Hangzhou GreatStar Industrial Co., Ltd.
2023 Annual Report
2024-008[April 2024]IntroductionIn 2023, GreatStar delivered record-setting results by adhering to the development philosophy of "remainingdevoted to perfection while keeping the grand vision in mind" in the face of the most severe challenges in 30 yearsdue to the active destocking and declining demand in the European and American markets that began in H2 2022.In 2023, GreatStar achieved a total operating revenue of RMB 10.929 billion, a net profit attributable to the parentCompany of RMB 1.691 billion, and a net cash flow from operating activities exceeding RMB 2.1 billion. Thanksto all GreatStar employees for their hard work that has allowed GreatStar to keep pushing forward. Despite thevicissitudes, GreatStar persisted in enhancing its comprehensive strengths and providing long-term returns toshareholders. Our journey will be as vast and enduring as the starry sky and the boundless sea. Thanks to theshareholders for their Company and perseverance.About 30 years ago, GreatStar started in an office building in downtown Hangzhou with a 20-square-meter office,a desk, and an employee. After over a decade of effort, in 2010, GreatStar successfully went public. In thesubsequent decade or so, GreatStar has steadily grown and rewarded shareholders, achieving compound annualgrowth rates (CAGR) of 14.49%, 15.23% and 14.32% in the operating revenues, net profit attributable to the parentCompany, and net assets, respectively. GreatStar has continuously rewarded investors through dividends, sharebuybacks, and other means. We will persistently adhere to the principle that the cash generated from GreatStar'soperating activities will either be used for acquiring renowned international brands to develop our main businesssegments or for distributing dividends and share buybacks to reward shareholders.GreatStar has achieved a number of notable achievements and milestones in its journey. By reflecting on this journey,it is a valuable exercise to re-examine the ever-changing global industrial landscape. As Wang Yangming said, "Lifeis like a spiritual practice, just like the lotus that can grow in the mud. All the difficulties and tribulations in theworld are opportunities to hone and improve myself." Whatever does not defeat us will ultimately make us stronger.From 2010 to 2016, although China's annual GDP growth rate declined from 10% to 7%, it was still far higher thanthe average GDP growth rate of 2% in GreatStar's main market, the United States. The substantial cash reserves andexcellent business model that GreatStar possessed during this period paradoxically presented a "resource curse," asthe Chinese market seemed replete with investment opportunities that promised growth far exceeding the original10%. GreatStar made numerous equity investments in non-core business segments. However, GreatStar's compoundannual growth rate (CAGR) during those six years turned out to be only slightly above 11%. At the end of 2016 andthe beginning of 2017, under the leadership of the chairman, GreatStar's Board of Directors and Management teamprofoundly reflected on and summarized the past course of diversification. They ultimately determined to focus onconsumer goods in Europe and the United States as the core business for future development and have consistentlyimplemented this strategy. However, the Company and the industry were set to be buffeted by dramatic challengesin 2017.Coinciding with GreatStar's refocusing on its core business in 2017, with a strong emphasis on developing itsoriginal brands (OBM business) and acquiring overseas brands for expansion, China introduced a series of importantnew policies and measures for environmental protection aimed at strengthening environmental protection andecological civilization development. These policies have objectively led to the elimination of outdated productioncapacity in the tooling industry, causing a short-term supply-demand imbalance. In 2018, the United Statesgovernment released a list of goods subject to increased tariffs, imposing an additional 10% to 25% tariff on certainChinese exports to the United States. This marked the beginning of the ongoing US-China trade dispute that haspersisted until today, drastically increasing GreatStar's operating costs. GreatStar was compelled to commence theglobal expansion and integration of its industrial and supply chains. In May 2019, the United States governmentraised the tariff rate from 10% to 25% on USD 200 billion worth of Chinese goods exported to the United States,affecting most of GreatStar products exported to the United States. To address this adverse situation, GreatStaraccelerated the construction of three major manufacturing bases in Vietnam, Cambodia, and Thailand to mitigateoperational risks to the greatest extent possible. In 2020, the sudden global black swan events first led to a sharp
decrease in orders, necessitating a pivot to the production and sale of personal protective equipment. Later, an abruptsurge in global orders resulted in insufficient production capacity, requiring all employees to work overtime. In2021, although end-market demand was robust, the simultaneous substantial increases in the RMB exchange rate,China-US shipping costs, and raw material prices resonated together, exceeding the Company's short-termadjustment threshold and causing a significant decline in the overall gross profit margin. In 2022, just as the costimpact had been alleviated, demand in Europe and America declined in the second half of the year due to interestrate hikes by the United States Federal Reserve. Clients with overstocked inventories initiated a wave of destocking,with orders rapidly plummeting to a freezing point.All these events posed tremendous challenges for GreatStar, representing profound changes that disrupted theexisting industry landscape. We are like a ship navigating the vast ocean. Every wave could potentially capsize thevessel or provide the impetus for acceleration. These external changes demanded that GreatStar actively optimizeits business model, adjust its governance system, and rapidly and appropriately respond to the ever-changing globalrules. Over the past 6 years, GreatStar has achieved a compound annual growth rate (CAGR) of 17% in operatingrevenues and 20% in net profits attributable to the parent Company, marking a notable improvement compared toprevious periods. We have also made substantial progress in the product portfolio, original brands, business models,and industrial upgrades.Product profile: At the time of its initial public offering, GreatStar only offered four major categories of hand tools,namely rotary, cutting, measuring, and lighting tools, along with a limited number of handheld power tools in justa few thousand SKUs. As HuaDa KeJie, LISTA Geelong and SHOPVAC joined GreatStar, accompanied byinvestments in market and R&D resources, GreatStar's non-hand tool categories accounted for nearly 40% of itsofferings in 2023. Moreover, GreatStar has become the world's second-largest manufacturer of laser measurementinstruments and tool storage cabinets, with over 30,000 SKUs. By steadily expanding its product range and addingnew categories, GreatStar has shown a strong ability to consistently grow in the European and American consumergoods tool markets. This is like a long, gradual climb that has laid a solid foundation for GreatStar to keepaccelerating its growth in the coming decade.Original brands: GreatStar has successively acquired ARROW, LISTA, BEA and some other leading brands inEuropean niche markets and emerging brands such as WORKPRO, DURATECH and SHEFFIELD. The revenuescontributed by original brands have risen from less than 10% in 2016 to nearly 50% in 2023. This transformationhas not only further broken GreatStar's gross profit margin ceiling but will also play a role in stabilizing performanceduring industry fluctuations as severe as those experienced in 2023.Business models: Through three parallel measures – direct cross-border e-commerce operations, acquisition ofEuropean and American distribution channels, and establishment of Asia-Pacific distribution channels, GreatStarhas effectively increased the proportion of direct-to-customer (DTC) business, prioritizing retail customer needsand directly reaching end retail customers. This has not only effectively enhanced the value proposition of individualproducts but has also provided firsthand client feedback to feed directly into R&D.Industrial upgrade: As a Company that originated from foreign trade, GreatStar has consistently derived over 90%of its revenues from regions outside of China. Prior to 2017, GreatStar had no overseas manufacturing or large-scalewarehousing and logistics bases. Over the past 6 years, GreatStar has acquired or built 10 production bases in China,3 production bases in Southeast Asia, 5 production bases in Europe, and 3 production bases in the United Statesthrough acquisitions of European and American factories as well as establishment of its own manufacturing basesin Southeast Asia. Currently, GreatStar has established multiple large logistics distribution centers and sales andafter-sales teams in Europe and the United States, achieving truly localized service in these markets. GreatStar hasactively introduced μ-class high-precision measurement instrument and equipment production capacity from theTESA brand to optimize the product range manufactured in China.The future can't be predicted with certainty, but it fills us with both awe and hope. No one can predict GreatStar'sfuture, just as it was impossible to foresee in 2017 that GreatStar would be as it is in 2023. We follow "The GrandWay" or the great trends of the times with patriotic sentiments. We remain devoted to perfection to beingmeticulously focused and specialized. In 2024, GreatStar will continue to adhere to the development philosophy of"remaining devoted to perfection while keeping the grand vision in mind," striving towards the goal of becomingthe world's largest tool Company.
The Board of Directors of Hangzhou GreatStar Industrial Co., Ltd.
April 24, 2024
2023 Annual ReportSection I Important Notice, Table of contents and DefinitionsThe Board of Directors and the Board of Supervisors of the Company and its directors, supervisors andsenior Management hereby warrant that the information contained in this annual report is true, accurateand complete without any fictitious records, misleading statements or material omissions, and severally andjointly assume legal responsibility thereof.Qiu Jianping, person in charge of the Company, and Ni Shuyi, person in charge of accounting and person incharge of the accounting department (Accounting Officer), have declared that they warrant the truthfulness,accuracy and completeness of the financial statements set out in this annual report.All directors of the Company were present in person at the Board of Directors' meeting for the review of thisReport.Forward-looking statements including future plans involved in this Report do not constitute the Company'ssubstantive commitments to investors. The investors and those who are interested are advised to payattention to relevant risks and understand the difference between plans, projections and commitments.The Report has described the Company's risk factors that may exist in its operations in detail in "Section IIIDiscussion and Analysis of the Management, (XI) Prospects for the Company's Future Development:
Potential Risks". Please pay attention to the relevant contents.The profit distribution proposal of the Company considered and approved by the meeting of the Board ofDirectors is to distribute a cash dividend of RMB 0 (including tax) and issue 0 bonus shares (including tax)for every 10 shares based on a total of 1,202,501,992 shares. No capital reserve is to be transferred into theshare capital.
Table of Contents
Section I Important Notice, Table of contents and Definitions ...... 3
Section II Company Profile and Key Financial Indicators ...... 7
Section III Discussion and Analysis of the Management ...... 13
Section IV Corporate Governance ...... 54
Section V Environmental and Social Responsibility ...... 76
Section VI Significant Matters ...... 78
Section VII Changes in Shares and Information about Shareholders ...... 111
Section VIII Preferred Shares ...... 120
Section IX Securities ...... 121
Section X Financial Report ...... 122
Documents Available for Inspection
I. Financial Statements with the signatures and seals of the person in charge of the Company, person in charge ofaccounting and person in charge of the accounting department of the Company.II. Original Audit Report bearing the seal of the accounting firm and signatures of the CPAs who have performedthe audit.III. All of the originals of the Company's documents and original drafts of the Company's announcements asdisclosed in the newspaper designated by China Securities Regulatory Commission (CSRC) in the reporting period.
Definitions
| Term to be defined | Refers to | Definition |
| reporting period | Refers to | The period from January 1, 2023 to December 31, 2023 |
| Company, the Company, the listed Company, GreatStar | Refers to | Hangzhou GreatStar Industrial Co., Ltd. |
| Sheffield | Refers to | Hangzhou GreatStar Sheffield Trading Co., Ltd. |
| Guozi Robotics | Refers to | Zhejiang Guozi Robotics Co., Ltd. |
| Arrow | Refers to | Arrow Fastener Co., LLC |
| HDKJ | Refers to | Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd. |
| OLEI | Refers to | Hangzhou Ole-Systems Co., Ltd. |
| Donghai Bank | Refers to | Ningbo Donghai Bank Co., Ltd. |
| PT Company | Refers to | PRIM'TOOLS LIMITED |
| GreatStar Group | Refers to | GreatStar Holding Group Co., Ltd. |
| Lista | Refers to | Lista Holding AG |
| Prime-Line | Refers to | Prime-Line Products, LLC |
| Lista | Refers to | Lista Holding AG |
| Haining GreatStar | Refers to | Haining GreatStar Intelligent Equipment Co., Ltd. |
| Zhongce Haichao | Refers to | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. |
| Hangcha Group | Refers to | Hangcha Group Co., Ltd. |
| Hangzhou Haichao | Refers to | Hangzhou Haichao Enterprise Management Partnership (Limited Partnership) |
| GreatStar Europe | Refers to | GreatStar Europe AG |
| JFB AG, BeA | Refers to | Joh. Friedrich Behrens AG |
| Geelong | Refers to | Geelong Holdings Limited |
| GDR | Refers to | Global Depository Receipts |
| CSRC | Refers to | China Securities Regulatory Commission |
Section II Company Profile and Key Financial IndicatorsI. Company Information
| Stock name | GreatStar | Stock code | 002444 |
| Stock exchanges on which the shares are listed | Shenzhen Stock Exchange | ||
| Name of the Company in Chinese | Hangzhou GreatStar Industrial Co., Ltd. | ||
| Short name of the Company in Chinese | GreatStar | ||
| Name of the Company in English (if any) | Hangzhou GreatStar Industrial Co., Ltd. | ||
| Short name of the Company in English (if any) | GreatStar | ||
| Legal representative of the Company | Qiu Jianping | ||
| Registered address | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | ||
| Post code at registered address | 310019 | ||
| Change history of registered address | Change from No. 35 Jiuhuan Road, Jianggan District, Hangzhou to No. 35 Jiuhuan Road, Shangcheng District, Hangzhou | ||
| Office address | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | ||
| Post code at office address | 310019 | ||
| Website | https://www.greatstartools.com/ | ||
| zq@greatstartools.com | |||
II. Contact persons and contact methods
| Sectary to the Board | Securities Affairs Representative | |
| Name | Zhou Siyuan | Lu Haidong |
| Address | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou |
| Tel | 0571-81601076 | 0571-81601076 |
| Fax | 0571-81601088 | 0571-81601088 |
| zq@greatstartools.com | zq@greatstartools.com |
III. Information Disclosure and Place for Inspection
| Websites of the stock exchanges for disclosure of annual report of the Company | http://www.szse.cn/ |
| Names and websites of media outlets for disclosure of annual report of the Company | Securities Times, Securities Daily, China Securities Journal, and cninfo (http://www.cninfo.com.cn) |
| Location for inspection of annual report of the Company | Office of the Board of Directors of the Company |
IV. Changes in Registration Information
| Unified social credit code | 91330000731506099D |
| Any change in main business lines since the Company's IPO | None |
| Any change in controlling shareholder | None |
V. Other Relevant InformationAccounting firm engaged by the Company
| Name of accounting firm | Pan-China Certified Public Accountants LLP (Special General Partnership) |
| Office address of accounting firm | Office Building T2, Run'ao Business Center, Intersection of Boao Road and Pinglan Road, Yingfeng Sub-district, Xiaoshan District, Hangzhou City, Zhejiang Province |
| Name of signing CPAs | Li Deyong and Hu Fujian |
Sponsor engaged by the Company for providing continuous supervision and guidance during the reporting period
□ Applicable √ Not Applicable
Financial consultant engaged by the Company for providing continuous supervision and guidance during thereporting period
□ Applicable √ Not Applicable
VI. Major Accounting Data and Financial IndicatorsWhether the Company needs to make retrospective adjustment or restatement of the accounting data for prior years?Yes □ NoReasons for retrospective adjustment or restatementChanges in accounting policies
| In 2023 | In 2022 | Increase or decrease over previous year | In 2021 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Operating income (RMB) | 10,929,992,802.32 | 12,610,189,590.33 | 12,610,189,590.33 | -13.32% | 10,919,683,344.37 | 10,919,683,344.37 |
| Net profit attributable to the shareholders of the listed Company (RMB) | 1,691,612,756.79 | 1,419,559,507.10 | 1,419,854,709.56 | 19.14% | 1,270,003,396.40 | 1,270,003,396.40 |
| Net profit after deduction of non-recurring gains and losses attributable to the shareholders of the listed Company (RMB) | 1,697,490,987.11 | 1,454,643,772.32 | 1,454,938,974.78 | 16.67% | 1,073,557,965.88 | 1,073,557,965.88 |
| Net cash flow from operating activities (RMB) | 2,125,854,925.65 | 1,631,836,642.39 | 1,631,836,642.39 | 30.27% | 18,632,169.67 | 18,632,169.67 |
| Basic earnings per | 1.4162 | 1.24 | 1.2448 | 13.77% | 1.13 | 1.13 |
| share (RMB/share) | ||||||
| Diluted earnings per share (RMB/share) | 1.4162 | 1.24 | 1.2448 | 13.77% | 1.13 | 1.13 |
| Weighted average ROE | 11.89% | 12.31% | 12.31% | -0.42% | 12.70% | 12.70% |
| End of 2023 | End of 2022 | Increase or decrease over end of previous year | End of 2021 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Total assets (RMB) | 19,683,797,271.17 | 18,579,554,796.77 | 18,596,305,792.11 | 5.85% | 17,307,154,886.67 | 17,307,154,886.67 |
| Net assets attributable to shareholders of the listed Company (RMB) | 14,847,980,075.62 | 13,397,947,543.83 | 13,398,132,756.12 | 10.82% | 10,598,896,746.70 | 10,598,896,746.70 |
Reasons for changes in accounting policies and situations of corrections of accounting errorsSince January 1, 2023, the Company has implemented the provision of "Accounting Treatment of No Applicationof Initial Recognition Exemption to Deferred Income Tax Related to Assets and Liabilities from IndividualTransactions" in the Interpretation No. 16 of Accounting Standards for Business Enterprises issued by the Ministryof Finance and made adjustments to individual transactions to which the provision applies from the beginning ofthe earliest reporting period appearing on the financial statements to which the provision applies to the first date onwhich the provision was applied. For lease liabilities and right-of-use assets recognized from individual transactionsto which the provision applies to at the beginning of the earliest reporting period appearing on the financialstatements to which the provision applies, and the estimated liabilities related to asset retirement obligations andcorresponding related assets, the Company has made adjustment to the opening retained earnings and other relevantfinancial statement items of the earliest reporting period appearing on the financial statements to which the provisionapplies with the cumulative effects in the case of occurrence of taxable and deductible temporary differences inaccordance with the provision and the Accounting Standards for Business Enterprises No. 18 - Income Taxes.The lower of the Company's net profit before and after deducting non-recurring gains and losses for the most lastthree fiscal years was negative, and the most recent audit report indicated uncertainty regarding the Company'sability to continue as a going concern
□ Yes √? No
The lower of net profit before and after deducting non-recurring gains and losses
□ Yes √? No
VII. Difference in Accounting Data under Domestic and Overseas Accounting Standards
1. Differences of net profit and net assets disclosed under International Accounting Standards (IFRS) andChinese Accounting Standards (CAS) in the financial reports
□ Applicable √ Not Applicable
There were no differences of net profit and net assets disclosed under International Accounting Standards (IFRS)and Chinese Accounting Standards (CAS) in the financial reports of the Company during the reporting period.
2. Differences of net profit and net assets disclosed under overseas accounting standards and ChineseAccounting Standards (CAS) in the financial reports
□ Applicable √ Not Applicable
There were no differences of net profit and net assets disclosed under overseas accounting standards and ChineseAccounting Standards (CAS) in the financial reports of the Company during the reporting period.VIII. Key Financial Indicators by QuarterUnit: RMB
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | |
| Operating income | 2,555,292,092.76 | 2,689,969,108.15 | 3,364,956,201.89 | 2,319,775,399.52 |
| Net profit attributable to shareholders of the listed Company | 302,441,087.90 | 570,109,868.37 | 633,634,145.08 | 185,427,655.44 |
| Net profit after deduction of non-recurring gains and losses attributable to the shareholders of the listed Company | 285,040,709.60 | 621,426,317.87 | 640,411,354.85 | 150,612,604.79 |
| Net cash flows from operating activities | 339,474,152.99 | 624,769,727.31 | 422,823,716.34 | 738,787,329.01 |
Are the above financial indicators or their totals significantly different from the relevant financial indicatorsdisclosed in the Company's previously released quarterly or interim reports?
□ Yes √? No
IX. Items and Amounts of Non-recurring Gains and Losses?√ Applicable □ Not ApplicableUnit: RMB
| Item | Amount in 2023 | Amount in 2022 | Amount in 2021 | Note |
| Profits or losses on disposal of non-current assets (including write-off of provision for assets impairment) | 1,655,224.56 | -24,332,379.79 | -4,813,678.28 | |
| Government grants included in profit or loss (excluding those closely related to operating activities of the Company and granted constantly affecting the Company's gains or losses in accordance with certain standards based on state policies) | 30,311,586.83 | 46,471,430.13 | 43,080,948.70 |
| Profits or losses from changes in fair value of value and disposal of financial assets and liabilities held by non-financial enterprises, excluding those arising from hedging business related to the Company's normal operating activities | -34,667,995.27 | -66,784,931.44 | 95,687,869.64 | |
| Profit or loss on entrusted investment or management of assets | 1,915,298.69 | 2,368,356.03 | 1,808,120.10 | |
| Reversal of impairment provision for accounts receivable subject to separate impairment testing | 96,458.50 | |||
| Gains arising from the investment cost in acquiring subsidiaries, associates and joint ventures being lower than the fair value of the invested entities' identifiable net assets entitled upon investment | 82,984,773.90 | |||
| Other non-operating revenue or expenditures | -3,873,470.17 | -12,290,983.36 | -127,210.71 | |
| Other profits or losses in compliance with the definition of non-recurring profits or losses | 12,733,584.83 | 502,892.56 | ||
| Less: Effect of income tax | -1,142,001.28 | -9,422,034.54 | 17,156,521.94 | |
| Non-controlling interest affected (after tax) | 2,457,334.74 | 2,671,376.16 | 5,521,763.45 | |
| Total | -5,878,230.32 | -35,084,265.22 | 196,445,430.52 | -- |
Details of gain or loss items that fall into the category of non-recurring gains and losses:
□ Applicable √ Not Applicable
The Company has no other gain or loss items that fall into the category of non-recurring gains and losses.
Notes for the situation that the non-recurring gain or loss items as illustrated in the Explanatory Announcement No.1on Information Disclosure for Companies Offering Their Securities to the Public – Non-recurring Profits or lossesare defined as recurring profits or losses
□ Applicable √ Not Applicable
None of non-recurring gain or loss items as illustrated in the Explanatory Announcement No.1 on InformationDisclosure for Companies Offering Their Securities to the Public – Non-recurring Profits or losses are defined bythe Company as its recurring profits or losses during the reporting period.
Section III Discussion and Analysis of the Management
I. Industry Overview during the Reporting PeriodThe Company has been engaged in the TOOLS & storage industry. Its products mainly include hand tools & storageas well as power tools & laser measurement, which are mainly used in the fields of home maintenance, constructionengineering, vehicle maintenance, surveying and mapping, etc. The home building, repair, and maintenance industryis the most important application channel with the highest proportion. By the group of clients, the industry may bedivided into consumer tools & storage and industrial tools & equipment.In North America and much of the Europe, due to the extensive use of detached houses and the large square footageper inhabitant, the repairing and maintenance cost of residential houses is high. Given the high cost of labor,residents in the Europe and North America prefer to repair and maintain houses and outbuildings on their own,giving rising to the popular DIY style in western culture. Considering the large number of cars held by Europeanand American families, the routine repair and maintenance tasks, including parts inspection and replacement, alsoplay an important role in the DIY of the families. Various tools, as repair and maintenance necessities, are highlyneeded by families in North America and Europe for professional and DIY purposes, which makes the Europe andNorth America the most important market with the highest share of tools in the globe.Tool industry, the oldest industry, has been growing with the human society. For the past century, with the increasingindustrialization, tools have been improved and refined steadily as a requisite support to manufacture supplies andcommodities. Thanks to the rigid demand and stable replacement cycle, the sector of industrial tools has beengrowing steadily. Regardless of the financial crisis in 2008, the industry maintained stable upward momentumaligned with GDP growth after short-term fluctuations.In 2023, the high interest rate in Europe and the United States suppressed real estate trading and industrialdevelopment, which forced the end consumption of the tool industry to continue the downward trend in the secondhalf of 2022. More fatally, as the global shipping system went normal in 2022, massive commodities stuck on theroad finally arrive at the channel retailers, including large superstores, which lifted the inventory-to-sales ratio,hence the commencement of extensive destocking in 2023. The overreaction in consequence resulted in a sharpdrop of orders, and thus to the Company suffered from the least year-on-year growth for 18 months, the worst recordfor the past 30 years.In 2024, considering the uncertainty about the Fed's cutting interest rate, the terminal demand of the industry willcontinue to fluctuate at a low level. However, as the inventories of channel retailers fall to a historical low, it isexpected to see demand recovery and restocking in the second half of 2024 or in early 2025.II. Principal Business of the Company during the Reporting PeriodDuring the reporting period, the Company continued the development of its main business in consumer tools &storage in Europe and the United States and also industrial tools & equipment, and vigorously promoted theimprovement of product structure and business models. In the face of the sharp decline of ODM business, theCompany made every effort to develop its OBM business where we logged an increase in market share against thedownward trend (except the storage) and maintained the growth of hand tools and power tools.During the reporting period, the Company registered an operating revenue of RMB10,929,992,802, a year-on-yeardecrease of 13.32%. In 2023, the net profit attributable to shareholders of the listed Company amounted to RMB1,691,612,756, with a year-on-year increase of 19.14%, and the net profit attributable to shareholders of the listedCompany after deducing non-recurring gains and losses amounted to RMB 1,697,490,987, with a year-on-yearincrease of 16.67%.III. Core Competencies
1. Innovation advantage
Innovation has always been the core of the Company, while variety enrichment been the key driver for the growth.The Company has an experienced R&D team for professional tools and non-tool consumer goods, which has beencommitted to developing and innovating new products, upholding the concept that it's the details that make thedifference in refining products in terms of functionality and added value, and working to ensure the long-term corecompetitiveness of the Company. During the reporting period, with an investment of RMB 323 million in R&D, theCompany designed 1,828 new products, applied for more than 200 new patents and granted more than 200 new
patents; its subsidiary, HDKJ, was rated as a "Small Giant" by the Ministry of Industry and Information Technologyof the People's Republic of China. The Company developed a variety of new products including knives and pliers,cordless lithium battery power tools and related spare parts, laser level rulers, and folding knives, all of which arehighly recognized in the market. During the reporting period, the Company continued extensive innovation in powertools, especially lithium battery power tools. Based on scores of cost-effective and innovative products, theCompany obtained orders for cordless lithium battery power tools and related spare parts from large retailers in theUnited States. Thanks to its innovation advantage, the Company has responded to and seized market opportunitiesin a timely manner, continued to gain market share and maintained long-term and stable development in thechangeable global tool industry.
2. Brand advantages
The Company specializes in residential durable consumer goods for households and industrial products forprofessionals. Brand is the most compelling guarantee for the Company to provide consumers with products andservices over the long term, so the Company has been committed to acquiring global leading brands and buildingand developing its original brands. During the reporting period, the Company acquired TESA (Swiss) andSCRUFFS (UK) for the purpose of developing high-precision measuring instruments and personal tooling products.Meanwhile, the Company spared no effort in developing its original brands and enhancing their brand influence andbrand advantage. Its original brands have achieved stable growth. The sales revenues of brands such as WORKPRO,DuraTech, Everbrite, and Prexiso have achieved significant YoY growth. In addition, the sales revenue of theCompany's original brands accounted for approximately 50% in general. The brand advantage not only furtherenhances the international competitiveness of the Company's products, but also effectively improves the Company'sgross profit margin and business stability, thus ensuring the long-term healthy development of the Company.
3. Channel advantages
The sales channels and the trust of clients are the basis for the continuous development of the Company. TheCompany's diversified product mix and sustained innovation capability can not only satisfy the one-stop shoppingdemand of channel clients to the greatest extent possible, but also constantly reduce its procurement andManagement costs and improve the loyalty of its channel clients. The Company has been one of the largest suppliersof tools and storage to many large supermarket chains such as The Home Depot, Walmart and Lowe's in the UnitedStates, Kingfisher in Europe and CTC in Canada. It has also expanded its product categories based on these clients.There are now more than 20,000 large supermarket chains worldwide that sell a wide range of the Company'sproducts, including those for hardware, building materials and automotive parts. These channels effectivelycontribute to the rapid development of various innovative products of the Company. Through three parallel measures– direct cross-border e-commerce operations, acquisition of European and American distribution channels, andestablishment of Asia-Pacific distribution channels, GreatStar has effectively increased the proportion of direct-to-customer (DTC) business, prioritizing retail customer needs and directly reaching end retail customers. This has notonly effectively enhanced the value proposition of individual products but has also provided firsthand clientfeedback to directly inform R&D. With the above-mentioned channel advantage, the Company is on track tocontinuously develop new products and expand product categories with good market prospects. It has achievedbreakthroughs in some major product categories such as laser measurement, storage and power tools.
4. Internationalization advantages
After years of development, the Company has initially developed and improved its global supply chain Managementsystem and established solid cooperation with thousands of suppliers worldwide. It can ensure that its rapid responseto market demand and timely delivery of all kinds of large orders will not be affected by its production capacity.Backed up by the perfect warehousing and distribution system in China, the United States, and Europe and 21manufacturing bases worldwide, the Company is capable of procurement, manufacturing, and distribution aroundthe globe. The perfect distributed manufacturing and processing system of the Company can greatly reduce the costsof manufacturing and purchase, enhance the competitiveness of its products in the end market, meet variousdemands, and respond to the complex external conditions. The Company is picking up as a global resourceallocation Company integrating local services in Europe and South America, industrial chains for manufacturing inAsia and R&D Management in China.
IV. Analysis of Principal Business
1. Overview
During the reporting period, the high interest rate in Europe and the United States suppressed real estate trading andindustrial development, which forced the end consumption of the tool industry to continue the downward trend inthe second half of 2022. More fatally, as the global shipping system went normal in 2022, massive commoditiesstuck on the road finally arrive at the channel retailers, including large superstores, which lifted the inventory-to-sales ratio, hence the commencement of extensive destocking in 2023. The overreaction in consequence resulted ina sharp drop of orders.In active response to such adverse situation, the Company took direct and effective marketing strategies using itsoriginal brands, racking up certain results in expanding distribution channels offline and online and attainingincrease in sales of original brands. Additionally, the Company clocked up new breakthroughs in some businessespertinent to cost-effective products. With the RMB exchange rate and costs are getting favorable, the Company'sprofitability is becoming reasonable. During the reporting period, the Company registered an operating revenue ofRMB10,929,992,802, a year-on-year decrease of 13.32%. In 2023, the net profit attributable to shareholders of thelisted Company amounted to RMB 1,691,612,756, with a year-on-year increase of 19.14%, and the net profitattributable to shareholders of the listed Company after deducing non-recurring gains and losses amounted to RMB1,697,490,987, with a year-on-year increase of 16.67%. The performance of each business segment is as follows:
1. Hand Tools & Storage
During the reporting period, the Company extended the coverage of its offline distributors, especially in thecountries and regions under the Belt and Road Initiative, constantly perfected its online channels on the globe, whichfurther enhanced the influence of the Company's own brands and greatly rose the market share; optimized innovativeR&D strategies and leveraged new varieties and products to provide clients with more competitive products, whichfurther increased its market share; actively applied Artificial Intelligence Generated Content tools for contentcreation and brand promotion to enhance the image of its original brands.Since clients are actively reducing inventories, ODM sales volume of storage declined sharply year-on-year. Listacontinued to stabilize by leveraging its brand premium and actively developing new products and markets.
2. Power Tools & Laser Measurement
During the reporting period, the Company acquired again the confirmation of a large retailer to purchase powertools. Thanks to the new cost-effective products and innovation from various aspects, the Company attained greatsales of some power tools, with significant increase of overall market share. The Company's original brand of powertools, with substantial year-on-year increase, is becoming one of the brands highly recognized by consumers inEurope and the United States.Despite the annual sales decline due to clients' destocking, the Laser Department strove for new customers and neworders for the sake of market share upon industry recovery by the following means: Improving distribution channelsand enhancing brand recognition and influence with the help of online channels and new media; integrating R&Dsystem and adjusting product advantages as needed by the market to enhance product attractiveness; expandingapplication scenarios of products to seek diversified orders from the market.
2. Revenue and costs
(1) Composition of operating revenue
Unit: RMB
| In 2023 | In 2022 | YoY increase or decrease | |||
| Amount | Proportion in operating income | Amount | Proportion in operating income | ||
| Total operating income | 10,929,992,802.32 | 100% | 12,610,189,590.33 | 100% | -13.32% |
| By industry | |||||
| Tools and hardware | 10,865,309,434.63 | 99.41% | 12,545,286,576.78 | 99.49% | -13.39% |
| Other income | 64,683,367.69 | 0.59% | 64,903,013.55 | 0.51% | -0.34% |
| By product | |||||
| Hand Tools & Storage | 8,066,150,767.41 | 73.80% | 10,004,744,537.61 | 79.34% | -19.38% |
| Power Tools & Laser Measurement | 2,799,158,667.22 | 25.61% | 2,540,542,039.17 | 20.15% | 10.18% |
| Other income | 64,683,367.69 | 0.59% | 64,903,013.55 | 0.51% | -0.34% |
| By region | |||||
| America | 6,968,627,907.78 | 63.76% | 7,892,263,869.75 | 62.59% | -11.70% |
| Europe | 2,791,945,594.80 | 25.54% | 3,296,852,123.29 | 26.14% | -15.31% |
| Other | 479,301,687.92 | 4.39% | 634,667,980.89 | 5.03% | -24.48% |
| Domestic (China) | 625,434,244.13 | 5.72% | 721,502,602.85 | 5.72% | -13.32% |
| Other income | 64,683,367.69 | 0.59% | 64,903,013.55 | 0.51% | -0.34% |
| By sales model | |||||
| OBM | 5,214,848,471.29 | 47.71% | 5,087,869,546.67 | 40.35% | 2.50% |
| ODM | 5,650,460,963.34 | 51.70% | 7,457,417,030.11 | 59.14% | -24.23% |
| Other income | 64,683,367.69 | 0.59% | 64,903,013.55 | 0.51% | -0.34% |
(2) Industries, products, regions, or sales models that account for more than 10% of operating revenue oroperating profit?√ Applicable □ Not ApplicableUnit: RMB
| Operating income | Operating cost | Gross margin | YoY increase or decrease in operating income | YoY increase or decrease in operating cost | YoY increase or decrease in gross margin | |
| By industry | ||||||
| Tools and hardware | 10,865,309,434.63 | 7,423,231,250.13 | 31.68% | -13.39% | -19.70% | 5.37% |
| By product | ||||||
| Hand Tools & Storage) | 8,066,150,767.41 | 5,218,734,848.42 | 35.30% | -19.38% | -28.82% | 8.59% |
| Power Tools & laser Measurement) | 2,799,158,667.22 | 2,204,496,401.71 | 21.24% | 10.18% | 15.29% | -3.49% |
| By region | ||||||
| America | 6,968,627,907.78 | 4,840,609,092.81 | 30.54% | -11.70% | -15.74% | 3.33% |
| Europe | 2,791,945,594.80 | 1,819,939,673.87 | 34.81% | -15.31% | -22.96% | 6.47% |
| By sales model | ||||||
| OBM | 5,214,848,471.29 | 3,594,939,343.35 | 31.06% | 2.50% | -6.18% | 6.37% |
| ODM | 5,650,460,963.34 | 3,828,291,906.78 | 32.25% | -24.23% | -29.27% | 4.83% |
Under the circumstances of statistical standard adjustment for the Company's principal business data in the reportingperiod, the Company's principal business data in the latest one year were adjusted based on the statistical standardat the end of the reporting period
□ Applicable √ Not Applicable
(3) Whether physical sales revenue exceeds service revenue
?Yes □ No
| Industry classification | Item | Unit | In 2023 | In 2022 | YoY increase or decrease |
| Tools and hardware | Sales volume | PCS | 467,668,618 | 513,462,176 | -8.92% |
| Production volume | PCS | 465,149,330 | 523,831,646 | -11.20% | |
| Inventory volume | PCS | 121,425,975 | 123,945,263 | -2.03% | |
Reasons for changes of 30% or more in related data
□ Applicable √ Not Applicable
(4) Performance status of significant sales contracts and major procurement contracts signed by theCompany as of the end of this reporting period
□ Applicable √ Not Applicable
(5) Composition of operating costs
Industry and product classificationIndustry and product classificationUnit: RMB
| Industry classification | Item | In 2023 | In 2022 | YoY increase or decrease | ||
| Amount | Proportion of operating costs | Amount | Proportion of operating costs | |||
| Tools and hardware | / | 7,423,231,250.13 | 99.59% | 9,244,404,166.19 | 99.76% | -19.70% |
| Other operating costs | / | 30,890,842.06 | 0.41% | 22,518,138.56 | 0.24% | 37.18% |
Unit: RMB
| Product classification | Item | In 2023 | In 2022 | YoY increase or decrease | ||
| Amount | Proportion of operating costs | Amount | Proportion of operating costs | |||
| Hand Tools & Storage | / | 5,218,734,848.42 | 70.01% | 7,332,189,779.90 | 79.12% | -28.82% |
| Power Tools & laser Measurement | / | 2,204,496,401.71 | 29.58% | 1,912,214,386.29 | 20.63% | 15.29% |
| Other operating costs | / | 30,890,842.06 | 0.41% | 22,518,138.56 | 0.24% | 37.18% |
NoteNone
(6) Whether there have been changes in the consolidation scope during the reporting period?Yes □ NoRefer to Section X, Clause VIII for details
(7) Details regarding significant changes or adjustments in the Company's business, products, or servicesduring the reporting period
□ Applicable √ Not Applicable
(8) Overview of main sales clients and main suppliers
Main sales clients of the Company
| Total sales amount from top five clients (RMB) | 5,011,763,646.63 |
| Proportion of total annual sales from top five clients | 45.85% |
| Proportion of related party sales in sales from top five clients to total annual sales | 0.00% |
Information of top five clients
| Serial No. | Client name | Sales amount (RMB) | Proportion of total annual sales |
| 1 | 1st | 2,059,791,262.37 | 18.84% |
| 2 | 2nd | 1,355,096,167.31 | 12.40% |
| 3 | 3rd | 1,117,688,761.50 | 10.23% |
| 4 | 4th | 272,149,524.96 | 2.49% |
| 5 | 5th | 207,037,930.49 | 1.89% |
| Total | -- | 5,011,763,646.63 | 45.85% |
Additional information about main clients
□ Applicable √ Not Applicable
Main suppliers of the Company
| Total purchase amount from top five suppliers (RMB) | 310,973,642.54 |
| Proportion of total annual purchases from top five suppliers | 5.19% |
| Proportion of related party purchases in purchases from top five suppliers to total annual purchases | 0.00% |
Information of top five suppliers
| Serial No. | Supplier name | Purchase amount (RMB) | Proportion of total annual purchase |
| 1 | 1st | 74,106,756.45 | 1.24% |
| 2 | 2nd | 70,613,529.55 | 1.18% |
| 3 | 3rd | 64,319,963.96 | 1.07% |
| 4 | 4th | 56,180,975.27 | 0.94% |
| 5 | 5th | 45,752,417.31 | 0.76% |
| Total | -- | 310,973,642.54 | 5.19% |
Additional information about main suppliers
□ Applicable √ Not Applicable
3. Expenses
Unit: RMB
| In 2023 | In 2022 | YoY increase or decrease | Explanation of significant change |
| Selling expenses | 851,283,975.98 | 757,228,439.80 | 12.42% | The increase in sales expenses is mainly due to the increase in expenditures on personnel salaries, advertising and promotion expenses, as well as office expenses |
| Administrative expenses | 776,183,642.34 | 760,961,439.86 | 2.00% | |
| Financial expenses | -207,501,523.06 | -110,855,174.76 | 87.18% | 1. Management of idle funds resulted in increased interest income; 2. Depreciation of the RMB led to an increase in exchange gains on financial expenses |
| R&D expenses | 322,536,093.62 | 319,444,535.16 | 0.97% |
4. Research and development investment
?√ Applicable □ Not Applicable
| Name of main research and development project | Project purpose | Project progress | Intended goals | Expected impact on Company's future development |
| Automatic slope leveling red light laser leveling instrument | Improving processes | Completed | Increasing sales volume | Increasing the Company's profits |
| High-brightness green light 12-line on-wall laser leveling instrument | Improving processes | Completed | Increasing sales volume | Increasing the Company's profits |
| Application of PVD vacuum coating on aluminum alloy lamps | Enhancing technical requirements for products | Completed | Increasing output value | Increasing the Company's profits |
| Development of multifunctional disassembly and assembly storage box series | Developing a series of multifunctional disassembly and assembly storage boxes with a modular structure to effectively reduce product packaging volume, thereby cutting costs and enhancing market competitiveness. Upon successful R&D and industrialization, | Completed | Developing new products | Expanding product lines and increasing revenues |
| estimated annual sales volume is 10,000 units, with projected annual sales revenue of 3 million RMB, achieving an average annual profit of 250,000 RMB. | ||||
| Research and development of collapsible multi-purpose outdoor utility cart series | Developing a collapsible multi-purpose outdoor utility cart series with simplified folding mechanisms and assembly methods to facilitate easier assembly and folding, while maintaining stability when loaded. Utilizing bolt and latch connections to reduce consumer installation time and assembly difficulty. Upon successful R&D and industrialization, estimated annual sales volume is 8,000 units, with projected annual sales revenue of 9.6 million RMB, achieving an average annual profit of 960,000 RMB. | Completed | Developing new products | Expanding product lines and increasing revenues |
| Development of foldable miter saw stand | Developing a foldable miter saw stand with a proprietary slot sliding mechanism and reverse latch technology to easily adjust the gaps at both ends of the product and save storage space when folded. Upon successful R&D and | Completed | Developing new products | Expanding product lines and increasing revenues |
| industrialization, estimated annual sales volume is 20,000 units, with projected annual sales revenue of 10 million RMB, achieving an average annual profit of 900,000 RMB. | ||||
| Development of multifunctional combination workstation | Developing a multifunctional combination workstation with independently made cabinets and universal note-support pillars on hanging boards for convenient consumer customization and installation. Upon successful R&D and industrialization, estimated annual sales volume is 500 units, with projected annual sales revenue of 5 million RMB, achieving an average annual profit of 800,000 RMB. | Completed | Developing new products | Expanding product lines and increasing revenues |
| Development of intelligent blade tool management equipment | Developing intelligent blade tool management equipment | To be completed | Developing new products | Expanding product lines and increasing revenues |
| Research and development of ultra-high-power professional grade blast furnace (10KW) | Developing the ultra-high-power professional-grade blast furnace (10KW) | To be completed | Developing new products | Expanding product lines and increasing revenues |
| Development of industrial-grade heavy-duty toolboxes | Developing industrial-grade heavy-duty toolboxes | To be completed | Developing new products | Expanding product lines and increasing revenues |
| Integrated application and research and development of laser long-distance ranging technology | Improving production efficiency and developing products with a new mode of operation | Completed | Reducing labor and improving construction efficiency | Innovative products, filling market gaps |
| and laser leveling instrument | ||||
| Application and research and development of large-angle high-precision attitude control sensors in laser measurement instruments | High-precision and high-value innovative technology | Completed | Platform technology, expanding new clients | Innovative platforms, filling market gaps |
| Application and research and development of high-precision panoramic three-dimensional laser imaging system based on single-photon array | Application of a full waveform measurement technology | To be completed | Platform technology for laser products | Innovative platforms, increasing product added value |
| Application and research and development of high-precision new long-focal-length optical path system platform for line and point projection instruments | Increasing product added value | To be completed | Application of new technologies, exploring new clients and increasing revenues | Enriching product lines |
| System application and research and development of 2D/3D laser ranging with intelligent receivers equipped with high-precision position/angle sensors | Increasing product added value | To be completed | Application of new technologies, exploring new clients and increasing revenues | Enriching product lines |
| The development and industrialization of 3D visual sensor with high-resolution and large imaging range | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Large injection mold based on "deterministic mold airbag polishing technology" | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application of modified PETG material in transparent toolboxes | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application of metal surface nano | Enhance product functionality or | Completed | Develop new products, and | Stabilize market, expand customer |
| molding technology (NMT) in tool products | performance | enhance product manufacturing technology | base, enhance market competitiveness | |
| Process solution for application of LED flexible light strips | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application of eco-friendly wood plastic injection molding technology in hand tool products | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Development and research of rapid folding, height-adjustable efficient flooring nail gun | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application of rare earth strengthened high-strength, low-cost, high-aluminum zinc alloy in tools | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Development and application of smart tool cabinet based on ultra-high frequency RFID technology | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application of ellipsoid algorithm in laser digital inclinometer | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application of smart chips in hand tools | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application research of high-power laser drive module in lighting products | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application of high-strength, wear-resistant, fatigue-resistant CrMo steel in high-end pliers products | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application of super-hard TaC diamond coating technology on blade tools | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Development and application of portable high-performance stone cutting tools | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Development and application of high-torque external rotor brushless motor in power tools | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Development and application of clean products based on new energy technologies | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application of AI facial recognition technology into tool storage | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Application and development of high-precision laser ranging chips in multi-functional laser measurement tools | Enhance product functionality or performance | Completed | Develop new products, and enhance product manufacturing technology | Stabilize market, expand customer base, enhance market competitiveness |
| Development of Phase II toolmall cloud platform project | Enhancing system functionality and operational efficiency | Completed | Meeting the needs of multi-mode business expansion | Fulfilling business development needs |
| International e-commerce middleware system | Enhancing system functionality and operational efficiency | Completed | Meeting the needs of multi-mode business expansion | Fulfilling business development needs |
| Surface treatment process research for die-cast surface of hand tool double-sided blade rack | Improving product performance and stability | Completed | Ensuring product stability | Expanding product lines |
| Research on multi-position continuous riveting process for extrusion gun shaped sheet metal parts | Increasing production efficiency and reducing labor costs | Completed | Reducing the number of workers | Expanding product lines |
| Development of integrated handheld rechargeable flashlight with touch digital focus functionality | Improving product performance and stability | Completed | Ensuring product stability | Expanding product lines |
| Development of high waterproof grade handheld high-power LED | Energy-saving and environmentally friendly practices, improving product | To be completed | Ensuring product stability | Expanding product lines |
| lighting fixtures | performance and stability | |||
| Infinitely rotatable handheld clamp with a main body that can freely rotate according to usage conditions | Improving product performance and stability | Completed | Ensuring product stability | Expanding product lines |
| Design and application of automatic feeding multi-position progressive die for sheet metal parts | Increasing production efficiency and reducing labor costs | To be completed | Reducing the number of workers | Further enhancing automation in production |
| Development of drive circuit for handheld device with power bank and multi-functional LED features | Improving product performance and stability | Completed | Ensuring product stability | Expanding product lines |
| Application and research of polymer stackable box technology | Saving labor costs and improving production efficiency | To be completed | Saving labor costs and improving production efficiency | Further advancing automation in production/Increasing the Company profits/Boosting revenue/Securing stable market orders/Improving product coating adhesion to reduce scrap rates/Enhancing production efficiency |
| Application and research of quick break structure for art knife blades | Saving labor costs and improving production efficiency | To be completed | Saving labor costs and improving production efficiency | Further advancing automation in production/Increasing the Company profits/Boosting revenue/Securing stable market orders/Improving product coating adhesion to reduce scrap rates/Enhancing production efficiency |
| Application and research of polymer anti-unbuckling technology | Saving labor costs and improving production efficiency | To be completed | Saving labor costs and improving production efficiency | Further advancing automation in production/Increasing the Company profits/Boosting revenue/Securing stable market orders/Improving |
| product coating adhesion to reduce scrap rates/Enhancing production efficiency | ||||
| Research and application of polymer automatic tensioning device | Saving labor costs and improving production efficiency | To be completed | Saving labor costs and improving production efficiency | Further advancing automation in production/Increasing the Company profits/Boosting revenue/Securing stable market orders/Improving product coating adhesion to reduce scrap rates/Enhancing production efficiency |
| Application and research of automatic assembly technology for plastic handle tail nails | Saving labor costs and improving production efficiency | To be completed | Saving labor costs and improving production efficiency | Further advancing automation in production/Increasing the Company profits/Boosting revenue/Securing stable market orders/Improving product coating adhesion to reduce scrap rates/Enhancing production efficiency |
| Development of an eight-in-one tiger wrench | This eight-in-one tiger wrench features four specifications on each side, utilizing spring steel balls for specification positioning | Completed | The tiger wrench has a total of 8 torque heads on both ends, allowing for multiple specification uses in one tool, capturing a certain market share of specialty wrenches | Increase revenue |
| Research and development of new DT water pump pliers | Adding dimples for orientation on traditional water pump pliers, upgrading functionality for easier and more aesthetically pleasing use | Completed | After the functional upgrade of the new DT water pump pliers, they become easier to use and more visually appealing, gaining a certain market share upon market release | Increase revenue |
| Research and development of VDE electrician screwdrivers | VDE insulated screwdrivers feature internally forged components and an | Completed | VDE insulated screwdrivers, with an external double-layered integral | Increase revenue |
| externally double-layered integral rubber coating, insulating currents above 1000V to provide operators with safety assurance. | rubber coating, offer safety assurance to operators, securing a certain market share in the electrician screwdriver market | |||
| Development of standard four-in-one ratchet wrench | This ratchet wrench has dual-headed reversible functionality, with two specifications set within each ratchet ring on both heads, enabling one wrench to handle four different nut tightening and loosening functions. | Completed | By enabling one wrench to handle four different nut specifications, the efficiency of the wrench is enhanced, providing convenience and speed, capturing a certain market share in the ratchet wrench market | Increase revenue |
| Development of semi-automatic snap ring assembly machine | Addressing the challenge of difficult snap ring assembly in ratchet wrenches, this machine is designed to clamp the ratchet ring and snap ring using pneumatic cylinders, with a head cylinder pushing the ratchet ring into the wrench head to complete the assembly | Completed | This design enhances the efficiency of snap ring assembly in ratchet wrenches, capturing a certain market share in the assembly market for ratchet wrenches. | Advance automation further |
| Research and development of full-contact multifunctional quick wrench | This wrench design employs a method where two wrench bodies separate and open, providing ratchet effects when tightening or loosening bolts. | Completed | The unique design of this quick wrench allows for rapid opening and generates a ratchet effect, offering practicality and innovation, thus securing a certain market share. | Increase revenue |
| Development of novel anti-slip dual-use wrench | This wrench features an S-shaped mouth with toothed flange and a V-shaped structure on top of the traditional open design, providing anti-slip functionality during usage, eliminating the common | Completed | The wrench prevents bolts from slipping during tightening and loosening, enhancing anti-slip effectiveness, thus securing a certain market share post-sales. | Increase revenue |
| slipping issue associated with conventional open-end wrenches. | ||||
| Research and development of novel anti-slip offset spanner | This novel anti-slip offset spanner, based on the conventional hexagonal design, incorporates grooves on three sides to enhance bolt anti-slip functionality | Completed | This anti-slip offset spanner effectively prevents slipping during bolt tightening and loosening processes, achieving good anti-slip results and potentially capturing a certain market share upon sales | Increase revenue |
| Large-scale multi-channel multi-reflection optical path scanning perception laser sensing detection device | Development of intrinsically safe multi-line laser radar level sensor for mining use | Completed | Enhancing the company's economic benefits | Increasing mass production of company products, expanding production lines, and enhancing product competitiveness |
| Heavy-duty multi-channel three-dimensional spatial scanning perception laser sensing detection device | Development of intrinsically safe multi-line laser radar level sensor for mining use | Completed | Enhancing the company's economic benefits | Increasing mass production of company products, expanding production lines, and enhancing product competitiveness |
| Lightweight ultra-small near-distance multi-angle scanning perception laser sensing detection device | Developing new products through projects, including a V-series laser radar and a C-series laser radar | Completed | Enhancing the company's economic benefits | Increasing mass production of company products, expanding production lines, and enhancing product competitiveness |
| High-precision near-distance scanning mapping laser sensing detection device | Developing a high-precision mapping laser product with millimeter-level accuracy for digital modeling in the construction industry | To be completed | Enhancing the company's economic benefits | Increasing mass production of company products, expanding production lines, and enhancing product competitiveness |
| Redundant safety near-distance scanning perception laser sensing detection device | Developing a safety radar | To be completed | Enhancing the company's economic benefits | Increasing mass production of company products, expanding production lines, and enhancing product competitiveness |
| Small pure solid-state near-distance scanning perception laser sensing detection device | Developing a C-series laser radar for low-cost commercial laser radar applications | To be completed | Enhancing the company's economic benefits | Increasing mass production of company products, expanding production lines, and enhancing product competitiveness |
| Development of efficient and energy-saving vacuum cleaners | Making vacuum cleaners more energy-efficient and environmentally friendly | Completed | Enhancing the company's economic benefits | Increase revenue |
| Development of silent high-flow vacuum cleaners | Reducing the noise of vacuum cleaners | Completed | Enhancing the company's economic benefits | Increase revenue |
| Research and development of dual-purpose pipes and vacuum cleaners | Enhancing the cleaning effectiveness of vacuum cleaners | Completed | Enhancing the company's economic benefits | Increase revenue |
| Improvement and development of self-sealing drainage covers for vacuum cleaners | Improving the usability of vacuum cleaners | Completed | Enhancing the company's economic benefits | Increase revenue |
| Application of immersion-free paint in efficient aluminum motors | Developing efficient vacuum motors using aluminum paint winding (more efficient than existing copper wire motors) | Completed | Enhancing the company's economic benefits | Increase revenue |
| Application of fluid dynamics-based efficient and energy-saving new impellers in vacuum cleaners | Enhancing the suction power of vacuum cleaners while reducing energy consumption | Completed | Enhancing the company's economic benefits | Increase revenue |
| Research and development of children's mechanical tool components | Developing more convenient and efficient products | Completed | Enhancing the company's economic benefits | Increase revenue |
| Application of robots in the welding of vacuum cleaner iron barrels | Improving production efficiency | Completed | Enhancing the company's economic benefits | Further automation of production |
| Research on vacuum cleaner nozzles with pet brushes | Effectively completing the combing and collection of pet hair | To be completed | Enhancing the company's economic benefits | Expand the product line |
| Development of vacuum cleaners suitable for use in | Enabling lighting functions of vacuum cleaners | To be completed | Enhancing the company's economic benefits | Expand the product line |
| dark environments | ||||
| Research and development of high-efficiency wireless charging technology for power tools and cabinets | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of leak-proof RFID technology cabinets | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of smart password lock combination cabinets | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of high-strength VCM laminated board toolboxes | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of smart following technology tool carts | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of modular tool storage | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of smart voice tool carts | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of a toolbox product with automatic drawer welding functionality | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of a toolbox product with box body welding and shaping machine functionality | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of radar sensing tool carts | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and development of rapid installation framework products | Developing new products | To be completed | Developing new products | Expand product lines, increase company revenue, and profit |
| Research and | Enhancing product | To be completed | Enhancing product | Expand product |
| development of high-performance wear-resistant anti-scratch coating materials | features | features | lines, increase company revenue, and profit | |
| Research and development of outdoor energy storage technology for cabinet products | Enhancing product features | To be completed | Enhancing product features | Expand product lines, increase company revenue, and profit |
| Project 310 (new 600 series) | Successor to the old series | To be completed | Increasing sales and reducing production costs | Increasing sales and reducing production costs |
| Project 330 (new 780 series) | Successor to the old series | To be completed | Increasing sales and reducing production costs | Increasing sales and reducing production costs |
| Project 340 (new 830 series) | Successor to the old series | To be completed | Increasing sales and reducing production costs | Increasing sales and reducing production costs |
| Battery nail gun | New tool/new technology | To be completed | Increasing sales of fasteners | Increasing sales of fasteners |
| Battery-powered sorted screwdriver | A new tool succeeding tethering devices | To be completed | Increasing market share of screw sorting products | Increasing market share of screw sorting products |
| Automatic screwdriver | Tools used for automatic tightening | To be completed | Expanding the autotec product portfolio and increasing the share in the automatic screws market | Expanding the autotec product portfolio and increasing the share in the automatic screws market |
| Skater Vario | New skater (semi-automatic tool), considering standardization changes | To be completed | Increasing sales and maintaining the existing market share | Increasing sales and maintaining the existing market share |
| Automatic technology configurator | Front-end and back-end office tools, reducing labor in autotec order processes | Completed | Reducing management workload | Reducing management workload |
| RFiD serial numbers | Scannable serial numbers to optimize processes | To be completed | Reducing management workload | Reducing management workload |
| Connection box | Digital cone-shaped box for collecting data from autotec tools | To be completed | Increasing sales with the benefits of preventive maintenance | Increasing sales with the benefits of preventive maintenance |
| "ISO Safety" project | Tools with special security mechanisms | To be completed | Increasing sales and market share | Increasing sales and market share |
| New version - eLock | Firmware version 40, Lista Access version 3.6.0 Function improvements | To be completed | Product improvements | Sales of functional products |
| New stretching machine (OLMA) | Drawers are manufactured with | Completed | More efficient production | Reducing manufacturing costs |
| the new machine (OLMA) | and improving quality | |||
| Xinfengdeng and Shiliciwangdanlage | The partition materials are manufactured on the new machine (OLMA) | Completed | More efficient production | Reducing manufacturing costs and improving quality |
| Hinge fixture Specially designed for bicycle shaping brackets | Supplement to the product series | To be completed | Entering more markets | Increasing sales |
| Dialogue table Specially designed for bicycle workshops | Supplement to the product series | To be completed | Entering more markets | Increasing sales |
| Cleaning stations and accessories | Supplement to the product series | To be completed | Entering more markets | Increasing sales |
| Disposable hinged door cabinet | Supplement to the product series | To be completed | Entering more markets | Increasing sales |
| Solo, duet New-type electrically adjustable height desk | Reducing procurement and manufacturing costs. Shorten delivery times. The entire series of Lista Erlen | To be completed | Entering more markets | Increasing sales |
| Compact workbench | Cost-effective products that clients can assemble themselves | To be completed | Entering more markets | Increasing sales |
| Vertically pull-out drawers | Higher load capacity. New product 500 kg, previous models 200 kg | To be completed | Increasing sales and maintaining the existing market share | Increasing sales |
| SmartBox (Small LEC Cabinet) | Supplement to the LEC series | Completed | Entering more markets | Increasing sales |
| RFID tags (integrated with GS system) | RFID tags in drawer cabinets | To be completed | Entering more markets | Increasing sales |
| LEC's ERLOX carriages | Reducing manufacturing costs with high quality and eco-friendliness | To be completed | More efficient production | Reducing manufacturing costs and improving quality |
| New electronic control software version | Firmware version 1.2.0 Control through the neu cabinet, correction of translations in EN, FR, IT, and ES, simplified user assignment, and correction of errors | To be completed | Product improvements | Sales of functional products |
| Electronic multi-position network | Expanding the product range | Completed | Increasing sales through new product groups | Expanding the electrified product portfolio |
| 3D printer | Construction of prototypes and small series | Completed | Production of prototypes and small batches | Reducing costs of external service providers |
Status of the Company's R&D personnel
| In 2023 | In 2022 | Rate of turnover | |
| Number of R&D personnel (individuals) | 1,105 | 1,099 | 0.55% |
| Proportion of R&D personnel | 10.23% | 10.41% | -0.18% |
| Educational background of R&D personnel | |||
| Bachelor's degree | 397 | 408 | -2.70% |
| Master's degree | 27 | 24 | 12.50% |
| Age composition of R&D personnel | |||
| Below 30 years old | 180 | 178 | 1.12% |
| 30-40 years old | 600 | 599 | 0.17% |
Investment in R&D by the Company
| In 2023 | In 2022 | Rate of turnover | |
| R&D investment amount (RMB) | 322,536,093.62 | 319,444,535.16 | 0.97% |
| Proportion of R&D investment to operating revenue | 2.95% | 2.53% | 0.42% |
| capitalized R&D investment amount (RMB) | 0.00 | 0.00 | |
| Proportion of capitalized R&D investment to total R&D investment | 0.00% | 0.00% |
Reasons for significant changes in the composition of R&D personnel in the Company and the impact
□ Applicable √ Not Applicable
Reasons for significant changes in the proportion of R&D investment to operating revenue compared to the previousyear
□ Applicable √ Not Applicable
Reasons for significant changes in the rate of capitalization of R&D investment and the rationale
□ Applicable √ Not Applicable
5. Cash flow
Unit: RMB
| Item | In 2023 | In 2022 | YoY increase or decrease |
| Subtotal of cash inflows from operating activities | 11,839,414,417.18 | 13,850,370,894.60 | -14.52% |
| Subtotal of cash outflows from operating activities | 9,713,559,491.53 | 12,218,534,252.21 | -20.50% |
| Net cash flows from operating activities | 2,125,854,925.65 | 1,631,836,642.39 | 30.27% |
| Subtotal of cash inflows from investing activities | 274,696,758.74 | 345,733,789.20 | -20.55% |
| Subtotal of cash outflows from investing activities | 936,720,309.97 | 860,100,111.16 | 8.91% |
| Net cash flows from investing activities | -662,023,551.23 | -514,366,321.96 | 28.71% |
| Subtotal of cash inflows from financing activities | 2,585,788,685.11 | 4,690,798,053.76 | -44.88% |
| Subtotal of cash outflows from financing activities | 3,817,385,902.57 | 5,300,549,759.79 | -27.98% |
| Net cash flows from financing activities | -1,231,597,217.46 | -609,751,706.03 | 101.98% |
| Net increase in cash and cash equivalents | 190,552,569.13 | 792,240,939.29 | -75.95% |
Explanation of the main factors contributing to significant year-on-year changes in relevant data?√ Applicable □ Not ApplicableNet cash flow from operating activities increased by 30.27% year-on-year, primarily due to destocking, resulting incash received from sales of goods and services exceeding cash paid for purchases of goods and services.Net cash flow from investing activities decreased by 28.71% year-on-year, mainly due to the increase in net cashpaid for acquisition of subsidiaries and other operating units in the current year as compared to the previous year;at the same time, cash received from investment income in the previous year included dividends from associates,and there was no cash inflow from dividends in the current period.Net cash flow from financing activities decreased by 101.98% year-on-year, primarily due to the comprehensiveimpact of the following activities: The Company conducted large-scale fund-raising through the issuance of GDRin the previous period, increasing cash inflows from financing activities, and there were no similar activities in thecurrent period; the company repaid a large amount of loans to shareholders, increasing cash outflows from financingactivities in the previous period, and there were no similar activities in the current period; meanwhile, thedistribution of dividends increased significantly compared to the previous period, resulting in an increase in cashoutflows from financing activities.Explanation of significant differences between net cash flow from operating activities and net profit for the year ofthe Company during the reporting period
□ Applicable √ Not Applicable
V. Analysis of Non-principal Business
□ Applicable √ Not Applicable
VI. Analysis of Assets and Liabilities
1. Significant changes in the composition of assets
Unit: RMB
| End of 2023 | At the beginning of 2023 | Proportion change | Explanation of significant change | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary assets | 5,178,727,811.76 | 26.30% | 4,863,206,182.40 | 26.15% | 0.15% | |
| Accounts receivable | 2,101,643,079.19 | 10.67% | 1,896,685,590.11 | 10.20% | 0.47% | There has been a change in the holding mode of accounts receivable, shifting from accounts receivable financing to accounts |
| receivable classification | ||||||
| Contract assets | 0.00 | 0.00% | 0.00 | 0.00% | 0.00% | |
| Inventories | 2,569,302,478.80 | 13.05% | 2,812,572,525.68 | 15.12% | -2.07% | The Company has strengthened inventory Management, increased inventory turnover, and reduced inventory balance |
| Investment property | 117,273,455.37 | 0.60% | 122,158,556.01 | 0.66% | -0.06% | |
| Long-term equity investments | 2,950,574,477.94 | 14.99% | 2,544,523,517.55 | 13.68% | 1.31% | Increased investment income recognized under the equity method for joint ventures and other equity changes |
| Fixed assets | 1,726,806,882.04 | 8.77% | 1,518,902,232.96 | 8.17% | 0.60% | Caused by the conversion of factory buildings of the manufacturing base in Vietnam to fixed assets and increased equipment purchases |
| Construction in progress | 270,199,288.71 | 1.37% | 304,599,362.46 | 1.64% | -0.27% | Caused by the conversion of factory buildings of the manufacturing base in Vietnam to fixed assets |
| Right-of-use assets | 378,820,165.25 | 1.92% | 417,129,361.41 | 2.24% | -0.32% | |
| Short-term borrowings | 1,103,247,899.65 | 5.60% | 1,379,062,713.11 | 7.42% | -1.82% | Repayment of maturing debts and reduction in |
| new borrowings according to the fund utilization plan for the period | ||||||
| Contractual liabilities | 147,202,549.06 | 0.75% | 131,898,420.14 | 0.71% | 0.04% | |
| Long-term borrowings | 708,270.00 | 0.00% | 798,604,951.84 | 4.29% | -4.29% | Mainly attributed to the reclassification of long-term loans maturing within one year into non-current liabilities due within one year |
| Lease liabilities | 283,800,769.92 | 1.44% | 318,221,349.99 | 1.71% | -0.27% |
Higher proportion of overseas assets?√ Applicable □ Not Applicable
| Item | Reason for formation | Size | Location | Operating model | Control measures to ensure asset safety | Profitability | Proportion of overseas assets in the Company's net assets | Whether there is material risk of impairment |
| Lista Holding AG's 100% equity | Equity acquisition | RMB 241.3969 million | Switzerland | Independent accounting | Financial supervision, and entrusting external audit | Profitable | 1.61% | No |
| Arrow Fasterner Co., LLC 100% equity | Equity acquisition | RMB 484.8587 million | The US | Independent accounting | Financial supervision, and entrusting external audit | Profitable | 3.23% | No |
2. Assets and liabilities measured at fair value
?√ Applicable □ Not ApplicableUnit: RMB
| Item | Opening balance | Gains and losses from fair value | Cumulative fair value changes | Impairment in the current period | Purchase amount in the current | Sales amount in the current | Other changes | Closing balance |
| changes in the current period | recognized in equity | period | period | |||||
| Financial assets | ||||||||
| 1. Transactional financial assets (excluding derivative financial assets) | 60,000,000.00 | 472,251.49 | 263,000,000.00 | 215,228,000.00 | 108,244,251.49 | |||
| 2. Derivative financial assets | 10,230,104.24 | 3,999,322.30 | 177,104.98 | 14,406,531.52 | ||||
| 4. Investment in other equity instruments | 16,550,000.00 | 16,550,000.00 | ||||||
| Financial assets subtotal | 86,780,104.24 | 4,471,573.79 | 0.00 | 0.00 | 263,000,000.00 | 215,228,000.00 | 177,104.98 | 139,200,783.01 |
| Above total | 86,780,104.24 | 4,471,573.79 | 0.00 | 0.00 | 263,000,000.00 | 215,228,000.00 | 177,104.98 | 139,200,783.01 |
| Financial liabilities | 48,413,710.29 | -45,703,477.14 | 517,493.08 | 3,227,726.23 | ||||
Other changesOther changes are due to exchange rate fluctuations.Whether there have been significant changes in the measurement attributes of the Company's major assets in thereporting period
□ Yes √? No
3. Restricted asset rights as of the end of this reporting period
| Item | Closing book balance | Book value at the end of the period | Types of restrictions | Reason for restriction |
| Monetary assets | 144,071,225.10 | 144,071,225.10 | Pledged | Guarantee deposit for short-term loan |
| Monetary assets | 21,496,066.60 | 21,496,066.60 | Pledged | Guarantee deposit for forward settlement of exchange and sale |
| Monetary assets | 16,290,210.00 | 16,290,210.00 | Pledged | Deposits for letter of credit |
| Monetary assets | 6,388,901.19 | 6,388,901.19 | Pledged | Guarantee deposit for bank acceptance |
| Item | Closing book balance | Book value at the end of the period | Types of restrictions | Reason for restriction |
| Monetary assets | 3,541,350.00 | 3,541,350.00 | Pledged | Deposits for credit card |
| Monetary assets | 1,416,859.57 | 1,416,859.57 | Pledged | Deposits for customs guarantees |
| Monetary assets | 1,494,449.70 | 1,494,449.70 | Pledged | Premium for lease |
| Monetary assets | 49,000.00 | 49,000.00 | Pledged | Guarantee deposit for ETC |
| Fixed assets | 40,901,325.49 | 25,832,626.15 | Mortgaged | Mortgage for bank acceptance |
| Fixed assets | 20,789,909.21 | 9,133,057.17 | Mortgaged | Mortgage for bank loan |
| Intangible assets | 3,198,505.51 | 1,982,663.42 | Mortgaged | Mortgage for bank acceptance |
| Intangible assets | 2,451,822.91 | 1,336,350.05 | Mortgaged | Mortgage for bank loan |
| Total | 262,089,625.28 | 233,032,758.95 |
VII. Analysis of Investment Status
1. Overview
?√ Applicable □ Not Applicable
| Investment amount in the reporting period (RMB) | Investment amount in the same period of the previous year (RMB) | Changes |
| 1,612,594,667.46 | 1,529,848,856.93 | 5.41% |
2. Major equity investment acquired during the reporting period
?√ Applicable □ Not ApplicableUnit: RMB
| Invested Company name | Principal business | Investment method | Investment amount | Holding proportion | Source of funds | Partner | Investment duration | Product type | Progress as of balance sheet date | Expected returns | Investment gain/loss for the period | Litigation involvement | Disclosure date (if any) | Disclosure index (if any) |
| GREATSTAR UNITED KINGDOM LTD | Holding Company, clothing and footwear wholesale | New establishment | 513,481,870.38 | 100.00% | Self-owned funds | / | Permanent | Long-term equity investments | Completed | 1,106,239.03 | 1,106,239.03 | No | ||
| Tota | -- | -- | 513, | -- | -- | -- | -- | -- | -- | 1,106 | 1,106 | -- | -- | -- |
| l | 481,870.38 | ,239.03 | ,239.03 |
3. Major ongoing non-equity investment during the reporting period
?√ Applicable □ Not ApplicableUnit: RMB
| Project Name | Investment method | Fixed asset investment or not | Industry involved in investment project | Investment during the reporting period | The cumulative actual investment amount as of the end of the reporting period | Source of funds | Project progress | Expected returns | Accumulated earnings realized as of the end of the reporting period | Reasons for not meeting planned progress and expected returns | Disclosure date (if any) | Disclosure index (if any) |
| Intelligent Factory Project with an Annual Output of 1 Million Sets of New Power Tools | Self-built | Yes | Power tools | 103,963,826.00 | 123,164,273.56 | Funds raised and own funds | 95.00% | 0.00 | 0.00 | / | ||
| Total | -- | -- | -- | 103,963,826.00 | 123,164,273.56 | -- | -- | 0.00 | 0.00 | -- | -- | -- |
4. Investment in financial assets
(1) Investment in securities
□ Applicable √ Not Applicable
The Company did not invest in securities during the reporting period.
(2) Investment in derivatives
?√ Applicable □ Not Applicable
1) Investment in derivatives for hedging purpose during the reporting period?√ Applicable □ Not ApplicableUnit: ten thousand RMB
| Type | Initial investment amount | Opening amount | Gains and losses from fair value changes in the current period | Cumulative fair value changes recognized in equity | Purchase amount in the reporting period | Sales amount in the reporting period | Closing amount | Proportion of the closing amount in the Company's net assets at the end of the reporting period |
| Forward exchange | 306,895.99 | 306,895.99 | 4,970.28 | 0 | 251,313.69 | 398,246.99 | 164,932.97 | 10.99% |
| Total | 306,895.99 | 306,895.99 | 4,970.28 | 0 | 251,313.69 | 398,246.99 | 164,932.97 | 10.99% |
| Significant changes in the accounting policies and specific accounting principles of hedging business during the reporting period compared to the same period in the previous year | Unchanged | |||||||
| Actual profits or losses during the reporting period | The investment income related to derivative investments recognized during the reporting period amounted to RMB -84,843,046.20. | |||||||
| Effect of hedging | During the reporting period, the Company adhered to the principle of risk neutrality with respect to foreign exchange rates and entered into forward foreign exchange contracts as hedging instruments according to the amount of foreign exchange receipts estimated based on the sales as well as exchange rate targets, with the delivery time and the agreed delivery amount matching the expected cash amount, so as to avoid the risks caused by exchange rate fluctuations. During the report period, | |||||||
| the changes in the cash flows of the hedging instruments were able to offset the changes in the cash flows of the hedged projects caused by the risk of exchange rate fluctuations, thereby satisfying the hedge effectiveness requirement and achieving the hedging objective. | |
| Source of funds for investment in derivatives | Self-owned funds |
| Position risk analysis and control measures for derivatives during the reporting period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | 1. Market risk: Changes in international and domestic economic conditions may lead to large fluctuations in foreign exchange rates and therefore forward foreign exchange transactions will subject to certain market risks. The Company's forward foreign exchange transactions aim to lock in the settlement or sale price of foreign exchange and reduce the impact of exchange rate fluctuations on the Company's profits. The Company will closely monitor changes in exchange rates and determine the plan to enter into forward foreign exchange contracts based on the target exchange rate for transactions, the research and evaluation of foreign exchange rate trends, as well as the Company's forecasts of foreign exchange receipts and payments and ability to withstand price changes caused by exchange rate fluctuations. Meanwhile, it will ensure a reasonable profit level through dynamic Management on transactions. 2. Liquidity risk: All of the Company's foreign exchange transactions are based on reasonable estimates of the Company's future imports and exports and meet the requirements of transaction authenticity. 3. Bank default risk: In the event of a bank default, such as a bank failure, during the term of the contract, the Company will not be able to deliver the original foreign exchange contract at the contract price and will be exposed to the risk of uncertain returns. As a result, the Company chooses to conduct foreign exchange transactions with the five major state-owned banks, Chinese-funded banks such as CMB and foreign-funded banks such as HSBC and SCB. These banks have strong strength and stable operations, and the risk of their failure causing losses to the Company is very low. 4. Operational risk: The Company's forward foreign exchange transactions may give rise to related risks due to the improper operation of undertakers. The Company has developed relevant Management systems and defined the operating procedures and responsible persons, which are conducive to the prevention and control of risks. 5. Legal risk: Legal disputes may arise if the Company engages in forward foreign exchange transactions and enters into unclear contracts or agreements with banks for such transactions. The Company will legally strengthen the review of relevant contracts and select banks with good credit ratings to conduct such transactions in order to control the risks. |
| Changes in the market prices or the fair values of the invested derivatives during the reporting period, the analysis of the fair values of derivatives shall disclose | N/A |
| the specific method used and the setting of relevant assumptions and parameters | |
| Whether it is involved in litigation (if applicable) | N/A |
| Date of announcement of the Board Meeting to approve investment in derivatives (if any) | 22 April 2023 |
| Date of announcement of the Shareholders' Meeting to approve investment in derivatives (if any) | 23 May 2023 |
| Special opinion of the independent directors on the Company's investment in derivatives and risk control | It is necessary for the Company to enter into foreign exchange derivative transactions that meet the needs of the Company's actual operations and can reduce the impact of exchange rate fluctuations on the Company's profits to a certain extent. The Company has developed the Management System of Foreign Exchange Derivative Transactions and effective risk control measures in accordance with relevant laws and regulations. We concur with the Company's proposal to engage in foreign exchange derivative transactions for the fiscal year 2023. |
2) Investment in derivatives for speculative purposes during the reporting period
□ Applicable √ Not Applicable
The Company did not invest in derivatives for speculative purposes during the reporting period.
5. Use of raised funds
?√ Applicable □ Not Applicable
(1) Overall use of raised funds
?√ Applicable □ Not ApplicableUnit: RMB ten thousand
| Fund-raising year | Fund-raising method | Total raised funds | Net funds raised | Total funds used during the current period | Total funds used cumulatively | Total funds raised for altered purpose during the reporting period | Total funds raised cumulatively for altered purpose | Proportion of total raised funds cumulatively for altered purpose | Total unused funds | Use and allocation of unused funds | Funds that have been idle for more than two years |
| 2020 | Issue convertible bonds | 97,260 | 96,512.15 | 14,909.48 | 88,915.82 | 0 | 13,494.42 | 13.87% | 11,530.14 | Deposit into special fundraising account | 0 |
| Total | -- | 97,260 | 96,512.15 | 14,909.48 | 88,915.82 | 0 | 13,494.42 | 13.87% | 11,530.14 | -- | 0 |
| Overall use of raised funds | |||||||||||
| According to the Response to Approval of Public Issue of Convertible Bonds for Hangzhou GreatStar Industrial Co., Ltd. (CSRC License [2019] No. 2656) from CSRC, the Company is authorized to issue convertible bonds in an amount not exceeding RMB 97,260 million. China Securities Co., Ltd., the lead underwriter, shall give priority to the original shareholders of the Company for placement, and the balance after the prior placement to the original shareholders (including the portion waived by the original shareholders) shall be issued to public investors via the Internet. The undersubscribed portion of the subscription amount of RMB 97,260 million shall be underwritten by the lead underwriter. The Company actually issued 9,726,000 convertible corporate bonds, with a face value of RMB 100.00 each, raising a total of RMB 97,260 million. After deducting the underwriting and sponsor fees of RMB 5,188,679.25 (excluding tax), the funds raised amounted to RMB 967,411,320.75, which has been remitted to the regulatory account of the Company's raised fund by the lead underwriter, China Securities Co., Ltd., on July 2, 2020. In addition, after deducting external expenses of RMB 2,289,867.92 directly related to the issuance of convertible corporate bonds, such as the underwriting and sponsor fees, audit and capital verification fees, attorney fees, credit rating fees, information disclosure fees for the issuance, lottery fees and bond issuance registration fees, the Company raised a net amount of RMB 965,121,452.83. The above raised funds have been verified by Pan-China Certified Public Accountants LLP (Special General Partnership) with the Verification Report (Pan-China verified [2020] No. 244) issued by the LLP. As of December 31, 2023, the Company has invested a total of RMB 889.1582 million in the raised funds. The net interest income of the raised funds is RMB 38.1179 million, the gains from exchange of financial expenses are RMB 1.2202 million. As of December 31, 2023, the account balance of the raised funds account is RMB 115.3014 million. | |||||||||||
(2) Committed investment projects of raised funds
?√ Applicable □ Not ApplicableUnit: ten thousand RMB
| Committed investment projects and allocation of over-raised funds | Whether the project has been altered (including partially altered) | Total committed investment of funds raised | Total investment after alteration (1) | Investment during the reporting period | Accumulative investment at the end of the period (2) | Investment progress at the end of the period (3) = (2)/(1) | Date of achieving expected conditions for use | Benefits achieved in the current reporting period | Whether expected benefits have been achieved | Whether there have been significant changes to the feasibility of project |
| Committed investment projects | ||||||||||
| Laser Measurement and Smart Home Production Base Construction Project | No | 20,426 | 20,426 | 3,432 | 20,394.59 | 99.85% | December 2023 | 0 | N/A | No |
| Tool Storage Production Base Construction Project | Yes | 26,776 | 13,281.58 | 13,281.58 | 100.00% | 1,192.67 | N/A | Yes | ||
| Intelligent Warehousing and Logistics Base Construction Project | No | 22,542.15 | 22,542.15 | 7,933.79 | 15,650.85 | 69.43% | December 31, 2024 | 0 | N/A | No |
| R&D Center Construction Project | No | 7,768 | 7,768 | 3,543.69 | 7,094.38 | 91.33% | December 2023 | 0 | N/A | No |
| Capital increase to subsidiaries | No | 13,494.42 | 13,494.42 | 100.00% | 2 July 2021 | 8,054.78 | N/A | No | ||
| and acquisition of 100% equity of Geelong Holdings Limited held by Geelong Orchid Holdings Ltd. | ||||||||||
| Subtotal of committed investment projects | -- | 77,512.15 | 77,512.15 | 14,909.48 | 69,915.82 | -- | -- | 9,247.45 | -- | -- |
| Allocation of over-raised funds | ||||||||||
| N/A | ||||||||||
| Replenishment of working fund (if any) | -- | 19,000 | 19,000 | 19,000 | 100.00% | -- | -- | -- | -- | |
| Subtotal of allocated over-raised funds | -- | 19,000 | 19,000 | 19,000 | -- | -- | -- | -- | ||
| Total | -- | 96,512.15 | 96,512.15 | 14,909.48 | 88,915.82 | -- | -- | 9,247.45 | -- | -- |
| Failures to complete the planned schedule and to achieve the expected income and | I. The reasons why the Company's investments of the funds raised did not meet the planned schedule are as follows: 1. The implementation subjects of the Laser Measurement and Smart Home Production Base Construction Project are Haining GreatStar Intelligent Equipment Co., Ltd., the Company's wholly-owned sub-subsidiary, Vietnam GreatStar Intelligence Co., Ltd. and Hangzhou GreatStar Tools Co., Ltd., the Company's two wholly-owned subsidiaries. The implementation locations of the project are Lianhang Economic and Technological Development Zone, Haining City, Zhejiang Province, Nam Cau Kien Industrial Park, Thuy Nguyen, Haiphong, Vietnam and Hangzhenggongchu [2020] No. 26 Plot, Jianggan District, Hangzhou. The project is expected to be completed by December 31, 2022. In the process of project implementation, the Company was constrained by the insufficient global shipping capacity in 2021 and H1 2022, so some raw materials and equipment could not be delivered to the project sites in time, thereby affecting the project's progress to a certain extent and delaying the completion timeline. In order to ensure the smooth implementation of the project and the maximum benefit of the project, the 29th Meeting of the 5th Board of Directors and the 1st Extraordinary General Meeting of Shareholders in 2023 approved the extension of the project implementation period to | |||||||||
| their respective reasons (including reasons for "N/A" as to "Whether expected benefits have been achieved") | December 31, 2023. 2. The implementation subject of the Intelligent Warehousing and Logistics Base Construction Project is Haining GreatStar Intelligent Equipment Co., Ltd., the wholly owned sub-subsidiary of the Company. The implementation location of the project is Lianhang Economic and Technological Development Zone, Haining City, Zhejiang Province. The project is expected to be completed by December 31, 2022. The addition of wholly-owned subsidiary Vietnam GreatStar Intelligence Co., Ltd., and wholly-owned sub-subsidiary Hangzhou GreatStar Energy Co., Ltd., as one of the Implementation Subjects of the Smart Warehousing and Logistics Base Construction Project was approved during the 29th Meeting of the 5th Board of Directors and the 1st Extraordinary General Meeting of Shareholders in 2023. This expansion includes adding Nam Cau Kien Industrial Park, Thuy Nguyen, Haiphong, Vietnam, and JG1601-43 Plot, Unit of Genbei New District, Shangcheng District, Hangzhou, Zhejiang Province, as well as Chang'an Town, Haining, Zhejiang Province, as project sites. Simultaneously, the investment structure of the project was adjusted, and the project implementation period extended until December 31, 2023. Upon approval by the 4th Meeting of the 6th Board of Directors, due to objective reasons, the Smart Warehousing and Logistics Base Construction Project failed to acquire the factory land in Nam Cau Kien industrial park, Thuy Nguyen, Haiphong, Vietnam, as planned by December 31, 2023, resulting in the inability to complete the payment for the aforementioned land as scheduled. To better facilitate the project implementation and ensure maximum project benefits, the Company decided to extend the project implementation period until December 31, 2024. 3. The implementation subject of the R&D Center Construction Project is the Company. The implementation location of the project is the northwest corner of the intersection of Hongpu Road and Jiuheng Road, Jiubao Street, Shangcheng District, Hangzhou City. The project is expected to be completed by December 31, 2022. In the process of project implementation, new products were continuously launched, so it was necessary to adjust the R&D focus to products that are more in line with the long-term development strategies of the Company. Meanwhile, following the consolidation of the Company through the consolidation of its original wholly-owned subsidiary, Lista Holding AG, the planned investments in equipment and software had to be re-evaluated, resulting in the failure to complete the relevant work as planned. In order to make efficient use of the Company's R&D capability and ensure the maximum benefit of the project, the 29th Meeting of the 5th Board of Directors and the 1st Extraordinary General Meeting of Shareholders in 2023 approved the extension of the project implementation period to December 31, 2023. II. Failure to calculate the benefits of the investment projects of raised funds separately The Intelligent Warehousing and Logistics Base Construction Project is designed to meet the Company's needs for operational efficiency improvement, future business expansion and sustained development, so its benefits cannot be calculated separately. The implementation of R&D Center Construction Projects is mainly based on product R&D design, product trial production and product testing, generating no direct economic benefits. The Replenishment Working Capital Project is designed to meet the needs of working capital for the continuous expansion of the Company's operating scale, so the benefits cannot be accounted separately. |
| Description of significant changes in project feasibility | Due to constraints posed by the global shipping capacity shortages, some raw materials and equipment could not be delivered to the project sites on time, resulting in certain impacts on the construction progress of the Company's tool storage production base construction project and causing delays in the original fundraising project completion timeline. According to the Company's long-term strategic planning and current development needs, in order to use the raised funds more efficiently, improve the Company's existing production capacity and supply capacity faster, and better meet clients' needs, after deliberation and approval of the 7th Meeting of 5th Session of Board of Directors and the 2020 Annual General Meeting of Shareholders, the Company used the uninvested raised funds of RMB 134.9442 million for the Tool Storage Production Base Construction Project by 5 April 2021 for the acquisition of 100% equity of Geelong Holdings Limited held by Geelong Orchid Holdings Ltd., and the Tool Storage Production Base Construction Project was terminated. In order to promote the smooth implementation of equity acquisition and reduce transaction costs, the Company held its 10th Meeting of 5th Session of Board of Directors on 21 June 2021, deliberated and approved the Proposal on Changing Part of the Implementation Subjects of the Raised Funds Investment Project, and agreed to change the implementation subject of equity acquisition projects from the Company to Hong Kong GreatStar International Co., Ltd., a wholly-owned subsidiary of the Company. |
| Amoun | N/A |
| t, purpose and progress of over-raised funds | |
| Changes in the implementation locations of the raised funds investment project | Applicable |
| Incurred in prior years | |
| On 22 July 2020, the Company held the 37th Meeting of the 4th Board of Directors, deliberated and approved the Proposal on Adding Part of Implementation Subjects and Locations to the Raised Funds Investment Project and Using Part of the Raised Funds to Increase Capital to Wholly-owned Subsidiaries. 1. Agreed to add Vietnam GreatStar Intelligence Co., Ltd., a wholly-owned subsidiary of the Company, as one of the implementation subjects of the Laser Measurement and Smart Home Production Base Construction Project, and add Nam Cau Kien Industrial Park, Thuy Nguyen, Haiphong, Vietnam, as one of the implementation locations of the Project; 2. Agreed to add the wholly-owned subsidiary Thailand Xindadi Co., Ltd. (renamed Geelong (Thailand) Co., Ltd.) as one of the implementation subjects of the Tool Storage Production Base Construction Project, and add No. 54/5, Village 1, Map Yang Phon, Pluak Daeng, Rayong, Thailand, as one of the implementation locations of the Project. On 14 April 2021, the Company held the 8th Meeting of the 5th Board of Directors, deliberated and approved the Proposal on Changing the Implementation Subjects and Locations of the Raised Funds Investment Project, Adjusting the Investment Structure of the Raised Funds Investment Project and Extending the Implementation Period. 1. Agreed to add Hangzhou GreatStar Sheffield Tools Co., Ltd., a wholly-owned subsidiary, as one of the implementation subjects of the Laser Measurement and Smart Home Production Base Construction Project, and add Hangzhenggongchu [2020] No. 26 Plot, Jianggan District, Hangzhou as one of the implementation locations of the project; 2. Agreed to change the implementation subject of R&D Center Construction Project to Hangzhou GreatStar Industrial Co., Ltd. On 21 June 2021, the Company held the 10th Meeting of the 5th Session of Board of Directors, deliberated and approved the Proposal on Changing Part of the Implementation Subjects of the Raised Funds Investment Project, and agreed to change the implementation subject for the acquisition of 100% equity of Geelong Holdings Limited held by Geelong Orchid Holdings Ltd. from the Company to Hong Kong GreatStar International Co., Ltd., a wholly-owned subsidiary of the Company. On 30 December 2022, the Company held the 29th Meeting of the 5th Session of Board of Directors, deliberated and approved the Proposal on Increasing the Implementation Subjects and Implementation Locations of the Raised Funds Investment Project, Adjusting the Investment Structure of the Raised Projects and Extending the Implementation Period. The Company agreed to add Vietnam GreatStar Intelligence Co., Ltd., a wholly-owned subsidiary, and Hangzhou GreatStar Energy Co., Ltd., a wholly-owned sub-subsidiary, as Intelligent Warehousing and Logistics Base Construction Project's implementation subjects. Meanwhile, Nam Cau Kien Industrial Park, Thuy Nguyen, Haiphong, Vietnam, and JG1601-43 Plot, Unit of Genbei New District, Shangcheng District, Hangzhou, Zhejiang Province, as well as Chang'an Town, Haining, Zhejiang Province were added as its implementation locations of the Project. | |
| Adjustment of implementation methods of the raised funds investment project | N/A |
| Advance investment and fund replacement of the raised funds investment project | Applicable |
| 1. On 22 July 2020, the Company held the 37th Meeting of the 4th Board of Directors, deliberated and approved the Proposal on Using Raised Funds to Replace Self-raised Funds Pre-invested in the Raised Funds Investment Project. (1) The Company agreed to replace the self-raised funds pre-invested in the raised funds investment project with the raised funds of RMB 148.2549 million. (2) The Company agreed to replace the issuance fee of RMB 1.7238 million paid by the Company's own funds with the raised funds. 2. The expenditures for the Research and Development Center Construction Project include personnel expenses such as salaries, bonuses, social insurance premiums, and housing provident fund contributions. In accordance with the relevant provisions of the People's Bank of China's "Measures for the Administration of RMB Current Accounts with Banks", employee salaries cannot be directly disbursed through the Company's dedicated account. Considering that the Company's social insurance premiums and housing provident fund contributions are all transferred or paid from the Company's own funds account, it is operationally infeasible to directly pay personnel expenses related to the fundraising investment project (hereinafter referred to as the fundraising project) from the fundraising special account. Therefore, it is necessary to advance payment using the Company's own funds and then transfer an equivalent amount from the fundraising special account to the Company's relevant deposit account. On September 23, 2022, the Company held the 24th Meeting of the 5th Session of Board of Directors, deliberated and approved the Proposal on Using Self-owned Funds to Make Partial Payments to the Raised Funds Investment Project and Subsequent Replacement with the Same Amount of Raised Funds. It is agreed that during the implementation of the fundraising project, the Company shall first make partial payments (personnel expenses such as salary, bonus, social insurance premiums, housing provident fund, etc.) to the Project with its own funds, then make monthly statistics on the amount of funds paid for the Project with its own funds, and transfer the same amount from the special account for raised funds to the Company's own fund account. As of December 31, 2023, the Company has used its own funds to pay for the fundraising project expenses and transferred an equivalent amount from the fundraising special account to the Company's own funds account, totaling RMB 42.7744 million. | |
| Description of temporary replenishment of working capital with idle raised funds | N/A |
| Amount and reasons of raised fund surplus in the implementation of the project | Applicable |
| 1. The Company’s project of "Capital Increase to Subsidiaries and Acquisition of 100% Equity of Geelong Holdings Limited Held Through Geelong Orchid Holdings Ltd." has been implemented as planned. In order to facilitate the Management of the special account for raised funds, the Company has cancelled the special account for raised funds of the project. In addition, the raised fund surplus (interest income) of USD 14.98 (converted to RMB 100.00 at the spot exchange rate on the transaction date) will be transferred to its own fund account for permanent replenishment of working capital. 2. As of December 25, 2023, both the Laser Measurement and Smart Home Production Base Construction Project and the Research and Development Center Construction Project have reached the designated usable status, meeting the conditions for closure. During the implementation of the fundraising project, the Company, guided by the principles of science and efficiency, strengthened control, supervision, and Management of expenses at all stages. It exercised caution in using the raised funds, optimizing resource allocation, reducing costs, thereby saving a portion of the raised funds. Additionally, the funds accrued interest income while held in the special account. In accordance with |
| the resolutions of the 4th Meeting of the 6th Board of Directors and the 1st Extraordinary General Meeting of Shareholders in 2024, aiming to enhance the efficiency of fundraising utilization, the Company agreed to permanently supplement working capital with the aforementioned surplus raised funds for the Company's daily operations. As of April 24, 2024, the Company has closed the fundraising account (632923398) at the Hangzhou Branch of China Minsheng Bank and transferred out a surplus fundraising amount of RMB 59,569.58. | |
| Purpose and destination of unutilized raised funds | By the end of the period, the balance of the unutilized raised funds is equivalent to RMB 115.3014 million (including the net amount of RMB 38.1179 million in respect of cumulative bank deposit interest minus bank charges), which is deposited in the special account for raised funds. |
| Problems or other circumstances in the utilization and disclosure of the raised funds | N/A |
(3) Projects involved with changes in raised fund
?√ Applicable □ Not ApplicableUnit: RMB ten thousand
| The project after change | Corresponding original committed project | Total raised funds to be invested in the project after the change (1) | Actual investment amount in current reporting period | Actual cumulative investment as of the end of the period (2) | Investment progress at the end of the period (3) = (2)/(1) | Date of achieving expected conditions for use | Benefits achieved in the current reporting period | Whether expected benefits have been achieved | Whether the project feasibility has changed significantly after the change |
| Capital increase to subsidiaries and acquisition of 100% equity of Geelong Holdings Limited held by Geelong | Tool Storage Production Base Construction Project | 13,494.42 | 0 | 13,494.42 | 100.00% | 2 July 2021 | 8,054.78 | N/A | No |
| Orchid Holdings Ltd. | |||||||||
| Total | -- | 13,494.42 | 0 | 13,494.42 | -- | -- | 8,054.78 | -- | -- |
| Description of reasons for change, decision-making procedures and information disclosure (for specific projects) | Due to constraints posed by the global shipping capacity shortages, some raw materials and equipment could not be delivered to the project sites on time, resulting in certain impacts on the construction progress of the Company's tool storage production base construction project and causing delays in the original fundraising project completion timeline. According to the Company's long-term strategic planning and current development needs, in order to use the raised funds more efficiently, improve the Company's existing production capacity and supply capacity faster, and better meet clients' needs, after deliberation and approval of the 7th Meeting of 5th Board of Directors and the 2020 Annual General Meeting of Shareholders, the Company used the uninvested raised funds of RMB 134.9442 million for the Tool Storage Production Base Construction Project by 5 April 2021 for the acquisition of 100% equity of Geelong Holdings Limited held by Geelong Orchid Holdings Ltd., and the Tool Storage Production Base Construction Project was terminated. The raised funds that have been utilized have been invested in the construction of the tool storage production base for Haining GreatStar Intelligent Equipment Co., Ltd. and Geelong (Thailand) Co., Ltd. In order to promote the smooth implementation of equity acquisition and reduce transaction costs, the Company held its 10th Meeting of 5th Session of Board of Directors on 21 June 2021, deliberated and approved the Proposal on Changing Part of the Implementation Subjects of the Raised Funds Investment Project, and agreed to change the implementation subject of equity acquisition projects from the Company to Hong Kong GreatStar International Co., Ltd., a wholly-owned subsidiary of the Company. | ||||||||
| Details and reasons for not achieving the planned progress or expected earnings (for specific projects) | N/A | ||||||||
| Description of significant changes in project feasibility after change | N/A | ||||||||
VIII. Sale of Major Assets and Equity
1. Sale of major assets
□ Applicable √ Not Applicable
No major assets were sold during the reporting period.
2. Sale of major equity
□ Applicable √ Not Applicable
IX. Analysis of Major Holding and Equity Participation Companies?√ Applicable □ Not ApplicableDetails of main subsidiaries and equity participation companies that affect the Company's net profit by 10% or moreUnit: RMB
| Company name | Type | Principal business | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| GreatStar Europe | Subsidiary | Manufacturing | - | 3,029,031,999.33 | 910,704,741.57 | 1,941,232,564.38 | 257,946,847.19 | 208,144,223.40 |
AG
Acquisition and disposal information of subsidiaries during the reporting period?√ Applicable □ Not Applicable
| Company name | Acquisition and disposal method of subsidiaries during the reporting period | Impact on overall production, operation and performance |
| GreatStar tools Germany GmbH | Established | No significant impact |
| GREATSTAR UNITED KINGDOM LTD | Established | No significant impact |
| SCRUFFS WORKWEAR LTD | Established | No significant impact |
| Lista Eastern Europe spol. s.r.o | Established | No significant impact |
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd (HDKJ) | Established | No significant impact |
| Geelong Sales (Macau Commercial) Limited | Cancelled | No significant impact |
| Guangdong Shiwanke Electrical Appliance Co., Ltd. | Cancelled | No significant impact |
| Shenzhen Workpro Technology Co., Ltd. | Cancelled | No significant impact |
| Newland. LLC | Cancelled | No significant impact |
Description of major holding and equity participation companiesNoneX. Structural Subjects under Control of the Company
□ Applicable √ Not Applicable
XI. Prospects for the Company's Future Development(I) Development Strategy of the CompanyOverall development strategy: Main business priority, product innovation, brand operation, and global service.Main business priority: The Company continues to leverage the existing large supermarkets in Europe and theUnited States and self-operated channels to develop the main business of tools and to dispose of non-core businessesfor asset recovery and investment in the main business. The Company will also continue M&A to seek furtherdevelopment of non-hand tools including power tools and outdoor supplies.Production innovation: While developing and upgrading existing products to improve convenience for users, theCompany will continue to develop new products that are suitable for its own supply chain and distributors. Underthe support of supply chain network and Chinese engineers, the Company will dominate the current global divisionof tools industry, enhance its leading position of the industry for further development, and take over the tasks ofindustrial transfer centering on client demand creation from the Europe and the United States in the era of innovativeeconomy.Brand operation: The Company will carry on and develop the existing world-renowned tool brands and e-commercetool brands for the new era, continue to improve the service system for the original brands of the Europe and theUnited States, and make a long-term plan for the original brands and development path hinged on the stable cashflow of durable consumer goods to improve brand value.Global service: Against the reverse globalization, the Company continues to actively increase the investment in themarket of Europe, the United States, and the Southeast Asia, select outstanding foreign companies for M&A to havebetter access to international resources and markets in the pursuit of a globe-oriented Company.(II) Business PlanThe Company proposes the goal of 100% cumulative growth in its main business for the next three years in early2023. In spite of the first year-on-year decrease for a variety of reasons in 2023, the Company kept growth as
expected and will continue to uphold its long-term growth prospect and compounded annual growth rate the sameas years before.(III) Possible RisksAfter a comprehensive analysis of the Company's external environment and actual situation, the main operatingrisks the Company faces include:
1. Exchange rate fluctuation risk
At present, the Company's operating income basically comes from the overseas market. For example, the widefluctuation of Chinese Yuan exchange rate will have a certain impact on the Company's operating income. Most ofthe Company's principal business orders are denominated in US Dollars, and the fluctuations of the exchange ratebetween Chinese Yuan and US Dollars directly affect the price competitiveness of products, thus affecting theCompany's operating performance. In this regard, the Company will continue to strengthen its development inoverseas market and foreign exchange settlement regulation, to hedge and reduce the impact of exchange ratefluctuations on the Company's performance.
2. Risk of rising raw material prices
Recently, the Company's main raw material prices fluctuated greatly, causing the Company's production costs tofluctuate as well. Although the Company's production capacity is dominated by outsourced production and has astrong ability of bargaining with upstream outsourced manufacturers, the Company's profitability may still beaffected to some extent if the price of raw materials continues to rise. In this regard, the Company will continue tostrengthen procurement and cost control, establish strategic cooperative relations with suppliers and sign long-termagreements to absorb the risk of raw material price fluctuations. Meanwhile, the Company will continue to optimizethe product mix, strengthen the R&D of new products, and rely on innovative products to set reasonable prices andmaintain the product gross margin.
3. Risk of trade conflict
Currently, the United States is the largest single market of the Company, and a vast majority of the Company'sproducts exported to the United States are still subject to a 25% tariff, which has an adverse impact on thedevelopment of the Company. In this regard, the Company will pay close attention to the international situation,continue to implement the internationalization strategy, promote the construction of overseas manufacturing bases,cultivate overseas supply chains, and establish a global production capacity layout and supply chain system to ensurethe stable development of the Company's business.XII. Activities Involving Hosting Research, Communication, Interviews, etc. in Reporting Period?√ Applicable □ Not Applicable
| Reception date | Reception venue | Reception method | Type of reception object | Reception object | Main topics discussed and information provided | Index of basic research situation |
| 25 April 2023 | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | Telephone communication | Other | Institutional investors, individual investors | Company's 2022 annual report, 2023 first quarter report, and Company's operational situation | Company's 2022 annual report, 2023 first quarter report, and Company's operational situation |
| April 26, 2023 | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | Telephone communication | Other | Institutional investors, individual investors | Company's 2022 annual report, 2023 first quarter report, and Company's operational | Company's 2022 annual report, 2023 first quarter report, and Company's operational |
| situation | situation | |||||
| April 27, 2023 | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | Telephone communication | Other | Institutional investors, individual investors | Company's 2022 annual report, 2023 first quarter report, and Company's operational situation | Company's 2022 annual report, 2023 first quarter report, and Company's operational situation |
| August 25, 2023 | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | Telephone communication | Other | Institutional investors, individual investors | Company's 2023 interim report and Company's operational situation | Company's 2023 interim report and Company's operational situation |
| August 28, 2023 | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | Telephone communication | Other | Institutional investors, individual investors | Company's 2023 interim report and Company's operational situation | Company's 2023 interim report and Company's operational situation |
| August 29, 2023 | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | Telephone communication | Other | Institutional investors, individual investors | Company's 2023 interim report and Company's operational situation | Company's 2023 interim report and Company's operational situation |
| October 27, 2023 | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | Telephone communication | Other | Institutional investors, individual investors | Company's 2023 third quarter report and Company's operational situation | Company's 2023 third quarter report and Company's operational situation |
| October 30, 2023 | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | Telephone communication | Other | Institutional investors, individual investors | Company's 2023 third quarter report and Company's operational situation | Company's 2023 third quarter report and Company's operational situation |
| December 20, 2023 | No. 35, Jiuhuan Road, Shangcheng District, Hangzhou | Telephone communication | Other | Institutional investors, individual investors | Basic information on the acquisition target and Company's operational situation | Company's 2023 third quarter report and Company's operational situation |
XIII. Implementation of the "Quality and Return Dual Enhancement" Action PlanHas the Company disclosed the implementation of the "Quality and Return Dual Enhancement" action plan.
□ Yes √? No
Section IV Corporate GovernanceI. Basic Status of Corporate GovernanceDuring the reporting period, the Company strictly adhered to the requirements of the Company Law, Securities Law,Code of Corporate Governance of Listed Companies, and Stock Listing Rules of the Shenzhen Stock Exchange,continuously improved the corporate governance structure, established and improved internal Management andcontrol systems, enhanced corporate governance, and standardized Company operations.As of the end of this reporting period, the actual corporate governance situation of the Company basically meets therequirements of the relevant listed Company governance documents issued by the China Securities RegulatoryCommission.(I) Shareholders and Shareholders' MeetingThe Company strictly followed the requirements of the Guidelines for Shareholders' Meetings of Listed Companies,the Articles of Association, and the Rules of Procedure of the Shareholders' Meeting, standardized the convening,holding, and voting procedures of the shareholders' meeting, treated all shareholders equally, ensured that allshareholders have the right to be informed and participate in major Company matters, and ensured that allshareholders can fully exercise their rights.(II) Directors and Board of DirectorsThe Company strictly followed the procedures for the election of directors as stipulated in the Company Law andthe Articles of Association. The Company currently has nine directors, including three independent directors,accounting for one-third of all directors. The number and composition of the board of directors comply with legalrequirements. The board of directors has four specialized committees: the Strategic and Development Committee,the Remuneration and Assessment Committee, the Nomination Committee, and the Audit Committee. The board ofdirectors operates in accordance with the Articles of Association, the Rules of Procedure of the Board of Directors,the Measures for the Administration of Independent Directors of Listed Companies, the Work Rules of the BoardSecretary, and the Announcement No.1 of the Shenzhen Stock Exchange for Self-Regulation Guidelines for MainBoard Listed Companies——Standard Operation of Listed Companies on the Main Board, exercising its powers inaccordance with the law. All directors attend board meetings and shareholders' meetings on time, fulfilling theirduties honestly, faithfully, diligently, and responsibly.(III) Supervisors and Board of SupervisorsThe Company's board of supervisors strictly followed the procedures for the election of supervisors as stipulated inthe Company Law, the Articles of Association, and the Rules of Procedure of the Board of Supervisors. The boardof supervisors consists of three supervisors, including one employee supervisor. The number and composition ofthe board of supervisors comply with legal requirements. The supervisors conscientiously fulfill their duties, in thespirit of being responsible to all shareholders, convene board of supervisors' meetings and attend shareholders'meetings and board meetings in accordance with the Rules of Procedure of the Board of Supervisors. The supervisorseffectively supervise major Company matters, related party transactions, financial conditions, and the performanceof directors and the president, and provide independent opinions.(IV) Relationship between Controlling Shareholders and Listed CompaniesThe Company and the controlling shareholders are separate and independent in personnel, assets, finances,organizations, and operations. The board of directors, board of supervisors, and internal institutions of the Companycan operate independently. The behavior of the controlling shareholders is regulated. They exercise shareholderrights through shareholders' meetings, assume corresponding obligations, and do not directly or indirectly interferewith the Company's decision-making and business activities beyond the shareholders' meeting, thereby safeguardingthe legitimate rights and interests of the Company and other shareholders.(V) Performance Evaluation and Incentive MechanismsThe Company has established a comprehensive performance evaluation method, and the appointment of seniorManagement is open, transparent, and in compliance with relevant laws, regulations, and internal Company rulesand regulations. The Company has established a performance evaluation system that links employees' income totheir job performance. In the future, the Company will explore more forms of incentive mechanisms, establish amulti-level comprehensive incentive mechanism, improve performance evaluation standards, better motivate
Management personnel, attract and retain outstanding Management talents, and technical and business backbone.(VI) Related StakeholdersThe Company fully respects and protects the legitimate rights and interests of related stakeholders, achieving abalance of interests among shareholders, employees, society, and other parties, emphasizing social responsibility,and jointly promoting the Company's sustainable and healthy development.(VII) Information Disclosure and TransparencyThe Company strictly complies with relevant laws and regulations and the regulations of the Corporate InformationDisclosure Management System, strengthens information disclosure affairs Management, fulfills informationdisclosure obligations, and designates Securities Times, Securities Daily, China Securities Journal, and cninfo.comas newspapers and websites to truthfully, accurately, timely, and completely discloses information, ensuring that allinvestors have fair access to Company information. The Company will continue to improve and perfect the internalrules and regulations of corporate governance, strengthen standardized operations, and promote the Company'ssustained and stable development in accordance with the requirements of the Code of Corporate Governance ofListed Companies and Stock Listing Rules of the Shenzhen Stock Exchange.Is there a significant difference between the actual state of corporate governance and the laws, regulations, as wellas rules issued by the China Securities Regulatory Commission regarding the governance of listed companies
□ Yes √? No
There is no significant difference between the actual state of corporate governance and the laws, regulations, as wellas rules issued by the China Securities Regulatory Commission regarding the governance of listed companies.II. Independence of the Company from Controlling Shareholders and Actual Controllers in terms ofCompany Assets, Personnel, Finances, Organizations, and OperationsDuring the reporting period, the Company maintained complete separation from the controlling shareholders interms of business, assets, personnel, organization, and finances, ensuring stable production and operation, with well-established internal mechanisms capable of independent and standardized operation:
(I) Business Independence of the CompanyThe Company possesses independent production, procurement, and sales systems, operating entirely independentlyfrom the controlling shareholders. There is no horizontal competition between the controlling shareholders and theiraffiliated enterprises and the Company.(II) Personnel Independence of the CompanyThe Company's personnel, human resources, and salaries are entirely independent. Senior Management such as theCEO, vice presidents, board secretary, and CFO all work for the Company and receive compensation withoutholding any positions or receiving remuneration from the controlling shareholders or their subsidiaries other thanas directors or supervisors.(III) Integrity of Company AssetsClear property rights exist between the Company and the controlling shareholders. The Company's funds, assets,and other resources are not illegally occupied or controlled. The Company's assets are intact, with complete controland ownership rights over all assets, including production equipment, auxiliary production equipment, patents, andother assets appropriate for its scope of business.(IV) Organizational IndependenceThe Company's board of directors, board of supervisors, Management, and other internal institutions operateindependently. Functional departments are completely separated from the controlling shareholders in terms ofresponsibilities, personnel, etc. There is no hierarchical relationship between the controlling shareholders, theirfunctional departments and the Company and its functional departments. There is no phenomenon of controllingshareholders influencing the independence of the Company's production, operation, and Management.(V) Financial Independence
The Company has established an independent finance department and implemented sound financial and accountingManagement systems. The Company conduct independent accounting without any interference from the controllingshareholders in the Company's financial and accounting activities. The Company maintains separate bank accountsin commercial banks without sharing bank accounts with the controlling shareholders. The Company fulfills its taxdeclaration and tax obligations independently and in accordance with the law.III. Horizontal Competition
□ Applicable √ Not Applicable
IV. Description of Annual and Extraordinary General Meetings Held During Reporting Period
1. General meeting of shareholders during current reporting period
| Session | Type | Investor participation ratio | Date of convening | Date of disclosure | Resolution |
| 1st extraordinary general meeting of shareholders in 2023 | Extraordinary general meeting of shareholders | 50.12% | 20 January 2023 | 30 January 2023 | Announcement No.: 2023-002 |
| 2022 Annual General Meeting of Shareholders | Annual general meeting of shareholders | 49.28% | 22 May 2023 | 23 May 2023 | Announcement No.: 2023-032 |
| 2nd extraordinary general meeting in 2023 | Extraordinary general meeting of shareholders | 50.64% | September 11, 2023 | September 12, 2023 | Announcement No.: 2023-045 |
| 3rd extraordinary general meeting in 2023 | Extraordinary general meeting of shareholders | 49.52% | November 27, 2023 | November 28, 2023 | Announcement No.: 2023-054 |
2. Preferred shareholders whose voting rights have been restored request an extraordinary general meetingof shareholders
□ Applicable √ Not Applicable
V. Directors, Supervisors and Senior Management Personnel
1. Basic information
| Name | Gender | Age | Title | Status | Commencement date of term | Termination date of term | Number of shares held at the beginning of the period | Number of additional shares held during the period | Number of reduced shares held during the period | Other changes in shareholding | Number of shares held at the end of the period | Reason for change in shareholding |
| Qiu Jianping | Male | 62 | Incumbent | June 16, 2008 | September 10, 2026 | 48,696,458 | 2,318,800 | 0 | 0 | 51,015,258 | Increase in shareholding | |
| Chi Xiaoh | Female | 49 | Incumbent | January 12, | September | 729,950 | 0 | 0 | 0 | 729,950 |
| eng | 2021 | 10, 2026 | ||||||||||
| Wang Lingling | Female | 62 | Incumbent | June 16, 2008 | September 10, 2026 | 12,950,960 | 0 | 0 | 0 | 12,950,960 | ||
| Li Zheng | Male | 64 | Incumbent | August 31, 2020 | September 10, 2026 | 676,470 | 0 | 0 | 0 | 676,470 | ||
| Xu Zheng | Female | 40 | Incumbent | June 16, 2008 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Wang Weiyi | Male | 54 | Incumbent | September 11, 2023 | September 10, 2026 | 771,525 | 0 | 0 | 0 | 771,525 | ||
| Wang Gang | Male | 48 | Incumbent | August 31, 2020 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Chen Zhimin | Female | 63 | Incumbent | August 31, 2020 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Shi Hong | Female | 60 | Incumbent | August 31, 2020 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Sheng Guihao | Male | 58 | Incumbent | September 11, 2023 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Chen Jun | Male | 43 | Incumbent | June 15, 2011 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Huang Qiaozhen | Female | 40 | Incumbent | May 9, 2022 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Ni Shuyi | Female | 47 | Incumbent | June 16, 2008 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Wang Min | Male | 52 | Incumbent | June 16, 2008 | September 10, 2026 | 760,200 | 0 | 0 | 0 | 760,200 | ||
| Li Feng | Male | 49 | Incumbent | June 16, 2008 | September 10, 2026 | 853,277 | 0 | 0 | 0 | 853,277 | ||
| Zhou Siyuan | Male | 37 | Incumbent | January 31, 2018 | September 10, | 600,000 | 270,000 | 217,500 | 0 | 652,500 | Increase in share |
| 2026 | holding, decrease in shareholding | |||||||||||
| Jiang Saiping | Female | 52 | Incumbent | May 10, 2022 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Zhang Mao | Female | 44 | Incumbent | January 27, 2022 | September 10, 2026 | 2,900 | 0 | 0 | 0 | 2,900 | ||
| Zhou Yiqiong | Female | 52 | Incumbent | September 11, 2023 | September 10, 2026 | 0 | 0 | 0 | 0 | 0 | ||
| Cen Zhengping | Male | 62 | Resignation | May 24, 2019 | September 11, 2023 | 0 | 0 | 0 | 0 | 0 | ||
| Fu Yajuan | Female | 51 | Resignation | August 31, 2020 | September 11, 2023 | 0 | 0 | 0 | 0 | 0 | ||
| Zhang Ou | Male | 57 | Resignation | April 29, 2019 | September 11, 2023 | 0 | 0 | 0 | 0 | 0 | ||
| Total | -- | -- | -- | -- | -- | -- | 66,041,740 | 2,588,800 | 217,500 | 0 | 68,413,040 | -- |
During the reporting period, were there any cases of directors, supervisors leaving office, or senior Managementpersonnel being dismissed during their term of office?
□ Yes √? No
Changes in directors, supervisors and senior Management personnel of the Company?√ Applicable □ Not Applicable
| Name | Position | Type | Date | Reason |
| Wang Weiyi | Director | Elected | September 11, 2023 | |
| Wang Weiyi | Vice president | End of term | September 11, 2023 | |
| Sheng Guihao | Chairman of the supervisory board | Elected | September 11, 2023 | |
| Zhou Yiqiong | Vice president | Appointment | September 11, 2023 | |
| Cen Zhengping | Director | End of term | September 11, 2023 | |
| Fu Yajuan | Chairman of the supervisory board | End of term | September 11, 2023 | |
| Zhang Ou | Vice president | End of term | September 11, 2023 |
2. Employment
The professional background, key work experience, and main responsibilities in the Company of the currentdirectors, supervisors, and senior Management personnel
Mr. Qiu Jianping, chairman of the Company, is a Chinese national with no permanent residency abroad. He wasborn in 1962 and graduated from Xi'an Jiaotong University with an engineering master's degree in mechanicalcasting in 1985. From June 2008 to January 2021, he served as the chairman and president of the Company. SinceJanuary 2021, he has been serving as the chairman of the Company.Ms. Chi Xiaoheng, vice chairman and president of the Company, is a Chinese national with no permanent residencyabroad. She was born in 1975 and holds an associate degree. From June 2008 to August 2020, she served as adirector and vice president of the Company. From August 2020 to January 2021, she served as vice chairman andvice president of the Company. Since January 2021, she has been serving as vice chairman and president of theCompany.Mr. Li Zheng, director and vice president of the Company, is a Chinese national with no permanent residency abroad.He was born in 1959 and holds an associate degree. From 2008 to August 2020, he served as vice chairman andvice president of the Company. Since August 2020, he has been serving as a director and vice president of theCompany.Ms. Wang Lingling, director and vice president of the Company, is a Chinese national with no permanent residencyabroad. She was born in 1961 and holds a bachelor's degree. Since 2008, she has been serving as a director and vicepresident of the Company.Ms. Xu Zheng, director of the Company, is a Chinese national with no permanent residency abroad. She was bornin 1984 and holds a bachelor's degree. Since 2008, she has served as the chairman's secretary of GreatStar HoldingGroup Co., Ltd. Since 2011, she has served as a director of Hangcha Group Co., Ltd. She has been serving as adirector of the Company since 2008.Mr. Wang Weiyi, director of the Company, is a Chinese national with no permanent residency abroad. He was bornin 1970 and graduated from Zhejiang University with a bachelor's degree in mechanical manufacturing andtechnology. From 2008 until September 2023, he served as vice president of the Company, responsible for productresearch and development, and quality Management. He was also one of the main responsible persons for theCompany's national-level laboratory. Since September 2023, he has been serving as a director of the Company.Mr. Wang Gang, independent director of the Company, is a Chinese national with no permanent residency abroad.He was born in October 1975 and holds a master's degree. He is a certified public accountant (CPA) and a senioreconomist. Since August 2017, he has been serving as a director, vice general manager, and secretary of the boardof directors of Hangzhou Robam Appliances Co., Ltd. Since August 2020, he has been serving as an independentdirector of the Company.Ms. Shi Hong, independent director of the Company, is a Chinese national with no permanent residency abroad.She was born in July 1963 and holds a master's degree. She is an associate professor. From September 2005 to July2018, she served as an associate professor at the Environmental Engineering Teaching and Research Office of theCollege of Ocean Science and Engineering, Shanghai Maritime University, and concurrently served as the directorof the Environmental Engineering Laboratory. Since August 2020, he has been serving as an independent directorof the Company.Ms. Chen Zhimin, independent director of the Company, is a Chinese national with no permanent residency abroad.She was born in April 1960 and holds a master's degree. She currently serves as a director of Zhejiang CaitongCapital Investment Co., Ltd., supervisor of Hangzhou Tigermed Technology Co., Ltd. and Zhejiang CanaanTechnology Co., Ltd., and independent director of Hangzhou Honghua Digital Technology Co., Ltd. and TongkunHolding Group Co., Ltd. Since August 2020, he has been serving as an independent director of the Company.
2. Supervisors
Mr. Sheng Guihao, supervisor of the Company, is a Chinese national with no permanent residency abroad. He wasborn in December 1966 and holds a bachelor's degree. Since August 2014, he has been serving as vice chairman ofZhejiang Hangcha Holding Co. Ltd. Since September 2023, he has been serving as the chairman of the board ofsupervisors of the Company.Mr. Chen Jun, supervisor of the Company, is a Chinese national with no permanent residency abroad. He was bornin August 1980 and holds a bachelor's degree. He is a junior engineer. Since 2009, he has been serving as themanager of the Company's industrial design department and as the deputy secretary-general of the Company's
Enterprise Science and Technology Association, as well as the secretary of the Communist Party of China'sGreatStar Research and Development Innovation Branch.Ms. Huang Qiaozhen, supervisor of the Company, is a Chinese national with no permanent residency abroad. Shewas born in November 1983 and holds a bachelor's degree. Since January 2021, she has been serving as thepresident's secretary and deputy director of the President's Office.
3. Other senior Management personnel
Mr. Zhou Siyuan, secretary of the board and vice president of the Company, is a Chinese national with no permanentresidency abroad. He was born in 1986 and holds a graduate degree. Since January 2018, he has been serving as theboard secretary of the Company.Ms. Ni Shuyi, chief financial officer of the Company, is a Chinese national with no permanent residency abroad.She was born in 1976 and holds a bachelor's degree. Since 2008, she has been serving as the chief financial officerof the Company.Mr. Wang Min, vice president of the Company, is a Chinese national with no permanent residency abroad. He wasborn in 1971 and holds an associate degree. Since 2008, he has been serving as vice president of the Company,responsible for the Company's procurement business.Mr. Li Feng, vice president of the Company, is a Chinese national with no permanent residency abroad. She wasborn in 1975 and holds an associate degree. He has been serving as vice president of the Company since 2008,responsible for the Company's external sales business.Ms. Zhang Mao, vice president of the Company, is a Chinese national with no permanent residency abroad. Shewas born in 1979 and holds a bachelor's degree. From May 2021 to January 2022, she served as senior director ofInternational E-commerce at Hangzhou GreatStar Industrial Co., Ltd. Since January 2022, she has been serving asvice president of the Company, responsible for the Company's international e-commerce business.Ms. Jiang Saiping, vice president of the Company, is a Chinese national with no permanent residency abroad. Shewas born in November 1971 and holds a bachelor's degree. From December 2013 to May 2022, she served asdirector of export at the Company. Since May 2022, she has been serving as vice president of the Company,responsible for the Company's own brand and major customer business.Ms. Zhou Yiqiong, vice president of the Company, is a Chinese national with no permanent residency abroad. Shewas born in December 1971 and holds a bachelor's degree. From July 2002 to January 2023, she served as seniorsourcing manager at Home Depot Asia Pacific Procurement. Since September 2023, she has been serving as vicepresident of the Company.Employment in corporate shareholders?√ Applicable □ Not Applicable
| Employee name | Corporate shareholder name | Position | Commencement date of term | Termination date of term | Receive compensation or not |
| Qiu Jianping | GreatStar Holding Group Co., Ltd. | Chairman of the Board | August 10, 2009 | No | |
| Wang Lingling | GreatStar Holding Group Co., Ltd. | Vice chairman | January 10, 2020 | No | |
| Li Zheng | GreatStar Holding Group Co., Ltd. | Director | August 10, 2009 | No | |
| Chi Xiaoheng | GreatStar Holding Group Co., Ltd. | Director | August 10, 2009 | No | |
| Xu Zheng | GreatStar Holding Group | Supervisor | October 16, 2023 | Yes |
| Co., Ltd. | ||
| Explanation of employment in corporate shareholders | None | |
Employment in other organizations?√ Applicable □ Not Applicable
| Employee name | Other organization's name | Position | Commencement date of term | Termination date of term | Receive compensation or not |
| Qiu Jianping | Zhejiang Hangcha Holding Co., Ltd | Chairman, general manager | February 2, 2011 | No | |
| Qiu Jianping | Hangcha Group Co., Ltd. | Director | February 2, 2011 | No | |
| Qiu Jianping | Zhejiang Zhongtai GreatStar Real Estate Co., Ltd. | Director | May 10, 2005 | No | |
| Qiu Jianping | Hangzhou Haiwo Holdings Co., Ltd. | Executive director | March 19, 2011 | No | |
| Qiu Jianping | Hangzhou GreatStar Precision Machinery Co., Ltd | Chairman of the Board | December 30, 2006 | No | |
| Qiu Jianping | SMART SILVER LIMITED | Director | January 20, 2011 | No | |
| Qiu Jianping | Hong Kong Golden Deer Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | Shui On Zhaowei Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | Shui On Qihao Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | Shui On Junye Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | GreatStar Industrial Co., Ltd. | Executive director | June 20, 2013 | No | |
| Qiu Jianping | Jindao Investment Co., Ltd. | Director | January 20, 2011 | No | |
| Qiu Jianping | Hangzhou Xihu Tiandi Development Co., Ltd | Director | May 13, 2011 | No | |
| Qiu Jianping | Xinjiang Lianhe Investment Co., Ltd. | Executive Partner | January 10, 2012 | No | |
| Qiu Jianping | Taifeng Co., | Director | January 20, | No |
| Ltd. | 2011 | ||||
| Qiu Jianping | Hangzhou Kunxia Investment Management Partnership (Limited Partnership) | Executive Partner | January 18, 2018 | No | |
| Qiu Jianping | Zhejiang Equity Service Group Co., Ltd. | Director | November 8, 2017 | No | |
| Qiu Jianping | Zhejiang Guozi Robotics Co., Ltd. | Director | September 26, 2014 | No | |
| Qiu Jianping | Zhejiang United Investment Co., Ltd. | Director | April 13, 2015 | No | |
| Qiu Jianping | Hangzhou Lujing Culture and Creativity Co., Ltd. | Executive director | November 26, 2015 | No | |
| Qiu Jianping | Zhejiang Youbon Small Loan Co., Ltd. | Director | December 25, 2009 | No | |
| Qiu Jianping | Shanghai Haichao Haoyun Enterprise Management Partnership (Limited Partnership) | Executive Partner | April 17, 2019 | No | |
| Qiu Jianping | Shanghai Haichao Wenxing Enterprise Management Partnership (Limited Partnership) | Executive Partner | January 7, 2021 | No | |
| Qiu Jianping | Shanghai Jinguan Haoyun Enterprise Management Partnership (Limited Partnership) | Executive Partner | January 7, 2021 | No | |
| Qiu Jianping | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | Chairman of the Board | April 17, 2019 | No | |
| Qiu Jianping | Zhejiang Xinchai Co., Ltd. | Director | December 26, 2019 | No | |
| Qiu Jianping | Zhongce | Director | October 21, | No |
| Rubber Group Company Limited | 2019 | ||||
| Wang Lingling | Hangzhou GreatStar Precision Machinery Co., Ltd | Director | September 20, 2011 | No | |
| Wang Lingling | Hangzhou Fuyang Chongsheng Trading Co., Ltd. | Executive Director and General Manager | November 11, 2013 | No | |
| Wang Lingling | Zhejiang Zhongtai GreatStar Real Estate Co., Ltd. | Supervisor | March 11, 2011 | No | |
| Wang Lingling | Zhejiang Hangcha Holding Co., Ltd | Director | January 27, 2012 | No | |
| Wang Lingling | Hangzhou Haiwo Holdings Co., Ltd. | Supervisor | February 17, 2022 | No | |
| Wang Lingling | Zhejiang Yunsong Artificial Intelligence Technology Co., Ltd. | Supervisor | May 20, 2022 | No | |
| Li Zheng | Hangzhou GreatStar Precision Machinery Co., Ltd | Director | September 20, 2011 | No | |
| Xu Zheng | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | Supervisor | April 21, 2019 | No | |
| Xu Zheng | Hangcha Group Co., Ltd. | Director | March 25, 2011 | No | |
| Xu Zheng | Zhejiang Hangcha Holding Co., Ltd | Supervisor | January 27, 2012 | No | |
| Xu Zheng | Zhongce Rubber Group Co. Ltd. | Chairman of the supervisory board | October 21, 2019 | No | |
| Wang Weiyi | Zhejiang Guozi Robotics Co., Ltd. | Chairman of the Board | November 28, 2023 | No | |
| Wang Gang | Hangzhou Robam Electrical Appliance Co., | Board Secretary, Director | June 1, 2008 | Yes |
| Ltd. | |||||
| Wang Gang | Hangzhou Nbond Nonwovens Co., Ltd. | Director | January 1, 2013 | No | |
| Wang Gang | De Dietrich Household Appliances (Shanghai) Trading Co., Ltd. | Director | July 1, 2012 | No | |
| Wang Gang | Hangzhou Fortune Gas Cryogenic Group Co., Ltd. | Director | January 1, 2018 | No | |
| Wang Gang | Hanjia Design Group Co., Ltd. | Independent Director | March 15, 2022 | Yes | |
| Wang Gang | Hangzhou XZB Tech Co., Ltd. | Independent Director | December 28, 2022 | Yes | |
| Wang Gang | De Dietrich Trading (Shanghai) Co., Ltd. | Director | June 1, 2016 | No | |
| Wang Gang | Hangzhou G&G Tourism Supplies Co., Ltd. | Director | October 1, 2017 | No | |
| Wang Gang | Shanghai MXCHIP Information Technology Co., Ltd. | Supervisor | November 1, 2017 | No | |
| Wang Gang | Hangzhou Laoban Fuchuang Investment Management Co., Ltd. | Supervisor | May 1, 2018 | No | |
| Wang Gang | Shengzhou Kinde Intelligent Kitchen Electric Appliance Co., Ltd. | Director | July 1, 2018 | No | |
| Wang Gang | Versolsolar Hangzhou Co., Ltd. | Director | December 28, 2022 | No | |
| Chen Zhimin | Zhejiang Caitong Capital Investment Co., Ltd. | Director | March 24, 2015 | No | |
| Chen Zhimin | Hangzhou Tigermed Pharmaceutical Technology Co., Ltd. | Supervisor | April 22, 2020 | Yes | |
| Chen Zhimin | Zhejiang | Supervisor | September 20, | Yes |
| Canaan Technology Co., Ltd. | 2022 | ||||
| Chen Zhimin | Hangzhou Atexco Digital Technology Co., Ltd. | Independent Director | December 6, 2019 | Yes | |
| Chen Zhimin | Tongkun Group Co., Ltd. | Independent Director | June 23, 2020 | Yes | |
| Sheng Guihao | Zhejiang Hangcha Holding Co., Ltd | Director | January 11, 2019 | Yes | |
| Zhou Siyuan | Zhejiang Guozi Robotics Co., Ltd. | Director | September 14, 2017 | No | |
| Zhou Siyuan | Hangzhou Weiming Investment Management Co. Ltd. | Director | September 1, 2017 | No | |
| Zhou Siyuan | Hangzhou Xihu Tiandi Development Co., Ltd | Director | May 13, 2011 | No | |
| Zhou Siyuan | Hangzhou Xihu Tiandi Business Management Co., Ltd. | Director | July 23, 2014 | No | |
| Zhou Siyuan | Zhejiang Hangcha Holding Co., Ltd | Director | January 28, 2011 | No | |
| Zhou Siyuan | Ningbo Donghai Bank Co., Ltd. | Director | No | ||
| Note on positions with other organizations | None | ||||
Cases where current directors, supervisors and senior managers or those who departed during the reporting periodwere penalized by securities regulatory authorities in the past three years
□ Applicable √ Not Applicable
3. Changes in Remuneration of Directors, Supervisors and Senior ManagersDecision-making processes, basis for determination, and actual payment of remuneration for directors, supervisorsand senior managers
1. Decision-making processes of remuneration for directors, supervisors and senior managersThe remuneration for the Company's directors is proposed by the Remuneration Committee and reviewed andapproved by the Board of Directors and the General Meeting of Shareholders. The remuneration for the Company'ssupervisors is proposed by the Human Resources Department and reviewed and approved by the Board ofSupervisors and the Shareholders' Meeting. The position-based portion of senior managers' compensation isproposed by the Remuneration Committee and approved by the Board of Directors; the performance-based portionis determined based on the Company's operating performance and annual bonus principles, combined with
individual performance evaluations, and disbursed after review by the Chairman.
2. Basis for determination of remuneration for directors, supervisors and senior managersDirectors, supervisors and senior managers serving in the Company receive a position-based portion ofremuneration. Their performance-based portion of remuneration is determined based on the Company's operatingperformance and annual bonus principles, combined with individual performance evaluations, and disbursed afterreview by the Chairman.Remuneration of directors, supervisors and senior managers during the reporting periodUnit: RMB ten thousand
| Name | Gender | Age | Title | Status | Total pre-tax remuneration received from the Company | Whether to receive remuneration from related parties of the Company |
| Qiu Jianping | Male | 62 | Incumbent | 62.57 | No | |
| Chi Xiaoheng | Female | 49 | Incumbent | 180 | No | |
| Li Zheng | Male | 64 | Incumbent | 120 | No | |
| Wang Lingling | Female | 62 | Incumbent | 40.67 | No | |
| Wang Weiyi | Male | 54 | Incumbent | 120 | No | |
| Xu Zheng | Female | 40 | Incumbent | 0 | Yes | |
| Shi Hong | Female | 60 | Incumbent | 10 | No | |
| Chen Zhimin | Female | 63 | Incumbent | 10 | No | |
| Wang Gang | Male | 48 | Incumbent | 10 | No | |
| Sheng Guihao | Male | 58 | Incumbent | 0 | Yes | |
| Chen Jun | Male | 43 | Incumbent | 44 | No | |
| Huang Qiaozhen | Female | 40 | 23.4 | No | ||
| Zhou Siyuan | Male | 37 | Incumbent | 100 | No | |
| Ni Shuyi | Female | 47 | 100 | No | ||
| Wang Min | Male | 52 | 100 | No | ||
| Li Feng | Male | 49 | Incumbent | 120 | No | |
| Zhou Yiqiong | Female | 52 | Incumbent | 83.84 | No | |
| Jiang Saiping | Female | 52 | Incumbent | 68.4 | No | |
| Zhang Mao | Female | 44 | Incumbent | 62.4 | No | |
| Cen Zhengping | Male | 62 | Resignation | 0 | Yes | |
| Fu Yajuan | Female | 51 | Resignation | 46.32 | No | |
| Zhang Ou | Male | 57 | Resignation | 135.03 | No | |
| Total | -- | -- | -- | -- | 1,436.63 | -- |
Additional information
□ Applicable √ Not Applicable
VI. Performance of Duties by Directors during the Reporting Period
1. Board of Directors during the Reporting Period
| Session | Date of convening | Date of disclosure | Resolution |
| The 30th meeting of the 5th Board of Directors | April 21, 2023 | 22 April 2023 | Announcement No.: 2023-014 |
| The 31st meeting of the 5th Board of Directors | April 24, 2023 | 25 April 2023 | Announcement No.: 2023-026 |
| The 32nd meeting of the 5th Board of Directors | May 8, 2023 | May 9, 2023 | Announcement No.: 2023-029 |
| The 33rd meeting of the 5th Board of Directors | August 24, 2023 | August 25, 2023 | Announcement No.: 2023-038 |
| The 1st meeting of the 6th Board of Directors | September 11, 2023 | September 12, 2023 | Announcement No.: 2023-046 |
| The 2nd meeting of the 6th Board of Directors | October 26, 2023 | October 27, 2023 | Announcement No.: 2023-049 |
| The 3rd meeting of the 6th Board of Directors | December 18, 2023 | December 20, 2023 | Announcement No.: 2023-056 |
| The 4th meeting of the 6th Board of Directors | December 29, 2023 | December 30, 2023 | Announcement No.: 2023-058 |
2. Attendance of Directors at Meetings of the Board of Directors and General Meetings of Shareholders
| Attendance of directors at meetings of the Board of Directors and General Meetings of Shareholders | |||||||
| Name of director | Number of times to attend the required meetings of Board of Directors during the reporting period | Times of attendance in person at meetings of Board of Directors | Times of attendance at meetings of Board of Directors through telecommunication means | Times of attendance by proxy at meetings of Board of Directors | Times of absences from meetings of Board of Directors | Absences from two consecutive meetings of Board of Directors | Times of attendance at General Meetings of Shareholders |
| Qiu Jianping | 8 | 8 | 0 | 0 | 0 | No | 4 |
| Chi Xiaoheng | 8 | 8 | 0 | 0 | 0 | No | 4 |
| Wang Lingling | 8 | 8 | 0 | 0 | 0 | No | 4 |
| Li Zheng | 8 | 8 | 0 | 0 | 0 | No | 4 |
| Xu Zheng | 8 | 8 | 0 | 0 | 0 | No | 4 |
| Wang Weiyi | 4 | 4 | 0 | 0 | 0 | No | 1 |
| Wang Gang | 8 | 8 | 0 | 0 | 0 | No | 4 |
| Chen Zhimin | 8 | 8 | 0 | 0 | 0 | No | 4 |
| Shi Hong | 8 | 8 | 0 | 0 | 0 | No | 4 |
| Cen Zhengping | 4 | 4 | 0 | 0 | 0 | No | 3 |
Note on absences from two consecutive meetings of Board of DirectorsN/A
3. Objections Raised by Directors on Matters Related to the Company
Objections raised by directors on matters related to the Company
□ Yes √? No
Directors raised no objection on matters related to the Company during the reporting period.
4. Other Notes on Performance of Duties by Directors
Adoption of suggestions from directors in connection with the Company?Yes □ No
Notes on adoption or rejection of suggestions from directors in connection with the CompanyDuring the reporting period, each director of the Company strictly adhered to the relevant laws, regulations, theCompany's Articles of Association, and the Rules of Procedure for Meetings of Board of Directors, conscientiouslyfulfilled their respective duties, rigorously implemented resolutions of the General Meetings of Shareholders,attended meetings of the Board of Directors and Shareholders' Meetings, carefully deliberated on proposals, andactively promoted the implementation of resolutions of the Board of Directors. Each director worked to understandthe Company's operating conditions, internal control system development, and the implementation of resolutions ofthe Board of Directors. They discussed and deployed the priorities work for the next stage, fully understood andagreed to matters such as the reappointment of the financial auditing firm, profit distribution, related-partytransactions, and external investments that occurred during the reporting period, and contributed to the sustainedhigh-quality development of the Company's business lines.VII. Performance of Committees under the Board of Directors During the Reporting Period
| Committee Name | Members | Number of meetings held | Date of convening | Agenda | Important opinions and suggestions proposed | Other information on performance of duties | Details of objections (if any) |
| Remuneration and Evaluation Committee | Chen Zhimin, Shi Hong, Wang Gang, Chi Xiaoheng, and Xu Zheng | 1 | April 21, 2023 | Consideration and adoption of the Proposal on Remuneration Plan for Directors of Company for 2023 and the Proposal on Remuneration Plan for Senior Managers of Company for 2023. | |||
| Audit Committee | Wang Gang, Shi Hong, Chen Zhimin, Wang Lingling, and Xu Zheng | 4 | April 21, 2023 | Consideration and adoption of the full text and summary of the 2022 Annual Report, Company's 2022 Audit Report, Company's 2022 Financial Statement, Company's 2022 |
| Internal Control Self-Evaluation Report, Proposal on Renewal of Pan-China Certified Public Accountants LLP (Special General Partnership) as Company's Auditing Firm for 2023, Proposal on Company's Anticipated Routine Related-party Transactions in 2023, Summary of Company Audit Department's Audit Work in 2022 and Audit Work plan for 2023, and Special Report on Custody and Use of Funds Raised in 2022 | |||||||
| Audit Committee | Wang Gang, Shi Hong, Chen Zhimin, Wang Lingling, and Xu Zheng | 4 | April 24, 2023 | Consideration and adoption of the 2023 Q1 Report | |||
| Audit Committee | Wang Gang, Shi | 4 | August 24, 2023 | Consideration and |
| Hong, Chen Zhimin, Wang Lingling, and Xu Zheng | adoption of the Semi-annual Report 2023 and Special Semi-annual Report on Custody and Use of Funds Raised 2023 | ||||||
| Audit Committee | Wang Gang, Shi Hong, Chen Zhimin, Qiu Jianping, and Xu Zheng | 4 | October 26, 2023 | Consideration and adoption of the 2023 Third-Quarter Report and 2023 Third-Quarter Special Report on Custody and Use of Funds Raised | |||
| Nomination Committee | Chen Zhimin, Shi Hong, and Chi Xiaoheng | 1 | August 24, 2023 | Consideration and adoption of the Proposal on Election of Non-independent Directors to Company's New Board of Directors and Proposal on Election of Independent Directors to Company's New Board of Directors |
VIII. Performance of Board of SupervisorsRisks identified by the Board of Supervisors in supervisory activities for the Company during the reporting period
□ Yes √? No
The Board of Supervisors raised no objection to the supervisory matters during the reporting period.IX. Employees
1. Number of Employees, Professional Composition, and Education Levels
| Number of current employees of the parent Company at the end of the reporting period (person) | 1,380 |
| Number of current employees of main subsidiaries at the end of the reporting period (person) | 9,418 |
| Total number of current employees at the end of the reporting period (person) | 10,798 |
| Total number of employees receiving pay in the reporting period (person) | 10,798 |
| Number of retired employees whose expenses are borne by the parent Company and main subsidiaries (person) | 0 |
| Specialty composition | |
| Specialty category | Number of employees (person) |
| Production personnel | 7,265 |
| Sales personnel | 1,075 |
| Technical personnel | 1,105 |
| Financial personnel | 236 |
| Administrative personnel | 1,117 |
| Total | 10,798 |
| Education level | |
| Education level category | Employees (person) |
| Master's degree or above | 146 |
| University (including junior college) | 2,442 |
| Senior high school (including vocational and technical schools) | 2,831 |
| Under senior high school | 5,379 |
| Total | 10,798 |
2. Remuneration Policy
The Company strictly follows the relevant provisions of the Labor Contract Law in managing employeecompensation, ensuring that employees' wages are paid in full and on time before the 20th day of each month. In2023, average employee wage of the Company was higher than the average wage standard of Zhejiang Province in2023. The Company paid employees' regular, weekend and overtime pay in full accordance with relevant regulationsand a comprehensive working hour system for some positions. The Company carried out one Company-wide salaryadjustment, three quarterly salary adjustments, and one external salary level survey over the year. The salarycalculation schemes fall into two categories. Frontline employees receive pay for overtime work, with hourly wagesand overtime wages calculated according to national labor laws and policies; employees holding Managementpositions receive a combination of a fixed portion and a performance-based portion of pay.
3. Training Plan
Employee training and development is an important part of the Company's work. In 2023, training Managementcontinued to focus on three areas: new employee growth education, specialized technical training, and employeecareer literacy education. Over the year, the Company organized 61 training sessions with a total of 3,037 employeesparticipating, accumulating 9,217 total training hours. The Company also continued the talent pipeline development,with a focus on selecting and cultivating director-level and manager-level candidates. Business elites were alsoselected to participate in the Eagle Training Camp to enhance their business Management capabilities. In 2024, theCompany will continue to carry out organizational empowerment and talent development work centering on theCompany's development needs, implement the Eagle Training Camp and a Management leadership capabilityenhancement plan, and strengthen the internal trainer team and build a strong instructor team that can meet thegrowing demand for training.
4. Use of Employment Services
□ Applicable √ Not Applicable
X. Profit Distribution of the Company and Transfer of Capital Reserve into Share CapitalFormulation, implementation or adjustment of the profit distribution policy during the reporting period, especiallythe cash dividend policy?√ Applicable □ Not ApplicableOn May 10, 2021, the Company held the annual General Meeting of Shareholders of 2020, which reviewed andapproved the Company's Shareholder Return Plan for the Next Three Years (2021-2023). The Board of Directorsformulated the Company's Shareholder Return Plan for the Next Three Years (2021-2023) after havingcomprehensively considered the Company's profitability, development strategies and plans, shareholder returns,social capital costs, external financing environment and other factors.In the reporting period, the formulation and implementation of the Company's profit distribution plan conforms tothe China Securities Regulatory Commission's Notice on Further Implementation of Cash Dividends Distributionof Listed Companies, the No.3 Guideline for the Supervision of Listed Companies - Cash Dividend Distribution ofListed Companies as well as the Articles of Association. The deliberation and decision-making procedures andmechanisms were complete; the independent directors diligently fulfilled their duties; and the legitimate rights andinterests of minority shareholders were fully protected.
| Special note of the cash dividend policy | |
| Conforming to the provisions of the Company's Articles of Association or the requirements of the General Meeting of Shareholders resolutions: | Yes |
| The distribution standards and ratios were clear and unambiguous: | Yes |
| The relevant decision-making procedures and mechanisms were complete: | Yes |
| The independent directors performed their duties diligently and played their due role: | Yes |
| If the Company did not distribute cash dividends, it should disclose the specific reasons and the measures to be taken to enhance the return level for investors: | Yes |
| Minority shareholders had sufficient opportunities to express their opinions and appeals, and their legitimate rights and interests were fully protected: | Yes |
| If the cash dividend policy was adjusted or changed, the conditions and procedures were compliant and transparent: | Yes |
The Company made profits during the reporting period and the parent Company's profits distributable toshareholders were positive, but no cash dividend distribution plan was announced
□ Applicable √ Not Applicable
Profit distribution and transfer of capital reserve into share capital in the reporting period?√ Applicable □ Not Applicable
| Number of bonus shares distributed for every 10 shares (shares) | 0 |
| Cash dividends distributed for every 10 shares (RMB) (including tax) | 1 |
| Base number of shares for the distribution plan (shares) | 1,194,478,182 |
| Cash dividend amount (RMB) (including tax) | 119,447,818.20 |
| Cash dividend amount distributed by other means (e.g., share buyback) (RMB) | 0.00 |
| Total cash dividends (including those distributed by other means) (RMB) | 119,447,818.20 |
| Distributable profits (RMB) | 5,600,927,990.13 |
| Percentage of total cash dividends (including those distributed by other means) to total profit distribution | 100% |
| Information on the current cash dividend distribution | |
| Other | |
| Notes on profit distribution and plan of transfer of capital reserve into share capital | |
| As audited by Pan-China Certified Public Accountants LLP (Special General Partnership), the Company (parent Company) achieved a net profit of RMB1,251.1709 million in 2023. In accordance with the Company Law, Accounting Standards for Business Enterprises and the Company's Articles of Association, the Company plans to allocate 10% of its net profit in 2023 equal to RMB 125.11709 million as statutory surplus reserves. By adding the remaining distributable profits of RMB 4,882.1912 million from previous years, and deducting RMB 407.3171 million from the cash dividend, the actual profits distributable to shareholders are RMB 5,600.9280 million. (Note: Any discrepancies between totals and entries are due to rounding of individual figures) | |
XI. Implementation of the Company's Equity Incentive Plan, Employee Stock Ownership Plans or OtherEmployee Incentive Measures
□ Applicable √ Not Applicable
The Company has no implementation of equity incentive plan, employee stock ownership plan or other employeeincentive measures during the reporting period.XII. Development and Implementation of the Internal Control System During the Reporting Period
1. Development and Implementation of the Internal Control System
During the reporting period, the Company strictly followed the requirements of the Company Law, Securities Law,Code of Corporate Governance of Listed Companies, General Regulation for Enterprise Internal Control, and otherrelevant laws, regulations and normative documents in continuously improving the Company's internal controlsystem. The Board of Directors carried out an annual self-evaluation of the Company's internal controls anddisclosed the Internal Control Self-Evaluation Report and engaged an accounting firm to audit the Company'sinternal controls as required by the Shenzhen Stock Exchange. In 2023, the Company revised its Working Rules ofIndependent Directors and Rules on Implementation of Audit Committee in accordance with the CSRC's Measuresfor the Administration of Independent Directors of Listed Companies. Based on the Company's actual businessconditions, the Articles of Association were revised to continuously enhance and improve the Company's corporategovernance.During the reporting period, there were no material deficiencies or important deficiencies in the Company's internalcontrols over financial reporting or non-financial reporting. The Company has maintained effective internal controlsover financial reporting in all material aspects in accordance with the enterprise internal control standards systemand relevant regulatory requirements.
2. Details on Deficiencies in Material Internal Controls Discovered During the Reporting Period
□ Yes √? No
XIII. The Company's Management and Control over Subsidiaries During the Reporting Period
| Company name | Integration plan | Integration progress | Issues encountered in integration | Measures taken | Solution progress | Follow-up solution plan |
| N/A | N/A | N/A | N/A | N/A | N/A | N/A |
XIV. Internal Control Evaluation Report or Internal Control Audit Report
1. Internal Control Evaluation Report
| Date of disclosing the full text of the Internal Control Evaluation Report | April 25, 2024 |
| Index for disclosing the full text of | 2023 Internal Control Self-Evaluation Report disclosed on cninfo |
| the Internal Control Evaluation Report | (http://www.cninfo.com.cn) | |
| Percentage of total assets of units covered by evaluation to the Company's consolidated total assets | 100.00% | |
| Percentage of operating revenues of units covered by evaluation to the Company's consolidated operating revenues | 100.00% | |
| Deficiency identification criteria | ||
| Category | Financial reporting | Non-financial reporting |
| Qualitative criteria | (1) Signs of material deficiencies in financial reporting include: i) fraud by directors, supervisors and senior managers; ii) corrections of material errors in issued financial reports; iii) material misstatements in financial reports issued in the current period identified by CPAs and not detected by the Company's internal controls during operation; iv) ineffective supervision of internal controls by the Audit Committee and internal audit function. (2) Signs of important deficiencies in financial reporting include: i) failure to select and apply accounting policies in accordance with generally accepted accounting standards; ii) failure to establish anti-fraud procedures and control measures; iii) lack of corresponding control mechanisms or implementation for the accounting method of non-routine or special transactions, without compensating controls. (3) Deficiencies other than material and important deficiencies are considered general deficiencies. | The following cases can be identified as material deficiencies, while other cases are determined as important or general deficiencies based on the severity of impact. (1) The unscientific nature of the Company's decision-making process; (2) violation of national laws and regulations, such as environmental pollution; (3) loss of a significant number of managerial or technical personnel; (4) loss of a significant number of managerial or technical personnel; (5) failure to make correction, particularly for significant or important deficiencies identified, in internal control evaluation; (6) lack of institutional controls or systemic failure of controls over important business areas. |
| Quantitative criteria | Internal control deficiencies that may lead to or have led to losses related to profits are measured by the operating revenues. If such a deficiency alone or together with other deficiencies may lead to misstatements in financial reporting of less than 1% of the operating revenues, it is considered a general deficiency; if the resultant misstatements exceed 1% but less than 3% of the operating revenues, it is considered an important deficiency; if the resultant misstatements exceed 3% of the operating revenues, it is considered a material deficiency. Internal | (1) Material deficiency: Causing direct property loss of over RMB 10 million;(2) Important deficiency: Causing direct property loss of RMB 1-10 million (inclusive) (3) General deficiency: Causing direct property loss below RMB 1 million (inclusive). |
| control deficiencies that may lead to or have led to losses related to asset Management are measured by the total assets. If such a deficiency alone or together with other deficiencies may lead to misstatements in financial reporting of less than 1% of the total assets, it is considered a general deficiency; if the resultant misstatements exceed 1% but less than 3% of the total assets, it is considered an important deficiency; if the resultant misstatements exceed 3% of the total assets, it is considered a material deficiency. | ||
| Number of material deficiencies in financial reporting | 0 | |
| Number of material deficiencies in non-financial reporting | 0 | |
| Number of important deficiencies in financial reporting | 0 | |
| Number of important deficiencies in non-financial reporting | 0 | |
2. Internal Control Audit Report
?√ Applicable □ Not Applicable
| Review opinion from the Internal Control Audit Report | |
| We believe that GreatStar has maintained effective internal controls over financial reporting in all material aspects in accordance with the General Regulation for Enterprise Internal Control and relevant regulatory requirements as of December 31, 2023. | |
| Disclosure of Internal Control Audit Report | Disclosure |
| Date of disclosing the full text of the Internal Control Audit Report | April 25, 2024 |
| Index for disclosing the full text of the Internal Control Audit Report | Certified Report on Internal Controls of Hangzhou GreatStar Industrial Co., Ltd. (Pan-China Audited [2024] No.3683) disclosed on cninfo (http://www.cninfo.com.cn) |
| Type of opinion on the Internal Control Audit Report | Standard unqualified opinion |
| Existence of material deficiencies in non-financial reporting | No |
The accounting firm gives a non-standard opinion in the Internal Control Audit Report
□ Yes √? No
Consistency between the accounting firm's opinion in the Internal Control Audit Report with that in the Board ofDirectors' Self-Evaluation Report?Yes □ NoXV. Correction of Issues Identified by Self-Inspection in the Corporate Governance Special Operation forListed CompaniesN/A.
Section V Environmental and Social ResponsibilityI. Major Environmental Protection IssuesWhether the listed Company and its subsidiaries belong to the key pollutant discharge units announced by theenvironmental protection department
□ Yes √? No
Administrative punishment for environmental problems during the reporting period
| Name of Company or subsidiary | Causes | Violations | Punishment result | The impact on the production and operation of the listed Company | Corrective action of the Company |
| None | None | None | None | None | None |
Refer to other environmental information disclosed by key pollutant discharge unitsThe Company and its subsidiaries do not belong to the key pollutant discharge units announced by the nationalenvironmental protection department. The Company was subject to no administrative punishment for environmentalproblems during the reporting period.Measures taken to reduce its carbon emissions during the reporting period and their effects?√ Applicable □ Not ApplicableIn response to the national call for energy conservation and emission reduction, the Company has formulated theEnergy Conservation and Emission Reduction Management System, Energy Management Operation Instruction,Regulations on Greenhouse Gas Management and other systems, integrating the concept of environmentalprotection into the routine operation and development of the Company. Meanwhile, the Company actively designsgreen products, builds green factories, promotes the green office concept, and makes other efforts to implement theenergy efficiency and low carbon concepts. The Company takes environmental factors into full consideration in theproduct design and R&D stage, actively launches green products, constantly improves the product environmentalprotection attributes, and continuously develops new environmental protection technology to reduce waste materials,environmental pollution and energy consumption. In order to facilitate the fight against pollution, the Company hasdeveloped scientific waste Management and control procedures, chemical Management procedures and otherrelevant standards to strictly control pollution, minimize the impact of its business operations on the environment,and realize green production; In accordance with the principles of low-carbon energy and clean production, theCompany promotes the green transformation and upgrading of the factory through the construction of rooftop solarenergy, the United States of electric forklift and other measures to achieve green development; Centering on theconcept of green office, the Company advocates system upgrading, and actively promote the green office awarenessacross the whole Company with mutual supports of all departments.Reasons for not disclosing other environmental informationNoneII. Social Responsibility
(1) Protection of rights and interests of shareholders and creditors
During the reporting period, the Company further strengthened regulations of operations, established and improvedits corporate governance structure, and regulated the Management of matters such as the convening, holding anddeliberation procedures of General Meetings of Shareholders to ensure shareholders' rights to be informed,participate and vote on the Company's major matters. The Company continuously improved its internal controlsystem and revised the Working Rules of Independent Directors and Rules on Implementation of Audit Committeeaccording to relevant regulations. It diligently fulfilled its information disclosure obligations, ensuring informationdisclosures were truthful, accurate, complete, timely and fair without selective disclosure. It strictly implementedinsider registration and confidentiality regulations, treated all shareholders and investors impartially, strengthenedinvestor relations Management, and communicated with investors through multiple channels like the investor
relations interactive platform and hotlines to protect the legal rights and interests of all shareholders, especiallyminority shareholders.
(2) Protection of rights and interests of employees
The Company adheres to a people-oriented philosophy, makes the talent strategy a priority for enterprisedevelopment, strictly abides by laws and regulations such as the Labor Law and Law on the Protection of Women'sRights and Interests, pays for employees' pensions, medical, unemployment, work-related injury and maternityinsurances on time, respects and protects employees' individual rights and interests, and attach close attention toemployee health, safety and satisfaction. The Company values talent development, regularly organizing safetyknowledge training, basic skills training for various positions, comprehensive quality training for managers, etc.,allowing employees to effectively enhance their overall specialized qualities and comprehensive abilities beyondtheir current roles, achieving mutual growth of employees and the Company, and building harmonious and stablelabor relations.
(3) Protection of rights and interests of suppliers, clients and consumers
The Company has always adhered to the principles of "honesty and trustworthiness, mutual benefits and reciprocity,and compliance" in transactions, attaches great importance to communication and coordination with all relatedparties, respects and protects the legitimate rights and interests of suppliers and clients, and works to establishstrategic partnership relationships with them. The Company continuously improves its procurement systems andprocesses and has established a fair and impartial evaluation system to screen and select qualified suppliers. TheCompany insists on putting clients' interests first, applies strict controls over product quality, continuously improvesservice quality, and always pays attention to product safety, ensuring that the rights and interests of all parties areproperly protected.
(4) Environmental protection
The Company highly values environmental protection efforts, treating environmental protection, energyconservation and emission reduction as important tasks. During the reporting period, the Company strictly carriedout effective comprehensive treatment of wastewater and exhaust gases in accordance with relevant environmentalregulations and corresponding standards, with the normal operation of wastewater and exhaust gas treatmentfacilities. To strengthen emission reduction Management and pollution control, the Company conducts regularinspections and ensures that the environmental protection facilities work properly and energy conservation andemission reduction efforts proceed smoothly.III. Consolidating and Expanding Achievements in Poverty Alleviation and Rural RevitalizationDuring the reporting period, the Company did not participate in the poverty alleviation and rural revitalization work.
Section VI Significant MattersI. Fulfillment of Commitments
1. Commitments fulfilled, being fulfilled and unfulfilled by the actual controller, shareholders, related parties,acquirers, the Company and other relevant parties as of the end of the reporting period?√ Applicable □ Not Applicable
| Commitment | Made by | Type of commitment | Subject of commitment | Made on | Deadline of commitment | Fulfillment |
| Commitments made upon asset restructuring | Qiu Jianping; Wang Lingling | Reduction and control of related party transactions | 1. I and the companies under my control will reduce related party transactions with the listed Company as much as possible and will not seek treatment more favorable than that given to other third parties in business cooperation with the listed Company by taking advantage of my position as the actual controller of the listed Company. 2. The Company will not seek preference in reaching transactions with the listed Company by taking advantage of its position as the controlling shareholder of the listed | June 4, 2019 | Perpetual | Being strictly fulfilled |
| market prices, and refrain from any acts that harm the legitimate rights and interests of the listed Company and other shareholders through such transactions. | ||||||
| Commitments made upon asset restructuring | GreatStar Group | Reduction and control of related party transactions | 1. The Company and the companies under its control will reduce related party transactions with the listed Company as much as possible and will not seek treatment more favorable than that given to other third parties in business cooperation with the listed Company by taking advantage of its position as the controlling shareholder of the listed Company. 2. The Company will not seek preference in reaching transactions with the listed Company by | June 4, 2019 | Perpetual | Being strictly fulfilled |
| will not be conducted under terms that are evidently unfair compared to market prices, and refrain from any acts that harm the legitimate rights and interests of the listed Company and other shareholders through such transactions. | ||||||
| Commitments made upon asset restructuring | Qiu Jianping; Wang Lingling | Horizontal competition | 1. I will not directly or indirectly engage in or participate in any business activity that constitutes potential direct or indirect competition with the business activities of the listed Company and its subsidiaries, and I will ensure that effective legal measures are taken to prevent other companies controlled by me from engaging in or participating in any business activities that competes | June 4, 2019 | Perpetual | Being strictly fulfilled |
| provide the commercial opportunity to the listed Company. 4. If I breach the above commitments, I am willing to bear all liability arising therefrom and fully indemnify the listed Company for all direct or indirect losses. | ||||||
| Commitments made upon asset restructuring | GreatStar Group | Horizontal competition | 1. The Company will not directly or indirectly engage in or participate in any business activity that constitutes potential direct or indirect competition with the business activities of the listed Company and its subsidiaries, and the Company will ensure that effective legal measures are taken to prevent other companies controlled by the Company from engaging in or participating in any | June 4, 2019 | Perpetual | Being strictly fulfilled |
| advantage of the opportunity within the reasonable period specified in the notification, the Company or other companies under its control will make all efforts to provide the commercial opportunity to the listed Company. 4. If I breach the above commitments, the Company is willing to bear all liability arising therefrom and fully indemnify the listed Company for all direct or indirect losses. | ||||||
| Commitments made upon asset restructuring | Qiu Jianping; Wang Lingling | Maintaining the listed Company's independence | I undertake that after the completion of this transaction, I will ensure that the listed Company continues to improve its corporate governance structure and independent operating Management system in accordance with the | June 4, 2019 | Perpetual | Being strictly fulfilled |
| requirements of relevant laws, regulations and its Articles of Association and the listed Company will maintain its independence in terms of business, assets, finance, institutions, staffing and other aspects to effectively protect the interests of all shareholders. | ||||||
| Commitments made upon asset restructuring | GreatStar Group | Maintaining the listed Company's independence | The Company undertakes that after the completion of this transaction, it will ensure that the listed Company continues to improve its corporate governance structure and independent operating Management system in accordance with the requirements of relevant laws, regulations and its Articles of Association and the listed Company will maintain its independence | June 4, 2019 | Perpetual | Being strictly fulfilled |
| in terms of business, assets, finance, institutions, staffing and other aspects to effectively protect the interests of all shareholders. | ||||||
| Commitments made upon asset restructuring | All directors and senior managers of the Company | Other commitments | 1. I undertake not to transfer benefits to other entities or individuals for free or on unfair terms, nor will I damage the Company's interests in any other way. 2. I undertake to restrain my job-related consumption. 3. I undertake not to use the Company's assets for investments or consumption activities unrelated to the fulfillment of my duties. 4. I undertake that the remuneration system formulated by the Board of Directors or the Remuneration and Evaluation Committee will be linked to the implementation of the | June 4, 2019 | Perpetual | Being strictly fulfilled |
Company'smeasures tosupplementreturns. If Iviolate theabovecommitmentsand causelosses to theCompany orshareholders,I shall be heldliable forindemnification inaccordancewith the law.
| Commitments made upon asset restructuring | GreatStar Group | Other commitments | 1. I will not overstep authority to interfere with the Company's operating and Management activities, nor will I infringe upon the Company's interests. 2. The Company will make supplementary commitments in accordance with the China Securities Regulatory Commission's regulations from the date of this commitment until the completion of this transaction, if the CSRC issues clear regulations on measures to supplement returns and | June 4, 2019 | Perpetual | Being strictly fulfilled |
| the above commitments and cause losses to the Company or shareholders, the Company shall be held liable for indemnification in accordance with the law. | ||||||
| Commitments made upon asset restructuring | Qiu Jianping; Wang Lingling | Other commitments | 1. I will not overstep authority to interfere with the Company's operating and Management activities, nor will I infringe upon the Company's interests. 2. The Company will make supplementary commitments in accordance with the China Securities Regulatory Commission's regulations from the date of this commitment until the completion of this transaction, if the CSRC issues clear regulations on measures to supplement returns and related commitments, and the above | June 4, 2019 | Perpetual | Being strictly fulfilled |
| indemnification in accordance with the law. | ||||||
| Commitments made upon IPO or refinancing | All directors and senior managers of the Company | Other commitments | 1. Undertaking not to transfer benefits to other entities or individuals for free or on unfair terms or damage the Company's interests in any other way. 2. Undertaking to restrain my job-related consumption by directors and senior managers. 3. Undertaking not to use the Company's assets for investments or consumption activities unrelated to the fulfillment of duties of oneself. 4. Undertaking that the remuneration system formulated by the Board of Directors or the Remuneration and Evaluation Committee will be linked to the implementation of the Company's measures to supplement | November 23, 2018 | Perpetual | Being strictly fulfilled |
| Commitments made upon IPO or refinancing | GreatStar Group | Other commitments | Undertaking not to overstep authority to interfere with the Company's operating and Management activities or infringe upon the Company's interests. As one of the responsible persons for the measures to supplement returns, if the Company violates or refuses to fulfill the above commitments, the Company agrees to accept relevant penalties or Management measures imposed by the China Securities Regulatory Commission, the Shenzhen Stock Exchange and other regulatory authorities in accordance with their relevant regulations and rules, and the Company is willing to assume the corresponding legal liability. | November 23, 2018 | Perpetual | Being strictly fulfilled |
| Commitments made upon IPO or refinancing | Qiu Jianping; Wang Lingling | Other commitments | Undertaking not to overstep authority to interfere with the Company's operating and Management activities or infringe upon the Company's interests. As one of the responsible persons for the measures to supplement returns, if I violate or refuse to fulfill the above commitments, I agree to accept relevant penalties or Management measures imposed by the China Securities Regulatory Commission, the Shenzhen Stock Exchange and other regulatory authorities in accordance with their relevant regulations and rules, and I am willing to assume the corresponding legal liability. | November 13, 2019 | Perpetual | Being strictly fulfilled |
| Commitments made upon IPO or refinancing | GreatStar Group | Commitments regarding horizontal competition, | During the period when it is the controlling | April 5, 2009 | As controlling shareholder of the | Being strictly fulfilled |
| related party transactions and misappropriation of funds | shareholder of the issuer, GreatStar Holding Group Co., Ltd. and enterprises that it will directly or indirectly control in the future will not engage in or participate in any operations or activities in or outside China in any form (including but not limited to investment, acquisition, joint operation, joint venture, cooperation, partnership, contracting or leasing operations, or purchase of the listed Company's shares) that constitute or may constitute substantial competition with the issuer's main business activities. Nor will they support any third parties other than the issuer and its wholly-owned or controlled subsidiaries to engage in | Company |
| or participate in any operations or activities that constitute or may constitute substantial competition with the issuer's main business operations in or outside China in any form. GreatStar Holding Group Co., Ltd. will indemnify the issuer for all actual losses incurred by the issuer due to GreatStar's failure to fulfill the commitments and warranties made in the letter of commitment. | ||||||
| Commitments made upon IPO or refinancing | Qiu Jianping; Wang Lingling | Commitments regarding horizontal competition, related party transactions and misappropriation of funds | During the period when they possess the actual control rights over the issuer, Qiu Jianping and his wife and enterprises that they directly or indirectly control other than the issuer and its wholly-owned or controlled subsidiaries will not engage in or participate in | April 5, 2010 | As actual controller of the Company | Being strictly fulfilled |
| form. Qiu Jianping and his wife will indemnify the issuer for all actual losses incurred by the issuer due to their failure to fulfill the commitments and warranties made in the letter of commitment. | |||
| Fulfilment of commitments as scheduled | Yes | ||
2. If the Company's assets or projects are expected to generate revenues in the reporting period, the Companyshould explain whether the assets or projects have generated revenues as expected and reasons
□ Applicable √ Not Applicable
II. Non-operational funds occupied by controlling shareholders and other related parties of the listedCompany
□ Applicable √ Not Applicable
There was no occupation of non-operational funds of the listed Company by controlling shareholders and otherrelated parties during the reporting period.III. Illegal external guarantee
□ Applicable √ Not Applicable
There is no illegal external guarantee during the reporting period.IV. Explanation of the Board of Directors on the Last "Non-standard Audit Report"
□ Applicable √ Not Applicable
V. Explanation of the Board of Directors, the Board of Supervisors and independent directors (If Any) on the"Non-standard Audit Report" of the accounting firm in the current reporting period
□ Applicable √ Not Applicable
VI. Notes on changes in accounting policies and accounting estimates and correction of major accountingCompared to the previous year's financial report?√ Applicable □ Not ApplicableSee Section 10.V "Significant Accounting Policies and Accounting Estimates" and 35. "Changes in materialaccounting policies and accounting estimates"VII. Notes on changes in the scope of consolidated financial statements compared to the previous year'sfinancial report?√ Applicable □ Not ApplicableSee Section 10.VIII "Changes in the consolidation scope"
VIII. Employment and dismissal of accounting firmCurrently engaged accounting firm
| Accounting firm in China | Pan-China Certified Public Accountants LLP (Special General Partnership) |
| Compensation for accounting firm in China (RMB 10,000) | 89.5 |
| Continuous duration of audit service of accounting firm in China | 15 |
| Name of the CPAs from accounting firm in China | Li Deyong and Hu Fujian |
| Continuous duration of audit service of CPAs from accounting firm in China | 1 |
| Accounting firm outside China (if any) | N/A |
| Continuous duration of service of accounting firm outside China (if any) | N/A |
| Name of the CPAs from accounting firm outside China (if any) | N/A |
| Continuous duration of audit service of CPAs from accounting firm outside China (if any) | N/A |
Change to accounting firm
□ Yes √? No
Information on appointment of accounting for internal control audit, financial consultant or sponsor
□ Applicable √ Not Applicable
IX. Potential delisting situation after disclosure of annual report
□ Applicable √ Not Applicable
X. Matters related to bankruptcy reorganization
□ Applicable √ Not Applicable
No bankruptcy reorganization related matters occurred during the reporting period.XI. Major litigation and arbitration matters?√ Applicable □ Not Applicable
| Basic information of litigation (arbitration) | Amount involved (RMB ten thousand ) | Whether projected liabilities are formed | Progress of litigation (arbitration) | Litigation (arbitration) hearing results and impacts | Enforcement of litigation (arbitration) judgments | Date of disclosure | Disclosure index |
| Summary of other matters not meeting the disclosure criteria for material litigation (the Company as plaintiff) | 352.15 | No | As of December 31, 2023, the amount of money involved in cases that have been successfully arbitrated is RMB 1,560,900, that | For litigation matters, the Company will: 1. Successful litigation or mediation to recover the funds involved; 2. Require the | In execution |
| involved in cases that have been lost in arbitration is RMB 1,208,700, that involved in cases have been appealed in arbitration is RMB 291,300, and that involved in cases that have been mediated is RMB 460,600. | involved unit and its associated legal person to naturally provide guarantee for the execution of the debt, so as to guarantee the recovery of the involved funds; 3. Make provision for bad debt in accordance with accounting standards and Company Management systems. In summary, | ||||||
| Summary of other matters not meeting the disclosure criteria for material litigation (the Company as defendant) | 260.66 | No | As of December 31, 2023, the amount of money involved in cases that have been successfully arbitrated is RMB 3,000, and that involved in cases that have been mediated is RMB 2,603,600. | For litigation matters, the Company will: 1. Successful litigation or mediation to recover the funds involved; 2. Require the involved unit and its associated legal person to naturally provide guarantee for the execution of the debt to | Enforcement concluded |
guaranteetherecovery oftheinvolvedfunds; 3.Makeprovisionfor bad debtinaccordancewithaccountingstandardsandCompanyManagement systems.Insummary,thislitigationhas nomaterialimpact ontheCompany.
XII. Punishment and rectification
□ Applicable √ Not Applicable
The Company did not invest in any case of punishment or rectification during the reporting period.XIII. Integrity of the Company, its controlling shareholders and actual controller?√ Applicable □ Not ApplicableDuring the reporting period, the Company and its controlling shareholder, GreatStar Group, and the actual controller,Mr. Qiu Jianping, were in good faith, and there were no cases of failing to perform court judgments in force, ordebts incurred in high amounts that have not been settled by the due date.XIV. Significant Related-party Transactions
1. Related-party transactions relevant to routine operations
□ Applicable √ Not Applicable
The Company has no related-party transactions relevant to routine operations in the reporting period.
2. Related-party transactions arising from acquisition and sale of assets or equity
□ Applicable √ Not Applicable
The Company has no related-party transactions arising from acquisition and sale of assets or equity in the reportingperiod.
3. Related-party transactions with joint investments
□ Applicable √ Not Applicable
The Company has no related-party transactions with joint investments in the reporting period.
4. Credits and liabilities with related parties
□ Applicable √ Not Applicable
The Company has no credits and liabilities with related parties in the reporting period.
5. Transactions with related finance companies
□ Applicable √ Not Applicable
There was no deposit, loan, credit granting or other financial business between the Company and related financecompanies or parties.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable √ Not Applicable
There was no deposit, loan, credit granting or other financial business between financial companies controlled bythe Company and related parties.
7. Other significant related-party transactions
□ Applicable √ Not Applicable
The Company has no other significant related-party transactions in the reporting period.XV. Material contracts and their performance
1. Trusteeships, Contracts, and Leases
(1) Trusteeships
□ Applicable √ Not Applicable
The Company has no trusteeships in the reporting period.
(2) Contracts
□ Applicable √ Not Applicable
The Company has no contracts in the reporting period.
(3) Leases
□ Applicable √ Not Applicable
The Company has no leases in the reporting period.
2. Material guarantee
?√ Applicable □ Not ApplicableUnit: RMB ten thousand
| External guarantees of the Company and its subsidiaries (excluding guarantees for subsidiaries) | ||||||||||
| Guaranteed party | Disclosure date of announcement relating to guarantee quota | Guarantee quota | Occurrence date of actual guarantee | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter guarantee (if any) | Guarantee period | Performance completed or not | Guarantee for related parties or not |
| N/A | N/A | N/A | N/A | |||||||
| The Company's guarantee to its subsidiaries | ||||||||||
| Guaranteed party | Disclosure date of announcement relating to guarantee quota | Guarantee quota | Occurrence date of actual guarantee | Actual guarantee amount | Type of guarantee | Collateral (if any) | Counter guarantee (if any) | Guarantee period | Performance completed or not | Guarantee for related parties or not |
| GreatStar Europe AG | December 4, 2021 | 27,507.2 | December 27, 2021 | 21,926.23 | General guarantee | N/A | N/A | 2021.12.27-2029.06.30 | No | Yes |
| Zhongshan Geelong Industry Co., Ltd. | September 24, 2022 | 8,400 | November 3, 2022 | 7,082.7 | General guarantee | N/A | N/A | 3 years | No | Yes |
| Arrow Fastener Co., LLC | May 9, 2023 | 7,082.7 | May 17, 2023 | 708.27 | General guarantee | N/A | N/A | 1 year | No | Yes |
| Prime Line Products, LLC | May 9, 2023 | 5,312.03 | May 17, 2023 | 5,312.03 | General guarantee | N/A | N/A | 1 year | No | Yes |
| Shop-Vac USA, LLC | May 9, 2023 | 7,082.7 | May 17, 2023 | 7,082.7 | General guarantee | N/A | N/A | 1 year | No | Yes |
| Suzhou Xindadi Hardware Product Co., Ltd | May 9, 2023 | 10,000 | June 22, 2023 | 6,200 | General guarantee | N/A | N/A | 3 years | No | Yes |
| Total guarantee quota for subsidiaries approved in the reporting period (B1) | 29,477.43 | Total guarantee amount actually incurred for subsidiaries in the reporting period (B2) | 19,303 | |||||||
| Total guarantee quota approved for subsidiaries as of the end of the reporting period (B3) | 65,384.63 | Total actual guarantee balance for subsidiaries as of the end of the reporting period (B4) | 48,311.92 | |||||||
| Subsidiaries' guarantee to subsidiaries | ||||||||||
| Guaranteed | Disclosure date | Guarantee | Occurrence | Actual guarant | Type of guarant | Collateral (if | Counter | Guarantee | Performance | Guarantee for |
| party | of announcement relating to guarantee quota | quota | date of actual guarantee | ee amount | ee | any) | guarantee (if any) | period | completed or not | related parties or not |
| N/A | ||||||||||
| Total guarantee quota for subsidiaries approved in the reporting period (C1) | 0 | Total guarantee amount actually incurred for subsidiaries in the reporting period (C2) | 0 | |||||||
| Total guarantee quota approved for subsidiaries as of the end of the reporting period (C3) | 0 | Total actual guarantee balance for subsidiaries as of the end of the reporting period (C4) | 0 | |||||||
| The Company's total guarantee amount (i.e., the sum of the first three items) | ||||||||||
| Total guarantee quota approved in the reporting period (A1+B1+C1) | 29,477.43 | Total guarantee amount actually incurred in the reporting period (A2+B2+C2) | 19,303 | |||||||
| Total guarantee quota approved as of the end of the reporting period (A3+B3+C3) | 65,384.63 | Total actual guarantee balance during as of the end of the reporting period (A4+B4+C4) | 48,311.92 | |||||||
| Proportion of the actual guarantee amount (A4+B4+C4) to the Company's net assets | 3.25% | |||||||||
| Including: | ||||||||||
| Guarantee balance for shareholders, actual controller and their related parties (D) | 0 | |||||||||
| Balance of debt guarantee provided directly or indirectly to the guaranteed party with an asset-liability ratio of higher than 70% (E) | 40,520.95 | |||||||||
| Amount in total guarantee amount exceeding 50% of net assets (F) | 0 | |||||||||
| Total amount of the above three items (D+E+F) | 40,520.95 | |||||||||
| Notes on unexpired guarantee contracts where guarantee liabilities occurred or there is evidence indicating potential joint liabilities for debt repayment during the reporting period (if any) | None | |||||||||
| Notes on provision of external guarantees in violation of stipulated procedures (if any) | None | |||||||||
Description on the specific situation of the composite guarantee
3. Entrusted Management of Cash Assets
(1) Entrusted Wealth Management
?√ Applicable □ Not ApplicableInformation on entrusted wealth Management during the reporting PeriodUnit: RMB ten thousand
| Type | Sources of funds for entrusted wealth Management | Amount of funds for entrusted wealth Management | Balance not yet due | Overdue amount not recovered | Overdue wealth Management has been deducted impairment amount |
| Bank financial products | Self-owned funds | 26,300 | 10,824.43 | 0 | 0 |
| Total | 26,300 | 10,824.43 | 0 | 0 | |
Specific cases of high-risk entrusted wealth Management with substantial amount of money, low security and poorliquidity
□ Applicable √ Not Applicable
Entrusted wealth Management is expected to fail to recover the principal or exist other circumstances that may leadto impairment
□ Applicable √ Not Applicable
(2) Entrusted loans
□ Applicable √ Not Applicable
The Company had no entrusted loans during the reporting period.
4. Other material contracts
□ Applicable √ Not Applicable
The Company has no other material contracts in the reporting period.XIII. Other Major Issues?√ Applicable □ Not Applicable
1. During the reporting period, the Company has received the "Announcement on the Filing of the High-techEnterprises Recognized by Zhejiang Provincial Certification Authority in 2022" issued by the National High-techEnterprise Certification Management Leading Group Office, and has successfully passed the filing of the high-techenterprise certification. High-tech enterprise certificate No.: GR202233005456; Issue date: December 24, 2022;Validity: 3 years.
2. During the reporting period, the restricted period for the redemption of the GDRs issued by the Company expiredon March 14, 2023 (Swiss time), and the GDRs issued can be converted into the Company's A shares from March15, 2023 onwards. As of the end of the reporting period, all GDRs issued have been converted into A shares of theCompany.During the reporting period, the Company obtained procurement confirmation from a large retail Company in theUnited States, the procurement subject is cordless lithium battery power tools and related spare parts, the purchasescope is all the sales and services of this series of products in about 2,000 stores in North America in the next three
years, the order amount is expected to be not less than USD 40 million per year, exceeding 10% of the revenue ofthe Company's 2022 power tool products.
4. The Company received the "Partner of the Year" award from D59 Storage of the key client The Home Depot,Inc. ("Home Depot") again and the "Vendor Partner of the Year" award from the key client Tooling unit of Lowe'sCompanies, Inc. ("Lowe's") during the reporting period.
5. The Company intended to purchase all TESA Group assets held by Hexagon Smart Solutions AB in cash,including the 100% equity of TESA Precision Measurement Instruments Sarl and related assets of Chinese,American and French companies, in a transaction price not more than 40 million euros. As of the date of this report,the above-mentioned assets have been delivered.XIV. Significant Matters of Subsidiaries of the Company
□ Applicable √ Not Applicable
Section VII Changes in Shares and Information about ShareholdersI. Changes in shares
1. Changes in shares
Unit: share
| Before change | Increase/decrease (+, -) | After change | |||||||
| Quantity | Proportion | New shares issued | Bonus shares | Conversion of capital reserve into share capital | Other | Subtotal | Quantity | Proportion | |
| I. Conditional shares | 49,531,304 | 4.12% | 1,941,600 | 1,941,600 | 51,472,904 | 4.28% | |||
| 1. State-owned shares | |||||||||
| 2. Legal person shares of state | |||||||||
| 3. Shares held by other domestic capital | 49,531,304 | 4.12% | 1,941,600 | 1,941,600 | 51,472,904 | 4.28% | |||
| Of which: Domestic legal person shares | |||||||||
| Domestic natural person shares | 49,531,304 | 4.12% | 1,941,600 | 1,941,600 | 51,472,904 | 4.28% | |||
| 4. Shares held by overseas capital | |||||||||
| Of which: Overseas legal person shares | |||||||||
| Overseas natural person shares | |||||||||
| II. Unconditional shares | 1,152,970,688 | 95.88% | -1,941,600 | -1,941,600 | 1,151,029,088 | 95.72% | |||
| 1. RMB-denominated ordinary shares | 1,152,970,688 | 95.88% | -1,941,600 | -1,941,600 | 1,151,029,088 | 95.72% | |||
| 2. Foreign capital shares listed in China | |||||||||
| 3. Foreign capital stocks listed overseas | |||||||||
| 4. Others | |||||||||
| III. Total number of shares | 1,202,501,992 | 100.00% | 0 | 0 | 1,202,501,992 | 100.00% |
Reasons for changes in shares
□ Applicable √ Not Applicable
Approval of share changes
□ Applicable √ Not Applicable
Transfer of share ownership
□ Applicable √ Not Applicable
Impacts of share changes on the basic EPS, diluted EPS, net assets per share attributable to ordinary shareholdersof the Company, and other financial indicators for the last year and the last reporting period
□ Applicable √ Not Applicable
Other contents that the Company considers necessary, or are required by the securities regulatory authorities, todisclose
□ Applicable √ Not Applicable
2. Changes in restricted shares
?√ Applicable □ Not ApplicableUnit: share
| Name of shareholders | Number of shares restricted for sale in the beginning of the period | Number of additional shares restricted for sales in the current period | Number of shares discharged from restriction for sale in the current | Number of shares restricted for sale in the end of the period | Cause for restriction | Date of discharge |
| period | ||||||
| Qiu Jianping | 36,522,343 | 1,739,100 | 0 | 38,261,443 | Shares locked for directors | 25% of the total number of shares discharged from restricted holdings at the beginning of each year within the tenure |
| Zhou Siyuan | 450,000 | 202,500 | 0 | 652,500 | Shares locked for executives | 25% of the total number of shares discharged from restricted holdings at the beginning of each year within the tenure |
| Total | 36,972,343 | 1,941,600 | 0 | 38,913,943 | -- | -- |
II. Issue and Listing of Securities
1. Securities issuance during the reporting period (excluding preferred shares)
□ Applicable √ Not Applicable
2. Explanation of changes in the total shares of the Company, the shareholder structure, and the assets-liabilities structure of the Company
□ Applicable √ Not Applicable
3. Existing internal employee shares
□ Applicable √ Not Applicable
III. Shareholders and the actual controller
1. Total number of shareholders and their shareholdings
Unit: share
| Total number of ordinary shareholders at the end of the reporting period | 31,368 | Total number of ordinary shareholders at the end of the previous month before the disclosure date of the annual report | 33,519 | Total number of preferred shareholders whose voting rights were restored at the end of the reporting period (if any) | 0 | Total number of preferred shareholders whose voting rights were restored at the end of the previous month before the disclosure date of the annual report (if any) (Note 8) | 0 |
| (Note 8) | ||||||||
| Shareholding of shareholders holding more than 5% of the shares or the top 10 shareholders (excluding shares lent through refinancing) | ||||||||
| Name of shareholders | Nature of shareholder | Holding proportion | Number of shares at the end of the reporting period | Changes during the reporting period | Number of restricted shares | Number of unrestricted shares | Pledged, marked or frozen | |
| Share status | Quantity | |||||||
| GreatStar Holding Group Co., Ltd. | Domestic non-state-owned legal person | 38.56% | 463,739,864 | 11,434,000 | 0 | 463,739,864 | N/A | 0 |
| Hong Kong Securities Clearing Company Limited | Offshore legal entity | 4.60% | 55,270,995 | 30,226,372 | 0 | 55,270,995 | N/A | 0 |
| Qiu Jianping | Domestic natural person | 4.24% | 51,015,258 | 2,318,800 | 38,261,443 | 12,753,815 | N/A | 0 |
| Industrial and Commercial Bank of China - Full goal Tianhui Selected Growth Fund (LOF) | Other | 1.61% | 19,306,800 | 9,303,400 | 0 | 19,306,800 | N/A | 0 |
| National Social Security Fund 418 Portfolio | Other | 1.23% | 14,752,300 | 3,116,580 | 0 | 14,752,300 | N/A | 0 |
| CITIC Securities Company Limited - Social Security Fund 17052 Portfolio | Other | 1.15% | 13,793,219 | 4,032,921 | 0 | 13,793,219 | N/A | 0 |
| Wang Lingling | Domestic natural person | 1.08% | 12,950,960 | 0 | 9,713,220 | 3,237,740 | N/A | 0 |
| National Social Security Fund 115 Portfolio | Other | 1.06% | 12,800,000 | 500,000 | 0 | 12,800,000 | N/A | 0 |
| Monetary | Offshore | 1.01% | 12,202,20 | 5,599,876 | 0 | 12,202,20 | N/A | 0 |
| Authority of Macao - Own funds | legal entity | 8 | 8 | |||||
| China Construction Bank Corporation - BOCOM Schroder Economic New Dynamic Hybrid Securities Investment Fund | Other | 1.00% | 12,070,647 | -7,288,637 | 0 | 12,070,647 | N/A | 0 |
| Strategic investors or general legal persons becoming the top 10 shareholders owing to the placement of new shares (if any) (Note 3) | None | |||||||
| Description of the relationship or concerted action among the above shareholders | GreatStar Group Co., Ltd., Qiu Jianping and Wang Lingling are related and are parties acting in concert as defined in the “Measures for the Administration of Takeovers of Listed Companies”. | |||||||
| Descriptions on entrusting/entrusted voting and waiver of voting right by the above-mentioned shareholders | None | |||||||
| Description on the top 10 shareholders with special repurchase accounts (if any) (Note 10) | None | |||||||
| Shareholding of the top 10 shareholders with unrestricted shares | ||||||||
| Name of shareholders | Number of unrestricted shares at the end of the reporting period | Type of shares | ||||||
| Type of shares | Quantity | |||||||
| GreatStar Holding Group Co., Ltd. | 463,739,864 | RMB Ordinary Shares | 463,739,864 | |||||
| Hong Kong Securities Clearing Company Limited | 55,270,995 | RMB Ordinary Shares | 55,270,995 | |||||
| Qiu Jianping | 51,015,258 | RMB Ordinary Shares | 51,015,258 | |||||
| Industrial and Commercial Bank of China - Full goal Tianhui Selected | 19,306,800 | RMB Ordinary Shares | 19,306,800 | |||||
| Growth Fund (LOF) | |||
| National Social Security Fund 418 Portfolio | 14,752,300 | RMB Ordinary Shares | 14,752,300 |
| CITIC Securities Company Limited - Social Security Fund 17052 Portfolio | 13,793,219 | RMB Ordinary Shares | 13,793,219 |
| Wang Lingling | 12,950,960 | RMB Ordinary Shares | 12,950,960 |
| National Social Security Fund 115 Portfolio | 12,800,000 | RMB Ordinary Shares | 12,800,000 |
| Monetary Authority of Macao - Own funds | 12,202,208 | RMB Ordinary Shares | 12,202,208 |
| China Construction Bank Corporation - BOCOM Schroder Economic New Dynamic Hybrid Securities Investment Fund | 12,070,647 | RMB Ordinary Shares | 12,070,647 |
| Description on connected relation or concerted action among the top 10 shareholders with outstanding unrestricted shares and between the top 10 shareholders with outstanding unrestricted shares and the top 10 shareholders | GreatStar Group Co., Ltd., Qiu Jianping and Wang Lingling are related and are parties acting in concert as defined in the “Measures for the Administration of Takeovers of Listed Companies”. | ||
| Description of the participation of the top 10 common shareholders in the financing and securities loans (if any) (Note 4) | None | ||
Description on the top 10 shareholders engaging in lending shares through refinancing?√ Applicable □ Not ApplicableUnit: share
| Description on the top 10 shareholders engaging in lending shares through refinancing | ||||
| Name of shareholders (full name) | Number of shares held by common securities accounts and credit securities accounts at the beginning of the | Number of shares lent through refinancing and have not yet returned at the beginning of the period | Number of shares held by common securities accounts and credit securities accounts at the end of the period | Number of shares lent through refinancing and have not yet returned at the end of the period |
| period | ||||||||
| Total number | Percentage of total share capital (%) | Total number | Percentage of total share capital (%) | Total number | Percentage of total share capital (%) | Total number | Percentage of total share capital (%) | |
| GreatStar Holding Group Co., Ltd. | 452,305,864 | 37.61% | 11,434,000 | 0.95% | 463,739,864 | 38.56% | 0 | 0.00% |
| Monetary Authority of Macao - Own funds | 6,602,332 | 0.55% | 0 | 0.00% | 12,202,208 | 1.01% | 342,600 | 0.03% |
| National Social Security Fund 115 Portfolio | 12,300,000 | 1.02% | 500,000 | 0.04% | 12,800,000 | 1.06% | 0 | 0.00% |
The top 10 shareholders have changed from the previous period?√ Applicable □ Not ApplicableUnit: share
| Description on the changes in the top 10 shareholders from the end of the previous period | |||||
| Name of shareholders (full name) | Enter/Slip out of the top 10 during the reporting period | Number of shares lent through refinancing and have not yet returned at the end of the period | Number of shares held by common securities accounts and credit securities accounts and shares lent through refinancing and have not yet returned at the end of the period | ||
| Total number | Percentage of total share capital (%) | Total number | Percentage of total share capital (%) | ||
| Citibank, National Association | Slip out of | 0 | 0.00% | 0 | 0.00% |
| China Merchants Bank Corporation - BOCOM Schroder Innovation Pilot Hybrid Securities Investment Fund | Enter | 0 | 0.00% | 0 | 0.00% |
| CITIC Securities Company Limited - Social | Enter | 0 | 0.00% | 0 | 0.00% |
| Security Fund 17052 Portfolio | |||||
| Monetary Authority of Macao - Own funds | Enter | 342,600 | 0.03% | 12,544,808 | 1.04% |
Whether the Company's top 10 common shareholders and top 10 common shareholders unrestricted for sale engagedin agreed repurchase within the reporting period
□ Yes √? No
The Company's top 10 common shareholders and top 10 common shareholders unrestricted for sale did not engagein agreed repurchase within the reporting period.
2. Controlling shareholder of the Company
Nature of controlling shareholder: Natural person holdingType of controlling shareholder: Natural person
| Name of Controlling Shareholder | Nationality | Whether to obtain residency permits in other countries or regions |
| Qiu Jianping | China | No |
| Main occupation and position | Chairman of the Company, Chairman of the GreatStar Group | |
| Shareholdings of other domestic and overseas listed companies that controlled and owned during the reporting period | Hangcha Group Co., Ltd., Stock code: 603298, Stock name: Hangcha Group; the Company was listed on the Shanghai Stock Exchange on December 27, 2016, and is mainly engaged in industrial vehicles such as forklifts and smart vehicles and related main parts. Zhejiang Xinchai Co., Ltd., Stock code: 301032, Stock name: Zhejiang Xinchai; the Company was listed on the Shenzhen Stock Exchange on July 22, 2021, and is mainly engaged in the research and development, production and sales of non-road diesel engines and related parts. | |
Changes in controlling shareholders during the reporting period
□ Applicable √ Not Applicable
No change was recorded in the controlling shareholders of the Company during the reporting period.
3. Actual controller of the Company and persons acting in concert
Nature of the actual controller: Domestic natural personType of the actual controller: Natural person
| Name of the actual controller | Relationship with the actual controller | Nationality | Whether to obtain residency permits in other countries or regions |
| Qiu Jianping | The actual controller | China | No |
| Main occupation and position | Chairman of the Company, Chairman of the GreatStar Group | ||
| Overseas listed companies controlled over the past decade | Mr. Qiu Jianping is the actual controller of Hangcha Group Co., Ltd. (Stock code: 603298) and Zhejiang Xinchai Co., Ltd. (Stock code: 301032). | ||
Change in actual controllers during the reporting period
□ Applicable √ Not Applicable
No change was recorded in the actual controllers of the Company during the reporting period.Block diagram showing the property rights and control relationships between the Company and the actual controller
The actual controller controls the Company via asset Management methods such as trust
□ Applicable √ Not Applicable
4. The accumulative number of pledged shares of the Company's controlling shareholder or the largestshareholder and its persons acting in concert account for more than 80% of the Company's shares held bythem
□ Applicable √ Not Applicable
5. Other legal person shareholders holding more than 10% of the shares
□ Applicable √ Not Applicable
6. Restrictions on shareholding reduction of the controlling shareholder, the actual controller, thereorganizing party and other committing entities
□ Applicable √ Not Applicable
IV. Implementation progress of share repurchase during the reporting periodImplementation progress of share repurchase
□ Applicable √ Not Applicable
Implementation progress of reducing share repurchase via centralized bidding transactions
□ Applicable √ Not Applicable
Section VIII Preferred Shares
□ Applicable √ Not Applicable
The Company had no preferred shares during the reporting period.
Section IX Securities
□ Applicable √ Not Applicable
Section X Financial ReportI. Audit Report
| Type of audit opinion | Standard unqualified opinion |
| Signing date of the Audit Report | April 24, 2024 |
| Auditing Firm | Pan-China Certified Public Accountants LLP (Special General Partnership) |
| Document No. of the Audit Report | Tian Jian Shen〔2024〕 No. 3682 |
| Name of the CPAs | Li Deyong and Hu Fujian |
Audit ReportAll shareholders of Hangzhou GreatStar Industrial Co., Ltd.:
I. OpinionWe have audited the Financial Statements of Hangzhou GreatStar Industrial Co., Ltd. (hereinafter referred to as"GreatStar"), which comprise the consolidated and parent Company's balance sheets at December 31, 2023, theconsolidated and parent Company's income statements, the consolidated and parent Company's cash flow statementsand the consolidated and parent Company's statements of changes in owner's equity for 2023, and the notes to therelated Financial Statements.In our opinion, the Companying Financial Statements, in all material respects, have been prepared in accordancewith the provisions of Accounting Standards for Business Enterprises, presenting fairly the consolidated and parentCompany's financial positions of GreatStar as at December 31, 2023, and the consolidated and parent Company'sfinancial performance and cash flows for 2023.
II. Basis for OpinionWe conducted our audit in accordance with the provisions of China CPA Standard on Auditing (CSA). Ourresponsibilities under those standards are further described in the CPA's Responsibilities for the Audit of theFinancial Statements section of the Audit Report. We are independent of GreatStar and have fulfilled our otherethical responsibilities in accordance with the China Code of Ethics for Certified Public Accountants. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
III. Critical Audit MattersCritical 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 shall be addressed in the context of our audit of theFinancial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion onthese matters.(I) Revenue recognition
1. Description
Refer to Note V (II)-1 and Note III (XXVI) to these Financial Statements.GreatStar's operating revenues are mainly generated from the Hand Tools, Power Tools, Laser Measurement andStorage. GreatStar has achieved the operating revenue of RMB 10,929.9928 million in 2023. As operating revenueis one of the key performance indicators of GreatStar, there may be an inherent risk that the Management ofGreatStar (hereinafter referred to as the "Management") may resort to inappropriate revenue recognition to achievespecific objectives or expectations. Therefore, we included revenue recognition as a critical audit matter.
2. Audit response
In response to this critical audit matter, we performed the following major audit procedures:
(1) Obtained an understanding of the key internal controls related to revenue recognition, evaluated the design ofthese controls, identified whether they are implemented, and tested whether the relevant internal controls functioneffectively;
(2) Assessed the sales contract, obtained an understanding of the main terms and conditions of contracts, andevaluated whether the revenue recognition method is appropriate;
(3) Analyzed the operating revenues and gross profit margin on a monthly basis, by products and by clients, toidentify whether there are major or abnormal fluctuations, and to identify the reasons for the fluctuations;
(4) For the domestic sales revenue, assessed the supporting document of selected items, such as sales contracts,orders, sales invoices, stock-out document and clients' receipts; for the export revenue, collected electronic port dataand compared it with accounts and assessed the supporting document of selected items, such as sales contracts,export declarations, bills of lading, clients' receipts and sales invoices;
(5) Issued letters to solicit proof the sales revenues for selected items with the letter proving of accounts receivablefrom the major clients;
(6) Performed a cut-off test on the operating revenues to check whether the operating revenues have been recognizedwithin the appropriate period; and
(7) Assessed whether the information related to the operating revenues has been appropriately presented in theFinancial Statements.
(II) Impairment of goodwill
1. Description
Refer to Note III (XXI) and Note V (I)-19 to these Financial Statements.As of December 31, 2023, the original carrying value of goodwill of GreatStar was RMB 2,750,291,615.37, and theprovision for impairment was RMB 150,679,689.23, resulting in a carrying value of RMB 2,599,611,926.14.When conducting the goodwill impairment test, the Management has combined goodwill with its related asset groupor combination of asset groups, and the recoverable amount of the related asset group or combination of asset groupsis confirmed based on the present value of estimated future cash flows.Considering that the goodwill is of significant value and that the goodwill impairment test may impact criticalManagement judgment, we included impairment of goodwill as a critical audit matter.
2. Audit response
In response to impairment of goodwill, we performed the following major audit procedures:
(1) Obtained an understanding of the key internal controls related to impairment of goodwill, evaluated the designof these controls, identified whether they are implemented, and tested whether the relevant internal controls functioneffectively;
(2) Reviewed the Management's estimation of the present value of future cash flows in previous years, or requiredthe Management to make re-estimation;
(3) Assessed the competence, professionalism and objectivity of external valuation experts engaged by theManagement;
(4) Evaluated the suitability and consistency of the methods used by the Management in the impairment test;
(5) Evaluated the suitability of the key assumptions used by the Management in the impairment test, and reviewedwhether the relevant assumptions are consistent with the business situation, historical experience and approvedbudgets;
(6) Assessed the suitability, relevance and reliability of the data used by the Management in the impairment test,and reviewed the consistency of the relevant information in the impairment test;
(7) Tested whether the Management's calculation of the present value of estimated future cash flows is accurate;and
(8) Assessed whether the information related to impairment of goodwill has been appropriately presented in theFinancial Statements.
IV. Other informationThe Management of the Company are responsible for the other information. The other information comprises allthe information included in the annual report other than the Financial Statements and our Audit Report thereon.Our audit opinion on the Financial Statements does not cover the other information and we do not express any formof appraisal conclusion thereon.We are responsible for reading the other information based on our audit of the Financial Statements and, in doingso, consider whether the other information is materially inconsistent with the Financial Statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.If we conclude that there is a material misstatement of the other information based on the work we have performed,we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the Management and those charged with governance for the Financial StatementsThe Management of the Company is responsible for the preparation of the Financial Statements that give a true andfair view in accordance with the Accounting Standards for Business Enterprises, and for the design, implementationand maintenance of such internal controls, so as to ensure that the Financial Statements are free from materialmisstatement, whether due to fraud or error.The Management is responsible for assessing GreatStar's ability to continue as a going concern, disclosing, asapplicable, matters related to going concern and using assumption of ongoing concern in preparing the FinancialStatements, unless the Management either intend to liquidate the Company or to cease operations, or have norealistic alternative but to do so.Those charged with governance at GreatStar (hereinafter referred to as "those charged with governance") areresponsible for overseeing GreatStar's financial reporting process.
VI. Responsibilities of the CPAs for the audit of the Financial StatementsWe aim to obtain reasonable assurance about whether the Financial Statements are free from material misstatement,whether due to fraud or error, and to issue an audit report that includes our audit opinion. Reasonable assurance isa high level of assurance, but is not a guarantee that an audit conducted in accordance with the CSA will alwaysdetect a material misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Financial Statements.As part of an audit in accordance with the CSA, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error,design and perform audit processes responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. As fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control, the risk of failing to detect a material misstatement resultingfrom fraud is higher than the risk of failing to detect a material misstatement resulting from error.(II) Obtain an understanding of internal controls relevant to the audit in order to design appropriate audit processes.(III) Evaluate the appropriateness of accounting policies used by the Management and the rationality of accountingestimates and related disclosures made by the Management.
(IV) Conclude on the appropriateness of the Management's use of the assumption of ongoing concern, and onwhether a material uncertainty exists related to events or conditions that may cast significant doubt on GreatStar'sability to continue as a going concern based on the audit evidence obtained. In accordance with the CSA, we arerequired to draw attention in our audit report to the related disclosures in the Financial Statements if we concludethat a material uncertainty exists, or to issue an audit report containing the modified opinion if such disclosures areinadequate. Our conclusions are based on the audit evidence obtained up to the date of our audit report. However,future events or conditions may cause GreatStar to cease to continue as a going concern.(V) Evaluate the overall presentation, structure and content of the Financial Statements, and whether the FinancialStatements give a true and fair view of the underlying transactions and events.(VI) Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or businessactivities within GreatStar to issue an audit opinion on the Financial Statements. We are responsible for the direction,supervision and performance of the group audit, and we remain solely responsible for our audit opinion.We communicate with those charged with governance regarding matters such as the planned scope and timing ofthe audit and significant audit findings, including any significant deficiencies in internal control that we identifyduring our audit.We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them on all relationships and other matters thatmay reasonably be considered to bear on our independence, and relevant preventive measures which are applicable.Based on the matters communicated with those charged with governance, we determine the matters that are of mostsignificance in the audit of the Financial Statements of the current period and are therefore the critical audit matters.We describe such matters in our audit report unless law or regulation precludes public disclosure of the matters orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefitsof such communication.
Pan-China Certified Public Accountants LLP (Special General Partnership) China CPA:
(Project Partner)
Hangzhou China CPA:
April 24, 2024
II. Financial StatementsUnit in notes to financial statements: RMB
1. Consolidated balance sheet
Prepared by: Hangzhou GreatStar Industrial Co., Ltd.31 December 2023Unit: RMB
| Item | 31 December 2023 | January 1, 2023 |
| Current assets: | ||
| Monetary assets | 5,178,727,811.76 | 4,863,206,182.40 |
| Settlement funds | 0.00 | 0.00 |
| Loans to other banks | 0.00 | 0.00 |
| Held-for-trading financial assets | 122,650,783.01 | 70,230,104.24 |
| Derivative financial assets | 0.00 | 0.00 |
| Notes receivable | 18,703,655.36 | 18,765,981.83 |
| Accounts receivable | 2,101,643,079.19 | 1,896,685,590.11 |
| Receivables financing | 266,675,016.64 | 324,557,679.71 |
| Advances paid | 103,522,565.06 | 128,254,093.87 |
| Premiums receivable | 0.00 | 0.00 |
| Reinsurance accounts receivable | 0.00 | 0.00 |
| Reinsurance reserve receivable | 0.00 | 0.00 |
| Other receivables | 66,293,368.61 | 58,325,042.10 |
| Including: Interest receivable | 0.00 | 0.00 |
| Dividend receivable | 0.00 | 0.00 |
| Financial assets under reverse repo | 0.00 | 0.00 |
| Inventories | 2,569,302,478.80 | 2,812,572,525.68 |
| Contract assets | 0.00 | 0.00 |
| Assets held for sale | 0.00 | 0.00 |
| Non-current assets due within one year | 108,310.38 | 98,061.60 |
| Other current assets | 128,790,614.47 | 134,130,648.58 |
| Total current assets | 10,556,417,683.28 | 10,306,825,910.12 |
| Non-current assets: | ||
| Loans and advances | 0.00 | 0.00 |
| Debt investments | 0.00 | 0.00 |
| Other debt investments | 0.00 | 0.00 |
| Long-term receivables | 335,454.55 | 2,872,179.47 |
| Long-term equity investments | 2,950,574,477.94 | 2,544,523,517.55 |
| Other equity instrument investments | 16,550,000.00 | 16,550,000.00 |
| Other non-current financial assets | 0.00 | 0.00 |
| Investment property | 117,273,455.37 | 122,158,556.01 |
| Fixed assets | 1,726,806,882.04 | 1,518,902,232.96 |
| Construction in progress | 270,199,288.71 | 304,599,362.46 |
| Productive biological assets | 0.00 | 0.00 |
| Oil & gas assets | 0.00 | 0.00 |
| Right-of-use assets | 378,820,165.25 | 417,129,361.41 |
| Intangible assets | 887,953,084.78 | 712,798,866.46 |
| Development expenditures | 0.00 | 0.00 |
| Goodwill | 2,599,611,926.14 | 2,436,140,794.66 |
| Long-term prepayments | 33,173,513.74 | 29,683,274.34 |
| Deferred tax assets | 92,688,356.60 | 109,614,608.72 |
| Other non-current assets | 53,392,982.77 | 74,507,127.95 |
| Total non-current assets | 9,127,379,587.89 | 8,289,479,881.99 |
| Total assets | 19,683,797,271.17 | 18,596,305,792.11 |
| Current liabilities: | ||
| Short-term borrowings | 1,103,247,899.65 | 1,379,062,713.11 |
| Central bank loans | 0.00 | 0.00 |
| Loans from other banks | 0.00 | 0.00 |
| Held-for-trading financial liabilities | 3,227,726.23 | 48,413,710.29 |
| Derivative financial liabilities | 0.00 | 0.00 |
| Notes payable | 18,253,448.48 | 21,096,540.03 |
| Accounts payable | 1,567,046,072.54 | 1,366,875,268.71 |
| Advances received | 0.00 | 0.00 |
| Contractual liabilities | 147,202,549.06 | 131,898,420.14 |
| Financial liabilities under repo | 0.00 | 0.00 |
| Absorbing deposit and interbank deposit | 0.00 | 0.00 |
| Deposit for agency security transaction | 0.00 | 0.00 |
| Deposit for agency security underwriting | 0.00 | 0.00 |
| Employee benefits payable | 243,435,045.23 | 270,678,187.82 |
| Taxes and rates payable | 132,452,194.11 | 176,943,955.53 |
| Other payables | 37,629,238.62 | 21,198,376.32 |
| Including: Interest payable | 0.00 | 0.00 |
| Dividend payable | 8,400,000.00 | 0.00 |
| Handling fee and commission payable | 0.00 | 0.00 |
| Reinsurance accounts payable | 0.00 | 0.00 |
| Liabilities held for sale | 0.00 | 0.00 |
| Non-current liabilities due within one year | 978,130,617.03 | 323,296,833.40 |
| Other current liabilities | 2,050,790.27 | 2,136,266.97 |
| Total current liabilities | 4,232,675,581.22 | 3,741,600,272.32 |
| Non-current liabilities: | ||
| Insurance policy reserve | 0.00 | 0.00 |
| Long-term borrowings | 708,270.00 | 798,604,951.84 |
| Bonds payable | 0.00 | 0.00 |
| Including: Preferred shares | 0.00 | 0.00 |
| Perpetual bonds | 0.00 | 0.00 |
| Lease liabilities | 283,800,769.92 | 318,221,349.99 |
| Long-term payables | 0.00 | 0.00 |
| Long-term employee benefits payable | 19,098,027.87 | 19,223,856.97 |
| Provisions | 7,702,646.75 | 4,548,413.90 |
| Deferred income | 2,518,392.49 | 2,364,687.74 |
| Deferred tax liabilities | 124,722,086.70 | 86,792,014.84 |
| Other non-current liabilities | 0.00 | 0.00 |
| Total non-current liabilities | 438,550,193.73 | 1,229,755,275.28 |
| Total liabilities | 4,671,225,774.95 | 4,971,355,547.60 |
| Equity: | ||
| Share capital | 1,202,501,992.00 | 1,202,501,992.00 |
| Other equity instruments | 0.00 | 0.00 |
| Including: Preferred shares | 0.00 | 0.00 |
| Perpetual bonds | 0.00 | 0.00 |
| Capital reserve | 3,999,886,029.16 | 3,950,778,936.53 |
| Less: Treasury shares | 236,625,962.00 | 236,625,962.00 |
| Other comprehensive income | 231,453,437.99 | 115,008,916.12 |
| Special reserve | 0.00 | 0.00 |
| Surplus reserve | 788,960,468.06 | 663,843,379.04 |
| General risk reserve | 0.00 | 0.00 |
| Undistributed profit | 8,861,804,110.41 | 7,702,625,494.43 |
| Total equity attributable to the parent Company | 14,847,980,075.62 | 13,398,132,756.12 |
| Non-controlling interest | 164,591,420.60 | 226,817,488.39 |
| Total equity | 15,012,571,496.22 | 13,624,950,244.51 |
| Total liabilities & equity | 19,683,797,271.17 | 18,596,305,792.11 |
Legal representative: Qiu Jianping Person in charge of accounting: Ni Shuyi Person in charge of accountingdepartment: Ni Shuyi
2. Balance sheet of the parent Company
Unit: RMB
| Item | 31 December 2023 | January 1, 2023 |
| Current assets: | ||
| Monetary assets | 2,400,684,069.57 | 1,959,109,461.78 |
| Held-for-trading financial assets | 0.00 | 0.00 |
| Derivative financial assets | 0.00 | 0.00 |
| Notes receivable | 8,033,890.80 | 6,303,252.22 |
| Accounts receivable | 1,638,745,287.87 | 1,094,304,301.40 |
| Receivables financing | 262,013,539.68 | 321,247,171.36 |
| Advances paid | 11,438,698.21 | 11,356,975.59 |
| Other receivables | 1,445,999,317.30 | 2,755,900,353.60 |
| Including: Interest receivable | 0.00 | 0.00 |
| Dividend receivable | 0.00 | 0.00 |
| Inventories | 101,143,349.48 | 67,443,090.27 |
| Contract assets | 0.00 | 0.00 |
| Assets held for sale | 0.00 | 0.00 |
| Non-current assets due within one year | 0.00 | 0.00 |
| Other current assets | 66,731,233.06 | 56,338,463.11 |
| Total current assets | 5,934,789,385.97 | 6,272,003,069.33 |
| Non-current assets: | ||
| Debt investments | 0.00 | 0.00 |
| Other debt investments | 0.00 | 0.00 |
| Long-term receivables | 0.00 | 0.00 |
| Long-term equity investments | 7,703,097,944.18 | 6,646,597,702.06 |
| Other equity instrument investments | 16,550,000.00 | 16,550,000.00 |
| Other non-current financial assets | 0.00 | 0.00 |
| Investment property | 117,273,455.37 | 122,158,556.01 |
| Fixed assets | 239,950,369.38 | 164,458,168.94 |
| Construction in progress | 0.00 | 32,000,978.77 |
| Productive biological assets | 0.00 | 0.00 |
| Oil & gas assets | 0.00 | 0.00 |
| Right-of-use assets | 0.00 | 0.00 |
| Intangible assets | 26,740,634.44 | 21,448,416.46 |
| Development expenditures | 0.00 | 0.00 |
| Goodwill | 0.00 | 0.00 |
| Long-term prepayments | 0.00 | 0.00 |
| Deferred tax assets | 18,122,919.74 | 16,436,967.81 |
| Other non-current assets | 932,619.13 | 2,422,590.14 |
| Total non-current assets | 8,122,667,942.24 | 7,022,073,380.19 |
| Total assets | 14,057,457,328.21 | 13,294,076,449.52 |
| Current liabilities: | ||
| Short-term borrowings | 450,357,500.00 | 656,030,197.16 |
| Held-for-trading financial liabilities | 1,167,281.60 | 13,075,775.62 |
| Derivative financial liabilities | 0.00 | 0.00 |
| Notes payable | 0.00 | 100,000,000.00 |
| Accounts payable | 1,238,382,198.05 | 1,107,917,284.47 |
| Advances received | 0.00 | 0.00 |
| Contractual liabilities | 58,701,562.32 | 43,237,007.23 |
| Employee benefits payable | 61,070,459.75 | 52,247,521.65 |
| Taxes and rates payable | 32,211,961.74 | 35,226,805.80 |
| Other payables | 15,986,880.08 | 3,392,054.12 |
| Including: Interest payable | 0.00 | 0.00 |
| Dividend payable | 0.00 | 0.00 |
| Liabilities held for sale | 0.00 | 0.00 |
| Non-current liabilities due within one year | 875,578,132.08 | 73,583,468.23 |
| Other current liabilities | 917,003.08 | 604,815.09 |
| Total current liabilities | 2,734,372,978.70 | 2,085,314,929.37 |
| Non-current liabilities: | ||
| Long-term borrowings | 708,270.00 | 792,728,586.65 |
| Bonds payable | 0.00 | 0.00 |
| Including: Preferred shares | 0.00 | 0.00 |
| Perpetual bonds | 0.00 | 0.00 |
| Lease liabilities | 0.00 | 0.00 |
| Long-term payables | 0.00 | 0.00 |
| Long-term employee benefits payable | 0.00 | 0.00 |
| Provisions | 0.00 | 0.00 |
| Deferred income | 327,332.57 | 795,332.50 |
| Deferred tax liabilities | 3,375,906.47 | 2,413,918.11 |
| Other non-current liabilities | 0.00 | 0.00 |
| Total non-current liabilities | 4,411,509.04 | 795,937,837.26 |
| Total liabilities | 2,738,784,487.74 | 2,881,252,766.63 |
| Equity: | ||
| Share capital | 1,202,501,992.00 | 1,202,501,992.00 |
| Other equity instruments | 0.00 | 0.00 |
| Including: Preferred shares | 0.00 | 0.00 |
| Perpetual bonds | 0.00 | 0.00 |
| Capital reserve | 3,999,622,372.57 | 3,958,727,598.88 |
| Less: Treasury shares | 236,625,962.00 | 236,625,962.00 |
| Other comprehensive income | -32,965,723.38 | -54,066,268.84 |
| Special reserve | 0.00 | 0.00 |
| Surplus reserve | 785,212,171.15 | 660,095,082.13 |
| Undistributed profit | 5,600,927,990.13 | 4,882,191,240.72 |
| Total equity | 11,318,672,840.47 | 10,412,823,682.89 |
| Total liabilities & equity | 14,057,457,328.21 | 13,294,076,449.52 |
3. Consolidated income statement
Unit: RMB
| Item | 2023 | 2022 |
| I. Total operating revenue | 10,929,992,802.32 | 12,610,189,590.33 |
| Including: Operating income | 10,929,992,802.32 | 12,610,189,590.33 |
| Interest income | 0.00 | 0.00 |
| Premiums earned | 0.00 | 0.00 |
| Revenue from handling charges and commission | 0.00 | 0.00 |
| II. Total operating cost | 9,240,335,423.72 | 11,041,030,293.49 |
| Including: Operating cost | 7,454,122,092.19 | 9,266,922,304.75 |
| Interest expenses | 0.00 | 0.00 |
| Handling charges and commission expenditures | 0.00 | 0.00 |
| Surrender value | 0.00 | 0.00 |
| Net payment of insurance claims | 0.00 | 0.00 |
| Net provision of insurance reserve | 0.00 | 0.00 |
| Premium bonus expenditures | 0.00 | 0.00 |
| Reinsurance expenses | 0.00 | 0.00 |
| Taxes and surcharges | 43,711,142.65 | 47,328,748.68 |
| Selling expenses | 851,283,975.98 | 757,228,439.80 |
| Administrative expenses | 776,183,642.34 | 760,961,439.86 |
| R&D expenses | 322,536,093.62 | 319,444,535.16 |
| Financial expenses | -207,501,523.06 | -110,855,174.76 |
| Including: Interest expense | 84,769,466.12 | 102,114,891.52 |
| Interest income | 139,528,683.81 | 83,482,441.75 |
| Add: Other earnings | 38,182,241.65 | 50,671,622.68 |
| Investment income (or less: losses) | 241,291,566.77 | 176,927,540.37 |
| Including: Earnings from the investment in associated Company and joint venture | 342,117,235.54 | 186,224,854.43 |
| Gains from derecognition of financial assets at amortized cost | 0.00 | 0.00 |
| Gains on foreign exchange (losses presented by “-”) | 0.00 | 0.00 |
| Gains on net exposure to hedging risk (or less: losses) | 0.00 | 0.00 |
| Gains on changes in fair value (losses presented by “-”) | 50,175,050.93 | -50,580,428.04 |
| Credit impairment losses (losses presented by “-”) | -3,493,974.10 | 19,113,580.83 |
| Assets impairment loss (losses presented by “-”) | -24,884,814.56 | -61,324,795.37 |
| Gains on asset disposal (losses presented by “-”) | 5,810,457.76 | -16,894,964.73 |
| III. Operating profit (or less: losses) | 1,996,737,907.05 | 1,687,071,852.58 |
| Add: Non-operating revenue | 2,829,375.43 | 1,183,010.44 |
| Less: Non-operating expenditure | 10,858,078.80 | 20,981,657.35 |
| IV. Profit before tax (or less: total loss) | 1,988,709,203.68 | 1,667,273,205.67 |
| Less: Income tax expenses | 293,995,290.66 | 222,099,594.42 |
| V. Net profit ("-" for net loss) | 1,694,713,913.02 | 1,445,173,611.25 |
| (I) Categorized by the continuity of operations | ||
| 1. Net profit from continuing operations (“-” for net loss) | 1,694,713,913.02 | 1,445,173,611.25 |
| 2. Net profit from discontinuing operations (“-” for net loss) | 0.00 | 0.00 |
| (II) Categorized by the portion of equity ownership | ||
| 1. Net profit attributable to shareholders of the parent Company | 1,691,612,756.79 | 1,419,854,709.56 |
| 2. Net profit attributable to non- | 3,101,156.23 | 25,318,901.69 |
| controlling interests | ||
| VI. Other comprehensive income after tax | 117,066,457.29 | 345,138,127.53 |
| Items attributable to the owners of the parent Company | 116,444,521.87 | 344,782,951.32 |
| (I) Not to be reclassified subsequently to profit or loss | -5,844,140.40 | -57,181,824.00 |
| 1. Remeasurement profits or losses of a defined benefit plan | -5,844,140.40 | -57,181,824.00 |
| 2. Other comprehensive income using the equity method that will not be reclassified to profit or loss | 0.00 | 0.00 |
| 3. Changes in fair value of other equity instrument investments | 0.00 | 0.00 |
| 4. Changes in fair value of enterprise’s own credit risk | 0.00 | 0.00 |
| 5. Others | 0.00 | 0.00 |
| (II) To be reclassified subsequently to profit or loss | 122,288,662.27 | 401,964,775.32 |
| 1. Other comprehensive income that can be reclassified to profit or loss in equity method | 21,100,545.46 | 30,873,368.37 |
| 2. Changes in fair value of other debt investments | 0.00 | 0.00 |
| 3. Amount of financial assets reclassified into other comprehensive income | 0.00 | 0.00 |
| 4. Provision for credit impairment of other debt investments | 0.00 | 0.00 |
| 5. Cash flow hedging reserves | 0.00 | 0.00 |
| 6. Exchange differences on translation of foreign currency financial statements | 101,188,116.81 | 371,091,406.95 |
| 7. Others | 0.00 | 0.00 |
| Items attributable to non-controlling shareholders | 621,935.42 | 355,176.21 |
| VII. Total comprehensive income | 1,811,780,370.31 | 1,790,311,738.78 |
| Total comprehensive income attributable to owners of the parent Company | 1,808,057,278.66 | 1,764,637,660.88 |
| Total comprehensive income attributable to non-controlling interests | 3,723,091.65 | 25,674,077.90 |
| VIII. Earnings per share | ||
| (I) Basic EPS (yuan per share) | 1.4162 | 1.2446 |
| (II) Diluted EPS (yuan per share) | 1.4162 | 1.2446 |
If a combination of enterprises under common control occurs during the current period, the net profit realized bythe combined Company before the combination: RMB , net profit realized by the combined Company in the priorperiod: RMBLegal representative: Qiu Jianping Person in charge of accounting: Ni Shuyi Person in charge of accountingdepartment: Ni Shuyi
4. Income statement of parent Company
Unit: RMB
| Item | 2023 | 2022 |
| I. Business revenue | 5,100,581,314.29 | 4,823,927,494.05 |
| Less: Business cost | 3,792,527,183.47 | 3,916,985,810.07 |
| Taxes and surcharges | 7,715,724.52 | 7,125,272.26 |
| Selling expenses | 173,392,838.87 | 157,616,107.21 |
| Administrative expenses | 166,179,737.65 | 158,154,677.59 |
| R&D expenses | 187,893,193.78 | 172,795,285.87 |
| Financial expenses | -143,455,738.47 | -118,107,418.16 |
| Including: Interest expense | 46,016,538.72 | 61,350,280.13 |
| Interest income | 108,657,184.31 | 81,159,347.99 |
| Add: Other earnings | 17,451,841.60 | 26,535,450.88 |
| Investment income (or less: losses) | 445,995,857.81 | 212,798,675.79 |
| Including: Earnings from the investment in associated Company and joint venture | 343,264,489.19 | 185,125,266.05 |
| Gains on derecognition of financial assets measured at amortized cost ("-"for loss) | 0.00 | 0.00 |
| Gains on net exposure to hedging risk (or less: losses) | 0.00 | 0.00 |
| Gains on changes in fair value (losses presented by “-”) | 11,908,494.02 | -15,881,175.62 |
| Credit impairment losses (losses presented by “-”) | -4,822,719.73 | -19,083,749.36 |
| Assets impairment loss (losses presented by “-”) | -1,720,872.69 | -766,503.26 |
| Gains on asset disposal (losses presented by “-”) | -2,578.20 | 70,451.00 |
| II. Operating profit (“-” for loss) | 1,385,138,397.28 | 733,030,908.64 |
| Add: Non-operating revenue | 21,839.75 | 624.86 |
| Less: Non-operating expenditure | 1,221,834.95 | 118,114.79 |
| III. Total profit (“-” for loss) | 1,383,938,402.08 | 732,913,418.71 |
| Less: Income tax expenses | 132,767,511.86 | 79,911,394.57 |
| IV. Net profit (“-” for net loss) | 1,251,170,890.22 | 653,002,024.14 |
| (I) Net profit from continuing operations (“-” for net loss) | 1,251,170,890.22 | 653,002,024.14 |
| (II) Net profit from discontinued operations (“-” for net loss) | 0.00 | 0.00 |
| V. Other comprehensive income after tax | 21,100,545.46 | 30,873,368.37 |
| (I) Not to be reclassified subsequently to profit or loss | 0.00 | 0.00 |
| 1. Remeasurement profits or losses of a defined benefit plan | 0.00 | 0.00 |
| 2. Other comprehensive income using the equity method that will not be reclassified to profit or loss | 0.00 | 0.00 |
| 3. Changes in fair value of other equity instrument investments | 0.00 | 0.00 |
| 4. Changes in fair value of enterprise’s own credit risk | 0.00 | 0.00 |
| 5. Others | 0.00 | 0.00 |
| (II) To be reclassified subsequently to profit or loss | 21,100,545.46 | 30,873,368.37 |
| 1. Other comprehensive income that can be reclassified to profit or loss in equity method | 21,100,545.46 | 30,873,368.37 |
| 2. Changes in fair value of other | 0.00 | 0.00 |
| debt investments | ||
| 3. Amount of financial assets reclassified into other comprehensive income | 0.00 | 0.00 |
| 4. Provision for credit impairment of other debt investments | 0.00 | 0.00 |
| 5. Cash flow hedging reserves | 0.00 | 0.00 |
| 6. Exchange differences on translation of foreign currency financial statements | 0.00 | 0.00 |
| 7. Others | 0.00 | 0.00 |
| VI. Total comprehensive income | 1,272,271,435.68 | 683,875,392.51 |
| VII. Income per share | ||
| (I) Basic EPS (yuan per share) | ||
| (II) Diluted EPS (yuan per share) |
5. Consolidated statement of cash flows
Unit: RMB
| Item | 2023 | 2022 |
| I. Cash flows from operating activities: | ||
| Cash receipts from sales of goods or rendering of services | 11,048,006,862.67 | 12,910,612,353.48 |
| Net increase of client deposit and interbank deposit | 0.00 | 0.00 |
| Net increase of central bank loans | 0.00 | 0.00 |
| Net increase of loans from other financial institutions | 0.00 | 0.00 |
| Cash receipts from original insurance contract premium | 0.00 | 0.00 |
| Net cash receipts from reinsurance | 0.00 | 0.00 |
| Net increase of policy-holder deposit and investment | 0.00 | 0.00 |
| Cash receipts from interest, handling charges and commission | 0.00 | 0.00 |
| Net increase of loans from others | 0.00 | 0.00 |
| Net increase of repurchase | 0.00 | 0.00 |
| Net cash receipts from agency security transaction | 0.00 | 0.00 |
| Receipts of tax refund | 583,201,648.50 | 767,676,772.01 |
| Other cash receipts related to operating activities | 208,205,906.01 | 172,081,769.11 |
| Subtotal of cash inflows from operating activities | 11,839,414,417.18 | 13,850,370,894.60 |
| Cash payments for goods purchased and services received | 5,989,741,586.47 | 8,589,229,524.03 |
| Net increase of loans and advances to clients | 0.00 | 0.00 |
| Net increase of central bank deposit and interbank deposit | 0.00 | 0.00 |
| Cash payments for insurance indemnities of original insurance contracts | 0.00 | 0.00 |
| Net increase of loans to others | 0.00 | 0.00 |
| Cash payments for interest, handling charges and commission | 0.00 | 0.00 |
| Cash payments for policy bonus | 0.00 | 0.00 |
| Cash paid to and on behalf of employees | 2,120,346,828.58 | 2,037,598,678.58 |
| Cash payments for taxes and rates | 452,373,215.20 | 419,820,083.63 |
| Other cash payments related to operating activities | 1,151,097,861.28 | 1,171,885,965.97 |
| Subtotal of cash outflows from operating activities | 9,713,559,491.53 | 12,218,534,252.21 |
| Net cash flows from operating activities | 2,125,854,925.65 | 1,631,836,642.39 |
| II. Cash flows from investing activities: | ||
| Cash receipts from withdrawal of investments | 215,228,000.00 | 167,680,415.22 |
| Cash receipts from investment income | 2,073,898.69 | 67,654,596.08 |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 23,946,188.31 | 40,203,072.92 |
| Net cash receipts from the disposal of subsidiaries & other business units | 0.00 | 0.00 |
| Other cash receipts related to investing activities | 33,448,671.74 | 70,195,704.98 |
| Subtotal of cash inflows from investing activities | 274,696,758.74 | 345,733,789.20 |
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 437,785,839.58 | 432,498,640.04 |
| Cash payments for investments | 264,938,405.70 | 221,000,000.00 |
| Net increase of pledged borrowings | 0.00 | 0.00 |
| Net cash payments for the acquisition of subsidiaries & other business units | 127,498,351.89 | 76,724,758.42 |
| Other cash payments related to investing activities | 106,497,712.80 | 129,876,712.70 |
| Subtotal of cash outflows from investing activities | 936,720,309.97 | 860,100,111.16 |
| Net cash flows from investing activities | -662,023,551.23 | -514,366,321.96 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | 0.00 | 1,087,601,650.11 |
| Including: Cash received by subsidiaries from non-controlling shareholders as investments | 0.00 | 0.00 |
| Cash receipts from borrowings | 2,366,725,718.44 | 3,498,929,736.98 |
| Other cash receipts related to financing activities | 219,062,966.67 | 104,266,666.67 |
| Subtotal of cash inflows from financing activities | 2,585,788,685.11 | 4,690,798,053.76 |
| Cash payments for repayment of borrowings | 3,007,635,287.44 | 4,431,592,234.99 |
| Cash payments for distribution of dividends or profits and for interest expenses | 485,345,579.38 | 84,667,826.94 |
| Including: Cash paid by subsidiaries to non-controlling shareholders as dividend or profit | 3,661,540.00 | 13,170,580.97 |
| Other cash payments related to financing activities | 324,405,035.75 | 784,289,697.86 |
| Subtotal of cash outflows from financing activities | 3,817,385,902.57 | 5,300,549,759.79 |
| Net cash flows from financing activities | -1,231,597,217.46 | -609,751,706.03 |
| IV. Effect of foreign exchange rate changes on cash & cash equivalents | -41,681,587.83 | 284,522,324.89 |
| V. Net increase in cash and cash equivalents | 190,552,569.13 | 792,240,939.29 |
| Add: Opening balance of cash and cash equivalents | 4,793,427,180.47 | 4,001,186,241.18 |
| VI. Closing balance of cash and cash equivalents | 4,983,979,749.60 | 4,793,427,180.47 |
6. Cash flow of parent Company
Unit: RMB
| Item | 2023 | 2022 |
| I. Cash flows from operating activities: | ||
| Cash receipts from sales of goods or rendering of services | 4,835,766,166.56 | 4,918,593,279.27 |
| Receipts of tax refund | 430,347,044.12 | 478,049,259.74 |
| Other cash receipts related to operating activities | 120,761,810.00 | 91,105,691.64 |
| Subtotal of cash inflows from operating activities | 5,386,875,020.68 | 5,487,748,230.65 |
| Cash payments for goods purchased and services received | 4,225,129,108.58 | 3,482,411,796.27 |
| Cash paid to and on behalf of employees | 336,593,149.20 | 316,096,416.76 |
| Cash payments for taxes and rates | 144,878,031.37 | 135,425,402.10 |
| Other cash payments related to operating activities | 300,115,796.73 | 274,272,238.19 |
| Subtotal of cash outflows from operating activities | 5,006,716,085.88 | 4,208,205,853.32 |
| Net cash flows from operating activities | 380,158,934.80 | 1,279,542,377.33 |
| II. Cash flows from investing activities: | ||
| Cash receipts from withdrawal of investments | 79,878,183.33 | 119,399.32 |
| Cash receipts from investment income | 137,938,460.00 | 78,605,425.60 |
| Net cash receipts from the disposal of fixed assets, intangible assets and other long-term assets | 30,597.86 | 731,000.00 |
| Net cash receipts from the disposal of subsidiaries & other business units | 0.00 | 0.00 |
| Other cash receipts related to investing activities | 1,500,029,015.02 | 103,688,450.77 |
| Subtotal of cash inflows from | 1,717,876,256.21 | 183,144,275.69 |
| investing activities | ||
| Cash payments for the acquisition of fixed assets, intangible assets and other long-term assets | 55,045,787.35 | 39,019,508.60 |
| Cash payments for investments | 617,551,952.54 | 154,755,189.04 |
| Net cash payments for the acquisition of subsidiaries & other business units | 0.00 | 0.00 |
| Other cash payments related to investing activities | 260,731,453.45 | 1,360,257,082.16 |
| Subtotal of cash outflows from investing activities | 933,329,193.34 | 1,554,031,779.80 |
| Net cash flows from investing activities | 784,547,062.87 | -1,370,887,504.11 |
| III. Cash flows from financing activities: | ||
| Cash receipts from absorbing investments | 0.00 | 1,087,601,650.11 |
| Cash receipts from borrowings | 1,989,119,500.00 | 2,986,019,388.00 |
| Other cash receipts related to financing activities | 0.00 | 18,857,097.90 |
| Subtotal of cash inflows from financing activities | 1,989,119,500.00 | 4,092,478,136.01 |
| Cash payments for repayment of borrowings | 2,190,236,500.00 | 3,637,460,412.39 |
| Cash payments for distribution of dividends or profits and for interest expenses | 454,071,750.47 | 42,758,384.71 |
| Other cash payments related to financing activities | 17,897,921.26 | 676,660,516.57 |
| Subtotal of cash outflows from financing activities | 2,662,206,171.73 | 4,356,879,313.67 |
| Net cash flows from financing activities | -673,086,671.73 | -264,401,177.66 |
| IV. Effect of foreign exchange rate changes on cash & cash equivalents | -50,071,484.72 | 108,079,052.78 |
| V. Net increase in cash and cash equivalents | 441,547,841.22 | -247,667,251.66 |
| Add: Opening balance of cash and cash equivalents | 1,957,673,368.78 | 2,205,340,620.44 |
| VI. Closing balance of cash and cash equivalents | 2,399,221,210.00 | 1,957,673,368.78 |
7. Consolidated statement of changes in owners' equity
Amount for the current periodUnit: RMB
| Item | 2023 | ||||||||||||||
| Owners' equity attributable to the parent Company | Non-controlling interest | Total equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive inco | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| me | |||||||||||||||
| I. Ending balance of the previous year | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,950,778,936.53 | 236,625,962.00 | 115,010,556.85 | 0.00 | 663,843,379.04 | 0.00 | 7,702,438,641.41 | 0.00 | 13,397,947,543.83 | 226,581,692.93 | 13,624,529,236.76 |
| Add: Changes in accounting policies | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -1,640.73 | 0.00 | 0.00 | 0.00 | 186,853.02 | 0.00 | 185,212.29 | 235,795.46 | 421,007.75 |
| Correction for previous errors | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| II. Opening balance for the current year | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,950,778,936.53 | 236,625,962.00 | 115,008,916.12 | 0.00 | 663,843,379.04 | 0.00 | 7,702,625,494.43 | 0.00 | 13,398,132,756.12 | 226,817,488.39 | 13,624,950,244.51 |
| III. Amount of increase/decrease within the current period | 0.00 | 0.00 | 0.00 | 0.00 | 49,107,092.63 | 0.00 | 116,444,521.87 | 0.00 | 125,117,089.02 | 0.00 | 1,159,178,615.98 | 0.00 | 1,449,847,319.50 | -62,226,067.79 | 1,387,621,251.71 |
| ("-" for less) | |||||||||||||||
| (I) Total comprehensive income | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 116,444,521.87 | 0.00 | 0.00 | 0.00 | 1,691,612,756.79 | 0.00 | 1,808,057,278.66 | 3,723,091.65 | 1,811,780,370.31 |
| (II) Owners' investment and reductions in capital | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 1. Common shares invested by owners | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Capital contribution from holders of other equity instruments | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Am | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| ount of share-based payments recognized in owners' equity | |||||||||||||||
| 4. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (III) Profit distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 125,117,089.02 | 0.00 | -532,434,140.81 | 0.00 | -407,317,051.79 | -12,061,540.00 | -419,378,591.79 |
| 1. Withdrawal of surplus reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 125,117,089.02 | 0.00 | -125,117,089.02 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Provision for general risk reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Distribution to owners (or shareholders) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -407,317,051.79 | 0.00 | -407,317,051.79 | -12,061,540.00 | -419,378,591.79 |
| 4. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (IV) Internal carry-forward of owners' equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 1. Capital surplus transferred to paid-in capital (or share capital) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Surplus reserve transferred to paid-in capital (or share capital) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Surplus reserve to | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| cover losses | |||||||||||||||
| 4. Changes in defined benefit plans carried over to retained earnings | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 5. Other comprehensive income carried over to retained earnings | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 6. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (V) Special reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 1. Withdrawn for the current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Used for the current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (VI) Others | 0.00 | 0.00 | 0.00 | 0.00 | 49,107,092.63 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 49,107,092.63 | -53,887,619.44 | -4,780,526.81 |
| IV. Ending balance of the current period | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,999,886,029.16 | 236,625,962.00 | 231,453,437.99 | 0.00 | 788,960,468.06 | 0.00 | 8,861,804,110.41 | 0.00 | 14,847,980,075.62 | 164,591,420.60 | 15,012,571,496.22 |
Amount in the previous periodUnit: RMB
| Item | 2022 | ||||||||||||||
| Owners' equity attributable to the parent Company | Non-controlling interest | Total equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | General risk reserve | Undistributed profit | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| I. Ending balance of the previous year | 1,143,438,492.00 | 0.00 | 0.00 | 0.00 | 2,924,951,844.93 | 186,441,914.48 | -229,774,189.10 | 0.00 | 598,543,176.63 | 0.00 | 6,348,179,336.72 | 10,598,896,746.70 | 214,393,044.14 | 10,813,289,790.84 | |
| Add: Changes in accounting | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 153.9 | 0.00 | 0.00 | 0.00 | -108,349.44 | -108,195.54 | 647.73 | -107,547.81 | |
| policies | |||||||||||||||
| Correction for previous errors | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Other | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| II. Opening balance for the current year | 1,143,438,492.00 | 0.00 | 0.00 | 0.00 | 2,924,951,844.93 | 186,441,914.48 | -229,774,035.20 | 0.00 | 598,543,176.63 | 0.00 | 6,348,070,987.28 | 10,598,788,551.16 | 214,393,691.87 | 10,813,182,243.03 | |
| Amount of increase/decrease within the current period ("-" for less) | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,025,827,091.60 | 50,184,047.52 | 344,782,951.32 | 0.00 | 65,300,202.41 | 0.00 | 1,354,554,507.15 | 2,799,344,204.96 | 12,423,796.52 | 2,811,768,001.48 | |
| (I) Total comprehensive income | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 344,782,951.32 | 0.00 | 0.00 | 0.00 | 1,419,854,709.56 | 1,764,637,660.88 | 25,674,077.90 | 1,790,311,738.78 | |
| (II) Owners' investment and | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,012,264,796.24 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,071,328,296.24 | 0.00 | 1,071,328,296.24 |
| reductions in capital | |||||||||||||||
| 1. Common shares invested by owners | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,012,264,796.24 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,071,328,296.24 | 0.00 | 1,071,328,296.24 | |
| 2. Capital contribution from holders of other equity instruments | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 3. Amount of share-based payments recognized in owners' equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 4. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (III) Profit distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 65,300,202.41 | 0.00 | -65,300,202.41 | 0.00 | -13,170,580.97 | -13,170,580.97 | |
| 1. Withdrawal of surplus reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 65,300,202.41 | 0.00 | -65,300,202.41 | 0.00 | 0.00 | 0.00 | |
| 2. Provision for general risk reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 3. Distribution to owners (or shareholders) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -13,170,580.97 | -13,170,580.97 | |
| 4. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (IV) Internal carry-forward of owners' equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 1. Capital surplus | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| transferred to paid-in capital (or share capital) | |||||||||||||||
| 2. Surplus reserve transferred to paid-in capital (or share capital) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 3. Surplus reserve to cover losses | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 4. Changes in defined benefit plans carried over to retained | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| earnings | |||||||||||||||
| 5. Other comprehensive income carried over to retained earnings | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 6. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (V) Special reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 1. Withdrawn for the current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 2. Used for the current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (VI) Others | 0.00 | 0.00 | 0.00 | 0.00 | 13,562,295.36 | 50,184,047.52 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -36,621,752.16 | -79,700.41 | -36,701,452.57 | |
| IV. Ending balance of | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,950,778,936.53 | 236,625,962.00 | 115,008,916.12 | 0.00 | 663,843,379.04 | 0.00 | 7,702,625,494.43 | 13,398,132,756.12 | 226,817,488.39 | 13,624,950,244.51 |
thecurrentperiod
8. Statement of changes in owners' equity of the parent Company
Amount for the current periodUnit: RMB
| Item | 2023 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Other | Total equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| I. Ending balance of the previous year | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,958,727,598.88 | 236,625,962.00 | -54,066,268.84 | 0.00 | 660,095,082.13 | 4,882,191,240.72 | 0.00 | 10,412,823,682.89 |
| Add: Changes in accounting policies | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Correction for previous errors | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Other | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| II. Opening balance for the current year | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,958,727,598.88 | 236,625,962.00 | -54,066,268.84 | 0.00 | 660,095,082.13 | 4,882,191,240.72 | 0.00 | 10,412,823,682.89 |
| Amount of increase/decrease within the | 0.00 | 0.00 | 0.00 | 0.00 | 40,894,773.69 | 0.00 | 21,100,545.46 | 0.00 | 125,117,089.02 | 718,736,749.41 | 0.00 | 905,849,157.58 |
| current period ("-" for less) | ||||||||||||
| (I) Total comprehensive income | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 21,100,545.46 | 0.00 | 0.00 | 1,251,170,890.22 | 0.00 | 1,272,271,435.68 |
| (II) Owners' investment and reductions in capital | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 1. Common shares invested by owners | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Capital contribution from holders of other equity instruments | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 3. Amount of share-based payments recognized in owners' | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| equity | ||||||||||||
| 4. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (III) Profit distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 125,117,089.02 | -532,434,140.81 | 0.00 | -407,317,051.79 |
| 1. Withdrawal of surplus reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 125,117,089.02 | -125,117,089.02 | 0.00 | 0.00 |
| 2. Distribution to owners (or shareholders) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -407,317,051.79 | 0.00 | -407,317,051.79 |
| 3. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (IV) Internal carry-forward of owners' equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 1. Capital surplus transferred to paid-in capital (or share capital) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2. Surplus reserv | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| e transferred to paid-in capital (or share capital) | ||||||||||||
| 3. Surplus reserve to cover losses | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 4. Changes in defined benefit plans carried over to retained earnings | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 5. Other comprehensive income carried over to retained earnings | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 6. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (V) Special reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 1. Withd | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| rawn for the current period | ||||||||||||
| 2. Used for the current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| (VI) Others | 0.00 | 0.00 | 0.00 | 0.00 | 40,894,773.69 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 40,894,773.69 |
| IV. Ending balance of the current period | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,999,622,372.57 | 236,625,962.00 | -32,965,723.38 | 0.00 | 785,212,171.15 | 5,600,927,990.13 | 0.00 | 11,318,672,840.47 |
Amount in the previous periodUnit: RMB
| Item | 2022 | |||||||||||
| Share capital | Other equity instruments | Capital reserve | Less: Treasury shares | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profit | Other | Total equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| I. Ending balance of the previous year | 1,143,438,492.00 | 0.00 | 0.00 | 0.00 | 2,930,657,501.76 | 186,441,914.48 | -84,939,637.21 | 0.00 | 594,794,879.72 | 4,298,560,664.99 | 8,696,069,986.78 | |
| Add: Changes in accounting policies | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Correction | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| for previous errors | ||||||||||||
| Other | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| II. Opening balance for the current year | 1,143,438,492.00 | 0.00 | 0.00 | 0.00 | 2,930,657,501.76 | 186,441,914.48 | -84,939,637.21 | 0.00 | 594,794,879.72 | 4,298,560,664.99 | 8,696,069,986.78 | |
| Amount of increase/decrease within the current period ("-" for less) | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,028,070,097.12 | 50,184,047.52 | 30,873,368.37 | 0.00 | 65,300,202.41 | 583,630,575.73 | 1,716,753,696.11 | |
| (I) Total comprehensive income | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 30,873,368.37 | 0.00 | 0.00 | 653,002,024.14 | 683,875,392.51 | |
| (II) Owners' investment and reductions in capital | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,012,264,796.24 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,071,328,296.24 | |
| 1. Common shares invested by owners | 59,063,500.00 | 0.00 | 0.00 | 0.00 | 1,012,264,796.24 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,071,328,296.24 | |
| 2. Capital contri | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| bution from holders of other equity instruments | ||||||||||||
| 3. Amount of share-based payments recognized in owners' equity | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 4. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (III) Profit distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 65,300,202.41 | -65,300,202.41 | 0.00 | |
| 1. Withdrawal of surplus reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 65,300,202.41 | -65,300,202.41 | 0.00 | |
| 2. Distribution to owners (or shareholders) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 3. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (IV) Internal carry-forward of owner | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| s' equity | ||||||||||||
| 1. Capital surplus transferred to paid-in capital (or share capital) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 2. Surplus reserve transferred to paid-in capital (or share capital) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 3. Surplus reserve to cover losses | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 4. Changes in defined benefit plans carried over to retained earnings | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 5. Other comp | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| rehensive income carried over to retained earnings | ||||||||||||
| 6. Others | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (V) Special reserve | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 1. Withdrawn for the current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| 2. Used for the current period | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| (VI) Others | 0.00 | 0.00 | 0.00 | 0.00 | 15,805,300.88 | 50,184,047.52 | 0.00 | 0.00 | 0.00 | -4,071,246.00 | -38,449,992.64 | |
| IV. Ending balance of the current period | 1,202,501,992.00 | 0.00 | 0.00 | 0.00 | 3,958,727,598.88 | 236,625,962.00 | -54,066,268.84 | 0.00 | 660,095,082.13 | 4,882,191,240.72 | 10,412,823,682.89 |
III. Basic Information of the CompanyJointly established by natural persons Qiu Jianping, Wang Lingling, Li Zheng, Wang Weiyi and Wang Min,Hangzhou GreatStar Industrial Co., Ltd. (hereinafter referred to "Company" or the "Company") was approved bythe Hangzhou Administration for Industry and Commerce and registered with the Hangzhou Administration forIndustry and Commerce headquartered in Hangzhou, Zhejiang on August 9, 2001. The Company holds the businesslicense and its Unified Social Credit Code is 91330000731506099D, with registered capital of RMB
1,202,501,992.00 and a total of 1,202,501,992 shares (par value of RMB 1 per share), including 51,472,904outstanding A-shares restricted for sale and 1,151,029,088 outstanding A-shares unrestricted for sale. TheCompany's shares have been listed for trading on July 13, 2010 on the Shenzhen Stock Exchange.The Company is a player under the hardware industry, mainly engaged in the research and development, productionand sale of hand tools, power tools, laser measurement tools, storage cabinets.The Financial Statements have been authorized for issuance with the approval of the 6th Meeting of the 6th Boardof Directors on April 24, 2024.IV. Basis for Preparing the Financial Statements
1. Basis for preparation
These Financial Statements of the Company are prepared on a going concern basis.
2. Going concern
There are no matter or circumstance that results in any significant doubt about the Company's ability to continue asa going concern for a period of 12 months from the end of the reporting period.V. Significant Accounting Policies and Accounting EstimatesReminder to specific accounting policies and accounting estimates:
Important Notes: The Company formulated specific accounting policies and estimates for transactions or matterssuch as impairment of financial instruments, inventory, depreciation of fixed assets, construction in progress,intangible assets, and revenue recognition.
1. Statement of compliance with accounting standards for business enterprisesThese Financial Statements prepared by the Company comply with the requirements of the Accounting Standardsfor Business Enterprises and give an authentic and complete picture of the Company's financial position, results ofoperations and cash flows, and other relevant information.
2. Accounting period
The fiscal year starts from January 1 to December 31 on Gregorian calendar.
3. Business cycle
The Company features a short period of business operations, with 12 months as the standard for the liquidity of itsassets and liabilities.
4. Recording currency
The Company and its domestic subsidiaries take Renminbi (RMB) as recording currency. Hong Kong GreatStarInternational Co., Ltd., GreatStar Tools USA, Inc, GreatStar Europe AG, and other overseas subsidiaries, which areengaged in foreign operations, select the currency of the principal economic environments in which they operate asthe recording currency.
5. Determination method and selection basis of materiality standard
?√ Applicable □ Not Applicable
| Item | Materiality standard |
| Important construction in progress | The Company recognizes the construction in progress whose amount exceeds 0.5% of the total assets as an important construction in progress |
| Important goodwill | The Company recognizes the combination of asset groups whose original book value of goodwill exceeds 10% of the total original book value of the Group's goodwill as an important goodwill |
| Important cash flow from investing activities | The Company recognizes the cash flow from investing activity exceeding 5% of the total assets as an important |
| cash flow from investment activities | |
| Important overseas operating entity | The Company recognizes overseas operating entities whose total revenue exceeds 5% of the Group's total revenue as important overseas operating entities |
| Important subsidiary and non-wholly owned subsidiary | The Company recognizes subsidiaries whose total revenue exceeds 15% of the Group's total revenue as important subsidiaries and important non-wholly owned subsidiaries |
| Important joint venture | The Company recognizes joint ventures whose total revenue exceeds 15% of the Group's total revenue as important joint ventures |
| Important commitments | The Company recognizes the commitment whose amount exceeds 0.5% of the total assets as an important commitment |
| Important contingencies | The Company recognizes the contingent event whose amount exceeds 0.5% of the total assets as an important contingent event |
| Important events subsequent to the balance sheet date | The Company recognizes the event subsequent to the balance sheet date whose amount exceeds 0.5% of the total assets as an important event subsequent to the balance sheet date |
6. Accounting method for consolidation of enterprises under or not under the joint control
1. Accounting methods for consolidation of enterprises under the joint control
Assets and liabilities acquired by the Company in a consolidation are measured at the book value of the party beingconsolidated in the consolidated financial statements of ultimate controlling party at the date of consolidation. TheCompany adjusts capital surplus by the difference between the share of the book value of the owners' equity of theparty being consolidated in the consolidated financial statements of the ultimate controlling party and the book valueof the consideration paid for the consolidation or the total nominal value of the shares issued. If capital surplus isinsufficient for write-down, the retained earnings shall be adjusted.
2. Accounting methods for consolidation of enterprises not under the joint controlThe Company recognizes the difference of the cost of consolidation minus the share of fair value of the identifiablenet assets of the acquiree acquired in the consolidation at the date of purchase as the goodwill. If the cost ofconsolidation is less than the share of fair value of the identifiable net assets of the acquiree acquired in theconsolidation, the Company firstly reviews the fair value of each of identifiable assets, liabilities and contingentliabilities acquired from the acquiree as well as the measurement of consolidation cost; and if the cost ofconsolidation remains less than the share of fair value of the identifiable net assets of the acquiree acquired in theconsolidation upon review, the difference is recognized in the current profits or losses.
7. Criteria for joint control and methods for preparing consolidated financial statements
1. Recognition of control
Control is recognized if one entity has the power over the invested entity, enjoying variable returns throughparticipating in related activities of the invested entity, and has the ability to use the power over the invested entityto influence its variable return amount.
2. Method of preparing consolidated financial statements
The parent company includes all its controlled subsidiaries in the scope of the consolidated financial statements.The consolidated financial statements are based on the financial statements of the parent company and itssubsidiaries and other relevant data and are prepared by the parent company in accordance with AccountingStandards for Business Enterprises No. 33 - Consolidated Financial Statements.
8. Classification of joint venture arrangements and accounting method for joint operations
1. Joint venture arrangements are divided into joint operation and joint venture.
2. Where the Company is a joint party in a joint operation, the following items related to the share of interest in thejoint operation shall be recognized:
(1) To recognize the assets held assumed solely by the Company and the assets held assumed jointly as per theshares of the Company;
(2) To recognize the liabilities held assumed solely by the Company and the assets held assumed jointly as per theshares of the Company;
(3) To recognize revenue from disposal of the share of joint operations of the Company to be sold;
(4) To recognize revenue from joint operations arising from the sale of assets based on the shares held by theCompany; and
(5) To recognize fees solely occurred by Company and recognize fees from joint operations in appropriation to theshare of the Company.
9. Recognition criteria of cash and cash equivalents
Cash set out in the cash flow statement refers to stock cash and bank deposits that can be used for payment at anytime. Cash equivalent refers to investment that is held for a short period, highly mobile, easily convertible into givenamount of cash and unlikely to change in value.
10. Translation of foreign-currency transactions and foreign-currency financial statements
1. Translation of foreign-currency transactions
In the initial recognition of foreign currency transactions, amounts in foreign currency are translated into amountsin RMB at the spot exchange rate on the transaction date. Foreign-currency monetary items at the balance sheet dateare translated with the spot exchange rate on the same date, and the exchange differences arising from differentexchange rates, except for the exchange differences on the principal of and interest on special foreign-currencyborrowings relating to the acquisition and setup of assets eligible for capitalization, are recognized in currentgains/losses; foreign currency non-monetary items measured with historical cost are still converted based on thespot exchange rate on the transaction date, without changing its RMB amount; and for the foreign currency non-monetary items measured with fair value, conversion is made as per the spot exchange rate on the date when thefair value is defined, with the different stated as the current profits or losses or other comprehensive income.
2. Translation of foreign-currency financial statements
The asset items and liability items in the balance sheet adopt the exchange rate of the balance sheet date fortranslation; the owners' equity items adopt the exchange rate of date when the transactions occurred, except for theitems of “undistributed profit”; and the revenues and expenses items in the income statements are translated by therate similar to the spot rate on the date of transaction. Differences in translation of foreign-currency financialstatements arising from the foregoing are stated as other comprehensive income.
11. Financial instruments
1. Classification of financial assets and financial liabilities
Financial assets are classified into the three categories at initial recognition: (1) Financial assets measured atamortized cost; (2) financial assets measured at fair value through other comprehensive income; and (3) financialassets measured at fair value through current gains/losses.Financial liabilities are classified into four categories at initial recognition: (1) Financial liabilities measured at fairvalue through current gains/losses; (2) financial liabilities resulting from unqualified transfer of financial assets onderecognition or from continued involvement in the transferred financial assets; (3) financial guarantee contractsthat do not fall under (1) or (2) above and loan commitments that fall out of (1) above and that are loaned out at alower-than-market interest rate; and (4) financial liabilities measured at amortized cost.
2. Basis of recognition, measurement method and derecognition conditions of financial assets and financialliabilities
(1) Basis of recognition and initial measurement of financial assets and financial liabilities
The Company recognizes an item of financial asset or financial liability at the time when it becomes one party to acontract of the financial instruments. On initial recognition, a financial asset or financial liability is measured at fairvalue; for financial assets and financial liabilities at fair value through current profits or losses, the relatedtransaction costs are recognized directly in the current profits or losses; for other categories of financial assets orfinancial liabilities, relevant transaction costs are included in the amount of initial recognition. However, if thereceivables initially recognized by the Company exclude significant financing components or if the Company doesnot consider any financing component in a contract of less than a year, the Company initially measures thereceivables in accordance with the transaction price as defined in Accounting Standards for Business EnterprisesNo. 14 -Revenue.
(2) Subsequent measurement of financial assets
1) Financial assets measured at amortized cost
Such financial liabilities are measured subsequently at amortized cost by the actual interest rate method. Profits orlosses arising from financial assets measured at amortized cost that are not part of any hedging relationship arerecognized in the current profits or losses when they are derecognized, reclassified, amortized by the effectiveinterest rate method or recognized as impairment.
2) Investment in debt instruments measured at fair value through other comprehensive incomeSuch financial asset is measured subsequently at fair value. Interest, impairment losses or gains and exchangegains/losses calculated using the method of effective interest rate are recognized in the current profits or losses forthe period. Upon derecognition, the cumulative profits or losses previously recognized in other comprehensiveincome is transferred out and recognized in current gains/losses.
3) Investment in equity instruments at fair value through other comprehensive incomeSuch financial asset is measured subsequently at fair value. Dividends received (except for those attributable to theinvestment costs recovered) are recognized in current gains/losses, and other profits or losses are recognized in othercomprehensive income. Upon derecognition, the cumulative profits or losses previously recognized in othercomprehensive income is transferred therefrom to retained earnings.
4) Financial assets measured at fair value through current gains/losses
Profits or losses arising from subsequent measurement at fair value, including interest and dividend income, arestated as current gains/losses unless the financial assets are part of a hedging relationship.
(3) Subsequent measurement of financial liabilities
1) Financial liabilities at fair value through current gains/losses
Such financial liabilities comprise those held for trading (including derivatives that are financial liabilities) andthose designated for measurement at fair value through current gains/losses. Such financial liabilities are measuredsubsequently at fair value. The amount of changes in the fair value of financial liabilities designated formeasurement at fair value through current gains/losses arising from changes in the Company's credit risk isrecognized in other comprehensive income, unless such disposal would create or enlarge the accounting mismatchin gains/losses. Other profits or losses arising from such financial liabilities (including interest cost and changes infair value other than those arising from changes in the Company's credit risk) are recognized in current gains/losses,unless the financial liabilities are part of a hedging relationship. Upon derecognition, the cumulative profits or lossespreviously recognized in other comprehensive income is transferred therefrom to retained earnings.
2) Financial liabilities resulting from unqualified transfer of financial assets on derecognition or from continuedinvolvement in the transferred financial assetsSuch financial liabilities are measured in accordance with Accounting Standards for Business Enterprises No.23 -Transfer of Financial Assets.
3) Financial guarantee contracts that do not fall under (1) or (2) above and loan commitments that fall out of (1)above and that are loaned out at a lower-than-market interest rateSubsequent measurement after initial recognition is based on, whichever is higher: (i) The amount of the provisionfor losses determined in accordance with the regulations on impairment of financial instruments; or (ii) difference
between the amount initially recognized minus the amount of cumulative amortization defined in accordance withAccounting Standards for Business Enterprises No. 14 - Revenue.
4) Financial liabilities measured at amortized cost
Such financial liabilities are measured at amortized cost using the effective interest method. Profits or losses arisingfrom financial liabilities measured at amortized cost and not part of any hedging relationship are recognized in thecurrent gains/losses at the time of derecognition and amortized by effective interest method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized if one of the following conditions is satisfied:
(i) The contractual right to receive cash flows from financial assets is terminated;(ii) The financial asset is transferred, and such transfer satisfies the regulations on derecognition of financial assetsunder Accounting Standards for Business Enterprises No.23 - Transfer of Financial Assets.
2) Where a financial liability (or a portion thereof) is discharged from a present obligation, such financial liability(or such portion thereof) is derecognized accordingly.
3. Basis of recognition and measurement methods of financial assets
If the Company transfers nearly all the risks and rewards of ownership of a financial asset, such financial asset isderecognized, and the right and obligation arising from or retained in the transfer is recognized as an asset or aliability; if nearly all the risks and rewards on the ownership of a financial asset are retained, the transferred financialasset continues to be recognized. If the Company neither transfers nor retains nearly all risks and rewards on theownership of a financial asset, the Company shall: (1) derecognize the financial asset and recognize the right andobligation arising from or retained in the transfer if it has no control over the asset; and (2) recognize the relevantfinancial asset and relevant financial liability by the extent of its continued involvement in the transferred financialasset if it has control over the said financial asset.If the overall transfer of a financial asset satisfies the conditions for derecognition, the difference between (1) thebook value of the transferred financial asset on the date of derecognition; and (2) the sum of the consideration fromthe transfer of the financial asset and the amount of derecognized portion in the accumulated changes of fair valueoriginally stated as other comprehensive income (the financial asset involved in transfer is an investment in a debtinstrument measured at fair value through other comprehensive income) is recognized in current gains/losses.Should a portion of a financial asset be transferred and such transferred portion as a whole is qualified forderecognition, the book value of such financial asset as a whole before the transfer is apportioned between thederecognized portion and the portion for continued recognition based on their respective fair value on the date oftransfer; and the difference between (1) the book value of the derecognized portion and (2) the sum of theconsideration for the derecognized portion and the amount of derecognized portion in the accumulated changes offair value originally stated as other comprehensive income (the financial asset involved in transfer is an investmentin a debt instrument measured at fair value through other comprehensive income) is recognized in currentgains/losses.
4. Methods for determining the fair value of financial assets and financial liabilitiesThe Company employs the appraisal technique that is applicable in current period and is supported by sufficientavailable data and other information to determine the fair value of financial assets and financial liabilities. TheCompany categorizes the inputs used in the valuation technique in the following levels and applies such inputs in acertain order:
(1) Level-1 inputs are unadjusted offers in any active market for identical assets or liabilities that are available onthe measurement date;
(2) Level-2 inputs are those other than the Level-1 inputs and observable for underlying assets or liabilities, directlyor indirectly, including offers for similar assets or liabilities in any active market; offers for identical or similarassets or liabilities in any inactive market; observable inputs other than offers (e.g., interest rates and yield curvesobservable in normal intervals of offering; and market-validated inputs;
(3) Level-3 inputs are unobservable inputs for the underlying assets or liabilities, including interest rates that arenot directly observable or cannot be verified with observable market data, stock volatility, future cash flowsassuming retirement obligations in a business consolidation, and financial projections with self-owned data.
5. Impairment of financial instruments
The Company impairs and recognizes provisions for loss based on expected credit losses on financial assetsmeasured at amortized cost, investments in debt instruments at fair value through other comprehensive income,contract assets, receivables from leasing, loan commitments other than those classified as financial liabilitiesmeasured at fair value through current gains/losses, and financial guarantee contracts that are not classified asfinancial liabilities measured at fair value through current gains/losses or financial liabilities resulting fromunqualified transfer of financial assets on derecognition or from continued involvement in the transferred financialassets.Expected credit loss refers to the weighted average of credit loss of financial instruments weighted by the risk ofdefault. Credit loss represents the difference between all contractual cash flows discounted at the original effectiveinterest rate and receivable under the contract and all cash flows expected to be collected, i.e., the present value ofthe entire cash shortfall. In particular, for any financial asset purchased or originated by the Company with creditimpaired, such asset is discounted at effective interest rate upon credit adjustment.For any financial asset purchased or originated by the Company with credit impaired, the Company recognizes onlythe cumulative changes in expected credit losses over the entire period of existence from initial recognition as theprovision for losses on the balance sheet date.For the receivables and contract assets that result from transactions governed by Accounting Standards for BusinessEnterprises No. 14 -Revenue and do not contain any significant financing component or for which the Companydoes not consider a financing component in any contract of no more than a year, the Company applies a simplifiedmeasurement method to measure the provision for losses at an amount equivalent to the expected credit losses overthe entire period of existence.For any financial asset other than those measured by the above-mentioned methods, the Company evaluates on eachbalance sheet date whether the credit risk of such asset sees significant increase after initial recognition. If the creditrisk has increased significantly since initial recognition, the Company measures the provision for losses based onthe amount of expected credit losses over the entire period of existence; if not, the Company measures the provisionfor losses based on the amount of expected credit losses of such financial instrument over the next 12 months.The Company uses reasonably available and supportable information, including forward-looking information, todetermine whether the credit risk of a financial instrument sees significant increase after initial recognition bycomparing the risk of default of the said financial instrument on the balance sheet date with the risk of default onthe date of initial recognition.On the balance sheet date, if the Company believes that a financial instrument features a low credit risk, it shall beassumed that its credit risk has not increased significantly since initial recognition.The Company evaluates expected credit risks and measures expected credit losses based on a single financialinstrument or a portfolio of financial instruments. Where a portfolio of financial instruments is applied, the Companyclassifies financial instruments into portfolios based on common risk features.The Company remeasures expected credit losses on each balance sheet date, from which the amount increased orreversed from the provision for losses resulted is recognized as impairment profits or losses in current gains/losses.For any financial asset measured at amortized cost, the provision for losses is offset against the book value of suchfinancial asset as stated in the balance sheet; for any debt investment measured at fair value through othercomprehensive income, the Company recognizes its provision for losses in other comprehensive income, withoutoffsetting the book value of the financial asset.
6. Offset between financial assets and financial liabilities
Financial assets and financial liabilities are presented separately in the balance sheet and are not mutually offset.However, where both of the following conditions are met, the financial assets and financial liabilities will bepresented in the balance sheet with the net amount after mutual offset: (1) The Company has the legal right to offsetthe recognized amount, which is executable for; and (2) the Company plans to make settlement in net amount, orrealizes the financial assets and settles the financial liabilities simultaneously.
When a financial asset is transferred without satisfying the conditions for derecognition, the Company does offsetsuch transferred financial asset and related liabilities.
12. Notes receivable
The Company refers to the historical credit loss and combines the current situation and the projections of futureeconomic situation, in a bid to calculate the expected credit loss based on the default risk exposure and the expectedcredit loss rate of the whole duration.
13. Accounts receivables
1. Accounts receivable and contract assets with expected credit losses measured on a portfolio basis
| Category | Basis for portfolio determination | Methods to measure expected credit losses |
| Receivables - Ageing combination | Ageing | The Company refers to the historical credit loss, combines the current situation and the projections of future economic situation, and prepares a comparison table between the ageing of accounts receivables and expected credit loss rate, in a bid to calculate the expected credit loss |
| Other receivables - Ageing combination | Ageing | The Company refers to the historical credit loss, combines the current situation and the projections of future economic situation, and prepares a comparison table between the ageing of other receivables and expected credit loss rate, in a bid to calculate the expected credit loss |
| Other receivables - Portfolio of receivables from connected parties with consolidated scope | Receivables from and payables to connected parties within the consolidation scope | The Company calculates expected credit losses by reference to historical credit loss, taking into current conditions and projections of future economic conditions through default exposures and expected credit loss rate over the entire period of existence. |
| Prepayments - Ageing combination | Ageing | The Company refers to the historical credit loss, combines the current situation and the projections of future economic situation, and prepares a comparison table between the ageing of prepayments and expected credit loss rate, in a bid to calculate the expected credit loss |
2. The comparison table between the ageing of accounts receivables and expected credit loss rate
| Ageing | Accounts receivable Expected credit loss rate (%) | Other receivables Expected credit loss rate (%) | Advances paid Expected credit loss rate (%) |
| Within one year (inclusive, the same below) | 5 | 5 | 5 |
| 1-2 years | 10 | 10 | 10 |
| 2-3 years | 20 | 20 | 20 |
| 3-4 years | 30 | 30 | 30 |
| 4-5 years | 50 | 50 | 50 |
| Ageing | Accounts receivable Expected credit loss rate (%) | Other receivables Expected credit loss rate (%) | Advances paid Expected credit loss rate (%) |
| More than 5 years | 100 | 100 | 100 |
The aging of accounts receivable/other receivables/prepayments starts from the month in which the paymentactually occurs.
3. Identification standards for accounts receivable and contract assets with expected credit losses measured on asingle item basisFor accounts receivable and contract assets whose credit risk is significantly different from the portfolio credit risk,the Company measures expected credit losses on a single item basis.
14. Contract assets
The Company presents contract assets or contract liabilities in the balance sheet based on the relationship betweenthe fulfillment of performance obligations and clients' payment. The contractual assets and liabilities under the samecontract are shown on a net basis after mutual offset.The Company presents the right to receive consideration from a client that it owns unconditionally (i.e., dependingonly on the passage of time) as a receivable and the right to receive consideration for a commodity transferred to aclient (depending on any factor other than the passage of time) as a contract asset.
15. Inventory
1. Category of inventories
Inventories include finished products or commodities held for sale in daily operations, or work in progress, ormaterials and supplies to be consumed in production or provision of labor.
2. Method for appraising outgoing inventories
The Company appraises outgoing inventories with weighted-average system at the end of the month.
3. Stocktaking system of inventories
Stocktaking is based on perpetual inventory system.
4. Amortization of low-value consumables and packages
(1) Low-value consumables
Low-value consumables are amortized by lump sum.
(2) Packages
Low-value consumables are amortized by lump sum.
5. Provision for decline in value of inventories
Recognition criteria and accrual method for provision for decline in value of inventoriesInventories are valued at lower of cost and NRV (net realizable value) at the balance sheet date, and the provisionfor decline in value of inventories are made based on the difference between cost and NRV. The net realizable valueof an inventory directly for sale is determined in the normal production and operation by its estimated selling priceminus estimated selling expense(s) and related tax (es); and that of an inventory requiring processing is determinedin normal production and operation by the estimated selling price of the finished product minus estimated cost(s) toincur by the time of completion, estimated selling expense (s) and related tax (es). In case the price of part of aninventory is specified in the contract but that of the other parts is not specified in the contract by the balance sheetdate, their net realizable values are determined separately and compared with their corresponding costs in order todetermine the amount for withdrawal or reversal of provision for inventory depreciation.
16. Assets held for sale
1. Classification of non-current assets or disposal groups held for sale
The Company classifies non-current assets or disposal groups as held for sale where both of the following conditionsare satisfied: (1) The sale is imminent under current conditions based on the common practice of selling such assetsor disposal groups in similar transactions; and (2) the sale is highly possible, i.e., the Company has resolved on aplan for the sale and obtained a firm commitment to purchase, and the sale is expected to be completed within oneyear.Non-current assets or disposal groups acquired by the Company for the sole purpose of resale are classified as heldfor sale on the date of acquisition if, on the date of acquisition, the condition that "the sale is expected to becompleted within one year" is satisfied and other conditions for classification as held for sale are also likely to besatisfied within a short period of time (normally three months).If any transaction between or among unconnected parties fails to be completed within one year for any of thefollowing reasons beyond the control of the Company, and the Company remains committed to selling the non-current assets or disposal groups, such assets or groups will continue to be classified as held for sale: (1) The buyeror any other party unexpectedly sets conditions that result in a delay in the sale, and the Company has acted on thoseconditions in a timely manner and expects to successfully resolve the delay within one year upon the setting; (2)any rare event occurs that causes the sale of the non-current assets or disposal groups held for sale not to becompleted within one year, and the Company has addressed such event within the initial year, for which theconditions for classification of those held for sale have been satisfied.
2. Accounting method for non-current assets or disposal groups held for sale
(1) Initial measurement and subsequent measurement
At the initial measurement of and remeasurement on balance sheet date of non-current assets or disposal groupsheld for sale, if the book value is higher than the fair value less costs to sell, the book value is written down to a netamount of fair value less costs to sell, and the amount of write-down is stated as an impairment loss on the assetsthrough current gains/losses and a provision for impairment of the assets held for sale is withdrawn.Non-current assets or disposal groups classified as held for sale on the date of acquisition measured at whichever islower, amount of initial measurement that would have been determined assuming that they were not classified asheld for sale or the net amount of fair value less costs to sell. Except for the non-current assets or disposal groupsacquired in a business consolidation, the difference arising from the initial measurement of a non-current asset ordisposal group at fair value less costs to sell is recognized in current gains/losses.The amount of asset impairment loss recognized for a disposal group held for sale is offset against the book valueof goodwill in the disposal group and then against the book value of each non-current asset on a pro rata basis byits proportion in the disposal group.Non-current assets held for sale or in the disposal groups shall not be depreciated or amortized, and interest andother expenses of liabilities in the disposal groups held for sale shall be recognized.
(2) Accounting method for reversal of assets impairment loss
If the net amount of the fair value of non-current assets held for sale after subtracting the selling expense increasesat subsequent balance sheet dates, the amount previously written down shall be restored. Moreover, the amount ofassets impairment loss recognized after non-current assets are classified as held for sale shall be reversed andrecorded in profit or loss for the current period. The assets impairment loss recognized before non-current assets areclassified as held for sale shall not be reversed.If the net amount of the fair value of disposal groups held for sale after subtracting the selling expense increases atsubsequent balance sheet dates, the amount previously written down shall be restored. Moreover, the amount ofassets impairment loss recognized after non-current assets are classified as held for sale shall be reversed andrecorded in profit or loss for the current period. The book value of goodwill that has been written off and the assetsimpairment loss recognized before non-current assets are classified as held for sale shall not be reversed.
For the subsequently reversed amount of the asset impairment loss recognized on disposal groups held for sale, thebook value shall be increased based on the proportion of the book value of each non-current asset except goodwillin the disposal group.
(3) Discontinued classification as held for sale and derecognition
When non-current assets or disposal groups are no longer classified as held for sale because they do not meet thecorresponding conditions or non-current assets are removed from disposal groups held for sale, they shall bemeasured at the lower of the following: 1) the book value before being classified as held for sale, adjusted fordepreciation, amortization or impairment that would have been recognized had they not been classified as held forsale; 2) the recoverable amount.At the time of derecognition of non-current assets or disposal groups held for sale, the unrecognized profits or lossesshall be recorded in profit or loss for the current period.
3. Recognition criteria for discontinued operations
A separately distinguishable component that has been disposed of or is held for sale and meets one of the followingconditions is recognized as a discontinued operation:
(1) The component represents an independent main business or an independent main business area;
(2) The component is part of a plan concerning the proposed disposal of an independent main business or anindependent main business area;
(3) This component is a subsidiary acquired exclusively for resale.
4. Presentation method for discontinued operations
The Company presents the profit or loss from continuing operations and the profit or loss from discontinuedoperations separately in the income statement. Operating profit or loss and profit or loss from disposal such as theimpairment loss and the reversed amount from discontinued operations are reported as profit or loss fromdiscontinued operations. For the discontinued operations reported in the current period, the data originally presentedas the profit or loss from continuing operations shall be re-presented as the profit or loss from discontinuedoperations for the comparable period in the current financial statements. If the discontinued operation no longermeets the criteria to be classified as held for sale, the data originally presented as the profit or loss from discontinuedoperations shall be re-presented as the profit or loss from continuing operations for the comparable period in thecurrent financial statements.
17. Long-term equity investments
1. Recognition of joint control and significant influence
Joint control refers to the shared control over an arrangement, regarding which activities can be decided on onlywith the unanimous consent of the parties sharing control, as agreed upon. Significant influence refers to the powerto participate in decision-making on the financial and operating policies of the investee, but with no control or jointcontrol over the formulation of these policies.
2. Determination of investment cost
(1) For business combination under common control, where long-term equity investments are obtained by cash paid,non-Monetary funds paid, assumed liabilities or equity securities issued as consideration by the combining party,on the combination date, the initial investment cost shall be taken as the share of the owner's equity of the combinedparty at book value in the final control party's consolidated financial statements. According to the difference betweenthe initial investment cost of long-term equity investments and the book value of the consideration paid or theaggregate nominal value of shares issued, capital reserve shall be written down. If the capital reserve is not sufficientto be written down, then the retained earnings shall be written down.For long-term equity investments resulting from business combinations involving entities under common control,which are achieved step by step in multiple transactions, the Company will assess whether these transactionsconstitute a "package deal". Each of these transactions shall be accounted for as a transaction for acquisition ofcontrol if they constitute a "package deal". Otherwise, the initial investment cost shall be recognized on thecombination date according to the share of the combined party's net assets to be acquired after combination at book
value in the final control party's consolidated financial statements. According to the difference between the initialinvestment cost of long-term equity investments on the combination date and the sum of the book value of long-term equity investments before combination plus the book value of the consideration paid for further acquisition ofshares on the combination date, capital reserve shall be written down. If the capital reserve is not sufficient to bewritten down, then the retained earnings shall be written down.
(2) For business combination not under common control, on the combination date, the initial investment cost oflong-term equity investments shall be taken as the fair value of the consideration paid.For long-term equity investments resulting from business combinations involving entities not under common control,which are achieved step by step in multiple transactions, different approaches in accounting method are adopted forindividual financial statements and consolidated financial statements as follows:
1) For individual financial statements, the initial investment cost is calculated as the sum of the book value ofinvestments in equity originally held plus the additional investment cost using the cost method.
2) For consolidated financial statements, whether these transactions constitute a "package deal" will be assessed.Each of these transactions shall be accounted for as a transaction for acquisition of control if they constitute a"package deal". For transactions do not constitute a "package deal", the target entity's equity held before the purchasedate shall be remeasured at the fair value of the equity on the purchase date, and the difference between the fairvalue and book value of the equity shall be recorded in investment income for the current period; if the target entity'sequity held before the purchase date involves other comprehensive income accounted with the equity method, othercomprehensive income associated, except when arising from the changes due to remeasurement of net liabilities ornet assets of defined benefit plan by the investor, shall be transferred to income for the current period on the purchasedate.
(3) Other long-term equity investments not resulting from business combination: For long-term equity investmentsobtained by cash paid, the initial investment cost shall be the amount actually paid. For those obtained by equitysecurities issued, the initial investment cost shall be the fair value of equity securities issued. For those obtained bydebt restructuring, the initial investment cost shall be recognized according to Accounting Standards for BusinessEnterprises No. 12 - Debt Restructuring. For those obtained by the exchange of non-Monetary funds, the initialinvestment cost shall be recognized according to Accounting Standards for Business Enterprises No. 7 Exchange ofNon-Monetary funds.
3. Subsequent measurement and recognition of profit or loss
Where the Company is able to exercise control over an investee, long-term equity investments are accounted forusing the cost method. Long-term equity investments in associates and joint ventures are accounted for using theequity method.
4. Accounting method for disposal of investments in subsidiaries step by step in multiple transactions and loss ofcontrol
(1) Judgment principles of whether the transactions constitute a "package deal"
Where the equity investment in a subsidiary is disposed of step by step through multiple transactions until it losescontrol, the Company shall judge whether the transactions constitute a "package deal" based on informationincluding the terms of the transaction agreement, the consideration of disposal obtained, the object of the sale of theequity, the method of disposal, and the time of disposal for each step of the step-by-step transaction. The multipletransactions constitute a "package deal" when the terms, conditions and economic impacts of the multipletransactions meet the following one or more conditions:
1) These transactions are entered into at the same time or after considering their impacts on each other;
2) These transactions as a whole may reach a complete business result;
3) The occurrence of a transaction depends on at least the occurrence of another transaction;
4) An individual transaction is not deemed as economic, but is deemed as economic when considered with othertransactions.
(2) Accounting methods do not constitute a "package deal"
(1) Individual financial statements
For the equity to be disposed of, the difference between its book value and the actual acquisition price shall berecorded in profit or loss for the current period. The residual equity which still has a significant influence on theinvestee or for which joint control is exercised over the investee shall be accounted for using the equity method. Ifno control or joint control is exercised over the investee or there is no significant influence on the investee, theaccounting method shall be subject to Accounting Standards for Business Enterprises No. 22 Recognition andMeasurement of Financial Instruments.
(2) Consolidated financial statements
Prior to the loss of control, according to the difference between the disposal price and the share of long-term equityinvestments disposed of in the net assets of subsidiaries to be held and continuously calculated from the combinationdate, capital reserve (capital premium) shall be written down. If the capital reserve is not sufficient to be writtendown, then the retained earnings shall be written down.For the loss of control over former subsidiaries, the residual equity shall be remeasured at the fair value on the dateof such loss. The difference between the sum of the consideration received from the disposal of the equity plus thefair value of the residual equity and the share of former subsidiaries' net assets to be held and continuously calculatedfrom the combination date based on the shareholding ratio shall be recorded in investment income for the currentperiod in which the loss of control occurs, and goodwill shall be written down. Other comprehensive income relatedto equity investments in former subsidiaries shall be transferred to investment income for the current period at thetime of the loss of control.
(3) Accounting methods constitute a "package deal"
(1) Individual financial statements
Each of these transactions shall be accounted for as a transaction relating to disposal of investments in subsidiariesand loss of control. However, the difference between the disposal price and the book value of the long-term equityinvestment corresponding to the disposal investment shall be recognized as other comprehensive income inindividual financial statements prior to the loss of control and, at the time of the loss of control, transferred to profitor loss for the current period in which the loss of control occurs.
(2) Consolidated financial statements
Each of these transactions shall be accounted for as a transaction relating to disposal of investments in subsidiariesand loss of control. However, the difference between the disposal price and the share of investments disposed of inthe net assets of subsidiaries to be held shall be recognized as other comprehensive income in consolidated financialstatements prior to the loss of control and, at the time of the loss of control, transferred to profit or loss for thecurrent period in which the loss of control occurs.
18. Investment properties
Measurement model of investment propertiesCost modelMethod of depreciation or amortization
1. Investment properties include land use rights leased out, land use rights held and to be transferred afterappreciation and buildings leased out.
2. Investment properties are measured initially at cost and subsequently using the cost model and depreciated oramortized in the same way as fixed assets and intangible assets.
19. Fixed assets
(1) Recognition criteria
Fixed assets refer to tangible assets held for the purpose of commodity production, services rendering, renting orbusiness administration with useful lives exceeding one accounting year. Fixed assets shall be recognized wheneconomic benefits are likely to flow in and costs can be measured reliably.
(2) Depreciation method
| Category | Depreciation method | Depreciable life | Residual rate | Annual depreciation rate |
| Buildings | Straight-line method | 20-25 years | 0%, 5% | 5.00%-3.80% |
| General equipment | Straight-line method | 3-10 years | 0%, 10% | 33.33%-9.00% |
| Special equipment | Straight-line method | 5-15 years | 0%, 10% | 20.00%-6.00% |
| Transportation facilities | Straight-line method | 4-10 years | 5%, 10% | 23.75%-9.00% |
20. Construction in progress
1. The construction in progress shall be recognized when the economic benefits are likely to flow to the Company,and the cost can be measured reliably. The construction in progress is measured at the actual cost incurred before itis ready for its intended use.
2. The construction in progress shall be transferred to fixed assets at actual cost when it is ready for its intended use.It shall be transferred to fixed assets at estimated value when it is ready for its intended use but the final settlementof account has not been finished. The estimated value shall be adjusted according to the actual cost after the finalsettlement of account, while the accrued depreciation shall not be adjusted.
| Category | The standard and time node for the construction in progress to be transferred to fixed assets |
| Machinery and equipment | The machinery and equipment meet the design requirements or the standards stipulated in the contract |
| Buildings | (1) The substantial construction, including installation, has been finished completely or substantially; (2) The amount of continuing disbursements for the houses and buildings under acquisition and construction is very small, or nearly no such disbursement incurs; (3) The houses and buildings under acquisition and construction have met the design or contract requirements, or are basically in compliance with the design or contract requirements; (4) If the final settlement of account has not been completed while the construction project reaching the designed usable conditions, the construction project shall be transferred to fixed assets using estimated value based on the actual cost of the project from the date of reaching the expected usable state |
21. Borrowing costs
1. Recognition criteria for capitalization of borrowing costs
Borrowing costs are capitalized when they are directly attributable to the acquisition, construction or production ofa qualifying asset and included in the cost of related assets. Other borrowing costs are recognized as expenses andrecorded in profit or loss for the current period when incurred.
2. Capitalization period of borrowing costs
(1) Borrowing costs can only begin to be capitalized if the following three conditions are all met simultaneously: 1)The expenditures to acquire assets have been incurred; 2) The borrowing costs have been incurred; 3) Theacquisition, construction or production activities to make the asset ready for its intended use or sale have begun.
(2) If the acquisition, construction or production of assets that meet the conditions for capitalization is suspendedabnormally, and the suspension lasts for more than 3 months, the capitalization of borrowing costs will be suspended.The borrowing costs incurred during the suspension period will be recognized as current expenses until theacquisition, construction or production of such assets is resumed.
(3) When the acquired, constructed or produced asset that meets the conditions for capitalization is ready for itsintended use or sale, the capitalization of borrowing costs will be stopped.
3. Capitalization rate and capitalized amount of borrowing costs
If a special loan is borrowed for the acquisition, construction or production of assets that meet the capitalizationconditions, the amount of interest expenses (including amortization of discounts or premiums determined using theeffective interest method) actually incurred in the current period of the special loan shall be recognized as the interestamount to be capitalized after deduction of the interest income obtained by depositing the unused loan funds in thebank or the income from temporary investment. If general borrowings are occupied for the purpose of acquisition,construction or production of assets that meet the capitalization conditions, the Company shall calculate anddetermine the amount of interest of general borrowings to be capitalized based on the weighted average value ofasset expenditures over which the accumulated asset expenditure exceeds the special borrowings multiplied by thecapitalization rate of the occupied general borrowings.
22. Intangible assets
(1) Useful life and the basis for determination, estimates, amortization method or review process thereof
1. Intangible assets include land ownership, land use rights, patent rights, trademark rights, proprietary technologies,Management software and emission rights and are initially measured at cost.
2. Intangible assets with limited useful lives shall be systematically and reasonably amortized during their usefullives according to the expected realization mode of economic benefits relating to such assets, and where the expectedrealization mode cannot be reliably determined, the assets shall be amortized using the straight-line method. Thedetails are listed below:
| Item | Useful life and basis for determination | Amortization method |
| Land use rights | 50 or 30 years, referring to the years of land available for use | Straight Line Method |
| Patent rights | 10 years, referring to the years that it can bring economic benefits to the Company | Straight Line Method |
| Trademark rights | 10 years, referring to the years that it can bring economic benefits to the Company | Straight Line Method |
| Proprietary technologies | 5 years, referring to the years that it can bring economic benefits to the Company | Straight Line Method |
| Management software | 3-10 years, referring to the years that it can bring economic benefits to the Company | Straight Line Method |
| Emission rights | 10 years, referring to the years that it can bring economic benefits to the Company | Straight Line Method |
The Company does not amortize intangible assets with indefinite useful lives, and the Company reviews the UnitedStates lives of these intangible assets in each accounting period. For intangible assets with indefinite useful life, theassessment basis for indefinite useful life is that the period to bring future economic benefits to the Company isunforeseeable. The Company's intangible assets with indefinite useful life are land ownership.
(2) Adscription ranges of expenditures on research and development and relevant accounting method
(1) Personnel and labor costs
Personnel and labor costs cover the wages and salaries of the Company's R&D personnel, basic endowmentinsurance premiums, basic medical insurance premiums, unemployment insurance premiums, work-related injuryinsurance premiums, maternity insurance premiums and housing provident funds, as well as labor costs for externalR&D personnel.For R&D personnel serving multiple R&D projects at the same time, the labor costs are confirmed based on theworking hours records of the R&D personnel of each R&D project provided by the Management department of theCompany, and are distributed among different R&D projects on a proportional basis.
For personnel directly engaged in R&D activities and external R&D personnel engaged in non-R&D activities atthe same time, the Company will distribute the actual personnel and labor costs incurred among R&D expenses andproduction and operation expenses based on working hours records of R&D personnel in different positions byadopting reasonable methods such as the proportion of actual working hours.
(2) Direct investment costs
Direct investment costs refer to the relevant expenses actually incurred by the Company for the implementation ofR&D activities, including: 1) the cost of materials, fuel and power directly consumed; 2) the development andmanufacturing cost of molds and process equipment for intermediate testing and trial production, the purchase costof samples, prototypes and general testing methods that do not constitute fixed assets, and the inspection cost oftrial products; 3) the operation and maintenance, adjustment, inspection, testing and overhaul of instruments andequipment for R&D activities.
(3) Depreciation expense and long-term deferred expenses
Depreciation expense represents the depreciation expense of instruments, equipment and buildings in use used inR&D activities.For instruments, equipment and buildings in use used both in R&D activities and non-R&D activities, the necessaryrecords shall be kept on the United States of such instruments, equipment and buildings in use, and the actualdepreciation expense incurred is allocated between R&D expenses and production and operating expenses byreasonable methods, with reference to factors such as actual working hours and usable area.Long-term deferred expenses represent the long-term deferred expenses in the process of reconstruction,modification, decoration and repair of R&D facilities, which are aggregated according to actual expenditures andamortized in equal instalments over a specified period of time.
(4) Amortization expense of intangible assets
Amortization expense of intangible assets represents the amortization expense of software, intellectual propertyrights and non-patented technologies (proprietary technology, licenses, designs, computational methods, etc.) usedin R&D activities.
(5) Design expense
Design expense refers to expense incurred in the conception, development and manufacture of new products andprocesses and design of processes, technical specifications, protocols, operational characteristics, etc., includingcosts related to creative design activities carried out for developing innovative, creative and breakthrough products.
(6) Commissioning expense and test expense of equipment
Commissioning expense refers to expense incurred for R&D activities in the preparation of tooling process,including expense incurred for activities such as the development of special and dedicated production machines,changes in production and quality control procedures, or the formulation of new methods and standards.Expense incurred for routine preparation for the tooling process and industrial engineering for large-scale batchproduction and commercial production are not included in the aggregation scope.Test expense includes clinical trial expense for the development of new drugs, field test expense for exploration anddevelopment technologies, and field trial expense.
(7) Expense for commissioned external R&D
Expense for commissioned external R&D refers to expenses incurred by the Company for R&D activities entrustedto other organizations or individuals inside or outside the country (the results of the R&D activities are owned bythe Company and are closely related to the Company's main business).
(8) Other expenses
Other expenses refer to expenses other than those mentioned above that are directly related to the R&D activities,including information costs for technical books, data translation fees, expert consultation fees, high-tech researchand development insurance premiums, search, demonstration, review, appraisal and acceptance fees of R&D results,
intellectual property rights application fees, registration fees, agency fees, conference fees, travel costs,communication fees, etc.
4. Expenditures for the research phase of internal R&D projects are recognized in the profit and loss for the currentperiod when incurred. Expenditures incurred during the development phase of internal research and developmentprojects shall be recognized as intangible assets if the following conditions are all met simultaneously: (1) It istechnically feasible to complete the intangible asset so that it can be used or sold; (2) There is intention to completethe intangible asset for use or sales; (3) The methods for intangible assets to generate economic benefits are useful,and there is a potential market for the products manufactured by applying the intangible assets or for the intangibleassets themselves (for intangible assets to be used internally, the usefulness can be proved); (4) Adequate technical,financial and other resources are available to finish the development of the intangible assets and use or sell theintangible assets; (5) The expenditure attributable to the intangible asset during its development phase can bemeasured reliably.
23. Long-term assets impairment
For long-term equity investments, investment properties measured using the cost model, fixed assets, constructionin progress, right-of-use assets, intangible assets with limited useful lives and other long-term assets, where thereare indications of impairment at the balance sheet date, the recoverable amount shall be estimated. For goodwillarising from a business combination or intangible assets with indefinite useful lives, regardless of whether there areindications of impairment, an impairment test shall be conducted every year. Goodwill shall, together with therelated asset group or combination of asset groups, be subject to the impairment test.If the recoverable amount of any of the above-mentioned long-term assets is lower than its book value, the provisionfor assets impairment shall be recognized according to the difference and recorded in profit or loss for the currentperiod.
24. Long-term deferred expenses
Long-term amortized expenses refer to expenses that have been paid and whose amortization period is more than 1year (excluding 1 year). Long-term amortized expenses are recorded at the actual amounts incurred and amortizedevenly over the benefit period or specified period. If a long-term amortized expense item does not bring benefitsover the subsequent accounting periods, the amortized value of the item that has not been amortized shall be fullytransferred to profit or loss for the current period.
25. Contractual liabilities
The obligation to transfer goods to a client, for which consideration has been received or is receivable from theclient, is shown as a contractual liability.
26. Employee benefits
(1) Accounting method of short-term employee benefits
In the accounting period in which employees have rendered services, the Company recognizes the short-termemployee benefits actually incurred as a liability and charges to profit or loss for the current period or the cost ofrelated assets.
(2) Accounting method of post-employment benefits
Post-employment benefits are divided into defined contribution plans and defined benefit plans.
(1) During the accounting period in which employees have rendered services, the Company recognizes thecontributions to be paid according to the defined contribution plans as a liability and charges to profit or loss for thecurrent period or the cost of related assets.
(2) The accounting method of defined benefit plans generally covers the following steps:
1) It is necessary to use unbiased and mutually compatible actuarial assumptions based on the projected unit creditmethod to estimate related demographic variables and financial variables, measure the obligations under the definedbenefit plans and determine the periods to which the obligations are attributable. Furthermore, the obligations underthe defined benefit plans shall be discounted to determine the present value of the defined benefit plan obligationsand the current service cost;
2) When a defined benefit plan has assets, the deficit or surplus by deducting the present value of the defined benefitplan obligations from the fair value of the defined benefit plan assets shall be recognized as a net liability or netasset of the defined benefit plan. The net asset of the defined benefit plan shall be measured at the lower of thesurplus in the defined benefit plan and the asset ceiling.
3) At the end of the period, the employee benefit costs arising from defined benefit plans shall be recognized as thecost of service, the net interest on net liabilities or assets of defined benefit plans and the changes resulting from theremeasurement of net liabilities or assets of defined benefit plans. The cost of service and the net interest on netliabilities or assets of defined benefit plans are recorded in profit or loss for the current period or the cost of relatedassets, while the changes resulting from the remeasurement of net liabilities or assets of defined benefit plans areincluded in other comprehensive income and shall not be transferred back to profit or loss in subsequent accountingperiods. However, the amounts recognized as other comprehensive income may be transferred within the scope ofequity.
(3) Accounting method of termination benefits
Termination benefits provided to employees are recognized as an employee benefit liability and charged to profitor loss for the current period at the earlier of the following dates: (1) The Company cannot unilaterally withdrawthe offer of termination benefits because of an employment termination plan or a curtailment proposal; (2) TheCompany recognizes costs or expenses related to the reconstructing that involves the payment of terminationbenefits.
(4) Accounting method of other long-term employee benefits
Other long-term employee benefits provided to employees are accounted for in accordance with the requirementsrelating to defined contribution plans if the conditions for classifying as a defined contribution plan are met andotherwise are accounted for in accordance with the requirements relating to defined benefit plans. To simplify therelevant accounting method process, the employee benefit costs incurred are recognized as the cost of service, thenet interest on net liabilities or assets of other long-term employee benefits and the changes resulting from theremeasurement of net liabilities or assets of other long-term employee benefits. The total net amount is included inprofit or loss for the current period or the cost of related assets.
27. Estimated liabilities
1. The Company recognizes an obligation arising from the provision of external guarantees, litigation matters,product quality assurance, loss contract, and other contingencies as a present obligation of the Company when it isprobable that the performance of the obligation will result in an outflow of economic benefits from the Companyand the amount of the obligation can be measured reliably, as a provision for liabilities.
2. The Company initially measures the provision for liabilities based on the best estimate of the expendituresrequired to meet the relevant present obligations and reviews the carrying amount of the provision for liabilities atthe balance sheet date.
28. Share-based payment
1. Types of share-based payments
Include equity-settled share-based payments and cash-settled share-based payments.
2. Accounting for the implementation, modification and termination of share-based payment plans
(1) Equity-settled share-based payments
Equity-settled share-based payments in exchange for staff services that are immediately available upon grant areincluded in the related costs or expenses at the fair value of the equity instruments at the date of grant, with acorresponding adjustment to the capital reserve. Equity-settled share-based payments in exchange for staff servicesthat are contingent upon completion of services in the waiting period or satisfaction of specified performanceconditions, the services received in the present period are included in the related costs or expenses at fair value onthe date of grant of the equity instruments, based on the best estimate of the number of contingent equity instruments,at each balance sheet date in the waiting period, with a corresponding adjustment to the capital reserve.Equity-settled share-based payments in exchange for services rendered by other parties, if the fair value of theservices rendered by the other parties can be measured reliably, is measured at the fair value of the services rendered
by the other party at the acquisition date; If the fair value of the services provided by other parties cannot be reliablymeasured, but the fair value of the equity instrument can be reliably measured, it is measured at the fair value of theequity instrument at the date when the services are obtained and included in the related cost or expense, with acorresponding increase in owner's equity.
(2) Cash-settled share-based payments
Cash-settled share-based payments in exchange for staff services that are immediately available after the grant areincluded in the related costs or expenses at the date of grant at the fair value of the liability assumed by the Company,with a corresponding increase in the liability. Cash-settled share-based payments in exchange for staff services thatare contingent upon the completion of services in the waiting period or satisfaction of specified performanceconditions, are included in the related costs or expenses and the corresponding liabilities for services rendered inthe present period at the fair value of the liabilities assumed by the Company on the basis of the best estimate of theright to perform at each balance sheet date during the waiting period.
(3) Amending or terminating the Share-based Payment Plan
If the modification increases the fair value of the equity instruments granted, the Company recognizes an increasein services received in response to the increase in fair value of the equity instruments; If the modification increasesthe number of equity instruments granted, the Company recognizes the fair value of the increased equity instrumentsas an increase in access to services accordingly; If the Company modifies the vesting conditions in a mannerbeneficial to the employees, the Company considers the modified vesting conditions when dealing with the vestingconditions.If the modification reduces the fair value of the equity instruments granted, the Company continues to recognize theamount of services received based on the fair value of the equity instruments at the date of grant, irrespective of thedecrease in fair value of the equity instruments; If the modification reduces the number of equity instruments granted,the Company treats the reduction as a cancellation of the equity instruments granted; If the vesting condition ismodified in a manner detrimental to the employees, the modified vesting condition is not considered when dealingwith the vesting condition.If the Company cancels an equity instrument granted or settles an equity instrument granted within the waitingperiod (unless canceled because the vesting condition is not met), the cancellation or settlement is treated as anaccelerated vesting, immediately recognizing the amount that would have been recognized within the remainingwaiting period.
29. Revenue
Disclosure of accounting policies used in revenue recognition and measurement by business type
1. Revenue recognition principle
At the commencement date of a contract, the Company performs an assessment of the contract, identifies theindividual performance obligation contained in the contract, and determines whether the individual performanceobligation is performed within a certain period of time or at a certain point in time.A performance obligation is satisfied within a certain period of time when one of the following conditions is met;otherwise, the performance obligation is satisfied at a certain point in time: (1) the client obtains and consumes theeconomic benefits brought by the performance of the Company while the Company performs; (2) the client is ableto control the goods under construction during the performance of the Company; (3) Commodities produced in thecourse of the Company's performance have an irreplaceable use and the Company is entitled to collect paymentsfor the part of performance that has been completed so far during the entire contract period.For performance obligations performed over a period of time, the Company recognizes revenue based on theprogress of the performance over that period of time. When the performance progress cannot be reasonablydetermined, if the costs incurred are expected to be compensated, revenue is recognized based on the amount ofcosts incurred until the performance progress can be reasonably determined. For performance obligations performedat a certain point in time, revenue is recognized at the point in time when the client obtains control of the relatedgoods or services. In determining whether the client has obtained control of the commodity, the Company considersthe following indicators: (1) the Company has a present collection right in respect of the commodity, i.e. the clienthas a present payment obligation in respect of the commodity; (2) the Company has transferred the legal ownershipof the commodity to the client, i.e. the client has owned the legal ownership of the commodity; (3) The Company
has physically transferred the commodity to the client, i.e. the client has physically occupied the commodity; (4)the Company has transferred the principal risks and rewards of ownership of the commodity to the client, i.e. theclient has obtained the principal risks and rewards of ownership of the commodity; (5) the client has accepted thecommodity; (6) Other indicators that the client has obtained control of the commodity.
2. Revenue measurement principles
(1) The Company measures revenue at the transaction price allocated to the individual performance obligation. Thetransaction price is the amount of consideration to which the Company is expected to be entitled to collect for thetransfer of goods or services to the client, excluding amounts received on behalf of third parties and amountsexpected to be returned to the client.
(2) Where there is a variable consideration in the contract, the Company determines the best estimate of the variableconsideration based on the expected value or the amount that is most likely to occur, but the transaction price thatcontains the variable consideration does not exceed the amount by which it is highly probable that a significantreversal of the cumulative revenue recognized will not occur when the relevant uncertainty is eliminated.
(3) Where there is a significant financing component in the contract, the Company determines the transaction pricebased on the amount payable that is assumed to be paid in cash when the client obtains control of the goods orservices. The difference between the transaction price and the contract consideration is amortized using the effectiveinterest method over the contract period. At the commencement date of the contract, if the Company expects theclient to obtain control of the goods or services within one year of the customer paying the price, it does not considerthe significant financing component in the contract.
(4) If the contract contains two or more performance obligations, the Company shall, on the commencement dateof the contract, allocate the transaction price to the individual performance obligation based on the relativeproportion of the individual selling prices of the commodities promised by the individual performance obligation.
3. Specific methods of revenue recognition
Sales of products such as the Company's Hand Tools, Power Tools, Laser Measurement and Storage areperformance obligations performed at a certain point in time, and revenue from domestic sales is recognized whenthe Company delivers the product to the contractually agreed place of delivery and the client confirms acceptance,has received the price or has the right to receive the payment and the related economic benefits are likely to flow in.Export revenue is recognized when the Company has declared the product in accordance with the contract, obtaineda bill of lading or arrived at the destination specified by the client and the client confirms the acceptance, hasreceived the payment for goods or has obtained the right to receive payment and the related economic benefits arelikely to flow in.Similar businesses adopt different business models and involve different revenue recognition and measurementmethods
30. Contract cost
Incremental costs of the Company to acquire a contract that are expected to be recovered are recognized as an assetas contract acquisition cost. If contract acquisition cost is amortized over a period not exceeding one year, suchcosts are recognized directly in current gains/losses when incurred.Costs of the Company for the performance of a contract, which fall out of the scope of regulation on standards aboutinventories, fixed assets, or intangible assets and fall in the following conditions, are recognized as an asset ascontract performance cost:
1. Such cost is directly related to a current contract or a contract expected to be awarded, including the cost on directlabor, direct materials, manufacturing expense (or similar cost), cost explicitly attributable to a client and any othercost incurred solely as a result of contract;
2. Such cost increases the resources available to the Company to fulfil its performance obligations in the future; and
3. Such cost is expected to be recovered.
The Company amortizes assets related to contract costs on the same basis as income recognition for the commoditiesor services to which the asset connects through current gains/losses.If the book value of an asset related to contract costs is greater than the remaining consideration expected to bereceived for the transfer of commodities or services related to the asset, less estimated costs estimated to be incurred,the Company withdraws a provision for impairment and recognizes an asset impairment loss for the excess. If, as aresult of subsequent changes to the factors to impair the asset in a previous period, the residual considerationexpected to be received for the transfer of the commodities or services on the asset, less estimated costs to beincurred, is greater than the book value of the asset, the original provision for impairment of the asset is reversedand stated as current gains/losses, provided that the book value of the asset after the reversal is no greater than whatthe asset would have been had no provision for impairment been withdrawn by the date of the reversal.
31. Government grants
1. A government grant is recognized when both of the following conditions are met: (1) the Company is able tomeet the conditions attached to the government grant; (2) The Company is able to receive government grants. Wheregovernment grants are monetary funds, they are measured at the amount received or receivable. Government grantsthat are non-Monetary funds are measured at fair value; Where the fair value cannot be reliably obtained, it ismeasured at the nominal amount.
2. Basis for judging government grants related to assets and accounting methodsGovernment documents provide that government grants used to purchase, build or otherwise forming long-termassets are classified as government grants related to the assets. If the government documents are not clear, thejudgment shall be based on the basic conditions necessary to obtain the grant, and the government grant whose basicconditions are to purchase, build or otherwise form long-term assets shall be deemed as the government grant relatedto the asset. Government grants relating to assets offset against the carrying amount of the related assets or arerecognized as deferred income. Where government grants relating to assets are recognized as deferred income, theyare credited to profit or loss over the United States life of the relevant assets in a reasonable and systematic manner.Government grants measured at nominal amounts are credited directly to profit or loss for the current period. Wherethe relevant asset is sold, transferred, scrapped or damaged before the end of its useful life, the undistributed balanceof the relevant deferred income is transferred to the profit or loss of the current period in which the asset is disposedof.
3. Basis for judging government grants related to income and accounting methodGovernment grants other than those relating to assets are classified as income-related government grants. Forgovernment grants that contain both asset-related and revenue-related components, those that are difficult todistinguish between asset-related and income-related are classified as income-related government grants in theirentirety. Government grants relating to income that compensate for related costs, expenses or losses in subsequentperiods are recognized as deferred income, and are credited to profit or loss or reduced to related costs in the currentperiod in which the related costs, expenses or losses are recognized; Those used to compensate the related costs orlosses incurred are directly included in the current profit or loss or offset against the related costs.
4. Government grants relating to the Company's daily operating activities are included in other revenue or offsetagainst related costs and expenses in accordance with the substance of the economic business. Government grantsthat are not related to the Company's daily activities are included in the non-operating revenue and expenses.
32. Deferred tax assets/deferred tax liabilities
1. A deferred income tax asset or a deferred income tax liability is recognized based on the difference between thecarrying amount of an asset or liability and its tax basis (or the difference between the carrying amount of an itemthat is not recognized as an asset or liability and the tax basis if its tax basis can be determined in accordance withthe provisions of the tax law) at the tax rates applicable in the period in which the asset is expected to be recoveredor the liability is settled.
2. Deferred income tax assets are recognized to the extent of the amount of the taxable income that is likely to beobtained and deducted from deductible temporary difference. On the balance sheet date, deferred income tax assetsthat have not been recognized in previous accounting periods shall be recognized if there is conclusive evidencethat sufficient taxable income is likely to be obtained in the future period to offset deductible temporary differences.
3. On the balance sheet date, the carrying value of deferred income tax assets is reviewed and, if it is probable thatsufficient taxable income will not be available in future periods to offset the benefits of the deferred income taxassets, the carrying value of the deferred income tax assets is written down. The amount written down is reversedwhen it is probable that sufficient taxable income will be available.
4. The current corporate income tax and deferred income tax are included in the current profit or loss as income taxexpense or earnings, but do not include income tax arising from (1) business combination; (2) Transactions or eventsrecognized directly in owner's equity.
5. The Company will list the deferred tax assets and deferred tax liabilities as the net amounts upon offsetting whereall the following conditions are met: (1) It has the statutory right to offset current tax assets against current taxliabilities; (2) The deferred tax assets and deferred tax liabilities are related to the income tax levied by the same taxadministration department on the same taxpayer or related to different taxpayers, but during any future period inwhich important deferred tax assets or liabilities are reversed, the taxpayers involved have the intention to offset thecurrent tax assets against the current tax liabilities, or acquire assets and settle liabilities concurrently.
33. Lease
(1) Accounting method for lease as lessee
At the commencement date of the lease term, the Company considers a lease that has a lease term of not more than12 months and does not contain a purchase option as a short-term lease; Leases that have a lower value when theindividual leased asset is an entirely new asset are considered to be leases of low-value assets. Where the Companysubleases or expects to sublease the leased asset, the original lease is not deemed as a lease of low-value assets.For all short-term leases and leases of low-value assets, the Company includes the amount of lease payments intothe relevant asset cost or current profit and loss according to the straight-line method during each period of the leaseterm.In addition to the short-term leases and leases of low-value assets with simplified treatment described above, theCompany recognizes right-of-use assets and lease liabilities for leases at the commencement date of the lease term.
(1) Right-of-use assets
Right-of-use assets are initially measured at cost, which includes: 1) the amount initially measured for the leaseliability; 2) the amount of lease payments paid on or before the commencement date of the lease term, if there is alease incentive, less the amount of the lease incentive already enjoyed; 3) initial direct costs incurred by the lessee;
4) the costs that the lessee expects to incur to dismantle and remove the leased asset, restore the site on which theleased asset is located, or restore the leased asset to the condition agreed upon in the lease terms.The Company depreciates the right-of-use assets on a straight-line basis. If it is reasonably certain that the ownershipof assets leased will be obtained at the end of the lease term, the Company conducts depreciation during theremaining useful life of the leased assets. Otherwise, depreciation is conducted during the lease term or theremaining useful life of the leased assets, whichever is shorter.
(2) Lease liabilities
At the commencement date of the lease term, the Company recognizes the present value of the unpaid leasepayments as the lease liabilities. The present value of lease payments is calculated using the interest rate implicit inthe lease as the discount rate. If the interest rate implicit in the lease cannot be determined, the corporate incrementalborrowing rate is used as the discount rate. The difference between the lease payments and their present value istreated as an unrecognized finance charge. Interest expense is recognized in profit or loss for each lease term periodat the discount rate used to recognize the present value of the lease payments. Variable lease payments that are notincluded in the measurement of lease liabilities are included in current profit or loss when they actually occur.After the commencement date of the lease term, when there is a change in the amount of substantially fixedpayments, a change in the amount expected to be payable for the remaining value of the guarantee, a change in theindex or rate used to determine the amount of the lease payments, a change in the outcome of an assessment of apurchase option, a renewal option or a termination option, or a change in the actual exercise, the Companyremeasures the lease liability based on the present value of the changed lease payments and adjusts the carryingvalue of the right-of-use asset accordingly. If the carrying value of the right-of-use asset has been reduced to zerobut the lease liability still needs to be further reduced, the remaining amount is included in the current profit or loss.
2. The Company as lessor
At the commencement date of a lease, the Company classifies a lease as a finance lease in which substantially allthe risks and rewards associated with ownership of the leased asset are transferred, with the exception of an operatinglease.
(1) Operating leases
The Company recognizes lease receipts as rental income on a straight-line basis over each period of the lease term,capitalizes the initial direct costs incurred and allocates them on the same basis as rental income recognition and iscredited to profit or loss in installments. Variable lease payments relating to operating leases obtained by theCompany that are not included in the lease receipts are included in profit or loss as they actually occur.
(2) Finance lease
At the commencement date of the lease term, the Company recognizes the finance lease payments receivable basedon the net investment in the lease (the sum of the unguaranteed residual value and the present value of the leasereceipts outstanding at the commencement date discounted at the interest rate implicit in the lease) and derecognizesthe finance lease asset. The Company calculates and recognizes interest income at the interest rate implicit in thelease for each period of the lease term.Variable lease payments received by the Company that are not included in the measurement of net lease investmentare included in profit or loss as they actually occur.
3. Sale and leaseback
(1) The Company operates as a lessee
The Company assesses whether the transfer of assets in a sale-and-leaseback transaction is a sale in accordance withthe provisions of Accounting Standards for Business Enterprises No. 14 - Revenues.If the transfer of an asset in a sale-and-leaseback transaction is a sale, the Company measures the right-of-use assetresulting from the sale-and-leaseback at the portion of the original asset's carrying value that relates to the right-of-use acquired through the leaseback, and recognizes a gain or loss related to the right transferred to the lessor only.If the transfer of an asset in a sale-and-leaseback transaction is not a sale, the Company continues to recognize thetransferred asset and, at the same time, recognizes a financial liability equal to the transfer proceeds and accountsfor the financial liability in accordance with Accounting Standards for Business Enterprises No. 22 - Recognitionand Measurement of Financial Instruments.
(2) Accounting method for lease as lessor
The Company assesses whether the transfer of assets in a sale-and-leaseback transaction is a sale in accordance withthe provisions of Accounting Standards for Business Enterprises No. 14 - Revenues.If the transfer of an asset in a sale-and-leaseback transaction is a sale, the Company accounts for the purchase ofassets in accordance with other applicable Accounting Standards for Business Enterprises and accounts for the leaseof assets in accordance with Accounting Standards for Business Enterprises No. 21 - Leases.If the transfer of an asset in a sale-and-leaseback transaction is not a sale, the Company does not recognize thetransferred asset, but recognizes a financial asset equal to the transfer proceeds and accounts for the financial assetin accordance with Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement ofFinancial Instruments.
34. Other significant accounting policies and accounting estimates
1. Segment report
The Company determines its operating segment based on its internal organizational structure, Managementrequirements and internal reporting system. An operating segment is a component of the Company that satisfies allthe following conditions:
(1) The component is able to generate revenues and incur expenses in daily operations;
(2) The operating results of the component are able to be regularly reviewed by the Management to determineresources to be allocated to the segment and to assess its performance; and
(3) The information on financial position, operating results and cash flows of the segment is available to theCompany via analysis.
35. Changes in significant accounting policies and accounting estimates
Since January 1, 2023, the Company has implemented the provision of "Accounting Treatment of No Applicationof Initial Recognition Exemption to Deferred Income Tax Related to Assets and Liabilities from IndividualTransactions" in the Accounting Standards for Business Enterprises Interpretation No. 16 issued by the Ministry ofFinance and made adjustments to individual transactions to which the provision applies from the beginning of theearliest reporting period appearing on the financial statements to which the provision applies to the first date onwhich the provision was applied. For lease liabilities and right-of-use assets recognized from individual transactionsto which the provision applies to at the beginning of the earliest reporting period appearing on the financialstatements to which the provision applies, and the estimated liabilities related to asset retirement obligations andcorresponding related assets, the Company has made adjustment to the opening retained earnings and other relevantfinancial statement items of the earliest reporting period appearing on the financial statements to which the provisionapplies with the cumulative effects in the case of occurrence of taxable and deductible temporary differences inaccordance with the provision and the Accounting Standards for Business Enterprises No. 18 - Income Taxes. Themajor changes are as follows:
| Report items significantly affected | Amount affected | Remarks |
| Items of the balance sheet for December 31, 2022 | ||
| Deferred tax assets | 16,750,995.34 | |
| Deferred tax liabilities | 16,329,987.59 | |
| Other comprehensive income | -1,640.73 | |
| Undistributed profit | 186,853.02 | |
| Non-controlling interest | 235,795.46 | |
| Items of the 2022 Income Statement | ||
| Income tax expenses | -530,186.38 |
VI. Taxes
1. Major taxes and tax rates
| Taxes | Tax basis | Tax rate |
| Value-added tax | The output tax is calculated based on the income from sales of goods and taxable services calculated in accordance with the provisions of the tax law. After deducting the deductible input tax for the current period, the difference is the value-added tax payable. | 13%, 6% |
| Property tax | If levied on an ad valorem basis, calculated and paid at 1.2% of the residual value after deducting 30% from the original value of the property; If levied on the rental, calculated and paid at 12% of the rental income | 1.2%, 12% |
| Urban maintenance and construction tax | Actual turnover tax paid | 7%, 5%, 1% |
| Education surcharge | Actual turnover tax paid | 3% |
| Local education surcharge | Actual turnover tax paid | 2% |
| Business income tax | Taxable amount of income | For details, please refer to the description of the business income tax rates of the taxpayers with different tax rates. |
Description of the business income tax rates of the taxpayers with different tax rates
| Name of tax payer | Income tax rate |
| The company | 15% |
| Hong Kong GreatStar International Co., Ltd. | 16.50% |
| Prim' Tools Limited | 16.50% |
| Hong Kong Goldblatt Industrial Co., Ltd | 16.50% |
| Hong Kong International Huada Kejie Opto-Electro Instruments Co., Ltd. | 16.50% |
| Hongkong Shop-Vac International Co., Limited | 16.50% |
| Geelong Sales Company International (HK) Limited | 16.50% |
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd. | 15% |
| Hangzhou Lianhe Electric Manufacturing Co., Ltd. | 15% |
| Dongguan Ouda Electronics Co., Ltd. | 15% |
| Hangzhou Lianhe Tools Manufacturing Co., Ltd. | 15% |
| Hangzhou Liansheng Tools Manufacturing Co., Ltd. | 20% |
| Zhejiang Yiyang Tool Manufacturing Co., Ltd. | 15% |
| Suzhou Xindadi Hardware Product Co., Ltd | 15% |
| Zhongshan Geelong Industry Co., Ltd. | 15% |
| Ningbo Fenghua GreatStar Tools Co., Ltd. | 15% |
| Geelong Investment Holding Limited | 15% |
| GreatStar Europe AG and its subsidiaries | 13.42%, 19%, 19.41%, 20.60%, 21%, 22%, 23.50%, 24%, 25%, 27.90%, 29.13%, 30% |
| GreatStar United Kingdom Ltd and its subsidiaries | 23.50% |
| Zhejiang Guoxin Tools Co., Ltd. | 20% |
| Haining GreatStar Hardware Tools Co., Ltd. | 20% |
| Hangzhou GreatStar Craftsman Tools Co., Ltd. | 20% |
| Hangzhou GreatStar Sheffield Trading Co., Ltd. | 20% |
| Ningbo Fenghua GreatStar Tools Co., Ltd. | 20% |
| Yiyang Tools Manufacturing Co., Ltd | 20% |
| PREXISO Laser Measurement Tool (Hangzhou) Co., Ltd | 20% |
| Shanghai Endura Tools Co., Ltd. | 20% |
| Changzhou Huada Kejie Construction Machinery Co., Ltd. | 20% |
| GreatStar Vietnam Co., Ltd | 20% |
| Vietnam United Co., Ltd | 20% |
| TGH (Cambodia) Industrial Co., LTD | 20% |
| Geelong (Thailand) Co., Ltd | 20% |
| GreatStar Industrial Vietnam Co., Ltd | 20% |
| XDD Products (USA) LLC | 21% |
| GreatStar Tools USA, Inc and its subsidiaries | 25.1745%, according to the regulations of Internal Revenue Code of the United States, GreatStar Industrial USA, LLC, Arrow Fastener Co., LLC, Prime-Line Products, LLC, 4900 Highlands Parkway, LLC, Shop-Vac USA, LLC and SK Hand Tool, LLC, as LLC, are not required to report and pay business income tax, and the taxpayer is GreatStar Tools USA, Inc |
| GreatStar Japan Co., Ltd | Corporate tax is payable at progressive rates |
| GreatStar International Holdings Limited | Is a company incorporated in the British Virgin Islands. There is no need to pay business income tax under the British Virgin Islands tax regime . |
| Geelong Orchid Holding Limited | Is a company incorporated in the British Cayman Islands. There is no need to pay business income tax under the British Cayman Islands tax regime. |
| Geelong Holdings Limited | Is a company incorporated in the British Cayman Islands. There is no need to pay business income tax under the British Cayman Islands tax regime. |
| Other taxpayers other than those mentioned above | 25% |
2. Tax incentives
1. In accordance with the relevant provisions of the Administrative Measures for the Identification of High-techEnterprises (Guo Ke Fa Huo [2016] No.32) and the Administrative Work Guide for the Identification of High-techEnterprises (Guo Ke Fa Huo [2016] No.195), the Company was identified as a high-tech enterprise and obtainedthe High-tech Enterprise Certificate numbered GR202233005456, which was valid for 3 years (2022 to 2024), andwas subject to business income tax at the rate of 15% in the year of 2023.
2. In accordance with the relevant provisions of the Administrative Measures for the Identification of High-techEnterprises (Guo Ke Fa Huo [2016] No.32) and the Administrative Work Guide for the Identification of High-techEnterprises (Guo Ke Fa Huo [2016] No.195), the subsidiary Changzhou Huada Kejie Opto-Electronic InstrumentsCo., Ltd. was identified as a high-tech enterprise and obtained the High-tech Enterprise Certificate numberedGR202332000640, which was valid for 3 years (2023 to 2025) and was subject to business income tax at a rate of15% in the of 2023.
3. In accordance with the relevant provisions of the Administrative Measures for the Identification of High-techEnterprises (Guo Ke Fa Huo [2016] No.32) and the Administrative Work Guide for the Identification of High-techEnterprises (Guo Ke Fa Huo [2016] No.195), the subsidiary Hangzhou Lianhe Electric Manufacturing Co., Ltd.was identified as a high-tech enterprise and obtained the High-tech Enterprise Certificate numberedGR202233010022, which was valid for 3 years (2022 to 2024) and was subject to business income tax at a rate of15% in the of 2023.
4. According to the relevant provisions of the Administrative Measures for the Identification of High-techEnterprises (Guo Ke Fa Huo [2016] No.32) and the Administrative Work Guide for the Identification of High-techEnterprises (Guo Ke Fa Huo [2016] No.195), the subsidiary Dongguan Ouda Electronics Co., Ltd. was identifiedas a high-tech enterprise and obtained the High-tech Enterprise Certificate numbered GR202144002851, which wasvalid for 3 years (2021-2023) and was subject to business income tax at the rate of 15% for the year of 2023.
5. According to the "Reply on the Record of High-tech Enterprises in Zhejiang Province in 2020" (Guo Ke Huo Zi[2020] No. 251) issued by the Leading Group of National New High-tech Enterprise Certification & Management,the subsidiary Hangzhou Lianhe Tool Manufacturing Co., Ltd has been accredited as a high-tech enterprise andobtained the "High-tech Enterprise Certificate" with the number of GR202133002795, which is valid for 3 years(2021-2023), and was subject to business income tax at a rate of 15% in the of 2023.
6. In accordance with the relevant provisions of the Administrative Measures for the Accreditation of High and NewTechnology (Guo Ke Fa Huo [2016] No. 32) and the Guidelines for Administrative Measures for the Accreditationof High and New Technology (Guo Ke Fa Huo [2016] No. 195), the sub-subsidiary, Zhejiang Yiyang ToolsManufacturing Co., Ltd. has been accredited as a high-tech enterprise and has obtained High-tech EnterpriseCertificate with the number of GR202233007785, which is valid for 3 years (from 2022 to 2024), and was subjectto business income tax at the rate of 15% for the year of 2023.
7. In accordance with the relevant provisions of the Administrative Measures for the Accreditation of High and NewTechnology (Guo Ke Fa Huo [2016] No. 32) and the Guidelines for Administrative Measures for the Accreditationof High and New Technology (Guo Ke Fa Huo [2016] No. 195), the subsidiary, Suzhou Xindadi Hardware ProductCo., Ltd has been accredited as a high-tech enterprise and has obtained the High-tech Enterprise Certificate withthe number of GR202132006099, which is valid for 3 years (from 2021 to 2023), and was subject to business incometax at a rate of 15% in the of 2023.
8. In accordance with the relevant provisions of the Administrative Measures for the Accreditation of High and NewTechnology (Guo Ke Fa Huo [2016] No. 32) and the Guidelines for Administrative Measures for the Accreditationof High and New Technology (Guo Ke Fa Huo [2016] No. 195), the sub-subsidiary, Zhongshan Geelong IndustryCo., Ltd has been accredited as a high-tech enterprise and has obtained the High-tech Enterprise Certificate with thenumber ofGR202244011605, which is valid for 3 years (from 2022 to 2024), and was subject to business incometax at the rate of 15% for the year of 2023.
9. In accordance with the relevant provisions of the Administrative Measures for the Accreditation of High and NewTechnology (Guo Ke Fa Huo [2016] No. 32) and the Guidelines for Administrative Measures for the Accreditationof High and New Technology (Guo Ke Fa Huo [2016] No. 195), the subsidiary, Ningbo Fenghua Juxing Tools Co.,Ltd has been accredited as a high-tech enterprise and has obtained the High-tech Enterprise Certificate with the
number of GR202233100274, which is valid for 3 years (from 2022 to 2024), and was subject to business incometax at the rate of 15% for the year of 2023.
10. In accordance with the Notice on Issuing Administrative Measures on Preferential Policies on Value-added Taxfor Promoting the Employment of Persons with Disabilities (Cai Shui [2016] No. 52) issued by the Ministry ofFinance and State Taxation Administration, the subsidiary Company, Longyou Hugong Forging Three Tools Co.,Ltd, which accommodated persons with disabilities for employment, is entitled to enjoy preferential policies onimmediate withdrawal of value-added tax (VAT) quota in the current period, after the filing for the competent taxauthorities.
11. According to the document "Announcement on Preferential Policies on Income Tax for Small and Micro-Enterprises" (Announcement No. 6 of the Ministry of Finance and the Taxation Administration, 2022) of theMinistry of Finance and the Taxation Administration, during the period from January 1, 2023 to December 31, 2024,the portion of the annual taxable income of small and micro-enterprises that does not exceed 1 million is to beincluded in the taxable income at a reduced rate of 25.00%, and the enterprise income tax shall be paid at a rate of20%. From January 1, 2023 to December 31, 2023, Hangzhou Liansheng Tool Manufacturing Co., Ltd., ZhejiangGuoxin Tools Co., Ltd., Haining GreatStar Hardware Tools Co., Ltd., Hangzhou GreatStar Craftsman Tools Co.,Ltd., Hangzhou Juxing Sheffield Trading Co., Ltd., Longyou Yiyang Forging Co., Ltd., PREXISO LaserMeasurement Tool (Hangzhou) Co., Ltd., Shanghai Endura Tools Co., Ltd., and Changzhou Huada KejieEngineering Machinery Co., Ltd. are eligible for this income tax preferential policy, and are subject to a corporateincome tax rate of 20%.
(1) Other debt investments due within one year
3. Right-of-use assets
VII. Notes to the Consolidated Financial Statements Items(I) Notes to the consolidated balance sheet items
1. Monetary capital
(1) Detailed information
| Item | Closing balance | Opening balance |
| Cash on hand | 700,564.56 | 4,328,053.84 |
| Bank deposits | 4,982,842,025.49 | 4,788,725,570.94 |
| Other monetary capital | 195,185,221.71 | 70,152,557.62 |
| Total | 5,178,727,811.76 | 4,863,206,182.40 |
| Of which: Total amount of funds deposited beyond China | 1,695,139,084.93 | 1,073,586,253.48 |
(2) Other notes
Other monetary capital at the end of the period included short-term loan deposits of RMB 144,071,225.10, forwardexchange settlement deposits of RMB 21,496,066.60, letter of credit deposits of RMB 16,290,210.00, bankacceptance deposits of RMB 6,388,901.19, credit card deposits of RMB 3,541,350.00, customs duty bond depositsof RMB 1,416,859.57, rent deposits of RMB 1,494,449.70, deposits held in Alipay of RMB 437,159.55, and ETCdeposit of RMB 49,000.00. Other monetary capital at the beginning of the period included forward exchangesettlement deposits of RMB 33,448,671.74, short-term loan deposits of RMB 20,893,800.00, letter of credit depositsof RMB 6,616,370.00, bank acceptance deposits of RMB 7,384,067.19, customs duty bond deposits of RMB1,393,093.00, deposits held in Alipay of RMB 373,555.69, and ETC deposit of RMB 43,000.00.
2. Financial assets for trading
| Item | Closing balance | Opening balance |
| Financial assets measured at fair value and the changes thereof are included in current profits and losses | 122,650,783.01 | 70,230,104.24 |
| including: derivative financial assets | 14,406,531.52 | 10,230,104.24 |
| Bank financial products | 108,244,251.49 | 60,000,000.00 |
| Total | 122,650,783.01 | 70,230,104.24 |
3. Notes receivable
(1) Detailed information
| Item | Closing balance | Opening balance |
| Bankers' acceptance bill | 18,203,655.36 | 18,765,981.83 |
| Commercial acceptance bill | 500,000.00 | |
| Total | 18,703,655.36 | 18,765,981.83 |
(2) Provision for bad debts
1) Detailed information in category
| Type | Closing balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision made on a portfolio basis | 18,703,655.36 | 100.00 | 18,703,655.36 | ||
| including: Bankers' acceptance bill | 18,203,655.36 | 97.33 | 18,203,655.36 | ||
| Commercial acceptance bill | 500,000.00 | 2.67 | 500,000.00 | ||
| Total | 18,703,655.36 | 100.00 | 18,703,655.36 | ||
(Continued)
| Type | Opening balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision made on a portfolio basis | 18,765,981.83 | 100.00 | 18,765,981.83 | ||
| Type | Opening balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| including: Bankers' acceptance bill | 18,765,981.83 | 100.00 | 18,765,981.83 | ||
| Commercial acceptance bill | |||||
| Total | 18,765,981.83 | 100.00 | 18,765,981.83 | ||
2) Notes receivable with bad debt provision by combination
| Item | Closing balance | ||
| Book balance | Provision for bad debts | Percentage of Provision (%) | |
| Bankers' acceptance bill as a combination | 18,203,655.36 | ||
| Commercial acceptance bill as a combination | 500,000.00 | ||
| Subtotal | 18,703,655.36 | ||
4. Accounts receivables
(1) Information on ageing
| Ageing | Closing book balance | Opening book balance |
| Within 1 year | 2,176,117,907.81 | 1,970,425,386.97 |
| 1-2 years | 23,191,769.49 | 25,344,201.58 |
| 2-3 years | 13,428,736.08 | 5,830,575.46 |
| 3-4 years | 3,543,090.14 | 696,290.54 |
| 4-5 years | 470,644.20 | 454,657.11 |
| More than 5 years | 1,070,863.59 | 972,453.32 |
| Total | 2,217,823,011.31 | 2,003,723,564.98 |
(2) Provision for bad debts
1) Detailed information in category
| Type | Closing balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision for Individual bad debt | |||||
| Provision made on a portfolio basis | 2,217,823,011.31 | 100.00 | 116,179,932.12 | 5.24 | 2,101,643,079.19 |
| Total | 2,217,823,011.31 | 100.00 | 116,179,932.12 | 5.24 | 2,101,643,079.19 |
(Continued)
| Type | Opening balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision for Individual bad debt | 3,780,753.57 | 0.19 | 3,780,753.57 | 100.00 | |
| Provision made on a portfolio basis | 1,999,942,811.41 | 99.81 | 103,257,221.30 | 5.16 | 1,896,685,590.11 |
| Total | 2,003,723,564.98 | 100.00 | 107,037,974.87 | 5.34 | 1,896,685,590.11 |
2) Accounts receivable with bad debt provision by ageing combination
| Ageing | Closing balance | ||
| Book balance | Provision for bad debts | Percentage of Provision (%) | |
| Within 1 year | 2,176,117,907.81 | 108,805,895.17 | 5.00 |
| 1-2 years | 23,191,769.49 | 2,319,176.96 | 10.00 |
| 2-3 years | 13,428,736.08 | 2,685,747.22 | 20.00 |
| 3-4 years | 3,543,090.14 | 1,062,927.05 | 30.00 |
| 4-5 years | 470,644.20 | 235,322.13 | 50.00 |
| More than 5 years | 1,070,863.59 | 1,070,863.59 | 100.00 |
| Subtotal | 2,217,823,011.31 | 116,179,932.12 | 5.24 |
(3) Change of provision for bad debts
| Item | Opening balance | Amount of change during the period | Closing balance | |||
| Make provision | Recovery or reversal | Write-offs | Other | |||
| Provision for Individual bad debt | 3,780,753.57 | 96,458.50 | 3,684,295.07 | |||
| Provision made on a portfolio basis | 103,257,221.30 | 11,105,061.48 | 394,047.93 | 2,211,697.27 | 116,179,932.12 | |
| Total | 107,037,974.87 | 11,105,061.48 | 96,458.50 | 4,078,343.00 | 2,211,697.27 | 116,179,932.12 |
4. The accounts receivable actually written off during the period was RMB 4,078,343.00.
5. Top five accounts receivable
The aggregate amount of top five accounts receivable and contractual assets at the end of the period was RMB168,601,296.68, accounting for 52.69% of the aggregate amount of accounts receivable and contractual assets atthe end of the period, and the aggregate amount of corresponding provision for bad debts and that for contractualassets was RMB 58,430,541.96.
5. Receivables financing
(1) Detailed information
| Item | Closing balance | Opening balance |
| Bankers' acceptance bill | 4,661,476.96 | 3,310,508.35 |
| Accounts receivable | 262,013,539.68 | 321,247,171.36 |
| Total | 266,675,016.64 | 324,557,679.71 |
(2) Provision for impairment
1) Detailed information in category
| Type | Closing balance | ||||
| Cost | Cumulative confirmed provision for credit impairment | Book value | |||
| Amount | Percentage (%) | Amount | Percentage of Provision (%) | ||
| Provision for impairment by combination | 280,465,202.94 | 100.00 | 13,790,186.30 | 4.92 | 266,675,016.64 |
| including: Bankers' acceptance bill | 4,661,476.96 | 1.66 | 4,661,476.96 | ||
| Accounts receivable | 275,803,725.98 | 98.34 | 13,790,186.30 | 5.00 | 262,013,539.68 |
| Type | Closing balance | ||||
| Cost | Cumulative confirmed provision for credit impairment | Book value | |||
| Amount | Percentage (%) | Amount | Percentage of Provision (%) | ||
| Total | 280,465,202.94 | 100.00 | 13,790,186.30 | 4.92 | 266,675,016.64 |
(Continued)
| Type | Opening balance | ||||
| Cost | Cumulative confirmed provision for credit impairment | Book value | |||
| Amount | Proportion (%) | Amount | Make provision Percentage (%) | ||
| Provision for impairment by combination | 341,465,425.57 | 100.00 | 16,907,745.86 | 4.95 | 324,557,679.71 |
| including: Bankers' acceptance bill | 3,310,508.35 | 0.97 | 3,310,508.35 | ||
| Accounts receivable | 338,154,917.22 | 99.03 | 16,907,745.86 | 5.00 | 321,247,171.36 |
| Total | 341,465,425.57 | 100.00 | 16,907,745.86 | 4.95 | 324,557,679.71 |
2) Receivables financing with provision for impairment by combination
| Item | Closing balance | ||
| Cost | Cumulative confirmed provision for credit impairment | Percentage of Provision (%) | |
| Bankers' acceptance bill as a combination | 4,661,476.96 | ||
| Receivables - Ageing combination | 275,803,725.98 | 13,790,186.30 | 5.00 |
| Subtotal | 280,465,202.94 | 13,790,186.30 | 4.92 |
(3) Change of provision for credit impairment
| Item | Opening balance | Amount of change during the period | Closing balance | |||
| Make provision | Recovery or reversal | Write-offs | Other | |||
| Provision for impairment by combination | 16,907,745.86 | -3,117,559.56 | 13,790,186.30 | |||
| Total | 16,907,745.86 | -3,117,559.56 | 13,790,186.30 | |||
(4) Receivables financing endorsed or discounted by the Company at the end of the period and not yet due at thebalance sheet date
| Item | Amounts derecognized at the end of the period |
| Bankers' acceptance bill | 13,808,004.57 |
| Subtotal | 13,808,004.57 |
The acceptors of bankers' acceptance bills are commercial banks with a high credit standing. The Companyderecognizes such bankers' acceptance bills that have been endorsed or discounted, as the commercial banks havea high level of creditworthiness and the likelihood of non-payment of bankers' acceptance bill at maturity is low.However, if such bills are not paid at maturity, the Company will still be jointly and severally liable to the bearer inaccordance with the provisions of the Bills of Exchange Act.
(5) Accounts receivable of which recognition is terminated due to transfer of financial assets
| Item | Amounts derecognized | Gain or loss related to derecognition | Method of transferring financial assets |
| Loans | 1,913,440,543.28 [Note] | -17,897,921.26 | Assignment in receivables financing without recourse |
| Subtotal | 1,913,440,543.28 | -17,897,921.26 |
[Note]: Of which, the US dollar amount of assignment in receivables financing without recourse wereUSD264,804,135.43. The US dollar amount of assignment in receivables financing without recourse translated intoRMB at the closing exchange rate, was RMB1,875,528,250.01.
6. Prepayments
(1) Ageing analysis
| Ageing | Closing balance | Opening balance | ||||||
| Book balance | Percentage (%) | Provision for impairment | Book value | Book balance | Percentage (%) | Provision for impairment | Book value | |
| Within 1 year | 106,611,225.38 | 97.48 | 5,330,561.49 | 101,280,663.89 | 129,634,797.70 | 95.02 | 6,481,739.86 | 123,153,057.84 |
| 1-2 years | 1,816,906.88 | 1.66 | 181,690.68 | 1,635,216.20 | 4,204,728.69 | 3.08 | 420,472.87 | 3,784,255.82 |
| 2-3 years | 617,246.80 | 0.56 | 123,449.36 | 493,797.44 | 1,011,134.97 | 0.74 | 202,226.99 | 808,907.98 |
| 3-4 years | 78,182.89 | 0.07 | 23,454.86 | 54,728.03 | 608,856.38 | 0.45 | 182,656.91 | 426,199.47 |
| 4-5 years | 116,319.01 | 0.11 | 58,159.51 | 58,159.50 | 163,345.53 | 0.12 | 81,672.77 | 81,672.76 |
| More than 5 years | 126,013.32 | 0.12 | 126,013.32 | 811,464.85 | 0.59 | 811,464.85 | ||
| Total | 109,365,894.28 | 100.00 | 5,843,329.22 | 103,522,565.06 | 136,434,328.12 | 100.00 | 8,180,234.25 | 128,254,093.87 |
(2) The provision for bad debts in the period was RMB -1,814,906.71, with an increase of RMB 163,409.68 to theprovision for bad debts due to exchange rate fluctuations.
(3) The actual prepaid amount written off in the period was RMB 685,408.00.
(4) Top five prepayments
The aggregate amount of prepayments in the top 5 at the end of the period was RMB36,117,972.97, accounting for
33.02% of the aggregate amount of prepayments at the end of the period.
7. Other receivables
(1) Classification by nature
| Nature of payment | Closing book balance | Opening book balance |
| Deposit Guarantee | 25,769,009.71 | 30,880,521.21 |
| Export tax refund receivable | 36,262,490.59 | 24,697,312.44 |
| Temporary payments receivable | 9,062,266.44 | 5,617,725.38 |
| Other | 2,406,414.47 | 2,327,676.34 |
| Employee reserves | 516,688.29 | 1,529,914.18 |
| Total | 74,016,869.50 | 65,053,149.55 |
(2) Information on ageing
| Ageing | Closing book balance | Opening book balance |
| Within 1 year | 60,333,551.96 | 52,430,223.89 |
| 1-2 years | 4,497,031.02 | 1,990,783.43 |
| 2-3 years | 1,406,745.06 | 7,755,521.23 |
| 3-4 years | 5,173,757.51 | 588,931.41 |
| 4-5 years | 364,280.00 | 215,910.64 |
| More than 5 years | 2,241,503.95 | 2,071,778.95 |
| Total | 74,016,869.50 | 65,053,149.55 |
(3) Provision for bad debts
1) Detailed information in category
| Type | Closing balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision for Individual bad debt | |||||
| Provision made on a portfolio basis | 74,016,869.50 | 100.00 | 7,723,500.89 | 10.43 | 66,293,368.61 |
| Total | 74,016,869.50 | 100.00 | 7,723,500.89 | 10.43 | 66,293,368.61 |
(Continued)
| Type | Opening balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision for Individual bad debt | |||||
| Provision made on a portfolio basis | 65,053,149.55 | 100.00 | 6,728,107.45 | 10.34 | 58,325,042.10 |
| Total | 65,053,149.55 | 100.00 | 6,728,107.45 | 10.34 | 58,325,042.10 |
2) Other receivables with bad debt provision by combination
| Name of combination | Closing balance | ||
| Book balance | Provision for bad debts | Percentage of Provision (%) | |
| Ageing combination | 74,016,869.50 | 7,723,500.89 | 10.43 |
| Including: within 1 year | 60,333,551.96 | 3,016,677.58 | 5.00 |
| 1-2 years | 4,497,031.02 | 449,703.10 | 10.00 |
| 2-3 years | 1,406,745.06 | 281,349.01 | 20.00 |
| 3-4 years | 5,173,757.51 | 1,552,127.25 | 30.00 |
| 4-5 years | 364,280.00 | 182,140.00 | 50.00 |
| More than 5 years | 2,241,503.95 | 2,241,503.95 | 100.00 |
| Total | 74,016,869.50 | 7,723,500.89 | 10.43 |
(4) Change of provision for bad debts
| Item | Phase I | Phase II | Phase III | Total |
| Next 12 months Expected credit losses | Expected credit losses for the entire duration (no credit impairment) | Expected credit losses for the entire duration (credit impairment occurred) | ||
| Opening balance | 2,621,511.17 | 199,078.34 | 3,907,517.94 | 6,728,107.45 |
| Opening balance during the period | —— | —— | —— | |
| -- Transferred to Phase II | -224,851.55 | 224,851.55 | ||
| --Transferred to Phase III | -140,674.51 | 140,674.51 | ||
| -- Reversed to Phase II | ||||
| -- Reversed to Phase I | ||||
| Provision during the period | -3,053,996.59 | 166,447.72 | 208,927.76 | -2,678,621.11 |
| Recovery or reversal during the period | ||||
| Write-offs during the period | ||||
| Impact of exchange rate changes | 3,674,014.55 | 3,674,014.55 | ||
| Closing balance | 3,016,677.58 | 449,703.10 | 4,257,120.21 | 7,723,500.89 |
| Percentage of Provision for bad debts at end of period | 5.00 | 10.00 | 46.34 | 10.43 |
The basis for phase division: a period of less than one year represents that the credit risk failed to increasesignificantly after initial recognition (Phase I); a period of 1-2 years represents that the credit risk increasedsignificantly after initial recognition (Phase II) but did not result in credit impairment; a period of over 2 yearsrepresents that credit impairment occurred after initial recognition (Phase III).
(5) Top five other receivables
| Unit name | Nature of payment | Closing book balance | Ageing | Percentage of balance of other receivables (%) | Provision for bad debts at end of period |
| Export tax refund receivable | Export tax refund receivable | 36,262,490.59 | Within 1 year | 48.99 | 1,813,124.53 |
| C?ng ty c? ph?n T??ng Viên Grand Park | Deposit Guarantee | 3,075,787.51 | 3-4 years | 4.16 | 922,736.25 |
| Administrative Committee of Hangzhou Qiantang Smart City | Deposit Guarantee | 1,908,000.00 | Over 5 years | 2.58 | 1,908,000.00 |
| 1,007,000.00 | 3-4 years | 1.36 | 302,100.00 | ||
| Contribution to employee's social insurance | Temporary payments receivable | 2,502,296.97 | Within 1 year | 3.38 | 125,114.85 |
| Unit name | Nature of payment | Closing book balance | Ageing | Percentage of balance of other receivables (%) | Provision for bad debts at end of period |
| premium and housing provident funds | |||||
| China Construction Electronic Commerce Co., Ltd | Deposit Guarantee | 2,150,000.00 | Within 1 year | 2.90 | 107,500.00 |
| Subtotal | 46,905,575.07 | 63.37 | 5,178,575.63 |
8. Inventories
(1) Detailed information
| Item | Closing balance | ||
| Book balance | Provision for decline | Book value | |
| Raw materials | 669,059,988.90 | 8,495,823.44 | 660,564,165.46 |
| Work in progress | 274,146,569.34 | 274,146,569.34 | |
| Inventory | 1,651,616,654.30 | 34,234,466.08 | 1,617,382,188.22 |
| Commissioned processing materials | 14,520,201.78 | 14,520,201.78 | |
| Low-value consumables | 2,689,354.00 | 2,689,354.00 | |
| Total | 2,612,032,768.32 | 42,730,289.52 | 2,569,302,478.80 |
(Continued)
| Item | Opening balance | ||
| Book balance | Provision for decline | Book value | |
| Raw materials | 763,015,426.57 | 11,758,583.43 | 751,256,843.14 |
| Work in progress | 346,179,403.66 | 346,179,403.66 | |
| Inventory | 1,769,035,629.25 | 72,251,465.32 | 1,696,784,163.93 |
| Commissioned processing materials | 16,699,727.54 | 16,699,727.54 | |
| Low-value consumables | 1,652,387.41 | 1,652,387.41 | |
| Total | 2,896,582,574.43 | 84,010,048.75 | 2,812,572,525.68 |
(2) Provision for decline in value of inventories
1) Detailed information
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Make provision | Impact of exchange rate changes | Write off | Write-offs | |||
| Raw materials | 11,758,583.43 | 4,049,820.79 | 6,328.08 | 6,638,914.64 | 679,994.22 | 8,495,823.44 |
| Inventory | 72,251,465.32 | 19,167,146.71 | 440,942.42 | 57,625,088.37 | 34,234,466.08 | |
| Total | 84,010,048.75 | 23,216,967.50 | 447,270.50 | 64,264,003.01 | 679,994.22 | 42,730,289.52 |
2) Specific basis for determining net realizable value, and the reason for provision for reversal or inventory write-off during the period
| Item | Specific basis For determining net realizable value | Reasons for reversal of provision for decline in value of inventories | Reasons for write off of provision for decline in value of inventory |
| Raw materials | Net realizable value is determined as the estimated selling price of the relevant finished goods less costs estimated to be incurred to completion, estimated selling expenses and related taxes | Consumption of inventories for which provision for decline in value of inventories has been made during the period | |
| Inventory | Net realizable value is determined as the estimated selling price of the relevant finished goods, less estimated selling expenses and related taxes. | Part of the inventories for which provision for decline in value of inventories had been made were sold or scrapped, and the corresponding provision for decline in value of inventories had been written off |
9. Non-current assets due within one year
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Finance lease payments receivable | 108,310.38 | 108,310.38 | 98,061.60 | 98,061.60 | ||
| Total | 108,310.38 | 108,310.38 | 98,061.60 | 98,061.60 | ||
10. Other current assets
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Retained VAT | 95,585,442.39 | 95,585,442.39 | 114,913,836.33 | 114,913,836.33 | ||
| Prepaid enterprise income tax | 11,454,011.78 | 11,454,011.78 | 4,945,994.21 | 4,945,994.21 | ||
| Amortized expenses | 1,409,020.54 | 1,409,020.54 | 3,832,917.83 | 3,832,917.83 | ||
| Interest on fixed deposits | 20,342,139.76 | 20,342,139.76 | 10,437,900.21 | 10,437,900.21 | ||
| Total | 128,790,614.47 | 128,790,614.47 | 134,130,648.58 | 134,130,648.58 | ||
11. Long-term receivables
| Item | Closing balance | Opening balance | Discount rate range | ||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | ||
| Finance lease payments | 335,454.55 | 335,454.55 | 299,568.31 | 299,568.31 | 0.75% | ||
| Of which: unrealized financing gains | -3,685.91 | -3,685.91 | -4,002.95 | -4,002.95 | |||
| Land lease deposits | 2,572,611.16 | 2,572,611.16 | |||||
| Total | 335,454.55 | 335,454.55 | 2,872,179.47 | 2,872,179.47 | |||
12. Long-term equity investments
(1) Classification
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in joint ventures | 2,950,574,477.94 | 2,950,574,477.94 | 2,544,523,517.55 | 2,544,523,517.55 | ||
| Total | 2,950,574,477.94 | 2,950,574,477.94 | 2,544,523,517.55 | 2,544,523,517.55 | ||
(2) Detailed information
| Invested units | Opening balance | Increase and decrease during the period | ||||
| Book value | Provision for Impairment Individual bad debt | Additional investments | Decrease in investments | Gains and losses on investments recognized under the equity method | Adjustment to other comprehensive income comprehensive income | |
| Joint ventures | ||||||
| Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | 1,387,637,932.17 | 259,947,378.38 | 17,435,798.12 | |||
| Zhejiang Hangcha Holding Co., Ltd | 797,869,729.35 | 138,739,441.51 | 2,817,986.16 | |||
| Zhejiang Guozi Robotics Co., Ltd. | 62,379,261.25 | -72,548,870.44 | -101,852.77 | |||
| Ningbo Donghai Bank Co., Ltd. | 201,743,081.34 | 8,680,923.63 | 948,892.18 | |||
| Changzhou Stabila Laser Instrument Company Limited | 2,973,263.38 | 1,938,405.70 | -1,147,253.65 | |||
| Hangzhou Weina Technologies Co., Ltd. | 91,920,250.06 | 8,445,616.11 | -278.23 | |||
| Total | 2,544,523,517.55 | 1,938,405.70 | 342,117,235.54 | 21,100,545.46 | ||
(Continued)
| Invested units | Increase and decrease during the period | Closing balance | ||||
| Other changes in equity | Declaration of issuing cash dividends or profits | Provision for accrual impairment | Other | Book value | Provision for impairment | |
| Joint ventures | ||||||
| Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | 5,380,273.50 | 1,670,401,382.17 | ||||
| Invested units | Increase and decrease during the period | Closing balance | ||||
| Other changes in equity | Declaration of issuing cash dividends or profits | Provision for accrual impairment | Other | Book value | Provision for impairment | |
| Zhejiang Hangcha Holding Co., Ltd | 21,082,359.51 | 960,509,516.53 | ||||
| Zhejiang Guozi Robotics Co., Ltd. | 14,432,140.68 | 4,160,678.72 | ||||
| Ningbo Donghai Bank Co., Ltd. | 211,372,897.15 | |||||
| Changzhou Stabila Laser Instrument Company Limited | 3,764,415.43 | |||||
| Hangzhou Weina Technologies Co., Ltd. | 100,365,587.94 | |||||
| Total | 40,894,773.69 | 2,950,574,477.94 | ||||
13. Investment in other equity instruments
| Item | Opening balance | Increase and decrease during the period | |||
| Additional investments | Decrease in investments | Gains and losses recognized in other comprehensive income for current period | Other | ||
| Hangzhou Haibang Xinhu Talent Venture Capital Partnership (limited partnership) | 16,550,000.00 | ||||
| Total | 16,550,000.00 | ||||
(Continued)
| Item | Closing balance | Dividend income recognized for current period | Cumulative gains and losses recognized in other comprehensive income at the end of the period |
| Hangzhou Haibang Xinhu Talent Venture Capital Partnership (limited partnership) | 16,550,000.00 | ||
| Total | 16,550,000.00 |
14. Investment property
| Item | Buildings | Land use rights | Total |
| Original book value | |||
| Opening balance | 118,165,047.78 | 16,928,850.24 | 135,093,898.02 |
| Amount of increase during the period | |||
| Amount of decrease during the period | |||
| Closing balance | 118,165,047.78 | 16,928,850.24 | 135,093,898.02 |
| Accumulated depreciation and accumulated amortization | |||
| Opening balance | 10,621,732.55 | 2,313,609.46 | 12,935,342.01 |
| Amount of increase during the period | 4,546,523.64 | 338,577.00 | 4,885,100.64 |
| (1) Accrual or amortization | 4,546,523.64 | 338,577.00 | 4,885,100.64 |
| Amount of decrease during the period | |||
| Closing balance | 15,168,256.19 | 2,652,186.46 | 17,820,442.65 |
| Book value | |||
| Book value at the end of the period | 102,996,791.59 | 14,276,663.78 | 117,273,455.37 |
| Book value at the beginning of the period | 107,543,315.23 | 14,615,240.78 | 122,158,556.01 |
15. Fixed assets
(1) Detailed information
| Item | Buildings | General equipment | Special equipment | Transportation facilities | Total |
| Original book value | |||||
| Opening balance | 1,308,659,311.34 | 251,943,918.56 | 1,370,067,468.87 | 44,757,332.91 | 2,975,428,031.68 |
| Amount of increase during the period | 284,514,444.08 | 49,679,407.73 | 137,530,885.77 | 5,366,443.41 | 477,091,180.99 |
| 1) Acquisitions | 23,796,017.69 | 74,338,313.55 | 4,068,940.77 | 102,203,272.01 | |
| 2) Transfer from construction in progress | 269,346,652.92 | 14,395,990.03 | 20,395,700.04 | 304,138,342.99 | |
| 3) Impact of exchange rate changes | 15,167,791.16 | 11,487,400.01 | 42,796,872.18 | 1,297,502.64 | 70,749,565.99 |
| Item | Buildings | General equipment | Special equipment | Transportation facilities | Total |
| Amount of decrease during the period | 6,721,170.16 | 7,203,580.29 | 41,945,663.18 | 3,743,403.86 | 59,613,817.49 |
| 1) Disposal or retirement | 6,721,170.16 | 7,203,580.29 | 41,945,663.18 | 3,743,403.86 | 59,613,817.49 |
| Closing balance | 1,586,452,585.26 | 294,419,746.00 | 1,465,652,691.46 | 46,380,372.46 | 3,392,905,395.18 |
| Accumulated depreciation | |||||
| Opening balance | 435,285,918.07 | 160,367,019.73 | 821,945,421.30 | 34,826,115.06 | 1,452,424,474.16 |
| Amount of increase during the period | 74,512,180.80 | 31,858,098.36 | 142,051,286.22 | 3,732,680.02 | 252,154,245.40 |
| 1) Accrual | 70,462,039.75 | 28,422,903.39 | 107,304,963.53 | 3,615,057.42 | 209,804,964.09 |
| 2) Impact of exchange rate changes | 4,050,141.05 | 3,435,194.97 | 34,746,322.69 | 117,622.60 | 42,349,281.31 |
| Amount of decrease during the period | 1,160,795.74 | 6,577,869.25 | 31,014,695.82 | 3,395,023.67 | 42,148,384.48 |
| 1) Disposal or retirement | 1,160,795.74 | 6,577,869.25 | 31,014,695.82 | 3,395,023.67 | 42,148,384.48 |
| Closing balance | 508,637,303.13 | 185,647,248.84 | 932,982,011.70 | 35,163,771.41 | 1,662,430,335.08 |
| Provision for impairment | |||||
| Opening balance | 4,101,324.56 | 4,101,324.56 | |||
| Amount of increase during the period | 54,264.94 | 54,264.94 | |||
| 1) Impact of exchange rate changes | 54,264.94 | 54,264.94 | |||
| Amount of decrease during the period | 487,411.44 | 487,411.44 | |||
| 1) Disposal or retirement | 487,411.44 | 487,411.44 | |||
| Closing balance | 3,668,178.06 | 3,668,178.06 | |||
| Book value | |||||
| Book value at the end of the period | 1,077,815,282.13 | 108,772,497.16 | 529,002,501.70 | 11,216,601.05 | 1,726,806,882.04 |
| Book value at the beginning of the period | 873,373,393.27 | 91,576,898.83 | 544,020,723.01 | 9,931,217.85 | 1,518,902,232.96 |
(2) Fixed assets under operating leases
| Item | Book value at the end of the period |
| Buildings | 36,465,996.45 |
| Subtotal | 36,465,996.45 |
(3) Fixed assets with pending ownership certificates
| Item | Book value | Reason of ownership certificates being pending |
| GreatStar e-Commerce Building | 72,609,255.49 | Being applied for |
| Laser Building of Hangzhou GreatStar Tools Co., Ltd. | 57,741,935.01 | Being applied for |
| Plant Buildings 1 and 2 of Viet Nam GreatStar Intelligence Co., Ltd. | 87,647,906.42 | Documents being collected for application |
| Subtotal | 217,999,096.92 |
16. Construction in progress
(1) Detailed information
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Annual output of 550,000 sets of laser sensor modules project | 1,865,865.07 | 1,865,865.07 | ||||
| Phase I Plant Construction Project of Vietnam Intelligent Co. Ltd | 22,619,555.29 | 22,619,555.29 | 95,185,314.94 | 95,185,314.94 | ||
| Phase II Plant Construction Project of Vietnam Intelligent Co. Ltd | 22,994,368.41 | 22,994,368.41 | ||||
| Phase II Plant Construction Project in Cambodia | 21,017,425.13 | 21,017,425.13 | ||||
| Phase III Plant Construction | 19,576,510.61 | 19,576,510.61 | ||||
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Project in Cambodia | ||||||
| Phase II Project with Annual Output of 1.5 Million Mesh Technical Reform | 5,438,938.06 | 5,438,938.06 | 9,141,619.68 | 9,141,619.68 | ||
| Intelligent Factory Project with an Annual Output of 1 Million Sets of New Power Tools | 121,305,866.48 | 121,305,866.48 | 19,200,447.56 | 19,200,447.56 | ||
| Hangzhou GreatStar headquarter transformation projects | 28,297,770.43 | 28,297,770.43 | ||||
| Thailand tool box cabinet production base construction project | 11,842,636.03 | 11,842,636.03 | ||||
| Vietnam Joint Plant Equipment Installation | 219,966.85 | 219,966.85 | 1,348,331.57 | 1,348,331.57 | ||
| Drawer production line construction project | 28,596,859.65 | 28,596,859.65 | ||||
| GreatStar Energy industrial building project | 24,054,355.41 | 24,054,355.41 | ||||
| Sporadic project | 73,566,238.21 | 73,566,238.21 | 68,526,581.79 | 68,526,581.79 | ||
| Total | 270,199,288.71 | 270,199,288.71 | 304,599,362.46 | 304,599,362.46 | ||
(2) Changes in significant construction-in-progress projects during the period
| Name of project | Budgeted number (in ten thousand yuan) | Opening balance | Increase for the period | Transfer to Fixed assets | Other decreases | Impact of exchange rate changes | Closing balance |
| Intelligent Factory Project with an Annual Output of 1 Million Sets of New Power Tools | 13,300.00 | 19,200,447.56 | 103,963,826.00 | 1,858,407.08 | 121,305,866.48 | ||
| Subtotal | 13,300.00 | 19,200,447.56 | 103,963,826.00 | 1,858,407.08 | 121,305,866.48 |
(Continued)
| Name of project | The proportion of cumulative investment in the project to the budget (%) | Progress of Works (%) | Accumulated interest capitalization amounts | Interests capitalization amounts for the period for the period | Interest capitalization rate for the period (%) | Source of funds |
| Intelligent Factory Project with an Annual Output of 1 Million Sets of New Power Tools | 92.60 | 95.00 | Raised and own funds | |||
| Subtotal |
17. Right-of-use assets
| Item | Buildings | General equipment | Special equipment | Transportation facilities | Total |
| Original book value | |||||
| Opening balance | 597,080,299.43 | 4,212,281.97 | 18,107,197.67 | 619,399,779.07 | |
| Amount of increase during the period | 86,136,933.35 | 375,999.42 | 4,122,094.65 | 12,223,425.62 | 102,858,453.04 |
| (1) Leased-in | 41,602,288.16 | 3,856,604.80 | 11,659,509.20 | 57,118,402.16 | |
| (2) Effect of exchange rate changes | 44,534,645.19 | 375,999.42 | 265,489.85 | 563,916.42 | 45,740,050.88 |
| Amount of decrease | 42,972,960.10 | 7,372,123.20 | 50,345,083.30 |
| during the period | |||||
| (1) Lease expiration | 42,972,960.10 | 7,372,123.20 | 50,345,083.30 | ||
| Closing balance | 640,244,272.68 | 4,588,281.39 | 4,122,094.65 | 22,958,500.09 | 671,913,148.81 |
| Accumulated depreciation | |||||
| Opening balance | 190,981,143.46 | 1,823,239.26 | 9,466,034.94 | 202,270,417.66 | |
| Amount of increase during the period | 127,441,138.09 | 549,335.50 | 2,879,790.01 | 7,734,714.61 | 138,604,978.21 |
| (1) Accrual | 104,888,766.10 | 388,102.31 | 2,694,312.71 | 5,416,600.26 | 113,387,781.38 |
| (2) Effect of exchange rate changes | 22,552,371.99 | 161,233.19 | 185,477.30 | 2,318,114.35 | 25,217,196.83 |
| Amount of decrease during the period | 40,410,289.11 | 7,372,123.20 | 47,782,412.31 | ||
| (1) Lease expiration | 40,410,289.11 | 7,372,123.20 | 47,782,412.31 | ||
| Closing balance | 278,011,992.44 | 2,372,574.76 | 2,879,790.01 | 9,828,626.35 | 293,092,983.56 |
| Book value | |||||
| Book value at the end of the period | 362,232,280.24 | 2,215,706.63 | 1,242,304.64 | 13,129,873.74 | 378,820,165.25 |
| Book value at the beginning of the period | 406,099,155.97 | 2,389,042.71 | 8,641,162.73 | 417,129,361.41 |
18. Intangible assets
| Item | Land ownership | Land use rights | Patent rights | Trademark rights |
| Original book value | ||||
| Opening balance | 135,014,576.18 | 255,109,422.91 | 5,407,650.57 | 326,422,582.83 |
| Amount of increase during the period | 6,087,114.93 | 68,535,948.15 | 22,783,086.49 | 104,110,028.30 |
| (1) Acquisitions | 68,292,268.06 | 397,322.89 | ||
| (2) Increase due to consolidation | 21,859,366.00 | 78,979,761.00 | ||
| (3) Effect of exchange rate changes | 6,087,114.93 | 243,680.09 | 526,397.60 | 25,130,267.30 |
| Amount of decrease during the period | 2,727,072.90 |
| (1) Disposal | 2,727,072.90 | |||
| Closing balance | 138,374,618.21 | 323,645,371.06 | 28,190,737.06 | 430,532,611.13 |
| Accumulated amortization | ||||
| Opening balance | 45,272,589.30 | 3,149,553.87 | 10,082,454.18 | |
| Amount of increase during the period | 10,244,714.17 | 1,176,857.15 | 7,774,802.46 | |
| (1) Accrual | 10,266,051.73 | 1,156,405.39 | 7,508,421.85 | |
| (2) Effect of exchange rate changes | -21,337.56 | 20,451.76 | 266,380.61 | |
| Amount of decrease during the period | ||||
| (1) Disposal | ||||
| Closing balance | 55,517,303.47 | 4,326,411.02 | 17,857,256.64 | |
| Book value | ||||
| Book value at the end of the period | 138,374,618.21 | 268,128,067.59 | 23,864,326.04 | 412,675,354.49 |
| Book value at the beginning of the period | 135,014,576.18 | 209,836,833.61 | 2,258,096.70 | 316,340,128.65 |
(Continued)
| Item | Proprietary technologies | Management software | Emission rights | Total |
| Original book value | ||||
| Opening balance | 18,478,820.35 | 162,902,092.41 | 2,648,543.69 | 905,983,688.94 |
| Amount of increase during the period | 23,799,376.78 | 225,315,554.65 | ||
| (1) Acquisitions | 7,510,588.36 | 76,200,179.31 | ||
| (2) Increase due to consolidation | 100,839,127.00 | |||
| (3) Effect of exchange rate changes | 16,288,788.42 | 48,276,248.34 | ||
| Amount of decrease during the period | 2,020,718.10 | 4,747,791.00 | ||
| (1) Disposal | 2,020,718.10 | 4,747,791.00 | ||
| Closing balance | 18,478,820.35 | 184,680,751.09 | 2,648,543.69 | 1,126,551,452.59 |
| Accumulated amortization | ||||
| Opening balance | 13,019,868.82 | 120,711,294.71 | 949,061.60 | 193,184,822.48 |
| Amount of increase during the period | 1,755,487.93 | 24,905,521.12 | 264,854.40 | 46,122,237.23 |
| (1) Accrual | 1,755,487.93 | 16,893,466.43 | 264,854.40 | 37,844,687.73 |
| (2) Effect of exchange rate changes | 8,012,054.69 | 8,277,549.50 | ||
| Amount of decrease during the period | 708,691.90 | 708,691.90 | ||
| (1) Disposal | 708,691.90 | 708,691.90 | ||
| Closing balance | 14,775,356.75 | 144,908,123.93 | 1,213,916.00 | 238,598,367.81 |
| Book value | ||||
| Book value at the end of the period | 3,703,463.60 | 39,772,627.16 | 1,434,627.69 | 887,953,084.78 |
| Book value at the beginning of the period | 5,458,951.53 | 42,190,797.70 | 1,699,482.09 | 712,798,866.46 |
19. Goodwill
(1) Detailed information
| Name of investee or matters forming goodwill | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Lista Holding AG | 1,189,377,366.10 | 70,398,887.67 | 1,118,978,478.43 | 1,065,726,426.39 | 70,398,887.67 | 995,327,538.72 |
| Geelong Orchid Holdings Ltd | 568,037,859.11 | 2,455,041.61 | 565,582,817.50 | 568,037,859.11 | 1,573,951.59 | 566,463,907.52 |
| Arrow Fastener Co., LLC | 653,931,525.60 | 653,931,525.60 | 643,027,588.80 | 643,027,588.80 | ||
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd. | 118,076,677.01 | 58,591,956.96 | 59,484,720.05 | 118,076,677.01 | 58,591,956.96 | 59,484,720.05 |
| Prim' Tools Limited | 69,957,952.71 | 69,957,952.71 | 68,791,443.58 | 68,791,443.58 | ||
| Suzhou Xindadi Hardware Product Co., Ltd | 42,288,608.30 | 42,288,608.30 | 42,288,608.30 | 42,288,608.30 | ||
| Prexiso AG | 38,079,740.04 | 38,079,740.04 | 34,120,865.62 | 34,120,865.62 | ||
| Prime-Line Products, LLC | 30,455,610.00 | 3,311,657.93 | 27,143,952.07 | 29,947,780.00 | 3,311,657.93 | 26,636,122.07 |
| Workwear and labor protection equipment-related asset | 24,973,059.72 | 808,928.28 | 24,164,131.44 | |||
| group purchased by Scruffs Workwear Ltd | ||||||
| Longyou Hugong Forging Three Tools Co., Ltd, | 8,072,738.29 | 8,072,738.29 | 8,072,738.29 | 8,072,738.29 | ||
| Shanghai Endura Tools Co., Ltd. | 5,677,361.84 | 5,677,361.84 | 5,677,361.84 | 5,677,361.84 | ||
| Hangzhou Shibeide Cutting Tools Co., Ltd | 884,415.32 | 884,415.32 | 884,415.32 | 884,415.32 | ||
| Zhejiang Guoxin Tools Co., Ltd. | 308,667.41 | 308,667.41 | 308,667.41 | 308,667.41 | ||
| Yiyang Tools Manufacturing Co., Ltd | 170,033.92 | 170,033.92 | 170,033.92 | 170,033.92 | ||
| Total | 2,750,291,615.37 | 150,679,689.23 | 2,599,611,926.14 | 2,585,130,465.59 | 148,989,670.93 | 2,436,140,794.66 |
(2) Original book value of goodwill
| Name of investee or matters forming goodwill | Opening balance | Resulting from business combination in the period | Impact of exchange rate changes | Decrease for the period | Closing balance | |
| Disposals | Other | |||||
| Lista Holding AG | 1,065,726,426.39 | 123,650,939.71 | 1,189,377,366.10 | |||
| Geelong Orchid Holdings Ltd | 568,037,859.11 | 568,037,859.11 | ||||
| Arrow Fastener Co., LLC | 643,027,588.80 | 10,903,936.80 | 653,931,525.60 | |||
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd. | 118,076,677.01 | 118,076,677.01 | ||||
| Prim' Tools Limited | 68,791,443.58 | 1,166,509.13 | 69,957,952.71 | |||
| Suzhou Xindadi Hardware Product Co., Ltd | 42,288,608.30 | 42,288,608.30 | ||||
| Prexiso AG | 34,120,865.62 | 3,958,874.42 | 38,079,740.04 | |||
| Prime-Line Products, LLC | 29,947,780.00 | 507,830.00 | 30,455,610.00 | |||
| Name of investee or matters forming goodwill | Opening balance | Resulting from business combination in the period | Impact of exchange rate changes | Decrease for the period | Closing balance | |
| Disposals | Other | |||||
| Workwear and labor protection equipment-related asset group purchased by Scruffs Workwear Ltd | 24,385,822.23 | 587,237.49 | 24,973,059.72 | |||
| Longyou Hugong Forging Three Tools Co., Ltd, | 8,072,738.29 | 8,072,738.29 | ||||
| Shanghai Endura Tools Co., Ltd. | 5,677,361.84 | 5,677,361.84 | ||||
| Hangzhou Shibeide Cutting Tools Co., Ltd | 884,415.32 | 884,415.32 | ||||
| Zhejiang Guoxin Tools Co., Ltd. | 308,667.41 | 308,667.41 | ||||
| Yiyang Tools Manufacturing Co., Ltd | 170,033.92 | 170,033.92 | ||||
| Total | 2,585,130,465.59 | 24,385,822.23 | 140,775,327.55 | 2,750,291,615.37 | ||
(3) Provision for impairment of goodwill
| Name of investee or matters forming goodwill | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Make provision | Other | Disposals | Other | |||
| Lista Holding AG | 70,398,887.67 | 70,398,887.67 | ||||
| Geelong Orchid Holdings Ltd | 1,573,951.59 | 881,090.02 | 2,455,041.61 | |||
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd. | 58,591,956.96 | 58,591,956.96 | ||||
| Prime-Line Products, LLC | 3,311,657.93 | 3,311,657.93 | ||||
| Workwear and labor protection equipment-related asset group purchased by Scruffs Workwear Ltd | 808,928.28 | 808,928.28 | ||||
| Name of investee or matters forming goodwill | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Make provision | Other | Disposals | Other | |||
| Longyou Hugong Forging Three Tools Co., Ltd, | 8,072,738.29 | 8,072,738.29 | ||||
| Shanghai Endura Tools Co., Ltd. | 5,677,361.84 | 5,677,361.84 | ||||
| Hangzhou Shibeide Cutting Tools Co., Ltd | 884,415.32 | 884,415.32 | ||||
| Zhejiang Guoxin Tools Co., Ltd. | 308,667.41 | 308,667.41 | ||||
| Yiyang Tools Manufacturing Co., Ltd | 170,033.92 | 170,033.92 | ||||
| Total | 148,989,670.93 | 1,690,018.30 | 150,679,689.23 | |||
[Note] Goodwill arose from the recognition of deferred income tax liabilities for the relevant asset group of GeelongOrchid Holdings Ltd and workwear and labor protection equipment-related asset group purchased by ScruffsWorkwear Ltd. A provision of RMB 881,090.02 and a provision of RMB 808,928.28 for impairment of goodwillhave been made due to the reversal of deferred income tax liabilities in the current period.
(4) Information about the asset group or combination of asset groups in which main goodwill is located
| Name of asset group or combination of asset groups | Composition and basis of asset group or combination of asset groups | Operating segment and its basis | Whether the asset group or combination of asset groups was consistent with that determined on the purchase date and when the previous-year goodwill impairment test was made |
| Lista Holding AG | The operational assets and liabilities relating to tool storage business in Lista Holding AG asset group can generate independent cash inflows | The asset group containing goodwill in Lista Holding AG is its asset group of tool storage D&R, production and marketing business | Yes |
| Geelong Orchid Holdings Ltd | The operational assets and liabilities relating to tool storage business in Geelong Orchid Holdings Ltd asset group, which can generate independent cash inflows | The asset group containing goodwill in Geelong Orchid Holdings Ltd is its asset group of tool storage D&R, production and marketing business | Different from that determined on the purchase date, and consistent with that determined when a goodwill impairment test was made in 2022 The difference from that on the purchase date was mainly due to the adjustment of internal business and equity structure, and Geelong (Thailand) Co, Ltd was introduced into Geelong Orchid Holdings Ltd asset group since 2022 |
| Name of asset group or combination of asset groups | Composition and basis of asset group or combination of asset groups | Operating segment and its basis | Whether the asset group or combination of asset groups was consistent with that determined on the purchase date and when the previous-year goodwill impairment test was made |
| Arrow Fastener Co., LLC | The operational assets and liabilities relating to tools business in Arrow Fastener Co., LLC asset group can generate independent cash inflows | The asset group containing goodwill in Arrow Fastener Co., LLC is its asset group of tools D&R, production and marketing business | Yes |
(5) Specific method for determining recoverable amount of major goodwill
The recoverable amount was determined based on the present value of expected future cash flows
| Item | Book value of the asset group or combination of asset groups containing goodwill | Recoverable amount | Provision for Impairment in the current period |
| Lista Holding AG | 1,623,529,995.17 | 1,967,380,000.00 | |
| Geelong Orchid Holdings Ltd | 1,043,440,203.22 | 1,153,042,000.00 | |
| Arrow Fastener Co., LLC | 1,061,688,865.87 | 1,064,104,848.00 |
(Continued)
| Item | Years of forecast period | Revenue growth rate, profit margin and other parameters over the forecast period and their determination basis | Growth rate and other parameters over the stabilization period and their determination basis | Discount rate and its determination basis |
| Lista Holding AG | 5-year period for detailed forecasts | Based on historical experience and market development forecasts, the Company has determined that during the forecast period (2024-2028), the revenue growth rate is -2.24% -5.93%, the gross profit margin (excluding depreciation and amortization) 27.13%-30.59%, and the profit margin before interest, taxes, depreciation, and amortization 17.24%-20.70%, respectively | The growth rate reaches stability in the fifth year of the forecast period, and 0 growth in the sixth year and perpetuity period, | The pre-tax interest rate for the time value of market currency and specific risks of related asset groups, with a discount rate of 10.59% |
| Geelong Orchid Holdings Ltd | Based on historical experience and market development forecasts, the Company has determined that during the forecast period (2024-2028), the revenue growth rate is 3.81%-52.49%, the gross profit margin 18.32%-18.87%, and the profit | The pre-tax interest rate for the time value of market currency and specific risks of related asset groups, with a |
| Item | Years of forecast period | Revenue growth rate, profit margin and other parameters over the forecast period and their determination basis | Growth rate and other parameters over the stabilization period and their determination basis | Discount rate and its determination basis |
| margin before interest and taxes 11.21%-12.42%, respectively | discount rate of 12.68% | |||
| Arrow Fastener Co., LLC | Based on historical experience and market development forecasts, the Company has determined that during the forecast period (2024-2028), the revenue growth rate is 5.00%-10.00%, the gross profit margin 23.63%-29.54%, and the profit margin before interest and taxes 8.74%-14.73%, respectively | The pre-tax interest rate for the time value of market currency and specific risks of related asset groups, with a discount rate of 11.65% |
20. Long-term amortized expenses
| Item | Opening balance | Increase for the period | Amortization for the period | Impact of exchange rate changes | Closing balance |
| Expenditure on leasehold improvements of fixed assets | 6,735,976.64 | 53,905.29 | 1,930,160.51 | 1,734.40 | 4,861,455.82 |
| Renovation expense | 10,874,395.67 | 5,023,237.67 | 6,855,182.72 | -110,899.47 | 8,931,551.15 |
| Mold costs | 10,234,156.01 | 12,100,259.24 | 8,569,429.44 | -7,354.67 | 13,757,631.14 |
| Other | 1,838,746.02 | 5,075,498.97 | 1,310,952.50 | 19,583.14 | 5,622,875.63 |
| Total | 29,683,274.34 | 22,252,901.17 | 18,665,725.17 | -96,936.60 | 33,173,513.74 |
21. Deferred income tax assets/deferred income tax liabilities
(1) Deferred tax liabilities without offsetting
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Provision for bad debts | 114,342,356.82 | 20,739,142.33 | 75,037,482.03 | 19,562,336.87 |
| Provision for decline in value of inventories | 51,824,082.19 | 11,178,964.81 | 94,747,478.74 | 20,983,892.60 |
| Lease liabilities | 153,978,306.34 | 29,296,516.80 | 195,295,175.16 | 39,349,672.33 |
| Changes in fair value of financial | 1,305,491.60 | 195,823.74 | 13,075,775.60 | 1,961,366.34 |
| instruments held for trading | ||||
| Accrued expenses | 115,214,300.28 | 29,368,943.84 | 87,802,250.40 | 26,072,370.12 |
| Deferred income | 327,332.57 | 49,099.89 | 795,332.50 | 119,299.88 |
| Distribution of partnership profits | 12,399,101.26 | 1,859,865.19 | 10,437,803.87 | 1,565,670.58 |
| Total | 449,390,971.06 | 92,688,356.60 | 477,191,298.30 | 109,614,608.72 |
(2) Deferred tax liabilities without offsetting
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Changes in fair value of financial instruments held for trading | 472,251.49 | 70,837.72 | 216,822.79 | 32,523.42 |
| Interest receivable | 20,342,139.76 | 3,081,934.25 | 10,354,688.66 | 1,553,203.30 |
| Depreciation of fixed assets | 156,961,011.90 | 35,286,769.43 | 60,487,407.12 | 10,661,582.63 |
| Appraisal of appreciation of assets in non-identically controlled business combinations | 200,326,710.67 | 44,293,429.84 | 130,493,175.41 | 22,637,189.13 |
| Other | 63,126,203.66 | 12,905,251.70 | 59,993,435.24 | 12,273,663.16 |
| Right-of-use assets | 151,808,469.71 | 29,083,863.76 | 188,537,708.58 | 39,633,853.20 |
| Total | 593,036,787.19 | 124,722,086.70 | 450,083,237.80 | 86,792,014.84 |
(3) Breakdown of unrecognized deferred tax assets
| Item | Closing balance | Opening balance |
| Deductible losses | 308,577,922.52 | 291,942,202.73 |
| Total | 308,577,922.52 | 291,942,202.73 |
(4) The deductible losses for which no deferred income tax assets have been recognized will expire in the followingyears
| Years | Closing balance | Opening balance |
| 2023 | 12,521,147.05 |
| 2024 | 32,427,712.45 | 32,951,460.64 |
| 2025 | 34,160,783.63 | 34,819,578.42 |
| 2026 | 49,388,642.26 | 69,022,589.38 |
| 2027 | 49,038,971.22 | 50,649,136.49 |
| 2028 | 59,949,715.41 | 26,243,099.31 |
| 2029 | 7,438,617.58 | 7,438,617.58 |
| 2030 | 13,508,002.18 | 13,508,002.18 |
| 2031 | 27,932,795.58 | 32,348,426.72 |
| 2032 | 10,717,366.53 | 12,440,144.96 |
| 2033 | 24,015,315.68 | |
| Total | 308,577,922.52 | 291,942,202.73 |
22. Other non-current assets
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Prepayment for acquisition of land | 39,173,724.83 | 39,173,724.83 | 57,883,798.81 | 57,883,798.81 | ||
| Prepayments for equipment | 13,667,157.94 | 13,667,157.94 | 14,558,437.00 | 14,558,437.00 | ||
| Prepayments for acquisition of intangible assets | 552,100.00 | 552,100.00 | 2,064,892.14 | 2,064,892.14 | ||
| Total | 53,392,982.77 | 53,392,982.77 | 74,507,127.95 | 74,507,127.95 | ||
23. Assets subject to ownership or use restrictions
(1) Restricted assets as of the end of the period
| Item | Closing book balance | Book value at the end of the period | Types of restrictions | Reason for restriction |
| Monetary assets | 144,071,225.10 | 144,071,225.10 | Pledged | Guarantee deposit for short-term loan |
| Monetary assets | 21,496,066.60 | 21,496,066.60 | Pledged | Guarantee deposit for forward settlement of exchange and sale |
| Item | Closing book balance | Book value at the end of the period | Types of restrictions | Reason for restriction |
| Monetary assets | 16,290,210.00 | 16,290,210.00 | Pledged | Deposits for letter of credit |
| Monetary assets | 6,388,901.19 | 6,388,901.19 | Pledged | Guarantee deposit for bank acceptance |
| Monetary assets | 3,541,350.00 | 3,541,350.00 | Pledged | Deposits for credit card |
| Monetary assets | 1,416,859.57 | 1,416,859.57 | Pledged | Deposits for customs guarantees |
| Monetary assets | 1,494,449.70 | 1,494,449.70 | Pledged | Premium for lease |
| Monetary assets | 49,000.00 | 49,000.00 | Pledged | Guarantee deposit for ETC |
| Fixed assets | 40,901,325.49 | 25,832,626.15 | Mortgaged | Mortgage for bank acceptance |
| Fixed assets | 20,789,909.21 | 9,133,057.17 | Mortgaged | Mortgage for bank loan |
| Intangible assets | 3,198,505.51 | 1,982,663.42 | Mortgaged | Mortgage for bank acceptance |
| Intangible assets | 2,451,822.91 | 1,336,350.05 | Mortgaged | Mortgage for bank loan |
| Total | 262,089,625.28 | 233,032,758.95 |
(2) Restricted assets as of the end of the period
| Item | Opening book balance | Book value at the beginning of the period | Types of restrictions | Reason for restriction |
| Monetary assets | 33,448,671.74 | 33,448,671.74 | Pledged | Guarantee deposit for forward settlement of exchange and sale |
| Monetary assets | 20,893,800.00 | 20,893,800.00 | Pledged | Guarantee deposit for short-term loan |
| Monetary assets | 6,616,370.00 | 6,616,370.00 | Pledged | Deposits for letter of credit |
| Monetary assets | 7,384,067.19 | 7,384,067.19 | Pledged | Guarantee deposit for bank acceptance |
| Monetary assets | 1,393,093.00 | 1,393,093.00 | Pledged | Deposits for customs guarantees |
| Monetary assets | 43,000.00 | 43,000.00 | Pledged | Guarantee deposit for ETC |
| Fixed assets | 40,901,325.49 | 27,776,638.39 | Mortgaged | Mortgage for bank acceptance |
| Fixed assets | 20,789,909.21 | 10,003,152.72 | Mortgaged | Mortgage for bank loan |
| Intangible assets | 3,198,505.51 | 2,046,633.50 | Mortgaged | Mortgage for bank acceptance |
| Intangible assets | 2,451,822.91 | 1,385,386.53 | Mortgaged | Mortgage for bank loan |
| 100% shares of Arrow Fastener Co., LLC [Note] | —— | 481,723,419.57 | Pledge | Pledge for bank loan |
| Total | 137,120,565.05 | 592,714,232.64 |
[Note] 100.00% shares of Arrow Fastener Co., LLC is the net book assets at the beginning of the period
24. Short-term borrowings
| Item | Closing balance | Opening balance |
| Credit borrowing | 884,391,813.12 | 1,199,414,617.82 |
| Mortgage | 10,000,000.00 | 10,000,000.00 |
| Pledge and guaranteed borrowing | 70,827,000.00 | |
| Guaranteed borrowing | 62,000,000.00 | 145,646,000.00 |
| Pledge borrowing | 75,565,506.84 | 20,924,304.95 |
| Interest payable not yet due for accrual | 463,579.69 | 3,077,790.34 |
| Total | 1,103,247,899.65 | 1,379,062,713.11 |
25. Held-for-trading financial liabilities
| Item | Opening balance | Increase for the period | Decrease for the period | Impact of exchange rate changes | Closing balance |
| Held-for-trading financial liabilities | 48,413,710.29 | 3,126,803.29 | 48,830,280.43 | 517,493.08 | 3,227,726.23 |
| including: derivative financial liabilities | 48,413,710.29 | 3,126,803.29 | 48,830,280.43 | 517,493.08 | 3,227,726.23 |
| Total | 48,413,710.29 | 3,126,803.29 | 48,830,280.43 | 517,493.08 | 3,227,726.23 |
26. Notes payable
| Item | Closing balance | Opening balance |
| Bankers' acceptance bill | 18,253,448.48 | 21,096,540.03 |
| Total | 18,253,448.48 | 21,096,540.03 |
27. Accounts payable
| Item | Closing balance | Opening balance |
| Payables for materials procurement | 1,330,757,594.65 | 1,150,990,191.95 |
| Payable expenses | 161,043,215.61 | 165,627,875.06 |
| Payables for project equipment | 75,245,262.28 | 50,257,201.70 |
| Total | 1,567,046,072.54 | 1,366,875,268.71 |
28. Contractual liabilities
| Item | Closing balance | Opening balance |
| Loans | 147,202,549.06 | 131,898,420.14 |
| Total | 147,202,549.06 | 131,898,420.14 |
29. Employee benefits payable
(1) Detailed information
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | |
| Accrual for the current period | Impact of exchange rate changes | ||||
| Short-term remuneration | 258,307,029.37 | 1,952,473,977.70 | 5,591,567.55 | 1,987,287,670.21 | 229,084,904.41 |
| Post-employment benefits - defined contribution plans | 12,371,158.45 | 109,774,105.92 | 509,781.93 | 108,304,905.48 | 14,350,140.82 |
| Total | 270,678,187.82 | 2,062,248,083.62 | 6,101,349.48 | 2,095,592,575.69 | 243,435,045.23 |
(2) Detailed information on Short-term compensation
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | |
| Accrual for the current period | Impact of exchange rate changes | ||||
| Wages, bonuses, allowances and subsidies | 253,037,098.02 | 1,766,204,283.78 | 5,470,546.38 | 1,802,353,632.09 | 222,358,296.09 |
| Employee welfare expenses | 59,063,981.52 | 60,472.07 | 57,865,508.30 | 1,258,945.29 | |
| Social insurance premium | 3,983,299.73 | 89,775,181.36 | 63,052.94 | 89,641,993.68 | 4,179,540.35 |
| Including: Medical insurance premiums | 3,678,123.24 | 82,468,963.73 | 62,766.05 | 82,525,590.17 | 3,684,262.85 |
| Work injury compensation insurance premiums | 301,310.41 | 6,689,077.65 | 286.89 | 6,504,504.82 | 486,170.13 |
| Maternity insurance premiums | 3,866.08 | 617,139.98 | 611,898.69 | 9,107.37 | |
| Housing provident funds | 345,149.56 | 27,166,147.64 | 3,249.45 | 27,187,487.81 | 327,058.84 |
| Labor union funds and | 941,482.06 | 10,264,383.40 | -5,753.29 | 10,239,048.33 | 961,063.84 |
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | |
| Accrual for the current period | Impact of exchange rate changes | ||||
| employee education funds | |||||
| Subtotal | 258,307,029.37 | 1,952,473,977.70 | 5,591,567.55 | 1,987,287,670.21 | 229,084,904.41 |
(3) Details on defined contribution plans
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | |
| Accrual for the current period | Impact of exchange rate changes | ||||
| Basic pension insurance | 12,188,772.91 | 98,798,377.11 | 348,171.81 | 99,739,026.60 | 11,596,295.23 |
| Unemployment insurance premiums | 182,385.54 | 10,975,728.81 | 161,610.12 | 8,565,878.88 | 2,753,845.59 |
| Subtotal | 12,371,158.45 | 109,774,105.92 | 509,781.93 | 108,304,905.48 | 14,350,140.82 |
30. Taxes and rates payable
| Item | Closing balance | Opening balance |
| Business income tax | 97,187,904.30 | 128,337,935.70 |
| Value-added tax | 15,175,202.82 | 25,628,212.44 |
| Property tax | 8,004,245.12 | 6,855,195.19 |
| Stamp duty | 1,823,901.04 | 2,116,945.92 |
| Withheld individual income tax | 2,756,689.72 | 3,844,249.01 |
| Land use tax | 3,360,603.50 | 2,072,352.53 |
| Urban maintenance and construction tax | 561,518.74 | 1,356,721.18 |
| Education surcharge | 322,147.54 | 682,263.36 |
| Local education surcharge | 214,765.00 | 462,433.69 |
| Environmental protection tax | 1,974.70 | 1,442.26 |
| Disabled person's protection fund | 66,367.44 | 61,129.65 |
| Withheld consumption tax | 2,251,893.93 | 4,646,613.97 |
| Withheld VAT | 582,131.10 | 494,411.75 |
| Withheld enterprise income tax | 142,849.16 | 384,048.88 |
| Item | Closing balance | Opening balance |
| Total | 132,452,194.11 | 176,943,955.53 |
31. Other payables
(1) Detailed information
| Item | Closing balance | Opening balance |
| Dividend payable | 8,400,000.00 | |
| Other payables | 29,229,238.62 | 21,198,376.32 |
| Total | 37,629,238.62 | 21,198,376.32 |
(2) Dividend payable
| Item | Closing balance | Opening balance |
| Dividend payable to non-controlling shareholders | 8,400,000.00 | |
| Subtotal | 8,400,000.00 |
(3) Other payables
| Item | Closing balance | Opening balance |
| Temporary receipts payable | 4,920,331.64 | 8,050,261.29 |
| Borrowed funds | 5,055,791.67 | |
| Deposit Guarantee | 6,717,780.30 | 2,453,772.95 |
| Accrued expenses | 1,829,256.00 | 1,447,150.53 |
| Payables for share acquisition | 13,219,688.93 | |
| Other | 2,542,181.75 | 4,191,399.88 |
| Total | 29,229,238.62 | 21,198,376.32 |
32. Non-current liabilities due within one year
| Item | Closing balance | Opening balance |
| Long-term borrowings due within one year | 874,962,000.00 | 233,875,782.07 |
| including: pledge borrowings | 73,520,000.00 | |
| Credit borrowing | 874,962,000.00 | 26,402,268.47 |
| Item | Closing balance | Opening balance |
| Guaranteed borrowing | 133,953,513.60 | |
| Lease liabilities due within one year | 102,552,484.95 | 88,367,583.10 |
| Interest payable on long-term borrowing not yet due for accrual | 616,132.08 | 1,053,468.23 |
| Total | 978,130,617.03 | 323,296,833.40 |
33. Other current liabilities
| Item | Closing balance | Opening balance |
| Output tax amount to be forwarded | 2,050,790.27 | 2,136,266.97 |
| Total | 2,050,790.27 | 2,136,266.97 |
34. Long-term borrowings
| Item | Closing balance | Opening balance |
| Credit borrowing | 708,270.00 | 724,448,825.19 |
| Pledge borrowing | 73,600,000.00 | |
| Interest payable on long-term borrowing not yet due for accrual | 556,126.65 | |
| Total | 708,270.00 | 798,604,951.84 |
35. Lease liabilities
| Item | Closing balance | Opening balance |
| Outstanding lease payments | 298,113,358.92 | 324,601,077.37 |
| Less: unrecognized financing costs | 14,312,589.00 | 6,379,727.38 |
| Total | 283,800,769.92 | 318,221,349.99 |
36. Long-term employee benefits payable
| Item | Closing balance | Opening balance |
| Benefits upon severance | 19,098,027.87 | 19,223,856.97 |
| Total | 19,098,027.87 | 19,223,856.97 |
37. Estimated liabilities
| Item | Closing balance | Opening balance |
| Soil remediation costs | 2,601,750.88 | 2,036,528.30 |
| Product quality warranty | 5,100,895.87 | 2,511,885.60 |
| Total | 7,702,646.75 | 4,548,413.90 |
38. Deferred income
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | Reason for formation |
| Government grants | 2,364,687.74 | 1,120,500.00 | 966,795.25 | 2,518,392.49 | Special subsidization |
| Total | 2,364,687.74 | 1,120,500.00 | 966,795.25 | 2,518,392.49 |
39. Share capital
| Item | Opening balance | Increase/decrease within the current period ("-" for less) | Closing balance | ||||
| New shares issued | Bonus shares | Conversion of capital reserve into share capital | Other | Subtotal | |||
| Total number of shares | 1,202,501,992 | 1,202,501,992 | |||||
40. Capital reserve
(1) Detailed information
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance |
| Capital premium (share premium) | 3,732,447,073.66 | 12,832,066.78 | 4,619,747.84 | 3,740,659,392.60 |
| Other capital reserves | 218,331,862.87 | 40,894,773.69 | 259,226,636.56 | |
| Total | 3,950,778,936.53 | 53,726,840.47 | 4,619,747.84 | 3,999,886,029.16 |
(2) Other notes
1) Notes on changes in Capital reserve - share capital premium)
(i) Increase for the periodThe Company acquired 16.286%, 28.00% and 18.00% interests in Hangzhou Lianhe Electric Manufacturing Co.,Ltd, Hangzhou Liansheng Tools Manufacturing Co., Ltd and Longyou Hugong Forging Three Tools Co., Ltd, heldby their minority shareholders, respectively with a value of RMB 12,818,462.70, RMB 5,056,837.80 and RMB20,097,475.51. When preparing the consolidated financial statements, the differences of RMB 5,754,208.97, RMB64,162.19 and RMB 7,013,695.62 between the long-term equity investment acquired by acquiring minority interests
and the share of net assets of the above companies that should be held by the Company from the consolidation datebased on the new shareholding percentage were included into the capital reserve.(ii) Decrease for the periodThe Company acquired 3.00% and 8.085% interests in Hangzhou Ole-Systems Co., Ltd and Yiyang ToolsManufacturing Co., Ltd held by their minority shareholders, respectively with a value of RMB 800,000.00 and RMB6,902,524.49. When preparing the consolidated financial statements, the differences of RMB 1,899,591.38 andRMB 2,720,156.46 between the long-term equity investment acquired by acquiring minority interests and the shareof net assets of the above companies that should be held by the Company from the consolidation date based on thenew shareholding percentage wrote down the capital reserve.
2) Notes on changes in Capital reserve - Other capital reserves
The share of changes in owners' equity, other than net profit/loss, other comprehensive income and profitdistribution, of Zhejiang Guozi Robotics Co., Ltd., Zhejiang Hangcha Holding Co., Ltd. and Hangzhou ZhongceHaichao Enterprise Management Co., Ltd. that should be held by the Company based on shareholding percentagewas adjusted to increase the Long-term equity investments and Capital reserve - Other capital reserve by RMB14,432,140.68, RMB 21,082,359.51 and RMB 5,380,273.50, respectively.
41. Treasury shares
(1) Detailed information
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance |
| Treasury shares | 236,625,962.00 | 236,625,962.00 | ||
| Total | 236,625,962.00 | 236,625,962.00 |
(2) Other notes
By resolution of the 11th session of the Company's 5th Board of Directors meeting, the Company has agreed to buyback part of the Company's shares by means of centralized bidding, with its own funds of not less than RMB 180million and not more than RMB 360 million. The repurchase price of shares shall not exceed RMB 36 per share,and the repurchase period shall not exceed 12 months from the date of approval by the board of directors. As of theend of the period, the Company's special account for share repurchase has cumulatively repurchased 8,023,810shares and paid a total price of RMB 236,625,962.00 therefor.
42. Other comprehensive income
| Item | Opening balance | Jan.-Sept. 2022 | Closing balance | |||||
| Other comprehensive income after tax | Less: Amounts of transferring from other comprehensive income recognized in previous periods to retained | |||||||
| Accrued amount before income tax in the period | Less: Amounts of transferring from other comprehensive income recognized in previous | Less: Income tax expenses | After-tax amount attributable to the parent Company | After-tax amount attributable to non-controlling shareholders | ||||
| periods to gains and losses in the period | earnings in the period (After-tax amount attributable to the parent Company) | |||||||
| Not to be reclassified subsequently to profit or loss | -88,739,461.08 | -7,080,703.80 | -1,236,563.40 | -5,844,140.40 | -94,583,601.48 | |||
| Including: Remeasurements of the net defined benefit plan | -88,739,461.08 | -7,080,703.80 | -1,236,563.40 | -5,844,140.40 | -94,583,601.48 | |||
| To be reclassified subsequently to profit or loss | 203,748,377.20 | 122,288,662.27 | 122,288,662.27 | 621,935.42 | 326,037,039.47 | |||
| Including: Items under equity method that may be reclassified to profit or loss | -54,066,268.84 | 21,100,545.46 | 21,100,545.46 | -32,965,723.38 | ||||
| Translation reserve | 257,814,646.04 | 101,188,116.81 | 101,188,116.81 | 621,935.42 | 359,002,762.85 | |||
| Total of other comprehensive income | 115,008,916.12 | 115,207,958.47 | -1,236,563.40 | 116,444,521.87 | 621,935.42 | 231,453,437.99 |
43. Surplus reserve
(1) Detailed information
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance |
| Statutory surplus reserve | 663,843,379.04 | 125,117,089.02 | 788,960,468.06 | |
| Total | 663,843,379.04 | 125,117,089.02 | 788,960,468.06 |
(2) Other notes
According to the provisions of the Company's articles of association, a statutory surplus reserve of 10% shall bewithdrawn from the net profit realized by the parent Company in the period.
44. Undistributed profit
(1) Detailed information
| Item | Current period cumulative | Preceding period comparative |
| Undistributed profits at the beginning of the period | 7,702,625,494.43 | 6,348,070,987.28 |
| Add: Net profits attributable to owners of the parent Company | 1,691,612,756.79 | 1,419,854,709.56 |
| Less: Provision of statutory surplus reserve | 125,117,089.02 | 65,300,202.41 |
| Dividends payable for common shares | 407,317,051.79 | |
| Undistributed profits at the end of the period | 8,861,804,110.41 | 7,702,625,494.43 |
(2) Other information
According to the resolutions of the second meeting of the sixth Board of Directors and the third temporary GeneralMeetings of Shareholders in 2023 of the Company, the Company distributed rights for the first three quarter of 2023.In December 2023, the Company distributed RMB 1.75 (tax included) per 10 shares to all shareholders based onthe total of 1,194,478,182 shares (i.e., total share capital of 1,202,501,992 shares excluding repurchased 8,023,810shares), and cash dividends of RMB 209,033,681.85 were distributed in total.According to the resolutions of the thirtieth meeting of the fifth Board of Directors and the General Meetings ofShareholders in 2022 of the Company, the Company distributed rights for the year of 2022. In June 2023, theCompany distributed RMB 1.66 (tax included) per 10 shares to all shareholders based on the total of 1,194,478,182shares (i.e., total share capital of 1,202,501,992 shares excluding repurchased 8,023,810 shares), and cash dividendsof RMB 198,283,372.94 were distributed in total.(II) Notes to the Consolidated income statement Items
1. Operating revenues / operating costs
(1) Detailed information
| Item | Current period cumulative | Preceding period comparative | ||
| Revenue | Cost | Revenue | Cost | |
| Main business income | 10,865,309,434.63 | 7,423,231,250.13 | 12,545,286,576.78 | 9,244,404,166.19 |
| Other income | 64,683,367.69 | 30,890,842.06 | 64,903,013.55 | 22,518,138.56 |
| Total | 10,929,992,802.32 | 7,454,122,092.19 | 12,610,189,590.33 | 9,266,922,304.75 |
| including: revenue generated from the contracts with the clients | 10,905,014,276.29 | 7,448,115,357.77 | 12,586,390,194.72 | 9,261,882,586.65 |
(2) Breakdown information of the revenue generated from contracts with clients by major categories
1) The breakdown information of operating revenue by products or service types is detailed in Note XVI "Othersignificant matters".
2) The revenue generated from contracts with clients is broken down by the time of transfer of goods or service
| Item | Current period cumulative | Preceding period comparative |
| Revenue is recognized at a point in time | 10,905,014,276.29 | 12,586,390,194.72 |
| Subtotal | 10,905,014,276.29 | 12,586,390,194.72 |
(3) The revenue recognized in the period and included in the opening book value of contractual liabilities is RMB131,898,420.14.
2. Taxes and surcharges
| Item | Current period cumulative | Preceding period comparative |
| Property tax | 19,937,301.79 | 16,912,104.43 |
| Urban maintenance and construction tax | 7,241,177.65 | 11,571,038.85 |
| Stamp duty | 7,168,194.80 | 8,040,968.45 |
| Education surcharge | 3,574,975.46 | 5,189,547.92 |
| Land use tax | 3,341,880.06 | 2,084,005.49 |
| Local education surcharge | 2,383,316.95 | 3,459,698.53 |
| Vehicle and vessel tax | 50,150.66 | 58,382.49 |
| Environmental protection tax | 14,145.28 | 13,002.52 |
| Total | 43,711,142.65 | 47,328,748.68 |
3. Selling expenses
| Item | Current period cumulative | Preceding period comparative |
| Employee benefits expenses | 418,565,790.97 | 398,662,746.55 |
| Advertising and promotional expenses | 259,757,461.00 | 234,815,034.42 |
| Office expenses | 77,260,165.18 | 53,295,831.67 |
| Depreciation and amortization | 26,148,085.42 | 16,451,396.81 |
| Consulting fees | 19,448,345.84 | 14,737,583.22 |
| Travel expenses | 11,266,789.56 | 6,520,356.14 |
| Housing rent | 9,659,563.96 | 8,096,364.87 |
| Item | Current period cumulative | Preceding period comparative |
| Employee benefits expenses | 418,565,790.97 | 398,662,746.55 |
| Commodity inspection fees | 6,518,131.28 | 5,278,754.56 |
| Insurance premiums | 7,255,364.16 | 4,133,914.99 |
| Other | 15,404,278.61 | 15,236,456.57 |
| Total | 851,283,975.98 | 757,228,439.80 |
4. Administrative expenses
| Item | Current period cumulative | Preceding period comparative |
| Employee benefits expenses | 473,117,714.26 | 474,556,828.40 |
| Office expenses | 101,251,279.49 | 97,032,204.35 |
| Depreciation and amortization | 83,879,427.97 | 77,866,531.84 |
| Consulting fees | 72,053,321.84 | 64,751,668.35 |
| Travel expenses | 17,686,407.52 | 17,871,137.28 |
| Business entertainment expenses | 3,794,559.90 | 3,874,433.78 |
| Taxes and rates | 2,690,241.29 | 2,793,774.11 |
| Greening expenses | 2,273,011.25 | 2,976,006.64 |
| Other | 19,437,678.82 | 19,238,855.11 |
| Total | 776,183,642.34 | 760,961,439.86 |
5. R&D expenses
| Item | Current period cumulative | Preceding period comparative |
| Employee benefits expenses | 191,340,299.56 | 198,631,442.97 |
| Direct input | 95,403,069.21 | 83,802,929.10 |
| Depreciation and amortization | 13,275,762.42 | 15,283,842.90 |
| Other | 22,516,962.43 | 21,726,320.19 |
| Total | 322,536,093.62 | 319,444,535.16 |
6. Financial expenses
| Item | Current period cumulative | Preceding period comparative |
| Interest expenses | 84,769,466.12 | 102,114,891.52 |
| Interest income | -139,528,683.81 | -83,482,441.75 |
| Profits or losses on foreign exchange | -163,005,391.80 | -146,152,161.07 |
| Bank charges | 10,263,086.43 | 16,664,536.54 |
| Total | -207,501,523.06 | -110,855,174.76 |
7. Other income
| Item | Current period cumulative | Preceding period comparative | Amounts included in non-recurring gains and losses of the period |
| Government grants related to assets | 866,795.25 | 1,110,756.89 | 866,795.25 |
| Government grants related to income | 33,110,021.82 | 49,227,280.96 | 29,344,791.58 |
| Refund of handling fees for withholding personal income tax | 650,837.62 | 333,584.83 | |
| Additional deduction of value-added tax | 3,554,586.96 | ||
| Total | 38,182,241.65 | 50,671,622.68 | 30,211,586.83 |
8. Investment income
| Item | Current period cumulative | Preceding period comparative |
| Income from long-term equity investments recognized under the equity method | 342,117,235.54 | 186,224,854.43 |
| Investment income from disposal of long-term equity investments | 70,248.49 | |
| Discounting loss on receivables financing | -17,897,921.26 | -7,931,415.18 |
| Investment income from disposal of held-for-trading financial assets | -82,927,747.51 | -13,836,147.37 |
| Including: derivative financial instruments | -84,843,046.20 | -25,565,069.36 |
| Bank financial products | 1,915,298.69 | 2,368,356.03 |
| Investment in equity instruments | 9,360,565.96 | |
| Dividend income from investments in other equity instruments during the holding period | 12,400,000.00 | |
| Total | 241,291,566.77 | 176,927,540.37 |
9. Gains on changes in fair value
| Item | Current period cumulative | Preceding period comparative |
| Held-for-trading financial assets | 50,175,050.93 | -41,392,762.63 |
| Including: Gains on changes in fair value from derivative financial liabilities | 49,702,799.44 | -41,392,762.63 |
| including: financial products | 472,251.49 | |
| Gains on changes in fair value of other equity instrument investments | -9,187,665.41 | |
| Total | 50,175,050.93 | -50,580,428.04 |
10. Credit impairment loss
| Item | Current period cumulative | Preceding period comparative |
| Loss due to bad debt | -3,493,974.10 | 19,113,580.83 |
| Total | -3,493,974.10 | 19,113,580.83 |
11. Assets impairment loss
| Item | Current period cumulative | Preceding period comparative |
| Loss from decline in value of inventories | -23,216,967.50 | -43,189,938.27 |
| Fixed assets impairment loss | -3,305,922.73 | |
| Goodwill impairment losses | -1,667,847.06 | -14,828,934.37 |
| Total | -24,884,814.56 | -61,324,795.37 |
12. Gains on asset disposal
| Item | Current period cumulative | Preceding period comparative | Amounts included in non-recurring gains and losses of the period |
| Gains on disposal of fixed assets | 5,561,483.02 | -15,154,452.66 | 5,561,483.02 |
| Gains on disposal of intangible assets | -20,689.66 | -1,816,371.00 | -20,689.66 |
| Gains on disposal of right-of-use assets | 269,664.40 | 75,858.93 | 269,664.40 |
| Total | 5,810,457.76 | -16,894,964.73 | 5,810,457.76 |
13. Non-operating revenue
| Item | Current period cumulative | Preceding period comparative | Amounts included in non-recurring gains and losses of the period |
| Income from compensation | 1,614,376.69 | 142,321.59 | 1,614,376.69 |
| Accounts unable to be paid | 968,138.29 | 927,736.08 | 968,138.29 |
| Gains from damage and scrapping of non-current assets | 38,194.24 | 245.38 | 38,194.24 |
| Other | 208,666.21 | 112,707.39 | 208,666.21 |
| Total | 2,829,375.43 | 1,183,010.44 | 2,829,375.43 |
14. Non-operating expenditures
| Item | Current period cumulative | Preceding period comparative | Amounts included in non-recurring gains and losses of the period |
| Expenditure for compensation | 3,042,379.23 | 9,616,939.96 | 3,042,379.23 |
| Outward donations | 2,730,011.37 | 2,381,483.86 | 2,730,011.37 |
| Losses from damage and scrapping of non-current assets | 4,193,427.44 | 7,507,908.93 | 4,193,427.44 |
| Fines | 307,807.49 | 846,535.48 | 307,807.49 |
| Other | 584,453.27 | 628,789.12 | 584,453.27 |
| Total | 10,858,078.80 | 20,981,657.35 | 10,858,078.80 |
15. Income tax expenses
(1) Detailed information
| Item | Current period cumulative | Preceding period comparative |
| Current income tax expenses | 261,599,598.13 | 273,828,973.28 |
| Deferred income tax expenses | 32,395,692.53 | -51,729,378.86 |
| Total | 293,995,290.66 | 222,099,594.42 |
(2) Accounting adjustment process for profits and income tax expenses
| Item | Current period cumulative | Preceding period comparative |
| Total profits | 1,988,709,203.68 | 1,667,273,205.67 |
| Income tax expenses calculated based on applicable tax rates to the parent Company | 298,306,380.55 | 250,090,980.85 |
| Impact of different tax rates applicable to subsidiaries | 27,889,299.65 | 16,972,963.30 |
| Impact of adjusting income tax expenses in previous periods | 8,651,068.49 | 23,824,878.53 |
| Impact of non-taxable income | -3,691,860.64 | -7,509,723.61 |
| Impact of non-deductible costs, expenses, and losses | 3,759,418.30 | 7,280,854.51 |
| Impact of applying deductible losses for which no deferred income tax assets have been recognized in previous periods | -21,053,086.14 | -20,962,995.36 |
| Impact of investment income from long-term equity investments recognized under the equity method | -51,553,276.20 | -28,150,792.19 |
| Impact of deductible temporary differences or deductible losses for which no deferred income tax assets have been recognized in the current period | 67,702,780.72 | 17,778,857.42 |
| Impact of additional deduction for technical development expenses and disabled person's wages | -36,015,434.07 | -37,225,429.03 |
| Income tax expenses | 293,995,290.66 | 222,099,594.42 |
16. Other comprehensive income after tax
Other comprehensive income after tax is detailed in Note 43 of (I) "Notes to the consolidated balance sheet items"under VII. "Notes to the Consolidated Financial Statements Items".
(III) Notes to the Consolidated cash flow statement Items
1. Cash receipts or payments related to important investment activities
Net cash payments for the acquisition of subsidiaries & other business units
| Item | Current period cumulative | Preceding period comparative |
| Cash or cash equivalents paid in the current period for business combination occurring in the current period | 127,498,351.89 | 76,724,758.42 |
| including: workwear and labor protection equipment-related asset group purchased by Scruffs Workwear Ltd | 127,498,351.89 | |
| Geelong Orchid Holding Limited | 47,973,954.65 | |
| BeA Company | 28,750,803.77 | |
| Net cash payments for the acquisition of subsidiaries | 127,498,351.89 | 76,724,758.42 |
2. Other cash receipts or payments related to operating, investment and financing activities
(1) Other cash receipts related to operating activities
| Item | Current period cumulative | Preceding period comparative |
| Recovered deposits for bankers' acceptance bills and letters of credit | 14,000,437.19 | 27,725,700.00 |
| Interest income | 129,624,444.26 | 76,728,216.03 |
| Income from government grants | 34,230,521.82 | 46,029,953.90 |
| Operating lease income | 24,978,526.03 | 20,667,575.93 |
| Recovered deposits for customs guarantees | 700,000.00 | |
| Other | 5,371,976.71 | 230,323.25 |
| Total | 208,205,906.01 | 172,081,769.11 |
2. Other cash payments related to operating activities
| Item | Current period cumulative | Preceding period comparative |
| Current operating costs | 1,118,626,858.56 | 1,146,808,817.06 |
| Payments for deposits for bankers' acceptance bills and letters of credit, and credit cards | 26,220,461.19 | 14,000,437.19 |
| Other | 6,250,541.53 | 11,076,711.72 |
| Total | 1,151,097,861.28 | 1,171,885,965.97 |
3. Other cash receipts related to investing activities
| Item | Current period cumulative | Preceding period comparative |
| Recovered deposits for purchasing forward settlement and sale of foreign exchange | 33,448,671.74 | 69,702,798.00 |
| Recovered deposits for project performance | 492,906.98 | |
| Total | 33,448,671.74 | 70,195,704.98 |
4. Other cash payments related to investing activities
| Item | Current period cumulative | Preceding period comparative |
| Deposits for purchasing forward settlement and sale of foreign exchange | 21,496,066.60 | 100,856,217.74 |
| Loss on investment in forward settlement and sale of foreign exchange | 85,001,646.20 | 29,020,494.96 |
| Total | 106,497,712.80 | 129,876,712.70 |
5. Other cash receipts related to financing activities
| Item | Current period cumulative | Preceding period comparative |
| Recovered deposits for bank loans | 20,893,800.00 | |
| Received discount payments for bills issued within the scope of consolidation | 198,169,166.67 | 99,266,666.67 |
| Receipt of Borrowed funds | 5,000,000.00 | |
| Total | 219,062,966.67 | 104,266,666.67 |
6. Other cash payments related to financing activities
| Item | Current period cumulative | Preceding period comparative |
| Funds paid for share repurchase | 50,184,047.52 | |
| Funds paid for acquiring non-controlling interests | 32,455,611.57 | |
| Repayment of Borrowed funds and their interests | 5,197,708.36 | 602,271,700.00 |
| Repayment of lease liabilities and interests | 123,288,119.76 | 86,735,381.29 |
| Handling fees for financing guarantees and receivables financing transfers | 17,897,921.26 | 7,931,415.18 |
| Payment of deposits for bank loans | 144,071,225.10 | 20,893,800.00 |
| Payment of deposits for lease of right-of-use assets | 1,494,449.70 | |
| Payment for stock issue | 16,273,353.87 | |
| Total | 324,405,035.75 | 784,289,697.86 |
3. Additional information on cash flow statement
| Additional information | Current period cumulative | Preceding period comparative |
| (1) Adjustment of net profits to cash flows from operating activities: | ||
| Net profit | 1,694,713,913.02 | 1,445,173,611.25 |
| Add: Provision for impairment of assets | 28,378,788.66 | 42,211,214.54 |
| Depreciation of fixed assets, depletion of oil and gas assets, and depreciation of productive biological assets | 214,351,487.73 | 181,387,033.50 |
| Depreciation of right-of-use assets | 113,387,781.38 | 98,348,716.39 |
| Amortization of intangible assets | 38,183,264.73 | 32,283,200.07 |
| Amortization of long-term amortized expenses | 18,665,725.17 | 16,566,519.35 |
| Loss on disposal of fixed assets, intangible assets, and other long-term assets (or less: income) | -5,810,457.76 | 16,894,964.73 |
| Loss on scrapping of fixed assets (or less: income) | 4,155,233.20 | 7,507,663.55 |
| Loss from changes in fair value (or less: income) | -50,175,050.93 | 50,580,428.04 |
| Financial expenses (or less: income) | -78,235,925.68 | -44,037,269.55 |
| Investment losses (or less: income) | -241,291,566.77 | -176,927,540.37 |
| Decrease in deferred income tax assets (or less: increase) | 16,926,252.12 | -29,523,941.16 |
| Increase in deferred income tax liabilities (or less: decrease) | 37,930,071.86 | -26,001,565.70 |
| Decrease in inventory (or less: increase) | 219,605,808.88 | -24,001,558.52 |
| Decrease in operating receivables (or less: increase) | -21,476,546.56 | 313,928,739.58 |
| Additional information | Current period cumulative | Preceding period comparative |
| Increase in operating payables (or less: decrease) | 136,546,146.60 | -272,553,573.31 |
| Other | ||
| Net cash flows from operating activities | 2,125,854,925.65 | 1,631,836,642.39 |
| (2) Major investment and financing activities involving no cash receipts and payments: | ||
| Debt converted to capital | ||
| Convertible corporate bonds maturing within one year | ||
| Financial lease of fixed assets | ||
| (3) Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 4,983,979,749.60 | 4,793,427,180.47 |
| Less: Opening balance of cash | 4,793,427,180.47 | 4,001,186,241.18 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 190,552,569.13 | 792,240,939.29 |
4. Composition of cash and cash equivalents
(1) Detailed information
| Item | Closing balance | Opening balance |
| 1) Cash | 4,983,979,749.60 | 4,793,427,180.47 |
| including: cash on hand | 700,564.56 | 4,328,053.84 |
| Bank deposits readily available for payment | 4,982,842,025.49 | 4,788,725,570.94 |
| Other monetary fund readily available for payment | 437,159.55 | 373,555.69 |
| Central bank deposit available for payment | ||
| Deposit from the same trade | ||
| Call loan to the same trade | ||
| 2) Cash equivalents | ||
| including: bond investment maturing within three months | ||
| 3) Closing balance of cash and cash equivalents | 4,983,979,749.60 | 4,793,427,180.47 |
| including: cash and cash equivalents for limited use by parent Company or subsidiaries within the group |
(2) Cash and cash equivalents held by the Company for limited use
| Item | Closing balance | Opening balance | Reasons for their limited use and for their use as cash and cash equivalents |
| Raised funds | 115,301,372.56 | 259,919,361.39 | For limited use but being readily available |
| Subtotal | 115,301,372.56 | 259,919,361.39 |
(3) Monetary fund not belonging to cash and cash equivalents
| Item | Closing balance | Opening balance | Reasons for not belonging to cash and cash equivalents |
| Guarantee deposit for forward settlement of exchange and sale | 21,496,066.60 | 33,448,671.74 | Not readily available |
| Guarantee deposit for short-term loan | 144,071,225.10 | 20,893,800.00 | Not readily available |
| Deposits for letter of credit | 16,290,210.00 | 6,616,370.00 | Not readily available |
| Guarantee deposit for bank acceptance | 6,388,901.19 | 7,384,067.19 | Not readily available |
| Deposits for credit card | 3,541,350.00 | Not readily available | |
| Premium for lease | 1,494,449.70 | Not readily available | |
| Deposits for customs guarantees | 1,416,859.57 | 1,393,093.00 | Not readily available |
| Guarantee deposit for ETC | 49,000.00 | 43,000.00 | Not readily available |
| Subtotal | 194,748,062.16 | 69,779,001.93 |
5. Changes of liabilities related to financing activities
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Cash Change | Non-cash change | Cash Change | Non-cash change | |||
| Short-term borrowings | 1,379,062,713.11 | 2,366,725,718.44 | 112,068,452.45 | 2,754,608,984.35 | 1,103,247,899.65 | |
| Long-term borrowings (including those due within one year) | 1,033,534,202.14 | 170,145,490.62 | 327,393,290.68 | 876,286,402.08 | ||
| Lease liabilities (including those due | 406,588,933.09 | 103,831,552.56 | 121,326,898.40 | 2,740,332.38 | 386,353,254.87 | |
| Item | Opening balance | Increase for the period | Decrease for the period | Closing balance | ||
| Cash Change | Non-cash change | Cash Change | Non-cash change | |||
| within one year) | ||||||
| Subtotal | 2,819,185,848.34 | 2,366,725,718.44 | 386,045,495.63 | 3,203,329,173.43 | 2,740,332.38 | 2,365,887,556.60 |
(2) Major activities involving no cash receipts and payments
Amount transferred through commercial bill endorsement involving no cash receipts and payments
| Item | Current period cumulative | Preceding period comparative |
| Amount of commercial bills transferred through endorsement | 22,963,797.20 | 18,854,235.67 |
| including: payment for goods | 22,474,502.07 | 18,023,192.60 |
| Payment for acquisition of fixed assets and other long-term assets | 489,295.13 | 831,043.07 |
(IV) Others
1. Monetary items in foreign currencies
(1) Detailed information
| Item | Closing balance of foreign currencies | Exchange rate for translation | Closing balance in RMB after translation |
| Monetary assets | 2,729,050,133.86 | ||
| Including: USD | 283,638,365.93 | 7.0827 | 2,008,925,454.37 |
| EUR | 35,891,676.59 | 7.8592 | 282,079,864.66 |
| HKD | 16,054,387.26 | 0.9062 | 14,548,485.74 |
| CHF | 2,882,267.55 | 8.4184 | 24,264,081.14 |
| GBP | 40,967,826.29 | 9.0411 | 370,394,214.27 |
| CAD | 7,498.20 | 5.3673 | 40,245.09 |
| AUD | 365,798.81 | 4.8484 | 1,773,538.95 |
| NZD | 46.98 | 4.4998 | 211.40 |
| THB | 12,090,649.50 | 0.2074 | 2,507,600.71 |
| JPY | 109,425.00 | 0.0502 | 5,493.14 |
| VND | 61,162,031,163.00 | 0.00029207 | 17,863,594.44 |
| Mexican peso | 48,790.00 | 0.4181 | 20,399.10 |
| Riel | 4,016,920.00 | 0.0017 | 6,828.76 |
| CZK | 10,217,807.30 | 0.3193 | 3,262,545.87 |
| DKK | 1,911,227.09 | 1.0536 | 2,013,668.86 |
| SEK | 1,470,735.93 | 0.7110 | 1,045,693.25 |
| NOK | 428,283.94 | 0.6963 | 298,214.11 |
| Accounts receivable | 2,033,380,391.40 | ||
| Including: USD | 245,075,271.83 | 7.0827 | 1,735,794,627.79 |
| EUR | 31,455,655.93 | 7.8592 | 247,216,291.09 |
| HKD | 48,125.18 | 0.9062 | 43,611.04 |
| CHF | 918,668.71 | 8.4184 | 7,733,720.67 |
| GBP | 3,470,278.31 | 9.0411 | 31,375,133.23 |
| VND | 419,666,860.68 | 0.00029207 | 122,572.10 |
| CZK | 18,687,041.62 | 0.3193 | 5,966,772.39 |
| DKK | 1,994,443.14 | 1.0536 | 2,101,345.29 |
| SEK | 262,658.69 | 0.7110 | 186,750.33 |
| NOK | 1,083,126.78 | 0.6963 | 754,181.18 |
| AUD | 430,118.45 | 4.8484 | 2,085,386.29 |
| Receivables financing | 202,966,744.21 | ||
| Including: USD | 28,656,690.84 | 7.0827 | 202,966,744.21 |
| Long-term receivables | 335,454.55 | ||
| Including: CHF | 39,847.78 | 8.4184 | 335,454.55 |
| Short-term borrowings | 581,387,930.81 | ||
| Including: USD | 20,029,200.00 | 7.0827 | 141,860,814.84 |
| EUR | 31,968,826.53 | 7.8592 | 251,249,401.46 |
| CHF | 22,314,866.89 | 8.4184 | 187,855,475.43 |
| GBP | 46,702.18 | 9.0411 | 422,239.08 |
| Accounts payable | 562,857,026.53 | ||
| Including: USD | 47,870,102.26 | 7.0827 | 339,049,573.28 |
| EUR | 14,863,906.17 | 7.8592 | 116,818,411.37 |
| HKD | 2,408,224.42 | 0.9062 | 2,182,332.97 |
| CHF | 3,078,763.12 | 8.4184 | 25,918,259.45 |
| GBP | 99,544.82 | 9.0411 | 899,994.67 |
| AUD | 219,713.71 | 4.8484 | 1,065,259.95 |
| JPY | 66,139,778.54 | 0.0502 | 3,320,216.88 |
| THB | 64,406,570.64 | 0.2074 | 13,357,922.75 |
| VND | 181,413,623,558.20 | 0.00029207 | 52,985,477.03 |
| CZK | 19,623,072.75 | 0.3193 | 6,265,647.13 |
| DKK | 16,218.19 | 1.0536 | 17,087.48 |
| SEK | 693,947.67 | 0.7110 | 493,396.79 |
| NOK | 694,308.17 | 0.6963 | 483,446.78 |
| Non-current liabilities due within one year | 498,074,049.44 | ||
| Including: USD | 62,890,640.00 | 7.0827 | 445,435,535.93 |
| EUR | 1,634,740.37 | 7.8592 | 12,847,751.52 |
| HKD | 138,403.40 | 0.9062 | 125,421.16 |
| CHF | 3,603,977.27 | 8.4184 | 30,339,722.25 |
| VND | 31,929,395,619.42 | 0.00029207 | 9,325,618.58 |
| Long-term borrowings | 708,270.00 | ||
| Including: USD | 100,000.00 | 7.0827 | 708,270.00 |
| Lease liabilities | 238,759,985.48 | ||
| Including: USD | 211,847.00 | 7.0827 | 1,500,448.75 |
| EUR | 3,505,841.92 | 7.8592 | 27,553,112.82 |
| CHF | 24,631,151.80 | 8.4184 | 207,354,888.31 |
| VND | 8,051,274,000.00 | 0.00029207 | 2,351,535.60 |
(2) Description of overseas operating entities
2. Lease
(1) The Company operates as a lessee
1) The information on right-of-use assets is detailed in Note 17 of (I) under VII. "Notes to the Consolidated FinancialStatements Items"..
2) The accounting policy of the Company related to short-term leases and leases of low-value assets is detailed inNote 31 under V. "Significant Accounting Policies and Accounting Estimates". The expenses for short-term leasesand leases of low-value assets recognized in current profits and losses are as follows:
| Item | Principal operating locations | Bookkeeping currency |
| BeA GmbH and its subsidiaries | Germany, Austria, Australia, France, Czech Republic, United States, Norway, Sweden, Switzerland, Slovakia, Spain, Italy, and United Kingdom | EUR, AUD, USD, CHF, GBP, CZK, SEK, and NOK |
| GreatStar Tools USA, INC. and its subsidiaries | The US | USD |
| Lista Holding AG and its subsidiaries | Switzerland, Austria, Germany, France, Spain, Italy, United Kingdom, and Czech Republic | CHF, EUR, GBP, and CZK |
| Hong Kong GreatStar International Co., Ltd. | Hong Kong | USD |
| Item | Current period cumulative | Preceding period comparative |
| Expenses for short-term lease | 15,101,440.22 | 41,007,534.99 |
| The expenses for lease of low-value assets (excluding short-term lease) | 1,471,965.78 | 640,296.62 |
| Total | 16,573,406.00 | 41,647,831.61 |
3) Current profits and losses and cash flow related to leasing
| Item | Current period cumulative | Preceding period comparative |
| Interest expense for lease liabilities | 9,930,569.77 | 10,349,638.07 |
| Income obtained from subleasing right-of-use assets | 1,974,154.92 | |
| Total cash outflow related to leasing | 140,625,880.63 | 128,383,212.90 |
4) The analysis of the maturity period of lease liabilities and corresponding liquidity risk Management are detailedin Note (II) under XI. "Risks Related to Financial Instruments".
(2) The Company as lessor
1) Operating leases
(i) Lease income
| Item | Current period cumulative | Preceding period comparative |
| Lease income | 24,978,526.03 | 23,799,395.61 |
(ii) Operating lease assets
| Item | Closing balance | Opening balance |
| Fixed assets | 36,465,996.45 | 10,845,503.63 |
| Investment property | 117,273,455.37 | 122,158,556.01 |
| Subtotal | 153,739,451.82 | 133,004,059.64 |
Fixed assets under operating leases are detailed in Note 15 of (I) under VII. "Notes to the Consolidated FinancialStatements Items".(iii) the amount of undiscounted lease receipts in the future from an irrevocable lease under the lease contract withthe lessee
| Remaining period | Closing balance | Opening balance |
| Within 1 year | 18,883,203.89 | 17,223,063.97 |
| More than 1 year | 111,517,578.57 | 110,837,023.47 |
| Total | 130,400,782.46 | 128,060,087.44 |
2) Finance lease
(i) Current profits and losses related to finance lease
| Item | Current period cumulative | Preceding period comparative |
| Financing income from net leasing investment | 102,390.60 | 84,672.00 |
(ii) Reconciliation table of undiscounted lease receipts and net leasing investment
| Item | Closing balance | Opening balance |
| Undiscounted lease receipts | 447,450.84 | 401,632.86 |
| less: unrealized financing gains related to lease receipts | 3,685.91 | 4,002.95 |
| Net leasing investment | 443,764.93 | 397,629.91 |
(iii) the amount of undiscounted lease receipts in the future from an irrevocable lease under the lease contract withthe lessee
| Remaining period | Closing balance | Opening balance |
| Within 1 year | 108,310.38 | 98,061.60 |
| 1-2 years | 109,439.20 | 78,321.04 |
| 2-3 years | 109,439.20 | 78,321.04 |
| 3-4 years | 101,020.80 | 78,321.04 |
| 4-5 years | 19,241.26 | 68,608.14 |
| Total | 447,450.84 | 401,632.86 |
8. Changes in the scope of consolidations
(I) Consolidations of businesses not under common control
1. Consolidations of businesses not under common control in the period
(1) General information
| Target entity | Acquisition point of time | Acquisition Cost | Acquisition method | Date of purchase |
| Workwear and labor protection equipment-related asset group purchased by Scruffs Workwear Ltd | September 25, 2023 | 127,498,351.89 | Agreement transfer | September 25, 2023 |
(Continued)
| Target entity | Basis of recognizing date of purchase | Revenues of target entity from date of purchase to end of period | Net profits of target entity from date of purchase to end of period | Cash flow of target entity from date of purchase to end of period | ||
| Cash inflows from operating activities | Cash inflows from investing activities | Cash inflows from financing activities | ||||
| Workwear and labor protection equipment-related asset group purchased by Scruffs Workwear Ltd | Transfer of control | 32,150,809.22 | -1,132,059.10 | -24,035,583.04 | 140,146,091.10 | |
2. Consolidation costs and goodwill
(1) Detailed information
| Item | Workwear and labor protection equipment-related asset group purchased by Scruffs Workwear Ltd |
| Consolidation costs | |
| Cash | 127,498,351.89 |
| Total consolidation costs | 127,498,351.89 |
| Less: Share in fair value of identifiable net assets obtained | 103,112,529.66 |
| Goodwill | 24,385,822.23 |
(2) Notes on methods for determining the fair value of consolidation costs, contingent considerations, and theirchanges
3. Identifiable assets and liabilities of target entities on dates of purchase
(1) Detailed information
| Item | Workwear and labor protection equipment-related asset group purchased by Scruffs Workwear Ltd | |
| Date of purchase Fair value | Date of purchase Book value | |
| Assets | ||
| Inventories | 55,952,873.55 | 55,952,873.55 |
| Intangible assets | 100,839,127.00 | |
| Liabilities | ||
| Payables | 29,982,276.04 | 29,982,276.04 |
| Deferred tax liability | 23,697,194.85 | |
| Net assets | 103,112,529.66 | 25,970,597.51 |
| Item | Workwear and labor protection equipment-related asset group purchased by Scruffs Workwear Ltd | |
| Date of purchase Fair value | Date of purchase Book value | |
| Less: Non-controlling interests | ||
| Acquired net assets | 103,112,529.66 | 25,970,597.51 |
(2) Method for determining the fair value of identifiable assets and liabilities
Determined with reference to the fair value of each of identifiable assets and liabilities after being appraised by anasset appraisal agency in an asset-based method.(II) Changes in the scope of consolidation due to other reasons
1. Increase of the scope of consolidation
| Company name | Method of equity acquisition | Date of equity acquisition | Contribution | Proportion of contribution |
| GreatStar Tools Germany GmbH | Established | April 13, 2023 | EUR 25,000.00 | 100.00% |
| GreatStar United Kingdom Ltd | Established | June 12, 2023 | GBP 55,000,200.00 | 100.00% |
| Scruffs Workwear Ltd | Established | August 7, 2023 | GBP 100.00 | 100.00% |
| Lista Eastern Europe spol. s.r.o | Established | October 18, 2023 | Czech Krone 3 million | 100.00% |
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd (HDKJ) | Established | October 20, 2023 | No contributions made as of December 31, 2023 | 100.00% |
2. Decrease of the scope of consolidation
| Company name | Method of equity disposal | Point of time of equity disposal | Net assets at the date of disposal | From the beginning of the period until the date of disposal Net profit |
| Geelong Sales (Macau Commercial) Limited | Cancelled | May 9, 2023 | 57,874,309.08 | 2,387,724.46 |
| Guangdong Shiwanke Electrical Appliance Co., Ltd. | Cancelled | July 26, 2023 | 6,605,345.92 | 1,176,240.13 |
| Shenzhen Workpro Technology Co., Ltd. | Cancelled | June 29, 2023 | -3,414.52 | 5,215.08 |
| Newland. LLC | Cancelled | June 28, 2023 | 1,034,009.91 | 2,043,398.90 |
IX. Interests in other entities
1. Equity in subsidiaries
(I) Composition of the business group
1. The Company incorporated 92 subsidiaries, including Zhejiang GreatStar Tools Co., Ltd, into the consolidatedfinancial statements.
(2) General information on major subsidiaries
| Subsidiary | Registered capital | Principal operating location and registration place | Nature of business | Holding proportion (%) | Method of acquisition | |
| Direct | Indirect | |||||
| Zhejiang GreatStar Tools Co., Ltd. | RMB 464.80 million | Haining, Zhejiang province | Manufacturing | 100.00 | Established | |
2. Transactions where the controlling interests in subsidiaries are maintained even after the share of owner'sequity changes
1. Notes on changes in the share of owner's equity in subsidiaries
| Subsidiary | Date of change | Holding proportion before change | Holding proportion after change |
| Hangzhou Lianhe Electric Manufacturing Co., Ltd. | September, 2023 | 83.714% | 100.00% |
| Hangzhou Liansheng Tools Manufacturing Co., Ltd. | August, 2023 | 72.00% | 100.00% |
| Hangzhou Ole-Systems Co., Ltd. | August, 2023 | 48.00% | 51.00% |
| Yiyang Tools Manufacturing Co., Ltd | May, 2023 | 91.915% | 100.00% |
| Longyou Hugong Forging Three Tools Co., Ltd, | May, 2023 | 82.00% | 100.00% |
2. Impact of transactions on non-controlling shareholders' equity and owner's equity attributable to the parentCompany
| Item | Hangzhou Lianhe Electric Manufacturing Co., Ltd. | Hangzhou Liansheng Tools Manufacturing Co., Ltd. | Hangzhou Ole-Systems Co., Ltd. |
| Purchase cost | |||
| Cash | 12,818,462.70 | 5,056,837.80 | 800,000.00 |
| Total purchase cost | 12,818,462.70 | 5,056,837.80 | 800,000.00 |
| Less: Share of net assets of subsidiaries calculated based on the proportion of equity acquired | 18,572,671.67 | 5,120,999.99 | -1,099,591.38 |
| Difference | -5,754,208.97 | -64,162.19 | 1,899,591.38 |
| Including: Adjustment to the capital reserve | 5,754,208.97 | 64,162.19 | -1,899,591.38 |
| Adjustment to the surplus reserve | |||
| Adjustment to the undistributed profits |
(Continued)
| Item | Yiyang Tools Manufacturing Co., Ltd | Longyou Hugong Forging Three Tools Co., Ltd, |
| Purchase cost | ||
| Cash | 6,902,524.49 | 20,097,475.51 |
| Total purchase cost | 6,902,524.49 | 20,097,475.51 |
| Less: Share of net assets of subsidiaries calculated based on the proportion of equity acquired | 4,182,368.03 | 27,111,171.13 |
| Difference | 2,720,156.46 | -7,013,695.62 |
| Including: Adjustment to the capital reserve | -2,720,156.46 | 7,013,695.62 |
| Adjustment to the surplus reserve | ||
| Adjustment to the undistributed profits |
3. Equity in joint ventures
1. Major joint ventures
(1) General information
| Name of joint venture | Principal business location | Place of registration | Nature of business | Holding proportion (%) | Accounting treatment method applied to investment in the joint venture | |
| Direct | Indirect | |||||
| Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | Hangzhou, Zhejiang Province Hangzhou | Hangzhou, Zhejiang Province Hangzhou | Service | 27.8571 | Equity method accounting | |
| Zhejiang Hangcha Holding Co., Ltd | Hangzhou, Zhejiang Province Hangzhou | Hangzhou, Zhejiang Province Hangzhou | Manufacturing | 20.00 | Equity method accounting | |
| Zhejiang Guozi Robotics Co., Ltd. | Hangzhou, Zhejiang Province Hangzhou | Hangzhou, Zhejiang Province Hangzhou | Manufacturing | 18.76 | Equity method accounting | |
| Ningbo Donghai Bank Co., Ltd. | Ningbo, Hangzhou, Zhejiang Province | Ningbo, Hangzhou, Zhejiang Province | Finance | 19.00 | Equity method accounting | |
| Changzhou Stabila Laser Instrument Company Limited | Changzhou City, Jiangsu Province Jiangsu Province | Changzhou City, Jiangsu Province Jiangsu Province | Manufacturing | 31.85 [Note] | Equity method accounting | |
| Hangzhou Weina Technologies Co., Ltd. | Hangzhou, Zhejiang Province | Hangzhou, Zhejiang Province | Manufacturing | 32.53 | Equity method accounting | |
| Hangzhou | Hangzhou |
[Note] the Company holds a 31.85% equity interest in Changzhou Stabila Laser Instrument Company Limitedthrough Changzhou Huada Kejie Opto-Electronic Instruments Co., Ltd; on June, 2023, Changzhou Huada KejieOpto-Electronic Instruments Co., Ltd transferred its 40% equity interest in Shanghai Lainuo OptoelectronicsTechnology Co., Ltd, which is no longer a joint venture of the Company
(2) Basis for the ability to impose significant influence while holding a voting right of less than 20%The Company holds 19.00% equity in Ningbo Donghai Bank Co., Ltd. and 18.76% equity of Zhejiang GuoziRobotics Co., Ltd. The Company has representatives on these two company's boards of directors who have thepower to participate in decision-making regarding its financial and operational policies.
2. Key financial information of significant joint ventures
| Item | Closing balance/current period balance (in ten thousand yuan) | Opening balance/balance in the same period of the previous year (in ten thousand yuan) | ||
| Zhejiang Hangcha Holding Co., Ltd | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | Zhejiang Hangcha Holding Co., Ltd | Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | |
| Current assets | 968,562.05 | 1,855,834.93 | 827,744.11 | 1,830,890.82 |
| Non-current assets | 514,443.03 | 2,323,629.66 | 413,129.27 | 2,207,297.75 |
| Total assets | 1,483,005.08 | 4,179,464.59 | 1,240,873.38 | 4,038,188.57 |
| Current liabilities | 451,672.29 | 2,092,263.42 | 374,026.60 | 2,127,236.37 |
| Non-current liabilities | 22,228.12 | 554,730.87 | 115,335.16 | 614,652.99 |
| Total liabilities | 473,900.41 | 2,646,994.29 | 489,361.76 | 2,741,889.36 |
| Non-controlling interest | 583,339.75 | 932,838.10 | 407,066.59 | 798,172.02 |
| Owners' equity attributable to the parent Company | 425,764.92 | 599,632.19 | 344,445.03 | 498,127.20 |
| Share of net assets calculated based on the holding proportion | 85,152.98 | 167,040.14 | 68,889.00 | 138,763.79 |
| Adjustments | ||||
| Difference between fair value and book value | 10,897.97 | 10,897.97 | ||
| Book value of equity investment in associated enterprises | 96,050.95 | 167,040.14 | 79,786.97 | 138,763.79 |
| Fair value of equity investments in associated enterprises with publicly quoted prices | ||||
| Operating income | 1,627,541.52 | 3,525,225.46 | 1,441,624.45 | 3,188,885.32 |
| Net profit | 180,723.23 | 242,747.40 | 111,075.28 | 102,303.93 |
| Net profits of discontinued operations | ||||
| Other comprehensive income | 1,380.06 | 15,236.05 | 1,824.22 | 24,718.29 |
| Total comprehensive income | 182,103.29 | 257,983.45 | 112,899.50 | 127,022.22 |
| Dividends from joint ventures received in the period | 4,000.00 |
3. Summary of financial information on insignificant joint ventures
| Item | Closing balance/current period (in ten thousand yuan) | Opening balance/balance in the same period of the previous year (in ten thousand yuan) |
| Joint ventures | ||
| Total book value of investment | 31,966.36 | 35,901.59 |
| Total of following items calculated by based on the holding proportion | ||
| Net profit | -5,656.96 | 607.12 |
| Other comprehensive income | 84.68 | -106.21 |
| Total comprehensive income | -5,572.28 | 500.91 |
X. Government Grants(I) Increase of government grants in the period
| Item | Increase amounts in grants during the period |
| Government grants related to assets | 1,120,500.00 |
| including: recognized in deferred income | 1,120,500.00 |
| Government grants related to income | 33,110,021.82 |
| including: recognized in other income | 33,110,021.82 |
| Total | 34,230,521.82 |
(II) Projects involving government grants
| Items presented in financial statements | Opening balance | Increase amounts in grants during the period | Amounts charged to other gains for the period | Amount included in non-operating income for the period |
| Deferred income | 2,264,687.74 | 1,120,500.00 | 866,795.25 |
| Items presented in financial statements | Opening balance | Increase amounts in grants during the period | Amounts charged to other gains for the period | Amount included in non-operating income for the period |
| Deferred income | 100,000.00 | |||
| Subtotal | 2,364,687.74 | 1,120,500.00 | 866,795.25 |
(Continued)
| Items presented in financial statements | Costs offset in the period | Assets offset in the period | Other changes | Closing balance | Related to assets/income |
| Deferred income | 2,518,392.49 | Related to assets | |||
| Deferred income | 100,000.00 | Related to income | |||
| Subtotal | 100,000.00 | 2,518,392.49 |
(III) Government grants included in current gains and losses:
| Item | Current period cumulative | Preceding period comparative |
| Other government grants included in other income | 33,976,817.07 | 50,338,037.85 |
| Government grants for offsetting research and development expenses | 100,000.00 | 200,000.00 |
| Total | 34,076,817.07 | 50,538,037.85 |
XI. Risks Related to Financial InstrumentsThe Company's objective for managing risks associated with financial instruments is to balance risk and return,minimize the negative impact of risks on the Company's operating results, and maximize returns for shareholdersand other equity investors. According to the risk Management objective, the Company has developed a basic riskManagement strategy to identify and analyze the various risks faced by the Company, establish appropriate risktolerance thresholds and risk controls, and monitor risks in a timely and reliable manner, keeping them withinpredefined limits.In its daily activities, the Company faces various risks associated with financial instruments, primarily includingcredit, liquidity and market risks. The Management has reviewed and approved policies for managing these risks,summarized below.(I) Credit risksCredit risk refers the risk that one party to a financial instrument will cause a financial loss for the other party byfailing to discharge an obligation.
1. Credit risk Management practices
(1) Credit risk evaluation methods
The Company evaluates at each balance sheet date whether the credit risks of relevant financial instruments haveincreased significantly since their initial recognition. When determining whether credit risks have increasedsignificantly since their initial recognition, the Company considers reasonable and supported information that isavailable without unnecessary extra cost or effort, including qualitative and quantitative analyses based on historicaldata, external credit risk ratings and forward-looking information. The Company evaluates financial instruments
either individually or collectively under similar credit risk characteristics, by comparing the risk of default occurringat the balance sheet date with the risk of default at initial recognition, to determine changes in the risk of defaultover the expected life of the financial instrument.The Company considers that the credit risk of a financial instrument has increased significantly when one or moreof the following quantitative or qualitative criteria are triggered:
1) As the main quantitative criterion, the probability of default in the remaining term on the balance sheet date hasincreased by over a certain percentage compared to that in the initial recognition;
2) As the main qualitative criteria, significant adverse changes appear in the operational or financial situation ofdebtors, or existing or anticipated changes in the technological, market, economic or legal environment would havea significant adverse effect on debtors' ability to meet their obligations to the Company, etc.
(2) Definition of default and credit-impaired assets
The Company defines a financial asset as in default when one or more of the following conditions are met, whichare consistent with the definition of credit-impaired assets:
1) The debtor faces significant financial difficulty;
2) The debtor breaches contractual covenants binding on the debtor;
3) It is very likely that the debtor will enter bankruptcy or other financial reorganization;
4) the creditor of the debtor, for economic or contractual reasons relating to the debtor's financial difficulty, havinggranted to the debtor a concession(s) that the creditor would not otherwise consider.
2. Measurement of expected credit losses
The key factors in the measurement of expected credit loss include the probability of default, loss rate of default,and exposure to default risk. The Company develops a model of the probability of default, loss rate of default, andexposure to default risk on the basis of quantitative analysis of historical data (e.g., counterparty rating, guaranteemeasures and collateral type, payment method, etc.) and forward-looking information.
3. Please refer to section VII (I)- 4, VII (I)-5, VII (I)-6 and VII (I)-7 under VII. "Notes to the Consolidated FinancialStatements Items for details on the reconciliation table of opening balance and closing balance of provision forlosses of financial instrument.
4. Exposure to credit risk and concentration of credit risk
The Company's credit risk is primarily attributable to monetary funds and receivables. In order to control such risks,the Company has taken the following measures.
(1) Monetary funds
The Company deposits its bank balances and other monetary funds in financial institutions with a relatively highcredit rating, and therefore its credit risk is relatively low.
2. Receivables
The Company performs credit assessment on customers using credit settlement on a continuous basis. The Companyselects credible and well-reputed customers based on credit assessment result, and conducts ongoing monitoring onbalance of receivables, to avoid significant risks in bad debts.Since the Company's risk points of accounts receivable are distributed among multiple partners and clients, as ofDecember 31, 2023, the Company has certain concentration of credit risk, and 52.69% (versus 37.03% on December31, 2022:) of the total accounts receivable was due from the five largest clients of the Company. The Company heldno collateral or other credit enhancement on balance of receivables.The maximum amount of exposure to credit risk of the Company is the carrying amount of each financial asset atthe balance sheet.(II) Liquidity risk
Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting obligations associatedwith cash or other financial assets settlement. Liquidity risk is possibly attributable to failure in selling financialassets at fair value on a timely basis, or failure in collecting liabilities from counterparties of contracts, or earlyredemption of debts, or failure in achieving estimated cash flows.In order to control such risk, the Company comprehensively utilized financing tools such as notes settlement, bankborrowings, etc. and adopts long-term and short-term financing methods to optimize financing structures, and finallymaintains a balance between financing sustainability and flexibility. The Company has obtained credit limit fromseveral commercial banks to meet working capital requirements and expenditures.Financial liabilities classified based on remaining time period till maturity
| Item | Closing balance | ||||
| Book value | Contract amount not yet discounted | Within 1 year | 1-3 year(s) | More than 3 years | |
| Bank borrowings | 1,979,534,301.73 | 2,013,990,884.23 | 2,013,195,731.04 | 795,153.19 | |
| Held-for-trading financial liabilities | 3,227,726.23 | 3,227,726.23 | 3,227,726.23 | ||
| Notes payable | 18,253,448.48 | 18,253,448.48 | 18,253,448.48 | ||
| Accounts payable | 1,567,046,072.54 | 1,567,046,072.54 | 1,567,046,072.54 | ||
| Other payables | 37,629,238.62 | 37,629,238.62 | 37,629,238.62 | ||
| Lease liabilities | 386,353,254.87 | 408,466,278.75 | 110,352,919.83 | 126,407,678.23 | 171,705,680.69 |
| Subtotal | 3,992,044,042.47 | 4,048,613,648.85 | 3,749,705,136.74 | 126,407,678.23 | 172,500,833.88 |
(Continued)
| Item | Opening balance | ||||
| Book value | Contract amount not yet discounted | Within 1 year | 1-3 year(s) | More than 3 years | |
| Bank borrowings | 2,412,596,915.25 | 2,479,666,840.77 | 1,653,566,564.54 | 825,295,053.98 | 805,222.25 |
| Held-for-trading financial liabilities | 48,413,710.29 | 48,413,710.29 | 48,413,710.29 | ||
| Notes payable | 21,096,540.03 | 21,096,540.03 | 21,096,540.03 | ||
| Accounts payable | 1,366,875,268.71 | 1,366,875,268.71 | 1,366,875,268.71 | ||
| Other payables | 21,198,376.32 | 21,198,376.32 | 21,198,376.32 | ||
| Lease liabilities | 406,588,933.09 | 413,037,311.70 | 88,436,234.33 | 134,252,177.05 | 190,348,900.32 |
| Subtotal | 4,276,769,743.69 | 4,350,288,047.82 | 3,199,586,694.22 | 959,547,231.03 | 191,154,122.57 |
(III) Market risk
Market risk is the risk that the Company may encounter fluctuation in fair value or future cash flows of financialinstruments due to changes in market price. Market risk mainly includes interest risk and foreign currency risk.
1. Interest risk
Interest risk is the risk that an enterprise may encounter fluctuation in fair value or future cash flows of financialinstruments due to changes in market interest. The Company's fair value interest risks arise from fixed-rate financialinstruments, while the cash flow interest risks arise from floating-rate financial instruments. The Companydetermines the proportion of fixed-rate financial instruments and floating-rate financial instruments based on themarket environment, and maintains a proper financial instruments portfolio through regular review and monitoring.The Company's interest risk in cash flows relates mainly to bank borrowings with floating interest rate.As of December 31, 2023, balance of borrowings with interest accrued at floating interest rate totaled RMB456,526,439.62 (December 31, 2022: RMB 713,120,304.41). If interest rates had been 50 basis points higher/lowerand all other variables were held constant, the Company's gross profit and equity will not be significantly affected.
2. Foreign currency risk
Foreign currency risk is the risk arising from changes in fair value or future cash flows of financial instrumentresulted from changes in exchange rate. The Company's foreign currency risk relates mainly to foreign currencymonetary funds and liabilities. When short-term imbalance occurred to foreign currency assets and liabilities, theCompany may trade foreign currency at market exchange rates when necessary to maintain the net risk exposurewithin an acceptable level.XII. Fair Value Disclosure(I) Detailed information on fair value of assets and liabilities measured at fair value at the balance sheet date
| Item | Fair value as of the balance sheet date | |||
| Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total | |
| Continuing fair value measurement | ||||
| 1. Financial assets for trading | 122,650,783.01 | 122,650,783.01 | ||
| Financial assets measured at fair value and the changes thereof are included in current profits and losses | 122,650,783.01 | 122,650,783.01 | ||
| Bank financial products | 108,244,251.49 | 108,244,251.49 | ||
| Derivative financial assets | 14,406,531.52 | 14,406,531.52 | ||
| 2. Receivables financing | 266,675,016.64 | 266,675,016.64 | ||
| 3. Investment in other equity instruments | 16,550,000.00 | 16,550,000.00 | ||
| Total assets continuously measured at fair value | 122,650,783.01 | 283,225,016.64 | 405,875,799.65 | |
| 4. Held-for-trading financial liabilities | 3,227,726.23 | 3,227,726.23 | ||
| Derivative financial liabilities | 3,227,726.23 | 3,227,726.23 | ||
| Total liabilities measured at fair value on a continuing basis | 3,227,726.23 | 3,227,726.23 | ||
(II). Qualitative and quantitative information of valuation technique(s) and key input(s) for level 2 fair value atrecurring and non-recurring fair measurement
Bank financial products, derivative financial assets and derivative financial liabilities are measured using valuationnotices provided by banks and securities companies as a reasonable estimate of fair value .(III). Qualitative and quantitative information of valuation technique(s) and key input(s) for level 3 fair value atrecurring and non-recurring fair measurement
1. As receivables financing is within 1 year, whose time value has no significant impact on the fair value, it isrecognized that the fair value of receivables financing mentioned above is approximately equal to its carryingamount.
2. Other equity instrument investments (Hangzhou Haibang Xinhu Talent Venture Capital Investment Partnership(LP)), are measured using investment cost as a reasonable estimate of fair value,XIII. Related Party Relationships and Transactions(I) Related parties
1. Information on Parent Company
(1) Parent Company
| Parent Company | Place of registration | Nature of business | Registered capital | Holding proportion over the Company (%) | Voting right proportion over the Company (%) |
| GreatStar Holding Group Co., Ltd. | Hangzhou | Industrial investment | 100 million yuan | 38.56 | 38.56 |
(2) The Company’s ultimate controlling party is Qiu Jianping.
2. The information on the Company's subsidiaries and joint ventures is detailed in IX. "Interests in other entities".
3. The information on the Company's other related parties
| Other related parties | Relationships with the Company |
| Hangzhou GreatStar Precision Machinery Co., Ltd | Controlled by the same actual controller |
| Hangcha Group Co., Ltd. and its affiliated companies | Controlled by the Company's associate, Zhejiang Hangcha Holding Co., Ltd. and under common control by the actual controller |
| Zhongce Rubber Group Company Limited. and its affiliated companies | Controlled by the Company's associate, Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. and under common control by the actual controller |
| Zhou Siyuan | Senior management member of the Company |
(II) Related party transactions
1. Related party transactions for purchase and sale of goods, rendering and acceptance of labor services
(1) Related party transactions for purchase of goods and acceptance of labor service
| Related parties | Content of transaction | Current period cumulative | Preceding period comparative |
| Zhongce Rubber Group Company Limited. and its affiliated companies | Tier products and maintenance costs | 44,380,282.86 | 57,766,301.68 |
| Automatic library | 26,548,672.57 |
| Related parties | Content of transaction | Current period cumulative | Preceding period comparative |
| Hangcha Group Co., Ltd. and its affiliated companies | Forklift, spare parts and maintenance | 3,743,555.68 | 16,577,579.13 |
| Zhejiang Guozi Robotics Co., Ltd and its affiliated companies | Intelligent logistics robots and services | 2,258,835.96 | 9,276,973.76 |
| Changzhou Stabila Laser Instrument Company Limited | Material | 389,429.96 | 95,066.86 |
(2) Related party transactions for sales of goods and rendition of labor service
| Related parties | Content of transaction | Current period cumulative | Preceding period comparative |
| Changzhou Stabila Laser Instrument Company Limited | Laser measurement product | 1,859,443.11 | 8,430,267.36 |
| Consulting service fee | 1,297,169.82 | 3,476,428.09 | |
| Utilities | 148,176.00 | 134,416.80 | |
| Hangcha Group Co., Ltd. and its affiliated companies | Hand tools and spare parts | 15,643,976.65 | 13,943,429.18 |
| Lidar sensors | 2,148,008.87 | ||
| Operating service | 1,086,566.24 | 2,903,893.36 | |
| Zhejiang Guozi Robotics Co., Ltd and its affiliated companies | Lidar sensors | 5,333,946.90 | |
| Hand tools and spare parts | 354,282.65 | 11,977,029.04 | |
| Maintenance costs | 442.48 | ||
| GreatStar Holding Group Co., Ltd. | Hand tools and spare parts | 25,432.22 | |
| Shanghai Lainuo Optoelectronics Technology Co., Ltd. | Sale of goods | 3,010.31 | 3,043.54 |
| Hangzhou GreatStar Precision Machinery Co., Ltd | Hand tools | 1,269.94 | 2,807.12 |
| Zhejiang Hangcha Holding Co., Ltd | Hand tools | 594.69 |
2. Related party lease
(2) The Company as lessor
| Lessees | Types of assets leased | Lease income recognized for current period Lease income | Lease income recognized over the same period of the previous year Lease income |
| Changzhou Stabila Laser Instrument Company Limited | Buildings | 222,264.00 | 201,625.20 |
(2) The Company as lessee
| Lessor | Types of assets leased | Current period cumulative | |||
| Simplified rental expenses for short-term lease and low-value asset lease and variable lease payment not adopted in the measurement of lease liabilities | Lease of recognized right-of-use assets | ||||
| Paid rental (not including variable lease payment not adopted in the measurement of lease liabilities) | Increased principal amount of lease liabilities | Recognized interest expenses | |||
| Hangzhou GreatStar Precision Machinery Co., Ltd | Buildings | 1,383,389.91 | |||
| Hangcha Group Co., Ltd's affiliated Company Shanghai Hangcha Forklift Sales Co., Ltd | Transport equipment | 7,244.20 | |||
| Hangcha Group Co., Ltd's affiliated Company Guangzhou Hangcha Forklift Leasing Co., Ltd | Transport equipment | ||||
(Continued)
| Lessor | Types of assets leased | Preceding period comparative | |||
| Simplified rental expenses for short-term lease and low-value asset lease and variable lease payment not adopted in the measurement of lease liabilities | Lease of recognized right-of-use assets | ||||
| Paid rental (not including variable lease payment not adopted in the measurement of lease liabilities) | Increased principal amount of lease liabilities | Recognized interest expenses | |||
| Hangzhou GreatStar Precision Machinery Co., Ltd | Buildings | 1,342,542.86 | |||
| Hangcha Group Co., Ltd's affiliated Company Shanghai Hangcha Forklift Sales Co., Ltd | Transport equipment | ||||
| Hangcha Group Co., Ltd's affiliated Company Guangzhou Hangcha Forklift Leasing Co., Ltd | Transport equipment | 154,024.82 | |||
3. Assets transfer between related parties
In July 2023, according to the resolution of the shareholders' meeting of Hangzhou Ole-Systems Co., Ltd., ZhouSiyuan was authorized to transfer the shares held by him equal to 2% equity of Hangzhou Ole-Systems Co., Ltd. atthe consideration of RMB 400,000 to Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd. The commercialand industrial registration for the aforesaid transaction was completed in August 2023.
4. Key Management’s emoluments
| Item | Current period cumulative | Preceding period comparative |
| Key Management’s emoluments | RMB 14.3663 million | RMB 13.2279 million |
(III) Balance due to or from related parties
1. Balance due from related parties
| Project Name | Related parties | Closing balance | Opening balance | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Accounts receivable | Zhejiang Guozi Robotics Co., Ltd and its affiliated companies | 3,206,165.06 | 160,308.25 | 19,380,071.99 | 1,220,477.10 |
| Changzhou Stabila Laser Instrument Company Limited | 1,832,009.43 | 91,600.47 | 2,886,966.26 | 144,348.31 | |
| Shanghai Lainuo Optoelectronics Technology Co., Ltd. | 3,780,753.57 | 3,780,753.57 | |||
| Hangcha Group Co., Ltd. and its affiliated companies | 2,133,051.03 | 106,652.55 | 2,302,883.58 | 115,144.18 | |
| Hangzhou GreatStar Precision Machinery Co., Ltd | 472.05 | 23.60 | |||
| Zhejiang Hangcha Holding Co., Ltd | 672.00 | 33.60 | 672.00 | 33.60 | |
| Subtotal | 7,171,897.52 | 358,594.87 | 28,351,819.45 | 5,260,780.36 | |
| Notes receivable | Zhejiang Guozi Robotics Co., Ltd. | 500,000.00 | 2,300,000.00 | ||
| Subtotal | 500,000.00 | 2,300,000.00 | |||
| Advances paid | Hangcha Group Co., Ltd. and its affiliated companies | 3,352,500.00 | 167,625.00 | 37,000.00 | 1,850.00 |
| Subtotal | 3,352,500.00 | 167,625.00 | 37,000.00 | 1,850.00 | |
| Other receivables | Changzhou Stabila Laser Instrument Company Limited | 86,250.78 | 4,312.54 | 103,556.95 | 5,177.85 |
| Subtotal | 86,250.78 | 4,312.54 | 103,556.95 | 5,177.85 | |
2. Balance due to related parties
| Project Name | Related parties | Closing balance | Opening balance |
| Accounts payable | Hangcha Group Co., Ltd. and its affiliated companies | 1,339,665.54 | 2,557,004.00 |
| Zhejiang Guozi Robotics Co., Ltd and its affiliated companies | 5,998,323.14 | 1,589,938.36 | |
| Zhongce Rubber Group Company Limited. and its affiliated companies | 2,808,809.51 | 7,567,269.62 |
| Project Name | Related parties | Closing balance | Opening balance |
| Hangzhou GreatStar Precision Machinery Co., Ltd | 512,360.95 | 36,500.00 | |
| Subtotal | 10,659,159.14 | 11,750,711.98 | |
| Contract liabilities | Zhejiang Guozi Robotics Co., Ltd and its affiliated companies | 4,227,186.77 | |
| Subtotal | 4,227,186.77 | ||
| Other payables | Zhejiang Guozi Robotics Co., Ltd and its affiliated companies | 7,285.00 | |
| Subtotal | 7,285.00 |
XIV. Commitments and contingencies
1. Important commitments
Significant commitments on balance sheet dateAs of the approved issuing date of this report, the Company has no significant commitments to be disclosed.
2. Contingencies
(1) Important contingent matters as at the balance sheet date
As of the approved issuing date of this report, the Company has no significant contingencies to be disclosed.
(2) If the Company has no important contingent matters to disclose, a statement thereof shall be madeNo significant contingent matters to be disclosed.XV. Events after the balance sheet date
1. Distribution of profits
| Cash dividends proposed to be distributed for every 10 shares (RMB) | 1 |
| Profit distribution plan | On April 24, 2024, the Proposal on the Profit distribution plan for 2023 was deliberated and adopted at the 6th Meeting of the 6th Board of Directors of the Company. The Company proposed that, with a base of 1,194,478,182 shares, that is, the Company's total share capital of 1,202,501,992 shares as of December 31, 2023 less 8,023,810 shares held in the Company's special securities account for repurchased shares, a cash dividend of RMB 1 (including tax) will be paid to all shareholders for every 10 shares. The total amount of cash dividends is estimated to be RMB 119,447,818.20. The remaining undistributed profits are carried forward to the next year. No bonus shares will be issued, nor will the capital reserve be converted into share capital. The above distribution plan is still subject to consideration and approval by the Company's general meeting. |
XVI. Other significant matters
1. Segment information
1. Considerations for determining reporting segments
Reportable segments are identified according to the structure of the Company's internal organization, Managementrequirements and internal reporting system, and based on product segments. The assets and liabilities shared withdifferent segments are allocated among segments proportionate to their respective sizes.
2. Financial information of reporting segments
Unit: ten thousand RMB
| Item | Hand Tools & Storage | Power Tools and Laser Measurement | Other | Total |
| Operating income | 806,615.08 | 279,915.87 | 6,468.33 | 1,092,999.28 |
| Operating cost | 521,873.48 | 220,449.64 | 3,089.09 | 745,412.21 |
| Total assets | 1,576,761.89 | 379,890.49 | 11,727.35 | 1,968,379.73 |
| Total liabilities | 387,545.22 | 76,812.94 | 2,764.42 | 467,122.58 |
2. Other important transactions and matters that can affect investor decision - makingOn December 18, 2023, the third session of the Company's 5th Board of Directors meeting deliberated and passedthe Proposal on Acquisition of TESA Group Assets, agreeing that the Company would purchase all TESA Groupassets held by Hexagon Smart Solutions AB in cash, including the 100% equity of TESA Precision MeasurementInstruments Sarl and related assets of Chinese, American and French companies, in a transaction price not morethan 40 million euros. As of December 31, 2023, the relevant asset acquisition matters have not been completed yet.XVII. Notes to the Principal Items in the Financial Statements of the Parent Company(I) Notes to the balance sheet Items of the parent Company
1. Accounts receivables
(1) Information on ageing
| Ageing | Closing book balance | Opening book balance |
| Within 1 year | 1,694,000,248.98 | 1,129,025,055.05 |
| 1-2 years | 19,461,035.02 | 15,584,716.05 |
| 2-3 years | 12,778,077.46 | 4,726,442.38 |
| 3-4 years | 2,436,939.79 | 3,922,817.49 |
| 4-5 years | 3,600.00 | 2,354,257.02 |
| More than 5 years | 92,426.99 | 4,694,396.09 |
| Total | 1,728,772,328.24 | 1,160,307,684.08 |
(2) Provision for bad debts
1) Detailed information in category
| Type | Closing balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision for Individual bad debt | |||||
| Provision made on a portfolio basis | 1,728,772,328.24 | 100.00 | 90,027,040.37 | 5.21 | 1,638,745,287.87 |
| Total | 1,728,772,328.24 | 100.00 | 90,027,040.37 | 5.21 | 1,638,745,287.87 |
(Continued)
| Type | Opening balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision for Individual bad debt | |||||
| Provision made on a portfolio basis | 1,160,307,684.08 | 100.00 | 66,003,382.68 | 5.69 | 1,094,304,301.40 |
| Total | 1,160,307,684.08 | 100.00 | 66,003,382.68 | 5.69 | 1,094,304,301.40 |
2) Accounts receivable with bad debt provision by ageing combination
| Ageing | Closing balance | ||
| Book balance | Provision for bad debts | Percentage of Provision (%) | |
| Within 1 year | 1,694,000,248.98 | 84,700,012.44 | 5.00 |
| 1-2 years | 19,461,035.02 | 1,946,103.51 | 10.00 |
| 2-3 years | 12,778,077.46 | 2,555,615.50 | 20.00 |
| 3-4 years | 2,436,939.79 | 731,081.93 | 30.00 |
| 4-5 years | 3,600.00 | 1,800.00 | 50.00 |
| More than 5 years | 92,426.99 | 92,426.99 | 100.00 |
| Subtotal | 1,728,772,328.24 | 90,027,040.37 | 5.21 |
(3) Change of provision for bad debts
| Item | Opening balance | Amount of change during the period | Closing balance | |||
| Make provision | Recovery or reversal | Write-offs | Other | |||
| Provision for Individual bad debt | ||||||
| Provision made on a portfolio basis | 66,003,382.68 | 24,119,346.19 | 95,688.50 | 90,027,040.37 | ||
| Total | 66,003,382.68 | 24,119,346.19 | 95,688.50 | 90,027,040.37 | ||
(4) Top five accounts receivable and contract assets
The aggregate amount of top five accounts receivable at the end of the period was RMB 1,289,472,377.70,accounting for 74.59% of the aggregate amount of accounts receivable and contractual assets at the end of the period,and the aggregate amount of corresponding provision for bad debts was RMB 64,473,618.89
2 Other receivables
(1) Classification by nature
| Nature of payment | Closing book balance | Opening book balance |
| Accounts receivable from related parties within the scope of the consolidation | 1,510,290,450.29 | 2,841,560,502.29 |
| Export tax refund receivable | 21,753,209.85 | 15,408,984.91 |
| Deposit Guarantee | 6,855,020.74 | 7,280,560.36 |
| Temporary payments receivable | 1,354,256.48 | 1,762,196.83 |
| Employee reserves | 107,575.00 | 178,008.90 |
| Total | 1,540,360,512.36 | 2,866,190,253.29 |
(2) Information on ageing
| Ageing | Closing book balance | Opening book balance |
| Within 1 year | 1,508,399,514.57 | 2,835,493,076.60 |
| 1-2 years | 1,809,061.25 | 1,124,531.56 |
| 2-3 years | 1,005,531.25 | 1,317,279.20 |
| 3-4 years | 1,068,525.00 | 6,345,509.32 |
| 4-5 years | 6,214,209.32 | 816,868.00 |
| More than 5 years | 21,863,670.97 | 21,092,988.61 |
| Subtotal | 1,540,360,512.36 | 2,866,190,253.29 |
(3) Provision for bad debts
1) Detailed information in category
| Type | Closing balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision for Individual bad debt | |||||
| Provision made on a portfolio basis | 1,540,360,512.36 | 100.00 | 94,361,195.06 | 6.13 | 1,445,999,317.30 |
| Total | 1,540,360,512.36 | 100.00 | 94,361,195.06 | 6.13 | 1,445,999,317.30 |
(Continued)
| Type | Opening balance | ||||
| Book balance | Provision for bad debts | Book value | |||
| Amount | Percentage (%) | Amount | Make provision Percentage (%) | ||
| Provision for Individual bad debt | |||||
| Provision made on a portfolio basis | 2,866,190,253.29 | 100.00 | 110,289,899.69 | 3.85 | 2,755,900,353.60 |
| Total | 2,866,190,253.29 | 100.00 | 110,289,899.69 | 3.85 | 2,755,900,353.60 |
2) Other receivables with bad debt provision by combination
| Name of combination | Closing balance | ||
| Book balance | Provision for bad debts | Percentage of Provision (%) | |
| Portfolio of receivables from related parties within the consolidation scope | 1,510,290,450.29 | 90,687,305.48 | 6.00 |
| Ageing combination | 30,070,062.07 | 3,673,889.58 | 12.22 |
| Including: within 1 year | 26,359,402.49 | 1,317,970.13 | 5.00 |
| 1-2 years | 1,068,061.25 | 106,806.12 | 10.00 |
| 2-3 years | 145,500.00 | 29,100.00 | 20.00 |
| 3-4 years | 161,550.00 | 48,465.00 | 30.00 |
| 4-5 years | 328,000.00 | 164,000.00 | 50.00 |
| More than 5 years | 2,007,548.33 | 2,007,548.33 | 100.00 |
| Subtotal | 1,540,360,512.36 | 94,361,195.06 | 6.13 |
4) Change of provision for bad debts
(i) Detailed information
| Item | Phase I | Phase II | Phase III | Subtotal |
| Next 12 months Expected credit losses | Expected credit losses for the entire duration (no credit impairment) | Expected credit losses for the entire duration (credit impairment occurred) | ||
| Opening balance | 86,508,915.28 | 112,453.16 | 23,668,531.25 | 110,289,899.69 |
| Opening balance during the period | —— | —— | —— | |
| -- Transferred to Phase II | -90,453.06 | 90,453.06 | ||
| --Transferred to Phase III | -100,553.13 | 100,553.13 | ||
| -- Reversed to Phase II | ||||
| -- Reversed to Phase I | ||||
| Provision during the period | -17,730,612.66 | 78,553.03 | 1,723,355.00 | -15,928,704.63 |
| Recovery or reversal during the period | ||||
| Write-offs during the period | ||||
| Other changes | ||||
| Closing balance | 68,687,849.56 | 180,906.12 | 25,492,439.38 | 94,361,195.06 |
| Percentage of Provision for bad debts at end of period | 4.55 | 10.00 | 84.55 | 6.13 |
The basis for phase division: a period of less than one year represents that the credit risk failed to increasesignificantly after initial recognition (Phase I); a period of 1-2 years represents that the credit risk increasedsignificantly after initial recognition (Phase II) but did not result in credit impairment; a period of over 2 yearsrepresents that credit impairment occurred after initial recognition (Phase III).
(5) Top five other receivables
| Unit name | Nature of payment | Closing book balance | Ageing | Percentage of balance of other receivables (%) | Provision for bad debts at end of period |
| GreatStar Tools USA, Inc. | Receivables from related parties within the consolidation scope | 701,078,592.17 | Within 1 year | 45.51 | 35,053,929.61 |
| Hong Kong GreatStar | Receivables from related | 235,977,382.85 | Within 1 year | 15.32 | 5,066,742.97 |
| International Co., Ltd | parties within the consolidation scope | ||||
| Geelong Sales Company International (HK) Limited | Receivables from related parties within the consolidation scope | 205,398,300.00 | Within 1 year | 13.33 | 10,269,915.00 |
| Haining GreatStar Intelligent Equipment Co., Ltd. | Receivables from related parties within the consolidation scope | 166,000,000.00 | Within 1 year | 10.78 | 8,300,000.00 |
| Hangzhou Ole-Systems Co., Ltd. | Receivables from related parties within the consolidation scope | 48,600,672.23 | Within 1 year | 3.16 | 2,430,033.61 |
| Subtotal | 1,357,054,947.25 | 88.10 | 61,120,621.19 |
3. Long-term equity investments
(1) Detailed information
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision for Impairment Individual bad debt | Book value | Book balance | Provision for Impairment Individual bad debt | Book value | |
| Investment in subsidiaries | 4,756,287,881.67 | 4,756,287,881.67 | 4,105,047,447.89 | 4,105,047,447.89 | ||
| Investment in joint ventures | 2,946,810,062.51 | 2,946,810,062.51 | 2,541,550,254.17 | 2,541,550,254.17 | ||
| Total | 7,703,097,944.18 | 7,703,097,944.18 | 6,646,597,702.06 | 6,646,597,702.06 | ||
(2) Investment in subsidiaries
| Invested units | Opening balance | Increase and decrease during the period | Closing balance | |||||
| Book value | Provision for Impairment | Additional investments in investments | Decrease in investments | Provision for accrual impairment | Other | Book value | Provision for Impairment | |
| Individual bad debt | Individual bad debt | |||||||
| Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd. | 200,864,082.56 | 200,864,082.56 | ||||||
| Guangdong Shiwanke Electrical Appliance Co., Ltd. | 50,000,000.00 | 50,000,000.00 | ||||||
| Haining GreatStar Hardware Tools Co., Ltd. | 2,000,000.00 | 2,000,000.00 | ||||||
| Hangzhou GreatStar Electrical Tools Co., Ltd. | ||||||||
| Hangzhou GreatStar Craftsman Tools Co., Ltd. | 4,250,000.00 | 4,250,000.00 | ||||||
| Hangzhou GreatStar Tools Co., Ltd. | 63,772,246.86 | 63,772,246.86 | ||||||
| Hangzhou GreatStar Hardware Tools Co., Ltd. | 3,406,500.00 | 3,406,500.00 | ||||||
| Hangzhou GreatStar Sheffield Trading Co., Ltd. | 5,000,000.00 | 5,000,000.00 | ||||||
| Hangzhou GreatStar Intelligent Technology Co., Ltd. | 22,000,000.00 | 20,000,000.00 | 2,000,000.00 | |||||
| Hangzhou United Tools Co., Ltd. | 120,000,000.00 | 120,000,000.00 | ||||||
| Hangzhou Lianhe Electric Manufacturing Co., Ltd. | 21,185,561.86 | 12,818,462.70 | 34,004,024.56 |
| Hangzhou Lianhe Tools Manufacturing Co., Ltd. | 12,804,728.00 | 12,804,728.00 | ||||||
| Lista Holding AG | ||||||||
| Hangzhou Liansheng Tools Manufacturing Co., Ltd. | 10,030,288.26 | 5,056,837.80 | 15,087,126.06 | |||||
| Hangzhou Ole-Systems Co., Ltd. | 9,600,000.00 | 9,600,000.00 | ||||||
| Longyou Hugong Forging Three Tools Co., Ltd, | 104,612,153.88 | 27,000,000.00 | 131,612,153.88 | |||||
| Yiyang Tools Manufacturing Co., Ltd | 48,437,846.12 | 3,305,000.00 | 45,132,846.12 | |||||
| Ningbo Fenghua GreatStar Tools Co., Ltd. | 22,558,141.65 | 22,558,141.65 | ||||||
| PREXISO Laser Measurement Tool (Hangzhou) Co., Ltd | 3,920,000.00 | 3,920,000.00 | ||||||
| Suzhou Xindadi Hardware Product Co., Ltd | 60,000,000.00 | 60,000,000.00 | ||||||
| Zhejiang Guoxin Tools Co., Ltd. | 25,750,000.00 | 25,750,000.00 | ||||||
| Zhejiang GreatStar Tools Co., Ltd. | 464,800,000.00 | 464,800,000.00 | ||||||
| Zhejiang Shiwanke Electrical Appliance Co., Ltd. | 10,000,000.00 | 40,000,000.00 | 50,000,000.00 | |||||
| Geelong(Thailand) Co., Ltd | ||||||||
| GreatStar Tools USA, Inc | 955,660,000.00 | 955,660,000.00 |
| GreatStar Europe AG | 794,984,104.04 | 794,984,104.04 | ||||||
| GreatStar Industrial Vietnam Co., Ltd | 110,499,800.00 | 126,188,262.90 | 236,688,062.90 | |||||
| Hong Kong GreatStar International Co., Ltd. | 978,911,994.66 | 978,911,994.66 | ||||||
| GREATSTAR UNITED KINGDOM LTD | 513,481,870.38 | 513,481,870.38 | ||||||
| Subtotal | 4,105,047,447.89 | 724,545,433.78 | 73,305,000.00 | 4,756,287,881.67 |
(3) Investment in joint ventures
| Invested units | Opening balance | Increase and decrease during the period | ||||
| Book value | Provision for Impairment Individual bad debt | Additional investments | Decrease in investments | Gains and losses on investments recognized under the equity method | Adjustment to other comprehensive income comprehensive income | |
| Joint ventures | ||||||
| Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | 1,387,637,932.17 | 259,947,378.38 | 17,435,798.12 | |||
| Zhejiang Hangcha Holding Co., Ltd | 797,869,729.35 | 138,739,441.51 | 2,817,986.16 | |||
| Zhejiang Guozi Robotics Co., Ltd. | 62,379,261.25 | -72,548,870.44 | -101,852.77 | |||
| Ningbo Donghai Bank Co., Ltd. | 201,743,081.34 | 8,680,923.63 | 948,892.18 | |||
| Hangzhou Weina Technologies Co., Ltd. | 91,920,250.06 | 8,445,616.11 | -278.23 | |||
| Total | 2,541,550,254.17 | 343,264,489.19 | 21,100,545.46 | |||
(Continued)
| Invested units | Increase and decrease during the period | Closing balance | ||||
| Other changes in equity | Declaration of issuing cash dividends or profits | Provision for accrual impairment | Other | Book value | Provision for impairment | |
| Joint ventures | ||||||
| Hangzhou Zhongce Haichao Enterprise Management Co., Ltd. | 5,380,273.50 | 1,670,401,382.17 | ||||
| Zhejiang Hangcha Holding Co., Ltd | 21,082,359.51 | 960,509,516.53 | ||||
| Zhejiang Guozi Robotics Co., Ltd. | 14,432,140.68 | 4,160,678.72 | ||||
| Ningbo Donghai Bank Co., Ltd. | 211,372,897.15 | |||||
| Hangzhou Weina Technologies Co., Ltd. | 100,365,587.94 | |||||
| Total | 40,894,773.69 | 2,946,810,062.51 | ||||
(II) Notes to the income statement items of the parent Company
1. Operating revenues / operating costs
(1) Detailed information
| Item | Current period cumulative | Preceding period comparative | ||
| Revenue | Cost | Revenue | Cost | |
| Main business income | 5,058,479,654.25 | 3,766,003,062.81 | 4,800,335,671.96 | 3,904,877,757.04 |
| Other income | 42,101,660.04 | 26,524,120.66 | 23,591,822.09 | 12,108,053.03 |
| Total | 5,100,581,314.29 | 3,792,527,183.47 | 4,823,927,494.05 | 3,916,985,810.07 |
| including: revenue generated from the contracts with the clients | 5,084,611,479.37 | 3,787,642,082.83 | 4,818,508,234.87 | 3,915,359,557.23 |
(2) The revenue is broken down by the time of transfer of goods or service
| Item | Current period cumulative | Preceding period comparative |
| Revenue is recognized at a point in time | 5,084,611,479.37 | 4,818,508,234.87 |
| Subtotal | 5,084,611,479.37 | 4,818,508,234.87 |
(3) The revenue recognized in the period and included in the opening book value of contractual liabilities is RMB43,237,007.23.
2. Investment income
| Item | Current period cumulative | Preceding period comparative |
| Income from long-term equity investments recognized under the equity method | 343,264,489.19 | 185,125,266.05 |
| Income from long-term equity investments accounted for under the cost method | 137,938,460.00 | 22,750,000.00 |
| Investment income from disposal of long-term equity investments | 6,573,183.33 | -3,000,600.68 |
| Discounting loss on receivables financing | -17,897,921.26 | -7,931,415.18 |
| Investment income from disposal of held-for-trading financial assets | -23,882,353.45 | 3,455,425.60 |
| Including: derivative financial instruments | -23,882,353.45 | 3,455,425.60 |
| Dividend income from investments in other equity instruments during the holding period | 12,400,000.00 | |
| Total | 445,995,857.81 | 212,798,675.79 |
XVIII. Supplementary Information
1. Current non-recurring profit and loss statement
?√ Applicable □ Not ApplicableUnit: RMB
| Item | Amount | Note |
| Profit or loss from disposal of non-current assets | 1,655,224.56 | |
| Government grants included in profit or loss (excluding those closely related to operating activities of the Company and granted constantly affecting the Company's gains or losses in accordance with certain standards based on state policies) | 30,311,586.83 | |
| Profits or losses from changes in fair value of value and disposal of financial assets and liabilities held by non-financial enterprises, excluding those arising from hedging business related to the | -34,667,995.27 |
| Company's normal operating activities | ||
| Profit or loss on entrusted investment or management of assets | 1,915,298.69 | |
| Reversal of impairment provision for accounts receivable subject to separate impairment testing | 96,458.50 | |
| Other non-operating revenue or expenditures | -3,873,470.17 | |
| Less: Effect of income tax | -1,142,001.28 | |
| Non-controlling interest affected (after tax) | 2,457,334.74 | |
| Total | -5,878,230.32 | -- |
Details of gain or loss items that fall into the category of non-recurring gains and losses:
□ Applicable √ Not Applicable
The Company has no other gain or loss items that fall into the category of non-recurring gains and losses.Notes for the situation that the non-recurring gain or loss items as illustrated in the Explanatory Announcement No.1on Information Disclosure for Companies Offering Their Securities to the Public – Non-recurring Profits or lossesare defined as recurring profits or losses
□ Applicable √ Not Applicable
2. Return on equity and earnings per share
| Profit for the reporting period | Weighted average ROE | Earnings per share (RMB/ share) | |
| Basic earnings per share (RMB/share) | Diluted earnings per share (RMB/share) | ||
| Net profit attributable to ordinary shareholders of the Company | 11.89% | 1.4162 | 1.4162 |
| Net profit attributable to ordinary shareholders of the Company after deduction of non-recurring gains and losses | 11.93% | 1.4211 | 1.4211 |
3. Differences in accounting data under domestic and foreign accounting standards
(1) Differences in net profit and net assets in financial reports disclosed simultaneously under IAS and underPRC GAAP
□ Applicable √ Not Applicable
(2) Differences in net profit and net assets between financial reports disclosed in accordance with foreignaccounting standards and those disclosed in accordance with PRC GAAP at the same time
□ Applicable √ Not Applicable
(3) Explanation of the reasons for differences in accounting data under domestic and foreign accountingstandards, and the name of the foreign institution should be indicated if the data that has been audited bythe foreign auditor has been reconciled for differences
4. Others
The impacts caused by implementation of the Explanatory Announcement No.1 on Information Disclosure forCompanies Offering Their Securities to the Public – Non-recurring Profits or losses (revised in 2023), on recurringprofits or losses for 2022
| Item | Amount |
| Net non-recurring gains and losses for 2022 attributable to the parent Company owners | -34,824,547.27 |
| Net non-recurring gains and losses for 2022 attributable to the parent Company owners, as calculated according to the requirements of the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public – Non-recurring Profits or losses (revised in 2023) | -35,095,904.08 |
| Difference | 271,356.81 |