Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
FOSHAN ELECTRICAL AND LIGHTING CO., LTD.
ANNUAL REPORT 2017
March 2018
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part I Important Statements, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Board as well as the Directors,
Supervisors and senior management of Foshan Electrical and Lighting Co., Ltd. (the
“Company”) hereby guarantee the factuality, accuracy and completeness of the contents of
this Report, and shall be jointly and severally liable for any false representations, misleading
statements or material omissions in this Report.
He Yong, the Company’s legal representative, Liu Xingming, the Company’s General
Manager, and Tang Qionglan, the Company’s Chief Financial Officer (CFO) hereby
guarantee that the Financial Statements carried in this Report are factual, accurate and
complete.
All directors have attended in person the board session for reviewing this report except the
following:
Reason for not attending
Name Position Name of the proxy
the session in person
Lv Wei Independent Director On business Lu Rui
The future plans and other forward-looking statements, as well as the cautionary statements
mentioned in this Report shall NOT be considered as virtual promises of the Company to
investors. And investors are kindly reminded to be well aware of possible risks.
This Report has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version shall
prevail.
The Company has described in detail in this Report the risk of market competition, the risk of
rising labor costs, the risk of rising raw material prices, the risk of falling prices of inventories,
the risk of exchange rate fluctuations and the risk of doubtful receivable accounts. Please
refer to “Possible Risks” in “Outlook of the Company’s Future Development” in “Part IV
Company Performance Discussion and Analysis” of this Report.
The Board has considered and approved the following dividend payout proposal for the
Reporting Period: based on the total shares of 1,272,132,868, a cash dividend of RMB 3.29(tax
inclusive) per 10 shares would be distributed to all the common shareholders, with the share
dividend being 0 shares (tax inclusive) per 10 shares to be converted from retained earnings
and 1 share per 10 shares to be converted from capital reserves.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Table of Contents
Part I Important Statements, Table of Contents and Definitions ................................................. 2
Part II Corporate Profile and Key Financial Information ............................................................ 5
Part III Business Summary ............................................................................................................. 10
Part IV Company Performance Discussion and Analysis ............................................................ 14
Part V Significant Events ................................................................................................................ 42
Part VI Share Changes and Shareholder Information ................................................................ 65
Part VII Preferred Shares ............................................................................................................... 76
Part VIII Directors, Supervisors, Senior Management and Staff ............................................... 77
Part IX Corporate Governance ...................................................................................................... 87
Part X Corporate Bonds .................................................................................................................. 97
Part XI Financial Statements .......................................................................................................... 98
Part XII Documents Available for Reference.............................................................................. 222
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Definitions
Term Definition
Foshan Electrical and Lighting Co., Ltd. and its consolidated subsidiaries,
The “Company”, “FSL” or “we”
except where the context otherwise requires
Foshan Electrical and Lighting Co., Ltd. exclusive of subsidiaries, except where
Parent, Parent Company
the context otherwise requires
GRAM Guangdong Rising Assets Management Co., Ltd.
Electronics Group Guangdong Electronics Information Industry Group Ltd.
GD Rising Finance Guangdong Rising Finance Holding Co., Ltd.
Shenzhen Rising Investment Shenzhen Rising Investment Development Co., Ltd.
Hong Kong Rising Investment Hong Kong Rising Investment Development Limited
CSRC China Securities Regulatory Commission
SZSE Shenzhen Stock Exchange
Meeting of Shareholders Meeting of shareholders of Foshan Electrical and Lighting Co., Ltd.
Board of Directors Board of directors of Foshan Electrical and Lighting Co., Ltd.
Supervisory Board Supervisory board of Foshan Electrical and Lighting Co., Ltd.
Annual report auditor Beijing Zhongzhengtiantong Certified Public Accountants LLP
RMB, RMB’0,000 In RMB yuan, in RMB ten thousand yuan
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part II Corporate Profile and Key Financial Information
I Corporate Information
Stock name FSL / FSL B Stock symbol 000541/200541
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 佛山电器照明股份有限公司
Abbr. 佛山照明
Company name in English (if
FOSHAN ELECTRICAL AND LIGHTING CO.,LTD
any)
Abbr. (if any) FSL
Legal representative He Yong
Registered address No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China
Zip code
Office address No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China
Zip code
Company website www.chinafsl.com
Email address gzfsligh@pub.foshan.gd.cn
II Contact Information
Board Secretary Securities Representative
Name Lin Yihui Huang Yufen
No. 64, Fenjiang North Road, Chancheng No. 64, Fenjiang North Road, Chancheng
Address District, Foshan City, Guangdong District, Foshan City, Guangdong
Province, P.R.China Province, P.R.China
Tel. （0757）82810239 （0757）82966028
Fax （0757）82816276 （0757）82816276
Email address fsl-yh@126.com fslhyf@163.com
III Media for Information Disclosure and Place where this Report Is Kept
Newspapers designated by the Company for China Securities Journal, Securities Times, Securities Daily, Ta Kung Pao
information disclosure (HK)
Website designated by CSRC for publication of this
http://www.cninfo.com.cn
Report
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Board Secretary’s Office, FSL Office Building, No. 64, Fenjiang North
Place where this Report is kept
Road, Chancheng District, Foshan City, Guangdong Province, P.R.China
IV Company Registered Information and Alterations
Unified social credit code 91440000190352575W
Change in main business scope of the
No change
Company since going public (if any)
Change of controlling shareholder (if any) No change
V Other Information
Independent certified public accounting (or “CPA”) firm hired by the Company:
Name Beijing Zhongzhengtiantong Certified Public Accountants LLP
Office address 13/F, Tower B, Jinyun Building, A43 Xizhimen Avenue North, Haidian District, Beijing
Accountants writing signatures Tong Quanyong, Luo Dongri
Independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting
Period:
□ Applicable √ Not applicable
Independent financial advisor hired by the Company to exercise constant supervision over the Company in the
Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2017-over-2016
2017 2016
change
Operating revenue (RMB) 3,800,188,261.54 3,366,454,968.60 12.88% 2,876,659,100.63
Net income attributable to
shareholders of the listed company 740,308,725.30 1,072,342,050.13 -30.96% 53,405,593.12
(RMB)
Net income attributable to
shareholders of the listed company 353,549,021.39 351,237,317.17 0.66% 150,093,497.33
before nonrecurring gains and
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
losses (RMB)
Net cash flows from operating
215,821,192.79 289,978,768.48 -25.57% 188,325,189.43
activities (RMB)
Basic earnings per share
0.5819 0.8429 -30.96% 0.042
(RMB/share)
Diluted earnings per share
0.5819 0.8429 -30.96% 0.042
(RMB/share)
Weighted average return on equity
15.14% 21.40% -6.26% 1.27%
(%)
Change of December
December 31, 2017 December 31, 2016 31, 2017 over December 31, 2015
December 31, 2016
Total assets (RMB) 5,675,811,824.29 6,100,169,400.30 -6.96% 6,048,296,432.78
Equity attributable to shareholders
4,779,115,459.39 4,990,466,577.12 -4.24% 5,023,546,888.12
of the listed company (RMB)
VII Accounting Data Differences under Chinese Accounting Standards (CAS) and
International Financial Reporting Standards (IFRS) and Foreign Accounting Standards
1. Net Income and Equity Differences under CAS and IFRS
□ Applicable √ Not applicable
No such differences for the Reporting Period.
2. Net Income and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 1,093,649,938.81 930,275,644.03 926,328,050.98 849,934,627.72
Net income attributable to
119,874,574.94 108,620,085.63 450,036,365.74 61,777,698.99
shareholders of the listed company
Net income attributable to
shareholders of the listed company
119,491,016.83 107,693,216.87 65,754,068.84 60,610,718.85
before nonrecurring gains and
losses
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Net cash flows from operating
-50,923,130.47 19,859,943.25 -72,743,338.89 319,627,718.90
activities
Indicate by tick mark whether any of the financial data in the table above or their summations differs materially
from what have been disclosed in the Company’s quarterly or semi-annual reports.
□ Yes √ No
IX Nonrecurring Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2017 2016 2015 Note
Sale of the Company’s
entire stake in Qinghai
Gains and losses on disposal of non-current
Fozhao Lithium
assets (inclusive of offset allowance for 176,540,060.61 -5,776,457.37 -8,172,702.85
Energy Exploitation
asset impairments)
Co., Ltd. in Current
Period
Government subsidies charged to current
gains and losses (exclusive of government
subsidies given in the Company’s ordinary
1,185,148.00 1,669,377.53 4,780,007.27
course of business at fixed quotas or
amounts as per government’s uniform
standards )
Sale in Current Period
Gains and losses on changes in fair value of
through stock
trading financial assets and liabilities &
exchange’s public
investment income from disposal of trading
centralized quotation
financial assets and liabilities and 269,362,165.95 853,216,065.17 19,472,654.77
system of shares of
available-for-sale financial assets (exclusive
Guoxuan High-Tech
of effective portion of hedges that arise in
stock held by the
the Company’s ordinary course of business)
Company
Reversed portion of impairment allowance
for accounts receivable on which 3,535,749.69
impairment test is carried out separately
Non-operating income and expense other
1,640,395.69 -4,774,788.19 -130,293,226.71
than above
Other gains and losses that meet definition
944,428.72
of nonrecurring gain/loss
Less: Income tax effects 61,971,050.60 127,331,306.57 -16,925,475.37
Non-controlling interests effects (net
-2,984.26 -566,092.70 344,540.78
of tax)
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Total 386,759,703.91 721,104,732.96 -96,687,904.21 --
Explanation of why the Company classifies an item as a nonrecurring gain/loss according to the definition in the
Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the
Public—Nonrecurring Gains and Losses, or reclassifies any nonrecurring gain/loss item listed in the said
explanatory announcement as a recurring gain/loss:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part III Business Summary
I Main Business Scope of the Company in Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
1. The Company’s Main Business Scope or Products
We design, manufacture and market high-quality, green and energy-efficient lighting products and electrical
equipment, as well as provide comprehensive lighting and electrical solutions. Our products mainly include
electrical products such as LED lighting products and fixtures, traditional lighting products and switches, which
are widely used for indoor and outdoor lighting, landscape lighting, motor vehicle lighting and buildings’
electrical switch systems, among others. Currently, we have three major operating divisions, namely, lighting,
electrical products and vehicle lighting. Upon years of development, we have won quite many honors such as the
title of “The King of Lamps in China”, and our “FSL” and “Fenjiang” brands have been certified as “Famous
China Brands”.
2. Main business models
(1) Procurement model
We mainly procure raw materials such as lamp beads, lamp holders, electronic components, aluminum substrate,
plastic parts, metal materials, quartz tubes and fuel by way of bids invitation. A bids invitation supervisory
committee consisting of personnel from several departments will be set up in the future. For every kind of our
main raw materials, we usually have a few suppliers to choose from in procurement so that the procurement prices
would be fair, the supply of raw materials in time and the good quality of the raw materials ensured.
(2) Production models
① Production of the conventional products
Concerning the conventional products, we analyze sales of every month and predict future market demand so as to
formulate a production plan for the coming month. And our workshops produce according to the plan to avoid
extra stock and at the same time ensure that there is enough for sale.
② Production according to orders
Different from the conventional lighting products which are of little variation in specifications, LED lighting
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
products are at a fast pace of renewal and different customers often have different requirements regarding the
products’ appearances and performance indexes. Therefore, we have to organize individualized production for
some orders for LED lighting products, export orders in particular. For this kind of orders, we formulate our
production plans based on them and then make procurement plans according to the production plans, which will
help effectively control the stock and the procurement prices of raw materials, reduce capital occupation and
improve our operating efficiency to the maximum.
③ Combination of independent production and outsourcing
With a high production capacity, we produce most of our products and parts on our own. Only a small portion of
parts and low-tech products is outsourced to sub-manufacturers, who will produce in strict accordance with our
requirements. We will also tag along their production processes and examine carefully the quality of the products
finished. In this way, our supply of products is guaranteed.
(3) Sales model
We mainly adopt a commercial agent model, selling our products to commercial agents through various channels
and setting up business divisions under the sales department to follow up the use of our products by customers and
provide relevant support. In terms of channels, besides consolidating wholesale, we will also focus on the
development of franchised stores, illumination engineering & commercial lighting, e-commerce & retail sales and
automotive lighting to minimize our weaknesses in this respect for a better chance of survival.
3. Main driving forces for growth
The Reporting Period saw unfavorable factors such as fierce competition, price battles, rising raw material and
labor costs and the appreciation of RMB. However, relying on its advantages in technology, brand, channel, and
scale, the Company consistently pushed forward the technology upgrade of main products through continual R&D
investment and technological innovation so as to improve the quality of its products. It also strengthened
marketing and optimized the structure of its products to be sold. Additionally, it effectively controlled
procurement cost and improved production efficiency by way of a higher level of automation in manufacturing.
As a result, the Company’s comprehensive competitiveness has increased further and its operating revenue kept
growing in a steady manner.
4. Development stage and periodicity of the lighting industry as well as our position in the market
The recent years have witnessed the rapid rise of the LED lighting technology. Due to the sharp drop in their cost
and their remarkable performance in energy saving & emission reduction, LED lighting products have been
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
generally accepted by consumers, resulting in a higher and higher penetration rate as well as a fast-shrinking
market for conventional lighting products. However, after years of fast development and renewal, growth in LED
lighting has slowed down. Particularly the LED downstream with a low requirement for market access is suffering
from an obvious problem of structural overcapacity, leading to the disordered, cutthroat competition on the market.
Under the double hits by a macro economic downturn and fierce competition, large enterprises will expand
through mergers and acquisitions for stronger competitiveness, while some small and medium ones can only face
the fate of being washed out of the market due to lack of competitiveness, which is bringing the entire industry
into an integration phase. As a necessity for daily life, lighting products are mainly under the influence of the
macro economy and the real estate sector but are little affected by seasons and regions.
Generally speaking, China’s lighting industry is insufficiently centralized with no overwhelmingly superior
enterprises despite an enlarging market share of competitive brands. Upon years of development, we have become
a leading and quite competitive lighting enterprise with strong competitiveness in brand, production scale, channel,
R&D, etc.
II Material Change in Main Assets
1. Material Change in Main Assets
Main assets Reason for material change in the period
Property, plant and equipment No material change
Intangible assets No material change
The closing amount increased 127.78% from the opening amount mainly due to increase
Construction in progress
in ongoing construction projects
2. Main Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?
No.
The core competitiveness of the Company mainly reflects on fours aspects listed below:
Channel advantage
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
The Company has been sticking to the marketing strategy of deeply focusing and refining channels. Through years
of development and experience accumulation, the Company currently has four major sales channels for the
domestic market, which contains the circulation and wholesales channel, the exclusive shop channel, the E-business
retail channel, and the engineering commercial lighting channel, forming a marketing network covering the whole
country. And the Company primarily serves as an OEM partner for internationally famous lighting companies and
sells its own FSL-branded products on the overseas market. Replying on strong and perfect sales channels,
products of the Company can rapidly enter the market, which has significantly improved the Company’s market
development capability and competitiveness.
Brand advantage
The Company keeps focusing on the positioning, core value, and features of FSL brand, and continually improved
the brand recognition and reputation of FSL brand by product design, end sales, advertisement, special lighting
exhibition, and so on. At present, FSL and Fen Jiang among the three brands of the Company are both famous
trademarks in China. The FSL brand has become one of the most influential and popular brands in China, and the
powerful brand influence has become the main driver for continuous sales growth of the Company.
Technology advantage
The Company has always been attaching importance to R&D of new products and technologies, increasing the input
on independent innovation on technologies and products, and perfecting the improvement process for R&D and
technique of all products. The Company absorbs and trains technical talents, set up innovative incentive mechanism
and performance mechanism, and fully provides with supports in fund, talents, and mechanisms.
Scale advantage
As one of the enterprises to first step into the industry of producing and selling lighting products, the Company
possesses the manufacture culture of refining production and the large-scale manufacturing capability by years of
experience accumulation. The Company has production bases in Foshan, Nanjing and Xinxiang. The large-scale
and centralized production brings obvious economic benefits to the Company, which not only shows in manufacture
cost of products, but also shows in aspects such as raw material procurement and product pricing.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part IV Company Performance Discussion and Analysis
I Overview
(I) Summary
China still saw a harsh and complicated economic development at home and abroad during 2017. Internationally,
the world economy continued to recover with stronger power for growth, whereas political and economic factors
caused an anti-globalization tide where certain economies called for the return of its international companies from
abroad, increasing trade conflicts, more volatile currency exchange rates and dramatic political changes.
Domestically, China’s economy entered a “New Normal” state steadily, with intensive and tight real estate
macro-controls. Regarding the lighting industry, it is shifting from fast development to a period characterized by
slowdown in growth along with the general economic trend, with high costs of raw materials squeezing
companies’ space for profits. In face of the complicated economic environment and the fierce industry-wide
competition, the Company adapted to the “New Normal” state of China’s economy by closely adhering to the
strategic objectives of “Cutting-Edge Technologies, Internationally-Famous Brands and Large-Scale Production”
the Board had put forward, continually encouraging innovation through more investments, expanding its markets,
building its brands, upgrading management and increasing its core competitiveness.
For 2017, the Company achieved operating revenue of RMB 3,800.1883 million, up 12.88% from the year earlier,
and net income attributable to the shareholders of the listed company of RMB 740.3087 million, down 30.96%
compared to last year. Net income decreased primarily because of a 46.63% drop in investment income from
RMB 853.2161 million generated in 2016 by selling 29,270,000 shares of Guoxuan High-tech’s stock to
RMB455.3777 million generated in 2017 by selling 8,770,400 shares of Guoxuan High-tech’s stock and a 38%
stake in Qinghai Fozhao Lithium Energy Exploitation Co., Ltd.
(II) Major Work in 2017
1. Continued to increase investment in R&D and innovation, and strengthened core competitiveness of the
Company
During the Reporting Period, the Company closely focused on its strategic goals to continue increasing new
product development, technology upgrades and process improvements, and enhance product market
competitiveness of the Company. In 2017, the Company was guided by market demands to develop 385 series of
new products and 27 series of technological processes, which included main products such as indoor lighting,
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
household products and commercial lighting. Sales revenue came from new products reached RMB1.145 billion.
At the same time, the Company increased investment in smart lighting. Through the cooperation with external
scientific research institutes and smart companies, the designs of wired and wireless schemes for the three
intelligent lighting control systems and supporting smart lighting products were completed, which helped the
Company to prepared well for the launch of smart lighting products in 2018.
2. Deepened market development and built a multi-dimensional market structure
In 2017, the Company piloted a new operation mode, and deeply tapped the development potential of each
channel based on the promotion of new products to build a market structure in which domestic, foreign, online,
and offline multi-dimensional markets are closely interacting and developing collaboratively. In the domestic
market, the wholesale channels adopted new operation modes to standardize market prices, achieve the sharing of
interests and ensure long-term beneficial development of the market; in the meanwhile, establishment of special
stores was expanded and accelerated to set up greater special stores to offer better experiences, and during the
year, 443 new stores were set up. In respect of e-commerce channel, in addition to the flagship stores opened by
Tmall, Jingdong and Suning Tesco, new professional e-commerce channel distributors were developed to
cooperate with platform promotion activities to promote product differentiation, and thus won competition share
and formed a retail mode for online and offline communication. In the development of engineering channel, the
Company successfully entered into contracts on the centralized purchasing projects with Evergrande Real Estate,
Times Property, Guangwu Real Estate, Galaxy Real Estate and Heneng Group and other real estate firms, which
fully recognized products of the Company, and thus greatly enhanced the brand influence of the Company. In
terms of overseas sales, the Company continued to maintain and develop key customers by R&D and services to
increase order quantities of individual customer, actively developed new customers and made major
breakthroughs in weak areas. During the Reporting Period, more than 200 new customers were developed,
including three key customers, which increased the Company's overseas sales. Efforts were continuously put on
brand promotion, channel construction and product development of FSL's independent brands to further increase
the publicity and reputation of FSL brands overseas, constantly improve overseas channel network layout, and
develop different products for different regional markets. During the Reporting Period, the sales revenue from
products under the Company’s own brands increased by 37%.
3. Comprehensively promoted brand building and remodeled brand value
In 2017, the Company comprehensively promoted brand building of FSL and FSL Electric Technology. On the
traditional media TV, it signed the 2018 strategic cooperation agreement with CCTV, and planned to place
advertisements on CCTV in 2018. On the Internet, it cooperated with Baidu Promotion and conducted in-depth
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
brand communication in WeChat and other social media platforms to attract more online click-through rates. In
terms of outdoor advertisement, seats advertisements and posters were placed on the Beijing-Guangzhou
high-speed rail line. On the advertising channel of the industry, information on new products and the Company
were published from time to time in “DAZHAOMING”, and strengthened company branding by holding activities
like Designers’ Assistance and sponsoring influential competitions of the industry. At the same time, the
Company participated in international and domestic large-scale exhibitions and released various series of new
products with different specifications. Through approach to different channels, the Company brand image had
been further enhanced to a middle and high end gradually.
4. Actively developed new business and rapidly developed electric technology
2017 was the first whole year for full-scale operation of the Company’s holding subsidiary Zhida Electric
Technology. The Company created high-quality creative switch products by innovations of product technology,
appearance and innovation. It encouraged distributors by integration of existing channel resources, development
of core distributors and the full implementation of the county and township regional exclusive agency policy of
\"Who sows, who reaps\". In addition, it greatly improved the brand publicity of FSL Electric Technology by
activities such as WeChat red packet promotion, hydroelectricity conferences and centralized promotion with
brand promotion of the Company, and thus increased the sales of electric technology business. At present, Zhida
Electric Technology owns 216 first-tier contributors and more than 4,800 terminal outlets. It also entered into
strategic cooperation agreements with 7 real estate developers such as Evergrande Real Estate and Kangqiao Real
Estate, and 5 decoration companies such as Gold Mantis and Grandland, building a good base for the future
development of KA channel of Zhida Electric Technology. During the Reporting Period, We gained sales revenue
in electrical engineering equipment of RMB 128.5913 million.
5. Breakthroughs in the development of automotive lighting and new impetus for the Company development
The company seized the opportunity of transformation and upgrading of automotive lighting industry from
traditional light sources to LED automotive lighting, gave full play to the Company’s accumulated advantages in
the traditional light source of car lights and cut into the LED automotive lighting business. In August 2017, the
Company established the Automotive Lamp Department to achieve flat management of automotive lamp business.
By increasing R&D investment and introducing automated production lines, the Company's LED automotive lamp
products now cover LED headlights, LED-assisted lamps and LED rear lights. At the same time, it intensified
efforts in market development and had succeeded in reaching cooperation with Dongfeng Nissan, Dongfeng
Liuzhou Automobile, BAIC Yinxiang, Geely, Chery, Changfeng Leopaard, Lifan Motors and other well-known
domestic automotive OEMs. The sales revenue of LED auto lighting business increased by 225% year-on-year,
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
and added new impetus for the Company development.
II Analysis of Main Business
1. Summary
See “Part IV Company Performance Discussion and Analysis”, “I Overview” herein.
2. Revenue and Cost
(1) Breakdown of Operating Revenue
Unit: RMB
2017
Percentage of total Percentage of total
Change
Revenue operating revenue Revenue operating revenue
(%) (%)
Total 3,800,188,261.54 100% 3,366,454,968.60 100% 12.88%
By operating division
Lighting products
3,800,188,261.54 100.00% 3,366,454,968.60 100.00% 12.88%
and fixtures
By product category
LED lighting
2,629,174,231.52 69.19% 2,045,681,465.82 60.77% 28.52%
products
Traditional lighting
1,015,201,248.68 26.71% 1,293,539,060.72 38.42% -21.52%
products
Electrical products 128,591,276.67 3.38%
Other 27,221,504.67 0.72% 27,234,442.06 0.81% -0.05%
By operating segment
China 2,311,103,467.42 60.82% 2,147,742,100.25 63.80% 7.61%
Overseas 1,489,084,794.12 39.18% 1,218,712,868.35 36.20% 22.19%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating Revenue
or Income
√ Applicable □ Not applicable
Is the Company subject to any disclosure requirements for special industries?
No.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Unit: RMB
YoY change in YoY change in
Operating Cost of operating Gross margin YoY change in
cost of operating gross margin
revenue revenue percentage operating revenue
revenue percentage
By operating division
Lighting products
3,800,188,261.54 2,940,069,129.71 22.63% 12.88% 16.75% -2.57%
and fixtures
By product category
LED lighting
2,629,174,231.52 2,088,567,069.13 20.56% 28.52% 31.93% -2.05%
products
Traditional
1,015,201,248.68 745,553,284.02 26.56% -21.52% -18.66% -2.58%
lighting products
Electrical
128,591,276.67 89,456,617.22 30.43%
products
Other 27,221,504.67 16,492,159.34 39.41% -0.05% -10.61% 7.16%
By operating segment
China 2,311,103,467.42 1,697,439,056.07 26.55% 7.61% 6.47% 0.78%
Overseas 1,489,084,794.12 1,242,630,073.64 16.55% 22.19% 34.50% -7.64%
Main business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2017 2016 Change
Unit sales Piece 868,749,877 871,948,420 -0.37%
Lighting products
Output Piece 852,675,184 881,564,257 -3.28%
and fixtures
Inventory Piece 117,711,225 133,785,918 -12.02%
Reason for any over 30% YoY movements in the data above:
□ Applicable √ Not applicable
(4) Execution Progress of Major Signed Sales Contracts in Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Operating Revenue
By operating division and product category
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Unit: RMB
2017
Percentage of Percentage of
Operating
Item Cost of operating total cost of total cost of Change
division Cost
revenue operating revenue operating revenue
(%) (%)
Lighting products
2,940,069,129.71 100.00% 2,518,164,099.97 100.00% 16.75%
and fixtures
Lighting products
Raw materials 2,139,903,308.07 72.78% 1,696,469,566.51 67.37% 26.14%
and fixtures
Lighting products
Labor cost 500,797,273.73 17.03% 504,117,326.14 20.02% -0.66%
and fixtures
Lighting products Depreciation and
282,876,388.57 9.62% 299,126,920.36 11.88% -5.43%
and fixtures other
Lighting products
Other 16,492,159.34 0.56% 18,450,286.96 0.73% -10.61%
and fixtures
Unit: RMB
2017
Percentage of Percentage of
Product category Item Cost of operating total cost of Cost of operating total cost of Change
revenue operating revenue revenue operating revenue
(%) (%)
LED lighting
Raw materials 1,658,258,780.94 56.40% 1,139,950,591.51 45.27% 45.47%
products
LED lighting
Labor cost 320,338,525.94 10.90% 264,639,920.23 10.51% 21.05%
products
LED lighting Depreciation and
109,969,762.25 3.74% 178,506,859.97 7.09% -38.39%
products other
LED lighting
Subtotal 2,088,567,069.13 71.04% 1,583,097,371.71 62.87% 31.93%
products
Traditional
Raw materials 412,293,959.50 14.02% 556,518,975.00 22.10% -25.92%
lighting products
Traditional
Labor cost 167,854,073.03 5.71% 239,477,405.91 9.51% -29.91%
lighting products
Traditional Depreciation and
165,405,251.49 5.63% 120,620,060.39 4.79% 37.13%
lighting products other
Traditional
Subtotal 745,553,284.02 25.36% 916,616,441.30 36.40% -18.66%
lighting products
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Electrical
Raw materials 69,350,567.63 2.36%
products
Electrical
Labor cost 12,604,674.76 0.43%
products
Electrical Depreciation and
7,501,374.83 0.26%
products other
Electrical
Subtotal 89,456,617.22 3.04%
products
Other products
Other 16,492,159.34 0.56% 18,450,286.96 0.73% -10.61%
and services
Total 2,940,069,129.71 100.00% 2,518,164,099.97 100.00% 16.75%
(6) Change in Scope of Consolidated Financial Statements for Reporting Period
√ Yes □ No
1、FSL Europe GmbH, a new subsidiary 100% owned by the Company with a registered capital of EUR25,000,
was newly included into the Company’s consolidated financial statements of the Reporting Period.
2、A creditor of subsidiary Suzhou Mont Lighting Co., Ltd. (Suzhou Mont) applied to the court for Suzhou Mont’s
bankruptcy. On June 2, 2016, the Suzhou Industrial Park court appointed Jiangsu Yingyuan Law Firm to be
Suzhou Mont’s custodian through the Decision (2016) Suzhou 0591 Civil Bankruptcy No. 03. And the control of
the Company over Suzhou Mont has ceased since that day. Pursuant to the accounting standards for business
enterprises, the Company has excluded Suzhou Mont from its consolidation scope.
(7) Major Change in Business Scope or Product or Service Range in Reporting Period
□ Applicable √ Not applicable
(8) Main Customers and Suppliers
Main customers:
Total sales to top five customers (RMB) 597,183,160.80
Total sales to top five customers as a percentage of total
15.72%
sales of Reporting Period (%)
Total sales to related parties among top five customers as
0.00%
a percentage of total sales of Reporting Period (%)
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Information about top five customers:
Sales revenue generated Percentage of total sales of Reporting
No. Customer
(RMB) Period (%)
1 Customer A 234,665,863.31 6.18%
2 Customer B 122,733,845.02 3.23%
3 Customer C 122,393,439.52 3.22%
4 Customer D 65,196,701.18 1.72%
5 Customer E 52,193,311.77 1.37%
Total -- 597,183,160.80 15.72%
Other information about the main customers:
√ Applicable □ Not applicable
None of the top five customers is a related party of the Company.
Main suppliers:
Total purchases from top five suppliers (RMB) 354,148,637.74
Total purchases from top five suppliers as a percentage of
15.64%
total purchases of Reporting Period (%)
Total purchases from related parties among top five
suppliers as a percentage of total purchases of Reporting 4.08%
Period (%)
Information about top five suppliers:
Percentage of total purchases of Reporting
No. Supplier Payment for purchases (RMB)
Period (%)
1 Supplier A 94,588,261.29 4.08%
2 Supplier B 88,306,378.54 3.90%
3 Supplier C 69,978,442.82 3.09%
4 Supplier D 67,937,029.09 3.00%
5 Supplier E 33,338,526.00 1.47%
Total -- 354,148,637.74 15.64%
Other information about the main suppliers:
√ Applicable □ Not applicable
Among the top five suppliers, the 1st supplier is a related party of the Company while the other 4 are not.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
3. Expense
Unit: RMB
2017 2016 Change Reason for material change
Selling expenses 213,812,639.74 204,777,965.73 4.41%
Administrative expenses 213,580,974.54 211,412,262.47 1.03%
Increase in currency exchange loss
Finance costs 10,972,282.52 -28,457,453.89 138.56% driven by RMB appreciation and
growing exports
4. Research and Development Expense
√ Applicable □ Not applicable
The Company always took science and technology as the first priority, paid attention to technology R&D,
constantly researched and developed new products and technologies meeting market demands, promoted the
optimization and upgrade of product structure, improved the technology content of products, and improved the
core competitiveness of the Company. Meanwhile, the Company strengthened the research on technique and
technology of products, so as to cut down product cost and improve quality. In the Reporting Period, the
Company spent a total of RMB127.98 million on R&D, accounting for 3.37% of the operating revenue of the
Reporting Period.
Details about R&D expense:
2017 2016 Change
Number of R&D personnel 260 259 0.39%
R&D personnel as a percentage
2.82% 2.78% 0.04%
of total employees
R&D expense (RMB) 127,982,819.06 110,070,467.56 16.27%
R&D expense as a percentage
3.37% 3.27% 0.10%
of operating revenue
Capitalized R&D expense
0.00 0.00
(RMB)
Capitalized R&D expense as a
percentage of total R&D 0.00% 0.00%
expense
Reason for any significant YoY change in the proportion of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of the capitalized R&D expense and rationale
□ Applicable √ Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
5. Cash Flows
Unit: RMB
Item 2017 2016 Change
Subtotal of cash generated by
3,792,544,040.88 3,266,614,809.01 16.10%
operating activities
Subtotal of cash used in
3,576,722,848.09 2,976,636,040.53 20.16%
operating activities
Net cash flows from operating
215,821,192.79 289,978,768.48 -25.57%
activities
Subtotal of cash generated by
366,096,873.47 982,592,873.51 -62.74%
investing activities
Subtotal of cash used in
946,893,845.08 720,093,967.08 31.50%
investing activities
Net cash flows from investing
-580,796,971.61 262,498,906.43 -321.26%
activities
Subtotal of cash generated by
10,000,000.00 -100.00%
financing activities
Subtotal of cash used in
539,956,095.34 15,901,660.85 3,295.60%
financing activities
Net cash flows from financing
-539,956,095.34 -5,901,660.85 -9,049.22%
activities
Net increase in cash and cash
-909,099,433.58 545,737,534.17 -266.58%
equivalents
Explanation of why any of the data above varies materially:
√ Applicable □ Not applicable
1. Cash generated by investing activities decreased 62.74% during the current year compared to last year,
primarily driven by a sharp drop in shares of Guoxuan High-Tech’s stock sold by the Company through the stock
exchange’s public centralized quotation system.
2. Cash used in investing activities increased 31.50% during the current year compared to last year, primarily
driven by a higher amount of investments in bank’s principal-protected wealth management products and
structured deposit products by the Company with its own idle money.
3. Net cash flows from investing activities decreased 321.26% during the current year compared to last year,
primarily driven by a sharp drop in shares of Guoxuan High-Tech’s stock sold by the Company through the stock
exchange’s public centralized quotation system.
4. Cash generated by financing activities decreased 100.00% during the current year compared to last year,
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
primarily driven by last year’s cash received from minority shareholder investments by subsidiaries.
5. Cash used in financing activities increased 3,295.60% during the current year compared to last year, primarily
driven by a sharp increase in cash dividend distributed.
6. Net cash flows from financing activities decreased 9049.22% during the current year compared to last year,
primarily driven by a sharp increase in cash dividend distributed.
7. Net increase in cash and cash equivalents decreased 266.58% during the current year compared to last year,
primarily driven by decreases in net cash flows from investing and financing activities.
Reason for any material difference between the net operating cash flows and the net income of the Reporting
Period:
√ Applicable □ Not applicable
For the Reporting Period, the net operating cash flows stood at RMB215,821,192.79 while the net income stood at
RMB745,820,319.26, representing a difference of RMB-529,999,126.47, primarily driven by the Company’s sale
of some shares of Guoxuan High-Tech’s stock, as well as by the Company’s sale of its whole stake in Qinghai
Fozhao Lithium Energy Exploitation Co., Ltd. in the current year.
III Non-Core Business Analysis
√ Applicable □ Not applicable
Unit: RMB
Percentage of pretax
Amount Source/Reason Recurring or not
income (%)
Sale of certain shares of
Guoxuan High-tech’s stock
and stake in Qinghai Fozhao
Investment income 522,604,626.66 59.88% Not
Lithium Energy Exploitation
Co., Ltd. & receipt of
dividend from investee
Allowances for doubtful
Asset impairments 34,774,814.13 3.98% accounts and inventory Not
valuation
Non-operating Government subsidies
3,420,866.46 0.39% Not
income received and others
Non-operating Disposal of non-current
8,329,138.20 0.95% Not
expense assets
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
IV Analysis of Assets and Liabilities
1. Material Change in Asset Composition
Unit: RMB
December 31, 2017 December 31, 2016
Change in
Percentage of Percentage of
percentag Reason for material change
Value total assets Value total assets
e (%)
(%) (%)
A higher amount of investments in
bank’s principal-protected wealth
570,184,208.9 1,479,283,642.
Monetary assets 10.05% 24.25% -14.20% management products and structured
6
deposit products by the Company with
its own idle money
Increase in operating revenue and
Accounts 756,291,432.5
13.32% 595,257,954.00 9.76% 3.56% changed payment days of certain
receivable
customers
746,466,889.8
Inventories 13.15% 753,681,605.19 12.36% 0.79%
Long-term equity 179,414,105.1
3.16% 210,394,932.69 3.45% -0.29%
investments
Property, plant 483,520,866.6
8.52% 446,006,929.66 7.31% 1.21%
and equipment
Construction in 162,814,991.6
2.87% 71,479,325.91 1.17% 1.70% More ongoing construction items
process
2. Assets and Liabilities Measured at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gains/losses on
Cumulative fair Allowance for
fair value Purchased in Sold in
Opening value changes impairment for Closing
Item changes in Reporting Reporting
balance charged to Reporting balance
Reporting Period Period
equity Period
Period
Financial assets
3.Available-for
1,427,901,096. 1,086,953,22
-sale financial 843,068,339.74 143,604,335.25 303,851,886.49
63 7.20
assets
Subtotal of 1,427,901,096. 843,068,339.74 143,604,335.25 303,851,886.49 1,086,953,22
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
financial assets 63 7.20
1,427,901,096. 1,086,953,22
Total of above 843,068,339.74 143,604,335.25 303,851,886.49
63 7.20
Financial
0.00 0.00
liabilities
Material change in the measurement attributes of the main assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as of End of Reporting Period
Not applicable.
V Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Total investment amount of Reporting Total investment amount of last year
Change
Period (RMB) (RMB)
143,604,335.25 220,507,350.00 -34.90%
2. Material Equity Investments Made in Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Investm Return Index
The
Source ent on Any to
Main Way Amoun Compa Term Project
of Type of progres investm legal Disclos disclose
Inve business of t of ny’s Joint of ed
investm investm s as of ent in matter ure date d
stee scope of invest investm stake in investor investm earning
ent ent balance Reporti involve (if any) informa
investee ment ent investe ent s
funds sheet ng d tion (if
e
date Period any)
Developmen Subsc
t, riptio
Guo Subscri
manufacturi n in The
xuan ption in
ng and sales Guox 143,60 Compa www.c
High Rights rights 89,896, 11/17/2
of uan 4,335.2 3.99% ny’s None N/A 0.00 No ninfo.c
-tech issue issue 943.25
lithium-ion High- 5 own om.cn
Co., complet
battery and tech’s money
Ltd. ed
its materials, rights
battery, issue
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
motor and
vehicle
control
system;
R&D,
manufacturi
ng and sales
of
emergency
power
supply for
lithium-ion
battery,
energy
storage
battery and
electric tool
battery;
R&D,
manufacturi
ng, sales and
installation
of high and
low pressure
switches and
complete
sets of
equipment,
digitized
electrical
equipment,
distribution
network
intelligent
equipment
and
components
as well as
three-box
products;
R&D,
manufacturi
ng, sales and
installation
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
of renewable
solar and
wind energy
equipment;
R&D,
manufacturi
ng, sales and
installation
of
energy-savin
g and
environment
al protection
appliances
and
equipment
as well as
marine
electrical
appliances
and
equipment;
R&D,
manufacturi
ng, and sales
of
transformer,
substation,
large-scale
charging
equipment,
vehicle-mou
nted charger
and
vehicular
high-voltage
distribution
cabinet;
self-operatio
n and
agency of
import and
export of
various
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
commodities
and
technologies
(national
restrictions
(except for
goods and
technologies
limited to be
operated or
prohibited to
be imported
or exported
by the
State);
design and
construction
of urban and
road lighting
projects.
(Projects
that are
subject to
approval
according to
the law may
only be
carried out
after
approval by
the relevant
departments.
)
143,60
Tota 89,896,
-- -- 4,335.2 -- -- -- -- -- -- 0.00 -- -- --
l 943.25
3. Material Non-Equity Investments Ongoing in Reporting Period
□ Applicable √ Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
Gain/Lo
Accumu
ss on Source
Variety Symbol lated
Account fair Purchas Gain/los
Name of Initial fair Sold in of
of of ing Opening value ed in s in Closing Account
value Reporti
securitie investm measure carrying changes Reporti Reporti carrying investm
securitie securitie changes ng
ment value in ng ng value ing title
s ent cost charged Period ent
s s method Reporti Period Period
to
ng funds
equity
Period
Availabl
Guoxua The
Domesti Fair 1,355,3 1,011,8 e-for-sal
n 160,000 791,603 143,604 304,428 277,558 Compan
c/Foreig 002074 value 83,288. 38,873. e
High-tec ,000.00 ,733.86 ,335.25 ,520.24 ,504.02 y’s own
n stock method 49 50 financia
h money
l asset
Availabl
The
Domesti China Fair e-for-sal
30,828, 72,517, 51,464, 1,817,5 75,114, Compan
c/Foreig 601818 Everbrig value e
816.00 808.14 605.88 81.89 353.70 y’s own
n stock ht Bank method financia
money
l asset
Availabl
The
Domesti e-for-sal
Xiamen 292,574 Cost 292,574 21,942, 292,574 Compan
c/Foreig N/A e
Bank ,133.00 method ,133.00 835.20 ,133.00 y’s own
n stock financia
money
l asset
Foshan
branch
Availabl
of The
Domesti e-for-sal
Guangd 500,000 Cost 500,000 500,000 Compan
c/Foreig N/A e
ong .00 method .00 .00 y’s own
n stock financia
Develop money
l asset
ment
Bank
1,720,9 1,380,0
483,902 843,068 143,604 304,428 301,318
Total -- 75,229. 0.00 27,360. -- --
,949.00 ,339.74 ,335.25 ,520.24 ,921.11
63
Disclosure date of
announcement on Board’s
consent for securities
investment
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Disclosure date of
announcement on
shareholders’ meeting’s
consent for securities
investment (if any)
(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in this Reporting Period.
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
√ Applicable □ Not applicable
Relatio
Net Ratio
nship
profit of the
betwee Credito Execute
contrib net
n the Owners r’s d as
uted to profit
transact hip of rights schedul
the contrib
ion the and ed or Index
Transac Compa Effect uted by Related
party asset liabiliti not; if to
Transac tion ny from on the the sale Pricing -party
Asset Date of and the involve es not, Disclos disclose
tion price the Compa of the principl transact
sold sale Compa d has involve give ure date d
party (RMB0 period- ny (see asset to e ion or
ny been all d have reasons informa
’000) begin note 3) the not
(applica transfer been all and tion
to the Compa
ble for red or transfer measur
date of ny’s
related- not red or es
sale total
party not taken
(RMB0 profit
transact
’000) (%)
ions)
Concen Some No Market Indicati
trated of the impact price ve
07/06/2 30,442. 22,895. 08/15/2
bidding Guoxua on the 30.70% when No N/A Yes Yes Yes Announ
017 85 78
in n busines reducin cement
second High-te s g the on Sale
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
ary ch continu stock of
market stock ity and Some
manage of
ment Guoxua
stability n
of the High-te
Compa ch
ny Stock
(No.
2017-0
23) on
www.c
ninfo.c
om.cn
2. Sale of Major Equity Interests
√ Applicable □ Not applicable
Net Ratio of
profit the net
Owners Execute
contribu profit
Relation hip of d as
ted to contribu
ship the schedul
the ted by
Transact Related- between equity ed or Index to
Compan Effect the sale
Transact ion Pricing party the interests not; if disclose
Equity Date of y from on the of the Disclos
ion price principl transacti transacti involve not, d
sold sale the Compan equity ure date
party (RMB0’ e on or on party d has give informat
period-b y interests
000) not and the been all reasons ion
egin to to the
Compan transferr and
the date Compan
y ed or measure
of sale y’s total
not s taken
(RMB0’ profit
000) (%)
Progress
38% No
Announ
stock impact
cement
equity on the
on the
of business
Keda transfer
Qinghai continui Assess
Clean 06/27/2 18,981. 16,151. 06/28/2 of the
Fozhao ty and 21.66% ment No N/A Yes Yes
Energy 017 76 2 017 stock
Lithium manage result
Co. Ltd equity
Energy ment
of
Exploita stability
Qinghai
tion Co., of the
FSL
Ltd. Compan
Lithium
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
y Energy
Exploita
tion Co.,
Ltd.
(No.
2017-01
9) on
www.cn
info.co
m.cn
VII Main Controlled and Joint Stock Companies
√ Applicable □ Not applicable
Main subsidiaries and joint stock companies with an over 10% influence on the Company’s net profit
Unit: RMB
Relationship Main
Company business Registered Operating Operating
with the Total assets Net assets Net profit
name scope capital revenues profit
Company
Foshan
Chansheng
47,424,057.2 35,554,946.8 185,797,415. 14,645,341.3 10,983,679.0
Electronic Subsidiary Manufacture 1,000,000.00
5 0 13 9
Ballast Co.,
Ltd.
Foshan
Chanchang
Electric 72,782,944.0 117,638,074. 110,891,072. 72,330,165.5
Subsidiary Manufacture 6,800,675.91 4,927,919.16
Appliances 0 35 56
(Gaoming)
Co., Ltd.
Foshan
Taimei 89,867,338.7 21,976,179.3 153,043,784.
Subsidiary Manufacture 500,000.00 6,992,974.05 5,218,058.76
Times Lamps 6 6
Co., Ltd.
FSL New
Light Source 50,000,000.0 56,578,705.8 54,822,930.3 21,756,800.7
Subsidiary Manufacture 1,331,464.34 998,598.25
Technology 0 1 7
Co., Ltd.
FSL
35,418,439.7 53,192,692.4 47,115,552.9 51,442,544.3
(Xinxiang) Subsidiary Manufacture 3,681,443.91 2,744,753.56
6 2 2
Lighting Co.,
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Ltd.
Guangdong
Fozhao
200,000,000. 229,946,252. 229,346,302.
Financing Subsidiary Finance 7,902,089.02 5,926,566.76
00 53
Lease Co.,
Ltd.
FSL Lighting
Equipment 15,000,000.0 64,378,292.6 51,014,875.4 116,648,546. 11,052,666.4
Subsidiary manufacture 5,931,359.45
Co., Ltd. 0 6 6 63
Nanjing
Fozhao
Lighting 41,683,200.0 57,100,355.4 49,522,513.7 37,612,371.6
Subsidiary Manufacture 7,910,295.39 4,057,448.65
Components 0 3 0
Manufacturin
g Co., Ltd.
FSL Zhida
Electric 50,000,000.0 100,220,916. 43,513,890.9 129,462,815. 10,787,534.6
Subsidiary Manufacture 8,053,421.08
Technology 0 31 9 58
Co., Ltd.
FSL Europe
Subsidiary Manufacture 195,812.50 195,057.50 195,057.50
GmbH
Subsidiaries obtained or disposed in this Reporting Period
√ Applicable □ Not applicable
How to obtain or dispose the subsidiary in Effect on overall production and operation
Subsidiary
this Reporting Period results
Good for expanding the international
market, and improving the Company’s
sustained development capability and
FSL Europe GmbH Newly incorporated
overall earnings, and laying a foundation
for the next step of the Company’s
development strategy
Information about the main controlled and joint stock companies:
—Foshan Chansheng Electronic Ballast Co., Ltd. was invested and established by the Company and Mr. Ma
Henglai and had set up and obtained license for business corporation on August 26, 2003. The Company holds
75% equities of the said company; therefore the said subsidiary was included into the scope of the consolidated
financial statements since the date of foundation.
On December 24, 2013, the Company and Mr. Ma Henglai signed the equity transfer agreement. The Company
purchased 25% equity of Foshan Chansheng Electronic Ballast Co., Ltd. held by Mr. Ma Henglai. After the
purchasing, the Company held 100% equity of Foshan Chansheng Electronic Ballast Co., Ltd.
—Foshan Chanchang Electric Appliances (Gaoming) Co., Ltd., which is a Sino-foreign joint venture invested and
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
established by the Company and Prosperity Lamps and Components Ltd, had obtained license for business
corporation on August 23, 2005 through approval by Foreign Trade and Economic Cooperation Bureau of
Gaoming District, Foshan with document “MWJMY Zi [2005] No. 79”. The Company holds 70% equities of the
said company; therefore the said subsidiary was included into the scope of the consolidated financial statements
since the date of foundation.
On August 23, 2016, the Company and Prosperity Lamps and Components Ltd signed the equity transfer
agreement. The Company purchased 30% equity of Foshan Chanchang Electric Appliances (Gaoming) Co., Ltd.
held by Prosperity Lamps and Components Ltd. After the purchasing, the Company held 100% equity of Foshan
Chanchang Electric Appliances (Gaoming) Co., Ltd.
—Foshan Taimei Times Lamps Co., Ltd., which is a Sino-foreign joint venture invested and established by the
Company and Reback North America Investment Limited, had obtained license for Business Corporation on
December 5, 2005 through approval by Foreign Trade and Economic Cooperation Bureau of Gaoming District,
Foshan with document “MWJMY Zi [2005] No. 97”. The Company holds 70% equities of the said company;
therefore the said subsidiary was included into the scope of the consolidated financial statements since the date of
foundation.
—FSL New Light Source Technology Co., Ltd. (its predecessor was “Foshan Lighting Lamps and Lanterns Co.,
Ltd.” and it changed its name to “FSL New Light Source Technology Co., Ltd.” on December 17, 2014), which is
invested and established by the Company together with Foshan Haozhiyuan Trading Co., Ltd., Shanghai Liangqi
Electric Co., Ltd, Changzhou Sanfeng Electrical & Lighting Co., Ltd., Henan Xingchen Electrical & Lighting Co.,
Ltd., Foshan Hongbang Electrical & Lighting Co., Ltd., Hebei Jinfen Trading Co., Ltd., obtaining its license for
Business Corporation on September 27, 2009. The Company holds 60% equities of this company. Therefore the
said subsidiary was included into the scope of the consolidated financial statements since the date of foundation.
On September 25, 2009 and November 19, 2010, the equity transfer agreement was signed between the Company
and the minority shareholders, in which the minority shareholders respectively transferred their equities of Foshan
Lighting Lamps and Lanterns Co., Ltd. to the Company. After transfer, the Company holds 100% equities of
Foshan Lighting Lamps and Lanterns Co., Ltd.
—FSL (Xinxiang) Lighting Co., Ltd. is a limited liability company which is invested and established by the
Company, obtaining its license for Business Corporation on April 17, 2009. The Company holds 100% equities of
the said company, therefore the said subsidiary was included into the scope of the consolidated financial
statements since date of foundation. On August 27, 2013, the 3rd Session of the 7th Board of Directors reviewed
and approved to invest another RMB 2 million (land in an industrial park in Xinxiang, Henan Province and
monetary funds) in FSL (Xinxiang) Lighting, increasing the registered capital of FSL (Xinxiang) Lighting to
RMB 35,418,439.76.
—FSL Lighting Equipment Co., Ltd. is a limited liability company invested and established by the Company with
the registered capital of RMB 15 million, which had obtained its license for Business Corporation on May 8, 2013.
And the Company holds 100% equities of this company. Therefore the said subsidiary was included into the scope
of the consolidated financial statements since the date of foundation.
—In accordance with the equity transfer agreement signed between the Company and Prosperity Lamps and
Components Ltd. on August 27, 2008, Prosperity Lamps and Components Ltd. transferred 100% equities of
Nanjing Fozhao Lighting Components Manufacturing Co., Ltd. (formerly known as “Prosperity (Nanjing)
Lighting Components Co., Ltd.”, and changed name to “Nanjing Fozhao Lighting Components Manufacturing
Co., Ltd.” on November 15, 2010.) to the Company. Therefore, Nanjing Fozhao Lighting Components
Manufacturing Co., Ltd. became a wholly-owned subsidiary of the Company. The said subsidiary was included
into the scope of the consolidated financial statements since the merger date.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
—FSL Zhida Electric Technology Co., Ltd. (FSL Zhida) was incorporated by the Company, Foshan Zhibida
Enterprise Management Co., Ltd. and Dongguan Baida Semiconductor Material Co., Ltd. on a joint investment
basis. FSL Zhida obtained its business license on October 21, 2016. Holding a stake of 51% in it, the Company
has included FSL Zhida in its consolidated financial statements since the date of FSL Zhida’s incorporation.
—FSL Europe GmbH is a Limited Liability company invested and set up in German with registered capital
Euro25,000. It got the business license on November 30, 2017 whose 100% stock equity is held by the Company,
and it is included into the scope of consolidated financial statement from the date of establishment.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Outlook for the Future Development of the Company
(I) Development trends of the industry
1. Industry competition
LED light source is hailed as the third revolution in the lighting history of mankind. It has the advantages of high
efficiency, energy saving, environmental protection, long service life and rich colors. It has set off an upsurge of
development and research in the world. Although the new lighting and replacement needs have led to the rapid
development of LED, due to too much capital influx into the LED field, especially in the LED downstream
applications because of its relatively low barriers to entry, there is a clear structural overcapacity in the LED
lighting industry, and thus led disorder and vicious competition in the market, which mainly focus on serious
product homogeneity, unclear product standards and fierce competition in the price of finished products. At
present, market concentration of LED downstream applications is still not high, and the competition among
brands and companies is still fierce. At the same time, the great pressure from continuous rise of raw material
prices, transportation costs and manpower costs hinders the rapid development and profitability of enterprises.
The industry is facing reshuffling. Enterprises lacking technology, brands and channels can’t survive in the \"LED
winter\" and quite from the market, while large enterprises or companies with core competitiveness can seize the
opportunity of deep adjustment and re-division of global industrial structure, and continue to extend the industrial
chain to consolidate their leading positions by the use of funds, technology, brands, channels and other advantages.
Superior resources are further concentrated in leading enterprises in the industry. The stronger becomes stronger.
The market share of a strong brand with leading reputation will be effectively increased on the basis of
maintaining stable consumption.
2. Development trend of the industry
In the long run, with the accelerated pace of urbanization in China, the per capita disposable income of urban and
rural residents has increased, and consumer demand has increased. Some international lighting companies have
withdrawn from the domestic market and shortened their product lines, thus creating room for the development of
lighting companies in China. At the same time, the continued emergence of emerging segments will bring major
opportunities for the future development of the lighting industry, and consumers will become the driving force for
the industry to change. It can be predicted that the market competition will continue to be fierce, and the
subdivisions of channel, consumer group and product will enter a new stage.
(1) Integrated lighting has become the trend of the industry
In the early stages of development of LED lighting, due to price, technology, consumer habits and other reasons,
alternative LED light source products with the same appearance and interface of traditional light sources were the
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
first to penetrate this stage. However, after several years of development, LED technology has become more and
more stable, furthermore, prices have been declining and consumption upgrades, consumer acceptance of LED
lighting products continues to increase, and the requirements for the comfort, appearance, and function of LED
lighting products are constantly raised. The design of LED lighting products focuses on appearance, user
experience, color and material instead of lighting effect. LED lighting products effectively integrate lighting
technology and product applications through industrial design to achieve more novel design sense and light
comfort, bringing greater added value to lighting products to meet different lighting needs of consumers.
Therefore, integrated LED lighting products will become key products and the major driving force in the future
application development of LED lighting.
(2) The coming forth of hot products in subdivided areas brings significant opportunities for industrial
development
With the continuous development and progress of LED technology, features of LED lighting such as rich colors
and diverse functions have been continuously found. In addition to the penetration of traditional lighting market,
LED automotive lighting, plant lighting, medical lighting and other emerging market segments have become hot
spots in the market, generating great opportunities for LED industry development. Taking LED automotive
lighting as an example, automotive lighting mainly includes headlights, taillights, turn signals, reversing lights,
daytime running lights and interior lighting. Due to characteristics of LED automotive lighting such as
energy-saving, long life, small size and high brightness, LED lights are applied in more and more cars. In
particular, LED headlights were only used in high-end brands and high-end models in the past, but nowadays,
they are applied in many domestic self-owned brand vehicles, making a trend of popularization. According to
statistics from China Association of Automobile Manufacturers, in 2017, China had an annual vehicle production
of 29.015 million and a sale of 28.879 million, ranking the first in the world for nine consecutive years. According
to the Market Research Report on LED Automotive Lighting Industry 2017”issued by OFweek Industry Research
Center, the penetration rate of LED lights in China was about 10%~15% in 2016, and the overall market size of
LED lights exceeds RMB 5 billion. According to the estimated penetration rate of 60% of LED lights in the
market in 2022 and domestic automobile market sales growth rate of 5% in the next few years, by 2022, the
domestic market size of LED lights will reach RMB 76.6 billion. In the meanwhile, according to statistics from
the Ministry of Public Security of China, as of the end of 2017, the number of motor vehicles in China was as high
as 310 million. There is also a promising market for LED automotive lighting modification and replacement.
(3) Smart lighting has become a new direction for the development of the industry and enjoys a promising market
In 2015, the State Council issued the document Made in China 2025, which clearly stated that it was necessary to
overall layout and promote the research, development, and industrialization of products such as smart lighting
appliances, indicating that intelligent lighting (home) would usher in the “Blue Ocean”. At the same time, with the
rapid development of mobile Internet and cloud computing, intelligent control technology continues to advance.
The functions of intelligent lighting systems are increasingly diverse and can be applied in different environments,
gradually satisfying consumers' demand for personalized lighting and quality of life. Smart lighting is attracting
more and more attention from companies and consumers. According to the national smart lighting (home) market
research data published in “DAZHAOMING”, more than 67% of LED lighting dealers began to consider agents
and sales of smart lighting (home) products. Moreover, an online survey from Tencent Home Appliances showed
that as many as 95% of netizens expressed interest in smart homes. Considering the huge market potential,
Huawei, Haier, Midea, Xiaomi and other large companies have entered the smart lighting (home) field, and smart
lighting has entered a stage of rapid development. According to the data from the LED Research Institute of GGII,
the scale of China's intelligent lighting output reached RMB 14.7 billion in 2016, an increase of 102.8% compared
to 2015; and China's smart lighting output value is expected to reach RMB 28.4 billion in 2017, an increase of
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
93.2% year-on-year. It is estimated that by 2020 China's smart lighting output scale will reach RMB 103.5 billion.
Smart lighting is becoming a new outlet for the development of the industry and enjoys a promising market.
(4) Healthy lighting gradually enters the market and becomes an important direction for future development
With the introduction of national strategic plan Healthy China 2030, the health industry may become a new
growth point for stimulating the economy of our country. The health industry covers a wide range which includes
health lighting. After more than ten years of development, LED technology keeps making breakthroughs.
Consumer demand for lighting is no longer limited to lighting functions and aesthetic requirements, but upgrades
to quality, health, biological safety and environment of light. Healthy lighting has gradually entered the
consumption field of the public and become an important direction for the future development of LED.
(II) Future development strategy of the Company
The company will keep adhering to professional development and focusing on the three major business segments
of “lighting, electric technology and automotive lighting”. It will vigorously implement the strategy of “high-tech
precision, internationalization of brand and sales, and large-scale production” to comprehensively enhance
operation quality and sustainability of the Company.
(III) Business Plan for 2018
1. Keep developing the market for extension
(1) Keep developing the domestic market for the three major business of lighting, electric technology and
automotive lighting
In the lighting section, the Company will systematically plan for various channels, implement channel
optimization and addition, coordinate product optimization and innovation for different channels, and tap the
market potential of various channels. It will reform the project operation system, improve the level of terminal
services and accelerate the development of engineering channels and KA channels. In addition, the Company will
integrate multiple resources with the help of brand communication and assistance, and promote sales by all-round
promotions, publishes of new products, news and hot products.
In terms of electric technology, the Company will carry out creative product upgrades with the concept of “rich,
smart and updatable” on the basis of existing product lines, so as to further expand the brand reputation of FSL
Electric Technology with brand promotion of the Company. It will continue to implement the regional exclusive
agency policy and strictly follow up the system. It will continue to improve the coverage of sales network, guide
distributors to increase resource investments, and vigorously expand engineering and KA channels to provide
creative electric technology solutions for more large-scale projects.
In respect of automotive lighting, the Company will keep increasing R&D investment in LED modules, LED
optical components and other products, speeding up upgrading of production lines and launch of new products. It
will maintain existing customers, actively follow up potential customers in negotiation, and develop new
customers.
(2) For overseas markets, the Company will keep following up the strategy of key customers by good
management and services to improve relationship with customers. It will continue to optimize product sales
structure, increase the proportion of LED lighting sales, further focus on strategic markets, develop key and
potential markets to optimize overseas market layout of the Company.
2. Accelerate R&D of new products, enrich and upgrade smart lighting and intelligent electric technology product
lines
LED products are replaced extremely fast, and R&D of new products must be continuously conducted to enrich
product lines so as to guarantee sustainable development of the Company. In 2018, the Company will continue to
increase investment in technology and products, enhance cooperation between production, teaching and research,
keep innovating for product iterations, and reserve cutting-edge and forward-looking technologies. According to
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
the development orientation of the Company, R&D will be focused on lighting products and LED automotive
lighting that are applicable to different channels and regions. In terms of smart lighting, based on the smart
lighting control system completed in 2017, the Company will develop smart lighting voice control, APP control,
and panel control systems which are the combination of intelligent lighting and smart switches. Besides, more
intelligent lighting positioned in smart lighting systems will be developed to integrate products and control
systems, and thus form the overall solution of indoor lighting from a single product for more comfortable and
smarter living experiences of consumers.
3. Continue to reduce costs and increase efficiency
First of all, the Company will strengthen production and procurement management to increase income, reduce
expenditure and improve efficiency. To achieve this item, the Company will improve material utilization,
save energy, reduce consumption, and optimized staffing to improve efficiency; strictly control production
process costs to improve management; expand the scope of centralized procurement and tender procurement to
strengthen procurement management; strengthen the pre-judgment of material prices and make good procurement
plans in advance; promote the development and use of procurement supply chain systems, and improve supplier
management to ensure the quality and quantity of materials supplied. Secondly, the Company will increase
investment in technological transformation to improve technology. For this item, the Company will keep
increasing the degree of automation and intelligent production, save human resources costs, improve product
process structure, and increase production efficiency. Thirdly, the Company will exert scale effect to expand the
scale of production and sales, which will bring marginal utility and effectively reduce unit product cost.
4. Strengthen brand promotion for brand upgrade
On the basis of comprehensive promotion of brand building in 2017, the Company will continue to strengthen its
brand promotion in 2018. It will carry out long term advertising and special projects in the authoritative high-end
video media of CCTV-2、CCTV-7、CCTV-10, high-speed rail cars with high-end people and professional
newspapers. In addition, the Company will increase promotion in online new media, and make full use of new
media such as the Company official website and WeChat to carry out various forms of online publicity and
promotion activities to fully demonstrate the philosophy, brand culture and product connotation of Foshan
Lighting. At the same time, the Company will build the image of terminal stores by participation in large-scale
professional exhibitions at home and abroad, so as to establish the industry status and leading brand image of
Foshan Lighting. Through these all-round and multi-channel brand promotions, the brand influence of Foshan
Lighting will be further enhanced and new brand value will be greatly added.
5. Strengthen staff training and improve remuneration assessment system
The Company will strengthen staffing, improve the selection and training of staff as well as the training system,
and promote the training of professional and highly-skilled personnel. It will improve the remuneration
assessment system in key departments such as production workshops, sales departments and R&D departments,
and implement a result-oriented remuneration system to continuously improve remuneration efficiency. It will
also promote the construction of a diversified incentive mechanism and constantly improve the remuneration
assessment system.
(IV) Possible risks
1. The risk of increased market competition
From the macro perspective, with the declining growth rate of domestic investment, the implementation of real
estate control policies, the rise of international trade protectionism, political turmoil and other issues, the
industry may face the risk of lack of growth momentum. From the industry perspective, as a fully competitive
industry, lighting applications are not only subject to the competition of companies in the field of original
applications, but also the competition of LED upstream and downstream chip companies as well as packaging
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
companies that gradually extends to the lighting application field. If the market competition intensifies further in
the future, the profitability of the Company may be negatively impacted.
2. The risk of rising labor costs and raw material price fluctuations
Due to the influence of domestic labor supply and demand as well as employment policies, labor costs keep
increasing, especially in the Pearl River Delta region with more developed economy. In addition, raw materials of
the Company account for a high proportion of operation costs, and some of the raw materials experienced a wave
of price increases in 2017. As some raw material prices are associated with uncontrollable factors such as global
market conditions and national macroeconomic policies, there is a risk of price fluctuation of raw materials.
3. The risk of inventory loss from falling price
As of the end of the reporting period, the inventory amount is high, and the inventory mainly includes raw
materials, semi-finished products and finished products. Due to the large number of product types and models, the
inventory amount of the Company is relatively high. Moreover, as the sales revenue of the Company increases
year by year, the raw materials and inventories that are stored to meet production and sales will increase
simultaneously. It will lead to a higher inventory maintained in the Company. In case that prices or demand
changes occur in the raw material or product sales market in the future, the Company may experience a risk of
inventory depreciation.
4. The risk of exchange rate fluctuations
The RMB exchange rate in China is based on market supply and demand, with reference to a basket of currencies
for regulation and a managed floating exchange rate system. Exchange rate fluctuations will happen with the
fluctuations of global economy, simmering tension of some regions and the monetary policies of various countries.
Export business accounts for 39.18% of the Company business, and the scale has been increasing year by year. If
the exchange rate fluctuates significantly, business performance of the Company will be affected.
5. The risk of bad debts on accounts receivable
With the expansion of sales scale of the Company, the amount of accounts receivable has increased. The main
debit customers of the Company are all long-term customers with good business reputations. Major adverse
changes in the financial status of major debtors may result in the risk of bad debts on accounts receivable.
X Visits Paid to the Company for Purposes of Research, Communication, Interview, etc.
√ Applicable □ Not applicable
Date of visit Way of visit Type of visitor Index to main inquiry information
Investor Relations-EasyIR-
02/16/2017 One-on-one meeting Institution
www.cninfo.com.cn
Investor Relations-EasyIR-
06/01/2017 One-on-one meeting Institution
www.cninfo.com.cn
Investor Relations-EasyIR-
07/06/2017 One-on-one meeting Institution
www.cninfo.com.cn
Investor Relations-EasyIR-
12/05/2017 One-on-one meeting Institution
www.cninfo.com.cn
Investor Relations-EasyIR-
12/12/2017 One-on-one meeting Institution
www.cninfo.com.cn
12/14/2017 One-on-one meeting Institution Investor Relations-EasyIR-
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
www.cninfo.com.cn
Times of visit
Number of visiting institutions
Number of visiting individuals
Number of other visitors
Significant undisclosed information disclosed,
None
revealed or leaked
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part V Significant Events
I Profit Distribution and Converting Capital Reserve into Share Capital for Common
Shareholders
Formulation, execution or adjustments of profit distribution policy, especially cash dividend policy, for common
shareholders in this Reporting Period
√ Applicable □ Not applicable
According to the CSRC Notice on Further Implementing Matters Related to Cash Dividend Distribution of Listed
Companies (Zheng-Jian-Fa [2012] No. 37) and the Guangdong CSRC Notice on Further Implementing
Regulations Related to Dividend Distribution of Listed Companies (Guang-Dong-Zheng-Jian [2012] No. 91), in
order to further standardize the dividend mechanism, promote a scientific, sustained and stable dividend
mechanism and protect legal rights and interests of investors, in 2012, the Company convened a general meeting
to revise the dividend-related contents in its Articles of Association and specify the dividend conditions, the
lowest dividend ratio, the decision-making procedure, etc.. Meanwhile, it formulated the Management Rules for
Profit Distribution and the Return for Shareholder Plan for the Coming Three Years (2015-2017), specifying the
arrangements and forms of dividends, the cash dividend planning and the distribution intervals, which further
improved the decision-making and supervision procedures for dividend distribution. According to the Company’s
Articles of Association, the profit distributed in cash shall not be less than 30% of the distributable profit achieved
in the year.
Special statement about cash dividend policy
In compliance with the Company’s Articles of Association and
Yes
resolution of general meeting
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors fulfilled their responsibilities and played
Yes
their due role.
Minority interests have the chance to fully express their opinion
and desire and their legal rights and interests were fully Yes
protected.
In adjustment or alteration of the cash dividend policy, the
conditions and procedure were in compliance with applicable Yes
regulations and transparent.
Plans/proposals for profit distribution and converting capital reserve into share capital for common shareholders
for the past three years (including this Reporting Period):
For 2015, based on the total 1,272,132,868 shares of the Company as at December 31, 2015, a cash dividend of
RMB 0.125 (tax included and dividends for B-share holders paid in the Hong Kong dollars) was distributed to the
A-share and B-share holders for every 10 shares they held, with the total distributed cash dividends reaching RMB
15,901,660.85.
For 2016, based on the total 1,272,132,868 shares of the Company as at December 31, 2016, a cash dividend of
RMB4.20 (tax included and dividends for B-share holders to be paid in the Hong Kong dollars) will be distributed
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
to the A-share and B-share holders for every 10 shares they hold, with the total distributed cash dividends
reaching RMB534,295,804.56.
For 2017, based on the total 1,272,132,868 shares of the Company as at December 31, 2017, a cash dividend of
RMB3.29 (tax included and dividends for B-share holders to be paid in the Hong Kong dollars) will be distributed
to the A-share and B-share holders for every 10 shares they hold, with the total distributed cash dividends
reaching RMB 418,531,713.57. Meanwhile, converting capital reserve into 1 share to all shareholders for every 10
shares.
Cash dividend distribution of the Company to common shareholders over the past three years (including this
Reporting Period)
Unit: RMB
Net profit Proportion in net
attributable to profit attributable to
common common
Cash dividends shareholders of the shareholders of the Ratio of cash
Cash dividends in
Year dividends in other
(tax included) Company in the Company in the other forms
forms
consolidated consolidated
statements for the statements for the
year year (%)
2017 418,531,713.57 740,308,725.30 56.53% 0.00 0.00%
2016 534,295,804.56 1,072,342,050.13 49.83% 0.00 0.00%
2015 15,901,660.85 53,405,593.12 29.78% 0.00 0.00%
Indicate by tick mark whether the Company made profit in this Reporting Period and the profit distributable to
common shareholders of the Company was positive, but it did not put forward a proposal for cash dividend
distribution to its common shareholders
□ Applicable √ Not applicable
II Proposal for Profit Distribution and Converting Capital Reserve into Share Capital for this
Reporting Period
√ Applicable □ Not applicable
Bonus shares for every 10 shares (share)
Dividend for every 10 shares (RMB) (tax inclusive) 3.29
Additional shares to be converted from capital
reserve for every 10 shares (share)
Total shares as the basis for the profit distribution 1,272,132,868
proposal (share)
Total cash dividends (RMB) (tax included) 418,531,713.57
Distributable profit (RMB) 1,572,167,765.91
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Percentage of cash dividends in the total profit to 100%
be distributed (%)
Cash dividend policy
Where the Company is at a mature stage of development and has plans for considerable spending, in profit distribution, cash
dividends shall reach at least 40% in the total profit to be distributed.
Details about the proposal for profit distribution and converting capital reserve into share capital
As audited by Beijing Zhongzhengtiantong Certified Public Accountants LLP, the after-tax net profits of RMB 696,583,753.29 of
the Parent Company for 2017, plus the opening retained profits of RMB1,448,907,867.73, minus the distributed profits of
RMB534,295,804.56 for 2016 (a cash dividend of RMB4.20 for every 10 shares) and the statutory surplus reserve of RMB
39,028,050.55 for 2017. (According to the regulations of Articles of Association, after withdrawing 5.60% statutory surplus reserve
of RMB 39,028,050.55, the statutory surplus reserve of the Company which reached 50% of the registered capital could be no
longer withdrew). The closing profits distributable to shareholders of were RMB1,572,167,765.91 for 2017. The Board of Directors
has proposed to allocate profits for 2017 as follows: Based on the total 1,272,132,868 shares of the Company as at December 31,
2017, a cash dividend of RMB3.29 (tax included and dividends for B-share holders to be paid in the Hong Kong dollars) will be
distributed to the A-share and B-share holders for every 10 shares they hold, with the total cash dividends to be distributed reaching
RMB 418,531,713.57. Meanwhile, converting capital reserve into 1 share to all shareholders for every 10 shares. The retained
profits of RMB 1,153,636,052.34 will be carried forward into the next year. The profit allocation preplan can be effective upon
review and approval of the Shareholders’ General Meeting of the Company.
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirer, as well as the
Company and Other Commitment Makers, Fulfilled in this Reporting Period or Ongoing at the Period-end
√ Applicable □ Not applicable
Date of
Commitment Type of Period of
Commitment Contents commitment Fulfillment
maker commitment commitment
making
Electronics Group and its
acting-in-concert parties
Shenzhen Rising Investment
and Hong Kong Rising
Commitments made Investment have made a
About
in acquisition commitment that they shall
Controlling avoidance of
documents or eliminate the horizontal 12/04/2017 24 months Ongoing
shareholder horizontal
shareholding competition between Foshan
competition
alteration NationStar Optoelectronics Co.,
documents Ltd. and the Company through
business integration or other
ways or arrangements before
December 4, 2019.
Controlling About Electronics Group and its 12/04/2015 Long-standing Ongoing
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
shareholder avoidance of acting-in-concert parties
horizontal Shenzhen Rising Investment
competition and Hong Kong Rising
Investment have made more
commitments as follows to
avoid horizontal competition
with the Company: 1. They
shall conduct supervision and
restraint on the production and
operation activities of
themselves and their relevant
enterprises so that besides the
enterprise above that is in
horizontal competition with the
Company for now, if the
products or business of them or
their relevant enterprises
become the same with or similar
to those of the Company or its
subsidiaries in the future, they
shall take the following
measures: (1) If the Company
thinks necessary, they and their
relevant enterprises shall reduce
and wholly transfer their
relevant assets and business;
and (2) If the Company thinks
necessary, it is given the priority
to acquire first, by proper
means, the relevant assets and
business of them and their
relevant enterprises. 2. All the
commitments made by them to
eliminate or avoid horizontal
competition with the Company
are also applicable to their
directly or indirectly controlled
subsidiaries. They are obliged to
urge and make sure that other
subsidiaries execute what’s
prescribed in the relevant
document and faithfully honor
all the relevant commitments. 3.
If they or their directly or
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
indirectly controlled
subsidiaries break the aforesaid
commitments and thus cause a
loss for the Company, they shall
compensate the Company on a
rational basis.
Electronics Group and its
acting-in-concert parties
Shenzhen Rising Investment
and Hong Kong Rising
Investment have made a
commitment that during their
direct or indirect holding of the
Company’s shares, they shall 1.
strictly abide by the regulatory
documents of the CSRC and the
SZSE, the Company’s Articles
of Association, etc. and not
harm the interests of the
Company or other shareholders
of the Company in their
production and operation
activities by taking advantage of
About reduction their position as the controlling
Controlling and regulation shareholder and actual
12/04/2015 Long-standing Ongoing
shareholder of related-party controller; 2. make sure that
transactions they or their other controlled
subsidiaries, branch offices,
jointly-run or associated
companies (the “Relevant
Enterprises” for short) will try
their best to avoid or reduce
related-party transactions with
the Company or the Company’s
subsidiaries; 3. strictly follow
the market principle of justness,
fairness and equal value
exchange for necessary and
unavoidable related-party
transactions between them and
their Relevant Enterprises and
the Company, and withdraw
from voting when a
related-party transaction with
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
them or their Relevant
Enterprises is being voted on at
a general meeting or a board
meeting, and execute the
relevant approval procedure and
information disclosure duties
pursuant to the applicable laws,
regulations and regulatory
documents. Where the aforesaid
commitments are broken and a
loss is thus caused for the
Company, its subsidiaries or the
Company’s other shareholders,
they shall be obliged to
compensate.
In order to ensure the
independence of the Company
in business, personnel, asset,
organization and finance,
Electronics Group and its
acting-in-concert parties
Shenzhen Rising Investment
and Hong Kong Rising
Investment have made the
following commitments: 1.
They will ensure the
independence of the Company
in business: (1) They promise
that the Company will have the
Controlling About
assets, personnel, qualifications 12/04/2015 Long-standing Ongoing
shareholder independence
and capabilities for it to operate
independently as well as the
ability of independent,
sustainable operation in the
market. (2) They promise not to
intervene in the Company’s
business activities other than the
execution of their rights as the
Company’s shareholders. (3)
They promise that they and their
related parties will not be
engaged in business that is
substantially in competition
with the Company’s business.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
And (4) They promise that they
and their related parties will try
their best to reduce related-party
transactions between them and
the Company; for necessary and
unavoidable related-party
transactions, they promise to
operate fairly following the
market-oriented principle and at
fair prices, and execute the
transaction procedure and the
duty of information disclosure
pursuant to the applicable laws,
regulations and regulatory
documents. 2. They will ensure
the independence of the
Company in personnel: (1) They
promise that the Company’s
GM, deputy GMs, CFO,
Company Secretary and other
senior management personnel
will work only for and receive
remuneration from the
Company, not holding any
positions in them or their other
controlled subsidiaries other
than director and supervisor. (2)
They promise the Company’s
absolute independence from
their related parties in labor,
human resource and salary
management. And (3) They
promise to follow the legal
procedure in their
recommendation of directors,
supervisors and senior
management personnel to the
Company and not to hire or
dismiss employees beyond the
Company’s Board of Directors
and General Meeting. 3. They
will ensure the independence
and completeness of the
Company in asset: (1) They
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
promise that the Company will
have a production system, a
auxiliary production system and
supporting facilities for its
operation; legally have the
ownership or use rights of the
land, plants, machines,
trademarks, patents and
non-patented technology in
relation to its production and
operation; and have independent
systems for the procurement of
raw materials and the sale of its
products. (2) They promise that
the Company will have
independent and complete
assets all under the Company’s
control and independently
owned and operated by the
Company. And (3) They
promise that they and their other
controlled subsidiaries will not
illegally occupy the Company’s
funds and assets in any way, or
use the Company’s assets to
provide guarantees for the debts
of themselves or their other
controlled subsidiaries with. 4.
They will ensure the
independence of the Company
in organization: (1) They
promise that the Company has a
sound corporate governance
structure as a joint-stock
company with an independent
and complete organization
structure. And (2) They promise
that the operational and
management organs within the
Company will independently
execute their functions
according to laws, regulations
and the Company’s Articles of
Association. And 5. They will
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
ensure the independence of the
Company in finance: (1) They
promise that the Company will
have an independent financial
department and financial
accounting system with
normative, independent
financial accounting rules. (2)
They promise that the Company
will have independent bank
accounts and not share bank
accounts with its related parties.
(3) They promise that the
Company’s financial personnel
do not hold concurrent positions
in its related parties. (4) They
promise that the Company will
independently pay its tax
according to law. And (5) They
promise that the Company can
make financial decisions
independently and that they will
not illegally intervene in the
Company’s use of its funds.
The profits distributed by the
Other commitments Company in cash every year
About cash
made to minority The Company shall not be less than 30% of the 05/27/2009 Long-standing Ongoing
dividends
interests distributable profits it has
achieved in the year.
Executed on time or
Yes
not
Specific reasons for
failing to fulfill
commitments on N/A
time and plans for
next step
2. Where there had been an Earnings Forecast for an Asset or Project and this Reporting Period was still within
the Forecast Period, Explain why the Forecast has been Reached for this Reporting Period.
□Applicable √ Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
IV Occupation of the Company’s Funds by the Controlling Shareholder or its Related Parties
for Non-operating Purposes
□ Applicable √ Not applicable
No such cases in this Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) regarding the “Modified Auditor’s Report” Issued by the CPAs Firm for
this Reporting Period
□ Applicable √ Not applicable
VI YoY changes in accounting policies, estimations and methods
√ Applicable □ Not applicable
In order to implement the following changes in accounting policy, the 20th meeting of the 8th Board of Directors of
the Company reviewed and approved the Proposal on Changes in Accounting Policies.
On April 28, 2017, the Ministry of Finance issued the Circular on Issuing of Accounting Standards for Business
Enterprises No. 42 - Non-current Assets and Disposal Groups Held for Sale and Termination of Operations
(CaiKuai [2017] No. 13), which is required to be implemented by all enterprises that implement the Accounting
Standards for Business Enterprises from the date of May 28, 2017.
On May 10, 2017, the Ministry of Finance issued the Circular on Issuance and Revision of Accounting Standards
for Business Enterprises No. 16 - Government Subsidies (CaiKuai [2017] No. 15), which is required to be
implemented by all enterprises that implement the Accounting Standards for Business Enterprises from the date of
June 12, 2017. Government subsidies for enterprises existing on January 1, 2017 will be treated with prospective
application method, and new government subsidies between January 1, 2017 and the implementation of this
guideline will be adjusted according to the guideline.
On December 25, 2017, the Ministry of Finance issued the Notice of the Ministry of Finance on Revision and
Issuance of Format of General Financial Statements of Enterprise (CaiKuai [2017] No. 30) in accordance with the
relevant provisions of Accounting Standards for Business Enterprises No. 42 - Non-current Assets and Disposal
Group Held for sale and Terminations of Operation (CaiKuai [2017] No. 13) and Accounting Standards for
Business Enterprises No. 16 - Government Subsidies (CaiKuai [2017] No. 15) implemented in 2017, to revise the
format of general finance statements of enterprises and apply to financial statements in 2017 and the subsequent
periods.
This revision only affected the presentation of the above financial statement items. Neither did it impact the
financial status, operation achievements or cash flow of the Company in 2017, nor did it involve retrospective
adjustments in previous years.
Particulars about the changes are as follows:
Contents and reasons Approval procedure Influenced statement items and
amounts
(1) The Ministry of Finance issued the Circular on Issuing of Reviewed and approved N/A
th
Accounting Standards for Business Enterprises No. 42 - by the 20 Meeting of the
Non-current Assets and Disposal Groups Held for Sale and 8th Board of Directors of
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Termination of Operations in 2017, which was implemented from the Company
May 28, 2017. Non-current Assets and Disposal Groups Held for
Sale and Termination of Operations existed on the date of
implementation will be required to be treated with prospective
application method.
(2) The Ministry of Finance issued the Circular on Issuance and 2017:
Revision of Accounting Standards for Business Enterprises No. 16 - Other income: RMB6,876,386.18
Government Grants in 2017, which was implemented from June 12, Non-operating income:
2017. Government subsidies existed on January 1, 2017 will be RMB-6,876,386.18
required to be treated with prospective application method; the 2016:
newly added Government subsidies from January 1, 2017 to the N/A
date of implementation also will be required to be adjusted
according to the revised rules.
(3) The Ministry of Finance issued the Notice of the Revision and 2017:
Issuance of Format of General Financial Statements of Enterprise Asset disposal income:
(CaiKuai [2017] No. 30) on December 25, 2017, which has RMB-10,790.68
reclassified asset disposal gains and losses from “non-operating Non-operating expense:
income” or “non-operating expense” to “asset disposal income”. RMB-10,790.68
2016:
Asset disposal income:
RMB10,852.26
Non-operating income:
RMB -10,852.26
VII Retroactive Restatement due to Correction of Material Accounting Errors in this
Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
VIII YoY Changes in the Scope of the Consolidated Financial Statements
√ Applicable □ Not applicable
1、FSL Europe GmbH, a new subsidiary 100% owned by the Company with a registered capital of EUR25,000,
was newly included into the Company’s consolidated financial statements of the Reporting Period.
2、A creditor of subsidiary Suzhou Mont Lighting Co., Ltd. (Suzhou Mont) applied to the court for Suzhou Mont’s
bankruptcy. On June 2, 2016, the Suzhou Industrial Park court appointed Jiangsu Yingyuan Law Firm to be
Suzhou Mont’s custodian through the Decision (2016) Suzhou 0591 Civil Bankruptcy No. 03. And the control of
the Company over Suzhou Mont has ceased since that day. Pursuant to the accounting standards for business
enterprises, the Company has excluded Suzhou Mont from its consolidation scope.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
IX Engagement and Disengagement of CPAs Firm
Current CPAs firm
Name of the domestic CPAs firm Beijing Zhongzhengtiantong Certified Public Accountants LLP
The Company’s payment for the domestic CPAs
firm (RMB’0,000)
Consecutive years of the audit service provided by
the domestic CPAs firm
Names of the certified public accountants from the
Tong Quanyong, Luo Dongri
domestic CPAs firm
Consecutive years of the certified public accountants
from the domestic CPAs firm
Name of the foreign CPAs firm (if any) Naught
The Company’s payment for the foreign CPAs
Naught
firm(if any)
Consecutive years of the audit service provided by
Naught
the foreign CPAs firm (if any)
Names of the certified public accountants from the
Naught
foreign CPAs firm (if any)
Consecutive years of the certified public accountants
Naught
from the foreign CPAs firm (if any)
Indicate by tick mark whether the CPAs firm was changed in this Reporting Period.
□ Yes √ No
CPAs firm, financial advisor or sponsor engaged for internal control audit
√ Applicable □ Not applicable
In the Reporting Period, the Company engaged Beijing Zhongzhengtiantong Certified Public Accountants LLP as
its internal control auditor with the total audit fees of RMB 480,000
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Bankruptcy and Restructuring
□ Applicable √ Not applicable
No such cases in this Reporting Period.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
XII Significant Litigations and Arbitrations
□ Applicable √ Not applicable
No such cases in this Reporting Period.。
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XIV Credit Conditions of the Company as well as its Controlling Shareholder and Actual
Controller
√ Applicable □ Not applicable
In the Reporting Period, the company as well as its controlling shareholder and actual controller without
unsatisfied court judgments, large-amount overdue liabilities or the like.
XV Implementation of any Equity Incentive Plan, Employee Stock Ownership Plan or other
Incentive Measures for Employees
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVI Significant Related-party Transactions
1. Related-party Transactions Relevant to Routine Operation
√ Applicable □ Not applicable
Obtaina
As a
ble
percenta
Approv market Index
Transac ge of
Relation Contents ed Over Method price for to
Related Type of Pricing tion Price total
with the of transacti approve of same-ty Disclos disclose
transactio transacti principl price(R (RMB’0 value of
Compan transacti on line d line or settleme pe ure date d
n party on e MB’0,0 ,000) same-ty
y on (RMB’0 not nt transacti informa
00) pe
,000) on tion
transacti
(RMB’0
ons
,000)
Prosperity Shareho Purchasi Purchas
www.c
Lamps & lder that ng e of Market Remitta 03/30/2
170.60 170.6 0.08% 200 Not 170.60 ninfo.c
Compone holds products material price nce
om.cn
nts over 5% and s
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Limited shares receivin
of the g labor
Compan service
y from
related
party
Purchasi
ng
Enterpri
products
se
Prosperity and Purchas
controll www.c
Electrical receivin e of Market Remitta 03/30/2
ed by 2.57 2.57 0.00% 600 Not 2.57 ninfo.c
(China) g labor material price nce
related om.cn
Co., Ltd. service s
individu
from
al
related
party
Purchasi
ng
Enterpri
Hangzhou products
se
Times and Purchas
controll www.c
Lighting receivin e of Market Remitta 03/30/2
ed by 161.30 161.3 0.07% 300 Not 161.30 ninfo.c
and g labor material price nce
related om.cn
Electrical service s
individu
Co., Ltd. from
al
related
party
Purchasi
ng
Foshan products
Under
NationSta and Purchas
same www.c
r receivin e of Market 9,458.8 Remitta 03/30/2
actual 9,458.8 4.18% 20,000 Not 9,458.8 ninfo.c
Optoelect g labor material price 3 nce
controll 3 3 om.cn
ronics service s
er
Co., Ltd. from
related
party
Purchasi
Guangdo
Under ng
ng Purchas
same products www.c
Fenghua e of Market Remitta 03/30/2
actual and 683.79 683.79 0.30% 900 Not 683.79 ninfo.c
Advanced material price nce
controll receivin om.cn
Holding s
er g labor
Co., Ltd.
service
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
from
related
party
Purchasi
ng
Guangdo products
Under
ng and Purchas
same
Huayueba receivin e of Market Remitta
actual 93.34 93.34 0.04% Not 93.34 N/A
o New g labor material price nce
controll
Energy service s
er
Co., Ltd. from
related
party
Purchasi
Guangdo ng
ng products
Under
Zhongke and Purchas
same www.c
Hongwei receivin of Remitta 03/30/2
actual Market 46.69 46.69 0.83% 200 Not 46.69 ninfo.c
Semicond g labor equipme nce
controll price om.cn
uctor service nts
er
Equipmen from
t Co.,Ltd related
party
Purchasi
ng
Guangdo
products
ng Under
and Purchas
HuaShen same
receivin of Remitta
g data actual Market 40.00 40.00 0.71% Not 40.00 N/A
g labor equipme nce
solid-state controll price
service nts
storage er
from
Co., Ltd
related
party
Selling
Shareho
products
lder that
Prosperity and
holds
Lamps & providin www.c
over 5% Selling Market 2,917.9 Remitta 03/30/2
Compone g labor 2,917.9 0.77% 3,000 Not 2,917.9 ninfo.c
shares products price 1 nce
nts service 1 1 om.cn
of the
Limited to
Compan
related
y
party
Prosperity Enterpri Selling Selling Market 6.45 6.45 0.00% 50 Not Remitta 6.45 03/30/2 www.c
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
(Hangzho se products products price nce 017 ninfo.c
u) controll and om.cn
Lighting ed by providin
and related g labor
Electrical individu service
Co., Ltd. al to
related
party
Selling
Enterpri products
se and
Prosperity
controll providin www.c
Electrical Selling Market Remitta 03/30/2
ed by g labor 27.89 27.89 0.01% 50 Not 27.89 ninfo.c
(China) products price nce
related service om.cn
Co., Ltd.
individu to
al related
party
Selling
products
Foshan
Under and
NationSta
same providin www.c
r Selling Market Remitta 03/30/2
actual g labor 0.55 0.55 0.00% 50 Not 0.55 ninfo.c
Optoelect products price nce
controll service om.cn
ronics
er to
Co., Ltd.
related
party
Selling
Guangdo products
ng Rising Under and
Optoelect same providin
Selling Market Remitta
ronics actual g labor 0.28 0.28 0.00% Not 0.28 N/A
products price nce
Technolo controll service
gy Co., er to
Ltd related
party
13,610.
Total -- -- -- 25,350-- -- -- -- --
Details of large-amount sales return Naught
Give the actual situation in the
In March 2017, the Company predicted the total value of its routine transactions with
Reporting Period (if any) where a
related parties Foshan NationStar Optoelectronics Co., Ltd., Guangdong Fenghua Advanced
forecast had been made for the total
Holding Co., Ltd., Prosperity Lamps & Components Limited, Prosperity Electrical (China)
value of routine related transactions
Co., Ltd., Prosperity (Hangzhou) Lighting and Electrical Co., Ltd. and Hangzhou Times
by type to occur in the Reporting
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Period Lighting and Electrical Co., Ltd. ， Guangdong Zhongke Hongwei Semiconductor
Equipment Co.,Ltd Concerning the purchases from its related parties, the actual amount in
2017 was RMB106,571,200, accounting for 47.36% of the predicted. As for the sales to its
related parties, the actual amount in 2017 was RMB29,530,800, accounting for 93.75% of
the predicted.
Reason for any significant difference
between the transaction price and the N/A
market reference price (if applicable)
2. Related Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Significant Related Transactions
√ Applicable □ Not applicable
1. On December 23, 2016, the Company held the 11th meeting of the 8th Board of Directors, and the Proposal on
Signing the Financial Services Agreement with Guangdong Rising Finance Co., Ltd. was examined and approved
at the meeting. On the same day, the Company signed the Financial Services Agreement with Guangdong Rising
Finance Co., Ltd. (hereinafter referred to as “Rising Finance”), and Rising Finance would provide deposit and
settlement services for the Company with half a year validity. During the term of validity of the Agreement, the
daily deposit balance of the Company in Rising Finance Company shall not exceed RMB150 million. During the
Reporting Period, the daily deposit balance of the Company in Rising Finance Company was RMB101 million.
2. On June 28, 2017, the Company held the 15th meeting of the 8th Board of Directors, and the Proposal on
Signing the Financial Services Agreement with Guangdong Rising Finance Co., Ltd. was examined and approved
at the meeting. On the same day, the Company signed the Financial Services Agreement with Guangdong Rising
Finance Co., Ltd. (hereinafter referred to as “Rising Finance”), and Rising Finance would provide deposit and
settlement services for the Company for a term of one year. During the term of validity of the Agreement, the
daily deposit balance of the Company in Rising Finance Company shall not exceed RMB150 million. During the
Reporting Period, the daily deposit balance of the Company in Rising Finance Company was RMB148 million.
Index to the current announcements about the said related transactions disclosed:
Title of announcement Disclosure date Disclosure website
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Announcement on Signing Financial Service
Agreement with Guangdong Rising Finance 12/24/2016 www.cninfo.com.cn
Co., Ltd.
Announcement on Renewing Financial Service
Agreement with Guangdong Rising Finance 06/29/2017 www.cninfo.com.cn
Co., Ltd.
XVII Significant Contracts and Execution
1. Entrustment, Contracting and Leasing
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Significant Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Entrusted Cash Management
(1) Entrusted Cash Management
√ Applicable □ Not applicable
Overviews of entrusted cash management during the Reporting Period
Unit: RMB'0,000
Specific type Capital resources Amount incurred Undue Balance Overdue amount
Bank financial products Self-owned funds 86,000 47,000
Structural deposits Self-owned funds 61,000 51,000
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Total 147,000 98,000
Particulars of entrusted cash management with single significant amount or low security, bad liquidity, and no capital preservation
Unit: RMB'0,000
Index
to
transa
Annua Allow Prescr
Type Actual Receip Plan ction
lized Expect ance ibed
of Source Deter gain/lo t/paym for summ
Type Begin Use of yield ed for proced
Truste wealth Princi of Endin minati ss in ent of more ary
of ning princi rate yield impair ure
e manag pal princi g date on of Report such transa and
trustee date pal for (if ment execut
ement pal yield ing gain/lo ction other
refere any) (if ed or
product Period ss or not infor
nce any) not
matio
n (if
any)
Repay
Bank Princip The
ment
of al-prot Comp www.
of To be
China, ected any’s 07/28/ 01/29/ Invest cninfo
Bank 7,000 princi 4.20% 149.01 125.65 receiv Yes Yes
Fosha with own 2017 2018 ment .com.c
pal ed
n floatin idle n
with
branch g yield funds
yield
Repay
Bank Princip The
ment
of al-prot Comp www.
of To be
China, ected any’s 08/08/ 02/07/ Invest cninfo
Bank 5,000 princi 4.20% 105.29 84 receiv Yes Yes
Fosha with own 2017 2018 ment .com.c
pal ed
n floatin idle n
with
branch g yield funds
yield
PingA
n
Repay
Bank, Princip The
ment
Guang al-prot Comp www.
of To be
zhou ected any’s 08/17/ 02/14/ Invest cninfo
Bank 5,000 princi 4.20% 104.14 78.82 receiv Yes Yes
Huans with own 2017 2018 ment .com.c
pal ed
hi East floatin idle n
with
Road g yield funds
yield
sub-br
anch
Huaxi Princip The Repay To be www.
10/19/ 04/19/ Invest
a Bank al-prot 13,000 Comp ment 4.00% 259.29 104 receiv Yes Yes cninfo
2017 2018 ment
Bank, ected any’s of ed .com.c
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Fosha with own princi n
n floatin idle pal
branch g yield funds with
yield
PingA
n Repay
Princip The
Bank, ment
al-prot Comp www.
Fosha of To be
ected any’s 10/27/ 04/27/ Invest cninfo
n Bank 6,000 princi 4.20% 125.65 44.88 receiv Yes Yes
with own 2017 2018 ment .com.c
Jiangw pal ed
floatin idle n
an with
g yield funds
sub-br yield
anch
Shenz
hen
Rural
Comm
Repay
ercial Princip The
ment
Bank, al-prot Comp www.
of To be
Busine ected any’s 11/08/ 02/08/ Invest cninfo
Bank 5,000 princi 4.35% 54.82 30.99 receiv Yes Yes
ss with own 2017 2017 ment .com.c
pal ed
Depart floatin idle n
with
ment g yield funds
yield
of
Luohu
sub-br
anch
Industr
ial and
Comm
ercial
Bank Repay
Princip The
of ment
al-prot Comp www.
China, of To be
ected any’s 12/12/ 03/14/ Invest cninfo
Busine Bank 3,000 princi 4.00% 30.25 6.25 receiv Yes Yes
with own 2017 2018 ment .com.c
ss pal ed
floatin idle n
Depart with
g yield funds
ment yield
of
Fosha
n
branch
Industr Bank Princip 3,000 The 12/29/ 03/30/ Invest Repay 4.00% 29.92 0.66 To be Yes Yes www.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
ial and al-prot Comp 2017 2018 ment ment receiv cninfo
Comm ected any’s of ed .com.c
ercial with own princi n
Bank floatin idle pal
of g yield funds with
China, yield
Busine
ss
Depart
ment
of
Fosha
n
branch
Total 47,000 -- -- -- -- -- -- 858.37 475.25 -- -- -- --
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause
impairment for entrusted asset management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in this Reporting Period.
4. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in this Reporting Period.
XVIII Social Responsibilities
1. Social Responsibilities Taken
We have always attached importance to the accomplishment of our social value. With “provide returns for
shareholders, provide a platform for employees, create value for customers and create prosperity for the society”
as our mission, we take on the social responsibilities to protect the interests of our creditors, employees, customers,
suppliers and community. We have been utilizing resources in a scientific, rational way, effectively protecting the
natural environment and safeguarding social safety so as to promote common, harmonious and sustainable
development of the Company and the society.
1. Protection of the rights and interests of our shareholders and creditors
We continuously improve our corporate governance structure, regulate our operation and enhance our
management on information disclosure and investor relations. We treat all our investors fairly and justly, ensure
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
their rights to know about, participate in and vote on the significant events of the Company, and safeguard the
legal rights and interests of all our shareholders, especially our minority shareholders.
2. Protection of the rights and interests of our employees
Considering employees the most valuable resource for our survival and development, we constantly improve our
employment system, improve the compensation packages for our employees and attach importance to talent
cultivation so as to provide opportunities and space for the sustainable development of our employees as well as
realize the common development of the employees and the Company. We also pay attention to the health of our
employees, attach importance to production safety and labor protection, and improve the working and living
conditions for our employees so as to formulate harmonious and stable labor relations.
3. Protection of the rights and interests of our customers and consumers
We have been upholding the “Customer First” principle in our provision of quality products and services to
customers. We operate honestly and disallow any unfair trade practice against commercial ethics, market rules
and the fair competition principle. We also improve our product quality and after-sales services and try to build a
win-win relationship with our customers.
4. Protection of the rights and interests of our suppliers
We respect and protect the legal rights and interests of our suppliers, carefully protect their secret and proprietary
information, encourage and push them to continuously improve the quality of their products and services through
creating an environment for open and fair competition among them so as to realize mutual benefits and mutual
development of the suppliers and the Company.
5. Environmental protection and sustainable development
As an active response to the government’s call for building an environment-friendly and resource-saving society,
we take on our responsibility of environmental protection and strictly abide by the government’s laws and
regulations in environmental protection. In the Reporting Period, we enhanced the R&D, promotion and sale of
environment-friendly and high-efficient products. We have passed the ISO14001 environmental management
system certification, passed the province’s voluntary clean production examination and won the title of “Clean
Production Enterprise in Guangdong Province”.
6. Public relations and welfare
We attach importance to the realization of our social value and see creating a prosperous society as a commitment
that we should take on, trying to boost the local economy through our own development. We have been granted
by the local government the title of “Foshan Over-100-Million Tax Payer” for many years due to our
contributions in boosting the harmonious development of the Company and the community.
2. Targeted Measures Taken to Help People Lift themselves out of Poverty
The Company didn’t take any targeted measures to help people lift themselves out of poverty during the
Reporting Period, no subsequent plan temporarily too.
3. Particulars Relevant to Environmental Protection
Is the Company or any of its subsidiaries a heavily polluting business identified by the environmental protection
authorities of China?
No.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Neither the Company nor any of its controlled subsidiaries have been identified as a heavily polluting business by
the environmental protection authorities of China.
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease (+/-) After
Increase
Percentag New Bonus from Percentag
Number Other Subtotal Number
e (%) issues shares capital e (%)
reserve
12,522,47 12,582,00
1. Restricted shares 0.98% 59,524 59,524 0.99%
9
1.3 Shares held by other
4,406,450 0.34% 59,524 59,524 4,465,974 0.35%
domestic investors
Among which: Shares held
3,860,675 0.30% 3,860,675 0.30%
by domestic corporations
Shares held by domestic
545,775 0.04% 59,524 59,524 605,299 0.05%
individuals
1.4 Shares held by foreign
8,116,029 0.64% 8,116,029 0.64%
investors
Shares held by foreign
8,116,029 0.64% 8,116,029 0.64%
individuals
1,259,610, 1,259,550
99.02% -59,524 -59,524 99.01%
2. Non-restricted shares 389 ,865
974,940,0 974,879,5
2.1 RMB common shares 76.64% -60,499 -60,499 76.63%
45
2.2 Domestically listed 284,670,3 284,671,3
22.38% 975 975 22.38%
foreign shares 44
1,272,132, 1,272,132
3. Total shares 100.00% 100.00%
868 ,868
Reasons for any share changes:
√ Applicable □ Not applicable
1. During the Reporting Period, some supervisors and executive officers increased their shareholdings in the
Company, representing an increase of 91,049 restricted shares.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
2. During the Reporting Period, the Company’s shares held by some former executive officers who had stayed
unemployed by the Company for six months were unlocked, resulting in an increment of 31,525 non-restricted
shares.
3. Due to Item 1 and 2 above, the Company’s restricted shares increased by 59,524 shares in the Reporting Period.
Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Effects of share changes on the basic EPS, diluted EPS, net assets per share attributable to common shareholders
of the Company and other financial indexes of the prior year and the prior period:
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory authorities to
disclose:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
√ Applicable □ Not applicable
Unit: share
Reason for
Name of Opening Unlocked in Increased in Closing restricted Date of
lock-up/unlockin
shareholder restricted shares Reporting Period Reporting Period shares unlocking
g
Lock-up of
Liu Xingming 359,073 0 21,450 380,523 executive Uncertain
officer’s shares
Lock-up of
Tang Qionglan 0 0 12,150 12,150 executive Uncertain
officer’s shares
Lock-up of
Wei Bin 25,627 0 9,975 35,602 Uncertain
executive
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
officer’s shares
Lock-up of
Chen Yu 12,870 0 7,500 20,370 executive Uncertain
officer’s shares
Lock-up of
Jiao Zhigang 31,083 0 9,375 40,458 executive Uncertain
officer’s shares
Lock-up of
Zhang Yong 18,720 0 7,275 25,995 executive Uncertain
officer’s shares
Lock-up of
Zhang Xuequan 9,908 0 10,125 20,033 executive Uncertain
officer’s shares
Lock-up of
Xu Xiaoping 0 0 7,575 7,575 executive Uncertain
officer’s shares
Lock-up of
Ye Zhenghong 33,696 0 5,625 39,321 supervisor’s Uncertain
shares
Expiration of
lock-up of
Xie Qing 31,525 31,525 0 0 outgoing 05/24/2017
executive
officer’s shares
Total 522,502 31,525 91,050 582,027 -- --
II Issuance and Listing of Securities
1. Securities (Excluding Preference Shares) Issued in this Reporting Period
□ Applicable √ Not applicable
2. Changes in Total Shares of the Company and the Shareholder Structure, as well as the Asset and
Liability Structures
□ Applicable √ Not applicable
3. Existing Employee-held Shares
□ Applicable √ Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
III Shareholders and Actual Controller
1. Total Number of Shareholders and their Shareholdings
Unit: share
Total number of
preference
Total number of
Total number of shareholders
common
preference with resumed
Total number shareholders at
shareholders with voting rights at
of common the prior
92,005 91,073 resumed voting 0 the prior
shareholders at month-end
rights at the month-end
the period-end before the
period-end (if any) before the
disclosure of this
(see note 8) disclosure of this
Report
Report (if any)
(see note 8)
5% or greater shareholders or the top 10 shareholders
Increase/d Pledged or frozen shares
Number of
Shareholdin Total shares ecrease Number of
Name of Nature of restricted
g percentage held at the during this non-restricted
shareholder shareholder shares Status Number
(%) period-end Reporting shares held
held
Period
Hong Kong Wah
Foreign
Shing Holding 13.47% 171,360,391 171,360,391 Pledged 83,966,592
corporation
Company Limited
Prosperity Lamps
Foreign
& Components 10.50% 133,577,143 133,577,143
corporation
Limited
Shenzhen Rising
Investment State-owned
5.12% 65,178,305 65,178,305
Development Co., corporation
Ltd.
Guangdong
Electronics
State-owned
Information 4.74% 60,357,728 60,357,728 Pledged 29,575,287
corporation
Industry Group
Ltd.
Central Huijin
State-owned
Asset Management 2.42% 30,799,000 30,799,000
corporation
Co., Ltd.
Essence Foreign 1.99% 25,327,190 1532342 25,327,190
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
International corporation
Securities (Hong
Kong) Co., Ltd.
DBS Vickers
Foreign
(Hong Kong) Ltd 1.86% 23,645,755 90000 23,645,755
corporation
A/C Clients
Hong Kong Rising
Investment Foreign
1.82% 23,165,684 23,165,684
Development Co., corporation
Ltd.
China Merchants
Foreign
Securities (Hong 0.86% 10,945,361 10,945,361
corporation
Kong) Co., Ltd
Foreign
Zhuang Jianyi 0.85% 10,821,372 8,116,029 2,705,343
individual
Strategic investors or general
corporations becoming top-ten
Naught
shareholders due to placing of
new shares (if any) (see Note 3)
Among the top 10 shareholders, Hong Kong Wah Shing Holding Company Limited, Shenzhen
Rising Investment Development Co., Ltd., Guangdong Electronics Information Industry Group
Related or acting-in-concert Ltd. and Hong Kong Rising Investment Development Co., Ltd. are acting-in-concert parties;
parties among the shareholders and Prosperity Lamps & Components Limited and Zhuang Jianyi are acting-in-concert parties.
above Apart from that, it is unknown whether there is among the top 10 shareholders any other related
parties or acting-in-concert parties as defined in the Administrative Measures for the
Acquisition of Listed Companies.
Shareholdings of the top ten non-restricted shareholders
Number of non-restricted shares held at the Type of shares
Name of shareholder
period-end Type Number
Hong Kong Wah Shing Holding RMB common
171,360,391 171,360,391
Company Limited share
Prosperity Lamps & Components RMB common
133,577,143 133,577,143
Limited share
Shenzhen Rising Investment RMB common
65,178,305 65,178,305
Development Co., Ltd. share
Guangdong Electronics Information RMB common
60,357,728 60,357,728
Industry Group Ltd. share
Central Huijin Asset Management Co., RMB common
30,799,000 30,799,000
Ltd. share
Essence International Securities (Hong 25,327,190 Domestically 25,327,190
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Kong) Co., Ltd. listed foreign
share
Domestically
DBS Vickers (Hong Kong) Ltd A/C
23,645,755 listed foreign 23,645,755
Clients
share
Domestically
Hong Kong Rising Investment
23,165,684 listed foreign 23,165,684
Development Co., Ltd.
share
Domestically
China Merchants Securities (Hong
10,945,361 listed foreign 10,945,361
Kong) Co., Ltd
share
RMB common
Peng Weiyan 8,188,888 8,188,888
share
Among the top 10 non-restricted common shareholders, Hong Kong Wah Shing Holding
Related or acting-in-concert parties
Company Limited, Shenzhen Rising Investment Development Co., Ltd., Guangdong
among the top ten non-restrictedly
Electronics Information Industry Group Ltd. and Hong Kong Rising Investment
tradable share holders and between the
Development Co., Ltd. are acting-in-concert parties; Apart from that, it is unknown whether
top ten non-restrictedly tradable share
there is among the top 10 shareholders any other related parties or acting-in-concert parties
holders and the top ten shareholders
as defined in the Administrative Measures for the Acquisition of Listed Companies.
Among the top ten non-restricted shareholders, individual shareholder Peng Weiyan held 0
Ten top common shareholders shares in the Company through her common securities accounts and held 8,188,888 shares
conducting securities margin trading(if in the Company through her accounts of collateral securities for margin trading,
any) (see note 4) representing a total holding of 8,188,888 shares in the Company.
Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted common
shareholders of the Company conducted any promissory repo during this Reporting Period.
□ Yea √ No
No such cases in this Reporting Period.
2. Information about the Controlling Shareholder
Nature of the controlling shareholder: Controlled by the local government
Type of the controlling shareholder: Corporation
Legal
Name of controlling
representative/pers Date of establishment Credibility code Main business scope
shareholder
on in charge
Guangdong Electronics Development, production and sale of
He Yong 10/19/2000 91440000725458764N
Information Industry electronics, IT products and
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Group Ltd. electrical appliances, operation of
electronic information networks and
computers, electronic computer
technology service, and equipment
and venue rental service; sale of
electronic computers and fittings,
electronic components, electron
devices, and electrical machinery and
equipment; wholesale of coal; energy
performance contracting service,
development and consulting service
of energy-saving technology, and
manufacture and installation of
energy-saving equipment; parking lot
operation (188 Yueken Road, Tianhe
District, Guangzhou, Guangdong
Province, P.R.China); import and
export of goods; and training of
professional and technical personnel.
Equity and venture capital
investment (approval shall be
obtained for each specific investment
project); industrial investment
(approval shall be obtained for each
specific investment project); trustee
service for asset management (not
Shenzhen Rising including securities, insurance,
Investment Wu Xiaohui 08/27/2003 91440300754255560K funds, financial service, human
Development Co., Ltd. resources consulting service and
other restricted business); and
investment information consulting
service, economic information
consulting service, investment
management planning, corporate
identity design (excluding restricted
business).
Guangdong Rising
Finance Holding Co., Che Zuobin 11/14/2014 91440400315213166P Investment and asset management
Ltd.
Hong Kong Rising
Investment Liu Wei 07/11/2001 764105 Investment and asset management
Development Limited
Shareholdings of In the reporting period,
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
controlling shareholder 1、Guangdong Electronics Information Industry Group Ltd. held 61,348,500 shares in Foshan NationStar
in other listed Optoelectronics Co., Ltd., representing a stake of 12.90% in NationStar.
companies at home or 2、Shenzhen Rising Investment Development Co., Ltd. held 26,891,983 shares in Guangdong Fenghua
abroad in reporting Advanced Holding Co., Ltd., accounting for 3% of Fenghua’s total shares; and held 93,143,935 shares in
period Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd., representing a stake of 3.91% in Nonfemet. Shenzhen
Rising Investment Development Co., Ltd. held 1,302,027 shares in Dongjiang Environmental Co. Ltd,
accounting for 0.15% of Dongjiang Environment’s total shares;
3、Guangdong Rising Finance Holding Co., Ltd. held 8,583,755 shares in Guangdong Fenghua Advanced
Holding Co., Ltd., accounting for 0.96% of Fenghua’s total shares; and held 6,876,386 shares in
Dongjiang Environmental Co. Ltd, accounting for 0.54% of Dongjiang Environment’s total shares.
Change of the controlling shareholder during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
3. Information about the Actual Controller
Nature of the actual controller: Local administrator for state-owned assets
Type of the actual controller: Corporation
Legal
Date of
Name of actual controller representative/person Credibility code Main business scope
establishment
in charge
Asset management and
operation, equity
management and operation,
investment operation, and
management and
re-investment of investment
earnings; other business
authorized by the
state-owned assets
Guangdong Rising Assets
Xu Guang 12/23/1999 91440000719283849E administration of the
Management Co., Ltd.
Guangdong Province;
contractor service for
overseas projects and
domestic projects calling for
international bids, contractor
service for survey,
consulting, design and
supervision of the aforesaid
overseas projects, export of
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
equipment and materials for
the aforesaid overseas
projects, and dispatch of
contract workers for the
aforesaid overseas projects;
property rental service; and
exploitation, sale and deep
processing of rare earth
(operated by the branches
with the relevant licenses).
At the end of the Reporting Period, Guangdong Rising Assets Management Co., Ltd. directly or
indirectly held the following stakes in other listed companies at home or abroad:
Shareholdings of the actual 1. a 42.87% stake of 129,372,517 shares in Rising Nonferrous (stock code: 600259);
controller in other listed 2. a 32.28% stake of 768,173,283 shares in Nonfemet (stock code: 000060);
companies at home or abroad in 3. a 23.99% stake of 214,778,089 shares in Fenghua Advanced (stock code: 000636);
this Reporting Period 4. a 20.38% stake of 96,933,132 shares in NationStar Optoelectronics (stock code: 002449);
5. a 15.70% stake of 139,456,690 shares in Dongjiang Environment (stock code: 002672);
6. a 6.94% stake of 5,614,082,653 shares in China Telecom (stock code: 00728).
Change of the actual controller during this Reporting Period
□ Applicable √ Not applicable
No such cases in this Reporting Period.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Ownership and control relations between the actual controller and the Company
State-owned Assets Supervision and Administration Commission of
the People’s Government of Guangdong Province
100%
Guangdong Rising Assets Management Co., Ltd.
100% 100% 100%
Guangdong Rising Financial Holding Hong Kong Rising Investment Guangdong Electronics
Co., Ltd. Development Limited Information Industry Group Ltd.
0.541% 100% 4.745% 100%
%
Shenzhen Rising Investment Hong Kong Wah Shing Holding
Development Co., Ltd. 1.821% Company Limited
5.124% 13.470%
Foshan Electrical and Lighting Co., Ltd.
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset
management.
□ Applicable √ Not applicable
4. 10% or Greater Corporate Shareholders
√ Applicable □ Not applicable
Name of corporate Legal representative / Date of
Registered capital Business scope
shareholder company principal establishment
Import and export of electronics,
electric lighting products, lamps,
Prosperity Lamps & electric lighting equipment, etc.,
Zhuang Jianyi 04/28/1978 HKD2 million
Components Limited and design, installation and
after-sales service of lighting
solutions
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part VIII Directors, Supervisors, Senior Management and Staff
I Changes in Shareholdings of Directors, Supervisors and Executive Officers
Increase Decrease
Opening Other Closing
in this in this
Office Incumben Starting Ending sharehold increase/d sharehold
Name Gender Age date of date of Reporting Reporting
title t/former tenure tenure ing ecrease ing
Period Period
(share) (share) (share)
(share) (share)
Board Incumben 12/25/201 12/25/201
He Yong Male 57 0 0 0 0
Chairman t 5
Vice
Zhuang Incumben 12/25/201 12/25/201 10,821,37 10,821,37
Board Male 66 0 0
Jianyi t 5 8 2
Chairman
Incumben 12/25/201 12/25/201
Cheng Ke Director Male 43 10,500 0 0 0 10,500
t 5
Incumben 10/18/201 12/25/201
Qi Siyin Director Male 37 0 0 0 0
t 6
Huang Incumben 12/25/201 12/25/201
Director Male 48 0 0 0 0
Zhiyong t 5
Liu Director Incumben 04/22/201 12/25/201
Male 55 478,764 28,600 0 0 507,364
Xingming & GM t 6
Independ
Zhang Incumben 12/25/201 12/25/201
ent Female 68 0 0 0 0
Nan t 5
Director
Independ
Incumben 12/25/201 12/25/201
Lu Rui ent Male 42 0 0 0 0
t 5
Director
Independ
Incumben 12/25/201 12/25/201
Lv Wei ent Male 53 0 0 0 0
t 5
Director
Chairman
Liang of the Incumben 12/25/201 12/25/201
Female 42 0 0 0 0
Yuefei Superviso t 5
ry Board
Zhuang Superviso Incumben 12/25/201 12/25/201
Male 32 0 0 0 0
Junjie r t 5
Ye
Superviso Incumben 12/10/201 12/25/201
Zhenghon Male 44 44,928 7,500 0 0 52,428
r t 5
g
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Superviso Incumben 09/20/201 12/25/201
Lin Qing Male 48 20,530 0 0 0 20,530
r t 6 8
Liang Superviso Incumben 09/20/201 12/25/201
Female 43 0 0 0 0
Yueyi r t 6 8
Board Incumben 01/26/201 12/25/201
Lin Yihui Male 63 13,000 16,600 0 0 29,600
Secretary t 6 8
Tang Incumben 01/26/201 12/25/201
CFO Female 47 0 16,200 0 0 16,200
Qionglan t 6 8
Incumben 01/26/201 12/25/201
Wei Bin Vice GM Male 48 34,169 13,300 0 0 47,469
t 6 8
Jiao Incumben 01/26/201 12/25/201
Vice GM Male 45 41,444 12,500 0 0 53,944
Zhigang t 6 8
Incumben 01/26/201 12/25/201
Chen Yu Vice GM Male 45 17,160 10,000 0 0 27,160
t 6 8
Zhang Incumben 08/23/201 12/25/201
Vice GM Male 43 24,960 9,700 0 0 34,660
Yong t 6 8
Zhang Incumben 08/23/201 12/25/201
Vice GM Male 40 13,211 13,500 0 0 26,711
Xuequan t 6 8
Xu Incumben 01/26/201 12/25/201
Vice GM Male 47 0 10,100 0 0 10,100
Xiaoping t 6 8
11,520,03 11,658,03
Total -- -- -- -- -- -- 138,000 0
8
Note: The management used an equity incentive fund to purchase shares of the Company’s stock at the end of the
year.
II Changes in Directors, Supervisors and Executive Officers
□ Applicable √ Not applicable
III Brief Biographies
Professional backgrounds, main working experience and current responsibilities in the Company of the incumbent
directors, supervisors and executive officers
1. Working Experience of the Directors
Mr. He Yong: Han nationality, born in September 1960, a member of the Communist Party of China. He
graduated from Open University of Hong Kong with a MBA. He once acted as the Vice-minister of the Operating
and Management Department of Guangdong Rising Assets Management Co., Ltd., the Chairman of the Reform
and Stableness Office, the Minister of the Operating and Management Department, the Supervisor of Shenzhen
Zhongjin Lingnan Nonfemet Co., Ltd., the GM of Guangdong Electronics Information Industry Group Ltd. and
Deputy Secretary. Now he serves as the Chairman of the Board of Directors of Guangdong Electronics
Information Industry Group Ltd., the Party Secretary and the Chairman of Foshan NationStar Optoelectronics Co.,
Ltd., the Chairman of Foshan Sigma Venture Capital Co., Ltd. And he has been the Board Chairman of the
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Company since December 2015.
Mr. Zhuang Jianyi: born in 1951, with a bachelor’s degree and MBA. He now acts as the Chairman of Hong
Kong Youchang Lighting Equipment, and has been engaged in the electric light source equipment production as
well as the trading business for about 40 years. From 1995 to 2010, he acted as the Directors, the Vice Chairman
and the Chairman of the Company. And he was elected as a vice chairman of the 8th Board of the Company in
December 2015.
Mr. Cheng Ke: Han nationality, born in February 1974, a member of the Communist Party of China and an
auditor with the bachelor’s degree. He once acted as the Attendant of the Audit Division of Guangzhou Dongshan
Corporate Authority of Guangzhou Military Logistics Department, the Assistant Supervisor, the Supervisor, the
Senior Executive and the Vice-Minister of the Financing Plan Department of Guangdong Rising Assets
Management Co., Ltd., Vice GM of Hubei Ashennan Expressway Development Co., Ltd., Hubei Gdrising Han-E
Expressway Co., Ltd. and Hubei Han-Cai Expressway Co., Ltd. and now acts as the Minister of the Financing
Plan Department of Guangdong Rising Assets Management Co., Ltd. and the Director of Guangdong Rising
Finance Co., Ltd. and Foshan NationStar Optoelectronics Co., Ltd. And he was elected as a director of the 8th
Board of the Company in December 2015.
Mr. Qi Siyin: Chinese nationality, with no right of permanent residence abroad. Born in May 1980, a member of
the Communist Party of China, postgraduate degree, dual master’s degrees. He ever worked in Guangdong
Provincial Expressway Development Co., Ltd., former investor relations management clerk, investor relations
management director, information disclosure director and securities affairs representative of the Securities
Department. He has been working in Guangdong Rising Assets Management Co., Ltd. as Senior Director of
Capital Operation Department, Deputy Secretary of the Communist Youth League and Deputy Director; as
Director and Deputy General Manager of Hong Kong Rising Investment Co., Ltd.; as Deputy Director of Capital
Operations Department of Guangdong Rising Assets Management Co., Ltd. since 2007. Currently, he works as
the Director of Capital Operations Department of Guangdong Rising Assets Management Co., Ltd, the director of
Foshan NationStar Optoelectronics Co., Ltd, Guangdong Nanyue Bank Co., Ltd, and Shenzhen Zhongjin Lingnan
Nonfemet Co., Ltd. In October 2016, he elected as the director of the 8th Board of Directors of the Company.
Mr. Huang Zhiyong: Han nationality, born in August 1969, a member of the Communist Party of China and an
engineer. He graduated from Xidian University with a bachelor’s degree of Electronic Devices Structures. He
once acted as the Vice GM of Shenzhen Primatronix (Nanho) Electronics Ltd., the Minister of Enterprise
Development Department and the GM Assistant of Guangdong Electronics Information Industry Group Ltd. He
now acts as the Vice GM and a member of Communist Party of China of Guangdong Electronics Information
Industry Group Ltd. and the Chairman of Vollsun Ltd., Guangdong HuaSheng Data Solid-state Storage Co., Ltd,
and Shenzhen Yuebao Electronic Technology Co., Ltd. And he was elected as a director of the 8th Board of the
Company in December 2015.
Mr. Liu Xingming: Born in June 1962, a member of the Communist Party of China and an engineer with a
bachelor’s degree. He joined the Company in 1983, and acted as Vice GM from 1997 to 2005; acted as GM of the
Company from December 2005 to November 2008; acted as Vice GM of the Company in December 2008; elected
as the Director of the Company from 1995 to Dec. 2015; acted as Vice Director of the Board from April 2011 to
December 2015; from April 2012 up to now, he acted as the GM and Vice Director of the Board; after 1995, he
was elected as the Director of the Company; and he was elected as a director of the Company in April 2016. In
July 2015, he was elected as the Party Secretary of the Company.
Ms. Zhang Nan (Independent Director): Han nationality, born in February 1949, a member of the Communist
Party of China and a senior economist. She graduated from Chinese Academy of Social Sciences with a master
degree of economic law. She once acted as the Vice-Minister of Beijing Electronic Instruments Industry System
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Office, Deputy Director of Audit and Regulations Bureau, the Director, the Deputy Director and the Chief of the
research laboratory of SETC, the Regulations Bureau and the Economic cadre training center as well as the
bureau-level Supervisor of the large enterprises of the Board of Supervisors of the State-owned Assets
Supervision and Administration Commission and retired in March 2009. She used to be an Independent Director
of CSCL and Guandgong Rising Nonferrous Metals Co., Ltd. And she was elected as an independent director of
the 8th Board of the Company in December 2015.
Mr. Lu Rui (Independent Director): Chinese Han Nationality, no permanent residency abroad, born in January
1975. He is now a professor of Finance, doctorial tutor, the Head of the Accounting and Capital Operation
Research Center of the Lingnan College of Sun Yat-Sen University. He graduated in 2003 from the Management
Accounting of Sun Yat-Sen University with a master’s degree of Management; and in 2006, he graduated from
the Management Accounting of Sun Yat-Sen University with a doctor’s degree of Management. He acted as the
Teaching Assistant and the Lecturer of the Financial Accounting Department of Guangzhou Finance & Trade
Management Institute during the period from July 1996 to August 2003; the Lecturer and associate professor of
the Finance and Taxation Department of Lingnan College of Sun Yat-Sen University during the period from July
2006 to October 2012; and the associate professor of Finance of the Lingnan College of Sun Yat-Sen University
during the period from November 2012 to June 2016. And he has been a profession of Finance and doctorial tutor
at the Lingnan College of Sun Yat-Sen University since July 2016. His other academic and social posts mainly
include: the member of Expert Committee of China Association for Public Companies, a national leading
accounting professional recognized by the Ministry of Finance, the member of All-China Financial Youth
Federation, the member of the senior member of Accounting Society of China, the member of Accounting Society
of America; the Independent Director of Guangzhou GCI Science & Technology Co., Ltd., Xilong Scientific Co.,
Ltd., Guangzhou Goaland Energy Conservation Tech Co., Ltd., and Youmi Technology Co., Ltd; the Chairman
of Guangzhou Zijing Education Co., Ltd. And he was elected as an independent director of the 8th Board of the
Company in December 2015.
Mr. Lv Wei (Independent Director): Chinese Nationality, born in December 1964. He is a doctoral candidate in
economic administration at Fudan University and a doctor’s degree holder in economics. He was a teaching
assistant, a lecturer, a departmental chief, an associate profession and then a professor at Fudan University during
the period from August 1989 to March 2003. And he has been working in Shanghai Jiao Tong University since
April 2003. He was a professor and doctoral tutor of the Department of Business Administration of the Antai
Management School of Shanghai Jiao Tong University during the period from April 2003 to March 2006, and has
been a professor and doctoral tutor of the Department of Business Administration of the Antai Economics and
Management School of Shanghai Jiao Tong University since April 2006. He has been the head of the SJTU-USC
Cultural Creativity Industries School since October 2014; an independent director of Shanghai Shibei Hi-tech Co.,
Ltd. since September 2012; and an independent director of Shanghai Lujiazui Finance & Trade Zone
Development Co., Ltd. since May 2015. And he was elected as an independent director of the 8th Board of the
Company in December 2015.
2. Working Experience of the Supervisors
Ms. Liang Yuefei: Han nationality, born in November 1975, a member of the Communist Party of China and a
CCPA member. She graduated from Guangdong Polytechnik Normal College with a bachelor’s degree. She once
acted as the Vice-Minister of the Total Fiscal Audit Department of Guangdong Electronics Information Industry
Group Ltd.. And now acts as the general manager assistant, Minister of the Total Fiscal Department and
Employee Supervisor of Guangdong Electronics Information Industry Group Ltd., the Supervisor of Foshan
Sigma Venture Capital Co., Ltd. and the chairman of the Supervisory Board of Foshan NationStar Optoelectronics
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Co., Ltd. And she was elected as the chairman of the 8th Supervisory Board of the Company in December 2015.
Mr. Zhuang Junjie: Born in September 1985, a Hong Kong permanent resident. He graduated with a bachelor’s
degree and once acted as the Consultant Manager of Accenture Software and now acts as the Director of Hong
Kong Youchang Lighting Equipment Co., Ltd. And he was elected as a supervisor of the 8th Supervisory Board of
the Company in December 2015.
Mr. Ye Zhenghong: Born in June 1973, a member of the Communist Party of China with a college degree. He
joined the Company from July 1995; worked in the Machine Repair Shop from July 1995 to June 1997; worked in
the Mechanical Power Department from July 1997 to January 2001; acted as Equipment Management Director in
T8 Fluorescent Lamp Factory from February 2001 to January 2005; acted as Director of Machine Repair
Workshop from May 2005 to January 2007; acted as Chief Officer of Machinery Dynamic Department from May
2006 to December 2007; and acted as factory director of T8 Fluorescent Lamp Factory from January 2008 to
November 2013; and acted as factory director of LED of T8 from December 2013 up to now; the Chairman of the
5th Board of Supervisors and the Employee Supervisor of the 6th, 7th and 8th Board of Supervisors.
Mr. Lin Qing: born in September 1969, member of the Communist Party of China, undergraduate degree, electric
light source engineer; has been working in the company since August 1991; worked as mercury lamp workshop
technician and workshop director from June 1996 to February 2002; as the workshop director and factory director
of the fluorescent lamp factory from March 2002 to September 2009; as the director of Technology Department
since October 2009; in July 2015, elected as a discipline committee member of the company’s CPC committee.
And he was elected as a Employee Supervisor of the Company in September 2016.
Ms. Liang Yueyi: born in June 1974, member of the Communist Party of China, college degree; has been
working in the company since August 1995; worked as the Secretary to the President from August 1995 to
September 2002; as clerk of the Import & Export Trade Department from October 2002 to December 2006; as the
Deputy Manager of the Import & Export Trade Department since January 2007; a member of the company’s CPC
committee since July 2015; as a female member of the company’s labor union since April 2016. And she was
elected as a Employee Supervisor of the Company in September 2016..
3. Working experience of the Senior Management Staff
Mr. Liu Xingming: Born in Jun. 1962, a member of the Communist Party of China and an engineer with a
bachelor’s degree. He joined the Company in 1983, and acted as Vice GM from 1997 to 2005; acted as GM of the
Company from December 2005 to November 2008; acted as Vice GM of the Company in December 2008; elected
as the Director of the Company from 1995 to December 2015; acted as Vice Chairman of the Board from April
2011 to December 2015; from April 2012 up to now, he acted as the GM of the Company; and he was elected as a
director of the Company in April 2016. In July 2015, he was elected as the Party Secretary of the Company.
Mr. Lin Yihui: Born in November 1954, a member of the Communist Party of China with a master’s degree in
Economics. He was in active service in force from December 1970 to 1986 and acted as posts of command,
battalion and group; works in Foshan International Trust and Investment Company from 1986 to September 2000
and acted as Section Chief and Vice GM and was in charge of the securities business of the Company as well as
host the works such as the underwritten offering and listing recommendation of the shares of various companies
over years; acted as the 1st and 2nd Directors of the Company; worked as Board Secretary of the Company from
October 2000 to April 2010; acted as Party Secretary of the Company from May. 2010 to July 2015. He has acted
as the Secretary of the Company since May 2013.
Ms. Tang Qionglan: born in March 1970, member of the Communist Party of China, bachelor degree, China
Certified Public Accountant, worked as an accountant in Foshan Certified Public Accountants, served as audit
manager of BDO China Shu Lun Pan Certified Public Accountants LLP Foshan Branch; as Deputy Manager of
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
the Finance Department, Manager, Chief Financial Officer, Deputy General Manager and Chief Financial Officer
of Foshan NationStar Optoelectronics Co., Ltd. from October 2008 to January 2016. In January 2016, he elected
as the Chief Financial Officer of the Company.
Mr. Wei Bin: Born in May 1969, a member of the Communist Party of China and an engineer with a bachelor’s
degree. He joined in the Company in 1991, and responsible for the product development of the graduate school of
the Company from March 1992 to December 1996, acted as Workshop Manager of Energy Saving Lamp
Workshop from January 1997 to December 2004, acted as Workshop Manager of HID Workshop from January to
December 2005, acted as Workshop Manager of T5 Workshop from 2006 to November 2008, acted as the
Department Director of the Technology Department from November 2008 to 2009 and acted as Vice GM of the
Company from September 2009.
Mr. Jiao Zhigang: Born in May 1972, a member of the Communist Party of China with a bachelor’s degree. He
graduated from South China University of Technology in July 1994, and at the same year he entered Foshan
Electrical and Lighting Co., Ltd. He acted as Warehouse Director of the Company from August 1995 to
September 2013, acted as Department Director of Human Resources Department from May 2010 to September
2013; selected as Employee Supervisor from March 2007 to September 2013, and as Chairman of the Supervisory
of the Company from May 2010 to September 2013. He acted as Vice GM of the Company in September 2013.
Mr. Chen Yu: Born in December 1972, a member of the Communist Party of China, college graduate and
engineer. He entered Foshan Electrical and Lighting Co., Ltd. in July 1994. And acted as workshop manager of
parabolic reflector, coating film, energy saving lamp, factory director of the branch factory of Gaoming and
workshop manager of general bulbs from January 1997 to December 2012, acted as Director of Production
Department, OEM Department and Mechanical Dynamics Department from January to August 2013, acted as
Director of Production Department and OEM Department from September 2013 to May 2014 as well as acted as
Vice GM of the Company from May 2014.
Mr. Xu Xiaoping: born in July 1970, member of the Communist Party of China, postgraduate degree, engineer.
Worked as Deputy General Manager and General Manager of Guangdong Fenghua Advanced Technology
Holding Co., Ltd. Xin’gu Branch from September 2000 to December 2013, also as the General Manager of
Guangdong Fenghua Semiconductor Technology Co., Ltd. from January 2011 to December 2013, and Deputy
Director of Headquarters Operations Center from January 2013 to February 2015; as the General Manager of
Guangdong Fenghua Advanced Technology Holding Co., Ltd. Lihua Branch from March 2015 to January 2016;
won the first prize of scientific and technological progress of Zhaoqing in 2008; won the title of the “Ninth Batch
of Top Talents of Zhaoqing” in 2010; served as Deputy General Manager of the company in January 2016.
Mr. Zhang Yong: Born in June 1974, a member of the Communist Party of China and a mechanical engineer
with a college degree. From July 1997, he joined in the Foshan Electrical and Lighting Co., Ltd. and successively
acted as Deputy Director and Director of Lamp Filament Appliance Workshop from October 1999 to June 2008;
acted as Factory Director of Gaoming Fluorescent Lamp Factory and Factory Director of Gaoming Branch
Factory from July 2008 to December 2008; respectively acted as Department Director of Product Department,
OEM Department, Mechanical Dynamics Department and Infrastructure Department from January 2009 to
December 2012; acted as General Manager Assistant from March 2013 to August 2016. He was a supervisor and
the Chairman of the Board of Supervisors of the Company from September 2013 to August 2016; has been the
chairman of the Labor Union of the Company since September 2013; was elected as the Deputy Party Secretary in
July 2015; and has been a vice GM of the Company since August 2016.
Mr. Zhang Xuequan: Born in December 1977, a member of the Communist Party of China with a bachelor’s
degree. He joined the Company in October 1996. He worked in the former Iodine-tungsten Lamp Workshop from
October to December 1996; worked in the Technology Department and then the Quality Control Department from
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
January 1997 to August 2002; acted as the Workshop Manager of Lamp Workshop from September 2002 to May
2008; acted as the Department Director of the Business Management Department of the Company from June 2008
to August 2016. He has concurrently acted as the Office Director since February 2016. He has been the Party
Branch Secretary for the Administrative Office of the Company from July 2010 to June 2017, and a member of
the party committee of the Company since July 2015. He was a supervisor of the Company from May 2013 to
August 2016 and has been a vice GM of the Company since August 2016.
Posts concurrently held in shareholding entities
√Applicable □Not applicable
Allowance from
Starting date of Ending date of
Name Shareholding entity Post the shareholding
tenure tenure
entity (yes/no)
Chairman,
Guangdong Electronics Information
He Yong Party Yes
Industry Group Ltd.
Secretary
Zhuang Jianyi Prosperity Lamps & Components Limited Chairman Yes
Guangdong Electronics Information
Huang Zhiyong Vice GM Yes
Industry Group Ltd.
Planning
Guangdong Electronics Information
Liang Yuefei Manager & Yes
Industry Group Ltd.
GM Assistant
Zhuang Junjie Prosperity Lamps & Components Limited Director Yes
Posts held concurrently in other entities
√Applicable □Not applicable
Starting date of Ending date of Allowance from
Name Other entity Post
tenure tenure the entity (yes/no)
Planning and
Guangdong Rising Assets Management Co.,
Cheng Ke Finance Yes
Ltd.
Manager
Capital
Guangdong Rising Assets Management Co.,
Qi Siyin Operation Yes
Ltd.
Manager
Lingnan (University) College of Sun
Lu Rui Professor Yes
Yat-Sen University
Lv Wei Antai School of Management of SJTU Professor Yes
Punishments imposed in the recent three years by the securities regulators on the incumbent directors, supervisors
and executive officers as well as those who left in this Reporting Period
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Executive Officers
Decision-making procedure, determination basis and actual remuneration payment of directors, supervisors and
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
executive officers
The Remuneration & Appraisal Committee under the Board of Directors decides the
remuneration of directors, supervisors and senior management in accordance with the Plan for
Decision-making procedure for the Implementing the Equity Incentive Mechanism for Middle-and Top-Rank Management
remuneration of directors, Personnel, Compensation Plan for Executive Officers, and the Salary System reviewed and
supervisors and senior management
approved on the 2001 Annual Shareholders’ General Meeting, and the particulars on
completing current main financial indexes & operating goals, as well as the fulfillment of job
responsibilities by them.
The remuneration of directors (excluding independent directors), supervisors and senior
management who withdraw remuneration in the Company are all decided in accordance with
Basis for determining the the Company’s Plan for Implementing the Equity Incentive Mechanism for Middle-and
remuneration of directors, Top-Rank Management Personnel, Compensation Plan for Executive Officers, and the Salary
supervisors and senior management System and the relevant appraisal indexes.
The allowance of independent directors should be granted according to the standard reviewed
and approved by 2015 Annual Shareholders’ General Meeting.
Actual payment of the remuneration
The total remuneration (before tax) actually paid to the directors, supervisors and senior
of directors, supervisors and senior
management staff for 2017 were RMB11.2967 million.
management
Remuneration of directors, supervisors and executive officers in this Reporting Period
Unit: RMB'0,000
Remuneration
Total before-tax
from related
remuneration
Name Office title Gender Age Incumbent/former parties of the
from the
Company
Company
(yes/no)
He Yong Board Chairman Male 57 Incumbent Yes
Vice Board
Zhuang Jianyi Male 66 Incumbent Yes
Chairman
Cheng Ke Director Male 43 Incumbent Yes
Qi Siyin Director Male 37 Incumbent Yes
Huang Zhiyong Director Male 48 Incumbent Yes
Liu Xingming Director & GM Male 55 Incumbent 173.17 No
Independent
Zhang Nan Female 68 Incumbent No
Director
Independent
Lu Rui Male 42 Incumbent 14.4 No
Director
Independent
Lv Wei Male 53 Incumbent 14.4 No
Director
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Supervisory
Liang Yuefei Female 42 Incumbent Yes
Board Chairman
Zhuang Junjie Supervisor Male 32 Incumbent Yes
Ye Zhenghong Supervisor Male 44 Incumbent 54.02 No
Lin Qing Supervisor Male 48 Incumbent 39.17 No
Liang Yueyi Supervisor Female 43 Incumbent 64.23 No
Lin Yihui Board Secretary Male 63 Incumbent 101.91 No
Tang Qionglan CFO Female 47 Incumbent 106.84 No
Wei Bin Vice GM Male 48 Incumbent 103.84 No
Jiao Zhigang Vice GM Male 45 Incumbent 100.68 No
Chen Yu Vice GM Male 45 Incumbent 93.68 No
Zhang Yong Vice GM Male 43 Incumbent 93.68 No
Zhang Xuequan Vice GM Male 40 Incumbent 96.84 No
Xu Xiaoping Vice GM Male 47 Incumbent 72.81 No
Total -- -- -- -- 1,129.67 --
Equity incentives for directors, supervisors and executive officers in this Reporting Period
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company 2,113
Number of in-service employees of main subsidiaries 7,096
Total number of in-service employees 9,209
Total number of employees with remuneration in this Reporting
9,209
Period
Number of retirees to whom the Company or its main
subsidiaries need to pay retirement pension
Functions
Function Number of employees
Production 7,653
Sales
Technical
Financial
Administrative
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Total 9,209
Educational backgrounds
Educational background Number of employees
College and above 1,472
Technical secondary school and high school 1,652
Below high school 6,085
Total 9,209
2. Employee Remuneration Policy
The general principal of the employee’s remuneration policy is: as for the external part, the Company should
maintain the market competitiveness of the talents by possessing of the attraction and as for the internal part,
should possess of the impartiality and consistency. The salary level of the external labor market and the social
average salary level as well as the wage guiding issued by the governmental department are the important
reference basis for the confirm of the salary standard of the Company; to confirm different pay grade according to
different positions and the position characteristics and to furthest incentive the enthusiasm of the employees; to
abide with the principal of giving priority to efficiency and give consideration of the fairness and to object to the
equalitarianism when distributing the remunerations, to pay with generous compensation for those excellent
employees who creates great value, to appropriately incline to the key talents and the market supply shortage
talents; the lowest salary of the Company should not be lower than the local lowest salary standard.
3. Employee Training Plans
The Company has been setting great store on the training and development work of the employees, and combined
with the actual situation, annual plan, the position nature and the responsibilities as well as the development
demands, the Company built up a serious of training plan through the methods of having classes by internal
lecturers and external engaged professors, which with multiple levels, channels, fields and ways to strengthen the
employee training work, including the new employee orientation training, the on-the-job personnel professional
training, the frontline staff skills training, skills training for sales personnel, and skills training for managerial
personnel, etc., to constantly improve the overall quality of the current employees for realizing the win-win
situation and mutual progress.
4. Labor Outsourcing
□ Applicable √ Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part IX Corporate Governance
I Basic Situation of Corporate Governance
During the Reporting Period, in strict accordance with relevant requirements of Company Law, Securities Law,
Code of Corporate Governance of Listed Companies and Rules of Stock Listing of Shenzhen Stock Exchange as
well as other relevant laws, rules and regulations, the Company continuously perfected the corporate governance
structure and set up an effective corporate governance system. At present, the Company has set up governance
structure of responsible Shareholders’ General Meeting, the Board of Directors, the Supervisory Committee and
managers, who performed right of decision-making, execution and supervision respectively according to their
duties; besides, the Company set up special committees of the Board of Directors and system for independent
directors. The Company strengthened information disclosure of principal shareholders and persons
acting-in-concert, forbidden shareholders of the Company to misapply their rights. The Company separated from
the principal shareholder in personnel, assets, business, financial affairs and organizational, and was absolutely
impendent. The Company timely revised and perfected various systems in accordance with the latest issued laws
& rules and relevant regulations of CSRC and Shenzhen Stock Exchange. And the corporate governance is
basically in line with the requirements of relevant laws, regulations and regulatory documents.
Any significant incompliance with the regulatory documents issued by the CSRC governing the governance of
listed companies
□ Yes √ No
No such cases in this Reporting Period.
II Independence of Businesses, Personnel, Asset, Organizations and Finance which are
Separate from the Controlling Shareholder
The Company is completely separated from its controlling shareholder in aspects such as business, personnel,
assets, institutions and finance and possesses independent and complete business and self-dependent operating
ability.
1. As for the business, the Company is independent of the controlling shareholders and the subordinate enterprises
and owns the independent business departments and management system as well as possesses of impendent and
entire business and self-dependent operating ability.
2. As for the personnel, the Company formulates the independent management system such as the labor, personnel
and the salary, possesses the independent personnel department and the operating management team. The Senior
Executives of the Company are serving at the Company in full time and receiving the salary from the Company.
3. As for the assets, the assets of the Company are independent and entire with clear ownership, and possesses the
independent production system, BOP system and the supporting facilities, as well as possesses the legal
ownership of the land, factories, equipments related to the production and operating and the assets such as the
trademark, patent and the non-patent technology, and possesses the entire control and govern power of all the
assets of the Company without any behavior such as any controlling shareholder occupies the assets of the
Company.
4. As for the institutions, the Company set up the independent and entire organizations and institutions, and the
construction as well as the operating of the corporate governance institutions is executed strictly executed
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
according to the Articles of Association, and the production and operating as well as the offices are entirely
independent from the controlling shareholders with any situation of working under one roof with the controlling
shareholders.。
5. As for the finance, the Company set up the independent finance department and builds up the independent and
normative accounting and financial control system according to the requirements of the ASBE, set up the
independent bank account and pays the taxes legally and independently and the Company could make the
financial decisions independently without any situation of the shareholding intervenes the capital usage.
III Horizontal Competition
√ Applicable □ Not applicable
Nature of Solution’s
Name of controlling
Type of issue controlling Cause for issue Solution progress and
shareholder
shareholder follow-up plan
Controlling shareholders
have made a commitment:
(I). Eliminating the
horizontal competition
between Foshan NationStar
Optoelectronics Co., Ltd.
and the Company through
business integration or other
ways or arrangements
before December 4, 2019.
Guangdong (II) Commitment of other
Electronics Some enterprises arrangements for avoiding
Information controlled by the horizontal competition. As
Industry Group Ltd., controlling for avoiding the horizontal
Local State-owned
Shenzhen Rising shareholders engage competition with Foshan
Horizontal Assets Supervision
Investment in the same or similar Electrical and Lighting, the Ongoing
competition and Administration
Development Co., business with the further commitments on the
Commission
Ltd., Hong Kong Company, which relevant arrangements made
Rising Investment incurs horizontal by the Electronics Group,
Development competition. Shenzhen Guangdong
Limited Rising Investment and Hong
Kong Guangdong Rising
Investment as follows: 1.
the commitment maker will
execute the supervision and
restriction on the production
and the operating activities
of the company and the
relevant enterprises except
for the above enterprises
currently involved with the
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
horizontal competition with
Foshan Electrical and
Lighting and if there is same
or similar situation occurs
horizontal competition with
Foshan Electrical and
Lighting from the future
promises and the relevant
enterprises on the products
or business, the commitment
maker following measures
to solve the problem: (1)
when commits to adopt the
Foshan Electrical and
Lighting considers it is
necessary, the Company and
the relevant enterprises
would decrease the
shareholding until entirely
completes the transfer of the
held relevant assets and
business; (2) when Foshan
Electrical and Lighting
considers it is necessary,
should take preference to
purchase the relevant assets
and business held by the
commitment maker and the
relevant enterprises through
appropriate methods; 2.each
commitment made by the
commitment maker on
eliminating or avoiding the
horizontal competition is
also adapted to the
subordinate enterprises
directly or indirectly
controlled by the
commitment maker and the
Company owns the
obligation to urge and
ensure the other subordinate
enterprises to carry out each
events and arrangement
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
stated on the document and
to strictly abide to the whole
commitments. 3. If the
commitment maker or the
subordinate enterprises
directly or indirectly
controlled by the company
violated the above
commitments that led to the
losses of Foshan Electrical
and Lighting, the
commitment maker should
pay for the reasonable
compensation.”
The controlling shareholders
committed: 1. guaranteed to
strictly abide by the each
regulation from the CSRC,
the normative laws
documents of SZSE and the
Articles of Association of
Foshan Electrical and
Lighting. Among the
production and operating
Guangdong
activities since then, the
Electronics
promisee would not take
Information Related-party
advantage of the position of
Industry Group Ltd., transactions existed
the controlling shareholders
Shenzhen Rising between some
Related-party and the actual controller to
Investment Local SASAC enterprises controlled Ongoing
transactions carry out any behavior that
Development Co., by the controlling
harm the benefits of Foshan
Ltd., Hong Kong shareholders and the
Electrical and Lighting and
Rising Investment Company
other shareholders; 2. the
Development
promisee and the other
Limited
subsidiaries, the branch
companies, the joint
ventures or associated
companies (hereinafter
referred to as the “relevant
enterprises”) will try their
best to avoid and reduce the
related transactions with
Foshan Electrical and
Lighting and its
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
subsidiaries; 3. as for the
related transactions which
are indeed necessary and
could not be avoided
between the promisee, the
relevant enterprises and
Foshan Electrical and
Lighting, will strictly abide
by the market principles of
fairness, justice with
valuable consideration.
When the Annual General
Meeting or the Board of
Directors is executing the
voting on the related
transactions which involved
with the promisee and the
relevant enterprises, should
execute the obligation of
avoiding the voting and at
the same time execute the
transactions vetting process
as well as the information
disclosure obligations
according to the relevant
laws and regulations and the
normative documents. If
violated the above
commitments and caused
the losses to Foshan
Electrical and Lighting as
well as the subsidiaries and
other shareholders, the
promisee should assume
compensation liability.
IV Annual and Special Meetings of Shareholders Convened during this Reporting Period
1. Meetings of Shareholders Convened during this Reporting Period
Investor Index to the disclosed
Meeting Type Convened date Disclosure date
participation ratio information
2016 Annual Announcement on
Annual 38.71% 04/26/2017 04/27/2017
Meeting of Resolutions of 2016
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Shareholders Annual Meeting of
Shareholders (No.
2017-016) disclosed on
www.cninfo.com.cn
Announcement on
Resolutions of 1st
The 1st Special
Special Meeting of
Meeting of Special 40.01% 12/04/2017 12/05/2017
Shareholders in 2017
Shareholders in 2017
(No. 2017-037) disclosed
on www.cninfo.com.cn
2. Special Meetings of Shareholders Convened at the Request of Preference Shareholders with Resumed
Voting Rights
□ Applicable √ Not applicable
V Performance of Independent Directors in this Reporting Period
1. Attendance of Independent Directors in Board Meetings and Meetings of Shareholders
Attendance of independent directors in board meetings
Presence the
Due presence in Presence by Absent for two
Independent Presence on Presence through Absence meetings of
this Reporting telecommunicati consecutive
director site (times) a proxy (times) (times) shareholders
Period (times) on (times) times
(times)
Zhang Nan 8 2 6 0 0 No
Lu Rui 8 2 6 0 0 No
Lv Wei 8 1 7 0 0 No
2. Objections Raised by Independent Directors on Issues of the Company
Indicate by tick mark whether any independent directors raised any objections on issues of the Company.
□ Yes √ No
No such cases in this Reporting Period.
3. Other Details about the Performance of Duties by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
During the Reporting Period, in accordance with the requirements of Company Law, Code of Governance of
Listed Companies, Guidance on the Establishment of the Independent Directors System of the Listed Companies,
Articles of Association and relevant systems, the independent directors of the Company attended the board
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
sessions held during the Reporting Period, carefully reviewed the proposals proposed on the sessions, paid
attention to the operation of the Company, performed the duties sincerely and diligently, and issued independent
opinion on acquisition and sale of assets, purchase of financial products, related-party transactions, profit
distribution, etc., as well as proposed precious advices on perfection of systems and decision of routine operation
of the Company, so as to play an active role in protecting the legal right of the Company and its shareholders.
VI Performance of Duties by Specialized Committees under the Board during this Reporting
Period
(I) Work Accomplished by the Audit Committee
According to the related provisions of China Securities Regulatory Commission and Shenzhen Stock Exchange,
as well as the Rules of Implementation for the Audit Committee of the Board, the Audit Committee diligently
performed the following work duties:
On March 17, 2017, the Audit Committee convened to discuss and approve the following two topics:
(1) 2016 financial audit report of the Company;
(2) The proposal for renewing the engagement of accounting firm;
Considering that Beijing ZhongzhengTiantong Certified Public Accountants (LLP) is professional and
experienced in financial audit of listed companies, and performed its duties diligently in the Company's financial
audit work and internal control audit work in 2016, playing the role of the auditing agency well. Moreover, after a
year of auditing, it is familiar with the Company’s business development and financial status. Therefore, the Audit
Committee proposed to continue to employ Beijing ZhongzhengTiantong Certified Public Accountants (special
ordinary partnership) as the annual financial auditing agency and internal control auditing agency of the Company
in 2017.
(3) 2016 annual work report and 2017 work plan of the Audit Department.
(II) The work of the Remuneration and Assessment Committee
On March 7, 2017, the Remuneration and Assessment Committee of the Board of Directors convened a meeting
to assess of the remuneration of the senior management of the Company based on the major financial indicators
and business objectives of the Company in 2016, the scope of work and major responsibilities of the senior
management of the Company and the indicators of assessment system related to the senior management’s job
performance. It was considered that the remuneration of the senior management personnel of the Company in
2016 was determined based on the principle of “Remuneration Plan for Senior Management” and the relevant
regulations of “Remuneration System” of the Company. The implementation of the Company's accrued incentive
fund was in line with the “Establishment of Equity Incentive System for Middle and Senior Management” which
was reviewed and approved at the general meeting of shareholders. The incentives implemented by the Company
for middle and senior management personnel, business and technology elites was legal and reasonable, and it was
conducive to improve the integration of interests of the management and the Company as well as shareholders.
VII Performance of Duties by the Supervisory Board
Did the Supervisory Board find any risks to the Company during its supervision in this Reporting Period?
□ Yes √ No
The Supervisory Board raised no objections in this Reporting Period.
VIII Appraisal and Incentive for Executive Officers
The senior management of the Company is appointed by the Board of Directors, evaluated by the Remuneration
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
and Appraisal Committee of the Board of Directors according to their work abilities, duty performance and
fulfillment of the operating performance management, and paid according to Establishing Equity Incentive
System for Middle and Senior Management and Remuneration System of the company considered and passed at
the Annual Shareholders’ General Meeting of the Company in 2001, the Remuneration Plan for Executive
Officers considered and approved by the Board and salary system of the Company.
IX Internal Control
1. Serious Internal Control Defects Found in this Reporting Period
□ Yes √ No
2. Internal Control Self-evaluation Report
Disclosure date of the internal control
03/30/2018
self-evaluation report
Index to the disclosed internal control
See www.cninfo.com.cn for the Internal Control Self-Evaluation Report 2017
self-evaluation report
Defect identification standards
Type Financial-report related Non-financial-report related
Defect with one of the following Defect with one of the following
characteristics should be recognized as a characteristics should be recognized as a
serious defect: 1. the defect involved with serious defect: 1. being punished for
the malpractices of the Directors, the seriously violating the national laws, the
Supervisors and the Senior Executives; 2. the administrative laws and regulations and
controlled environment is invalid; 3. the the normative documents; 2. the
CPA discovered any significant Company suffers a serious economic loss
misstatement from the current financial due to any serious errors made in
report while the internal control could not decision-making caused by serious lack
discover the mistake during the operating of decision-making procedures on
process; 4. the supervision from the significant events or unfair
Nature standard Corporate Audit Committee and the internal decision-making; 3. the Company’s
audit institution on the internal control. If reputation has been unrepairably
there met with one of the situation of the damaged by any conduct in violation of
following, should be recognized as an laws and regulations which produces a
important defect: 1. the recognized important far-reaching negative impact and draws
defect is not solved during the reasonable the public’s attention widely; 4. the
period; 2. corrects the published financial major business involved with the
report; 3. the function of the internal audit of production and operating of the
the Company is invalid; 4. the control of Company lack of the system control or
whether execute the selection and the the system control is invalid; 5. the
application of the accounting policies results of the internal control assessment
according to the Generally Accepted turn out to include any serious defects
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Accounting Principles is invalid. and such defects fail to be rectified
effectively within 12 months. Defects
with the following characteristics should
be recognized as important defects: 1.
owing to partly lack of the
decision-making process on significant
events and the undemocratic
decision-making process which caused
the decision-making mistake that led the
Company face with certain economic
losses; 2. the negative influences owning
to the unlawful acts and the irregularities
h involve with wide range and cause
public concern among the partial regions
which bring certain harms to the
reputation of the Company; 3. the system
of the major business involved with the
production and operating of the
Company is incomplete or partially
invalid; 4. the results of the internal
control assessment turn out to include
any serious defects and such defects fail
to be rectified effectively within 6
months.
Based on the data of the 2017 consolidated According to the quantitative criterion of
statements, the quantitative criterion of the internal control defects of the
confirming the important degree of the financial report, the quantitative criterion
misstatement (including the false negatives) of the internal control defects assessment
from of the consolidated statements of the of the non-financial report confirmed by
listed companies is as follows: serious the Company is as follows: serious
Quantitative standard
defect: misstatement≥1.0% of the total assets defect: misstatement≥1.0% of the total
amount; important defects: 0.5% of the total assets amount; important defects: 0.5%
assets amount ≤misstatement＜1.0% of the of the total assets amount ≤misstatement
total assets amount; common defects: ＜1.0% of the total assets amount;
misstatement ＜ 0.5% of the total assets common defects: misstatement＜0.5% of
amount. the total assets amount.
Number of serious financial-report-related
defects
Number of serious
non-financial-report-related defects
Number of important
financial-report-related defects
Number of important
non-financial-report-related defects
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
X Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the auditor’s report on internal control
Beijing Zhongzhengtiantong Certified Public Accountants LLP considered that: Foshan Electrical and Lighting Co., Ltd.
maintained effective internal control of the financial report in all significant aspects according to the Basic Standards for Internal
Control and relevant regulations.
Auditor’s report on internal control
Disclosed
disclosed or not
Disclosure date 03/30/2018
Index to the disclosed auditor’s
See www.cninfo.com.cn for the Auditor’s Report on Internal Control
report on internal control
Type of the auditor’s opinion Standard unqualified opinion
Serious non-financial-report-related
None
defects
Indicate by tick mark whether any modified opinions are expressed by the CPAs firm in its auditor’s report on the
Company’s internal control.
□ Yes √ No
Indicate by tick mark whether the auditor’s report on the Company’s internal control issued by the CPAs firm is
consistent with the self-evaluation report of the Board.
√ Yes □ No
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part X Corporate Bonds
Are there any corporate bonds publicly offered and listed on the stock exchange, which were undue before the
approval date of this Report or were due but could not be redeemed in full?
No.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Part XI Financial Statements
I Independent Auditor’s Report
Type of independent auditor’s opinion Unmodified unqualified opinion
Date of signing the auditor’s report 03/28/2017
Name of independent auditor Beijing Zhongzhengtiantong Certified Public Accountants LLP
No. of independent auditor’s report ZZTT（2018）Auditor’s Report No. 0707001
Names of certified public accountants Tong Quanyong, Luo Dongri
Text of the Independent Auditor’s Report
Independent Auditor’s Report
To the Shareholders of Foshan Electrical and Lighting Co., Ltd.
I Opinion
We have audited the financial statements of Foshan Electrical and Lighting Co., Ltd. (the “Company”), which
comprise the consolidated and parent company balance sheets as of December 31, 2017, the consolidated and
parent company statements of income, cash flows and changes in owners’ equity for the year then ended, as well
as the notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
and parent company financial position of the Company at December 31, 2017, and the consolidated and parent
company operating results and cash flows for the year then ended, in conformity with the Chinese Accounting
Standards (CAS).
II Basis for Opinion
We conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of Financial
Statements section of our report. We are independent of the Company in accordance with the China Code of
Ethics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with
the said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
III Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. And key audit matter identified in our audit is summarized as follows:
(I) Bad debt provision for accounts receivable
1. Description of the item
As stated in Notes V and 11 、Notes VII and 5 of the Consolidated Financial Statements of the Company, as of
December 31, 2017, balance of accounts receivable of the Company is RMB805,862,316.13 in total, and the bad
debt provision is RMB49,570,883.57, and the book value of accounts receivable is high. For accounts receivable,
as per the Chinese Accounting Standards, FSL management determined the allowance for doubtful accounts based
on their recoverability. Considering that provision for bad debts of accounts receivable requires the Management
to use significant accounting estimates and judgments, and that accounts receivable cannot be recovered on time
or cannot be recovered and bad debt losses will have a significant impact on the company’s financial statements,
we take bad debt provision for account receivable as a key audit item.
2. Audit response
We evaluated and tested the effectiveness of the design and operation of the key internal controls of the
Company’s Credit Policy and Accounts Receivable Management to confirm the effectiveness of internal controls.
We analyzed the reasonableness of the Company's accounting estimation policy for the provision for bad debts of
receivables, including the basis for determining the characteristics of credit risk combination, the criteria for
significant amounts and the judgment for separate plan of bad debt provision. We analyzed and calculated the
ratio of amount of daily bad debts on the balance sheet and the balance of accounts receivable, and make
comparison with the earlier period. We studied the actual amount of bad debt losses of accounts receivable of the
previous period, and analyzed whether the provision for bad debts of accounts receivable in this period is
sufficient. We also analyzed the aging of accounts receivable and the creditworthiness of customers, and assessed
the reasonableness of bad debt provision for accounts receivable.
We combined with audit procedures of other accounts receivable to confirm the recoverability of accounts
receivable, such as: correspondence, payment collection after inspection period, consistency of counting and
drawing method with the Company's accounting policy, recalculation for confirmation of accuracy of bad debt
provision and so on.
IV Other Information
The Company’s management is responsible for the other information. The other information comprises all of the
information included in the Company’s 2017 Annual Report other than the financial statements and our auditor’s
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
V Responsibilities of Management and Those Charged with Governance for Financial Statements
The Company’s management is responsible for the preparation of the financial statements that give a fair view in
accordance with CAS, and for designing, implementing and maintaining such internal control as the management
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the management either intends to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI Auditor’s Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with CAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required by CAS to draw users’ attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the financial statements. We are responsible for the
direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any noteworthy deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Beijing Zhongzhengtiantong Certified Chinese CPA:
Public Accountants LLP （Engagement Partner）
Tong Quanyong
Chinese CPA:
Beijing China Luo Dongri
March 28, 2018
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
II Financial Statements
Currency unit for the statements in the notes to the financial statements: RMB
1. Consolidated Balance Sheet
Prepared by Foshan Electrical and Lighting Co., Ltd.
December 31, 2017
Unit: RMB
Item December 31, 2017 December 31, 2016
Current assets:
Monetary assets 570,184,208.96 1,479,283,642.54
Settlement reserve
Interbank loans granted
Financial assets at fair value through
profit or loss
Derivative financial assets
Notes receivable 68,368,192.41 67,925,843.74
Accounts receivable 756,291,432.56 595,257,954.00
Prepayments 33,095,313.35 30,292,007.11
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Interest receivable 12,428,451.86 4,612,406.80
Dividends receivable
Other receivables 21,215,215.15 11,977,660.58
Financial assets purchased under
resale agreements
Inventories 746,466,889.87 753,681,605.19
Assets classified as held for sale
Current portion of non-current assets
Other current assets 1,006,062,102.56 441,205,461.72
Total current assets 3,214,111,806.72 3,384,236,581.68
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 1,390,581,536.60 1,732,150,857.01
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Held-to-maturity investments
Long-term receivables
Long-term equity investments 179,414,105.14 210,394,932.69
Investment property
Property, plant and equipment 483,520,866.64 446,006,929.66
Construction in progress 162,814,991.68 71,479,325.91
Construction materials
Proceeds from disposal of property,
plant and equipment
Productive living assets
Oil and gas assets
Intangible assets 155,544,720.36 160,330,395.13
R&D expense
Goodwill
Long-term prepaid expense 9,088,933.56 6,897,119.78
Deferred income tax assets 37,675,828.79 43,547,918.44
Other non-current assets 43,059,034.80 45,125,340.00
Total non-current assets 2,461,700,017.57 2,715,932,818.62
Total assets 5,675,811,824.29 6,100,169,400.30
Current liabilities:
Short-term borrowings
Borrowings from central bank
Customer deposits and deposits from
banks and other financial institutions
Interbank loans obtained
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable
Accounts payable 539,303,554.54 552,255,512.33
Advances from customers 48,706,778.49 41,180,818.13
Financial assets sold under
repurchase agreements
Handling charges and commissions
payable
Payroll payable 81,948,630.59 96,021,156.06
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Taxes payable 27,350,670.40 138,282,644.72
Interest payable
Dividends payable 6,287,923.09
Other payables 40,548,489.03 50,104,338.81
Reinsurance payables
Insurance contract reserve
Payables for acting trading of
securities
Payables for acting underwriting of
securities
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
liabilities
Other current liabilities
Total current liabilities 737,858,123.05 884,132,393.14
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Specific payables
Provisions
Deferred income 11,858,330.49 10,449,768.49
Deferred income tax liabilities 126,460,250.96 200,112,595.11
Other non-current liabilities
Total non-current liabilities 138,318,581.45 210,562,363.60
Total liabilities 876,176,704.50 1,094,694,756.74
Owners’ equity:
Share capital 1,272,132,868.00 1,272,132,868.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 285,821,459.07 285,821,459.07
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Less: Treasury shares
Other comprehensive income 716,607,333.78 1,133,971,372.25
Specific reserve
Surplus reserves 772,953,002.36 733,924,951.81
General reserve
Retained earnings 1,731,600,796.18 1,564,615,925.99
Total equity attributable to owners of
4,779,115,459.39 4,990,466,577.12
Parent Company
Non-controlling interests 20,519,660.40 15,008,066.44
Total owners’ equity 4,799,635,119.79 5,005,474,643.56
Total liabilities and owners’ equity 5,675,811,824.29 6,100,169,400.30
Legal representative: He Yong General Manager: Liu Xingming
Chief Financial Officer: Tang Qionglan
2. Parent Company Balance Sheet
Unit: RMB
Item December 31, 2017 December 31, 2016
Current assets:
Monetary assets 502,169,100.40 1,235,417,964.88
Financial assets at fair value through
profit or loss
Derivative financial assets
Notes receivable 67,268,192.41 66,222,840.44
Accounts receivable 747,430,159.61 611,855,496.90
Prepayments 70,580,941.09 117,217,953.23
Interest receivable 9,744,035.20 3,590,629.01
Dividends receivable 14,671,820.57
Other receivables 42,174,877.89 56,714,849.84
Inventories 670,527,529.71 717,097,516.25
Assets classified as held for sale
Current portion of non-current assets
Other current assets 777,495,203.31 379,932,325.87
Total current assets 2,887,390,039.62 3,202,721,396.99
Non-current assets:
Available-for-sale financial assets 1,390,581,536.60 1,732,150,857.01
Held-to-maturity investments
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Long-term receivables
Long-term equity investments 663,207,207.40 693,992,222.45
Investment property
Property, plant and equipment 404,667,257.11 375,075,102.44
Construction in progress 161,024,975.28 69,589,510.14
Construction materials
Proceeds from disposal of property,
plant and equipment
Productive living assets
Oil and gas assets
Intangible assets 112,251,734.86 117,017,633.92
R&D expense
Goodwill
Long-term prepaid expense 8,209,699.77 6,897,119.78
Deferred income tax assets 32,985,075.62 37,790,043.38
Other non-current assets 42,661,573.80 44,519,790.00
Total non-current assets 2,815,589,060.44 3,077,032,279.12
Total assets 5,702,979,100.06 6,279,753,676.11
Current liabilities:
Short-term borrowings
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable
Accounts payable 719,912,246.75 701,814,818.26
Advances from customers 47,306,971.94 38,406,798.91
Payroll payable 60,345,714.81 66,764,581.34
Taxes payable 13,294,037.24 121,939,572.62
Interest payable
Dividends payable
Other payables 96,824,757.90 258,368,416.59
Liabilities directly associated with
assets classified as held for sale
Current portion of non-current
liabilities
Other current liabilities
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Total current liabilities 937,683,728.64 1,187,294,187.72
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Specific payables
Provisions
Deferred income 11,548,330.26 9,984,768.34
Deferred income tax liabilities 126,460,250.96 200,112,595.11
Other non-current liabilities
Total non-current liabilities 138,008,581.22 210,097,363.45
Total liabilities 1,075,692,309.86 1,397,391,551.17
Owners’ equity:
Share capital 1,272,132,868.00 1,272,132,868.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 293,425,065.15 293,425,065.15
Less: Treasury shares
Other comprehensive income 716,608,088.78 1,133,971,372.25
Specific reserve
Surplus reserves 772,953,002.36 733,924,951.81
Retained earnings 1,572,167,765.91 1,448,907,867.73
Total owners’ equity 4,627,286,790.20 4,882,362,124.94
Total liabilities and owners’ equity 5,702,979,100.06 6,279,753,676.11
Legal representative: He Yong General Manager: Liu Xingming
Chief Financial Officer: Tang Qionglan
3. Consolidated Income Statement
Unit: RMB
Item 2017
1. Revenue 3,800,188,261.54 3,366,454,968.60
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Including: Operating revenue 3,800,188,261.54 3,366,454,968.60
Interest revenue
Premium revenue
Handling charge and commission
revenue
2. Cost of revenue 3,451,947,340.47 2,966,419,594.56
Including: Cost of operating revenue 2,940,069,129.71 2,518,164,099.97
Interest expense
Handling charge and commission
expense
Surrenders
Net claims paid
Net amount provided as insurance
contract reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surtaxes 38,737,499.83 34,882,209.20
Selling expense 213,812,639.74 204,777,965.73
Administrative expense 213,580,974.54 211,412,262.47
Finance costs 10,972,282.52 -28,457,453.89
Asset impairment losses 34,774,814.13 25,640,511.08
Add: Gains on changes in fair value (“-”
for losses)
Investment income (“-” for loss) 522,604,626.66 882,079,521.77
Including: Share of profit or loss of
2,222,185.57 4,327,697.03
joint ventures and associates
Foreign exchange gains (“-” for losses)
Asset disposal income (“-” for loss) -10,790.68 10,852.26
Other income 6,876,386.18
3. Operating income (“-” for loss) 877,711,143.23 1,282,125,748.07
Add: Non-operating income 3,420,866.46 3,729,834.01
Less: Non-operating expense 8,329,138.20 12,622,554.30
4. Pretax income (“-” for loss) 872,802,871.49 1,273,233,027.78
Less: Income tax expense 126,982,552.23 199,976,634.04
5. Net income (“-” for net loss) 745,820,319.26 1,073,256,393.74
5.1 Net income from continuing
745,820,319.26 1,073,256,393.74
operations (“-” for net loss)
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
5.2 Net income from discontinued
operations (“-” for net loss)
Attributable to owners of Parent
740,308,725.30 1,072,342,050.13
Company
Attributable to non-controlling
5,511,593.96 914,343.61
interests
6. Other comprehensive income, net of
-417,364,038.47 -1,079,017,783.77
tax
Attributable to owners of Parent
-417,364,038.47 -1,079,017,783.77
Company
6.1 Items that will not be
reclassified to profit or loss
6.1.1 Changes in net liabilities or
assets caused by remeasurements on
defined benefit pension schemes
6.1.2 Share of other
comprehensive income of investees that
will not be reclassified to profit or loss
under equity method
6.2 Items that may subsequently be
-417,364,038.47 -1,079,017,783.77
reclassified to profit or loss
6.2.1 Share of other
comprehensive income of investees that
-21,831,908.42 21,831,908.42
will be reclassified to profit or loss under
equity method
6.2.2 Gains/Losses on changes in
fair value of available-for-sale financial -395,531,375.05 -1,100,849,692.19
assets
6.2.3 Gains/Losses arising from
reclassification of held-to-maturity
investments to available-for-sale financial
assets
6.2.4 Effective gains/losses on
cash flow hedges
6.2.5 Differences arising from
translation of foreign
-755.00
currency-denominated financial
statements
6.2.6 Other
Attributable to non-controlling
interests
7. Total comprehensive income 328,456,280.79 -5,761,390.03
Attributable to owners of Parent 322,944,686.83 -6,675,733.64
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Company
Attributable to non-controlling
5,511,593.96 914,343.61
interests
8. Earnings per share
8.1 Basic earnings per share 0.5819 0.8429
8.2 Diluted earnings per share 0.5819 0.8429
Where business mergers under the same control occurred in the current period, the net income achieved by the merged parties before
the business mergers was RMB0.00, with the amount for last year being RMB0.00.
Legal representative: He Yong General Manager: Liu Xingming
Chief Financial Officer: Tang Qionglan
4. Parent Company Income Statement
Unit: RMB
Item 2017
1. Operating revenue 3,708,507,664.85 3,419,178,022.89
Less: Cost of operating revenue 2,969,826,402.98 2,643,247,405.29
Taxes and surtaxes 26,665,351.14 23,282,652.36
Selling expense 194,724,192.62 202,456,041.37
Administrative expense 187,215,509.99 193,826,370.43
Finance costs 11,678,797.13 -23,363,408.54
Asset impairment losses 31,993,956.76 25,569,327.12
Add: Gains on changes in fair value
(“-” for losses)
Investment income (“-” for loss) 514,832,777.29 895,733,724.43
Including: Share of profit or loss
2,222,185.57 4,327,697.03
of joint ventures and associates
Asset disposal income (“-” for
loss)
Other income 5,041,565.24
2. Operating income (“-” for loss) 806,277,796.76 1,249,893,359.29
Add: Non-operating income 3,066,550.72 3,197,757.63
Less: Non-operating expense 3,305,063.89 10,946,958.61
3. Pretax income (“-” for loss) 806,039,283.59 1,242,144,158.31
Less: Income tax expense 109,455,530.30 187,285,711.44
4. Net income (“-” for net loss) 696,583,753.29 1,054,858,446.87
4.1 Net income from continuing 696,583,753.29 1,054,858,446.87
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
operations (“-” for net loss)
4.2 Net income from discontinued
operations (“-” for net loss)
5. Other comprehensive income, net of
-417,363,283.47 -1,079,017,783.77
tax
5.1 Items that will not be reclassified
to profit or loss
5.1.1 Changes in net liabilities or
assets caused by remeasurements on
defined benefit pension schemes
5.1.2 Share of other
comprehensive income of investees that
will not be reclassified into profit or
loss under equity method
5.2 Items that may subsequently be
-417,363,283.47 -1,079,017,783.77
reclassified to profit or loss
5.2.1 Share of other
comprehensive income of investees that
-21,831,908.42 21,831,908.42
will be reclassified into profit or loss
under equity method
5.2.2 Gains/Losses on changes in
fair value of available-for-sale financial -395,531,375.05 -1,100,849,692.19
assets
5.2.3 Gains/Losses arising from
reclassification of held-to-maturity
investments to available-for-sale
financial assets
5.2.4 Effective gains/losses on
cash flow hedges
5.2.5 Differences arising from
translation of foreign
currency-denominated financial
statements
5.2.6 Other
6. Total comprehensive income 279,220,469.82 -24,159,336.90
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
Legal representative: He Yong General Manager: Liu Xingming
Chief Financial Officer: Tang Qionglan
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2017
1. Cash generated by or used in
operating activities:
Proceeds from sale of commodities
3,619,290,013.43 3,142,236,107.62
and rendering of services
Net increase in customer deposits and
deposits from banks and other financial
institutions
Net increase in loans from central
bank
Net increase in loans from other
financial institutions
Premiums received on original
insurance contracts
Net proceeds from reinsurance
Net increase in deposits and
investments of policy holders
Net increase in proceeds from
disposal of financial assets at fair value
through profit or loss
Interest, handling charges and
commissions received
Net increase in interbank loans
obtained
Net increase in proceeds from
repurchase transactions
Tax rebates received 112,779,670.77 71,456,301.70
Cash generated by other operating
60,474,356.68 52,922,399.69
activities
Subtotal of cash generated by operating
3,792,544,040.88 3,266,614,809.01
activities
Payments for goods and services 2,448,023,788.20 1,962,007,251.93
Net increase in loans and advances to
customers
Net increase in deposits in central
bank and in interbank loans granted
Payments for claims on original
insurance contracts
Interest, handling charges and
commissions paid
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Policy dividends paid
Cash paid to and for employees 687,278,446.70 610,995,842.31
Taxes paid 213,491,815.63 242,817,744.82
Cash used in other operating
227,928,797.56 160,815,201.47
activities
Subtotal of cash used in operating
3,576,722,848.09 2,976,636,040.53
activities
Net cash flows from operating activities 215,821,192.79 289,978,768.48
2. Cash generated by or used in
investing activities:
Proceeds from disinvestments 167,044,960.00 64,155,025.41
Investment income received 197,311,986.47 918,324,848.10
Net proceeds from disposal of
property, plant and equipment,
1,739,927.00 113,000.00
intangible assets and other long-lived
assets
Net proceeds from disposal of
subsidiaries or other business units
Cash generated by other investing
activities
Subtotal of cash generated by investing
366,096,873.47 982,592,873.51
activities
Payments for acquisition of property,
plant and equipment, intangible assets 223,289,509.83 99,546,739.15
and other long-lived assets
Payments for investments 723,604,335.25 620,507,350.00
Net increase in pledged loans granted
Net payments for acquisition of
subsidiaries and other business units
Cash used in other investing
39,877.93
activities
Subtotal of cash used in investing
946,893,845.08 720,093,967.08
activities
Net cash flows from investing activities -580,796,971.61 262,498,906.43
3. Cash generated by or used in
financing activities:
Capital contributions received 10,000,000.00
Including: Capital contributions by
10,000,000.00
non-controlling interests to subsidiaries
Increase in borrowings
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Net proceeds from issuance of bonds
Cash generated by other financing
activities
Subtotal of cash generated by financing
10,000,000.00
activities
Repayment of borrowings
Payments for interest and dividends 539,956,095.34 15,901,660.85
Including: Dividends paid by
subsidiaries to non-controlling interests
Cash used in other financing
activities
Subtotal of cash used in financing
539,956,095.34 15,901,660.85
activities
Net cash flows from financing activities -539,956,095.34 -5,901,660.85
4. Effect of foreign exchange rate
-4,167,559.42 -838,479.89
changes on cash and cash equivalents
5. Net increase in cash and cash
-909,099,433.58 545,737,534.17
equivalents
Add: Cash and cash equivalents,
1,479,283,642.54 933,546,108.37
beginning of the period
6. Cash and cash equivalents, end of the
570,184,208.96 1,479,283,642.54
period
Legal representative: He Yong General Manager: Liu Xingming
Chief Financial Officer: Tang Qionglan
6. Parent Company Cash Flow Statement
Unit: RMB
Item 2017
1. Cash generated by or used in
operating activities:
Proceeds from sale of commodities
3,498,984,831.17 3,164,460,619.08
and rendering of services
Tax rebates received 112,779,670.77 71,456,301.70
Cash generated by other operating
54,666,997.92 43,134,054.60
activities
Subtotal of cash generated by operating
3,666,431,499.86 3,279,050,975.38
activities
Payments for goods and services 2,825,997,236.90 2,428,381,785.03
Cash paid to and for employees 303,882,045.65 235,862,626.78
Taxes paid 103,612,962.70 141,319,406.75
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Cash used in other operating
237,297,152.74 155,496,800.41
activities
Subtotal of cash used in operating
3,470,789,397.99 2,961,060,618.97
activities
Net cash flows from operating activities 195,642,101.87 317,990,356.41
2. Cash generated by or used in
investing activities:
Proceeds from disinvestments 167,044,960.00 64,155,025.41
Investment income received 205,798,152.73 918,324,848.10
Net proceeds from disposal of
property, plant and equipment,
1,693,927.00 14,000.00
intangible assets and other long-lived
assets
Net proceeds from disposal of
subsidiaries or other business units
Cash generated by other investing
activities
Subtotal of cash generated by investing
374,537,039.73 982,493,873.51
activities
Payments for acquisition of property,
plant and equipment, intangible assets 206,165,249.35 90,609,951.60
and other long-lived assets
Payments for investments 558,800,147.75 591,007,350.00
Net payments for acquisition of
subsidiaries and other business units
Cash used in other investing
activities
Subtotal of cash used in investing
764,965,397.10 681,617,301.60
activities
Net cash flows from investing activities -390,428,357.37 300,876,571.91
3. Cash generated by or used in
financing activities:
Capital contributions received
Increase in borrowings
Net proceeds from issuance of bonds
Cash generated by other financing
activities
Subtotal of cash generated by financing
activities
Repayment of borrowings
Payments for interest and dividends 534,295,804.56 15,901,660.85
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Cash used in other financing
activities
Sub-total of cash used in financing
534,295,804.56 15,901,660.85
activities
Net cash flows from financing activities -534,295,804.56 -15,901,660.85
4. Effect of foreign exchange rate
-4,166,804.42 -838,479.89
changes on cash and cash equivalents
5. Net increase in cash and cash
-733,248,864.48 602,126,787.58
equivalents
Add: Cash and cash equivalents,
1,235,417,964.88 633,291,177.30
beginning of the period
6. Cash and cash equivalents, end of the
502,169,100.40 1,235,417,964.88
period
Legal representative: He Yong General Manager: Liu Xingming
Chief Financial Officer: Tang Qionglan
7. Consolidated Statements of Changes in Owners’ Equity
2017
Unit: RMB
Equity attributable to owners of Parent Company
Other equity Non-co
Other Retaine Total
Item instruments Less: ntrollin
Share Capital compre Specific Surplus General d owners’
Treasur g
Prefer Perpet equity
capital reserves hensive reserve reserves reserve earning
y shares interests
red ual Other
income s
shares bonds
1,272, 1,133,9 1,564,6 5,005,4
1. Balances as of 285,821 733,924 15,008,
132,86 71,372. 15,925. 74,643.
end of prior year ,459.07 ,951.81 066.44
8.00 25 99
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Adjustments for
business mergers
under same control
Other
adjustments
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
2. Balances as of 1,272, 1,133,9 1,564,6 5,005,4
285,821 733,924 15,008,
beginning of the 132,86 71,372. 15,925. 74,643.
,459.07 ,951.81 066.44
year 8.00 25 99
3. Increase/
-417,36 -205,83
decrease in the 39,028, 166,984 5,511,5
4,038.4 9,523.7
period (“-” for 050.55 ,870.19 93.96
7
decrease)
3.1 Total -417,36
740,308 5,511,5 328,456
comprehensive 4,038.4
,725.30 93.96 ,280.79
income
3.2 Capital
increased and
reduced by owners
3.2.1
Common shares
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
-573,32 -534,29
3.3 Profit 39,028,
3,855.1 5,804.5
distribution 050.55
1
3.3.1
39,028, -39,028,
Appropriation to
050.55 050.55
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
-534,29 -534,29
Appropriation to
5,804.5 5,804.5
owners (or
6
shareholders)
3.3.4 Other
3.4
Carryforwards
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific
reserve
3.5.1
Withdrawn for the
period
3.5.2 Used
during the period
3.6 Other
1,272, 1,731,6 4,799,6
4. Balances as of 285,821 716,607 772,953 20,519,
132,86 00,796. 35,119.
end of the period ,459.07 ,333.78 ,002.36 660.40
8.00 18
2016
Unit: RMB
Equity attributable to owners of Parent Company
Non-co
Other equity
Other ntrollin Total
Item instruments Less: Retaine
Share Capital compre Specific Surplus General g owners’
Prefer Perpet Treasur d
capital reserves hensive reserve reserves reserve interest equity
red ual Other y shares earnings
income s
shares bonds
1,272, 2,212,9 5,057,7
1. Balances as of 296,324 628,439 613,661 34,193,
132,86 89,156. 40,219.
end of prior year ,375.58 ,107.12 ,381.40 330.93
8.00 02
Add: Adjustments
for changed
accounting
policies
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Adjustments for
corrections of
previous errors
Adjustments for
business mergers
under same control
Other
adjustments
2. Balances as of 1,272, 2,212,9 5,057,7
296,324 628,439 613,661 34,193,
beginning of the 132,86 89,156. 40,219.
,375.58 ,107.12 ,381.40 330.93
year 8.00 02
3. Increase/
-1,079,0
decrease in the -10,502, 105,485 950,954 -19,185 -52,265,
17,783.
period (“-” for 916.51 ,844.69 ,544.59 ,264.49 575.49
decrease)
3.1 Total -1,079,0 1,072,3
914,343 -5,761,3
comprehensive 17,783. 42,050.
.61 90.03
income 77
3.2 Capital
-10,508, -13,811 -24,320,
increased and
536.76 ,685.01 221.77
reduced by owners
3.2.1
Common shares 10,000, 10,000,
increased by 000.00 000.00
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
-10,508, -23,811 -34,320,
3.2.4 Other
536.76 ,685.01 221.77
-121,38
3.3 Profit 5,620.2 105,485 -6,287, -22,183,
7,505.5
distribution 5 ,844.69 923.09 963.69
3.3.1 -105,48
105,485
Appropriation to 5,844.6
,844.69
surplus reserves
3.3.2
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Appropriation to
general reserve
3.3.3
Appropriation to -15,901, -6,287, -22,189,
owners (or 660.85 923.09 583.94
shareholders)
5,620.2 5,620.2
3.3.4 Other
5
3.4
Carryforwards
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific
reserve
3.5.1
Withdrawn for the
period
3.5.2 Used
during the period
3.6 Other
1,272, 1,133,9 1,564,6 5,005,4
4. Balances as of 285,821 733,924 15,008,
132,86 71,372. 15,925. 74,643.
end of the period ,459.07 ,951.81 066.44
8.00 25 99
Legal representative: He Yong General Manager: Liu Xingming
Chief Financial Officer: Tang Qionglan
8. Parent Company Statements of Changes in Owners’ Equity
2017
Unit: RMB
Item
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Other equity instruments Other
Less: Retaine Total
Share Capital comprehe Specific Surplus
Preferre Perpetu Treasury d owners’
capital Other reserves nsive reserve reserves
d shares al bonds shares earnings equity
income
1,448,9
1. Balances as of 1,272,13 293,425,0 1,133,971 733,924,9 4,882,362
07,867.
end of prior year 2,868.00 65.15 ,372.25 51.81 ,124.94
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Other
adjustments
2. Balances as of 1,448,9
1,272,13 293,425,0 1,133,971 733,924,9 4,882,362
beginning of the 07,867.
2,868.00 65.15 ,372.25 51.81 ,124.94
year
3. Increase/
decrease in the -417,363, 39,028,05 123,259 -255,075,
period (“-” for 283.47 0.55 ,898.18 334.74
decrease)
3.1 Total
-417,363, 696,583 279,220,4
comprehensive
283.47 ,753.29 69.82
income
3.2 Capital
increased and
reduced by owners
3.2.1
Common shares
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
3.3 Profit 39,028,05 -573,32 -534,295,
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
distribution 0.55 3,855.1 804.56
3.3.1
39,028,05 -39,028,
Appropriation to
0.55 050.55
surplus reserves
3.3.2
-534,29
Appropriation to -534,295,
5,804.5
owners (or 804.56
shareholders)
3.3.3 Other
3.4
Carryforwards
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific
reserve
3.5.1
Withdrawn for the
period
3.5.2 Used
during the period
3.6 Other
1,572,1
4. Balances as of 1,272,13 293,425,0 716,608,0 772,953,0 4,627,286
67,765.
end of the period 2,868.00 65.15 88.78 02.36 ,790.20
2016
Unit: RMB
Item Share Other equity instruments Capital Less: Other Specific Surplus Retaine Total
capital Preferre Perpetu Other reserves Treasury comprehe reserve reserves d owners’
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
d shares al bonds shares nsive earnings equity
income
1. Balances as of 1,272,13 293,419,4 2,212,989 628,439,1 515,436 4,922,417
end of prior year 2,868.00 44.90 ,156.02 07.12 ,926.40 ,502.44
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Other
adjustments
2. Balances as of
1,272,13 293,419,4 2,212,989 628,439,1 515,436 4,922,417
beginning of the
2,868.00 44.90 ,156.02 07.12 ,926.40 ,502.44
year
3. Increase/
decrease in the -1,079,01 105,485,8 933,470 -40,055,3
5,620.25
period (“-” for 7,783.77 44.69 ,941.33 77.50
decrease)
3.1 Total 1,054,8
-1,079,01 -24,159,3
comprehensive 58,446.
7,783.77 36.90
income
3.2 Capital
increased and
reduced by owners
3.2.1
Common shares
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
-121,38
3.3 Profit 105,485,8 -15,896,0
5,620.25 7,505.5
distribution 44.69 40.60
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
3.3.1 -105,48
105,485,8
Appropriation to 5,844.6
44.69
surplus reserves
3.3.2
Appropriation to -15,901, -15,901,6
owners (or 660.85 60.85
shareholders)
3.3.3 Other 5,620.25 5,620.25
3.4
Carryforwards
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Surplus
reserves used to
make up losses
3.4.4 Other
3.5 Specific
reserve
3.5.1
Withdrawn for the
period
3.5.2 Used
during the period
3.6 Other
1,448,9
4. Balances as of 1,272,13 293,425,0 1,133,971 733,924,9 4,882,362
07,867.
end of the period 2,868.00 65.15 ,372.25 51.81 ,124.94
Legal representative: He Yong General Manager: Liu Xingming
Chief Financial Officer: Tang Qionglan
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
III Company profile
1. Basic Information
Foshan Electrical and Lighting Co., Ltd. (hereinafter referred to as “the Company”), a joint-stock limited
company jointly founded by Foshan Electrical and Lighting Company, Nanhai Wuzhuang Color Glazed Brick
Field, and Foshan Poyang Printing Industrial Co. on October 20, 1992 by raising funds under the approval of YGS
(1992) No. 63 Document issued by the Joint Examination Group for Experimental Enterprises in Stock System of
Guangdong Province and the Economic System Reform Commission of Guangdong Province, is an enterprise
with its shares held by both the corporate and the natural persons. As approved by China Securities Regulatory
Commission with Document (1993) No. 33, the Company publicly issued 19.3 million shares of social public
shares (A shares) to the public in October 1993, and was listed in Shenzhen Stock Exchange for trade on
November 23, 1993. The Company was approved to issue 50,000,000 B shares on July 23, 1995. And, as
approved to change into a foreign-invested stock limited company on August 26, 1996 by (1996) WJMZEHZ No.
466 Document issued by the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic of
China. On December 11, 2000, as approved by China Securities Regulatory Commission with ZJGS Zi [2000] No.
175 Document, the Company additionally issued 55,000,000 A shares. At approved by the Shareholders’ General
Meeting 2006, 2007, 2008 and 2014 the Company implemented the plan of capitalization of capital reserve, after
the transfer, the registered capital of the Company has increased to RMB1,272,132,868.00.
Credibility code of the Company: 91440000190352575W.
Legal representative: Mr. He Yong
Address: No. 64, Fenjiang North Road, Foshan, Guangdong Province
Main business of the company and its subsidiaries (hereinafter referred to as “the Company”): lighting products
and electro technical products.
The business term of the Company is long-term, which was calculated from the date of issuance of License of
Business Corporation.
The Financial Report was approved and authorized for issue by the Board of Directors on March 28, 2018.
2. Scope of the Consolidated Financial Statements
The consolidation scope of the financial statement during the Reporting Period including the Company and the 10
subordinate subsidiaries such as Foshan Chanchang Electric Appliance (Gaoming) Co., Ltd.( referred to as
“Chanchang Company”), Foshan Chansheng Electronic Ballast Co., Ltd. ( referred to as “Chansheng Company”),
Foshan Taimei Times Lamps and Lanterns Co., Ltd. ( referred to as “Taimei Company”), Nanjing Fozhao
Lighting Components Co., Ltd. ( referred to as “Nanjing Fozhao”), FSL (Xinxiang) Lighting Co., Ltd. ( referred
to as “Xinxiang Company”), Foshan Electrical and Lighting New Light Source Technology Co., Ltd. ( referred to
as “New Light Source Company”), Guangdong Fozhao Leasing Co., Ltd. ( referred to as “Leasing Company”),
Foshan Lighting Lamps & Components Co., Ltd. ( referred to as “Lamps & Components Company”) and FSL
Zhida Electric Technology Co., Ltd( referred to as “Zhida Electric Technology”), and FSL Europe GmbH
(referred to as “FSL Europe”). 1 subsidiary was newly added during the Reporting Period.
For details, see relevant contents in Note VIII “Changes in the consolidation scope”, and Note IX “Equities in
other entities”
IV Basis for Preparation of Financial Statements
1. Preparation Basis
The financial statements of the Company are based on the continuing operation, and are confirmed and measured
according to the actual transactions and events, the Accounting Standards for Business Enterprises - Basic
Standards, other various specific accounting standards, the application guide, the interpretation of accounting
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
standards for business enterprises (hereinafter referred to as the Accounting Standards for Business Enterprises).
And based on the following important accounting policies, and accounting estimations, they are prepared
according to the relevant regulations of Rules for the Information Disclosure of Companies Publicly Issuing
Securities No. 15 - General Provisions on Financial Reporting of China Securities Regulatory Commission
(Revised in 2014). Except the Cash Flow Statement prepared under the principle of cash basis, the rest of financial
statement of the Company are prepared under the principle of accrual basis.
The Company didn’t find anything like being suspicious of the ability of continuing operation within 12 months
from the end of the Reporting Period with all available information.
2. Continuation
The Company has no matters affecting the continuing operation of the Company and is expected to have the
ability to continue to operate in the next 12 months. The financial statements of the Company are prepared on the
basis of continuing operation.
V Important Accounting Policies and Estimations
Is the Company subject to any disclosure requirements for special industries?
No.
Reminders of the specific accounting policies and accounting estimations:
The Company confirmed the specific accounting policies and estimations according to production and operation
features, mainly reflecting in the method of provision for accounts receivables bad debt (Note 11. Account
Receivables), pricing method of inventory (Note 12. Inventory), depreciation of fixed assets and amortization of
intangible assets (Note 16. Fixed Assets and Note 21. Intangible Assets), and recognized time point of income
(Note 28. Income), etc.
1. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company are in compliance with the Accounting Standards for Business
Enterprises, which factually and completely present the Company’s and the consolidated financial positions,
business results and cash flows, as well as other relevant information.
2. Fiscal Year
A fiscal year starts on January 1 and ends on December 31 according to the Gregorian calendar.
3. Operating Cycle
An operating cycle for the Company is 12 months, which is also the classification criterion for the liquidity of its
assets and liabilities.
4. Recording Currency
Renminbi is the recording currency for the statements of the Company, and the financial statements are listed and
presented by Renminbi.
5. Accounting Treatment Methods for Business Combinations under the Same Control or not under the Same
Control
1. Business combinations under the same control
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes
payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
book value among final controller’s consolidated financial statement of the owner's equity of the merged
enterprise as the initial cost of the long-term equity investment. The difference between the initial cost of the
long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the
debts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient to
dilute, the retained earnings shall be adjusted.
If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger,
regard the share of the book value among final controller’s consolidated financial statement of the owner's equity
of the merged enterprise as the initial cost of the long-term equity investment. The total face value of the stocks
issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity
investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is
insufficient to dilute, the retained earnings shall be adjusted.
2. Business combinations not under the same control
The Company measured the paid assets as the consideration of business combination and liabilities happened or
undertaken by fair value. The difference between fair value and its book value shall be included into the current
losses and gains. The Company distributed combined cost on the purchasing date.
The difference of the combination cost greater than the fair value of the identifiable net assets of the acquiree
acquired is recognized as goodwill; the difference of the combination cost less than the fair value of the
identifiable net assets of the acquiree acquired is included into current losses and gains.
As for the assets other than intangible assets acquired from the acquiree in a business combination (not limited to
the assets which have been recognized by the acquiree), if the economic benefits brought by them are likely to
flow into the Company and their fair values can be measured reliably, they shall be separately recognized and
measured in light of their fair values; intangible asset whose fair value can be measured reliably shall be
separately recognized as an intangible asset and shall measured in light of its fair value; As for the liabilities other
than contingent liabilities acquired from the acquiree, if the performance of the relevant obligations is likely to
result in any out-flow of economic benefits from the Company, and their fair values can be measured reliably,
they shall be separately recognized and measured in light of their fair values; As for the contingent liabilities of
the acquiree, if their fair values can be measured reliably, they shall separately recognized as liabilities and shall
be measured in light of their fair values.
6. Methods for Preparing Consolidated Financial Statements
1. Principle of determining the scope of consolidation
The scope of consolidation of the consolidated financial statements of the Company is determined on the basis of
control. Control means that the investors has the right to invest in the investee and enjoy a variable return through
the participation of the relevant activities of the investee, and has the ability to use the power over the investee to
affect the amount of its return. The Company includes the subsidiaries with actual right of control (including
separate entity controlled by the Parent Company) into consolidated financial statements.
2. Principles, procedures and methods for the preparation of consolidated statements
(1) Principles, procedures and methods for the preparation of consolidated statements
All subsidiaries included into the scope of consolidated financial statements adopted same accounting policies and
fiscal year with the Company. If the accounting policies and fiscal year of the subsidiaries are different to the
Company’s, necessary adjustment should be made in accordance with the Company’s accounting policies and
fiscal year when consolidated financial statements are prepared.
The consolidated financial statements are based on the financial statements of the Parent Company and
subsidiaries included into the consolidated scope. The consolidated financial statements are prepared by the
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
Company who makes adjustment to long-term equity investment to subsidiaries by equity method according to
other relevant materials after the offset of the share held by the Parent Company in the equity capital investment
of the Parent Company and owner’s equity of subsidiaries and the significant transactions and intrabranch within
the Company.
For the balance formed because the current loss shared by the minority shareholders of the subsidiary is more than
the share enjoyed by the minority shareholders of the subsidiary in the initial shareholders’ equity, if the Articles
of Corporation or Agreement didn’t stipulate that minority shareholders should be responsible for it, then the
balance need to offset the shareholders’ equity of the Company; if the Articles of Corporation or Agreement
stipulated that minority shareholders should be responsible for it, then the balance need to offset the minority
shareholders’ equity.
(2) Treatment method of increasing or disposing subsidiaries during the Reporting Period
During the Reporting Period, if the subsidiaries were added due to Business combinations under the same control,
then initial book balance of consolidated balance sheet need to be adjusted; the income, expenses, and profits of
subsidiaries from the combination’s period-begin to the end of the reporting period need to be included into
consolidated income statement; the cash flow of subsidiaries from the combination’s period-begin to the end of
the reporting period need to be included into consolidated cash flow statement. if the subsidiaries were added due
to Business combinations not under the same control, then initial book balance of consolidated balance sheet
doesn’t need to be adjusted; the income, expenses, and profits of subsidiaries from the purchasing date to the end
of the reporting period need to be included into consolidated income statement; the cash flow of subsidiaries from
purchasing date to the end of the reporting period need to be included into consolidated cash flow statement.
During the Reporting Period, if the Company disposed the subsidiaries, then the income, expenses, and profits of
subsidiaries from period-begin to the disposal date need to be included into consolidated income statement; the
cash flow of subsidiaries from period-begin to the disposal date need to be included into consolidated cash flow
statement.
7. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
A joint arrangement refers to an arrangement jointly controlled by two participants or above and be divided into
joint operations and joint ventures.
When the Company is the joint venture party of the joint operations, should recognize the following items related
to the interests share of the joint operations:
(1) Recognize the assets individually held and the assets jointly held by recognizing according to the holding
share;
(2) Recognize the liabilities undertook individually and the liabilities jointly held by recognizing according to the
holding share;
(3) Recognize the revenues occurred from selling the output share of the joint operations enjoy by the Company;
(4) Recognize the revenues occurred from selling the assets of the joint operations according to the holding share;
(5) Recognize the expenses individually occurred and the expenses occurred from the joint operations according
to the holding share of the Company.
When the Company is the joint operation party of the joint ventures, should recognize the investment of the joint
ventures as the long-term equity investment and be measured according g to the said methods of the notes of the
long-term equity investment of the financial statement.
8. Recognition Standard for Cash and Cash Equivalents
In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used for
cover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments,
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
which are easily convertible into known amount of cash and whose risks in change of value are minimal.
9. Foreign Currency and Accounting Method for Foreign Currency
1. Foreign currency business
Foreign currency shall be recognized by employing systematic and reasonable methods, and shall be translated
into the amount in the functional currency at the exchange rate which is approximate to the spot exchange rate of
the transaction date. On the balance sheet date, the foreign currency monetary items shall be translated at the spot
exchange rate. The balance of exchange arising from the difference between the spot exchange rate on the balance
sheet date and the spot exchange rate at the time of initial recognition or prior tot the balance sheet date shall be
recorded into the profits and losses at the current period except that the balance of exchange arising from foreign
currency borrowings for the purchase and construction or production of qualified assets shall be capitalized. The
foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange
rate on the transaction date.
2. Translation of foreign currency financial statements
The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet
date. Among the owner’s equity items, except for the items as “undistributed profits”, other items shall be
translated at the spot exchange rate at the time when they are incurred. The revenues and the expenses items of the
income statement should be translated according to the spot rate on the exchange date.
The difference of the foreign currency financial statements occurred from the above translation should be listed
under the “other comprehensive income” item of the owners’ equity of the consolidated financial statement. As
for the foreign currency items which actually form into the net investment of the foreign operation, the exchange
difference occurred from the exchange rate changes should be listed under the “other comprehensive income” of
the owners’ equity among the consolidated financial statement when compile the consolidated financial statement.
When disposing the foreign operation, as for the discounted difference of the foreign financial statement related to
the foreign operation should be transferred in the current gains and losses according to the proportion. The foreign
cash flow adopts the spot exchange rate on the occurring date of the cash flow. And the influenced amount of the
exchange rate changes should be individually listed among the cash flow statement.
10. Financial Instruments
1. Classification, recognition and measurement of financial assets
Financial assets shall be classified into the following four categories when they are initially recognized: financial
assets measured at fair value and of which variations are recorded in the profits and losses for the current period,
loans and the account receivables, financial assets available for sale and the investments which will be held to
their maturity.
(1) Financial assets measured at fair value and of which variations are recorded in the profits and losses for the
current period refer to financial assets held by the Company for the purpose of selling in the near future, including
transactional financial assets, or financial assets designated by the management in the initial recognition to be
measured at fair value with variations recorded in the gains and losses for the current period. Financial assets
measured at fair value and of which variations are recorded in the profits and losses for the current period are
subsequently measured at their fair values. Interest or cash dividends arising from such assets during the holing
period are recognized as investment gains. Gains or losses arising from fair value changes are recorded in the
gains and losses for the current period at the end of the Reporting Period. When such assets are disposed, the
difference between their fair values and initially recognized amounts is recognized as investment gains and the
gains and losses arising from fair value changes are adjusted accordingly.
(2) Loan and accounts receivable: the non-derivative financial assets for which there is no quoted price in the
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
active market and of which the recoverable amount is fixed or determinable shall be classified as loan and
accounts receivable. The Company shall make subsequent measurement on its loan and accounts receivable on the
basis of the post-amortization costs by adopting the actual interest rate, from which gains and losses, when loan
and accounts receivable are terminated from recognizing, or are impaired or amortized, shall be recorded into the
profits and losses of the current period.
(3)Available-for-sale Financial Assets: the non-derivative financial assets which are designated as
available-for-sale financial assets when they are initially recognized as well as the non-derivative financial assets
other than loans and accounts receivables, investments held until their maturity; and transaction financial assets.
The Company shall make subsequent measurement on available-for-sale financial assets at fair value and
recognize the interests or the cash bonus acquired the holding period as the investment income, as well as directly
include the profits or losses formed by the changes of the fair value into the owners’ equity at the period-end, until
the said financial assets shall be transferred out when they are terminated from recognizing or are impaired, which
shall be recorded into the profits and losses of current period.
(4) Held-to-maturity Investments: non-derivative financial asset with a fixed date of maturity, a fixed or
determinable recoverable amount and which the Company’s management holds for a definite purpose or the
Company’s management is able to hold until its maturity. The Company shall make subsequent measurement on
its Held-to-maturity Investments on the basis of the post-amortization costs by adopting the actual interest rate,
from which gains and losses, when loan and accounts receivable are terminated from recognizing, or are impaired
or amortized, shall be recorded into the profits and losses of the current period.
2. Classification, Recognition and Measurement of Financial Liabilities
Financial liabilities shall be classified into the following two categories when they are initially recognized: the
transactional financial liabilities; and other financial liabilities. The financial liabilities initially recognized by the
Company shall be measured at their fair values. For the transactional financial liabilities, the transaction expenses
thereof shall be directly recorded into the profits and losses of the current period; for other categories of financial
liabilities, the transaction expenses thereof shall be included into the initially recognized amount.
(1) As for the financial liabilities measured by fair value and its changes be included in the current gains and
losses, which including trading financial liabilities and the financial liabilities be appointed to be measured by fair
value with the changes be included in the current gains and losses when being initially recognized, should be
executed subsequent measurement according to the fair value with the profits or losses formed by the changes of
the fair value be included in the current gains and losses.
(2) Other financial liabilities: The Company shall make subsequent measurement on its other financial liabilities
on the basis of the post-amortization costs by adopting the actual interest rate, from which gains and losses, when
other financial liabilities are terminated from recognizing or amortized, shall be recorded into the profits and
losses of the current period.
3. Recognition and measurement of financial asset transfers
As for the Company transferred nearly all of the risks and rewards related to the ownership of a financial asset to
the transferee, should derecognize the financial assets; as for maintained nearly all of the risks and rewards related
to the ownership of a financial asset, should continue to recognize the transferred financial assets and recognize
the received counter price as a financial liability. Where the Company does not transfer or retain nearly all of the
risks and rewards related to the ownership of a financial asset (that is to say, it is not under a circumstance as
mentioned in Article 7 of these Standards), it shall deal with it according to the circumstances as follows,
respectively: (1) If it gives up its control over the financial asset, it shall stop recognizing the financial asset; (2) If
it does not give up its control over the financial asset, it shall, according to the extent of its continuous
involvement in the transferred financial asset, recognize the related financial asset and recognize the relevant
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between
the amounts of the following 2 items shall be recorded in the profits and losses of the current period: (1) The book
value of the transferred financial asset; (2) the sum of consideration received from the transfer, and the
accumulative amount of the changes of the fair value originally recorded in the owner's equities.
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the entire book value of the
transferred financial asset shall, between the portion whose recognition has been stopped and the portion whose
recognition has not been stopped, be apportioned according to their respective relative fair value, and the
difference between the amounts of the following 2 items shall be included into the profits and losses of the current
period: (1)The book value of the portion whose recognition has been stopped; (2)The sum of consideration of the
portion whose recognition has been stopped, and the portion of the accumulative amount of the changes in the fair
value originally recorded in the owner's equities which is corresponding to the portion whose recognition has been
stopped.
4. De-recognition conditions of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the
financial liability be terminated in all or partly. Where the Group (debtor) enters into an agreement with a creditor
so as to substitute the existing financial liabilities by way of any new financial liability, and if the contractual
stipulations regarding the new financial liability is substantially different from that regarding the existing financial
liability, it terminates the recognition of the existing financial liability, and at the same time recognizes the new
financial liability. If executed practical modification on the whole or part of the contract regulations of the existing
financial liabilities, should terminate to recognize the existing financial liabilities or certain part of it and at the
same time recognize the revised financial liabilities as a new financial liabilities.
Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall
include into the profits and losses of the current period for the gap between the book value which has been
terminated from recognition and the considerations it has paid (including the non-cash assets it has transferred out
and the new financial liabilities it has assumed).
If the Company re-purchase part of the financial liabilities, should distribute the whole book value of the financial
liabilities according to the comparatively fair value between the continued reorganization part and the terminated
reorganization part on the re-purchase date. And the difference between the book value distributed to the
terminated recognition part and the counter price of the paid part (including the rolled out non-cash assets or the
new financial liabilities undertook) should be included in the current gains and losses.
5. Recognition method of the fair value of the financial assets and the financial liabilities
As for the financial instruments for which there is an active market, the quoted prices in the active market shall be
used to determine the fair values thereof. Where there is no active market for a financial instrument, the Company
concerned shall adopt value appraisal techniques to determine its fair value. The value appraisal techniques
mainly include the prices adopted by the parties, who are familiar with the condition, in the latest market
transaction upon their own free will, the current fair value obtained by referring to other financial instruments of
the same essential nature, the cash flow capitalization method and the option pricing model, etc.
6. Impairment test of financial assets (excluding the accounts receivable) and withdrawal method of impairment
provision
The Company inspects the book value of the financial assets on the balance sheet date to judge whether there are
evidences indicate that the financial assets had occurred impairment owning to the occurrence of one or multiple
events.
As for the measurement for impairment of financial assets measured on the basis of the post-amortization costs,
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
where there is any objective evidence proving that a financial asset measured on the basis of post-amortization
costs is impaired, should be recognized by the carrying amount of the difference between the said financial asset
which shall be written down to the current value of the predicted future cash flow (excluding the loss of future
credits not yet occurred) and the amount of the as written down which shall be recognized as loss of the
impairment of the asset. When calculating the current value of the estimated future cash flow, should adopt the
original effective interests’ rate of the financial assets as the discount rate. The book value of the assets should be
written down to the estimated recoverable amount through impairment provision items with the written down
amount be included in the current gains and losses. As for the financial assets with individual significant amount,
should adopt the individual assessment for ensure whether there are objective evidences indicate the impairment
provision and as for the other assets with insignificant amount, should be inspected by individual or group
assessment for ensure whether there are objective evidences indicate the impairment provision.
As for the financial assets measured by cost, if there are evidences indicate the impairment of the financial
instruments without market price which had not measured by fair value because the fair value could not be
reliable measured, the amount of the impairment losses should be measured by the difference between the book
value of the financial assets and the current value of the estimated future cash flow acquired from the discounting
measurement of the current market return rate of the similar financial assets.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the
fair value of the owner’s equity which was directly included shall be transferred out and recorded into the profits
and losses of the current period.
7. Recognition method of fair value
Fair value refers to the price that market participants got from the sale of an asset or the price paid for the transfer
of a liability among the orderly transactions happened on the measurement date. For a financial instrument with
active market, its fair value shall be determined by the quotes in the active market. For a financial instrument with
no active market, its fair value shall be determined by adopting value appraisal techniques. When the value is
appraised, by adopting the value appraisal techniques applying to the current situations with the support of enough
available data and other information, the Company chooses the same input value with features of assets and
liabilities considered by market participants in the transactions of relevant assets and liabilities, and gives priority
in use of observable input value as far as possible. Unobservable input value shall be used when the relevant
observable input value cannot be obtained or the obtainment is not practical.
11. Receivables
(1) Accounts Receivable with Significant Single Amount for which the Bad Debt Provision is Made Individually
Definition or amount criteria for an account receivable with a Top five accounts receivable with the largest balances or
significant single amount accounts accounting for over 10% of the total balance of
receivables.
Making separate bad-debt provisions for accounts receivable For an account receivable with a significant single amount, the
with a significant single amount impairment test shall be carried out on it separately. If there is
any objective evidence of impairment, the impairment loss is
recognized and the bad-debt provision is made according to the
difference between the present value of the account receivable’s
future cash flows and its carrying amount. As for non-significant
accounts receivable for which separate impairment provisions are
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
not necessary as proved by the impairment test, as well as other
significant accounts receivable that have not been impaired as
proved by a separate impairment test, they shall be grouped
according to their credit risks and account ages, and then the
impairment test is carried out on a group basis.
(2) Accounts Receivable which the Bad Debt Provision is withdrawn by Credit Risk Characteristics
Group name Withdrawal method of bad debt provision
Common transaction group Aging analysis method
Internal transaction group Other methods
In the groups, those adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Withdrawal proportion of account Withdrawal proportion of other account
Aging
receivables receivables
Within 1 year (including 1 year) 3.00% 3.00%
1 to 2 years 10.00% 10.00%
2 to 3 years 30.00% 30.00%
3 to 4 years 50.00% 50.00%
4 to 5 years 80.00% 80.00%
Over 5 years 100.00% 100.00%
In the groups, those adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
In the groups, those adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(3) Accounts Receivable with an Insignificant Single Amount but for which the Bad Debt Provision is Made
Independently
Reason of individually withdrawing bad debt provision There are definite evidences indicate the obvious difference of
thee return ability
Withdraw the bad debt provision according to the difference of
Withdrawal method for bad debt provision
which the future cash flow lower than the book value.
12. Inventory
Is the Company subject to any disclosure requirements for special industries?
No.
1. Classification of inventory
Inventory refers to finished products, goods in process, and materials consumed in the production process or the
provision of labor services held by the Company for sale in daily activities, mainly including raw materials, goods
in process, materials in transit, finished products, commodities, turnover materials, and commissioned processing
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
materials. Turnover materials include low-value consumables and packaging.
2. Pricing method of inventory sent out
The inventory is valued at actual cost when acquired, and inventory costs include procurement costs, processing
costs and other costs. The weighted average method is used when receiving or sending out inventory.
3. Basis for determining the net realizable value of inventory and the method of withdrawal for inventory
impairment
Net realizable value refers to the estimated selling price of the inventory minus the estimated cost to be incurred at
the time of completion, the estimated selling expenses and the relevant taxes and fees in daily activities. In
determining the net realizable value of inventory, the conclusive evidence obtained is used as the basis and the
purpose of holding the inventory and the impact of the events after the balance sheet date should be taken into
account.
For finished products, the materials used for sale and other goods used for direct sale, the net realizable value is
determined by the estimated selling price of the inventory minus the estimated selling expenses and related taxes
in the process of normal production and operation.
For materials inventory needs to be processed, the net realizable value is determined by the estimated selling price
of the finished products minus the estimated cost to be incurred, the estimated sales costs and the relevant taxes
and fees in the process of normal production and operation.
4. Inventory system
The inventory system of the Company is perpetual inventory.
5. Amortization method of turnover materials
Low-value consumables are amortized in one-off method.
The packaging is amortized in one-off method.
13. Assets Held for Sale
1. Assets held for sale
When a company relies mainly on selling (including the exchanges of non-monetary assets with commercial
substance) instead of continuing to use a non-current asset or disposal group to recover its book value, the
non-current asset or disposal group is classified as asset held for sale. The non-current assets mentioned above do
not include investment properties that are subsequently measured by the fair value model, biological assets
measured by fair value less net selling costs, assets formed from employee remuneration, financial assets, deferred
income tax assets and rights generated from insurance contracts.
Disposal group refers to a group of assets that are disposed of together as a whole through sale or other means in a
transaction, and the liabilities directly related to these assets transferred in the transaction. In certain
circumstances, the disposal group includes goodwill obtained in business combination.
The Company recognizes non-current assets or disposal groups that meet both of the following conditions as held
for sale: ① Assets or disposal groups can be sold immediately under current conditions based on the practice of
selling such assets or disposal groups in similar transactions; ② Sales are highly likely to occur, that is, the
Company has already made a resolution on a sale plan and obtained a certain purchase commitment, and the sale
is expected to will be completed within one year, and the sale has been approved if relevant regulations require
relevant authority or regulatory authority of the Company to approve it.
Non-current assets or disposal groups specifically obtained by the Company for resale will be classified by the
Company as a held-for-sale category on the acquisition date when they meet the stipulated conditions of
“expected to be sold within one year” on the acquisition date, and may well satisfy the category of held-for-sale
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
within a short time (which is usually 3 months).
If one of the following circumstances cannot be controlled by the Company and the transaction between
non-related parties fails to be completed within one year, and there is sufficient evidence that the Company still
promises to sell the non-current assets or disposal groups, the Company should continue to classify the
non-current assets or disposal groups as held-for-sale: ①The purchaser or other party unexpectedly sets
conditions that lead to extension of the sale. The Company has already acted on these conditions in a timely
manner and it is expected to be able to successfully deal with the conditions that led to the extension of the sale
within one year after the conditions were set. ②Due to unusual circumstances, the non-current assets or disposal
groups held for sale failed to be sold within one year. In the first year, the Company has taken necessary measures
for these new conditions and the assets or disposal groups meet the conditions of held-for-sale again.
If the Company loses control of a subsidiary due to the sale of investments to its subsidiaries, whether or not the
Company retains part of the equity investment after the sale, when the proposed sale of the investment to the
subsidiary meets the conditions of held- for-sale, the investment to the subsidiary will be classified as
held-for-sale in the individual financial statement of the parent company, and all the assets and liabilities of the
subsidiary will be classified as held-for-sale in the consolidated financial statement.
When the company initially measures or re-measures non-current assets or disposal groups held for sale on the
balance sheet date, if the book value is higher than the fair value minus the net amount of the sale costs, the book
value will be written down to the net amount of fair value minus the sale costs, and the amount written down will
be recognized as impairment loss of assets and included in the current profit and loss, and provision for
impairment of held-for-sale assets will be made. For the confirmed amount of impairment loss of assets of the
disposal groups held for sale, the book value of goodwill of the disposal groups will be offset first, and then the
book value of various non-current assets in the disposal groups will be offset according to the proportions.
If the net amount that the fair value of the non-current assets or disposal groups held for sale on the follow-up
balance sheet date minus the sale costs increases, the previous written-down amount will be restored, and reversed
to the asset impairment loss confirmed after the assets being classified as held-for-sale. The reversed amount will
be included in the current profit or loss. The book value of goodwill that has been deducted cannot be reversed.
Non-current assets held for sale or non-current assets in the disposal group are not subject to depreciation or
amortization. Interest and other expenses of liabilities in the disposal group held for sale will be confirmed as
before.
When a non-current asset or disposal group ceases be classified as held-for-sale or a non-current asset is removed
out from the held-for-sale disposal group due to failure in meeting the classification conditions for the category of
held-for-sale, it will be measured by one of the followings whichever is lower:
① The book value before being classified as held for sale will be adjusted according to the depreciation,
amortization or impairment that would have been recognized under the assumption that it was not classified as
held for sale;
② The recoverable amount.
2. Termination of operation
Termination of operation refers to a separately identifiable constituent part that satisfies one of the following
conditions that has been disposed of by the Company or is classified as held-for-sale:
(1) This constituent part represents an independent main business or a separate main business area.
(2) This constituent part is part of an associated plan that is intended to be disposed of in an independent main
business or a separate major business area.
(3) This constituent part is a subsidiary that is specifically acquired for resale.
3. Presentation
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
In the balance sheet, the Company distinguishes the non-current assets held for sale or the assets in the disposal
group held for sale separately from other assets, and distinguishes the liabilities in the disposal group held for sale
separately from other liabilities. The non-current assets held for sale or the assets in the disposal group held for
sale are not be offset against the liabilities in the disposal group held for sale. They are presented as current assets
and current liabilities respectively.
The Company lists profit and loss from continuing operations and profit and loss from operating profits in the
income statement. For the termination of operations for the current period, the Company restates the information
originally presented as profit or loss of continuing operation in the current financial statements to profit or loss of
termination of the comparable accounting period. If the termination of operation no longer meets the conditions of
held-for-sale, the Company restates the information originally presented as a profit and loss of termination in the
current financial statements to profit or loss of continuing operation of the comparable accounting period.
14. Long-term Equity Investments
Long-term equity investment refers to the Company’s long-term equity investment with control, joint control or
significant influence on the investee. The long-term equity investment of the Company which has no control, joint
control or significant influence on the investee is accounted for as financial assets available-for-sale or financial
assets at fair value and changes recognized in profit or loss for the current period. For details of accounting
policies, please refer to 10. Financial instruments in Notes V.
Joint control refers to the control that is common to an arrangement in accordance with the relevant agreement,
and the relevant activities of the arrangement must be agreed upon by the participant who has shared the control.
Significant influence refers to the Company has the power to participate in decision-making on the financial and
operating policies of the investee, but can’t control or jointly control the formulation of these policies with other
parties.
1. Investment cost recognition for long-term equity investments
(1) For the merger of enterprises under the same control, it shall, on the date of merger, regard the share of the
book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment,
and the direct relevant expenses occurred for the merger of enterprises shall be included into the profits and losses
of the current period.
(2) For the merger of enterprises not under the same control, The combination costs shall be the fair values, on the
acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the
Company in exchange for the control on the acquiree, and all relevant direct costs incurred to the acquirer for the
business combination. Where any future event that is likely to affect the combination costs is stipulated in the
combination contract or agreement, if it is likely to occur and its effects on the combination costs can be measured
reliably, the Company shall record the said amount into the combination costs.
(3) The cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost
which is actually paid. The cost consists of the expenses directly relevant to the obtainment of the long-term
equity investment, taxes and other necessary expenses.
(4) The cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair
value of the equity securities issued.
(5) The cost of a long-term investment obtained by the exchange of non-monetary assets (having commercial
nature) shall be recognized base on taking the fair value and relevant payable taxes as the cost of the assets
received.
(6) The cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at the
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
fair value.
2. Subsequent measurement of long-term equity investment and recognized method of profit/loss
The long-term equity investment with joint control (except for the common operator) or significant influence on
the investee is accounted by equity method. In addition, the Company's financial statements use cost method to
calculate long-term equity investments that can control the investee.
(1) Long-term equity investment accounted by cost method
When the cost method is used for accounting, the long-term equity investment is priced at the initial investment
cost, and the cost of the long-term equity investment is adjusted according to additional investment or recovered
investment. Except the price actually paid when acquired investment or cash dividends or profits that have been
declared but not yet paid included in the consideration, current investment income is recognized by the cash
dividends or profits declared by the investee.
(2) Long-term equity investment accounted by equity method
When the equity method is used for accounting, if the initial investment cost of the long-term equity investment is
greater than the fair value of the investee’s identifiable net assets, the initial investment cost of the long-term
equity investment shall not be adjusted; if the initial investment cost is less than the fair value of the investee’s
identifiable net assets, the difference shall be recorded into the current profits and losses, and the cost of the
long-term equity investment shall be adjusted at the same time.
When the equity method is used for accounting, the investment income and other comprehensive income shall be
recognized separately according to the net profit or loss and other comprehensive income realized by the investee,
and the book value of the long-term equity investment shall be adjusted at the same time. The part entitled shall be
calculated according to the profits or cash dividends declared by the investee, and the book value of the long-term
equity investment shall be reduced accordingly. For other changes in the owner’s equity other than the net profit
or loss, other comprehensive income and profit distribution of the investee, the book value of the long-term equity
investment shall be adjusted and included in the capital reserve. When the share of the net profit or loss of the
investee is recognized, the net profit of the investee shall be adjusted and recognized according to the fair value of
the identifiable assets of the investee when the investment is made. If the accounting policies and accounting
periods adopted by the investee are inconsistent with the Company, the financial statements of the investee shall
be adjusted according to the accounting policies and accounting periods of the Company and the investment
income and other comprehensive income shall be recognized accordingly. For the transactions between the
Company and associates and joint ventures, if the assets made or sold don’t constitute business, the unrealized
gains and losses of the internal transactions are offset by the proportion attributable to the Company, and the
investment gains and losses are recognized accordingly. However, the loss of unrealized internal transactions
incurred by the Company and the investee attributable to the impairment loss of the transferred assets shall not be
offset. If the assets made to associates or joint ventures constitute business, and the investor makes long-term
equity investment but does not obtain the control, the fair value of the investment shall be taken as the initial
investment cost of the new long-term equity investment, and the difference between initial investment and the
book value of the investment is fully recognized in profit or loss for the current period. If the assets sold by the
Company to joint ventures or associates constitute business, the difference between the consideration and the book
value of the business shall be fully credited to the current profits and losses. If the assets purchased by Company
from joint ventures or associates constitute business, conduct accounting treatment in accordance with the
provisions of Accounting Standard for Business Enterprises No. 20 - Business combination, and the profits or
losses related to the transaction shall be recognized in full.
When the net loss incurred by the investee is recognized, the book value of the long-term equity investment and
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
other long-term equity that substantially constitute the net investment in the investee shall be written down to zero.
In addition, if the Company has an obligation to bear additional losses to the investee, the estimated liabilities are
recognized in accordance with the obligations assumed and included in the current investment losses. If the
investee has realized net profit in later period, the Company will resume the recognition of the income share after
the income share has made up the unrecognized loss share.
(3) Acquisition of minority interests
In the preparation of the consolidated financial statements, capital reserve shall be adjusted according to the
difference between the long-term equity investment increased due to the purchase of minority interests and the
share of the net assets held by the subsidiary from the date of purchase (or the date of combination) calculated
according to the proportion of the new shareholding ratio, and retained earnings shall be adjusted if the capital
reserve is insufficient to offset.
(4) Disposal of long-term equity investment
In the consolidated financial statements, the parent company partially disposes of the long-term equity investment
in the subsidiary without the loss of control, and the difference between the disposal price and the net assets of the
subsidiary corresponding to the disposal of the long-term equity investment is included in the shareholders’ equity.
If the disposal of long-term equity investment in subsidiaries results in the loss of control over the subsidiaries,
handle in accordance with the relevant accounting policies described in 6. “Preparation method of consolidated
financial statements” in Notes V.
In other cases, the difference between the book value and the actual acquisition price shall be recorded into the
current profits and losses for the disposal of the long-term equity investment.
For long-term equity investment accounted by the equity method and residual equity after disposal still accounted
by the equity method, other comprehensive income originally included in the shareholders’ equity shall be treated
in the same basis of the investee directly disposing related assets or liabilities by corresponding proportion. The
owner’s equity recognized by the change of the owner’s equity of the investee other than the net profit or loss,
other comprehensive income and profit distribution is carried forward proportionally into the current profits and
losses.
For long-term equity investment accounted by the cost method and residual equity after disposal still accounted by
the cost method, other comprehensive income accounted by equity method or recognized by financial instrument
and accounted and recognized by measurement criteria before the acquisition of the control over the investee is
treated in the same basis of the investee directly disposing related assets or liabilities, and carried forward
proportionately into the current profits and losses. Other changes of owner’s equity in net assets of the investee
accounted and recognized by the equity method other than the net profit or loss, other comprehensive income and
profit distribution are carried forward proportionally into the current profits and losses.
3. Impairment provisions for long-term equity investments
For the relevant testing method and provision making method, see 22. Impairment of Long-term Assets in
Notes V herein.
15. Investment Real Estates
Measurement mode of investment real estates
Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
16. Fixed Assets
(1) Recognition Conditions
Fixed assets of the Company refers to the tangible assets that simultaneously possess the features as follows: they
are held for the sake of producing commodities, rendering labor service, renting or business management; and
their useful life is in excess of one accounting year and unit price is higher. No fixed assets may be recognized
unless it simultaneously meets the conditions as follows: ① The economic benefits pertinent to the fixed asset
are likely to flow into the Company; and ② The cost of the fixed asset can be measured reliably.
(2) Depreciation Method
Expected net salvage
Category of fixed assets Method Useful life Annual deprecation
value
Housing and building Average method of
3—30 years 5% 31.67%-3.17%
useful life
Machinery equipments Average method of
2—10 years 5% 47.50%-9.50%
useful life
Transportation vehicle Average method of
5—10 years 5% 19.00%-9.50%
useful life
Average method of
Electronic equipment 2—8 years 5% 47.50%-11.88%
useful life
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
Not applicable
17. Construction in Progress
Is the Company subject to any disclosure requirements for special industries?
No
1. Pricing of construction in progress
The constructions are accounted according to the actual costs incurred. The constructions shall be carried forward
into fixed assets at the actual cost when reach intended usable condition. The borrowing expenses eligible for
capitalization incurred before the delivery of the construction are included in the construction cost; after the delivery,
the relevant interest expense shall be recorded into the current profits and losses.
2. Standard and time of construction in progress carrying forward into fixed assets
The Company’s construction in progress is carried forward into fixed assets when the construction completes and
reaches intended usable condition. The criteria for determining the intended usable condition shall meet one of the
following:
(1) The physical construction (including installation) of fixed assets has been completed or substantially completed;
(2) Has been produced or run for trial, and the results indicate that the assets can run normally or can produce stable
products stably, or the results of the trial operation show that it can operate normally;
(3) The amount of the expenditure on the fixed assets constructed is little or almost no longer occurring;
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
(4) The fixed assets purchased have reached the design or contract requirements, or basically in line with the design
or contract requirements.
3. Provision for impairment of construction in progress
Please refer to Note 22: Long-term Asset Impairment under Note V for the impairment test method and provision
for impairment of construction in progress.
18. Borrowing Costs
The borrowing costs refer to interest and other related costs incurred by the Company as a result of borrowings,
including interest on borrowings, amortization of discounts or premiums, ancillary expenses and exchange
differences arising from foreign currency borrowings. The borrowing costs incurred by the Company directly
attributable to the acquisition, construction or production of assets eligible for capitalization are capitalized and
included in the cost of the relevant assets. Other borrowing costs are recognized as expenses according to the
amount at the time of occurrence, and are included in the current profits and losses.
1. Principle of capitalization of borrowing costs
Borrowing costs can be capitalized when all the following conditions are met: Asset expenditure has already
occurred; borrowing costs have already occurred; construction or production activities necessary to bring the
assets to the intended useable or sellable status have already begun.
2. Capitalization period of borrowing costs
Capitalization period refers to the period from the capitalization of borrowing costs starting to the end of
capitalization, excluding the period when capitalization is suspended.
If assets that meet the conditions of capitalization are interrupted abnormally in the course of construction or
production, and the interruption time exceeds 3 consecutive months, the capitalization of borrowing costs shall be
suspended. The borrowing costs incurred during the interruption are recognized as expenses and included in
current profits and losses until the acquisition or construction of the assets is resumed. The capitalization of the
borrowing costs continues if the interruption is a procedure necessary for the purchase or production of assets
eligible for capitalization to meet the intended useable or sellable status.
The borrowing costs shall cease to be capitalized when the purchased or produced assets that meet the conditions
of capitalization meet the intended useable or sellable status. The borrowing costs incurred after the assets eligible
for capitalization meet the intended useable or sellable status can be included in the current profits and losses
when incurred.
3. Calculation method of capitalized amount of borrowing costs
During the period of capitalization, the capitalization amount of interests (including amortization of discounts or
premiums) for each accounting period is determined in accordance with the following provisions:
(1) For special borrowings for the acquisition or construction of assets eligible for capitalization, the interest
expenses actually incurred in the current period of borrowings shall be recognized after deducting the interest
income obtained by depositing the unused borrowing funds into the bank or investment income obtained from
temporary investment.
(2) Where the general borrowing is occupied for the acquisition or construction of assets eligible for capitalization,
the Company multiplies the weighted average of the asset expenditure of the accumulated asset expenditure
exceeding the special borrowing by the capitalization rate of the general borrowing to calculate the amount of
interest that should be capitalized for general borrowings. The capitalization rate is determined based on the
weighted average interest rate of general borrowings.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
19. Biological Assets
Not applicable
20. Oil-gas Assets
Not applicable
21. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
1. Recognition criteria of intangible assets
Intangible assets are identifiable non-monetary assets that are owned or controlled by the Company without physical
form. The intangible assets are recognized when all the following conditions are met: (1) Conform to the definition
of intangible assets; (2) Expected future economic benefits related to the assets are likely to flow into the Company;
(3) The costs of the assets can be measured reliably.
2. Initial measurement of intangible assets
Intangible assets are initially measured at cost. Actual costs are determined by the following principles:
(1) The cost of the acquisition of intangible assets, including the purchase price, relevant taxes and other expenses
directly attributable to the intended use of the asset. The payment of purchase price of intangible assets exceeding
normal credit terms is deferred, and the cost of intangible assets having financing nature in essence shall be
recognized based on the present value of the purchase price. The difference between the actual payment price and
the present value of the purchase price shall be recorded into the current profits and losses in the credit period except
that can be capitalized in accordance with the Accounting Standard for Business Enterprises No. 17 - Borrowing
Cost.
(2) The cost of investing in intangible assets shall be recognized according to the value agreed upon in the
investment contract or agreement, except that the value of the contract or agreement is unfair.
3. Subsequent measurement of intangible assets
The Company shall determine the useful life when it obtains intangible assets. The useful life of intangible assets is
limited, and the years of the useful life or output that constitutes the useful life or similar measurement units shall be
estimated. The intangible assets are regarded as intangible assets with uncertain useful life if the term that brings
economic benefits to the Company is unforeseeable
Intangible assets with limited useful life shall be amortized by straight line method from the time when the
intangible assets are available until can’t be recognized as intangible assets; intangible assets with uncertain useful
life shall not be amortized. The Company reviews the estimated useful life and amortization method of intangible
assets with limited useful life at the end of each year, and reviews the estimated useful life of intangible assets with
uncertain useful life in each accounting period. For intangible assets that evidence shows the useful life is limited,
the useful life shall be estimated and the intangible assets shall be amortized in the estimated useful life.
4. Recognition criteria and withdrawal method of intangible asset impairment provision
The impairment test method and withdrawal method for impairment provision of intangible assets are detailed in
Note 22: Long-term asset impairment under Note V.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
(2) Accounting Policy for Internal Research and Development Expenditures
The expenditures in internal research and development projects of the Company are classified into expenditures in
research stage and expenditures in development stage. The expenditures in research stage are included in the
current profits and losses when incurred. The expenditures in development stage are recognized as intangible
assets when meeting the following conditions:
(1) The completion of the intangible assets makes it technically feasible for using or selling;
(2) Having the intention to complete and use or sell the intangible assets;
(3) The way in which an intangible asset generates economic benefits, including the proof that the products
produced with the intangible asset have market or the proof of its usefulness if the intangible asset has market and
will be used internally;
(4) Having sufficient technical, financial resources and other resources to support the development of the
intangible assets and the ability to use or sell the intangible assets;
(5) Expenditure attributable to the development stage of intangible assets can be measured reliably.
The cost of self-developed intangible assets includes the total expenditure incurred since meeting intangible assets
recognition criterion until reaching intended use. Expenditures that have been expensed in previous periods are no
longer adjusted.
Non-monetary assets exchange, debt restructuring, government subsidies and the cost of intangible assets acquired
by business combination are recognized according to relevant provisions of Accounting Standard for Business
Enterprises No. 7 - Non-monetary assets exchange, Accounting Standard for Business Enterprises No. 12 - Debt
restructuring, Accounting Standards for Business Enterprises No. 16 - Government subsidies, Accounting
Standard for Business Enterprises No. 20 - Business combination respectively.
22. Impairment of Long-term Assets
For non-current non-financial assets such as fixed assets, construction in progress, intangible assets with limited
useful life, investment real estate measured in cost mode and long-term equity investments in subsidiaries, joint
ventures and associates, the Company determines whether there is indication of impairment at balance sheet date.
If there is indication of impairment, then estimate the amount of its recoverable value and test the impairment.
Goodwill, intangible assets with uncertain useful life and intangible assets that have not yet reached useable state
shall be tested for impairment every year, whether or not there is any indication of impairment.
If the impairment test results indicate that the recoverable amount of the asset is lower than its book value, the
impairment provision shall be made at the difference and included in the impairment loss. The recoverable
amount is the higher of the fair value of the asset minus the disposal cost and the present value of the expected
future cash flow of the asset. The fair value of the asset is recognized according to the price of the sales agreement
in the fair trade; if there is no sales agreement but there is an active market, the fair value is recognized according
to the buyer’s bid of the asset; if there is no sales agreement or active market, the fair value of asset shall be
estimated based on the best information that can be obtained. Disposal costs include legal costs related to disposal
of assets, related taxes, handling charges, and direct costs incurred to enable the asset reaching sellable status. The
present value of the expected future cash flows of the assets is recognized by the amount discounted at appropriate
discount rate according to the expected future cash flows arising from the continuing use of the asset and the final
disposal. The provision for impairment of assets is calculated and recognized on the basis of individual assets. If it
is difficult to estimate the recoverable amount of individual assets, the recoverable amount of the asset group shall
be recognized by the asset group to which the asset belongs. The asset group is the smallest portfolio of assets that
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
can generate cash inflows independently.
The book value of the goodwill presented separately in the financial statements shall be apportioned to the asset
group or portfolio of asset groups that is expected to benefit from the synergies of the business combination when
the impairment test is conducted. The corresponding impairment loss is recognized if the test results indicate that
the recoverable amount of the asset group or portfolio of asset groups containing the apportioned goodwill is
lower than its book value. The amount of the impairment loss shall offset the book value of the goodwill
apportioned to the asset group or portfolio of asset groups, and offset the book value of other assets in proportion
according to the proportion of the book value of other assets except the goodwill in the asset group or portfolio of
asset groups.
Once the impairment loss of the above asset is recognized, the portion that the value is restored will not be written
back in subsequent periods.
23. Amortization Method of Long-term Deferred Expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one year (one year
excluded) that have occurred but attributable to the current and future periods. Long-term deferred expense shall
be amortized averagely within benefit period. In case of no benefit in the future accounting period, the amortized
value of such project that fails to be amortized shall be transferred into the profits and losses of the current period.
24. Payroll
(1) Accounting Treatment of Short-term Compensation
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and
benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing
fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term
compensation actually happened during the accounting period when the active staff offering the service for the
Group should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of
which the non-monetary benefits should be measured according to the fair value.
(2) Accounting Treatment of the Welfare after Demission
Welfare after demission mainly includes defined contribution plans and defined benefit plans. Of which defined
contribution plans mainly include basic endowment insurance, unemployment insurance, annuity funds, etc., and
the corresponding payable and deposit amount should be included into the relevant assets cost or the current gains
and losses when happen.
(3) Accounting Treatment of the Demission Welfare
If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant labor
contract or brings forward any compensation proposal for the purpose of encouraging the employee to accept a
layoff, and should recognize the payroll liabilities occurred from the demission welfare base on the earlier date
between the time when the Group could not one-sided withdraw the demission welfare which offered by the plan
or layoff proposal owning to relieve the labor relationship and the date the Group recognizes the cost related to the
reorganization of the payment of the demission welfare and at the same time includes which into the current gains
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
and losses. But if the demission welfare is estimated that could not totally pay after the end of the annual report
within 12 months, should be disposed according to other long-term payroll payment.
(4) Accounting Treatment of the Welfare of Other Long-term Staffs
The inside employee retirement plan is treated by adopting the same principle with the above dismiss ion welfare.
The group would recorded the salary and the social security insurance fees paid and so on from the employee’s
service terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under the
condition that they meet the recognition conditions of estimated liabilities.
The other long-term welfare that the Group offers to the staffs, if met with the setting drawing plan, should be
accounting disposed according to the setting drawing plan, while the rest should be disposed according to the
setting revenue plan.
25. Estimated Liabilities
1. Recognition of estimated debts
The obligation such as external guaranty, pending litigation or arbitration, product quality assurance, layoff plan,
loss contract, restructuring and disposal of fixed assets, pertinent to a contingencies shall be recognized as an
estimated debts when the following conditions are satisfied simultaneously: ① That obligation is a current
obligation of the enterprise; ② It is likely to cause any economic benefit to flow out of the enterprise as a result
of performance of the obligation; and ③ The amount of the obligation can be measured in a reliable way
2. Measurement of estimated debts
The estimated debts shall be initially measured in accordance with the best estimate of the necessary expenses for
the performance of the current obligation. If there is a sequent range for the necessary expenses and if all the
outcomes within this range are equally likely to occur, the best estimate shall be determined in accordance with
the middle estimate within the range. In other cases, the best estimate shall be conducted in accordance with the
following situations, respectively: ① If the Contingencies concern a single item, it shall be determined in the
light of the most likely outcome. ② If the Contingencies concern two or more items, the best estimate should be
calculated and determined in accordance with all possible outcomes and the relevant probabilities. ③ When all
or some of the expenses necessary for the liquidation of an estimated debts of an enterprise is expected to be
compensated by a third party, the compensation should be separately recognized as an asset only when it is
virtually certain that the reimbursement will be obtained. The Company shall check the book value of the
estimated debts on the balance sheet date. The amount of compensation is not exceeding the book value of the
recognized estimated liabilities.
26. Share-based Payment
Not applicable
27. Other Financial Instruments such as Preferred Shares and Perpetual Capital Securities
Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
28. Revenue
Is the Company subject to any disclosure requirements for special industries?
No
1. Sale of goods
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: ① The
significant risks and rewards of ownership of the goods have been transferred to the buyer by the Company; ② The
Company retains neither continuous management right that usually keeps relation with the ownership nor effective
control over the sold goods; ③ The revenue amount could be reliably measured; and ④ The relevant economic
benefits may flow into the Company, and the relevant cost which had occurred or will occur could be reliably
measured.
Specific principles for recognition of the “domestic sale and export” incomes of the Company:
(1) Method for recognition of the domestic sale income: According to the buyer’s requirements, the Company
delivers to the buyer the products that have been considered qualified upon examination. The amount of the income
has been determined and the sales invoice has been issued. The payment for the delivered products has been
received in full or is expectedly recoverable.
(2) Method for recognition of the export income: The Company produces the products according to the contract
signed with the buyer. After the products have been examined as qualified, the Company completes the customs
clearing procedure for export. The shipping company loads the products for shipping. The amount of the income has
been determined and the export sales invoice has been issued. The payment for the delivered products has been
received in full or is expectedly recoverable.
2. Provision of labor services
In the case that the results of the labor service transaction can be reliably estimated, the income from the provision of
labor services shall be recognized at the balance sheet date by the percentage of completion method according to the
progress of the labor transaction.
The result of the provision of labor services can be reliably estimated refers that all the following conditions are met:
① The amount of income can be measured reliably; ②The relevant economic benefits are likely to inflow to the
enterprise; ③ The progress of the transaction can be reliably determined; ④ The cost incurred and to be incurred in
the transaction can be measured reliably.
If the result of the provision of labor services can’t be reliably estimated, the income from the provision of labor
services shall be recognized according to the cost of labor services that have incurred and are expected to be
compensated, and the cost of labor services that have incurred is recognized as the current expenses. If the cost of
labor services already incurred isn’t expected to be compensated, the income will not be recognized.
If the contract or agreement between the Company and other enterprises includes the sale of goods and the provision
of labor services, and the sale of goods and the provision of labor services can be distinguished and measured
separately, the sale of goods and the provision of labor services shall be dealt with separately; if the sale of goods
and the provision of labor services can’t be distinguished or can’t be measured separately, the contract will be
treated as sale of goods.
3. Income from transferring the right to use assets
The operating income is calculated and recognized according to the time and method stipulated by relevant
contracts and agreements.
4. Interest income
Recognized when all the following conditions are met: ① The amount of income can be measured reliably; ②
Economic benefits related to the transaction can inflow.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
29. Government Subsidies
(1) Judgment Basis and Accounting Treatment of Government Subsidies Related to Assets
The government subsidies related to assets refer to the government subsidies obtained for acquisition, construction
or otherwise formation of long-term assets. The government subsidies related to income refer to the government
subsidies except the government subsidies related to assets.
The specific standard of classifying the government subsidies as subsidies related to assets: government subsidies
for acquisition, construction or otherwise formation of long-term assets.
If the government documents do not specify the subsidy object, the bases that the Company classified the
government subsidies as assets-related subsidies or income-related subsidies were as follows: (1) If the specific
items for which the subsidy is targeted are stipulated in government documents, divide according to the relative
proportion of the amount of expenditure that forms assets and the amount of expenditure included in the cost in
the budget for that particular project, and the proportion shall be reviewed at each balance sheet date and changed
as necessary; (2) if the government documents only have a general statement of the purpose and do not specify a
specific project.
If a government subsidy is a monetary asset, it shall be measured according to the amount received or receivable.
If a government subsidy is a non-monetary asset, it shall be measured at its fair value, and shall be measured at a
nominal amount (RMB1) when the fair value cannot be obtained reliably.
For confirmed government subsidies that need to be returned, if there is relevant deferred income, the book
balance of related deferred income shall be written off and the excess shall be charged to profit or loss for the
Current Period; for other circumstances, it shall be directly charged to profit or loss for the Current.
The Company adopts the gross method to confirm government subsidies. The government subsidies related to
assets are recognized as deferred income, and are charged to the current profit or loss in a reasonable and
systematic manner within the useful lives of the relevant assets (subsidies related to the daily activities of the
Company are included in other income; while subsidies unrelated to the daily activities of the Company are
included in non-operating income). Government subsidies measured at nominal amounts are directly charged to
profit or loss for the Current Period. Where the relevant assets are sold, transferred, scrapped or damaged before
the end of their useful lives, the balance of related undistributed deferred income shall be transferred to the profit
or loss of the asset disposal in the Current Period.
(2) Judgment Basis and Accounting Treatment of Government Subsidies Pertinent to Incomes
The specific criteria that the Company classifies government subsidies as income related is: other government
subsidies other than asset-related government subsidies.
Government subsidies related to income are treated as follows:
(1) government subsidies used to compensate the relevant costs, expenses or losses of the Company in the
subsequent period shall be recognized as deferred income, and shall be included in the current profit and loss
during the period of confirming the relevant costs, expenses or losses (subsidies related to the daily activities of
the Company are included in other income; while subsidies unrelated to the daily activities of the Company are
included in non-operating income);
(2) government subsidies used to compensate the relevant costs, expenses or losses incurred by the Company
shall be directly included in the current profits and losses (subsidies related to the daily activities of the Company
are included in other income; while subsidies unrelated to the daily activities of the Company are included in
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
non-operating income).
For government subsidies that include both assets-related and income-related parts, they should be distinguished
separately for accounting treatment; for government subsidies that are difficult to be distinguished, they should be
classified as income-related.
30. Deferred Income Tax Assets/Deferred Income Tax Liabilities
The income tax of the Company includes the current income tax and deferred income tax. Both are recorded into
the current gains and losses as income tax expenses or revenue, except in the following circumstances:
(1) The income tax generated from the business combination shall be adjusted into goodwill;
(2) The income tax related to the transaction or event directly included in shareholders’ equity shall be recorded
into shareholders’ equity.
At the balance sheet date, the Company recognizes the deferred income tax assets or deferred income tax
liabilities in accordance with the balance sheet liability method for the temporary difference between the book
value of assets or liabilities and its tax base.
The Company recognizes all taxable temporary differences as deferred income tax liabilities unless taxable
temporary differences arise in the following transactions:
(1) The initial recognition of goodwill or the initial recognition of the assets or liabilities arising from a transaction
with the following characteristics: the transaction is not a business combination and neither the accounting profit
nor the taxable income is incurred at the time of the transaction;
(2) The time of write-back of taxable temporary differences related to the investments in subsidiaries, associates
and joint ventures can be controlled and the temporary differences are likely to not be written back in the
foreseeable future.
The Company recognizes the deferred income tax assets arising from deductible temporary differences, subject to
the amount of taxable income obtained to offset the deductible temporary differences, unless the deductible
temporary differences arise in the following transactions:
(1) The transaction is not a business combination, and the transaction does not affect the accounting profit or the
amount of taxable income;
(2) The deductible temporary differences related to the investments in subsidiaries, associates and joint ventures
are not met simultaneously: Temporary differences are likely to be written back in the foreseeable future and are
likely to be used to offset the taxable income of deductible temporary differences in the future.
At the balance sheet date, the Company measures the deferred income tax assets and deferred income tax
liabilities at the applicable tax rate of the period expected to recover the asset or pay off the liabilities according to
tax law, and reflects the income tax effect of expected assets recovery or liabilities payoff method at the balance
sheet date.
At the balance sheet date, the Company reviews the book value of the deferred income tax assets. If it is likely
that sufficient taxable income will not be available to offset the benefit of the deferred income tax assets in the
future period, the book value of the deferred income tax assets will be written down. If it is probable that
sufficient taxable income will be available, the amount of write-down will be written back.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
31. Lease
(1) Accounting Treatment of Operating Lease
(1) The lease fee paid by the Company for rented assets shall be apportioned using the straight-line method over
the entire lease term without deducting the rent-free period and shall be included in the current period expenses.
The initial direct costs related to the lease transaction paid by the Company are included in current expenses.
When the lessor of the asset assumes the lease-related expenses that should be borne by the Company, the
Company should deduct the part of the expenses from the total rental amount, and the deducted rental expenses
are apportioned during the lease term and included in the current expenses.
(2) The rental fees received by the company for leasing assets are apportioned on a straight-line basis over the
entire lease term without deducting the rent-free period and are recognized as lease income. The initial direct
expenses related to lease transactions paid by the company are included in the current expenses; if the amount is
larger, they are capitalized and are recorded in the current period in stages on the same basis as the recognition of
lease income during the entire lease period.
When the company assumes the lease-related expenses that should be borne by the lessee, the company deducts
the expenses from the total amount of rental income and allocates the deducted rental expenses during the lease
period.
(2) Accounting Treatments of Financial Lease
(1) Financing leased assets: on the lease starting date, the Company recorded the lower one of the fair value of the
leased asset and the present value of the minimum lease payments on the lease beginning date as the entering
value in an account, recognized the amount of the minimum lease payments as the entering value in an account of
long-term account payable, and treated the balance between the recorded amount of the leased asset and the
long-term account payable as unrecognized financing charges. The company adopted the effective interest method
to amortize the unrecognized financing expenses during the asset lease period and included it into financial
expenses.
(2) Assets leased by finance: On the lease beginning date, the Company recognized the financial lease receivables,
and the difference between the sum of unguaranteed residual values and its present value as unrealized financing
income. It is recognized as lease income during any lease period in the future. The initial direct costs incurred by
the Company in relation to the lease transaction, were included in the initial measurement of the financial lease
receivable and the amount of revenue recognized during the lease period shall be reduced.
32. Other Significant Accounting Policies and Estimates
Not applicable
33. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable □ Not applicable
Content and reason for changes Approval procedures Note
Foshan Electrical and Lighting Co., Ltd. Annual Report 2017
(1) The Ministry of Finance issued the
Circular on Issuing of Accounting Standards
