FOSHAN ELECTRICAL AND LIGHTING CO., LTD.
ANNUAL REPORT 2019
April 2020
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.He Yong, the Company’s legal representative, Liu Xingming, the Company’s GeneralManager, and Tang Qionglan, the Company’s Chief Financial Officer (CFO) herebyguarantee that the Financial Statements carried in this Report are factual, accurate andcomplete.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 market competition, the risk of rising labor costs, the risk of rising raw materialprices, the risk of falling prices of inventories, the risk of exchange rate fluctuations and therisk of doubtful receivable accounts. Please refer to the section headed “Potential Risks” in ItemIX of Part IV of this Report.
The Board has approved a final dividend plan as follows: based on the total share capital of1,399,346,154 shares, a cash dividend of RMB1.85 (tax inclusive) per 10 shares is to bedistributed to the shareholders, with no bonus issue from either profit or capital reserves.This Report have been prepared in both Chinese and English. Should there be anydiscrepancies or misunderstandings between the two versions, the Chinese versions shallprevail.
Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 5
Part III Business Summary ...... 9
Part IV Operating Performance Discussion and Analysis ...... 14
Part V Significant Events ...... 45
Part VI Share Changes and Shareholder Information ...... 69
Part VII Preferred Shares ...... 80
Part VIII Convertible Corporate Bonds ...... 81
Part IX Directors, Supervisors, Senior Management and Staff ...... 82
Part X Corporate Governance ...... 93
Part XI Corporate Bonds ...... 103
Part XII Financial Statements ...... 104
Part XIII Documents Available for Reference ...... 250
Definitions
| Term | Definition |
| The “Company”, “FSL” or “we” | Foshan Electrical and Lighting Co., Ltd. and its consolidated subsidiaries, except where the context otherwise requires |
| GRAM | Guangdong Rising Assets Management Co., Ltd. |
| Electronics Group | Guangdong Electronics Information Industry Group Ltd. |
| GD Rising Finance | Guangdong Rising Finance Holding Co., Ltd. |
| Shenzhen Rising Investment | Shenzhen Rising Investment Development Co., Ltd. |
| Hong Kong Rising Investment | Hong Kong Rising Investment Development Limited |
| CSRC | China Securities Regulatory Commission |
| SZSE | Shenzhen Stock Exchange |
| 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 |
Part II Corporate Information and Key Financial Information
I 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 | He Yong | ||
| Registered address | No. 64, Fenjiang North Road, Chancheng District, Foshan City, Guangdong Province, P.R.China | ||
| Zip code | 528000 | ||
| 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 | He Yong | 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 | yh888@chinafsl.com | fslhyf@163.com |
III Media for Information Disclosure and Place where this Report Is Lodged
| Newspapers designated by the Company for information disclosure | China Securities Journal, Securities Times, Securities Daily, Ta Kung Pao (HK) |
| Website designated by CSRC for publication of this Report | http://www.cninfo.com.cn |
| Place where this Report is lodged | Board Secretary’s 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) | Unchanged |
V Other Information
The 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 | Tong Quanyong, Luo Dongri |
The independent sponsor hired by the Company to exercise constant supervision over the Company in theReporting Period:
□ 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
| 2019 | 2018 | 2019-over-2018 change (%) | 2017 | |
| Operating revenue (RMB) | 3,337,576,747.66 | 3,801,955,946.76 | -12.21% | 3,800,188,261.54 |
| Net profit attributable to the listed company’s shareholders (RMB) | 301,182,906.24 | 377,615,133.62 | -20.24% | 740,308,725.30 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 283,753,154.31 | 354,513,585.67 | -19.96% | 353,549,021.39 |
| Net cash generated from/used in operating activities (RMB) | 508,084,757.46 | 617,987,487.05 | -17.78% | 215,821,192.79 |
| Basic earnings per share (RMB/share) | 0.2152 | 0.2699 | -20.27% | 0.5290 |
| Diluted earnings per share (RMB/share) | 0.2152 | 0.2699 | -20.27% | 0.5290 |
| Weighted average return on equity (%) | 6.37% | 8.36% | -1.99% | 15.14% |
| 31 December 2019 | 31 December 2018 | Change of 31 December 2019 over 31 December 2018 (%) | 31 December 2017 | |
| Total assets (RMB) | 6,175,200,008.24 | 5,588,166,699.30 | 10.50% | 5,675,811,824.29 |
| Equity attributable to the listed company’s shareholders (RMB) | 4,880,736,800.07 | 4,319,259,418.46 | 13.00% | 4,779,115,459.39 |
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 | 889,232,750.52 | 797,951,910.34 | 755,281,612.77 | 895,110,474.03 |
| Net profit attributable to the listed company’s shareholders | 86,659,035.18 | 80,616,690.57 | 63,440,260.60 | 70,466,919.89 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 74,681,526.84 | 79,836,460.82 | 64,734,076.20 | 64,501,090.45 |
| Net cash generated from/used in operating activities | 29,966,955.13 | 160,714,878.35 | 145,265,388.22 | 172,137,535.76 |
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
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
| Item | 2019 | 2018 | 2017 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -413,275.62 | -1,671,154.30 | 176,540,060.61 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 6,485,365.31 | 30,005,231.23 | 1,185,148.00 | |
| Gain or loss on fair-value changes in held-for-trading and derivative financial assets and liabilities & income from disposal of held-for-trading and derivative financial assets and liabilities and other investments in debt obligations (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 15,574,400.00 | -477,200.00 | 269,362,165.95 | |
| Non-operating income and expense other than the above | -2,543,083.02 | -594,356.14 | 1,640,395.69 | |
| Less: Income tax effects | 2,635,263.29 | 4,222,066.76 | 61,971,050.60 | |
| Non-controlling interests effects (net of tax) | -961,608.55 | -61,093.92 | -2,984.26 | |
| Total | 17,429,751.93 | 23,101,547.95 | 386,759,703.91 | -- |
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in theExplanatory Announcement 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.
Part III Business SummaryI 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 and electricalproducts, as well as provide complete lighting and electrical solutions. Our products mainly include electricalproducts such as LED light sources and luminaries, automotive LED luminaries, traditional light sources switchesand socket. Currently, we have three major operating divisions, namely, lighting, electrical products and vehiclelighting. Upon years of development, we have won quite many honors, and 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 lamp beads, lamp holders, electronic components, aluminum substrate,plastic parts, metal materials, quartz tubes and fuel by way of bids invitation. A bids invitation supervisorycommittee consisting of personnel from several departments will be set up in the future. For every kind of ourmain raw materials, we usually have a few suppliers to choose from in procurement so that the procurement priceswould be fair, the supply of raw materials in time and the good quality of the raw materials ensured.
(2) Production models
① Production of the conventional products
Concerning the conventional products, we analyze sales of every month and predict future market demand so as toformulate a production plan for the coming month. And our workshops produce according to the plan to avoidextra stock and at the same time ensure that there is enough for sale.
② Production according to orders
Different from the conventional lighting products which are of little variation in specifications, LED 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 will
help 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
Domestically, we mainly adopt a commercial agent model. In terms of channels, we have wholesale, franchisedstore, illumination engineering & commercial lighting, industrial and mining outdoor channels, e-commerce &retail sales and automotive lighting channels.For overseas markets, we primarily adopt OEM/ODM models and also sell under our own brands (throughagents).
3. Main driving forces for growth
Despite the impact of negative factors such as domestic economic downturn and US-China trade war during theReporting Period, with the evolution of the industrial competition model, consumers are getting increasinglyconcerned with product quality and brand. As a result, companies with weak competitiveness will be graduallyelbowed out of the market while large enterprises or enterprises with core competitiveness will have more marketopportunities. By virtue of its advantages in technology, brand, channel and scale, the Company has continued topromote the technical upgrading of main products, improve product quality, beef up market expansion andoptimize and upgrade the product sales structure through sustained spending on R&D and technical innovation.Meanwhile, it has gained an advantageous position in the process of enhancing market concentration byincreasing the level of production automation, effectively controlling purchase costs and ramping up productionefficiency.
4. Development stage and periodicity of the lighting industry as well as our position in the marketThe recent years have witnessed the rapid rise of the LED lighting technology. Due to the sharp drop in their costand their remarkable performance in energy saving & emission reduction, LED lighting products have beengenerally accepted by consumers, resulting in a higher and higher penetration rate as well as a fast-shrinkingmarket for conventional lighting products. However, after years of fast development and renewal, growth in LEDlighting has slowed down. Particularly the LED downstream with a low requirement for market access is suffering
from an obvious problem of structural overcapacity, leading to the disordered, cutthroat competition on the market.Under the double hits by a macro economic downturn and fierce competition, large enterprises will expandthrough mergers and acquisitions for stronger competitiveness, while some small and medium ones can only facethe fate of being washed out of the market due to lack of competitiveness, which is bringing the entire industryinto an integration phase. As a necessity for daily life, lighting products are mainly under the influence of themacro economy and the real estate sector but are little affected by seasons and regions.Generally speaking, China’s lighting industry is insufficiently centralized with no overwhelmingly 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 Significant Changes in Major Assets
1. Significant Changes in Major Assets
| Major assets | Main reason for significant changes |
| Equity assets | No significant change during the Reporting Period |
| Fixed assets | No significant change during the Reporting Period |
| Intangible assets | No significant change during the Reporting Period |
| Construction in progress | The ending amount was down 47.01% from the beginning amount, primarily driven by the transfer of certain plants in Gaoming District, Foshan City to fixed assets. |
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness AnalysisThe core competitiveness of the Company mainly reflects on fours aspects listed below:
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(wholesale, franchised store, e-commerce & retail sales, illumination engineering & commercial lighting and
industrial and mining outdoor channels), forming a marketing network covering the whole country; in foreignmarket, the Company has made active steps to develop international market business, sold products to more than100 countries and regions in North America, Europe, Southeast Asia, Africa and Oceania, and kept improvingoverseas sales channel. By virtue of its powerful and comprehensive sales channels, the Company has enabled itsproducts to enter market rapidly, substantially enhancing 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”. In recent years, with the enhancement of its developmentpositioning, product design and user experience, the Company has initiated the strategy of brand upgrading andcarried out promotion by centering around the new “Professional, Healthy, Fashionable and Intelligent”. Inaddition, it has driven the transition of “FSL” from an industrial brand to a popular brand to maintain the brandvitality and competitiveness. Among the Company’s brands, both “FSL” and “Fenjiang” are China FamousTrademarks. The brand “FSL” has become one of the most influential and popular industrial brands in China, andthe powerful brand influence has played a key role in driving the sustained growth of the Company’s sales.Technical R&D advantageThe Company has been valuing the R&D of new products and the development of innovation and R&D teams. Ithas further increased spending on technology and independent product innovation. The Company is equipped withits own electric light source institute, National CNAS Lighting Laboratory and Guangdong EngineeringTechnology Development Center. It has won the title of “Provincial IP Advantaged Enterprise” and obtained 404domestic patents and 26 foreign patents. In terms of the development of the R&D team, the Company hasformulated a comprehensive R&D personnel management policy and appraisal system, intensified theintroduction of high calibre talents, and reinforced cooperation with colleges and universities inindustry-university-research projects, which has created a smooth path for the development of R&D professionalsand provided strong support for it to maintain a technology-leading position and to further carry out productinnovation.Scale advantageAs one of the enterprises to first step into the industry of producing and selling lighting products, the Company
possesses the manufacture culture of refining production and the large-scale manufacturing capability by years ofexperience accumulation. The Company has production bases in Foshan, Nanjing and Xinxiang. The large-scaleand centralized production brings obvious economic benefits to the Company, which not only shows inmanufacture cost of products, but also shows in aspects such as raw material procurement and product pricing.
Part IV Operating Performance Discussion and Analysis
I Overview(I) Summary2019 saw intense pressure on the lighting industry as a whole. In terms of the macro economic situation, China’seconomy slowed down in growth, with a tightening real estate policy, a slower growth in consumer demand andgreater hardship for the real economy; overseas, developed economies were in lack of impetus for growth,emerging economies saw a weakening momentum in growth, and the deteriorating China-U.S. trade frictioncreated a negative impact and mounting pressure on exporters in China. From the industry perspective, on onehand, LED lighting has developed at a fast pace, the penetration rate of LED lighting products has continued toincrease, and the growth of market demand has slowed down in recent years; on the other hand, lightingcompanies are under pressure on both revenue and profit amid fierce competition caused by new productioncapacity, as well as rising labor and logistics costs and other rigid costs. In face of an unfavorable externalenvironment, the Company continued to focus on the strategic objective of “Cutting-edge Technology,International Brand and Market and Large-scale Production”, deepen technological reform and refine the productmix towards high- and mid-end products. Meanwhile, refinement was also carried out in the organizational anddistribution channel structures so that the Company could better adapt to market competition. For the ReportingPeriod, the Company achieved operating revenue of RMB3337.5767 million, a year-on-year decrease of12.21%;and a net profit attributable to the listed company’s shareholders of RMB301.1829 million, a year-on-yeardecrease of 20.24%.(II) Major Work in 2019
1. Greater Innovation Efforts Led to Substantial Growth in Intelligent ProductsIn 2019, the Company continued to improve its R&D system and policy, introduce high-calibre R&Dprofessionals, increase R&D spending, accelerate the advancement of innovation, drive the shift from lightsources to lamps, from mid-end to mid- to high-end products and from single lighting products to lighting systemsolutions in a bid to enhance the additional value of products.The Company made active steps to establish industry-education-research and interdisciplinary collaboration withthe upper and middle streams of industrial chains, colleges and technology platform companies as part of its
continuous efforts to drive the introduction, promotion and application of new technologies and new processes. Interms of intelligent lighting, the Company signed strategic cooperation agreements with Alibaba Cloud and Tuya;the FSLxTmall Genie A.I. Voice Bedside Lamp, developed jointly with Tmall Genie, won the global top designaward “German iF Design Award 2020” in February 2020; the Company connected with more influentialmainstream cloud platforms both at home and abroad, including Huawei, Tencent, Alibaba and Jingdong, andAmazon, Google, WIZ and key accounts platforms; it conducted collaborative research with technologycompanies in lighting Bluetooth modules. In terms of healthy lighting, the Company cooperated withupper-stream companies for the R&D of healthy lighting products. In terms of industrial design, the Company’sapplication for recognition of “provincial industrial design center” passed expert view and publicity, withdiscussions going on with key colleges on cooperation in industrial design. Through various measures, theCompany continued to enhance its innovation level, enrich and refine intelligent products and upgrade intelligentcontrol technology.During the Reporting Period, the Company applied for 131 different new patents (including 12 patents, 63 utilitymodels, 52 design patents and 4 international PCTs and was granted 106 new patents (including 9 patents, 60utility models, 35 design patents and 2 foreign patents). In 2019, the Company generated a sales revenue ofRMB44,031,000 from intelligent products, a YOY increase of 210%. Won the contracts for a number ofintelligent projects, including Digital Industrial Headquarters Business Complex in Wanbo CBD of Guangzhou,Guangzhou Vocational School of Tourism and Business, the Administration Committee of the Development Zoneof Binhai New District of Tianjin and Changlong-Xihuan Tunnel of Zhuhai.
2. Improvement in the Marketing System towards Stronger Market Competitiveness
(1) Lighting
In 2019, the Company implemented the BU system reform. It set up the R&D center and three sales BUs, adjustedthe BU organizational structure and talent structure and teased out BU process and authorization to enable fastermarket response. At the same time, it improved the remuneration and inventive system of business units tomobilize the enthusiasm of employees across all levels.The Domestic Sales BU continued to advance the marketing model reform, drove distributors to shift from“shopkeepers” to “itinerant traders”, promoted the expansion of sales channels to rural areas and advanced flatmanagement to improve the end market service capacity. It actively planned and promoted the sales in the threeeconomically developed regions, including the Pearl River Delta, the Yangtze River Delta and theBeijing-Tianjin-Hebei Region, expanded the sales network on a hierarchical basis by centering around the three
economic belts, propelled the high-end development of products and further optimized the product mix. Itdeepened and refined the sales network in different fields with focus on centralized purchases of properties,renovations of education systems, municipal projects and rail transit projects. All the efforts led to a YOYincrease of 33.75% in the sales revenue from projects and industrial and mining channels in the year.The E-commerce BU won the contracts for the centralized purchases of Tmall Genie intelligent lamps and Baiduintelligent lamps, signed a cooperation memorandum with Tmall Genie IOT for collaborative development ofintelligent products for IOT scenarios, such as smart households, worked with Huawei’s IOT team to connect withHuawei’s HILINK ecosystem for lighting products, and established strategic cooperation with Suning for B2Bkey accounts, laying a solid foundation for the future development of e-commerce. In 2019, the E-commerce BUwitnessed a YOY increase of 29.60% in sales revenue.By analyzing the characteristics of customers at an in-depth level, the Export BU strengthened its marketing workin “technology + customer service” for key accounts, continued to enhance customer satisfaction and deepenedcooperation with key accounts, as part of its response to U.S.-China trade frictions. It vigorously promoted lampsand intelligent products and optimized the product sales structure. It toiled to develop new high-quality customersand expand the market space. It worked on e-commerce channels to lay a good foundation for overseas onlinebusiness. By making use of the “Belt and Road” opportunity, the BU energetically promoted the overseas sales ofFSL, which has successfully gained access to the European market, other than Southeast Asia, South Asia, WestAsia and South Africa.
(2) Electrical Products
The Company reinforced its network of end outlets, increased the market coverage of electrical products, assisteddistributors to enhance their market service capacity, and further improved the development and maintenancework of outlets. It reformed the operation model of KA (engineering) channel and focused on customers withcentralized purchases of properties and brand chain corporation customers. In 2019, the Company secured thecontracts for six cooperation projects of centralized purchase of properties and three cooperation projects withhome decoration companies, and won the bids for 11 projects, effectively enhancing FSL’s industrial visibilityand brand influence for electrical products. The Company expanded the intelligent household field by developingand promoting intelligent switches, intelligent sockets, intelligent locks and other intelligent products as part of itseffort to extend from the general public market to the mid- to high-end market.
(3) Vehicle Lighting Products
The Company closely followed the development trend of LED vehicle lighting technology, continued to increase
spending on the R&D of LED vehicle lighting, strengthened the R&D of new products, diversified the categoriesof LED vehicle lighting products and focused on developing LED module projects. Through vigorous marketexpansion, the Company undertook 12 new LED module projects in 2019 in a bid to continuously increase themarket share of its products. Meanwhile, the Company set up a back-end market promotion team to carry out endpromotion activities in different places across the country and enhance the product visibility on end market. In2019, the Company saw a YOY increase of 82% in the sales revenue from LED vehicle lighting products.
3. Deepening intelligent manufacturing by enhancing the integration of automation and information technologyThe Company’s production automation has improved substantially over recent years’ continuous development inproduction automation. On the basis of that, the Company continued to center around the goal of “Automation,Flexibility and Large Scale”, optimized automation for some production lines based on the actual productionconditions, and tried to push the standard and modular process from front end to back end, in an effort to enhancethe flexibility and compatibility of production automation. It also enhanced communication and cooperation withcapable equipment suppliers to jointly develop intelligent manufacturing equipment. At the same time, theCompany accelerated the level of information building. On the basis of the existing SAP system, OA system, HRsystem and MES system, it established the SRM (supply chain) system, WMS (warehouse) system and PDM(R&D) system, set up its own e-commerce platform, and promoted the integration of its automated productionlines and information systems, aiming to achieve inter-connectivity and integration and open up its business datachains in different segments, including R&D, purchase, manufacturing, warehousing and sales. Thus, it will helpthe Company’s management to quickly understand production conditions, expedite the adjustment of itsproduction according to market demands and enhance its overall response speed and management abilities,providing customers with better delivery experience and achieving the goal of win-win results between theCompany and its customers.
4. Stronger Delicacy Management towards Lower Cost and Higher Efficiency
In 2019, the Company promoted cost reduction and efficiency enhancement by improving production processesand controlling the quality of raw materials and products. It took a number of measures, including strengtheningdelicacy management of production, driving the improvement of production processes, exerting the control of keyexpenses and optimizing plant appraisal indicators, to improve production efficiency and cut production andoperating costs. The Company intensified the control of purchase process, and through the SRM (supply chain)
system, improved the supply chain management system to guarantee materials supply. It kept close watch on themarket prices of materials, reasonably arranged material purchase plans and further exerted the control overmaterial costs. It strictly controlled product quality, and to deal with the changes brought by new products andnew processes, strengthened the training on product quality standard systems, further reinforced the qualitymonitoring on the whole process ranging from raw material purchase to production and quality inspection, andimplanted quality awareness into each step of production to strengthen product competitiveness.
5. Strengthening brand promotion for brand upgrading
In 2019, the Company continued to strengthen brand promotion. Pursuing a whole new brand image of“Professional, Healthy, Fashionable and Intelligent”, it carried out multi-dimensional brand promotion activitiesthrough multiple channels, and promoted the transition of the “FSL” brand from being industry-wide well-knownto being generally well-known. In respect of conventional media, the Company placed in 2019 hardadvertisements on China Central Television (CCTV), Guangzhou Baiyun International Airport, ShanghaiHongqiao International Airport, Shanghai Pudong International Airport and Beijing-Guangzhou high-speed trains,which has brought the brand promotion of the Company to a new level and rapidly boosted the brand presence. Interms of mobile new media, the Company also enhanced advertising on high-traffic platforms such as WeChat,Weibo and Tik Tok, with a view to boosting brand recognition among young consumers. Such amulti-dimensional and diverse ad matrix would greatly boost the recognition and influence of the “FSL” brandand help build a high-end popular brand image. As for image presentation at the retail end, the Company upgradedthe image of its exclusive shops and improved user experience to attract the younger consumers to the shops.Through multiple measures, the brand presence of the Company has been further strengthened.II Core Business Analysis
1. Overview
See “I Overview” above.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
| 2019 | 2018 | Change (%) |
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 3,337,576,747.66 | 100% | 3,801,955,946.76 | 100% | -12.21% |
| By operating division | |||||
| Lighting products and luminaries | 3,337,576,747.66 | 100.00% | 3,801,955,946.76 | 100.00% | -12.21% |
| By product category | |||||
| LED lighting products | 2,530,826,166.63 | 75.83% | 2,776,060,566.71 | 73.02% | -8.83% |
| Traditional lighting products | 685,726,922.53 | 20.55% | 905,695,616.42 | 23.82% | -24.29% |
| Electrical products | 80,498,200.00 | 2.41% | 96,493,768.09 | 2.54% | -16.58% |
| Other | 40,525,458.50 | 1.21% | 23,705,995.54 | 0.62% | 70.95% |
| By operating segment | |||||
| Domestic | 1,983,289,202.28 | 59.42% | 2,158,770,050.28 | 56.78% | -8.13% |
| Overseas | 1,354,287,545.38 | 40.58% | 1,643,185,896.48 | 43.22% | -17.58% |
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of OperatingRevenue 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 | 3,337,576,747.66 | 2,560,513,052.56 | 23.28% | -12.21% | -12.40% | 0.16% |
| By product category | ||||||
| LED lighting products | 2,530,826,166.63 | 1,975,925,436.56 | 21.93% | -8.83% | -9.02% | 0.16% |
| Traditional lighting products | 685,726,922.53 | 497,438,329.77 | 27.46% | -24.29% | -25.53% | 1.21% |
| Electrical products | 80,498,200.00 | 52,233,400.00 | 35.11% | -16.58% | -18.76% | 1.75% |
| Other | 40,525,458.50 | 34,915,886.23 | 13.84% | 70.95% | 86.21% | -7.06% |
| By operating segment | ||||||
| Domestic | 1,983,289,202.28 | 1,484,503,844.14 | 25.15% | -8.13% | -5.99% | -1.71% |
| Overseas | 1,354,287,545.38 | 1,076,009,208.42 | 20.55% | -17.58% | -19.93% | 2.33% |
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 | 2019 | 2018 | Change (%) |
| Lighting products and luminaries | Unit sales | Piece | 626,090,881 | 767,969,866 | -18.47% |
| Output | Piece | 606,160,734 | 771,535,024 | -21.43% | |
| Inventory | Piece | 101,346,236 | 121,276,383 | -16.43% |
Any over 30% YoY movements in the data above and why:
□ Applicable √ Not applicable
(4) Execution Progress of Major Signed Sales 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 | 2019 | 2018 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Lighting products and luminaries | 2,560,513,052.56 | 100.00% | 2,922,833,510.40 | 100.00% | -12.40% | |
| Lighting products and luminaries | Raw materials | 1,939,695,600.35 | 75.76% | 2,199,097,763.69 | 75.24% | -11.80% |
| Lighting products and luminaries | Labor cost | 340,520,251.28 | 13.30% | 419,756,197.29 | 14.36% | -18.88% |
| Lighting products and luminaries | Depreciation and other | 245,381,314.70 | 9.58% | 285,228,811.19 | 9.76% | -13.97% |
| Lighting products and luminaries | Other | 34,915,886.23 | 1.36% | 18,750,738.24 | 0.64% | 86.21% |
Unit: RMB
| Product category | Item | 2019 | 2018 | Change (%) |
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| LED lighting products | Raw materials | 1,571,660,353.88 | 61.38% | 1,754,239,718.12 | 60.02% | -10.41% |
| LED lighting products | Labor cost | 237,779,502.49 | 9.29% | 265,927,179.88 | 9.10% | -10.58% |
| LED lighting products | Depreciation and other | 166,485,580.19 | 6.50% | 151,672,427.91 | 5.19% | 9.77% |
| LED lighting products | Subtotal | 1,975,925,436.56 | 77.17% | 2,171,839,325.91 | 74.31% | -9.02% |
| Traditional lighting products | Raw materials | 323,991,639.55 | 12.65% | 388,968,905.47 | 13.31% | -16.71% |
| Traditional lighting products | Labor cost | 98,224,247.66 | 3.84% | 149,172,301.24 | 5.10% | -34.15% |
| Traditional lighting products | Depreciation and other | 75,222,442.56 | 2.94% | 129,804,090.42 | 4.44% | -42.05% |
| Traditional lighting products | Subtotal | 497,438,329.77 | 19.43% | 667,945,297.12 | 22.85% | -25.53% |
| Electrical products | Raw materials | 44,043,606.92 | 1.72% | 55,889,140.10 | 1.91% | -21.19% |
| Electrical products | Labor cost | 4,516,501.13 | 0.18% | 4,656,716.17 | 0.16% | -3.01% |
| Electrical products | Depreciation and other | 3,673,291.95 | 0.14% | 3,752,292.86 | 0.13% | -2.11% |
| Electrical products | Subtotal | 52,233,400.00 | 2.04% | 64,298,149.13 | 2.20% | -18.76% |
| Other products and services | Other | 34,915,886.23 | 1.36% | 18,750,738.24 | 0.64% | 86.21% |
| Total | 2,560,513,052.56 | 100.00% | 2,922,833,510.40 | 100.00% | -12.40% |
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
The Company convened the 26th Meeting of the 8th Board of Directors on 7 September 2018, which reviewedand approved the Proposal on the De-Registration of Wholly-owned Subsidiary Guangdong Fozhao FinanceLease Co., Ltd. (hereinafter referred to as “Fozhao Lease”). Upon the receipt of the Notice on Approval of
De-Registration from the Foshan Administration for Market Regulation in 2019, the de-registration procedure ofFozhao Lease has been completed and Fozhao Lease has been excluded from the scope of the Company’sconsolidated financial statements.
(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:
| Total sales to top five customers (RMB) | 578,233,699.96 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 17.32% |
| 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 | 323,032,103.83 | 9.68% |
| 2 | Customer B | 93,927,668.88 | 2.81% |
| 3 | Customer C | 63,499,323.20 | 1.90% |
| 4 | Customer D | 52,872,150.14 | 1.58% |
| 5 | Customer E | 44,902,453.91 | 1.35% |
| Total | -- | 578,233,699.96 | 17.32% |
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) | 189,615,811.39 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 9.73% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 2.42% |
Information about top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 53,916,135.38 | 2.77% |
| 2 | Supplier B | 47,177,854.15 | 2.42% |
| 3 | Supplier C | 30,521,718.60 | 1.57% |
| 4 | Supplier D | 30,276,114.91 | 1.55% |
| 5 | Supplier E | 27,723,988.35 | 1.42% |
| Total | -- | 189,615,811.39 | 9.73% |
Other information about major suppliers:
√ Applicable □ Not applicable
Among the top five suppliers, the 2nd supplier is a related party of the Company while the other 4 are not.
3. Expense
Unit: RMB
| 2019 | 2018 | Change (%) | Reason for any significant change | |
| Selling expense | 241,414,766.43 | 237,485,389.89 | 1.65% | |
| Administrative expense | 145,080,623.05 | 173,871,085.61 | -16.56% | |
| Finance costs | -27,725,342.20 | -26,115,179.16 | -6.17% | |
| R&D expense | 79,444,261.80 | 52,726,585.28 | 50.67% | More investments in R&D in the Current Period, including significantly higher labor cost |
4. R&D Expense
√ Applicable □ Not applicable
The Company always took science and technology as the first priority, paid attention to technology R&D,constantly researched and developed new products and technologies meeting market demands, promoted theoptimization and upgrade of product structure, improved the technology content of products, and improved thecore competitiveness of the Company. Meanwhile, the Company strengthened the research on technique andtechnology of products, so as to cut down product cost and improve quality. Where the R&D funds go to: One isforward-looking technologies and products independently developed by the Company through separate R&Dprojects as product and technology reserve for market expansion in the future. For this kind of R&D projects, theCompany usually launches the project and sets up a dedicated research team. The other is new products developed
according to customers’ technological requirements. For this kind of R&D projects, the Company formulates aninitial design plan and starts trial productions after the plan has been approved by the customer, with thebench-scale and pilot-scale production expenses included into the R&D expense.According to the Measures for the Administration of the Accreditation of High-Tech Enterprises, R&D expenseincludes the R&D expense recorded in cost of sales and the R&D expense capitalized as per the relevantaccounting standards. In 2019, the Company’s R&D expense amounted to RMB139.0544 million, accounting for
4.17% of the operating revenue. The revenue generated from the sale of products through the bench-scale andpilot-scale production was recorded in the core business revenue, while RMB55.4257 million and RMB79.4443million of the costs and expenses incurred were recorded in the cost of sales of core businesses and the R&Dexpense respectively.Unit:RMB’0,000
| Year | Operating revenue | R&D expense | R&D expense as % of operating revenue | Costs recorded in cost of sales | Expense recorded in R&D expense |
| 2019年 | 333,757.67 | 13,905.44 | 4.17% | 5,542.57 | 7,944.43 |
| 2018年 | 380,195.59 | 13,959.49 | 3.67% | 8,367.75 | 5,272.66 |
Details about R&D expense:
| 2019 | 2018 | Change (%) | |
| Number of R&D personnel | 632 | 673 | -6.09% |
| R&D personnel as % of total employees | 8.38% | 7.29% | 1.09% |
| R&D expense (RMB) | 139,054,379.24 | 139,594,894.62 | -0.39% |
| R&D expense as % of operating revenue | 4.17% | 3.67% | 0.50% |
| Capitalized R&D expense (RMB) | 0.00 | 0.00 | 0.00% |
| Capitalized R&D expense as % of total R&D expense | 0.00% | 0.00% | 0.00% |
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
| Item | 2019 | 2018 | Change (%) |
| Subtotal of cash generated from operating activities | 3,716,893,712.44 | 3,844,002,001.24 | -3.31% |
| Subtotal of cash used in operating activities | 3,208,808,954.98 | 3,226,014,514.19 | -0.53% |
| Net cash generated from/used in operating activities | 508,084,757.46 | 617,987,487.05 | -17.78% |
| Subtotal of cash generated from investing activities | 70,764,256.00 | 271,716,187.40 | -73.96% |
| Subtotal of cash used in investing activities | 108,476,166.05 | 248,587,186.18 | -56.36% |
| Net cash generated from/used in investing activities | -37,711,910.05 | 23,129,001.22 | -263.05% |
| Subtotal of cash generated from financing activities | 2,350,000.00 | ||
| Subtotal of cash used in financing activities | 218,298,000.02 | 418,531,713.57 | -47.84% |
| Net cash generated from/used in financing activities | -215,948,000.02 | -418,531,713.57 | 48.40% |
| Net increase in cash and cash equivalents | 254,547,798.64 | 225,101,547.42 | 13.08% |
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
1. Net cash generated from operating activities decreased 17.78% year-on-year, primarily driven by a decrease inproceeds from sale of commodities and rendering of services.
2. Net cash generated from investing activities decreased 263.05% year-on-year, primarily driven by a greater gapbetween the purchase amount and the withdrawn amount of bank’s low-risk principal-protected wealthmanagement products and structured deposits.
3. Net cash used in financing activities increased 48.40% year-on-year, primarily driven by a smaller amount ofcash dividend payout.
4. Net increase in cash and cash equivalents increased 13.08% year-on-year, primarily driven by more net cashgenerated from financing activities.
Explanation of why net cash generated from/used in operating activities varies significantly from net profit for the
Reporting Period:
√ Applicable □ Not applicable
For the Reporting Period, net cash generated from operating activities stood at RMB508,084,757.46 while netprofit stood at RMB303,452,471.39, representing a difference of RMB204,632,286.07. Mainly due to thereinforcement of the settlement and loans with bank’s acceptance bills and the extension of loan repayment termin the Reporting Period.III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
| Amount | As % of total profit | Main source/Reason | Recurrent or not | |
| Return on investment | 60,878,425.30 | 17.29% | Gains on banks’ low-risk wealth management products and dividends from holding investments in other equity instruments | Not |
| Gain/loss on changes in fair value | 2,024,400.00 | 0.57% | Changes in the fair value of derivative financial instruments | Not |
| Asset impairments | -16,675,215.52 | -4.74% | Inventory valuation allowances | Not |
| Non-operating income | 3,072,145.61 | 0.87% | Government subsidies and other income received | Not |
| Non-operating expense | 5,517,243.94 | 1.57% | Inventory loss | Not |
| Other income | 11,202,255.25 | 3.18% | Government subsidies that arose in the ordinary course of business of the Company | Not |
| Credit impairment loss | -3,693,729.47 | -1.05% | Allowances for doubtful accounts | Not |
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
| 31 December 2019 | 1 January 2019 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 1,125,456,662.64 | 18.23% | 896,703,037.65 | 15.13% | 3.10% | |
| Accounts receivable | 712,175,266.51 | 11.53% | 834,420,596.05 | 14.07% | -2.54% | |
| Inventory | 637,336,584.06 | 10.32% | 767,319,599.00 | 12.94% | -2.62% | |
| Long-term equity investments | 181,093,725.43 | 2.93% | 182,458,559.69 | 3.08% | -0.15% | |
| Fixed assets | 629,832,098.35 | 10.20% | 512,106,912.39 | 8.64% | 1.56% | |
| Construction in progress | 119,030,610.16 | 1.93% | 224,624,447.16 | 3.79% | -1.86% | |
| Investments in other equity instruments | 1,454,740,241.46 | 23.56% | 1,232,130,339.01 | 20.78% | 2.78% |
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 | ||||||||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 6,000,000.00 | 13,550,000.00 | 19,550,000.00 | |||||
| 2. Derivative financial assets | 1,547,200.00 | 1,547,200.00 | ||||||
| 4. Investments in other equity instruments | 1,232,130,339.01 | 222,609,902.45 | 1,454,740,241.46 | |||||
| Subtotal of financial assets | 1,238,130,339.01 | 15,097,200.00 | 222,609,902.45 | 19,550,000.00 | 1,456,287,441.46 | |||
| Total of the above | 1,238,130,339.01 | 15,097,200.00 | 222,609,902.45 | 19,550,000.00 | 1,456,287,441.46 | |||
| Financial liabilities | -477,200.00 | 477,200.00 | 0.00 |
Notes: For details about bank's wealth management products, see "XVII Significant Contracts and Execution" in"Part V Significant Events".Details about other changes:
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 | 68,958,729.27 | Security deposits for notes and forward forex settlement |
| Notes receivable | 67,035,696.27 | In pledge for notes pool |
| Total | 135,994,425.54 |
V Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
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 | Guoxuan High-tech | 160,000,000.00 | Fair value method | 525,465,291.00 | 135,911,870.25 | 441,142,021.61 | 4,545,547.50 | 661,377,161.25 | Investments in other equity instruments | Self-funded | ||
| Domestically/Overseas listed stock | 601818 | China Everbright Bank | 30,828,816.00 | Fair value method | 68,622,989.80 | 13,168,195.34 | 58,141,437.32 | 2,986,027.39 | 81,791,185.14 | Investments in other equity instruments | Self-funded | ||
| Domestically/Overseas listed stock | N/A | Xiamen Bank | 292,574,133.00 | Fair value method | 632,987,881.81 | 73,529,836.86 | 413,943,585.67 | 10,971,417.60 | 706,517,718.67 | 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 | 7,962.31 | 500,000.00 | Investments in other equity instruments | Self-funded | ||||
| Total | 483,902,949.00 | -- | 1,227,576,162.61 | 222,609,902.45 | 913,227,044.60 | 0.00 | 0.00 | 18,510,954.80 | 1,450,186,065.06 | -- | -- | ||
| 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) |
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: US$’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 China Construction Bank | Not related | Not | Forward forex settlement portfolio | 1,200 | 12 July 2018 | 14 January 2019 | 200 | 200 | -1.78 | ||||
| Foshan branch of the Agricultural Bank of China | Not related | Not | Forward forex settlement portfolio | 1,200 | 2 August 2018 | 1 February 2019 | 400 | 400 | -0.12 | ||||
| Foshan branch of Guangzhou Rural Commercial Bank | Not related | Not | General forward forex settlement | 600 | 22 March 2019 | 12 June 2019 | 600 | 600 | 1.88 | ||||
| Foshan branch of Guangzhou Rural Commercial Bank | Not related | Not | General forward forex settlement | 600 | 24 April 2019 | 31 October 2019 | 600 | 600 | 0.48 |
| Foshan branch of China Construction Bank | Not related | Not | General forward forex settlement | 500 | 9 May 2019 | 15 October 2019 | 500 | 500 | 4.81 | ||||
| Foshan branch of the Agricultural Bank of China | Not related | Not | General forward forex settlement | 500 | 9 May 2019 | 14 October 2020 | 500 | 500 | 4.99 | ||||
| Foshan branch of Bank of China | Not related | Not | General forward forex settlement | 800 | 4 November 2019 | 7 January 2020 | 800 | 400 | 400 | 0.57% | -0.94 | ||
| Foshan branch of the Agricultural Bank of China | Not related | Not | General forward forex settlement | 1,200 | 4 December 2019 | 1 April 2020 | 1,200 | 1,200 | 1.71% | ||||
| Total | 6,600 | -- | -- | 600 | 4,200 | 3,200 | 1,600 | 2.28% | 9.32 | ||||
| Funding source | All self-funded | ||||||||||||
| Legal matters involved (if applicable) | N/A | ||||||||||||
| Disclosure date of board announcement approving derivative investment (if any) | 23 May 2018 | ||||||||||||
| 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, liquidity risk, credit risk, operational risk, legal risk, etc.) | 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 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 reviewed and 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) | 1. The Company invests in Forward Exchange Settlement 3+3 Portfolio. This product portfolio is superior to other ordinary forward settlement products during the same period. The first three sessions of vesting conditions of this portfolio are: the spot exchange rate at maturity is lower than the agreed front-end exchange rate, and the exchange settlement shall be carried out based on the agreed front-end exchange rate; if the spot exchange rate at maturity is higher than the agreed front-end exchange rate, the Company can choose not to settle the exchange or choose to settle the exchange based on the spot exchange rate at maturity. The back-end three sessions of vesting conditions are: the spot exchange rate at maturity is lower than the agreed back-end exchange rate, and the Company can choose not to settle the exchange or choose to settle the exchange based on the spot exchange rate at maturity; if the spot exchange rate at maturity is higher than the agreed back-end exchange rate, the exchange settlement shall be carried out based on the agreed back-end exchange rate. At present, in terms of Forward Exchange Settlement 3+3 Portfolio purchased by the Company, the spot exchange rates at maturity are all higher than the agreed front-end exchange rates, and the Company chooses not to exercise the right. Therefore, the product’s fair value has not changed. 2. The Company invests in general forward forex settlement products, where settlement is carried out according to the currency, amount and exchange |
| rate as stipulated in the forward forex settlement contract. The fair value of the products may change. | |
| Major changes in accounting policies and specific accounting principles adopted for derivative investments in Reporting Period compared to last reporting period | N/A |
| Opinion of independent directors on derivative investments and risk control | The independent directors of the Company are of the opinion that during the Reporting Period, the Company carried out forward forex settlement in strict compliance with the Company Law, the Regulations of the People’s Bank of China on Foreign Exchange Settlement, Sale and Payment and the Company’s Management Rules for Forward Foreign Exchange Settlement and Sale, among others, as well as within the Board’s authorization. Such trading is primarily aimed to prevent exchange rate fluctuations from impacting the Company’s export business and operating earnings, with no speculative trading involved. It is a necessity, and the risk is well under control. |
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting PeriodVI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
√ Applicable □ Not applicable
| Counterparty | Asset sold | Sales date | Transaction price (RMB’0,000) | Net profits of the Company generated from the asset for the period from the period-begin to the sales | Influence of the sale on the Company (note 3) | Proportion of net profits of the Company generated from the sale of the asset to the total net profits of the | Pricing basis for the sale of asset | Related-party transaction or not | Relationship with the counterparty (applicable related-party transaction case) | The ownership for the asset involved has been transferred in full or not | The credits and liabilities involved have been transferred in full or not | Implemented on schedule or not, if not, explanations and measures taken by the Company shall be | Disclosure date | Disclosure index |
| date (RMB’0,000) | Company | given | ||||||||||||
| Xiamen Tungsten Corporation, Ltd. | 6.94% of equity of Chengdu Hongbo Industrial Co., Ltd. | 7 March 2019 | 1,955 | 1,326.75 | The sale will have no influence on the Company’s business continuity and stability of the management. | 4.37% | Based on the evaluation result | No | N/A | Yes | Yes | Yes | 8 March 2019 | Announcement on Transfer of Equity of Chengdu Hongbo Industrial Co., Ltd. (Announcement No.: 2019-005) disclosed on cninfo.com.cn. |
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII 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 |
| Foshan Chansheng Electronic Ballast Co., Ltd. | Subsidiary | Manufacturing | 1,000,000.00 | 46,395,846.08 | 45,997,919.72 | 12,008,176.40 | 885,028.64 | 698,936.92 |
| FSL Chanchang Optoelectronics Co., Ltd. | Subsidiary | Manufacturing | 72,782,944.00 | 158,523,694.06 | 127,314,519.31 | 95,513,556.45 | 2,767,058.20 | 2,058,884.61 |
| Foshan Taimei Times Lamps Co., Ltd. | Subsidiary | Manufacturing | 500,000.00 | 58,772,995.14 | 30,709,717.93 | 129,622,438.26 | 4,549,331.64 | 3,682,835.31 |
| FSL New Light Source Technology Co., Ltd. | Subsidiary | Manufacturing | 50,000,000.00 | 58,528,894.33 | 57,029,125.16 | 16,839,394.80 | 1,082,659.31 | 970,435.61 |
| FSL (Xinxiang) Lighting Co., Ltd. | Subsidiary | Manufacturing | 35,418,439.76 | 56,884,630.43 | 50,371,213.42 | 42,886,072.02 | 2,142,741.18 | 1,619,595.11 |
| FSL Lighting Equipment Co., Ltd. | Subsidiary | Manufacturing | 15,000,000.00 | 64,028,453.24 | 55,910,458.39 | 68,746,113.18 | 613,079.53 | 423,260.19 |
| Nanjing Fozhao Lighting Components Manufacturing Co., Ltd. | Subsidiary | Manufacturing | 41,683,200.00 | 76,880,243.15 | 61,182,460.04 | 29,744,601.57 | 8,078,062.01 | 6,034,676.11 |
| FSL Zhida Electric Technology Co., Ltd. | Subsidiary | Manufacturing | 50,000,000.00 | 88,774,594.30 | 48,281,658.56 | 88,828,868.23 | 5,394,223.07 | 2,376,968.48 |
| FSL Lighting GmbH | Subsidiary | Manufacturing | 195,812.50 | 1,258,116.12 | -33,096.48 | 2,248,901.40 | 24,625.30 | 24,625.30 |
Subsidiaries obtained or disposed in the Reporting Period:
√ Applicable □ Not applicable
| Subsidiary | How subsidiary was obtained or disposed in the Reporting Period | Effects on overall operations and operating performance |
| Guangdong Fozhao Financing Lease Co., Ltd. | Cancelling | No influence |
Information about major majority- and minority-owned subsidiaries:
—Foshan Chansheng Electronic Ballast Co., Ltd. was invested and established by the Company and Mr. MaHenglai and had set up and obtained license for business corporation on 26 August 2003. The Company holds75% equities of the said company; therefore the said subsidiary was included into the scope of the consolidatedfinancial statements since the date of foundation.On 24 December 2013, the Company and Mr. Ma Henglai signed the equity transfer agreement. The Companypurchased 25% equity of Foshan Chansheng Electronic Ballast Co., Ltd. held by Mr. Ma Henglai. After thepurchasing, the Company held 100% equity of Foshan Chansheng Electronic Ballast Co., Ltd.—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;therefore the said subsidiary was included into the scope of the consolidated financial statements since the date offoundation.—FSL New Light Source Technology Co., Ltd. (its predecessor was “Foshan Lighting Lamps and Lanterns Co.,Ltd.” and it changed its name to “FSL New Light Source Technology Co., Ltd.” on 17 December 2014), which isinvested and established by the Company together with Foshan Haozhiyuan Trading Co., Ltd., Shanghai Liangqi
Electric Co., Ltd, Changzhou Sanfeng Electrical & Lighting Co., Ltd., Henan Xingchen Electrical & Lighting Co.,Ltd., Foshan Hongbang Electrical & Lighting Co., Ltd., Hebei Jinfen Trading Co., Ltd., obtaining its license forBusiness Corporation on 27 September 2009. The Company holds 60% equities of this company. Therefore thesaid subsidiary was included into the scope of the consolidated financial statements since the date of foundation.On 25 September 2009 and 19 November 2010, the equity transfer agreement was signed between the Companyand the minority shareholders, in which the minority shareholders respectively transferred their equities of FoshanLighting Lamps and Lanterns Co., Ltd. to the Company. After transfer, the Company holds 100% equities ofFoshan Lighting Lamps and Lanterns Co., Ltd.—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 reviewedand approved to invest another RMB2 million (land in an industrial park in Xinxiang, Henan Province andmonetary funds) in FSL (Xinxiang) Lighting, increasing the registered capital of FSL (Xinxiang) Lighting toRMB35,418,439.76.—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.VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects
(I) Development trends of the industry
1. Industry competition
In recent years, costs have kept decreasing and the effects of energy conservation and emission reduction havebeen prominent due to the rapid development of the LED lighting technology. In addition, LED has been appliedin increasingly widespread scenarios with the continuous technical breakthroughs. As a result, LED lighting hasmaintained a fast and stable development trend in recent years. Over years’ rapid development, although theoverall sales of the LED industry is still increasing, the growth speed has slowed down substantially compared tothe previous years. In the LED lower-stream application area, due to the relatively lower threshold, the problem ofexcess structured capacity is quite obvious in the LED lighting industry, which has resulted in chaotic and viciouscompetition in the market, mainly manifested as serious product homogenization, ambiguous product standardsand fierce price competition at the finished product end. At present, despite the increasing market concentrationon leading enterprises in LED lighting application, there is still a great number of companies in the industry, withvery fierce competition among different brands. At the same time, the ever-growing raw material prices andtransportation and human resource costs are putting the companies under great pressure for rapid development andprofitability. From a long-term view, as LED lighting industry enters the stage of integration and continuousreshuffle, the companies with advantages in brand, channel, R&D and fund will use their advantaged position tokeep extending their industrial chain and enhancing their advantages amid the intense competition of industrialupgrading. As a result, market resources will be further gathered in industrial leading companies. Meanwhile, themarket recession will drive the companies to accelerate technological innovation, proactively develop the newblue ocean market, continuously work on such market segments as intelligent lighting and healthy lighting andexpand the market space.
2. Industrial Development Trend
(1) Faster Industrial Transformation and Upgrading and Deeper Interdisciplinary Cooperation-based DevelopmentWith continuous advancement of market competition and industrial reshuffle, many SMEs lacking corecompetitiveness are withdrawing from LED lighting market. As a result, industrial advantaged resources aregathering in leading enterprises with faster M&As and a gradual shift from industrial M&A to interdisciplinaryintegration. Enterprises are continuing to update their service models and transforming from productmanufacturers to product and service system integrated providers, with faster corporate transformation andupgrading. At the same time, with faster development of digitization, intelligence and IoT, LED lighting isundergoing the development trend of technology crossover ad industrial interdisciplinary integration. In particularas intelligent lighting technology is maturing, LED lighting companies will conduct in-depth cooperation with thecompanies in cloud computing, IoT, sensor and artificial intelligence in the field of intelligent household, bringinghuge new revolutions to LED lighting industry.
(2) The Rapid Development of Intelligent Lighting Leads the Trend of the TimesAs an important part of intelligent household, intelligent lighting market will enter a stage of rapid developmentwith technological development, product maturity, manufacturers’ proactive promotion and the popularization ofintelligent lighting related concepts. According to OFweek statistics, the global intelligent lighting market sizewas US$16.6 billion in 2018. With more prominent energy conservation problems, declining LED componentprices and the engagement of emerging advanced technologies, such as IoT and connection devices, driven by thebuilding of smart cities, the compound grow rate of the intelligent lighting market is expected to exceed 25% inthe next few years, reaching more than US$40 billion by 2022. Currently, global LED lighting giants are givingmore focus to intelligent lighting, leading to ever-growing development speed of intelligent lighting. Domesticleading LED companies are stepping into the development and application of intelligent lighting one after anotherthrough interdisciplinary cooperation with big platform enterprises, such as Alibaba, Tencent, Huawei and Xiaomi,which continuously pushes the development of intelligent household technology and services, includingintelligent lighting. With faster speed and refinement in 5G, such ecosystems as “intelligent households”, “smartcities” and “smart factories” will be implemented and applied on a large scale with continuous expansion andimprovement of the application scenarios of intelligent lighting. Intelligent lighting is expected to maintain amomentum of stable high-speed development.
(3) Innovation Becomes the Key to Development as the Industry Enters the Maturity StageOver more than ten years of development, LED industry has undergone continuous changes in industrial marketstructure, competition framework and market consumption demand. Till now, under the double factors of internal
and external environment, growth of the overall industrial market size is slowing down, as technologies ondifferent segments of the industrial chain are maturing with a trend of market concentration, marking that theindustry is gradually entering the maturity stage. According to OFweek statistics, the overall market size ofChina’s LED industry reached RMB755.5 billion in 2018 (including upper, middle and lower streams),representing a YOY increase of 15.1%, while that number from 2014 to 2017 was 35%, 26.2%, 22.5% and 25.5%respectively from 2014 to 2017. The growth in 2018 is evidently slower than the years before. By purely relyingon price and size, LED industrial companies will not be able to maintain their competitive edge or expand marketshares. Some competent companies will resort to innovation-driven means to promote new applications and newproducts to seize market. Hence, LED industry will witness more emerging applications and technologies in thefuture. The large-scale and commercial application of new technologies will bring LED industry to a new stage ofdevelopment.(II) The Future Development Strategies of the CompanyThe Company will continue to stick to the road of professional development, center around the three keybusinesses of “lighting, electrical products and vehicle lighting”, vigorously implement the strategic goal of“Cutting-Edge Technologies, Internationally-Famous Brands and Large-Scale Production”, drive the shift fromlight sources to lamps, from mid-end to mid- to high-end products, from single lighting products to lightingsystem solutions and from following innovation through independent R&D to leading innovation focusing oncustomer demands, and fully improve the operation quality and sustainable development capacity by increasingthe efficiency of human resources, fund and resources.(III) Work Plan for 2020
1. R&D, Innovation and Technology Leading
By centering around the industrial trends represented by intelligent products, segmented markets and high-endquality, the Company will increase spending on the R&D of new technologies, new products and new processes,speed up the R&D process that drives the mid- to high-end development of products, refine the intelligent productand segmented market product systems, accelerate the development of “LED+” series products and continue toupgrade the intelligent control technology. It will reinforce the analysis of the industrial development trend, makefull use of the resources of colleges and research institutions, conduct research on cutting-edge technology,establish industry-education-research project cooperation and sustain its product competitiveness and sustainabledevelopment. It will further strengthen the staffing of the R&D team, reinforce the building of the R&D system,improve the overall technological innovation level and lead the high-end process through technology.
2. Strengthening Delicacy Management of Channels and Expanding Brand Influence
(1) Refining Market Control for Win-Win Results with Customers
The Company will further refine market control over sales prices and regions, impose severe punishment onvicious competition on end market, mobilize the enthusiasm of distributors and maintain the win-win results withthem.
(2) Opening Up Sales Linearly through Information Services
The Company will continue to promote the flat management of sales BUs and improve its information services tostrengthen connections with end customers and open up sales linearly.
(3) Promoting Sales in the Three Economically Developed Regions and Establishing a Multi-Hierarchical SalesSystemThe Company will proactively plan and drive sales in the three economically developed regions, including thePearl River Delta, the Yangtze River Delta and the Beijing-Tianjin-Hebei Region, accelerate the planning forhigh-end products and establish a multi-hierarchical sales system according to different regional characteristics.
(4) Developing Market Segments and Expanding Market Coverage
The Company will make active steps to develop market segments, look for competent project distributors,vigorously develop large projects, focus on the fields of real estate, education, municipal works, rail transit,intelligent firefighting and 5G smart road lamps, establish a product mix based on market demands and provideusers with highly efficient and professional lighting product solutions.
(5) Continuing to Develop International Market and Enhance the Overseas Influence of FSLThe Company will continue to work on the maintenance and development of key accounts and enhance theadvantage of strategically cooperating with core customers. It will vigorously develop new customers andcontinue to promote FSL in European market. It will promote online business in overseas market with an attemptto combine online and offline business. The Company will use the “Belt and Road” opportunity to extend thedevelopment measure of “going global”; it will strengthen brand promotion overseas to enhance the influence ofFSL.
3. Optimizing the HR Management System and Improving the Healthy Talent Competition MechanismThe Company will establish two-way professional development channels, form the talent competition model of“promoting competent employees and abandoning non-performers”, effectively carry out motivation andpromotion, continue to enhance the openness and rationality of the employment system and create a favorablehuman resource environment with stable technology, loyalty and effectiveness.
The Company will work on the talent mechanism adjustment and the remuneration and incentive mechanismreform, focus on introducing and developing technical, marketing and management talents and optimize the talentstructure. It will strengthen the cultivation and development of young talents with great potentials, include them inthe talent reserve and build a team of key talents to support corporate sustainable development. The Company willestablish and improve the performance appraisal system and the HR management system and build a fair andincentive remuneration system to inspire and unleash the innovation impetus of talents at the maximum level andensure its ability to introduce, retain and motivate talents.(IV) Potential Risks
1. Risk of Macro Economic Uncertainties
Domestic and foreign countries are facing a number of unstable factors affecting economic development,including trade frictions, global public health emergencies, international financial market turbulence and intensegeopolitical situations, all of which may result in global economic slowdown. Developed economies, despite theirrelatively higher level of economic aggregate, are still facing various problems. For emerging markets anddeveloping countries, under the forecast of slowing global economic development and industrial production, theyneed more economic growth drivers. The economic uncertainties will affect market demands, with impact on theCompany’s performance ultimately.
2. Risk of Market Competition
Lighting industry is an industry with global competition. It is particularly so for domestic companies in thelower-stream application area of lighting, which face the competition from home appliance and electronicenterprises and LED upper- and middle-stream chip packaging enterprises that extend to the lighting applicationfield, in addition to the competition from international famous branded lighting companies. Furthermore, as theimbalance in industrial supply and demand is rising, the Company will face a market environment with fiercercompetition. The Company may be exposed to the risk of losses in market share if it fails to maintain itscompetitive edge in technology, service and price.
3. The risk of rising labor costs and raw material price fluctuations
Due to the influence of domestic labor supply and demand as well as employment policies, labor costs keepincreasing, especially in the Pearl River Delta region with more developed economy. In addition, raw materials ofthe Company account for a high proportion of operation costs. As some raw material prices are associated withuncontrollable factors such as global market conditions and national macroeconomic policies, there is a risk ofprice fluctuation of raw materials.
4. The risk of inventory loss from falling price
As of the end of the reporting period, the inventory amount is high, and the inventory mainly includes rawmaterials, semi-finished products and finished products. Due to the large number of product types and models, theinventory amount of the Company is relatively high. Moreover, as the sales revenue of the Company increasesyear by year, the raw materials and inventories that are stored to meet production and sales will increasesimultaneously. It will lead to a higher inventory maintained in the Company. In case that prices or demandchanges occur in the raw material or product sales market in the future, the Company may experience a risk ofinventory depreciation.
5. The risk of exchange rate fluctuations
The RMB exchange rate in China is based on market supply and demand, with reference to a basket of currenciesfor regulation and a managed floating exchange rate system. Exchange rate fluctuations will happen with thefluctuations of global economy, simmering tension of some regions and the monetary policies of various countries.Export business accounts for 43.22% of the Company business, and the scale has been increasing year by year. Ifthe exchange rate fluctuates significantly, business performance of the Company will be affected.
6. The risk of bad debts on accounts receivable
As of the end of the reporting period, the accounts receivable is high. The main debit customers of the Companyare all long-term customers with good business reputations. Major adverse changes in the financial status of majordebtors may result in the risk of bad debts on accounts receivable.X Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
√ Applicable □ Not applicable
| Date | Way of communication | Type of communication party | Index to main information communicated |
| 21 February 2019 | One-on-one meeting | Institution | Investor Relations-EasyIR- www.cninfo.com.cn |
| 19 March 2019 | One-on-one meeting | Institution | Investor Relations-EasyIR- www.cninfo.com.cn |
| 5 June 2019 | One-on-one meeting | Institution | Investor Relations-EasyIR- www.cninfo.com.cn |
| 3 September 2019 | One-on-one meeting | Institution | Investor Relations-EasyIR- www.cninfo.com.cn | |
| Times of visit | 4 | |||
| Number of visiting institutions | 15 | |||
| Number of visiting individuals | 38 | |||
| Number of other visitors | 0 | |||
| Tip-offs or leakages of substantial supposedly-confidential information during communications | None | |||
Part V Significant EventsI Profit Distributions to Ordinary 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 ListedCompanies (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 (2018-2020), 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 |
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years(including the Reporting Period) are summarized as follows:
For 2017, based on the total 1,272,132,868 shares of the Company as at 31 December 2017, a cash dividend ofRMB3.29 (tax included and dividends for B-share holders to be paid in the Hong Kong dollars) will be distributed tothe A-share and B-share holders for every 10 shares they hold, with the total distributed cash dividends reachingRMB 418,531,713.57. Meanwhile, converting capital reserve into 1 share to all shareholders for every 10 shares.For 2018, based on the total 1,399,346,154 shares of the Company as at 31 December 2018, a cash dividend ofRMB1.56 (tax included and dividends for B-share holders to be paid in the Hong Kong dollars) will be distributed tothe A-share and B-share holders for every 10 shares they hold, with the total distributed cash dividends reachingRMB 218,298,000.02.For 2019, based on the total 1,399,346,154 shares of the Company as at 31 December 2019, a cash dividend ofRMB1.85 (tax included and dividends for B-share holders to be paid in the Hong Kong dollars) will be distributed tothe A-share and B-share holders for every 10 shares they hold, with the total distributed cash dividends reachingRMB258,879,038.49.
Cash dividend for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
| Year | Cash dividends (tax inclusive) (A) | Net profit attributable to ordinary shareholders of the listed company in consolidated statements for the year (B) | A as % of B (%) | Cash dividends in other forms (such as share repurchase) (C) | C as % of B (%) | Total cash dividends (including those in other forms) (D) | D as % of B (%) |
| 2019 | 258,879,038.49 | 301,182,906.24 | 85.95% | 0.00 | 0.00% | 258,879,038.49 | 85.95% |
| 2018 | 218,298,000.02 | 377,615,133.62 | 57.81% | 0.00 | 0.00% | 218,298,000.02 | 57.81% |
| 2017 | 418,531,713.57 | 740,308,725.30 | 56.53% | 0.00 | 0.00% | 418,531,713.57 | 56.53% |
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the ordinaryshareholders despite the facts that the Company has made profits in the Reporting Period and the profits of theCompany as the parent distributable to the ordinary shareholders are positive.
□ Applicable √ Not applicable
II Final Dividend Plan for the Reporting Period
√Applicable □ Not applicable
| Bonus shares for every 10 shares (share) | 0 |
| Dividend for every 10 shares (RMB) (tax inclusive) | 1.85 |
| 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) | 1,399,346,154 |
| Cash dividends (RMB) (tax inclusive) | 258,879,038.49 |
| Cash dividends in other forms (such as share repurchase) (RMB) | 0.00 |
| Total cash dividends (including those in other forms) (RMB) | 258,879,038.49 |
| Distributable profit (RMB) | 1,523,507,818.11 |
| Total cash dividends (including those in other forms) as % of total profit distribution | 100% |
| Cash dividend policy | |
| Where the Company is at a mature stage of development and has plans for considerable spending, in profit distribution, cash dividends shall reach at least 40% in the total profit to be distributed. | |
| Details about the proposal for profit distribution and converting capital reserve into share capital | |
| As audited by Zhongzheng Tiantong Certified Public Accountants LLP, the after-tax net profits of RMB286,744,570.37 of the Company as the parent for 2019, plus the beginning retained profits of RMB1,482,164,706.92, minus the distributed profits of RMB218,298,000.02 for 2018 and the statutory surplus reserve of RMB 27,103,459.16 for 2019. The ending profits distributable to shareholders of were RMB1,523,507,818.11 for 2019. The Board of Directors has proposed to allocate profits for 2019 as follows: Based on the total 1,399,346,154 shares of the Company as at 31 December 2019, a cash dividend of RMB1.85 (tax included and dividends for B-share holders to be paid in the Hong Kong dollars) will be distributed to the A-share and B-share holders for every 10 shares they hold, with the total cash dividends to be distributed reaching RMB258,879,038.49. The retained profits of RMB1,264,628,779.62 will be carried forward into the next year. The profit allocation preplan can be effective upon review and approval of the Shareholders’ General Meeting of the Company. | |
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and 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 | Controlling shareholder | About avoidance of horizontal competition | Electronics Group and its acting-in-concert parties Shenzhen Rising Investment and Hong Kong Rising Investment have made a commitment that they shall eliminate the horizontal competition between Foshan NationStar Optoelectronics Co., Ltd. and the Company through business integration or other ways or arrangements before 4 June 2020. | 3 December 2019 | Six months | Ongoing |
| Controlling shareholder | About avoidance of horizontal competition | Electronics Group and its acting-in-concert parties Shenzhen Rising Investment and Hong Kong Rising Investment have made more commitments as follows to avoid horizontal competition with the Company: 1. They shall conduct supervision and restraint on the production and operation activities of themselves and their relevant enterprises so that besides the enterprise above that is in horizontal competition with the Company for now, if the products or business of them or their relevant enterprises become the same with or similar to those of the Company or its subsidiaries in the future, they shall take the following measures: (1) If the Company thinks necessary, they and their relevant enterprises shall reduce and wholly transfer their relevant assets and business; and (2) If the Company thinks necessary, it is given the priority to acquire first, by proper means, the relevant assets and business of them and their relevant enterprises. 2. All the commitments made by them to eliminate or avoid horizontal competition with the Company are also applicable to their directly or indirectly controlled subsidiaries. | 4 December 2015 | Long-standing | Ongoing |
| 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. | |||||
| Controlling shareholder | About reduction and regulation of related-party transactions | Electronics Group and its acting-in-concert parties Shenzhen Rising Investment and Hong Kong Rising Investment have made a commitment that during their direct or indirect holding of the Company’s shares, they shall 1. strictly abide by the regulatory documents of the CSRC and the SZSE, the Company’s Articles of Association, etc. and not harm the interests of the Company or other shareholders of the Company in their production and operation activities by taking advantage of 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 | 4 December 2015 | Long-standing | Ongoing |
| 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 the Company, its subsidiaries or the Company’s other shareholders, they shall be obliged to compensate. | |||||
| Controlling shareholder | About independence | In order to ensure the independence of the Company in business, personnel, asset, organization and finance, Electronics Group and its acting-in-concert parties Shenzhen Rising Investment and Hong Kong Rising Investment have made the following commitments: 1. They will ensure the independence of the Company in business: (1) They promise that the Company will have the 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 | 4 December 2015 | Long-standing | Ongoing |
| financial decisions independently and that they will not illegally intervene in the Company’s use of its funds. | ||||||
| Other commitments made to minority interests | The Company | About cash dividends | The profits distributed by the Company in cash every year shall not be less than 30% of the distributable profits it has achieved in the year. | 27 May 2009 | Long-standing | Ongoing |
| Executed on time or not | Yes | |||||
| Specific reasons for failing to fulfill commitments on time and plans for next step | N/A | |||||
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still within theforecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
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 Methods
√Applicable □ Not applicable
| Changes in accounting policy | Approval procedure | Remark |
| In accordance with the Notice on Revising and Printing the Format of 2019 General Enterprises Financial Statement (CK [2019] No. 6), the Notice on Revising and Printing the Format of Consolidated Financial Statements (2019) (CK [2019] No. 16) issued by the Ministry of Finance, the Company adjusted the formats of financial | Approved by the 35th Meeting of the 8th Board of Directors |
| statements accordingly. | See the Note 44 Changes in Main Accounting Policies and Estimates in Part XII (V) of the Report for details | |
| The Ministry of Finance issued the revised Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises No. 23-Transfer of Financial Assets, Accounting Standards for Business Enterprises No. 24-Hedging and Accounting Standards for Business Enterprises No.37-Presentation of Financial Instruments in 2017. The Company starts to implement the above standards since 1 January 2019 and adjusted the financial statements accordingly on 1 January 2019 in accordance with the above standards governing connection regulation. | Approved by the 30th Meeting of the 8th Board of Directors | |
| The Ministry of Finance issued the revised Accounting Standards for Business Enterprises No.7-Exchange of Non-monetary Assets on 9 May 2019 which is carried out since 10 June 2019. No retroactive adjustment was needed for exchanges of non-monetary assets before 1 January 2019 and adjustment made in accordance with the revised standards is required for the exchanges of non-monetary assets occurring during the period from 1 January 2019 to the execution date. | ||
| Approved by the 35th Meeting of the 8th Board of Directors | ||
| The Ministry of Finance issued the revised Accounting Standards for Business Enterprises No.12-Debt Restructuring on 16 May 2019 which s carried out since 17 June 2019. No retroactive adjustment was needed for the debt restructuring before 1 January 2019 and adjustment made in accordance with the revised standards is required for the debt restructuring occurring during the period of 1 January 2019 to the execution date. |
VII Retrospective Restatements due to Correction of Material Accounting Errors in theReporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
The Company held the 26
th Meeting of the 8
th
Board of Directors on 7 September 2018, on which the Proposal onDe-Registration of the Wholly-Owned Subsidiary of Guangdong FSL Financing Lease Co., Ltd. (hereinafterreferred to as the “FSL Lease Company”) was reviewed and approved. The Company received the Notice onApproval of De-Registration issued by the Foshan Market Supervision and Administration Bureau in 2019. Thede-registration procedure of FSL Lease Company has been completed. After the completion of de-registration,FSL Lease Company will no longer be included into the consolidation scope of financial statements of theCompany.
IX 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) | 130 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 4 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the auditor’s report | Tong Quanyong, Luo Dongri |
| How many consecutive years the certified public accountants from the domestic independent auditor have provided audit service for the Company | 4 |
| Name of the foreign independent auditor (if any) | Naught |
| The Company’s payment to the foreign independent auditor (RMB’0,000) (if any) | 0 |
| How many consecutive years the foreign independent auditor has provided audit service for the Company (if any) | Naught |
| Names of the certified public accountants from the foreign independent auditor writing signatures on the auditor’s report (if any) | Naught |
| How many consecutive years the certified public accountants from the foreign independent auditor have provided audit service for the Company (if any) | Naught |
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 LLPas its internal control auditor with the total audit fees of RMB480,000.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.XII Major Legal Matters
□ Applicable √ Not applicableNo such cases in the Reporting Period.
XIII Punishments and Rectifications
□ Applicable √ Not applicableNo such cases in the Reporting Period.XIV 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 inany unsatisfied court judgments, large-amount overdue liabilities or the like.XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measuresfor Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVI 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 | 4,717.79 | 4,717.79 | 2.42% | 21,000 | Not | Remittance | 4,717.79 | 29 March 2019 | 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 | 387.47 | 387.47 | 0.20% | 1,200 | Not | Remittance | 387.47 | 29 March 2019 | 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 | 271.98 | 271.98 | 0.14% | 1,000 | Not | Remittance | 271.98 | 29 March 2019 | www.cninfo.com.cn |
| Hangzhou Times Lighting and Electrical Co., Ltd. | Enterprise controlled by related natural person | Purchasing products and receiving labor service from related party | Purchase of materials | Market price | 67.48 | 67.48 | 0.03% | 100 | Not | Remittance | 67.48 | 29 March 2019 | www.cninfo.com.cn |
| Guangdong Zhongke | Under same actual | Purchasing products | Purchase of equipme | Market price | 41.05 | 41.05 | 2.08% | 100 | Not | Remittance | 41.05 | 29 March 2019 | www.cninfo.com.cn |
| Hongwei Semiconductor Equipment Co.,Ltd | controller | and receiving labor service from related party | nt | ||||||||||
| Guangdong Electronic Technology Research Institute | Under same actual controller | Purchasing products and receiving labor service from related party | Purchase of equipment | Market price | 4.66 | 4.66 | 0.24% | 300 | Not | Remittance | 4.66 | 29 March 2019 | www.cninfo.com.cn |
| Shaoguan Green Resource Recycling Development Co., Ltd. | Under same actual controller | Purchasing products and receiving labor service from related party | receiving labor service | Market price | 9.33 | 9.33 | 7.96% | Remittance | 9.33 | N/A | |||
| Zhuhai Doumen District Yongxingsheng Environmental Industrial Wastes Recycling Comprehensive Treatment Co., Ltd. | Under same actual controller | Purchasing products and receiving labor service from related party | receiving labor service | Market price | 5.47 | 5.47 | 4.66% | Remittance | 5.47 | N/A | |||
| Prosperity | Shareho | Selling | Selling | Market | 2,032.3 | 0.61% | 4,200 | Not | Remitta | 29 | www.c |
| Lamps & Components Limited | lder that holds over 5% shares of the Company | products and providing labor service to related party | products | price | 2,032.38 | 8 | nce | 2,032.38 | March 2019 | ninfo.com.cn | |||
| Prosperity Electrical (China) Co., Ltd. | Enterprise controlled by related natural person | Selling products and providing labor service to related party | Selling products | Market price | 7.88 | 7.88 | 0.00% | 200 | Not | Remittance | 7.88 | 29 March 2019 | www.cninfo.com.cn |
| Guangzhou Diansheng Property Management Co., Ltd | Under same actual controller | Selling products and providing labor service to related party | Selling products | Market price | 0.08 | 0.08 | 0.00% | Remittance | 0.08 | N/A | |||
| Total | -- | -- | 7,545.57 | -- | 28,100 | -- | -- | -- | -- | -- | |||
| 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 March 2019, 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., Prosperity Lamps & Components Limited, Prosperity Electrical (China) Co., Ltd., and Hangzhou Times Lighting and Electrical Co., Ltd. Concerning the purchases from its related parties, the actual amount in 2019 so far was RMB55.0523 million, accounting for23.23% of the estimate in 2019. As for the sales to its related parties, the actual amount in 2019 so far was RMB20.4034 million, accounting for 46.37% of the estimate in 2019. | ||||||||||||
| 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
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Major Related-Party Transactions
√ Applicable □ Not applicable
1. On 26 June 2018, the Company held the 23
rd Meeting of the 8
thBoard of Directors, and the Proposal on Signingthe Financial Services Agreement with Guangdong Rising Finance Co., Ltd. was examined and approved at themeeting. On the same day, the Company signed the Financial Services Agreement with Guangdong RisingFinance Co., Ltd. (hereinafter referred to as “Rising Finance”), and Rising Finance would provide deposit andsettlement services for the Company for a term of one year. During the term of validity of the Agreement, thedaily deposit balance of the Company in Rising Finance Company shall not exceed RMB150 million. During theReporting Period, the daily deposit balance of the Company in Rising Finance Company was RMB149 million.
2. On 21 June 2019, the Company held the 31
st Meeting of the 8
thBoard of Directors, and the Proposal on Signingthe Financial Services Agreement with Guangdong Rising Finance Co., Ltd. was examined and approved at themeeting. On the same day, the Company signed the Financial Services Agreement with Guangdong RisingFinance Co., Ltd. (hereinafter referred to as “Rising Finance”), and Rising Finance would provide deposit andsettlement services for the Company for a term of one year. During the term of validity of the Agreement, thedaily deposit balance of the Company in Rising Finance Company shall not exceed RMB150 million. During theReporting Period, the daily deposit balance of the Company in Rising Finance Company was RMB149 million.
Index to the current announcements about the said related-party transactions disclosed:
| Title of announcement | Disclosure date | Disclosure website |
| Announcement on Signing Financial Service Agreement with Guangdong Rising Finance Co., Ltd. | 27 June 2018 | www.cninfo.com.cn |
| Announcement on Signing Financial Service Agreement with Guangdong Rising Finance Co., Ltd. | 22 June 2019 | www.cninfo.com.cn |
XVII 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
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overviews of cash entrusted for wealth management during the Reporting Period
Unit: RMB'0,000
| Specific type | Capital resources | Amount incurred | Undue Balance | Overdue amount |
| Bank financial products | Self-owned funds | 46,500 | 46,500 | 0 |
| Structural deposits | Self-owned funds | 60,000 | 43,000 | 0 |
| Total | 106,500 | 89,500 | 0 | |
Particulars of cash entrusted for wealth management with single significant amount or low security, bad liquidity,and no capital preservation
√ 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) |
| China Bohai Bank Shenzhen Chegongmiao sub-branch | Bank | Principal-protected with floating yield | 5,000 | The Company’s own idle funds | 9 August 2019 | 10 February 2020 | Investment | Repayment of principal with yield | 3.85% | 97.57 | 75.95 | To be received | Yes | Yes | www.cninfo.com.cn | |
| China Guangfa Bank, Guangzhou development area sub-branch | Bank | Principal-protected with floating yield | 8,000 | The Company’s own idle funds | 15 October 2019 | 13 January 2020 | Investment | Repayment of principal with yield | 3.85% | 75.95 | 64.98 | To be received | Yes | Yes | www.cninfo.com.cn |
| Huaxia Bank, Foshan branch | Bank | Principal-protected with floating yield | 5,000 | The Company’s own idle funds | 23 October 2019 | 23 January 2020 | Investment | Repayment of principal with yield | 3.90% | 49.15 | 36.86 | To be received | Yes | Yes | www.cninfo.com.cn | |
| China Minsheng Bank Foshan sub-branch | Bank | Principal-protected with floating yield | 5,000 | The Company’s own idle funds | 25 October 2019 | 3 February 2020 | Investment | Repayment of principal with yield | 4.00% | 55.34 | 36.16 | To be received | Yes | Yes | www.cninfo.com.cn | |
| Huaxia Bank, Foshan branch | Bank | Principal-protected with floating yield | 3,000 | The Company’s own idle funds | 13 November 2019 | 14 February 2020 | Investment | Repayment of principal with yield | 3.78% | 28.89 | 15.22 | To be received | Yes | Yes | www.cninfo.com.cn | |
| China Guangfa Bank, Guangzhou development area sub-branch | Bank | Principal-protected with floating yield | 2,000 | The Company’s own idle funds | 19 November 2019 | 17 February 2020 | Investment | Repayment of principal with yield | 3.85% | 18.99 | 9.07 | To be received | Yes | Yes | www.cninfo.com.cn | |
| China Guangfa Bank, Guangzhou development area sub-br | Bank | Principal-protected with floating yield | 5,000 | The Company’s own idle funds | 26 November 2019 | 24 February 2020 | Investment | Repayment of principal with yield | 3.85% | 47.47 | 18.46 | To be received | Yes | Yes | www.cninfo.com.cn |
| anch | ||||||||||||||||
| PingAn Bank, Foshan Jiangwan sub-branch | Bank | Principal-protected with floating yield | 3,500 | The Company’s own idle funds | 29 November 2019 | 2 March 2020 | Investment | Repayment of principal with yield | 3.80% | 34.25 | 12.02 | To be received | Yes | Yes | www.cninfo.com.cn | |
| China Guangfa Bank, Foshan Chengnan sub-branch | Bank | Principal-protected with floating yield | 4,000 | The Company’s own idle funds | 5 December 2019 | 4 March 2020 | Investment | Repayment of principal with yield | 3.75% | 36.99 | 10.68 | To be received | Yes | Yes | www.cninfo.com.cn | |
| Bank of Hangzhou Shenzhen sub-branch | Bank | Principal-protected with floating yield | 3,000 | The Company’s own idle funds | 12 December 2019 | 12 March 2020 | Investment | Repayment of principal with yield | 3.85% | 28.8 | 6.01 | To be received | Yes | Yes | www.cninfo.com.cn | |
| Bank of Shanghai Shenzhen Qianhai sub-branch | Bank | Principal-protected with floating yield | 3,000 | The Company’s own idle funds | 26 December 2019 | 26 March 2020 | Investment | Repayment of principal with yield | 3.80% | 28.42 | 1.56 | To be received | Yes | Yes | www.cninfo.com.cn | |
| China CITIC Bank,Business | Bank | Principal-protected with floatin | 5,000 | The Company’s own idle | 29 September 2019 | 06 January 2020 | Investment | Repayment of principal | 3.90% | 52.89 | 49.68 | To be received | Yes | Yes | www.cninfo.com.cn |
| Department of Guang zhou branch | g yield | funds | with yield | |||||||||||||
| Industrial Bank Guangzhou Baiyun Sub-branch | Bank | Principal-protected with floating yield | 12,000 | The Company’s own idle funds | 01 November 2019 | 30 January 2020 | Investment | Repayment of principal with yield | 3.77% | 111.55 | 74.37 | To be received | Yes | Yes | www.cninfo.com.cn | |
| China Everbright Bank Guangzhou Sub-branch | Bank | Principal-protected with floating yield | 5,000 | The Company’s own idle funds | 05 December 2019 | 05 March 2020 | Investment | Repayment of principal with yield | 3.85% | 48.13 | 13.9 | To be received | Yes | Yes | www.cninfo.com.cn | |
| China Minsheng Bank Foshan sub-branch | Bank | Principal-protected with floating yield | 16,000 | The Company’s own idle funds | 11 December 2019 | 11 March 2020 | Investment | Repayment of principal with yield | 3.80% | 151.58 | 34.98 | To be received | Yes | Yes | www.cninfo.com.cn | |
| China Minsheng Bank Foshan sub-branch | Bank | Principal-protected with floating yield | 5,000 | The Company’s own idle funds | 27 December 2019 | 27 March 2020 | Investment | Repayment of principal with yield | 3.70% | 46.12 | 2.03 | To be received | Yes | Yes | www.cninfo.com.cn | |
| Total | 89,500 | -- | -- | -- | -- | -- | -- | 912.09 | 461.93 | -- | -- | -- | -- | |||
Whether there is the case where the principal cannot be recovered at maturity or other case which may cause
impairment of cash entrusted for wealth management
□ Applicable √ Not applicable
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVIII Corporate Social Responsibility (CSR)
1. Measures Taken to Fulfill CSR Commitment
We 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 creditors
We continuously improve our corporate governance structure, regulate our operation and enhance ourmanagement on information disclosure and investor relations. We treat all our investors fairly and justly, ensuretheir rights to know about, participate in and vote on the significant events of the Company, and safeguard thelegal 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 ouremployment system, improve the compensation packages for our employees and attach importance to talentcultivation so as to provide opportunities and space for the sustainable development of our employees as well asrealize the common development of the employees and the Company. We also pay attention to the health of ouremployees, attach importance to production safety and labor protection, and improve the working and livingconditions for our employees so as to formulate harmonious and stable labor relations.
3. Protection of the rights and interests of our customers and consumers
We have been upholding the “Customer First” principle in our provision of quality products and services tocustomers. We operate honestly and disallow any unfair trade practice against commercial ethics, market rules andthe fair competition principle. We also improve our product quality and after-sales services and try to build awin-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 throughcreating an environment for open and fair competition among them so as to realize mutual benefits and mutualdevelopment of the suppliers and the Company.
5. Environmental protection and sustainable development
As an active response to the government’s call for building an environment-friendly and resource-saving society,we take on our responsibility of environmental protection and strictly abide by the government’s laws andregulations in environmental protection. In the Reporting Period, we enhanced the R&D, promotion and sale ofenvironment-friendly and high-efficient products. We have passed the ISO14001 environmental managementsystem certification, passed the province’s voluntary clean production examination and won the title of “CleanProduction Enterprise in Guangdong Province”. At the same time, the identification of Green Factory of theCompany has been examined and approved by the Ministry of National Industry and Information Technology. TheCompany becomes the demonstration unit of the second batch of the National 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 commitmentthat we should take on, trying to boost the local economy through our own development. We have been granted bythe local government the title of “Foshan Over-100-Million Tax Payer” for many years due to our contributions inboosting the harmonious development of the Company and the community.
2. Measures Taken for Targeted Poverty Alleviation
The Company didn’t take any targeted measures to help people lift themselves out of poverty during the ReportingPeriod, no subsequent plan temporarily too.
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by theenvironmental protection authorities.NoIn strict accordance with the government’s requirements, the Company has been conscientiously carrying outenvironment-related work, including establishing and improving various related systems, and continuouslyincreasing related expenditure. These environment improvement efforts have helped build a good image of theCompany in relation to environmental protection. Meanwhile, the Company’s environmental protecting facilitieshave been running stably, with the discharge of waste gas and water in compliance with the relevant standards. Nopollution incidents have occurred.In addition to the environmental protection authorities’ quarterly examination and supervision, the Company hasalso entrusted, on a yearly basis, an independent institution to exam the Company’s waste gas treatment systems,as well as waste water and noise discharges, so as to minimize environment risk. All the examinations and testshave been documented and released to the employees on the environmental protection and safety bulletin boardsat every workshop. Employees at all levels, with a strong awareness of environment protection, have beencooperating closely with each other to implement the policy of “Save Energy, Reduce Consumption, LowerPollution and Increase Efficiency”. In all, the Company’s environment risk is controllable and its environmentmanagement keeps improving.
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
Part VI Share Changes and Shareholder InformationI. 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 | 13,968,654 | 1.00% | -315,603 | -315,603 | 13,653,051 | 0.98% | |||
| 1.2 Shares held by state-owned legal persons | 1 | 1 | 1 | 0.00% | |||||
| 1.3 Shares held by other domestic investors | 5,041,022 | 0.36% | -315,604 | -315,604 | 4,725,418 | 0.34% | |||
| Among which: Shares held by domestic legal persons | 4,237,081 | 0.30% | -483,109 | -483,109 | 3,753,972 | 0.27% | |||
| Shares held by domestic natural persons | 803,941 | 0.06% | 167,505 | 167,505 | 971,446 | 0.07% | |||
| 1.4 Shares held by foreign investors | 8,927,632 | 0.64% | 8,927,632 | 0.64% | |||||
| Shares held by foreign natural persons | 8,927,632 | 0.64% | 8,927,632 | 0.64% | |||||
| 2. Unrestricted shares | 1,385,377,500 | 99.00% | 315,603 | 315,603 | 1,385,693,103 | 99.02% | |||
| 2.1 RMB-denominated ordinary shares | 1,072,239,049 | 76.62% | 315,603 | 315,603 | 1,072,554,652 | 76.65% | |||
| 2.2 Domestically listed foreign shares | 313,138,451 | 22.38% | 313,138,451 | 22.38% | |||||
| 3. Total shares | 1,399,346,154 | 100.00% | 1,399,346,154 | 100.00% | |||||
Reasons for share changes:
√ Applicable □ Not applicable
1. During the Reporting Period, some directors and supervisors, as well as all the senior management increasedtheir shareholdings in the Company, representing an increase of 167,505 restricted shares.
2. 483,108 restricted shares held by domestic legal persons became domestic natural persons’ holdings during theReporting Period and were freed from the lock-in period and changed into unrestricted shares.To sum up the point 1 and point 2 above, 315,603 restricted shares were decreased during the Reporting Period.Approval of share changes:
√ Applicable □ Not applicable
During the Reporting Period, 483,108 restricted shares were changed into unrestricted shares, which has beenagreed by Shenzhen Stock Exchange and Shenzhen Branch of China Securities Depositary and ClearingCorporation Limited.
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchases:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to theCompany’s ordinary 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
Unit: share
| Shareholder | Beginning restricted shares | Increase in Reporting Period | Released in Reporting Period | Ending restricted shares | Reason for restriction/release from restriction | Date of release |
| Liu Xingming | 444,150 | 39,705 | 0 | 483,855 | Lock-up of senior management’s shares | Uncertain |
| Tang Qionglan | 30,030 | 26,925 | 0 | 56,955 | Lock-up of senior management’s shares | Uncertain |
| Wei Bin | 55,744 | 23,175 | 0 | 78,919 | Lock-up of senior management’s shares | Uncertain |
| Jiao Zhigang | 56,549 | 11,250 | 0 | 67,799 | Lock-up of senior management’s shares | Uncertain |
| Chen Yu | 34,699 | 14,850 | 0 | 49,549 | Lock-up of senior management’s shares | Uncertain |
| Zhang Yong | 41,547 | 16,650 | 0 | 58,197 | Lock-up of senior management’s shares | Uncertain |
| Zhang Xuequan | 38,289 | 16,500 | 0 | 54,789 | Lock-up of senior management’s shares | Uncertain |
| Xu Xiaoping | 18,727 | 9,225 | 0 | 27,952 | Lock-up of senior management’s shares | Uncertain |
| Ye Zhenghong | 48,946 | 9,225 | 0 | 58,171 | Lock-up of senior management’s shares | Uncertain |
| Li Keli | 483,108 | 0 | 483,108 | 0 | Restricted shares before the initial issue | 31 December 2019 |
| Total | 1,251,789 | 167,505 | 483,108 | 936,186 | -- | -- |
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 | 85,911 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 82,890 | 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 or frozen | ||||||||
| Status | Shares | ||||||||||||||
| Hong Kong 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 | |||||||||||
| Shenzhen Rising Investment Development Co., Ltd. | State-owned legal person | 5.12% | 71,696,136 | 71,696,136 | In pledge | 35,800,000 | |||||||||
| Guangdong Electronics Information Industry Group Ltd. | State-owned legal person | 4.74% | 66,393,501 | 66,393,501 | In pledge | 32,532,815 | |||||||||
| Central Huijin Asset Management Co., Ltd. | State-owned legal person | 2.42% | 33,878,900 | 33,878,900 | ||||
| Essence International Securities (Hong Kong) Co., Ltd. | Foreign legal person | 2.22% | 31,008,913 | 1,676,727 | 31,008,913 | |||
| Hong Kong Rising Investment Development Co., Ltd. | Foreign legal person | 1.82% | 25,482,252 | 25,482,252 | ||||
| DBS Vickers(Hong Kong) Ltd A/C Clients | Foreign legal person | 1.57% | 22,002,137 | -100,000 | 22,002,137 | |||
| China Merchants Securities (Hong Kong) Co., Ltd | Foreign legal person | 0.87% | 12,160,236 | -173,600 | 12,160,236 | |||
| Zhuang Jianyi | Foreign natural person | 0.85% | 11,903,509 | 8,927,632 | 2,975,877 | |||
| 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, Hong Kong Wah Shing Holding Company Limited, Shenzhen Rising Investment Development Co., Ltd., Guangdong Electronics Information Industry Group Ltd. and Hong Kong Rising Investment Development Co., Ltd. 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. | |||||||
| Top 10 unrestricted shareholders | ||||||||
| Name of shareholder | Unrestricted shares at the Period-end | Type of shares | ||||||
| Type | Shares | |||||||
| Hong Kong 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 stock | 146,934,857 | |||||
| Shenzhen Rising Investment Development Co., Ltd. | 71,696,136 | RMB-denominated ordinary stock | 71,696,136 | |||||
| Guangdong Electronics Information Industry Group Ltd. | 66,393,501 | RMB-denominated ordinary stock | 66,393,501 |
| Central Huijin Asset Management Co., Ltd. | 33,878,900 | RMB-denominated ordinary stock | 33,878,900 |
| Essence International Securities (Hong Kong) Co., Ltd. | 31,008,913 | Domestically listed foreign stock | 31,008,913 |
| Hong Kong Rising Investment Development Co., Ltd. | 25,482,252 | Domestically listed foreign stock | 25,482,252 |
| DBS Vickers (Hong Kong) Ltd A/C Clients | 22,002,137 | Domestically listed foreign stock | 22,002,137 |
| China Merchants Securities (Hong Kong) Co., Ltd | 12,160,236 | Domestically listed foreign stock | 12,160,236 |
| Zhao Xiyi | 7,868,765 | RMB-denominated ordinary stock | 7,868,765 |
| Related or acting-in-concert parties among the top ten unrestricted public shareholders and between the top ten unrestricted public shareholders and the top ten shareholders | Among the top 10 unrestricted ordinary shareholders, Hong Kong Wah Shing Holding Company Limited, Shenzhen Rising Investment Development Co., Ltd., Guangdong Electronics Information Industry Group Ltd. and Hong Kong Rising Investment Development Co., Ltd. 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. | ||
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 Electronics Information Industry Group Ltd. | He Yong | 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. | ||||
| Shenzhen Rising Investment Development Co., Ltd. | Wu Xiaohui | 27 August 2003 | 91440300754255560K | Equity and venture capital investment (approval shall be obtained for each specific investment project); industrial investment (approval shall be obtained for each specific investment project); trustee service for asset management (not including securities, insurance, funds, financial service, human resources consulting service and other restricted business); and investment information consulting service, economic information consulting service, investment management planning, corporate identity design (excluding restricted business). |
| Guangdong Rising Finance Holding Co., Ltd. | Liu Zumian | 14 November 2014 | 91440400315213166P | Investment and asset management |
| Hong Kong Rising Investment Development Limited | Deng Qian | 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, 1. Guangdong Electronics Information Industry Group Ltd. held 79,753,050 shares in Foshan NationStar Optoelectronics Co., Ltd., representing 12.90% of the total shares of Foshan NationStar Optoelectronics Co., Ltd. 2. Shenzhen Rising Investment Development Co., Ltd. held shares in domestic and overseas listed companies as follows: (1) held 139,715,902 shares in Zhongjin Lingnan (000060), accounting for 3.91% of total shares of Zhongjin Lingnan (2) held 4,192,734 shares in Fenghua Advanced Technology (000636), accounting for 0.47% of total shares of Fenghua Advanced Technology (3) held 1,302,027 shares in Dongjiang Environmental (002672), accounting for 0.15% of total shares of Dongjiang Environmental (4) held 1,303,363 shares in Central China Securities (601375), accounting for 0.03% of total shares of Central China Securities 3. Guangdong Rising Finance Holding Co., Ltd. held shares in domestic and overseas listed companies as follows: (1) held 21,733,582 shares in Dongjiang Environmental (002672), accounting for 2.47% of total shares of Dongjiang Environmental (2) held 7,551,648 shares in Zhongjin Lingnan (000060), accounting for 0.21% of total shares of Zhongjin Lingnan (3) held 5,791,924 shares in NationStar Optoelectronics (002449), accounting for 0.94% of total shares of NationStar Optoelectronics | |||
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 Assets Management 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). |
| 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 Assets Management Co., Ltd. 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 32.49% stake of 1,159,811,571 shares in Zhongjin Lingnan Nonfemet (stock code: 000060); 3. a 20.49% stake of 183,495,085 shares in Fenghua Advanced (stock code: 000636); 4. a 21.32% stake of 131,804,995 shares in NationStar Optoelectronics (stock code: 002449); 5. a 21.84% stake of 186,526,928 A shares and H shares in Dongjiang Environment (stock code: 002672); 6. a 6.94% stake of 5,614,082,653 shares in China Telecom (stock code: 00728. HK). 7. a 0.23% stake of 9,024,363 shares in Central China Securities (stock code: 601375). | |||
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:
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of assetmanagement.
□ Applicable √ Not applicable
4. 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 |
State-owned Assets Supervision and Administration Commission of
the People’s Government of Guangdong Province100%
100%Guangdong Rising Assets Management Co., Ltd.
Guangdong Rising Assets Management Co., Ltd.100%
| 100% | 100% | 100% |
| Guangdong Rising Finance Holding Co., Ltd. | Hong Kong Rising Investment Development Limited | Guangdong Electronics Information Industry Group Ltd. |
Shenzhen Rising Investment
Development Co., Ltd.
Foshan Electrical and Lighting Co., Ltd.
Foshan Electrical and Lighting Co., Ltd.100%
100%
5.124%
5.124%
1.821%
1.821%
Hong Kong Wah Shing Holding
Company Limited
Hong Kong Wah Shing Holding
Company Limited
4.745%
| 4.745% | 100% |
13.470%
0.541%
%
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
Part VIII Convertible Corporate Bonds
□ Applicable √ Not applicable
No convertible corporate bonds in the Reporting Period.
Part IX Directors, Supervisors, Senior Management and StaffI Change in Shareholdings of Directors, Supervisors and Senior Management
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) |
| He Yong | Board Chairman | Incumbent | Male | 59 | 25 December 2015 | 25 December 2018 | 0 | 0 | 0 | 0 | 0 |
| Zhuang Jianyi | Vice Board Chairman | Incumbent | Male | 68 | 25 December 2015 | 25 December 2018 | 11,903,509 | 0 | 0 | 0 | 11,903,509 |
| Cheng Ke | Director | Incumbent | Male | 45 | 25 December 2015 | 25 December 2018 | 11,550 | 0 | 0 | 0 | 11,550 |
| Qi Siyin | Director | Incumbent | Male | 39 | 25 December 2015 | 25 December 2018 | 0 | 0 | 0 | 0 | 0 |
| Huang Zhiyong | Director | Incumbent | Male | 50 | 25 December 2015 | 25 December 2018 | 0 | 0 | 0 | 0 | 0 |
| Liu Xingming | Director & GM | Incumbent | Male | 57 | 25 December 2015 | 25 December 2018 | 592,200 | 52,940 | 0 | 0 | 645,140 |
| Zhang Nan | Independent Director | Incumbent | Female | 70 | 25 December 2015 | 25 December 2018 | 0 | 0 | 0 | 0 | 0 |
| Lu Rui | Independent Director | Incumbent | Male | 44 | 25 December 2015 | 25 December 2018 | 0 | 0 | 0 | 0 | 0 |
| Lyu Wei | Independent Director | Incumbent | Male | 55 | 25 December 2015 | 25 December 2018 | 0 | 0 | 0 | 0 | 0 |
| Li Huashan | Chairman of the Supervisory Committee | Incumbent | Male | 56 | 25 April 2019 | 30 June 2020 | 0 | 0 | 0 | 0 | 0 |
| Zhuang Junjie | Supervisor | Incumbent | Male | 34 | 25 December 2015 | 25 December 2018 | 0 | 0 | 0 | 0 | 0 |
| Ye Zhenghong | Supervisor | Incumbent | Male | 46 | 25 December 2015 | 25 December 2018 | 65,261 | 12,300 | 0 | 0 | 77,561 |
| Lin Qing | Supervisor | Incumbent | Male | 50 | 20 September 2016 | 25 December 2018 | 22,583 | 0 | 0 | 0 | 22,583 |
| Liang Yueyi | Supervisor | Incumbent | Female | 45 | 20 September 2016 | 25 December 2018 | 0 | 0 | 0 | 0 | 0 |
| Zhang Xuequan | Vice GM | Incumbent | Male | 42 | 23 August 2016 | 25 December 2018 | 51,052 | 22,000 | 0 | 0 | 73,052 |
| Tang Qionglan | CFO | Incumbent | Female | 49 | 26 January 2016 | 25 December 2018 | 40,040 | 35,900 | 0 | 0 | 75,940 |
| Wei Bin | Vice GM | Incumbent | Male | 50 | 26 January 2016 | 25 December 2018 | 74,326 | 30,900 | 0 | 0 | 105,226 |
| Jiao Zhigang | Vice GM | Incumbent | Male | 47 | 26 January 2016 | 25 December 2018 | 75,399 | 15,000 | 0 | 0 | 90,399 |
| Chen Yu | Vice GM | Incumbent | Male | 47 | 26 January 2016 | 25 December 2018 | 46,266 | 19,800 | 0 | 0 | 66,066 |
| Zhang Yong | Vice GM | Incumbent | Male | 45 | 23 August 2016 | 25 December 2018 | 55,396 | 22,200 | 0 | 0 | 77,596 |
| Xu Xiaoping | Vice GM | Incumbent | Male | 49 | 26 January 2016 | 25 December 2018 | 24,970 | 12,300 | 0 | 0 | 37,270 |
| Li Jinkun | Chairman of the Supervisory Committee | Former | Male | 55 | 24 July 2018 | 25 April 2019 | 0 | 0 | 0 | 0 | 0 |
| Lin Yihui | Secretary of the Board | Former | Male | 65 | 26 January 2016 | 29 June 2019 | 53,790 | 0 | 0 | 0 | 53,790 |
| Total | -- | -- | -- | -- | -- | -- | 13,016,342 | 223,340 | 0 | 0 | 13,239,682 |
Note: The management used an equity incentive fund to purchase shares of the Company
,
s stock atthe end of the year.II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
| Name | Office title | Type of change | Date of change | Reason for change |
| Li Jinkun | Chairman of the Supervisory Committee | Left | 11 April 2019 | Job turnover |
| Lin Yihui | Secretary of the Board | Dismiss | 29 June 2019 | Resign for personal reason |
III Biographical InformationProfessional 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. He Yong: Han nationality, born in September 1960, a member of the Communist Party of China. Hegraduated from Open University of Hong Kong with a MBA. He once acted as the Vice-minister of the Operatingand Management Department of Guangdong Rising Assets Management Co., Ltd., the Chairman of the Reformand Stableness Office, the Minister of the Operating and Management Department, the Supervisor of ShenzhenZhongjin Lingnan Nonfemet Co., Ltd., the GM of Guangdong Electronics Information Industry Group Ltd. andDeputy Secretary. Now he serves as the Chairman of the Board of Directors of Guangdong ElectronicsInformation Industry Group Ltd., the Party Secretary and the Chairman of Foshan NationStar Optoelectronics Co.,Ltd., the Chairman of Foshan Sigma Venture Capital Co., Ltd. And he has been the Board Chairman of theCompany since December 2015.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 was elected as a vice chairman of the 8
thBoard of the Company in
December 2015.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 Attendant of the Audit Division of Guangzhou DongshanCorporate Authority of Guangzhou Military Logistics Department, the Assistant Supervisor, the Supervisor, theSenior Executive, the Vice-Minister and the Minister of the Financing Plan Department of Guangdong RisingAssets Management Co., Ltd., Vice GM of Hubei Ashennan Expressway Development Co., Ltd., Hubei GdrisingHan-E Expressway Co., Ltd. and Hubei Han-Cai Expressway Co., Ltd. and now acts as the Vice-Minister of theAudit Department of Guangdong Rising Assets Management Co., Ltd. and the Director of Guangdong RisingFinance Co., Ltd, Foshan NationStar Optoelectronics Co., Ltd, and Hong Kong Rising Investment DevelopmentLimited. And he was elected as a director of the 8
thBoard of the Company in December 2015.Mr. Qi Siyin: Chinese nationality, with no right of permanent residence abroad. Born in May 1980, a member ofthe Communist Party of China, postgraduate degree, dual master’s degrees. He ever worked in GuangdongProvincial Expressway Development Co., Ltd., former investor relations management clerk, investor relationsmanagement director, information disclosure director and securities affairs representative of the SecuritiesDepartment. He has been working in Guangdong Rising Assets Management Co., Ltd. as Senior Director ofCapital Operation Department, Deputy Secretary of the Communist Youth League, Deputy Director and Director;as Director and Deputy General Manager of Hong Kong Rising Investment Co., Ltd since 2007. Currently, heworks as the Office Director of Board of Directors in Guangdong Rising Assets Management Co., Ltd, thedirector of Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd, Guangdong Fenghua Advanced Technology HoldingCo., Ltd, Foshan NationStar Optoelectronics Co., Ltd, Guangdong Nanyue Bank Co., Ltd, and E FundManagement Co., Ltd. In October 2016, he elected as the director of the 8th Board of Directors of the Company.Mr. Huang Zhiyong: Han nationality, born in August 1969, a member of the Communist Party of China and 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 and the GM Assistant of Guangdong Electronics Information Industry Group Ltd. Henow acts as the Vice GM and a member of Communist Party of China of Guangdong Electronics InformationIndustry Group Ltd. and the Chairman and Party branch secretary of Guangdong HuaSheng data solid-statestorage Co., Ltd. And he was elected as a director of the 8
thBoard of the Company in December 2015.Mr. Liu Xingming: Born in June 1962, a member of the Communist Party of China and an engineer with abachelor’s degree. He joined the Company in 1983, and acted as Vice GM from 1997 to 2005; acted as GM of theCompany from December 2005 to November 2008; acted as Vice GM of the Company in December 2008; electedas the Director of the Company from 1995 to Dec. 2015; acted as Vice Director of the Board from April 2011 toDecember 2015; from April 2012 up to now, he acted as the GM and Vice Director of the Board; after 1995, hewas elected as the Director of the Company; and he was elected as a director of the Company in April 2016. InJuly 2015, he was elected as the Party Secretary of the Company.Ms. Zhang Nan (Independent Director): Han nationality, born in February 1949, a member of the CommunistParty of China and a senior economist. She graduated from Chinese Academy of Social Sciences with a masterdegree of economic law. She once acted as the Vice-Minister of Beijing Electronic Instruments Industry SystemOffice, Deputy Director of Audit and Regulations Bureau, the Director, the Deputy Director and the Chief of theresearch laboratory of SETC, the Regulations Bureau and the Economic cadre training center as well as thebureau-level Supervisor of the large enterprises of the Board of Supervisors of the State-owned Assets Supervisionand Administration Commission and retired in March 2009. She used to be an Independent Director of CSCL andGuandgong Rising Nonferrous Metals Co., Ltd. And she was elected as an independent director of the 8
thBoard ofthe Company in December 2015.
Mr. Lu Rui (Independent Director): Chinese Han Nationality, no permanent residency abroad, born in January1975. He is now a professor of Finance, doctorial tutor, the Head of the Accounting and Capital OperationResearch Center of the Lingnan College of Sun Yat-Sen University. He graduated in 2003 from the ManagementAccounting of Sun Yat-Sen University with a master’s degree of Management; and in 2006, he graduated from theManagement Accounting of Sun Yat-Sen University with a doctor’s degree of Management. He acted as theTeaching Assistant and the Lecturer of the Financial Accounting Department of Guangzhou Finance & TradeManagement Institute during the period from July 1996 to August 2003; the Lecturer and associate professor ofthe Finance and Taxation Department of Lingnan College of Sun Yat-Sen University during the period from July2006 to October 2012; and the associate professor of Finance of the Lingnan College of Sun Yat-Sen Universityduring the period from November 2012 to June 2016. And he has been a profession of Finance and doctorial tutorat the Lingnan College of Sun Yat-Sen University since July 2016. His other academic and social posts mainlyinclude: the member of Expert Committee of China Association for Public Companies, a national leadingaccounting professional recognized by the Ministry of Finance, the member of All-China Financial YouthFederation, the member of the senior member of Accounting Society of China, the member of Accounting Societyof America; the Independent Director of Guangzhou Goaland Energy Conservation Tech Co., Ltd., ShenzhenKingsion Technology Co, Ltd. Huabang Construction Investment Group and Bank of Guangzhou; the Director ofGuangzhou Zijing Education Co., Ltd. And he was elected as an independent director of the 8
th
Board of theCompany in December 2015.Mr. Lyu Wei (Independent Director): Chinese Nationality, born in December 1964. He is a doctoral candidate ineconomic administration at Fudan University and a doctor’s degree holder in economics. He was a teachingassistant, a lecturer, a departmental chief, an associate profession and then a professor at Fudan University duringthe period from August 1989 to March 2003. And he has been working in Shanghai Jiao Tong University sinceApril 2003. Now he is a professor and doctoral tutor of the Department of Business Administration of the AntaiEconomics and Management School of Shanghai Jiao Tong University, the executive director of the AcademicCouncil of China Marketing Association, the editorial board member of Korean Journal of Marketing, and anindependent director of Shanghai Shine-Link International Logistics Co., Ltd., Luolai Lifestyle TechnologyCo.,Ltd., Shandong Wohua Pharmaceutical Co.,Ltd., Shanghai Lujiazui Finance & Trade Zone Development Co.,Ltd. and China Yongda Automobile Services Co., Ltd. And he was elected as an independent director of the 8
th
Board of the Company in December 2015.
2. Working Experience of the Supervisors
Mr. Li Huashan: Male, a member of the Communist Party of China, Chinese Han Nationality, born in September1963, an engineer graduated from Air Force Telecommunications Engineering Academy with a bachelor degree.He once acted as the wireless engineer and the director in the Communication Repair Institute of Air Force Unit86336, the staff officer of Air Command Communication Agency of Guangzhou Military Area, assistant to officedirector, head of Administration and Security Division, vice minister of Administration and Security Department,and vice minister of Operation Department in Guangdong Rising Assets Management Co., Ltd., director, deputyParty secretary, secretary of Committee for Discipline Inspection in Guangdong Zhongren Group Co., Ltd.,director, deputy Party secretary, secretary of Committee for Discipline Inspection, vice GM in Guangdong RisingInvestment Group Co., Ltd., Party secretary, deputy chairman of the board in Guangdong Huihua Group Co., Ltd.,director, deputy Party secretary, secretary of Committee for Discipline Inspection, chairman of the labor union inGuangdong Rising Real Estate Group Co., Ltd. He was elected as the member of the Party Committee, secretaryof Committee for Discipline Inspection of the Company in December of 2018 and the chairman of theSupervisory Committee of the Company in April of 2019.
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 Youchang Lighting Equipment Co., Ltd. And he was elected as a supervisor of the 8
th
Supervisory Board ofthe Company in December 2015.Mr. Ye Zhenghong: Born in June 1973, a member of the Communist Party of China with a college degree. Hejoined 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 RepairWorkshop from May 2005 to January 2007; acted as Chief Officer of Machinery Dynamic Department from May2006 to December 2007; and acted as factory director of T8 Fluorescent Lamp Factory from January 2008 toFebruary 2016; and acted as Chief Officer of Production Department from March 2016 to March 2019; and actedas the director of E-Commerce Business Department and vice GM of FSL Zhida Electric Technology Co., Ltd.from April 2019 to February 2020; and acted as the director of E-Commerce Business Department and GM ofFSL Zhida Electric Technology Co., Ltd. since March 2020 ; the Chairman of the 5
thSupervisory Committee andthe Employee Supervisor of the 6
th, 7th and 8thSupervisory 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 directorof the fluorescent lamp factory from March 2002 to September 2009; as the director of Technology Departmentsince October 2009; in July 2015, elected as a discipline committee member of the company’s CPC committee.And he was elected as a Employee Supervisor of the Company in September 2016.Ms. Liang Yueyi: born in June 1974, member of the Communist Party of China, college degree; has beenworking in the company since August 1995; worked as the Secretary to the President from August 1995 toSeptember 2002; as clerk of the Import & Export Trade Department from October 2002 to December 2006; as theDeputy Manager of the Import & Export Trade Department since January 2007; a member of the company’s CPCcommittee since July 2015; as a female member of the company’s labor union since April 2016. And she waselected as a Employee Supervisor of the Company in September 2016..
3. Working experience of the Senior Management Staff
Mr. Liu Xingming: Born in Jun. 1962, a member of the Communist Party of China and an engineer with abachelor’s degree. He joined the Company in 1983, and acted as Vice GM from 1997 to 2005; acted as GM of theCompany from December 2005 to November 2008; acted as Vice GM of the Company in December 2008; electedas the Director of the Company from 1995 to December 2015; acted as Vice Chairman of the Board from April2011 to December 2015; from April 2012 up to now, he acted as the GM of the Company; and he was elected as adirector of the Company in April 2016. In July 2015, he was elected as the Party Secretary of the Company.Mr. Zhang Xuequan: Born in December 1977, a member of the Communist Party of China with a bachelor’sdegree. He joined the Company in October 1996. He worked in the former Iodine-tungsten Lamp Workshop fromOctober to December 1996; worked in the Technology Department and then the Quality Control Department fromJanuary 1997 to August 2002; acted as the Workshop Manager of Lamp Workshop from September 2002 to May2008; acted as the Department Director of the Business Management Department of the Company from June 2008to August 2016. He has concurrently acted as the Office Director since February 2016. He has been the PartyBranch Secretary for the Administrative Office of the Company from July 2010 to June 2017, and a member ofthe party committee of the Company since July 2015. He was a supervisor of the Company from May 2013 toAugust 2016 and has been a vice GM of the Company since August 2016; Act as the Deputy General Manager of
the Company since March 2020.Ms. Tang Qionglan: born in March 1970, member of the Communist Party of China, bachelor degree, ChinaCertified Public Accountant, worked as an accountant in Foshan Certified Public Accountants, served as auditmanager of BDO China Shu Lun Pan Certified Public Accountants LLP Foshan Branch; as Deputy Manager ofthe Finance Department, Manager, Chief Financial Officer, Deputy General Manager and Chief Financial Officerof Foshan NationStar Optoelectronics Co., Ltd. from October 2008 to January 2016. In January 2016, he electedas the Chief Financial Officer of the Company.Mr. Wei Bin: Born in May 1969, a member of the Communist Party of China and an engineer with a bachelor’sdegree. He joined in the Company in 1991, and responsible for the product development of the graduate school ofthe Company from March 1992 to December 1996, acted as Workshop Manager of Energy Saving LampWorkshop from January 1997 to December 2004, acted as Workshop Manager of HID Workshop from January toDecember 2005, acted as Workshop Manager of T5 Workshop from 2006 to November 2008, acted as theDepartment Director of the Technology Department from November 2008 to 2009 and acted as Vice GM of theCompany from September 2009.Mr. Jiao Zhigang: Born in May 1972, a member of the Communist Party of China with a bachelor’s degree. Hegraduated from South China University of Technology in July 1994, and at the same year he entered FoshanElectrical and Lighting Co., Ltd. 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;selected as Employee Supervisor from March 2007 to September 2013, and as Chairman of the Supervisory of theCompany from May 2010 to September 2013. He acted as Vice GM of the Company in September 2013.Mr. Chen Yu: Born in December 1972, a member of the Communist Party of China and an engineer with abachelor’s degree. He entered Foshan Electrical and Lighting Co., Ltd. in July 1994. And acted as workshopmanager of parabolic reflector, coating film, energy saving lamp, factory director of the branch factory ofGaoming and workshop manager of general bulbs from January 1997 to December 2012, acted as Director ofProduction Department, OEM Department and Mechanical Dynamics Department from January to August 2013,acted as Director of Production Department and OEM Department from September 2013 to May 2014 as well asacted as Vice GM of the Company from May 2014.Mr. Zhang Yong: Born in June 1974, a member of the Communist Party of China and a mechanical engineer witha college degree. From July 1997, he joined in the Foshan Electrical and Lighting Co., Ltd. and successively actedas Deputy Director and Director of Lamp Filament Appliance Workshop from October 1999 to June 2008; actedas Factory Director of Gaoming Fluorescent Lamp Factory and Factory Director of Gaoming Branch Factory fromJuly 2008 to December 2008; respectively acted as Department Director of Product Department, OEMDepartment, Mechanical Dynamics Department and Infrastructure Department from January 2009 to December2012; acted as General Manager Assistant from March 2013 to August 2016. He was a supervisor and theChairman of the Board of Supervisors of the Company from September 2013 to August 2016; has been thechairman of the Labor Union of the Company since September 2013; was elected as the Deputy Party Secretary inJuly 2015; and has been a vice GM of the Company since August 2016.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 TechnologyHolding Co., Ltd. Xin’gu Branch from September 2000 to December 2013, also as the General Manager ofGuangdong Fenghua Semiconductor Technology Co., Ltd. from January 2011 to December 2013, and DeputyDirector of Headquarters Operations Center from January 2013 to February 2015; as the General Manager ofGuangdong Fenghua Advanced Technology Holding Co., Ltd. Lihua Branch from March 2015 to January 2016;won the first prize of scientific and technological progress of Zhaoqing in 2008; won the title of the “Ninth Batch
of Top Talents of Zhaoqing” in 2010; served as Deputy General Manager of the company in January 2016.
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 |
| He Yong | Guangdong Electronics Information Industry Group Ltd. | Chairman, Party Secretary | Yes | ||
| Zhuang Jianyi | Prosperity Lamps & Components Limited | Chairman of the Board | Yes | ||
| Huang Zhiyong | Guangdong Electronics Information Industry Group Ltd. | Vice GM | 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 |
| Cheng Ke | Guangdong Rising Assets Management Co., Ltd. | Vice-Minister of the Audit Department | Yes | ||
| Qi Siyin | Guangdong Rising Assets Management Co., Ltd. | Director of Board Office | Yes | ||
| Lu Rui | Lingnan (University) College of Sun Yat-Sen University | Professor and doctoral tutor | Yes | ||
| Lyu Wei | Antai Economics and Management School of SJTU | Professor and doctoral tutor | Yes |
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
IV Remuneration of Directors, Supervisors and Senior ManagementDecision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and seniormanagement:
| Decision-making procedure for the remuneration of directors, supervisors and senior management | The Remuneration & Appraisal Committee under the Board of Directors decides the remuneration of directors, supervisors and senior management in accordance with the Plan for Implementing the Equity Incentive Mechanism for Middle-and Top-Rank Management |
Personnel, Compensation Plan for Executive Officers, and the Salary System reviewed andapproved on the 2001 Annual Shareholders’ General Meeting, and the particulars oncompleting current main financial indexes & operating goals, as well as the fulfillment of jobresponsibilities by them.
Basis for determining theremuneration of directors,supervisors and senior management
| Basis for determining the remuneration of directors, supervisors and senior management | The remuneration of directors (excluding independent directors), supervisors and senior management who withdraw remuneration in the Company are all decided in accordance with the Company’s Plan for Implementing the Equity Incentive Mechanism for Middle-and Top-Rank Management Personnel, Compensation Plan for Executive Officers, and the Salary System and the relevant appraisal indexes. The allowance of independent directors should be granted according to the standard reviewed and approved by 2015 Annual Shareholders’ General Meeting. |
| Actual payment of the remuneration of directors, supervisors and senior management |
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 |
| He Yong | Board Chairman | Male | 59 | Incumbent | Yes | |
| Zhuang Jianyi | Vice Board Chairman | Male | 68 | Incumbent | Yes | |
| Cheng Ke | Director | Male | 45 | Incumbent | Yes | |
| Qi Siyin | Director | Male | 39 | Incumbent | Yes | |
| Huang Zhiyong | Director | Male | 50 | Incumbent | Yes | |
| Liu Xingming | Director & GM | Male | 57 | Incumbent | 141.56 | No |
| Zhang Nan | Independent Director | Female | 70 | Incumbent | No | |
| Lu Rui | Independent Director | Male | 44 | Incumbent | 14.4 | No |
| Lyu Wei | Independent Director | Male | 55 | Incumbent | 14.4 | No |
| Li Huashan | Chairman of the Supervisory Committee | Male | 56 | Incumbent | 77.7 | No |
| Zhuang Junjie | Supervisor | Male | 34 | Incumbent | Yes | |
| Ye Zhenghong | Supervisor | Male | 46 | Incumbent | 58.31 | No |
| Lin Qing | Supervisor | Male | 50 | Incumbent | 37.56 | No |
| Liang Yueyi | Supervisor | Female | 45 | Incumbent | 48.02 | No |
| Zhang Xuequan | Vice GM | Male | 42 | Incumbent | 71.56 | No |
| Tang Qionglan | CFO | Female | 49 | Incumbent | 81.56 | No |
| Wei Bin | Vice GM | Male | 50 | Incumbent | 78.56 | No |
| Jiao Zhigang | Vice GM | Male | 47 | Incumbent | 78.56 | No |
| Chen Yu | Vice GM | Male | 47 | Incumbent | 71.56 | No |
| Zhang Yong | Vice GM | Male | 45 | Incumbent | 71.56 | No |
| Xu Xiaoping | Vice GM | Male | 49 | Incumbent | 59.56 | No |
| Li Jinkun | Chairman of the Supervisory Committee | Male | 55 | Former | Yes | |
| Lin Yihui | Board Secretary | Male | 65 | Former | 25 | No |
| Total | 929.87 |
Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
| Number of in-service employees of the Company | 5,349 |
| Number of in-service employees of main subsidiaries | 2,192 |
| Total number of in-service employees | 7,541 |
| Total number of employees with remuneration in this Reporting Period | 7,541 |
| Number of retirees to whom the Company or its main subsidiaries need to pay retirement pension | 0 |
| Functions | |
| Function | Number of employees |
| Production | 5,825 |
| Sales | 795 |
| Technical | 694 |
| Financial | 47 |
| Administrative | 180 |
| Total | 7,541 |
| Educational backgrounds | |
| Educational background | Number of employees |
| Bachelor and above | 639 |
| College | 1,069 |
| Technical secondary school and high school | 1,214 |
| Below high school | 4,619 |
| Total | 7,541 |
2. Employee Remuneration Policy
The general principal of the employee’s remuneration policy is: as for the external part, the Company shouldmaintain the market competitiveness of the talents by possessing of the attraction and as for the internal part,should possess of the impartiality and consistency. The salary level of the external labor market and the socialaverage salary level as well as the wage guiding issued by the governmental department are the importantreference basis for the confirm of the salary standard of the Company; to confirm different pay grade according todifferent positions and the position characteristics and to furthest incentive the enthusiasm of the employees; toabide with the principal of giving priority to efficiency and give consideration of the fairness and to object to theequalitarianism when distributing the remunerations, to pay with generous compensation for those excellentemployees who creates great value, to appropriately incline to the key talents and the market supply shortagetalents; the lowest salary of the Company should not be lower than the local lowest salary standard.
3. Employee Training Plans
The Company has been setting great store on the training and development work of the employees, and combinedwith the actual situation, annual plan, the position nature and the responsibilities as well as the developmentdemands, the Company built up a complete training plan and required all departments to work out annual trainingplan. The training plan will be implemented through the methods of having classes by internal lecturers andexternal engaged professors as well as going out. In addition, a training system with multiple levels, channels,fields and ways will be built. The main training work includes the new employee orientation training, theon-the-job personnel professional training, the frontline staff skills training, skills training for sales personnel,skills training for managerial personnel, skills training for professional technical personnel etc., to constantlyimprove the overall quality of the current employees for realizing the win-win situation and mutual progress.
4. Labor Outsourcing
□ Applicable √ Not applicable
Part X 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 regulatory documents issued by theCSRC governing the governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial AffairsThe 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.
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 legal ownershipof the land, factories, equipments related to the production and operating and the assets such as the trademark,patent and the non-patent technology, and possesses the entire control and govern power of all the assets of theCompany without any behavior such as any controlling shareholder occupies the assets of the Company.
4. As for the institutions, the Company set up the independent and entire organizations and institutions, and 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 entirely
independent 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
| Type of issue | Name of controlling shareholder | Nature of controlling shareholder | Cause for issue | Solution | Solution’s progress and follow-up plan |
| Horizontal competition | Guangdong Electronics Information Industry Group Ltd., Shenzhen Rising Investment Development Co., Ltd., Hong Kong Rising Investment Development Limited | Local State-owned Assets Supervision and Administration Commission | Some enterprises controlled by the controlling shareholders engage in the same or similar business with the Company, which incurs horizontal competition. | Controlling shareholders have made a commitment: (I). Eliminating the horizontal competition between Foshan NationStar Optoelectronics Co., Ltd. and the Company through business integration or other ways or arrangements before 4 June 2020. (II) Commitment of other arrangements for avoiding horizontal competition. As for avoiding the horizontal competition with Foshan Electrical and Lighting, the further commitments on the relevant arrangements made by the Electronics Group, Shenzhen Guangdong Rising Investment and Hong Kong Guangdong Rising Investment as follows: 1. the commitment maker will execute the supervision and restriction on the production and the operating activities of the company and the relevant enterprises except for the above enterprises currently involved with the horizontal competition with Foshan Electrical and Lighting and if there is same or similar situation occurs horizontal competition with Foshan Electrical and Lighting from the future promises and the relevant enterprises on the products or | Ongoing |
| business, the commitment maker following measures to solve the problem: (1) when commits to adopt the Foshan Electrical and Lighting considers it is necessary, the Company and the relevant enterprises would decrease the shareholding until entirely completes the transfer of the held relevant assets and business; (2) when Foshan Electrical and Lighting considers it is necessary, should take preference to purchase the relevant assets and business held by the commitment maker and the relevant enterprises through appropriate methods; 2.each commitment made by the commitment maker on eliminating or avoiding the horizontal competition is also adapted to the subordinate enterprises directly or indirectly controlled by the commitment maker and the Company owns the obligation to urge and ensure the other subordinate enterprises to carry out each events and arrangement stated on the document and to strictly abide to the whole commitments. 3. If the commitment maker or the subordinate enterprises directly or indirectly controlled by the company violated the above commitments that led to the losses of Foshan Electrical and Lighting, the commitment maker should pay for the reasonable compensation.” | |||||
| Related-party transactions | Guangdong Electronics Information Industry Group Ltd., Shenzhen Rising Investment | Local SASAC | Related-party transactions existed between some enterprises controlled by the controlling | The controlling shareholders committed: 1. guaranteed to strictly abide by the each regulation from the CSRC, the normative laws documents of SZSE and the Articles of Association of Foshan Electrical | Ongoing |
| Development Co., Ltd., Hong Kong Rising Investment Development Limited | shareholders and the Company | and Lighting. Among the production and operating activities since then, the promisee would not take advantage of the position of the controlling shareholders and the actual controller to carry out any behavior that harm the benefits of Foshan Electrical and Lighting and other shareholders; 2. the promisee and the other subsidiaries, the branch companies, the joint ventures or associated companies (hereinafter referred to as the “relevant enterprises”) will try their best to avoid and reduce the related transactions with Foshan Electrical and Lighting and its subsidiaries; 3. as for the related transactions which are indeed necessary and could not be avoided between the promisee, the relevant enterprises and Foshan Electrical and Lighting, will strictly abide by the market principles of fairness, justice with valuable consideration. When the Annual General Meeting or the Board of Directors is executing the voting on the related transactions which involved with the promisee and the relevant enterprises, should execute the obligation of avoiding the voting and at the same time execute the transactions vetting process as well as the information disclosure obligations according to the relevant laws and regulations and the normative documents. If violated the above commitments and caused the losses to Foshan Electrical and Lighting as well as the subsidiaries and other shareholders, the promisee should assume compensation liability. |
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
| The 2018 Annual General Meeting | Annual General Meeting | 37.83% | 25 April 2019 | 26 April 2019 | Announcement on Resolutions of the 2018 Annual General Meeting (No. 2019-021) disclosed on www.cninfo.com.cn |
| The 1st Extraordinary General Meeting of 2019 | Extraordinary General Meeting | 39.28% | 3 December 2019 | 4 December 2019 | Announcement on Resolutions of the 1st Extraordinary General Meeting of 2019 (No. 2019-032) disclosed on www.cninfo.com.cn |
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed VotingRights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
| Attendance of independent directors at board meetings and general meetings | |||||||
| Independent director | Total number of board meetings the independent 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 independent director failed to attend | The independent director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Zhang Nan | 7 | 1 | 6 | 0 | 0 | No | 0 |
| Lu Rui | 7 | 1 | 6 | 0 | 0 | No | 0 |
| Lyu Wei | 7 | 1 | 6 | 0 | 0 | No | 0 |
2. Objections Raised by Independent Directors on Matters of the CompanyIndicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent DirectorsIndicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
During the Reporting Period, in accordance with the requirements of Company Law, Code of Governance ofListed Companies, Guidance on the Establishment of the Independent Directors System of the Listed Companies,Articles of Association and relevant systems, the independent directors of the Company attended the boardsessions held during the Reporting Period, carefully reviewed the proposals proposed on the sessions, paidattention to the operation of the Company, performed the duties sincerely and diligently, and issued independentopinion on purchase of financial products, related-party transactions, profit distribution, etc., as well as proposedprecious advices on perfection of systems and decision of routine operation of the Company, so as to play anactive role in protecting the legal right of the Company and its shareholders.VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
(I) Work Accomplished by the Audit CommitteeAccording to the related provisions of China Securities Regulatory Commission and Shenzhen Stock Exchange, aswell as the Rules of Implementation for the Audit Committee of the Board, the Audit Committee diligentlyperformed the following work duties:
1. On 14 March 2019, the Audit Committee convened to discuss and approve the following topics:
(1) 2018 financial audit and internal control audit report of the Company;
(2) The proposal for renewing the engagement of accounting firm;
Considering that Beijing Zhongzheng Tiantong Certified Public Accountants (LLP) is professional andexperienced in financial audit of listed companies, and performed its duties diligently in the Company's financialaudit work and internal control audit work in 2018, playing the role of the auditing agency well. Moreover, after ayear of auditing, it is familiar with the Company’s business development and financial status. Therefore, the AuditCommittee proposed to continue to employ Beijing Zhongzheng Tiantong Certified Public Accountants (specialordinary partnership) as the annual financial auditing agency and internal control auditing agency of the Companyin 2019.
(3) 2018 annual work report and 2019 work plan of the Audit Department.
2. On 23 May 2019, the Audit Committee held a meeting, on which the Proposal on Appointment of Liang Yuefeiand Su Minqing Respectively as the Minister and Vice Minister of the Audit Department was reviewed andapproved.The Audit Committee believed that Liang Yuefei and Su Minqing possessed rich work experience in finance andaudit affairs and the appointment of Liang Yuefei and Su Minqing respectively as the Minister and Vice Ministerof the Audit Department helps to improve the audit work quality of the Company and further increase the internalaudit work level of the Company.
(II) The work of the Remuneration and Assessment CommitteeOn 14 March 2019, the Remuneration and Assessment Committee of the Board of Directors convened a meetingto assess of the remuneration of the senior management of the Company based on the major financial indicatorsand business objectives of the Company in 2018, the scope of work and major responsibilities of the seniormanagement of the Company and the indicators of assessment system related to the senior management’s jobperformance. It was considered that the remuneration of the senior management personnel of the Company in2018 was determined based on the principle of “Remuneration Plan for Senior Management” and the relevantregulations of “Remuneration System” of the Company. The implementation of the Company's accrued incentivefund was in line with the “Establishment of Equity Incentive System for Middle and Senior Management” whichwas reviewed and approved at the general meeting of shareholders. The incentives implemented by the Companyfor middle and senior management personnel, business and technology elites was legal and reasonable, and it wasconducive to improve the integration of interests of the management and the Company as well as shareholders.VII Performance of Duty by the Supervisory CommitteeIndicate 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.
VIII Appraisal of and Incentive for Senior Management
The senior management of the Company is appointed by the Board of Directors, evaluated by the Remunerationand Appraisal Committee of the Board of Directors according to their work abilities, duty performance andfulfillment of the operating performance management, and paid according to Establishing Equity IncentiveSystem for Middle and Senior Management and Remuneration System of the company considered and passed atthe Annual Shareholders’ General Meeting of the Company in 2001, the Remuneration Plan for Executive Officersconsidered and approved by the Board and salary system of the Company.IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 10 April 2020 |
| Index to the disclosed internal control self-evaluation report | See www.cninfo.com.cn for the Internal Control Self-Evaluation Report 2019 |
| 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 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. | 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 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 2019 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: misstatement＜0.5% of the total assets amount. | 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: 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 | |
X 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 | 10 April 2020 |
| 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
Part XI Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstandingbefore the date of this Report’s approval or were due but could not be redeemed in full?No.
Part XII Financial StatementsI Independent Auditor’s Report
| Type of the independent auditor’s opinion | Unmodified unqualified opinion |
| Date of signing this report | 8 April 2020 |
| Name of the independent auditor | Zhongzheng Tiantong Certified Public Accountants LLP |
| No. of independent auditor’s report | ZZTT (2020) Auditor’s Report No. 0700001 |
| Names of certified public accountants | Tong Quanyong, Luo Dongri |
Text of the Independent Auditor’s ReportIndependent Auditor’s Report
ZZTT (2020) Auditor’s Report No. 0700001To 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 2019,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 consolidatedand parent company financial position of the Company at 31 December 2019, and the consolidated and thecompany as the parent operating results and cash flows for the year then ended, in conformity with the ChineseAccounting Standards (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 ofEthics for Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance withthe said Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.III Key Audit MattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion onthese matters. And key audit matter identified in our audit is summarized as follows:
(I) Recognition of Revenue
1. Event description
As stated in the notes “III. Significant Accounting Policies and Accounting Estimation (XXIV)” and “V. Notes onthe Key Items in the Consolidated Financial Statements (IV)” to the consolidated financial statements, theCompany takes the transfer of major risks and remunerations in respect of commodity ownership to the buyers asthe recognition time of revenue. In addition, it has formulated specific policies for the recognition of revenue fordifferent types of business with revenue. In 2019, it achieved an operating revenue of RMB3,337,576,747.66,which decreased RMB464,379,199.10 compared to that of last year with a reduction rate of 12.21%. As operatingrevenue is one of the key performance indicators of The Company and there are hereditary risks of the revenuebeing manipulated to achieve the objective or expected level, we identify the recognition of revenue as a key auditevent.
2. Audit response
With regard to FSL’s revenue recognition, we mainly implemented the following procedures: (1) Understand andtest the design and implementation of key internal control related to revenue recognition to verify theeffectiveness of internal control. (2) Seek confirmation from customers for the balance of accounts receivable. (3)Perform sampling inspection of contract related shipment and acceptance, payment and settlement, productplacement and return policies and other important contractual terms and conditions. (4) Examine the credit limitfor customers and the approval record to identify whether there is any unapproved sale on credit. (5) Search thebusiness registration record of customers through open information platforms, obtain and examine the list ofrelated parties to check whether FSL is related to any of the customers. (6) Select FSL’s revenue and tradingsamples and verify the invoices, shipment documents and customs declaration documents for export. (7) Obtainthe record of product replacement and return and check whether there is any major abnormal replacement orreturn. (8) By comparing with industrial peers and considering the changes in FSL’s customers, product mix, pricemanagement and other related factors, assess the reasonableness of the changes in FSL’s operating revenue. (9)Verify the authenticity and completeness of the current revenue through other revenue audit procedures, such aschecking the payment collection after the period and examining FSL’s statement of account with customers.(II) Measurement of fair value of investment in other equity instruments
1. Event description
As stated in the notes “III. Significant Accounting Policies and Accounting Estimation (IX) and (XXXI)” and “V.Notes on the Key Items in the Consolidated Financial Statements (X)” to the consolidated financial statements, theCompany starts to implement the revised Accounting Standards for Business Enterprises No. 22-Recognition andMeasurement of Financial Instruments enacted by the Ministry of Finance in 2017 since 1 January 2019, andmeasured the equity investments at fair value and the changes thereof would be recorded into othercomprehensive income. As of 31 December 2019, the Company’s investment in other equity instruments wasRMB1,454,740,241.46, accounting for 23.56% of total assets of the consolidated financial statement. Becauseamount of investment in other equity instruments is large, and the measurement of fair value involves estimationsand judgment of management layer, we should confirm the measurement of fair value of investment in otherequity instruments as the key auditing item.
2. Audit response
With regard to FSL’s fair value of investment in other equity instruments, we mainly implemented the following
procedures: (1) Obtain the management’s basis for classifying equity instruments and verify its reasonableness; (2)Review the investment agreements, understand related investment clauses and identify clauses related to thevaluation of financial instruments; (3) Search and confirm the open active market price of public equityinvestment projects on the day of closing fair value measurement to verify the accuracy of the fair valuemeasurement; (4) Confirm the investment cost of non-public equity projects to assess the reasonableness of theunobservable inputs and observable inputs adopted by the management in measuring the fair value of the financialinstruments classified as Level 3; (5) Evaluate whether the disclosure related to the fair value assessment of thefinancial instruments measured at fair value and classified as Level III in the financial statements meets therequirements of accounting standards.IV Other InformationThe Company’s management is responsible for the other information. The other information comprises all of theinformation included in the Company’s 2019 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 reportthat fact. 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 tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the goingconcern basis of accounting unless the management either intends to liquidate the Company or to cease operations,or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.VI Auditor’s Responsibilities for Audit of Financial 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 accordancewith CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or errorand are considered material if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CAS, we exercise professional judgment and maintain 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
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that 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 materialuncertainty exists, we are required by CAS to draw users’ attention in our auditor’s report to the relateddisclosures in the financial statements or, if such disclosures are inadequate, we should express modified opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, futureevents or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,and whether the financial statements represent the underlying transactions and events in a manner that achievesfair presentation.
(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 thedirection, 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 andtiming of the audit and significant audit findings, including any noteworthy deficiencies in internal control that weidentify during 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 ofmost significance in the audit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
| Beijing Zhongzheng Tiantong Certified Public Accountants LLP | Chinese CPA: （Engagement Partner） |
| Tong Quanyong | |
| Chinese CPA: | |
| Beijing · China | Luo Dongri |
| 8 April 2020 |
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Foshan Electrical and Lighting Co., Ltd.
31 December 2019
Unit: RMB
| Item | 31 December 2019 | 31 December 2018 |
| Current assets: | ||
| Monetary assets | 1,125,456,662.64 | 896,646,719.87 |
| Settlement reserve | ||
| Interbank loans granted | ||
| Held-for-trading financial assets | 901,166,682.64 | |
| Financial assets at fair value through profit or loss | ||
| Derivative financial assets | ||
| Notes receivable | 109,444,480.94 | 107,506,613.50 |
| Accounts receivable | 712,175,266.51 | 834,420,596.05 |
| Accounts receivable financing | ||
| Prepayments | 7,851,390.78 | 13,811,905.18 |
| Premiums receivable | ||
| Reinsurance receivables | ||
| Receivable reinsurance contract reserve | ||
| Other receivables | 22,307,344.76 | 21,745,690.53 |
| Including: Interest receivable | 5,152,364.04 | |
| Dividends receivable | ||
| Financial assets purchased under resale agreements | ||
| Inventories | 637,336,584.06 | 767,319,599.00 |
| Contractual assets | ||
| Assets classified as held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 52,502,863.59 | 864,093,663.30 |
| Total current assets | 3,568,241,275.92 | 3,505,544,787.43 |
| Non-current assets: | ||
| Loans and advances to customers | ||
| Investments in debt obligations | ||
| Available-for-sale financial assets | 897,716,590.20 | |
| Investments in other debt obligations | ||
| Held-to-maturity investments | ||
| Long-term receivables | ||
| Long-term equity investments | 181,093,725.43 | 182,458,559.69 |
| Investments in other equity instruments | 1,454,740,241.46 | |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 629,832,098.35 | 512,106,912.39 |
| Construction in progress | 119,030,610.16 | 224,624,447.16 |
| Productive living assets | ||
| Oil and gas assets | ||
| Use rights assets | ||
| Intangible assets | 167,826,499.74 | 172,725,277.21 |
| R&D expense | ||
| Goodwill | ||
| Long-term prepaid expense | 7,727,394.74 | 6,852,985.35 |
| Deferred income tax assets | 36,847,064.36 | 37,831,704.45 |
| Other non-current assets | 9,861,098.08 | 48,305,435.42 |
| Total non-current assets | 2,606,958,732.32 | 2,082,621,911.87 |
| Total assets | 6,175,200,008.24 | 5,588,166,699.30 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Borrowings from the central bank | ||
| Interbank loans obtained | ||
| Held-for-trading financial liabilities | ||
| Financial liabilities at fair value through profit or loss | 477,200.00 | |
| Derivative financial liabilities | ||
| Notes payable | 374,665,327.74 | 452,683,676.97 |
| Accounts payable | 559,016,692.70 | 532,597,143.95 |
| Advances from customers | 50,449,357.17 | 43,850,788.04 |
| Contractual liabilities | ||
| Financial assets sold under repurchase agreements | ||
| Customer deposits and interbank deposits | ||
| Payables for acting trading of securities | ||
| Payables for underwriting of securities | ||
| Payroll payable | 83,156,852.86 | 96,088,621.59 |
| Taxes payable | 17,211,068.21 | 25,354,466.37 |
| Other payables | 46,073,344.71 | 43,115,011.68 |
| Including: Interest payable | ||
| Dividends payable | ||
| Handling charges and commissions payable | ||
| Reinsurance payables | ||
| Liabilities directly associated with assets classified as held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | ||
| Total current liabilities | 1,130,572,643.39 | 1,194,166,908.60 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term payroll payable | ||
| Provisions | ||
| Deferred income | 155,000.31 | |
| Deferred income tax liabilities | 137,216,136.70 | 52,530,509.00 |
| Other non-current liabilities |
| Total non-current liabilities | 137,216,136.70 | 52,685,509.31 |
| Total liabilities | 1,267,788,780.09 | 1,246,852,417.91 |
| Owners’ equity: | ||
| Share capital | 1,399,346,154.00 | 1,399,346,154.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 158,608,173.07 | 158,608,173.07 |
| Less: Treasury stock | ||
| Other comprehensive income | 776,260,348.19 | 297,667,872.80 |
| Specific reserve | ||
| Surplus reserves | 836,559,645.36 | 809,456,186.20 |
| General reserve | ||
| Retained earnings | 1,709,962,479.45 | 1,654,181,032.39 |
| Total equity attributable to owners of the Company as the parent | 4,880,736,800.07 | 4,319,259,418.46 |
| Non-controlling interests | 26,674,428.08 | 22,054,862.93 |
| Total owners’ equity | 4,907,411,228.15 | 4,341,314,281.39 |
| Total liabilities and owners’ equity | 6,175,200,008.24 | 5,588,166,699.30 |
Legal representative: He Yong General Manager: Liu Xingming Chief Financial Officer: Tang Qionglan
2. Balance Sheet of the Company as the Parent
Unit: RMB
| Item | 31 December 2019 | 31 December 2018 |
| Current assets: | ||
| Monetary assets | 1,059,001,233.28 | 848,949,693.91 |
| Held-for-trading financial assets | 901,166,682.64 | |
| Financial assets at fair value through profit or loss | ||
| Derivative financial assets | ||
| Notes receivable | 107,567,164.99 | 104,945,398.61 |
| Accounts receivable | 666,106,832.53 | 795,897,932.65 |
| Accounts receivable financing | ||
| Prepayments | 6,614,791.10 | 25,444,445.34 |
| Other receivables | 37,934,614.96 | 43,538,848.72 |
| Including: Interest receivable | 5,152,364.04 | |
| Dividends receivable | ||
| Inventories | 553,557,529.00 | 692,681,479.03 |
| Contractual assets | ||
| Assets classified as held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 43,118,385.01 | 856,504,839.81 |
| Total current assets | 3,375,067,233.51 | 3,367,962,638.07 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Available-for-sale financial assets | 897,716,590.20 | |
| Investments in other debt obligations | ||
| Held-to-maturity investments | ||
| Long-term receivables | ||
| Long-term equity investments | 464,886,827.69 | 466,251,661.95 |
| Investments in other equity instruments | 1,454,740,241.46 | |
| Other non-current financial assets | ||
| Investment property | ||
| Fixed assets | 573,844,707.66 | 427,947,613.74 |
| Construction in progress | 116,240,559.37 | 222,570,503.14 |
| Productive living assets | ||
| Oil and gas assets | ||
| Use rights assets | ||
| Intangible assets | 125,673,065.66 | 129,452,067.42 |
| R&D expense | ||
| Goodwill | ||
| Long-term prepaid expense | 4,891,398.93 | 5,106,268.25 |
| Deferred income tax assets | 34,205,213.27 | 35,908,741.15 |
| Other non-current assets | 8,440,448.08 | 46,852,235.42 |
| Total non-current assets | 2,782,922,462.12 | 2,231,805,681.27 |
| Total assets | 6,157,989,695.63 | 5,599,768,319.34 |
| Current liabilities: |
| Short-term borrowings | ||
| Held-for-trading financial liabilities | ||
| Financial liabilities at fair value through profit or loss | 477,200.00 | |
| Derivative financial liabilities | ||
| Notes payable | 376,265,327.74 | 452,683,676.97 |
| Accounts payable | 689,846,497.35 | 681,490,174.69 |
| Advances from customers | 46,758,714.00 | 41,912,301.85 |
| Contractual liabilities | ||
| Payroll payable | 68,658,329.30 | 84,220,746.16 |
| Taxes payable | 12,374,430.19 | 17,528,644.83 |
| Other payables | 125,001,875.83 | 114,073,355.23 |
| Including: Interest payable | ||
| Dividends payable | ||
| Liabilities directly associated with assets classified as held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | ||
| Total current liabilities | 1,318,905,174.41 | 1,392,386,099.73 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term payroll payable | ||
| Provisions | ||
| Deferred income | ||
| Deferred income tax liabilities | 137,216,136.70 | 52,530,509.00 |
| Other non-current liabilities | ||
| Total non-current liabilities | 137,216,136.70 | 52,530,509.00 |
| Total liabilities | 1,456,121,311.11 | 1,444,916,608.73 |
| Owners’ equity: |
| Share capital | 1,399,346,154.00 | 1,399,346,154.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 166,211,779.15 | 166,211,779.15 |
| Less: Treasury stock | ||
| Other comprehensive income | 776,242,987.90 | 297,672,884.34 |
| Specific reserve | ||
| Surplus reserves | 836,559,645.36 | 809,456,186.20 |
| Retained earnings | 1,523,507,818.11 | 1,482,164,706.92 |
| Total owners’ equity | 4,701,868,384.52 | 4,154,851,710.61 |
| Total liabilities and owners’ equity | 6,157,989,695.63 | 5,599,768,319.34 |
Legal representative: He Yong General Manager: Liu Xingming Chief Financial Officer: Tang Qionglan
3. Consolidated Income Statement
Unit: RMB
| Item | 2019 | 2018 |
| 1. Revenue | 3,337,576,747.66 | 3,801,955,946.76 |
| Including: Operating revenue | 3,337,576,747.66 | 3,801,955,946.76 |
| Interest income | ||
| Premium income | ||
| Handling charge and commission income | ||
| 2. Costs and expenses | 3,036,750,150.30 | 3,397,178,722.20 |
| Including: Cost of sales | 2,560,513,052.56 | 2,922,833,510.40 |
| Interest expense | ||
| Handling charge and commission expense | ||
| Surrenders | ||
| Net claims paid | ||
| Net amount provided as insurance contract reserve | ||
| Expenditure on policy dividends | ||
| Reinsurance premium expense |
| Taxes and surcharges | 38,022,788.66 | 36,377,330.18 |
| Selling expense | 241,414,766.43 | 237,485,389.89 |
| Administrative expense | 145,080,623.05 | 173,871,085.61 |
| R&D expense | 79,444,261.80 | 52,726,585.28 |
| Finance costs | -27,725,342.20 | -26,115,179.16 |
| Including: Interest expense | 371,567.15 | |
| Interest income | 24,418,569.09 | 11,450,858.00 |
| Add: Other income | 11,202,255.25 | 31,210,613.26 |
| Return on investment (“-” for loss) | 60,878,425.30 | 53,329,524.74 |
| Including: Share of profit or loss of joint ventures and associates | 1,755,751.49 | 6,165,040.30 |
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Foreign exchange gain (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | 2,024,400.00 | -477,200.00 |
| Credit impairment loss (“-” for loss) | -3,693,729.47 | |
| Asset impairment loss (“-” for loss) | -16,675,215.52 | -37,673,120.95 |
| Asset disposal income (“-” for loss) | -78,039.44 | |
| 3. Operating profit (“-” for loss) | 354,562,732.92 | 451,089,002.17 |
| Add: Non-operating income | 3,072,145.61 | 3,808,610.50 |
| Less: Non-operating expense | 5,517,243.94 | 3,827,826.27 |
| 4. Profit before tax (“-” for loss) | 352,117,634.59 | 451,069,786.40 |
| Less: Income tax expense | 48,665,163.20 | 71,919,450.25 |
| 5. Net profit (“-” for net loss) | 303,452,471.39 | 379,150,336.15 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 303,452,471.39 | 379,150,336.15 |
| 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 | 301,182,906.24 | 377,615,133.62 |
| 5.2.1 Net profit attributable to non-controlling interests | 2,269,565.15 | 1,535,202.53 |
| 6. Other comprehensive income, net of tax | 189,240,788.90 | -418,939,460.98 |
| Attributable to owners of the Company as the parent | 189,240,788.90 | -418,939,460.98 |
| 6.1 Items that will not be reclassified to profit or loss | 189,218,417.07 | |
| 6.1.1 Changes caused by remeasurements on defined benefit pension 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 | 189,218,417.07 | |
| 6.1.4 Changes in the fair value of the company’s credit risks | ||
| 6.1.5 Other | ||
| 6.2 Items that will be reclassified to profit or loss | 22,371.83 | -418,939,460.98 |
| 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 Gain/Loss on changes in the fair value of available-for-sale financial assets | -418,935,204.44 | |
| 6.2.4 Other comprehensive income arising from the reclassification of financial assets | ||
| 6.2.5 Gain/Loss arising from the reclassification of held-to-maturity investments to available-for-sale financial assets | ||
| 6.2.6 Allowance for credit impairments in investments in other debt obligations |
| 6.2.7 Reserve for cash flow hedges | ||
| 6.2.8 Differences arising from the translation of foreign currency-denominated financial statements | 22,371.83 | -4,256.54 |
| 6.2.9 Other | ||
| Attributable to non-controlling interests | ||
| 7. Total comprehensive income | 492,693,260.29 | -39,789,124.83 |
| Attributable to owners of the Company as the parent | 490,423,695.14 | -41,324,327.36 |
| Attributable to non-controlling interests | 2,269,565.15 | 1,535,202.53 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 0.2152 | 0.2699 |
| 8.2 Diluted earnings per share | 0.2152 | 0.2699 |
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: He Yong General Manager: Liu Xingming Chief Financial Officer: Tang Qionglan
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | 2019 | 2018 |
| 1. Operating revenue | 3,235,948,439.05 | 3,702,821,298.76 |
| Less: Cost of sales | 2,538,328,460.62 | 2,937,650,787.51 |
| Taxes and surcharges | 32,695,622.91 | 27,577,025.83 |
| Selling expense | 222,786,236.44 | 209,377,549.84 |
| Administrative expense | 124,637,990.70 | 157,272,662.59 |
| R&D expense | 69,817,196.60 | 51,004,161.82 |
| Finance costs | -27,260,802.84 | -25,129,599.00 |
| Including: Interest expense | 371,567.15 | |
| Interest income | 23,903,504.29 | 10,435,158.99 |
| Add: Other income | 10,837,075.25 | 28,953,872.06 |
| Return on investment (“-” for loss) | 61,208,653.50 | 81,803,713.29 |
| Including: Share of profit or loss of joint ventures and associates | 1,755,751.49 | 6,165,040.30 |
| 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) | 2,024,400.00 | -477,200.00 |
| Credit impairment loss (“-” for loss) | -2,467,565.77 | |
| Asset impairment loss (“-” for loss) | -16,240,391.22 | -37,157,044.60 |
| Asset disposal income (“-” for loss) | ||
| 2. Operating profit (“-” for loss) | 330,305,906.38 | 418,192,050.92 |
| Add: Non-operating income | 2,522,638.65 | 3,361,305.10 |
| Less: Non-operating expense | 3,039,777.74 | 3,284,428.73 |
| 3. Profit before tax (“-” for loss) | 329,788,767.29 | 418,268,927.29 |
| Less: Income tax expense | 43,044,196.92 | 53,237,088.87 |
| 4. Net profit (“-” for net loss) | 286,744,570.37 | 365,031,838.42 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 286,744,570.37 | 365,031,838.42 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of tax | 189,218,417.07 | -418,935,204.44 |
| 5.1 Items that will not be reclassified to profit or loss | 189,218,417.07 | |
| 5.1.1 Changes caused by remeasurements on defined benefit pension 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 | 189,218,417.07 | |
| 5.1.4 Changes in the fair value of the company’s credit risks | ||
| 5.1.5 Other |
| 5.2 Items that will be reclassified to profit or loss | -418,935,204.44 | |
| 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 Gain/Loss on changes in the fair value of available-for-sale financial assets | -418,935,204.44 | |
| 5.2.4 Other comprehensive income arising from the reclassification of financial assets | ||
| 5.2.5 Gain/Loss arising from the reclassification of held-to-maturity investments to available-for-sale financial assets | ||
| 5.2.6 Allowance for credit impairments in investments in other debt obligations | ||
| 5.2.7 Reserve for cash flow hedges | ||
| 5.2.8 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 5.2.9 Other | ||
| 6. Total comprehensive income | 475,962,987.44 | -53,903,366.02 |
| 7. Earnings per share | ||
| 7.1 Basic earnings per share | ||
| 7.2 Diluted earnings per share |
Legal representative: He Yong General Manager: Liu Xingming Chief Financial Officer: Tang Qionglan
5. Consolidated Cash Flow Statement
Unit: RMB
| Item | 2019 | 2018 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 3,512,742,623.39 | 3,605,503,899.24 |
| 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 | 83,431,462.66 | 143,119,777.70 |
| Cash generated from other operating activities | 120,719,626.39 | 95,378,324.30 |
| Subtotal of cash generated from operating activities | 3,716,893,712.44 | 3,844,002,001.24 |
| Payments for commodities and services | 2,167,028,031.70 | 2,142,755,608.20 |
| 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 | 618,899,328.71 | 645,756,586.20 |
| Taxes paid | 192,588,156.19 | 222,679,823.50 |
| Cash used in other operating activities | 230,293,438.38 | 214,822,496.29 |
| Subtotal of cash used in operating activities | 3,208,808,954.98 | 3,226,014,514.19 |
| Net cash generated from/used in operating activities | 508,084,757.46 | 617,987,487.05 |
| 2. Cash flows from investing activities: |
| Proceeds from disinvestment | 19,550,000.00 | 220,000,000.00 |
| Return on investment | 51,173,422.00 | 51,208,590.20 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 40,834.00 | 507,597.20 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 70,764,256.00 | 271,716,187.40 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 53,476,166.05 | 168,587,186.18 |
| Payments for investments | 55,000,000.00 | 80,000,000.00 |
| Net increase in pledged loans granted | ||
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 108,476,166.05 | 248,587,186.18 |
| Net cash generated from/used in investing activities | -37,711,910.05 | 23,129,001.22 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | 2,350,000.00 | |
| Including: Capital contributions by non-controlling interests to subsidiaries | 2,350,000.00 | |
| Borrowings obtained | ||
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | 2,350,000.00 | |
| Repayments of borrowings | ||
| Payments for interest and dividends | 218,298,000.02 | 418,531,713.57 |
| Including: Dividends paid by subsidiaries to non-controlling interests | ||
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 218,298,000.02 | 418,531,713.57 |
| Net cash generated from/used in financing activities | -215,948,000.02 | -418,531,713.57 |
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | 122,951.25 | 2,516,772.72 |
| 5. Net increase in cash and cash equivalents | 254,547,798.64 | 225,101,547.42 |
| Add: Cash and cash equivalents, beginning of the period | 795,285,756.38 | 570,184,208.96 |
| 6. Cash and cash equivalents, end of the period | 1,049,833,555.02 | 795,285,756.38 |
Legal representative: He Yong General Manager: Liu Xingming Chief Financial Officer: Tang Qionglan
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
| Item | 2019 | 2018 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 3,381,315,269.05 | 3,483,708,617.22 |
| Tax rebates | 83,431,462.66 | 143,095,603.13 |
| Cash generated from other operating activities | 103,736,924.38 | 83,179,427.33 |
| Subtotal of cash generated from operating activities | 3,568,483,656.09 | 3,709,983,647.68 |
| Payments for commodities and services | 2,259,948,774.41 | 2,348,474,172.05 |
| Cash paid to and for employees | 465,547,076.42 | 408,213,944.72 |
| Taxes paid | 146,779,499.56 | 136,626,264.27 |
| Cash used in other operating activities | 207,660,819.69 | 191,822,944.12 |
| Subtotal of cash used in operating activities | 3,079,936,170.08 | 3,085,137,325.16 |
| Net cash generated from/used in operating activities | 488,547,486.01 | 624,846,322.52 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 19,550,000.00 | 200,000,000.00 |
| Return on investment | 51,503,650.20 | 76,706,836.19 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 40,330.00 | |
| Net proceeds from the disposal of subsidiaries and other business units |
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 71,093,980.20 | 276,706,836.19 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 50,654,548.37 | 160,084,524.03 |
| Payments for investments | 55,000,000.00 | 80,000,000.00 |
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 105,654,548.37 | 240,084,524.03 |
| Net cash generated from/used in investing activities | -34,560,568.17 | 36,622,312.16 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Borrowings obtained | ||
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | ||
| Repayments of borrowings | ||
| Payments for interest and dividends | 218,298,000.02 | 418,531,713.57 |
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 218,298,000.02 | 418,531,713.57 |
| Net cash generated from/used in financing activities | -218,298,000.02 | -418,531,713.57 |
| 4. Effect of foreign exchange rate changes on cash and cash equivalents | 100,477.42 | 2,482,708.91 |
| 5. Net increase in cash and cash equivalents | 235,789,395.24 | 245,419,630.02 |
| Add: Cash and cash equivalents, beginning of the period | 747,588,730.42 | 502,169,100.40 |
| 6. Cash and cash equivalents, end of the period | 983,378,125.66 | 747,588,730.42 |
Legal representative: He Yong General Manager: Liu Xingming Chief Financial Officer: Tang Qionglan
7. Consolidated Statements of Changes in Owners’ Equity
2019
Unit: RMB
| Item | 2019 | ||||||||||||||
| 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. Balances as at the end of the prior year | 1,399,346,154.00 | 158,608,173.07 | 297,667,872.80 | 809,456,186.20 | 1,654,181,032.39 | 4,319,259,418.46 | 22,054,862.93 | 4,341,314,281.39 | |||||||
| Add: Adjustments for changed accounting policies | 289,351,686.49 | 289,351,686.49 | 289,351,686.49 | ||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||||
| Adjustments for business combinations under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balances as at the beginning of the year | 1,399,346,154.00 | 158,608,173.07 | 587,019,559.29 | 809,456,186.20 | 1,654,181,032.39 | 4,608,611,104.95 | 22,054,862.93 | 4,630,665,967.88 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 189,240,788.90 | 27,103,459.16 | 55,781,447.06 | 272,125,695.12 | 4,619,565.15 | 276,745,260.27 | |||||||||
| 3.1 Total comprehensive income | 189,240,788.90 | 301,182,906.24 | 490,423,695.14 | 2,269,565.15 | 492,693,260.29 | ||||||||||
| 3.2 Capital increased and reduced by owners | 2,350,000.00 | 2,350,000.00 | |||||||||||||
| 3.2.1 Ordinary shares increased by owners | 2,350,000.00 | 2,350,000.00 | |||||||||||||
| 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 | |||||||||||||||
| 3.3 Profit distribution | 27,103,459.16 | -245,401,459.18 | -218,298,000.02 | -218,298,000.02 | |||||||||||
| 3.3.1 Appropriation to surplus reserves | 27,103,459.16 | -27,103,459.16 | |||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -218,298,000.02 | -218,298,000.02 | -218,298,000.02 | ||||||||||||
| 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 pension 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. Balances as at the end of the period | 1,399,346,154.00 | 158,608,173.07 | 776,260,348.19 | 836,559,645.36 | 1,709,962,479.45 | 4,880,736,800.07 | 26,674,428.08 | 4,907,411,228.15 |
2018
Unit: RMB
| Item | 2018 | ||||||||||||||
| 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. Balances as at the end of the prior year | 1,272,132,868.00 | 285,821,459.07 | 716,607,333.78 | 772,953,002.36 | 1,731,600,796.18 | 4,779,115,459.39 | 20,519,660.40 | 4,799,635,119.79 | |||||||
| Add: Adjustments for changed accounting policies | |||||||||||||||
| Adjustments for corrections of previous errors | |||||||||||||||
| Adjustments for business combinations under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balances as at the beginning of the year | 1,272,132,868.00 | 285,821,459.07 | 716,607,333.78 | 772,953,002.36 | 1,731,600,796.18 | 4,779,115,459.39 | 20,519,660.40 | 4,799,635,119.79 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 127,213,286.00 | -127,213,286.00 | -418,939,460.98 | 36,503,183.84 | -77,419,763.79 | -459,856,040.93 | 1,535,202.53 | -458,320,838.40 | |||||||
| 3.1 Total comprehensive income | -418,939,460.98 | 377,615,133.62 | -41,324,327.36 | 1,535,202.53 | -39,789,124.83 | ||||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||||
| 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 | |||||||||||||||
| 3.3 Profit distribution | 36,503,183.84 | -455,034,897.41 | -418,531,713.57 | -418,531,713.57 | |||||||||||
| 3.3.1 Appropriation to surplus reserves | 36,503,183.84 | -36,503,183.84 | |||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -418,531,713.57 | -418,531,713.57 | -418,531,713.57 | ||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | 127,213,286.00 | -127,213,286.00 |
| 3.4.1 Increase in capital (or share capital) from capital reserves | 127,213,286.00 | -127,213,286.00 | |||||||||||||
| 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 pension 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. Balances as at the end of the period | 1,399,346,154.00 | 158,608,173.07 | 297,667,872.80 | 809,456,186.20 | 1,654,181,032.39 | 4,319,259,418.46 | 22,054,862.93 | 4,341,314,281.39 |
Legal representative: He Yong General Manager: Liu Xingming Chief Financial Officer: Tang Qionglan
8. Statements of Changes in Owners’ Equity of the Company as the Parent2019
Unit: RMB
| Item | 2019 | |||||||||||
| 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. Balances as at the end of the prior year | 1,399,346,154.00 | 166,211,779.15 | 297,672,884.34 | 809,456,186.20 | 1,482,164,706.92 | 4,154,851,710.61 | ||||||
| Add: Adjustments for changed accounting policies | 289,351,686.49 | 289,351,686.49 | ||||||||||
| Adjustments for corrections of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balances as at the beginning of the year | 1,399,346,154.00 | 166,211,779.15 | 587,024,570.83 | 809,456,186.20 | 1,482,164,706.92 | 4,444,203,397.10 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 189,218,417.07 | 27,103,459.16 | 41,343,111.19 | 257,664,987.42 | ||||||||
| 3.1 Total comprehensive income | 189,218,417.07 | 286,744,570.37 | 475,962,987.44 | |||||||||
| 3.2 Capital increased and | ||||||||||||
| reduced by owners | ||||||||||||
| 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 | ||||||||||||
| 3.3 Profit distribution | 27,103,459.16 | -245,401,459.18 | -218,298,000.02 | |||||||||
| 3.3.1 Appropriation to surplus reserves | 27,103,459.16 | -27,103,459.16 | ||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -218,298,000.02 | -218,298,000.02 | ||||||||||
| 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 pension 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. Balances as at the end of the period | 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 |
2018
Unit: RMB
| Item | 2018 | |||||||||||
| 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. Balances as at the end of the prior year | 1,272,132,868.00 | 293,425,065.15 | 716,608,088.78 | 772,953,002.36 | 1,572,167,765.91 | 4,627,286,790.20 | ||||||
| Add: Adjustments for changed accounting policies | ||||||||||||
| Adjustments for corrections of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balances as at the beginning of the year | 1,272,132,868.00 | 293,425,065.15 | 716,608,088.78 | 772,953,002.36 | 1,572,167,765.91 | 4,627,286,790.20 | ||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 127,213,286.00 | -127,213,286.00 | -418,935,204.44 | 36,503,183.84 | -90,003,058.99 | -472,435,079.59 | ||||||
| 3.1 Total comprehensive income | -418,935,204.44 | 365,031,838.42 | -53,903,366.02 | |||||||||
| 3.2 Capital increased and reduced by owners | ||||||||||||
| 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 | ||||||||||||
| 3.3 Profit distribution | 36,503,183.84 | -455,034,897.41 | -418,531,713.57 | |||||||||
| 3.3.1 Appropriation to surplus reserves | 36,503,183.84 | -36,503,183.84 |
| 3.3.2 Appropriation to owners (or shareholders) | -418,531,713.57 | -418,531,713.57 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | 127,213,286.00 | -127,213,286.00 | ||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | 127,213,286.00 | -127,213,286.00 | ||||||||||
| 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 pension 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. Balances as at the end of the period | 1,399,346,154.00 | 166,211,779.15 | 297,672,884.34 | 809,456,186.20 | 1,482,164,706.92 | 4,154,851,710.61 |
Legal representative: He Yong General Manager: Liu Xingming Chief Financial Officer: Tang QionglanIII Company profile(I) Basic informationFoshan 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. He YongAddress: No. 64, Fenjiang North Road, Foshan, Guangdong ProvinceMain business of the company and its subsidiaries (hereinafter referred to as “the Company”): lighting productsand electro technical 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 8 April 2020.
(II) Consolidation scope of financial statementThe consolidation scope of the financial statement during the Reporting Period including the Company and the 9subordinate subsidiaries such as FSL Chanchang Optoelectronics Co., Ltd. ( referred to as “ChanchangCompany”), Foshan Chansheng Electronic Ballast Co., Ltd. ( referred to as “Chansheng Company”), FoshanTaimei Times Lamps and Lanterns Co., Ltd. ( referred to as “Taimei Company”), Nanjing Fozhao LightingComponents Co., Ltd. ( referred to as “Nanjing Fozhao”), FSL (Xinxiang) Lighting Co., Ltd. ( referred to as“Xinxiang Company”), Foshan Electrical and Lighting New Light Source Technology Co., Ltd. ( referred to as“New Light Source Company”), Foshan Lighting Lamps & Components Co., Ltd. ( referred to as “Lamps &Components Company”) and FSL Zhida Electric Technology Co., Ltd ( referred to as “Zhida ElectricTechnology”), and FSL LIGHTING GmbH (referred to as “FSL LIGHTING”), a total of nine subsidiaries in all.
The consolidation scope of financial statement in the Reporting Period decreased one subsidiary GuangdongFozhao Financial Leasing Co., Ltd. (referred to as “Leasing Company”) compared with that of last year.For details, see relevant contents in Note VIII “Changes in the consolidation scope”, and Note IX “Equities inother entities”
IV Basis for Preparation of Financial Statements
1. Preparation Basis
The financial statements of the Company are based on the continuing operation, and are confirmed and 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 accounts receivables bad debt (Note 12. AccountsReceivable), depreciation of fixed assets and amortization of intangible assets (Note 24. Fixed Assets and Note 30.Intangible Assets), and recognized time point of income (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 into
joint 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 comprehensive income except for interest income,impairment losses and exchange differences, which should be recognized as current profits/losses. When afinancial asset is derecognized, the cumulative gains or losses included into other comprehensive incomepreviously should be transferred out and included into current profits/losses. Such financial assets should bepresented as other credit investments. Other credit investments that will mature within one year from the date ofbalance sheet should be presented as non-current assets due within one year, and other credit investments with theoriginal maturity date coming within one year should be presented as other current assets.
(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 and contract assets that do not contain significant financing components, theCompany uses the simplified measurement method to measure bad debt provision by the amount equivalent to theexpected credit losses of the whole duration.In respect of receivable accounts and contract assets that contain significant financing components, the Companyopts to use the simplified measurement method to measure bad debt provision by the amount equivalent to theexpected credit losses 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 into currentprofits/losses.
8. Revision of financial assets
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 the
revised book balance of financial assets and amortized in the remaining period of the revised financial assets.
9. 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 Bad Debt Provision is Made Individually
| Definition or amount criteria for an account receivable with a significant single amount | Making separate bad-debt provisions for accounts receivable with a significant single amount |
| Making separate bad-debt provisions 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 bad-debt provision is made according to the difference between the present value of the account receivable’s future cash flows and its carrying amount. |
2. Accounts Receivable for which the Bad Debt Provision is Withdrawn by Credit Risk Characteristics
| Group name | Withdrawal method of bad debt provision |
| Common transaction group | Aging analysis method |
| Internal transaction group | Other methods |
In the groups, those adopting aging analysis method to withdraw bad debt provision:
| Aging | Withdrawal proportion of accounts receivable |
| 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 Bad Debt Provision is MadeIndependently
| Reason of individually withdrawing bad debt provision | There are definite evidences indicate the obvious difference of thee return ability |
| Withdrawal method for bad debt provision | Recognizing the impairment loss and withdrawing the bad debt provision 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 since 1 January 2019.
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 into
account.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. Contractual Assets
Not applicable
17. Contractual 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 between
non-related parties fails to be completed within one year, and there is sufficient evidence that the Company stillpromises 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 sale
separately from other liabilities. The non-current assets held for sale or the assets in the disposal group held forsale 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. The long-term equity investment of the Company which has no control, jointcontrol or significant influence on the investee is accounted for as financial assets available-for-sale or financialassets at fair value and changes recognized in profit or loss for the current period. For details of accountingpolicies, please refer to 10. Financial instrumentsJoint 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 measured
reliably, the Company shall record the said amount into the combination costs.
(3) The cost of a long-term equity investment obtained by making payment in cash shall be the purchase 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 fairvalue 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-term
equity 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 Companyfrom 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
Not applicable
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; andtheir useful life is in excess of one accounting year and unit price is higher. No fixed assets may be recognizedunless it simultaneously meets the conditions as follows: ① The economic benefits pertinent to the fixed asset arelikely to flow into the Company; and ② The cost of the fixed asset can be measured reliably.
(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 | 5% | 31.67%-3.17% |
| Machinery equipments | Average method of useful life | 2—10 years | 5% | 47.50%-9.50% |
| Transportation vehicle | Average method of useful life | 5—10 years | 5% | 19.00%-9.50% |
| Electronic equipment | Average method of useful life | 2—8 years | 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 the delivery,the relevant interest expense shall be recorded into the current profits and losses.
2. Standard and Time of Construction in Progress Carrying Forward into Fixed 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 substantially completed;
(2) Has been produced or run for trial, and the results indicate that the assets can run normally or can produce stableproducts 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 the designor contract requirements.
3. Provision for Impairment of Construction in Progress
Please refer to Note 31: Long-term Asset Impairment under Note V for the impairment test method and provisionfor impairment 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 eligiblefor 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
Not applicable
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 without physicalform. The intangible assets are recognized when all the following conditions are met: (1) Conform to the definitionof intangible assets; (2) Expected future economic benefits related to the assets are likely to flow into the Company;
(3) The costs of the assets can be measured reliably.
2. Initial Measurement of Intangible Assets
Intangible assets are initially measured at cost. Actual costs are determined by the following principles:
(1) The cost of the acquisition of intangible assets, including the purchase price, relevant taxes and other 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 period exceptthat can be capitalized in accordance with the Accounting Standard for Business Enterprises No. 17 - BorrowingCost.
(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 assets islimited, and the years of the useful life or output that constitutes the useful life or similar measurement units shall beestimated. The intangible assets are regarded as intangible assets with uncertain useful life if the term that bringseconomic 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 assets withuncertain useful life in each accounting period. For intangible assets that evidence shows the useful life is limited,the useful life shall be estimated and the intangible assets shall be amortized in the estimated useful life.
4. Recognition Criteria and Withdrawal Method of Intangible Asset Impairment ProvisionThe impairment test method and withdrawal method for impairment provision of intangible assets are detailed in
Note 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 final
disposal. 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 yearexcluded) 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.
33. Contractual Liabilities
Not applicable
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 gains
and losses when happen.
(3) Accounting Treatment of the Demission Welfare
If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant 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
Not applicable
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 ofperformance 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 the lightof 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 all orsome of the expenses necessary for the liquidation of an provisions of an enterprise is expected to be compensatedby a third party, the compensation should be separately recognized as an asset only when it is virtually certain that
the reimbursement will be obtained. The Company shall check the book value of the provisions on the balancesheet date. The amount of compensation is not exceeding the book value of the recognized provisions.
37. Share-based Payment
Not applicable
38. Other Financial Instruments such as Preferred Shares and Perpetual BondsNot applicable
39. Revenue
Has implemented the new standards governing revenue
□ Yes √ No
1. Sale of Goods
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: ① Thesignificant risks and rewards of ownership of the goods have been transferred to the buyer by the Company; ② TheCompany retains neither continuous management right that usually keeps relation with the ownership nor effectivecontrol over the sold goods; ③ The revenue amount could be reliably measured; and ④ The relevant economicbenefits may flow into the Company, and the relevant cost which had occurred or will occur could be reliablymeasured.Specific principles for recognition of the “domestic sale and export” incomes of the Company:
(1) Method for recognition of the domestic sale income: According to the buyer’s requirements, the Companydelivers to the buyer the products that have been considered qualified upon examination. The amount of the incomehas been determined and the sales invoice has been issued. The payment for the delivered products has beenreceived in full or is expectedly recoverable.
(2) Method for recognition of the export income: The Company produces the products according to the contractsigned with the buyer. After the products have been examined as qualified, the Company completes the customsclearing procedure for export. The shipping company loads the products for shipping. The amount of the income hasbeen determined and the export sales invoice has been issued. The payment for the delivered products has beenreceived in full or is expectedly recoverable.
2. Provision of Labor Services
In the case that the results of the labor service transaction can be reliably estimated, the income from the provision oflabor services shall be recognized at the balance sheet date by the percentage of completion method according to theprogress of the labor transaction.The result of the provision of labor services can be reliably estimated refers that all the following conditions are met:
① The amount of income can be measured reliably; ②The relevant economic benefits are likely to inflow to theenterprise; ③ The progress of the transaction can be reliably determined; ④ The cost incurred and to be incurred inthe transaction can be measured reliably.If the result of the provision of labor services can’t be reliably estimated, the income from the provision of laborservices shall be recognized according to the cost of labor services that have incurred and are expected to becompensated, and the cost of labor services that have incurred is recognized as the current expenses. If the cost of
labor services already incurred isn’t expected to be compensated, the income will not be recognized.If the contract or agreement between the Company and other enterprises includes the sale of goods and the provisionof labor services, and the sale of goods and the provision of labor services can be distinguished and measuredseparately, the sale of goods and the provision of labor services shall be dealt with separately; if the sale of goodsand the provision of labor services can’t be distinguished or can’t be measured separately, the contract will betreated as sale of goods.
3. Income from Transferring the Right to Use Assets
The operating income is calculated and recognized according to the time and method stipulated by relevantcontracts and agreements.
4. Interest Income
Recognized when all the following conditions are met: ① The amount of income can be measured reliably; ②Economic benefits related to the transaction can inflow.
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 toassets are recognized as deferred income, and are charged to the current profit or loss in a reasonable and
systematic manner within the useful lives of the relevant assets (subsidies related to the daily activities of theCompany are included in other income; while subsidies unrelated to the daily activities of the Company areincluded in non-operating income). Government subsidies measured at nominal amounts are directly charged toprofit or loss for the Current Period. Where the relevant assets are sold, transferred, scrapped or damaged beforethe end of their useful lives, the balance of related undistributed deferred income shall be transferred to the profitor 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 ventures
are 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
(1) The lease fee paid by the Company for rented assets shall be apportioned using the straight-line method overthe entire lease term without deducting the rent-free period and shall be included in the current period expenses.The initial direct costs related to the lease transaction paid by the Company are included in current expenses.When the lessor of the asset assumes the lease-related expenses that should be borne by the Company, theCompany should deduct the part of the expenses from the total rental amount, and the deducted rental expensesare apportioned during the lease term and included in the current expenses.
(2) The rental fees received by the company for leasing assets are apportioned on a straight-line basis over theentire lease term without deducting the rent-free period and are recognized as lease income. The initial directexpenses related to lease transactions paid by the company are included in the current expenses; if the amount islarger, they are capitalized and are recorded in the current period in stages on the same basis as the recognition oflease income during the entire lease period.When the company assumes the lease-related expenses that should be borne by the lessee, the company deductsthe expenses from the total amount of rental income and allocates the deducted rental expenses during the leaseperiod.
(2) Accounting Treatments of Financial Lease
(1) Financing leased assets: on the lease starting date, the Company recorded the lower one of the fair value of theleased asset and the present value of the minimum lease payments on the lease beginning date as the enteringvalue in an account, recognized the amount of the minimum lease payments as the entering value in an account oflong-term account payable, and treated the balance between the recorded amount of the leased asset and thelong-term account payable as unrecognized financing charges. The company adopted the effective interest methodto amortize the unrecognized financing expenses during the asset lease period and included it into financialexpenses.
(2) Assets leased by finance: On the lease beginning date, the Company recognized the financial lease receivables,and the difference between the sum of unguaranteed residual values and its present value as unrealized financingincome. It is recognized as lease income during any lease period in the future. The initial direct costs incurred bythe Company in relation to the lease transaction, were included in the initial measurement of the financial leasereceivable and the amount of revenue recognized during the lease period shall be reduced.
43. Other Significant Accounting Policies and Estimates
Not applicable
44. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√ Applicable □ Not applicable
| Changes in accounting policy | Approval procedure | Remark |
| In accordance with the Notice on Revising and Printing the Format of 2019 General Enterprises Financial Statement (CK [2019] No. 6), the Notice on Revising and Printing the Format of Consolidated Financial Statements (2019) (CK [2019] No. 16) issued by the Ministry of Finance, the Company adjusted the formats of financial statements accordingly. | Approved by the 35th Meeting of the 8th Board of Directors | See the 1-(1) of the Note 44 Changes in Main Accounting Policies and Estimates for details |
| The Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 22-Recognition and Measurement of Financial Instruments, Accounting Standards for Business Enterprises No. 23-Transfer of Financial Assets, Accounting Standards for Business Enterprises No. 24-Hedging and Accounting Standards for Business Enterprises No. 37-Presentation of Financial Instruments in 2017. The Company starts to implement the above standards since 1 January 2019 and adjusted the financial statements accordingly on 1 January 2019 in accordance with the above standards governing connection regulation. | Approved by the 30th Meeting of the 8th Board of Directors | See the Note from 10 to 14 for details |
| The Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 7-Exchange of Non-monetary Assets on 9 May 2019 which is carried out since 10 June 2019. No retroactive adjustment was needed for exchanges of non-monetary assets before 1 January 2019 and adjustment made in accordance with the revised standards is required for the exchanges of non-monetary assets occurring during the period from 1 January 2019 to the execution date. | Approved by the 35th Meeting of the 8th Board of Directors | |
| The Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 12-Debt Restructuring on 16 May 2019 which s | Approved by the 35th Meeting of the 8th Board of Directors |
Change of accounting policies caused by change of Accounting Standards for Business Enterprises
(1) The Company prepared 2019 Financial Statements in accordance with the Notice on Revising and Printing theFormat of 2019 General Enterprises Financial Statements (CK [2019] No. 6), the Notice on Revising and Printingthe Format of Consolidated Financial Statements (2019) (CK [2019] No. 16) issued by the Ministry of Financeand the requirements of the Accounting Standards for Business Enterprises. Retroactive adjustment was adoptedfor the changes in the accounting policy. The significantly affected items and amounts in 2018 FinancialStatements are as follows:
Unit: RMB
carried out since 17 June 2019. No retroactiveadjustment was needed for the debt restructuringbefore 1 January 2019 and adjustment made inaccordance with the revised standards is required forthe debt restructuring occurring during the period of 1January 2019 to the execution date.Item and amount in original financial statement
| Item and amount in original financial statement | Item and amount in new financial statement | ||
| Item | Amount | Item | Amount |
| Notes receivable and accounts receivable | 941,927,209.55 | Notes receivable | 107,506,613.50 |
| Accounts receivable | 834,420,596.05 | ||
| Notes payable and accounts payable | 985,280,820.92 | Notes payable | 452,683,676.97 |
| Accounts payable | 532,597,143.95 | ||
(2) The new standards governing financial instruments divide financial assets into three categories: financialassets measured at amortized cost, financial assets at fair value through other comprehensive income, andfinancial assets at fair value through profit or loss. The Company reclassified the financial assets with the businessmodel for financial assets management and the contract cash flow characteristics thereof on the first executiondate. The new accounting standards governing financial instruments replace the incurred loss method of theoriginal standards governing financial instruments with expected credit loss method of the new standardsgoverning financial instruments.
(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 Financial Instruments, Revenue or Leases since 2019
√ Applicable □ Not applicable
Consolidated balance sheet:
Unit: RMB
| Item | 31 December 2018 | 1 January 2019 | Adjustment |
| Current assets: |
| Monetary assets | 896,646,719.87 | 896,703,037.65 | 56,317.78 |
| Settlement reserve | |||
| Interbank loans granted | |||
| Held-for-trading financial assets | 851,096,046.26 | 851,096,046.26 | |
| Financial assets at fair value through profit or loss | |||
| Derivative financial assets | |||
| Notes receivable | 107,506,613.50 | 107,506,613.50 | |
| Accounts receivable | 834,420,596.05 | 834,420,596.05 | |
| Accounts receivable financing | |||
| Prepayments | 13,811,905.18 | 13,811,905.18 | |
| Premiums receivable | |||
| Reinsurance receivables | |||
| Receivable reinsurance contract reserve | |||
| Other receivables | 21,745,690.53 | 16,593,326.49 | -5,152,364.04 |
| Including: Interest receivable | 5,152,364.04 | -5,152,364.04 | |
| Dividends receivable | |||
| Financial assets purchased under resale agreements | |||
| Inventories | 767,319,599.00 | 767,319,599.00 | |
| Contractual assets | |||
| Assets classified as held for sale | |||
| Current portion of non-current assets | |||
| Other current assets | 864,093,663.30 | 24,093,663.30 | -840,000,000.00 |
| Total current assets | 3,505,544,787.43 | 3,511,544,787.43 | 6,000,000.00 |
| Non-current assets: | |||
| Loans and advances to customers | |||
| Investments in debt obligations |
| Available-for-sale financial assets | 897,716,590.20 | -897,716,590.20 | |
| Investments in other debt obligations | |||
| Held-to-maturity investments | |||
| Long-term receivables | |||
| Long-term equity investments | 182,458,559.69 | 182,458,559.69 | |
| Investments in other equity instruments | 1,232,130,339.01 | 1,232,130,339.01 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 512,106,912.39 | 512,106,912.39 | |
| Construction in progress | 224,624,447.16 | 224,624,447.16 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 172,725,277.21 | 172,725,277.21 | |
| R&D expense | |||
| Goodwill | |||
| Long-term prepaid expense | 6,852,985.35 | 6,852,985.35 | |
| Deferred income tax assets | 37,831,704.45 | 37,831,704.45 | |
| Other non-current assets | 48,305,435.42 | 48,305,435.42 | |
| Total non-current assets | 2,082,621,911.87 | 2,417,035,660.68 | 334,413,748.81 |
| Total assets | 5,588,166,699.30 | 5,928,580,448.11 | 340,413,748.81 |
| Current liabilities: | |||
| Short-term borrowings | |||
| Borrowings from central bank | |||
| Interbank loans obtained | |||
| Held-for-trading financial liabilities | 477,200.00 | 477,200.00 |
| Financial liabilities at fair value through profit or loss | 477,200.00 | -477,200.00 | |
| Derivative financial liabilities | |||
| Notes payable | 452,683,676.97 | 452,683,676.97 | |
| Accounts payable | 532,597,143.95 | 532,597,143.95 | |
| Advances from customers | 43,850,788.04 | 43,850,788.04 | |
| Contractual liabilities | |||
| Financial assets sold under repurchase agreements | |||
| Customer deposits and interbank deposits | |||
| Payables for acting trading of securities | |||
| Payables for underwriting of securities | |||
| Payroll payable | 96,088,621.59 | 96,088,621.59 | |
| Taxes payable | 25,354,466.37 | 25,354,466.37 | |
| Other payables | 43,115,011.68 | 43,115,011.68 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Handling charges and commissions payable | |||
| Reinsurance payables | |||
| Liabilities directly associated with assets classified as held for sale | |||
| Current portion of non-current liabilities | |||
| Other current liabilities | |||
| Total current liabilities | 1,194,166,908.60 | 1,194,166,908.60 | |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term borrowings | |||
| Bonds payable |
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term payroll payable | |||
| Provisions | |||
| Deferred income | 155,000.31 | 155,000.31 | |
| Deferred income tax liabilities | 52,530,509.00 | 103,592,571.32 | 51,062,062.32 |
| Other non-current liabilities | |||
| Total non-current liabilities | 52,685,509.31 | 103,747,571.63 | 51,062,062.32 |
| Total liabilities | 1,246,852,417.91 | 1,297,914,480.23 | 51,062,062.32 |
| Owners’ equity: | |||
| Share capital | 1,399,346,154.00 | 1,399,346,154.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 158,608,173.07 | 158,608,173.07 | |
| Less: Treasury stock | |||
| Other comprehensive income | 297,667,872.80 | 587,019,559.29 | 289,351,686.49 |
| Specific reserve | |||
| Surplus reserves | 809,456,186.20 | 809,456,186.20 | |
| General reserve | |||
| Retained earnings | 1,654,181,032.39 | 1,654,181,032.39 | |
| Total equity attributable to owners of the Company as the parent | 4,319,259,418.46 | 4,608,611,104.95 | 289,351,686.49 |
| Non-controlling interests | 22,054,862.93 | 22,054,862.93 | |
| Total owners’ equity | 4,341,314,281.39 | 4,630,665,967.88 | 289,351,686.49 |
| Total liabilities and owners’ equity | 5,588,166,699.30 | 5,928,580,448.11 | 340,413,748.81 |
Note for adjustment:
In 2017, Ministry of Finance respectively revised and issued the Accounting Standards for Business Enterprises No. 22 - Recognitionand Measurement of Financial Instruments (CK[2017]No.7), the Accounting Standards for Business Enterprises No. 23 – Transfer ofFinancial Assets (CK[2017]No.8), the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting (CK[2017]No.9),and the Accounting Standards for Business Enterprises No. 37 – Presentation of Financial Instruments (CK[2017]No.14). TheCompany starts to implement above new standards since 1 January 2019. In accordance with the link up provision, no adjustmentwas made to information of comparative period, and the Company retroactively adjusted the retained earnings of period-begin orother comprehensive income based on the difference between the original standards and the new standards on the first execution date.Those originally recorded into “available-for-sale financial assets” are now recorded into “trading financial assets” and “otherinvestments in equity instruments”; those originally recorded into “financial liabilities at fair value through profit or loss” are nowrecorded into “trading financial liabilities”.
Balance sheet of the Company as the parent:
Unit: RMB
| Item | 31 December 2018 | 1 January 2019 | Adjustment |
| Current assets: | |||
| Monetary assets | 848,949,693.91 | 849,006,011.69 | 56,317.78 |
| Held-for-trading financial assets | 851,096,046.26 | 851,096,046.26 | |
| Financial assets at fair value through profit or loss | |||
| Derivative financial assets | |||
| Notes receivable | 104,945,398.61 | 104,945,398.61 | |
| Accounts receivable | 795,897,932.65 | 795,897,932.65 | |
| Accounts receivable financing | |||
| Prepayments | 25,444,445.34 | 25,444,445.34 | |
| Other receivables | 43,538,848.72 | 38,386,484.68 | -5,152,364.04 |
| Including: Interest receivable | 5,152,364.04 | -5,152,364.04 | |
| Dividends receivable | |||
| Inventories | 692,681,479.03 | 692,681,479.03 | |
| Contractual assets | |||
| Assets classified as held for sale |
| Current portion of non-current assets | |||
| Other current assets | 856,504,839.81 | 16,504,839.81 | -840,000,000.00 |
| Total current assets | 3,367,962,638.07 | 3,373,962,638.07 | 6,000,000.00 |
| Non-current assets: | |||
| Investments in debt obligations | |||
| Available-for-sale financial assets | 897,716,590.20 | -897,716,590.20 | |
| Investments in other debt obligations | |||
| Held-to-maturity investments | |||
| Long-term receivables | |||
| Long-term equity investments | 466,251,661.95 | 466,251,661.95 | |
| Investments in other equity instruments | 1,232,130,339.01 | 1,232,130,339.01 | |
| Other non-current financial assets | |||
| Investment property | |||
| Fixed assets | 427,947,613.74 | 427,947,613.74 | |
| Construction in progress | 222,570,503.14 | 222,570,503.14 | |
| Productive living assets | |||
| Oil and gas assets | |||
| Right-of-use assets | |||
| Intangible assets | 129,452,067.42 | 129,452,067.42 | |
| R&D expense | |||
| Goodwill | |||
| Long-term prepaid expense | 5,106,268.25 | 5,106,268.25 | |
| Deferred income tax assets | 35,908,741.15 | 35,908,741.15 | |
| Other non-current assets | 46,852,235.42 | 46,852,235.42 | |
| Total non-current assets | 2,231,805,681.27 | 2,566,219,430.08 | 334,413,748.81 |
| Total assets | 5,599,768,319.34 | 5,940,182,068.15 | 340,413,748.81 |
| Current liabilities: |
| Short-term borrowings | |||
| Held-for-trading financial liabilities | 477,200.00 | 477,200.00 | |
| Financial liabilities at fair value through profit or loss | 477,200.00 | -477,200.00 | |
| Derivative financial liabilities | |||
| Notes payable | 452,683,676.97 | 452,683,676.97 | |
| Accounts payable | 681,490,174.69 | 681,490,174.69 | |
| Advances from customers | 41,912,301.85 | 41,912,301.85 | |
| Contractual liabilities | |||
| Payroll payable | 84,220,746.16 | 84,220,746.16 | |
| Taxes payable | 17,528,644.83 | 17,528,644.83 | |
| Other payables | 114,073,355.23 | 114,073,355.23 | |
| Including: Interest payable | |||
| Dividends payable | |||
| Liabilities directly associated with assets classified as held for sale | |||
| Current portion of non-current liabilities | |||
| Other current liabilities | |||
| Total current liabilities | 1,392,386,099.73 | 1,392,386,099.73 | |
| Non-current liabilities: | |||
| Long-term borrowings | |||
| Bonds payable | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Lease liabilities | |||
| Long-term payables | |||
| Long-term payroll payable | |||
| Provisions |
| Deferred income | |||
| Deferred income tax liabilities | 52,530,509.00 | 103,592,571.32 | 51,062,062.32 |
| Other non-current liabilities | |||
| Total non-current liabilities | 52,530,509.00 | 103,592,571.32 | 51,062,062.32 |
| Total liabilities | 1,444,916,608.73 | 1,495,978,671.05 | 51,062,062.32 |
| Owners’ equity: | |||
| Share capital | 1,399,346,154.00 | 1,399,346,154.00 | |
| Other equity instruments | |||
| Including: Preferred shares | |||
| Perpetual bonds | |||
| Capital reserves | 166,211,779.15 | 166,211,779.15 | |
| Less: Treasury stock | |||
| Other comprehensive income | 297,672,884.34 | 587,024,570.83 | 289,351,686.49 |
| Specific reserve | |||
| Surplus reserves | 809,456,186.20 | 809,456,186.20 | |
| Retained earnings | 1,482,164,706.92 | 1,482,164,706.92 | |
| Total owners’ equity | 4,154,851,710.61 | 4,444,203,397.10 | 289,351,686.49 |
| Total liabilities and owners’ equity | 5,599,768,319.34 | 5,940,182,068.15 | 340,413,748.81 |
Note for adjustment:
In 2017, Ministry of Finance respectively revised and issued the Accounting Standards for Business Enterprises No. 22 - Recognitionand Measurement of Financial Instruments (CK[2017]No.7), the Accounting Standards for Business Enterprises No. 23 – Transfer ofFinancial Assets (CK[2017]No.8), the Accounting Standards for Business Enterprises No. 24 – Hedging Accounting (CK[2017]No.9),and the Accounting Standards for Business Enterprises No. 37 – Presentation of Financial Instruments (CK[2017]No.14). TheCompany starts to implement above new standards since 1 January 2019. In accordance with the link up provision, no adjustmentwas made to information of comparative period, and the Company retroactively adjusted the retained earnings of period-begin orother comprehensive income based on the difference between the original standards and the new standards on the first execution date.Those originally recorded into “available-for-sale financial assets” are now recorded into “trading financial assets” and “otherinvestments in equity instruments”; those originally recorded into “financial liabilities at fair value through profit or loss” are nowrecorded into “trading financial liabilities”.
(4) Retroactive Adjustments to Comparative Data of Prior Years when Execution of any New StandardsGoverning Financial Instruments or Leases since 2019
√ Applicable □ Not applicable
The comparative statements of financial assets in classification and measurement before and after the execution ofthe new standards governing financial instruments on 1 January 2019A. Consolidated financial statement
| 31 December 2018 (original standards governing financial instruments) | 1 January 2019 (new standards governing financial instruments) |
| Item | Measurement category | Carrying value | Item | Measurement category | Carrying value |
| Monetary assets | Amortized cost | 896,646,719.87 | Monetary assets | Amortized cost | 896,646,719.87 |
| Other receivables-interest receivable | Amortized cost | 5,152,364.04 | Monetary assets | Amortized cost | 56,317.78 |
| Held-for-trading financial assets | At fair value through profit or loss | 5,096,046.26 | |||
| Other current assets-wealth management products and structural deposits | Amortized cost | 840,000,000.00 | Held-for-trading financial assets | At fair value through profit or loss | 840,000,000.00 |
| Available-for-sale financial assets | Cost method/measured at fair value | 897,716,590.20 | Investment in other equity instruments | Investment in held-not for-trading equity instruments designated to be measured at fair value through other comprehensive income | 1,232,130,339.01 |
| Held-for-trading financial assets | At fair value through profit or loss | 6,000,000.00 | |||
| Financial liabilities at fair value through profit or loss | At fair value | 477,200.00 | Held-for-trading financial liabilities | At fair value through profit or loss | 477,200.00 |
B. Financial statement of the Company as the parent
| 31 December 2018 (original standards governing financial instruments) | 1 January 2019 (new standards governing financial instruments) | ||||
| Item | Measurement category | Carrying value | Item | Measurement category | Carrying value |
| Monetary assets | Amortized cost | 848,949,693.91 | Monetary assets | Amortized cost | 848,949,693.91 |
| Other | Amortized cost | 5,152,364.04 | Monetary assets | Amortized cost | 56,317.78 |
| receivables-interest receivable | Held-for-trading financial assets | At fair value through profit or loss | 5,096,046.26 | ||
| Other current assets-wealth management products and structural deposits | Amortized cost | 840,000,000.00 | Held-for-trading financial assets | At fair value through profit or loss | 840,000,000.00 |
| Available-for-sale financial assets | Cost method/measured at fair value | 897,716,590.20 | Investment in other equity instruments | Investment in held-not for-trading equity instruments designated to be measured at fair value through other comprehensive income | 1,232,130,339.01 |
| Held-for-trading financial assets | At fair value through profit or loss | 6,000,000.00 | |||
| Financial liabilities at fair value through profit or loss | At fair value | 477,200.00 | Held-for-trading financial liabilities | At fair value through profit or loss | 477,200.00 |
The reconciliation statement of the carrying values of the original financial assets and financial liabilities adjusted into thoseaccording to the new standards governing financial instruments on 1 January 2019A. Consolidated financial statement
| Item | Carrying value on 31 December 2018 (according to the original standards governing financial instruments) | Reclassified | Remeasured | Carrying value on 1 January 2019 (according to the new standards governing financial instruments) |
| Financial assets at amortized cost according to the new standards governing financial instruments | ||||
| Monetary assets | 896,646,719.87 | |||
| Add: transfer of other receivables-interest receivable | 56,317.78 | |||
| Monetary assets (listed according to the new standards governing financial instruments) | 896,703,037.65 |
| Other receivables-interest receivable | 5,152,364.04 | |||
| Less: transferred to monetary assets | 56,317.78 | |||
| Less: Transferred to held-for-trading financial assets | 5,096,046.26 |
| Other receivables-interest receivable (listed according to the new standards governing financial instruments) | ||||
| Other current assets-wealth management products and structural deposits | 840,000,000.00 | |||
| Less: transferred to held-for-trading financial assets | 840,000,000.00 | |||
| Other current assets-wealth management products and structural deposits (listed according to the new standards governing financial instruments) | ||||
| Financial assets at fair value according to the new standards governing financial instruments | ||||
| Held-for-trading financial assets | ||||
| Add: transfer of other receivables-interest receivable | 5,096,046.26 | |||
| Add: transfer of other current assets-wealth management products and structural deposits | 840,000,000.00 | |||
| Add: transfer of available-for-sale financial assets | 6,000,000.00 | |||
| Held-for-trading financial assets (listed according to the new standards governing financial instruments) | 851,096,046.26 |
| Available-for-sale financial assets | 897,716,590.20 | |||
| Less: transferred to investment in other equity instruments | 891,716,590.20 | 340,413,748.81 | ||
| Less: transferred to held-for-trading financial assets | 6,000,000.00 | |||
| Investment in other equity instruments (listed according to the new standards governing financial instruments) | 1,232,130,339.01 | |||
| Financial liabilities at fair value according to the new standards governing financial instruments | ||||
| Financial liabilities at fair value through profit or loss | 477,200.00 | |||
| Less: transferred to held-for-trading financial liabilities | 477,200.00 | |||
| Held-for-trading financial liabilities (listed according to the new standards governing financial instruments) | 477,200.00 |
B. Financial statement of the Company as the parent
| Item | Carrying value on 31 December 2018 (according to the original standards governing financial instruments) | Reclassified | Remeasured | Carrying value on 1 January 2019 (according to the new standards governing financial instruments) |
| Financial assets at amortized cost according to the new standards governing financial instruments | ||||
| Monetary assets | 848,949,693.91 | |||
| Add: transfer of other receivables-interest receivable | 56,317.78 | |||
| Monetary assets (listed according to the new standards governing financial instruments) | 849,006,011.69 | |||
| Other receivables-interest receivable | 5,152,364.04 | |||
| Less: transferred to monetary assets | 56,317.78 | |||
| Less: Transferred to held-for-trading financial assets | 5,096,046.26 | |||
| Other receivables-interest receivable (listed according to the new standards governing financial instruments) | ||||
| Other current assets-wealth management products and structural deposits | 840,000,000.00 | |||
| Less: transferred to held-for-trading financial assets | 840,000,000.00 | |||
| Other current assets-wealth management products and structural deposits (listed according to the new standards governing financial instruments) | ||||
| Financial assets at fair value according to the new standards governing financial instruments | ||||
| Held-for-trading financial assets | ||||
| Add: transfer of other receivables-interest receivable | 5,096,046.26 | |||
| Add: transfer of other current assets-wealth management products and structural deposits | 840,000,000.00 |
| Add: transfer of available-for-sale financial assets | 6,000,000.00 | |||
| Held-for-trading financial assets (listed according to the new standards governing financial instruments) | 851,096,046.26 | |||
| Available-for-sale financial assets | 897,716,590.20 | |||
| Less: transferred to investment in other equity instruments | 891,716,590.20 | 340,413,748.81 | ||
| Less: transferred to held-for-trading financial assets | 6,000,000.00 | |||
| Investment in other equity instruments (listed according to the new standards governing financial instruments) | 1,232,130,339.01 | |||
| Financial liabilities at fair value according to the new standards governing financial instruments | ||||
| Financial liabilities at fair value through profit or loss | 477,200.00 | |||
| Less: transferred to held-for-trading financial liabilities | 477,200.00 | |||
| Held-for-trading financial liabilities (listed according to the new standards governing financial instruments) | 477,200.00 | |||
The reconciliation statement of the original provision for impairment of financial assets adjusted into that according to the newstandards governing financial instruments on 1 January 2019A. Consolidated financial statement
| Item | Carrying value on 31 December 2018 (according to the original standards governing financial instruments) | Reclassified | Remeasured | Carrying value on 1 January 2019 (according to the new standards governing financial instruments) |
| Financial assets at amortized cost | ||||
| Of which: provisions for impairment of notes receivable | ||||
| Provisions for impairment of accounts receivable | 49,017,296.46 | 49,017,296.46 | ||
| Provisions for impairment of other receivables | 1,331,371.60 | 1,331,371.60 | ||
| Provisions for impairment of available-for-sale financial assets | 5,850,000.00 | -5,850,000.00 |
B. Financial statement of the Company as the parent
| Item | Carrying value on 31 December 2018 (according to the original standards governing financial instruments) | Reclassified | Remeasured | Carrying value on 1 January 2019 (according to the new standards governing financial instruments) |
| Financial assets at amortized cost | ||||
| Of which: provisions for impairment of notes receivable | ||||
| Provisions for impairment of accounts receivable | 46,625,926.10 | 46,625,926.10 | ||
| Provisions for impairment of other receivables | 1,301,617.92 | 1,301,617.92 | ||
| Provisions for impairment of available-for-sale financial assets | 5,850,000.00 | -5,850,000.00 |
45. Other
Naught
VI. 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%, 10%, 13%, 16% |
| Urban maintenance and construction tax | Turnover tax payable | 7%, 5% |
| Enterprise income tax | Taxable income | 15%, 20%, 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 |
| Foshan Electrical and Lighting Co., Ltd. | 15% |
| FSL Chanchang Optoelectronics Co., Ltd. | 25% |
| Foshan Chansheng Electronic Ballast Co., Ltd. | 20% |
| Foshan Taimei Times Lamps and Lanterns Co., Ltd. | 25% |
| Nanjing Fozhao Lighting Components Manufacturing Co., Ltd. | 25% |
| Foshan Electrical & Lighting (Xinxiang) Co., Ltd. | 25% |
| FSL New Light Source Technology Co., Ltd. | 25% |
| Foshan Lighting Lamps and Lanterns Co., Ltd. | 25% |
| FSL Zhida Electric Technology Co., Ltd. | 15% |
| FSL Lighting GmbH | 15% |
2. Tax Preference
The Company passed the re-examination for High-tech Enterprises in 2017, 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 2017.FSL Zhida Electric Technology Co., Ltd. passed the examination for High-tech Enterprises in December 2019,and thus FSL Zhida Electric Technology Co., Ltd. paid the corporate income tax based on a tax rate of 15% withinthree years since 1 January 2019 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.According to Notice of Implementation of Inclusive Tax Reduction Policy to Small and Micro Enterprises byMinistry of Finance and State Administration of Taxation (CS [2019] No. 13), Foshan Chansheng ElectronicBallast Co., Ltd. is applicable to the preferential tax policy for small low-profit enterprises in 2019: the portion ofannual taxable income less than RMB1 million shall be included in the taxable income based on a tax rate of 25%and 20% of preferential tax rate paid for the corporate income tax; the portion of annual taxable income more thanRMB1 million but less than RMB3 million shall be included in the taxable income based on a tax rate of 50% and20% of preferential tax rate paid for the corporate income tax.
3. Other
Paid according to the relevant regulation 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 | 18,281.85 | 34,937.47 |
| Bank deposits | 1,048,694,037.32 | 784,166,295.87 |
| Other monetary assets (Note 1) | 70,079,965.12 | 112,445,486.53 |
| Unexpired interest (Note 2) | 6,664,378.35 | 56,317.78 |
| Total | 1,125,456,662.64 | 896,703,037.65 |
| Of which: Total amount deposited overseas | 1,232,977.34 | 739,617.83 |
Other notesNote 1: Other monetary assets includes cash deposit for notes, cash deposit for future foreign exchange settlement,guarantee deposit, investment fund deposited in securities companies and e-commerce balance, of which, the cashdeposit for notes and cash deposit for future foreign exchange settlement are restricted assets. For details, pleaserefer to Note VII-Notes to Items of Consolidated Financial Statements (81. Assets with Restricted Ownership andRight to Use).Note 2: The undue interest does 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 | 899,619,482.64 | 845,096,046.26 |
| Including: | ||
| Wealth management products (note) | 467,869,852.09 | 241,944,150.72 |
| Structural deposits (note) | 431,749,630.55 | 603,151,895.54 |
| Financial assets designated to be measured at fair value through profit or loss | 1,547,200.00 | 6,000,000.00 |
| Total | 901,166,682.64 | 851,096,046.26 |
Other notes:
They are the principal-guaranteed wealth management products of banks with maturity date over three monthsand investment cycle less than one year and the structural deposits cannot be terminated in advance.
3. Derivative Financial Assets
Not applicable
4. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
| Item | Ending balance | Beginning balance |
| Bank acceptance bill | 109,444,480.94 | 107,506,613.50 |
| Total | 109,444,480.94 | 107,506,613.50 |
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) Notes Receivable 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 | 67,035,696.27 |
| Total | 67,035,696.27 |
(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 terminated recognition at the period-end |
| Bank acceptance bill | 56,863,345.47 | |
| Total | 56,863,345.47 |
(5) Notes Transferred to Accounts Receivable because Drawer of the Notes Fails to Executed the Contractor AgreementNaught
(6) The Actual Write-off Accounts 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 | 23,377,223.66 | 3.06% | 16,266,810.09 | 69.58% | 7,110,413.57 | 23,377,223.66 | 2.65% | 16,266,810.09 | 69.58% | 7,110,413.57 |
| Of which: | ||||||||||
| Accounts receivable withdrawn bad debt provision by group | 740,781,145.60 | 96.94% | 35,716,292.66 | 4.82% | 705,064,852.94 | 860,060,668.85 | 97.35% | 32,750,486.37 | 3.81% | 827,310,182.48 |
| Of which: | ||||||||||
| Total | 764,158,369.26 | 100.00% | 51,983,102.75 | 6.80% | 712,175,266.51 | 883,437,892.51 | 100.00% | 49,017,296.46 | 5.55% | 834,420,596.05 |
Individual withdrawal of bad debt provision:
Unit: RMB
| Name | Ending balance | |||
| Carrying amount | Bad debt provision | Withdrawal proportion | Withdrawal reason | |
| Customer A | 14,220,827.14 | 7,110,413.57 | 50.00% | Involved in the lawsuit, the Company won the lawsuit in the first instance, and the other side has appealed. |
| Customer B | 9,156,396.52 | 9,156,396.52 | 100.00% | Involved in the lawsuit with long aging. Expected irrecoverable |
| Total | 23,377,223.66 | 16,266,810.09 | -- | -- |
Withdrawal of bad debt provision by group:
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal proportion | |
| Credit risk group | 740,781,145.60 | 35,716,292.66 | 4.82% |
| Total | 740,781,145.60 | 35,716,292.66 | -- |
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 663,779,904.80 |
| 1 to 2 years | 58,181,262.60 |
| 2 to 3 years | 22,204,210.61 |
| Over 3 years | 19,992,991.25 |
| 3 to 4 years | 5,365,572.32 |
| 4 to 5 years | 2,306,889.59 |
| Over 5 years | 12,320,529.34 |
| Total | 764,158,369.26 |
(2) Accounts Receivable Withdrawn, Reversed or Collected during the Reporting PeriodInformation of withdrawal of bad debt provision:
Unit: RMB
| Category | Beginning amount | Changes in the Reporting Period | Ending balance | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Accounts receivable | 49,017,296.46 | 3,076,684.86 | 110,878.57 | 51,983,102.75 | |
| Total | 49,017,296.46 | 3,076,684.86 | 110,878.57 | 51,983,102.75 | |
Of which bad debt provision recovered or reversed with significant amount during Reporting Period:
Naught
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
| Item | Amount |
| No.1 | 110,652.83 |
| Other retails accounts | 225.74 |
| Total | 110,878.57 |
(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 | 105,391,428.29 | 13.79% | 3,161,742.85 |
| No. 2 | 37,026,996.74 | 4.85% | 1,110,809.90 |
| No. 3 | 20,353,852.72 | 2.66% | 610,615.58 |
| No. 4 | 19,217,070.82 | 2.51% | 576,512.12 |
| No. 5 | 17,862,770.80 | 2.34% | 1,330,554.10 |
| Total | 199,852,119.37 | 26.15% |
(5) Derecognition of Accounts Receivable due to the Transfer of Financial AssetsNaught
(6) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement ofAccounts ReceivableNaught
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 | 4,151,087.73 | 52.87% | 8,074,848.21 | 58.46% |
| 1 to 2 years | 1,687,169.78 | 21.49% | 3,525,963.03 | 25.53% |
| 2 to 3 years | 710,290.79 | 9.05% | 721,403.24 | 5.22% |
| Over 3 years | 1,302,842.48 | 16.59% | 1,489,690.70 | 10.79% |
| Total | 7,851,390.78 | -- | 13,811,905.18 | -- |
(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 | 1,020,929.09 | 13.00% | Y2019 |
| No. 2 | Non-related party | 738,514.14 | 9.41% | Y2019 |
| No. 3 | Non-related party | 601,013.10 | 7.65% | Y2017-2019 |
| No. 4 | Non-related party | 332,473.41 | 4.23% | Y2019 |
| No. 5 | Non-related party | 307,514.01 | 3.92% | Y2017-Y2019 |
| Total | 3,000,443.75 | 38.21% |
8. Other Receivables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Other receivables | 22,307,344.76 | 16,593,326.49 |
| Total | 22,307,344.76 | 16,593,326.49 |
(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 |
| VAT export tax refunds | 8,154,485.23 | 6,252,642.96 |
| Performance bond | 3,236,931.10 | 2,905,450.00 |
| Staff borrow and deposit | 5,991,107.91 | 3,451,053.16 |
| Rent, water & electricity fees | 1,686,102.59 | 765,582.10 |
| Other | 5,187,134.14 | 4,549,969.87 |
| Total | 24,255,760.97 | 17,924,698.09 |
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 2019 | 427,381.20 | 903,990.40 | 1,331,371.60 |
| Balance of 1 January 2019 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | 166,368.30 | 450,676.31 | 617,044.61 | |
| Balance of 31 December 2019 | 593,749.50 | 1,354,666.71 | 1,948,416.21 |
Changes of carrying amount with significant amount changed of loss provision in the current period
□Applicable √Not applicable
Disclosure by aging
Unit: RMB
| Aging | Carrying amount |
| Within 1 year (including 1 year) | 19,791,650.37 |
| 1 to 2 years | 1,897,234.23 |
| 2 to 3 years | 1,552,433.11 |
| Over 3 years | 1,014,443.26 |
| 3 to 4 years | 565,642.96 |
| 4 to 5 years | 162,042.14 |
| Over 5 years | 286,758.16 |
| Total | 24,255,760.97 |
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
Information of withdrawal of bad debt provision:
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Other receivables | 1,331,371.60 | 617,044.61 | 1,948,416.21 | ||
| Total | 1,331,371.60 | 617,044.61 | 1,948,416.21 | ||
Of which bad debt provision reversed or recovered with significant amount during Reporting Period:
Naught
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 | Export rebates | 8,154,485.23 | Within 1 year | 33.62% | 244,634.56 |
| No. 2 | Social insurance | 1,742,504.58 | Within 1 year | 7.18% | 52,275.14 |
| No. 3 | Other | 1,296,947.31 | Within 4 years | 5.35% | 396,659.49 |
| No. 4 | Other | 698,071.26 | Within 3 years | 2.88% | 109,288.47 |
| No. 5 | Rent, water & electricity fees | 691,931.41 | Within 1 year | 2.85% | 20,757.94 |
| Total | -- | 12,583,939.79 | -- | 51.88% | 823,615.60 |
6) Accounts Receivable Involving Government Subsidies
Naught
7) Derecognition of Other Receivables due to the Transfer of Financial AssetsNaught
8) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement ofOther ReceivablesNaught
9. Inventory
Whether the Company has executed the new revenue standards
□ Yes √ No
(1) Category of Inventory
Unit: RMB
| Item | Ending balance | Beginning balance | ||||
| Carrying amount | Falling price reserves | Carrying value | Carrying amount | Falling price reserves | Carrying value | |
| Raw materials | 124,826,657.81 | 2,426,340.03 | 122,400,317.78 | 126,493,040.39 | 1,912,404.69 | 124,580,635.70 |
| Goods in process | 32,861,535.80 | 32,861,535.80 | 34,923,287.33 | 34,923,287.33 | ||
| Inventory goods | 380,880,872.40 | 25,335,631.67 | 355,545,240.73 | 495,768,205.24 | 25,743,927.08 | 470,024,278.16 |
| Semi-finished goods | 125,058,072.72 | 1,658,579.31 | 123,399,493.41 | 135,536,163.37 | 787,982.05 | 134,748,181.32 |
| Low priced and easily worn articles | 3,129,996.34 | 3,129,996.34 | 3,043,216.49 | 3,043,216.49 | ||
| Total | 666,757,135.07 | 29,420,551.01 | 637,336,584.06 | 795,763,912.82 | 28,444,313.82 | 767,319,599.00 |
(2) Falling Price Reserves of Inventory
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | ||
| Withdrawal | Other | Reversal or write-off | Other | |||
| Raw materials | 1,912,404.69 | 2,179,459.99 | 1,665,524.65 | 2,426,340.03 | ||
| Inventory goods | 25,743,927.08 | 11,251,759.62 | 11,660,055.03 | 25,335,631.67 | ||
| Semi-finished goods | 787,982.05 | 1,414,915.85 | 544,318.59 | 1,658,579.31 | ||
| Total | 28,444,313.82 | 14,846,135.46 | 13,869,898.27 | 29,420,551.01 | ||
(3) Notes to the Ending Balance of Inventory Including Capitalized Borrowing ExpenseNaught
(4) Completed Unsettled Assets Formed from the Construction Contact at the Period-end
Naught
10. Contract Assets
Naught
11. Held-for-Sale Assets
Naught
12. Current Portion of Non-current Assets
Naught
13. Other Current Assets
Whether the Company has executed the new revenue standards
□ Yes √ No
Unit: RMB
| Item | Ending balance | Beginning balance |
| Deductible input tax of VAT | 49,860,530.03 | 21,691,700.53 |
| Advance payment of enterprise income tax | 2,642,333.56 | 2,401,962.77 |
| Total | 52,502,863.59 | 24,093,663.30 |
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. | 182,458,559.69 | 1,755,751.49 | 3,120,585.75 | 181,093,725.43 | |||||||
| Subtotal | 182,458,559.69 | 1,755,751.49 | 3,120,585.75 | 181,093,725.43 | |||||||
| Total | 182,458,559.69 | 1,755,751.49 | 3,120,585.75 | 181,093,725.43 | |||||||
18. Other Equity Instrument Investment
Unit: RMB
| Item | Ending balance | Beginning balance |
| Non-listed equity investment | 711,571,895.07 | 638,042,058.21 |
| Listed equity investment | 743,168,346.39 | 594,088,280.80 |
| Total | 1,454,740,241.46 | 1,232,130,339.01 |
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 the current gains and losses | Reason for other comprehensive income transferred to retained earnings |
| Stock of Guoxuan High-tech | 4,545,547.50 | 441,142,021.61 | Not satisfied with the condition of trading equity instrument | |||
| Stock of Everbright Bank | 2,986,027.39 | 58,141,437.32 | Not satisfied with the condition of trading equity instrument | |||
| Xiamen Bank | 10,971,417.60 | 413,943,585.67 | Not satisfied with the condition of trading equity instrument | |||
| Guangdong Development Bank Co.,Ltd | 7,962.31 | Not satisfied with the condition of trading equity instrument | ||||
| Foshan Fochen Road Development Company Limited | Not satisfied with the condition of trading equity instrument | |||||
| Shenzhen Zhonghao (Group) Ltd | Not satisfied with the condition of trading equity instrument |
| Total | 18,510,954.80 | 913,227,044.60 |
19. Other Non-current Financial Assets
Naught
20. Investment Property
Naught
21. Fixed Assets
Unit: RMB
| Item | Ending balance | Beginning balance |
| Fixed assets | 629,832,098.35 | 512,106,912.39 |
| Total | 629,832,098.35 | 512,106,912.39 |
(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 | 710,892,641.29 | 721,559,752.40 | 22,584,005.26 | 27,863,135.01 | 1,482,899,533.96 |
| 2. Increased amount of the period | 160,788,118.95 | 22,399,252.57 | 651,700.23 | 1,507,112.62 | 185,346,184.37 |
| (1) Purchase | 9,413,232.54 | 651,700.23 | 1,421,170.90 | 11,486,103.67 | |
| (2) Transfer from construction in progress | 160,788,118.95 | 12,986,020.03 | 85,941.72 | 173,860,080.70 | |
| (3) Enterprise combination increase | |||||
| 3. Decreased amount of the period | 8,677,753.58 | 1,563,188.28 | 72,287.50 | 10,313,229.36 | |
| (1) Disposal or scrap | 7,395,472.55 | 1,563,188.28 | 72,287.50 | 9,030,948.33 |
| (2) Equipment transformation | 1,282,281.03 | 1,282,281.03 | |||
| 4. Ending balance | 871,680,760.24 | 735,281,251.39 | 21,672,517.21 | 29,297,960.13 | 1,657,932,488.97 |
| II. Accumulative depreciation | |||||
| 1. Beginning balance | 432,350,311.91 | 497,669,898.94 | 16,516,228.63 | 21,965,331.34 | 968,501,770.82 |
| 2. Increased amount of the period | 21,320,267.22 | 40,082,389.78 | 1,111,251.18 | 2,271,943.40 | 64,785,851.58 |
| (1) Withdrawal | 21,320,267.22 | 40,082,389.78 | 1,111,251.18 | 2,271,943.40 | 64,785,851.58 |
| 3. Decreased amount of the period | 7,754,453.03 | 1,467,828.99 | 37,323.11 | 9,259,605.13 | |
| (1) Disposal or scrap | 7,026,246.86 | 1,467,828.99 | 37,323.11 | 8,531,398.96 | |
| (2) Equipment transformation | 728,206.17 | 728,206.17 | |||
| 4. Ending balance | 453,670,579.13 | 529,997,835.69 | 16,159,650.82 | 24,199,951.63 | 1,024,028,017.27 |
| III. Depreciation reserves | |||||
| 1. Beginning balance | 2,290,422.72 | 428.03 | 2,290,850.75 | ||
| 2. Increased amount of the period | 1,829,080.06 | 1,829,080.06 | |||
| (1) Withdrawal | 1,829,080.06 | 1,829,080.06 | |||
| 3. Decreased amount of the period | 47,557.46 | 47,557.46 | |||
| (1) Disposal or scrap | 47,557.46 | 47,557.46 | |||
| 4. Ending balance | 4,071,945.32 | 428.03 | 4,072,373.35 | ||
| IV. Carrying value | |||||
| 1. Ending carrying value | 418,010,181.11 | 201,211,470.38 | 5,512,866.39 | 5,097,580.47 | 629,832,098.35 |
| 2. Beginning carrying value | 278,542,329.38 | 221,599,430.74 | 6,067,776.63 | 5,897,375.64 | 512,106,912.39 |
(2) List of Temporarily Idle Fixed Assets
Unit: RMB
| Item | Original carrying value | Accumulated depreciation | Depreciation reserves | Carrying value | Note |
| T5, T8, energy-saving lamp production line | 7,940,325.52 | 5,945,024.07 | 1,943,741.93 | 51,559.52 | |
| Total | 7,940,325.52 | 5,945,024.07 | 1,943,741.93 | 51,559.52 |
(3) Fixed Assets Leased in by Financing Lease
Naught
(4) Fixed Assets Leased out by Operation Lease
Naught
(5) Fixed Assets Failed to Accomplish Certification of Property
Fuwan standard workshop J3 and K1, Gaoming Family Housing Building Eight and Fuwan Employee DormitorySeven have been put into use and carried over fixed assets. As of 31 December 2019, relevant certificates ofproperty were in procedure. The management layer is of the opinion that there is no substantial legal impedimentin the procedure of certificates as well as no significant negative influence to the normal operation of theCompany.
(6) Disposal of Fixed Assets
Naught
22. Construction in Progress
Unit: RMB
| Item | Ending balance | Beginning balance |
| Construction in progress | 119,030,610.16 | 224,624,447.16 |
| Total | 119,030,610.16 | 224,624,447.16 |
(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 | 119,030,610.16 | 119,030,610.16 | 224,624,447.16 | 224,624,447.16 | ||
| Total | 119,030,610.16 | 119,030,610.16 | 224,624,447.16 | 224,624,447.16 |
(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 |
| Fuwan intelligent workshop H | 49,070,000.00 | 41,583,109.95 | 5,124,952.15 | 46,708,062.10 | 95.19% | 95.00% | Other | |||||
| Gaoming R&D workshop 11, 12, 13, 14 and 18 | 45,000,000.00 | 12,615,097.54 | 18,238,833.89 | 30,853,931.43 | 68.56% | 85.00% | Other | |||||
| Automatic system of intelligent production workshop (workshop H) | 21,920,000.00 | 11,604,461.41 | 486,620.65 | 11,117,840.76 | 50.72% | 90.00% | Other |
| Upgrading project in Local roads and greening of Gaoming | 6,500,000.00 | 5,408,815.09 | 5,408,815.09 | 83.21% | 95.00% | Other | ||||||
| Upgrading project of Standard C workshop external facade | 4,200,000.00 | 3,502,568.80 | 3,502,568.80 | 83.39% | 95.00% | Other | ||||||
| 48 tons electric melting furnace (18025) Gaoming tank furnace | 7,766,000.00 | 3,149,937.35 | 1,145,583.01 | 4,295,520.36 | 55.31% | 80.00% | Other | |||||
| Fuwan standard workshop K3 | 27,000,000.00 | 21,942,287.85 | 4,975,990.98 | 26,918,278.83 | 0.00 | 99.70% | 100.00% | Other | ||||
| Fuwan standard workshop K2 | 26,200,000.00 | 21,702,430.93 | 4,387,322.56 | 26,089,753.49 | 0.00 | 99.58% | 100.00% | Other | ||||
| Fuwan standard workshop K1 | 21,661,900.00 | 19,241,452.36 | 2,420,443.38 | 21,661,895.74 | 0.00 | 100.00% | 100.00% | Other |
| Fuwan standard workshop J3 | 21,304,900.00 | 19,015,075.82 | 2,289,827.31 | 21,304,903.13 | 0.00 | 100.00% | 100.00% | Other | ||||
| Fuwan standard workshop J1 | 20,870,000.00 | 18,583,845.29 | 2,256,522.40 | 20,840,367.69 | 0.00 | 99.86% | 100.00% | Other | ||||
| Fuwan standard workshop J2 | 20,510,000.00 | 18,367,669.88 | 2,111,625.31 | 20,479,295.19 | 0.00 | 99.85% | 100.00% | Other | ||||
| Family housing of Gaoming, Building Eight | 10,860,000.00 | 7,693,423.10 | 2,120,287.87 | 9,813,710.97 | 0.00 | 90.37% | 100.00% | Other | ||||
| Employee Dormitory Seven of Fuwan | 7,600,000.00 | 5,643,729.10 | 1,569,049.48 | 7,212,778.58 | 0.00 | 94.90% | 100.00% | Other | ||||
| Total | 290,462,800.00 | 201,142,520.58 | 55,551,822.23 | 154,320,983.62 | 486,620.65 | 101,886,738.54 | -- | -- | -- |
(3) List of the Withdrawal of the Depreciation Reserves for Construction in ProgressNaught
(4) Engineering Materials
Naught
23. Productive Living Assets
Naught
24. Oil and Gas Assets
□ Applicable √ Not applicable
25. Right-to-use Assets
Naught
26. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
| Item | Land use right | Patent | Non-patent technology | Using right of software | Total |
| I. Original carrying value | |||||
| 1. Beginning balance | 233,741,723.60 | 200,000.00 | 2,773,651.87 | 236,715,375.47 | |
| 2. Increased amount of the period | |||||
| (1) Purchase | |||||
| (2) Internal R&D | |||||
| (3) Business combination increase | |||||
| 3. Decreased amount of the period | |||||
| (1) Disposal | |||||
| 4. Ending balance | 233,741,723.60 | 200,000.00 | 2,773,651.87 | 236,715,375.47 | |
| II. Accumulated amortization | |||||
| 1. Beginning balance | 61,904,106.59 | 200,000.00 | 1,885,991.67 | 63,990,098.26 | |
| 2. Increased amount of the period | 4,785,078.78 | 113,698.69 | 4,898,777.47 | ||
| (1) Withdrawal | 4,785,078.78 | 113,698.69 | 4,898,777.47 | ||
| 3. Decreased amount of the period | |||||
| (1) Disposal |
| 4. Ending balance | 66,689,185.37 | 200,000.00 | 1,999,690.36 | 68,888,875.73 | |
| III. Depreciation reserves | |||||
| 1. Beginning balance | |||||
| 2. Increased amount of the period | |||||
| (1) Withdrawal | |||||
| 3. Decreased amount of the period | |||||
| (1) Disposal | |||||
| 4. Ending balance | |||||
| IV. Carrying value | |||||
| 1. Ending carrying value | 167,052,538.23 | 773,961.51 | 167,826,499.74 | ||
| 2. Beginning carrying value | 171,837,617.01 | 887,660.20 | 172,725,277.21 |
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%.
(2) Land Use Right with Certificate of Title Uncompleted
Naught
27. R&D Expense
Naught
28. Goodwill
Naught
29. Long-term Prepaid Expense
Unit: RMB
| Item | Beginning balance | Increased amount | Amortization amount of the period | Other decreased amount | Ending balance |
| Maintenance and decoration expenses | 6,004,040.42 | 5,644,088.02 | 5,730,726.96 | 5,917,401.48 | |
| Other | 848,944.93 | 1,792,321.52 | 831,273.19 | 1,809,993.26 | |
| Total | 6,852,985.35 | 7,436,409.54 | 6,562,000.15 | 7,727,394.74 |
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 | 93,274,443.32 | 14,388,688.12 | 86,933,832.63 | 13,391,933.49 |
| Unrealized profit of internal transactions | 1,885,791.90 | 282,868.80 | 1,187,129.74 | 178,069.46 |
| Depreciation of fixed assets | 76,057,614.11 | 11,908,759.43 | 75,022,616.39 | 11,594,644.46 |
| Payroll payable | 68,444,986.72 | 10,266,748.01 | 83,969,846.94 | 12,595,477.04 |
| Changes in fair value of trading financial liabilities | 477,200.00 | 71,580.00 | ||
| Total | 239,662,836.05 | 36,847,064.36 | 247,590,625.70 | 37,831,704.45 |
(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 | |
| Changes in fair value of other equity instrument investment | 913,227,044.60 | 136,984,056.70 | 690,617,142.15 | 103,592,571.32 |
| Changes in fair value of tranding financial assets | 1,547,200.00 | 232,080.00 | ||
| Total | 914,774,244.60 | 137,216,136.70 | 690,617,142.15 | 103,592,571.32 |
(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 | 36,847,064.36 | 37,831,704.45 | ||
| Deferred income tax liabilities | 137,216,136.70 | 103,592,571.32 |
(4) List of Unrecognized Deferred Income Tax Assets
Naught
(5) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following YearsThe deferred income tax liabilities increased by 32.46% with RMB33,623,565.38 at the period-end compared tothe period-begin, mainly resulted from the rise in stocks of Guoxuan High-tech and Everbright Bank held by theCompany and the fair value of Xiamen Bank.
31. Other Non-current Assets
Whether the Company has executed the new revenue standards
□ Yes √ No
Unit: RMB
| Item | Ending balance | Beginning balance |
| Land purchase and the ownership implicit of relevant items | 41,755,700.00 | |
| Prepayments for business facilities | 9,861,098.08 | 6,549,735.42 |
| Total | 9,861,098.08 | 48,305,435.42 |
Other notes:
Other non-current assets were RMB-38,444,337.34 at the end of the Reporting Period with a decrease of 79.59%compared to that at the beginning of the Reporting Period, which was mainly caused by withdrawal of landpurchase and recognition of accounts thereof in the Reporting Period.
32. Short-term Borrowings
Naught
33. Trading Financial Liabilities
Unit: RMB
| Item | Ending balance | Beginning balance |
| Of which: | ||
| Specified as financial liabilities at fair value through profit or loss | 477,200.00 | |
| Of which: | ||
| Total | 477,200.00 |
34. Derivative Financial Liabilities
Naught
35. Notes Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Bank acceptance bill | 374,665,327.74 | 452,683,676.97 |
| Total | 374,665,327.74 | 452,683,676.97 |
The total amount of the due but not paid notes payable at the end of the period was of RMB0.00
36. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| Accounts payable | 559,016,692.70 | 532,597,143.95 |
| Total | 559,016,692.70 | 532,597,143.95 |
(2) Significant Accounts Payable Aging over One Year
Naught
37. Advances from Customer
Whether the Company has executed the new revenue standards
□ Yes √ No
(1) List of Advances from Customers
Unit: RMB
| Item | Ending balance | Beginning balance |
| Advances from customers | 50,449,357.17 | 43,850,788.04 |
| Total | 50,449,357.17 | 43,850,788.04 |
(2) Significant Advances from Customers Aging over One Year
Naught
(3) Settled but Uncompleted Projects Formed by Construction Contracts at the Period-endNaught
38. Contract Liabilities
Naught
39. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| I. Short-term salary | 96,088,621.59 | 564,974,134.21 | 577,905,902.94 | 83,156,852.86 |
| II. Post-employment benefit-defined contribution plans | 40,993,425.77 | 40,993,425.77 | ||
| Total | 96,088,621.59 | 605,967,559.98 | 618,899,328.71 | 83,156,852.86 |
(2) List of Short-term Salary
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Salary, bonus, allowance, subsidy | 95,725,486.52 | 509,039,057.39 | 521,920,577.79 | 82,843,966.12 |
| 2. Employee welfare | 17,201,557.94 | 17,201,557.94 | ||
| 3. Social insurance | 24,109,320.87 | 24,109,320.87 |
| Of which: Medical insurance premiums | 18,853,545.96 | 18,853,545.96 | ||
| Work-related injury insurance | 979,186.35 | 979,186.35 | ||
| Maternity insurance | 4,276,588.56 | 4,276,588.56 | ||
| 4. Housing fund | 10,650,851.50 | 10,650,851.50 | ||
| 5.Labor union budget and employee education budget | 363,135.07 | 3,973,346.51 | 4,023,594.84 | 312,886.74 |
| Total | 96,088,621.59 | 564,974,134.21 | 577,905,902.94 | 83,156,852.86 |
(3) List of Defined Contribution Plans
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| 1. Basic pension benefits | 39,783,886.46 | 39,783,886.46 | ||
| 2. Unemployment insurance | 1,209,539.31 | 1,209,539.31 | ||
| Total | 40,993,425.77 | 40,993,425.77 |
Other notes:
The Company participates in the scheme of pension insurance and unemployment insurance established bygovernment agencies as required. According to the scheme, fees are paid to it on a monthly basis and at the rate ofstipulated by government agencies. In addition to the above monthly deposit fees, the Company no longerassumes further payment obligations. Corresponding expenses are recorded into the current profits or losses or thecost of related assets when incurred.
40. Taxes Payable
Unit: RMB
| Item | Ending balance | Beginning balance |
| VAT | 2,848,860.13 | 3,147,064.81 |
| Corporate income tax | 12,419,827.14 | 14,907,122.79 |
| Personal income tax | 595,012.66 | 704,101.03 |
| Urban maintenance and construction tax | 385,734.01 | 761,673.03 |
| Education surcharge | 281,417.17 | 544,052.17 |
| Property tax | 264,468.41 | 2,374,748.34 |
| Land use tax | 187,752.00 | 2,750,413.52 |
| Other | 227,996.69 | 165,290.68 |
| Total | 17,211,068.21 | 25,354,466.37 |
41. Other Payables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Other payables | 46,073,344.71 | 43,115,011.68 |
| Total | 46,073,344.71 | 43,115,011.68 |
(1) Interest Payable
Naught
(2) Dividends Payable
Naught
(3) Other Payables
1) Other Payables Listed by Nature
Unit: RMB
| Item | Ending balance | Beginning balance |
| Performance bond | 29,641,485.45 | 27,413,254.10 |
| Relevant expense of sales | 3,323,583.65 | 3,568,835.91 |
| Compensation for lawsuit | 1,126,231.95 | 1,762,533.43 |
| Other | 11,982,043.66 | 10,370,388.24 |
| Total | 46,073,344.71 | 43,115,011.68 |
2) Significant Other Payables Aging over One Year
Naught
42. Held-for-sale Liabilities
Naught
43. Current Portion of Non-current Liabilities
Naught
44. Other Current Liabilities
Whether the Company has executed the new revenue standards
□ Yes √ No
Naught
45. Long-term Borrowings
Naught
46. Bonds Payable
Naught
47. Lease Liabilities
Naught
48. Long-term Payables
Naught
49. Long-term Payroll Payable
Naught
50. Provisions
Whether the Company has executed the new revenue standards
□ Yes √ No
Naught
51. Deferred Income
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance | Reason for formation |
| Government subsidies | 155,000.31 | 155,000.31 | 0.00 | Government subsidies related to assets/income | |
| Total | 155,000.31 | 155,000.31 | -- |
Item involving government subsidies:
Unit: RMB
| Item | Beginning balance | Amount of newly subsidy | Amount recorded into non-operating income in the Reporting Period | Amount recorded into other income in the Reporting Period | Amount offset cost in the Reporting Period | Other changes | Ending balance | Related to assets/related to income |
| Production line of 50 million energy-saving fluorescent lamp | 155,000.31 | 155,000.31 | Related to assets | |||||
| Total | 155,000.31 | 155,000.31 |
52. Other Non-current Liabilities
Whether the Company has executed the new revenue standards
□ Yes √ No
Naught
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 | 0.00 | 1,399,346,154.00 | ||||
54. Other Equity Instruments
Naught
55. Capital Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Capital premium (premium on stock) | 151,362,201.53 | 151,362,201.53 | ||
| Other capital reserves | 7,245,971.54 | 7,245,971.54 |
| Total | 158,608,173.07 | 158,608,173.07 |
56. Treasury Shares
Naught
57. Other Comprehensive Income
Unit: RMB
| Item | Beginning balance | 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 | |||
| I. Other comprehensive income that may not subsequently be reclassified to profit or loss | 587,024,570.83 | 222,609,902.44 | 33,391,485.37 | 189,218,417.07 | 776,242,987.90 | |||
| Changes in fair value of other equity instrument investment | 587,024,570.83 | 222,609,902.44 | 33,391,485.37 | 189,218,417.07 | 776,242,987.90 | |||
| II. Other comprehensive income that may subsequently be reclassified to profit or loss | -5,011.54 | 22,371.83 | 22,371.83 | 17,360.29 | ||||
| Differences arising from translation of foreign currency-denominated financial statements | -5,011.54 | 22,371.83 | 22,371.83 | 17,360.29 | ||||
| Total of other comprehensive income | 587,019,559.29 | 222,632,274.27 | 33,391,485.37 | 189,240,788.90 | 776,260,348.19 | |||
58. Specific Reserve
Naught
59. Surplus Reserves
Unit: RMB
| Item | Beginning balance | Increase | Decrease | Ending balance |
| Statutory surplus reserves | 672,569,617.84 | 27,103,459.16 | 699,673,077.00 | |
| Discretionary surplus reserves | 136,886,568.36 | 136,886,568.36 | ||
| Total | 809,456,186.20 | 27,103,459.16 | 836,559,645.36 |
Notes, including changes and reason of change:
In line with regulations stipulated in the articles of association, no more statutory surplus reserves shall bewithdrawn if the accumulated amount is more than 50% of registered capital of the Company. The statutorysurplus reserves withdrawn in the Reporting Period was RMB27,103,459.16, of which the accumulated amountreached 50% of registered capital of the Company
60. Retained Earnings
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Beginning balance of retained earnings before adjustments | 1,654,181,032.39 | 1,731,600,796.18 |
| Beginning balance of retained earnings after adjustments | 1,654,181,032.39 | 1,731,600,796.18 |
| Add: Net profit attributable to owners of the Company as the parent | 301,182,906.24 | 377,615,133.62 |
| Less: Statutory surplus reserves withdrawn | 27,103,459.16 | 36,503,183.84 |
| Dividend of ordinary shares payable | 218,298,000.02 | 418,531,713.57 |
| Ending retained earnings | 1,709,962,479.45 | 1,654,181,032.39 |
List of adjustment of beginning retained earnings:
(1) RMB0.00 beginning retained earnings was affected by retrospective adjustment conducted according to theAccounting Standards for 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 samecontrol.
(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 | 3,297,051,289.16 | 2,525,597,166.33 | 3,778,249,951.22 | 2,904,082,772.16 |
| Other operations | 40,525,458.50 | 34,915,886.23 | 23,705,995.54 | 18,750,738.24 |
| Total | 3,337,576,747.66 | 2,560,513,052.56 | 3,801,955,946.76 | 2,922,833,510.40 |
Whether the Company has executed the new revenue standards
□ Yes √ No
62. Taxes and Surtaxes
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Urban maintenance and construction tax | 13,718,448.61 | 12,673,452.76 |
| Education surcharge | 5,875,150.20 | 5,459,067.96 |
| Property tax | 7,253,138.07 | 7,538,403.90 |
| Land use tax | 5,170,993.34 | 5,285,219.55 |
| Vehicle and vessel use tax | 8,963.29 | 16,218.98 |
| Stamp duty | 1,936,005.71 | 1,719,791.33 |
| Local education surcharge | 3,916,753.75 | 3,639,365.84 |
| Environmental protection tax | 143,335.69 | 45,809.86 |
| Total | 38,022,788.66 | 36,377,330.18 |
63. Selling Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Employee’s remuneration | 59,514,723.34 | 61,175,236.43 |
| Freight | 72,159,943.87 | 75,271,832.22 |
| Business propagandize fees and advertizing fees | 44,063,012.20 | 37,609,042.39 |
| Sales promotion fees | 18,636,028.73 | 19,875,800.05 |
| Business travel charges | 14,446,070.14 | 12,650,960.49 |
| Dealer meeting expense | 3,071,651.46 | 3,640,647.76 |
| Other | 29,523,336.69 | 27,261,870.55 |
| Total | 241,414,766.43 | 237,485,389.89 |
64. Administrative Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Employee’s remuneration | 81,935,330.84 | 106,255,136.92 |
| Depreciation charge | 15,698,024.73 | 15,362,970.68 |
| Office expenses | 15,170,870.33 | 13,142,511.18 |
| Rent of land and management charge | 5,590,455.39 | 5,352,109.19 |
| Amortization of intangible assets | 4,898,777.47 | 4,841,228.15 |
| Other | 21,787,164.29 | 28,917,129.49 |
| Total | 145,080,623.05 | 173,871,085.61 |
65. R&D Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Employee’s remuneration | 56,240,623.29 | 34,627,641.09 |
| Expense on equipment debugging | 7,388,906.41 | 6,569,264.14 |
| Fees for certification testing | 6,986,168.45 | 4,743,946.71 |
| Material consumption | 5,534,108.08 | 2,732,468.55 |
| Charges related to patents | 607,081.96 | 1,119,733.39 |
| Depreciation and long-term prepayments | 663,707.88 | 413,561.08 |
| Other | 2,023,665.73 | 2,519,970.32 |
| Total | 79,444,261.80 | 52,726,585.28 |
Other notes:
1. In the Company’s R&D activities, the expense on bench-scale and pilot-scale production is recorded in R&Dexpense, the revenue generated from the sale of products through bench-scale and pilot-scale production isrecorded in main operation revenue, and the costs incurred are recorded in the cost of sales of main operation.
2. The R&D expenditure included in amount of R&D expenses was RMB26,717,676.52 with increase of 50.67%compared with that of last year which was due to the increase in R&D investment during the Reporting Period andlabor costs compared with that of last year.
66. Finance Costs
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Interest expense | 371,567.15 | |
| Less: Interest income | 24,418,569.09 | 11,450,858.00 |
| Foreign exchange gains or losses | -4,684,048.90 | -16,834,523.05 |
| Other | 1,377,275.79 | 1,798,634.74 |
| Total | -27,725,342.20 | -26,115,179.16 |
67. Other Income
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Supporting fund for import and export | 5,228,150.25 | 2,282,553.00 |
| Rewards of “Competition among Hundreds of Enterprises” | 700,000.00 | 23,710,397.00 |
| Subsidy for stabilizing posts | 1,091,084.26 | |
| Other | 5,274,105.00 | 4,126,579.00 |
| Total | 11,202,255.25 | 31,210,613.26 |
68. Investment Income
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Long-term equity investment income accounted by equity method | 1,755,751.49 | 6,165,040.30 |
| Investment income from holding of trading financial assets | 1,750,000.00 | |
| Investment income from disposal of trading financial assets | 13,550,000.00 | |
| Investment income from holding of other equity instrument investment | 18,510,954.80 | |
| Investment income from holding of available-for-sale financial assets | 18,873,927.57 | |
| Income received from financial products and structural deposits | 29,554,019.01 | 29,098,956.87 |
| Other | -4,242,300.00 | -808,400.00 |
| Total | 60,878,425.30 | 53,329,524.74 |
69. Net Gain on Exposure Hedges
Naught
70. Gain on Changes in Fair Value
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Trading financial assets | 2,024,400.00 | |
| Of which: Gain on changes in fair value of derivative financial instrument | 2,024,400.00 | |
| Financial liabilities at fair value through profit or loss | -477,200.00 | |
| Total | 2,024,400.00 | -477,200.00 |
71. Credit Impairment Loss
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Bad debt loss of other receivables | -617,044.61 | |
| Bad debt loss of accounts receivable | -3,076,684.86 | |
| Total | -3,693,729.47 |
72. Assets Impairment Loss
Whether the Company has executed the new revenue standards
□ Yes √ No
Unit: RMB
| Item | Reporting Period | Same period of last year |
| I. Bad debt loss | -11,904,279.15 | |
| II. Loss on inventory valuation | -14,846,135.46 | -25,768,841.80 |
| VII. Impairment loss of fixed assets | -1,829,080.06 | |
| Total | -16,675,215.52 | -37,673,120.95 |
Other notes:
The assets impairment loss decreased 55.74% with RMB-20,997,905.43compared with that of last year, mainly resulted from theless withdrawal of falling price loss of inventory in overstocked goods compared with that of last year, and bad debt loss be listed inthe item of “credit impairment loss” according to the requirements of new standard governing financial instruments.
73. Assets Disposal Income
Unit: RMB
| Sources | Reporting Period | Same period of last year |
| Disposal income of fixed assets | -78,039.44 | |
| Total | -78,039.44 |
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 subsidy | 511,260.31 | 2,168,255.23 | 511,260.31 |
| Total income from disposal of non-current assets | 138,567.76 | ||
| Of which: Income from disposal of fixed assets | 138,567.76 | ||
| Other | 2,560,885.30 | 1,501,787.51 | 2,560,885.30 |
| Total | 3,072,145.61 | 3,808,610.50 | 3,072,145.61 |
Government subsidies 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 |
| Production line of 50 million energy-saving fluorescent lamp | Subsidy | Due to engaged in special industry that the state encouraged and supported, gained subsidy (obtaining in line with the law and the regulations of national policy) | No | No | 155,000.31 | 154,999.92 | Related to assets | |
| Standard optical components testing laboratory capacity construction and product quality guarantee project | Subsidy | Subsidy from R&D technical updating and transformation, etc. | No | No | 272,669.78 | Related to assets | ||
| Standard development of wide-angle stunning LED lights | Subsidy | Subsidy from R&D technical updating and transformation, etc. | No | No | 173,385.53 | Related to income | ||
| Other miscellaneous government subsidies | Reward | Subsidy from R&D technical updating and transformation, etc. | No | No | 356,260.00 | 1,567,200.00 | Related to income | |
| Total | 511,260.31 | 2,168,255.23 |
75. Non-operating Expense
Unit: RMB
| Item | Reporting Period | Same period of last year | Amount recorded in the current non-recurring profit or loss |
| Donation | 111,946.90 | 60,000.00 | 111,946.90 |
| Total losses from disposal of non-current assets | 413,275.62 | 1,731,682.62 | 413,275.62 |
| Of which: Losses from disposal of fixed assets | 413,275.62 | 1,731,682.62 | 413,275.62 |
| Losses on inventories | 2,618,995.48 | 1,932,550.28 | 2,618,995.48 |
| Delaying payment | 230,330.34 | 230,330.34 | |
| Penalty | 7,095.00 | 36,499.25 | 7,095.00 |
| Other | 2,135,600.60 | 67,094.12 | 2,135,600.60 |
| Total | 5,517,243.94 | 3,827,826.27 | 5,517,243.94 |
76. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Current income tax expense | 47,448,443.11 | 72,075,325.91 |
| Deferred income tax expense | 1,216,720.09 | -155,875.66 |
| Total | 48,665,163.20 | 71,919,450.25 |
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
| Item | Reporting Period |
| Profit before taxation | 352,117,634.59 |
| Current income tax expense accounted at statutory/applicable tax rate | 52,817,645.19 |
| Influence of applying different tax rates by subsidiaries | 1,914,255.48 |
| Influence of income tax before adjustment | -700,603.99 |
| Influence of non-deductable costs, expenses and losses | 2,539,670.71 |
| Influence of deductable losses of unrecognized deferred income tax at the beginning of the Reporting Period | -663,395.15 |
| Influence of R&D expense deduction | -4,384,025.91 |
| Regarded as sales | 444,122.81 |
| Investment income and final dividend | -3,302,505.94 |
| Income tax expense | 48,665,163.20 |
Other notesThe income tax expense decreased 32.33% with RMB-23,254,287.05 in the Reporting Period compared with thatof last year, mainly resulted from the decline of total sales performance in the Reporting Period.
77. Other Comprehensive Income
Refer to Note 57 for details.
78. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Land purchase and recognition of accounts thereof | 41,755,700.00 | |
| Government subsidies received | 12,161,459.24 | 29,539,856.03 |
| Cash margin received | 14,050,387.86 | 9,433,019.86 |
| Deposit interest | 17,811,071.70 | 13,324,810.23 |
| Income from waste | 15,659,638.44 | 15,994,366.63 |
| Income from insurance compensation | 1,379,315.03 | 7,953,870.72 |
| Property and rental income | 8,290,054.43 | 4,314,891.32 |
| Other | 9,611,999.69 | 14,817,509.51 |
| Total | 120,719,626.39 | 95,378,324.30 |
(2) Cash Used in Other Operating Activities
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Administrative expense paid in cash | 57,772,851.77 | 61,534,145.31 |
| Selling expense paid in cash | 152,608,630.02 | 132,808,161.86 |
| Finance costs paid in cash | 354,365.91 | 1,267,358.28 |
| Returned government subsidies | 10,000,000.00 | |
| Returned cash deposit | 16,375,903.00 | 8,876,805.00 |
| Other | 3,181,687.68 | 336,025.84 |
| Total | 230,293,438.38 | 214,822,496.29 |
(3) Cash Generated from Other Investing Activities
Naught
(4) Cash Used in Other Investing Activities
Naught
(5) Cash Generated from Other Financing Activities
Naught
(6) Cash Used in Other Financing Activities
Naught
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 | 303,452,471.39 | 379,150,336.15 |
| Add: Provision for impairment of assets | 20,368,944.99 | 37,673,120.95 |
| Depreciation of fixed assets, oil-gas assets, and productive living assets | 64,785,851.58 | 70,186,632.84 |
| Amortization of intangible assets | 4,898,777.47 | 4,841,228.15 |
| Amortization of long-term prepaid expenses | 6,562,000.15 | 6,034,592.46 |
| Loss from disposal of fixed assets, intangible assets and other long-term assets (gains: negative) | 78,039.44 | |
| Losses from scrapping of fixed assets (gains: negative) | 413,275.62 | 1,593,114.86 |
| Losses from changes in fair value (gains: negative) | -2,024,400.00 | 477,200.00 |
| Investment loss (gains: negative) | -60,878,425.30 | -53,329,524.74 |
| Decrease in deferred income tax assets (increase: negative) | 984,640.09 | -155,875.66 |
| Increase in deferred income tax liabilities ("-" for decrease) | 232,080.00 | |
| Decrease in inventory ("-" for increase) | 115,136,879.48 | -46,621,550.93 |
| Decrease in operating receivables ("-" for increase) | 261,135,157.63 | -80,985,456.28 |
| Increase in operating payables ("-" for decrease) | -206,982,495.64 | 299,045,629.81 |
| Net cash generated from/used in operating activities | 508,084,757.46 | 617,987,487.05 |
| 2.Significant investing and financing activities without involvement of cash receipts and payments | -- | -- |
| 3.Net increase/decrease of cash and cash equivalents: | -- | -- |
| Ending balance of cash | 1,049,833,555.02 | 795,285,756.38 |
| Less: Beginning balance of cash | 795,285,756.38 | 570,184,208.96 |
| Net increase in cash and cash equivalents | 254,547,798.64 | 225,101,547.42 |
(2) Net Cash Paid For Acquisition of Subsidiaries
Naught
(3) Net Cash Received from Disposal of the Subsidiaries
Naught
(4) Cash and Cash Equivalents
Unit: RMB
| Item | Ending balance | Beginning balance |
| I. Cash | 1,049,833,555.02 | 795,285,756.38 |
| Including: Cash on hand | 18,281.85 | 34,937.47 |
| Bank deposit on demand | 1,047,408,408.07 | 783,346,295.87 |
| Other monetary assets on demand | 2,406,865.10 | 11,904,523.04 |
| III. Ending balance of cash and cash equivalents | 1,049,833,555.02 | 795,285,756.38 |
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 to Use
Unit: RMB
| Item | Ending carrying value | Reason for restriction |
| Monetary assets | 68,958,729.27 | Security deposit of notes and security deposit of future foreign exchange settlement |
| Notes receivable | 67,035,696.27 | Pledged for notes pool |
| Total | 135,994,425.54 | -- |
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 | -- | -- | 2,181,879.99 |
| Of which: USD | 247,340.08 | 6.9762 | 1,725,493.87 |
| EUR | 58,395.00 | 7.8155 | 456,386.12 |
| HKD | |||
| Accounts receivable | -- | -- | 282,214,714.63 |
| Of which: USD | 40,453,931.17 | 6.9762 | 282,214,714.63 |
| EUR | |||
| HKD | |||
| Long-term borrowings | -- | -- | |
| Of which: USD | |||
| EUR | |||
| HKD | |||
| Advances from customers | 18,901,957.57 | ||
| Of which: USD | 2,666,516.87 | 6.9762 | 18,602,154.99 |
| EUR | 38,360.00 | 7.8155 | 299,802.58 |
| Prepayments | 1,070,987.55 | ||
| Of which: USD | 153,520.19 | 6.9762 | 1,070,987.55 |
| Other payables | 488,822.33 | ||
| Of which: USD | 70,070.00 | 6.9762 | 488,822.33 |
(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
Naught
84. Government Subsidy
(1) Basic Information on Government Subsidy
Unit: RMB
| Type | Amount | Presented in | Charged to current profit or loss |
| Rewards for “Competition among Hundreds of Enterprises” | 700,000.00 | Other income | 700,000.00 |
| Supporting fund for import and export | 5,228,150.25 | Other income | 5,228,150.25 |
| Other | 5,274,105.00 | Other income | 5,274,105.00 |
| Production line of 50 million energy-saving fluorescent lamp | 155,000.31 | Non-operating income | 155,000.31 |
| Other miscellaneous government subsidies | 356,260.00 | Non-operating income | 356,260.00 |
| Total | 11,713,515.56 | 11,713,515.56 |
(2) Return of Government Subsidy
□ Applicable √ Not applicable
85. Other
Naught
VIII. Changes of Consolidation Scope
1. Business Combination Not under the Same Control
(1) Business Combination Not under the Same Control in the Reporting PeriodNaught
(2) Combination Cost and Goodwill
Naught
(3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date
Naught
(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 andgaining the control during 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
Naught
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
On 7 September 2018, the Company held the 26th meeting of the 8th Board of Directors, in which examined andapproved the Proposal on Cancelling the Wholly-owned Subsidiary Guangdong FSL Finance Leasing Co., Ltd.(hereinafter referred as “FSL Leasing Company). The Company received the Notice on Approval of Cancellationand Registration issued by Market Supervision and Administration of Foshan in 2019 and has completed theregistration cancellation of FSL Leasing Company. FSL Leasing Company will not be included in theconsolidated financial statements of the Company after deregistering thereof.
6. Other
NaughtIX. 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 Chansheng Electronic Ballast Co., Ltd. | Foshan | Foshan | Production and sales | 100.00% | Newly established | |
| Foshan Lighting Lamps & Components Co., Ltd. | Foshan | Foshan | Production and sales | 100.00% | Newly established | |
| Guangdong Fozhao New Light Sources Technology 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 |
(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% | 1,104,850.59 | 9,212,915.38 | |
| FSL Zhida Electric Technology Co., Ltd. | 49.00% | 1,164,714.56 | 17,461,512.70 |
(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. | 40,797,259.87 | 17,975,735.27 | 58,772,995.14 | 28,063,277.21 | 28,063,277.21 | 35,881,053.56 | 19,031,531.64 | 54,912,585.20 | 27,885,702.58 | 27,885,702.58 | ||
| FSL Zhida Electric Technology Co., Ltd. | 79,707,213.61 | 9,067,380.69 | 88,774,594.30 | 40,492,935.74 | 40,492,935.74 | 74,044,533.25 | 10,388,813.87 | 84,433,347.12 | 40,878,657.04 | 40,878,657.04 |
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 Taimei Times Lamps and Lanterns Co., Ltd. | 129,622,438.26 | 3,682,835.31 | 3,682,835.31 | 4,489,707.08 | 138,186,413.51 | 5,050,703.26 | 5,050,703.26 | 3,857,467.68 |
| FSL Zhida Electric Technology Co., Ltd. | 88,828,868.23 | 2,376,968.48 | 2,376,968.48 | 11,912,536.03 | 96,231,697.26 | 40,799.09 | 40,799.09 | 1,465,964.60 |
(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/The same period of last year | |
| Joint ventures: | -- | -- |
| The total of following items according to the shareholding proportions | -- | -- |
| Associated enterprises: | -- | -- |
| Total carrying value of investment | 181,093,725.43 | 182,458,559.69 |
| The total of following items according to the shareholding proportions | -- | -- |
| --Net profit | 1,755,751.49 | 6,165,040.30 |
| --Total comprehensive income | 1,755,751.49 | 6,165,040.30 |
(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 VenturesNaught
(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
NaughtX. The Risk Related to Financial Instruments
The financial instruments of the Company included: monetary funds, notes receivable, accounts receivable, notesreceivable, accounts payable, etc. The details of each financial instrument see relevant items of Note Ⅶ.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 was referred to risk of possible losses due to changes of exchange rate. The exchange rate risk
undertaken by the Company was mainly generated from USD and EUR. On 31 December 2019, all assets andliabilities of the Company were balances in RMB except that the balances of assets and liabilities presented in theNote Ⅶ (82) Foreign Currency Monetary Items were in USD and EUR. The exchange rate risk generated fromthose balance of assets and liabilities in foreign currency might influence the running performance of theCompany to some extent.The Company made efforts to avoid exchange rate risk through forward exchange settlement, improving operationmanagement and promoting 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 tothe change of market price. There was no bank loan in the Company, thus no RMB benchmark interest rate changes
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) Trading financial assets | 1,547,200.00 | 899,619,482.64 | 901,166,682.64 | |
| 1.Financial assets at fair value through profit or loss | 899,619,482.64 | 899,619,482.64 | ||
| 2. Specified as financial assets at fair value through profit or loss | 1,547,200.00 | 1,547,200.00 | ||
| (III) Other equity instrument investment | 743,168,346.39 | 711,571,895.07 | 1,454,740,241.46 | |
| 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 exchangerate.
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 include bank's wealth management products and structured desposits, which aremeasured at the contractual 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) Owing to the invested company, Xiamen Bank planned IPO and to list, significant changes have been occurredto the business environment, operation conditions and financial conditions compared to the initial investment.Refer to prospectus declaration and relative proportion between the recent issue price of similar listed banks andnet assets, as well as regard the period-end portion of net assets in Xiamen Bank enjoyed by the Company as thereasonable estimation of fair value to measure.
(2) Owing to the business environment, operation conditions and financial conditions of the invested companies,China Guangfa Bank and Foshan Fochen Expressway Development Co., Ltd. haven’t changed significantly, theCompany takes investment costs as the reasonable estimation of fair value to measure.
(3) Owing to the business environment, operation conditions and financial conditions of the invested company,Shenzhen Zhonghao (Group) Co., Ltd. have 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 ValueFinancial 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
Naught
XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent 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 |
| Hong Kong Wah Shing Holding Company Limited | Hong Kong | Investment | HKD110,000 | 13.47% | 13.47% |
| Shenzhen Rising Investment Development Co., Ltd. | Shenzhen | Investment | RMB135.409614 million | 5.12% | 5.12% |
| Guangdong Electronics Information Industry Group Ltd. | Guangzhou | Sales & Production | RMB462 million | 4.74% | 4.74% |
| Rising Investment Development Co., Ltd. | Hong Kong | Investment | RMB200 million and HKD1 million | 1.82% | 1.82% |
| Guangdong Rising Finance Holding Co., Ltd. | Zhuhai | Investment | RMB1,393 million | 0.54% | 0.54% |
| Total | 25.70% | 25.70% |
Notes: Information on the Company as the parentThe largest shareholder of the Company, Hong Kong Wah Shing Holding Co., Ltd., was the wholly-ownedsubsidiary of Electronics Group, and Electronics Group, Shenzhen Rising Investment Development Co., Ltd.(hereinafter referred to as “Shenzhen Rising”), Guangdong Rising Finance Holding Co., Ltd. (hereinafter referredto as “GD Rising Finance”) and Rising Investment Development Co., Ltd. (hereinafter referred to as “RisingInvestment”) were the wholly-owned subsidiaries of Guangdong Rising Assets Management Co., Ltd. (hereinafterreferred to as “Rising Company”). In line with the relevant stipulation of Corporation Law and Rules on ListedCompanies Acquisition, Electronics Group, Shenzhen Rising and Rising Investment were persons acting inconcert, and the Rising Company was the actual controller of the Company. As of 31 December 2019, theaforesaid persons acting in concert holding total A, B share of the Company 359,632,344.00 shares, 25.70 % oftotal share equity of the Company.The final controller of the Company was Guangdong Rising Assets Management Co., Ltd.
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 ofsignificant joint ventures or associated enterprises of the Company.
4. Information on Other Related Parties
| Name | Relationship with the Company |
| Foshan NationStar Optoelectronics Co. Ltd. | Under same actual controller |
| Guangdong Fenghua Advanced Technology Holding Co., Ltd. | Under same actual controller |
| Guangdong Rising Optoelectronics 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 |
| PROSPERITY LAMPS & COMPONENTS LTD | Shareholder owning over 5% shares |
| Hangzhou Times Lighting and Electrical Co., Ltd. | Company controlled by related natural person |
| Prosperity (Hangzhou) Lighting and Electrical Co., Ltd. | Company controlled by related natural person |
| Prosperity Electrical (China) Co., Ltd. | Company controlled by related natural person |
| Siteco Prosperity Lighting (Langfang) Co., Ltd. | Company controlled by related natural person |
| OSRAM (China) Lighting Co., Ltd. | Company controlled by related natural person with significant influence |
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 | 47,177,854.15 | 210,000,000.00 | No | 95,223,746.49 |
| Prosperity Lamps and Components Ltd. | Purchase of materials | 3,874,689.74 | 12,000,000.00 | No | 6,066,082.69 |
| Guangdong Fenghua Advanced Technology Holding Co., Ltd. | Purchase of materials | 2,719,775.90 | 10,000,000.00 | No | 8,520,579.75 |
| Prosperity Electrical (China) Co., Ltd. | Purchase of materials | 4,500,000.00 | 729,882.89 | ||
| Hangzhou Times Lighting and Electrical Co., Ltd. | Purchase of materials | 674,827.48 | 1,000,000.00 | No | 673,304.64 |
| Siteco Prosperity Lighting (Langfang) Co., Ltd. | Purchase of materials | 251,021.56 | |||
| Guangdong Vollsun Data Solid-state Storage Co., Ltd. | Purchase of equipment | 1,600,000.00 | |||
| MTM Semiconductor Equipment Co., Ltd. | Purchase of equipment | 410,527.58 | 1,000,000.00 | No | 653,196.58 |
| Guangdong Electronic Technology Research Institute | Purchase of equipment | 46,551.72 | 3,000,000.00 | No | 1,529,914.53 |
| Shaoguan Green Resource Recycling Development Co., Ltd. | receiving labor service | 93,318.58 | |||
| Zhuhai Doumen District Yongxingsheng Environmental Industrial Wastes Recycling Comprehensive Treatment Co., Ltd. | receiving labor service | 54,676.52 | |||
| Total | 55,052,221.67 | 241,500,000.00 | 115,247,729.13 |
Information of sales of goods and provision of labor service
Unit: RMB
| Related party | Content | Reporting Period | Same period of last year |
| PROSPERITY LAMPS & COMPONENTS LTD | Sale of products | 20,323,829.52 | 35,007,006.69 |
| Guangdong Vollsun Data Solid-state Storage Co., Ltd. | Sale of products | 2,373,517.23 | |
| Prosperity Electrical (China) Co., Ltd. | Sale of products | 78,769.53 | 215,459.99 |
| Guangdong Rising Optoelectronics Co., Ltd. | Sale of products | 2,456.90 | |
| Guangzhou Diansheng Property Management Co., Ltd. | Sale of products | 846.90 | 1,118.97 |
| Hangzhou Times Lighting and Electrical Co., Ltd. | Sale of products | 73,790.53 | |
| Total | 20,403,445.95 | 37,673,350.31 |
Information of sales/purchase of goods and provision/reception of labor serviceThe pricing for related-party transactions observes the principle of market subject to the market price when thetransaction happens and relevant accounts shall be paid on time based on actual transaction.
(2) Information on Related-party Trusteeship/Contract
Naught
(3) Information on Related-party Lease
The Company was lessor:
NaughtThe Company was lessee:
Unit: RMB
| Name of lessor | Category of leased assets | The lease fee confirmed in the Reporting Period | The lease fee confirmed in the same period of last year |
| Guangdong Electronics Information Industry Group Ltd. | Vehicles | 5,699.21 | 16,666.67 |
(4) Information on Related-party Guarantee
Naught
(5) Information on Inter-bank Lending of Capital of Related Parties
Naught
(6) Information on Assets Transfer and Debt Restructuring by Related PartyNaught
(7) Information on Remuneration for Key Management Personnel
Unit: RMB
| Item | Reporting period | Same period of last year |
| Chairman of the Board | ||
| General Manager | 1,415,554.04 | 1,775,401.52 |
| Chairman of the Supervisory Committee | 777,020.00 |
| Secretary of the Board | 250,000.00 | 1,052,000.00 |
| Chief Financial Officer | 815,554.04 | 1,103,401.52 |
| Other | 6,040,140.36 | 7,589,589.28 |
| Total | 9,298,268.44 | 11,520,392.32 |
(8) Other Related-party Transactions
Naught
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. | 3,126,022.22 | 49,800.02 | ||
| Accounts receivable | PROSPERITY LAMPS & COMPONENTS LTD | 3,158,126.65 | 94,743.80 | 3,676,377.29 | 110,291.32 |
| Accounts receivable | Guangdong Vollsun Data Solid-state Storage Co., Ltd. | 2,653,280.00 | 265,328.00 | 2,753,280.00 | 82,598.40 |
| Accounts receivable | OSRAM (China) Lighting Co., Ltd. | 117,554.16 | 58,777.08 | 117,554.16 | 35,266.25 |
| Accounts receivable | Prosperity (Hangzhou) Lighting and Electrical Co., Ltd. | 86,367.27 | 86,293.82 | 86,367.27 | 69,093.82 |
| Other receivables | Guangdong Electronics Information Industry Group Ltd. | 19,500.00 | 585.00 | ||
| Prepayments | MTM Semiconductor Equipment Co., Ltd | 28,368.00 | |||
| Prepayments | Foshan NationStar Optoelectronics Co., Ltd. | 4,866.76 | |||
| Prepayments | Prosperity Electrical (China) Co., Ltd. | 7,521.37 | 7,521.37 | ||
| Total | 9,153,738.43 | 505,142.70 | 6,738,768.11 | 297,834.79 |
(2) Accounts Payable
Unit: RMB
| Item | Related party | Ending carrying amount | Beginning carrying amount |
| Accounts payable | Foshan NationStar Optoelectronics Co., Ltd. | 13,443,520.14 | 17,964,138.25 |
| Accounts payable | PROSPERITY LAMPS & COMPONENTS LTD | 554,680.06 | |
| Accounts payable | Guangdong Fenghua Advanced Technology Holding Co., Ltd. | 384,036.84 | 1,489,703.61 |
| Accounts payable | Hangzhou Times Lighting and Electrical Co., Ltd. | 219,439.95 | 229,109.60 |
| Accounts payable | Siteco Prosperity Lighting (Langfang) Co., Ltd. | 251,021.56 | |
| Accounts payable | Prosperity Electrical (China) Co., Ltd. | 160,759.70 | 160,759.70 |
| Other payables | PROSPERITY LAMPS & COMPONENTS LTD | 488,822.33 | 480,904.43 |
| Other payables | Guangdong Electronic Technology Research Institute | 181,700.00 | 179,000.00 |
| Other payables | Prosperity Electrical (China) Co., Ltd. | 100,000.00 | 100,000.00 |
| Other payables | MTM Semiconductor Equipment Co., Ltd. | 38,600.00 | |
| Other payables | Guangdong Electronics Information Industry Group Ltd. | 11,111.12 | |
| Advances from customers | Prosperity Electrical (China) Co., Ltd. | 52,619.26 | 38,646.66 |
| Total | 15,030,898.22 | 21,497,674.99 |
7. Commitments of Related Party
(1)Commitment: commitments made in acquisition documents or shareholding alteration documentsCommitment maker: Controlling shareholderType of commitment: About avoidance of horizontal competitionContents: Electronics Group and its acting-in-concert parties Shenzhen Rising Investment and Hong Kong RisingInvestment have made a commitment that the elimination of the horizontal competition between Foshan NationStar Optoelectronics Co., Ltd. and the Company through business integration or other ways or arrangements shallbe completed before 4 June 2020.Date of commitment making: 3 December 2019Term of commitment: 6 monthsFulfillment: In execution(2)Commitment: commitments made in acquisition documents or shareholding alteration documentsCommitment maker: Controlling shareholderType of commitment: About avoidance of horizontal competitionElectronics Group and its acting-in-concert parties Shenzhen Rising Investment and Hong Kong RisingInvestment have made more commitments as follows to avoid horizontal competition with the Company: 1. Theyshall conduct supervision and restraint on the production and operation activities of themselves and their relevantenterprises so that besides the enterprise above that is in horizontal competition with the Company for now, if theproducts or business of them or their relevant enterprises become the same with or similar to those of theCompany or its subsidiaries in the future, they shall take the following measures: (1) If the Company thinksnecessary, 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 relevantassets and business of them and their relevant enterprises. 2. All the commitments made by them to eliminate oravoid horizontal competition with the Company are also applicable to their directly or indirectly controlledsubsidiaries. They are obliged to urge and make sure that other subsidiaries execute what’s prescribed in therelevant document and faithfully honor all the relevant commitments. 3. If they or their directly or indirectlycontrolled subsidiaries break the aforesaid commitments and thus cause a loss for the Company, they shallcompensate the Company on a rational basis.Date of commitment making: 4 December 2015Term of commitment: Long-standingFulfillment: In execution(3)Commitment: commitments made in acquisition documents or shareholding alteration documentsCommitment maker: Controlling shareholderType of commitment: About reduction and regulation of related-party transactionsContent: Electronics Group and its acting-in-concert parties Shenzhen Rising Investment and Hong Kong RisingInvestment have made a commitment that during their direct or indirect holding of the Company’s shares, theyshall 1. Strictly abide by the regulatory documents of the CSRC and the SZSE, the Company’s Articles ofAssociation, etc. and not harm the interests of the Company or other shareholders of the Company in theirproduction and operation activities by taking advantage of their position as the controlling shareholder and actualcontroller; 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 transactionswith the Company or the Company’s subsidiaries; 3. strictly follow the market principle of justness, fairness andequal value exchange for necessary and unavoidable related-party transactions between them and their RelevantEnterprises and the Company, and withdraw from voting when a related-party transaction with them or theirRelevant Enterprises is being voted on at a general meeting or a board meeting, and execute the relevant approvalprocedure and information disclosure duties pursuant to the applicable laws, regulations and regulatory documents.Where the aforesaid commitments are broken and a loss is thus caused for the Company, its subsidiaries or theCompany’s other shareholders, they shall be obliged to compensate.Date of commitment making: 4 December 2015Term of commitment: Long-standingFulfillment: In execution(4)Commitment: commitments made in acquisition documents or shareholding alteration documentsCommitment maker: Controlling shareholderType of commitment: About independenceIn order to ensure the independence of the Company in business, personnel, asset, organization and finance,Electronics Group and its acting-in-concert parties Shenzhen Rising Investment and Hong Kong RisingInvestment have made the following commitments: 1. They will ensure the independence of the Company inbusiness: (1) They promise that the Company will have the assets, personnel, qualifications and capabilities for itto operate independently as well as the ability of independent, sustainable operation in the market. (2) Theypromise not to intervene in the Company’s business activities other than the execution of their rights as theCompany’s shareholders. (3) They promise that they and their related parties will not be engaged in business thatis substantially in competition with the Company’s business. And (4) They promise that they and their relatedparties will try their best to reduce related-party transactions between them and the Company; for necessary andunavoidable related-party transactions, they promise to operate fairly following the market-oriented principle andat fair prices, and execute the transaction procedure and the duty of information disclosure pursuant to theapplicable laws, regulations and regulatory documents. 2.They will ensure the independence of the Company inpersonnel: (1) They promise that the Company’s GM, deputy GMs, CFO, Company Secretary and other seniormanagement personnel will work only for and receive remuneration from the Company, not holding any positionsin them or their other controlled subsidiaries other than director and supervisor. (2) They promise the Company’sabsolute independence from their related parties in labor, human resource and salary management. And (3) Theypromise to follow the legal procedure in their recommendation of directors, supervisors and senior managementpersonnel to the Company and not to hire or dismiss employees beyond the Company’s Board of Directors andGeneral Meeting. 3. They will ensure the independence and completeness of the Company in asset: (1) Theypromise that the Company will have a production system, an auxiliary production system and supporting facilitiesfor its operation; legally have the ownership or use rights of the land, plants, machines, trademarks, patents andnon-patented technology in relation to its production and operation; and have independent systems for theprocurement of raw materials and the sale of its products. (2) They promise that the Company will haveindependent and complete assets all under the Company’s control and independently owned and operated by theCompany. And (3) They promise that they and their other controlled subsidiaries will not illegally occupy theCompany’s funds and assets in any way, or use the Company’s assets to provide guarantees for the debts ofthemselves or their other controlled subsidiaries with. 4. They will ensure the independence of the Company inorganization: (1) They promise that the Company has a sound corporate governance structure as a joint-stockcompany with an independent and complete organization structure. (2) They promise that the operational and
management organs within the Company will independently execute their functions according to laws, regulationsand the Company’s Articles of Association. 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 systemwith normative, independent financial accounting rules. (2) They promise that the Company will haveindependent bank accounts and not share bank accounts with its related parties. (3) They promise that theCompany’s financial personnel do not hold concurrent positions in its related parties. (4) They promise that theCompany will independently pay its tax according to law. And (5) They promise that the Company can makefinancial decisions independently and that they will not illegally intervene in the Company’s use of its funds.Date of commitment making: 4 December 2015Term of commitment: Long-standingFulfillment: 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 dateCommitment: Commitment made to small and medium shareholders of the companyType of commitment: Commitment about cash dividends
Contents: 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. Contingency
(1) Significant Contingency on Balance Sheet Date
1. Securities false statement liability disputes
According to the Supreme People's Court of the People's Supreme People’s Court of the People's Republic of China(2017) Supreme People’s Court No. 3437 to No. 3466, No. 3499 and No. 3480 Civil Ruling, the Plaintiff of theSecurities False Statement Liability Disputes (Retrial Application 32) The 32 people were not satisfied with theGuangdong Provincial Higher People's Court (2016) Guangdong People's Court Decision No. 407-436 and No.1841-1852 and applied to the Supreme People's Court for a retrial. The Supreme People’s Court ruled that it shouldbe tried. As of 31 December 2019, thirty one of the above-mentioned cases had concluded. And as of the date ofthe audit report, one case hadn’t yet been brought to trial with the amount involved of RMB107,549.00.
2. The lawsuit with Dongguan Lindun
As Dongguan FSL Lindun Energy-saving Technology Co., Ltd. (hereinafter referred to as “Dongguan Lindun”)defaulted on the payment of the Company, the Company filed a lawsuit with Dongguan First People’s Court on 22March 2016 (Case No.: (2016) Yue 1971 MC No. 6481), and demanded a verdict that Dongguan Lindun should payoverdue payment RMB9,559,837.55 and liquidated damages RMB955,983.76 (total: RMB10,515,821.31).Dongguan Lindun filed Civil Counterclaim with Dongguan First People’s Court on 28 April 2016 against theCompany on the grounds of quality problems in the goods provided by the Company, and requested the Court toorder the Company to indemnify a loss of RMB11,727,003.10 and pay liquidated damages RMB1,552,159.76 (total:
RMB13,279,162.86). On 9 October 2019, Dongguan First People’s Court (2016) Yue 1971 MC No. 6481 CivilRuling adjudicated: (1) Dongguan Lindun should pay the payment for goods of RMB9,559,837.55 and liquidateddamages of RMB955,983.75 within 5 days from the effective date of the judgment; (2) the Company should paythe loss of RMB577,189.00 to Dongguan Lindun within 5 days from the effective date of the judgment; (3) otherclaims of the Company and Dongguan Lindun are rejected.
3. 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. As of the date of the audit report, the above-mentioned casewas at the reception stage and hadn’t yet been brought to trial.
4. The lawsuit with Shanghai Feilo
As Shanghai Feilo Investment Co., Ltd. (hereinafter referred to as “Shanghai Feilo) defaulted on the Company’spayment for goods, the Company filed a lawsuit with the Shanghai Xuhui District People’s Court in 2019, and theclaims are as follows: (1) demanding an immediately settlement of the overdue payment for shipped goods withRMB2,485,037.50 from the defendant; (2) demanding the defendant to take delivery of OEM goods and to pay offRMB5,923,158.80; (3) demanding the defendant to pay the interest of the principle of RMB8,408,196.30 of loaninterest rate at the same period from the date of the filing of the suit to the actual settlement date of the payment;
(4) demanding No.2 defendant, Shanghai Feilo Acoustics Co., Ltd. (solely-invested shareholder of Shanghai Feilo)to undertake the joint liability for satisfaction to above obligation. As of the date of the audit report, the casehasn’t been concluded.
5. The lawsuit with Shanghai Dinghui
Among the year of 2016 and 2017, goods of lamp bead from Shanghai Toplite Technology Co, Ltd. (hereinafterreferred to as “Shanghai Toplite”) supplied to the Company existed quality problems, and the Company shallreturn the goods and not pay the payment. Therefore, Shanghai Toplite filed a lawsuit with the Foshan ChanchengDistrict People’s Court, demanding the payment of RMB2,183,009.58 from the Company and to compute theinterest of the loan interest rate floating 50% at the same period from 21 January 2018 to the actual settlement dateof the payment. In 2019, the Company filed a counterclaim to Foshan Chancheng District People’s Court,demanding to return goods of lamp bead provided by Shanghai Toplite with RMB3,168,204.00 including tax price,as well as to compensate the economic loss of RMB2,916,735.00 to the Company (total amount of counterclaim:
6,084,759.00). As of the date of the audit report, the case hasn’t been concluded.
6. The lawsuit with Kaichuang Industrial
As Shenzhen Kaichuang Industrial Co., Ltd. (hereinafter referred to as “Kaichuang Industrial”) defaulted on thegoods of payment of the Company and FSL Chanchang Optoelectronics Co., Ltd., Kaichuang Industrial rejectedto pay off after repeated collections, which has constituted the breach. The Company filed a lawsuit with theFoshan Gaoming District People’s Court, demanding Kaichuang Industrial one-off payment withRMB2,123,952.16 and to compute the interest of the loan interest rate floating 50% at the same period from dateof the filing of the suit to the actual settlement date of the payment. As of the date of the audit report, the casehasn’t been concluded.
7. Disputes on infringement of design patent rights sued by Guangdong Cobra Industrial Co., Ltd. to the CompanyOwing to the disputes on the design patent rights, Guangdong Cobra Industrial Co., Ltd. filed a lawsuit with theGuangzhou Intellectual Property Court to the Company (Case No.: (2019) Yue 73 MC No. 865, (2019) Yue 73MC No. 866). As of the date of the audit report, the case hasn’t been concluded.
(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make RelevantStatementsThere was no significant contingency in the Company.
3. Other
Naught
XV. Events after Balance Sheet Date
1. Significant Non-adjusted Events
Naught
2. Profit Distribution
Unit: RMB
| Profits or dividends planned to distribute | 258,879,038.49 |
| Reviewed and approved profits or dividends declared to distribute | 258,879,038.49 |
3. Sales Return
Naught
4. Notes to Other Events after Balance Sheet Date
(I) Profit Distribution PlanThe profit distribution plan in 2019 of the Company is as follows: based on the total 1,399,346,154 shares as atthe end of 2019, the Company intends to distribute a cash dividend of RMB1.85(tax included and dividends forB-share holders to be paid in the Hong Kong dollars) for every 10 shares held by A-share and B-share holder,with the total distributed cash dividends reaching RMB258,879,038.49. Apart from the aforesaid cash dividend,the Company would not offer bonus issue from capital reserves and bonus issue from profit in this profitdistribution.The proposal is still to be submitted to the 2019 Annual General Meeting for review.(II) Impact on the Epidemic situation of COVID-19 EpidemicOwing to the outbreak of COVID-19 Epidemic, which has the temporary impact on the material purchase, productsale and reflow of corporate sales income of the Company to some extent, the ultimate impact depends on the heprevention and control of the national epidemic situation, duration and the implementation of each regulatorypolicies. Now the Company has conducted a series of measures and resumed work and production gradually,reducing the adverse effects on the Company generated from the epidemic situation as much as possible.
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) About Equity Incentive FundOn 16 May 2002, the resolution of The 2001 Annual General Meeting of the Company passed the proposal ofestablishing equity incentive system for middle and senior executives, which stipulated that the assessment targetshall be annual return on net assets of 6%. When the annual return on net assets reached 6%, withdraw equityincentive funds by 5% of the net profit, the accruing proportion of incentive funds and the increase ratio of return onnet assets should increase simultaneously. The scheme was implemented from the fiscal year 2001. The accruedequity incentive fund of the Company was RMB14 million for the present year.
XVII. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Notes Receivable
(1) Category of Notes 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 | 23,377,223.66 | 3.27% | 16,266,810.09 | 69.58% | 7,110,413.57 | 23,377,223.66 | 2.78% | 16,266,810.09 | 69.58% | 7,110,413.57 |
| Of which: | ||||||||||
| Accounts receivable for which bad debt provision accrued by group | 691,130,612.31 | 96.73% | 32,134,193.35 | 4.65% | 658,996,418.96 | 819,146,635.09 | 97.22% | 30,359,116.01 | 3.71% | 788,787,519.08 |
| Of which: | ||||||||||
| Total | 714,507,835.97 | 100.00% | 48,401,003.44 | 6.77% | 666,106,832.53 | 842,523,858.75 | 100.00% | 46,625,926.10 | 5.53% | 795,897,932.65 |
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 | 14,220,827.14 | 7,110,413.57 | 50.00% | Involved in the lawsuit; the Company won in the first instance judgment and the other side had appealed |
| Customer B | 9,156,396.52 | 9,156,396.52 | 100.00% | Involved in the lawsuit with long aging; expected irrecoverable |
| Total | 23,377,223.66 | 16,266,810.09 | -- | -- |
Withdrawal of bad debt provision by group:
Unit: RMB
| Name | Ending balance | ||
| Carrying amount | Bad debt provision | Withdrawal reason | |
| Credit risk | 691,130,612.31 | 32,134,193.35 | 4.65% |
| Total | 691,130,612.31 | 32,134,193.35 | -- |
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable ifadopting the general mode of 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) | 629,187,154.43 |
| 1 to 2 years | 44,567,434.73 |
| 2 to 3 years | 21,658,102.87 |
| Over 3 years | 19,095,143.94 |
| 3 to 4 years | 5,365,572.32 |
| 4 to 5 years | 1,817,662.76 |
| Over 5 years | 11,911,908.86 |
| Total | 714,507,835.97 |
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting PeriodInformation of withdrawal of bad debt provision:
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Accounts receivable | 46,625,926.10 | 1,884,709.32 | 109,631.98 | 48,401,003.44 | |
| Total | 46,625,926.10 | 1,884,709.32 | 109,631.98 | 48,401,003.44 | |
Of which bad debt provision recovered or reversed with significant amount during the Reporting Period:
Naught
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
| Item | Amount |
| No. 1 | 109,420.64 |
| Other driblet small amount | 211.34 |
| Total | 109,631.98 |
Of which verification of significant accounts receivable:
Naught
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Unit: RMB
| Name | Ending balance of accounts receivable | Proportion to total ending balance of accounts receivable | Ending balance of bad debt provision |
| No. 1 | 105,391,428.29 | 14.75% | 3,161,742.85 |
| No. 2 | 37,026,996.74 | 5.18% | 1,110,809.90 |
| No. 3 | 20,353,852.72 | 2.85% | 610,615.58 |
| No. 4 | 19,217,070.82 | 2.69% | 576,512.12 |
| No. 5 | 16,557,721.50 | 2.32% | 1,266,160.92 |
| Total | 198,547,070.07 | 27.79% |
(5) Derecognition of Accounts Receivable due to the Transfer of Financial AssetsNaught
(6) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement ofAccounts ReceivableNaught
2. Other Receivables
Unit: RMB
| Item | Ending balance | Beginning balance |
| Other receivables | 37,934,614.96 | 38,386,484.68 |
| Total | 37,934,614.96 | 38,386,484.68 |
(1) Interest Receivable
Naught
(2) Dividends Receivable
Naught
(3) Other Receivables
1) Other Receivables Classified by Accounts Nature
Unit: RMB
| Nature | Ending carrying amount | Beginning carrying amount |
| Internal business group | 17,624,135.10 | 22,478,786.69 |
| VAT export tax refunds | 8,154,485.23 | 6,252,642.96 |
| Borrowings and petty cash for employees | 5,436,926.32 | 3,294,170.26 |
| Performance bond | 3,231,331.10 | 2,905,450.00 |
| Rental fees and water & electricity fees | 1,476,056.29 | 765,582.10 |
| Other intercourse | 3,896,155.29 | 3,991,470.59 |
| Total | 39,819,089.33 | 39,688,102.60 |
2) 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 2019 | 406,679.05 | 894,938.87 | 1,301,617.92 | |
| Balance of 1 January 2019 in the Current Period | —— | —— | —— | —— |
| Withdrawal of the Current Period | 125,930.97 | 456,925.48 | 582,856.45 | |
| Balance of 31 December 2019 | 532,610.02 | 1,351,864.35 | 1,884,474.37 |
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) | 33,823,552.58 |
| 1 to 2 years | 3,431,260.38 |
| 2 to 3 years | 1,549,833.11 |
| Over 3 years | 1,014,443.26 |
| 3 to 4 years | 565,642.96 |
| 4 to 5 years | 162,042.14 |
| Over 5 years | 286,758.16 |
| Total | 39,819,089.33 |
3) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting PeriodInformation of withdrawal of bad debt provision
Unit: RMB
| Category | Beginning balance | Changes in the Reporting Period | Ending balance | ||
| Withdrawal | Reversal or recovery | Write-off | |||
| Other accounts receivable | 1,301,617.92 | 582,856.45 | 1,884,474.37 | ||
| Total | 1,301,617.92 | 582,856.45 | 1,884,474.37 |
Of which bad debt provision recovered or reversed with significant amount during the Reporting Period:
Naught
4) Particulars of the Actual Verification of Other Receivables during the Reporting PeriodNaught
5) Top 5 of the Ending Balance of 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 | 14,542,856.74 | Within 2 years | 36.52% | |
| No. 2 | Export rebates | 8,154,485.23 | Within 1 year | 20.48% | 244,634.56 |
| No. 3 | Internal business group | 2,950,161.82 | Within 1 year | 7.41% | |
| No. 4 | Other | 1,296,947.31 | Within 4 years | 3.26% | 396,659.49 |
| No. 5 | Social insurance | 1,037,048.12 | Within 1 year | 2.60% | 31,111.44 |
| Total | -- | 27,981,499.22 | -- | 70.27% | 672,405.49 |
6) Accounts Receivable Involving Government Subsidies
Naught
7) Derecognition of Other Receivables due to the Transfer of Financial AssetsNaught
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 | 283,793,102.26 | 283,793,102.26 | 283,793,102.26 | 283,793,102.26 | ||
| Investment to joint ventures and associated enterprises | 181,093,725.43 | 181,093,725.43 | 182,458,559.69 | 182,458,559.69 | ||
| Total | 464,886,827.69 | 464,886,827.69 | 466,251,661.95 | 466,251,661.95 |
(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 | ||||
| Foshan Chansheng Electronic Ballast Co., Ltd. | 2,744,500.00 | 2,744,500.00 | |||||
| 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 (Xinxiang) Co., Ltd. | 35,418,439.76 | 35,418,439.76 | |||||
| Guangdong Fozhao New Light Sources Technology Co., Ltd. | 50,077,000.00 | 50,077,000.00 | |||||
| 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 | |||||
| Total | 283,793,102.26 | 283,793,102.26 |
(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. | 182,458,559.69 | 1,755,751.49 | 3,120,585.75 | 181,093,725.43 | |||||||
| Subtotal | 182,458,559.69 | 1,755,751.49 | 3,120,585.75 | 181,093,725.43 | |||||||
| Total | 182,458,559.69 | 1,755,751.49 | 3,120,585.75 | 181,093,725.43 | |||||||
（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 | 3,124,143,587.99 | 2,445,365,718.26 | 3,606,985,537.23 | 2,858,585,674.76 |
| Other business | 111,804,851.06 | 92,962,742.36 | 95,835,761.53 | 79,065,112.75 |
| Total | 3,235,948,439.05 | 2,538,328,460.62 | 3,702,821,298.76 | 2,937,650,787.51 |
Whether the Company has executed the new revenue standards
□ Yes √ No
5. Investment Income
Unit: RMB
| Item | Reporting Period | Same period of last year |
| Long-term equity investment income accounted by equity method | 1,755,751.49 | 6,165,040.30 |
| Investment income from disposal of long-term equity investment | 330,228.20 | 31,946,218.59 |
| Investment income from holding of trading financial assets | 1,750,000.00 | |
| Investment income from disposal of trading financial assets | 13,550,000.00 | |
| Dividend income from holding of other equity instrument investment | 18,510,954.80 | |
| Investment income from holding of available-for-sale financial assets | 18,873,927.57 | |
| Investment income from financial products and structural deposits | 29,554,019.01 | 25,626,926.83 |
| Other | -4,242,300.00 | -808,400.00 |
| Total | 61,208,653.50 | 81,803,713.29 |
6. Other
Naught
XVIII. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
| Item | Amount | Note |
| Gains/losses on the disposal of non-current assets | -413,275.62 | |
| 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 | 6,485,365.31 | |
| Gain/loss from change of fair value of trading financial assets and liabilities, derivative financial assets and liabilities, and investment gains from disposal of trading financial assets and liabilities, derivative financial assets and liabilities, and other creditor’s rights investment, other than valid hedging related to the Company’s common businesses | 15,574,400.00 | |
| Other non-operating income and expenses other than the above | -2,543,083.02 | |
| Less: Income tax effects | 2,635,263.29 | |
| Non-controlling interests effects | -961,608.55 | |
| Total | 17,429,751.93 | -- |
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains andLosses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/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 | 6.37% | 0.2152 | 0.2152 |
| Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring profit or loss | 6.00% | 0.2028 | 0.2028 |
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
Part XIII 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 sealed by the Company’s legal representative, GeneralManager and Chief Financial Officer;
2. The original copy of the Independent Auditor’s Report signed and sealed by the certified publicaccountants and stamped by the CPA firm.
3. All the originals of the Company’s announcements and documents that were disclosed to thepublic during the Reporting Period on the media designated by the CSRC for informationdisclosure.
The Board of DirectorsFoshan Electrical and Lighting Co., Ltd.
8 April 2020