Guangdong Dongfang Precision Science & Technology Co., Ltd.
Semi-Annual Report 2023
【Date of Disclosure】26 July 2023
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
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Part I Important Notes, Table of Contents and DefinitionsThe Board of Directors (or the “Board”), the Supervisory Committee as well as thedirectors, supervisors and senior management of Guangdong Dongfang Precision Science &Technology Co., Ltd. (hereinafter referred to as the “Company”) hereby guarantee that thecontents of this Report are true, accurate and complete and free of any misrepresentations,misleading statements, or material omissions, and collectively and individually accept legalresponsibility for such contents.Tang Zhuolin, the Company’s legal representative, Shao Yongfeng, the Company’s ChiefFinancial Officer, and Yao Bin, the Head of the Company’s Accounting Department (equivalentto Financial Manager) hereby guarantee that the financial statements carried in this Report aretruthful, accurate and complete.All directors of the Company attended in person the board meeting for the approval of thisReport.For possible risks with respect to the Company, please refer to “X Risks Faced by theCompany and Countermeasures” of “Part III Management Discussion and Analysis” herein.And investors are kindly advised to read through the aforesaid contents.The Company has no semi-annual dividend plan, either in the form of cash or stock.
This Report has been prepared in Chinese and translated into English. Should there beany discrepancies or misunderstandings between the two versions, the Chinese version shallprevail.
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Table of Contents
Part I Important Notes, Table of Contents and Definitions ...... 2
Part II Corporate Information and Key Financial Information ...... 7
Part III Management Discussion and Analysis ...... 10
Part IV Corporate Governance ...... 67
Part V Environmental and Social Responsibilities ...... 70
Part VI Significant Events ...... 72
Part VII Share Changes and Shareholder Information ...... 78
Part VIII Preference Shares ...... 86
Part IX Corporate Bonds ...... 87
Part X Corporate Financial Statements ...... 88
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Documents Available for Reference
1. The financial statements signed and sealed by the Company’s legal representative, Chief Financial Officer,and the person-in-charge of the financial organ.
2. All the originals of the Company’s announcements and documents that were disclosed to the public duringthe Reporting Period on the media designated by the CSRC for information disclosure.
3. The 2023 Semi-Annual Report carrying the signature of the legal representative.
4. The documents above are lodged in the Securities Department of the Company, 18A, China Merchants Plaza,1166 Wanghai Road, Shekou, Shuiwan Community, Zhaoshang Street, Nanshan District, Shenzhen City,Guangdong Province, China.
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Definitions
| Term | Definition |
| Dongfang Precision, or the “Company” | Guangdong Dongfang Precision Science & Technology Co., Ltd., and its consolidated subsidiaries, except where the context otherwise requires |
| Dongfang Precision (China) | The corrugated box packaging machinery division of Guangdong Dongfang Precision Science & Technology Co., Ltd. |
| Fosber Italy | Fosber S.p.A. |
| Fosber Asia | Guangdong Fosber Intelligent Equipment Co., Ltd. |
| Fosber America | Fosber America, Inc. |
| Fosber Tianjin | Fosber Machinery (Tianjin) Co., Ltd. |
| Fosber Group | The business group including subsidiaries Fosber Italy, Fosber America, Qcorr, Tiru?a Group, etc. |
| Tiru?a Group | Tiru?a Grupo Industrial S.L. |
| Tiru?a America | Tiru?a America Inc. |
| Tiru?a Asia | Tiru?a (Guangdong) Intelligent Equipment Manufacturing Co., Ltd.( i.e. the former Foshan Yinglian Digital Printing Equipment Co., Ltd., which changed its name during the reporting period.) |
| QCorr | QuantumCorrugated S.r.l. |
| Dongfang Precision (Europe)/EDF | EDF Europe S.r.l. |
| Dongfang Precision (Netherland) | Dong Fang Precision (Netherland) Cooperatief U.A. |
| Dongfang Precision (HK) | Dong Fang Precision (HK) Limited |
| Wonder Digital | Shenzhen Wonder Digital Technology Co., Ltd. (formerly known as “Shenzhen Wonder Printing System Co., Ltd.”) |
| Parsun Power | Suzhou Parsun Power Machine Co., Ltd. |
| Suzhou Jinquan | Suzhou High-Tech Zone Jinquan Business Management Partnership (Limited Partnership) |
| Shunyi Investment | Suzhou Shunyi Investment Co., Ltd. |
| Jaten Robot | Guangdong Jaten Robot & Automation Co., Ltd. |
| Yineng Investment | Hainan Yineng Investment Co., Ltd. |
| Yineng International | Dongfang Yineng International Holding Co., Ltd. |
| Dongfang Digicom | Dongfang Digicom Technology Co., Ltd. |
| Dongfang Digicom (Guangdong) | Dongfang Digicom Technology (Guangdong) Co., Ltd. |
| Corrugated cardboard | Corrugated cardboard is a multi-layer paper-bonding object composed of at least one sandwich layer of wavy medium (commonly known as "corrugated paper", "corrugated medium paper", "corrugated paper medium" and "corrugated base paper") and one layer of cardboard (also known as "liner board"). |
| Corrugated box | Corrugated box is a rigid paper container made of corrugated boards through die cutting, indenting, nailing, or gluing. Corrugated box is one of the most widely used packaging containers in modern business and trade. |
| Corrugated box printing and packaging production line equipment | Corrugated box printing and packaging production line equipment include corrugated box printing and packaging line and stand-alone products that integrates pre-feeding, printing, grooving, die cutting, forming and packaging functions in whole or in part, which is highly functionally integrated, highly automated and highly technical, can save the capital and manpower investment, reduce workers' workload and improve the production efficiency of box manufacturers, and requires equipment manufacturers to be highly competent in design, technological innovation, assembly and finishing of parts. |
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| Corrugated cardboard production lines | Corrugated cardboard production lines are assembly lines comprising corrugating, gluing, agglutinating, bundle breaking, dimension board cutting and output processes, which are used to produce and process corrugated boards. A corrugated cardboard production line has two independent process sections as the wet section and the dry section. The wet section, composed of the base paper stand, auto splicer, preheat pre-regulator, single-face corrugator, feeding bridge, glue machine and double facer, is used to make corrugated based paper into three-layer, five-layer, and seven-layer corrugated boards of different corrugated combinations. The dry section, composed of the rotary shear, slitter indenter, cut-off knife and stacker, is used to slit, indent, cut off and stack corrugated boards as ordered. Corrugated cardboard production lines are key production equipment for corrugated board and box manufacturers. |
| Pre-printing and post-printing intelligent automatic packaging machinery | Pre-printing and post-printing intelligent automatic packaging machinery refers to equipment that is compatible with the corrugated box printing line or stand-alone products and can provide functions related to pre-printing and post-printing processes of corrugated box printing and packaging. It includes the pre-feeder, stripper conveyor, intelligent stacker, and folder gluer. |
| Outboard motors | Outboard motors are a kind of detachable power units that are mounted on the stern plate of a boat to drive the boat to sail. |
| General utility small gasoline motors | General utility small gasoline motors are a kind of thermo-dynamic machinery of 20kW power or less with a wide range of applicability. It is characterized by small size, light weight, and easy operation, and is usually used as a power engine for a variety of terminal products. By the structure of engine and principle of work, general utility small gasoline motors can be divided into two-stroke general utility small gasoline motors and four-stroke general utility small gasoline motors. |
| CSRC | China Securities Regulatory Commission |
| SZSE, or the “Stock Exchange” | Shenzhen Stock Exchange |
| RMB yuan, RMB’0,000 | Expressed in the Chinese currency of Renminbi, expressed in tens of thousands of Renminbi |
| The “Reporting Period” or “Current Period” | The period from 1 January 2023 to 30 June 2023 |
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Part II Corporate Information and Key Financial Information
I Corporate Information
| Stock name | Dongfang Precision | Stock code | 002611 |
| Stock exchange | Shenzhen Stock Exchange | ||
| Company name in Chinese | 广东东方精工科技股份有限公司 | ||
| Abbr. | 东方精工 | ||
| Company name in English (if any) | Guangdong Dongfang Precision Science & Technology Co., Ltd | ||
| Abbr. (if any) | Dongfang Precision | ||
| Legal representative | Tang Zhuolin | ||
II Contact Information
| Board Secretary | Securities Representative | |
| Name | Feng Jia | Zhu Hongyu |
| Office address | 18A, China Merchants Plaza, 1166 Wanghai Road, Shekou, Shuiwan Community, Zhaoshang Street, Nanshan District, Shenzhen City, Guangdong Province, China | 18A, China Merchants Plaza, 1166 Wanghai Road, Shekou, Shuiwan Community, Zhaoshang Street, Nanshan District, Shenzhen City, Guangdong Province, China |
| Tel. | 0755-36889712 | 0755-36889712 |
| Fax | 0755-36889822 | 0755-36889822 |
| Email address | ir@vmtdf.com | ir@vmtdf.com |
III Other Information
1. Contact information of the company
Whether the company's registered address, company office address and its postal code, company website and e-mail address havechanged during the reporting period.
□ Applicable ? Not applicable
The company's registered address, company office address and its postal code, the company's website and e-mail address remainunchanged during the reporting period, which can be found in the 2022 Annual report.
2. Information disclosure and location.
Whether the information disclosure and location have changed during the reporting period.
□ Applicable ? Not applicable
The name of the information disclosure newspaper selected by the company, the URL of the website designated by the CSRC thatpublishes the semi-annual report, and the location where the semi-annual report lodges remain unchanged during the reportingperiod, which can be found in the 2022 Annual report.
3. Other relevant information
Whether other relevant information has changed in the reporting period
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□ Applicable √ Not applicable
IV Key Financial Information
Indicate whether there is any retrospectively restated datum in the table below.
□ Yes √ No
| 2023H1 | 2022H1 | change (%) | |
| Operating revenue (RMB yuan) | 2,082,606,453.72 | 1,535,615,634.26 | 35.62% |
| Net profit attributable to the listed company’s shareholders (RMB yuan) | 206,149,605.30 | 148,199,917.83 | 39.10% |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB yuan) | 162,525,892.40 | 119,896,025.29 | 35.56% |
| Net cash generated from/used in operating activities (RMB yuan) | 191,436,066.52 | 152,250,706.73 | 25.74% |
| Basic earnings per share (RMB yuan /share) | 0.17 | 0.12 | 41.67% |
| Diluted earnings per share (RMB yuan /share) | 0.17 | 0.12 | 41.67% |
| Weighted average return on equity (%) | 4.95% | 4.08% | 0.87% |
| 30 June 2023 | 30 June 2022 | Change (%) | |
| Total assets (RMB yuan) | 7,546,446,714.30 | 6,928,577,115.10 | 8.92% |
| Equity attributable to the listed company’s shareholders (RMB yuan) | 4,310,080,299.27 | 4,063,966,310.23 | 6.06% |
V Accounting Data Differences under China’s Accounting Standards for Business Enterprises(CAS) and International Financial Reporting Standards (IFRS) and Foreign AccountingStandards
1. Net Profit and Equity under CAS and IFRS
□ Applicable ? Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable ? Not applicable
No difference for the Reporting Period.VI Exceptional Gains and Losses? Applicable □ Not applicable
Unit: RMB yuan
| Item | 2023H1 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -2,288,094.62 | |
| Government grants through profit or loss (exclusive of government | 4,339,827.39 |
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| grants given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | ||
| Gain or loss on fair-value changes on held-for-trading and derivative financial assets and liabilities & income from disposal of held-for-trading and derivative financial assets and liabilities and other debt investments (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 40,448,241.27 | |
| Non-operating income and expenses other than the above | 913,829.34 | |
| Less: Income tax effects | -675,162.52 | |
| Non-controlling interests effects (net of tax) | 465,253.00 | |
| Total | 43,623,712.90 | -- |
Details of other profit and loss items that meet the definition of non-recurring profit or loss.
□ Applicable ? Not applicable
No such cases in the Reporting Period.
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the ExplanatoryAnnouncement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/LossItems:
□ Applicable ? Not applicable
No such cases in the Reporting Period.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Part III Management Discussion and AnalysisI Principal Operations of the Company in the Reporting Period(I) Industries in which the Company principally operatesWith “intelligent equipment manufacturing” as its primary strategic focus, Dongfang Precision concentrateson the manufacturing of high-end intelligent equipment. Its principal operations include “intelligent packagingequipment” and “water powersports equipment”. The “intelligent packaging equipment business” consists of smartcorrugated packaging equipment, digital printers, and industrial Internet industry solutions.
Since its IPO on the Shenzhen Stock Exchange in 2011, Dongfang Precision has grown into a global leader insmart corrugated packaging equipment, a leading domestic provider of digital printers, and a top-ranking domesticsupplier of water powersports equipment. The Company is developing its industrial Internet industry solutionsbusiness to upgrade from an intelligent equipment manufacturer to a provider of overall solutions for intelligentplants.According to the Classification of Strategic Emerging Industries (2018) and the Industrial Classification forNational Economic Activities (GB/T 4754-2017), the industries in which the Company principally operates areshown below:
The Company’s Principal Business Divisions and Their Industries
| Strategic emerging industry | Industry | Principal business division | Primary products and their applications |
| Intelligent manufacturing equipment | Specialised equipment manufacturing | Smart corrugated packaging equipment | 1. Corrugated cardboard production lines: The corrugated cardboard production lines are used for the production of corrugated cardboards of different specifications, are the core machinery for corrugated packaging production, and are widely used by medium and large enterprises (cardboard plants) that produce corrugated cardboards in the corrugated packaging industry. 2. Corrugated box printing and packaging production line equipment: The corrugated box printing and packaging production line equipment is used to produce and process corrugated cardboards into corrugated boxes of different specifications and is the back-end machinery of the corrugated cardboard production lines. Of the machinery, the printing unit is the core machinery, of which the peripheral equipment units includes the paper feeder unit, slotting and die cutter unit, stripper transfer unit, FFG and stitching unit, and the counting and palletizer unit. The corrugated box printing and packaging production line equipment is widely used by various enterprises (box plants) that produce corrugated boxes in the corrugated packaging industry. |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Strategic emerging industry | Industry | Principal business division | Primary products and their applications |
| Digital printers | Digital printing is a printing method that generates sheet-by-sheet variable graphic images from digital information. With the help of printhead ink, digital printing enables the formation of the image directly on the printing stocks and can indirectly transmit the colour and auxiliary substances to the print stocks to form the presswork. Digital printing can meet the requirement for industrial production. Wonder Digital, one of the subsidiaries controlled by Dongfang Precision, is a leading supplier of digital printers in China. It is committed to providing digital printers for industries such as paper packaging (colour printing & pre-printing), advertising, home decoration, building materials, and label printing. | ||
| Industrial Internet and supporting services | Software and information services | Industrial Internet industry solutions | Build the Industrial Internet Platform for industry, provide end-to-end solutions and operational services that range from intelligent machinery, integrated management of production and operations of enterprises, intelligent business decision-making, to agile corporate reforms and innovation for corporate customers from more than the paper packaging industry, and promote the step-by-step digital transformation of the business with a focus on essentials such as “connecting + data processing and modeling + data intelligence applications”. |
| Manufacturing of ship auxiliary equipment | Railway, shipping, aviation and other transport equipment manufacturing industries | Water powersports equipment | Outboard motors are a kind of detachable power units that are mounted on the stern plate of a boat to drive the boat to sail and can be applied to boats shorter than 24m in inland rivers, lakes, and coastal waters. They are widely used in water recreation, fishing, water traffic, emergency rescue, shore landing and maritime patrol. |
(II) Industry overview
1. Industry of the smart corrugated packaging equipment and digital printer business
(1) Demand side:
The downstream industry of the Company’s core business, “smart corrugated packaging equipment”, is thecorrugated packaging industry, and the main customers include cardboard plants, box plants, and other business-end (B-end) customers. As a machinery supplier, the Company provides various single machine and completeproduction line products for cardboard and box production and manufacturing, which is relevant to the developmentof the downstream paper packaging industry.
The corrugated box field is one of the major fields of the paper packaging industry, of which the terminaldemand is relevant to the prosperity of consumption and business activities. Corrugated packaging products are
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
used in a vast number of fields, including food and beverage, household chemicals, e-commerce, and express, andare inelastically demanded by consumers. Concerning the growth rate of demand in these fields for corrugatedpackaging, the express and logistics field has grown rapidly, with its share in the total downstream corrugated boxshare continuously increasing between 2017 and 2021.Between 2017 and 2021, the domestic express business recorded rapid growth, with a compound annual growthrate (CAGR) of approximately 28%. Despite a slight drop in growth in 2022, the volume of express business acrossChina still maintained growth. By estimation, with the recovery of GDP growth in 2023, the growth of the volumeof express business is expected to get back onto the rapid growth track. This will boost the development of thecorrugated packaging industry.Movements in the Business Volume of Express Enterprises above the Designated Size in China between 2016
and 2022
According to the China Express Development Index Report for June 2023 released by the State Post Bureauin July 2023, the express delivery industry maintained a stable foundation and steady growth in the first half of 2023,demonstrating strong resilience and good potential. Express delivery volume exceeded 60 billion pieces in the firsthalf, up over 17% YoY. Online promotions were frequent during multiple holidays in the first half, especially duringthe "618" online shopping festival, with daily collection volume exceeding 400 million pieces each day from 16-20June. In the second half, the industry is still expected to grow as new infrastructure operates normally and theexpansion of networks to rural areas accelerates. The steady growth of the express delivery industry continues tohave a positive impact on the domestic corrugated packaging industry.The terminal market demand is constantly unleashed, increasing the demand for the expansion of theindustry’s capacity: Over the past few years, the scale of China’s express corrugated packaging market has beenon the rise. According to the data released by the China Paper Association, the express corrugated packaging marketis continuously scaled up in China. By the forecast of Qianzhan Industry Research Institute, the scale of China’sexpress corrugated packaging market will continue to rise in the upcoming years and is estimated to reach RMB86.4
1,083
1,106
1,0001,200
2016201720182019202020212022
2016年-2022年中国快递业务量(单位：件）
(单位：件）Volume of Chinese Express Business between 2016 and 2022 (Unit: Piece)
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
billion by 2025 (CAGR for 2019 to 2025: Approximately 15%). Terminal markets, including the express, electronics,and household chemicals terminal markets, show an increasing demand for corrugated box and board packaging,which will drive the expansion of the capacity of corrugated packaging enterprises and thus increase the demandfor corrugated packaging machinery, benefiting the machinery manufacturers.Robust overseas demand: In recent years, corrugated packaging markets in Europe and the US have operatedat high levels due to factors like global supply chain restructuring, onshoring of manufacturing in Europe and theUS, and increased overseas consumer online spending.Based on financial analysis of major listed corrugated packaging companies in Europe and the US, Capexexpenditures (including equipment, land, factories, etc.) of major corrugated packaging companies hit record highsin absolute terms in 2022. According to China Customs statistics, China's exports of printing equipment totalledUSD3.109 billion in 2022, up 8% YoY, of which printer exports were USD1.873 billion, up 16% YoY. From Januaryto March 2023, China's printing equipment exports were USD734 million, up 10% over the same period in 2022,of which printer exports were USD441 million, up 13% YoY.
In recent years when environmental pollution becomes more and more serious, growing environmentalawareness has led to “plastic bans and restrictions” across the world, providing a major boost to paper as analternative to plastic. England announced a ban on single-use plastics starting October 2023, covering items likedisposable plastic plates, trays, bowls and utensils. France is phasing in bans on single-use plastic packaging foraround 30 fruits and vegetables starting January 2022. The U.S. Department of the Interior announced that single-use plastics will be gradually phased out in national parks and other public lands by 2032. The global greenpackaging market is projected to grow from USD262.27 billion in 2023 to USD381.98 billion in 2028, with acompound annual growth rate of 7.81% during the forecast period (2023-2028).Phase and clear out machinery with backward capacity and continue to upgrade machinery: China’spaper packaging industry market shows a low concentration degree. In 2021, the CR5 of paper packaging enterprisesabove the designated size was only 14%. Additionally, the industry has a number of low-end small and medium boxplants, presenting a highly decentralized competitive landscape. With the brand-based development and upgradingof the downstream terminal consumer industry, the requirements of corporate customers for corrugated boxesgradually increase. Concurrently, the supply-side upgrading of the industry is an inevitable trend, and the industrywill boost its concentration through market competition, capacity upgrading, and M&A. This trend will boost theupgrading and iteration of technologies and machinery and accelerate industry integration. Additionally, it isestimated that the line machinery that is more intelligent and productive will replace the existing corrugatedcardboard production lines and corrugated box printing and packaging production line equipment in the upcomingfive to ten years.By statistics, there are over 6,000 existing corrugated cardboard production lines in the domestic market, andmore corrugated box printing and packaging machinery, which will be replaced by more intelligent ones with higherproduction efficiency in the next five to ten years. Data show that the domestic market share of the 15 listedcorrugated packaging companies in China combined has risen from 5.7% in 2017 to 10.1% in 2022, indicating thecontinued concentration of the domestic corrugated packaging industry and the steadily increasing market share ofmajor manufacturers. In 2022, the new additions to the domestic corrugated and liner board capacity were 5.24
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
million tonnes, and the phased-out capacity was 1.84 million tonnes, resulting in a net new capacity of 3.4 milliontonnes.Digital and intelligent upgrading of the paper packaging and printing industry bring new developmentopportunities: The traditional production mode has caused domestic paper packaging and printing enterprises tobe overly dependent on skilled technicians at critical positions and slow to identify the outdated management mode.The “strategy of robot assembling line” and “smart factory” are increasingly recognized by the industry. Amidintelligent manufacturing, the paper packaging and printing industry will usher in industrial upgrading andtransformation. Additionally, leading packaging enterprises, including Xiamen Hexing Packaging Printing Co., Ltd.(HXPP), MYS Group Co. Ltd. (MYS), Shenzhen YUTO Packaging Technology Co., Ltd., and Shenzhen JinjiaGroup Co., Ltd., have pushed ahead with Internet-based development in recent years by entering into intelligentmanufacturing, cloud printing, or other markets, expected to launch a revolution in the Internet-based developmentof the paper packaging and printing industry and injecting new impetus into industry integration. Concurrently, amidintelligent manufacturing and Internet-based packaging, leading enterprises engaged in corrugated packagingmachinery are also expected to embrace new development opportunities.By estimate, the scale of the global corrugated packaging machinery market is approximately RMB30 to 40billion.
(2) Supply side:
A. World-leading comprehensive strengthCorrugated cardboard production lines: Major manufacturers of corrugated cardboard production lines aroundthe world include Fosber Group, BHS (Germany), Marquip (a wholly-owned subsidiary of the American Barry-Wehmiller), and J.S. Machine. Among them, Fosber Group and its major rival from Germany, BHS, lead the othersand are leaders in the global middle- and high-end corrugated cardboard production line field. Fosber Group holdsapproximately 30% of the global middle- and high-end corrugated cardboard production line market and more than50% of the North American market.Corrugated rollers, key components of corrugated cardboard production lines: The subsidiary Tiru?a Group isa time-honoured and prestigious corrugated roller supplier, specializing in the production of corrugated rollers andpressure rollers for industrial corrugated cardboards. It leads the global market.Corrugated box printing and packaging production line equipment: Major manufacturers in this field includeDongfang Precision, Bobst (Switzerland), Gopfert (Germany), Ward (a wholly-owned subsidiary of the AmericanBarry-Wehmiller), Ding Long (Shanghai), and Guangzhou Keshenglong. Dongfang Precision is an industry leaderin China and is competitive with the global industry leader, Bobst, from Switzerland. With an advantage in globalresource coordination, leading design concept, excellent overall R&D strength, and a product system featuringcomplete categories and rich specifications, the Company can produce products that meet dozens of specificationsand different market positioning, covering fixed/open-close type, top printing/bottom printing, and completeproduction line (inline) products/single machine, and has the completest product lines and richest product base ofthe corrugated box printing and packaging production line equipment worldwide.
Digital printing: Major manufacturers include Wonder Digital, Hanway (China), Atexco, HP (the US), and EFI
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
(the US). The subsidiary, Wonder Digital, takes the lead among global suppliers of digital printing solutions inapplying high-speed inkjet printing technology to corrugated packaging and is committed to extending digitalprinting technology to such fields as home building materials, label printing, and advertising. Digital printers underthe brand Wonder has been sold at home and abroad since Wonder Digital was established in 2011. Statistically,more than 1,400 pieces of machinery have been sold to over 80 countries around the world.In conclusion, Dongfang Precision leads the world in terms of its comprehensive strength in smart corrugatedpackaging equipment business and can provide downstream customers such as cardboard plants and box plants with“one-stop” machinery and service support that covers each production process, including corrugated cardboardproduction, corrugated box production, and pre-printing and post-printing production processes, and differenttechnology roadmaps, including flexographic printing and digital printing. In terms of the size of revenue, DongfangPrecision’s corrugated packaging machinery business accounts for approximately 10% of the global industrymarket, ranking first among domestic enterprises of the same type and second in the global market.B. The rapid development of digital printing brings more development opportunities for the industry.According to the report The Future of Inkjet Printing to 2023 released by the research institution, Smithers Pira,in the global presswork and packaging field, the market scale of inkjet printing technology between 2013 and 2018increased from USD43.4 billion to USD69.6 billion and is expected to reach USD109 billion in 2023, with a CAGRof nearly 10%. The percentage of inkjet printing in the entire printing market is expected to increase to 13.0% in2023.
Scale of the Inkjet Printing Market in the Global Presswork and Packaging Field
According to the latest report The Future of Inkjet Printing to 2027 by Smithers Pira, the market value of inkjetprinting in graphic printing and package printing globally reached USD86.8 billion in 2022. The inkjet printingmarket has grown strongly over the past 5 years. Total inkjet printing output in 2022 was 46.2% higher comparedto 2017, with printed volume growing by over two-thirds. The report forecasts that growth of inkjet printing inpackaging will be most rapid from 2022 to 2027, with expected compound annual growth rates of 17.7% by
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
shipment quantity and 16.3% by value.
Digital inkjet printing without the need to produce costly and time-consuming printing plates or rollers, andhas a more comprehensive data variability, higher packaging flexibility, lower operating costs, in the production ofsmall orders, digital printing than the traditional analog printing technology (flatbed printing, letterpress, gravure,silkscreen, etc.), more cost-effective, more economical. Digital printing was initially used for short-run printing andthen gradually expanded to long-run printing. Digital printing can be better for business users to provide flexibleand rapid response capabilities, support and can be better on-demand printing business model.In the field of label printing, digital printing has occupied a significant share of the market. Other applicationareas of digital printing technology include home decoration, textile printing, ceramics, electronics, glass,automotive, biomedical, 3D printing, and so on.Wonder Digital’s digital printing technology enables the documents on the computer/mobile phone to bedirectly printed on corrugated cardboards, offset cartons, and other packaging materials. The technology allows one-sheet printing and can present the effects of the finished products without platemaking, imposition, and colourcalibration. Additionally, the technology enables immediate problem remediation, variable printing, and printing ondemand. The major advantages of the technology are shown as follows:
(1) Convenient and fast
Digital printing enjoys an absolute advantage in small and medium batches of printing and urgent printingneeds as it saves tedious processes, such as platemaking, imposition, and colour calibration. It enables electronicdocuments generated via typesetting software, design software, and office applications to be directly output to digitalprinters.
(2) Cost-saving
Digital printers require no platemaking, so no platemaking fees will be incurred. Additionally, there are multi-pass and single-pass digital printers, and the volume of waste ink every month is only 1 L to 20 L.
(3) More user-friendly and easier-to-operate with human-machine interaction
Wonder Digital’s digital printers feature high levels of system integration and human-machine interaction inproduct design and technical implementation. Compared to traditional package printers, they are more user-friendlyand easier-to-operate. Traditional package printers require highly skilled and experienced operators, who need longtraining periods to become proficient. Wonder Digital’s digital printers can be operated after simple training, withjust one person needed to operate a multi-pass digital printer and two to run a single-pass inline for mass production.
(4) One-sheet printing
Although it does not take long to complete small batches of printing orders, such orders still share the samecomplex and time-consuming printing commissioning process with large batches of printing orders. Therefore, boxprinting and colour printing usually have standards for the base number of sheets for printing. If the base numbercannot be met, the printing cost of a single sheet will be increased. Digital printing enables one-sheet printing andimmediate availability. Additionally, it can flexibly perform small and medium batches of production. Moreover,one piece of neutral machinery can be fully operated by one person and covers less production space.
(5) Product quality
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Digital printing adopts inkjet printing technology. It can be divided into water-based ink printing and UVprinting in terms of the ink type and printing effects. As digital printing technology constantly improves, WonderDigital’s WD200 series can rival traditional HD water-based ink printing in terms of printing effects, while WonderDigital’s WDUV series achieves the spot colour effects of traditional offset printing.
(6) Product quality
Digital printing adopts inkjet printing technology. It can be divided into UV printing (including colour printing& pre-printing, with printing effects close to colour offset printing) and water-based ink printing (including colourprinting & pre-printing, with water-based dye/pigment inks, etc.) in terms of the ink type and printing effects. Withcontinuous improvements in technology, the printing effects of Wonder Digital’s WD200++ digital printer seriesapproach those of traditional HD water-based ink printing, while the printing effects of Wonder Digital’sWDUV200++ digital printer series rival those of traditional colour offset printing.
(7) Printing efficiency
The printing process of traditional printers is complex, with a long order-to-delivery time. From design -customer review – plate making - plate exposure - sampling - customer approval - printer imposition - plate exposure- plate adjustment - colour matching - completion, it takes at least three days. With digital inkjet printing technology,there are just three steps: design - customer review - completion, greatly improving printing efficiency.
2. Industry of the industrial Internet industry solutions business
According to the Classification of Strategic Emerging Industries (2018), Dongfang Precision’s “industrialInternet industry solutions” business division falls under the “industrial Internet and supporting services” industry.
Policy side: The Guiding Opinions of the State Council on Deepening the “Internet plus AdvancedManufacturing” and Developing the Industrial Internet released by the State Council in 2017 marked China’s officialentry into digital development from information-based development in terms of industries. “Accelerate thedevelopment of the industrial Internet” was proposed for the first time in the report on government work in 2018and became a frequent visitor in the reports on government work for the next five years. In 2020, the NationalDevelopment and Reform Commission stated that, as one of the new network infrastructure types, the industrialInternet is a part of the new infrastructure. Under the guidance of a range of policies, the industrial Internet andsmart factory have become the strategic development orientation of the transformation and upgrading of China’smanufacturing.
Market side: China is the only country in the world whose industries cover all industrial categories in theUnited Nations’ industrial classification. Concurrently, it is expected to grow into the world’s largest industrialdigitalization market. For the current manufacturing industry of China, digital transformation is no longer an “option”but a “compulsory course” that is critical to its survival and long-term development.
As the manufacturing industry enters the “Industry 4.0” era, an increasing number of manufacturing enterpriseshave realized that buying production equipment, enterprise resource planning (ERP) systems, or manufacturingexecutive systems (MES) cannot meet the systematic requirements of intelligent manufacturing. By contrast,industrial Internet platforms can systematically resolve all critical issues that cannot be handled through traditionalmeans. According to the Bluebook on the Digital Transformation of Enterprises--Empowering the Low-carbon and
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Green Transformation of the Real Economy with New IT released by the China Academy of Information andCommunications Technology, after relevant manufacturing enterprises complete digital transformation, on average,their production efficiency will be boosted by 37.6%, their operating expenses will be lowered by 21.2%, and theirenergy utilisation rate will be improved by 16.1%. Concurrently, with the rapid development and continuousiteration of the new-generation information technology, the cost of digital transformation of enterprises is graduallydecreasing, and more and more industrial enterprises will implement industrial Internet-based digital transformation.
According to the data released by Frost & Sullivan, the scale of the market of industrial Internet platforms andrelevant solutions in China by 2025 is estimated to reach RMB193.12 billion. Between 2021 and 2025, the CAGRof the market of industrial Internet platforms and relevant solutions in China is approximately 45.3%.The Scale of the Market of Industrial Internet Platforms and Relevant Solutions and Forecast between 2020 and
2025
Supply side: According to the White Paper on the Economic Development of the Industrial Internet Industryin China (2022), participants in the construction of industrial Internet platforms in China are diversified. Leadingmanufacturing enterprises, information and communications enterprises, and Internet-based enterprises buildindustrial Internet platforms in different dimensions and from different perspectives based on their own comparativeadvantages, enabling China’s industrial Internet industry to enjoy industrial enterprises, ICT enterprises, and Internetenterprises at the same time.
The key technologies and industries that the industrial Internet involves are extensive and complex and canhardly be fully covered by enterprises. Thus, developing the industrial Internet by relying on industrialmanufacturing enterprises becomes a typical development path of industrial Internet enterprises, such as Root Cloud,Midea Cloud, and Baosight. In the packaging field, major manufacturers that provide industrial Internet-relatedproducts and solutions services include Yunyin, Dongfang Digicom, and wantit.
The subsidiary Dongfang Digicom, carrying Dongfang Precision’s missions of expanding into the industrialInternet industry and implementing “digital and intelligent transformation strategies”, was established in 2020. With
| RMB'00 million |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
the vision “to become a world-leading provider of industrial Internet industry solutions”, Dongfang Digicom isengaged in building industrial Internet platforms for industries using new-generation information technologies, suchas the IoT, cloud computing, big data, and artificial intelligence and becoming a leader in the domesticmanufacturing industry in digital and intelligent upgrading.
3. Industry of the water powersports equipment business
According to the Classification of Strategic Emerging Industries (2018), the water powersports products of thesubsidiary, Parsun Power, fall under the “manufacturing of marine equipment” industry. The outboard motors areParsun Power’s main water powersports products. Outboard motors are the key auxiliary equipment for small- andmedium-sized ships and are characterized by their compact structures, light weights, convenient installation andmaintenance, easy operations, and low noise. They are widely used in water recreation and sports, fishing, watertraffic, emergency rescue, shore landing, and maritime patrol.
Applications of Parsun Power’s Outboard Motors
| Field | Scenario | Example |
| Recreational | Recreational fishing, sailing and water sports | |
| Commercial | Fishing, water traffic and waterway maintenance |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Official and military | Emergency rescue and maritime patrol Beach landing and water reconnaissance |
With global economic growth, personal income increase, and the change in personal consumption habits, theglobal outboard motor market trends toward stable growth. Considering the development of China’s water tourismand recreational industry and the emphasis of the government on maritime rights, the Chinese government agenciesat all levels have granted vigorous policy support to ship-related industries. For example, the National Developmentand Reform Commission has included high-performance ships, such as superyachts, luxury cruise ships, marinesurveillance vessels, and small-waterplane-area twin hulls, among items for encouragement. The Ministry ofIndustry and Information Technology has proposed developing brand products, such as luxury superyachts,sightseeing boats, and official boats. The State Council has also proposed vigorously developing marine tourism,manufacturing localised tourism equipment such as cruises and cruise yachts, and vigorously developing cruiseyacht tourism. Under the guidance of policies, China’s yacht industry will usher in rapid development.According to the report released by Global Market Insights Research Private Limited, an international marketresearch institution, in terms of sale volume, the sale volume of the global outboard motors in 2022 reached 888,600and is expected to reach 1.171 million by 2030, with a CAGR of 3.50% from 2022 to 2030. In terms of revenue,the size of the global outboard motor market in 2022 was USD10.572 billion and is expected to reach USD15.975billion by 2030, with a CAGR of 5.30% from 2022 to 2030. With global economic growth, personal income increase,and the change in personal consumption habits, the global outboard motor market trends toward stable growth.Global Sales and Market Size of Outboard Motors between 2022 and 2030 (Units: ’0,000 Pieces; USD’00
Million)
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
According to the GMI report, the sizes of the global low-horsepower and medium- and high-horsepoweroutboard motor markets in 2022 were USD2.145 billion and USD8.426 billion, representing 20.29% and 79.71%of the total, respectively. Among the two types of markets, the medium- and high-horsepower outboard motormarket had a larger size. Between 2022 and 2030, the CAGRs of the global low-horsepower and medium- and high-horsepower outboard motor markets are 5.40% and 5.27%, respectively, indicating that the global outboard motormarket is driving the development recreational and luxury yachts and obviously trending toward high-horsepoweroutboard motors.The Sizes of Markets of Outboard Motors with Different Horsepowers between 2022 and 2030 and
Estimations (USD’00 Million)
In terms of Chinese market, by the GMI report, the sale volume of outboard motors in the Chinese market in2022 reached 43,000 and is expected to reach 75,800 by 2030, with a CAGR of 7.34% from 2022 to 2030,substantially larger than the 3.50% of the global market. In terms of sales, the size of the Chinese outboard motor
| 020406080100120140160180020406080100120202220232024202520262027202820292030数量金额（右轴） | |||
| Amount (right axis) | |||
202220232024202520262027202820292030
小马力中大马力
| 020406080100120140202220232024202520262027202820292030小马力中大马力 | ||
| Medium-and high-hp | ||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
market in 2022 was USD282 million and is expected to reach USD588 million by 2030, with a CAGR of 9.62%from 2022 to 2030, also substantially larger than the 5.30% of the global market.Size of the Chinese Outboard Motor Market and Estimation between 2022 and 2030 (Units: ’0,000 Pieces;
USD’00 Million)
Worldwide, the outboard motor industry is dominated by Japanese and American brands, including Yamaha,Japan (an outboard motor brand under Yamaha Motor) and Mercury, USA (an outboard motor brand under BentfieldGroup). China has become one of the world’s fastest-growing outboard motor markets owing to its rapid economicgrowth and changing recreational habits. With the rise of domestic brands represented by Parsun Power, domesticsubstitution has gradually become one of the mainstream trends in the development of the outboard motor industryin China, and there is the huge market potential for domestic substitution.(III) Principal operations of the Company in the Reporting PeriodWith “intelligent equipment manufacturing” as its primary strategic focus, Dongfang Precision concentrateson the manufacturing of high-end intelligent equipment. Its principal operations include “intelligent packagingequipment” and “water powersports equipment”. The “intelligent packaging equipment business” consists of smartcorrugated packaging equipment, digital printers, and industrial Internet industry solutions.
| NumberAmount (right axis) |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Business Divisions and Entities of Dongfang Precision
1. The intelligent packaging equipment business
A. Corrugated packaging equipmentThe most vital component of Dongfang Precision’s intelligent packaging equipment business is the smartcorrugated packaging equipment business, which includes corrugated cardboard production lines, corrugated boxprinting and packaging production lines, as well as corrugated & pressure rollers.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Relationship between Corrugated Packaging Manufacturing Value Chain and the Company's Smart Corrugated Packaging Equipment
Raw paperKraft paper
Kraft paperCorrugated boxes
Corrugated boxesIntelligent high-speed corrugated cardboard production line
Intelligent high-speed corrugated cardboard production lineHigh-precision corrugated cardboard production line
High-precision corrugated cardboard production lineCorrugated box printing and packaging production line (top printing fixed type)
Corrugated box printing and packaging production line (top printing fixed type)Corrugated box printing and packaging production line (bottom printing open-close type)
Corrugated box printing and packaging production line (bottom printing open-close type)Corrugated cardboard
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
a) Corrugated cardboard production linesDongfang Precision’s corrugated cardboard production line business primarily consists of Fosber Group andthe majority-owned subsidiary Fosber Asia. Fosber Group includes Fosber Italy, Fosber America, QCorr, Tiru?aGroup, etc.
(1) Fosber Italy
Fosber Italy, a subsidiary, specializes in manufacturing mid-to-high-end corrugated cardboard production linesunder the Fosber brand. The product line includes two major series, namely S-Line and C-Line, which cater towidths ranging from 2.5 meters to 2.8 meters and speeds ranging from 250 meters/minute to 470 meters/minute.These corrugated lines are applicable for producing corrugated cardboard with a thickness of 2mm to 13mm, knownfor their high load-bearing capacity, excellent shock resistance, plasticity, and environmental performance. Theresulting corrugated cardboard is extensively used in fields such as logistics and express delivery, furniture andhousehold appliances, and electronic product packaging, serving as the outer packaging for various types ofcorrugated boxes.The primary markets for Fosber Italy’s mid-to-high-end corrugated cardboard production line products areEurope, North America, and Latin America. The company’s primary research and production base is situated inLucca, Italy.
(2) Fosber America
Fosber America, a subsidiary, is a top-notch provider of equipment and services for corrugated cardboardproduction lines in the North American market. The company is renowned for its world-class installation, training,service, spare parts, and upgrade support. Fosber America’s production base is located in Green Bay, Wisconsin,and it has a market share of over 50% in the mid-to-high-end corrugated cardboard production line industry in theUnited States, making it the top-ranked company in the market.
(3) Fosber Asia
Fosber Asia, a subsidiary, specializes in homegrown S/Line and Pro/Line series corrugated cardboardproduction lines, which cover widths ranging from 2.2 meters to 2.8 meters and speeds ranging from 180meters/minute to 370 meters/minute. It also provides single module products such as the Instant Set and PaperLinksystems for corrugated cardboard production lines.
Fosber Asia mainly serves the Chinese market, as well as countries along the Belt and Road Initiative routesuch as Southeast Asia, South Asia, the Middle East and Africa, in addition to Eastern Europe and Latin America.
Fosber Asia’s high-end corrugated cardboard production lines incorporate design concepts from the Italianbrand of Fosber, and are customized and produced locally based on the needs of Chinese customers. Fosber Asiaaims to provide corrugated cardboard production lines that are high-tech, high-performance and cost-efficient tosatisfy needs of corrugated packaging industry customers. Supported by China’s most complete supply chains acrossall industrial sectors globally, around 90% of the components of Fosber Asia’s corrugated cardboard productionlines are manufactured domestically.
(4) QCorr
QCorr, a subsidiary, specializes in manufacturing Quantum Line, Wavy Line, and other related products. The
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Quantum Line production line is primarily used for creating solid fiberboard below 2mm and micro flute corrugatedboard, covering widths ranging from 1.8 meters to 2.5 meters. With innovative designs and new production processconcepts, the Quantum Line boasts unique technical features and compact dimensions. Solid fiberboard and microflute corrugated board are known for being lightweight, strong, moisture-resistant, and environmentally friendly. Assuch, they are widely used in offset carton packaging, high-end products, electronic products, and cultural andartistic product packaging. QCorr and Fosber’s corrugated cardboard production lines have excellentcomplementarity from the standpoint of the end-use application fields of the manufactured cardboard products. Thediverse range of products offered by both brands covers the entire spectrum of end-use application requirements,ensuring comprehensive coverage.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Primary Product Portfolio of Dongfang Precision’s intelligent packaging Equipment Business - Corrugated Cardboard Production Lines
| Product type | Brand | Product image | Main characteristics |
| Corrugated Cardboard Production Lines | Width: 2.5m~2.8m Design speed: 250~470 meters/minute; Designed for large corrugated board manufacturers "Extended engagement" beltless technology; Cadre without lubrication technology; No-speed drop cadre gapless sheet change Industry leading changeover times; Optimal board quality and low operating costs; Industry-leading Syncro4 system control Process Control Supervision (PCS) Data Tracking Supervision (DTS) | ||
| Widths from 1.8 meters to 2.5 meters Innovative design Compact and flexible More suitable for lightweight corrugated board production | |||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Design speed: 180~320 meters/minute Integrated machine unit with staggered stacking Single-watt, double-watt and triple-watt wet section Beltless technology for wet section; Lubrication-free technology in the dry section; High board quality and low operating costs; Industry-leading Syncro4 system control; Process Control Supervision (PCS); Data Tracking Supervision (DTS) | ||||||
| Pro/Line | ||||||
| Dual-module slitter Gapless order change speed of 250 meters/minute Positioning accuracy of +/-0.5mm, 3 seconds to change order and arrange knives | ||||||
| 秒机（Instant Set） | ||||||
| Corrugated & pressure rollers | The world's leading supplier of corrugating rolls and pressure rolls with industry-leading machining and tungsten carbide treatment | |||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
b) Corrugated box printing and packaging production linesIn this regard, the primary business entities are Dongfang Precision (China) and Dongfang Precision (Europe).Dongfang Precision (China) specializes in offering a diverse range of corrugated box printing and packagingcomplete lines, including fixed/open-close type, top printing/bottom printing corrugated converting lines. The“Dongfang Star” series consists of top printing fixed type and top printing open-close type FFG inlines, while the“Super Star” series comprises bottom printing die cutter stripper vacuum stacker converting lines, bottom printingopen-close type FFG inlines, bottom printing open-close type/FFG & stitchers, and other products. Furthermore,Dongfang Precision (China) provides a wide range of market-oriented corrugated box printing and packagingproduction line equipment in different specifications to meet customer demands. The products are highly popularnot only in the domestic market but also exported to over 30 countries and regions worldwide, including Europe,America, Asia, Africa, Latin America, and Oceania.Dongfang Precision (Europe), a subsidiary, specializes in high-end corrugated converting line products. Thecompany offers a range of products, including FD series quickset top printing FFG, HGL series quickset bottomprinting FFG, and quickset bottom printing/die cutter stripper vacuum lines. These products are designed with non-crush feeder design, full servo control, and fully automatic control features, making them suitable for high-definitionprinting. Dongfang Precision (Europe) also provides various pre-printing and post-printing equipment compatiblewith the complete line products, such as feeder unit, stripper transfer, intelligent palletizer, and folder gluer, toenhance the efficiency and quality of the entire production process. Dongfang Precision (Europe) primarily targetsthe European and American markets.c) Corrugated & pressure rollersTiru?a Group, a subsidiary, is a specialist in the production of corrugated rollers and pressure rollers for thecorrugated cardboard industry. Leveraging years of experience in the field, Tiru?a is well-versed in all types ofcorrugated cardboard production lines and can manufacture a diverse range of corrugated rollers and pressure rollers.Additionally, the company can design and produce customized rollers to meet the specific needs of customers,taking into account their machine types, special coating requirements, and paper characteristics. Tiru?a possessesstate-of-the-art coating roll equipment and patented polishing equipment, and is highly specialized in re-cutting, re-casting, and coating techniques.Dongfang Precision aims to further strengthen synergy across its various business divisions within the Groupand capitalize on China’s competitive advantage in global manufacturing. To better support the domestic high-endcorrugated cardboard production line business, the company plans to introduce Tiru?a’s corrugated roller andpressure roller business to China in 2023. This will involve the establishment of the Tiru?a Asia team and thecreation of a new subsidiary, Tiru?a Asia, located in the Nanhai District of Foshan City. This strategic move willenable the localization of corrugated roller and pressure roller business, catering to the needs of DongfangPrecision’s corrugated cardboard production line business. At the same time, it will expand the Tiru?a brand’scorrugated roller and pressure roller into new markets in China and Asia.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Primary Product Portfolio of Dongfang Precision’s Smart Corrugated Packaging Equipment Business - Corrugated Box Printing and Packaging Production Line Equipment
| Product type | Brand | Product image | Main characteristics | ||||
| Integrated corrugated box printing and packaging lines | Upper printing fixed type Full servo control No downtime for plate change 2 minutes quick order change Vacuum adsorption large belt, high precision cardboard transfer, long service life Energy saving up to 30 Only 2 people are needed to operate the whole line | ||||||
| DONGFANG STAR I QUICKSET TOP PRINTING FFG | |||||||
| Print-on/off type Vacuum adsorption roller transfer; Computerized adjustment, easy to operate; High speed and stable operation; Patented folding structure; Improve carton molding effect Only 2-3 persons are needed to operate the whole line | |||||||
| DONGFANG STAR II TOP PRINTING OPEN-CLOSE TYPE FFG | |||||||
| Suitable for shaped box, machine box and pre-printed box, etc., with one point and multiple die-cutting. Mature down-printing die-cutting technology; Clean chip removal and accurate counting Efficient production; Uninterrupted feeding; No-speed down output of bundles, flexible palletizing methods Configurable for double-sided printing; 2-3 person operation | |||||||
| Asia-Pacific STAR I BOTTOM PRINTING DIE CUTTER STRIPPER VACUUM STACKER CONVERTING LINE | |||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Product type | Brand | Product image | Main characteristics | |||
| Integrated corrugated box printing and packaging lines | Vacuum adsorption roller transfer Computerized adjustment of the whole machine, easy to operate Good effect of clearing waste, can realize one opening and two die-cutting line gluing carton. Patented folding structure improves carton molding effect. The whole line is operated by 2-3 persons | |||||
| Asia-Pacific STAR II BOTTOM PRINTING OPEN-CLOSE TYPE FFG INLINE | ||||||
| Design concept of down-printing type gluing and nailing as a whole Multi-purpose machine, to meet the production needs of different orders Saving space, reducing process, greatly reducing labor cost. Multiple pre-pressure to enhance folding and molding effect, precise control of molding accuracy. | ||||||
| Asia-Pacific STAR III BOTTOM PRINTING OPEN-CLOSED TYPE/FFG & STITCHER | ||||||
| High-end down-printing fixed in-line Spindle servo drive Quick order change Complete pre-press and post-press supporting units | ||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
d) Business model of the smart corrugated packaging equipment businessR&D model: The Company has industry-leading independent design and R&D capabilities, continuallyestablishing high-level R&D innovation management mechanisms. The R&D team, spearheaded by industry experts,employs a blend of long and short-term product R&D planning, supported by a market-oriented R&D mechanism.Additionally, a robust R&D talent incentive mechanism enhances the Company’s overall technical proficiency,cementing its leadership position in the industry.Procurement and production model: The Company procures raw materials, such as steel plates, metalcomponents, and electrical parts (such as motors and PLCs), from external suppliers, while producing some corecomponents and corrugated rollers in-house.
The majority of the Company’s equipment products adhere to a “made-to-order production” model. Uponreceiving orders and partial deposits from customers, the Company purchases raw materials from suppliers basedon specific customer requirements and inventory levels, and develops production plans and schedules. TheCompany advocates a “lean production” model for production and operational management, ensuring precisecontrol over BOM costs and manufacturing expenses, while continuously enhancing operational efficiency.Typically, the delivery time for corrugated cardboard production line orders ranges between 4 to 6 months, whilethe delivery time for corrugated box printing and packaging production line equipment orders is approximately 2 to3 months.Marketing Model: The Company employs a “direct selling + distribution” marketing model. It utilizes a directsales approach for the domestic market and a combination of direct sales and agent distribution for overseas markets,tailoring the strategy to suit the unique needs of different countries and regions. This approach not only widens thescope of sales channels and increases sales volume but also reduces market expansion and sales costs.The Company’s complete production line and single machine products are typically one-time sales, with moresignificant transaction amounts. However, accessories, software, and services can be sold multiple times throughoutthe lifecycle of complete production line or single machine products. The growing number of existing equipmentsold in the downstream industry market presents a steady stream of sales opportunities for accessories, software,and services. Additionally, providing high-quality technical support and services helps to promote the sales ofcomplete production line products.In terms of the settlement of orders, the Company enjoys a high brand awareness and superior bargain powerin the industry, so it collects down payment in advance and payment by stages for the sales of corrugated cardboardproduction lines and corrugated box printing and packaging equipment. Generally, 80% to 90% of the sales paymentcan be collected upon the delivery of products.B. Industrial Internet industry solutionsDongfang Digicom, a subsidiary of Dongfang Precision, serves as the primary business entity for “industrialInternet industry solutions”. The company’s business comprises two main divisions: the “Industrial InternetPlatform for Industry” and the “Factory-wide Intelligent Logistics System”.
1. Industrial Internet Platform for Industry
Leveraging the extensive industry experience of Dongfang Precision spanning over three decades in the field
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
of corrugated packaging equipment, Dongfang Digicom employs cutting-edge technologies such as the Internet ofThings (IoT), cloud computing, big data, 5G, and artificial intelligence (AI) to develop an advanced industrialInternet platform for the industry. This platform comprises three levels:
(1) Equipment digital acquisition (IoT platform): By leveraging IoT, 5G, and edge computing technologies,the focus is on the core hardware of equipment to establish connections between different equipment and integrateequipment data with enterprise-specific system data. This approach enables the equipment layer to become digitizedand networked.
(2) Data processing and modeling (middle platform): By utilizing data modeling, data mining, algorithmanalysis, cloud computing, and other cutting-edge technologies, the collected data is integrated and analyzed tobuild an enterprise data hub. Based on this foundation, a business integration hub is created to offer industrial modelsand algorithms, which aid enterprises in transforming their operational experience into data models. This approachassists enterprises in achieving comprehensive business trend analysis and prediction while providing visual BItools that present key data and analysis results in an intuitive manner.
(3) Data intelligence application solutions (application platform): The use of big data, artificial intelligence,and other cutting-edge technologies can facilitate the development of intelligent applications. These applications,including equipment maps, fault prediction, remote operation and maintenance, digital twins, and full lifecyclemanagement, can cover all value chain segments from procurement, production operations, sales, and after-salesservices. By adopting these tools, enterprises can achieve data-based management and decision-making, ultimatelypromoting their digital transformation.
Dongfang Digicom released the Industrial Internet Platform v1.0 in 2022, which features independentintellectual property rights. The product is comprised of three key components: an IoT platform, a middle platform,and an intelligent application platform. It effectively facilitates data collection, processing, and analysis, providingintelligent applications based on data insights. The platform supports integrated applications across multipleterminals and can be deployed in various ways, including public cloud, private cloud, or hybrid cloud. Additionally,customers have the ability to independently develop secondary applications using the platform.
Dongfang Digicom distinguishes itself from other information service providers in the paper packagingindustry by offering an Industrial Internet Platform specifically designed for this sector. As a result, DongfangDigicom is currently the leading provider of Industrial Internet Platform solutions for the paper packaging industry.
DFDIGICOM Industrial Internet Platform offers end-to-end services, including equipment connectivity fordata collection, data integration and analysis, and intelligent applications. By utilizing these services, customers canachieve intelligent manufacturing capabilities.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Architecture of DFDIGICOM Industrial Internet Platform
2. Intelligent Logistics
As the manufacturing industry undergoes an intelligent upgrade, the “factory-wide intelligent logistics system”has emerged as a crucial area of focus for packaging enterprises seeking to transition towards “intelligentmanufacturing.” This system utilizes digital technology to transform production lines, warehouses, and logisticsdistribution within the factory into digitally intelligent entities. By doing so, it facilitates comprehensive automationcontrol and management of production, warehousing, and distribution processes, reducing human intervention andmanagement costs, improving production efficiency, and enhancing product and logistics service quality.The “factory-wide intelligent logistics system” can be integrated with the industrial Internet platform to enablereal-time monitoring and control of production and logistics data. Through the analysis and mining of logistics data,it can provide accurate decision-making support for enterprises, facilitating their digital transformation andintelligent upgrading.To address the challenges faced by domestic corrugated packaging enterprises, such as poor productionresource integration capabilities, labor recruitment/employment difficulties, unreasonable workshop layouts, andlow production efficiency, Dongfang Digicom’s intelligent logistics business team is utilizing Dongfang Precision’sextensive industry experience, advanced international technical concepts, and unique understanding of the Chinesepaper packaging market. They are customizing factory-wide intelligent logistics systems specifically for Chinesepaper packaging enterprises.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Application Model of Industrial Internet Platform + Factory-wide Intelligent Logistics System
| Data cleansing | Data processing |
DFDSplatform(dataapplication)
DFDSplatform
(dataapplication)Corrugated packaging enterprises
Corrugated packaging enterprises
APP
| APP | Large screen dashboard | Data report |
Bog dataplatform
Bog dataplatformData storage
| Data storage | Data analysis |
Equipment access
| IOT | Equipment access | Data collection | Data storage | Rules Engine | |||
Border gateway (edge acquisition terminal + intelligent sensing terminal)
| Border gateway (edge acquisition terminal + intelligent sensing terminal) | |||||||||||||||||
| Internet of Machines | Internet of Things | Internet of Persons | |||||||||||||||
| Equipment | |||||||||||||||||
| Printer | Flat-pressing flat die cutter | FFG & stitcher | Corrugator lines | Visual inspection | Smart electric meter | Smart water meter | |||||||||||
Intelligentsensor for
| environmental monitoring | RFID/bar code tag |
Fieldoperators
Fieldoperators
Industrial Internet Platform
Industrial Internet PlatformFactory-wide Intelligent Logistics System
Factory-wide Intelligent Logistics System
Fast moving consumer
goods
| Fast moving consumer goods | Electronics industry | Appliance industry | Pharmaceuticals industry | Light industry | Other industries |
End-market application
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
C. The digital printer businessThe business is primarily led by the subsidiary Shenzhen Wonder Digital Technology Co., Ltd. Wonder Digitalprovides solutions for customers in the digital printing industry, including digital printers, ink, accessories, andprofessional services. Wonder Digital has introduced a variety of digital printers to meet the diverse needs ofdifferent market segments and customer levels, including:
(1) Multi Pass digital printer series applicable for small-batch paper packaging printing
(2) Single Pass digital printer series applicable for large/medium/small batch paper packaging printing
(3) Single Pass digital series applicable for pre-printing on raw paper
(4) Hybrid printer series that combines Multi Pass high-precision printing and Single Pass high speed printinginto one, supporting both scanning mode printing for large size, high precision, and full colour orders, and instantlyswitching to Single Pass mode for printing large volumes of small size orders
Wonder Digital’s UV digital printers and single-pass digital printers feature printing accuracy as high as1200dpi. Their colour printing effects rival those of traditional offset printers in clarity, fineness, colour brightnessand saturation but with lower costs, helping customers effectively enhance competitiveness.
The Multi Pass series targets mainly small and medium-sized customers and provides package printingsolutions that are cost-effective and high-performance, which can reduce overall packaging costs for e-commerceand export OEM models such as “one-piece drop shipping” and “transit warehouse” sales. The Single Pass seriesretains all the features of the Multi Pass series and is primarily designed for fast printing of medium-sized orders.The Single Pass digital series primarily caters to large-volume order printing, providing comprehensive costs similarto traditional printing and superior printing effects.
Wonder Digital offers a diverse range of products that cover various types and specifications, from post-printing to pre-printing, from water-based dye/pigment, water-based ink to spot colour UV ink, from boxes, offsetcartons to sheet metal. The products also support a range of application modes and scenarios, from single-sheetprinting to exchange orders seamlessly with variable data printing, and from single machine printing to integrationwith ERP systems. Wonder Digital’s large format roll to roll high speed digital printer outperforms domesticcompetitors in terms of width and resolution and is competitive on the market in terms of size, energy consumption,and cost-performance.
With a comprehensive product matrix, Wonder Digital provides paper packaging digital printers that meet thediverse needs of industry customers with different market positions and levels. Since its establishment in 2011,Wonder Digital’s digital printers have been exported to countries and regions such as Europe, America, the MiddleEast, Latin America, and Southeast Asia, with over 1,600 units of equipment installed in more than 80 countriesworldwide.
Apart from digital printers, Wonder Digital also sells supporting units after printing section including slottingand varnish coating units, as well as special ink products that are compatible with its own-brand equipment. Thesespecial ink products, including water-based dye ink, water-based pigment ink, and UV ink. Wonder Digital’s highcost-performance digital printing solution provides customers with cost-effective configuration plans for digitalinkjet printing equipment and ink formulation plans. The cost-performance ratio of the ink is a crucial factor for
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
customers to consider when evaluating the overall solution.
Based on accumulated know-how and experience, Wonder Digital provides digital printers for advertising,home decoration, and other fields, including flatbed printing and roll to roll printing technologies. The flatbedmodels can be used for digital printing on materials such as aluminium panels, glass, ceramic tiles, metal plates,acrylic sheets, and alucobond panels, while the roll-to-roll models are applicable for digital printing on corrugatedcardboard, vehicle paste paper, lamp box fabric, PVC film, decorated paper, and sheet metal like aluminium sheets,among others. Additionally, Wonder Digital also offers digital printers for the label printing industry.Wonder Digital aims to offer its customers in the paper packaging industry more than just individual productsor services. More importantly, it strives to provide complete digital printing solutions to help customers producehigh-quality packaging materials in a convenient, efficient, and cost-effective way and make profit on fiercelycompetitive markets. To achieve this, tailored solutions are needed for different application areas and customerrequirements. With years of accumulation in technology, manufacturing process and industry experience in the fieldof digital printing, Wonder Digital can provide different combinations of printheads, inks, inkjet control systemsand other key components according to the needs of different customers. Meanwhile, it optimizes pre-printing,printing, and post-printing processes, matches equipment with corresponding production materials, and offerstailored digital printing solutions to help customers improve order delivery efficiency, increase turnover, reducecosts and ultimately strengthen competitiveness on the market.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Primary Product Portfolio of Dongfang Precision’s Smart Corrugated Packaging Equipment Business——Digital Printers
| Product type | Brand | Product image | Main characteristics | ||||
| Digital Printers | Adopts Epson's latest HD industrial printheads. Printing width up to 2500mm Speed up to 700㎡/h Printing thickness 1.5mm-35mm Full suction platform printing and feeding Coated paper and honeycomb board can also be easily printed. Base accuracy 1200dpi Water-based dye ink/water-based pigment waterproof ink is optional. | ||||||
| WD250++ Series Scanning Wide Format High Quality Carton Digital Printer | |||||||
| Reference accuracy 1200dpi Printing speed 150m/min Support 8 colors printing Wide format can be customized | |||||||
| WD200++SINGLE-PASS industrial grade high speed cardboard digital printing machine | |||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Digital Printers | Suitable for corrugated paper, body stickers, light box fabric, PVC color film, decorative paper, thin aluminum sheet, etc. Decorative paper, thin aluminum plate, etc. Centralized printing and decentralized printing, cost saving | |||
| Combines two different digital printing methods: Multi Pass high-precision scanning and Single Pass high-speed printing. Reduce the capital investment in equipment, save space, labor, maintenance and other costs, improve production efficiency | ||||
MULTI PASS-SINGLE PASS All-in-OneDigital Printing MachineIndustrial SINGLE PASS roll-to-roll high-speed digital pre-printing machine
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
2. The water powersports equipment business
The subsidiary, Parsun Power, is the main business entity for the Company’s water powersports products(outboard motors) and is a leading enterprise in the domestic outboard motor industry. It ranked first in the industry’smarket share in China from 2018 to 2020. Parsun Power’s main products are outboard motors of variousspecifications and different series, with horsepower ranging from 2 to 130. The outboard motor products areexported to hundreds of countries and regions, including Europe, Africa, Oceania, South America, North America,the Middle East, and Southeast Asia.
(1) Outboard motors
By the source of power, outboard motor products of Parsun Power are divided into gasoline outboard motors,electric outboard motors, and diesel outboard motors.
Gasoline outboard motors enjoy the most abundant specifications and varieties. Parsun Power has accumulatedyears of industry experience in the field and has had several proprietary technologies and applied them to products.It has achieved mass production of the maximum 115hp gasoline outboard motors, and has successfully broken thelong-term monopoly by international well-known brands in the 115hp sector. With stable and reliable quality of its115hp gasoline outboard motors, Parsun Power has won more and more product orders in Europe and China,contributing to domestic substitution of medium- and high-horsepower outboard motors and the improvement ofthe global market share of domestic brands. After successfully conquering the 115hp gasoline model, Parsun Power'sR&D team marches toward higher-horsepower models and strives the make domestic-brand high-horsepoweroutboard motors take a place in the global competition of the high-horsepower outboard motor market. In the firsthalf of 2023, Parsun Power took it to the next level by successfully completing the mass production and sale of130hp gasoline outboard motors.
Electric outboard motors are powered by batteries. They convert electric power into kinetic power throughmotors, and are characterized by zero emissions, low noise, and easy operation, and are mainly used in scenic spotsand other sectors requiring stricter environmental protection. Parsun Power’s electric outboard motors, including
1.2KW, 5.15KW and 7.3KW, are now in mass production and exported.
Diesel outboard motors not only retain the characteristics of easy assembly, easy maintenance and easyoperation of gasoline outboard motors but also enjoy the advantages of fuel saving, lower emissions, greater torqueand being safer, more reliable, and easier for maintenance, which are mainly used in commercial transportation andpublic law enforcement. Parsun Power now has diesel outboard motors and is selling the high-horsepower outboardmotors of 150hp to 300hp of OXE Marine (a Swedish brand) in the domestic market.
Parsun Power has achieved a complete product line layout of “gasoline-diesel-electric” outboard motors, andwill rely on its years of technical expertise and leading market share in the gasoline outboard motor field to expandinto high-horsepower diesel outboard motors and electric outboard motors.
Parsun Power's outboard motor products have stable quality and reliable performance, and some of them enjoythe comprehensive performance comparable to that of internationally well-known brands and emissions reachingEuropean and American standards. In the future, Parsun Power will focus on medium- and high-horsepoweroutboard motors, enrich electric outboard motor production lines, continuously optimize the product structure ofoutboard motors, and consolidate its leading position among domestic outboard motor manufacturers.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
(2) Sales Model
Parsun Power follows an industry-standard sales model that primarily relies on distribution, supplemented bydirect selling. The demand for outboard motors, which are the company’s main product, is mainly distributedoverseas, with end customers scattered throughout the world. Adopting a distribution-centric sales model enablesParsun Power to reach end customers to the fullest extent possible.
(3)Production Model
Parsun Power produces outboard motor products independently, utilizing sales demand forecasts, customerorders, product inventory status, material delivery progress, and product production cycles to formulate productionplans. The company then organizes the production of components in accordance with specialized processes andprocedures.
(4) Procurement Model
Following the principle of “sales determine production, production determines procurement,” Parsun Powerdetermines the procurement requirements for its outboard motor business, while also taking into account reasonablesafety stock.II Core Competitiveness Analysis
The analysis of the Company’s core competitiveness in the Reporting Period is as follows:
(I) Complete layout in the corrugated packaging machinery industry chain and the most complete andrichest product portfolio in the industry
Among enterprises of the same type in the domestic corrugated packaging machinery industry, DongfangPrecision has the most complete and comprehensive industry chain layout, with its business covering almost all keyprocesses in the corrugated packaging production and processing business chain. Meanwhile, the Company has themost complete and richest corrugated packaging production line equipment in the industry, making it capable ofmeeting the demands for complete production line and single machine products of different market positioning,different customer types and dozens of specifications and models, second to none in China.
Corrugated cardboard production lines: Business entities, such as Fosber Italy, Fosber America, FosberAsia, and QCorr, provide corrugated cardboard production lines of different specifications and types that meetvaried market levels and positioning to multiple countries and regions worldwide. Fosber is one of the twocompanies with the strongest comprehensive technical strength in middle- and high-end corrugated cardboardproduction lines worldwide. The extensive application of software systems based on Industry 4.0 to its corrugatedlines results in industry-leading digitalization. Featuring unique technological characteristics and compact size, thehigh-speed corrugated cardboard production line, Quantum Line, launched by the subsidiary QCorr can producesingle-layer corrugated cardboards in line with any standards and allow the embedding and matching of digitalprinting technology. The corrugated cardboard production lines of Fosber and QCorr are highly complementary,and multiple product series of the two brands fully cover terminal application needs.
Corrugated rollers (key components in a corrugated cardboard production line): Tiru?a Group, asubsidiary, is a time-honored, prestigious, and world-leading corrugated roller supplier in Europe, specializing in
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
the production of corrugated rollers and pressure rollers for corrugated cardboards.
Corrugated box printing and packaging production lines: Business units, such as Dongfang Precision(China) and Dongfang Precision (Europe), serve domestic and overseas markets by supplying high-qualitycorrugated converting line and single machine products covering multiple specifications. They can produce productsthat meet dozens of specifications and different market positioning, covering fixed type/open-close type, topprinting/bottom printing, and converting line (inline)/single machine products, and has the most complete productlines and riches product portfolio of the corrugated box printing and packaging production line equipmentworldwide.Digital printers: In terms of digital printing, Wonder Digital is one of the earliest enterprises worldwide thathave taken the lead in applying the high-speed inkjet printing technology to corrugated packaging and home buildingmaterials, and service provider that can provide customers with a full set of digital printing solutions.Industrial Internet industry solutions: Dongfang Digicom, a subsidiary, is the only industrial Internetplatform enterprise in the paper packaging industry. Based on its “Industrial Internet Platform for Industry” and“Factory-wide Intelligent Logistics System” with independent property rights, it is committed to becoming a serviceprovider and ecosystem operator that provides customers with one-stop overall solutions for intelligent plants.(II) Industry-leading technology level and strong capabilities of R&D and innovationThe Company is at the forefront industry-wide in China in terms of R&D and technology.
● The smart corrugated packaging equipment business:
The middle- and high-end corrugated cardboard production lines under the Fosber brand are industry-leadingin speed, width, precision, stability, reliability, failure rate, and intelligence, characterized by high efficiency, energysaving, stability, reliability, intelligent control, and easy operation and maintenance. The corrugated cardboardproduction lines under the Fosber brand boast machinery with high technology, quality, and reliability, advancedintelligent software systems, and technical support services and have won the praise of customers worldwide.
Fosber Asia has launched the “Instant Set” unit and applied it to corrugated cardboard production lines. Eachcutting blade and indentor are independently controlled by the servo motor, thus significantly improving the speedof the order change of the dry section of corrugated lines and shortening the average time of order change from 8-15 seconds to around 3 seconds. Moreover, it can better support the quick order switch of downstream customersand meet the characteristics of multiple types and small batches of paper packaging orders in China.
Fosber Group has control systems that are developed based on Industry 4.0 technologies for its own high-endcorrugated cardboard production lines, including functional modules such as Syncro
, PCS (Process ControlSystem), Pro/Care, and Pro/Quality. These systems can help achieve highly accurate, digital and intelligentmanagement and control of the machine status, production process, routine maintenance, technical support, andquality inspection of corrugated cardboard production lines. Advanced technologies, such as sensors, AdvancedReality (AR), algorithm analysis, big data, and cloud computing, are adopted in these systems to realize the fullautomation and intelligence of the whole process of production and processing of corrugated cardboards, monitorthe temperature, humidity, heat, folds, and other data of corrugated cardboard production lines in real time, andmonitor the dashboard dynamically in the production process. Through data-based production performance analysisand cost analysis, it helps customers improve production efficiency. Through the “self-diagnosis system”, it
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
identifies abnormal operations and sends alerts, and identifies solutions in an intelligent manner. Through the “bigdata analysis system” module, it collects real-time data in the corrugator production process through sensors, outputsrecommended configuration parameters and improvements through algorithm analysis, and helps customersimprove the effectiveness of production process control.How Fosber Group’s PRO Series Intelligent Production Management Information Technology System Works
● The industrial Internet industry solutions business:
The “DFDIGICOM Industrial Internet Platform”, independently developed by Dongfang Digicom, a subsidiary,enables digital, visual, and transparent equipment connection, and facilitates intelligent plants to become self-adaptive, systematic, and end-to-end. Big data, algorithm analysis, and artificial intelligence (AI) are employed toachieve low coupling, high availability, high performance, independence, safety, and controllability. Moreover, theplatform can be used at multiple terminals, deployed on public, private, and hybrid cloud, and independently andsecondarily developed by customers.The architecture of the industrial Internet platform products independently developed by Dongfang Digicomconsists of an Internet of Things (IoT) platform, a middle platform, and an intelligent application platform, coveringmultiple functional modules, such as EMS, MES, QMS, WMS, and PMS. The basic architecture of this industrialInternet platform includes the sensing layer (the IoT platform), the network layer (the IoT platform/the middleplatform), the platform layer (middle platform), and the application layer (the intelligent application platform).Dongfang Digicom is currently the only enterprise in the paper packaging industry that can provide all-roundindustrial Internet platform products and overall solutions. It can provide the industry with end-to-end solutions andoperating services, such as intelligent equipment, integrated management of production and operations ofenterprises, intelligent business decision-making, agile corporate reforms and innovation. Most core members ofthe Dongfang Digicom team come from famous manufacturers in the Internet, industrial Internet, and ERP industries
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
at home and abroad. Of IT manufacturers in the paper packaging industry, Dongfang Digicom boasts highprofessionalism and strong R&D strength. Dongfang Digicom, in the past two years since its establishment, hascumulatively submitted 37 software copyright applications and 49 patent applications. As of March 2023, it hasbeen cumulatively granted 37 software copyrights and 21 patents, including 12 invention patents.
● The water powersports equipment business:
The subsidiary Parsun Power is committed to independent R&D and innovation of China-made outboardmotors, and is a state-level "Little Giant" enterprise with specialties, refined management, unique technologies andinnovation, a national high-tech enterprise, the Provincial Outboard Motor Engineering and Technology ResearchInstitute of Jiangsu, a technology center recognized by Jiangsu Province, a leading enterprise in China's internalcombustion engine industry and a council member of the Small Gasoline Motor Branch of China InternalCombustion Engine Industry Association. Its outboard motor products have won the Certificate for IndustrializationDemonstration Program under the National Torch Plan and honors including Innovative Products in ChineseMachinery Industry, Products of Well-known Brands in Jiangsu, and Products of Well-known Brands in Suzhou.Parsun Power has been developing in the outboard motor industry for over ten years and has had several China-leading core technologies and accumulated rich scientifically innovative achievements after long-term R&D inputand technical accumulation. As at the end of the Reporting Period, it has been cumulatively granted 57 patents(inclusive of 11 invention patents) and won two second prizes of the China Machinery Industry Science andTechnology Award and is one of the main drafters of two industry standards including Outboard Gasoline Engines-General Requirements (JB/T 11875-2014) and General Technical Specification of Outboard Engine (CB/T 4505-2020). In 2021, Parsun Power successfully realized the mass production of 115hp outboard motors, breaking thelong-standing monopoly of internationally well-known brands in the 115hp sector.In 2023, Parsun Power took it tothe next level by successfully completing the mass production and sale of 130hp outboard motors.
(III) Profound Know-How experience and experienced team in the industry
Dongfang Precision has an experienced team with profound Know-How experience in the industry, which has20 years of experience in both global and domestic industry markets and has an in-depth understanding of theCompany's industrial layout, development planning, R&D approach, production operation, marketing, and teammanagement. The core management team has a broad vision, can promptly keep up with the general developmenttrend of the smart corrugated packaging equipment manufacturing industry, and can enable the Company to achievesteady and sustainable development through forward-looking strategic planning and layout.
As an enterprise that practices the management model of professional manager team and attaches greatimportance to authorization management, Dongfang Precision takes "a wealth of talent" and "cultural guidance" asthe basis of its corporate strategy and corporate culture, and develops its organizational capacity, improves theGroup's control over all business units and subsidiaries and integration of resources and assistance and aid, improvesthe Group's overall operational efficiency and reduces the Group's operation cost and promotes the Company'shealthy and sustainable development by optimizing the organizational structure design, standardizing theauthorization and control system, implementing medium- and long-term incentives and further developing thecorporate culture.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
(IV) High brand popularity and customer recognition worldwideDongfang Precision-branded corrugated box printing and packaging production line equipment, Fosber-branded corrugated cardboard production lines, Wonder Digital-branded digital printers, Quantum-brandedcorrugated cardboard production lines, Tiru?a-branded corrugated rollers and Parsun-branded outboard motors ofthe Company are enjoying considerable brand recognition and industry influence at home and abroad.
The Company has become an influential enterprise in the industry, as evidenced by its honors like the "Top500 Private Manufacturers of China", the "Champion in Single Aspect", and the "Leader in Industry Segment".
In the business division of "corrugated packaging equipment", the Company has established good partnershipswith domestically leading enterprises in the corrugated packaging industry including Nine Dragons Paper, ShanyingIntl, Yuen Foong Yu, HXPP, MYS, XTL, Great Shengda, Forest Packing Co., Ltd., UCPS and ZhengyeInternational, and large international groups in the corrugated packaging industry including International Paper,Smurfit Kappa, DS Smith, APP Sinar Mas and Mpact.
With the constant growth in concentration and the continuous upgrading of capacity in the downstream industry,large- and medium-sized packaging enterprises will need more middle- and high-end production line equipment,digital printing solutions, and industrial Internet industry solutions. The Company has seized opportunities andformed a better competitive edge by virtue of its stable business partnership during the industry changes.
(V) Global layout of business assets
The Company mainly serves customers in the corrugated packaging industry worldwide, and has realized theglobal layout of its business assets:
In Asia, the Company has three domestic R&D and production bases in Foshan, Suzhou, and Shenzhen, inEurope, it has R&D and production bases in Lucca, Bologna and Milan, Italy, and Pamplona, Spain, and in NorthAmerica, it has a production base in Green Bay, Wisconsin, USA. With such a layout in the three continents, theCompany has formed a global marketing and service network.
An internationalized marketing and service network enables the Company to seize all opportunities in theglobal industry market and to provide product machinery and technical services for customers in the industry inover 100 countries and regions worldwide.
An internationalized product R&D, production and supply chain layout enables the Company to make promptresponses worldwide and meet customer demands and is conducive to the Company's integration of global resources,improvement of resource allocation efficiency, complement of advantages, reduction of the total cost andimprovement of the allocation efficiency, so that the Company can be increasingly competitive in the world whenit is operated as a group.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Global Layout of the Company’s Business Assets and Marketing Network
(VI) Strong capabilities of strategic control and integrationSince listing, the Company has kept expanding its presence in the upstream and downstream of the industrychain of its core business. After years of practice, the Company has developed strong strategic control and deepintegration of its business divisions and accumulated rich experience and practice, through the deep perception ofthe industry, forecast of industry trends, and a clear understanding of its own strategic development objectives.Strategic control is the core capability that the Company relies on to manage its various business entities. Inpractice, the Company adjusted the strategic development plans, business models, product portfolios, marketstrategies, and core management teams of the companies acquired with its in-depth understanding of the industry,forward-looking foresight to the development trend of the industry, clear awareness of its strategic developmentobjectives, and well-established understanding of the capabilities and resources of all its business entities, so thatthese companies can be energized for new growth and step on a new development stage.
In terms of post-investment integration, the Company has formulated a set of effective controls for post-investment integration, including the corporate governance standardization policy, the “Board of Directors-Supervisory Committee-General Meeting” operation mechanism, the strategic and financial control system,decentralized authorization management, complete audits, and management incentives, forming a set of measuresfor effective controls for post-investment integration with the Company’s own characteristics to secure the effectiveimplementation of the strategic plan.
● Corrugated cardboard production lines: Fosber Group recorded a compound annual growth rate (CAGR) ofnet profit of 25%
After acquiring the controlling stake of Fosber Italy in 2014, the Company and its management took severaleffective measures for integration, helped Fosber Group adjust its strategic planning and business strategies andstandardize the authorization management system, implemented the performance incentive policy for the coremanagement, and strengthened financial control. Such measures have successfully stimulated Fosber Group’sbusiness vitality. From 2015 to 2022, the CAGR of the operating revenue of Fosber Group was approximately 16%,
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
and that of its net profit was 25%.
● Water powersports products: Parsun Power’s CAGRs of operating revenue and net profit exceeded 20%After acquiring the controlling stake of Parsun Power in 2015, the Company helped Parsun Power streamlineand adjust its strategies, develop the new development roadmap, increase inputs in technology, products, and R&D,strengthen the marketing force, and improve the efficiency of the supply chain and production. It also supportedParsun Power to introduce excellent talent for a more powerful core team. These measures enabled Parsun Powerto realize continuous and stable growth. From 2017 to 2022, both CAGRs of the operating revenue and net profitof Parsun Power surpassed 20%.
● Tiru?a Group and, the manufacturing pioneer, Agnati, were expanded to effectively stimulate newmomentum of established enterprisesIn 2019 and 2020, the Company acquired the relevant business assets of Tiru?a Group, a nearly century-oldcorrugated roller manufacturer, and merged Agnati, an Italian corrugated cardboard production line manufacturerenjoying a high reputation for more than eight decades, into QCorr, a subsidiary of Dongfang Precision. TheCompany and its management fully streamlined and standardized the development strategies, R&D planning,product positioning, marketing, team building, and authorization management of these two established enterprises,based on which optimization and adjustment were performed. These measures effectively stimulated the vitality ofthe two old European companies and the enthusiasm of their manager teams. In 2022, the operating revenues ofTiru?a Group and QCorr exceeded 10%. Particularly, Tiru?a Group’s orders of corrugated rollers hit a record high.Relying on its strong strategic control and integration of business divisions, based on “mutual respect andmutual trust” and with an open mind seeking common grounds while putting aside differences, the Companyeffectively integrated all its business entities continuously released the synergy with the industry chain. Moreover,it conducted active practice and accumulated precious experience in helping domestic private enterprises go globaland perform overseas industrial M&As and overseas companies carry out post-investment integration andmanagement optimization. Concurrently, such practice and experience facilitated the Company to lay a solidfoundation and provided strong support for the Company to promote the implementation of the five-year strategicplanning and realize long-term, sustainable, and steady development.III Analysis of Principal Operations(I) OverviewIn the first half of 2023, China’s economy maintained a recovery trend. According to data from the NationalBureau of Statistics, the PMI for the equipment manufacturing industry has remained above theexpansion/contraction threshold since 2023, showing an overall expansionary trend. In June, the PMIs forequipment manufacturing and high-tech manufacturing were 50.9% and 51.2% respectively, up 0.5 and 0.7percentage points from the previous month, rising for two consecutive months. According to the latest OECDEconomic Outlook, the global economy is picking up, but the pace of recovery is expected to be slow with adownward risk due to multiple factors.Under the strong leadership of the Board of Directors and the management team, all the people in the Company
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
actively seized opportunities, took pragmatic actions, and forged ahead together in the first half of 2023, helpingthe Company sustain the strong growth momentum since 2022.For the six months ended 30 June 2023, the Company recorded operating revenue of approximately RMB2,083million, up 35.62% YoY; a net profit attributable to its shareholders of approximately RMB206 million, up 39.10%YoY; a net profit attributable to its shareholders before exceptional gains and losses of approximately RMB163million, up 35.56% YoY; and net cash generated from operating activities of approximately RMB191 million, up
25.74% YoY.
For Q2 2023 alone, operating revenue was approximately RMB1,176 million, up 31% YoY; and net profitattributable to the Company’s shareholders before exceptional gains and losses was approximately RMB111 million,up 49% YoY. As of the end of June 2023, the Company had a total order backlog worth approximately RMB4,360million.
(II) Performance of principal operations during the Reporting Period
1. The business division of intelligent packaging equipment
In the first half of 2023, the business division of intelligent packaging equipment recorded operating revenueof approximately RMB1,668 million, up 33.1% YoY; and an order intake worth approximately RMB2,480 million.As of the end of June 2023, the order backlog of this business division was worth approximately RMB4,170 million(including production line equipment, accessories and technical services).
A. The segment of corrugated cardboard production lines
All the business units and profit centres of the subsidiary Fosber Group have their business, assets and stafflocated in Europe and North America. They adopt a local management and operation model, and design, developand manufacture their products locally. The customers they serve are mostly large and medium-sized manufacturersin Europe, North America, Latin America, Africa and other countries and regions. Fosber Group has establishedstable partnerships with major manufacturers in the corrugated packaging industry in Europe and the US, such asSmurfit Kappa, International Paper, DS Smith, SAICA and others.
The corrugated cardboard produced by Fosber-branded corrugated cardboard production lines is ultimatelyused to make various corrugated boxes, corrugated cartons and other corrugated packaging materials, which arerigid consumer products in European and American countries. According to Statista data, the US e-commercemarket is expected to grow at a compound annual growth rate of 12.7% from 2017 to 2027. The trend of“sustainability” is gaining ground in Europe and the US, which continues to drive the trend of "replacing plasticswith paper" in the packaging industry. Demand for corrugated packaging materials in the end-consumer marketcontinues to grow, helping to drive demand for corrugated packaging production line equipment.
The subsidiary Fosber Group, which caters mainly to the European and American markets, has achieved rapidgrowth in 2022 and delivered record order intake and operating revenue in the year, benefiting from the rapid growthof the e-commerce market in the US and Europe in recent years, increased capital expenditure by medium and largemanufacturers in the paper packaging industry, and a combination of factors such as sustainability and the greeneconomy. In the first half of 2023, the good momentum in the overseas corrugated packaging equipment market
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
continued, and the subsidiary Fosber Group achieved strong growth in operating revenue and net profit withimproved business operations and more comprehensive development.
During the first half of 2023, Fosber Group recorded operating revenue of approximately RMB1.2 billion ona consolidated basis, up 29.0% YoY; and a net profit of approximately RMB115 million on a consolidated basis,up 54.2% YoY. From the first half of 2018 to the first half of 2023, Fosber Group's operating revenue and net profit(both on a consolidated basis) grew at a compound annual growth rate of approximately 14% and 23%, respectively.
As of the end of June 2023, the equipment order backlog of Fosber Group (Fosber Italy + Fosber America +QCorr + Tiru?a Group) and Fosber Asia combined was worth RMB3.18 billion, representing the highest at the endof the first half of a year in the six years since 2018. In particular, the production for part of Fosber America’s orderbacklog has been scheduled to 2025.
a) The business of corrugated cardboard production lines
(1) Fosber Italy
In the first half of 2023, Fosber Italy achieved operating revenue of approximately RMB712 million, up 34%YoY.
Market performance: In its most important market, Europe, Fosber Italy continued deepening cooperation withlongstanding major corrugated packaging industry customers in Europe and the US in the first half of 2023, layinga solid foundation for steady business growth. In Latin America, Fosber Italy’s efforts earned orders in the Mexicanmarket. Orders were also won in regional markets like North Africa and South Africa. In the first half of 2023,Fosber Italy’s order intake for equipment totalled approximately RMB630 million; and order intake for parts andservices totalled approximately RMB220 million.
Revenue structure: During the Reporting Period, Fosber Italy not only successfully achieved sales targets forcorrugated cardboard production lines; its after-sales service and technical support business also demonstratedstrong growth momentum, especially in parts sales and machine upgrade services where revenues outperformedexpectations.
Gross margin: As inflationary pressures eased in Europe, market prices for Fosber Italy’s main raw materials(steel) and electricity were somewhat lower in the Reporting Period compared to 2022 levels. At the same time,supply of key electrical components improved significantly compared to 2022, helping increase Fosber Italy’s grossmargin during the Reporting Period.
R&D: Fosber Italy’s new belt and single-facer products demonstrated excellent performance at customers’plants in Europe. The company is also committed to enhancing application of advanced technologies like augmentedreality (AR), machine learning and digital twin in Fosber-branded high-end intelligent corrugated cardboardproduction line solutions.
In addition, based on its five-year development strategy and actual operational needs, Fosber Italy steadilyadvanced its new headquarters construction project during the Reporting Period.
(2) Fosber America
In the first half of 2023, Fosber America maintained its leading position in the North America market ofcorrugated packaging equipment, with Fosber-branded corrugated cardboard production lines continuing close
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
cooperation with major North American customers. During the Reporting Period, Fosber America achievedoperating revenue of approximately RMB500 million, up 12% YoY. Its order intake for equipment totalledapproximately RMB520 million; and order intake for parts and services totalled approximately RMB231 million.
(3) QCorr
QCorr achieved outstanding performance in market development in the first half of 2023, with Quantum Lineseeing an order intake of more than RMB158 million, up 74% YoY, representing its best first half year performancesince it joined Dongfang Precision in 2020.
(4) Fosber Asia
In the first half of 2023, Fosber Asia achieved operating revenue of approximately RMB160 million, with theYoY growth exceeding 30%. Its compound annual growth rate of operating revenue was about 37% for the periodfrom the first half of 2018 to the first half of 2023. During the Reporting Period, its order intake for equipment wasapproximately RMB180 million, up 62% YoY; and order intake for parts and services was approximately RMB66million.
In terms of market development in 2023, Fosber Asia made breakthroughs in sales of its homegrown high-endS/Line corrugated cardboard production lines, obtaining orders in both the domestic and overseas markets, some ofwhich have been delivered. Additionally, it has successfully entered the Saudi Arabian market, filling a gap inoverseas sales. More and more industry customers are partnering with Fosber Asia and becoming users of itshomegrown high-end corrugated cardboard production lines.
In 2023, a groundbreaking ceremony was held for Fosber Asia’s new corrugated cardboard production lineintelligent plant construction project, which is located in Songxia Industrial Park, Foshan City, Guangdong Province,covering an area of approximately 80 mu. It is expected that upon completion of the new plant, Fosber Asia’sproduction capacity will be significantly increased, allowing it to respond to customer demand and serve customersfaster and better, and to drive the industry towards high-end, green and intelligent development. The project iscurrently progressing with the foundation construction of the plant and is expected to complete the roofing work ofthe main constructions by the end of 2023.
b) The business of corrugated & pressure rollers
In July 2022, Fosber Group completed the acquisition of a 30% interest in Tiru?a Group. Upon completion ofthe transaction, Fosber Group holds 100% of Tiru?a Group, and Tiru?a Group becomes a wholly-owned subsidiaryof Dongfang Precision.
After the acquisition of the remaining equity interests was completed, cooperation between Tiru?a Group andFosber Group has become even closer. With support from the shareholders and approval of the Board of Directors,Tiru?a Group launched a new business plan during the Reporting Period, which is summarized as follows:
① Production ramp-up: It plans to invest nearly EUR10 million in this respect. After completion, Tiru?aGroup’s existing production capacity of corrugated & pressure rollers is expected to increase by nearly 60%.
② Improving production efficiency: It will thoroughly implement the Toyota lean manufacturing model, addproduction shifts, as well as improve operational efficiency and capacity utilization.
As the business plan is gradually implemented, Tiru?a Group’s vitality and development potential are expected
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
to be further stimulated, driving healthy growth. In the first half of 2023, Tiru?a Group achieved operating revenueof approximately RMB120 million, up 23% YoY.
On market development: Europe and the Americas are Tiru?a Group’s main markets. In the North Americanmarket, Tiru?a-branded corrugated & pressure rollers are preferred for Fosber-branded corrugated lines with thehighest market share. In Latin America, Tiru?a Group has served the market for over 30 years and enjoys a strongbrand presence and a high market share among industry customers. Meanwhile, market development efforts inoverseas markets like the Middle East, Africa and Australia also won orders.As customer recognition of Tiru?a-branded corrugated & pressure rollers continues rising, Tiru?a Group isnow capable of supplying corrugated & pressure rollers for corrugated cardboard production lines of both the Fosberbrand and other major international brands.
In order to further strengthen synergies among the business divisions within the Dongfang Precision, leveragethe competitive advantages of Chinese manufacturing on a global scale, and better support the development of thehigh-end domestic corrugated cardboard production line business, in 2023, the Company introduced the Tiru?acorrugated & pressure roller business to China, established a new subsidiary, Tiru?a Asia, in Nanhai District, FoshanCity, and built up the Tiru?a Asia team for localisation of corrugated & pressure roller business and expansion ofnew markets of Tiru?a corrugated & pressure roller in China and entire Asia while satisfying the needs of thecorrugated cardboard production line business of Dongfang Precision. During the Reporting Period, theinfrastructure project of Tiru?a Asia progressed smoothly with the completion of the acceptance of the constructionand the decoration of the staff dormitory buildings, and it is expected that the project will be gradually put intoproduction by the end of this year.
B. The corrugated box printing and packaging segment
a) The corrugated box printing and packaging production line business
In the first half of 2023, Dongfang Precision (China) achieved sales revenue of approximately RMB204 million,up 10% YoY, with an order intake of RMB232 million.
The overseas market: In the first half of 2023, export revenue accounted for around 75% of Dongfang Precision(China)’s total revenues, which was slightly higher than that in the same period of 2022. Its overseas marketingteam made visits to major direct sales markets covering multiple countries and regions including Southeast Asia,the Middle East, Central Asia and Africa, significantly improving interaction with overseas customers. In addition,Dongfang Precision (China) strengthened service team building for the international market to continuously enhancethe quality of product installation and after-sales service in the overseas market.
The domestic market: As China’s economy recovered, the domestic corrugated packaging market also pickedup. In the first half of the year, Dongfang Precision (China)’s domestic sales grew approximately 54% YoY, and itsdomestic order intake for complete lines/machines went up over 60% YoY. In May and July 2023, DongfangPrecision (China) exhibited together with its business units Fosber Asia, Wonder Digital, and Dongfang Digicom atthe 2023 China International Corrugated Festival, China (Tianjin) Printing and Packaging Industry Expo 2023, andSinoCorrugated 2023, receiving a lot of attention industry-wide and a multitude of pre-orders.
b) The industrial Internet industry solutions business
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
(1) Marketing and delivery
In 2023, Dongfang Digicom focuses on marketing. As a result, its order intake in the first half of the yeartotalled approximately RMB6.78 million, involving over 20 projects, with customers covering domestic areas likeSouth China and East China as well as overseas regions like Southeast Asia and Africa. The proprietary industrialInternet platforms also achieved initial industry application from zero during the Reporting Period.
(2) R&D and technology
Dongfang Digicom continued iterating its proprietary industrial Internet platform products during theReporting Period to resolve pain points based on industry customer feedback and continuously improvefunctionality. For the independently developed smart manufacturing execution systems, Dongfang Digicom notonly continued iterative development of products applied in corrugated cardboard printing and packaging, but alsosuccessfully developed a smart manufacturing execution system for composite cardboard printing and packagingwhich has achieved sales.
On intellectual property rights, as of 30 June 2023, Dongfang Digicom had cumulatively been granted 27patents and 41 software copyright certificates.
(3) Recognition in the industry
In the first half of 2023, Dongfang Digicom was selected for the “Top 100 Industrial Internet Companies” listorganized by the Ministry of Industry and Information Technology, and jointly compiled the White Paper onIndustrial Internet Facilitating the Packaging Industry’s Digital Transformation with the Ministry of Industry andInformation Technology and the Alliance of Industrial Internet.
c) The digital printer business
Wonder Digital, a majority-owned subsidiary, has been included in the Group’s consolidated financialstatements since June 2022 (contributing revenue of approximately RMB5.61 million to Dongfang Precision in thefirst half of 2022). After becoming a member of the Group, Wonder Digital achieved operating revenue ofapproximately RMB65.65 million in the first half of 2023, creating a new earnings growth curve for DongfangPrecision’s intelligent packaging equipment business.
Amid China’s economic recovery in 2023, the corrugated packaging industry, especially the numerous third-tier factories, showed significantly greater recognition of the characteristics offered by digital printers compared totraditional printing equipment, including lower one-time initial investment, greater variability in printing data, andbetter adaptability to end packaging flexibility and short, flat, quick marketing needs, enabling higher turnover,higher on-time delivery rates, and higher return on investment.
In addition, Wonder Digital launched competitive new products in the first half of 2023, with continuouslyimproving comprehensive competitiveness in the market segment of China’s paper packaging digital printers. Agood brand image and industry reputation, leading technology and reliability/stability, as well as competitive price-performance ratios are Wonder Digital’s major competitive edges.
In the first half of 2023, Wonder Digital achieved an order intake of approximately RMB79 million. From ageographic perspective, domestic orders surged in the first half of the year, with the domestic order intake for wholemachines reaching approximately RMB48.3 million, about 3.2 times the same period in 2022. The proportion of
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
higher value products like high-definition single-pass digital printer inlines rose markedly in the order structure.
With respect to market development, Wonder Digital took proactive action to expand sales markets and seizemarket opportunities. In the first half of the year, it participated in a significant number of industry exhibitions athome and abroad, including CCE International in Germany, 2023 China International Corrugated Festival, China(Tianjin) Printing and Packaging Industry Expo 2023, 2023 IC Expo, and SinoCorrugated 2023. Wonder Digitalreaped a large number of pre-orders during the exhibitions. At SinoCorrugated 2023 held in Shanghai in July 2023,it received pre-orders of approximately RMB50 million.
2. The business division of water powersports equipment
In the first half of 2023, the majority-owned subsidiary Parsun Power recorded a YoY growth of approximately
46.89% in operating revenue, with sales revenue of whole outboard motors up 54.57% YoY; and a YoY growth ofapproximately 66.99% in net profit.
Benefiting from the growing demand for outboard motors for water recreational activities in overseas marketsand the trend of domestic substitution in the domestic market, Parsun Power maintained rapid growth in salesrevenue of outboard motors in the first half of 2023. From 2020 to 2022, the sales revenue of models with mediumand high horsepower as a percentage of the total sales revenue of outboard motors increased from 8.29% to 31.77%,with a compound annual growth rate of 171.33%. Thanks to the steady growth of downstream market demand, theneed for domestic replacement of medium and high horsepower and the gradual maturity of the domestic industrychain, the company has gradually realized the transformation from medium and low horsepower to medium andhigh horsepower outboard motor products.
With respect to sales, Parsun Power actively participated in exhibitions targeting domestic and overseaswatersports markets in the first half of 2023 to strengthen marketing efforts. It attended the China ShanghaiInternational Boat Show in March and the China Import and Export Fair in May. During the Reporting Period, itsorder intake for outboard motors grew 70% YoY. And its domestic sales of whole outboard motors increased over200% YoY.
In terms of production, Parsun Power continued to tap the existing capacity potential, and outboard motoroutput value continued to increase. In March 2023, the construction of a new green digital and intelligence factorywith an annual production capacity of 76,400 units of high-end water powersports equipment and the constructionof a new R&D centre was officially started, which will lay a solid foundation for the further development of ParsunPower.
In January 2023, the application for Parsun Power’s IPO on the ChiNext board of the Shenzhen Stock Exchangewas approved at the second meeting in 2023 of the ChiNext Board Listing Committee of the Shenzhen StockExchange. Currently, Parsun Power is applying to the China Securities Regulatory Commission (CSRC) for therelevant registration.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
3. Analysis of key financial indicators
YoY changes in major financial data
Unit: RMB yuan
| 2023H1 | 2022H1 | Change (%) | Cause of change | |
| Operating revenue | 2,082,606,453.72 | 1,535,615,634.26 | 35.62% | Mainly due to the increase in sales for the period. |
| Operating cost | 1,472,630,144.11 | 1,134,044,266.22 | 29.86% | Mainly due to the increase in sales for the period. |
| Selling expenses | 119,248,680.76 | 62,093,800.66 | 92.05% | Mainly due to the increase in product quality guarantee deposits, commissions and agency service fees as a result of the sales growth during the period. |
| Administrative expenses | 174,818,664.63 | 133,292,392.91 | 31.15% | Mainly due to the increase in compensation expenses, travel and related expenses. |
| Finance costs | -4,539,148.71 | -8,856,622.89 | 48.75% | Mainly due to the change in foreign exchange gain for the period. |
| Income tax expenses | 56,229,619.60 | 31,123,723.82 | 80.66% | Mainly due to the increase in income tax payable for the period. |
| R&D expenses | 59,929,020.05 | 44,132,225.30 | 35.79% | Mainly due to the increased investment in research and development. |
| Net cash generated from/used in operating activities | 191,436,066.52 | 152,250,706.73 | 25.74% | Mainly due to the increase in sales for the period. |
| Net cash generated from/used in investing activities | 20,667,431.59 | -171,226,100.99 | 112.07% | Mainly due to the payment for the acquisition of equity interest in Vantage Digital last year, but not in the current period. |
| Net cash generated from/used in financing activities | -135,534,045.74 | -9,276,543.86 | -1,361.04% | Mainly due to the payment of loan deposits during the period. |
| Net increase in cash and cash equivalents | 129,900,525.40 | -31,580,854.21 | 511.33% | Mainly due to the payment for the acquisition of equity interest in Vantec last year, but not in the current period. |
Significant changes in the composition or source of profits during the reporting period.
□ Applicable ? Not applicable
There is no significant change in the composition or source of profits during the reporting period.
Breakdown of Operating Revenue
Unit: RMB yuan
| 2023H1 | 2022H1 | Change | |||
| Operating revenue | As a % of total operating revenue (%) | Operating revenue | As a % of total operating revenue (%) | ||
| Total | 2,082,606,453.72 | 100% | 1,535,615,634.26 | 100% | 35.62% |
| By operating division | |||||
| Intelligent manufacturing | 2,082,606,453.72 | 100% | 1,535,615,634.26 | 100% | 35.62% |
| By product category | |||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| 2023H1 | 2022H1 | Change | |||
| Operating revenue | As a % of total operating revenue (%) | Operating revenue | As a % of total operating revenue (%) | ||
| Corrugated cardboard production lines | 1,324,169,018.63 | 63.58% | 1,005,932,572.90 | 65.51% | 31.64% |
| Corrugated box printing and packaging production line equipment | 344,038,055.26 | 16.52% | 247,566,396.26 | 16.12% | 38.97% |
| Water powersports products and general machines | 414,399,379.83 | 19.90% | 282,116,665.10 | 18.37% | 46.89% |
| By operating segment | |||||
| Mainland China | 367,898,338.78 | 17.67% | 140,124,894.68 | 9.12% | 162.55% |
| Other countries and regions | 1,714,708,114.94 | 82.33% | 1,395,490,739.58 | 90.88% | 22.87% |
Operating Division, Product Category or Operating Segment Contributing over 10% of Operating Revenue or Operating Profit? Applicable □ Not applicable
Unit: RMB yuan
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Intelligent manufacturing | 2,082,606,453.72 | 1,472,630,144.11 | 29.29% | 35.62% | 29.86% | 3.14% |
| By product category | ||||||
| Corrugated cardboard production lines | 1,324,169,018.63 | 953,562,169.59 | 27.99% | 31.64% | 28.42% | 1.80% |
| Corrugated box printing and packaging production line equipment | 344,038,055.26 | 215,776,277.80 | 37.28% | 38.97% | 27.33% | 5.73% |
| Water powersports products and general machines | 414,399,379.83 | 303,291,696.72 | 26.81% | 46.89% | 36.58% | 5.52% |
| By operating segment | ||||||
| Mainland China | 367,898,338.78 | 282,666,372.77 | 23.17% | 162.55% | 187.22% | -6.60% |
| Other countries and regions | 1,714,708,114.94 | 1,189,963,771.34 | 30.60% | 22.87% | 14.90% | 4.81% |
When the statistical caliber of the company's main business data is adjusted in the reporting period, the company's last issue of themain business data is adjusted according to the caliber at the end of the reporting period.
□ Applicable ? Not applicable
Any over 30% YoY movements in the data above and why:
□ Applicable ? Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
IV Analysis of Non-Core Businesses
? Applicable □ Not applicable
Unit: RMB yuan
| Amount | As a % of gross profit | Primary source/reason | Recurrent or not | |
| Return on investment | 36,109,196.08 | 12.65% | Mainly due to the increase in the change in investment income recognized from the implementation of investments in securities during the period. | Yes |
| Gain/loss on changes in fair value | 2,006,095.39 | 0.70% | Mainly due to the increase in the change in fair value recognized from the implementation of investments in securities during the period. | Yes |
| Asset impairment loss | -5,612,938.09 | -1.97% | Mainly due to the provision for decline in value of inventories during the period. | Not |
| Non-operating income | 2,034,810.24 | 0.71% | No significant impact. | Not |
| Non-operating expenses | 1,131,918.48 | 0.40% | No significant impact. | Not |
V Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB yuan
| 30 June 2023 | 31 December 2022 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As a % of total assets | Amount | As a % of total assets | |||
| Cash and bank balances | 1,512,206,543.53 | 20.04% | 1,274,447,199.74 | 18.39% | 1.65% | No significant change. |
| Accounts receivable | 855,062,593.38 | 11.33% | 837,305,757.46 | 12.08% | -0.75% | No significant change. |
| Contract assets | 49,965,091.73 | 0.66% | 65,089,851.21 | 0.94% | -0.28% | No significant change. |
| Inventories | 1,390,730,554.45 | 18.43% | 1,092,981,884.51 | 15.77% | 2.66% | Mainly due to the increase in sales orders, resulting in the increase in inventory reserve. |
| Investment property | 0.00% | 0.00% | 0.00% | NA | ||
| Long-term equity investments | 93,124,195.76 | 1.23% | 95,352,681.52 | 1.38% | -0.15% | No significant change. |
| Fixed assets | 567,038,393.94 | 7.51% | 570,200,113.79 | 8.23% | -0.72% | No significant change. |
| Construction in progress | 124,402,838.73 | 1.65% | 38,904,537.85 | 0.56% | 1.09% | No significant change. |
| Right-of-use assets | 84,967,181.12 | 1.13% | 86,448,978.02 | 1.25% | -0.12% | No significant change. |
| Short-term borrowings | 358,142,248.87 | 4.75% | 41,815,129.24 | 0.60% | 4.15% | Mainly due to the short-term borrowings during the period. |
| Contract | 830,600,374.59 | 11.01% | 692,567,968.60 | 10.00% | 1.01% | Mainly due to the increase in sales |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| 30 June 2023 | 31 December 2022 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As a % of total assets | Amount | As a % of total assets | |||
| liabilities | orders and advance receipts during the period. | |||||
| Long-term borrowings | 87,312,366.53 | 1.16% | 57,884,494.89 | 0.84% | 0.32% | No significant change. |
| Lease liabilities | 69,495,680.09 | 0.92% | 68,989,111.33 | 1.00% | -0.08% | No significant change. |
| Financial assets held for trading | 754,101,755.27 | 9.99% | 860,832,278.88 | 12.42% | -2.43% | No significant change. |
| Non-current liabilities due within one year | 65,583,276.30 | 0.87% | 315,767,431.26 | 4.56% | -3.69% | Mainly due to the repayment of borrowings during the period. |
2. Major Assets Overseas
? Applicable □ Not applicable
| Asset | Source | Asset value (RMB) | Location | Management model | Control measures to protect asset safety | Return | As a % of the Company’s net asset value | Any material impairment risk or not |
| 100% interest of Fosber S.p.A. | M&A | 1,024,107,541.13 | Italy | Producing and marketing by itself | Operation management | Good | 22.60% | Not |
| 100% interest of EDF S.R. L | M&A | 33,463,404.69 | Italy | Producing and marketing by itself | Operation management | Good | 0.74% | Not |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
3. Assets and Liabilities at Fair Value
? Applicable □ Not applicable
Unit: RMB yuan
| Item | Opening amount | Gain/loss on fair-value changes in the period | Cumulative fair-value changes recognized in equity | Impairment allowance for the period | Purchased in the period | Sold in the period | Other changes | Closing amount |
| Financial assets | ||||||||
| 1. Financial assets held for trading (exclusive of derivative financial assets) | 860,049,558.59 | 6,066,411.66 | 1,644,291,105.71 | 1,757,045,271.91 | 753,361,804.05 | |||
| 2. Derivative financial assets | 782,720.29 | -128,513.10 | 171,818.03 | 86,074.00 | 739,951.22 | |||
| Subtotal of financial assets | 10,000,000.00 | 82,273.97 | 10,082,273.97 | |||||
| Other non-current financial assets | 334,449,603.33 | -3,991,412.19 | 50,000,000.00 | 1,665,778.13 | 382,123,969.27 | |||
| Total of the above | 1,195,281,882.21 | 1,946,486.37 | 1,704,462,923.74 | 1,757,131,345.91 | 1,748,052.10 | 1,146,307,998.51 | ||
| Financial liabilities | 1,195,281,882.21 | 1,946,486.37 | 1,704,462,923.74 | 1,757,131,345.91 | 1,748,052.10 | 1,146,307,998.51 | ||
| 193,418,848.13 | -59,609.02 | 3,099,208.01 | 10,793,663.53 | 1,335,348.24 | 187,000,131.83 | |||
Particulars about other changes: Other changes are mainly due to changes in exchange rates and interest accruals.Indicate whether any significant change occurred to the measurement attributes of the major assets in the Reporting Period. □ Yes √ No
4. Assets to which the Company’s Rights Were Restricted as at the Period-End
Unit: RMB yuan
| Item | Closing carrying amount | Reason for Restriction |
| Cash and bank balances | 148,585,320.86 | Used as deposits to obtain bank acceptance bills and letters of guarantee. |
| Fixed assets | 4,575,662.37 | Used to obtain bank loans by subsidiaries. |
| Other non-current assets due within one year | 315,375,000.00 | Used as deposits for loans of subsidiaries. |
Total
| Total | 468,535,983.23 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
VI Analysis of Investments Made
1. Total Investment Amount
? Applicable □ Not applicable
| Total investment amount in 2022H1 (RMB) | Total investment amount in 2021H1 (RMB) | Change (%) |
| 957,152,298.32 | 1,227,440,484.73 | -22.02% |
2. Significant Equity Investments Acquired in the Reporting Period
□ Applicable ? Not applicable
3. Significant Non-Equity Investments of which the Acquisition Was Uncompleted in the Reporting Period
□ Applicable ? Not applicable
4. Financial Investments
(1) Securities Investments
? Applicable □ Not applicable
Unit: RMB yuan
| Security type | Security code | Security name | Initial investment cost | Measurement method | Opening carrying amount | Gain/loss on fair-value changes in the period | Cumulative fair-value changes recognized in equity | Purchased in the period | Sold in the period | Gain/loss in the period | Closing carrying amount | Accounting title | Funding source |
| Domestically listed stocks | 600416 | Xiangtan Electric | 36,882,169.60 | Fair value | 3,441,331.96 | 36,882,169.60 | 3,441,331.96 | 40,323,501.56 | Financial assets held for trading | Self-funded | |||
| Domestically listed stocks | 603566 | Pleco | 62,847,290.00 | Fair value | -15,215,015.00 | 62,847,290.00 | -15,215,015.00 | 47,632,275.00 | Financial assets held | Self-funded |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| for trading | |||||||||||||
| Domestically listed stocks | ---- | Others | 165,553,521.28 | Fair value | 165,553,521.28 | 10,490,188.68 | 74,352,742.17 | 293,336,037.13 | 53,429,773.68 | Financial assets held for trading | Self-funded | ||
| Trust products | ---- | ---- | 717,241.38 | Fair value | 717,241.38 | 717,241.38 | Financial assets held for trading | Self-funded | |||||
| Funds | ---- | ---- | 342,596,480.19 | Fair value | 342,596,480.19 | 4,054,835.83 | 270,000,000.00 | 340,135,287.31 | -2,643,975.13 | 269,817,217.75 | Financial assets held for trading | Self-funded | |
| Others | ---- | ---- | 351,182,315.74 | Fair value | 351,182,315.74 | 3,295,070.19 | 1,200,208,903.94 | 1,162,135,695.80 | 5,616,044.48 | 394,871,568.36 | Financial assets held for trading | Self-funded | |
| Total | 959,779,018.19 | -- | 860,049,558.59 | 6,066,411.66 | 1,644,291,105.71 | 1,795,607,020.24 | 44,628,159.99 | 753,361,804.05 | -- | -- | |||
| Disclosure date of the board announcement approving the securities investments | On 24 March 2023, the Board of Directors of the Company held a meeting to consider and approve the proposal relating to securities investment, with the securities investment valid for 12 months from the date of approval at the shareholders' meeting and the announcement date of the Board of Directors' resolution was 28 March 2023. | ||||||||||||
| Disclosure date of the general meeting announcement approving the securities investments (if any) | On 17 April 2022, the shareholders' meeting was held to consider and approve the proposal relating to securities investment, and the announcement date of the resolution of the shareholders' meeting was 18 April 2022. | ||||||||||||
(2) Investments in Derivative Financial Instruments
? Applicable □ Not applicable
Unit: RMB'0,000
| Counterparty | Relationship with the Company | Related transaction | Type of derivative | Initial investment amount | Start date | End date | Opening investment amount | Purchased in the Reporting Period | Sold in the Reporting Period | Impairment allowance (if any) | Closing investment amount | Closing investment amount as % of the Company’s closing equity | Actual gain/loss in the Reporting Period |
| Ningbo Bank | N/A | No | Forward forex settlement and sale | 161.10 | 2023-01-01 | 2023-06-30 | 161.10 | 239.82 | 297.80 | 0.00 | 103.12 | 0.02% | -32.67 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Counterparty | Relationship with the Company | Related transaction | Type of derivative | Initial investment amount | Start date | End date | Opening investment amount | Purchased in the Reporting Period | Sold in the Reporting Period | Impairment allowance (if any) | Closing investment amount | Closing investment amount as % of the Company’s closing equity | Actual gain/loss in the Reporting Period |
| contract | |||||||||||||
| Total | 161.10 | -- | -- | 161.10 | 239.82 | 297.80 | 0.00 | 103.12 | 0.02% | -32.67 | |||
| Funding source | Self-funded | ||||||||||||
| Legal matter (if applicable) | N/A | ||||||||||||
| Disclosure date of the announcement about the board’s consent for the derivative investment (if any) | 28 March 2023 | ||||||||||||
| Disclosure date of the announcement about the general meeting’s consent for the derivative investment (if any) | 18 April 2023 | ||||||||||||
| Risk analysis of positions held in derivatives during the Reporting Period and description of control measures (Including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | The Company's financial derivative transaction business is mainly intended to avert and prevent risks arising from fluctuations in exchange rates and commodity prices. In the Rules on the Management of Financial Derivative Transaction Business formulated by the Company, the operating rules, review and approval authority, routine management, and risk control mechanisms on the financial derivative transaction business have been prescribed to standardize business operation as well as prevent and control related risks. Chinese futures exchanges have established well-improved risk control mechanisms. As future exchanges assume the performance responsibility, there is a low probability of credit risk. The Company will strengthen the understanding and mastering of national policies and requirements of relevant governing bodies to avoid related credit and legal risks. | ||||||||||||
| Changes in market prices or fair value of derivative products during the Reporting Period, specific methods used, and relevant assumption and parameter settings shall be disclosed for analysis of fair value of derivatives | Undue forward forex settlement and sale contracts are measured at fair value, i.e., the difference between the signing price of an undue forward forex settlement and sale contract held at the period-end and the bank’s forward forex rates at the period-end. | ||||||||||||
| Description of significant changes in accounting policies and specific financial accounting principles in respect of the Company's derivatives for the Reporting Period as compared to the prior reporting period | N/A | ||||||||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Counterparty | Relationship with the Company | Related transaction | Type of derivative | Initial investment amount | Start date | End date | Opening investment amount | Purchased in the Reporting Period | Sold in the Reporting Period | Impairment allowance (if any) | Closing investment amount | Closing investment amount as % of the Company’s closing equity | Actual gain/loss in the Reporting Period |
| Special opinions expressed by independent directors concerning the Company's derivatives investment and risk control | 1. Based on the realities and normal needs of routine operation, the Company and its subsidiaries intend to conduct the financial derivative transaction business, for the purposes of reducing the risks arising from fluctuations in exchange rates and prices of related commodities to the principal business of the Company and decreasing the impacts of market fluctuations on the principal business of the Company and its subsidiaries. By giving full play to the hedging function of financial derivative instruments, the operating results and finance of the Company and its subsidiaries are increasingly robust. 2. The Company has prepared the rules on the internal control management of the financial derivate transaction business by relevant regulatory prescriptions, which is conducive to standardizing and strengthening the risk control management of financial derivative transactions. The Board of Directors of the Company has performed the necessary review and approval procedures for this matter in a legal and rule-compliant manner. No illegalities or violations of regulations and Articles of Association have occurred. 3. In strict compliance with the Stock Listing Rules of the Shenzhen Stock Exchange, the Guideline No. 7 of the Shenzhen Stock Exchange for the Self-regulation of Listed Companies--Transactions and Related-party Transactions, and other relevant laws and regulatory guidelines, the Company shall make prudent decisions and conduct prudent management, inspections and monitoring of the financial derivative transactions of the Company and its subsidiaries, strictly control risks, and promptly discharge the information disclosure duty. 4. We hold that the financial derivative transaction business of the Company and its subsidiaries does not prejudice the interests of the Company and all shareholders, particularly not impair the interests of non-controlling shareholders. Therefore, we approve this matter and suggest submitting it to the General Meeting of Shareholders of the Company for deliberation. | ||||||||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
5. Use of Raised Funds
□ Applicable ? Not applicable
VII Sale of Major Assets and Equity Investments
1. Sale of Major Assets
□ Applicable ? Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Investments
□ Applicable ? Not applicable
No such cases in the Reporting Period.VIII Principal Subsidiaries and Joint Stock Companies
? Applicable □ Not applicablePrincipal subsidiaries and joint stock companies with an over 10% effect on the consolidated net profit:
Unit: RMB
| Name | Relationship with the Company | Principal activities | Registered capital | Total assets | Net assets | Operating revenue | Operating profit | Net profit |
| Fosber Group | Subsidiary | R&D, processing, manufacturing, and marketing of corrugated cardboard production lines and parts, as well as provision of after-sales services | EUR1.56 million | 2,629,287,329.78 | 1,024,107,541.13 | 1,199,066,616.27 | 155,304,322.59 | 115,307,732.13 |
| Shunyi Investment | Subsidiary | Shunyi Investment is principally engaged in business entity and project investments, | RMB10 million | 696,877,795.78 | 376,950,083.03 | 414,399,379.83 | 57,652,717.67 | 51,230,231.10 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
etc. It is thedirectcontrollingshareholderof ParsunPower.
Subsidiaries acquired or disposed of in the Reporting Period:
□ Applicable ? Not applicable
IX Structured Bodies Controlled by the Company
√ Applicable □ Not applicable
1. In March 2021, the Company established Tianjin Hangchuang Zhijin Investment Partnership (Limited Partnership)(the "Tianjin Hangchuang Fund" or the "Partnership") with AVIC Innovation Capital Management Co., Ltd. TheCompany, as the sole LP of the Fund, subscribed for the Partnership's contribution share of RMB20,000,000. TheFund is a special fund which is to invest in the equity of Sichuan Dajin Stainless Steel Co., Ltd. (now renamed asChengdu Dajin Aero-Tech Co., Ltd.).This investment is in line with the Company’s development strategy considering the Fund’s investment direction,decision-making, management, income distribution, loss allocation, etc. From the perspective of business nature,the Company provides much of the capital of the Tianjin Hangchuang Fund, so it is reasonable to include the Fundin the Company’s consolidated financial statements of the Reporting Period.
2. In March 2022, the wholly owned subsidiary Yineng Investment indirectly invested in Beijing SinoscienceFullcryo Technology Co., Ltd. (referred to as "Fullcryo" in this Report) and Sinoscience Fullcryo (Zhongshan)Equipment Manufacturing Co., Ltd. by making a capital contribution to a limited partnership and obtained non-controlling interests of the two companies.As one of the limited partners of the partnership, Yineng Investment accounts for 94.86% of the total capitalcontributions. Considering the partnership's agreements on investment orientation, investment decisions, operationand management, income apportionment, and loss bearing, and the fact that Yineng Investment accounts for themajority of the capital contributions to the partnership, the partnership is included in the consolidated statements ofDongfang Precision as a "structured body controlled by the Company" from the perspective of commercialsubstance and after complying with the Accounting Standard for Business Enterprises and referring to theprofessional opinions of the independent auditor.X Risks Faced by the Company and Countermeasures
1. Risks arising from fluctuations in exchange rates
The main settlement currency and recording currency of Fosber Group, the principal overseas business entity of theCompany, are euros, while the revenue of Fosber America and domestic entities from export is mainly settled withthe US dollar. Fluctuations in the US dollar and euro exchange rates do not significantly impact the routine operationof overseas business entities but exert certain impacts on the presentation of their assets and operating results in theconsolidated financial statements.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Since 2022, changes in global geopolitical landscape, climate risks, and macroeconomic cycles have resulted indeveloped economies operating under high inflation and high interest rates, leading to pronounced volatility ininternational currency markets. In H1 2022, the euro depreciated constantly; the US dollar became robust after itentered the interest rate hike cycle, and the US Dollar Index has hit a record high since 2002. In the first half of2023, after three interest rate hikes and as inflation cooled, the US dollar entered a consolidation phase at high levels.The Euro rebounded somewhat against the US dollar, with volatility declining. Over the same period, RMB foreignexchange market saw markedly increased volatility amid China's economic recovery, US dollar index fluctuations,inverted China-US interest rate differences, and other factors. The RMB/USD spot exchange rate experienced largefluctuations, depreciating somewhat. Looking to the second half, the RMB/USD exchange rate may continuerebounding driven by accelerated Chinese economic recovery and declining US inflation.Countermeasures:
The Company can closely track the global financial market and national exchange rate policies, make timelydecisions to select proper exchange rate management tools to manage exchange rate risks actively. It can also reducerisk exposure and increase exchange gains by increasing debts of foreign currency and rely on Group managementto strengthen the level of capital coordination in different countries and regions, balance, and offset fluctuation risksat the Group level.
2. Potential risks of financial investment business
In recent years, the Company has arranged some of its idle owned funds to carry out financial investment businesssuch as securities investment and entrusted wealth management in an appropriate manner, based on the actual anddevelopment needs. There are certain risks of carrying out the above business due to fluctuations in the financialmarket and uncertainty of income; and the risk that the Company may suffer certain investment losses in case ofrisk events in the process of wealth management activities in terms of investment strategies and use of funds.Countermeasures:
On the premise that the funds required for the daily operation of the main business will not be affected, the Companyreasonably controls the capital scale for financial investment; it establishes and improves the internal control systemand mechanism standards for securities investment and entrusted financial management, and strengthens the riskcontrol management of securities investment business, safeguard the safety of investment funds, and strictly controlthe risk exposure. In accordance with the economic situation and changes in the financial market, it continuouslytracks and analyses the progress of securities investment and the investment of funds, the progress of projectinvestment and the performance of the capital market, and timely takes corresponding preservation measures tocontrol investment risks.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Part IV Corporate Governance
I Annual and Extraordinary General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Resolution |
| The First Extraordinary General Meeting of 2023 | Extraordinary General Meeting | 35.5383% | 30 January 2023 | 31 January 2023 | 2. The Proposal on the Request for the General Meeting to Authorize the Board of Directors to Handle Matters in Relation to the Share Repurchase was approved. |
| The Second Extraordinary General Meeting of 2023 | Extraordinary General Meeting | 33.4246% | 6 March 2023 | 7 March 2023 | 1. The Proposal on the Repurchase and Retirement of Some Restricted Shares was approved. 2. The Proposal on the Change to the Registered Capital & Amendments to the Articles of Association was approved. |
| The 2022 Annual General Meeting | Annual General Meeting | 36.1623% | 17 April 2023 | 18 April 2023 | 2. The Proposal on the 2022 Work Report of the Supervisory Committee was approved. 3. The Proposal on the 2022 Annual Report and Its Summary was approved. 4. The Proposal on the 2022 Final Financial Accounts was approved. 5. The Proposal on the 2023 Budget was approved. 6. The Proposal on the 2022 Final Dividend Plan was approved. 7. The Proposal on the 2022 Internal Control Assessment Report was approved. 8. The Proposal on the Appointment of the Independent Auditor for 2023 was approved. 9. The Proposal on the Use of Own Funds for Entrusted Wealth Management in 2023 was approved. 10. The Proposal on the Estimated Futures and Derivatives Trading Limit for 2023 was approved. |
| The Third Extraordinary General Meeting of 2023 | Extraordinary General Meeting | 33.9262% | 30 June 2023 | 1 July 2023 | 1. The Proposal on the Repurchase and Retirement of Some Restricted Shares was approved. 2. The Proposal on the Change to the Registered Capital & Amendments to the Articles of Association was approved. |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
2. Extraordinary General Meetings Convened at the Request of Preference Shareholders with ResumedVoting Rights
□ Applicable ? Not applicable
II Changes of Directors, Supervisors and Senior Management
□ Applicable ? Not applicable
The Company’s directors, supervisors and senior management remained unchanged during the Reporting Period.For details, see the 2022 Annual Report.III Dividend Plan for the Reporting Period
□ Applicable ? Not applicable
The Company has no semi-annual dividend plan, either in the form of cash or stock.IV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures forEmployees? Applicable □ Not applicable
1. Equity Incentives
To refine its long-term incentive mechanism, boost the enthusiasm of management personnel and keyemployees of all levels, effectively promote long-term development, and achieve the objective of “Promoting TeamStability and Morale, Attract Talent and Improve Operating Performance”, the Company launched the 2020Restricted Share Incentive Plan in the first quarter of 2020. For details, see the Summary of the 2020 RestrictedShare Incentive Plan disclosed by the Company on www.cninfo.com.cn dated 12 March 2020.To further build and improve its long-term incentive mechanism, attract, and retain talent, fully motivate itskey managerial, technological, and business personnel, effectively align the Company’s and shareholders’ interestswith the personal interests of the core team, and make all the parties concerned to focus on the long-termdevelopment of the Company, the Company launched the 2022 Restricted Share Incentive Plan in the first quarterof 2022. For details, see the 2022 Restricted Share Incentive Plan disclosed by the Company on www.cninfo.com.cndated 15 March 2022.
The implementations of the above-mentioned incentive plans during the Reporting Period are as follows:
1. On 17 February 2023, the Proposal on the Satisfaction of the Unlocking Conditions for the SecondUnlocking Period for the Reserved Restricted Shares under the 2020 Restricted Share Incentive Plan was approvedat the 23rd (Extraordinary) Meeting of the 4th Board of Directors and the 17th (Extraordinary) Meeting of the 4thSupervisory Committee. On 28 February 2023, 1,632,000 shares held by 17 awardees were unlocked for publictrading in the second unlocking period for the reserved restricted shares under the 2020 Restricted Share IncentivePlan.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
2. On 21 April 2023, the Proposal on the Satisfaction of the Unlocking Conditions for the First UnlockingPeriod for the First Grant under the 2022 Restricted Share Incentive Plan was approved at the 25th (Extraordinary)Meeting of the 4th Board of Directors and the 17th (Extraordinary) Meeting of the 4th Supervisory Committee. On28 April 2023, 530,000 shares held by 7 awardees were unlocked for public trading in the first unlocking period forthe first grant under the 2022 Restricted Share Incentive Plan.
3. On 13 June 2023, the Proposal on the Satisfaction of the Unlocking Conditions for the Third UnlockingPeriod for the First Grant under the 2020 Restricted Share Incentive Plan was approved at the 26th (Extraordinary)Meeting of the 4th Board of Directors and the 20th (Extraordinary) Meeting of the 4th Supervisory Committee. On26 June 2023, 8,620,000 shares held by 37 awardees were unlocked for public trading in the third unlocking periodfor the first grant under the 2020 Restricted Share Incentive Plan.
4. On 6 March 2023, the Proposal on the Repurchase and Retirement of Some Restricted Shares was approvedat the Second Extraordinary General Meeting of 2023. As one awardee resigned from the Company due to personalreasons and thus was no longer eligible as an awardee for the restricted shares, the Company repurchased and retiredthe 128,000 restricted shares that had been granted to this awardee but were still in lockup. The Shenzhen branchof China Securities Depository and Clearing Corporation Limited confirmed that the retirement of the aforesaidrepurchased restricted shares was completed on 22 March 2023.
5. On 13 June 2023, the Proposal on the Repurchase and Retirement of Some Restricted Shares was approvedat the 26th (Extraordinary) Meeting of the 4th Board of Directors and the 20th (Extraordinary) Meeting of the 4thSupervisory Committee. As one awardee was to resign from the Company shortly and thus was no longer eligiblefor the equity incentives, the Company intended to repurchase the 120,000 restricted shares that had been grantedto this awardee but were still in lockup, all of which would be retired. The said matter has been approved at theThird Extraordinary General Meeting of 2023.
2. Implementation of Employee Stock Ownership Plans
□ Applicable ? Not applicable
3. Other Incentive Measures for Employees
□ Applicable ? Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Part V Environmental and Social Responsibilities
I Significant Environmental IssuesWhether the listed company and its subsidiaries fell into major pollutant-discharge enterprises and institutions published by nationalenvironmental protection authorities.
□ Yes √ No
The Company and its subsidiaries did not fall into major pollutant-discharge enterprises and institutions published by nationalenvironmental protection authorities, and the Company was not administratively punished for environmental issues in the ReportingPeriod. For other environmental information, please refer to “II Social Responsibilities” below.
Measures taken to reduce carbon emissions in the Reporting Period and the impact:
□ Applicable ? Not applicable
II Social ResponsibilitiesThe Company attached importance to fulfil social responsibility in daily operations, intending to promote the harmony and co-prosperity between it and parties related to its interests. The Company also took active measures in the protection of the rights andinterests of shareholders, creditors, employees, suppliers, customers and consumers, environmental protection, sustainabledevelopment, public relations and social public welfare undertakings, and strived to maximize comprehensive social benefitsincluding the sustainable development of itself.
(1) Corporate governance: During the Reporting Period, the Company strictly abided by the Company Law, the Securities Law andCode of Corporate Governance for Listed Companies, continued to refine the corporate governance structure, improve the internalcontrol system, formed the decision-making system comprising the Shareholders' General Meeting, the Board of Directors, theSupervisory Committee and the Management, and timely fulfilled its obligation of information disclosure according to laws andregulations and effectively safeguarded the rights and interests of all shareholders.
(2) Rights and interests of employees: The Company provided employees with welfare and care by providing holiday gifts andholding employee birthday parties, annual meetings and team building activities, improved employees' professional competence byoffering regular or irregular training to employees in the headquarters and domestic and foreign branches and subsidiaries, andcontinued to improve the competitive comprehensive remuneration system to retain and attract talents needed for the Company'ssustainable development.
(3) Relationship with customers and suppliers: Long adhering to the principle of "honest business" and "mutual benefit and win-win",the Company took the initiative to construct and develop strategic partnership with suppliers and customers and jointly built aplatform of trust and cooperation, and earnestly fulfilled its social responsibilities to suppliers, customers and consumers. TheCompany has been well performing contracts with suppliers and customers and ensuring that the rights and interests of all parties arehighly valued and duly protected.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
(4) Production safety: The Company strictly abided by the Labour Law and the Labour Contract Law, adhered to the "people-oriented" principle, attached importance to the needs of employees, strived to improve the working and living environments ofemployees, and has set up a labour union to effectively protect the interests of employees. It also provided labour protection suppliesaccording to the risk factors of different posts, organized occupational health examinations for employees (before taking the post, onthe post and before leaving the post), and bought safety liability insurance for employees on highly risky posts. In 2020, DongfangPrecision extended its Grade II Production Safety Standardization Certificate for Machinery Enterprises, and Parsun Power andFosber Asia were granted the Grade III Production Safety Standardization Certificate for Machinery Enterprises.
(5) Environmental protection: First, Dongfang Precision was granted the National Pollutant Discharge Permit and met post-licensingregulatory requirements as required. Second, Dongfang Precision commissioned the qualified third-party environmental protectionagencies to compile the Contingency Plans for Environmental Emergencies, and commission a third-party testing agency to takesamples every quarter to monitor and issue third-party test reports, and transfer hazardous waste in strict accordance with nationalrequirements. Third, the Company’s environmental protection facilities passed the qualification re-examination onOHSAS18001:2007 Occupational Health and Safety Management Systems and ISO14001:2005 Environmental ManagementSystem. Parsun Power, which is a subsidiary of the Company, is not in the heavy pollution industry, its production process has lessimpact on the environment, and it has purchased complete environmental protection equipment, which are in normal operation andcan meet the daily pollutant treatment requirements, that leads no violation of environmental protection related laws andadministrative regulations and receive administrative penalties.
(6) Anti-fraud: The Group complied a thorough internal authorization manual that detailed provisions on internal authorizationprocess of major matters to ensure appropriate internal control and reduce the risk of fraud. In order to create a fair, just, honest andnon-corrupt internal business environment and strengthen internal monitoring, the Company also established and launched the anti-fraud reporting platform to encourage employees to report fraud findings.
(7) Social Honors: Dongfang Precision won honorary titles including “Top 500 Private Manufacturing Enterprises in China”,“Guangdong Provincial Industrial Design Centre”, “Guangdong Innovative Small and Medium-sized Enterprises”, “LeadingEnterprises in Subdivided Industries in Foshan”, and “Model Enterprise for High Quality Development in the ManufacturingIndustry in Nanhai District of Foshan City in 2022. The subsidiary Fosber Asia has been recognized as a “Guangdong DemonstrationEnterprise of Intellectual Property”. The subsidiary Parsun Power is a national “small giant” enterprise, a national high-techenterprise, an engineering technology research center for outboard motors in Jiangsu Province, an enterprise technology Centerrecognized by Jiangsu Province, a leading enterprise in China's internal combustion engine industry and a director unit of the SmallGasoline Engine Branch of China Internal Combustion Engine Industry Association. The outboard motors of Parsun Power have alsowon many honors such as the certificate of industrialization demonstration project of national torch plan, innovative product of Chinamachinery industry, famous brand product of Jiangsu province and famous brand product of Suzhou city.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Part VI Significant Events
I Undertakings of the Company’s Actual Controller, Shareholders, Related Parties andAcquirers, as well as the Company Itself and Other Entities Fulfilled in the Reporting Periodor Unfulfilled and Overdue at the Period-End
□ Applicable ? Not applicable
No such cases in the Reporting Period.II Occupation of the Company’s Capital by the Controlling Shareholder or Other RelatedParties for Non-Operating Purposes
□ Applicable ? Not applicable
No such cases in the Reporting Period.III Irregularities in Provision of Guarantees
□ Applicable ? Not applicable
No such cases in the Reporting Period.IV Engagement and Disengagement of Independent AuditorWhether the semi-annual financial report was audited.
□ Yes √ No
The semi-annual financial report was not audited.V Explanations Given by the Board of Directors and the Supervisory Committee Regarding theIndependent Auditor's “Modified Opinion” on the Financial Statements of the ReportingPeriod
□ Applicable ? Not applicable
VI Explanations Given by the Board of Directors Regarding “Modified Opinion” on theFinancial Statements of Last Year
□ Applicable ? Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
VII Insolvency and Reorganization
□ Applicable ? Not applicable
No such cases in the Reporting Period.
VIII Legal MattersSignificant Legal Matters
□ Applicable ? Not applicable
No such cases in the Reporting Period.Other Legal Matter
□ Applicable ? Not applicable
IX Punishments and Rectifications
□ Applicable ? Not applicable
No such cases in the Reporting Period.X Credit Quality of the Company as well as Its Controlling Shareholder and Actual Controller
□ Applicable ? Not applicable
XI Significant Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable ? Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Investments
□ Applicable ? Not applicable
No such cases in the Reporting Period.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
□ Applicable ? Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
No such cases in the Reporting Period.
4. Amounts Due to and from Related Parties
□ Applicable ? Not applicable
No such cases in the Reporting Period.
5. Transactions with Related Financial Companies
□ Applicable ? Not applicable
No such cases in the Reporting Period.
6. Transactions between the finance company controlled by the company and related parties
□ Applicable ? Not applicable
No such cases in the Reporting Period.
7. Other Significant Related-Party Transactions
□ Applicable ? Not applicable
No such cases in the Reporting Period.
XII Significant Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable ? Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable ? Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable ? Not applicable
No such cases in the Reporting Period.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
2. Significant Guarantees
? Applicable □ Not applicable
Unit: RMB’0,000
| Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries) | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Security (if any) | Counter-guarantees (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Guarantees provided by the Company as the parent for its subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Security (if any) | Counter-guarantees (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| Dongfang Precision (Netherland) | 5 June 2020 | No more than EUR35 million | 30 June 2020 | 26,388.29 | Joint liability, pledge | Security deposits | None | From the date when the guarantee took effect to 29 June 2023 | Yes | No |
| Dongfang Precision (Netherland) | 14 June 2023 | No more than EUR34.5 million | 15 June 2023 | 27,101.64 | Joint liability, pledge | Security deposits | None | From the date when the guarantee took effect to 15 June 2024 | No | No |
| Total approved line for such guarantees in the Reporting Period (B1) | No more than EUR34.5 million | Total actual amount of such guarantees in the Reporting Period (B2) | 27,101.64 | |||||||
| Total approved line for such guarantees at the end of the Reporting Period (B3) | No more than EUR69.5 million | Total actual balance of such guarantees at the end of the Reporting Period (B4) | 27,101.64 | |||||||
| Guarantees provided between subsidiaries | ||||||||||
| Obligor | Disclosure date of the guarantee line announcement | Line of guarantee | Actual occurrence date | Actual guarantee amount | Type of guarantee | Security (if any) | Counter-guarantees (if any) | Term of guarantee | Having expired or not | Guarantee for a related party or not |
| QCorr | 15 May 2020 | EUR3 million | 30 April 2020 | 646.68 | Joint liability | None | None | From the date when the guarantee took effect to | No | No |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| 30 June 2024 | |||||
| Total approved line for such guarantees in the Reporting Period (C1) | 0 | Total actual amount of such guarantees in the Reporting Period (C2) | 0 | ||
| Total approved line for such guarantees at the end of the Reporting Period (C3) | EUR3 million | Total actual balance of such guarantees at the end of the Reporting Period (C4) | 646.68 | ||
| Total guarantee amount (total of the three kinds of guarantees above) | |||||
| Total guarantee line approved in the Reporting Period (A1+B1+C1) | No more than EUR34.5 million | Total actual guarantee amount in the Reporting Period (A2+B2+C2) | 27,101.64 | ||
| Total approved guarantee line at the end of the Reporting Period (A3+B3+C3) | No more than EUR72.5 million | Total actual guarantee balance at the end of the Reporting Period (A4+B4+C4) | 27,748.32 | ||
| Total actual guarantee amount (A4+B4+C4) as % of the Company’s net assets | 6.44% | ||||
| Of which: | |||||
| Balance of guarantees provided for shareholders, the actual controller and their related parties (D) | 0 | ||||
| Balance of debt guarantees provided directly or indirectly for obligors with an over 70% debt/asset ratio (E) | 0 | ||||
| Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) | 0 | ||||
| Total of the three amounts above (D+E+F) | 0 | ||||
| Joint liability possibly borne or already borne in the Reporting Period for outstanding guarantees (if any) | N/A | ||||
| Guarantees provided in breach of prescribed procedures (if any) | N/A | ||||
3. Cash Entrusted for Wealth Management
? Applicable □ Not applicable
Unit: RMB’0,000
| Type | Funding source | Amount | Undue amount | Unrecovered overdue amount | Impairment provision for unrecovered overdue amount |
| Bank’s wealth management product | Self-funded | 33,473.16 | 8,500.00 | 0 | |
| Securities firm’s wealth management product | Self-funded | 44,040.00 | 31,700.00 | 0 | |
| Trust product | Self-funded | 358.62 | 0.00 | 358.62 | 286.90 |
| Total | 77,871.78 | 40,200.00 | 358.62 | 286.90 | |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
High-risk wealth management transactions with a significant single amount or with low security, low liquidity, and no principalprotection:
□ Applicable ? Not applicable
Wealth management transactions where the principal is expectedly irrecoverable or an impairment may be incurred:
? Applicable □ Not applicableAs of the end of the Reporting Period, the unrecovered amount of trust products was RMB3.5862 million, for which an impairmentallowance of RMB2.8690 million was established.
4. Other Significant Contracts
□ Applicable ? Not applicable
No such cases in the Reporting Period.
XIII Other Significant Events
□ Applicable ? Not applicable
XIV Significant Events of Subsidiaries
□ Applicable ? Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Part VII Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in the period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| 1. Restricted shares | 233,182,533 | 18.79% | 0 | 0 | 0 | -4,204,403 | -4,204,403 | 228,978,130 | 18.45% |
| 1.1 Shares held by the government | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 1.2 Shares held by state-owned corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 1.3 Shares held by other domestic investors | 232,342,533 | 18.72% | 0 | 0 | 0 | -3,524,403 | -3,524,403 | 228,818,130 | 18.44% |
| Including: Shares held by domestic corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by domestic individuals | 232,342,533 | 18.72% | 0 | 0 | 0 | -3,524,403 | -3,524,403 | 228,818,130 | 18.44% |
| 1.4 Shares held by overseas investors | 840,000 | 0.07% | 0 | 0 | 0 | -680,000 | -680,000 | 160,000 | 0.01% |
| Including: Shares held by overseas corporations | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| Shares held by overseas individuals | 840,000 | 0.07% | 0 | 0 | 0 | -680,000 | -680,000 | 160,000 | 0.01% |
| 2. Unrestricted shares | 1,007,923,867 | 81.21% | 0 | 0 | 0 | 4,076,403 | 4,076,403 | 1,012,000,270 | 81.55% |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| 2.1 RMB-denominated ordinary shares | 1,007,923,867 | 81.21% | 0 | 0 | 0 | 4,076,403 | 4,076,403 | 1,012,000,270 | 81.55% |
| 2.2 Domestically listed foreign shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2.3 Overseas listed foreign shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2.4 Others | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 3. Total shares | 1,241,106,400 | 100.00% | 0 | 0 | 0 | -128,000 | -128,000 | 1,240,978,400 | 100.00% |
Reasons for share changes:
? Applicable □ Not applicable
1. 25% of the shareholdings of a director that had left office for more than six months became transferable, i.e.unlocking of 300,000 shares in this caseIn July 2022, Director Mr. Zhou Wenhui left office and the shares held by him were not transferable for six months.The six-month lockup period expired in January 2023, and 25% of his shareholdings (300,000 shares) were unlockedand became transferable according to applicable regulations.
2. Unlocking for public trading of shares in the second unlocking period for the reserved restricted shares under theRestricted Share Incentive PlanIn February 2023, the shares were unlocked for public trading in the second unlocking period for the reservedrestricted shares under the 2020 Restricted Share Incentive Plan, which involved 1,632,000 shares held by 17awardees.
3. Repurchase and retirement of some restricted shares
In March 2023, one awardee for the reserved restricted shares under the 2020 Restricted Share Incentive Plan leftoffice and was thus no longer eligible for the said equity incentives. Therefore, the Company repurchased and retiredthe 128,000 restricted shares that had been granted to this awardee but were still in lockup.
4. Unlocking for public trading of shares in the first unlocking period for the first grant under the Restricted ShareIncentive PlanIn April 2023, the shares were unlocked for public trading in the first unlocking period for the first grant under the2022 Restricted Share Incentive Plan, which involved 530,000 shares held by seven awardees.
5. Unlocking for public trading of shares in the third unlocking period for the first grant under the Restricted ShareIncentive PlanIn June 2023, the shares were unlocked for public trading in the third unlocking period for the first grant under the2020 Restricted Share Incentive Plan, which involved 8,620,000 shares held by 37 awardees.Approval of share changes:
? Applicable □ Not applicableIn the Reporting Period, with respect to share changes involved in the “unlocking for public trading of shares in thesecond unlocking period for the reserved restricted shares under the 2020 Restricted Share Incentive Plan”,
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
“unlocking for public trading of shares in the first unlocking period for the first grant under the 2022 RestrictedShare Incentive Plan” and “unlocking for public trading of shares in the third unlocking period for the first grantunder the 2020 Restricted Share Incentive Plan”, the Company followed the applicable laws and regulations and itsArticles of Association, executed the approval procedures with the general meeting and the Board of Directors, andobtained approval from the Shenzhen Stock Exchange.Transfer of share ownership:
? Applicable □ Not applicableIn the Reporting Period, with respect to the transfers of share ownership involved in the “repurchase and retirementof some restricted shares”, the Company completed the transfers with the Shenzhen branch of China SecuritiesDepository and Clearing Co., Ltd. after they were approved by the Shenzhen Stock Exchange.Progress on any share repurchase:
? Applicable □ Not applicableDuring the period from 17 February 2023 to 30 June 2023, the Company repurchased a total of approximately
15.0938 million shares (or around 1.22% of the Company’s total share capital) through centralized bidding. Withthe highest trading price being RMB4.71/share and the lowest being RMB4.50/share, the total amount paid wasapproximately RMB69.7815 million (exclusive of transaction costs).Progress on reducing the repurchased shares by way of centralized bidding:
□ Applicable ? Not applicable
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per shareattributable to the Company’s ordinary shareholders and other financial indicators of the prior year and theprior accounting period, respectively:
□ Applicable ? Not applicable
Other information that the Company considers necessary or is required by the securities regulator to bedisclosed:
□ Applicable ? Not applicable
2. Changes in Restricted Shares
? Applicable □ Not applicable
Unit: share
| Shareholder | Opening restricted shares | Unlocked in the period | Increase in restricted shares in the period | Closing restricted shares | Reason for restriction | Date of unlocking |
| Qiu Yezhi | 17,536,791 | 3,600,000 | 5,845,597 | 19,782,388 | Participated in the Restricted Share Incentive Plan of the Company/restricted shares of senior management | 2023-6-26 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Shareholder | Opening restricted shares | Unlocked in the period | Increase in restricted shares in the period | Closing restricted shares | Reason for restriction | Date of unlocking |
| Xie Weiwei | 750,000 | 400,000 | 400,000 | 750,000 | Participated in the Restricted Share Incentive Plan of the Company/restricted shares of senior management | 2023-6-26 |
| Zhou Wenhui | 1,200,000 | 780,000 | 480,000 | 900,000 | Participated in the Restricted Share Incentive Plan of the Company/restricted shares of senior management | 2023-6-26 |
| The other 34 awardees of the first grant of the 2020 Restricted Share Incentive Plan | 4,140,000 | 4,140,000 | 0 | 0 | Participated in the Restricted Share Incentive Plan of the Company | 2023-6-26 |
| Feng Jia | 700,000 | 140,000 | 0 | 560,000 | Participated in the Restricted Share Incentive Plan of the Company | 2023-4-28 |
| The other 6 awardees of the first grant of the 2022 Restricted Share Incentive Plan | 1,950,000 | 390,000 | 0 | 1,560,000 | Participated in the Restricted Share Incentive Plan of the Company | 2023-4-28 |
| Shao Yongfeng | 640,000 | 320,000 | 280,000 | 600,000 | Participated in the Restricted Share Incentive Plan of the Company | 2023-2-28 |
| The other 16 awardees of the reserved grant of the 2020 Restricted Share Incentive Plan | 2,752,000 | 1,312,000 | 0 | 1,312,000 | Participated in the Restricted Share Incentive Plan of the Company | 2023-2-28 |
| Total | 29,668,791 | 11,082,000 | 7,005,597 | 25,464,388 | -- | -- |
II Issuance and Listing of Securities
□ Applicable ? Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
III Shareholders and Their Shareholdings
Unit: share
| Number of ordinary shareholders at the period-end | 42,956 | Number of preference shareholders with resumed voting rights at the period-end (if any) (see note 8) | 0 | |||||
| 5% or greater ordinary shareholders or top 10 ordinary shareholders | ||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total ordinary shares held at the period-end | Increase/decrease in the Reporting Period | Restricted ordinary shares held | Unrestricted ordinary shares held | Shares in pledge, marked or frozen | |
| Status | Shares | |||||||
| Tang Zhuolin | Domestic individual | 21.82% | 270,737,568 | 0 | 203,053,176 | 67,684,392 | In pledge | 105,360,000 |
| Tang Zhuomian | Domestic individual | 7.81% | 96,885,134 | 0 | 0 | 96,885,134 | In pledge | 40,000,000 |
| Hong Kong Securities Clearing Company Limited | Overseas corporation | 4.61% | 57,237,391 | 47,721,177 | 0 | 57,237,391 | ||
| Pulead Technology Industry Co., Ltd. | State-owned corporation | 3.04% | 37,708,587 | -10,441,200 | 0 | 37,708,587 | ||
| Luzhou Industrial Development Investment Group Co., Ltd. | State-owned corporation | 2.56% | 31,770,010 | 0 | 0 | 31,770,010 | ||
| Qinghai Puren Intelligent Technology R & D Center (Limited Partnership) | Domestic non-state-owned corporation | 2.15% | 26,628,340 | 0 | 0 | 26,628,340 | ||
| Qiu Yezhi | Domestic individual | 1.88% | 23,382,388 | 0 | 19,782,388 | 3,600,000 | ||
| CITIC Securities Company Limited | State-owned corporation | 1.00% | 12,435,553 | 11,863,876 | 0 | 12,435,553 | ||
| China Merchants | Domestic non-state- | 0.87% | 10,841,080 | 10,841,080 | 0 | 10,841,080 | ||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Bank Co., Ltd.－Wanjiang China Securities 1000 Index Strengthened Initiated Securities Investment Fund | owned corporation | |||||||
| Shengji Equity Investment Fund (Shanghai) Co., Ltd. | State-owned corporation | 0.54% | 6,700,000 | -12,907,843 | 0 | 6,700,000 | In pledge | 6,700,000 |
| Strategic investor or general corporation becoming a top-10 ordinary shareholder in a rights issue (if any) (see note 3) | None | |||||||
| Related or acting-in-concert parties among the shareholders above | Mr. Tang Zhuolin and Mr. Tang Zhuomian are brothers. On 18 August 2010, they signed the Agreement on Acting in Concert. Pulead Technology Industry Co., Ltd. (Chinese name has changed from “北大先行科技产业有限公司” to “东圣先行科技产业有限公司” during the reporting period.) and Qinghai Puren Intelligent Technology R & D Center (Limited Partnership) are acting-in-concert parties. Apart from that, the Company is not aware of any related or acting-in-concert parties among the other shareholders above. | |||||||
| Above shareholders entrusting or entrusted with voting rights, or waiving voting rights | None | |||||||
| Top 10 shareholders including the special account of repurchased shares (if any) (see note 11) | As of the end of the Reporting Period, there were 36,424,192 shares in the Company’s special account for repurchase, accounting for 2.94% of its total share capital. As per the Shenzhen Stock Exchange Guideline No. 1 for the Self-regulation of Listed Companies—Business Handling, the existence of a special account of repurchased shares among the top 10 shareholders should be specifically stated but not included in the presentation of the top 10 shareholders. | |||||||
| Top 10 unrestricted ordinary shareholders | ||||||||
| Name of shareholder | Unrestricted ordinary shares held at the period-end | Shares by type | ||||||
| Type | Shares | |||||||
| Tang Zhuolin | 96,885,134 | RMB-denominated ordinary stock | 96,885,134 | |||||
| Tang Zhuomian | 67,684,392 | RMB-denominated ordinary stock | 67,684,392 | |||||
| Hong Kong Securities Clearing Company Limited | 57,237,391 | RMB-denominated ordinary stock | 57,237,391 | |||||
| Pulead Technology Industry Co., Ltd. | 37,708,587 | RMB-denominated ordinary stock | 37,708,587 | |||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
| Luzhou Industrial Development Investment Group Co., Ltd. | 31,770,010 | RMB-denominated ordinary stock | 31,770,010 |
| Qinghai Puren Intelligent Technology R & D Center (Limited Partnership) | 26,628,340 | RMB-denominated ordinary stock | 26,628,340 |
| CITIC Securities Company Limited | 12,435,553 | RMB-denominated ordinary stock | 12,435,553 |
| China Merchants Bank Co., Ltd.－Wanjiang China Securities 1000 Index Strengthened Initiated Securities Investment Fund | 10,841,080 | RMB-denominated ordinary stock | 10,841,080 |
| Shengji Equity Investment Fund (Shanghai) Co., Ltd. | 6,700,000 | RMB-denominated ordinary stock | 6,700,000 |
| Liu Wucai | 6,597,688 | RMB-denominated ordinary stock | 6,597,688 |
| Related or acting-in-concert parties among top 10 unrestricted ordinary shareholders, as well as between top 10 unrestricted ordinary shareholders and top 10 ordinary shareholders | Mr. Tang Zhuolin and Mr. Tang Zhuomian are brothers. On 18 August 2010, they signed the Agreement on Acting in Concert. Pulead Technology Industry Co., Ltd. (Chinese name has changed from “北大先行科技产业有限公司” to “东圣先行科技产业有限公司” during the reporting period.) and Qinghai Puren Intelligent Technology R & D Center (Limited Partnership) are acting-in-concert parties. Apart from that, the Company is not aware of any related or acting-in-concert parties among the other shareholders above. | ||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Top 10 ordinary shareholders involved in securities margin trading:
Shareholder Luzhou Industrial Development Investment Group Co., Ltd. held 31,770,010 shares in the Companyin its client account of collateral securities for margin trading in Guotai Junan Securities Co., Ltd., representing allits shareholdings in the Company.Indicate whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of theCompany conducted any promissory repo during the Reporting Period.
□ Yes ? No
No such cases in the Reporting Period.
IV Changes in the Shareholdings of Directors, Supervisors and Senior Management? Applicable □ Not applicable
| Name | Office title | Incumbent/Former | Opening shareholding (share) | Increase in the period (share) | Decrease in the period (share) | Closing shareholding (share) | Opening shareholding of granted restricted shares (share) | Restricted shares granted in the period (share) | Closing shareholding of granted restricted shares (share) |
| Xie Weiwei | Director and Deputy General Manager | Incumbent | 1,000,000 | 0 | 248,000 | 752,000 | 400,000 | 0 | 0 |
| Total | -- | -- | 1,000,000 | 0 | 248,000 | 752,000 | 400,000 | 0 | 0 |
V Changes of the Company’s Controlling Shareholder and Actual Controller
Controlling Shareholder changed during the Reporting Period
□ Applicable ? Not applicable
No such cases in the Reporting Period.Actual Controller changed during the Reporting Period
□ Applicable ? Not applicable
No such cases in the Reporting Period.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Part VIII Preference Shares
□ Applicable ? Not applicable
No preference shares in the Reporting Period.
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Part IX Corporate Bonds
□ Applicable ? Not applicable
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Page 87 of 191
Part X Corporate Financial Statements
I Auditor’s ReportWhether the semi-annual financial statements were audited.
□ Yes ? No
The semi-annual financial statements were not audited.
II Financial StatementsCurrency unit for the tables in the notes to the financial statements: RMB yuan
1. Consolidated Balance Sheet
Prepared by: Guangdong Dongfang Precision Science & Technology Co., Ltd.
30 June 2023
Unit: RMB yuan
| Item | 30 June 2023 | 31 December 2022 |
| Current assets: | ||
| Cash and bank balances | 1,512,206,543.53 | 1,274,447,199.74 |
| Settlement provisions | ||
| Dismantling funds | ||
| Financial assets held for trading | 754,101,755.27 | 860,832,278.88 |
| Derivative financial assets | ||
| Notes receivable | 31,691,432.59 | 24,566,100.12 |
| Accounts receivable | 855,062,593.38 | 837,305,757.46 |
| Receivable financing | 20,326,332.51 | 15,305,668.26 |
| Prepayments | 74,387,264.01 | 64,946,901.26 |
| Premium receivable | ||
| Receivable reinsurance account | ||
| Provision for reinsurance contract receivable | ||
| Other receivables | 45,591,048.13 | 83,996,902.82 |
| Including: Interest receivable | ||
| Dividend receivable | ||
| Buy back resale financial assets | ||
| Inventories | 1,390,730,554.45 | 1,092,981,884.51 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Page 88 of 191
| Contract assets | 49,965,091.73 | 65,089,851.21 |
| Assets held for sale | ||
| Current portion of non-current assets | 316,695,000.00 | 311,763,750.00 |
| Other current assets | 82,833,569.91 | 61,370,451.31 |
| Total current assets | 5,133,591,185.51 | 4,692,606,745.57 |
| Non-current assets: | ||
| Loans and advances | ||
| Debt investment | ||
| Other debt investments | 10,082,273.97 | |
| Long-term receivables | 639,711.00 | 1,294,299.00 |
| Long-term equity investment | 93,124,195.76 | 95,352,681.52 |
| Investment in other equity instruments | ||
| Other non-current financial assets | 382,123,969.27 | 334,449,603.33 |
| Real estate investment | ||
| Fixed assets | 567,038,393.94 | 570,200,113.79 |
| Construction in progress | 124,402,838.73 | 38,904,537.85 |
| Productive biological assets | ||
| Oil and gas asset | ||
| Right-of-use assets | 84,967,181.12 | 86,448,978.02 |
| Intangible assets | 370,398,809.68 | 368,103,395.11 |
| Development expenditure | 3,702,229.76 | 3,702,229.76 |
| Goodwill | 441,032,482.73 | 430,916,848.74 |
| Long-term prepaid expenses | 27,898,999.08 | 16,735,552.98 |
| Deferred tax assets | 246,134,036.77 | 244,542,124.61 |
| Other non-current assets | 61,310,406.98 | 45,320,004.82 |
| Total non-current assets | 2,412,855,528.79 | 2,235,970,369.53 |
| Total assets | 7,546,446,714.30 | 6,928,577,115.10 |
| Current liabilities: | ||
| Short-term borrowings | 358,142,248.87 | 41,815,129.24 |
| Borrowing from the Central Bank | ||
| Borrowed funds | ||
| Financial liabilities held for trading | 46,357,405.15 | 57,022,555.58 |
| Derivative financial liabilities | ||
| Notes payable | 142,436,565.07 | 149,918,253.31 |
| Accounts payable | 819,639,505.61 | 748,319,561.21 |
| Advance receivables | ||
| Contract liabilities | 830,600,374.59 | 692,567,968.60 |
| Selling back financial assets | ||
| Deposits and Interbank deposit | ||
| Agent trading securities | ||
| Agent underwriting securities |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Page 89 of 191
| Employee benefits payable | 135,080,942.32 | 123,695,328.31 |
| Tax payable | 49,569,083.96 | 24,111,703.70 |
| Other payables | 97,794,484.13 | 90,080,142.50 |
| Including: Interest payable | ||
| Dividend payable | ||
| Fees and commissions | ||
| Reinsurance accounts payable | ||
| Liabilities held for sale | ||
| Current portion of non-current liabilities | 65,583,276.30 | 315,767,431.26 |
| Other current liabilities | 7,676,610.19 | 5,988,879.29 |
| Total current liabilities | 2,552,880,496.19 | 2,249,286,953.00 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term borrowings | 87,312,366.53 | 57,884,494.89 |
| Bonds payable | ||
| Including: Preference Shares | ||
| Perpetual bonds | ||
| Lease liabilities | 69,495,680.09 | 68,989,111.33 |
| Long-term payables | ||
| Long-term employee benefits payable | 13,732,297.46 | 13,179,944.17 |
| Provisions | 132,835,763.09 | 118,945,953.78 |
| Deferred income | 10,515,321.66 | 11,073,651.66 |
| Deferred tax liabilities | 6,698,908.98 | 6,825,450.77 |
| Other non-current liabilities | 140,642,726.68 | 136,396,292.55 |
| Total non-current liabilities | 461,233,064.49 | 413,294,899.15 |
| Total Liabilities | 3,014,113,560.68 | 2,662,581,852.15 |
| Equity: | ||
| Share capital | 1,240,978,400.00 | 1,241,106,400.00 |
| Other equity instruments | ||
| Including: Preference Shares | ||
| Perpetual bonds | ||
| Capital surplus | 2,892,561,865.00 | 2,947,263,843.53 |
| Less: Treasury stock | 210,882,717.78 | 240,255,502.45 |
| Other comprehensive income | 90,956,058.31 | 26,512,917.07 |
| Special reserve | 15,467,391.88 | 14,488,955.52 |
| Surplus reserves | 51,830,974.45 | 51,830,974.45 |
| General risk preparation | ||
| Retained earnings | 229,168,327.41 | 23,018,722.11 |
| Total equity attributable to owners of the parent | 4,310,080,299.27 | 4,063,966,310.23 |
| Non-controlling interests | 222,252,854.35 | 202,028,952.72 |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Page 90 of 191
| Total equity | 4,532,333,153.62 | 4,265,995,262.95 |
| Total liabilities and equity | 7,546,446,714.30 | 6,928,577,115.10 |
Legal representative: Tang Zhuolin Chief in charge of accounting work: Shao Yongfeng Head of accounting institution: Yao Bin
2. Parent Company Balance Sheet
Unit: RMB yuan
| Item | 30 June 2023 | 31 December 2022 |
| Current assets: | ||
| Cash and bank balances | 320,710,163.16 | 150,462,307.50 |
| Financial assets held for trading | 565,719,372.24 | 544,644,172.35 |
| Derivative financial assets | ||
| Notes receivable | ||
| Accounts receivable | 208,556,239.47 | 252,845,901.89 |
| Receivable financing | 14,644,011.14 | 8,665,919.20 |
| Prepayments | 3,657,936.30 | 5,599,366.14 |
| Other receivables | 420,748,851.41 | 595,201,759.62 |
| Including: Interest receivable | ||
| Dividend receivable | 17,840,000.00 | 17,840,000.00 |
| Inventories | 174,299,197.78 | 144,657,557.06 |
| Contract assets | 17,898,110.12 | 28,301,152.72 |
| Assets held for sale | ||
| Current portion of non-current assets | 316,695,000.00 | 311,763,750.00 |
| Other current assets | 2,823,904.30 | 620,238.68 |
| Total current assets | 2,045,752,785.92 | 2,042,762,125.16 |
| Non-current assets: | ||
| Debt investment | ||
| Other debt investments | ||
| Long-term receivables | 639,711.00 | 1,294,299.00 |
| Long-term equity investment | 777,935,245.98 | 760,833,667.45 |
| Investment in other equity instruments | ||
| Other non-current financial assets | 139,175,369.58 | 134,097,590.81 |
| Real estate investment | ||
| Fixed assets | 304,159,173.95 | 311,637,453.98 |
| Construction in progress | 4,716.98 | 4,716.98 |
| Productive biological assets | ||
| Oil and gas asset | ||
| Right-of-use assets | 7,052,109.09 | 8,298,157.57 |
| Intangible assets | 57,172,280.27 | 56,644,698.03 |
| Development expenditure | ||
| Goodwill |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Page 91 of 191
| Long-term prepaid expenses | 5,755,155.46 | 6,215,303.00 |
| Deferred tax assets | 170,319,535.02 | 173,968,753.31 |
| Other non-current assets | 39,445,162.50 | 34,520,000.00 |
| Total non-current assets | 1,501,658,459.83 | 1,487,514,640.13 |
| Total assets | 3,547,411,245.75 | 3,530,276,765.29 |
| Current liabilities: | ||
| Short-term loan | 36,129,000.00 | |
| Financial liabilities held for trading | 7,230,000.00 | 7,230,000.00 |
| Derivative financial liabilities | ||
| Notes payable | 38,938,151.96 | 47,602,955.27 |
| Accounts payable | 72,340,089.14 | 46,036,442.22 |
| Advance receivables | ||
| Contract liabilities | 61,461,380.02 | 29,803,024.37 |
| Employee benefits payable | 7,403,385.54 | 14,571,839.42 |
| Tax payable | 1,854,926.64 | 430,234.63 |
| Other payables | 37,460,204.03 | 125,142,268.32 |
| Including: Interest payable | ||
| Dividend payable | ||
| Liabilities held for sale | ||
| Current portion of non-current liabilities | 8,294,460.85 | 1,703,312.89 |
| Other current liabilities | 1,747,999.73 | 1,481,251.36 |
| Total current liabilities | 272,859,597.91 | 274,001,328.48 |
| Non-current liabilities: | ||
| Long-term borrowings | 26,784,000.00 | |
| Bonds payable | ||
| Including: Preference Shares | ||
| Perpetual bonds | ||
| Lease liabilities | 5,987,283.97 | 6,781,238.89 |
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | 4,357,750.25 | 1,283,500.00 |
| Deferred income | 10,515,321.66 | 11,073,651.66 |
| Deferred tax liabilities | ||
| Other non-current liabilities | 470,437.92 | 470,437.92 |
| Total non-current liabilities | 48,114,793.80 | 19,608,828.47 |
| Total Liabilities | 320,974,391.71 | 293,610,156.95 |
| Equity: | ||
| Share capital | 1,240,978,400.00 | 1,241,106,400.00 |
| Other equity instruments | ||
| Including: Preference Shares | ||
| Perpetual bonds |
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Page 92 of 191
| Capital surplus | 2,762,868,944.82 | 2,820,661,243.26 |
| Less: Treasury stock | 210,882,717.78 | 240,255,502.45 |
| Other comprehensive income | ||
| Special reserve | 7,575,990.78 | 7,200,502.88 |
| Surplus reserves | 51,830,974.45 | 51,830,974.45 |
| Retained earnings | -625,934,738.23 | -643,877,009.80 |
| Total equity | 3,226,436,854.04 | 3,236,666,608.34 |
| Total liabilities and equity | 3,547,411,245.75 | 3,530,276,765.29 |
3. Consolidated Income Statement
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| 1 Total operating revenue | 2,082,606,453.72 | 1,535,615,634.26 |
| Including: Operating revenue | 2,082,606,453.72 | 1,535,615,634.26 |
| Interest income | ||
| Premiums earned | ||
| Fee and commission income | ||
| 2 Total operating cost | 1,830,369,837.74 | 1,371,662,485.67 |
| Including: Cost of sales | 1,472,630,144.11 | 1,134,044,266.22 |
| Interest expense | ||
| Payment of fees and commission | ||
| Surrender fund | ||
| Net indemnity expenditure | ||
| Draw the net reserve of insurance liability contract | ||
| Policy dividend expense | ||
| Reinsurance cost | ||
| Taxes and surcharges | 8,282,476.90 | 6,956,423.47 |
| Selling expenses | 119,248,680.76 | 62,093,800.66 |
| Administrative expenses | 174,818,664.63 | 133,292,392.91 |
| R&D expenses | 59,929,020.05 | 44,132,225.30 |
| Finance costs | -4,539,148.71 | -8,856,622.89 |
| Including: Interest expenses | 5,872,796.16 | 5,668,853.58 |
| Interest income | 12,725,562.50 | 8,770,967.42 |
| Add: Other income | 4,339,827.39 | 6,210,725.52 |
| Investment income (loss with "-" sign) | 36,109,196.08 | -222,580.97 |
| Including: Share of profit or loss of joint ventures and associates | -2,332,949.80 | 1,279,980.62 |
| Income from derecognition of financial assets measured at amortised cost (loss with "-" sign) |
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| Exchange gain (loss with "-" sign) | ||
| Net exposure hedging gain (loss with "-" sign) | ||
| Gain/loss on changes in fair value (loss with "-" sign) | 2,006,095.39 | 24,927,586.43 |
| Credit impairment loss (loss is listed with "-" sign) | -2,271,114.46 | 1,790,013.02 |
| Asset impairment loss (loss with "-" sign) | -5,612,938.09 | -6,154,706.43 |
| Gain/loss on disposal of assets (loss with "-" sign) | -2,277,157.05 | -233,705.60 |
| 3 Operating profit (losses are listed with "-" sign) | 284,530,525.24 | 190,270,480.56 |
| Add: Non-operating income | 2,034,810.24 | 1,033,996.47 |
| Less: Non-operating expenses | 1,131,918.48 | 714,629.11 |
| 5 Gross profit (the gross loss shall be filled in with the sign "-") | 285,433,417.00 | 190,589,847.92 |
| Less: Income tax expenses | 56,229,619.60 | 31,123,723.82 |
| Net profit (net loss is listed with "-" sign) | 229,203,797.40 | 159,466,124.10 |
| (1) Net profit from continuing operations | ||
| i. Net profit from continuing operations (net loss with "-" sign) | 229,203,797.40 | 159,466,124.10 |
| ii. Net profit from termination of operation (net loss with "-" sign) | ||
| (2) Net profit classified by attribution of ownership | ||
| i. Net profit attributable to owners of the parent | 206,149,605.30 | 148,199,917.83 |
| ii. Net profit attributable to non-controlling interests | 23,054,192.10 | 11,266,206.27 |
| 6 Other comprehensive income/(loss), net of tax | 63,837,540.77 | -12,838,602.70 |
| Other comprehensive income/(loss) attributable to owners of the parent, net of tax | 64,443,141.24 | -11,553,404.31 |
| (1) Other comprehensive loss that will not be reclassified to profit or loss | -247,369.25 | 440,788.86 |
| i. Changes caused by remeasurements on defined benefit schemes | -247,369.25 | 440,788.86 |
| ii. Other comprehensive income that cannot be transferred to profit or loss under the equity method | ||
| iii. Changes in fair value of investments in other equity instruments | ||
| iv. Fair value change of enterprise's own credit risk | ||
| v. Other | ||
| (2) Other comprehensive income/(loss) that will be reclassified to profit or loss | 64,690,510.49 | -11,994,193.17 |
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| i. Other comprehensive income that can be transferred to profit or loss under the equity method | ||
| ii. Changes in fair value of other debt investments | ||
| iii. The amount of financial assets reclassified to other comprehensive income | ||
| iv. Provision for credit impairment of other debt investments | ||
| v. Cash flow hedging reserve | ||
| vi. Differences arising from the translation of foreign currency-denominated financial statements | 64,690,510.49 | -11,994,193.17 |
| vii. Other | ||
| Other comprehensive income attributable to non-controlling interests, net of tax | -605,600.47 | -1,285,198.39 |
| Total comprehensive income | 293,041,338.17 | 146,627,521.40 |
| Total comprehensive income attributable to owners of the parent | 270,592,746.54 | 136,646,513.52 |
| Total comprehensive income attributable to non-controlling interests | 22,448,591.63 | 9,981,007.88 |
| Earnings per share: | ||
| (1) Basic earnings per share | 0.17 | 0.12 |
| (2) Diluted earnings per share | 0.17 | 0.12 |
Legal representative: Tang Zhuolin Chief in charge of accounting work: Shao Yongfeng Head of accounting institution: Yao Bin
4. Parent Company Income Statement
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| 1 Operating Revenue | 219,595,252.63 | 214,661,874.19 |
| Less: Cost of sales | 117,899,186.43 | 117,832,956.03 |
| Taxes and surcharges | 4,622,821.78 | 3,855,068.95 |
| Selling expenses | 18,963,858.37 | 9,405,763.83 |
| Administrative expenses | 47,531,438.00 | 41,497,863.33 |
| R&D expenses | 9,329,637.83 | 9,213,094.41 |
| Finance costs | -8,777,405.86 | -20,244,231.98 |
| Including: Interest expense | 443,302.69 | 1,004,912.07 |
| Interest income | 6,549,723.09 | 6,309,101.69 |
| Add: other income | 2,476,014.96 | 1,681,381.91 |
| Investment income (loss with "-" sign) | -4,520,432.89 | 20,596,618.64 |
| Including: Share of profit or loss of joint ventures and associates | -1,781,870.58 | 1,279,980.62 |
| Termination of recognition of gains on financial assets measured at amortised cost (loss with "-" sign) |
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| Net exposure hedging gain (loss with "-" sign) | ||
| Gain/loss on changes in fair value (loss with "-" sign) | -5,837,992.54 | 188,520.19 |
| Credit impairment loss (loss is listed with "-" sign) | 336,909.99 | |
| Asset impairment loss (loss with "-" sign) | -336,909.99 | |
| Gain/loss on disposal of assets (loss with "-" sign) | -0.01 | 15,331.98 |
| 2 Operating profit (loss shall be listed with "-" sign) | 22,143,305.60 | 75,583,212.34 |
| Add: Non-operating income | 285,781.66 | 599,580.06 |
| Less: Non-operating expenses | 837,597.40 | 146,746.24 |
| 3 Gross profit (gross loss shall be filled in with the sign "-") | 21,591,489.86 | 76,036,046.16 |
| Less: Income tax expenses | 3,649,218.29 | -1,957,983.03 |
| 4 Net profit (net loss is listed with "-" sign) | 17,942,271.57 | 77,994,029.19 |
| (1) Net profit from continuing operation (net loss with "-" sign) | ||
| (2) Net profit from termination of operation (net loss with "-" sign) | ||
| 5 Other comprehensive income/(loss), net of tax | ||
| (1) Other comprehensive loss that will not be reclassified to profit or loss | ||
| i. Re-measure the change in the benefit plan | ||
| ii. Other comprehensive income that cannot be transferred to profit or loss under the equity method | ||
| iii. Changes in fair value of investments in other equity instruments | ||
| iv. Fair value change of enterprise's own credit risk | ||
| v. Other | ||
| (2) Other comprehensive income/(loss) that will be reclassified to profit or loss | ||
| i. Other comprehensive income that can be transferred to profit or loss under the equity method | ||
| ii. Changes in fair value of other debt investments | ||
| iii. The amount of financial assets reclassified to other comprehensive income. | ||
| iv. Provision for credit impairment of other debt investments. | ||
| v. Cash flow hedging reserve. | ||
| vi. Differences arising from the |
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| translation of foreign currency-denominated financial statements | ||
| vii. Other. | ||
| 6 Total comprehensive income | 17,942,271.57 | 77,994,029.19 |
| 7 Earnings per share: | ||
| (1) Basic earnings per share | ||
| (2) Diluted earnings per share |
5. Consolidated Statement of Cash Flows
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| 1 Cash flows from operating activities: | ||
| Proceeds from sale of goods and rendering of services | 2,234,391,644.12 | 1,802,969,150.43 |
| Net increase in customer deposits and interbank deposits | ||
| Net increase in borrowing from the central bank | ||
| Net increase in funds transferred to other financial institutions | ||
| Cash received from the premium of the original insurance contract | ||
| Net cash received from reinsurance business | ||
| Net increase in depositors' deposits and investment funds | ||
| Cash that collects interest, commission, and commission | ||
| Net increase in borrowed funds | ||
| Net increase in funds for repurchase business | ||
| Net cash received by agents buying and selling securities | ||
| Receipts of taxes and surcharges refunds | 30,108,533.01 | 34,829,359.93 |
| Cash generated from other operating activities | 30,337,789.00 | 35,764,026.73 |
| Subtotal of cash generated from operating activities | 2,294,837,966.13 | 1,873,562,537.09 |
| Payments for goods and services | 1,499,173,858.61 | 1,185,626,748.22 |
| Net increase in customer loans and advances | ||
| Net increase in central bank and interbank deposits | ||
| Cash to pay the indemnity of the original insurance contract | ||
| Net increase in loan funds | ||
| Cash for the payment of interest, fees, and commissions | ||
| Cash for the payment of policy |
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| dividends | ||
| Cash payments to and on behalf of employees | 393,735,088.13 | 338,168,044.20 |
| Payments of all types of taxes and surcharges | 61,126,879.31 | 71,822,125.03 |
| Cash used in other operating activities | 149,366,073.56 | 125,694,912.91 |
| Subtotal of cash used in operating activities | 2,103,401,899.61 | 1,721,311,830.36 |
| Net cash generated from/used in operating activities | 191,436,066.52 | 152,250,706.73 |
| 2 Cash flows from investing activities: | ||
| Proceeds from disinvestment | 1,778,154,089.71 | 2,960,986,699.67 |
| Investment income | 60,835,876.45 | 26,404,419.77 |
| Net proceeds from the disposal of fixed assets, intangible assets, and other long-lived assets | 92,406.87 | 580,757.16 |
| Disposal of net cash received by subsidiaries and other business units | ||
| Cash generated from other investing activities | 742,251.94 | |
| Subtotal of cash generated from investing activities | 1,839,082,373.03 | 2,988,714,128.54 |
| Payments for the acquisition of fixed assets, intangible assets, and other long-lived assets | 113,551,038.37 | 58,758,055.34 |
| Payments for investments | 1,704,863,903.07 | 2,962,010,158.14 |
| Net increase in pledged loans | ||
| Obtain net cash paid by subsidiaries and other business units | 139,172,016.05 | |
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 1,818,414,941.44 | 3,159,940,229.53 |
| Net cash generated from/used in investing activities | 20,667,431.59 | -171,226,100.99 |
| 3 Cash flows from financing activities: | ||
| Absorb the cash received by the investment | ||
| Including: the subsidiary absorbs the cash received from the investment of minority shareholders | ||
| Borrowings raised | 360,128,520.13 | 236,920,326.91 |
| Cash generated from other financing activities | 39,381,507.99 | 657,362,397.48 |
| Subtotal of cash generated from financing activities | 399,510,028.12 | 894,282,724.39 |
| Repayment of borrowings | 288,815,086.23 | 406,841,266.43 |
| Interest and dividends paid | 7,237,289.74 | 3,152,285.82 |
| Including: Interest and dividends paid to minority shareholders | ||
| Cash used in other financing activities | 238,991,697.89 | 493,565,716.00 |
| Subtotal of cash used in financing | 535,044,073.86 | 903,559,268.25 |
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| activities | ||
| Net cash generated from/used in financing activities | -135,534,045.74 | -9,276,543.86 |
| 4 Effect of foreign exchange rates changes on cash and cash equivalents | 53,331,073.03 | -3,328,916.09 |
| 5 Net (decrease)/increase in cash and cash equivalents | 129,900,525.40 | -31,580,854.21 |
| Add: Cash and cash equivalents, beginning of the period | 1,233,720,697.27 | 1,259,303,775.74 |
| 6 Cash and cash equivalents, end of the period | 1,363,621,222.67 | 1,227,722,921.53 |
6. Parent Company Statement of Cash Flow
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| 1 Cash flow generated by business activities: | ||
| Cash received from the sale of goods and the provision of services | 282,261,729.73 | 175,645,201.33 |
| Receipts of taxes and surcharges refunds | 8,800,337.38 | 10,824,585.72 |
| Cash generated from other operating activities | 14,348,299.02 | 41,727,032.51 |
| Subtotal of cash generated from operating activities | 305,410,366.13 | 228,196,819.56 |
| Payments for goods and services | 115,692,389.65 | 133,586,738.91 |
| Cash payments to and on behalf of employees | 54,177,377.99 | 47,338,808.49 |
| Payments of all types of taxes and surcharges | 4,054,551.59 | 4,698,999.52 |
| Cash used in other operating activities | 126,905,787.49 | 23,214,510.22 |
| Subtotal of cash used in operating activities | 300,830,106.72 | 208,839,057.14 |
| Net cash generated from/used in operating activities | 4,580,259.41 | 19,357,762.42 |
| 2 Cash flows from investing activities: | ||
| Proceeds from disinvestment | 1,174,847,116.06 | 1,622,634,482.77 |
| Investment income | 18,717,756.49 | 25,484,477.04 |
| Net proceeds from the disposal of fixed assets, intangible assets, and other long-lived assets | 0.00 | 23,000.00 |
| Disposal of net cash received by subsidiaries and other business units | ||
| Cash generated from other investing activities | 270,000,000.00 | 903,000.00 |
| Subtotal of cash generated from investing activities | 1,463,564,872.55 | 1,649,044,959.81 |
| Payments for the acquisition of fixed assets, intangible assets, and other long-lived assets | 10,894,394.77 | 9,616,254.16 |
| Payments for investments | 1,281,050,329.82 | 1,404,898,673.23 |
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| Obtain net cash paid by subsidiaries and other business units | 149,040,000.00 | |
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 1,291,944,724.59 | 1,563,554,927.39 |
| Net cash generated from/used in investing activities | 171,620,147.96 | 85,490,032.42 |
| 3 Cash flows from financing activities: | ||
| Absorb the cash received by the investment | ||
| Cash received for obtaining loans | 68,180,000.00 | |
| Cash generated from other financing activities | 8,077,201.63 | 581,434,806.25 |
| Subtotal of cash generated from financing activities | 76,257,201.63 | 581,434,806.25 |
| Repayment of borrowings | ||
| Interest and dividends paid | 2,635,213.97 | 603,835.52 |
| Cash used in other financing activities | 201,228,410.87 | 527,514,138.31 |
| Subtotal of cash used in financing activities | 203,863,624.84 | 528,117,973.83 |
| Net cash generated from/used in financing activities | -127,606,423.21 | 53,316,832.42 |
| 4 Effect of foreign exchange rates changes on cash and cash equivalents | ||
| 5 Net (decrease)/increase in cash and cash equivalents | 48,593,984.16 | 158,164,627.26 |
| Add: Cash and cash equivalents, beginning of the period | 142,319,826.12 | 156,610,136.21 |
| 6 Cash and cash equivalents, end of the period | 190,913,810.28 | 314,774,763.47 |
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7. Consolidated Statements of Changes in Equity
Amount of current period
Unit: RMB yuan
| Item | H1 2023 | ||||||||||||||
| Equity attributable to owners of the parent | Non-controlling interests | Total equity | |||||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | General reserve | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. On 31 December 2022 | 1,241,106,400.00 | 2,947,263,843.53 | 240,255,502.45 | 26,512,917.07 | 14,488,955.52 | 51,830,974.45 | 23,018,722.11 | 4,063,966,310.23 | 202,028,952.72 | 4,265,995,262.95 | |||||
| Add: Adjustments for changes in accounting policies | |||||||||||||||
| Adjustments for correction of previous errors | |||||||||||||||
| Adjustments for business combinations involving entities under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| II. On 1 January 2023 | 1,241,106,400.00 | 2,947,263,843.53 | 240,255,502.45 | 26,512,917.07 | 14,488,955.52 | 51,830,974.45 | 23,018,722.11 | 4,063,966,310.23 | 202,028,952.72 | 4,265,995,262.95 | |||||
| III. Changes for the period (“-” for decrease) | -128,000.00 | -54,701,978.53 | -29,372,784.67 | 64,443,141.24 | 978,436.36 | 206,149,605.30 | 246,113,989.04 | 20,223,901.63 | 266,337,890.67 | ||||||
| (I) Total comprehensive income | 64,443,141.24 | 206,149,605.30 | 270,592,746.54 | 22,448,591.63 | 293,041,338.17 | ||||||||||
| (II) Owner’s contributions and reduction in capital | -128,000.00 | -56,926,668.53 | -29,372,784.67 | -27,681,883.86 | -27,681,883.86 | ||||||||||
| 1. Ordinary shares increased by owners | |||||||||||||||
| 2. Capital increased by holders of other equity instruments | |||||||||||||||
| 3. Share-based payments included in equity | 20,566,434.45 | 20,566,434.45 | 20,566,434.45 | ||||||||||||
| 4. Others | -128,000.00 | -77,493,102.98 | -29,372,784.67 | -48,248,318.31 | -48,248,318.31 | ||||||||||
| (III) Profit distribution | |||||||||||||||
| 1. Appropriation to surplus reserves | |||||||||||||||
| 2. Appropriation to general reserve | |||||||||||||||
| 3. Appropriation to owners (or shareholders) | |||||||||||||||
| 4. Others | |||||||||||||||
| (IV) Transfers within equity | |||||||||||||||
| 1. Increase in capital (or share capital) from capital surplus | |||||||||||||||
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| Item | H1 2023 | ||||||||||||||
| Equity attributable to owners of the parent | Non-controlling interests | Total equity | |||||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | General reserve | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| 2. Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3. Surplus reserves used to offset loss | |||||||||||||||
| 4. Changes in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 5. Other comprehensive income transferred to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | 978,436.36 | 978,436.36 | 978,436.36 | ||||||||||||
| 1. Provision in the period | 2,531,949.77 | 2,531,949.77 | 2,531,949.77 | ||||||||||||
| 2. Utilisation in the period | -1,553,513.41 | -1,553,513.41 | -1,553,513.41 | ||||||||||||
| (VI) Others | 2,224,690.00 | 2,224,690.00 | -2,224,690.00 | ||||||||||||
| IV. On 30 June 2023 | 1,240,978,400.00 | 2,892,561,865.00 | 210,882,717.78 | 90,956,058.31 | 15,467,391.88 | 51,830,974.45 | 229,168,327.41 | 4,310,080,299.27 | 222,252,854.35 | 4,532,333,153.62 | |||||
Amount of previous period
Unit: RMB yuan
| Item | H1 2022 | ||||||||||||||
| Equity attributable to owners of the parent | Non-controlling interests | Total equity | |||||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | General reserve | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| I. On 31 December 2021 | 1,331,938,167.00 | 3,238,765,859.94 | 494,335,503.94 | -33,322,662.98 | 11,252,639.19 | 51,830,974.45 | -424,159,175.27 | 3,681,970,298.39 | 171,605,247.28 | 3,853,575,545.67 | |||||
| Add: Adjustments for changes in accounting policies | |||||||||||||||
| Adjustments for correction of previous errors | |||||||||||||||
| Adjustments for business combinations involving entities under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| II. On 1 January 2022 | 1,331,938,167.00 | 3,238,765,859.94 | 494,335,503.94 | -33,322,662.98 | 11,252,639.19 | 51,830,974.45 | -424,159,175.27 | 3,681,970,298.39 | 171,605,247.28 | 3,853,575,545.67 | |||||
| III. Changes for the period (“-” for decrease) | 38,844,952.73 | 215,563,545.78 | -11,553,404.31 | 1,290,379.57 | 148,199,917.83 | -38,781,699.96 | 59,954,374.92 | 21,172,674.96 | |||||||
| (I) Total comprehensive income | -11,553,404.31 | 148,199,917.83 | 136,646,513.52 | 9,981,007.88 | 146,627,521.40 | ||||||||||
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| Item | H1 2022 | ||||||||||||||
| Equity attributable to owners of the parent | Non-controlling interests | Total equity | |||||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | General reserve | Retained earnings | Others | Subtotal | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||||
| (II) Owner’s contributions and reduction in capital | 13,344,952.73 | 215,563,545.78 | -202,218,593.05 | -202,218,593.05 | |||||||||||
| 1. Ordinary shares increased by owners | |||||||||||||||
| 2. Capital increased by holders of other equity instruments | |||||||||||||||
| 3. Share-based payments included in equity | 13,388,065.57 | 13,388,065.57 | 13,388,065.57 | ||||||||||||
| 4. Others | -43,112.84 | 215,563,545.78 | -215,606,658.62 | -215,606,658.62 | |||||||||||
| (III) Profit distribution | |||||||||||||||
| 1. Appropriation to surplus reserves | |||||||||||||||
| 2. Appropriation to general reserve | |||||||||||||||
| 3. Appropriation to owners (or shareholders) | |||||||||||||||
| 4. Others | |||||||||||||||
| (IV) Transfers within equity | |||||||||||||||
| 1. Increase in capital (or share capital) from capital surplus | |||||||||||||||
| 2. Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3. Surplus reserves used to offset loss | |||||||||||||||
| 4. Changes in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 5. Other comprehensive income transferred to retained earnings | |||||||||||||||
| 6. Others | |||||||||||||||
| (V) Special reserve | 1,290,379.57 | 1,290,379.57 | 1,290,379.57 | ||||||||||||
| 1. Provision in the period | 2,655,989.89 | 2,655,989.89 | 2,655,989.89 | ||||||||||||
| 2. Utilisation in the period | -1,365,610.32 | -1,365,610.32 | -1,365,610.32 | ||||||||||||
| (VI) Others | 25,500,000.00 | 25,500,000.00 | 49,973,367.04 | 75,473,367.04 | |||||||||||
| IV. On 30 June 2022 | 1,331,938,167.00 | 3,277,610,812.67 | 709,899,049.72 | -44,876,067.29 | 12,543,018.76 | 51,830,974.45 | -275,959,257.44 | 3,643,188,598.43 | 231,559,622.20 | 3,874,748,220.63 | |||||
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8. Company Statement of Changes in Equity
Amount of current period
Unit: RMB yuan
| Item | H1 2023 | |||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | Retained earnings | Others | Total equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| I. On 31 December 2022 | 1,241,106,400.00 | 2,820,661,243.26 | 240,255,502.45 | 7,200,502.88 | 51,830,974.45 | -643,877,009.80 | 3,236,666,608.34 | |||||
| Add: Adjustments for changes in accounting policies | ||||||||||||
| Adjustments for correction of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| II. On 1 January 2023 | 1,241,106,400.00 | 2,820,661,243.26 | 240,255,502.45 | 7,200,502.88 | 51,830,974.45 | -643,877,009.80 | 3,236,666,608.34 | |||||
| III. Changes for the period (“-” for decrease) | -128,000.00 | -57,792,298.44 | -29,372,784.67 | 375,487.90 | 17,942,271.57 | -10,229,754.30 | ||||||
| (I) Total comprehensive income | 17,942,271.57 | 17,942,271.57 | ||||||||||
| (II) Owner’s contributions and reduction in capital | -128,000.00 | -57,792,298.44 | -29,372,784.67 | -28,547,513.77 | ||||||||
| 1. Ordinary shares increased by owners | ||||||||||||
| 2. Capital increased by holders of other equity instruments | ||||||||||||
| 3. Share-based payments included in equity | 19,700,804.54 | 19,700,804.54 | ||||||||||
| 4. Others | -128,000.00 | -77,493,102.98 | -29,372,784.67 | -48,248,318.31 | ||||||||
| (III) Profit distribution | ||||||||||||
| 1. Appropriation to surplus reserves | ||||||||||||
| 2. Appropriation to owners (or shareholders) | ||||||||||||
| 3. Others | ||||||||||||
| (IV) Transfers within equity | ||||||||||||
| 1. Increase in capital (or share capital) from capital surplus | ||||||||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Page 104 of 191
| Item | H1 2023 | |||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | Retained earnings | Others | Total equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| 2. Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3. Surplus reserves used to offset loss | ||||||||||||
| 4. Changes in defined benefit schemes transferred to retained earnings | ||||||||||||
| 5. Other comprehensive income transferred to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | 375,487.90 | 375,487.90 | ||||||||||
| 1. Provision in the period | 825,942.88 | 825,942.88 | ||||||||||
| 2. Utilisation in the period | -450,454.98 | -450,454.98 | ||||||||||
| (VI) Others | ||||||||||||
| IV. On 30 June 2023 | 1,240,978,400.00 | 2,762,868,944.82 | 210,882,717.78 | 7,575,990.78 | 51,830,974.45 | -625,934,738.23 | 3,226,436,854.04 | |||||
Amount of previous period
Unit: RMB yuan
| Item | H1 2022 | |||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | Retained earnings | Others | Total equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| I. On 31 December 2021 | 1,331,938,167.00 | 3,162,960,902.13 | 494,335,503.94 | 5,067,104.62 | 51,830,974.45 | -888,576,335.08 | 3,168,885,309.18 | |||||
| Add: Adjustments for changes in accounting policies | ||||||||||||
| Adjustments for correction of previous errors | ||||||||||||
| Other adjustments | ||||||||||||
| II. On 1 January 2022 | 1,331,938,167.00 | 3,162,960,902.13 | 494,335,503.94 | 5,067,104.62 | 51,830,974.45 | -888,576,335.08 | 3,168,885,309.18 | |||||
| III. Changes for the period (“-” for decrease) | 12,412,821.98 | 215,563,545.78 | 877,492.87 | 77,994,029.19 | -124,279,201.74 | |||||||
Guangdong Dongfang Precision Science & Technology Co., Ltd. Semi-Annual Report 2023
Page 105 of 191
| Item | H1 2022 | |||||||||||
| Share capital | Other equity instruments | Capital surplus | Less: Treasury stock | Other comprehensive income | Special reserve | Surplus reserves | Retained earnings | Others | Total equity | |||
| Preference shares | Perpetual bonds | Others | ||||||||||
| (I) Total comprehensive income | 77,994,029.19 | 77,994,029.19 | ||||||||||
| (II) Owner’s contributions and reduction in capital | 12,412,821.98 | 215,563,545.78 | -203,150,723.80 | |||||||||
| 1. Ordinary shares increased by owners | ||||||||||||
| 2. Capital increased by holders of other equity instruments | ||||||||||||
| 3. Share-based payments included in equity | 12,455,934.82 | 12,455,934.82 | ||||||||||
| 4. Others | -43,112.84 | 215,563,545.78 | -215,606,658.62 | |||||||||
| (III) Profit distribution | ||||||||||||
| 1. Appropriation to surplus reserves | ||||||||||||
| 2. Appropriation to owners (or shareholders) | ||||||||||||
| 3. Others | ||||||||||||
| (IV) Transfers within equity | ||||||||||||
| 1. Increase in capital (or share capital) from capital surplus | ||||||||||||
| 2. Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3. Surplus reserves used to offset loss | ||||||||||||
| 4. Changes in defined benefit schemes transferred to retained earnings | ||||||||||||
| 5. Other comprehensive income transferred to retained earnings | ||||||||||||
| 6. Others | ||||||||||||
| (V) Special reserve | 877,492.87 | 877,492.87 | ||||||||||
| 1. Provision in the period | 936,757.32 | 936,757.32 | ||||||||||
| 2. Utilisation in the period | -59,264.45 | -59,264.45 | ||||||||||
| (VI) Others | ||||||||||||
| IV. On 30 June 2022 | 1,331,938,167.00 | 3,175,373,724.11 | 709,899,049.72 | 5,944,597.49 | 51,830,974.45 | -810,582,305.89 | 3,044,606,107.44 | |||||
Page 106 of 191
III Corporate Background
Guangdong Dongfang Precision Science & Technology Co., Ltd. (the "Company"), a joint stock company with limited liabilityregistered in Guangdong Province of the People's Republic of China and established on 9 December 1996, obtained a Business Licensefor Enterprise Legal Person with a registration number of 440682000040868.In August 2011, upon the approval by the China Securities Regulatory Commission (CSRC) in the Reply on Approving the InitialPublic Offering of Shares by Guangdong Dongfang Precision Science & Technology Co., Ltd. (ZH.J.X.K. [2011] No. 1237), theCompany issued Renminbi-denominated ordinary shares to the public, and was listed on the Shenzhen Stock Exchange in the samemonth. The Company started to use the unified social credit code (914406002318313119) in 2016. The Company is headquartered in2 Qiangshi Road, Shishan Town, Nanhai District, Foshan City, Guangdong Province, China.Business scope of the Company:
General items: Network and information security software development; manufacturing of special printing equipment; computersystem services; information system integration services; information consulting services (excluding licensing information consultingservices); manufacturing of material handling equipment; manufacturing of special equipment for pulping and papermaking;manufacturing of industrial robots; manufacturing of special-purpose equipment (excluding manufacturing of special licensingequipment); manufacturing of industrial control computers and systems; sales of intelligent material handling equipment; softwaresales; intelligent control system integration; AI universal application system; domestic freight forwarding; information technologyconsulting services; socio-economic consulting services; environmental protection consulting services; technology intermediaryservices. (Except for items subject to approval according to law, business activities shall be conducted independently in accordancewith the business license) Licensed items: import and export agency; import and export of goods; import and export of technologies.(Business activities that require approval according to law shall be subject to the approval by relevant authorities. Specific businessitems are indicated in the approval documents or permit documents of relevant authorities.) The Company belongs to the special-purpose equipment manufacturing industry.The actual controllers of the Company are Tang Zhuolin and Tang Zhuomian.These financial statements were authorized for issue by the Board of Directors of the Company on 24 July 2023.The consolidation scope for consolidated financial statements is determined based on the concept of control. No changes occurred tothe consolidation scope in the period. For interests in other entities, please refer to Note VIII.IV Basis of Preparation of the Financial StatementsThese financial statements have been prepared in accordance with China’s “Accounting Standards for Business Enterprises — BasicStandards” promulgated by the Ministry of Finance and the specific accounting standards, application guidance, interpretations andother relevant regulations issued or amended thereafter (hereafter collectively referred to as “Accounting Standards for BusinessEnterprises” or “CAS”).
The financial statements are prepared on a going concern basis.In the preparation of the financial statements, all items are recorded by using historical cost as the basis of measurement except forsome financial instruments. Impairment allowance is made according to relevant regulations if the assets are impaired.
Page 107 of 191
V Principal Accounting Policies and Accounting Estimates
Reminder of specific accounting policies and accounting estimates:
1. Statement of compliance
The financial statements present truly and completely the financial positions of the Group and the Company as of 30 June 2023, andthe financial performance and the cash flows for the half year then ended in accordance with Accounting Standards for BusinessEnterprises.
2. Accounting year
The accounting year of the Group is from 1 January to 31 December of each calendar year.
3. Functional currency
The Group’s functional currency and the currency used in preparing the financial statements were Renminbi. Theamounts in the financial statements were denominated in Renminbi yuan, unless otherwise stated.
4. Business combination
Business combinations are classified into business combinations involving entities under common control andbusiness combinations not involving entities under common control.
Business combinations involving entities under common control
A business combination involving entities under common control is a business combination in which all of thecombining entities are ultimately controlled by the same party or parties both before and after the businesscombination, and that control is not transitory. The acquirer is the entity that obtains control of the other entitiesparticipating in the combination at the combination date, and the other entities participating in the combination arethe acquirees. The combination date is the date on which the combining party effectively obtains control of theparties being combined.
Assets and liabilities obtained by combining party in the business combination involving entities under commoncontrol (including goodwill arising from the acquisition of the merged party by the ultimate controller) arerecognized on the basis of their carrying amounts at the combination date recorded on the financial statements ofthe ultimate controlling party. The difference between the carrying amount of the consideration paid for thecombination (or aggregate face values of the shares issued) and the carrying amount of the net assets obtained isadjusted to capital surplus. If the capital surplus are not sufficient to absorb the difference, any excess is adjusted toretained earnings.
Page 108 of 191
V Principal Accounting Policies and Accounting Estimates (Cont’d)
4. Business combination (cont’d)
Business combinations not involving entities under common control
A business combination not involving entities under common control is a business combination in which all of thecombining entities are not ultimately controlled by the same party or parties both before and after the businesscombination. The acquirer is the entity that obtains control of the other entities participating in the combination atthe acquisition date, and the other entities participating in the combination are the acquirees. The acquisition date isthe date on which the acquirer effectively obtains control of the acquiree.
The acquiree’s identifiable assets, liabilities and contingent liabilities are recognized at their fair values at theacquisition date.
The excess of the sum of the consideration paid (or equities issued) for business combination and equity interestsin the acquiree held prior to the date of acquisition over the share of the attributable net identifiable assets of theacquiree, measured at fair value, was recognized as goodwill, which is subsequently measured at cost lesscumulative impairment loss. In case the fair value of the sum of the consideration paid (or equities issued) andequity interests in the acquire held prior to the date of acquisition is less than the fair value of the share of theattributable net identifiable assets of the acquiree, a review of the measurement of the fair values of the identifiableassets, liabilities and contingent liabilities, the consideration paid for the combination (or equity issued) and theequity interests in the acquiree held prior to the date of acquisition is conducted. If the review indicates that the fairvalue of the sum of the consideration paid (or equities issued) and equity interests in the acquiree held prior to thedate of acquisition is indeed less than the fair value of the share of the attributable net identifiable assets of theacquiree, the difference is recognized in profit or loss.
Where a business combination not involving entities under common control realized step by step through multipletransactions, the long-term equity investments held by the acquiree prior to the purchase date shall be remeasuredat the fair value of the long-term equity investments on the purchase date, and the difference between the fair valueand their carrying value shall be recognized in profit or loss. For other comprehensive income of the long-termequity investments under the equity method held by the acquiree prior to the purchase date, accounting treatmentshall be performed on the same basis as the direct disposal of relevant assets or liabilities by the invested entity, andother changes in equity than net profit and loss, other comprehensive income and the distribution of profits shall beconverted into current profits and losses on the purchase date. The changes in the fair value of the equity instrumentinvestments held by the acquiree prior to the purchase date and accumulated in other comprehensive income priorto the purchase date shall be transferred to retained profits and losses.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
5. Consolidated financial statements
The consolidation scope for consolidated financial statements is determined based on the concept of control,including the Company and all subsidiaries’ financial statements. Subsidiaries are those enterprises or entities whichthe Company has control over (including enterprises, separable components of investee units and structured entitiescontrolled by the Company).
The financial statements of the subsidiaries are prepared for the same reporting period as the Company, usingconsistent accounting policies. Any inconsistent accounting policies have been adjusted to become consistent withthe Company’s accounting policies. All assets, liabilities, equities, revenues, costs and cash flows arising fromintercompany transactions are eliminated on consolidation.
The excess of current loss attributable to non-controlling shareholders of a subsidiary over their entitlements to theopening balance of equity shall be charged to non-controlling interests.
For subsidiaries obtained through a business combination not involving entities under common control, theoperating results and cash flows of the acquirees will be recognized in consolidated financial statements from thedate the Group effectively obtains the control until the date that control is terminated. When consolidated financialstatement is prepared, the subsidiaries’ financial statements will be adjusted based on the fair values of theidentifiable assets, liabilities and contingent liabilities at the acquisition date.
For subsidiaries acquired through combination of entities under common control, the business results and cash flowsof the combined entities are included in the consolidated financial statements from the beginning of the period inwhich the combination occurred. When preparing and comparing the consolidated financial statements, the Groupmakes adjustments to relevant items of the financial statements of the previous period, deeming the reporting entityformed through combination as existing since initial implementation of control by the ultimate controlling party.
In the event of the change in one or more elements of control as a result of changes in relevant facts and conditions,the Group reassesses whether it has control over the investee.
6. Cash and cash equivalents
Cash comprises cash on hand and deposits readily available for payments. Cash equivalents represent short-termhighly liquid investments which are readily convertible to known amounts of cash, and subject to an insignificantrisk of changes in value.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
7. Foreign currency translation
For foreign currency transactions, the Group translates the foreign currency into its functional currency.
Upon initial recognition, foreign currency transactions are translated into the functional currency using the spotexchange rate of the dates on which transactions occur. At the balance sheet date, foreign currency monetary itemsare translated using the spot exchange rate at the balance sheet date. The translation differences arising from thesettlement and foreign currency monetary items are recognized in profit or loss. Also at the balance sheet date,foreign currency non-monetary items measured at historical cost continue to be translated using the spot exchangerate at the dates of the transactions and it does not change its carrying amount in functional currency. Foreigncurrency non-monetary items measured at fair value are translated using the spot exchange rate. The differencesarising from the above translations are recognized in current profit or loss or other comprehensive income accordingto the nature of foreign currency non-monetary items.
The Group translates the functional currencies of foreign operations into Renminbi when preparing the financialstatements. Asset and liability items in the balance sheet are translated at the spot exchange rate prevailing at thebalance sheet date. Equity items, except for retained earnings, are translated at the spot exchange rates at the datewhen such items arose. Revenue and expense items in the income statement are translated using the averageexchange rate for the periods when transactions occur. Translation differences arising from the aforesaid translationof financial statements denominated in foreign currency shall be recognized as other comprehensive income. Whenforeign operations are disposed, other comprehensive income relating to the foreign operation is transferred tocurrent profit or loss. Partial disposal shall be recognized on a pro-rata basis.
Cash flows denominated in foreign currencies and foreign subsidiaries’ cash flows are translated using the averageexchange rate for the period when cash flows occur. The impact on cash by the fluctuation of exchange rates ispresented as a separate line item of reconciliation in the statement of cash flows.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
8. Financial instruments
Financial instruments refer to the contracts which give rise to a financial asset in one entity and a financial liabilityor equity instrument in another entity.
Recognition and derecognition of financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to the contractual provisionsof the financial instrument.
A financial asset (or part of it, or a part of a group of similar financial asset) is derecognized when one of thefollowing criteria is met, that is, when a financial asset is written off from its account and balance sheet:
（1） The right of receiving the cash flow generated from the financial asset has expired;
（2） The right of receiving cash flow generated by the financial assets is transferred, or an obligation of paying
the full amount of cash flow received to third parties in a timely manner has been undertaken under “pass-through” agreements, where (a) substantially all risks and rewards of the ownership of such type of financialassets have been transferred, or (b) control over such type of financial assets has not been retained eventhough substantially all risks and rewards of the ownership of such type of financial assets have been neithertransferred nor retained.
If the obligation of financial liability has been fulfilled, cancelled or expired, the financial liability is derecognized.If the present financial liability is substituted by the same debtee with another liability differing in substance, or theterms of the present liability have been substantially modified, this substitution or modification is treated asderecognition of a present liability and recognition of a new liability with any arising differences recognized inprofit or loss.
Conventional dealings in financial assets are recognized or derecognized under the trade day accounting method.Conventional dealings refer to the receipt or delivery of financial assets within periods stipulated by the law andaccording to usual practices. The trade day is the date on which the Group undertakes to buy or sell a financial asset.
Classification and measurement of financial assets
At initial recognition, the Group classifies its financial assets into: financial assets at fair value through profit orloss, financial assets at amortized cost, or financial assets at fair value through other comprehensive income,according to the Group’s business model for managing financial assets and the contract cash flow characteristics ofthe financial assets. When and only when the Group changes its business model of managing financial assets, allrelevant financial assets affected will be re-classified.
Financial assets are measured at fair value on initial recognition, but if the accounts receivable or notes receivablegenerated from the sales of goods or provision of services do not contain significant financing components or donot consider financing components of no longer than one year, the initial measurement will be based on thetransaction price.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
8. Financial instruments (cont’d)
Classification and measurement of financial assets (cont’d)
For financial assets at fair value through profit or loss, the relevant transaction costs are directly recognized in profitor loss; for other financial assets, the relevant transaction costs are recognized in their initial recognition amount.
The subsequent measurement of financial assets is dependent on its classification:
Debt instruments measured at amortized costFinancial assets fulfilling all of the following conditions are classified as financial assets at amortized cost: theobjective of the Group’s business management model in respect of such type of financial assets is to generatecontract cash flow; the contract terms of such type of financial assets provide that cash flow generated on specificdates represents interest payment in relation to principal amounts based on outstanding principal amounts only.Interest income from such type of financial assets are recognized using the effective interest rate method, and anyprofit or loss arising from derecognition, amendments or impairment shall be charged to current profit or loss.
Debt instruments at fair value through other comprehensive incomeFinancial assets fulfilling all of the following conditions are classified as financial assets at fair value through othercomprehensive income: the objective of the Group’s business management model in respect of such type of financialassets is both to generate contract cash flow and to sell such type of financial assets; the contract terms of such typeof financial assets provide that cash flow generated on specific dates represents interest payment in relation toprincipal amounts based on outstanding principal amounts only. Interest income from this type of financial assetsis recognized using the effective interest rate method. Other than interest income, impairment loss and exchangedifferences which shall be recognized as current profit or loss, other fair value changes shall be included in othercomprehensive income. Upon derecognition of the financial assets, the cumulative gains or losses previouslyincluded in other comprehensive income shall be transferred from other comprehensive income to current profit orloss.
Financial assets at fair value through profit or lossOther than financial assets measured at amortized cost and financial assets at fair value through other comprehensiveincome as aforementioned, all financial assets are classified as financial assets at fair value through profit or loss,which are subsequently measured at fair value, any changes of which are recognized in current profit or loss.
Classification and measurement of financial liabilitiesThe Group classifies its financial liabilities at initial recognition: financial liabilities at fair value through profit orloss, and other financial liabilities. For financial liabilities at fair value through profit or loss, the relevant transactioncosts are directly recognized in profit or loss; for other financial liabilities, the relevant transaction costs arerecognized in their initial recognition amount.
The subsequent measurement of financial liabilities is dependent on its classification:
Page 113 of 191
V Principal Accounting Policies and Accounting Estimates (Cont’d)
8. Financial instruments (cont’d)
Classification and measurement of financial liabilities (cont’d)
Financial liabilities at fair value through profit or lossFinancial liabilities at fair value through profit or loss include mainly financial liabilities held for trading(comprisingderivatives classified as financial liabilities). Financial liabilities held for trading (comprising derivatives classifiedas financial liabilities) are subsequently measured at fair value and all changes are recognized in current profit orloss.
Other financial liabilitiesSubsequent to initial recognition, these financial liabilities are carried at amortized cost using the effective interestmethod.
Impairment of financial instruments
The Group performs impairment treatment on financial assets at amortized cost, debt instruments at fair valuethrough other comprehensive income and contract assets based on expected credit losses (ECL) and recognizesallowances for losses.
For receivables and contract assets that do not contain significant financing components, the Group adopts asimplified measurement method to measure allowances for losses based on an amount equivalent to the lifetimeexpected credit losses.
Financial assets other than those measured with simplified valuation methods, the Group evaluates at each balancesheet date whether its credit risk has significantly increased since initial recognition. The period during which creditrisk has not significantly increased since initial recognition is considered the first stage, at which the Group shallmeasure loss allowance based on the amount of expected credit loss for the next 12 months and shall computeinterest income according to the book balance and effective interest rate; the period during which credit risk hassignificantly increased since initial recognition although no credit impairment has occurred is considered the secondstage, at which the Group shall measure loss allowance based on the amount of expected credit loss for the entirevalid period and shall compute interest income according to the book balance and effective interest rate; The periodduring which credit impairment has occurred after initial recognition is considered the third stage, at which theGroup shall measure loss allowance based on the amount of the lifetime expected credit loss and shall computeinterest income according to the amortized cost and effective interest rate.
The Group estimates the expected credit loss of financial instruments individually and on a group basis. The Groupconsiders the credit risk features of different customers and estimates the expected credit losses of financialinstruments based on aging portfolio.
For the Group’s criteria for judging whether credit risks have significantly increased, the definition of assetssubjected to credit impairment, and assumptions underlying the measurement of expected credit losses, please referto Note IX.
Page 114 of 191
V Principal Accounting Policies and Accounting Estimates (Cont’d)
8. Financial instruments (cont’d)
Impairment of financial instruments (cont’d)
When the Group no longer reasonably expects to be able to fully or partially recover the contract cash flow offinancial assets, the Group directly writes down the book balance of such financial assets.
Derivative financial instruments
The Group uses derivative financial instruments. Derivative financial instruments are initially recognized at fairvalue on the date on which a derivative contract is entered into and are subsequently re-measured at fair value.Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
Gains or losses arising from changes in the fair value of derivative instruments shall be directly recognized in currentprofit or loss.
Transfer of financial assets
If the Group has transferred substantially all the risks and rewards associated with the ownership of a financial assetto the transferee, the asset should be derecognized. If the Group retains substantially all the risks and rewards ofownership of a financial asset, the asset should not be derecognized.
When the Group has neither transferred nor retained substantially all the risks and rewards of ownership of thefinancial asset, it may either derecognize the financial asset and recognize any associated assets and liabilities ifcontrol of the financial asset has not been retained; or recognizes the financial asset to the extent of its continuinginvolvement in the transferred financial asset and recognizes an associated liability if control has been retained.
Assets formed by the continuing involvement by way of the provision of financial guarantee in respect of thetransferred financial assets shall be recognized as the lower of the carrying value of the financial asset and theamount of financial guarantee. The amount of financial guarantee means the maximum amount amongconsiderations received to be required for repayment.
Page 115 of 191
V Principal Accounting Policies and Accounting Estimates (Cont’d)
9. Inventories
Inventories include raw materials, work-in-progress, finished goods, product deliveries, semi-finished goods,materials consigned for processing, etc.
Inventories are initially recorded at costs. Inventories’ costs include purchasing costs, processing costs and othercosts. Actual costs of product deliveries are recognized using the weighted average method. Turnover materialsinclude low-value consumables, packaging materials, etc., which are expensed in full.
The Group adopts the perpetual inventory system.
Inventories on the balance sheet date are stated at the lower of cost or net realisable value. Inventory valuationallowance is made and recognized in profit or loss when the net realisable value is lower than cost. Net realizablevalue is determined based on the estimated selling price in the ordinary course of business, less the estimated coststo completion and estimated costs necessary to make the sale and related taxes. Valuation allowances for rawmaterials are established by category, and those for finished goods by individual item. For inventories that relate toproducts produced and sold in the same region, have the same or similar ultimate purpose, and are difficult toseparate in measurement, valuation allowances are established on a combined basis.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
10. Long-term equity investments
Long-term equity investments include equity investments in subsidiaries, joint ventures and associates.
Long-term equity investments were recorded at initial investment cost on acquisition. For long-term equityinvestments acquired through the business combination of entities under common control, the initial investmentcost shall be the share of carrying value of the equity of the merged party at the date of combination as stated in theconsolidated financial statements of the ultimate controlling party. Any difference between the initial investmentcost and the carrying value of the consideration for the combination shall be dealt with by adjusting the capitalsurplus(if the capital surplus are insufficient for setting off the difference, such difference shall be further set offagainst retained earnings). Upon disposal of the investment, other comprehensive income prior to the date ofcombination shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly bythe investee. Equity recognized as a result of changes in equity other than the set-off of profit and loss, othercomprehensive income and profit allocation of the investee shall be transferred to current profit and loss upondisposal of the investment. Items which remain long-term equity investments after the disposal shall be accountedfor on a pro-rata basis, while items reclassified as financial instruments following the disposal shall be accountedfor in full. For long-term equity investments acquired through the business combination of entities not undercommon control, the initial investment cost shall be the cost of combination (for business combinations of entitiesnot under common control achieved in stages through multiple transactions, the initial investment cost shall be thesum of the carrying value of the equity investment in the acquired party held at the date of acquisition and newinvestment cost incurred as at the date of acquisition). The cost of combination shall be the sum of assets contributedby the acquiring party, liabilities incurred or assumed by the acquiring party and the fair value of equity securitiesissued. Upon disposal of the investment, other comprehensive income recognized under the equity method heldprior to the date of acquisition shall be dealt with on the same basis as if the relevant assets or liabilities weredisposed of directly by the investee. Equity recognized as a result of changes in equity other than the set-off of profitand loss, other comprehensive income and profit allocation of the investee shall be transferred to current profit andloss upon disposal of the investment. Items which remain long-term equity investments after the disposal shall beaccounted for on a pro-rata basis, while items reclassified as financial instruments following the disposal shall beaccounted for in full. The initial investment cost of long-term equity investments other than those acquired throughbusiness combination shall be recognized in accordance with the following: for those acquired by way of cashpayments, the initial investment cost shall be the consideration actually paid plus expenses, tax amounts and othernecessary outgoings directly related to the acquisition of the long-term equity investments. For long-term equityinvestments acquired by way of debt restructuring, the initial investment cost shall be determined in accordancewith “CAS No. 12 — Debt Restructuring.”
In the financial statements of the Company, the cost method is used for long term equity investments in investeesover which the Company exercises control. Control is defined as the power exercisable over the investee, theentitlement to variable return through involvement in the activities of the investee and the ability to influence theamount of return using the power over the investee.
When the cost method is used, long-term equity investments are measured at initial cost on acquisition. Whenadditional investments are made or investments are recouped, the cost of longterm equity investments shall beadjusted. Cash dividend or profit distribution declared by the investee shall be recognized as investment income forthe period.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
10. Long-term equity investments (cont’d)
The equity method is used to account for long-term equity investments when the Group can jointly control or hassignificant influence over the invested entity. Joint control is the contractually agreed sharing of control of anarrangement, which exists only when decisions about the relevant activities require the unanimous consent of theparties sharing control. Significant influence means having the authority to take part in the decision over thefinancial and operational policies but not the authority to control or jointly control with other parties the formulationof such policies.
Under the equity method, any excess of the initial investment cost over the Company’s share of the net fair valueof the investment’s identifiable assets and liabilities is included in the initial investment cost of the long-term equityinvestment. When the carrying amount of the investment is less than the Company’s share of the fair value of theinvestment’s identifiable net assets, the difference is recognized in profit or loss of the current period and debitedto long-term equity investments.
Under the equity method, after the long-term equity investments are acquired, investment gains or losses and othercomprehensive income are recognized according to the entitled share of net profit or loss and other comprehensiveincome of the investee and the carrying amount of the long-term equity investment is adjusted accordingly. Whenrecognising the Group’s share of the net profit or loss of the invested entity, the Group makes adjustments based onfair values of the investees’ identifiable assets and liabilities at the acquisition date in accordance with the Group’saccounting policy and accounting period to investee’s net profits, eliminating pro-rata profit or loss from internaltransactions with associates and joint ventures attributed to investor (except that loss from inter-group transactionsdeemed as asset impairment loss shall be fully recognized), provided that invested or sold assets constitutingbusinesses shall be excluded. When the invested enterprise declares profit distribution or cash dividends, thecarrying amount of investment is adjusted down by the Group’s share of the profit distribution and dividends. TheGroup shall derecognize its share of the losses of the investee after the long-term equity investment together withany long-term interests that in substance forms part of the Group’s net investment in the investee are reduced tozero, except to the extent that the Group has incurred obligations to assume additional losses. The Group also adjuststhe carrying amount of long-term equity investments for other changes in owner’s equity of the investees (otherthan the net-off of net profits or losses, other comprehensive income and profit distribution of the investee), andincludes the corresponding adjustment in equity.
On disposal of the long-term equity investments, the difference between carrying value and market price isrecognized in profit or loss for the current period. For long-term equity investments under equity method, when theuse of the equity method is discontinued, other comprehensive income previously accounted for under the equitymethod shall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly by theinvestee. Equity recognized as a result of changes in equity other than the net-off of profit and loss, othercomprehensive income and profit distribution of the investee shall be transferred in full to current profit and loss. Ifthe equity method remains in use, other comprehensive income previously accounted for under the equity methodshall be dealt with on the same basis as if the relevant assets or liabilities were disposed of directly by the investeeand transferred to current profit and loss on a pro-rata basis. Equity recognized as a result of changes in shareholders’equity other than the net-off of profit and loss, other comprehensive income and profit distribution of the investeeshall be transferred to current profit and loss on a pro-rata basis.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
11. Fixed assets
A fixed asset is recognized when, and only when, it is probable that future economic benefits that are associatedwith the fixed asset will flow to the Group and the cost can be measured reliably. Subsequent expenditures relatedto a fixed asset are recognized in the carrying amount of the fixed asset if the above recognition criteria are met,and the carrying value of the replaced part is derecognized; otherwise, those expenditures are recognized in profitor loss as incurred.
Fixed assets are initially recognized at cost. Cost of purchased fixed assets includes purchasing price, relevant taxes,and any directly attributable expenditure for bringing the asset to working conditions for its intended use.
Except for those incurred by using the accrued expenses for safety production, fixed assets are depreciated on astraight-line basis, and the respective estimated useful lives, estimated residual value ratios and annual depreciationrates are as follows:
| Useful life | Estimated residual value ratio | Annual depreciation rate | |||||||
| Buildings and constructions | 20-40 years | 5.00% | 2.38%-4.75% | ||||||
| Machinery | 5-18 years | 5.00% | 5.28%-19.00% | ||||||
| Transportation equipment | 5-10 years | 5.00% | 9.5%-19.00% | ||||||
| Electronic equipment | 3-10 years | 5.00% | 9.5%-31.67% | ||||||
| Office equipment | 3-10 years | 5.00% | 9.5%-31.67% | ||||||
| Other equipment | 5-10 years | 5.00% | 9.5%-19.00% | ||||||
The Group reviews, at least at each year end, useful lives, estimated residual values, and depreciation methods offixed assets and makes adjustments if necessary.
12. Construction in progress
Construction in progress is measured at the actual construction expenditures, including necessary project workexpenses incurred during the period while construction is in progress, and other related fees.
Construction in progress is transferred into fixed assets when it is ready for its intended use.
13. Borrowing costs
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying assetare capitalized. The amounts of other borrowing costs incurred are recognised as an expense in the period in whichthey are incurred. The Group has no borrowing costs eligible for capitalization in the current year.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
14. Right-of-use assets
At the commencement date of the lease, the Group recognizes a right-of-use asset. The cost of the right-of-use assetcomprises: (1) the amount of the initial measurement of the lease liability; (2) any lease payments made at or beforethe commencement date less any lease incentives received; (3) any initial direct cost incurred; (4) an estimate ofcosts incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is locatedor restoring the underlying asset to the condition required by the terms and conditions of the lease. The right-of-useassets are depreciated on a straight-line basis subsequently by the Group. If ownership of the leased asset transfersto the Group at the end of the lease term, depreciation is calculated using the estimated useful life of the asset.Otherwise, the right-of-use assets are depreciated over the shorter of the lease term and the estimated useful livesof the assets.
15. Intangible assets
Intangible assets are recognized only when it is probable that economic benefits relating to such intangible assetswould flow into the Group and that their cost can be reliably measured. Intangible assets are initially measured atcost, provided that intangible assets which are acquired in a business combination not under common control andwhose fair value can be reliably measured shall be separately recognized as intangible assets at fair value.
Useful life of an intangible asset is determined by the period over which it is expected to bring economic benefitsto the Group. For an intangible asset with no foreseeable limit to the period over which it is expected to bringeconomic benefits to the Group, it is treated as an intangible asset with indefinite useful life.
Useful life of respective intangible assets is as follows:
| Useful life | |||||
| Land use rights | 40-50 years | ||||
| Land ownership (overseas) | Indefinite | ||||
| Trademarks | 5-10 years | ||||
| Trademarks (overseas) | Uncertain | ||||
| Patents | 5-10 years |
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
15. Intangible assets (cont’d)
Property in land acquired by the Group is normally accounted for as intangible assets. Property in land and buildingsrelating to plants constructed by the Group are accounted for as intangible assets and fixed assets, respectively. Thecosts for acquiring land and buildings are apportioned between the property in land and buildings, or accounted foras fixed assets if they cannot be apportioned.
The straight-line amortisation method is used during the useful life period for intangible assets with definite usefullives. The Group reviews, at least at each year end, useful lives and amortization method for intangible assets withdefinite lives and makes adjustment when necessary.
For intangible assets with indefinite useful life, impairment tests shall be conducted annually regardless of whetherthere are indications of impairment. Such intangible assets shall not be amortized and their useful life shall bereviewed during each accounting period. If there is evidence suggesting that their useful life is limited, accountingtreatment will be performed according to the above policy on intangible assets with definite useful life.
The land ownership of Fosber S.p.A. ("Fosber Group"), a subsidiary of the Company, in Italy has a permanent term,and the Company believes that the land ownership will be used and will bring expected inflows of economic benefitsto the Company in the foreseeable future, so its useful life is regarded as indefinite. The trademarks registered bysubsidiaries Fosber Group and Fosber America, Inc. ("Fosber America") have a useful life in accordance with thelaw, but at the expiration of the protection period, Fosber Group and Fosber America can apply for an extension atlow service charges, so the Company will benefit from the above trademarks in the long term. Thus, the Companyrecognized the trademark use right as intangible assets with indefinite useful life. The useful life of intangible assetswith indefinite useful life will be reviewed at the end of each year. After review, the useful life of the aboveintangible assets is still uncertain.
The Group classifies the expenses for internal research and development as research costs and development costs.All research costs are charged to the current profit or loss as incurred. Expenditure incurred on projects to developnew products is capitalized and deferred only when the Group can demonstrate the technical feasibility ofcompleting the intangible asset so that it will be available for use or sale, its intention to complete and its ability touse or sell the asset, how the asset will generate future economic benefits (including demonstration that the productderived from the intangible asset or the intangible asset itself will be marketable or, in the case of internal use, theusefulness of the intangible asset as such), the availability of technical and financial resources to complete theproject and procure the use or sale of the intangible asset, and the ability to measure reliably the expenditure duringthe development. Development costs which do not meet these criteria is recognized in profit or loss when incurred.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
16. Impairment
The Group assesses impairment of assets other than inventories, contract assets and assets related to contract costs,deferred tax assets and financial assets, using the methods described below:
Impairment of assets (other than the impairment of inventories, contract assets and contract cost assets, investmentproperties measured using the fair value model, deferred tax assets, and financial assets ) is determined in thefollowing way: the Group assesses at the balance sheet date whether there is any indication that an asset may beimpaired; if any indication exists that an asset may be impaired, the Group estimates the recoverable amount of theasset and performs impairment testing; goodwill arising from a business combination, intangible assets withindefinite useful lives and intangible assets not yet available for use are tested for impairment at least at each yearend, irrespective of whether there is any indication that the asset may be impaired.
The recoverable amount is the higher of the asset’s fair value less costs to sell and its present value of estimatedfuture cash flows. The Group estimates recoverable value for individual assets. When it is difficult to estimateindividually, the recoverable value of the cash generating units which the asset belongs to will be estimated. Thedefinition of cash generating units is determined on the basis of whether the cash generating units generate cashflows which are largely independent of those from other cash generating units.
Where the carrying amount of an asset or a cash generating unit exceeds its recoverable amount, the asset or cashgenerating unit is considered impaired and is written down to its recoverable amount. The difference between thecarrying amount and recoverable amount is recognized in profit or loss and allowance for impairment is madeaccordingly.
In connection with impairment tests for goodwill, the carrying value of goodwill arising from business combinationis allocated to relevant cash generating units (“CGU”) from the date of acquisition on a reasonable basis. If it isdifficult to allocate such goodwill to a relevant CGU, it should be allocated to a relevant CGU group. A relevantCGU or CGU group is defined as one which can benefit from the synergies of the business combination and is notlarger than the reporting segments determined by the Group.
In connection with impairment tests for CGUs or CGU groups that comprise goodwill, where indications ofimpairment exists in a CGU or CGU group related to goodwill, impairment tests should be performed first on CGUsor CGU groups that do not comprise goodwill and recognize impairment loss after estimating the recoverableamount. Then impairment tests on CGUs or CGU groups that comprise goodwill should be performed and thecarrying value and recoverable amount should be compared. Where the recoverable amount is lower than thecarrying value, the impairment loss should first be offset against the carrying value of the goodwill allocated toCGUs or CGU groups and then against assets in the CGUs or CGU groups other than goodwill in proportion to theweighting of these assets.
Previously recognized impairment losses are not reversed in subsequent periods.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
17. Long-term prepaid expenses
Long-term prepaid expenses are amortized using the straight-line method, with the amortization periods as follows:
| Amortization period | |||||
| Decoration expenditures | 3-5 years | ||||
| Amortization of moulds | 3 years | ||||
| Other expenditures | 3-5 years |
18. Employee benefits
Employee benefits include all kinds of rewards or compensation incurred by the Group in exchange for servicerendered by employees or in the termination of employment, other than share-based payment. Employee benefitsinclude short-term benefits, retirement benefits, dismission benefits and other long-term employees’ benefits.Benefits provided by the Group to the spouses, children and dependents of employees and families of deceasedemployees are also a part of employee benefits.
Short-term benefits
For accounting periods during which services are rendered by employees, short-term benefits that will incur isrecognized as liability and included in profit and loss or related capital costs.
Retirement benefits (defined contribution schemes)
Employees of the Group participated in pension insurance and unemployment insurance schemes managed by thelocal government. The contribution costs are charged as asset cost or to profit or loss when incurred.
Retirement benefits (defined benefit schemes)
The Group operates a defined benefit pension scheme, which requires payments to an independently operated fund.No funds have been injected into the scheme. The cost of benefits provided under the defined benefit scheme iscalculated using the expected benefit accrual unit approach.
Remeasurement arising from defined benefit pension schemes, including actuarial gains or losses, changes in theasset cap effect (deducting amounts included in net interest on net liabilities of the defined benefit schemes) andreturn on scheme assets (deducting amounts included in net interest on net liabilities of the defined benefit schemes)are instantly recognized in the balance sheet and charged to equity through other comprehensive income for theperiod during which it is incurred. It will not be reversed to profit and loss in subsequent periods.
Previous service costs are recognized as current expenses when: the defined benefit scheme is revised, or relevantrestructuring costs or dismission benefits are recognized by the Group, whichever earlier.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
18. Employee benefits (cont’d)
Retirement benefits (defined benefit schemes) (cont’d)recognizerecognizeNet interest is arrived at by multiplying net liabilities or net assets of defined benefits with a discount rate. Changesin net obligations of defined benefits are recognized as cost of sales, administrative expenses, R&D expenses, sellingexpenses and finance costs in the income statement. Service costs included current services costs, past service costsand settlement of profit or loss. Net interest included interest income from scheme assets, interest expenses forscheme obligations and interest of the asset cap effect.
19. Lease liabilities
At the commencement date, the Group measures the lease liability at the present value of the lease payments thatare not paid at that date, except for short-term leases and low-value asset leases.
Lease payments include constant payments and the substantial constant payments net of lease incentives, variablelease payments that depend on an index or ratio, the estimated payables of guaranteed residual value, and alsoinclude the exercise price of the purchase option or the amount to be paid upon vest of the termination option,provided that the Group is reasonably certain that the option will be vested or that the lease term reflects that theGroup will exercise the termination option.
In calculating the present value of the lease payments, the Group uses the interest rate implicit in the lease as thediscount rate. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate. TheGroup calculates the interest expenses of the lease liability in each period during the lease term using the constantperiodic rate of interest, and recognizes such interest expenses in profit or loss, except those that in the related assetcosts as required. Variable lease payments that are not included in the measurement of the lease assets are recognizedin profit or loss as incurred, except those that shall be included in the related asset costs as required.
After the commencement date, the Group increases the book value of the lease liability when interest is recognizedand decreases the book value of the lease liability when lease payments are made. In the event of any change to thesubstantial constant payments, the estimated payables of guaranteed residual value, the index or ratio used todetermine lease payments, the assessment results or actual vesting of the purchase option, the renewal option or thetermination option, the Group remeasures the lease liability at the present value of the modified lease payments.
20. Provisions
Other than contingent consideration and assumed contingent liabilities in a business combination not involvingentities under common control, the Group recognizes as provision an obligation that is related to contingent matterswhen all of the following criteria are fulfilled:
（1） the obligation is a present obligation of the Group;
（2） the obligation would probably result in an outflow of economic benefits from the Group;
（3） the obligation could be reliably measured.
V Principal Accounting Policies and Accounting Estimates (Cont’d)
20. Provisions (cont’d)
Provisions are initially measured according to the best estimate of expenses on fulfilling the current liabilities, inconnection with the risk, uncertainty and timing value of the currency. The carrying value of the provisions would
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be reassessed on every balance sheet date. The carrying value will be adjusted to the best estimated value if there iscertain evidence that the current carrying value is not the best estimate.
The contingent liabilities obtained from a business combination not involving entities under common control shallbe measured at fair value at the time of initial recognition. After the initial recognition, according to the amountconfirmed by provisions and the balance of the initial recognition amount after deducting the accumulatedamortization determined by the revenue recognition principle, the higher of the two shall prevail for subsequentmeasurements.
21. Share-based payments
Share-based payments can be distinguished into equity-settled share-based payments and cash-settled share-basedpayments. Equity-settled share-based payments are transactions of the Group settled through the payment of sharesor other equity instruments in consideration for receiving services.
Equity-settled share-based payments made in exchange for services rendered by employees are measured at the fairvalue of equity instruments granted to employees. Instruments which are vested immediately upon the grant arecharged to relevant costs or expenses at the fair value on the date of grant and the capital surplus are creditedaccordingly. Instruments of which vesting is conditional upon completion of services or fulfillment of performanceconditions are measured by recognising services rendered during the period in relevant costs or expenses andcrediting the capital surplus accordingly at the fair value on the date of grant according to the best estimates of thenumber of exercisable equity instruments conducted by the Group at each balance sheet date during the pendingperiod. The fair value of equity instruments is determined using the closing price of the Company’s stock on thedate of grant.
No expenses are recognized for awards that do not ultimately vest due to non-fulfillment of nonmarket conditionsand/or vesting conditions. For the market or non-vesting condition under the share-based payments agreement, itshould be treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, providedthat other performance condition and/or vesting conditions are satisfied.
22. Revenue generating from contracts with customers
The Group recognizes its revenue upon the fulfilment of contractual performance obligations under a contract,namely, when the customer obtains control over the relevant products or services. The acquisition control overrelevant products or services shall mean the ability to direct the use of the products or the provision of the servicesand receive substantially all economic benefits derived therefrom.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
22. Revenue generating from contracts with customers (cont’d)
Contract for the sales of productsThe product sales contract between the Group and its customers typically includes different contractual performanceobligations for the transfer of products and the rendering of services. With respect to the sales of products, the Grouptypically recognizes its revenue at the time when the customer takes control over the products, taking into accountthe following factors: the acquisition of the current right to receive payments for the products, the transfer of majorrisks and rewards of ownership, the transfer of the legal title of the products, the transfer of the physical assets ofthe products, and customers’ acceptance of the products.
Contract for the rendering of installation servicesThe service contract between the Group and its customers includes contractual performance obligations forinstallation services. As the customer is able to forthwith obtain and consume the economic benefits brought by theGroup’s contractual performance when the Group performs a contract, the Group considers such contractualperformance obligations to be obligations performed over a period of time, and revenue shall be recognized on eachbalance sheet date according to the progress of installation.
Significant financing componentWhere a contract contains a significant financing component, the Group determines transaction prices based onamounts payable assumed to be settled in cash by customers immediately upon the acquisition of control over theproducts or services. The difference between such transaction price and contract consideration is amortized over thecontract period using the effective interest method based on a ratio that discounts the nominal contractualconsideration to the current selling price of the products or services. The Group shall not give consideration to anysignificant financing component in a contract if the gap between the customer’s acquisition of control over theproducts or services and payment of consideration is expected to be less than 1 year.
Warranty clausesThe Group provides quality assurance for products sold in accordance with contract terms and laws and regulations.The accounting treatment of quality assurance in the form of warranty assuring customers products sold are incompliance with required standards is set out in Note V. 20. Where the Group provides a service warranty for astandalone service in addition to the assurance of compliance of products with required standards, such warranty istreated as a standalone contractual performance obligation, and a portion of the transaction price shall be allocatedto the service warranty based on a percentage of the standalone price for the provision of product and servicewarranty. When assessing whether a warranty is rendering a standalone service in addition to providing guaranteeto customers that all sold goods are in compliance with required standards, the Group will consider whether or notsuch warranty is a statutory requirement, the term of the warranty and the nature of the Group’s undertaking toperform its obligations.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
22. Revenue generating from contracts with customers (cont’d)
Principal/agent
When the Group obtains control of trade goods or services from a third party and then transfers it to a customer, orhas the ability to direct the third party to provide the service to the customer on the Group’s behalf, the Group isentitled to determine the transaction price of the goods or services by itself, i.e., the Group controls the trade goodsor services before they are transferred to the customer. Thus, the Group is a principal and recognizes revenue in thegross amount of consideration received or receivable. Otherwise, the Group is an agent and recognizes revenue inthe amount of any fee or commission to which it expects to be entitled from the customer. The amount is the netamount of the gross consideration received or receivable after paying the other party the consideration received inexchange for the goods or services to be provided by that party.
23. Contract assets and contract liabilities
The Group presents contract assets or contract liabilities on the balance sheet according to the relationship betweencontractual performance obligations and customer payments.
Contract assetsContract assets are the right to receive consideration following the transfer of products or services to customerswhich is dependent on factors other than the passage of time.
For details of the Group’s determination and accounting treatment of expected credit losses from contract assets,please refer to Note V.8.
Contract liabilitiesContract liabilities are the obligation to pass products or services to customers in connection with customerconsideration received or receivable, for example, amounts received prior to the transfer of the promised productsor services.
24. Assets relating to contract cost
The Group’s assets relating to contract costs include the contract acquisition costs and contract performance costs.The costs are presented in inventory, other current assets or other non-current assets based on liquidity of the assets.
Where the Group expects the incremental costs for acquiring a contract to be recoverable, such contract acquisitioncosts are recognized as an asset (unless the amortisation period of the asset is not more than 1 year).
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
24. Assets relating to contract cost (cont’d)
Costs incurred by the Group for the performance of a contract are recognized as an asset as contract performancecosts if they do not fall under the scope of the relevant standards for inventories, fixed assets or intangible assetsbut meet all the following conditions:
（1） they are directly related to a current or anticipated contract, including direct labour, direct materials,
manufacturing expenses (or similar expenses), to be borne by customers as specifically stipulated, andotherwise incurred solely in connection with the contract;
（2） they will increase the resources to be utilized in the Company’s future performance of its contractual
obligations;
（3） they are expected to be recoverable.
25 Government grants
Government grants are recognized when there is reasonable assurance that the grant will be received and allattaching conditions will be complied with. The grant is measured as the amount received or receivable where ittakes the form of a cash asset, or at fair value where it is not a cash asset. Where the fair value cannot be reliablyobtained, it should be measured at the nominal value.
In accordance with the stipulations of the government instruments, government grants applied towards acquisitionor the formation of long-term assets in other manners are asset-related government grants; the instrumentsunspecifically refer to the exercise of judgement based on the basic conditions for receiving the asset-related grantapplied towards or the formation of long-term assets in other manners. All other grants are recognized as income-related government grants.
Government grants relating to income and applied to make up for related costs or losses in future periods shall berecognized as deferred income, and shall be recognized in profit or loss of the period for which related costs or lossare recognized. Government grants specifically applied for the reimbursement of incurred related costs and expensesshall be directly recognized in profit or loss.
Government grants relating to assets shall offset the carrying amount of related assets, or be recognized as deferredincome and credited to profit or loss over the useful life of the asset concerned by reasonable and systematicinstalments (provided that government grants measured at nominal value shall be directly recognized in profit orloss). Where the asset concerned is disposed of, transferred, retired or damaged prior to the end of its useful life, thebalance of the deferred income yet to be allocated shall be transferred to “asset disposal” under current profit orloss.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
26. Deferred tax assets
The Group recognizes deferred tax assets and liabilities based on temporary differences using the balance sheetliability method. Temporary differences are differences between the carrying amount of assets or liabilities in thebalance sheet and their tax base on the balance sheet date. Temporary differences also include the differencesbetween the carrying values and tax bases of items not recognized as assets or liabilities where the tax base can becalculated according to the relevant tax regulations.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
（1） where the taxable temporary difference arises from goodwill or the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects neither theaccounting profit nor taxable profit or loss;
（2） in respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, where the timing of the reversal of the temporary differences can be controlledand it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits andunused tax losses, to the extent that it is probable that taxable profit will be available against which the deductibletemporary differences, and the carryforward of unused tax credits and unused tax losses can be utilized except:
（1） where the deductible temporary difference arises from transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
（2） deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures are recognized when all following conditions are met: it is probable that the temporary differenceswill reverse in the foreseeable future, it is probable that taxable profit against the deductible temporarydifferences will be available.
As at balance sheet date, deferred tax assets and liabilities are measured in accordance with relevant tax laws at thetax rates that are expected to apply to the period when the asset is realized or the liability is settled, and reflects thetax consequences that would follow the manner in which the Group expects, at the balance sheet date, to recoverthe assets or settle the carrying amount of its assets and liabilities.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extentthat it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred taxasset to be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting period and arerecognized to the extent that it has become probable that sufficient taxable profit will be available to allow all orpart of the deferred tax asset to be recovered.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
26. Deferred tax assets (cont’d)
Deferred tax assets and liabilities are offset and presented as a net amount if all of the following conditions are met:
the Group has the legal right to set off the current income tax assets and liabilities and the deferred tax assets andliabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or differenttaxable entities, provided that the taxable entity concerned intends either to settle current income tax liabilities andassets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in whichsignificant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
27. Leases
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains,a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange forconsideration.
As lessee
The Group recognizes leases as the right-of-use asset and lease liabilities, except for short-term leases and leases oflow-value assets. For general accounting practice, please see Items 14 and 19 of Note V.
Short-term leases and leases of low-value assetsA short-term lease is a lease that, at the commencement date, has a lease term of 12 months or less, and does notcontains any purchase option. The Group does not recognize the right-of-use assets and lease liabilities for buildingsshort-term leases. The Group recognizes lease payments on short-term leases and leases of low-value assets in therelated asset costs or profit or loss on a straight-line basis over the lease term.
As a lessor
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownershipof an underlying asset, except that a lease is classified as an operating lease at the inception date.
As a lessor of operating leases
Rental income of operating leases is recognized in current profit or loss over the respective periods during the leaseterm on a straight-line basis, while variable lease payment not included in lease receipts is charged to profit or lossas and when incurred.
Initial direct costs are capitalised and recognised over the lease term on the same basis as rental income, throughprofit or loss.
28. Share repurchase
The consideration and transaction costs paid to repurchase equity instruments are charged against owner’s equity.Except for share-based payments, the issue (including refinancing), repurchase, disposal or retirement of theCompany’s own equity instruments are accounted for as changes in equity.
V Principal Accounting Policies and Accounting Estimates (Cont’d)
29. Profit distribution
The Company’s cash dividends are recognized as liabilities upon the approval by the general meeting.
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30. Expenses for safety production
The expenses for safety production set side as stipulated shall be included in the cost of relevant products or currentprofits and losses, and included in the special reserve at the same time. When such expenses are used, accountingtreatment will be performed according to whether fixed assets are formed. If identified as expense expenditures, thespecial reserve will be written down directly; if fixed assets are formed, the expenses incurred will be collected,fixed assets will be recognized when they reach a predetermined usable state, and the equivalent amount of specialreserve will be written down and the equivalent accumulated depreciation will be recognized.
31. Put option related to non-controlling interests
In the process of acquiring majority equity of subsidiaries, the Group grants to minority shareholders the option tosell the shares of subsidiaries held by them to the Group (put option). The Group recognizes the shares ofsubsidiaries held by minority shareholders as non-controlling interests in its consolidated financial statements; forthe put option, the Group undertakes the obligation to redeem the shares of the subsidiaries held by minorityshareholders in cash. The Group removes the present value of the amount payable to redeem the put option from itsequity (excluding non-controlling interests) and classifies it as financial liability, which is remeasured in subsequentperiods at the present value of the the amount payable to redeem the put option and recognized in profit or loss.
32. Fair value measurement
At each balance sheet date, the Group measures the fair value of derivative financial instruments and equityinstrument investments. Fair value means the price receivable from the disposal of an asset or required to be paidfor the transfer of a liability in an orderly transaction incurred by market participants on the measurement date.
The fair value hierarchy to which an asset or liability measured or disclosed in the financial statements at fair valuewill be determined on the basis of the lowest level of input which is significant for the fair value measurement as awhole. Input at the first level represents unadjusted quoted prices in an active market for the acquisition of the sameasset or liability on the measurement date. Input at the second level represents directly or indirectly observableassets or liabilities apart from input at the first level. Input at the third level represents unobservable input for theasset or liability.
At each balance sheet date, the Group reassesses assets and liabilities measured at fair value on an ongoing basisrecognized in the financial statements to determine whether the level of fair value measurement should be changed.
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V Principal Accounting Policies and Accounting Estimates (Cont’d)
33. Significant accounting judgements and estimates
The preparation of financial statements requires judgement and estimation of the management. Such judgement andestimation will affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure ofcontingent liabilities as at the balance sheet date. However, the consequence arising from the uncertain nature ofsuch estimation may result in significant adjustment to the carrying value of the asset or liability affected in thefuture.
Judgement
In the process of applying the Group’s accounting policies, management has made the following judgements, whichhave the most significant effect on the amounts recognized in the financial statements:
Determination of standalone contractual performance obligationsThe intelligent packaging equipment (printers and corrugators) business of the Group includes four kinds of productor service commitments, i.e. the sale, installation, transportation and insurance services of machinery. As thecustomer can benefit from the individual use of the four kinds of products or services or their use together withother readily available resources and such product or service commitments are distinctly separable from otherproducts or service commitments, the aforesaid product or service commitments constitute standalone contractualperformance obligations respectively.
Business modelThe classification of financial assets at initial recognition is dependent on the Group’s business model for managingthe assets. Factors considered by the Group in judging the business model include enterprise valuation, the methodof reporting the results of financial assets to key management members, risks affecting the results of financial assetsand the method for managing such risks, as well as the form of remuneration received by the management personnelof the businesses concerned. In assessing whether the business model is aimed at receiving contract cash flow, theGroup is required to analyze and exercise judgment in respect of the reasons, timing, frequency and values of anydisposals prior to maturity.
Characteristics of contract cash flowThe classification of financial assets at initial recognition is dependent on the characteristics of the contract cashflow of such type of financial assets. Judgement is required to determine whether the contract cash flow representsinterest payment in relation to principal amounts based on outstanding principal amounts only, including judgementof whether it is significantly different from the benchmark cash flow when assessing modifications to the time valueof currencies, and judgement of whether the fair value of early repayment features is minimal where the financialassets include such early repayment features.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheetdate, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilitieswithin subsequent financial years, are discussed below.
Impairment of financial instruments and contract assetsThe Group has adopted the expected credit loss model to evaluate the impairment of financial instruments andcontract assets. The application of the expected credit loss model requires significant judgement and estimates andthe consideration of all reasonable and soundly based information, including forward-looking information. Inmaking such judgement and estimates, the Group estimates the projected movements of the debtor’s credit risk
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according to past repayment records, economic policies, macro-economic indicators and industry risks. Differentestimates may affect impairment allowances, and established impairment allowances may not equal the actualimpairment loss amount in the future.
Impairment of non-current assets other than financial assets (exclusive of goodwill)The Group assesses at each balance sheet date whether there is an indication that a non-current asset other thanfinancial assets may be impaired. For an intangible asset with an indefinite useful life, in addition to the annualimpairment test, it is also tested when there is an indication that it may be impaired. Non-current assets other thanfinancial assets are tested for impairment when there is an indication that the carrying amount is irrecoverable.Where the carrying amount of an asset or an asset group exceeds its recoverable amount—the higher of the asset orasset group’s fair value less costs to sell and its present value of estimated future cash flows, it is consideredimpaired. The net amount of the fair value less costs to sell is determined based on the price of a similar asset’ssales contract in a fair transaction or the observable market price less the incremental cost directly attributable tothe disposal of the asset. When estimating the present value of future cash flows, the management must choose aproper discount rate.
Impairment of goodwillGoodwill must be tested for impairment at least annually. It requires estimating the present value of future cashflows of an asset group or asset group portfolio allocated with goodwill. When estimating the present value of futurecash flows, the Group needs to estimate future cash flows generating from the asset group or asset group portfolio,and at the same time choose a proper discount rate to determine the present value of future cash flows. For details,see Note VII.21.
Fair value of unlisted equity investmentsThe unlisted equity investments have been valued based on the expected cash flows discounted at current ratesapplicable for items with similar terms and risk characteristics. This valuation requires the Group to make estimatesabout expected future cash flows, credit risk, volatility and discount rates, and hence they are subject to uncertainty.
Deferred tax assetsDeferred tax assets are recognized for all unused tax losses, to the extent that it is likely that taxable profit will beavailable to utilize these unused tax losses. Significant judgments are needed from management to estimate thetiming and amount of taxable profit in the future, with tax planning strategies, to determine the amount of thedeferred tax assets that should be recognized.
Lessee’s incremental borrowing rateIf the interest rate implicit in the lease cannot be readily determined, the Group measures the lease liability at thepresent value of the lease payments that are not paid at that date. The Group discounted the lease payments usingthe lessee’s incremental borrowing rate. The Group determines the incremental borrowing rate based on theeconomic environment by reference to the observable interest rate. Then the Group adjusts the reference interestrate based on its own circumstances, underlying assets, lease terms and amounts of lease liabilities to determine theapplicable incremental borrowing rate.
ProvisionsThe Group estimates and makes corresponding provision for product quality guaranty according to contract terms,existing knowledge and past experience. When such contingencies have formed a present obligation and it isprobable that an outflow of economic benefits from the Group will be required to settle the obligation, the Grouprecognizes the contingencies as provisions based on the best estimate of the expenditure required to settle the relatedpresent obligation. The recognition and measurement of provisions largely depend on the judgment of management.In the process of making judgment, the Group is required to assess the risks, uncertainties, time value of money andother factors related to such contingencies.
The Group will undertake the provisions for post-sale quality maintenance provided to customers for the sale,maintenance and renovation of the sold goods. The provisions have been made taking into account the Group’s
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recent data of maintenance experience, and taking into account the risks, uncertainties and other factors related tomaintenance matters. Any increase or decrease in this provision may affect the profit and loss in future years.VI Taxation
1. Principal tax items and tax rates
Value-added tax (VAT) – The output tax of the taxable income is calculated at the rate of 13% and 6% and
VAT is levied according to the difference after deducting the input tax which isallowed to be deducted in the current period.
City maintenanceand construction tax – Levied at 7% of the turnover tax actually paid
Education surcharge – Levied at 3% of the turnover tax actually paid
Local education Surcharge – Levied at 2% of the turnover tax actually paid
Corporate income tax – Corporate income tax of the Group’s subsidiaries located in Mainland China shall
be levied at 25% of the taxable income (except for the preferential taxation asdescribed in Note IV 2). Subsidiaries located in Hong Kong shall calculate and paythe corporate income tax at 16.5% of the taxable income, and subsidiaries registeredoverseas shall apply the corporate income tax rate as required by the local tax law.The details are as follows:
1. Principal tax items and tax rates (Cont’d)
| Name of subsidiaries | Income tax rate | |
| Dong Fang Precision (Netherland) Cooperatief U.A.（“Dongfang Precision (Netherland)”） | 20% | |
| Fosber S.p.A.（“Fosber Group”） | 24% | |
| Fosber America, Inc.（“Fosber America”） | 21% | |
| EDF Europe s.r.l.（“Italy EDF”） | 24% | |
| Tiru?a Group Industrial, S.L.（“Tiru?a Group”） | 28% | |
| Tiru?a America inc. (“Tiru?a America”) Quantum Corrugated S.r.l. (Italy QCorr) Tiru?a S.L.U. | 21% 24% 28% | |
| Tratatamientos Industriales Tiru?a S.A.U. | 28% | |
| Tiru?a France SARL | 15% | |
| SCI Candan | 15% |
Property tax – Ad valorem tax: levied at 1.2% of the remaining value after deducting 30% from the originalvalue of the property; Tax levied from rent: levied at 12% of the rental income.
2. Tax concessions
On 9 December 2020, the Company passed the high-tech enterprise review by the Department of Science andTechnology of Guangdong Province, Department of Finance of Guangdong Province, Guangdong Provincial TaxService of State Taxation Administration and Guangdong Provincial Local Taxation Bureau and obtained a High-tech Enterprise Certificate (certificate no.: GR202044007667) jointly issued by the above authorities, with a validityof three years, during which the Company paid the corporate income tax at a reduced rate of 15%, so the preferentialtax rate of 15% was applicable to the Company's corporate income tax as at the Reporting Period.
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Suzhou Parsun Power Machine Co., Ltd. ("Parsun Power"), a subsidiary of the Company, passed the high-techenterprise review by the Department of Science and Technology of Jiangsu Province, Department of Finance ofJiangsu Province and Jiangsu Provincial Tax Service of State Taxation Administration on 18 November 2022 andobtained a High-tech Enterprise Certificate (certificate no.: GR201932000339) jointly issued by the aboveauthorities, with a validity of three years, during which the subsidiary paid the corporate income tax at a reducedrate of 15%, so the preferential tax rate of 15% was applicable to the corporate income tax of Parsun Power as atthe Reporting Period.
Guangdong Fosber Intelligent Equipment Co., Ltd. ("Fosber Asia"), a subsidiary of the Company, passed the high-tech enterprise review by the Department of Science and Technology of Guangdong Province, Department ofFinance of Guangdong Province and Guangdong Provincial Tax Service of State Taxation Administration on 20December 2021 and obtained a High-tech Enterprise Certificate (certificate no.: GR202144003984) jointly issuedby the above authorities, with a validity of three years, during which the subsidiary paid the corporate income taxat a reduced rate of 15%, so the preferential tax rate of 15% was applicable to the corporate income tax of FosberAsia as at the Reporting Period.
Shenzhen Wonder Printing System Co.,Ltd. ("Wonder Printing"), a subsidiary of the Company, passed the high-tech enterprise review by the Department of Science and Technology of Guangdong Province, Department ofFinance of Guangdong Province and Guangdong Provincial Tax Service of State Taxation Administration on 19December 2022 and obtained a High-tech Enterprise Certificate (certificate no.: GR202244206125) jointly issuedby the above authorities, with a validity of three years, during which the subsidiary paid the corporate income taxat a reduced rate of 15%, so the preferential tax rate of 15% was applicable to the corporate income tax of WonderPrinting as at the Reporting Period.
VII Notes to the Consolidated Financial Statements
1. Cash and bank balances
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Cash on hand | 654,807.40 | 589,575.75 |
| Cash at banks | 1,313,373,881.02 | 1,011,562,524.44 |
| Other cash balances | 198,177,855.11 | 262,295,099.55 |
| Total | 1,512,206,543.53 | 1,274,447,199.74 |
| Of which: Total amount overseas | 868,474,429.22 | 752,430,975.78 |
| Total restricted amount as collateral, pledge or frozen | 148,585,320.86 | 40,726,502.47 |
Other information:
The fund deposited abroad with restrictions on repatriation was equivalent to RMB7,807,976.40 (31 December 2022:
RMB17,937,703.00). Current bank deposits earn interest income based on interest rates for current deposits.
2. Financial assets held for trading
Unit: RMB yuan
| Item | Closing balance | Opening balance |
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| Financial assets at fair value through profit or loss | 754,101,755.27 | 860,832,278.88 |
| Of which: | ||
| Investments in trust products | 717,241.38 | 717,241.38 |
| Funds management plans | 269,817,217.77 | 307,794,620.13 |
| Derivative financial assets | 739,951.22 | 782,720.29 |
| Investments in bank’s wealth management products | 394,871,568.34 | 351,182,315.74 |
| Stock and fund investments | 87,955,776.56 | 200,355,381.34 |
| Of which: | ||
| Total | 754,101,755.27 | 860,832,278.88 |
3. Notes receivable
(1) Notes receivable by type
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Bank acceptance notes | 31,691,432.59 | 24,566,100.12 |
| Total | 31,691,432.59 | 24,566,100.12 |
Unit: RMB yuan
| Type | Closing balance | Opening balance | ||||||||
| Gross amount | Allowance | Carrying amount | Gross amount | Allowance | Carrying amount | |||||
| Amount | Percentage | Amount | Allowance percentage | Amount | Percentage | Amount | Allowance percentage | |||
| Of which: | ||||||||||
| Of which: | ||||||||||
Allowances established individually:
Unit: RMB yuan
| Item | Closing balance | |||
| Gross amount | Allowance | Allowance percentage | Reason for allowance | |
Allowances established by group:
Unit: RMB yuan
| Item | Closing balance | ||
| Gross amount | Allowance | Allowance percentage | |
Grouping basis:
Where allowances for doubtful notes receivable are established using the general model of expected credit loss, please discloseallowance information as other receivables:
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□ Applicable ? Not applicable
4. Accounts receivable
(1) Accounts receivable by type
Unit: RMB yuan
| Type | Closing balance | Opening balance | ||||||||
| Gross amount | Allowance | Carrying amount | Gross amount | Allowance | Carrying amount | |||||
| Amount | Percentage | Amount | Allowance percentage | Amount | Percentage | Amount | Allowance percentage | |||
| Accounts receivable for which the allowances are established individually | 2,488,100.00 | 0.28% | 2,488,100.00 | 100.00% | 3,004,100.00 | 0.35% | 3,004,100.00 | 100.00% | ||
| Of which: | ||||||||||
| Accounts receivable for which the allowances are established individually | 2,488,100.00 | 0.28% | 2,488,100.00 | 100.00% | 3,004,100.00 | 0.35% | 3,004,100.00 | 100.00% | ||
| Accounts receivable for which the allowances are established by group | 888,834,349.27 | 99.72% | 33,771,755.89 | 3.80% | 855,062,593.38 | 866,713,808.17 | 99.65% | 29,408,050.71 | 3.39% | 837,305,757.46 |
| Of which: | ||||||||||
| 888,834, | 99.72% | 33,771,7 | 3.80% | 855,062, | 866,713, | 99.65% | 29,408,0 | 3.39% | 837,305, | |
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| Accounts receivable for which the allowances are established by group with similar credit risk characteristics | 349.27 | 55.89 | 593.38 | 808.17 | 50.71 | 757.46 | ||||
| Total | 891,322,449.27 | 100.00% | 36,259,855.89 | 855,062,593.38 | 869,717,908.17 | 100.00% | 32,412,150.71 | 837,305,757.46 |
Accounts receivable for which the allowances are established individually:
Unit: RMB yuan
| Entity | Closing balance | |||
| Gross amount | Allowance | Allowance percentage | Reason for allowance | |
| Customer 1 | 15,700.00 | 15,700.00 | 100.00% | Customer’s inability to settle the amount due |
| Customer 2 | 939,000.00 | 939,000.00 | 100.00% | Customer’s inability to settle the amount due |
| Customer 3 | 283,000.00 | 283,000.00 | 100.00% | Customer’s inability to settle the amount due |
| Customer 4 | 641,600.00 | 641,600.00 | 100.00% | Customer’s inability to settle the amount due |
| Customer 5 | 608,800.00 | 608,800.00 | 100.00% | Customer’s inability to settle the amount due |
| Total | 2,488,100.00 | 2,488,100.00 | ||
Accounts receivable for which the allowances are established by group:
Unit: RMB yuan
| Item | Closing balance | ||
| Gross amount | Allowance | Allowance percentage | |
| Within 1 year (inclusive) | 791,123,179.93 | 11,194,847.73 | 1.42% |
| 1-2 years (including 2 years) | 49,995,409.89 | 2,759,952.69 | 5.52% |
| 2-3 years (including 3 years) | 26,699,996.94 | 1,729,262.82 | 6.48% |
| 3-4 years (including 4 years) | 6,375,847.79 | 4,604,794.41 | 72.22% |
| 4-5 years (including 5 years) | 9,801,357.21 | 8,644,340.73 | 88.20% |
| Over 5 years | 4,838,557.51 | 4,838,557.51 | 100.00% |
| Total | 888,834,349.27 | 33,771,755.89 | |
Where allowances for doubtful accounts receivable are established using the general model of expected credit loss, please discloseallowance information as other receivables.
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□ Applicable ? Not applicable
By aging:
Unit: RMB yuan
| Aging | Closing balance |
| Within 1 year (inclusive) | 791,123,179.93 |
| 1-2 years | 49,995,409.89 |
| 2-3 years | 26,699,996.94 |
| Over 3 years | 23,503,862.51 |
| 3-4 years | 6,375,847.79 |
| 4-5 years | 9,801,357.21 |
| Over 5 years | 7,326,657.51 |
| Total | 891,322,449.27 |
(2) Allowances established or reversed in the current period
Allowances in the current period:
Unit: RMB yuan
| Type | Opening balance | Change in the current period | Closing balance | |||
| Established | Reversed | Written off | Others | |||
| Allowances for doubtful accounts receivable | 32,412,150.71 | 2,942,367.40 | 660,547.54 | 1,565,885.32 | 36,259,855.89 | |
| Total | 32,412,150.71 | 2,942,367.40 | 660,547.54 | 1,565,885.32 | 36,259,855.89 | |
Of which, substantial reversed amounts of allowances in the current period:
Unit: RMB yuan
| Entity | Reversed amount | Way of recovery |
(3) Top five entities with respect to accounts receivable
Unit: RMB yuan
| Entity | Closing balance of accounts receivable | As a % of the closing balance of total accounts receivable | Closing balance of allowances |
| Customer 6 | 64,092,216.35 | 7.19% | 2,532,696.34 |
| Customer 7 | 69,736,994.94 | 7.82% | 589,294.41 |
| Customer 8 | 45,109,631.03 | 5.06% | 721,282.73 |
| Customer 9 | 36,499,400.00 | 4.09% | 1,824,970.00 |
| Customer 10 | 27,607,064.73 | 3.10% | 232,363.81 |
| Total | 243,045,307.05 | 27.26% |
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5. Receivables financing
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Notes receivable | 20,326,332.51 | 15,305,668.26 |
| Total | 20,326,332.51 | 15,305,668.26 |
Changes in receivables financing and in their fair value in the current period:
□ Applicable ? Not applicable
Where allowances for doubtful receivables financing are established using the general model of expected credit loss, please discloseallowance information as other receivables:
□ Applicable ? Not applicable
Other information:
Notes receivable that were endorsed or discounted but undue on the balance sheet date at the period-end:
| Item | Closing balance | Opening balance | ||
| Derecognized | Un-derecognized | Derecognized | Un-derecognized | |
| Bank acceptance notes | 19,068,863.29 | 37,725,855.84 | ||
6. Prepayments
(1) Prepayments by aging
Unit: RMB yuan
| Aging | Closing balance | Opening balance | ||
| Amount | Percentage | Amount | Percentage | |
| Within 1 year | 69,788,935.94 | 93.82% | 64,413,090.83 | 99.18% |
| 1-2 years | 4,103,601.25 | 5.52% | 275,315.22 | 0.42% |
| 2-3 years | 237,805.03 | 0.32% | 31,175.83 | 0.05% |
| Over 3 years | 256,921.79 | 0.34% | 227,319.38 | 0.35% |
| Total | 74,387,264.01 | 64,946,901.26 | ||
Reason for outstanding prepayments that are over 1 year and of a substantial amount:
(2) Top five entities with respect to prepayments
The closing balance of total prepayments to the top five entities amounted to RMB34,815,361.37, accounting for 46.80% of theclosing balance of the total prepayments.
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7. Other receivables
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Other receivables | 45,591,048.13 | 83,996,902.82 |
| Total | 45,591,048.13 | 83,996,902.82 |
(1) Other receivables
1) Other receivables by nature
Unit: RMB yuan
| Nature | Closing gross amount | Opening gross amount |
| Amount for transfer of equity investments | 39,461,356.50 | |
| Prepaid service charges | 15,169,803.93 | 12,446,401.37 |
| Security deposits | 10,395,326.86 | 8,340,341.53 |
| Export tax refunds | 8,396,593.71 | 1,294,466.80 |
| Employee loans and petty cash | 4,162,336.38 | 3,388,217.50 |
| Others | 11,506,158.17 | 22,954,593.56 |
| Total | 49,630,219.05 | 87,885,377.26 |
2) Allowances
Unit: RMB yuan
| Allowances | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit loss | Lifetime expected credit loss (without credit impairment) | Lifetime expected credit loss (with credit impairment) | ||
| Balance as at 1 January 2023 | 3,388,474.44 | 500,000.00 | 3,888,474.44 | |
| Balance as at 1 January 2023 in the current period | ||||
| Reversed in the current period | 5,293.40 | 5,293.40 | ||
| Other changes | 155,989.88 | 155,989.88 | ||
| Balance as at 30 June 2023 | 3,539,170.92 | 500,000.00 | 4,039,170.92 |
Balances with significant changes in loss allowances in the current period:
□ Applicable ? Not applicable
By aging:
Unit: RMB yuan
| Aging | Closing balance |
| Within 1 year (inclusive) | 34,600,494.81 |
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| 1-2 years | 8,830,473.38 |
| 2-3 years | 2,304,443.12 |
| Over 3 years | 3,894,807.74 |
| 3-4 years | 2,260,317.33 |
| 4-5 years | 400,846.87 |
| Over 5 years | 1,233,643.54 |
| Total | 49,630,219.05 |
3) Allowances established or reversed in the current period
Allowances in the current period:
Unit: RMB yuan
| Type | Opening balance | Change in the current period | Closing balance | |||
| Established | Reversed | Written off | Others | |||
| Allowances for doubtful other receivables | 3,888,474.44 | 5,293.40 | 155,989.88 | 4,039,170.92 | ||
| Total | 3,888,474.44 | 5,293.40 | 155,989.88 | 4,039,170.92 | ||
Of which, substantial reversed amounts of allowances in the current period:
Unit: RMB yuan
| Entity | Reversed amount | Way of recovery |
4) Top five entities with respect to other receivables
Unit: RMB yuan
| Entity | Nature of other receivable | Closing balance | Aging | As a % of the closing balance of total other receivables | Closing balance of allowances for doubtful other receivables |
| Entity 1 | Export tax refunds | 6,076,643.65 | Within 1 year | 12.24% | |
| Entity 2 | Insurance amounts | 2,782,955.03 | Within 1 year | 5.61% | |
| Entity 3 | Security deposits | 2,675,000.00 | Within 1 year, or 1-2 years | 5.39% | |
| Entity 4 | Product warranties | 1,630,000.00 | 2-3 years | 3.28% | |
| Entity 5 | Prepayments for service | 1,507,611.80 | Within 1 year | 3.04% | |
| Total | 14,672,210.48 | 29.56% |
8. Inventories
Is the Company subject to the disclosure requirements for the real estate industry?No.
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(1) Inventories by type
Unit: RMB yuan
| Item | Closing balance | Opening balance | ||||
| Gross amount | Inventory valuation allowances or impairment allowances for contract performance costs | Carrying amount | Gross amount | Inventory valuation allowances or impairment allowances for contract performance costs | Carrying amount | |
| Raw materials | 648,704,441.77 | 20,498,207.94 | 628,206,233.83 | 582,372,253.76 | 18,010,104.87 | 564,362,148.89 |
| Work-in-progress | 641,921,000.30 | 20,131,438.10 | 621,789,562.20 | 368,570,631.39 | 19,879,129.16 | 348,691,502.23 |
| Finished goods | 98,633,210.36 | 5,211,456.17 | 93,421,754.19 | 108,150,704.87 | 4,681,895.11 | 103,468,809.76 |
| Product deliveries | 24,434,627.46 | 24,434,627.46 | 35,190,253.35 | 35,190,253.35 | ||
| Semi-finished goods | 21,571,026.56 | 321,564.99 | 21,249,461.57 | 28,847,199.70 | 787,613.38 | 28,059,586.32 |
| Materials consigned for processing | 1,628,915.20 | 1,628,915.20 | 13,209,583.96 | 13,209,583.96 | ||
| Total | 1,436,893,221.65 | 46,162,667.20 | 1,390,730,554.45 | 1,136,340,627.03 | 43,358,742.52 | 1,092,981,884.51 |
(2) Inventory valuation allowances and impairment allowances for contract performance costs
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Established | Others | Reversed or written off | Others | |||
| Raw materials | 18,010,104.87 | 4,544,270.17 | 863,597.91 | 2,919,765.01 | 20,498,207.94 | |
| Work-in-progress | 19,879,129.16 | 268,136.03 | 15,827.09 | 20,131,438.10 | ||
| Finished goods | 4,681,895.11 | 1,117,820.74 | 588,259.68 | 5,211,456.17 | ||
| Semi-finished goods | 787,613.38 | 361,427.48 | 827,475.87 | 321,564.99 | ||
| Total | 43,358,742.52 | 6,023,518.39 | 1,131,733.94 | 4,351,327.65 | 46,162,667.20 | |
9. Contract assets
Unit: RMB yuan
| Item | Closing balance | Opening balance | ||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |
| Contract assets | 52,230,695.95 | 2,265,604.22 | 49,965,091.73 | 67,018,545.44 | 1,928,694.23 | 65,089,851.21 |
| Total | 52,230,695.95 | 2,265,604.22 | 49,965,091.73 | 67,018,545.44 | 1,928,694.23 | 65,089,851.21 |
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Significant changes in the carrying amounts of contract assets in the current period and reasons:
Unit: RMB yuan
| Item | Change | Reason for change |
Where impairment allowances for contract assets are established using the general model of expected credit loss, please discloseallowance information as other receivables:
□ Applicable ? Not applicable
Impairment allowances for contract assets in the current period:
Unit: RMB yuan
| Item | Established in the current period | Reversed in the current period | Written off/charged off in the current period | Reason |
| Impairment allowances for contract assets | 336,909.99 | |||
| Total | 336,909.99 |
10. Current portion of non-current assets
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Current portion of long-term receivables | 1,320,000.00 | 1,463,750.00 |
| Current portion of long-term security deposits | 315,375,000.00 | 310,300,000.00 |
| Total | 316,695,000.00 | 311,763,750.00 |
Substantial debt investments/other debt investments:
Unit: RMB yuan
| Debt investment | Closing balance | Opening balance | ||||||
| Face value | Stated interest rate | Effective interest rate | Due date | Face value | Stated interest rate | Effective interest rate | Due date | |
11. Other current assets
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Input value-added tax (VAT) to be deducted | 5,086,056.41 | 15,469,529.33 |
| Overpaid VAT | 58,022,281.17 | 23,483,390.49 |
| Tax repayments | 6,565,345.39 | 13,582,808.39 |
| Others | 13,159,886.94 | 8,834,723.10 |
| Total | 82,833,569.91 | 61,370,451.31 |
12. Other debt investments
Unit: RMB yuan
| Item | Opening balance | Accrued interest | Change in fair value | Closing balance | Cost | Cumulative fair value | Loss allowances | Remark |
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| in the current period | change | cumulatively recognized in other comprehensive income | ||||||
| Large-denomination certificate of deposit | 82,273.97 | 10,082,273.97 | 10,000,000.00 | |||||
| Total | 82,273.97 | 10,082,273.97 | 10,000,000.00 |
Substantial other debt investments:
Unit: RMB yuan
| Other debt investment | Closing balance | Opening balance | ||||||
| Face value | Stated interest rate | Effective interest rate | Due date | Face value | Stated interest rate | Effective interest rate | Due date | |
Impairment allowances established:
Unit: RMB yuan
| Allowances | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit loss | Lifetime expected credit loss (without credit impairment) | Lifetime expected credit loss (with credit impairment) | ||
| Balance as at 1 January 2023 in the current period |
Balances with significant changes in loss allowances in the current period:
□ Applicable ? Not applicable
13. Long-term receivables
(1) Particulars about long-term receivables
Unit: RMB yuan
| Item | Closing balance | Opening balance | Range of discount rates | ||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | ||
| Amounts receivable by installment for selling goods | 645,000.00 | 5,289.00 | 639,711.00 | 1,305,000.00 | 10,701.00 | 1,294,299.00 | |
| Total | 645,000.00 | 5,289.00 | 639,711.00 | 1,305,000.00 | 10,701.00 | 1,294,299.00 | |
Allowances:
Unit: RMB yuan
Page 145 of 191
| Allowances | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit loss | Lifetime expected credit loss (without credit impairment) | Lifetime expected credit loss (with credit impairment) | ||
| Balance as at 1 January 2023 | 10,701.00 | 10,701.00 | ||
| Balance as at 1 January 2023 in the current period | ||||
| Reversed in the current period | 5,412.00 | 5,412.00 | ||
| Balance as at 30 June 2023 | 5,289.00 | 5,289.00 |
Balances with significant changes in loss allowances in the current period:
□ Applicable ? Not applicable
14. Long-term equity investments
Unit: RMB yuan
| Investee | Opening balance (carrying amount) | Change in the current period | Closing balance (carrying amount) | Closing balance of impairment allowance | |||||||
| Additional investment | Reduced investment | Return on investment under the equity method | Adjustment to other comprehensive income | Other equity changes | Declared cash dividends or profit | Impairment allowance | Others | ||||
| 1. Joint ventures | |||||||||||
| 2. Associates | |||||||||||
| Jaten Robot | 86,533,484.12 | -1,781,870.58 | 84,751,613.54 | ||||||||
| Talleres Tapre | 1,707,227.29 | 104,464.04 | 1,811,691.33 | ||||||||
| Nanjing Profeta | 7,111,970.11 | -551,079.22 | 6,560,890.89 | ||||||||
| Subtotal | 95,352,681.52 | -2,332,949.80 | 104,464.04 | 93,124,195.76 | |||||||
| Total | 95,352,681.52 | -2,332,949.80 | 104,464.04 | 93,124,195.76 | |||||||
15. Other non-current financial assets
Unit: RMB yuan
Page 146 of 191
| Item | Closing balance | Opening balance |
| Financial assets at fair value through profit or loss | 382,123,969.27 | 334,449,603.33 |
| Total | 382,123,969.27 | 334,449,603.33 |
16. Fixed assets
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Fixed assets | 566,967,597.48 | 570,200,113.79 |
| Disposal of fixed assets | 70,796.46 | |
| Total | 567,038,393.94 | 570,200,113.79 |
(1) Particulars about fixed assets
Unit: RMB yuan
| Item | Buildings and constructions | Machinery | Transportation equipment | Other equipment | Total |
| I. Gross amount | |||||
| 1. Opening balance | 595,767,164.77 | 495,941,700.77 | 35,181,776.36 | 65,440,308.96 | 1,192,330,950.86 |
| 2. Increase in the current period | 12,107,386.30 | 27,215,634.83 | 3,392,911.14 | 3,494,565.76 | 46,210,498.03 |
| (1) Purchases | 671,212.49 | 4,710,398.48 | 3,091,513.75 | 2,700,135.21 | 11,173,259.93 |
| (2) Transfers from construction in progress | 2,763,761.15 | 2,763,761.15 | |||
| (3) Increase in business combination | |||||
| (4) Effect of exchange rate movements | 11,436,173.81 | 19,741,475.20 | 301,397.39 | 794,430.55 | 32,273,476.95 |
| 3. Decrease in the current period | 1,553,341.50 | 1,934,183.07 | 124,465.29 | 3,611,989.86 | |
| (1) Disposal or retirement | 1,553,341.50 | 1,934,183.07 | 124,465.29 | 3,611,989.86 | |
| 4. Closing balance | 607,874,551.07 | 521,603,994.10 | 36,640,504.43 | 68,810,409.43 | 1,234,929,459.03 |
| II. Accumulated depreciation | |||||
| 1. Opening balance | 199,822,190.57 | 364,322,605.23 | 20,295,753.93 | 37,690,287.34 | 622,130,837.07 |
| 2. Increase in the current period | 13,994,104.62 | 27,953,703.23 | 1,960,488.64 | 4,766,485.12 | 48,674,781.61 |
| (1) Provision | 7,699,233.64 | 10,722,918.49 | 1,829,891.28 | 4,347,477.56 | 24,599,520.97 |
Page 147 of 191
| (2) Effect of exchange rate movements | 6,294,870.98 | 17,230,784.74 | 130,597.36 | 419,007.56 | 24,075,260.64 |
| 3. Decrease in the current period | 855,948.86 | 1,875,982.15 | 111,826.12 | 2,843,757.13 | |
| (1) Disposal or retirement | 855,948.86 | 1,875,982.15 | 111,826.12 | 2,843,757.13 | |
| 4. Closing balance | 213,816,295.19 | 391,420,359.60 | 20,380,260.42 | 42,344,946.34 | 667,961,861.55 |
| III. Impairment allowances | |||||
| 1. Opening balance | |||||
| 2. Increase in the current period | |||||
| (1) Established | |||||
| 3. Decrease in the current period | |||||
| (1) Disposal or retirement | |||||
| 4. Closing balance | |||||
| IV. Carrying amount | |||||
| 1. Closing carrying amount | 394,058,255.88 | 130,183,634.50 | 16,260,244.01 | 26,465,463.09 | 566,967,597.48 |
| 2. Opening carrying amount | 395,944,974.20 | 131,619,095.54 | 14,886,022.43 | 27,750,021.62 | 570,200,113.79 |
17. Construction in progress
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Construction in progress | 124,402,838.73 | 38,904,537.85 |
| Total | 124,402,838.73 | 38,904,537.85 |
(1) Particulars about construction in progress
Unit: RMB yuan
| Item | Closing balance | Opening balance | ||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |
| Plants and buildings | 103,348,609.79 | 103,348,609.79 | 36,216,546.63 | 36,216,546.63 | ||
Page 148 of 191
| Equipment installation | 21,054,228.94 | 21,054,228.94 | 2,687,991.22 | 2,687,991.22 | ||
| Total | 124,402,838.73 | 124,402,838.73 | 38,904,537.85 | 38,904,537.85 |
(2) Changes in substantial construction in progress in the current period
Unit: RMB yuan
| Project | Budget | Opening balance | Increase in the current period | Transferred to fixed assets in the current period | Other decreases in the current period | Closing balance | Cumulative project investment as a % of the budget | Project progress | Cumulative capitalized interest | Of which: Capitalized interest in the current period | Interest capitalization rate for the current period | Funding source |
| Tiru?aAsia - plant construction | 50,000,000.00 | 32,851,532.05 | 12,954,575.37 | 45,806,107.42 | 91.61% | Other | ||||||
| FosberAsia -Songgang plant construction | 171,547,000.00 | 1,673,461.65 | 451,937.95 | 2,125,399.60 | 1.24% | Other | ||||||
| Parsun Power -equipment installation | 54,800,000.00 | 1,675,957.18 | 4,003,982.31 | 1,719,762.49 | 3,960,177.00 | 46.04% | Other | |||||
| Parsun Power - plant construction | 348,500,000.00 | 1,570,900.95 | 53,371,127.84 | 54,942,028.79 | 15.76% | Other | ||||||
| FosberGroup - equipment installation | 32,479,371.46 | 1,012,034.04 | 16,239,685.73 | 997,447.72 | -839,779.89 | 17,094,051.94 | 53.12% | Other | ||||
| Others | 120,651.98 | 377,585.11 | 46,550.94 | -23,387.83 | 475,073.98 | Other | ||||||
| Total | 657,326,371.46 | 38,904,537.85 | 87,398,894.31 | 2,763,761.15 | -863,167.72 | 124,402,838.73 |
Page 149 of 191
18. Right-of-use assets
Unit: RMB yuan
| Item | Buildings and constructions | Transportation equipment | Total |
| I. Gross amount | |||
| 1. Opening balance | 107,881,926.02 | 16,228,783.97 | 124,110,709.99 |
| 2. Increase in the current period | 9,787,371.82 | 993,023.41 | 10,780,395.23 |
| (1) Increase in the current period | 5,705,476.32 | 5,705,476.32 | |
| (2) Effect of exchange rate movements | 4,081,895.50 | 993,023.41 | 5,074,918.91 |
| 3. Decrease in the current period | 10,808,589.18 | 10,808,589.18 | |
| (1) Disposal | 10,808,589.18 | 10,808,589.18 | |
| 4. Closing balance | 106,860,708.66 | 17,221,807.38 | 124,082,516.04 |
| II. Accumulated depreciation | |||
| 1. Opening balance | 29,083,848.03 | 8,577,883.94 | 37,661,731.97 |
| 2. Increase in the current period | 9,741,745.66 | 2,520,446.46 | 12,262,192.12 |
| (1) Established | 8,502,457.99 | 1,956,146.47 | 10,458,604.46 |
| (2) Effect of exchange rate movements | 1,239,287.67 | 564,299.99 | 1,803,587.66 |
| 3. Decrease in the current period | 10,808,589.17 | 10,808,589.17 | |
| (1) Disposal | 10,808,589.17 | 10,808,589.17 | |
| 4. Closing balance | 28,017,004.52 | 11,098,330.40 | 39,115,334.92 |
| III. Impairment allowances | |||
| 1. Opening balance | |||
| 2. Increase in the current period | |||
| (1) Established | |||
| 3. Decrease in the current period | |||
| (1) Disposal | |||
| 4. Closing balance | |||
| IV. Carrying amount | |||
| 1. Closing carrying amount | 78,843,704.14 | 6,123,476.98 | 84,967,181.12 |
| 2. Opening carrying amount | 78,798,077.99 | 7,650,900.03 | 86,448,978.02 |
Other information:
Page 150 of 191
19. Intangible assets
(1) Particulars about intangible assets
Unit: RMB yuan
| Item | Land use rights | Patent rights | Non-patented technologies | Land ownership | Trademarks and software | Total |
| I. Gross amount | ||||||
| 1. Opening balance | 177,783,228.49 | 112,511,121.61 | 15,881,320.90 | 187,064,046.11 | 493,239,717.11 | |
| 2. Increase in the current period | 5,732,091.20 | 971,762.51 | 13,896,128.71 | 20,599,982.42 | ||
| (1) Purchases | 3,356,170.05 | 3,356,170.05 | ||||
| (2) Internal R&D | ||||||
| (3) Increase in business combination | ||||||
| (4) Effect of exchange rate movements | 5,732,091.20 | 971,762.51 | 10,539,958.66 | 17,243,812.37 | ||
| 3. Decrease in the current period | 17,960.16 | 345,733.08 | 363,693.24 | |||
| (1) Disposal | 17,960.16 | 345,733.08 | 363,693.24 | |||
| 4. Closing balance | 177,783,228.49 | 118,225,252.65 | 16,853,083.41 | 200,614,441.74 | 513,476,006.29 | |
| II. Accumulated amortization | ||||||
| 1. Opening balance | 24,758,265.85 | 66,420,930.77 | 33,957,125.38 | 125,136,322.00 | ||
| 2. Increase in the current period | 2,187,387.60 | 10,077,678.20 | 6,039,502.05 | 18,304,567.85 | ||
| (1) Provision | 1,928,010.74 | 5,877,817.35 | 4,291,763.43 | 12,097,591.52 | ||
| (2) Effect of exchange rate movements | 259,376.86 | 4,199,860.85 | 1,747,738.62 | 6,206,976.33 | ||
| 3. Decrease in the current period | 17,960.16 | 345,733.08 | 363,693.24 | |||
| (1) Disposal | 17,960.16 | 345,733.08 | 363,693.24 | |||
| 4. Closing balance | 26,945,653.45 | 76,480,648.81 | 39,650,894.35 | 143,077,196.61 | ||
| III. Impairment allowances |
Page 151 of 191
| 1. Opening balance | ||||||
| 2. Increase in the current period | ||||||
| (1) Established | ||||||
| 3. Decrease in the current period | ||||||
| (1) Disposal | ||||||
| 4. Closing balance | ||||||
| IV. Carrying amount | ||||||
| 1. Closing carrying amount | 150,837,575.04 | 41,725,698.80 | 16,853,083.41 | 160,982,452.43 | 370,398,809.68 | |
| 2. Opening carrying amount | 153,024,962.64 | 46,090,190.84 | 15,881,320.90 | 153,106,920.73 | 368,103,395.11 |
As at the period-end, intangible assets arising from internal R&D accounted for 0.00% of the carrying amount of total intangible assets.
20. Research and development expenditures
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||||
| Internal research and development expenditures | Other | Recognized as intangible assets | Transferred to profit or loss | |||||
| Data middle platform project | 108,069.78 | 108,069.78 | ||||||
| Business middle platform project | 2,874,316.59 | 2,874,316.59 | ||||||
| IoT platform project | 719,843.39 | 719,843.39 | ||||||
| Total | 3,702,229.76 | 3,702,229.76 | ||||||
Other information:
Page 152 of 191
21. Goodwill
(1) Gross amounts of goodwill
Unit: RMB yuan
| Investee or item generating goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Generated due to business combination | Effect of exchange rate movements | Disposal | Effect of exchange rate movements | |||
| Parsun Power | 208,031,946.10 | 208,031,946.10 | ||||
| EDF | 65,167,148.84 | 3,987,514.18 | 69,154,663.02 | |||
| Fosber Group | 152,396,437.31 | 9,324,989.14 | 161,721,426.45 | |||
| QCorr | 12,921,351.12 | 790,644.85 | 13,711,995.97 | |||
| Wonder Digital | 119,422,168.56 | 119,422,168.56 | ||||
| Total | 557,939,051.93 | 14,103,148.17 | 0.00 | 572,042,200.10 | ||
(2) Impairment allowances for goodwill
Unit: RMB yuan
| Investee or item generating goodwill | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | ||
| Established | Effect of exchange rate movements | Disposal | Effect of exchange rate movements | |||
| Parsun Power | 61,855,054.35 | 61,855,054.35 | ||||
| EDF | 65,167,148.84 | 3,987,514.18 | 69,154,663.02 | |||
| Total | 127,022,203.19 | 3,987,514.18 | 0.00 | 131,009,717.37 | ||
22. Long-term prepaid expenses
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Amortization in the current period | Other decreases | Closing balance |
| Plant decoration expenditures | 3,387,139.73 | 1,166,808.63 | 2,220,331.10 | ||
| Expenditures on plant supporting engineering | 2,117,612.73 | 197,757.80 | 325,578.81 | 1,989,791.72 | |
| Internet access for offices | 811,214.14 | 269,255.00 | 198,233.67 | 882,235.47 | |
| Amortization of lease assets | 2,172,204.26 | 2,172,204.26 | |||
| Office decoration expenditures | 5,324,776.48 | 1,963,248.26 | 2,236,528.52 | 5,051,496.22 | |
| Amortization of moulds | 2,305,043.35 | 16,091,006.20 | 3,412,242.27 | 14,983,807.28 | |
| CE certification fee | 617,562.29 | 122,641.51 | 141,070.77 | 599,133.03 | |
| Total | 16,735,552.98 | 18,643,908.77 | 7,480,462.67 | 27,898,999.08 |
Other information:
Page 153 of 191
23. Deferred tax assets/liabilities
(1) Deferred tax assets before offsetting
Unit: RMB yuan
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Asset impairment allowances | 37,845,410.84 | 7,068,590.42 | 39,530,769.25 | 7,299,859.61 |
| Internal unrealized profit | 32,457,065.38 | 7,789,695.70 | 29,017,229.54 | 6,964,135.09 |
| Deductible loss | 1,123,232,276.20 | 171,792,449.45 | 1,115,356,405.03 | 170,790,680.98 |
| Credit impairment allowances | 37,199,811.80 | 9,611,321.41 | 38,382,165.54 | 8,119,663.58 |
| Deferred income | 65,484,104.34 | 14,769,806.09 | 63,619,447.75 | 14,092,864.85 |
| Provisions—after-sales maintenance service charges | 119,419,681.17 | 29,400,813.20 | 110,904,039.46 | 27,965,656.80 |
| Accrued expenses | 32,088,530.10 | 4,029,683.79 | 29,263,236.96 | 4,659,406.75 |
| Equity incentives | 16,058,535.65 | 2,579,856.40 | 59,507,278.84 | 9,165,630.00 |
| Financial liabilities at fair value through profit or loss | 6,039,473.81 | 1,621,745.76 | ||
| Others | 115,323,806.70 | 21,212,870.89 | 121,057,339.07 | 22,623,110.51 |
| Total | 1,585,148,695.99 | 269,876,833.11 | 1,606,637,911.44 | 271,681,008.17 |
(2) Deferred tax liabilities before offsetting
Unit: RMB yuan
| Item | Closing balance | Opening balance | ||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | |
| Increase in value in asset valuation in business combination not involving entities under common control | 47,439,852.39 | 8,448,417.73 | 49,738,790.86 | 8,867,879.18 |
| Depreciation difference of fixed assets | 44,170,160.17 | 8,761,955.91 | 26,455,083.92 | 5,468,413.09 |
| Financial assets at fair value through profit or loss | 21,098,870.19 | 3,750,525.42 | ||
| Others | 62,565,611.40 | 13,231,331.68 | 79,681,187.34 | 15,877,516.64 |
| Total | 154,175,623.96 | 30,441,705.32 | 176,973,932.31 | 33,964,334.33 |
Page 154 of 191
(3) Net balances of deferred tax assets/liabilities after offsetting
Unit: RMB yuan
| Item | Offset amount between deferred tax assets and liabilities as at the period-end | Closing balance of deferred tax assets or liabilities after offsetting | Offset amount between deferred tax assets and liabilities as at the period-begin | Opening balance of deferred tax assets or liabilities after offsetting |
| Deferred tax assets | 23,742,796.34 | 246,134,036.77 | 27,138,883.56 | 244,542,124.61 |
| Deferred tax liabilities | 23,742,796.34 | 6,698,908.98 | 27,138,883.56 | 6,825,450.77 |
(4) Breakdown of deferred tax assets unrecognized
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 10,850,192.71 | 9,196,588.97 |
| Deductible losses | 96,133,358.07 | 90,723,784.03 |
| Total | 106,983,550.78 | 99,920,373.00 |
(5) Deductible losses not recognized as deferred tax assets will expire as follows
Unit: RMB yuan
| Year | Closing amount | Opening amount | Remark |
| 2023 | 13,100,636.61 | 11,447,032.87 | |
| 2024 | 493,437.20 | 493,437.20 | |
| 2025 | 13,984,168.64 | 13,984,168.64 | |
| 2026 | 12,841,957.31 | 12,841,957.31 | |
| 2027 | 60,775,301.88 | 61,153,776.98 | |
| 2028 | 5,788,049.14 | ||
| Total | 106,983,550.78 | 99,920,373.00 |
24. Other non-current assets
Unit: RMB yuan
| Item | Closing balance | Opening balance | ||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |
| Prepayments for long-lived assets | 61,310,406.98 | 61,310,406.98 | 45,320,004.82 | 45,320,004.82 | ||
| Total | 61,310,406.98 | 61,310,406.98 | 45,320,004.82 | 45,320,004.82 | ||
25. Short-term borrowings
(1) Short-term borrowings by type
Unit: RMB yuan
| Item | Closing balance | Opening balance |
Page 155 of 191
| Guaranteed loan | 261,166,563.38 | 2,800,000.00 |
| Credit loan | 96,975,685.49 | 39,015,129.24 |
| Total | 358,142,248.87 | 41,815,129.24 |
Description of types of short-term borrowings:
On 30 June 2023, the annual interest rates of the loans in the table above ranged from 1.9% to 6.22% (31 December 2022: 1.4%-
4.4%).
On 30 June 2023 and 31 December 2022, the Group had no overdue loans.
26. Financial liabilities held for trading
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Financial liabilities held for trading | 46,357,405.15 | 57,022,555.58 |
| Of which: | ||
| Non-controlling interests put options | 46,357,405.15 | 57,022,555.58 |
| Of which: | ||
| Total | 46,357,405.15 | 57,022,555.58 |
27. Notes payable
Unit: RMB yuan
| Type | Closing balance | Opening balance |
| Bank acceptance notes | 142,436,565.07 | 149,918,253.31 |
| Total | 142,436,565.07 | 149,918,253.31 |
As at the period-end, notes payable that were due but unpaid totaled RMB0.00.
28. Accounts payable
(1) Breakdown of accounts payable
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Purchases of inventories | 817,648,587.07 | 747,704,598.49 |
| Others | 1,990,918.54 | 614,962.72 |
| Total | 819,639,505.61 | 748,319,561.21 |
29. Contract liabilities
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Contract liabilities | 830,600,374.59 | 692,567,968.60 |
| Total | 830,600,374.59 | 692,567,968.60 |
Page 156 of 191
30. Employee benefits payable
(1) Breakdown of employee benefits payable
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| I. Short-term benefits | 114,133,461.02 | 357,777,587.00 | 348,426,165.41 | 123,484,882.61 |
| II. Retirement benefits-defined contribution schemes | 9,561,867.29 | 47,004,845.11 | 44,970,652.69 | 11,596,059.71 |
| Total | 123,695,328.31 | 404,782,432.11 | 393,396,818.10 | 135,080,942.32 |
(2) Breakdown of short-term benefits
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Salaries, bonuses, allowances, and subsidies | 108,414,374.41 | 313,148,488.05 | 306,472,944.66 | 115,089,917.80 |
| 2. Employee welfare | 4,716,503.25 | 19,588,246.13 | 16,758,669.11 | 7,546,080.27 |
| 3. Social security contributions | 554,100.71 | 21,955,991.81 | 22,013,803.44 | 496,289.08 |
| Including: medical insurance | 529,159.87 | 14,270,196.99 | 14,572,399.68 | 226,957.18 |
| Work injury insurance | 23,264.84 | 7,395,347.12 | 7,164,665.88 | 253,946.08 |
| Maternity insurance | 1,676.00 | 290,447.70 | 276,737.88 | 15,385.82 |
| 4. Housing funds | 22,348.00 | 2,468,898.17 | 2,459,182.17 | 32,064.00 |
| 5. Labour union funds and employee education funds | 426,134.65 | 615,962.84 | 721,566.03 | 320,531.46 |
| Total | 114,133,461.02 | 357,777,587.00 | 348,426,165.41 | 123,484,882.61 |
(3) Breakdown of defined contribution schemes
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| 1. Basic endowment insurance | 9,553,228.48 | 46,607,110.76 | 44,587,135.83 | 11,573,203.41 |
| 2. Unemployment insurance | 8,638.81 | 397,734.35 | 383,516.86 | 22,856.30 |
| Total | 9,561,867.29 | 47,004,845.11 | 44,970,652.69 | 11,596,059.71 |
31. Tax payable
Unit: RMB yuan
Page 157 of 191
| Item | Closing balance | Opening balance |
| Value-added tax | 2,927,901.78 | 2,794,718.85 |
| Corporate income tax | 29,894,106.00 | 9,990,213.17 |
| Individual income tax | 14,182,305.95 | 9,978,972.79 |
| City maintenance and construction tax | 346,552.02 | 552,631.31 |
| Education surcharge | 267,291.04 | 411,264.85 |
| Stamp duties | 102,072.97 | 109,070.84 |
| Property tax | 1,565,532.03 | 218,184.92 |
| Land use tax | 275,833.51 | 47,325.67 |
| Others | 7,488.66 | 9,321.30 |
| Total | 49,569,083.96 | 24,111,703.70 |
32. Other payables
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Other payables | 97,794,484.13 | 90,080,142.50 |
| Total | 97,794,484.13 | 90,080,142.50 |
(1) Other payables
1) Other payables by nature
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Accrued expenses | 46,080,083.55 | 36,647,193.30 |
| Repurchase obligation of restricted shares | 6,762,000.00 | 28,440,000.00 |
| Payables for settled lawsuit | 3,319,360.31 | 3,127,963.30 |
| Security deposits | 4,281,642.97 | 4,807,183.50 |
| Payables for equipment and engineering | 25,583,054.92 | 2,753,189.09 |
| Others | 11,768,342.38 | 14,304,613.31 |
| Total | 97,794,484.13 | 90,080,142.50 |
33. Current portion of non-current liabilities
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Current portion of long-term borrowings | 45,517,428.38 | 295,113,556.27 |
| Current portion of lease liabilities | 20,065,847.92 | 20,653,874.99 |
| Total | 65,583,276.30 | 315,767,431.26 |
Page 158 of 191
34. Other current liabilities
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| To-be-output tax | 7,676,610.19 | 4,539,069.11 |
| Endorsed undue notes receivable | 1,449,810.18 | |
| Total | 7,676,610.19 | 5,988,879.29 |
35. Long-term borrowings
(1) Long-term borrowings by type
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Pledge loan | 2,700,594.73 | 2,262,533.40 |
| Collateralized loan | 6,500,000.00 | 7,100,000.00 |
| Guaranteed loan | 44,326,983.24 | 296,130,679.37 |
| Credit loan | 79,302,216.94 | 47,504,838.39 |
| Less: Current portion of long-term borrowings | -45,517,428.38 | -295,113,556.27 |
| Total | 87,312,366.53 | 57,884,494.89 |
Other information, including interest rate ranges:
On 30 June 2023, the annual interest rates of the loans in the table above ranged from 0.0% to 3.05% (31 December 2022: 0.0%-
4.55%).
On 30 June 2023 and 31 December 2022, the Group had no overdue loans.
36. Lease liabilities
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Lease liabilities | 89,561,528.01 | 89,642,986.32 |
| Less: Current portion of non-current liabilities | -20,065,847.92 | -20,653,874.99 |
| Total | 69,495,680.09 | 68,989,111.33 |
37. Long-term employee benefits payable
(1) Long-term employee benefits payable
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| I. Retirement benefits- net liabilities of defined benefit schemes | 13,732,297.46 | 13,179,944.17 |
| Total | 13,732,297.46 | 13,179,944.17 |
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38. Provisions
Unit: RMB yuan
| Item | Closing balance | Opening balance | Reason for provision |
| Product quality warranty | 123,047,978.99 | 108,406,154.83 | |
| Others | 9,787,784.10 | 10,539,798.95 | |
| Total | 132,835,763.09 | 118,945,953.78 |
39. Deferred income
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance | Reason for deferred income |
| Government grants | 11,073,651.66 | 558,330.00 | 10,515,321.66 | ||
| Total | 11,073,651.66 | 558,330.00 | 10,515,321.66 |
Deferred income associated with government grants:
Unit: RMB yuan
| Liabilities | Opening balance | New government grants in the current period | Amount recognized in non-operating income in the current period | Amount recognized in other income in the current period | Amount offsetting costs and expenses in the current period | Other changes | Closing balance | Asset/income-related |
| Special Project Funds for Industrial Revitalisation and Technological Transformation (4 Mitsubishi machining centers and 3 vertical machining centers) | 11,073,651.66 | 558,330.00 | 10,515,321.66 | Asset-related |
40. Other non-current liabilities
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Non-controlling put options | 133,412,683.20 | 132,077,339.29 |
| Others | 7,230,043.48 | 4,318,953.26 |
| Total | 140,642,726.68 | 136,396,292.55 |
Page 160 of 191
Other information:
Non-controlling put options involved the non-controlling interests of QCorr and Suzhou Parsun.
41. Share capital
Unit: RMB yuan
| Opening balance | Increase/decrease in the current period | Closing balance | |||||
| New issues | Shares as dividend converted from profit | Shares as dividend converted from capital surplus | Others | Subtotal | |||
| Total share capital | 1,241,106,400.00 | -128,000.00 | -128,000.00 | 1,240,978,400.00 | |||
Other information:
In the current period, the Company retired a total of 128,000 shares, reducing its total share capital from 1,241,106,400 shares to1,240,978,400 shares.
42. Capital surplus
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Capital premium (share premium) | 2,848,837,575.96 | 74,962,290.00 | 77,493,102.98 | 2,846,306,762.98 |
| Other capital surplus | 98,426,267.57 | 20,566,434.45 | 72,737,600.00 | 46,255,102.02 |
| Total | 2,947,263,843.53 | 95,528,724.45 | 150,230,702.98 | 2,892,561,865.00 |
Other information, including changes in the current period and reasons for changes:
(1) The share-based payments by the Group in the period were recorded in shareholders’ equity, increasing capital surplus byRMB20,566,434.45.
(2) The first batch of share-based payments of 2020 was due and unlocked, resulting in a transfer of RMB72,737,600.00 fromother capital surplus to share premium. The corresponding restricted share repurchase obligations were terminated, reducing capitalsurplus by RMB77,018,861.05.
(3) The share repurchase-related commissions and service charges incurred by the Company in the current period reduced capitalsurplus by RMB16,774.91.
(4) A total of 128,000 shares were retired in the current period (as stated in Item 41 under Note VII), reducing capital surplus byRMB457,467.02.
(5) The Company acquired a 2% interest in Fosber Asia in the current period, increasing capital surplus by RMB2,224,690.00.
43. Treasury shares
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Share repurchase | 240,255,502.45 | 69,781,543.40 | 99,154,328.07 | 210,882,717.78 |
| Total | 240,255,502.45 | 69,781,543.40 | 99,154,328.07 | 210,882,717.78 |
Page 161 of 191
Other information, including changes in the current period and reasons for changes:
The increase in treasury shares was driven by the share repurchases of the Company in the current period, while the decrease intreasury shares was mainly due to the share retirement (as stated in Item 41 under Note VII) and the unlocking of due share-basedpayments (as stated in Item 42 under Note VII) in the current period.
44. Other comprehensive income
Unit: RMB yuan
| Item | Opening balance | Amount generated in the current period | Closing balance | |||||
| Amount before income tax generated in the current period | Less: amount previously recognized in other comprehensive income and currently transferred to profit or loss | Less: amount previously recognized in other comprehensive income and currently transferred to retained earnings | Less: Income tax expense | After-tax amount attributable to the parent | After-tax amount attributable to non-controlling interests | |||
| I. Other comprehensive income that will not be reclassified to profit or loss | 1,209,005.83 | -247,369.25 | -247,369.25 | 961,636.58 | ||||
| Of which: Changes due to remeasurement of defined benefit schemes | 1,209,005.83 | -247,369.25 | -247,369.25 | 961,636.58 | ||||
| II. Other comprehensive income that will be reclassified to profit or loss | 25,303,911.24 | 64,084,910.02 | 64,690,510.49 | -605,600.47 | 89,994,421.73 | |||
| Differences arising from the translation of foreign currency- | 25,347,883.31 | 64,084,910.02 | 64,690,510.49 | -605,600.47 | 90,038,393.80 | |||
Page 162 of 191
| denominated financial statements | ||||||||
| Others | -43,972.07 | -43,972.07 | ||||||
| Total other comprehensive income | 26,512,917.07 | 63,837,540.77 | 64,443,141.24 | -605,600.47 | 90,956,058.31 |
Other information, including the reconciliation from the valid portion of gains and losses on cash flow hedges to initial recognitionamounts of hedged items:
45. Special reserve
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Expenses for safety production | 14,488,955.52 | 2,531,949.77 | 1,553,513.41 | 15,467,391.88 |
| Total | 14,488,955.52 | 2,531,949.77 | 1,553,513.41 | 15,467,391.88 |
Other information, including movements in the current period and reasons for the movements:
46. Surplus reserves
Unit: RMB yuan
| Item | Opening balance | Increase in the current period | Decrease in the current period | Closing balance |
| Statutory surplus reserves | 51,830,974.45 | 51,830,974.45 | ||
| Total | 51,830,974.45 | 51,830,974.45 |
Notes to surplus reserves, including movements in the current period and reasons for the movements:
47. Retained earnings
Unit: RMB yuan
| Item | Current period | Last year |
| Opening retained earnings after adjustment | 23,018,722.11 | -424,159,175.27 |
| Add: Net profit attributable to owners of the parent in the current period | 206,149,605.30 | 447,177,897.38 |
| Closing retained earnings | 229,168,327.41 | 23,018,722.11 |
Adjustments to opening retained earnings:
1) Retrospective adjustments as a result of the Accounting Standards for Business Enterprises and related new regulations had aneffect of RMB0.00 on opening retained earnings.
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2) Accounting policy changes had an effect of RMB0.00 on opening retained earnings.
3) Correction of material accounting errors had an effect of RMB0.00 on opening retained earnings.
4) Changes to the consolidation scope as a result of any business combination involving entities under common control had aneffect of RMB0.00 on opening retained earnings.
5) Other adjustments had a combined effect of RMB0.00 on opening retained earnings.
48. Operating revenue and costs
Unit: RMB yuan
| Item | H1 2023 | H1 2022 | ||
| Revenue | Costs | Revenue | Costs | |
| Principal operations | 2,069,224,162.36 | 1,459,261,571.03 | 1,519,070,665.37 | 1,118,118,448.59 |
| Other operations | 13,382,291.36 | 13,368,573.08 | 16,544,968.89 | 15,925,817.63 |
| Total | 2,082,606,453.72 | 1,472,630,144.11 | 1,535,615,634.26 | 1,134,044,266.22 |
Information related to contract performance obligations:
Information related to the transaction price allocated to residual performance obligations:
At the end of the Reporting Period, the amount of revenue corresponding to performance obligations that had been contracted butnot yet performed or fulfilled was RMB830,600,374.59, of which RMB830,600,374.59 is expected to be recognized during 2023-2024,RMB0.00 is expected to be recognized during 2024-2025, and RMB0.00 is expected to be recognized during 2025-2026.
49. Taxes and surcharges
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| City maintenance and construction tax | 2,991,325.36 | 2,403,719.33 |
| Education surcharge | 2,143,432.58 | 1,406,640.94 |
| Property tax | 2,241,139.82 | 2,245,774.79 |
| Land use tax | 311,593.32 | 239,515.20 |
| Vehicle and vessel use tax | 4,782.72 | 7,330.53 |
| Stamp duties | 497,520.52 | 446,737.45 |
| Others | 92,682.58 | 206,705.23 |
| Total | 8,282,476.90 | 6,956,423.47 |
50. Selling expenses
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Commissions and agency fees | 27,156,128.98 | 15,772,413.20 |
| Employee benefits | 33,175,562.84 | 26,129,144.08 |
| Product quality warranties | 35,889,981.39 | 6,100,304.93 |
| Advertising and exhibition expenses | 6,775,903.30 | 2,671,213.87 |
| Travel expenses | 6,013,175.38 | 4,913,530.31 |
| Office expenditures | 1,243,666.65 | 986,366.54 |
| Depreciation and amortization expenses | 1,119,258.60 | 497,868.97 |
Page 164 of 191
| Other expenses | 7,875,003.62 | 5,022,958.76 |
| Total | 119,248,680.76 | 62,093,800.66 |
51. Administrative expenses
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Employee benefits | 92,138,490.27 | 68,012,749.61 |
| Depreciation and amortization expenses | 15,556,417.85 | 16,883,464.07 |
| Intermediary expenses | 11,002,554.66 | 8,308,753.73 |
| Equity incentives | 15,217,575.03 | 13,388,065.57 |
| Office expenditures | 8,539,427.19 | 5,262,273.16 |
| Travel and business entertainment expenses | 8,038,848.68 | 4,778,309.22 |
| Conference expenses | 5,214,777.28 | 4,383,169.39 |
| Rental expenses | 3,258,863.24 | 237,969.84 |
| Property management expenses | 2,098,316.95 | 1,244,898.31 |
| Other expenses | 13,753,393.48 | 10,792,740.01 |
| Total | 174,818,664.63 | 133,292,392.91 |
52. R&D expenses
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Employee benefits | 34,207,002.02 | 31,029,072.46 |
| Depreciation and amortization expenses | 8,169,488.94 | 5,794,158.26 |
| Material expenses | 4,204,251.70 | 2,142,276.51 |
| Technology development expenses | 5,470,265.49 | 195,843.53 |
| Other expenses | 7,878,011.90 | 4,970,874.54 |
| Total | 59,929,020.05 | 44,132,225.30 |
53. Finance costs
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Interest expenses | 5,872,796.16 | 5,668,853.58 |
| Less: Interest income | 12,725,562.50 | 8,770,967.42 |
| Exchange gains and losses | -2,238,057.48 | -7,211,018.81 |
| Others | 4,551,675.11 | 1,456,509.76 |
| Total | -4,539,148.71 | -8,856,622.89 |
54. Other income
Unit: RMB yuan
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| Source of other income | H1 2023 | H1 2022 |
| Government grants | 3,598,750.12 | 6,032,264.36 |
| Handling charges for individual income tax withheld | 741,077.27 | 178,461.16 |
| Total | 4,339,827.39 | 6,210,725.52 |
55. Investment income
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Income from long-term equity investments measured at equity method | -2,332,949.80 | 1,279,980.62 |
| Income from financial assets held for trading | 38,442,145.88 | -1,502,561.59 |
| Total | 36,109,196.08 | -222,580.97 |
56. Gains and losses on changes in fair value
Unit: RMB yuan
| Source of gains and losses on changes in fair value | H1 2023 | H1 2022 |
| Financial assets held for trading | 2,006,095.39 | 24,927,586.43 |
| Total | 2,006,095.39 | 24,927,586.43 |
57. Credit impairment loss
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Loss on doubtful other receivables | 5,293.40 | -3,182.86 |
| Loss on doubtful long-term receivables | 5,412.00 | |
| Loss on doubtful accounts receivable | -2,281,819.86 | 1,793,195.88 |
| Total | -2,271,114.46 | 1,790,013.02 |
58. Asset impairment loss
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| II. Inventory valuation loss and loss on impairments of contract performance costs | -5,276,028.10 | -6,154,706.43 |
| XII. Loss on impairments of contract assets | -336,909.99 | |
| Total | -5,612,938.09 | -6,154,706.43 |
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59. Gains on disposal of assets
Unit: RMB yuan
| Source of gains on disposal of assets | H1 2023 | H1 2022 |
| Loss on disposal of fixed assets | -2,277,157.05 | -233,705.60 |
| Total | -2,277,157.04 | -233,705.60 |
60. Non-operating income
Unit: RMB yuan
| Item | H1 2023 | H1 2022 | Amount recognized in exceptional gains and losses |
| Others | 2,034,810.24 | 1,033,996.47 | 2,034,810.24 |
| Total | 2,034,810.24 | 1,033,996.47 | 2,034,810.24 |
Government grants recognized in profit or loss:
Unit: RMB yuan
| Title | Grantor | Reason | Nature/type | Profit-to-loss/loss-to-profit impact in the period | Special grant or not | H1 2023 | H1 2022 | Asset-related/income-related |
61. Non-operating expenses
Unit: RMB yuan
| Item | H1 2023 | H1 2022 | Amount recognized in exceptional gains and losses |
| Donations | 213,596.37 | 185,431.30 | 213,596.37 |
| Loss on disposal of non-current assets | 10,937.57 | 133,876.71 | 10,937.57 |
| Others | 907,384.54 | 395,321.10 | 907,384.54 |
| Total | 1,131,918.48 | 714,629.11 | 1,131,918.48 |
62. Income tax expenses
(1) Income tax expenses
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Current income tax expenses | 52,891,480.67 | 35,242,804.62 |
| Deferred income tax expenses | 3,338,138.93 | -4,119,080.80 |
| Total | 56,229,619.60 | 31,123,723.82 |
Page 167 of 191
(2) Reconciliation between accounting profit and income tax expenses
Unit: RMB yuan
| Item | H1 2023 |
| Gross profit | 285,433,417.00 |
| Income tax calculated at statutory/applicable tax rates | 42,815,012.46 |
| Different tax rates for specific provinces or enacted by local authority | 13,817,518.12 |
| Adjustment to income tax in previous periods | -3,664,464.33 |
| Income not subject to tax | 6,557,988.16 |
| Costs, expenses, and losses not deductible for tax | 1,880,958.59 |
| Utilization of deductible losses on previously unrecognized deferred tax assets | -5,792,948.80 |
| Effect of deductible temporary differences or deductible losses on current unrecognized deferred tax assets | 4,026,374.73 |
| Over-deduction of the taxable profit amount for R&D | -3,417,412.44 |
| Others | 6,593.11 |
| Income tax expenses | 56,229,619.60 |
Other information:
63. Other comprehensive income
See Item 44 under Note VII.
64. Line items of the cash flow statement
(1) Cash generated from other operating activities
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Current accounts and others | 8,272,973.12 | 10,938,730.56 |
| Interest income | 7,683,458.57 | 2,763,833.20 |
| Government grants | 6,781,497.39 | 5,652,395.52 |
| Letter of guarantee received | 6,419,859.92 | 16,409,067.45 |
| Security deposits | 1,180,000.00 | |
| Total | 30,337,789.00 | 35,764,026.73 |
(2) Cash used in other operating activities
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Selling expenses in cash | 68,986,775.28 | 48,115,660.15 |
| Administrative expenses in cash | 52,432,257.53 | 38,227,480.77 |
Page 168 of 191
| R&D expenses in cash | 10,366,406.31 | 4,950,622.76 |
| Letter of guarantee paid | 6,168,384.35 | 15,780,974.76 |
| Current accounts and others | 10,329,778.09 | 17,375,948.50 |
| Security deposits | 1,082,472.00 | 1,244,225.97 |
| Total | 149,366,073.56 | 125,694,912.91 |
(3) Cash generated from other investing activities
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Performance compensation | 742,251.94 | |
| Total | 742,251.94 |
(4) Cash used in other investing activities
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
(5) Cash generated from other financing activities
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Security deposits received for internal guarantees for external loans | 420,000,000.00 | |
| Security deposits for bank acceptance notes | 39,381,507.99 | 94,712,397.48 |
| Share subscription | 2,650,000.00 | |
| Deposits for loans | 140,000,000.00 | |
| Total | 39,381,507.99 | 657,362,397.48 |
(6) Cash used in other financing activities
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Security deposits paid for internal guarantees for external loans | 107,345,506.70 | 210,000,000.00 |
| Share repurchase | 69,926,318.31 | 215,606,658.62 |
| Security deposits for bank acceptance notes | 22,446,295.25 | 59,353,845.18 |
| Rental and interest paid | 10,779,914.10 | 8,605,212.20 |
| Deposits for loans paid | 17,700,000.00 | |
| Acquisition of non-controlling interests | 10,793,663.53 | |
| Total | 238,991,697.89 | 493,565,716.00 |
Page 169 of 191
65. Supplemental information on statement of cash flows
(1) Supplemental information on statement of cash flows
Unit: RMB yuan
| Supplementary information | H1 2023 | H1 2022 |
| 1. Reconciliation of net profit to net cash generated from/used in investing activities: | ||
| Net profit | 229,203,797.40 | 159,466,124.10 |
| Add: Asset impairment allowances | 5,612,938.09 | 6,154,706.43 |
| Credit impairment loss | 2,271,114.46 | -1,790,013.02 |
| Depreciation of fixed assets, depletion of oil and gas assets, and depreciation of productive living assets | 24,599,520.97 | 22,520,853.53 |
| Depreciation of right-of-use assets | 10,458,604.46 | 8,898,752.32 |
| Amortization of intangible assets | 12,097,591.52 | 11,227,954.62 |
| Amortization of long-term prepaid expenses | 7,480,462.67 | 3,473,882.95 |
| Loss on the disposal of fixed assets, intangible assets, and other long-lived assets (“-” for gain) | 2,277,157.05 | 233,705.60 |
| Loss on the retirement of fixed assets (“-” for gain) | 10,937.57 | 133,876.71 |
| Loss on changes in fair value (“-” for gain) | -2,006,095.39 | -24,927,586.43 |
| Finance costs (“-” for income) | 7,219,522.20 | 593,853.58 |
| Loss on investment (“-” for income) | -36,109,196.08 | 222,580.97 |
| Decrease in deferred tax assets (“-” for increase) | 8,697,392.25 | 4,377,469.88 |
| Increase in deferred tax liabilities (“-” for decrease) | -4,816,451.79 | -7,231,414.10 |
| Decrease in inventories (“-” for increase) | -253,435,681.37 | -295,593,753.30 |
| Decrease in operating receivables (“-” for increase) | 89,453,122.15 | -176,463,861.35 |
| Increase in operating payables (“-” for decrease) | 66,876,459.48 | 426,275,129.13 |
| Others | 21,544,870.88 | 14,678,445.11 |
| Net cash generated from/used in operating activities | 191,436,066.52 | 152,250,706.73 |
| 2. Significant investing and financing activities that involve no cash proceeds or payments: | ||
| Conversion of debt to capital |
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| Current portion of convertible corporate bonds | ||
| Fixed assets leased in in finance leases | ||
| 3. Net changes in cash and cash equivalents: | ||
| Closing balance of cash | 1,363,621,222.67 | 1,227,722,921.53 |
| Less: Opening balance of cash | 1,233,720,697.27 | 1,259,303,775.74 |
| Add: Closing balance of cash equivalents | ||
| Less: Opening balance of cash equivalents | ||
| Net increase in cash and cash equivalents | 129,900,525.40 | -31,580,854.21 |
(2) Breakdown of cash and cash equivalents
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| I. Cash | 1,363,621,222.67 | 1,233,720,697.27 |
| Including: cash on hand | 654,807.40 | 589,575.75 |
| Bank deposits readily available | 1,313,373,881.02 | 1,011,562,524.44 |
| Other cash and bank balances readily available | 49,592,534.25 | 221,568,597.08 |
| III. Closing balance of cash and cash equivalents | 1,363,621,222.67 | 1,233,720,697.27 |
66. Assets with restricted ownership or right of use
Unit: RMB yuan
| Item | Closing carrying amount | Reason for restriction |
| Cash and bank balances | 148,585,320.86 | Payments of security deposits for bank acceptance notes, loans and performance bonds |
| Fixed assets | 4,575,662.37 | Collaterals of subsidiaries for bank loans |
| Current portion of other non-current assets | 315,375,000.00 | Security deposits of subsidiaries for loans |
| Total | 468,535,983.23 |
67. Monetary items in foreign currencies
(1) Monetary items in foreign currencies
Unit: RMB yuan
| Item | Closing balance in foreign currency | Exchange rate | Closing balance in RMB |
| Cash and bank balances |
Page 171 of 191
| Including: USD | 53,473,401.27 | 7.2258 | 386,388,102.90 |
| EUR | 75,809,379.29 | 7.8771 | 597,158,061.61 |
| HKD | 35,371.29 | 0.9220 | 32,612.33 |
| RUB | 40.00 | 1.9740 | 78.96 |
| BUK | 34,000.00 | 0.0034 | 115.60 |
| THB | 110.00 | 0.2034 | 22.37 |
| Accounts receivable | |||
| Including: USD | 930,732.80 | 7.2258 | 6,725,289.07 |
| EUR | 87,321,105.25 | 7.8771 | 687,837,078.16 |
| HKD | 0.9220 | ||
| Long-term borrowings | |||
| Including: USD | 7.2258 | ||
| EUR | 7,684,092.69 | 7.8771 | 60,528,366.53 |
| HKD | 0.9220 | ||
| Accounts payable | |||
| Including: EUR | 70,555,120.47 | 7.8771 | 555,769,739.45 |
| Other receivables | |||
| Including: EUR | 3,064,016.15 | 7.8771 | 24,135,561.62 |
| Short-term borrowings | |||
| Including: USD | 5,000,000.00 | 7.2258 | 36,129,000.00 |
| EUR | 40,879,670.04 | 7.8771 | 322,013,248.87 |
| Current portion of non-current liabilities | |||
| Including: EUR | 3,945,421.95 | 7.8771 | 31,078,483.24 |
| Other payables | |||
| Including: USD | 575,665.02 | 7.2258 | 4,159,640.30 |
| EUR | 2,527,885.92 | 7.8771 | 19,912,410.18 |
| Lease liabilities | |||
| Including: EUR | 5,781,028.14 | 7.8771 | 45,537,736.76 |
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(2) Overseas business entities (for substantial overseas business entities, the following information shall bedisclosed: principal place of business, functional currency, and basis for the choice, change of functionalcurrency and reasons)? Applicable □ Not applicable
| Substantial overseas business entity | Principal place of business | Functional currency | Basis for the choice |
| Fosber Italy | Italy | EUR | Settlement currency for local business operations |
| Fosber America | America | USD | Settlement currency for local business operations |
| EDF | Italy | EUR | Settlement currency for local business operations |
| Tiru?a Group | Spain | EUR | Settlement currency for local business operations |
68. Government grants
(1) Basic information of government grants
Unit: RMB yuan
| Type | Amount | Recognized in | Amount recognized in profit or loss |
| 4 Mitsubishi double-column milling machines and 3 fixed double-column milling machines | 10,515,321.66 | Deferred income | 558,330.00 |
| Special funds for high-quality development of foreign trade of Nanhai District Promotion Bureau | 50,079.00 | Other income | 50,079.00 |
| Immediate VAT refund for embedded software | 1,679,682.38 | Other income | 1,679,682.38 |
| 2022 Foshan city copyright registration subsidy of Foshan Committee Publicity Department | 250.00 | Other income | 250.00 |
| Housing pool and first-year operation incentives | 897,000.00 | Other income | 897,000.00 |
| Suzhou human resources and social security training subsidy | 170,300.00 | Other income | 170,300.00 |
| Social insurance payments-related employment expansion allowance | 3,000.00 | Other income | 3,000.00 |
| 2022 Suzhou business development special funds | 34,700.00 | Other income | 34,700.00 |
| 2022 District-level complementary reward by Scientific and Technological Innovation Bureau | 29,040.00 | Other income | 29,040.00 |
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| Incentives in relation to research and development costs for scientific and technological innovation | 7,400.00 | Other income | 7,400.00 |
| First appropriation of the first batch of subsidy funds for 2023 high-tech enterprise cultivation-Shenzhen Technology Innovation Funds [2023] No. 11 (20230073) | 120,000.00 | Other income | 120,000.00 |
| Unemployment subsidy by the social security bureau | 443.08 | Other income | 443.08 |
| Foreign government subsidies | 48,525.66 | Other income | 48,525.66 |
VIII Interests in Other Entities
1. Interests in subsidiaries
(1) Composition of the Group
| Subsidiary | Principal place of business | Place of registration | Business nature | The Company’s interest | How the subsidiary was obtained | |
| Direct | Indirect | |||||
| Dongfang Precision (HK) | HK | HK | Trading | 100.00% | Incorporated | |
| Dongfang Precision (Netherland) | Netherland | Netherland | Trading | 90.00% | 10.00% | Incorporated |
| Fosber Asia | Foshan, Guangdong, China | Foshan, Guangdong, China | Manufacturing | 91.20% | Incorporated | |
| Suzhou Jinquan* | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Investment | 1.27% | Incorporated | |
| Parsun Power | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Manufacturing | 7.83% | 61.79% | Acquired in business combination not under common control |
| Parsun Power Technology | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Trading | 69.62% | Incorporated | |
| Parsun International | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Trading | 69.62% | Incorporated | |
| Shunyi Investment | Suzhou, Jiangsu, China | Suzhou, Jiangsu, China | Investment | 100.00% | Acquired in business combination not under common control | |
| Tiru?a Asia | Foshan, Guangdong, China | Foshan, Guangdong, China | Manufacturing | 100.00% | Acquired in business combination not under common control | |
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| EDF | Italy | Italy | Manufacturing | 100.00% | Acquired in business combination not under common control | |
| Fosber. S.p.A. | Italy | Italy | Manufacturing | 100.00% | Acquired in business combination not under common control | |
| Fosber America, Inc | America | America | Manufacturing | 100.00% | Acquired in business combination not under common control | |
| Fosber Tianjin | Tianjin, China | Tianjin, China | Manufacturing | 100.00% | Acquired in business combination not under common control | |
| Tiru?a Grupo Industrial S. L | Spain | Spain | Manufacturing | 100.00% | Acquired in business combination not under common control | |
| Tiru?a S.L.U. | Spain | Spain | Manufacturing | 100.00% | Acquired in business combination not under common control | |
| Tratamientos Industriales Iru?a S. A | Spain | Spain | Manufacturing | 100.00% | Acquired in business combination not under common control | |
| Tiru?a France SARL | France | France | Manufacturing | 100.00% | Acquired in business combination not under common control | |
| SCI Candan | France | France | Manufacturing | 100.00% | Acquired in business combination not under common control | |
| Tiru?a America inc. | America | America | Manufacturing | 100.00% | Acquired in business combination |
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| not under common control | ||||||
| Quantum Corrugated S.r.l. | Italy | Italy | Manufacturing | 60.00% | Incorporated | |
| Dongfang Digicom | Haikou, Hainan, China | Haikou, Hainan, China | Industrial Internet | 100.00% | Incorporated | |
| Dongfang Digicom (Guangdong) | Foshan, Guangdong, China | Foshan, Guangdong, China | Industrial Internet | 100.00% | Incorporated | |
| Yineng Investment | Haikou, Hainan, China | Haikou, Hainan, China | Investment | 100.00% | Incorporated | |
| Tianjin Hangchuang | Tianjin, China | Tianjin, China | Investment | 95.24% | Incorporated | |
| Yineng International | Foshan, Guangdong, China | Foshan, Guangdong, China | Investment | 100.00% | Incorporated | |
| Changzhou Xinchen | Changzhou, Jiangsu, China | Changzhou, Jiangsu, China | Investment | 94.86% | Incorporated | |
| Wonder Digital | Shenzhen, Guangdong, China | Shenzhen, Guangdong, China | Manufacturing | 51.00% | Acquired in business combination not under common control | |
| Wonder Tejing | Dongguan, Guangdong, China | Dongguan, Guangdong, China | Manufacturing | 51.00% | Acquired in business combination not under common control |
Reason for holding different equity percentage and voting right percentage in a subsidiary:
Basis for holding 50% or lower voting rights but having control in an investee, or holding over 50% voting rights but not having controlin an investee:
Basis for control over substantial structured entities included in the consolidated financial statements:
Basis for determining whether the Company is an agent or a principal:
Other information:
*According to the partnership agreement, the partnership is executed by the general partner and the other partners are not allowed toexecute the partnership affairs. The Company, as the sole general partner, exercises control over the partnership, which is included inthe Group's scope of consolidation.
2. Interests in joint ventures and associates
(1) Financial information of insignificant joint ventures and associates combined
Unit: RMB yuan
| Closing balance/H1 2023 | Opening balance/H1 2022 | |
| Joint ventures: | ||
| Totals based on the Company’s interests | ||
| Associates: | ||
| Total carrying amount of investments | 93,124,195.76 | 95,352,681.52 |
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| Totals based on the Company’s interests | ||
| --Net profit | -2,332,949.80 | 1,279,980.62 |
| --Total comprehensive income | -2,332,949.80 | 1,279,980.62 |
Other information:
IX Risks Associated with Financial InstrumentsThe Group is faced with various financial instrument risks in its routine activities, mainly including credit risk, liquidity risk and marketrisk (including exchange rate risk and interest rate risk). The Group mainly has the following instruments: cash and bank balances,equity investment, borrowings, notes receivable, accounts receivable, notes payable and accounts payable. The risk managementstrategies adopted by the Group to lower risks associated with these financial instruments are described below.The Group's Board of Directors is fully responsible for the determination of risk management objectives and policies and assumesultimate responsibility for such risk management objectives and policies, but the Board of Directors has authorized the ChiefExecutive's Office of the Group to design and implement procedures to ensure the effective execution of risks management objectivesand policies. The Board of Directors reviews the effectiveness of the executed procedures and the rationality of the risk managementobjectives and policies through the monthly reports submitted by the treasury supervisor. The internal auditors of the Group will alsoaudit the risk management policies and procedures and will report relevant findings to the Audit Committee.The Group's overall goals for risk management are to develop risk management policies to minimize risks without unduly affecting thecompetitiveness and strain capacity of the Group.Credit riskThe Group transacts only with recognized and reputable third parties. According to the Group's policies, credit checks are needed forall customers that require transactions should be conducted by means of credit. Additionally, the Group performs continuous monitoringof the balance of accounts receivable to ensure that the Group will not face major bad debt risk. For transactions not settled in theaccounting standard currency of the relevant business unit, unless specifically approved by the credit control department of the Group,the Group will not provide credit transaction conditions.Since the counterparties of cash and bank balances and notes receivable are banks with a good reputation and high credit rating, thecredit risk of such financial instruments is low.Other financial assets of the Group mainly include accounts receivable, other receivables and contract assets, the credit risk of whicharises from counterparty default, and the maximum risk exposure is equal to the carrying value of these instruments.The Group transacts only with recognized and reputable third parties, so no collateral is required. Credit risk concentration is managedby customer/counterparty, geographic region, and industry. Because the customer base of accounts receivable of the Group is widelydispersed in different departments and industries, there is no major credit risk concentration within the Group. The Group does nothold any collateral or other credit enhancement on the balance of accounts receivable.Criteria for judging significant increases in credit risk
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The Group assesses whether or not the credit risk of the relevant financial instruments has increased significantly since the initialrecognition at each balance sheet date. While determining whether the credit risk has significantly increased since initial recognitionor not, the Group takes into account the reasonable and substantiated information that is accessible without exerting undue extra costor effort, including qualitative and quantitative analysis based on the historical data of the Group, external credit risk rating, andforward-looking information. Based on the single financial instrument or the combination of financial instruments with similarcharacteristics of credit risk, the Group compares the risk of default of financial instruments on the balance sheet date with that on theinitial recognition date in order to determine changes in the risk of default during the expected lifetime of financial instruments.Definition of credit-impaired financial assetsThe standard adopted by the Group to determine whether a credit impairment occurs is consistent with the internal credit riskmanagement objectives of the relevant financial instrument, taking into account quantitative and qualitative criteria. When the Groupassesses whether the credit impairment of debtor occurred, the principal factors considered are as follows:
（1）Significant financial difficulty of the issuer or debtor;
（2）Debtors’ breach of contract, such as defaulting or becoming overdue on interest or principal payments;
（3）The creditor of the debtor, for economic or contractual reasons relating to the debtor’s financial difficulty, having granted to thedebtor a concession that the creditor would not otherwise consider;
（4）It is becoming probable that the debtor will enter bankruptcy or other financial restructuring;
（5）The disappearance of an active market for that financial asset because of financial difficulties of the issuer or debtor;
（6）The purchase or origination of a financial asset at a deep discount that reflects the incurrence of credit losses.The credit impairment on a financial asset may be caused by the combined effect of multiple events and may not be necessarily due toa single event.Exchange rate riskThe Group is exposed to trading exchange rate risks. Such exposures arise from sales or purchases by business units in currencies otherthan the units’ functional currencies.The sensitivity analysis of exchange rate risks is set out in the following table, reflecting the impact of reasonable and probable changein the exchange rates of EUR and USD on net profit or loss and other comprehensive income (net of tax) assuming that other variablesremain constant.
| Increase/(decrease) in exchange rate (%) | Increase/(decrease) in net profit or loss | Increase/(decrease) in total equity | |
| Stronger RMB against EUR | 2.00 | -4,169,218.89 | -4,169,218.89 |
| Weaker RMB against EUR | (2.00) | 4,169,218.89 | 4,169,218.89 |
| Stronger RMB against USD | 2.00 | -5,892,173.35 | -5,892,173.35 |
| Weaker RMB against USD | (2.00) | 5,892,173.35 | 5,892,173.35 |
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X Disclosure of Fair Values
1. The closing fair value of assets and liabilities measured at fair value
Unit: RMB yuan
| Item | Closing fair value | |||
| Level 1 fair value measurement | Level 2 fair value measurement | Level 3 fair value measurement | Total | |
| I. Continuous measurement of fair value | -- | -- | -- | -- |
| (I) Financial assets held for trading | 754,101,755.27 | 754,101,755.27 | ||
| Receivables financing | 20,326,332.51 | 20,326,332.51 | ||
| Other non-current financial assets | 34,123,970.29 | 149,633,064.36 | 198,366,934.62 | 382,123,969.27 |
| Other debt investments | 10,082,273.97 | 10,082,273.97 | ||
| Total assets continuously measured at fair value | 788,225,725.56 | 180,041,670.84 | 198,366,934.62 | 1,166,634,331.02 |
| (VI) Financial liabilities held for trading | 46,357,405.15 | 46,357,405.15 | ||
| Other non-current liabilities | 1,293,646.77 | 139,349,079.91 | 140,642,726.68 | |
| Total liabilities continuously measured at fair value | 1,293,646.77 | 185,706,485.06 | 187,000,131.83 | |
| II. Non-continuous measurement of fair value | ||||
XI Related Parties and Related-party Transactions
1. Parent
Information on the parent:
| Name | Relationship with the Company | Interest in the Company (%) |
| Tang Zhuolin (individual) | The Company’s controlling shareholder and one of the actual controllers | 21.82 |
| Tang Zhuomian (individual) | The Company’s controlling shareholder and one of the actual controllers | 7.81 |
The ultimate controllers of the Company are Tang Zhuolin and Tang Zhuomian.
2. Subsidiaries of the Company
See Item 1 under Note VIII.
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3. Joint ventures and associates of the Company
For substantial joint ventures and associates of the Company, see Item 2 under Note VIII.Other joint ventures or associates that had related-party transactions with the Company in the current period, or have had related-partytransactions with the Company in prior periods with a balance in the current period:
| Joint venture or associate | Relationship with the Company |
Other information:
4. Other related parties
| Other related parties | Relationship with the Company |
| Qiu Yezhi | Director and General Manager |
| Xie Weiwei | Director and Deputy General Manager |
| Chen Huiyi | Chairman of the Supervisory Committee |
| Zhao Xiuhe | Employee Supervisor |
| He Baohua | Supervisor |
| Shao Yongfeng | Chief Financial Officer and Vice President |
| Li Ketian | Independent Director |
| Liu Da | Independent Director |
| Tu Haichuan | Independent Director |
| Feng Jia | Director and Board Secretary |
5. Related-party transactions
(1) Remuneration of key management
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Remuneration of key management | 8,086,182.30 | 7,801,939.42 |
XII Share-based Payments
1. The overall situation of share-based payments
? Applicable □ Not applicable
Unit: RMB yuan
| Total amount of various equity instruments granted by the Company during the current period | 0.00 |
| Total amount of various equity instruments exercised by the Company during the current period | 21,550,000.00 |
Other information:
2. Equity-settled share-based payments
? Applicable □ Not applicable
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Unit: RMB yuan
| Methods for determining the fair value of equity instruments on the grant date | Market prices |
| Basis for determining the number of feasible right equity instruments | 2020 Restricted Share Incentive Plan & 2022 Restricted Share Incentive Plan |
| Reason for significant difference between estimates of the current period and the last period | Not applicable |
| Cumulative amount of equity-settled share-based payments recognized in capital surplus | 90,608,424.83 |
| Total costs of equity-settled share-based payments in the current period | 20,566,434.45 |
Other information:
3. Other information
On 27 March 2020, the Company convened the 44th (Extraordinary) Meeting of the Third Board ofDirectors, where the Proposal on Granting Restricted Shares to Awardees was approved, and theBoard of Directors agreed to grant 22.85 million restricted shares to 42 awardees. The grant date forthe first grant of restricted shares was 27 March 2020. On 8 June 2020, the Company approved theProposal on Adjusting Matters Related to the 2020 Restricted Share Incentive Plan, the number ofawardees was adjusted to 40, and the number of granted restricted shares was adjusted to 22.6 million.The exercise price of this restricted share grant was RMB1. As at 31 December 2020, the accumulatedamount of subscription funds received by the Company for the first grant of restricted shares underthis incentive plan totaled RMB22,600,000.00.
As authorized by the first Extraordinary Meeting of the Third Board of Directors in 2020, on 29December 2020, the Company convened the 4th (Extraordinary) Meeting of the Fourth Board ofDirectors, where the Proposal on Granting Reserved Restricted Shares to Awardees was approved,and the Board of Directors agreed to grant 4.24 million restricted shares to 18 awardees. The grantdate was 29 December 2020. As at 31 December 2021, the accumulated amount of subscription fundsreceived by the Company for the reserved restricted shares under this incentive plan totaledRMB4,240,000.00.
The maximum number of unexercised share options currently available under the plan is equal to10% of the shares issued by the Company. According to the plan, the maximum number of shares inthe share options granted to each eligible grantee during any period spanning 12 months is 1% of theshares issued by the Company at any time. Any grant of share options above this limit shall be subjectto the approval of the General Meeting.
The arrangements for unlocking the restricted shares under the restricted share incentive plan are asfollows:
| Unlocking arrangements | Time of unlocking | Percentage of unlocking |
| 1st unlocking period | From the first trading day 12 months after the date of listing of the first grant of/reserved restricted shares to the day of the last trading day within 24 months after the date of listing of the first grant of restricted shares | 20% |
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| 2nd unlocking period | From the first trading day 24 months after the date of listing of the first grant of/reserved restricted shares to the day of the last trading day within 36 months from the date of listing of the first grant of restricted shares | 40% |
| 3rd unlocking period | From the first trading day 36 months after the date of listing of the first grant of/reserved restricted shares to the day of the last trading day within 48 months from the date of listing of the first grant of restricted shares | 40% |
The unlocking conditions of the restricted share incentive plan are as follows:
In addition to meeting the relevant requirements for granting, awardees must also meet the followingunlocking conditions on the sale of granted restricted shares:
Performance appraisal requirements at the company level:
| Unlocking period | Performance appraisal objectives | |
| 1st unlocking period | The adjusted average net profit for 2018 and 2019 is used as the base of the performance appraisal, and the growth rate of net profit in 2020 shall not be less than 20% | |
| 2nd unlocking period | The adjusted average net profit for 2018 and 2019 is used as the base of the performance appraisal, and the growth rate of net profit in 2021 shall not be less than 35% | |
| 3rd unlocking period | The adjusted average net profit for 2018 and 2019 is used as the base of the performance appraisal, and the growth rate of net profit in 2022 shall not be less than 55% |
The net profit during the appraisal period from 2020 to 2022 mentioned above refers to the auditedconsolidated statement of net profit attributable to the shareholders of the Company excluding theimpact of share-based payments under this and other equity incentive plans. The base of performanceappraisal is the average net profit (the net profit attributable to shareholders of the listed company inconsolidated statements) of the Company for 2018 and 2019 after deducting the relevant financialimpacts of Beijing Pride New Energy Battery Technology Co., Ltd.
Performance appraisal requirements at the personal level:
The performance appraisal results of the awardees are divided into Levels A, B, C and D. The non-resalable restricted shares of those awardees with appraisal results of Level D will be repurchasedand retired by the Company, and the repurchase price is the grant price.
As authorized by the first Extraordinary Meeting of the Fourth Board of Directors in 2022, on 21March 2022, the Company convened the 15th (Extraordinary) Meeting of the Fourth Board of
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Directors, where the Proposal on Granting Restricted Shares to Awardees was approved, and theBoard of Directors agreed to grant 2.65 million restricted shares to 7 awardees. The grant date was21 March 2022. As at 31 December 2022, the accumulated amount of subscription funds received bythe Company for the reserved restricted shares under this incentive plan totaled RMB2,650,000.00.
The arrangements for unlocking the restricted shares under the restricted share incentive plan are asfollows:
| Unlocking arrangements | Time of unlocking | Percentage of unlocking |
| 1st unlocking period | From the first trading day 12 months after the date of listing of the first grant of restricted shares to the day of the last trading day within 24 months after the date of listing of the first grant of restricted shares | 20% |
| 2nd unlocking period | From the first trading day 24 months after the date of listing of the first grant of restricted shares to the day of the last trading day within 36 months from the date of listing of the first grant of restricted shares | 40% |
| 3rd unlocking period | From the first trading day 36 months after the date of listing of the first grant of restricted shares to the day of the last trading day within 48 months from the date of listing of the first grant of restricted shares | 40% |
The unlocking conditions of the restricted share incentive plan are as follows:
In addition to meeting the relevant requirements for granting, awardees must also meet the followingunlocking conditions on the sale of granted restricted shares:
Performance appraisal requirements at the company level:
| Unlocking period | Performance appraisal objectives | |
| 1st unlocking period | The average net profit for 2020 and 2021 is used as the base, and the growth rate of net profit in 2022 shall not be less than 10% | |
| 2nd unlocking period | The average net profit for 2020 and 2021 is used as the base, and the growth rate of net profit in 2023 shall not be less than 20% | |
| 3rd unlocking period | The average net profit for 2020 and 2021 is used as the base, and the growth rate of net profit in 2024 shall not be less than 30% |
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The above assessment annual net profit index refers to the net profit attributable to the shareholdersof the Company in the audited consolidated statements and excluding the impact of the sharepayment expenses of this and other equity incentive plans as the calculation basis.
Performance appraisal requirements at the personal level:
The performance appraisal results of the awardees are divided into Levels A, B, C and D. The non-resalable restricted shares of those awardees with appraisal results of Level D will be repurchasedand retired by the Company, and the repurchase price is the grant price.
XIII Commitments and Contingencies
1. Substantial commitments
Outstanding substantial commitments at the balance sheet date:
At the balance sheet date, the Group had no commitments that were required to be disclosed.
2. Contingencies
(1) Explain if the Company has no substantial contingencies that need to be disclosedThe Company had no substantial contingencies that needed to be disclosed.XIV Events after the Balance Sheet Date
1. Other information on events after the balance sheet date
At the balance sheet date, the Group had no events after the balance sheet date that are required to be disclosed.XV Other Significant Matters
1. Segment reporting
(1) Basis for the determination of reporting segments and accounting policies
The Company divides reporting segments on a geographic basis. Assets and liabilities shared by different segments are allocated tothese segments according to their scales.
(2) Financial information of reporting segments
Unit: RMB yuan
| Item | Domestic entities | Overseas entities | Offset | Total |
| Operating revenue | 907,382,681.17 | 1,314,194,802.62 | -138,971,030.07 | 2,082,606,453.72 |
| Cost of sales | 612,950,796.41 | 979,745,547.11 | -120,066,199.41 | 1,472,630,144.11 |
| Total assets | 5,363,238,058.90 | 3,308,300,247.83 | -1,125,091,592.43 | 7,546,446,714.30 |
| Total liabilities | 1,338,248,179.27 | 2,168,227,152.82 | -492,361,771.41 | 3,014,113,560.68 |
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XVI Notes to Major Items in the Company Financial Statements
1. Accounts receivable
(1) Accounts receivable by type
Unit: RMB yuan
| Type | Closing balance | Opening balance | ||||||||
| Gross amount | Allowance | Carrying amount | Gross amount | Allowance | Carrying amount | |||||
| Amount | Percentage | Amount | Allowance percentage | Amount | Percentage | Amount | Allowance percentage | |||
| Accounts receivable for which the allowances are established individually | 2,488,100.00 | 1.17% | 2,488,100.00 | 100.00% | 3,004,100.00 | 1.17% | 3,004,100.00 | 100.00% | ||
| Of which: | ||||||||||
| Accounts receivable for which the allowances are established individually | 2,488,100.00 | 1.17% | 2,488,100.00 | 100.00% | 3,004,100.00 | 1.17% | 3,004,100.00 | 100.00% | ||
| Accounts receivable for which the allowances are established by group | 210,191,465.16 | 98.83% | 1,635,225.69 | 0.78% | 208,556,239.47 | 254,296,625.57 | 98.83% | 1,450,723.68 | 0.57% | 252,845,901.89 |
| Of which: | ||||||||||
| Accounts receivable for which the allowanc | 210,191,465.16 | 98.83% | 1,635,225.69 | 0.78% | 208,556,239.47 | 254,296,625.57 | 98.83% | 1,450,723.68 | 0.57% | 252,845,901.89 |
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| es are established by group with similar credit risk characteristics | ||||||||||
| Total | 212,679,565.16 | 100.00% | 4,123,325.69 | 1.94% | 208,556,239.47 | 257,300,725.57 | 100.00% | 4,454,823.68 | 1.73% | 252,845,901.89 |
Accounts receivable for which the allowances are established individually:
Unit: RMB yuan
| Entity | Closing balance | |||
| Gross amount | Allowance | Allowance percentage | Reason for allowance | |
| Customer 1 | 15,700.00 | 15,700.00 | 100.00% | |
| Customer 2 | 939,000.00 | 939,000.00 | 100.00% | |
| Customer 3 | 283,000.00 | 283,000.00 | 100.00% | |
| Customer 4 | 641,600.00 | 641,600.00 | 100.00% | |
| Customer 5 | 608,800.00 | 608,800.00 | 100.00% | |
| Total | 2,488,100.00 | 2,488,100.00 | ||
Accounts receivable for which the allowances are established by group:
Unit: RMB yuan
| Item | Closing balance | ||
| Gross amount | Allowance | Allowance percentage | |
| Within 1 year (inclusive) | 129,035,532.14 | 466,440.35 | 0.36% |
| 1-2 years (including 2 years) | 69,593,772.32 | 542,831.42 | 0.78% |
| 2-3 years (including 3 years) | 11,562,160.70 | 625,953.92 | 5.41% |
| 3-4 years (including 4 years) | |||
| 4-5 years (including 5 years) | |||
| Over 5 years | |||
| Total | 210,191,465.16 | 1,635,225.69 | |
Basis for grouping：
Where allowances for doubtful accounts receivable are established using the general model of expected credit loss, please discloseallowance information as other receivables.
□ Applicable ? Not applicable
By aging:
Unit: RMB yuan
| Aging | Closing balance |
| Within 1 year (inclusive) | 129,035,532.14 |
| 1-2 years | 69,593,772.32 |
| 2-3 years | 11,562,160.70 |
| Over 3 years | 2,488,100.00 |
| Over 5 years | 2,488,100.00 |
| Total | 212,679,565.16 |
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(2) Allowances established or reversed in the current period
Allowances in the current period:
Unit: RMB yuan
| Type | Opening balance | Change in the current period | Closing balance | |||
| Established | Reversed | Written off | Others | |||
| Allowances for doubtful accounts receivable | 4,454,823.68 | 184,502.01 | 516,000.00 | 4,123,325.69 | ||
| Total | 4,454,823.68 | 184,502.01 | 516,000.00 | 4,123,325.69 | ||
Significant allowances that were withdrawn or reversed in the current period:
Unit: RMB yuan
| Entity | Reversed amount | Way of recovery |
(3) Top five entities with respect to accounts receivable
Unit: RMB yuan
| Entity | Closing balance of accounts receivable | As a % of the closing balance of total accounts receivable | Closing balance of allowances |
| Dongfang Precision (Netherland) | 121,776,835.54 | 57.26% | |
| Dongfang Precision (HK) | 40,391,445.51 | 18.99% | |
| EDF | 12,387,840.99 | 5.82% | |
| Customer 7 | 7,000,353.16 | 3.29% | 57,402.90 |
| Customer 8 | 3,647,929.52 | 1.72% | 29,913.02 |
| Total | 185,204,404.72 | 87.08% |
2. Other receivables
Unit: RMB yuan
| Item | Closing balance | Opening balance |
| Dividends receivable | 17,840,000.00 | 17,840,000.00 |
| Other receivables | 402,908,851.41 | 577,361,759.62 |
| Total | 420,748,851.41 | 595,201,759.62 |
(1) Dividends receivable
1) Dividends receivable by type
Unit: RMB yuan
| Item (or investee) | Closing balance | Opening balance |
| Fosber Asia | 17,840,000.00 | 17,840,000.00 |
| Total | 17,840,000.00 | 17,840,000.00 |
Page 187 of 191
(2) Other receivables
1) Other receivables by nature
Unit: RMB yuan
| Nature | Closing gross amount | Opening gross amount |
| Internal transactions with related parties | 395,262,077.12 | 562,762,515.20 |
| Prepaid service charges | 984,312.90 | 2,772,188.53 |
| Security deposits | 1,367,869.05 | 2,089,429.81 |
| Performance compensation | 500,000.00 | 500,000.00 |
| Employee loans and petty cash | 1,432,842.53 | 1,806,931.45 |
| Others | 4,516,774.35 | 8,585,719.17 |
| Total | 404,063,875.95 | 578,516,784.16 |
2) Allowances
Unit: RMB yuan
| Allowances | Stage 1 | Stage 2 | Stage 3 | Total |
| 12-month expected credit loss | Lifetime expected credit loss (without credit impairment) | Lifetime expected credit loss (with credit impairment) | ||
| Balance as at 1 January 2023 | 655,024.54 | 500,000.00 | 1,155,024.54 | |
| Balance as at 1 January 2023 in the current period | ||||
| Balance as at 30 June 2023 | 655,024.54 | 500,000.00 | 1,155,024.54 |
Balances with significant changes in loss allowances in the current period:
□ Applicable ? Not applicable
By aging:
Unit: RMB yuan
| Aging | Closing balance |
| Within 1 year (inclusive) | 171,579,031.20 |
| 1-2 years | 204,150,556.88 |
| 2-3 years | 27,428,190.01 |
| Over 3 years | 906,097.86 |
| 3-4 years | 29,661.18 |
| 4-5 years | 4,400.00 |
| Over 5 years | 872,036.68 |
| Total | 404,063,875.95 |
3) Allowances established or reversed in the current period
Allowances for doubtful other receivables in the current period:
Unit: RMB yuan
| Type | Opening | Change in the current period | Closing balance |
Page 188 of 191
| balance | Established | Reversed | Written off | Others | ||
| Allowances for doubtful other receivables | 1,155,024.54 | 1,155,024.54 | ||||
| Total | 1,155,024.54 | 1,155,024.54 |
Of which, substantial reversed amounts of allowances in the current period:
Unit: RMB yuan
| Entity | Reversed amount | Way of recovery |
4) Top five entities with respect to other receivables
Unit: RMB yuan
| Entity | Nature of other receivable | Closing balance | Aging | As a % of the closing balance of total other receivables | Closing balance of allowances for doubtful other receivables |
| Yineng Investment | Current account | 253,725,984.64 | Within 1 year , 1-2 years, or 2-3 years | 62.79% | |
| Tiru?a Asia | Current account | 82,298,991.51 | Within 1 year , 1-2 years, or 2-3 years | 20.37% | |
| Dongfang Digicom (Guangdong) | Current account | 38,485,556.97 | Within 1 year , or 1-2 years | 9.52% | |
| Dongfang Digicom | Current account | 9,801,166.19 | Within 1 year , or 1-2 years | 2.43% | |
| Dongfang Precision (Netherland) | Current account | 6,682,462.38 | 1-2 years | 1.65% | |
| Total | 390,994,161.69 | 96.76% |
3. Long-term equity investments
Unit: RMB yuan
| Item | Closing balance | Opening balance | ||||
| Gross amount | Impairment allowance | Carrying amount | Gross amount | Impairment allowance | Carrying amount | |
| Investments in subsidiaries | 738,487,118.43 | 45,303,485.99 | 693,183,632.44 | 719,603,669.32 | 45,303,485.99 | 674,300,183.33 |
| Investments in joint ventures and associates | 84,751,613.54 | 84,751,613.54 | 86,533,484.12 | 86,533,484.12 | ||
| Total | 823,238,731.97 | 45,303,485.99 | 777,935,245.98 | 806,137,153.44 | 45,303,485.99 | 760,833,667.45 |
(1) Investments in subsidiaries
Unit: RMB yuan
| Investee | Opening balance (carrying amount) | Change in the current period | Closing balance (carrying amount) | Closing balance of impairment allowance | |||
| Additional investment | Reduction in investment | Impairment allowance | Others | ||||
Page 189 of 191
| Dongfang Precision (HK) | 1,856,010.00 | 1,856,010.00 | |||||
| Dongfang Precision (Netherland) | 967,767.81 | 634,626.49 | 1,602,394.30 | ||||
| Fosber Asia | 55,275,470.44 | 10,793,663.53 | 1,570,898.95 | 67,640,032.92 | |||
| Shunyi Investment | 305,584,828.17 | 305,584,828.17 | |||||
| Parsun Power | -13,747,060.68 | 2,961,590.27 | -10,785,470.41 | 45,303,485.99 | |||
| Tiru?a Asia | 21,903,462.34 | 21,903,462.34 | |||||
| Dongfang Digicom | 5,419,727.91 | 1,327,746.75 | 6,747,474.66 | ||||
| Dongfang Digicom (Guangdong) | 470,213.33 | 410,754.47 | 880,967.80 | ||||
| Yineng Investment | 101,572,033.67 | 549,542.16 | 102,121,575.83 | ||||
| EDF | 1,197,730.34 | 634,626.49 | 1,832,356.83 | ||||
| Tianjin Hangchuang | 20,000,000.00 | 20,000,000.00 | |||||
| Wonder Digital | 173,800,000.00 | 173,800,000.00 | |||||
| Total | 674,300,183.33 | 10,793,663.53 | 8,089,785.58 | 693,183,632.44 | 45,303,485.99 |
(2) Investments in joint ventures and associates
Unit: RMB yuan
| Investee | Opening balance (carrying amount) | Change in the current period | Closing balance (carrying amount) | Closing balance of impairment allowance | |||||||
| Additional investment | Reduction in investment | Return on investment recognized using the equity method | Adjustment to other comprehensive income | Other equity changes | Declared cash dividends or profit | Impairment allowance | Others | ||||
| 1. Joint ventures | |||||||||||
| 2. Associates | |||||||||||
| Jaten Robot | 86,533,484.12 | -1,781,870.58 | 84,751,613.54 | ||||||||
| Subtotal | 86,533,484.12 | -1,781,870.58 | 84,751,613.54 | ||||||||
| Total | 86,533,484.12 | -1,781,870.58 | 84,751,613.54 | ||||||||
4. Operating revenue and costs
Unit: RMB yuan
Page 190 of 191
| Item | H1 2023 | H1 2022 | ||
| Revenue | Costs | Revenue | Costs | |
| Principal operations | 199,620,855.04 | 115,715,894.18 | 174,984,173.72 | 111,562,446.47 |
| Other operations | 19,974,397.59 | 2,183,292.25 | 39,677,700.47 | 6,270,509.56 |
| Total | 219,595,252.63 | 117,899,186.43 | 214,661,874.19 | 117,832,956.03 |
Information on performance obligations:
Information related to the transaction price allocated to residual performance obligations:
At the end of the Reporting Period, the amount of revenue corresponding to performance obligations that had been contracted but notyet performed or fulfilled was RMB61,461,380.02, of which RMB61,461,380.02 is expected to be recognized during 2023-2024,RMB0.00 is expected to be recognized during 2024-2025, and RMB0.00 is expected to be recognized during 2025-2026.
5. Investment income
Unit: RMB yuan
| Item | H1 2023 | H1 2022 |
| Income from long-term equity investments measured at cost method | 17,840,000.00 | |
| Income from long-term equity investments measured at equity method | -1,781,870.58 | 1,279,980.62 |
| Income from financial assets held for trading | -2,738,562.31 | 1,476,638.02 |
| Total | -4,520,432.89 | 20,596,618.64 |
XVII Supplementary Information
1. Schedule of exceptional gains and losses in the current period
? Applicable □ Not applicable
Unit: RMB yuan
| Item | Amount | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -2,288,094.62 | |
| Government grants through profit or loss (exclusive of government grants given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 4,339,827.39 | |
| Gain or loss on fair-value changes on held-for-trading financial assets and liabilities & income from disposal of held-for-trading financial assets and liabilities and available-for-sale financial assets (exclusive of the effective portion of hedges that arise in the Company’s ordinary course of business) | 40,448,241.27 | |
| Non-operating income and expenses other than the above | 913,829.34 |
Page 191 of 191
| Less: Income tax effects | -675,162.52 | |
| Non-controlling interests effects (net of tax) | 465,253.00 | |
| Total | 43,623,712.90 | -- |
Other items that meet the definition of exceptional gain/loss:
□ Applicable ? Not applicable
No such cases for the Reporting Period.Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item listed in the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss Items:
□ Applicable ? Not applicable
2. Return on equity (ROE) and earnings per share (EPS)
| Profit of the Reporting Period | Weighted average ROE | EPS | |
| Basic EPS (RMB yuan/share) | Diluted EPS (RMB yuan/share) | ||
| Net profit attributable to ordinary shareholders of the Company | 4.95% | 0.17 | 0.17 |
| Net profit attributable to ordinary shareholders of the Company before exceptional gains and losses | 3.90% | 0.14 | 0.14 |
3. Accounting data differences under China’s Accounting Standards for Business Enterprises (CAS) andInternational Financial Reporting Standards (IFRS) and foreign accounting standards
(1) Net profit and equity under CAS and IFRS
□ Applicable ? Not applicable
(2) Net profit and equity under CAS and foreign accounting standards
□ Applicable ? Not applicable