand and evaluate the design and operation effectiveness

of key internal control related to the recognition of income made

by the company management;

2. Select sample to inspect sales contract, examine contractual

clause and condition related to risk and remuneration transfer of

commodity ownership right, evaluate whether the SUPOR

income recognition time point complies with the requirements of


82

small domestic appliances and cookware; its products are

cookware and small kitchen appliances.

Since the income is one of the key performance indicators,

and the equity incentive policy was launched by Supor in 2017,

which gave clear amount requirements for Supor’s domestic sales

income in following four years from 2017. The higher

performance stress increases the inherent risk that the company

management manipulates income recognition time point for the

purpose of achieving performance target or expectations; therefore

we identified the income recognition of Supor as the key audit

item.

accounting standards for business enterprises or not;

3. Perform analytical review procedures to identify abnormal

changes, including analysis by sales channel, customer analysis,

product analysis and monthly analysis.

4. Select sample of income transaction recorded in this year and

check relevant invoice, sales contract, shipping order and sign-off

information; carry out crossing check and evaluate relevant

income to confirm accounting policy of income recognition is

met.

5. Spot check original documents such as shipping order and

customs declaration form and trace to accounting record, to check

whether all sales meeting condition are recorded in account book.

6. Select sample of income transaction to be recorded before and

after the balance sheet date, check the outbound delivery order

and other supporting documents, evaluate whether the income

transaction is recorded within the appropriate accounting period

or not.

7. Check whether subsidiaries use SAP recognize the sales

income of this year is SAP automatic bookkeeping, and

whether there is manual book entry or not.

8. Send confirmation request to parts of customers oriented to

sales income of this year, to confirm sales amount of 2019 and

balance of accounts receivable as of December 31, 2019.

2. Inventory falling price reserves


See the accounting policy described by “V. Critical

Accounting Policy and Accounting Estimate” (11 – Inventory) and

“VII. Annotations to Items in Consolidated Financial Statement”

(7 – Inventory) in Footnotes to Financial Statements.

By December 31, 2019, the original value of inventory on the

consolidated financial statement of Supor was RMB

2,303,192,187.98, and the inventory falling price reserves were

RMB 55,579,287.98.

Due to the huge inventory amount, and the company

management made significant judgment when determining

inventory falling price reserves, we determine the inventory falling

price reserves as the key audit item.

1. Understand the management’s process about accruing process

of inventory falling price reserves and evaluate its key internal

control;

2. Supervise the inventory process and care about whether

defective or unsalable inventory is identified;

3. Recheck the turnover process of inventory according to the

receiving, delivery and storage statement of inventory, and

recalculate the depreciation of inventory according to the

accounting policy;

4. Evaluate assumptions and estimates on net realizable value

made by management layer based on the available market

information (such as e-commerce platforms including Tmall,

JD.com, Suning, and Gome).

5. Understand actual disposal in 2018 of provision for impairment

of inventories made at the beginning of this year and implement

analytical review for the change of the provision for impairment

of inventories.

3. Related party relationships and completeness of its transaction disclosure



83

See “XII. Related Party and Connected Transactions” of

Footnotes to Financial Statements.

By December 31, 2019, SEB Group held 81.19% stocks of

Supor indirectly via its wholly-owned subsidiary SEB

Internationale; it belongs to the absolute shareholding. Meanwhile

Supor and internal related party of SEB Group were involved in

different transaction categories of connected transaction with

significant amount, and there was the risk of failing to disclose all

relationships among related parties and connected transactions in

Footnotes to Financial Statements. Therefore, we cared about the

completeness of connected transaction disclosure by deeming it as

the key audit item.

1. Evaluate and test the internal control on the related-party

relationships and its transactions identified and disclosed by

Supor, such as company management makes double check on

related party list regularly, executes related party account

checking regularly, and follows up difference in account

statement.

2. Obtain the related party relationship list provided by company

management, execute the following procedures:

·Check and verify the information acquired from the related

party relationship list exported from the financial system and

from other open channels;

·Double-check significant sales contract, purchase contract and

other contracts, identify whether there is undisclosed related party

relationships;

3. Otain the related-party transaction accrual and balance

breakdown provided by company management, and execute the

following procedures:

·Check and verify them with the financial record;

·Make sample check on related-party transaction accrual and

balance’s account checking results;

·Make sample check on letters of conformation of related-party

transaction accrual and balance;

·Make sample check on the one whether related-party

transaction accrual matches with the contract.

4. Check and verify the aforesaid related-party relationship,

related-party transaction accrual and balance with the information

disclosed by financial statement, so as to assess whether the

disclosure is complete and accurate.

(iv) Other information

The company management of Supor is responsible for other information. Other information includes the information covered by

the Annual Report 2019, but excludes the financial statement and our audit report.

Our audit opinions on financial statement do not cover other information, and we do not express any authentication conclusions

on other information.

Integrated with our audit on financial statement, our responsibility is to read other information. In this process, we consider

whether the other information is significantly different from the information we will acquire from our audit or whether the other

information has significant error.

Based on the works we have already executed, if we confirm the other information has significant error, we should report the

fact. On this aspect, we do not need to report any items.

(v) Responsibility of company management and governance layer on financial statement

The company management of Supor (hereinafter referred to as the company management) is responsible for preparing financial

statement according to the stipulations of ASBE (Accounting Standards for Business Enterprises) to make it realize fair presentation,

designing, executing and maintaining the required internal control to keep the financial statement free of material misstatement

caused by fraudulent practice or error.

When preparing the financial statement, the company management is responsible for evaluating the sustainable operation ability


84

of Supor, disclosing the items related to sustainable operation (if any), and use going-concern assumption; unless otherwise that the

company management is planning to liquidate Supor, terminate its operation or have no other realistic choice.

The governance layer is responsible for supervising the financial statement process of Supor.

(vi) Responsibility of certified public accountant for financial statement audit

Our objective is to acquire rational guarantee for keeping the financial statement free of material misstatement caused by

fraudulent practice or error and providing the audit report containing audit opinions. The rational guarantee is a high-level guarantee,

but it cannot guarantee that a materials misstatement can be found if it exists when we audit according to the auditing standard. The

misstatement may be caused by fraudulent practice or error. If a single or summarized rational expectation on misstatement may

cause certain influence when financial statement user makes economic decision in accordance with the financial statement, the

misstatement will be deemed as “significant”.

In the process of our audit according to the auditing standards, we used our professional judgment and retained our professional

skepticism. Meanwhile we executed the following works:

(1) Identify and evaluate material misstatement risk of financial statement caused by fraudulent practice or error, design and

implement audit procedures to cope with these risks, acquire sufficient and appropriate audit evidences, and use them as the basis for

expressing audit opinions. A fraudulent practice may involve in collusion, counterfeit, deliberate omission, false statement or may be

above the internal control, so the risk that material misstatement caused by fraudulent practice may not be found is higher than the

risk that material misstatement caused by error may not be found.

(2) Understand the internal control related to audit and design appropriate audit procedures.

(3) Evaluate the appropriateness of the accounting policy selected by company management and the rationality of the

accounting estimate and related disclosure made by the company management.

(4) Make conclusion for the appropriateness of the going-concern assumption used by company management. Meanwhile,

make conclusions for the one whether there is significant uncertainty in the issue or item which may result in substantive doubt on

the sustainable operation ability of Supor in accordance with the acquired audit evidences. If our conclusion thinks that there is

significant uncertainty, the auditing standard requires us to remind financial statement user in our audit report of paying attention to

the related disclosure in the financial statement. If the disclosure is not sufficient, we should present modified audit report. Our

conclusion is based on the information that is available by the audit report date. However future issue or circumstance may result in

unsustainable operation to Supor.

(5) Evaluate the overall presentation, structure and contents of financial statement, evaluate whether financial statement

presents related transactions and items fairly.

(6) Acquire sufficient and appropriate audit evidences for financial information of entity activity or business activity of Supor,

express opinions on financial statement. We are responsible for guiding, supervising and executing the audit of the group. We bear

full responsibility for audit opinions.

We communicated audit scope, time schedule and significant audit finding and other issues with company governance layer,

including the internal control defect that is worthy of noting in the audit process.

We have provided declaration to the company governance layer that we have abided by the professional ethics requirements

related to independency, and have communicated with the company governance layer all relationships and other issues those are

thought to affect our independency, as well as the related precautionary measures (if any).

In the issue we communicated with the company governance layer, we determined which issues are most important to the

financial statement audit, so which constitutes the key audit items. We described these items in our audit report, unless otherwise

these items are prohibited to openly disclose by law and regulation, or under few circumstances, if according to an rational

expectation, when negative consequence of communicating an issue in the audit report may exceed its benefit on the aspect of public

benefit, we confirm that we will not communicate the issue in our audit report.


85

UNION POWER CERTIFIED PUBLIC ACCOUNTANTS (SPECIAL GENERAL PARTNERSHIP) Chinese Certified Public

Accountant: Li Wei

(Project partner):

Chinese Certified Public Accountant: Li Huihui

Wuhan, China

April 28, 2020

II. Financial statement

Unit of statement in notes to financial statement: RMB Yuan

1. Consolidated balance sheet

Compiled by: Zhejiang Supor Co., Ltd.

Unit: Yuan

Item December 31, 2019 December 31, 2018

Current assets:

Cash and bank balances 1,308,132,657.16 1,416,762,574.83

Settlement reserve

Loans to other banks

Transactional financial assets 1,264,563,042.79

Financial assets held at fair value through profit or loss 435,241,736.40

Derivative financial assets

Notes receivable 701,179,379.24

Accounts receivable 1,796,909,432.40 1,727,619,712.96

Financing of receivables 1,186,980,101.71

Advance payment 278,545,463.04 216,573,318.30

Premiums receivable

Reinsurance accounts receivable

Reinsurance contract reserve receivable

Other receivables 14,230,736.62 143,352,998.18

Where: interest receivable 600,649.75

Dividend receivable

Reverse-REPO financial assets


86

Inventories 2,247,612,900.00 2,361,653,181.94

Contract assets

Held-for-sale assets

Non-current assets due within one year

Other current assets 1,732,984,689.16 1,990,934,740.49

Total current assets 9,829,959,022.88 8,993,317,642.34

Non-current assets

Loans and advances granted

Debt investment

Available-for-sale financial assets

Other debt investments

Held-for-maturity investment

Long-term receivables

Long-term equity investment 61,917,730.62 60,646,438.46

Other equity instrument investments

Other non-current assets

Investment properties

Fixed assets 908,982,690.72 868,297,081.06

Construction in progress 215,167,399.12 40,562,136.79

Productive biological assets

Oil and gas assets

Use right assets

Intangible assets 465,546,894.17 397,272,432.11

Development expenditures

Goodwill

Long-term unamortized expenses 2,168,302.35 3,284,532.30

Deferred income tax assets 364,211,946.59 269,780,914.15


Total non-current assets 2,017,994,963.57 1,639,843,534.87

Total assets 11,847,953,986.45 10,633,161,177.21

Current liabilities:

Short-term borrowings

Central bank loan

Loans from others


87

Transactional financial liabilities

Financial liabilities held at fair value through profit or loss

Derivative financial liabilities

Notes payable

Accounts payable 3,011,464,656.36 2,953,812,235.17

Advances received 1,106,996,534.96 1,207,916,762.75

Contract liabilities

Proceeds from sale of repurchase financial assets

Deposit taken and interbank deposit

Proceeds from security transaction agency

Proceeds from security underwriting agency

Employee pay payable 300,734,908.98 289,033,981.74

Taxes payable 172,591,751.41 162,065,893.88

Other payables 93,696,839.73 95,355,792.24

Where: interest payable

Dividend payable

Handling fee and commission payable


Held-for-sale liabilities

Non-current liabilities due within one year

Other current liabilities 290,585,764.00

Total current liabilities 4,976,070,455.44 4,708,184,665.78

Non-current liabilities

Reinsurance contract reserve

Long-term borrowings

Bonds payable

Where: preferred shares

Perpetual bond

Lease obligation

Long-term payables

Long-term employee pay payable 3,683,907.11 4,524,667.94

Estimated liabilities 21,150,000.00 10,150,000.00

Deferred income

Deferred income tax liabilities 2,436,047.01 3,234,750.00


88

Other non-current liabilities

Total non-current liabilities 27,269,954.12 17,909,417.94

Total liabilities 5,003,340,409.56 4,726,094,083.72

Owner’s equity:

Share capital 821,119,910.00 821,243,960.00

Other equity instruments


Perpetual bond

Capital reserves 194,633,350.10 139,529,530.66

Minus: treasury stock 4,342,472.56 3,868,950.00

Other comprehensive incomes -20,313,446.20 -24,490,354.80

Special reserves

Surplus reserve 401,648,181.64 401,648,181.64

General risk reserve

Undistributed profit 5,443,671,509.58 4,573,275,094.31

Total owner’s equity belonging to parent company 6,836,417,032.56 5,907,337,461.81

Minority equity 8,196,544.33 -270,368.32

Total owner’s equity 6,844,613,576.89 5,907,067,093.49

Total liabilities and owner’s equity 11,847,953,986.45 10,633,161,177.21

Legal representative: Thierry de LA TOUR D’RTAISE Person in charge of accounting: Xu Bo Person in charge of

accounting department: Xu Bo

2. Balance sheet of parent company

Unit: Yuan

Item December 31, 2019 December 31, 2018

Current assets:

Cash and bank balances 877,009,108.98 466,625,941.96

Transactional financial assets 702,525,313.39

Financial assets held at fair value through profit or loss 304,655,466.53



Accounts receivable 341,182,660.24 413,073,855.58

Financing of receivables 22,735,319.00

Advance payment 41,392,385.97 39,325,985.53


89


Where: interest receivable 5,062.50

Dividend receivable

Inventories 146,997,997.90 187,734,497.22

Contract assets





Non-current assets

Debt investment





Long-term equity investment 2,975,731,261.81 2,787,966,574.79




Fixed assets 168,793,198.76 142,684,254.10



Oil and gas assets

Use right assets



Goodwill

Long-term unamortized expenses




Total assets 7,102,299,118.22 6,208,404,756.48




90


Financial liabilities held at fair value through profit or loss


Notes payable

Accounts payable 209,574,572.27 208,479,126.48

Advances received 6,231,654.41 5,035,058.53



Taxes payable 6,323,506.14 2,884,844.16

Other payables 3,852,130,178.87 3,063,662,415.83


Dividend payable



Other current liabilities




Bonds payable


Perpetual bond

Lease obligation

Long-term payables

Long-term employee pay payable

Estimated liabilities

Deferred income

Deferred income tax liabilities 378,797.01


Total non-current liabilities 378,797.01


Owner’s equity:

Share capital 821,119,910.00 821,243,960.00




91

Perpetual bond



Other comprehensive incomes

Special reserves

Surplus reserve 410,621,980.00 410,621,980.00




3. Consolidated profit statement

Unit: Yuan

Item 2019 2018

I. Total operating revenue 19,853,477,882.97 17,851,264,801.72

Where: operating revenue 19,853,477,882.97 17,851,264,801.72

Interest revenue

Premium earned

Revenue from handling charges and commission

II. Total operating cost 17,752,977,819.33 16,010,890,836.59

Where: operating cost 13,668,228,395.96 12,341,938,965.93

Interest expense

Expense for handling fee and commission

Surrender value

Net payments for insurance claims

Net amount of withdrawn reserve fund for insured liability

Premium bonus expenditures

Reinsurance expenses

Taxes and surcharges 123,738,246.51 113,764,536.95

Selling expenses 3,206,043,042.00 2,813,288,857.74

Administrative expenses 345,732,916.45 344,810,539.64

Research and development expenses 452,560,910.68 402,632,732.79

Financial expenses -43,325,692.27 -5,544,796.46

Where: interest expenses 1,045,657.32 2,474,506.93

Interest revenue 43,916,125.68 7,928,053.60


92

Plus: other incomes 166,638,678.35 111,289,110.59

Return on investment (“-” for loss) 67,253,304.83 86,896,061.23

Where: return on investment on associated enterprise and

cooperative enterprise 4,843,516.71 3,196,717.87

Income from termination of financial assets measured by

amortized cost

Exchange earning (“-” for loss)

Net exposure hedging gains (“-” for loss)

Gains on changes of fair value (“-” for loss) 4,563,042.79 -10,288,760.43

Credit impairment loss (“-” for loss) -2,439,857.31

Asset impairment loss (“-” for loss) -38,502,625.50 -46,008,075.99

Return on assets disposal (“-” for loss) -1,711,476.60 -327,730.99

III. Operating profit (“-” for loss) 2,296,301,130.20 1,981,934,569.54

Plus: non-operating revenue 4,570,807.72 11,144,521.49

Minus: non-operating expenditure 27,414,104.13 11,540,834.47

IV. Total profit (“-” for total loss) 2,273,457,833.79 1,981,538,256.56

Minus: income tax expenses 357,804,716.77 312,757,023.23

V. Net profit (“-” for net loss) 1,915,653,117.02 1,668,781,233.33

(I) By business continuity

1. Net profit under continuing operating (“-” for net loss) 1,915,653,117.02 1,668,781,233.33

2. Net profit under discontinuing operation (“-” for net loss)

(II) By ownership

1. Net profit belonging to the owners of parent company 1,919,914,191.25 1,669,873,440.00

2. Minority interest -4,261,074.23 -1,092,206.67

VI. After-tax net amount of other comprehensive income 4,157,206.81 5,001,974.93

After-tax net amount of other comprehensive income belonging to the

owners of parent company 4,176,908.60 5,003,409.47

(I) Other comprehensive incomes that can not be reclassified into profit

and loss

1. Remeasured amount of changes in defined benefit plan

2. Other comprehensive income that can not be transferred to

gain and loss under the equity law

3. Changes in the fair value of other equity instrument

investments

4. Changes in the fair value of the Company’s own credit risk

5. Others


93

(II) Other comprehensive incomes to be reclassified into the profit and

loss 4,176,908.60 5,003,409.47

1. Other comprehensive income that can be transferred to gain

and loss under the equity law

2. Changes in the fair value of other debt investments

3. Earnings from change in fair value of financial assets available

for sales

4. Amount of financial assets reclassified into other

comprehensive income

5. Held-to-maturity investments reclassified as gains and losses

on available-for-sale financial assets

6. Credit impairment reserve for other debt investments

7. Cash flow hedging reserve

8. Foreign currency translation difference in financial statements 4,176,908.60 5,003,409.47

9. Others

After-tax net profit of other comprehensive income belonging to minority

shareholder -19,701.79 -1,434.54

VII. Total comprehensive income 1,919,810,323.83 1,673,783,208.26

Total comprehensive income attributed to owners of parent company 1,924,091,099.85 1,674,876,849.47

Total comprehensive income attributed to minority shareholders -4,280,776.02 -1,093,641.21

VIII. Earnings per share:

(I) Basic earnings per share (EPS) 2.347 2.041

(II) Diluted earnings per share (EPS) 2.338 2.033

If the enterprise under the same control is merged, the net profit realized by the party to be merged before merger was 0 yuan, the net

profit realized by the party to be merged during the prior period was 0 yuan

Legal representative: Thierry de LA TOUR D’RTAISE Person in charge of accounting: Xu Bo Person in charge of

accounting department: Xu Bo

4. Profit statement of parent company

Unit: Yuan

Item 2019 2018

I. Operating income 2,256,358,529.23 2,322,036,922.30

Minus: operating costs 1,740,747,009.65 1,813,132,446.23

Taxes and surcharges 15,658,922.74 12,055,916.78

Selling expenses 53,699,115.64 51,287,097.65


94

Administrative expenses 118,031,797.32 128,906,934.41

Research and development expenses 78,464,653.41 80,521,812.73

Financial expenses 154,545.30 18,276,699.20

Where: interest expenses 34,103,130.03 21,925,468.96

Interest revenue 31,075,718.14 2,652,398.64

Plus: other incomes 23,042,341.42 35,871,916.69

Return on investment (“-” for loss) 874,434,061.96 778,016,473.70

Where: return on investment on associated enterprise and

cooperative enterprise 4,843,516.71 3,196,717.87

Income from termination of financial assets measured by

amortized cost (“-” for loss)

Net exposure hedging gains (“-” for loss)

Gains on changes of fair value (“-” for loss) 2,525,313.39 -2,478,573.28

Credit impairment loss (“-” for loss) 4,161,948.94

Asset impairment loss (“-” for loss) -2,635,356.56 -1,574,425.96

Return on assets disposal (“-” for loss) -894,884.90 -87,363.63

II. Operating profit (“-” for loss) 1,150,235,909.42 1,027,604,042.82

Plus: non-operating revenue 1,461,263.01 6,234,290.04

Minus: non-operating expenditure 4,685,259.15 4,148,016.01

III. Total profit (“-” for total loss) 1,147,011,913.28 1,029,690,316.85

Minus: income tax expenses 47,287,779.47 39,252,415.69

IV. Net profit (“-” for net loss) 1,099,724,133.81 990,437,901.16

(I) Net profit under continuing operating (“-” for net loss) 1,099,724,133.81 990,437,901.16

(II) Net profit under discontinuing operation (“-” for net loss)

V. After-tax net amount of other comprehensive income

(I) Other comprehensive incomes that can not be reclassified into profit

and loss

1. Remeasured amount of changes in defined benefit plan

2. Other comprehensive income that can not be transferred to

gain and loss under the equity law

3. Changes in the fair value of other equity instrument

investments

4. Changes in the fair value of the Company’s own credit risk

5. Others

(II) Other comprehensive incomes to be reclassified into the profit and

loss


95

1. Other comprehensive income that can be transferred to gain

and loss under the equity law

2. Changes in the fair value of other debt investments

3. Earnings from change in fair value of financial assets available

for sales

4. Amount of financial assets reclassified into other

comprehensive income

5. Held-to-maturity investments reclassified as gains and losses

on available-for-sale financial assets

6. Credit impairment reserve for other debt investments

7. Cash flow hedging reserve

8. Foreign currency translation difference in financial statements

9. Others

VI. Total comprehensive income 1,099,724,133.81 990,437,901.16

VII. Earnings per share:

(I) Basic earnings per share (EPS)

(II) Diluted earnings per share (EPS)

5. Consolidated cash flow statement:

Unit: Yuan

Item 2019 2018

I. Cash flows from business activities

Cash received from sales of goods or rendering of services 20,987,627,971.98 18,753,763,889.59

Net increase of client deposit and interbank deposit

Net increase of central bank loans

Net increase of loans from other financial institutions

Cash received from original insurance contract premium

Net cash received from reinsurance

Net increase of policy-holder deposit and investment

Cash receipts from interest, handling charges and commission

Net increase of loans from others

Net increment of repurchase capital

Net cash from security transaction agency

Tax refund received 253,301,218.86 197,071,052.71

Other cash receipts related to operating activities 307,686,528.82 137,853,941.46


96

Sub-total of cash inflows from operating activities 21,548,615,719.66 19,088,688,883.76

Cash payments for purchasing goods and receiving services 15,394,115,893.50 13,288,113,877.56

Net increment of customer loans and advances

Net increase of central bank deposit and interbank deposit

Cash payment for insurance indemnities of original insurance contracts

Net increase of loans from others

Cash payment of interest, handling charges and commission

Cash payment of policy bonus

Cash paid to and for employees 1,570,784,787.25 1,499,672,639.49

Taxes paid 1,067,360,644.90 858,454,442.77

Other cash payments related to operating activities 1,783,413,416.89 1,428,789,179.10

Subtotal of cash outflows from operating activities 19,815,674,742.54 17,075,030,138.92

Net cash flows from operating activities 1,732,940,977.12 2,013,658,744.84

II. Cash flows from investing activities:

Cash received from return of investments

Cash received from investment income 39,216,159.25 89,713,558.92

Net cash received from disposal of fixed assets, intangible assets and

other long-term assets 12,920,951.95 3,558,267.04

Net cash received from disposal of subsidiaries and other business units

Other cash receipts related to operating activities 2,345,900,000.00 2,226,000,000.00

Subtotal of cash inflows from investing activities 2,398,037,111.20 2,319,271,825.96

Cash paid for acquiring fixed assets, intangible assets and other

long-term assets 454,911,537.10 202,286,032.36

Cash paid for investment

Net increase of pledge loans

Net cash paid for acquiring subsidiaries and other business units 274,000,000.00

Other cash payments related to investing activities 2,810,000,000.00 2,347,047,257.18

Sub-total of cash outflow from investment activity 3,264,911,537.10 2,823,333,289.54

Net cash flow from investment activities 866,874,425.90 -504,061,463.58

III. Cash flows from financing activities:

Cash received from investment by others 12,747,688.67

Where: cash received by subsidiaries from minority shareholder

investment 12,747,688.67

Cash received from obtaining borrowings

Other cash receipts related to financing activities


97

Sub-total of cash inflows from financing activities 12,747,688.67

Cash paid for debt repayment

Cash paid for distribution of dividends or profits or for payment of

interest 1,049,517,775.98 968,565,192.80

Where: dividends or profits paid by subsidiaries to minority

shareholders

Other cash payments related to financing activities 1,438,172.56

Subtotal of cash outflows from financing activities 1,050,955,948.54 968,565,192.80

Net cash flows from financing activities -1,038,208,259.87 -968,565,192.80

IV. Impact of exchange rate changes on cash and cash equivalents 5,511,790.98 6,150,595.16

V. Net increase in cash and cash equivalents 166,629,917.67 547,182,683.62

Plus: balance of cash and cash equivalents at the beginning of the period 1,400,762,574.83 853,579,891.21

VI. Balance of cash and cash equivalents at the end of the period 1,234,132,657.16 1,400,762,574.83

6. Cash flow statement of parent company

Unit: Yuan

Item 2019 2018

I. Cash flows from business activities

Cash received from sales of goods or rendering of services 2,429,648,136.56 2,374,681,897.68

Tax refund received 109,045,458.11 66,502,468.37

Other cash receipts related to operating activities 55,918,407.47 37,795,851.76

Sub-total of cash inflows from operating activities 2,594,612,002.14 2,478,980,217.81

Cash payments for purchasing goods and receiving services 1,734,295,249.13 1,994,329,928.56

Cash paid to and for employees 231,915,759.38 198,652,967.64

Taxes paid 57,155,571.49 54,584,143.38

Other cash payments related to operating activities 132,493,746.46 141,432,418.97

Subtotal of cash outflows from operating activities 2,155,860,326.46 2,388,999,458.55

Net cash flows from operating activities 438,751,675.68 89,980,759.26

II. Cash flows from investing activities:

Cash received from return of investments

Cash received from investment income 844,615,269.45 1,179,628,881.79

Net cash received from disposal of fixed assets, intangible assets and

other long-term assets 935,216.08 1,491,610.75

Net cash received from disposal of subsidiaries and other business units

Other cash receipts related to operating activities 2,771,029,818.82 1,371,803,704.95


98

Subtotal of cash inflows from investing activities 3,616,580,304.35 2,552,924,197.49

Cash paid for acquiring fixed assets, intangible assets and other

long-term assets 44,765,971.31 54,587,921.04

Cash paid for investment 1,899,900,000.00

Net cash paid for acquiring subsidiaries and other business units 170,201,756.95 394,000,000.00

Other cash payments related to investing activities 3,140,256,040.51 52,135,062.74

Sub-total of cash outflow from investment activity 3,355,223,768.77 2,400,622,983.78

Net cash flow from investment activities 261,356,535.58 152,301,213.71

III. Cash flows from financing activities:

Cash received from investment by others

Cash received from obtaining borrowings

Other cash receipts related to financing activities 790,824,882.07 890,566,342.94

Sub-total of cash inflows from financing activities 790,824,882.07 890,566,342.94

Cash paid for debt repayment

Cash paid for distribution of dividends or profits or for payment of

interest 1,083,620,905.99 990,490,661.76

Other cash payments related to financing activities

Subtotal of cash outflows from financing activities 1,083,620,905.99 990,490,661.76

Net cash flows from financing activities -292,796,023.92 -99,924,318.82

IV. Impact of exchange rate changes on cash and cash equivalents 3,070,979.68 1,297,479.01

V. Net increase in cash and cash equivalents 410,383,167.02 143,655,133.16

Plus: balance of cash and cash equivalents at the beginning of the period 466,625,941.96 322,970,808.80

VI. Balance of cash and cash equivalents at the end of the period 877,009,108.98 466,625,941.96

7. Statement of Changes in Consolidated Owners’ Equity

Amount of this period

Unit: Yuan

Item

2019

Equity attributable to parent company

Minori

ty

equity

Total

owner’

s

equity

Share

capita

l

Other equity

instruments Capital

reserve

s

Minus:

treasur

y stock

Other

compr

ehensi

ve

incom

es

Specia

l

reserve

s

Surplu

s

reserve

Genera

l risk

reserve

Undist

ributed

profit

Others Subtot

al

Prefe

rred

share

s

Perpe

tual

bond

Other

s


99

I. Balance at the

end of prior

year

821,2

43,96

0.00

139,52

9,530.

66

3,868,

950.00

-24,49

0,354.

80

401,64

8,181.

64

4,573,

275,09

4.31

5,907,

337,46

1.81

-270,3

68.32

5,907,

067,09

3.49

Plus:

cumulative

changes of

accounting

policies

Error

correction of

prior period

Merger of

enterprises

under the same

control

Others

II. Balance at

the beginning of

current year

821,2

43,96

0.00

139,52

9,530.

66

3,868,

950.00

-24,49

0,354.

80

401,64

8,181.

64

4,573,

275,09

4.31

5,907,

337,46

1.81

-270,3

68.32

5,907,

067,09

3.49

III. Current

period increase

(or less:

decrease)

-124,

050.0

0

55,103

,819.4

4

473,52

2.56

4,176,

908.60

870,39

6,415.

27

929,07

9,570.

75

8,466,

912.65

937,54

6,483.

40

(i) Total of

comprehensive

incomes

4,176,

908.60

1,919,

914,19

1.25

1,924,

091,09

9.85

-4,280,

776.02

1,919,

810,32

3.83

(ii) Capital

invested and

reduced by the

owner

-124,

050.0

0

55,103

,819.4

4

-964,6

50.00

55,944

,419.4

4

12,747

,688.6

7

68,692

,108.1

1

1. Common

shares invested

by shareholders

2. Capital

invested by

other equity

instrument

holders


100

3. Amount of

share-based

payment

included in

equity

-124,

050.0

0

55,103

,819.4

4

-964,6

50.00

55,944

,419.4

4

55,944

,419.4

4

4. Others

12,747

,688.6

7

12,747

,688.6

7

(III) Profit

distribution

-1,049,

517,77

5.98

-1,049,

517,77

5.98

-1,049,

517,77

5.98

1. Appropriation

of surplus

reserve

2. Appropriation

of general risk

reserve

3. Appropriation

of profit to

owners

-1,049,

517,77

5.98

-1,049,

517,77

5.98

-1,049,

517,77

5.98

4. Others

(IV) Internal

carry-over

within equity

1. Transfer of

capital reserve

to capital

2. Transfer of

surplus reserve

to capital

3. Surplus

reserve to cover

losses

4. Earnings

retained after

carrying over

amount of

changes in

defined benefit

plan


101

5. Earnings

retained after

carrying over

other

comprehensive

incomes

6. Others

(V) Special

reserve

1. Appropriation

of current

period

2. Application

of current

period

(VI) Others 1,438,

172.56

-1,438,

172.56 -1,438,

172.56

IV. Balance at

the end of

current period

821,1

19,91

0.00

194,63

3,350.

10

4,342,

472.56

-20,31

3,446.

20

401,64

8,181.

64

5,443,

671,50

9.58

6,836,

417,03

2.56

8,196,

544.33

6,844,

613,57

6.89

Amount of prior period

Unit: Yuan

Item

Annual Report 2018

Equity attributable to parent company

Minorit

y equity

Total

owner’s

equity

Share

capita

l

Other equity

instruments Capital

reserve

s

Minus:

treasur

y stock

Other

compr

ehensi

ve

incom

es

Specia

l

reserve

s

Surplu

s

reserve

Genera

l risk

reserve

Undist

ributed

profit

Others Subtot

al

Prefe

rred

share

s

Perp

etual

bond

Other

s

I. Balance at

the end of prior

year

821,2

87,61

0.00

93,907

,646.3

7

21,945

,167.6

9

-29,49

3,764.

27

393,89

3,137.

71

3,940,

017,05

1.62

5,197,

666,51

3.74

823,272

.89

5,198,4

89,786.

63

Plus:

cumulative

changes of

accounting

policies


102

Error

correction of

prior period

Merger of

enterprises

under the same

control

168,04

9,265.

82

41,355

,573.6

0

209,40

4,839.

42

209,404

,839.42

Others

II. Balance at

the beginning

of current year

821,2

87,61

0.00

261,95

6,912.

19

21,945

,167.6

9

-29,49

3,764.

27

393,89

3,137.

71

3,981,

372,62

5.22

5,407,

071,35

3.16

823,272

.89

5,407,8

94,626.

05

III. Current

period increase

(or less:

decrease)

-43,6

50.00

-122,4

27,381

.53

-18,07

6,217.

69

5,003,

409.47

7,755,

043.93

591,90

2,469.

09

500,26

6,108.

65

-1,093,

641.21

499,172

,467.44

(i) Total of

comprehensive

incomes

5,003,

409.47

1,669,

873,44

0.00

1,674,

876,84

9.47

-1,093,

641.21

1,673,7

83,208.

26

(ii) Capital

invested and

reduced by the

owner

-43,6

50.00

45,621

,884.2

9

-18,07

6,217.

69

4,300,

000.00

67,954

,451.9

8

67,954,

451.98

1. Common

shares invested

by shareholders

2. Capital

invested by

other equity

instrument

holders

3. Amount of

share-based

payment

included in

equity

-43,6

50.00

45,621

,884.2

9

-18,07

6,217.

69

4,300,

000.00

67,954

,451.9

8

67,954,

451.98

4. Others

(III) Profit

distribution

7,755,

043.93

-976,3

20,236

.73

-968,5

65,192

.80

-968,56

5,192.8

0


103

1.

Appropriation

of surplus

reserve

7,755,

043.93 -7,755,

043.93

2.

Appropriation

of general risk

reserve

3.

Appropriation

of profit to

owners

-968,5

65,192

.80

-968,5

65,192

.80

-968,56

5,192.8

0

4. Others

(IV) Internal

carry-over

within equity

1. Transfer of

capital reserve

to capital

2. Transfer of

surplus reserve

to capital

3. Surplus

reserve to cover

losses

4. Earnings

retained after

carrying over

amount of

changes in

defined benefit

plan

5. Earnings

retained after

carrying over

other

comprehensive

incomes

6. Others

(V) Special

reserve


104

1.

Appropriation

of current

period

2. Application

of current

period

(VI) Others

-168,0

49,265

.82

-105,9

50,734

.18

-274,0

00,000

.00

-274,00

0,000.0

0

IV. Balance at

the end of

current period

821,2

43,96

0.00

139,52

9,530.

66

3,868,

950.00

-24,49

0,354.

80

401,64

8,181.

64

4,573,

275,09

4.31

5,907,

337,46

1.81

-270,36

8.32

5,907,0

67,093.

49

8. Statement of Changes in Owners’ Equity of the Parent Company

Amount of this period

Unit: Yuan

Item

2019

Share

capital

Other equity

instruments Capital

reserves

Minus:

treasury

stock

Other

compreh

ensive

incomes

Special

reserves

Surplus

reserve

Undistr

ibuted

profit

Others

Total

owner’s

equity

Preferr

ed

shares

Perpet

ual

bond

Others

I. Balance at the

end of prior year

821,24

3,960.0

0

589,235,

394.74

3,868,95

0.00

410,621,

980.00

1,050,2

95,609.

89

2,867,527,

994.63

Plus:

cumulative

changes of

accounting

policies

Error

correction of

prior period

Others

II. Balance at the

beginning of

current year

821,24

3,960.0

0

589,235,

394.74

3,868,95

0.00

410,621,

980.00

1,050,2

95,609.

89

2,867,527,

994.63


105

III. Current

period increase

(or less:

decrease)

-124,05

0.00

48,718,7

61.29

473,522.

56

50,206,

357.83

98,327,54

6.56

(i) Total of

comprehensive

incomes

1,099,7

24,133.

81

1,099,724,

133.81

(ii) Capital

invested and

reduced by the

owner

-124,05

0.00

48,718,7

61.29

-964,650

.00

49,559,36

1.29

1. Common

shares invested

by shareholders

2. Capital

invested by other

equity

instrument

holders

3. Amount of

share-based

payment

included in

equity

-124,05

0.00

48,718,7

61.29

-964,650

.00

49,559,36

1.29

4. Others

(III) Profit

distribution

-1,049,

517,77

5.98

-1,049,517

,775.98

1. Appropriation

of surplus

reserve

2. Appropriation

of profit to

owners

-1,049,

517,77

5.98

-1,049,517

,775.98

3. Others

(IV) Internal

carry-over

within equity


106

1. Transfer of

capital reserve to

capital

2. Transfer of

surplus reserve

to capital

3. Surplus

reserve to cover

losses

4. Earnings

retained after

carrying over

amount of

changes in

defined benefit

plan

5. Earnings

retained after

carrying over

other

comprehensive

incomes

6. Others

(V) Special

reserve

1. Appropriation

of current period

2. Application of

current period

(VI) Others 1,438,17

2.56

-1,438,172

.56

IV. Balance at

the end of

current period

821,11

9,910.0

0

637,954,

156.03

4,342,47

2.56

410,621,

980.00

1,100,5

01,967.

72

2,965,855,

541.19

Amount of prior period

Unit: Yuan

Item

Annual Report 2018

Share

capital

Other equity

instruments

Capital

reserves

Minus:

treasury

Other

compre

Special

reserves

Surplus

reserve

Undistrib

uted Others

Total

owner’s


107

Preferr

ed

shares

Perpet

ual

bond

Others

stock hensive

incomes

profit equity

I. Balance at the

end of prior

year

821,28

7,610.

00

608,956

,223.13

21,945,1

67.69

402,866

,936.07

1,031,877

,945.46 2,843,043,5

46.97

Plus:

cumulative

changes of

accounting

policies

Error

correction of

prior period

Others

II. Balance at

the beginning

of current year

821,28

7,610.

00

608,956

,223.13

21,945,1

67.69

402,866

,936.07

1,031,877

,945.46 2,843,043,5

46.97

III. Current

period increase

(or less:

decrease)

-43,65

0.00

-19,720,

828.39

-18,076,

217.69

7,755,0

43.93

18,417,66

4.43 24,484,447.

66

(i) Total of

comprehensive

incomes

990,437,9

01.16

990,437,90

1.16

(ii) Capital

invested and

reduced by the

owner

-43,65

0.00

42,126,

442.99

-18,076,

217.69

4,300,000

.00 64,459,010.

68

1. Common

shares invested

by shareholders

2. Capital

invested by

other equity

instrument

holders


108

3. Amount of

share-based

payment

included in

equity

-43,65

0.00

42,126,

442.99

-18,076,

217.69

4,300,000

.00 64,459,010.

68

4. Others

(III) Profit

distribution

7,755,0

43.93

-976,320,

236.73 -968,565,19

2.80

1.

Appropriation

of surplus

reserve

7,755,0

43.93

-7,755,04

3.93

2.

Appropriation

of profit to

owners

-968,565,

192.80 -968,565,19

2.80

3. Others

(IV) Internal

carry-over

within equity

1. Transfer of

capital reserve

to capital

2. Transfer of

surplus reserve

to capital

3. Surplus

reserve to cover

losses

4. Earnings

retained after

carrying over

amount of

changes in

defined benefit

plan


109

5. Earnings

retained after

carrying over

other

comprehensive

incomes

6. Others

(V) Special

reserve

1.

Appropriation

of current

period

2. Application

of current

period

(VI) Others -61,847,

271.38

-61,847,271

.38

IV. Balance at

the end of

current period

821,24

3,960.

00

589,235

,394.74

3,868,95

0.00

410,621

,980.00

1,050,295

,609.89 2,867,527,9

94.63

III. Company profile

Zhejiang Supor Co., Ltd. (by shares) (“the Company”) is a limited liability company (by shares) transformed on an integral

basis from Zhejiang Supor Cookware Co., Ltd. under the approval of Leading Group for Enterprise Listing of the People’s

Government of Zhejiang Province with No. ZSS [2000] 24 approval document. On November 10, 2000, the Company registered at

Zhejiang Administration for Industry and Commerce. Registered address: Yuhuan City, Zhejiang Province; head office address:

Hangzhou City, Zhejiang Province. The Company’s parent company is SEB INTERNATIONALE S.A.S whose final parent

company is SEB S.A. The Company has a corporate business license numbered 913300007046976861.

The Company and its subsidiaries (hereinafter referred to as “the Group”) are mainly specialized in the R & D, manufacturing

and sales of kitchen utensils, stainless steel products, daily hardware, small household appliance and cookware; the products include

cookware and small household appliances.

The financial statement was released after the approval of the Company’s the 16th meeting of the 6th board of directors on

April 28, 2020.

By December 31, 2019, there were altogether 20 subsidiaries included in the scope of consolidated financial statement. See

Note (IX) “Equity in Other Entities” for details. The consolidation scope of the group in the year increases by 3 companies,

decreases by 0 company. See Note VIII “Change on consolidation scope” for details.


110

IV. Preparation basis of the financial statements

1. Preparation basis

The financial statements of the group are prepared based on the assumption of continuing operation assumption and actual

transactions and items and in accordance with the Accounting Standard for Business Enterprises——Basic Standard (Released CZBL

No.33, Revised CZBL No.76), and 42 specific accounting standards, guidelines for the application of accounting standards for

business enterprises, interpretations to the accounting standards for business enterprises and other provisions released and revised on

and after February 15, 2006 (hereinafter referred to as accounting standards for business enterprises) and the disclosure provisions of

the Regulations of Corporate Information Disclosure and Preparation by Companies Publicly Issuing Securities No. 15 - General

Provisions on Financial Reporting (Revised in 2014) of the China Securities Regulatory Commission.

According to the relevant regulations of the accounting standards for business enterprises, the Group’s accounting is made on

accrual basis. Except for certain financial instruments, measurements in these financial statements are made on the basis of historical

cost. If an asset is impaired, corresponding impairment provision will be made in accordance with relevant regulations.

2. Going concern

The Company has the ability to continue operations for at least 12 months since the end of the reporting period, and there are no

major issues affecting the ability to continue operations.

V. Critical accounting policies and estimates

The group has made accounting policies and accounting estimates as to method for accruing bad debt provision for

receivables, method for calculating inventory value and accruing depreciation provision, depreciation of fixed assets and

amortization of intangible assets, recognition time point of income and other transactions and items based on the actual production

and operation features and the provisions of related accounting standards for business enterprises. For details, please refer to

descriptions of 9 “financial instruments”, 11 “Inventory” - (3), 14 “Fixed assets” - (2), 16 “Intangible assets” - (1), 22 “Income” of V

in the Footnotes.

1. Abidance of the statement of Standard for Enterprise Business

The financial statement prepared by the Company conforms to the requirements of Standard for Enterprise Business and has

reflected relevant information such as the financial conditions on December 31, 2019, operation results and cash flow in 2019 of the

Company and the Group on an authentic and intact basis. In addition, the financial statements of the Company and the Group

conform to the disclosure requirements of the Regulations of Corporate Information Disclosure and Preparation by Companies

Publicly Issuing Securities No. 15 - General Provisions on Financial Reporting revised by the China Securities Regulatory

Commission in 2014 and related financial statements and their footnotes.

2. Accounting period

The Group takes calendar year as the accounting year, i.e., from January 1 to December 31.

3. Operating cycle

The normal operating cycle means the period from the time when the enterprise purchases the assets used for processing to the


111

time of realizing cash or cash equivalents. The Group’s normal operating cycle lasts for 1 year. If it is shorter than 1 year, the assets

realized within 1 year upon the date of balance sheet or the liabilities that should be paid off within 1 year upon the date of balance

sheet shall be classified as the current assets or current liabilities.

4. Recording currency

RMB is used in the main economic environment in which the Company and its domestic subsidiaries operate and the Company

and its domestic subsidiaries use RMB as the recording currency. Recording currency for foreign subsidiaries of the Company is

determined as VND, SGD and IDR separately based on the currency in main economic environment in which they operate. The

Group uses RMB as the recording currency to prepare the financial statement.

5. Accounting treatment method for the enterprise merger under and not under the same control

(1) In case merger of enterprises under the same control happens within the reporting period of the Group, pooling of interest method

shall be employed to carry out accounting treatment. The assets and liabilities acquired by the combining party during enterprise

merger shall be measured on the merger date according to the book value set forth in consolidated financial statements of the final

controlling party. As to the difference between the book value of net assets acquired by combining party and the book value of

merger consideration paid by it (or total amount of the face value of shares issued), the capital reserve shall be adjusted

correspondingly; in case the capital reserve is insufficient for the offset, it’s required to adjust the retained earnings. Various related

direct expenses incurred by combining party for enterprise merger, including the audit fee, evaluation fee, legal service fee, etc. paid

for enterprise merger, shall be included in the current profits and losses upon such expenses are incurred. The bonds issued for

enterprise merger or service charge, commission, etc. paid for bearing other liabilities shall be included in initial measurement

amount of the bonds issued and other liabilities. Service charge, commission, etc. incurred for issuing equity securities during

enterprise merger shall be deducted from premium income of equity securities. In case the premium income is insufficient for the

offset, retained earnings shall be used for the offset. In case parent-subsidiary relationship is formed during the enterprise merger, it’s

required to prepare consolidated financial statements and execute the accounting policy on “consolidated financial statements”

formulated by the Group. The adjustment period of comparative data in consolidated financial statements shall not be earlier than the

time when the combining party or the combined party is under the control of final controlling party, subject to the later time.

(2) In case merger of enterprises under different controls happens within the reporting period of the Group, purchase method shall be

employed to carry out accounting treatment. It’s required to confirm merger cost respectively according to the following conditions:

① In case the enterprise merger is realized by one exchange transaction, the merger cost shall be the fair value of the assets paid,

liabilities incurred or assumed and equity securities issued for acquiring the control right of the purchased party at the purchase date.

② In case the enterprise merger is realized step by step through several exchange transactions, as to the equity of the purchased party

held before the purchase date, related accounting treatment shall be carried out respectively according to individual financial

statements and consolidated financial statements:

A. In individual financial statements, the sum of the book value of equity investment of the purchased party held originally and the

increased investment cost shall serve as initial investment cost checked by cost method; as to other comprehensive income checked

and recognized by equity method for equity investment held before the purchase date, when the investment is disposed, accounting

treatment shall be carried out by employing the same basis of disposing related assets or liabilities by the purchased party directly. As

to the equity investment held before the purchase date, accounting treatment shall be carried out according to related provisions of

Accounting Standard for Business Enterprises No. 22—Recognition and Measurement of Financial Instruments and the accumulated

change in fair value included in other comprehensive income shall be transferred to the current profits and losses when it’s checked

by cost method.

B. In consolidated financial statements, the equity of the purchased party held before the purchase date shall be measured again

according to the fair value of the equity at the purchase date, and the difference between fair value and its book value shall be


112

included in the current investment income; in case the equity of the purchased party held before the purchase date involves in other

comprehensive income checked by equity method, other comprehensive income related to it shall be transferred to the current

investment income at the purchase date. The Group will disclose the fair value of the equity of the purchased party held before the

purchase date on the purchase date and the amount of related profits or losses incurred by re-measurement according to the fair value.

③ Audit fee, legal service fee, evaluation & consulting cost and other intermediary expenses and other related management cost

incurred for enterprise merger shall be included in the current profits and losses upon they’re incurred; transaction cost of equity

securities or debt securities issued as merger consideration shall be included in initial recognition amount of the equity securities or

debt securities. ④ When any provision on future event that may influence the merger cost is stipulated in merger contract or

agreement, in case it’s estimated that the future event may happen at the purchase date and the amount of the influence on merger

cost can be measured reliably, it shall be included in merger cost.

The Group shall measure the assets paid and liabilities incurred or assumed as the consideration of enterprise merger on the purchase

date shall be measured according to the fair value, and the difference between fair value and its book value shall be included in the

current profits and losses.

While distributing merger cost at the purchase date, the Group shall recognize various identifiable assets, liabilities and contingent

liabilities of the purchased party acquired by it according to related provisions. ① The amount of the merger cost larger than the fair

value of identifiable net assets of the purchased party acquired by it shall be recognized as goodwill. ② As to the amount of merger

cost smaller than the fair value of identifiable net assets of the purchased party acquired by it, it’s required to recheck the

measurement of fair value of various identifiable assets, liabilities and contingent liabilities of the purchased party acquired by it and

the merger cost. After the rechecking, in case the merger cost is still smaller than the fair value of identifiable net assets of the

purchased party acquired by it, the difference shall be included in the current profits and losses.

In case parent-subsidiary relationship is formed during the enterprise merger, parent company shall set a memorandum book to

record the fair value of various identifiable assets, liabilities and contingent liabilities of the subsidiary acquired in enterprise merger

on the purchase date. When consolidated financial statements are prepared, it’s required to adjust the financial statements of the

subsidiary on the basis of the fair value of various identifiable assets, liabilities and contingent liabilities confirmed at the purchase

date and execute according to accounting policy on “consolidated financial statements” formulated by the Group.

6. Preparation Method for Consolidated Financial Statements

(1) Consolidation scope

Consolidation scope of the consolidated financial statements shall be confirmed on the basis of control, including annual financial

statements of the Company and all subsidiaries as of December 31, 2018. Subsidiary refers to the entity controlled by the Company

(including the divisible part in enterprise and the invested unit, structural entity controlled by the Company, etc.). Control refers to

the power of the investor over the invested party and the investor can enjoy variable return through participating in related activities

of the invested party and has the ability of using its power over the invested party to influence the return amount.

(2) Preparation method for consolidated financial statements

The Company shall prepare consolidated financial statements on the basis of its own and subsidiary’s financial statements according

to other related data.

While preparing consolidated financial statements, the Company shall consider the whole enterprise Group as an accounting entity to

reflect overall financial condition, business performance and cash flow of enterprise Group according to recognition, measurement

and reporting requirements of related accounting standards for business enterprises and unified accounting policy.

When consolidated financial statements are prepared, in case the accounting policies or accounting periods employed by the

subsidiary and the Company are different, it’s required to make necessary adjustment on the subsidiary’s financial statements

according to the Company’s accounting policy and accounting period. As to the subsidiary acquired by the merger of enterprises

under different controls, it’s required to adjust its financial statements on the basis of fair value of identifiable net assets at the


113

purchase date.

(3) Reporting of minority interest and profits and losses

The share in owner's equity of the subsidiary that doesn’t belong to parent company shall serve as minority interest and set out as

“minority interest” under owner's equity in the consolidated balance sheet.

The share in the current net profit or loss of the subsidiary that belongs to minority interest shall be set out as “minority interest”

under net profit in the consolidated income statement.

(4) Treatment of excess deficit

In the consolidated financial statements, in case the current deficit shared by minority shareholders of the subsidiary has exceeded the

share enjoyed by minority shareholders in owner’s equity of the subsidiary at the beginning of the period, the balance shall still be

used to offset minority interest.

(5) Treatment of consolidated statements for the increase and decrease of subsidiaries in the current period

Within the reporting period, as to the subsidiary increased due to merger of enterprises under the same control, when the consolidated

balance sheet is prepared, it’s required to adjust the Opening balance of the consolidated balance sheet. As to the subsidiary increased

due to merger of enterprises under different controls, when the consolidated balance sheet is prepared, it’s unnecessary to adjust the

Opening balance of the consolidated balance sheet. In case the subsidiary is disposed within the reporting period, when the

consolidated balance sheet is prepared, it’s unnecessary to adjust the Opening balance of the consolidated balance sheet.

Within the reporting period, as to the subsidiary increased due to the merger of enterprises under the same control, the income,

expense and profit of the subsidiary from the beginning of the merger period to the end of the reporting period shall be incorporated

into the consolidated income statement, and the cash flow of the subsidiary from the beginning of the merger period to the end of the

reporting period shall be incorporated into the consolidated statement of cash flow. As to the subsidiary increased due to merger of

enterprises under different controls, the income, expense and profit of the subsidiary from the purchase date to the end of the

reporting period shall be incorporated into the consolidated income statement, and the cash flow of the subsidiary from purchase date

to the end of the reporting period shall be incorporated into the consolidated statement of cash flow. In case the subsidiary is disposed

within the reporting period, the income, expense and profit of the subsidiary from the beginning of the period to the disposal date

shall be incorporated into the consolidated income statement, and the cash flow of the subsidiary from the beginning of the period to

the disposal date shall be incorporated into the consolidated statement of cash flow.

In case of losing the control right on the original subsidiary due to disposing part of the equity investments or other reasons, the

residual equity investment after the disposal shall be measured again according to the fair value at the date when the control right is

lost. The balance between the sum of the consideration acquired by equity disposal and the fair value of residual equity and the share

of net assets of the original subsidiary that shall be enjoyed and is calculated continuously from the purchase date according to the

original shareholding ratio shall be included in the investment income of the current period when the control right is lost. Other

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

period when the control right is lost.

As to the difference between long-term equity investments newly acquired due to the purchase of minority interest and the share of

identifiable net assets of the subsidiary enjoyed and calculated according to the new shareholding ratio, and the difference between

the disposal proceedings acquired due to disposing part of the subsidiary’s equity investments in the condition of not losing the

control right and the share of net assets of the subsidiary that shall be enjoyed corresponding to the disposal of long-term equity

investments, it’s required to adjust the share premium in capital reserve in the consolidated balance sheet. In case the share premium

in capital reserve is insufficient for the offset, it’s required to adjust the retained earnings.

7. Determining Standards for Cash and Cash Equivalents

Cash and cash equivalents of the Group includes cash on hand and the deposit that can be used for making payment at any time

as well as investments that are held by the Group, have a short term (generally mature within 3 months since the purchase date) and


114

strong liquidity, can be converted into the cash of known amount easily, and have small risks in value change.

8. Foreign Currency Business and Foreign Currency Statement Translation

Foreign currency transactions of the Group shall be translated into the recording currency according to the spot rate at the transaction

date.

(1) Treatment of exchange difference

At the balance sheet date, it’s required to treat foreign currency monetary items and foreign currency non-monetary items according

to the following provisions: as to foreign currency monetary items, it’s able to employ the spot rate at the balance sheet date for

translation. Exchange difference arising from different spot rates at the balance sheet date and during initial recognition or at the last

balance sheet date shall be included in the current profits and losses. As to foreign currency non-monetary items measured by

historical cost, it’s still required to employ the spot rate at the transaction date for translation and the recording currency amount shall

not be changed; as to foreign currency non-monetary items measured by fair value, it’s required to employ the spot rate at the fair

value confirmation date for translation, and the difference between the translated recording currency amount and the original

recording currency amount shall be treated as the change in fair value (including the change in exchange rate) and included in the

current profits and losses. Within the capitalized period, the exchange difference of special loan principal and interest in foreign

currency shall be capitalized and included in the cost of the assets complying with the conditions of capitalization.

(2) Translation of foreign currency financial statement

During the translation of financial statements for overseas operation, the Group shall observe the following provisions: items under

the assets and liabilities in balance sheet shall be translated according to the spot rate at the balance sheet date. As to the owner’s

equity, except for the item “undistributed profit”, other items shall be translated according to the spot rate at the occurrence date.

Items under income and expense in income statement shall be translated according to the spot rate at the transaction date. The

translation difference of foreign currency financial statements arising from above translation shall be recognized as other

comprehensive income. The translation of comparative financial statements shall also be handled according to above provisions.

9. Financial Instruments

When the Group becomes one party of financial instrument contract, it’s required to recognize financial assets or financial

liabilities.

(1) Classification, recognition and measurement of financial assets

Based on the business model for managing financial assets and the contracted cash flow features of financial assets, the Group

divides the financial assets into: financial assets measured by amortized cost, financial assets at fair value through other

comprehensive income and, financial assets at fair value through current profit or loss.

② Financial assets shall be measured by fair value during initial recognition. As to financial assets at fair value through profit

and loss, related transaction cost shall be included in the current profits and losses directly; as to other categories of financial assets,

related transaction cost shall be included in initial recognition amount. Accounts receivable or notes receivable that are from sale of

products or rendering of labors, and do not include or take into account major financing components are taken as initial recognition

amount by the Group based on the consideration amount that the Group is entitled to receive.

① Financial assets measured by amortized cost

The business model of the Group to manage financial assets measured by amortized cost is aimed at receiving contracted cash

flows; the contracted cash flow features of such financial assets are consistent with basic loan arrangements, that is, cash flows

generated at specific date are only payment of principal and interests for outstanding principal amount. Effective interest method is

used by the Group to carry out subsequent measurement of such financial asset according to the amortized cost, and the profits or

losses arising from amortization and impairment are included in the current profits and losses.

② Financial assets held at fair value through other comprehensive income


115

The business model of the Group to manage such financial assets is aimed at receiving contracted cash flows as well as sales;

the contract cash flow features of such financial assets are consistent with basic loan arrangements. The Group measures such

financial assets at fair value with changes included in other comprehensive income, but impairment losses or gains, exchange gains

and losses, and interest income calculated based on effective interest method are included in the current profit and loss.

③ Financial assets held at fair value through profit or loss

The Group recognizes foregoing financial assets measured by amortized cost and that are not financial assets at fair value

through other comprehensive income as financial assets at fair value through current profit or loss. In addition, during initial

recognition, in order to eliminate or significantly reduce accounting mismatches, the Group designates part of the financial assets as

financial assets measured at fair value through current profits and losses As to such financial assets, subsequent measurement shall be

carried out by the Group based on fair value, and all change in fair value shall be included in the current profits and losses.

(2) Classification, recognition and measurement of financial liabilities

Financial liabilities are classified into financial liabilities at fair value through profit and loss and other financial liabilities

during initial recognition. As to financial liabilities at fair value through profit and loss, related transaction cost shall be included in

the current profits and losses directly; as to other financial liabilities, related transaction cost shall be included in initial recognition

amount.

① Financial liabilities held at fair value through profit or loss

Financial liabilities at fair value through profit and loss include tradable financial liabilities (including derivatives belonging to

financial liabilities) and financial liabilities that are designated to be measured at fair value with changes recorded into current

period profit or loss during initial recognition.

Tradable financial liabilities (including derivatives belonging to financial liabilities) are measured subsequently at fair value and

except for those related to hedging accounting, changes in fair value are included in current period profit or loss.

For financial liabilities measured at fair value through current profit and loss, changes in their fair value caused by changes in

the Group’s own credit risk are included in other comprehensive income, and when such liabilities are stopped to be recognized,

accumulated changes in their fair value caused by changes in the Group’s own credit risk that is included in other comprehensive

income are transferred to earnings retained. Remaining fair value changes are included in current profit or loss If the treatment of

impact of changes in credit risk of these financial liabilities in the above manner will cause or expand accounting mismatches in

profit or loss, the Group will include all gains or losses of such financial liabilities (including impact of changes in the Company’s

own credit risk) in the current profit and loss.

② Other financial liabilities

In addition to financial liabilities and financial guarantee contracts as a result of financial asset transfers that are not in line with

derecognition condition or continuous involvement in transferred financial asset, other financial liabilities are classified as financial

liabilities measured at amortized cost and measured subsequently at amortized cost, and gains or losses arising from derecognition or

amortization of such liabilities are included in the current profit and loss.

(3) Recognition basis and measurement method of the transfer of financial assets

If financial assets meet one of the following conditions, derecognition of such financial assets will be carried out: ① the

contractual right to receive cash flow from the financial assets is terminated; ② the financial assets have been transferred and

almost all the risks and rewards in the ownership of the financial assets are transferred to the transferee; ③ the financial assets have

been transferred and, although the Group has neither transferred nor retained almost all risks and rewards in the ownership of the

financial assets, it has waived its control over the financial assets.

If the Group neither transfers nor retains almost all the risks and rewards in the ownership of the financial assets and does not

relinquish control over the financial assets, the financial assets shall be recognized according to the degree of continuous involvement

of the financial assets transferred, and the relevant liabilities shall be recognized accordingly. Degree of continuous involvement of

the financial assets transferred is the risk level of the Group due to changes in value of such financial assets.

In case whole transfer of financial assets satisfies the derecognition condition, the difference between the sum of the book value


116

of financial assets transferred and consideration received due to the transfer and the sum of changes in fair value original included in

other comprehensive income shall be included in current profit or loss.

In case part transfer of financial assets satisfies the derecognition condition, book value of the financial assets transferred shall

be amortized between the derecognition part and the part without derecognition according to their own fair value, and the difference

between the sum of the consideration received for the transfer and accumulated amount of the change in fair value to be amortized to

derecognition part and originally included in other comprehensive income, and the foregoing book value amortized shall be included

in the current profits or losses.

For financial assets sold with right of recourse, or to transfer financial assets by endorsement, the Group needs to determine

whether almost all risks and rewards related to ownership of such financial assets have been transferred. If almost all risks and

rewards related to the ownership of such financial assets are transferred to the transferred party, derecognition of such financial assets

should be conducted; derecognition of such financial assets should not be conducted if the risks and rewards related to the ownership

of such financial assets are reserved; if the risks and rewards related to the ownership of such financial assets are not transferred nor

reserved, it needs to determine whether the Company keeps its control over such assets and make accounting treatment based on

principles as described in the foregoing paragraphs.

(4) Derecognition of financial liabilities

In case the current obligations of financial liabilities (or part of the financial liabilities) have been terminated, the Group will

carry out derecognition of such financial liabilities or part of them. In case the Group (borrower) signs an agreement with the debtor

to replace the original financial liabilities by means of bearing new financial liabilities, and contract clauses related to the new

financial liabilities and original financial liabilities are different in essence, it’s required to carry out derecognition of original

financial liabilities and recognize the new financial liabilities simultaneously. If the Group substantially modifies the contract terms

of the original financial liability (or part of it), the original financial liability is derecognised and a new financial liability is

recognized in accordance with the revised terms.

In case derecognition is carried out for the whole or part of financial liabilities, the difference between their book value and the

consideration paid (including non-cash assets transferred out or liabilities assumed) shall be included by the Group in the current

profits and losses.

(5) Offset of financial assets and financial liabilities

In case the Group has the legal right of offsetting the financial assets and financial liabilities recognized and such legal right is

executable now, and the Group plans to carry out settlement by net amount or realize the financial assets and pay off the financial

liabilities simultaneously, the net amount after mutual offset of such financial assets and financial liabilities shall be set out in the

balance sheet. Otherwise, financial assets and financial liabilities shall be set out in the balance sheet respectively and will not be

offset mutually.

(6) Method of recognizing fair value of financial assets and financial liabilities

Fair value, refers to the price that market participant can obtain or needs to pay after selling an asset or transferring a liability,

among the orderly transactions made on the measurement date. Where there is an active market for financial instruments, the Group

determines their fair value based on quoted prices in the active market. Quoted prices in an active market refer to prices that are

easily available on a regular basis from exchanges, brokers, industry associations, pricing service agencies, etc., and represent the

prices of actual market transactions among fair transactions. Where there is not an active market for financial instruments, the Group

determines their fair value based on valuation techniques. Valuation techniques include reference to the prices in recent market

transactions between the parties who are familiar with the situation and willing to transact, reference to the current fair value of other

financial instruments that are substantially the same, discounted cash flow method, option pricing models, etc. During the valuation,

the Group adopts valuation techniques that are applicable under the current circumstances and supported by sufficient available data

and other information, chooses input values that are consistent with the characteristics of assets or liabilities considered by market

participants in the transaction of related assets or liabilities, and gives priority to the use of related observable input values as far as

possible. Unobserved input values may be used when relevant observable input values cannot be obtained or it is not feasible to


117

obtain them.

(7) Equity instruments

An equity instrument refers to a contract that can prove the ownership of residual interest in assets after the Group deducts all

liabilities. The Group’s issuing (including refinancing), repurchase, sale or cancellation of equity instruments are treated as changes

in equity, and transaction costs related to equity transactions are deducted from equity. The Group does not determine changes in fair

value of equity instruments.

Distribution of dividends (including “interest” from instruments classified as equity instruments) from the equity instruments

during the existence of the Group is treated as profit distribution.

(8) Impairment of financial assets

The financial assets to be confirmed for impairment losses in the Group are those measured by amortized cost, including bills

receivable, accounts receivable and other receivables. Moreover, as for financial guarantee contract, it’s necessary to calculate and

withdraw impairment provision and recognize credit impairment losses pursuant to accounting policy set forth in this part.

1) Recognition method of impairment provision

The above items are accrued for impairment provision and credit impairment losses by the Group in accordance with applicable

expected credit loss measure methods (general or simplified) based on the expected credit loss.

Credit loss refers to the difference between all contractual cash flows discounted as per the original effective interest rate and

receivable from the contract and all cash flows expected to be received by the Group, namely, the present value of a shortage of cash.

Wherein, the purchased or underlying financial assets with impairment on credit of the Group shall be discounted as per effective

interest rate based on credit adjustment.

The general method for measuring expected credit loss is as follows, the Group evaluates whether credit risk of financial assets

has remarkably increased after initial recognition on each balance sheet date. In case of credit risk having remarkably increased after

initial recognition, the Group will measure provision for loss as per the amount equivalent to expected credit loss in the whole period

of existence; In case of credit risk failing to remarkably increase after initial recognition, the Group will measure provision for loss as

per the amount equivalent to expected credit loss in the next 12 months. At the time of evaluating expected credit loss, the Group

considers all reasonable and well-founded information, including forward-looking information.

For the financial instrument with a lower credit risk on the balance sheet date, the Group assumes that its credit risks have not

increased significantly since the initial recognition, and measures the loss provisions according to the expected credit losses of the

future 12 months.

2) Standard for judging whether credit risk has remarkably increased after initial recognition.

In case that probability of default of one financial asset confirmed on the balance sheet date in the expected period of existence

is obviously higher than that confirmed at the moment of initial recognition in the expected period of existence, it means credit risk

of such financial asset remarkably increases. The changes of default risk within the next 12 months are adopted by the Group other

than special cases as reasonable estimate in the entire duration, ensuring whether the credit risk has increased significantly since the

initial recognition.

3) Combinatorial method of appraising future credit risk based on combination

the Group appraises the credit risk of the financial asset item of significantly different credit risks, such as: receivables disputed

with the opposite side or involving litigation or arbitration; there have been obvious signs showing that the debtor possibly is not able

to perform the repayment obligations of receivable amounts, etc.

Except financial assets of individual credit risk assessment, the Group divides financial assets into different groups based on the

common risk characteristics and appraises credit risks based on combination.

4) Accountant arrangement method of financial assets impairment

The expected credit losses of all kinds of financial assets are calculated by the Group at the end of the duration. If the estimated

credit loss is greater than the carrying amount of the current impairment provision, the difference is recognized as impairment loss; If

not, it is recognized as impairment profits.


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5) Test method of credit losses of all kinds of financial assets

① Notes receivable

The Group measures loss preparation for notes receivable based on the amount equivalent to predicted credit loss in the whole

period of existence. Notes receivable are divided into different portfolios based on their credit risk characteristics.

Item Basis for determination of portfolio

Bank acceptance Acceptor is a bank with less credit risk

② Accounts receivable

For account receivable not containing significant financing part, the Group measures its loss provisions based on the amount of

expected credit losses during the entire duration.

For account receivable containing significant financing part, the Group always measures its loss provisions based on the amount

of expected credit losses during the entire duration.

The other accounts receivables other than individual credit risk assessment are divided into different combinations based on

their credit risk characteristics:


Portfolio 1: age portfolio Aging of receivables is used as the credit risk feature for this portfolio.

Portfolio 2: low-risk portfolio The portfolio includes very low-risk amounts such as the payment of export third-party

goods.

Portfolio 3: merged related parties

portfolio

This portfolio includes current amount between related parties within the consolidation scope

of amounts receivable.

③ Other receivables

The impairment loss is measured by the Group in accordance with the amount of expected credit loss equivalent to that within

the next 12 months or the entire duration based on whether the credit risk of other receivables has increased significantly since the

initial recognition. The other receivables other than individual credit risk assessment are divided into different combinations based on

their credit risk characteristics:


Portfolio 1: age portfolio Aging of receivables is used as the credit risk feature for this portfolio.

Portfolio 2: risk-free portfolio The portfolio consists of interests receivable, dividends receivable, receivables from

government departments, and other risk-free amounts.

Portfolio 3: merged related parties

portfolio

This portfolio includes current amount between related parties within the consolidation scope

of amounts receivable.

10.Financing of receivables

The bill receivable, classified to fair value measurement and changes included in other comprehensive earnings, is listed as

receivables financing with a term of less than one year (including one year) from the acquisition; That with a term of more than one

year from the acquisition is listed as other debt investment. For related accounting policies, please refer to V - 9 “Financial

instruments”.

11. Inventories

(1) Inventory classification

Inventory mainly includes raw materials, unfinished products, commodity inventory, low value consumables and packing

materials.


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(2) Valuation method for the acquisition and distribution of inventory

When inventories are acquired, they are priced at actual costs. Inventory costs include procurement costs, processing costs, and

other costs. When inventories are used and distributed, the price is calculated by the one-off weighted average method at the end of a

month.

(3) Method of recognizing net realizable value and accruing depreciation reserve of inventories

Net realizable value refers to the amount of the estimated selling price of inventories deducted by estimated costs to be incurred

upon completion, estimated selling expenses and related taxes in daily activities. The determination of realizable net value of the

inventory shall be based on the concrete evidence acquired and consider the purpose of holding inventory, and impacts of the events

after the balance sheet date.

At the balance sheet date, the inventory shall be measured according to the cost or realizable net value, subject to the lower one.

In case the cost is higher than realizable net value, inventory depreciation reserves shall be withdrawn. The inventory depreciation

reserve is withdrawn based on the difference between the cost of a single inventory item and its net realizable value.

After the inventory depreciation reserve is withdrawn, if factors that previously reduced the value of inventory disappear,

causing net realizable value of inventory to be higher than its book value, the original inventory depreciation reserves will be

transferred back and the amount transferred back is included in current profit and loss.

(4) Inventory system is perpetual inventory system.

(5) Amortization method for low-value consumables and packing materials

Low-value consumables shall be amortized by one-off amortization method during the requisition or amortize during the period

of use; packing materials shall be amortized by one-off amortization method during the requisition.

12. Available-for-sale assets

(1) Recognition standards for available-for-sale category

In case the Group mainly recovers the book value by selling (including non-monetary assets exchange of commercial essence, the

same below) rather than using a non-current asset or disposal group continuously, it will be classified as available-for-sale category.

Non-current asset or disposal group is classified as available-for-sale category and shall also satisfy the following conditions:

① According to the convention of selling such asset or disposal group in similar transactions, it can be sold immediately in the

current condition;

②The sale may happen extremely, namely, the Group has made a resolution on a sale plan and acquired the confirmed purchase

commitment, and the sale is predicted to be completed within 1 year. Those that can be sold only after getting the approval of related

authority or supervision department of the Group according to related provisions shall have got the approval. The confirmed purchase

commitment refers to purchase agreement signed by the Group and other party and with legal binding force. The agreement shall

contain the transaction price, time, harsh punishment for breach of contract and other important clauses, so that it’s of extremely

small possibility of great adjustment or revocation of the agreement.

As to non-current asset or disposal group acquired by the Group exclusively for resale, it will be classified as available-for-sale

category at the acquisition date if it satisfies the regulated condition that “the sale is predicted to be completed within 1 year” at the

acquisition date and may satisfy other classification conditions of available-for-sale category within a short term (generally 3

months).

Disposal group refers to a group of assets that will be disposed together as a whole by selling or other means in a transaction and the

liabilities directly related to these assets and transferred in the transaction. In case the asset group or asset group combination where

the disposal group belongs has amortized the goodwill acquired in enterprise merger according to Accounting Standard for Business

Enterprises No. 8—Impairment of Assets, the disposal group shall include the goodwill amortized to it.

(2) Accounting treatment method for available-for-sale category

As to non-current assets and disposal group classified as available-for-sale category, the Group shall carry out initial measurement or


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re-measurement according to the net amount of book value or fair value after subtracting the disposal cost, subject to the lower one.

In case the net amount of fair value after subtracting the disposal cost is lower than the original book value, the difference shall be

recognized as impairment loss of assets and included in the current profits and losses, and provision for impairment of

available-for-sale assets shall be withdrawn simultaneously; the amount of impairment loss of assets recognized for available-for-sale

disposal group shall be used to offset the book value of goodwill in the disposal group at first and then offset the book value of

various non-current assets applying to the measurement provisions on available-for-sale category in disposal group according to the

proportion of their book value. In case the net amount of the fair value of available-for-sale non-current assets after subtracting the

selling cost at the subsequent balance sheet date is increased, the amount written down previously shall be recovered and transferred

back within the amount of impairment loss of assets recognized after the assets are classified as available-for-sale category. The

amount transferred back shall be included in the current profits and losses. Impairment loss of assets recognized before the assets are

classified as available-for-sale category shall not be transferred back. In case the net amount of the fair value of available-for-sale

disposal group after subtracting the selling cost at the subsequent balance sheet date is increased, the amount written down previously

shall be recovered and transferred back within the amount of impairment loss of assets recognized for the non-current assets applying

to the measurement provisions on available-for-sale category after the assets are classified as available-for-sale category. The amount

transferred back shall be included in the current profits and losses. Book value of the goodwill that has been offset and impairment

loss of assets recognized before the non-current assets applying to the measurement provisions on available-for-sale category are

classified as available-for-sale category shall not be transferred back. As to the amount transferred back subsequently for impairment

loss of assets recognized for available-for-sale disposal group, its book value shall be increased according to the proportion of the

book value of various non-current assets applying to the measurement provisions on available-for-sale category in the disposal group

except the goodwill. Depreciation or amortization will not be withdrawn for available-for-sale non-current assets or non-current

assets in the disposal group, and the interest of liabilities in available-for-sale disposal group and other expenses shall be recognized

continuously.

Measurement method for available-for-sale category is inapplicable to deferred income tax assets, financial assets specified in

Accounting Standard for Business Enterprises No. 22—Recognition and Measurement of Financial Instruments, investment real

estates and biological assets measured by fair value, contractual rights incurred in insurance contract and the assets incurred from

employee benefits, and they will be measured according to related criteria or corresponding accounting policies formulated by the

Group. In case the disposal group contains non-current assets applying to the measurement method for available-for-sale category,

the measurement method for available-for-sale category shall be applicable to the whole disposal group. The measurement of

liabilities in disposal group shall apply to related accounting standards.

When the non-current assets or disposal group can’t be classified as available-for-sale category continuously due to failing to satisfy

the classification conditions of available-for-sale category or non-current assets are removed from the available-for-sale disposal

group, the measurement shall be carried out according to the following two items, subject to the lower one: ① book value before the

assets are classified as available-for-sale category, namely, the amount after the adjustment is carried out according to the

depreciation, amortization or impairment, etc. that shall be recognized in the condition that the assets are supposed not to be

classified as available-for-sale category; ② recoverable amount.

13. Long-term equity investment

Long-term equity investments include equity investments in subsidiaries, joint ventures and associated enterprises.

(1) Initial measurement

The Group shall carry out initial measurement of long-term equity investments respectively according to the following two

conditions:

① As to long-term equity investments formed in enterprise merger, initial investment cost shall be confirmed according to the

following provisions:


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A. In the merger of enterprises under the same control, in case the combining party realizes merger consideration by making payment

in cash, transferring non-cash assets or bearing liabilities, the shares of book value of owner's equity of the combined party in

consolidated financial statements of the final controlling party at the merger date shall serve as the initial investment cost of

long-term equity investments. As to the difference between initial investment cost of long-term equity investments and the book

value of the cash paid, non-cash assets transferred and liabilities assumed, it’s required to adjust the capital reserve correspondingly.

In case the capital reserve is insufficient for the offset, it’s required to adjust the retained earnings. Various direct related expenses

incurred for enterprise merger, including the audit fee, evaluation fee, legal service fee, etc. paid for enterprise merger, shall be

included in the current profits and losses upon such expenses are incurred.

In case the combining party realizes merger consideration by issuing equity securities, the shares of book value of owner's equity of

the combined party in consolidated financial statements of the final controlling party at the merger date shall serve as the initial

investment cost of long-term equity investments. Total amount of the face value of shares issued shall serve as the capital stock. As

to the difference between initial investment cost of long-term equity investments and the total amount of face value of the shares

issued, it’s required to adjust the capital reserve correspondingly. In case the capital reserve is insufficient for the offset, it’s required

to adjust the retained earnings. Service charge, commission, etc. incurred by issuing equity securities in the merger shall be offset by

premium income of equity securities. In case the premium income is insufficient, retained earnings shall be used for such offset.

B. In the merger of enterprises under different controls, the Group shall confirm merger cost respectively according to the following

conditions:

a) In case the enterprise merger is realized by one exchange transaction, the merger cost shall be the fair value of the assets paid,

liabilities incurred or assumed and equity securities issued for acquiring the control right of the purchased party at the purchase date.

b) In case the enterprise merger is realized step by step through several exchange transactions, the sum of the book value of equity

investment of the purchased party held before the purchased date and the increased investment cost at the purchased date shall serve

as initial investment cost of the investment;

c) Audit fee, legal service fee, evaluation & consulting cost and other intermediary expenses and other related management cost

incurred for enterprise merger shall be included in the current profits and losses upon they’re incurred; transaction cost of equity

securities or debt securities issued as merger consideration shall be included in initial recognition amount of the equity securities or

debt securities.

d) When any provision on future event that may influence the merger cost is stipulated in merger contract or agreement, in case it’s

estimated that the future event may happen at the purchase date and the amount of the influence on merger cost can be measured

reliably, it shall be included in merger cost.

② Except the long-term equity investments formed in enterprise merger, initial investment cost of the long-term equity investments

acquired by other means shall be confirmed according to the following provisions:

A. As to long-term equity investments obtained by making payment in cash, the purchase price paid actually shall be initial

investment cost. The initial investment cost includes expenses directly related to the acquisition of long-term equity investments,

taxes and other necessary expenditures.

B. As to long-term equity investments obtained by issuing equity securities, fair value of the equity securities issued shall serve as

initial investment cost, but excluding cash dividends or profits that shall be charged from the invested unit and have been announced

but haven’t been distributed. Transaction cost incurred when equity instrument is issued or acquired can be directly attributed to

equity transaction and deducted from the equity.

C. As to long-term equity investments obtained by means of non-monetary assets exchange, the initial investment cost shall be

confirmed according to Accounting Standard for Business Enterprises No. 7—Exchange of Non-monetary Assets.

D. As to long-term equity investments obtained by means of debt restructuring, the initial investment cost shall be confirmed

according to Accounting Standard for Business Enterprises No. 12—Debt Restructurings.

③ No matter by which means the long-term equity investment is acquired, when the investment is acquired, cash dividends or profits

of the invested unit that is included in the consideration paid, shall be enjoyed and have been announced but haven’t been distributed


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shall be checked separately as accounts receivable, and shall not constitute initial investment cost for acquiring the long-term equity

investment.

(2) Subsequent measurement

Long-term equity investments that can realize control on the invested unit shall be checked by cost method in individual financial

statements, and long-term equity investments with common control or significant impacts on the invested unit shall be checked by

equity method.

① When cost method is employed for accounting, long-term equity investments shall be valued according to initial investment cost,

and the cost of long-term equity investments shall be adjusted when the investment is increased or recovered. Cash dividends or

profits announced and distributed by the invested unit shall be recognized as investment income of the current period.

② As to long-term equity investments checked by equity method, in case the initial investment cost is more than the shares of fair

value of identifiable net assets of the invested unit that shall be enjoyed during the investment, initial investment cost of the

long-term equity investments shall not be adjusted; in case the initial investment cost is less than the shares of fair value of

identifiable net assets of the invested unit that shall be enjoyed during the investment, the difference shall be included in the current

profits and losses and the cost of long-term equity investments shall be adjusted simultaneously.

After the long-term equity investment is acquired, it’s required to recognize the investment income and other comprehensive income

respectively according to net profit or loss realized by the invested unit that shall be enjoyed or shared and other comprehensive

income, and book value of the long-term equity investment shall be adjusted simultaneously. As to the part that shall be enjoyed and

calculated according to the profits or cash dividends announced and distributed by the invested unit, it’s required to reduce the book

value of long-term equity investment correspondingly. As to other changes in owner’s equity except for net profit or loss, other

comprehensive income and profit distribution, book value of the long-term equity investment shall be adjusted and included in the

owner’s equity. When the shares of net profit or loss of the invested unit that shall be enjoyed are recognized, it shall be based on fair

value of identifiable net assets of the invested unit when the investment is acquired and after the adjustment is made on net profit of

the invested unit. In case the accounting policy and accounting period employed by the invested unit are different from those

employed by the Group, financial statements of the invested unit shall be adjusted according to the Group’s accounting policy and

accounting period. Besides, investment income, other comprehensive income, etc. shall be recognized on this basis. Recognition of

net loss incurred by the invested unit shall be limited to writing down the book value of long-term equity investments and other

long-term equity constituting net investment in the invested unit in essence to zero, unless the Group is obliged to bear extra losses.

In case the net profit is realized by the invested unit later, after the Group makes up the unrecognized loss amount shared by the

income amount shared, it’s required to recover the recognition of income amount shared.

When the net profit or loss of the invested unit that shall be enjoyed or shared is calculated and recognized, the part that shall belong

to the Group according to the proportion and is incurred between the Group and associated enterprises and joint ventures without

internal transaction profit or loss shall be offset, and investment income shall be recognized on this basis. In case the part incurred

between the Group and the invested unit without internal transaction loss belongs to impairment loss of assets, it shall be recognized

by the full amount.

③When the Group disposes any long-term equity investment, the difference between its book value and the price acquired actually

shall be included in the current profits and losses. As to the long-term equity investment checked by equity method, when it’s

disposed, accounting treatment shall be carried out for the part included in other comprehensive income originally according to

corresponding proportion on the same basis for disposing related assets or liabilities directly by the invested unit.

④ In case the Group loses the control right but can implement common control or impose significant impacts for its shareholding

ratio is decreased due to capital increase of its subsidiary by other investor, in individual financial statements, the long-term equity

investment shall be checked by equity method from the original cost method. At first, the difference between the shares of the

increased net assets that are arising from the increase in capital and share of the original subsidiary and shall be enjoyed by the Group

and recognized according to the new shareholding ratio and the original book value of long-term equity investment corresponding to

the decrease part of shareholding ratio that shall be carried forward shall be included in the current profits and losses. Then carry out


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adjustment on the accounting by equity method carried out when the investment is acquired according to the new shareholding ratio.

(3) Basis for confirming common control and significant impacts on the invested unit

Common control refers to common control on a certain arrangement according to related provisions and related activities of the

arrangement can be decided only after the consent of the participant sharing the control right. Related activity refers to the activity

imposing significant impacts on the return of a certain arrangement. Significant impact refers to the investor’s power on participating

in the decision-making of financial and operating policies of the invested unit, but it can’t control the formulation of these policies or

control the formulation commonly with other party.

(4) Impairment test method and method for withdrawing the provision of impairment

Impairment test method and method for withdrawing the provision of impairment shall comply with the accounting policy of

“impairment of assets” formulated by the Group.

14. Fixed assets

(1) Recognition principles of fixed assets

Fixed assets of the Group refer to tangible assets held for producing commodities, providing labor service, leasing or operation

management with service life of more than 1 fiscal year.

1) When the fixed assets satisfy the following conditions simultaneously, initial measurement shall be carried out according to the

cost:

① economic benefits related to the fixed assets may flow into the enterprise;

② fixed assets cost can be measured reliably.

(2) Depreciation method

Subsequent expenditure related to the fixed assets, if complying with the regulated recognition conditions of fixed assets, shall be

included in fixed assets cost; if not complying with the regulated recognition conditions of fixed assets, shall be included in the

current profits and losses directly when they’re incurred.

Fixed assets depreciation method of the Group is straight-line depreciation method.

Categories Depreciation method Useful life (years) Estimated residual value

proportion Annual depreciation rate

Buildings and structures Straight-line method 20-30 3%-10% 3.00%-4.85%

General equipment Straight-line method 3-5 3%-10% 18.00%-32.33%

Special equipment Straight-line method 10 3%-10% 9.00%-9.70%

Transport facilities Straight-line method 4-10 3%-10% 9.00%-24.25%

(3) Fixed assets impairment

It will be executed in accordance with the “impairment of assets” policy developed by the Group.

15. Construction in progress

1. Valuation of construction in progress: Determine project cost according to the actual expenditure incurred. The cost of

construction in progress also includes capitalized borrowing costs and exchange gains or losses.

2. The Group transfers construction in progress into fixed assets when they reach a predetermined state of use. A fixed asset that


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has reached a predetermined state of use but has not undergone final accounts of completed project will be recognized as fixed

assets according to its appraised value and be depreciated; after the final accounts of completed project is handled, the

temporarily appraised value will be adjusted based on actual costs; however, the accrued depreciation amount will not to be

adjusted.

3. Impairment of construction in progress will be executed in accordance with the “impairment of assets” policy developed by the

Group.

16. Intangible assets

(1) Valuation method, service life and impairment test

Intangible assets of the Group refer to the identifiable non-monetary assets that have are owned or controlled by the Group and have

no physical form.

(1) Recognition of intangible assets

The Group confirms intangible assets when they meet both of the following conditions:

① Economic benefits related to the intangible asset may flow into the enterprise;

② Cost of the intangible asset can be measured reliably.

(2) Measurement of intangible assets

① Intangible assets of the Group is measured initially based on cost.

② Subsequent measurement of intangible assets

A. For an intangible asset with limited service life, its service life will be judged when it is obtained and straight-line method will be

adopted within its service life in the following period. Amortization amount will be included in relevant costs and cost accounting

according to benefited items.

The specific length is as shown below:

Items Amortization period (years)

Land use right 43-50

Application software 2-10

Right to use trademark 10

Intangible assets with undetermined service life will not be amortized.

At the end of each period, the service life of intangible assets with limited service life and the amortization method for them will be

rechecked. Changes of them will be regarded as changes of accounting estimate. In addition, the service life of intangible assets with

undetermined service life will be rechecked. If there is evidence manifesting that an intangible asset can bring economic benefits for

the enterprise within a foreseeable period, then its service life will be estimated and it will be amortized according to the amortization

policy for intangible assets with limited service life.

B. Intangible assets will write down according to the “impairment of assets” accounting policy developed by the Group.

(2) Accounting policy on internal research and development expenditures

Expenditures on the internal research and development items of the Group are divided into research expenditure and development

expenditure.

Research expenditure is included in current gains or losses when it occurs

Development expenditure that can meet the following conditions will be recognized as intangible assets, while those cannot meet will

be included in current gains or losses:


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① Complete the intangible asset so as to make the use or sale of it technically feasible;

② Have the intention to complete the intangible asset and use or sell it;

③ The way that an intangible asset generates economic benefits is to certify that the products produced with the intangible asset has

market or the intangible asset itself has market, or to certify its usability when it will be used internally;

④ There are enough technology, financial resources and other resources to support finishing the development of an intangible asset,

and it is capable of using or selling this intangible asset;

⑤ Expenditure within the development stage of this intangible asset can be measured reliably.

If it is unable to distinguish the research expenditure from development expenditure, both research and development expenditures

will be included in the current gains or losses.

17. Impairment of long-term assets

The following evidences indicate the possible impairment of assets:

(1) The market price of assets drops significantly at the current period and the drop is obviously higher than the drop estimated

according to the passage of time or normal use.

(2) The economic, technical or legal environment for the Group’s operation and the market of the Group’s assets changed or will

change significantly in the current period or in the recent period, and the Group will thus be adversely affected.

(3) The market rate or other marketing ROI have risen in the current period and therefore affect the discount rate that the enterprise

used to calculate the estimated present value of future cash flows, leading to significant decrease of the recoverable amount of assets.

(4) This is evidence certifying that assets are antiquated or their physical form is damaged.

(5) Assets have already been or will be left unused, stopped using or disposed in advance

(6) Internal reports of the Group certify that the economic performance of assets have already been lower or will be lower than the

expectation, for example, the net cash flows created by assets or operating profits (or losses) realized by the assets are far lower than

the expected amount, etc.

(7) Other signs showing that the assets might have depreciated.

The Group will judge all its assets, including long-term equity investments, fixed assets, project materials, construction in progress,

intangible assets (excluding those with undetermined service life), that are applicable to Accounting Standard for Business

Enterprises No. 8 - Impairment of Assets on the balance sheet date, and carry out impairment test – estimation of the recoverable

amount of them when there is an indication of impairment. The recoverable amount shall be determined as the net amount obtained

by the fair value of asset – disposal expense, or as the present value of the estimated future cash flow of asset, whichever is higher. If

the recoverable amount of asset is lower than its book value, then the book value will write off to the recoverable amount, and the

write-off will be recognized as asset impairment loss and included in the current gains or losses. At the same time, corresponding

provision for impairment will be accrued.

If there is an indication of the impairment of an asset, the Group usually estimates its recoverable amount based on single assets. If

the recoverable amount of a single asset is hard to estimate, then the recoverable amount of the asset group that this asset belongs to

will be determined based on asset group.

Asset group refers to a minimum combination of assets that may be recognized by the Group, by which the flow-in cash generated

shall be generally independent of those by other assets or asset group. Asset groups are affirmed depending on whether the main cash

flows generated by asset groups are independent to other assets or on the cash flows of asset group.

The Group conducts impairment test of the goodwill formed as a result of merger and the intangible assets with undetermined service

life each year, whether there are indications of impairment or not. Goodwill impairment test is carried out together with the asset

groups or combinations of asset groups related to it.

Once asset impairment losses are confirmed, they will not be reversed.


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18. Long-term deferred expenses

Long-term deferred expenses are expenses that have occurred but should be borne during the reporting period and subsequent

periods with a sharing period of more than one year. Long-term deferred expenses of the Group mainly include improvement

expenditure of fixed assets leased for operation. Long-term deferred expenses are amortized on a straight-line basis over the expected

benefit period.

19. Employee compensation

Employee compensation, is the Group paid for employee’s service or compensation paid for dissolution of labor relations. The

Group’s employee compensation mainly includes short-term employee compensation, post-employment benefits, termination

benefits and other long-term employee benefits. The welfare provided to employee’s spouse 、kids、the supported people、survivors

of deceased employees and other beneficiaries, also belong to employee compensation.

(1) Accounting methods for short-term compensation

In the accounting period that its employees provide services for it, the Group recognizes the short-term compensations that have

actually occurred as liabilities and include them in its current gains or losses, unless other accounting standards require or allow

including them in the cost of assets.

(2)Accounting methods for post-employment benefits

The Group classifies post-employment benefit plan as defined contribution plans (DCPs) and defined benefit plans (DBPs).

Post-employment benefit plan refers to the agreement reached by the Group and its employees on post-employment benefits, or the

rules or measures the Group develops in order to provide post-employment benefits. Furthermore, DCPs mean that the Group will

not be further obliged to pay after it pays a fixed amount to an independent fund; DBPs refer to the post-employment plans other than

DCPs.

A. DCPs

In the accounting period that its employees provide services for it, the Group recognizes the to-be-paid amount calculated according

to DCPs as liabilities and includes them in its current gains or losses or relevant cost of assets.

B. DBPs

The Group has not yet operated DBPs or other long-term employee benefits complying with DBPs.

(3) Accounting methods for termination benefits

If providing termination benefits to employees, the Group will recognize the employee compensation liabilities generated by

termination benefits in any of the following 2 circumstances, whichever happens earlier, and include them in its current gains or

losses: when the Group is unable to unilaterally withdraw the plan on the cancellation of labor relationship or the layoff proposal;

when the Group recognizes the costs or expenses related to the recombination involving with termination benefits payment.

(4) Accounting methods for other long-term employee benefits

Other long-term employee benefits provided by the Group to employees, if complying with DDPs, shall be treated according to the

abovementioned accounting policies for DDPs; if not, the above accounting policies for DBPs shall be used to recognize and measure

their net liabilities or net assets.


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20. Estimated liabilities

(1) Estimated liability reorganization standards

When the Group’s regulations and relevant obligations of the contingencies can meet the following conditions at the same time, they

will be recognized as estimated liabilities:

① The obligation is the present obligation undertaken by the enterprise;

② Performance of this obligation may make economic benefits flow out of the enterprise;

③ Amount of this obligation can be reliably measured.

(2) Estimated liability measurement method

Estimated liabilities are measured initially according to the optimal estimate that needs to expend in order to perform relevant present

obligations. The necessary expenditure has a contiguous range, and within this range, all kinds of results have the same possibility to

occur. The optimal estimate is determined according to the median of this range. In other circumstances, the optimal estimate is

treated as below:

① If the contingency involves with a single item, then the optimal estimate will be determined based on the amount that is most

likely to occur.

② If the contingency involves with several items, then the optimal estimate will be determined based on all possible results and their

probabilities.

When the optimal estimate is determined, the risks, uncertainties and the time value of money related to contingencies shall be taken

into full consideration. If the time value of money has great impact, the optimal estimate shall be determined after discounting

relevant future cash outflows.

If it is expected that the estimated liabilities that the Group needs to pay off will be fully or partially compensated by a third

party, the compensation amount cannot be recognized separately as assets when it can be basically ensured. The recognized

compensation amount must not be higher than the book value of the estimated liabilities.

The Group re-checks the book value of estimated liabilities on balance sheet date. If there is unambiguous evidence showing that the

book value cannot reflect the current optimal estimate truly, this book value shall be adjusted according to the current optimal

estimate.

21. Share-based payment

Share-based payment of the Company is recognized and measured based on true, complete and effective shared-based payment

agreement, and implemented by equity - settled share-based payment.

(1) Equity-settled share-based payment:

If equity-settled share-based payment is used to exchange employee services, then it shall be measured with the fair value of the

equity instruments granted to employees. If equity-settled share-based payment is used to exchange employee services with

immediate vesting after granting, it shall be included in relevant cost or expense based on the fair value of equity instruments on the

granting day, and capital reserves shall be added correspondingly. If the equity-settled share-based payment is used to exchange

employee services with vesting after completing services within the waiting period or meeting the specified performance conditions,

the services obtained in the current period shall be included in relevant cost or expense and capital surplus based on the optimal

estimate of the quantity of equity instruments for right exercising and according to the fair value of the day granting equity

instruments on each balance sheet date within the waiting period.

Determination of the fair value of equity instruments:

①For shares granted to the employees, the fair value measured according to the market price of the company's share capital and

adjusted according to the granting terms and conditions (not including the vesting conditions out of market conditions).

② For the equity instrument granted to the employees ,such as stock option, if there is no terms or similar condition of equity

instrument, The Company estimates the fair value of the granted equity instruments with Black-Scholes Option Pricing Model.


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When determining the fair value of the day granting equity instruments, the Company considers the influence of market conditions of

non-vesting conditions included in vesting conditions which are specified in the share-based agreement. If there are non-vesting

conditions for share-based payment, the Company will confirm that the cost or expense corresponding to services has been obtained

as long as the non-market conditions (such as service term, etc.) included in vesting conditions are met by employees or other parties.

The Company grants restricted shares to employees to implement equity incentive plan, see Note (13) for details. When the increase

of equity instruments is confirmed on the issuing day of restricted shares, the treasury shares and repurchase obligations and

liabilities shall be confirmed according to the quantity of issued restricted shares and the amount calculated and confirmed based on

repurchase price at the same time, and the repurchase obligations and liabilities shall be measured subsequently in accordance with

the requirements of Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.

(2) Basis for confirming the optimal estimate of vesting equity instruments: On each data balance date within the waiting period, the

Company makes its optimal estimate and corrects the estimated quantity of equity instruments for vesting according to the

subsequent information that it has obtained, such as the variation of number of employees with vesting, in order for the optimal

estimate of vesting equity instruments.

(3) Accounting treatment related to the modification and termination of shared-based payment plan

If the fair value of the granted equity instruments is modified or increased, the Company will confirm the increase of services it

obtains correspondingly; if the quantity of the granted equity instruments is modified or increased, the Company will recognize the

increase of the fair value of the increased equity instruments as the increase of services; if the Company modifies the vesting

conditions by a favorable way for employees, it shall take the modified vesting conditions into consideration while dealing with

vesting conditions.

If the fair value of the granted equity instruments is modified or decreased, the Company will continue confirming the amount of

services obtained based on the fair value of equity instruments on the granting date, without considering the decrease of fair value; if

the quantity of the granted equity instruments is modified or decreased, the Company will treat considering the decrease as the

cancellation of granted equity instruments; if the Company modifies the vesting conditions by an unfavorable way for employees, it

shall not take the modified vesting conditions into consideration while dealing with vesting conditions.

If the Company cancels the granted equity instruments or settles them (unless they are cancelled due to the failure to meet vesting

conditions) within the waiting period, then the cancellation or settlement shall be regarded as accelerated vesting, and the amount that

shall be confirmed in the remaining waiting period shall be confirmed immediately.

22. Income

Does the Company need to abide by the disclosure requirements for special industries and sectors?

No

Incomes of the Group include income from sales of goods, income from rendering of services and income from alienating the right to

use assets.

(1) Income from sales of goods

The Group recognizes its income from sales of goods after it transfers the main risks of and rewards from the property in goods,

reserving neither the right to continue management that is often related to property nor effective control of sold goods, relevant costs

that have incurred or are going to be incurred can be reliably measured and related economic benefits is highly possible to flow into

the enterprise.

Revenue recognition arising from domestic product and export products to related party should meet the following conditions: the

company has delivered the products according to the contract, and sales amount have been identified, payment for goods have been

collected or the receipt voucher have been got and the relevant economic benefits are likely to flow into, the product costs can be

measured reliably. Revenue recognition arising from export products to a third part should meet the following conditions: the

company has made the customs clearance, departed from port, got the bill of lading according to the contract, and product sales


129

amount have been identified, payment for goods have been collected or the receipt voucher have been got and the relevant economic

benefits are likely to flow into, the product costs can be measured reliably.

(2) Income from rendering of services

① The Group recognizes income from rendering of services with percentage of completion method when the completion progress

can be reliably determined, the amount of income, the costs that have incurred or are going to be incurred can be reliably measured

and related economic benefits is highly possible to flow into the enterprise.

Method to determine the service transaction completion progress: Proportion of provided labor in the total quantity of labor that

should be provided and the proportion of incurred cost in the total estimated cost.

② If the service transition result of the Group cannot be reliably estimated on data balance sheet date, it can be handled with the

following methods:

A. If it is estimated that the labor cost occurred can be compensated, then the income from rendering of services shall be confirmed

according to it and labor cost shall be carried over based on this amount.

B. If it is estimated that the labor cost occurred cannot be compensated, then it will be included in the current gains or losses; whether

to provide the income from proving labor will not be confirmed.

(3) Income from alienating the right to use assets

Income from alienating the right to use assets includes income from interests, income from royalties, etc.

The Group recognizes the income from alienating the right to use assets when the amount of its income can be measured reliably and

relevant economic interests is most likely to flow into the enterprise.

23. Government grants

Government grants of the Group are divided into government grants concerning assets and government grants concerning benefits.

Government grants concerning assts refer to the government grants that the Group has obtained and will be used to purchase and

construct long-term assets, or to form long-term assets by other ways. Government grants concerning benefits refer to the

government grants other than government grants concerning assets. If the grant object is not made clear in the government’s files,

judgment shall be made based on the basic conditions for obtaining grants. To be specific, grants that form long-term assets through

purchase and construction or by other ways shall be regarded as government grants concerning assets, and other assets shall be

regarded as government grants concerning benefits.

(1) Recognition of government grants

Government grants shall be recognized when they meet all the following conditions:

① Meet the attached conditions to government grants;

② Be able to receive government grants.

(2) Measurement of government grants:

① If government grants are monetary assets, they shall be measured according to the amount received or receivable. If not, they shall

be measured according to their fair value; if their fair value cannot be reliably obtained, they shall be measured according to their

nominal amount.

② Government grants concerning assets will be recognized as deferred income when they are obtained, and will be included in gains

or losses by period with a reasonable and systematic method within its service life when they reach the predetermined state of use. If

relevant asset is sold, transferred, scrapped or damaged before its service life ends, the balance of undistributed deferred income will

be transferred into the gains or losses of the current asset disposal period.

Government grants concerning benefits used to compensate future relevant costs or losses will be recognized as deferred income

when they are obtained; those used to compensate relevant costs or losses that have occurred will be included in the current gains or

losses directly when they are obtained.

Government grants concerning daily activities will be included in other income; government grants concerning not daily activities


130

will be included in non-operating income.

③ If it has confirmed that government grants need to be returned, they shall be dealt with according to the following circumstances:

A. When there is relevant deferred income, the book balance of relevant deferred income shall write down and the exceeding part

shall be included in the current gains or losses.

B. In other circumstances, they shall be included in current gains or losses directly.

24. Deferred income tax assets/ deferred income tax liabilities

The Group deals with accounting for income taxes with balance sheet liability method.

(1) Deferred income tax assets

① If there is a deductible temporary difference between the book value of assets and liabilities, the deferred income tax assets

generated by this deductible temporary difference shall be calculated and confirmed according to the tax rate of the expected period

to recover this asset or pay off this liability, to the extent of the taxable income that may be obtained in the future to offset this

deductible temporary difference.

② If there is unambiguous evidence to certify that it is very likely to obtain enough taxable income to offset deductible temporary

difference in the future on the balance sheet date, the deferred income tax assets that are not recognized before shall be recognized.

③ The book value of deferred income tax assets shall be rechecked on balance sheet date. If it is hardly possible to obtain enough

taxable income in the future to offset the benefits from deferred income tax assets, the book value of deferred income tax assets shall

write down. When it is very likely to obtain enough taxable income the write-down amount shall be reversed.

(2) Deferred income tax liabilities

If there is taxable temporary difference between the book value of assets and liabilities and the tax basis, the deferred income tax

liabilities generated by taxable temporary difference shall be recognized according to the applicable tax rate of the expected period to

recover the asset or pay off the liability.

25. Leasing

(1) Accounting method for operating lease

(1) Operating lease

The Group, as the lessee, shall include the rentals of operating lease in relevant asset cost or current gains or losses with straight-line

method in all periods; the initial direct expenses occurred shall be included in the current gains or losses; contingent rentals shall be

included in the current gains or losses when they happen actually.

The Group, as the lessor, shall include the assets of operating lease in relevant items in the balance sheet according to asset nature;

rentals of operating lease shall be recognized as current gains or losses with straight-line method in all periods within the lease term.

The initial direct expenses occurred shall be included in the current gains or losses; fixed assets of assets under operating lease shall

be depreciated according to similar asset depreciation policy. Other assets under operating lease shall be amortized with a systematic

and reasonable method. Contingent rentals shall be included in the current gains or losses when they happen actually.

26. Other important accounting policies and accounting estimates

(1) Repurchase of shares

If the Group reduces its capital by acquiring the shares of the Company with approval, then it shall reduce equities according to

the total amount of the face value of cancelled shares, and adjust the difference between the price paid to purchase shares back

(including transaction expense) and the face value of shares. The part exceeding the total face value shall be used to write down

capital surplus (premium on capital stock), surplus reserve and undistributed profit. If the price is lower than the total face value, then


131

the part lower shall be added with capital surplus (premium on capital stock).

Shares repurchased by the Group shall be managed as treasury shares before they are cancelled or transferred; total expenditure

of repurchased shares shall be transferred as the cost of treasury shares.

When treasury shares are transferred, the part higher than their cost shall be transferred to increase capital surplus (premium on

capital stock); the part lower than the cost of treasury shares shall write down capital surplus (premium on capital stock), surplus

reserve and undistributed profit in sequence.

If the Group repurchase shares for the reason of equity incentive, it shall treat all expenses on shares repurchase as treasury

shares while repurchasing and make registration for future reference.

(2) Hedge accounting

Some financial instruments are used as hedging tools by the Group to avoid certain risks. For those hedges meeting

requirements specified, the Group will deal with them by hedge accounting method. The hedge of the Group is fair value hedge. The

hedge for foreign exchange risk of firm commitment is used as fair value hedge by the Group.

The hedging tool and the hedged item are formally specified by the Group at the beginning of hedge with written documents

about the hedging relationship, risk management strategy and risk management objectives. In addition, the hedge effectiveness will

be assessed continuously by the Group from the beginning of hedge.

① Fair value hedge

The profit or loss from the hedging tool specified as fair value hedge with qualification is recorded in the current profit and loss.

Otherwise, the profits or losses from non-tradable equity instruments (or their components) with fair value measurement and

changes included in other comprehensive income are recorded in other comprehensive earning. The profits or losses formed from

the hedging risks of the hedged item should be included into current profit and loss and the book value of hedged item should be

adjusted simultaneously. The related profit and loss from the hedged item that is measured as fair value is recorded in the current

profit and loss and other comprehensive earning without accounting value adjusting.

The hedge accounting is terminated when the hedging relationship is revoked by the Group, the hedging tool is expired or sold,

the contract is terminated or exercised, or the condition is out of qualification.

(3) Measurement of fair value

Fair value, refers to the price that market participant can obtain or needs to pay after selling an asset or transferring a liability,

among the orderly transactions made on the measurement date. The Group measures relevant asset or liability and considers the

characteristics of this asset or liability at fair value; supposes the selling of assets or transfer of liabilities by market participant are

orderly transaction under current market conditions; supposes the orderly selling of assets or transfer of liabilities are carried out in

the main market of relevant assets or liabilities; supposes the transaction is made in the most favorable market for relevant assets or

liabilities when there is no main market. The Group adopts the assumptions that market participants use to maximum their economic

benefits when they price assets or liabilities.

The Company judges whether the fair value at initial recognition equals to its transaction price according to transaction nature

and the characteristics of relevant assets or liabilities; if the transaction price is not equal to the fair value, relevant profits or losses

will be included in the current gains or losses, unless otherwise specified by relevant accounting standards.

The Group adopts the valuation technique that is applicable to the current situation and has enough available data and other

information to support. Mainly used valuation techniques include market approach, income approach and cost approach. In the

application of valuation techniques, relevant observable input values shall be used first, and unobserved input values can only be

used when relevant observable input values cannot be obtained or it is not feasible to obtain them.

Input values used by the Group for fair value measurement is divided into 3 levels. The first level of input values will be used

first, and then the second level and the third level. First level of input values are the quotations of same assets or liabilities that can be

obtained on the measurement date and are not adjusted in the active market; the second level of input values are the direct or indirect

observable input values of relevant assets or liabilities other than the first level of input values; the third level of input values are the

unobservable input values of relevant assets or liabilities.


132

The Group measures non-financial assets with fair value, considers market participant’s ability to use this asset in the best way

to generate economic benefits, or the ability to sell this asset to other market participants who can use this asset in the best way to

generate economic benefits. To measure a liability with fair value, the Group supposes this liability is transferred to other market

participants on the measurement date, and further exists after transfer, and the market participant, who is the transferee, performs

obligations. To measure one’s own equity instrument with fair value, suppose this equity instrument is transferred to other market

participants on the measurement data, and further exits after transfer, and the market participant, as the transferee, obtains relevant

rights to this instrument and undertakes corresponding obligations.

27. Change of important accounting policies and accounting estimates

(1) Change of important accounting policies


Change of accounting policies caused by the adoption of the new financial instruments standards

The Ministry of Finance promulgated the Accounting Standards for Business Enterprises No. 22 - Recognition and

Measurement of Financial Instruments (Revised Version 2017) (C.K. [2017] No. 7), the Accounting Standards for Business

Enterprises No. 23 - Transfer of Financial Assets (Revised Version 2017) (C.K. [2017] No. 8), and the Accounting Standards for

Business Enterprises No. 24 - Hedging Accounting (Revised Version 2017) (C.K. [2017] No. 9) on March 31, 2017 and the

Accounting Standards for Business Enterprises No. 37 - Financial Instruments Presentation (Revised Version 2017) (C.K. [2017] No.

14) on May 2, 2017 (the foregoing standards are collectively referred to as “new financial instruments standards”), requiring that

listed enterprises in China shall implement the new financial instruments standards from January 1, 2019.

The Group began to implement the new financial instruments standards from January 1, 2019.

All identified financial assets under the new financial instruments standards are subsequently measured at amortized cost or fair

value. On the implementation of the new financial instruments standards, the Group evaluated the business model for managing

financial assets based on the actual facts and situation on the day and evaluated the contracted cash flow features of financial assets

based on the facts and situation during the preliminary identification of financial assets, and divided the financial assets into:

financial assets measured by amortized cost, financial assets at fair value through other comprehensive income and, financial assets at

fair value through current profit or loss. For equity equipment investment at fair value through other comprehensive income, at the

time of derecognition of such financial asset, accumulative gains or losses previously included in other comprehensive income should

be transferred from other comprehensive income and included in retained earnings instead, and not included in current profit or

loss.

Under the new financial instruments standards, the Group made provision for impairment reserve and identified credit

impairment loss for financial assets measured at amortized cost and financial security contracts based on expected credit losses.

The Group adopted the new financial instruments standards in a retroactive manner and chose not to make a restatement on the

inconsistency between classification and measurement (including decrease in value) in previous financial statements and in financial

statements prepared under the new financial instruments standards. Therefore, with regards to the accumulated amount affected by

the first implementation of the standards, the Group adjusted the amount of retained earnings or other comprehensive income and

other related items in the financial statements at the beginning of 2019, and did not make a restatement in the financial statements of

2018.

The main changes caused by and impacts of the adoption of new financial instrument standards on the Group are as follows:

--The Group endorses or discounts part of bank acceptance bills in its daily fund management to receive contracted cash flows

and sell financial assets. Therefore, the Group reclassifies these notes receivables on and after January 1, 2019 as financial assets

measured at fair value through other comprehensive income, and presented as receivables financing.

A. Financial asset classification and measurement comparison table before and after the first implementation date


133

a. Impact on consolidated statements

December 31, 2018 (Before change) January 01, 2019 (After change)

Item Type of

measurement Carrying amount Item Type of measurement Carrying amount

Cash and bank

balances Amortized cost 1,416,762,574.83

Cash and bank

balances Amortized cost 1,416,762,574.83

Financial assets held at

fair value through

current profit or loss

Held at fair value

through current

profit or loss

435,241,736.40 Transactional

financial assets

Held at fair value through

current profit or loss 435,241,736.40

Notes receivable Amortized cost 701,179,379.24 Financing of

receivables


other comprehensive

income

701,179,379.24

Accounts receivable Amortized cost 1,727,619,712.96 Accounts receivable Amortized cost 1,727,619,712.96

Other receivables Amortized cost 143,352,998.18 Other receivables Amortized cost 143,352,998.18

Other current assets

[Note] Amortized cost 1,909,177,135.70



Note: They are the financial products purchased and reverse repurchase of national debts.

b. Impact on financial statements of the Company

December 31, 2018 (Before change) January 01, 2019 (After change)

Item Type of

measurement Carrying amount Item Type of measurement Carrying amount

Cash and bank

balances Amortized cost 466,625,941.96

Cash and bank

balances Amortized cost 466,625,941.96

Financial assets held at

fair value through

current profit or loss

Held at fair value

through current

profit or loss

304,655,466.53 Transactional

financial assets


current profit or loss 304,655,466.53

Notes receivable Amortized cost 16,714,350.98 Financing of

receivables


other comprehensive

income

16,714,350.98

Accounts receivable Amortized cost 413,073,855.58 Accounts receivable Amortized cost 413,073,855.58

Other receivables Amortized cost 110,207,407.00 Other receivables Amortized cost 110,207,407.00






B. Table on adjustment of the book value of the original financial asset to the book value of new financial asset classified and

measured in accordance with the new financial instrument standards on the first implementation date

a. Impact on consolidated statements

Item December 31, 2018

(Before change) Reclassification Re-measurement

January 01, 2019

(After change)

Amortized cost:


Minus: Transferred to financing of receivables 701,179,379.24


134

Balance under the new financial instrument

standards

Held at fair value through current profit or loss:

Financial assets held at fair value through current

profit or loss (original standards) 435,241,736.40

Minus: Transferred to transactional financial

assets 435,241,736.40


standards

Transactional financial assets

Plus: Transferred from financial assets held at fair

value through current profit or loss (original

standards)

435,241,736.40


standards 435,241,736.40

Held at fair value through other comprehensive

income:


Transferred from notes receivable 701,179,379.24


standards 701,179,379.24

b. Impact on financial statements of the Company

Item December 31, 2018

(Before change) Reclassification Re-measurement

January 01, 2019

(After change)

Amortized cost:


Minus: Transferred to financing of receivables 16,714,350.98


standards

Held at fair value through current profit or loss:

Financial assets held at fair value through current

profit or loss (original standards) 304,655,466.53

Minus: Transferred to transactional financial

assets 304,655,466.53


standards

Transactional financial assets

Plus: Transferred from financial assets held at fair

value through current profit or loss (original

standards)

304,655,466.53

Balance under the new financial instrument 304,655,466.53


135

standards

Held at fair value through other comprehensive

income:


Transferred from notes receivable 16,714,350.98


standards 16,714,350.98

C. Financial asset impairment reserve adjustment table on the first implementation date

Based on the principle of prudence and consistency, the Group and company still use the accrual ratio under the original aging

analysis method as the expected credit loss rate., so the age portfolio has no impact on bad debts provision change. Payment of

third-party goods which has no provision for bad debts ,classified as low-risk portfolio, the expected credit loss rate is 0.1%, as the

impact amount is very small, so has not adjusted the opening balance.

a. Impact on consolidated statements and financial statement of the Company

measurement category Dec 31th 2018

（before change） reclassification remeasurement

Jan 1st 2019

（after change）

Amortized cost：

Impairment provision of accounts receivable 102,123,323.37 102,123,323.37

Impairment provision of other receivable 4,788,312.94 4,788,312.94

b、impact on financial statement of the company

measurement category Dec 31th 2018

（before change） reclassification remeasurement

Jan 1st 2019

（after change）

Amortized cost：

Impairment provision of accounts receivable 18,419,554.79 18,419,554.79

Impairment provision of other receivable 1,080,952.02 1,080,952.02

D、impact on retained earning and other comprehensive income on Jan 1st 2019

Implement of the new financial instrument standards has no impact on retained earning and and other comprehensive income

on Jan 1st 2019

(2) Change of important accounting estimates


(3) Adjustment and implementation of related items of financial statements at the beginning of the year

when the new financial instrument standards, new income standards, new lease standards were

implemented since 2019


Consolidated balance sheet

Unit: Yuan


136

Item December 31, 2018 January 01, 2019 Adjustment amount

Current assets:


Settlement reserve

Loans to other banks

Transactional financial assets 435,241,736.40 435,241,736.40

Financial assets held at fair value through profit or loss 435,241,736.40 -435,241,736.40


Notes receivable 701,179,379.24 -701,179,379.24


Financing of receivables 701,179,379.24 701,179,379.24

Advance payment 216,573,318.30 216,573,318.30

Premiums receivable


Reinsurance contract reserve receivable


Where: interest receivable 600,649.75 600,649.75

Dividend receivable

Reverse-REPO financial assets

Inventories 2,361,653,181.94 2,361,653,181.94

Contract assets





Non-current assets

Loans and advances granted

Debt investment





Long-term equity investment 60,646,438.46 60,646,438.46



137



Fixed assets 868,297,081.06 868,297,081.06



Oil and gas assets

Use right assets



Goodwill

Long-term unamortized expenses 3,284,532.30 3,284,532.30




Total assets 10,633,161,177.21 10,633,161,177.21



Central bank loan

Loans from others


Financial liabilities held at fair value through profit or

loss


Notes payable


Advances received 1,207,916,762.75 1,207,916,762.75


Proceeds from sale of repurchase financial assets

Deposit taken and interbank deposit

Proceeds from security transaction agency

Proceeds from security underwriting agency


Taxes payable 162,065,893.88 162,065,893.88

Other payables 95,355,792.24 95,355,792.24


138


Dividend payable

Handling fee and commission payable







Reinsurance contract reserve


Bonds payable


Perpetual bond

Lease obligation

Long-term payables

Long-term employee pay payable 4,524,667.94 4,524,667.94

Estimated liabilities 10,150,000.00 10,150,000.00

Deferred income

Deferred income tax liabilities 3,234,750.00 3,234,750.00


Total non-current liabilities 17,909,417.94 17,909,417.94


Owner’s equity:

Share capital 821,243,960.00 821,243,960.00


Wherein: preferred shares

Perpetual bond



Other comprehensive incomes -24,490,354.80 -24,490,354.80

Special reserves

Surplus reserve 401,648,181.64 401,648,181.64

General risk reserve


139


Total owner’s equity belonging to parent company 5,907,337,461.81 5,907,337,461.81

Minority equity -270,368.32 -270,368.32



Description on adjustments

The Company has implemented the new financial instruments standards from January 1, 2019. According to the connecting

rules of the new financial instrument standard, the Company should classify and measure financial instruments in accordance with

the rules on the date of implementation. The previous comparable figures have no need to be restated if those in the previous

comparative financial statements are inconsistent with the requirements of the standard. The difference between the new standard and

the original one is recorded in the beginning retained earnings or other comprehensive earnings.

Balance sheet of parent company

Unit: Yuan

Item December 31, 2018 January 01, 2019 Adjustment amount

Current assets:

Cash and bank balances 466,625,941.96 466,625,941.96


Financial assets held at fair value through profit or loss 304,655,466.53 -304,655,466.53


Notes receivable 16,714,350.98 -16,714,350.98

Accounts receivable 413,073,855.58 413,073,855.58


Advance payment 39,325,985.53 39,325,985.53


Where: interest receivable 5,062.50 5,062.50

Dividend receivable

Inventories 187,734,497.22 187,734,497.22

Contract assets





Non-current assets

Debt investment



140




Long-term equity investment 2,787,966,574.79 2,787,966,574.79




Fixed assets 142,684,254.10 142,684,254.10



Oil and gas assets

Use right assets



Goodwill

Long-term unamortized expenses




Total assets 6,208,404,756.48 6,208,404,756.48




Financial liabilities held at fair value through profit or

loss


Notes payable

Accounts payable 208,479,126.48 208,479,126.48

Advances received 5,035,058.53 5,035,058.53



Taxes payable 2,884,844.16 2,884,844.16

Other payables 3,063,662,415.83 3,063,662,415.83



141

Dividend payable







Bonds payable


Perpetual bond

Lease obligation

Long-term payables

Long-term employee pay payable

Estimated liabilities

Deferred income

Deferred income tax liabilities


Total non-current liabilities


Owner’s equity:

Share capital 821,243,960.00 821,243,960.00


Wherein: preferred shares

Perpetual bond



Other comprehensive incomes

Special reserves

Surplus reserve 410,621,980.00 410,621,980.00




Description on adjustments

The Company has implemented the new financial instruments standards from January 1, 2019. According to the connecting

rules of the new financial instrument standard, the Company should classify and measure financial instruments in accordance with


142

the rules on the date of implementation. The previous comparable figures have no need to be restated if those in the previous

comparative financial statements are inconsistent with the requirements of the standard. The difference between the new standard and

the original one is recorded in the beginning retained earnings or other comprehensive earnings.

VI. Taxes

1. Main taxes and tax rates

Taxes Tax bases Tax rates

Value-added tax

(VAT)

The taxable revenue from sales of goods or

rendering of services

Taxable income is calculated at output tax rates of 0, 6%,

9%, and 13%, and VAT is calculated based on the

difference after deducting the input tax allowable for the

current period. The applicable tax rate for the Group’s VAT

taxable sales or imported goods during the period from

January to March 2019 was 16% / 10%. According to the

Notice on Deepening the Policies Related to Value-Added

Tax Reform ([2019] No. 39) released by the Ministry of

Finance, the State Taxation Administration and the General

Administration of Customs, such applicable tax rate has

been adjusted to 13% / 9% from April 1, 2019.

Urban maintenance

and construction tax Turnover tax payable 7%

Enterprise income tax Taxable income

Enterprise income tax rate is 25%. The Company and

Zhejiang Shaoxing Supor Domestic Electrical Appliances

Co., Ltd. are levied at a preferential tax rate of 15%.

Housing property tax

Wuhan Supor Pressure Boiler Co., Ltd.* and

Wuhan Supor Cookware Co., Ltd. are levied at

the rate of 1.2% of the balance of the housing

property cost after deducting 25% of the cost;

other companies are levied at the rate of 1.2%

of the balance of the housing property cost after

deducting 30% of the cost; for housing property

levied on the basis of rent, housing property tax

is levied at the rate of 12% of rent revenue.

1.2%, 12%

Education surcharge Turnover tax payable 3%

Local education

surcharge Turnover tax payable

2%, subsidiaries excluding those in Wuhan are levied at

the rate of 1.5%

Different enterprise income tax rates applicable to different taxpayers:

Taxpayers Income tax rate

The Company 15%

Zhejiang Shaoxing Supor Domestic Electrical Appliances Co., Ltd. 15%


143

Taxpayers other than the above-mentioned 25%

2. Tax preferential policies

(1) Pursuant to No. GKHZ [2019] No. 70 document, the Company renewed the hi-tech enterprise qualification in 2018 and is entitled

to enjoy the preferential tax rate of 15% for the three-year period starting from January 1, 2018.

(2) Pursuant to No. GKHZ [2020] 32 documents, Zhejiang Shaoxing Supor Domestic Electrical Appliances Co., Ltd. renewed the

hi-tech enterprise qualification in 2019 and is entitled to enjoy the preferential tax rate of 15% for the three-year period starting from

January 1, 2019.

VII. Notes to items of consolidated financial statements

1. Monetary capital

Unit: Yuan

Item Closing balance Opening balance

Cash on hand 91,345.89 55,510.80

Cash in bank 1,227,662,240.97 1,396,282,615.31

Other cash and bank balances 80,379,070.30 20,424,448.72

Total 1,308,132,657.16 1,416,762,574.83

Including: deposited overseas 42,514,760.41 29,559,652.01

Other remarks:

1) There is RMB 74,000,000 restricted amount at the end of the period as supply chain financial deposit. Alipay wallet ,JD settlement

account, securities settlement accounts, futures settlement accounts, and account at youzan.com, amount in this account is not limited

to use..

2) On December 31, 2019, the Group’s monetary funds deposited in Vietnam amounted to RMB 34,283,080.13 (December 31, 2018:

equivalent to RMB 25,908,347.48); monetary funds deposited in Singapore amounted to RMB 6,762,757.40 (2018 December 31,

2013: equivalent to RMB 3,651,304.53); monetary funds deposited in Indonesia equivalent to RMB 1,468,922.88 (December 31,

2018: equivalent to RMB 0)

2. Transactional financial assets

Unit: Yuan


Financial assets held at fair value through current profit or loss 1,264,563,042.79 435,241,736.40

Total 1,264,563,042.79 435,241,736.40

Other remarks:

The Company, Shaoxing Supor Company, Shaoxing Zhejiang Supor Electrical and SEB Shanghai purchased financial products of

RMB 700,000,000, RMB 300,000,000, RMB 200,000,000 and RMB 60,000,000, respectively. These financial products guarantee

principal, have floating benefits and relate to interest rate and exchange rate. At the period end of 2019, the income from changes in

fair value was recognized as RMB 4,563,042.79.


144

3. Accounts receivable

(1) Details on categories

Unit: Yuan

Categories

Closing balance Opening balance

Book balance Provision for bad

debts Carrying

amount


debts Carrying

amount Amount Ratio Amount

Provision

proportio

n

Amount Ratio Amount

Provision

proportio

n

Receivables for

provision made on an

individual basis

6,351,58

7.89 0.34%

6,351,58

7.89 100.00%

14,234,40

0.67 0.78%

14,234,40

0.67 100.00%

Including:

Receivables for

provision made on

the basis of portfolio

1,888,00

4,836.29 99.66%

91,095,4

03.89 4.82%

1,796,909

,432.40

1,815,508

,635.66 99.22%

87,888,92

2.70 4.84%

1,727,619,7

12.96

Including:

Portfolio 1: age

portfolio

1,808,26

6,453.40 95.45%

91,015,6

65.51 5.03%

1,717,25

0,787.89

1,744,335

,355.42 95.33%

87,888,92

2.70 5.04%

1,656,446,4

32.72

Portfolio 2: low-risk

portfolio

79,738,3

82.89 4.21%

79,738.3

8 0.10%

79,658,64

4.51

71,173,28

0.24 3.89%

71,173,280.

24

Total 1,894,35

6,424.18 100.00%

97,446,9

91.78 5.14%

1,796,909

,432.40

1,829,743

,036.33 100.00%

102,123,3

23.37 5.58%

1,727,619,7

12.96

Provision made on an individual basis:

Unit: Yuan

Name

Closing balance

Book balance Provision for

bad debts

Provision

proportion Reasons

Customer 1 4,523,328.43 4,523,328.43 100.00% Full provisions are made as such receivables are with

long age and estimated to be unrecoverable.

Customer 2 1,447,935.17 1,447,935.17 100.00% Full provisions are made as such receivables are with

long age and estimated to be unrecoverable.

Customer 3 126,440.44 126,440.44 100.00% Full provisions are made as such receivables are

estimated to be unrecoverable.

Customer 4 253,883.85 253,883.85 100.00% Full provisions are made as such receivables are

estimated to be unrecoverable.

Total 6,351,587.89 6,351,587.89 -- --


145

Provision made on the basis of portfolio: Portfolio 1: age portfolio

Unit: Yuan

Name Closing balance

Book balance Provision for bad debts Provision proportion

Within 1 year (inclusive) 1,805,902,862.50 90,219,369.84 5.00%

1-2 years (inclusive) 1,382,768.73 110,621.50 8.00%

2-3 years (inclusive) 342,405.61 51,360.84 15.00%

3-4 years (inclusive) 50.00%

4-5 years (inclusive) 20,516.16 16,412.93 80.00%

Over 5 years 617,900.40 617,900.40 100.00%

Total 1,808,266,453.40 91,015,665.51 --

If bad-debt provision for accounts receivable is made based on the general model of expected credit losses, please disclose the

relevant information about the bad-debt provision with reference to the disclosure of other receivables:


Disclosure by ages

Unit: Yuan

Ages Book balance

Within 1 year (inclusive) 1,885,895,129.24

1-5 years (with 2 years) 1,509,209.17

2-3 years 342,405.61

Over 3 years 6,609,680.16

3-4 years 2,622,700.00

4-5 years (with 5 years) 1,921,144.59

Over 5 years 2,065,835.57

Total 1,894,356,424.18

(2) Provisions made, collected or reversed in current period

Provisions made in current period

Unit: Yuan

Categories Opening balance

Amount of changes in current period

Closing balance Provision [note]

Recovered or

carried back

Canceled after

verification

Provision for bad debts for

accounts receivable 102,123,323.37 3,586,805.48 8,263,137.07 97,446,991.78

Total 102,123,323.37 3,586,805.48 8,263,137.07 97,446,991.78



146

[Note]: Including increased bad debt reserve of RMB 104,611.49 for converted difference in foreign currency statement caused by

exchange rate fluctuations.

(3) Accounts receivable actually written off in current period

Unit: Yuan

Item Amount

Accounts receivable actually written off 8,263,137.07

Including significant accounts receivable written off:

Unit: Yuan

Debtors Type of accounts

receivable Amount Reason

Write-off

procedures

performed

Whether the

amount was

from connected

transactions

Customer 1 Goods payment 8,263,137.07

Goods payment cannot be recovered

because of the Company’s capital

chain rupture

Approval by the

management No

Total -- 8,263,137.07 -- -- --

(4) Details of the top 5 debtors with largest balances

Unit: Yuan

Debtors Ending balance of accounts

receivable

Proportion in the total ending

balance of accounts receivable

Ending balance of provision for

bad debt

SEB ASIA LTD. 1,046,184,084.11 55.23% 52,309,204.21

Customer 1 218,134,707.58 11.51% 10,906,735.38

Customer 2 49,869,284.12 2.63% 49,869.28

Customer 3 45,212,859.96 2.39% 2,260,643.00

Customer 4 44,835,978.27 2.37% 2,241,798.91

Total 1,404,236,914.04 74.13%

4. Financing of receivables

Unit: Yuan


Notes receivable measured at the fair value

Including: Bank acceptance 1,186,980,101.71 701,179,379.24

Total 1,186,980,101.71 701,179,379.24

Changes in receivables financing and its fair value during the period


147


If impairment provision for receivables financing is made based on the general model of expected credit losses, please disclose the

relevant information about the impairment provision with reference to the disclosure of other receivables:


Other remarks:

(1) The Group discounts or endorses part of bank acceptance before maturity as required by fund management. This related

management mode about bank acceptance including collect contract cash flow and sell it as target. Therefore, such bank acceptance

was classified as financial assets measured at fair value through other comprehensive income.

(2) There is no financing of receivables pledged at the end of the year.

(3) Endorsed or discounted notes receivable undue at the balance sheet date at the end of the year

Unit: Yuan

Item Closing balance derecognized Closing balance not yet derecognized

Bank acceptance 3,328,398,198.58 290,585,764.00

Total 3,328,398,198.58 290,585,764.00

5. Advance payment

(1) Listing by ages

Unit: Yuan

Ages Closing balance Opening balance

Amount Ratio Amount Ratio

Within one year 270,517,693.79 97.12% 210,300,972.64 97.10%

1-2 years 7,241,332.84 2.60% 5,513,186.03 2.55%

2-3 years 23,631.87 0.01% 659,555.09 0.30%

Over 3 years 762,804.54 0.27% 99,604.54 0.05%

Total 278,545,463.04 -- 216,573,318.30 --

(2) Details of the top 5 debtors with largest balances

Debtors Book balance Proportion to the total balance of advances paid

Supplier 1 41,311,061.14 14.83%

Supplier 2 29,859,599.92 10.72%

Supplier 3 23,538,823.57 8.45%

Supplier 4 17,991,308.50 6.46%

Supplier 5 15,994,074.13 5.74%

Subtotal 128,694,867.26 40.20%


148

(6) Other receivables

Unit: Yuan


Interest receivable 600,649.75


Total 14,230,736.62 143,352,998.18

(1) Interest receivable

1) Classification of interest receivable

Unit: Yuan


Interest for time deposit 600,649.75

Total 600,649.75

2) Provision for bad debts



1) Other receivables categorized by nature

Unit: Yuan

Nature of receivables Ending book balance Beginning book balance

Deposit as security 7,778,406.29 12,562,551.19

VAT refund on export goods 395,957.97 26,278,547.43

Temporary payment receivable 7,192,490.76 7,823,097.13

Personal deposit 2,610,424.76 3,877,681.17

Insurance indemnity 96,998,784.45

Total 17,977,279.78 147,540,661.37


Unit: Yuan

Provision for bad debts Phase I Phase II Phase III Total


149

Predicted credit loss in

future 12 months

Predicted credit loss in the

whole period of existence

(without credit

impairment)

Predicted credit loss in the

whole period of existence

(with credit impairment)

Balance on January 1, 2019 4,788,312.94 4,788,312.94

Balance on January 1, 2019 in the

current period —— —— —— ——

Carried back in the current period 1,042,336.68 1,042,336.68

Other changes [note] 566.90 566.90

Balance on December 31, 2019 3,746,543.16 3,746,543.16

[Note]: Increased bad debt reserve of RMB 566.90 for converted difference in foreign currency statement caused by exchange rate

fluctuations.

Changes in book balance of loss provision due to significant changes in the current period


Disclosure by ages

Unit: Yuan

Ages Book balance

Within 1 year (inclusive) 11,725,321.33

1-5 years (with 2 years) 2,554,200.71

2-3 years 393,520.00

Over 3 years 3,304,237.74

3-4 years 416,515.63

4-5 years (with 5 years) 101,000.00

Over 5 years 2,786,722.11

Total 17,977,279.78

3) Provisions made, collected or reversed in current period


Unit: Yuan



Closing balance Accrued

Recovered or

carried back

Canceled after

verification others

Other receivables 4,788,312.94 1,042,336.68 566.90 3,746,543.16

Total 4,788,312.94 1,042,336.68 566.90 3,746,543.16


150

4) Other receivables actually written off in current period

Unit: Yuan

Item Amount

Other receivables actually written off in current period 0.00

5) Other receivables of the top 5 ending balances by the debtor

Unit: Yuan

Debtors Nature of

receivables Closing balance Ages

Proportion in total

balance of other

receivables at the

end of the period

Ending balance

of provision for

bad debt

Administrative Committee of Shaoxing

Keqiao Economic Development Zone

Deposit as

security 1,980,000.00

Within one

year 11.01%

Entity 1 Deposit as

security 799,996.20 Over 5 years 4.45% 799,996.20

Entity 2

Temporary

payment

receivable

753,726.94 Within one

year 4.19% 37,686.35

Special account of social insurance for

medical treatment of work-related injury

Temporary

payment

receivable


year 3.60% 32,379.64

Entity 3

Temporary

payment

receivable


year 3.12% 28,077.11

Total -- 4,742,858.02 -- 26.37% 898,139.30

7. Inventories

Have the new income standards been implemented?

□ Yes √ No

(1) Inventory classification

Unit: Yuan

Item



write-down Carrying amount Book balance

Provision for

write-down Carrying amount


151

Raw

materials 376,996,325.50 13,375,569.48 363,620,756.02

345,695,996.65 13,875,643.43 331,820,353.22

Goods in

process 79,867,603.11 79,867,603.11 85,751,268.03 85,751,268.03

Merchandise

inventory 1,717,274,161.57 41,458,937.84 1,675,815,223.73 1,875,076,011.29 39,563,320.06 1,835,512,691.23

Low value

consumables 116,061,025.42 744,780.66 115,316,244.76 97,808,785.27 44,393.35 97,764,391.92

Packages 12,993,072.38 12,993,072.38 10,804,477.54 10,804,477.54

Total 2,303,192,187.98 55,579,287.98 2,247,612,900.00 2,415,136,538.78 53,483,356.84 2,361,653,181.94

(2) Provision for obsolete stocks

Unit: Yuan

Item Opening balance

Increase Decrease

Closing balance Provision Other [note]

Reversal or

write-off Others

Raw materials 13,875,643.43 14,995,946.00 53,017.03 15,549,036.98 13,375,569.48

Merchandise

inventory 39,563,320.06 22,806,292.19 17,832.68 20,928,507.09 41,458,937.84

Low value

consumables 44,393.35 700,387.31 744,780.66

Total 53,483,356.84 38,502,625.50 70,849.71 36,477,544.07 55,579,287.98

[Note]: Increased inventory depreciation reserve of RMB 70,849.71 for converted difference in foreign currency statement caused by

exchange rate fluctuations.

8. Other current assets


□ Yes √ No

Unit: Yuan


Creditable VAT 139,222,321.24 80,719,521.31

Financial products 908,129,878.52

Reverse repurchase of national debts 1,001,047,257.18

Time deposits(remark) 1,591,313,150.71

Others 2,449,217.21 1,038,083.48

Total 1,732,984,689.16 1,990,934,740.49


152

Other remarks: The time deposit for the purpose of earning interest, including deposit principle RMB 1,550,000,000, interest

receivable RMB 41,313,150.71.

9. Long-term equity investments

Unit: Yuan

Investee

Opening

balance

(Carrying

amount)

Increase/decrease

Closing

balance

(Carrying

amount)

Closing

balance

of

provision

for

impairme

nt

Investme

nt

increased

Investme

nt

decreased

Investme

nt profit

or loss

recognize

d by

equity

method

Adjustme

nt in other

comprehe

nsive

income

Changes

in other

equity

Cash

dividend/

profit

declared

for

distributio

n

Provision

for

impairme

nt

Others

I. Joint ventures

II. Associated enterprises

Wuhan

Anzai

Cookware

Co., Ltd.

60,646,43

8.46

4,271,292

.16

3,000,000

.00

61,917,73

0.62

Subtotal 60,646,43

8.46

4,271,292

.16

3,000,000

.00

61,917,73

0.62

Total 60,646,43

8.46

4,271,292

.16

3,000,000

.00

61,917,73

0.62

Other remarks:

In net profits of Wuhan Anzai Cookware Co., Ltd. investment income owned by the Company determined according to

shareholding ratio in current period totaled RMB 4,843,516.71 and amount influenced by upstream transaction was RMB

-572,224.55.

10. Fixed assets

Unit: Yuan


Fixed assets 908,982,690.72 868,297,081.06

Total 908,982,690.72 868,297,081.06

(1) Fixed assets

Unit: Yuan

Item Buildings and

structures

General

equipment Special equipment Transport facilities Total


153

I. Cost:

1. Opening balance 767,731,849.02 221,541,855.97 790,238,778.83 29,405,400.68 1,808,917,884.50

2. Increase 13,293,773.70 38,576,399.28 105,902,779.78 5,623,221.79 163,396,174.55

(1) Acquisition 3,482,814.29 27,283,361.20 61,964,982.82 5,492,963.07 98,224,121.38

(2)Transferred in from

construction in progress 9,810,959.41 11,293,038.08 43,937,796.96 130,258.72 65,172,053.17

(3) Increase from

business combination

3. Decrease 9,635,738.45 49,124,145.54 6,999,221.03 65,759,105.02

(1) Disposal or scrapping 9,635,738.45 49,124,145.54 6,999,221.03 65,759,105.02

4. Ending balance 781,025,622.72 250,482,516.80 847,017,413.07 28,029,401.44 1,906,554,954.03

II. Accumulated depreciation

1. Opening balance 238,733,772.34 161,833,212.18 520,127,856.13 19,925,962.79 940,620,803.44

2. Increase 25,164,918.80 19,055,728.54 59,242,525.43 4,221,262.65 107,684,435.42

(1) Provision 25,164,918.80 19,055,728.54 59,242,525.43 4,221,262.65 107,684,435.42

3. Decrease 9,006,726.85 35,145,594.08 6,580,654.62 50,732,975.55

(1) Disposal or scrapping 9,006,726.85 35,145,594.08 6,580,654.62 50,732,975.55

4. Ending balance 263,898,691.14 171,882,213.87 544,224,787.48 17,566,570.82 997,572,263.31

III. Provision for impairment

1. Opening balance

2. Increase

(1) Provision

3. Decrease

(1) Disposal or scrapping

4. Ending balance

IV. Carrying amount

1. Closing book value 517,126,931.58 78,600,302.93 302,792,625.59 10,462,830.62 908,982,690.72

2. Opening book value 528,998,076.68 59,708,643.79 270,110,922.70 9,479,437.89 868,297,081.06

(2) Fixed assets with certificate of titles unsettled

Unit: Yuan

Item Carrying amount Reasons for unsettlement

Function dormitory of Shaoxing Supor

Company 42,034,445.30

For all projects completed and completed the unification for

property certificates after completion and settlement procedures


154

No. 8 plant of Shaoxing Supor Company 33,376,019.20 For all projects completed and completed the unification for


No.3 plant of Shaoxing Supor Company 31,309,613.98 For all projects completed and completed the unification for


No.1 plant of Shaoxing Supor Company 28,718,945.47 For all projects completed and completed the unification for


Function cafeteria of Shaoxing Supor

Company 14,024,978.40



12# plant of Shaoxing Supor Co., Ltd. 13,777,379.21 For all projects completed and completed the unification for


Transformer substation (35 kV) of

Shaoxing Supor Company 3,832,864.96



No. 11 plant and structures of P&R

Products 2,744,192.96

Transfer procedure of land use right certificate not settled due to

land ownership issue

Extended plant for bakelite workshop of

P&R Products 335,866.79



No. 10 workshop building and structures

of P&R Products 225,549.87



Water pump building and structures of

P&R Products 152,165.08



Polishing workshop of P&R Products 149,760.00 Transfer procedure of land use right certificate not settled due to


Generator room of Rubber and Plastics

Product Company 3,926.89



Subtotal 170,685,708.11

11. Construction in progress

Unit: Yuan



Total 215,167,399.12 40,562,136.79

(1) Details

Unit: Yuan

Item



impairment Carrying amount Book balance

Provision for

impairment Carrying amount


155

Plant construction of

Shaoxing Supor

Company

85,194,744.55 85,194,744.55 2,193,233.79 2,193,233.79

WMF factory project in

Yuhuan 83,421,885.21 83,421,885.21 720,214.14 720,214.14

Kitchen and electrical

appliances infrastructure

project

30,553,854.96 30,553,854.96

Equipment payment 9,644,260.36 9,644,260.36 21,002,105.99 21,002,105.99

Piecemeal projects 6,352,654.04 6,352,654.04 16,646,582.87 16,646,582.87

Total 215,167,399.12 215,167,399.12 40,562,136.79 40,562,136.79

(2)Changes in significant projects

Unit: Yuan

Projects Budgets Opening

balance Increase

Transferr

ed to

fixed

assets

Other

decrease

Closing

balance

Accumul

ated

investme

nt to

budget

Completi

on

percenta

ge (%)

Accumul

ated

amount

of

borrowin

g cost

capitaliz

ation

Includin

g:

amount

of

borrowin

g cost

capitaliz

ation in

current

period

Annual

capitaliz

ation rate

(%)

Capital

source

Plant

construct

ion of

Shaoxin

g Supor

Compan

y

96,460,0

00.00

2,193,23

3.79

85,031,1

81.67

2,029,67

0.91

85,194,7

44.55 90.43% 90.43%

Self-own

ed

capital

WMF

factory

project

in

Yuhuan

214,400,

000.00

720,214.

14

82,701,6

71.07

83,421,8

85.21 38.91% 38.91%

Self-own

ed

capital


156

Kitchen

and

electrical

applianc

es

infrastru

cture

project

115,580,

000.00

30,553,8

54.96

30,553,8

54.96 26.44% 26.44%

Self-own

ed

capital

Equipme

nt

payment

21,002,1

05.99

10,848,1

64.06

22,206,0

09.69

9,644,26

0.36

Self-own

ed

capital

Pieceme

al

projects

16,646,5

82.87

30,642,4

43.74

40,936,3

72.57

6,352,65

4.04

Self-own

ed

capital

Total 426,440,

000.00

40,562,1

36.79

239,777,

315.50

65,172,0

53.17

215,167,

399.12 -- -- --

12. Intangible assets

(1) Details

Unit: Yuan

Item Land use right Trademark use right Software Total

I. Cost:

1. Opening balance 402,886,490.11 47,328,811.32 47,330,585.83 497,545,887.26

2. Increase 71,801,206.42 12,870,467.36 84,671,673.78

(1) Acquisition 71,801,206.42 12,870,467.36 84,671,673.78

(2) In-house R&D

(3) Increase from business

combination

3. Decrease

(1) Disposal

4. Ending balance 474,687,696.53 47,328,811.32 60,201,053.19 582,217,561.04

II. Accumulated amortization

1. Opening balance 63,240,843.96 14,153,593.39 22,879,017.80 100,273,455.15

2. Increase 7,113,657.39 4,732,881.13 4,550,673.20 16,397,211.72

(1) Provision 7,113,657.39 4,732,881.13 4,550,673.20 16,397,211.72


157

3. Decrease

(1) Disposal

4. Ending balance 70,354,501.35 18,886,474.52 27,429,691.00 116,670,666.87

III. Provision for impairment

1. Opening balance

2. Increase

(1) Provision

3. Decrease

(1) Disposal

4. Ending balance

IV. Carrying amount

1. Closing book value 404,333,195.18 28,442,336.80 32,771,362.19 465,546,894.17

2. Opening book value 339,645,646.15 33,175,217.93 24,451,568.03 397,272,432.11

The percentage of intangible assets generated from in-house R&D in intangible assets balance is 0.00%.

13. Long-term deferred expenses

Unit: Yuan

Item Opening balance Increase Amortization Other decrease Closing balance

Improvement expenditure of

fixed assets leased for operation 3,206,258.12 1,043,030.55 2,163,227.57

System upgrading fees 78,274.18 73,199.40 5,074.78

Total 3,284,532.30 1,116,229.95 2,168,302.35

14. Deferred income tax assets/ deferred income tax liabilities

(1) Un-offset deferred income tax assets

Unit: Yuan

Item


Deductible temporary

difference

Deferred income tax

assets

Deductible temporary

difference

Deferred income tax

assets

Provision for impairment of

assets 143,830,951.12 30,275,578.66 148,820,932.73 28,558,606.93

Profits not realized by internal

transaction 44,573,926.15 9,352,565.17 41,773,559.38 8,720,890.11

Accrued expenses 1,197,930,323.25 277,540,340.32 951,565,580.21 198,053,772.69


158

Accrued salary 71,753,378.99 16,944,497.60 57,585,659.02 14,394,513.56

Estimated liabilities 21,150,000.00 4,272,500.00 10,150,000.00 1,522,500.00

Share-based payment 135,922,797.01 23,859,926.04 94,420,446.30 16,644,169.15

Book-tax difference for

depreciation of fixed assets 7,866,155.15 1,966,538.80 7,545,846.83 1,886,461.71

Total 1,623,027,531.67 364,211,946.59 1,311,862,024.47 269,780,914.15

(2) Deferred tax liabilities before offset

Unit: Yuan

Item


Taxable temporary

difference

Deferred income tax

liabilities

Taxable temporary

difference

Deferred income tax

liabilities

Governmental subsidy

for deferred tax 8,229,000.00 2,057,250.00 12,939,000.00 3,234,750.00

Profit and loss from fair

value changes 2,525,313.39 378,797.01

Total 10,754,313.39 2,436,047.01 12,939,000.00 3,234,750.00

15. Accounts payable

(1) Details

Unit: Yuan


Goods payment 1,705,733,536.18 1,890,712,727.11

Equipment payment 49,987,734.84 30,610,807.18

Expenses payment 1,255,743,385.34 1,032,488,700.88

Total 3,011,464,656.36 2,953,812,235.17

16. Advances received


□ Yes √ No

(1) Details

Unit: Yuan



159

Goods payment 1,106,996,534.96 1,207,916,762.75

Total 1,106,996,534.96 1,207,916,762.75

17. Employee benefits payable

(1) Details

Unit: Yuan

Item Opening balance Increase Decrease Closing balance

I. Short-term employee benefits 284,710,462.05 1,491,891,468.49 1,482,550,528.72 294,051,401.82

II. Post-employment benefits -

defined contribution plan 3,392,344.04 89,558,803.94 87,161,860.03 5,789,287.95

III. Termination benefits 931,175.65 1,035,442.06 1,072,398.50 894,219.21

Total 289,033,981.74 1,582,485,714.49 1,570,784,787.25 300,734,908.98

(2) Details of short-term employee benefits

Unit: Yuan


1. Wage, bonus, allowance and

subsidy 260,229,050.89 1,320,938,048.40 1,316,751,257.76 264,415,841.53

2. Employee welfare fund 3,065,123.40 70,891,659.04 70,767,329.50 3,189,452.94

3. Social insurance premium 2,154,635.98 39,794,723.88 38,481,702.20 3,467,657.66

Including: Medicare premium 1,894,741.79 33,690,362.79 32,565,951.66 3,019,152.92

Occupational injuries

premium 116,750.70 2,565,724.66 2,533,427.28 149,048.08

Maternity premium 143,143.49 3,538,636.43 3,382,323.26 299,456.66

4. Housing accumulation funds -257,850.20 31,115,642.00 30,839,204.72 18,587.08

5. Trade union fund and employee

education fund 19,519,501.98 29,151,395.17 25,711,034.54 22,959,862.61

Total 284,710,462.05 1,491,891,468.49 1,482,550,528.72 294,051,401.82

(3) Details of defined contribution plan

Unit: Yuan


1. Basic endowment insurance

premium 3,211,010.24 87,049,350.15 84,687,260.45 5,573,099.94


160

2. Unemployment insurance premium 181,333.80 2,509,453.79 2,474,599.58 216,188.01

Total 3,392,344.04 89,558,803.94 87,161,860.03 5,789,287.95

(4) Termination benefits

The termination benefits paid by the Group as a result of the termination of labor relations during the year were RMB

1,072,398.50 and the unpaid amount payable at the end of the year was RMB 894,219.21.

18. Taxes and rates payable

Unit: Yuan


Value-added tax (VAT) 4,978,757.32 25,040,283.48

Enterprise income tax 151,162,623.73 122,594,961.38

Individual income tax 3,441,139.07 2,782,370.19

Urban maintenance and construction tax 3,531,652.87 2,066,097.55

Housing property tax 4,043,597.20 2,985,716.63

Land use tax 496,420.60 2,373,258.39

Stamp tax 2,402,242.33 2,782,575.78

Water conservancy special fund 12,741.47 12,741.46

Education surcharge 1,518,315.16 903,810.43

Local education surcharge 1,004,261.66 524,078.59

Total 172,591,751.41 162,065,893.88

19. Other payables

Unit: Yuan


Other payables 93,696,839.73 95,355,792.24

Total 93,696,839.73 95,355,792.24

(1) Other payables

1) Listing by nature

Unit: Yuan


Deposit as security 64,440,771.49 62,267,376.78


161

Temporary receipts payable 13,180,587.11 19,709,879.44

Others 16,075,481.13 13,378,536.02

Total 93,696,839.73 95,355,792.24

20.Other current liability

Whether the new revenue guidelines have been implemented

□ YES √ NO

Unit:Yuan


Endorsed bank acceptance unrecognized 290,585,764.00

Total 290,585,764.00

21. Long-term employee benefits payable

(1) Details

Unit: Yuan


II. Termination benefits 3,683,907.11 4,524,667.94

Total 3,683,907.11 4,524,667.94

22. Estimated liabilities


□ Yes √ No

Unit: Yuan

Item Closing balance Opening balance Reasons for the balance

Pending lawsuit 21,150,000.00 10,150,000.00 Please refer to Note 14 commitments and

contingencies for details

Total 21,150,000.00 10,150,000.00 --

23. Share capital

Unit: Yuan

Opening balance

Movements (+, -)

Closing balance New shares

Shares

bonus

Converted

capital Others Subtotal


162

Total shares 821,243,960.00 -124,050.00 -124,050.00 821,119,910.00

Other remarks:

Share capital decreased by RMB 124,050 in this period, which is due to the repurchase and cancellation of the 124,050

restricted shares of resigned incentive objects at a price of RMB 1/share.

24. Capital reserve

Unit: Yuan


Equity premium 56,961,402.25 56,961,402.25

Other capital reserve 139,529,530.66 55,103,819.44 56,961,402.25 137,671,947.85

Total 139,529,530.66 112,065,221.69 56,961,402.25 194,633,350.10

Other notes (including increase and decrease in current period and variation reason):

1)Equity premium increased RMB 56,961,402.25, carry forward capital reserve of payment in viable shares confirmed during

waiting period.

2)Other capital reserve was increased by RMB 55,103,819.44 in current period. Increase reason is as follows: ① Equity-settled

share-based payment RMB 41,132,741.22 in current period was included in capital reserve (other capital reserve). For details, please

see Note XIII Description on share-based payment. ② Pre-tax amount deducted of share-based payment in current period was

allowed to exceed the cost related to share-based payment as specified in accounting standards. Income tax effect RMB

13,971,078.22 of the excess portion was included in capital reserve-other capital reserve directly, wherein corresponding impact of

deferred income tax assets is RMB 7,469,723.92, and the current income tax impact RMB 6,501,354.30.

Other capital reserve decreased by RMB 56,961,402.25,carry forward to equity premium.

25. Treasury stock

Unit: Yuan


Treasury stock 3,868,950.00 1,438,172.56 964,650.00 4,342,472.56

Total 3,868,950.00 1,438,172.56 964,650.00 4,342,472.56

Other notes (including increase and decrease in current period and variation reason):

1) The increase in this period was due to the Group’s repurchase of 20,000 shares of the Company’s shares from the secondary

market in a centralized bidding during the reporting period.

2) Treasure stock decreased by RMB 964,650.00 in current period. Increase reason is as follows: ① according to the resolutions of

the eighth meeting of the sixth board of directors and the eleventh meeting of the sixth the board of directors of the Company, nine

incentive objects of the Company did not meet the incentive conditions because they left the Company, so a total of 124,050

restricted stocks were repurchased at the price of 1 yuan / share, and repurchase obligation was reduced by RMB 124,050

accordingly; ② restricted shares granted under the 2017 restricted stock incentive plan: the unlocking conditions for unlock part in

the second phase of first batch of shares granted and unlock part in the first phase of second batch of shares granted were satisfied, so

repurchase obligations was released by RMB 756,400 and RMB 84,200.


163

26. Other comprehensive income

Unit: Yuan

Item Opening balance

Amount incurred during this period

Closing

balance

Current period

cumulative

before income

tax

Minus:

OCI

carried

forward

transferred

to profit or

loss

Minus:

OCI

carried

forward

transferred

to retained

earnings

Min

us:

inco

me

tax

expe

nses

Attributable to

parent

company

Attributable

to

non-controll

ing interest

II. Other

comprehensive

incomes to be

reclassified into the

profit and loss

-24,490,354.80 4,157,206.81 4,176,908.60 -19,701.79 -20,313,446.20

Translation

difference of financial

statements in foreign

currencies

-24,490,354.80 4,157,206.81 4,176,908.60 -19,701.79 -20,313,446.20

Total of other

comprehensive

income

-24,490,354.80 4,157,206.81 4,176,908.60 -19,701.79 -20,313,446.20

27. Surplus reserve

Unit: Yuan


Statutory surplus reserve 401,648,181.64 401,648,181.64

Total 401,648,181.64 401,648,181.64

Description on surplus reserve, including increase/decrease in this period and reason for the change:

Statutory surplus reserve will not be extracted, as statutory surplus reserve accumulatively extracted in this period reaches 50%

of the Company’s registered capital.

28. Undistributed profit

Unit: Yuan

Item Current period Preceding period

Retained earnings at last period end before adjustment 4,573,275,094.31 3,940,017,051.62

Total undistributed profits at the beginning of adjustment period (increase +,

decrease -) 41,355,573.60


164

Retained profits at period beginning after adjustment 4,573,275,094.31 3,981,372,625.22

Plus: Net profit attributable to owners of the parent company 1,919,914,191.25 1,669,873,440.00

Minus: withdrawal of statutory surplus reserve 7,755,043.93

Ordinary share dividends payable 1,049,517,775.98 968,565,192.80

Surplus reserve of the period when merger of enterprises under the

same control occurs is not enough to restore 41,355,573.60

Premium adjustment at business merger date under the same control 61,847,271.38

Net profit adjustment before business merger under the same control 2,747,889.20

Plus: Surplus reserve transferred back after grant of restricted stock 4,300,000.00

Undistributed profits at the end of the period 5,443,671,509.58 4,573,275,094.31

Adjustment of undistributed profits at period beginning:

1). Due to retroactive adjustment of Accounting Standards for Enterprises and relevant new regulations, undistributed profit at period

beginning was changed by RMB 0.00.

2). Due to change of accounting policies, undistributed profit at period beginning was changed by RMB 0.00.

3). Due to rectification of major accounting errors, undistributed profit at period beginning was changed by RMB 0.00.

4). Due to change of combination scope resulted from same control, undistributed profit at period beginning was changed by RMB

0.00.

5). Due to other adjustment, undistributed profit at period beginning was changed by RMB 0.00.

29. Operating revenue/cost

Unit: Yuan

Item Amount incurred during this period Amount incurred during prior period

Income Cost Income Cost

Revenue from main

operations 19,681,479,953.85 13,519,174,731.86 17,702,377,864.31 12,201,039,582.04

Revenue from other

operations 171,997,929.12 149,053,664.10 148,886,937.41 140,899,383.89

Total 19,853,477,882.97 13,668,228,395.96 17,851,264,801.72 12,341,938,965.93


□ Yes √ No

30. Taxes and surcharge

Unit: Yuan

Item Amount incurred during

this period

Amount incurred during

prior period

Urban maintenance and construction tax 60,663,892.00 53,901,913.32


165

Education surcharge 26,471,082.59 24,088,126.49

Housing property tax 7,938,929.63 7,236,246.32

Land use tax 893,035.02 3,809,268.21

Vehicle and vessel use tax 64,322.23 70,025.00

Stamp tax 11,170,640.90 9,686,030.79

Local education surcharge 16,497,089.28 14,943,745.55

Environmental protection tax 39,254.86 29,181.27

Total 123,738,246.51 113,764,536.95

31. Selling expenses

Unit: Yuan


this period


prior period

Advertising, sales promotion, and special gift expenses 2,122,727,108.43 1,747,785,121.49

Transportation expenses 464,415,237.50 421,457,488.47

Employee benefits 434,909,258.53 453,157,885.75

Office and business traveling expenses 125,202,755.25 135,044,085.82

Others 58,788,682.29 55,844,276.21

Total 3,206,043,042.00 2,813,288,857.74

32. Administrative expenses

Unit: Yuan

Item Amount incurred during this

period

Amount incurred

during prior period


Office, business traveling and depreciation and amortization expenses 80,834,445.23 71,112,237.69

Share incentive expenses 41,132,741.22 61,238,303.85

Others 39,056,475.68 38,206,249.33

Total 345,732,916.45 344,810,539.64

33. Research and development expenses

Unit: Yuan


this period


prior period


166


Trial production experiment cost and consumption expenditure 199,665,290.17 167,585,531.84

New product design cost 34,516,435.87 33,166,909.95

Patent and external institutional fees 32,604,830.62 31,912,286.02

Others 21,433,466.53 22,817,203.15

Total 452,560,910.68 402,632,732.79

34. Financial expenses

Unit: Yuan


this period


prior period

Interest expenses 1,045,657.32 2,474,506.93

Interest revenue -43,916,125.68 -7,928,053.60

Gain or loss on foreign exchange -1,354,584.16 -933,971.86

Handling charges and others 899,360.25 842,722.07

Total -43,325,692.27 -5,544,796.46

35. Other income

(1) Classification of other income

Item Amount incurred

during this period


prior period

Amount included in non-recurring

profit or loss

Government subsidies related to

day-to-day activities

165,824,087.78 109,921,377.76 165,824,087.78

Refund of individual income tax

withholding commission

814,590.57 1,367,732.83 814,590.57

Total 166,638,678.35 111,289,110.59 166,638,678.35

(2) Governmental subsidy included in current profits and losses

Subsidy item Amount incurred

during this period


prior period

Related to assets/income

Project subsidy 40,819,494.21 13,806,047.36 Related to benefits

Government reward 124,350,124.97 94,167,860.00 Related to benefits

Tax returns 654,468.60 1,947,470.40 Related to benefits

Total 165,824,087.78 109,921,377.76

36. Investment income

Unit: Yuan


167


this period


prior period

Investment income from long-term equity investments under the equity

method 4,843,516.71 3,196,717.87

Interest from deposit 41,313,150.71

Investment income from financial products 20,262,602.73 78,084,794.72

Monetary fund income 3,392,413.95

Income from reverse repurchase of government bond 834,034.68 2,222,134.69

Total 67,253,304.83 86,896,061.23

37. Gains on changes in fair value

Unit: Yuan

Resource for gains from changes of fair value Amount incurred during

this period


prior period

Variation in fair value of financial products 4,563,042.79 -10,288,760.43

Total 4,563,042.79 -10,288,760.43

38. Credit impairment loss

Unit: Yuan


this period


prior period

Loss on bad debts of other receivables 1,042,336.68

Accounts receivable impairment loss -3,482,193.99

Total -2,439,857.31

39. Assets impairment loss


□ Yes √ No

Unit: Yuan


this period


prior period

I. Bad debts -9,857,180.80

II. Inventory write-down loss -38,502,625.50 -36,150,895.19

Total -38,502,625.50 -46,008,075.99


168

40. Assets disposal income

Unit: Yuan

Source of assets disposed income Amount incurred during

this period


prior period

Profits for non-current assets disposal Profits of non-current assets (loss “-”) -1,711,476.60 -327,730.99

Total -1,711,476.60 -327,730.99

41. Non-operating revenue

Unit: Yuan


period


prior period

Amount included in

non-recurring profit or

loss

Gains from disposal of dead non-current

assets 864,221.60 1,860,346.57 864,221.60

Including: Gains from scrap of fixed assets 864,221.60 1,860,346.57 864,221.60

Default fine revenue 2,935,045.75 2,714,222.58 2,935,045.75

Turn-over of accrued liabilities 5,000,000.00

Others 771,540.37 1,569,952.34 771,540.37

Total 4,570,807.72 11,144,521.49 4,570,807.72

Governmental subsidies recorded in the current profits:

Unit: Yuan

Subsidy item Granted by Granted for Nature

Impacting the

profit and

loss in

current year

or not?

Special or

not?

Amount

incurred

during this

period

Amount

incurred

during prior

period

Related to

assets/income

Project

subsidy Subsidy No 1,811.38 0.00

Related to

benefits

42. Non-operating expenditures

Unit: Yuan


period


prior period

Amount included in

non-recurring profit or

loss

fire losses 10,255,653.45 10,255,653.45


169

Damage and scrapping loss of non-current

assets 1,257,922.52 1,031,319.85 1,257,922.52

Donation expenditures 2,232,402.01 4,017,297.08 2,232,402.01

Indemnity expenditure 11,000,000.00 3,845,880.17 11,000,000.00

Default fine expenditure 825,749.38

Others 2,668,126.15 1,820,587.99 2,668,126.15

Total 27,414,104.13 11,540,834.47 27,414,104.13

43. Income tax expenses

(1) Details

Unit: Yuan


this period


prior period

Current period income tax expenses 445,564,728.28 378,871,621.82

Deferred income tax expenses -87,760,011.51 -66,114,598.59

Total 357,804,716.77 312,757,023.23

(2) Reconciliation of accounting profit to income tax expenses

Unit: Yuan


this period

Total profit 2,273,457,833.79

Income tax expenses based on statutory/applicable tax rate [Note] 341,018,675.07

Effect of different tax rate applicable to subsidiaries 59,128,725.94

Effect of prior income tax reconciliation -9,683,595.79

Effect of non-taxable income -726,527.51

Effect of non-deductible costs, expenses and losses 7,449,277.91

Effect of deducible temporary differences or deductible losses not recognized -91,989.50

Effect of tax incentives -40,890,017.35

Other effects deemed sales 1,600,168.00

Income tax expense 357,804,716.77

Note: Calculation based on the Company’s income tax rate 15% this year


170

44. Other comprehensive income

See VII -26 of the Footnotes for details.

45. Notes to items of the consolidated cash flow statement

(1) Other cash receipts related to operating activities

Unit: Yuan


this period


prior period

Receipt of government grants 165,824,087.78 107,973,907.36

Insurance indemnity received 86,114,820.00

Receipt of deposit and staff reserve fund loan 6,051,401.31 17,667,805.58

Interest revenue and others 49,696,219.73 12,212,228.52

Total 307,686,528.82 137,853,941.46

(2) Other cash payments related to operating activities

Unit: Yuan


this period


prior period

Cash payment for sales expense 1,240,130,679.46 963,368,264.48

Cash payment for management expenses 170,908,917.41 196,405,685.63

Cash payment for research and development expenses 291,951,045.71 255,481,930.96

Supply chain financial account 74,000,000.00

Donations payment 2,232,402.01 4,017,297.08

Other payments 4,190,372.30 9,516,000.95

Total 1,783,413,416.89 1,428,789,179.10

(3) Other cash receipts related to investing activities

Unit: Yuan


this period


prior period

Cash receipt from recovery of financial products, principal and interest of

time deposit 2,345,900,000.00 2,226,000,000.00

Total 2,345,900,000.00 2,226,000,000.00


171

(4) Other cash payments related to investing activities

Unit: Yuan


this period


prior period

Cash payment for financial products and time deposit 2,810,000,000.00 2,347,047,257.18

Total 2,810,000,000.00 2,347,047,257.18

(5) Other cash payments related to financing activities

Unit: Yuan


this period


prior period

Repurchase of shares 1,438,172.56

Total 1,438,172.56

46. Supplement information to the cash flow statement

(1) Supplement information to the cash flow statement

Unit: Yuan

Supplement information Amount of this period Amount of prior period

1. Reconciliation of net profit to cash flow from operating activities: -- --

Net profit 1,915,653,117.02 1,668,781,233.33

Plus: Provision for assets impairment loss 38,502,625.50 46,008,075.99

Provision for credit impairment loss 2,439,857.31

Depreciation of fixed assets, oil and gas assets, productive biological assets 107,684,435.42 104,088,054.46

Amortization of intangible assets 16,397,211.72 15,628,305.91

Amortization of long-term deferred expenses 1,116,229.95 1,479,259.98

Loss on disposal of fixed assets, intangible assets and other non-current

assets (“-” for gains) 1,711,476.60 327,730.99

Fixed assets retirement loss (“-” for gains) 393,700.92 -829,026.72

Losses on changes in fair value (“-” for gains) -4,563,042.79 10,288,760.43

Financial expenses (“-” for gains) -1,354,584.16 -933,971.86

Investments losses (“-” for gains) -67,253,304.83 -86,896,061.23

Decrease of deferred tax assets (“-” for increase) -86,961,308.52 -64,864,598.59

Increase of deferred tax liabilities (“-” for decrease) -798,702.99 -1,250,000.00

Decrease in inventories (“-” for increase) 76,039,031.28 -194,682,912.07


172

Decrease in operating receivables (“-” for increase) -259,843,882.12 -233,511,053.87

Increase of operating payables (“-” for increase) 26,769,425.59 688,404,294.24

Others -32,991,308.78 61,620,653.85

Net cash flows from operating activities 1,732,940,977.12 2,013,658,744.84

2. Significant investing and financing activities not related to cash receipts

and payments: -- --

3. Net changes in cash and cash equivalents: -- --

Cash at the end of the period 1,234,132,657.16 1,400,762,574.83

Minus: Cash at the beginning of the period 1,400,762,574.83 853,579,891.21

Net increase in cash and cash equivalents -166,629,917.67 547,182,683.62

(2) Cash and cash equivalents

Unit: Yuan


I. Cash 1,234,132,657.16 1,400,762,574.83

Including: Cash on hand 91,345.89 55,510.80

Cash in bank on demand for payment 1,227,662,240.97 1,380,282,615.31

Other cash and bank balances on demand for payment 6,379,070.30 20,424,448.72

III. Balance of cash and cash equivalents at the end of the period 1,234,132,657.16 1,400,762,574.83

47. Assets with title or use right restrictions

Unit: Yuan

Item Closing carrying amount Reasons for restrictions

Monetary capital 74,000,000.00 Supply chain deposit

Total 74,000,000.00

48. Monetary items in foreign currencies

(1) Monetary items in foreign currencies

Unit: Yuan

Item Closing balance in foreign

currencies Exchange rate RMB equivalent

Cash and bank balances -- --

Including: USD 39,982,933.82 6.9762 278,928,942.92

EUR 7,194,190.09 7.8155 56,226,192.65


173

HKD

GBP 25.35 9.0726 229.99

VND 40,832,489,931.03 0.000301088 12,294,172.73

SGD 1,363,904.37 5.1739 7,056,704.82

IDR 2,926,141,194.00 0.000502 1,468,922.88

Accounts receivable -- --

Including: USD 27,947,510.62 6.9762 194,967,423.59

EUR 1,392,369.82 7.7558 10,798,941.85

HKD

VND 41,492,149,753.04 0.000301088 12,492,788.38

IDR 6,357,271,890.00 0.000502 3,191,350.49

Long-term borrowings -- --

Including: USD

EUR

HKD

Accounts payable

Including: USD 1,842,966.18 6.9762 12,856,900.64

EUR 55,752.00 7.8155 435,729.76

VND 70,458,031,832.35 0.000301088 21,214,067.89

SGD 165,814.00 5.1739 857,905.05

IDR 3,292,496,932.27 0.000502 1,652,833.46

VIII. Changes in the Consolidated Scope

1. Changes in the consolidated scope for other reasons

Description on the changes in the consolidated scope for other reasons (such as newly established subsidiaries, liquidation

subsidiaries, etc.) and related conditions:

Newly established subsidiaries:

Name Time of new inclusion in the

consolidated scope

Net assets at the end of

the year

Net profits from the

consolidation date to the

end of the year

Zhejiang Supor Kitchen & Electric Appliance

Co., Ltd. January 02, 2019 105,131,806.17 5,131,806.17

PT Groupe SEB Indonesia MSD May 24, 2019 5,600,135.84 -3,422,175.47

Zhejiang Supor Water Heater Co., Ltd. November 15, 2019 0.00 0.00


174

IX. Equity in Other Entities

1. Equity in subsidiaries

(1)Structure of enterprise Group

Subsidiaries

Main

operating

place

Place of

registratio

n

Business

nature

Shareholding ratio

Acquisition method Direct Indirect

Zhejiang Supor Electrical Appliance

Manufacturing Co., Ltd. [Note 1] Hangzhou Hangzhou

Manufactu

ring

industry

100.00% Establishment

Zhejiang Shaoxing Supor Domestic Electrical

Appliances Co., Ltd. [Note 1] Shaoxing Shaoxing

Manufactu

ring

industry


Supor (Vietnam) Co., Ltd. [Note 1] Vietnam Vietnam

Manufactu

ring

industry


Wuhan Supor Recycling Co., Ltd. [Note 1] Wuhan Wuhan Commerce 100.00% Establishment

Wuhan Supor Cookware Co., Ltd. [Note 1]&

[Note 2] Wuhan Wuhan

Manufactu

ring

industry

25.00% 75.00% Establishment

Hangzhou Omegna Commercial Trade Co.,

Ltd. [Note 1] Hangzhou Hangzhou Commerce 100.00% Establishment

Shanghai Supor Cookware Marketing Co.,

Ltd. [Note 1] Shanghai Shanghai Commerce 100.00% Establishment

Wuhan Supor Pressure Cooker Co., Ltd.

[Note 1] Wuhan Wuhan

Manufactu

ring

industry

100.00% Merger of enterprises

under the same control

Zhejiang Supor Plastic & Rubber Co., Ltd.

[Note 1] Yuhuan Yuhuan

Manufactu

ring

industry



Wuhan Supor Co., Ltd. [Note 1] Wuhan Wuhan

Manufactu

ring

industry



Yuhuan Supor Cookware Sales Co., Ltd.)

[Note 1] Yuhuan Yuhuan Commerce 100.00%

Merger of enterprises


SEADA [Note 1] Singapore Singapore Commerce 51.00% Merger of enterprises



175

AFS Vietnam Management Co., Ltd. [Note 1]

[Note 3] Vietnam Vietnam Commerce 100.00%

Merger of enterprises


WMF (Shanghai) Co., Ltd [Note 1] Shanghai Shanghai

Manufactu

ring

industry


Zhejiang WMF Housewares Co., Ltd. [Note

1] Yuhuan Yuhuan

Manufactu

ring

industry


Zhejiang Shaoxing Supor Housewares Co.,

Ltd. [Note 1] Shaoxing Shaoxing

Manufactu

ring

industry


Shanghai SEB Electrical Appliances Co., Ltd.

[Note 1] Shanghai Shanghai

Manufactu

ring

industry



Zhejiang Supor Kitchen & Electric Appliance

Co., Ltd. [Note 1] [Note 4] Shaoxing Shaoxing

Manufactu

ring

industry


PT GROUPE SEB INDONESIA MSD [Note

5] Indonesia Indonesia Commerce 67.00% Establishment

Zhejiang Supor Water Heater Co., Ltd. [Note

1] [Note 6] Shaoxing Shaoxing

Manufactu

ring

industry


Other remarks:

Note 1: The following are abbreviations short names: Zhejiang Household Appliances Company, Shaoxing Supor Company, Vietnam

Supor Company, Wuhan Recycling Company, Wuhan Cookware Company, Omegna Company, Shanghai Sales Company, Wuhan

Pressure Cooker Company, Rubber and Plastics Product Company, Wuhan Supor Company, Yuhua Cookware Sales Company,

SEADA, AFS, WMF (Shanghai) Co., Ltd., WMF Housewares Company, Shaoxing Supor Housewares Company, Shanghai SEB

Electrical Appliances Co., Ltd., Supor Kitchen & Electric Appliance and Supor Water Heater.

Note 2: The Company is subsidiary of Wuhan Supor Pressure Cooker Co., Ltd.; of which, Wuhan Supor Pressure Cooker Co., Ltd.

holds 75% shares and the Company holds 25% shares.

Note 3: AFS is a subsidiary, of which shares are totally held by SEADA.

Note 4: Zhejiang Supor Kitchen & Electric Appliance Co., Ltd. is a subsidiary of the Company, established in 2019, mainly engaged

in the production and sales of kitchen & electric appliance products of the Company.

Note 5: PT GROUPE SEB INDONESIA MSD was established jointly by SEADA, a subsidiary of the Company and PT

MULTIFORTUNA in Indonesia this year. SEADA holds 67% shares and PT MULTIFORTUNA holds 33% shares.

Note 6: Zhejiang Supor Water Heater Co., Ltd. is a joint venture established by the Company and Supor Group with their own

planned capital of RMB 52 million and RMB 48 million in 2019 and the Company holds 52% of its shares. The company was

registered but not funded in 2019.


176

(2) Significant not wholly-owned subsidiaries

Unit: Yuan

Subsidiaries

Holding proportion

of non-controlling

interest

Profit or loss

attributable to

non-controlling

interest

Dividend declared

to non-controlling

interest

Balance of rights

and interests of

minority

shareholders at the

end of the period

SEADA [Note 1] 49.00% -3,120,349.07 6,329,832.38

PT GROUPE SEB INDONESIA MSD 33.00% -1,140,725.16 1,866,711.95

Supor Water Heater [Note 2] 48.00%

Other remarks:

Note 1: SEADA includes its subsidiaries AFS and PT GROUPE SEB INDONESIA MSD.

Note 2: Supor Water Heater was registered, but it did not have capital injections or substantial businesses as of December 31,

2019.

(3) Main financial information of significant not wholly-owned subsidiaries

Unit: Yuan

Subsidia

ries


Current

assets:

Non-curr

ent

assets

Total

assets

Current

liabilities

:

Non-curr

ent

liabilities

Total

liabilities

Current

assets:

Non-curr

ent

assets

Total

assets

Current

liabilities

:

Non-curr

ent

liabilities

Total

liabilities

SEADA 21,457,5

96.67

859,538.

05

22,317,1

34.72

7,159,92

6.09

45,546.7

3

7,205,47

2.82

8,773,29

4.86

107,082.

07

8,880,37

6.93

9,175,46

1.44

9,175,46

1.44

PT

GROUP

E SEB

INDON

ESIA

MSD

9,941,38

0.85

770,516.

08

10,711,8

96.93

5,111,76

1.09

5,111,76

1.09

Unit: Yuan

Subsidiaries

Amount incurred during this period Amount incurred during prior period

Total sales Net profit

Total of

comprehensi

ve incomes

Cash flows

from

operating

activities

Total sales Net profit

Total of

comprehensi

ve incomes

Cash flows

from

operating

activities

SEADA 5,355,037.80 -7,441,895.02 -7,193,584.45 -7,057,645.24 9,405,682.88 -2,001,352.43 -2,221,841.59 1,316,729.92


177

PT GROUPE

SEB

INDONESIA

MSD

3,254,719.28 -3,422,175.47 -3,435,864.17 -214,897.94

2. Equity in joint venture or associates

(1) Significant joint venture or associates

Name of joint venture or

associate

Main operating

place

Place of

registration

Business

nature

Shareholding ratio Accounting method

for the investment in

joint venture or

associates

Direct Indirect

Wuhan Anzai Cookware Co.,

Ltd. Wuhan Wuhan

Manufacturi

ng industry 30.00% Equity method

(2) Main financial information of significant joint venture

Unit: Yuan

Closing balance/current

period cumulative

Opening

balance/preceding period

comparative

Current assets: 125,140,246.10 125,392,481.72

Non-current assets 51,182,661.63 52,434,024.36

Total assets 176,322,907.73 177,826,506.08

Current liabilities: 44,375,191.09 50,016,524.98

Non-current liabilities 840,000.00 940,000.00

Total liabilities 45,215,191.09 50,956,524.98

Equity attributable to owners of parent company 131,107,716.64 126,869,981.10

Proportionate share in net assets 39,332,314.99 38,060,994.33

--Goodwill 22,585,444.13 22,585,444.13

Carrying amount of investments in joint ventures 61,917,759.12 60,646,438.46

Total sales 347,620,937.57 335,723,922.59

Net profit 14,237,735.54 9,394,374.33

Total of comprehensive incomes 14,237,735.54 9,394,374.33

Dividends received from associates in current year 3,000,000.00


178

X. Risks Related to Financial Instruments

The Company aims to seek the appropriate balance between the risks and benefits from its use of financial instruments and to

mitigate the adverse effects that the risks of financial instruments have on the Company’s financial performance. Based on such

objectives, the Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set

appropriate risk limits and controls, and to monitor risks and adherence to limits.

The Company has exposure to the following risks from its use of financial instruments, which mainly include: credit risk,

liquidity risk, and market risk. Management have deliberated and approved policies concerning such risks, and details are:

(I) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge

an obligation.

The Company’s credit risk is primarily attributable to receivables. In order to control such risks, the Company has taken the

following measures:

1. Financing of receivables

Financing of receivables of the Company is mainly bank acceptance receivable. The Company conducts ongoing monitoring on

receivables, to avoid significant risks in bad debts.


The Company only conducts business with credible and well-reputed third parties. According to the Company’s policies, credit

evaluations are performed on all customers to determine the credit limit and terms applicable to the customers. In addition, the

Company conducts ongoing monitoring on receivables, to avoid significant risks in bad debts.

(1) Continue to strengthen risk awareness, strengthen risk management of accounts receivable. And strengthen internal control

of customer credit policy management. Customer credit policy adjustments are required to pass the necessary approval procedures.

(2) Keep detailed business records and accounting work. And use the records as important reference for future credit rating.

Keep real time updating on customers’ information and learn their latest credit situation, in order to make suitable credit policies.

As the Company only conducts business with credible and well-reputed third parties, normally, does not obtain collateral from

customers. The Company manages credit risk aggregated by customers. At the end of the year, the Company’s accounts receivable

from related party SEB ASIA LTD. accounted for 55.23% of closing balance (68.28% as of December 31, 2018), and the Company’s

account receivables are expected to have less credit risk. As the Company’s credit risks fall into several business partners and

customers, as of December 31, 2019, 18.90% (December 31, 2018: 10.76%) of the total accounts receivable was due from the five

largest customers of the Company after deducting receivables from related party SEB ASIA LTD. The Company has no significant

central credit risk.

3. Other receivables

Other receivables of the Company are mainly interest receivable and deposits receivable, etc. The Company performed

collective management and ongoing monitoring on such receivables and related business to avoid significant risks in bad debts.

(1) Analysis of receivables not past due but impaired and receivables past due but not impaired are as follows:

Items

Closing balance

Neither past due nor

impaired

Past due but not impaired Total

Within one year 1-2 years Over 2 years

financial

receivable

1,186,980,101.71 1,186,980,101.71

Subtotal 1,186,980,101.71 1,186,980,101.71

(Continued)

Items Opening balance

Neither past due nor Past due but not impaired Total


179

impaired Within one year 1-2 years Over 2 years

financial

receivable

701,179,379.24 701,179,379.24

Subtotal 701,179,379.24 701,179,379.24

(2) Please refer to notes to receivables for receivables with provision for impairment made on individual basis.

(II) Liquidity risk

Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting obligations associated with cash or

other financial assets settlement. Liquidity risk is possibly attributable to failure in selling financial assets at fair value on a timely

basis, or failure in collecting liabilities from counterparts of contracts, or early redemption of debts, or failure in achieving estimated

cash flows.

In order to control such risk, the Company optimizes financing structures, and finally maintains a balance between financing

sustainability and flexibility.

Financial instruments classified based on remaining time period till maturity

Items Closing balance

Carrying amount Within one year 1-3 years Over 3 years

Financial assets


Transactional financial assets 1,264,563,042.79 1,264,563,042.79


Financing of receivables 1,186,980,101.71 1,186,980,101.71


Other current assets(note) 1,591,313,150.71 1,591,313,150.71

Subtotal 7,162,129,121.39 7,162,129,121.39

Financial debts


Other payables 93,696,839.73 93,696,839.73

Other current liabilities 290,585,764.00 290,585,764.00

Subtotal 3,395,747,260.09 3,395,747,260.09

Note: bank deposit to earning interest as purpose

(Continued)

Items Opening balance

Carrying amount Within one year 1-3 years Over 3 years

Financial assets






Other current assets [Note] 1,909,177,135.70 1,909,177,135.70

Subtotal 6,333,333,537.31 6,333,333,537.31

Financial debts


180


Other payables 95,355,792.24 95,355,792.24

Subtotal 3,049,168,027.41 3,049,168,027.41


(III) Market risk

Market risk is the risk that the Company may encounter fluctuation in fair value of financial instruments or future cash flows

due to changes in market price. Market risk mainly includes interest risk and foreign currency risk.

1. Interest risk

Interest risk is the risk that an enterprise may encounter fluctuation in fair value of financial instruments or future cash flows due

to changes in market interest. As of December 31, 2019, balance of borrowings is zero, the Company’s gross profit and equity will

not be significantly affected by interest risk.

2. Foreign currency risk

Foreign currency risk is the risk arising from changes in exchange rate. The Company’s foreign currency risk relates mainly to

foreign currency monetary assets and liabilities. When short-term imbalance occurred to foreign currency assets and liabilities, the

Company may conduct foreign exchange hedge or trade foreign currency at market exchange rate when necessary, in order to

maintain the net risk exposure within an acceptable level.

Please refer to notes to others - monetary items in foreign currencies for details in foreign currency financial assets and liabilities

at the end of the year.

XI. Fair Value Disclosure

1. Details of fair value of assets and liabilities at fair value at the balance sheet date

Unit: Yuan

Item Fair value as of the balance sheet date

Level 1 Level 2 Level 3 Total

I. Recurring fair value measurement -- -- -- --

(I)．Trading financial assets

2. Financial assets measured at fair value with

variation included in current profits and losses 1,264,563,042.79 1,264,563,042.79

(II) financial receivable

Financial assets measured at fair value with

variation included in OCI 1,186,980,101.71 1,186,980,101.71

Total assets continuously measured at fair value 1,186,980,101.71 1,264,563,042.79 2,451,543,144.50

II. Non-continued measurement of fair value -- -- -- --

2. Basis for determining the market value of continuous and non-continuous first-level fair value

measurement items

The first-level input value is the unadjusted quoted price of the same asset or liability that can be obtained on the measurement

date in an active market.


181

3. Valuation techniques and qualitative and quantitative information on important parameters are used for

continuous and non-continuous second-level fair value measurement items

The second-level input value is the directly or indirectly observable input value of related assets or liabilities except for

first-level input value.

4. Valuation techniques and qualitative and quantitative information on important parameters are used for

continuous and non-continuous third-level fair value measurement items

The second-level input value is the unobservable input value of relevant asset or liability.

XII. Related Party Relationships and Transactions

1. Parent company

Name of company Place of

registration Business nature Registered capital

Holding

proportion over

the Company (%)

Voting right

proportion over the

Company (%)

SEB INTERNATIONALE S.A.S France Investment

company EUR 830 Million 81.19% 81.19%

Remarks on the parent company

Business scope of the parent company: equity participation in all kinds of French and overseas enterprises (regardless operation

purpose), namely, purchase and subscription of shares, bonds, company shares and interest, various securities and marketable

securities, and transfer of such securities or notes, all financial operations related to equity participation, purchase, manufacturing and

selling of home appliance for the purpose of distribution and rendering of relevant services, all activities directly or indirectly

contributing to the realization of these operations, particularly in the areas of movable properties, real estate, finance, commerce and

industry operation.

The Company’s ultimate controlling party is SEB S.A.

2. Company’s subsidiaries

Please refer IX -1. “Equity in subsidiaries” of the Footnotes for details on the Company’s subsidiaries.

3. Joint ventures and associates of the Company

Please refer to IX -1. “Equity in joint venture or associates” of the Footnotes for details on the Company’s significant joint ventures

and associates.

Details of other joint ventures or associates carrying out related party transactions with the Company in current period or in preceding

period but with balance in current period are as follows:

Joint ventures or associates Relationships with the Company

Wuhan Anzai Cookware Co., Ltd. Associated enterprise


182

4. Other related parties of the Company

Related party Relationships with the Company

SEB S.A. Holding shareholder of SEB Internationale S.A.S.

SEB ASIA LTD. Same controlling shareholder

TEFAL S.A.S Same controlling shareholder with the controlling

shareholder

ALL-CLAD METALCRAFTERS LLC Same controlling shareholder

S.A.S. SEB Same controlling shareholder with the controlling

shareholder

SEB INTERNATIONAL SERVICE S.A.S. Same controlling shareholder with the controlling

shareholder

LAGOSTINA S.P.A. Same controlling shareholder

GROUPE SEB COLOMBIA Same controlling shareholder

GROUPE SEB MOULINEX Same controlling shareholder with the controlling

shareholder

GROUPE SEB EXPORT Same controlling shareholder with the controlling

shareholder

SEB DEVELOPPMENT SAS Same controlling shareholder with the controlling

shareholder

ROWENTA FRANCE Same controlling shareholder with the controlling

shareholder

IMUSA USA LLC Same controlling shareholder

CALOR SAS Same controlling shareholder with the controlling

shareholder

Supor Group Company controlled by related natural person

Zhejiang Supor sanitary ware Co.,Ltd Company controlled by related natural person

Hangzhou Supor Property Management Co., Ltd. Company controlled by related natural person

ETHERA Same controlling shareholder with the controlling

shareholder

GROUPE SEB CZECH REPUBLIC Same controlling shareholder

WMF CONSUMER ELECTRIC GMBH Same controlling shareholder

WMF Consumer Goods (Shanghai) Co, Ltd. Same controlling shareholder

WMF Groupe Gmbh Same controlling shareholder

VIETNAM FAN JOINT STOCK COMPANY Same controlling shareholder

GROUPE SEB SINGAPORE Same controlling shareholder

GROUPE SEB THAILAND Same controlling shareholder


183

Emsa Taicang Co., Ltd. Same controlling shareholder

Heshan Demei Tableware Co., Ltd. Same controlling shareholder

ROWENTA WERKE GMBH Same controlling shareholder with the controlling

shareholder

EMSA GmbH Same controlling shareholder

GROUPE SEB USA Same controlling shareholder

GROUPE SEB AUSTRALIA Same controlling shareholder

GROUPE SEB CANADA Same controlling shareholder

GROUPE SEB INDIA Same controlling shareholder

GROUPE SEB ANDEAN S.A. Same controlling shareholder

GROUPE SEB IBERICA Same controlling shareholder

GROUPE SEB SCHWEIZ GMBH Same controlling shareholder

5. Related party transactions

(1)Purchase and sale of goods, rendering and receiving services

Purchase of goods and receiving of services

Unit: Yuan

Connected party

Contents of

connected

transaction

Amount

incurred during

this period

Transaction

quota granted

Whether or

not

exceeding

transaction

quota

Amount incurred

during prior

period

Wuhan Anzai Cookware Co., Ltd. Finished

products 245,220,959.34 No 278,718,891.03

Wuhan Anzai Cookware Co., Ltd. Accessories 104,545,838.53 No 56,964,064.41

GROUPE SEB EXPORT Finished

products 11,242,535.92 No 9,009,323.67

TEFAL S.A.S Accessories 6,798,154.99 No 2,759,558.13

LAGOSTINA S.P.A. Finished

products 1,310,236.48 No 7,629,949.47

SEB INTERNATIONAL SERVICE S.A.S. Finished

products 1,210,295.64 No 410,326.68

SEB ASIA LTD. Finished

products 985,244.58 No 2,111,421.69

SEB ASIA LTD. Accessories 367,364.53 No 547,103.55

GROUPE SEB MOULINEX Accessories 8,492,592.09 No 14,967,658.68


184

GROUPE SEB MOULINEX Rework fee 71,104.80 No 49,883.12

S.A.S. SEB Rework fee 31,411.59 No 911,697.39

S.A.S. SEB Quality fee 1,882,303.68 No

CALOR SAS Accessories 8,903,210.20 No 10,104,713.87

Heshan Demei Tableware Co., Ltd. Finished

products 435,652.26 No 4,956,693.79

GROUPE SEB SINGAPORE Finished

products 2,444,699.88 No 2,745,538.54

GROUPE SEB THAILAND Finished

products 2,222,688.50 No 489,092.78

EMSA GmbH Finished

products 8,760,509.59 No 8,881,726.51

Emsa Taicang Co., Ltd. Finished

products 3,737,221.03 No 2,108,718.38

ETHERA Accessories 3,792,487.79 No 5,777,826.64

ROWENTA WERKE GMBH Accessories No 12,093.00

WMF Groupe Gmbh Finished

products 27,500,644.34 No 42,443,948.76

WMF Consumer Goods (Shanghai) Co, Ltd. Finished

products 4,892,834.63 No 77,169,073.47

WMF Consumer Goods (Shanghai) Co, Ltd. Fixed assets No 8,496,036.92

WMF Consumer Goods (Shanghai) Co, Ltd. Intangible

assets No 677,879.70

WMF Consumer Goods (Shanghai) Co, Ltd. Accessories No 53,439.10

Supor Group Fixed assets No 844,533.33

WMF CONSUMER ELECTRIC GMBH Mold cost 26,286.53 No 141,372.83

Sale of goods and rendering of services

Unit: Yuan

Connected party

Contents of

connected

transaction


this period


prior period

SEB ASIA LTD. Finished products 4,571,567,935.23 4,245,470,246.60

SEB ASIA LTD. Accessories 2,945,723.59 3,496,490.51

S.A.S. SEB Finished products 21,504,270.70 22,126,878.32

S.A.S. SEB Accessories 1,117,754.60 1,590,195.06

TEFAL S.A.S Finished products 8,283,933.50 10,016,328.72

TEFAL S.A.S Accessories 11,013,151.21 12,408,978.39


185

GROUPE SEB MOULINEX Finished products 27,111,444.73 32,505,062.04

Supor Group Finished products 4,792,732.86 4,225,709.25

SEB INTERNATIONAL SERVICE S.A.S. Finished products 8,491,976.82 6,466,938.84

SEB INTERNATIONAL SERVICE S.A.S. Accessories 1,857,282.35 1,174,828.14

GROUPE SEB COLOMBIA Accessories 205,282.47

LAGOSTINA S.P.A. Finished products 158,162.97 321,628.73

LAGOSTINA S.P.A. Accessories 1,461,963.44 772,212.09

ALL-CLAD METALCRAFTERS LLC Finished products 639,387.68 472,101.78

IMUSA USA LLC Finished products 3,037,634.48 3,336,772.36

WMF Consumer Goods (Shanghai) Co, Ltd. Finished products 1,016,908.56 4,702,968.31

WMF Groupe Gmbh Finished products 12,656,493.40 9,806,824.39

WMF CONSUMER ELECTRIC GMBH Finished products 104,474.64 12,596,349.95

GROUPE SEB USA Finished products 92,615.91

GROUPE SEB CANADA Finished products 14,373,634.36 8,258,615.96

VIETNAM FAN JOINT STOCK COMPANY Finished products 21,848,291.97 42,436,818.64

VIETNAM FAN JOINT STOCK COMPANY Accessories 19,582.19

CALOR SAS Finished products 32,007,829.63 24,548,678.46

GROUPE SEB ANDEAN S.A. Accessories 270,422.66

Wuhan Anzai Cookware Co., Ltd. Finished products 780,395.22

(2) Related party leases

Related party leases

The Group serves as the Lessee:

Unit: Yuan

Lessor Lessees Types of

leased assets

Current period

cumulative

Lease income

Lease income for

the same period

last year

Supor Group Co. Ltd.

The Company Real estate 645,141.71 885,363.93

Wuhan Cookware Real estate 2,572,703.54 2,691,026.51

Omegna Real estate 119,048.36 217,930.23

Zhejiang Supor Electrical Real estate 4,452,501.97 2,341,023.89

Shaoxing Supor Real estate 793,645.49

P&R Land 11,391.84 35,884.32

Zhejiang Supor sanitary ware

Co.,Ltd

The Company Real estate 1,743,600.00

WMF Consumer Goods

(Shanghai) Co, Ltd.

Shanghai WMF Enterprise

Development Co., Ltd. Real estate

1,138,629.03


186

(3) Key management’s emoluments


this period


prior period

Key management’s emoluments RMB 17,891,800 RMB 18,300,900

(4) Other related party transactions

(1) Water and electricity fee

Unit:

Yuan

Selling parties Purchasing parties Current period cumulative Preceding period

comparative

Supor Group

Zhejiang Supor Electrical 619,288.84 519,922.81

Wuhan Cookware 188,019.89 183,524.33

Omegna 52,195.55 25,085.00

The Company 662,484.30

The Company Supor Group Co. Ltd. 621,572.07

WMF Consumer Goods (Shanghai)

Co, Ltd.


Development Co., Ltd.

18,300.00

(2) Property management, maintenance and berth fees

Unit: Yuan

Service renderer Purchasing parties

Current period cumulative

Property management,

maintenance and berth

fees

Current period cumulative

Property management,

maintenance and berth

fees

Hangzhou Supor Property

Management Co., Ltd.

Wuhan Cookware 329,992.65 426,820.63

Omegna 10,462.70 23,185.90

The Company 46,497.05 45,714.29

Zhejiang Supor Electrical 505,457.45 340,404.83

Shaoxing Supor 115,583.15

Supor Group The Company 7,090.00

Zhejiang Supor Electrical 114,285.71

(3) Decoration fee

Unit: Yuan

Service renderer Purchasing parties Current period cumulative Current period cumulative

Supor Group Zhejiang Supor Electrical 458,715.60

(4) Consulting fee

Unit: Yuan

Service renderer Purchasing parties Current period cumulative Preceding period comparative

SEB ASIA LTD. The Company 2,829,732.00 2,529,030.93

Wuhan Cookware 1,431,456.00 1,431,454.00


187

Shaoxing Supor 2,483,567.58 2,008,188.00

Zhejiang Supor

Electrical

1,296,336.00

SEB DEVELOPPMENT SAS Zhejiang Supor

Electrical

648,168.00

(5) Cost of international shopping center

Unit: Yuan

Service renderer Purchasing parties Current period cumulative Preceding period comparative

SEB DEVELOPPMENT SAS

Shaoxing Supor 2,375,497.97 7,342,440.00

Zhejiang Supor

Electrical

1,008,853.46 5,677,560.00

Wuhan Cookware 13,060,421.33 11,674,880.19

(6) Test service, etc.

Unit: Yuan

Service renderer Purchasing parties Amount incurred this year Amount incurred during prior

period

Shanghai SEB Electrical

Appliances Co., Ltd.

CALOR SAS 115,164.17

SEB ASIA LTD. 151,209.43 200,591.50

(7) Pursuant to the Technical License Contract entered into between Wuhan Supor Cookware Co., Ltd. and TEFAL S.A.S on January

21, 2009, TEFAL S.A.S licensed Wuhan Supor Cookware Co., Ltd. compensated use of its patent of “heating element covered with

color-changing decorative layer”. According to related terms in the contract signed by both parties, use charges are accrued at 3% of

revenue from sales of products licensed. In the current period, Wuhan Supor Cookware Co., Ltd. should pay TEFAL S.A.S

technology use charges of RMB 2,521,601.55, and as of December 31, 2019, the amount has been fully paid.

(8) Pursuant to the Technical License Contract entered into between Wuhan Supor Cookware Co., Ltd. and SEB S.A. on December

29, 2013, SEB S.A. licensed Wuhan Supor Cookware Co., Ltd. compensated use of its patent of “with the safety valve of elastomer

used in pressure cooking” and other five utility patents. According to related terms in the contract signed by both parties, use charges

are accrued at 3% of revenue from sales of products licensed. In the current period, Wuhan Supor Cookware Co., Ltd. should pay

SEB S.A. technology use charges of RMB 445,647.31, and as of December 31, 2019, a balance of RMB 45,527.92 has not been paid.

(9) Pursuant to the Trademark License entered into between Wuhan Supor Cookware Co., Ltd. and LAGOSTINA SPA. on December

15, 2014, LAGOSTINA SPA licensed Wuhan Supor Cookware Co., Ltd. compensated use of its trademark “LAGE”. According to

related terms in the contract signed by both parties, use charges are accrued at 4% of revenue from sales of products licensed. In the

current period, Wuhan Supor Cookware Co., Ltd. should pay LAGOSTINA SPA. trademark use charges of RMB 701,137.28, and as

of December 31, 2019, a balance of RMB 728,296.42 has not been paid.

(10) Pursuant to the Trademark License Agreement entered into between Omegna and LAGOSTINA SPA. on December 5, 2016,

LAGOSTINA SPA licensed Omegna compensated use of its trademark “LAGE”. According to related terms in the contract signed by

both parties, use charges are accrued at 4% of revenue from sales of products licensed. In the current period, Omegna should pay

LAGOSTINA SPA. trademark use charges of RMB 1,192,695.74, and as of December 31, 2019, a balance of RMB 3,463,890.50 has

not been paid.

(11) Shaoxing Supor Company purchased and used particles product of air purifier and relevant technology in accordance with

Agreement on Purchase and Using for Particles of Air Purifier signed by Shaoxing Supor Company on April 25, 2016 with ETHERA.

According to relevant terms in the contract signed by both parties, Shaoxing Supor Company should pay technology transfer fee

RMB 595,278.73 to ETHERA in current period, which was calculated as per corresponding unit price of actual total sales. Until

December 31, 2019, the remaining RMB 189,393.10 had not been paid yet.


188

(12) According to the Supplementary Agreement to Land Use Right Transfer Agreement signed by the Company and Supor Group on

March 13, 2019, the Company purchases and uses land use rights of Plot A and Plot B located in Nanyou Industrial Zone, Damaiyu

Sub-district, Yuhuan City, Zhejiang Province based on compensation. According to relevant terms of the contract signed by the two

parties, the Company should pay a total of RMB 3,149,900.00 for the transfer of land use rights to Supor Group in this period, and as

of December 31, 2019, the amount had been fully paid.

6. Receivables and payables by connected parties

(1) Items receivable

Unit: Yuan

Projects Connected party



bad debts Book balance

Provision for

bad debts

Accounts

receivable SEB ASIA LTD. 1,046,184,084.11 52,309,204.21 1,249,284,389.96 62,464,219.50

S.A.S. SEB 10,576,480.27 528,824.01 6,116,273.98 305,813.70

TEFAL S.A.S 5,688,007.14 284,400.36 4,817,107.99 240,855.40

SEB INTERNATIONAL SERVICE

S.A.S. 2,283,192.69 114,159.63 2,080,491.52 104,024.58

CALOR SAS 9,842,684.27 492,134.21 3,191,100.46 159,555.02

ALL-CLAD METALCRAFTERS

LLC 162,888.10 8,144.41

GROUPE SEB MOULINEX 6,310,183.58 315,509.18 7,684,705.59 384,235.28

IMUSA USA LLC 497,161.68 24,858.08 814,697.53 40,734.88

Supor Group 52,182.43 2,609.12

WMF Groupe Gmbh 4,358,529.06 217,926.45

WMF CONSUMER ELECTRIC

GMBH 10,156.51 507.83


Co, Ltd. 156,791.86 7,839.59 39,821.28 1,991.06

GROUPE SEB CANADA 3,171,017.29 158,550.86 2,941,503.15 147,075.16

VIETNAM FAN JOINT STOCK

COMPANY 14,037,492.72 701,874.64 18,422,541.99 921,127.10

GROUPE SEB ANDEAN S.A. 103,282.64 5,164.13

Wuhan Anzai Cookware Co., Ltd. 279,935.00 13,996.75

GROUPE SEB COLOMBIA 16,128.52 806.43

LAGOSTINA S.P.A. 808,790.65 40,439.53 282,685.00 14,134.25


189

Total 1,099,949,260.41 54,997,463.01 1,300,265,046.56 65,013,252.34

Advance payment Emsa Taicang Co., Ltd. 1,675.55

Total 1,675.55

Other receivables CALOR SAS 320,668.55 16,033.43 70,509.21 3,525.46

GROUPE SEB CANADA 1,575.24 78.76

GROUPE SEB USA 17,984.30 899.22

GROUPE SEB IBERICA 483.19 24.16

ROWENTA WERKE GMBH 662.08 33.10

SEB DEVELOPPMENT SAS 25,917.00 1,295.85 22,318.72 1,115.94

SEB ASIA LTD. 262,014.17 13,100.71 602,824.12 30,141.21

SEB SAS 14,062.62 703.13

GROUPE SEB MOULINEX 104,733.16 5,236.66 35,909.94 1,795.50

GROUPE SEB SCHWEIZ GMBH 1,868.84 93.44

Supor Group 165,000.00 17,250.00


Co, Ltd. 281,687.30 14,084.37 967,056.93 48,352.85

GROUPE SEB AUSTRALIA 4,465.20 223.26

GROUPE SEB INDIA 1,451.28 72.56

TEFAL S.A.S 8,363.76 418.19 3,817.01 190.85

SAS SEB 10,546.49 527.31

Total 1,201,504.08 69,075.20 1,722,415.03 86,120.76

(2) Payables

Unit: Yuan

Projects Connected party Ending book balance Beginning book balance

Accounts payable Wuhan Anzai Cookware Co., Ltd. 47,066,107.40 41,395,612.51

WMF Groupe Gmbh 4,206,147.56 6,502,457.67

GROUPE SEB EXPORT 6,458,074.15 578,269.92

TEFAL S.A.S 2,751,174.27 1,667,074.34

S.A.S. SEB 45,527.92 2,059,713.75

LAGOSTINA S.P.A. 4,796,584.50 4,606,043.81

GROUPE SEB MOULINEX 1,330,922.16 1,744,530.94

SEB DEVELOPPMENT SAS 13,566,500.80 1,754,929.73

SEB ASIA LTD. 3,324,140.11 559,487.91


190

GROUPE SEB THAILAND 560,631.73 303,195.50

GROUPE SEB SINGAPORE 105,936.87 638,267.83

CALOR SAS 1,623,212.28 2,039,908.83

EMSA GmbH 3,420,473.77 9,012,505.84

ROWENTA WERKE GMBH 12,093.00

Emsa Taicang Co., Ltd. 2,212,442.45

WMF Consumer Goods (Shanghai) Co, Ltd. 4,906.00 243,602.40

Heshan Demei Tableware Co., Ltd. 2,495,040.00

SEB INTERNATIONAL SERVICE S.A.S. 140,694.92 155,792.44

ETHERA 435,729.76 159,535.39

Total 89,836,764.20 78,140,504.26

Advances received Supor Group 725,467.73 1,057,128.72

WMF Consumer Goods (Shanghai) Co, Ltd. 508,280.13

Total 725,467.73 1,565,408.85

Other payables SAS SEB 3,687,688.05 325,734.53

GROUPE SEB UK 570,676.03

CALOR SAS 272,408.03 56,731.90

SEB S.A. 42,182.81 4,330,219.17

WMF Consumer Goods (Shanghai) Co, Ltd. 275,372.73

Wuhan Anzai Cookware Co., Ltd. 20,000.00

Total 4,592,954.92 4,988,058.33

XIII. Share-based Payment

1. Overall information


Unit: Yuan

Total equity instruments granted in current period 0.00

Total equity instruments vested in current period 840,600.00

Total equity instruments expired in current period 124,050.00

The range of exercise prices of equity instruments at the end of the period and the

remaining contractual life

Stock Incentive Plan for 2017: RMB 1/share,

2.93 years

Other remarks:

Pursuant to the “Proposal for Restricted Share Incentive Plan (Revised Draft) of Zhejiang Supor Co., Ltd. and Its Summary

(hereinafter referred to as “2017 Incentive Plan”) ratified in the Second Interim General Meeting of Shareholders 2017 via

deliberation held on November 16, 2017, the Company was to grant 4,300,000 restricted shares to incentive objects, and repurchased


191

4,300,000 share capital successfully during the period from November 6, 2017 to November 28, 2017. The Company granted

3,874,000 shares initially on December 4, 2017 and granted the remainder 426,000 shares on August 30, 2018, with price of shares

granted for RMB 1/share.

The Incentive Plan 2017 is valid for five years from the grant date, within which, the first 12 months are the lock-up period for

first grant, and the following 48 months are the unlocking period, which may be unlocked in four phases provided that all conditions

for unlocking are met. Incentive targets may apply for unlocking 10%, 20%, 30% and 40% of the total restricted shares respectively

in 12 months, 24 months, 36 months and 48 months after the grant date. The lock-up period of reservation is 12 months, and the

unlocking period is 36 months, which may be unlocked in three phases provided that all conditions for unlocking are met. Incentive

targets may apply for unlocking 20%, 30% and 50% of the total restricted shares respectively in 12 months, 24 months and 36

months after the grant date. As of December 31, 2019, the aforesaid incentive plan has a remaining term of 2.93 years.

According to the Proposal on Unlocking of Restricted Stock within the First Unlock Period of 2017 Restricted Stock Incentive

Plan deliberated and adopted at the 6th Session of Sixth Board of Directors, totally 387,400 shares of restricted stock were unlocked

in 2018.

According to the Proposal on Unlocking of Restricted Stock within the Second Unlock Period and of Remaining Restricted

Stock within the First Unlock Period of 2017 Restricted Stock Incentive Plan deliberated and adopted at the 11th Session of Sixth

Board of Directors, 756,400 and 84,200 shares of restricted stock, totaling 840,600 shares, were unlocked in 2019.

The 6th Session of Sixth Board of Directors adopted the Proposal on Repurchasing and Canceling a Part of Restricted Stock.

For disqualification of three Incentive Objects due to their resignation, the Company has repurchased and canceled 43,650 shares of

Restricted Stock at the price of 1 yuan per share.







2. Equity-settled share-based payment


Unit: Yuan

Determination method for fair value of equity instruments

on Grant Date According to the market price on the Grant Date.

Determination method for the best estimate of the number

of equity instruments expected to vest

Based on the corresponding equity instruments of incentive targets, the

performance of the Company and the forecast of future performance

of the Company

The significant difference between this period estimate and

last period None

Capital reserve accumulated due to equity-settled

share-based payment -53,314,954.13

Total expenses incurred due to equity-settled share-based

payment transactions 41,132,741.22

Other remarks:


192

Note 1: Of which, accumulative amount of 2017 equity incentive plan at period-begin is RMB -108,418,773.57, current

occurrence amount is RMB 55,103,819.44 and accumulative amount is RMB -53,314,954.13.

Note 2: 2017 Equity Incentive Plan:

According to actual occurrence amount of domestic sales income and domestic operating profits in 2019, the 2019 incentive

plan above can reach unlocking assessment index of restricted shares in Proposal on 2017 Restricted Share Incentive Plan (Revised

Draft) of Zhejiang Supor Co., Ltd. and Its Summary, and the share-based payment recognized in current period totals RMB

41,132,741.22.

XIV. Commitments and contingencies

1. Significant commitments

Significant commitments at the date of balance sheet

(1) Capital commitment

Items Ending balance

Commitment on foreign investment having been signed but not determined in financial

statement [Note 1]

RMB 52,000,000

Commitment on purchase long-term investment having been signed but not determined in

financial statement

RMB 123,850,000

Total RMB 175,850,000

[Note 1] According to the 14th meeting of the sixth board of directors of the Company, the Company and Supor Group, which is its

related party, jointly founded the joint venture Zhejiang Supor Water Heater Co., Ltd. with investment from their own capital of

RMB 52,000,000 and RMB 48,000,000 respectively on November 15, 2019 for the production, sales and installation of water heaters.

Registered capital of the company is RMB 100,000,000, and no contribution had been made by the Company as of December 31,

2019.

2. Contingencies

(1) Significant contingencies at the date of balance sheet

1) Contingent liabilities arising from pending litigation and arbitration and their financial impact

In 2016, a non-governmental patent holder filed a lawsuit to the subsidiary Shaoxing Supor Company in the name of infringing

its patent. This case has not been settled yet. Based on the principle of conservatism, the Company withdrew RMB 10,150,000

accrued liabilities.

In 2019, landlord of the leased warehouse of the subsidiary Zhejiang Supor Electrical filed a lawsuit against Zhejiang Supor

Electrical for damaging its property due to fire, and a third party company brought legal proceedings against the Company and its

subsidiary Wuhan Supor Cookware Co., Ltd. for infringing its patent; neither of the above two cases is conclusive. Based on the

principle of conservatism, the Company accrued estimated liabilities totaling RMB 11,000,000 for the above cases.

(2) A statement should be given even if the Company has no significant contingencies to disclose.

The Company has no significant contingencies to disclose.


193

XV. Events after the Balance Sheet Date

1. Description on other events after the balance sheet date

(1) Profit distribution

According to the Profit Distribution Preplan 2019 approved at the 16th Session of the sixth Board of Directors of the Company

on April 28, 2020, based on the 821,099,910 shares at the end of 2019 (total capital stock of 821,119,910 shares at the end of 2019

deducted by 20,000 shares of repurchased shares in the Company’s special stock repurchase account), the Company will distribute all

shareholders cash dividends of RMB 13.30 per 10 shares (tax-inclusive) and the total cash dividends is RMB 1,092,062,880.30. No

bonus share will be distributed or conversion from capital reserves to share capital is made this year. The undistributed profits of

parent company at the end of the reporting period are RMB 1,100,501,967.72 including the cash to be distributed, i.e., RMB

1,092,062,880.30.

During the period from the disclosure of this profit distribution preplan to the actual implementation, if the Company’s capital

stock changes due to conversion of convertible bonds into stocks, share repurchases, equity incentive exercise, and refinancing and

new share listing, it will be executed based on the changed capital stock, and the above distribution ratio remains unchanged.

The proposal needs to be submitted to the Annual General Meeting of Shareholders for 2019 Fiscal Year for approval after

approved by the Board of Directors.

(2) Effects of coronavirus disease (COVID-19)

Since the outbreak nationwide in January 2020, COVID-19 has had negative effects on the whole macro-economy. The

Company has given positive response to and has strictly implemented local governments’ regulations and requirements on epidemic

prevention and control to epidemic prevention and production. The Company and its subsidiaries have successively resumed

production in good order. It is estimated by the Company that the COVID-19 pandemic and related prevention and control measures

will have temporary effects on the production and operation of the Company to a certain extent, depending on the progress of global

pandemic prevention and control, duration and prevention and control measures taken by countries. The Company has taken a range

of measures to reduce the adverse effects of the pandemic on the Company as much as possible.

XVI. Other Major Events

1. Segment information

(1) Determination basis and accounting policy of report segment

The Group establishes operating segment according to internal organizational structure, management requirement and internal

report system; determines report segment and disclose segment information based on Operating Segment.

Operating Segment refers to the Group’s organization meeting following conditions: ① The organization can yield income

and cost in daily activity; ② The Group’s management can appraise operating result of the organization regularly, so as to allocate

resources on a targeted basis and evaluate its performance; ③ The Group can obtain financial information, operating result, cash

flow and other relevant accounting information of the organization. Two or more operating segments, which have similar economic

characteristics and meet a certain condition, can be combined into an operating segment.

The Group, with main product focused on cookware and SDA (small domestic appliances) in kitchen, establishes report

segment based on product and geographic segments and assets and liabilities shared by product segments is unable to be clearly


194

distinguished.

(2) Financial information of reportable segments

1) Products segment

Unit: Yuan

Item Cookware Electrical

appliances

Plastic & rubber Inter-segment

offsetting

Total

Revenue from

main operations

6,143,262,075.25 13,527,606,591.73 164,741,299.19 154,130,012.32 19,681,479,953.85

Cost of main

operations

4,009,722,169.67 9,515,401,543.38 148,134,927.95 154,083,909.14 13,519,174,731.86

2) Geographic segment

Unit: Yuan

Items Domestic Overseas Inter-segment

offsetting

Total

Revenue from

main operations 14,571,549,991.86 5,115,304,812.25 5,374,850.26 19,681,479,953.85

Cost of main

operations 9,368,234,110.58 4,156,354,772.83 5,414,151.55 13,519,174,731.86

XVII. Notes to items of parent company financial statements


(1) Details on categories

Unit: Yuan

Categories



debts Carrying

amount


debts Carrying

amount Amount Ratio Amount

Provision

proportio

n

Amount Ratio Amount

Provision

proportio

n

Including:

Receivables for

provision made on

the basis of portfolio

355,544,

502.20 100.00%

14,361,8

41.96 4.04%

341,182,6

60.24

431,493,4

10.37 100.00%

18,419,55

4.79 4.27%

413,073,85

5.58

Including:

Portfolio 1: age

portfolio

287,236,

839.11 80.79%

14,340,3

36.16 5.00%

272,896,5

02.95

368,391,0

95.74 85.38%

18,419,55

4.79 5.00%

349,971,54

0.95


195

Portfolio 2: low-risk

portfolio

21,505,7

98.70 6.05%

21,505.8

0 0.10%

21,484,29

2.90

46,081,90

1.97 10.68%

46,081,901.

97

Portfolio 3: merged

related parties

portfolio

46,801,8

64.39 13.16%

46,801,86

4.39

17,020,41

2.66 3.94%

17,020,412.

66

Total 355,544,

502.20 100.00%

14,361,8

41.96 4.04%

341,182,6

60.24

431,493,4

10.37 100.00%

18,419,55

4.79 4.27%

413,073,85

5.58

Provision made on an individual basis: None

Provision made on the basis of portfolio: Portfolio 1: age portfolio

Unit: Yuan

Name Closing balance

Book balance Provision for bad debts Provision proportion

Within one year 287,236,839.11 14,340,336.16 5.00%

Total 287,236,839.11 14,340,336.16 --

If bad-debt provision for accounts receivable is made based on the general model of expected credit losses, please disclose the

relevant information about the bad-debt provision with reference to the disclosure of other receivables:


Disclosure by ages

Unit: Yuan

Ages Book balance


Total 355,544,502.20

(2) Bad debt provisions accrued, recovered or carried back in current period


Unit: Yuan



Closing balance Accrued

Recovered or

carried back

Canceled after

verification

Provision for bad debts for

accounts receivable 18,419,554.79 4,057,712.83 14,361,841.96

Total 18,419,554.79 4,057,712.83 14,361,841.96

(3) Accounts receivable actually written off in current period

Unit: Yuan

Item Amount


196

Accounts receivable actually written off in current period 0.00

(4)Details of the top 5 debtors with largest balances

Unit: Yuan

Debtors Ending balance of accounts

receivable

Proportion in the total

ending balance of accounts

receivable

Ending balance of

provision for bad debt

SEB ASIA LTD. 277,111,605.92 77.94% 13,855,580.30

Shanghai WMF Enterprise Development

Co., Ltd. 44,369,781.92 12.48%

Customer 1 4,381,346.73 1.23% 4,381.35

SAS SEB 3,594,235.00 1.01% 179,711.75

GROUPE SEB CANADA INC 3,171,017.29 0.89% 158,550.86

Total 332,627,986.86 93.55%


Unit: Yuan


Interest receivable 5,062.50


Total 110,807,092.72 110,207,407.00

(1) Interest receivable

1) Classification of interest receivable

Unit: Yuan


Interest for time deposit 5,062.50

Total 5,062.50


1) Other receivables categorized by nature

Unit: Yuan

Nature of receivables Ending book balance Beginning book balance


197

Deposit as security 2,518,020.63

Export rebate receivable 17,675,941.90

Fund pool 109,322,670.70 89,066,630.19

Temporary payment receivable 2,013,476.48 1,515,057.07

Personal deposit 447,661.45 507,646.73

Total 111,783,808.63 111,283,296.52


Unit: Yuan

Provision for bad debts

Phase I Phase II Phase III

Total Predicted credit loss in

future 12 months


the whole period of

existence (without credit

impairment)


the whole period of

existence (with credit

impairment)

Balance on January 1, 2019 1,080,952.02 1,080,952.02

Balance on January 1, 2019 in the

current period —— —— —— ——

Carried back in the current period 104,236.11 104,236.11

Balance on December 31, 2019 976,715.91 976,715.91


Disclosure by ages

Unit: Yuan

Ages Book balance



2-3 years 5,000.00

Over 3 years 908,483.18


Over 5 years 854,483.18

Total 111,783,808.63

3) Provisions made, collected or reversed in current period


Unit: Yuan

Categories Opening balance Amount of changes in current period Closing balance


198

Accrued Recovered or carried

back

Canceled after

verification

Other receivables 1,080,952.02 104,236.11 976,715.91

Total 1,080,952.02 104,236.11 976,715.91

4) Other receivables actually written off in current period

Unit: Yuan

Item Amount

Other receivables actually written off in current period 0.00

5) Other receivables of the top 5 ending balances by the debtor

Unit: Yuan

Debtors Nature of

receivables Closing balance Ages

Proportion of the

total balance of other

receivables

Ending balance of

provision for bad

debt

Omegna Fund pool 55,972,220.70 Within one

year 50.07%

Zhejiang WMF Housewares

Co., Ltd. Fund pool 30,025,375.00

Within one

year 26.86%


Development Co., Ltd. Fund pool 17,320,000.00

Within one

year 15.49%

Supor Kitchen & Electric

Appliance Fund pool 6,005,075.00

Within one

year 5.37%

Special account of social

insurance for medical

treatment of work-related

injury

Temporary payment

receivable 647,592.72

Within one

year 0.58% 32,379.64

Total -- 109,970,263.42 -- 98.37% 32,379.64

3. Long-term equity investments

Unit: Yuan

Item


Book balance

Provision

for

impairmen

t

Carrying amount Book balance

Provision

for

impairme

nt

Carrying amount

Investment in subsidiaries 2,914,007,433.92 2,914,007,433.92 2,728,086,263.61 2,728,086,263.61


199

Investments in associates

and joint ventures 61,723,827.89 61,723,827.89 59,880,311.18 59,880,311.18

Total 2,975,731,261.81 2,975,731,261.81 2,787,966,574.79 2,787,966,574.79

(1) Investments in subsidiaries

Unit: Yuan

Investee Opening balance

(Carrying amount)

Increase/decrease

Closing balance

(Carrying amount)

Closing

balance

of

provision

for

impairme

nt

Investment

increased

Investmen

t

decreased

Provision for

impairment Others

Wuhan PC 240,428,244.41 240,428,244.41

P&R 20,804,297.92 20,804,297.92

Yuhuan Recycling 2,990,149.81 2,990,149.81

Wuhan Supor 11,180,583.31 11,180,583.31

Zhejiang Supor Electrical 758,928,931.93 5,558,336.19 764,487,268.12

Shaoxing Supor 630,457,337.90 4,783,245.10 635,240,583.00

Supor Vietnam 105,143,165.64 105,143,165.64

Wuhan Recycling 1,000,000.00 1,000,000.00

Omegna 10,000,000.00 10,000,000.00

Shanghai Marketing 5,000,000.00 5,000,000.00

Wuhan Cookware 588,311,958.57 5,377,832.07 593,689,790.64

SEADA 1,688,865.50 10,201,756.95 11,890,622.45


Development Co., Ltd. 50,000,000.00 50,000,000.00

Shanghai SEB Electrical

Appliances Co., Ltd. 212,152,728.62 212,152,728.62

Zhejiang WMF

Housewares Co., Ltd. 90,000,000.00 10,000,000.00 100,000,000.00

Supor Kitchen & Electric

Appliance 100,000,000.00 100,000,000.00

Shaoxing Supor

Housewares Company 50,000,000.00 50,000,000.00

Total 2,728,086,263.61 185,921,170.31 2,914,007,433.92


200

(2) Investments in associates and joint ventures

Unit: Yuan

Investee

Opening

balance

(Carrying

amount)

Increase/decrease

Closing

balance

(Carrying

amount)

Closing

balance

of

provision

for

impairme

nt

Investme

nt

increased

Investme

nt

decreased

Investme

nt profit

or loss

recognize

d by

equity

method

Adjustme

nt in other

comprehe

nsive

income

Changes

in other

equity

Cash

dividend/

profit

declared

for

distributio

n

Provision

for

impairme

nt

Others

I. Joint ventures

II. Associated enterprises

Wuhan

Anzai

Cookware

Co., Ltd.

59,880,31

1.18

4,843,516

.71

3,000,000

.00

61,723,82

7.89

Subtotal 59,880,31

1.18

4,843,516

.71

3,000,000

.00

61,723,82

7.89

Total 59,880,31

1.18

4,843,516

.71

3,000,000

.00

61,723,82

7.89

Other remarks:

1) The increase of Zhejiang Supor Electrical, Shaoxing Supor Company and Wuhan Cookware is due to the Company’s

implementation of stock incentive plan and therefore, the foregoing share-based payment fees that should be borne by companies

accepting services are included as the changes of long-term equity investment by the Company.

2) The Company increased its capital investment in SEADA with its own funds.

3) Zhejiang WMF Housewares Co., Ltd. is a subsidiary established by the Company in 2018, with registered capital of RMB

100,000,000. In 2018, RMB 90,000,000 was contributed and in 2019, the remaining RMB 10,000,000 was contributed.

4) Supor Kitchen & Electric Appliance and Shaoxing Supor Housewares Company are subsidiaries of the Company, established in

2018, with a registered capital of RMB 100,000,000 and 50,000,000, and all contributions were made in 2019.

4. Operating revenue/cost

Unit: Yuan

Item Amount incurred during this period Amount incurred during prior period

Income Cost Income Cost

Revenue from main

operations 2,230,304,990.50 1,717,167,717.56 2,296,540,064.51 1,792,399,409.74


201

Revenue from other

operations 26,053,538.73 23,579,292.09 25,496,857.79 20,733,036.49

Total 2,256,358,529.23 1,740,747,009.65 2,322,036,922.30 1,813,132,446.23


□ Yes √ No

5. Investment income

Unit: Yuan


this period


prior period

Investment income from long-term equity investments under the cost method 813,403,497.06 725,424,075.01

Investment income from long-term equity investments under the equity

method 4,843,516.71 3,196,717.87

Deposit interest 41,313,150.71

Financial products 14,039,862.80 47,173,546.13

Investment income from reverse repurchase of national debts 834,034.68 2,222,134.69

Total 874,434,061.96 778,016,473.70

XVIII. Other supplementary information

1. Breakdown of non-recurring profit or loss in the current period


Unit: Yuan

Item Amount Notes

Profit or loss on disposal of non-current assets -2,105,177.52

Government subsidy included in current profit or loss (excluding

government subsidies closely related to operating activities of the

Company and subject to uniform national standards on amount and

quantity)

165,824,087.78

Except the effective hedging business related to the normal operation of

the company, the gain and loss in FV changes from trading financial

assets、derivative financial assets、trading financial liability、derivative

financial liability and disposal of trading financial assets、derivative

financial assets、trading financial liability、derivative financial liability

and investment revenue from other liability investment

66,972,830.91

Other non-operating revenues or expenditures except for the foregoing

items -21,635,004.92


202

Other profit or loss conforming to the definition of non-recurring profit or

loss 12,102,997.12

Minus: income tax impact 35,547,895.67

Effects on minority interest -80.89

Total 185,611,918.59 --

The Company should state reason for defining “non-recurring profit or loss items” defined in the Explanatory Announcement No.1

on Disclosure of the Information of Companies Offering Their Securities to the Public -- Non-recurring Profit or Loss and

non-recurring profit or loss items listed in the Explanatory Announcement No.1 on Disclosure of the Information of Companies

Offering Their Securities to the Public -- Non-recurring Profit or Loss as recurring profit or loss items.


2. RONA and EPS

Profit of the reporting period Weighted average return on

net assets

EPS (RMB Yuan/share)

Basic earnings per share

(Yuan/share)

Diluted earnings per

share (Yuan/share)


ordinary shares 30.54% 2.347 2.338


ordinary shares after deducting non-recurring

profit or loss

27.59% 2.120 2.112


203

SECTION XIII CATALOG OF REFERENCE DOCUMENTS

I. 2019 Annual Report of the Company and Abstract with signature of legal representative;

II. Financial statements with signature of legal representative, person in charge of accounting and director of accounting department

and seal of the Company;

III. Original of auditing report with seal of accounting firm and signature of certified public accountants (CPA);

IV. Original of all documents and announcements published in newspapers designated by CSRC.

Reference documents above should be prepared by Securities Department of the Company.

Zhejiang Supor Co., Ltd.

Board Chairman: Thierry de LA TOUR D’ARTAISE

April 29, 2020

zhejiang supor co., ltd.€¦ · analysis”. the profit distribution plan adopted at this board...

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