Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
FOSHAN ELECTRICAL AND LIGHTING CO., LTD.
ANNUAL REPORT 2021
March 2022
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Part I Important Notes, Table of Contents and DefinitionsThe Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,supervisors and senior management of Foshan Electrical and Lighting Co., Ltd. (hereinafterreferred to as the “Company”) hereby guarantee the factuality, accuracy and completeness ofthe contents of this Report and its summary, and shall be jointly and severally liable for anymisrepresentations, misleading statements or material omissions therein.Wu Shenghui, the Company’s legal representative, Tang Qionglan, the Company’s ChiefFinancial Officer (CFO), and Liang Yuefei, the person-in-charge of the Company’s accountingorgan (equivalent to accounting manager) hereby guarantee that the Financial Statementscarried in this Report are factual, accurate and complete.All the Company’s directors have attended the Board meeting for the review of this Reportand its summary.The future plans and other forward-looking statements, as well as the cautionary statementsmentioned in this Report shall NOT be considered as virtual promises of the Company toinvestors. And investors are kindly reminded to be well aware of possible risks.The Company has described in detail in this Report the risk of uncertainty in macro-economy,the risk of fiercer market competition, the risk of rising raw material prices, and the risk ofexchange rate fluctuations. Please refer to the section headed “Potential Risks” in Item XI ofPart III of this Report.The Board has approved a final dividend plan as follows: based on the share capital of1,348,994,647 shares (the total share capital of 1,361,994,647 shares minus the remaining13,000,000 A-shares repurchased in the share repurchase account at the disclosure date of the2021 Annual Report, a cash dividend of RMB1 (tax inclusive) per 10 shares is to bedistributed to the shareholders, with no bonus issue from either profit or capital reserves.Where any change occurs to the total shares entitled to the final dividend due to any new issue,grant of equity incentives, etc. when the final dividend plan is implemented, the dividend pershare shall remain the same while the total payout amount shall be adjusted accordingly.This Report has been prepared in both Chinese and English. Should there be anydiscrepancies or misunderstandings between the two versions, the Chinese version shallprevail.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 6
Part III Management Discussion and Analysis ...... 12
Part IV Corporate Governance ...... 51
Part V Environmental and Social Responsibility ...... 79
Part VI Significant Events ...... 86
Part VII Share Changes and Shareholder Information ...... 153
Part VIII Preferred Shares ...... 165
Part IX Corporate Bonds ...... 166
Part X Financial Statements ...... 167
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Documents Available for Reference
Investors and interested parties can get access to the following materials in the Board Secretary’sOffice in the Company’s office building:
1. The financial statements signed and stamped by the Company’s legal representative, ChiefFinancial Officer, and the person-in-charge of the Company’s accounting organ.
2. The original copy of the Independent Auditor’s Report signed and stamped by the certified publicaccountants and stamped by the CPA firm.
3. The originals of all the Company’s announcements and documents disclosed to the public duringthe Reporting Period on the media designated by the CSRC for information disclosure.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Definitions
| Term | Definition |
| The “Company”, “listed company”, “FSL” or “we” | Foshan Electrical and Lighting Co., Ltd. and its consolidated subsidiaries, except where the context otherwise requires |
| Rising Group | Guangdong Rising Holdings Group Co., Ltd. |
| Electronics Group | Guangdong Electronics Information Industry Group Ltd. |
| Rising Capital | Guangdong Rising Capital Investment Co., Ltd. (formerly known as “Guangdong Rising Finance Holding Co., Ltd.”) |
| Shenzhen Rising Investment | Shenzhen Rising Investment Development Co., Ltd. |
| Hong Kong Rising Investment | Rising Investment Development Limited |
| Hongkong Wah Shing | Hongkong Wah Shing Holding Company Limited |
| NationStar Optoelectronics | Foshan NationStar Optoelectronics Co., Ltd. |
| Sigma | Foshan Sigma Venture Capital Co., Ltd. |
| Nanning Liaowang | Nanning Liaowang Auto Lamp Co., Ltd. |
| CSRC | China Securities Regulatory Commission |
| SZSE | Shenzhen Stock Exchange |
| General meeting | General meeting of Foshan Electrical and Lighting Co., Ltd. |
| Board of Directors | The board of directors of Foshan Electrical and Lighting Co., Ltd. |
| Supervisory Committee | The supervisory committee of Foshan Electrical and Lighting Co., Ltd. |
| Annual report auditor | Zhongzheng Tiantong Certified Public Accountants LLP |
| RMB, RMB’0,000, RMB’00,000,000 | Expressed in the Chinese currency of Renminbi, expressed in tens of thousands of Renminbi, expressed in hundreds of millions of Renminbi |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Part II Corporate Information and Key Financial InformationI Corporate Information
| Stock name | FSL, FSL-B | Stock code | 000541/200541 |
| Stock exchange for listing | 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 any) | FOSHAN ELECTRICAL AND LIGHTING CO.,LTD | ||
| Abbr. (if any) | FSL | ||
| Legal representative | Wu Shenghui | ||
| Registered address | No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China | ||
| Zip code | 528000 | ||
| Changes of registered address | N/A | ||
| Office address | No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China | ||
| Zip code | 528000 | ||
| Company website | www.chinafsl.com | ||
| Email address | gzfsligh@pub.foshan.gd.cn | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Huang Zhenhuan | Huang Yufen |
| Address | No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China | No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China |
| Tel. | （0757）82810239 | （0757）82966028 |
| Fax | （0757）82816276 | （0757）82816276 |
| Email address | fsldsh@chinafsl.com | fslhyf@163.com |
III Media for Information Disclosure and Place where this Report Is Lodged
| Stock exchange website where this Report is disclosed | http://www.cninfo.com.cn |
| Media and website where this Report is disclosed | China Securities Journal, Ta Kung Pao (HK), and http://www.cninfo.com.cn |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Place where this Report is lodged | Board Office, FSL Office Building, No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China |
IV Change to Company Registered Information
| Unified social credit code | 91440000190352575W |
| Change to principal activity of the Company since going public (if any) | Unchanged |
| Every change of controlling shareholder since incorporation (if any) | In April 2006, the State-owned Assets Supervision and Administration Commission (SASAC) of Foshan Municipal People's Government, the former controlling shareholder of the Company, transferred 13.47% of shares it held in the Company to OSRAM Prosperity Holding Company Limited (later renamed as "OSRAM Holding Company Limited"), and at the same time, SASAC of Foshan Municipal People's Government transferred 10.50% of shares it held in the Company to Prosperity Lamps & Components Limited. Upon completion of such transfer, the biggest shareholder of the Company was OSRAM Prosperity Holding Company Limited, and the Company had no any controlling shareholder or actual controller. In December 2015, OSRAM of Germany transferred 100% equity it held in OSRAM Holding Company Limited (OSRAM Holding Company Limited held 13.47% of shares of the Company, being the biggest shareholder of the Company and later renamed as "Hongkong Wah Shing Holding Company Limited") to Electronics Group. In addition, Electronics Group and its parties acting in concert (Rising Capital, Shenzhen Rising Investment and Hong Kong Rising Investment), held 23.144% of the shares of the Company through increasing their shareholding of the Company. Electronics Group and its parties acting in concert became the controlling shareholder of the Company and Electronics Group is a wholly-owned subsidiary of Rising Holdings Group. In December 2021, wholly-owned subsidiaries of Rising Holdings Group, Rising Capital and Shenzhen Rising Investment transferred 5.94% of shares they held in the Company to Rising Holdings Group through transfer by agreement for no compensation. Therefore, Rising Holdings Group and its parties acting in concert held 30% of shares in the Company. As of the date of this Report, due to the retirement of certain shares repurchased by the Company, Rising Holdings Group and its parties acting in concert hold 30.82% of shares in the Company. |
V Other InformationThe independent audit firm hired by the Company:
| Name | Zhongzheng Tiantong Certified Public Accountants LLP |
| Office address | 13/F, Tower B, Jinyun Building, A43 Xizhimen Avenue North, Haidian District, Beijing |
| Accountants writing signatures | Feng Wei and Li Qiongqian |
The independent sponsor hired by the Company to exercise constant supervision over the Company in theReporting Period:
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company inthe Reporting Period:
□ Applicable √ Not applicable
VI Key Financial InformationIndicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
| 2021 | 2020 | 2021-over-2020 change (%) | 2019 | |
| Operating revenue (RMB) | 4,772,690,469.14 | 3,744,914,452.72 | 27.44% | 3,337,576,747.66 |
| Net profit attributable to the listed company’s shareholders (RMB) | 250,091,965.87 | 316,914,185.34 | -21.09% | 296,077,926.11 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 150,010,381.60 | 276,795,046.07 | -45.80% | 283,753,154.31 |
| Net cash generated from/used in operating activities (RMB) | -277,025,085.26 | 394,828,331.90 | -170.16% | 509,889,792.05 |
| Basic earnings per share (RMB/share) | 0.1854 | 0.2349 | -21.07% | 0.2195 |
| Diluted earnings per share (RMB/share) | 0.1836 | 0.2327 | -21.10% | 0.2174 |
| Weighted average return on equity (%) | 4.23% | 5.82% | -1.59% | 6.18% |
| 31 December 2021 | 31 December 2020 | Change of 31 December 2021 over 31 December 2020 (%) | 31 December 2019 | |
| Total assets (RMB) | 9,699,592,528.61 | 8,519,336,914.11 | 13.85% | 6,477,955,373.32 |
| Equity attributable to the listed company’s shareholders (RMB) | 5,800,558,588.34 | 6,263,921,304.54 | -7.40% | 4,944,201,236.25 |
Note: The Company repurchased some shares during 2021. For details, see “2. Share repurchase” under “XVI Other SignificantEvents” of Part VI of this Report. According to Preparation Rule 9 on Information Disclosure for Companies Offering TheirSecurities to the Public—Calculation and Disclosure of ROE and EPS (2010 Revision), EPS of comparative periods have beenrecalculated based on the adjusted shares.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders beforeand after exceptional gains and losses was negative for the last three accounting years, and the latest independentauditor’s report indicated that there was uncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders beforeand after exceptional gains and losses was negative.
□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for BusinessEnterprises (CAS) and International Financial Reporting Standards (IFRS) and ForeignAccounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.VIII Key Financial Information by Quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 825,678,013.99 | 1,129,664,102.21 | 1,291,797,822.97 | 1,525,550,529.97 |
| Net profit attributable to the listed company’s shareholders | 42,203,399.57 | 68,352,143.36 | 81,457,735.74 | 58,078,687.20 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 39,266,019.69 | 59,684,487.82 | 49,859,285.46 | 1,200,588.63 |
| Net cash generated from/used in operating activities | 48,558,082.07 | -2,778,441.55 | -99,365,759.87 | -223,438,965.91 |
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differsmaterially from what have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2021 | 2020 | 2019 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | 82,233,742.26 | 7,466,798.65 | -413,275.62 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies consistently given in the Company’s ordinary course of business at fixed quotas or amounts as per government policies or standards) | 15,971,903.24 | 25,372,941.13 | 6,485,365.31 | |
| Capital occupation charges on non-financial enterprises that are recognized in profit or loss | 881,704.19 | 1,337,410.12 | ||
| Current profit or loss on subsidiaries obtained in business combinations involving entities under common control from the period-beginning to combination dates, net | -5,613,743.03 | -5,104,980.13 | ||
| Gain or loss on fair-value changes on held-for-trading financial assets and liabilities & income from disposal of held-for-trading financial assets and liabilities and available-for-sale financial assets (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 10,663,119.44 | 8,463,850.00 | 15,574,400.00 | |
| Reversed portions of impairment allowances for receivables which are tested individually for impairment | 9,156,396.52 | |||
| Non-operating income and expense other than the above | 10,640,975.11 | -123,367.66 | -2,543,083.02 | |
| Less: Income tax effects | 17,224,178.81 | 5,643,715.91 | 2,635,263.29 | |
| Non-controlling interests effects (net of tax) | 3,085,681.16 | 297,430.55 | -961,608.55 | |
| Total | 100,081,584.27 | 40,119,139.27 | 12,324,771.80 | -- |
Details of other items that meet the definition of exceptional gain/loss:
□ Applicable √ Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
No such cases for the Reporting Period.Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to thePublic—Exceptional Gain/Loss Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Part III Management Discussion and Analysis
I Industry Overview for the Reporting PeriodAt present, the lighting industry is experiencing a gradual growth slowdown and significant structuralovercapacity. With rigidly increasing operating costs, the profit margins of lighting enterprises have beensqueezed to a certain extent. From the perspective of the global market, with the fluctuations in the RMB-to-USDexchange rate and the Covid-19 pandemic not entirely under control across the world, the lighting industry isfacing many uncertainties in export, and many export-oriented enterprises are turning to the domestic market,exacerbating the competition in the domestic market. Under the dual pressures from market demand and fiercecompetition, the lighting industry, dominated by micro-, small- and medium-sized enterprises, will see deepshuffling and accelerated industrial chain integration. Enterprises with advantages in capital and manufacturingwill have the opportunity to expand their market share by integrating high-quality targets with channels,technologies and prospects, and quickly enhance their scales.Generally speaking, China’s lighting industry is insufficiently centralized with no overwhelmingly superiorenterprises despite an enlarging market share of competitive brands. Upon years of development, we have becomea leading and quite competitive lighting enterprise with strong competitiveness in brand, production scale, channel,R&D, etc.II Principal Activity of the Company in the Reporting Period
1. The Company’s Principal Activities or Products
We design, manufacture and market high-quality, green and energy-efficient lighting products, auto lamps, andelectrical products, as well as provide complete lighting, electrical, and auto lamp solutions. Our products mainlyinclude LED, traditional lighting products, auto lamps, switches and sockets. Our “FSL” and “Fenjiang” brandshave been certified as “Famous China Brands”.
2. Main business models
(1) Procurement model
We mainly procure raw materials such as LED lamp beads, electronic components, aluminum substrate, plasticparts, metal materials by way of tendering and bidding. A tendering and bidding supervisory committee consisting
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
of personnel from key departments has been put in place. For every kind of our main raw materials, we usuallyhave a few suppliers to choose from in procurement so that the procurement prices would be fair, the supply ofraw 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, predict future market demand and takeinto account the safe inventory line so as to formulate a production plan for the coming month. And ourworkshops produce according to the plan to avoid extra stock and at the same time ensure that there is enough forsale.
② Production according to orders
Different from the conventional lighting products which are of little variation in specifications, LED lightingproducts are at a fast pace of renewal and different customers often have different requirements regarding theproducts’ appearances and performance indexes. Therefore, we have to organize individualized production forsome orders for LED lighting products, export orders in particular. For this kind of orders, we formulate ourproduction plans based on them and then make procurement plans according to the production plans, which willhelp effectively control the stock and the procurement prices of raw materials, reduce capital occupation andimprove 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 ofparts and low-tech products is outsourced to sub-manufacturers, who will produce in strict accordance with ourrequirements. We will also tag along their production processes and examine carefully the quality of the productsfinished. In this way, our supply of products is guaranteed.
(3) Sales model
In terms of domestic sale, the Company adopts the sale mode of dealer distribution and direct supply forengineering projects. In terms of channels, the Company boasts hardware store, home decoration, engineering,industrial lighting, e-commerce & retail sales channels. In the factory-installed market, auto lamp products areprovided directly to automobile manufacturers; and in the aftermarket, products are mainly sold by dealers.For overseas markets, we adopt OEM and OBM models and also sell under our own brands (through agents).
3. Main driving forces for growth
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
During the Reporting Period, the Covid-19 pandemic was not entirely under control across the world, and thedownward pressure on the economy kept mounting. However, China’s policies of “Carbon Emission Peak andCarbon Neutrality”, new infrastructure, new urbanization, major construction projects, new energy vehicles, etc.have brought new development opportunities for the country’s lighting industry and auto lamp segment.Upholding the overall idea of "stabilizing the fundamentals and expanding new businesses", the Companycontinuously strengthened the innovation driver and promoted the change of the marketing model. It tackledproblems of capital operation, optimized the industrial layout, intensified management and improvement, andvigorously explored the segmented market. In 2021, the Company acquired Nanning Liaowang, which providedstrong support for the Company to rapidly enter the OEM market and make the automobile vehicle lamp businessof the Company stronger and bigger. Meanwhile, with the evolution of the industrial competition model,consumers are getting increasingly concerned with product quality and brand. As a result, companies with weakcompetitiveness will be gradually elbowed out of the market while large enterprises or enterprises with corecompetitiveness will have more market opportunities. By virtue of its advantages in technology, brand, channeland scale, the Company has continued to promote the technical upgrading of main products, improve productquality, beef up market expansion and optimize the business portfolio through sustained spending on R&D andtechnical innovation. Meanwhile, it has gained an advantageous position in the process of enhancing marketconcentration by increasing the level of production automation, effectively controlling purchase costs and rampingup production efficiency.III Core Competitiveness AnalysisThe Company's core competitiveness is mainly reflected in the following four aspects:
Channel advantageThe Company has been sticking to the market strategy of deeply cultivating and refining channels. Over years ofdevelopment and experience, the Company has been equipped with five major sales channels in domestic market(hardware distribution, home, e-commerce & retail sales, engineering, and industrial lighting channels), forming amarketing network covering the whole country; in foreign market, the Company has made active steps to developinternational market business, sold products to more than 120 countries and regions in North America, Europe,Southeast Asia, Africa and Oceania, and kept improving overseas sales channel. By virtue of its powerful and
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
comprehensive sales channels, the Company has enabled its products to enter market rapidly, substantiallyenhancing its market development abilities and competitiveness.Brand advantageThe Company has accumulated more than 60 years' experience in the lighting industry and enjoyed continuouslyincreasing influence and brand value for its "FSL". For 16 consecutive years, the Company has been included inthe list of "China's 500 Most Valuable Brands". In 2021, the value of FSL brand reached RMB22,865 million. Inrecent years, with the enhancement of its development positioning, product design and user experience, theCompany has initiated the strategy of brand upgrading and carried out promotion by centering around the new"Professional, Healthy, Fashionable and Intelligent". In addition, it has accelerated brand building throughhigh-end mainstream media platform, Internet emerging media and offline terminal advertising respectively,maximized the brand and product communication effect, formed a comprehensive and diversified publicityposition, and driven the transition of “FSL” from an industrial brand to a popular brand to maintain the brandvitality and competitiveness. The brand "FSL" has become one of the most influential and popular industrialbrands in China, and the powerful brand influence has played a key role in driving the sustained growth of theCompany’s sales.R&D technical advantageThe Company values the R&D of new products and the development of innovation and R&D teams, and hasestablished a systematic and scientifically independent science and technology innovation system, and a team ofwell-structured, collaborative and efficient talents. It has further increased spending on technology andindependent product innovation and introduced first-class R&D equipment and facilities from home and abroad toprovide high-quality conditions for scientific and technological innovation. The Company is a national high-techcompany, and its testing center has the CNAS-approved qualification. In addition, the Company has builtinnovative platforms such as "Guangdong Engineering Technology Development Center", "Guangdong IndustrialDesign Center", "Guangdong Enterprise Technology Center", and "Lighting Research Institute". Besides, theCompany has won the titles of "National IP Advantaged Enterprise" and "Guangdong IP DemonstrationEnterprise". The Company has built a "Guangdong Province Doctor Workstation" to explore and intensify effortsin the cutting-edge technology of LEDs, strengthen key technology research and basic research, and formtechnical barriers with proprietary intellectual property rights in lighting, spectroscopic, electrical, IoT, AI andmany other fields. and has been cumulatively granted 922 valid patents. Also, it has led or participated in the
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
revision of 66 standards at all levels. The Company actively integrates internal and external resources andcollaborates with Tsinghua University, Fudan University, Sun Yat-sen University, South China University ofTechnology, Institute of Deep-Sea Science and Engineering, CAS and other scientific research institutes toestablish in-depth industrial and research cooperation, so as to promote key technological breakthroughs andtransformation of scientific and technological achievements. Meanwhile, the Company has formed a smooth R&Dtalent cultivation channel to provide a strong guarantee for the Company to maintain technological leadership andcontinuous product innovation.Scale advantageAs one of the enterprises to first step into the industry of producing and selling lighting products, the Companyforms a capability of mass manufacturing by years of experience accumulation. After years of continuousinvestment, the Company has greatly improved its production automation level. The large-scale and centralizedproduction brings obvious economic benefits to the Company, which not only shows in manufacture cost ofproducts, but also shows in aspects such as raw material procurement and product pricing.Advantage of a vertical and integrated LED industrial chainIn February 2022, the Company completed the acquisition of NATIONSTAR, held 21.48% shares ofNATIONSTAR, and became a shareholder of NATIONSTAR. The business of NATIONSTAR covers theupstream LED chip manufacturing and midstream LED packaging in the LED industrial chain. Through thisresource integration, the Company has a complete and refined LED industrial chain covering upstream LED chipmanufacturing, midstream LED packaging and downstream LED application products, thus strengthening thecompetitiveness and presence of the Company in the industry.
IV Core Business Analysis
1. Overview
Faced with the complicated and severe situation such as the rising prices of raw materials, the sharp rise of exportlogistics cost, the appreciation of RMB and the shortage of key supplies in 2021, the Company, upholding theoverall idea of "stabilizing the fundamentals and expanding new businesses", forged ahead and intensified efforts inproduction and operation by continuously strengthening innovation drive, promoting marketing model reform,optimizing the business portfolio, and promoting management improvement. As a result, the Company achieved a
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
record high in operating revenue. During the Reporting Period, the Company recorded operating revenue ofRMB4772.6905 million, up by 27.44 % year-on-year (YoY) and a net profit attributable to shareholders of the listedcompany of RMB250.092 million, down by 21.09% YoY.In 2021, the Company mainly focused on the following tasks:
1. Enhanced innovation of R&D technology.
The Company adhered to innovation-driven development, and vigorously enhanced R&D and innovation. Also, itcontinued to increase investment in R&D, and invested RMB233 million in R&D in the year, accounting for
4.88% of operating revenue. Throughout the year, the Company has developed a total of 425 new products,creating sales of about RMB700 million and applied for 283 patents, 207 of which were authorized. Also, fourproducts were awarded international bid acceptance certificates, and 21 international, industry and groupstandards were formulated. Meanwhile, the Company has vigorously promoted the construction of innovationplatforms, and built provincial platforms such as the "Doctor Workstation" and "Corporate Technology Center".Additionally, its Testing Center was accredited by US Energy Star, and the innovation platform has played anincreasing important supporting role. The Company also deepened industrial and university research cooperation,strengthened cooperation with universities and research institutes such as the Institute of Deep-Sea Science andEngineering of Chinese Academy of Sciences, Tsinghua University and Fudan University, and jointly carried outresearch on new materials, new technologies, intelligent control and other topics, promoted the breakthrough andreserve of key technologies, and constantly enhanced research and development and innovation capabilities. TheResearch and Development Center of the Company won the "National Worker Pioneer" in 2021, and wasshortlisted into the top 50 divisions of the Guangdong-Hong Kong-Macao Greater Bay Area High Value PatentCultivation Layout Competition.
2. Improved industrial optimization layout.
The Company focused on market demand, vigorously optimized the industrial layout, and actively explored newbusinesses. In terms of marine lighting, the Company has developed a series of products for deep-sea lighting,fish-collecting lighting and aquaculture lighting with the Institute of Deep-Sea Science and Engineering ofChinese Academy of Sciences and Dalian Ocean University. The Company established a subsidiary in Hainan, setup and deployed marine lighting and other related business teams to conduct market development and channellayout. In terms of intelligent lighting, the Company introduced smart office, smart education, smart home system,5G smart lamppost solutions in light of different application scenarios, and launched a batch of intelligent
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
products together with notable platform companies. In terms of health lighting, the Company, taking theconstruction of light health laboratory as an opportunity, focused on the fields of vision protection, rhythm health,disinfection and sterilization, and introduced a range of new health lighting products. The reading and writingdesk lamp obtained the five-star evaluation of Chinese audio-visual health products and human comfort evaluationissued by China Association for Medical Devices Industry and the clinical report issued by ZhongshanOphthalmic Center, Sun Yat-sen University. In terms of animal and plant lighting, the Company has introducedprograms for animal and plant lighting and disinfection solution in various application scenarios, developed basicproducts such as culture fill light lamp, plant growth flying saucer lamp and lamp tube, and Chinese herbalmedicine spectrum programme. In terms of lighting electronic FMCG, the Company has developed 112 productswith intelligent sensing, portable mobile and entertainment functions. In terms of airport lighting, the Companyhas continuously advanced the research and development of lighting products in the terminal area and airportground transportation area, and developed products of 37 specification under nine major categories. These sixsegments have laid a solid foundation for the sustainable development of the Company in the future.
3. Strengthened market development.
The Company adopted a target-oriented approach, made great efforts to promote the development of largecustomer projects and independent brands, and increased market volume. Also, it intensified efforts to completelarge customer projects, set up special teams to focus on large customer projects in the fields of animal and plantlighting, educational lighting, rail transit, etc., with multiple major projects being implemented one after another.The Company has enhanced cooperation with overseas major customers, exploring more business opportunities. Itvigorously explored overseas markets, opened up many influential new customers, and successfully entered anumber of mainstream supermarkets in Europe and the largest building materials supermarket chain in SouthAmerica. Also, the own-branded lighting, electrical and auto lamp products of the Company realized sales inSoutheast Asia, Middle East and Oceania respectively. The Company continued to promote the reform ofmarketing model, strictly regulated regional market price system, and solved the problems of development andbad competition in regional market. It continuously promoted the construction of provincial service centers andenhanced the market service and development capacities of service centers. Also, the Company promoted thereform of domestic provincial marketing management system.
4. Intensified operation.
First, the Company made efforts to reduce costs. It accelerated the automation of production and promoted
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
automatic production and process flow management, minor changes of process technology and other measuresthrough automated transformation of lamps, lamp tubes and other assembly lines and application of product linefor intelligent bulb manufacturing, so as to reduce personnel, cut intermediate links, and greatly improveefficiency production. The Company also reduced material cost by purchasing large quantity for lower price,bidding for lower price and new material replacement through centralized purchasing. Second, the Companysought to reduce inventory. It built an inventory management and control mechanism, clarified inventorymanagement and control tasks, followed up and supervised the inventory each month to reduce inventory. Third,the Company took measures to control risks. It strengthened contract management, conducted strict credit reviewfor each amount, and implemented customer asset pledge and established accounts receivable early warningmechanisms to enhance accounts receivable collection and prevent fund risks.
5. Fortified capital operation.
During the Reporting Period, the Company successfully completed the merger and acquisition of NanningLiaowang, which provided strong support for the Company to enter the OEM industrial chain, build upautomotive lighting sector and further expand its business overseas. With the help of the Company, NanningLiaowang actively explored new customers, successfully became a new supplier of certain major OEMs, andaccelerated the introduction of medium- and high-end R&D and sale talents. Besides, Nanning Liaowang hasmade breakthroughs in the integration of display and luminaire technology, assembly size chain CAE analysis andother technologies, and constantly strengthened its R&D strength, laying a solid foundation for itself to become asupplier of more medium- and high-end OEMs more quickly and better. During the Reporting Period, theCompany went through the decision-making process for the major asset restructuring project of acquisition ofequity of NATIONSTAR.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
| 2021 | 2020 | Change (%) | |||
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 4,772,690,469.14 | 100% | 3,744,914,452.72 | 100% | 27.44% |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| By operating division | |||||||
| Lighting products and luminaries | 4,772,690,469.14 | 100.00% | 3,744,914,452.72 | 100.00% | 27.44% | ||
| By product category | |||||||
| LED products | 2,988,460,170.89 | 62.62% | 2,826,795,772.25 | 75.48% | 5.72% | ||
| Traditional lighting products | 597,103,329.41 | 12.51% | 581,481,348.04 | 15.53% | 2.69% | ||
| Auto lamps | 899,064,914.20 | 18.84% | 185,907,625.69 | 4.96% | 383.61% | ||
| Electrical products | 122,634,832.36 | 2.57% | 105,652,219.59 | 2.82% | 16.07% | ||
| Other | 165,427,222.28 | 3.47% | 45,077,487.15 | 1.20% | 266.98% | ||
| By operating segment | |||||||
| Domestic | 3,273,811,238.64 | 68.59% | 2,264,373,046.87 | 60.47% | 44.58% | ||
| Overseas | 1,498,879,230.50 | 31.41% | 1,480,541,405.85 | 39.53% | 1.24% | ||
| By distribution model | |||||||
| Direct sales | 43,652,588.73 | 0.91% | 48,371,189.85 | 1.29% | -9.75% | ||
| Distribution | 4,563,610,658.13 | 95.62% | 3,651,465,775.72 | 97.50% | 24.98% | ||
| other | 165,427,222.28 | 3.47% | 45,077,487.15 | 1.20% | 266.98% | ||
(2) Operating Division, Product Category, Operating Segment and Distribution Model Contributing over10% of Operating Revenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Lighting products and luminaries | 4,772,690,469.14 | 3,962,183,323.47 | 16.98% | 27.44% | 32.24% | -3.01% |
| By product category | ||||||
| LED products | 2,988,460,170.89 | 2,524,850,293.04 | 15.51% | 5.72% | 9.01% | -2.55% |
| Traditional lighting products | 597,103,329.41 | 474,386,396.24 | 20.55% | 2.69% | 11.74% | -6.44% |
| Auto lamps | 899,064,914.20 | 747,331,339.98 | 16.88% | 383.61% | 404.26% | -3.40% |
| Electrical products | 122,634,832.36 | 89,772,637.68 | 26.80% | 16.07% | 30.45% | -8.07% |
| Other | 165,427,222.28 | 125,842,656.53 | 23.93% | 266.98% | 225.89% | 9.59% |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| By operating segment | ||||||
| Domestic | 3,273,811,238.64 | 2,639,556,650.24 | 19.37% | 44.58% | 51.57% | -3.72% |
| Overseas | 1,498,879,230.50 | 1,322,626,673.23 | 11.76% | 1.24% | 5.41% | -3.49% |
| By distribution model | ||||||
| Direct sales | 43,652,588.73 | 29,629,037.23 | 32.13% | -9.75% | -17.71% | 6.56% |
| Distribution | 4,563,610,658.13 | 3,806,711,629.71 | 16.59% | 24.98% | 30.29% | -3.40% |
| other | 165,427,222.28 | 125,842,656.53 | 23.93% | 266.98% | 225.89% | 9.59% |
Core 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 | 2021 | 2020 | Change (%) |
| Lighting products and luminaries | Unit sales | Piece | 673,457,301 | 716,506,189 | -6.01% |
| Output | Piece | 687,092,615 | 714,484,762 | -3.83% | |
| Inventory | Piece | 112,960,123 | 99,324,809 | 13.73% |
Any over 30% YoY movements in the data above and why:
□ Applicable √ Not applicable
(4) Execution Progress of Major Signed Sales and Purchase Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
| Operating division | Item | 2021 | 2020 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Lighting products and luminaries | 3,962,183,323.47 | 100.00% | 2,996,273,910.80 | 100.00% | 32.24% | |
| Lighting products and luminaries | Raw materials | 3,001,186,699.23 | 75.75% | 2,230,736,822.88 | 74.45% | 34.54% |
| Lighting products and luminaries | Labor cost | 476,659,230.59 | 12.03% | 447,002,407.48 | 14.92% | 6.63% |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Lighting products and luminaries | Depreciation and other | 358,494,737.12 | 9.05% | 279,919,016.68 | 9.34% | 28.07% |
| Lighting products and luminaries | Other | 125,842,656.53 | 3.18% | 38,615,663.76 | 1.29% | 225.89% |
Unit: RMB
| Product category | Item | 2021 | 2020 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| LED lighting products | Raw materials | 2,067,044,284.57 | 52.17% | 1,790,215,086.03 | 59.75% | 15.46% |
| LED lighting products | Labor cost | 278,057,829.97 | 7.02% | 326,408,017.07 | 10.89% | -14.81% |
| LED lighting products | Depreciation and other | 179,748,178.50 | 4.54% | 199,466,678.95 | 6.66% | -9.89% |
| LED lighting products | Subtotal | 2,524,850,293.04 | 63.72% | 2,316,089,782.05 | 77.30% | 9.01% |
| Traditional lighting products | Raw materials | 326,913,472.47 | 8.25% | 276,836,739.94 | 9.24% | 18.09% |
| Traditional lighting products | Labor cost | 98,778,080.95 | 2.49% | 84,211,159.40 | 2.81% | 17.30% |
| Traditional lighting products | Depreciation and other | 48,694,842.82 | 1.23% | 63,501,003.52 | 2.12% | -23.32% |
| Traditional lighting products | Subtotal | 474,386,396.24 | 11.97% | 424,548,902.86 | 14.17% | 11.74% |
| Auto lamps | Raw materials | 535,110,159.03 | 13.51% | 108,505,008.56 | 3.62% | 393.17% |
| Auto lamps | Labor cost | 89,481,090.61 | 2.26% | 28,617,438.10 | 0.96% | 212.68% |
| Auto lamps | Depreciation and other | 122,740,090.34 | 3.10% | 11,079,929.95 | 0.37% | 1,007.77% |
| Auto lamps | Subtotal | 747,331,339.98 | 18.86% | 148,202,376.61 | 4.95% | 404.26% |
| Electrical products | Raw materials | 72,118,783.16 | 1.82% | 55,179,988.35 | 1.84% | 30.70% |
| Electrical products | Labor cost | 10,342,229.06 | 0.26% | 7,765,792.91 | 0.26% | 33.18% |
| Electrical products | Depreciation and other | 7,311,625.46 | 0.18% | 5,871,404.26 | 0.20% | 24.53% |
| Electrical products | Subtotal | 89,772,637.68 | 2.27% | 68,817,185.52 | 2.30% | 30.45% |
| Other products | Other | 125,842,656.53 | 3.18% | 38,615,663.76 | 1.29% | 225.89% |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
For details, see “VII YoY Changes to the Scope of the Consolidated Financial Statements” in Part VI of thisReport.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
and servicesTotal sales to top five customers (RMB)
| Total sales to top five customers (RMB) | 1,032,503,083.81 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 21.64% |
| Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | 0.00% |
Information about top five customers:
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
| 1 | Customer A | 442,978,447.77 | 9.28% |
| 2 | Customer B | 278,031,461.29 | 5.83% |
| 3 | Customer C | 131,200,529.71 | 2.75% |
| 4 | Customer D | 96,974,946.12 | 2.03% |
| 5 | Customer E | 83,317,698.92 | 1.75% |
| Total | -- | 1,032,503,083.81 | 21.64% |
Other information about major customers:
√ Applicable □ Not applicable
None of the top five customers is a related party of the Company.Major suppliers:
| Total purchases from top five suppliers (RMB) | 220,364,648.80 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 6.67% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 1.29% |
Information about top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 49,647,217.33 | 1.50% |
| 2 | Supplier B | 45,804,291.12 | 1.39% |
| 3 | Supplier C | 42,644,701.72 | 1.29% |
| 4 | Supplier D | 42,333,486.34 | 1.28% |
| 5 | Supplier E | 39,934,952.29 | 1.21% |
| Total | -- | 220,364,648.80 | 6.67% |
Other information about major suppliers:
√ Applicable □ Not applicable
Except for supplier B, none of the other suppliers is a related party of the Company.
3. Expense
Unit: RMB
| 2021 | 2020 | Change (%) | Reason for any significant change | |
| Selling expense | 170,281,041.34 | 145,219,700.35 | 17.26% | |
| Administrative expense | 206,336,111.81 | 155,365,373.75 | 32.81% | Acquisition in the current period of Nanning Liaowang, which was not under common control with the Company |
| Finance costs | 3,120,029.73 | -5,623,285.45 | 155.48% | Lower interest income from bank deposits in the current period |
| R&D expense | 203,681,619.16 | 108,885,296.71 | 87.06% | It is mainly due to the continuous increase in investment in research and development by the Company, the expansion of the R&D team, the increase in R&D projects compared with the previous period, and the combination of subsidiary Nanning Liaowang not under the same control in the current period. |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
4. R&D Investments
√ Applicable □ Not applicable
| Names of main R&D projects | Project objectives | Project progress | Objectives to be achieved | Expected impact on the future development of the Company |
| Research on key technologies of smart home controller and application of LED luminaries | Smart home is based on the Internet of Things system, which changes the system from the original single control to the two-way intelligent dialogue between people and things, things and things, and realizes an intelligent ecosystem. | R&D completed | It has the functions of intelligent lighting control, intelligent electrical appliance control, security monitoring system and home theater system. Improve the safety, convenience, comfort and artistry of the home, and realize an environmentally friendly and energy-saving living environment. | Accelerate the layout of smart lighting sub-sectors, make every effort to break through differentiation and functional product innovation, empower business channels such as smart home, smart FSL, smart education, smart business and smart road as a whole, and foster new business growth points. |
| Research and application of key technologies of high reliability LED luminaries for marine lighting | The lamps used for fishing boats are mainly traditional metal halide lamps, which feature high energy consumption, low light utilization rate and short service life, and are difficult to realize intelligent operation; | Ongoing | Achieve the advantages of high light efficiency, low energy consumption, high reliability, long life and easy maintenance, and lay a solid foundation for the subsequent intelligent fishing lamp and lamp system. | actively integrate into the field of health lighting, continuously speed up the rapid transformation of innovation achievements from demand to products, from theory to market, and cultivate new business growth points. |
| Research on disinfection technology of visible photocatalyst | use LED lamps as light sources to realize the functions of purification, antibacterial and antiviral in light environment space. | Ongoing | achieve safe and healthy disinfection effect. | expand the product line in the field of health disinfection lighting, and enhance the brand influence. |
| Research and development of key technologies and industrialization of intelligent LED automobile lamps | Develop intelligent, safe and reliable LED automobile lamps for the market. | To be accepted | Improve the high temperature resistance, high reliability and intelligent control technology of LED automobile headlamps, realize the integration of driving, communication and parameter acquisition technologies, and form LED automobile headlamps and their intelligent control systems to realize industrialization and successfully push to the | Establish and reform an LED automobile headlamp and its intelligent control system production line through the application of the project products, and upgrade LED headlamp modules, LED headlamp plastic parts, painting and distribution production lines to enhance the Company's market competitiveness. |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| market. | ||||
| 24-Pixel intelligent ADB high beam module | Develop an intelligent high beam module, which can effectively use the high beam mode by switching the high beam mode under different driving modes, and improve the driving safety of automobiles. Make driving more comfortable. | Ongoing | Improve the intelligent development ability of the Company through the design and development regarding electronic software, system and optics. | improve the technical ability of the Company to equip intelligent ADB high beam in the middle and high-end models, and enable the Company to better occupy the middle and high-end market. After the completion of the 24-pixel ADB functional sample, the Company has an ADB framework that can be equipped with major OEMs to develop and mass-produce ADB modules. |
Details about R&D personnel:
| 2021 | 2020 | Change (%) | |
| Number of R&D personnel | 1226 | 856 | 43.22% |
| R&D personnel as % of total employees | 13.20% | 10.81% | 2.39% |
| Educational background | —— | —— | —— |
| Bachelor | 609 | 373 | 63.27% |
| Master | 28 | 12 | 133.33% |
| Doctor | 4 | 0 | |
| Junior college and below | 589 | 471 | 25.05% |
| Age structure | —— | —— | —— |
| Below 30 | 521 | 423 | 23.17% |
| 30~40 | 447 | 266 | 68.05% |
| Over 40 | 258 | 167 | 54.49% |
Details about R&D investments:
| 2021 | 2020 | Change (%) | |
| R&D investments (RMB) | 232,707,972.02 | 161,198,331.61 | 44.36% |
| R&D investments as % of operating revenue | 4.88% | 4.30% | 0.58% |
| Capitalized R&D investments (RMB) | 0.00 | 0.00 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Capitalized R&D investments as % of total R&D investments | 0.00% | 0.00% |
R&D investment calculated in accordance with the Administrative Measures for the Determination of High andNew Tech Enterprises and other relevant provisions, including R&D investment included in cost of sales andexpensed R&D spending in accordance with accounting standards. In 2021, the Company's R&D investment wasRMB232,707,972.02, accounting for 4.88% of the operating revenue, of which the revenue formed after theexternal sales of the Company's medium- and small-scale trial production products was included in the mainbusiness revenue, the expenditure of RMB29,026,400 was included in the main cost of sales, and the expenditureof RMB203,681,600 was included in the R&D expense item.Reason for any significant change to the composition of R&D personnel and impact:
□ Applicable √ Not applicable
Reasons for any significant YoY change in the percentage of R&D investments in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D investments and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
| Item | 2021 | 2020 | Change (%) |
| Subtotal of cash generated from operating activities | 4,544,248,307.83 | 3,574,410,231.32 | 27.13% |
| Subtotal of cash used in operating activities | 4,821,273,393.09 | 3,179,581,899.42 | 51.63% |
| Net cash generated from/used in operating activities | -277,025,085.26 | 394,828,331.90 | -170.16% |
| Subtotal of cash generated from investing activities | 1,914,743,798.27 | 467,212,335.49 | 309.82% |
| Subtotal of cash used in investing activities | 941,892,466.14 | 544,306,623.11 | 73.04% |
| Net cash generated from/used in investing activities | 972,851,332.13 | -77,094,287.62 | 1,361.90% |
| Subtotal of cash generated from financing activities | 127,386,000.00 | 48,300,000.00 | 163.74% |
| Subtotal of cash used in financing activities | 554,227,366.75 | 536,686,783.37 | 3.27% |
| Net cash generated from/used in financing activities | -426,841,366.75 | -488,386,783.37 | 12.60% |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Net increase in cash and cash equivalents | 263,360,932.74 | -175,350,823.84 | 250.19% |
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
1. Net cash generated from operating activities decreased by170.16% year on year, mainly due to the increase incash payments due to the increase in raw material prices and the increase in taxes and levies paid due to the sale ofsome shareholdings in the current period.
2. Net cash generated from investing activities increased 1,361.90% year on year, primarily driven by an increasein disinvestment as a result of the sale of some shareholdings in the current period.
3. Net cash generated from financing activities increased12.60% year on year, primarily due to increasedborrowings obtained in the current period.
Explanation of why net cash generated from/used in operating activities varies significantly from net profit for theReporting Period:
√ Applicable □ Not applicable
There is a gap of RMB544,322,520.56 between net cash generated from operating activities ofRMB-277,025,085.26and net profit of RMB267,297,435.30 in the year, mainly due to the increase in cashpayments due to the increase in raw material prices and the increase in taxes and levies paid due to the sale ofsome shareholdings in the current period.V Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | As % of gross profit | Main source/Reason | Recurrent or not | |
| Return on investment | 36,121,053.68 | 12.36% | Dividend income from other equity investments held during the period, and gains on forward forex settlement contracts | Not |
| Gain/loss on changes in fair value | 4,649,669.44 | 1.59% | Gain/loss on changes in fair value of derivative financial instruments | Not |
| Asset impairments | -30,891,621.47 | -10.57% | Inventory valuation allowances | Not |
| Non-operating income | 13,186,956.38 | 4.51% | Income from counter-party default | Not |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Non-operating expense | 1,188,471.54 | 0.41% | Loss on retirement of non-current assets | Not |
| Other income | 16,311,903.24 | 5.58% | Receipt of continuing government grants | Not |
| Credit impairment loss | -4,657,215.52 | -1.59% | Allowances for doubtful accounts | Not |
| Asset disposal income | 77,713,637.77 | 26.58% | Disposal of immovable properties | Not |
VI Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 31 December 2021 | 1 January 2021 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 1,384,218,544.27 | 14.27% | 981,249,699.49 | 11.51% | 2.76% | Sale of some shareholdings in the current period |
| Accounts receivable | 1,452,728,276.48 | 14.98% | 1,134,233,235.70 | 13.31% | 1.67% | Acquisition of subsidiary Nanning Liaowang in the current period which was not under common control with the Company |
| Contract assets | 8,561,303.10 | 0.09% | 0.00% | 0.09% | ||
| Inventory | 1,063,489,341.00 | 10.96% | 735,685,116.91 | 8.63% | 2.33% | Acquisition of subsidiary Nanning Liaowang in the current period which was not under common control with the Company |
| Investment property | 43,347,824.34 | 0.45% | 0.00% | 0.45% | Change of some of the self-used properties to investment properties in the current period | |
| Long-term equity investments | 181,545,123.09 | 1.87% | 181,365,016.32 | 2.13% | -0.26% | |
| Fixed assets | 1,323,076,326.60 | 13.64% | 685,707,548.55 | 8.05% | 5.59% | Acquisition of subsidiary Nanning Liaowang in the current period which was not under common control with the Company |
| Construction in progress | 730,595,319.42 | 7.53% | 503,941,120.31 | 5.91% | 1.62% | Increase in infrastructure investment projects in the current period |
| Right-of-use assets | 13,497,139.00 | 0.14% | 3,943,088.30 | 0.05% | 0.09% | |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Short-term borrowings | 226,779,997.01 | 2.34% | 0.00% | 2.34% |
Receipt of bank loan and acquisition ofsubsidiary Nanning Liaowang in thecurrent period which was not undercommon control with the Company
| Contract liabilities | 84,818,285.22 | 0.87% | 65,777,726.45 | 0.77% | 0.10% | |
| Lease liabilities | 7,862,803.22 | 0.08% | 2,192,806.19 | 0.03% | 0.05% |
Indicate by tick mark whether overseas assets account for a high proportion of total assets.
□ Applicable √ Not applicable
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Other changes | Ending amount |
| Financial assets | ||||||||
| 2. Derivative financial assets | 6,332,900.00 | -1,683,230.56 | 1,176,008.74 | 5,825,678.18 | ||||
| 4. Investments in other equity instruments | 3,305,501,030.06 | -322,793,550.14 | 1,158,465,606.86 | 9,402,110.68 | 1,517,248,805.45 | 1,474,860,785.15 | ||
| Subtotal of financial assets | 3,311,833,930.06 | -324,476,780.70 | 1,158,465,606.86 | 9,402,110.68 | 1,517,248,805.45 | 1,176,008.74 | 1,480,686,463.33 | |
| Total of the above | 3,311,833,930.06 | -324,476,780.70 | 1,158,465,606.86 | 9,402,110.68 | 1,517,248,805.45 | 1,176,008.74 | 1,480,686,463.33 | |
| Financial liabilities | 0.00 | 0.00 | ||||||
Contents of other changes:
The increase is mainly due to the acquisition in the current period of Nanning Liaowang, which was not under common control withthe Company.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Note: Gain/loss on fair-value changes recorded in equity in the current period was inclusive of value-added taxespayable arising from the sale of shares of the stocks including Gotion High-tech, Xiamen Bank, etc.Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
Unit: RMB
| Item | Ending carrying value | Reason for restriction |
| Monetary assets | 245,575,069.72 | Security deposits for notes and performance bonds |
| Notes receivable | 275,626,604.28 | In pledge for notes pool |
| Fixed assets | 277,849,723.49 | As mortgage and guarantee for related party, see XIV (III) “Guarantees” in Part X |
| Intangible assets | 11,274,770.33 | |
| Long-term prepaid expense | 2,773,669.04 | |
| Total | 813,099,836.86 |
VII Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
| Investment amount in the Reporting Period (RMB) | Investment amount in the same period of last year (RMB) | Change (%) |
| 693,880,163.76 | 328,313,442.49 | 111.35% |
2. Major Equity Investments Made in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
| Name of investee enterprise | Main businesses | Investment methods | Invested amount | Shareholding percentage | Funding Resources | Partners | Investment Duration | Product type | Status as on the date of the balance sheet | Predicted return | Investment return in the current period | Whether involved in any legal actions | Date of disclosure (if any) | Disclosure index (if any) |
| Fozhao (Hainan) Technol | Manufacturing and marketi | Newly established | 200,000,000.00 | 100.00% | Self-funded | None | Long-term | Wholly-owned subsidiary | Incorporated | 13,141.64 | 13,141.64 | No | N/A |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| ogy Co., Ltd. | ng of luminaries, lighting devices, household electrical appliances, hardware, sanitary ware, electric wires, electric cables, and distribution switches control devices | |||||||||||||
| Nanning Liaowang Auto Lamp Co., Ltd. | Auto lamps, auto subassembly, automotive electronics products research and development design, product | Acquired | 493,880,163.76 | 53.79% | Self-funded | None | Long-term | Majority-owned subsidiary | Ownership transferred, together with related creditor’s rights and liabilities | 14,590,127.06 | 14,590,127.06 | No | 24 June 2021 | Announcement No. 2021-038 on Acquisition of Nanning Liaowang Auto Lamp Co., Ltd. disclosed on http://w |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| ion sale; mold design and manufacturing; plastic parts processing; import and export business of general business project commodity and technology under self-operation and agency modes | ww.cninfo.com.cn | |||||||||||||
| Total | -- | -- | 693,880,163.76 | -- | -- | -- | -- | -- | -- | 14,603,268.70 | 14,603,268.70 | -- | -- | -- |
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Unit: RMB
| Security type | Security code | Security name | Initial investment cost | Measurement method | Beginning carrying value | Gain/Loss on fair-value changes in Reporting Period | Accumulated fair-value changes charged to equity | Purchased in Reporting Period | Sold in Reporting Period | Gain/loss in Reporting Period | Ending carrying value | Accounting title | Funding source |
| Domestically/Overseas listed stock | 002074 | Gotion High-tech | 83,899,118.12 | Fair value method | 1,778,218,182.00 | 367,881,685.17 | 803,565,100.63 | 1,258,635,648.42 | 887,464,218.75 | Investments in other equity instruments | Self-funded | ||
| Domestically/Overseas listed stock | 601818 | China Everbright Bank | Fair value method | 74,001,548.46 | -10,221,957.98 | 63,779,590.48 | 3,894,818.34 | Investments in other equity instruments | Self-funded | ||||
| Domestically/Overseas listed stock | 601187 | Xiamen Bank | 222,593,949.49 | Fair value method | 1,448,227,123.20 | -692,398,112.25 | 353,361,994.91 | 179,873,066.55 | 19,748,551.68 | 575,955,944.40 | Investments in other equity instruments | Self-funded | |
| Domestically/Overseas listed stock | 002449 | Nationstar Optoelectronics | 9,402,110.68 | Fair value method | 0.00 | 1,538,511.32 | 1,538,511.32 | 9,402,110.68 | 10,940,622.00 | Investments in other equity instruments | Self-funded | ||
| Domestically/Overseas listed stock | N/A | Foshan branch of Guangdong Development Bank | 500,000.00 | Fair value method | 500,000.00 | 500,000.00 | Investments in other equity instruments | Self-funded |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Domestically/Overseas listed stock | 601777 | Lifan Technology | 1,176,008.74 | Fair value method | 1,176,008.74 | 382,769.44 | 1,558,778.18 | Held-for-trading financial assets | Other | ||||
| Total | 317,571,187.03 | -- | 3,302,122,862.40 | -332,817,104.30 | 1,158,465,606.86 | 9,402,110.68 | 1,502,288,305.45 | 23,643,370.02 | 1,476,419,563.33 | -- | -- | ||
| Disclosure date of announcement on Board’s consent for securities investments | |||||||||||||
| Disclosure date of announcement on general meeting’s consent for securities investments (if any) | |||||||||||||
Note: The increase is mainly due to the acquisition of subsidiary Nanning Liaowang in the current period whichwas not under common control with the Company.
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: USD’0,000
| Operating party | Relationship with the Company | Related-party transaction or not | Type of derivative | Initial investment amount | Beginning date | Ending date | Beginning investment | Purchased in Reporting Period | Sold in Reporting Period | Impairment allowance (if any) | Ending investment | Ending investment as % of the Company’s ending net assets | Actual gain/loss in Reporting Period |
| Foshan branch of the Agricultural Bank of China | Not related | Not | General forward | 600 | 25 August 2020 | 29 March 2021 | 600 | 600 | 48.59 | ||||
| Foshan branch | Not related | Not | General forward | 300 | 28 October | 29 January | 300 | 300 | 10.40 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| of the Industrial and Commercial Bank of China | 2020 | 2021 | |||||||||||
| Foshan branch of the Industrial and Commercial Bank of China | Not related | Not | General forward | 200 | 3 December 2020 | 29 January 2021 | 200 | 200 | 1.45 | ||||
| Foshan branch of the Industrial and Commercial Bank of China | Not related | Not | General forward | 300 | 30 September 2020 | 23 February 2021 | 300 | 300 | 19.61 | ||||
| Foshan branch of the Industrial and Commercial Bank of China | Not related | Not | General forward | 600 | 20 October 2020 | 23 April 2021 | 600 | 600 | 22.24 | ||||
| Foshan branch of Bank of Communications | Not related | Not | General forward | 300 | 15 January 2021 | 25 February 2021 | 300 | 300 | 1.10 | ||||
| Foshan branch | Not related | Not | General forward | 200 | 21 January | 25 Februar | 200 | 200 | 0.49 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| of the Industrial and Commercial Bank of China | 2021 | y 2021 | |||||||||||
| Foshan branch of the Agricultural Bank of China | Not related | Not | General forward | 400 | 8 March 2021 | 29 April 2021 | 400 | 400 | -1.18 | ||||
| Foshan branch of the Industrial and Commercial Bank of China | Not related | Not | General forward | 300 | 25 March 2021 | 29 April 2021 | 300 | 300 | -0.38 | ||||
| Foshan branch of Bank of China | Not related | Not | General forward | 400 | 23 April 2021 | 27 May 2021 | 400 | 400 | 1.57 | ||||
| Foshan branch of the Industrial and Commercial Bank of China | Not related | Not | General forward | 800 | 4 June 2021 | 8 December 2021 | 800 | 800 | 15.34 | ||||
| Foshan branch of the Industrial and Commercial | Not related | Not | General forward | 800 | 11 June 2021 | 16 November 2021 | 800 | 800 | 6.06 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Bank of China | |||||||||||||
| Foshan branch of Bank of China | Not related | Not | General forward | 2,000 | 30 June 2021 | 22 December 2021 | 2,000 | 2,000 | 54.07 | ||||
| Foshan branch of the Agricultural Bank of China | Not related | Not | General forward | 600 | 19 August 2021 | 23 November 2021 | 600 | 600 | 12.27 | ||||
| Foshan branch of the Agricultural Bank of China | Not related | Not | General forward | 180 | 16 September 2021 | 22 March 2022 | 180 | 180 | |||||
| Foshan branch of the Agricultural Bank of China | Not related | Not | General forward | 280 | 22 September 2021 | 24 March 2022 | 280 | 280 | |||||
| Foshan branch of the Industrial and Commercial Bank of China | Not related | Not | General forward | 350 | 28 September 2021 | 1 April 2022 | 350 | 350 | |||||
| Foshan branch of the Agricultural Bank of | Not related | Not | General forward | 360 | 12 October 2021 | 14 April 2022 | 360 | 360 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| China | |||||||||||||
| Foshan branch of the Industrial and Commercial Bank of China | Not related | Not | General forward | 700 | 20 October 2021 | 1 June 2022 | 700 | 700 | |||||
| Foshan branch of the Industrial and Commercial Bank of China | Not related | Not | General forward | 260 | 3 November 2021 | 7 June 2022 | 260 | 260 | |||||
| Foshan branch of the Industrial and Commercial Bank of China | Not related | Not | General forward | 1,000 | 29 December 2021 | 5 July 2022 | 1,000 | 1,000 | |||||
| Total | 10,930 | -- | -- | 2,000 | 8,930 | 7,800 | 0 | 3,130 | 0.00% | 191.63 | |||
| Funding source | All self-funded | ||||||||||||
| Legal matters involved (if applicable) | N/A | ||||||||||||
| Disclosure date of board announcement approving derivative investment (if any) | 28 January 2021 27 August 2021 | ||||||||||||
| Disclosure date of general meeting announcement approving derivative investment (if any) | |||||||||||||
| Analysis of risks and control measures associated with derivative investments held in Reporting Period (including but not limited to market | Risk Analysis of Forward Exchange Settlement Business: 1. Risk of exchange rate fluctuations. In the case of large fluctuations in the exchange rate, the quoted price of the bank’s forward exchange rate may be lower than the Company’s quoted exchange rate to the customer, which will make the Company unable to lock the quoted exchange rate to the | ||||||||||||
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | customer or the bank’s forward exchange rate may deviate from the exchange rate at the time of the Company’s actual receipt and payment, and causes exchange losses. 2. Risk of customer default. The customer’s accounts receivable may be overdue, and the payment for goods cannot be recovered within the predictable payback period, which will result in the loss of the Company due to the delayed forward settlement. 3. Risk of payback prediction. The marketing department shall made corresponding payback prediction based on customer orders and expected orders. However, during the actual implementation process, customers may adjust their orders and predictions, which will result in the Company’s incorrect payback prediction and cause the risk of delayed delivery of forward exchange settlement. Adopted Risk Control Measures: 1. The Company will strengthen the research and analysis of the exchange rate. When the exchange rate fluctuates greatly, it will adjust the business strategy in a timely manner to stabilize the export business and avoid exchange losses to the utmost. 2. The Management System for Forward Settlement and Sales of Foreign Exchanges approved by the Board of Directors of the Company stipulates that all forward foreign exchange settlement businesses of the Company shall be based on the normal production and operation, and relied on specific business operations to avoid and prevent various exchange rate risks. However, speculative transaction and interest arbitrage are not allowed. At the same time, the system clearly defines the operating principles, approval authority, responsible department and responsible person, internal operation procedures, information isolation measures, internal risk reporting system, risk management procedures, and information disclosure related to the forward settlement business as well. In fact, the system is conducive to strengthen the management of the Company’s forward foreign exchange settlement business and prevent investment risks. 3. In order to prevent any delay in the forward exchange settlement, the Company will strengthen the management of accounts receivable, actively collect receivables, and avoid any overdue receivables. In the meantime, the Company plans to increase the export purchases and purchase corresponding credit insurance so as to reduce the risk of default and customer default. 4. The Company’s forward foreign exchange settlement transactions must be based on the Company’s foreign exchange earnings prediction. Besides, the Company shall strictly control the scale of its forward foreign exchange settlement business, and manage all risks that the Company may face within a controllable range. 5. The internal audit department of the Company shall check the actual signing and execution situation of all trading contracts on a regular or irregular basis. |
| Changes in market prices or fair value of derivative investments in Reporting Period (fair value analysis should include measurement method and related assumptions and parameters) | The Company carries out recognition and measurement in accordance with the Accounting Standard for Business Enterprises No. 22—Recognition and Measurement of Financial Instruments, the Accounting Standard for Business Enterprises No. 24—Hedges, the Accounting Standard for Business Enterprises No. 37—Presentation of Financial Instrument and other applicable regulations. Fair value is arrived at based on the price provided by pricing service providers such as banks or the price obtained. Fair value measurement and recognition are carried out on a monthly basis. Changes in the fair value of forward exchange settlement contracts entered into by the Company are mainly attributable to difference arising from exchange rate fluctuations. |
| Major changes in accounting policies | N/A |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| and specific accounting principles adopted for derivative investments in Reporting Period compared to last reporting period | |
| Opinion of independent directors on derivative investments and risk control | Opinions of the Independent Directors: The forward foreign exchange settlement transactions conducted by the Company are based on normal production and operation, are supported by specific businesses, aim to avoid and prevent foreign exchange risks associated with export businesses, do not involve speculative operations and are consistent with the needs of the Company's operation and development. The Company has established relevant business management policies and risk control and prevention measures. The risk is controllable. The proposal was passed following a lawful, valid decision-making procedure, has no negative impact on the Company's normal operation and business development and does not undermine the interest of the Company and its shareholders. Therefore, the Company's conducting forward foreign exchange settlement transactions is approved. |
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period
VIII Sale of Major Assets and Equity Interests
1. Sale of Major Assets
√ Applicable □ Not applicable
| Transaction party | Asset sold | Date of sale | Transaction price (RMB’0,000) | Net profit contributed to the Company from the period-begin to the date of sale (RMB’0,000) | Effect on the Company (see note 3) | Ratio of the net profit contributed by the sale of the asset to the Company’s total profit (%) | Pricing principle | Related-party transaction or not | Relationship between the transaction party and the Company (applicable for related-party transactions) | Ownership of the asset involved has been all transferred or not | Creditor’s rights and liabilities involved have been all transferred or not | Executed as scheduled or not; if not, give reasons and measures taken | Disclosure date | Index to disclosed information |
| Centralized | Part of the | 2021 | 150,228.83 | 2,364.34 | The sale | 0.00% | Market prices | Not | N/A | Yes | Yes | N/A | 27 August | Announcement |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| bidding on the secondary market | Company’s shareholdings in Gotion High-tech Co., Ltd., China Everbright Bank, and Xiamen Bank | would not affect the Company’s business continuity or management stability. | of the stocks when reducing the shareholdings | 2021 | No. 2021-056 on Board Resolutions Regarding the Interim Report disclosed on http://www.cninfo.com.cn |
Note: In conformity with the new financial instrument standards effective on 1 January 2019, the Companyrecorded the investment in Gotion High-tech,Everbright Bank, and Xiamen Bank as non-trading equity instrumentinvestment at fair value through other comprehensive income. The decrease did not affect the Company's profit inthe current period. The net profit contributed by the asset to the Company from the period-begin to the date of salewas dividends received in the current period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
IX Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on theCompany’s net profit:
Unit: RMB
| Name | Relationship with the Company | Principal activity | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| FSL Chanchang Optoelectronics Co., Ltd. | Subsidiary | Manufacturing | 72,782,944.00 | 295,908,457.61 | 167,282,654.33 | 315,044,707.95 | 22,624,286.12 | 18,959,568.49 |
| Foshan Taimei Times | Subsidiary | Manufacturing | 500,000.00 | 153,402,445. | 38,168,506.6 | 147,525,074. | 3,258,273.89 | 2,474,926.17 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Lamps Co., Ltd. | 48 | 0 | 10 | |||||
| FSL (Xinxiang) Lighting Co., Ltd. | Subsidiary | Manufacturing | 35,418,439.76 | 64,956,562.49 | 54,550,766.90 | 42,482,443.88 | 1,053,970.31 | 804,842.87 |
| FSL Lighting Equipment Co., Ltd. | Subsidiary | Manufacturing | 15,000,000.00 | 20,430,403.80 | 19,425,794.38 | 20,296,271.64 | 657,076.08 | 131,862.68 |
| Nanjing Fozhao Lighting Components Manufacturing Co., Ltd. | Subsidiary | Manufacturing | 41,683,200.00 | 147,620,249.37 | 76,488,172.22 | 34,233,638.04 | 10,491,331.85 | 7,515,946.18 |
| FSL Zhida Electric Technology Co., Ltd. | Subsidiary | Manufacturing | 50,000,000.00 | 139,272,155.63 | 62,592,379.33 | 164,800,910.54 | 6,120,518.94 | 5,129,689.55 |
| FSL Lighting GmbH | Subsidiary | Manufacturing | 195,812.50 | 803,224.12 | -71,781.13 | 1,899,067.72 | -79,031.34 | -79,031.34 |
| Foshan Hortilite Optoelectronics Co.,Ltd. | Subsidiary | Manufacturing | 17,158,000.00 | 73,778,585.28 | 34,394,375.83 | 81,332,587.18 | 3,899,949.94 | 2,888,499.38 |
| Fozhao (Hainan) Technology Co., Ltd. | Subsidiary | Manufacturing | 200,000,000.00 | 153,422,521.40 | 150,013,141.60 | 3,383,898.90 | 20,401.12 | 13,141.64 |
| Foshan Kelian New Energy Technology Co., Ltd. | Subsidiary | Investment and technology development | 170,000,000.00 | 657,056,361.77 | 155,388,149.77 | 20,006,978.03 | 723,879.33 | 530,180.08 |
| Nanning Liaowang Auto Lamp Co., Ltd. | Subsidiary | Manufacturing | 35,055,700.00 | 2,164,227,577.12 | 835,748,803.15 | 707,022,757.31 | 28,145,655.61 | 28,862,888.63 |
Note: the operating income, operating profit and net profit of Nanning Liaowang lamp Co., Ltd. are the annualamount, which is the amount after it is included in the scope of consolidated financial statements
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Subsidiaries obtained or disposed in the Reporting Period:
√Applicable □ Not applicable
| Name | How the subsidiary was obtained or disposed of in the Reporting Period | Impact on overall operations and performance |
| Fozhao (Hainan) Technology Co., Ltd. | Newly established | No significant impact during the Reporting Period |
| Nanning Liaowang Auto Lamp Co., Ltd. | Acquired | Provides the Company with fast access to the industrial chains of automobile manufacturers, gives a strong boost to the Company’s auto lighting division, and contributed RMB707.0228 million and RMB14.5901 million to the Company’s operating revenue and net profit respectively during the Reporting Period |
| FSL New Light Source Technology Co., Ltd. | De-registered | No significant impact |
| Hunan Keda New Energy Investment and Development Co., Ltd. | Consolidated | No significant impact |
Information about major majority- and minority-owned subsidiaries:
—FSL Chanchang Optoelectronics Co., Ltd. (renamed on 19 June 2018 from “Foshan Chanchang ElectricAppliances (Gaoming) Co., Ltd.”), which is a Sino-foreign joint venture invested and established by the Companyand Prosperity Lamps and Components Ltd, had obtained license for business corporation on 23 August 2005through approval by Foreign Trade and Economic Cooperation Bureau of Gaoming District, Foshan withdocument “MWJMY Zi [2005] No. 79”. The Company holds 70% equities of the said company; therefore the saidsubsidiary was included into the scope of the consolidated financial statements since the date of foundation.On 23 August 2016, the Company and Prosperity Lamps and Components Ltd signed the equity transferagreement. 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 FoshanChanchang Electric Appliances (Gaoming) Co., Ltd.—Foshan Taimei Times Lamps Co., Ltd., which is a Sino-foreign joint venture invested and established by theCompany and Reback North America Investment Limited, had obtained license for Business Corporation on 5December 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;
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
therefore the said subsidiary was included into the scope of the consolidated financial statements since the date offoundation.—FSL (Xinxiang) Lighting Co., Ltd. is a limited liability company which is invested and established by theCompany, obtaining its license for Business Corporation on 17 April 2009. The Company holds 100% equities ofthe said company, therefore the said subsidiary was included into the scope of the consolidated financialstatements since date of foundation.On 27 August 2013, the 3rd Meeting of the 7th Board of Directors reviewed and approved to invest anotherRMB2 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 RMB35,418,439.76.—Foshan Lighting Lamps and Lanterns Co., Ltd. is a limited liability company invested and established by theCompany with the registered capital of RMB15 million, which had obtained its license for Business Corporationon 8 May 2013. And the Company holds 100% equities of this company. Therefore the said subsidiary wasincluded 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 andComponents Ltd. on 27 August 2008, Prosperity Lamps and Components Ltd. transferred 100% equities ofNanjing Fozhao Lighting Components Manufacturing Co., Ltd. (formerly known as “Prosperity (Nanjing)Lighting Components Co., Ltd.”, and changed name to “Nanjing Fozhao Lighting Components ManufacturingCo., Ltd.” on 15 November 2010.) to the Company. Therefore, Nanjing Fozhao Lighting ComponentsManufacturing Co., Ltd. became a wholly-owned subsidiary of the Company. The said subsidiary was includedinto the scope of the consolidated financial statements since the merger date.—FSL Zhida Electric Technology Co., Ltd. (FSL Zhida) was incorporated by the Company, Foshan ZhibidaEnterprise Management Co., Ltd. and Dongguan Baida Semiconductor Material Co., Ltd. on a joint investmentbasis. FSL Zhida obtained its business license on 21 October 2016. Holding a stake of 51% in it, the Company hasincluded FSL Zhida in its consolidated financial statements since the date of FSL Zhida’s incorporation.—FSL Lighting GmbH is a Limited Liability company invested and set up in German with registered capitalEuro25,000. It got the business license on 30 November 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. As of the endof the Reporting Period, the company is handling the relevant procedures for liquidation and cancellation.—Foshan Haolaite was incorporated by the Company and Foshan NationStar, with a registered capital ofRMB17,158,000 contributed by the Company and Foshan NationStar and the corporate business license granted
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
on 30 July 2020. The Company owns 51 percent of the equity of Foshan Haolaite, which has been included in thescope of the consolidated financial statements of the Company since its day of incorporation.—The 100 percent of the equity of Hunan Keda was transferred from Guangdong Huajian to the Company underan equity transfer agreement between the Company and Guangdong Huajian signed on 21 December 2020,whereby Hunan Keda has become a wholly owned subsidiary of the Company. Hunan Keda has been included inthe scope of the consolidated financial statements of the Company since the day the Company assumed actualcontrol over Hunan Keda. The Company held the 15th meeting of the 9th Board of Directors on 16 August 2021,where the proposal for Merger of Hunan Keda New Energy Investment and Development Co., Ltd., aWholly-owned Subsidiary, by Absorption, was deliberated and adopted. In November 2021, the industrial andcommercial cancellation of Hunan Keda involved in the merger by absorption has been completed. After themerger by absorption, Foshan Kelian New Energy Technology Co., Ltd. was changed from sub-subsidiary to awholly-owned subsidiary of the Company.—Nanning Liaowang Auto Lamp Co., Ltd. signed an equity agreement with its existing shareholders in July 2021,and acquired Nanning Liaowang through equity acquisition and capital increase and share expansion. After thetransaction is completed, the Company eventually held 53.79% of the shares of Nanning Liaowang, and NanningLiaowang became the controlling subsidiary of the Company. The Company shall include Nanning Liaowang inthe scope of consolidated financial statements from the date when the Company obtains its actual control right.X Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
XI Prospects(I) Development trend of the Industry
1. Competitive landscape in the industry
The lighting industry saw a slowdown in growth and increasingly fierce market competition in recent yearsfollowing the fast development of the previous years. In addition, the increasing raw material and labor costs havebrought a big pressure on the rapid development and profitability of enterprises. However, as lighting products aredeveloping in the direction of being more smart, individualized and customized, enterprises with competitivetechnology, brand, financial resources and capabilities will survive and prevail through the survival-of-the-fittestmechanism of market competition, and the industry is expected to experience accelerated mergers, acquisitions
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
and restructuring. Mergers and acquisitions enable enterprises to expand their business space, increase theirexisting market share or create a larger market space in specific market segments, thereby increasing the degree ofconcentration of the industry. The lighting industry will have a competitive landscape in which "the big becomesbigger, the strong becomes stronger."
2. Development trend of the industry
(1) Intelligent lighting market embraces faster development
With the development of communication, control and sensor technologies, the popularization of intelligentlighting related concepts, and the improvement of consumers' pursuit of quality of life, intelligent lighting willusher in a period of rapid development. According to the forecast of Qianzhan Industry Research Institute, themarket size of China's intelligent lighting industry will reach RMB43.1 billion in 2022, with an annual growth rateof about 23%. Intelligent lighting has brought a new experience to people's life and work. Besides saving energy,it can also adjust people's mood and relieve people's mood. As household appliances enter the era ofinterconnection, intelligent lighting solutions will become a new development direction of the industry.
(2) The industry has entered the mature stage and innovation is key to development
After the decade-plus of fast development, the LED industry, under the impact of both internal and externalenvironment, is experiencing a slow growth in overall market size. The technologies for all links of the industrychain have gradually become mature. And the industry has entered the mature stage. Enterprises cannot maintaintheir competitive advantages and increase their market share simply through the means of price and economy ofscale. They must keep developing new application and new products through innovation so as to expand themarket. The scaling-up and commercialization of new technologies will drive the LED industry to a new stage ofdevelopment.
(3) Market segments boast broad development prospects
With the continuous deepening of carbon peaking and carbon neutrality in China, efforts are made to encourageinfrastructure construction and rural revitalization. Besides, the acceleration of smart cities and the maturity ofrelated technologies will facilitate the development of intelligent lighting, health lighting, marine lighting, 5Gsmart lampposts, animal and plant lighting and other fields, and the new business segmentation will bring newgrowth opportunities to the industry.(II) The Company's strategies for future developmentThe Company will take technology and services as two top-priority fronts, focus on brand and value and center its
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
efforts on upgrading to medium- to high-end smart manufacturing, transitioning to a provider of products andintegrated solutions and transcending to "smart, healthy, green and human-oriented lighting." The Company willstep up efforts on the application end, further exploit the Internet-of-Things (IoT) ecosphere and niche markets,develop more new application scenarios and products, continuously improve our core competitiveness andaccelerate the new round of development.(III) Work Plan for 2022
1. Promote product innovation
(1) The Company will strengthen cooperation with authoritative R&D institutions, universities and leadingenterprises in sub-sectors in the industry, and unswervingly make breakthroughs in product innovation in twodirections: Differentiation and functionality.
(2) The Company will optimize the product structure, comprehensively sort out existing products, focus on theresearch and development and production of high-end intelligent products of lamps and lanterns and products inthe new business segmentation, increase the proportion of high value-added products, and accelerate thetransformation from selling products to selling overall solutions and services.
2. Carry out the marketing mode reform
(1) The Company adopts a market-oriented approach and speed up the construction of market-oriented marketingmechanism. Moreover, the Company will deepen the reform of the provincial management system, promote thepre-positioning of management, supervision and coordination functions, and strengthen channel coordination. Itwill continue to promote the service center model, pay great attention to regional control and price systemreconstruction, and realize the pre-market of service functions.
(2) The Company will tackle difficulties in winning major customers and projects and expand incrementalmarkets.
(3) The Company will strengthen the publicity and channel construction of overseas independent brands, andincrease the overseas proportion of independent brands.
3. Implement cost control
(1) Through the bidding and price comparison of Sunshine Procurement Platform, the Company conductsprocurement in an intensive, informationized and standardized fashion, improves the screening, access and exitmechanism of core suppliers, formulates differentiated supplier management strategy, implements new materialsubstitution, and take multiple measures to reduce the procurement cost.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
(2) The Company focuses on improving the intelligent rate of production equipment, labor productivity andexcellent rate of products. With intelligent manufacturing and intelligent logistics as the core, the Companyimproves the serialization, standardization and modularization of core components and materials of products,plans production lines and introduces automation equipment, so as to continuously promote the construction ofintelligent manufacturing and digital workshop in high-lighting parks and realize intensive and flexible large-scaleproduction.
(3) The Company strengthens inventory management, establishes a dynamic rolling sales forecasting mechanismaccording to market demand and actual production, reasonably formulates peak-shifting production plans, andminimizes inventory backlog.
(IV) Potential risks
1. Risks associated with the uncertainties of the macroeconomy
At present, the global Covid-19 pandemic has not been effectively controlled, global economic growth is stillunder great pressure and uncertainty, which may have an adverse impact on the development of the industry.
2. Risk of intensified market competition
The lighting industry is an industry with global competition. In particular, domestic enterprises in the downstreamlighting application sector face not only the competition from international lighting companies with well-knownbrands but also the competition from home appliances enterprises, electronics enterprises and IC enterprises in themidstream and upstream of the LED industry as these enterprises keep expanding into the lighting applicationsector. The Company will be facing a market environment with increasingly fierce competition.
3. Risk of fluctuations in raw material prices
The Company's main raw materials include LED lamp beads, electronic components, aluminum substrates, plasticparts, metal materials, etc., and the price fluctuations of main raw materials will have an impact on the Company'sproduction costs. If the price of raw materials continues to rise in the future, it may adversely affect theCompany's production and operation.
4. Risk of exchange rate fluctuation
Overseas sales account for around 30% of the Company’s total sales, which are mainly settled in USD. Exchangerate fluctuations could lead to higher exchange loss, which will have an adverse impact on the Company’s net
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
profit. A significant appreciation of the RMB will negatively impact the Company's performance.XII Communications with the Investment Community such as Researches, Inquiries andInterviews
□ Applicable √ Not applicable
No such cases for the Reporting Period.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Part IV Corporate GovernanceI General Information of Corporate GovernanceDuring 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 aswell as other relevant laws, rules and regulations, the Company continuously perfected the corporate governancestructure and set up an effective corporate governance system. At present, the Company has set up governancestructure of responsible Shareholders’ General Meeting, the Board of Directors, the Supervisory Committee andmanagers, who performed right of decision-making, execution and supervision respectively according to theirduties; besides, the Company set up special committees of the Board of Directors and system for independentdirectors. The Company strengthened information disclosure of principal shareholders and personsacting-in-concert, forbidden shareholders of the Company to misapply their rights. The Company separated fromthe principal shareholder in personnel, assets, business, financial affairs and organizational, and was absolutelyimpendent. 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 isbasically in line with the requirements of relevant laws, regulations and regulatory documents.
Indicate by tick market whether there is any material incompliance with the applicable laws, regulations, or rulesissued by the CSRC governing the governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.II The Company’s Independence from Its Controlling Shareholder and Actual Controller inAsset, Personnel, Financial Affairs, Organization and BusinessThe 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 operatingability.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
1. As for the business, the Company is independent of the controlling shareholders and the subordinate enterprisesand owns the independent business departments and management system as well as possesses of impendent andentire business and self-dependent operating ability.
2. As for the personnel, the Company formulates the independent management system such as the labor, personneland the salary, possesses the independent personnel department and the operating management team. The SeniorExecutives 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 theindependent production system, BOP system and the supporting facilities, as well as possesses the legalownership of the land, factories, equipments related to the production and operating and the assets such as thetrademark, patent and the non-patent technology, and possesses the entire control and govern power of all theassets of the Company without any behavior such as any controlling shareholder occupies the assets of theCompany.
4. As for the institutions, the Company set up the independent and entire organizations and institutions, and theconstruction as well as the operating of the corporate governance institutions is executed strictly executedaccording to the Articles of Association, and the production and operating as well as the offices are entirelyindependent from the controlling shareholders with any situation of working under one roof with the controllingshareholders.。
5. As for the finance, the Company set up the independent finance department and builds up the independent andnormative accounting and financial control system according to the requirements of the ASBE, set up theindependent bank account and pays the taxes legally and independently and the Company could make thefinancial decisions independently without any situation of the shareholding intervenes the capital usage.III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor | Convened date | Disclosure date | Resolutions of the |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| participation ratio | meeting | ||||
| The 2020 Annual General Meeting | Annual General Meeting | 44.37% | 21 May 2021 | 22 May 2021 | Resolutions of the 2020 Annual General Meeting |
| The 1st Extraordinary General Meeting of 2021 | Extraordinary General Meeting | 43.09% | 13 September 2021 | 14 September 2021 | Resolutions of the 1st Extraordinary General Meeting of 2021 |
| The 2nd Extraordinary General Meeting of 2021 | Extraordinary General Meeting | 42.72% | 24 November 2021 | 25 November 2021 | Resolutions of the 2nd Extraordinary General Meeting of 2021 |
| The 3rd Extraordinary General Meeting of 2021 | Extraordinary General Meeting | 45.40% | 31 December 2021 | 1 January 2022 | Resolutions of the 3rd Extraordinary General Meeting of 2021 |
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
V Directors, Supervisors and Senior Management
1. General Information
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Share options | Restricted shares granted (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) | Reason for share changes |
| Wu Shenghui | Board Chairman | Incumbent | Male | 51 | 24 August 2020 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Zhuang Jianyi | Vice Board Chairman | Incumbent | Male | 70 | 24 August 2020 | 23 August 2023 | 11,903,509 | 0 | 0 | 0 | 0 | 0 | 11,903,509 | |
| Lei Zihe | Director & GM | Incumbent | Male | 54 | 24 August 2020 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Zhang Xianfeng | Director | Incumbent | Male | 51 | 24 August 2020 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Cheng Ke | Director | Incumbent | Male | 47 | 24 August 2020 | 23 August 2023 | 11,550 | 0 | 0 | 0 | 0 | 0 | 11,550 | |
| Huang Zhiyong | Director | Incumbent | Male | 52 | 24 August 2020 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Dou Linping | Independent Director | Incumbent | Male | 62 | 24 August 2020 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Li Xiyuan | Independent Director | Incumbent | Male | 60 | 13 September 2021 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Zhang Renshou | Independent Director | Incumbent | Male | 56 | 13 September 2021 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Li Yizhi | Supervisor | Incumbent | Male | 34 | 24 August 2020 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Zhuang Junjie | Supervisor | Incumbent | Male | 36 | 24 August 2020 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Ye Zhenghong | Supervisor | Incumbent | Male | 48 | 24 August 2020 | 23 August 2023 | 77,561 | 0 | 0 | 0 | 0 | 0 | 77,561 | |
| Lin Qing | Supervisor | Incumbent | Male | 52 | 24 August 2020 | 23 August 2023 | 22,583 | 0 | 0 | 0 | 0 | 0 | 22,583 | |
| Zhang Xuequan | ExecutiveVice GM | Incumbent | Male | 44 | 24 August 2020 | 23 August 2023 | 73,052 | 0 | 0 | 0 | 0 | 0 | 73,052 | |
| Tang Qionglan | CFO | Incumbent | Female | 51 | 24 August 2020 | 23 August 2023 | 75,940 | 0 | 0 | 0 | 0 | 0 | 75,940 | |
| Wei | Vice | Incumb | Male | 52 | 24 August | 23 August | 105,22 | 0 | 0 | 0 | 0 | 0 | 105,22 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Bin | GM | ent | 2020 | 2023 | 6 | 6 | ||||||||
| Jiao Zhigang | Vice GM | Incumbent | Male | 49 | 24 August 2020 | 23 August 2023 | 90,399 | 0 | 0 | 0 | 0 | 0 | 90,399 | |
| Chen Yu | Vice GM | Incumbent | Male | 49 | 24 August 2020 | 23 August 2023 | 66,066 | 0 | 0 | 0 | 0 | 0 | 66,066 | |
| Zhang Yong | Vice GM | Incumbent | Male | 47 | 24 August 2020 | 23 August 2023 | 77,596 | 0 | 0 | 0 | 0 | 0 | 77,596 | |
| Xu Xiaoping | Vice GM | Incumbent | Male | 51 | 24 August 2020 | 23 August 2023 | 37,270 | 0 | 0 | 0 | 0 | 0 | 37,270 | |
| Huang Zhenhuan | Board Secretary | Incumbent | Male | 34 | 19 May 2021 | 23 August 2023 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Zhang Nan | Independent Director | Former | Female | 72 | 24 August 2020 | 13 September 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Lu Rui | Independent Director | Former | Male | 46 | 24 August 2020 | 13 September 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Li Huashan | Chairman of the Supervisory Committee | Former | Male | 58 | 24 August 2020 | 27 December 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Total | -- | -- | -- | -- | -- | -- | 12,540,752 | 0 | 0 | 0 | 0 | 0 | 12,540,752 | -- |
Indicate by tick mark whether any director, supervisor or senior management resigned during the ReportingPeriod.
√ Yes □ No
In July 2021, independent directors Ms. Zhang Nan and Mr. Lu Rui resigned for personal reasons. In December2021, Chairman of the Supervisory Committee Mr. Li Huashan resigned for reasons of job adjustment.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Change of directors, supervisors and senior management:
√Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
| Huang Zhenhuan | Board Secretary | Appointed | 19 May 2021 | Appointed by the Board of Directors |
| Li Xiyuan | Independent Director | Elected | 13 September 2021 | Elected by general meeting |
| Zhang Renshou | Independent Director | Elected | 13 September 2021 | Elected by general meeting |
| Zhang Nan | Independent Director | Resigned | 13 September 2021 | Personal reasons |
| Lu Rui | Independent Director | Resigned | 13 September 2021 | Personal reasons |
| Li Huashan | Chairman of the Supervisory Committee | Resigned | 27 December 2021 | Job adjustment |
2. Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors,supervisors and senior management:
1. Working Experience of the Directors
Mr. Wu Shenghui: Han nationality, was born in July 1970. He is a member of the CPC and has no right ofpermanent residence in a foreign country. He finished a part-time postgraduate program. Previously, he has servedas Senior Staff Member and then Principal Staff Member of Guuangdong Provincial Commission for DisciplineInspection, Assistant Manager and then Manager of the Human Resources Department and then Manager of theDepartment of Party and Mass Work and Personnel of Guangdong Rising Holdings Group Co., Ltd., and CPCCommittee Secretary, then Full-Time Deputy Secretary and then Director of Shenzhen Zhongjin LingnanNonfemet Company Limited. He became CPC Committee Member and Secretary of the Company in April 2020and became President of the Board of Directors of the Company in May 2020.Mr. Zhuang Jianyi: born in 1951, with a bachelor’s degree and MBA. He now acts as the Chairman of HongKong Youchang Lighting Equipment, and has been engaged in the electric light source equipment production aswell as the trading business for about 40 years. From 1995 to 2010, he acted as the Directors, the Vice Chairmanand the Chairman of the Company. And he serves as a vice chairman of the Company since December 2015.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Mr. Lei Zihe: Han nationality, was born in August 1967. He is a member of the CPC and has no right ofpermanent residence in a foreign country. He finished a postgraduate program and bears a professional title ofSenior Engineer. Previously, he has served as Assistant Manager of the Quality Management Department, thenManager of the Technical Department, then Director of the No. 1 Device Factory, and then Manager of the SecondMarketing Department of Foshan Optoelectronic Devices Company, Assistant to the General Manager and thenSecretary of the Board of Directors of Foshan NationStar Optoelectronic Technology Co., Ltd., CPC CommitteeMember, then Vice General Manager and General Manager of the RGB Device Division, then Director, and thenExecutive General Manager of Foshan NationStar Optoelectronics Co., Ltd., and President of the Board ofDirectors of Foshan NationStar Semiconductor Technology Co., Ltd.. He became CPC Committee Member andDeputy Secretary of the Company in April 2020 and became Director and General Manager of the Company inMay 2020.Mr. Zhang Xianfeng: Han nationality, was born in July 1970. He is a member of the CPC and has no right ofpermanent residence in a foreign country. He finished a MBA program at Renmin University of China and bearsprofessional titles of Senior Political Mentor and Economist. Previously, he has served as Assistant DepartmentalManager and then Departmental Manager of China Guangdong International Economic and TechnologicalCooperation (Group) Company, Assistant Director and then Director of the General Office of GuangdongXinguang International Group Co., Ltd., Assistant Manager of the Human Resources Department, then AssistantManager of the Department of Party and Mass Work and Personnel, then Assistant Director of the CPCCommittee's General Office, and then Manager of the Department of Party and Mass Work of Guangdong RisingHoldings Group Co., Ltd.. He became CPC Committee Member and Deputy Secretary of the Company in June2020, became Chairman of the Labor Union of the Company in July 2020, and became Director of the Companyin August 2020.Mr. Cheng Ke: Han nationality, born in February 1974, a member of the Communist Party of China and anauditor with the bachelor’s degree. He once acted as the Vice-Minister and the Minister of the Financing PlanDepartment and Vice Minister of Audit Department in Guangdong Rising Holdings Group Co., Ltd., Vice GM ofHubei Ashennan Expressway Development Co., Ltd., the Executive Deputy GM of Hubei Gdrising Han-EExpressway Co., Ltd. and Hubei Han-Cai Expressway Co., Ltd., the Director of Guangdong Rising Finance Co.,Ltd and Rising Investment Development Limited. And now acts as the Full-time Director accredited to theCompany by Capital Operation Department of Guangdong Rising Holdings Group Co., Ltd., Director of
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Guangdong Fenghua Advanced Technology Holding Co., Ltd and Foshan NationStar Optoelectronics Co., Ltd. Heserves as a Director of the Company since December 2015.Mr. Huang Zhiyong: Han nationality, born in August 1969, a member of the Communist Party of China and anengineer. He graduated from Xidian University with a bachelor’s degree of Electronic Devices Structures. Heonce acted as the Vice GM of Shenzhen Primatronix (Nanho) Electronics Ltd., the Minister of EnterpriseDevelopment Department, the GM Assistant and Vice GM in Guangdong Electronics Information Industry GroupLtd. He now acts as a member of CPC, Deputy Secretary of CPC and Chairman of Labor Union in GuangdongElectronics Information Industry Group Ltd. And he serves as a Director of the Company since December 2015.Li Xiyuan: Male, born in March 1961, member of the Communist Party of China, no permanent residence abroad,doctoral degree, professor-level senior engineer. He has served as deputy director of the ConstructionManagement Office of the Northern Section of Beijing-Zhuhai Expressway in Guangdong Province, DeputyDirector of Infrastructure Management Department of Guangdong Provincial Communication Group Co., Ltd.,General Manager of Guangdong Gaintop Highway Engineering Construction Group Co., Ltd., General Managerand Chairman of Guangdong Provincial Expressway Development Co., Ltd., Chairman of Guangdong Road andBridge Construction Development Co., Ltd., Director of Guangdong Construction Engineering Group Co., Ltd.,Guangdong Province Navigation Group Co., Ltd., Guangdong Namyue Group Co., Ltd. and GuangdongProvincial Railway Construction Investment Group Co., Ltd. He is currently an external director of GuangzhouPort Group Co., Ltd. and an independent director of Dongguan Development (Holdings) Co., Ltd. He has been anindependent director of the Company since September 2021.Zhang Renshou: Male, born in May 1965, Ph.D., professor, doctoral supervisor, no permanent residence abroad,doctoral degree. He has served as lecturer and associate professor of Guangzhou Foreign Language TrainingCenter of Ministry of Petroleum Industry and China University of Petroleum, Editor of Development ResearchCenter of People's Government of Guangdong Province, Professor of Accounting Department of School ofManagement of Guangzhou University and independent director of Jiangmen Rural Commercial Bank CompanyLimited. He also serves as: Member of the Expert Group of the Budget Committee of Guangzhou MunicipalPeople's Congress, Member of the Expert Group of the Economic Committee of Guangzhou Municipal People'sCongress, Member of the 8th Committee of Guangdong Social Sciences Association, Member of the AcademicCommittee of Research Center for Guangdong Local Public Finance, Professional Advisory Committee Memberof Guangdong Statistics Bureau, Member of the Academic Committee of Guangdong Coastal Economic Belt
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Development Research Center, President of Guangdong South China Economic Development ResearchAssociation, Major Administrative Decision Demonstration Expert and Innovation and EntrepreneurshipDevelopment Expert of Shaoguan Municipal People's Government of Guangdong Province, and SpecialResearcher of Guangzhou Taxation Bureau of State Taxation Administration of the People's Republic of China.He has been an independent director of the Company since September 2021.Mr. Dou Linping: Han nationality, was born in August 1959. He is of Chinese nationality and has no right ofpermanent residence in a foreign country. He received a bachelor's degree and bears a professional title of SeniorEngineer. Previously, he has served as Director of the Office of Design Standards and then Vice Director ofBeijing Luminaries Research Institution, Deputy Secretary-General and Managing Director of China Associationof Lighting Industry, and Managing Director and Secretary-General of China Illuminating Engineering Society. Atpresent, he serves as Vice Director-General of China Solid State Lighting Alliance and Independent Director ofHengdian Group TOSPO Lighting Co., Ltd. and Beijing New Space Technology Co., Ltd.. He serves as anindependent director of the Company since August 2020.
2. Working Experience of the Supervisors
Mr. Li Yizhi: Han nationality, was born in March 1987. He is a member of the CPC. He received a bachelor'sdegree ，intermediate accountant and is an Association of Chartered Certified Accountants (ACCA) certifiedaccountant. Previously, he has worked at the Guangzhou Office of WUYIGE Certified Public Accountants LLP(special general partnership) as an Audit Assistant, at the Guandong Office of Pan-China Certified PublicAccountants LLP (special general partnership) as a Project Manager, at the Shenzhen Office ofPricewaterhouseCoopers Zhong Tian LLP (special general partnership) as an auditor, and at the GuangdongOffice of China Central Public Accounting Firm (special general partnership) as a Project Manager. At present, heserves as Supervisor of the Finance Department (Settlement Center) of Guangdong Rising Holdings Group Co.,Ltd.. He serves as a supervisor of the Company since August 2020.Mr. Zhuang Junjie: Born in September 1985, a Hong Kong permanent resident. He graduated with a bachelor’sdegree and once acted as the Consultant Manager of Accenture Software and now acts as the Director of HongKong Prosperity Lighting Equipment Co., Ltd. And he serves as a supervisor of the Company since December2015.Mr. Ye Zhenghong: Born in June 1973, a member of the Communist Party of China with a college degree. He
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
joined the Company from July 1995; worked in the Machine Repair Shop from July 1995 to June 1997; worked inthe Mechanical Power Department from July 1997 to January 2001; acted as Equipment Management Director inT8 Fluorescent Lamp Factory from February 2001 to January 2005; acted as Director of Machine Repair Workshopfrom May 2005 to January 2007; acted as Chief Officer of Machinery Dynamic Department from May 2006 toDecember 2007; and acted as factory director of T8 Fluorescent Lamp Factory from January 2008 to February 2016;and acted as Chief Officer of Production Department from March 2016 to March 2019; and acted as the director ofE-Commerce Business Department from April 2019 to June 2020; and acted as the vice GM of FSL Zhida ElectricTechnology Co., Ltd. from November 2016 to February 2020, and acted as the GM of FSL Zhida ElectricTechnology Co., Ltd. from March 2020 to March 2021; and has acted as the Chairman of the Board of FSL ZhidaElectric Technology Co., Ltd. since April 2021; the Chairman of the 5
thSupervisory Committee and the EmployeeSupervisor of the 6
th, 7th, 8th and 9thSupervisory Committee.Mr. Lin Qing: born in September 1969, member of the Communist Party of China, undergraduate degree, electriclight source engineer; has been working in the company since August 1991; worked as mercury lamp workshoptechnician and workshop director from June 1996 to February 2002; as the workshop director and factory director ofthe fluorescent lamp factory from March 2002 to September 2009; as the director of Technology Department fromOctober 2009 to September 2020 ; as the Technical Director of the R&D and Technology Department since October2020; in July 2015, elected as a discipline committee member of the company’s CPC committee. And he serves asan Employee Supervisor of the Company since September 2016.
3. Working experience of the Senior Management Staff
Mr. Lei Zihe: Han nationality, was born in August 1967. He is a member of the CPC and has no right ofpermanent residence in a foreign country. He finished a postgraduate program and bears a professional title ofSenior Engineer. Previously, he has served as Assistant Manager of the Quality Management Department, thenManager of the Technical Department, then Director of the No. 1 Device Factory, and then Manager of theSecond Marketing Department of Foshan Optoelectronic Devices Company, Assistant to the General Managerand then Secretary of the Board of Directors of Foshan NationStar Optoelectronic Technology Co., Ltd., CPCCommittee Member, then Vice General Manager and General Manager of the RGB Device Division, thenDirector, and then Executive General Manager of Foshan NationStar Optoelectronics Co., Ltd., and President ofthe Board of Directors of Foshan NationStar Semiconductor Technology Co., Ltd.. He became CPC Committee
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Member and Deputy Secretary of the Company in April 2020 and became Director and General Manager of theCompany in May 2020.Mr. Zhang Xuequan: Born in December 1977, a member of the Communist Party of China, MBA of LingnanCollege of Sun Yat-Sen University. He joined the Company in 1996. He worked in the former Iodine-tungstenLamp Workshop from October to December 1996; worked in the Technology Department and then the QualityControl Department from January 1997 to August 2002; acted as the Workshop Manager of Lamp Workshop fromSeptember 2002 to May 2008; acted as the Department Director of the Business Management Department of theCompany from June 2008 to August 2016. He has concurrently acted as the Office Director from February 2016to December 2018. He has been the Party Branch Secretary for the Administrative Office of the Company fromJuly 2010 to June 2017, and a member of the party committee of the Company since July 2015. He was asupervisor of the Company from May 2013 to August 2016 and has been a vice GM of the Company since August2016; Act as the Deputy General Manager of the Company since March 2020.Mr. Zhang Yong: Born in June 1974, a member of the Communist Party of China and a senior engineer with abachelor degree. He joined in the Company in July 1997. and successively acted as Deputy Director and Director ofLamp Filament Appliance Workshop from October 1999 to June 2008; acted as Factory Director of GaomingFluorescent 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 DynamicsDepartment and Infrastructure Department from January 2009 to December 2012; acted as General ManagerAssistant from March 2013 to August 2016. He was a supervisor and the Chairman of the Board of Supervisors ofthe Company from September 2013 to August 2016; served as the chairman of the Labor Union of the Companyfrom September 2013 to May 2019; acted as the Deputy Party Secretary from July 2015 to 27 December 2021; andhas been a vice GM of the Company since August 2016.Mr. Wei Bin: Born in May 1969, a member of the Communist Party of China and a Senior engineer of electronicengineering technology with a Master’s degree. He joined in the Company in 1991, and responsible for the productdevelopment of the graduate school of the Company from March 1992 to December 1996, acted as WorkshopManager of Energy Saving Lamp Workshop from January 1997 to December 2004, acted as Workshop Manager ofHID Workshop from January to December 2005, acted as Workshop Manager of T5 Workshop from January 2006to November 2008, acted as the Department Director of the Technology Department from November 2008 toAugust 2009 and acted as Vice GM of the Company from September 2009.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Mr. Chen Yu: Born in December 1972, a member of the Communist Party of China and an engineer with abachelor’s degree. He entered the Company in 1994. And acted as workshop manager of parabolic reflector, coatingfilm, energy saving lamp, factory director of the branch factory of Gaoming and workshop manager of general bulbsfrom January 1997 to December 2012, acted as Director of Production Department, OEM Department andMechanical Dynamics Department from January to August 2013, acted as Director of Production Department andOEM Department from September 2013 to May 2014 as well as acted as Vice GM of the Company from May 2014.Ms. Tang Qionglan: born in March 1970, member of the Communist Party of China, bachelor degree, ChinaCertified Public Accountant, served as audit manager of BDO China Shu Lun Pan Certified Public AccountantsLLP Foshan Branch; as Deputy Manager of the Finance Department, Manager, Chief Financial Officer, DeputyGeneral Manager and Chief Financial Officer of Foshan NationStar Optoelectronics Co., Ltd.. and serves as theChief Financial Officer of the Company since January 2016.Mr. Jiao Zhigang: Born in May 1972, a member of the Communist Party of China with a bachelor’s degree. Heentered the Company in 1994. He acted as Warehouse Director of the Company from August 1995 to September2013, acted as Department Director of Human Resources Department from May 2010 to September 2013; acted asSupervisor from March 2007 to September 2013, and as Chairman of the Supervisory of the Company from May2010 to September 2013. He acted as Vice GM of the Company in September 2013.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 HoldingCo., Ltd. Xin’gu Branch, also as the General Manager of Guangdong Fenghua Semiconductor Technology Co., Ltd.,and Deputy Director of Headquarters Operations Center; as the General Manager of Guangdong Fenghua AdvancedTechnology Holding Co., Ltd. Lihua Branch from March 2015 to January 2016; won the first prize of scientific andtechnological 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 since January 2016.Huang Zhenhuan: Born in December 1987, he holds a master's degree in finance, is a financial economist, andhas obtained the qualification certificate of Secretary of the Board of Directors issued by Shenzhen StockExchange. He used to be the sponsor of Assets Department, Assistant General Manager of Investment Departmentand General Manager of Finance Department of Guangzhou Guangyong State-owned Asset Sales Co., Ltd.,General Manager of Guangzhou Guangyong Equity Investment Fund Management Co., Ltd., General Manager ofCorporate Finance Department III (Industry Center) of Minsheng Bank Guangzhou Branch, Investment Director
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
of Guangdong Rising Financial Holding Co., Ltd., and Senior Director of Capital Operation Department ofGuangdong Rising Holdings Group Co., Ltd. He has served as Board Secretary of the Company since May 2021.
Offices held concurrently in shareholding entities:
√Applicable □Not applicable
| Name | Shareholding entity | Office held in the shareholding entity | Start of tenure | End of tenure | Remuneration or allowance from the shareholding entity |
| Cheng Ke | Guangdong Rising Holdings Group Co., Ltd. | Full-time director accredited to the listed company by capital operation department | Yes | ||
| Huang Zhiyong | Guangdong Electronics Information Industry Group Ltd. | Deputy Secretary of CPC, Chairman of the Labor Union | Yes | ||
| Li Yizhi | Guangdong Rising Holdings Group Co., Ltd. | Head of the Financial Department (Settlement Center) | Yes | ||
| Zhuang Jianyi | Prosperity Lamps & Components Limited | Chairman of the Board | Yes | ||
| Zhuang Junjie | Prosperity Lamps & Components Limited | Director | Yes |
Offices held concurrently in other entities:
√Applicable □Not applicable
| Name | Other entity | Office held in the entity | Start of tenure | End of tenure | Remuneration or allowance from the entity |
| Zhang Renshou | Guangzhou University | Professor at the Accounting Department | Yes | ||
| Dou Linping | CHINA SOLED STATE LIGHTING ALLIANCE | Vice Chairman | Yes |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisorsand senior management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
3. Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisorsand senior management:
The Remuneration & Appraisal Committee under the Board of Directors decided the 2020 remunerations for theleadership team members in accordance with the Measures for Managing the Remuneration of the LeadershipTeam Members, the particulars on completing current main financial indexes & operating goals, as well as thefulfillment of job responsibilities by them, before submitting the remuneration plan to the Board of Directors forapproval.The total remuneration (before tax) actually paid to the directors, supervisors and senior management staff for2021 were RMB16.6599 million.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
| Wu Shenghui | Board Chairman | Male | 51 | Incumbent | 150.35 | No |
| Zhuang Jianyi | Vice Board Chairman | Male | 70 | Incumbent | Yes | |
| Lei Zihe | Director & GM | Male | 54 | Incumbent | 142.51 | No |
| Zhang Xianfeng | Director | Male | 51 | Incumbent | 111.85 | No |
| Cheng Ke | Director | Male | 47 | Incumbent | Yes | |
| Huang Zhiyong | Director | Male | 52 | Incumbent | Yes | |
| Li Xiyuan | Independent Director | Male | 60 | Incumbent | No | |
| Zhang Renshou | Independent Director | Male | 56 | Incumbent | 4.2 | No |
| Dou Linping | Independent | Male | 62 | Incumbent | 14.4 | No |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Director | ||||||
| Li Yizhi | Supervisor | Male | 34 | Incumbent | Yes | |
| Zhuang Junjie | Supervisor | Male | 36 | Incumbent | Yes | |
| Ye Zhenghong | Supervisor | Male | 48 | Incumbent | 47.7 | No |
| Lin Qing | Supervisor | Male | 52 | Incumbent | 41.92 | No |
| Zhang Xuequan | ExecutiveVice GM | Male | 44 | Incumbent | 141.3 | No |
| Zhang Yong | Vice GM | Male | 47 | Incumbent | 139.69 | No |
| Wei Bin | Vice GM | Male | 52 | Incumbent | 133.53 | No |
| Chen Yu | Vice GM | Male | 49 | Incumbent | 140.99 | No |
| Tang Qionglan | CFO | Female | 51 | Incumbent | 130.27 | No |
| Jiao Zhigang | Vice GM | Male | 49 | Incumbent | 131.97 | No |
| Xu Xiaoping | Vice GM | Male | 51 | Incumbent | 151.36 | No |
| Huang Zhenhuan | Board Secretary | Male | 34 | Incumbent | 30.67 | No |
| Zhang Nan | Independent Director | Female | 72 | Former | 10.2 | No |
| Lu Rui | Independent Director | Male | 46 | Former | 10.2 | No |
| Li Huashan | Chairman of the Supervisory Committee | Male | 58 | Former | 132.88 | No |
| Total | -- | -- | -- | -- | 1,665.99 | -- |
VI Performance of Duty by Directors in the Reporting Period
1. Board Meetings Convened during the Reporting Period
| Meeting | Convened date | Disclosure date | Resolution |
| The 8th Meeting of the 9th Board of Directors | 27 January 2021 | 28 January 2021 | Announcement on Resolutions of the 8th Meeting of the 9th Board of Directors |
| The 9th Meeting of the 9th Board of Directors | 7 April 2021 | 9 April 2021 | Announcement on Resolutions of the 9th Meeting of the 9th Board of Directors |
| The 10th Meeting of the 9th Board of Directors | 14 April 2021 | 15 April 2021 | Announcement on Resolutions of the 10th Meeting of the 9th Board of Directors |
| The 11th Meeting of the 9th | 23 April 2021 | 26 April 2021 | Announcement on Resolutions |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Board of Directors | of the 11th Meeting of the 9th Board of Directors | ||
| The 12th Meeting of the 9th Board of Directors | 19 May 2021 | 20 May 2021 | Announcement on Resolutions of the 12th Meeting of the 9th Board of Directors |
| The 13th Meeting of the 9th Board of Directors | 21 May 2021 | 22 May 2021 | Announcement on Resolutions of the 13th Meeting of the 9th Board of Directors |
| The 14th Meeting of the 9th Board of Directors | 23 June 2021 | 24 June 2021 | Announcement on Resolutions of the 14th Meeting of the 9th Board of Directors |
| The 15th Meeting of the 9th Board of Directors | 16 August 2021 | 17 August 2021 | Announcement on Resolutions of the 15th Meeting of the 9th Board of Directors |
| The 16th Meeting of the 9th Board of Directors | 25 August 2021 | 27 August 2021 | Announcement on Resolutions of the 16th Meeting of the 9th Board of Directors |
| The 17th Meeting of the 9th Board of Directors | 28 September 2021 | 30 September 2021 | Announcement on Resolutions of the 17th Meeting of the 9th Board of Directors |
| The 18th Meeting of the 9th Board of Directors | 13 October 2021 | 14 October 2021 | Announcement on Resolutions of the 18th Meeting of the 9th Board of Directors |
| The 19th Meeting of the 9th Board of Directors | 27 October 2021 | 28 October 2021 | Announcement on Resolutions of the 19th Meeting of the 9th Board of Directors |
| The 20th Meeting of the 9th Board of Directors | 29 October 2021 | 30 October 2021 | Announcement on Resolutions of the 20th Meeting of the 9th Board of Directors |
| The 21st Meeting of the 9th Board of Directors | 8 November 2021 | 9 November 2021 | Announcement on Resolutions of the 21st Meeting of the 9th Board of Directors |
| The 22nd Meeting of the 9th Board of Directors | 16 November 2021 | 17 November 2021 | Announcement on Resolutions of the 22nd Meeting of the 9th Board of Directors |
| The 23rd Meeting of the 9th Board of Directors | 23 November 2021 | 24 November 2021 | Announcement on Resolutions of the 23rd Meeting of the 9th Board of Directors |
| The 24th Meeting of the 9th Board of Directors | 15 December 2021 | 16 December 2021 | Announcement on Resolutions of the 24th Meeting of the 9th |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Board of Directors | |||
| The 25th Meeting of the 9th Board of Directors | 29 December 2021 | 30 December 2021 | Announcement on Resolutions of the 25th Meeting of the 9th Board of Directors |
2. Attendance of Directors at Board Meetings and General Meetings
| Attendance of directors at board meetings and general meetings | |||||||
| Director | Total number of board meetings the director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the director failed to attend | The director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Wu Shenghui | 18 | 3 | 15 | 0 | 0 | No | 4 |
| Zhuang Jianyi | 18 | 0 | 18 | 0 | 0 | No | 4 |
| Lei Zihe | 18 | 3 | 15 | 0 | 0 | No | 4 |
| Zhang Xianfeng | 18 | 3 | 15 | 0 | 0 | No | 4 |
| Cheng Ke | 18 | 3 | 15 | 0 | 0 | No | 4 |
| Huang Zhiyong | 18 | 3 | 15 | 0 | 0 | No | 1 |
| Dou Linping | 18 | 2 | 16 | 0 | 0 | No | 4 |
| Li Xiyuan | 9 | 1 | 8 | 0 | 0 | No | 2 |
| Zhang Renshou | 9 | 1 | 8 | 0 | 0 | No | 1 |
3. Objections Raised by Directors on Matters of the Company
Indicate by tick mark whether any directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
4. Other Information about the Performance of Duty by Directors
Indicate by tick mark whether any suggestions from directors were adopted by the Company.
√ Yes □ No
Suggestions from directors adopted or not adopted by the Company:
During the Reporting Period, the directors of the Company worked to fulfill their functions and duties, actively
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
attended Board of Directors meetings and Shareholders’ General Meetings, offered advices and suggestions andperformed their rights, functions, duties, and obligations as defined in the Company Law, the Securities Law andthe Articles of Association. They fulfilled their role as a director, upheld the legitimate rights and interests of theCompany and its shareholders, promoted further improvement in corporate governance and effectively facilitatedregulatory compliance of the Company's operation. During the Reporting Period, the directors of the Companyactively performed their functions and duties, made full use of their professional knowledge, worked diligently tofulfill their duties and offered many invaluable advices and suggestions on the Company's managementdecision-making and major matters based on their in-depth understanding of the Company's operations. Theymade resolutions on the Company's significant matters such as profit distribution, capital operation, asset disposal,and related-party transactions. They played their due role in improving the Company's supervision mechanism,promoting improvement in the Company's risk control capacity and upholding the legitimate rights and interestsof the Company and its shareholders.VII Performance of Duty by Specialized Committees under the Board in the Reporting Period
| Committee | Members | Meetings convened | Convened date | Contents reviewed | Opinion and advice | Other activities | Objection (if any) |
| The Audit Committee | Zhang Renshou, Li Xiyuan, Dou Linping, Cheng Ke, and Huang Zhiyong | 3 | 23 March 2021 | 2020 Financial Audit and Internal Control Audit Report; 2021 Financial Budget Report; and 2020 Annual Work Report and 2021 Work Plan of the Audit Department | Approved | ||
| 16 August 2021 | Work Report of the Audit Department for Q1 2021; Proposal on Formulating | Approved |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| the Internal Audit System | |||||||
| 5 November 2021 | Work Report of the Audit Department for H1 2021; and Proposal on Renewing the Engagement of Auditing Agency for 2021 | Approved | |||||
| The Remuneration and Appraisal Committee | Zhang Renshou, Li Xiyuan, Dou Linping, Zhang Xianfeng, and Cheng Ke | 2 | 12 November 2021 | Proposal on Appraisal Plan for 2020 Remunerations for Leadership Team Members | Approved | ||
| 24 December 2021 | Proposal on Adjustment to Allowances for Independent Directors; and Proposal on Termination of the Establishment of Equity Incentive System for Middle and Senior Management | Approved | |||||
| The Nomination Committee | Li Xiyuan, Zhang Renshou, Dou Linping, Lei Zihe, and Zhang Xianfeng | 2 | 13 May 2021 | Proposal on Appointment of Board Secretary | Approved | ||
| 16 August 2021 | Proposal on Nomination of Li Xiyuan and Zhang Renshou as Candidate Independent | Approved |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
VIII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision inthe Reporting Period.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.IX Employees
1. Number, Functions and Educational Backgrounds of Employees
DirectorsNumber of in-service employees of the Company at theperiod-end
| Number of in-service employees of the Company at the period-end | 5,740 |
| Number of in-service employees of main subsidiaries at the period-end | 3,547 |
| Total number of in-service employees at the period-end | 9,287 |
| Total number of employees with remuneration in this Reporting Period | 9,287 |
| Number of retirees to whom the Company or its main subsidiaries need to pay retirement pension | 242 |
| Functions | |
| Function | Number of employees |
| Production | 6,618 |
| Sales | 861 |
| Technical | 940 |
| Financial | 74 |
| Administrative | 794 |
| Total | 9,287 |
| Educational backgrounds | |
| Educational background | Number of employees |
| Master and above | 65 |
| Bachelor | 1,134 |
| Junior college | 1,357 |
| Technical secondary school and high school | 1,717 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Below high school | 5,014 |
| Total | 9,287 |
Note: “Number of retirees to whom the Company or its main subsidiaries need to pay retirement pension” in thetable above refer to retirees of subsidiary Nanning Liaowang, and the payments to them mainly comprise livingallowances, festival allowances, etc. The amount paid by Nanning Liaowang stands at RMB645,900 per year.This is a historical issue coming from before the Company’s acquisition of Nanning Liaowang. Starting from 1January 2021, the number of the retirees and the annually paid amount have ceased to increase.
2. Employee Remuneration Policy
Adhering to the principle of "giving priority to efficiency, giving consideration to fairness, creating and sharingtogether", the Company takes value creation as the guide, constructs four sets of salary systems of management,R&D, sales and production, determines salary grades according to different positions and their characteristics, andinclines salary distribution to core talents and key positions, so as to maximize the enthusiasm of employees.
3. Employee Training Plans
The Company pays attention to personnel training and employee career development and has established theStarlight Lecture Hall. In light of the Company's development needs and post nature, the Company has built up acomplete training plan, and carried out a series of trainings such as R&D, marketing, production and managementby combining offline and offline learning platforms. Also, it organized training camps for internal lecturers, andestablished a training system with multiple levels, channels, fields and ways to promote employees' skillsupgrading, ability advancement and quality improvement.
4. Labor Outsourcing
□ Applicable √ Not applicable
X Profit Distributions to Shareholders (in the Form of Cash and/or Stock)How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated,executed or revised in the Reporting Period:
√ Applicable □ Not applicable
According to the CSRC Notice on Further Implementing Matters Related to Cash Dividend Distribution of Listed
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Companies (Zheng-Jian-Fa [2012] No. 37) and the Guangdong CSRC Notice on Further ImplementingRegulations Related to Dividend Distribution of Listed Companies (Guang-Dong-Zheng-Jian [2012] No. 91), inorder to further standardize the dividend mechanism, promote a scientific, sustained and stable dividendmechanism and protect legal rights and interests of investors, in 2012, the Company convened a general meetingto revise the dividend-related contents in its Articles of Association and specify the dividend conditions, thelowest dividend ratio, the decision-making procedure, etc.. Meanwhile, it formulated the Management Rules forProfit Distribution and the Return for Shareholder Plan for the Coming Three Years (2021-2023), specifying thearrangements and forms of dividends, the cash dividend planning and the distribution intervals, which furtherimproved the decision-making and supervision procedures for dividend distribution. According to the Company’sArticles of Association, the profit distributed in cash shall not be less than 30% of the distributable profit achievedin the year.
| Special statement about the cash dividend policy | |
| In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
| Specific and clear dividend standard and ratio | Yes |
| Complete decision-making procedure and mechanism | Yes |
| Independent directors faithfully performed their duties and played their due role | Yes |
| Non-controlling interests are able to fully express their opinion and desire and their legal rights and interests are fully protected | Yes |
| In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in compliance with applicable regulations and transparent | Yes |
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for shareholders despitethe facts that the Company has made profits in the Reporting Period and the profits of the Company as the parentdistributable to shareholders are positive.
□ Applicable √ Not applicable
Final dividend plan for the Reporting Period:
√Applicable □ Not applicable
| Bonus shares for every 10 shares (share) | 0 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Dividend for every 10 shares (RMB) (tax inclusive) | 1.00 |
| Additional shares to be converted from capital reserve for every 10 shares (share) | 0 |
| Total shares as the basis for the profit distribution proposal (share) | 1,348,994,647 |
| Cash dividends (RMB) (tax inclusive) | 134,899,464.70 |
| Cash dividends in other forms (such as share repurchase) (RMB) | 249,744,793.06 |
| Total cash dividends (including those in other forms) (RMB) | 384,644,257.76 |
| Distributable profit (RMB) | 2,738,229,003.27 |
| Total cash dividends (including those in other forms) as % of total profit distribution | 100% |
| Cash dividend policy | |
| Where it is difficult to determine the development stage of the Company but it has plans for considerable spending, in profit distribution, cash dividends shall reach at least 20% in the total profit to be distributed. | |
| Details about the proposal for profit distribution and converting capital reserve into share capital | |
| As audited by Zhongzheng Tiantong Certified Public Accountants LLP, the after-tax net profits of RMB241,148,689.36 of the Company as the parent for 2021, plus the beginning retained profits of RMB1,591,884,733.49, minus the distributed profits of RMB135,847,668.70 for 2020, plus RMB1,041,043,249.12 of cumulative fair value changes which had been previously recognized in other comprehensive income but were transferred to retained profits in the current period as a result of the sale of shareholdings in the current period, equal the ending profits distributable to shareholders of RMB2,738,229,003.27 for 2021. The Board of Directors has proposed to allocate profits for 2021 as follows: based on the share capital of 1,348,994,647 shares (the total share capital of 1,361,994,647 shares minus the remaining 13,000,000 A-shares repurchased in the share repurchase account at the disclosure date of the 2021 Annual Report, a cash dividend of RMB1 (tax inclusive and dividends for B-share holders to be paid in the Hong Kong dollars) per 10 shares is to be distributed to the shareholders. The retained profits will be carried forward into the next year. Where any change occurs to the total shares entitled to the final dividend due to any new issue, grant of equity incentives, etc. when the final dividend plan is implemented, the dividend per share shall remain the same while the total payout amount shall be adjusted accordingly. | |
Note: “Cash dividends in other forms (such as share repurchase)” in the table above is arrived at based on thefunds (exclusive of transaction costs) used to repurchase A- and B-shares during 2021 using the RMB:HKDexchange rate at 17 December 2021, the last trading day of the valid period of the repurchase.XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
XII Formulation and Implementation of Internal Control System during the ReportingPeriod
1. Internal control formulation and implementation
During the Reporting Period, the Company, in accordance with the Basic Standards for Internal Control and itssupporting guidelines, as well as the actual situation, further revised and improved the relevant internal controlsystems, adjusted the internal organizational structure and job responsibilities, and established a relativelyeffective internal control system, so as to effectively prevent and discover deviations in the process of operationand management in time, and provide guarantee for the legal compliance and asset safety of operation andmanagement.The Board of Directors of the Company has an Audit Committee, which is responsible for reviewing the internalcontrol of the Company, supervising the effective implementation of internal control and self-evaluation ofinternal control, and cooperating with internal control audit and other related matters. The internal auditdepartment of the Company is responsible for the internal audit supervision of the Company, includingsupervising and inspecting the implementation of the internal control system of the Company, regularly orirregularly conducting routine audits or special audits on finance, internal control, major projects and theirbusinesses, and putting forward suggestions for improving internal control to control and prevent risks. If theAudit Department finds major defects in internal control in the process of supervision and inspection, it has theright to report directly to the Audit Committee of the Board of Directors and the Board of Supervisors.According to the identification of major defects in the Company's internal control, there were no major defects inthe internal control of financial reports and non-financial reports in 2021.
2. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
XIII Management and Control of Subsidiaries by the Company during the Reporting Period
| Name of company | Integration plan | Integration progress | Problems encountered in integration | Solutions taken | Settlement progress | Follow-up settlement plan |
| Nanning Liaowang Auto Lamp Co., Ltd. | The company empowers Nanning | After the Company empowered Nanning Liaowang in terms of | None | None | None | None |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| (Nanning Liaowang) | Liaowang in talents, capital, technology, management, informationization and other aspects to help Nanning Liaowang develop faster. | talents, capital, technology, management and informationization, Nanning Liaowang introduced a group of middle and high-end talents, made breakthroughs in some important technology research and development, reduced financial expenses, optimized internal management and improved informationization level. |
XIV Self-Evaluation Report or Independent Auditor’s Report on Internal Control
1. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 1 April 2022 | |
| Index to the disclosed internal control self-evaluation report | See www.cninfo.com.cn for the Internal Control Self-Evaluation Report 2021 | |
| Evaluated entities’ combined assets as % of consolidated total assets | 100.00% | |
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 100.00% | |
| Identification standards for internal control weaknesses | ||
| Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting |
| Nature standard | Defect with one of the following characteristics should be recognized as a serious defect: 1. the defect involved with the malpractices of the Directors, the Supervisors and the Senior Executives; 2. the controlled environment is invalid; 3. the CPA discovered any significant misstatement from the current financial report while the internal control | Defect with one of the following characteristics should be recognized as a serious defect: 1. being punished for seriously violating the national laws, the administrative laws and regulations and the normative documents; 2. the Company suffers a serious economic loss due to any serious errors made in decision-making |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| could not discover the mistake during the operating process; 4. the supervision from the Corporate Audit Committee and the internal audit institution on the internal control. If there met with one of the situation of the following, should be recognized as an important defect: 1. the recognized important defect is not solved during the reasonable period; 2. corrects the published financial report; 3. the function of the internal audit of the Company is invalid; 4. the control of whether execute the selection and the application of the accounting policies according to the Generally Accepted Accounting Principles is invalid. | caused by serious lack of decision-making procedures on significant events or unfair decision-making; 3. the Company’s reputation has been unrepairably damaged by any conduct in violation of laws and regulations which produces a far-reaching negative impact and draws the public’s attention widely; 4. the major business involved with the production and operating of the Company lack of the system control or the system control is invalid; 5. the results of the internal control assessment turn out to include any serious defects 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. | |
| Quantitative standard | Based on the data of the 2020 consolidated statements, the quantitative criterion of confirming the important degree of the misstatement (including the false negatives) from of the consolidated statements of the listed companies is as follows: serious defect: misstatement ≥1.0% of the total assets amount; important defects: 0.5% of the total assets amount ≤misstatement＜1.0% of the total assets amount; common defects: | According to the quantitative criterion of the internal control defects of the financial report, the quantitative criterion of the internal control defects assessment of the non-financial report confirmed by the Company is as follows: serious defect: misstatement ≥1.0% of the total assets amount; important defects: 0.5% of the total assets amount ≤misstatement＜1.0% of the total assets amount; common defects: |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| misstatement＜0.5% of the total assets amount. | misstatement＜0.5% of the total assets amount. | |
| Number of material weaknesses in internal control over financial reporting | 0 | |
| Number of material weaknesses in internal control not related to financial reporting | 0 | |
| Number of serious weaknesses in internal control over financial reporting | 0 | |
| Number of serious weaknesses in internal control not related to financial reporting | 0 | |
2. Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
| Opinion paragraph in the independent auditor’s report on internal control | |
| Zhongzheng Tiantong 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. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 1 April 2022 |
| Index to such report disclosed | See www.cninfo.com.cn for the Auditor’s Report on Internal Control |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on theCompany’s internal control.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistentwith the internal control self-evaluation report issued by the Company’s Board.
√ Yes □ No
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
XV Rectifications of Problems Identified by Self-inspection in the Special Action for ListedCompany Governance
According to the requirements of the regulatory authorities, the Company carried out special self-examinationactivities on corporate governance from 2018 to 2020, and conducted self-examination item by item in variousaspects according to the Company Law, Securities Law, Stock Listing Rules of the Shenzhen Stock Exchange andother relevant laws and regulations, normative documents and the Articles of Association of the Company. Uponself-examination, it was found that the Board of Directors and the Supervisory Committee did not change in timeupon expiration of term of office, and some directors, supervisors and senior management personnel of theCompany sometimes did not attend or attend the shareholders' meeting as nonvoting attendees.Rectification: On 24 August 2020, the Company held the first extraordinary general meeting in 2020 and electedthe 9th Board of Directors and Board of Supervisors. The term of office of directors and supervisors was threeyears until 24 August 2023, and the change of Board of Directors and Board of Supervisors was completed.Subsequently, the Company will strictly implement the Company Law, Securities Law and other laws andregulations and the Articles of Association, continue to enhance shareholder communication before the re-electionof the Board of Directors and the Supervisory Committee, and complete the re-election of the Board of Directorsand the Supervisory Committee in compliance with applicable regulations. At the same time, when theshareholders' meeting is held, all directors, supervisors and senior management personnel of the Company arerequired to attend or attend the meeting as non-voting attendees. If the directors, supervisors and seniormanagement personnel cannot attend or attend the meeting as non-voting attendees, they shall submit a writtenleave report to the Board of Directors.
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Part V Environmental and Social ResponsibilityI Major Environmental IssuesIndicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by theenvironmental protection authorities.
√ Yes □ No
| Name of Company or Subsidiary Company | Major and Characteristic Pollutants | Discharge Method | Outlet Quantity | Outlet Distribution | Discharge Concentration | Pollutant Discharge Standards | Total Actual Discharge | Total Discharge Approved | Excessive Discharge |
| Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | SO2 | Discharged in an organized manner | 1 | In the plant | SO2: 289 mg/m3 | Emission Standards for Air Pollutants in Glass Industry (DB44/2159-2019) | SO2: 9.208 t/y | SO2: 39.937 t/y | None |
| Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | Oxynitride | Discharged in an organized manner | 1 | In the plant | Oxynitride: 550mg/m3 | Emission Standards for Air Pollutants in Glass Industry (DB44/2159-2019) | Oxynitride: 50.576 t/y | Oxynitride: 83.549 t/y | None |
| Liuzhou Guige Lighting Technology Co., Ltd. | Xylene, SO2, nitrogen oxide, benzene, toluene, particulate matter, volatile organic matter | Discharged in an organized manner | 1 | In the plant | Discharged upon reaching applicable standards | Integrated Emission Standards of Air Pollutants (GB16297-1996) | No limit | No limit | None |
| Liuzhou Guige | Volatile organic | Discharged in an | 2 | In the plant | Discharged upon | Integrated Emission | No limit | No limit | None |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Lighting Technology Co., Ltd. | compounds | un-organized manner | reaching applicable standards | Standards of Air Pollutants (GB16297-1996) |
Construction and operation of pollution control facilities:
| No. | Facility | Total Investment (RMB0,000) | Date of Construction (MM/YYYY) | Date of Operation (MM/YYYY) | Operator | Processes | Design Capacity (m3/h) | Actual Capacity (m3/h) | Operation Hours (h/d) |
| 1 | Desulfurization, denitration, and dust removal system | 500 | November 2015 | December 2015 | Independent operations | Semi-dry flue gas desulphurization (SDFGD) + electric precipitation + SCR denitration | 60,000 | 60,000 | 24 |
| 2 | RTO oxidation furnace | 360 | November 2016 | March 2017 | Independent operations | Dry filter+RTO catalytic combustion | 10000 | 10000 | 24 |
| 3 | Activated carbon adsorption device | 60 | March 2019 | November 2019 | Independent operations | Filter cotton+ activated carbon adsorption device+22.5m vent | 60712 | 60712 | 24 |
Assessment of the environmental impact of construction projects and other administrative licenses ofenvironmental protection:
| No. | Document Name of Administrative License of Environmental Protection | Approver | Date of Approval | Approval No. |
| 1 | Approval for Environmental Impact Report on New Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | Environmental Protection Bureau of Gaoming District, Foshan City | 3 November 2004 | / |
| 2 | Environmental Protection Acceptance Opinions on Phase I of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | Environmental Protection Bureau of Gaoming District, Foshan City | 28 August 2008 | MHY [2008] No. 26 |
| 3 | Acceptance Opinions on Flue Gas Emission Continuous Monitoring System of Foshan Electrical and Lighting Co., Ltd. Gaoming | Environmental Protection Bureau of Gaoming District, Foshan City | 22 February 2010 | MHY [2010] No. 8 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Branch
| 4 | Approval for Environmental Impact Report on Energy-saving Lamp Expansion Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | Environmental Protection Bureau of Gaoming District, Foshan City | 30 August 2013 | MHGYB [2013] No. 030 |
| 5 | Letter of Environmental Protection Acceptance Opinions on Energy-saving Lamp Expansion Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | Environmental Transport and Urban Management Bureau of Gaoming District (Environmental Protection) | 19 February 2014 | MGY [2014] No. 2 |
| 6 | Approval from Environmental Protection Bureau of Gaoming District, Foshan City, of Environmental Impact Report on Expansion Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | Environmental Protection Bureau of Gaoming District, Foshan City | 13 February 2015 | MHS [2015] No. 14 |
| 7 |
Approval from Environmental ProtectionBureau of Gaoming District, Foshan City, ofKiln Expansion and Flue Gas Control andRemediation Project of Foshan Electrical andLighting Co., Ltd. Gaoming Branch
| Environmental Protection Bureau of Gaoming District, Foshan City | 26 November 2015 | MHS [2015] No. 157 | ||
| 8 | Letter from Environmental Protection Bureau of Gaoming District, Foshan City of Environmental Protection Acceptance Opinions on Kiln Expansion and Flue Gas Control and Remediation Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | Environmental Protection Bureau of Gaoming District, Foshan City | 24 December 2015 | MHY [2015] No. 83 |
| 9 | Approval from Environmental Protection Bureau of Gaoming District, Foshan City, of Environmental Impact Report on New LED Luminaries R&D Production Base Construction Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | Environmental Protection Bureau of Gaoming District, Foshan City | 30 September 2017 | MHS [2017] No. 138 |
| 10 | Approval from Environmental Protection Bureau of Gaoming District, Foshan City, of Environmental Impact Report on Glass Kiln (Change) Construction Project of Foshan Electrical and Lighting Co., Ltd. Gaoming Branch | Environmental Protection Bureau of Gaoming District, Foshan City | 14 January 2019 | MHS [2019] No. 11 |
| 11 | Letter from Foshan Municipal Ecology and Environment Bureau of Environmental Protection Acceptance Opinions on Solid Waste | Ecology and Environment Bureau of Foshan City | 12 September 2019 | FMHY [2019] No. 126 |
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
| Pollution Prevention and Control Facility for New LED Luminaries R&D Production Base Construction Project (Phase I) of Foshan Electrical and Lighting Co., Ltd. | ||||
| 12 | Sewage Discharge License | Ecology and Environment Bureau of Foshan City | 1 June 2020 | 91440600784850061B001U |
| 13 | Reply on the Environmental Impact Report of Liuzhou Guige Lighting Technology Co., Ltd. with an Annual Output of 1.35 Million Sets of Auto Parts (Motor Vehicle Lamps) | Liuzhou Environmental Protection Bureau | 25 September 2015 | LHS Zi [2015] No. 134 |
| 14 | Reply on Completion Acceptance of Environmental Protection Facilities of Liuzhou Guige Lighting Technology Co., Ltd. with an Annual Output of 1.35 Million Sets of Auto Parts (Motor Vehicle Lamps) (Solid Waste) | Liuzhou Liudong New Area Administrative Examination and Approval Bureau | 28 October 2019 | LDSPHB Zi [2019] No. 70 |
| 15 | Sewage Discharge License | Liuzhou Liudong New Area Administrative Examination and Approval Bureau | 18 July 2020 | 914502000836092085001V |
Contingency plan for environmental emergenciesThe Company formulated the Contingency Plan for Environmental Emergencies of Foshan Electrical andLighting Co., Ltd. Gaoming Branch (Including Risk Assessment Report and Material Survey of EnvironmentalEmergencies in August 2017, had it reviewed by experts on 13 September 2017, and had it filed with the FoshanMunicipal Ecology and Environment Bureau Gaoming Sub-bureau (Filing No.: 440608-2017-094-L) on 24October 2017.This document was revised in August 2020, reviewed by experts again on 7 September 2020, and filed with theFoshan Municipal Ecology and Environment Bureau Gaoming Sub-bureau (Filing No.: 440608-2020-056-M) on 25September 2020.In June 2018, Liuzhou Guige Lighting Technology Co., Ltd. completed the preparation of the Emergency Plan forEnvironmental Emergencies of Liuzhou Guige Lighting Technology Co., Ltd. (including the Risk AssessmentReport for Environmental Emergencies and the Investigation Report for Emergency Resources for EnvironmentalEmergencies), which was reviewed by experts and released, and filed with Liudong Branch of LiuzhouEnvironmental Protection Bureau on 29 August 2018 (No. 450203-2018-022-1). In August 2021, the EmergencyPlan for Environmental Emergencies of Liuzhou Guige Lighting Technology Co., Ltd. (including the Risk
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
Assessment Report for Environmental Emergencies and the Investigation Report for Emergency Resources forEnvironmental Emergencies) was updated and compiled, passed the expert review and released, and on 27December 2021, the Emergency Plan was filed with the Ecological Environment Bureau of Liudong New Area,Liuzhou City (No. 450203-2021-0019-L).
Environmental self-monitoring planFoshan Electrical and Lighting Co., Ltd. Gaoming Branch developed an environmental self-monitoring plan,numbered: FSLFMF001, at the beginning of the year. It entrusted a third-party environmental testing agency, GDVeizhong Testing Technique Co., Ltd. (Veizhong Testing), to perform the annual inspection of the exhaust outlet.All the inspection results were lower than the standard limits. Meanwhile, it accepted the annual supervision andmonitoring by local environmental protection departments. All the monitoring results were lower than thestandard limits.Liuzhou Guige Lighting Technology Co., Ltd. has put in place the Self-monitoring Plan of Liuzhou GuigeLighting Technology Co., Ltd. It entrusted a third-party environmental testing agency, Guangxi ZhongzhenTesting Technology Co., Ltd., to perform the annual inspection of the exhaust outlet. All the inspection resultswere lower than the standard limits. Meanwhile, it accepted the annual supervision and monitoring by localenvironmental protection departments. All the monitoring results were lower than the standard limits.
Administrative punishments received with respect to environmental issues in the Reporting Period:
| The Company/subsidiary | Reason for punishment | Incompliance | Punishment | Impact on the Company’s operations | Rectification |
| N/A | N/A | N/A | N/A | N/A | N/A |
Other environment-related information that should be disclosed:
None.Measures taken during the Reporting Period to reduce carbon emissions and the impact:
√Applicable □Not applicable
During the Reporting Period, the Company reduced electricity consumption under the same output value byselecting high-efficiency and energy-saving equipment. The Company insists on constantly publicizingenvironmental protection knowledge to employees, improving their awareness of environmental protection, and
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
realizing the sustainable development goal of harmonious coexistence between enterprises and the environmentthrough the joint efforts of all employees.Other relevant information:
None.II Social ResponsibilityWe have always attached importance to the accomplishment of our social value. With “provide returns forshareholders, 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 thenatural environment and safeguarding social safety so as to promote common, harmonious and sustainabledevelopment of the Company and the society.
1. Protection of the rights and interests of our shareholders and creditorsWe 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 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 consumersWe 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
Foshan Electrical and Lighting Co., Ltd. Annual Report 2021
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 realizemutual benefits and mutual development of the suppliers and the Company.
5. Production Safety, Environmental Protection and Sustainable DevelopmentThe Company sees production safety, environmental protection and energy conservation as an important part of its strategy of sustainable development. It implements accountability systems in relation environmental protection and production safety in strict accordance with the applicable laws and regulations. In addition, it is ISO9001-(a quality management system), IATF16949-(a quality management system), ISO14001-(an environment management system), ISO45001-(a management system for occupational health and safety) and ISO50001-(an energy management system) certified. In 2018, upon the review and publication by the Ministry of Industry and Information Technology, the Company was certified as one of the secondbatch of National Demonstration Entity of Green Factory.
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.III Efforts in Poverty Alleviation and Rural RevitalizationDuring the Reporting Period, the Company actively responded to the call to consolidate the achievements ofpoverty alleviation and revitalize the countryside, and carried out the work of helping farmers with consumptionto facilitate rural revitalization. During the Reporting Period, the Company actively purchased characteristicagricultural products from Wuhua County, Meizhou City, with a purchase amount of nearly RMB1 million.
Part VI Significant EventsI Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as wellas the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√ Applicable □ Not applicable
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in acquisition documents or shareholding alteration documents | Electronics Group and Hong Kong Rising Investment | About avoidance of horizontal competition | Electronics Group and Hong Kong Rising Investment have made 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 | 4 December 2015 | Long-term | Ongoing |
| 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 indirectly controlled subsidiaries break the aforesaid commitments and thus cause a loss for the Company, they shall compensate the Company on a rational basis. | |||||
| Rising Group | About avoidance of horizontal competition | 1. Rising Group will take active measures to avoid any business or activity that competes or may compete with the principal business of the Company and its auxiliary enterprises, and urge the Promisor to control enterprises to avoid any business or activity that competes or may compete with the principal business of the Company and its auxiliary enterprises. 2. If Rising Group and its controlled enterprises are given the opportunity to engage in new business that constitutes or may constitute horizontal competition with the principal businesses of the Company and its auxiliary enterprises, Rising Group will make every effort to make the business opportunity first available to the Company or its auxiliary enterprises on reasonable and fair terms and | 4 November 2021 | Long-term | Ongoing |
| conditions on the premise that conditions permit and in the interest of the listed company. | |||||
| Electronics Group and Hong Kong Rising Investment | About reduction and regulation of related-party transactions | Electronics Group 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 their position as the controlling shareholder and actual controller; 2. make sure that 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 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 | 4 December 2015 | Long-term | Ongoing |
| 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. | |||||
| Rising Group | 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 their position as the controlling shareholder and actual controller; 2. make sure that 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 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. | 4 November 2021 | Long-term | Ongoing | |
| Electronics Group and Hong Kong | About | In order to ensure the independence of the Company in | 4 December | Long-term | Ongoing |
| Rising Investment | independence | business, personnel, asset, organization and finance, Electronics Group 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 assets, personnel, qualifications 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. 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 | 2015 |
| 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 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. | |||||
| Rising Group | To maintain the independence of the Company, Rising Group has made the following commitments: | 4 November 2021 | Long-term | Ongoing |
| decisions independently and that they will not illegally intervene in the Company’s use of its funds. 4. It will ensure the independence of the Company in organization: (1) It promises that the Company can operate independently with an independent and complete organization structure. (2) It promises that the office and production and business premises of the Company are separated from those of Rising Group. And (3) It promises that the Board of Directors, the Board of Supervisors and various functional departments of the Company operate independently, and there is no subordinate relationship with the functional departments of Rising Group. And 5 It will ensure the independence of the Company in business: (1) It promises that the Company will have independence in business. And (2) It promises that the Company will have the assets, personnel, qualifications and capabilities for it to operate independently as well as the ability of independent, sustainable operation in the market. | ||||||
| Commitments made in shareholding alteration documents | FSL | About avoidance of horizontal competition | 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 NATIONSTAR for now, if the products or business of them or their relevant enterprises become the same with or similar to those of | 27 October 2021 | Long-term | Ongoing |
| NATIONSTAR or its subsidiaries in the future, they shall take the following measures: (1) If NATIONSTAR thinks necessary, they and their relevant enterprises shall reduce and wholly transfer their relevant assets and business; and (2) If NATIONSTAR 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 FSL 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 indirectly controlled subsidiaries break the aforesaid commitments and thus cause a loss for NATIONSTAR, they shall compensate NATIONSTAR on a rational basis. | ||||||
| Commitments made in shareholding alteration documents | FSL | About reduction and regulation of related-party transactions | 1. FSL and enterprises under its control (except NATIONSTAR and its subsidiaries) will reduce and standardize related transactions with NATIONSTAR and its subsidiaries. 2. In case of any inevitable or reasonably justified related party transactions, FSL and enterprises under its control (exceFpt NATIONSTAR and its | 7 October 2021 | Long-term | Ongoing |
| subsidiaries) will strictly abide by the market principles, conduct related party transactions with NATIONSTAR fairly and reasonably based on the general principles of equality, mutual benefit, equal value and compensation, and perform legal procedures in accordance with laws, regulations, normative documents and relevant regulations of NATIONSTAR. | |||||
| FSL | About maintaining independence of the listed company | In order to promote the standardized management of NATIONSTAR, legally and compliantly exercise shareholders' rights and fulfill corresponding obligations, and take practical and effective measures to ensure the independence of NATIONSTAR in personnel, assets, finance, institutions and business, the Promisor promises: (I) It will ensure the independence of NATIONSTAR in personnel 1. FSL promises that GM, deputy GMs, CFO, Company Secretary and other senior management personnel of NATIONSTAR will not hold any positions in FSL and other enterprises under its control (except NATIONSTAR and its controlled enterprises, the same below) other than director and supervisor, and not receive salaries from in FSL and other enterprises under its control; 2. It will ensure NATIONSTAR’s absolute independence from FSL and enterprises under its control in labor, human resource and salary management. (II) It will ensure the independence of NATIONSTAR in asset 1. FSL promises that NATIONSTAR will have independent and complete | 7 October 2021 | Long-term | Ongoing |
| operation in the market. | ||||||
| Commitments made during asset restructuring | FSL | About absence of insider trading | 1. FSL does not disclose the relevant insider information of this trading or make use of the insider information for insider trading; 2. As of the issuance date of the Report on Major Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft), FSL has not been placed on file for investigation or criminal investigation due to suspected insider trading related to this trading, and has not been subject to administrative punishment by the CSRC or criminal responsibility investigated by judicial organs according to law for insider trading related to any major asset restructuring, and has not been prohibited from engaging in any major asset restructuring of listed companies according to Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies in the last 36 months. | 27 October 2021 | From the time when the Company plans the major asset restructuring to the date when the major asset restructuring is completed. | Ongoing |
| FSL | About compliance with Several Provisions on the Reduction of Shares by Shareholders, Directors and Supervisors of Listed Companies | 1. FSL is not subject to any securities and futures crimes as stipulated in Article 6 of Several Provisions on the Reduction of Shares by Shareholders, Directors and Supervisors of Listed Companies. During the period when the CSRC or the judicial organ filed a case for investigation, and less than six months after the administrative penalty decision and criminal | 27 October 2021 | To 6 months after the implementation of major asset restructuring | Ongoing |
| judgment were made, there was no situation that the shares of NATIONSTAR could not be reduced due to violation of the rules of stock exchanges and public censure by stock exchanges for less than three months. 2. If the commitment maker still holds shares in NATIONSTAR after this transaction, the commitment maker shall be subject to the following regulations: (1) Within the six months following the completion of this transaction, if the commitment maker intends to reduce by way of centralized bidding at the stock exchange the shares obtained in this transaction, the commitment maker shall report to the stock exchange and disclose the shareholding reduction plan (which will be kept for record by the stock exchange) 15 trading days before the first sale. (2) Within the six months following the completion of this transaction, if the commitment maker intends to reduce by way of centralized bidding at the stock exchange within three months the shares obtained in this transaction, the total shares reduced shall not exceed 1% of NATIONSTAR’s total shares. | |||||
| FSL | About legal compliance | 1. As of the date of issuance of the letter of commitment, the listed company has not received any criminal punishment or administrative punishment related to the securities market in the last three years, and has | 27 October 2021 | Within the three years preceding the date of issuance of the | Expired |
| not been subject to any major civil lawsuit or arbitration related to economic disputes. The listed company has no other major acts of dishonesty publicly condemned by any stock exchange in the last 12 months; the listed company has been in good faith, and has not failed to repay large debts on schedule, failed to fulfill its commitments, been taken administrative supervision measures by the CSRC, or been disciplined by any stock exchange. 2. Up to the date of this Letter of Commitment, the listed company has not been investigated by the judicial organ for suspected crimes or by the CSRC for suspected violations of laws and regulations, nor has it been investigated for suspected involvement in insider trading in relation to major asset restructuring with pending conclusion, in the last three years. 3. Up to the date of this Letter of Commitment, the existing directors, supervisors and senior management of the listed company had held offices in the company in a way that is in compliance with the applicable laws, administrative regulations, regulatory documents and the company’s Articles of Association. No current or former government officials, party cadres at universities have had full-time or part-time jobs in the | letter of commitment (inclusive) |
| company in an illegal manner. | |||||
| FSL | About the truthfulness, accuracy and completeness of the information provided during this major asset restructuring | 1. FSL has provided relevant information and documents (including but not limited to original written materials, duplicate materials or oral testimony, etc.) related to this trading to the intermediaries providing professional services of auditing, valuation, legal and financial consultancy for this trading. FSL promises that the copies or photocopies of the documents and materials provided are consistent with the originals, and that the signatures and seals of the documents and materials are authentic, and the signatories of the documents have been legally authorized and effectively signed the documents; that the provided information and documents are authentic, accurate and complete and that there are no false records, misleading statements or material omissions. FSL also promises to bear individual and joint and several liability. 2. The commitment maker promises that the information provided is true, accurate and complete. Where any investor suffers a loss as a result of any misrepresentation, misleading statement or material omission in the information provided, the commitment maker shall be liable for compensation according to law. | 27 October 2021 | Long-term | Ongoing |
| Director and senior management | About measures to fill up returns | 1. They promise not to transfer benefits to other units or individuals free of charge or | 27 October | Long-term | Ongoing |
| office of FSL | for risks arising from diluting immediate return in major asset restructuring | under unfair conditions, and not to harm the interests of the Company in any other ways; 2. They promise to restrain position-related consumption behavior; 3. They promise not to use the Company's assets to engage in investment and consumption activities unrelated to the performance of duties; 4. They promise that the future remuneration system formulated by the Board of Directors or the Remuneration and Assessment Committee will be linked to the implementation of the Company's measures to fill up returns; 5. If the Company formulates an equity incentive plan in the future, they will actively promote the exercise conditions of the future equity incentive plan to be linked with the implementation of the Company's measures to fill up returns; 6. From the date of issuance of these commitments to the completion of this major asset restructuring of the Company, if the CSRC makes other new regulatory provisions on measures to fill up returns and the relevant commitments, and these commitments cannot meet these provisions of the CSRC, they promise to issue supplementary commitments in accordance with the latest regulations of the CSRC at that time. 7. They promise to earnestly fulfill the compensation measures formulated by the Company and any commitments it made. If | 2021 |
| they violate any of these commitments and cause losses to the Company or investors, they are willing to bear corresponding legal responsibilities to the Company or investors according to law. | |||||
| Director and senior management office of FSL | About non-reduction of FSL shares during major asset restructuring | 1. They promise that there will be no share reduction plan from the date of issuance of this Letter of Commitments to the completion of this trading, and they will not reduce its FSL shares (if any) in any other way. 2. If FSL implements ex-rights behaviors such as share conversion, share offering and share allotment from the date of issuance of this Letter of Commitments to the completion of this trading, the newly added shares obtained by them will also be subject to the above commitments related to not reducing share holdings. 3. Where FSL or any other investor suffers a loss as a result of my violation of the aforesaid commitment, I shall be liable for compensation to FSL and investors according to law. They promise that they have the right to enter into this Letter of Commitments, and once this Letter of Commitments is entered into by them, it will constitute an effective, legal and binding responsibility upon them, and this Letter of Commitments will remain valid and irrevocable. They promise to strictly fulfill all commitments in this Letter of Commitments. In case of | 28 September 2021 | Until this trading is completed | Ongoing |
| violation of this Letter of Commitments, they will bear relevant legal responsibilities. | |||||
| Director and senior management of FSL | About absence of insider trading | 1. They do not disclose the relevant insider information of this trading or make use of the insider information for insider trading; 2. They have not been placed on file for investigation or criminal investigation due to suspected insider trading related to this trading, and have not been subject to administrative punishment by the CSRC or criminal responsibility investigated by judicial organs according to law for insider trading related to major asset restructuring, and has not been prohibited from engaging in any major asset restructuring of listed companies according to Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies in the last 36 months. 3. In case of violation of the above commitments, they will bear all losses caused to the listed company and its shareholders. | 27 October 2021 | From the time when the Company plans the major asset restructuring to the date when the major asset restructuring is completed. | Ongoing |
| Directors and senior management of FSL | About legal compliance | 1. As of the date of issuance of the Letter of Commitments, they have and abide by the qualifications and obligations stipulated in the Company Law of the People's Republic of China and other laws, regulations, normative documents and the Articles of Association of the Company, and their employments are | 28 September 2021 | Within three years preceding the date of the issuance of the letter of commitment | Expired |
| made through legal procedures. They do not hold any concurrent positions prohibited by relevant laws, regulations, normative documents, Articles of Association, relevant regulatory authorities and part-time units (if any). 2. As of the date of issuance of the Letter of Commitments, they have not violated the relevant provisions of the Company Law of the People's Republic of China, have not been subject to any criminal punishment in the last 36 months, have not been subject to administrative punishment by the CSRC, have not been subject to any public censure by any stock exchange in the last 12 months and have not been subject to any outstanding or foreseeable major litigation or arbitration cases related to economic disputes in the last 36 months. 3. As of the date of issuance of the Letter of Commitments, they have been in good faith, have no other major acts of dishonesty and have not failed to repay large debts on schedule, failed to fulfill their commitments, been taken administrative supervision measures by the CSRC, or been disciplined by any stock exchange in the last 36 months. | (inclusion) | ||||
| Directors and senior management of FSL | About the truthfulness, accuracy and completeness of the information | 1. They have provided relevant information and documents (including but not limited to original written materials, duplicate materials or oral testimony, etc.) related to this | 27 October 2021 | Long-term | Ongoing |
| provided during this major asset restructuring | trading to the intermediaries providing professional services of auditing, assessment, legal and financial consultancy for this trading. They promise that the copies or photocopies of the documents and materials provided are consistent with the originals, and that the signatures and seals of the documents and materials are authentic, and the signatories of the documents have been legally authorized and effectively signed the documents; that the provided information and documents are authentic, accurate and complete and that there are no false records, misleading statements or material omissions. They also promise to bear individual and joint and several liability. 2. They promise that the information provided is true, accurate and complete. In case of any losses caused to investors due to any false presentations, misleading statements or material omissions in the information provided, they will be liable for compensation according to law. 3. Where the information provided or disclosed by them in this trading is suspected of false records, misleading statements or material omissions, and they are filed for investigation by the judicial organ or by the CSRC, the shares with interests in the listed company will not be transferred until the investigation conclusion is |
| formed. | |||||
| Rising Group, Rising Capital, Electronics Group, Hongkong Wah Shing, Hong Kong Rising Investment and Shenzhen Rising Investment | About effective performance of measures to fill up returns | 1. They promise not to interfere in the operation and management activities of the listed company beyond their authority and not to encroach on the interests of the listed company. 2. From the date of issuance of these commitments to the completion of this trading of the listed company, if the CSRC makes new regulatory requirements on measures to fill up returns and commitments of relevant personnel, and the above commitments cannot meet these new regulatory requirements of the CSRC, they promise to issue supplementary commitments according to the latest regulations of the CSRC at that time. 3. They promise to earnestly fulfill the measures to fill up returns formulated by the listed company and any commitments made by them. If they violate these commitments and causes losses to the listed company or investors, they are willing to bear the compensation responsibility for the listed company or investors according to law. As one of the subjects responsible for the measures to fill up returns, if they violate the above commitments or refuses to fulfill the above commitments, they agree that the securities regulatory agencies such as the CSRC and the SZSE will punish them or take relevant regulatory measures in accordance with the relevant | 27 October 2021 | Long-term | Ongoing |
| regulations and rules they formulated or issued. | |||||
| Rising Group, Rising Capital, Electronics Group, Hongkong Wah Shing, Hong Kong Rising Investment and Shenzhen Rising Investment | About non-reduction of FSL shares during major asset restructuring | 1. They promise that there will be no share reduction plan from the date of issuance of this Letter of Commitments to the completion of this trading, and they will not reduce its FSL shares in any other way (except the transfer or transfer between Rising Group and its wholly-owned subsidiaries). 2. If FSL implements ex-rights behaviors such as share conversion, share offering and share allotment from the date of issuance of this Letter of Commitments to the completion of this trading, the newly added shares obtained by them will also be subject to the above commitments related to not reducing share holdings. 3. Where FSL or any other investor suffers a loss as a result of our violation of the aforesaid commitment, we shall be liable for compensation to FSL and investors according to law. | 28 September 2021 | Until the completion of this trading | Ongoing |
| Rising Group, Rising Capital, and Hongkong Wah Shing | About avoidance of horizontal competition | 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 FSL for now, if the products or business of them or their relevant enterprises become the same with or similar to those of FSL or its subsidiaries in the future, they | 27 October 2021 | Long-term | Ongoing |
| shall take the following measures: (1) If FSL thinks necessary, they and their relevant enterprises shall reduce and wholly transfer their relevant assets and business; and (2) If FSL 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 FSL 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 indirectly controlled subsidiaries break the aforesaid commitments and thus cause a loss for FSL, they shall compensate FSL on a rational basis. | |||||
| Rising Group, Rising Capital, and Hongkong Wah Shing | About regulation and reduction of related-party transactions | They have made a commitment that during their direct or indirect holding of FSL’s shares, they shall 1. strictly abide by the regulatory documents of the CSRC and the SZSE, FSL’s Articles of Association, etc. and not harm the interests of the Company or other shareholders of FSL in their production and operation activities by taking advantage of their position as the controlling shareholder and | 27 October 2021 | Long-term | Ongoing |
| actual controller; 2. make sure that 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 FSL or FSL’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 FSL, and withdraw from voting when a related-party transaction with 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 FSL, its subsidiaries or FSL’s other shareholders, they shall be obliged to compensate. | |||||
| Shenzhen Rising Hongkong Wah Shing, and Hongkong Wah Shing | Explanation about not prohibited from participating in of any major asset restructuring of listed companies as stipulated in Article 13 of | As of the issuance date of the Report on Major Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft), they have not been placed on file for investigation or criminal investigation due to suspected insider trading related to this trading, and has not been subject to administrative punishment by the CSRC or | 27 October 2021 | Within the three years preceding the date of issuance of the letter of commitment (inclusive) | Expired |
| the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies | criminal responsibility investigated by judicial organs according to law for insider trading related to any major asset restructuring in the last 36 months. The relevant entities of this trading are not prevented from participating in any major asset restructuring of listed companies according to Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies. | ||||
| Shenzhen Rising Investment, Hong Kong Rising Investment, and Hongkong Wah Shing | About legal compliance | 1. They have not been investigated by the judicial organ for suspected crimes or by the CSRC for suspected violations of laws and regulations, and there is no administrative punishment (except those obviously unrelated to the securities market) or criminal punishment in the last three years; 2. They have not failed to repay large debts on schedule, failed to fulfill their commitments, been taken administrative supervision measures by the CSRC, or been disciplined by any stock exchange, have not been publicly condemned by any stock exchange, have no other major acts of dishonesty and have no any other bad record in the last three years. | 27 October 2021 | Within the three years preceding the date of issuance of the letter of commitment (inclusive) | Expired |
| Directors, supervisors and senior management personnel of | Explanation about not prohibited from participating | As of the issuance date of the Report on Major Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft), | 27 October 2021 | Within the three years preceding the date of | Expired |
| Shenzhen Rising Investment, Hong Kong Rising Investment, and Hongkong Wah Shing | in of any major asset restructuring of listed companies as stipulated in Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies | they have not been placed on file for investigation or criminal investigation due to suspected insider trading related to this trading, and has not been subject to administrative punishment by the CSRC or criminal responsibility investigated by judicial organs according to law for insider trading related to any major asset restructuring in the last 36 months. The relevant entities of this trading are not prevented from participating in any major asset restructuring of listed companies according to Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies. | issuance of the letter of commitment (inclusive) | ||
| Rising Group, Electronics Group, and Rising Capital | About compensation for possible violations of laws and regulations by NATIONSTAR | If NATIONSTAR is subject to administrative penalties such as accountability and fines by relevant competent departments after the completion of this trading due to the illegal acts of NATIONSTAR before the completion of this acquisition, they promise to fully bear the losses of NATIONSTAR or FSL, as well as the expenses and fees under punishment or recourse, to ensure that NATIONSTAR or FSL will not suffer any economic losses. | 27 October 2021 | Long-term | Ongoing |
| Rising Group, Electronics Group, and Rising Capital | About explanation of confidentiality measures and confidentiality system | 1. During the preliminary negotiation between the listed company and the counterparty on this trading, necessary and sufficient confidentiality measures were taken to limit the | 27 October 2021 | Until the completion of this trading | Ongoing |
| adopted for this trading | scope of knowledge of relevant sensitive information. According to the requirements of the SZSE, the listed company has completed the submission and online reporting of the memorandum of trading process, relevant materials of insider information insiders. The listed company has hired independent financial advisers, legal advisers, audit institutions, valuation institutions and other intermediaries, and signed confidentiality agreements or appointment agreements with confidentiality clauses with the above intermediaries, clearly stipulating the scope of confidential information and the confidentiality responsibilities of each intermediary. 2. In communicating with the transaction counterparties, the listed company made clear to them that they shall be strictly confidential about the relevant information, shall not leak the information to others, and shall not trading in shares of the listed company with the information. 3. When discussing the problems, solutions, suggestions, ideas and solutions with respect to the transaction, the transaction counterparties did not leak the restructuring information to any other irrelevant entities or individuals. 4. Before the listed company discloses information in relation to the transaction, the |
| transaction counterparties strictly abided by the confidentiality obligation and did not conduct any insider trading using the information. | |||||
| Rising Group, Electronics Group, and Rising Capital | About the truthfulness, accuracy and completeness of the information provided during this major asset restructuring | 1. They promise that the information provided is true, accurate and complete, and there are no false records, misleading statements or material omissions. 2. They have provided relevant information and documents (including but not limited to original written materials, duplicate materials or oral testimony, etc.) related to this trading to the intermediaries. They promise that the copies or photocopies of the documents and materials provided are consistent with the originals, and that the signatures and seals of the documents and materials are authentic, and the signatories of the documents have been legally authorized and effectively signed the documents; that there are no false records, misleading statements or material omissions. 3. They promise that the explanations and confirmations issued by them are true, accurate and complete, and there are no false records, misleading statements or material omissions. 4. During this trading, they will disclose the information about this trading in a timely manner in accordance with relevant laws and regulations, the CSRC and the SZSE, and ensure the | 27 October 2021 | Long-term | Ongoing |
| authenticity, accuracy and completeness of such information. 5. They shall bear legal responsibility for the authenticity, accuracy and completeness of the information, documents, materials, explanations and confirmations provided. In case of any violation or losses caused to the listed company, investors, parties to the trading and intermediaries participating in this trading, they will be liable for compensation according to law. 6. Where the information provided or disclosed by them in this trading is suspected of false records, misleading statements or material omissions, and they are filed for investigation by the judicial organ or by the CSRC, the shares with interests in the listed company will not be transferred until the investigation conclusion is formed. | |||||
| Rising Group, Electronics Group, and Rising Capital | Statement about not prohibited from participating in of any major asset restructuring of listed companies as stipulated in Article 13 of the Interim Provisions on Strengthening the | As of the issuance date of the Report on Major Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft), the counterparties of this restructuring have not been placed on file for investigation or criminal investigation due to suspected insider trading related to this trading, and has not been subject to administrative punishment by the CSRC or criminal responsibility investigated by judicial organs according to law for insider | 27 October 2021 | Within the three years preceding the date of issuance of the letter of commitment (inclusive) | Expired |
| Supervision of Abnormal Stock Trading Related to Major Asset Restructuring of Listed Companies | trading related to any major asset restructuring in the last 36 months. The relevant entities of this trading do not disclose the insider information of this restructuring or use the insider information of this restructuring to conduct trading. In case of any violations to the above commitments, the relevant subjects of this trading will bear corresponding compensation liabilities. | ||||
| Electronics Group | About the clarity of the underlying assets of this major asset restructuring | Electronics Group promises that the 100% equity of Sigma it held is clear in ownership and is not subject to any dispute or potential dispute, and there is no situation affecting its legal existence; the above shares are not subject to any other pledges, guarantees or third-party interests or restrictions and there is no pending or potential litigation, arbitration and any other administrative or judicial procedure that may lead to the seizure, freezing, expropriation or restriction of transfer of the above-mentioned equity by the relevant judicial or administrative organs. There is no entrusted shareholding or trust shareholding, restriction or prohibition of transfer of the above-mentioned equity controlled by Electronics Group. | 27 October 2021 | Long-term | Ongoing |
| Rising Group | About the clarity of the underlying assets of this major asset | Rising Group promises that 46,260,021 shares of NATIONSTAR it held is clear in ownership and is not subject to any dispute or potential dispute, and there is no situation | 27 October 2021 | Long-term | Ongoing |
| restructuring | affecting its legal existence; the above shares are not subject to any other pledges, guarantees or third-party interests or restrictions and there is no pending or potential litigation, arbitration and any other administrative or judicial procedure that may lead to the seizure, freezing, expropriation or restriction of transfer of the above-mentioned equity by the relevant judicial or administrative organs There is no entrusted shareholding or trust shareholding, restriction or prohibition of transfer of the above-mentioned equity controlled by Rising Group. | ||||
| Rising Capital | About the clarity of the underlying assets of this major asset restructuring | Rising Capital promises that 5,791,924 shares of NATIONSTAR it held is clear in ownership and is not subject to any dispute or potential dispute, and there is no situation affecting its legal existence; and there is no pending or potential litigation, arbitration and any other administrative or judicial procedure that may lead to the seizure, freezing, expropriation or restriction of transfer of the above-mentioned equity by the relevant judicial or administrative organs. There is no entrusted shareholding or trust shareholding, restriction or prohibition of transfer of the above-mentioned equity controlled by Rising Capital. | 27 October 2021 | Long-term | Ongoing |
| Rising Group and Rising Capital | About compliance of this major asset | They are not subject to any securities and futures crimes as stipulated in Article 6 of Several Provisions on the Reduction of | 27 October 2021 | Until the completion of this | Ongoing |
| restructuring with Several Provisions on the Reduction of Shares by Shareholders, Directors and Supervisors of Listed Companies | Shares by Shareholders, Directors and Supervisors of Listed Companies. During the period when the CSRC or the judicial organ filed a case for investigation, and less than six months after the administrative penalty decision and criminal judgment were made, there was no situation that the shares of NATIONSTAR could not be reduced due to violation of the rules of stock exchanges and public censure by stock exchanges for less than three months. 2. In case of any violation or losses caused to NATIONSTAR, investors, parties to the trading and intermediaries participating in this trading, they will be liable for compensation according to law. | trading | |||
| Rising Capital | About legal compliance | 1. Rising Capital has not been investigated by the judicial organ for suspected crimes or by the CSRC for suspected violations of laws and regulations, and there is no administrative punishment (except those obviously unrelated to the securities market) or criminal punishment in the last five years; 2. Rising Capital has not failed to repay large debts on schedule, failed to fulfill its commitments, been taken administrative supervision measures by the CSRC, or been disciplined by any stock exchange, has not been publicly condemned by any stock exchange, has no other major acts of dishonesty and has no any other bad record in the last five | 27 October 2021 | Within five years preceding the date of the issuance of the letter of commitment (inclusive) | Expired |
| years. 3. The main management personnel of Rising Capital have not received administrative punishment or criminal punishment related to the securities market, and have not involved in major civil litigation or arbitration related to economic disputes in the last five years. 4. The main management personnel of Rising Capital have not failed to repay large debts on schedule, failed to fulfill their commitments, been taken administrative supervision measures by the CSRC or been disciplined by any stock exchange in the last five years. | |||||
| Electronics Group | 1. Electronics Group has not been investigated by the judicial organ for suspected crimes or by the CSRC for suspected violations of laws and regulations, and there is no administrative punishment (except those obviously unrelated to the securities market) or criminal punishment in the last five years; 2. Electronics Group has not failed to repay large debts on schedule, failed to fulfill its commitments, been taken administrative supervision measures by the CSRC, or been disciplined by any stock exchange, has not been publicly condemned by any stock exchange, has no other major acts of dishonesty and has no any other bad record in the last five years. 3. On 20 November 2019, Guangdong Regulatory Bureau of the CSRC issued an administrative penalty decision ([2019] No. 13), giving Liu Ke, | 27 October 2021 | Within five years preceding the date of the issuance of the letter of commitment (inclusion) | Expired |
| then director of Guang Dong Fenghua Advanced Technology (Holding) Co., Ltd. (now chairman of Electronics Group), a warning and a fine of RMB30,000 over the case of illegal information disclosure of Guang Dong Fenghua Advanced Technology (Holding) Co., Ltd. Except as aforesaid, the main management personnel of Electronics Group have not received administrative punishment or criminal punishment related to the securities market, and have not involved in major civil litigation or arbitration related to economic disputes in the last five years; 4. Except as aforesaid, the main management personnel of Electronics Group have not failed to repay large debts on schedule, failed to fulfill their commitments, been taken administrative supervision measures by the CSRC or been disciplined by any stock exchange in the last five years. | |||||
| Rising Group | 1. Rising Group has not been investigated by the judicial organ for suspected crimes or by the CSRC for suspected violations of laws and regulations, and there is no administrative punishment (except those obviously unrelated to the securities market) or criminal punishment in the last five years; 2. Rising Group has not failed to repay large debts on schedule, failed to fulfill its commitments, been taken administrative supervision measures by the CSRC, or been | 27 October 2021 | Within five years preceding the date of the issuance of the letter of commitment (inclusion) | Expired |
| disciplined by any stock exchange, has not been publicly condemned by any stock exchange, has no other major acts of dishonesty and has no any other bad record in the last five years. 3. According to the announcement of Guangdong Discipline Inspection and Supervision Network on October 18, 2021, Yu Gang, a member of the Party Committee and deputy general manager of Rising Group, is suspected of serious disciplinary violations and is currently undergoing disciplinary review and supervision by the Supervision Committee of Guangdong Provincial Commission for Discipline Inspection. As of the date of issuance of this Letter of Commitments, there is no result of disciplinary review and supervision. Except as aforesaid, the main management personnel of Rising Group have not received administrative punishment or criminal punishment related to the securities market, and have not involved in major civil litigation or arbitration related to economic disputes in the last five years. 4. The main management personnel of Rising Group have not failed to repay large debts on schedule, failed to fulfill their commitments, been taken administrative supervision measures by the CSRC or been disciplined by any stock exchange in the last five years. | |||||
| Electronics Group | About the release of | 1. As of the date of issuance of the Letter of Commitments, | 27 October | Until the completio | Ongoing |
| credit guarantee | Sigma has signed the Maximum Guarantee Contract (Contract No.: XYYBZ (BY) No. 201906280001-1) and the Maximum Pledge Contract for Stocks of Listed Companies (Contract No.: XXYZZ (BY) No. 201906280001-2) with Guangzhou Branch of Industrial Bank Co., Ltd. Sigma will provide the maximum guarantee and pledge guarantee for the debt of Electronics Group, with the guarantee amount of RMB400 million (in words: RMB Four Hundred Million), and the guarantee will be valid from June 28, 2019 to June 27, 2022. Electronics Group promises that on the date of issuance of this Letter of Commitment, all the loans involved in the Maximum Guarantee Contract and the Maximum Pledge Contract for Stocks of Listed Companies have been repaid, there is no debt based on the guarantee under the above contracts, and 39,876,500 shares of NATIONSTAR held by Sigma have been released from pledge. At the same time, Electronics Group further makes an irrevocable commitment that it will not add any new loans to Guangzhou Branch of Industrial Bank Co., Ltd. as a borrower before the expiration date of the Maximum Guarantee Contract and the Maximum Pledge Contract for Stocks of Listed Companies, so as to ensure that Sigma will not actually assume | 2021 | n of this trading |
| any guarantee responsibilities due to the above guarantee contracts. 2. Electronics Group promises that it will not arrange for Sigma to add any form of guarantee before the completion of the delivery of Sigma's equity in this trading. 3. In case of any violations of the above commitments, Electronics Group shall solve and eliminate the above situation within ten days, and bear corresponding legal responsibilities to Sigma and FSL. | |||||
| Key management personnel of Rising Group, Electronics Group, and Rising Capital | About absence of insider trading | They promise that they will not disclose the relevant insider information of this trading or make use of the insider information for insider trading; 2. As of the issuance date of the Report on Major Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft), they have not been placed on file for investigation or criminal investigation due to suspected insider trading related to this trading, and have not been subject to administrative punishment by the CSRC or criminal responsibility investigated by judicial organs according to law for insider trading related to any major asset restructuring, and have not been prohibited from engaging in any major asset restructuring of listed companies according to Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset | 27 October 2021 | From the date of the issuance of the letter of commitment until the completion of this trading | Ongoing |
| Restructuring of Listed Companies in the last 36 months; 3. In case of violation of the above commitments, they will bear all losses caused to the listed company and its shareholders. | |||||
| NATIONSTAR and Sigma | About explanation on legal compliance | NATIONSTAR and Sigma have not been investigated by judicial organs for suspected crimes or by the CSRC for suspected violations of laws and regulations, and have not been subject to major administrative punishment or criminal punishment in the last five years. | 27 October 2021 | Within five years preceding the date of the issuance of the letter of commitment (inclusive) | Expired |
| NATIONSTAR | About statement and commitment of truthfulness, accuracy and completeness of information provided | NATIONSTAR has provided the necessary, true, accurate, complete and effective documents, materials or oral statements and explanations for this trading at this stage, and there is no concealment, falsehood or material omission. The copies or photocopies of the documents provided are consistent with the original materials or originals. The signatures and seals on the documents and materials provided are authentic, and NATIONSTAR has fulfilled the legal procedures required for such signatures and seals and obtained legal authorization. All the facts stated and explained are consistent with the facts that happened. As this transaction proceeds, the Company shall provide needed information and documents as required by applicable laws, regulations, | 27 October 2021 | Long-term | Ongoing |
| rules and requirements of CSRC and the stock exchange, and continue to guarantee the truthfulness, accuracy, completeness and validity of the information and documents provided. The Company promises and guarantees the truthfulness, accuracy and completeness of the information provided or disclosed with respect to this transaction. It guarantees that there are no misrepresentations, misleading statements or material omissions. And it shall be individually and jointly liable for that. | |||||
| Sigma | About the clarity of the ownership of the underlying assets of this major asset restructuring | Among 79,753,050 shares of tradable shares with unlimited selling conditions of NATIONSTAR held by Sigma, 39,876, 500 shares were pledged for Guangdong Electronics Information Industry Group Ltd. As of the date of issuance of this commitment, the pledge of the above shares has been released. However, the Maximum Pledge Contract for Stocks of Listed Companies (No.: XXYZZ (BY) No. 201906280001-2) signed by Sigma and Guangzhou Branch of Industrial Bank Co., Ltd. has not been dissolved. Guangdong Electronics Information Industry Group Ltd. has promised that it will not add any new loans to Guangzhou Branch of Industrial Bank Co., Ltd. as a borrower during the validity period of the guarantee, and that it will not | 27 October 2021 | Long-term | Ongoing |
| substantially assume any guarantee responsibility due to the Maximum Pledge Contract for Stocks of Listed Companies. Except as aforesaid, the asset ownership of Sigma is clear, there is no dispute or potential dispute, and there is no situation affecting the legal existence. There is no entrusted shareholding or trust shareholding, restriction or prohibition of transfer of the above-mentioned equity controlled by Rising Group. | |||||
| Sigma | About no ownership dispute in equity | 1. Sigma promises that all its registered capital has been paid in. 2. Sigma promises that all existing shareholders contribute their own funds to hold shares, there is no situation such as holding shares on behalf of them, and there is no dispute or potential dispute between shareholders over their shares. | 27 October 2021 | Long-term | Ongoing |
| Sigma | About explanation on litigation and administrative punishment | As of the date of issuance of this statement, Sigma and its wholly-owned and controlled subsidiaries have no outstanding or foreseeable major lawsuits, arbitrations and administrative penalties that have a significant adverse impact on this trading. As of the date of issuance of this note, the directors, supervisors and senior management personnel of Sigma have no pending or foreseeable major lawsuits, arbitrations and administrative penalties that have a significant adverse impact on this trading. | 27 October 2021 | Before the date of the issuance of the letter of commitment | Expired |
| Sigma | About | 1. Sigma has provided relevant | 27 | Long-term | Ongoing |
| statement and commitment of truthfulness, accuracy and completeness of information provided | information and documents (including but not limited to original written materials, duplicate materials or oral testimony, etc.) related to this trading to the intermediaries providing professional services of auditing, valuation, legal and financial consultancy for this trading. Sigma promises that the copies or photocopies of the documents and materials provided are consistent with the originals, and that the signatures and seals of the documents and materials are authentic, and the signatories of the documents have been legally authorized and effectively signed the documents; that the provided information and documents are authentic, accurate and complete and that there are no false records, misleading statements or material omissions. Sigma also promises to bear individual and joint and several liability. 2. Sigma promises that the information provided is true, accurate and complete. In case of any losses caused to investors due to any false presentations, misleading statements or material omissions in the information provided, Sigma will be liable for compensation according to law. | October 2021 | |||
| Directors, supervisors and senior management personnel of NATIONSTAR | About legal compliance | They have not been investigated by judicial organs for suspected crimes or by the CSRC for suspected violations of laws and regulations, and have not been subject to major administrative | 27 October 2021 | Within five years preceding the date of the issuance | Expired |
| and Sigma | punishment or criminal punishment in the last five years. | of the letter of commitment | ||||
| Commitments made to minority shareholders of the Company | FSL | About cash dividends | FSL’s profit distributed in cash shall not be less than 30% of the distributable profit realized in the year. | 27 May 2009 | Long-term | Ongoing |
| Whether the commitments were timely performed | Yes | |||||
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was stillwithin the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable √ Not applicable
II Occupation of the Company’s Capital by the Controlling Shareholder or Its Related Partiesfor Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.III Irregularities in the Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.IV Explanations Given by the Board of Directors Regarding the Independent Auditor's“Modified Opinion” on the Financial Statements of the Latest Period
□ Applicable √ Not applicable
V Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Correction of Material AccountingErrors
√Applicable □ Not applicable
Refer to Part X Financial Statements-V Important Accounting Policies and Estimations-44. Changes in MainAccounting Policies and Estimates for details.VII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
Compared with the previous period, the consolidated scope of financial statements in this period is increased,including two subsidiaries of Nanning Liaowang lamp Co., Ltd. and fozhao (Hainan) Technology Co., Ltd., aswell as five subsidiaries of Liuzhou Guige Photoelectric Technology Co., Ltd., Liuzhou Guige FuxuanTechnology Co., Ltd., Chongqing Guinuo photoelectric technology Co., Ltd., Qingdao Guige photoelectric Co.,Ltd. and Indonesia Liaowang lamp Co., Ltd, Reduce two subsidiaries of Foshan Electric lighting new light sourcetechnology Co., Ltd. and Hunan Keda new energy investment and Development Co., Ltd. for details, see note VIII"change of consolidation scope" and note IX "equity in other entities".VIII Engagement and Disengagement of Independent AuditorCurrent independent auditor:
| Name of the domestic independent auditor | Zhongzheng Tiantong Certified Public Accountants LLP |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 162 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 6 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Feng Wei, Li Qiongqian |
| How many consecutive years the certified public accountants from the domestic independent auditor have provided audit service for the Company | 1 |
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
In the Reporting Period, the Company engaged Beijing Zhongzheng Tiantong Certified Public Accountants LLP asits internal control auditor with the total audit fees of RMB500,000.
IX Possibility of Delisting after Disclosure of this Report
□ Applicable √ Not applicable
X Insolvency and Reorganization
□ Applicable √ Not applicableNo such cases in the Reporting Period.XI Major Legal Matters
□ Applicable √ Not applicableNo such cases in the Reporting Period.XII Punishments and Rectifications
□ Applicable √ Not applicableNo such cases in the Reporting Period.XIII Credit Quality of the Company as well as Its Controlling Shareholder and ActualController
√Applicable □ Not applicable
In the Reporting Period, the Company and its controlling shareholder and actual controller were not involved in anyunsatisfied court judgments, large-amount overdue liabilities or the like.
XIV Major Related-Party Transactions
1. Continuing Related-Party Transactions
√Applicable □ Not applicable
| Related party | Relationship with the Company | Type of transaction | Specific transaction | Pricing principle | Transaction price(RMB’0,000) | Total value (RMB’0,000) | As % of total value of all same-type transactions | Approved transaction line (RMB’0,000) | Over the approved line or not | Method of settlement | Obtainable market price for same-type transactions(RMB’0,000 | Disclosure date | Index to disclosed information |
| ) | |||||||||||||
| Foshan NationStar Optoelectronics Co., Ltd. | Under same actual controller | Purchasing products and receiving labor service from related party | Purchase of materials | Market price | 4,264.47 | 4,264.47 | 1.55% | 12,000 | Not | Bank transfers or bank acceptance notes | 4,264.47 | 28 January 2021 | www.cninfo.com.cn |
| Guangdong Fenghua Advanced Technology Holding Co., Ltd. | Under same actual controller | Purchasing products and receiving labor service from related party | Purchase of materials | Market price | 785.86 | 785.86 | 0.28% | 1,500 | Not | Bank transfers or bank acceptance notes | 785.86 | 28 January 2021 | www.cninfo.com.cn |
| Prosperity Lamps & Components Limited | Shareholder that holds over 5% shares of the Company | Purchasing products and receiving labor service from related party | Purchase of materials | Market price | 265.44 | 265.44 | 0.10% | 1,300 | Not | Bank transfers or bank acceptance notes | 265.44 | 28 January 2021 | www.cninfo.com.cn |
| Hangzhou Times Lighting and Electrical Co., Ltd. | Acting-in-concert party of a 5% greater shareholder of the Company | Purchasing products and receiving labor service from related party | Purchase of materials | Market price | 64.65 | 64.65 | 0.02% | Not | Bank transfers or bank acceptance notes | 64.65 | N/A |
| Guangdong Electronic Technology Research Institute | Under same actual controller | Purchasing products and receiving labor service from related party | Purchase of equipment | Market price | 115.19 | 115.19 | 1.83% | 300 | Not | Bank transfers or bank acceptance notes | 115.19 | 28 January 2021 | www.cninfo.com.cn |
| Jiangmen Dongjiang Environmental Technology Co, Ltd. | Under same actual controller | Purchasing products and receiving labor service from related party | Receiving labor service | Market price | 26.94 | 26.94 | 21.83% | Not | Bank transfers or bank acceptance notes | 26.94 | N/A | ||
| Foshan Fulong Environmental Technology Co., Ltd. | Under same actual controller | Purchasing products and receiving labor service from related party | Receiving labor service | Market price | 2.55 | 2.55 | 2.06% | Not | Bank transfers or bank acceptance notes | 2.55 | N/A | ||
| Zhuhai Doumen District Yongxingsheng Environmental Industrial Wastes Recycling Comprehensive Treatment | Under same actual controller | Purchasing products and receiving labor service from related party | Receiving labor service | Market price | 0.57 | 0.57 | 0.46% | Not | Bank transfers or bank acceptance notes | 0.57 | N/A |
| Co., Ltd. | |||||||||||||
| Guangdong Electronic Technology Research Institute | Under same actual controller | Purchasing products and receiving labor service from related party | Receiving labor service | Market price | 0.27 | 0.27 | 0.03% | Not | Bank transfers or bank acceptance notes | 0.27 | N/A | ||
| Prosperity Electrical (China) Co., Ltd. | Acting-in-concert party of a 5% greater shareholder of the Company | Purchasing products and receiving labor service from related party | Purchase of materials | Market price | 139.46 | 139.46 | 0.05% | Not | Bank transfers or bank acceptance notes | 139.46 | N/A | ||
| Guangdong Yixin Changcheng Construction Group | Under same actual controller | Purchasing products and receiving labor service from related party | Receiving labor service | Market price | 1,648.96 | 1,648.96 | 26.22% | Not | Bank transfers or bank acceptance notes | 1,648.96 | N/A | ||
| Guangdong Zhongnan Construction Co., Ltd. | Under same actual controller | Purchasing products and receiving labor service from related party | Receiving labor service | Market price | 6,043.04 | 6,043.04 | 26.66% | Not | Bank transfers or bank acceptance notes | 6,043.04 | N/A |
| Shenzhen yuepeng Construction Co., Ltd | Under same actual controller | Purchasing products and receiving labor service from related party | Receiving labor service | Market price | 23.42 | 23.42 | 0.10% | Not | Bank transfers or bank acceptance notes | 23.42 | N/A | ||
| Guangdong New Electronics Information Import&Export Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 3,751.62 | 3,751.62 | 0.79% | 3,800 | Not | Bank transfers or bank acceptance notes | 3,751.62 | 28 January 2021 | www.cninfo.com.cn |
| Prosperity Lamps & Components Limited | Shareholder that holds over 5% shares of the Company | Selling products and providing labor service to related party | Selling products | Market price | 2,544.25 | 2,544.25 | 0.53% | 3,600 | Not | Bank transfers or bank acceptance notes | 2,544.25 | 28 January 2021 | www.cninfo.com.cn |
| Guangdong Rising Rare Metals-EO Materials Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 810.10 | 810.1 | 0.17% | 1,500 | Not | Bank transfers or bank acceptance notes | 810.10 | 28 January 2021 | www.cninfo.com.cn |
| Guangdong Yixin Changcheng Construction Group | Under same actual controller | Selling products and providing labor service | Selling products | Market price | 308.96 | 308.96 | 0.06% | 3,000 | Not | Bank transfers or bank acceptance | 308.96 | 28 January 2021 | www.cninfo.com.cn |
| to related party | notes | ||||||||||||
| Guangdong Zhongnan Construction Co., Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 186.31 | 186.31 | 0.04% | Not | Bank transfers or bank acceptance notes | 186.31 | N/A | ||
| Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 310.44 | 310.44 | 0.07% | 1,000 | Not | Bank transfers or bank acceptance notes | 310.44 | 28 January 2021 | www.cninfo.com.cn |
| Guangdong Heshun Property Management Co., Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 7.35 | 7.35 | 0.00% | Not | Bank transfers or bank acceptance notes | 7.35 | N/A | ||
| Guangdong Zhongjin Lingnan Junpeng Intelligent Equipment Co., Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 4.97 | 4.97 | 0.00% | Not | Bank transfers or bank acceptance notes | 4.97 | N/A | ||
| Guangdong Zhongjin Lingnan | Under same actual controll | Selling products and providin | Selling products | Market price | 22.57 | 22.57 | 0.00% | Not | Bank transfers or bank | 22.57 | N/A |
| Equipment Technology Co., Ltd. | er | g labor service to related party | acceptance notes | ||||||||||
| Guangdong Zhongjin Lingnan Engineering Technology Co., Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 10.86 | 10.86 | 0.00% | Not | Bank transfers or bank acceptance notes | 10.86 | N/A | ||
| Guangdong Rising Holdings Group Co., Ltd. | Actual controller | Selling products and providing labor service to related party | Selling products | Market price | 3.02 | 3.02 | 0.00% | Not | Bank transfers or bank acceptance notes | 3.02 | N/A | ||
| Prosperity Electrical (China) Co., Ltd. | Acting-in-concert party of a 5% greater shareholder of the Company | Selling products and providing labor service to related party | Selling products | Market price | 2.70 | 2.7 | 0.00% | Not | Bank transfers or bank acceptance notes | 2.70 | N/A | ||
| Guangdong Electronics Information Industry Group Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 0.80 | 0.8 | 0.00% | Not | Bank transfers or bank acceptance notes | 0.80 | N/A |
| Guangzhou Huajian Engineering Construction Co.,Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 0.61 | 0.61 | 0.00% | 3,600 | Not | Bank transfers or bank acceptance notes | 0.61 | 28 January 2021 | www.cninfo.com.cn |
| Primatronix Nanho Technology Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 0.09 | 0.09 | 0.00% | Not | Bank transfers or bank acceptance notes | 0.09 | N/A | ||
| Guangdong Rising South Construction Co., Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 1.44 | 1.44 | 0.00% | Not | Bank transfers or bank acceptance notes | 1.44 | N/A | ||
| NationStar Optoelectronics (Germany) Co., Ltd. | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 164.30 | 164.3 | 0.03% | Not | Bank transfers or bank acceptance notes | 164.30 | N/A | ||
| Guangdong Heshun Property Management Co., Ltd. | Under same actual controller | Selling products and providing labor service to | Selling products | Market price | 61.92 | 61.92 | 0.01% | Not | Bank transfers or bank acceptance notes | 61.92 | N/A |
| related party | ||||||||||||
| Total | -- | -- | 21,573.13 | -- | 31,600 | -- | -- | -- | -- | -- | ||
| Large-amount sales return in detail | N/A | |||||||||||
| Give the actual situation in the Reporting Period (if any) where an estimate had been made for the total value of continuing related-party transactions by type to occur in the Reporting Period | In January 2021, the Company estimated the total value of its continuing transactions with related parties Foshan NationStar Optoelectronics Co., Ltd., Guangdong Fenghua Advanced Technology Holding Co., Ltd., Rising Investment Development Limited and its majority-owned subsidiaries, Prosperity Lamps & Components Limited and its majority-owned subsidiaries, Guangdong Electronic Technology Research Institute, Guangdong New Electronics Information Import&Export Ltd., Guangdong Huajian Enterprise Group Co., Ltd. and its majority-owned subsidiaries, Guangdong Rising Real Estate Group Co., Ltd. and its majority-owned subsidiaries, Guangzhou Rising Non-ferrous Metal Group Co., Ltd. and its majority-owned subsidiaries, Guangdong Rising Property Group Co., Ltd. and its majority-owned subsidiaries, Guangdong Rising Investment Group and its majority-owned subsidiaries, Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd. and its majority-owned subsidiaries. Concerning the purchases from its related parties, the actual amount in 2021 was RMB133.8082 million, accounting for 73.93% of the estimate for 2021. As for the sales to its related parties, the actual amount in 2021 was RMB81.9231million, accounting for 34.86% of the estimate for 2021. | |||||||||||
| Reason for any significant difference between the transaction price and the market reference price (if applicable) | N/A | |||||||||||
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
√ Applicable □ Not applicable
| Related party | Related relationship | Related party name | Content of related party transaction | Pricing policy | Book value of the transferred assets (RMB’0,000) | Estimated value of the transferred assets (RMB’0,000) | Transaction price (RMB’0,000) | Settlement method | Transaction gains and losses (RMB’0,000) | Date of disclosure | Disclosure index |
| Guangdong Rising Holdings Group Co., Ltd. | Rising Group is the actual controller of the Company | Equity acquisition | The Company acquired 46,260,021 shares of NationStar Optoelectronics | Refer to the valuation in the Valuation Report on the Valuation Project in which | 27,824.28 | 50,099.60-55,974.63 | 53,245.28 | Cash | 0 | 28 October 2021 | Title of announcement: Report on Related-party Transaction regarding Major |
| held by Rising Group | Foshan Electrical and Lighting Co., Ltd. Plans to Purchase 52,051,945 Shares of Foshan Nationstar Optoelectronics Co., Ltd. Held by Guangdong Rising Holdings Group Co., Ltd. and Guangdong Rising Finance Holding Co., Ltd. issued by China United International Appraisal Consulting Co., Ltd., and shall be determined by both parties through negotiation | Assets Restructuring (Draft); published on: Cninfo (http://www.cninfo.com.cn/). | |||||||||
| Guangdo | Rising | Equity | The | Refer to | 3,483.70 | 6,272.65- | 6,666.5 | Cash | 0 | 28 | Title of |
| ng Rising Capital Investment Co., Ltd. | Capital is a wholly-owned subsidiary of Rising Group | acquisition | Company acquired 5,791,924 shares of NationStar Optoelectronics held by Rising Group | the valuation in the Valuation Report on the Valuation Project in which Foshan Electrical and Lighting Co., Ltd. Plans to Purchase 52,051,945 Shares of Foshan Nationstar Optoelectronics Co., Ltd. Held by Guangdong Rising Holdings Group Co., Ltd. and Guangdong Rising Finance Holding Co., Ltd. issued by China United International Appraisal Consulting Co., | 7,008.23 | October 2021 | announcement: Report on Related-party Transaction regarding Major Assets Restructuring (Draft); published on: Cninfo (http://www.cninfo.com.cn/). |
| Ltd., and shall be determined by both parties through negotiation | |||||||||||
| Guangdong Electronics Information Industry Group Ltd. | Electronics Group is a wholly-owned subsidiary of Rising Group | Equity acquisition | The Company acquired 100% of equity of Sigma (holding 79,753,050 shares of NationStar Optoelectronics) held by Electronics Group | Value of shares of NationStar Optoelectronics held by Sigma | 47,969.53 | 86,372.55-96,501.19 | 91,798.02 | Cash | 0 | 28 October 2021 | Title of announcement: Report on Related-party Transaction regarding Major Assets Restructuring (Draft); published on: Cninfo (http://www.cninfo.com.cn/). |
| Reasons for considerable differences between the transaction price and the book value or estimated value (if applicable) | None | ||||||||||
| Impact on the Company's operating results and financial conditions | In 2021, NationStar Optoelectronics was not included in the Company’s consolidated financial statements. The Company has made a prepayment of around RMB450 million to the former shareholders of NationStar Optoelectronics for the acquisition of a 30% interest from them, which has resulted in a significant impact on the cash flows of the Company in 2021. | ||||||||||
| The actual performance during the Reporting Period if the related-party transaction is conditioned on the performance. | N/A | ||||||||||
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Amounts Due to and from Related Parties
√ Applicable □ Not applicable
Non-operating amounts due to and from related parties or not
□ Yes √ No
No such cases in the Reporting Period.
5. Transactions with Related Finance Companies
√ Applicable □ Not applicable
Deposit business
| Related party | Relationship | Daily maximum limits (RMB’0,000) | Interest rate range | Beginning balance (RMB’0,000) | Actual amount | Ending balance (RMB’0,000) | |
| Total deposited in (RMB’0,000) | Total withdrawn (RMB’0,000) | ||||||
| Guangdong Rising Finance Co., Ltd. | Controlled by the same controlling shareholder | 30,000 | 1.75%-3.30% | 30,082.70 | 331,309.03 | 331,913.98 | 29,477.75 |
Note: Due to a business combination under common control in December 2020, the Company recorded into the beginning balancethe RMB827,000 that was deposited by subsidiary Foshan Kelian New Energy Technology Co., Ltd. in Guangdong Rising FinanceCo., Ltd., which has been transferred out in January 2021.
Credit or other finance business
| Related party | Related relationship | Type of business | Total amount (RMB’0,000) | Actual amount (RMB’0,000) |
| Guangdong Rising Finance Co., Ltd. | Controlled by the same controlling shareholder | Credit | 40,000 | 0 |
6. Transactions with Related Parties by Finance Company Controlled by the Company
□ Applicable √ Not applicable
7. Other Major Related-Party Transactions
√ Applicable □ Not applicable
1. Upon review and approval at the Shareholders' General Meeting for 2020, the Company will use its equity fund ofno more than RMB300 million to purchase shares of no more than 5% of the current total share capital of FoshanNationStar Optoelectronics Co., Ltd. (NationStar) in the secondary market (including but not limited to the wayspermitted by laws and regulations like call auction and bulk commodity trading), when appropriate. On 16 June2021, the Company purchased 1,014,900 shares of NationStar at the cost of RMB9,402,100.
2. The Company bid for the Phase II office building project of the production base at Gaoming Headquarters inMarch 2021. Upon bidding, review, and announcement, the consortium composed of Guangdong YixinChangcheng Construction Group Co., Ltd. (primary) and Guangdong Architectural Design & Research Institute Co.,Ltd. (member) won the project at RMB175,025,600. Guangdong Yixin Changcheng Construction Group Co., Ltd. isa tier-2 wholly owned subsidiary of Guangdong Rising Holdings Group Co., Ltd. which is the controller shareholderof the Company. The Company had a connected transaction regarding the "General Contracting of Design andConstruction of Phase II Office Building Project of Production Base at Gaoming Headquarters of Foshan Electricaland Lighting Co., Ltd. (FSL)" won by the consortium of Guangdong Yixin Changcheng Construction Group Co.,Ltd., in accordance with relevant regulations.
3. The Company bid for the general contracting of design and construction of the decoration engineering project ofFoshan Kelian Building in April 2021. Upon bidding, review, and announcement, the consortium composed ofGuangdong Zhongnan Construction Co., Ltd. (primary) and Guangdong Architectural Design & Research InstituteCo., Ltd. (member) won the project at the offer of RMB189,070,200. Guangdong Zhongnan Construction Co., Ltd.is a tier-2 wholly owned subsidiary of Guangdong Rising Holdings Group Co., Ltd. which is the controllershareholder of the Company. The Company had a connected transaction regarding the "General Contracting ofDesign and Construction of Decoration Engineering Project of Foshan Kelian Building" won by the consortium ofGuangdong Zhongnan Construction Co., Ltd., in accordance with relevant regulations.
4. In June, 2021, the Company conducted a public tender for the renovation project of Staff Apartments 1, 2, 3, 4 andShop No. 18 in Gaoming Headquarters Production Base. After performing the corresponding procedures of bidopening, evaluation and publicity, the winning bidder was determined to be Guangdong Zhongnan ConstructionReal Estate Development General Company (hereinafter referred to as "Zhongnan Construction"), with a total bidamount of RMB25,709,006. Zhongnan Construction is a second-level wholly-owned subsidiary of Guangdong
Rising Holdings Group Co., Ltd. (Rising Group), the controlling shareholder of the Company. According to Article
10.1.3 of the Stock Listing Rules of the Shenzhen Stock Exchange, Zhongnan Construction won the bid for the"Decoration Project of Staff Apartments 1, 2, 3, 4 and Shop No. 18 in Gaoming Headquarters Production Base ofFoshan Electrical and Lighting Co., Ltd." to form a related party transaction.
Index to the current announcement about the said related-party transaction disclosed:
| Title of announcement | Disclosure date | Disclosure website |
| Announcement on the Related-Party Transaction regarding Purchase of Some Shares of Nationstar Optoelectronics | 26 April 2021 | www.cninfo.com.cn |
| Announcement on a Related-Party Transaction Due to Public Bidding | 6 May 2021 | www.cninfo.com.cn |
| Announcement on a Related-Party Transaction Due to Public Bidding | 9 July 2021 | www.cninfo.com.cn |
| Announcement on a Related-Party Transaction Due to Public Bidding | 17 August 2021 | www.cninfo.com.cn |
XV Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(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) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major guarantees
√ Applicable □ Not applicable
Unit: RMB'0,000
| Guarantees provided by the Company and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Total approved line for such guarantees in the Reporting Period (A1) | Total actual amount of such guarantees in the Reporting Period (A2) | |||||||||
| Total approved line for such guarantees at the end of the Reporting Period (A3) | Total actual balance of such guarantees at the end of the Reporting Period (A4) | |||||||||
| Guarantees provided by the Company as the parent for its subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Total approved line for such guarantees in the Reporting Period (B1) | Total actual amount of such guarantees in the Reporting Period (B2) | |||||||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | Total actual balance of such guarantees at the end of the Reporting Period (B4) | |||||||||
| Guarantees provided between subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcem | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter guarantee (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| ent | ||||||||||
| Liuzhou Guige Optoelectronics Technology Co., Ltd.(Note:1) | 24 June 2021 | 15,000.00 | 26 January 2021 | 5,000.00 | Joint-liability | None | None | 2019/12/30-2024/12/30 | Not | Not |
| Liuzhou Guige Optoelectronics Technology Co., Ltd.(Note:1) | 24 June 2021 | 10 November 2020 | 1,000.00 | Joint-liability | None | None | 2019/12/30-2024/12/30 | Yes | Not | |
| Liuzhou Guige Optoelectronics Technology Co., Ltd.(Note:1) | 24 June 2021 | 10 December 2020 | 1,000.00 | Joint-liability | None | None | 2019/12/30-2024/12/30 | Yes | Not | |
| Nanning Liaowang Auto Lamp Co., Ltd. (Note 2) | 24 June 2021 | 20,000.00 | 1 February 2021 | 4,770.00 | Joint-liability;mortgage | Yes | None | 2019/12/30-2024/12/30 | Not | Not |
| Nanning Liaowang Auto Lamp Co., Ltd. (Note 2) | 24 June 2021 | 26 August 2020 | 850.00 | Joint-liability | None | None | 2019/12/30-2024/12/30 | Yes | Not | |
| Nanning Liaowang Auto Lamp Co., Ltd. (Note 2) | 24 June 2021 | 16 September 2020 | 2,000.00 | Joint-liability | None | None | 2019/12/30-2024/12/30 | Yes | Not | |
| Total approved line for such guarantees in the | Total actual amount of such guarantees in the | 14,620 | ||||||||
| Reporting Period (C1) | Reporting Period (C2) | |||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | Total actual balance of such guarantees at the end of the Reporting Period (C4) | 9,770 | ||
| Total guarantee amount (total of the three kinds of guarantees above) | ||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 14,620 | ||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 9,770 | ||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 1.68% | |||
| Of which: | ||||
| Balance of guarantees provided for shareholders, actual controller and their related parties (D) | ||||
| Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) | ||||
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | ||||
| Total of the three amounts above (D+E+F) | ||||
| Joint responsibilities possibly borne or already borne in the Reporting Period for undue guarantees (if any) | ||||
| Provision of external guarantees in breach of the prescribed procedures (if any) | ||||
Note :Chongqing Guinuo Lighting Technology Co., Ltd. (“Chongqing Guinuo”), Qingdao Guige Lighting Technology Co., Ltd.(“Qingdao Lighting”) and Liuzhou Guige Lighting Technology Co., Ltd. (“Liuzhou Lighting”) are all wholly-owned subsidiaries ofNanning Liaowang Auto Lamp Co., Ltd. (“Nanning Liaowang”). The aforesaid guarantees all occurred before the Company’sacquisition of Nanning Liaowang, and have been disclosed in the Company’s Announcement on the Acquisition of NanningLiaowang Auto Lamp Co., Ltd. dated 24 June 2021. As of 31 December 2021, guarantees between Nanning Liaowang and itssubsidiaries are set out in “3. Other” under “XIV Commitments and contingencies” of Part X.Note 1: Nanning Liaowang provided guarantees for Liuzhou Lighting.Note 2: Qingdao Lighting, Liuzhou Lighting and Chongqing Guinuo provided guarantees for Nanning Liaowang.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overview of cash entrusted for wealth management during the Reporting Period
Unit: RMB'0,000
| Type | Funding source | Amount | Undue amount | Unrecovered overdue amount | Provision for impairment on unrecovered overdue amount |
| Bank financial products | Self-owned funds | 40,000 | 32,191 | 0 | 0 |
| Others | Self-owned funds | 30,000 | 0 | 0 | 0 |
| Total | 70,000 | 32,191 | 0 | 0 | |
High-risk wealth management transactions with a significant single amount, or with low security and low liquidity:
√ Applicable □ Not applicable
Unit: RMB’0,000
| Trustee | Type of trustee | Type of wealth management product | Principal | Source of principal | Beginning date | Ending date | Use of principal | Determination of yield | Annualized yield rate for reference | Expected yield (if any) | Actual gain/loss in Reporting Period | Receipt/payment of such gain/loss | Allowance for impairment (if any) | Prescribed procedure executed or not | Plan for more transaction or not | Index to transaction summary and other information (if any) |
| Guangzhou Rural Commercial Bank | Bank | Not principal-protected with floating yield | 20,000 | Self-owned funds | 27 December 2021 | 3 January 2022 | Other | Repayment of principal with yield upon maturity | 3.80% | 14.58 | 10.41 | To be received | Yes | Yes |
| Bank of Guangzhou | Bank | Not principal-protected with floating yield | 10,000 | Self-owned funds | 29 December 2021 | 5 January 2022 | Other | Repayment of principal with yield upon maturity | 3.60% | 6.9 | 1.48 | To be received | Yes | Yes | ||
| Guangzhou Rural Commercial Bank | Bank | Not principal-protected with floating yield | 1,000 | Self-owned funds | 30 December 2021 | 6 January 2022 | Other | Repayment of principal with yield upon maturity | 3.80% | 0.73 | To be received | Yes | Yes | |||
| Jimo Branch of Industrial Bank | Bank | Non-guaranteed floating income | 791 | Self-funded | 13 September 2021 | 30 June 2022 | Creditor's rights assets | Withdrawal at any time | 3.00% | 36.00 | 35.99 | To be recovered | Yes | Yes | ||
| Nanning Branch Business Department of Industrial Bank | Bank | Non-guaranteed floating income | 400 | Self-funded | 13 September 2021 | 30 June 2022 | Creditor's rights assets | Withdrawal at any time | 3.00% | 3.50 | 3.37 | To be recovered | Yes | Yes | ||
| Total | 32,191 | -- | -- | -- | -- | -- | -- | 61.71 | 51.25 | -- | -- | -- | -- | |||
Situation where the principal is expectedly irrecoverable or an impairment may be incurred:
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Significant Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVI Other Significant Events
√ Applicable □ Not applicable
1. Major asset restructuring
The Company held the 19th meeting of the ninth Board of Directors and the Third Extraordinary General Meeting ofShareholders for the year 2021 on 27 October 2021 and 31 December 2021, respectively, where the “Report onMajor Asset Purchase and Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft) and ItsSummary” and other proposals related to this trading was deliberated and adopted. It was agreed that the Companywill purchase 100% equity of Foshan Sigma Venture Capital Co., Ltd. (hereinafter referred to as "Sigma") held byElectronics Group (Sigma holds 79,753,050 shares of NationStar Optoelectronics) and 52,051,945 tradable sharesof NationStar Optoelectronics held by Rising Holdings Group and Rising Capital in total. As of 25 February 2022,the Company has paid all the transfer price, and the transfer of the underlying assets involved in this major assetrestructuring has been completed, and the Company has become the controlling shareholder of NationStarOptoelectronics.
2. Share repurchase
The Third Extraordinary Shareholders’ General Meeting for 2020 of the Company reviewed and passed theProposal on Repurchasing Some A and B Shares of the Company on 18 December 2020. The Company formulatedand disclosed the repurchase report in line with relevant regulations. See the Report on Repurchasing Some A and BShares of the Company published on Cninfo (www.cninfo.com.cn) on 24 December 2020. As of 18 December 2021,the Company accumulatively repurchased 31,952,995 A-Shares and 18,398,512 B-Shares, respectively, by way ofcentralized bidding, representing 3.60% of the total share capital. RMB201,955,600 (excluding the transaction cost)and HKD58,588,200 (excluding the transaction cost) were spent for the repurchase of the A and B Shares,respectively. The implementation period of this share repurchase has expired.The Company held the 26th Meeting of the Ninth Board of Directors on 14 January 2022, where the Proposal onRetirement of Some Shares in the Company's Repurchase Special Securities Account was deliberated and approved.The Board of Directors agreed to use the repurchased 13 million A shares for the equity incentive plan. After
deducting the 13 million A shares used for the equity incentive plan, the remaining 18,952,995 A shares and18,398,512 B shares would be retired, totalling 37,351,507 shares. On 8 February 2022, the above-mentionedshares were retired, and the total share capital of the Company was changed from 1,399,346,154 shares to1,361,994,647 shares.
3. Sales of shares of other listed companies
In 2021, the Company sold 28,139,100 shares of Gotion High-tech at the price of RMB45.21 per share totalingRMB1,260,021,700 (with taxes and fees not deducted yet). Upon the decrease, it held 17,316,375 shares of GotionHigh-tech, representing 1.35% of the total share capital. In 2021, the Company sold 26,242,300 shares of XiamenBank at the price of RMB6.88 per share totaling RMB180,074,800 (with taxes and fees not deducted yet). Upon thedecrease, it held 83,471,876 shares of Xiamen Bank, representing 3.17% of the total share capital. In 2021, theCompany sold 18,546,754 shares of Everbright Bank at the price of RMB3.44 per share totaling RMB63,851,100(with taxes and fees not deducted yet). Upon the decrease, it no longer held shares of Everbright Bank. Inconformity with the new financial instrument standards effective on 1 January 2019, the Company recorded theinvestment in Gotion High-tech, Xiamen Bank and Everbright Bank as non-trading equity instrument investment atfair value through other comprehensive income. The decrease did not affect the Company's profit in the currentperiod.
XVII Significant Events of Subsidiaries
√ Applicable □ Not applicable
1. Deregistration of New Light Source
On 17 July 2020, the Company held the 41st Meeting of the Eighth Board of Directors, where the Proposal onDeregistration of Wholly Owned Subsidiaries was deliberated and approved, and the Board of Directors agreed toderegister Foshan Electrical and Lighting Co., Ltd., a wholly owned subsidiary. In September 2021, the Companyreceived the Notice of Approval for Deregistration Registration issued by Foshan Municipal Market SupervisionAdministration, and the deregistration registration procedures of New Light Source have been completed. NewLight Source has been excluded in the scope of the consolidated financial statements since the day the companyregistration cancellation procedure was completed.
2. Merger of Hunan Keda by absorption
The Company held the 15th meeting of the ninth Board of Directors on 16 August 2021, where the Proposal for
Merger of the Wholly-owned Subsidiary Hunan Keda New Energy Investment and Development Co., Ltd. byAbsorption, was deliberated and adopted. In order to streamline corporate management, reduce management costsand improve operational efficiency, the Board of Directors agreed that the Company should merge Hunan KedaNew Energy Investment and Development Co., Ltd., a wholly-owned subsidiary by absorption. Upon completion ofthis merger by absorption, Hunan Keda's independent legal personality will be cancelled, and all assets, creditor'srights and debts, business, personnel and all other rights and obligations of Hunan Keda will be inherited by theCompany according to law. In November 2021, the Company received the Notice of Approval for DeregistrationRegistration ((GX) DJNZH Zi [2021] No. 20795) issued by Changsha High-tech Industrial Development ZoneManagement Committee, approving deregistration registration of Hunan Keda. The industrial and commercialderegistration of Hunan Keda involved in this merger by absorption has been completed.
3. Expropriation of land and above-ground housing of Nanjing Fozhao
The Company held the 24th Meeting of the Ninth Board of Directors on 15 December 2021, where the Proposal onExpropriation of Land and Above-ground Housing of the Wholly-owned Subsidiary Nanjing Fozhao LightingEquipment Manufacturing Co., Ltd., was deliberated and adopted. The Board of Directors agreed that NanjingLishui District People's Government expropriates the land use rights and above-land housing of Nanjing FozhaoLighting Equipment Manufacturing Co., Ltd. (hereinafter referred to as "Nanjing Fozhao"), a wholly-ownedsubsidiary of the Company, at a compensation amount of RMB183,855,895, and Nanjing Fozhao signed anexpropriation and compensation agreement with Lishui County House Dismantling, Moving & ResettlingDevelopment Co., Ltd., the implementing unit of the housing expropriation. As of 31 December 2021, NanjingFozhao has received 30% of the compensation, that is, RMB55,160,000.00, and the land use right certificate andhouse ownership certificate of the assets involved have been cancelled. As of the date of this report, the sitehandover is still in progress.
4. Cancellation of FSL LIGHTING GmbH
On October 22, 2021, FSL held an office meeting of the general manager, where the proposal for cancellation ofits wholly-owned subsidiary FSL LIGHTING GmbH was deliberated and adopted. As of the end of the reportingperiod, the Company is handling the relevant procedures for liquidation and cancellation.
Part VII Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| 1. Restricted shares | 13,169,196 | 0.94% | 0 | 0 | 13,169,196 | 0.94% | |||
| 1.1 Shares held by state | |||||||||
| 1.2 Shares held by state-owned legal persons | 1 | 0.00% | 2,415,538 | 2,415,538 | 2,415,539 | 0.17% | |||
| 1.3 Shares held by other domestic investors | 4,241,563 | 0.30% | -2,415,538 | -2,415,538 | 1,826,025 | 0.13% | |||
| Among which: Shares held by domestic legal persons | 3,753,972 | 0.27% | -2,415,538 | -2,415,538 | 1,338,434 | 0.10% | |||
| Shares held by domestic natural persons | 487,591 | 0.03% | 487,591 | 0.03% | |||||
| 1.4 Shares held by foreign investors | 8,927,632 | 0.64% | 8,927,632 | 0.64% | |||||
| Among which: Shares held by foreign legal persons | |||||||||
| Shares held by foreign natural persons | 8,927,632 | 0.64% | 8,927,632 | 0.64% | |||||
| 2. Unrestricted shares | 1,386,176,958 | 99.06% | 1,386,176,958 | 99.06% | |||||
| 2.1 RMB-denominated ordinary shares | 1,073,038,507 | 76.68% | 1,073,038,507 | 76.68% | |||||
| 2.2 Domestically listed foreign shares | 313,138,451 | 22.38% | 313,138,451 | 22.38% | |||||
| 2.3 Overseas listed foreign | |||||||||
| shares | |||||||||
| 2.4 Other | |||||||||
| 3. Total shares | 1,399,346,154 | 100.00% | 0 | 0 | 1,399,346,154 | 100.00% |
Reasons for share changes:
□ Applicable √ Not applicable
Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’sordinary shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
| Number of ordinary shareholders | 69,896 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 69,546 | Number of preferred shareholders with resumed voting rights (if any) (see note 8) | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | 0 | |||||||
| 5% or greater shareholders or top 10 shareholders | ||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Unrestricted shares held | Shares in pledge, marked or frozen | |||||||
| Status | Shares | |||||||||||||
| Hongkong Wah Shing Holding Company Limited | Foreign legal person | 13.47% | 188,496,430 | 188,496,430 | In pledge | 92,363,251 | ||||||||
| Prosperity Lamps & Components Limited | Foreign legal person | 10.50% | 146,934,857 | 146,934,857 | ||||||||||
| Guangdong Electronics Information Industry Group Ltd. | State-owned legal person | 8.77% | 122,694,246 | 122,694,246 | In pledge | 32,532,815 | ||||||||
| Guangdong Rising Holdings Group Co., Ltd. | State-owned legal person | 5.94% | 83,130,898 | 83,130,898 | 83,130,898 | |||||||||
| Essence International Securities (Hong Kong) Co., Ltd. | Foreign legal person | 2.54% | 35,586,037 | 2,535,909 | 35,586,037 | |||||||||
| Central Huijin Asset Management Co., Ltd. | State-owned legal person | 2.37% | 33,161,800 | -717,100 | 33,161,800 | |||||||||
| Rising Investment Development Limited | Foreign legal person | 1.82% | 25,482,252 | 25,482,252 | ||||
| China Merchants Securities (Hong Kong) Co., Ltd | State-owned legal person | 1.03% | 14,448,307 | 484,913 | 14,448,307 | |||
| Zhuang Jianyi | Foreign natural person | 0.85% | 11,903,509 | 8,927,632 | 2,975,877 | |||
| DBS VICKERS (HONG KONG) LTD A/C CLIENTS | Foreign legal person | 0.70% | 9,744,456 | -8,893,199 | 9,744,456 | |||
| Strategic investors or general corporations becoming top-ten shareholders due to placing of new shares (if any) (see Note 3) | Naught | |||||||
| Related or acting-in-concert parties among the shareholders above | Among the top 10 shareholders, Hongkong Wah Shing Holding Company Limited, Guangdong Rising Holdings Group Co., Ltd., Guangdong Electronics Information Industry Group Ltd. and Rising Investment Development Limited are acting-in-concert parties; and Prosperity Lamps & Components Limited and Zhuang Jianyi are acting-in-concert parties. 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. | |||||||
| Above shareholders involved in entrusting/being entrusted with voting rights and giving up voting rights | Naught | |||||||
| Special account for share repurchases (if any) among the top 10 shareholders (see note 10) | As of 18 December 2021, the implementation period of this share repurchase has expired. As of the period-end, the Company had repurchased a total of 31,952,995 A-Shares and 18,398,512 B-shares of the Company through centralized bidding. The repurchased shares account for 3.60% of the Company's total share capital. | |||||||
| Top 10 unrestricted shareholders | ||||||||
| Name of shareholder | Unrestricted shares at the Period-end | Type of shares | ||||||
| Type | Shares | |||||||
| Hongkong Wah Shing Holding Company Limited | 188,496,430 | RMB-denominated ordinary stock | 188,496,430 | |||||
| Prosperity Lamps & Components Limited | 146,934,857 | RMB-denominated ordinary | 146,934,857 | |||||
| stock | |||
| Guangdong Electronics Information Industry Group Ltd. | 122,694,246 | RMB-denominated ordinary stock | 122,694,246 |
| Guangdong Rising Holdings Group Co., Ltd. | 83,130,898 | RMB-denominated ordinary stock | 83,130,898 |
| Essence International Securities (Hong Kong) Co., Ltd. | 35,586,037 | Domestically listed foreign stock | 35,586,037 |
| Central Huijin Asset Management Co., Ltd. | 33,161,800 | RMB-denominated ordinary stock | 33,161,800 |
| Rising Investment Development Limited | 25,482,252 | Domestically listed foreign stock | 25,482,252 |
| China Merchants Securities (Hong Kong) Co., Ltd | 14,448,307 | Domestically listed foreign stock | 14,448,307 |
| DBS VICKERS (HONG KONG) LTD A/C CLIENTS | 9,744,456 | Domestically listed foreign stock | 9,744,456 |
| Zhang Shaowu | 9,300,050 | RMB-denominated ordinary stock | 9,300,050 |
| Related or acting-in-concert parties among the top 10 unrestricted ordinary shareholders, as well as between the top 10 unrestricted ordinary shareholders and the top 10 ordinary shareholders | Among the top 10 unrestricted ordinary shareholders, Hong Kong Wah Shing Holding Company Limited, Guangdong Rising Holdings Group Co., Ltd., Guangdong Electronics Information Industry Group Ltd., and Rising Investment Development Limited are acting-in-concert parties; 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. | ||
| Top 10 ordinary shareholders involved in securities margin trading (if any) (see note 4) | None | ||
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinaryshareholders of the Company conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a local state-owned legal personType of the controlling shareholder: legal person
| Name of controlling shareholder | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| Guangdong Rising Holdings Group Co., Ltd. | Liu Weidong | 23 December 1999 | 91440000719283849E | 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 administration of the 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 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). |
| Guangdong Electronics Information Industry Group Ltd. | Liu Ke | 19 October 2000 | 91440000725458764N | Development, production and sale of electronics, IT products and 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 (Limited to branch operation); .technical services. | ||||
| Rising Investment Development Limited | Yao Shu | 11 July 2001 | 764105 | Investment and asset management |
| Shareholdings of controlling shareholder in other listed companies at home or abroad in reporting period | At the end of the Reporting Period, Guangdong Rising Holdings Group Co., Ltd. and its parties acting in concert. directly or indirectly held the following stakes in other listed companies at home or abroad: 1. a 42.87% stake of 129,372,517 shares in Rising Nonferrous (stock code: 600259); 2. a 33.72% stake of 1,230,807,848 shares in Zhongjin Lingnan Nonfemet (stock code: 000060); 3. a 20.50% stake of 183,495,085 shares in Fenghua Advanced (stock code: 000636); 4. a 21.48% stake of 132,819,895 shares in NationStar Optoelectronics (stock code: 002449); 5. a 25.72% stake of 226,147,494 A shares and H shares in Dongjiang Environment (stock code: 002672); 6. a 6.14% stake of 91,507,138,699 shares in China Telecom (stock code: 601728、00728. HK). | |||
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Local institution for state-owned assets managementType of the actual controller: legal person
| Name of actual controller | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| Guangdong Rising Holdings Group Co., Ltd. | Liu Weidong | 23 December 1999 | 719283849 | 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 administration of the 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 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). | ||
| Shareholdings of the actual controller in other listed companies at home or abroad in this Reporting Period | At the end of the Reporting Period, Guangdong Rising Holdings Group Co., Ltd. and its parties acting in concert. directly or indirectly held the following stakes in other listed companies at home or abroad: 1. a 42.87% stake of 129,372,517 shares in Rising Nonferrous (stock code: 600259); 2. a 33.72% stake of 1,230,807,848 shares in Zhongjin Lingnan Nonfemet (stock code: 000060); 3. a 20.50% stake of 183,495,085 shares in Fenghua Advanced (stock code: 000636); 4. a 21.48% stake of 132,819,895 shares in NationStar Optoelectronics (stock code: 002449); 5. a 25.72% stake of 226,147,494 A shares and H shares in Dongjiang Environment (stock code: 002672); 6. a 6.14% stake of 91,507,138,699 shares in China Telecom (stock code: 601728、 00728. HK). | |
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Ownership and control relations between the actual controller and the Company:
Note: The diagram above shows how the actual controller owned the Company as at 31 December 2021. So far,the total share capital of the Company has decreased from 1,399,346,154 shares to 1,361,994,647 shares due to theretirement in February 2022 of 37,351,507 shares repurchased by the Company. As of the disclosure date of thisReport, the combined interest of the Company held by the actual controller is 30.82%.Indicate by tick mark whether the actual controller controls the Company via trust or other ways of assetmanagement.
□ Applicable √ Not applicable
4. Number of Accumulative Pledged Shares held by the Company’s Controlling Shareholder or the LargestShareholder as well as Its Acting-in-Concert Parties Accounts for 80% of all shares of the Company held byThem
□ Applicable √ Not applicable
5. Other 10% or Greater Corporate Shareholders
√ Applicable □ Not applicable
| Name of corporate shareholder | Legal representative / company principal | Date of establishment | Registered capital | Business scope |
| Prosperity Lamps & Components Limited | Zhuang Jianyi | 28 April 1978 | HKD2 million | Import and export of electronics, electric lighting products, lamps, electric lighting equipment, etc., and design, installation and after-sales service of lighting solutions |
6. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
IV Specific Implementation of Share Repurchases in the Reporting PeriodProgress on any share repurchasesApplicable □ Not applicable
| Disclosure time of plan | Number of shares to be repurchased | As % of total share capital | Amount of all repurchased shares | Term of repurchase | Usage | Number of shares repurchased (share) | Number of shares repurchased as % of the underlying stocks involved in the equity incentive plan (if any) |
| 3 December 2020 | According to the lower limit of the total amount of A-share repurchase of RMB200 million and the upper limit of the price of repurchased | 3.54%-6.66% | The total amount of funds for repurchasing A shares is not less than RMB200 million (inclusive) and not more than RMB350 | Not exceeding 12 months since this repurchase plan has been reviewed and approved on the shareholders’ meeting of the Company | All B shares repurchased shall be cancelled according to law. The repurchased A shares are planned to be no less than 9 million shares | 50,351,507 | None |
| shares of RMB8.52/share, it is estimated that the number of A-share repurchased shares is about 23.4741 million shares. According to the upper limit of the total amount of A-share repurchase of RMB350 million, it is estimated that the number of A-share repurchases is 41.0798 million shares. According to the lower limit of the total amount of B-share repurchase of HKD100 million (equivalent to RMB84.635 million) and the upper limit of the price of repurchased shares of HKD3.84/share, it is estimated that the number of B-share repurchase is | million (inclusive). The total amount of funds for repurchasing B shares is not less than HKD100 million (inclusive) and not more than HKD200 million (inclusive), which is converted according to the central parity of HKD to RMB exchange rate on 2 December 2020: HKD1 = RMB0.84635, equivalent to RMB not less than RMB84.635 million (inclusive) and not more than RMB169.27 million (inclusive). | and no more than 13.99 million shares for the equity incentive plan, and no less than 14.4741 million shares and no more than 27.0898 million shares are planned to be cancelled. |
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Part VIII Preferred Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
Part IX Corporate Bonds
□ Applicable √ Not applicable
Part X Financial StatementsI Auditor’s Report
| Type of the independent auditor’s opinion | Unmodified unqualified opinion |
| Date of signing this report | 30 March 2022 |
| Name of the independent auditor | Zhongzheng Tiantong Certified Public Accountants LLP |
| No. of independent auditor’s report | ZZTT (2022) Auditor’s Report No. 0700003 |
| Names of certified public accountants | Feng Wei, Li Qiongqian |
Independent Auditor’s ReportTo the Shareholders of Foshan Electrical and Lighting Co., Ltd.I OpinionWe have audited the financial statements of Foshan Electrical and Lighting Co., Ltd. (the “Company”), whichcomprise the consolidated balance sheets and balance sheet of the Company as the parent as of 31 December 2021,the consolidated income statement and income statement of the Company as the parent, consolidated cash flowstatement and cash flow statement of the Company as the parent and consolidated statement of changes in owners’equity and statement of changes in owners’ equity of the Company as the parent for the year then ended, as well asthe notes to the financial statements.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated andparent company financial position of the Company at 31 December 2021, and the consolidated and the company asthe parent operating results and cash flows for the year then ended, in conformity with the Chinese AccountingStandards (CAS).II Basis for OpinionWe conducted our audits in accordance with the Audit Standards for Chinese Registered Accountants. Ourresponsibilities under those standards are further described in the Auditor’s Responsibilities for Audit of FinancialStatements section of our report. We are independent of the Company in accordance with the China Code of Ethicsfor Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with the saidCode of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.III Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of thefinancial statements of the current period. These matters were addressed in the context of our audit of the financialstatements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters. And key audit matter identified in our audit is summarized as follows:
(I) Business combination not under the same control
1. Description
As stated in the notes to the consolidated financial statements "VIII. Changes in the Scope of Consolidation (I)" and"XVII. Notes to Major Items in the Financial Statements of the Parent Company (III)", FSL acquired 53.79% equityof Nanning Liaowang Auto Lamp Co., Ltd. (hereinafter referred to as "Nanning Liaowang") in August 2021 byacquiring the equity of the original shareholders and making additional investment. In view of the fact that thejudgment of the acquisition date and the determination of the fair value of identifiable assets and liabilities on theacquisition date involve more management's estimation and judgment, we determined the business combination notunder the same control as a key audit item.
2. Response to audit
In view of the business combination of FSL not under the same control, we have implemented the following mainprocedures:
(1) Learning and testing the design and implementation of internal control system related to investment activities inan effort to confirm the effectiveness of internal control operation. (2) Inquiring the management to learn thecommercial substance of this equity transaction matter and assess its rationality. (3) Obtaining and consulting theequity transfer agreement, resolutions of shareholders' meeting and board of directors related to equity acquisition,equity payment documents, control right transfer procedures and other documents, and Check whether the relevantlegal procedures are completed, and comprehensively judge the rationality of the management's determination ofthe purchase date. (4) Obtaining the asset evaluation report produced by a third-party evaluation institution, evaluatethe competence, professionalism and objectivity of the appraiser, and review the accuracy and rationality of theparameters used during the evaluation process. (5) Check the accuracy of accounting treatment related to purchasedate and consolidated cost.(6) Evaluating the adequacy and appropriateness of the disclosure of the equityacquisition in the financial statements.(II) Revenue recognition
1. Description
As stated in the notes to the consolidated financial statements "V. Important Accounting Policies and AccountingEstimates (39)" and "VII. Notes to Major Items of the Consolidated Financial Statements (61)", FSL achievedoperating revenue of RMB4,772,690,469.14 in 2021, an increase of RMB1,027,776,016.42 or 27.44% over theprevious period. As operating revenue is one of the key performance indicators of FSL, there is an inherent risk thatrevenue will be manipulated to achieve the target or expected level. Thus, we determined that revenue is recognizedas a key audit item.
2. Response to audit
In terms of revenue recognition of FSL, we performed the following main procedures: (1) Learning and testing thedesign and implementation of FSL’s key internal controls related to revenue recognition in an effort to confirm theeffectiveness of internal control operation. (2) Sales contracts will be sample-checked to identify terms andconditions on the transfer of the control of commodities and assess whether the Company complies with the newaccounting standards in terms of the time of recognition of revenue. (3) Collecting FSL's revenue transactions tocheck the invoices, shipping documents and customs clearance documents and assess whether the revenues arerecorded in the appropriate accounting periods. (4) Obtaining letters of confirmation from customers to check theexactness and completeness of the data about the balances of accounts receivable. (5) Checking the industrial andcommercial registration information of customers through public information platforms, including a list of therelated parties of each customer for checking the related-party relationship between FSL and customers. (6)
Carrying out cut-off test on revenue, selecting samples of revenue recognition tradings before and after the balancesheet date, obtaining relevant data such as outbound delivery orders, and evaluating whether revenue is recognizedin an appropriate period. (7) Analyzing the revenue and gross profit according to the product type, and judgingwhether there is abnormal fluctuation in the current income amount. (8) Obtaining the record of return and exchangeto check whether there is any major abnormal return and exchange. (9) Checking the record of the revenuetransactions in the current period for exactness and completeness by using other audit procedures such as checkingthe payment collections and sales returns subsequent to the current period and the letters of reconciliation betweenFSL and customers.IV Other InformationThe Company’s management is responsible for the other information. The other information comprises all of theinformation included in the Company’s 2021 Annual Report other than the financial statements and our auditor’sreport thereon.Our opinion on the financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we haveperformed, we conclude that there is a material misstatement of this other information, we are required to report thatfact. We have nothing to report in this regard.V Responsibilities of Management and Those Charged with Governance for Financial StatementsThe Company’s management is responsible for the preparation of the financial statements that give a fair view inaccordance with CAS, and for designing, implementing and maintaining such internal control as the managementdetermines 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 continueas a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis ofaccounting unless the management either intends to liquidate the Company or to cease operations, or have norealistic 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 StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial 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 withCAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economicdecisions 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 professionalskepticism 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 andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraudis 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 areappropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting and, basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertaintyexists, we are required by CAS to draw users’ attention in our auditor’s report to the related disclosures in thefinancial statements or, if such disclosures are inadequate, we should express modified opinion. Our conclusions arebased on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions maycause 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, andwhether the financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities 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 timingof the audit and significant audit findings, including any noteworthy deficiencies in internal control that we identifyduring our audit.We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that mayreasonably 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 mostsignificance in the audit of the financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefitsof such communication.
| Beijing Zhongzheng Tiantong Certified Public Accountants LLP | Chinese CPA: （Engagement Partner） |
| Feng Wei | |
| Chinese CPA: | |
| Beijing · China | Li Qiongqian |
| 30 March 2022 |
II Financial StatementsCurrency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Foshan Electrical and Lighting Co., Ltd.
31 December 2021
Unit: RMB
Item
| Item | 31 December 2021 | 31 December 2020 |
| Current assets: | ||
| Monetary assets | 1,384,218,544.27 | 981,249,699.49 |
| Settlement reserve | ||
| Interbank loans granted | ||
| Held-for-trading financial assets | 328,248,125.61 | 407,619,201.36 |
| Derivative financial assets | ||
| Notes receivable | 594,208,093.58 | 140,972,143.00 |
| Accounts receivable | 1,452,728,276.48 | 1,134,233,235.70 |
| Accounts receivable financing | ||
| Prepayments | 20,119,957.02 | 11,994,745.05 |
| Premiums receivable | ||
| Reinsurance receivables | ||
| Receivable reinsurance contract reserve | ||
| Other receivables | 34,082,909.41 | 20,194,968.19 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Financial assets purchased under resale agreements | ||
| Inventories | 1,063,489,341.00 | 735,685,116.91 |
| Contract assets | 8,561,303.10 | |
| Assets held for sale | 23,831,992.10 | |
| Current portion of non-current assets | ||
| Other current assets | 85,693,988.74 | 175,090,368.85 |
| Total current assets | 4,995,182,531.31 | 3,607,039,478.55 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 181,545,123.09 | 181,365,016.32 |
| Investments in other equity instruments | 1,474,860,785.15 | 3,305,501,030.06 |
| Other non-current financial assets | ||
| Investment property | 43,347,824.34 | |
| Fixed assets | 1,323,076,326.60 | 685,707,548.55 |
| Construction in progress | 730,595,319.42 | 503,941,120.31 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 13,497,139.00 | |
| Intangible assets | 271,673,951.80 | 170,693,873.30 |
| Development costs | ||
| Goodwill | 16,211,469.82 | |
| Long-term prepaid expense | 125,238,940.05 | 13,411,226.23 |
| Deferred income tax assets | 54,211,287.28 | 40,253,777.17 |
| Other non-current assets | 470,151,830.75 | 11,423,843.62 |
| Total non-current assets | 4,704,409,997.30 | 4,912,297,435.56 |
| Total assets | 9,699,592,528.61 | 8,519,336,914.11 |
| Current liabilities: | ||
| Short-term borrowings | 226,779,997.01 | |
| Borrowings from the central bank | ||
| Interbank loans obtained | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 826,164,918.71 | 480,971,214.80 |
| Accounts payable | 1,554,585,231.38 | 1,059,674,020.99 |
| Advances from customers | 8,106,923.79 | 1,285,357.28 |
| Contract liabilities | 84,818,285.22 | 65,777,726.45 |
| Financial assets sold under repurchase agreements |
| Customer deposits and interbank deposits | ||
| Payables for acting trading of securities | ||
| Payables for underwriting of securities | ||
| Employee benefits payable | 88,925,889.20 | 82,485,090.47 |
| Taxes payable | 82,011,059.45 | 18,876,657.51 |
| Other payables | 298,811,112.73 | 76,668,330.66 |
| Including: Interest payable | ||
| Dividends payable | 15,646.07 | |
| Handling charges and commissions payable | ||
| Reinsurance payables | ||
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | 27,279,273.54 | |
| Other current liabilities | 8,038,471.15 | 5,503,702.07 |
| Total current liabilities | 3,205,521,162.18 | 1,791,242,100.23 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 7,862,803.22 | |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | 7,671,948.69 | |
| Deferred income | 14,414,666.71 | |
| Deferred income tax liabilities | 187,691,340.19 | 414,670,609.97 |
| Other non-current liabilities | 22,653.46 | 1,244,064.84 |
| Total non-current liabilities | 217,663,412.27 | 415,914,674.81 |
| Total liabilities | 3,423,184,574.45 | 2,207,156,775.04 |
| Owners’ equity: | ||
| Share capital | 1,399,346,154.00 | 1,399,346,154.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 12,071,920.14 | 15,157,514.90 |
| Less: Treasury stock | 250,600,874.54 | |
| Other comprehensive income | 984,638,432.01 | 2,349,388,533.61 |
| Specific reserve | ||
| Surplus reserves | 741,353,347.96 | 741,567,039.55 |
| General reserve | ||
| Retained earnings | 2,913,749,608.77 | 1,758,462,062.48 |
| Total equity attributable to owners of the Company as the parent | 5,800,558,588.34 | 6,263,921,304.54 |
| Non-controlling interests | 475,849,365.82 | 48,258,834.53 |
| Total owners’ equity | 6,276,407,954.16 | 6,312,180,139.07 |
| Total liabilities and owners’ equity | 9,699,592,528.61 | 8,519,336,914.11 |
Legal representative: Wu Shenghui Chief Financial Officer: Tang QionglanPerson-in-charge of the Company’s accounting organ: Liang Yuefei
2. Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2021 | 31 December 2020 |
| Current assets: | ||
| Monetary assets | 1,017,365,290.91 | 896,261,882.77 |
| Held-for-trading financial assets | 304,385,804.11 | 407,619,201.36 |
| Derivative financial assets | ||
| Notes receivable | 72,114,026.44 | 137,477,199.21 |
| Accounts receivable | 1,058,935,664.33 | 1,030,713,074.22 |
| Accounts receivable financing | ||
| Prepayments | 9,292,256.82 | 9,581,302.45 |
| Other receivables | 511,056,231.24 | 462,284,585.09 |
| Including: Interest receivable | ||
| Dividends receivable | ||
| Inventories | 617,905,747.50 | 615,106,650.81 |
| Contract assets | 8,561,303.10 | |
| Assets held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 36,097,001.14 | 139,275,518.71 |
| Total current assets | 3,635,713,325.59 | 3,698,319,414.62 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 1,243,081,889.11 | 536,949,311.73 |
| Investments in other equity instruments | 1,474,860,785.15 | 3,305,501,030.06 |
| Other non-current financial assets | ||
| Investment property | 43,347,824.34 | |
| Fixed assets | 576,386,630.08 | 628,174,755.88 |
| Construction in progress | 120,514,314.18 | 54,652,119.14 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | 9,827,757.94 | |
| Intangible assets | 123,089,721.51 | 122,391,701.60 |
| Development costs | ||
| Goodwill | ||
| Long-term prepaid expense | 31,897,595.21 | 11,651,100.48 |
| Deferred income tax assets | 31,373,123.07 | 31,403,727.94 |
| Other non-current assets | 460,618,564.04 | 7,548,885.47 |
| Total non-current assets | 4,114,998,204.63 | 4,698,272,632.30 |
| Total assets | 7,750,711,530.22 | 8,396,592,046.92 |
| Current liabilities: | ||
| Short-term borrowings | 127,596,999.82 | |
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 445,480,718.92 | 484,230,566.21 |
| Accounts payable | 949,520,447.82 | 1,108,208,382.75 |
| Advances from customers | 6,857,142.86 |
| Contract liabilities | 64,120,388.15 | 53,572,800.70 |
| Employee benefits payable | 51,520,068.31 | 62,075,512.08 |
| Taxes payable | 57,207,865.54 | 7,819,839.48 |
| Other payables | 223,535,108.76 | 171,916,835.73 |
| Including: Interest payable | ||
| Dividends payable | ||
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | 2,800,876.97 | |
| Other current liabilities | 5,920,593.62 | 4,483,279.11 |
| Total current liabilities | 1,934,560,210.77 | 1,892,307,216.06 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | 7,026,880.97 | |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | ||
| Deferred income tax liabilities | 173,532,376.03 | 414,670,609.97 |
| Other non-current liabilities | ||
| Total non-current liabilities | 180,559,257.00 | 414,670,609.97 |
| Total liabilities | 2,115,119,467.77 | 2,306,977,826.03 |
| Owners’ equity: | ||
| Share capital | 1,399,346,154.00 | 1,399,346,154.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 22,568,665.93 | 7,426,635.62 |
| Less: Treasury stock | 250,600,874.54 | |
| Other comprehensive income | 984,695,765.83 | 2,349,389,658.23 |
| Specific reserve |
| Surplus reserves | 741,353,347.96 | 741,567,039.55 |
| Retained earnings | 2,738,229,003.27 | 1,591,884,733.49 |
| Total owners’ equity | 5,635,592,062.45 | 6,089,614,220.89 |
| Total liabilities and owners’ equity | 7,750,711,530.22 | 8,396,592,046.92 |
Legal representative: Wu Shenghui Chief Financial Officer: Tang QionglanPerson-in-charge of the Company’s accounting organ: Liang Yuefei
3. Consolidated Income Statement
Unit: RMB
| Item | 2021 | 2020 |
| 1. Revenue | 4,772,690,469.14 | 3,744,914,452.72 |
| Including: Operating revenue | 4,772,690,469.14 | 3,744,914,452.72 |
| Interest income | ||
| Insurance premium income | ||
| Handling charge and commission income | ||
| 2. Costs and expenses | 4,591,588,279.47 | 3,438,752,837.39 |
| Including: Cost of sales | 3,962,212,033.47 | 2,996,273,910.80 |
| Interest expense | ||
| Handling charge and commission expense | ||
| Surrenders | ||
| Net insurance claims paid | ||
| Net amount provided as insurance contract reserve | ||
| Expenditure on policy dividends | ||
| Reinsurance premium expense | ||
| Taxes and surcharges | 45,957,443.96 | 38,631,841.23 |
| Selling expense | 170,281,041.34 | 145,219,700.35 |
| Administrative expense | 206,336,111.81 | 155,365,373.75 |
| R&D expense | 203,681,619.16 | 108,885,296.71 |
| Finance costs | 3,120,029.73 | -5,623,285.45 |
| Including: Interest expense | 5,790,716.89 |
| Interest income | 16,201,526.00 | 37,650,815.03 |
| Add: Other income | 16,311,903.24 | 28,989,528.20 |
| Return on investment (“-” for loss) | 36,121,053.68 | 44,236,204.90 |
| Including: Share of profit or loss of joint ventures and associates | 2,260,497.27 | 2,351,681.39 |
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Exchange gain (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 4,649,669.44 | 4,785,700.00 |
| Credit impairment loss (“-” for loss) | -4,657,215.52 | -16,109,592.36 |
| Asset impairment loss (“-” for loss) | -30,891,621.47 | -7,581,307.74 |
| Asset disposal income (“-” for loss) | 77,713,637.77 | 9,090,874.79 |
| 3. Operating profit (“-” for loss) | 280,349,616.81 | 369,573,023.12 |
| Add: Non-operating income | 13,186,956.38 | 2,164,694.19 |
| Less: Non-operating expense | 1,188,471.54 | 3,854,417.99 |
| 4. Profit before tax (“-” for loss) | 292,348,101.65 | 367,883,299.32 |
| Less: Income tax expense | 25,050,666.35 | 45,714,707.53 |
| 5. Net profit (“-” for net loss) | 267,297,435.30 | 322,168,591.79 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 267,297,435.30 | 322,168,591.79 |
| 5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5.2 By ownership | ||
| 5.2.1 Net profit attributable to owners of the Company as the parent | 250,091,965.87 | 316,914,185.34 |
| 5.2.1 Net profit attributable to non-controlling interests | 17,205,469.43 | 5,254,406.45 |
| 6. Other comprehensive income, net of tax | -323,678,183.01 | 1,573,128,185.42 |
| Attributable to owners of the Company as the parent | -323,706,852.48 | 1,573,128,185.42 |
| 6.1 Items that will not be reclassified to profit or loss | -323,650,643.28 | 1,573,146,670.33 |
| 6.1.1 Changes caused by |
| remeasurements on defined benefit schemes | ||
| 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 6.1.3 Changes in the fair value of investments in other equity instruments | -323,650,643.28 | 1,573,146,670.33 |
| 6.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 6.1.5 Other | ||
| 6.2 Items that will be reclassified to profit or loss | -56,209.20 | -18,484.91 |
| 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 6.2.2 Changes in the fair value of investments in other debt obligations | ||
| 6.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 6.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 6.2.5 Reserve for cash flow hedges | ||
| 6.2.6 Differences arising from the translation of foreign currency-denominated financial statements | -56,209.20 | -18,484.91 |
| 6.2.7 Other | ||
| Attributable to non-controlling interests | 28,669.47 | |
| 7. Total comprehensive income | -56,380,747.71 | 1,895,296,777.21 |
| Attributable to owners of the Company as the parent | -73,614,886.61 | 1,890,042,370.76 |
| Attributable to non-controlling interests | 17,234,138.90 | 5,254,406.45 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 0.1854 | 0.2349 |
| 8.2 Diluted earnings per share | 0.1836 | 0.2327 |
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before thecombinations was RMB0.00, with the amount for last year being RMB0.00.Legal representative: Wu Shenghui Chief Financial Officer: Tang Qionglan
Person-in-charge of the Company’s accounting organ: Liang Yuefei
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | 2021 | 2020 |
| 1. Operating revenue | 3,718,308,372.46 | 3,490,267,102.53 |
| Less: Cost of sales | 3,154,039,179.53 | 2,860,949,556.76 |
| Taxes and surcharges | 33,093,843.08 | 32,375,835.55 |
| Selling expense | 147,260,099.98 | 126,810,307.11 |
| Administrative expense | 148,755,543.99 | 129,489,381.94 |
| R&D expense | 141,658,884.16 | 96,789,792.55 |
| Finance costs | -176,513.65 | -4,922,225.34 |
| Including: Interest expense | 1,265,956.56 | |
| Interest income | 15,062,071.87 | 36,942,203.37 |
| Add: Other income | 9,664,951.38 | 27,001,177.15 |
| Return on investment (“-” for loss) | 78,883,660.55 | 87,972,948.71 |
| Including: Share of profit or loss of joint ventures and associates | 2,260,497.27 | 2,351,681.39 |
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 4,266,900.00 | 4,785,700.00 |
| Credit impairment loss (“-” for loss) | -5,389,224.73 | -10,299,990.56 |
| Asset impairment loss (“-” for loss) | -13,439,357.01 | -6,366,924.12 |
| Asset disposal income (“-” for loss) | 76,410,098.79 | 9,090,874.79 |
| 2. Operating profit (“-” for loss) | 244,074,364.35 | 360,958,239.93 |
| Add: Non-operating income | 11,385,484.38 | 1,892,869.67 |
| Less: Non-operating expense | 552,333.59 | 2,969,626.09 |
| 3. Profit before tax (“-” for loss) | 254,907,515.14 | 359,881,483.51 |
| Less: Income tax expense | 13,758,825.78 | 32,625,529.64 |
| 4. Net profit (“-” for net loss) | 241,148,689.36 | 327,255,953.87 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 241,148,689.36 | 327,255,953.87 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of tax | -323,650,643.28 | 1,573,146,670.33 |
| 5.1 Items that will not be reclassified to profit or loss | -323,650,643.28 | 1,573,146,670.33 |
| 5.1.1 Changes caused by remeasurements on defined benefit schemes | ||
| 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 5.1.3 Changes in the fair value of investments in other equity instruments | -323,650,643.28 | 1,573,146,670.33 |
| 5.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 5.1.5 Other | ||
| 5.2 Items that will be reclassified to profit or loss | ||
| 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 5.2.2 Changes in the fair value of investments in other debt obligations | ||
| 5.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 5.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 5.2.5 Reserve for cash flow hedges | ||
| 5.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 5.2.7 Other | ||
| 6. Total comprehensive income | -82,501,953.92 | 1,900,402,624.20 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | ||
| 7.2 Diluted earnings per share |
Legal representative: Wu Shenghui Chief Financial Officer: Tang QionglanPerson-in-charge of the Company’s accounting organ: Liang Yuefei
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | 2021 | 2020 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 4,285,672,614.47 | 3,342,410,171.83 |
| Net increase in customer deposits and interbank deposits | ||
| Net increase in borrowings from the 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 | ||
| Interest, handling charges and commissions received | ||
| Net increase in interbank loans obtained | ||
| Net increase in proceeds from repurchase transactions | ||
| Net proceeds from acting trading of securities | ||
| Tax rebates | 87,549,907.00 | 112,333,842.35 |
| Cash generated from other operating activities | 171,025,786.36 | 119,666,217.14 |
| Subtotal of cash generated from operating activities | 4,544,248,307.83 | 3,574,410,231.32 |
| Payments for commodities and services | 3,427,906,318.91 | 2,077,887,848.58 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits in the central bank and in interbank loans granted | ||
| Payments for claims on original insurance contracts |
| Net increase in interbank loans granted | ||
| Interest, handling charges and commissions paid | ||
| Policy dividends paid | ||
| Cash paid to and for employees | 831,530,484.58 | 690,837,445.67 |
| Taxes paid | 331,339,000.56 | 203,087,061.81 |
| Cash used in other operating activities | 230,497,589.04 | 207,769,543.36 |
| Subtotal of cash used in operating activities | 4,821,273,393.09 | 3,179,581,899.42 |
| Net cash generated from/used in operating activities | -277,025,085.26 | 394,828,331.90 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 1,700,278,266.95 | 405,000,000.00 |
| Return on investment | 44,567,889.06 | 52,397,663.37 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 114,907,595.26 | 9,814,672.12 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | 54,990,047.00 | |
| Subtotal of cash generated from investing activities | 1,914,743,798.27 | 467,212,335.49 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 326,012,276.21 | 232,678,180.62 |
| Payments for investments | 484,531,545.66 | 311,628,442.49 |
| Net increase in pledged loans granted | ||
| Net payments for the acquisition of subsidiaries and other business units | 131,348,644.27 | |
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 941,892,466.14 | 544,306,623.11 |
| Net cash generated from/used in investing activities | 972,851,332.13 | -77,094,287.62 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | 300,000.00 | |
| Including: Capital contributions by non-controlling interests to subsidiaries | 300,000.00 |
| Borrowings raised | 127,386,000.00 | 48,000,000.00 |
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | 127,386,000.00 | 48,300,000.00 |
| Repayment of borrowings | 113,682,766.67 | 277,807,744.88 |
| Interest and dividends paid | 139,734,157.74 | 258,879,038.49 |
| Including: Dividends paid by subsidiaries to non-controlling interests | ||
| Cash used in other financing activities | 300,810,442.34 | |
| Subtotal of cash used in financing activities | 554,227,366.75 | 536,686,783.37 |
| Net cash generated from/used in financing activities | -426,841,366.75 | -488,386,783.37 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -5,623,947.38 | -4,698,084.75 |
| 5. Net increase in cash and cash equivalents | 263,360,932.74 | -175,350,823.84 |
| Add: Cash and cash equivalents, beginning of the period | 875,728,218.57 | 1,051,079,042.41 |
| 6. Cash and cash equivalents, end of the period | 1,139,089,151.31 | 875,728,218.57 |
Legal representative: Wu Shenghui Chief Financial Officer: Tang QionglanPerson-in-charge of the Company’s accounting organ: Liang Yuefei
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
| Item | 2021 | 2020 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 3,675,366,946.16 | 3,158,187,056.43 |
| Tax rebates | 87,497,039.45 | 112,333,842.35 |
| Cash generated from other operating activities | 90,141,698.38 | 100,553,598.15 |
| Subtotal of cash generated from operating activities | 3,853,005,683.99 | 3,371,074,496.93 |
| Payments for commodities and services | 3,127,675,269.69 | 2,140,803,641.40 |
| Cash paid to and for employees | 598,949,378.79 | 531,803,255.67 |
| Taxes paid | 264,570,561.48 | 151,834,032.77 |
| Cash used in other operating activities | 158,324,765.43 | 187,443,912.27 |
| Subtotal of cash used in operating activities | 4,149,519,975.39 | 3,011,884,842.11 |
| Net cash generated from/used in operating activities | -296,514,291.40 | 359,189,654.82 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 1,700,278,266.95 | 407,744,500.00 |
| Return on investment | 45,162,968.14 | 95,949,228.67 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 114,426,514.66 | 9,787,055.02 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 1,859,867,749.75 | 513,480,783.69 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 116,516,470.65 | 183,152,607.04 |
| Payments for investments | 1,123,715,946.11 | 328,313,442.49 |
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 1,240,232,416.76 | 511,466,049.53 |
| Net cash generated from/used in investing activities | 619,635,332.99 | 2,014,734.16 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Borrowings raised | 127,386,000.00 | |
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | 127,386,000.00 | |
| Repayment of borrowings | 277,807,744.88 | |
| Interest and dividends paid | 135,847,668.70 | 258,879,038.49 |
| Cash used in other financing activities | 250,814,566.13 |
| Subtotal of cash used in financing activities | 386,662,234.83 | 536,686,783.37 |
| Net cash generated from/used in financing activities | -259,276,234.83 | -536,686,783.37 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | -5,283,585.19 | -4,630,938.55 |
| 5. Net increase in cash and cash equivalents | 58,561,221.57 | -180,113,332.94 |
| Add: Cash and cash equivalents, beginning of the period | 803,264,792.72 | 983,378,125.66 |
| 6. Cash and cash equivalents, end of the period | 861,826,014.29 | 803,264,792.72 |
Legal representative: Wu Shenghui Chief Financial Officer: Tang QionglanPerson-in-charge of the Company’s accounting organ: Liang Yuefei
7. Consolidated Statements of Changes in Owners’ Equity
2021
Unit: RMB
| Item | 2021 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balance as at the end of the prior year | 1,399,346,154.00 | 15,157,514.90 | 2,349,388,533.61 | 741,567,039.55 | 1,758,462,062.48 | 6,263,921,304.54 | 48,258,834.53 | 6,312,180,139.07 | |||||||
| Add: Adjustment for change in accounting policy | |||||||||||||||
| Adjustment for correction of previous error | |||||||||||||||
| Adjustment for business | |||||||||||||||
| combination under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 1,399,346,154.00 | 15,157,514.90 | 2,349,388,533.61 | 741,567,039.55 | 1,758,462,062.48 | 6,263,921,304.54 | 48,258,834.53 | 6,312,180,139.07 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -3,085,594.76 | 250,600,874.54 | -1,364,750,101.60 | -213,691.59 | 1,155,287,546.29 | -463,362,716.20 | 427,590,531.29 | -35,772,184.91 | |||||||
| 3.1 Total comprehensive income | -323,706,852.48 | 250,091,965.87 | -73,614,886.61 | 17,234,138.90 | -56,380,747.71 | ||||||||||
| 3.2 Capital increased and reduced by owners | -3,085,594.76 | 250,600,874.54 | -213,691.59 | -253,900,160.89 | 410,356,392.39 | 156,456,231.50 | |||||||||
| 3.2.1 Ordinary shares increased by owners | 250,600,874.54 | -250,600,874.54 | -250,600,874.54 | ||||||||||||
| 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 | -3,085,594.76 | -213,691.59 | -3,299,286.35 | 410,356,392.39 | 407,057,106.04 | ||||||||||
| 3.3 Profit distribution | -135,847,668.70 | -135,847,668.70 | -135,847,668.70 | ||||||||||||
| 3.3.1 Appropriation to |
| surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -135,847,668.70 | -135,847,668.70 | -135,847,668.70 | ||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | -1,041,043,249.12 | 1,041,043,249.12 | |||||||||||||
| 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 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | -1,041,043,249.12 | 1,041,043,249.12 | |||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the |
| period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balance as at the end of the period | 1,399,346,154.00 | 12,071,920.14 | 250,600,874.54 | 984,638,432.01 | 741,353,347.96 | 2,913,749,608.77 | 5,800,558,588.34 | 475,849,365.82 | 6,276,407,954.16 |
2020
Unit: RMB
| Item | 2020 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balance as at the end of the prior year | 1,399,346,154.00 | 231,608,173.07 | 776,260,348.19 | 836,559,645.36 | 1,700,426,915.63 | 4,944,201,236.25 | 26,674,428.08 | 4,970,875,664.33 | |||||||
| Add: Adjustment for change in accounting policy | |||||||||||||||
| Adjustment for correction of previous error | |||||||||||||||
| Adjustment for business combination under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 1,399,346,154.00 | 231,608,173.07 | 776,260,348.19 | 836,559,645.36 | 1,700,426,915.63 | 4,944,201,236.25 | 26,674,428.08 | 4,970,875,664.33 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -216,450,658.17 | 1,573,128,185.42 | -94,992,605.81 | 58,035,146.85 | 1,319,720,068.29 | 21,584,406.45 | 1,341,304,474.74 | ||||||||
| 3.1 Total comprehensive income | 1,573,128,185.42 | 316,914,185.34 | 1,890,042,370.76 | 5,254,406.45 | 1,895,296,777.21 | ||||||||||
| 3.2 Capital increased and reduced by owners | -216,450,658.17 | -94,992,605.81 | -311,443,263.98 | 16,330,000.00 | -295,113,263.98 | ||||||||||
| 3.2.1 Ordinary shares increased by owners | 16,330,000.00 | 16,330,000.00 | |||||||||||||
| 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 | -216,450,658.17 | -94,992,605.81 | -311,443,263.98 | -311,443,263.98 | |||||||||||
| 3.3 Profit distribution | -258,879,038.49 | -258,879,038.49 | -258,879,038.49 | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or | -258,879,038.49 | -258,879,038.49 | -258,879,038.49 |
| shareholders) | |||||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers 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 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balance as at the end of the period | 1,399,346,154.0 | 15,157,514.90 | 2,349,388,533.61 | 741,567,039.55 | 1,758,462,062.48 | 6,263,921,304.54 | 48,258,834.53 | 6,312,180,139.07 |
Legal representative: Wu Shenghui Chief Financial Officer: Tang QionglanPerson-in-charge of the Company’s accounting organ: Liang Yuefei
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2021
Unit: RMB
Item
| Item | 2021 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balance as at the end of the prior year | 1,399,346,154.00 | 7,426,635.62 | 2,349,389,658.23 | 741,567,039.55 | 1,591,884,733.49 | 6,089,614,220.89 | ||||||
| Add: Adjustment for change in accounting policy | ||||||||||||
| Adjustment for correction of previous error | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 1,399,346,154.00 | 7,426,635.62 | 2,349,389,658.23 | 741,567,039.55 | 1,591,884,733.49 | 6,089,614,220.89 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 15,142,030.31 | 250,600,874.54 | -1,364,693,892.40 | -213,691.59 | 1,146,344,269.78 | -454,022,158.44 | ||||||
| 3.1 Total comprehensive income | -323,650,643.28 | 241,148,689.36 | -82,501,953.92 | |||||||||
| 3.2 Capital increased and reduced by owners | 15,142,030.31 | 250,600,874.54 | -213,691.59 | -235,672,535.82 | ||||||||
| 3.2.1 Ordinary shares increased by owners | 250,600,874.54 | -250,600,874.54 | ||||||||||
| 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 | 15,142,030.31 | -213,691.59 | 14,928,338.72 | |||||||||
| 3.3 Profit distribution | -135,847,668.70 | -135,847,668.70 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -135,847,668.70 | -135,847,668.70 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | -1,041,043,249.12 | 1,041,043,249.12 | ||||||||||
| 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 Loss offset by surplus reserves |
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | -1,041,043,249.12 | 1,041,043,249.12 | ||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balance as at the end of the period | 1,399,346,154.00 | 22,568,665.93 | 250,600,874.54 | 984,695,765.83 | 741,353,347.96 | 2,738,229,003.27 | 5,635,592,062.45 |
2020
Unit: RMB
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balance as at the end of the prior year | 1,399,346,154.00 | 166,211,779.15 | 776,242,987.90 | 836,559,645.36 | 1,523,507,818.11 | 4,701,868,384.52 | ||||||
| Add: Adjustment for change in accounting policy | ||||||||||||
| Adjustment for correction of previous error | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 1,399,346,154.00 | 166,211,779.15 | 776,242,987.90 | 836,559,645.36 | 1,523,507,818.11 | 4,701,868,384.52 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | -158,785,143.53 | 1,573,146,670.33 | -94,992,605.81 | 68,376,915.38 | 1,387,745,836.37 | |||||||
| 3.1 Total comprehensive income | 1,573,146,670.33 | 327,255,953.87 | 1,900,402,624.20 | |||||||||
| 3.2 Capital increased and reduced by owners | -158,785,143.53 | -94,992,605.81 | -253,777,749.34 | |||||||||
| 3.2.1 Ordinary shares increased by owners | ||||||||||||
| 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 | -158,785,143.53 | -94,992,605.81 | -253,777,749.34 | |||||||||
| 3.3 Profit distribution | -258,879,038.49 | -258,879,038.49 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or | -258,879,038.49 | -258,879,038.49 |
| shareholders) | ||||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers 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 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balance as at the end of the period | 1,399,346,154.00 | 7,426,635.62 | 2,349,389,658.23 | 741,567,039.55 | 1,591,884,733.49 | 6,089,614,220.89 |
Legal representative: Wu Shenghui Chief Financial Officer: Tang QionglanPerson-in-charge of the Company’s accounting organ: Liang Yuefei
III Company profile
Foshan Electrical and Lighting Co., Ltd. (hereinafter referred to as “the Company”), a joint-stock limitedcompany jointly founded by Foshan Electrical and Lighting Company, Nanhai Wuzhuang Color Glazed BrickField, and Foshan Poyang Printing Industrial Co. on 20 October 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 ofGuangdong Province and the Economic System Reform Commission of Guangdong Province, is an enterprisewith its shares held by both the corporate and the natural persons. As approved by China Securities RegulatoryCommission with Document (1993) No. 33, the Company publicly issued 19.3 million shares of social publicshares (A shares) to the public in October 1993, and was listed in Shenzhen Stock Exchange for trade on 23November 1993. The Company was approved to issue 50,000,000 B shares on 23 July 1995. And, as approved tochange into a foreign-invested stock limited company on 26 August 1996 by (1996) WJMZEHZ No. 466Document issued by the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic of China.On 11 December 2000, as approved by China Securities Regulatory Commission with ZJGS Zi [2000] No. 175Document, the Company additionally issued 55,000,000 A shares. At approved by the Shareholders’ GeneralMeeting 2006, 2007, 2008, 2014 and 2017 the Company implemented the plan of capitalization of capital reserve,after the transfer, the registered capital of the Company has increased to RMB1,399,346,154.00.Credibility code of the Company: 91440000190352575W.Legal representative: Mr. Wu ShenghuiAddress: No. 64, Fenjiang North Road, Foshan, Guangdong ProvinceMain business of the company and its subsidiaries (hereinafter referred to as “the Company”): lighting products,electro technical products and vehicle lamp products .The business term of the Company is long-term, which was calculated from the date of issuance of License ofBusiness Corporation.The Financial Report was approved and authorized for issue by the Board of Directors on 30 March 2022.
The consolidation scope of the financial statement during the Reporting Period including the Company and FSLChanchang Optoelectronics Co., Ltd. ( referred to as “Chanchang Company”), Foshan Taimei Times Lamps andLanterns Co., Ltd. ( referred to as “Taimei Company”), Nanjing Fozhao Lighting Components Co., Ltd. ( referredto as “Nanjing Fozhao”), FSL (Xinxiang) Lighting Co., Ltd. ( referred to as “Xinxiang Company”), FoshanLighting Lamps & Components Co., Ltd. ( referred to as “Lamps & Components Company”), FSL Zhida ElectricTechnology Co., Ltd ( referred to as “Zhida Company”), FSL LIGHTING GMBH (referred to as “FSLLIGHTING”), Foshan Hortilite Optoelectronics Co.,Ltd. (referred to as “Hortilite Company”), Fozhao (Hainan)Technology Co., Ltd. (referred to as “Hainan Technology”), Foshan Kelian New Energy Technology Co., Ltd.(referred to as “Foshan Kelian”) and Nanning Liaowang Auto Lamp Co., Ltd. (referred to as “NanningLiaowang”), in total 11 subsidiaries and Liuzhou Guige Lighting Technology Co., Ltd. (referred to as “LiuzhouLighting”), Liuzhou Guige Foreshine Technology Co., Ltd. (referred to as “Liuzhou Foreshine”), Chongqing
Guinuo Lighting Technology Co., Ltd. (referred to as “Chongqing Guinuo”), Qingdao Guige Lighting TechnologyCo., Ltd. (referred to as “Qingdao Lighting”) and Indonesia Liaowang Auto Lamp Co., Ltd. (referred to as“Indonesia Liaowang”) in total five sub-subsidiary.Compared with the previous period, the consolidation scope of the current financial statements added twosubsidiaries of Nanning Liaowang and Hainan Technology, and five sub-subsidiaries of Liuzhou Guige Lighting,Liuzhou Guige Foreshine, Chongqing Guinuo, Qingdao Lighting and Indonesia Liaowang, and deleted twosubsidiaries, Foshan Electric Lighting New Light Source Technology Co., Ltd. (referred to as "New Light Source")and Hunan Keda New Energy Investment and Development Co., Ltd. (referred to as "Hunan Keda"). For details,please refer to Note VIII "Changes in the Scope of Consolidation" and Note IX "Interests in Other Subjects".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 measuredaccording to the actual transactions and events, the Accounting Standards for Business Enterprises - BasicStandards, other various specific accounting standards, the application guide, the interpretation of accountingstandards 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 preparedaccording to the relevant regulations of Rules for the Information Disclosure of Companies Publicly IssuingSecurities 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 financialstatement 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 monthsfrom 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 theability to continue to operate in the next 12 months. The financial statements of the Company are prepared on thebasis of continuing operation.V Important Accounting Policies and EstimationsReminders of the specific accounting policies and accounting estimations:
The Company confirmed the specific accounting policies and estimations according to production and operationfeatures, mainly reflecting in the method of provision for expected credit loss of accounts receivables (Note 12.Accounts Receivable), depreciation of fixed assets and amortization of intangible assets (Note 24. Fixed Assetsand Note 30. Intangible Assets), and recognition of revenue (Note 39. Revenue), etc.
1. Statement of Compliance with the Accounting Standards for Business EnterprisesThe financial statements prepared by the Company are in compliance with the Accounting Standards for BusinessEnterprises, 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
st
and ends on December 31
staccording 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 itsassets and liabilities.
4. Recording Currency
Renminbi is the recording currency for the statements of the Company, and the financial statements are listed andpresented by Renminbi.
5. Accounting Treatment Methods for Business Combinations under the Same Control or not under theSame 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 makespayment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of thebook value among final controller’s consolidated financial statement of the owner's equity of the mergedenterprise as the initial cost of the long-term equity investment. The difference between the initial cost of thelong-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of thedebts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient todilute, 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 equityof the merged enterprise as the initial cost of the long-term equity investment. The total face value of the stocksissued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equityinvestment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve isinsufficient 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 orundertaken by fair value. The difference between fair value and its book value shall be included into the currentlosses 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 acquireeacquired is recognized as goodwill; the difference of the combination cost less than the fair value of theidentifiable 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 tothe assets which have been recognized by the acquiree), if the economic benefits brought by them are likely toflow into the Company and their fair values can be measured reliably, they shall be separately recognized andmeasured in light of their fair values; intangible asset whose fair value can be measured reliably shall beseparately recognized as an intangible asset and shall measured in light of its fair value; As for the liabilities otherthan contingent liabilities acquired from the acquiree, if the performance of the relevant obligations is likely toresult 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 ofthe acquiree, if their fair values can be measured reliably, they shall separately recognized as liabilities and shallbe 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 ofcontrol. Control means that the investors has the right to invest in the investee and enjoy a variable return throughthe participation of the relevant activities of the investee, and has the ability to use the power over the investee toaffect the amount of its return. The Company includes the subsidiaries with actual right of control (includingseparate 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 StatementsAll subsidiaries included into the scope of consolidated financial statements adopted same accounting policies andfiscal year with the Company. If the accounting policies and fiscal year of the subsidiaries are different to theCompany’s, necessary adjustment should be made in accordance with the Company’s accounting policies andfiscal year when consolidated financial statements are prepared.The consolidated financial statements are based on the financial statements of the Parent Company andsubsidiaries included into the consolidated scope. The consolidated financial statements are prepared by theCompany who makes adjustment to long-term equity investment to subsidiaries by equity method according toother relevant materials after the offset of the share held by the Parent Company in the equity capital investmentof the Parent Company and owner’s equity of subsidiaries and the significant transactions and intrabranch withinthe Company.For the balance formed because the current loss shared by the minority shareholders of the subsidiary is more thanthe share enjoyed by the minority shareholders of the subsidiary in the initial shareholders’ equity, if the Articlesof Corporation or Agreement didn’t stipulate that minority shareholders should be responsible for it, then thebalance need to offset the shareholders’ equity of the Company; if the Articles of Corporation or Agreementstipulated that minority shareholders should be responsible for it, then the balance need to offset the minorityshareholders’ equity.
(2) Treatment Method of Increasing or Disposing Subsidiaries during the Reporting PeriodDuring 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 ofsubsidiaries from the combination’s period-begin to the end of the reporting period need to be included intoconsolidated income statement; the cash flow of subsidiaries from the combination’s period-begin to the end ofthe reporting period need to be included into consolidated cash flow statement. if the subsidiaries were added dueto Business combinations not under the same control, then initial book balance of consolidated balance sheetdoesn’t need to be adjusted; the income, expenses, and profits of subsidiaries from the purchasing date to the endof the reporting period need to be included into consolidated income statement; the cash flow of subsidiaries frompurchasing 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 ofsubsidiaries from period-begin to the disposal date need to be included into consolidated income statement; thecash flow of subsidiaries from period-begin to the disposal date need to be included into consolidated cash flowstatement.
7. Classification of Joint Arrangements and Accounting Treatment of Joint OperationsA joint arrangement refers to an arrangement jointly controlled by two participants or above and be divided intojoint operations and joint ventures.When the Company is the joint venture party of the joint operations, should recognize the following items relatedto the interests share of the joint operations:
(1) Recognize the assets individually held and the assets jointly held by recognizing according to the holdingshare;
(2) Recognize the liabilities undertook individually and the liabilities jointly held by recognizing according to theholding 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 accordingto the holding share of the Company.When the Company is the joint operation party of the joint ventures, should recognize the investment of the jointventures as the long-term equity investment and be measured according g to the said methods of the notes of thelong-term equity investment of the financial statement.
8. Recognition Standard for Cash and Cash Equivalents
In the Company’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used forcover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments,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 translatedinto the amount in the functional currency at the exchange rate which is approximate to the spot exchange rate ofthe transaction date. On the balance sheet date, the foreign currency monetary items shall be translated at the spotexchange rate. The balance of exchange arising from the difference between the spot exchange rate on the balancesheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date shall berecorded into the profits and losses at the current period except that the balance of exchange arising from foreigncurrency borrowings for the purchase and construction or production of qualified assets shall be capitalized. Theforeign currency non-monetary items measured at the historical cost shall still be translated at the spot exchangerate 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 sheetdate. Among the owner’s equity items, except for the items as “undistributed profits”, other items shall betranslated at the spot exchange rate at the time when they are incurred. The revenues and the expenses items of theincome 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 listedunder the “other comprehensive income” item of the owners’ equity of the consolidated financial statement. Asfor the foreign currency items which actually form into the net investment of the foreign operation, the exchangedifference 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 tothe foreign operation should be transferred in the current gains and losses according to the proportion. The foreigncash flow adopts the spot exchange rate on the occurring date of the cash flow. And the influenced amount of theexchange rate changes should be individually listed among the cash flow statement.
10. Financial Instruments
Financial instruments refer to the contracts that constitute a company’s financial assets and the financial liabilitiesor equity instruments of other units.
1. Recognition and derecognition of financial instruments
When the Company becomes a party to a financial instrument, it shall recognize a financial asset or financialliability.A financial asset (or part of a financial asset or part of a group of similar financial assets) that meets the followingconditions should be derecognized, or in other words, be written off from its account and balance sheet:
1) The right to receive cash flow from the financial asset has expired;
2) The right to receive cash flow from the financial asset has been transferred, or the “transfer” agreementspecifies the obligation to duly pay the full amount of cash flow received to a third party; and (a) has transferredsubstantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all therisks and rewards of the asset, but has transferred control of the asset.A financial liability that has been fulfilled, canceled or expired should be derecognized. If a financial liability isreplaced with another financial liability by the same creditor on almost entirely different terms materially, or theterms for an existing liability have been almost fully revised materially, such replacement or revision should betreated as derecognition of the original liability and recognition of the new liability, and the difference should beincluded into current profits/losses.A financial asset traded in a conventional manner should be recognized and derecognized by trade-dateaccounting. The trading of financial assets in a conventional manner means that financial assets are received ordelivered by the deadline as specified in regulations or general practice according to contract provisions. Tradedate refers to the date committed by the Company to buy or sell a financial asset.
2. Classification and measurement of financial assets
The Company classifies the financial assets when initially recognized into financial assets measured at amortizedcost, financial assets measured by the fair value and the changes recorded in other comprehensive income andfinancial assets at fair value through profit or loss based on the business model for financial assets managementand characteristics of contractual cash flow of financial assets. Financial assets initially recognized shall bemeasured at their fair values. For accounts receivable and notes receivable excluding major financing or withoutregard to financing over one year generated from ales of commodities or provision of labor services, the initialmeasurement shall be conducted based on the transaction price.For financial assets at fair value through profit or loss, the transaction expenses thereof shall be directly includedinto the current profit or loss; for other financial assets, the transaction expenses thereof shall be included into theinitially recognized amount.The subsequent measurement of financial assets depends on the classification thereof:
(1) Debt instrument investments measured at amortized cost
Financial assets meeting the following conditions at the same time shall be classified as financial assets measuredat amortized cost: the business mode of the Company to manage such financial assets targets at collecting the
contractual cash flow. The contract of such financial assets stipulates that the cash flow generated in the specificdate is the payment of the interest based on the principal and outstanding principal amount. The interest incomefor this kind of financial assets shall be recognized by effective interest method, and the gains or losses generatedfrom the derecognition, modification or impairment shall all be included into the current profit or loss. This kindof financial assets mainly consist of monetary capital, accounts receivable and notes receivable, other receivables,investments in debt obligations and long-term receivables. The Company presents the investments in debtobligations due within one year since the balance sheet date and long-term receivables as current portion ofnon-current assets and the original investments in debt obligations with maturity date within one year as othercurrent assets.
(2) Investments in debt instruments measured at fair value and changes thereof recorded into other comprehensiveincomeFinancial assets meeting the following conditions at the same time shall be classified as financial assets measuredat fair value and changes thereof recorded into other comprehensive income: the business mode of the Companyto manage such financial assets takes contract cash flow collected as target and selling as target. The contract ofsuch financial assets stipulates that the cash flow generated in the specific date is the payment of the interest basedon the principal and outstanding principal amount. The interest income for this kind of financial assets shall berecognized by effective interest method. All changes in fair value should be included into other comprehensiveincome except for interest income, impairment losses and exchange differences, which should be recognized ascurrent profits/losses. When a financial asset is derecognized, the cumulative gains or losses included into othercomprehensive income previously should be transferred out and included into current profits/losses. Suchfinancial assets should be presented as other credit investments. Other credit investments that will mature withinone year from the date of balance sheet should be presented as non-current assets due within one year, and othercredit investments with the original maturity date coming within one year should be presented as other currentassets.
(3) Equity instrument investment measured at fair value with changes included into other comprehensive incomeThe Company irrevocably chooses to designate part of non-trading equity instrument investments as financialassets measured at fair value with changes included into other comprehensive income. Only related dividendincome (excluding the dividend income confirmed to be recovered as part of investment costs) will be recognizedinto current profits/losses, while subsequent changes in fair value will be recognized into other comprehensiveincome without the withdrawal of impairment provisions required. When a financial asset is derecognized, thecumulative gains or losses included into other comprehensive income previously should be recognized intoretained earnings. Such financial assets should be presented as other equity investments.A financial asset that meets one of the following conditions is classified as a trading financial asset: The financialasset has been acquired in order to be sold or repurchased in the near future; the financial asset is part of anidentifiable financial instrument portfolio under centralized management, and there is evidence proving that thecompany has recently adopted a short-term profit model; it is a derivative instrument, but derivative instrumentsthat are designated as and are effective hedging instruments and those conforming with financial guaranteecontracts are excluded.
(4) Financial assets at fair value through profit or loss
The Company classifies financial assets except for above-mentioned financial assets measured with amortizedcost and financial assets measured with fair value whose change is included into other comprehensive income intofinancial assets at fair value through profit or loss. The subsequent measurement of such kind of financial assetsshall be conducted by fair value method and all changes in fair value shall be recorded into the current profit orloss. Such financial assets shall be presented as trading financial assets, and those will due over one year since the
balance sheet date and expectedly held over one year shall be presented as other non-current financial assets.
3. Classification and measurement of financial liabilities
The Company’s financial liabilities are, on initial recognition, classified into financial liabilities at fair valuethrough profit or loss, other financial liabilities and derivative instruments designated as effective hedginginstruments. For financial liabilities at fair value through profit or loss, relevant transaction costs are immediatelyrecognized in profit or loss for the current period, and transaction costs relating to other financial liabilities areincluded in the initial recognition amounts.The subsequent measurement of financial liabilities depends on the classification thereof:
(1) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include trading financial liabilities (including the derivativeinstruments belonging to financial liabilities) and financial liabilities designated at the initial recognition to bemeasured by the fair value and their changes are recorded in the current profit or loss.A financial liability that meets one of the following conditions is classified as a trading financial liability: Thefinancial liability has been undertaken in order to be sold or repurchased in the near future; the financial liability ispart of an identifiable financial instrument portfolio under centralized management, and there is evidence provingthat the company has recently adopted a short-term profit model; it is a derivative instrument, but derivativeinstruments that are designated as and are effective hedging instruments and those conforming with financialguarantee contracts are excluded. Trading financial liabilities (including derivative instruments classified asfinancial liabilities) should be subsequently measured at fair value, and all changes in fair value should berecorded into current profits/losses, except for those related to hedging accounting.
(2) Other financial liabilities
For such kind of financial liabilities, the subsequent measurement shall be conducted by effective interest methodbased on the amortized cost.
4. Impairment of financial instruments
Based on expected credit losses, the Company carries out impairment treatment on financial assets measured atamortized cost and debt instrument investments measured at fair value with changes included into othercomprehensive income, rental receivables, contract assets and financial assets and recognizes bad debt provision.Credit losses refer to the difference between all contract cash flows discounted by the original actual interest ratereceivable according to contracts and all cash flows expected to be received by the Company, which is the presentvalue of all cash shortfalls. The financial assets purchased by or originating from the Company with creditimpairment should be discounted by the actual interest rate of the financial assets after credit adjustment.In respect of receivable accounts that do not contain significant financing components, the Company uses thesimplified measurement method to measure bad debt provision by the amount equivalent to the expected creditlosses of the whole duration.In respect of receivable accounts that contain significant financing components, the Company opts to use thesimplified measurement method to measure bad debt provision by the amount equivalent to the expected creditlosses for the whole duration.For other financial assets and financial guarantee contracts than the above using the simplified measurementmethod, the Company on the balance sheet date assesses whether their credit risks have increased substantiallysince the initial recognition. If the credit risks have not increased substantially since the initial recognition and arein the first stage, the Company will measure bad debt provision by the amount equivalent to the expected creditlosses for the next 12 months and calculate interest income by the book balance and the actual interest rate; if thecredit risks have increased obviously without credit impairment since the initial recognition and are in the secondstage, the Company will measure bad debt provision by the amount equivalent to the expected credit losses for the
whole duration and calculate interest income by the book balance and the actual interest rate; if the credit riskshave increased substantially with credit impairment since the initial recognition and are in the third stage, theCompany will measure bad debt provision by the amount equivalent to the expected credit losses for the wholeduration and calculate interest income by the amortized cost and the actual interest rate. For financial instrumentswith only low credit risks on the balance sheet date, the Company assumes that their credit risks have notincreased substantially since the initial recognition.The Company 1) assesses expected credit losses of financial assets with credit impairment based on individualitems; 2) assesses expected credit losses of financial assets that are not derecognized but with changes in contractcash flows due to revision of or renegotiation on contracts by the Company and the counterparty, based onindividual items; 3) assesses expected credit losses of other financial assets based on age combination.The Company considers related past matters, current conditions, the reasonableness of the forecast on futureeconomic conditions and well-founded information when assessing expected credit losses.The Company’s information of the judgment standards for remarkable increase in credit risks, definition of assetswith incurred credit impairment and assumption of measurement on expected credit losses is disclosed in thisNote 12 Accounts Receivable.When no longer reasonably expects to recover all or partial contractual cash flow of financial assets, the Companydirectly writes down the carrying amount of the financial assets.
5. Financial instruments offset
a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet whenthe following conditions are met at the same time: When the Company has a legal right that is currentlyenforceable to set off the recognized financial assets and financial liabilities, and intends either to settle on a netbasis, or to realize the financial asset and settle the financial liability simultaneously.
6. Financial guarantee contract
A financial guarantee contract refers to a contract in which a specific debtor shall compensate the contract holdersuffering the losses when the debtor is unable to repay the debt in due course according to the debt instrumentterms. Financial guarantee contracts are measured at fair value at the initial recognition. After the initialrecognition, all financial guarantee contracts should be subsequently measured by the higher amount between theamount of bad debt provision for expected credit losses recognized on the balance sheet date and the balance ofthe initially recognized amount deducting the cumulative amortization recognized according to the incomerecognition principle, except for the financial guarantee contracts designated as financial liabilities measured atfair value with changes recorded into current profits/losses.
7. Derivative financial instruments
The Company uses derivative financial instruments, which are initially measured at the fair value on the signaturedate of the derivative transaction contract and subsequently measured at their fair value. A derivative financialinstrument with a positive fair value is recognized as an asset and that with a negative fair value is recognized as aliability. Gains or losses from changes in the fair value of derivative instruments are directly recognized intocurrent profits/losses.For the financial assets that are not derecognized but with changes in contract cash flows due to revision of orrenegotiation on contracts by the Company and the counterparty, the Company recalculates the book balance ofthe financial assets according to the renegotiated or revised contract cash flows by the discounted value of theoriginal actual interest rate (or the actual interest rate after credit adjustment). Relevant gains or losses arerecorded into current profits/losses. Costs or expenses for the revision of financial assets are adjusted to therevised book balance of financial assets and amortized in the remaining period of the revised financial assets.
8. Transfer of financial assets
As for the Company transferred nearly all of the risks and rewards related to the ownership of a financial asset tothe transferee, should derecognize the financial assets; as for maintained nearly all of the risks and rewards relatedto the ownership of a financial asset, should continue to recognize the transferred financial assets.Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of afinancial asset, it shall deal with it according to the circumstances as follows, respectively: (1) If it gives up itscontrol over the financial asset, it shall stop recognizing the financial asset and recognize the assets and liabilitiesgenerated; (2) If it does not give up its control over the financial asset, it shall, according to the extent of itscontinuous involvement in the transferred financial asset, recognize the related financial asset and recognize therelevant liability accordingly.
11. Notes Receivable
| Category | Accounting estimate policy |
| Bank’s acceptance bill | The Company evaluates that the portfolio has relatively low credit risks, and generally no provision for impairment is made. |
12. Accounts Receivable
The Company withdraws the impairment loss for accounts receivable excluding significant financing componentwith the simplified method.
1. Accounts Receivable with Significant Single Amount for which the Expected Credit Loss is Made Individually
| Definition or amount criteria for an account receivable with a significant single amount | Making separate expected credit loss for accounts receivable with a significant single amount |
| Making separate expected credit loss for accounts receivable with a significant single amount | For an account receivable with a significant single amount, the impairment test shall be carried out on it separately. If there is any objective evidence of impairment, the impairment loss is recognized and the expected credit loss is made according to the difference between the present value of the account receivable’s future cash flows and its carrying amount. |
2. Accounts Receivable for which the Expected Credit Loss is Withdrawn by Credit Risk Characteristics
| Group name | Withdrawal method of expected credit loss |
| Common transaction group | Aging analysis method |
| Internal transaction group | Other methods |
In the groups, those adopting aging analysis method to withdraw expected credit loss:
| Aging | Withdrawal proportion of expected credit loss |
| Within 1 year (including 1 year) | 3% |
| 1 to 2 years | 10% |
| 2 to 3 years | 30% |
| 3 to 4 years | 50% |
| 4 to 5 years | 80% |
| Over 5 years | 100% |
3. Accounts Receivable with an Insignificant Single Amount but for which the Expected Credit Loss is MadeIndependently
| Reason of individually withdrawing expected credit loss | There are definite evidences indicate the obvious difference of thee return ability |
| Withdrawal method for expected credit loss | Recognizing the impairment loss and withdrawing the expected credit loss according to the difference between the present value of the account receivable’s future cash flows and its carrying amount. |
13. Accounts Receivable Financing
Not applicable
14. Other Receivables
Recognition method and accounting treatment for expected credit losses of other receivablesRefer to Note 12 Accounts Receivable for details about the recognition method and accounting treatment forexpected credit losses of other receivables which is the same as that of accounts receivable.
15. Inventories
1. Classification of Inventory
Inventory refers to finished products, goods in process, and materials consumed in the production process or theprovision of labor services held by the Company for sale in daily activities, mainly including raw materials, goodsin process, materials in transit, finished products, commodities, turnover materials, and commissioned processingmaterials. 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, processingcosts 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 InventoryImpairmentNet realizable value refers to the estimated selling price of the inventory minus the estimated cost to be incurred atthe time of completion, the estimated selling expenses and the relevant taxes and fees in daily activities. Indetermining the net realizable value of inventory, the conclusive evidence obtained is used as the basis and thepurpose of holding the inventory and the impact of the events after the balance sheet date should be taken intoaccount.For finished products, the materials used for sale and other goods used for direct sale, the net realizable value isdetermined by the estimated selling price of the inventory minus the estimated selling expenses and related taxesin the process of normal production and operation.
For materials inventory needs to be processed, the net realizable value is determined by the estimated selling priceof the finished products minus the estimated cost to be incurred, the estimated sales costs and the relevant taxesand 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.
16. Contract Assets
The Company presents the right possessed to collect consideration from customers unconditionally (onlydepending on the passing of time) as accounts receivable, and the right to charge the consideration throughtransferring any commodity to clients which depends on other factors except the passing of time as contract assets.As for the recognition method and accounting treatment for expected losses of contract assets, please refer to Note
12. Accounts Receivable.
17. Contract Cost
Not applicable
18. Assets Held for Sale
1. Assets Held for Sale
When a company relies mainly on selling (including the exchanges of non-monetary assets with commercialsubstance) instead of continuing to use a non-current asset or disposal group to recover its book value, thenon-current asset or disposal group is classified as asset held for sale. The non-current assets mentioned above donot include investment properties that are subsequently measured by the fair value model, biological assetsmeasured by fair value less net selling costs, assets formed from employee remuneration, financial assets, deferredincome 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 atransaction, and the liabilities directly related to these assets transferred in the transaction. In certaincircumstances, 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 heldfor sale: ① Assets or disposal groups can be sold immediately under current conditions based on the practice ofselling such assets or disposal groups in similar transactions; ② Sales are highly likely to occur, that is, theCompany has already made a resolution on a sale plan and obtained a certain purchase commitment, and the saleis expected to will be completed within one year, and the sale has been approved if relevant regulations requirerelevant 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 theCompany 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-salewithin a short time (which is usually 3 months).If one of the following circumstances cannot be controlled by the Company and the transaction betweennon-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 thenon-current assets or disposal groups as held-for-sale: ①The purchaser or other party unexpectedly setsconditions that lead to extension of the sale. The Company has already acted on these conditions in a timelymanner and it is expected to be able to successfully deal with the conditions that led to the extension of the salewithin one year after the conditions were set. ②Due to unusual circumstances, the non-current assets or disposalgroups held for sale failed to be sold within one year. In the first year, the Company has taken necessary measuresfor 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 theCompany retains part of the equity investment after the sale, when the proposed sale of the investment to thesubsidiary meets the conditions of held- for-sale, the investment to the subsidiary will be classified asheld-for-sale in the individual financial statement of the parent company, and all the assets and liabilities of thesubsidiary 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 thebalance sheet date, if the book value is higher than the fair value minus the net amount of the sale costs, the bookvalue will be written down to the net amount of fair value minus the sale costs, and the amount written down willbe recognized as impairment loss of assets and included in the current profit and loss, and provision forimpairment of held-for-sale assets will be made. For the confirmed amount of impairment loss of assets of thedisposal groups held for sale, the book value of goodwill of the disposal groups will be offset first, and then thebook 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-upbalance sheet date minus the sale costs increases, the previous written-down amount will be restored, and reversedto the asset impairment loss confirmed after the assets being classified as held-for-sale. The reversed amount willbe 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 oramortization. Interest and other expenses of liabilities in the disposal group held for sale will be confirmed asbefore.When a non-current asset or disposal group ceases be classified as held-for-sale or a non-current asset is removedout from the held-for-sale disposal group due to failure in meeting the classification conditions for the category ofheld-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 asheld 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 followingconditions 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 mainbusiness or a separate major business area.
(3) This constituent part is a subsidiary that is specifically acquired for resale.
3. Presentation
In the balance sheet, the Company distinguishes the non-current assets held for sale or the assets in the disposalgroup held for sale separately from other assets, and distinguish the liabilities in the disposal group held for saleseparately 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 assetsand current liabilities respectively.The Company lists profit and loss from continuing operations and profit and loss from operating profits in theincome statement. For the termination of operations for the current period, the Company restates the informationoriginally presented as profit or loss of continuing operation in the current financial statements to profit or loss oftermination of the comparable accounting period. If the termination of operation no longer meets the conditions ofheld-for-sale, the Company restates the information originally presented as a profit and loss of termination in thecurrent financial statements to profit or loss of continuing operation of the comparable accounting period.
19. Investments in Debt Obligations
Not applicable
20. Other Investments in Debt Obligations
Not applicable
21. Long-term Receivables
Not applicable
22. Long-term Equity Investments
Long-term equity investment refers to the Company’s long-term equity investment with control, joint control orsignificant influence on the investee.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 andoperating policies of the investee, but can’t control or jointly control the formulation of these policies with otherparties.
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 thebook 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 lossesof the current period.
(2) For the merger of enterprises not under the same control, The combination costs shall be the fair values, on theacquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by theCompany in exchange for the control on the acquiree, and all relevant direct costs incurred to the acquirer for thebusiness combination. Where any future event that is likely to affect the combination costs is stipulated in thecombination contract or agreement, if it is likely to occur and its effects on the combination costs can be measuredreliably, 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 costwhich is actually paid. The cost consists of the expenses directly relevant to the obtainment of the long-termequity 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 commercialnature) shall be recognized base on taking the fair value and relevant payable taxes as the cost of the assetsreceived.
(6) The cost of a long-term equity investment obtained by recombination of liabilities shall be recognized at thefair value.
2. Subsequent Measurement of Long-term Equity Investment and Recognized Method of Profit/LossThe long-term equity investment with joint control (except for the common operator) or significant influence onthe investee is accounted by equity method. In addition, the Company's financial statements use cost method tocalculate 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 investmentcost, and the cost of the long-term equity investment is adjusted according to additional investment or recoveredinvestment. Except the price actually paid when acquired investment or cash dividends or profits that have beendeclared but not yet paid included in the consideration, current investment income is recognized by the cashdividends 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 isgreater than the fair value of the investee’s identifiable net assets, the initial investment cost of the long-termequity investment shall not be adjusted; if the initial investment cost is less than the fair value of the investee’sidentifiable net assets, the difference shall be recorded into the current profits and losses, and the cost of thelong-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 berecognized 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 becalculated according to the profits or cash dividends declared by the investee, and the book value of the long-termequity investment shall be reduced accordingly. For other changes in the owner’s equity other than the net profitor loss, other comprehensive income and profit distribution of the investee, the book value of the long-term equityinvestment shall be adjusted and included in the capital reserve. When the share of the net profit or loss of theinvestee is recognized, the net profit of the investee shall be adjusted and recognized according to the fair value ofthe identifiable assets of the investee when the investment is made. If the accounting policies and accountingperiods adopted by the investee are inconsistent with the Company, the financial statements of the investee shallbe adjusted according to the accounting policies and accounting periods of the Company and the investmentincome and other comprehensive income shall be recognized accordingly. For the transactions between theCompany and associates and joint ventures, if the assets made or sold don’t constitute business, the unrealizedgains and losses of the internal transactions are offset by the proportion attributable to the Company, and theinvestment gains and losses are recognized accordingly. However, the loss of unrealized internal transactionsincurred by the Company and the investee attributable to the impairment loss of the transferred assets shall not beoffset. If the assets made to associates or joint ventures constitute business, and the investor makes long-termequity investment but does not obtain the control, the fair value of the investment shall be taken as the initialinvestment cost of the new long-term equity investment, and the difference between initial investment and thebook value of the investment is fully recognized in profit or loss for the current period. If the assets sold by theCompany to joint ventures or associates constitute business, the difference between the consideration and the bookvalue 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 theprovisions of Accounting Standard for Business Enterprises No. 20 - Business combination, and the profits orlosses 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 andother 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 arerecognized in accordance with the obligations assumed and included in the current investment losses. If theinvestee has realized net profit in later period, the Company will resume the recognition of the income share afterthe 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 thedifference between the long-term equity investment increased due to the purchase of minority interests and theshare of the net assets held by the subsidiary from the date of purchase (or the date of combination) calculatedaccording to the proportion of the new shareholding ratio, and retained earnings shall be adjusted if the capitalreserve 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 investmentin the subsidiary without the loss of control, and the difference between the disposal price and the net assets of thesubsidiary 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 NotesⅥ. “Principles, Procedures andMethods for the Preparation of Consolidated Statements” .In other cases, the difference between the book value and the actual acquisition price shall be recorded into thecurrent 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 accountedby the equity method, other comprehensive income originally included in the shareholders’ equity shall be treatedin the same basis of the investee directly disposing related assets or liabilities by corresponding proportion. Theowner’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 andlosses.For long-term equity investment accounted by the cost method and residual equity after disposal still accounted bythe cost method, other comprehensive income accounted by equity method or recognized by financial instrumentand accounted and recognized by measurement criteria before the acquisition of the control over the investee istreated in the same basis of the investee directly disposing related assets or liabilities, and carried forwardproportionately into the current profits and losses. Other changes of owner’s equity in net assets of the investeeaccounted and recognized by the equity method other than the net profit or loss, other comprehensive income andprofit 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 Notes 31. Impairment of Long-term Assets.
23. Investment Property
Measurement model for investment propertyCost method measurement
Method for depreciation or amortizationThe Company's investment real estates include leased land use rights, leased buildings, and land use rights held andready to be transferred after appreciation. Investment real estate is initially measured according to cost, and thenmeasured by cost model.
1. Recognition of investment real estate
Investment real estate can only be recognized if it meets the following conditions at the same time: (1) Economicbenefits related to investment real estate are likely to flow into enterprises. (2) The cost of the investment real estatecan be measured reliably.
2. Initial measurement of investment real estate
(1) The cost of purchased investment real estate includes the purchase price, relevant taxes and fees and otherexpenses directly attributable to the asset.
(2) The cost of self-construction of investment real estate consists of the necessary expenses incurred before theconstruction of the asset reaches the predetermined serviceable condition.
(3) The cost of investment real estate acquired by other means shall be determined in accordance with relevantaccounting standards.
(4) Subsequent expenditures related to investment real estate, if they meet the confirmation conditions of investmentreal estate, shall be included in the cost of investment real estate; those that do not meet the recognition conditionsare included in the current profits and losses when they occur.
3. Subsequent measurement of investment real estate
The Company adopts the cost model to carry out subsequent measurement of investment real estate on the balancesheet date. According to the relevant provisions of Accounting Standard for Business Enterprises No.4-Fixed Assetsand Accounting Standard for Business Enterprises No.6-Intangible Assets, the investment real estate is amortized ordepreciated according to the life average method within the expected useful life.
4. Conversion of investment real estate
The Company has conclusive evidence that the use of real estate has changed, and the investment real estate isconverted into other assets, or other assets are converted into investment real estate, and the book value before theconversion of real estate is taken as the recorded value after the conversion.
24. Fixed Assets
(1) Recognition Conditions
Fixed assets of the Company refers to the tangible assets that simultaneously possess the features as follows: theyare held for the sake of producing commodities, rendering labor service, renting or business management; and theiruseful life is in excess of one accounting year and unit price is higher. No fixed assets may be recognized unless itsimultaneously meets the conditions as follows: ① The economic benefits pertinent to the fixed asset are likely toflow into the Company; and ② The cost of the fixed asset can be measured reliably. The Company's fixed assetsare initially measured at cost. Specifically, the costs of purchased fixed assets include the purchase price, relevanttaxes and fees, and other expenditures incurred before the fixed assets reach the pre-determined serviceablecondition that can be directly attributable to the assets. The costs of self-built fixed assets contain the necessaryexpenditures incurred before the assets built reach their pre-determined serviceable condition. If the amount paid forthe purchase of fixed assets witnesses postponed payment due to that the normal credit conditions are exceeded andis actually financing in nature, the costs of such fixed assets shall be determined on the basis of the present value ofthe purchase price. The difference between the actual amount paid and the present value of the purchase price,except for the difference that should be capitalized, shall be recognized as profit and loss of the current period duringthe credit period.
(2) Depreciation Method
| Category of fixed assets | Method | Useful life | Expected net salvage value | Annual deprecation |
| Housing and building | Average method of useful life | 3—30 years | 1%-5% | 31.67%-3.17% |
| Machinery equipments | Average method of useful life | 2—10 years | 1%-5% | 47.50%-9.50% |
| Transportation vehicle | Average method of useful life | 5—10 years | 1%-5% | 19.00%-9.50% |
| Electronic equipment | Average method of useful life | 2—8 years | 1%-5% | 47.50%-11.88% |
(3) Recognition Basis, Pricing and Depreciation Method of Fixed Assets by Finance Lease
25. Construction in Progress
1. Pricing of Construction in Progress
The constructions are accounted according to the actual costs incurred. The constructions shall be carried forwardinto fixed assets at the actual cost when reach intended usable condition. The borrowing expenses eligible forcapitalization incurred before the delivery of the construction are included in the construction cost; after thedelivery, 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 AssetsThe Company’s construction in progress is carried forward into fixed assets when the construction completes andreaches intended usable condition. The criteria for determining the intended usable condition shall meet one of thefollowing:
(1) The physical construction (including installation) of fixed assets has been completed or substantiallycompleted;
(2) Has been produced or run for trial, and the results indicate that the assets can run normally or can producestable 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;
(4) The fixed assets purchased have reached the design or contract requirements, or basically in line with thedesign or contract requirements.
3. Provision for Impairment of Construction in ProgressPlease refer to Note 31 Impairment of Long-term Assets,for details of impairment test methods and impairment provision methods of construction in progress.
26. 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 exchangedifferences arising from foreign currency borrowings. The borrowing costs incurred by the Company directlyattributable to the acquisition, construction or production of assets eligible for capitalization are capitalized andincluded in the cost of the relevant assets. Other borrowing costs are recognized as expenses according to theamount 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 alreadyoccurred; borrowing costs have already occurred; construction or production activities necessary to bring theassets 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 ofcapitalization, excluding the period when capitalization is suspended.If assets that meet the conditions of capitalization are interrupted abnormally in the course of construction orproduction, and the interruption time exceeds 3 consecutive months, the capitalization of borrowing costs shall besuspended. The borrowing costs incurred during the interruption are recognized as expenses and included incurrent profits and losses until the acquisition or construction of the assets is resumed. The capitalization of theborrowing costs continues if the interruption is a procedure necessary for the purchase or production of assetseligible 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 conditionsof 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 losseswhen incurred.
3. Calculation method of capitalized amount of borrowing costs
During the period of capitalization, the capitalization amount of interests (including amortization of discounts orpremiums) 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 interestexpenses actually incurred in the current period of borrowings shall be recognized after deducting the interestincome obtained by depositing the unused borrowing funds into the bank or investment income obtained fromtemporary 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 expenditureexceeding the special borrowing by the capitalization rate of the general borrowing to calculate the amount ofinterest that should be capitalized for general borrowings. The capitalization rate is determined based on theweighted average interest rate of general borrowings.
27. Living Assets
Not applicable
28. Oil and Gas Assets
Not applicable
29. Right-of-use Assets
On the start date of the lease term, the Company recognizes its right to use the leasehold property in the lease termas right-of-use assets, including: The initial measurement amount of the lease obligation; the lease payment paidon or before the start date of the lease term. If there is a lease incentive, the amount related to the lease incentivetaken should be deducted. the initial direct cost incurred by the lessee; the estimated cost that the lessee will use topull down and remove the leasehold property, and restore the site of the leasehold property or restore theleasehold property to the state agreed in the lease clauses. Then, the Company will depreciate the right-of-useassets with the straight-line method. If it is reasonably certain that the ownership of the leasehold property will beobtained at the end of the lease term, the Company will depreciate the leasehold property over its remainingservice life. If it is not reasonably certain that the ownership of the leasehold property will be obtained at the endof the lease term, the Company will depreciate the leased asset(s) over the lease term or the remaining service life,whichever is shorter. When the Company re-calculates the lease obligation using the present value (PV) of thechanged lease payment and correspondingly adjusts the book value of the right-of-use assets, if the book value isalready reduced to zero, yet the lease obligation still needs to be reduced further, the Company will include theremaining amount in the current profit or loss.
30. 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 withoutphysical form. The intangible assets are recognized when all the following conditions are met: (1) Conform to thedefinition of intangible assets; (2) Expected future economic benefits related to the assets are likely to flow intothe 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 expensesdirectly attributable to the intended use of the asset. The payment of purchase price of intangible assets exceedingnormal credit terms is deferred, and the cost of intangible assets having financing nature in essence shall berecognized based on the present value of the purchase price. The difference between the actual payment price andthe present value of the purchase price shall be recorded into the current profits and losses in the credit periodexcept 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 theinvestment 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 assetsis limited, and the years of the useful life or output that constitutes the useful life or similar measurement unitsshall be estimated. The intangible assets are regarded as intangible assets with uncertain useful life if the term thatbrings economic benefits to the Company is unforeseeableIntangible assets with limited useful life shall be amortized by straight line method from the time when theintangible assets are available until can’t be recognized as intangible assets; intangible assets with uncertain usefullife shall not be amortized. The Company reviews the estimated useful life and amortization method of intangibleassets with limited useful life at the end of each year, and reviews the estimated useful life of intangible assetswith uncertain useful life in each accounting period. For intangible assets that evidence shows the useful life islimited, 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 ProvisionThe impairment test method and withdrawal method for impairment provision of intangible assets are detailed inNote 31: Long-term asset impairment under Note V.
(2) Accounting Policy for Internal Research and Development Expenditures
The expenditures in internal research and development projects of the Company are classified into expenditures inresearch stage and expenditures in development stage. The expenditures in research stage are included in thecurrent profits and losses when incurred. The expenditures in development stage are recognized as intangibleassets 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 productsproduced with the intangible asset have market or the proof of its usefulness if the intangible asset has market andwill be used internally;
(4) Having sufficient technical, financial resources and other resources to support the development of theintangible 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 assetsrecognition criterion until reaching intended use. Expenditures that have been expensed in previous periods are nolonger adjusted.Non-monetary assets exchange, debt restructuring, government subsidies and the cost of intangible assets acquiredby business combination are recognized according to relevant provisions of Accounting Standard for BusinessEnterprises No. 7 - Non-monetary assets exchange, Accounting Standard for Business Enterprises No. 12 - Debtrestructuring, Accounting Standards for Business Enterprises No. 16 - Government subsidies, AccountingStandard for Business Enterprises No. 20 - Business combination respectively.
31. Impairment of Long-term Assets
For non-current non-financial assets such as fixed assets, construction in progress, intangible assets with limiteduseful life, investment real estate measured in cost mode and long-term equity investments in subsidiaries, jointventures 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 stateshall 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, theimpairment provision shall be made at the difference and included in the impairment loss. The recoverableamount is the higher of the fair value of the asset minus the disposal cost and the present value of the expectedfuture cash flow of the asset. The fair value of the asset is recognized according to the price of the sales agreementin the fair trade; if there is no sales agreement but there is an active market, the fair value is recognized accordingto the buyer’s bid of the asset; if there is no sales agreement or active market, the fair value of asset shall beestimated based on the best information that can be obtained. Disposal costs include legal costs related to disposalof assets, related taxes, handling charges, and direct costs incurred to enable the asset reaching sellable status. Thepresent value of the expected future cash flows of the assets is recognized by the amount discounted at appropriatediscount rate according to the expected future cash flows arising from the continuing use of the asset and the finaldisposal. The provision for impairment of assets is calculated and recognized on the basis of individual assets. If itis difficult to estimate the recoverable amount of individual assets, the recoverable amount of the asset group shallbe recognized by the asset group to which the asset belongs. The asset group is the smallest portfolio of assets thatcan generate cash inflows independently.The book value of the goodwill presented separately in the financial statements shall be apportioned to the assetgroup or portfolio of asset groups that is expected to benefit from the synergies of the business combination whenthe impairment test is conducted. The corresponding impairment loss is recognized if the test results indicate thatthe recoverable amount of the asset group or portfolio of asset groups containing the apportioned goodwill islower than its book value. The amount of the impairment loss shall offset the book value of the goodwillapportioned to the asset group or portfolio of asset groups, and offset the book value of other assets in proportionaccording to the proportion of the book value of other assets except the goodwill in the asset group or portfolio ofasset groups.Once the impairment loss of the above asset is recognized, the portion that the value is restored will not be writtenback in subsequent periods.
32. Long-term Prepaid Expense
Long-term prepaid expense refers 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 shallbe amortized averagely within benefit period. In case of no benefit in the future accounting period, the amortizedvalue of such project that fails to be amortized shall be transferred into the profits and losses of the current period.The amortization period of various expenses is as follows:
| Item | Amortization Period |
| Expenditure on improvement of rented fixed assets | 3-5 years |
| Fixed repair expenditure | 5 years |
| Mould | 3 years |
| Wrap-around boxes | 2 years |
33. Contract Liabilities
The Company’s obligation of transferring commodities to customers due to consideration received or receivablefrom clients. If the client has paid the contract consideration or the Company has obtained the unconditional rightof collection before the Company transfers commodities to the customer, the Company shall present the accountsreceived or receivable as contract liabilities at the earlier time between the time when the client actually conductspayment and the deadline of payment. Contract assets and contract liabilities under the same contract shall bepresented based on the net amount, while those not under the same contract shall not be offset.
34. Payroll
(1) Accounting Treatment of Short-term Compensation
Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services andbenefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housingfund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-termcompensation actually happened during the accounting period when the active staff offering the service for theGroup should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Ofwhich 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 definedcontribution plans mainly include basic endowment insurance, unemployment insurance, annuity funds, etc., andthe corresponding payable and deposit amount should be included into the relevant assets cost or the current gainsand 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 laborcontract or brings forward any compensation proposal for the purpose of encouraging the employee to accept alayoff, and should recognize the payroll liabilities occurred from the demission welfare base on the earlier datebetween the time when the Group could not one-sided withdraw the demission welfare which offered by the planor layoff proposal owning to relieve the labor relationship and the date the Group recognizes the cost related to thereorganization of the payment of the demission welfare and at the same time includes which into the current gainsand losses. But if the demission welfare is estimated that could not totally pay after the end of the annual reportwithin 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’sservice terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under thecondition 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 beaccounting disposed according to the setting drawing plan, while the rest should be disposed according to thesetting revenue plan.
35. Lease Liabilities
On the start date of the lease term, the Company recognizes the PV of the unpaid lease payment as a leaseobligation, except for the short-term and low-value asset leases. It will regard the interest rate implicit in lease asthe rate of discount, when calculating the PV of the lease payment. The incremental lending rate of the lessee willbe deemed as the rate of discount, if the interest rate implicit in lease cannot be confirmed. The Companycalculates the interest charge of the lease obligation in each period in the lease term at a fixed periodic interest rateand includes it in the current profit or loss, unless such interest charge is stipulated to be included in theunderlying asset cost. Variable lease payments that are not included in the measurement of the lease obligationshould be included in the current profit or loss when they are actually incurred, unless such payments arestipulated to be included in the underlying asset cost.The Company will re-calculate the lease obligation using the PV of the changed lease payment, if the actual fixedpayment, the estimated payable of the residual value of the guarantee, the index or rate used to confirm the leasepayment, or the assessment result of the call option, the renewal option, or the termination option, or the actualexercise changes, after the start date of the lease term.
36. Provisions
1. Recognition of Provisions
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 anprovisions when the following conditions are satisfied simultaneously: ① That obligation is a current obligationof 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 Provisions
The provisions shall be initially measured in accordance with the best estimate of the necessary expenses for theperformance of the current obligation. If there is a sequent range for the necessary expenses and if all theoutcomes within this range are equally likely to occur, the best estimate shall be determined in accordance withthe middle estimate within the range. In other cases, the best estimate shall be conducted in accordance with thefollowing situations, respectively: ① If the Contingencies concern a single item, it shall be determined in thelight of the most likely outcome. ② If the Contingencies concern two or more items, the best estimate should becalculated and determined in accordance with all possible outcomes and the relevant probabilities. ③ When allor some of the expenses necessary for the liquidation of an provisions of an enterprise is expected to becompensated by a third party, the compensation should be separately recognized as an asset only when it isvirtually certain that the reimbursement will be obtained. The Company shall check the book value of theprovisions on the balance sheet date. The amount of compensation is not exceeding the book value of therecognized provisions.
37. Share-based Payment
Not applicable
38. Other Financial Instruments such as Preferred Shares and Perpetual Bonds
Not applicable
39. Revenue
The Accounting Policy Adopted for Recognition and Measurement of Revenue
1. Accounting policies adopted in revenue recognition and measurement
The Company recognizes revenue when it has satisfied its performance obligations under the contract, i.e., when thecustomer has obtained control of relevant goods or services. Obtaining control of relevant goods or services meansbeing able to direct the use of them and obtain substantially all of the benefits from them.Where the contract contains two or more performance obligations, the Company, at the inception date of the contract,allocates the transaction price to each performance obligation in accordance with the relative proportion of thestand-alone selling price of the goods or services promised by each performance obligation. The Company measuresrevenue on the basis of the transaction price allocated to each performance obligation.Transaction price is the amount of consideration to which the Company expects to be entitled in exchange fortransferring goods or services to a customer, excluding amounts collected on behalf of third parties and amountsexpected to be returned to the customer. The Company determines the transaction price in accordance with the termsof the contract, with past business practices taken into account. When determining the transaction price, it considersthe impact of variable consideration, the existence of a significant financing component in the contract, non-cashconsideration, consideration payable to a customer and other factors. The transaction price is recognized only to theextent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will notoccur when the relevant uncertainty is resolved. Where a contract contains a significant financing component, theCompany determines the transaction price on the basis of the amount presumably payable in cash when thecustomer obtains control of the goods or services, and uses the actual interest method to amortize the difference
between the transaction price and the contract consideration during the contract period.A performance obligation is satisfied over time if one of the following conditions is met; otherwise, it is treated assatisfied at a point in time:
(1) The customer simultaneously receives and consumes the benefits provided by the Company's performance as theCompany performs.
(2) The customer can control the goods as they are created during the Company's performance.
(3) The goods produced by the Company's performance have no alternative use, and the Company has the right tocollect payment for performance completed to date during the entire contract period.Where a performance obligation is to be satisfied over time, the Company recognizes revenue in accordance withthe progress of performance during that period, except when the progress cannot be reasonably determined. Indetermining the progress of performance, the Company takes into account the nature of the goods or services andadopts the output methods or the input methods.Where the performance progress cannot be reasonably determined, and the costs incurred are expected to berecovered, the Company recognizes revenue according to the amount of the costs incurred until the progress can bereasonably determined.Where the performance obligation is to be satisfied at a certain point in time, the Company recognizes revenue at thepoint when the customer obtains control of the relevant goods or services. When judging whether the customer hasobtained control of goods or services, the Company considers the following indicators:
(1) The Company has a present right to receive payment for the goods or services, i.e., the customer has a presentobligation to pay for the goods or services.
(2) The Company has transferred the legal ownership of the goods to the customer, i.e., the customer has obtainedthe legal ownership of the goods.
(3) The Company has transferred physical possession of the goods to the customer, i.e., the customer has takenphysical possession of the goods.
(4) The Company has transferred significant risks and rewards of ownership of the goods to the customer, i.e., thecustomer has obtained significant risks and rewards of ownership of the goods.
(5) The customer has accepted the goods or services.
2. Specific methods
(1) Recognition of domestic sales revenue: Under the conventional settlement mode, the Company has deliveredgoods that have passed inspection to the purchaser as required by the purchaser; the amount of revenue has beendetermined, a sales invoice has been issued and the payment has been received or is expected to be recovered. Underthe consignment sales settlement mode, the Company recognizes sales revenue when the product is issued and thesettlement notice is issued after the customer inspection is qualified.
(2) Recognition of export sales revenue: The Company has produced goods according to the requirements stipulatedin the sales contract, and completed the export declaration procedures after the goods have passed inspection; thefreight company has shipped the goods, the amount of revenue has been determined, an export sales invoice hasbeen issued, and the payment has been received or is expected to be recovered.
Differences in accounting policies for the recognition of revenue caused by different business models for the sametype of business
40. Government Subsidies
1. Category of Government Subsidies
Government subsidies refer to the monetary assets and non-monetary assets obtained by the Company from thegovernment, which mainly include government subsidies related to assets and government subsidies related toincome.
2. Distinction Standard of Government Subsidies Related to Assets with Government Subsidies Related to IncomeThe government subsidies related to assets refer to the government subsidies obtained for acquisition, constructionor otherwise formation of long-term assets. The government subsidies related to income refer to the governmentsubsidies except the government subsidies related to assets.The specific standard of classifying the government subsidies as subsidies related to assets: government subsidiesfor acquisition, construction or otherwise formation of long-term assets.The specific criteria that the Company classifies government subsidies as income related is: other governmentsubsidies other than asset-related government subsidies.If the government documents do not specify the subsidy object, the bases that the Company classified thegovernment subsidies as assets-related subsidies or income-related subsidies were as follows: (1) If the specificitems for which the subsidy is targeted are stipulated in government documents, divide according to the relativeproportion of the amount of expenditure that forms assets and the amount of expenditure included in the cost inthe budget for that particular project, and the proportion shall be reviewed at each balance sheet date and changedas necessary; (2) if the government documents only have a general statement of the purpose and do not specify aspecific project, the subsidy is recognized as government subsidy related to income.
3. Measurement of Government Subsidies
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 anominal 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 bookbalance of related deferred income shall be written off and the excess shall be charged to profit or loss for theCurrent Period; for other circumstances, it shall be directly charged to profit or loss for the Current.
4. Accounting Treatment for Government Subsidies
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 currentprofit or loss in a reasonable and systematic manner within the useful lives of the relevant assets (subsidies relatedto the daily activities of the Company are included in other income; while subsidies unrelated to the dailyactivities of the Company are included in non-operating income). Government subsidies measured at nominalamounts 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 incomeshall be transferred to the profit or loss of the asset disposal in the Current Period.Government subsidies related to income shall be treated as follows:
(1) government subsidies used to compensate the relevant costs, expenses or losses of the Company in thesubsequent period shall be recognized as deferred income, and shall be included in the current profit and lossduring the period of confirming the relevant costs, expenses or losses (subsidies related to the daily activities ofthe Company are included in other income; while subsidies unrelated to the daily activities of the Company areincluded in non-operating income);
(2) government subsidies used to compensate the relevant costs, expenses or losses incurred by the Companyshall be directly included in the current profits and losses (subsidies related to the daily activities of the Companyare included in other income; while subsidies unrelated to the daily activities of the Company are included innon-operating income).For government subsidies that include both assets-related and income-related parts, they should be distinguishedseparately for accounting treatment; for government subsidies that are difficult to be distinguished, they should beclassified as income-related.
41. 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 intothe 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 recordedinto shareholders’ equity.At the balance sheet date, the Company recognizes the deferred income tax assets or deferred income taxliabilities in accordance with the balance sheet liability method for the temporary difference between the bookvalue of assets or liabilities and its tax base.The Company recognizes all taxable temporary differences as deferred income tax liabilities unless taxabletemporary differences arise in the following transactions:
(1) The initial recognition of goodwill or the initial recognition of the assets or liabilities arising from a transactionwith the following characteristics: the transaction is not a business combination and neither the accounting profitnor 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, associatesand joint ventures can be controlled and the temporary differences are likely to not be written back in theforeseeable future.The Company recognizes the deferred income tax assets arising from deductible temporary differences, subject tothe amount of taxable income obtained to offset the deductible temporary differences, unless the deductibletemporary differences arise in the following transactions:
(1) The transaction is not a business combination, and the transaction does not affect the accounting profit or theamount of taxable income;
(2) The deductible temporary differences related to the investments in subsidiaries, associates and joint venturesare not met simultaneously: Temporary differences are likely to be written back in the foreseeable future and arelikely 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 taxliabilities at the applicable tax rate of the period expected to recover the asset or pay off the liabilities according totax law, and reflects the income tax effect of expected assets recovery or liabilities payoff method at the balancesheet date.At the balance sheet date, the Company reviews the book value of the deferred income tax assets. If it is likelythat sufficient taxable income will not be available to offset the benefit of the deferred income tax assets in thefuture period, the book value of the deferred income tax assets will be written down. If it is probable thatsufficient taxable income will be available, the amount of write-down will be written back.
42. Lease
(1) Accounting Treatment of Operating Lease
As the lessee:
On the start date of the lease term, the Company deems the right-of-use assets and lease obligations of all theoperating leases, except for the simplified short-term lease and low-value leases. See Note 29. Right-of-use Assetsand 35. Lease Liabilities for the general accounting treatment of the Company as the lessee.Lease changeA lease change refers to a change in the scope, consideration, and term of lease outside the original contractclauses, including the addition or termination of the one or several rights to use lease assets, and the extension orreduction of the lease term specified in the contract.When the lease changes and the following conditions are met, the Company will regard the lease charge as aseparate lease for accounting treatment:
(1) The lease change expands the scope of lease through the increase of one or several rights to use the leaseassets;
(2) The increased consideration and the separate price of the expanded part of the scope of lease are the same,upon adjustment, according to the contract.If the lease change is not deemed as a separate lease for accounting treatment, the Company will re-amortize theconsideration of the changed contract, re-confirm the lease term, and re-calculate the PV of the lease obligationusing the changed lease payment and the revised rate of discount, on the date when the lease change takes effect.The Company will correspondingly reduce the book value of the right-of-use assets and include the profit or lossof the lease terminated in part or whole in the current profit or loss, if the lease change narrows the scope of leaseor shortens the lease term. The Company will correspondingly adjust the book value of the right-of-use assets, ifother lease changes result in the re-calculation of the lease obligation.Short-term and low-value asset leasesThe Company chooses not to confirm the right-of-use assets and lease obligations of the short-term and low-valueasset leases, and include the relevant lease payment in each period in the lease term in the current profit or loss orthe underlying asset cost on a straight-line basis. A short-term lease refers to the lease whose lease term does notexceed 12 months and that does not include the call option on the start date of the lease term. A low-value assetlease refers to the lease where the value will be low when the single lease asset is the new asset. For the leaseholdproperty that is underleased or expected to be underleased, the original lease does not belong to low-value assetlease.As the lessor:
The Company classifies lease into finance and operating leases on the start date of the lease term. A finance leaserefers to the lease where almost all the risks and remuneration, related to the ownership of the leasehold property,is transferred, no matter whether the ownership is finally transferred or not. An operating lease refers to all leasesother than finance leases.The lease receivable of the operating lease in each period in the lease term is deemed as a rental on a straight-linebasis. The Company capitalizes the initial direct cost related to the operating finance, amortize and include it inthe current profit or loss on the basis same as the recognition of rentals in the lease term. Variable lease paymentsthat are not included in the lease receivable are included in the current profit or loss when they are actuallyincurred. If an operating lease changes, the Company will regard it as a new lease for accounting treatment from
the effective date of the change. The advance receipt or the lease receivable related to the lease prior to the changeis recognized as the payment receivable of the new lease.
(2) Accounting Treatments of Financial Lease
As the lessee:
For financing leased assets, on the beginning date of the lease term, the lower of the fair value of the leased asset andthe present value of the minimum lease payment amount on the lease commencement date is taken as the recordedvalue of the leased asset, the minimum lease payment amount is regarded as the recorded value of long-termpayables, and the difference is regarded as unrecognized financing expense, which is apportioned by the effectiveinterest rate method in each period of the lease term. The contingent rentals are included in the profit or loss for thecurrent period upon actual incurrence thereof.As the lessor:
The Company confirms the finance lease receivable of the finance lease and finally confirms the finance leaseholdproperty on the start date of the lease term. It recognizes the net investment in the lease as the entry value of thefinance lease, when initially calculating the finance lease receivable. The net investment in the lease is the sum ofthe net value of the unguaranteed residual value and the lease receivable not received on the start date of the leaseterm at the interest rate implicit in lease. The Company calculates and confirms the interest income at a fixedperiodic interest rate in each period in the lease term.
43. Other Significant Accounting Policies and Estimates
Naught
44. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable □ Not applicable
| Contents of and reasons for the changes to accounting policies | Approval procedure | Remarks |
| On December 7, 2018, the Ministry of Finance (MOF) issued the Notice on Revision and Issuance of the Accounting Standard for Business Enterprises No. 21: Lease (C.K. [2018] No. 45). According to the requirements of the Ministry of Finance, those enterprises that are listed both at home and abroad and those enterprises that are listed overseas and adopt the International Financial Reporting Standards or the Accounting Standards for Business Enterprises for preparation of financial statements should implement it from 1 January 2019; the other enterprises that adopt the Accounting Standards for Business Enterprises should implement it from 1 | Deliberated and approved by the 16th meeting of the Nine Board of Directors of the company | See 44. Changes in important accounting policy and accounting estimates (3) for details about the influence of implementing the new lease standards on items of financial statements at period-beginning.. |
(2) Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any NewStandards Governing Leases since 2021
√ Applicable □ Not applicable
Whether items of balance sheets at the beginning of the year need adjustment
√ Yes □ No
Consolidated Balance Sheet
Unit: RMB
January 2021. The Company started to implementthe new lease standards from 1 January 2021 andfollowed the relevant transitional requirements.Item
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Monetary assets | 981,249,699.49 | 981,249,699.49 | |
| Settlement reserve | |||
| Interbank loans granted | |||
| Held-for-trading financial assets | 407,619,201.36 | 407,619,201.36 | |
| Derivative financial assets | |||
| Notes receivable | 140,972,143.00 | 140,972,143.00 | |
| Accounts receivable | 1,134,233,235.70 | 1,134,233,235.70 | |
| Accounts receivable financing | |||
| Prepayments | 11,994,745.05 | 11,994,745.05 | |
| Premiums receivable | |||
| Reinsurance receivables | |||
| Receivable reinsurance contract reserve | |||
| Other receivables | 20,194,968.19 | 20,194,968.19 | |
| Including: Interest receivable | |||
| Dividends receivable |
| Financial assets purchased under resale agreements | |||
| Inventories | 735,685,116.91 | 735,685,116.91 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 175,090,368.85 | 175,090,368.85 | |
| Total current assets | 3,607,039,478.55 | 3,607,039,478.55 | |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Investments in debt obligations | |||
| Investments in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 181,365,016.32 | 181,365,016.32 | |
| Investments in other equity instruments | 3,305,501,030.06 | 3,305,501,030.06 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 685,707,548.55 | 685,707,548.55 | |
| Construction in progress | 503,941,120.31 | 503,941,120.31 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 3,943,088.30 | 3,943,088.30 | |
| Intangible assets | 170,693,873.30 | 170,693,873.30 | |
| Development costs | |||
| Goodwill | |||
| Long-term prepaid expense | 13,411,226.23 | 13,411,226.23 | |
| Deferred income tax assets | 40,253,777.17 | 40,253,777.17 | |
| Other non-current assets | 11,423,843.62 | 11,423,843.62 |
| Total non-current assets | 4,912,297,435.56 | 4,916,240,523.86 | 3,943,088.30 |
| Total assets | 8,519,336,914.11 | 8,523,280,002.41 | 3,943,088.30 |
| Current liabilities: | |||
| Short-term borrowings | |||
| Borrowings from the central bank | |||
| Interbank loans obtained | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 480,971,214.80 | 480,971,214.80 | |
| Accounts payable | 1,059,674,020.99 | 1,059,674,020.99 | |
| Advances from customers | 1,285,357.28 | 1,285,357.28 | |
| Contract liabilities | 65,777,726.45 | 65,777,726.45 | |
| Financial assets sold under repurchase agreements | |||
| Customer deposits and interbank deposits | |||
| Payables for acting trading of securities | |||
| Payables for underwriting of securities | |||
| Employee benefits payable | 82,485,090.47 | 82,485,090.47 | |
| Taxes payable | 18,876,657.51 | 18,876,657.51 | |
| Other payables | 76,668,330.66 | 76,668,330.66 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Handling charges and commissions payable | |||
| Reinsurance payables | |||
| Liabilities directly associated with assets held for sale | |||
| Current portion of | 1,750,282.11 | 1,750,282.11 |
| non-current liabilities | |||
| Other current liabilities | 5,503,702.07 | 5,503,702.07 | |
| Total current liabilities | 1,791,242,100.23 | 1,792,992,382.34 | 1,750,282.11 |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 2,192,806.19 | 2,192,806.19 | |
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | |||
| Deferred income tax liabilities | 414,670,609.97 | 414,670,609.97 | |
| Other non-current liabilities | 1,244,064.84 | 1,244,064.84 | |
| Total non-current liabilities | 415,914,674.81 | 418,107,481.00 | 2,192,806.19 |
| Total liabilities | 2,207,156,775.04 | 2,211,099,863.34 | 3,943,088.30 |
| Owners’ equity: | |||
| Share capital | 1,399,346,154.00 | 1,399,346,154.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 15,157,514.90 | 15,157,514.90 | |
| Less: Treasury stock | |||
| Other comprehensive income | 2,349,388,533.61 | 2,349,388,533.61 | |
| Specific reserve | |||
| Surplus reserves | 741,567,039.55 | 741,567,039.55 |
| General reserve | |||
| Retained earnings | 1,758,462,062.48 | 1,758,462,062.48 | |
| Total equity attributable to owners of the Company as the parent | 6,263,921,304.54 | 6,263,921,304.54 | |
| Non-controlling interests | 48,258,834.53 | 48,258,834.53 | |
| Total owners’ equity | 6,312,180,139.07 | 6,312,180,139.07 | |
| Total liabilities and owners’ equity | 8,519,336,914.11 | 8,523,280,002.41 | 3,943,088.30 |
Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2020 | 1 January 2021 | Adjusted |
| Current assets: | |||
| Monetary assets | 896,261,882.77 | 896,261,882.77 | |
| Held-for-trading financial assets | 407,619,201.36 | 407,619,201.36 | |
| Derivative financial assets | |||
| Notes receivable | 137,477,199.21 | 137,477,199.21 | |
| Accounts receivable | 1,030,713,074.22 | 1,030,713,074.22 | |
| Accounts receivable financing | |||
| Prepayments | 9,581,302.45 | 9,581,302.45 | |
| Other receivables | 462,284,585.09 | 462,284,585.09 | |
| Including: Interest receivable | |||
| Dividends receivable | |||
| Inventories | 615,106,650.81 | 615,106,650.81 | |
| Contract assets | |||
| Assets held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 139,275,518.71 | 139,275,518.71 | |
| Total current assets | 3,698,319,414.62 | 3,698,319,414.62 | |
| Non-current assets: |
| Investments in debt obligations | |||
| Investments in other debt obligations | |||
| Long-term receivables | |||
| Long-term equity investments | 536,949,311.73 | 536,949,311.73 | |
| Investments in other equity instruments | 3,305,501,030.06 | 3,305,501,030.06 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 628,174,755.88 | 628,174,755.88 | |
| Construction in progress | 54,652,119.14 | 54,652,119.14 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | 3,943,088.30 | 3,943,088.30 | |
| Intangible assets | 122,391,701.60 | 122,391,701.60 | |
| Development costs | |||
| Goodwill | |||
| Long-term prepaid expense | 11,651,100.48 | 11,651,100.48 | |
| Deferred income tax assets | 31,403,727.94 | 31,403,727.94 | |
| Other non-current assets | 7,548,885.47 | 7,548,885.47 | |
| Total non-current assets | 4,698,272,632.30 | 4,702,215,720.60 | 3,943,088.30 |
| Total assets | 8,396,592,046.92 | 8,400,535,135.22 | 3,943,088.30 |
| Current liabilities: | |||
| Short-term borrowings | |||
| Held-for-trading financial liabilities | |||
| Derivative financial liabilities | |||
| Notes payable | 484,230,566.21 | 484,230,566.21 | |
| Accounts payable | 1,108,208,382.75 | 1,108,208,382.75 | |
| Advances from customers | |||
| Contract liabilities | 53,572,800.70 | 53,572,800.70 |
| Employee benefits payable | 62,075,512.08 | 62,075,512.08 | |
| Taxes payable | 7,819,839.48 | 7,819,839.48 | |
| Other payables | 171,916,835.73 | 171,916,835.73 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Liabilities directly associated with assets held for sale | |||
| Current portion of non-current liabilities | 1,750,282.11 | 1,750,282.11 | |
| Other current liabilities | 4,483,279.11 | 4,483,279.11 | |
| Total current liabilities | 1,892,307,216.06 | 1,894,057,498.17 | 1,750,282.11 |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | 2,192,806.19 | 2,192,806.19 | |
| Long-term payables | |||
| Long-term employee benefits payable | |||
| Provisions | |||
| Deferred income | |||
| Deferred income tax liabilities | 414,670,609.97 | 414,670,609.97 | |
| Other non-current liabilities | |||
| Total non-current liabilities | 414,670,609.97 | 416,863,416.16 | 2,192,806.19 |
| Total liabilities | 2,306,977,826.03 | 2,310,920,914.33 | 3,943,088.30 |
| Owners’ equity: | |||
| Share capital | 1,399,346,154.00 | 1,399,346,154.00 | |
| Other equity instruments |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 7,426,635.62 | 7,426,635.62 | |
| Less: Treasury stock | |||
| Other comprehensive income | 2,349,389,658.23 | 2,349,389,658.23 | |
| Specific reserve | |||
| Surplus reserves | 741,567,039.55 | 741,567,039.55 | |
| Retained earnings | 1,591,884,733.49 | 1,591,884,733.49 | |
| Total owners’ equity | 6,089,614,220.89 | 6,089,614,220.89 | |
| Total liabilities and owners’ equity | 8,396,592,046.92 | 8,400,535,135.22 | 3,943,088.30 |
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any NewStandards Governing Leases since 2021
□ Applicable √ Not applicable
45. Other
Naught
46. Fair value measurement
1. Scope of assets and liabilities measured by fair value:
The assets and liabilities of the Company measured by fair value include: Tradable financial assets and investmentsin other equity instruments.
2. The alternative valuation techniques include: Market approach, income approach and cost approach.
3. Initial measurement of fair value
Fair value refers to the price that market participants can receive from selling an asset or pay for transferring aliability in an orderly trading on the measurement date, that is, the exit price.According to the nature of the trading and the characteristics of related assets or liabilities, the Company shall judgewhether the fair value at the time of initial recognition is equal to the trading price. Generally, the fair value is equalto the trading price except for the following circumstances:
(1) The trading takes place between related parties. However, the Company has evidence that the related partytrading was conducted under market conditions.
(2) Trading is forced.
(3) The unit of measurement represented by the trading price is different from the unit of measurement of relatedassets or liabilities measured at fair value.
(4) The trading market is not the principal market (or the most advantageous market) for the related assets or
liabilities.Unless otherwise specified, if the trading price is not equal to the fair value, the difference shall be included in theprofits and losses of the current period.
47. Other Comprehensive Income
Other comprehensive earnings refer to various gains and losses that are not recognized in the current profits andlosses according to the Accounting Standard for Business Enterprises. It is presented in the following twocategories:
1. Other comprehensive earnings that cannot be reclassified into profits and losses in future accounting periodsmainly include the changes caused by re-measuring the net liabilities or net assets of the set income plan, the shareof other comprehensive earnings that cannot be reclassified into profit and loss in the future accounting period of theinvested entity calculated by the equity method, the changes in the fair value of other equity instruments investment,and the changes in the fair value of the enterprise's own credit risk.
2. Other comprehensive earnings that will be reclassified into profits and losses when the prescribed conditions aremet in future periods mainly include the share of other comprehensive earnings reclassified into profit and loss whenthe prescribed conditions are met in the future accounting period of the investee calculated according to the equitymethod, the changes in fair value of other creditor's rights investments, the reclassification of financial assets intoother comprehensive earnings, the provision for credit impairment of other creditor's rights investments, the gains orlosses arising from cash flow hedging instruments that belong to effective hedging, and the translation differences inforeign currency financial statements, etc.
48. Profit Distribution Method
The profits of the Company are distributed in the following order according to the Articles of Association:
1. To make up for the losses of previous years;
2. To withdraw the statutory surplus reserve, which may not be withdrawn when the accumulated withdrawalamount exceeds 50% of the registered capital;
3. To withdraw any provident fund after the resolution of the Shareholders’ General Meeting;
4. The remaining profits shall be distributed according to the resolutions of the Shareholders withdrawal amountVI. Taxes
1. Main Taxes and Tax Rates
| Category of taxes | Tax basis | Tax rate |
| VAT | Sales volume from goods selling or taxable service | 3%, 6%, 9%, 13% |
| Urban maintenance and construction tax | Turnover tax payable | 7%, 5% |
| Enterprise income tax | Taxable income | 10%, 15%, 25% |
| Educational surtax | Turnover tax payable | 3% |
| Local educational surtax | Turnover tax payable | 2% |
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
| Name | Income tax rate |
| The Company, Zhida Company, Chanchang Company, Nanning Liaowang, Chongqing Guinuo, Liuzhou Lighting, Liuzhou Foreshine | 15% |
| FSL Lighting GmbH | 15% |
| Indonesia Liaowang | 10% |
| Other subsidiaries | 25% |
2. Tax Preference
The Company passed the re-examination for High-tech Enterprises in 2020, as well as won the “Certificate ofHigh-tech Enterprise” after approval by Department of Science and Technology of Guangdong Province,Department of Finance of Guangdong Province, Guangdong Provincial Bureau of State Taxation and GuangdongProvincial Bureau of Local Taxation. In accordance with relevant provisions in Corporate Income Tax Law of thePeople’s Republic of China and the Administration Measures for Identification of High-tech Enterprisespromulgated in 2007, the Company paid the corporate income tax based on a tax rate of 15% within three yearssince 1 January 2020.Zhida Company and Chanchang Company passed the examination for High-tech Enterprises respectively inDecember 2019 and December 2021, and thus Zhida Company and Chanchang Company paid the corporateincome tax based on a tax rate of 15% within three years respectively since 1 January 2019 and 1 January 2021 inaccordance with relevant provisions in Corporate Income Tax Law of the People’s Republic of China and theAdministration Measures for Identification of High-tech Enterprises promulgated in 2007.
3. According to the Decision on Tax Matters approved by the Local Taxation Bureau of Nanning High-techIndustrial Development Zone (NGDSSB [2015] No. 1), Nanning Liaowang will enjoy the preferential tax reductionand exemption of enterprise income tax in the western development from 1 January 2015, and the enterprise incometax will be levied at a reduced rate of 15%.
4. After being examined and filed by the competent tax authorities, Chongqing Guinuo will enjoy the preferentialtax reduction and exemption of enterprise income tax in the western development from 1 January 2019, and theenterprise income tax will be levied at a reduced rate of 15%.
5. According to the letter (LFGH Zi [2020] No. 196) issued by Liuzhou Development and Reform Commission on17 August 2020, Liuzhou Guige Photoelectric is determined to be in line with the encouraged industries in thewestern region, and the enterprise income tax will be paid at a reduced rate of 15% from 1 January 2020.
6. According to the letter (GKGH [2021] No. 237) jointly issued by the Science and Technology Department ofGuangxi Zhuang Autonomous Region, Finance Department of Guangxi Zhuang Autonomous Region and GuangxiZhuang Autonomous Region Tax Service, State Taxation Administration on 30 November 2021, Liuzhou GuigeFuxuan is recognized as a high-tech enterprise (the certificate has not been obtained yet), and the preferential taxrate of income tax for high-tech enterprises is 15%.
3. Other
Pay in accordance with the relevant provisions of the tax law
VII. Notes to Main Items of Consolidated Financial Statements
1. Monetary Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Cash on hand | 16,733.10 | 14,800.25 |
| Bank deposits | 1,053,051,643.16 | 883,112,636.02 |
| Other monetary assets(Note 1) | 330,829,702.26 | 96,541,013.22 |
| Unexpired interest(Note 2) | 320,465.75 | 1,581,250.00 |
| Total | 1,384,218,544.27 | 981,249,699.49 |
| Of which: Total amount deposited overseas | 26,786,097.33 | 1,127,886.79 |
Other notesNote 1: Other monetary assets were security deposits for notes and performance bonds, as well as investmentsplaced with security firm and the balance with e-commerce platforms, of which the security deposits for notes andperformance bonds were restricted assets (see “81. Assets with Restricted Ownership or Right of Use” in Note“VII Notes to Consolidated Financial Statements”).Note 2: Unexpired interest did not belong to cash and cash equivalents.
2. Trading Financial Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Financial assets at fair value through profit or loss | 328,248,125.61 | 407,619,201.36 |
| Including: | ||
| Debt instrument investments | ||
| Equity instrument investments | 1,558,778.18 | |
| Wealth management products | 322,422,447.43 | 401,286,301.36 |
| Others | 4,266,900.00 | 6,332,900.00 |
| Including: | ||
| Total | 328,248,125.61 | 407,619,201.36 |
3. Derivative Financial Assets
Naught
4. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
| Item | Ending balance | Beginning balance |
| Bank acceptance bill | 594,208,093.58 | 140,972,143.00 |
| Total | 594,208,093.58 | 140,972,143.00 |
Note: The ending balance of notes receivable increased by 321.51% to RMB453,235,950.58 compared with the beginning of theperiod, which was mainly due to the combination of Nanning Liaowang not under the same control of RMB517,137,558.88 in thecurrent period.Note:
Please refer to the relevant information of disclosure of bad debt provision of other receivables if adopting the general mode ofexpected credit loss to withdraw bad debt provision of notes receivable.
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting PeriodNaught
(3) Notes Receivable Pledged at the Period-end
Unit: RMB
| Item | Amount pledged at the period-end |
| Bank acceptance bill | 275,626,604.28 |
| Total | 275,626,604.28 |
(4) Notes Receivable which Had Endorsed by the Company or Had Discounted and Had not Due on theBalance Sheet Date at the Period-end
Unit: RMB
| Item | Amount of recognition termination at the period-end | Amount of not recognition termination at the period-end |
| Bank acceptance bill | 431,082,830.83 | |
| Total | 431,082,830.83 |
(5) Notes Transferred to Accounts Receivable because Drawer of the Notes Fails to Executed the Contractor Agreement
Naught
(6) The Actual Write-off Notes Receivable
Naught
5. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Unit: RMB
| Category | Ending balance | Beginning balance | ||||||||
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | |||||
| Amount | Proportion | Amount | Withdrawal proportion | Amount | Proportion | Amount | Withdrawal proportion | |||
| Accounts receivable withdrawn bad debt provision separately | 26,084,522.39 | 1.68% | 23,840,356.97 | 91.40% | 2,244,165.42 | 15,257,662.85 | 1.27% | 9,569,331.99 | 62.72% | 5,688,330.86 |
| Of which: | ||||||||||
| Accounts receivable withdrawn bad debt provision by group | 1,523,452,180.67 | 98.32% | 72,968,069.61 | 4.79% | 1,450,484,111.06 | 1,185,342,187.03 | 98.73% | 56,797,282.19 | 4.79% | 1,128,544,904.84 |
| Of which: | ||||||||||
| (1) General business portfolio | 1,523,452,180.67 | 98.32% | 72,968,069.61 | 4.79% | 1,450,484,111.06 | 1,185,342,187.03 | 98.73% | 56,797,282.19 | 4.79% | 1,128,544,904.84 |
| (2) Internal business portfolio | ||||||||||
| Total | 1,549,536,703.06 | 100.00% | 96,808,426.58 | 6.25% | 1,452,728,276.48 | 1,200,599,849.88 | 100.00% | 66,366,614.18 | 5.53% | 1,134,233,235.70 |
Note: The ending balance of accounts receivable increased by 28.08% to RMB318,495,040.78 compared with the beginning of theperiod, which was mainly due to the combination of Nanning Liaowang not under the same control in the current period. On thepurchase date, the book balance of accounts receivable of Nanning Liaowang was RMB261,213,859.26, and the expected credit lossbalance was RMB27,802,323.36.Individual withdrawal of bad debt provision:
Unit: RMB
| Name | Ending balance |
| Carrying amount | Bad debt provision | Withdrawal proportion | Withdrawal reason | |
| Customer A | 11,220,827.14 | 8,976,661.72 | 80.00% | Involved in the lawsuit, the Company won the lawsuit in the second instance, which had not yet executed completely |
| Customer B | 9,111,336.51 | 9,111,336.51 | 100.00% | Existing pending litigation matters |
| Customer C | 4,702,051.28 | 4,702,051.28 | 100.00% | Existing pending litigation matters |
| Customer D | 526,858.54 | 526,858.54 | 100.00% | Existing pending litigation matters |
| Customer E | 523,448.92 | 523,448.92 | 100.00% | The customer had executed bankruptcy liquidation in December 2020, thus the accounts were unrecoverable. |
| Total | 26,084,522.39 | 23,840,356.97 | -- | -- |
Withdrawal of bad debt provision by group:
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Credit risk group | 1,523,452,180.67 | 72,968,069.61 | 4.79% |
| Total | 1,523,452,180.67 | 72,968,069.61 | -- |
Please refer to the relevant information of disclosure of bad debt provision of other receivables if adopting the general mode ofexpected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Ending balance |
| Within 1 year (including 1 year) | 1,417,722,342.04 |
| 1 to 2 years | 62,047,044.50 |
| 2 to 3 years | 22,972,772.35 |
| Over 3 years | 46,794,544.17 |
| 3 to 4 years | 24,800,747.87 |
| 4 to 5 years | 12,031,839.07 |
| Over 5 years | 9,961,957.23 |
| Total | 1,549,536,703.06 |
(2) Bad Debt Provision Withdrawn, Reversed or Collected during the Reporting PeriodThe amount of expected credit loss accrued in the current period is RMB4,202,667.10, and the amount of expectedcredit loss recovered or reversed in the current period is RMB0.00, which is RMB98.71 different from the amountof credit impairment loss accrued in the current period of RMB4,202,568.39, which is caused by the translationdifference of foreign currency statement of Indonesia Liaowang at the end of the period.
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
| Item | Amount |
| No. 1 | 1,036,835.71 |
| No. 2 | 247,740.00 |
| No. 3 | 117,554.16 |
| No. 4 | 86,000.00 |
| No. 5 | 40,908.20 |
| No. 6 | 23,972.28 |
| No. 7 | 10,000.00 |
| Other retails accounts | 167.71 |
Of which, verification of significant accounts receivable:
Unit: RMB
| Name of the entity | Nature | Amount | Reason | Procedure | Whether occurred because of related-party transactions |
| No. 1 | Payment for goods | 1,036,835.71 | After litigation and compulsory execution, the other party has no enforceable property | The approval procedure is carried out according to the Company’s rules for managing bad debt. | Not |
| No. 2 | Payment for goods | 247,740.00 | Unrecoverable | The approval procedure is carried out according to the Company’s rules for managing bad debt. | Not |
| No. 3 | Payment for goods | 117,554.16 | Unrecoverable | The approval procedure is carried | Yes |
| out according to the Company’s rules for managing bad debt. | |||||
| Total | -- | 1,402,129.87 | -- | -- | -- |
Note:
The approval procedure for the verification of accounts receivable during the Reporting Period had been performed in accordancewith provisions of the bad debt management system of the Company.
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party
Unit: RMB
| Name of units | Ending balance of accounts receivable | Proportion to total ending balance of accounts receivable (%) | Ending balance of bad debt provision |
| No. 1 | 166,366,875.25 | 10.74% | 4,991,006.26 |
| No. 2 | 131,241,873.99 | 8.47% | 3,937,256.22 |
| No. 3 | 89,015,269.51 | 5.74% | 2,670,458.09 |
| No. 4 | 52,487,287.78 | 3.39% | 1,574,618.63 |
| No. 5 | 26,525,457.91 | 1.71% | 795,763.74 |
| Total | 465,636,764.44 | 30.05% |
(5) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement ofAccounts ReceivableNaught
(6) Derecognition of Accounts Receivable due to the Transfer of Financial Assets
Naught
6. Accounts Receivable Financing
Naught
7. Prepayment
(1) Listed by Aging
Unit: RMB
| Aging | Ending balance | Beginning balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within 1 year | 14,144,142.09 | 70.30% | 9,193,885.82 | 76.65% |
| 1 to 2 years | 3,949,733.77 | 19.63% | 355,870.31 | 2.97% |
| 2 to 3 years | 231,355.67 | 1.15% | 1,081,261.45 | 9.01% |
| Over 3 years | 1,794,725.49 | 8.92% | 1,363,727.47 | 11.37% |
| Total | 20,119,957.02 | -- | 11,994,745.05 | -- |
Note: The ending balance of prepayments increased by 67.74% to RMB8,125,211.97 compared with the beginning of the period,which was mainly due to the combination of Nanning Liaowang not under the same control in the current period.
(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target
Unit: RMB
| Name of units | Relationship with the Company | Ending balance | Proportion to total prepayments (%) | Prepayment time |
| No. 1 | Non-related party | 2,456,719.58 | 12.21% | 2020-2021 |
| No. 2 | Non-related party | 1,482,752.68 | 7.37% | 2021 |
| No. 3 | Non-related party | 1,327,340.00 | 6.60% | 2021 |
| No. 4 | Non-related party | 1,281,260.12 | 6.37% | 2021 |
| No. 5 | Non-related party | 1,250,000.00 | 6.21% | 2021 |
| Total | 7,798,072.38 | 38.76% |
8. Other Receivables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Other receivables | 34,082,909.41 | 20,194,968.19 |
| Total | 34,082,909.41 | 20,194,968.19 |
(1) Interest Receivable
Naught
(2) Dividends Receivable
Naught
(3) Other Receivables
1) Other Receivables Classified by Account Nature
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Staff borrow and petty cash | 4,018,439.87 | 7,866,311.07 |
| Performance bond | 9,165,300.58 | 4,166,580.10 |
| Rent, water & electricity fees | 2,564,557.87 | 3,389,778.15 |
| VAT export tax refunds | 4,674,335.06 | 195,141.85 |
| Other | 22,642,922.70 | 7,020,439.45 |
| Total | 43,065,556.08 | 22,638,250.62 |
Note: The ending balance of other receivables increased by 68.77% to RMB13,887,941.22 compared with the beginning of the period,which was mainly due to the combination of Nanning Liaowang not under the same control in the current period. the book balance ofother receivables of Nanning Liaowang was RMB28,872,830.21, and the expected credit loss balance was RMB6,349,173.76.
2) Information of Withdrawal of Bad Debt Provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 499,462.41 | 1,943,820.02 | 2,443,282.43 | |
| Balance of 1 January 2021 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | -1,297,178.88 | 1,487,369.36 | 190,190.48 | |
| Other changes (note) | 1,607,681.38 | 452,034.40 | 4,289,457.98 | 6,349,173.76 |
| Balance of 31 December 2021 | 809,964.91 | 3,883,223.78 | 4,289,457.98 | 8,982,646.67 |
Note: It is the expected credit loss balance of other receivables of Nanning Liaowang on the purchase date, of which the third stage isthe current accounts involved in litigation, and Nanning Liaowang has fully accrued the expected credit loss.Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable √Not applicable
Disclosure by aging
Unit: RMB
| Aging | Ending balance |
| Within 1 year (including 1 year) | 26,998,830.90 |
| 1 to 2 years | 9,016,668.21 |
| 2 to 3 years | 4,127,817.63 |
| Over 3 years | 2,922,239.34 |
| 3 to 4 years | 1,004,374.23 |
| 4 to 5 years | 1,239,473.81 |
| Over 5 years | 678,391.30 |
| Total | 43,065,556.08 |
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The amount of expected credit loss accrued in the current period is RMB190,190.49, and the amount of expected credit lossrecovered or reversed in the current period is RMB0.00, which is RMB325.92 different from the amount of credit impairment lossaccrued in the current period of RMB189,864.57, which is caused by the translation difference of foreign currency statement ofIndonesia Liaowang at the end of the period.
4) Particulars of the Actual Verification of Other Receivables during the Reporting PeriodNaught
5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
| Name of the entity | Nature | Ending balance | Aging | Proportion to total ending balance of other receivables (%) | Ending balance of bad debt provision |
| No. 1 | Intercourse accounts | 7,060,000.00 | Within 1 year | 16.39% | 211,800.00 |
| No. 2 | VAT export tax refunds | 4,674,335.06 | Within 1 year | 10.85% | 140,230.05 |
| No. 3 | Intercourse accounts | 4,289,457.98 | 1-2 years | 9.96% | 4,289,457.98 |
| No. 4 | Social insurance | 2,242,142.33 | Within 1 year | 5.21% | 67,264.27 |
| No. 5 | Performance bond | 1,946,000.00 | 2-3 years | 4.52% | 583,800.00 |
| Total | -- | 20,211,935.37 | -- | 46.93% | 5,292,552.30 |
6) Accounts Receivable Involving Government Grants
Naught
7) Derecognition of Other Receivables due to the Transfer of Financial Assets
Naught
8) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement ofOther ReceivablesNaught
9. Inventory
Whether the Company needs to comply with disclosure requirements for real estate industryNo
(1) Category of Inventory
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Falling price reserves of inventory or depreciation reserves of contract performance cost | Carrying value | Carrying amount | Falling price reserves of inventory or depreciation reserves of contract performance cost | Carrying value | |
| Raw materials | 247,709,680.24 | 5,172,760.57 | 242,536,919.67 | 177,234,228.73 | 2,901,800.45 | 174,332,428.28 |
| Goods in process | 66,382,820.07 | 66,382,820.07 | 40,969,288.80 | 40,969,288.80 | ||
| Inventory goods | 597,575,545.42 | 41,900,565.60 | 555,674,979.82 | 387,194,563.02 | 13,992,901.12 | 373,201,661.90 |
| Goods in transit | 93,671,492.20 | 3,530,794.31 | 90,140,697.89 | |||
| Semi-finished goods | 100,723,505.66 | 377,760.65 | 100,345,745.01 | 145,960,270.11 | 1,013,387.91 | 144,946,882.20 |
| Low priced and easily worn articles | 3,231,115.87 | 3,231,115.87 | 2,234,855.73 | 2,234,855.73 | ||
| Others | 5,177,062.67 | 5,177,062.67 | ||||
| Total | 1,114,471,222.13 | 50,981,881.13 | 1,063,489,341.00 | 753,593,206.39 | 17,908,089.48 | 735,685,116.91 |
(2)Falling Price Reserves of Inventory and Depreciation Reserves of Contract Performance Cost
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | ||
| Withdrawal | Other (note) | Reversal or write-off | Other | |||
| Raw materials | 2,901,800.45 | 2,974,237.10 | 1,105,571.99 | 1,808,848.97 | 5,172,760.57 | |
| Inventory goods | 13,992,901.12 | 27,507,871.77 | 11,399,695.96 | 10,999,903.25 | 41,900,565.60 | |
| Semi-finished goods | 1,013,387.91 | 409,446.80 | 1,045,074.06 | 377,760.65 | ||
| Goods in transit | 191,990.59 | 3,491,750.59 | 152,946.87 | 3,530,794.31 | ||
| Others | 1,899,338.66 | 1,899,338.66 | ||||
| Total | 17,908,089.48 | 31,083,546.26 | 17,896,357.20 | 15,906,111.81 | 50,981,881.13 |
Note: refer to the increase generated from the consolidation of Nanning Liaowang not under the same control inthe Reporting Period.
| Item | Basis for withdrawal of falling price reserves of inventory | Reasons for reversal or write-off of falling price reserves of inventory | Note |
| Raw materials | The lower one between the inventory cost and net realizable value | Sales or scrap of raw materials | |
| Inventory goods | The lower one between the inventory cost and net realizable value | Sales or scrap of products | |
| Goods in transit | The lower one between the inventory cost and net realizable value | Sales or scrap of products |
Reasons for the provision for inventory depreciation: Provisions are set for the stagnancy of a few raw materials;some inventory products become temporarily idle due to classification.
(3) Notes to the Ending Balance of Inventories Including Capitalized Borrowing ExpenseNaught
(4) Amortization Amount of Contract Performance Cost during the Reporting PeriodNaught
10. Contract Assets
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserves | Carrying value | Carrying amount | Depreciation reserves | Carrying value | |
| Contract assets | 8,826,085.67 | 264,782.57 | 8,561,303.10 | |||
| Total | 8,826,085.67 | 264,782.57 | 8,561,303.10 | |||
11. Held-for-Sale Assets
Unit: RMB
| Item | Ending carrying amount | Depreciation reserves | Ending carrying value | Fair value | Estimated disposal expense | Estimated disposal time |
| Houses, buildings and land involved in expropriation | 23,831,992.10 | 23,831,992.10 | 183,855,895.00 | 55,718,333.95 | 31 December 2022 | |
| Total | 23,831,992.10 | 23,831,992.10 | 183,855,895.00 | 55,718,333.95 | -- |
Other notes:
Note: For details, see Note 20 "Demolition Matters of Nanjing Fozhao". The estimated disposal costs include employee resettlementfees, compensation for the termination of the original tenant's contract, and taxes related to the proceeds of demolition.
12. Current Portion of Non-current Assets
Naught
13. Other Current Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Large bank deposit certificate (note) | 90,417,315.07 | |
| Input tax of VAT to be certified and deducted | 84,065,408.31 | 84,673,053.78 |
| Advance payment of enterprise income tax | 1,573,600.91 | |
| Others | 54,979.52 | |
| Total | 85,693,988.74 | 175,090,368.85 |
Other notes;Bank deposit receipts of large amounts with a maturity of over three months which were transferable but not redeemable untilmaturity.
14. Creditor’s Rights Investment
Naught
15. Other Creditor’s Rights Investment
Naught
16. Long-term Accounts Receivable
Naught
17. Long-term Equity Investment
Unit: RMB
| Investees | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserves | |||||||
| Additional investment | Reduced investment | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Other | ||||
| I. Joint ventures | |||||||||||
| II. Associated enterprises | |||||||||||
| Shenzhen Primatronix (Nanho) Electronics Ltd. | 181,365,016.32 | 2,260,497.27 | 2,080,390.50 | 181,545,123.09 | |||||||
| Subtotal | 181,365,016.32 | 2,260,497.27 | 2,080,390.50 | 181,545,123.09 | |||||||
| Total | 181,365,016.32 | 2,260,497.27 | 2,080,390.50 | 181,545,123.09 | |||||||
18. Other Equity Instrument Investment
Unit: RMB
| Item | Ending balance | Beginning balance |
| Non-listed equity investment | 500,000.00 | 5,054,176.40 |
| Listed equity investment | 1,474,360,785.15 | 3,300,446,853.66 |
| Total | 1,474,860,785.15 | 3,305,501,030.06 |
Disclosure of non-trading equity instrument investment by items
Unit: RMB
| Item | Dividend income recognized | Accumulative gains | Accumulative losses | Amount of other comprehensive income transferred to retained earnings | Reason for assigning to measure in fair value and the changes included in other | Reason for other comprehensive income transferred to retained earnings |
| comprehensive income | ||||||
| Stock of Xiamen Bank | 19,748,551.68 | 353,361,994.91 | 93,217,030.86 | Not satisfied with the condition of trading equity instrument | Sale of shareholdings | |
| Stock of Gotion High-tech | 803,565,100.63 | 903,146,499.85 | Not satisfied with the condition of trading equity instrument | Sale of shareholdings | ||
| Stock of Everbright Bank | 3,894,818.34 | 33,804,550.70 | Not satisfied with the condition of trading equity instrument | Sale of shareholdings | ||
| Stock of Nationstar Optoelectronics | 1,538,511.32 | Not satisfied with the condition of trading equity instrument | ||||
| Foshan Fochen Highway Development Co., Ltd. | 10,875,167.71 | Not satisfied with the condition of trading equity instrument | Sale of shareholdings |
Other notes:
Note: The ending balance of other equity instrument investment was RMB-1,830,640,244.91, decreasing by 55.38%, which wascaused by sales of some stocks in the current period.
19. Other Non-current Financial Assets
Naught
20. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
| Item | Houses and buildings | Land use right | Construction in progress | Total |
| I. Original carrying value | ||||
| 1. Beginning balance | ||||
| 2. Increased amount of the period | 49,792,377.90 | 49,792,377.90 |
| (1) Outsourcing | ||||
| (2) Transfer from inventories/fixed assets/construction in progress | 49,792,377.90 | 49,792,377.90 | ||
| (3) Enterprise combination increase | ||||
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| (2) Other transfer | ||||
| 4. Ending balance | 49,792,377.90 | 49,792,377.90 | ||
| II. Accumulative depreciation and accumulative amortization | ||||
| 1. Beginning balance | ||||
| 2. Increased amount of the period | 6,444,553.56 | 6,444,553.56 | ||
| (1) Withdrawal or amortization | 591,284.49 | 591,284.49 | ||
| (2) Transfer from inventories/fixed assets/construction in progress (note) | 5,853,269.07 | 5,853,269.07 | ||
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| (2) Other transfer | ||||
| 4. Ending balance | 6,444,553.56 | 6,444,553.56 | ||
| III. Depreciation reserves | ||||
| 1. Beginning balance | ||||
| 2. Increased amount of the period | ||||
| (1) Withdrawal |
| 3. Decreased amount of the period | ||||
| (1) Disposal | ||||
| (2) Other transfer | ||||
| 4. Ending balance | ||||
| IV. Carrying value | ||||
| 1. Ending carrying value | 43,347,824.34 | 43,347,824.34 | ||
| 2. Beginning carrying value |
(2) Investment Property Adopting the Fair Value Measurement Mode
□ Applicable √ Not applicable
(3) Investment Property Failed to Accomplish Certification of Property
Other notes
In October 2021, the Company held the 20th meeting of the ninth Board of Directors, where the Proposal onChanging Some Self-used Real Estate into Investment Real Estate and Measuring by Cost Model was deliberatedand adopted, and the K2 and K3 buildings of Gaoming Fuwan Standard Workshop were changed from fixed assetsprojects to investment real estate projects, measured by cost model, and depreciation was accrued by the samemethod as fixed assets.
21. Fixed Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Fixed assets | 1,323,076,326.60 | 685,707,548.55 |
| Disposal of fixed assets | ||
| Total | 1,323,076,326.60 | 685,707,548.55 |
(1) List of Fixed Assets
Unit: RMB
| Item | Houses and buildings | Machinery equipment | Transportation equipment | Electronic equipment | Total |
| I. Original carrying value | |||||
| 1. Beginning balance | 949,016,860.88 | 758,424,898.71 | 21,812,402.45 | 31,973,759.69 | 1,761,227,921.73 |
| 2. Increased amount of the period | 555,809,608.91 | 496,874,274.30 | 17,554,115.68 | 11,649,527.67 | 1,081,887,526.56 |
| (1) Purchase | 1,607,505.81 | 70,262,183.04 | 1,120,502.82 | 3,528,254.56 | 76,518,446.23 |
| (2) Transfer from construction in progress | 1,241,854.38 | 28,794,297.61 | 20,088.49 | 30,056,240.48 | |
| (3) Enterprise combination increase | 552,954,860.11 | 397,812,688.27 | 16,433,247.05 | 8,101,171.12 | 975,301,966.55 |
| (4) Others (note) | 5,388.61 | 5,105.38 | 365.81 | 13.50 | 10,873.30 |
| 3. Decreased amount of the period | 189,692,181.66 | 17,760,021.13 | 2,924,011.24 | 486,326.24 | 210,862,540.27 |
| (1) Disposal or scrap | 119,223,121.12 | 17,388,683.55 | 2,697,365.24 | 388,960.36 | 139,698,130.27 |
| (2) Equipment transformation | |||||
| (3) Transfer into investment property | 49,792,377.90 | 49,792,377.90 | |||
| (4) Others (note) | 20,676,682.64 | 371,337.58 | 226,646.00 | 97,365.88 | 21,372,032.10 |
| 4. Ending balance | 1,315,134,288.13 | 1,237,539,151.88 | 36,442,506.89 | 43,136,961.12 | 2,632,252,908.02 |
| II. Accumulative depreciation | |||||
| 1. Beginning balance | 485,466,988.27 | 544,961,514.42 | 16,641,194.44 | 26,409,762.43 | 1,073,479,459.56 |
| 2. Increased amount of the period | 149,848,278.22 | 213,102,232.90 | 12,237,551.66 | 6,403,908.90 | 381,591,971.68 |
| (1) Withdrawal | 38,269,817.31 | 61,555,839.99 | 2,296,408.80 | 2,038,449.30 | 104,160,515.40 |
| (2) Enterprise combination increase | 111,577,060.55 | 151,543,552.88 | 9,940,676.08 | 4,365,442.15 | 277,426,731.66 |
| (3) Others | 1,400.36 | 2,840.03 | 466.78 | 17.45 | 4,724.62 |
| 3. Decreased amount of the period | 131,254,902.80 | 13,348,260.01 | 2,697,430.50 | 410,475.65 | 147,711,068.96 |
| (1) Disposal or scrap | 111,285,269.26 | 13,039,992.46 | 2,493,449.10 | 351,709.23 | 127,170,420.05 |
| (2) Equipment transformation | |||||
| (3) Transfer into investment property | 5,853,269.07 | 5,853,269.07 | |||
| (4) Others (note) | 14,116,364.47 | 308,267.55 | 203,981.40 | 58,766.42 | 14,687,379.84 |
| 4. Ending balance | 504,060,363.69 | 744,715,487.31 | 26,181,315.60 | 32,403,195.68 | 1,307,360,362.28 |
| III. Depreciation reserves | |||||
| 1. Beginning balance | 2,040,485.59 | 428.03 | 2,040,913.62 | ||
| 2. Increased amount of the period | |||||
| (1) Withdrawal | |||||
| 3. Decreased amount of the period | 224,694.48 | 224,694.48 | |||
| (1) Disposal or scrap | 224,694.48 | 224,694.48 | |||
| (2) Equipment transformation | |||||
| 4. Ending balance | 1,815,791.11 | 428.03 | 1,816,219.14 | ||
| IV. Carrying value | |||||
| 1. Ending carrying value | 811,073,924.44 | 491,007,873.46 | 10,261,191.29 | 10,733,337.41 | 1,323,076,326.60 |
| 2. Beginning carrying value | 463,549,872.61 | 211,422,898.70 | 5,171,208.01 | 5,563,569.23 | 685,707,548.55 |
Note: Other assets such as houses and buildings involved in demolition of Nanjing Fozhao have been transferred to assets held for sale.
(2) List of Temporarily Idle Fixed Assets
Unit: RMB
| Item | Original carrying value | Accumulated depreciation | Depreciation reserves | Carrying value | Note |
| T5, T8, | 7,270,900.82 | 5,675,051.55 | 1,536,308.44 | 59,540.83 |
| energy-saving lamp production line | |||||
| Total | 7,270,900.82 | 5,675,051.55 | 1,536,308.44 | 59,540.83 |
(3) Fixed Assets Leased out by Operation Lease
Naught
(4) Fixed Assets Failed to Accomplish Certification of Property
Other notesThe Company's Fuwan Standard Workshop J3, Fuwan Standard Workshop K1, Building 8 of Gaoming FamilyDormitory, Fuwan Staff Dormitory Building 7, Family Dormitory Building 3 to 6, Staff Village Dormitory BuildingA, Staff Village Dormitory Building 2, 3, 5, 6, 10 to 13, Staff Dormitory Building 1 to 4, Fuwan Energy SavingLamp Workshop 2, Glass Workshop 8, Glass Workshop 9, Fluorescent Lamp Workshop, Standard Workshop A andled Workshop have been completed and put into use and carried forward fixed assets. As of 31 December 2021, therelevant real estate licenses are being processed. In addition, the ownership of four parking spaces of NanningLiaowang at No. 584 Zhenghe City, No. 155 Kerui Jiangyun, No. 160 Kerui Jiangyun and No. 588 Zhenghe City,Liuzhou, are being processed. The management believed that there are no substantive legal barriers to the handlingof these title certificates, and it will not have a significant adverse impact on the normal operation of the Company.
(5) Disposal of Fixed Assets
Naught
22. Construction in Progress
Unit: RMB
| Item | Ending balance | Beginning balance |
| Construction in progress | 730,595,319.42 | 503,941,120.31 |
| Total | 730,595,319.42 | 503,941,120.31 |
(1) List of Construction in Progress
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserves | Carrying value | Carrying amount | Depreciation reserves | Carrying value | |
| Construction in progress | 731,914,119.42 | 1,318,800.00 | 730,595,319.42 | 503,941,120.31 | 503,941,120.31 | |
| Total | 731,914,119.42 | 1,318,800.00 | 730,595,319.42 | 503,941,120.31 | 503,941,120.31 | |
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
| Item | Budget | Beginning balance | Increased amount | Transferred in fixed assets | Other decreased amount | Ending balance | Proportion of accumulative investment in constructions to budget | Job schedule | Accumulative amount of interest capitalization | Of which: amount of capitalized interests for the Reporting Period | Capitalization rate of interests for the Reporting Period | Capital resources |
| Kelian Building | 726,738,900.00 | 448,595,364.96 | 52,999,487.08 | 501,594,852.04 | 77.99% | 76.73% | 36,640,953.02 | Other | ||||
| 15th and 16th floors office buildings of R&F Center | 115,752,763.00 | 106,195,222.94 | 106,195,222.94 | 100.00% | 98.00% | Other | ||||||
| Gaoming R&D Workshop 11, 12, 13, 14 and 18 | 71,690,000.00 | 31,610,809.51 | 21,920,251.81 | 53,531,061.32 | 84.38% | 87.00% | Other | |||||
| FSL intelligent manufacturing factory project | 89,680,000.00 | 23,808,849.57 | 23,808,849.57 | 30.00% | 30.00% | Other | ||||||
| Gaoming office building | 115,000,000.00 | 5,236,801.98 | 16,972,649.43 | 22,209,451.41 | 21.82% | 10.00% | Other | |||||
| Overhaul of Gaoming No. 8 tank furnace Work order: 20029 Gaoming tank furnace | 10,890,000.00 | 6,242,799.53 | 6,242,799.53 | 64.78% | 70.00% | Other | ||||||
| Chongqing Guinuo machinery and equipme | 14,676,705.40 | 12,759,209.37 | 12,164,486.22 | 594,723.15 | 98.24% | 94.14% | Other |
| nt batch | ||||||||||||
| Gaoming LED T8 workshop relocation | 4,170,000.00 | 3,691,776.89 | 3,691,776.89 | 96.50% | 100.00% | Other | ||||||
| Relocation and reconstruction project of general light bulb workshop (formerly T8 I) | 6,542,600.00 | 5,903,254.16 | 5,903,254.16 | 98.35% | 100.00% | Other | ||||||
| 48 t electric furnace (18025) Gaoming tank furnace | 11,650,000.00 | 4,721,119.09 | 4,643,527.44 | 9,364,646.53 | 90.83% | 100.00% | Other | |||||
| APS system project | 2,990,000.00 | 877,679.42 | 1,919,114.72 | 2,796,794.14 | 100.00% | 100.00% | Other | |||||
| Upgrading and reconstruction project of Haolaite production workshop and office | 2,800,000.00 | 1,024,809.18 | 466,385.92 | 1,491,195.10 | 60.18% | 100.00% | Other | |||||
| Relocation and reconstruction project of medium lamp workshop (original paper products) | 1,877,280.00 | 1,590,898.68 | 1,590,898.68 | 95.76% | 100.00% | Other | ||||||
| Self-made 1 fifth generation LEDT8 lamp automatic | 2,000,000.00 | 1,011,239.59 | 686,583.35 | 1,697,822.94 | 95.93% | 100.00% | Other |
| assembly line Work order: 20030 Gaoming LEDT8 | ||||||||||||
| Total | 1,176,458,248.40 | 493,077,823.73 | 259,800,010.89 | 24,718,150.79 | 13,982,723.87 | 714,176,959.96 | -- | -- | 36,640,953.02 | -- |
(3) List of the Withdrawal of the Depreciation Reserves for Construction in Progress
Unit: RMB
| Item | Amount withdrawn | Reason for withdrawal |
| Oxidation line engineering | 1,318,800.00 | Idleness |
| Total | 1,318,800.00 | -- |
(4) Engineering Materials
Naught
23. Productive Living Assets
Naught
24. Oil and Gas Assets
□ Applicable √ Not applicable
25. Right-of-use Assets
Unit: RMB
| Item | Houses and buildings | Land use right | Total |
| I. Original carrying value | |||
| 1. Beginning balance | 851,453.04 | 28,139,965.65 | 28,991,418.69 |
| 2. Increased amount of the period | 17,081,728.89 | 17,081,728.89 | |
| (1) Leased in | 10,378,526.12 | 10,378,526.12 | |
| (2) Business combination increase | 6,703,202.77 | 6,703,202.77 | |
| 3. Decreased amount of the period | 725,181.47 | 2,451,601.62 | 3,176,783.09 |
| 4. Ending balance | 17,208,000.46 | 25,688,364.03 | 42,896,364.49 |
| II. Accumulated amortization | |||
| 1. Beginning balance | 14,234.11 | 25,034,096.28 | 25,048,330.39 |
| 2. Increased amount of the period | 6,020,215.21 | 1,291,150.56 | 7,311,365.77 |
| (1) Withdrawal | 2,689,218.04 | 1,291,150.56 | 3,980,368.60 |
| (2) Business combination increase | 3,330,997.17 | 3,330,997.17 | |
| 3. Decreased amount of the period | 684,511.68 | 2,275,958.99 | 2,960,470.67 |
| 4. Ending balance | 5,349,937.64 | 24,049,287.85 | 29,399,225.49 |
| IV. Carrying value | |||
| 1. Ending carrying value | 11,858,062.82 | 1,639,076.18 | 13,497,139.00 |
| 2. Beginning carrying value | 837,218.93 | 3,105,869.37 | 3,943,088.30 |
26. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
| Item | Land use right | Patent | Non-patent technology | Software | Others (note 1) | Total |
| I. Original carrying value | ||||||
| 1. Beginning balance | 232,199,092.68 | 4,597,419.45 | 7,622,600.00 | 244,419,112.13 | ||
| 2. Increased amount of the period | 126,333,626.70 | 19,051.89 | 14,141,452.07 | 61,387.26 | 140,555,517.92 | |
| (1) Purchase | 26,596,784.43 | 5,774,506.85 | 12,277.36 | 32,383,568.64 | ||
| (2) Internal R&D | ||||||
| (3) Business combination increase | 99,736,842.27 | 19,051.89 | 8,366,945.22 | 49,109.90 | 108,171,949.28 | |
| 3. Decreased amount of the period | 24,594,710.00 | 24,594,710.00 |
| (1) Disposal | ||||||
| (2) Others (note 2) | 24,594,710.00 | 24,594,710.00 | ||||
| 4. Ending balance | 333,938,009.38 | 19,051.89 | 18,738,871.52 | 7,683,987.26 | 360,379,920.05 | |
| II. Accumulated amortization | ||||||
| 1. Beginning balance | 71,255,724.77 | 2,215,427.39 | 254,086.67 | 73,725,238.83 | ||
| 2. Increased amount of the period | 17,810,980.47 | 1,428.93 | 3,414,683.43 | 812,392.88 | 22,039,485.71 | |
| (1) Withdrawal | 5,720,423.15 | 793.85 | 1,261,650.26 | 767,375.56 | 7,750,242.82 | |
| (2) Business combination increase | 12,090,557.32 | 635.08 | 2,153,033.17 | 45,017.32 | 14,289,242.89 | |
| 3. Decreased amount of the period | 7,447,370.16 | 7,447,370.16 | ||||
| (1) Disposal | ||||||
| (2) Others (note 2) | 7,447,370.16 | 7,447,370.16 | ||||
| 4. Ending balance | 81,619,335.08 | 1,428.93 | 5,630,110.82 | 1,066,479.55 | 88,317,354.38 | |
| III. Depreciation reserves | ||||||
| 1. Beginning balance | ||||||
| 2. Increased amount of the period | 388,613.87 | 388,613.87 | ||||
| (1) Withdrawal | 388,613.87 | 388,613.87 | ||||
| 3. Decreased amount of the period | ||||||
| (1) Disposal |
| 4. Ending balance | 388,613.87 | 388,613.87 | ||||
| IV. Carrying value | ||||||
| 1. Ending carrying value | 252,318,674.30 | 17,622.96 | 12,720,146.83 | 6,617,507.71 | 271,673,951.80 | |
| 2. Beginning carrying value | 160,943,367.91 | 2,381,992.06 | 7,368,513.33 | 170,693,873.30 |
The proportion of intangible assets formed from the internal R&D of the Company at the period-end to the ending balance ofintangible assets was 0.00%.
(2) Land Use Right with Certificate of Title Uncompleted
Other notes:
Note 1: Intangible assets-others mainly include the marketing channels and human resources invested by Foshan NationstarOptoelectronics Co., Ltd. (hereinafter referred to as "Nationstar") in Haolaite Company.Note 2: Other reductions in intangible assets in the current period are the land involved in demolition in Nanjing Fozhao, which hasbeen transferred to assets held for sale.
27. Development Costs
Naught
28. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMB
| Name of the invested units or events generating goodwill | Beginning balance | Increase | Decrease | Ending balance | ||
| Formed by business combination | Disposal | |||||
| Nanning Liaowang Auto Lamp Co., Ltd. | 16,211,469.82 | 16,211,469.82 | ||||
| Total | 16,211,469.82 | 16,211,469.82 | ||||
Note: It is the difference between the combined consideration paid and the fair value of the identifiable netassets purchased (including the recognized deferred income tax liabilities).
(2) Depreciation Reserves of Goodwill
None
29. Long-term Prepaid Expense
Unit: RMB
| Item | Beginning balance | Increased amount | Amortization amount of the period | Other decreased amount | Ending balance |
| Mould | 879,096.86 | 123,131,220.31 | 36,882,355.13 | 87,127,962.04 | |
| Expense on maintenance and decoration | 10,828,775.09 | 25,349,246.45 | 8,118,275.54 | 28,059,746.00 | |
| Boarding box | 4,466,068.58 | 1,474,241.95 | 578.17 | 2,991,248.46 | |
| Other | 1,703,354.28 | 9,119,292.30 | 3,762,663.03 | 7,059,983.55 | |
| Total | 13,411,226.23 | 162,065,827.64 | 50,237,535.65 | 578.17 | 125,238,940.05 |
Other notesNote: Due to the merger of Nanning Liaowang not under the same control in the current period, RMB94,182,937.64 of the increase inlong-term deferred expenses in the current period is the amortized amount on the purchase day, mainly for automobile lampmanufacturing molds.
30. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that Had not Been Off-set
Unit: RMB
| Item | Ending balance | Beginning balance | ||
| Deductible temporary difference | Deferred income tax assets | Deductible temporary difference | Deferred income tax assets | |
| Provision for impairment of assets | 160,147,646.18 | 24,951,655.41 | 88,758,899.69 | 14,118,876.93 |
| Unrealized profit of internal transactions | 21,677,239.37 | 3,251,585.91 | 5,784,713.24 | 867,706.99 |
| Undistributed deficit | 36,016,962.39 | 7,312,677.73 | 20,735,316.21 | 5,183,829.06 |
| Depreciation of fixed assets | 63,273,361.51 | 9,491,004.25 | 71,106,985.78 | 10,810,152.06 |
| Payroll payable | 51,262,888.11 | 7,689,433.22 | 61,821,414.20 | 9,273,212.13 |
| Accrued liabilities | 7,671,948.69 | 1,150,792.30 | ||
| Others | 1,625,953.13 | 364,138.46 | ||
| Total | 341,675,999.38 | 54,211,287.28 | 248,207,329.12 | 40,253,777.17 |
Deferred income tax assets increased by 34.67% to RMB13,957,510.11 at the end of the period compared with the beginning of theperiod, which was mainly due to the combination of Nanning Liaowang not under the same control in the current period.
(2) Deferred Income Tax Liabilities Had not Been Off-set
Unit: RMB
| Item | Ending balance | Beginning balance | ||
| Taxable temporary difference | Deferred income tax liabilities | Taxable temporary difference | Deferred income tax liabilities | |
| Assets assessment appreciation from business consolidation not under the same control | 93,485,366.87 | 14,022,805.03 | ||
| Changes in fair value of financial assets recorded into other comprehensive income | 1,152,615,606.86 | 172,892,341.03 | 2,758,137,833.20 | 413,720,674.97 |
| Changes in fair value of held-for-trading financial assets | 4,912,265.32 | 776,194.13 | 6,332,900.00 | 949,935.00 |
| Total | 1,251,013,239.05 | 187,691,340.19 | 2,764,470,733.20 | 414,670,609.97 |
Deferred income tax liabilities decreased by 54.74% at the end of the period to RMB-226,979,269.78 compared with the beginning ofthe period, which was mainly due to the Company's sale of some stocks in the current period and the corresponding accumulated fairvalue changes carried forward.
(3) Deferred Income Tax Assets or Liabilities Listed by Net Amount after Off-set
Unit: RMB
| Item | Mutual set-off amount of deferred income tax assets and liabilities at the period-end | Amount of deferred income tax assets or liabilities after off-set at the period-end | Mutual set-off amount of deferred income tax assets and liabilities at the period-begin | Amount of deferred income tax assets or liabilities after off-set at the period-begin |
| Deferred income tax assets | 54,211,287.28 | 40,253,777.17 | ||
| Deferred income tax | 187,691,340.19 | 414,670,609.97 |
(4) List of Unrecognized Deferred Income Tax Assets
Naught
(5) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following YearsNaught
31. Other Non-current Assets
Unit: RMB
liabilities
Item
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Prepayments for equity acquisition (note) | 455,129,434.98 | 455,129,434.98 | ||||
| Prepayments for construction and equipment | 14,219,171.65 | 14,219,171.65 | 10,401,758.47 | 10,401,758.47 | ||
| Assets of subsidiaries to be cleared and cancelled | 803,224.12 | 803,224.12 | 1,022,085.15 | 1,022,085.15 | ||
| Total | 470,151,830.75 | 470,151,830.75 | 11,423,843.62 | 11,423,843.62 | ||
Other notes: Refer to the prepayments for purchasing 30% of equity to former shareholders of NationStar Optoelectronics inaccordance with the Share Transfer Agreement.
32. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
| Item | Ending balance | Beginning balance |
| Guarantee loans | 97,700,000.00 | |
| Credit loans | 128,914,000.00 | |
| Interest from short-term borrowings | 165,997.01 | |
| Total | 226,779,997.01 |
Notes of short-term borrowings category:
List of short-term borrowings as of 31 December 2021 was as follows:
Unit: RMB
| Borrowing contract number | Loan balance | Term of borrowing | Conditions of loan | Annual interest rate |
| GJKFYHWHLDZJDK4410202101100001595 | 63,757,000.00 | 2021-12-7 to 2022-12-7 | Credit loans | 1.2711% |
| GJKFYHWHLDZJDK4410202101100001595 | 63,757,000.00 | 2021-12-20 to 2022-12-20 | Credit loans | 1.3115% |
| XYGDMYBLJZ (2021) No. 1001 | 47,700,000.00 | 2021-2-1 to 2022-2-1 | Guarantee, pledge | 2.76% |
| XY WYZH2021012600174 | 10,000,000.00 | 2021-1-26 to 2022-1-26 | Guarantee, pledge | 2.97% |
| XYMYZH2021042100146 | 20,000,000.00 | 2021-4-21 to 2022-4-21 | Guarantee, pledge | 2.97% |
| XYMYZH2021042100164 | 20,000,000.00 | 2021-4-21 to 2022-4-21 | Guarantee, pledge | 2.97% |
| LZYHKJZHJK210418069785 | 1,400,000.00 | 2021-4-18 to 2022-4-18 | Credit loans | 4.90% |
| Total | 226,614,000.00 | —— | —— | —— |
Note: see Note XIV-(III) Others for details about guarantees of short-term borrowings.
(2) List of the Short-term Borrowings Overdue but not Returned
Naught
33. Held-for-trading Financial Liabilities
Naught
34. Derivative Financial Liabilities
Naught
35. Notes Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Bank acceptance bill | 826,164,918.71 | 480,971,214.80 |
| Total | 826,164,918.71 | 480,971,214.80 |
The total amount of the due but not paid notes payable at the end of the period was of RMB0.00.The ending balance of bills payable increased by 71.77% to RMB345,193,703.91 compared with the beginning of the period,which was mainly due to RMB353,248,472.44 arising from the combination of Nanning Liaowang not under the same control in thecurrent period.
36. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Accounts payable | 1,554,585,231.38 | 1,059,674,020.99 |
| Total | 1,554,585,231.38 | 1,059,674,020.99 |
The ending balance of accounts payable increased by 46.70% to RMB494,911,210.39 compared with the beginning of the period,which was mainly due to the combination of Nanning Liaowang not under the same control in the current period.
(2) Significant Accounts Payable Aging over One Year
Unit: RMB
| Item | Ending balance | Unpaid/ Un-carry-over reason |
| Supplier A | 50,857,480.81 | Not reaching the settlement period |
| Supplier B | 11,408,340.39 | No settlement yet for quality dispute |
| Supplier C | 5,937,450.99 | No settlement yet for quality dispute |
| Supplier D | 4,273,965.99 | Not reaching the settlement period |
| Total | 72,477,238.18 | -- |
37. Advances from Customer
(1) List of Advances from Customers
Unit: RMB
| Item | Ending balance | Beginning balance |
| Advances from customers | 8,106,923.79 | 1,285,357.28 |
| Total | 8,106,923.79 | 1,285,357.28 |
(2) Significant Advances from Customers Aging over One Year
Naught
38. Contract Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Advances from customers | 84,818,285.22 | 65,777,726.45 |
| Total | 84,818,285.22 | 65,777,726.45 |
39. Employee Benefits Payable
(1) List of Employee Benefits Payable
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| I. Short-term salary | 82,485,090.47 | 781,021,939.02 | 775,031,452.39 | 88,475,577.10 |
| II. Post-employment benefit-defined contribution plans | 56,718,237.36 | 56,267,925.26 | 450,312.10 | |
| III. Termination benefits | 231,106.93 | 231,106.93 | ||
| Total | 82,485,090.47 | 837,971,283.31 | 831,530,484.58 | 88,925,889.20 |
(2) List of Short-term Salary
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Salary, bonus, allowance, subsidy | 82,131,394.79 | 701,502,776.07 | 698,073,511.49 | 85,560,659.37 |
| 2. Employee welfare | 32,127,911.04 | 31,335,455.09 | 792,455.95 | |
| 3. Social insurance | 25,647,623.95 | 25,169,757.60 | 477,866.35 | |
| Of which: Medical insurance premiums | 19,980,988.36 | 19,575,936.99 | 405,051.37 | |
| Work-related injury insurance | 1,305,393.14 | 1,236,876.17 | 68,516.97 | |
| Maternity insurance | 4,361,242.45 | 4,356,944.44 | 4,298.01 | |
| 4. Housing fund | 15,028,878.11 | 14,865,923.40 | 162,954.71 | |
| 5. Labor union budget and employee education budget | 353,695.68 | 6,714,749.85 | 5,586,804.81 | 1,481,640.72 |
| Total | 82,485,090.47 | 781,021,939.02 | 775,031,452.39 | 88,475,577.10 |
(3) List of Defined Contribution Plans
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Basic pension benefits | 55,513,044.63 | 55,077,515.01 | 435,529.62 | |
| 2. Unemployment insurance | 1,137,309.73 | 1,122,527.25 | 14,782.48 | |
| 3. Annuity | 67,883.00 | 67,883.00 | ||
| Total | 56,718,237.36 | 56,267,925.26 | 450,312.10 |
Other notes:
The Company participates in the scheme of pension insurance and unemployment insurance established by government agencies asrequired. According to the scheme, fees are paid to it on a monthly basis and at the rate of stipulated by government agencies. Inaddition to the above monthly deposit fees, the Company no longer assumes further payment obligations. Corresponding expensesare recorded into the current profits or losses or the cost of related assets when incurred.
(4) Termination Benefits
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Compensation for termination of labor relations | 231,106.93 | 231,106.93 | ||
| 2. Estimated internal staff expenditure |
Total
| Total | 231,106.93 | 231,106.93 |
40. Taxes Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| VAT | 12,999,526.19 | 7,470,456.34 |
| Corporate income tax | 54,088,937.37 | 6,753,904.80 |
| Personal income tax | 2,643,442.46 | 1,009,832.30 |
| Urban maintenance and construction tax | 2,060,219.96 | 1,174,681.01 |
| VAT of land | 6,392,510.40 | 414,132.63 |
| Education surcharge | 1,536,805.36 | 845,486.44 |
| Property tax | 821,836.12 | 315,798.24 |
| Land use tax | 545,215.31 | 187,752.00 |
| Other | 922,566.28 | 704,613.75 |
| Total | 82,011,059.45 | 18,876,657.51 |
41. Other Payables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Dividends payable | 15,646.07 | |
| Other payables | 298,795,466.66 | 76,668,330.66 |
| Total | 298,811,112.73 | 76,668,330.66 |
(1) Interest Payable
Naught
(2) Dividends Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Ordinary share dividends | 15,646.07 | |
| Total | 15,646.07 |
(3) Other Payables
1) Other Payables Listed by Nature
Unit: RMB
| Item | Ending balance | Beginning balance |
| Account current | 165,250,657.72 | |
| Performance bond | 51,177,605.86 | 42,365,111.53 |
| Relevant expense of sales | 5,853,486.17 | 3,143,336.62 |
| Compensation for lawsuit | 1,082,784.95 | |
| Payments for demolition | 54,990,047.00 | |
| Other | 21,523,669.91 | 30,077,097.56 |
| Total | 298,795,466.66 | 76,668,330.66 |
2) Significant Other Payables Aging over One Year
Unit: RMB
| Item | Ending balance | Reason for not repayment or carry-over |
| Unit A | 120,352,181.20 | Unsettled |
| Unit B | 5,327,583.26 | Unsettled for involving in lawsuits |
| Total | 125,679,764.46 | -- |
Other notesThe ending balance of other payables increased by 289.75% to RMB222,142,782.07 compared with the beginning of the period, whichwas mainly caused by the merger of Nanning Liaowang not under the same control in the current period and the compensation for
demolition received by Nanjing Fozhao in the current period.
42. Liabilities Held for sale
Naught
43. Current Portion of Non-current Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Current portion of long-term borrowings (note) | 19,423,561.38 | |
| Current portion of lease liabilities | 7,855,712.16 | 1,750,282.11 |
| Total | 27,279,273.54 | 1,750,282.11 |
Note: Refer to the current portion of financing lease payments.
44. Other Current Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Pending changerover output VAT | 8,038,471.15 | 5,503,702.07 |
| Total | 8,038,471.15 | 5,503,702.07 |
45. Long-term Borrowings
Naught
46. Bonds Payable
Naught
47. Lease Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Lease liabilities | 15,718,515.38 | 3,943,088.30 |
| Less: current portion of lease liabilities | -7,855,712.16 | -1,750,282.11 |
| Total | 7,862,803.22 | 2,192,806.19 |
Analysis on maturity date of lease liabilities
| Item | Ending balance | Beginning balance |
| 1 to 2 years | 2,780,281.78 | 1,552,519.37 |
| 3 to 5 years | 4,095,243.05 | 640,286.82 |
Over 5 years
| Over 5 years | 987,278.39 | |
| Total | 7,862,803.22 | 2,192,806.19 |
48. Long-term Payables
(1) Long-term Payables Listed by Nature
Unit: RMB
| Item | Ending balance | Beginning balance |
| Principal and interest of financing lease borrowings (note) | 19,423,561.38 | |
| Less: Current portion of long-term payables | 19,423,561.38 | |
| Total | 0.00 |
Other notes:
Note: The ending balance is generated from the financial leasing business of Nanning Liaowang.
(2) Specific Payables
Naught
49. Long-term Employee Benefits Payable
Naught
50. Provisions
Unit: RMB
| Item | Ending balance | Beginning balance | Reason for formation |
| Product Quality Assurance | 7,671,948.69 | Provisions of claim on using the oil paint of Hipro by DFSK | |
| Total | 7,671,948.69 | -- |
51. Deferred Income
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | Reason for formation |
| The first batch of special funds for industrial and information development for autonomous regions in 2017 (technical transformation) | 2,333,333.50 | 166,666.65 | 2,166,666.85 | Related to assets | |
| Special funds for industry and informatization in Chongqing Liang Jiang New Area | 2,225,000.00 | 125,000.00 | 2,100,000.00 | Related to assets | |
| The Second batch of support funds for the "technological transformation of thousands of enterprises" project in the autonomous region in 2021 | 2,000,000.00 | 33,333.34 | 1,966,666.66 | Related to assets | |
| Government fund subsidy of Liuzhou Treasury Payment Bureau | 1,882,999.97 | 82,999.97 | 1,800,000.00 | Related to assets | |
| Allocation of the 14th batch of industrial support funds by Finance Bureau of Chongqing Liang Jiang New Area in 2019 | 1,112,500.00 | 62,500.00 | 1,050,000.00 | Related to assets | |
| Special funds for automobile and parts projects in 2020 | 1,000,000.00 | 83,333.35 | 916,666.65 | Related to assets | |
| Innovation funds for enterprises in Liudong New Area in 2017 | 962,500.00 | 62,500.00 | 900,000.00 | Related to income | |
| Liuzhou Guige 2021 Liuzhou urban construction industrial Internet demonstration city financial support project | 790,000.00 | 52,666.68 | 737,333.32 | Related to assets | |
| The Third Batch of Special Funds for Innovation-Driven Development in Guangxi in 2018 | 752,000.00 | 40,000.00 | 712,000.00 | Related to income | |
| Funds for intelligent transformation and upgrading project of automobile industry enterprises in 2021 | 651,666.65 | 28,333.35 | 623,333.30 | Related to assets | |
| Project funds of Liuzhou High-tech Industrial Development Zone Management | 602,666.69 | 26,666.65 | 576,000.04 | Related to assets |
| Committee | |||||
| The first batch of Liuzhou enterprise support fund support projects in 2018 | 471,333.27 | 65,333.38 | 405,999.89 | Related to assets | |
| Funding for innovative projects | 372,000.00 | 20,000.00 | 352,000.00 | Related to assets | |
| Special funds of Guangxi Zhuang Science and Technology Department for innovation-driven development in 2020 | 113,000.00 | 5,000.00 | 108,000.00 | Related to assets | |
| Research and development of key technologies and industrialization of intelligent LED automobile lamps | 550,376.08 | 550,376.08 | Related to assets | ||
| Total | 15,819,376.16 | 1,404,709.45 | 14,414,666.71 | -- |
Other notes:
Note: Due to the merger of Nanning Liaowang not under the same control in the current period, RMB13,029,376.16 of the increasein deferred income in the current period is the amortized amount on the purchase day.
52. Other Non-current Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Liabilities of subsidiaries to be cleared and cancelled | 22,653.46 | 1,244,064.84 |
| Total | 22,653.46 | 1,244,064.84 |
53. Share Capital
Unit: RMB
| Beginning balance | Increase/decrease (+/-) | Ending balance | |||||
| New shares issued | Bonus shares | Bonus issue from profit | Other | Subtotal | |||
| The sum of shares | 1,399,346,154.00 | 1,399,346,154.00 | |||||
Other notes:
Unit: RMB
| Item/Investor | Beginning balance | Increase | Decrease | Ending balance | ||
| Invested amount | Proportion | Invested amount | Proportion | |||
| Restricted shares | 13,169,196.00 | 0.94% | 13,169,196.00 | 0.94% | ||
| Unrestricted shares | 1,386,176,958.00 | 99.06% | 1,386,176,958.00 | 99.06% | ||
| Total | 1,399,346,154.00 | 100.00% | 1,399,346,154.00 | 100.00% |
54. Other Equity Instruments
Naught
55. Capital Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Capital premium (premium on stock) | 7,911,543.36 | 3,085,594.76 | 4,825,948.60 | |
| Other capital reserves | 7,245,971.54 | 7,245,971.54 | ||
| Total | 15,157,514.90 | 3,085,594.76 | 12,071,920.14 |
56. Treasury Shares
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Treasury shares (A-share) | 201,955,572.33 | 201,955,572.33 | ||
| Treasury shares (B-share) | 48,645,302.21 | 48,645,302.21 | ||
| Total | 250,600,874.54 | 250,600,874.54 |
Other notes, including changes and reason of change:
Note: According to the Proposal on Repurchase of Some RMB Common Shares (A Shares) and Domestic Listed Foreign Shares (BShares) of the Company, which was deliberated and adopted at the sixth meeting of the ninth Board of Directors and the ThirdExtraordinary General Meeting in 2020 in December 2020, during the period, the Company repurchased 31,952,995 A shares and18,398,512 B shares by means of call auction trading with its own funds of RMB250,600,874.54 (excluding trading costs). As of theend of the reporting period, the share repurchase has been completed. For details, please refer to Note XV-2 "Cancellation ofRepurchase Shares".
57. Other Comprehensive Income
Unit: RMB
| Item | Beginning | Reporting Period | Ending |
| balance | Income before taxation in the Current Period | Less: Recorded in other comprehensive income in prior period and transferred to profit or loss in the Current Period | Less: Recorded in other comprehensive income in prior period and transferred to retained earnings in the Current Period | Less: Income tax expense | Attributable to owners of the Company as the parent after tax | Attributable to non-controlling interests after tax | balance | |
| I. Other comprehensive income that may not subsequently be reclassified to profit or loss | 2,349,389,658.23 | -380,765,462.68 | 1,041,043,249.12 | -57,114,819.40 | -1,364,693,892.40 | 984,695,765.83 | ||
| Changes in fair value of other equity instrument investment | 2,349,389,658.23 | -380,765,462.68 | 1,041,043,249.12 | -57,114,819.40 | -1,364,693,892.40 | 984,695,765.83 | ||
| II. Other comprehensive income that may subsequently be reclassified to profit or loss | -1,124.62 | -27,539.73 | -56,209.20 | 28,669.47 | -57,333.82 | |||
| Differences arising from translation of foreign currency-denominated financial statements | -1,124.62 | -27,539.73 | -56,209.20 | 28,669.47 | -57,333.82 | |||
| Total of other comprehensive income | 2,349,388,533.61 | -380,793,002.41 | 1,041,043,249.12 | -57,114,819.40 | -1,364,750,101.60 | 28,669.47 | 984,638,432.01 |
Other notes, including the adjustment of the effective gain/loss on cash flow hedges to the initial recognized amount:
The ending balance of other comprehensive income was RMB-1,364,750,101.60 decreasing 58.09% compared with that at thebeginning of the period, mainly due to the transfer of the accumulated fair value previously recorded into other comprehensiveincome into retained earnings for sales of some stocks by the Company in the Reporting Period.
58. Specific Reserve
Naught
59. Surplus Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Statutory surplus reserves | 699,673,077.00 | 699,673,077.00 | ||
| Discretionary surplus reserves | 41,893,962.55 | 213,691.59 | 41,680,270.96 | |
| Total | 741,567,039.55 | 213,691.59 | 741,353,347.96 |
Notes including changes and reasons thereof:
1. In line with the Company's Articles of Association, if the Company's accumulative statutory surplus reserve exceeds theCompany's registered capital by over 50%, withdrawal is not required any more.
2. During the reporting period, the trading fees related to repurchase of shares of the Company offset any surplus reserve byRMB213,691.59.
60. Retained Earnings
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Beginning balance of retained earnings before adjustments | 1,758,462,062.48 | 1,700,426,915.63 |
| Beginning balance of retained earnings after adjustments | 1,758,462,062.48 | 1,700,426,915.63 |
| Add: Net profit attributable to owners of the Company as the parent | 250,091,965.87 | 316,914,185.34 |
| Dividend of ordinary shares payable | 135,847,668.70 | 258,879,038.49 |
| Others (note) | -1,041,043,249.12 | |
| Ending retained earnings | 2,913,749,608.77 | 1,758,462,062.48 |
When selling stocks for the current period, the accumulated changes in fair value included in other comprehensive earnings in theprevious period are transferred to retained earnings.List of adjustment of beginning retained earnings:
(1) RMB0.00 beginning retained earnings was affected by retrospective adjustment conducted according to the Accounting Standardsfor Business Enterprises and relevant new regulations.
(2) RMB0.00 beginning retained earnings was affected by changes in accounting policies.
(3) RMB0.00 beginning retained earnings was affected by correction of significant accounting errors.
(4) RMB0.00 beginning retained earnings was affected by changes in combination scope arising from same control.
(5) RMB0.00 beginning retained earnings was affected totally by other adjustments.
61. Operating Revenue and Cost of Sales
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main operations | 4,607,263,246.86 | 3,836,340,666.94 | 3,699,836,965.57 | 2,957,658,247.04 |
| Other operations | 165,427,222.28 | 125,871,366.53 | 45,077,487.15 | 38,615,663.76 |
| Total | 4,772,690,469.14 | 3,962,212,033.47 | 3,744,914,452.72 | 2,996,273,910.80 |
Whether the lower of the net profit before and after deduction of non-recurring gains and losses through audit is negative
□ Yes √ No
62. Taxes and Surtaxes
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Urban maintenance and construction tax | 14,486,804.19 | 12,797,350.61 |
| Education surcharge | 6,546,395.13 | 5,487,588.14 |
| Property tax | 10,858,526.89 | 8,136,199.68 |
| Land use tax | 5,641,160.53 | 5,170,804.93 |
| Vehicle and vessel use tax | 31,087.26 | 15,852.28 |
| Stamp duty | 3,996,416.04 | 2,847,363.44 |
| Local education surcharge | 3,900,946.03 | 3,660,351.56 |
| VAT of land | 414,132.63 | |
| Environmental protection tax | 102,675.89 | 101,985.20 |
| Others | 393,432.00 | 212.76 |
| Total | 45,957,443.96 | 38,631,841.23 |
63. Selling Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Employee benefits | 74,454,733.88 | 62,699,560.82 |
| Business propagandize fees and advertizing fees | 44,511,114.76 | 23,567,538.03 |
| Sales promotion fees | 12,840,438.91 | 10,124,091.58 |
| Business travel charges | 11,418,043.43 | 9,248,697.83 |
| Commercial insurance premium | 4,751,270.10 | 5,257,100.62 |
| Dealer meeting expense | 806,507.86 | 974,212.62 |
| Other | 21,498,932.40 | 33,348,498.85 |
| Total | 170,281,041.34 | 145,219,700.35 |
64. Administrative Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Employee benefits | 119,834,123.62 | 89,335,431.10 |
| Office expenses | 19,943,898.38 | 14,548,829.21 |
| Depreciation charge | 18,638,776.21 | 16,796,115.88 |
| Amortization of intangible assets | 7,598,775.25 | 5,036,363.10 |
| Engineering decoration cost | 6,980,479.30 | 4,504,630.47 |
| Rent of land and management charge | 4,477,445.47 | 5,822,250.99 |
| Utilities | 4,270,695.13 | 4,811,554.12 |
| Service charge | 3,260,561.19 | |
| Disability security fund | 2,955,901.37 | 1,466,128.42 |
| Party construction funds | 5,050,315.69 | |
| Others | 18,375,455.89 | 7,993,754.77 |
| Total | 206,336,111.81 | 155,365,373.75 |
Other notes:
Compared with the previous period, the management expenses rose by 32.81% to RMB50,970,738.06 in the current period, which wasmainly caused by the merger of Nanning Liaowang in the current period and the reduction and exemption of social security due to thepandemic in the previous period.
65. Development Costs
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Employee benefits | 95,475,565.26 | 64,755,944.49 |
| Material consumption | 52,326,677.63 | 8,251,441.92 |
| Depreciation and long-term prepaid expense | 19,220,357.95 | 6,884,584.37 |
| Certification and testing fee | 10,890,898.99 | 12,746,279.58 |
| Expense on equipment debugging | 8,662,071.21 | 7,866,127.63 |
| Charges related to patents | 1,287,039.72 | 1,970,723.98 |
| Other | 15,819,008.40 | 6,410,194.74 |
| Total | 203,681,619.16 | 108,885,296.71 |
Other notes:
1. In respect of R&D expense incurred by the Company, expense other than that on bench-scale and pilot-scale production isincluded in R&D expense; and sales revenue of products from bench-scale and pilot-scale production is included in core business
revenue and the relevant costs are included in cost of sales of core business.
2. R&D expense stood at RMB94,796,322.45 in the current period, up 87.06% year-on-year, primarily driven by a considerableincrease of input in R&D, expansion of R&D teams and R&D projects, etc. as well as the combination of Nanning Liaowang in thecurrent period.
66. Finance Costs
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Interest expense | 5,790,716.89 | |
| Less: Interest income | 16,201,526.00 | 37,650,815.03 |
| Foreign exchange gains or losses | 12,012,555.38 | 30,819,758.83 |
| Other | 1,518,283.46 | 1,207,770.75 |
| Total | 3,120,029.73 | -5,623,285.45 |
Other notes:
The financial expenses in the current period grew by RMB8,743,315.18 compared with the previous period, which was mainly due tothe increase in interest expenses of new bank loans in the current period and the simultaneous decrease in interest income caused by thedecrease in time deposit business.
67. Other Income
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Subsidies for position training of employees | 2,968,000.00 | 5,541,000.00 |
| Special fund for promoting high-quality economic development | 2,004,092.60 | |
| Subsidies for high-tech enterprises | 1,510,200.00 | |
| Support funds for industrial design industry development in Chancheng District, Foshan City | 1,000,000.00 | |
| Subsidy for stabilizing posts | 824,913.04 | 2,907,529.01 |
| Industrial Internet project transformation award | 809,900.00 | |
| The third batch of special funds for innovation-driven development in Guangxi by the Guangxi Zhuang Science and Technology Department (Intelligent LED Lamp Project) | 550,376.08 | |
| Rewards of “Competition among Hundreds of Enterprises” | 500,000.00 | 500,000.00 |
| Chongqing enterprise R&D reserve in 2021 | 410,000.00 | |
| Supporting fund for import and export | 340,000.00 | 3,674,307.07 |
| Foshan's funds for supporting municipal-level development of industrial design | 300,000.00 | 1,000,000.00 |
| Science and technology innovation inclusive policy funds provided by the Finance Bureau of Liang Jiang New Area in 2021 | 300,000.00 | |
| Foshan's funds for promotion of robot application and industrial development | 4,988,602.00 | |
| Foshan's special funds for supporting industrial Internet development | 3,000,000.00 | |
| Chancheng District's funds for supporting example setting and quality improvement of high-tech enterprises (towns and streets) in 2018 | 1,422,900.00 | |
| Chancheng District's government quality award in 2019 | 1,000,000.00 | |
| Other | 4,794,421.52 | 4,955,190.12 |
| Total | 16,311,903.24 | 28,989,528.20 |
Other income decreased by 43.73% to RMB-12, 677,624.96 in the current period compared with the previous period, mainly due to thedecrease of industrial development support funds received in the current period compared with the previous period.
68. Investment Income
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Long-term equity investment income accounted by equity method | 2,260,497.27 | 2,351,681.39 |
| Investment income from disposal of long-term equity investment | 3,085,594.76 | |
| Investment income from holding of other equity instrument investment | 23,643,370.02 | 14,940,422.96 |
| Income received from financial products and structural deposits | 1,118,141.63 | 23,451,129.06 |
| Other | 6,013,450.00 | 3,492,971.49 |
| Total | 36,121,053.68 | 44,236,204.90 |
69. Net Gain on Exposure Hedges
Naught
70. Gain on Changes in Fair Value
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Held-for-trading financial assets | 4,649,669.44 | 4,785,700.00 |
| Total | 4,649,669.44 | 4,785,700.00 |
71. Credit Impairment Loss
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Expected credit loss of accounts receivable | -4,202,568.39 | -15,841,416.23 |
| Expected credit loss of other receivables | -189,864.56 | -268,176.13 |
| Expected credit loss of contract assets | -264,782.57 | |
| Total | -4,657,215.52 | -16,109,592.36 |
72. Asset Impairment Loss
Unit: RMB
| Item | Reporting Period | Same period of last year |
| II. Loss on inventory valuation and contract performance cost | -29,184,207.60 | -7,581,307.74 |
| VII. Loss on construction in progress | -1,318,800.00 | |
| X. Loss on intangible assets | -388,613.87 | |
| Total | -30,891,621.47 | -7,581,307.74 |
Other notes:
The asset impairment loss increased by 307.47% to RMB23,310,313.73 in the current period compared with the previous period, whichwas mainly caused by the increase of Nanning Liaowang's asset impairment loss of RMB14,681,409.95 in the current period comparedwith the previous period, and the Company's replenishment of inventory depreciation loss for newly added backlog products.
73. Assets Disposal Income
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Disposal income of fixed assets | 77,713,637.77 | 9,090,874.79 |
Compared with the previous period, the income from disposal of fixed assets increased by RMB68,622,762.98 in the current period,mainly due to the disposal of some property assets by the Company in the current period, including No.59 Lecheng Second Road, Suite24 of Middle and North Blocks of No.1 Lecheng First Road, Luocun District 3, No.2 Lecheng Third Road Fourth Street and No.4Lecheng Third Street.
74. Non-operating Income
Unit: RMB
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Government grants | 57,720.00 | ||
| Total income from scrap of non-current assets | 2,003,455.62 | 48,168.04 | 2,003,455.62 |
| Of which: Income from scrap of fixed assets | 2,003,455.62 | 48,168.04 | 2,003,455.62 |
| Income from default money | 7,060,000.00 | 7,060,000.00 | |
| Other | 4,123,500.76 | 2,058,806.15 | 4,123,500.76 |
| Total | 13,186,956.38 | 2,164,694.19 | 13,186,956.38 |
Government grants recorded in current profit or loss:
Unit: RMB
| Item | Distribution entity | Distribution reason | Nature | Whether influence the profits or losses of the year or not | Special subsidy or not | Reporting Period | Same period of last year | Related to assets/related to income |
| Other miscellaneous government grants | Subsidy | No | No | 57,720.00 | Related to income |
75. Non-operating Expense
Unit: RMB
| Item | Reporting Period | Same period of last year | Amount recorded in the current |
| non-recurring profit or loss | |||
| Exchange loss on non-monetary assets | 645,945.89 | 1,672,244.18 | 645,945.89 |
| Donations | 104,364.08 | ||
| Losses on inventories | 311,858.32 | 291,692.80 | 311,858.32 |
| Penalty | 200.00 | 26,000.00 | 200.00 |
| Delaying payment | 190,078.72 | 556.29 | 190,078.72 |
| Other | 40,388.61 | 1,759,560.64 | 40,388.61 |
| Total | 1,188,471.54 | 3,854,417.99 | 1,188,471.54 |
76. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Current income tax expense | 23,309,089.13 | 46,120,717.25 |
| Deferred income tax expense | 1,741,577.22 | -406,009.72 |
| Total | 25,050,666.35 | 45,714,707.53 |
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
| Item | Reporting Period |
| Profit before taxation | 292,348,101.65 |
| Current income tax expense accounted at statutory/applicable tax rate | 43,852,215.25 |
| Influence of applying different tax rates by subsidiaries | 3,056,765.33 |
| Influence of income tax before adjustment | 1,031,206.00 |
| Influence of non-deductable costs, expenses and losses | 2,944,791.18 |
| Influence of deduction | -21,834,983.83 |
| Regarded as sales | 349,091.72 |
| Investment income and final dividend | -4,348,419.30 |
| Income tax expense | 25,050,666.35 |
77. Other Comprehensive Income
Refer to Note VII Main Items of Consolidated Financial Statements-57 for details.
78. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Taxes of equity transfer payments from former shareholder of Nanning Liaowang | 48,637,165.49 | |
| Margin income | 40,666,019.15 | 12,240,049.79 |
| Income from waste | 27,393,454.55 | 18,500,712.83 |
| Deposit interest | 18,109,095.02 | 38,946,211.76 |
| Government grants | 17,435,679.47 | 29,323,585.92 |
| Property and rental income | 12,980,397.19 | 9,828,318.01 |
| Income from insurance compensation | 25,003.20 | 21,871.82 |
| Other | 5,778,972.29 | 10,805,467.01 |
| Total | 171,025,786.36 | 119,666,217.14 |
(2) Cash Used in Other Operating Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Administrative and R&D expense paid in cash | 67,305,563.82 | 51,683,094.67 |
| Selling expense paid in cash | 61,331,324.84 | 139,896,500.31 |
| Finance costs paid in cash | 1,302,431.92 | 509,435.98 |
| Returned cash deposit | 42,863,242.64 | 8,933,825.48 |
| Payment for taxes of equity transfer accounts on behalf of former shareholder of Nanning Liaowang | 48,637,165.49 | |
| Other | 9,057,860.33 | 6,746,686.92 |
| Total | 230,497,589.04 | 207,769,543.36 |
(3) Cash Generated from Other Investing Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Demolition compensation received | 54,990,047.00 | |
| Total | 54,990,047.00 |
(4) Cash Used in Other Investing Activities
Naught
(5) Cash Generated from Other Financing Activities
Naught
(6) Cash Used in Other Financing Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Share repurchase | 250,814,566.13 | |
| Finance lease rent | 49,995,876.21 | |
| Total | 300,810,442.34 |
79. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
| Supplemental information | Reporting Period | Same period of last year |
| 1. Reconciliation of net profit to net cash flows generated from operating activities: | -- | -- |
| Net profit | 267,297,435.30 | 322,168,591.79 |
| Add: Provision for impairment of assets | 35,548,836.99 | 23,690,900.10 |
| Depreciation of fixed assets, oil-gas assets, and productive living assets | 104,751,799.89 | 76,762,605.39 |
| Depreciation of right-of-use assets | 3,980,368.60 | |
| Amortization of intangible assets | 7,750,242.82 | 5,036,363.10 |
| Amortization of long-term prepaid expenses | 50,237,535.65 | 8,024,378.24 |
| Loss from disposal of fixed assets, intangible assets and other long-term assets (gains: negative) | -77,713,637.77 | -9,090,874.79 |
| Losses from scrapping of fixed assets (gains: negative) | -1,357,509.73 | 1,624,076.14 |
| Losses from changes in fair value (gains: negative) | -4,649,669.44 | -4,785,700.00 |
| Finance costs (gains: negative) | 5,790,716.89 |
| Investment loss (gains: negative) | -36,121,053.68 | -44,236,204.90 |
| Decrease in deferred income tax assets (increase: negative) | 2,222,138.97 | -246,364.71 |
| Increase in deferred income tax liabilities (“-” for decrease) | -480,561.75 | 717,855.00 |
| Decrease in inventory (“-” for increase) | -43,528,121.23 | -105,929,840.59 |
| Decrease in operating receivables (“-” for increase) | -201,444,146.36 | 86,704,874.15 |
| Increase in operating payables (“-” for decrease) | -389,309,460.41 | 34,387,672.98 |
| Others | ||
| Net cash generated from/used in operating activities | -277,025,085.26 | 394,828,331.90 |
| 2. Significant investing and financing activities without involvement of cash receipts and payments | -- | -- |
| Transfer of debts into capital | ||
| Current portion of convertible corporate bonds | ||
| Fixed assets leased in for financing | ||
| Share purchase fund unpaid yet (note) | 41,695,763.31 | |
| 3.Net increase/decrease of cash and cash equivalents: | -- | -- |
| Ending balance of cash | 1,139,089,151.31 | 875,728,218.57 |
| Less: Beginning balance of cash | 875,728,218.57 | 1,051,079,042.41 |
| Add: Ending balance of cash equivalents | ||
| Less: Beginning balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 263,360,932.74 | -175,350,823.84 |
The unpaid equity purchase price refers to the unpaid price arising from the combination of Nanning Liaowang not under the samecontrol by the Company in the current period. According to the Share Transfer Agreement, the Company will pay the second sharetransfer price within 15 days after the original shareholders of Nanning Liaowang complete the share transfer in 2022.
(2) Net Cash Paid For Acquisition of Subsidiaries
Unit: RMB
| 金额 |
| Cash or cash equivalents paid in the Reporting Period for business combination occurring in the Reporting Period | 252,184,400.45 |
| Of which: | -- |
| Nanning Liaowang Auto Lamp Co., Ltd. | 252,184,400.45 |
| Less: Cash and cash equivalents held by subsidiaries on purchase date | 120,835,756.18 |
| Of which: | -- |
| Nanning Liaowang Auto Lamp Co., Ltd. | 120,835,756.18 |
| Of which: | -- |
| Nanning Liaowang Auto Lamp Co., Ltd. | 120,835,756.18 |
| Net payments for acquisition of subsidiaries | 131,348,644.27 |
Other notes:
Note: The difference between the cash and cash equivalents held by Nanning Liaowang on the purchase date and the monetary funds onthe purchase date was RMB55,190,042.63 for the limited use of bank acceptance bill margin and wealth management products.
(3) Net Cash Received from Disposal of the Subsidiaries
Naught
(4) Cash and Cash Equivalents
Unit: RMB
| Item | Ending balance | Beginning balance |
| I. Cash | 1,139,089,151.31 | 875,728,218.57 |
| Including: Cash on hand | 16,733.10 | 14,800.25 |
| Bank deposit on demand | 1,039,748,114.76 | 870,224,197.60 |
| Other monetary assets on demand | 99,324,303.45 | 5,489,220.72 |
| III. Ending balance of cash and cash equivalents | 1,139,089,151.31 | 875,728,218.57 |
(5) Subsidiaries and Other Business Units Acquired or Disposed in the Reporting Period
Naught
(6) Other Notes
Naught
80. Notes to Items of the Statements of Changes in Owners’ Equity
Notes to the name of “Other” of ending balance of the same period of last year adjusted and the amount adjusted:
Not applicable
81. Assets with Restricted Ownership or Right of Use
Unit: RMB
| Item | Ending carrying value | Reason for restriction |
| Monetary assets | 245,575,069.72 | Security deposit of notes, letter of guarantee, etc. |
| Notes receivable | 275,626,604.28 | Pledged for notes pool |
| Fixed assets | 277,849,723.49 | Related-party mortgage guarantee, see Note XIV-(III) Others for details |
| Intangible assets | 11,274,770.33 | Related-party mortgage guarantee, see Note XIV-(III) Others for details |
| Total | 810,326,167.82 | -- |
82. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
| Item | Ending foreign currency balance | Exchange rate | Ending balance converted to RMB |
| Monetary assets | -- | -- | 266,653,929.34 |
| Of which: USD | 31,760,973.86 | 6.3757 | 202,498,441.04 |
| EUR | 44,157.41 | 7.2197 | 318,803.25 |
| HKD | 45,316,276.57 | 0.8176 | 37,050,587.72 |
| IDR | 59,924,155,104.30 | 0.000447 | 26,786,097.33 |
| Accounts receivable | -- | -- | 376,000,761.23 |
| Of which: USD | 58,005,666.69 | 6.3757 | 369,826,729.12 |
| EUR | 212,143.56 | 7.2197 | 1,531,612.86 |
| HKD | |||
| IDR | 10,385,725,386.30 | 0.000447 | 4,642,419.25 |
| Long-term borrowings | -- | -- | |
| Of which: USD | |||
| EUR | |||
| HKD | |||
| Other non-current assets | 766,142.51 | ||
| Of which: USD | 59,710.71 | 6.3757 | 380,697.60 |
| EUR | 53,387.94 | 7.2197 | 385,444.91 |
| Short-term borrowings | 127,514,000.00 | ||
| Of which: USD | 20,000,000.00 | 6.3757 | 127,514,000.00 |
| Accounts payable | 593,644.68 | ||
| Of which: IDR | 1,328,064,155.40 | 0.000447 | 593,644.68 |
| Contract liabilities: | 19,121,489.94 | ||
| Of which: USD | 2,965,980.32 | 6.3757 | 18,910,200.73 |
| EUR | 29,265.65 | 7.2197 | 211,289.21 |
| Current portion of non-current liabilities | 2,982,902.02 | ||
| Of which: IDR | 6,673,158,881.43 | 0.000447 | 2,982,902.02 |
| Lease liabilities | 81,284.42 | ||
| Of which: IDR | 181,844,340.04 | 0.000447 | 81,284.42 |
| Other non-current liabilities | 11,004.46 | ||
| Of which: USD | 1,726.00 | 6.3757 | 11,004.46 |
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, RecordingCurrency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, RelevantReasons Shall Be Disclosed.
□ Applicable √ Not applicable
83. Arbitrage
Qualitative and quantitative information of relevant arbitrage instruments, hedged risk in line with the type of arbitrage to disclose:
Naught
84. Government Grants
Government grants
Unit: RMB
| Sources | Amount | Listed items | Amount recorded in the current profit or loss |
| Grants for employees' on-the-job training | 2,968,000.00 | Other income | 2,968,000.00 |
| Special funds for promoting high-quality economic development | 2,004,092.60 | Other income | 2,004,092.60 |
| Grants for high-tech enterprises | 1,510,200.00 | Other income | 1,510,200.00 |
| Support funds for industrial design industry development in Chancheng District, Foshan City | 1,000,000.00 | Other income | 1,000,000.00 |
| Subsidy for stabilizing employment | 824,913.04 | Other income | 824,913.04 |
| Industrial Internet project transformation award | 809,900.00 | Other income | 809,900.00 |
| The third batch of special funds for innovation-driven development in Guangxi by the Science and Technology Department of Guangxi Zhuang Autonomous Region (Intelligent LED Lamp Project) | 550,376.08 | Other income | 550,376.08 |
| "100 Enterprises Strive for the First Place" bonus | 500,000.00 | Other income | 500,000.00 |
| Chongqing enterprise R&D reserve in 2021 | 410,000.00 | Other income | 410,000.00 |
| Import and export support funds | 340,000.00 | Other income | 340,000.00 |
| Industrial design development support funds in Foshan | 300,000.00 | Other income | 300,000.00 |
| Science and technology innovation inclusive policy funds provided by the Finance Bureau of Liang Jiang New Area in 2021 | 300,000.00 | Other income | 300,000.00 |
| Others | 4,794,421.52 | Other income | 4,794,421.52 |
| Total | 16,311,903.24 | 16,311,903.24 |
85. Other
NaughtVIII. Changes of Consolidation Scope
1. Business Combination Not under the Same Control
(1) Business Combination Not under the Same Control in the Reporting Period
Unit: RMB
| Name of acquiree | Time and place of gaining the equity | Cost of gaining the equity | Proportion of equity | Way to gain the equity | Purchase date | Recognition basis of purchase date | Income of acquiree from the purchase date to period-end | Net profits of acquiree from the purchase date to period-end |
| Nanning Liaowang Auto Lamp Co., Ltd. | 1 August 2021 | 493,880,163.76 | 53.79% | Purchase of former shareholders’ equity and capital increase in cash | 1 August 2021 | Reelect directors and complete changes of industrial and commercial registration | 707,022,757.31 | 28,862,888.63 |
(2) Combination Cost and Goodwill
Unit: RMB
| Combination cost | |
| --Cash | 493,880,163.76 |
| Total combination cost | 493,880,163.76 |
| Less: fair value of identifiable net assets acquired | 477,668,693.94 |
| The amount of goodwill/combined cost less than the fair value share of identifiable net assets obtained | 16,211,469.82 |
(3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date
Unit: RMB
| Nanning Liaowang lamp Co., Ltd | ||
| Fair value on purchase date | Carrying value on purchase date | |
| Monetary assets | 176,025,798.81 | 176,025,798.81 |
| Inventories | 313,460,310.46 | 313,460,310.46 |
| Fixed assets | 697,875,234.89 | 629,478,819.32 |
| Intangible assets | 93,882,706.39 | 66,748,282.54 |
| Held-for-trading financial assets | 15,086,008.74 | 15,086,008.74 |
| Notes receivable and accounts receivable | 598,705,624.03 | 598,705,624.03 |
| Other current assets | 8,843,992.98 | 8,843,992.98 |
| Construction in progress | 3,901,388.20 | 3,901,388.20 |
| Right-of-use assets | 3,372,205.60 | 3,372,205.60 |
| Long-term prepaid expense | 94,182,937.64 | 94,182,937.64 |
| Goodwill | 14,329,625.91 | |
| Deferred income tax assets | 16,179,649.08 | 16,179,649.08 |
| Other non-current assets | 21,659,286.52 | 21,659,286.52 |
| Total assets | 2,043,175,143.34 | 1,947,644,303.92 |
| Borrowings | 198,258,013.62 | 198,258,013.62 |
| Deferred income tax liabilities | 14,329,625.91 | |
| Notes payable and accounts payable | 1,015,328,033.63 | 1,015,328,033.63 |
| Employee benefits payable | 19,573,230.62 | 19,573,230.62 |
| Taxes payable | 9,284,798.88 | 9,284,798.88 |
| Current portion of non-current liabilities | 53,169,797.06 | 53,169,797.06 |
| Lease liabilities | 1,941,745.82 | 1,941,745.82 |
| Long-term payables | 22,247,027.59 | 22,247,027.59 |
| Provisions | 7,988,407.72 | 7,988,407.72 |
| Deferred income | 13,029,376.16 | 13,029,376.16 |
| Total liabilities | 1,355,150,057.01 | 1,340,820,431.10 |
| Net assets | 688,025,086.33 | 606,823,872.82 |
| Less: Non-controlling interests | 406,462,516.18 | 358,491,518.87 |
| Net assets acquired (note) | 281,562,570.15 | 248,332,353.95 |
The determination method of the fair value of identifiable assets and liabilities:
The Company adopts the asset-based method to determine the fair value of the assets and liabilities of Nanning Liaowang at the date ofpurchase. The valuation methods of major assets and their key assumptions are listed as follows:
The evaluation method of fixed assets is replacement cost method, and the fair value is determined by the current market price plusnecessary transportation and miscellaneous expenses, installation and commissioning expenses, capital cost and newness rate.The valuation method of intangible assets is market approach, and the fair value is mainly determined by the land price on the base dateof valuation.The valuation method of inventory is the market price method, and the fair value is determined according to the book value and productsales profit on the valuation base date.Other notes:
After purchasing about 40.92% of the original shareholder's equity in Nanning Liaowang, the Company increased its capital byRMB200,000,000.00 in cash, including an increase in paid-in capital of RMB7,635,930.00 and an increase in capital reserve-capitalpremium of RMB192,364,070.00; the fair value after capital increase is RMB888,025,086.33, and the Company holds 53.79% sharesin Nanning Liaowang, and the owner's equity attributable to the Company is RMB477,668,693.94.
(4) Gains or losses from Re-measurement of Equity Held before the Purchase Date at Fair ValueWhether there is a transaction that through multiple transaction step by step to realize business combination and gaining the controlduring the Reporting Period
□ Yes √ No
(5) Notes to Reasonable Consideration or Fair Value of Identifiable Assets and Liabilities of the Acquireethat Cannot Be Determined on the Acquisition Date or during the Period-end of the MergerNaught
(6) Other Notes
Naught
2. Business Combination under the Same Control
(1) Business Combination under the Same Control during the Reporting Period
Naught
(2) Combination Cost
Naught
(3) The Carrying Value of Assets and Liabilities of the Combined Party on the Combination DateNaught
3. Counter Purchase
Naught
4. Disposal of Subsidiary
Whether there is a single disposal of the investment to the subsidiary and lost control?
□ Yes √ No
Whether there are several disposals of the investment to the subsidiary and lost controls?
□ Yes √ No
5. Changes in Combination Scope for Other Reasons
Note to changes in combination scope for other reasons (such as newly establishment or liquidation of subsidiaries, etc.) and relevantinformation:
Hainan Technology was newly established in May of this period and has been included in the scope of consolidation since itsestablishment. New Light Source and Hunan Keda have completed industrial and commercial cancellation in September andNovember respectively, and will no longer be included in the scope of consolidation from the date of cancellation.
6. Other
Naught
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
| Name | Main operating place | Registration place | Nature of business | Holding percentage | Way of gaining | |
| Directly | Indirectly | |||||
| Foshan Lighting Lamps & Components Co., Ltd. | Foshan | Foshan | Production and sales | 100.00% | Newly established | |
| FSL Chanchang Optoelectronics Co., Ltd. | Foshan | Foshan | Production and sales | 100.00% | Newly established | |
| Foshan Taimei Times Lamps and Lanterns Co., Ltd. | Foshan | Foshan | Production and sales | 70.00% | Newly established | |
| Foshan Electrical & Lighting (Xinxiang) Co., Ltd. | Xinxiang | Xinxiang | Production and sales | 100.00% | Newly established | |
| Nanjing Fozhao Lighting Components Manufacturing Co., Ltd. | Nanjing | Nanjing | Production and sales | 100.00% | Acquired | |
| FSL Zhida Electric Technology Co., Ltd. | Foshan | Foshan | Production and sales | 51.00% | Newly established | |
| FSL LIGHTING GMBH | Germany | Germany | Production and sales | 100.00% | Newly established | |
| Foshan Haolaite Lighting Co., Ltd. | Foshan | Foshan | Production and sales | 51.00% | Newly established | |
| Foshan Kelian New Energy Technology Co., Ltd. | Foshan | Foshan | Property development | 100.00% | Acquired | |
| Fozhao (Hainan) Technology Co., | Haikou | Haikou | Production and sales | 100.00% | Newly established | |
| Ltd. | ||||||
| Nanning Liaowang Auto Lamp Co., Ltd. (note 2) | Nanning | Nanning | Manufacturing of vehicle lamps | 53.79% | Acquired | |
| Liuzhou Guige Lighting Technology Co., Ltd. | Liuzhou | Liuzhou | Manufacturing of vehicle lamps | 53.79% | Acquired | |
| Liuzhou Guige Foreshine Technology Co., Ltd. | Liuzhou | Liuzhou | Manufacturing of automotive electronic products | 53.79% | Acquired | |
| Chongqing Guinuo Lighting Technology Co., Ltd. | Chongqing | Chongqing | Manufacturing of vehicle lamps | 53.79% | Acquired | |
| Qingdao Guige Lighting Technology Co., Ltd. | Qingdao | Qingdao | Manufacturing of vehicle lamps | 53.79% | Acquired | |
| Indonesia Liaowang Auto Lamp Co., Ltd. | Indonesia | Indonesia | Manufacturing of vehicle lamps | 53.79% | Acquired |
Other notes:
Note: Liuzhou Guige Lighting, Liuzhou Guige Foreshine, Chongqing Guinuo, Qingdao Lighting and Indonesia Liaowang arewholly-owned subsidiaries (grandchildren) of Nanning Liaowang.
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
| Name | Shareholding proportion of non-controlling interests | The profit or loss attributable to the non-controlling interests | Declaring dividends distributed to non-controlling interests | Balance of non-controlling interests at the period-end |
| Foshan Taimei Times Lamps and Lanterns Co., Ltd. | 30.00% | 742,477.85 | 11,450,551.98 | |
| FSL Zhida Electric Technology Co., Ltd. | 49.00% | 2,513,547.88 | 24,626,765.88 | |
| Foshan Haolaite Lighting Co., Ltd. | 49.00% | 1,415,333.79 | 16,852,876.19 |
| Nanning Liaowang Auto Lamp Co., Ltd. | 46.21% | 12,562,779.38 | 422,919,171.77 |
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
| Name | Ending balance | Beginning balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liability | Total liabilities | |
| Foshan Taimei Times Lamps and Lanterns Co., Ltd. | 135,829,008.12 | 17,573,437.36 | 153,402,445.48 | 115,233,938.88 | 115,233,938.88 | 71,270,518.28 | 15,316,406.34 | 86,586,924.62 | 50,893,344.19 | 50,893,344.19 | ||
| FSL Zhida Electric Technology Co., Ltd. | 126,777,943.85 | 12,494,211.78 | 139,272,155.63 | 76,679,776.30 | 76,679,776.30 | 112,196,198.34 | 8,962,676.26 | 121,158,874.60 | 63,696,184.82 | 63,696,184.82 | ||
| Foshan Haolaite Lighting Co., Ltd. | 60,890,648.90 | 12,887,936.38 | 73,778,585.28 | 39,384,209.45 | 39,384,209.45 | 51,192,090.96 | 12,249,945.68 | 63,442,036.64 | 31,936,160.19 | 31,936,160.19 | ||
| Nanning Liaowang Auto Lamp Co., Ltd. | 1,346,863,737.14 | 817,363,839.98 | 2,164,227,577.12 | 1,305,420,077.19 | 23,058,696.78 | 1,328,478,773.97 | ||||||
| Total | 1,670,361,338.01 | 860,319,425.50 | 2,530,680,763.51 | 1,536,718,001.82 | 23,058,696.78 | 1,559,776,698.60 | 234,658,807.58 | 36,529,028.28 | 271,187,835.86 | 146,525,689.20 | 146,525,689.20 | |
Unit: RMB
| Name | Reporting Period | Same period of last year | ||||||
| Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | Operating revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| Foshan | 147,525,074. | 2,474,926.17 | 2,474,926.17 | 3,103,173.55 | 145,973,615. | 4,983,862.50 | 4,983,862.50 | -1,854,553.69 |
| Taimei Times Lamps and Lanterns Co., Ltd. | 10 | 97 | ||||||
| FSL Zhida Electric Technology Co., Ltd. | 164,800,910.54 | 5,129,689.55 | 5,129,689.55 | -10,852,478.65 | 123,690,820.25 | 8,881,031.22 | 8,881,031.22 | 2,202,238.82 |
| Foshan Haolaite Lighting Co., Ltd. | 81,332,587.18 | 2,888,499.38 | 2,888,499.38 | 1,704,983.53 | 30,156,976.58 | -1,209,123.55 | -1,209,123.55 | -5,636,610.73 |
| Nanning Liaowang Auto Lamp Co., Ltd. | 707,022,757.31 | 28,862,888.63 | 28,924,930.33 | 13,797,867.21 | ||||
| Total | 1,100,681,329.13 | 39,356,003.73 | 39,418,045.43 | 7,753,545.64 | 299,821,412.80 | 12,655,770.17 | 12,655,770.17 | -5,288,925.60 |
(4) Significant Restrictions on Using the Assets and Liquidating the Liabilities of the CompanyNaught
(5) Financial Support or Other Supports Provided to Structural Entities Incorporated into the Scope ofConsolidated Financial StatementsNaught
2. The Transaction of the Company with Its Owner’s Equity Share Changed but Still Controlling theSubsidiaryNaught
3. Equity in Joint Ventures or Associated Enterprises
(1) Significant Joint Ventures or Associated Enterprises
Naught
(2) Main Financial Information of Significant Joint Ventures
Naught
(3) Main Financial Information of Significant Associated Enterprises
Naught
(4) Summary Financial Information of Insignificant Joint Ventures or Associated Enterprises
Unit: RMB
| Ending balance/Reporting Period | Beginning balance/Same period of last year | |
| Joint ventures: | -- | -- |
| The total of following items according to the shareholding proportions | -- | -- |
| Associated enterprises: | -- | -- |
| Total carrying value of investment | 181,545,123.09 | 181,365,016.32 |
| The total of following items according to the shareholding proportions | -- | -- |
| --Net profit | 2,260,497.27 | 2,351,681.39 |
| --Total comprehensive income | 2,260,497.27 | 2,351,681.39 |
(5) Note to the Significant Restrictions on the Ability of Joint Ventures or Associated Enterprises toTransfer Funds to the CompanyNaught
(6) The Excess Loss of Joint Ventures or Associated Enterprises
Naught
(7) The Unrecognized Commitment Related to Investment to Joint Ventures
Naught
(8) Contingent Liabilities Related to Investment to Joint Ventures or Associated EnterprisesNaught
4. Significant Common Operation
Naught
5. Equity in the Structured Entity Excluded in the Scope of Consolidated Financial StatementsNaught
6. Other
Naught
X. The Risk Related to Financial Instruments
The financial instruments of the Company included: equity investment, notes receivable, accounts receivable,accounts payable, etc. The details of each financial instrument see relevant items of Note V.The main risks of the Company due to financial instruments were credit risk, liquidity risk and market risk. Theoperating management of the Company was responsible for the risk management target and the recognition of thepolicies.(I) Credit riskCredit risk was one party of the contract failed to fulfill the obligations and causes loss of financial assets of theother party. The credit risk the Company faced was selling on credit which leads to customer credit risk.The Company will evaluate credit risk of new customer, and set credit limit, once the balance of accountreceivable over credit limit, require the customer to pay or producing and delivering goods shall be approved bythe management of the Company.The Company through monthly aging analysis of account receivable and monitoring the collection situation of thecustomer ensured the overall credit risk of the Company was in control scope. Once appear abnormal situation,the Company should conduct necessary measures to requesting the payment timely.(II) Liquidity RiskLiquidity risk is referred to their risk of incurring capital shortage when performing settlement obligation in theway of cash payment or other financial assets. The policies of the Company are to ensure that there was sufficientcash to pay the due liabilities. The liquidity risk is centralized controlled by the Financial Department of theCompany. The financial department through supervising the balance of the cash and securities can be convert tocash at any time and the rolling prediction of cash flow in future 12 months to ensure the Company have sufficientcash to pay the liabilities under the case of all reasonable prediction, Each financial liability of the Company wasestimated due within 1 year.(III) Market riskMarket risk was referred to risk of the fair value or future cash flow of financial instrument changed due to thechange of market price, including: exchange rate risk, interest rate risk and other price risk.
1. Exchange rate risk
Exchange rate risk refers to the risk of loss due to exchange rate changes. The Company's exposure to foreignexchange risk is mainly related to the US dollar and the euro. As of 31 December 2021, the Company's assets andliabilities were in RMB, except for the balances of usd, euro, Hong Kong dollar and rupiah as set out in this NoteVII-82, Foreign Currency Monetary Items. Foreign exchange risk arising from the assets and liabilities of suchforeign currency balances may have a certain impact on the Company's operating results.The Company madeefforts to avoid exchange rate risk through forward exchange settlement, improving operation management andpromoting the international competitiveness of the Company, etc.
2. Interest rate risk
Interest rate risk is refers to fluctuation risk of the fair value or future cash flow of financial instrument change due
to the change of market interest rates. The interest rate risk faced by the Company mainly comes from bankborrowings. By establishing a good bank-enterprise relationship, the Company reasonably designed the credit line,credit variety and credit period, ensured sufficient credit line of banks, and met various short-term financing needsof the Company with preferential loan interest rates. As of 31 December 2021, the Company's fixed interest rateloan balance was RMB226,614,000.00, accounting for 100% of the total loan balance, and the risks in this partwere controllable.
3. Other price risk
NaughtXI. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
| Item | Ending fair value | |||
| Fair value measurement items at level 1 | Fair value measurement items at level 2 | Fair value measurement items at level 3 | Total | |
| I. Consistent fair value measurement | -- | -- | -- | -- |
| (I) Held-for-trading financial assets | 5,825,678.18 | 322,422,447.43 | 328,248,125.61 | |
| 1. Financial assets at fair value through profit or loss | 5,825,678.18 | 322,422,447.43 | 328,248,125.61 | |
| (III) Other equity instrument investment | 1,474,360,785.15 | 500,000.00 | 1,474,860,785.15 | |
| II. Inconsistent fair value measurement | -- | -- | -- | -- |
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
In line with the market price of shares on the balance sheet date and forward foreign exchange option rate.
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters forConsistent and Inconsistent Fair Value Measurement Items at Level 2Items measured at fair value level 2 are bank's wealth management products, which are measured at thecontractual expected yield rate as a reasonable estimate of the fair value.
4. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters forConsistent and Inconsistent Fair Value Measurement Items at Level 3
(1) Because the business environment, operation conditions and financial conditions of the invested company,China Guangfa Bank has not changed significantly, the Company takes investment costs as the reasonableestimation of fair value to measure.
(2) Because the business environment, operation conditions and financial conditions of the invested company,Shenzhen Zhonghao (Group) Co., Ltd. were deteriorated, the Company takes zero element as the reasonableestimation of fair value to measure.
5. Sensitiveness Analysis on Unobservable Parameters and Adjustment Information between Beginning andEnding Carrying Value of Consistent Fair Value Measurement Items at Level 3Naught
6. Explain the Reason for Conversion and the Governing Policy when the Conversion Happens ifConversion Happens among Consistent Fair Value Measurement Items at Different LevelsNaught
7. Changes in the Valuation Technique in the Current Period and the Reason for Such ChangesNaught
8. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
Financial assets and liabilities not measured at fair value include: monetary assets, accounts receivable andaccounts payable, etc. There is small difference between the carrying value of above financial assets and liabilitiesand fair value.
9. Other
NaughtXII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
1. The parent company of the Company
| Name | Registration place | Nature of business | Registered capital | Proportion of share held by the Company as the parent against the Company (%) | Proportion of voting rights owned by the Company as the parent against the Company (%) |
| Hongkong Wah Shing Holding Company Limited | Hong Kong | Investment | HKD110,000 | 13.47% | 13.47% |
| Guangdong Electronics Information Industry Group Ltd. | Guangzhou | Production and sales | RMB462 million | 8.77% | 8.77% |
| Guangdong Rising Holdings Group Co., Ltd. | Guangzhou | Investment | 100亿元 | 5.94% | 5.94% |
| Rising Investment Development Limited | Hong Kong | Investment | RMB200 million and HKD1 million | 1.82% | 1.82% |
| Total | 30.00% | 30.00% |
Notes: Information on parent company of the CompanyHongkong Wah Shing Holding Company Limited (hereinafter referred to as "Hongkong Wah Shing"), the largest shareholder of theCompany, is a wholly-owned subsidiary of Guangdong Electronics Information Industry Group Ltd. (hereinafter referred to as"Electronics Group"), and Electronics Group, Shenzhen Rising Investment Development Co., Ltd. (hereinafter referred to as"Shenzhen Rising"), Guangdong Rising Holdings Group Co., Ltd. (renamed Guangdong Rising Capital Investment Co., Ltd. on 13December 2021, hereinafter referred to as “Rising Capital”) and Rising Investment Development Limited (hereinafter referred to as“Rising Investment”) are wholly-owned subsidiaries of Guangdong Rising Holdings Group Co., Ltd. (hereinafter referred to as“Rising Holdings Group”). According to the relevant provisions of the Company Law and the Measures for the AdministrativeMeasures on Acquisition of Listed Companies, Electronics Group, Shenzhen Rising, Rising Capital and Rising Investment areconcerted actors, and Rising Holdings Group becomes the actual controller of the Company. On 15 December 2021, Shenzhen Risingand Rising Capital transferred all their shares of the Company to Rising Holdings Group. After the transfer, Rising Holdings Group,Electronics Group and Rising Investment acted in concert with each other. As of 31 December 2021, the above-mentioned personsacting in concert held a total of 419,803,826.00 A and B shares of the Company, accounting for 30.00% of the total share capital ofthe Company.
2. Subsidiaries of the Company
Refer to Note IX Equity in Other Entities-1. Equity in Subsidiaries for details.
3. Information on the Joint Ventures and Associated Enterprises of the CompanyRefer to Note IX Equity in Other Entities-3. Equity in Joint Ventures or Associated Enterprises for details of significant joint venturesor associated enterprises of the Company.
4. Information on Other Related Parties
| Name | Relationship with the Company |
| PROSPERITY LAMPS & COMPONENTS LTD | Shareholder owning over 5% shares |
| Foshan NationStar Optoelectronics Co. Ltd. | Under same actual controller |
| Guangdong Fenghua Advanced Technology Holding Co., Ltd. | Under same actual controller |
| Guangdong Rising Lighting Technology Co., Ltd. | Under same actual controller |
| Guangdong Vollsun Data Solid-state Storage Co., Ltd | Under same actual controller |
| Guangdong Rising Finance Limited | Under same actual controller |
| MTM Semiconductor Equipment Co., Ltd. | Under same actual controller |
| Guangdong Electronic Technology Research Institute | Under same actual controller |
| Guangzhou Diansheng Property Management Co., Ltd. | Under same actual controller |
| Shaoguan Green Resource Recycling Development Co., Ltd. | Under same actual controller |
| Zhuhai Doumen District Yongxingsheng Environmental Industrial Wastes Recycling Comprehensive Treatment Co., Ltd. | Under same actual controller |
| Jiangmen Dongjiang Environmental Protection Technology Co., Ltd. | Under same actual controller |
| Foshan Fulong Environmental Protection Technology Co., Ltd. | Under same actual controller |
| Guangdong New Electronic Information Ltd. | Under same actual controller |
| Guangdong Huajian Enterprise Group Co. Ltd. | Under same actual controller |
| Guangdong Zhongnan Construction Co., Ltd. | Under same actual controller |
| Guangzhou Huajian Engineering Construction Co., Ltd. | Under same actual controller |
| Guangdong Yixin Changcheng Construction Group | Under same actual controller |
| Guangdong Zhongjin Lingnan Equipment Technology Co., Ltd. | Under same actual controller |
| Shenzhen Zhongjin Lingnan Nonfemet Company Limited | Under same actual controller |
| Guangdong Guangsheng Communications Technology Co., Ltd. | Under same actual controller |
| Guangdong Rising Capital Investment Co., Ltd. | Under same actual controller |
| Guangdong Electronics Information Industry Group Ltd. | Under same actual controller |
| Guangdong Heshun Property Management Co., Ltd. | Under same actual controller |
| Rising International Building Branch of Guangdong Heshun Property Management Co., Ltd. | Under same actual controller |
| Guangdong Zhongjin Lingnan Engineering Technology Co., Ltd. | Under same actual controller |
| Guangdong Rising Rare Metals Photoelectric Materials Ltd. | Under same actual controller |
| Shenzhen Yuepeng Construction Co., Ltd. | Under same actual controller |
| NationStar Optoelectronics (Germany) Co., Ltd. | Under same actual controller |
| Guangdong Zhongjin Lingnan Junpeng Intelligent Equipment Co., Ltd. | Under same actual controller |
| Guangdong Rising South Construction Co., Ltd. | Under same actual controller |
| Primatronix Nanho Technology Ltd. | Under same actual controller |
| Hangzhou Times Lighting and Electrical Co., Ltd. | Enterprise controlled by related natural person |
| Prosperity (Hangzhou) Lighting and Electrical Co., Ltd. | Enterprise controlled by related natural person |
| Prosperity Electrical (China) Co., Ltd. | Enterprise controlled by related natural person |
| Siteco Prosperity Lighting (Langfang) Co., Ltd. | Enterprise controlled by related natural person |
| OSRAM (China) Lighting Co., Ltd. | Enterprise significantly affected by related natural person |
| Shanglin ChenWang Ecological Agriculture Professional Cooperative | Enterprise significantly affected by related natural person |
| Nanning Qiuyuan Jingwang Industrial Investment Co., Ltd. | Enterprise significantly affected by related natural person |
| Nanning Ruixiang Industrial Investment Co., Ltd. | Enterprise significantly affected by related natural person |
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
Information on acquisition of goods and reception of labor service
Unit: RMB
| Related party | Content | Reporting Period | The approval trade credit | Whether exceed trade credit or not | Same period of last year |
| Foshan NationStar Optoelectronics Co., Ltd. | Purchase of materials | 42,644,701.72 | 120,000,000.00 | 否 | 54,268,443.27 |
| Guangdong Fenghua Advanced Technology Holding Co., Ltd. | Purchase of materials | 7,858,610.67 | 15,000,000.00 | 否 | 8,810,002.31 |
| PROSPERITY LAMPS & COMPONENTS LTD | Purchase of materials | 2,654,442.36 | 13,000,000.00 | 否 | 3,128,174.91 |
| Prosperity Electrical (China) Co., Ltd. | Purchase of materials | 1,394,588.50 | 118,407.08 | ||
| Hangzhou Times Lighting and Electrical Co., Ltd. | Purchase of materials | 646,501.00 | 448,824.06 | ||
| Guangdong Electronic Technology Research Institute | Purchase of equipment | 1,151,902.67 | 3,000,000.00 | 否 | 724,424.77 |
| Guangdong Zhongnan Construction Co., | Receiving labor service | 60,430,362.16 | 139,734,113.59 |
| Ltd. | |||||
| Guangdong Yixin Changcheng Construction Group | Receiving labor service | 16,489,569.63 | |||
| Jiangmen Dongjiang Environmental Protection Technology Co., Ltd. | Receiving labor service | 269,383.02 | 326,229.47 | ||
| Guangdong Electronic Technology Research Institute | Receiving labor service | 2,734.91 | 16,851.55 | ||
| Foshan Fulong Environmental Protection Technology Co., Ltd. | Receiving labor service | 25,471.70 | 42,477.88 | ||
| Zhuhai Doumen District Yongxingsheng Environmental Industrial Wastes Recycling Comprehensive Treatment Co., Ltd. | Receiving labor service | 5,660.38 | 13,274.34 | ||
| Shenzhen Yuepeng Construction Co., Ltd. | Receipt of labor services | 234,245.88 | |||
| Shaoguan Green Resource Recycling Development Co., Ltd. | Receiving labor service | 35,150.44 | |||
| Total | 133,808,174.60 | 151,000,000.00 | 207,666,373.67 |
Information of sales of goods and provision of labor service
Unit: RMB
| Related party | Content | Reporting Period | Same period of last year |
| Guangdong New Electronic Information Ltd. | Sale of products | 37,516,153.50 | 13,257,739.83 |
| PROSPERITY LAMPS & | Sale of products | 25,442,505.36 | 23,581,892.27 |
| COMPONENTS LTD | |||
| Guangdong Rising Rare Metals Photoelectric Materials Ltd. | Sale of products | 8,100,954.40 | |
| Shenzhen Zhongjin Lingnan Nonfemet Company Limited | Sale of products | 3,104,398.07 | 508,074.33 |
| Guangdong Yixin Changcheng Construction Group | Sale of products | 3,089,642.46 | 2,001,082.10 |
| NationStar Optoelectronics (Germany) Co., Ltd. | Sale of products | 1,642,983.52 | |
| Guangdong Zhongnan Construction Co., Ltd. | Sale of products | 1,863,057.74 | 2,478,832.12 |
| Rising International Building Branch of Guangdong Heshun Property Management Co., Ltd. | Sale of products | 619,220.36 | |
| Guangdong Zhongjin Lingnan Equipment Technology Co., Ltd. | Sale of products | 225,710.62 | 367,903.54 |
| Guangdong Zhongjin Lingnan Engineering Technology Co., Ltd. | Sale of products | 108,592.02 | |
| Guangdong Heshun Property Management Co., Ltd. | Sale of products | 73,458.68 | |
| Guangdong Zhongjin Lingnan Junpeng Intelligent Equipment Co., Ltd. | Sale of products | 49,674.33 | |
| Guangdong Rising Holdings Group Co., Ltd. | Sale of products | 30,226.55 | 57,417.70 |
| Prosperity Electrical (China) Co., Ltd. | Sale of products | 26,984.56 | 44,923.04 |
| Guangdong Rising South Construction Co., Ltd. | Sale of products | 14,356.46 | |
| Guangdong Electronics Information Industry Group Ltd. | Sale of products | 8,013.27 | 8,004.42 |
| Guangzhou Huajian Engineering Construction Co., Ltd. | Sale of products | 6,145.47 | 678,572.88 |
| Primatronix Nanho Technology Co., Ltd. | Sale of products | 857.79 |
| Guangdong Electronic Technology Research Institute | Sale of products | 856,798.23 | |
| Guangdong Rising Communications Technology Co., Ltd. | Sale of products | 23,628.32 | |
| Total | 81,922,935.16 | 43,864,868.78 |
Information of sales/purchase of goods and provision/reception of labor service
1. The pricing policy for related-party transactions is as follows:
The pricing for related-party transactions observes the principle of market subject to the market price when the transaction happensand relevant accounts shall be paid on time based on actual transaction.
2. Related-party transactions between the Company and its subsidiaries, as well as those between the subsidiaries were offset whenpreparing the consolidated financial statements.
(2) Information on Related-party Trusteeship/Contract
Naught
(3) Information on Related-party Lease
Naught
(4) Information on Related-party Guarantee
Other notesSee Note XIV-(III) Others.
(5) Information on Inter-bank Lending of Capital of Related Parties
Naught
(6) Information on Assets Transfer and Debt Restructuring by Related Party
Naught
(7) Information on Remuneration for Key Management Personnel
Unit: RMB
| Item | Reporting period | Same period of last year |
| Chairman of the Board | 1,503,487.93 | 553,233.53 |
| General Manager | 1,425,147.02 | 2,246,860.84 |
| Chairman of the Supervisory Committee | 1,328,797.52 | 1,011,360.58 |
| Secretary of the Board | 306,708.16 |
| Chief Financial Officer | 1,302,654.16 | 992,873.82 |
| Other | 10,793,083.07 | 7,286,668.80 |
| Total | 16,659,877.86 | 12,090,997.57 |
(8) Other Related-party Transactions
(8.1) Acquisition of equity from related partiesIn October 2021, Electronics Group signed the Equity Transfer Agreement with the Company on Foshan Sigma Venture Capital Co.,Ltd., and transferred its 100% equity of Sigma (Sigma holds 79,753,050 shares of NationStar Optoelectronics) to the Company at aconsideration of RMB917,980,229.67. In the same month, Rising Holdings Group and Rising Capital respectively signed the ShareTransfer Agreement on Foshan NationStar Optoelectronics Co., Ltd. with the Company, and transferred their total 52,051,945 tradableshares of NationStar Optoelectronics with unlimited selling conditions to the Company at a consideration of RMB599,117,886.95(RMB11.51/share). As of 31 December 2021, the Company has paid 30% of the equity acquisition amount, that is,RMB455,129,434.98, as the security deposit for this trading. For details of the equity acquisition progress, please refer to Note XVEvents after the Balance Sheet Date.
(8.2) Funds Interests of Related Parties
| Related party | Content | Reporting Period | Same period of last year |
| Guangdong Huajian Enterprise Group Co., Ltd. (Note) | Borrowing interest expense | 11,857,755.40 |
Total
| Total | 11,857,755.40 |
Note: It is the loan interest expense of Foshan Kelian, a subsidiary, from Guangdong Huajian Enterprise Group Co., Ltd.(hereinafter referred to as "Huajian Enterprise Group"). The relevant loan principal and interest have been settled, and there isno new loan interest in this period.(8.3) Collect liquidated damages from related partiesIn December 2020, the Company signed the Equity Transfer Agreement and Supplementary Agreement with HuajianEnterprise Group, and the Company acquired 100% equity of Hunan Keda, thus holding Kelian Building. In this period, dueto the dispute between the two parties over the completion acceptance date agreed in the Equity Transfer Agreement, theCompany required Huajian Enterprise Group to bear the liquidated damages for delayed delivery of the building according tothe Agreement. After negotiation, Huajian Enterprise Group will pay liquidated damages of RMB7,060,000.00 to theCompany.(8.4) Deposits and Loans of Related Parties
| Related party | Deposit nature | Deposit term | Ending balance |
| Guangdong Rising Finance Co., Ltd. (note) | Current, agreed | can be withdrawn at any time | 294,777,469.27 |
Note: According to the Financial Services Agreement signed by both parties in 2020 and 2021, the maximum daily deposit balance ofthe company in Guangdong Rising Finance Co., Ltd. does not exceed RMB300,000,000.00, of which the annualized interest rate oftime deposit is 3.3%, the annualized interest rate of seven-day notice deposit is 2.45%, and the annualized interest rate of agreementdeposit is 1.75%; the interest income incurred and recognized in the current period is RMB6,873,960.08.
6. Accounts Receivable and Payable of Related Party
(1) Accounts Receivable
Unit: RMB
| Item | Related party | Ending balance | Beginning balance | ||
| Carrying amount | Bad debt provision | Carrying amount | Bad debt provision | ||
| Monetary capital-Interest receivable | Guangdong Rising Finance Co., Ltd. | 1,581,250.00 | |||
| Accounts receivable | PROSPERITY LAMPS & COMPONENTS LTD | 7,536,111.98 | 226,083.36 | 3,953,777.97 | 118,613.34 |
| Accounts receivable | OSRAM (China) Lighting Co., Ltd. | 117,554.16 | 94,043.33 | ||
| Accounts receivable | Prosperity (Hangzhou) Lighting and Electrical Co., Ltd. | 86,000.00 | 86,000.00 | ||
| Accounts receivable | Guangdong Vollsun Data Solid-state Storage Co., Ltd. | 2,553,280.00 | 765,984.00 | ||
| Accounts receivable | Guangdong Zhongnan Construction Co., Ltd. | 1,095,727.04 | 32,871.81 | 2,642,688.00 | 79,280.64 |
| Accounts receivable | Guangdong Yixin Changcheng Construction Group | 5,752,518.74 | 172,575.56 | 2,261,222.79 | 67,836.68 |
| Accounts receivable | Shenzhen Zhongjin Lingnan Nonfemet Company Limited | 2,621,178.80 | 78,635.36 | 574,124.00 | 17,223.72 |
| Accounts receivable | Guangdong Zhongjin Lingnan Equipment Technology Co., Ltd. | 670,784.00 | 46,301.49 | 415,731.00 | 12,471.93 |
| Accounts receivable | Guangzhou Huajian Engineering Construction Co., Ltd. | 44,823.00 | 4,445.48 | 289,857.54 | 8,695.73 |
| Accounts receivable | Guangdong New Electronic Information Ltd. | 10,627,013.80 | 318,810.41 | 14,131,264.06 | 423,937.92 |
| Accounts receivable | Guangdong Zhongjin Lingnan Engineering Technology Co., Ltd. | 10,118.00 | 303.54 | ||
| Accounts receivable | Guangdong Rising Rare Metals Photoelectric Materials Ltd. | 6,455,385.93 | 193,661.58 | ||
| Accounts receivable | Guangdong Heshun Property Management Co., Ltd. | 2,303.60 | 69.11 | ||
| Accounts receivable | Rising International Building Branch of Guangdong Heshun Property Management Co., Ltd. | 669,790.40 | 20,093.71 | ||
| Other receivables | Guangdong Huajian Enterprise Group Co. Ltd. | 7,060,000.00 | 211,800.00 | ||
| Other receivables | Guangdong New Electronic Information Ltd. | 8,865.50 | 265.97 | ||
| Prepayments | Prosperity Electrical (China) Co., Ltd. | 39,428.00 | |||
| Prepayments | Foshan NationStar Optoelectronics Co. Ltd. | 31,266.86 | |||
| Other non-current assets | Guangdong Rising Capital Investment Co., Ltd. | 19,999,513.57 | |||
| Other non-current assets | Guangdong Electronics Information Industry Group Ltd. | 275,394,068.90 | |||
| Other non-current assets | Guangdong Rising Holdings Group Co., | 159,735,852.51 |
| Ltd. | |||||
| Total | 497,684,055.77 | 1,305,917.38 | 28,677,444.38 | 1,674,087.29 |
(2) Accounts Payable
Unit: RMB
| Item | Related party | Ending carrying amount | Beginning carrying amount |
| Notes payable | Foshan NationStar Optoelectronics Co., Ltd. | 5,816,952.78 | |
| Notes payable | Guangdong Fenghua Advanced Technology Holding Co., Ltd. | 798,496.60 | |
| Accounts payable | Foshan NationStar Optoelectronics Co., Ltd. | 13,989,061.63 | 32,866,944.98 |
| Accounts payable | Guangdong Fenghua Advanced Technology Holding Co., Ltd. | 794,923.94 | 5,258,863.67 |
| Accounts payable | Prosperity Electrical (China) Co., Ltd. | 567,218.00 | |
| Accounts payable | PROSPERITY LAMPS & COMPONENTS LTD | 1,350,955.58 | |
| Accounts payable | Hangzhou Times Lighting and Electrical Co., Ltd. | 178,185.14 | 289,282.42 |
| Accounts payable | HONG KONG PROSPERITY LAMPS & COMPONENTS LTD | 1,337,304.32 | |
| Accounts payable | Guangdong Zhongnan Construction Co., Ltd. | 12,370,475.74 | |
| Accounts payable | Guangdong Yixin Changcheng Construction Group | 3,825,018.07 | |
| Other payables | Nanning Ruixiang Industrial Investment Co., Ltd. | 120,352,181.20 | |
| Other payables | Guangdong Huajian Enterprise Group Co., Ltd. | 1,726,264.40 | 9,358,999.63 |
| Other payables | Guangdong Electronic Technology Research Institute | 391,025.00 | 260,860.00 |
| Other payables | Guangdong Fenghua Advanced Technology Holding Co., Ltd. | 30,000.00 | 30,000.00 |
| Other payables | Shenzhen Yuepeng Construction Co., Ltd. | 298,300.64 | |
| Other payables | Foshan NationStar | 240,354.07 | 279,800.91 |
| Optoelectronics Co., Ltd. | |||
| Contract liabilities, other current liabilities | Prosperity Electrical (China) Co., Ltd. | 59,428.00 | 39,764.94 |
| Contract liabilities, other current liabilities | Guangdong Heshun Property Management Co., Ltd. | 2,303.60 | |
| Contract liabilities, other current liabilities | Guangdong Rising South Construction Co., Ltd. | 3,233.00 | |
| Contract liabilities, other current liabilities | NationStar Optoelectronics (Germany) Co., Ltd. | 7,219.71 | |
| Total | 162,787,945.84 | 49,735,472.13 |
7. Commitments of Related Party
1. Commitment on Avoidance of Horizontal Competition
(1) Commitment maker: Electronics Group and Hong Kong Rising Investment
Contents of Commitment: Electronics Group and its acting-in-concert parties Hong Kong Rising Investment havemade more commitments as follows to avoid horizontal competition with the Company: 1. They shall conductsupervision and restraint on the production and operation activities of themselves and their relevant enterprises sothat besides the enterprise above that is in horizontal competition with the Company for now, if the products orbusiness of them or their relevant enterprises become the same with or similar to those of the Company or itssubsidiaries in the future, they shall take the following measures: (1) If the Company thinks necessary, they andtheir relevant enterprises shall reduce and wholly transfer their relevant assets and business; and (2) If theCompany thinks necessary, it is given the priority to acquire first, by proper means, the relevant assets andbusiness of them and their relevant enterprises. 2. All the commitments made by them to eliminate or avoidhorizontal 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 documentand faithfully honor all the relevant commitments. 3. If they or their directly or indirectly controlled subsidiariesbreak the aforesaid commitments and thus cause a loss for the Company, they shall compensate the Company on arational basis.Date of commitment making: 4 December 2015Term of commitment: Long-standingFulfillment: In execution
(2) Commitment maker: Rising Group
Contents of Commitment: 1. The Promisor will take active measures to avoid any business or activity thatcompetes or may compete with the principal business of the Company and its auxiliary enterprises, and urge thePromisor to control enterprises to avoid any business or activity that competes or may compete with the principalbusiness of the Company and its auxiliary enterprises. 2. If the Promisor and its controlled enterprises are giventhe opportunity to engage in new business that constitutes or may constitute horizontal competition with theprincipal businesses of the Company and its auxiliary enterprises, the Promisor will make every effort to make thebusiness opportunity first available to the Company or its auxiliary enterprises on reasonable and fair terms andconditions on the premise that conditions permit and in the interest of the listed company.Date of commitment making: 4 November 2021Term of commitment: Long-standing
Fulfillment: In execution
（3）Commitment maker: Rising Group, Rising Capital, and Hongkong Wah Shing
Contents of Commitment: 1. They shall conduct supervision and restraint on the production and operationactivities of themselves and their relevant enterprises so that besides the enterprise above that is in horizontalcompetition with FSL for now, if the products or business of them or their relevant enterprises become the samewith or similar to those of FSL or its subsidiaries in the future, they shall take the following measures: (1) If FSLthinks necessary, they and their relevant enterprises shall reduce and wholly transfer their relevant assets andbusiness; and (2) If FSL thinks necessary, it is given the priority to acquire first, by proper means, the relevantassets and business of them and their relevant enterprises. 2. All the commitments made by them to eliminate oravoid horizontal competition with FSL 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 documentand faithfully honor all the relevant commitments. 3. If they or their directly or indirectly controlled subsidiariesbreak the aforesaid commitments and thus cause a loss for FSL, they shall compensate FSL on a rational basis.Date of commitment making: 27 October 2021.Term of commitment: Long-standing.Fulfillment: In execution.
2. Commitment on Reduction and Regulation of Related-party Transactions
(1) Commitment maker: Electronics Group and Hong Kong Rising Investment
Contents of Commitment: Electronics Group and its acting-in-concert parties Hongkong Wah Shing and HongKong Rising Investment have made a commitment that during their direct or indirect holding of the Company’sshares, they shall 1. Strictly abide by the regulatory documents of the CSRC and the SZSE, the Company’sArticles of Association, etc. and not harm the interests of the Company or other shareholders of the Company intheir production and operation activities by taking advantage of their position as the controlling shareholder andactual controller; 2. make sure that they or their other controlled subsidiaries, branch offices, jointly-run orassociated companies (the “Relevant Enterprises” for short) will try their best to avoid or reduce related-partytransactions 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 andtheir Relevant Enterprises and the Company, and withdraw from voting when a related-party transaction withthem or their Relevant Enterprises is being voted on at a general meeting or a board meeting, and execute therelevant approval procedure and information disclosure duties pursuant to the applicable laws, regulations andregulatory 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.Date of commitment making: 4 December 2015Term of commitment: Long-standingFulfillment: In execution
(2) Commitment maker: Rising Group
Contents of Commitment: 1. Strictly abide by the regulatory documents of the CSRC and the SZSE, the Company’sArticles of Association, etc; and not harm the interests of the Company or other shareholders of the Company intheir production and operation activities by taking advantage of their position as the controlling shareholder andactual controller; 2. make sure that they or their other controlled subsidiaries, branch offices, jointly-run orassociated companies (the "Relevant Enterprises" for short) will try their best to avoid or reduce related-partytransactions 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 theirRelevant Enterprises and the Company, and withdraw from voting when a related-party transaction with them or
their Relevant Enterprises is being voted on at a general meeting or a board meeting, and execute the relevantapproval procedure and information disclosure duties pursuant to the applicable laws, regulations and regulatorydocuments.Date of commitment making: 4 November 2021Term of commitment: Long-standingFulfillment: In execution
（3）Commitment maker: Rising Group, Rising Capital, and Hongkong Wah Shing
Contents of Commitment: They have made a commitment that during their direct or indirect holding of FSLactivities of themselvesstrictly abide by the regulatory documents of the CSRC and the SZSE,FSL’s Articles ofAssociation, etc. and not harm the interests of the Company or other shareholders of FSL in their production andoperation activities by taking advantage of their position as the controlling shareholder and actual controller; 2.make sure that 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 FSL or FSL’ssubsidiaries; 3. strictly follow the market principle of justness, fairness and equal value exchange for necessary andunavoidable related-party transactions between them and their Relevant Enterprises and FSL, and withdraw fromvoting when a related-party transaction with them or their Relevant Enterprises is being voted on at a generalmeeting or a board meeting, and execute the relevant approval procedure and information disclosure duties pursuantto the applicable laws, regulations and regulatory documents. Where the aforesaid commitments are broken and aloss is thus caused for FSL, its subsidiaries or FSL’s other shareholders, they shall be obliged to compensate.Date of commitment making: 27 October 2021.Term of commitment: Long-standing.Fulfillment: In execution.
3. Commitment on Independence
(1) Commitment maker: Electronics Group and Hong Kong Rising Investment
Contents of Commitment: In order to ensure the independence of FSL in business, personnel, asset, organizationand finance, Electronics Group and Hong Kong Rising Investment have made the following commitments: 1. Theywill ensure the independence of FSL in business: (1) They promise that FSL will have the assets, personnel,qualifications and capabilities for it to operate independently as well as the ability of independent, sustainableoperation in the market. (2) They promise not to intervene in FSL’s business activities other than the execution oftheir rights as FSL’s shareholders. (3) They promise that they and their related parties will not be engaged inbusiness that is substantially in competition with FSL’s business. And (4) They promise that they and their relatedparties will try their best to reduce related-party transactions between them and FSL; for necessary and unavoidablerelated-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 FSL in personnel: (1) They promisethat FSL’s GM, deputy GMs, CFO, Company Secretary and other senior management personnel will work only forand receive remuneration from FSL, not holding any positions in them or their other controlled subsidiaries otherthan director and supervisor. (2) They promise FSL’s absolute independence from their related parties in labor,human resource and salary management. And (3) They promise to follow the legal procedure in theirrecommendation of directors, supervisors and senior management personnel to FSL and not to hire or dismissemployees beyond FSL’s Board of Directors and General Meeting. 3. They will ensure the independence andcompleteness of FSL in asset: (1) They promise that FSL will have a production system, an auxiliary productionsystem 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 FSLwill have independent and complete assets all under FSL’s control and independently owned and operated by FSL.And (3) They promise that they and their other controlled subsidiaries will not illegally occupy FSL’s funds andassets in any way, or use FSL’s assets to provide guarantees for the debts of themselves or their other controlledsubsidiaries with. 4. They will ensure the independence of FSL in organization: (1) They promise that FSL has asound corporate governance structure as a joint-stock company with an independent and complete organizationstructure. (2) They promise that the operational and management organs within FSL will independently executetheir functions according to laws, regulations and FSL’s Articles of Association. 5. They will ensure theindependence of FSL in finance: (1) They promise that FSL will have an independent financial department andfinancial accounting system with normative, independent financial accounting rules. (2) They promise that FSL willhave independent bank accounts and not share bank accounts with its related parties. (3) They promise that FSL’sfinancial personnel do not hold concurrent positions in its related parties. (4) They promise that FSL willindependently pay its tax according to law. And (5) They promise that FSL can make financial decisionsindependently and that they will not illegally intervene in FSL’s use of its funds.Date of commitment making: 4 December 2015Term of commitment: Long-standingFulfillment: In execution
(2) Commitment maker: Rising Group
Contents of Commitment: To maintain the independence of the Company, the Promisor has made the followingcommitments: 1. It will ensure the personnel independence of the Company. It promises to ensure personnelindependence with the Company, and GM, deputy GMs, CFO, Secretary of the Board of Directors and other seniormanagement personnel of the Company will not hold positions other than directors and supervisors in theenterprises wholly owned, controlled or actually controlled by it and its subsidiaries (hereinafter referred to as"subsidiaries"), and will not receive salaries from it or its subsidiaries. the Company: To maintain the independenceof the Company, the Promisor has made the following commitments: 1. It will ensure the personnel independence ofthe Company. It promises to ensure personnel independence with the Company, and GM, depnd (2) It promises thatit and its subsidiaries will not illegally occupy the Company’s funds and assets in any way. 3. It will ensure thefinancial independence of the Company: (1) It promises that the Company will have an independent financialdepartment and financial accounting system. (2) It promises that the Company will have a standardized andindependent financial accounting system. (3) It promises that the Company will have independent bank accountsand not share bank accounts with it. (4) It promises that the Company’s financial personnel do not hold concurrentpositions in it or its subsidiaries. And (5) It promises that the Company can make financial decisions independentlyand that they will not illegally intervene in the Company’s use of its funds. 4. It will ensure the independence of theCompany in organization: (1) It promises that the Company can operate independently with an independent andcomplete organization structure. (2) It promises that the office and production and business premises of theCompany are separated from those of Rising Holdings Group. And (3) It promises that the Board of Directors, theSupervisory Committee and various functional departments of the Company operate independently, and there is nosubordinate relationship with the functional departments of Rising Holdings Group. And 5, It will ensure theindependence of the Company in business: (1) It promises that the Company will have independence in business.And (2) It promises that the Company will have the assets, personnel, qualifications and capabilities for it to operateindependently as well as the ability of independent, sustainable operation in the market.Date of commitment making: 4 November 2021Term of commitment: Long-standingFulfillment: In execution
4. Commitment on effective performance of measures to fill up returns
Commitment maker: Rising Group, Rising Capital, Electronics Group, Hongkong Wah Shing, Hong Kong RisingInvestment and Shenzhen Rising InvestmentContents of Commitment: 1. They promise not to interfere in the operation and management activities of the listedcompany beyond their authority and not to encroach on the interests of the listed company. 2. From the date ofissuance of these commitments to the completion of this trading of the listed company, if the CSRC makes newregulatory requirements on measures to fill up returns and commitments of relevant personnel, and the abovecommitments cannot meet these new regulatory requirements of the CSRC, they promise to issue supplementarycommitments according to the latest regulations of the CSRC at that time. 3. They promise to earnestly fulfill themeasures to fill up returns formulated by the listed company and any commitments made by them. If they violatethese commitments and causes losses to the listed company or investors, they are willing to bear the compensationresponsibility for the listed company or investors according to law. As one of the subjects responsible for themeasures to fill up returns, if they violate the above commitments or refuses to fulfill the above commitments, theyagree that the securities regulatory agencies such as the CSRC and the SZSE will punish them or take relevantregulatory measures in accordance with the relevant regulations and rules they formulated or issued.Date of commitment making: 27 October 2021.Term of commitment: Long-standing.Fulfillment: In execution.
5. Commitment on non-reduction of FSL shares during major asset restructuringCommitment maker: Rising Group, Rising Capital, Electronics Group, Hongkong Wah Shing, Hong Kong RisingInvestment and Shenzhen Rising InvestmentContents of Commitment: 1. They promise that there will be no share reduction plan from the date of issuance ofthis Letter of Commitments to the completion of this trading, and they will not reduce its FSL shares in any otherway (except the transfer or transfer between Rising Holdings Group and its wholly-owned subsidiaries). 2. If FSLimplements ex-rights behaviors such as share conversion, share offering and share allotment from the date ofissuance of this Letter of Commitments to the completion of this trading, the newly added shares obtained by themwill also be subject to the above commitments related to not reducing share holdings.Date of commitment making: 28 September 2021.Term of commitment: Until the completion of this trading.Fulfillment: Complete
6. Commitment on explanation about not prohibited from participating in of any major asset restructuringof listed companies as stipulated in Article 13 of the Interim Provisions on Strengthening the Supervision ofAbnormal Stock Trading Related to Major Asset Restructuring of Listed Companies
(1) Commitment maker: Shenzhen Rising Investment, Hong Kong Rising Investment, and Hongkong Wah ShingContents of Commitment: As of the issuance date of the Report on Major Asset Purchase and Related Party Tradingof Foshan Electrical and Lighting Co., Ltd. (Draft), they have not been placed on file for investigation or criminalinvestigation due to suspected insider trading related to this trading, and has not been subject to administrativepunishment by the CSRC or criminal responsibility investigated by judicial organs according to law for insidertrading related to any major asset restructuring in the last 36 months. The relevant entities of this trading are notprevented from participating in any major asset restructuring of listed companies according to Article 13 of theInterim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major AssetRestructuring of Listed Companies.Date of commitment making: 27 October 2021.Term of commitment: Three years prior to the date of issue of commitment.Fulfillment: Complete
(2) Commitment maker: Directors, supervisors and senior management of Shenzhen Rising Investment, Hong KongRising Investment, and Hongkong Wah Shing
Contents of Commitment: As of the issuance date of the Report on Major Asset Purchase and Related Party Tradingof Foshan Electrical and Lighting Co., Ltd. (Draft), they have not been placed on file for investigation or criminalinvestigation due to suspected insider trading related to this trading, and has not been subject to administrativepunishment by the CSRC or criminal responsibility investigated by judicial organs according to law for insidertrading related to any major asset restructuring in the last 36 months. The relevant entities of this trading are notprevented from participating in any major asset restructuring of listed companies according to Article 13 of theInterim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major AssetRestructuring of Listed Companies.Date of commitment making: 27 October 2021.Term of commitment: Three years prior to the date of issue of commitment.Fulfillment: Complete
(3) Commitment maker: Rising Group, Electronics Group, and Rising Capital
Contents of Commitment: As of the issuance date of the Report on Major Asset Purchase and Related Party Tradingof Foshan Electrical and Lighting Co., Ltd. (Draft), the counterparties of this restructuring have not been placed onfile for investigation or criminal investigation due to suspected insider trading related to this trading, and has notbeen subject to administrative punishment by the CSRC or criminal responsibility investigated by judicial organsaccording to law for insider trading related to any major asset restructuring in the last 36 months. The relevantentities of this trading do not disclose the insider information of this restructuring or use the insider information ofthis restructuring to conduct trading. In case of any violations to the above commitments, the relevant subjects ofthis trading will bear corresponding compensation liabilities.Date of commitment making: 27 October 2021.Term of commitment: Three years prior to the date of issue of commitment.Fulfillment: Complete
7. Commitment on legal compliance
（1）Commitment maker: Shenzhen Rising Investment, Hong Kong Rising Investment, and Hongkong Wah ShingContents of Commitment: 1. They have not been investigated by the judicial organ for suspected crimes or by theCSRC for suspected violations of laws and regulations, and there is no administrative punishment (except thoseobviously unrelated to the securities market) or criminal punishment in the last three years; 2. They have not failedto repay large debts on schedule, failed to fulfill their commitments, been taken administrative supervision measuresby the CSRC, or been disciplined by any stock exchange, have not been publicly condemned by any stock exchange,have no other major acts of dishonesty and have no any other bad record in the last three years.Date of commitment making: 27 October 2021.Term of commitment: Three years prior to the date of issue of commitment.Fulfillment: Complete
(2) Commitment maker: Rising Capital
Contents of Commitment: 1. Rising Capital has not been investigated by the judicial organ for suspected crimes orby the CSRC for suspected violations of laws and regulations, and there is no administrative punishment (exceptthose obviously unrelated to the securities market) or criminal punishment in the last five years; 2. Rising Capitalhas not failed to repay large debts on schedule, failed to fulfill its commitments, been taken administrativesupervision measures by the CSRC, or been disciplined by any stock exchange, has not been publicly condemned byany stock exchange, has no other major acts of dishonesty and has no any other bad record in the last five years. 3.The main management personnel of Rising Capital have not received administrative punishment or criminalpunishment related to the securities market, and have not involved in major civil litigation or arbitration related toeconomic disputes in the last five years. 4. The main management personnel of Rising Capital have not failed torepay large debts on schedule, failed to fulfill their commitments, been taken administrative supervision measuresby the CSRC or been disciplined by any stock exchange in the last five years.Date of commitment making: 27 October 2021Term of commitment: Five years prior to the date of issue of commitment.
Fulfillment: Complete
(3) Commitment maker: Electronics Group
Contents of Commitment: 1. Electronics Group has not been investigated by the judicial organ for suspected crimesor by the CSRC for suspected violations of laws and regulations, and there is no administrative punishment (exceptthose obviously unrelated to the securities market) or criminal punishment in the last five years; 2. ElectronicsGroup has not failed to repay large debts on schedule, failed to fulfill its commitments, been taken administrativesupervision measures by the CSRC, or been disciplined by any stock exchange, has not been publicly condemned byany stock exchange, has no other major acts of dishonesty and has no any other bad record in the last five years. 3.On 20 November , 2019, Guangdong Regulatory Bureau of the CSRC issued an administrative penalty decision([2019] No. 13), giving Liu Ke, the director of Guang Dong Fenghua Advanced Technology (Holding) Co., Ltd.(now chairman of Electronics Group), a warning and a fine of RMB30,000 over the case of illegal informationdisclosure of Guang Dong Fenghua Advanced Technology (Holding) Co., Ltd. Except as aforesaid, the mainmanagement personnel of Electronics Group have not received administrative punishment or criminal punishmentrelated to the securities market, and have not involved in major civil litigation or arbitration related to economicdisputes in the last five years; 4. Except as aforesaid, the main management personnel of Electronics Group have notfailed to repay large debts on schedule, failed to fulfill their commitments, been taken administrative supervisionmeasures by the CSRC or been disciplined by any stock exchange in the last five years.Date of commitment making: 27 October 2021Term of commitment: Five years prior to the date of issue of commitment.Fulfillment: Complete
(4) Commitment maker: Rising Group
Contents of Commitment: 1. Rising Group has not been investigated by the judicial organ for suspected crimes or bythe CSRC for suspected violations of laws and regulations, and there is no administrative punishment (except thoseobviously unrelated to the securities market) or criminal punishment in the last five years; 2. Rising Group has notfailed to repay large debts on schedule, failed to fulfill its commitments, been taken administrative supervisionmeasures by the CSRC, or been disciplined by any stock exchange, has not been publicly condemned by any stockexchange, has no other major acts of dishonesty and has no any other bad record in the last five years. 3. Accordingto the announcement of Guangdong Discipline Inspection and Supervision Network on 18 October 2021, Yu Gang,a member of the Party Committee and deputy general manager of Rising Group, is suspected of serious disciplinaryviolations and is currently undergoing disciplinary review and supervision by the Supervision Committee ofGuangdong Provincial Commission for Discipline Inspection. As of the date of issuance of this Letter ofCommitments, there is no result of disciplinary review and supervision. Except as aforesaid, the main managementpersonnel of Rising Group have not received administrative punishment or criminal punishment related to thesecurities market, and have not involved in major civil litigation or arbitration related to economic disputes in thelast five years. 4. The main management personnel of Rising Capital have not failed to repay large debts on schedule,failed to fulfill their commitments, been taken administrative supervision measures by the CSRC or been disciplinedby any stock exchange in the last five years.Date of commitment making: 27 October 2021Term of commitment: Five years prior to the date of issue of commitment.Fulfillment: Complete
(5) Commitment maker: NATIONSTAR and Sigma
Contents of Commitment: NATIONSTAR and Sigma have not been investigated by judicial organs for suspectedcrimes or by the CSRC for suspected violations of laws and regulations, and have not been subject to majoradministrative punishment or criminal punishment in the last five years.
Date of commitment making: 27 October 2021.Term of commitment: Five years prior to the date of issue of commitment.Fulfillment: Complete
(6) Commitment maker: Directors, supervisors and senior management personnel of NationStar Optoelectronicsand SigmaContents of Commitment: NationStar Optoelectronics and Sigma have not been investigated by judicial organs forsuspected crimes or by the CSRC for suspected violations of laws and regulations, and have not been subject tomajor administrative punishment or criminal punishment in the last five years.Date of commitment making: 27 October 2021.Term of commitment: Five years prior to the date of issue of commitment.Fulfillment: Complete
8. Commitment on compensation for possible violations of laws and regulations by NationStarOptoelectronicsCommitment maker: Rising Holdings Group, Electronics Group, and Rising CapitalContents of Commitment: If NationStar Optoelectronics is subject to administrative penalties such as accountabilityand fines by relevant competent departments after the completion of this trading due to the illegal acts of NationStarOptoelectronics before the completion of this acquisition, they promise to fully bear the losses of NATIONSTAR orFSL, as well as the expenses and fees under punishment or recourse, to ensure that NationStar Optoelectronics orFSL will not suffer any economic losses.Date of commitment making: 27 October 2021.Term of commitment: Long-standing.Fulfillment: In execution.
9. Commitment on explanation of confidentiality measures and confidentiality system adopted for thistradingCommitment maker: Rising Group, Electronics Group, and Rising CapitalContents of Commitment: 1. During the preliminary negotiation between the listed company and the counterpartyon this trading, necessary and sufficient confidentiality measures were taken to limit the scope of knowledge ofrelevant sensitive information. According to the requirements of the SZSE, the listed company have completed thesubmission and online reporting of the memorandum of trading process, relevant materials of insider informationinsiders. The listed company have hired independent financial advisers, legal advisers, audit institutions, valuationinstitutions and other intermediaries, and signed confidentiality agreements or appointment agreements withconfidentiality clauses with the above intermediaries, clearly stipulating the scope of confidential information andthe confidentiality responsibilities of each intermediary.Date of commitment making: 27 October 2021.Term of commitment: Until the completion of this trading.Fulfillment: In execution.
10. Commitment on the truthfulness, accuracy and completeness of the information provided during thismajor asset restructuring
(1) Commitment maker: Rising Group, Electronics Group, and Rising Capital
Contents of Commitment: 1. They promise that the information provided is true, accurate and complete, and thereare no false records, misleading statements or material omissions. 2. They have provided relevant information anddocuments (including but not limited to original written materials, duplicate materials or oral testimony, etc.) relatedto this trading to the intermediaries. They promise that the copies or photocopies of the documents and materialsprovided are consistent with the originals, and that the signatures and seals of the documents and materials are
authentic, and the signatories of the documents have been legally authorized and effectively signed the documents;that there are no false records, misleading statements or material omissions. 3. They promise that the explanationsand confirmations issued by them are true, accurate and complete, and there are no false records, misleadingstatements or material omissions. 4. During this trading, they will disclose the information about this trading in atimely manner in accordance with relevant laws and regulations, the CSRC and the SZSE, and ensure theauthenticity, accuracy and completeness of such information. 5. They shall bear legal responsibility for theauthenticity, accuracy and completeness of the information, documents, materials, explanations and confirmationsprovided. In case of any violation or losses caused to the listed company, investors, parties to the trading andintermediaries participating in this trading, they will be liable for compensation according to law. 6. Where theinformation provided or disclosed by them in this trading is suspected of false records, misleading statements ormaterial omissions, and they are filed for investigation by the judicial organ or by the CSRC, the shares withinterests in the listed company will not be transferred until the investigation conclusion is formed.Date of commitment making: 27 October 2021.Term of commitment: Long-standing.Fulfillment: In execution.
(2) Commitment maker: NationStar Optoelectronics
Contents of Commitment: NationStar Optoelectronics has provided the necessary, true, accurate, complete andeffective documents, materials or oral statements and explanations for this trading at this stage, and there is noconcealment, falsehood or material omission. The copies or photocopies of the documents provided are consistentwith the original materials or originals. The signatures and seals on the documents and materials provided areauthentic, and NationStar Optoelectronics has fulfilled the legal procedures required for such signatures and sealsand obtained legal authorization. All the facts stated and explained are consistent with the facts that happened.Date of commitment making: 27 October 2021.Term of commitment: Long-standing.Fulfillment: In execution.
（3）Commitment maker: Sigma
Contents of Commitment: 1. Sigma has provided relevant information and documents (including but not limited tooriginal written materials, duplicate materials or oral testimony, etc.) related to this trading to the intermediariesproviding professional services of auditing, valuation, legal and financial consultancy for this trading. Sigmapromises that the copies or photocopies of the documents and materials provided are consistent with the originals,and that the signatures and seals of the documents and materials are authentic, and the signatories of the documentshave been legally authorized and effectively signed the documents; that the provided information and documents areauthentic, accurate and complete and that there are no false records, misleading statements or material omissions.FSL also promises to bear individual and joint and several liability. 2. Sigma promises that the information providedis true, accurate and complete. In case of any losses caused to investors due to any false presentations, misleadingstatements or material omissions in the information provided, Sigma will be liable for compensation according tolaw.Date of commitment making: 27 October 2021Term of commitment: Long-standing..Fulfillment: In execution.
11. Commitment on the clarity of the underlying assets of this major asset restructuring
(1) Commitment maker: Electronics Group
Contents of Commitment: Electronics Group promises that the 100% equity of Sigma it held is clear in ownershipand is not subject to any dispute or potential dispute, and there is no situation affecting its legal existence; and
there is no pending or potential litigation, arbitration and any other administrative or judicial procedure that maylead to the seizure, freezing, expropriation or restriction of transfer of the above-mentioned equity by the relevantjudicial or administrative organs. There is no entrusted shareholding or trust shareholding, restriction orprohibition of transfer of the above-mentioned equity controlled by Electronics Group.Date of commitment making: 27 October 2021.Term of commitment: Long-standing.Fulfillment: In execution.
(2) Commitment maker: Rising Group
Contents of Commitment: Rising Group promises that 46,260,021 shares of NationStar Optoelectronics it held isclear in ownership and is not subject to any dispute or potential dispute, and there is no situation affecting its legalexistence; the above shares are not subject to any other pledges, guarantees or third-party interests or restrictionsand there is no pending or potential litigation, arbitration and any other administrative or judicial procedure thatmay lead to the seizure, freezing, expropriation or restriction of transfer of the above-mentioned equity by therelevant judicial or administrative organs. There is no entrusted shareholding or trust shareholding, restriction orprohibition of transfer of the above-mentioned equity controlled by Rising Group.Date of commitment making: 27 October 2021.Term of commitment: Long-standing.Fulfillment: In execution.
(3) Commitment maker: Rising Capital
Contents of Commitment: Rising Capital promises that 5,791,924 shares of NationStar Optoelectronics it held isclear in ownership and is not subject to any dispute or potential dispute, and there is no situation affecting its legalexistence; the above shares are not subject to any other pledges, guarantees or third-party interests or restrictionsand there is no pending or potential litigation, arbitration and any other administrative or judicial procedure thatmay lead to the seizure, freezing, expropriation or restriction of transfer of the above-mentioned equity by therelevant judicial or administrative organs. There is no entrusted shareholding or trust shareholding, restriction orprohibition of transfer of the above-mentioned equity controlled by Rising Group.Date of commitment making: 27 October 2021.Term of commitment: Long-standing.Fulfillment: In execution.
（4）Commitment maker: Sigma
Contents of Commitment: Among 79,753,050 shares of tradable shares with unlimited selling conditions ofNationStar Optoelectronics held by Sigma, 39,876, 500 shares were pledged for Guangdong ElectronicsInformation Industry Group Ltd. As of the date of issuance of this commitment, the pledge of the above shares hasbeen released. However, the Maximum Pledge Contract for Stocks of Listed Companies (No.: XYYZZ (BY)No.201906280001-2) signed by Sigma and Guangzhou Branch of Industrial Bank Co., Ltd. has not been dissolved.Guangdong Electronics Information Industry Group Ltd. has promised that it will not add any new loans toGuangzhou Branch of Industrial Bank Co., Ltd. as a borrower during the validity period of the guarantee, and that itwill not substantially assume any guarantee responsibility due to the Maximum Pledge Contract for Stocks of ListedCompanies. Except as aforesaid, the asset ownership of Sigma is clear, there is no dispute or potential dispute, andthere is no situation affecting the legal existence. There is no entrusted shareholding or trust shareholding,restriction or prohibition of transfer of the above-mentioned equity controlled by Rising Holdings Group.Date of commitment making: 27 October 2021Term of commitment: Long-standing.Fulfillment: Complete
12. Commitment on compliance of this major asset restructuring with Several Provisions on the Reduction ofShares by Shareholders, Directors and Supervisors of Listed CompaniesCommitment maker: Rising Group and Rising CapitalContents of Commitment: 1. They are not subject to any securities and futures crimes as stipulated in Article 6 ofSeveral Provisions on the Reduction of Shares by Shareholders, Directors and Supervisors of Listed Companies.During the period when the CSRC or the judicial organ filed a case for investigation, and less than six monthsafter the administrative penalty decision and criminal judgment were made, there was no situation that the sharesof NATIONSTAR could not be reduced due to violation of the rules of stock exchanges and public censure bystock exchanges for less than three months. 2. In case of any violation or losses caused to NATIONSTAR,investors, parties to the trading and intermediaries participating in this trading, they will be liable forcompensation according to law.Date of commitment making: 27 October 2021.Term of commitment: Until the completion of this trading.Fulfillment: In execution.
13. Commitment on the release of credit guarantee
Commitment maker: Electronics GroupContents of Commitment: 1. As of the date of issuance of the Letter of Commitments, Sigma has signed theMaximum Guarantee Contract (Contract No.: XYYBZ (BY) No.201906280001-1) and the Maximum PledgeContract for Stocks of Listed Companies (Contract No.: XYYZZ (BY) No.201906280001-2) with GuangzhouBranch of Industrial Bank Co., Ltd. Sigma will provide the maximum guarantee and pledge guarantee for the debt ofElectronics Group, with the guarantee amount of RMB400 million (in words: RMB Four Hundred Million), and theguarantee will be valid from 28 June 2019 to 27 June 2022. Electronics Group promises that on the date of issuanceof this Letter of Commitment, all the loans involved in the Maximum Guarantee Contract and the Maximum PledgeContract for Stocks of Listed Companies have been repaid, there is no debt based on the guarantee under the abovecontracts, and 39,876,500 shares of NationStar Optoelectronics held by Sigma have been released from pledge. Atthe same time, Electronics Group further makes an irrevocable commitment that it will not add any new loans toGuangzhou Branch of Industrial Bank Co., Ltd. as a borrower before the expiration date of the Maximum GuaranteeContract and the Maximum Pledge Contract for Stocks of Listed Companies, so as to ensure that Sigma will notactually assume any guarantee responsibilities due to the above guarantee contracts. 2. Electronics Group promisesthat it will not arrange for Sigma to add any form of guarantee before the completion of the delivery of Sigma'sequity in this trading. 3. In case of any violations of the above commitments, Electronics Group shall solve andeliminate the above situation within ten days, and bear corresponding legal responsibilities to Sigma and FSL.Date of commitment making: 27 October 2021Term of commitment: Until the completion of this trading.Fulfillment: In execution.
14. Commitment on no ownership dispute in equity
Commitment maker: SigmaContents of Commitment: 1. Sigma promises that all its registered capital has been paid in. 2. Sigma promises thatall existing shareholders contribute their own funds to hold shares, there is no situation such as holding shares onbehalf of them, and there is no dispute or potential dispute between shareholders over their shares.Date of commitment making: 27 October 2021Term of commitment: Long-standing.Fulfillment: In execution.
15. Commitment on explanation on litigation and administrative punishment
Commitment maker: SigmaContents of Commitment: As of the date of issuance of this note, Sigma and its wholly-owned and controlledsubsidiaries have no outstanding or foreseeable major lawsuits, arbitrations and administrative penalties that have asignificant adverse impact on this trading. As of the date of issuance of this note, the directors, supervisors andsenior management personnel of Sigma have no pending or foreseeable major lawsuits, arbitrations andadministrative penalties that have a significant adverse impact on this trading.Date of commitment making: 27 October 2021Term of commitment: Before the date of issuance of the commitment.Fulfillment: Complete16．About absence of insider tradingCommitment maker: Key management personnel of Rising Group, Electronics Group, and Rising CapitalContents of Commitment: They promise that they will not disclose the relevant insider information of this trading or make use ofthe insider information for insider trading; 2. As of the issuance date of the Report on Major Asset Purchase and Related PartyTrading of Foshan Electrical and Lighting Co., Ltd. (Draft), they have not been placed on file for investigation or criminalinvestigation due to suspected insider trading related to this trading, and have not been subject to administrative punishment by theCSRC or criminal responsibility investigated by judicial organs according to law for insider trading related to any major assetrestructuring, and have not been prohibited from engaging in any major asset restructuring of listed companies according to Article13 of the Interim Provisions on Strengthening the Supervision of Abnormal Stock Trading Related to Major Asset Restructuring ofListed Companies in the last 36 months; 3. In case of violation of the above commitments, they will bear all losses caused to thelisted company and its shareholders.
Date of commitment making: 27 October 2021Term of commitment: From the date of the issuance of the letter of commitment until the completion of this tradingFulfillment: In execution.
8. Other
Naught
XIII. Stock Payment
1. The Overall Situation of Stock Payment
□Applicable √ Not applicable
2. The Stock Payment Settled in Equity
□Applicable √ Not applicable
3. The Stock Payment Settled in Cash
□Applicable √ Not applicable
4. Modification and Termination of the Stock Payment
Naught
5. Other
NaughtXIV. Commitments and Contingency
1. Significant Commitments
Significant commitments on the balance sheet date
1. Commitment about cash dividends
Commitment maker: The CompanyContents: The annual profits distributed in cash by the Company shall be not less than 30% of the distributableprofits of the year.Date of commitment making: 27 May 2009Term of commitment: Long-standingFulfillment: In execution
2. Commitment on the development of Haikou plot
In November 2021, Hainan Technology, a wholly-owned subsidiary of the Company, acquired an industrial landlocated in Mei'an Science and Technology New City, Haikou, with a land area of 34,931.13 square meters and aland price of RMB26,596,784.43. In the same month, Hainan Technology signed the Agreement on IndustrialProject Development and Land Access with Haikou National High-tech Industrial Development Zone ManagementCommittee (hereinafter referred to as “Haikou Development Zone Management Committee”). The agreementstipulates that the above-mentioned plots are used for the development of marine lighting R&D and manufacturingbase projects, and the investment in fixed assets is about RMB314 million (including plant, equipment and land,equivalent to RMB6 million per mu). Hainan Technology promises to complete the planning scheme design withintwo months from the date of signing the Confirmation of Listing and Transferring the Right to Use State-ownedConstruction Land; complete the construction drawing design within three months after completing the planningscheme design and obtain the Building Construction Permits and start construction at the same time (subject to thefoundation concrete pouring of the main buildings). The project will be put into production within 18 months fromthe date of signing the Confirmation of Listing and Transferring the Right to Use State-owned Construction Land.From the date of signing the contract to the first year after the project is put into production, the accumulated taxpayment is not less than RMB10 million, the accumulated tax payment in the first two years is not less thanRMB27.4 million, the accumulated tax payment in the first three years is not less than RMB67.1 million, theaccumulated tax payment in the first four years is not less than RMB117 million, and the accumulated tax paymentin the five years is not less than RMB203 million. The total industrial output value (or revenue) in the first year afterthe project is put into production is not less than RMB218 million, the accumulated value in the first two years is notless than RMB433 million, the accumulated value in the first three years is not less than RMB929 million, theaccumulated value in the first four years is not less than RMB1.548 billion, and the accumulated value in the fiveyears is not less than RMB2.62 billion. If the project fails to start construction within 12 months from the date ofsigning the Confirmation of Listing and Transfering of State-owned Construction Land Use Rights due to HainanTechnology reasons, the Haikou Development Zone Management Committee has the right to unilaterally terminatethe contract and the municipal government will recover the land use rights according to law; if the total amount oftax paid in the year after putting into production does not reach the annual agreement, Hainan Technology shall payliquidated damages to Haikou Development Zone Management Committee according to the difference; if Hainan
Technology has idle land due to government reasons and force majeure, the municipal government shall collect idleland fees or recover the right to use state-owned construction land.
2. Contingency
(1) Significant Contingency on Balance Sheet Date
1. The lawsuit with Beijing Zhengshi
As Beijing Zhongao Zhengshi Lighting Appliance Co., Ltd. and its subordinate dealers (hereinafter referred to as“Beijing Zhengshi”) defaulted on the Company’s payment for goods, the Company filed a lawsuit with the FoshanChancheng District People’s Court in September 2017 (Case No.: (2017) Yue 0604 MC No. 13425), demandingan immediately settlement of the payment and overdue liquidated damages of the loan interest rate at the sameperiod from 31 July 2017 from No. 1 defendant, Beijing Zhengshi, as well as jointly and severally liability for theabove debt from No. 2 defendant Jiang Zhenghao. On 10 May 2018, in People’s Court of Chancheng District,Foshan City (2017) Yue 0604 MC No. 13425 Civil Ruling, Beijing Zhengshi was adjudged to pay the payment forgoods of RMB14,220,827.14 and liquidated damages for the Company and Jiang Zhenghao undertook the jointlyand severally liability. Beijing Zhengshi and Jiang Zhenghao were not satisfied with the judgment and applied tothe Foshan Intermediate People’s Court on 24 May 2018 and asked for the revocation of the first instancejudgment and rejection of all claims of the Company. On 28 October 2021, the Civil Judgment of FoshanIntermediate People's Court ((2018) Y06MZ No.6382) ruled that the preserved goods should be deducted from thepayment of RMB3 million owed by Beijing Zhengshi, and Beijing Zhengshi should pay the balance ofRMB11,220,827.14 and liquidated damages to the Company, and Jiang Zhenghao should bear joint and severalliabilities. As of the date of this report, the above balance has not been implemented. On 16 December 2021, theCompany applied to the court for compulsory enforcement, and on 21 February 2022, it received the court's orderrestricting the consumption of Beijing Zhengshi and Jiang Zhenghao.
2. Litigation between Foshan Kelian and some owners
Due to the late delivery of housing by Foshan Kelian, three owners (plaintiffs) of the housing filed a lawsuit againstFoshan Kelian and Shenzhen Chuanglian Real Estate Agency Co., Ltd. (hereinafter referred to as "ShenzhenChuanglian") with Chancheng District People's Court of Foshan City in October 2021 (case number: (2021)Y0604MC No.41627, No.41628 and No.41629 respectively), requesting: 1. Terminate the Commodity HousePurchase and Sales Contract entered into between the plaintiffs and Foshan Kelian; 2. Order the two defendants tojointly refund the house price and interest of RMB1,999,544.00 (based on the total house price, calculated at anannual interest rate of 4.35% from 1 October 2020 to the actual refund date), compensate for losses ofRMB71,185.48 (including property management and maintenance fund and deed tax), and bear liquidated damagesof RMB 149,008.00 (calculated according to the total house price), totaling RMB2,219,737.48 3. The litigationcosts in this case shall be borne by the two defendants. The above case has been heard on 30 December 2021, and asof the date of this report, the above case has not been concluded.
3. Litigation between Foshan Kelian and Shenzhen Chuanglian
In April 2021, Foshan Kelian and Shenzhen Chuanglian signed the Exclusive Sales Agreement of Property ofFoshan Kelian Center Project. Both parties confirm that the original contract was terminated, ShenzhenChuanglian's agency sales right was terminated, and it was unable to fulfill the exclusive purchase of the targetproperty. However, Shenzhen Chuanglian was responsible for handling the follow-up related matters such as thedecoration and repossession of 32 apartments that have been sold. On the premise that Shenzhen Chuanglian fulfills
the terms agreed in this agreement, Foshan Kelian will refund part of the deposit of the original contract in batches.In December 2021, Shenzhen Chuanglian filed a lawsuit with Chancheng District People's Court of Foshan City(Case No.: (2021) Y0604MC No.42183). On the grounds that Foshan Kelian failed to deliver the house to the ownerbefore July 31, 2021, which made it impossible to achieve the conditions agreed in the termination agreement, itrequested to order the Company to return the money of RMB5,572,000.00 and interest of RMB50,000.00(provisional), pay the lawyer's fee of RMB98,000.00 to Shenzhen Chuanglian and bear all the litigation costs of thiscase, totaling RMB5,720,000.00 (provisional). The case was heard on 11 February 2022, and as of the date of thisreport, it has not yet been concluded. As of the date of this report, the case has not been concluded.
4. Sales contract disputes between Nanning Liaowang and Hubei Meiyang
Nanning Liaowang filed a lawsuit with Xiangyang High-tech Development Zone People's Court for a dispute overthe sales contract with Hubei Meiyang Automobile Industry Co., Ltd. (hereinafter referred to as "Hubei Meiyang"),demanding that Hubei Meiyang pay RMB590,948.44 as payment for goods and RMB59,000 as liquidated damages.After coordination by the court, both parties voluntarily reached the following mediation agreement: HubeiMeiyang made the goods payment of RMB196,890.00 before June 30 and July 31 respectively and fully paid theremaining payment of RMB197,168.44 before 31 August, 2021. If the defendant Hubei Meiyang failed to fulfill thepayment obligations as agreed in any of the above periods, Nanning Liaowang has the right to apply to the court forcompulsory execution of the actual outstanding payment. Up to now, Hubei Meiyang has not fulfilled its paymentobligations. Nanning Liaowang has applied for compulsory execution. The court has not found any enforceableproperty, and has returned the litigation costs borne by Nanning Liaowang.
5. Technology entrusted development contract disputes between Nanning Liaowang and Chongqing MeiwanNanning Liaowang has a dispute with Chongqing Meiwan New Energy Automobile Technology Co., Ltd.(hereinafter referred to as "Chongqing Meiwan") over the entrusted development contract of technology, and filedan arbitration application with China Chongqing Arbitration Commission (Case No.: (2020) YZ Zi No.3414),demanding that Chongqing Meiwan pay RMB4,702,100 for technology development, RMB707,300 for latepayment and RMB50,000 for attorney fees, totaling RMB5,459,400 (the above amount is provisional).On 19 March 2021, China Chongqing Arbitration Commission ruled as follows: Chongqing Meiwan paidRMB4,702,100 to Nanning Liaowang, paid liquidated damages for late payment (based on the payment, calculatedaccording to the judgment), paid attorney fees of RMB50,000, and the arbitration fee of RMB55,200 in this casewas borne by Chongqing Meiwan. This award is final. Because Chongqing Meiwan failed to fulfill its paymentobligations according to the arbitration award, Nanning Liaowang applied to Chongqing No.1 Intermediate People'sCourt for compulsory execution, and was allowed to file a case for execution on 6 July, 2021 (Case No.: (2021)Y01Z No.1419). On 23 September, 2021, Chongqing No.1 Intermediate People's Court made an execution ruling:
The execution procedure was terminated because no property available for execution was found yet.On 6 December 2021, Chongqing No.5 Intermediate People's Court made a civil ruling ((2021) Y05PS No.504),ruling to accept the bankruptcy liquidation case of Chongqing Meiwan. On 16 December 2021, Chongqing No.5Intermediate People's Court made a decision ((2021) Y05P No.343), appointing Sichuan Finding (Chongqing) LawFirm as the manager of Chongqing Meiwan. On 4 January 2022, Nanning Liaowang received the Notice ofCreditor's Rights Declaration under Bankruptcy Liquidation of Chongqing Meiwan. On 26 January 2022, NanningLiaowang collected the information according to the notice requirements and sent it to the administrator of thisbankruptcy liquidation case. On 17 February 2022, the administrator of Chongqing Meiwan held the first creditors'meeting of the case. On 25 February 2022, the voting notice of the first creditors' meeting was received: The votingresults of the first creditors' meeting of Chongqing Meiwan are as follows: The Debtor's Property Management Plan,Bankruptcy Estate Conversion Plan, Bankruptcy Estate Distribution Plan and Proposal for Off-site Votingdeliberated by this creditors' meeting were all voted and adopted and are binding on all creditors.
6. Sales contract disputes between Nanning Liaowang and Hipro Polymer Materials
Nanning Liaowang has a dispute over the sales contract with Hipro Polymer Materials (Jiangsu) Co., Ltd.(hereinafter referred to as "Hipro Polymer Materials"), and filed a lawsuit with Nanning Intermediate People's Courtof Guangxi Zhuang Autonomous Region (Case No.: (2021) G01MC No.1028), requesting Hipro Polymer Materialsto compensate Nanning Liaowang for the loss of quality claim amount of RMB21.304 million and the loss ofoverdue interest on payment of goods of RMB2.876 million, totaling RMB24.1799 million. Nanning Liaowangprovided the Sales Contract of Car Lamp Parts and Materials, Quality Assurance Agreement and Claim Agreementrelated to this case. Due to the quality problems of the surface hardening coating provided by Hipro PolymerMaterials, Nanning Liaowang began to receive three packages of returned parts from the host customer due to thefailure of the surface hardening coating in January 2018. As of 30 October 2020, Nanning Liaowang had 28 batchesof car lamp products returned and claimed by the host customer, with a total of 29,657 car lamp products, resultingin a loss of RMB21.304 million. After many negotiations, both parties failed to reach a claim agreement.Because of the emergence of new facts in this case, after comprehensive consideration, Nanning Liaowang decidedto withdraw the lawsuit and then file a new lawsuit and submit evidence to the court. After Nanning Liaowangsubmitted the application for withdrawal, Nanning Intermediate People's Court made a ruling on 8 October 2021,allowing the plaintiff (Nanning Liaowang) to withdraw the lawsuit, and the case acceptance fee was halved (theapplication for withdrawal and refund of fees has been submitted to Nanning Intermediate People's Court forprocessing). At present, the evidence has been sorted out and is being submitted. At present, the evidence hasbasically been collected and sorted out and printed according to the requirements of the lawyer, the first batch ofelectronic mail and other evidence applications are notarized, and the second batch of evidence (OEM has sent anemail, to be sorted and checked) are to be collected and notarized, and then submitted for prosecution after thenotarization is completed.
7. Sales contract disputes between Chongqing Guinuo and Hubei Meiyang
Chongqing Guinuo filed a lawsuit with the People's Court of Xiangyang High-tech Development Zone because ofthe dispute over the sales contract with Hubei Meiyang, requesting the court to order Hubei Meiyang to payRMB8,493,100 for goods and the loss of capital occupation. After the case was filed with the court on 16 August2019, the court heard the case according to the summary procedure. After mediation by the court, Hubei Meiyangagreed to make the payment to Chongqing Guinuo in installments, but it actually failed to fulfill the payments.Chongqing Guinuo has applied to the court for enforcement, which is currently under implementation.Chongqing Guinuo has a dispute over the sales contract with Hubei Meiyang and filed a lawsuit with the People'sCourt of Xiangyang High-tech Development Zone, requesting the court to order Hubei Meiyang to bear the loss ofgoods of RMB3,694,800. On 3 May 2021, the People's Court of Xiangyang High-tech Development Zone ruled thatthe parts purchase contract and price agreement between Chongqing Guinuo and Hubei Meiyang were dissolved,and other claims of Chongqing Guinuo were rejected. On 11 January 2022, Chongqing Guinuo applied to the courtfor compulsory enforcement, and the court took measures to restrict consumption in Hubei, and because there wasno enforceable property, the court terminated this enforcement.
8. Labor disputes
(1) In June, 2021, a lighting equipment company moved to Gaoming District, Foshan City, and at the same time, ittook compensatory measures such as providing shuttle bus or accommodation to all employees. However, 13employees were still unwilling to resign with the relocation of the company, and asked the lighting equipmentcompany to pay economic compensation. On 20 August 2021, Foshan Nanhai District Labor and Personnel DisputeMediation and Arbitration Commission issued the Arbitration Order (FNLRZA Zi [2021] No.3423), rejecting thearbitration request for economic compensation of the above 13 persons. As a result, 12 of them refused to accept theabove arbitration order, and filed a lawsuit with Nanhai District People's Court of Foshan City in September 2021,
requesting confirmation that the labor contract between them and the lighting equipment company was terminatedon 28 June 2021, and ordered the lighting equipment company to pay economic compensation totalingRMB412,100.00 for terminating the labor contract and bear the litigation costs of this case. As of the date of thisreport, the above cases have not been concluded. The case was heard on 13 December 2021 and has not beenconcluded as of the date of this report.
(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant StatementsThere was no significant contingency in the Company.
3. Other
As of 31 December 2021, guarantees among Nanning Liaowang and its subsidiaries, Nanning Ruixiang IndustrialInvestment Co., Ltd. (formerly named Nanning Guige Precision Industry Technology Co., Ltd., hereinafterreferred to as “Nanning Ruixiang”) were as follows (RMB’0,000):
| Principal debtor | Principal debtee | Guarantor | Type of guarantee | Guarantee amount | Guarantee balance |
| Nanning Liaowang (note 1) | Nanning Branch of Industrial Bank | Kuang Linchang, Liang Xiaoling, Yang Shiyue, Gu Hanhua, Nanning Ruixiang, Qingdao Lighting, Liuzhou Lighting, Chongqing Guinuo | Joint-liability guarantee, mortgage | 20,000.00 | 4,770.00 |
| Nanning Liaowang (note 2) | Far Eastern International Financial Leasing Co., Ltd. | Nanning Liaowang, Nanning Ruixiang, Qingdao Lighting, Liuzhou Lighting, Kuang Linchang, Liang Xiaoling, Yang Shiyue, Gu Hanhua | Joint-liability guarantee | 2,600.00 | 724.13 |
| Liuzhou Lighting (note 3) | Nanning Branch of Industrial Bank | Nanning Liaowang, Liuzhou Lighting, Kuang Linchang, Liang Xiaoling, Yang Shiyue, Gu Hanhua | Joint-liability guarantee, mortgage | 15,000.00 | 5,000.00 |
| Chongqing Guinuo (note 4) | Far Eastern International Financial Leasing Co., Ltd. | Nanning Liaowang, Nanning Ruixiang, Qingdao Lighting, Liuzhou Lighting, Kuang Linchang, Liang Xiaoling, Yang Shiyue, Gu Hanhua | Joint-liability guarantee | 3,990.00 | 1,218.23 |
| Total | —— | —— | —— | 41,590.00 | 11,712.36 |
Note 1: Nanning Liaowang and Nanning Branch of Industrial Bank signed the Working Capital Loan Contract (XYGCBLJ Zi (2021)No.1001), with a loan amount of RMB47.7 million (from 1 February 2021 to 1 February 2022). Among them, Nanning Liaowangprovides mortgage guarantee with the immovable property owned as collateral, and the balance of its creditor's rights does not exceedthe maximum mortgage principal of RMB72.3444 million. The mortgaged real estate is a) YG (2017) NNSBDCQZ No.0065501; b)EG (2017) NNSBDCQZ No.0065499; c) SG (2017) NNSBDCQZ No.0065498; d) SG (2017) NNSBDCQZ No.0065497; NanningRuixiang provides mortgage guarantee with the immovable property owned as collateral, and the balance of its creditor's rights does notexceed the maximum mortgage principal of RMB24.0445 million. The mortgaged real estate is: e) WG (2017) NNSBDCQZNo.0064815; f) LG (2017) NNSBDCQZ No.0064833; g) QG (2017) NNSBDCQZ No.0064840. Kuang Linchang, Liang Xiaoling,
Yang Shiyue, Gu Hanhua, Nanning Ruixiang, Qingdao Lighting, Liuzhou Guige Lighting and Chongqing Guinuo jointly assume jointand several guarantee liabilities for all creditor's rights balances under the maximum principal limit of RMB200 million, and theguarantee amount is valid from 30 December 2019 to 30 December 2024.In addition to the above mortgages and guarantees, Chongqing Guinuo takes its immovable property as collateral for the maximumbalance of its main creditor's rights not exceeding RMB122,294,700, and the mortgage amount is valid from 15 June 2020 to 15 June2023. The mortgaged real estate is a) YY (2020) LJXQBDCQ No.000436821, b) EY (2020) LJXQBDCQ No.000437330, c) SY (2020)LJXQBDCQ No.000437429 and d) SY (2020) LJXQBDCQ No.000437448.Note 2: On 18 May 2020, Nanning Liaowang and Far East International Financial Leasing Co., Ltd. (hereinafter referred to as "Far EastLeasing") signed the Sale Lease Contract (Contract No.: IFELC20DE24MZT-L-01), with a financing loan amount of RMB26 million,and the actual loan amount obtained was RMB24 million (the difference with the financing loan amount was RMB2 million as a deposit,which was withheld by Far East Leasing), and the loan term of finance lease is 30 months. Nanning Ruixiang, Liuzhou Guige Lighting,Qingdao Lighting, Yang Shiyue, Gu Hanhua, Kuang Linchang and Liang Xiaoling provide joint and several liability guarantee for thisfinancing loan. Nanning Liaowang signed the Ownership Transfer Agreement with Far East Leasing. According to the General Termsand Conditions of the Sale and Return Lease Contract: Under the condition that Party B (Nanning Liaowang, the same below) enjoys allthe rights under this contract and does not affect Party B's normal use, Party A (Far East Leasing, the same below) may transfer itsownership of the leased items to any third party, or mortgage the leased items and other guarantees, and the validity of the contract willnot be affected. Party A undertakes not to adversely affect Party B's rights (especially the performance of this contract) due to thetransfer/mortgage. Party B shall perform this contract according to the contract, and Party A shall guarantee that Party B shall have theright to use the leased items and the ownership after the expiration of the lease period according to the contract.Note 3: Liuzhou Guige Lighting and Nanning Branch of Industrial Bank signed loan contracts numbered WYZH2021012600174,WYZH2021042100164 and WYZH2021042100146, borrowing RMB10 million (from 26 January 2021 to 26 January 2022), RMB20million (from 21 April 2021 to 21 April 2022), and RMB20 million (from 22 April 2021 to 22 April 2022) respectively. Among them,Liuzhou Guige Lighting provides mortgage guarantee with the real estate owned by Liuzhou Guige Lighting as collateral for themaximum balance of its main creditor's rights not exceeding RMB150 million, and the guarantee amount is valid from 30 December2019 to 30 December 2024. The mortgaged real estate is: a) YG (2019) LZSBDCQ No.0191988, located at No.1 Factory Building,No.12 Hengsi Road, Cheyuan; b) EG (2019) LZSBDCQ No.0191991, located in the mold center of No.12 Hengsi Road, Cheyuan; c)SG (2019) LZSBDCQ No.0191994, located in the logistics gate guard room at No.12 Hengsi Road, Cheyuan; d) SG (2019) LZSBDCQNo.0191995, located in the guard room of Gate 12, Hengsi Road, Cheyuan. Nanning Liaowang, Kuang Linchang, Liang Xiaoling,Yang Shiyue and Gu Hanhua provide joint and several liability guarantee with the maximum balance of principal creditor's rights notexceeding RMB150 million exposure, and the guarantee amount is valid from 30 December 2019 to 30 December 2024.Note 4: On 21 June 2020, Chongqing Guinuo signed the Sale and Return Lease Contract with Far East Leasing (Contract No.:
IFELC20DE2XZXM-L-01), with a financing loan amount of RMB39.9 million and an actual loan amount of RMB35.99 million (thedifference with the financing loan amount is RMB4 million as a deposit, which is withheld by Far East Leasing), and the loan term offinance lease is 30 months. This financial lease loan is mortgaged by Chongqing Guinuo with 28 fixed assets and 104 molds owned byitself. Chongqing Guinuo signed the Ownership Transfer Agreement with Far East Leasing, and Nanning Liaowang, Nanning Ruixiang,Liuzhou Guige Lighting, Qingdao Lighting, Liang Xiaoling, Yang Shiyue, Gu Hanhua and Kuang Linchang provided joint and severalliability guarantee for the lease loan. According to the General Terms and Conditions of the Sale and Return Lease Contract: Under thecondition that Party B (Chongqing Guinuo, the same below) enjoys all the rights under this contract and does not affect Party B'snormal use, Party A (Far East Leasing, the same below) may transfer its ownership of the leased items to any third party, or mortgagethe leased items and other guarantees, and the validity of the contract will not be affected. Party A undertakes not to adversely affectParty B's rights (especially the performance of this contract) due to the transfer/mortgage. Party B shall perform this contract accordingto the contract, and Party A shall guarantee that Party B shall have the right to use the leased items and the ownership after theexpiration of the lease period according to the contract.
XV. Events after Balance Sheet Date
1. Significant Non-adjusted Events
Naught
2. Profit Distribution
The Company's profit distribution plan for 2021 is as follows: Based on the total share capital of 1,361,994,647shares disclosed in the Company's 2021 annual report, deducting 13 million A shares of the remainingrepurchased shares in the Company's special repurchase account, that is, 1,348,994,647 shares, the Companyintends to distribute a cash dividend of RMB1 (tax included and dividends for B-share holders to be paid in theHong Kong dollars) for every 10 shares held by A-share and B-share holder.
3. Sales Return
N/A
4. Notes to Other Events after Balance Sheet Date
(I) Profit Distribution PlanThe Company's profit distribution plan for 2021 is as follows: Based on the total share capital of 1,361,994,647shares disclosed in the Company's 2021 annual report, deducting 13 million A shares of the remaining repurchasedshares in the Company's special repurchase account, that is, 1,348,994,647 shares, the Company intends todistribute a cash dividend of RMB1 (tax included) for every 10 shares held by A-share and B-share holder and 0bonus shares (tax included and dividends for B-share holders to be paid in the Hong Kong dollars). Where the totalshares of the Company with profit distribution rights change due to the issuance of new shares, the grant of equityincentives and other reasons during the implementation of this profit distribution plan, the Company will adjust thetotal dividends accordingly according to the principle of unchanged distribution ratio per share.The proposal is still to be submitted to the 2021 Annual General Meeting for review.
(II) Cancellation of repurchased sharesThe Company held the 26th meeting of the ninth Board of Directors on 14 January 2022, where the Proposal onCancelling Some Shares of the Company's Repurchase Special Securities Account was deliberated and adopted,and used the repurchased 13 million A shares for the equity incentive plan. The remaining 18,952,995 A sharesand 18,398,512 B shares were repurchased, totaling 37,351,507 shares. On 8 February 2022, it was confirmed byShenzhen Branch of China Securities Depository and Clearing Co., Ltd. that the number of repurchased publicshares cancelled this time was 37,351,507, accounting for 2.67% of the total share capital of the Company beforecancellation, including 18,952,995 A shares and 18,398,512 B shares. Upon completion of this share cancellation,the total share capital of the Company was changed from 1,399,346,154 shares to 1,361,994,647 shares. Industrialand commercial change procedures are still in process.
(III) Progress in major asset restructuringThe Company held the 19th meeting of the ninth Board of Directors and the Third Extraordinary General Meeting in2021 on 27 October 2021 and 31 December 2021 respectively, where the untport on Major Asset Purchase and
Related Party Trading of Foshan Electrical and Lighting Co., Ltd. (Draft) and Its Summary" and other proposalsrelated to this trading was deliberated and adopted. It was agreed that the Company will purchase 100% equity ofSigma held by Electronics Group (Sigma holds 79,753,050 shares of NationStar Optoelectronics) and 52,051,945tradable shares of NationStar Optoelectronics held by Rising Group and Rising Capital in total by paying cash.According to the resolution of the Shareholders' General Meeting, the Company organized and implemented thework related to this major asset restructuring. As of 25 February 2022, the Company has completed the 100% equitytransfer and industrial and commercial change procedures of Sigma, and Sigma has become a wholly-ownedsubsidiary of the Company. The 52,051,945 tradable shares of NationStar Optoelectronics held by Rising Groupand Rising Capital with unlimited selling conditions have been transferred and registered to the Company, and thedelivery of 52,051,945 shares of NationStar Optoelectronics has been completed. So far, the Company and itswholly-owned subsidiary Sigma hold a total of 132,819,895 shares of NationStar Optoelectronics, accounting for
21.48% of the total share capital of NationStar Optoelectronics, and the Company has become the controllingshareholder of NationStar Optoelectronics.
XVI. Other Significant Events
1. The Accounting Errors Correction in Previous Period
Naught
2. Debt Restructuring
Naught
3. Assets Replacement
Naught
4. Pension Plan
Naught
5. Discontinued Operations
Naught
6. Segment Information
Naught
7. Other Significant Transactions and Events with Influence on Investors’ Decision-makingNaught
8. Other
(I) Demolition Matters of Nanjing FozhaoAccording to the Decision of Nanjing Lishui District People's Government on House Expropriation onState-owned Land of Honglan Street Affordable Housing Project in Lishui District (NLFZ Zi [2020] No.18), Thehouse owned by Nanjing Fozhao, a wholly-owned subsidiary of the Company, located at 688 Jinniu North Road,Honglan Street, Lishui District, Nanjing (the total construction area of the house is 44,558.09 square meters,which is an industrial house; The land use right covers an area of 135,882.4 square meters, which is industrial land)belongs to the expropriation scope, and the compensation, relocation fee, loss fee of production and businesssuspension and other rewards of the expropriated assets total RMB183,855,895.00. As of 31 December 2021,Nanjing Fozhao has received 30% of the compensation, that is, RMB55,160,000.00, and the land use rightcertificate and house ownership certificate of the assets involved have been cancelled. As of the date of this report,the site handover is still in progress. After the demolition work is completed, Nanjing Fozhao plans to carry outliquidation and cancellation.XVII. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Category of Accounts Receivable
Unit: RMB
| Item | Ending balance | Beginning balance | ||||||||
| Carrying amount | Bad debt provision | Carrying value | Carrying amount | Bad debt provision | Carrying value | |||||
| Amount | Proportion | Amount | Withdrawal proportion | Amount | Proportion | Amount | Withdrawal proportion | |||
| Accounts receivable for which bad debt provision separately accrued | 11,220,827.14 | 1.00% | 8,976,661.72 | 80.00% | 2,244,165.42 | 15,257,662.85 | 1.40% | 9,569,331.99 | 62.72% | 5,688,330.86 |
| Of which: | ||||||||||
| Accounts receivable for which bad debt provision accrued by group | 1,108,641,819.86 | 99.00% | 51,950,320.95 | 4.69% | 1,056,691,498.91 | 1,073,149,615.48 | 98.60% | 48,124,872.12 | 4.48% | 1,025,024,743.36 |
| Of which: | ||||||||||
| (1) Common business portfolio | 1,022,005,643.56 | 91.26% | 51,950,320.95 | 5.08% | 970,055,322.61 | 1,012,031,374.59 | 92.98% | 48,124,872.12 | 4.76% | 963,906,502.47 |
| (2) Internal business portfolio | 86,636,176.30 | 7.74% | 86,636,176.30 | 61,118,240.89 | 5.62% | 61,118,240.89 | ||||
| Total | 1,119,862,647.00 | 100.00% | 60,926,982.67 | 5.44% | 1,058,935,664.33 | 1,088,407,278.33 | 100.00% | 57,694,204.11 | 5.30% | 1,030,713,074.22 |
Individual withdrawal of bad debt provision by single item:
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Reason for withdrawal | |
| Customer A | 11,220,827.14 | 8,976,661.72 | 80.00% | Involved in the lawsuit; the Company won in the first instance judgment and not executed completely |
| Total | 11,220,827.14 | 8,976,661.72 | -- | -- |
Withdrawal of bad debt provision by group:
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Credit risk portfolio | 1,108,641,819.86 | 51,950,320.95 | 4.69% |
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general modeof expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
| Aging | Ending balance |
| Within 1 year (including 1 year) | 1,048,406,539.45 |
| 1 to 2 years | 24,832,557.94 |
| 2 to 3 years | 8,500,312.82 |
| Over 3 years | 38,123,236.79 |
| 3 to 4 years | 17,208,975.28 |
| 4 to 5 years | 11,978,176.23 |
| Over 5 years | 8,936,085.28 |
| Total | 1,119,862,647.00 |
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting PeriodThe amount of expected credit loss accrued in the current period is RMB4,387,268.74, and the amount of expected credit lossrecovered or reversed in the current period is RMB0.00.
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
| Item | Amount |
| No. 1 | 1,036,835.71 |
| No. 2 | 117,554.16 |
| Other driblet small amount | 100.31 |
| Total | 1,154,490.18 |
Of which, verification of significant accounts receivable:
Unit: RMB
| Name of the entity | Nature | Amount | Reason | Procedure | Whether occurred because of related-party transactions |
| No. 1 | Payment for goods | 1,036,835.71 | After litigation and compulsory execution, the other party has no enforceable property | The approval procedure is carried out according to the Company’s rules for managing bad debt. | Not |
| No. 2 | Payment for goods | 117,554.16 | Unrecoverable | The approval procedure is carried out according to the Company’s rules for managing bad debt. | Yes |
| Other retails accounts | Payment for goods | 100.31 | Unrecoverable | The approval procedure is carried out according to the Company’s rules for managing bad debt. | Not |
| Total | -- | 1,154,490.18 | -- | -- | -- |
Note:
The approval procedure for the verification of accounts receivable during the Reporting Period had been performed in accordancewith provisions of the bad debt management system of the Company.
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party
Unit: RMB
| Name of units | Ending balance of accounts receivable | Proportion to total ending balance of accounts receivable (%) | Ending balance of bad debt provision |
| No. 1 | 166,366,875.25 | 14.86% | 4,991,006.26 |
| No. 2 | 89,015,269.51 | 7.95% | 2,670,458.09 |
| No. 3 | 72,464,493.55 | 6.47% | |
| No. 4 | 26,525,457.91 | 2.37% | 795,763.74 |
| No. 5 | 25,411,814.39 | 2.27% | 762,354.43 |
| Total | 379,783,910.61 | 33.92% | -- |
(5) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement ofAccounts ReceivableNaught
(6) Derecognition of Accounts Receivable due to the Transfer of Financial Assets
Naught
2. Other Receivables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Other receivables | 511,056,231.24 | 462,284,585.09 |
| Total | 511,056,231.24 | 462,284,585.09 |
(1) Interest Receivable
Naught
2) Significant Overdue Interest
Naught
3) Information of Withdrawal of Bad Debt Provision
□ Applicable √ Not applicable
(2) Dividends Receivable
Naught
(3) Other Receivables
1) Other Receivables Classified by Account Nature
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Staff borrow and petty cash | 3,486,778.81 | 7,403,907.26 |
| Performance bond | 5,597,832.99 | 4,025,073.30 |
| Rent, water & electricity fees | 2,564,557.87 | 2,989,445.13 |
| VAT export tax refunds | 4,674,335.06 | 195,141.85 |
| Other intercourse | 497,805,458.10 | 450,006,575.72 |
| Total | 514,128,962.83 | 464,620,143.26 |
2) Information of Withdrawal of Bad Debt Provision
Unit: RMB
| Bad debt provision | First stage | Second stage | Third stage | Total |
| Expected credit loss of the next 12 months | Expected loss in the duration (credit impairment not occurred) | Expected loss in the duration (credit impairment occurred) | ||
| Balance of 1 January 2021 | 454,821.73 | 1,880,736.44 | 2,335,558.17 | |
| Balance of 1 January 2021 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | 308,426.99 | 428,746.43 | 737,173.42 | |
| Balance of 31 December 2021 | 763,248.72 | 2,309,482.87 | 3,072,731.59 |
Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable √Not applicable
Disclosure by aging
Unit: RMB
| Aging | Ending balance |
| Within 1 year (including 1 year) | 488,303,376.34 |
| 1 to 2 years | 19,335,851.40 |
| 2 to 3 years | 2,598,983.38 |
| Over 3 years | 3,890,751.71 |
| 3 to 4 years | 2,377,256.70 |
| 4 to 5 years | 1,079,847.71 |
| Over 5 years | 433,647.30 |
| Total | 514,128,962.83 |
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The amount of expected credit loss accrued in the current period is RMB737,173.42, and the amount of expected credit lossrecovered or reversed in the current period is RMB0.00
4) Particulars of the Actual Verification of Other Receivables during the Reporting PeriodNaught
5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
| Name of the entity | Nature | Ending balance | Aging | Proportion to total ending balance of other receivables (%) | Ending balance of bad debt provision |
| No. 1 | Internal business group | 395,836,356.26 | Within 1 year | 76.99% | |
| No. 2 | Internal business group | 69,983,015.32 | Within 2 years | 13.61% | |
| No. 3 | Internal business group | 11,931,264.29 | Within4 year | 2.32% | |
| No. 4 | Intercourse accounts | 7,060,000.00 | Within 1 year | 1.37% | 211,800.00 |
| No. 5 | VAT export tax refunds | 4,674,335.06 | Within 1 year | 0.91% | 140,230.05 |
| Total | -- | 489,484,970.93 | -- | 95.20% | 352,030.05 |
6) Accounts Receivable Involving Government Grants
Naught
7) Derecognition of Other Receivables due to the Transfer of Financial Assets
Naught
8) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement ofOther ReceivablesNaught
3. Long-term Equity Investment
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Depreciation reserve | Carrying value | Carrying amount | Depreciation reserve | Carrying value | |
| Investment to subsidiaries | 1,061,536,766.02 | 1,061,536,766.02 | 355,584,295.41 | 355,584,295.41 | ||
| Investment to joint ventures and associated enterprises | 181,545,123.09 | 181,545,123.09 | 181,365,016.32 | 181,365,016.32 | ||
| Total | 1,243,081,889.11 | 1,243,081,889.11 | 536,949,311.73 | 536,949,311.73 | ||
(1) Investment to Subsidiaries
Unit: RMB
| Investee | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserve | |||
| Additional investment | Reduced investment | Depreciation reserves withdrawn | Other | ||||
| FSL Chanchang Optoelectronics Co., Ltd. | 82,507,350.00 | 82,507,350.00 | |||||
| Foshan Taimei Times Lamps and Lanterns Co., Ltd. | 350,000.00 | 350,000.00 | |||||
| Nanjing Fozhao Lighting Components Manufacturing Co., Ltd. | 72,000,000.00 | 72,000,000.00 | |||||
| Foshan Electrical & Lighting | 35,418,439.76 | 35,418,439.76 | |||||
| (Xinxiang) Co., Ltd. | |||||||
| Guangdong Fozhao New Light Sources Technology Co., Ltd. | 50,077,000.00 | 50,077,000.00 | |||||
| Foshan Haolaite Lighting Co., Ltd. | 16,685,000.00 | 16,685,000.00 | |||||
| Foshan Lighting Lamps & Components Co., Ltd. | 15,000,000.00 | 15,000,000.00 | |||||
| FSL Zhida Electric Technology Co., Ltd. | 25,500,000.00 | 25,500,000.00 | |||||
| FSL Lighting GMBH | 195,812.50 | 195,812.50 | |||||
| Hunan Keda New Energy Investment and Development Co., Ltd. | 57,850,693.15 | 40,000,000.00 | -97,850,693.15 | ||||
| Foshan Kelian New Energy Technology Co., Ltd. | 57,000,000.00 | 113,000,000.00 | 170,000,000.00 | ||||
| Fozhao (Hainan) Technology Co., Ltd. | 150,000,000.00 | 150,000,000.00 | |||||
| Nanning Liaowang Auto Lamp Co., Ltd. | 493,880,163.76 | 493,880,163.76 | |||||
| Total | 355,584,295.41 | 740,880,163.76 | 50,077,000.00 | 15,149,306.85 | 1,061,536,766.02 |
Note: For details, please refer to Section XVII Major Events of the Company's Subsidiaries, 2. Absorption andMerger of Hunan Keda, of this report.
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
| Investee | Beginning balance (carrying value) | Increase/decrease | Ending balance (carrying value) | Ending balance of depreciation reserve | |||||||
| Additional investment | Reduced investment | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced to issue | Withdrawal of impairment provision | Other | ||||
| I. Joint ventures | |||||||||||
| II. Associated enterprises | |||||||||||
| ShenzhenPrimatronix (Nanho) Electronics Ltd. | 181,365,016.32 | 2,260,497.27 | 2,080,390.50 | 181,545,123.09 | |||||||
| Subtotal | 181,365,016.32 | 2,260,497.27 | 2,080,390.50 | 181,545,123.09 | |||||||
| Total | 181,365,016.32 | 2,260,497.27 | 2,080,390.50 | 181,545,123.09 | |||||||
(3) Other Notes
Naught
4. Operating Revenue and Cost of Sales
Unit: RMB
| Item | Reporting Period | Same period of last year | ||
| Operating revenue | Cost of sales | Operating revenue | Cost of sales | |
| Main business | 3,548,713,016.46 | 3,011,542,500.00 | 3,341,450,360.57 | 2,726,640,272.12 |
| Other business | 169,595,356.00 | 142,496,679.53 | 148,816,741.96 | 134,309,284.64 |
| Total | 3,718,308,372.46 | 3,154,039,179.53 | 3,490,267,102.53 | 2,860,949,556.76 |
5. Investment Income
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Long-term equity investment income accounted by cost method | 38,645,385.25 | |
| Long-term equity investment income accounted by equity method | 2,260,497.27 | 2,351,681.39 |
| Investment income from disposal of long-term equity investment | 7,349,443.02 | 43,551,565.30 |
| Investment income from holding of other equity instrument investment | 23,643,370.02 | 14,940,422.96 |
| Investment income from financial products and structural deposits | 971,514.99 | 23,451,129.06 |
| Other | 6,013,450.00 | 3,678,150.00 |
| Total | 78,883,660.55 | 87,972,948.71 |
Note: Refer to dividends of the subsidiary Lamps & Components Limited.
6. Other
NaughtXVIII. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Note |
| Gain/Loss arising from disposal of non-current assets | 82,233,742.26 | |
| Government grants recognized in the current period, except for those acquired in the ordinary course of business or granted at certain quotas or amounts according to the government’s unified standards | 15,971,903.24 | |
| Capital occupation charges on non-financial enterprises that are recorded into current profit or loss | 881,704.19 | |
| Gain/loss from change of fair value of | 10,663,119.44 |
| trading financial assets and liabilities, and investment gains from disposal of trading financial assets and liabilities, and available-for-sale financial assets, other than valid hedging related to the Company’s common businesses | ||
| Other non-operating income and expenses other than the above | 10,640,975.11 | |
| Less: Income tax effects | 17,224,178.81 | |
| Non-controlling interests effects | 3,085,681.16 | |
| Total | 100,081,584.27 | -- |
Others that meets the definition of non-recurring gain/loss:
□ Applicable √ Not applicable
No such cases in the Reporting Period.Explain the reasons if the Company classifies any extraordinary gain/loss item mentioned in the Explanatory Announcement No. 1 onInformation Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains and Losses as a recurrentgain/loss item
□ Applicable √ Not applicable
2. Return on Equity and Earnings Per Share
| Profit as of Reporting Period | Weighted average ROE (%) | EPS (Yuan/share) | |
| EPS-basic | EPS-diluted | ||
| Net profit attributable to ordinary shareholders of the Company | 4.23% | 0.1854 | 0.1836 |
| Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit or loss | 2.53% | 0.1112 | 0.1101 |
3. Differences between Accounting Data under Domestic and Overseas Accounting Standards
(1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under Internationaland Chinese Accounting Standards
□ Applicable √ Not applicable
(2) Differences of Net profit and Net assets Disclosed in Financial Reports Prepared under Overseas andChinese Accounting Standards
□ Applicable √ Not applicable
(3) Explain Reasons for the Differences between Accounting Data under Domestic and OverseasAccounting Standards; for any Adjustment Made to the Difference Existing in the Data Audited by theForeign Auditing Agent, Such Foreign Auditing Agent’s Name Shall Be Clearly StatedNaught
4. Other
Naught
Wu Shenghui, legal representative
Foshan Electrical and Lighting Co., Ltd.
30 March 2022